Arthur James Balfour to Walter Hines Page

Copy of letter sent by Mr. Balfour to Mr. Page on August 16th, 1917.

"When I was in US the question was raised as to whether Shipping under construction in American yards on British account should be taken over by USG. or should remain in ownership of country for which it was being built.Mr. Denman at that time head of Shipping Board raised this point in the course of a conference at which both he and General Goethals were present. Mr. Denman made somewhat a grievance of course which British Government had adopted: his line of argument being that British orders occupied all yards in US; that American labour and American capital were absorbed in construction of British shipping; and that with their assistance Britain would find herself at the end of the war possessed of great Mercantile Marine which US had built but did not own.

I took the liberty of pointing out to Mr. Denman in reply that in ordering these ships before America entered the war Great Britain took the only course open to her and one which, however question of ownership was ultimately decided, must be to the advantage of all Powers fighting against Germany. It was of first necessity that the whole world's resources in shipbuilding open to the Allies should be used in contruction of mercantile ships and as America was not then among belligerents it was only by British Government that necessary arrangements could at that time be made with private owners of shipyards in US I added that under no circumstances would the British Government enter into controversy with State Department on the question of ownership and that we placed complete reliance upon justice and goodwill of Authorities in Washington.To this policy we still adhere. If USG. after surveying all circumstances of the case think ships that we have ordered in their yards should belong to them we shall not think of making any protest, nor are we of opinion that, if ships on completion are used in war work of the Allies, question of ownership has any material bearing upon conduct of war.

It may however be worth observing that if our own policy towards our Allies were taken as a precedent there would be no change of ownership in case of British ships now under construction in American yards. We always drew sharp distinction between ships building for Allies in our yards and ships building for neutrals; the latter were brought under British flag and retained in allied services for the period of the war; work on the former was dealt with exactly as if ships were being built for British owners and when finished they were handed over without reserve to the country on whose account they had been ordered. There was as far as I could ascertain only one exception to this general practice and in this particular case satisfactory arrangements were made.

From the very nature of the case largest losses in mercantile shipping have been borne by Great Britain. It is on Great Britain in the main that the allies have relied for maintenance of sea borne traffic on which not merely their capacity for fighting but their very existence depends; it is on Great Britain that the full brunt of submarine campaign has fallen. Our losses have been heavy and unless we obtain ships now under construction for us in America we cannot easily tide over critical period which must elapse before our own extended shipbuilding programme bears its full fruit.

We should therefore feel much gratification if USG. thought it consistent with the claims of their own national interests to allow ships now building for us in America to remain in their present ownership; though for the reasons given above we shall not press the point. We rely (as I said at Washington) on their justice and goodwill".