740.00112 European War 1939/258

Memorandum of Conversation, by Mr. Leroy D. Stinebower of the Office of the Adviser on International Economic Affairs

Participants: British Embassy: Sir Owen Chalkley16
Mr. Keith Officer17
Captain Curzon-Howe18
Mr. Foster19
U. S. Navy: Captain Schuirmann
Captain Moore
State Dept.: Mr. Moffat20 Mr. Hickerson23
Mr. Feis21 Mr. Alger Hiss24
Mr. Hawkins22 Mr. Stinebower

Mr. Feis opened the discussion by referring briefly to the conversation between the Secretary of State and the British Ambassador to the effect that it might be desirable for the two Governments to explore in a preliminary way questions arising out of the British interference with American trade with neutral countries with a view to avoiding or minimizing as much as possible many of the problems and difficulties which arose during the last War. After communicating with his Government, the Ambassador had indicated that the British Government was agreeable to such discussion. Sir Owen Chalkley verified these terms of reference, adding his understanding they were to be only exploratory conversations, the object being to minimize to the greatest extent possible delays to American ships and cargoes which are inevitable in the present circumstances. It was further mutually understood that for various reasons, the conversations would be conducted with only northern neutrals in mind. These were defined as the Oslo group of nations. The question of whether the northern neutrals include Estonia, Lithuania, and Latvia was by agreement left open.

It was agreed to dispense with any review of the statistics of the trade of the United States with the northern neutrals on the understanding that such information would be sent promptly to the British Embassy. It was added orally, however, that it should be kept in mind that a certain part of American trade with those countries has normally been transshipped through German free ports or through [Page 729] the United Kingdom, and that the recorded figures would tend to understate total United States exports.

As a final orientation of the problem, Mr. Feis recalled that the trade of the United States with the neutral area is very substantial and that in one sense the Oslo group of nations constitutes the leading area of the world which is conducting trade along the lines of the American trade agreements system, and that for these reasons our trade with those areas assumed a position of great importance to us.

Mr. Foster then briefly reviewed the system of control adopted by the British during the last War. Because cargoes on neutral ships were subject to very serious delay by British investigation, various devices were adopted. At first shipping companies on their own initiative started sending cables of inquiry to London giving information as to their cargoes and asking whether they would be permitted to pass through the British blockade to neutral countries. Sometimes these inquiries were answered and other times not. These were followed by “letters of assurance” which some shippers obtained in advance of shipment. The difficulties that arose in this case, however, arose out of the fact that some cargoes in a given ship would have letters of assurance whereas others would not and the ship would be delayed anyway.

These preliminary systems were followed by the “Navicert” system. Fairly comprehensive notice was given to shippers in advance that the system was to be imposed. Following that, the prospective shipper would obtain a form from the nearest British consul on which he gave very extensive information as to the cargo, consignee, et cetera. These forms were then sent to the British Embassy, or some central clearing authority, and in some cases referred to London for an indication as to whether the cargo could go through or not or whether it must await further investigation. If everything appeared in order, a certificate was issued.

This system tied in with many other types of agreements between the British Government and private exporters in the United States and other neutral countries as to how much would be exported to other countries, agreements with shippers that the spirit of the blockade would not be broken, agreements with private parties or neutral governments as to import rationing, et cetera. When the United States came into the war, it joined in the same system.

Unless everything in a ship had been navicerted, there was danger that the ship might be delayed, whereas otherwise it might go through with the minimum delay, therefore shippers had agreed among themselves that everything in a given ship would be required to have received a certificate.

It was alleged that the system in the last War had worked to the satisfaction of everyone.

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Mr. Officer then briefly outlined the system now contemplated by the British, alleging that it was made to work chiefly for the “advantage and convenience of neutrals.” Simple suggestions have already been made public to shippers as to how to avoid undue delay, such as making public lists of contraband, suggesting that boats carry an extra copy of their manifests for inspection, et cetera. It now appears that the navicert system will be revived as soon as necessary details and public notice thereof can be worked out.

In response to particular questions, the following additional facts were elicited as to the operation of the system in the past:

Certificates were issued on cargo alone, not for the ship on which it moves. Certificates were good for only two months. In issuing certificates, account was taken of the amounts of imports which were permitted to neutrals under rationing controls or agreements. The navicert system was not controlled by the contraband list but many other considerations were taken into account in issuing certificates.

A question was asked whether the navicert system would enable shipment of arms, ammunitions and implements of war destined for neutral governments to move through the blockade. In reply it was stated that applications for certificates on such things as airplanes, for example, destined for the Netherlands would be more carefully examined and subject to more delay than would certain other shipments.

It is proposed to have the system worldwide in scope and in response to a question as to how the British trade with neutrals was affected, it was replied that all British trade will be closely controlled.

Mr. Chalkley then asked what systems of controls had been set up by the United States for the enforcement of the Neutrality Act25 and what controls were contemplated. In reply it was explained that the decisive control is exercised by the Division of Controls in this Department before a license is granted, that the utmost care is taken to be sure that the consignments of arms, ammunition and implements of war are genuinely destined to neutral countries. In recent days the examination has been doubly careful. The licenses so obtained are presented by the shippers at the time of shipment. Further, customs officials have begun greatly to intensify checking up on all cargo, in many cases requiring the deposit of export declarations and manifests before clearance is allowed to ships. This whole problem is still being further considered by the responsible Departments of the Government. Reference was also briefly made to the measures which the shipping companies had themselves voluntarily taken to require permits before goods can be delivered to their piers.

It was agreed that a memorandum of the new regulations and machinery for checking on export cargo from the United States would [Page 731] be prepared for the information of the Embassy and of the Department. On their part the Embassy undertook to see that all notices issued for the information of shippers would be sent to Mr. Hickerson.

Mr. Chalkley expressed the hope that it would be possible for this Government to coordinate its measures with those of the British Government so as to reduce delays and interference with American exports to a minimum. No reply was made on this point other than an agreement that both the Embassy and the Department would give thought to all of the problems raised by the discussion with a view to resuming the discussion at a later date.

Mr. Feis added that of course behind all of this discussion and the prospect of any further discussion, would lie the determination of what attitude this Government is going to take toward the whole problem of belligerent interference with our trade with neutrals. This question of policy which would have to be settled would have a determining bearing upon whatever else might be said as to the mechanics of any system which the British might set up.

  1. Commercial Counselor of the British Embassy.
  2. Australian Counselor of the British Embassy.
  3. British Naval Attaché.
  4. Legal adviser for the British Embassy with local rank of First Secretary.
  5. Chief, Division of European Affairs.
  6. Assistant Chief, Division of European Affairs.
  7. Adviser on International Economic Affairs.
  8. Assistant to the Adviser on Political Relations.
  9. Chief, Division of Trade Agreements.
  10. Approved May 1, 1937; 50 Stat. 121.