Memorandum by the Acting Chief of the Division of Special Inter-American Affairs (Dreier)37


Following up the remarks which Under Secretary of the Navy Sullivan made to Acting Secretary Acheson on November 13, a meeting was held in General Connolly’s office yesterday, November 21, with Mr. Chester Lane,38 Admiral Noble, Captain Dennison, myself and others present to clarify the problems of the Navy’s interim program for the transfer of vessels to the other American republics.

Briefly, the situation is that the Navy, after offering about 200 vessels to the other American countries, found that the vessels had been caught in the whirlwind of demobilization and were for the most part in inoperable condition, as well as stripped of much of their equipment, [Page 107] including armament. Moreover, much of the equipment which has been removed from these vessels is not in surplus, and therefore cannot be transferred, except by presidential authority under the Act of June 15, 1940,39 at 100% reimbursement. The Latin Americans obviously do not wish to buy inoperable hulls, nor does the Navy or this Department wish to sell them inoperable vessels which will only give a black eye to our whole program.

In order to extricate themselves from this problem, it will be necessary for the Navy and FLC to arrange for some method of financing the reconditioning of the vessels (the total cost of which will be regained from the purchasing countries), and to get certain authorization from the President for the Navy to employ additional shipyard personnel and to transfer non-surplus items back on the ships under the Act of 1940. Before approaching the Budget Bureau and the White House on this matter, both the Navy and the FLC said they felt it was important to get reassurances from the State Department that completion of this interim program was consistent with the Department’s policy, particularly since everyone was aware of doubts which the State Department entertained in regard to the long-range program and HR 6326. I informed the meeting that the interim program had been approved by the State Department, and that this Government was committed to make good on its word inasmuch as we had informed the other countries that the ships would be available for their purchase provided satisfactory terms could be arranged. I was asked to get official confirmation of this viewpoint and have therefore drafted the underlying memorandum for Mr. Acheson’s signature.

Admiral Noble requested also that the Department make known its position in regard to HR 6326, but I informed him that I did not believe this question could or need be settled in connection with the interim program in view of the urgency of the latter.

It is recommended that the underlying memorandum40 be sent to General Connolly, with a copy to Captain Dennison of the Navy under cover of my letter.

John C. Dreier
  1. Addressed to the Assistant Secretary of State (Braden), the Director of the Office of American Republic Affairs (Briggs), and the Under Secretaries of State (Acheson and Clayton).
  2. Deputy Foreign Liquidation Commissioners, Gen. Donald H. Connolly and Chester Lane.
  3. For joint resolution approved June 15, 1940 to authorize the Secretaries of War and of the Navy to assist the governments of American Republics to increase their military and naval establishments, and for other purposes, see 54 Stat. 396.
  4. Not found in Department files.