362.115 St 21/449: Telegram

The Secretary of State to the Ambassador in France (Herrick)


286. For Hill. H–92.

Upon formal assurances from the Reparation Commission that such action on the part of the United States shall in no sense be construed by that Commission as an admission on the part of this Government of the correctness of the view of the Finance Service that the amount due for the expenses incurred on account of the Loki and Wotan should not be deducted from the proceeds of the operation of all five tankers, the Government of the United States is prepared to deliver immediately to Great Britain the three tankers, Pawnee, Hera and Niobe.
Upon the condition that the Loki and the Wotan are deemed to be also tendered by the United States for delivery to the Reparation Commission with the offer on the part of the United States that the Wotan be held in the custody of the Standard Oil Company, out of commission, as at present, at Baltimore, and the Loki in like possession and condition at Hamburg, subject to the order of the Reparation Commission, provided that all the expense thus incurred shall be chargeable to operating proceeds accrued under tanker agreement from operation of all tankers, delivery of the Pawnee, Hera, and Niobe is to be made.
The Shipping Board is advised by the Standard Oil Company that, with respect to expenditures on the Loki and the Wotan, the Loki has from time to time required extensive repairs in order to keep that vessel in operation. She had her final break-down of machinery in the North Sea in September 1925, at which time the Standard Oil Company recommended that she be re-engined. The Reparation Commission refused to approve the expenditure of $300,000, which repairs could have been made for approximately that amount at that time. She probably would have now been in operation and making a profit had she been re-engined as recommended. The Wotan has not been operated since her arrival owing to fundamental defects but she was used for a time as a storage hulk. She was brought here at a heavy expense due to the preparation for the voyage and operating difficulties en route. The expenditures incurred on the Wotan since her arrival have been limited to managing fee and the ordinary care of a laid up vessel. In view of the probable delay in obtaining permission of the Reparation Commission and expected early decision of independent tribunal, the Standard Oil Company, while it did consider recommending the sale of the [Page 197] vessel, felt that it was not worth while to attempt its sale. The tribunal’s decision has been delayed many months longer than had been anticipated.
It would appear that the British are still in agreement with the view of the Finance Service regarding the nondeduction from the proceeds of operation of expenses incurred on the Loki and Wotan. You should in any informal conversation on this matter, if you have not already done so, impress clearly the fact that the Government of the United States disagrees definitely with the view of the Finance Service. It appears to be quite unwarranted to make such an interpretation of the tanker agreements.