CLAIM BY THE UNITED STATES OF THE RIGHT TO BE REIMBURSED OUT OF BULGARIAN REPARATION PAYMENTS FOR COSTS OF THE AMERICAN ARMY OF OCCUPATION IN GERMANY 462.00 R 294/316: Telegram The Ambassador in France (Herrick) to the Secretary of State [Paraphrase] PARIS, February 1, 1924—5 p. m. 54. L-86, from Logan.61 Reference Department's telegram December 13, 1923, 3 p. m.62 1. Am I to understand that if Bulgarian payment is to be credited to reparation account of Germany, I am to claim participation by United States therein under article 2 of Army Costs Agreement? 63 2. Personally I hold strongly to the view that if funds are not to be used for cost of Armies of Occupation in Bulgaria or for Bulgarian commissions of control, they must be credited on Bulgarian reparation account; and if they are so credited they must at the same time be credited to Germany's reparation account and so to reduction of the 132 billion gold marks. 3. See in this connection paragraph 11, Finance Ministers' Agreement, March 11, 1922,64 which relates to the German C bonds: 65 "The Powers receiving payments in cash or in kind from Austria, Hungary and Bulgaria, shall return to the Reparation Commission for cancellation series C bonds of the nominal value of these payments." 4. Even if reparation payment made by Bulgaria last October should be used for commissions of control or for Army of Occupation costs, some of the future payments to come from Bulgaria undoubtedly will be applied to reparation. It follows that in any event Department must take definite position on asserting right to participation for our Army costs in Bulgarian payments which are applied to reparations. 5. I fear that though the Bulgarian payment is at present in a blocked account, the blockade might be lifted suddenly, and the funds distributed in the customary fashion, and should that happen we would be faced with a fait accompli, which would provide the Allies with a strong tactical position. Past experience demonstrates amply that once cash has been distributed it is almost impossible 61 American unofficial representative on the Reparation Commission. Foreign Relations, 1923, vol. II, p. 190. 62 €3 Agreement of May 25, 1923; see ibid., p. 180. 64 British and Foreign State Papers, 1922, vol. cxvi, p. 612. 65 Quoted sentence not paraphrased. to recover it, but if I have clear instructions ahead of time on Department's attitude, I shall be able to take appropriate conservatory action when the blockade on the payment is lifted, or at any other time that seems most opportune so that our claim will be given full consideration. 6. I do not think the Reparation Commission is competent to interpret the Army Costs Agreement without a mandate from the powers and the United States. The powers might tacitly assent to the action of their delegates. If the delegates oppose claim of our Government, I would reserve all rights. The Department should be prepared on the next step to take, that is, either reference for arbitration to some personage or body, or diplomatic parleys with the Allied Powers. The latter course would, however, doubtless make for delay. Logan. HERRICK 462.00 R 294/316: Telegram The Secretary of State to the Ambassador in France (Herrick) [Paraphrase] WASHINGTON, February 7, 1924-7 p. m. 48. L 47, for Logan. Your L-86, February 1, 5 p. m. If, as appears to be the fact, the amount of reparation assessed against Germany also includes the amount for damages caused by her allies, then obviously any payments made by the latter on their reparation accounts should be set down as credits against Germany's obligations. This principle is implicit in article 1 (c), Schedule of Payments, and in paragraph 11, Finance Ministers' Agreement. The Department believes, therefore, that unless Bulgarian payments are used to cover Army of Occupation costs in Bulgaria, or costs of commission of control, or possibly the service of the external Ottoman debt referred to in the Treaty of Neuilly, article 135, they should be credited to the reparation account of Germany; and if these payments are credited in this way then the charge created in favor of the Government of the United States by paragraph 3 under article 2 of the Army Costs Agreement would apply when the agreement goes into effect. If Bulgarian payments are credited to the reparation account of Germany and should the question of American participation therein arise, the Department desires, in accordance with the facts set forth in the above paragraph, that you support our right to participation before the commission in such manner as to indicate that this Government has taken it for granted that the Army Costs Agreement would be held to apply, and that a share of the Bulgarian payments would be set aside for payment to the United States when the Army Costs Agreement is finally ratified. The Department agrees with you that the Reparation Commission is not competent to settle any disputed question of interpretation of the Army Costs Agreement without a specific mandate from the signatory powers, and should the commission oppose our participation under that agreement in Bulgarian reparation payments credited to Germany, you should, as you stated, reserve all rights for the United States. If an attempt should in the meantime be made to release the blocked Bulgarian account, you may take appropriate steps to prevent this, and advise Department promptly. HUGHES 462.00 R 294/335: Telegram The Ambassador in France (Herrick) to the Secretary of State 261. [From Logan.] PARIS, May 14, 1924-noon. 1. Supplementing my L-86, February 1. By an agreement signed March 28th, 1924, between the Bulgarian Government and the representatives of Great Britain, Italy and France, subject to ratification of all four Governments, it has been stipulated that the cost of the Armies of Occupation in Bulgaria shall be fixed at an all inclusive sum of 25 million gold francs and that payment there for shall be spread over a period of 10 years commencing on September 30, 1924, with a payment of 1,250,000 gold francs. The Bulgarian Government assigns the revenues of the customs to discharge of these costs. 2. The agreement has been submitted to the Reparation Commission for its information by the inter-Allied commission at Sofia and the inter-Allied commission expresses the view that the agreement will satisfy the proviso of that part of [Reparation] Commission's decision number 2493 66 which preserves the priority in favor of army costs upon the semiannual payments which are being made by Bulgaria in adjustment of her reparation obligations "unless and until claims of the creditor powers are otherwise provided for." 3. If the agreement is ratified, it seems almost certain that Bulgaria's other payments will be wholly free for application to reparations and consequently, as hitherto outlined, this will involve a credit on Germany's reparation account by reduction of C bonds. Finance Service of commission is now working on question of proper distribution amongst powers. Probable that some powers which were not signatories to or adherents of Army Costs Agreement will be allocated part of this money. Seems likely that United States can only claim participation in sums received by those countries who were signatories to or adherents of Costs Agreement. 4. When the subject of distribution comes before commission, I shall take necessary action to carry out instructions of the Department in Department's L-47, February 9th [7th], concerning our claiming participation Bulgarian payments. Logan. HERRICK 462.00 R 294/344: Telegram The Ambassador in France (Herrick) to the Secretary of State PARIS, June 27, 1924-5 p. m. [Received 7:10 p. m.] Question of repartition 319. L-181 [from Logan]. Your L-47.7 ing of Bulgarian payments discussed by commission today as presented in annex 2099 A B C D mailed to the Department June 2nd.68 Commission decided request delegates to refer this question to their respective Governments. In view of your L-47 and relation to question to [of] army costs I made following statement: "The report of the Finance Service now under consideration states that it has not taken into account the possibility of any claim being made by the United States Government against the Bulgarian payments since the agreement of May 25, 1923 has not yet been ratified. I permit myself to call the attention of the commission to decision number 2751 of December 16, 1923 by which the commission took conservative measures and created a special blocked account into which was to be deposited that proportion of all accruing cash payments which are available for the reimbursement of the American Army costs. Pursuant to the terms of that decision, therefore, it would appear that even though the American Army Cost[s] Agreement has not yet been ratified, the proper proportion of all accruing cash payments applicable to those costs under the terms of the agreement should be placed in this account. Upon the instructions of my Government I desire to say that the Bulgarian payments are considered by it as applicable to the American Army costs pursuant to the ratification of the pending Army Cost[s] Agreement, particularly paragraph 3 of article 2 thereon. If credited to Bulgaria's reparation account as now contemplated it would seem that they must simultaneously and automatically be applied to the reparation account of Germany and as such fall within the scope of Army Cost[s] Agreement. Ante, p. 153. I desire to make the position of the United States a formal matter of record and to state that the Bulgarian cash payments if credited on Germany's reparation account should in the proper proportion be placed in the special account created by decision 2751 when they are released from the account where they now are. I note the decision just taken by Reparation Commission and I will be obliged if the delegates in referring this matter to their respective governments would at the same time call the attention of these governments to the remarks which I have just made. Furthermore I would appreciate it were the decision of the commission to be so worded as to contain an invitation to the delegates to follow the course I have just suggested." The commission decided accordingly. Logan. HERRICK PROPOSALS FOR A COMPROMISE SETTLEMENT OF THE DISPUTE BETWEEN THE STANDARD OIL COMPANY AND THE REPARATION COMMISSION OVER THE DISPOSAL OF THE D. A. P. G. TANK SHIPS" 362.115 St 21/337: Telegram The Secretary of State to the Ambassador in France (Herrick) WASHINGTON, January 12, 1924-6 p. m. 15. L-39. For Logan. Your L-69, December 29.70 1. While Department agrees that stockholders have no legal title to the assets of a corporation, it is entirely unable to concur in intimated decision of Tribunal that stockholders have no equitable or beneficial interest in corporation's assets. Not only have text writers and the courts repeatedly recognized the beneficial interest of shareholders in corporation's assets, but governments have repeatedly lent diplomatic assistance to support such beneficial interest. As to the position of governments in this respect, see cases cited in Section 20, pages 58 to 74 of first brief filed with Tribunal by Standard Oil. See quotations in Section 19 from Morawetz and German Text Writers. See also German and American cases cited in that section, and particularly the opinion of the Supreme Court in Bacon v. Robinson [Robertson], page 46, wherein the court in part stated that it was the tendency of the courts of the United States and Great Britain: "to concede the existence of a distinct and positive right of property in the individuals composing the corporation, in its capital and business, which is subject in the main to the management and control of the corporation itself; but that cases may arise where the 60 For previous correspondence concerning disposal of the D. A. P. G. tank ships, see Foreign Relations, 1923, vol. 1, pp. 209 ff. 70 Ibid., p. 217. |