Papers Relating to the Foreign Relations of the United States, 1917, Supplement 2, The World War, Volume II

File No. 600.119/270

The British Embassy to the Department of State

Memorandum

The attached notes give roughly the general position of the various neutral European countries as regards trade with the Allies and with the enemy, and as regards shipping. It will be seen that pressure of the strongest kind is suggested in the case of Sweden and Spain, very definite pressure in the case of Norway, and pressure of a highly flexible and judicious character in the case of Denmark and Holland. It is obvious that flexible pressure, no less than very strong pressure, calls for the widest discretionary powers in the Government which attempts to exert it, and the whole diplomatic situation towards neutral Europe will, it is submitted, require the exercise by the United States Government of comprehensive powers of embargo on exports.

The figures given in the attached notes are highly confidential, since they have in large part been obtained from sources which would be closed were it to become known that the statistics were in the possession of the Allies. They should therefore on no account be used in discussions with the Governments concerned.

The seriousness of the present position arises from the fact that the shipping crisis is working with ever increasing force to the detriment of the Allies who depend on sea-borne supplies from neutral countries, and to the advantage of Germany who is in a position to receive neutral supplies across land frontiers.

Washington , May 7, 1917.

[Enclosure]

Notes of the British Embassy on the Position of Neutrals Regarding Trade with the Allies and the Enemy, and Regarding Shipping

Sweden

1. Exports to Germany

The most important articles, with figures for the last quarter of 1916 in round numbers, so far as known (metric tons):

Iron ore	1,500,000
Iron, pig, rolled, ingots, bars, etc	24,000
Lathes and machines
Pyrites
Purple ore	21,200
Copper ore	50
Carbide of calcium	?350
Ferro-manganese and ferro-silicon	3,500
Ferro-chrome	170
Cellulose (wood-pulp)	31,000
Rosin	1,000
Ball bearings	129,000	kroner in second quarter of 1916
Fish	8,000
Cattle
Meat products
Beef	650
Butter and cream	170
Pork	2,000

2. Imports from the United States

The United States and United Kingdom together control all Swedish supplies of:

• Cereals and fodder Tobacco
• Syrup and molasses
• Mineral oils Copper
• Rubber, raw and manufactures
• Paraffin wax
• Cotton, raw and waste
• Cotton, yarn and manufactures
• Jute
• Leather
• Tobacco
• Anti-friction metals
• Copper
• Lead
• Tin
• Asbestos
• Borax and boric acid
• Abrasives
• Soda compounds

Other commodities in which Sweden is largely dependent upon the two countries are:

• Fruit, fresh and dried
• Animal and vegetable oils and fats
• Rosins and gums
• Hides and skins
• Fibres for brushmaking
• Tanning materials

3. Shipping position

Swedish shipping is almost entirely laid up and its refusal to sail is supported by the Swedish Government.

4. Transit to Russia

This has, for obvious reasons, always been regarded as vital to the Allies. As an instance of the effect which the attitude of the Swedish Government has had upon vital Allied interests may be mentioned the latter’s recent refusal to allow the transit of bags from Great Britain to Russia, thus making it impossible to move Russian grain urgently needed in the United Kingdom. Last winter the Russian Government were absolutely dependent upon Swedish transit for obtaining lathes, machine tools, agricultural machinery, crucibles and earthenware and stoneware material, all of which were urgently needed for war purposes.

5. Diplomatic position

. . . . . . . . . . . . . .

In January the British Government arrived at an agreement with Swedish delegates in London on blockade and transit questions. This agreement has never been ratified by the Swedish Government. Meanwhile a most serious controversy has arisen out of the action of the Swedish Government in closing the Kogrund Passage in order to prevent the escape of British merchant ships from the Baltic.¹ The strongest pressure is now being applied to Sweden by the Allies, by holding up shipments to Sweden, and one of the objects aimed at by this pressure is to force the Swedish Government to ratify the January draft agreement. This agreement provides for the setting up in Sweden, with the recognition of the Government, of trade associations which can control goods imported and prevent their re-export to Germany. It also provides for an elaborate system of exchange between British exports to Sweden on the one hand and Swedish exports to Great Britain plus goods transited to Russia on the other hand. It also provides for the fixing of rations on a large number of articles imported into Sweden.

The dependence of the United Kingdom upon Sweden for munitions and other essential materials may be judged by the following estimate of requirements for 1917:

Pit props	400,000	tons
Mineral ore	600,000	“
Pig iron	120,000	“
Bar iron	37,500	“
Bessemer and Siemens-Martin steel	62,500	“
Scrap	12,500	“
Balls	30,000,000	(number)
Ball bearings	700,000	“
Refined zinc (either for Great Britain or Russia)	8,100	tons
Perchlorate of ammonia	1,400 to 1,800	“

This estimate was made last December and may be subject to modifications. The Swedish Government engage, in the draft agreement, to facilitate the export to the United Kingdom, against compensation, of not less than the following quantities of specified articles per quarter:

Chemical pulp	50,000	tons
Iron ore	150,000	“
Pig iron	30,000	“
Bar iron	9,375	“
Ferro-silicon	750	“
Steel	15,000	“
Pit props	50,000	“
Perchlorate of ammonia	450	“
Refined zinc	2,000	“
Balls	7,500,000	(number)
Ball bearings	175,000	“

It is suggested that the United States should prohibit the export of all articles to Sweden and require from the Swedish Government compensation in the form of transit to Russia for all quantities of American products licensed for export, such compensation to be expressly in addition to the compensation guaranteed by the Swedish Government in the draft agreement with the British Government, which the Swedish Government should be called upon to ratify without delay as a part of the proposed bargain with the United States. The precise terms of any such bargain should, so far as possible, be worked out in London with the Transits Committee on which the United States Government have already been invited to appoint a representative, but the main object of any such bargain, on which it is possible to insist without further examination of details, is that the Swedish Government should increase the amount of transit guaranteed under the draft agreement with Great Britain, i. e., 3,000 tons a week, winter and summer, via Haparanda and an additional quantity of not less than 3,000 tons a week by other lines when the ports of the Gulf of Bothnia are open.

Besides this general bargain, it is suggested that the United States might impose the further conditions in respect of particular articles that—

(a) Licenses for the export of fodder to Sweden from the United States will only be granted if the export of Swedish cattle and meat products, including pork products, ceases entirely;

(b) All exports of mineral oils to Sweden should be suspended until all exports of Swedish fish to Germany have ceased, including all fish products.

The attitude of the Swedish Government being a constant source of anxiety to the Allies, and that attitude constantly taking on new forms detrimental to the Allies, there will probably be new occasions for pressure as the war proceeds, but the above suggestions seem to be the most urgent at this moment. It is not considered probable that the Allies have now anything to fear in the way of actual warlike action by Sweden but she will doubtless always threaten to cut off essential supplies from them and in any negotiations care will have to be taken to prevent any such development.

In addition, detailed suggestions will shortly be made as to the best means of forcing Swedish shipping into employment. For the present, it is suggested that the Swedish Government might at least be informed that Sweden can not, in the existing shortage of world supplies, be given the advantage of the near market of the United States unless a proper proportion of her shipping is employed in the general service of the world’s commerce.

Spain

Spain stands in a different position from the other European neutrals. The position in regard to her has been already set forth in a letter from Mr. Balfour to the Secretary of State.¹ It may therefore be sufficient to say here that the attitude of the present Spanish Government appears to render advisable the very strongest pressure through the prohibition of exports from the United States, if a continued flow of essential supplies from Spain to the Allies is to [be] assured. Besides coal, the United States is believed to control other important supplies upon which Spain is dependent, such as cotton and cottonseed oil.

It is, moreover, important that all exports of oil to Spain should be carefully controlled, since Spain has for long been a notorious base for German submarines. Great Britain needs iron ore from Spain for munitions.

Norway

1. Exports to Germany

Proper figures of Norwegian exports are not available, so that the position can only be stated in a somewhat complicated form.

(a) Articles in respect of which assurances should, if possible, be obtained as soon as possible that no further export to enemy countries will be allowed.

• Pyrites (cupreous and non-cupreous)
• Nickel
• Iron concentrates
• Carbide of calcium
• Ferro-silicon and other electric furnace products
• Refined zinc
• Molybdenite

(b) Articles which the Norwegian Government have themselves stated were exported during the first six months of 1916 (values in millions of kroner).

Canned foodstuffs, herrings and fish	105
Codliver oil and hardened fats	20
Saltpetre, carbide, nitrate of sodium, nitrate of ammonia, ferro-silicon and carbide of silicon	9
Zinc	6
Sulphurous pyrites and iron ore	6
Copper	2½
Fish guano	2

(c) Foodstuffs which are believed, at a rough estimate, to have been exported to Germany in 1916 (amounts in thousands of metric tons).

Milk	67
Fish	145
Fruit	500
Coffee (say)	3½

2. Imports from the United States

The United States and the United Kingdom together control all Norwegian supplies of:

• Cereals and fodder
• Vegetable and mineral oils
• Paraffin wax
• Cotton, raw and waste
• Leather and manufactures
• Tobacco
• Copper and alloys
• Tinned plates
• Lead
• Tin
• Asbestos
• Borax and boric acid
• Agricultural machinery

Other commodities in which Norway is in large measure dependent on the two countries are:

• Fruit, fresh and dried
• Meat
• Sugar
• Animal oils and fats
• Rosin and gums
• Cordage
• Hides and skins
• Tanning materials
• Brushmaking fibres
• Pig iron

3. Shipping position

Norwegian shipping is employed, in fair proportion, in Allied services, and further negotiations are proceeding with Norwegian shipowners.

4. Diplomatic position

Norway, like other neutral countries, fears attack from Germany. Her policy has been to temporize and hope for the best. She exports milk, fish and other important articles to the United Kingdom and in the event of severe controversy with the Allies she might cut these off. At present, however, it is not thought likely either that Germany will attack Norway or that Norway will cut off supplies to the United Kingdom. Caution is however necessary. As a first step it is suggested that the United States might make any further export of copper or copper goods to Norway conditional on an absolute assurance that no further pyrites will be shipped to Germany so long as the war lasts, and might use her control over Norwegian supplies of cereals, feeding stuffs, oil, meat and leather to stop or at least reduce Norwegian exports to Germany, especially as regards nickel, carbide, fish and the other articles under 1 (a) above.

Denmark

1. Exports to Germany

Figures for the fourth quarter of 1916, in metric tons (round numbers only).

Bacon	6,000
Butter	7,500
Cheese	1,500
Eggs	1,500
Lard	800
Preserves	10,000
Meat	8,000
Fish	32,000
Milk	1,500
Cattle	50,000	head
Sheep	1,800	“

These exports represent about 24 per cent of total Danish exports for this quarter, as against a normal export to Germany before the war of 3 per cent. For the first quarter of 1916 the percentage was about 20 per cent or rather over, for the second and third quarters it was about 15 per cent. At the present moment Denmark is exporting to Germany about 7,000 head of cattle or over (live and slaughtered) a week, as against 5,000 before the war.

2. Imports from the United States

The United States and United Kingdom together control all Danish supplies of:

• Grain and fodder Leather
• Vegetable and mineral oils
• Rubber, raw and manufactures
• Waxes Lead
• Binder twine
• Cotton, raw and waste
• “, yarn and manufactures
• Jute
• Leather
• Tobacco
• Copper
• Lead
• Tin
• Abrasives
• Soda compounds
• Agricultural machinery

Other commodities in which Denmark is largely dependent upon the two countries are:

• Fruit, fresh and dried
• Rosins and gums
• Cordage
• Hides
• Fibres for brushmaking
• Tanning materials

3. Shipping position

Some Danish ships are still lying idle in Scandinavian ports, but a regular service of produce boats is being kept running to the United Kingdom, while some vessels are fulfilling their charters in Allied interests and others are allowed to come to the United Kingdom in ballast and return direct with British coal. Danish traffic with overseas countries has also been resumed. Meanwhile, with the consent of the owners, the British Government have requisitioned about 20 Danish ships and intend to requisition others, but further requisitions are for the moment suspended until the result of discussions now proceeding at Copenhagen.

4. Diplomatic position

British policy with regard to Denmark has been controlled by three considerations—first, the helplessness of Denmark against any attack by Germany; secondly, the desirability of not forcing a largely increased slaughtering of cattle and pigs and their export to Germany by a too drastic reduction of fodder imports; and thirdly, the necessity of maintaining the flow of Danish supplies to the United Kingdom, which is at present carried on under an agreement between the Danish and German Governments whereby the latter undertake to respect Danish produce boats to the United Kingdom, at least as far on their voyage as Norway and possibly for the whole voyage. Denmark exported 82,000 tons of bacon to the United Kingdom in 1916.

For the present, therefore, it is suggested that the United States might confine itself to prohibiting the export of fodder to Denmark and informing the Danish Government that licenses will only be granted if Denmark will continue to supply the United Kingdom with bacon at pre-war percentage rates and curtail exports of cattle and beef to Germany at least to pre-war figures. Unless and until Denmark accepts these terms, it is suggested that licenses for exports of fodder should not be issued and perhaps also that other exports to Denmark should be curtailed, since any such curtailment will set free Danish tonnage for requisition by the British Government. Pressure along these lines can probably be continued through the summer, though the pressure would have to be relaxed if Danish slaughtering began seriously to increase or exports to the United Kingdom seriously to diminish.

This pressure would be much increased in effectiveness if it were reinforced by a threat to cut off oil supplies from the United States.

Holland

1. Exports to Germany

(a) Foodstuffs falling under the agricultural agreement. Official statistics for the fourth quarter of 1916, in metric tons.

Butter	4,358
Cheese	4,317
Eggs	2,437
Meat	5,870
Potatoes and potato meal	5,825
Fruit	8,958
Vegetables	(not dealt with in the official returns. Exports are very large. A Dutch paper gives the export for the first ten months of the year as 215,434 tons)
Sugar	(no figures for the last quarter. Over 12,000 tons for the whole year)
Live-stock	(no figures for the last quarter. There was a total export of 35,000 head in the year, of which most must have gone to Germany)

(b) Other commodities. Statistics as before, in most cases.

Fish	37,918
Train oil	654
Scrap metal	(limited by agreement with the Dutch Government to 20 tons a week)
Tar	246
Paper	1,060
Flax	(11784 For the whole year)
Margarine	1,108
Rapeseed	71
Coffee	3,765	}	Dutch colonial products free of control under N. O. T. agreement
Cinchona	893
Tobacco	7,260

(c) Smuggling.

This has assumed very serious proportions. The articles chiefly affected are believed to be pepper, chocolate, carbide, spices, fats and soap.

(d) Transit trade between Germany and Sweden and Germany and Belgium.

Iron ore, zinc ore, metals, wood, carbide, matches, etc., pass between Sweden and Germany via Holland. In 1916 130,000 tons of Swedish iron ore passed through Holland for Krupp’s and 27,000 tons of zinc ore to Belgium under German occupation.

Enormous quantities of sand, gravel, stone, and appreciable amounts of coal, coke, zinc, fertilizers, tanning materials, alum, pulp, etc., pass between Germany and Belgium. The sand, gravel and stone are for military use on the western front.

2. Imports from the United States

The United States and the United Kingdom together control all Dutch supplies of:

• Grain and fodder
• Petroleum (lamp oil)
• Lubricating oil
• Petrol
• Fuel oil
• Paraffin wax
• Cotton, raw and waste
• “, yarn and manufactures
• Jute
• Hides
• Copper
• Lead
• Asbestos
• Borax and boric acid
• Abrasives
• Soda compounds

Other commodities in which Holland is in large measure dependent on the two countries are:

• Fruit
• Animal and vegetable oils and fats
• Rosin and gums
• Fibres for brushmaking
• Tanning materials

3. Shipping position

Dutch shipping is largely laid up and efforts to induce it to sail have hitherto met with no success.

4. Diplomatic position

The present military position makes it important that Holland should remain neutral. Any course which would involve her in excessive and dangerous friction with Germany should therefore be avoided. The supplies which Holland furnishes to the United Kingdom are:

• Foodstuffs under the agricultural agreement
• Margarine
• Flax-seed
• Electric-lamp caps
• Spelter
• Glycerine

We are specially dependent on her for margarine, flax-seed and condensed milk and we should be very sorry to lose her exports under the agricultural agreement of bacon, butter, cheese, mutton, onions and eggs. Any attempt to reduce food exports to Germany below the percentages at which they are left by the agricultural agreement would produce a very strained diplomatic situation with Germany. For the moment it is suggested that the United States might—

(a) Give to the Dutch Government a general statement of its policy as regards conserving shipping and supplies for the needs of the Allies and the home needs of neutrals;

(b) Give its support to the protests of the Allied representatives at The Hague against the use of Dutch territory for transiting military supplies;

(c) Make continued exports to Holland conditional on the proper employment of Dutch shipping;

(d) Examine the possibility of supplying the United Kingdom with margarine, so as to diminish British dependence on Holland. As the development of the manufacture of margarine in the United Kingdom is now under serious consideration it would be useful to have information on this point as soon as possible.

Switzerland

The position of Switzerland is peculiar. The whole rationing of the country is carried out by the exercise of the powers of the French and Italian Governments to control transit. The administrative body is an Allied rationing committee at Paris. It is suggested that any action by the United States Government should be made the subject of consultation with that committee at Paris, and that American representatives should be attached to it for that purpose.

There is, however, one point on which the assistance of the United States Government would be welcome at once. In the third quarter of 1916 the Swiss exports of animals to enemy countries were:

To Germany	7,869	head
To Austria	6,660	“

The British and French Governments propose to join in buying the surplus Swiss cattle which would otherwise be exported to enemy countries and it is understood that the American Minister at Berne has proposed that the United States Government should offer some two and one-half million dollars to the French Government towards this purchase. Any such assistance would, of course, be much appreciated.

1. Telegram from the Minister in Denmark, May 8, 1917, received May 9, 2 a.m. (File No. 763.72112/3591):

   344. British Minister informs me British and Swedish Governments have reached an agreement whereby 90,000 tons of Allied ships now detained in Gulf of Bothnia will be released and allowed to proceed overseas. In return Great Britain will release certain vessels laden with cargoes of cereals destined for Sweden and that from now on Swedish shipping will probably be gradually resumed.

   Morris

1. Post, p. 1199.