441.11 W 892/110

Memorandum by the Assistant Secretary of State (Olds)


The problem presented by these so-called war claims has been magnified out of all proportion to its true merit. Upon serious examination it turns out to be not nearly so momentous a matter as at first supposed, and there is every reason for treating the disposition of these claims as a piece of routine business.

We are simply engaged upon an effort to clear away the debris which any war inevitably leaves behind. In this case we are fortunate in dealing with an Ally, rather than an enemy power. The differences between the United States and Great Britain on this subject arose during the period of our neutrality. More than ten years have now elapsed and it is high time to sweep aside the odds and ends which have been left over from that troubled period.

It appears that both Governments have long remained under a complete misapprehension as to the nature and extent of this task. Great Britain thought we had a huge bill to present, while we likewise were under the impression that thousands of real claims were involved. Investigation has shown these fears to be groundless.

What happened was this: At the outbreak of the war Great Britain put in force certain measures which seriously interfered with neutral trade, and, as we contended, constituted a violation of established principles of international law. Naturally our citizens who were affected by these measures complained, and our Government protested vigorously. Between August 4, 1914, and the date of our entry into the war several thousand complaints were made to the Department of State, and a series of notes were sent by us to the British Government. In important respects the methods and practices of the British Government were modified as the result of our protests, and many of the specific complaints were dealt with and satisfied, although England did not yield on the issues of principle which we raised. Generally speaking, there is where the matter has rested for more than a decade.

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The desirability of clearing up this situation has been obvious to everybody. England has been obsessed by the idea that the United States might make demands which she could not meet; various public men and others in our own country have been perplexed by the failure on the part of our Government to take up and dispose of what seemed to be the only remaining international controversy growing out of the war. Manifestly an uncertainty of this nature should not be permitted to drag on indefinitely as a potential menace to good relations between two friendly nations. The sensible thing to do is to resolve it if possible.

As in so many such matters, it is useful to distinguish the practical from the theoretical feature. If we follow pure theory we should go back to our neutrality notes and insist upon a show-down in principle. The short answer to this program is that there is no way to get such a show-down. England will not concede the invalidity, or even arbitrate the question of the validity of her war measures. This has been declared over and over again with the utmost emphasis ever since her replies to our original notes were made. It is worse than futile to raise that issue. Nothing but increased bitterness without any beneficial results would ensue. Moreover, it is extremely doubtful, even if an arbitration were feasible, whether any tribunal could settle the principles in the way in which we should like to have them determined. Most thoughtful students of international law are coming to feel that the rights of neutrals under these modern conditions must be defined, if at all, by some form of international legislation, rather than by tribunals bound by precedents laid down in circumstances which have little in common with those of the present day. Anyhow, it is clear that whatever issue of principle there may be in this regard between the United States and Great Britain, it is not going to be resolved, either by mutual concession or by arbitration. This being so, there is nothing to do but go around this issue and leave it behind us where it can do no harm. That is precisely what the proposed adjustment attempts to do. It formally reserves the respective positions of the two Governments in principle, and, by practical adjustment of the specific cases, seeks to remove the occasion for discussing the rights of neutral[s] on any theoretical basis. Happily the concrete cases before us can be so classified and treated.

The alternatives therefore are plain: On the one hand, a logical insistence upon our theoretical rights, which leads nowhere; on the other hand, a practical adjustment of concrete cases, leaving intact our position in principle. If we choose the first alternative, we perpetuate the issue, promote strained relations and get no tangible results. If we take the second alternative, the issue ceases to have anything but an academic interest, we eliminate the little grains of sand from the bearings of the machine, and both countries go on their [Page 749] way without any cause for worry. Assuming that the primary business of statesmanship is to get rid of troublesome issues, rather than to perpetuate them, the choice ought not to be a difficult one.


The proposed agreement is almost suspiciously simple. Disregarding the specific exceptions from its scope and matters of mere detail, there are but three main provisions.

Purely inter-governmental claims, whether for supplies furnished, services rendered, or damages sustained in connection with the prosecution of the war are cancelled both ways. A recent accounting between the two Governments shows a net balance in favor of Great Britain, on the basis of verified and acknowledged items, amounting to $1,427,029.27. If additional items claimed by Great Britain should eventually be substantiated, the balance in her favor would be increased to approximately $3,500,000. Some of these items are said to be fairly allowable.
Each Government agrees not to present diplomatically or to request international arbitration of claims on behalf of any of its nationals alleging loss or damage through war measures adopted by the other. Their respective nationals are to be referred to the appropriate judicial or administrative tribunals of the Government against which the claim is alleged to lie. The British Government specifically agrees that fullest access to its prize courts (which under British law have jurisdiction over the subject matter of all so-called “blockade” claims) shall remain open to American claimants, subject, of course, to the right of the British authorities to plead any defenses that may be legally open to them; and each Government undertakes to use its best endeavors to secure for the nationals of the other the same rights and remedies in its courts as may be enjoyed by its own nationals in similar circumstances.
With respect to the legality or illegality under international law of all measures giving rise to claims covered in the agreement, each Government reserves its juridical position and its right to maintain such position as it may deem appropriate in future contingencies involving such questions.

It appears from a careful examination of the specific cases recorded in the Department’s files that there are a few American claims, (of which probably not more than eleven involve any substantial sums) which the Government of the United States on further examination might regard as meritorious, but which might not be adequately provided for under the proposed agreement either because the claimants had already exhausted their legal remedies in the British courts, or because no legal remedy was open to them. As to these cases the Government of the United States proposes to say to the British Government that it will regard the net amount saved to it, under the first main provision of the agreement above referred to, as intended for their satisfaction. In other words, our Government announces that [Page 750] in so far as these claims may be found by it to be meritorious, it will endeavor to take care of them by recommending to Congress such actions as may insure the utilization for the purpose of the net amount accruing to the United States through the cancellation of inter-governmental claims. There is every reason to believe that the amount thus saved will be more than ample to satisfy meritorious cases.

The foregoing agreement from every angle lies plainly within the acknowledged province of the executive department of the Government.

There can be no doubt whatever of the power to adjust and settle inter-governmental claims. In this instance no appropriation is required by Congress, the net balance being in favor of Great Britain.
So far as the individual claimants are concerned, the situation is perfectly clear. The Government is exercising its indisputable right to determine in its own discretion whether it will espouse and present diplomatically the claims of its nationals against a foreign Government. It says it will not espouse and present the claims here in question. The American claimant has no standing to complain. No right which he enjoys is taken away from him. On the contrary his position with respect to the foreign Government against which his claim lies is amply secured and to some extent improved. He can still proceed in his own right under guarantees which are in addition to those which he already had. Let it be understood that the claimant has no indefeasible right to have his Government take up his claim and present it diplomatically. The espousal of a claim means that the individual drops out and the Government takes the claim as its own property on the theory that an injury or denial of justice to one of its nationals is an injury to it. If the Government later succeeds by negotiation, arbitration, or otherwise in securing reparation, the amount received belongs to the Government, and the citizen or claimant can get redress only as an act of grace. Consequently, in the proposed settlement this Government is scrupulously protecting, in fact enlarging, the rights of its citizens to proceed in their own behalf.
Congressional action is not committed to the slightest extent. The Government only undertakes to recommend legislation if necessary to put British nationals on the same footing with our own citizens in certain particulars; and further indicates its intention to recommend appropriations by Congress for the benefit of some of our own nationals (who otherwise could obtain no compensation whatsoever) provided certain conditions named in the agreement are found to exist. It goes without saying that Congress is quite free to reject any recommendation that may be made.