File No. 862.85/425d

The Secretary of State to the Uruguayan Minister ( De Pena)

The Secretary of State presents his compliments to the Uruguayan Minister and desires to refer to the conversation which took place on the 5th instant between the Secretary of the Uruguayan Legation and Mr. Johnson, of the Latin American Division of the State Department, in regard to the following points which the Government of Uruguay desire to have incorporated in the contract for the charter of the eight German vessels now sheltered in Uruguayan ports:

The opinion of the Uruguayan Government must be asked and their consent obtained to the sub-chartering of the ex-German ships. The Uruguayan Government agrees to sub-chartering in principle.
Substitution of tonnage shall be limited to four vessels.
If one of the ex-German vessels is taken off a certain commercial route and some other vessel substituted for it, and the former vessel is sunk or lost, the latter must maintain the commercial route initiated by the former.

The Secretary of State has the honor to inform the Uruguayan Minister that this matter has been taken up with the Emergency Fleet Corporation, which has requested that the following information be conveyed to the Uruguayan Legation.

With reference to the first point it is desired to invite attention to the fact that inasmuch as an arrangement was made between Great Britain and the United States that the vessels acquired should be divided between the two countries, and also as the Government of Uruguay has requested that the Government of the United States obtain the consent and approval of the British authorities to the charter of these vessels by the Emergency Fleet Corporation and inasmuch as the consent and approval of the British authorities was based on the agreement that four vessels should be sub-chartered to a company nominated by Great Britain, it would be difficult to reserve to the Uruguayan Government the right to approve or disapprove of a company to which the vessels are chartered.

Informal advice has been received by the United States Shipping Board that it is the intention of the British authorities to charter these vessels to Houlder Brothers of Montevideo, and the Shipping Board feels confident that the foregoing explanation will place the present situation in such a clear light that the Government of Uruguay will offer no further objections to the reservation on the part of the Emergency Fleet Corporation of the right to select the company to whom the vessels will be chartered.

With reference to the second point attention is invited to the fact that the Emergency Fleet Corporation desires it to be understood [Page 677] that it feels that the reservation of the right to substitute equal or greater tonnage for any or all of the ex-German ships cannot, in any way, work a disadvantage to Uruguay, in view of the fact that the effect of such a substitution is to place in the actual position of the vessel for which substitution has been made, another vessel of equal or greater deadweight tonnage. The Emergency Fleet Corporation considers that this matter is a most important element in the contract.

The Emergency Fleet Corporation considers that the third point is equitable and agrees to it.