894.24/1307

The British Chargé (Butler) to the Adviser on Political Relations (Hornbeck)

Dear Dr. Hornbeck: With reference to our conversation of January 6th, I enclose a list7 showing departures for Japan from United States ports of Panamanian tankers and of one Philippine tanker during November and December.

These eight Panamanians have been engaged regularly in the trade. Four vessels are owned by United States interests, and of the others one, the “Norness”, has now been withdrawn from this route, while we have reason to believe that the owners of two, if not of all of the remaining three, will respect any proposals to curtail Japan’s chartering of foreign flag tankers. The problem of employment for these vessels is eased by the existing tight tanker market.

If, as the estimates made recently in London seem to indicate, Japan at her current rate of import is still accumulating stocks of oil, I feel that this must be a matter of serious concern to both our Governments, and a limitation of Japanese chartering of foreign flag vessels seems to offer the most practical means of correcting the situation in a manner least likely to provoke Japan. This was one of the suggestions of my previous memorandum: my Government would be ready to cooperate with the United States Government in such further measures as may be possible to this end, if the United States Government is in a position and is willing to discourage or curb Japanese chartering of foreign flag vessels owned by United States interests under Panamanian or other flags.

I write also to confirm that the figure of 140,000 tons, given you yesterday morning on the telephone as the amount of oil involved in the Japanese offer of an increased quota for the Shell organization in Japan, is only an approximate one. Accurate figures have been requested of London. Nevertheless, the amount is certainly greater than [Page 776] that involved in the proposal to the Standard Oil Company: the two amounts together represent a substantial addition to Japan’s imports.

The tonnage involved would be supplied by the companies and would represent a net addition to the tanker tonnage now engaged in the Japanese trade. I therefore hope very much that the United States authorities will find it possible, in order to prevent fresh tonnage becoming available to Japanese trade, to advise the Standard Oil Company of their desire that they should not make increased deliveries under the Japanese proposals. In such circumstances the Shell would be guided by the wishes of His Majesty’s Government, who would give them similar service.

In this question, as you know, we are concerned not only with the restriction of Japanese imports of oil but also with the tanker tonnage situation in general. Voyages to Japan from the United States consume greater time than voyages to the United Kingdom. Our own tanker needs being now so urgent, any transfer of tonnage from the Japanese trade would be most helpful to us, and seeing that our shortage must be known to the Japanese, any such transfer could hardly appear unreasonable to them. Similarly any additional tanker tonnage put at the disposal of the Japanese, especially if supplied by the Standard and Shell Companies would materially harm our own tanker position and might, as it seems to me, give the Japanese an impression of diminishing resolution.

To this rehearsal of certain points in our conversation of January 6th I would add that tanker curtailment would not materially detract from Japan’s ability to import aviation gasoline, other gasolines, and lubricating oils, as these products are carried chiefly in steel drums as part of general freight cargoes. I mention this in case the United States authorities feel it desirable to give consideration to the question of restraining this trade, which has latterly been increasing, perhaps through subjecting the export of drums to licence.

Yours very sincerely,

Nevile Butler
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