File No. 659.119/185a
The Acting Secretary of State to the Ambassador in Great Britain ( Page)
6297. For Sheldon [from War Trade Board]:
No. 27. Following proposal was delivered by War Trade Board to Danish Minister on January 17. Repeat to Copenhagen.
In our proposal to you of November 271 we offered to license the following commodities which we understood constituted your needs, these being in metric tons unless otherwise stated:
|[Class of goods]||[Quantity]|
|Mineral turpentine for varnish||300|
|Kerosene and gasoline||70,000|
|Zinc and lead paints||2,500|
|Garden and tree seeds||117|
|Cotton and cotton goods||10,500|
|Boots and shoes||280|
|Apricot and peach kernels||50|
(Up to September 1918. Thereafter double that quantity.)
|Other nuts and kernels||250|
|Rice from Orient||2,000|
|Lubricating oils,greases (bbls.)||45,000|
|Crude fuel oil||50|
|[Page 1300]Wood tar||900|
|Tragacanth, various gums||90|
|Various sorts of glues and limes||500|
|Rubber goods and auto tires||500|
|Other rubber articles||255|
Group 1, subdivision 1. Of the foregoing commodities you request the following increases:
- Coffee to 16,000 tons;
- Tea to 600 tons;
- Spices to 500 tons;
- Pepper to 168 tons;
- Rubber, rubber goods, rubber shoes and rubber tires to 500 tons. This quantity to be increased to 700 tons, provided Denmark can prove her real need of this quantity.
Every neutral nation in Europe is looking to us in some measure to meet its needs, and we have not supplies in sufficient quantities to meet these requirements in addition to our own and those of our associates in this war. Under these distressing conditions the United States is denied the privilege of generosity, and in the light of its own and its associates’ situation this Government thinks the desire it evidenced to be just and fair, by its proposal of November 27, should have made a stronger appeal to Denmark than seems to be the case. However, we reluctantly accede to your request for the foregoing increases upon the condition of your full acceptance of all the conditions herein.
In view of depleted tonnage facilities, we suggest that you should obtain your requirements for various woods from Norway or Sweden. In no event could we agree to leave this question open to be settled in accordance with your future needs, but supplies for indoor or cabinet work that must be obtained overseas up to the foregoing amount may come via America, except that no aeroplane material can be granted.
We do not think your suggestion that future negotiations for further goods and rations may always be possible has any proper place in the proposed agreement, as its insertion would negative the idea of definitiveness. Requests for modifications of the agreement by either side can always be made.
Inasmuch as we are unaware of the quantity of merchandise and goods you have already bought, we cannot concede your right to free them from the restrictions imposed hereby with respect to all commodities.[Page 1301]
We will gladly give our aid to effect an equal division of rations over the year and to space commodities [according] to seasonal needs.
Subdivision 2. The foregoing commodity items are intended to include all goods, whether originating in America or elsewhere, and the Board assumes that the Danish Government will consult with the United States as to the sources from which Denmark from time to time shall obtain these supplies. If this be done it will make it much more certain that the commodities will be obtained in full by Denmark, as the United States and its associates will use their efforts to this end.
We purpose placing cargoes passing through American jurisdiction or carried in vessels using American fuel in the same category as cargoes originating in the United States. Approved cargoes of foreign derivation will therefore have the same status and will be treated precisely as though they were of domestic origin.
Subdivision 3. The wording of this paragraph suggests the possibility of a misunderstanding respecting the limitation of Denmark’s export of manufactured articles. Our proposal intended such manufactured articles to apply not alone to articles manufactured from merchandise of American origin but to all articles manufactured in Denmark. Prepared fish and meat or dairy products are not to be regarded as included in this term, but are treated separately hereafter.
In order to meet the suggestion of the Danish Government to eliminate the limitation of $2,000 in value per month of such manufactured articles, we propose as a substitute that such export shall not exceed in value the export of such manufactured articles from Denmark during the past year, and we assent to the guarantee system [of licenses] by the Grosserer Societet and the Industriraad upon the Danish Government’s assurance that these two institutions will fulfill their obligations in this regard. Effective guarantees are, however, to be given by Denmark that no metals except such as are employed in passive finishing processes, nor any articles whatever capable of employment in military operations shall be exported; and it is of course understood that no articles imported from the countries associated with the United States in the war shall be re-exported directly or indirectly to the Central Powers, and that no dispensations whatever from this general prohibition shall be granted.
We appreciate the Danish Government’s acceptance of our condition that lubricants, oils, kerosene, or gasoline received from the United States shall not be employed in factories or in manufacturing plants of any kind (excepting dairies) operating to produce commodities of any kind for exportation to Germany.
An appropriate clause in the final agreement will provide that no commodities which the United States or its associates may furnish to Denmark shall be exported to the Central Powers or shall be used in the production of any other commodities to be exported to the Central Powers, with the exceptions expressly provided for; and, further, that in case Denmark shall export to any neutral country contiguous to the Central Powers or either of them any commodity [Page 1302]which Denmark agrees not to export to the Central Powers, that no such commodity so exported shall be re-exported directly or indirectly to the Central Powers.
It is further understood that no dispensation whatever will be granted when a general prohibition of export is provided for.
In case an agreement shall be reached, this Board will exercise its full power to grant export licenses for the commodities covered, as well as for bunker coal and ships’ stores to facilitate transportation to Denmark. This Board cannot absolutely guarantee to Denmark the supply or the licensing for export of the foregoing commodities, as some are necessarily subject to the uncertainties of future harvests and others to future conditions of production and transportation which cannot be foreseen; nor can the requirements of the United States and its associates be in all respects accurately estimated.
Group 2. The Danish Government’s counterproposal with respect to this group convinces us that a basic and very serious misunderstanding exists respecting the situation of the United States in these negotiations. Prior to our entrance into the war, at a tremendous cost in human life and treasure to the nations now associated with us, a flow of supplies of the kind included in this group was kept up from Denmark to the German Army and civil population. We are now in the struggle, and the people of the United States must not be expected to deny themselves and their associates in order that Germany may continue to be so supplied by Denmark. In all of our negotiations with you we have only sought fair limits upon your trade with our enemy as a consideration for the large supplies you are asking from and through us.
Subdivision 1. We will agree to your limitation of exports to the Central Empires of 38 per cent as a maximum of your exportable surplus of butter and 18 per cent as a maximum of your exportable surplus of bacon, provided these percentages are understood to apply monthly and to the exportable surplus available after your domestic needs and your exports to Sweden and Norway have been first deducted from each month’s total. We accept your guarantee that exports to the Central Powers shall not exceed 800 tons per week. We understand that the remainder of your exportable surplus will be exported monthly to Great Britain.
Subdivision 2. Concessions were heretofore made at the request of the Danish Government permitting the employment of kerosene, gasoline, and lubricants imported from the United States in Danish dairies but not in Danish fisheries whose catch is to be exported to the Central Powers. Germany must furnish the fuel supply for that portion of the Danish fishing fleet which is engaged in securing the fish exported to the Central Powers. We note with satisfaction that you will limit this export to 25,000 tons per annum in terms of fresh fish, at the rate of about 2,100 tons per month. But we cannot consent to any deficit in one month being made good in the following months.
Subdivision 3. We cannot consent to your proposed increase in the export of cattle to Germany to 8,000 per week. This export must be limited to 6,000 per week, and we cannot agree to your reserving the right of being four weeks ahead in this export.[Page 1303]
Subdivision 4. Denmark’s former proposal for a maximum export limitation of 30,000 horses per annum to the Central Powers was accepted by us, and we cannot consent to the proposed reservation that during the two months of January and February an extra quantity of 15,000 may be exported.
It is understood that the foregoing provisions for the export of butter, bacon, cattle, and horses embrace all agricultural products to be exported by Denmark to the Central Powers.
No dispensation will be given by the Danish Government for any export to the Central Powers of lard, cheese, milk, tallow, fats, fish oil, whale oil, or any other oils or fats except bacon and butter.
All Danish fishermen and Danish fishing boats must land their catch in Denmark. They must not transfer it at sea and must not deliver to Norway, Sweden, or the Central Powers. The exports of fish agreed upon to the Central Empires must occur via Denmark. Denmark also agrees that she will not transfer to other flags any Danish fishing vessels.
Denmark agrees to furnish to the United States monthly statistics of its exportations to the Central Powers.
Subdivision 5. We cannot consent to your suggestion that you divide the exportable surplus of hides between the Allies, Sweden, and Germany. We are willing to meet the requirements of Denmark for heavy hides and tanning materials in exchange for Denmark’s entire export of its surplus of hides after legitimate requirements of Norway and Sweden have been filled by Denmark, upon the understanding that Norway and Sweden shall not re-export or export to Central Powers Danish hides or hides of Norwegian or Swedish origin released by imports of Danish hides.
In view of the shortage in tonnage and the prevailing high price for Chile saltpetre, we beg to suggest that Denmark should be able to substitute calcium nitrate from Norway without greatly increasing her costs and with a great saving in transportation. This, however, must not operate to reduce the exportation of Norwegian nitrate and nitric acid to the Allies.
Group 3. The United States has, through conditions not of its own imposing, become the commodity trustee for a large part of the civilized world and is burdened with the unpleasant task of distributing as best it can an inadequate supply to many distressed nations, of which yours is but one. In this distribution it must be governed by the needs, not the desires, of those with whom it has to deal, and recognition of and sympathy with the difficulties surrounding its thankless work does not seem too much to ask. In the matter of ships every available ton of all nations must be utilized both to increase the size of the too-small loaf and to speed its distribution when cut up.
These results will be impossible of accomplishment without the employment of a substantial portion of the tonnage of all the nations in the danger zones, but in so far as is compatible with actual needs the United States will endeavor to conserve Danish tonnage by its employment in safe zones.
It is believed that 450,000 tons dead-weight for Denmark’s tonnage requirements is overestimated, as Captain Cold’s statements made here were that Danish-American trade requires 200,000 tons [Page 1304]and that Danish-British trade requires 150,000 tons. The new Danish-British coal agreement provides for the carriage of 50,000 tons of coal per month, which we consider should be covered on the basis of a month’s round trip, so we add 50,000 tons of tonnage, making the total requirements for Denmark’s needs 400,000 [tons]. The total Danish steam and motor tonnage amounts to 865,000 tons dead-weight. This leaves, after deducting the 200,000 tons chartered to Great Britain, a balance to be chartered to the United States of 265,000 tons.
Delivery of tonnage under proposed agreement shall begin not later than January 15, and all vessels under this arrangement shall be delivered for service under charter by United States Government for the period of the war not later than February 15.
The Danish owners will agree to make no new charters from the time this agreement is consummated.
It is understood that the 265,000 tons are to be chartered to the United States Shipping Board for the period of the war. Of this quantity one-third is to be used in trades outside of Europe and the Atlantic islands, one-third for the Belgian Relief and one-third in the war zone. It is agreed that if the Belgian Relief Commission’s needs shall be less than one-third of the tonnage chartered, the Shipping Board shall have the privilege of using such tonnage as is not needed, one-half in trades outside of Europe and the Atlantic islands and one-half in the war zone.
Subdivision 3. We agree to your proposal that this tonnage originally chartered to the United States by Denmark will be treated as definitely settling the tonnage arrangement, no claims to be made for replacement of tonnage lost by war or marine risks.
Subdivision 4. We agree to the basis of “Baltime” form of charter, with such changes as to off-hire and other clauses as are in conformity with the New York [Produce Exchange time] form suggested in our proposal of November 27.
Subdivision 5. We agree that the time charter on vessels employed in the Belgian Relief and war zone service shall be at the rate of about $10.75 and the rate on those employed in safe trade shall be about $8.50, and we will indemnify Danish owners for losses caused by war risks on the basis of $140 per ton deadweight.
We are glad to be able also to meet the Danish request that both stipulated rate for charter hire and loss of vessel be expressed in American dollars.
There are 53,000 tons of sailing vessels which we request be diverted into safe trade on this side.
Subdivision 6. All Danish ships are to conform to instructions in regard to route, time of sailing, etc., which may be given by competent Allied authorities.
Subdivision 7. We are as desirous as Denmark that the most effective use of tonnage shall be arranged and will agree to avoid inspection harbors as soon as the development of a practical system will permit this to be done.
Subdivision 8. We agree that none of Danish tonnage chartered to the United States shall be used for Swedish ore trade.
Subdivision 9. As to the duration of the agreement, this Board feels that it should be operative for one year from the date of the agreement without cancellation privileges.[Page 1305]
Denmark to agree in principle to provide through the extension of credit for the settlement of trade balances adverse to the United States and its associates.
We remain [etc.]
Vance C. McCormick