BERLIN, June 10, 1927


II. The Transfer Committee.

The Transfer Committee under the Experts' Plan has charge of the transfer of German reparation payments to the creditor Powers. The Plan provides that the Committee shall regulate the execution of the programmes for deliveries in kind and Reparation Recovery Act payments in such manner as to prevent difficulties arising with the foreign exchange, shall control the transfer of cash to the creditor Governments by purchase of foreign exchange, and generally so act as to secure the maximum transfers without bringing about instability of the currency."

The Plan lays corresponding obligations on the German Government and the Reichsbank to facilitate the work of the Transfer Committee. It provides, in paragraph VII of Annex 6, under the title "Co-operation by the German Government and the Bank," that "The German Government and the Bank shall undertake to facilitate in every reasonable way within their power the work of the Committee in making transfers of funds, including such steps as will aid in the control of foreign exchange. When the Committee is of the opinion that the Bank's discount rate is not in relation to the necessity of making important transfers, it shall inform the President of the Bank."

Since the last Report there have been two changes in the membership of the Transfer Committee, both effective in January, 1927. Mr. Joseph E. Sterrett resigned to resume the practice of his profession in New York, after having served since the beginning of the Plan as American member of the Transfer Committee and principal Assistant to the Agent General for Reparation Payments. Mr. Pierre Jay, Chairman of the Board of Directors of the Federal Reserve Bank of New York, was appointed to succeed him. M. René Tilmont, Director of the Banque Nationale de Belgique, resigned at the same time as Belgian member of the Committee. M. Albert Janssen, Director of the Société Nationale de Crédit à l'Industrie of Brussels, who had previously served on the Committee from its organization until his resignation in June, 1925, was appointed as Belgian member in M. Tilmont's stead.


a. Summary of Transfer Operations.

The Experts, in recommending the transfer clauses of the Plan, emphasized that "experience, and experience alone, can show what transfer into foreign currencies can in practice be made. Our system provides in the meantime for a proper charge upon the German taxpayer and a corresponding deposit in gold marks to the Allies' account; and then secures the maximum conversion of these mark deposits into foreign currencies which the actual capacity of the exchange position at any given time renders possible. "

The following statement, expressed in gold marks, shows the funds available for transfer during the period from September 1, 1926, to May 31, 1927, and the transfers actually made during this period under authority of the Transfer Committee:


(a) Balance of cash unexpended at August 31, 1926  


(b) The balance of the second Annuity due and received in September, 1926  


(c) The portion of the third Annuity received during the period September 1, 1926 --- May 31, 1927  


(d) Interest on cash balances  





(a) Discount on interest on German railway bonds received in advance of due dates


(b) Loss in exchange



Balance available for transfer  



1. Transferred in foreign currencies:    
(a) Service of German External Loan, 1924


(b) British Reparation Recovery Act


(c) French Reparation Recovery Act


(d) Deliveries under agreement to the United States of America


(e) Transport of coal on the lower Rhine


(f) Settlement of balances owing for deliveries made or services rendered by the German Government prior to September 1, 1924


(g) Transferred in cash


(h) Costs of Inter-Allied Commissions .


(i) Costs of arbitral bodies



2. Transferred by gold mark payments for:    
(a) Deliveries in kind


(b) Armies of occupation


(e) Costs of Inter-Allied Commissions


(d) Miscellaneous payments



Total amount transferred



Leaving a balance of cash unexpended at May 31, 1927, of  





The foregoing statement shows that the transfers made during the first nine months of the third Annuity year have amounted in the aggregate to 921,983,565.38 gold marks. It will be observed that during this period the amounts transferred in foreign currencies have amounted to 449,303,986.74 gold marks, or about 48.73 per cent of the total transfers, while the amounts transferred by gold mark payments have amounted to 472,679,578.64 gold marks, or about 51.27 per cent of the total.

The gold mark payments within Germany have been made principally for deliveries in kind and for the expenses of the armies of occupation. The amounts transferred in foreign currencies include payments made for the service of the German Loan and payments under the Reparation Recovery Acts, as well as direct cash transfers in foreign currencies. The cash transfers themselves include the payments on account of the priority of the United States of America for army costs in arrears, and cash transfers for general distribution among the Powers, to the equivalent of about 100 million gold marks. The priority of the United States on account of army costs in arrears amounts for the third Annuity year to a total of 55 million gold marks, and this sum is being paid monthly, substantially in proportion to the monthly income available to the Annuity.

The foregoing statement shows a balance of cash unexpended on May 31, 1927, amounting to 151,547,672.59 gold marks. This balance is larger by nearly 58 million gold marks than it was at the opening of the third Annuity year, but in relation to the increased size of the Annuity it provides only a normal working fund. At its present figure it reflects to some extent the much increased reparation payments received from Germany in April and May, 1927. It naturally takes time for these increased credits to show themselves in increased deliveries and payments, and it is important, in this connection, to note that on May 31, 1927, there were outstanding commitments against the balance amounting to over 93 million gold marks. These commitments, as appears from the balance sheet which is given as Exhibit IV to this Report. consist of about 38 million gold marks of accounts payable and about 55 million gold marks of funds committed under approved contracts for deliveries in kind.


b. Development of Deliveries in Kind.

The general procedure for effecting deliveries in kind has been described in previous reports. Several new developments during the period under review are, however, worthy of mention.

Annex 5 of the Treaty of Versailles provides for the delivery of coal by Germany to France at a price equivalent to (a) the German pit-head price to German nationals plus freight, or (b) the pit-head price of British coal for export plus freight,---whichever is the lower; while Annex to the London Agreement and the so-called Wallenberg Regulations for Deliveries in Kind contemplate deliveries under the Plan in so far as possible by commercial contract and under ordinary commercial conditions. On October 20, 1926, a convention, subsequently approved by both the French and German Governments, was concluded between the French Office of Devastated Mines and the Rhineland-Westphalian Coal Syndicate with a view to providing for deliveries of coal to France along more nearly commercial lines. The convention provided for the sale of coal by the Coal Syndicate to French purchasers under Ordinary commercial contracts, for the payment of the purchase price in all cases to the French Office of Devastated Mines, and for settlement upon all agreed basis between the latter and the Coal Syndicate, to be effected through the Agent General for Reparation Payments in so far as authorized by programmes regularly established by the Reparation Commission after consultation with the Transfer Commission. At the same time the convention provided a basis for settling a number of important questions that had long been pending between the governments concerned in connection with coal deliveries. The convention went into effect as of January 1, 1927, after the necessary consideration by the Transfer Committee and the Reparation. Commission. The duration of the convention is six months, but if confirmed by both parties on or before July 1, 1927, it will continue in full force and effect, subject to the right of denunciation in certain contingencies upon three months' notice by either party.

Since the last Report an arrangement has also been concluded between the United States and Germany for the purpose of realizing currently upon the special 2 1/4 per cent share that was allotted to the United States under the Finance Ministers' Agreement of January 14, 1925, "for the purpose of satisfying the awards of the Mixed Claims Commission established in pursuance of the Agreement between the United States and Germany of August 10, 1922." This arrangement contemplates that each month German firms shall voluntarily surrender to the Reichsbank, out of the dollar proceeds accruing from deliveries in kind or services rendered to the United States, a sum in dollars equivalent to the reichsmark credit held by the Agent General for the account of the United States and available for payment during the month in question, pursuant to the regularly established programmes. The necessary sum is then deposited by the Reichsbank to the credit of the Agent General with the Federal Reserve Bank of New York. The Agent General, upon telegraphic advice of the deposit, pays the German firms through the Reichsbank the equivalent in reichsmarks of the dollars surrendered, and, subject to approval by the Transfer Committee, pays over the dollars to the United States Government. The agreement conforms generally to the arrangements already in effect for payments under the Reparation Recovery Acts and for financing deliveries in kind, and it went into actual operation in February, 1927, after the necessary consideration by the Transfer Committee and by the Reparation Commission.

The so-called "Wallenberg Regulations" for deliveries in kind were by their terms subject to revision as of April 1, 1927. It was provided that the revision might be effected at the request made on or before January 1, 1927, of any one of the creditor Powers, of the Reparation Commission, of the Transfer Committee or of the German Government. None of the interested parties had any important modifications to suggest, and it was accordingly agreed that the Regulations should continue in force for another year, on the understanding that a revision might be effected as of April 1, 1928, at the request, on or before January 1, 1928, of any of the parties above-named.

All the reparation deliveries in kind, except dyestuffs and the deliveries of coal under Annex V of the Treaty, are effected through contracts passed under the-so-called Wallenberg regulations, Most of these contracts are for the account of France and Belgium, and the following table indicates the extent and value of the contracts for these two countries submitted to the Transfer Committee from September 1, 1926, to May 31, 1927.




Analysis of Contracts by Commodities

No. of contracts


Values in reichsmarks

No. of contracts


Values in reichsmarks

Coal, coke and lignite







Coal by-products







Bricks and other refractory pro ducts







Fertilizers and other chemical products







Iron, steel and other metals .







Dredging of the port of Havre (extension of original contract)





















Telegraph poles







Railway sleepers







Pulp and other paper material














Sugar and other agricultural products





















Other commodities
















In tons.
In cubic meters.
In units.

It will be observed from the foregoing table that 3,126 contracts, amounting in value to nearly 347,000,000 reichsmarks, have been submitted by France and Belgium during the first nine months of the third Annuity year. Included in these figures are six coal contracts calling for total payments of 70,579,000 reichsmarks, which have been made in accordance with the above-mentioned agreement of October 20, 1926, between the French Office of Devastated Mines and the Rhineland-Westphalian Coal Syndicate. In addition there are 99 other coal contracts for France, calling for a total of 76,059,000 reichsmarks, so that deliveries of coal, coke and lignite constitute by far the largest group, in money value, of the French contracts. The other important groups of contracts for France are the contracts for lumber, aggregating 38,332,000 reichsmarks; for machinery, amounting to 33,898,000 reichsmarks; for wood pulp and paper material, to a total of 26,204,000 reichsmarks, and for sugar and other agricultural products to the amount of 17,309,000 reichsmarks. For Belgium, the groups of contracts which represent the greatest money value are those for fertilizers and other chemical products. The others of importance are iron and steel, machinery and wood pulp. Belgium, since the beginning of the third Annuity year, has taken no coal on reparation account.

The other Powers have also contracted for deliveries in kind in important amounts. The greater part of the Italian share has been taken in coal, chiefly for the Italian State Railways. In addition, Italy has contracted for textile machinery costing 5,612,000 reichsmarks, thermo-electric machinery to the value of 3,000,000 reichsmarks, and coal by-products to the amount of 4,834,000 reichsmarks. Serbia has contracted for railway material to the value of 2,102,000 reichsmarks, for agricultural and other machinery costing 5,823,000 reichsmarks, and for a bridge over the Danube between Belgrade and Pancevo at a total cost of 21,100,000 reichsmarks, of which 16,814,000 reichsmarks are payable on reparation account over a period of four years. Rumania has purchased from the German Railway Company 100 locomotives at a total cost of 11,600,000 reichsmarks, to be paid out of reparation account over a period of 29 months. Japan has contracted for sulphate of ammonia costing 2,754,000 reichsmarks, machinery to the value of 1,850,000 reichsmarks, and a wireless installation costing 1,522,000 reichsmarks. Portugal has bought railway material to the value of 7,429,000 reichsmarks, agricultural and other machinery aggregating 869,000 reichsmarks, and tug-boats and barges costing 1,004,000 reichsmarks; it has also contracted for the construction of a passenger steamer costing approximately 5,655,000 reichsmarks. Greece has contracted for printing machinery costing 591,000 reichsmarks, while Poland has bought horses costing 170,000 reichsmarks.


c. The German Railway and Industrial Bonds.

The previous Report examined the pertinent provisions of the. Experts' Plan and other governing documents as to the sale of the German Railway and industrial bonds. and in that connection defined the nature of the Transfer Committee's jurisdiction of the question and its relation to the functions of the other agencies which are concerned in the practical problem of marketing the bonds.

No proposal for selling either the Railway or the industrial bonds has come before the Transfer Committee since the last Report, and it has accordingly been unnecessary for the Committee to consider the question or to express any opinion thereon.

Section III, The Work of the Commissioners and Trustees

Table of Contents