362.115 St 21/103: Telegram
The Secretary of State to the Ambassador in France ( Wallace )
273. For Rathbone.
Your urgent January 9, R–201 and 79, R–202.
After the return of the Imperator group of ships in compliance with the request of Great Britain, the proposal of the British representative that the tankers be placed temporarily under British registry and ownership of British Shipping Ministry, coupled with the verbal intimation that the vessels could not be temporarily allocated to the United States because this Government could not be trusted to carry out its obligations, cannot be taken otherwise than as an attempt to delay cordial and speedy settlement of a protracted controversy.
Aside from the shares of voting stock, the attempted sale of which to German interests was held void by the American Alien Property Custodian in 1918, the Standard Oil Company owns securities of the D.A.P.G., in the nature of share warrants and so-called debentures amounting to nearly seven times the value of the voting stock, and consequently has a preponderate financial interest in the German company and its assets, warranting the temporary allocation of the tankers to the United States. On the other hand no British private interest in the vessels has ever been claimed to exist. In light of the above the fact that no reason was advanced beyond lack of confidence in the agents of this Government and in the Standard Oil Company would seem strikingly to attest the want of any legitimate grounds for the suggestion of allocation to the British Shipping Ministry.
In this connection attention is called to the principle, with which the British representative is doubtless familiar, that provisional allocation should be made to conform, as far as possible, to the prima facie case which each nation can present for the ultimate final allocation. It was on this principle that Great Britain established to the satisfaction of this Government a right as against other Allied Powers to a settlement in its favor of the controversy relative to the disposition of the Imperator group of ships. This same principle would seem clearly to entitle the United States to a provisional allocation to it of the tankers. The sense of the British proposal would seem to recognize the application of this principle to the tankers, were it not that an agency of this Government could not be trusted to abide by the final decision of allocation.
You may answer the Kemball-Cook proposal somewhat in the sense of the foregoing, and add that:
- First: This Government cannot agree to the provisional allocation of the D.A.P.G. tankers to other than the United States, with [Page 585] the understanding, however, that the vessels will fly the AMTE flag together with U.S. flag.
- Second: This Government will consent to the use of the vessels as outlined in paragraph B of your cablegram, with the understanding that it may use any surplus tonnage free from restriction.
- Third: Irrespective of the question as to whether there may be any obligation to pay charter hire to the German Government, it is agreed that all proceeds arising from the use of the vessels, less the cost of operation and fees for management, will be credited, or, if so desired, will be deposited as they accrue with the Reparation Commission, to be held in trust pending final disposal with the interest accrued, in accordance with the decision of the disposition of the tankers as provided below. If it is decided that charter hire is due Germany, charter hire on British bare boat charter rates, less operating costs, shall be refunded to the United States by the Reparations Commission and credited by it to Germany for purchase of food in accordance with agreements pursuant to Brussels Convention.
- Fourth: This Government will agree that if any of the vessels are used for relief cargoes to Germany, freight rates will be charged representing the cost of the voyages, but when vessels are used otherwise than for German relief the current rate of freight will be charged.
- Fifth: This Government will agree to leave final determination to the Reparation Commission and abide by its decision provided the treaty is ratified by the United States by July 1st, 1920, and the United States is officially represented on the Commission when and if this question comes before it for determination, or if Treaty is not so ratified and the United States duly represented, to a special tribunal to be mutually agreed upon, it being understood and agreed that the determination shall in either case be governed by the rule embodied in the British proposal, in Paragraph F, and Clause 5th of your cable which is understood to mean that on proof by the Standard of its preponderant financial interest in the D.A.P.G. by whatever name such interest may be called, whether described as beneficial ownership or as value, and whether based on ownership of shares, of share warrants, or of debentures, the tankers shall remain with the Standard Company finally and under the American flag.
- Sixth. The Wilhelm A. Riedemann now building in Germany to be completed and follow the fate of the other tankers.
For your information Standard Oil and Shipping Board have agreed to foregoing proposal. Davis concurs.