File No. No. 763.72112/3844

The Secretary of State to the Attorney General ( Gregory)

Sir: I have the honor to acknowledge the receipt of your letter of June 18, 1917,1 enclosing a copy of one from the United States Attorney at New York respecting a proposed payment by the National City Bank of New York to Hallgarten & Co., of that city, for the account of the Niederosterreichische Escompte Gesellschaft, Vienna, together with copies of a letter from Hallgarten & Co. to the United States Attorney at New York, concerning the matter, a telegram from the Niederosterreichische Escompte Gesellschaft to Hallgarten & Co., and a statement of the account of that concern with Hallgarten & Co.

Your letter states that, before replying to the letter of the United States Attorney in regard to this matter, the Department of Justice would be glad to have a statement from this Department as to whether or not such payment would be in any way undesirable from a diplomatic standpoint.

In reply I have the honor to say that, inasmuch as it appears that the proposed transaction merely contemplates the transfer from one American concern to another, both of which are resident in New York City, of a credit of $400,000, and does not involve commercial intercourse of any character with persons in Germany, there would seem to be no legal inhibition of the transaction in question. The Department does not, therefore, consider that it would be “undesirable from a diplomatic standpoint.”

Since, however, the Special Assistant United States Attorney at New York states that this is the first transaction of this character which has come to his attention, the Department would suggest that it might be appropriate to call to his attention the rule enunciated by American courts to the effect that all commercial intercourse between enemy countries is illegal; to the bill (H.R. 4704) with regard to trade with the enemy which is now pending before Congress; and as bearing on the general question of commercial intercourse with [Page 421] the enemy, to Moore’s International Law Digest, volume 7, page 237, et seq., and particularly to the following cases: Montgomery v. United States, 15 Wall: 395; Scholefield v. Eichelberger, 7 Pet. 586; Kershaw v. Kelsey, 100 Mass. 561.

I have [etc.]

For the Secretary of State:
William Phillips

Assistant Secretary
  1. Not printed.