811.7353b W 52/41

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

No. 746

Sir: The Department has received your despatch No. 1631 of August 19, 1922, transmitting a copy of the Embassy’s note of July 24, 1922, to the Foreign Office and of a reply from the Foreign Office dated August 18, 1922, relating to the opposition of the British Government to the applications of the Western Union Telegraph Company and the Commercial Cable Company to the Portuguese Government for concessions authorizing them to land and operate cables at the Azores.

The Department desires that you address a further communication to the Foreign Office reading substantially as follows:4

Referring to the note No. A–5216/116/45, which was addressed to the Embassy by Sir William Tyrrell on August 18, 1922, relative to [Page 384]the opposition of His Majesty’s Government to the granting by the Portuguese Government of concessions to the Western Union Telegraph Company and the Commercial Cable Company, authorizing them to land and operate submarine cables at the Azores, I have the honor to state that I promptly forwarded a copy of the communication to my Government and am now in receipt of instructions to address a further communication to His Majesty’s Government in regard to the matter.

As the Western Union Telegraph Company has now been authorized to land and operate its cable at Miami Beach, Florida, connecting the United States with Brazil by way of Barbados, the President having granted a license to the Company on August 24, 1922, it would seem that no useful purpose would be served by a further discussion of the matter of the delay in granting that license were it not that the Foreign Office note of August 18, 1922, deals almost entirely with that subject and indicates that, notwithstanding that the attitude of the Government of the United States with respect to the landing and operation of cables on the shores of the United States and the delay in granting a license to the Western Union Telegraph Company to land a cable at Miami Beach has been fully explained in previous communications, there is a misunderstanding on the part of His Majesty’s Government in regard to these matters. With a view to removing this misunderstanding I am directed to inform you with regard to the statement in the first paragraph of the Foreign Office note that His Majesty’s Government had never received from the Government of the United States a copy of the conditions on which the United States Government was willing to grant a license for the landing at Miami Beach, although the line of cables terminating at Miami is partially owned by a British company, that the Western Union Telegraph Company, the applicant for the license, was fully informed concerning those conditions. The Government of the United States was not in communication with the Western Telegraph Company regarding the matter but had reason to believe that the Western Union Telegraph Company kept the Western Telegraph Company fully informed of the conditions on which the United States was willing to grant the license and of the developments in the matter.

As bearing on this phase of the question under discussion, reference may be made to the proposals which were communicated on February [21 and February 23], 1921, (here insert date of your communications transmitting the substance of Department’s telegrams No. 103 [102] of February 19, 9 P.M., and No. 107 of February 21, 7 P.M.),5 to F. J. Brown, formerly chief delegate of Great Britain to the Preliminary Conference on Communications, to which the Foreign Office replied on February [25], 1922 [1921], (here insert date of Foreign Office note referred to in your telegram No. 152 of February 26, 1921, 2 P.M.),6 stating that “the Western Telegraph Company, having carried out their part of the agreement between the two companies, His Majesty’s Government are of the opinion that [Page 385]any proposal for the modification of that agreement should be addressed to the Western Telegraph Company by the Western Union Company direct”.

In a further communication which was addressed to Mr. Brown on March [3], 1921, (here insert date of Embassy’s communication to Mr. Brown based on Department’s telegram No. 118, March 2, 1921, 5 P.M.),6a it was stated that since Mr. Brown’s answer indicated that the British Government no longer had its former interest in the situation, it was assumed that no progress could be made by further exchange of views. It was observed, however, that without an agreement between the two governments on the larger question of policy involved, and their concurrent support, it was not apparent how the companies could make any progress toward a settlement by direct negotiations. In response to this communication the Foreign Office stated in its note of March [8], 1921, (here insert date of Foreign Office note quoted in your telegram No. 194 of March 9, 1921, 6 P.M.),7 that “the suggestion that direct relations should take place between the two companies was made merely because it was the opinion of His Majesty’s Government that this would be the most effective means of reaching a solution satisfactory to both governments”. In view of these repeated suggestions of the British Government it was not unnatural that the Government of the United States did not again urge the Foreign Office to deal with the matter.

The statement contained in the second paragraph of the Foreign Office note that the Western Union Telegraph Company secured a landing license from the United States War Department indicates that the practice of my Government with respect to issuing licenses authorizing the landing of cables has not been understood by the British authorities, although it was fully explained in the note which was addressed to the Foreign Office on August [27], 1919, by my predecessor (here insert date of note to Foreign Office based on Department’s instruction No. 324 of July 31, 1919).7 Reference is made to the copy of the Presidential permit for landing a cable on the shores of the United States, and also to the copy of the form of permit issued by the Secretary of War covering the physical landing of the cable, enclosed with that note. It is the custom in issuing Presidential licenses authorizing the landing and operation of cables in the United States to provide in the license that the location of the cables within the territorial waters of the United States and upon the foreshore thereof shall be in conformity with plans approved by the Secretary of War who acts on recommendation of the Chief of Engineers, The permit of the Secretary of War does not authorize the establishment of a physical connection between the United States and a foreign country but approves the plans for laying cables in the territorial waters of the United States. The practice of the United States Government in this regard was well known to the Western Union Telegraph Company.

With respect to the statement that the Western Telegraph Company laid the south section of the cable from Brazil to Barbados at a cost of some three million dollars and the Western Union Telegraph [Page 386]Company was about to land the north section at Miami when it was forcibly prevented from doing so by the United States Government, I am directed to state that it is the understanding of my Government that the section of the cable from Brazil to Barbados was not laid until after the attempt of the Western Union Telegraph Company to land its cable at Miami Beach had been opposed by the Government of the United States. Furthermore, on July 30, 1920, when information was received at the Department of State that the British cable ship Colonia was on its way from Plymouth to Miami Beach prepared to lay the cable from Miami Beach to Barbados, the Secretary of State informed the British Ambassador at Washington that the United States had not issued a license for the landing of this cable and stated that since it appeared that an effort would be made to effect the landing of the cable despite the fact that the license was withheld, instructions had been issued to the Navy Department to safeguard the Government’s position. It was further stated that since the vessel employed was a British vessel, it would be appreciated if a timely warning could be conveyed to her master.8 The British Ambassador replied on July 31, 1920,9 stating that he had taken steps to bring the matter to the notice of His Majesty’s Government and had asked that every effort be made to prevent the cable steamer Colonia from attempting to land the cable. It appears that a warning was communicated to the master of the vessel by the British Vice Consul at Miami. Despite warnings given to the Western Union Telegraph Company that it would not be allowed to land its cable in the United States, so long as the objectionable monopoly existed in Brazil, and the notice given to the master of the Colonia, the company in August, 1920, laid the cable from a point outside the three mile limit off Miami Beach to Barbados.10 It is stated in an informal note No. 580 of July 27, 1921, from the British Ambassador at Washington to the Secretary of State of the United States11 that “expenses were incurred by the delaying of the British cable ship Stephan which was occasioned by the circumstance that the operations allotted to her had to be carried out in conjunction with the S.S. Colonia”. The Stephan laid the section of the cable from Maranhão, Brazil, to Barbados. It would appear from the foregoing that both cables were laid with knowledge that the Government of the United States was opposed to the landing of the cable in the United States so long as the monopoly in Brazil existed.

With regard to the statement in the third paragraph of the Foreign Office note that the Department of State apparently feared an adverse decision in the litigation which the Western Union Telegraph Company had instituted to enjoin the authorities of the Government from preventing the landing of the cable and secured the passage of an act transferring the authority to grant landing [Page 387]licenses from the War Department to the Department of State, I am instructed to state that His Majesty’s Government has apparently overlooked the long line of precedents followed by the Government of the United States in refusing to permit the landing of the cable by the Western Union Telegraph Company and information which has been furnished His Majesty’s Government regarding the procedure which has heretofore been followed in granting licenses. These precedents began with the action of the President when in 1869 he declined to allow a cable extending from France to the United States to be landed on the shores of the United States until a monopoly which had been granted by the French Government to the cable company which desired to lay the cable was abandoned.12 This precedent of prescribing conditions on which cables could be laid in the United States has been followed by Chief Executives of the United States and numerous permits authorizing the landing of cables have been issued. Furthermore, the Western Union Telegraph Company when the landing of certain cables was against its interest had effectively appealed to the President to prevent the landing of such cables without a Presidential permit. It will be seen from the foregoing that the Western Union Telegraph Company was fully aware of the long established policy of the Government of the United States with respect to the landing of cables when the foreign termini of the cables were in countries which had granted monopolies adversely affecting American interests. The Act of Congress, approved May 27, 1921, a copy of which is enclosed,13 was not intended to transfer from the War Department to the Department of State authority to grant licenses to land cables in the United States. The War Department has not at any time undertaken to grant such licenses. Its authority has been restricted to the regulation in accordance with the provisions of Section 10 of the Act of Congress, approved March 3, 1899, of the construction of necessary works within the navigable waters of the United States to prevent interference with navigation. (30 Stat. L., 1115 [1151])

With respect to the statement which representatives of the Department of State are said to have made during the Preliminary Conference on Communications held in Washington in 1920 and 1921, to the effect that it was contrary to the practice of the United States to grant landing licenses to companies enjoying exclusive privileges in foreign countries, I am directed to inform you that the statement which Sir William Tyrrell makes does not accurately describe the position of the Government of the United States. It has been the long standing practice of the Government of the United States to decline to grant to foreign companies permission to land in the United States cables connecting with foreign countries in which the foreign company has obtained monopolistic privileges which exclude American cable companies. This practice was extended to the Western Union Telegraph Company in the matter of the Company’s application for permission to land a cable at Miami [Page 388]for the reason that the cable which the Company desired to lay was to connect the United States with Brazil where the Western Telegraph Company, Limited, with which the Western Union Telegraph Company had associated itself in the enterprise, asserted exclusive privileges.

The suggestion made in the Foreign Office note that it was inconsistent to grant to All America Cables, Incorporated, a license to land a cable in the United States when the company possessed exclusive privileges on the west coast of South America, and that an arrangement for the mutual waiver by All America Cables and the Western Telegraph Company was made after informal discussions during the Disarmament Conference, is noted. The Foreign Office is correct in its understanding that All America Cables, Incorporated, surrendered such exclusive rights as it possessed on the west coast of South America. However, the impression that the plan for the mutual surrender by All America Cables and the Western Telegraph Company was in any way related to informal discussions which took place during the Disarmament Conference is inaccurate.

On July 15, 1921, the Western Union Telegraph Company made application for a license to land a cable at Miami Beach, pursuant to the provisions of the Act of Congress, approved May 27, 1921. The application was the subject of a series of conferences at the Department of State in which representatives of the Western Union Telegraph Company and of All America Cables participated. As a result of these conferences, the plan of mutual waiver of exclusive privileges was developed, and on December 6 [8], 1921, a draft license contemplating a mutual waiver was handed to the representatives of the Western Union Telegraph Company.14 One of the conditions of the proposed license required the Western Union Telegraph Company to subscribe to a declaration that it was not associated and should not associate with any foreign company or concern having in Brazil or elsewhere in South America rights of entry, connection or operation denied to any American cable company. This condition the Western Union Company could not accept until the Western Telegraph Company effectively waived its exclusive privileges in Brazil and elsewhere in South America. To place the Western Union Telegraph Company in a position to accept the proposed license, it was arranged with representatives of the Western Union Telegraph Company and All America Cables that All America Cables and the Western Telegraph Company should adopt resolutions waiving in favor of American and British cable companies any exclusive rights of entry, connection or operation of submarine cables which they possessed in South America. As indicated, the plan for the mutual waiver of exclusive privileges was not in any way related to informal discussions between representatives of the United States and the British Government during the Disarmament Conference. However, the Government of the United States understands from the comment made in the Foreign Office note that His Majesty’s Government acquiesced in the plan for mutual waivers. This information is gratifying to the Government of the United States.

[Page 389]

It may be explained in relation to comments made in paragraph four regarding action taken by the Argentine Government with respect to the resolution adopted by the Western Telegraph Company, Limited, to waive its exclusive privileges in South America that the communication of the Argentine Government, to which reference is made in Sir William Tyrrell’s note, related to the laying of cables and not in terms to other preferential privileges which the Western Telegraph Company secured by contract with the Government of the Argentine Republic. Article XIII of the contract between the Company and the Government, concluded June 3, 1909,15 obligated the Government to send over the lines of the Western Telegraph Company official telegraphic communications with Europe, North America and Africa and private messages not otherwise expressly routed. Inasmuch as the communication of the Argentine Government, to which reference has been made, apparently related only to the matter of laying cables and since Article XIII of the concession seemed to provide for the enjoyment by the Company of other preferential privileges, it was deemed necessary to obtain an expression from the Argentine Government relating to these other preferential privileges.

It seems from the fifth and sixth paragraphs of Sir William Tyrrell’s note that notwithstanding the explanation which was made in the Embassy’s note of July 24th to the Foreign Office it is not yet clear to His Majesty’s Government why a license was not issued to the Western Union Telegraph Company for the landing at Miami when the Western Telegraph Company presented its resolutions of waiver to the governments of the countries in South America in which preferential rights were asserted. As stated in the Embassy’s note of July 24th, the waivers of All America Cables and the Western Telegraph Company became effective upon the acquiescence of the South American governments concerned. It was, therefore, deemed necessary to withhold granting the license until all the South American governments had acquiesced in the waivers.

It is noted from the seventh paragraph of the note that His Majesty’s Government does not consider objectionable the acquisition under certain conditions of exclusive rights which serve as inducements to the extension of business to points where traffic would not be immediately remunerative. The Government of the United States does not understand that it is contended that it is necessary for cable companies to possess exclusive privileges in South America to make cable traffic between the United States and South America remunerative, nor is it understood that the question of exclusive privileges in the Azores is presented by the applications of American companies for licenses to land and operate cables there. Therefore, it is not perceived that the question whether the acquisition of exclusive rights as an inducement to lay cables to points where the traffic would not be remunerative is objectionable or warranted is material to the present discussion.

It is assumed that in mentioning in the eighth paragraph of the note representations which had been made to the Government of [Page 390]the United States regarding losses sustained by the British company as a result of the delay in landing the cable at Miami Beach, it was intended to refer to the note which His Excellency Sir Auckland Geddes addressed to the Secretary of State on July 27, 1921.16 This note was answered on October 31, 1921.16

Sir William Tyrrell states in paragraph nine of the note of August 18th that requests by cable companies to land cables on British territory will in the future, as in the past, be considered on their merits; that the merits of such requests have hitherto been considered merely from the commercial point of view and that His Majesty’s Government would be loath to introduce other factors into consideration. It is this willingness of His Majesty’s Government to consider on their merits requests for permission to land and operate cables in British territory that, as indicated in this Embassy’s note of July 24th, the Government of the United States is unable to reconcile with the apparent purpose of His Majesty’s Government to oppose, regardless of their merits, applications of American cable companies for permission to land cables at the Azores.

In paragraph 10 of Sir William Tyrrell’s note it is stated with reference to section 2 of the Act of Congress approved May 27, 1921, that if the refusal to issue the license for the landing of the cable at Miami is an example of an application of that section, it is not clear how it can be employed to obtain for American cable companies greater facilities in Great Britain than they already enjoy. As has been indicated in previous communications and emphasized in this note, the purpose of the Government of the United States in withholding permission to land the cable of the Western Union Telegraph Company at Miami Beach was to cause the Western Telegraph Company to surrender its monopolies the existence of which rendered it impossible for American cable companies to obtain privileges similar to those enjoyed by that company with which the Western Union Telegraph Company had associated itself for carrying cable traffic between the United States and Brazil. The delay in granting the license was not intended to have any relation to facilities granted to American cable companies in Great Britain. Happily it has not been necessary to invoke the long standing practice of this Government or the provisions of the Act of May 27, 1921, in behalf of American cable companies seeking privileges in His Majesty’s domain.

As His Majesty’s Government is aware, telegraph lines in the United States are operated by private companies which compete not only for domestic business but also for international traffic. Neither American telegraph companies nor American cable companies have been granted monopolies in the United States. It is well known that companies which have landed cables on the shores of the United States own and operate extensive telegraph systems in the United States and maintain offices and deal directly with the American public.

In encouraging and supporting American companies in extending their systems so as to provide better facilities and services, the United [Page 391]States Government does so without any intention whatever of interfering with similar development and extension of British communication facilities. The United States Government clearly recognizes the importance to the British Empire of extensive cable systems throughout the world and has no disposition to interfere with the maintenance or development of such systems. The United States Government favors the widest possible development of international communication facilities and services and desires that American enterprise be accorded the same freedom in extending and developing communication facilities as the cable companies of other nationalities enjoy. The Government of the United States is ready at any time to discuss with His Majesty’s Government any question which arises in which the United States and Great Britain are concerned. As indicating the attitude of the American Government, you will recall that at the Washington Conference on Communications the American delegation offered to enter into an arrangement which would make possible wide use of American territory for cable relay purposes.17

In conclusion, I beg to state that while the Government of the United States desires that His Majesty’s Government understand the general policy to which the Government of the United States has adhered in relation to applications for permission to land cables to connect the United States with foreign countries and has endeavored clearly to explain that policy and its application to the effort of the Western Union Telegraph Company to obtain permission to land its cable at Miami Beach, I am directed to observe that there is not perceived in the attitude of the Government of the United States with respect to landing cables on the shores of the United States any relation to the attitude which His Majesty’s Government has adopted toward the landing of cables in Portuguese territory or any justification for the action of His Majesty’s Government in opposing the efforts of American companies to obtain cable facilities in territory over which His Majesty’s Government does not have jurisdiction. It is hoped that the opposition which His Majesty’s Government has deemed it proper to exert against the applications of American companies for concessions to land and operate cables in the Azores may not longer be maintained.

The Department desires to receive from you a copy of the communication which you send to the Foreign Office pursuant to this instruction and copies of the correspondence with the Foreign Office mentioned therein and of other notes exchanged on this subject which have not previously been forwarded to the Department. The Department desires a complete file of this correspondence in order that it may be published or submitted to Congress if such a course should be deemed desirable.

I am [etc.]

Charles E. Hughes
  1. Note based upon these instructions was addressed to the British Foreign Office on Dec. 21. The bracketed dates inserted throughout the text here printed are taken from copy of the note which was transmitted to the Department by the Chargé in his despatch no. 1926, Dec. 29 (file no. 811.7353b/143).
  2. Foreign Relations, 1921, vol. i, pp. 824 and 825, respectively.
  3. Ibid., p. 826.
  4. Ibid., p. 826.
  5. Not printed.
  6. Not printed.
  7. Note of July 30, 1920, to the British Ambassador, Foreign Relations, 1920, vol. ii, p. 687.
  8. Reply not printed.
  9. See memorandum of the Third Assistant Secretary of State, Foreign Relations, 1920, vol. ii, p. 695.
  10. Not printed.
  11. See S. Ex. Doc. No. 122, 49th Cong., 2d sess., pp. 65 ff.
  12. Printed, 42 Stat. 8.
  13. See telegram no. 3, Feb. 4, 1922, to the Chargé in Argentina, vol. i, p. 518.
  14. See footnote 55, vol. i, p. 530.
  15. Not printed.
  16. Not printed.
  17. See section entitled “Failure to Secure Ratification of the Cable Agreement between the United States, Great Britain, and Italy, etc.”, vol. i, p. 538.