The Secretary of State to the Ambassador in Germany (Sackett)
Sir: There is enclosed, for your confidential information, a copy of a memorandum of a conversation which the Under Secretary had on November 28th with the German Ambassador,66a concerning a report that the President would include, in his message to Congress, a recommendation as to a change in priority of payments of claims.[Page 337]
For your further information, subsequent to this conversation the German Ambassador discussed with the Secretary of State and the Secretary of the Treasury the difficulties inherent in the situation. As a result of the Ambassador’s statement, Secretary Mills agreed to withhold temporarily from his annual report his proposed recommendation that legislation be enacted to revise the settlement of War Claims Act of 1928 in such a way as to set back the German priorities to a point where they will receive no more payments until and unless the German Government shall have resumed payment of the semi-annual annuities into the special Treasury fund. His agreement to withhold such recommendation was predicated on the condition that the German Government make an unequivocal statement of its intention of ultimately paying the proposed annuities. In the event that the German Government refused to make this statement, the Secretary of the Treasury stated that he would revive his suggestion for revised legislation.
A plan is being considered to handle the settlement of the mixed claims by having the American claimants paid off in dollars out of the Treasury fund and by having the German Government pay off the claims of its nationals in reichsmarks. Progress already made in the development of this scheme would indicate that it stands a reasonable chance of being carried through.
Very truly yours,