Foreign Relations of the United States Diplomatic Papers, 1936, General, British Commonwealth, Volume I

811.71247H/53

Memorandum of Conversation, by Mr. John R. Minter of the Division of Western European Affairs⁷²

[Washington,] February 24, 1936.

This conversation related to the position of the Matson Line in Australia and New Zealand. It will be recalled that previous memoranda⁷³ emanating from this Division and the Trade Agreements Division carried an expression of opinion that a frank talk with British officials might have the effect of forestalling action by those Dominions which would open up an orgy of shipping legislation which would be disastrous. The Secretary had approved of some kind of informal representations but had instructed that it be done by some other office. Accordingly, Mr. Dunn requested Mr. Chalkley to come to see him on February 21, 1936.

Upon learning the subject of discussion, Mr. Chalkley said that if he had known what was to be discussed he probably would have approached the Department with a feeling of hope that we were now prepared to offer some suggestion which might be helpful to them. He said that there had been continuous discussions between British and Dominion governments since the first plenary conclave at the Ottawa conference. He said that in the interest of Empire shipping, generally, the British had through friendly conference been able to persuade the Dominions to take no action which would stir things up. They realized that the United Kingdom now had no constitutional right to interfere, and Mr. Runciman⁷⁴ had capitulated last summer when, faced with rather frantic appeals from the Dominion Prime Ministers and a rather definite ultimatum from the P. and O. group,⁷⁵ as well as a threat from Canadian-Pacific headquarters, he told Mr. Lyons that as far as the British Government was concerned the Dominions may now consider themselves to have a free hand in the matter. Mr. Chalkley said that the British Government is still opposed to any action which would make British shipping vulnerable to retaliatory attack in other parts of the world.

Mr. Dunn had, of course, told Mr. Chalkley that he did not call him here to offer any helpful suggestion. He did feel, however, that it was not only a friendly act but that it might be considered as helpful for the British Government to be told that all the officials of this Department entertained very grave fears of the result of action by New Zealand and Australia to exclude the Matson Line via legislation. We had no quarrel with the alternative suggestion of financial assistance to the British lines to enable them to compete with the American line, and we did not believe that our Congress could find reason to take umbrage. We did feel, however, that in the wake of such Dominion legislation a new and irresistible effort to pass excluding legislation in this country would probably be successful. Mr. Dunn recalled the numerous bills which had been presented and defeated, but which were not yet dead. Their revival and possible passage awaited only some good provocation, and we believe that Dominion legislation pointing at one American line would be that provocation.

Mr. Chalkley said that they had been fully aware of the danger underlying such action by the Dominions and that he appreciated our telling him about our latest fears. He said that of course legislation was an alternative plan. Mr. Dunn said that we realized that, but that in view of the budget situation in those Dominions and recent utterances by the two Prime Ministers it would appear that they were falling back on legislation. Mr. Chalkley then hinted that the British Government was perhaps expected to bear the chief financial burden if financial assistance were decided upon, and I think this hint throws light upon the present attitude of the British Government, which probably realizes that it would be the British Exchequer and not the Dominions’ Exchequers which would be tapped to “save” the British lines in the Pacific trade.

In his somewhat indifferent manner Mr. Chalkley said that he would make a note of what had been said. Shortly thereafter, however, it was revealed to him that certain lobbyists were now contemplating pressing for a Congressional resolution which would take cognizance of the proposed Dominion action and which would so widely advertise it that the doors would undoubtedly be open for the passage of harmful legislation here. This information obviously startled Mr. Chalkley and caused him to indicate by tone and text that he would do more than merely “make a note of what had been said.” He asked us by all means to keep in touch with him on this resolution proposal and closed the conversation by saying that he would inform his Government and suggest that it inform the Dominion governments.

72. Conversation between James Clement Dunn, Special Assistant to the Secretary of State and Chief of the Division of Western European Affairs, and Harry Owen Chalkley, Commercial Counselor of the British Embassy.
73. None printed.
74. Walter Runciman, President of the British Board of Trade.
75. Peninsular and Orient Steam Navigation Co.