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

741.92/11–1245

The British Embassy to the Department of State ¹³

Aide-Mémoire

His Majesty’s Government note that the United States Government agree that the terminal date of the proposed tripartite agreement with Siam should be 1st September, 1947, instead of 1st March, 1947, and that in conformity the United States Government are agreeable to providing in that agreement for a second renewal of six months at the request of the British and American Governments. His Majesty’s Government also note the suggested revision of Clause 15 (now 14) but inasmuch as the negotiations with the Siamese Government for the establishment of the special organization referred to may be protracted, and inasmuch as His Majesty’s Government consider that it is essential that the Siamese Government should be bound by the provisions of that clause forthwith, His Majesty’s Government accept the suggestion that reference in it to the United States of America should be deleted.

2. His Majesty’s Government are happy to confirm that it was from the outset their intention that the amount of the free contribution of rice should be limited to that of the accumulated stocks and that there Avas no wish to levy on future production. The figure of 1,500,000 tons was based on the best available estimates at a time when first-hand information could not be had. In fact His Majesty’s Government have reason now to believe that it fell short of reality. M. Seni Premoj informed a member of the Foreign Office that the accumulated stocks in the hands of the Siamese Government were of the order of one and a half million tons.¹⁴ More recently experts of the Siamese Rice Unit in a telegram dated 11th October, stated that investigations showed a likelihood that a surplus of 2,500,000 tons of paddy, which is the equivalent of 1,700,000 tons of rice, had been accumulated. This estimate has been confirmed in a subsequent telegram of October 29th.

3. His Majesty’s Government would therefore be very well content to accept the United States Government’s suggestion that the amount of the free contribution should be the exact surplus, which should be left to be determined by the Rice Commission after full investigation of the facts, but for the fact that if this course were adopted the Siamese would probably be prejudiced. They would therefore prefer to confine their demand to the original estimate of 1,500,000 tons.

4. As regards the compensation to be paid by the Siamese Government under Section B.3 of the Heads of Agreement and Clause 4 of the Annex, His Majesty’s Government note that it is the policy of the United States Government that reparations should not be exacted from a defeated enemy beyond his ability to pay without crippling his peacetime civilian economy. But they do not agree that to make the proposed contribution of rice and at the same time to pay the compensation provided for would unduly strain Siam’s economy or jeopardise the stabilisation of that economy, which, His Majesty’s Government no less than the United States Government earnestly desire to expedite and assist. The free contribution of rice involves a deprivation of a potential source of foreign exchange which in view of Siam’s well-known foreign exchange position she can face with equanimity. Apart from her substantial holdings of gold, the sterling assets of Siam at present in the hands of the United Kingdom custodian of enemy property, when ultimately released after all due deductions have been made, will undoubtedly still constitute very substantial assets. The claims for compensation will for the most part fall to be met in Siamese currency; and whilst it is of course impossible to assess in advance of proper investigation of the facts what will be the amount of these claims, His Majesty’s Government are confident that they will not be so large as to impose any intolerable strain on Siam’s internal economy. The obligation to restore British and Allied interests, with compensation as and when necessary, is one which has been provided for in all the Armistice terms in Europe and it is not one which His Majesty’s Government are prepared to forego in the case of Siam, which, in the last resort, is in a far stronger position as regards foreign exchange than any other defeated enemy, and has a good foreign exchange earning potential.

5. The suggestion that the free contribution of rice should be substituted as reparations in kind for all or part of the compensation Siam will be called upon to pay under Section B3 of the Heads of Agreement and Clause 4 of the Annex is therefore unacceptable to His Majesty’s Government. This contribution is regarded by His Majesty’s Government as implying no such penal connotation as does the word “reparations”. It is their intention that it shall constitute a special measure of reconcilement and aid by Siam towards those of the United Nations who suffered directly through denial of Siam’s rice exports during the war years; and that it should be allocated by agreement amongst the recipients in accordance with the criteria previously suggested.

6. As for the suggestion that claims for compensation should be brought within the scope of an Allied Claims Commission, which would be charged with the task of assessing Siam’s capacity to pay and of allocating compensation accordingly, His Majesty’s Government would not regard it as appropriate for any Government which is not in a state of war to be associated in determining either the capacity of an enemy to pay reparations or the equitable settlement of claims. They would naturally expect that such claims should rank for reparations ahead of those of States which had not been at war. The disposal of British claims against Siam would appear to be a matter for direct settlement between His Majesty’s Government and the Siamese Government.

Washington , November 12, 1945.

13. Handed by Mr. Everson to the Chief of the Division of Southeast Asian Affairs on November 13.
14. In a memorandum of June 27 of a conversation with the Thai Minister and various members of his staff, the Chief of the Division of Southeast Asian Affairs reported a statement by Phra Bhisal, adviser to the Minister on postwar relief and reconstruction, that “there are about 2 million tons of rice ready for export in Thailand”. (892.61317/6–2745)