The Secretary of State to the Chairman of the House Committee on Merchant Marine and Fisheries ( Bland )13

My Dear Mr. Bland: I am informed that the ship subsidy and water carrier bills (H. R. 7521 and 5379 respectively) now pending before the Committee on Merchant Marine and Fisheries contain provisions for the regulation by governmental authority of rates, fares and charges of foreign ships in our commerce, and as this would directly affect our foreign relations and the problems of commercial policy with which my Department is concerned, I feel that I should not fail to make clear the fact that such provisions are, to my mind, open to certain serious objections.

I can understand that the regulation of the rates charged by vessels in our domestic commerce may be necessary, but I think it important [Page 478] to keep clearly in mind the essential distinction between that commerce which both begins and ends within our territory, and the foreign commerce which at one end or the other enters into the jurisdiction of another government.

I do not feel that an attempt by this Government to prescribe minimum rates which may be charged by foreign vessels on the cargoes which they carry between American and foreign ports would be in harmony with that basic principle in our treaty structure under which we have granted to foreign shipping the right of free access to our ports and in return have obtained for our ships the right of free access to foreign ports. Certainly such regulation would be in conflict with the generally accepted practices of international law. It is pertinent to observe that when, last year, a code of fair competition for the shipping industry was under consideration,14 which would have authorized the regulation of the rates of foreign vessels with respect to traffic into and out of our ports, representations were made by several foreign governments to the effect that such regulation would be in violation of treaty rights. On April 5, I transmitted to you a copy of a note from the Danish Minister in Washington15 expressing his Government’s objections, on similar grounds, to the relevant provisions of the Eastman water carrier bills, and I am sending you separately a copy of the same Minister’s more recent note16 relating to the corresponding provisions of the ship subsidy bills.

As you are doubtless aware, the proposed code of fair competition for the shipping industry referred to above failed to receive the President’s approval, and one of the principal objections raised against it related to the provisions for regulation of rates in foreign commerce.

In my opinion, a most serious objection to any unilateral attempt by this Government to fix rates in foreign commerce lies in the fact that this procedure would add one more form of restriction to the entangled and conflicting mass of nationalistic restrictions from which our foreign trade is suffering today. The impracticability of such unilateral regulation can readily be appreciated if one considers the impasse that would result if another government should adopt the same practice, but should prescribe rates covering its trade with us differing from those our authorities prescribed for the very same trade. It is fundamental that any method of control or stabilization of shipping rates, fares and charges in foreign commerce must, if it is to operate satisfactorily, be formulated with due regard to the fact that the carrying of our foreign trade takes place in part on the high seas and in part within the jurisdiction of foreign governments.

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The Executive Committee on Commercial Policy has adopted, and requested me to transmit to you, a resolution on this subject which has my full concurrence, and which I am accordingly sending to you as an inclosure17 to this letter. I hope that the Committee on Merchant Marine and Fisheries will be good enough to give consideration to the remarks I have expressed in the foregoing paragraph and to the enclosed resolution.

For the convenience of your Committee, in view of the advanced stage which I understand the Committee has reached in its consideration of the ship subsidy and water carrier regulation bills, a copy of this letter is being transmitted to each member.

Sincerely yours,

Cordell Hull
  1. Similar letters were sent on May 16, 1935, to Royal S. Copeland, Chairman of the Senate Committee on Commerce, and Burton K. Wheeler, Chairman of the Senate Committee on Interstate Commerce.
  2. See Foreign Relations, 1934, vol. i, pp. 681 ff.
  3. Ante, p. 468.
  4. Ante, p. 475.
  5. Ante, p. 474.