Memorandum by the Secretary of the Navy ( Matthews ) to the Secretary of Defense ( Marshall )

top secret

Subject: Trans-shipment of China bound cargoes of Isbrandtsen ships Flying Cloud and Sir John Franklin via the Norwegian ship Hoi Houw

You will recall that in a memorandum of 2 January, 1951,1 there was set forth the circumstances under which the cargoes of the Isbrandtsen ships Flying Cloud and Sir John Franklin were being offloaded at Bombay. Briefly, these ships were transporting cargo, the delivery of which to Communist China would have been inimical to the security interests of the United States and in violation of the Department of Commerce Transportation Order No. 2. The Isbrandtsen Company, alleging that such action would facilitate the clearance of two ships then at Taku Bar, obtained the approval of the State and Commerce Departments to allow an exception to the Commerce Department order and permit unloading at Bombay. When it became known that the ships at Taku Bar were not jeopardized, and at your insistence by reason of the nature of the cargoes, the off-loading authority was revoked. About 6,000 tons of the cargo had been unloaded.
The Norwegian flag-ship Hoi Houw has loaded 4,000 tons of this cargo for trans-shipment to Hong Kong and is now en route Hong Kong with an estimated time of arrival of 8 February, 1951. When first reports of the Hoi Houw loading were received, the Department of State made representation to the Norwegian Government requesting that action be taken to deny shipment by a Norwegian flag vessel. The Norwegian Government subsequently reported to the Department of State that it was their understanding that the Hoi Houw had been chartered to the Jebsen Company of Hong Kong, who later chartered the vessel to the Isbrandtsen Company. The Isbrandtsen Company, in turn, sub-chartered it to the Bank of China, Bombay, for the lift in question. The Department of State further advises that the Treasury Department (Foreign Assets Control) has initiated an investigation of the Isbrandtsen Company’s involvement in the transaction and the Consul General in Bombay has been directed to investigate at that end. The results of these investigations have not yet been received.
As previously reported, a substantial portion of the cargoes of the Flying Cloud and Sir John Franklin, in addition to 1,500 lbs. of the “truth drug” chloralhydrate, consisted of very large shipments of other drugs (on the order of 3,220,000 vials antibiotics; 8,200 lbs. [Page 1893] sulfa drugs; 127 drums DDT solution; and 45,000 lbs. aspirin and phenacetin). Recent intelligence reports indicate that typhus is reaching epidemic proportions among enemy units on the East coast and in the East Central area of Korea. A typhus epidemic without specific antibiotics and sulfa drugs for treatment will greatly reduce the effectiveness of the Communist forces. It is not improbable that the recent weakening of the Chinese Communist offensive action can be attributed, in part, to this condition.
It is strongly recommended that:
The Department of State continue to press the Norwegian Government to forbid the delivery of this cargo by a Norwegian flag ship.
In the event the investigations now in progress show that the Isbrandtsen Company figured in the charter of the Hoi Houw to the Bank of China, the Department of Commerce or the Attorney General2 take such measures as may be practicable to block the delivery.
Francis P. Matthews
  1. Not printed.
  2. J. Howard McGrath.