458.11 Dexter and Carpenter/185

The Minister in Sweden (Steinhardt) to the Secretary of State

No. 22

Sir: With reference to my despatch No. 21 of August 18, 1933,13 I have the honor to report that I had two further conferences on Friday, August 18, with Mr. Haight,14 the one in the morning and the other in the evening after dinner. The substance of these two conferences was a report by me to Mr. Haight of my talk with Mr. Undén. Mr. Haight was thoroughly discouraged and prepared to leave in the morning. He said that it was perfectly obvious to him from Mr. Undén’s attitude that there was no hope of a settlement and asked me to arrange, if possible, for an arbitration at the earliest possible moment. He was quite frank in telling me that he had sensed Mr. Undén’s hostility and that he was convinced that the Foreign Office would not offer more than $30,000 to $40,000 at the most. I told Mr. Haight that I did not agree with him and that I believed a settlement could be put through with patience and a reasonable position on his part and that of his clients. I asked him to tell me confidentially what the minimum amount was that his clients would accept and promised not to disclose that amount to the Foreign Office unless I was convinced that it could be achieved. Mr. Haight apparently had considerable mental reservations about telling me his irreducible minimum. We discussed figures at length in an attempt on my part to draw him out. I urged him to give me authority to settle for $100,000. He said he did not have the remotest hope that I could obtain any such offer and then qualified this remark by saying that he could not authorize the acceptance of $100,000 without the authority of his clients. I urged him to obtain such authority and he said he would endeavor to do so. Both he and I considered it inadvisable for him to cable from Stockholm as we feared that the answer might come to the attention of the Foreign Office and disclose his minimum figure. It was therefore agreed that Mr. Haight would cable his clients from Oslo and would telephone me this evening or tomorrow morning using a code agreed upon between us. At the conclusion of our last conference I had failed to obtain from Mr. Haight a flat statement that he would recommend or his clients accept $100,000, but had the very definite impression that he intended to recommend that amount to his clients and if driven to it would accept while still hoping to obtain somewhat more.

The relations between Mr. Haight and myself have been extremely cordial and friendly throughout.

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By appointment I conferred alone this morning at 10.30 a.m. with Mr. Undén. He told me that he had had a conference with the head of the State Railways. He said he was having great difficulty with the State Railways as they were adamant in their position and that the question of where to get the money with which to conclude a settlement was an extremely troublesome one in that it might be necessary to obtain a special appropriation from the Riksdag. I told him that I recognized this position and that I was most sympathetic towards their difficulties but that if the case went to arbitration and an award was made it would doubtless be for a much greater amount and that the same difficulties would then present themselves with the amount so much greater that its payment might cause a political upheaval whereas a settlement for a lesser amount would permit the Swedish Government to stress the saving from the judgment. Mr. Undén replied that he did not fear the outcome of an arbitration and that he believed the Railways would prevail, but was desirous of removing the only cause of controversy between the two Governments. We then discussed at length the desirability of a prompt settlement and I emphasized the necessity of prompt payment as a condition of any settlement. Mr. Undén then said that the State Railways proposed to pay not more than $75,000 in full and final settlement of all claims by Dexter and Carpenter. I told him that this amount was, of course, inacceptable as it did not cover the Dexter and Carpenter out of pocket loss nor did it include the expenses and counsel fees which he had previously expressed himself as willing to take into consideration. I felt at this point that a reasonable initial offer having been made it was incumbent upon me to indicate that Dexter and Carpenter were likewise prepared to make concessions. I explained to Mr. Undén that I had as yet received no authority to mention an acceptable amount but that I was quite sure that $200,000 would be accepted. These two figures having been mentioned afforded a basis for further discussion. I stressed the concession from the amount of the judgment and the inadequacy of the $75,000. Mr. Undén then said that he believed he could persuade the State Railways to pay $100,000. It was obvious to me that that was the maximum amount he and the head of the State Railways had agreed to pay. I then told him that I was prepared to exert the utmost persuasion with Mr. Haight to accept less than $200,000 and that I expected to have a talk with him within the next 48 hours and would communicate with Mr. Undén at once thereafter. I asked him whether I must consider $100,000 as the absolute limit to which the Foreign Office was prepared to go in bringing pressure to bear upon the State Railways. He replied very firmly that he doubted they would agree to any more but qualified his doubts by adding that the Foreign Office was greatly interested in the matter and [Page 757] if necessary was in a position to force the State Railways to pay more. He added that the Railways’ capacity to pay without a special appropriation of the Riksdag must be carefully considered.

Feeling that substantial progress had been made and that Mr. Undén was in no humor to be pressed further I took my departure. I am satisfied that further negotiations if kept alive from day to day and not allowed to lag will bring forth a final offer to pay $150,000, the Foreign Office working out some method of apportioning the payment as between the State Railways and the Government. I am equally certain that $150,000 is the absolute maximum and that an attempt to obtain more will provoke friction. I believe from an intensive study of the record of the case which I have made that $150,000 is a fair, almost generous settlement having regard to the merits and without regard to the existence of a judgment for very considerably more. Taking into consideration that whatever payment is made is a voluntary one, and that the Foreign Office is at last giving evidence of its desire to indemnify Dexter and Carpenter without allowing them to collect prospective profits, I have no hesitancy in recommending a settlement for $150,000 if it can be obtained and in saying to the Department that if that amount should prove inacceptable to Dexter and Carpenter they are not meeting the Swedish Government in the same spirit of conciliation evidenced today by the latter.

I have little doubt that after a brief discussion with Mr. Haight on the telephone tonight or tomorrow morning he will authorize me on behalf of his clients to accept $150,000, in which event and should the Foreign Office agree to this amount, I shall cable the Department for authority to close the negotiations on that basis.

Respectfully yours,

Laurence A. Steinhardt
  1. Not printed.
  2. Charles S. Haight, attorney for Dexter and Carpenter, Inc.