500.C1197/159b
The Acting Secretary of State to Four American Insurance Companies
Sirs: For many years the United States has been keenly alive to the necessity of eradicating the illicit trade in narcotic substances. With this end in view the Government has not only enacted domestic legislation but has undertaken commitments in conjunction with other nations, the general policy of narcotic control being based upon the principles laid down in the Hague Opium Convention of 1912, to which the United States is a signatory. Despite the measures of control adopted by the United States and by certain other countries, the illegitimate trade in narcotics is widespread, to the serious detriment of the people of this and other nations.
In 1926 there was brought to the attention of this Government an agreement made by the British Government with Lloyds and the members of the London Underwriters’ Association, which was designed to prevent facilities being given for the insurance of consignments of opium or other dangerous drugs intended for illicit purposes. The danger was pointed out of underwriters, unaware of the fact that shipments were destined for illicit purposes, issuing policies [Page 447] which were subsequently used to borrow funds to finance the illicit business. The British met this situation by inserting a clause in all maritime policies which provides that no losses will be paid on narcotic shipments unless each shipment is covered by an import permit from the country to which it is consigned, or by an export permit from the country from which the goods are exported. It is required also that the route of shipment be usual and customary, that the drugs be declared such in the policy and that the policy indicate the country from which and to which the shipment is consigned.
This alteration in maritime insurance policies is in harmony with the efforts of this Government to give practical effect to the principles of the Hague Opium Convention and with its action in requiring, in pursuance of the Narcotic Drugs Import and Export Act of 1922, that shipments of narcotics to and from this country be covered by import and export certificates. It is realized that such a voidance of maritime insurance for inadequately controlled narcotic shipments would cause illicit traffickers to have recourse to the insurance companies of countries in which the ban is not in force. This Government has been gratified to observe the willingness of seventy-two of the companies represented in the American Institute of Marine Underwriters voluntarily to adopt this so-called “Dangerous Drug Clause” in their contracts. It is understood that your company is one of four companies which have not yet given their assent to the inclusion of this clause, and the matter is brought to your attention in the belief that, with the above explanation of the nature and purpose of the proposed clause before you, you will not hesitate to indicate your willingness to join with the other American companies in adopting it.
In view of the traditional attitude of the Government of the United States concerning the suppression of the illicit traffic in narcotic drugs, as evidenced by its participation in the conferences at Shanghai in 1909 and at the Hague in 1912, together with the steps which have been taken, by domestic legislation and by cooperation with other powers, to bring about the control of the traffic contemplated by the Hague Convention of 1912, it would be most unfortunate if the United States should appear to be less willing than other countries to adopt any measure designed to reduce, in any degree, the menace of narcotic drug addiction. I should very much appreciate receiving some indication of your attitude, which I feel confident will be favorable, in regard to this matter.
A similar letter is being addressed to the other three companies which have not yet signified their acceptance of the proposal.76
I am [etc.]
- The four replies received indicated no agreement as to a new clause in these insurance policies.↩