653.116/167
Memorandum by the Minister in Portugal (Caldwell), Temporarily in Washington
Referring to the problem of flag discrimination between Portugal and the United States, from informal conversations of an unofficial character with the Secretary General for the Ministry of Foreign Affairs in Lisbon and, since my arrival in Washington, with the Minister of Portugal to the United States I gained the impression that the Portuguese authorities realize that the policy of flag discrimination [Page 666] as applied to the United States is of entirely minor importance either as a source of revenue or as a means of protecting the Portuguese Merchant Marine. On the other hand, the Portuguese Government has committed itself so fully to the use of flag discrimination as a means for securing protection for the regional marks of Portuguese wines that it would probably find it extremely difficult to recede frankly and immediately from its position by removing the present discrimination against American ships. For a limited period, however, perhaps as much as one year, I believe that there would be a reasonable probability that Portugal would be willing to accept a face-saving formula by which the most-favored-nation clause in the modus vivendi of 1910 would be interpreted in an absolute and unconditional sense pending the consideration of a more permanent treaty or agreement. If such a proposition were accepted, it would be my hope that flag discrimination, once given up for a limited period, would never be renewed.