File No. 195/406

The British Ambassador ( Spring Rice ) to the Secretary of State

No. 223

Sir: I have the honour to acknowledge the receipt of your note of the 24th instant enclosing a resolution of the Shipping Board as to requisitioning vessels building in American yards for foreign governments or owners.

As you are aware, this has been the subject of frequent discussion both verbally and in correspondence between your Government and ours.

We had expected in view of the state in which these discussions were left that no actual decision would be arrived at without a further communication with us and we had no idea that the Shipping Board were re-considering the matter with a view to a final decision.

Your note forwarding the resolution is dated on the day on which [Page 606] the resignations of the chairman and one of the members of the Board were announced; and I see that it is stated to-day that the vice-chairman also has tendered his resignation.

In the circumstances, I presume that we may expect the new board will reconsider the matter in the light of the representations which have already been made.

I should be obliged if the following considerations could also be brought to the notice of the Shipping Board:

At the beginning of the war there was a considerable number of vessels building in Great Britain which were the property of Great Britain’s allies or of neutral shipowners, just as there is now a number of vessels building in the United States which are the property of the British Government.

It was therefore necessary for Great Britain to consider, as America has now had to consider, how she should control the building of such ships in view of the limited supplies of labour and material, and whether in view of the enormous strain upon her mercantile marine imposed by war requirements she would be justified in breaking contracts, and requisitioning the vessels.

It must be remembered that the strain thrown upon the British mercantile marine by the immediate necessities of the war was enormous.

While the vessels in question were still building, half of the British mercantile marine had to be devoted to direct naval and military requirements.

In addition, in view of the inadequate mercantile marines of her allies Great Britain provided some 2,000,000 tons to France, Russia and Italy at rates very much below (and in the case of nearly a million tons at less than one-sixth of) the present market rates.

The strain gradually forced Great Britain to abandon her shipping interests, and to destroy old established lines, till now no oceangoing British vessels are allowed to trade on any route except those which are required, not for trading purposes but for the transport of articles essential to the Empire.

Similarly, civilian consumption had to be cut down to a point involving real hardship to the individual citizen as well as destruction of industries not directly required for war purposes. Before the war, Great Britain imported over 50,000,000 tons of civilian and industrial requirements (including nearly 20,000,000 tons of foodstuffs). This year her imports for civilian requirements will be about 20,000,000 tons including foodstuffs, and this in spite of the fact that she is bound anyhow to import four-fifths of her wheat supply.

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At the same time the brunt of the submarine campaign has fallen upon Great Britain whose mercantile marine has lost a larger proportion than that of any of her allies.

Since the war began, over 4,000,000 tons gross of British tonnage have been destroyed by war risk. Allowing for gains by new building and by seizure of German ships, this still leaves a net loss of two and one-fourth million gross tons. In contrast to this American tonnage shows an increase (including some half million tons of seized German ships) of nearly one and three-fourths million gross tons. Excluding as gains in both cases the seized German ships, the war has meant a net loss of two and three-fourths million tons gross to Great Britain and a gain of nearly one and one-fourth million gross tons to America. At the same time America is only beginning to have her mercantile marine drawn upon either for her own military requirements or for providing ships to the Allies.

In the circumstances described above, the action taken by Great Britain was as follows:

In the case of vessels building for Allied countries, she gave unconditional facilities for the completion of the vessels and allowed them to remain under Allied ownership, under the Allied flag and under Allied control, both during the war and afterwards.

Even in the case of mercantile neutral vessels, she did not feel justified in breaking the contracts. All she did was to make an arrangement with the neutral owner under which, in return for facilities for the speedy completion of the vessels, they were chartered (at rates leaving about five times the profit allowed for British ships) for the period of the war and six months after, the vessels being then transferred to the neutral flag and remaining throughout the property of the neutral.

These arrangements both in the case of the Allied ships and the neutral ships were of course in no way inconsistent with the proper control of building by the British Government who arranged for the supply of steel, etc., under the priority system set up on account of the shortage of material. The control of building, however, was treated as an entirely separate question from that of the control and ownership of vessels after completion.

In conclusion I ought to add that the communications I have received from His Majesty’s Government show that they consider the retention of their vessels building in America to be essential to their shipping programme and would learn with great regret that the United States Government intended to break the contracts.

I have [etc.]

Cecil Spring Rice