TNT and no TNT was available elsewhere. The bombs he said were therefore useless. He added that this country had already inflicted great injury upon China in refusing to permit arms to be exported in American owned ships, and he seemed to interpret this refusal of du Pont to enter into further contracts with Wah Chang as another blow aimed by this country at China. It appeared from his letter that Mr. Li wished to give the Ambassador the impression that the Department had requested du Pont to fill this order, but that du Pont was nevertheless refusing to do so. He begged the Ambassador to attempt to prevail upon the Department to take up the matter with du Pont.

I told Mr. Tsui that the Department had had no communication with du Pont in regard to the difficulties which his Government was encountering in making purchases from that company, other than the telephone conversation which I had had in his presence on October 1 with Major Casey and that he had heard what I had said to the Major. Mr. Tsui asked me to write to du Pont requesting at least that it agree to sell 750 tons of TNT to Wah Chang.

I told Mr. Tsui that I believed that it would be contrary to the practice of the Department to request an American company to enter into any particular transaction. I reiterated what I had told him on October 1 that the refusal of du Pont to sell any further arms or ammunition of a specifically military character was general in its application.

Major K. K. V. Casey of du Pont called at my office this afternoon. He showed me a letter which he had received from Mr. Li and permitted me to make the copy which is attached hereto. He said that upon receipt of this letter he had telephoned to several officers of du Pont asking whether they had received any telephone message from any officer of the Department such as that quoted in Mr. Li's letter. Unable to obtain any information, he called Mr. Li by telephone and asked him who had telephoned the message and to whom it had been telephoned. Mr. Li replied that I had telephoned the message to the Major himself. The Major said that he had thereupon categorically denied that I had ever said anything of the kind, adding that if I had, such a message would have been utterly without result as the company would require a written request from the Department before it would make any exception to its general policy of refusing to sell for export any arms or ammunition of a specifically military character.

Major Casey said that he personally was opposed to the policy which had been adopted by du Pont, and that his attitude was shared by other officers of the company, including Lammot du Pont himself.

34 Not printed.

He spoke of the company's policy as "a private neutrality policy" and he made it clear that it was motivated by a desire to avoid being "crucified by publicity".

J[OSEPH] C. G[REEN]

711.0011 Lic. Martin Company, Glenn L./25: Telegram

93

The Consul at Hong Kong (Donovan) to the Secretary of State

HONG KONG, October 6 [99], 1937-2 p. m. [Received October 9-2: 52 p. m.]

Department's telegram of October 7, 7 p. m.35 Following is text of letter from Gauss, American Consul General at Shanghai to Harry Roland, dated August 26, 1937, of which the original has been seen by me:

"You have informed this office that the Central Trust solicits the despatch of Mr. F. G. Foster and Mr. J. Gody, two American citizens, attached to your company to proceed to Nanchang for the purpose of repairing a Martin bomber understood to have been sold by you to the Chinese Government.

In view of the present combat operations between the Chinese and Japanese forces, the Consulate General considers it unsafe for Americans to proceed to Nanchang at this time. Further, in this connection, your attention is directed to section 21 and 22, title 18, and section 167, by [title] 22, Code of Laws of the United States, which govern service by American citizens with foreign armies in event of war between countries with which the United States is at peace."

DONOVAN

711.00111 Lic. Martin Company, Glenn L./29

93

Memorandum of Conversations, by the Chief of the Office of Arms and Munitions Control (Green)

[WASHINGTON,] October 14, 1937. Mr. J. T. Hartson of the Glenn L. Martin Company called me by telephone from Baltimore this morning. He said that the three planes which were exported under License No. 2965 issued on July 30, 1937, and amended on August 19,6 had been put ashore in Manila. He referred to his statements in previous conversations that these planes were already the property of the Chinese Government, but that the Glenn L. Martin Company had agreed to assemble them before final delivery to the Chinese. It had been the intention of the Company

35 Not printed.

36 See footnote 30, p. 538.

to have them assembled by its mechanics who are now awaiting their arrival in Hong Kong. The captain of the steamship Tai Yin, exercising the authority vested in all masters of vessels to land cargo at some port other than the port of destination named in the shipping documents if such action appears necessary to safeguard the cargo, has, however, put the planes ashore at Manila. Mr. Hartson said that it was now proposed by the Chinese Government that his Company arrange to have the planes assembled in Manila, whence they would be flown by Chinese aviators to China. He asked whether the Department would have any objection to the proposed procedure.

I told Mr. Hartson that as China was named on the export license as the country of final destination, no question could arise as to the validity of the license merely because the planes left United States territory at Manila, or because the planes were not shipped via Hong Kong in accordance with the plans which the Company had in mind when the license was amended on August 19. I added that it was my offhand opinion that some objection to the proposed procedure might arise on the ground that it would constitute a violation of the law prohibiting the setting on foot in American territory of a military expedition against a state with which the United States is at peace. I emphasized that this was mere offhand opinion on a question to which I could not give him a definite answer until I had consulted other officers of the Department. I suggested that in order to avoid any question of law or policy, it would seem to be preferable for the Chinese Government to arrange to send the planes crated by sea from Manila to Hong Kong and to have them assembled by the Company's mechanics there.

Mr. Hartson said that he agreed with me that it would be preferable to obviate any possible objection on the part of this Government by sending the planes to Hong Kong to be assembled. He added that if the planes were assembled in Manila, the Chinese would undoubtedly wish to have them armed before their departure for China, and that the flight might, therefore, be held to constitute an armed expedition. The law to which I referred in my conversation with Mr. Hartson is U. S. C., title 18, section 25, which provides:

"Whoever, within the territory or jurisdiction of the United States or of any of its possessions, knowingly begins or sets on foot or provides or prepares a means for or furnishes the money for, or who takes part in, any military or naval expedition or enterprise to be carried on from thence against the territory or dominion of any foreign prince or state, or of any colony, district, or people with whom the United States is at peace, shall be fined not more than $3,000 or imprisoned not more than three years, or both."

Mr. Tswen-ling Tsui, Second Secretary of the Chinese Embassy, called at my office this afternoon. He described the situation which

Mr. Hartson had described to me in the morning, and he asked me whether this Government would have any objection to the Chinese Government's flying the planes equipped with armament from Manila to China.

I told Mr. Tsui that I could not answer his question until I had consulted my superiors, but that it occurred to me that the Chinese Government might wish to avoid any possibility of objection by arranging to have the planes shipped to Hong Kong and assembled there.

Mr. Tsui said that he agreed with me and although I had made no reference to the law of which I had spoken to Mr. Hartson, Mr. Tsui volunteered the suggestion that the flying of armed planes from Manila to China might be considered as constituting the use of American soil as a base for an armed expedition, and that if it were so considered he foresaw the possibility of various complications.

I told Mr. Tsui that I hoped that his Government would attempt to carry out the alternative procedure and that I would communicate with him later if I had anything further to tell him in answer to the question which he had raised.

JOSEPH] C. GREEN]

711.00111 Lic. Martin Company, Glenn L./28

93

The Secretary of State to the Secretary of War (Woodring)

WASHINGTON, October 20, 1937.

The Secretary of State presents his compliments to the Honorable the Secretary of War and acknowledges the receipt of his letter of October 18, 1937, transmitting a copy of a confidential radiogram 37 received in the Bureau of Insular Affairs from the United States High Commissioner to the Philippine Islands, in regard to a proposed shipment of three airplanes from Manila to Hong Kong.

Mr. Hull would appreciate it if Mr. Woodring would transmit to the High Commissioner a reply as follows:

The President on September 14, following a conference with the Secretary of State and the Chairman of the United States Maritime Commission, issued a statement in part as follows:

"Merchant vessels owned by the Government of the United States will not hereafter, until further notice, be permitted to transport to China or Japan any of the arms, ammunition, or implements of war which were listed in the President's Proclamation of May 1, 1937.

37 Neither printed.

"Any other merchant vessels, flying the American flag, which attempt to transport any of the listed articles to China or Japan will, until further notice, do so at their own risk."

No restrictions other than those indicated in the President's statement are in effect in respect to the transportation of arms to China or Japan. There are, however, no restrictions in effect in respect to transportation of arms to Hong Kong whatever the intended ultimate destination may be.

711.00111 Armament Control/1563

Memorandum of Conversation, by the Chief of the Office of Arms and Munitions Control (Green)

[WASHINGTON,] November 1, 1937. Mr. R. G. Ervin, President of the P. and E. Corporation, 420 Lexington Avenue, New York, New York, called on Mr. Welles 38 this morning by appointment. I was present during the conversation.

Mr. Ervin asked whether it would be contrary to the law or to the policy of the Government for an American corporation to purchase a large number of rifles in this country and to export them to China. He was informed that if an American corporation were to purchase rifles from American manufacturers, it could, by complying with the laws and regulations governing the registration of exporters of arms and the issuance of arms export licenses, export them to China and that such action would not contravene the policy of the Government.

Mr. Ervin said that he referred not to rifles purchased from American manufacturers, but to Enfield rifles which the Corporation proposed to purchase from the War Department.

Mr. Ervin was informed that the War Department possessed no surplus Enfield rifles; that no surplus of such rifles was likely to be declared in the immediate future; and that moreover it was contrary to the policy of the Government to sell arms for export to any country. JOSEPH] C. G[REEN]

711.00111 Armament Control/1568

Memorandum of Conversation, by the Assistant Chief of the Office of Arms and Munitions Control (Yost)

[WASHINGTON,] November 5, 1937.

Captain H. Tauscher, President of the H. Tauscher Arms Corporation of New York City, called this morning to say that they had been approached by a British company which desired to purchase half

3 Sumner Welles, Under Secretary of State.