that it is willing to recast the Army Cost Agreement and to make an extension of the time of payments provided a reasonable allowance is made upon its other claims. Thus it would appear to my Government to be practicable, and it would be willing, to make an arrangement (For possible insert here see end of [this] message) by which through a recasting of the Army Cost Agreement for an extended period with appropriate provision for priority as to the reduced annual payments the total amount of the annual payment to be made to the United States for army costs and on account of the claims in question would be substantially equivalent to the annual payment likely to be required under the present Army Cost Agreement. My Government is hopeful that, with good will on both sides, as Your Excellency suggests, a satisfactory arrangement can be reached on these lines. It is not perceived that it would be necessary or appropriate to resort to arbitration. My Government would be unwilling to overlook the equities involved and notwithstanding its confidence in its legal position would be unwilling to limit itself to a discussion of merely legal questions appropriate to arbitral determination. An equitable arrangement mutually satisfactory should be more readily reached as between two Governments enjoying such friendly relations as happily exist between the United States and Great Britain. My Government believes that a resort to arbitral procedure would simply invite unnecessary delay, and my Government sees no reason why the matter cannot be dealt with adequately at the coming conference." If Logan's memorandum has been handed to Leith-Ross, and if you see no objection, please insert at point indicated above the following: ("as indicated in Mr. Logan's memorandum recently handed to Mr. Leith-Ross" 29.) HUGHES 462.00 R 296/866 The American Representative at the Preliminary Meeting of Experts (Logan) to the British Representative (Leith-Ross) 3o 30 [LONDON,] January 3, 1925. Subject to the following observations, our position is that set forth in your letter of December 23, 1924 31: 20 The clause as inserted in the note was made to read as follows: "as indicated in Mr. Logan's memorandum of January 3rd handed to Mr. Leith-Ross." 30 Copy transmitted to the Department by the Ambassador in London in his despatch no. 978, Jan. 5, 1925. This memorandum, handed to Mr. Leith-Ross by the Ambassador, Jan. 3, 1925, is substantially the same as the draft (not printed) telegraphed to the Department by Mr. Logan, Dec. 29, 1924, except for slight modifications of the text, chiefly verbal, made by the Department. "See telegram no. 606, Dec. 29, 1924, from the Ambassador in France, p. 117. 1. United States Army cost claims: The following statement in your letter under reference is noted: (a) "The U. S. Army Costs arrears should be met by an annuity spread over 24 years from the 1st January, 1923, which would be a prior charge on future cash receipts and which would amount to from 45 to 50 million gold Marks per annum." We are prepared to recast the Wadsworth Agreement, provided the Finance Ministers Conference agrees to accord our Army Costs claims an absolute foreign exchange cash priority annuity of 65 million gold Marks over a period of approximately 19 years from September 1, 1924, the date of the commencement of the first Dawes annuity. The balances which have already accrued to our Army Cost account through payments falling due before the going into effect of the Dawes Report are not to be considered as Annuities, but are to be credited to the capital amount of our Army Cost claims. The foregoing proposition is advanced solely on the condition that satisfaction is given with respect to other American claims. As already admitted by all concerned, our Army Cost annuities have a priority immediately after the cash priorities incident to the service of the recent 800 million gold Marks loan and after such limited amounts of foreign exchange as may be necessary to meet the cost of the Reparation Commission including the Dawes organizations, the Inter-Allied Rhineland High Commission and the Military Control Commissions, and immediately before any other priorities. This priority and the provision that any arrears after 1927 shall bear interest will, of course, be maintained. As the amount of foreign exchange available during the first one or two years of the operation of the Dawes Plan will in all probability be limited, which might possibly mean that the United States would not receive in these two years the full annuities in respect of the American Army Costs, it is felt that the figure of 65 million is fair and reasonable. 2. Other American claims: With respect to other American claims, the following statement in your letter is noted: (b) "The other claims would be met by an annuity not exceeding 40 to 50 million gold Marks per annum, expressed as a percentage of the Dawes annuity, i. e., as the annual payments in the normal year are fixed at 22 milliards, the percentage required would not exceed 2%. These payments would not be entitled to any priority and would be transferred pari passu with the reparation shares of the Allied Powers." You are quite correct in your statement that we do not ask any priority in payment of these claims over the so-called "Reparation" claims of the Allies. We do, however, expect to participate in the annuities on as favorable a basis as that accorded the Allied Powers. Our claims, other than Army Costs, are, as you know, in the neighborhood of 350 million dollars. In respect of these claims, it is intended that they should be met by an annual payment of about 60 million gold Marks per annum, expressed as a percentage of the net Dawes Annuities after allowing for priorities. The exact percentages cannot, of course, be determined at this time, in view of the unsettled position of the various priorities. It naturally follows that any decision reached relating to priorities must be in agreement with the United States, and, in addition, we must be in a position similarly to consider any foreign exchange priorities that may be accorded. 3. Belgian War debt: We are naturally interested in any arrangement made for payments on account of the Belgian War Debt. In the absence of definite instructions from Washington, this point must be reserved for later. 4. Remarks: The fact must not be overlooked that under the Wadsworth Agreement we are entitled to the benefit of 21 million dollars (i. e., approximately 88 million gold marks) per annum during a period of 12 years from January 1, 1923. Attention is also invited to the fact that any arrears in the payments during the first four years of the currency of the Wadsworth Agreement, must be made good in the last 8 years. As such arrears have actually occurred and as they probably will reoccur in the next one or two years, we would be entitled from January 1, 1927, to a total annual amount in respect of Army Costs of between 30 and 32 million dollars (i. e., between 126 and 134 million gold marks). In view of this latter situation it will be noted that the amount requisite for payment of all our claims under the Dawes Annuities, as outlined above, would be less annually than the amounts provided for under the Wadsworth Agreement for our Army Costs alone, although extended over a longer period of time. Furthermore, (so far as the Dawes Annuities are concerned), we would not claim an absolute priority for the total of these annuities as is the case of the annuities payable under the Wadsworth Agreement, but only a priority for the portion received in respect of Army Costs. Therefore, in its entirety, and vis a vis the payments which we would otherwise be entitled to under the Wadsworth Agreement, we consider the foregoing entirely fair and in fact a liberal concession in deference to the Allies. APPOINTMENT OF AN AMERICAN AS AGENT GENERAL FOR REPARATION PAYMENTS UNDER THE DAWES PLAN 462.00 R 296/384: Telegram The Ambassador in France (Herrick) to the Secretary of State 313. L-179, from Logan. [Paraphrase] PARIS, June 25, 1924—7 p. m. (1) The American Embassy in London has telephoned that full report of the results of the Herriot-MacDonald conversations were cabled to you and that I shall have a copy tomorrow; after seeing it I shall cable my further recommendations. (2) In a confidential conversation on the set-up of the personnel of controls provided for in the experts' report, Bradbury 3* stated that the present British attitude is that the Agent General is to be an American; he intimated that the city of London is pushing Dwight Morrow. At risk of being misunderstood I venture nevertheless to suggest that an eminent banker, especially from Wall Street, is not the best choice for the post, if present political psychology in Europe with strong socialist and anti-capitalist trend be taken into consideration. There is already a not inconsiderable attack, only partly veiled, on the experts' plan on general ground that it represents capitalistic dictation of Wall Street and city of London. This criticism would be crystallized and confirmed by banker's appointment from Great Britain or the United States. Poincaré has been particularly outspoken about such influences. I fully appreciate Morrow's special and undoubted equipment for the job, and the effect that his appointment might have on the flotation of a loan in the United States. It is, however, a question whether even these advantages are not counterbalanced by risk of future trouble not merely in Germany but also in the Allied countries where socialistic tendencies are quick to attack anything which has a semblance of capitalistic domination. The plan will be difficult enough to work out without any handicaps of this nature. I feel confident that the Department will appreciate that I am endeavoring to express a wholly impersonal view, that Morrow is a personal friend and that the objects of my remarks are best interests of the plan and of American unofficial participation therein as I see them. . . 34 Telegram in two sections. Sir John Bradbury, British representative on the Reparation Commission. From what I gather from talking with Bradbury, the designation of the Agent General would practically be arranged in London within the coming week and the other appointments would follow shortly thereafter. Logan. HERRICK 462.00 R 296/384: Telegram The Secretary of State to the Ambassador in France (Herrick) [Paraphrase] WASHINGTON, June 29, 1924-4 p. m. 207. L-92, for Logan. Referring to last paragraph your L-179, June 25, 7 p. m., Owen Young has cabled to Kindersley " as follows: 36 35 "Hope my suggestion of selecting all personnel at one time after plan is accepted may be adopted and I will come over if that will help. Most important that name should emerge from discussions between Germans, French, English and other allies as their unanimous choice. If you agree can you see that Paris and Berlin avoid personnel discussion for the present. Please answer fully. Young." HUGHES 462.00 R 296/393: Telegram The Ambassador in Paris (Herrick) to the Secretary of State 324. L-185 [from Logan]. [Extract] PARIS, July 2, 1924-7 p.m. (1) Reference my L-179,38 Department's L-92.39 Barthou" called unofficial and confidential meeting commission delegates his office this morning. Stated purpose of meeting was to discuss choice of individuals and nationality for principal offices control personnel contemplated by Dawes report. It developed during meeting that there was unanimous desire, with Governments also agreeing, for appointment of an American as Agent General. Barthou predicated French agreement to American Agent General and all other appointments on condition that French national, agreeable to French "Sir Robert Molesworth Kindersley, British member of the first committee of experts. Quotation not paraphrased. Telegram in three sections. 38 Ante, p. 135. 89 Supra. 40 Louis Barthou, French representative on the Reparation Commission. |