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

File No. 600.119/362

The British Embassy to the Department of State

Memorandum

The following memorandum has been drawn up in reply to informal enquiries from the Department of State regarding the weight to be attached to the argument, put forward by neutral European Governments, that drastic restrictions of their supplies from the United States would “throw them into the arms of Germany.”

In general, the reply to this argument is that neutral countries, which have given every possible proof for three years of the supreme value which they attach to the maintenance of neutrality, will not take sides with that one of the belligerents with whom their peoples as a whole have the least sympathy, at the very moment when that belligerent has the whole world ranged against it and is, to say the least, facing complete military, economic and political ruin, unless the restrictions imposed upon them are such as to imperil their honour or the livelihood of their people. This general statement applies even to Sweden and Spain, where large sections of the people—that is to say, the governing classes—have in the past shown themselves friendly to Germany, for even in these countries any open departure from neutrality in favour of Germany could not fail to rouse the working classes at least and to lead to strikes and riots, if not to actual revolution.

Now, neither the British nor the American Government have ever contemplated any policy towards these neutrals incompatible either with their honour or their welfare. The policy of restrictions which is now under discussion amounts to nothing more than a threefold statement:

(1) That no country can, in the existing shortage of world supplies, enjoy much more than a barely comfortable subsistence, reduced to the amount indispensable to the maintenance of full health and vigour;

(2) That, in so far as the assurance to neutral countries of such a minimum subsistence depends upon the export to them of supplies from the United States or the European Allies, and in so far as their industry and commerce is also maintained by exports from the same sources, the licensing of such exports must be conditional on the cessation of shipments of articles of military value to Germany and her Allies and on the maintenance of such shipments to the United States and European Allies;

(3) That neutral shipping shall not be laid up in port but shall be reasonably and usefully employed.

There is nothing in such a policy which could arouse that popular resentment and antagonism without which no government can to-day venture upon a rupture of friendly international relations.

More, any such rupture would forfeit the benefits and services which all these countries are now receiving from Great Britain and the United States. British ships have relieved Norwegian ships from the maintenance of dangerous services to Norway in the North Sea. British mines in 1916 provided Norway and Denmark with 4,613,162 tons of coal against a normal peace importation of coal by those countries from all sources, less exports, of no more than 4,972,331 tons. In addition Great Britain has supplied Sweden and Holland in 1916 with 2,992,631 tons of coal, and these figures do not include all the services maintained for the benefit of these countries by British bunkers in British and other ports. These are only two instances of manifold services which are still being continued, partly, it is true, in the interests of the Allies themselves but mainly for no other purpose than to supply these countries with their reasonable needs. The interests of the Allies could have been far better served, so far as merely material considerations are concerned, by a policy of threatening demands, from which they have always consciously and deliberately refrained. Germany cannot replace the services which the Allies have rendered and thus, even if public opinion could allow the neutrals to gravitate towards Germany, they could only do so at the cost of material losses out of all proportion to the reasonable restrictions which it is supposed would cause their alienation.

To sum up this phase of the question, the British Government can guarantee that their present relations with the neutral Governments concerned, tested as they have been by three years of continual negotiation and controversy, give no cause whatever to apprehend any rupture of any kind. If any proof of this were needed it would be found in the fact that, within the last few days, the British Government have agreed no longer to withhold facilities, so far as it concerns them, for the shipment of large quantities of arms and ammunition and explosives to Holland. They do not, indeed, view such shipments with approval, but their reluctance to facilitate them has had nothing to do with any fear that such equipment could be used against them.

There is, however, another similar argument which is frequently urged by neutrals, namely, that any refusal on their part to allow exports to Germany would expose them to attack from Germany. It is not believed that, in the present military situation, Germany could in any circumstances afford to effect so considerable a diversion of her forces as would be entailed by an attack on Holland, Denmark or Switzerland, still less such a one as would be necessary to attack Norway or Sweden. No one of these countries has been generally supposed to be so open to attack, or has more often alleged her dangerous position as a pretext for maintaining large exports to Germany, than Denmark; yet when recently a bill was introduced into the Danish Parliament to reduce the emergency force maintained as a safeguard against a surprise attack, it was accepted by all parties except the Conservatives. This certainly does not indicate any great apprehension of a German invasion and a similar tendency may be observed in the other countries. It is no longer the German armies that are feared, but the German submarines, and the latter can make few if any worse attacks on neutrals than they are already making. The most, therefore, that contiguous neutrals have to fear from Germany merely as reprisals for an interruption of commercial relations would be sudden acts of terrorism such as aircraft attacks of which both the Dutch and the Norwegians have on various occasions shown themselves afraid. Such attacks might be very serious in such a country as Norway but even this possibility is hypothetical and remote and should be regarded rather as a danger to be forestalled by consultation between the United States and British General Staffs, who are probably in a position to concert measures to meet it, than as an argument in favour of inaction.

The argument as to “throwing the neutrals into the arms of Germany” is, however, sometimes put in a more practical form, namely, that these neutral countries, if they are dependent upon the Allies and upon the United States for supplies and shipping, are also dependent upon Germany for supplies which neither the European Allies nor the United States can furnish. In these circumstances, it is argued, if the neutrals are forced to choose between trade with Germany and trade with Germany’s enemies, the economic arguments in favour of either choice may be so evenly balanced as to make the fear of Germany’s anger the determining factor, even though that fear might not in itself be sufficient to make them break with the Allies. There is some superficial force in this argument since, as regards coal at any rate, some of the neutrals are really, as things stand at present, dependent upon Germany. Norway and Denmark receive sufficient coal from the United Kingdom, as has already been pointed out, but Sweden, Holland and Switzerland get a large proportion of their coal from Germany. Switzerland stands on a different footing in many ways from the other contiguous neutrals. As regards Sweden and Holland, their imports of coal from non-German sources in 1916, as compared with their normal imports from all sources, were as follows:

Holland, 1916	1,346,129	tons	(all from the United Kingdom)
Normal	7,310,702	tons
Sweden, 1916	1,749,936	tons	(of which 1,646,502 tons from the United Kingdom)
Normal	4,305,787	tons

But, while this might seem to furnish a strong case for these neutrals to allege the absolute necessity of continuing their trade with Germany, a closer examination of the situation will show that, if they accept our demands, we are not necessarily incapable of replacing the supplies which Germany might consequently cut off, in so far as those supplies are really necessary. It must be remembered that a general reduction of supplies such as, ex hypothesi, the neutrals, like the belligerents, must face, of itself reduces the need for coal. Denmark, in face of the conviction that she would be unable to obtain the large quantities of fats, oils, fodder, etc., which she originally demanded from overseas, has, in recent negotiations in London, stated that she will need only 1,200,000 tons of coal a year from the United Kingdom, owing to the reduction of industrial activity which will be entailed by a restriction of these imports. This amounts to less than half her normal coal imports and, prima facie, it might not be unfair to divide the requirements of Sweden and Holland for coal by half in a similar way. The total annual requirements of these two countries would then fall to only some 5,800,000, or no more than about 2,800,000 tons more than the United Kingdom actually sent them in 1916. There would be nothing impossible in Great Britain increasing her coal production for export by this amount, but even such an increase in production might be unnecessary since, as shown above, Denmark is taking this year some 1,100,000 tons less from the United Kingdom than she did in 1916, and in 1916 the United Kingdom sent some 1,130,000 tons to Chile, Brazil, Uruguay and the Argentine, a burden which it is hoped that the United States will now take off our shoulders. The 2,230,000 tons thus hypothetically released would almost suffice to cover the additional needs of Holland and Sweden, provided only that those countries will provide the shipping necessary to carry this coal from the United Kingdom, as the Danes have been doing in the past and will almost certainly continue to do.

It is not, of course, pretended that this calculation is other than extremely conjectural, but it may serve as an instance of the extent to which any allegation as to the necessary dependence of neutrals on Germany must be accepted with reserve and examined in the greatest detail. Moreover, it would be highly dangerous to assume that Germany’s exports to these neutrals will not continue in Germany’s own interest even if the importing neutrals cease to send supplies to Germany. Germany has markets to preserve in these countries and she has debts to pay there. Even if they entirely stopped all exports to her, her exchange with them would inevitably fall heavily below even its present figure if she were to stop all exports to them. It must be remembered that, during the whole of 1915 at any rate, Germany continued to export enormous quantities of coal to Antwerp for no other purpose than to maintain a long-standing market. For the rest, the detailed problems of neutrals’ dependence on the Central Empires must be left for minute examination by the Allies and the United States in concert when the neutrals produce reasoned evidence in support of their allegations. For this purpose, consultation by experts in London would be particularly profitable since constant discussions are proceeding there with all these Governments, the details of which it is very difficult to convey sufficiently quickly and fully to the Allied representatives in Washington.

In conclusion, one other aspect of the question must be considered. Those who plead that they ought not to be thrown into the arms of Germany must show that they are not in those arms already. Short of an actual entry into the war in alliance with Germany, an adventure too wild to be contemplated for a moment, it may seriously be doubted whether some of these neutrals could, by gravitating towards Germany, show her more favour or add more to her strength than they are already doing. One of them, Sweden, has in two years supplied her with 9,000,000 tons of iron ore, with many thousands of tons of steel-hardening metals and with raw material for explosives in enormous quantities, while deliberately barring the way for the passage even of ordinary commercial supplies to her opponent Russia. Sweden has, moreover, forbidden any of her citizens to give the Allies any guarantee against the re-exportation to Germany of any goods imported from overseas and her governing classes have constantly proclaimed their sympathy with the Central Empires and their confidence in their ultimate victory. Norway, Denmark and Holland have, indeed, shown a better appreciation than Sweden of the meaning and obligations of neutrality, but Norway, like Sweden, has provided Germany with indispensable steel-hardening metals and with enormous quantities of sulphur ores, while all three have diverted to Germany the food exports which they normally sent to Allied countries and have very greatly increased those exports for Germany’s benefit, while their own people are to-day going short of food. In any other language than that of extreme legal technicality, these countries have been and are a base of supplies for Germany. Their people are quite aware of this and their sentiment revolts against it. They are indeed sending some similar supplies, though in smaller quantities, to the Allies which must at all costs be maintained, but while this consideration may protect them from any legal accusation of breach of neutrality, it does not lessen the assistance they have afforded to our enemies, and the supreme importance which Great Britain attaches to the maintenance of her supplies from these neutrals is in itself a proof of the incalculable military benefits which Germany has secured from the far larger share of these supplies allotted to her during three years of war. If the policy of the United States towards these neutrals is stated, as it can be stated, in terms of essential justice and moderation, it is far more likely that their people will be confirmed in their present anger against Germany and encouraged to an open expression of their sympathy for the Allies, than that they will gravitate towards the Central Empires.

One last consideration must be emphasised. In this memorandum an attempt has been made to state the broad facts of the situation as a basis for the broad policy already advocated by Mr. Balfour’s mission and by the British Embassy. The Allied Governments are convinced that this policy is both right, necessary and safe. But when once that policy is declared, Germany will undoubtedly counter it by a still further hardening of her attitude towards these neutrals, by threats and by demonstrations. The neutrals will come forward with difficult arguments and doubtful pleas, possibly even with requests for protection or assistance. The resulting negotiations will not only involve questions of economic fact on which the British Embassy can in part supply information to supplement the independent investigations of United States representatives abroad, but will also raise military and strategic problems which cannot adequately be dealt with merely through the diplomatic channel. Military and naval measures of a precautionary kind may have to be concerted as a basis for such assurances to neutrals as may be necessary to confirm their resistance to German threats. Short of this, any such problem as that of the coal supply touched on above involves decisions as to the relative importance of man-power in the army and in industry, the allotment of tonnage and the protection of routes in the North Sea. Such decisions are among the most important that any belligerent Government can take and they can be taken only after full discussion between the political, military and naval advisers of the various Allied Governments. It would be highly unsatisfactory, and might be dangerous, to rely solely on cable communication and diplomatic discussion at Washington for the solution of problems which will always be difficult and may, in the event of German demonstrations become at any moment of the most vital urgency. The avoidance of urgent crises will largely depend on the extent to which the policy of the United States and the European Allies can be given the appearance, as well as the substance, of steadiness and continuity and for this the closest and most constant touch between the United States and the situation in Northern Europe will be absolutely indispensable. The British Government cannot therefore over-emphasise the supreme importance they attach to the acceptance by the United States of the invitation already extended to them to send representatives to London competent to discuss all such matters with the advisers, and if necessary with the cabinets, of the Allied Governments, in order that the United States Government may be fully informed, as they cannot otherwise be, not only of the economic facts of war trade, but also of the strategic and political situation with which those facts must be constantly adjusted.

Washington , July 5, 1917.