195.1/15½b
The Counselor for the Department of State ( Lansing ) to President Wilson
Dear Mr. President: You ask me for an opinion upon the subject of the transfer of title of German merchant ships, now in American waters, to the United States or its citizens, in connection with certain information contained in a letter to you from Mr. J. P. Morgan under date of August 21, 1914, which letter I herewith return.2
I annex copies of two telegrams received by the Department from the American Ambassador at London, dated respectively August 18th and 21st,3 and also the paraphrase of a telegram received by the British Chargé here from Sir Edward Grey, which the former handed to me on the afternoon of August 22nd.4
From these communications it is manifest that there has been a very decided change of policy on the part of the British Government between the 18th and 21st. From a general attitude of opposition on legal and technical grounds to our purchase of the German ships, they now do not oppose the purchase but seek only that this Government shall guarantee that the vessels purchased shall not trade to German ports or neutral ports easily accessible to German territory.
The only condition, which Great Britain now seeks to impose on the purchase of the ships, seems to be a general requirement that their habits shall be changed, assuming of course that the transfer of title is absolute and intended to be perpetual.
[Page 102]The question of the legality of sale is a question of bona fides, and the accepted rule appears to impose the burden of proof on the parties to the sale, particularly the vendee, to establish such bona fides. I think that the condition, which the British Government now urge, is a reasonable one. The presumption that a sale is made to avoid the consequences of belligerent ownership is regarded as very strong if the vessel continues to follow the same trade route which it had pursued prior to the outbreak of hostilities, and as almost conclusive if the route lay between the neutral country and the ports of the belligerent, whose subjects are selling the vessel.
In one way the British condition does not go as far as the general rule, in that it does not appear to apply to trade routes other than with Germany or nearby neutral ports. On the other hand it goes beyond the rule in requiring no trade with ports of Germany or those near German territory regardless of the previous trade routes of the vessels sold.
It seems to me that the foregoing modification of the general rule in a way changes its application from the presumption created against the bona fides of the sale, and introduces a new element as to the violation of neutrality by the purchaser.
To illustrate, the change after sale of the trade route of a German vessel, which prior to hostilities had been running between American and German ports would remove the presumption that the sale had not been bona fides. On the other hand, a similar change of route by a purchased vessel formerly trading to a South American port would not be required to avoid the presumption, but the condition would be that the route could not be changed to Germany. The first case deals with the presumption of bona fides; the latter, with neutrality.
Nevertheless, from this point of view, I do not think the requirement unjustified or one to which this Government should seriously object, in view of the British Government’s express willingness to waive all other technical grounds of objection to the sale, which I assume includes the production of evidence to establish bona fides in addition to the transfer papers.
In my opinion, therefore, there should be no difficulty in removing any objection by Great Britain to the purchase of German merchant vessels now in neutral harbors. As to the attitude of other belligerents we are not yet advised.
I do not think it necessary to say that in no event should we accede formally to such a condition as one which could properly be imposed. To do so might invite protest from the German Government on the ground that we were not preserving a strict neutrality. But having received notice from Great Britain of its view as to [Page 103] vessels so trading the American owners would naturally avoid the risk by using the vessels in other commerce.
In case you desire a more elaborate consideration of the general subject of the purchase of belligerent merchant ships by neutrals I shall be glad to furnish it.
I am [etc.]