File No. 600.119/391

The Commercial Adviser of the British Embassy ( Crawford) to the Counselor for the Department of State ( Polk)

Dear Mr. Counsellor: With reference to our conversation on May 8 with regard to coal and bunker control, I enclose herewith [Page 839] two memoranda—one, marked “A,” a general consideration of the methods of controlling neutral tonnage which will presumably be of interest, to various departments here, and the other, marked “B,” a memorandum of our actual desires in the matter for your own information and for such use as you may think best.

A third memorandum covering the whole ground of our present practice, with an argumentative consideration of the alternatives open to the United States Government, is being annexed to the report of the Sub-Committee on Export Restrictions since that report necessarily touches on the question.1

Believe me [etc.]

Richard Crawford
[Enclosure 1]

Memorandum “A”: Control of Neutral Tonnage

The question of neutral tonnage has two aspects:

The tendency of neutral countries and shipowners to employ their ships in “safe” trades, or even in trades beneficial to the enemy, and to withhold them from trade with or on behalf of the Allies.
The tendency of certain neutral countries to lay up their tonnage altogether.

The position with regard to each neutral country has been dealt with in separate memoranda.

The following action has been taken in the past, or is proposed for the future, by the British Government in order to meet these two problems and to induce neutral tonnage to render reasonable services to the Allies. If the United States decide to co-operate in these measures, their effectiveness will be greatly increased, since the Allies will be in control of practically the whole coal supplies of the world and any conditions, short of compelling the neutral shipowner to run his ships at a loss, can be imposed as a quid pro quo for the supply of coal.

Refusal of bunkers and coal cargoes to all neutral ships proceeding on voyages not in the interests of the Allies, unless and until the owner, or time-charterer if the ship is on time-charter, has satisfied the appropriate Allied authority that a satisfactory proportion of the tonnage owned or controlled by him is in the service of the Allies. Each case must be considered on its merits.
Prohibition by the Allies of any private chartering of neutral ships by their citizens, except under special license from the competent authority. It is at this point that any co-operation by the United States would be particularly effective since practically the only employment, other than the supply of their own country, which neutral ships can find outside the danger zone is trade from the [Page 840] United States to South America and elsewhere. Unless therefore the use of neutral tonnage by private American firms is controlled by law, the policy of the Allies may be stultified.
Restriction of bunkers given to neutral ships to an amount sufficient to take them to the next suitable bunkering port, and no more.
Control over the supply of spare parts, etc., and the repair of neutral ships. If a neutral ship requires extensive repairs, this utilizes valuable Allied material and labour and the British Government therefore insists in each case that the ship, when repaired, or an equivalent ship, shall be chartered to the Inter-Allied Executive.
The administration of the above measures is in the hands of the Bunker Committee in London and the Inter-Allied Chartering Executive, also in London. It is essential that the United States Government should be represented on the Inter-Allied Chartering Executive, and it would be desirable that they should maintain a representative or representatives in London who could settle with the Bunker Committee the terms of any agreements with neutral shipowners on whom American coal pressure has been exercised.
Besides the above terms, the British Government requires neutral vessels, in return for bunkers, to call for examination at British ports when proceeding to European countries contiguous to enemy countries and it is proposed to strengthen this by requiring that they shall not carry any cargo which has not been definitely approved by the appropriate Allied authority. The object of this additional requirement will be the elimination of the delays involved in the examination of neutral ships and the quicker and fuller use of the tonnage available. Further in order to prevent the supply of coal, oil, etc., to enemy commerce raiders, etc., Great Britain requires that all shipments of coal and oil shall be approved by the British Minister in the port of destination. This prevents cargoes which might be destined for a raider or submarine being sent out to a dummy consignee or even to a real consignee who is unreliable. Vessels whose owners have complied with these conditions are placed on the ships white list, and all coal is refused to ships not on this list, unless engaged directly in the service of the Allies. It is proposed, in the event of co-operation by the United States, to revise this list by removing those firms who refuse to do reasonable service for the Allies.
No coal cargoes are licensed for export to neutral countries unless consigned to firms who have agreed to supply bunkers only to ships which have subscribed to the bunker conditions. There exists a list of regular and reliable consignees for coal in neutral countries to which in the event of United States co-operation it is suggested that shipments of American coal should be made exclusively, on the understanding, of course, that additions or subtractions from that list will be considered jointly by the two Governments.
There is further a black list of ships which consists of ships believed to be enemy owned or controlled or belonging to owners who have broken the undertaking to abide by the conditions of supply. No coal is ever supplied to a ship on the black list whatever its employment. Ships can be removed from the black list by being chartered to the Inter-Allied Chartering Executive.
[Page 841]

The problem of the owners who prefer to lay their ship up rather than perform any service for the Allies is a more difficult one, and would have to be met by direct pressure upon the neutral countries concerned by refusal of supplies.

In view of the military and economic factors involved, the case of each country has to be considered separately. The first step, however, must be the adoption of such a measure of common policy between the Allies as will prevent neutral countries from playing one Ally off against another. Spain, for instance, is under obligation to supply iron ore to Great Britain in return for coal, and it would be highly detrimental to Allied interests if she were enabled to escape from this obligation by obtaining supplies of American coal.

Another method of preventing the laying up of tonnage is that adopted by Great Britain in regard to Denmark, viz., requisition of the tonnage in Allied ports. This power of requisition is exercised by collusion with the neutral owners, but even in the absence of the owner’s consent there appears to be no reason why the exercise of the power should not be justified by the law of angary.

It is, of course, understood that all tonnage building in Allied ports for neutral flags has been and is requisitioned and put into Allied service, except in the case of ships sold or time-chartered to an approved Allied firm.

[Enclosure 2]

Memorandum “B”: Control over the Supply of Bunkers

The British authorities at present exercise the following control over the supply of bunkers:

In all British ports the supply of bunkers is regulated by the policy of the prohibition of export. Similar control is exercised in French and Italian ports by the French and Italian Governments, respectively.
In certain neutral ports (e. g., the Atlantic islands) where the depots are owned by British firms and managed in London, the supply of bunkers is regulated by the firm in accordance with the instructions of His Majesty’s Government.
In all other ports where British coal is used the supply of bunkers is regulated by the British consul by means of the undertaking given by every importer of British coal, namely, that he will not supply bunkers, whatever the origin of the coal, to ships specially notified to him.

In this way a very substantial control is obtained. It is not very effective in Holland where German coal is available, and recently certain firms in other countries have shown an inclination to evade the control by using American coal.

[Page 842]

Hitherto the policy adopted has been only to impose upon neutral shipowners conditions which they will recognise as reasonable and are such as to give the shipowner every opportunity of engaging in lucrative trade, so that he is not led either by indignation or by commercial considerations to attempt to evade the bunker control by using American coal. A copy of these conditions is attached, (A). This policy has on the whole been successful. Now, however, that the United States Government are proposing to control American coal, it is possible to impose much more stringent conditions upon the supply of bunkers for neutral ships. A draft of the proposed new conditions is attached, (B). These conditions besides securing the original objects of the bunker control, namely, preventing supplies reaching enemy countries, and preventing neutral ships being used as supply ships for enemy warships, definitely require that a satisfactory proportion of neutral tonnage should be employed in essential Allied trades. It is desirable that as the United States and Great Britain practically control all the available coal in the world, the two Governments should adopt the same policy in regard to the supply of bunkers. It is, however, essential for administrative reasons that there should be only one central authority.

It is accordingly suggested that the United States Government should take the following action:

1. In United States ports

Prohibit the supply of coal as bunkers without the consent of the appropriate authority (e. g., the collector of customs);
Instruct the appropriate authority only to authorise the supply of bunkers to (1) Allied ships, (2) ships on the ships white list;
Instruct the appropriate authority to report to the appropriate government department all other applications for bunkers. This department would exercise its discretion in authorising the supply of bunkers even though the ship was not on the white list, if it appeared that the proposed voyage was in the interest of the Allies. In such cases, however, the master should be warned that the owner must take steps to place the ship on the white list and only sufficient bunkers should be granted to take the ship to the next suitable bunker port.

2. In Foreign ports

If the export of American coal is limited to firms on the Regular and Reliable List, the supply of bunkers by such firms would, under the present arrangements, be under the control of the British consul, who acts in the manner suggested above for the authority in the United States ports, or, as is the case in many of the South American ports, under the control of British firms whose head offices are in London. [Page 843] If desired, this control could be transferred to the United States consul, who would no doubt in such event work in close co-operation with the British consul, who has had considerable experience in the administration of the bunker control. If, however, the United States Government preferred not to take an active part in the bunker control at ports abroad, it would be quite sufficient for them to limit the export of coals to firms on the regular and reliable list leaving the British authorities to exercise the required control.

It will be seen that the above control is based, primarily, upon the ships white list. It is clearly desirable that there should only be one ships white list applicable both to American coal and British coal. Hitherto the list has been compiled by the British Admiralty under the instructions of a committee in London on which the Foreign Office, Board of Trade and Admiralty are represented. This committee is largely guided by the advice of His Majesty’s representatives abroad. The introduction into the conditions of supply of a specific requirement that the shipowner shall employ a satisfactory proportion of his ships in essential Allied trades will involve a series of negotiations with individual shipowners. It will further involve the consideration of the amount of neutral tonnage which may be found essential for various United States trades. It seems desirable, therefore, that the compilation of the ships white list should remain as heretofore in the hands of the Bunker Committee in London, but that the United States Government should appoint some representative in London either to attend the meetings of the Bunker Committee regularly—which scarcely seems necessary, as a good deal of the work is purely routine work—or to be available for consultation with the committee when any question affecting United States trade arises.

[Subenclosure A]

Supply of Bunker Coal to Neutral Vessels

Bunker coal can be supplied to neutral vessels if the following conditions are complied with in the case of all the vessels owned, chartered or controlled by a particular firm wherever they are trading. Failure to comply with any of the conditions in the case of any one vessel may involve refusal of bunkers to all the vessels:

The British authorities to be kept informed of the names of all the vessels owned, chartered or controlled by the firm.
No vessel to be chartered to an enemy subject or company, or to any person whose name may be specially notified to the firm; and no vessel to be let on time-charter without informing the British authorities beforehand.
Particulars of all existing time-charters to be given to the British authorities.
No vessel to trade with any port in any country at war with Great Britain.
No cargo to be carried which proceeds from or is destined for, a country at war with Great Britain.
For this purpose—
All vessels when inward or outward bound to or from Northern Europe must call in the United Kingdom for verification of papers, and special consideration will be shown to vessels which proceed via the English Channel. If vessels are bound to or from the Mediterranean they should not pass Gibraltar without communicating with the British authorities. If early notice is given of the intended call it will facilitate clearance.
All goods carried from Scandinavian ports to be accompanied by certificates of origin.
No goods to be carried which are consigned “to order,” and the firm to stipulate that no cargo is to be loaded which it is known would expose steamers to detention by British authorities.
A clause to be inserted in all bills of lading of all steamers bound to neutral ports in Europe or North Africa enabling the firm to withhold delivery of goods until a satisfactory guarantee is produced to the effect that the goods will not be re-exported.
No coal, petroleum or its products, lubricating oil, or castor oil from neutral countries to be carried unless the consignee is approved by the British Minister in the country of destination, or unless the vessel is calling for verification in the United Kingdom or at Gibraltar on the voyage in question.
No subject of any country at war with Great Britain, if of military age, to be carried.
Contraband goods destined for the United Kingdom or an Allied country only to be refused on reasonable grounds (e. g., that ship itself becomes liable to condemnation, that state insurance becomes invalid, etc.). Vessels carrying cargoes, contraband or other, to Allied ports will receive special consideration.

Note. If a firm elects to comply with these conditions, it is requested to forward the lists mentioned in paragraphs (1) and (2) to the Under-Secretary of State, Foreign Office, London, as soon as possible, in order that arrangements may be made for facilitating the bunkering of the vessels at all stations. To save delay, the envelope should be marked “bunker coal.”

If a firm is unable to guarantee the observance of the conditions in the case of vessels already chartered to other firms, the names of these vessels should be specially indicated. It will then be for the time [Page 845] charterer to approach the British authorities if he desires bunkering facilities.

October, 1915.

[Subenclosure B]

Revised Bunker Conditions

Bunker coal can be supplied to neutral vessels if the following conditions are complied with in respect of all ships managed, owned, chartered or controlled by a particular firm wherever they are trading.

Failure to comply with any of the conditions in the case of any one vessel may involve refusal of bunkers to all the vessels.

The names of all vessels under the firm’s charter, management or control, together with the names of the ships’ masters to be notified from time to time.
No vessel to be chartered to a subject (including a firm or company) of Germany or of any other power allied with Germany or to any person or firm whose name may be specially notified.
No vessel to trade with any port in Germany, or any country allied with Germany.
No German subject or the subject of any power allied with Germany to be carried without the consent of the Allied authorities.
No cargo to be carried which proceeds from, or is destined for Germany or any country allied with Germany.
For this purpose—
All vessels inward or outward bound, to or from Scandinavia, Denmark (including Iceland and Faroe Islands) or Holland, or proceeding to or from any neutral port in the Mediterranean must call for examination at an Allied port, as may be directed.
No cargo which has not been previously approved to be carried from overseas to any European port.
All goods carried from Scandinavia, Denmark (including Iceland and Faroe Islands) and Holland, to be accompanied by certificates of origin.
No goods to be carried which are consigned to “order.” (Goods may however be consigned to “the order of A. B.” where A. B. is the actual consignee.)
No coal or mineral oil to be carried unless the consignee has been previously approved. (This does not apply to coal or mineral oil loaded under license in an Allied port.)
If the ship is fitted with wireless telegraphy the sending apparatus is to be sealed in such a manner that no message can be sent without the knowledge of the master. The master to be responsible that no message of service to the enemy is sent by wireless telegraphy, in particular no reports are to be made of ships sighted or of weather conditions experienced.
No wireless messages of any kind to be sent when within 200 miles of any port of any Allied coast except emergency messages relating to vessels or persons in distress.
The owner or charterer will, if requested to do so, dispense with the services of the master, officers or any member of the crew.
No ship to be bought or sold without previous approval.
No ship to be chartered for voyage or time without the previous consent of the Inter-Allied Chartering Executive.
No ship to be laid up in port without approval.
A return to be furnished each month showing in detail the employment of all ships managed, owned, chartered, or controlled by the firm.
Every firm which requires bunker coals from Allied sources to perform a reasonable amount of service in return, i. e., to employ an agreed proportion of their fleet in carrying cargoes to or from Allied ports.
No cargo to be carried which is consigned to or shipped by any firm on the statutory black list.
  1. Post, p. 857.