The Chargé in Great Britain (Atherton) to the Secretary of State

No. 787

Sir: Confirming the Embassy’s telegram No. 76, April 6, 12 noon,3 I have the honor to transmit herewith copies of the full text of a note [Page 5] dated April 5 from the Foreign Office, in reply to the Embassy’s Aide-Mémoire based on the Department’s telegraphic instruction No. 16, January 19, 1 p.m.,4 concerning the difficulties at present encountered in shipping Canadian wheat to the United Kingdom via United States ports.

Respectfully yours,

Ray Atherton

The British Secretary of State for Foreign Affairs (Simon) to the American Chargé (Atherton)

No. A 2548/232/45

Sir: His Majesty’s Government in the United Kingdom have had under consideration the memorandum, which Mr. Mellon caused to be communicated to this department on the 24th January last5 regarding the recent decision of His Majesty’s Customs in respect of a shipment of Canadian wheat in the S. S. Laconia.

In reply I have the honour to state that it has, since the introduction in 1919 of the system of Imperial Preference, been a statutory condition of the grant of preference not only that goods must be of British Empire origin but also that they must be consigned to the United Kingdom from a part of the British Empire. This requirement of consignment from a part of the British Empire appears for the first time in Section 8 (1) of the Finance Act, 1919, and has been reproduced in subsequent enactments as an essential principle of Empire preference. Since that date the principle has on a number of occasions been sustained in respect of various commodities and various countries, as it has been found indispensable for a proper administration of the system by the Customs.
It is true that in the case of the recent shipment of Canadian wheat from New York the documents accompanying the wheat established its Canadian origin, but there was no satisfactory evidence that at the time of leaving Canada the wheat was definitely consigned to the United Kingdom, and the claim of preference consequently failed. This question of consignment is one of fact, and in cases in which the wheat, at the time of leaving Canada, is definitely consigned to the United Kingdom there should be no insuperable difficulty in producing the necessary documents to satisfy the Customs on this point. In the Laconia case the documents showed that the wheat was first consigned to Buffalo and subsequently re-consigned from the United States of [Page 6] America, the condition of through consignment thus clearly not being fulfilled.
While His Majesty’s Government have given the most careful and sympathetic consideration to the memorandum under reference, they are, unfortunately, unable to regard the first proposal (A) put forward therein as entirely satisfactory, since the Lake bill of lading mentioned therein, even if endorsed to a named consignee in this country, could not be accepted as satisfactory evidence that the consignment condition had been fulfilled; they are advised that this document merely covers transit to Buffalo and that the endorsement has no legal effect.
His Majesty’s Government in the United Kingdom are, however, most anxious to take account of the considerations set forth in the memorandum on behalf of the various United States interests concerned, so far as the statutory requirements in force permit and so far as is consistent with the essential objects which these requirements have in view. His Majesty’s Customs will accordingly be prepared to accept a satisfactory evidence of through consignment to the United Kingdom, in cases where wheat is definitely consigned to the United Kingdom at the time of shipment from Canada, an invoice to the consignee in the United Kingdom issued at the time of shipment and supported by supplementary evidence that there was a bona fide transaction (e.g. the order from the British consignee for the supply of the wheat), even though the wheat did not move to the original consignee named on the invoice but to some other ultimate purchaser in the United Kingdom. It is to be understood that in such a case the invoice must also be accompanied by the usual documents tracing the transit of the goods from Canada to the United Kingdom. I trust that the above procedure may be found acceptable to the interests concerned, and will provide a solution of the difficulties which have arisen.
The memorandum further proposes (under sub-head B), a transitory procedure for the treatment of Canadian grain now in the United States which had left Canada before the close of navigation on the Great Lakes in 1932. I regret that it is not possible to adopt this procedure, since the Ottawa Agreements Act makes no provision for any special treatment of commodities which were already under way at the time of its entry into force; in this respect it followed the procedure generally adopted in this country and also, so far as I am aware, in the United States of America.

I have [etc.]

(For the Secretary of State)
R. L. Craigie
  1. Not printed.
  2. Not printed.
  3. See aide-mémoire to the British Embassy, January 19, supra.