811.7353b/122

The Ambassador in Great Britain (Harvey) to the Secretary of State

No. 1631

Sir: I have the honor to inform the Department that, after several oral representations had been made to the Foreign Office, based on the Department’s cable instructions regarding the British opposition to the applications of the Western Union Telegraph Company and the Commercial Telegraph Company for concessions to land and operate cables at the Azores, it was considered desirable, and the tenor of the Department’s instructions indicated that it was expected, that a formal note on the subject be filed with the British Foreign Office.

Such a note was drawn up and submitted to the Foreign Office on July 24th, and supplemented by a personal letter from the Ambassador to Lord Balfour embodying a portion of the Department’s cable instruction No. 210, of July 17, 4 p.m., 1922. Copies of both communications are appended hereto.

Formal acknowledgment of the receipt of these communications was duly made by the Foreign Office (see Telegram No. 329 of August 1, 4 p.m.86), and today the definite answer has been received, a copy of which likewise is attached hereto. Briefly summarized, the British note justifies the British opposition, which it admits, to our interests in the Azores upon the ground that the establishment in those islands of the American cable companies concerned would, through consequent competition, further financially harm the British cable company which has already suffered heavy financial loss through the refusal of the Department to allow the landing at Miami of a cable in which it holds part interest. It is explained that the opposition, however, has for its object the securing to the British company of the South American traffic. The British Government [Page 370]professes to believe that, irrespective of the position taken by the Argentine Government, the requirements set down by the Department regarding the mutual waiver of the exclusive rights held in South America by the American and British cable companies have been fulfilled.

The further points discussed in the note apply more especially to matters hitherto handled at Washington.

I have [etc.]

For the Ambassador:
Post Wheeler

Counselor of Embassy
[Enclosure 1]

The American Ambassador (Harvey) to the British Acting Secretary of State for Foreign Affairs (Balfour)

No. 313

My Lord: I have the honor to advert to this Embassy’s recent representations orally made to the Foreign Office with respect to information received by my Government to the effect that the British Minister at Lisbon has lent active opposition to the applications of the Western Union Telegraph Company and the Commercial Cable Company for concessions to land and operate cables in the Azores.

As was stated to the Chief of the American Department at the time the above referred to representations were made, it is a source of keen disappointment to my Government that the British Government should oppose the legitimate efforts of American cable companies to obtain in the Azores cable facilities which are not exclusive and which would in no way interfere with the exercise by British cable companies of privileges similar to those sought by the American companies. My Government cannot reconcile the statements made in the Foreign Office’s Note A 3166/248/45, of May 16th, 1922,87 that the British Government intended to continue the practice of granting all possible facilities in British territory for the development of international communications, with opposition to the development of communication facilities in Portuguese territory.

In answer to the oral representations referred to, the Chief of the American Department of the Foreign Office did not disavow the acts of the British Minister at Lisbon, but stated that a British cable company now operating at the Azores had complained that the introduction of the American companies named would create harmful [Page 371]competition, and that the British Government had been disposed to heed this protest because the company making it was the same which was suffering great financial inconvenience through the failure of the Department of State at Washington to grant it the necessary permit to land its cable at Miami, Florida. In reply it was pointed out that my Government could perceive no relation between the efforts of the American companies to obtain privileges of landing and operating cables in the Azores and the application of the Western Union to land at Miami, inasmuch as the United States Government is withholding from an American company the privilege of establishing physical connection between the United States and foreign territory, while the British Government is seeking to interfere with the freedom of action of the Portuguese Government and is opposing efforts of American companies to obtain facilities in Portuguese territory.

The conditions on which the United States Government is willing to grant license for landing at Miami have been made clear to all parties concerned, and upon compliance with these conditions the license will be no longer withheld. These conditions, stated briefly, are: that the British Western Telegraph Company, the associate of the American Western Union Telegraph Company in the Miami–Barbados–Brazil Line, shall effectively surrender its exclusive privileges in South America, while a similar waiver is made by the All America Cable Company, the British Company waiving its exclusive or preferential privileges on the east coast and the American company its similar privileges on the west coast. It was further pointed out that the United States Government is cooperating in the effort of the Western Telegraph Company to readjust its position in South America to the end that the license for landing at Miami may issue, which further distinguished the attitude of the United States Government in the Miami matter from the attitude of the British Government in the Azores.

However, it was the opinion of the Chief of the American Department of the Foreign Office that the British Company referred to by the Department of State had fulfilled its part of the undertaking set up by the United States Government as prerequisite to the granting of the landing permit at Miami, and that, therefore, further delay in granting this permit was deemed unwarranted. The assurance was not given, however, that the granting of this permit to land at Miami would result in a cessation of the opposition to the acquisition of the concessions desired by the American companies in the Azores, notwithstanding the fact that the position of the United States Government with respect to the Miami cable was cited as a contributory cause of the opposition at Lisbon. As further indicating the attitude of Your Lordship’s Government in [Page 372]this matter I observe in your Note to me of July 17, 1922, (No. A 4262/3875/45)88 the statement (made in another connection) that “The British postal authorities, however, are not inclined to go out of their way to assist in promoting competition with the Eastern and Associated companies’ route between Europe and South America so long as the United States Government withholds permission for the working of the Maranhão–Barbados–Miami cable”.

I am now instructed, therefore, to communicate to Your Lordship, with reference to the foregoing, that the refusal of the landing of the Barbados–Miami Beach Cable until certain conditions have been complied with is in accordance with a long established policy of the United States Government not to allow the landing and operation in the United States of a cable running from a country which denies similar privileges to American cable concerns. The monopolies enjoyed by the Western Telegraph Company on the east coast of South America and the monopolies enjoyed by the All America Company on the West Coast have their foundation in bilateral agreements which can only be canceled by the action of the two parties to each agreement. The resolution of the Western Telegraph Company (to which the Chief of the American Department adverted as constituting evidence of the fulfillment by the British Company of its part of the waiving of these privileges) was in terms effective only when all South American Governments concerned acquiesced in the waivers by the Western Company and the All America Company.

The granting of a license to the Western Union to land at Miami a cable to connect at Barbados with a cable of the Western Union Telegraph Company awaits an expression from the Argentine Government which can be regarded as acquiescing in rendering effective the waivers of the Western Company. My Government does not consider that the possibility of American competition with British companies is an acceptable reason for the action of the British Government in opposing the applications of American companies for privileges in the Azores.

In presenting this matter anew to Your Lordship, I am instructed to state that my Government cannot fail to be influenced by the feeling that the British Government is unwarranted in opposing the legitimate efforts of American cable companies to obtain in the Azores cable facilities which would in no way interfere with the exercise by British cable companies of privileges similar to those sought by the American cable companies.

I have [etc.]

For the Ambassador:
Post Wheeler

Counselor of Embassy
[Page 373]
[Enclosure 2]

The American Ambassador (Harvey) to the British Acting Secretary of State for Foreign Affairs (Balfour)

My Dear Lord Balfour: With all my hesitation to infringe upon your time, which I appreciate is at present over-filled, I feel that I should be doing less than my Government would desire of me if I did not ask your personal attention to my note No. 313 of yesterday, with reference to the Embassy’s recent representations with respect to the cable situation in the Azores.

I am deeply concerned over the reflection that the attitude of the British Government, in opposing the application of American companies for privileges there, must inevitably be construed by my Government as a determination to assist British companies to maintain control of cable facilities in the Azores to the exclusion of legitimate competition of American companies.

I am [etc.]

George Harvey
[Enclosure 3]

The British Secretary of State for Foreign Affairs (Curzon) to the American Ambassador (Harvey)

No. A 5216/116/45.

Your Excellency: In a note of the 24th ultimo, you inform me that the conditions on which the United States Government is willing to grant license for landing at Miami have been made clear to all parties concerned. I have the honour to state, however, that His Majesty’s Government have never received from the United States Government a copy of those conditions although the line of cables terminating at Miami is partly owned by a British company. The information with regard to the matter so far as it is in the possession of His Majesty’s Government is as follows:—

2.
The (British) Western Telegraph Company has for some time past enjoyed certain exclusive rights in Brazil, which have been upheld by the Brazilian courts when challenged by other parties. The Western Union Company desiring to meet the demand in the United States for direct cable connection between the United States and Brazil concluded an eminently proper and business-like agreement with the Western Telegraph Company in 1920 whereby the Western Union Company became a partner in all the rights of the Western Telegraph Company in Brazil, and the two companies agreed to lay a joint cable from Brazil to the United States via Barbados, the Western Union undertaking the section from Barbados [Page 374]to Miami, where it secured a landing licence from the United States War Department. In 1920 the Western Telegraph Company duly laid the southern section from Brazil to Barbados at a cost of some three million dollars and the Western Union Company was about to land the northern section at Miami when it was forcibly prevented from so doing by the United States Government.
3.
The Western Union Company took the case into the United States courts, but the State Department, apparently fearing an adverse decision, secured the passage of an act by Congress in effect transferring the grant of landing licences from the War Department to the State Department89 and the act came into force before any decision in the Miami case could be rendered by the Supreme Court. Meanwhile, the matter had been referred to during the International Congress on communications held at Washington in 1920–21. The representatives of the State Department explained that it was contrary to the practice of the United States Government to grant landing licences to companies enjoying exclusive privileges in foreign countries, or themselves possessing such privileges. The British representatives pointed out that the All-America Company, which had obtained exclusive privileges on the west coast of South America, had been granted a landing licence in the United States. The State Department felt unable to justify this inconsistency, but no action was taken until, after informal discussions during the Disarmament Conference a year later,90 an understanding was reached that the Western Telegraph Company should abandon its exclusive rights on the east coast and the All America Company its similar rights on the west coast of South America.
4.
Notwithstanding the loss which had already been caused to the British Company, His Majesty’s Government felt that a fairly reasonable compromise had been reached and left the further negotiations to the two companies. The latter concluded an agreement at the end of last year which is embodied in a resolution already in Your Excellency’s possession, whereby each undertook to waive in favour of any British or United States cable companies its respective preferential or exclusive rights in those South American countries where it claimed such rights.91 The agreement was to become effective when the governments of the countries concerned acquiesced in [Page 375]the waiver. The Western Telegraph Company lost no time in notifying the Brazilian, Argentine and Uruguayan Governments of their surrender of all rights of an exclusive nature which they claimed or possessed. In order to expedite a settlement they even exceeded their contractual undertakings and urged those governments to notify the United States Government of their waiver. As far as I am aware, no delay occurred in Brazil. The Argentine Government on or about May 4th last, communicated to the United States Ambassador at Buenos Aires a resolution signed by the Minister of the Interior on that date to the effect that the Argentine Government were not called upon formally to admit the relinquishment of a right which—for them—did not exist, because they had already decided in that sense.92 The Uruguayan Minister for Foreign Affairs on June 6th last communicated to the United States Minister at Montevideo a legalised copy of correspondence showing that the Uruguayan Government also held that cable companies could own no preferential or exclusive rights in Uruguay.93
5.
The requirements of the United States Government were thus met in substance by the governments of all those countries where the Western Telegraph Company claimed or possessed any exclusive privileges. His Majesty’s Government have not been informed that there has been any delay on the part of the governments of Colombia, Ecuador or Peru in accepting the waiver of similar privileges by the All-America Company, though they are now making enquiries on that point.
6.
None the less the issue of the landing licence at Miami is still delayed and His Majesty’s Government are at a loss to understand the reasons for the action of the United States Government in this matter.
7.
The United States Government first prevented the landing of the Miami cable by force. Then they caused an act to be passed for the express purpose of preventing its operation or for enabling the licence to be cancelled in ninety days if the cable were already being operated under the existing legislation of the United States.94 They then further required the surrender of the exclusive rights of the Western Company in South America. Each of these steps involved much delay and loss to both the British and the United States cable companies concerned and, incidentally, deprived the public in the United States of direct cable communication with Brazil by the shortest route. His Majesty’s Government do not share the objections [Page 376]of the United States Government to the acquisition under certain conditions of exclusive rights, which they regard as legitimate inducements to the extension of business at points where traffic would not be immediately remunerative. Nevertheless His Majesty’s Government raised no objection of principle to the transaction whereby both the British and United States companies waived their exclusive rights, and, so far as that transaction is concerned, the United States Government have now secured the admission of the principle which they desired.
8.
The attention of the United States Government has been called to the serious loss caused to the British company by these continued delays. Representations having proved of no avail His Majesty’s Government would be neglecting their duty if they failed to protect the same British company from further loss by the competition of United States companies in other directions, as at the Azores and in the matter of “urgent” telegrams between Europe and South America.
9.
In this connection I observe that you are unable to reconcile the action of His Majesty’s Government with the statements made in my note of May 16th last.95 I venture to remind you of the passage in that note: “requests for permission to land cables on British territories will in future, as in the past be considered on their merits …”96 The merits of such requests have hitherto been considered purely from the commercial point of view, and His Majesty’s Government would be loth to introduce other factors into their consideration. In this respect, however, the policy of His Majesty’s Government differs from that of the United States Government.
10.
By section two of the act, to which I have referred, the President is authorised to withhold or revoke landing licences when he shall be satisfied that such action will assist in securing rights for the landing or operation of cables in foreign countries or in maintaining the rights or interests of the United States or of its citizens in foreign countries. His Majesty’s Government can only suppose that the refusal to issue the Miami landing licence is an example of the application of that section, though it is not clear how such action can assist United States cable companies in securing greater facilities in this country than those which they already enjoy. The policy of His Majesty’s Government has indeed been so liberal that all the cables connecting this country with the United States are owned and/or operated by United States cable companies, whereas, [Page 377]owing to the different system prevailing in the United States, no British cable company has been able to continue to operate to that country at all. Moreover, a British landing licence carries with it the valuable privilege of connection with the British land lines, a privilege which the United States Government is unable to confer. United States cable companies have also been allowed the further valuable facility of leasing private lines and dealing direct with the public in this country. His Majesty’s Government would regret the necessity for terminating any of these privileges, but they feel that such liberality merits reciprocity on the part of the United States Government, where the interests of British cable companies are concerned.
11.
I should add that the only condition for which the British companies are pressing as regards landing rights at the Azores is that the proposed cables between the Azores and North America should be restricted to North American traffic, and that traffic from the continent for South America should be exchanged with the Western Telegraph Company at the Azores.

I have [etc.]

(In the absence of the Secretary of State)
W. Tyrrell
  1. Not printed.
  2. Vol. i, p. 541.
  3. Not printed.
  4. Act of May 27, 1921; 42 Stat. 8.
  5. Conference on the Limitation of Armament, Washington, Nov. 12, 1921—Feb. 6, 1922.
  6. For resolution of the Western Telegraph Co., Ltd., see telegram no. 3, Feb. 4, to the Chargé in Argentina, vol. i, p. 518, and for that of the All America Cables, Inc., see telegram no. 12, Feb. 6, to the Chargé in Peru, vol. i, p. 521.
  7. See telegram no. 36, June 1, from the Ambassador in Argentina, vol. i, p. 529.
  8. See despatch no. 801, June 23, from the Chargé in Uruguay, vol. i, p. 531.
  9. Act of May 27, 1921; 42 Stat. 8.
  10. Vol. i, p. 541.
  11. Omission indicated on Foreign Office note of Aug. 18.