462.11L5232/892
Memorandum by the Legal Adviser (Hackworth)
The German Ambassador and Dr. Paulig called this morning by request of the Department and discussed with Mr. Moore, Mr. Hackworth, and Mr. Martin the proposed settlement of the sabotage claims.
Mr. Moore explained that the meeting was pursuant to our previous discussion of a few days ago with the Ambassador. (At that time [Page 359] he stated that his Government would not be willing to give effect to the Munich agreement unless both the sabotage claimants and the present awardholders would be willing to regard payment of funds now in the German special deposit account as a complete satisfaction of all private claims.)
At Mr. Moore’s request Mr. Hackworth explained that the claimants and the awardholders could not see their way clear to surrender all future expectancies but would be willing to meet the Ambassador half way by surrendering 50 percent of such expectancies on awards; that this would amount to a saving to the German Government of some forty-two million dollars on its obligations to the United States, which was believed to be a very liberal concession. Dr. Paulig replied that if awards were entered by the Commission pursuant to the Munich settlement Germany’s obligation would in fact be increased by eight million dollars, notwithstanding the 50 percent surrender on expectancies. He stated that under the Munich settlement the sabotage claimants were to waive all right to any future payments after the special deposit account had been exhausted. Mr. Martin observed that this statement was based upon the assumption that in the absence of such a settlement there would be no awards in the sabotage claims, and that Dr. Paulig was mistaken in thinking that the claimants by the Munich settlement waived future expectancies. He stated that this had been made very clear to the German negotiators at Munich at different times during those discussions. The Ambassador stated that he felt that his Government would not accept anything less than a complete cancellation, after exhaustion of the special deposit account, of all future rights of private claimants; that it was his view that the claims should proceed before the Commission in the regular way; that his Government felt confident that the situation had not changed since the decision of the Commission in 1930 and that the next decision, like that one, would be in favor of his Government; that any compromise settlement however worded would leave the impression that Germany was guilty of the acts of sabotage complained of and that his Government could not make such a sacrifice without a like sacrifice on the other side. Mr. Martin stated that the Commission had found that acts of sabotage had been committed by Germany in the United States but had not found that the acts here complained of had been so committed. The Ambassador stated that was the point he had in mind and that he felt that the position of his Government was impregnable. Mr. Moore remarked that the idea was to carry out the Munich arrangement and that he wondered what the Ambassador thought of the possibility of the Commission’s recognizing that agreement and whether the proposed compromise settlement would not be more favorable to [Page 360] Germany. The Ambassador reiterated his statement that he felt it would be better to go on with the hearing before the Commission regardless of the length of time required and take the chances of the decision going against the German Government, which he thought would not be as detrimental to his Government as an implied admission by that Government.
Mr. Hackworth inquired whether, considering the circumstances under which the Munich settlement was negotiated, i. e. that German officials had requested that we send representatives to Germany to discuss a compromise, that such representatives had been sent and an agreement reached, and considering also the fact that the claimants and awardholders were now willing to make concessions of some magnitude, his Government might not feel that it should go forward with the proposed arrangement. The Ambassador made no commitment but stated that he would promptly communicate the proposal to his Government and would advise us of the results.
Mr. Moore asked Mr. Martin to advise Mr. Morris, representing the awardholders, the representatives of the sabotage claimants, and Mr. Bonynge of the results of the conversation.