611.573/41
The Secretary of State to the Minister in Norway (Philip)
Sir: I enclose a copy of a memorandum of conversation15 held on October 4, 1934, between Mr. Francis B. Sayre, Assistant Secretary of State, and Mr. Wilhelm Munthe de Morgenstierne, Minister of Norway, in regard to whale oil.
This conversation brings up-to-date the attitudes of the two Governments on the subject referred to on the second page of your despatch No. 522 dated September 18, 1934.15 It is noted that while in Norway Mr. Morgenstierne had received the impression from reports by the Norwegian Chargé d’Affaires that favorable reception had been accorded here to Mr. Bachke’s16 proposal of more than a year ago that we conclude a preliminary agreement regarding the importation of whale oil. For your information all such overtures have been met with refusal on the very reasonable grounds that we had no authority to conclude such an agreement. At that time the only tax on whale oil was a duty of six cents a gallon, but even this small duty effected a differential in favor of the duty free vegetable oils with which it competed in our markets. By the imposition in the Revenue Act of [Page 652] 1934 of a tax (at the time of importation) of three cents a pound on whale oil, the total tax was increased to approximately twenty-four cents a gallon. But the processing tax of three cents a pound on vegetable oils served to hold the differential at approximately the same level. However, under the Tariff Bargaining Act we may reduce the total tax on Norwegian whale oil by 50 percent to approximately twelve cents, thus reversing the differential. This prospect has been explained to the Norwegian Chargé d’Affaires who seemed to be impressed with its logic and who stated that he would communicate the same to his Government.
For your information, shortly before this development the Chargé d’Affaires had indicated on more than one occasion that his Government probably would not be prepared to enter into negotiations unless some relief for whale oil were in prospect. He desired a statement from us, which could be used in Norway, that the Department would urge Congress to repeal section 602 of the Revenue Act of 1934, which imposes the three cents a pound tax. He hoped that a promise of this nature would have a good effect in Norway. By way of strengthening his case the Chargé d’Affaires informally stated, among other things, the following:
- 1.
- That the Norwegian whaling fleet, which ordinarily set out September first, had postponed its departure until December first to await our action. Probably 40,000 Norwegians were dependent upon whaling operations for their livelihood. This does not seem to reconcile with the statements made in your periodic reports dated July 18, 1934, (page 3) and August 16, 1934, (pages 10 and 11).18
- 2.
- The Norwegian whaling fleet purchased directly from American tankers bunker oil valued at approximately $2,600,000 last year. With the loss of the American market for whale oil, this trade would probably go elsewhere.
We would appreciate timely reports from you on any phase of this question which may come to your attention.
Very truly yours,