The Acting Secretary of State to the Ambassador in France ( Wallace )
Washington , March 8, 1920—3 p.m.
488. For Rathbone from Department and Davis. Treasury R–262.
Your R–373, February 28.
- First: We are in accord with views set forth in first paragraph your telegram.
- Second: Answer to inquiry in third paragraph your telegram regarding our attitude if Treaty is ratified is briefly stated that shipping question will presumably be settled so far as we are concerned under terms of Wilson–Lloyd George Agreement if approved by Congress and that a position can be maintained in harmony with discreet attitude outlined in first paragraph your telegram. In these circumstances probably neither Germany nor German nationals would raise any question respecting our title, but would consider all German interest in ships is cut off by terms of Treaty. Such a disposition of question would therefore eliminate possibility of differences of opinion such as arose during sessions of Conference respecting validity our claim of independent title.
- Third: Our telegram February 25 was sent to you for purpose of making certain you should understand our views regarding delicate character of questions which must be handled very discreetly in view of the language of the Treaty, the necessity of maintaining claim of independent title and the desirability of a satisfactory final adjustment of shipping question without controversy with Germany or with our cobelligerents. Your telegram under acknowledgment indicates that you appreciate necessity refraining from action which might preclude or hinder assertion of an independent title if at any time it should be advisable and that you have in mind situation in case of failure our Government to ratify Treaty.
- Fourth: By slight amplification, language of paragraph 3, Annex III, might have embodied explicit waiver of German rights to vessels to which claim of independent title is made. Your R–19531 shows you apparently understand that British contention prevented such drafting of the paragraph which would have covered vessels seized by us. If our claim of independent title is not based on belligerent right of confiscation, it apparently must be based on right of requisition. This latter basis involves an embarrassing question as to compensation. Under Lloyd-George Agreement value of excess of ships is paid into reparation fund, but unless German rights in vessels have been cut off by paragraph 3, Annex III, German nationals would not be deprived by provisions of that Article, of any right of compensation they might have. Article 439, however, would apparently preclude such claims. It was attempted to convey the idea in fifth paragraph our telegram of February 25 that although paragraph 3, Annex III apparently could not apply to ships to which title passed prior to date of Treaty all questions such as those above indicated can probably be avoided if we ratify the Treaty and adopt the Lloyd-George Agreement.
- Fifth: With regard to Brazilian ships referred to in fourth paragraph your telegram under acknowledgment, we believe you should be guided by general policy outlined in our telegrams of January 9 and 21.32 Your well reasoned argument in fourth paragraph your R–195 respecting effect of Article 297 could doubtless be pressed with considerable force, as warranted by explicit terms of that article. In view of that fact and in view of fact that general approval of Brazilian contention which you have pointed out may not be in harmony with your argument just mentioned, would evidently not adversely affect our position and might be favorable to it, it is suggested that you need not oppose their claim. The objection to interpretation that Article 297 in any way relates to ships of either class referred to in fourth paragraph your R–195 is that its correctness seems doubtful and that representatives of other nations will probably not agree to it. It is pertinent to bear in mind touching this point that ships in our ports were not taken over by the Alien Property Custodian under Enemy Trading Act. The claim of an independent title by us or the claim by Brazil of title by virtue of Article 297 does not prevent either from being a party to Wilson–Lloyd George Agreement as an amicable arrangement regarding shipping question. In such circumstances, it being assumed that the Treaty does not apply to ships seized in American ports, we are in the position of having confiscated them at the beginning of the war unless compensation is made. Brazil would in effect confiscate under Treaty provisions ships taken by it.