740.001121 Navicert/18½

Memorandum of Conversation, by the Assistant Secretary of State (Grady)

The British Ambassador3 called on me by appointment this morning and I informed him as follows:

“On October 16, 1939 Sir Owen Chalkley4 informally presented to the Department of State a statement5 that he had been ‘authorized by His Majesty’s Government to make the preliminary arrangements for the institution of a Navicert System, the object being to facilitate the legitimate trade of American exporters’ and that it was hoped ‘that the institution of this system will be welcomed and considered helpful by the United States Government’.

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“After careful consideration of this proposal from the standpoint of its numerous aspects in relation to the legitimate trade of the United States with other countries, we informally notified Sir Owen Chalkley on November 96 that, at that time we rather regarded ‘the proposed system as a matter between those American exporters who may desire to take advantage of it and the appropriate British authorities’ and that the Government of the United States had ‘no desire to take a position’ at that time with reference to the introduction of the system. It was added that ‘these comments are, however, based on the assumption that the following assertions are correct:

  • “‘1. The proposed Navicert system will in no sense be used to interfere in any way with the normal volume of exports of genuine neutral character from the United States to any neutral country.
  • “‘2. The proposed Navicert system will not be used in any way to discriminate against the United States and United States exporters.
  • “‘3. The granting or rejection of a Navicert shall be conditional upon circumstances related solely to the character of the goods and conditions in the country of importation and in no respect upon conditions related to American exporters or to the United States.
  • “‘4. Whenever applications for Navicerts are rejected, a clear, concise statement of the reasons for such rejections shall be given to the applicant for the Navicert’

“This statement was accepted by the representatives of His Majesty’s Government with the sole comment that it would be referred to London where it would receive careful consideration. This Government was given no indication that the conditions imposed were in any manner objectionable.

“On November 18 His Majesty’s representatives in Washington informally presented to the Department a statement which it was the intention of His Majesty’s representatives to give ‘to the press on Tuesday, November 21’. The Department of State naturally recognized that statement as an acceptance of the conditions specified in the Department’s statement of November 9, 1939, upon which, alone, its acquiescence in the institution of the Navicert System was indicated.

“It was, therefore, with great surprise that the Department of State received on December 14 a communication from a United States Senator notifying it that in reply to the request of an American exporter for an explanation of reasons as to why certain of his applications for Navicerts had been rejected, he had received a communication from the British Embassy in Washington reading in part as follows:

“‘With reference to your letter of December 8th, I am directed by His Majesty’s Ambassador to inform you that he regrets that he is unable to give any explanation for the rejection of any applications for Navicerts.’

The Department’s astonishment in this connection was intensified by a subsequent oral statement of Sir Owen Chalkley that the above quoted communication from the British Embassy represents British policy in this respect.

“The Department of State must, however, decline to accept such an explanation of so important and far-reaching a departure from what appeared to be a clear understanding between the two Governments with respect to the conditions under which the Navicert system would [Page 4] be instituted within the jurisdiction of the United States. The Department of State is, therefore, left no alternative than to ask for a clear and specific statement of the British Government’s attitude concerning each of the four assertions set forth in the oral statement of November 9, 1939.”

The Ambassador wanted some clarification of the above statement, which I made. He replied that he would look into the matter and discuss it with his people. He will shortly go into the matter with us again. He said that he understood our position very well but on the other hand he felt that the practice of giving reasons for the refusal of Navicerts would lead to all sorts of difficulties and possibly to lawsuits. The Ambassador informed me, confidentially, that according to the figures on Navicerts issued in December, there were 4,932 applications, 3,121 of which were granted, 40 were refused, and the balance are still under consideration. He said that it was his impression that there had been little or no complaint of the operation of the system and there possibly would be none other than an occasional protest to Senators by a few exporters.

H[enry] G[rady]
  1. Lord Lothian.
  2. Commercial Counselor of the British Embassy.
  3. Foreign Relations, 1939, Vol. i, p. 761.
  4. See memorandum by the Assistant Chief of the Division of European Affairs, November 9, 1939, Foreign Relations, 1939, Vol. i, p. 771.