The Consul General at London (Skinner) to the Secretary of State

No. 6942

Sir: I have the honor to refer to my Despatch No. 6872, dated October 2, 1918,20 and to the Department’s cablegrams, dated October 421 and October 10,22 instructing me to endeavor to effect the release of American goods, or their proceeds, now detained in the British Prize Court, and to advise that my prompt action was considerably hampered because of the absence from London of Mr. Woods, of the Procurator General’s office, the man who has, since the beginning of hostilities, had this matter immediately in his hands. On October 17th, however, an appointment was arranged with Mr. Woods, when the instructions of the Department were outlined.

The Procurator General stated that it was entirely feasible to dispose of each case of detained American goods by taking the owner’s individual guarantee, with proper security, rather than have a blanket bond signed by the Department.

He repeated that the proposed arrangements referred only to certain goods indicated on the list mentioned in the Embassy’s cablegram No. 1418, dated October 17 [August 27], or the proceeds of those goods, and that they did not extend to remittances, which are almost entirely eastward-bound to Germany, and as to which title had passed to the German addressees when the remittances were delivered to the post offices in America.

The possible disposal of money equal to the invoice value of detained goods, mostly westward-bound, which had been deposited in Prize Court with a view to releasing the goods, was then taken up, and it was pointed out that, under this arrangement, in many cases American owners had been obliged to pay twice for the merchandise.

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The Procurator stated that this double payment had, he believed, occurred in relatively few instances and, as evidencing this belief, he referred to a ring of underwriters, doing business in Hamburg, which was largely engaged in insuring against all war risks the parcel mails from Germany and Austria to the United States. Obviously, he stated, where goods were so insured, the loss had been paid by the underwriters to the person holding either the title or an insurable interest. After the war, therefore, the money deposited in Prize Court by the American claimants would, in such cases, go to the German underwriters, who were entitled, he stated, to receive it

It was pointed out, however, that in many cases no doubt a double payment had in fact occurred, and the Procurator was asked whether, on the proving of such double payment, the deposits in Prize Court might be released.

The Procurator replied that, in his estimation, if in fact a double payment had been made, then the American addressee of the goods had been able to sell the goods, because of their scarcity, at a price more than sufficient to make a profit, even after the double payment.

It was pointed out to the Procurator that the matter of possible and proper profits, even though they depended in part upon the scarcity of goods caused by the British blockade, was exclusively a matter of commercial business dealing in America, and had nothing to do with the question of whether the double price should be now retained by the British Government.

The Procurator stated that, although this was so, he had raised the question in order to dispose of any equitable claim on the part of the American claimants, because they were really not out of pocket.

It was then pointed out that the matter of price did not dispose of the equity, and if the question of the amount of profit was raised in each individual case, or if, because a few people had profited, all American claimants were to lose the interest on their money for the period of the war, it would really be an additional hardship on those who had made no profit at all, and on those who had already suffered a loss because of the British blockade. It would appear that the matter of profit was wholly irrelevant.

The Procurator stated that, if a double price was paid by the American claimants, the double price was more than paid by the American public, so that the claimants had in no case really been out of pocket.

It was pointed out that, from the point of view of the British Government, it would be expedient to release as much as possible, because, at this time, they were able to get, in return for the release, a full settlement of all claims in connection with the detention.

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The Procurator replied that the terms of release would be the same after the war; that the only term of release now was that it be in full settlement of all claims; and that they would certainly exact the same settlement when the releases were arranged after the war. He added that the matter of the legality of the Order in Council, by which the proceeds were detained, had been argued, the day before, in the case of A. F. Klaveness and Company, (s.s. Stigstad) before the Judicial Committee of the Privy Council, and that it would unquestionably be decided in favor of the Crown.

I am transmitting a report of the arguments,24 and shall not fail to forward the report of the decision in this case, as soon as it is received.

The Procurator suggested that the Department prepare a list of those cases in which it was certain that there had been a payment for the goods in Austria or Germany, as well as a deposit of their invoice value in Prize Court, but, when he was asked if he would acquiesce in the release of the deposits, if such a list were prepared, he stated that he was unable to make such an arrangement, and we therefore agreed that it would serve no useful purpose for the Department to prepare such a list. He therefore was unable to acquiesce in any arrangement for the release of the proceeds until after the war, when, he said, all could be more conveniently released at once.

Present at this interview was Mr. Bergman Richards, Special Assistant to the American Minister at Copenhagen, who is now on his way to the Department. His views on the interview may be of possible interest.

I have [etc.]

Robert Skinner
  1. Not printed.
  2. Ante, p. 620.
  3. Not found in Department files.
  4. Not printed.