763.72119/8328a: Telegram
The Secretary of State to the Ambassador in France (Wallace)
9334. For Rathbone66 from Secretary of State and Davis.
Treasury R–106. Reference your R–110.65
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Fifth: Your paragraph 5 and Mission’s 5599, December 7, 7 p.m.,65 relative to cession of tankers on account of reparation raises a very difficult question. You are authorized to state that we agree to the [Page 577] Reparation Commission definitely passing on final question of ownership of the tankers if after ratification by the U.S. an American Representative on the Commission is duly qualified and acting. The position taken by the Standard Oil Company, in paragraph 4 Department’s 3961, was taken on account of their unwillingness to make a general commitment in light of the possibility of there never being a duly qualified and acting American Representative on the Commission if we should fail to ratify the Treaty. If the tankers are now allocated to us for use pending final disposition, the Standard Oil Company has informally assured us that the ships will be turned over to the parties entitled by final decision as to ownership. We will request the Standard Oil Company to put this assurance in writing and will forward such statement to you for the proper Allied representatives. If the United States should finally refuse to ratify the Treaty, making impossible the presence on the Reparation Commission of a duly qualified and acting American Representative, the United States will agree to have the question of final ownership adjudicated in some manner agreeable to all which will guarantee an impartial tribunal and an opportunity to be heard for all interested parties. It is most important in general interests that these tankers be put in service and American beneficial interest is sufficiently predominating to entitle us to use them and object to their use by others. Presume you are conversant with Polk’s negotiations on this. In paragraph 4(a) of Annex III, following Article 244 the words “as the Commission may require” were added so that the Commission would have discretion as to the liens and charges which the German Government was required to lift, on assumption that Commission, in the proper exercise of this discretion, would be governed by paragraph 20 of Annex II, requiring it, in accepting payment in specific property, to have due regard for the legal or equitable interests of nationals of Allied Powers. We believe you should take position that Reparation Commission cannot require the delivery or cession to it of the tankers without satisfactory assurance to us that any beneficial interest of Americans therein would not be impaired thereby. If Reparation Commission in accepting payment in specified properties or rights gives due regard to the legal or equitable interests of nationals of Allied and Associated Powers, the Commission cannot consistently require Germany to exercise her right of eminent domain and eliminate the beneficial interest in question without violating rights which under paragraph 20, Annex II, Commission must respect. The Wilson-Lloyd George Agreement regarding German tonnage elaborates more fully the rights of equitable ownership and while this Agreement may not be considered operative if we do not ratify the Treaty, nevertheless it is indicative of the understanding which existed and [Page 578] which should prevail. Under Article 5 of the Wilson-Lloyd George Agreement, the Reparation Commission is supposed to reach a decision regarding the beneficial ownership before ships are delivered for allocation, that is, within 60 days after the coming into force of the Treaty.
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