The German Foreign Office to the American Embassy in Germany73
The German Government has taken cognizance of the contents of the Aide-Mémoire presented by the American Chargé d’Affaires ad interim, Mr. J. C. White, on March 26, 1934.74
I. The German Government regrets to see that there are still misunderstandings concerning the attitude of Germany, and in particular of the German Reichsbank President, in the question of German private foreign indebtedness.
II. As indicated by the development of the reserves of the Reichsbank, the question of how long foreign exchange or gold will still be available for meeting these debt obligations has reached a menacing stage which must be recognized by all creditors—regardless of what classification—as it is a clear, undeniable fact.
The development of the German foreign exchange situation is not comparable with that of other debtor countries. Germany’s will to do its utmost to obtain the necessary foreign exchange for meeting foreign commitments is demonstrated by the enormous payments of the last few crisis-years. This, moreover, has been repeatedly admitted in international quarters, particularly by the Committee of the Foreign Standstill creditors.
The German efforts could not lead to a still further payment of the foreign private claims, because the creditor countries did not and do not purchase from Germany as many goods as were and are necessary to earn the foreign exchange for all the claims of the creditors.
The handing over of the last millions of the reserves of the Reichsbank would place Germany in an impossible position with regard to all emergencies and unforeseen situations.
III. The internal attitude of Germany and of the German debtors towards the question of adhering to the agreements made concerning the private debts is a different matter from this external transfer problem. Never has a German Government or an authoritative German person made a remark—to say nothing of engaging in agitation—which justified the view that the German debtors wanted to free themselves unilaterally from or refuse the fulfilment of these obligations.
IV. The Reichsbank President’s speech mentioned in the Aide-Mémoire of March 26, 1934, is not reproduced verbatim in the Aide-Mémoire [Page 474]and was interpreted therein in a manner not justified by its contents. The complete text is here attached75 with the request that it be noted. The Government of the United States will have to admit there is no question therein of agitation against the German debts but that the speech merely represents the attempt to inform the American public frankly that it is not merely a matter of Germany’s choice whether and to what extent the further fulfilment of Germany’s private foreign obligations succeeds but that towards this end the cooperation of foreign countries, especially of the main creditor countries is extensively necessary. As regards the passage from the speech of the Reichsbank President quoted in the Aide-Mémoire, he has given the German Government the following explanation occasioned by this Aide-Mémoire: “According to the Layton Report 10,300 million marks of proceeds from private foreign loans were employed for the transfer of reparations. On this amount we have, moveover, transferred interest since 1924. Thus the Layton amount plus interest is exactly as large as the amount which we still owe for private foreign commitments. This alters nothing as regards the character of these debts as private debts nor as regards the obligation to pay them. It is, however, proven that Germany’s present transfer difficulties arise entirely and solely from the political compulsion of reparation payments, whereas we have already repaid to the full extent that amount of foreign loans whose proceeds could be employed for the reconstruction of Germany’s economic life.”
Besides, the Reichsbank President has declared publicly and unremittingly on numerous occasions that Germany recognizes her commercial debts. Only within the last few days he again took occasion to set forth, in reply to the enquiry of a distinguished American citizen concerning the Young Loan which is connected with these problems, the following: “I by no means fail to realize that the Young Loan also, just as all other loans which have come into the hands of the private public, represents to the full extent a private economic obligation on the part of Germany. Now that Germany, which regularly makes all mark payments, has encountered difficulties with the creditor countries in respect of the transfer, it has, as an honest debtor, to my mind the obligation to assume the same attitude towards all creditors. I already assumed this point of view in the discussions with the representatives of the creditors in June and July 1933.”
The German Government agrees with this attitude in all points.
V. The mixed-claims payments are based on indemnities for acts of war which were made the foundation of reparation claims by other states and thus were embraced by the inclusive amount rule of the Dawes Plan, that is by the reparation annuities. Nevertheless, the German Government complied with the earlier request of the Government [Page 475]of the United States to treat them as quasi private debts because, with a certain amount of justice, the obtaining of equivalents could be pointed to, which other states have kept back for themselves and in part employed to satisfy private claims for damages. The German Government is resolved to defend this standpoint in future as well, and quite generally, in so far as the means available for Germany in any way permit thereof, to see to it with all her strength that the private obligations entered into by Germany and German private persons are fulfilled in good faith.