In the autumn of 1920 General G. W. Burr, the Director of Purchase, Storage, and Traffic after the armistice and a member of the War Department Claims Board, went to England to close up all the outstanding claims existing between the United States and Great Britain as a result of the war. The outcome of his negotiations was the Burr-Niemeyer Agreement, which tied up all loose ends and brought about a final termination of the war business between the two nations. All pending claims were brought into one lump-sum settlement, under the terms of which the United States paid to Great Britain the sum of £2,946,511 2s 8d. This sum settled all the miscellaneous and minor claims noted above; settled, too, the debt owed by the United States to the British for the maintenance of our Siberian Expedition; and settled all other claims, including the hidden-loss claim and a British claim for reimbursement for various “overhead” inspection and storage charges. The settlement figure was much under what the British had originally claimed. In this settlement the hidden-loss and “overhead” claims were paired in a single item which accounted for approximately £1,500,000 of the total paid by the United States. The Burr-Niemeyer Agreement was dated November 23, 1920.
One general claim set up by the British Government against the United States the Liquidation Commission rejected. After we had paid to Great Britain the bill rendered for the transportation of our troops and supplies in England, the British Government rendered a supplementary bill for the same services. During the war Great Britain gave guaranties of income to the British railways, and in settling with the railroads the British Government granted to them an increase in military passenger rates, an increase which was retroactive to April 1, 1919. The British asked us to pay our share of the retroactive increase. This was refused on the ground that by the same token we could hold the British to their share of the loss sustained by the American Government in its operation of the American railroads by the United States Railroad Administration, since our roads had hauled great quantities of British supplies. To open up closed settlements because of retroactive agreements would open up a Pandora’s box of troubles for both nations.
Thus the international bargaining went on, back and forth, give and take, broad principles of settlement prevailing rather than the minute and individual merits of particular items, both sides accepting estimates and unaudited totals and each relying upon the good faith of the other. Thus this tremendously involved and intricate business was closed up with dispatch and amiability. As a rule the A. E. F. in its purchases had dealt with governments, with which such liquidation methods could be adopted; but there were a few relatively small contracts made directly with private individuals in England, France, Italy, Portugal, Spain, and Switzerland. These contracts were canceled outright in the full knowledge that we should have to pay indemnities. In the settlement of such contracts the United States Liquidation Commission acted for the A. E. F. much as the War Department Claims Board did for the producing bureaus at home—as a supervisory body, approving the settlements made by the various services of the A. E. F. and paying off the contractors. In all, indemnities were paid for the cancellation of some 450 contracts in Europe. In making these settlements, the United States benefited greatly by the depreciated rates of exchange against the currencies of several of these nations, since all indemnities were paid by the United States in the currency of the countries in which the claims arose. Expressed in dollars at par, it cost the United States $3,568,653.23 to cancel the miscellaneous European contracts, but the reduced exchange rates effected a considerable saving under that figure.
It is much easier to detect the failings and peculiarities of aliens than it is to recognize our own shortcomings; and if in these pages we have exulted somewhat over the successes of our delegates in checkmating the designs of our European associates, this is not to be taken as any boast that we ourselves were too disinterested and altruistic to overlook the main chance for ourselves. The truth is that, although all the belligerents were in the field primarily to win a victory of arms, not one of them entirely lost contact with the counting room. This was clearly shown in the American arrangements for the supply of French artillery.
The numerical expansion of the A. E. F. in the spring and summer of 1918 resulted in a greatly increased demand by the A. E. F. for French artillery and ammunition. America supplied schedules of the raw materials which she could furnish, and the French made estimates of the numbers of guns they could deliver monthly to the A. E. F. But this was all understanding and mutual agreement—no formal contract was drawn. When Mr. Stettinius reached Paris in the summer of 1918, he immediately began to press to get this agreement down in black and white, so that America might know exactly what her obligations were. At that time, of course, there was no thought that the war would end within the year. About the 1st of November, however, it became evident that an armistice was drawing near, and immediately the Americans grew lukewarm on the subject of a formal contract. The reason was evident. Under the terms of a formal contract, America’s termination obligations would be questions of fact; with the affair left as an unwritten agreement, our obligations would be questions of equity, to be negotiated, and we were likely to emerge from such negotiations in better case financially than we should be if held by the set and rigid conditions of a formal contract.
Nevertheless, the United States did not seek to evade its just obligations under the French ordnance agreement. France had spent large sums of money in expanding the industry to take care of the expected American consumption, and the money so spent was a proper charge against the United States in any settlement. Immediately after the armistice Mr. Stettinius ordered production stopped on our orders; but this the French, for domestic, social, and economic reasons, were unable to do; and at first they were inclined to insist that we should accept and pay for a large quantity of artillery produced during a gradual termination of the industry. Mr. Stettinius successfully maintained the position that this post-armistice production was undertaken purely in pursuance of an internal policy of the French Government and that by no stretch of logic could it be entered as a proper war charge against the United States. Mr. Stettinius then went on to conduct the settlement negotiations, and these were about complete when the Liquidation Commission arrived to inherit the transaction and to draw the final settlement contract.
As in the settlement of the British artillery contract, the American negotiators accepted guns and ammunition produced after the armistice by the French; and they did it in complete consistency with the position and policy defined in the preceding paragraph. The armistice found great numbers of French guns in process of manufacture for the A. E. F. The United States was obligated to accept and pay for this unfinished material. After the inventory of it had been taken, the Liquidation Commission suggested that in lieu of the unfinished parts the United States accept their value in full completions and that the production of all other guns be canceled without charge to the United States. This alternative, allowing, as it did, a measure of post-armistice production in the French mills, the French Government quickly accepted and, in carrying out the terms of the subsequent settlement contract, delivered to the United States 944 75-millimeter gun units, 700 155-millimeter howitzer units, and 198 155-millimeter gun units, all with limbers and with additional parts as spares. For these the United States paid 117,501,887.45 francs.
The French agreed to a similar plan in canceling the construction of airplanes and engines for the United States. This construction had been undertaken under a formal contract, signed by General Pershing. The contract contained no cancellation clause, but the French Government had provided for cancellation in its subcontracts with the French producers. Under the terms of the contract large numbers of airplane cellules (airplanes without engines), engines, and other aëronautical supplies were in production on the day of the armistice. In lieu of unfinished parts, the French agreed to deliver their equivalent (in value) in finished equipment. Under a preliminary agreement the United States acknowledged a cancellation debt of 167,667,761 francs. Of this, about 23,000,000 francs represented cancellation charges and the rest money to be paid for completed materials, the schedule of which included 3,568 cellules and 3,979 engines. This preliminary agreement, however, was modified later by the French Liberty engine settlement negotiated by the Cuthell Board. Under this settlement France agreed to accept and pay for Liberty engines still to be delivered, to the value of $19,530,000, and in addition to pay nearly $2,000,000 in cancellation indemnities.
This, then, was the situation. We were bound to accept and pay for a large number of French airplanes and engines which we did not need. The French were bound to accept and pay for a large number of Liberty engines which they did not need. We could, however, use some of the French planes and engines, and the French wanted 500 Liberty engines. Therefore we agreed to deliver the 500 engines and to accept French materials up to their value, and then to offset the excess number of Liberties provided for in the engine settlement agreement against the excess of French air materials named in the French aircraft settlement contract. This left a surplus of Liberty engines with the A. E. F., but these were delivered to the British to fulfill our obligations under the British Liberty engine settlement; and a few of the engines were sold to Poland.
The settlement with France for our use of her railroads during the war was so complicated that it would not be profitable to go into the details here. The intricacy of the problem was due to the fact that, while 2,000,000 Americans in France had used the French railroads for every transportation need,—and our forces fought farther from their expeditionary bases than did any other army in France,—we, in turn, had supplied to the French railroads locomotives, cars, crews, repairing, coal, track construction, and many other items. The Liquidation Commission itself did not attempt to go into these details, but turned the whole transaction over to a special section headed by Colonel F. A. Delano, the Deputy Director General of Transportation for the A. E. F., who had formerly been president of the Wabash Railroad and a member of the Federal Reserve Board. The upshot of the settlement was that we acknowledged a debt to France of 434,985,399.73 francs after all our claims had been set off against the French claim.