File No. 763.72112/2715
Mr. Carl S. Stern to the Secretary of State
Dear Sir: The British Embassy for the purpose of serving the convenience of American shippers, established the practice of issuing so-called letters of assurance. The practice has so far engrafted itself upon the American export business that, at the present time, no steamship company will accept a shipment for export to the Scandinavian countries unless it is covered by such a letter.
One of our clients, an exporter, has called to our attention that this system, designed for the benefit of the American export trade, has proved, instead, to be a menace. Exporters cannot tell in advance whether they will get letters of assurance; they know that no steamship company will take their shipment without such a letter; they know also that such a letter may be issued within a week, a month, two months, or may not be issued at all. Consequently, the American exporter is in straits. He does not know what orders to give to manufacturers or what orders to take for shipments. Letters are delayed and sometimes refused, although the goods are on the embargo list of the Scandinavian countries.
In the case of articles with fluctuating markets—and many of the articles exported are such—the danger and inconvenience is greatly magnified.
The American shipper can usually so contract as to place the risk of loss after shipments upon his foreign customer, so that the risk of seizure would be upon the customer. In any event, there are remedies for unlawful seizure; but the American exporter is entirely without a remedy if he cannot obtain shipments of his goods.
Moreover, the British Embassy, though it promptly charges the exporter with the cable charges involved in making its investigations concerning requests for letters, is in no haste to announce its decision. In instances cited by our clients, action upon applications was delayed for five weeks and seven weeks respectively, and in one of these cases the market has advanced 10 per cent in the meantime.
The practice of issuing letters of assurance, as it has worked out, enables the British Government to place a very real embargo upon [Page 499] any class of American merchandise destined for the Scandinavian countries by consistently refusing letters upon that class of merchandise. In this way American trade in any particular commodity could be destroyed and English export trade fostered at its expense.
Passing the serious inconveniences and delays even when the letters are granted and the obnoxiousness of what is, in practice, a requirement that American exporters must obtain the permission of the British Government before embarking in thoroughly lawful trade, we call to your attention that the power over American trade that this system places in the hands of the British Embassy is a dangerous one. It has been suggested, in consequence, that the American Government ought in order to protect American trade to take steps to obtain the prompt discontinuance of the practice of issuing letters of assurance, or if this cannot be done immediately, it should require steamship companies to take shipments without such letters and should penalize companies showing any preference to shipments accompanied by letters of assurance over those not so accompanied.
Will you kindly let me know, so far as is consistent with the practice of your Department, whether any action has been taken or is planned to be taken by our Government in this connection.
Thanking you [etc.]