London, February - August 1952

I. Introduction

1. The International Conference on German External Debts was called by the Governments of the Republic of France, the United Kingdom of Great Britain and Northern Ireland and the United States of America in order to work out a general agreement for the settlement of German external debts. The Conference presents to the Governments of the participating countries this Report describing its work and setting forth its recommendations relating to the settlement of these debts. The Conference suggests that copies of the Report should be made available to other interested Governments.

2. Prior to calling the Conference, the Governments of France, the United Kingdom and the United States of America and the Government of the Federal Republic of Germany concluded, on 6th March, 1951, an agreement in which the latter confirmed its liability for the pre-war external debts of the German Reich, acknowledged in principle its debts for post-war economic assistance furnished to Germany by the three Governments, and declared its willingness to resume payments on the German external debts in accordance with a plan to be worked out by all interested parties. A copy of the exchange of letters embodying this agreement is contained in Appendix 1.

3. In May 1951 the three Governments set up the Tripartite Commission on German Debts to represent them in the negotiations relating to the settlement of German external debts and to organise the work of the Conference. The three Governments were represented on the Tripartite Commission by M. François-Didier Gregh (France), Sir George Rendel (United Kingdom), and Ambassador Warren Lee Pierson (United States); their alternates were M. René Sergent (France), who was later replaced by M. A. Rodocanachi and M. H. Davost, Sir David Waley (United Kingdom) and Minister J. W. Gunter (United States).

4. The Commission held preliminary discussions in June and July 1951 with the German Delegation on External Debts, appointed by the Government of the Federal Republic of Germany, and with representatives from some of the principal creditor countries. The German Delegation was headed by Herr Hermann J. Abs, with alternate Dr. W. Kriege.

5 In December 1951 the Tripartite Commission informed the German Delegation of the amounts and terms of payment which the three Governments were prepared to accept in full settlement of their claims in respect of post-war economic assistance, on condition that a satisfactory and equitable settlement of Germany's pre-war debts were achieved. During the Conference the United States of America further offered to defer collection of the principal of its claim for a period of five years and amended its offer of December 1951 accordingly. The amounts and terms are outlined in Appendix 2 of this Report.

(1) Appendix 2 of the Conference Report has been superseded by the provisions of the Agreements for the settlement of the claims of the three Governments arising from the post-war economic assistance to Germany, signed on the same day as the Agreement on German External Debts. The last paragraph of the preamble of the latter Agreement makes reference to these Agreements.

II. Organisation of the Conference

6. The Conference held its first plenary meeting at Lancaster House, London, on 28th February, 1952. The Governments of France, The United Kingdom and the United States of America were represented by the Tripartite Commission on German Debts; the private creditors of these three countries were represented by separate delegations; 22 creditor countries sent national delegations composed of governmental and, in many cases, private creditor representatives; 3 countries sent observers; the Bank for International Settlements was represented as a creditor in its own right; the Delegation of the Federal Republic of Germany included governmental representatives and representatives of private debtors.

7. In accordance with the decisions of the Conference, there were set up:

(a) The Steering Committee, composed of the three members of the Tripartite Commission, 13 representatives of creditor interests from Belgium, Brazil, France, Italy, the Netherlands, Sweden, Switzerland, the United Kingdom and the United States, and 5 members representing public and private debtor interests. Its duty was to organise the work of the Conference and to ensure that alle recommendations submitted to plenary meetings were such as to achieve an equitable overall settlement and equal treatment for all creditors within each category.

(b) The Creditors' Committee, in which each of the delegations of creditor countries was represented. Its duty was to co-ordinate the views of the various groups of creditor interests, to appoint creditor representatives to negotiating committees and to convey to the Steering Committee the creditors' views with respect to any recommendations resulting from negotiating committees.

(c) The Conference Secretariat under a Secretary-General. The Secretary-General was first Mr. H. A. Cridland and later Mr. E. H. Peck.

8. The Steering Committee established four negotiating Committees to deal, respectively, with the following categories of debts:

Committee A. | Reich debts and other debts of public authorities;

Committee B. | Other medium and long-term debts;

Committee C. | Other medium and long-term debts;

Committee D. | Commercial and miscellaneous debts.

Each Committee was composed of representatives of the creditors and debtors, together with observers from the Tripartite Commission. A number of sub-committees was set up by the Negotiating Committees to deal with specific types of debts.

9. The Steering Committee also established a Statistical Committee to assist the Conference.

10. The Conference was in session between 28th February and 8th August, 1952, with a recess from 5th April to 19th May, to enable necessary consultations to take place.

III. Framework

11. In carrying out its work the Conference has been guided by the following facts, principles and objectives:

(a) The Governments of France, the United Kingdom and the United States of America have given the Government of the Federal Republic of Germany assurances with regard to the scaling down and the terms of settlement of the post-war claims for economic aid extended to Germany, which would be accepted by the three Governments on condition that a satisfactory and equitable settlement of pre-war debts were achieved;

(b) The Settlement Plan should

(i) take into account the general economic position of the Federal Republic and the effects of the limitations on its territorial jurisdiction; it should neither dislocate the German economy through undesirable effects on the internal financial situation, nor unduly drain existing or potential German foreign exchange resources, and it should not add appreciably to the financial burden of any of the three Governments;

(ii) provide for an orderly overall settlement and assure fair and equitable treatment of all the interests affected;

(iii) provide for appropriate action on the reunification of Germany.

(c) The Settlement Plan should promote the re-establishment of normal financial and commercial relations between the Federal Republic of Germany and other countries. To this end it should

(i) eliminate the state of default of Germany by suitable treatment of matured and maturing debts and of arrears of interest;

(ii) lead to a situation which would permit a return to normal debtor-creditor relationships;

(iii) be of such a character as to contribute to the recovery of Germany's international credit by the restoration of confidence in her financial standing and reliability as a borrower, while giving a reasonable assurance that Germany will not again default on her undertakings;