Papers Relating to the Foreign Relations of the United States, 1920, Volume II

362.115 St 21/80: Telegram

The Secretary of State to the Commission to Negotiate Peace

[Paraphrase]

Washington, November 5, 1919—11 a.m.

3674. Referring to your 4844 of October 27, 1 p.m.

1. For the following reasons it was at first thought wise to ask final decision as to ownership of the tankers by the Supreme Council:—

(a) The political situation here is such that there would be a serious result as regards the ratification of the Treaty if there should appear any failure on the part of the Government to safeguard fully the rights of the United States which eventually may be adjudicated by a treaty commission with somewhat loosely defined powers.

(b) The position of Senators who desire to restrict the jurisdiction of the Reparation Commission or other Treaty Commission respecting the adjudication of any question involving American rights would be greatly strengthened in case of a decision of the Reparation Commission adverse to the interests of the United States and biased by economic or political necessities of European countries rather than based on judicial principles.

(c) Unless decision on tankers by Reparation Commission is delayed considerably it might be difficult to insure effective American representation on it and the bringing about of an effective understanding that on legal questions the Reparation Commission will act as a court independent of political interests.

(d) While Supreme Council decision would require unanimous vote, it would seem under the 13th paragraph, annex II (Reparations) that matter of the tankers might be decided by a majority vote. It could perhaps be argued that under subparagraph (f), paragraph 13, annex II, the decision as to beneficial ownership might be treated as a question of interpretation of paragraph 20 of the same annex, thus requiring a unanimous vote. It is felt, however, that the ultimate question as to whether the United States, having proven its beneficial ownership, should receive the tankers or merely financial compensation, could be decided by a majority vote. To argue that this was a question of interpretation of paragraph 20, Annex II, would be very difficult.

(e) In Department’s 3528 of October 27 [22], 7 p.m.,⁵⁷ it was indicated that if the Senate should refuse to ratify the treaty the United States would not be bound by any decision in the tanker case by the Reparation Commission, on the ground that refusal to ratify cancels the treaty and the negotiations leading up to it and that there will therefore remain no agreement by the United States to present her claims to the Reparation Commission for adjudication. On the other hand decision by the Supreme Council might be construed as a special agreement by the United States to submit the claims to solution by diplomatic representatives.

2. The Department feels, on the other hand, that the Reparation Commission is the proper body to decide the question of ownership of the tankers for the following reasons which probably have already occurred to you:

(a) The Supreme Council is a political body established originally by the Peace Conference to settle conditions of peace with Germany and not to consider particular cases arising under terms of the treaty with Germany. In the case of the DAPG tankers the parties to that treaty have established the Reparation Commission to which the question of ownership of the tankers may be presented for consideration. All arguments of the Standard Oil Company and the United States may be addressed to that commission.

(b) If its rights and interests are fairly treated and properly safeguarded, the United States should stand by the provisions of the treaty which it has agreed to. It should not be led into a subsidiary agreement attempting to modify the treaty or to bind the decision of a body set up by the treaty. Furthermore, such agreement or understanding reached by the Supreme Council after the signature of the treaty with Germany, and while the Senate is nearing the close of its consideration of the treaty, might subject this Government to criticism as endeavoring to modify the terms of the treaty after it had been submitted to the Senate, by a diplomatic agreement which is not to be laid before the Senate.

(c) It could be argued that if the case of the tankers came up for consideration by the Reparation Commission before the treaty has been ratified by the United States, and if, after a decision by the Reparation Commission, the treaty should be ratified, without express reservation as to such decision, the decision might be binding on the United States. Because of this possibility it would be desirable for you to let your colleagues know that the United States expects not to be bound by any action of the Reparation Commission where American interests are affected, before ratification of the treaty by the United States and the participation of an American representative on the Commission in cases where American interests are involved. It is planned that the appointment of an American representative on the Reparation Commission and his participation in the proceedings of that body will be synchronous with deposit of ratification of the treaty. Since the Wilson–Lloyd George Agreement, which we understand is now adhered to by both Italy and France, provides that the Reparation Commission 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 or Associated Governments which are to be retained by them respectively as hereinbefore provided”, it appears that the case of the tankers can not be adjudicated by the Reparation Commission until at least two months after the treaty comes into force.

3. It seems therefore that under the provisions of the German treaty, American interests would be protected if it were clearly understood that the case of the D.A.P.G. tankers would not be brought up before the Reparation Commission before the United States ratifies the treaty and appoints an American representative on the Commission. On such conditions it seems desirable to leave to the Reparation Commission the final decision in the matter, the Supreme Council reversing its former decision regarding provisional allocation and allowing the tank steamers to remain under the original exemption of the Brussels agreement, if pending the final decision their use and management cannot be allocated to the United States.

4. Referring to your second paragraph stating that Germany considered the transfer of stock by the Standard Oil Company as a good transfer, it is noted that as far as we are informed Germany seized almost no alien property except that which she could use and in such case merely appointed managers. However, we do not have complete official information on this point.

5. Please inform us whether any of the other nations in Paris have brought up the point of the sale of the stock by the Standard Oil Company, which was not recognized by the Alien Property Custodian.

6. Referring to your paragraph 5, if you point out to the British the complication caused by the illness of the President, the Shipping Board’s independent character, and the political situation in America, they will probably ask what the Shipping Board will do regarding the Imperator group of ships. If they do, it might be easy for you to point out that though the Department is reluctant to couple the Imperator and tanker situations, the Shipping Board has made the proposition which has already been sent to you.

7. You may be interested to know that Tobey⁵⁸ has reported evidence of an agreement by the British with the French that in consideration of their obtaining the biggest share of the tank steamers, the French will withdraw their claims to some of the Imperator group. If true, such an agreement may have serious bearing on future decisions of the Reparation Commission and couples on their part the Imperator and tanker situations.

8. In your 4875 of October 28⁵⁹ you state that in the second paragraph of the memorandum in our 3532⁶⁰ we speak of the Standard Oil Company owning and controlling 5 “tank elevators” at Hamburg and that you thought there were in all 14 tank elevators. Without a doubt tank elevators is a telegraphic error and means tankers. In the second paragraph of our memorandum it is stated that the D.A.P.G. holds legal title to 9 not 5 tank steamers. The Standard Oil Company’s claim covers only the tankers belonging to D.A.P.G. These are the Mannheim, Helios, Sirius, Niobe, Pawnee, Hera, Loki, Wotan, and W. A. Riedemann.

9. Standard Oil Company has made further mention of three other tankers assumed to be under construction for the D.A.P.G. in Germany under contracts made before the war.

10. We see no reason why it would be unsatisfactory if tankers other than the D.A.P.G. were allocated temporarily to the French and Belgian Governments and sent to the United States for oil for Germany reserving any American rights, equitable or legal, which might come to light hereafter.

11. We feel that reports on conversations given by Hoover, Dulles, and Davis are entitled to as much credence as Loucheur’s statements unless contrary understandings can be proved by the Allies. It is our understanding that Loucheur was not present at the Brussels Conference.

12. Will comment soon on procedure for establishing title to the tank steamers asked for in your 4875 of October 28.

Lansing

57. Extract printed in Foreign Relations, 1919, vol. i, p. 16.
58. Comdr. E. C. Tobey, American assistant naval attaché at London.
59. Not printed.
60. Ante, p. 554.