The Secretary of State to President Roosevelt
My Dear Me. President: There exists a situation involving the obligations of this Government under treaties with Germany and Great Britain which I consider of sufficient importance to bring to your attention.
Section 601 of the Revenue Act of 1932 specifies in effect that “unless treaty provisions of the United States otherwise provide”, coal imported from any foreign country from which we import more coal than we export to it shall be subject to a duty of ten cents per hundred pounds. Under this provision, Canadian coal has been exempt from the duty. Notwithstanding our treaty obligations to accord most-favored-nation treatment to Germany and Great Britain, and notwithstanding the above quoted provision in the law safeguarding treaty obligations, coal from Germany [Page 531]and Great Britain has not been accorded the exemption, for the reason that exports of American coal to those countries do not exceed the imports of coal from them. With a view to obtaining the exemption of German and British coal under the treaties, importers have taken the case to the Customs Court where it is now pending.
Both the German and the British Governments have heretofore protested against the collection of the duty as a violation of their treaty rights. This Department considers their protests to be well founded. A note dated April 10 from the German Embassy again raises the question and intimates that if a satisfactory adjustment of this matter is not soon forthcoming the German Government will consider itself free likewise to disregard the provisions of the treaty. By virtue of the treaty of 1923 American commerce is assured the benefit of reductions made by Germany on numerous products under commercial treaties with other countries. If these guaranties should be withdrawn, American trade might be subject to discrimination on a most extended scale. In view of the importance of the German market and the pressing need in these times to maintain all existing market outlets for American products, the possible withdrawal of these benefits is a matter of serious concern.
The Department of Justice and the Treasury Department represent the interests of this Government in the case brought against it by the importers. It is recommended that the Attorney General and the Secretary of the Treasury be requested to take such steps as may be feasible to expedite an adjustment of this matter in a manner consistent with the treaty rights of Germany and Great Britain. I am informed that if the decision of the Customs Court should be favorable to the importers and the collectors of customs were notified that the Government will not appeal, German and British coal might at once be exempt from the tax. It is recommended that the heads of the two departments mentioned be requested to take this action if the decision of the Customs Court is favorable to the importers; or, whatever the decision of the Customs Court may be, to take such action as their familiarity with the circumstances and the legal procedure involved may indicate to be best suited to effecting an early termination of the treaty violations by the United States.78
- In a memorandum of May 17, 1933, the President considered the position taken up by the Secretary of State in this matter as “wholly justified” and said that he had referred the letter to the Attorney General “with the request that he also take it up with the Secretary of the Treasury.” (611.623 Coal/50)↩