File No. 763.72111/6809

The British Embassy to the Department of State

Memorandum

His Majesty’s Consul at Colon reports that the proclamation of neutrality of Canal Zone is still considered to be in force, and that troop transports and naval auxiliaries can only be supplied with sufficient coal to take them to the nearest British port, namely Jamaica. His Majesty’s Consul adds that Canal authorities have [Page 1270] plenty of coal available, and are willing to supply it, if special arrangements can be made through diplomatic channel. Relying on the assurances of the United States Government that no objection would be raised on their part, His Majesty’s Government have made arrangements for the carriage of Australasian troops through the Canal. Two transports are due at Colon on August 30th and another on September 4th, each requiring to take on board there 2,000 tons of coal.

A situation of great embarrassment will arise if the United States Government now insist on applying to our transports rules of proclamation of neutrality of Canal Zone. This will wreck the whole scheme for transport of Australasian troops through the Canal, and anticipated saving of tonnage under that scheme will be thrown away.

The United States Government hold, no doubt, that they are justified, by their sovereignty in Canal Zone, in relieving their own men-of-war and transports of restrictions. But if this contention is well founded, as would seem to be the case, the United States Government would be equally justified in relieving men-of-war and transports of their co-belligerents, in extending to them the same treatment as they would be given in United States territory proper.

His Majesty’s Government does not desire to raise the question as to the right to differentiate in favour of United States vessels in the Canal, which of course has been already the subject of prolonged negotiation; but they express the hope that under present circumstances such differentiation will not be applied to the disadvantage of Great Britain, in a matter of such vital importance to the conduct of the war.

In this connection attention is called to the request made on June 5th that the dry dock and repair shops at Balboa may be made available for the ships of the British Pacific Squadron, and that they may be supplied with the coal, oil and stores which may be required.

The matter is of urgent importance and an answer is requested as soon as possible.