File No. 600.119/427

Memorandum of the Law Adviser for the Department of State ( Woolsey )1

Questions of Policy Relating to Exports Control

1. Should the United States use its control of exports to “ration” neutral countries of Europe for the purposes: [Page 866]

Of satisfying the home requirements of the neutral country.

Note [1], The United States is willing to have representatives on the international commissions dealing with rationing, and it is expected that these representatives will have access to the data upon which the commissions’ decisions are based, and that the American policy as to rationing will be arrived at by an agreement with the United States Government instead of by mere vote of the members of the commission on which the United States is represented and in which the United States would be outvoted. The basis of the cooperation of the United States is not to assist in the blockade of neutral countries, nor to take part in other measures of the Allies which the United States has heretofore regarded as unfounded in international law, but is based on the right of the United States to control its exports to any country, neutral or belligerent, for the purposes (1) of conserving its own supplies for the use of the United States or for the use of its allies, (2) of preventing persons in the United States from trading, directly or indirectly, with, for the benefit of, or on behalf of, the enemy or his agents, and (3) of conserving tonnage for the transportation of military necessities for the United States and our allies.

Of maintaining its exports of imported or native produce to the Allies and to the United States.

Note 2. The United States is willing to assist in attaining this object purely on the ground of conserving its supplies as a domestic measure and of conserving tonnage for the carriage of such articles as are needed by the United States and by its allies; e. g., the restriction of exports of coal to Spain unless she is willing to export iron ore to Great Britain for use in manufacturing munitions, in order to save tonnage which otherwise would be used for the transportation of iron ore from the United States to Great Britain for the manufacture of munitions.

Of preventing all exports to enemy countries whether of imported or native produce.

Note 3. The United States is willing to assist, on the above-mentioned grounds, in preventing its exports from reaching the enemy or from being used by neutral countries to replace produce exported by them to the enemy; but the United States is unwilling to carry this policy to the point where it might force neutrals into the arms of Germany.

Of putting pressure upon neutral countries to render services in the form of shipping or otherwise, such as employing a reasonable percentage of their shipping in certain trades.

Note 4. The United States is unwilling to force neutrals to send their ships through the danger zone in the service of the Allies or the United States further than to insist that they should use their ships to carry their own supplies to and from the belligerents.

Of forcing neutral countries to enter into diplomatic agreements in respect to any of the above.

Note 5. The United States is willing, on the grounds mentioned above, to try to induce neutral countries to give satisfactory assurances in respect to the above points.

Of forcing Sweden to a diplomatic agreement in respect to the transit across her territory of goods for Russia.

Note 6. The United States will, on the grounds mentioned, assist in obtaining from Sweden an equitable arrangement for transit of goods to Russia, while recognizing Sweden’s absolute right to control transit of goods over her own territory. At the same time, the United States has the same right to control exports and to grant as a favor to Sweden exportation of certain articles in return for concessions by Sweden in the line of transit privileges to Russia and limitation of exports to Germany.

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Great Britain has heretofore attained the objects set forth above through her exercise of belligerent maritime measures, depending upon the prize court to condemn property violating those measures. The United States regards certain of the measures in question as illegal; but that does not prevent the United States from controlling its exports as a purely domestic measure for the conservation of supplies and of tonnage and for preventing indirect trading with the enemy, and from attaining through bargaining for the exportation of certain articles many of the objects attained by Great Britain.

2. Should the system of “letters of assurance” used by the British Embassy here in case of shipments to Norway, Sweden, and Denmark, preventing contraband carriage and enforcing “rationing,” “blacklists,” and “bunker control” as to these three neutral countries, be replaced by United States licenses to be issued after consultation with the British Government and to be recognized by the British patrol and by British authorities in the United Kingdom under an agreement between the two Governments? Occasionally American cargoes covered by letters of assurance are detained by the British patrol or British authorities in port because of the discovery of new facts between the date of shipment and the date of their detention.

Note 7. The United States is willing to undertake gradually to issue licenses for exports on condition that these licenses shall be by agreement recognized by the British patrol and by the British authorities as of the same value as their letters of assurance. There ought to be no difficulty as to the recognition of the validity of American licenses if the British patrol and British authorities are instructed to do so. The licenses may be made by agreement to be issued subject to the discovery of new facts subsequent to shipment, but these should be real facts, and not ostensible facts. The aim of the United States is finally to substitute complete licenses for letters of assurance; but naturally this will have to be accomplished gradually, taking, for example, certain articles at a time.

Or should an American license be issued after consultation with the British Government, and accompany British letters of assurance issued for the same shipment?

Note 8. The United States is unwilling to have British letters of assurance accompany an American license. The advantage of American licenses is that American citizens deal entirely with the American Government, the American authorities conferring with the British as to the issuance of licenses.

3. Should the United States undertake “bunker control” by the prohibition of bunker coal, oil fuel, and ships’ stores except by license, in order to control:

The supply of bunkers only to such neutral ships as are approved by the British Government?

Note 9. The United States Government desires to have an equal voice with the British Government in approving the neutral ships.

The exportation of coal, oil fuel, and ships’ stores to such firms as have agreed: [Page 868]
To supply bunkers only to approved ships;

Note 10. The United States desires to have an equal voice in the selection of these firms as well as in the approval of ships.

Not to dispose of coal, oil fuel, or ships’ stores in any way beneficial to the enemy.

Note 11. The United States can not go to the extent of refusing coal, oil fuel, and ships’ stores, or any of them, to persons merely on account of enemy nationality or association. Some reasonable ground for believing that the coal importers are using the coal for the direct benefit of Germany is essential. The United States is willing to see to it that its coal, fuel oil, and ships’ stores are not used to supply enemy raiders or submarines or otherwise in trading with the enemy.

The movements of neutral ships so that they would:
Call at British ports for examination;

Note 12. The United States is unwilling to force neutral ships to call at British ports for examination, but the issuance of licenses in the United States will make such examination unnecessary unless new evidence is discovered as mentioned in paragraph (2). It may be possible for the United States to allow outgoing ships to carry only a limited amount of coal, fuel oil, and ships’ stores, sufficient for reaching the British port of examination.

Refuse to supply commerce raiders;

Note 13. The United States is willing to refuse the supply of coal, fuel oil, and ships’ stores to neutral vessels who may possibly supply enemy raiders or submarines.

Refuse the transportation of enemy reservists and agents;

Note 14. The United States is willing to make the supply of coal, fuel oil, and ships’ stores to ships conditioned upon their agreeing not to transport enemy subjects or agents on the ground that the supply of coal, etc., is a favor, and in return the ships should not carry persons likely to be inimical to the interests of the United States.

Agree to do a certain amount of service beneficial to the Allies so as to economize tonnage;

Note 15. The United States is willing to induce neutral ships to carry supplies to and from neutral countries, but not to force neutral ships into the danger zone in service for the Allies or the United States.

Take only approved cargoes, so as to reduce the delay caused by examination in British ports.

Note 16. The issuance of licenses by the United States for cargoes going to Europe will, it is expected, by agreement between the two Governments, make delay by reason of examination in British ports unnecessary except in a case where, as mentioned above, new facts regarding the cargo are discovered after its departure.

The foregoing control has resulted in a British “ships’ white list” and a list of consignees called the “Regular and Reliable List of Coal Importers,” or the “coal white list.” The “ships’ black list” consists of ships who refuse to agree to this control or have broken their agreement, [Page 869] traded with the enemy, or supplied enemy ships. This list might now have to be extended so as to include (c) (4) (5) above.

Note 17. The United States is prepared to agree with the Allies upon a “coal white list” in accordance with the views expressed in Notes 9–16, inclusive. As probably the British “coal white list” is a compromise between France and Great Britain, there should be no objection to a list being prepared to which the United States could agree.

If the United States can not go this far, will it at least take such steps as are necessary to prevent American coal being used to weaken or evade the control at present exercised by means of British coal, by (1) limiting the export of American coal to firms on the “coal white list,” and (2) preventing neutral ships from bunkering for the round voyage, or further than the next suitable bunkering port, so that from that point they would come under British control.

Note 18. The United States prefers to reserve its decision on the foregoing paragraph until experience shall show how the procedure under the preceding paragraph operates in practice.

4. Will the United States refuse to export to persons on the British statutory list and confidential black list, as well as the French official black list, composed of persons of enemy nationality or association? The British mission point out the convenience of having the list of persons to whom the United States would refuse exports identical with their black lists.

Note 19. The United States is not prepared to accept the British and French black lists in their entirety. The United States, however, is prepared to refuse exports on the grounds already mentioned—

To persons in neutral countries who, there is good reason to believe, are using the goods in trade with, on behalf of, or for the benefit of, the enemy, directly or indirectly; and
To persons who, for special reasons, are not, in the opinion of the United States, entitled to exports; e. g., revolutionists in Central America, etc.

As the control of exports, to black-listed firms would not control imports from such firms, would the United States, under the Enemy Trading Act, prevent such import transactions as being for and on behalf of the enemy, within the terms of the act? The Enemy Trading Act provides that the President may, by proclamation, place enemies in neutral countries in the same category as persons in Germany; but this is discretionary with him, as the act is drafted to avoid the black list.

Note 20. The United States is not prepared to prevent, under the Enemy Trading Act, imports into the United States from black-listed firms and payments to them for such imports unless there is satisfactory reason to believe that the transaction amounts to trading with, for the benefit of, or on behalf of, Germany. The United States is in a different position from European countries as to such trade with South America, in that it can not afford to rouse the ill-feeling of Latin American countries nor to lose the profits which accrue from trading with Germans in those countries—profits which go toward defraying the expenses of the war.

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Would the United States make the import transactions prohibitive also through preventing transfers of money and credit by strict censorship of the mails as well as the cables, telegraph, and wireless?

Note 21. See Note 20.

Would the United States go to the extent of giving enemy character to natives of a neutral country who are not agents of Germany or an ally of Germany, but who might be actively assisting Germany in propaganda and intrigue?

Note 22. The United States is not prepared to go this length, but is prepared to examine each case in order to ascertain the seriousness of the propaganda or intrigue.

5. As to the necessary machinery for carrying out the foregoing, would the United States appoint a representative on the “Rationing Committee” and in the “War Trade Statistical Department” in London, et cetera, and allow the British Government to have a representative on similar advisory committees in Washington?

Note 23. The United States will appoint representatives on the various committees of the Allies on the understanding that arrangements reached by the Allies are not to be concluded without the approval of the United States Government. The United States desires that it cooperate with the Allies, not in an advisory capacity, but upon the basis of equality and mutual agreement.

Would the United States lend the assistance of the State, Commerce, and other Departments, both here and abroad, in obtaining necessary information regarding rationing, black lists, bunker control, et cetera?

Note 24. The United States will lend its assistance in obtaining all the information possible for the enforcement of the measures upon which it is in agreement with the Allies and for the enforcement of other measures upon which it is not in agreement, upon the reservation that such action is not to be taken as committing it to those measures.

6. Should the policies upon which licenses are issued by the United States be subject to the approval or disapproval of the Secretary of State?

Note 25. It is believed that the Department of State should have a veto power with regard to the issuance of licenses, on account of the international political questions which are involved in any licensing system which may be established. This is shown by the delicate situation of the neutral countries in Europe regarding which the Department of State has confidential information which can not be divulged.

  1. Notes attached to this paper:

    March 11, 1929.

    Mr. Woolsey stated that these notes, while not definitely approved by the Secretary of State as the basis of a formal communication to the British representatives, summarize the attitude taken by the American representatives in oral discussion of the various points raised by the British.

    May 27, 1929. The above was confirmed by Mr. Polk.