Foreign Relations of the United States Diplomatic Papers, 1939, The American Republics, Volume V

862.852/23

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

[ Washington ,] October 3, 1939.

The French Ambassador^7a called to see me today, at his own request. He referred to the ships blockaded in Latin American harbors and to the suggestion that the governments of these countries purchase these ships from Germany. He pointed out that his government took the same position as the British government, namely, that they would not recognize any such transfers and that such ships would accordingly be liable to capture as prize if they reached the high seas.

I stated that we had had a similar indication of attitude from the British government. Further, I said, we had asked the British Embassy to indicate their attitude towards an idea we were exploring, namely, that these ships might after a period of time be expropriated; the payment for them be held in escrow until the end of the war, in which case the ships might be used in the trans-Atlantic trade. I pointed out that we would not consider it satisfactory to have these ships operated by German crews or German agencies but that the transfer would have to be bona fide.

The Ambassador pointed out that certain large French ships, including the Normandie, were taking indefinite refuge in American ports and he wondered whether the procedure of expropriation might be applied to them. In this connection he recalled, rather unhappily, that Secretary Morgenthau⁸ had requested him and Lord Lothian to meet him at the Treasury and had there proposed that the British and French Governments sell the Queen Mary and the Normandie respectively, to the United States Government. On inquiry it developed that the price was to be credited on the French and British war debts. He and Lothian had thereafter conferred. He had, he said, presented the matter to his government in the kindliest light possible, namely, that the hope was to get a token payment on the French war debts in order to assist in passing the Neutrality Act⁹ here; but he was not altogether clear whether this was the real motive. However, he said, on endeavoring to discuss it with Mr. Hull shortly thereafter, Mr. Hull had stopped him by saying that the proposal had been entirely dropped, at the President’s suggestion.

I said at once that I did not think anyone had even remotely considered any idea of that kind. Our concern, rather, was that as and when Atlantic shipping became necessary, the Latin American countries which depended on such shipping might find it possible to use that shipping. I said that I thought it not unlikely that prior to expropriation some procedure would be adopted by which the owners of the vessels might be asked to take the vessels out, failing which they might be expropriated. I also pointed out that our cables from Panama indicated that certain Latin American governments desired to purchase the German merchant ships. M. de Saint-Quentin observed that they had no particular objection to these ships being purchased, but that they feared lest the price of these ships would become credits for the German government which it could use abroad; and consequently they objected. I said that if the idea we were exploring were carried into effect, this would not be a difficulty, because the price would be held in trust until the end of the war. In any case, the matter was not immediate, but merely an attempt to consider possibilities.

We talked briefly as to the progress of the war; the Ambassador considered that Mr. Hitler’s speech would probably be an offer of peace, including the establishment of a buffer Polish state and possibly Bohemia, accompanied by threats to wipe out London and Paris through air bombs. A Poland so constituted, he stated, would be meaningless, because it could be seized at any time. If it were thought that a threat of wiping out London or Paris would frighten anyone, the Germans would be surprised, since both populations were thoroughly prepared in their minds for that eventuality.

A. A. Berle, Jr.

1. Count de Saint-Quentin.
8. Henry Morgenthau, Jr., Secretary of the Treasury.
9. See section entitled “Revision of United States Neutrality Legislation,” vol. i, pp. 656 ff. The Neutrality Act was approved November 4, 1939; 54 Stat. 4.