648T.116/18

Memorandum by Mr. Gordon P. Merriam of the Division of Near Eastern Affairs

I asked Mr. Ward40 for his views on the desirability of forwarding to the British Government a note such as the one drafted last summer,41 [Page 864] pressing the British on the question of trade restrictions which discriminate against imports of American goods into Palestine, British mandated territory in Africa, and British territory in the Congo Basin.

Mr. Ward considers that we have a clear case against the British of violation of treaty rights. This was made a matter of record by the Embassy’s communications to the Foreign Office of December 21, 1939 and January 16, 1940.42 After initialling the draft of a further communication, Mr. Ward came to the conclusion that, in view of the difficulties under which the British were operating, their position, while legally unjustifiable, was reasonable because the conservation and channelling of available dollar exchange to pay for armament manufactured in the United States was for them a matter of survival which outweighed the legal aspects of the matter and could even be considered as in our own basic self-interest. Moreover, since at that time there was no way to ship American goods to Palestine, the matter was in large part academic. Accordingly, Mr. Ward felt that it would be best to hold the instruction in abeyance.43

In the meantime the situation as regards Palestine has changed in two respects. The authorities there, from experience gained over the past few months, have decided that certain commodities, regarded as essential, can be secured from the United States and from no other source. They are allowing, or will allow, these to come in. Moreover, the question of transport from the United States, while far from satisfactory, is not quite as difficult as before. These are, however, minor factors.

Mr. Ward notes, however, that present developments point to the definite possibility or likelihood that in the near future, by one means or another, British war requirements from the United States will be financed by this country. If and when that occurs, it is to be presumed that the British need of dollar exchange will be greatly reduced. For that reason, and because of the important financial service which would be rendered by this country, Mr. Ward considers that when such an arrangement is in definite form and working order we could very properly approach the British again in regard to the discriminations against our trade, but he does not believe the time to do so has arrived quite yet.

We did, of course, press the French on the matter in August and apparently got no reply whatever.44 The French were then no longer fighting or receiving war materials or much of anything else from the United States. Another justification for handling the British and [Page 865] the French differently in the matter, which seems to bulk rather largely in Mr. Ward’s eyes, is that the French reply to our original representations was short, vague, and nasty, whereas the British reply gave every evidence of careful consideration on their part and of a desire to fulfil their legal obligations to the greatest possible extent, and they went to some pains to justify their departure therefrom by overwhelming necessity.

  1. Frank X. Ward, Assistant to the Legal Adviser.
  2. Not printed.
  3. Ante, pp. 862 and 119, respectively.
  4. The instruction was not sent.
  5. See pp. 926 ff.