Memorandum of Conversation, by the Assistant Secretary of State (Berle)

Participants: Secretary Hull; Counselor, Mr. Moore; Assistant Secretary, Berle; Legal Adviser, Mr. Hackworth.

Following an inquiry received from the Maritime Commission regarding the law and policy applicable to the sale of merchant ships by the Maritime Commission, a meeting was held this afternoon in the Secretary’s office.

It is understood that the Maritime Commission has four ships which it desires to sell at public auction.

In addition, there are some 118 or more ships which are laid up and held in reserve, and which it is desired to dispose of, as they are in bad condition. All of these ships have reached an age and condition in which, under the policy of the Maritime Commission, they would normally be sold.

The Maritime Commission had inquired whether these ships could be sold to a belligerent government. It was the opinion of the Legal Adviser, and concurred in by all present, that they could not. While a private owner of vessels may sell ships to a belligerent government, a government may not sell such ships to a belligerent government without violating neutrality.

The question was also asked whether there is any reason why ships should not be sold at public auction; and in that case whether the Maritime Commission or this government assumed any responsibility for what happened after that.

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It was the opinion of the Legal Adviser, concurred in by the conference, that the ships, being the property of the government and held by the Maritime Commission, may be sold at auction to the public. Having validly reached private hands, the responsibility of the government thereafter ceases. Plainly, there can be no law which would prevent the free sale of government property within the United States to anyone other than a belligerent government.

If the sale had been consummated, the government would not be responsible in the event that a purchaser subsequently resold these ships, even to a belligerent government; provided, of course, the transaction is not collusive; that there is no knowledge or reason to believe that the bidder is acting for or on behalf of a belligerent government; or that the sale is anything other than a sale in regular course, [or that the ships were not being fitted out for use against a friendly power?]8

The desirable policy, accordingly, would seem to be to go forward with the sale of the four ships at public auction in the regular way; it being understood that a bid put in for or on behalf of a belligerent government would be rejected. As to the laid-up fleet, a similar procedure might be followed; sales being preferably in small lots.

A. A. Berle, Jr.
  1. Words in brackets are written in longhand within brackets on the original.