File No. 763.72112/349

The President of the Galveston Cotton Exchange and Board of Trade (I. H. Kempner) to the Solicitor for the Department of State

Sir: There is a good deal of cotton and cottonseed products being shipped to Norway, Denmark, and Sweden. Through the newspapers, the British Consul of Galveston has indicated that all cargoes going to these Scandanavian countries, particularly Sweden and Denmark, are subject to suspicion of being intended ultimately for German use, and has indicated the possibility of England diverting these cargoes from Denmark and Sweden.

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Only recently the British steamer Camperdown from Galveston, destined for Danish ports, put into Scotland en route, and was not allowed to proceed on the alleged ground that it was dangerous to go to Denmark, notwithstanding steamers are constantly going to and from Danish ports. This steamer had aboard a large cargo of cottonseed cake and a small cargo of cotton. The result of its detention has been a decline in the market for cottonseed cake and meal, lowering the price that oil mills can pay for seed, since exporters of cottonseed cake and meal find themselves hampered in their business by not being able to give assurance as to ultimate delivery of the goods. A recent decline in the cotton market may be traceable to the fear that the demand that has lately come from neutral countries for cotton is under the suspicion of the British Admiralty, who may interfere with the destination of these cargoes.

To the layman it would appear that cotton—which is at best only a conditional contraband of war, if indeed it is contraband at all—shipped in neutral bottoms to a neutral country should not be subject to interference by any belligerent. On account of this condition buyers in Sweden and Denmark ask that goods be sold them on terms involving their paying cash only on arrival of the goods at Sweden or Denmark, instead of acceptance against documents as heretofore. The war risk and the marine risk can be covered, but detention or diversion by England or her allies cannot be covered, since the insurance business on cargoes in English or neutral bottoms is carried almost exclusively by English companies, and this fear of diversion or detention is curtailing business and stifling what little foreign demand there is for cotton.

If assurance can be given that cotton and cottonseed products can be shipped to neutral countries without danger of interference by navies of belligerent nations, it will go a long way towards opening an untrammelled market to these countries, whose consumption of raw cotton can be materially increased but who naturally can not go to the expense of undertaking this increase, if they are hampered and fettered in securing the supply of raw cotton, which the South is so eager to sell.

It is impossible for a shipper or a seller on this side to always know definitely what becomes of the cotton when it reaches the other side, whether it is used in the country to which it is shipped, or exported, in the raw or manufactured state, to a belligerent. Unless this Government can obtain assurance that traffic in its great staple, cotton, and its by-products, in neutral bottoms to neutral countries, will not be interfered with, it will be a serious blow to the marketing of cotton.

I see in the paper where Sir George Paish, special adviser to the English Chancellor of the Exchequer, and Mr. Basil P. Blackett, of the British Treasury, are in Washington on a conference with reference to the marketing of cotton, and possibly their attention directed to the matter may aid in its solution.

This matter is one that is deserving of very serious attention, and I think it one that thoroughly justifies vigorous action by your Department; I write you direct in the matter on account of our personal acquaintance and friendship.

Very truly yours,

I. H. Kempner