811.114 British Honduras/191

The British Ambassador ( Lindsay ) to the Secretary of the Treasury ( Morgenthau )51

My Dear Mr. Secretary: You will doubtless recall that during Mr. Osborne’s discussions with officers of your Department regarding measures which might be taken by the various British West Indian Colonies to assist the United States authorities in the suppression of liquor smuggling, it was suggested to Mr. Osborne that such measures might include the refusal of clearance for the high seas and the exaction of landing certificates.

These proposals were communicated to the Colonial Governors concerned and I am now happy to be able to inform you of the steps which have been taken to meet the wishes of the United States Government.
The Governors of the Barbados and British Honduras have issued instructions to the effect that clearance for the high seas will not be permitted in the future, while the Governor of Bermuda reports that it is the ordinary practice for clearance to be refused unless the port and country of destination are declared, and adds that instructions have been issued that there should be no departure from this practice. Finally, the Governor of Bahamas has given an assurance [Page 425] that the “high seas” has never been accepted as the legitimate destination of cargo.
With regard to the request that a bond should be exacted on shipments of liquor, which would be redeemable by the production of a landing certificate issued by the appropriate authorities at the port of destination, the Governor of Barbados has undertaken to adopt the necessary arrangements as has also the Governor of British Honduras, though the latter proposes to exempt small craft engaged in the regular trade as this trade would otherwise be seriously affected. The craft in question are understood to be too small to be engaged in trade with the United States.
In Bermuda the bond system is already in operation in respect of goods exported from a warehouse and it is my understanding that the United States authorities are satisfied that it is being adequately enforced.
The case of the Bahamas is different in that the introduction of a bond and landing certificate system cannot be effected by an order on the part of the Governor, but only by local legislation and, according to a report from the Governor, any measure for introducing this system would be certain to be thrown out by the Legislature. Any introduction of the system in these islands is therefore considered impracticable.
On the other hand, conditions in the Bahamas are also peculiar, in that on all liquor imported into the Islands the whole duty is payable, whether that liquor is consumed or re-exported and whether it is kept in bond or in open stocks. No drawbacks are granted for export purposes. Any liquor exported from the Bahamas has therefore been subjected to one set of customs duties already, a fact which renders smuggling from the Bahamas appreciably less remunerative than smuggling from any place where storage in bond free of duty or a drawback on exports is allowed. In other words, the conditions which the bond system was devised to resist—i. e. re-export for smuggling purposes of liquor which has paid no duty—do not exist in the Bahamas.
The Governor of Bahamas has the impression, which is confirmed by the most recent reports of the United States Coast Guard, that the smuggling of liquor from the Bahamas into the United States is at present almost non-existent. The Government of the Bahamas are however very willing, as are the Governments of the other British West Indian Colonies, to cooperate energetically with the United States authorities for the suppression of smuggling and they are prepared to ensure that the existing means of suppression will be fully exploited and rigorously applied.
I would add in this connexion that the British West Indian Colonies have been invited by the Colonial Office to communicate to local United States Consular Officers information about the movements of ‘interesting cargoes’ on lines precisely similar to those adopted by the United Kingdom Customs Authorities. It is understood that these arrangements are working satisfactorily. Indeed the most recent reports would seem to show that the efforts made both in Newfoundland and in the West Indies to assist the United States authorities have been gratifyingly effective.
I am sending a copy of this letter to Mr. Phillips at the State Department in view of an enquiry which I have recently received from him.53

Believe me [etc.]

R. C. Lindsay
  1. Copy transmitted to the Under Secretary of State by the British Ambassador with his letter of August 1 (not printed).
  2. Not printed.