842.801/126

The Secretary of Commerce (Roper) to the Secretary of State

My Dear Mr. Secretary: The Department has given consideration to your letter of March 9, 1935,46 your reference WE: 842.801/120, regarding the possibility of entering into an agreement with Canada whereby on the Great Lakes and St. Lawrence River Canadian vessels may transport goods for export between ports and places in the United States, American vessels to have the same privilege as regards Canadian ports.

The proposal does not meet with the approval of this Department. The effect of the section 663 (1) of the Canadian Shipping Act will be felt by American ship owners and grain elevators only to the extent that Canadian grain is shipped to Buffalo for the purpose of later reshipment to Canadian points—principally Montreal. It has been found that the movement from Buffalo to Montreal has decreased markedly in the past year and that the size of this movement has no perceptible relation to the movement of Canadian grain into Buffalo. Further, because of other factors such as the imperial preference on Canadian wheat exported to the United Kingdom and extended use of the Welland Canal, Buffalo has lost considerable importance as one of the principal transshipment points for Canadian grain destined to Canadian ports. However, there is good reason to believe that Buffalo will retain its position as a transshipment point for Canadian grain principally for export through United States North Atlantic ports. If such is the case, neither the American vessels carrying Canadian grain to Buffalo nor the elevators at Buffalo in which said grain is stored will suffer to a serious degree from the Canadian Act.

The relaxation of the coastwise laws of the United States is viewed as a dangerous precedent coming at a time when such pressure is being [Page 47] exerted for a similar purpose as respects other aspects of our coastwise restrictions. Should the Great Lakes trade change so that a large amount of American goods would move for export, American vessels, because of much larger operating costs, would be unable to meet the competition of Canadian carriers. The concessions which such a relaxation would procure for citizens of the United States seem illusory and incommensurate with the potential danger to our coastwise trade which such a step entails.

For your further information a memorandum submitted by the Director of the United States Shipping Board Bureau, this Department, is enclosed.47 If this Department may be of any assistance in the matter, you are assured of its cooperation.

Very sincerely yours,

Daniel C. Roper
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