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

No. 78

Sir: I have the honor to acknowledge the receipt of the Department’s instruction No. 14, dated April 25, 1932, transmitting a copy of a note received by the Department from the British Ambassador at Washington relating to certain Congressional bills (H. R. 8874 and H. R. 8875) to amend the Merchant Marine Act, and directing the Embassy to forward any information which may be obtained regarding the attitude of the Cunard and other British shipping interests.

The Embassy has discussed the questions raised by the two bills under reference with representatives of American shipping in Great Britain. A great deal of what they said in description of the views of British ship-owners and operators with regard to the effect of the two bills was merely a repetition of the opinion already brought to the Department’s attention through the Embassy’s telegram No. 60, February 11, 10 a.m., and the note above-mentioned of the British Ambassador at Washington.

The point on which they placed the greatest emphasis was that British shipping interests have long resented the mercantile shipping policy of the United States. They are represented as feeling that while the practice of granting subsidies by government to private ship-owners is one of long standing, the amounts so paid have never been so great that the owners were relieved of the duty of operating their vessels as economically and efficiently as possible. Captain Laighton, of the British firm of Laighton and Stelp, said that the subsidies paid by the United States, as well as the rules under which they may be paid, are so generous that American owners and operators are not constrained to exercise efficiency and economy, and are thus enabled to maintain ships in circumstances which would prevent [Page 943]operation by British vessels, even when subsidized. In this sense, it might be contended, in their view, that all American vessels receiving subsidies on the present scale might be termed “fighting ships” as defined by H. R. 8874, for they have the effect of driving foreign vessels out of competition. The Embassy’s informants agree that British shipping interests are, therefore, inclined to revise their traditional attitude of opposition to the placing of restrictions on foreign vessels engaging in British coastwise trade—an attitude arising from the conviction that the efficiency of British operation need fear no competition in home waters—and are now in a particularly receptive mood to suggestions for reprisals against “Governments in the shipping business”.

In this relation, the Embassy was informed that unusual interest is being shown in the movements of the Shipping Board vessel Yomachichi, operated by the Roosevelt Steamship Company, which is asserted by one American shipping representative as having been set up by the British Kerr interests as an agency for the operation of American vessels. The Yomachichi is reported to have been chartered at 18 pence below the prevailing charter rate to carry a cargo of wheat from Australia to United Kingdom ports. It is considered quite possible in American circles here that the Shipping Board authorized the diversion of this vessel from its usual routes and the acceptance of the charter to “cut” costs, but the possibility is not being overlooked that the voyage is being undertaken—perhaps quite innocently so far as the Roosevelt Steamship Company is concerned—to create an instance of the use by Americans of a “fighting ship”, and thus open the way to legislation analogous to bill H. R. 8874.

The Embassy is keeping in touch with representatives of American shipping interests, and I shall not fail to transmit as it is obtained further information regarding the attitude of British shipping interests.

Respectfully yours,

(For the Ambassador)
Ray Atherton

Counselor of Embassy