Papers Relating to the Foreign Relations of the United States, 1920, Volume II

362.115 St 21/104: Telegram

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

Paris , January 9, 1920—7 p.m.
[Received January 10—4:42 a.m.]

75. R–201 for the Department and Davis from Rathbone and Dresel.

1st. Following proposals for settlement tank steamer question were advanced by Kemball-Cook⁷⁰ at conferences with us January 7th and 8th, namely:

(a) The 8 tankers now at Leith to be operated under the inter-Allied flag and under temporary registry of ownership of the British Shipping Controller who shall appoint [a] manager of the steamers from the Anglo-American Oil Company for full period until determination of final ownership.

(b) Until determination of final ownership, the tankers to be used for transportation of one or two relief cargoes to Germany from the United States unless the Reparation Commission should decide otherwise; except as so used for relief cargoes for Germany, the vessels to be used for threefold cargoes, to France, Belgium and Italy if so desired by those respective Governments up to the following gross tonnage for each country: 17,000 to France, 12,000 to Belgium, 9,000 to Italy, to extent, if any, that these tankers should not be required to transport cargoes to Germany, France, Belgium and Italy as above, then any surplus to be used by Anglo-American Oil Company, as it may desire, free from restriction.

(c) Until the coming into force of the peace treaty all these steamers will pay to the German Government the British Blue Book bare boat charter rate. All steamers used during the like period for transportation of relief cargoes to Germany will receive from Germany a rate of freight representing cost of the voyages.

(d) When the vessels are used otherwise than for German relief cargoes the current rate of freight for time being will be charged.

(e) All profits on freight after charging Blue Book bare boat charter rates payable to Germany and expenses of running and allowing for Anglo-American Oil Company’s fees for management, will be deposited in a London bank from time to time in joint names of British Shipping Controller and Anglo-American Oil Company and will be disposed of in accordance with general principles adopted by Reparation Commission.

(f) If Standard Oil Company makes good its claim before Reparation Commission or independent tribunal mentioned in paragraph one [i] then Allied and Associated Powers agree to satisfy value of claim by handing over and transferring tankers to Standard Oil Company under American flag.

(g) If Standard Oil Company fails to make good its claim before Reparation Commission or independent tribunal mentioned in paragraph one [i] then British Shipping Controller will transfer the ships in accordance with any allocation or decision which may be made by that Commission or tribunal.

(h) The Reparation Commission is definitely to settle final question of Standard Oil Company’s claim if United States finally ratifies peace treaty and an American representative is duly qualified and acting on Commission except as otherwise provided in paragraph one [i].

(i) If United States has not on July 1st 1920 ratified peace treaty so that an American representative is qualified and acting on Commission then Standard Oil Company claim shall, at the request of United States or other interested Government, be adjudicated by an impartial tribunal to be agreed upon so that all parties interested may be properly heard.

(j) The Wilhelm A. Riedemann now building in Germany to be completed and to follow fate of other tankers.

(k) It is understood that foregoing arrangement in no way prejudices claim of beneficial ownership of Standard Oil Company and on the other hand in no way recognizes validity any such claim.

2d. Kemball-Cook stated that work on this proposal was commenced before surrender of steamers by Shipping Board and before his receipt of Dresel’s memorandum mentioned in our R–167.⁷¹ He added that proposal was no less favorable to United States because of surrender of tankers.

3d. We understand that this proposal is substantially same as that suggested by Kemball-Cook to Piesse, Standard Oil Counsel in London, but we induced Kemball-Cook to make a number of verbal changes in proposal which we believe to be in interest of United States Government. Kemball-Cook stated that he had welcomed Piesse’s intervention as he had thought matter had reached such a state that it was difficult for either side to make any further move. He asked whether we objected to his further negotiations with Piesse and we refused to express an opinion stating that was a matter for him to decide. He finally said he would tell Piesse that he would not negotiate further with him.

4th. We desire to specifically call your attention to following points in connection with offer.

(a) Under paragraph a of offer registry of temporary ownership in British Shipping Board means that British flag will be flown as well as A.M.T.E. flag. Kemball-Cook asked that this point should be made particularly so that there could not be any charge of breach of faith in case offer was accepted and tankers when turned over to management of Anglo-American Oil Company flew British flag as well as A.M.T.E. flag. Understand from Kemball-Cook that in no case have ships surrendered by Germany flown A.M.T.E. flag alone except during voyage from Germany to be surrendered to representatives of Allied and Associated Governments.

(b) Regarding paragraph b of offer you will observe that tonnage is to be used for France, Belgium and Italy, respectively, in proportion stated after relief cargoes, if any, are sent to Germany. We do not know how important this provision is. It seems to us probable that Standard Oil Company by diverting certain ships in its fleet from French, Belgium and Italian service will be able to carry on its business substantially the same as if these particular tankers were left free from the service. That however is a matter that we are not competent to pass upon. You will note that proportion of tonnage established for these countries is the same as original allocation A.M.T.E.; you will also note that whether United States does or does not ratify treaty question of beneficial ownership can be finally determined shortly after July 1st. This question of allocation of tankers to needs of countries mentioned cannot continue for any very considerable period of time or for many voyages.

5th. You will appreciate that this arrangement proposed finally settles one question as to which we have always feared there might be difficulty, namely, whether the claim of beneficial ownership can be compensated for by money only and need not be met by the allocation of the vessel itself. That question seems to be somewhat uncertain under the treaty but is definitely settled as far as tankers are concerned in arrangement proposed and is so understood to be settled by British.

6th. Kemball-Cook stated that this arrangement was intended to be a compromise and as a compromise we could not expect that our views would be entirely adopted.

7th. In regard to this arrangement Kemball-Cook stated that he was prepared to say that French would agree to same; as to Italians and Belgians he stated he would use his best efforts to have them accept and he believed that he would be successful in such endeavor. Italians have asked to have tankers up to 9000 tons go to management of Standard Oil Italian subsidiary. Kemball-Cook states however he thinks he was in position to make other concessions to Italy which will result in Italy’s accepting arrangement proposed. Belgium has asked British to allocate to them one passenger steamer as a condition of their acceptance of this arrangement. This Kemball-Cook says he is not prepared to do but believes he can bring Belgians around.

8th. We pressed Kemball-Cook very hard to change paragraph a of proposal so that it would allocate tankers to American control. He finally stated that in view of experience in regard to Imperator and other ships the countries concerned were very unwilling to accept any assurances of United States Shipping Board or Standard Oil. We called to his attention that it might injuriously affect various British matters if a campaign was started in United States against Europe on theory that Great Britain was retaining tankers which ought to go to America. We think that this line of attack somewhat shook Kemball-Cook notwithstanding his previous statement that this offer was best that they would do. He however said that he was not authorized by his chief to consent to American management and that he doubted whether other countries concerned would consent to American flag during interim. His conversation with them in regard to proposed settlement had gone on theory embodied in offer above set forth.

9th. If it is desired we think we might be able to change date July 1st, subdivision 1 [i,] of offer, to some earlier date either 1st of April or 1st of a subsequent month.

10th. If we had British alone to deal with we are inclined to think that if matter was further pressed we might be able to succeed in having the ships surrendered to United States Navy instead of Shipping Board but in view of number of other countries concerned believe it would be difficult to have them reach any agreement to that effect. It is in our view most important that this tanker question should be settled as provided. It should be settled before ratifications are exchanged. This will of course be impossible if ratifications are exchanged Monday. It may be however that ratifications will not be exchanged until Wednesday. On the whole if, as we believe, there is no serious burden on Standard Oil in using these particular tankers for service to France, Italy and Belgium during limited period of time involved, we are strongly in favor of both propositions and settling this troublesome question. You will appreciate that, as pointed out in our previous cable,⁷² if no arrangements are made, the Reparations Commission when constituted is bound to proceed with fulfillment of duties imposed upon it under treaty, one of which is to demand and to receive German ships and the transfers giving title thereto. While we might be able to delay this action by Reparations [Commission] for a considerable time a further complication will certainly be injected into this situation just as soon as Reparations Commission which is a semi-judicial body begins to function.

11th. We assume from what Kemball-Cook said that Standard Oil in United States has received Kemball-Cook’s original proposal and has had opportunity to consider same. We deem it of utmost importance that instructions be sent us at once.

12th. Since preparing foregoing Captain Madison advises that he has again met Kemball-Cook who asked him to let us know that he feels quite confident that he can arrange that proposal will include no objections from French, Italians and Belgians and that Italians were in agreement this afternoon.

Wallace

70. B. A. Kemball-Cook, Director of Naval Sea Transport, British Ministry of Shipping; British representative on the Maritime Service, Reparation Commission.
71. Not printed.
72. Not printed.