Memorandum of a Conversation Between the Special Assistant to the Secretary of State (Hewes) and Mr. Charles S. Haight, in Washington, April 20, 1934

Statement by Mr. Haight

1. On the afternoon of March 7th—the day I sailed for the other side—Mr. Vallance41 telephoned and asked if I had any objection to having a copy of my letter of March 2nd to Mr. Sayre, or the substance of it, submitted to the Secretary of Commerce. I told him that I had not, and at the same time asked whether the Department would care to have me make discreet inquiries in the countries which I was planning to visit or would prefer to have me maintain complete silence. Mr. Vallance said that it would be entirely proper for me to continue my discussions with Lord Essendon and suggested that I also obtain additional information in the other countries and submit it.

Hamburg. I accordingly discussed the feasibility of a possible international shipping agreement, in Hamburg, with Mr. Obousier, the Managing Director of the Hamburg-American Line and, according to my understanding, a man who is influential in government circles. He said that, in his opinion, Germany would be only too glad to co-operate in an international agreement, although he doubted the possibility of persuading the world to adopt any such joint action.
Copenhagen. I saw the Directors of the Danish Steamship Owners’ Association, in Copenhagen, and they confirmed the statement made by Lord Essendon that the steamship owners of Norway, Sweden, Denmark and Holland had offered to urge upon their governments the acceptance of any reasonable international agreement for the rationalization of tonnage, if Great Britain could be dissuaded thereby from voting a subsidy for tramp tonnage.
Baltic Conference. On March 25th the Baltic International Maritime Conference met in Hamburg. I am attaching a press clipping42 which gives in full the resolution passed at that meeting, from which you will see that the Conference reached the conclusion that in the solution of the present shipping crisis “no measures can successfully be taken by individual shipowners or by national shipping associations unless the governments concerned lend their co-operation and help”. Action was accordingly taken to persuade the British government to call an international shipping conference.
London. I found the general feeling in London one of opposition to the calling of another international conference by Great Britain, even though requested to do so by the resolution of the Baltic Conference. Everyone seemed to feel very keenly the failure of the Economic Conference,43 and the shipping men were sure that without the unqualified support of the United States a shipping conference would also fail, and they were unwilling to initiate any action merely upon the supposition that the United States would favor it. Lord Essendon saw various government officials and discussed with them, informally, my letter of March 2nd to Mr. Sayre. The general consensus of opinion was that, for the success of the undertaking, it would be altogether better if the United States would call the conference. There was also, as was natural, a definite unwillingness to act upon information coming from a wholly unofficial source.

When this information had been secured, I cabled Mr. Sayre through the London Embassy. Copies of my cables are attached hereto,44 for convenience.

2. Joint Resolution, March 26th.45 Almost immediately after my cables were sent, announcement was made in the press of the approval by the President of the above Joint Resolution, and all of the shipping men in London were much disturbed. Some also were disposed to act upon the theory that a shipping war with the United States was unavoidable and that immediate retaliatory measures were called for. The Scandinavian interests telegraphed London, suggesting joint retaliation through the international shipping conference, and I was told that, but for the adjournment of the House of Commons, there would have been every likelihood of an angry debate there.

I felt certain that the Joint Resolution did not indicate a reversal in the declared policy of the Administration, and so stated, and after some argument I quieted the fears of the British Chamber of Shipping and its various members. At the request of Lord Essendon, I prepared [Page 713] a memorandum46 giving my views of the situation and, in particular, urging against heated comment in the press and in the House of Commons and against hasty retaliation. A copy of that memorandum has already been submitted to the State Department. Lord Essendon and the officials of the British Chamber, at a general conference, agreed to use their influence to quiet the excitement caused by the publication of the Joint Resolution and copies of my memorandum were submitted to various government officials. A general conference of the chief executives of the most important British lines was also called and I was asked to attend.

3. Liner Conference. This conference was attended by Lord Essendon, Chairman; Sir Alan Anderson, head of the Orient Line and President of the Association of British Chambers of Commerce; A. B. Cauty of the White Star Line; L. C. Harris, representing the Ellerman interests; Sir Norman Hill, for many years the Secretary of the Liverpool Steam Ship Owners’ Association; T. Harrison Hughes, representing the Harrison Line; Martin Hill, Joint Secretary of the Liverpool Steam Ship Owners’ Association; P. Maurice Hill, Assistant General Manager of the Chamber of Shipping. Lord Essendon posted the meeting fully as to the most recent developments. The Joint Resolution of March 26th was examined, which [and it was?] stated that some information had been received suggesting that it would be applied only to shipments made to China, Cuba and Russia. The language of the Resolution, however, appeared to be too broad to justify such a construction and it was proposed that the British Ambassador at Washington47 be directed to ask for assurances on the subject from the American government.

On the subject of a possible international conference, Sir Alan Anderson urged that, at any conference which was held, shipping should be treated as part of the general problem of trade restoration, which problem he thought must be handled on the lines of the agreed British policy. Sir Alan thought that there might be some danger in dealing with the shipping question first, before the general principles for trade restoration were established.

Sir Norman Hill was also of the same opinion.

Lord Essendon argued that a shipping agreement for the rationalization of tonnage could be taken up first and that it need not prejudice a wider trade agreement later. He favored a conference on the lines suggested in my letter to Mr. Sayre and argued that even if trade should improve in the immediate future, there would still be too many ships to handle the cargo moving. After discussion, the meeting agreed (a) that all agitation against the Joint Resolution, both in the [Page 714] press and in the House of Commons, should be avoided; (b) that retaliation should be kept in reserve; (c) that action by the British lines on the question of an international conference should await a disclosure of the American attitude. If the purpose of the American government was to seek a solution which would be for the general good of all shipping, the British owners would be more than glad to co-operate. If, on the other hand, the suggestion of a shipping conference, even if called by the United States, were to be based upon the theory that the United States must carry at least 50% of the entire trade, it would be far better not to have any conference at all. I was specially questioned on three points:

Continuity” of U. S. Government action. The obvious fear was lest, in the quick change of American officials, it should prove impossible to work out an international conference satisfactorily, even if it were called. I replied that the personnel of the State Department was not as transitory as that of the National Recovery Administration and that, in my opinion, if the American government saw fit to take the initiative in the settlement of the present shipping crisis, there need be no worry about carrying the project through to a finish.
I also urged that action should be through governments and not through private steamship owners.
Fifty percent of American trade. I was also asked about the attitude of the American government, in view of the numerous statements contained in the press that American steamship owners would never agree to carry less than 50% of America’s foreign trade. As already suggested, it was felt that if that position were to be persisted in, an agreement would be impossible. My answer was that I did not believe that the State Department would take as extreme a position as that declared in the press by the American Steamship Owners’ Association.
International free trade agreements. Sir Alan Anderson’s plan was also explained to me, under which the various commercial nations of the world are to be invited to combine with Great Britain and engage in free exchange of goods, without the restrictions of high tariffs, quotas, subsidies or other barriers. I answered that, in my judgment, it seemed wise to take one step at a time, and that the settlement of the shipping crisis would be a very useful step. I expressed the opinion, however, that the United States was serious in its purpose to lower tariffs; that we were shaping our policy on the theory that we could not sell abroad if we did not also buy, and that the Joint Resolution would be overcome in some way, since I had been assured that the State Department was opposed to it and was convinced that the other Departments, also, did not favor it.

[Page 715]

I also called attention to the fact that the reciprocal trade agreements48 which the President is to be authorized to enter into will be “executive agreements”, not requiring the ratification of the Senate, and that I hoped that a shipping agreement—if ever one were arrived at—would be handled in the same way. I asked for a more full statement of Sir Alan Anderson’s plan and, as a result, was furnished with a copy of the address which he was to deliver, as President of the Association of British Chambers of Commerce, at their annual meeting on April 19th. A copy of that address has already been forwarded to the Department.

At the close of the meeting I was requested (a) to report the general situation to the State Department, (b) to inquire if the American government would be prepared to approach the British government on the subject of an international shipping conference, and (c) to emphasize the need for general trade restoration.

Before leaving London I saw the American Ambassador and explained to him fully what I had done and gave him a copy of the memorandum which I had prepared on the subject of the Joint Resolution.

This completes my report to the Department on the subject of my informal activities abroad. Perhaps I may be permitted, however, to say that there are one or two points which really need fairly prompt action:

Joint Resolution, March 26th. I doubt if anything could cause more instantaneous trouble than this Joint Resolution, if it is put into effect. I know that within a few days after the announcement was made in the press, a large part of Europe was so stirred up that retaliatory action was a real danger. I also know that British officials are already prepared to advocate the passage of an Act by the House of Commons under which all British subjects purchasing goods in the United States will be required to buy them f. o. b. American ports and to bring them to Great Britain in British bottoms. Surely nothing could be more utterly destructive of the business of all international carriers than legislative warfare of this character. If assurance can be given to foreign governments that this Joint Resolution is not to be enforced in accordance with its broad language, that will be infinitely useful. Of course, the best thing possible would be to have it repealed, but that probably is not feasible before Congress adjourns.
American initiative. It is my conviction that no action which we are in a position to take will be more effective in restoring friendly relations with foreign countries than the calling by the United States [Page 716] government of an international shipping conference, for the declared purpose of seeking a solution which will benefit all nations equally. At the moment, many owners and a good many governments feel that the very heavy subsidies which we have paid to American operators have worked a real injustice to them, and that the world’s shipping ills have been substantially intensified thereby. We are now carrying approximately 35% of our foreign trade in American bottoms. If we could declare ourselves in favor of prompt rationalization, based upon the status quo, so as to keep surplus tonnage tied up, and operate such tonnage as is needed, at a profit, it would do much to relieve the tension in shipping matters, which is, today, pretty high. It is, of course, necessary to move advisedly and to consider the problem fully, but if any action looking towards an international conference is to be taken, the sooner that it can be taken the better it will be.

  1. William R. Vallance, Assistant to the Legal Adviser.
  2. From the London Times, March 26, 1934; not reprinted.
  3. See Foreign Relations, 1933, vol. i, pp. 452 ff.
  4. Telegrams are quoted by the Secretary of State in letter to the Secretary of Commerce dated April 5, p. 703.
  5. Ante, p. 706.
  6. Not printed.
  7. Sir Ronald Lindsay.
  8. Reciprocal Trade Agreements Act, approved June 12, 1934; 48 Stat. 943.