Foreign Relations of the United States: Diplomatic Papers, 1945, The British Commonwealth, The Far East, Volume VI

740.00119 PW/10–2545

The Department of State to the British Embassy ³

Aide-Mémoire

The Department of State has considered the suggestion communicated orally by the British Embassy⁴ that the terminal date of the proposed tripartite agreement with Siam be September 1, 1947 instead of March 1, 1947. In conformity with that suggestion, this Government is agreeable to providing in that agreement for a second renewal of six months at the request of the British and American Governments. The suggested revised language of Clause 15 of the Military Annex, however, should it believes exclude reference to the United States or should be revised to read “… under the direction of a special organization the establishment of which the British and American Governments desire to negotiate with the Siamese Government …”

Unfortunately, there is one important matter upon which it is now apparent that there has been a misunderstanding. From the suggested revised language of Clause 16a of the Military Annex communicated to the Department on October 19 [16], it would appear that the British Government still proposes to impose on Siam a levy of one and a half million tons of sound white rice or its equivalent in paddy. In its Aide-Mémoire of September 8 the British Government expressed the view that Siam had “been able in war conditions to accumulate a very large surplus of a commodity essential to the life of neighboring territories”, and that it would be unjust if Siam were “allowed to unload these involuntarily hoarded stocks at the present scarcity prices”. The British Government felt that “Siam should contribute out of her abundance to the needs of other countries” and explained that she should be compelled to contribute one and one-half million tons of rice “unless in the meantime Siam makes an offer of a voluntary contribution of the same amount”. The Aide-Mémoire then continued that it was estimated that the amount of rice so accumulated and on hand was one and one-half million tons. This Government had understood from the foregoing that the levy was intended to be on the rice accumulated during the war, and that if in fact the stocks of rice so accumulated proved to be less than the estimate upon which the British Government apparently relied, the amount of the proposed levy would be correspondingly reduced. That understanding was supported by Paragraph 17 of the same Aide-Mémoire which drew a sharp distinction between future production and the million and a half tons of rice on which it was proposed to levy.

This Government is deeply perturbed that the amount of the proposed levy has not been reduced as, according to the best estimate presently available to this Government, the amount of rice accumulated during the war amounted to less than 800,000 tons. Furthermore, there is every indication that the present crop will be unusually small. The amount of the proposed levy would, therefore, equal not only all the stocks accumulated in war conditions, but in addition all the surplus of this year’s crop and a substantial part of next year’s crop. This Government, while as hitherto stated disapproving any levy, considers that a levy which exceeds in amount the stocks of rice actually accumulated in Siam during the war would be so burdensome upon the Siamese economy and have such wide reaching effect on the interests of this nation and other countries concerned that it most earnestly requests that the amount of the levy be reduced to the amount of stocks so accumulated either by acceptance of the estimate of 780,000 tons made by the Siamese Government prior to the negotiations, or by leaving the determination of the amount so accumulated to a finding by the Rice Commission.⁵

This Government feels that it should raise also at this time a question involving the implementation of the proposed British–Siamese agreement which is of direct concern to it. It is settled American policy that no country, not even the major aggressor nations, should be compelled to pay reparations which, either in amount or kind, will impair its ability to provide for the essential peaceful requirements of its civilian economy without external financial assistance. When it appears that a nation’s capacity to pay may not be adequate to meet all reparation claims in full in accordance with the foregoing standard, it is American policy to recommend that all claimant governments associate themselves to make a joint determination of capacity to pay and an equitable settlement of claims.

In the opinion of this Government it is doubtful that the Siamese Government can, from its own resources and without serious impairment of the essential civilian economy of Siam, provide compensation in full for all claims which Allied Governments may advance and in addition meet the proposed rice levy. Indeed, it seems by no means certain that the Siamese economy could provide full compensation even if the value of the proposed rice levy were to be credited against the claims for damage or losses to Allied property, rights and interests. Although the claims of the United States will be relatively small, this Government is directly concerned in the preservation for the Siamese people of an adequate standard of living and of an opportunity for economic progress without dependence upon immediate or future financial aid from any other government. It believes that the prompt and orderly stabilizing of the Siamese economy is an essential element in the establishment and maintenance of peace, stability and tranquility throughout Southeastern Asia.

This Government considers, therefore, that in implementing Paragraph B 3 of the Heads of Agreement and Clause 4 of the Military Annex an Allied Claims Commission should be established to pass upon the claims against Siam for losses or damages sustained by Allied property, rights or interests, to determine Siam’s capacity to pay such claims including, of course, the effect of the proposed rice levy, and the method and allocation of compensation to be made. Because the rice surplus accumulated during the war may constitute a major portion of such resources as may be available for meeting external claims, this Government believes that it should be recognized as constituting reparations in kind, and that its allocation should be determined by the Allied Claims Commission.

While the foregoing views relate to the implementation of the proposed agreement, this Government would suggest that possibly some difficulty in concluding the British-Siamese negotiations could be obviated by clarifying the suggested revised language of Clause 16 a of the Military Annex by substituting the words “an Allied Claims Commission” for the words “organization to be indicated by His Majesty’s Government in the United Kingdom”.

Washington , October 25, 1945.

3. Handed to Mr. Everson by the Chief of the Division of Southeast Asian Affairs on October 26.
4. On October 16. In a memorandum covering the conversation the Chief of the Division of Southeast Asian Affairs stated that Mr. Everson had handed him a proposed revision of Clauses 15, 16 (a), and 16 (b) of the Military Annex; and that he had informally given to Mr. Everson a copy of a draft of a proposed tripartite agreement promised in the Department’s aide-mémoire of October 9 (741.92/10–1645). Mr. Everson gave corrections of the proposed revision to the Chief of the Division of Southeast Asian Affairs on October 18 (741.92/10–1845).
5. In telegram 930, November 6, noon, from New Delhi, Mr. Yost stated that, at his request, the Strategic Services Unit had made a thorough reexamination of the exportable rice surplus in Siam and had reported that not more than 800,000 tons would be available from November 1945 to November 1946, including the holdover remaining from, the last two years (892.61317/11–645). The SSU was successor to the Office of Strategic Services for those functions of the latter inherited by the War Department.