MOTOR TRANSPORT SALVAGE IN FRANCE
Then arose the determination of the “utilization value” of the movable stocks. This was estimated by taking the war cost of production, plus the cost of freighting the goods to France, and subtracting various estimated allowances—for natural deterioration, for expected losses from fire, theft, and other causes, for the saving to the United States in costs of merchandizing, labor, storage, insurance, interest on investment, and other overhead expense obviated by a possible bulk sale, for the fact that the stocks were widely scattered and had to be collected to be of use. The Commission consolidated these subtractions into a lump deduction of 25 per cent of the estimated value. Thus determined, the utilization value of both installations and movables was set at $562,230,800; and this was the figure carried by the Commission into the negotiations with the French.
From a photograph taken in France
INTERALLIED PURCHASERS
Left to right: Louis Loucheur, French Minister of Munitions; Winston Churchill, British Minister of Munitions; David Lloyd-George, Prime Minister of England; and Bernard M. Baruch, Chairman of the War Industries Board.
The French Government designated M. Paul Morel, the French Undersecretary of Finance for the Liquidation of War Stocks, to represent it in the negotiations with the Commission. On April 7, 1919, it was agreed in principle that France would buy the American installations, at any rate, at a price still to be fixed, the French assuming all charges and claims against the installations. The French were not so sure about the movables. M. Morel first proposed that the French Government pick out what it wanted and negotiate a price for the selection. But this would have skimmed the cream of the American property and left the A. E. F. with large quantities of unsalable materials which in all likelihood would eventually have become fuel for bonfires. This proposal was therefore rejected, and the French representatives were urged as a duty to buy all the movables in bulk, since the French people could use practically all the supplies. M. Morel, after consultation with his principals, eventually agreed to buy all the stocks at a price to be fixed.
Came the question then of the price. M. Morel’s first bid was 1,500,000,000 francs. Reckoning the value of francs then at ten to the dollar, that was an offer of $150,000,000, an offer firmly rejected. This was followed by other offers which our representatives could not entertain. The negotiations, which had begun early in April, continued throughout the spring and the fore part of the summer. M. André Tardieu and other eminent Frenchmen entered the conferences in July. On July 24 a tentative agreement was reached, and its terms were practically those of the bulk-sale contract, which was dated August 1, 1919.
France paid $400,000,000 for the property, the United States accepting in payment interest-bearing 10-year French bonds. Not all the property listed in the original inventory was involved in the sale. America made certain exceptions: (1) all animals (these were sold separately for a total of $29,016,506.59); (2) supplies previously sold out of the surplus stocks to France herself and other buyers to the value of $77,265,597.83; (3) military equipment returned to the United States, valued at $15,000,000; (4) supplies needed for the maintenance of the remnant of the A. E. F., worth $4,000,000; and (5) supplies worth $10,000,000 turned over to the American Red Cross as a gift. Thus, the utilization value of the original inventory was scaled down by these subtractions to approximately $427,000,000, and for this quantity the French Government paid $400,000,000—a fair return. It should be noted that in paying this price the French Government also canceled its claim for the payment of customs duties on the goods, and a conservative estimate placed the aggregate amount of these unpaid duties at $150,000,000. An even greater benefit to us was the fact that by the terms of the settlement France assumed all land claims which might otherwise have been pressed upon the United States by French nationals for years to come.
The bulk sale to France was the largest single transaction in the disposition of the A. E. F. surplus; but there were many other sales, some of them large. Goods went in these transactions to the governments of the Allies (France herself, outside the general sale, being a purchaser to the extent of $95,000,000), to individuals, companies, and syndicates in western Europe, to relief societies, to coöperative societies in the Balkans (these, being the economic organization of whole peoples, were not affected by political changes and sometimes seemed to have greater stability than the new governments themselves), to the governments of the so-called “liberated nations,” and to other purchasers. Although the United States Liquidation Commission made every effort to keep each transaction on the dollar basis, it was not always possible to do so, and payments were accepted in pounds sterling, in francs, in marks, and in other European currency, sometimes much depreciated. Yet, translating foreign money into terms of the dollar at average rates of exchange, and adding in the $400,000,000 received from France, we reach a total of approximately $800,000,000 received by the United States for the entire quantity of American military property left in Europe after the return of the expedition. It is roughly estimated that the property thus sold cost the United States $1,328,000,000. The salvage return, therefore, was practically 60 per cent of the cost. The miscellaneous sales transactions have practically all been closed, and the receipts have been covered into the Treasury. The French $400,000,000 is represented by bonds maturing in 1929.