362.115 St 21/125: Telegram

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

438. Your urgent 541, February 23.73

For Rathbone. Your R–297, R–302, R–351 for Department and Davis.74 As outlined in Department’s 273, February 3, this Government can not agree to temporary allocation of tankers to other than United States. You may so inform Kemball-Cook and submit, on behalf of this Government, the following counter-proposal to his as outlined in your R–201 of January 9:

  • “(a) The 8 D.A.P.G. tankers now at Leith to be provisionally allocated to the United States Government, and temporarily placed under American registry with understanding that they shall fly A.M.T.E. flag together with United States flag.
  • (b) Until determination of question of final disposition tankers to be used for transporting cargoes to France, Belgium and Italy, if so desired by the respective Governments, up to the following gross tonnage for each country: 17,000 to France, 12,000 to Belgium, 9,000 to Italy; tankers may also be used for transportation of one or two relief cargoes to Germany from United States, unless Reparations Commission should decide otherwise. To extent, if any, that these tankers should not be required to transport cargoes to Germany, France, Belgium and Italy as above, the United States shall be free to use them without restriction.
  • (c) If any of tankers are used for transportation of relief cargoes to Germany, freight rates representing the cost of the voyages shall be paid by Germany.
  • (d) When the vessels are used otherwise than for German relief cargoes, the current rate of freight for time being will be charged.
  • (e) Irrespective of the question as to whether there may be any obligation now to pay charter hire to the German Government, it is agreed that all proceeds arising from the use of vessels, less the cost of operation and fees for management will be credited, or if so desired, deposited as they accrue with the Reparations Commission, to be held in trust pending final disposal with interest accrued in accordance with the decision as to the disposition of the tankers as provided for below. If, however, it is decided that charter hire is due Germany, charter hire on British blue book bare boat rates less operating costs shall be refunded to the United States by the Reparations Commission, and credited by it to Germany for the purchase of food in compliance with agreements pursuant to Brussels Convention.
  • (f) If Standard Oil Company makes good its claim before Reparations Commission or independent tribunal mentioned in paragraph i, then Allied and Associated Powers agree to satisfy claim [Page 587] by handing over and transferring tankers to Standard Oil Company under American flag in tonnage bearing to the entire tonnage of the tankers a ratio not less than that which the par value of the D.A.P.G. securities proved to belong to the Standard Oil Company bears to the par value of all D.A.P.G. securities.
  • (g) If the Standard Oil Company fails to make good its claim before Reparations Commission or independent tribunal mentioned in paragraph i then the United States will transfer the ships in accordance with any allocation or decision which may be made by that Commission or tribunal.
  • (h) The Reparations Commission is to settle final question of Standard Oil Company’s claim if United States finally ratifies Peace Treaty and an American representative is duly qualified and acting on commission, except as otherwise provided in paragraph i.
  • (i) If United States has not on July 1, 1920, ratified Peace Treaty and an American representative is not qualified and acting on commission then Standard Oil Company’s claim shall, at request of United States or other interested Government, be adjudicated by an impartial tribunal to be agreed upon between the U.S. and other Governments concerned so that all parties interested may be properly heard.
  • (j) The Wilhelm A. Riedemann now building in Germany to be completed and to follow fate of other tankers.
  • (k) It is understood that temporary allocation will in no way prejudice claim of beneficial ownership of Standard Oil Company and, on other hand, will in no way recognize validity of any such claim.”

For your information, it will not be possible to place tankers under the United States Navy as suggested by you. If provisionally allocated tankers will be placed in charge of Shipping Board, and probably under management of Standard Oil Company. You may, if inquiry is made, so inform [Kemball]-Cook. The Department, however, considers it preferable not to definitely make this a term of the agreement.

With reference to above modification of paragraph f, Standard Oil Company states that the ratio whether determined by financial or market value or by par value would be substantially the same, since all three classes of the securities received the same return, the stock warrants and the so-called debentures being by their terms entitled to returns at the same rate as the dividends on the shares, and all returns have been declared and paid accordingly.

In view of this Government’s willingness to agree to carry cargoes, as outlined in paragraph b, it is felt that the agreement should not contain any further restrictions as to use of vessels during provisional allocation, and Department is therefore not disposed to agree to French and Italian reservations, which would limit the discretion of this Government as to what oil products shall be transported on [Page 588] the vessels. No attempt has therefore been made to modify proposal to accord with their position. This Government cannot of course assume any responsibility other than that of fair dealing in respect to the oil products to be delivered.

Polk
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