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[Paraphrase.] Yesterday I was informed ... that it was practically decided to award the contract to an Italian company of Taranto which is operated by Germans. This company constructs doublehulled ships of the same type as the Holland and considered by some to be superior. A report which was submitted by Lieutenant Commander Teisaire of the Naval Mission in Europe, who received his original submarine instruction at the Electric Boat Company's plant, that this type was preferable for their purposes, has caused the board of Admirals to reverse their original decision. . . . As yet the contracts have not been let. [End paraphrase.]

CABLE

835.34/428 : Telegram

The Secretary of State to the Chargé in Argentina (Cable)

[Paraphrase)

WASHINGTON, August 18, 1927—2 p. m. 31. Embassy's telegram No. 70, dated August 9, 5 p. m.

You are instructed to request an audience with the President and tell him that the Department, with a desire to insure full and careful consideration of the Electric Boat Company's proposition, sincerely hopes that no decision will be made until the company has had the opportunity to present evidence of the arrangements made by it in France on the understanding that the matter had been decided virtually in the company's favor.

The delay is partly desired in order that the Electric Boat Company may have time to enlist the support of the Government of France. Because of President Alvear's well-known disposition to favor France, the company believes this may be effective.

KELLOGG

10

835.34/461

The Ambassador in Argentina (Bliss) to the Secretary of State

No. 37
BUENOS AIRES, October 17, 1927.

.

[Received November 10.] SIR: I have the honor to refer to the Embassy's telegram No. 39, of May 21, 1926, and subsequent correspondence concerning the Argentine naval construction program, and, for the Department's information, to submit the following report concerning the various contracts which have already been let.

10 In a letter of Aug. 20, 1927, the Electric Boat Co. informed the Depart. ment that the Government of Argentina had agreed to postpone the final decision; letter not printed. (File No. 835.34/435.)

Two scout cruisers, nominally of approximately 8,000 tons, have been awarded to the Orlando Company, at Leghorn, in Italy. The keels of these vessels were laid on October 12. Two destroyer leaders were bought outright from Spain. It is understood that these ships, which are not yet completed, are being constructed in that country by the Sociedad Española de Constructores Navales. The actual, but not nominal, head of this company, which is supposedly a subsidiary of Armstrong and Vickers, is Sir Philip Watts. J. Samuel White and Company, of Cowes, will build three destroyer leaders. Two sloops and two tugs are to be constructed by Hawthorn, Leslie and Company; and the contract for the construction of three submarines has been awarded to Tossi, of Taranto, Italy.

The failure so far of the two American concerns most actively engaged in attempting to obtain contracts, i. e., the Electric Boat Company for submarines and the Bethlehem Steel Corporation for other units, may be explained as follows: it would undoubtedly appear that Admiral Domecq Garcia, the Minister of Marine, and Admiral Galindez, Chief of the Argentine Naval Commission in Europe, desired to have the complete naval program constructed in Italy. For various political reasons, however, the British and Spanish naval construction firms received contracts, although I understand that it was distinctly against naval opinion to purchase the two flotilla leaders from Spain. I am also led to believe that Sir Malcolm Robertson, the British Ambassador, interested himself extremely in the allotment of the various units to Great Britain and pointed out that as his country is Argentina's best customer, and the largest ship-building nation in the world, it should receive due consideration.

Even before presenting my letters of credence, I had a conversation with Dr. Gallardo, the Minister for Foreign Affairs, on behalf of the Electric Boat Company, recommending to the earnest consideration of the Argentine Naval authorities its proposition to build three submarines in France for the Argentine Navy. Before his departure for Europe, I talked with him again on the subject and also took it up later with Dr. Sagarna, Acting Minister for Foreign Affairs, and with Admiral Domecq Garcia, the Minister of Marine.

In view of the letting of the contract to the Tossi Company, I personally do not believe that the Electric Boat Company have any further opportunity of obtaining the units which are to be constructed in the future, unless they should adopt different means of approach.

As far as it has been possible to learn, the bid made by the Electric Boat Company exceeded that of the Tossi Company. It has been reported that Signor Mussolini, at the request of the head of the

Argentine Naval Commission in Europe, intervened with the Italian company, with the result that its price for the submarines was reduced from £218,000 to £208,000 for each vessel.

The Bethlehem Steel Corporation have, I believe, a fair chance to gain the contract for the four river gunboats, inasmuch as Mr. Hill, Vice President of the Corporation, who is now in Buenos Aires, has made a tender which has appealed to the Argentine Government. He has offered to assemble one of these units in Argentina, with Argentine workmen, only the direction to be controlled by the Bethlehem Steel Corporation. As this would be the first naval unit of any importance to be built in South America, it would naturally be a subject of local pride, and there is a reasonable expectation, therefore, that the Bethlehem Steel Corporation will be able to obtain the contract by this means.

The appropriation calls for $35,000,000 gold to be spent during the first three years, $20,000,000 during the next three, and $20,000,000 during the last four. Of the complete program there remain to be ordered one light cruiser, one destroyer leader, three submarines and various smaller craft for river work which are not specifically named in the bill.

Whether or not American firms will be able to obtain orders for these units depends principally upon whether they can reduce their cost of production sufficiently to enable them to approximate the prices of their European rivals. I have [etc.]

ROBERT Woods BLISS

AUSTRALIA

REPRESENTATIONS BY THE AUSTRALIAN GOVERNMENT REGARD

ING ENTRY OF AUSTRALIAN BUSINESSMEN INTO THE UNITED STATES

711.412/22

The Commissioner for Australia (Denison) to the Secretary of State

NEW YORK, 14 January, 1927.

[Received January 15.] DEAR MR. SECRETARY OF STATE: In connection with the recent visit of the Right Hon. S. M. Bruce, Prime Minister of Australia, to Washington, when he had the pleasure of an interview with you, the question of the position of Australian business men visiting the United States of America was discussed in the presence of His Excellency the British Ambassador, and myself, who accompanied Mr. Bruce. At the close of that interview you suggested that I should furnish you with a report on the existing position for your further consideration. I now have the honour of submitting same herewith.

It should be noted that the entrance of Australian citizens is controlled by certain regulations of the Bureau of Immigration, United States Department of Labor. These regulations may be defined broadly as:

(a) Entrance under the quota allotted to the Commonwealth of Australia.

(6) Entrance as transients, (c) Entrance of persons who visit the United States as students.

(d) Entrance as persons engaged in commerce, and who are granted liberty to remain in the country for a limited period (generally from three to six months), with the privilege of applying to the Bureau of Immigration for an extension of time.

The most embarrassing feature of these regulations is centred in the experience of Australians who enter for the purpose of extending their financial, commercial and industrial activities, and which are usually of mutual benefit to Australia and the United States.

It may be pointed out that American citizens are free to enter Australia, and to establish business offices in any part of the Commonwealth. There are no restrictions, and, consequently, full advantage is taken of this opportunity to engage in the ever-increasing trade as between the United States and Australia. One of the many

instances which might be cited for the purpose of emphasizing this feature, is the trade in automobiles and motor trucks. Australia today imports more American-made automobiles than any other country in the world, and in this activity alone there are a great many Americans who are engaged in American offices established in Australia.

On the other hand, if an Australian business house desires to extend its operations to the United States, a representative of the firm must enter this country either under (a) the Australian quota, or (d) as a temporary visitor. The annual quota for Australia is so limited that the opportunity to enter through that channel (a) is denied to many Australian business men, whilst the regulation which classes them as visitors (d) leaves no freedom to establish and maintain proper business offices with continuity of operations by those who are best qualified with a knowledge of the business.

It is desired to urge that consideration be given to the wish of the Government of the Commonwealth of Australia that the concessions granted to business men of the United Kingdom, who establish offices in the United States, be extended in like manner to citizens of Australia.

The privilege enjoyed by British citizens was made possible under the Treaty between the United States of America and Great Britain, proclaimed on December 22nd, 1815. That Treaty was designed to regulate commerce and navigation between the respective countries, and to ensure full liberty on both sides in connection with the commerce of the two countries. Its purport is that the merchants and traders of Great Britain and the United States shall enjoy the most complete protection and security for their commerce in such a manner as to render the same reciprocal, beneficial and satisfactory. The Treaty definitely limits its operation to "all the Territories of His Britannic Majesty in Europe.” The words "in Europe" isolate Australia, a country virtually unknown (at least in a trading sense) in 1815, when the Treaty was proclaimed as between Great Britain and the United States.

It is desired to learn whether (a) the Government of the United States of America is able, and would be willing, to extend to citizens of the Commonwealth of Australia the privileges granted to British citizens under the Treaty of 1815, or (b), in the event of it not being possible to effect such an extension under that Treaty, would be agreeable to negotiate a special Treaty with the Commonwealth for a similar purpose.

The consideration of this matter on the part of the United States Department of State will be greatly appreciated by the Government

* Signed July 3, 1815, Hunter Miller (ed.), Treaties and Other International Acts of the United States of America, vol. 2, p. 595.

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