362.115 St 21/451: Telegram

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

294. For Hill. H–94. Your H–175, November 17, 1 p.m. In view of numerous questions which have arisen, Department considers it desirable to re-state its position as follows:

This Government does not countenance view of Finance Section and declares that it has no lien on Wotan and Loki because all disbursements on those two vessels are properly chargeable to and have been deducted from proceeds of all five vessels. The provision for a lien was agreed upon only as additional security at a time when large advances became necessary for interim expenses, repairs and possible operating deficits. It was intended to become operative only in the event that the proceeds of operation from all vessels should not be sufficient to cover disbursements on account of all vessels.
This Government, in view of the award of the tribunal, must insist upon surrender to Reparation Commission of all five vessels and is prepared to make promptly a substantial payment from net operating fund ascertained as indicated in preceding paragraph and to pay balance as soon as all current accounts of the five vessels shall have been adjusted. Niobe, Hera and Pawnee will be delivered promptly to Great Britain if Reparation Commission so orders, and Loki and Wotan will be delivered as ordered by the Commission.
Surrender and acceptance of all five vessels shall be respectively without prejudice to the contentions or rights of either the Reparation Commission or this Government under the original and supplemental agreements regarding the vessels, provided, however, that the proceeds of the sale of Wotan and Loki shall be regarded as having been substituted for said vessels.
While the disposition to be made of the Wotan and Loki is a matter entirely within the control of the Reparation Commission, this Government considers that, in view of the existing favorable market conditions, these two vessels should be promptly sold at public sale. While neither this Government nor the managing operator would desire to participate in carrying out the sale of the vessels, this Government would desire to be informed in advance of the date and place thereof.
Department desires that this Government’s position regarding deduction of expenses from proceeds of operation of all vessels should be clearly and definitely re-stated to interested parties, and that there should be no indication of any departure therefrom.

The foregoing has been agreed upon in conference with Shipping Board and Standard Oil.