File No. 600.119/365

The British Embassy to the Department of State


The British Government understands that the Government of the United States wishes to secure identity of policy between the two Governments in matters of export restrictions. For this purpose two distinct measures appear to be necessary, namely:

The co-ordination of the licensing policy of the two Governments, and
The co-ordination of that licensing policy with the naval action of the two Governments under international maritime law.

As regards (1) the British Government has suspended licenses for export from the United Kingdom on all articles embargoed by the Government of the United States and will continue to do so as the United States list of prohibited exports is enlarged. Before, however, complete co-ordination can take place it will be necessary that the prohibited exports lists of the two Governments shall be made as nearly as possible identical. The British list now covers practically all articles whatever, so far as the northern European neutrals are concerned. When the two lists are identical, the British Government will wish to continue certain exports to the northern neutrals from the United Kingdom, the most important of which are coal to Norway and Denmark, munition materials to firms manufacturing munitions for the Allies in Norway and Sweden, margarine materials to Holland [Page 929] in return for Dutch margarine exported to the United Kingdom, and possibly certain textile goods, etc., exported to these neutrals for the purpose of maintaining exchange to counterbalance expenditures in purchasing the native produce of these neutrals, these expenditures being at present necessary, in the absence of proper prohibitions of export in these neutral countries, in order to keep the produce from flowing to Germany. These continued exports the British Government wishes however to submit to the Government of the United States for their opinion and judgment. Consultation will be necessary for this purpose and, in so far as this consultation involves the expression of an opinion by the Government of the United States on the export policy of Great Britain, the British Government would be glad of an opportunity for regular consultation in London. The same applies to the export policy of the other European Allies, notably the export policy of Russia as towards Sweden and that of Italy towards Switzerland. (Swiss questions are centered in Paris, not London.) It is assumed that the Government of the United States—the United States being now by far the largest exporter to these neutral countries—will wish similarly to consider the grant of certain licenses for export from the United States, either for reasons of domestic policy or because they consider that such exports will be advisable on international grounds. They will doubtless be willing to discuss their policy in this respect and for this purpose the British Government will make adequate provision for such consultation at Washington, if the Government of the United States so desires.

As regards (2), naval action is at present embodied in two British measures—the issue of letters of assurance and the examination of ships at Halifax or Kingston. Letters of assurance are a substitute for export licenses in the case of goods not yet subject to license, and also a passport for the guidance of the naval officer at the port of examination. In the first aspect, their purpose will vanish when the United States list of prohibited exports is made comprehensive, and when the co-ordination of the export policy of the two Governments has been attained, by consultation in London and Washington. In the second aspect, their fate depends to a certain extent on the decision as to the continuance of naval examination at Halifax and Kingston. That examination has three objects: (1) the search of the ship for the purpose of detecting smuggling, conveyance of clandestine correspondence, and undesirable passengers or members of the crew, etc., etc.; (2) the use of detention of ships at the port of examination as a lever to enforce proper behaviour on the part of neutrals; and (3) any detention necessary in connection with naval and military operation, especially in the North Sea or Mediterranean. The abandonment of such examination cannot, therefore, well take place until (1) arrangements can [Page 930] be made for thorough examination at the port of departure, this examination including not only the checking of the cargo, but a thorough search of the ship herself, satisfactory to the naval as well as to the customs authorities, on the basis of proper interchange of information between the Intelligence Departments of the Governments concerned; (2) the provision of some machinery for co-ordinating, the international, as well as the domestic export, policy of those associated in the war against Germany; and (3) full interchange of information as to naval and military operations. (1) and (3) need no further discussion, though the setting up of much complicated machinery is clearly required. In regard to (2) the following points should be borne in mind. This department of international policy requires not only economic knowledge, but also the fullest information as to the political, naval and military situation in Europe. As methods of consultation in London and Washington have been proposed above, corresponding respectively to the discussion of British and Allied export policy and of United States export policy, so similar dual methods of consultation appear advisable for the discussion of those aspects of international policy involved respectively in the detention of neutral ships by the British naval forces and in the grant of clearance papers to neutral ships by the Government of the United States. Further, it must be remembered that the call at Halifax is imposed on ships coming from other than United States ports, notably ships coming from the Plate, and the British Government would be glad to agree with the United States Government as to the method by which such ships should be now controlled. It is clear that examination at Halifax may still be necessary for naval and military reasons, even after the economic policy of the two Governments has been fully co-ordinated, until such time as adequate naval and military co-ordination can be secured. But even if this is the case, the British Government stands ready, as was explained to the Department of State about the beginning of June, to give an assurance to neutrals that, except for naval and military reasons, ships whose cargo has been approved at the port of departure shall not be detained at Halifax more than (say) from twenty-four to forty-eight hours.

To sum up, as soon as an understanding is arrived at as to the policy to be pursued by the United States, the British Government will be prepared to consider in a spirit of co-operation how the existing machinery of blockade, including examination at Halifax, can be modified and replaced by measures which would be enforced by the United States Government in the common interests of the nations associated in the war against Germany. For its part, the British Government defines its policy as a complete stoppage of exports from all Allied European countries to these neutrals with the exceptions noted above; the submission of these exceptions to [Page 931] the informed judgment of the United States Government; and the assumption of identical responsibility with the United States Government in demanding that the border neutrals shall stop exports to Germany, maintain exports to the Allies, put their ships into service and adopt, in all such matters as transit, etc., a policy consonant with the principles of international comity.