811.114 Canada/5081½

Memorandum by the Under Secretary of State (Phillips)

The Canadian Chargé d’Affaires left with me this morning the accompanying memorandum29 summary of discussions between representatives [Page 815] of the Canadian distillers and the representatives of the Treasury, which had been prepared by the distillers’ representatives before their departure from Washington yesterday. He pointed out that the final paragraph on page four, beginning with “It was suggested that the legislation etc.” stated the position of the companies’ representatives, which in brief is to the effect that the Treasury legislation be not proceeded with and that the individual companies endeavor to reach with the Treasury settlement of the alleged claims and that during this time the companies will continue to operate only their normal business with the United States and will not dispose of their assets in such a way as to affect the present position of the Treasury Department.

Mr. Hume Wrong said that there was one point which he regretted that he had not brought out at the meeting with the Treasury officials, but which he had already explained to us, namely, in connection with the Reifel case, which had already been disposed of out of court. The Treasury’s complaints against this company were probably far more substantial than that against any other Canadian company; the claim had amounted to $17,250,000 but had been disposed of for $500,000 in cash. If, therefore, the present legislation went into effect against the other seven companies, thus prohibiting them from continuing to do business with the United States, the Reifel company would be the beneficiary; this, he felt, was a highly inequitable situation.

Mr. Wrong asked me what the prospects were with regard to continuing the delay in the Senate. I told him that we were preparing a despatch for the President and certainly that nothing would be done in that respect until we had received the President’s reply. I added, however, that personally and quite frankly, I was not feeling particularly optimistic this morning with regard to his desire that Section 402 should be dropped from the legislation.

William Phillips
  1. Not printed.