859.85/5–445

The Danish Minister ( Kauffmann ) to the Assistant Secretary of State ( Clayton )

Dear Mr. Clayton: Since our meeting on April 25th,57 events in Europe have moved rapidly. If a settlement of the Danish ship matter is to be reached in time, we have perhaps only a few days left.

I came away from our talk encouraged to believe you appreciate the higher issues involved in this matter. It is unfortunate only that you do not know first hand the full background. The enclosed Aide-Mémoire should help to give this as well as to point out the extreme urgency of a solution.

Most sincerely,

Henrick
[Enclosure]

The Danish Legation to the Department of State

Aide-Mémoire

It will soon be four years since the United States requisitioned forty Danish vessels, the property of nationals of Denmark.58 It is over four years since Secretary of State Hull assured the Congress that the United States would not take the vessels “without making just compensation”59 and Assistant Secretary Long added that it would “pay for them full value”.60 It is two years since Secretary Hull wrote the War Shipping Administration that “the Department had in mind, of course, the payment of ‘just compensation’ as heretofore determined [Page 583] by both municipal and international tribunals”,61 and stated further to the Congress that “the Department is particularly interested in providing for the fulfillment of both the legal and moral obligations assumed by the United States when it requisitioned forty Danish vessels.”62 It is also two years since leading Congressmen of both major parties have called for the “validation of our promise to the Danish Minister”,63 “that we must put the owners of the ships and the Danish Government in position to go ahead with business the moment the war is over and the seas are clear”, and “that the Government of the United States in its dealing under necessity may exercise arbitrary power, but that we shall not fail to make just and generous amends”.64 From the day that President Roosevelt first mentioned to the Danish Minister65 the desirability of taking over the Danish vessels, the Minister has endeavored to cooperate in every way possible to assure their prompt and advantageous use in the defense of the countries that upheld the principles of democracy and of justice. Mr. de Kauffmann’s policy of cooperation in making available to the United States defense bases in Greenland led to his dismissal and recall to Nazi occupied Denmark for trial.66 The Danish Minister, however, remained at his post and he persevered in his efforts to avoid delay in making available the Danish vessels and their crews. In his note of May 22, 1941 to the Secretary of State,67 he said:

“When the Danish ships in United States ports were taken into custody on March 30th last, and when news of the proposed American legislation authorizing requisitioning of foreign ships became known, I received instructions from the Foreign Office in Copenhagen to lodge, on behalf of the Danish Government, an emphatic protest against any measures to be taken by the American Government aiming, contrary to the rules of international law, to requisition Danish ships either for title or for use.

“Although aware of the fact that it could be made a matter of discussion whether the planned requisitioning was in conformity with international law, and that such requisitioning in previous cases had [Page 584] been challenged, both diplomatically and by some of the most highly recognized legal authorities, I was of the opinion that a protest of the kind intended by Copenhagen would not serve its purpose under present circumstances.…68

“My views in this respect, which I made known to Copenhagen, and which made it impossible for me to associate myself with the protest formulated by the Government in Denmark, were greatly strengthened by the repeated assurances given me by various officers of the American Government, that any Danish shipowner whose ship might be requisitioned would receive just and adequate compensation.”

It was the opinion of the Danish Minister that the vessels should be requisitioned for use only, should fly, if not the Danish, then the American flag and he stipulated “adequate insurance cover to be given to enable owners to replace any tonnage lost”. However, the United States requisitioned the title to these vessels and transferred them to foreign registry. To sail under a flag foreign both to Denmark and the United States was disturbing to the Danish masters and crews. Nevertheless, with the help of the representatives of the Danish ship owners and the Danish Consulates, Mr. de Kauffmann succeeded in inducing nearly all of the Danish officers and seamen on the vessels to continue to man them. The vessels were sent into danger zones from which American ships were excluded by Proclamation of the President under the Neutrality Act. They sailed without protection and several were promptly destroyed with heavy loss of life. According to the information most recently available, at least fifteen have been destroyed by German submarines and at least eight more have been lost from causes that still remain to be definitely established.

In order to determine the stipulated insurance coverage to enable the owners to replace any tonnage lost they sought the advice of two appraisers69 reputed to be among the best, if not the very best, in the United States. These experts submitted their reports on June 9 and June 11, 1941.70 Copies of their reports have been given to the appropriate officials of the American Government. It has been the view of the Danish Minister and that of the representatives of the ship owners, that the values found by these appraisers reflect the very minimum that the United States should offer for the title it requisitioned.

The Chairman of the Senate Committee on Merchant Marine and Fisheries has stated to the Congress:71

“… We did not have time to enter into negotiations [, nor was it possible to enter into negotiations] with the Kingdom of Denmark, [Page 585] which was occupied by the German ruler and his party. So we took the ships.

“At the time we undertook to say that we had taken them by right of angary, and I said on the floor of the Senate, notwithstanding one representative of the State Department had taken a different view, that the right of angary could not arise except under the conditions of actual war; and we were not at war. I think the State Department is now inclined not to insist that the right of angary existed.

“However that may be, the ships were in our harbors and we took them. Denmark was not at arm’s length with us, she was not negotiating. We took the ships by right of our power to do it and by reason of the necessity which existed.

. . . . . . .

“I said here, at the time the requisition act in this case was passed, that under the circumstances I have narrated we were under obligation to treat the Kingdom of Denmark not only with justice, but with the utmost generosity. I think a court of equity would impose such generosity upon us. As I stated a moment ago, the man who undertakes to administer upon an estate without right, who, when someone dies steps in and takes charge of the affairs of the decedent, is held to a far higher degree of care and to a far greater degree of liability than the executor who qualifies under a will or an administrator who is appointed by the court, because he is acting of his own power, he is acting arbitrarily, he is acting without authority of the law; and the rule of strict conduct and the highest degree of care is applied to that type of executors.

“Here was Denmark, stricken down and helpless. Her ships were in our possession. We took them. It is very important to me that the United States of America shall always present to all the other nations of the world the spirit and the example of justice, of fairness, and of generosity.”

The State Department on November 26, 194372 summarized statements previously made by Secretary Hull and other officers of the Department as to the measure of the liability of the United States for taking title to the Danish vessels:

“… the conclusion was reached that the international legal liability of this Government with respect to requisitioned foreign vessels can be fully discharged only by the payment of amounts which will represent ‘just compensation’ in conformity with the decisions of the Supreme Court of the United States and of international tribunals, that is, an amount determined on the basis of the actual value at the time of the taking.”

[Page 586]

On the basis of a memorandum73 submitted by the Secretary of State the Controller General74 reached this conclusion:75

“It would seem that in view of the numerous authorities contained in the above-quoted memorandum, there may be accepted for present purposes the thesis that it is a well-established principle of customary international law that when a sovereign power takes private property under circumstances similar to those here involved, just compensation should be paid the owner of such property, and that just compensation constitutes the fair market value of the property at the time of the taking.”

The decisions of the Supreme Court of the United States likewise fix the market value at the time of the taking as the appropriate measure of just compensation. The owner whose property has been requisitioned by the United States is entitled to be offered “the sum that would in all probability result from fair negotiations between an owner who is willing to sell and a purchaser who desires to buy”.

It is entirely clear that the sum that would have resulted from fair and voluntary negotiations would have been no less, and in all probability would have been considerably more, than the sum arrived at by the independent appraisers. Numerous sales occurred after the appraisals were made in which the very same owners were in fact able to negotiate the price for the sale of comparable Danish ships. The Brazilian Reefer for example was sold by her Danish owners to the Argentine for an aggregate amount coming to $375,000, or one third more than the value fixed by the appraisers for a sister ship, the African Reefer. This latter vessel was taken by the United States after the owners brought her from Madeira to the United States for the purpose of letting the United States use her. The State Department has been furnished with many other examples, in each of which the sum arrived at by negotiation exceeded the amount fixed in the appraisals for comparable vessels taken by the United States.

An offer of compensation based upon actual sales of Danish and other foreign ships, would exceed, by a wide margin, the total valuation placed upon the vessels by the two American appraisers. The United States was still neutral when it took the Danish vessels. If “the spirit and the example of justice, of fairness, and of generosity” is to characterize the “fulfillment of both the legal and moral obligations assumed by the United States when it requisitioned forty Danish vessels”, [Page 587] surely it is reasonable to expect that the United States will be interested in providing compensation that is not less than that paid by other neutrals for Danish and other foreign vessels of comparable age, tonnage and type.

The good will repeatedly expressed in favor of a generous settlement has always been greatly appreciated by the Danish Minister and will be appreciated by the people of Denmark. However, Mr. de Kauffmann and the representatives of the owners have agreed from the beginning that they should ask only for what is just. The appraisals were made to determine a just valuation. The appraisers have testified that their valuations are conservative. Subsequent sales have demonstrated that the valuations were very conservative. Less than the amount arrived at by the appraisers cannot be considered as just or in conformity with the assurances made when the Minister took the responsibility of cooperating to make available to the United States the services of the Danish vessels and their crews.

It is nearly four years since the vessels were taken and during all this period Mr. de Kauffmann has done all in his power to secure an offer in fulfillment of the obligations assumed on behalf of the United States. With each successive discouragement, he has been reassured that the matter would be worked out satisfactorily in the very near future and in all events before the liberation of Denmark.

Relying on these assurances, the Danish Minister has continued without interruption to maintain the payment of the full amount of interest on the $125,000,000 principal amount of dollar bonds of Denmark issued in the United States. In order to continue such payments, Mr. de Kauffmann had to reduce the already sadly inadequate Danish gold reserve in the United States. He has had occasion by a note of March 12, 194576 to the Secretary of State to set forth the gravity of the foreign exchange problem of Denmark. The seriousness of that situation is increased by the periodic reductions of the Danish gold reserve, and the wisdom of the policy that has been followed might well be questioned if there were further delays in making the dollar payments for the requisitioned ships.

When the Danish Minister’s note of May 22, 1941 was written, it was understood that his policy of cooperation would be met in like spirit and that satisfactory compensation would be paid without difficulty or delay. The loss of the use of the sums that became due as soon as the Danish vessels were taken has cost the Danish owners and the Danish economy much more than the 6 percent interest normally allowed on delayed settlement of international claims. The need for foreign exchange upon the liberation of Denmark will be so immediate and severe that the damage through further delay will be incalculable.

[Page 588]

The Danish merchant marine is of the greatest importance to the Danish economy. It is a principal source of foreign exchange with which Denmark makes essential purchases in countries, such as the United States, which buy from it much less than they sell. Prompt settlement of the claims for the taking of the vessels will not by itself solve the foreign exchange problem, but failure to make the full payments that are owing would greatly aggravate it. The time is short if the United States is to “put the owners of the ships and the Danish Government in position to go ahead with business the moment the war is over and the seas are clear”.

The immediate settlement of the claims for the Danish vessels is so vital to Denmark that the Danish Minister has repeatedly asked the State Department to take up the matter and, in the spirit of cooperation that prevailed when the ships were taken, provide for a prompt settlement of a global sum that will conform to the standards prescribed for principal and interest under international law.

There is agreement as to the appropriate standards to be applied to determine what compensation is just. There is agreement as to the importance of restoring faith in international justice by observance of its principles. There is agreement that a prompt and friendly settlement will be most conducive to the maintenance of the great good will between the people of Denmark and the United States; and that resort to international arbitration would be as unnecessary as it would be unfortunate. With such agreement on basic principles and purposes, it should be possible promptly to reach a settlement that will satisfy the sense of fairness of the peoples of Denmark and of the United States.

Washington, May 4, 1945.

  1. According to a memorandum by Jesse E. Saugstad, April 29, 1945, Mr. Kauffmann met with Assistant Secretary Clayton on April 24, 1945, at which time the Danish Minister repeated his plea for a quick settlement of the ship compensation case and stated that no satisfactory figure could be derived from the War Shipping Administration (859.85/5–2045).
  2. Public Law 101, 77th Cong.: An act to authorize the acquisition by the United States of the title to or use of domestic or foreign merchant vessels for urgent needs of commerce and national defense, and for other purposes, approved June 6, 1941; 55 Stat. 242.
  3. Statement made in a letter from the Secretary of State to Senator Josiah W. Bailey, Chairman of the Senate Committee on Commerce, May 1, 1941, quoted in Just Compensation for Requisitioned Vessels: Hearings before the House Committee on Merchant Marine and Fisheries, 78th Cong., 1st sess., on H.R. 2731 (Washington, Government Printing Office, 1943), p. 144.
  4. Quotation from the testimony of Assistant Secretary of State Long on April 22, 3941, before the House Committee on Merchant Marine and Fisheries, Purchase and Charter of Foreign-Owned Vessels: Hearings before the House Committee on Merchant Marine and Fisheries, 77th Cong., 1st sess., on H.R. 4088 and H.J. Res. 167 (Washington, Government Printing Office, 1941), p. 54.
  5. Quotation from a Department of State memorandum dated April 12, 1943, sent as an enclosure to a letter from the Secretary of State to the War Shipping Administrator (Vice Adm. Emory S. Land) dated April 16, 1943, Just Compensation for Requisitioned Vessels.
  6. Quotation from a letter from the Secretary of State to Congressman Schuyler Otis Bland, Chairman of the House Committee on Merchant Marine and Fisheries, dated June 9, 1943, Just Compensation for Requisitioned Vessels, p. 142.
  7. Quotation from remarks made by Senator Arthur Vandenberg on the Senate floor on March 2, 1943, Congressional Record, vol. 89, pt. 2, p. 1467.
  8. Two quotations from remarks made by Senator Josiah W. Bailey, Chairman of the Senate Committee on Commerce, on the Senate floor on March 2, 1943, Congressional Record, vol. 89, pt. 2, p. 1468.
  9. Henrik de Kauffmann.
  10. For documentation regarding the agreement for the defense of Greenland signed with the Danish Minister, and refusal of the United States to recognize actions of Danish Government deemed to be under German duress, see Foreign Relations, 1941, vol. ii, pp. 35 ff.
  11. Ibid., p. 78.
  12. Omissions here and in remainder of document indicated in the original aide-mémoire.
  13. Robert S. Haight and William R. Bagger.
  14. Not printed.
  15. Senator Josiah W. Bailey, Chairman of the Senate Commerce Committee, made the statement that follows on the Senate floor on March 2, 1943 (Congressional Record, vol. 89, pt. 2, p. 1467).
  16. In a memorandum from the Department of State to the Advisory Board on Just Compensation dated November 26, 1943, a portion of which is quoted below, the Department of State briefly reaffirmed its previous views as to the payments that should be made on requisitioned foreign ships from an international law viewpoint (859.85/91–545); a copy of the memorandum of November 26 was, at the same time, sent to Mr. Frank J. Foley of the firm of Haight, Griffin, Deming and Gardner which was representing the Danish ship owners (859.85/2–243); the summary of statements previously made by officers of the Department of State regarding the liability of the United States for the requisitioned Danish vessels was made in the memorandum dated April 12, 1943; see footnote 61, p. 583.
  17. The Department of State memorandum of April 12, 1943, together with the letter from the Secretary of State to Admiral Land dated April 16, 1943, to which it was an enclosure, were transmitted by the War Shipping Administration to the Comptroller General (Warren) on April 20, 1943; see Just Compensation for Requisitioned Vessels, p. 143.
  18. Lindsay C. Warren.
  19. In a letter dated May 11, 1943, from the Comptroller General to the War Shipping Administrator, a portion of which is quoted below, the Comptroller General responded to the Department of State’s memorandum of April 12, 1943; see Just Compensation for Requisitioned Vessels, pp. 143, 148.
  20. Not printed.