711.00111 Unlawful Shipments/258
The Secretary of State to the Chargé in Canada (Simmons)
Sir: The receipt is acknowledged of your despatch no. 2424, dated July 28, 1938, transmitting a copy of note no. 107, dated July 27, from the Canadian Department of External Affairs in regard to the exportation of aircraft parts to the Canadian Car and Foundry Company, Limited, ostensibly for reshipment to Turkey, but apparently in fact for shipment to Spain.
The Department concurs in your belief that it would be advisable at this time to approach the appropriate authorities of the Canadian Government with a view to obtaining more direct and efficient cooperation in connection with the exchange of information and with a view to clarifying the position of this Government in respect to the question of future exports of aircraft and similar material to the Canadian Car and Foundry Company, Limited.
In regard to the first of these questions, reference is made to the Department’s instruction no. 1307 dated July 20, 1938.34 As stated [Page 360] in that instruction, this Government is desirous of receiving from the Canadian authorities certain additional information which is outlined in some detail in the instruction. This information will be useful in connection with the investigation now being conducted in this country to determine whether the Grumman Aircraft Engineering Corporation or the Brewster Aeronautical Corporation are subject to prosecution for a violation of the neutrality laws of this country. The results of this investigation will of course be communicated to the Canadian authorities and may well be of assistance to them in determining the responsibility of the officers of the Canadian Car and Foundry Company, Limited, for the fraudulent acts which took place in Canada in connection with these shipments.
In connection with the position of this Government in respect to the question of future exports of aircraft and similar material to the Canadian Car and Foundry Company, Limited, reference is made to the Department’s letters dated July 1 and July 6 [8], 1938, to the Brewster Aeronautical Corporation, copies of which were transmitted to you with instruction no. 1302 dated July 20, 1938.36 It will be noted from these letters that the Department has at all times been willing to issue export licenses for shipments to the Canadian Car and Foundry Company, Limited, provided the Department first receives assurances from the appropriate Canadian authorities that the articles covered by these export licenses will not be transshipped to any country to which the export of arms, ammunition, or implements of war is prohibited under the laws of this country. Information to this effect has been communicated to the applicant in the case of each of several applications recently received by the Department for license to export aircraft parts and accessories to Canada for the use of the Canadian Car and Foundry Company, Limited. Copies of these applications are enclosed.37
In communicating this information to the Canadian authorities, you may inform them that, in order to avoid undue delay in shipments to Canada, the Department is prepared to grant all applications for license to export arms, ammunition, and implements of war to the Canadian Car and Foundry Company, Limited, under a blanket assurance communicated to the Legation by the Canadian Department of External Affairs that transshipments of the character referred to above will not take place.
There are enclosed for the information of the Legation copies of despatch no. 732, dated July 9, 1938, from the American Embassy at Istanbul, Turkey,37 and a confidential communication from the War Department dated July 28, 1938, containing a paraphrase of a cablegram [Page 361] received by the War Department from the Military Attaché at Barcelona, Spain.38 There would be no objection to the communication of the substance of these documents to the Canadian authorities.
Very truly yours,