740.00111 A.R./378: Telegram
The American Delegate (Welles) to the Secretary of State
[Received 7:47 p.m.]
20. Your 24, September 27, 10 p.m. I have had the matter mentioned in your telegram very much in mind from the beginning of our consideration of the proposed restricted zone around this continent and if I remember correctly discussed it with you and with the President.
It is of course clear that if the proposed restricted zone is established and respected by the belligerents both Germany and the allies will derive certain advantages as well as disadvantages therefrom. From the standpoint of possible advantages to the allies the security of their ships carrying supplies of raw materials from the South American Republics to their own ports so long as they remain within the restrictive zone would be a very great gain. They would derive even greater benefits from the fact that if the restricted zone is respected they would be enabled to reduce materially their naval patrols within such areas as well as from the fact that their colonial possessions within the restricted zone would be far less liable to incur any danger. The sole disadvantage to the allies which I can see derives from the relative advantage to Germany which would result from the security of German merchant ships now within the restricted zone which would be enabled as you indicate to engage in coastwise shipping.
As you know there is already under way a movement on the part of some of the American governments to attempt to take over these German merchant vessels and if this is done there is no doubt that the allied governments would immediately raise the question as to the validity of such transfer of title during the war period. If we sustain the general proposal for the creation of a restricted zone on the ground that the American Republics are entitled to continue normal shipping communications with each other notwithstanding the outbreak of war in Europe it would seem to me that there would necessarily be inherent in such proposal the right of all belligerents to engage in maritime communications between the American Republics so long as their merchant ships kept within a reasonable distance of our coasts. The great fear of many of the American Republics which has been expressed to me in my conversations here and particularly in conversations with the representatives of the Pacific Coast republics is that the sharp reduction in British shipping from South American ports to Europe caused by the outbreak of war cannot within any foreseeable period be compensated for by any commensurate increase in American merchant ships. The unanimous [Page 32] tendency on the part of these republics will be to insist that German ships be permitted to continue inter-American trade whether under German flags or under the flags of some of these republics themselves after transfer of title.
I realize the complicated nature of this problem but so far as my own opinion is concerned I have reached the very definite conclusion that from the standpoint of preserving so far as possible healthy trade and commerce between the American Republics notwithstanding the outbreak of war the disadvantages resulting from the creation of the restricted zone would be far less than the advantages to be derived therefrom; I need hardly emphasize the fact that as is clearly stated in the project the restricted zone would only continue so long as all of the American Republics retained their present neutral status.