File No. 659.119/207

The Chargé in Denmark ( Grant-Smith) to the Secretary of State

[Telegram]

1982. As a result of discussions relative to the possibility of no agreement being arrived at between the United States and Danish Government and the possible advantages which might [accrue] to us from such an agreement with Japan [Denmark], the following memorandum has been prepared by Mr. Hurley at my request. I am loath to see our Government placed in a position where it would be precluded from further bargaining to meet the unforeseen contingencies which must arise as the war progresses. In the proposals thus far exchanged, provision for the importation of everything of prime necessity to Denmark has been included to tie our own hands while Germany remains free to apply pressure on Denmark to her own benefit and to Denmark’s almost certain disadvantage—a prospect which is not seductive.

In considering the Danish proposal of February 13, 1918, it would seem desirable to determine, first, whether Denmark, by this proposal or by any agreement which she is likely to be willing to enter into, makes any substantial return to the United States for the commodities which the United States have tendered to her, and secondly, whether all that Denmark here concedes or will ever concede can [Page 1318]be secured by any other means more advantageous to the United States.

Note that the American proposal of November 28,1 if accepted, would have precluded the large exports of horses and cattle occurring this winter. Also it would have supplied ships at the critical time when America was building. Also note that the new Danish proposal covers only from March to September, excluding next winter, when it may be expected that the exports will again be high; also that it undertakes nothing as to supplying the large needs of Norway and Sweden. Does the Danish proposal give us anything? Except in the matter of fish and hides, the limitations contained outline the economic policy which Denmark, of necessity, would pursue if the American demands had not been made. Denmark’s own desire to keep her herds intact would bring about a reduction of export from March to September to 6,000 per week or under. By March, an export of 25,000 horses per month will be high, as sales to Germany in past week have taken care of the surplus. The opportunity to increase the sales after the expiration of six months completely satisfies the country’s requirements. As to bacon and fats, Denmark has not nearly enough for herself. She should not sell a pound now and does so only by restricting her own people who are very short of cooking fats and materials for soap. Even with the present restriction on Danish people and no export to Sweden and Norway, it is submitted that Denmark could not ship south as much as 700 tons per week of the articles covered by that limit and the offer to divide the butter export with England is illusory, because to accept, England must pay $1 per pound. In Denmark the embargo has reduced possibility of export of these articles and the amounts sent now will, from purely Danish considerations, be held to a minimum which Germany demands. German demands are frankly stated to be the consideration for the amount fixed for this export and for ignoring the claims of Sweden and Norway, who would gladly take the whole surplus at German prices. American requests have effected no reduction of this limit. The latest suggestion as to limitations of manufactured articles gives Denmark the right to export all that she has been exporting in the past year and all that she could reasonably export in the next six months after restoring her now depleted stocks.

In a word, the limitations set on the export of cattle, horses, and fats are only such limitations as Denmark’s economic aims and needs would compel her to set, whether American commodities are received or not. In fact the figures were obtained by asking the semi-official committees in the various branches as to what the situation in the industry required.

The limitations on hides and fish were arrived at as a result of other considerations here. The extreme need for tanning material and mineral oil produced Danish desires which correspond to our own wishes, but a separate agreement could secure our ends in both these; see Legation’s telegrams as to hides.2 The present Anglo-Danish fish agreement might be perpetuated by sending some oil for Danish fishing and land use. The only remaining Danish concession [Page 1319]is tonnage. Less than 400,000 tons are left to the United States and her allies by this proposal. Of this amount, 135,000 tons are already under Allied control. Of the balance, a portion can be used for Belgian Relief and 65,000 tons may presumably be turned over to Great Britain for use in the danger zone. The balance is given with a prohibition against use in the danger zone, which may be interpreted as withdrawing from the Italian trade about 40,000 tons of shipping. It must be a serious question whether the loss to the United States of the 400,000 tons taken by Denmark is not greater than the gain secured by transferring this small amount of tonnage into traffic in the danger zone. At any rate it would seem highly probable that this amount of tonnage might be secured for the danger zone by an offer of saltpetre and coffee. If the American desires as to hides, fish, and tonnage were attained as above, the remaining commodities could be used to secure other concessions, all as a convenient lever to meet changes in conditions which must inevitably attend the future development of the war. It would seem to be a disadvantage to be bound once for all, however loosely, to license the goods in our schedule, and it might be well to consider whether it would not be better to make the several separate agreements. Then if we wish we can from time to time secure Danish friendship by making licenses for parts of the commodities not included in the separate agreements.

Grant-Smith