195.1/148½
The Acting Secretary of State to President Wilson
Dear Mr. President: Assistant Secretary Peters’ personal letter to me of the 14th, a copy of which is enclosed,5 was the result of a conversation which I had with him a few days ago and in which I expressed the opinion that the transfer of ownership of merchant vessels like the transfer of flag, when bona fide, is legal.
When it came to writing a letter to Mr. Peters, which would doubtless be the basis for the issuance of policies by the Bureau of War Risk Insurance to vessels purchased from nationals of belligerent powers, I hesitated to do so until you had given me authority, since the issuance of a policy covering a vessel of this class will amount to a declaration of the position of this Government as to such transfers, and in case of its subsequent seizure by a French or British warship [Page 105] it will be necessary to enter a vigorous protest which will precipitate a diplomatic controversy.
It seems to me that we cannot much longer postpone taking a decided stand on this question of transfer of ownership. We must either support American purchasers of vessels of belligerent nationality or else discourage such purchases. Our citizens ought to know whether they may expect the support of this Government.
You know my views upon the subject, in which I am supported by the Solicitor of the Department and by Professor Wambaugh, who for a time assisted my office as an expert, but in order that you may understand that there is difference of opinion by those who have studied the question I enclose two memoranda of the Joint State and Navy Neutrality Board6 which is at least in a measure adverse to the legality of such transfers.
I also enclose the opinions of the Solicitor and of Professor Wambaugh.6
Your attention should also be called to the fact that the French Government has consistently opposed the validity of such transfers and their naval vessels will undoubtedly act accordingly. The British Government at first took the same view, but later changed their attitude as stated in my letter to you of August 24th. From subsequent conversations with the British Ambassador it appears that his Government have since been impressed with the French argument that the purchase of German vessels would release large amounts of capital, which would otherwise be useless to the German owners. Just what position the British Government will take, therefore, is to an extent uncertain.
Since writing the foregoing I have received a memorandum from the British Ambassador which indicates very clearly what attitude his Government intends to take in the matter of the purchase of vessels of belligerent nationality by citizens of the United. States. A copy of the memorandum is herewith enclosed.7
In view of the importance of a decision of this question to the Bureau of War Risk Insurance it would seem well to reply to Mr. Peters’ letter as soon as possible.
Very sincerely yours,
- Supra.↩
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- Foreign Relations, 1914, supp., p. 499.↩