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

362.115 St 21/149: Telegram

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

Washington, May 14, 1920—6 p.m.

934. Your 1071, April 29th.⁷⁷

For Boyden.⁷⁸ Your B–56⁷⁷ badly garbled. Great delay in deciphering.

• First: In general it is important to keep in mind that original negotiations regarding temporary allocation tankers were started in Council of Heads of Delegations and that present discussion is based on independent proposal of Kemball-Cook through diplomatic negotiations. This Government has at no time consented to jurisdiction of Reparation Commission to decide this preliminary question of temporary allocation. We are willing to recognize authority of allied representatives on Reparation Commission to act as agency for negotiation with United States on this preliminary question, provided expeditious settlement can be reached. United States, however, cannot be bound by any decision of Reparation Commission as to American rights without consent of this Government.
• Second: Decision as to formation of independent tribunal would open discussion of numerous details which are not necessary for decision as to temporary allocation and would only tend to further delay. Department, at appropriate time, is disposed to give favorable consideration to suggestion that tribunal consist of one member from Reparation Commission, one from United States and one neutral. Department cannot agree to Bradbury’s⁷⁹ suggested change outlined in your first paragraph.
• Third: Our first explains why Department would be unwilling to agree to substitution of Reparation Commission for Government[s] in paragraph I (eye).
• Fourth: Department would agree to substitution in paragraph I (eye) (not paragraph one as stated by you) of the wording “independent” for “impartial” if you consider this necessary. In regard to additional language Bradbury proposes to insert, we believe question of authority under which tribunal should act is a matter for later discussion and probably detailed protocol.
• Fifth: (Your Fourth): Department not disposed to agree to Poincaré’s suggestion that further voyages be left open for discussion. This question should be definitely settled now. Use your authority for allowing three voyages if necessary.
• Sixth: Regarding paragraphs f and g of proposal. It is probable that our views are not materially at variance with Bradbury’s. The negotiations have been conducted on a basis of proof of beneficial ownership. To the extent S[tandard] O[il] might be awarded ships on proof of this beneficial ownership it should not be expected to surrender securities to R[eparation] C[ommission] since credit probably would not be due Germany in such case. Besides, a transfer of securities would result in transfer to non-American hands of the D.A.P.G., an important agency of American commerce and industry in Germany. Bradbury apparently willingly agreed with above view if beneficial ownership proved by S.O. establishing ownership of all securities. It seems to us that it is also entirely possible that beneficial ownership might be proved to exist even though it was found that all securities were not owned by S.O. Under paragraph f of Department’s proposal right to tankers was contingent on proof by S.O. of claim to beneficial ownership. Coupled with such condition the proportional basis of satisfaction provided for, amounts practically to an agreement on our part to limit the application of the proven right to the vessels, to only such proportion as established by the ownership of securities. The advantage therein for us is that such a principle might solve certain practical difficulties in reaching a solution. However, if on adjudication tribunal does not decide beneficial ownership actually proved, it would seem proper, and many equitable considerations would support such conclusion, that tankers should be surrendered to value of award. In that case we believe credit to Germany might be necessary and R.C. should be subrogated to that extent to right of indemnity, if any, of S.O. against Germany, but not to any right that S.O. might have against A[lien] P[roperty] C[ustodian] property. Any claim that S.O. might have to such property would depend not only upon treaty but upon Congressional action. Such right may be limited to American citizens and not transferable and an assignment might be contrary to government policy. Be careful not to suggest in any way or admit right of subrogation to claim against A.P.C. property.
• Seventh: We would be willing to substitute the following for paragraphs f and g of proposal
  • “[f.] As soon as the Reparations Commission or the Independent Tribunal mentioned in paragraph (eye) i has declared its decision upon the claim of the Standard Oil Company, United States will transfer tankers in accordance with such decision, it being agreed, however, that if Standard Oil Company makes good its claim of beneficial ownership, the tankers shall be awarded to that Company and transferred to the American flag in tonnage bearing to the entire tonnage in question a ratio not less than that which the value of D.A.P.G. securities proved to belong to the Standard Oil Company bears to the value of all D.A.P.G. securities, the same method of valuation to be used in each case.
  • g. However, if S.O. fails to make good its claim to beneficial ownership but financial reimbursement is found due, S.O. Company shall be entitled to the liquidation of such award by the transfer of tankers to a value equal to the sum due, the tankers to be valued by the Reparation Commission or independent tribunal and the particular tanker or tankers to be transferred, to be selected by the Standard Oil Company and accepted by that company at the valuation aforesaid; all provided that the S.O. shall agree to perfect such equitable arrangements as shall be necessary in connection with effecting proper credit to Germany for the value of such tankers if transferred to Reparations Commission by Germany as part of reparation payment.”
• Eighth: Department feels that proposal with foregoing change should be accepted, and thus temporary allocation disposed of. It is therefore not necessary at this time to consider suggestion in your paragraph 14 and in your B–57⁷⁸ for another arrangement for temporary allocation. Consideration of this proposal would also necessarily involve negotiations, and if a new arrangement such as that contemplated were entered into, the incentive for early adjustment of the matter might be removed if in the meantime cargoes were being carried for the Allied Governments.
• Ninth: Proposition outlined in paragraph 5th your B–77⁷⁸ involves new negotiations. Furthermore, if beneficial ownership claim of S.O. is sustained obviously United States should not have to account to R.C. for value of tankers. Department trusts that you will be able to obtain an agreement to present proposal.
• Tenth: Your amendments of paragraphs a and b, outlined in your B–40⁷⁸ and B–51,⁷⁸ acceptable to Department.
• Eleventh: Department trusts that you will be able to obtain acceptance of its paragraph d as outlined in its 729 of March 29 [April 10].⁷⁸ This is quite a concession, as the rate established by the Shipping Board for its own tankers is substantially less than the rate current generally.

Polk

77. Not printed.
78. Roland W. Boyden, assumed duties, Apr. 1, 1920, as American unofficial representative on the Reparation Commission, succeeding Albert Rathbone.
77. Not printed.
79. Sir John Bradbury, British representative on the Reparation Commission.
78. Not printed.
78. Not printed.
78. Not printed.
78. Not printed.
78. Not printed.