The Ambassador in the United Kingdom (Kennedy) to the Secretary of State
[Received April 22—9:35 a.m.]
1019. Referring to Department’s instruction 1276, March 14, 1940,52 regarding American Tobacco Company, matter has been thoroughly discussed with Board of Trade which has communicated informally [Page 114]after due consideration its refusal to allow tobacco imports on credit, basing the decision on grounds which it is believed may be of immediate interest to the Department. Board states
“There are two main reasons for this refusal. The first is that the Treasury do not regard a loan from an associated company as justifying the issue of a license to import which would not otherwise have been granted. As you know, I think, the Import Licensing Department have had many similar proposals made to them on other products and all have been turned down. In the second place you will I am sure appreciate that it would be very difficult indeed for us to maintain a position in which this one American Company was able to get supplies of tobacco while all British companies were precluded from doing so.”
Board still considering permit for one previous transaction. Despatch follows.53 I personally discussed this whole matter with Sir William Brown54 and he told me that before any decision would be made it would be taken up with Duncan, President Board of Trade. There are some angles of this situation that seem to me quite serious. When Simon originally told me they were cutting out tobacco purchases in order to conserve sterling he made it clear that it certainly was not done with the idea of hurting American tobacco growing. Now here is an opportunity to buy tobacco without losing sterling and I am not at all sure this refusal may not encourage the belief that the British want to do away with American tobacco buying. Of course there is also the danger that some people may believe that purchases on credit that might be made from American companies are being held off to increase the pressure on the broad question of credit for all purchases.