Foreign Relations of the United States Diplomatic Papers, 1932, General, Volume I

811.801/498½

The Canadian Legation to the Department of State

Memorandum

Bills were introduced in both Houses of Congress on February 4th to amend the shipping laws of the United States with respect to tourist cruises and the definition of the phrase “fighting ship”. The bills introduced in the House of Representatives (H. R. 8874 and 8875) were favorably reported on February 9th by the Committee on Merchant Marine, Radio, and Fisheries, with the addition of an amendment to H. R. 8875. The identical bills introduced in the Senate (S. 3501 and 3502) have been referred to the Committee on Commerce.

The Canadian Legation has been instructed to commend to the earnest consideration of the Department of State the effect of these measures, the enactment of which, at any rate in their present form, would be seriously detrimental to Canadian shipping interests. The Canadian Legation desires to urge that legislation so widely extending the principle of coastwise shipping laws is not only contrary to long established and widely accepted practice, but must also tend to intensify and extend the restrictions imposed on shipping generally, to the serious detriment of travel facilities between nations. Furthermore, the measures would increase so widely the scope of the coastwise shipping laws of the United States as to make them extend in certain important respects to Canadian ports as well. Moreover, the bills as they are now drafted would embrace regular services long maintained by Canadian lines with which they are undoubtedly not intended to interfere; and these services, convenient and necessary as they are to the regular commerce of both countries, would be hampered and restricted, if not actually eliminated, should the bills be passed without amendments exempting them from their scope.

H. R. 8875 and S. 3502 are designed to restrict to vessels of United States registry tourist cruises from ports of the United States. According to the Report of the House Committee, the particular objects are:

(1) to eliminate the so-called “cruises to nowhere” by foreign liners, an unimportant aspect of the cruising traffic which is not participated in by Canadian vessels;

(2) to prevent foreign vessels in the course of a cruise from touching at a port in Florida, an infrequent practice which is also not carried on by Canadian vessels; and

(3) to diminish competition during winter months with United States shipping engaged in regular services. The passage of the measure, however, would bring results far beyond the attainment of these limited purposes.

Tourist cruises have been developed out of United States ports since the Great War in response to a widespread and increasing public demand for an opportunity to visit foreign ports, especially during the winter season, while enjoying the comfort of ocean travel on large liners. The demand has been created and in large part served by foreign shipping companies, and Canadian companies have shared in meeting it. The traffic, which has grown up not only in the United States, but also in many other parts of the world, is generally recognized as an entirely legitimate mercantile enterprise. This appears to be admitted by the House Committee on Merchant Marine, Radio, and Fisheries, which amended the terms of H. R. 8875 so as to narrow its application to cruises between a port of the United States and “a nearby foreign port”, with the object of avoiding any interference with cruises to European and other distant waters. It is not clear whether the language of this amendment would exclude from the operation of the bill long cruises to Caribbean waters such as have been maintained for some years by a Canadian shipping company from New York to ports in Venezuela, Panama, the British, French, and Dutch West Indies, Cuba, and Porto Rico. These cruises are of three or four weeks’ duration, and are conducted on a regular schedule during the winter season. A similar cruising service is operated by another Canadian company from Boston to Panama and West Indian ports. It is not believed that cruises of this type are in any way competitive with regular all-year services maintained by United States lines.

The measure, as at present drawn, would not only affect regular cruising services of this sort, but would bear most heavily on a large number of regular shipping lines engaged in ordinary passenger traffic between ports of Canada, the United States, and neighbouring British colonies. None of these lines was established with a view to the cruising traffic in the usual sense; frequently, however, passengers desire to take a round-trip voyage, for example from New York to Montreal, or across Lake Ontario from Lewiston to Toronto, or from Seattle to Victoria and Vancouver. Any Canadian ship carrying a passenger from a port of the United States on such a round-trip would appear to be engaged “on a continuous voyage terminating at the port of departure”, and would therefore be liable under the proposed legislation to a penalty of $200 in respect of each passenger so transported.

On the Atlantic Coast the Canadian National Steamships maintain an all-year service, starting at Montreal in summer and at Halifax in winter, between Canada, Bermuda, and the British West Indies, and these vessels regularly call at Boston. A proportion of the passengers joining the vessels southbound at Boston return on the same ship after visiting the regular ports of call in southern waters. The same company maintains a weekly service in winter between Boston and Bermuda. Another Canadian company has a regular winter service between New York and Bermuda and a regular summer service between New York and Montreal. These are all international services of exactly the same nature as services to European ports.

Long-established services on the Great Lakes would be placed in the same difficulty. For many years a popular and frequent passenger service has run from Toronto across Lake Ontario to ports two or three hours distant at the mouth of the Niagara River, including Lewiston, New York. Another short international route is from Cobourg to Rochester, New York. If a passenger embarked on one of these vessels at Lewiston or Rochester and chose to return on the same trip of the same vessel (a common practice, especially in hot weather), the vessel would become liable for the prescribed penalty of $200. Several other Canadian lines on the Great Lakes would be similarly affected, and it is believed that such a consequence is entirely foreign to the purpose of the proposal. It may be mentioned that it would not be feasible on brief voyages such as these and those on the Seattle–Victoria–Vancouver run for shipping companies so to examine the passengers as to eliminate all round-trip travellers.

On the Pacific Coast a service, inaugurated in 1904, has been maintained for many years by a Canadian company between Victoria, Vancouver, and Seattle; two trips are made daily on an all-year schedule, and by mutual arrangement, tickets of this line are honoured on vessels of a United States line which participates in the traffic. Though this is a stable passenger service, it is also used for excursion purposes and for round-trip traffic on business or pleasure; the passage of this measure would gravely interfere with its operation.

Two Canadian lines maintain services between Vancouver and Skagway, Alaska. One, an all-year service, was inaugurated in 1898; the other, started in 1912, is an extension in summer months of a service between Vancouver and Prince Rupert. (United States vessels participate in the traffic between Canada and Alaska by calling at Vancouver and Victoria.) This measure would forbid foreign vessels from transporting passengers between ports in the United States or its possessions “either directly or by way of a foreign port, or for any part of such transportation”. This might be construed as prohibiting, for example, a Canadian ship from carrying a passenger going from Alaska to the United States for a part of his journey from Skagway to Vancouver, under penalty of being fined $200 on its return to Skagway, since this voyage would be part of a trip between two United States ports. Bookings on these lines in the United States might also be prevented, in spite of the fact that transshipment invariably takes place at Vancouver or Victoria.

H. R. 8874 and S. 3501 would amend the definition of a “fighting ship”: (a) by providing that a vessel entering a particular trade in order to increase competition (as well as to exclude, prevent, or reduce competition, as at present provided) is a fighting ship; and (b) by adding a new definition aimed only at foreign vessels “used, or proposed to be used, in a particular trade so as to produce unwarranted and excessive competition in such trade with vessels documented under the laws of the United States”. The Shipping Board would be given final and complete authority to decide whether a foreign vessel was a fighting ship; and clearance would be refused to vessels so certified by the Board.

The enactment of this measure would place in the hands of the Shipping Board, without the possibility of an appeal or of any judicial determination of the issue, the right to prevent any foreign shipping line from maintaining an existing service, or from establishing a new service, between a United States port and a foreign port, if the existing or proposed service was competitive with one maintained by a United States line. It could be employed, for example, to cut off the Canadian services of many years’ standing on the Pacific Coast between Vancouver and Skagway, and between Vancouver, Victoria, and Seattle. The bill would tend towards the establishment of a monopoly on certain routes, and could be used so as to operate to the serious disadvantage of shippers and of the travelling public. The measure does not appear to give due recognition to the undoubted right of a foreign country to secure for its shipping a reasonable share of the traffic between its own ports and those of the United States; and in this respect it is not only discriminatory but is also in principle an extension to foreign territory of the coastwise laws of the United States. It is avowedly aimed at a particular situation on the Atlantic Coast, but its sweeping language would permit its provisions to be applied to all services between Canadian and United States ports now existing or to be established in the future, as well as to trans-Atlantic and trans-Pacific ocean services.

The Canadian Legation finally submits that the passage of these bills at a time when trade is acutely depressed would tend to prolong the period of recovery, and could not fail to arouse resentment abroad by reason of the material losses inflicted on legitimate shipping interests and by the extension to foreign territories of principles of legislation which are regarded as of domestic application only.

Washington , March 2, 1932.