Report of the War Trade Board for the Period Ended December 31, 1917 2
To the President: The War Trade Board, through its chairman, has the honor to present its report for the calendar year ending December 31, 1917.
Prior to August 21, 1917, the authority for the control of exports vested in you by Title VII of the act approved June 15, 1917, was exercised pursuant to instructions issued by you, executive administration thereof being vested in the Secretary of Commerce.
Pursuant to an Executive order dated August 21, 1917,3 there was established an Exports Administrative Board, composed of a representative, respectively, of the Secretary of State, the Secretary of Agriculture, the Secretary of Commerce, the Food Administrator, [Page 1008] and the United States Shipping Board, and there was vested in this board the executive administration of all instructions which might be issued by you under Title VII of said act of June 15, 1917.
The Exports Administrative Board continued to operate as such until October 12, 1917, when, by Executive order,1 there was established a War Trade Board, composed of representatives, respectively, of the Secretary of State, of the Secretary of the Treasury, of the Secretary of Agriculture, of the Secretary of Commerce, of the Food Administrator, and of the United States Shipping Board.
There was vested in said War Trade Board authority, as in said Executive order is more particularly set forth, to issue or refuse to issue licenses for the importation or exportation of articles the importation or exportation of which might be restricted by any proclamation issued by you in accordance with law, and there was further vested in said War Trade Board certain authority to issue or refuse to enemies or allies of the enemy, other than enemy or ally of enemy insurance or reinsurance companies, licenses to do business in the United States, and certain authority to grant or refuse licenses to trade with an enemy or ally of enemy. The War Trade Board was, by said Executive order, authorized to and did take over and exercise, without interruption, the powers theretofore exercised by the above-mentioned Exports Administrative Board. The War Trade Board has, since its creation, been exercising the powers thus conferred upon it, and in addition, since November 23, 1917, it has been acting as the agency of the Secretary of the Treasury in administering the authority vested in him relative to transmitting out of the United States communications intended to be delivered to an enemy or ally of enemy.
For the purposes of this report the operations of the Exports Administrative Board are included as though they were those of the War Trade Board.
The membership of the War Trade Board is as follows:
- Vance C. McCormick, Chairman, representative of the Secretary of State.
- Albert Strauss, representative of the Secretary of the Treasury.
- Alonzo E. Taylor, representative of the Secretary of Agriculture. Clarence M. Woolley, representative of the Secretary of Commerce.
- John Beaver White, representative of the Food Administrator.
- Frank C. Munson, representative of the United States Shipping Board.
- Mr. T. D. Jones, representative of the Department of Commerce, to the great regret of his associates, resigned from the board on December 28, 1917, as a result of ill health, occasioned by the heavy burden of responsibility which he had borne.
The activities of the board are roughly divisible into three spheres, viz., those relating to the control of exports, those relating to control of imports, and those relating to enemy trade.
Control of Exports
By means of its authority to grant or withhold licenses to export commodities, the export of which was controlled by presidential proclamation, the board has sought, first, to conserve for ourselves and for those associated with us in the war such commodities as are required to maintain adequately the economic life of the several nations and to carry out their war programs. Other objects sought have been to prevent our commodities reaching the enemy, directly or indirectly, as by releasing like goods for the enemy, and to prevent commercial transactions between persons within the United States and an enemy or ally of enemy. In several cases, in seeming contravention of the first principle above referred to, exports have been offered to neutrals even where our own supplies and those of our cobelligerents have been very limited. In such cases the board has been actuated by a desire to prevent acute suffering in those neutrals and to prevent them from falling under the economic power of the enemy. It has been thought that even though such exports would entail an additional sacrifice on the part of our own people this burden should nevertheless be borne as a tangible evidence of the friendship of our people to those foreign peoples whose governments were endeavoring to maintain their neutrality on an equitable basis.
The application of the foregoing principles has been particularly important in the case of those European neutrals which are in trade relations with the enemy, and it has been found necessary in the case of such neutrals to enforce temporary embargoes pending the securing of information indispensable to permit the board to issue licenses in accordance with the principles above expressed.
On December 5, 1917, the board adopted a comprehensive measure dealing with licenses to export goods to Switzerland. This assures to Switzerland the periodic receipt of certain amounts of grain, of which Switzerland will have urgent need, and it contemplates the licensing for export to Switzerland of additional supplies of foodstuffs and other commodities required by Switzerland to maintain its economic existence. The Swiss Government, on the other hand, gives satisfactory assurances against exportation to our enemies of imported commodities and agrees to limit, in certain other respects, her trading with the enemy. Negotiations with other European neutrals have for some time been in progress and have advanced to a point where it is hoped that definite and comprehensive understandings can shortly be reached. In the case of certain of those neutrals [Page 1010] there has been a regrettable delay owing to failure to receive from them information necessary to guide the board’s action, and owing to pressure brought to bear on them by the enemy.
The supply of ships with bunker and ship’s stores, while controlled by virtue of the board’s general authority over export licenses, has necessarily been exercised in accordance with special considerations, the most important of which has been to assure the utilization of our own restricted supplies of coal, fuel oil, and ship’s stores primarily by ships performing services useful to the United States and her associates in the war. In exercising its authority in this respect the board has sought to cooperate closely with the United States Shipping Board.
In order to guide our merchants in their transactions with foreigners there was published on October 6, 1917, an enemy trading list containing the names of individuals and associations in neutral countries who were enemies or allies of enemies within the purview of the Trading with the Enemy Act.1 This list is not a fixed and unchanged classification, but is subject to constant revision, and the board has been able to remove from the original list many firms who have cleared themselves from the taint of enemy character.
Control of Imports
In exercising its authority to grant or refuse licenses to import commodities the importation of which is controlled by presidential proclamation, the board has sought, first, to secure to this country supplies adequate for the conduct of the war and the general welfare of the country, and, secondly, to control when necessary the distribution of important materials, to the end that they might be devoted to the needs of the country in the order of their urgency. The exercise of control over imports has in many cases been necessary to secure importation of adequate supplies, as many commodities are controlled by cobelligerents who have such need therefor themselves that they are not willing to permit exportation to this country unless assured that the goods will be devoted to uses which will assist in the successful prosecution of the war. Opportunity has frequently arisen, and has been availed of, to stimulate foreign production, and thus to insure increased imports of desired commodities.
Control of Trade with the Enemy
In exercising the authority conferred upon the board to license in certain cases commercial transactions with or by an enemy or ally of enemy, it has been sought in each case to ascertain and balance the [Page 1011] relative national advantages and disadvantages which would flow from issuing a license, and in cases where the advantage has preponderated, such a license has been issued. As illustrating the class of cases where licenses have been issued, there may be noted transactions entered into and in part completed before the declaration of war which still require some unimportant action on the part of an American firm in order to secure compensation for the whole; corresponding with an enemy necessary to collect debts due to persons in the United States; transactions with an enemy necessary to protect the interests of the Alien Property Custodian, etc.
The board has sought to attain the fullest measure of cooperation with those nations associated with us in the prosecution of the war. This cooperation was very largely promoted by the visit of the chairman and Doctor Taylor to Europe as members of the House mission, a report of which has already been submitted to you.1 Not only has coordination of policy been sought and very largely attained, but it has also been the War Trade Board’s endeavor through international understandings to reduce to a minimum the control machinery which must necessarily be established. Progress along these lines has been such that it is confidently believed that calls at Halifax by vessels sailing from our ports will be eliminated and export licenses issued by the War Trade Board will be recognized by our cobelligerents without the aid of national documents of their own.
The task of the War Trade Board, as the foregoing will have indicated, has been not so much the creation of new forces as the supervising and directing of an existing force, our foreign commerce, to the end that it shall most effectively assist in the prosecution of the war. Indications are not lacking that this is being successfully accomplished. The agreement with Switzerland has already been referred to. In the case of the northern European neutrals, where temporary embargoes are in force pending the conclusion of comprehensive agreements, their exports of foodstuffs to the Central powers have declined from last year’s corresponding exports in amounts estimated at from 65 to 85 per cent, depending on the neutral, and there has been a decrease in the export of many other important commodities. In November, 1917, we became a party to Great Britain’s tentative agreement with Norway, as a result of which action on our part 1,400,000 tons dead weight of Norwegian shipping were chartered into the service of the United States and Great Britain for the period of the war. Shortly following the date as of which this report speaks (December 31, 1917) temporary agreements were concluded with Holland and with Sweden. That with Holland gives us the use for periods up to 90 days of 450,000 tons dead weight [Page 1012] of her shipping which had theretofore for a long period lain idle. The agreement with Sweden gives us the use for three months of tonnage estimated at 250,000 tons dead weight which had not theretofore been employed in services useful to us.
Specific accomplishments of this character are, however, far from constituting a full measure of the results achieved by the War Trade Board during the period under review. The elimination of enemy advantage from our trade and to a considerable extent from that of the world, the securing and conserving of commodities essential to ourselves and those associated with us in the war, the bringing of shipping generally into the services most useful to us—these results can not be accurately stated or appraised at the present time, nor have they been accomplished by any single act or agreement. It is by a daily routine, where thousands of commercial transactions are scrutinized and acted upon, that there has been created a powerful economic weapon which is being utilized, and it is believed effectually utilized, to augment the power of the United States and her cobelligerents, and scientifically to undermine the strength of the enemy.
To permit of the efficient transaction of the business which has come before it, the board has from time to time created various bureaus charged with the duty of administering, under the direction of the board, policies formulated by the board, and securing the information necessary to guide the board’s actions. The following are the bureaus so created, with a brief statement of their respective duties:
- Bureau of Exports. This bureau applies policies formulated by the War Trade Board relative to the disposition of applications for licenses to export from the United States controlled commodities. Mr. C. A. Richards is director of this bureau.
- Bureau of Imports. This bureau applies policies formulated by the War Trade Board relative to disposing of applications for licenses to import controlled commodities, and it devises ways and means for obtaining increased supplies of commodities required by this country from abroad. Mr. Fred B. Peterson is director of this bureau.
- Bureau of Transportation. This bureau administers the rules of the War Trade Board relative to granting licenses for bunker fuel and ship’s stores. Mr. L. L. Richards is director of this bureau.
- Bureau of Enemy Trade. This bureau issues licenses permitting transactions involving trading with an “enemy” or “ally of enemy,” in so far as such transactions are within the jurisdiction of the War Trade Board. This bureau further administers by license the continued conduct of business in the United States by enemy concerns. Mr. John Henry Hammond is director of this bureau.
- Bureau of War Trade Intelligence. This bureau investigates the character of the persons involved in commercial transactions for which [Page 1013] a license is applied, to determine whether or not any such person is an “enemy” or “ally of enemy.” Mr. Paul Fuller, jr., is director of this bureau.
- Bureau of Research. This bureau concerns itself with statistical problems of an economic and commercial character. Prof. W. M. Adriance is director of this bureau.
- Bureau of Tabulations and Statistics. This bureau tabulates the licenses granted and refused by the War Trade Board, and prepares statistical studies covering these matters. Mr. Lowell J. Reed is director of this bureau.
- Bureau of Foreign Agents and Reports. This bureau instructs and directs special agents of the Department of State in foreign countries who may be engaged in carrying out the policies of or collecting information for the War Trade Board. From these agents and other sources the board receives reports and information on trade matters. Mr. Charles Denby is director of this bureau.
- Bureau of Administration. This bureau has charge of the office needs of the War Trade Board and of its bureaus, such as purchasing supplies, printing, messenger service, disbursing of funds, renting and maintaining buildings, etc. Mr. H. A. Engman, jr., is director of this bureau.
The War Trade Board has as representatives abroad, Mr. Sheldon at London and Mr. Dresel at Berne. These gentlemen have been appointed and duly accredited by the Department of State. Arrangements are well under way for the appointment of similar representatives to certain other foreign capitals.
An appreciation of the volume of business coming before the board may be gathered from the following:
The Bureau of Exports has handled approximately 425,000 applications for licenses to export. At present the bureau is handling daily between four and five thousand applications, which range in total value between ten and fifteen million dollars per day.
The Bureau of Imports, of more recent formation, has received 5,279 applications for licenses to import; 4,719 licenses have actually been issued covering commodities of an aggregate value of $237,810,949.
The Bureau of Transportation has granted 1,872 bunker licenses.
The Bureau of War Trade Intelligence has prepared approximately 50,000 cards containing information on separate individuals and associations in the United States and abroad, and is examining about 1,500 documents per week dealing with the supposed enemy character of various firms. It passes on the character of various firms. It passes on the character of the consignor, consignee, and other persons involved in approximately 2,500 applications daily received for licenses to export or import.
[Page 1014]The personnel of the War Trade Board as of the date of December 31, 1917, amounts to 1,526. The total amount of financial obligations incurred up to December 31, 1917, is $541,498.80, whereof $435,213.50 was incurred by the War Trade Board proper since its creation on October 12, 1917, and whereof $106,276.65 was incurred by the Exports Administrative Board, this including outstanding liabilities of August 27, 1917, contracted by the Department of Commerce and paid by the Exports Administrative Board. No salary paid by the board exceeds $3,500.
The board maintains branch offices in the cities of Boston, Mass.; Chicago, Ill.; New Orleans, La.; New York, N. Y.; San Francisco, Calif.; Seattle, Wash.; St. Louis, Mo.; Galveston, Tex.; Savannah, Ga.; Mobile, Ala.; Los Angeles, Calif.; Portland, Oreg.; and Philadelphia, Pa. In the city of Washington the board and its several bureaus occupy all or parts of 12 different buildings. The necessity for a physical separation of the different offices of the board has militated against complete cooperation and economy of time and labor. A contract has now been made for the construction of a new two-story building with 204,552 feet of space, and it is hoped that this building will be ready for occupancy by April.
To create in a brief period an organization adequate to control a very substantial portion of the world’s international trade has been a problem of magnitude. Such measure of success as may have been realized has been due very largely to the personal loyalty of those comprising the organization. They have given their best endeavor whole-heartedly, and in large part without adequate financial remuneration. The cooperation of other governmental departments has been of the greatest assistance to the board. Business and commercial interests of the United States have, with hardly an exception, accepted without complaint the measures adopted by the War Trade Board, even though such measures may have been burdensome and have involved them in financial losses. Their attitude in this respect has been a striking testimonial of their loyal support of the Government in the conflict in which it is engaged.
I have the honor to be,
Very respectfully yours,
Chairman, War Trade Board