Oil Company and its German subsidiary, but also the German Government, whose interests are affected, and the British Government, which under the existing interallied arrangement is entitled to the tankers themselves if they are deliverable.

6. There is indeed grave objection in principle to departing from the arbitral procedure formally agreed upon which in itself constituted a compromise assented to as an act of courtesy to the United States Government. Procedure by arbitration is likely to prove a matter of great practical importance on numerous occasions arising out of the Dawes plan and of interallied agreements; and if in such cases agreed procedure is to be modified ex post facto to suit the convenience of one of the parties to the case the whole method may easily be brought into disrepute.

7. His Majesty's Government trust that the United States Government will recognise the force of these considerations and will allow the arbitration now to take its course. No excessive delay need be anticipated and, as the case has already occupied several years, no serious inconvenience can reasonably be held to be involved by a further short delay in order to obtain the independent and impartial judicial decision which the parties have engaged themselves to accept.

I have [etc.]

AUSTEN CHAMBERLAIN

362.115 St 21/374: Telegram

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

WASHINGTON, March 31, 1925-1 p. m.

141. L-234 for Hill.46 Your L-371.47 Department considers that tanker case should now be permitted to go back to arbitrators for majority decision. Standard Oil Company indicates it is in accord with this view provided Sjoeborg 48 is to be third arbitrator as already agreed. Company expresses view that if Sjoeborg is unable to serve this Government should have voice in selecting arbitrator to serve in his place. It is noted that Reparation Commission in designating members to serve on Independent Tribunal with approval of American observer provided in its decision No. 1577 that the two arbitrators should name a disinterested person to serve in event that Lyon and Bayne" failed to agree upon a decision. It is

46

Ralph Waldo Snowden Hill, American acting unofficial representative on the Reparation Commission.

47

Not printed.

48

49

Dr. Erik Sjoeborg, Swedish lawyer, Stockholm.

Jacques Lyon and Col. Hugh A. Bayne, members of the independent tribunal for the Reparation Commission.

assumed that if Sjoeborg cannot serve Lyon and Bayne will appoint member to serve in his place, in which event Bayne should first consult Department through you.

KELLOGG

362.115 St 21/383

The Secretary of State to the Associate General Counsel of the Standard Oil Company (Wellman)

WASHINGTON, July 2, 1925.

SIR: I am in receipt of your letter of June 3, 1925,50 in regard to the Ex-D. A. P. G. Tankers. You state that the arbitration in this case was held under the arbitral agreement as amended, made at Paris by the Reparation Commission and the United States Government represented by Mr. Boyden, that when the case was submitted to the arbitrators the Standard Oil Company was represented by Mr. Montagu Piesse, who had been thoroughly in touch with the discussions leading up to the Tanker Agreement, and that the immediate question which you desire to have the Department consider is whether or not the United States Government shall be represented by counsel on the proposed submission of the Tanker case to the arbitrators when the third arbitrator is called in because of the disagreement of the two arbitrators who have heard the case.

This case was not referred to arbitration through a direct formal agreement between the United States and another foreign power, nor did the United States designate counsel to conduct the case before the arbitrators. The Department does not consider that it would be appropriate for it to designate counsel at this stage of the proceedings to serve with counsel for the Standard Oil Company in presenting the case to the tribunal constituted under the arbitral agreement when the third arbitrator is called in because of the disagreement of the two arbitrators before whom the case has been argued. It may be observed in this connection that in view of the apparent disagreement of the two arbitrators on the question whether the Standard Oil Company has failed to make good its claim to beneficial ownership of the tankers, it would seem that the decision will, in effect, rest with the third arbitrator upon a consideration of the facts and arguments already presented to the two arbitrators by counsel for the Reparation Commission and by counsel for the Standard Oil Company, and that no material advantage would in any event be derived from having counsel designated by the United States take up the case de novo.

Not printed.

Mr. Ralph Hill, who is familiar with the issues involved in the Tanker case, is, as you are aware, now Acting American Observer with the Reparation Commission and is keeping in touch with developments in the Tanker case. Mr. Hill will doubtless render to counsel for the Standard Oil Company all proper assistance short of acting as counsel for this Government, in presenting the case of the Standard Oil Company to the third arbitrator.

For your information it may be stated that the Department is in receipt of a telegram from Mr. Hill 51 in which he states that he has been endeavoring, through Mr. Bayne, but without success, to ascertain whether Mr. Sjoeborg will be in a position to serve as the third arbitrator. Mr. Hill added that he would see that the Department and your company are consulted in regard to the selection of the third arbitrator in the event that Mr. Sjoeborg cannot serve.

With reference to the inquiry contained in your letter under acknowledgment as to whether the arbitrators have filed their respective formal decisions in this case, it may be stated that the Department appears to have received no definite information as to what action the arbitrators may have taken after it became apparent that the case would probably be referred to the third arbitrator. However, Mr. Hill has been requested to submit a report on this point and upon the receipt of his reply the Department will communicate with you again. I am [etc.] FRANK B. KELLOGG

362.115 St 21/384

The Assistant Secretary of State (Harrison) to the Unofficial Representative on the Reparation Commission (Hill)

WASHINGTON, July 25, 1925.

MY DEAR MR. HILL: With further reference to the desire of the Standard Oil Company to have this Government designate counsel to serve with counsel for the Standard Oil Company in presenting the Ex-D. A. P. G. Tanker case to the third arbitrator, the Department encloses for your information a copy of a letter, dated July 3, 1925, from Mr. Guy Wellman, Associate General Counsel, Standard Oil Company, indicating the desire of that company to have the Department reconsider its decision not to designate counsel to serve with counsel for the Standard Oil Company in this case. A copy of the Department's reply, declining to modify its position in this matter, is also enclosed for your information.51

51

In this relation the Department deems it advisable to indicate to you the extent to which you may render assistance in the presentation of

the case of the Standard Oil Company to the Arbitral Tribunal when the third arbitrator is called in. The Department desires that you perform such duties in this case as were performed by Mr. Logan as American Observer. It is understood that these duties were in the main as follows:-Since the case of the Standard Oil Company was nominally presented on behalf of the United States it was understood that the American Observer had authority to place before the arbitrators any briefs or documents prepared by counsel for the Standard Oil Company in support of the contentions of the Company, and that the American Observer was authorized to act as the spokesman of this Government in any communications regarding the case which he was authorized by the Department to submit to the Reparation Commission. The American Observer also had authority from the Department to confer freely with the American arbitrator concerning the progress of the case and was encouraged to submit full reports to the Department in regard to developments in connection with the arbitration. You are authorized to take similar action.

The Department considers that you should avoid becoming interested in the case to such an extent as may give rise to the assumption that you are in effect acting as counsel for this Government in the presentation of the case. However, in view of your familiarity with the Department's attitude in this matter and your knowledge of the extent to which the Department has assisted the Standard Oil Company in its efforts to have the case fully presented to the Arbitral Tribunal, you may, in addition to your duties in the case as Acting American Observer, render to counsel for the Standard Oil Company such assistance as may be possible and proper with a view to having the company accorded a full opportunity to present its case to the arbitrators. I am [etc.] LELAND HARRISON

362.115 St 21/391.

The Assistant Secretary of State (Wright) to the Unofficial Representative on the Reparation Commission (Hill)

WASHINGTON, September 23, 1925. MY DEAR MR. HILL: The Department has received your letter of August 25, 1925, in further relation to the D. A. P. G. Tanker case.52 It concurs with you in your opinion that Mr. Sjoeborg must be considered, in view of the wording of paragraph 3 of Decision 1577 of October 14 [137], 1921, of the Reparation Commission, quoted in your letter under acknowledgment, as a member of the Tribunal, rather than as an umpire-and that the interested parties should be permitted, after the third member has joined the Tribunal, to file addi

"Not printed.

tional briefs and present oral arguments before the Tribunal thus reconstituted. The Department perceives no objection to your addressing a joint communication to the three arbitrators, requesting that an opportunity be given to the Standard Oil Company to submit, if it so desires, additional briefs or to present oral arguments to the Tribunal as now constituted.

As you accurately state, it is obvious that the arbitrators are vested with authority to construe paragraph 20 of Annex II of Part VIII of the Treaty of Versailles, and that their decision in the matter is apparently binding. In view of this fact, the Department does not deem it necessary at this time to determine the scope of the paragraph in question.

The Department does not consider, however, that it should undertake to advise the Standard Oil Company in regard to the competence of any attorney it may decide to retain to represent its interest in this matter. While the Department desires you to lend the Standard Oil Company every proper assistance in order that it may be assured a fair hearing in this controversy, and perceives no objection to your action in informally drawing the attention of Colonel Bayne and of the Standard Oil Company's representative to pertinent decisions and agreements which may have a bearing on the case, it considers, however, that the responsibility for the actual prosecution of the case must rest with the Standard Oil Company. The Department's refusal to appoint an attorney to take part in the proceedings in this case clearly indicates that it does not wish to assume any responsibility for the actual presentation of this case before the Tribunal. In view of the foregoing considerations, the Department does not deem it advisable to make any suggestions to the Standard Oil Company concerning the employment of additional counsel by that

company.

I am [etc.]

J. BUTLER WRIGHT

POLICY OF THE DEPARTMENT OF STATE REGARDING AMERICAN BANKERS' LOANS TO GERMAN STATES AND MUNICIPALITIES

862.51/2039

The Ambassador in Germany (Schurman) to the Secretary of State No. 295

BERLIN, September 15, 1925.
[Received October 1.]

SIR: In connection with previous reports from this Embassy concerning the placing of American loans in Germany, I have the honor