The Secretary of State to the Deputy Secretary of Defense ( Lovett )1

top secret

Dear Bob: This is to report on our efforts to frustrate delivery to Communist China of the China bound cargoes of the Isbrandtsen ships Flying Cloud and Sir John Franklin now aboard the Norwegian ship Hoi Houw.

On Friday, February 2, Mr. Merchant put the British Embassy on notice that we hoped that they could cooperate in frustrating delivery of the cargoes.2 On Saturday the Counselor of the British Embassy, accompanied by the Commercial Counselor3 and a Hong Kong Government representative4 recently arrived in Washington, called at Merchant’s office where our problem, and particularly its military aspect as set forth in Secretary Matthews’ memorandum of February 2, was put to the British fully and frankly.5 They were sympathetic, but maintained that they had little leverage in the operation since the owner of the cargo was the Chinese Communist Bank of China, the cargo itself of United States origin, and ship of Norwegian registry. We explored various methods by which the British might frustrate delivery, bearing in mind that only if the Hoi Houw enters British territorial waters at Singapore or Hong Kong will the British be in a position to apply pressure at all. The British Embassy has referred to London for urgent consideration the question of what steps can be taken if the ship enters British jurisdiction.

[Page 1898]

Following our talk with the British, we concluded that the most practical way of preventing the cargoes reaching the Chinese Communists was to have them off-loaded in Japan. In consequence, prior to talking with the Norwegians, who were best able to cooperate in this project, we obtained from Admiral Thach of the Navy Department a firm assurance that if the Hoi Houw could be diverted to a Japanese port authorities in Japan would be prepared to off-load the cargoes and make compensation to their owner.6 Admiral Thach said that the Department of Defense, unfortunately, could not undertake to indemnify the Norwegian master or owner for possible court costs. We informed him that this meant that those costs would be borne by the Norwegians, if they arose, and that this fact might cause them to refuse to take the action we desire, particularly since there are other considerations which could make them reluctant to cooperate. For example, there is little doubt that failure of the Norwegian master to take the Hoi Houw, as contracted, to Hong Kong would invite litigation which, if unsatisfactory, would expose the twenty-five odd Norwegian vessels still in the China trade to reprisal threats. Admiral Thach undertook to bring to the attention of Secretary Matthews the restriction upon use of the diplomatic channel which our inability to assure indemnification presented.

Having reached these preliminary understandings with Admiral Thach, we called in a representative of the Norwegian Embassy on Saturday afternoon7 and put to him the problem previously discussed with the British, suggesting, this time, that the Norwegian Government despatch an instruction to the Norwegian ship master to put in at a Japanese port. We gave assurance that authorities in Japan would unload and pay for the cargo. The Norwegian Embassy has undertaken to communicate our request to Oslo at once for urgent reply. The initial reaction of the Embassy representative was that it was unlikely that Oslo could take the action so desired, unless full indemnification of the ship owner could be assured.

I am attaching memoranda of conversation which enlarge upon this outline of the steps we have taken.

I think I should add that the possibility of involvement by the Isbrandtsen Company in the on-shipment from Bombay has been investigated by the Treasury Department which has informed us that its inquiry showed no evidence of involvement and that Mr. Isbrandtsen8 denies any involvement whatever.

Sincerely yours,

Dean Acheson
  1. Drafted by Mr. Robert W. Barnett.
  2. Memorandum of conversation not printed.
  3. R. Burns.
  4. Arthur Grenfell Clarke, Commissioner of Industry and Trade, Government of Hong Kong. In a memorandum of February 9 (not printed) addressed to Mr. O. Edmund Clubb, Director of the Office of Chinese Affairs, Mr. Merchant suggested that in view of the great importance the Department of State attached to stopping the import by Mainland China of any medicines useful in treating typhus, the Department of Commerce take advantage of Mr. Clarke’s presence in Washington to discuss the problem. A handwritten note on this memorandum by Mr. Clubb, also dated February 9, read as follows: “L[ivingston] T. M[erchant] & I agree that it would be impolitic to act in a way which would attract undue attention to restrictive measures on antibiotics when typhus reported epidemic in Korea.” (493.119/2–751)
  5. Attached memorandum of this conversation of February 3 not printed.
  6. Attached memorandum of this conversation of February 3 between Mr. Barnett and Adm. James H. Thach, Jr., not printed.
  7. Attached memorandum of conversation of February 3 between Messrs. Benjamin M. Hulley and Knut B. Aars, not printed.
  8. Hans J. Isbrandtsen, President of the Isbrandtsen Company, Inc.