Papers Relating to the Foreign Relations of the United States, 1924, Volume II

462.00 R 296/176: Telegram

The Secretary of State to the Ambassador in France (Herrick)

[Paraphrase]

Washington, February 23, 1924—5 p.m.

58. L–50, for Logan.² From the information in the hands of the Department on the proposed basis of report of the first committee,³ it appears that American rights may be adversely affected in two particulars, viz., reimbursement of Army costs and payment of claims adjudicated by the Mixed Claims Commission under the agreement of August 10, 1922, with Germany.⁴

The Army Costs Agreement of May 25, 1923,⁵ was negotiated and signed on the assumption that German reparation payments would, in some measure, continue to be made. A moratorium was thought of only in connection with a loan or anticipatory payments by Germany and in those circumstances the Allies undertook to communicate with this Government for the purpose of reaching an agreement which would not cause any prejudice to the Government of the United States. If now a moratorium is recommended, and if current army costs are exempted from it, an arrangement should also be made for excepting a certain definite amount as an annual payment on account of American Army costs, say a twelfth of the total under the agreement of May 25. The equity of the position of the Government of the United States in this respect is particularly obvious when it is recalled that this Government agreed to accept payment over a period of 12 years in settlement of its just and overdue Army cost claim, whereas Army costs of the Allies have been met practically in full as they fell due.

Agreement of August 10, 1922, provides for a Mixed Commission to determine amount to be paid by Germany in satisfaction of Germany’s financial obligations to the United States under the treaty concluded on August 5 [25], 1921,⁶ between the two countries, and under the Treaty of Versailles. While adjudication of claims by the commission is pending, it is impossible to determine accurately what the amount finally awarded will be. This amount is, however, estimated at approximately $500,000,000 exclusive of Army costs which were, for certain technical reasons, notified to the commission. It should be borne in mind in connection with the total amount of American claims that the Government of the United States did not present any claims included in the categories which are covered by paragraphs 5, 6 and 7, annex I of part VIII of the Treaty of Versailles. Had this Government followed the example of some of the other Allied and Associated Powers and included these categories, the total amount of American claims would have been greatly increased.

The Government of the United States considers that it is entitled to compensation for this $500,000,000 or whatever other amount the Mixed Claims Commission may finally determine.

Unless the attention of the first committee is called to the American claims, it is not improbable that this committee’s recommendation will provide for the utilization of all Germany’s available assets in compensation of claims of other Allied and Associated Powers without taking into consideration the claims of this Government. You should therefore acquaint General Dawes and Mr. Owen Young⁷ with the foregoing facts and add that the Government of the United States would view with disapproval any general settlement of the reparation problem which did not take into proper account its legitimate claims while providing for claims of the other powers.

You may discuss the foregoing with Mr. Arthur N. Young,⁸ referring to his personal correspondence with me.

Hughes

2. James A. Logan, Jr., American unofficial representative on the Reparation Commission.
3. International committee of experts appointed by the Reparation Commission to report on Germany’s budget and currency; see telegram no. 535, Dec. 21, 1923, from the Ambassador in France, Foreign Relations, 1923, vol. ii, p. 108.
4. Ibid., 1922, vol. ii, p. 262.
5. Ibid., 1923, vol. ii, p. 180.
6. Foreign Relations, 1921, vol. ii, p. 29.
7. American members of the first committee, of which General Dawes was chairman. They were not, however, representatives of the Government of the United States.
8. On Dec. 31, 1923, Mr. Young, the Economic Adviser of the Department of State, was sent to Paris to confer with Mr. Logan and the American Ambassador. He was instructed to return to the Department in May 1924. (File nos. 462.00 R 29/3264a, b.)