File No. 763.72112/2110

The British Ambassador ( Spring Rice ) to the Secretary of State

Dear Mr. Secretary: Statements have been widely circulated in this country to the effect that the trade of the United States has greatly suffered owing to the restrictive measures taken by the Allies against German commerce and more especially that British merchants [Page 631] and shippers are profiting greatly by the war measures of the British Government to the detriment of American trade.

As these statements seem to be largely based upon a report emanating from an officer of your Department who had not had access to the official statistics of the United States Government, I think it may be useful, in the interest of a fair and just appreciation of the facts (which I am sure is your object), if I enclose a memorandum on the subject of these assertions which is supplementary to that already communicated to you by my Government.

It is not to be expected that the United States should be wholly untouched by such a world calamity as the present war, and in the case of the American Civil War it will be in your recollection that the immediate effect on France and England was an unparalled industrial crisis which resulted in untold suffering to the working classes of those countries, hundreds of thousands being rendered absolutely destitute. It is satisfactory to note from the recently published report of the Secretary of the Treasury, that wholly apart from war orders, the industrial situation in this country is on a firm, steady, and healthy basis.

With regard to the specific accusation against my Government that while American trade with neutral countries has been diminished, British merchants have profited by the war measures to increase their export trade, I beg to recommend to your notice the figures given in the accompanying report, based on the official returns of American trade published by your Government. You will see that while British trade, which has suffered greatly in its general volume, has increased to a slight extent in certain branches, American trade has increased to a vastly greater extent.

It may be apposite to point out that British trade does not compete with American trade in the neutral countries of Europe, as the products of America, sent to those countries, are of a wholly different nature from those exported from Great Britain.

In some cases, which are explained in detail in the memorandum, there has been an increase of the exports from England but the amount involved has been infinitesimal as compared with the volume of American trade in the same articles, and the increase in the exports from England is explained by accidental causes which involved no loss to the American exporter. I need only mention the case of cotton. The export from England of American cotton increased during the first seven months of the year by 114,000 bales, largely owing to cotton which was purchased by the British Government in consequence of misapprehension as to the ownership and released to the Swedish consignees. In the same months the total exports from America increased by 2,300,000 bales.

I trust that it will not be found amiss that I ask your consideration of the enclosed memorandum which is not communicated in a controversial spirit, but merely in order to correct an impression which appears to have arisen from an imperfect appreciation of the facts.

I need only add in conclusion that if there comes to the knowledge of your Department any specific instance in which the British Government has made use of their restrictive trade measures for the purpose of unfairly discriminating between British and American [Page 632] trade, you will bring the facts to the knowledge of my Government in order that they may cause an enquiry and remedy such injustice.

I am [etc.]

Cecil Spring Rice
[Enclosure]

The British Embassy to the Department of State

Memorandum

1. The attention of His Britannic Majesty’s Embassy has been drawn to a report by the United States Consul General in London on the subject of British trade in July, which was published in Commerce Report No. 203 of August 30 and the substance of which was widely reproduced in the press.1

2. In the course of this report Mr. Skinner states as follows:

It continues to be the case that many classes of goods, the exportation of which from the United States to neutral countries is attended with great difficulties and hazards, are going forward freely from Great Britain to the same countries, and in some cases in largely increased quantities.

The idea that British trade is taking advantage of the conditions arising out of the military situation in order to establish itself in neutral markets at the expense of American trade is one that has already been submitted by the United States Consul General in London in a previous report, and Sir Edward Grey, in a note to Mr. Page dated August 13 last,2 endeavoured to show that the idea was founded upon a misapprehension of the facts. The sentence quoted above, however, and the publicity given to it in the American press and to the figures adduced to support it, render a further explanation desirable.

3. While British export trade has undergone a uniform decrease in practically all articles, the published figures of the United States Department of Commerce show that the export trade of the United States, in spite of lack of shipping, the complete dislocation of normal conditions of commerce and the measures taken by the Allied powers to restrict the trade of their enemies, and quite apart from the export of actual munitions of war, has increased to a phenomenal extent, and this, not only in supplying the requirements of certain of the belligerent nations but in general trade with the very countries from whose markets it has been claimed that Great Britain was endeavouring to exclude American products. On the other hand British trade has probably suffered more from the embargoes on exports imposed owing to the necessities of war by the British Government than has United States trade from the measures in restriction of neutral trade with the enemies of Great Britain.

4. Apart from this unprecedented volume of exports, American industry, which before the outbreak of the war had been suffering for over a year from general and widespread depression, has during the period of hostilities realized another benefit; the reduction in exports from the belligerent countries has supplied the opportunity for American industry to replace European products in the markets of South and Central America, the Far East and even in neutral European countries, so that the practical cessation of direct trade with Germany, Austria-Hungary, Belgium and Turkey is more than compensated by the opening up of new markets. The Secretary of the Treasury in his report for the year ending June 30, 1915, which has just been published says: “What extraordinary results have been achieved in the brief period since December 1914! During the year there has been a steady, healthy, forward movement in every line of activity, until now prosperity has been firmly established throughout the country.” From all points of view therefore it appears that the European war has proved rather beneficial than otherwise to American trade and industry, while any suggestion that Great Britain is attempting to use the military situation for the purpose of hampering American trade is utterly refuted by the actual facts and figures.

5. After stating that many classes of goods, the exportation of which from the United States is attended with difficulties and hazards, are going forward freely from the United Kingdom, Mr. Skinner’s report continues:

Exports of raw cocoa for example are reported in the following quantities: [Page 633]

Countries March April
1914 1915 1914 1915
Pounds Pounds Pounds Pounds
Denmark _ _ _ _ _ _ _ _ 1,642,909 1,555 685,336
Norway 21,687 276,388 12,586 194,705
Sweden 10,562 492,647 16,500 1,150,746
Holland 496,012 1,532,970 290,884 1,867,126
Total 528,261 3,944,914 321,525 3,897,913

It is to be presumed that these figures are quoted in support of the theory that British trade in certain articles is increasing at the expense of American trade, and that cocoa is selected as an especially favourable illustration. But figures procured from the United States Department of Commerce show that while the total British exports of raw cocoa to Norway, Sweden, Denmark, and the Netherlands increased from 528,261 pounds in March 1914 to 3,944,914 pounds in March 1915, and from 321,525 pounds in April 1914 to 3,897,913 pounds in April 1915, the United States exported no raw cocoa to any of these countries in March or April 1914; while in March 1915 2,558,787 pounds were exported to Sweden, Denmark, and the Netherlands and in April 1915 2,283,860 pounds were exported to Sweden and Denmark.

The following figures show these exports in detail:

Countries March April
1914 1915 1914 1915
Pounds Pounds Pounds Pounds
Denmark _ _ _ _ _ _ _ 1,664,085 _ _ _ _ _ _ 1,162,391
Sweden _ _ _ _ _ _ 884,858 _ _ _ _ _ _ 1,121,469
Holland _ _ _ _ _ _ 9,844 _ _ _ _ _ _ _ _ _ _ _ _
Norway _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Total_ _ _ _ _ _ _ _ _ _ _ _ _ 2,558,787 _ _ _ _ _ _ 2,283,860

The total amount of raw cocoa exported from the United States to all countries during these two months of 1914 and 1915 was as follows:

1914 1915
March 362,257 pounds 2,661,866 pounds
April 483,353 4,045,869

and during the nine months ending March 31 for the two years:

1914 3,553,025 pounds
1915 22,770,223 pounds

After quoting the British exports of cocoa to Scandinavia and the Netherlands in March and April 1914 and 1915, the report continues: “For July 1915 the total exports (from Great Britain) were 7,039,067 pounds against 1,283,585 pounds in July 1914.”

Figures published by the United States Department of Commerce show that for July 1915 the total exports from the United States were 1,765,463 pounds against 251,542 pounds in July 1914.

That is, during the month of July 1915 British exports were about six times as great as last year while United States exports were about seven times as great as last year.

Finally for the fiscal years ending June 30, the total United States exports of raw cocoa have increased from 4,577,622 pounds in 1914 to 28,979,053 pounds in 1915.

So that in spite of the “great difficulties and hazards” quoted in the report the United States trade in raw cocoa has increased sevenfold in the last year.

[Page 634]

6. Leaving the figures of British exports of raw cocoa, Mr. Skinner, still presumably developing the theory that British trade has benefitted at the expense of American trade, continues as follows:

Exports of cotton, as reported under the cotton statistics act of 1866, were as follows up to August 5:

American Total
Bales Bales
To August 5, 1915 220,847 445,843
To July 30, 1914 106,382 271,989
To July 31, 1913 153,832 315,757

Now when it is considered that the United States exports of cotton in July last alone were 244,474 bales, or more than the total number of bales of American cotton exported from Great Britain during the seven months ending August 5, 1915, and that during these seven months the United States exported some 6,000,000 bales of cotton as against 3,700,000 during the same period last year, the increase of 114,000 bales in British reexports of American cotton during the first seven months of 1915 as compared with the same period a year ago, and of 67,000 bales as compared with the same period two years ago, appears relatively insignificant. A large proportion of this increase consisted of cotton originally consigned from the United States to Swedish firms, purchased by the British Government from the American shippers under misrepresentations as to the real ownership and subsequently released and forwarded to Swedish firms who established their titles to it.

Moreover it is to be noticed that United States exports of cotton to “other Europe,” i. e., Europe except Austria-Hungary, Belgium, France, Germany, Italy, Russia, Spain, and the United Kingdom, for the twelve months ending June 30 have increased in value from $5,000,000 in 1914 to $60,000,000 in 1915. As the amount of cotton exported to Portugal, Switzerland, Turkey, and the Balkan States is negligible, this increase of $55,000,000 must have been derived from exports to Norway, Sweden, Denmark, and the Netherlands. In the light of these figures it is difficult to see what foundation there is for the suggestion that British trade is attempting to establish itself in the cotton markets of neutral European countries at the expense of the United States.

7. The report gives a table showing the exports of British products and manufactures and reexports of colonial and foreign merchandise from the United Kingdom during the months of July 1914 and July 1915, indicating in some cases the quantities exported to different countries.

Among the British products all articles show a decrease in the total quantity exported with the few unimportant exceptions of malt, rice, lard, cocoanut oil and palm oil. The exports to Allied and neutral countries show however an increase in certain cases. Press summaries of the report laid stress upon the increased exports of cotton goods to France, Russia, Norway, Sweden, Denmark, and the Netherlands, although except in the case of France these increases are inconsiderable. But it cannot be maintained that any of this increased trade is gained at the expense of American trade, seeing that the United States trade in cotton goods compares in size and importance with the British trade in about the ratio that British reexports of raw cotton compare with the United States exports of raw cotton. The manufacture of cotton goods in the Lancashire district is one of the greatest of British industries, just as the production of the staple in the United States is the greatest industry of the South, and there can therefore be no possibility of competition between the two countries. Moreover of American cotton goods not more than about 1 per cent goes to Europe.

8. Other papers remark on the increased British exports of wool and woolen goods to the allies of Great Britain and to neutral countries “though the United States has had great difficulty in getting wool and wool products to neutrals.”

The figures of British trade in July quoted in Mr. Skinner’s report show that British reexports of raw wool fell from sixteen to nine million pounds with a slight increase in the quantity exported to the United States and the Netherlands, and a considerable decrease in the exports to France. Total exports of wool tops have fallen from four to one and a half million pounds (no separate [Page 635] countries given); total exports of worsted yarn have fallen from four to one million pounds, exports to Russia, Sweden, Norway, Denmark, Holland, and the United States having all decreased while those to France have risen from 85,000 to 355,000 pounds; total exports of woollen tissues have decreased from eleven to seven million yards, exports to Sweden showing an increase of 24,000 yards, to Norway of 9,000 yards, to Denmark of 87,000 yards, and to France of nearly 3,000,000 yards, while exports to the Netherlands and the United States have decreased; total exports of worsted tissues have fallen from seven to five million yards, exports to Norway having increased by 16,000 yards, to Denmark by 9,000 yards and to France 300,000 yards, while exports to Sweden, the Netherlands, and the United States have decreased.

The increased exports to neutral countries are comparatively insignificant, as in the case of cotton goods, and the increased exports to France probably consist largely of war orders. The figures of the Department of Commerce show that during the month of July the United States exported to France woollen wearing apparel to the value of $725,531 as against none for the same period of last year. The total amount of raw wool reexported from the United States during the twelve months ending June 30, 1914–15, has increased from one to seven million pounds.

The total exports of wool and woollen goods from the United States have therefore increased to a considerable extent while total British exports have declined. American exports to Norway, Sweden, Denmark, and the Netherlands are not separately given by the Department of Commerce and cannot therefore be compared with British exports to these countries.

Any increase in British exports of cotton and woollen goods to these countries and to the allies of Great Britain is largely due to the fact that the French and Belgian textile industry districts are in German occupation while the output of the German industry itself is considerably curtailed by the lack of labour for other than war industries; these countries have therefore increased their imports from the nearest available source which is the United Kingdom.

9. Among the reexports from the United Kingdom of foreign and colonial merchandise the following show an increase:

Rice, cocoanut oil, cottonseed oil, cinnamon, ginger, cocoa, coffee, cotton, nuts and kernels, lamp oil, motor spirit, lubricating oil, gas oil, fuel oil, tobacco, rosin, and rubber.

Of these, cotton and cocoa have been discussed above. The following figures from the Summary of Foreign Commerce of the United States, Department of Commerce, for July show the exports of these articles from the United States:

July

1914 1915
Rice (reexports) 3,702,320 pounds 9,933,563 pounds
Rice (domestic) 1,541,437 4,682,254
Cocoanut oil (reexports) 99,287 228,969
Cottonseed oil (domestic) 5,903,709 21,066,077
Cinnamon1 _ _ _ _ _ _ _ _ _ _ _ _
Ginger (reexports) 17,046 10,130
Coffee (domestic) 1,101,439 1,626,338
Coffee (reexports) 732,365 5,514,342
Nuts (domestic) $1,470,934 $1,358,008
Crude oil (domestic) 16,720,303 gallons 11,755,109 gallons
Gasoline (domestic) 18,881,858 7,235,850
Gas and fuel oil (domestic) 59,026,109 71,579,643
Illuminating oil (domestic) 110,774,262 79,223,876
Lubricating oil (domestic) 17,428,046 24,980,304
Naphthas (domestic) 8,594,262 17,712,125
Total mineral oil (domestic) 231,745,910 218,090,714
Tobacco, raw (domestic) 43,589,445 pounds 39,577,367 pounds
Tobacco, mfs. (domestic) $467,342 $626,116
Rosin (domestic) 228.714 barrels 93.951 barrels
Rubber, mfs. (domestic) $1,089,602 $2,024,780
Rubber, raw (reexports) $157,547 $175,697

[Page 636]

It is seen therefore that United States exports of all these articles, with the exception of ginger, nuts, crude oil, gasoline, illuminating oil, raw tobacco, and rosin, show an increase over last year during the month of July. Of these, nuts and ginger are of little importance, and while exports of both in the month of July show a decrease, for the seven months ending July they show an increase of over one third.

10. With regard to oil products, the disparity between the quantities exported from the United States and the United Kingdom is so great as to preclude any possibilty of competition in neutral markets between British reexports and United States exports.

11. British reexports of rosin increased from 10,835 hundredweight in July 1914 to 60,218 hundredweight in July 1915 (the amounts exported to different countries are not given in Consul General Skinner’s report); while United States exports of rosin in the same month fell from 228,714 barrels in 1914 to 93,951 barrels in 1915 (from 571,785 to 234,878 hundredweight). Now of the total United States exports in July 1914, 127,840 barrels (319,600 hundredweight), or more than half, went to Belgium and Germany, to which countries there were no direct exports in July of this year, rosin being absolute contraband. On the other hand United States exports to “other Europe,” i. e., Europe exclusive of Austria-Hungary, Belgium, Germany, Italy, Holland, Russia, and the United Kingdom, rose from 135 barrels in July 1914 to 10,415 barrels in July 1915 (from: 338 to 26,038 hundredweight), so that if the United States trade with Germany, Austria-Hungary, and Belgium has been lost this year, on the other hand the trade with France, Spain, and the smaller neutral countries of Europe has increased. It can therefore hardly be suggested that British exports of rosin are supplanting those of the United States in the neutral European markets. United States exports of rosin to “other Europe” alone in July were nearly half the total British reexports of rosin to all destinations in the same month. Moreover it must be remembered that rosin is an element of primary importance in the manufacture of munitions of war and consequently large quantities which were previously available for export are now required in the United States.

12. British reexports of raw tobacco increased in July from 351,809 pounds in 1914 to 6,064,809 pounds1 in 1915; United States exports of raw tobacco in July decreased from 43,589,445 pounds in 1914 to 39,577,367 pounds; in 1915. The increase in British reexports is largely due to the diversion from continental to British ports of tobacco grown in the British Dominions. United States exports for the seven months ending July were 212,000,000 pounds this year as opposed to 215,000,000 last year—a loss of only 3,000,000 pounds in quantity and in value $392,000—showing that gains in other directions have made up for the loss of trade with Germany, which in the month of July 1914 alone took over 10,000,000 pounds of American tobacco.

13. Finally the articles in the press which quote the report in nearly all cases contain the following sentence which however does not appear in the report as reproduced in Commerce Report No. 203:

The customs returns of Sweden, Norway, Denmark, and the Netherlands all show a smaller volume of imports from America since the war than before, notwithstanding the British plea that they have swollen their imports to aid the Teutons.

On the other hand the figures of the United States Department of Commerce, showing the exports from the United States to these countries during the twelve months ending June 30, do support the “British plea” in a remarkable manner. They are as follows:2

[Page 637]

Exports from the United States for the Twelve Months Ended June 30

Countries 1913 1914 1915
Denmark $18,687,794 $15,670,135 $79,824,478
Norway 8,391,458 9,066,610 39,074,701
Sweden 12,104,366 14,644,226 78,273,818
Holland 125,909,862 112,215,673 143,267,019
Total $165,093,480 $151,596,644 $340,440,016

The following figures give the exports from the port of New York alone during the first thirteen months of war as compared with the same period last year:

Exports from New York to Norway, Sweden, and Denmark

Countries August 1, 1913, to September 4, 1914 August 1, 1914, to September 4, 1915
Denmark $6,730,814 $45,122,214
Norway 6,940,802 22,173,888
Sweden 6,394,240 36,996,720
Total $20,065,856 $104,292,822
Total, August 1, 1914, to September 4, 1915 $104,292,822
Total, August 1, 1913, to September 4, 1914  20,065,856
Difference $84,226,966

Exports from New York to Germany

August 1, 1913, to September 4, 1914 $90,720,149
August 1, 1914, to September 4, 1915  5,802,068
Difference $84,918,081

Now if the customs returns of Norway, Sweden, and Denmark show that imports from the United States have decreased since the war, while the official returns of the United States Department of Commerce show on the other hand that they have enormously increased, it seems legitimate, in the absence of any other explanation, to assume that the United States figures represent the amount of goods shipped from the United States to the Scandinavian countries and that the customs figures of the Scandinavian countries represent that proportion of the goods exported from the United States which paid duty and were entered for consumption in those countries, while the considerable difference represents the amount of goods exported from the United States which, on arrival in the Scandinavian countries, were reshipped largely to Germany. The fact that the increase in shipments from New York to Norway, Sweden, and Denmark during the first thirteen months of the war exactly balances the decrease in shipments to Germany during the same period is extremely significant.

14. The figures quoted above from the official reports of the Department of Commerce conclusively prove that the export trade of the United States has not suffered from the inevitable restrictions on neutral commerce deriving from the state of war, and that there is no vestige of foundation for the insinuation that Great Britain has taken advantage of war conditions and of the measures [Page 638] necessitated by military considerations, in order to increase British exports to neutral countries at the expense of American trade.

  1. Ante, p. 554.
  2. Ante, p. 511.
  3. No figures available.
  4. According to a letter from the Ambassador of March 27, 1916, this figure should be 1,064,809.
  5. See Monthly Summary of Foreign Commerce of the United States, June 1915, p. 1050.