793.94/15765
Memorandum by the Assistant Chief of the Division of Controls (Yost)
Some Effects of the Application of the Neutrality Act to the Far Eastern Conflict
Section 2
The provisions of section 2 prohibiting American vessels from carrying passengers or cargo to belligerent ports and requiring the transfer of title on all goods shipped to such ports could not have any [Page 288] great effect in this instance since paragraphs (g), (h) and (i) of this section exempt shipments (except arms, ammunition, and implements of war) on American or neutral vessels “to any port on the Pacific or Indian Oceans”. Shipments of arms to China are already subjected to these restrictions at the present time since they are necessarily shipped via such belligerent ports as Rangoon, Haiphong, and Hong Kong. As the result of the moral embargo, no shipments are being made to Japan at the present time. American commerce with the Far East would therefore not be hampered to any significant extent by the application of the provisions of sec. 2 of the Act.
Section 5
The provisions of section 5 which prohibit travel by American citizens on belligerent vessels would, if applied to the Far Eastern conflict, have no effect on travel in that area since the regulations issued on November 6, 1939, under this section of the Act, permit American citizens to travel on belligerent vessels in all parts of the world except the North Atlantic and other waters adjacent to Europe.
Section 7
Section 7 prohibits loans or credits to a belligerent government or any person acting on behalf of such government. The application of this section of the Act to the Far Eastern conflict would be of the greatest importance since it would presumably prevent the extension by the Export-Import Bank of further credits to the Universal Trading Corporation or any other agent of the Chinese Government and would, in addition, prevent any American manufacturer from selling any goods on credit to the Chinese Government or any of its agents.
Section 8
If the Neutrality Act were applied to the Far Eastern conflict, it would be unlawful under the provisions of this section for any person in the United States to solicit or receive any contribution for the Chinese Government or any of its agents. This would presumably prevent the collection of funds from Chinese resident in the United States for the use of the Chinese Government. Furthermore, all of the persons and organizations engaged in the collection of funds and contributions for relief work in China would be required to register with the Secretary of State and submit monthly reports of their operations.
The other sections of the Neutrality Act would not appear, if the Act were invoked, to have any significant effect on our relations with the Far Eastern nations.