BURY COURT, ST. MARY AXE, y LONDON, E.G. 3. Reference K/W. 8th January, 1940. W. Carter Ssq,, C.B.S., Marine A. Division, Ministry of Shipping, Berkeley Square House, Berkely Square, V,.l. My dear Carter, AMERICAN NEUTRALITY ACT- This question was further considered "by the Sub-Committee of representative owners in the light of your letter of the 23st December, ref. ¦«15739/39 and of recent communications from Agents in America. You desired information as to the effect of Section 2 of the Act on British shipping, I think a letter from I.orton Lilly £ Co. of the 11th December will be of interest to you and I therefore enclose a copy. It will be seen that they state that the hardships on British vessels have not yet been alleviated and in fact the continuous change in Governmental requirements have been more exacting. The Sub-Committee confirmed that Section 2 had had a prejudicial effect on their trades to a varying extent dependent upon different factors such as nature and quantity of cargo and the proportion of British Lines to American and neutral Lines in the trades. The position in the U.S.A./South African trade was particularly unsatisfactory, for example, in some recent cases the general cargo carried by a British ship was leus than 400 tons out ol a total cargo. In fact it might be said that British shipping companies were almost driven out of these trades. In some other trades the Norwegian Lines had taken 50 of the cargo. The Par Eastern Lines were also being prejudiced and in the Indian trade one . merican Line was doubled its number of sailings to Inulan ports to care for the 4/5000 tons of oil and oil products monthly which have for over 40 years past been carried by a British Line which still holds a contract with the shippers for their transport, a contract which is of course interfered with by the Act. In general it may be said that the Section has already operated to the prejudice of/ of British shipping companies and in favour of American and neutral companies, and that it is probably that the position for British shipping will still further deteriorate. It is desired to point out that reduction in British shipping services to and from America will reduce the amount of dollars earned in America, which it is so important for the Treasury to obtain. The Chamber does not agree with the American State Department's view that the provisions of Section 2 are not discriminatory. It la true that American vessels are excluded from trades in the combat areas but these only form a small proportion of trades between the United States and British ifimpire countries, and the effect of the Section is to prejudice British shipping companies to the advantage of American and neutral shipping companies in the important trades between the United States and British Empire countries. If the American State Department should point out that the Section merely compensates American shipping for its exclusion from trades in the combat areas, the British Government coulureply with some force that such exclusion involves discrimination against this country by depriving it in war time of the services of American shipping on which it had relied in peace time, with the result that this country is suffering in two respects, namely, in discrimination against her own shipping in trader outside the combat areas and in loss of American shipping services in the combat areas. It is urged that His Majesty's Ambassador shoulti be asked to continue to press on principle with the American State Department the question of discrimination. In this connection reference is made to Mr. Cordell Hull's statement, in letter from the Foreign Office of the 13th iMovember, that he thought he might be able to get the discrimination corrected when Congress meet in January. The Sub-Committee considered whether an approach should be made to Mr. Kennedy. It will be remembered that Lord Lothian previously/ previously stated that he would prefer to postpone an expression of opinion on this question until he heard the results of the conversations in New York. The Chamber has not yet received any official information as to the result of these conversations, and will therefore be glad to have Lord Lothian's present opinion in the matter. The Sub-Committee also considered means of removing or reducing the difficulties in the event of the State Department refusing to amend the Act, or pending such amendment. It was j agreed that in the present emergency consignees in British mpire countries should be encouraged, wherever British services are available, to specify shipment by British tonnage or otherwise control the flag of the carrying vessel by developing the practice of making their purchases from the United States on a f.o.b. basis. It is desired to ask that the British Government will endeavour to obtain support of this policy through His Majesty's representatives in this country of the Dominions and of the Colonial Office, Crown Agents for the Colonies, etc. If the cargoes are Government cargoes then the matter is in the hands of the Government concerned. If not, it is suggested that they should endeavour to influence consignees on the above lines. In suggesting to the Dominion and Colonial Governments that they should urge their merchants to put themselves in a position to insist upon shipment in British vessels it would be well to suggest that they make it clear that this is a war emergency measure necessitated by the Neutrality Act so that if and when the American Government, or American interests, learn that this course is being followed they will understand it is not a departure from British navigation policy. It will be noted from Messrs. Norton Lilly & Co's letter that the form of affidavit has given rise of difficulties owing to varying interpretations of the Act by different Collectors of Customs/ Customs. It is desired to ask that Hie Majesty's representative should press, as a point of immediate importance, that the. forms of affidavit should he unified and should he laid down hy Washington and not left to the descretion of local Collectors of Customs. The Chamber will appreciate it if the Ministry will ask the Foreign Office to instruct His Majesty's representative in America on the above lines. The Chamber is taking up with the shipowners' New York Committee the following further points which haye been raised:- (a) that the form of affidavit stating- that the goods are not American property at the time of swearing should be dropped and that the previous form of affidavit, which provided that the title would be transferred before the vessel sailed, should be restored. Alternatively, an affidavit could be sworn when the goods have been delivered on the dock as American law compels the shipowner to issue a Received for Shipment Bill of Lading as soonas the goods are delivered on the dock; (b) whether the negotiation of a Received for Shipment Bill of Lading through a British or Neutral Bank would constitute sufficient transfer of title to a foreigner; and (c) transfer of documents from an American Bank, ?/here used by the consignee, to a British or Neutral Bank. Yours sincerely, (Sgd) H.M. Cleminson. ENCLOSURE.