195.1/148½

The Assistant Secretary of the Treasury ( Peters ) to the Acting Secretary of State

My Dear Mr. Lansing: Our recent conversation on the international aspect of granting foreign-built vessels American registry, was most interesting, and I appreciate your giving me your views. You expressed so much interest that I am writing to present to you the situation which confronts the Bureau of War Risk Insurance.

This Bureau, which is under my supervision, is receiving inquiries almost daily in regard to insurance on vessels which formerly flew a foreign flag and have been granted American registry under the recent act of Congress. The vessels which have taken out United States Registry are of two classes:

(1)
Vessels which were owned by Americans at the breaking out of hostilities. To the right of these vessels to receive the protection of this Government and its flag I understand there is no objection, and insurance has already been placed on such vessels to a considerable sum.
(2)
Vessels which were owned before the war by citizens of belligerent countries, and which have been purchased by citizens of the United States only since the commencement of hostilities. The right of such vessels to American registry, I understand, has been questioned. No insurance on such vessels has been written as yet, or as yet has been refused. Inquiries, however, relative to such insurance have been made to the Bureau of War Risk Insurance. The owners intimate that if they are unable to get such insurance from the [Page 104] Bureau, they will be unable to use their vessel and their investment will have gone for naught.

The attention of the Bureau is called to the fact that its purpose is to assist American shippers and that its creation indicates a policy of accepting such a risk as the one referred to.

A direct answer in any one of the cases so far presented has not been demanded of us as yet. Such a demand seems imminent, and when the insurance is applied for an immediate answer will undoubtedly be required.

Unless a definite policy has previously been determined on the Bureau will be placed in a position of considerable embarrassment. Should these vessels not be treated by this Government as other vessels flying the American flag are treated, the usefulness of granting American registry to foreign-built ships may be much curtailed. On the other hand the acceptance of such insurance means that this Government must be prepared to insist on its protection of these vessels, and, should these vessels be seized by a belligerent, might be called upon to pay the loss or damages for detention. It does not seem to me that the Bureau, by its decision, ought to determine the policy of the Government on a question with possibilities so far reaching.

I hope I can get you for lunch.

Sincerely yours,

A. J. Peters