SPECIAL PROBLEMS

During the deliberations of the Conference, certain special problems are which merit brief explanations.

(1) The Conference recognized that the trade in war vessels could not, fron its nature and the place of such vessels in international law, be dealt with on the same basis as trade in rifles or ammunition. With a view to meeting this situ tion, the American Delegation proposed and found ready acceptance for the suggestion that the regime outlined in article XVI of the Washington treaty of February 6, 1922, limiting naval armament, should be adopted. According to this regime as outlined in Article 7 of the Convention, the High Contracting Powers undertake to supply full information with regard to the construction within their territory of a ship of war for delivery to any foreign Power.

(2) The problem which the Conference had to face with respect to the trade in airplanes was of a slightly different character in view of the recognized commercial uses of airplanes, as well as the practical difficulty of distinguishing between an airplane adapted for war purposes and an airplane adapted for the ends of peace. It was felt, therefore, that a provision (article 9) stipulating tha full publicity should be given to the foreign trade in aircraft and aircraft engines would meet the situation, without interfering with legitimate commerce.

(3) At an early stage in the Conference it became clear that the States bordering on Russia had a special problem to face in connection with the publicity of their military purchases. The Soviet regime declined to be represented at the Geness Conference and has indicated no interest whatever in adherence to the Arms Traffic Convention. The States bordering on Russia represented at the Coference are for the most part States which are dependent upon imports for the supply of the military equipment which they consider necessary for their national defense. The border States considered that an obligation on their part to publish full statistics of their importations while Russia was under no obligation to give similar publicity to its importation would be detrimental. For this reason therefore, the Conference agreed to incorporate in the Treaty a provision (Article 29) freeing certain States bordering on Russia from the obligation of publicity pending the adhesion of Russian to the Convention.

(4) Throughout the Conference the delegates of the so-called "Producing States" were constantly reminded that the problem which the Non-Producing States had to face was of a different character than that of the Producing States and that the former could not properly acquiesce in any treaty provisions which would prejudice their right to secure the arms necessary for their national defense In considering this situation the American Delegation was also impressed by the fact that any regime of control which restricted the right of the Non-producing Powers to purchase arms abroad might have the unfortunate result of foreit States at present non-producers of arms to introduce on a large scale the mat facture of arms and war material. Many a State might thus become more of less of an armed camp and the result would be detrimental to the cause of peace Therefore, there have been introduced into the Convention no provisions which prevent a State from securing arms for its national defense from other countries under certain safeguards and guarantees and with the publicity which should act as a preventive against the undue accumulation of imported arms in any given country.

(5) It was brought to the attention of the Conference that in States where extraterritorial rights were exercised there would be obvious difficulties in enforc ing the provisions of the Convention as against foreigners enjoying such extrater ritorial rights. This situation unless corrected might result in opening to for eigners, enjoying extraterritorial privileges in certain countries, the opportunity of engaging uncontrolled in an illicit trade. For these reasons Article 30 included in the Convention, according to which the "High Contracting Parties who possess extraterritorial jurisdiction in the territory of another State party to the present Convention undertake in cases where the rules of this Convention can not be enforced by the local courts as regards their nationals in such territory to prohibit all action by such nationals contrary to the provisions of the pres Convention."

(6) The question of the control of the trade in arms in time of war preples a particularly difficult problem. It is a recognized principle of international law that a neutral State is under no obligation to prevent the shipment of arm from its territory on behalf of a belligerent; provided, of course, as specified m the laws of the United States, that the territory of the neutral State shall not be used as a base for fitting out military expeditions. On the other hand, it is contrary to the obligations of neutrality, as recognized in the laws of the Led

States as well as in the law and practice of nations, for a State itself either directly or indirectly, to supply arms to a belligerent. Under the regime outlined in the Convention the approval of the Government of the exporting country is normally required in the case of the shipment of arms in Category One. Ïf such approval were also required in time of war the neutrality of a power formally approving the shipment of arms to a belligerent might be called in question. If therefore the Convention were applicable in its entirety in time of war, the result might be that it would be rendered impossible to permit shipments of arms to a belligerent although such shipment might otherwise be unobjectionable, and although the country in question might not desire to intervene to prevent shipments.

In view of these considerations it was the unanimous opinion of the delegates assembled that it would be unwise to endeavor to apply with respect to belligerents the articles of the Convention which involved the approval of the exporting government as a necessary prerequisite to a shipment. Consequently the fol

lowing article (Article 33) was introduced into the Convention:

"In time of war and without prejudice to the rules of neutrality the provisions of Chapter 2 shall be suspended from operation until the restoration of peace so far as concerns any consignment of arms or ammunition or implements of war to or on behalf of a belligerent."

AMERICAN INTERESTS INVOLVED

(1) The United States has for some time given full publicity to the statistics of its foreign trade, including publicity of its trade in war material. The American Delegation therefore felt that it would be according to American traditions of publicity and frankness to agree to continue such publicity and that it would be in our interest that other countries should likewise make public their trade in arms. (2) The method of supervision provided for in the Convention for the trade in arms is adapted to meet the special conditions existing in the United States. In particular it should be noted that the forms now used for export declarations are specifically recognized in the Convention and it is provided that these forms may, under certain safeguards, be employed to secure the requisite control and publicity. Thus the necessity for the creation of elaborate boards of control for the issuing of licenses in individual cases of shipments of arms is obviated.

(3) The Convention does not provide for the control of the international trade in arms by any international body. Each country is to exercise its control within its own jurisdiction and according to its own laws, without dictation, advice or interference by any international commission.

(4) In connection with the provision for the enforcement of a strict control of the arm, trade within certain areas of Africa and Asia, the American Delegation while recognizing the reasons for such a control and agreeing that shipments from the United States to the areas in question should be under strict supervision as far as their clearance from the United States was concerned, proposed and secured the insertion in the Convention, in Article 27, of a provision that would relieve the United States from any responsibility with respect to the application of this régime in territorial or maritime zones beyond the jurisdiction of the United States.

(5) The present Convention, superseding as it would the applicable provisions of the Brussels Act of 1890 and the unratified Saint Germain Convention, helps to clarify the situation and defines the conditions under which arms shipments from this country may properly be permitted. Its provisions would in no way conflict with the control which may now be exercised with respect to the export of arms to certain countries under existing provisions of American law.

CONCLUSIONS

The delegates at the Conference impressed upon the American Delegation their view that any international convention for the control of the trade in arms would be ineffective unless adhered to by the United States, one of the important arms producing powers. With a view to facilitating American adherence, the Conference did not press for the inclusion of any provision for the supervision or control of the arms trade by an international commission, recognizing that such control would be inacceptable to this Government. Further, the various proposals advanced from time to time by the American Delegation received the full and sympathetic consideration of the Conference and in every case where American principles and interests were involved, solution which the American Delegation considered acceptable were adopted. The American Delegation

desire to record their recognition of this attitude and, in submitting the Treaty, to state that in their opinion the success or failure of the present Convention will be in no small measure dependent upon the position assumed by the American Government in the matter.

While registering this view, the American Delegation would point out that in their opinion the adherence of all the important arms-producing powers, and not only that of the United States, is essential to the realization of the objects of the Convention. For the United States to ratify and to make the Convention effective prior to the ratification by other arms producing powers would only result in placing a premium upon non-ratification by certain producing powers, since they would then be free to sell arms to other powers without control and without publicity. If, therefore, the Convention meets with the approval of the Senate, and if the legislation which will be necessary to make it effective in the United States is assured, the delegates of the United States consider that the deposit of ratifications on the part of the United States should be conditioned upon the deposit of ratifications by the other great producing powers of the world. The American Delegation would not of course suggest any delay in the submission of the Convention to the Senate or its consideration by that body, but considers that in the event of Senatorial approval the deposit of ratifications, which would make the Convention binding upon the United States if thirteen other Powers deposit ratifications, should only take place when among the ratifying powers are included the other principal arms producing States.

The American Delegation appreciates that the present Convention does not specifically provide for any restriction in the volume of the trade in arms, although the control of this trade should indirectly result in such restriction through the reduction of the illicit traffic in war material. It is felt, however, that pending the realization of a definite disarmament program it would be futile, and possibly harmful, as indicated above, to attempt the arbitrary restriction of the trade in war material, which would place the non-producing powers at the mercy of the producing power, force production by all powers and, far from accomplishing the purposes of disarmament, might tend toward the increase of the military establishment of certain powers.

In addition to the Convention itself, there is also appended (Annex 3) a copy of the Protocol of signature and a copy of the Final Act (Annex 4) which describes the calling of the Conference and includes two declarations of the delegates assembled. Neither of these documents call for ratification. In addition, there was signed at Geneva a declaration relating to the inclusion of the territory of Ifni (in Spanish Morocco) in the special zones. This declaration was not signed on behalf of the United States, and it is not felt that it calls for action at this time on the part of this Government.

In conclusion, the American Delegation desire to express their appreciation of the invaluable assistance rendered by the Secretary of the American Delegation, Mr. Alan F. Winslow, and by the Technical Advisers, Mr. Charles E. Herring, Commercial Attaché at the Embassy in Berlin, Major George V. Strong and Major Earl J. Atkisson of the War Department, and Commander Herbert F. Leary, Assistant Naval Attaché at the Embassy in London.

The Delegation also take this occasion to record their appreciation of the effective and impartial manner in which the proceedings of the Conference were directed by its President, M. Carton de Wiart, former Prime Minister of Belgium, and in the latter's absence, by the Vice President of the Conference, Mr. Guerrero, of Salvador. The Delegation also desire to pay tribute to the efficient services rendered by the Secretary-General of the Conference, M. Madariaga, and by the other members of the Secretariat General of the Conference.

Respectfully submitted,

Enclosure: Annexes, as stated.

(signed) THEODORE E. BURTON.

214. REPORT OF THE SENATE COMMITTEE ON FOREIGN RELATIONS ON THE NEUTRALITY ACT OF 1939, SEPTEMBER 29, 1939 !

The Senate Committee on Foreign Relations, having had under consideration the resolution (H. J. Res. 306) entitled the "Neutralit v Act of 1939," hereby report the same with an amendment in the nature of a substitute with the recommendation that the resolution as amended do pass.

U. S. Congress. Senate. Report No. 1155, 76th Congress, 2d session.

The committee further reports the purpose of the substitute is to preserve the neutrality and the peace of the United States and to secure the safety of its citizens and their interests. In attempting to accomplish this purpose the committee has written into the proposed substitute definite and mandatory legislation wherever discretion. could be eliminated. From a consideration of the text it will be noted that the cash-and-carry provisions of the law which expired by their terms on May 1, 1939, and which have not been reenacted, have been strengthened as to the provisions dealing with the divesting of title of citizens in goods to be conveyed and transferred and exported to belligerent countries. The addition of this language to the paragraph in the old law with regard to the divesting of title, namely that "No loss incurred by any such citizen in connection with the sale or transfer of right, title, and interest in any such articles or materials shall be made the basis of any claim put forward by the Government of the United States.", covers any loophole that might have existed in the old provisions as an excuse for demanding of the Government that the Government undertake to collect debts due a citizen. This, however, is not the most important change in the old cash-and-carry law. The provisions of the old law with regard to carry did not prohibit the transfer of contraband, that is, articles and materials designated by warring powers as war materials, to belligerents except the few manufactured articles defined as arms, ammunition, and implements of war, but delegated to the President the discretion to prohibit American vessels from carrying certain articles to belligerents which he could name. The proposed substitute in definite language and in a mandatory manner prohibits American vessels to carry any passengers or any articles or materials to any foreign state named by the President as being in a state of war. The section of the proposed substitute which is intended to accomplish this purpose is found in section 2 (a) which reads as follows:

SEC. 2. (a) Whenever the President shall have issued a proclamation under the authority of section 1 (a) it shall thereafter be unlawful for any American vessel to carry any passengers or any articles or materials to any state named in such proclamation.

It is true, however, that in subsection (f) on page 17 there are certain exceptions to the mandatory provisions of section 2 (a) hereinbefore set out with relation to certain characters of transportation to ports in the Western Hemisphere. It will be noted that these exceptions are minor and in no way affect the prohibition of transportation by American vessels to the warring powers in Europe or by sea to Canada. It will be remembered, of course, that at the present time there is no law on our statute books with regard to cash-and-carry as such law by its own terms expired on May 1, 1939. However, a copy of our neutrality laws as they existed on April 30, 1939, including the cashand-carry provisions which expired at that time, are attached to this report for the information of the Senate.

The committee has inserted in the proposed substitute for the House resolution a new provision, being section 3 (a) entitled "Combat areas." This in its very nature must apply to neutrals and not to belligerents because there will be no commerce by American vessels with belligerents under the prohibition contained in section 2 (a). It is intended to grant to the President discretion to prevent our American ships from trading with neutrals adjacent to belligerents in the

event a belligerent is submarining our American merchant vessels which are engaged in commerce with such neutrals. It will be also noted, however, that this discretion may be used by the President under such rules and regulations as he may prescribe. I call attention to the fact that the words used are "as may be prescribed" because under section 13 entitled "Regulations" the President and the President alone is authorized from time to time to promulgate such rules and regulations not inconsistent with law as may be necessary and proper to carry out the intent of such provision or any other provision in the bill. This discretion was deemed necessary to meet any emergency for the transfer of a passenger to a neutral port, even though it be in a combat area, and to protect against unreasonable prosecution of a citizen of the United States under the harsh provisions of the section.

The section dealing with financial transactions in the existing law has been greatly strengthened as a comparison of the existing law with the proposed substitute will readily disclose. Under existing law credits to belligerent governments are prohibited, but there is a proviso attached to such section which states:

Provided, That if the President shall find that such action will serve to protect the commercial or other interests of the United States or its citizens, he may, in his discretion, and to such extent and under such regulations as he may prescribe, except from the operation of this section ordinary commercial credits and shorttime obligations in aid of legal transactions and of a character customarily used in normal peacetime commercial transactions.

In the House joint resolution the existing law was amended by inserting after the words "except from the operation of this section" the following words "for a period of not more than ninety days without renewals." Your committee did not consider such language a sufficient restriction upon the discretion vested in the President. It, therefore, struck out such language and inserted after the words "normal peacetime commercial transactions" the following:

but only if such credits and obligations have maturities of not more than ninety days and are not renewable. If any government, political subdivision, or person to which credit has been extended pursuant to the authority vested in the President under this subsection is in default in whole or in part upon any obligation to which such extension of credit relates, no further extension of credit to such government, political subdivision, or person shall be made or authorized under this subsection during the period of such default.

Attention of the Senate is called to the fact that the word "person" is qualified by the word "such person" as is described in the main body of the section wherein it says:

*** any State named in such proclamation, or of any political subdivision of any such State, or of any person acting for or on behalf of the government of any such State.

The provision with regard to traveling on vessels of belligerent states is in substance and effect the same as in existing law.

The provision in existing law with regard to the solicitation and collection of funds is reenacted in the proposed substitute with some modification of the language to make it more definite and to improve the construction.

The provisions in existing law with regard to restrictions on the uses of American ports and with regard to submarines and armed merchant vessels have been substantially reenacted in the proposed