File No. 862.85/202

The Minister in Uruguay ( Jeffery) to the Secretary of State

[Telegram]

Your October 29, 7 p.m. Uruguayan Minister for Foreign Affairs says that one of the conditions on which England agreed to sign arbitration treaty with Uruguay was that three-quarters of the total tonnage of the German vessels here should be used in the trade between Europe and Uruguay. Later the United States Shipping Board made a proposal to Uruguay for ships which was not accepted. Then Shipping Board made a proposal as follows: an American company was to be organized under Uruguayan laws to take over ships. By the terms of this proposition the ships were to be taken to the United States for repairs, after which a sufficient number would be used for traffic between the United States and Uruguay; remaining ships to be used according to agreement between these countries. Objection is made to requirement that ships must be in charge of American captains as this is contrary to pro visions of Uruguayan laws. Minister says that to be able to accept proposition of Shipping Board it is necessary to obtain from England and France consent that ships be given different destination and used in different traffic. It would also be necessary for American company to adjust itself to conditions provided by the law regulating the use of German vessels, which is at present being considered in the House of Representatives. British Minister in memorandum to me says:

It is my understanding that the ships shall be used in agreement with British Government; that Government insists that the greater part of tonnage shall be used in the trade with Europe. The French Government is acting in agreement with British Government. It is clear that the French Government will not sign arbitration treaty until British Government is satisfied on this score.

British Minister says that the firm of Houlder Bros. of this city in conjunction with Dodero Bros. of Buenos Aires is prepared to charter ships on terms which appear liberal or to operate ships for the account of Government and to undertake all repairs. I am informed [Page 358]that Houlder Bros, represent English capital of the Royal Mail Steamship Co. This proposition is practically same as American proposition except as to use and destination of ships. It is supported by British Minister, who tells me that the negotiations should not be interfered with or embarrassed by other propositions. French Minister told me in the presence of British Minister that his Government would not sign arbitration treaty until British Government signed the treaty. In my opinion the Uruguayan Government will be greatly pleased if Governments at Washington and London can reach an agreement by which most of ships may be used in traffic between the United States and Uruguay, in which event American capital could be used in securing control of ships.

Jeffery