[Communicated to the Council j^o. Official: O. 182. M a 100. IÇ35- VII.and the Members of the League.]

Geneva, May gth, 1935.

LEAGUE OF NATIONS

CLAIM MADE BY THE FINNISH GOVERNMENT WITH

REGARD TO FINNISH VESSELS USED DURING THE WAR

BY THE GOVERNMENT OF THE UNITED KINGDOM

COMMUNICATION FROM THE FINNISH GOVERNMENT

Translation.] Geneva, May 3rd, 1935.

To the Secretary-General.

Acting on instructions from m y Government, I have the honour to request you to be good enough to have the following documents circulated to the Members of the Council:

Page

1. Finland before the Declaration of Her Independence....................................................... 1

2. The Right of the Russian Authorities to requisition Finnish Vessels during the W ar 2

3. History of the Requisition of the Finnish Vessels in the United Kingdom during theW a r ........................................................................................................................................ 4

4. Finland after the Declaration of Her In d e p e n d e n c e ........................................................ 85. Attem pts by Finland to secure Compensation for the Use of the Vessels .................. 96. The Peace Treaty between the Republic of Finland and the Russian Socialist

Federal Soviet R e p u b l i c ................................................................................................. 107. Economic and Financial Aspects of the Requisitioning of the Finnish Vessels . . . 118. Final O bservations.................................................................................................................. 14

(Signed) Rudolf H o l s t i .

1. FINLAND BEFO R E TH E DECLARATION OF H ER INDEPENDENCE.

1. The real character of the dispute with regard to Finnish vessels used during the W ar by the United Kingdom Government is certainly difficult to understand without an adequate knowledge of the political status of Finland and, in general, the political conditions of th a t country before and during the War.

2. The fact that, from the standpoint of international relations, Finland, until 1917, formed p a rt of the Russian Empire has resulted in insufficient attention being paid to her status with regard to Russia as a self-governing Grand-Duchy. She had her own Constitution and this could not be modified without the consent of her own legislative organs. The Emperor, as hereditary Grand-Duke of Finland, was a constitutional monarch and not, as in Russia, an autocrat. Finland had her own Diet, her own Government and her own administration, financial organisation, Customs, army, State railways and currency (markka = 1 gold franc). The rouble circulated in Finland only in the same way as any other foreign currency. Russian subjects were not Finnish citizens. In order to obtain civil rights, they had to be naturalised. In general, the economic life of Finland, up to the outbreak of the W ar, developed in quite a different way from that of Russia. There was no Russian capital invested in Finland, and Finnish exports were readily disposed of in the countries of Western Europe.

S . d . N . 7 6 0 ( F . ) 705 (A .) 5 /3 5 . I m p . K u n d i g . Series of League of N ations P ublications

VII. POLITICAL

1935. VII.8.

3- In short, in their internal life, the Finns regarded themselves as free citizens of a free country. When they went abroad, they carried passports issued by the Finnish and not by the Russian authorities. Similarly, the Finnish mercantile marine, indeed, sailed under the Russian flag, but, on the other hand, Finland had her own shipping laws, her own registers, etc. The bills of lading and other documents carried by vessels always mentioned their Finnish nationality. Finnish shipowners had their own agents everywhere. The chaplains of missions to seamen stationed in the more im portant ports discharged, in practice, certain duties which were elsewhere performed by the consular service. The officers and crews of Finnish ships were consequently not very often in contact with the Russian consuls. I t should be added that, in the most im portant Russian consulate, the Consulate-General in London, there was a Finnish consular agent in charge of m atters connected with Finnish shipping, etc.

4. This historical background must not be overlooked in any consideration of the general conditions obtaining when, in 1916 and 1917, the Finnish ships entered the British service.

5. When the Great W ar broke out, transit traffic between the United Kingdom and Russia by way of the Scandinavian countries and Finland had to be arranged for. I t is a very characteristic fact that Russia by no means hastened to entrust this im portant m atter to her own authorities or her own traders. On the contrary, indeed, the Finns were, in this connection also, allowed to act in complete independence. On October 25th, 1915, the Finnish Government authorised the firm of Lars Krogius & Co. to organise the whole of this traffic, in collaboration with its British and Scandinavian agents. Hundreds of thousands of tons of British goods, war supplies, etc., were thus conveyed from England to Russia, and Russian exports to the United Kingdom were no less considerable. Owing to difficulties of communication, these m atters were frequently arranged by contact with the British authorities on the one hand, and British agents and captains on the other hand, the la tte r sometimes acting independently of the shipowners themselves.

6. The following fact, too, furnishes a good illustration of the general conditions obtaining during the War.

In the Russian Baltic ports there were twenty-two British cargo vessels which were urgently needed by their owners. If collaboration in regard to shipping between the British and Russian authorities had indeed been as intim ate as the United Kingdom Government now claims, what could have been more natural than to ask the Russian Government to place these vessels in safety in some Scandinavian or British port? In point of fact, what happened was just the opposite. I t was certain Finnish firms th a t were asked by the British Government to take charge of all these vessels and transfer them to a Swedish port.

7. Such was the situation when, in 1916, the first vessels outside the Baltic were requisitioned. W hatever may be said, it is still true, many years later, th a t the owners of these vessels, bearing in m ind their intimate collaboration with the British authorities, had good grounds for considering th a t the requisitioning of their vessels in British ports, a t the direct instance of the British author­ities, was nothing more than another phase of their collaboration, and that the part played by the Russian authorities in this particular case, if ever they played any part a t all in it, had no practical significance.

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2. TH E RIGHT OF TH E RUSSIAN AUTHORITIES TO REQUISITION FIN N ISHVESSELS DURING TH E WAR.

Reference has been made above to the fact that, in law, Finland possessed a mercantile m arine distinct from th a t of Russia. I t is, however, a generally adopted rule tha t the nationality of any vessel is everywhere normally determined in accordance with the laws of the country to which it belongs—in other words, all other countries recognise in this connection the laws of the country to which the vessel belongs. This rule is regarded as being so natural th a t it is frequently not even expressed in arrangements on this subject between different countries. In the T reaty of Commerce and Navigation which was concluded on December 31st, 1858, between Great Britain and the Russian Empire and which was still in force during the World War, however, care was taken to provide explicitly, in Article 9, th a t:

" All vessels which according to the laws of Great Britain are to be deemed British vessels, and all vessels which according to the laws of the Empire of Russia are to be deemed Russian vessels, shall for the purposes of this Treaty be deemed British and Russian vessels respectively.”

In view of the special status of Finnish vessels, as governed by the laws of the former Grand- Duchy of Finland, explained more in detail below, the strict application of this provision would, however, have resulted in excluding all Finnish vessels from the sphere of the treaty in question. A special article—viz., Article 19—was therefore added stating tha t:

“ The stipulations of the present Treaty shall be applicable to all vessels navigating under the Russian flag, without any distinction between the Russian mercantile marine, properly so called, and th a t which belongs more particularly to the Grand-Duchy of Finland.”

All Finnish vessels, indeed, flew the Russian flag but, in other respects, they were entirely distinct from Russian vessels, as the following details clearly show.

From the time of the union of Finland as a self-governing Grand-Duchy with the Russian Empire, there was always a clear distinction between the Russian mercantile marine and the Finnish mercantile marine.

This is proved by the fact that, from the earliest days of tha t union, merchant vessels belonging to shipowners domiciled in Finland and registered in Finland were not authorised to engage in sea-borne traffic either between the ports of the Russian Empire in the Baltic or between the Russian ports of th a t sea and the Russian ports of other seas within the limits of the Russian Empire—e.g. the W hite Sea, the Black Sea, the Sea of Azov, and the Russian coasts of Eastern Asia.

Thus, the Finnish mercantile marine was excluded from regions where there was an enormous sea-borne traffic which it might otherwise have found extremely profitable. All the efforts made during the last decades of the nineteenth century, whether by private individuals or by the Finnish Government, with a view to obtaining the right to engage in sea-borne traffic between the ports of the above-mentioned seas—this traffic being known as “ Russian coastal traffic ”—were met with a blank refusal to consider the m atter.

In this respect, however, a slight change occurred when the Finnish Law of November 6th, 1889, on Industry and Commerce, gave Russian vessels the right to engage in coastal sea-borne traffic between ports situated on the coast of the Grand-Duchy of Finland. In return, by the Ordinance of January 29th, 1897, promulgated by the Emperor Nicholas II, Grand-Duke of Finland, Russia made a concession by granting Finnish vessels the right to engage in sea-borne traffic between the Russian ports of the Baltic—this being, in actual fact, confined to the ports of the south coast of the Gulf of Finland, St. Petersburg, Libau and the intermediate ports.

This is sufficient, not only to prove conclusively the extent to which Finnish shipping was restricted by comparison with the Russian mercantile marine, but also to show that, during the time when Finland, as a self-governing Grand-Duchy, was united to the Russian Empire, a very clear distinction was drawn between the rights enjoyed by Russian vessels and by Finnish vessels respectively.

To ensure still further the maintenance of this discrimination, both Russia and Finland (Ordinance of November 21st, 1889) promulgated Ordinances to the effect th a t Russian vessels were to be registered in a Russian shipping register in Russian ports and Finnish vessels in a Finnish shipping register in Finnish ports.

Does not the foregoing constitute conclusive proof—in clear contradiction of the case put forward by the United Kingdom Government—th at the expression “ ships of the Russian Mercantile Marine ” employed in the above-mentioned agreement, dated May 4th, 1916, between Great Britain and Russia, could not apply to Finnish vessels ?

I t need only be added that, even quite apart from any knowledge of the above-mentioned laws, it was, in practice, easy to distinguish between Finnish and Russian vessels, or, rather, it was difficult to confuse them. Every Finnish vessel, in fact, had to be visibly marked with a crown and the letters “ F.S.” in Latin characters, whereas the Russian vessels used their own alphabet. In accordance with the regulations in force, moreover, all ship’s papers carried by Finnish vessels had to show their Finnish nationality ; even their bills of lading indicated their Finnish nationality. I t is therefore impossible th a t anyone could have had to deal with Finnish vessels without being aware of their nationality. I t is thus not surprising that the English and Russian authorities who, during the War, were concerned with questions connected with the requisitioning of the vessels in question, constantly referred in their correspondence to " Finnish ships ” .

But the objection m ay perhaps still be raised th a t the British authorities, and also the members of the Russian Government Committee in Londôn, whilst being aware of the distinct nationality of Finnish ships, were not acquainted with the legal restrictions regarding the possibility of their being requisitioned. In reply, it must be stated tha t ignorance of the relevant laws is not, in general, recognised as a legally valid excuse. But, even apart from this consideration based on principle, it should be noted that, a t all events in the case of the Russian authorities empowered to deal with these m atters, any such hypothesis would, per se, appear to be inconceivable in actual practice, in view particularly of the fact that, in addition to all the laws mentioned above, the Russian Emperor had, on Ju ly xoth, 1914, promulgated a law which explicitly provided that Russian authorities were empowered to requisition only Russian vessels properly so called, and not vessels belonging to F inland unless a special law was promulgated, in accordance with the Finnish Constitu­tion, giving a similar authorisation in respect of Finnish vessels (Appendix I). Now, no such law has ever been enacted. Accordingly, the Russian m ilitary authorities in Finland did not, of their own authority, requisition a single Finnish ship, but, in agreement with the various Finnish authorities, they set up a t Helsingfors a special mixed committee which, by friendly negotiation in each individual case, reached a decision as to the possibility of requisitioning any particular Finnish vessel for Russian military purposes, and determined the conditions attaching to the compensation to be paid to the respective shipowners. The rules laid down for this committee included the following points, to which we would direct particular attention, viz.:

That the Russian Law on Requisitions, dated Ju ly 10th, 1914, was not to apply to Finnish vessels ;

That, in virtue of the rules laid down for it, the committee was empowered to requisition only vessels th a t were registered in a Finnish shipping register and were stationed in Finnish ports. This committee, therefore, could not deal with any Finnish vessels other than those which were in the ports of Finland. In other words, the Russian authorities had themselves

to exercise the powers necessary to give practical effect to requisitions in the ports in question. As already stated, the m ilitary authorities nevertheless, on one occasion, wished, at the instance of the British authorities, as was afterwards learned, to requisition a Finnish vessel at Stock­holm. As the shipowners objected, however, the Russian authorities, recognising the limits of their power, had to abandon the idea of requisitioning this vessel.

The procedure, which is very detailed and precise in its form, that was followed by the mixed Finnish-Russian committee in regard to requisitioning is, in a general way, made clear in the docu­ments. When a vessel had been found to be suitable for certain special purposes, a detailed description, inventory, etc., was drawn up and the value of the vessel was determined—i.e., the amount of compensation to be paid in case of loss, the charter cost, the pay of the crew, etc., together with the dates on which these sums were to be paid.

At the expiration of each payment period—usually a m onth or a fortnight-—the committee gave the owner an order on the Russian State Treasury a t Helsingfors, where payment was made immediately and without any difficulty. This was, moreover, the case, as the Finnish Govern­ment is aware, in regard to payments for Russian vessels requisitioned under the Russian Law of Ju ly io th , 1914.

Some th irty vessels belonging to Finnish owners who are parties to the present claim were requisitioned in this way by the Finnish-Russian committee, and all these owners, in conjunction with a few other Finnish owners whose vessels were also requisitioned, are in a position to assert th a t the amounts due to them were, in every respect, regularly and fully paid until about a fort­night before the time when the Bolshevik revolution broke out in Finland and the Russian State Treasury ceased operations in Finland. Thus, the losses suffered by Finnish shipowners as a result of the requisitioning of Finnish vessels in Finland consist only of amounts representing the charter cost for a fortnight.

The Finnish Government ventures to draw attention to the contrast between this treatm ent and th a t which the Finnish owners received from the British Government in regard to their vessels which, having been taken and used by tha t Government, were in part lost in the service of the United Kingdom.

From what has been said above, it is clear that, if any Russian authority failed to recognise all the provisions and all the facts connected with requisitioning, the explanation is to be found only in its lack of competence in regard to m atters of this kind in particular.

As regards the Russian Government Committee in London, more particularly, this Committee, according to its own statutes, had no power to requisition vessels, even those of Russian nationality (Appendix II). This Committee was in London for the purpose of organising Russian purchases in England and the transport to Russia of the goods bought. And if the Committee failed to understand the limits of its powers on the basis of its own statutes, it should at least have under­stood them on the basis of a telegram, dated June 25th, 1916—i.e., after the conclusion of the Anglo-Russian Agreement of May 5th, 1916—in which the Chief of the Russian Baltic Fleet ordered the Committee, by friendly negotiations, to arrange charter parties for a limited period in respect of certain Finnish vessels.

If, on the other hand, the British authorities were not aware of the limits of the powers of this Russian Committee, they can offer no excuse, since it is a universally recognised rule th a t every authority of a country dealing with the authorities of another country in regard to questions connected with the exercise of their respective sovereign powers is required in the first place to ascertain the extent of the powers of the other party. Requisitioning is certainly always a question affecting sovereign rights. The validity of this argument is, moreover, proved by the fact th a t when, in 1916, an arrangement had to be made with the Russian authorities concerning the transport of certain war supplies to Russia, the British authorities did not content themselves with the provisions agreed upon with the representatives of the Russian Government Committee in London, bu t had the agreement concluded with them approved by the Russian Ambassador —i.e., by the only plenipotentiary representative of the Russian Government.

Once these principles and these facts have been made clear, it may be adm itted tha t the exigencies of the war, or the unusual circumstances of the period with regard to the whole conduct of business, m ay explain and make comprehensible various exceptions to and departures from such rules. These exceptional conditions, however, whilst justifying such irregular acts, did not change either the responsibility or the normal obligation to make compensation for all losses thus caused to private individuals. In this connection, it may be appropriate to direct attention to the fact th a t the Finnish Government was paid even for those Finnish vessels which, when the Bolshevik revolution broke out and the Russian Empire collapsed, were in Russian ports and were detained there or were taken to Russia by Bolshevik refugees leaving Finland. This is clear from the following particulars concerning the Peace of Tartu concluded between the Finnish Government and that of Soviet Russia.

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3. HISTORY OF T H E REQUISITION OF TH E FIN N ISH VESSELS

IN T H E UN ITED KINGDOM DURING TH E WAR.

The m ajority of the vessels covered by the present claim belonged to Finnish incorporated companies which ran regular maritime services between Finnish and foreign ports, particularly ports on the shores of the North Sea, bu t also sometimes as far as the Mediterranean.

When the W ar broke out, the Finnish vessels which were outside the Baltic could not do otherwise than seek safety in the ports of the countries which were expected to remain neutral or to become allies of Russia.

Noticing th a t freights were fast rising and th a t ships and their crews could still be insured against war risks of every kind on reasonable terms, Finnish shipowners gradually followed the example of the owners of other countries and employed their vessels as ordinary tramps, seeking cargoes everywhere.

Before entering upon an account of the requisition of the Finnish vessels, it is necessary to make the general rem ark th a t the documents in this connection which are still available show a striking absence of formality and clearness, and even in m any cases of coherence and consequence. This is partly to be explained by the employment of officials who had no special training for such work, or by their continual replacement by others, or again by the haste demanded by circumstances. Moreover, the owners’ agents, who should have defended their interests, were often deprived by force of circumstances of continuous contact with them and, being little versed in Finnish and Russian conditions, did not always know themselves exactly where they stood when they were left without instructions from their owners, as sometimes happened for considerable periods. All this naturally contributed to obscuring the situation and creating confusion as regards their respective rights and obligations in the minds of many of those concerned in the m atter a t th a t time.

In Ju ly 1916, rumours reached Finland th a t the smallest of the Finnish vessels outside the Baltic—namely, the S.S. Alexa—had been requisitioned by the British Admiralty. In September of the same year, it was learnt that four other vessels had suffered the same fate. Shipowners then began to become anxious, bu t all their efforts to ascertain what was actually happening met with slight success.

In December 1916 and in the first quarter of 1917, the six remaining vessels were also requisi­tioned by the British Admiralty. Nevertheless, it continued to be impossible to obtain exact information regarding freights, insurance, etc. The British agents of the Finnish owners were certainly doing their best to clear up the situation, but they could not do much, as they were anxious, among other things, not to be placed on the British Government’s “ Black Lists ’’. Moreover, protests had no effect except perhaps th a t of eliciting threats that things would be made worse, as is shown by a number of reports of captains who had tried to protest. These reports show the m anner in which the officers of the British Admiralty forced captains and their ships to break the previous engagements of the owners and to enter the service of the Admiralty. W ithout wishing to stress these aspects of the case any further, we cannot help pointing out how unnecessary such methods were in reality, since, after Finland’s declaration of independence, the British Government found it easy to procure the services of certain of these ships by amicable agreement, as soon as friendly overtures had been made to the owners in question.

W ithout going into all the innumerable details of the case, a brief summary may be given, beginning with a mention of the Russo-British Agreement of May 4th, 1916, regarding the transport of ammunition to Russia from May 1st, 1916, to May 1st, 1917 (document C.470.M.200.1931, Annex 3). Article 4 of this Agreement provides for the requisitioning of all suitable vessels of the Russian mercantile marine for the transport of war m aterial to Vladivostok or the White Sea ports, without, however, specifying who was to effect the requisition, except for the ships intended for the Vladivostok route, which were expressly to be procured by the Russian authorities.

On Ju ly 8th, 1916, the British Adm iralty wrote to the Russian Government Committee with regard to the S.S. Alexa, described as Finnish, and the Admiralty Transport Officer stated th a t it was not safe for th a t vessel to go to Archangel on account of her age and condition. I t had therefore been decided to send her to France as an Admiralty-requisitioned ship. The same question of unsuitability for the White Sea trip might also arise with some of the other Finnish steamers. Messrs. Mathwins (the British Government's agents) were instructed to enter and clear the ship.

This letter is the starting-point of the employment of Finnish ships in the British Government service. In this connection, it should be noted: (1) th a t the Agreement of May 5th, 1916, only concerns vessels which are genuinely suitable for W hite Sea traffic ; (2) th a t it was the Admiralty which inspected the Alexa and found that she was not in good condition; (3) that it was the Adm iralty which “ sent her across to France as an Admiralty-requisitioned ship ” without awaiting the consent of the Russian Government Committee and still less th a t of the Russian Government itself. Later, on November n t h , 1916, the Alexa was released, having been found unsuitable for Admiralty service. On November 20th, Gellatly Hankey & Co., agents of the Adm iralty and also of the Russian Government Committee, wrote to the agents of the Alexa, "W e have to-day received official notification from the Adm iralty th a t the above steamer has been paid off from Government service ”. No other form ality was observed and no receipt was asked for or given.

I t is now necessary to refer to a series of three letters written a t the beginning of July 1916, which show th a t the agents of the Hermes and Herakles regarded the Adm iralty as the authority which had to decide what was to happen to the ships, and that the Russian Government Com­m ittee’s attitude was the same: " We shall be glad to know your decision

On Ju ly 26th, 1916, the Adm iralty wrote to the Russian Government Committee requesting it to make arrangements to have the steamers Patria, Bjarmia and Constantia requisitioned “ for Adm iralty service”— “ I t is proposed to employ the vessels in the French service”. In other

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words, the Adm iralty announces th a t it intends to use the vessels as it thinks fit, regardless of the Agreement of May 4th, 1916.

On August 17th, 1916, the British agents of the owners wrote to the Admiralty concerning the requisitioning of the Patria and the Bjarmia, asking for particulars regarding hire and mode of paym ent by the Admiralty, and the Adm iralty replied in the same month. On August 18th,1916, the Russian Government Committee wrote to the Admiralty, referring to the Admiralty’s letter of Ju ly 26th, th a t the Constantia had arrived and that a formal letter of requisition had been sent to the agents. This letter was dated August 17th and, as pointed out in memorandum C.470.M.200.1931, a similar letter was sent in due course for each of these ships. This is the letter which constitutes what has been called the Russian requisition.

On August 31st, 1916, the Russian Government Committee asked the agents for particulars regarding the Tammerfors, to be received by the Admiralty, promising to give instructions regard­ing her later, but, on September 6th, 1916, a letter of requisition of the nature already indicated was sent without further formality by the Russian Committee to the said agents. Later, however, the same Committee informed the Admiralty that it (the Admiralty) had requisitioned the said vessel.

On November 3rd, 1916, the Adm iralty wrote to the Russian Government Committee: " The Herakles and the Pallas have been inspected by Admiralty officers and found suitable for British Government service. I shall therefore be much obliged if you will take steps to have those two vessels requisitioned." On November 22nd, the Russian Government Committee wrote to Gellatly Hankey & Co. with a view to the requisitioning of these vessels and the Hesperus for Adm iralty service. Much later, on January 2nd, 1917, the agents of the Hesperus wrote to Gellatly Hankey & Co., stating how and when this vessel had been taken over by the Admiralty. Lastly, the Adm iralty's instructions regarding the commissioning of the Hesperus were sent to the agents on January 5th, 1917, and only afterwards, on January 9th, 1917, the Admiralty informed Gellatly Hankey & Co. of the date on which it had taken over this ship, whereupon the latter notified the agents.

On November 29th, 1916, the charterers of the Herakles wrote to the Admiralty and to the Russian Government Committee asking for a postponement of the requisition. The Russian Government Committee asked the Adm iralty whether the request should be met or not, and the Admiralty replied to the charterers th a t “ the Adm iralty now propose to write to the Russian Government Committee th a t the requisition be m aintained ”. Copy of this letter was sent to the Committee, without comment. I t is evident tha t it was the Adm iralty which decided whether the vessel was to be requisitioned or not. Such, too, is the purport of a letter from the Russian Committee, dated December 4th, regarding the Trio, and later the Admiralty announced, in reply to requests from the agents, th a t no reason was seen for withdrawing the requisition.

On December 4th, 1916, the charterers of the Hesperus and the Algol asked the Admiralty not to requisition these vessels and, on December 13th, 1916, Lambert Bros. Ltd. submitted to it a similar request with regard to the Hesperus. On December 18th, the reply was made th a t " the Admiralty propose to maintain the requisition of this vessel ".

On December 15th, Gellatly Hankey & Co. informed the Russian Committee th a t they had requisitioned the Herakles. On December 30th, 1916, Gellatly Hankey & Co. also informed the Russian Committee that they had been instructed by the (British) Government to requisition the S.S. Hermes. The same occurred as regards the S.S. Algol and Leda. Not until January 6th,1917, did the Admiralty rem ark th a t it was perhaps necessary to ask the Russian Committee to requisition them—i.e., to write the usual letter. On January 8th, the charterers of the Algol (previously of the Hesperus) asked the Admiralty not to take over tha t vessel, since “your requi­sitions " (the Adm iralty’s) had fallen very heavily upon the applicants. On January 24th, 1917, the Admiralty replied in the negative. Replying to the Admiralty on the following day, the charterers continued to speak of the Adm iralty’s requisitions.

On January 24th, 1917, the Admiralty, referring to the requisition of the Algol, gave certain instructions to Gellatly Hankey & Co. According to the letter from the latter to their agent a t Manchester, however, the British authorities had not yet taken over this ship at tha t date. Only on Februay 5th were the Manchester representatives able to write to Gellatly Hankey & Co. that the Admiralty Transport Officer had requisitioned the Algol, although he had refused to give a certificate to this effect. On February 6th, Gellatly Hankey & Co. wrote to the Admiralty th a t the Algol had discharged a t noon on February 5th, from which time the Transport Officer, Manchester, had requisitioned the steamer.

On February 7th, Gellatly Hankey & Co. informed the Russian Government Committee of the taking-over of various Finnish ships, stating among other things with regard to the Algol that she had been requisitioned by the (British) Transport Officer. On the same date, the Admiralty appointed a supercargo for the Algol a t the Adm iralty’s expense. On February 10th, 1917, the Admiralty wrote to Gellatly Hankey & Co. acquainting them with the date fixed for the entry into pay of the Algol. On February 12th, Gellatly Hankey & Co. advised the Russian Government Committee of the fact, and received a reply from the la tter asking them to inform the owners also.

On February 12th, the Admiralty informed Gellatly Hankey & Co. of the date of entry into pay of the S.S. Trio and Leda “ in accordance with a clause of the [clearly British] Charter Party ’’. The Admiralty also notified the Russian Committee, as did Gellatly Hankey & Co.

Mention should be made here of certain letters relating to the date of the taking-over of the Herakles and of the Trio, which, on the one hand, show once more the uncertainty which prevailed several months after the first requisition and, on the other hand, show that the decision in these m atters belonged to the Admiralty.

The documents concerning the requisition of the Sirius begin on February 20th, 1917. I t should be noted first of all that the Russian Committee simply asked Gellatly Hankey & Co.

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to requisition the ship. The latter advised this Committee later tha t the Admiralty had decided not to requisition the steamer in question. Nevertheless, the Admiralty again decided later to requisition her and subsequently informed Gellatly Hankey & Co. of the date of her entry into pay.

In May 1917, the Admiralty took steps for the commissioning of the Leda and the Sirius.As observed in document C.470.M.200.1931, paragraph 10, all the acts of possession and

control were done by the British Government alone. We attach in Appendix III statements by certain captains of Finnish vessels describing what occurred on board at the time of requisition.

The Tammerfors was sunk by a German submarine off Barfleur on February 27th, 1917. Brown, Atkinson & Co., the owners’ agents, then claimed payment of the vessel’s value. I t appears from the correspondence between th a t firm, the Russian Government Committee and the Admiralty th a t the Admiralty assumed responsibility for the compensation and agreed to pay the sum representing the steam er’s value direct to the owners’ agents, and th a t it was not until after the Russian Government Committee had sent a cheque in advance of payment by the Admiralty th a t the British Treasury refused to authorise the Admiralty to pay in cash. The Russian Government Committee, in its report to Petrograd, stated tha t it had paid the owners " on account of British Admiralty ” .

When the Finnish owners received from their British agents information regarding the taking- over of their vessels by the British authorities, they naturally desired to address their claims for compensation to the proper quarter. Their first quite natural idea was th a t the British authorities, as beneficiaries of their vessels, were also the real debtors. During their first attem pts to obtain compensation, they were nevertheless informed among other things th a t they must procure charter parties regarding their vessels from the Russian authorities. The owners, knowing the legal incapacity of the Russian authorities for such requisitions, did not think it necessary, however, to make further investigations in th a t direction, particularly as all their previous experience of co-operation with the British authorities led them to believe th a t this time also the la tter would readily fulfil their natural obligations arising out of the utilisation of the ships. Only later, towards the spring of 1917, when the owners, having urgent need of the money which had for so long been withheld from their business, learnt once more th a t they must go to Russia to procure the charter parties, did they a t last decide to send a representative to St. Petersburg to obtain informa­tion on the subject. Indeed, the question as to where they should obtain payment for their vessels was still, at this stage of the case, only a practical one for the owners, and they would certainly have been prepared to go to any other place which the British authorities might have indicated as the place of payment. I t should, however, be emphasised th a t M. Lars Krogius, who went to Russia as representative of the owners on May 17th, 1917, applied first of all, even in th a t country, to the British Ambassador, Sir George Buchanan (see page 85 of the Finnish counter-memorandum of September 1932). Sir George was unable, however, to give M. Krogius any definite information, but he promised to send a despatch to his Government on the subject. This despatch was probably never answered, since no information was ever given to the owners from this quarter. The enquiries which M. Krogius afterwards made from different Russian authorities at St. Petersburg shed no light on the m atter.

Indeed, there is nothing surprising in this negative result, since a letter from M. Ostragrodsky, dated as late as May 29th, 1917, and addressed to Gellatly Hankey & Co., a copy of which reached the owners towards the end of June, through their British agents, shows th a t the exact circumstances in which the Finnish ships had been taken over were not yet known a t th a t time.

The question of requisition having often been mentioned as one of the most im portant points in the whole dispute, the Finnish Government thinks it necessary to emphasise further certain aspects of this question, particularly on the basis of the British Government’s memorandum of August 28th, 1931, in which it is alleged:

(1) That the Finnish vessels were requisitioned by the Russian Government;

(2) That those vessels were sub-chartered by the Russian Government to the British Government ;

(3) That the Agreement of May 4th, 1916, between the Russian and British Govern­ments, under which the former undertook th a t the Russian vessels taken over would be utilised for the transport in question, also covered the Finnish ships;

(4) That the Russian Government Committee in London had the power to requisition Finnish ships ;

(5) That, in the British Government’s opinion, the Finnish owners have not been ableto prove that their ships were requisitioned by the British Government ;

(6) That the British Government has already paid for those ships through the Russian Government.

The Finnish Government disputes the accuracy of all these allegations, observing with regard to point :

(1) That the British Government has not been able to prove th a t the ships were requi­sitioned by the competent Russian authorities, and th a t the Finnish Government has, on the contrary, adduced conclusive proof of the legal impossibility of the Russian authorities’ requisitioning Finnish ships except when, on the basis of special agreements, those authorities could use them in the Baltic;

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(2) T hat the British Government has never produced any evidence th a t the Russian Government sub-chartered the Finnish ships to the British Government ;

(3) T hat the Finnish Government has shown quite clearly th a t the Agreement of May 4th, 1916, nowhere mentions the Finnish ships, but refers only to ships of the Russian Volunteer Fleet " or of the Russian Mercantile Marine ”, and that, in general, a clear distinc­tion must be made between Russian ships registered in Russian ports and Finnish ships belonging to Finnish nationals and registered in Finnish ports;

(4) T hat the British Government has never been able to prove th a t the Russian Govern­m ent Committee in London had any power to requisition Finnish ships—which would, in fact, have m eant th a t the Committee had greater powers in th a t direction than the Russian Government itself;

(5) T hat the Finnish Government admits tha t it has been unable to prove th a t there was a formal requisition, in the full sense of the term, of the Finnish ships by the British authorities, since those authorities simply took possession of the ships without any express notification to the owners and without ever negotiating direct with the owners, their agents, or the shipmasters, in order to give them charter parties, receipts, or other documents indicating responsibility for the acts in question. As far as the Finnish Government is aware, even the Russian Government Committee received no such documents, properly speaking. The Finnish Government is further of the opinion th a t the fact of having “ taken over ” the ships without asking permission or concluding any special agreement on the subject is, in reality, equivalent to requisitioning, and in any case involves, taken in conjunction with utilisation, a corresponding obligation to pay compensation;

(6) That the Finnish Government disputes the allegation th a t the British Government has already paid for the said ships through the Russian Government. There is, indeed, no proof of any such transaction, or even the slightest sign of recognition of the acceptance of such a payment by the Russian Government.

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4. FINLAND A FTER TH E DECLARATION OF H E R INDEPENDENCE.

As soon as she had declared her independence on December 6th, 1917, Finland established her own diplomatic representatives in all the most im portant countries. In the case of the United Kingdom, Finnish independence was a t once recognised de facto by the British Government, and Dr. Holsti, the Finnish diplomatic representative, was duly accredited to th a t Government. A Finnish Consulate-General was subsequently established in London. I t should be noted that the British authorities ceased to correspond with the Russian Embassy and the Russian Consulate- General regarding Finnish affairs and discussed all m atters with the Finnish Legation, which was then of a semi-official character, and with the Finnish Consulate. Finland was accordingly treated by the British Government in all these respects as a country tha t had finally separated from Russia.

This attitude also directly affected the Finnish vessels. M. Eugen Wolff, a large shareholder in the Finnish Navigation Company, approached the Admiralty a t the beginning of February1918 regarding the fate of the vessels. On the following day, February 3rd, he received a written reply in which the Admiralty stated that “ the vessels had been requisitioned by the Russian Government ” . This was the first document on the m atter from an official British source which came to the knowledge of the Finnish Legation in London. B ut it was not until the end of April1921 tha t the Foreign Office sent the Legation particulars of the documents on which the alleged Russian requisition of the vessels was based.

This letter from the Admiralty is of greater importance from another point of view. In the second paragraph, the Admiralty promised in three or four days’ time to make a proposal designed to place the owners of the vessels in a more satisfactory position in respect of the past and future service of the vessels. Consequently, the British Government made no distinction, as regarded its liability for compensation, between the employment of the vessels in the past and in the future, although, according to its own statement, the vessels had been requisitioned by the Russian Government.

I t is obvious th a t the Government proposed to pay the owners of the vessels direct. By that time, diplomatic and economic relations between the United Kingdom and Russia had been broken off. W hatever compensation was to be paid for the employment of the vessels in the past must be received directly by the owners, or by the representatives of the Finnish Government on their behalf.

The fact that the British authorities were fully aware of the confusion that existed regarding the status of Finnish vessels is clearly shown by the incidents th a t occurred later in 1918.

As stated above, the Admiralty, in its letter of February 3rd to M. Eugen Wolff, promised tha t a more favourable arrangement would be made. I t is true (as stated in document C.470. M.200.1931, section 17) that a new arrangement was subsequently concluded. I t would be incorrect to assume th a t this was primarily the natural consequence of F inland’s declaration of independence and neutrality. If that fact had weighed most with the British authorities, their conduct would doubtless have been different. The new conditions offered were by no means comparable with

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those obtained by other neutral States for their nationals. The British Government was very anxious to keep the Finnish vessels in its service. A t the same time the Foreign Office had doubts about Finnish neutrality. Secondly, had there been a clearly defined arrangement regarding the employment of the Finnish vessels, then, doubtless, either the British authorities would have simply prolonged it unilaterally, just as they themselves fixed the new conditions regardless of the demands of the Finnish Government and the owners of the vessels for better terms, or the arrangement would have been taken as the basis of the negotiations. Consequently, the new arrangement of 1918 appears to have been due much less to the new international status of Finland than to the fear tha t uncertainty as to the legal position of the vessels might cause them to be laid up. No one in the United Kingdom—neither the Government nor the agents—appears to have had any faith in the validity of the alleged Russian requisition, and consequently a new arrangement was urgently required in the interests of British shipping, rather than on account of the new international position of Finland.

I t has also been asked whether certain formalities were observed—for instance, whether receipts were given, etc.—when the vessels were seized by the British authorities and when they were subsequently returned to their owners.

A negative reply must be given to the first part of this question. As regards the return of the vessels, the procedure was equally simple. On January 17th, 1919, the Finnish Legation wrote to the Foreign Office requesting that the vessels then in British service should be released, and, on February 4th, a favourable reply, containing, however, certain reservations, was received. Finally, on February 20th, the Foreign Office announced the release of the first vessel, and the release of the others followed. The British authorities never asked for a receipt for the vessels.

In order to show the absence of the usual diplomatic formalities and all other purely legal considerations in the relations between Great B ritain and Finland at th a t time, we should like to recall two other facts. To facilitate the transport of urgent supplies to Finland, the British Government, as promised by the Foreign Office, in January 1919, courteously placed two British vessels a t the disposal of the Finnish Legation. At the same time, the trade flag of Finland was recognised, several months before Finnish independence was legally recognised by the British Government.

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5. ATTEMPTS BY FINLAND TO SECURE COMPENSATION

FO R TH E USE OF TH E VESSELS.

I t should be observed that, during the whole course of this affair, which, in its final form, began with a note despatched on October 5th, 1920, by the Finnish Legation in London to the Foreign Office, containing certain specific claims, the British authorities never denied the actual principle of their liability to pay compensation for the services of the Finnish ships utilised by them.

The despatch of this note was followed by diplomatic correspondence in the course of which the Foreign Office informed the Finnish Minister in London, in its note of December 22nd, 1920, that the British Government “ are responsible only to the Russian Government and credits are consequently being held for th a t Government ” . Only as regards the S.S. Titania did the British Government accept any direct liability towards the owners, on account of the fact that “ this ship was actually chosen by the British Authorities for special work on account of her particular qualifications and requisitioned by the Russian Government a t their request . . . ” {i.e., a tthe request of the British Authorities). This, however, also applied to the other Finnish vessels. At the end of the note in question, the British Government repeats once more: “ His Majesty’s Government do not seek in any way to evade their responsibility; they must, however, insist on the fact that they are responsible to the Russian Government and to the Russian Government only for the hire of the ships named a t the beginning of this note ” (Bjarmia, Constantia, Patria, Hesperus, Algol, Hermes, Herakles and Sicilia). The Finnish Minister adds, in his comments on this note, that, according to verbal information received from the Foreign Office, this refusal was due to the Shipping Ministry’s opposition, and th a t the Shipping Ministry considered itself responsible towards the legal successors of the former Tsarist Government alone, and was afraid of subsequent claims on the part of such a Russian Government. The Finnish Minister then proposed (still according to his own comments) to procure a guarantee from the Finnish Government covering the possibility of such subsequent Russian claims, and the Foreign Office seemed quite prepared to reconsider the question if such a guarantee were practicable, “ because the Foreign Office did not share the Shipping Ministry’s views ”.

On March 3rd, 1921, the Finnish Minister reported to his Government that, with M. Procopé, he had had an interview arranged by the Foreign Office with the competent official of that Department and a representative of the Shipping Ministry. The representative of the Shipping Ministry had stated th a t a general agreement existed between the British and Russian Governments under which the former had been authorised to requisition all vessels flying the Russian flag.

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As the Finnish Minister had replied th a t the Finnish Government was now the legal successor of the Russian Government as far as Finnish ships were concerned, the representative of the Shipping Ministry had agreed to recommend the Treasury to consider the settlement of the m atter with the owners direct, subject, however, to a guarantee by the Finnish Government covering possible Russian claims.

Thereupon, the Finnish Government, through its Minister in London, offered a guarantee ^by the Bank of Finland. The Foreign Office then promised, on March 30th, 1921, to give its reply to this offer as soon as it had obtained the Treasury’s opinion.

From all this correspondence and all these negotiations, it is clear that the United Kingdom Government considered at tha t time th a t the services of the vessels in question had not yet been paid for, and that, hence, there had also been no accountancy transactions.

Meanwhile, the Finnish Government had also asked for a copy of the alleged agreement between the British and Russian Governments concerning the requisition of vessels. On March 24th,1921^ the Foreign Office replied that it had not yet been able to trace any such agreement. The Finnish Minister was also told verbally that, if such an agreement was not found, the British Government would settle the question with the owners without other formalities (Finnish Minister’s report to his Government).

On April 26th, the Foreign Office announced th a t it had found the agreement in question, together with a copy of one of M. Ostragrodsky’s written orders of requisition, and on this basis declined any liability for compensation to the owners. In the same note, the Foreign Office %nevertheless recognised that the vessels had been employed in the British service, but added tha t *zthe Russian Government had already been paid in cash or credit for the services of the vessels.This is the first time th a t we find a statement th a t the Russian Government had already been paid for the vessels in cash or credit.

The diplomatic conversations on the case were nevertheless continued and, on September 14th,1922, His Britannic Majesty’s Chargé d ’Affaires a t Helsingfors (Helsinki) stated, under instructions received, that the British Government maintained, in the m atter of the “ Finnish ships requisi­tioned by the British Government ” (Appendix IV), the attitude expressed in the note (mentioned above) of April 26th, 1921, but added th a t the British Government would bear the whole question in mind when the debt of His Majesty’s Government to Russia was under discussion with theRussian Government, and that they would endeavour to secure th a t provision would be madefor the legitimate claims of Finnish shipowners. Later, on September 19th, 1924, His Britannic M ajesty’s Chargé d ’Affaires, again acting on instructions received, repeated, in a note referring once more to the ships “ requisitioned by His Majesty’s Government ”, the promise th a t the m atter would not be lost sight of when the question of m utual debts was settled with the Russian „Government (Appendix V). I t was added th a t the discussion of this question had, however, been postponed for the moment.

Meanwhile, the owners, impatient at the small success of the long diplomatic negotiations, decided to try to advance the m atter by taking it to the British Courts. The negative result of this action is sufficiently well known to need no further comment. The only point th a t needs to be emphasised, and one to which the Admiralty Transport Arbitration Board itself called attention, is th a t the la tte r was not competent to go into all the aspects of the dispute—which is natural enough, not only on the basis of the considerations mentioned above, but in view of the fact that the Board, according to its own rules, could deal only with cases connected with certain specific kinds of requisition. After this judicial episode, by which the owners had never­theless exhausted, as far as they were concerned, the remedies available to them under English law, the Finnish Government endeavoured to continue diplomatic negotiations, but without any tangible result. The Finnish Government at last found itself forced to appeal to the League of Nations.

It should further be added that, on the British side, several new versions have been put forward regarding the payment of compensation for the vessels in question. According to one version, the sums due were paid in cash ; according to another, they were settled by book entries ; and, according to a third, the British Government would only be prepared to negotiate with the Finnish Government on certain entirely new conditions outside the scope of the present case.The only point th a t all these versions have in common is obviously the principle that the British Government should pay (or should have paid) someone for the use of the vessels. This explicit or implicit admission is, moreover, supported by the fact, already mentioned, that the British Government has actually paid for the S.S. Tammerfors, and is still paying pensions to the families of the crew of tha t vessel, which was sunk.

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6. TH E PEACE TREATY BETW EEN TH E REPUBLIC OF FINLAND AND TH E RUSSIAN SOCIALIST FED ERA L SOVIET REPUBLIC.

One might conclude from certain expressions tha t the British Government thinks that it can settle the question of compensation for the Finnish ships with the Government of Soviet Russia, and th a t it contemplates a m utual setting-off of claims and debts when a general settlement is undertaken between the two countries.

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The Peace Treaty between Finland and Soviet Russia, signed at Tartu on October 14th, 1920, contains the following clause (Article 23, paragraph 3) :

“ The Russian Government undertakes to restore to their former owners vessels belonging to Finnish nationals or to commercial associations established in Finland and requisitioned by the Russian Government during the World W ar without indemnification of their owners, and similarly Finnish vessels which have become the property of the Russian State without indemnification. A list of the vessels mentioned in this article is given in the Annex to this T reaty .”

The list (“ Specification ") given in the Annex does indeed enumerate a considerable number of vessels to tie restored to their Finnish owners, but nothing is said about the ships requisitioned for the British Authorities during the war. Had Finland not regarded them as forming a separate class on which agreement would have to be reached with the British Government, she would not have om itted to make a claim against Russia for the compensation payable to the shipowners who had suffered requisitions. I t should be noted th a t the question of three Danish ships which had been used by the Russian Government during the W ar, and had by then already been restored to the Danish owners, was discussed a t the T artu Peace Conference (meetings of August 23rd and September 17th, 1920). T hat being so, the thirteen Finnish ships could hardly have been completely ignored.

Article 24 contains the following provision :

“ The Contracting Powers will exact no indemnity whatsoever from one another for war expenses.

“ Finland will take no share in the expenses incurred by Russia in the World W ar of 1914-1918.”

This provision should be studied in connection with Article 25, whereby " neither of the Contracting Powers is responsible for the public debts and other obligations of the other Power ” .

I t is plain from these provisions, and from other stipulations in the Peace Treaty, th a t the parties intended to arrive a t a general settlem ent of their economic relations. Each party was to take the responsibility for its own acts, and to bear the expenses it had incurred through the war. Compensation payable to private persons falls within this latter category, and it cannot be supposed th a t the Finnish Government, anxious as it was to protect the rights and property of its nationals, would have failed to make any stipulation on the subject in the Peace Treaty, thereby making the indemnification of the Finnish shipowners dependent on Russia's willingness to meet the obligation based upon the use of the ships, or on her ability to decide for the benefit of what State they had been used. This seems particularly improbable, because a t th a t time the Government of the Russian Soviet Republic was not even recognised by the United Kingdom, whereas the United Kingdom was then in regular diplomatic relations with Finland. I t must further be pointed out th a t any idea of extending a possible settlem ent between the United Kingdom and Soviet Russia to the compensation due to Finnish shipowners would encounter the decisive objection tha t it would be quite unfair to set off Russia’s public debts against claims from private persons who were Finnish citizens.

The impossibility of such a hypothesis is further proved by the fact that, on October 5th, 1920, the Finnish Government sent a note to the British Government supporting the claims of the Finnish shipowners. This obviously could not have occurred had the Finnish Government, which signed the Peace Treaty with Russia only nine days later, been endeavouring to obtain direct indemnification of the shipowners from Soviet Russia herself, or had it contemplated the possibility of a settlement of the m atter between the United Kingdom and Soviet Russia.

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7. ECONOMIC AND FINANCIAL ASPECTS OF TH E REQUISITIONING OF THE

FIN N ISH VESSELS.

I t appears preferable to divide this study into three parts : (1) importance of the vessels to Finland; (2) effect of non-payment of compensation on Finnish shipping and the position of Finnish shipowners ; (3) extent of the loss of capital thus arising in relation to the national wealth.

(1) I m p o r t a n c e o f t h e S h i p s a n d o f t h e N a t i o n a l S h i p p i n g t o F i n l a n d .

A brief historical summary of the question must first be given in order to explain the situation. Finnish industrial development on a larger scale and according to modem ideas began about 1870. I t soon became evident th a t the possibility of obtaining markets for the products of Finnish industry and agriculture depended to a large degree on the existence of steamship communications westwards. The demand for sea communications increased year by year, especially between 1880

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and 1900. However, the difficulties in the way were considerable. Finnish fairways are far from being easily navigable ; the labyrinth of the skerries demands special skill and knowledge on the part of seafarers ; lastly, ice creates obstacles which are difficult to overcome. Under such conditions, the establishment of m aritime communications m ust depend on national ambition and the determination to surmount difficulties even at the risk of losing the stakes ventured. During the three decades from 1883 to 1914, efforts were made to establish the necessary communications. The shortage of capital and the above-mentioned difficulties made progress very slow. However, it was realised throughout th a t the development of Finnish trade depended on the number of Finnish vessels, which were to be regarded as important links in the chain and an essential factor in the country's economic life. Finnish vessels which were specially equipped to meet the particular difficulties they have to encounter undoubtedly constituted a very important part of the national assets. .

In 1914, Finnish ocean-going tonnage consisted of 136 vessels of 57,515 tons registered net tonnage, corresponding to 92,024 tons registered gross tonnage. I t will be seen from the foregoing particulars th a t each unit of this comparatively small merchant fleet was of very great value from the point of view of Finland’s foreign trade.

This was even more markedly the case after F inland’s separation from Russia and the conclusion of the Peace Treaty of 1920. Finland was even more dependent than before on the sea as a means of transport for the articles which she exported. Russia no longer had any markets worthy of the name for exports and no longer constituted a source of supply for imports. Strictly speaking, Finland was in the position of an island. More than 90% of her trade was sea-borne. Each unit of the merchant fleet was thus of capital importance from the point of view of the establishment and development of the maritime means of communication necessary to ensure the sale of national products. However, the losses sustained during the W ar hampered this constructive work. While it was in progress, the importance to Finland of her own vessels was even greater than it had been in the past. To-day, Finnish economists are prepared to state that, owing to the special climatic conditions which distant Finland has to contend with, Finnish vessels constitute a source of national wealth, a decisive factor for the material progress and culture of the country, and an im portant part of the national assets. Neither in 1914 nor in 1918 was th a t fleet very large, and consequently each unit was the more valuable and represented a precious source of wealth for the country as a whole.

(2) E f f e c t o f N o n -p a y m e n t o f C o m p e n s a t i o n o n t h e D e v e l o p m e n t o f F i n n i s h S h i p p i n g

a n d t h e P o s i t i o n o f F i n n i s h S h i p o w n e r s .

As the vessels in question were being employed by the British Admiralty, it was no longer possible for their owners to use them for other purposes. There is not the slightest doubt that, had they been able to employ them otherwise, they would have earned far more than the value of the freights now claimed. Nor can it be denied tha t the shipowners thus lost opportunities for making considerable profit, while actually they have not even received any compensation for the period during which the vessels were used by the British Admiralty or for their loss.

The amount of this compensation has been assessed at slightly over £500,000, corresponding to more than 100 million Finnish marks. (As the object of the present note is simply to expound a general thesis, round figures have been used.) In 1919, certain of the Finnish owners in question found themselves w ithout any ships, and had also lost a t least 100 million marks. During tha t same year, the share capital of the largest Finnish maritime transport company amounted to 20 million marks. If an a ttem pt is made to estimate the to tal amount of share capital of the Finnish shipping companies which owned vessels in 1919, a figure will be arrived at which in no case exceeds 60 million marks. Consequently, the deficit in question is nearly double the to ta l of their own capital invested in shipping businesses of this kind. The owners may thus be said to have suffered a crushing loss.

I t should also be mentioned th a t two of the shipping companies concerned were unable to carry on their business, while the development of the others was retarded. Everything goes to show, therefore, th a t valuable experience, which might have served as a basis for further progress, was thus lost.

Moreover, supposing the lost vessels or compensation for their loss, and the value of the freights of all the vessels utilised, had been at the disposal of the shipowners in 1919 or 1920 at the latest, it is more than probable tha t both vessels and capital could have been used to great advantage during the boom period following peace, which would have considerably strengthened the resources available for further extension. This argument is confirmed by the enormous progress made by the Scandinavian merchant marine after the War.

In any case it is obvious th a t the development of the shipping companies in question was either suspended or retarded by the lack of the capital in question. As those companies were the largest in the country, it might even be said to have delayed the development of the Finnish merchant

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marine as a whole. The slowness of this development during the following decade is shown by the table given below relating to the tonnage of Finnish ocean-going steamships :

N et tonnage Gross tonnage

1919 37,768 60,4281920 54.838 86,7401921 62,928 100,68.51922 61,143 97.8291925 76,314 122,1021928 116,539 186,462

The foregoing explanation clearly shows the disastrous extent to which Finnish shipowners and Finnish maritime navigation as a whole, as well as Finland's economic development, suffered by the non-payment a t the proper time of the various portions of the sum claimed. I t m ay be well, a t this point, to explain the reasons for the smallness of the shipowners’ original claim.

I t is obvious th a t the reason the shipowners assessed their claim for compensation on the basis of 30s. per ton dead weight, under the customary terms of time charter, was because they were so far away from the centre of the freight m arket th a t they had only an inadequate knowledge of the rates and were obliged to some extent to guess them. The figures shown in the freight accounts of the Finnish shipowners were approximately half the rates paid by the private charterers and by the British and Allied Governments. As a rule, the primary factor—i.e., insurance against war risks—was eliminated from the shipowners’ calculations, this terribly heavy burden being borne by the private charterers or the Government themselves. All these statements are confirmed by the article on page 210 of Brassery’s Naval and Shipping Annual, 1920-1921, written by the well-known British shipowner, Sir O. G. Holmden. Consequently, the Finnish shipowners’ claim for payment of the freight furnished by them was actually very much too low.

As regards compensation for the loss of vessels, which is included in the claim, it is certain th a t these figures by no means represent the value of the losses actually sustained. The assessment furnished by the Admiralty Transport Arbitration Board, on which the shipowners based their claim when they were daily expecting to be paid, was obviously—and in all good faith—based on the value of the vessels a t the time. However, from th a t time onwards, as everyone knows, the value of the available vessels began to increase almost month by month. As compared with the sales of vessels effected between 1920 and 1923, it m ay be said that, had they still existed, the lost vessels in question could have been sold for three or four times the value a t which they had been assessed. Anyone who has any knowledge of maritime transport knows what this would have m eant to the shipowners. At the same time, it should not be forgotten that, if those vessels had not been lost but had continued sailing under the management of their owners, they would have brought in enormous profits. We m ay m ention as an example the steamship Hermes (one of the lost vessels), for which, a t the time it was taken over by the British Government, a time charter was offered for four consecutive years a t the rate of £12,000 per month. During those four years the shipowners’ net profit would have been in the neighbourhood of £400,000. The other lost ships would have fetched in proportion— i.e., for each of the following four or five years— an annual net profit exceeding the value at which the vessels were assessed.

(3) A m o u n t o f t h e C o m p e n s a t i o n f o r m i n g t h e S u b j e c t o f t h e D i s p u t e i n r e l a t i o n t o t h e

C o u n t r y ’s E c o n o m i c R e s o u r c e s .

Some idea of Finland’s economic resources can be obtained from the various figures relating to the year 1921 given below. The year 1921 was selected mainly because by then the country had to some extent settled down after the great changes th a t had occurred subsequent to the general peace, and also because by th a t time the compensation due should in any case have already been paid to the Finnish shipowners.

Note circulation ................................................... approximately 1,380 million marksDeposits in Finnish commercial banks . . . ,, 2,800 ,,Value of i m p o r t s .............................................. ,, 3,500 „Value of e x p o r t s ............................................... ,, 3,300 „1921 budget ................... „ 2,500 „

If the original sum of 100,000,000 marks forming the subject of the present dispute is compared with these figures, we shall see th a t it represents :

7% of the amount of the note circulation ;3.6% of the value of deposits ;2.9% of the value of imports;3% of the value of exports ;4% of the State budget.

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The sum in question is thus of considerable importance in relation to Finland’s economic life and the S tate’s resources. From the point of view of the country as a whole, this is a very large sum.

If we were to take other examples for the purpose of showing the importance of this amount, we should arrive a t identical conclusions.

The losses sustained and the compensation claimed may appear to be insignificant to a large country. For a nation which had only 3,000,000 inhabitants who were working under difficult conditions, a country with very little capital, the payment claimed is of such importance that the possession or lack of this sum m ay be regarded as a m atter of national concern.

In order to complete the picture, figures must be given taken from the corresponding reports for 1934. Interest must then be added to the 100,000,000 marks. Leaving on one side any hypothetical possibility of profit, the increase represented by interest may be estimated at not less than 100 millions. The figure of 200,000,000 m arks m ay thus be taken as a basis for the 1934 calculation.

The figures in question would then be as follows :

Note c ircu la tion ....................................................... approximately 1,300 million marksDeposits in Finnish commercial banks . . . ,, 7,800 ,, ,,Value of i m p o r t s ........................................................ ,, 4,800 ,, ,,Value of e x p o r t s ........................................................ ,, 6,200 ,,S tate b u d g e t ................................................................ ,, 3,065 ,, ,,

The above-named sum of 200,000,000 marks would then represent :

16.2% of the amount of the note circulation ;2.6% of the amount of deposits;4.2% of the value of imports ;3.2% of the value of exports ;6.66% of the amount of the State budget.

Moreover, these figures show th a t for Finland, with its present population of 3,700,000, this is a considerable amount in relation to the S tate’s economic life and the commercial resources of the country as a whole.

I t is obvious th a t no direct comparison can be made between the 1921 and the 1934 figures. The former are naturally much more accurate. In the case of 1934, two additional factors of great importance must be taken into account.

First, during all the post-war years, the rate of interest in Finland was much higher than in m any other countries. The Finnish Government, the municipalities, joint-stock companies, banks, etc., also paid a high rate of interest on their foreign loans,. I t is obvious that, if the Finnish shipowners reckon the amount of interest on their claims at a similarly high rate, the total amount of compensation due in 1934 will greatly exceed 200,000,000 Finnish marks, especially if interest for the previous years is added to the capital.

Secondly, the sum of £525,000, calculated at the end of the World W ar, was based on the gold standard. As will be seen from the first Finnish memorandum, dated June 30th, 1931, addressed to the Secretary-General, this first claim in respect of a sum of £525,000 plus interest was made before the British Empire abandoned the gold standard. By April 1935, the English pound had lost more than 40% of its value as compared with the gold pound. Consequently, the total amount of compensation claimed by the Finnish Government in 1935 must be based, not on sterling at the present rate, but on gold—i.e., a figure at least 65% higher than th a t of July 1931.

In view of these two supplementary factors, the 1934 percentages must be approximately trebled and the actual compensation claimed doubled.

The comparative figures given above show th a t both in 1921 and in 1934 the amount of compensation claimed by the Finnish Government is of considerable importance from the point of view of the country’s economic life.

8. FINAL OBSERVATIONS.

Several of the above memoranda already contain summaries of the points dealt with. Nevertheless, we consider ourselves justified in recapitulating here the main outlines.

The United Kingdom Government has not refused to admit its liability for the losses suffered by the Finnish owners : it simply considers th a t the whole question of compensation directly concerns the United Kingdom and Russian Governments, but not the Finnish Government. Nevertheless, the memoranda show that the Russian Imperial Government never had any legal right to requisition any of the ships for British service. Moreover, the present Government of the U.S.S.R. has no right to claim the compensation due to the Finnish owners in connection

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with the settlement of claims and counter-claims between the United Kingdom and Russian Governments.

During the War, the Russian Imperial Government made certain special arrangements with the Finnish shipowners for the utilisation of Finnish tonnage in the Baltic. The Russian Imperial Government regularly made the payments due to the Finnish owners ; bu t it was not conscious of the alleged obligation to make simultaneous payments for Finnish tonnage in British service. This negligence must have been due to the fact th a t the Finnish ships in the British service were in reality requisitioned by the British authorities, and that the Russian Committee in London was only a cog of minor importance in the United Kingdom’s enormous war machine. I t is a patent fact that, in their m utual relations during the W ar, the Allied and Associated Governments only paid slight attention to peace-time formalities.

I t goes without saying th a t the losses suffered by the Finnish owners actually represent a very heavy loss for the Finnish nation as a whole. No country of F inland’s size could waive a claim of such importance to the national welfare.

I t is equally obvious th a t an enquiry as to the “ desirability ” of intervention by the Council in favour of the Finnish claim demands a careful examination of the substance of the present dispute viewed as a whole. For its part, the Finnish Government is m ost anxious to provide the Council with all possible information as regards the substance of the dispute in general.

One more observation in conclusion :

The Finnish Government is aware of the objections expressed by certain members of the Council a t the meeting of January 19th last to the effect that “ pecuniary claims of a private character ” are outside the sphere of action of the Council.

I t need hardly be repeated th a t the Finnish Government does not share this view in principle.However justified in m ay appear to interpret Article 11, paragraph 2, of the Covenant in

a very restrictive sense, it certainly cannot be justifiable at the present juncture to apply this interpretation to the case of the Finnish claim.

The Finnish Government has done all in its power to obtain a solution of the problem through ordinary diplomatic channels. Only after fourteen years of diplomatic negotiations and correspondence which proved to be of no avail did the Finnish Government ask eminently qualified authorities for their opinion on the desirability of bringing the m atter before the Council.

Next Ju ly it will be four years since the question was placed on the Council’s agenda, and it is now over three years since the first Committee of the Council unanimously recommended in its report a conciliatory intervention by the Council. I t should not be forgotten that, at the meeting of September 19th, 1931, the then President of the Council clearly stated th a t the Committee should make a report on the question whether “ it was desirable that the Council should deal with such m atters Notwithstanding the well-defined character of the task entrusted to the first Committee of the Council, no voice, apart from th a t of the British representative, was ever raised in the Council until September last to question the desirability of the Council’s dealing with the Finnish claim.

A second Committee of Three has now been asked to express a considered opinion on exactly this same question of “ desirability ” , I t is obvious that, after more than three years, during which the League of Nations has displayed its interest in the m atter, the Council is under a moral obligation to give satisfaction to the Finnish Government’s appeal. W'hatever doubts may be felt as to the expediency of interpreting the provisions of Article 11, paragraph 2, in such a way as to include pecuniary questions of a private character, these doubts cannot be entertained in a m atter regarding which the “ desirability ” of intervention by the Council was not questioned from the outset. After so m any years of discussions in the Council, the refusal to examine the Finnish Government’s claim in order to avoid creating a precedent would certainly be not only profoundly deplored in Finland, but would arouse apprehensions throughout the world. If the Council comes to the conclusion that, for reasons of expediency, a question of this nature should be excluded from its sphere of action, such a rule can only be applied to claims subsequent to the decision, bu t not to a case which has been on the Council’s agenda for nearly four years.

Appendix I.

[Translation from the Swedish.']

E x t r a c t o f t h e I m p e r i a l R u s s i a n L a w r e l a t i n g t o R e q u i s i t i o n i n g o f S h i p s .

Law concerning the Commandeertng of Ships, sanctioned by the Council of State and the Duma.

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III . The commandeering of ships shall be extended to vessels which are the property of Finnish citizens and general trading and shipping companies (limited liability companies, trading and m utual trust companies, co-operative societies, etc.) operating in the Grand-Duchy of Finland, provided such ships belong to ports of the Empire.

IV. Until such tim e as a law concerning the commandeering of ships be issued in the Grand-Duchy of Finland, shipowners are forbidden to enter ships belonging to ports of the Empire in the Shipping Registers of ports in the Grand-Duchy of Finland.

Appendix II.

Confirmed by the Council of [Copy of copy.]Ministers according to Minutes of November 6th, 1915.

General Secretary of the Special Commission for the Defence of the Realm, Lieutenant- General Bibikoff.

S t a t u t e s f o r t h e R u s s i a n G o v e r n m e n t C o m m i t t e e i n L o n d o n .

§ 1. For the consideration of tenders for orders and acquisition of materials and supplies for the requirements of Government defence in the British Empire and America, as well as for all orders and contracts in general to be paid for out of the credits opened for the Russian Government by the British Government, and for effecting such orders and purchases, a Russian Government Committee shall be formed in London.

§ 2. In its activities, the Committee shall be guided by the London Financial Agreement of September iy /soth , 1915, and by the special appendix to th a t Agreement.

§ 3. The duties of the Committee are as follows :

(a) The consideration of tenders for orders and the acquisition of materials and supplies for the requirements of Government defence in the British Empire and America, as well as for all orders and contracts in general to be paid for out of the credits opened for the Russian Government by the British Government ;

(b) The effecting of such orders and purchases on behalf of the departments and institutions concerned, the conclusion of contracts and signing of agreements both for the acquisition of the corresponding articles and supplies and for their delivery;

(c) To ascertain, a t the request of the Chairman of the Special Commission for considering and co-ordinating measures for the defence of the realm or of Government departments, what articles can be acquired in Great Britain and the terms on which they can be acquired;

(d) To supply information as to the status of foreign firms on the enquiry of the Russian Government institutions concerned, public organisations and private undertakings, if their paym ent is to be made out of the credits supplied by the British Government ;

(e) To supervise all deliveries for the requirements of defence carried out in England, and—in the event of delay in effecting deliveries—to ascertain and remove the causes of delay, to organise the receival of articles ordered and, in case of need, their despatch to Russia.

§ 4. The Chairman of the Committee and his Deputy in case of absence or illness are appointed by the Minister of W ar; the D eputy Chairman is entitled to all the rights of the Chairman in fulfilling the duties of the latter.

§ 5. The members of the Committee consist of representatives of the Ministries of: War, Marine, Finance, and Trade and Industry, as well as of the Government Control, appointed by order of the chiefs of the Departm ents concerned, and of such representatives of the Departments referred to, whose presence in the Committee as members is considered indispensable by the chiefs of these Departments.

Note 1. — Representatives of other Departments may also be included in the Committee by agreement between the Minister of War and the chiefs of the Departments concerned.

Note 2. — Persons who may be of assistance b y their knowledge or work m ay take part in the m eetings of the Committee on the special invitation of its Chairman.

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Note j . — The officiais of th e War Office and Admiralty sent to England to watch the manufacture and receival of supplies, within the limits of the duties imposed upon them, are at the disposal of the corresponding representatives.

§ 6. The Russian Government Committee is divided into the following sections : military, naval, financial, and commercial and industrial, each dealing with the questions of the corres­ponding Ministry.

Questions raised by departments th a t are not represented on the Committee and by private and public organisations shall be dealt with by the commercial and industrial section. The trans­port department, in which all questions shall be concentrated connected with the despatch from England of materials and supplies acquired for the requirements of Government defence, is also within the province of the same section ; the management of the transport department is entrusted to one of the members of the Committee, a t whose disposal the necessary number of persons acquainted with transport business is placed, these persons being allowed to be resident outside London.

The Committee has a chancellory attached to it, containing a counting and bookkeeping department.

The estimates for the maintenance of the Committee and the chancellory attached to it with its counting and bookkeeping departm ent are conformed, on being submitted by the Chairman of the Committee to the Minister of W ar after preliminary consultation with the Minister of Finance.

§ 7. The representatives of the Government Control, who are not on the staff of any of the sections of the Committee, acquaint themselves with all the business of the Committee irrespective of what section such business is transacted in; disagreement on part of representatives of the Government Control do not delay the further despatch of business.

§ 8. The Chairman of the Committee is its representative on the International Commission of Supply (Commission internationale de ravitaillement) ; members of the Committee take part in the la tte r according to the section concerned by the questions, by order of the Chairman of the Committee ; independently of this, for the purpose of constant relations with the International Commission, the Chairman of the Committee appoints one of its members.

§ 9. One of the members of the Committee from the Ministry of War, by order of the Chairman of the Committee, shall be the representative of the Russian Government on the Committee, formed a t the British W ar Office.

§ 10. The business of the Committee is divided according to the sections, managed by the corresponding members of the Committee.

§ 11. Agreements, undertakings and powers of attorney connected with the business of the Committee are drawn up on behalf of the la tte r and are signed jointly by the Chairman of the Committee and the representative of the departm ent concerned and are countersigned by the secretary of the corresponding section of the Committee. Other documents are signed by the Chairman of the Committee or by the representatives managing the corresponding sections of the Committee and are countersigned by the secretaries of the corresponding sections of the Committee; financial documents are signed by the Chairman of the Committee.

§ 12. The Committee is entitled to empower one or more members on its behalf, in accordance with a special resolution of the Committee on each separate occasion, to perform actions referring to the duties of the Committee.

§ 13. The sums required for orders given or articles purchased are remitted in the name of the Chairman of the Committee.

§ 14. Payments for transactions, after being verified by the section of the Committee concerned and by the representative of the Government Control, are made in the financial section of the Committee, th a t is placed under the management of the member of the Committee from the Ministry of Finance.

The payment of advances on account of orders, the drawing-up of final accounts and the liberation of securities are carried out by resolutions of the Committee.

§ 15. Expenditure on the maintenance of the Committee and the chancellory attached to it with its counting and bookkeeping department is made, on the instructions of the Chairman of the Committee, out of funds assigned for this purpose by the Ministry of W ar after preliminary reference, when necessary, to the Ministry of Finance.

§ 16. The detailed procedure of the Committee and of its sections is determined by the Committee itself.

(Signed) President of the Council of Ministers,Secretary o f State : G o r e m y k i n .

In agreement with the original : Chief of Department of the Chancellory of the Council of Ministers : A. P o u t i l o f f .

True copy: Secretary of the Special Commission, Aulic Councillor : B o s o b r .

True copy of copy: Late member of the Russian Government Committee,Colonel : (Signed) M i r o n o f f .

The correctness of the above translation is hereby certified,Helsingfors, March 1st, 1935.

No. 53 . B. W i d n â s (s ig n ) ,

Sworn Translator.

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Appendix III.

E x t r a c t s f r o m R e p o r t s o f t h e Ca p t a i n s a b o u t P r o c e d u r e a n d T r e a t m e n t

a t t h e R e q u i s i t i o n .

I.

" A couple of days after Christmas 1916, the Hesperus was surveyed and taken over by British authorities in Manchester. Orders were given by the English th a t the ship was to be supplied with provisions and engine-room stores for a voyage of 6,000 nautical miles. Several large boxes with various articles of woollen clothing for the crew and charts with descriptions for the intended voyage were sent on board sealed. The forecastles were provided with extra stoves, a deckhouse was built amidships for two gunners, the aft poop was strengthened and fitted with a gun-carriage. The cannon was to be taken on board at Liverpool. An agent was indicated, who provided some cash. Otherwise the English attended to everything and settled all accounts.

" Before loading in Manchester commenced, the undersigned applied to the highest officer a t Manchester dealing with the requisitioned ships and stated th a t the officers on board refused to sail with the ship now that she had been taken by the English for war purposes. This English officer then became very violent and said: ' Inform your officers th a t if they don’t accompany the ship I ’ll make it so hot for them that they will thank God to be allowed to go with the ship on her intended voyage ’. I t was thus by threats that we on the Hesperus were compelled by the English to sail with the ship in their service.

“ During the whole time the undersigned was quite convinced th a t the requisitioning of the Hesperus took place for account of the English, nor were any further instructions received from the authorities of any other country.

“ Valencia, November 13th, 1931.K. E. L i n d r o o s ,

Formerly Master of the s/s Hesperus."

** *

II.«Rouen, 12th November 1931.

“ When sailing on time charter for the firm Isaac & Co., London, there were on arrival in London still two months to run of this charter when three or four British officers in uniform appeared on board, stating th a t the ship was to be taken over by the British Government. Orders were given to take away the name of the ship, and th a t she was hereafter to bear the number 1538, which number was to be painted on a board, to be kept on the bridge, and hung out while the ship was lying in port.

“ I immediately went to Messrs. Isaac & Co., who informed me th a t nothing could be done in the m atter and tha t all my protests were unnecessary, as the country was at war.

“ Thereupon I went to see Charles Gee, the agent of my owners, b u t he also informed me th a t I had to make the best of m atters.

“ As the aforesaid officers had given me orders to go to the Intelligence Office, I went there, and was informed that the British Government had taken possession of the ship and th a t it belonged to the Naval Transport Office, under the number 1538.

“ On and after this day I therefore sailed under their orders, the whole time carrying ammu­nition and with sealed orders. From Messrs. Mathwin & Co., of Cardiff, and their representatives a t other places (they were probably brokers for the Naval Transport Office), I received the cash needed for wages, provisions, etc.

“ Your truly,Albin B l o m q u i s t .”

** *

III.

“ At the request of Finska Angfartygs Aktiebolaget (The Finland Steamship Company, Ltd.) the undersigned, who was Master during the Great W ar of the S/S Algol, belonging to the said company, which steamer was later on sunk, herewith gives an account mainly from memory (owing to the fact that the then correspondence and ship’s log are no longer available) of his recollections of the happenings during the time of the compulsory requisitioning.

f

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" During part of the Great W ar, the Algol traded for her owner’s account between England and North America, chartered by an English firm in Manchester. A t the beginning of January 1917, the undersigned received information from the Company’s agents in London, and also from the charterer, th a t the Algol, on her arrival in England, would be compulsorily requisitioned by the British Government, through the medium of the Russian Government, for purposes of transport. Received a t the same time the information th a t the requisition authorities would be responsible for the insurance of the ship.

“ During the whole of the time th a t the Algol was compulsorily requisitioned, she was solely directed by the above-mentioned authorities and their agents, Messrs, Wm. Mathwin & Son, Cardiff, from whom the undersigned received funds for provisions and wages. The undersigned had no contact whatever with any Russian authorities, other than the Consulates which the Masters, as customary during the Russian time, had to visit in person. These Consulates had however, nothing whatever to do with the directing of the Algol.

“ Kotka, 14th November 1931.(Signed) J . J o h a n s s o n ,

Master. "

IV.

" On arrival a t London, January 5th, 1917, Mr. Charles Gee informed me th a t the Leda, after discharge of her fruit cargo, would be taken over by the British Government to be used as a military transport. There was never any question of protest, as this would merely have had the appearance of illoyalty in consequence whereof further annoyances would have resulted.

“ Between January 10th and May 15th, 1917, the ship made six voyages between English ports and Rouen and one voyage from Cardiff to Southampton, under my command. The cargoes consisted of either coal or coke, of which the British troops in Rouen were receivers. Ammunition or other direct necessaries of war were never carried as long as I was on board, which was the greatest and perhaps the only ray of light and advantage one had among all the innumerable hardships and inconveniences of the Great W ar, which seems to me like a bad dream.

" London, January 15th, 1932.( Signed) J . W. E n g s t r ô m ,

Ex-Master of the S /S Leda.”

Appendix IV.

N o t e v e r b a l e .

His Britannic M ajesty’s Chargé d ’Affaires presents his Compliments to His Excellency the Minister for Foreign Affairs and, with reference to Mr. Rennie’s interview with His Excellency on September 7th, has the honour, under instructions from His Majesty's Government, to make the following communication with regard to the question of certain Finnish ships requisitioned by the British Government during the War.

Mr. Ogilvie-Forbes is instructed to inform His Excellency th a t His Majesty’s Government must m aintain their a ttitude, as expressed to the Finnish Minister a t the Court of St. James in their Note of April 26th, 1921, and th a t they do not consider tha t any useful purpose would be served by holding a conference in London.

He is, however, to add th a t His Majesty's Government are willing to undertake th a t they will bear the whole question in mind when the debt of His Majesty’s Government to Russia is under discussion with the Russian Government and th a t they will endeavour to secure th a t provision shall be made for the legitimate claims of Finnish shipowners.

[L.S.]

British Legation,

Helsingfors,

September 14th, 1922.

2 0 —

Appendix V.

British Legation,

Helsingfors,September 19th, 1924.

Monsieur le Ministre,

I have the honour to refer to Mr. Ogilvie Forbes’ note of September 14th, 1922, with regard to the question of certain Finnish ships requisitioned by His M ajesty’s Government during the W ar, in which he stated, by direction of His Majesty’s Government, that the latter were willing to undertake th a t this question should be borne in mind when the debt of His Majesty’s Government to Russia came under discussion with the Russian Government and th a t they would endeavour to secure th a t the legitimate claims of Finnish shipowners should be provided for. I have now the honour, under instructions from His M ajesty’s Principal Secretary of State for Foreign Affairs, to inform Your Excellency th a t Article 7 of the General Treaty recently concluded with the Government of the Union of Socialist Soviet Republics provides th a t the question of debts between the former Russian Government and British Government Departm ents is reserved for discussion at a later date. I am to add th a t the claims in respect of the Finnish shipping mentioned above have not been lost sight of and th a t they will be brought up for discussion when the debts in question are eventually examined in detail with the Government of the Union of Socialist Soviet Republics.

I avail myself of this opportunity, Monsieur le Ministre, to renew to Your Excellency the assurance of my highest consideration.

(Signed) Douglas M a c K i l l o p .

Excellency :

Monsieur Hj. J. P r o c o p é ,

Minister for Foreign Affairs,Helsingfors.