462.11W892/1945: Telegram
The Acting Secretary of State to the Ambassador in France (Edge)
423. Reference is made to your No. 516 of August 19. A decision on this matter cannot be much longer delayed. Accordingly the Department desires that the Ambassador take up the matter with Prime Minister Laval personally, presenting if necessary, and within his discretion, the following considerations to supplement those already advanced:
(1) The President’s proposal excluded obligations held by private parties. This Government cannot agree that payments under the German-American Claims Agreement are suspended by that proposal. Acting on this conviction the American Government is continuing to make payments to German nationals during the moratorium year. It cannot agree that the payments of the German Government should be treated on a different basis and suspended on the contention that they are intergovernmental obligations. These payments by Germany are likewise in compensation for private claims.
Moreover, if Germany fails to pay to the account of American nationals as the agreement requires, then Congress would have to give its consent to the postponement and to a refunding scheme if this action were not to stand as a default by Germany. It is clear that Congress [Page 289] would not consent to such postponement while our Government continued to pay the similar claims of German nationals.
(2) It should be understood by the French Government that the payments by the German Government are placed in a special account from which checks are drawn in favor of private claimants. The United States receives no benefit, directly or indirectly or even temporarily, from these payments. It should be further understood that the United States Government pays money into the same special account and that from this account both German and American claimants are paid according to established priorities.
(3) Something over $4,000,000 is the actual amount of the first German payment which is due on September 30, 1931. A similar payment is due on March 31, 1932, but under the German-American Claims Agreement this one might be suspended. In that event, the total German payment going into the special account will be somewhat over $4,000,000, while German nationals would receive out of that account $18,000,000 and very likely $31,000,000 during the moratorium year.
(4) In view of the economic situation in Germany, the American Government believes that the continuation of payments would greatly aid German economy and strengthen German exchange.
(5) It may be restated to the French Government that the fact that the Young Plan signatories took German payments into account as a fraction of the Young Plan annuities does not bind this Government and that this Government does not accept the view that the nature of the payments in question is thereby modified.
(6) The French Government must recognize that there is a necessary connection between the German payments and the disbursements from the special account created by Act of Congress, first of all, because the German payments are one source of the funds in the special account, and secondly, because the American Treasury would not feel itself legally authorized to pay German nationals and at the same time consent to the cessation of German payments into the account. This is because the payments in both directions are essentially identical.
(7) It is our hope that in view of the preceding statements and considering the relative smallness of the German payments involved, the Government of France will reconsider its attitude. In the present critical state of world affairs, it is obviously desirable that all these problems should be solved with complete cooperation and accord. We bring this matter to the attention of the French Government because we desire to secure such cooperation and accord.
(8) It is not possible to accept the French suggestion of payment of the net, for all the payments under discussion are in reality payments [Page 290] to private individuals. In order to discharge the private claims the whole body of payments must be made.
However, in seeking to reach agreement with the French Government on this matter, the American Government is ready to consider the French suggestion in any practicable form that enables the whole body of claims to be discharged. For example, a satisfactory solution would be for the German Government, instead of transmitting any funds to the American Treasury for the Special Deposit Account, to merely make payment in reichsmarks to the Reichsbank (for the credit of the Special Deposit Account) for the discharging of the claims of German nationals.
If you find that there is a serious desire on the part of the French Government to work out a solution, you might make the above suggestion.