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It now appears that the Textile Alliance does not intend to place further orders for reparation dyes. A statement purporting to be an official announcement of the Alliance to this effect was published in the Press on July 31, but this Department is without advices in the matter from the Alliance.

Upon the termination of the arrangement between this Department and the Textile Alliance, a number of American importing firms expressed a desire to obtain reparation dyes. This Department has interposed no objection to the procurement of dyes from the Commission by such firms, but, as explained above, the Commission has continued provisionally to deal with the Alliance.

Whatever may be the intentions of the Textile Alliance or the importing agencies concerned, the fact remains that it is most anomalous that the enjoyment of the benefits from the receipt of these dyes should depend upon the action of private organizations which are independent of governmental supervision or control. Under existing arrangements the Government of the United States is entitled to about one-fifth of any reparation dyes that may be obtained from Germany by the Reparation Commission. The arrangements made between this Department and the Textile Alliance during the past administration had as their object the receipt by the Textile Alliance, for distribution to American consumers, of the American share of these dyes. The Textile Alliance has paid to the Reparation Commission the so-called “reparation prices” for these dyes; these prices are relatively cheap, since they are based upon the domestic selling prices in Germany. The sums paid by the Alliance have gone into the general reparation funds and have been distributed, mostly to Belgium on account of Belgian priority.

It has also been anomalous that the United States, while owed large sums by Germany for the cost of the American Army of Occupation and for American claims, should not have received these dyes for nothing. As long as the United States had not ratified the Treaty of Versailles there seemed no remedy for this situation. Now, however, in view of the Treaty with Germany, proclaimed November 14, 1921, the United States has been accorded the rights and benefits under the reparation clauses of the Treaty of Versailles that it would have possessed had that treaty been ratified by this country. Accordingly, I have felt that an arrangement should be made, if possible, by which these dyes might be received and credited upon the claims of this Government. Since last March, when communications were addressed to the Allied Governments in regard to the payment of the cost of the American Army of Occupation,82 negotiations with these governments have been undertaken

81

See telegrams no. 90, Mar. 20, and no. 92, Mar. 22, to the Ambassador in France, pp. 220, 224.

with a view to devising a suitable means by which the sum due to this Government could be paid. The difficulties from the point of view of these governments are, of course, great, and as yet it has not been possible to make much progress in the matter. However, since it appeared possible and desirable to obtain at least the benefit of the value of these dyes, I instructed the Ambassador at Paris, on June 24,82 in cooperation with Mr. Boyden, to inquire whether the respective governments would be willing for the United States to receive reparation dyes in the future for nothing, the proceeds to be applied to pay current army costs and any surplus, should it exist, to be applied to the payment of accumulated costs.

I have now been advised that the Governments of France, Belgium, Italy, and Great Britain are willing that the proceeds of the disposition of the American share be applied to meet current army costs. It is not clear from the message received whether the accumulated costs are also included, but I do not anticipate any difficulty on this score.

As it appears possible for this Government to obtain reparation dyes for nothing, the importance of having authority to deal with this situation more definitely and directly is obviously enhanced. I feel that it would be most unfortunate if American consumers of these dyes should be deprived of the opportunity to obtain them cheaply and become dependent upon the German cartel, and also if this Government should be unable to receive the proceeds of their sale as a credit on its claims. The danger exists that both of these unfavorable contingencies will result, unless this Government can take some action.

Colonel Logan, who is acting in Mr. Boyden's place during his absence in the United States, has reported by telegraph 82 that the Dyestuff Bureau of the Reparation Commission is likely to recommend to the Commission, if the Textile Alliance takes no further dyes, that the share of the United States be held at its disposal for one month and then turned into the common pool.

To recapitulate, the points to be noted are these :

(1) It is desirable that the United States should receive reparation dyes.

(2) It is desirable to receive them without payment on account of current and accumulated army costs. It ow appears that this can be arranged.

(3) In view of our treaty rights, I suppose you have authority to receive these dyes.

(4) The difficulty is as regards their importation and distribution in the United States for the benefit of American consumers. Suitable action to this end, I take it, requires more adequate authority than the Executive now possesses with respect to the disposition of public property. Congress ought to give this authority.

* Not printed.

(5) There are also questions as regards settlement with the Textile Alliance, but these are distinct and can be disposed of in due course.

In view of this situation, I should be glad to have an opportunity to discuss the matter with you whenever it may suit your convenience. Faithfully yours,

CHARLES E. HUGHES

462.00 R 295/115: Telegram

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

PARIS, January 3, 192345 p.m.

[Received January 3—2:15 p.m.] 3. B-820. As a result formal notice from Textile Alliance its cessation dyestuff purchases Commission decided distribute between Great Britain, France, Italy and Belgium percentage dyes formerly taken by Textile.

Decision states if later United States Government propose to resume dyestuff orders Commission will reexamine the question. Informally seems taken for granted United States can start again whenever ready. In this connection we call your attention to delay which will ensue between time when you actually ready start and time when your orders will really become effective such delay resulting necessarily from procedure governing orders and allotments. Boyden.

HERRICK

AGREEMENT, AUGUST 10, 1922, BETWEEN THE UNITED STATES AND

GERMANY FOR A MIXED CLAIMS COMMISSION

462.11 W 892/31 : Telegram

The Chargé in Germany (Dresel) to the Secretary of State

(Paraphrase)

BERLIN, February 22, 1922–3 p.m.

[Received 10:37 p.m.] 30. Please refer to Department's instruction no. 1376, August 20, 1921, 6 p.m.,84 the first part of which I communicated verbatim to the German Government on August 22 in a memorandum. I took it to mean that it explicitly contemplated the immediate negotiation of a commercial treaty and now find some difficulty in persuading the Government here that the settlement of claims against Germany should precede the negotiation of such a treaty.

* Foreign Relations, 1921, vol. II, p. 19.

The Foreign Office has just handed me a memorandum which raises this point and protests the alleged injustice that is involved and states that it does not seem desirable that commercial negotiations be made to depend upon the settlement, possibly postponed for some length of time, of other questions.

In conversation with me as well as in the memorandum the Foreign Office expresses the view that the establishment of a mixed commission does not seem to be inadvisable but it assumes that a commission of this sort would have to determine not only the amounts to be paid but also to decide on the justification of the demands. It would be necessary to determine the categories of the indemnities for Germany to pay, and to make clear questions of finance. The Foreign Office requests the Department's suggestions on the composition of the commission. The Foreign Office also asks further if the establishment of such a commission as this would mean a waiver on the part of the United States of its right to take part in the reparations proceedings established under the Versailles Treaty. The Foreign Office assumes that such a waiver is intended but it would like to have a direct statement saying so.

DRESEL

462.11 W 892/31a : Telegram

The Secretary of State to the Chargé in Germany (Dresel)

WASHINGTON, April 15, 1922—2 p.m. 51. Your 30, February 22, 3 p.m., regarding claims and commercial treaty. Please address a note to the Foreign Office in the sense of the following:

“My Government does not object to action looking to the negotiation of a commercial treaty; it will consider suggestions in relation to the subject which the German Government may desire to make; and it is prepared itself to submit in a short time a draft of a comprehensive commercial treaty for the German Government's consideration.

“ However, the negotiation of such a treaty should not stand in the way of nor delay action respecting determination of claims. In connection with the preliminary steps proposed by my Government, it is believed that it would facilitate prompt disposition of the matter if financial questions concerning particular methods of payment are not raised. But with a view to the ultimate appropriate disposition of such questions it is desirable that amounts of claims should be determined as soon as possible. It is not the intention of my Government that the mixed Commission to pass on claims which have been proposed should not consider questions of liability where the facts are in dispute. Rules of liability, however, are prescribed by the Treaty of Versailles and by the Treaty concluded between the United States and Germany at Berlin, August 25, 1921,85 which contemplates the making of suitable arrangements for the satisfaction of American claims arising out of acts committed by the German Government or its agents since July 31, 1914, and secures to the United States and its nationals rights and advantages stipulated for their benefit in the Treaty of Versailles.

The obligations of Germany which a mixed arbitral tribunal would pass upon can be briefly indicated as follows: (1) claims of American citizens in respect of damage to, or seizure of, their property, rights and interests within German territory; (2) other claims growing out of loss, damage or injury resulting from acts of the German Government or its agents; (3) debts owing to American citizens by the German Government or by German nationals.

In the opinion of my Government the amounts of all classes of claims could in the most practical manner be determined by a Mixed Commission of adequate membership organized under the general plan which has been suggested. The Government of the United States would be glad to be informed at an early date of the German Government's views concerning these proposals."

Following the presentation of a note in the sense of the foregoing, you will please supplement it in an interview with the German Foreign Minister and urge on him the desirability of prompt steps being taken with a view to having the amounts of debts and claims assessed.

HUGHES

462.11 W 892/33 : Telegram

The Ambassador in Germany (Houghton) to the Secretary of State

BERLIN, May 5, 1922–5 p.m.

[Received May 6–12:04 a.m.] 87. Your 51, April 15, 2 p.m., Embassy's 76, April 18, noon.86 At Von Haniel's 87 request had interview with him Wednesday. He stated conversation would be wholly informal and largely to enable him to frame reply to Embassy's note. Two problems were involved: First, commercial treaty; second, matter of claims. Regarding former he suggested desirability of the revival, with such modifications as may be necessitated by post war conditions, of all treaties in force between the United States and Germany before the war or certain of them, the complete list made by him being as follows: (1) Patent Convention February 23, 1909; (2) Copyright

* For text of treaty, see Foreign Relations, 1921, vol. II, p. 29.
Latter not printed.
German Secretary of State in the Ministry of Foreign Affairs.

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