811.24 Raw Materials/959
The Under Secretary of State ( Welles ) to the Secretary of the Treasury ( Morgenthau )
Dear Henry: I have been able to secure the following information on the question raised in your inquiry of May 7, 1940,7 namely, as to whether anything had been heard from the Attorney General about the reexport of tin and rubber:
I understand that the Tin Trade Association, the Rubber Trade Association, and the Commodity Exchange, dealing in tin and rubber, had had under consideration the possibility of requiring clauses in contracts of sale providing that the tin or rubber sold should not be reexported in conflict with this Government’s policy, but that the membership of these organizations had hesitated to adopt such a measure because of their fear that it would be contrary to the provisions of the Sherman Anti-Trust Act,8 and that, therefore, they would be liable to either criminal or civil suits. This matter was taken up informally with the Department of Justice, and not long ago Mr. Thurman Arnold, Assistant Attorney General, advised that the Department of Justice is not able to give in advance approval to any combination or agreement in restraint of trade on the assumption that it would be reasonable and therefore legal, but that it recognizes that it is necessary to give whatever protection can be given under the law to business men who act in good faith, and he suggested procedure under which the proposed action could be brought formally to the attention of the Department of Justice.
[Page 256]This Department has transmitted to the three associations mentioned above the information furnished by Mr. Thurman Arnold and invited them to place the entire matter before the Attorney General by letters transmitted through this Department, so that supporting memoranda prepared in this Department and in the War and Navy Departments might be sent to the Attorney General at the same time. The matter is now before the two trade associations and the Commodity Exchange, and presumably they will submit letters to the Attorney General shortly unless they find too much opposition to this action within their membership.
Officers in this Department who have been following this matter closely advise me that discussions and correspondence with the interested parties have brought out the fact that the formal inclusion in contracts of the proposed clauses governing reexports will be relatively ineffective as a deterrent to undesired exports, since such action would be supported by no penalty which could be enforced in the courts. Presumably, the main problem is still in securing the voluntary cooperation of all of the private interests concerned in this country, and I am told that very good progress has been made in that direction. The large exports of tin and rubber which took place soon after the outbreak of war are not continuing, and the Amtorg Corporation9 in particular is now finding it difficult, if not impossible, to secure either commodity in this market.
Sincerely yours,