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.
[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.
