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Notes to Part VIII, Articles 231 to 247—Continued

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end in itself, and added: "The fundamental problem which remains is the final determination of Germany's reparation liabilities, and it will be in the best interests of the creditor powers and of Germany alike to reach a final settlement by mutual agreement 'as soon', to use the concluding words of the Experts, ‘as circumstances make this possible'."

The United States participated in the receipts from Germany under the Dawes Plan in virtue of an agreement regarding the distribution of the Dawes annuities signed at Paris January 14, 1925 on behalf of the Governments of Belgium, France, Great Britain, Italy, Japan, United States, Brazil, Greece, Poland, Portugal, Rumania, Serb-Croat-Slovene State, and Czecho-Slovakia (Foreign Relations, 1925, II, 145).

This instrument, popularly known as the Finance Ministers' Agreement, effected a settlement of past accounts and a precise allocation of the annuities to meet all requirements and to eliminate many miscellaneous claims. In addition to 12 percent of the special amount allocated for the reimbursement of the Belgian war debt as defined in article 232 of the treaty, the United States was to receive:

A. 55,000,000 gold marks per annum beginning September 1, 1926, "in reimbursement of the costs of the United States Army of Occupation," this provision being deemed to supersede the agreement with France, Great Britain, Italy, and Belgium of May 25, 1923" (ibid., 1923, II, 180);

B. In satisfaction of awards under the Mixed Claims Commission established in pursuance of the agreement between the United States and Germany, August 10, 1922, "214 percent of all receipts from Germany on account of the Dawes annuities available for distribution as reparation.'

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In virtue of these provisions, the report of the Agent-General for Reparation Payments, May 21, 1930, shows that 300,430,667.80 gold marks were transferred to the United States of America.


On September 16, 1928 the representatives of Germany, Belgium, France, Great Britain, Italy, and Japan, in attendance at Geneva on the ninth ordinary session of the Assembly of the League of Nations, announced that in concluding a series of three conversations

Notes to Part VIII, Articles 231 to 247—Continued

they had reached agreement upon (1) opening negotiations for complete evacuation of the Rhineland; (2) constituting a committee of financial experts for the settlement of the reparation problem; and (3) constituting "a committee of verification and conciliation" as a result of negotiations.

The six governments defined the committee's terms of reference on December 22, 1928 as follows:

"The Belgian, British, French, German, Italian and Japanese Governments, in pursuance of the decision reached at Geneva on September 16, 1928, whereby it was agreed to set up a committee of independent financial experts, hereby intrust to the committee the task of drawing up proposals for a complete and final settlement of the reparation problem. These proposals shall include a settlement of the obligations resulting from the existing treaties and agreements between Germany and the creditor powers. The committee shall address its report to the Governments which took part in the Geneva decision and also to the Reparation Commission."

This mandate was preceded on December 17, 1928 (Foreign Relations, 1928, 11, 878) by an agreement between France and Germany which set forth that the Belgian, French, British, Italian, and Japanese experts should be nominated by their Governments and appointed by the Reparation Commission, the German experts should be appointed by the German Government, and that "citizens of the United States should also take part in the work". The six governments approached the American Government on this latter point and on December 24 the Secretary of State announced that "the United States will have no objection" to Americans serving. The six governments joined in inviting Owen D. Young and J. P. Morgan to be the American members, with the approval of the United States Government. The Committee of Experts convened on February 11, when it chose Mr. Young as chairman, and dated its report June 7, 1929.

From March 3 onward, Mr. Young at the request of the Secretary of State forwarded statements on the program of the work for the attention of the President of the United States (ibid., 1929, 11, 1029 ff.). In the ensuing correspondence by or through the Secretary of State the chairman of the Committee of Financial Experts appointed by Belgium, France, Germany, Great Britain, Italy, and Japan was informed, in a memorandum by the Secretary of the

Notes to Part VIII, Articles 231 to 247—Continued

Treasury, that "under no circumstances" would any official of the Federal Reserve System "be permitted to serve as a director of the International Bank or to name a director" and "that our Government would consider it most unfortunate . . . if the proposed payments by Germany are divided into categories, one of which is to be made to correspond exactly to payments by the allied governments to this country" (ibid., p. 1040). It was subsequently confirmed that this memorandum was "neither an official communication to the Committee of Experts through us, nor an instruction to us"

(ibid., pp. 1043, 1059). The direct interest of the United States in the effect of the "final settlement" upon payment of army costs of occupation and mixed claims was the subject of a separate agreement signed on June 23, 1930 pursuant to act of Congress of June 5, 1930 (46 Stat. 500) and is in Annual Report of the Secretary of the Treasury, 1930, p. 341, and 106 League of Nations Treaties Series, p. 121.

The report of the committee of June 7, 1929 added two essential elements to the solution of the reparation problem:

(1) It fixed the number and reduced the amount of the annuities that were to be paid by Germany "on her own untrammeled responsibility".

(2) It removed the German reparation debt "from the sphere of inter-governmental relations" by making adequate provision for its liquidation in accordance with economic principles and, further, by its partial "commercialization".

The plan incidentally provided for several important develop


(1) It called for the establishment of the Bank for International Settlements to "provide additional facilities for the international movement of funds" in connection with reparation payments and otherwise, and "to afford a ready instrument for promoting international financial relations";

(2) It finally removed from Germany all politico-economic controls and assimilated the entire future mechanism of reparation payments to normal financial and economic principles;

(3) It abolished all organs invented specifically for the collection and distribution of reparation, including the Reparation Commission, the Agent-General for Reparation Payments, and foreign com

Notes to Part VIII, Articles 231 to 247—Continued

missioners supervising pledges representing security for Germany's liability;

(4) It abolished the joint liability of Germany for any Austrian, Bulgarian, or Hungarian indebtedness;

(5) It contemplated the eventual cessation of deliveries in kind, thus doing away with an artificial form of trade;

(6) It abolished the "index of prosperity" which under the Dawes Plan would have in the future increased or diminished the annuities; (7) It established an equitable agreement between debtor and creditor groups by reduction "in the face value of payments due”. In doing this the committee definitely based its decision upon the conviction that the best "basis of security" was "the solemn undertaking of the German Government, to which no further guaranty could add anything whatsoever". On the other hand, the creditors were to obtain "improvements in intrinsic and available values which arose from the practicability and certainty of commercialization and mobilization within a reasonable period and in its attendant financial and economic psychology".

The Report of the Committee of Experts on Reparations (United Kingdom, Cmd. 3343) required acceptance by the governments, the enactment of its recommendations into treaty form, the settlement of collateral or dependent questions between the parties, and the ratification of all these. Effect was given to the report in a conference at The Hague August 6-31, 1929 and January 3-20, 1930. The conference was attended by delegates of Germany, Belgium, Great Britain, Canada, Australia, Union of South Africa, New Zealand, India, France, Greece, Italy, Japan, Poland, Rumania, Yugoslavia, Czechoslovakia, and the United States "in the capacity of observer and with specifically limited powers".

The proceedings were delayed by difficulties put forward by the British Labor Government which had come into office on June 5. The New (Young) Plan had departed from the Spa percentages and, instead of 23.05 percent, gave the British Empire 19.494 percent of the total German payments in 37 years. The new Chancellor of the Exchequer set out to recover the remission of his predecessor. In a broadcast on September 2, 1929 he told how an increase of some £2,000,000 a year had been obtained by various assignments in the general scheme.

The first session of the conference reached the settlement on the evacuation of the Rhineland (104 League of Nations Treaty Series,

Notes to Part VIII, Articles 231 to 247-Continued

p. 473) and an agreement on Locarno commissions of conciliation (ibid., p. 487) on August 30, 1929 and on the 31st approved a protocol covering transitional details (file 462.00 R 296/3396). This protocol provided for interim committees which met as follows:

Organization Committee of the Bank for International Settlements, Baden-Baden, October 3 - November 13, 1929;

Committee on delivery in kind, Paris, September 16 - November 30,


Committee on ceded properties, liberation debts, and final settlement under the treaties of St. Germain, Trianon, and Neuilly, Paris. September 16 November 30, 1929;

Committee on liquidation of the past, Paris, September 16 - November 22, 1929;

Adaptation of the system of controlled revenues to the New Plan. Annex I to the final protocol signed at London, August, 16, 1924; report submitted November 10, 1929;

Adaptation of the German law on the Reichsbank of August 30, 1924; report submitted November 12, 1929;

Adaptation of the German law concerning the German Railway Company of August 30, 1924; report submitted November 19, 1929.

While these committees were sitting the German Nationalist Party sought to defeat the government's policy by initiating a petition for passage of legislation asserting that "no further financial burdens. or obligations based on the war guilt acknowledgement shall be assumed". That section was defeated in the Reichstag on November 30 by a vote of 317 to 82 (Verhandlungen der deutschen Nationalversammlung, band 426, 3374). There followed an attempt to pass the proposal by plebiscite which failed on December 22, the favorable vote being 13.8 percent out of a required 50 percent.

At the second session of the conference Austria, Bulgaria, and Hungary had representatives. The whole business was brought to a conclusion on January 20, 1930 when the following instruments were signed:

With Germany:

Agreement of January 20, 1930 on the final acceptance of the Plan of the Committee of Experts of June 7, 1929; with 12 annexes:

Exchange of declarations;

Measures of transition;


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