Memorandum by the Secretary of State

The German Ambassador came in to see me in respect to the possibility of the President in his message asking for a change in the priorities under the Settlement of War Claims Act. In anticipation of his coming, I had read over the aide-mémoire of the Under Secretary of November 28th and the memorandum66 made for me by the Economic Adviser on November 29th. I had also talked with the Secretary of the Treasury and had coordinated the views of the two Departments in regard to this matter. Accordingly, when the Ambassador came in and asked me what we were going to do about it, I told him I supposed that he had come to see me mainly as a matter [Page 336] of formality because the transaction in question was under the immediate control of the Treasury. He said yes, that he was going to see the Secretary of the Treasury this afternoon. I told him I had looked into the matter and I agreed with the Secretary of the Treasury that we could not wait indefinitely while American claimants were dropping behind in the payments made to them. I recalled to the Ambassador the fact that last September his government had been asked by us to make a firm statement of its intentions to bring its payments up again, and I told him that while we had no desire to muddy the waters at this dangerous period in international relations, I felt that we ought to have some assurance that they would pay their share very soon if we did not press this new legislation. I said that in any event I felt the legislation would have to be held in readiness so that we could move for it in case the payments were not made. He agreed that that was a perfectly reasonable position. He said the German Government had had great difficulty in meeting its payments owing to the difficulty in obtaining exchange and therefore had acted under the contracts to postpone its payments, but that it had every intention of not defaulting and of going ahead with the payments. Furthermore, he advanced as another reason for withholding a change in our legislation here, the fact that both the German and American claimants were negotiating an agreement which if effected would produce a very much more prompt payment to everybody than would otherwise have come under the settlement and that it would be well to wait and see whether that agreement could not be made and carried out. I told him that I thought he would find the Secretary of the Treasury in a reasonable frame of mind as to this position but that he would feel as I felt that there was a limit to the delay that we could allow in making the payments to the American awardees. I said that we must protect them. He agreed that that was undoubtedly so.

H[enry] L. S[timson]
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