811.114 Canada/5077a: Telegram

The Secretary of State to the Minister in Canada (Armour)

37. From Phillips. As you know, representatives of our Treasury Department and Department of Justice received on Monday of last week representatives of the four principal Canadian distillers to negotiate settlements or agreements to obviate the necessity of legislation dealing with imports of liquor. I am somewhat concerned at the reports which have been made to me today by our representatives at the lack of more definite progress in these conversations. I am told that the representative of Seagrams submitted an offer amounting to a little less than two (2) cents on the dollar for the settlement of the claim against his company which offer was promptly rejected as being wholly inadequate. I understand that in particular the representatives of the two largest Canadian concerns have made no offer to submit to the jurisdiction of our Court to litigate these suits on their merits provided an agreement could be obtained on the amount of security to be given the United States Government and that in general there has been a disinclination on the part of the representatives of the distillers to make positive offers in respect to security.

Our officials are prepared to discuss such security on a realistic basis but they insist that definite offers must be forthcoming from the Canadian representatives.

I believe that it might be well for you to see Skelton and to urge upon him the desirability of endeavoring to press upon the Canadian distillers the importance of coming to grips at once with the problem of making definite proposals in respect to security in the event it is not possible to make settlements with our representatives out of court. I am discussing this matter with Wrong in the same sense. [Phillips.]