763.72119/8953: Telegram

The Acting Secretary of State to the Ambassador in France ( Wallace )

356. For Rathbone from Davis. Treasury R–227.

Your R–299, February 7.

It appears Germans and Dutch were informed by Clemenceau, when matter concerning sale of ships to Dutch was under discussion by Peace Conference, that sale could not be recognized and that Allied and Associated Powers must insist Germany carry out stipulations in paragraph 7, Annex III, Reparation clauses.
It is considered important that you do not join in any action at variance with view of this Government, which is not concurred in by French authorities, that bona fide transfers of belligerent merchant vessels to neutrals in time of war are valid. American interests are involved in maintenance of this principle.
Question of rights of nationals of Holland, which is not party to Treaty, is obviously a disagreeable one. If bona fide sale were made to Dutch, Germany could evidently by purchase procure title to vessels in German waters and could presumably acquire some kind of a title by requisition, so that it might perform obligations under paragraph 7. And irrespective of hardship on Dutch such obligations can, strictly speaking, be insisted upon without reference to principle of validity of transfer of vessels in time of war. However, it would seem impossible to employ either [of] these methods to obtain title to vessel delivered to Dutch, in case they would not sell it to Germany. Measures that may be indicated to Germany referred to in paragraph 7 must apparently be construed as possible measures.
Having in mind your peculiar position at this time, since United States is not party to the Treaty, the fact that other representatives will doubtless insist Germany must deliver vessels, the explicit language of paragraph 7 in the Treaty which American representatives signed, and the concurrence of our delegation in correspondence with Germans and Dutch. I think that only practicable course for you to pursue is to take no exception to action of other representatives, which doubtless will be an insistence on delivery of [Page 362] vessels. You do not state in your telegram whether decision has been reached as to precise nature of course to be pursued. I further think it might also be desirable if you conveniently could make it clear that decision respecting action taken by Commission rested entirely with other representatives.