The Secretary of State to the Ambassador in France ( Wallace )
Washington , May 12, 1920—3 p.m.
919. For Boyden from Davis. Treasury B–31.
Your B–73 and B–74.38
- First: While we fully realize the desirability on the part of the Allies to know if we are to adhere to the Wilson–Lloyd George Agreement and what our position will be in case this agreement does not become effective, it would in our opinion be impossible at present to get any Congressional action on the question. While this agreement may be considered as an international agreement separate from the Treaty, we are inclined to the opinion that in practice our adherence to this agreement cannot be separated from the Treaty, because our right to pay into the Reparation pool, instead of direct to the owners, the [Page 533] surplus value of the ex-German ships is derived or safeguarded through Germany’s consent for us so to do under the Treaty. In other words, if we do not ratify the Treaty it would appear that if we pay for the ships at all, we must pay the ex-owners of the ships instead of the Reparation Commission.
- Second: While we of course desire to dispose of the matter and realize the desire of the Allies to know what we are going to do, I fail to see just why our delay should interfere with the other ship settlements because in no event are the ships which we hold to go into any ship pool. If we ratify the Treaty and adhere to the agreement we deduct from the value of these ships, the value of the ships which would be theoretically allocated to us against our losses, but we would not get those ships. If we do not ratify the Treaty we cannot define now what our position would be but in such event our claims for ships lost might not be under the Treaty, but probably would be a direct claim against Germany, unless we negotiate some agreement to the contrary. There appears to be some inconsistency in the Wilson–Lloyd George Agreement as to the theory of distribution of losses in paragraphs 3 and 4. As heretofore indicated, our primary purpose in entering into the Wilson–Lloyd George Agreement was not to confirm us in our title and possession of those ships with which we were satisfied, but was with the view of meeting the difficulties existing at that time and principally of England, by agreeing to pay the surplus value of those ships into the Reparation pool instead of otherwise. In so far as concerns the material or theoretical allocation of German tonnage among the Allies, we fail to see how they are estopped from proceeding therewith by the delay in the determination of our final position in respect to payment for the German ships which we took over.
- Latter not printed.↩