811.114 Canada/5041

The Secretary of the Treasury (Morgenthau) to the Secretary of State

My Dear Mr. Secretary: I have given careful consideration to the letter of your Department dated January 13, 1936, relating to Section 403 (a) of H. E. 9185, which would authorize the Secretary of the Treasury to declare an embargo against the importation of liquor in certain cases where the United States has a claim arising under the customs and internal-revenue laws.

With reference to the objection of the Canadian Chargé d’Affaires to the provision of that section requiring security, I am pleased to advise that this Department will recommend to the Congress that the provision be modified so as to limit the security requirement to a bond in the amount of the claim, together with interest and court costs. It will also be suggested that the provision be further modified to permit the giving of a lien on personal or real property situated in the United States in lieu of the furnishing of a bond.

I must, of course, take exception to the reference made by the Canadian Chargé d’Affaires to “exactions not now provided for in existing legal processes,” since the proposed legislation contemplates no recovery except by the usual judicial processes under a system of jurisprudence common to both countries.

The cooperation of the Canadian Government in the prevention of smuggling is appreciated, and I think this government may assure Canada that, in the instant case, it seeks no advantage which the Canadian Government should not have if the position of the two countries were reversed.

The reference to the trade agreement is, as the letter of your Department indicates, covered by the statement which was read to the Canadian Chargé d’Affaires and the Canadian Under Secretary of State for External Affaires prior to the signing of the trade agreement.

It will be recalled that, prior to the submission of this legislation to the Congress, the provision in question was the subject of extensive discussion among representatives of the State Department, the Department of Justice, and the Treasury Department. Since the Treasury Department is the department of the government primarily concerned with the proposed legislation, I shall be grateful if you will [Page 800] afford me an opportunity to discuss the matter personally with you in the event that you should decide to take any step which might retard the enactment of this legislation.

Very truly yours,

H. Morgenthau, Jr.