The British Embassy to the Department of State

Matson Line

The position as far as Australia is concerned is that on the 16th June the State Department were given, at their suggestion, a full statement of the Australian case and that in the course of his visit, on the 1st July, Mr. Casey explained to Mr. Sumner Welles and Mr. Dunn that in view of the Secretary of State’s request that an attempt should be made to settle the Tasman Sea question by voluntary discussion the Commonwealth Government were holding up the passage of their legislation for the present to allow time for such discussion, and that they looked to the State Department to aid them in trying to find such a settlement.8

So far the State Department have not made any proposal on the lines Mr. Casey suggested but Mr. Dunn on the 6th July advised Mr. Chalkley and myself of the Maritime Commission’s observations on the discussion we had had with Mr. Dunn on the 16th June. This memorandum unfortunately does not seem to advance the position at all. Although an attempt was made in the memorandum of the 16th June to emphasize that the difficulty to be dealt with was that of the Tasman Sea the present memorandum deals rather with the trans-Pacific problem and particularly the future of shipping in that Sea. After stating that American companies have been operating in the Southern trans-Pacific trade route almost continuously since 1885, it proceeds to say “that the suggestion that Dominion shipping is discriminated against as a result of American subsidies is without foundation as for the future for the reason that whilst the Matson Line will henceforth receive parity payments the Canadian-Australian line will be receiving fixed amounts of mail pay totalling substantial amounts.”

From the memorandum it would appear that the Maritime Commission have not appreciated the following points at issue:

That the United States line between San Francisco and Australia did not enter into the Tasman Sea traffic between New Zealand and Australia until 1931 when two ships, built as the result of very large advances by the United States Government, commenced calling in New Zealand and competing in the trans-Tasman trade
That such competition affects not only the Canadian-Australian line but also the Union Steamship Company and Huddart Parker, companies registered in New Zealand and Australia respectively and manned and operated under New Zealand and Australian conditions
That it is this situation created by past action and not the future shipping situation in the Pacific that the Commonwealth Government [Page 106] is immediately seeking to remedy and was taking steps to that end by introducing legislation on the model of the New Zealand Act
That in view of Mr. Hull’s request that action would be deferred to allow time for a discussion with a view to a voluntary settlement the Commonwealth Government did not proceed with their legislation during the recent short sitting of Parliament
That they are still anxious to arrive at a voluntary settlement of the matter in the absence of which they can hardly defer proceeding with the legislation and taking the necessary powers when Parliament meets again probably at the end of August.

  1. Memorandum of conversation not printed.