File No. 195/92
The Ambassador in Great Britain ( Page) to the Secretary of State
[Received August 22, 8.50 a.m.]
6993. I have received the following personal and private letter which I quote in full:
My dear Ambassador: When I was in the United States the question was raised as to whether the shipping under construction in American yards on British account should be taken over by the American Government or should remain in the ownership of the country for which it was being built. Mr. Denman, at that time head of the Shipping Board, raised this point in the course of a conference at which both he and General Goethals were present which the British Government had adopted: his line of argument being that British orders occupied all the yards in the United States, that American labor and American capital were absorbed in the construction of British shipping and that with their assistance Britain would find herself at the end of the war possessed of a great mercantile marine which the United States had built but did not own.
I took the liberty of pointing out to Mr. Denman in reply that in ordering these ships before America entered the war Great Britain took the only course open to her and one which, however the question of ownership was ultimately decided, must be to the advantage of all the powers fighting against Germany. It was of the first necessity that the whole of the world’s resources in shipbuilding open to the Allies should be used in the construction of mercantile ships and as America was not then among the belligerents it was only by the British Government that the necessary arrangements could at that time be made with private owners of shipyards in the United States. I added that under no circumstances would the British Government enter into controversy with the State Department on the question of ownership and that we placed complete reliance upon the justice and goodwill of the authorities in Washington. To this policy we still adhere. If the United States Government after surveying all the circumstances of the case think the ships that we have ordered in their yards should belong to them we shall not think of making any protest nor are we of opinion that if the ships on completion are used in the war work of the Allies the question of ownership has any material bearing upon the conduct of the war. It may however be worth observing that if our own policy towards our Allies were taken as a precedent there would be no change of ownership in the case of the British ships now under construction in American yards. We always drew a sharp distinction between ships building for Allies in our yards and ships building for neutrals. The latter were brought under the British flag and retained in Allied services for the period of the war, work on the former was dealt with exactly as if the ships were being built for British owners and when finished they were handed over without [Page 623] reserve to the country on whose account they had been ordered. There was as far as I can ascertain only one exception to this general practice and in this particular case satisfactory arrangements were made. From very nature of the case the largest losses in mercantile shipping have been borne by Great Britain. It is on Great Britain in the main that the Allies have relied for the maintenance of the seaborne traffic on which not merely their capacity for fighting but their very existence depends. It is on Great Britain that the full brunt of the submarine campaign has fallen. Our losses have been heavy and unless we obtain the ships now under construction for us in America we cannot easily tide over the critical period which must elapse before our own extended shipbuilding program bears its full fruit.
We should therefore feel much gratified if the United States Government thought it consistent with the claims of their own national interests to allow the ships now building for us in America to remain in their present ownership, though for the reasons given above we shall not press the point. We rely (as I said at Washington) on their justice and goodwill.
Yours sincerely,
Arthur James Balfour