462.11L5232/940

Memorandum by the Legal Adviser (Haekworth)

Mr. Moore, Dr. Thomsen, Counselor of the German Embassy, Dr. Paulig, Agent for Germany before the Mixed Claims Commission, Messrs. Bonynge and Martin representing the United States before the Commission, Mr. McCloy representing the sabotage claimants, and Mr. Roland S. Morris representing the awardholders, and the undersigned, conferred in Mr. Moore’s office this afternoon regarding a possible settlement of the claims pending before the Commission satisfactory to the claimants and the present holders of awards against Germany. The discussions revolved around the German Embassy’s note of August 10, 1937 on the subject.

Mr. Martin read a letter which had been addressed to Mr. Bonynge under date of December 7 by the law firm of Cravath, DeGersdorff, Swaine & Wood, New York City, in behalf of the sabotage claimants and one of the same date addressed to Mr. Bonynge by Mr. Roland S. Morris in behalf of the awardholders, copies of which letters are in the Department’s files.56 There was also read a letter57 addressed to Mx. Moore by Katz & Sommerich of New York City with respect to two claimants who had received awards from the War Claims Arbiter.

Mr. Moore pointed out that the purpose of the conference was to explore the situation with a view to determining whether the proposals made by the claimants and the awardholders would be in substantial compliance with the suggestions contained in the German Government’s note of August 10, leaving to later consideration the arrangement of details and the other conditions stated in the German note.

After some discussion of the proposed plan, Mr. Bonynge raised the question whether it was the purpose of Germany to waive the claims of German nationals who hold awards from the War Claims Arbiter [Page 366] which have not been completely satisfied. It was suggested that these amounted to about $60,000,000 and that the unsatisfied American awards are in about the same amount. Dr. Thomsen and Dr. Paulig stated that the German Government could not waive the German claims since those awards were in behalf of the individual claimants, but indicated that the most they could do would be to use their good offices if such seemed to be necessary or desirable.

Messrs. Bonynge and Martin observed that if the Deposit Account should be absorbed by the American claimants, the German nationals would have no recourse since it was understood at the time of the enactment of the Settlement of War Claims Act that the awards of the War Claims Arbiter were to be paid only from that Account.

Mr. Hackworth stated that whatever the understanding might have been at that time the fact remained that these awards were against the United States, were given by a domestic tribunal pursuant to an Act of Congress, and, regardless of whether the Deposit Account should be exhausted, would still remain in the nature of judgment against this Government. It was then suggested by Messrs. Bonynge, Martin and McCloy that if the Commission gave an award which had the effect of absorbing the Special Deposit Account, the German claimants would have nothing to say regarding their failure to participate in the distribution of the fund.

It was generally agreed that if the settlement should take that course, that is to say, an award rendered in favor of the sabotage claimants in such an amount as to exhaust the fund under the priority provisions of the Settlement of War Claims Act, the German awardholders would probably have no grounds for complaint, but Mr. Moore and Mr. Hackworth expressed the view that, in any event, so long as these awards remain unsatisfied there will be efforts made to put the United States under some obligation or duty to make payment; also, that as the situation now stands the American awardholders will be giving up some forty to sixty million dollars in expectancies while the German awardholders will be giving up nothing, but that if this is what the American claimants desire to do, there is no apparent reason why the Department should raise any objection.

Mr. Moore pointed out that whatever is done should be subject to the approval of the Commission, and that the Department’s only desire is to be helpful in bringing the Commission’s work to a close at the earliest possible date. It was tentatively agreed on the part of Dr. Thomsen and Dr. Paulig, subject the approval of the German Ambassador, that a further meeting should be held by the two Agents with representatives of the two groups of American claimants for the purpose of determining whether any method of settlement can be agreed upon and, if so, the working out of the details thereof.

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Mr. Moore also brought up the question of the so-called late claims against Germany, referring in that connection to our unanswered notes of May 1 and July 2458 to the German Ambassador. After some little discussion of the subject it was our understanding that we might expect a communication from the German Embassy on the subject.

Green H. Hackworth
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