Memorandum of Conversation, by Mr. Albert H. Gerberich of the Division of North and West Coast Affairs

Participants: SD—Mr. Falck
Mr. Wallace
Mr. Havemeyer
RPA—Mr. Tewkesbury
Le—Mr. Gray
NWC—Mr. Mills
Mr. McGinnis
Mr. Post
Mr. Owen
Mr. Gerberich

Mr. Mills began the discussion by calling attention to the last paragraphs of the Colombian note enclosed with the Embassy’s despatch [Page 565] no. 49 of October 21,16 which contain inferentially a counter-accusation that we ourselves have violated the 1846 treaty by imposing discriminations in favor of our shipping interests. The Colombian Government refers specifically to P.R. No. 17, which expresses the sense of Congress that articles purchased through Eximbank loans must be exported in United States ships.

The representatives of SD said they feel that our discriminations are of quite a different nature from those of the Colombians, and that we would have no objection if they imposed the same kind that we have. Mr. Mills said this viewpoint might be considered hypocritical on our part; that the Colombians might equally well say that they would not object if we discriminated in their way.

Mr. Falck and Mr. Wallace said that there is another thing to consider—that P.R. No. 17 operates solely in connection with purchases made with United States money advanced to other countries, and that it is not administered 100% against a foreign country; if the foreign country does not like the terms, there is no obligation for it to negotiate the loans. Mr. Mills said that he thought that this was splitting hairs, and that the first thing we should do if we want to be sure our skirts are clean is to repeal P.R. No. 17, Mr. Tewkesbury said he agreed with this.

Mr. Wallace said that he very much doubted that even if P.R. No. 17 were repealed it would make any difference in the Colombian attitude.

It semed to be the consensus of those present that the courts of Colombia are not the proper medium to appeal to in the case of a treaty violation, but that recourse must be had to normal diplomatic channels. Mr. Gray said that he felt that we have a pretty good case in contesting the exemption of port dues, but not a very good one on the inheritance and income tax issue. It was pointed out that the port dues and other taxes do not divert any freight to the Colombian line; exemption from them may increase its profits, but the freight rates are set by the Conference, to which the Gran Colombiana adheres.

Mr. Mills recommended that Mr. Gray prepare a statement regarding the port dues, outlining the arguments we could use with the Colombian Government, especially citing precedents.

It was agreed that in the dispute with Colombia the most important problem is discrimination in the shipment of coffee. Mr. Havemeyer said that 70% of Colombia’s export trade is in coffee, and to lose all this trade is therefore a serious matter for United States lines. He asked how many vessels the three sections of the Gran Colombiana now have in service, and the information on hand indicated that there [Page 566] are now three vessels being operated by the Venezuelan section and three by the Colombian section, all bought in the United States, averaging 5000 tons each, while the Ecuadoran section has one boat apparently dating back to pre-war years. The Colombians have bought six more boats which are being outfitted at Pascagoula, Mississippi, and are believed to be of the same tonnage as the three now in service; and there have been repeated rumors that they are trying to buy seven more freighters and a tanker. The Venezuelans apparently have no plans to increase their fleet, and we have no information on the Ecuadoran plans.

Mr. Mills suggested that a last resort but effective way for United States shipping to bring to the attention of the Colombians the seriousness with which it regards the policy of the Coffee Federation would be to refuse to call at Colombian ports. Mr. Falck agreed that the Gran Colombiana and other than United States lines would not be able to take care of all the cargo to Colombia in such an event. He said he believes that in a matter of two or three years the Gran Colombiana will have plenty of difficulties when its vessels stand in need of major repairs, as they doubtless will by then.

Mr. Tewkesbury outlined the type of discrimination practised by Argentina and Brazil against foreign steamship companies, and it was plain that it is different from the type confronting us in Colombia.

Mr. Wallace stated that he knows of no important discriminations by the United States except in P.R. No. 17, other than possibly subsidies. Mr. Falck added that SD would have no objection if Colombia should choose to subsidize its merchant marine in some such form as that adopted by us, or almost any other way.

It seemed to those present that to reply to the Colombian note by sending another note would be unsatisfactory: the Colombians will probably be in the same mind after they read our new arguments in any case. Moreover, it is impossible to get into an instruction to the Embassy all the information and suggestions that would be helpful in pursuing the case. Finally, since the coffee problem is the most important one, it would seem to be better to have it handled personally by a man sent to Bogotá to discuss it with the Ambassador and Colombian officials.

For these reasons it was recommended that SD discuss this further and consider sending a special representative to Bogotá to advise Ambassador Beaulac regarding future negotiations and inform him of certain facts that would be difficult to develop in an instruction. After this we could call another conference, if it is felt desirable.

It was further recommended, at Mr. Owen’s request, that we take [Page 567] up with the Ecuadoran Embassy here discriminations with regard to invoice fees, but not on the basis of a treaty, as we do not have a commercial treaty with Ecuador.

It was further recommended that, in meeting pressure from United States shippers, SD might be well advised to urge the Federation to come out strongly against any type of discrimination favoring United States vessels.

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