462.00R294/819b: Telegram
The Secretary of State to the Ambassador in Germany (Sackett)
104. Secretary of Treasury Mills requests that you transmit following to the German Government: [Page 324]
“Under date of June 23, 1930, the German Government entered into an agreement with the United States Government under the terms of which it agreed to make certain payments semi-annually on account of the amounts due covering the costs of the Army of Occupation and on account of so-called mixed claims, representing, generally speaking, the adjudicated claims of American citizens arising from war measures on the part of the German Government. Under the terms of this agreement the payments due semi-annually could, on 90 days’ notice, at the option of the German Government be postponed for a period of not exceeding 2½ years. It will be remembered that under the terms of the Settlement of War Claims Act52 the Government of the United States is returning the property of German nationals held by the Alien Property Custodian, as well as compensating the owners of ships, patents, and radio station[s] that had been seized for the use of the Government itself. The funds appropriated by the United States Government in accordance with the terms of this Act and the funds received from the German Government on account of mixed claims were placed in a common fund for the payment of both German and American claimants.
In June, 1931, in order to save Germany, the President of the United States suggested a suspension of intergovernmental payments on account of reparations, war and relief debts for 1 year.53 It was understood that this proposal applied to payments on account of army costs during the fiscal year 1931–32, but not to payments on account of mixed claims. In August, 1931, after the period for giving notice of postponement of the September 30th payment on account of mixed claims had expired, the German Ambassador requested the Under Secretary of the Treasury to waive the 90-day notice clause and to permit Germany to postpone the September 30th payment. In view of the representations made by the German Ambassador as to the difficult situation in which Germany found herself, the Secretary of the Treasury agreed on September 9th, 1931, to waive the 90-days’ notice and to permit the postponement of the September 30th payment. The German Government also gave notice of postponement on mixed claims covering the payment due on March 31, 1932. The Under Secretary of the Treasury suggested that Germany should accumulate the funds due the United States Government on September 30th, 1931, and March 31, 1932, so as to be in a position to transfer the postponed payments after the close of the Hoover moratorium year. At the same time, in order to be of further assistance to Germany, the United States Government expedited the payment of $18,000,000 payable to German nationals due under the terms of the Settlement of War Claims Act.
At that time the German Ambassador assured the Under Secretary of the Treasury that while Germany was compelled temporarily to postpone these payments, it had every intention of loyally fulfilling its obligations to the United States Government and that these payments would be made as soon as possible after the expiration of the Hoover moratorium year.
[Page 325]On May 26, 1932, the German and the United States Governments executed an agreement covering the suspension of payments due on account of army costs during the fiscal year 1931–32, in accordance with the general 1–year suspension program.54 At that time the representatives of the German Government requested that there be included in the agreement a clause similar to the following statement included in the London Protocol of August 11th, 1931:55 ‘The German Government pointed out that in accepting this proposal they had not intended to express any opinion as to Germany’s future capacity of payment, that question not having been in fact within the purview of the committee.’
The Treasury Department declined to entertain any such proposal. The Treasury representatives were then asked if an exchange of letters might not be made with the Treasury setting forth this statement. The German representatives were again advised that the Treasury would not make any such exchange.
The German Ambassador did, however, address a letter to the Secretary of State under date of May 26, 1932,56 in which he declared that ‘the German Government desires to emphasize that in making this agreement as to delayed payment of the costs of the American Army of Occupation it expresses no opinion as to whether Germany can actually fulfill the obligations named therein or similar obligations adjusted elsewhere.’
Under date of June 30th the German Ambassador called upon the Secretary of the Treasury and advised him that his Government desired if possible to make both payments due on September 30, 1932, under the debt funding agreement of June 23, 1930. He stated, however, that inasmuch as the agreement required 90 days’ advance notice of intention to postpone and the last day on which his Government could give the required notice was July 2, 1932, he wished to be advised as to whether the Secretary of the Treasury would allow the German Government to give notice just before the payment date if it found that it would be impossible for it to make the payments when due. The Secretary suggested to the Ambassador that in view of the fact that the Secretary had the right under the agreement to waive the 90 days’ required notice, the German Government do nothing about exercising the option and that if later an emergency arose whereby payment on September 30 should be rendered impossible, an arrangement would be made to waive the required notice of 90 days under the agreement.
Under date of September 8, 1932, the Under Secretary of State wrote to the Secretary of the Treasury and transmitted two letters of that date57 addressed to the Secretary of the Treasury by the Chargé d’Affaires of the German Embassy at Washington, informing the United States that Germany will postpone the payments due [Page 326] September 30, 1932, under the provisions of the debt funding agreement of June 23, 1930.
The following statement appears in each of those letters: ‘I take the liberty of referring to the statement made on May 26 of this year in a note to the Department of State which also applies to this notification of postponement.’
The Secretary of the Treasury had a conference with the Chargé d’Affaires of the German Embassy and explained to him that the Secretary of the Treasury could not under any circumstances accept the letter of notification as worded, and that in so far as the United States was concerned no waiver of the 90 days’ notice would be made as long as any such reservation was contained in the notice of postponement.
The Treasury Department does not recognize that the letter of May 26, 1932, to the Secretary of State has any validity or force in so far as Germany’s obligations to the United States Government are concerned. The Secretary of the Treasury, who was charged by Congress with the duty of executing the agreements with Germany, declined to embody in the agreement of May 26, 1932 any such clause as contained in the letter of May 26, 1932, or to receive any letters in connection with the execution of the agreement. The sending of this letter to the Secretary of State, followed by the incorporation of the clause in question in the notice of postponement of the payments due both on account of army costs and mixed claims on September 30th, 1932, raises the question as to Germany’s intentions in respect of the performance of the agreement of June 23, 1930. That agreement was made between the United States Government and the German Government alone. It has no relation whatsoever with any other agreements made by Germany with its other creditors. Its fulfillment is in no wise contingent on any action to be taken by Germany, or any other government. It constitutes on the part of Germany an unequivocal promise to pay.
It should be considered in connection with the Settlement of War Claims Act. That Act and the agreement of June 23, 1930, provide on the one hand for the settlement of claims of German citizens against the United States Government and on the other, for the payment of claims of the United States Government and her nationals against Germany. Since the execution of that agreement German nationals have received $43,000,000 from the United States; whereas the German Government has only paid about $19,000,000 for account of American nationals. In this connection it should not be forgotten that the United States Government is the only important creditor government that did not confiscate the property of German nationals, but has returned a large portion of the property seized by the Alien Property Custodian, and under a law enacted by the Congress of the United States has authorized the eventual return of the balance. Moreover, the German Government should be reminded that at a time of extreme difficulty, at the very moment when the German Government was giving notice that it would postpone its payment, the United States Government saw to it that $18,000,000 was expeditiously paid in satisfaction of the claims of German nationals.
Under all of these circumstances the United States Government [Page 327] can not entertain any suggestion that the obligations of the German Government under the terms of the agreement of June 23, 1930, will not be carried out.
It is true that representatives of the German Government have given verbal assurance that the German Government intends to meet these obligations in full. But in view of the letter to the State Department of May 26, 1932, and the reference to that letter contained in the notice of postponement submitted on September 8, 1932, subsequently withdrawn, the Government of the United States feels that it should have an unequivocal statement from the German Government as to its intentions.”
- March 10, 1928; 45 Stat. 254.↩
- For correspondence concerning President Hoover’s moratorium proposal. see Foreign Relations, 1931, vol. i, pp. 1 ff.↩
- See vol. i, pp. 614 ff.↩
- Great Britain, Cmd. 3947, Misc. No. 19 (1931): Report of International Committee of Experts Respecting Suspension of Certain Inter-governmental Debts, p. 3.↩
- Vol. i, p. 623.↩
- Not found in Department files.↩