Special Message to Congress on Acceptance of German Bonds for Belgian War Debt

The White House, February 22, 1921.

To the Senate and House of Representatives:

I herewith call your attention to an agreement with Belgium made by the British and French Premiers and myself, which is embodied in the following letter:

June 16, 1919.

M. Hymans, Ministre des Affaires Etrangères, Hotel Lotti, Paris.

Sir: The Reparation Clauses of the draft Treaty of Peace with Germany obligate Germany to make reimbursement of all sums which Belgium has borrowed from the Allied and Associated Governments up to November 11, 1918, on account of the violation by Germany of the Treaty of 1839. As evidence of such an obligation Germany is to make a special issue of bonds to be delivered to the Reparation Commission.

Each of the undersigned will recommend to the appropriate governmental agency of his Government that upon the delivery to the Reparation Commission of such bonds his Government accept an amount thereof corresponding to the sums which Belgium has borrowed from his Government since the war and up to November 11, 1918, together with interest at 5 per cent unless already included in such sums, in satisfaction of Belgium's obligation on account of such loans, which obligation of Belgium's shall thereupon be cancelled.

We are, dear Mr. Minister,

Very truly yours,

G. CLEMENCEAU,

WOODROW WILSON,

D. LLOYD-GEORGE.

In recommending to you that Congress take appropriate action with regard to this agreement, certain facts should be brought to your attention.

The neutrality of Belgium was guaranteed by the Treaty of London of 1839. considering the reparation to be made by Germany it was agreed that the action of Germany in grossly violating this Treaty by an attack on Belgium obligated the German Government under international law to repay to Belgium the costs of war. On this principle the Treaty of Versailles (Art. 232) provided that in accordance with Germany's pledges already given as to the complete restoration for Belgium, Germany should undertake, in addition to the compensation for material damage, to make reimbursement of all sums which Belgium had borrowed from the Allied and Associated Governments up to November 11, 1918, together with interest at 5 per cent per annum on such sums. This obligation was to be discharged by a special issue of bearer bonds to an equivalent amount payable in gold marks on May 1, 1926, or at the option of the German Government on the 1st of May in any year up to 1926.

For various reasons the undertaking defined in the above letter was not embodied in the Treaty. Belgium's obligations to the United States for advances made up to the date of the armistice amounted to approximately $171,000,000, and to England and France they amounted, I am informed, to about £164,700,000. In view of the special circumstances in which Belgium became involved in the war and the attitude of this country toward Belgium, it was felt that the United States might well agree to make the same agreement respecting pre-armistice loans to Belgium as England and France offered to do.

Advances made by the Treasury to the Belgian Government from the beginning of the war to the armistice amounted to $171,780,000. This principal sum, however, includes advances of $499400 made to enable the Belgians to pay the interest due November 15, 1917, and $1,571,468.42 to enable the payment of the interest due May 15, 1918. The interest on the advances has been paid up to April 15, 1919, the interest due from May 15, 1918, to that date having been paid out of the Treasury loans for which the United States holds Belgian obligations, which, however, were made after November 11, 1918, the date of the armistice. This latter advance would not come within the terms of the agreement above mentioned. If, therefore, the United States accepts payment of Belgian obligations given before the armistice by receiving a corresponding amount of German obligations, it would seem that it should receive German obligations amounting to $171,780,000 with interest from April 15, 1919.

Although it is understood that England and France will take their share of the German bonds when received by Belgium, I am informed that the Reparation Commission has not as yet finally determined the details of the issuance of the necessary bonds by the German Government. A recommendation at this time that suitable legislative action should be taken may appear somewhat premature, but in view of the approaching termination of my administration I have brought this matter to your attention, hoping that suitable action may be taken at the appropriate time.

WOODROW WILSON.