Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 1

940.53/9–1853

Memorandum by the Deputy Assistant Secretary of State for European Affairs (Bonbright) to the Under Secretary of State (Smith)

secret

[Washington,] September 16, 1953.

• Subject:
• Proposed meeting between the Secretary, Secretary Weeks¹ and Secretary Wilson² in the latter’s office, 2:30, Wednesday, September 23 concerning the wartime control of U.S. merchant shipping.

Discussion:

In August, 1951, a secret agreement was signed by Mr. Lovett and Mr. Sawyer³ which assured Defense that in a period of emergency the National Shipping Authority would allocate a bloc of normal cargo-type merchant vessels to the Navy for its exclusive use.^* This agreement was made without this Department’s knowledge and was in conflict with the principle of a single pool of civilian authority controlled NATO war-time merchant shipping agreed to by the North Atlantic Planning Board for Ocean Shipping (PBOS) and concurred by the Council Deputies in January, 1951. At the last PBOS meeting (May, 1952) we were obliged to indicate that some U.S. shipping would not be available to the NATO pool. This reservation resulted in considerable dismay in PBOS as well as in the North Atlantic Council itself.

A few weeks ago Commerce reopened with Defense the question of the control of U.S. cargo merchant shipping in wartime stating their view that it is not desirable for a large claimant on cargo merchant shipping in wartime to control exclusively a percentage of that resource: The Department of Defense in reply has indicated it stands firmly on the earlier Commerce–Defense agreement and will insist on having a bloc of unconverted cargo-type shipping under its exclusive jurisdiction.

This development permits the Department to stress the desirability of alleviating the serious concern which presently exists amongst our NATO partners and the importance of living up to our NATO commitments.

Recommendations:

1. That you attend the meeting in Secretary Wilson’s office.

2. That you state the following position during the course of the meeting:

a. In view of earlier U.S. commitments in NATO, it is desirable for this Government to be able to reaffirm in NATO that all its normal cargo-type merchant vessels will be in the NATO pool in time of war.

b. The Department agrees that the Commerce position that a non-claimant agency should control the allocation of cargo shipping resources to both the military and essential civilian wartime claimant agencies has considerable justification on its own grounds.

c. If agreement cannot be reached at this meeting, state that in the PBOS meeting in London October 6, the Department will be obliged to request that discussion of this item on the agenda be postponed.

3. Secretaries Weeks and Wilson will be accompanied by advisers familiar with this problem. It is recommended that Mr. James Swihart, RA, attend the meeting with you.⁴

[Attachment]

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Background of the North Atlantic Planning Board for Ocean Shipping (PBOS) and U.S. Policy in That Organization

In June, 1950, the North Atlantic Council created the North Atlantic Planning Board for Ocean Shipping (PBOS). PBOS’s terms of reference required it to recommend to the Council principles for wartime control and allocation of member government merchant shipping.

In November, 1950, PBOS agreed to the principles for the control of NATO merchant shipping in wartime including the form of an organization to exercise this control. In brief, these principles state that all member government merchant shipping at the outset of war will be taken over by these governments and placed in a single NATO pool of shipping. The control and allocation of shipping from this pool is to be made by an organization to be called the Defense Shipping Authority (DSA). The DSA is to be a service organization, not in itself a claimant for shipping. Its task is to meet the shipping requirements of both the military and essential civilian war claimant bodies. As a service organization the DSA will not determine major priorities—the latter are assumed to be the responsibility of the higher authority of the war. Although the DSA will be an international body, as a practical matter the real control will rest with the National Shipping Authority in Washington and the Ministry of Transport in London. The executive function of the DSA rests with a small executive board functioning in two branches—to be chaired by the U.S. and the U.K. respectively. In other words, the United States will have absolute control over its own contribution to the pool and at the same time have available to it the shipping resources of all our NATO partners. In brief, the rationale behind these principles is the conviction that it permits more effective and economical employment of a deficit critical resource, for that resource to be controlled by an organization thoroughly qualified technically to do so, but not having any claimant requirements in itself.

The U.S. concurred in the above principles in PBOS in November, 1950, and later again in the NATO Council Deputies in January, 1951. This position at that time had the concurrence of both the Departments of Defense and Commerce. In August, 1951, the Departments of Defense and Commerce without this Department’s knowledge entered into a domestic agreement in conflict with our NATO commitments. This agreement assured Defense that in a period of emergency the National Shipping Authority would transfer to Defense a sizable bloc of merchant-type ships which would be under the exclusive jurisdiction of the Department of Defense. There are two categories of shipping involved in this agreement—one of which is not an issue in the NATO nor between Commerce and Defense now. This category includes all merchant-type vessels to be converted to naval auxiliaries, e.g., tankers, submarine tenders, troop ships, hospital ships, especially adapted cargo ships for specialized military purposes, such as the carriage of ammunition, beach landings, etc. The second category includes a number of unconverted, civilian crewed, cargo vessels for the carriage of normal-type military requirements. It is the latter group which is the issue.

Despite the embarrassment it would cause this government in NATO, the Department had to agree with Defense and Commerce that a reservation to our earlier NATO undertaking was required. The Department’s view at the time was predicated on the agreement of the two agencies primarily concerned that it was to be national policy in wartime for Defense to have under its control in wartime a bloc of normal-type cargo shipping. Therefore, a U.S. reservation was made at the last PBOS meeting (May, 1952). It caused much dissension and the U.S. was requested to review its stand. Subsequently, the same concern was expressed in the North Atlantic Council.

Since the last PBOS meeting the Department has been attempting to find the most palatable method of presenting the U.S. position and an agreement for such a presentation was reached in August between Commerce, Defense, and State. A few weeks ago, however, Mr. Rothschild,⁵ the new Maritime Administrator, and Mr. Murray,⁶ the Under Secretary of Commerce, informed the Department they no longer agreed to the proposed presentation on the grounds that Commerce itself was no longer in agreement with Defense that the latter should have a bloc of normal cargo-type shipping under its exclusive jurisdiction in wartime. This development, of course, completely alters the premises under which the Department had been acting, i.e., agreement between Defense and Commerce. It affords for the first time since 1951 an opportunity for the Department to assist in the correction of a serious U.S. embarrassment in the NATO.

1. Sinclair Weeks, Secretary of Commerce.
2. Charles Erwin Wilson, Secretary of Defense.
3. Charles Sawyer, Secretary of Commerce, and Robert A. Lovett, Secretary of Defense, during the Truman Administration.
4. This agreement also guaranteed to transfer to Defense jurisdiction a number of merchant-type ships (includes all existing U.S. passenger ships, many tankers as well as cargo-type vessels) which would be converted or especially adapted to specialized military purposes. This aspect of the agreement is not an issue between the two agencies nor is it in conflict with our NATO commitments. [Footnote in the source text.]
4. No record of the proposed meeting was found in Department of State files.
5. Louis S. Rothschild.
6. Robert B. Murray.