Mr. Cuthell thereupon went to London to negotiate with the British. The British Government appointed and empowered a special commission, headed by Lord Inverforth, then the British Minister of Munitions, and including several eminent representatives of the British Government, among them Mr. W. T. Layton, a man of unusual ability and the one who took the actual lead for the British in the subsequent negotiations, to deal with the American claims. Meanwhile Mr. Cuthell’s principal assistants had arrived from the United States, bringing with them the now formulated statements analyzing the British war business in America and setting forth what our negotiators regarded as the proper charges for the British to pay in settlement. These assistants were Mr. Ralph W. Gwinn, who was to present the Liberty engine case; Mr. Miller D. Steever, in charge of the airplane lumber claim; and Mr. F. C. Weems, who had prepared the smokeless powder and cotton linters cases. The conferences began immediately, and such was the progress made that within ten days a complete agreement was reached, and the British war business in the United States was definitely terminated. The so-called Cuthell-Inverforth Agreement, which embodied the terms of settlement, was dated May 10, 1919.
The agreement, reached so speedily and with such complete mutual accord, terminated a vast business within the United States. From the United States as dealer, Great Britain had procured smokeless powder, picric acid, airplane lumber, and Liberty engines. As a partner of the United States, Great Britain participated in the pool of cotton linters which cornered the entire American supply for the benefit of the powder mills. England was also a partner with us in the project to build a chain of chemical factories in America to produce acetone, used in making dope for airplane wings. These factories never came into production, and the project was closed out with a loss of over $6,000,000, half of which loss the British were bound to share. We participated with England in the purchase of Australasian wool. The terms under which the wool contract was closed out were noted in a previous chapter of this volume.
The celerity with which these complicated war transactions were terminated was a distinct triumph in international negotiation. The British, when they entered the conferences, probably had no idea that they were to be rushed through to any such speedy conclusion. The conferences, in fact, began as if they were to drag along for an extended time. On the first day Mr. Gwinn gave a careful and clear exposition of the Liberty engine case, setting forth in detail just what we had done and to what extent the British ought to participate in the costs. Although, whenever any of his figures were challenged, the American delegation proceeded then and there to make adjustments apparently to the satisfaction of the British commissioners, yet when Mr. Gwinn had concluded, the Americans were unable to gain from the British any expression of opinion as to whether the total would be accepted, at least tentatively, as the British obligation. It was evident that the British expected to prepare and, later on, press an argument against the American statement. If this procedure were to be followed throughout the negotiations, it would be many weeks before the conferees could reach any final agreement.
This outcome of the first day’s negotiation was a disappointment to the Americans, but they determined to try again next day. The next morning Mr. Steever took up the airplane lumber case, and talked for nearly four hours. He went into a description of the picturesque phases of the northwestern lumbering enterprise—the felling of the spruce trees, the steel cables on which the great trunks slid down the mountain sides, the railroads built into hitherto inaccessible wildernesses. But punctuating his rhetoric were the hard figures of costs, expenditures, losses, deliveries, and values. The British had shared in this whole enterprise in the Pacific Northwest, the development of which had never reached the stage of turning out the airplane lumber at low prices. As Mr. Steever talked he invited interruption and objection, and the British delegates availed themselves of the invitation. The various objections were resolved as the case was unfolded. At the conclusion Mr. Cuthell asked for any further objections to the statement. But the British had exhausted their challenges during the presentation of the claim. The only objection raised was to British participation in the cost of certain dry kilns in which the export airplane lumber was not treated. This item was promptly subtracted from the claim’s total, and then Mr. Cuthell briefly urged that the column’s footing be accepted tentatively as the British obligation. If not to the surprise of the Americans, certainly to their extreme gratification, the British commission agreed.
That was the real victory, for it set the precedent for the entire settlement. Each day the Americans presented a new case; and each evening when the American representatives left the Hotel Metropole in London, where the conferences were held, a tentative agreement in that case had been reached. Finally all the claims were settled tentatively, except the Liberty engine claim. Once more the Americans pressed to have the original statement accepted, and it was. It was understood, however, that all figures were to be subject to verification by a British audit of the books of the War Department in Washington.
On the tenth day the Americans brought to the Metropole a tentative written agreement, embodying all the sub-settlements agreed upon. Mr. Cuthell then pointed out the considerable cost of a British audit of our books, the possibilities of friction arising over the presence of British auditors in our War Department over an extended period, and the likelihood, since all the American estimates were conservative, that the audit would not in any event greatly change the amount of the British obligation and might even increase it; and he suggested that it would be good policy for the British to accept the tentative figure as final and let it go at that. Lord Inverforth promptly agreed. That was cricket, as the English say.
The agreement fixed the cash liability of the British Government for its unpaid American war bills and its obligations arising from the termination of its American contracts and engagements at $35,464,823.10. Of this the Liberty engine item was the largest item—approximately $14,000,000. The British paid over $13,000,000 to satisfy all claims of the United States arising from the British purchases of airplane spruce, fir, and cedar. Its powder contracts accounted for nearly $4,700,000 of the settlement sum, wood distillates (principally acetone) for about $2,900,000, and its 2-per-cent share in the linters pool for the rest.
Practically all the settlements made by the Cuthell Board were carried as offsets to the American liabilities under the general foreign liquidation accomplished by the United States Liquidation Commission; but the British preferred to make their settlements separate transactions. Accordingly, on August 2, 1919, a representative of the British Treasury delivered to the War Department a check in payment of the British obligation under the terms of the Cuthell-Inverforth Agreement. This, however, was not a complete termination for Great Britain. That Government admitted full liability under numerous other, but small, claims which the War Department had not yet had time to prepare in detail. As invoices were subsequently presented to the British Government, these claims were promptly paid. The minor cases came to approximately $7,000,000.
Progress almost equally swift was made by the Cuthell Board in securing a settlement of the American claims against France. At first there was no official French agency empowered to make such a settlement. Mr. Cuthell and his assistants proceeded immediately to Paris after making the British agreement and importuned the French Government to designate a representative competent to conclude a settlement. There they were joined by Messrs. Charles B. Shelton, William Fisher, John H. Ray, Jr., and Harry A. Fisher, who brought with them from Washington the formulated statements of various American claims against the French. After several days’ delay Premier Clemenceau appointed the French Liquidation Commission, headed by M. Édouard de Billy, who had been with the French High Commission in Washington during the war and was therefore familiar with the French contracts in the United States. To France the War Department had sold picric acid, cotton linters, smokeless powder, airplane lumber, and Liberty engines. The French liability in these cases was finally fixed at $95,968,561.87, and a formal agreement admitting the liability was signed on May 29, 1919. There were other considerable claims against France, the statements of which had not yet been prepared. Later (September 9, 1919) Mr. Cuthell came to an agreement with M. Casenave, minister plenipotentiary of France in the United States, whereby the French admitted an additional liability of $64,910,352.92. Of this sum, $38,000,000 represented ocean freight charges upon war supplies bought by France in the United States and carried to France in American army cargo transports.
Two additional settlements with France, one terminating the French contract with J. G. White & Company for raw materials for airplane manufacture and the other terminating the French contract with the General Vehicle Company for the production of Gnome rotary airplane engines, increased the French liability by $2,117,785.34. These settlements were made in France by Mr. Monte Appel, chief assistant to Mr. Cuthell. The total liability arising from the American war business of France was therefore $162,996,700.13. This sum went into the general settlement agreement made with the French by the United States Liquidation Commission.