File No. 763.72112/1347

The Ambassador in Great Britain ( Page ) to the Secretary of State


2485. Your 1851, 15th.3 Urion’s letter to Sir Edward Grey consists of seven and half pages. Following is full résumé made by Urion at my request:

In view of final hearing next Monday, prize court, it is desirable bring to your notice the present condition negotiations for settlement.

Early last August American packers ascertained through Washington what the position of American shippers would be under war conditions. British Ambassador represented to State Department that exportation from the United States to neutrals would not be interferred, with, and, relying upon this assurance by packers, the Kim group of ships were loaded and dispatched.

Immediately after capture these and similar cargoes [and] complaints by shippers, British Government invited packers to send to England representative authorized negotiate terms settlement.

I was selected packers’ representative. Arrived England January 24. Found some time after arrival great difficulties in conduct negotiations with British [Page 475] Government because of overlapping jurisdiction various departments. Result: went round several Government departments, referred one to other, finally ending, after months, with Foreign Office, where started.

To May 1, although had striven hard, made several proposals for settlement, gone so far agree suspend further shipments Scandinavian countries pending negotiations as evidence packers’ good faith, seriously trying meet views British Government, being led to believe this an important consideration leading to settlement, I had never succeeded in obtaining any counter proposal from any of various Government departments what terms the British would be willing accept; but led understand, up to this time, difficulty was not arising out of values goods seized or prices, but settlement mainly depended upon packers entering arrangement control future shipments.

May 15 left this country for the United States; [at] that time ascertained that packers would come under positive understanding, backed bank guarantee, to control least 90 per cent future exports European neutrals. Would [in] future confine shipments packing-house products Scandinavian countries quantity equal average quantity exported countries from United States during last three years plus agreed allowance, increase population, other contingencies. Armed with this authority returned. Anticipated no difficulty arriving settlement, seeing only difficulty which up to that time confronted us now removed.

Shortly after return, informed British difficulty they had raised [regarding] future control was now removed. This obstacle removed question price was led believe only outstanding question remaining.

Packers conceived price ought receive for captured cargoes actual market price cargoes would have fetched had they proceeded to and arrived destination. Care taken ascertain these prices, called spot prices, market prices if such goods sold port destination day after arrival vessel that port. Ascertainment these prices on nearly forty ships sailing different times entailed considerable trouble, but submitted in detail to British who objected prices too high and different basis be adopted.

Seeing packers have been out their money nearly year and no interests what-ever been charged thought spot prices were proper prices packers entitled and was fortified arriving this conclusion knowledge Wilhelmina case. Government actually agreed pay owners the cargo prices upon basis I was asking. Not only was this [the] case, but within my knowledge other cargoes had been settled upon same footing, and spot prices such cargoes paid. Saw no reason why packer should be differentiated against, and thought [and] still think spot price proper which should have been paid. However clients anxious put no difficulties way settlement, and were all desirous avoiding any diplomatic interference. Thereupon a bargaining took place about prices as basis settlement.

To cut matter short ultimately offered to accept actual c. i. f. prices for goods; i. e., basis many Scandinavian independent buyers had actually paid Chicago packers for similar goods before being shipped to them. Again labor undertaken showing these c. i. f. prices. Complete list furnished British showing what entire claim on c. i. f. basis.

In view approaching hearing prize court briefs delivered three weeks. Since that time negotiations for settlement which had previously been conducted through the Foreign Office, board trade, departmental committees, Anderson, were now conducted by Attorney General, and all the prices were supplied him. Attorney General, when matter first came before him, informed Counsel Sir Robert Finlay before settlement could be made must ascertain whether owners five ships Kim group would concur in settlement and withdraw their independent claims. He also desired know whether the Scandinavian buyers who had bought [and] paid for their goods on c. i. f. terms would come into settlement.

Accordingly communicated with London representatives most c. i. f. buyers conclusion reached that c. i. f. buyers would probably settle on terms corresponding or nearly corresponding packers will accept.

Regarding owners five ships, packers went to length undertaking indemnify these five shipowners against expense claims which might be brought against them American courts by charterers, shipowners themselves relinquishing claims against Crown by reason capture. Attorney General so advised. This effectually cleared off the five shipowners.

Then asked by Crown furnish figures showing amount claims c. i. f. buyers. After considerable trouble, got complete list which showed if c. i. f. buyers were [Page 476] paid c. i. f. prices claims would amount approximately £682,816, and figures showing how this total arrived at submitted Attorney General.

Another meeting called House Commons July 7, and having up to that point met every successive difficulty which had been raised by the Crown’s advisers, believed was at last on eve arriving settlement. To my astonishment, at interview found Crown expected packers to undertake responsibility settling both with Scandinavian buyers and owners all ships.

Crown’s proposals with these new conditions added: (1) Packers to be paid lump sum £2,250,000 full settlement of their claims; (2) packers were to pay Scandinavian buyers amounting £682,816 or whatever larger sum buyers might [be] willing accept; (3) packers to protect Government against claims by owners of all ships; (3–a) it was subsequently suggested in discussion that Government would settle with buyers deducting sum £682,816 from amount payable packers who should indemnify Government against any excess which might be paid [to] settle buyers’ claims, and Government were also settle the shipowners (including the first four known as the Kim group), deducting further £50,000 from payment to be made packers. Net result would be packers would receive at most £1,500,000—perhaps no more than £1,250,000—in settlement their claims.

These terms [in] addition [to] two obligations which packers expressed willingness accept: (a) Future shipments from United States [to] Scandinavia [of] packing-house products [to] be confined [to] average quantity indicated; (b) that owners Kim group ships release all claims against Crown on surrender bail. The conditions (2), (3), (3–a), introduced for first time interviews July 7. Effect these repeated introductions new conditions most discouragingly unfair. Have on several occasions been as though on point arriving satisfactory settlement, but at last moment new conditions been added to old ones. This has not happened once, but on various occasions, with result have never been able arrive at any finality. Desire to repeat that packers are unable make any further concessions or undertake any new obligations other than those already expressed herein, and I emphatically assert that conditions (2), (3), and (3–a) will not be accepted, and the introduction and insistence upon them at the last moment will create, am sure, great offense in my country.

Am quite alive to fact that if prize court tribunal declines recognize international law and insists on being bound by rules and orders made by British Government for conduct proceedings its own courts, decision adverse to the packers’ claims may be arrived at. Having regard, however, to very large sum involved (reduced as heretofore stated to the c. i. f. figures of £2,073,284, waiving all interest, demurrage, and loss of market since our suspension of shipments to neutral countries on April 15 last, which amount and the proposition to control etc. is our last word in negotiations), and to state of feeling which exists in United States, I regard the decision of prize court as of comparatively minor importance, and whatever decision is arrived at by the prize court will in no way affect clients’ conduct or steps they will take to obtain through their own Government redress to which they are entitled.

American Ambassador
  1. Not printed.