Papers Relating to the Foreign Relations of the United States, 1916, Supplement, The World War

File No. 768.72112/2128

The Ambassador in Great Britain (Page) to the Secretary of State

No. 2794

London, January 5, 1916 .
[Received January 17.]

Sir: I have the honor to transmit herewith for the information of the Department, copies, in triplicate, of a statement presented to both Houses of Parliament, embodied in a White Paper entitled Measures Adopted to Intercept the Sea-borne Commerce of Germany. This White Paper was published on January 4.

In a leading article in the London Times of this morning, January 5, entitled “Sea power and German trade,” it is set forth that this White Paper is in compliance with the promise made to the Times by the Undersecretary of State for Foreign Affairs that the broad lines of the British blockading policy and the agreements with traders in different countries should be stated.

It is undoubtedly true that this White Paper was published in order to make clear the British blockading policy and the understanding with trade bodies in neutral countries, on account of the many questions which were asked of the Government in the House of Commons as to the recent agreement between the Foreign Office and certain trading corporations in Denmark.

The clipping, in triplicate, of the leading article in the Times is also enclosed herewith.¹

I have [etc.]

Walter Hines Page

[Enclosure]

Statement of the Measures Adopted to Intercept the Sea-borne Commerce of Germany

1. The object of this memorandum is to give an account of the manner in which the sea power of the British Empire has been used during the present war for the purpose of intercepting Germany’s imports and exports.

i. belligerent rights at sea

2. The means by which a belligerent who possesses a fleet has, up to the time of the present war, interfered with the commerce of his enemy are three in number:

(i) The capture of contraband of war on neutral ships.

(ii) The capture of enemy property at sea.

(iii) A blockade by which all access to the coast of the enemy is cut off.

3. The second of these powers has been cut down since the Napoleonic wars by the Declaration of Paris of 1856, under which enemy goods on a neutral ship, with the exception of contraband of war, were exempted from capture. Enemy goods which had been loaded on British or Allied ships, before the present war were seized in large quantities immediately after its outbreak; but for obvious reasons such shipments ceased, for all practical purposes, after the 4th August, 1914, and this particular method of injuring the enemy may therefore, for the moment, be disregarded.

No blockade of Germany was declared until March 1915, and therefore up to that date we had to rely exclusively on the right to capture contraband.

ii. contraband

4. By the established classification goods are divided into three classes:

(a) Goods primarily used for warlike purposes.

(b) Goods which may be equally used for either warlike or peaceful purposes.

(c) Goods which are exclusively used for peaceful purposes.

5. Under the law of contraband, goods in the first class may be seized if they can be proved to be going to the enemy country; goods in the second class may be seized if they can be proved to be going to the enemy Government or its armed forces; goods in the third class must be allowed to pass free. As to the articles which fall within any particular one of these classes, there has been no general agreement in the past, and the attempts of belligerents to enlarge the first class at the expense of the second, and the second at the expense of the third, have led to considerable friction with neutrals.

6. Under the rules of prize law, as laid down and administered by Lord Stowell, goods were not regarded as destined for an enemy country unless they were to be discharged in a port in that country; but the American prize courts in the Civil War found themselves compelled by the then existing conditions of commerce to apply and develop the doctrine of continuous voyage, under which goods which could be proved to be ultimately intended for an enemy country were not exempted from seizure on the ground that they were first to be discharged in an intervening neutral port. This doctrine, although hotly contested by many publicists, had never been challenged by the British Government, and was more or less recognised as having become part of International Law.

7. When the present war broke out it was thought convenient, in order, among other things, to secure uniformity of procedure among all the Allied forces, to declare the principles of international law which the Allied Governments regarded as applicable to contraband and other matters. Accordingly, by the Orders in Council of the 20th August and the 22d October. 1914, and the corresponding French Decrees, the rules set forth in the Declaration of London were adopted by the French and British Governments with certain modifications. As to contraband, the lists of contraband and free goods in the Declaration were rejected, and the doctrine of continuous voyage was applied not only to absolute contraband, as the Declaration already provided, but also to conditional contraband, if such goods were consigned to order, or if the papers did not show the consignee of the goods, or if they showed a consignee in enemy territory.

8. The situation as regards German trade was as follows: Direct trade to German ports (save across the Baltic) had almost entirely ceased, and practically no ships were met with bound to German ports. The supplies that Germany desired to import from overseas were directed to neutral ports in Scandinavia, Holland, or (at first) Italy, and every effort was made to disguise their real destination. The power which we had to deal with this situation in the circumstances then existing was:

(i) We had the right to seize articles of absolute contraband if it could be proved that they were destined for the enemy country, although they were to be discharged in a neutral port.

(ii) We had the right to seize articles of conditional contraband if it could be proved that they were destined for the enemy Government or its armed forces, in the cases specified above, although they were to be discharged in a neutral port.

9 On the other hand, there was no power to seize articles of conditional contraband if they could not be shown to be destined for the enemy Government or its armed forces, or non-contraband articles, even if they were on their way to a port in Germany, and there was no power to stop German exports.

10. That was the situation until the actions of the German Government led to the adoption of more extended powers of intercepting German commerce in March 1915. The Allied Governments then decided to stop all goods which could be proved to be going to, or coming from, Germany. The state of things produced is in effect a blockade, adapted to the condition of modern war and commerce, the only difference in operation being that the goods seized are not necessarily confiscated. In these circumstances it will be convenient, in considering the treatment of German imports and exports, to omit any further reference to the nature of the commodities in question as, once their destination or origin is established, the power to stop them is complete. Our contraband rights, however, remain unaffected, though they, too, depend on the ability to prove enemy destination.

iii. german exports

11. In carrying out our blockade policy great importance was from the outset attached to the stoppage of the enemy’s export trade, because it is clear that to the extent that his exports can be stopped, and his power to establish credits for himself in neutral countries curtailed, his imports from such neutral countries will more or less automatically diminish. The identification of articles of enemy origin is, thanks to the system of certificates of origin which has been established, a comparatively simple matter, and the degree to which the policy of stopping German and Austrian oversea exports has been successful can best be judged by looking at the statistics of German and Austrian imports into America.

12. The normal imports into the United States of America from Germany and Austria, before the war, for the seven months March to September inclusive, are valued approximately and in round figures at 124,000,000 dollars (24,800,000l.). From March to September inclusive, this year’s imports into the United States of America from those countries were valued at approximately 22,000,000 dollars (4,400,000l.). This sum includes the goods which were already in neutral ports in the way of shipment or in transit when the further measures adopted by the Allied Governments were announced in March, and also a considerable proportion of those which have been allowed to pass in the circumstances mentioned in paragraph 14. A certain amount is also to be accounted for by goods received from Germany and Austria by parcel post, which it was not originally possible to stop effectively. Steps have now been taken to close this channel to enemy exports. The latest returns available, those for September, show that over 92 per cent of the German exports to the United States of America have been stopped.

13. The above figures allow of but one conclusion: the oversea exports of Germany and Austria are very near extinction. It is of special interest to note that in the main these exports have not been merely diverted to the neutral countries adjacent to Germany. The imports which those countries have received from Germany have not in fact exceeded the normal quantities of previous years.

14. The object of the policy being to injure the enemy, the Allied Governments have in certain cases permitted the export of goods which had been ordered before the 1st March, and had been either paid for prior to that date or ordered before that date on terms which rendered the neutral purchaser liable to pay whether the goods reached him or not. It is clear that in these cases no harm would be done to the enemy, or pressure put upon him, by not allowing the goods to pass. On the contrary, he would, if that were done, both receive his price and retain the goods and their possible use. The total value of the goods with which the Allied Governments have undertaken not to interfere in such cases up to the end of 1915 is approximately 3,000,000l. If the goods allowed to pass under this arrangement were deducted from the total enemy exports to the United States of America, it would be seen that the amount of German exports which serve to increase the resources of the enemy is almost negligible.

iv. german imports

15. As regards German imports, however, the problem is much more complicated. Its central difficulty is that of distinguishing between goods with an enemy destination from those with a genuine neutral destination. A belligerent who makes use of his naval power to intercept the commerce of his enemy has to justify his action in each particular case before a Prize Court, which is bound by international law and not by the ordinary law of the country in which it sits. It is not sufficient for him to stop a neutral vessel and remove from her such articles as he may believe to be intended for his enemy; it is necessary subsequently to demonstrate in a court of law that the destination of the goods was such as to justify the belligerent in seizing them. If this is not proved, the goods will be released, and damages may be awarded against the captor. It must also be remembered that, in order to justify the seizure of a particular consignment, it is necessary to satisfy the Prize Court of the enemy destination of that consignment, and evidence of a general nature, if unaccompanied by proofs directly bearing on a particular case, is not enough. All this applies as much to goods seized as contraband as it does to those seized for breach of blockade.

16. In earlier wars the production of the necessary proof was a comparatively simple matter. Owing to the difficulties of inland transport before the introduction of railways, goods for the enemy country were usually carried to ports in that country and the ship’s papers showed their destination. When, therefore, the ship had been captured, the papers found on board were generally sufficient to dispose of the case. In the old cases of contraband, the question at issue was usually not where the goods were in fact going to, but whether their nature was such as to make them liable to condemnation in view of the destination shown on the ship’s papers. Even in the American Civil War the difficulty of proving destination was usually not serious, because the neutral harbours through which the supply of goods for the Confederate States was carried on were in normal time ports of comparatively small importance, and it could be shown that in normal times there was no local market for goods of such quantities and character.

17. The case has been far different in the present war. The goods which Germany attempts to import are consigned to neutral ports, and it need hardly be said that the papers on board convey no suggestion as to their ultimate destination. The conditions of modern commerce offer almost infinite opportunities of concealing the real nature of a transaction, and every device which the ingenuity of the persons concerned, or their lawyers, could suggest has been employed to give to shipments intended for Germany the appearance of genuine transactions with a neutral country. The ports to which the goods are consigned, such as Rotterdam and Copenhagen, have in peace time an important trade, which increases the difficulty of distinguishing the articles ultimately intended to reach the enemy country from those which represent importation into the neutral country concerned for its own requirements. If action had to be taken solely on such information as might be gathered by the boarding officer on his visit to the ship, it would have been quite impossible to interfere to an appreciable extent with German imports, and the Allied Governments would therefore have been deprived of a recognised belligerent right.

18. In these circumstances, unless the Allied Governments were prepared to seize and place in the Prize Court the whole of the cargo of every ship which was on her way to a neutral country adjacent to Germany, and to face the consequences of such action, the only course open to them was to discover some test by which goods destined for the enemy could be distinguished from those which were intended for neutral consumption.

19. The first plan adopted for this purpose is to make use of every source of information available in order to discover the real destination of sea-borne goods, and to exercise to the full the right of stopping such goods as the information obtained showed to be suspect, while making a genuine and honest attempt to distinguish between bona fide neutral trade and trade which, although in appearance equally innocent, was in fact carried on with the enemy country.

20. For this purpose a considerable organisation has been established in the Contraband Committee, which sits at the Foreign Office, and works in close touch with the Admiralty, Board of Trade, and War Trade Department. Nearly every ship on her way to Scandinavian or Dutch ports comes or is sent into a British port for examination, and every item of her cargo is immediately considered in the light of all the information which has been collected from the various sources open to the Government, and which, after nearly a year and a half of war, is very considerable. Any items of cargo as to which it appears that there is a reasonable ground for suspecting an enemy destination are placed in the Prize Court, while articles as to the destination of which there appears to be doubt are detained pending further investigation.

21. If, however, this were all that could be done, there is little doubt that it would be impossible to effect a complete cutting off of the enemy’s supplies. For instance, there are many cases in which it would be difficult to establish in the Prize Court our right to stop goods, although they or their products, perhaps after passing through several hands, would in all probability ultimately reach the enemy. To indicate more plainly the nature of these difficulties would obviously be to assist the enemy and the neutral traders who desire to supply him; but the difficulties exist, and, in order to meet them, it has been necessary to adopt other means by which neutral may be more easily distinguished from enemy trade, and the blockade of Germany made more effective than it would be if we relied solely on the right to stop goods which could be proved to be intended for the enemy.

v. guarantees by importers

22. Importers in neutral countries adjacent to Germany have found that the exercise of our belligerent rights to some extent impedes the importation of articles which they genuinely need for the requirements of their own country, and consequently they have in many cases shown willingness to make agreements with this country which on the one hand secure their receiving the sup plies which they need, while on the other guaranteeing to us that goods allowed to pass under the terms of the agreement will not reach the enemy. The neutral Governments themselves have as a rule considered it inadvisable to make agreements on such points with His Majesty’s Government; they have oh the whole confined their action to prohibiting the export of certain articles which it was necessary for them to import from abroad. Inasmuch, however, as in most cases they reserved the right to grant exemptions from such prohibitions, and as trade between the Scandinavian countries themselves was usually excluded from the scope of such measures, the mere fact of the existence of such prohibitions could not be considered a sufficient safeguard that commodities entering the country would not ultimately reach Germany.

23. In some neutral countries, however, agreements have been made by representative associations of merchants, the basis of which is that the associations guarantee that articles consigned to or guaranteed by them, and their products, will hot reach the enemy in any form, while His Majesty’s Government undertake not to interfere with shipments consigned to the association, subject to their right to institute prize proceedings in exceptional cases where there is evidence that an attempt has been made to perpetrate a fraud upon the association, and to pass the goods ultimately through to Germany. The first of these agreements was made with the Netherlands Oversea Trust, and similar agreements either general or dealing with particular commodities of special importance, such as rubber and cotton, have been made with bodies of merchants in Sweden, Norway, Denmark, and Switzerland. The details of these agreements it is impossible to give more fully, but the general principle is that the associations, before allowing goods to be consigned to them, require the would-be receivers to satisfy them, by undertakings backed by sufficient pecuniary penalties, that the goods will not leave the country, either in their original shape or after any process of manufacture, and notwithstanding any sales of which they may be the subject.

In some cases these agreements provide that the associations shall themselves be bound to detain or return goods, believed by His Majesty’s Government to be destined for the enemy; so that it does not follow that cargoes allowed’ to proceed to a neutral port will necessarily be delivered to the consignees.

24. The existence of such agreements is of great value in connection with the right of seizure, because the fact of articles not being consigned to of guaranteed by the association, or being consigned to it without the necessary consent, at once raises the presumption that they are destined for the enemy.

vi. agreements with shipping lines

25. Delays caused by the elaborate exercise of the belligerent right of visit and search are very irksome to shipping; and many shipping lines who carry on regular services with Scandinavia and Holland have found it well worth their while to make agreements with His Majesty’s Government under which they engage to meet our requirements with regard to goods carried by them, in return for an undertaking that their ships will be delayed for as short a time as possible for examination in British ports. Several agreements of this kind have been made; the general principle of them is that His Majesty’s Government obtain the right to require any goods carried by the line, if not discharged in the British port of examination, to be either returned to this country for Prize Court proceedings, or stored in the country of destination until the end of the war, or only handed to the consignees under stringent guarantees that they or their products will not reach the enemy. The companies obtain the necessary power to comply with these conditions by means of a special clause inserted in all their bills of lading, and the course selected by the British authorities is determined by the nature of the goods and the circumstances of the case. In addition to this, some of these companies make a practice, before accepting consignments of certain goods, of enquiring whether their carriage is likely to lead to difficulties, and of refusing to carry them in cases where it is intimated that such would be the case. The control which His Majesty’s Government are in a position to exercise under these agreements over goods carried on the lines in question is of very great value.

vii. bunker coal

26. Much use has been made recently of the power which the British Government are in a position to exercise owing to their ability to refuse bunker coal to neutral ships in ports in the British Empire. Bunker coal is now only supplied to neutral vessels whose owners are willing to comply with certain conditions which ensure that no vessels owned, chartered, or controlled by them trade with any port in an enemy country, or carry any cargo which proceeds from, or is destined for, an enemy country. The number of owners who accept these conditions increases almost daily. The use of this weapon has already induced several shipping lines which before the war maintained regular services between Scandinavian and German Baltic ports to abandon their services.

viii. agreements in respect of particular commodities

27. Special agreements have been made in respect of particular articles the supply of which is mainly derived from the British Empire or over which the British Government are in a position to exercise control. The articles covered by such agreements, the object of which is to secure such control over the supply of these materials as will ensure that they or their products will not reach the enemy, are rubber, copper, wool, hides, oil, tin, plumbago, and certain other metals.

ix. rationing

28. Though the safeguards already described do much to stop entirely all trade to and from Germany, yet, in spite of all of them, goods may and do reach our enemies, and, on the other hand, considerable inconvenience is caused to genuinely neutral trade. It is to avoid both evils that His Majesty’s Government have for months past advocated what is called rationing, as by far the soundest system both for neutrals and belligerents. It is an arrangement by which the import of any given article into a neutral country is limited to the amount of its true domestic requirements. The best way of carrying this arrangement into effect is probably by agreement with some body representing either one particular trade or the whole commerce of the country. Without such an agreement there is always a risk that, in spite of all precautions, the whole rationed amount of imports may be secured by traders who are really German agents. These imports might go straight on to Germany, and there would then be great practical difficulty in dealing with the next imports destined, it may be, for genuine neutral traders. If they were to be stopped, there would be great complaint of injustice to neutrals, and yet unless that be done the system would break down. Accordingly, agreements of this kind have been concluded in various countries, and His Majesty’s Government are not without hope that they may be considerably extended in the future. Even so the security is not perfect. An importer may always let his own country-men go short and re-export to Germany. The temptation to do so is great, and as our blockade forces prices up, is increasing. But the amount that gets through in this way cannot be large, and the system is in its working so simple that it minimises the delays and other inconveniences to neutral commerce inseparable from war. Of the details of these arrangements it is impossible to speak. But their principle appears to offer the most hopeful solution of the complicated problems arising from the necessity of exercising our blockade through neutral countries.

x. results

29. As to the results of the policy described in this memorandum, the full facts are not available. But some things are clear. It has already been shown that the export trade of Germany has been substantially destroyed. With regard to imports, it is believed that some of the most important, such as cotton, wool, and rubber, have for many months been excluded from Germany. Others, like fats and oils and dairy produce, can only be obtained there, if at all, at famine prices. All accounts, public and private, which reach His Majesty’s Government agree in stating that there is considerable discontent amongst sections of the German population, and there appear to have been food riots in some of the larger towns. That our blockade prevents any commodities from reaching Germany is not, and under the geographical circumstances cannot be true. But it is already successful to a degree which good judges both here and in Germany thought absolutely impossible, and its efficiency is growing day by day. It is right to add that these results have been obtained without any serious friction with any neutral Government. There are obvious objections to dwelling on the importance to us of the goodwill of neutral nations; but anyone who considers the geographical, military, and commercial situation of the various countries will certainly not underrate the value of this consideration. There is great danger when dealing with international questions in concentrating attention exclusively on one point in them, even if that point be as vital as is undoubtedly the blockade of Germany.

xi. conclusion

30. To sum up, the policy which has been adopted in order to enforce the blockade of Germany may be described as follows:

(i) German exports to oversea countries have been almost entirely stopped. Such exceptions as have been made are in cases Where a refusal to allow the export of the goods would hurt the neutral concerned without inflicting any injury upon Germany.

(ii) All shipments to neutral countries adjacent to Germany are carefully scrutinized with a view to the detection of a concealed enemy destination. Wherever there is reasonable ground for suspecting such destination, the goods are placed in the Prize Court. Doubtful consignments are detained until satisfactory guarantees are produced.

(iii) Under agreements in force with bodies of representative merchants in several neutral countries adjacent to Germany, stringent guarantees are exacted from importers, and so far as possible all trade between the neutral country and Germany, whether arising overseas or in the neutral country itself, is restricted.

(iv) By agreements with shipping lines and by a vigorous use of the power to refuse bunker coal, a large proportion of the neutral mercantile marine which carries on trade with Scandinavia and Holland has been induced to agree to conditions designed to prevent goods carried in these ships from reaching the enemy.

(v) Every effort is being made to introduce a system of rationing which will ensure that the neutral countries concerned only import such quantities of the articles specified as are normally imported for their own consumption.

1. Not printed.