Foreign Relations of the United States Diplomatic Papers, 1937, General, Volume I

711.00111 Armament Control/1610a

The Secretary of State to Diplomatic and Consular Officers in the American Republics

Diplomatic Serial No. 3338

Washington, December 17, 1937.

Sirs: Reference is made to Diplomatic Serial No. 2613 of November 21, 1935,¹ in regard to the exportation of arms, ammunition, and implements of war. Since questions have been from time to time addressed to the Department in regard to the policy laid down in this instruction, it has been deemed advisable to offer, for the consideration and guidance of diplomatic and consular officers, the following clarification of that policy.

A long-standing policy of this Government, dating from the Administration of President Harding, has consistently maintained that representatives of the Government shall not encourage the export trade in arms and munitions of war. Since December 1932, this policy has been embodied in a series of circular instructions to the field and in numerous and frequent communications with individual missions and consulates. In May 1933, the Secretaries of War, the Navy, and Commerce were specifically requested by the Secretary² to emphasize the importance of this policy to those of their officers who might, in the course of their duties, have to deal with the export trade in arms and munitions of war.

The most recent circular instruction issued by the Department on this subject, and that which sets forth the Government’s current policy in this regard, is the above-mentioned Diplomatic Serial of November 21, 1935. The central paragraph of this instruction reads as follows:

“It is not the policy of this Government to encourage the export trade in arms, ammunition, and implements of war. American diplomatic and consular officers should not, therefore, proceed on their own initiative to promote American trade in arms, ammunition, and implements of war and should not endeavor to create trade opportunities for American exporters of such articles. They should, however, in countries to which the exportation of these articles is not prohibited, when requested to do so by American exporters or their agents or by prospective purchasers, follow the same procedure in giving information and advice as they would follow in respect to the trade in any other commodity, except, however, that in order to disassociate the American Government from the promotion of the export trade in arms, ammunition, and implements of war, they should decline to use official channels for the communication of inquiries or offers between prospective purchasers and sellers.”

There then follows a list of the arms, ammunition, and implements of war enumerated in the President’s Proclamation of September 25, 1935,³ after which appears this sentence:

“The list of arms, ammunition, and implements of war enumerated above should not be considered as exhaustive but it will serve as an indication of the nature of the articles to be considered as arms, ammunition, and implements of war for the purposes of this instruction.”

Copies of this instruction were also transmitted to the Secretaries of War, the Navy, and Commerce with the request that they bring it to the attention of their officers in the field.

The motives which prompted this Government to adopt such a policy are too obvious to require more than brief reference. Since we, as a nation, had again and again reiterated our determination to do all in our power to preserve the peace of the world, since we had participated earnestly and whole-heartedly in disarmament conferences, had signed and ratified the Convention of 1925 for the control of the traffic in arms,⁴ and had, in 1934–35,⁵ sponsored a proposal for strengthening this Convention, it could not but seem inconsistent for representatives of the Government to participate in the sale abroad of those very weapons the dissemination of which we were endeavoring to check, and by such participation to stimulate and feed the national suspicions and rivalries which it was the chief aim of our foreign policy to abate. Furthermore, the abuses of the arms traffic, involving in many cases the artificial creation of war scares and the bribery of government officials, were at this time becoming more and more apparent. With the warm approval of the President, the Nye Committee was set up to investigate these abuses, and its revelations did at least prove indisputably that the arms business was not one with which representatives of the United States Government should be associated. In fact, the findings of the Committee regarding the extent to which some of our representatives abroad had participated in the arming of other powers caused a profound shock to public opinion which is still reflected in the numerous bills introduced at each session of the Congress providing for a nationalization of the arms industry and for a complete prohibition of the export of arms.

The policy, therefore, of refusing to encourage the export of arms and of disassociating representatives of the Government from the arms traffic could not but appear to be a wise and a logical one. Recently, however, some of our Government’s representatives abroad, including, in a few cases, representatives from this Department, have intimated that they felt the policy placed us at too great a disadvantage, both commercially and politically, in certain foreign countries, chiefly in the American republics. The point of view of these officers is easily understandable. They see the representatives of European governments participating openly and actively in the sale of armaments produced in those countries and not hesitating to exert political and economic pressure on governments of the American republics in order to induce them to purchase arms which are of a quality definitely inferior to the corresponding product of the United States. When such methods are successful, our representatives are obliged to observe the infiltration of the influence of the nation making the arms sale into the army, navy, or air force of the country to which the sale has been made, and the establishment of the European product in the market, perhaps for a period of years. Both American officers charged with the promotion of our export trade and those charged with our political relations with the countries to which they are accredited cannot but be troubled at these developments and cannot be expected to refrain from questioning at times the value of the policy itself. Confronted by their questions, however, we must reply with two others:

Is it our policy in regard to the traffic in arms which is really responsible for the comparative success of our European competitors in certain American countries? and

Would the abandonment of our policy and the frank participation in the scramble for arms markets ultimately improve or injure our political and economic relations with the American republics?

Most military, naval, and aviation officers of the American republics prefer materials from the United States because they believe that the quality is better. When the decision is left in their hands, the purchases are usually made in this country. Why, then, do so many orders go to Europe? The answer is simply that European governments are willing to accept methods of payment from countries lacking in foreign exchange which United States private manufacturers are unwilling or unable to take. A wealthy country such as Argentina, which is able to pay cash, concentrates her buying here. In the last two years, she has purchased arms, ammunition, and implements of war in the United States valued at about eight million dollars. Countries deficient in foreign exchange, however, are obliged to buy from sellers who will accept at least partial payment in copper, nitrates, coffee, cotton, and other commodities. Only in exceptional cases are American private manufacturers in a position to take such means of payment for they generally have no way of marketing the commodities in the United States. In fact, the United States is frequently already importing all of that particular commodity which it can reasonably be expected to consume. In cases of this kind, therefore, salesmanship of any sort by our representatives in the arms-purchasing country would be absolutely futile unless this Government were willing to offer terms comparable to those offered by European governments. This Government could not do so, however, unless it was prepared to modify radically the system under which American foreign trade is now being conducted. And even if it should attempt to do so, it would soon find that it was competing with, and perhaps forcing out of business, private United States importers of South American commodities.

It would seem, then, that the answer to our first question—is it our policy in regard to the traffic in arms which is really responsible for the comparative success of our European competitors in certain American countries—must be in the negative. The basic reason is that European countries will accept payments in kind. The proper way to overcome this obstacle would seem to be by other means than by permitting our representatives in the American republics to encourage actively the sale of United States arms.

The answer to the second question—would the abandonment of our policy in regard to encouraging arms sales ultimately improve or injure our political and economic relations with the American republics—would seem to be even more categorical. We are making every effort to promote the policy of the good neighbor throughout the Western Hemisphere. If it became known that our representatives were encouraging the purchase of arms by any given countries, the repercussions in other contiguous countries might well be such as to nullify all our recent efforts to cement friendly relations with all these powers.

Furthermore, would the American republics be inclined to accept as sincere the frequently expressed desire of the United States for the limitation of armaments, if at the same time this Government were actively endeavoring to persuade those republics to increase their armaments for the profit of our arms manufacturers? Finally, would American investors in South American nitrate and copper companies welcome the pursuance of an arms export policy by this Government which would have the effect of preventing or limiting the sale in Europe of the commodities which these companies produce?

The problem has many facets and it would be most unwise to attempt to treat it merely as a question of commercial and political rivalry between ourselves and certain European powers. While sympathizing fully with the disappointment of our representatives who are obliged to observe without being able to prevent increases in the political and commercial prestige of our European rivals, we must nevertheless recognize that under the circumstances now obtaining in many of the American republics the adoption of an active policy in regard to our arms export trade would not only be futile so long as we are not disposed to accept payments in kind, but would probably in the end weaken rather than strengthen our prestige throughout the hemisphere.

In support of these conclusions, there is quoted an excerpt from a memorandum⁶ prepared by the Counselor of the American Embassy in Santiago in regard to the recent purchase by Chile of airplanes in Italy and Germany. Mr. Frost’s statements are perhaps the best answer to those who wish to abandon our traditional policy in regard to the traffic in arms.

“Deep disappointment probably prevails in some American commercial quarters. The high standing of our aviation, due to Panagra (with Government subsidy), and other firms, has failed of its proper result, it is felt. There have been hints that the American Government might well (a) have intervened on behalf of our manufacturers in the same manner as did the German and Italian Governments, or might (b) in some vague and unspecified manner have waived its policy against barter or compensation agreements.

• “(a) It is true that Chilean officials have publicly adverted to the fact that our Government has shown none of the interest which the other two governments have so unctuously displayed. Germany showered honors upon the Chilean Mission, and in Italy General Aracena was received by Mussolini, and was given a royal decoration. The very dignity of our conduct, however, will be an element of strength in the future efforts of the Department in connection with disarmament. Chile has received a striking and unchallengeable proof that Washington is completely sincere in its readiness to forego American benefit, both economic and political, for the sake of discouraging international rivalry in armament matters.… It may also be borne in mind that attempts at intervention by our Government would certainly have aroused criticism and all feeling. The Germans and Italians would have been resentful, and the Chilean officials distrustful. The Chilean Opposition, which as things have developed has become pro-American as to aviation material, would just as joyfully have seized upon an occasion to denounce American imperialism and militarism.
• “(b) As to the American policy with regard to official barter agreements and blocking of international credits, American aviation representatives probably do not understand that no legal means exist for suspending it in connection with individual commercial proposals. They do not realize, moreover, that even if this could be done any attempt to place Chilean nitrate sales in the United States on a compensation basis would at once react adversely not only upon our nitrate investors but also upon our holders of Chilean bonds, our miscellaneous corporations operating in Chile, and our exporters whose goods are subject to Chilean tariff rates. Furthermore, again, as in the case of the possibilities for the political intervention mentioned just above, any attempts at economic intervention through facilitating a compensation plan would have been as likely as not to have met, after all the storm they would have raised, with a failure which would have been both ignominious and harmful.

. . . . . . . . . . . . . .

“Despite the commercial loss, however, and even despite the serious international political loss, our moral position has not been weakened but strengthened. The calm adherence by our Government to its policies will in all practical probability inure ultimately to the benefit of our country, and of other countries, in the upper strata of international affairs.” (Underscoring supplied)

In conclusion, we must not forget the repercussions which the abandonment of our policy in regard to arms exports might have in this country. A very sensitive public opinion has been created here on the subject of the munitions trade. If it became known, as it sooner or later certainly would, that this Government was once more participating in efforts to promote the arms traffic, the Government would be subjected to very strong criticism. Furthermore, the sentiment already existing in Congress in favor of prohibiting altogether the export of arms, ammunition, and implements of war would be strengthened and might well eventually crystallize in the enactment of a law imposing this prohibition notwithstanding the frequently expressed opinions of the Secretaries of War and of the Navy in regard to the effect which such a prohibition would have upon our national defense.

All in all, therefore, from every point of view—that of foreign trade policy, that of our relations with our American neighbors, that of internal politics, and that of national defense—it would seem to be the part of wisdom and prudence to continue to follow our traditional policy in regard to the association of the Government with the traffic in arms.

Very truly yours,

For the Secretary of State:

Sumner Welles

1. Foreign Relations, 1935, vol. i, p. 354.
2. No record of written communication found in Department files; a communication in this regard was sent to the Secretaries of War, the Navy, and Commerce, November 7, 1933 (811.113/345).
3. Department of State, Press Releases, September 28, 1935, p. 222.
4. Foreign Relations, 1925, vol. i, p. 61.
5. At the Conference for the Reduction and Limitation of Armaments, Geneva; see ibid., 1934, vol. i, pp. 1 ff., and ibid., 1935, vol. i, pp. 1 ff.
6. Copy transmitted to the Department by the Ambassador in Chile in his despatch No. 719, September 24; received September 30.