Papers Relating to the Foreign Relations of the United States, 1916, Supplement, The World War
File No. 763.72112/2217
The Ambassador in Great Britain (Page) to the Secretary of State
[Received February 17.]
Sir: Referring to the Department’s cablegram No. 2599 of December 19 [18], 1915,1 in regard to British trade regulations now in force in China and the effect thereof on American trade with that country, I have the honor to enclose herewith, for the information of the Department, a copy of the memorandum received from the Foreign Office in reply to my representations in this connection, and to which reference is made in my cablegram No. 3637 of to-day’s date.2
I have [etc.]
The British Foreign Office to the American Embassy
memorandum
His Majesty’s Government have not failed to give the most careful consideration to the memorandum on the subject of the effect of the trading with the enemy proclamations on American trade in China which was communicated by the United States Ambassador to this Department on the 22d ultimo.
From certain of the statements in this memorandum it would appear that the United States Government have been, to a certain extent, misled as to the exact scope, intention, and effect of the proclamations, and they therefore consider it advisable, before replying in detail to the points raised, to give a brief explanation of the history and intention of the various measures which have been taken.
The objects of the action which has been decided upon by His Majesty’s Government with respect to the question of trading with the enemy in China are, stated briefly and generally, to deprive all persons or bodies of persons of enemy nationality resident or carrying on business in China of any assistance or benefit whatever from British sources. With a view to achieve this purpose, the Trading with the Enemy Proclamation (China, Siam, Persia, and Morocco) was issued on June 25 last and was followed by King’s regulations issued by His Majesty’s Minister in China in accordance with this proclamation.
It became obvious almost immediately that this proclamation would fail of its effect unless some means could be devised to prevent enemy firms and persons [Page 346] from making use of neutral, British, or Allied intermediaries to continue their trade with British subjects. In order, therefore, to enforce the provisions of the proclamation and regulations upon British subjects, His Majesty’s Government on September 24 last issued a further proclamation prohibiting the consignment of goods from the United Kingdom to persons or bodies of persons in China or Siam whose names did not appear on a list of approved consignees in the London Gazette.
On this list are placed the names of all persons or firms who are above any reasonable suspicion of obtaining goods or other facilities from British subjects for the purpose of supplying them to persons of enemy nationality in China or Siam. At the present moment, the names of almost all British, Allied, and neutral firms of good reputation and standing appear on this list.
There remain two further classes of persons in China. First, a class which has failed to satisfy His Majesty’s Government that they do not act as intermediaries for enemy firms, but who have a genuine separate commercial existence of their own, apart from any enemy firm, and whose activities His Majesty’s Government are anxious to interfere with as little as possible provided that they can secure that these persons shall not assist enemy subjects to evade the effect of the regulations. These persons are prevented from obtaining goods directly from the United Kingdom, and from such of His Majesty’s Dominions as have adopted the provisions of the proclamation of September 24, and their use of British shipping is, to some extent, restricted by the necessity for British shipmasters and owners to obtain the approval of His Majesty’s consular officer at the port concerned before they may accept cargo shipped by them or deliver cargo consigned to them.
There is also a further list provided by His Majesty’s Government for the guidance of His Majesty’s consular officers and other British officials, which contains the names of persons and firms of enemy nationality in China, and a few further British, neutral, and Allied persons or firms who are so closely identified with enemy firms that it is impossible to distinguish any transaction with them from a transaction with the enemy firm which they represent. From these persons all British facilities of any kind whatever are, as far as possible, withdrawn for the simple reason that any British subject engaging in any transaction with them would render himself liable to prosecution for trading with the enemy person concerned.
His Majesty’s Government believe that the names of only two United States citizens appear on this list, and in both cases there is an accumulation of evidence in the hands of His Majesty’s Government showing that these persons have no separate business existence whatever and are simply employed as cloaks by enemy firms for the purpose of enabling them to evade the effect of the regulations.
The entire system of regulations described above is devised solely to prevent transactions between persons subject to British jurisdiction and persons of enemy nationality, which His Majesty’s Government are at liberty, and consider it their duty, to stop by all means in their power. No attempt is made to prevent commercial operations between neutral firms and enemy subjects in the countries in question, in so far as these operations are conducted without making use of British facilities. The right of His Majesty’s Government to deny the use of such facilities to enemy trade will scarcely be questioned.
The various measures taken by His Majesty’s consular officers and by shipping companies to which reference is made in the United States Ambassador’s memorandum are the result of voluntary arrangements come to between various British shipping lines and other associations of British subjects and His Majesty’s consular officers, with the approval of His Majesty’s Government, for the purpose of avoiding as far as possible inconvenience or loss to British subjects or to innocent neutral merchants from the operation of the regulations.
The above explanation will, His Majesty’s Government hope, make clear to the United States Government that there has been no attempt whatever to interfere with the legitimate activities of neutral traders except for the purpose of preventing the use of British facilities for carrying on business with enemy firms and the consequent infringement of the British proclamations and regulations by British subjects. They desire to add, however, the following observations in reply to the specific points raised in the memorandum.
(1) The “regulation” complained of in the first paragraph is in fact a semiofficial arrangement voluntarily entered into by British shipping companies [Page 347] with certain of His Majesty’s consular officers in certain ports in China for the purpose of protecting themselves against an unwilling infringement of the regulations by carrying enemy cargo, and minimizing any inconvenience or loss which might be occasioned to innocent shippers by the possible subsequent action of His Majesty’s naval officers or colonial officials at a port of trans-shipment.
His Majesty’s Government desire to add that detailed information of the nature described is only required when the intending exporter is in the suspect class described above, and that any information submitted to one of His Majesty’s consular officers for the purpose of satisfying him that the particular consignment in question is free from enemy taint is regarded as strictly confidential. In any case, if an American shipper considers that this system, which was devised for the convenience of shippers and shipowners in general, causes inconvenience in the conduct of his business, it is always open to him to make use of other than British facilities.
(2) With respect to the complaint in the first sentence of the second paragraph, His Majesty’s Government have in no case interfered in any degree whatever with the personnel of a neutral firm, and, as a matter of fact, they have, as a rule, no information as to the nationality of the employés of the neutral firms whose names at present appear on the approved list. Suitability for inclusion on this list is judged entirely by the conduct and general reputation of the firm. It appears possible, however, that in certain cases, firms with which United States citizens are connected have incurred suspicion of acting as intermediaries for enemy firms in transactions with British subjects, and their names have consequently been omitted from the approved list, and that when they have applied to one of His Majesty’s consular officers for recommendation for addition to the list they have been informed that it would assist in dispelling these suspicions if they removed an employé or employés of enemy nationality who had been concerned in the transactions.
(3) His Majesty’s Government are not aware of the circumstances which may have caused British consular officers in China to adopt, with regard to shipments of antimony and dyes, the procedure referred to in the second sentence of the same paragraph.
(4) The complaint in the third paragraph appears to have been based on a misunderstanding which His Majesty’s Government trust will have been dissipated by the explanations given above.
(5) With respect to the fourth paragraph His Majesty’s Government desire to point out that the action of British shipping companies is due to the fact that they are bound by the trading with the enemy regulations issued by His Majesty’s Government, and are liable to prosecution if they infringe them by carrying goods destined for enemy subjects in the countries in question.
As to the question of the position of shipowners; no doubt, though not common carriers, they are under certain of the liabilities of common carriers unless there is some special contract. But carrying as they do goods for various shippers irrespective of nationality, shipowners are neither bound nor entitled to carry goods which might subject ships and cargo generally to arrest or detention.
(6) With respect to the second sentence in the fourth paragraph: there is no necessity for American merchants to “comply with British regulations.” Such regulations are only enforced upon British subjects, and no steps have been taken to compel other than British subjects to comply with them. All that is necessary if an American firm desires to have its name added to the approved list, is, as explained above, to satisfy His Majesty’s Government that they are not acting, and will not act, as a channel for the supply of British goods or other facilities to firms or persons of enemy nationality. His Majesty’s Government are unaware of any instance in which an American or any other firm has taken this step without their name being consequently added to the list, and would be glad if the United States Ambassador could furnish them with particulars of any case in which this is alleged to have occurred.
(7) On the point raised in the third sentence of the fourth paragraph His Majesty’s Government are unable to make a definite statement unless they can be furnished with further details, but they desire to point out, that, prima facie, the British consular officer in question appears to have merely acted in [Page 348] accordance with the usual official practice in refusing to communicate to a third party any particulars of confidential information given by him to British shipmasters for their guidance.
(8) With regard to the final sentence in paragraph four His Majesty’s Government understand that the Japanese Government have taken certain measures to prevent the carriage of enemy cargo by Japanese vessels. They cannot, however, undertake to reply in detail to such questions which should more properly be addressed to the Japanese Government.
(9) Coming to the final paragraph of Mr. Page’s memorandum, His Majesty’s Government would observe that all cargo shipped from the United States or from any other neutral country to China is free from such interference on the part of British officials as is now under discussion unless it is consigned to an enemy firm or to a person or firm believed to be acting for an enemy firm. The question of the ownership of such cargo therefore does not arise, and there is consequently no necessity for affidavits to be sworn on the subject.
As regards goods exported from China, no attempt whatever is made to prevent the carriage of any consignment which is the genuine property of a neutral person or firm. In the case, however, of goods which have been purchased directly from an enemy, His Majesty’s Government cannot but regard the neutral firm concerned as being, however innocently engaged, with regard to the particular transaction, in acting as an intermediary to enable an enemy to obtain the use of British facilities, and would accordingly regard any British subject who afforded such facilities as having infringed the trading with the enemy regulations. It must be obvious that if His Majesty’s Government were to relax their attitude in this respect, their action would amount to licensing any British subject to trade with an enemy provided that a neutral could be discovered who was ready to act as an intermediary, with the result that the proclamation and regulations would to a very large degree be stultified.
Experience has shown that it is practicably impossible to devise a safeguard against this by means of affidavits of ownership or any other form of guarantee, as it is impossible for the consular officer or other official before whom such an affidavit is sworn to distinguish between a bona fide sale, and a merely collusive transaction for the purpose of enabling an enemy firm to continue its export trade with the assistance of British shipping.
With regard to the character of firms in China His Majesty’s Government must point out that while any neutral firm is of course at perfect liberty to trade with an enemy firm, His Majesty’s Government are also at perfect liberty to prevent British subjects from trading with any firm which adopts this practice if there appears to be a reasonable possibility that such trade will result, in fact, in British goods or facilities being placed at the disposal of an enemy firm, and that they cannot delegate the responsibility of deciding whether a British subject has or has not infringed the regulations by such a transaction, to any but British courts and officials. Although His Majesty’s consular officers will always attach the greatest weight to any information or recommendation concerning United States firms which may be communicated to them by their United States colleagues, the ultimate responsibility of deciding whether such a firm shall be placed on the approved list or not must therefore rest with His Majesty’s Government.
Moreover, while the genuine American character of a firm or person in China may be beyond any doubt, this character, while ensuring that the firm shall receive every possible consideration from the British authorities, cannot of itself ensure that the firm will not act as an intermediary for the purpose of procuring British goods for the ultimate benefit of an enemy firm, and although His Majesty’s Government will at all times exercise every possible precaution to prevent as far as possible any regulation imposed upon British subjects from causing inconvenience to a neutral firm or person, they cannot in the present circumstances undertake that they will not at any time restrict the commercial intercourse between British subjects and any neutral firm.
It is perhaps hardly necessary to repeat that all regulations issued by His Majesty’s Government and all action taken by British officials under their instructions, are directed solely to prevent persons under British jurisdiction from assisting or trading with persons of enemy nationality; that no attempt whatever has or will be made to interfere with trade between United States citizens or other neutral persons and enemy firms in cases which do not involve [Page 349] the use of British facilities or the supply of British goods; and that even in such cases the action of His Majesty’s Government is and will be strictly confined to the elimination of the British element in the transaction.
January 22, 1916 .
- Foreign Relations, 1915, Supplement, p. 641.↩
- Not printed.↩