The Department of State to the Brazilian Embassy


The Department of State desires to acknowledge the receipt of two memoranda from the Brazilian Embassy dated December 29, 1919,28 one setting forth the claim of the Brazilian Government in effect that Brazil has the right under certain provisions of the treaty of peace with Germany to sell German tonnage taken over by the Brazilian Government in Brazilian ports and apply the proceeds to the payment of claims of Brazilian nationals for war damages, the surplus after making such payments to be delivered under Article 297(h) (2) for reparation purposes, and requesting that the United States support this position before the Supreme Council; and the other expressing the opinion that the claims of Brazil are consistent with the Wilson–Lloyd-George Agreement.

In view of the fact that the United States has not as yet ratified the treaty with Germany, it is not in a position to state definitely at this time its views as regards the construction of the treaty in respect to the question of the Brazilian Government. Should the United States become a party to the treaty and should Congress raise no objection to the Wilson–Lloyd-George Agreement, the United States would be committed by that Agreement to the course of action laid down therein. (A copy of the Wilson–Lloyd-George Agreement is enclosed herewith for the confidential information of the Brazilian Government.) The United States accordingly is very willing to offer such support to Brazil as it may be possible to give consistent with the provisions of this agreement. In this relation, however, it should be pointed out that in the view of the United States the [Page 512] Wilson–Lloyd-George Agreement does not allow the application to the payment of war claims generally of the compensation to be made under the agreement to the Reparation Commission. It is understood, however, that the amount would be determined only after deducting certain costs and expenses such as those arising in connection with the taking over of the German ships. If, therefore, it should be deemed advisable by the Brazilian Government to adhere to the Wilson–Lloyd-George Agreement, the United States would be glad to support Brazil in such contentions in respect of German ships mentioned as seem to the United States to come within the scope of that agreement.

With reference to the statement of Brazilian Embassy that the Government of the United States has declared itself in agreement with Brazil’s theses in a communication made for the President of Brazil in August last to Ambassador Morgan, it may be stated that Ambassador Morgan was informed, on August 26, last, that Mr. Polk at Paris had notified the Department of State that on information of the contents of a note which the Brazilian Government was about to present to the Government of France, the matter would be taken up by Mr. Polk informally with the French authorities, and his support lent to any satisfactory request which Brazil might formulate, with the qualification, however, that the freedom of action of the United States with reference to the disposition of these vessels was in a certain manner limited by the Wilson-Lloyd-George Agreement which provided among other things in substance that Brazil is authorized to obtain or dispose of these ships on condition that the value thereof is paid over to the Reparation Commission.


Wilsons–Lloyd George Agreement

The Allied and Associated Governments whose signatures are hereto affixed, severally agree as regards merchant shipping as follows:

1. The Reparation Commission will as soon as possible compile a list giving fullest particulars available on all enemy ships still in existence, captured, seized or detained by any Allied or Associated Government during the war, and also all other enemy ships or boats which the enemy Powers are required to cede under the Treaty of Peace.

2. The Reparation Commission will take such steps as will secure that each of the Allied and Associated Governments will retain as its own the complete title to and use of all ships captured, seized, or [Page 513] detained during the war as a war measure and prior to November 11, 1918, and will own the same free from any claim of any of the other Allied and Associated Governments.

In all cases where the ships and boats so to be retained by any Allied or Associated Government are in excess of the claims of such Governments respectively for war losses in merchant ships such Governments shall not make any claim for a share in other ships and boats ceded under the Treaty of Peace.

3. In all cases where the ships and boats so to be retained by any such Governments are insufficient to satisfy in full the claims of such Governments respectively for war losses in merchant ships, the enemy ships which remain and which are to be ceded under the Treaty of Peace will be divided into three classes, viz. liners, other merchant ships, and fishing boats, and will be distributed to such Governments on the basis of ton-for-ton and class-f or-class of the ships and boats lost and not replaced by the ships and boats retained, but in proportion to the balances due on the claims of such Governments respectively.

4. As the ships and boats so to be retained will, in the case of Brazil, China, Cuba, Siam, and the United States, exceed the total amount of tonnage which would be allocated to those countries were the total enemy tonnage captured, seized, detained or still in existence shared in proportion to losses of ships and boats during the war, in each such case a reasonable value on the excess of ships and boats over the amount which would result from such a division will be determined. The amount of the value so fixed will be paid over by each such state to the Reparation Commission for the credit of Germany towards the sums due from her for Reparation, in respect to war losses of merchant ships.

5. As soon as the Reparation Commission has collected the necessary information, and is in a position so to do, they will give public notice that after an interval of two months they will proceed to divide the vessels except those captured, seized, or detained by the Allied and Associated Governments which are to be retained by them respectively as hereinbefore provided. If within one month of the publication of the notice, any Allied, Associated or Neutral Government, person or corporation, a national of such Government and acting through such Government, notifies the Commission that they have an equitable claim against any vessel which has not been, or is not being satisfied by the enemy Governments, that claim will be considered on its merits by the Commission which may adopt any procedure it thinks fit, provided it is expeditious and is calculated to do substantial justice as between the Allied and Associated Governments on the one hand and the claimant on the other.

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The Commission will have power to determine claims so presented, and such determination will be conclusive and the Commission will also have power to enforce its findings.

  • Woodrow Wilson*
  • D. Lloyd George


I deem it my duty to state, in signing this document, that, while I feel confident that the Congress of the United States will make the disposal of the funds mentioned in clause four which is there agreed upon, I have no authority to bind it to that action, but must depend upon its taking the same view of the matter that is taken by the joint signatories of this agreement.

  1. Neither printed.
  2. Other copies of this agreement found in the Department files likewise lack day of signature; a note from the British Embassy, Sept. 25, 1924 (file no. 763.72119/12143) speaks of this as the agreement of May 8, 1919.
  3. Subject to the explanation contained in the attached memorandum. [Footnote appears in the original.]