File No. 763.72112/1190
The Foreign Trade Adviser ( Rose ) to the Secretary of State
Sir: In view of certain phrases appearing in a letter which I received on May 19, 1915, from Sir Richard Crawford, commercial adviser of the British Embassy, a copy of which is annexed,1 I think it is necessary that the Department be fully advised of the unofficial conversations which have taken place between representatives of the British Government and Judge Fleming and myself as representatives of American shippers, importers and exporters.
The phrases to which I refer, read as follows: “a special concession to the United States Government” and “proof of payment prior to March 1 has been produced to this Embassy by the State Department” and “on the understanding that no further extension is asked for under any circumstances.” From these I am led to believe that the British Foreign Office has not understood the fact that in the conversations which have taken place between Judge Fleming and myself, representing the shippers and exporters of this country, and Sir Richard Crawford, we have not represented the Department or the Government in any official capacity.
This report will conclusively show that whatever misapprehension may exist on the part of the British Foreign Office as to the official character of the conversations which have taken place in Washington, the representative of the British Government who participated could not have understood them to be other than entirely informal and in no way involving the Department of State or the Government of the United States.
First. On March 3 I met the British Ambassador in the diplomatic room of the State Department, accompanied by Mr. L. Wolf of New York and his attorney Mr. Beer, Sir Richard Crawford at that time being absent from Washington. Before taking up the matter with his excellency, I explained to him that anything I said must be considered as unofficial and informal, without prejudice to the rights of American shippers and must not be taken as in any way a recognition of any rights claimed by the British Government under the declaration of March 1. I stated that in my capacity as foreign trade adviser of the Department of State, I had previously advised the cotton shippers of this country to take advantage of the demand for cotton in Germany; and I informed the Ambassador that this advice was based on assurances of his Government given through him that cotton would not be considered contraband, but on the contrary would remain on the free list; that pursuant to that advice many cotton shippers had purchased large quantities of cotton for the German market, had chartered vessels and made freight engagements which legally bound them. I said that, inasmuch as they had acted upon my advice based upon such assurances from his Government, I felt it incumbent upon me personally to do what I could to help them, but that in so doing I wished it to be understood that I was acting in the interest of shippers and not as an official of the [Page 217] Department of State. The Ambassador replied that he realized my position and that anything I did would not be considered as binding the Government of the United States.
Mr. Wolf, through his attorney, stated that he had large quantities of cotton in Galveston and had chartered certain ships which, because of unforseen delays, had not been loaded before March 1 and in fact were not then in port to be loaded. He asked that such cotton be allowed to go to its destination without being stopped by the British Government that he be given permission to fill the contracts actually entered into by him with German customers, and that a reasonable time be allowed before the declaration of March 1 should go into effect as to such contract shipments.
As a result of that conference the following telegram was prepared which the Ambassador stated he would forward to the British Foreign Office:
Contractors for cotton made before issuance of declaration in good faith and in view of assurance that cotton would not be treated as contraband, ask permission to fill existing contracts by delivery of cotton to German ports. If permission is not granted, information is asked for as to treatment of cotton already bought and freight paid for and to be loaded on board named ships which although chartered have not yet arrived at American ports owing to unforeseen delays.
Owners would be liable to incur heavy loss unless assurance is given at once as to rate of compensation for cargo consigned to Germany which will not under declaration be detained or diverted. Owners assume that compensation will amount to invoice price less cost of freight from Danish and Swedish ports to which freight has already been paid.
Ships are Marie, Dicido, Swedish, and Livonia, Danish, from Galveston, to Aalborg and Copenhagen.
The following day I had another conference with the British Ambassador, at which were also present Mr. L. Wolf and Mr. Beer. Upon his excellency’s request a brief was submitted sustaining the contention of the cotton shippers that summary action on the part of the British Government in shutting off all shipments to Germany without notice would be contrary to precedent and showing that both England and France had received at the hands of the United States, when the United States was a belligerent and they were neutrals, consideration and favor similar to that which was then requested on behalf of Mr. Wolf.
The Ambassador, after considering the brief, stated that his Government did not desire to do anything to handicap the cotton growers of the South for the reason that the prosperity of his Government depended on the cotton production of that section of this country and that they did not wish to decrease the acreage of cotton in 1916 in this country as it would result in high prices for British factories. He said that he would cable an abstract of the brief and would “make its arguments his arguments.”
On March 8, the British Ambassador handed me a note or notice of which the following is a copy:
Many enquiries have been received as to the treatment to be accorded to cotton shipped to Europe in view of the restrictive measures proposed to be taken by the Allied Governments.
As already announced there is no question of confiscating cotton cargoes that may come within the scope of order in council to be issued.
[Page 218]The following arrangement has been come to in London as to cotton consigned to neutral ports only:
- 1.
- All cotton for which contracts of sale and freight engagements had already been made before March 2 to be allowed free (or bought at contract price if stopped), provided ship sail not later than March 31.
- 2.
- Similar treatment to be accorded to all cotton insured before March 2, provided it is put on board not later than March 16.
- 3.
- All shipments of cotton claiming above protection to be declared before sailing and documents produced to and certificates obtained from consular officers or other authority fixed by Government.
Ships or cargoes consigned to enemy ports will not be allowed to proceed.
Washington , March 8, 1915.
A conference was immediately held between the British Ambassador, Senator Hoke Smith of Georgia, Mr. Beer, attorney for L. Wolf and Company, and myself. I took shorthand notes of the conference which show the understanding of those present, including the British Ambassador, to be that ships sent to enemy ports would not be allowed to proceed but that the owners would be compensated for any loss at contract price, and consequently that the cotton on ships consigned to enemy ports (not ultimate destination) would not be allowed to proceed but would be paid for at contract price.
Relying on the announcement of the British Ambassador of March 8 many American shippers of cotton sent cotton to neutral ports. Notwithstanding this, twenty-eight of these ships have been taken into British ports, the British Government stating that they would pay for the cotton at contract price. The Marie, Dicido and Livonia were taken in by the British Government over six weeks ago. I was with Mr. Wolf, the owner of the cotton, when he submitted to Sir Richard Crawford figures showing the value of the cotton, reserving the right to submit claims for demurrage, fines, etc. This was about three weeks ago, but so far as I have been advised the British Government have not compensated him for his losses.
Second. On March 15 the order in council of the British Government was published, and on March 30 a note on the subject was sent to London by the Government of the United States. In that note it is stated:
It is manifest that such limitations, risks, and liabilities placed upon the ships of a neutral power on the high seas, beyond the right of visit and search and the right to prevent the shipment of contraband already referred to, are a distinct invasion of the sovereign rights of the nation whose ships, trade, or commerce are interfered with.
On March 20 the following letter was received from Sir Richard Crawford, in response to oral inquiries which I had made:
With reference to your enquiries as to action under the order in council, I may acquaint you that the Foreign Office advise us that the problems which arise with regard to shipments from enemy countries to the United States on neutral vessels are exceedingly complex and it would be difficult for them to deal with same by binding themselves to hard and fast rules.
Each case will have to be dealt with on its merits. But American traders may rest assured that in cases of shipments on bona fide contracts made before March 1, goods, if owned by neutrals, will be dealt with as leniently as the order in council will allow.
On April 3 the British Embassy gave out the following statement:
The British Embassy are authorized to state that in cases where a merchant vessel sails from a port other than a German port carrying goods of enemy origin for which American importers claim to have made payment prior to March 1, 1915, proofs that such goods were paid for before March 1 may be [Page 219] submitted for examination to the Embassy. If such proofs are presented at a sufficiently early stage to enable the report thereon to be communicated in time to the British authorities, the results of the investigation will be taken into account and due weight attached to them in deciding whether the goods concerned should be discharged under the provisions of Article 4 of the order in council of March 11.
In order to facilitate the shipments of those goods Judge Fleming and I volunteered to collect evidence of American ownership of goods before March 1 for submission to the British Embassy with the understanding, however, that nothing done by us should be construed as a recognition of any rights claimed by the British Government under the order in council. The affidavits of reputable American business men, however, were rejected as of no value unless supported by collateral evidence which at times has been impossible to obtain unless the books of the firms were produced. I objected to the submission of the books of American firms to the British Embassy and on April 30 wrote a letter to Sir Richard Crawford stating my objections, a copy of which letter is attached.1
On May 1 Sir Richard Crawford called at the office of the foreign trade advisers and assured me that a practical method of taking the proof would be adopted, stating that, if I would certify that evidence submitted to me by the exporters was of such a character as to merit the favorable consideration of the Government of Great Britain he would then certify it to his Government.
Since that time we have submitted to Sir Richard Crawford many cases to which I have given my personal certificate, very few of which have received favorable consideration.
I also brought to the attention of Sir Richard Crawford the fact that, as Article 4 of the order in council was not published until March 15, 1915, and as American shippers had no notice of Article 4 before that time, the date of American ownership of goods of German origin mentioned in the notification of April 3 should be March 15 instead of March 1. I am assured by Sir Richard Crawford that he telegraphed in this sense to the British Foreign Office and, although submitted more than a month ago, no reply appears to have been received.
The contents of the first paragraph of the telegram were communicated to me by Sir Richard by telephone. About 10 o’clock p. m. of May 18 Sir Richard called me at my home and read the telegram mentioned in paragraph 2 of the note. He stated that he had, before telephoning me, asked his Government to extend the time to June 15.
I feel that I can not longer participate in an arrangement for the submission of proof to the British Embassy of the ownership of American goods of German and Austrian origin for the following reasons:
- 1.
- In the cotton arrangement we mutually understood that ships or cargoes consigned to neutral ports would be allowed to proceed and that all cotton for which contracts of sale and freight engagements had already been made before March 2, if consigned to [Page 220] neutral ports have been seized by the British Government and so far have not been paid for.
- 2.
- Notwithstanding the declaration in the letter of Sir Richard Crawford of March 20 that “American traders may rest assured that in cases of shipments on bona fide contracts made before March 1, goods, if owned by neutrals, will be dealt with as leniently as the order in council will allow,” coupled with the further statement in the British Embassy’s statement of April 3 to the effect that “in cases where the merchant vessel sails for a port other than a German port carrying goods of enemy origin for which American importers claim to have made payment prior to March 1, 1915, proofs that such goods were paid for before March 1 may be submitted for examination to the [British] Embassy,” the submission of proof to the British Embassy has been surrounded with such obstacles as to make the so-called concession of no benefit whatsoever.
- 3.
- That contentions on behalf of the shippers made in good faith and telegraphed by Sir Richard Crawford to the British Foreign Office have not even been acknowledged.
- 4.
- That notwithstanding the exchange of views which have taken place was of an unofficial character, Sir Richard Crawford’s letter of May 19 appears to imply a recognition by this Government of the assumed right of Great Britain to place restrictions upon the movement of American-owned goods from Germany. Inasmuch as neither Judge Fleming nor I ever asked for an extension of time from June 1 to June 15 on behalf of all American shippers, the statement “that as a special concession to the United States Government the British Government are prepared to allow shipment up to June 15 from neutral ports to the United States of those goods of enemy origin”, etc., is chiefly significant in that it implies that the “concession” is to this Government and not to the private parties interested. Furthermore, the statement that proof of payment prior to March 1 shall be produced to the British Embassy “by the State Department” contains the inference that the State Department has in the past produced evidence to the British Embassy of American ownership of goods in Germany. I attach hereto copies of letters exchanged between Sir Richard Crawford and me relative to the question.1
Sir Richard Crawford’s letter of May 19 concludes with “and on the understanding that no further extension is asked for under any circumstances.”
Neither of the Foreign Trade Advisers, officially or unofficially, has asked for any extensions or done anything which could be construed as an acknowledgment that the British Government had any right to determine in what circumstances American-owned goods can be brought out of Germany through a neutral port or otherwise.
Because of my belief that the “extension” offered amounts practically to a declaration that, in consideration of the British Government agreeing not to prevent American shippers from exercising their legitimate right of bringing out of Germany the goods which they have bought and paid for before a date fifteen days prior to the British order in council of March 15, citizens of the United [Page 221] States will refrain from requesting further time in which to do that which they have a legal right to do, I feel it to be my duty to report the matter to the Department in order that it may be fully advised of the situation.
Until I am informed, therefore, of the views of the Department as to the expediency of my continuing to act unofficially in behalf of the American citizens in the present circumstances, I shall decline to participate in further conferences with representatives of the British Government.
Respectfully submitted,