File No. 165.102/969
The Commercial Adviser of the British Embassy (Crawford) to the Acting Secretary of State
Dear Mr. Polk: With reference to the communication I made to you yesterday relative to the shipment of two cargoes of German dye-stuffs in return for two cargoes of cotton already delivered in Germany, I now write to confirm my statement as to the present situation of that question.
On January 28 last, the Foreign Office informed the United States Ambassador in London that if the cotton which was shipped to Germany had been paid for in the United States in cash, His Majesty’s Government would raise no objection to a similar payment being made in Germany for the two cargoes of dyestuffs.
The German Government have, however, never yet permitted any of these dyestuffs for the United States to leave Germany, notwithstanding that the guarantee of uninterrupted transit so far as His Majesty’s Government was concerned was given more than twelve months ago.
The Foreign Office now learn that the policy of the German Government as to permitting the exportation of dyestuffs to the United States is about to undergo a change, and that they are preparing to release the two cargoes in question, provided the purchasers agree to pay for them a price about five times that which was current at the time the undertaking of His Majesty’s Government was given.
This information has caused His Majesty’s Government considerable anxiety, for although no value was actually mentioned in April last year when the undertaking from His Majesty’s Government was sought and obtained, it was taken for granted that the whole transaction was one of exchanging a certain value of raw cotton for a corresponding value of dyestuffs.
The principle ever present to the mind of His Majesty’s Government was their sincere desire to cause to neutral nations as little damage as possible, or as little as might be compatible with the military interests of the British Empire, by the introduction of the measures against enemy trade embodied in the order in council of March 11, 1915.1
At that time His Majesty’s Government was assured that the measures they had adopted to prohibit the exportation of goods from enemy countries would inflict grave loss and hardship to many flourishing industries, and amongst other things it was pointed out that the industries dependent upon dyestuffs in the United States would be ruined, because their raw materials were derived chiefly from Germany. Moreover it was asserted that much ill feeling would be engendered against Great Britain and her allies, if obstacles were suddenly to be placed in the way of the arrival of those raw materials. For more than a year now the obstacles to the exportation of dyestuffs to the United States have been raised solely by the German Government, and yet it has not been noticed that any particular [Page 556] feelings of hostility or unfriendliness to the German Government or nation has been created thereby, such as His Majesty’s Government were led to expect would make itself felt against Great Britain were the positions reversed, and were His Majesty’s Government to stand in the way of the users of dyes in the United States receiving their normal supplies from Germany.
None of the forecasts have come true, the United States industries have not in reality suffered, an opening has been afforded for the foundation of a new industry in the United States, and from reports which have been transmitted to the Foreign Office from time to time it seems that the United States interests concerned are managing to dispense with the German product and that in the near future a sufficient supply of dyes will be available from domestic or other non-German sources.
It is at this moment therefore that the German Government is said to have decided to release dyestuffs to the United States at hugely advanced prices. The object of such a manoeuvre need not, in the opinion of His Majesty’s Government, be sought for in anything beyond the desire of or perhaps the necessity for, Germany to rehabilitate the already seriously depreciated value of the mark in the United States.
His Majesty’s Government feel that the entire situation has now changed, that the conditions under which they gave their undertaking last year are no longer in existence, and that a transaction to which there would have been no objection twelve months ago is now about to be utilised by the German Government for the purpose of creating for their own ends extensive credits in the United States.
His Majesty’s Government have in these circumstances decided that the undertaking given to the United States Ambassador in April 1915 must now be considered to have lapsed, and as the German Government have not carried out their part of the bargain in the ample period afforded to them, the offer of His Majesty’s Government is withdrawn.
His Majesty’s Government, however, would still be prepared to negotiate a new arrangement whereby a quantity of dyestuffs might be transmitted from Germany to the United States, equal in value to the two cotton cargoes above mentioned, but in any such new arrangement His Majesty’s Government would have to be assured that the sums paid for dyestuffs approximated to the sums already paid in cash for the cotton. Such negotiations should be opened before May 14.
Yours very truly,