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511.3 B 1/100: Telegram

The Minister in Switzerland (Grew) to the Secretary of State

BERNE, September 29, 1922-3 p.m.

[Received September 30-10:55 a.m.] 83. Legation's 74, September 3, noon. Assembly of League of Nations on September 27th passed the following resolutions submitted by the Committee on Reduction of Armaments:

"(a). The Assembly considers it highly desirable that the Government of the United States should express the objections which it has to formulate to the provisions of the Convention of Saint Germain as well as any proposals which it may care to make as to the way in which these objections can be overcome.

(b). The Assembly is of the opinion that the temporary mixed commission should be instructed to prepare a scheme for the control of the international traffic in arms to be considered by the conference which is to deal with the private manufacture of arms.

(c). The Assembly requests the Council to take such steps as it thinks advisable to carry out the purposes above indicated."

GREW

STATEMENT DEFINING THE INTEREST OF THE DEPARTMENT OF STATE IN THE FLOTATION OF FOREIGN LOANS IN THE AMERICAN MARKET

811.51/3108

The Foreign Trade Adviser (Young) to the Assistant Secretary of State (Dearing)

[Extract]

[WASHINGTON,] February 1, 1922. MR. DEARING: Following the White House Conference with certain New York Bankers in June, 1921, concerning cooperation with the Government in undertaking foreign loans, these bankers gave assurances to the President that:

"All are in complete accord with your suggestion, and agree to keep the State Department fully informed of any and all negotiations for loans to foreign governments which may be undertaken by them.00

However, subsequent developments indicated that the attitude and desire of this Department were not clearly understood, and it was determined to issue a public statement on the subject. After careful consideration, a draft statement was prepared and communicated to the Secretaries of Commerce and the Treasury on December 7, 1921.91

90 Quoted from a letter of June 6, 1921, from Mr. J. P. Morgan to President Harding; not printed.

01

"Not printed.

The mounting indebtedness of Europe, especially, to the United States makes more necessary than ever before the careful scrutiny of proposed loan transactions. This Government also has a very direct interest in seeing to it that loans to foreign governments are used for productive ends and not for military expenditures or to make up budgetary deficits. On January 12, 1922, the President wrote as follows to the Secretary of State:

"I do not suppose there is any way in which we can absolutely control American loans, but I do think that our efforts for accomplishment in the way of disarmament ought to justify a request to American bankers that no loans shall be made to any power which is making either maintained or increased expenditures for armament purposes."

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Accordingly, it is suggested that this Department issue a public statement in the sense of the attached draft 22 as soon as possible. . . A[RTHUR] N. Y[OUNG]

800.51/2871⁄2

Press Release Issued by the Department of State, March 3, 1922

FLOTATION OF FOREIGN LOANS

At a conference held last summer between the President, certain members of the Cabinet and a number of American investment bankers, the interest of the Government in the public flotation of issues of foreign bonds in the American market was informally discussed and the desire of the Government to be duly and adequately informed regarding such transactions before their consummation, so that it might express itself regarding them if that should be requested or seem desirable, was fully explained. Subsequently the President was informed by the bankers that they and their associates were in harmony with the Government's wishes and would act accordingly.

The desirability of such cooperation, however, does not seem sufficiently well understood in banking and investment circles.

The flotation of foreign bond issues in the American market is assuming an increasing importance and on account of the bearing of such operations upon the proper conduct of affairs, it is hoped that American concerns that contemplate making foreign loans will inform the Department of State in due time of the essential facts and of subsequent developments of importance. Responsible American bankers will be competent to determine what information they should furnish and when it should be supplied.

"Not printed; the Department's statement as issued on Mar. 3 is printed infra.

167952-38—vol. 1- 43

American concerns that wish to ascertain the attitude of the Department regarding any projected loan should request the Secretary of State, in writing, for an expression of the Department's views. The Department will then give the matter consideration and, in the light of the information in its possession, endeavor to say whether objection to the loan in question does or does not exist, but it should be carefully noted that the absence of a statement from the Department, even though the Department may have been fully informed, does not indicate either acquiescence or objection. The Department will reply as promptly as possible to such inquiries.

The Department of State can not, of course, require American bankers to consult it. It will not pass upon the merits of foreign loans as business propositions, nor assume any responsibility whatever in connection with loan transactions. Offers for foreign loans should not, therefore, state or imply that they are contingent upon an expression from the Department of State regarding them, nor should any prospectus or contract refer to the attitude of this Government. The Department believes that in view of the possible national interests involved it should have the opportunity of saying to the underwriters concerned, should it appear advisable to do so, that there is or is not objection to any particular issue.

EFFORTS TO COMBAT THE Smuggling OF INTOXICATING LIQUORS INTO THE UNITED STATES IN VIOLATION OF THE PROHIBITION LAWS 93

811.114/204

The Secretary of State to the Secretary of the Treasury (Mellon)

WASHINGTON, January 17, 1920. SIR: I have the honor to enclose for your consideration a copy of a memorandum of January 14, 1920, from the Italian Embassy,94 stating that it is in receipt of a telegraphic communication from the Italian Consul General at New York, from which it appears that the Collector of Customs at that port, acting under instructions from the Treasury Department, has had all the wine on board foreign steamers lying in that port put under seal; that the action of the Collector of Customs in preventing the crews of Italian steamers from getting their daily quantity of wine, to which, it is alleged, they are entitled under contract, has caused an agitation among them; and that while the members of the crew of the S. S. Pesora are on

03

The eighteenth amendment to the Constitution of the United States is printed in 40 Stat. 1941, and the national prohibition act of Oct. 28, 1919, in 41 Stat. 305.

"Not printed.

strike, others threaten to do the same; and requesting that if possible a way may be found by which the law may be so construed that the crews of Italian steamers in United States ports may be permitted their daily ration of wine. Pending a decision in the matter, the Embassy requests that if possible the instructions issued by the Treasury Department to the Collector of Customs at New York may be at least temporarily suspended.

In view of the practice (See Moore's International Law Digest, Vol II, p 286, et seq.), observed by states generally, not to interfere, through their authorities, in the internal administration, order or discipline of foreign vessels in their ports, unless it becomes necessary to do so in a case involving, or threatening to involve, a breach of the peace of the port or the commission of a crime, the Department trusts that, if consistent with existing laws applicable to the matter, it will be possible to comply with the Italian Embassy's request.

95

In this connection, I may state that the Department has received from the French Embassy a verbal complaint of a similar nature," concerning the action of the Collector of Customs at New York, in so far as it affects French vessels in that port. It is requested that any regulations adopted, or any steps taken in the matter, be made applicable to all foreign vessels in United States ports.

I shall be pleased to receive an early reply, indicating the action taken by the Treasury Department, in order that an answer may be promptly made to the Italian Embassy's memorandum.

I have [etc.]

For the Secretary of State:

ALVEY A. ADEE Second Assistant Secretary

811.114/212

The Secretary of the Treasury (Mellon) to the Secretary of State

96

WASHINGTON, January 27, 1920.

SIR: Reference is made to your letter of the 17th instant, (File SO 811.114/204) with its enclosure of a communication from the Italian Embassy 9 regarding the practice of collectors of customs under T. D. 38218, of sealing liquors listed as sea stores on vessels arriving in ports of the United States, and keeping them under seal during the vessel's stay in port.

95

"A note from the French Ambassador dated Jan. 12, 1920, making similar representations, was received by the Department on Jan. 17; not printed. Not printed.

You are advised that following the receipt of an opinion rendered by the Attorney General in the matter," this Department has prepared for publication as a Treasury Decision 98 at an early date, an amendment to the decision mentioned above, by reason of which liquors on foreign vessels will be placed under seal while the vessels are in port and such portions thereof released from seal from time to time as may be required for use by the officers and crews.

Appropriate instructions have been issued to collectors of customs at the various ports by telegram directing a modification of their practice in accordance with the foregoing.

By direction of the Secretary.

Respectfully,

JOUETT SHOUSE
Assistant Secretary

811.114 Gt. Brit./22

The Secretary of State to the British Ambassador (Geddes)

WASHINGTON, June 26, 1922.

EXCELLENCY: I have the honor to lay before you certain important considerations with respect to a possible cooperation on the part of British and American authorities with regard to the smuggling of liquor. The authorities of the United States charged with the duty of enforcing the law of this country with respect to this matter are confronted by serious difficulties which they feel might be effectively met with the assistance of British authorities in British territories, which it appears are made bases of operations in flagrant violation of constitutional and statutory provisions of the United States. It is understood that the importation of intoxicating liquors into the Canadian Provinces of Nova Scotia, Manitoba, Saskatchewan and Alberta, is also prohibited by law.

I venture to submit definite suggestions as to methods by which the existing extremely unfortunate conditions might be remedied. It is believed that effective measures for this purpose might be taken by a careful supervision of the issuance of registries to vessels suspected of being engaged in illegal traffic and of the issuance of clearance papers for such vessels, and by an international arrangement between the United States and Great Britain under which the authorities of each nation would be authorized to exercise beyond the three-mile limit of territorial waters a measure of control over vessels belonging to the other.

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