File No. No. 763.72112/5900
The Secretary of State to the Secretary of the Navy ( Daniels )
Sir: I have the honor to acknowledge the receipt of your letter of December 13, 1917,1 enclosing a copy of a despatch from the Head of the Military Government of Santo Domingo in which he states that it is his purpose to issue, if approved by the Navy Department and the State Department, an Executive order in the following terms: [Page 360]
Citizens, firms or corporations of the United States of America residing or doing business in Santo Domingo, West Indies, having contracts with persons, firms or corporations of enemy character as defined in the Trading with the Enemy Act, shall be absolved from any action for damage in the courts of Santo Domingo, West Indies, resulting from a suspension or breaking of such contracts by such citizens, firms or corporations of the United States in pursuance of their duty in observing the terms of the aforesaid Trading with the Enemy Act.
The Head of the Military Government suggests that authority be given him to issue temporary licenses that will permit Americans in business in Santo Domingo to readjust the engagements they now have with the enemy or to enable them to continue contracts with the proviso that no funds pass into enemy hands during the war, and inquires whether the Alien Property Custodian will have an agent in Santo Domingo.
I am also in receipt of a paraphrase of a despatch of December 19, 1917,1 from the Head of the Military Government, in which he requests that the International Banking Corp. be made an agent of the Alien Property Custodian in Santo Domingo.
The inquiries from the Head of the Military Government, with reference to the appointment of an agent in Santo Domingo for the Alien Property Custodian, appear to involve the question as to whether or not, in view of the occupation of the Republic by the forces of the United States, it is to be considered a part of the “United States” as those words are used in the Trading with the Enemy Act so as to extend to that country the application of the act.
In reply I have the honor to state that, bearing in mind the nature and purposes of the act and the circumstances surrounding the occupation of the Republic of Santo Domingo, it would appear that the words “United States” as used in the act, were not intended to include the Republic of Santo Domingo and that it was not contemplated that the provisions of the act should apply to that country. The Department has consulted the officers vested with the administration of the Trading with the Enemy Act, including the Alien Property Custodian, and they agree that the act need not be interpreted as applicable to the Republic of Santo Domingo.
In this relation, however, it would appear that the Head of the Military Government could issue such orders as may be necessary or appropriate to obtain the objects of the Trading with the Enemy Act in a manner suitable to the peculiar conditions prevailing in that country.
With reference to the suggestion of the Head of the Military Government that authority be given him to issue temporary licenses to Americans in business in Santo Domingo to readjust the arrangements [Page 361] they now have with enemies, attention is called to the fact that the Enemy Trading Act forbids persons in the United States to “trade” not only with enemies as defined in section 2 of that act but also under section 3(a) with any other person, with knowledge or reasonable cause to believe that such person is conducting or taking part in such trade, directly or indirectly, for, on account of, or on behalf of, or for the benefit of enemies.
This prohibition would appear to apply to American houses or corporation trading through their branches in foreign countries. Although the act does not make it unlawful for individual Americans (not agencies or branches) abroad to trade with the enemy, it is possible that the nature of such trade might place such Americans in the position of trading for, with, or on behalf of the enemy and therefore in the class of persons under section 3(a) with whom it is prohibited to trade. It would seem, therefore, that if the Head of the Military Government should grant licenses to any person to trade with the enemy or another who is trading with an enemy, such license would not prevent that person if the circumstances warranted from falling within the class of persons under section 3(a) with vhom persons in the United States are prohibited to trade.
In view of this, it would seem that the Head of the Military Government should not issue any such licenses to persons in Santo Domingo until some arrangement has been made with the War Trade Board as to the effect of the licenses of the Military Government.
In so far as branches in Santo Domingo of American houses or corporations may desire license to trade with the enemy, applications may be made to the War Trade Board through their offices in the United States. Consequently, the arrangement with the War Trade Board would need to deal only with other persons in Santo Domingo who desire to trade with the enemy and who do not wish thereby to incur the difficulties of the prohibition of section 3 (a) of the Trading with the Enemy Act.
I am enclosing, for the information of the Head of the Military Government, copies of two orders recently issued by the War Trade Board concerning branches of American houses and corporations in foreign countries.1
I have [etc.]