The Secretary of State to the Chargé in Turkey (Shaw)

No. 93

Sir: In view of the exchange of ratifications on February 15, 1933, of the Treaty of Establishment and Sojourn signed at Ankara on October 28, 1931, between the United States and Turkey,1 it becomes necessary to consider means of disposing of the claims of nationals of the respective countries against the other, as provided for in the exchanges of notes of December 24, 1923,2 and February 17, 1927,3 copies of which are enclosed for your convenient reference.

It is understood from recent reports from your mission that the Turkish Government may have overlooked the provisions of the above-mentioned exchanges of notes in accordance with which a claims committee, consisting of two representatives of each Government, is to meet at Istanbul six months after the exchange of ratifications of a commercial convention and a convention of establishment and residence. It is therefore desired that you seek an early occasion to invite the attention of the appropriate Turkish authorities to the provisions of these notes and to explain that, in accordance with the terms thereof, the United States Government is prepared to appoint its representatives on such a committee and that these representatives will be ready to meet with the Turkish representatives at Istanbul on August 15, 1933, i. e., six months after the exchange of ratifications of the Treaty of Establishment and Sojourn.

In bringing the foregoing to the attention of the Turkish authorities you may explain that, while the Government of the United States will be prepared to consider the possibility of a settlement of the claims question by some other means prior to the above date, it entertains no doubt that if such a settlement should prove impracticable the Turkish Government will carry out the provisions of the above mentioned exchange of notes and appoint its representatives for the meeting on August 15, 1933.

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You should explain that your Government has given careful consideration to the question of the claims of its nationals against the Turkish Government and it has come to the conclusion that the most practicable and least expensive means of settlement would be in the nature of a lump sum payment by the Turkish Government. Based upon its experience in settling other groups of claims by such means as claims commissions, the Department is convinced that the development and presentation of these claims to an international commission for adjudication would require the employment of a commission and a large staff of attorneys by both parties over a period of years. The Department feels that in the light of the many doubtful elements involved in these claims the expense that would be incurred by a consideration of each case individually would be out of proportion to the sums finally adjudicated.

The Department assumes that the Turkish Government is just as anxious as the Government of the United States to avoid a lengthy claims settlement of this kind. You may therefore state that in the interest of continued friendly relations between the two Governments and with a view to arriving at a settlement which would be fair to both parties, the American Government is prepared to accept in full payment of the claims of all of its nationals a sum representing a moderate percentage of the total claims.

In order that you may have a basis for discussing the payment of such a lump sum the following information is furnished regarding the claims that have been submitted to the Department up to the present time. A survey made several months ago of the claims then of record resulted in the rejection of a large group considered to be unsupportable and in the division of those thought to be supportable into the classifications, numbers and amounts which are shown on the attached list.4 It is considered desirable that you refrain for the present from revealing to the Turkish authorities the classifications into which these claims have been divided.

Because of the indefinite nature of the means provided for the settlement of the claims and because of the uncertainty of the date on which claims would be considered, claimants have had little incentive to incur the expenses usually involved in the development of their cases. It has therefore been impossible for the Department to arrive at a definite conclusion as to the number of claims which would be supportable in international law or as to the amount of damages properly to be claimed in those cases in which international responsibility may be established. Consequently, the information contained in the enclosed list does not purport to be entirely accurate.

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The two categories of claims shown in the enclosed tabulation include all of those that had been submitted up to approximately one year ago. However, at the time of the recent exchange of ratifications of the Treaty of Establishment and Sojourn, a circular letter was addressed to all claimants of record advising them that a definite time limit had been fixed for the completion of claims and that they should immediately proceed to the collection of the necessary evidence to perfect their claims. These claimants were also requested to advise the Department in case they intended to submit no further evidence or in the event that they wished to have their claims withdrawn.

As a result of this circular letter, which apparently was given wide publicity by publication in foreign language newspapers and otherwise, notice has been filed with the Department of approximately 750 additional claims. Up to the present the Department has been unable to determine the amounts claimed in these additional cases or the classifications into which they should be divided. It is certain, however, that the amounts claimed run into several millions of dollars.

From the foregoing it will be obvious that the Department is unable to arrive at any definite estimate of the total amount of damages claimed in the approximately 1,880 cases thus far submitted. It is possible, however, to arrive at a rough estimate of this total. Of the first category of claims shown on the enclosed list, i. e., those in which the amount of claim is stated, $21,965,622 is in American currency. The remaining claims in this category in foreign currency, when converted into United States dollars at rates corresponding roughly to those existing at the time the claims arose, bring the total in American currency to approximately $24,150,000.

Of the second category of claims, i. e., those received up to a year ago, in which the amounts were not stated, it may be estimated that they would average in value approximately fifty per cent each of the value of the claims on which the amounts were stated, or say $12,075,000. These two totals would amount to $36,225,000. It is estimated roughly that the amounts claimed in the 750 claims recently received would bring the grand total to approximately $55,000,000, and it is this figure which might tentatively be used as a total calculation of the claims which may be brought against the Turkish Government. The Department would envisage the possibility of setting a lump sum settlement at somewhat less than 10 per cent of the above mentioned figure, or approximately at $5,000,000, and this sum may be used in any preliminary discussions with the Turkish Government.

In view of the known attitude of the Turkish Government toward the payment of claims of naturalized American citizens of Ottoman origin, it is assumed that early in your discussion the Turkish authorities [Page 897]will raise the question as to the number and amount of claims made by such nationals. From the table given in the enclosure hereto you will understand that the Department is unable to determine the amount of such claims. At the present time, moreover, it is unable to state the number of claims which have been submitted by American nationals of Ottoman origin. This latter information is now being ascertained, however, and it will be transmitted to you for your information as soon as it is available.

In the event that the Turkish Government raises the question of claims of American nationals of Ottoman origin and takes the position that it will not consider the settlement of such claims, it is desired that you endeavor to obtain a written statement of the Turkish Government setting forth fully the reasons for its attitude.…

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Until you have explored the situation somewhat and reported thereon the Department will find it difficult to come to a definite conclusion as to the future course of action which it might take in the event that the Turkish Government declines to come to some reasonable settlement of this claims question. It is apparent, however, that in the event that the Turkish Government should refuse to make a satisfactory settlement, the publication of this fact could not fail to create an unfortunate impression upon American public opinion.

In your conversations with the appropriate Turkish authorities it is desired that you make it entirely clear that your Government is prepared to consider a settlement of the claims question in a most reasonable and sympathetic spirit. The American Government fully appreciates the financial situation in Turkey and is prepared to take this situation into full consideration in arriving at a settlement. It is confident that if the Turkish Government will approach the question in the same spirit of conciliation and good will which the United States proposes to exercise it will be possible to work out a solution which will be mutually fair and acceptable to both parties.

To recapitulate, the Department envisages the following steps on your part at this time:

You should recall the provisions of the exchange of notes of December 24, 1923, and February 17, 1927, to the attention of the Turkish authorities.
You should propose a settlement of the outstanding claims through the payment of a lump sum by Turkey, such settlement to be arrived at prior to August 15, 1933. The tentative amount of such lump sum payment to be $5,000,000.
In the event of the Turkish Government’s failing to agree to the consideration of a lump sum payment, it would be necessary to point out that your Government will expect the Turkish representatives to meet with the American representatives of the claims committee on August 15, 1933, at Istanbul.
Should the Turkish Government raise the question of the claims of American nationals of Ottoman origin, and decline to give consideration to the settlement of such claims, you should endeavor to obtain a written statement setting forth the basis of the Turkish position in the matter, and communicate the substance to the Department by cable and the text by pouch.
If such a course appears desirable, you should explain the unfortunate impression which would be created in the United States by the failure of the Turkish Government to arrive at a satisfactory settlement, and point out the discriminatory nature of any such action.
Throughout your conversations you should stress the desire of your Government to approach this problem in a conciliatory and sympathetic spirit and its intention to take carefully into consideration the present financial situation of Turkey.

As a result of the report which you will make upon the progress of your negotiations the Department expects to be able to issue more detailed and specific instructions, but it will not be possible to do so until some idea is obtained of the reaction of the Turkish Government to the proposals made in the present instruction. You will, of course, consult freely with the Department, by telegraph if such a procedure appears desirable, and every effort will be made to assist you in your endeavors to arrive at an early solution of the only outstanding problem now involved in American-Turkish relations.

Very truly yours,

Cordell Hull