740.00112 European War 1939/1641

Memorandum of Oral Statement by the British Ambassador (Lothian) to the Assistant Secretary of State (Grady)

On January 4th [2d?] Mr. Grady discussed the working of the Navicert System with the British Ambassador and stated that the absence of any advice to the contrary had led the Department to believe that the four assumptions in regard to the working of the system [Page 9] which had been informally notified to Sir Owen Chalkley on November 9th were correct. The British Ambassador explained that from the account given to him immediately afterwards by Sir Owen Chalkley and the other representatives of the British Embassy who had been present at the meeting at the State Department on November 9th he was quite certain that there had been a misunderstanding and that on the British side it had not been understood that the absence of a reply would be interpreted as an acceptance of the four assumptions.

The exact meaning of the four assumptions had then been discussed between Mr. Grady and the Ambassador. As a result of consultation with His Majesty’s Government the Ambassador had been instructed to reply that it is not possible for the British Government to accept the four assumptions in the form in which they were formulated but to submit the following explanation of the working of the Navicert System which it is hoped will meet the questions at issue.

Where agreements for the limitation of imports have been entered into between Great Britain and neutral states such as Sweden and Norway, the issue of navicerts is governed by the limits set forth in these agreements. Where it has proved impossible to reach agreements, usually because of the neutrals’ fear of German reprisals and consequent preference to be compelled to submit to force majeure, the rationing or restrictions of imports into these countries is effected by the contraband controls set up at Kirkwall, the Downs, Gibraltar and elsewhere. The sole purpose of these controls is to prevent supplies essential to the prosecution of the war from reaching Germany. Statistics show that neutral countries contiguous to Germany have since the outbreak of war been importing many essential commodities in quantities far in excess of the normal. A case in point is that of lubricating oils the statistical position as regards which in Scandinavian countries, and in Belgium and Holland is causing His Majesty’s Government much anxiety. The rationing of neutrals therefore is not effected through navicerts issued in the United States but by the system of contraband control and by the contraband control stations in European waters. The navicert is in effect simply a visa to facilitate the rapid transit of goods through the contraband control points by making unnecessary in all ordinary cases their examination there. American importers are of course at liberty to export goods to neutral ports without a navicert. Navicerts are simply a convenience to everybody to obviate the delays which would otherwise be inevitable at the contraband control points if the character of the goods or cargoes had to be examined there instead of being investigated before shipment.
The British Government understands that there is a natural anxiety on the part of the State Department lest the Navicert System should be used directly or indirectly to transfer trade from American [Page 10] to Allied firms or from the United States to other countries. His Majesty’s Government have authorised the Ambassador to give an assurance that it would not be so used.
At his last interview the Ambassador explained that it was impossible to give explanations to every applicant for a navicert whose application was rejected, because it would lead to endless controversy and probably litigation. His Majesty’s Government would be willing, unless there were strong reasons to the contrary, to acquaint the United States Government unofficially with the facts in regard to any cases in which they are especially interested or which may involve particular difficulties. They suggest however that as the decisions about navicerts are taken in the main in London and not in Washington these enquiries should ordinarily be made through the United States Embassy in London which can approach the Department concerned direct, though there may be cases in which it would be possible for the Ministry to supply answers through the British Embassy in Washington.