The Secretary of State to William H. Libby (for the Standard Oil Company of New Jersey)
Sir: The Department has received your letter of the 18th instant in regard to the transfer of American-owned ships to the American flag. Your letter points out that, even if the transfer is permitted, the good faith of the transaction would be open to inquiry which may be made in the prize courts of the belligerent powers. This you state would be attended with costs and delay incident upon a judicial examination. As obviating this contingency you suggest that it might be possible to obtain the assent of the belligerent powers engaged in the present war to the exemption from seizure and inquiry of vessels which have been transferred to the American flag by registration in accordance with the recent act of August 18, 1914, but which were actually owned in this country before the war began. You further point out that the vessels to which you refer are now “flying the German flag and are registered as the property of the Deutsch-Amerikanische Petroleum Gesellschaft.”
The Department presumes that the transaction would involve not only the transfer of the register from Germany to the United States, but also the transfer of the title from the Deutsch-Amerikanische Petroleum Gesellschaft to an American citizen or an American corporation in accordance with the provisions of the act of August 24, 1912 (37 Stat. L. 560).
The Department has reason to believe that its representations to the governments of the belligerents aligned against Germany in the present war, for the purpose of gaining recognition of the transfer of these vessels, would not be looked upon with general favor. Judging from the attitude of the powers represented at the naval conference at London in 1909, such a situation is very likely to result. It is well known that the powers of Europe do not agree as to whether bona fide transfers after the outbreak of war or within a fixed period before the war, are or are not permissible. Great Britain and several other powers adopt the view that, subject to certain conditions, such transfers are legitimate, but that it is, broadly speaking, for the purchaser to establish the bona fides of the transaction. The Department therefore feels that it would be futile to attempt to obtain the assent of the Allies to an arrangement involving, as your case does, German ships.
Furthermore, if any understanding of this kind is to be of value it would seem that it should be of a formal nature, but a formal arrangement with one or all of the Allies on a matter affecting, at least at present, largely if not entirely their own interest in the carrying trade, might be looked upon by their enemies as an unneutral act on the part of the United States. To avoid a charge of impartiality, if not of unneutrality, this Government is clear that it should not suggest an agreement on the matter except to all of the belligerents alike, and it believes it is too much to hope that an arrangement [Page 489] of the kind desired, could be arrived at to the mutual satisfaction of all of the powers at war.
I am [etc.]
Counselor