tankers represented [American] money whether or not they flew the German flag. It seems highly inequitable that to pay German reparations an ally should seize what really represents American capital. 3. If the Department concurs with suggestion of asking Kellogg to intervene I recommend that he await arrival of Wellman for an explanation of the equities of the case. Logan. WHITEHOUSE 362.115 St 21/351: Telegram The Acting Secretary of State to the Ambassador in Great Britain (Kellogg) [Paraphrase] WASHINGTON, October 14, 1924-2 p. m. 360. It is probable that Wellman of the Standard Oil Company of New Jersey will call this week to discuss the D. A. P. G. tanker case. These tankers belonged to German subsidiary of which practically all the securities and stock were owned by the Standard Oil Company. In February 1917, shortly before the United States entered the war, the company, to prevent seizure of tankers by Germany, endeavored to transfer voting shares valued at 9,000,000 marks to Germans. The American Alien Property Custodian held that the transfer was illegal. The Standard Oil Company retained, however, nonvoting shares valued at 21,000,000 marks and 31,000,000 marks of debentures, and even if the transfer of voting stock were legal, Standard's financial interest in the German company was vastly preponderant. Because of this preponderant interest, the United States, under an agreement of June 7, 1920, with interested Allied Governments and Reparation Commission, obtained temporary allocation of tankers pending decision as to their final disposition by a tribunal created under the agreement. Hugh Bayne, American member of the tribunal, and Jacques Lyon, the member appointed by Reparation Commission, have not been able to agree that the stockholders as beneficial owners are entitled to property of a corporation. They have agreed, however, to a compromise which they submitted to the Reparation Commission on June 28, last. The Standard Oil Company has informally accepted this compromise which the members of the tribunal considered would perhaps result in a more equitable solution of the problem than an attempt to apply strict, and often conflicting, rules of law to an involved international situation. Briefly, it envisages a 50-50 division between the company and the Reparation Commission of the proceeds of the sale of the tankers and their earnings. Logan advised that Bradbury was disposed to raise technical objections against approval of the proposed compromise by the Reparation Commission and had consulted his Government. He now reports receipt of a letter of October 9 from the British delegation stating that they have decided not to accept the compromise and that they believe that the referee should be called in as originally arranged. The Department considers that while possibly technically the two members of the tribunal had no authorization to make such a recommendation and the case should have been referred to the umpire for determination in the event of a disagreement between them, nevertheless a settlement of the nature they indicate appears clearly to come within the scope of the Tanker Agreement, and particularly within the spirit of paragraph G, which contemplates that the Standard Oil be paid compensation, even if it did not establish beneficial ownership, and even if, as is the case, Germany had paid some compensation to the German subsidiary. Logan has been instructed to send you a brief statement of the status of the case, also copies of documents mentioned above and Department's L-20 of December 12 88 and L-39 of January 12, last. After consulting these documents and after consultation with Wellman, you may, at his request, urge that the British Government reconsider, with a view to instructing its delegation on the Reparation Commission to approve the proposed compromise. In view of the obvious equities in the case and the undisputed preponderant financial interest of Standard Oil Company in the tankers, Department considers that Reparation Commission would be warranted in accepting the compromise proposed, thereby obviating necessity of referring case to the umpire for decision. GREW 362.115 St 21/358: Telegram The Ambassador in Great Britain (Kellogg) to the Secretary of State [Paraphrase] LONDON, October 21, 1924-4 p. m. [Received October 21-2:38 p. m.] 432. Referring to Department's 360, October 14, have studied documents supplied by Logan and have consulted Wellman. Because of absence of Prime Minister and indisposition of Sir Eyre Crowe, the Foreign Office suggested that I consult Niemeyer in the Treasury. I presented the case fully to him and stated that both my Government and Standard Oil Company would accept the compromise suggested by arbitrators. He stated his firm belief that as a matter of principle the agreed arbitration ought to be completed. Although there was further 83 Foreign Relations, 1923, vol. I, p. 213. discussion, there was no change of position. He agreed finally to discuss the case within the next few days with Sir John Bradbury, but I incline to the belief that both have their minds made up. Have informed Logan. KELLOGG 362.115 St 21/358: Telegram The Secretary of State to the Ambassador in Great Britain (Kellogg) [Paraphrase] WASHINGTON, November 8, 1924-2 p. m. 398. Your telegram 432, October 21. The Department did not expect favorable action from Bradbury as it understands he is inclined to raise technical objections. You may consider it advisable to bring the matter to the attention of the Foreign Office shortly after the new government is formed. Even if the attempted transfer of voting stock in the D.A.P.G. by the Standard Oil Company could be considered valid, it still owned securities of the subsidiary totaling nearly five times the value of the voting shares. Included in the securities it held were share warrants to over twice the number and value of the voting shares which were of exactly the same nature as the latter, except that they carried no voting right. Obviously, this voting right has no bearing upon the equitable or beneficial interest of the stockholder. The Department considers that the compromise suggested by the arbitrators is more than fair to the Reparation Commission and the interested Allied States, in view of this undisputed preponderant financial interest. It is believed that if the matter were referred to the umpire the Standard Oil might well expect to obtain a greater portion. In view of the equities in the case and because a settlement of the nature indicated appears clearly to come within the scope of the Tanker Agreement, and practically within the spirit of paragraph G, as indicated in Department's 360 of October 14, the Department is of the opinion that you may be able to persuade the British Foreign Office to instruct the British representative on the Reparation Commission to approve of the compromise. This would obviate the delay and expense incident to the reference of the case to the umpire for decision. The foregoing is to be read in connection with Department's 368 of October 21.89 Take no action which you feel might weaken the strength of any representations you may make in regard to our "Not printed. participation in the Dawes Plan annuities.89 Department leaves the matter wholly to your discretion. HUGHES DELIVERY OF THE GERMAN AIRSHIP “ZR-3" TO THE UNITED 811.348 Z 4/44 STATES " The Secretary of State to the Chargé in Great Britain (Wheeler) WASHINGTON, September 18, 1923. 91 SIR: The Department has been informed by the Secretary of the Navy that the rigid airship ZR-3, now building in Friedrichshafen, Germany, for the Government of the United States, will fly to Lakehurst, New Jersey, sometime between the fifteenth of November and the first of December, 1923. The probable route of the ship will be from Friedrichshafen across France to the Bay of Biscay, thence across Cape Finisterre, the Azores and possibly the Bermuda Islands. It appears that the route cannot be absolutely determined at this time, however, and it is possible that the airship may fly over The Netherlands, Belgium, Switzerland, France, Spain, Portugal and Great Britain before crossing the Atlantic Ocean. You are requested to advise the Government to which you are accredited of this proposed flight with a view to securing its permission for the airship to pass over its territory, and to report by cable. I am [etc.] For the Secretary of State: 811.348 Z 4/45: Telegram The Chargé in France (Whitehouse) to the Secretary of State [Paraphrase] PARIS, September 28, 1923-7 p. m. 393. Reference Department's unnumbered despatch of September 18, flight of Zeppelin to New Jersey. Before action is taken on instruction referred to, may I suggest that from here the safer course and one less likely to raise difficul 89a See pp. 1 ff. For correspondence concerning the construction in Germany of a dirigible for the United States, see Foreign Relations, 1921, vol. II, pp. 58 ff. 01 The same instruction, mutatis mutandis, was sent to the diplomatic representatives in Belgium, France, Portugal, Spain, Switzerland, and the Netherlands. ties would be to wait until the route is definitely determined and then to approach the Government or Governments concerned, taking the attitude of assuming as a matter of course that as necessary consequence of Allied Powers having consented to construction of our Zeppelin, authorization for its flight will be given. WHITEHOUSE 811.348 Z 4/47: Telegram The Ambassador in Belgium (Fletcher) to the Secretary of State BRUSSELS, October 1, 1923-1 p. m. [Received October 1-10:24 a. m.] 113. Department's unnumbered instructions September 18th last. Minister of Foreign Affairs states Belgian Government will grant desired permission for passage of airship mentioned over Belgian territory. FLETCHER 811.348 Z 4/49: Telegram The Minister in Switzerland (Grew) to the Secretary of State BERNE, October 10, 1923-6 p. m. [Received October 11-7:18 a. m.] 88. Department's unnumbered mail instruction of September 18th. Swiss Government authorizes voyage of ZR-3 across Switzerland without landing, on the following conditions. 1. The dirigible shall be subject to Swiss law respecting aerial navigation (Swiss regulations on the subject will be forwarded to the Department under cover of Legation's despatch number 1199 92). 2. The United States shall be responsible for any damage caused by the dirigible or by any person aboard. 3. In the event of a forced landing the captain shall immediately inform the Federal aerial office and the customs authorities through the local authorities and should see to it that the occupants and objects on board remain at the disposal of the authorities. 4. No photographs whatsoever shall be taken during the voyage. 5. The political department shall be notified several hours before the departure of the dirigible. Not printed. GREW |