EDWIN J. CLAPP
ECONOMIC ASPECTS
OF THE WAR
CHAPTER I
RIGHTS OF NEUTRALS UNDER INTERNATIONAL LAW
Before this war had been long in progress most of us learned for the first time the real nature of international law. The word "law" had tricked us into thinking of something clearly defined and accepted by those to whom it applied, and something backed by force to compel obedience.
Now we learn that what we considered international law consists mainly of a great body of precedents of different nations, some of them conflicting. These precedents represent certain immunities granted by belligerents to the commerce of neutrals in time of war. To be, sure, the immunities are an advance over the days when a belligerent proceeded like a pirate against lives and property on ships trading with the enemy. But the advance, when we consider it closely, is seen in no way to have kept pace with the growth of the vast interests it was designed to protect. International law at the best is an inadequate recognition of the rights of those who keep the peace at the hands of those who break it.
Yet even such law as there was has been disregarded. Blinded by self-interest, the belligerents have inaugurated a return to the practices of piracy from which this law has been designed to save us. When we turn to a power sufficient to compel obedience to the law, we find that behind it there is nothing but international morality, the public opinion of the world.
Especially in the last fifteen years this public opinion has been enlightened as to the great interests dependent upon an uninterrupted flow of peaceful commerce in war times. True, in the process of public enlightenment there has been more emphasis upon the horrors of war in general. The strongest of the forces forming public opinion on international matters has been the peace movement. Today we can say that more good might have been accomplished if the greater emphasis had been not upon preventing all war but upon confining its damage to those who fight. But a valuable by-product of the peace movement has been the spread of information on the rights of peaceful nations compared with belligerents and the need to extend those rights, not restrict them.
It was hoped that in time of war this international public opinion as to the rights of neutrals would exercise a strong moral force upon the belligerents to stay within the limits of law. That is, it was expected that the conscience of belligerents, fearing the disapproval of neutrals, would compel respect for the established order of things.
We were doomed to disappointment. The disapproval of neutrals has not been lacking, expressed most clearly in the protests of their governments directed to both belligerents. But a belligerent conscience, that is, fear of this disapproval or even any large respect for it, is lacking in the parties to the war.
Perhaps it was too much to expect that international morality alone would suffice to give sanction to international law. Within national boundaries we do not trust to morality alone. The prime interests of life and property are safeguarded by definite, clearly understood laws, accepted by all, and backed by force. Morality supplements force and does not supplant it. Withdraw the force of the law in any nation and its observance would disappear. Could we expect international morality alone to be any more able to supplant force in compelling observance of international law?
Whatever our expectations were, regarding the binding force of morality upon warring nations, we can have them no more. It is necessary to find some form of peaceable compulsion that will bring the belligerents back to the limits of law. Everyone recognizes the necessity of doing this at the end of the war. As a sequel to the peace, men are planning a new sort of international law with sharp power to enforce it. But the return to legal limits must be now, in the midst of the war. For neutrals to forfeit their rights will be a victory for the forces of international immorality and disorder. Respect for international law will be permanently weakened.
Moreover, no one can with certainty say that the end of the war will see established the formal system of international law of which we dream. It may be that this law will still be largely a matter of precedents, enforced by nothing stronger than the morality of nations. What security will there be in our relations if those precedents, hard won in the past, are now effaced and if that international morality notoriously proves unequal to its task?
Apart from this matter of principle, the great interests of trading nations, injured by the actions of belligerents, and the constant peril to innocent lives upon the high seas, both call for a return to freedom of neutral trade and travel now, before the end of the war, whose end we cannot foresee. Now is the time to put an end to the sacrifices of life and property demanded of those who choose to remain aloof from the conflict.
From the very beginning this war went beyond the limit of military and naval actions. It became an "economic war"; namely, a process of interrupting the flow of commerce between neutrals and belligerents and even between neutrals themselves. The purpose was to deprive the interrupted belligerent of necessities of military, industrial and civil life and so bring upon the enemy nation "pressure" sufficient to end the war.
But an economic war of this sort is also an economic war against neutrals, for the same pressure is brought to bear upon them as upon the belligerent attacked, perhaps even greater pressure. It may be that the belligerent can find or develop a substitute for the neutral's product more easily than the neutral can find a substitute for the belligerent's market.
There are two parties to all trade. It is impossible to interrupt the trade without striking them both.
The economic war began in August, 1914. Soon after the outbreak of the military war England's sea power drove German naval vessels from the ocean. Since then, Germany's navy upon the high seas has been unable to do more than carry on a sort of guerrilla warfare beneath the waves. England, after driving German cruisers from the Atlantic, proceeded to inaugurate measures designed to withhold from Germany the importation of most commodities that come to her by sea. Germany retaliated by a submarine campaign that endangered not only neutral property but also neutral lives on vessels sailing to or from England.
Through this policy of action, retaliation and counter-retaliation the seas have become a battlefield where the commerce and citizens of neutral countries venture at peril of capture or sudden destruction.
This book, dealing with the effect of belligerent violations of neutral trade rights upon the agriculture, industries and commerce of the United States, could be written about any nation now at peace. Our wrongs and losses are merely types of what has been forced on other neutrals as well. The sum of these wrongs and losses is an argument demanding that nations which plan to work and trade be led to dismiss now, and for all time, the aggressions of those that plan to devastate and slay.
It happens that the United States is the only great power remaining neutral, the only force today that is able to assert the rights of the world of peace. If we fail in the objects we seek, in the negotiations we carry on with both belligerents, the hope of all neutral nations is gone.
It is worth while briefly to review that body of neutral rights which we called international law and the successive measures by which those rights were abolished.
By common consent the seas are the public highways of nations; outside a zone three miles from shore they are not the domain of any one nation. They belong to peaceful commerce, not to belligerents who roam their surface seeking to destroy each other. As a remnant of marine barbarism, a belligerent has the right, if it has the power, to capture or drive from the ocean the merchant vessels of its foe. To the extent of its command over the sea, a belligerent may prevent contraband of war from reaching an enemy in any vessels; and, if capable of blockading the enemy's seacoast, may put a stop to all ocean commerce of the blockaded country. Under international law, these were the limits and conditions of interfering with commerce between neutrals and a country at war.
Only within much narrower limits, according to modern conceptions of international law, can a belligerent interfere with commerce between neutrals themselves. This commerce may be interrupted only when it consists of contraband of war---the actual tools of fighting---demonstrably in transit to enemy territory.
These are the rights of commerce on the seas. The rights of travel are as well understood. Though a belligerent may capture and in certain cases destroy a merchant vessel of the enemy, this may not be done without providing for the safety of crew and passengers. All passengers on neutral vessels, wherever bound, are immune from interference, excepting members of the armed forces of the enemy traveling home.
The laying of mines at sea is not permitted except for defensive purposes and then only in the territorial waters of the warring power that lays them.
With these main exceptions, which are burdensome enough, the sea must be free for the uses of commerce.
While this is international law as generally understood, it has not been in form to give nations a sense of security. The law is mainly in the form of precedents, such as proclamations of belligerents in previous wars, decisions of the prize courts of captors, and treaties between individual nations. Some of the precedents of different countries are conflicting. Therefore civilized powers have made several attempts to reduce the law of the sea to a form acceptable to all and accepted by all.
One such attempt resulted in the brief Declaration of Paris, adopted as a sequel to the peace negotiations following the Crimean War. More recently in the Hague Conferences efforts were made to form treaties which all nations were to sign. Most important for our present purposes is the Declaration of London. The British Government in 1909 called the London Conference to codify the law of the sea. All the leading nations took part. The result was the Declaration of London, signed by all national representatives who attended the Conference.
It is true that not all the Hague Conference agreements, called Conventions, were accepted by all civilized nations. It is true that for reasons partly selfish and partly technical the Declaration of London was not ratified by many home governments and so did not become officially binding upon them. But it was signed by the representatives of all great powers. The Preliminary Provision reads:
"The Signatory Powers are agreed that the rules contained in the following Chapters correspond in substance with the generally recognized principles of international law."
Hence it is that neutrals felt that the Declaration of London was morally binding. Hence it is that nations at peace looked forward to seeing the judgment of civilized nations as to the rights of neutrals upon the sea, expressed particularly in the Declaration of London, proclaimed as sea law by all belligerents at the outbreak of the war. We were disappointed.
The disregarding of legal limits was first in evidence when either Germany or England began laying floating mines upon the high seas, forbidden in a Hague Convention. Each took the alleged action of the other as the excuse for retaliation. Because of these floating mines in the North Sea, literally scores of vessels were lost, mostly belonging to the Scandinavian countries or Holland. Three American vessels were included, the Greenbriar, Carib and Evelyn. Because of the danger of mines, ocean freights and war risk insurance rates became a heavy burden on shippers and buyers and, in the case of some commodities, became prohibitive of commerce. A pall of uncertainty and fear was thrown over the commercial world.
Unfortunately, as it would seem in the light of later events, America refused to join the North Sea neutral countries in a protest against the mining of the North Sea. Such action might have made more effective the protest of all neutrals against the later German War Zone about the British Isles.
Yet the effect of mines upon the high seas was small compared with the paralysis of trade effected by a practical abolition of the rights of neutrals to trade with Germany and a severe restriction of their right to trade with each other. England brought this about by certain amendments to international law through its Orders in Council. Germany, with her retaliatory submarine warfare, designed the same paralysis of English trade. That the object was not attained is due solely to the fact that German submarines are less omnipresent and less able to intercept all trade than British cruisers are.
The exact process of this abolition of the freedom of commerce is easy to follow. At the very opening of the war the American Secretary of State, with a view to protecting neutral rights while allowing the belligerents all lawful freedom of action, suggested to them that they adopt during this conflict the unratified Declaration of London as their code of action towards neutrals. Germany and Austria agreed. Russia and France delayed their answer until they could hear from Great Britain, and then joined that country in its policy announced by the Order in Council of August 20, 1914, accepting the Declaration of London with modifications.
The modifications were subversive of the principles of the Declaration to which they were attached. These modifications, supplemented by an unexampled extension of the British contraband list, and finally by what our government calls an illegal blockade, have been England's method of exercising economic pressure upon Germany and, necessarily, upon all neutral nations that trade with her.
In the Declaration of London the articles classed as absolute contraband of war-that is, articles which Great Britain might properly shut out of Germany altogether, were restricted to the actual tools and equipment of fighting nations. Conditional contraband was a more comprehensive list, including such merchandise as food, clothing, coal, harness and saddlery, horseshoes and barbed wire. These articles, capable of direct use by the armed forces of the enemy, might be stopped only if the interfering belligerent could prove that they were destined for those forces. Finally, the Declaration specified a list of free goods, articles which might not be molested because only distantly related to warfare, necessary to the civilian population, and contributing a very important portion of the commerce of peaceful neutrals. Such articles were cotton, wool, hides and skins, and rubber.
This was law as codified in the Declaration of London. The British Order in Council of August 20 had the effect of adding the conditional contraband list (food, clothing, etc.) to the absolute list, by decreeing that conditional contraband would be presumed to be moving to the German military, and hence subject to capture, if the goods were "consigned to or for an agent of the enemy state or to or for a merchant or other person under control of the authorities of the enemy state." That is, goods could be consigned to no one in Germany; they could not be shipped to Germany at all. It is obvious that after this action any addition to the British conditional contraband list was as complete a ban on commerce as an addition to the absolute contraband list. The two henceforth were identical.
This action stopped our direct trade with Germany. It might appear that goods on the free list could still move. Some of them did move, from free to contraband. People feared to ship the others lest they should be so listed while ships were on the ocean, and the goods made subject to seizure. Practically nothing has been shipped to Germany from this country but cotton, and it was not shipped until December. In belated response to the insistence of southern senators and of American business interests which had found themselves gravely embarrassed by the cessation of cotton shipments, Great Britain finally made a clear statement that this particular commodity would not be considered contraband.
So much for direct trade with Germany. There was still a method by which we should have been able to export our goods and discharge our neutral obligations to trade with Germany as with England. We might have carried on this trade via neutral ports like Rotterdam or Copenhagen, from which the goods might have been shipped to Germany. The Declaration of London allows a belligerent to interfere with a shipment between two neutral ports only when it consists of absolute contraband for enemy territory. Conditional contraband so moving may not even be suspected. The Order in Council changed this. It extended the new intention of capturing conditional contraband to goods moving to Germany even through a neutral port. And, as explained, conditional contraband was seizable if destined to anyone in Germany; it was not conditional but absolute.
The British action, besides stopping our trade with Germany, barring only a certain amount of indirect trade carried on with much difficulty and danger, subjected to grave peril our commerce with other neutrals. The British contraband lists were extended so rapidly that soon almost no important article of commerce with neutrals was free from seizure by England, who suspected everything on these lists as being of possible German destination. The shipper to a neutral country then had the prospect of a British prize court passing judgment as to whether shipments were destined for Germany and, in the case of an affirmative judgment, whether any compensation should be paid the shipper, or his cargo simply confiscated. The uncertainty was a risk against which no one could insure.
As for the British contraband lists, a few instances will illustrate how they grew. On September 21, copper, lead, rubber, hides and skins were added; on October 29, motor vehicles, motor tires, mineral oil and leather. On December 23, naval stores and cottonseed oil went on the list. On March 11, raw wool was banned. The Germans have retaliated and published a contraband list containing articles that have nothing to do with war, like lumber and flax.
Our protests against the British August 20 Order in Council resulted in the substitution of an Order dated October 29. But when we came to observe the operation of the October 29 Order, we found that it did not lift the ban on our trade with Germany either direct or via neutrals, and that it added to the existing difficulties of our trade with neutrals a prohibition of shipments "to order." This prohibition dislocated the ordinary methods of foreign trade. Our protest to England of December 26 against interference with our trade with Europe failed to secure any modification of that interference.
At last a real test was made of the possibility of provisioning Germany. In January a St. Louis firm tried to get a cargo of foodstuffs to Germany on the American steamer Wilhelmina. The provisions were consigned to no one in Germany but to a member of the American firm who went to Hamburg to receive the cargo and distribute it to the civilian population. The British stopped the vessel. Unable to find any law for continuing the detention, they made law through a new Order in Council, enabling England to requisition, without trial, the cargo of any neutral ship brought into port. The Wilhelmina's cargo was so requisitioned.
On February 4 Germany, claiming that its act was a reprisal against an unlawful British attempt to starve a civilian population, declared the waters around the British Isles a War Zone where British merchant ships would be destroyed by German submarines---if necessary, without search---and where the submarines might endanger neutral vessels by mistake. Neutrals were warned to keep away. It was stated that it might be impossible to provide for the safety of passengers or crews of the British steamers destroyed.
When the War Zone was announced, our government recognized the danger, and addressed a sharp note to Germany, warning that country to be careful not to strike at American vessels or American lives. At the same time, we seemed to recognize in a degree the German point of view; so we sent a joint note to Britain and Germany suggesting that Britain give up its policy of stopping foodstuffs for German civilians, that Germany abandon its submarine warfare, and that both belligerents desist from mining the high seas.
With certain reservations Germany accepted the proposal. Great Britain rejected it and, indeed, instead of accepting, proceeded to more radical measures than before. On March 1, stating its action to be a retaliation against the submarine war and other alleged breaches of international law by the Germans, England instituted a "blockade" of Germany. The authorities at London announced that all vessels carrying cargoes to or from Germany, whether direct or via neutral ports, would be subject to seizure. This was the culmination of the British lawlessness. The culmination of the German lawlessness was the Lusitania horror.
The British "blockade" terminated our cotton trade with Germany, virtually the only trade that had moved. Whatever even of cotton thereafter found its way to Germany was involved in a smuggling operation. The third largest buyer from America became as distant from us as another world, barring some dangerous, indirect trade. Moreover, all our shipments to European neutrals adjacent to Germany now became tainted with suspicion and detention. Scores of cotton cargoes bound for neutrals have been held up in British ports.
For the first time American importers of German goods saw their supplies endangered; until March 1, the flow of commerce from Germany had been unhindered. Our Federal Government faced a loss of $20,000,000 per year in customs revenues levied on German goods.
The most striking circumstances in this extraordinary situation is the fact that Great Britain has at no time maintained a genuine blockade. British warships, fearing submarines, dare not undertake a close blockade of German ports. The Admiralty merely intercepts all traffic passing by Scotland or through the English Channel. Thus the blockade does not bear equally on all neutrals, for Scandinavian countries ship undisturbed to German Baltic ports, from which American products are barred.
This whole process of gradually damming the currents of trade to and from one of the members of the comity of nations has been attended with huge financial loss to the neutrals. More important than this, these neutrals, because the British operations have been contrary to the accepted interpretations of international law, have been put in a position where they ask themselves seriously whether, without violating their neutrality, they may lawfully continue to trade with one belligerent which unlawfully prevents them from trading with another. Above all, they question the possibility of silent acquiescence in the policy of both belligerents in abandoning decent restraints in their treatment of the lives and property of neutrals.
The time has arrived to revive the restraints and reassert international law and morals.
The lifting of the British "blockade" will not suffice, for we neutrals should then find many of the products of peaceful industry each burdened with an individual blockade. That is, these, products would be found included in the British contraband lists, with all that that means in the hindrance of trade between neutrals as well as between a neutral and a belligerent. If the "blockade" were lifted and the October 29 Order in Council and the British contraband lists kept in force, the relief to neutrals would be small.
What we need is a code of law and morals so simple in its terms that the self-interest of neither belligerent can evolve a quibbling interpretation of it different from that which neutrals hold. In this code must be determined what may be contraband and what may not; and it must define the entire method of procedure against merchant ships at sea.
There is no time now, in the midst of the war, for neutral nations to meet and devise such a code. The best we can do is to point to one already in existence: the Declaration of London. Formed by the best legal talent of all nations, it is fair and it is clear.
Along with the removal of England's illegal practices against the goods of neutrals must go the removal of Germany's illegal practices against their goods and lives. Germany must restrict her swollen contraband list and likewise return to the Declaration of London. "She must not use submarines against unresisting merchant vessels except to stop and search them in the approved legal way. Nor may English merchant vessels under any conditions be sunk until the safety of crew and passengers has been provided for.
Floating mine fields must be removed by those who laid them.
The following chapters are a review of the successive measures that led up to the present situation, and the effect of those measures upon leading articles of our foreign trade and upon our neutrality. It will be shown that it is in America's power, as it is her duty, to restore international law on behalf of the neutral world.
.
THE BRITISH AUGUST ORDER IN COUNCIL AND ITS EFFECT ON THE EXPORT OF FOODSTUFFS
The various measures taken to restrict the trade of neutrals are best reviewed in connection with a consideration of their effect upon the trade in foodstuffs, for it was foodstuffs against which most of these measures were aimed.
For a belligerent to interfere with food moving over the sea to the civilian population of the enemy is contrary to our conceptions of international law---and contrary to the conception formerly insisted upon by Great Britain---unless such interference is accomplished by means of an effective blockade.
Violation of the rights of trade means violation of the rights of both parties trading. In this particular case, one party was Germany and one party was the United States. We are less directly interested in the infringement of the right of German civilians to receive food than in the infringement of our right to ship it. Thomas Jefferson even tells us that to send food to one combatant and forego our right to send food to the other is a clear breach of neutrality.(1)
From the early days of August, 1914, England attempted by means lacking all legal recognition to shut off the movement of grain, flour and provisions to Germany. The frank object of the action was to bring such pressure to bear upon the entire people of Germany that it would sue for peace. In March the "attrition" campaign was given an outer appearance of legitimate practice by what is generally described as a blockade of the German coast, but what is in reality nothing more than an indefinite extension of the law of contraband.
The control of England over the food supply of the nations of the world was exercised at once after the declaration of war. Britain ordered to her own ports every British steamer on the seas then carrying foodstuffs to Europe. Their cargoes were unloaded and sold in the British market, which became glutted with grain. English vessels were carrying most of the world's trade. The diversions not only threw into the British market all German-bound grain, but also all neutral-bound grain in British steamers, and assisted the government materially in exercising pressure upon the neutral countries to comply with certain policies of the British Ministry which will require later attention.
After this initial measure to get control of grain that might be moving to Germany even via neutral countries, the British Government, in its August 20 Order in Council, altered the status of foodstuffs in international trade in war time. This alteration took the form of a modification of the Declaration of London, which England by that Order "accepted" as its code of naval warfare, and with whose terms we are already familiar.
It is recalled that the Declaration classified articles of commerce as absolute contraband, conditional contraband or free. Absolute contraband might be captured if moving to an enemy either in direct trade or via neutral countries. Conditional contraband might be captured if moving direct to the enemy's country, provided it could be proven destined to the enemy's armed forces. The destination of conditional contraband might not be questioned if it were moving to the enemy via a neutral; that is, conditional contraband so moving would be immune. Goods on the free list could move unhindered to the enemy's country in either direct or indirect trade. Goods from the enemy's country might not be stopped except by an effective blockade. Foodstuffs were conditional contraband.
Translated into terms of the present war, the Declaration prescribed that no interference should occur in trade between the United States and Holland, or Scandinavia, except in the case of ships which could be proven to carry absolute contraband, like arms and ammunition with ultimate German destination.
There could be no interference with the movement into Germany of such goods on the Declaration's free list as cotton, rubber and hides. There could be no hindrance of our export to Germany of conditional contraband like grain, flour and provisions, unless it could be proved by England that such shipments were destined for the German state or its armed forces. All foodstuffs moving to the civilian population of Germany were immune from capture. This question of army or civilian destination could not be raised if the food were moving to Germany via Holland or Scandinavia.
The Declaration prescribed that there could be no interference in the movement of any goods from Germany to the United States unless in the event of an effective blockade of Germany.
The things which by the Declaration of London Great Britain was obligated not to do gradually came to constitute a fairly good record of what she actually did. Step by step, the British Admiralty interfered with the shipment to neutral countries of the most innocent goods, like cotton, requisitioning the cargoes for British purposes. Rubber was haled into the absolute contraband list; hides were eventually made absolute contraband. Neither food nor other conditional contraband was allowed to get to Germany, either by direct sailing or via neutral ports. Without the maintenance of a genuine blockade, the export of all goods from Germany to the United States was finally made impossible.
The first of these serious "modifications" of the Declaration of London, appearing in the British August 20 Order in Council, was a change in the Declaration's contraband lists. Aeroplanes were made absolute contraband; they were conditional in the Declaration. The change was unimportant in itself but it introduced a policy that led to the greatest abuses.
The second and more dangerous change was in the treatment of conditional contraband, which was lawfully liable to capture only if it could be shown destined to the enemy state or its armed forces. The obligation of proof, as always under international law, lay upon the captor. Such hostile destination, the Declaration specified, might be presumed if the foodstuffs were consigned to the enemy authorities or to a contractor in enemy country publicly known to supply the enemy; or if the foodstuffs were sailing to a fortified place or base serving the armed enemy forces. That is, food ships consigned to ordinary merchants, not army purveyors, and sailing to commercial ports, were to be immune. As the Declaration says, "In cases where the above presumptions do not arise, the destination is presumed to be innocent."
So much for the law regarding conditional contraband. What did its British "modification" provide? It provided that destination for the hostile forces might be "inferred from any sufficient evidence" and experience proved that a mere suspicion in the mind of the British naval captain was sufficient evidence to detain ships. Moreover, in the new British-made law, destination for enemy forces was to be presumed if the goods were consigned to or for an agent of the enemy state or to or for a merchant or other person under control of the authorities of the enemy state."
This "modification" made direct shipment of foods to Germany impossible. It abolished the difference between absolute and conditional contraband; henceforth neither could move. The prize court judges who must administer this new sort of international law were thereby prevented from allowing the civilian population of Germany to get foodstuffs from America. Such foodstuffs must obviously be shipped to someone. There is no one in Germany or any other land who is not either "an agent of the enemy state or a merchant or other person in control of the authorities of the enemy state."
To be sure, the shipment might be consigned "to order," but events showed that the "evidence" would then be "sufficient" to "infer" destination to the enemy's forces.
Yet this did not exhaust the sweep of the British change in international law as brought forth in the Order in Council of August 20. There still remained the possibility of provisioning Germany by shipping to Rotterdam, Copenhagen, Gothenburg or Genoa, and thence forwarding into Germany. Against interference with conditional contraband so moving, stood the clear and unmistakable provisions of the Declaration of London. It read:
"Conditional contraband is not liable to capture except when on board a vessel bound for territory belonging to or occupied by the enemy . . . and when it is not to be discharged in an intervening neutral port."
If food is to be discharged in a neutral port, its destination is not subject to suspicion.
That is, applying the Declaration to the geography of the war, food bound for Germany, even if destined for military consumption, might lawfully be stopped only if shipped directly to Germany or Belgium, not if shipped to Germany through Dutch or Scandinavian ports.
The reason for this last provision is simple. It would be a disturbance of trade sufficiently serious if doubtful foodstuffs moving from America direct to Germany were to be subject to the review of English judges on the often debatable question whether their destination were civil or military. It would become insufferable if international law should enable the British authorities to halt food consigned to Scandinavian merchants and pass upon the dual question, first, the possibility of German destination, and next, the possibility of German army destination.
Such power would enable the British judges to ruin trade between America and Scandinavia, upon the mere suspicion that some of the goods might be leaking through to Germany. Great Britain might use this annoying power over Scandinavia and Holland to force them to refuse to trade with Germany in articles of their own growth and manufacture. Therefore international law forbids England the right to suspect that shipments to neutral countries have German military destination. International law forbids England the right to guard against such indirect shipment, in the interest of the higher right of neutral trade which would thereby be exposed to the constant peril of a prejudiced interpretation.
Experience has demonstrated the justice of these principles. And yet Great Britain in its August 20 Order proceeded to disregard them. That Order provided that conditional contraband, if destination to enemy forces could be shown, was
"liable to capture at whatever port the cargo is to be discharged."
But, as we already know, destination to enemy forces was assumed if the goods were moving to Germany at all. Conditional contraband, such as foodstuffs, could not move to Germany via a neutral country just as they could not move direct.
After barring neutral trade with Germany in all goods on the absolute and conditional contraband lists, England then increased these lists by adding to them articles that were either free or unclassified in the Declaration of London; such as rubber, copper, wool, hides and leather. Shippers feared to ship most goods not on the contraband lists, for fear they might be added to those lists. The result of all this was so severe that when the British began their "blockade," on March 1, the effect of it was not severely felt so far as traffic from America was concerned, excepting for cotton. Trade in most of our other important exports had already been stopped.
It is necessary to bear these facts in mind because, six months after hostilities began, we find England solemnly declaring that, as a retaliation against the barbarities of German warfare, it may find itself obliged to institute reprisals and shut off the oversea supplies of Germany, particularly food.. Germany, in the light of history, has a better right to call her acts reprisals, for the British policy began on August 20, 1914.
Yet the action of England went further than the measures described. There was still a possibility that Germany might be supplied with food or other commodities via neutral countries. This trade could move from America to merchants in Holland or Scandinavia, who would take delivery and later resell into Germany, attracted by the magnet of high prices prevailing there.
Two means were taken to prevent this resale trade. In the first place pressure was brought to bear upon steamship lines, plying from the United States to European neutral countries, not to accept shipments of articles on the British contraband lists unless each such shipment were accompanied by a sworn statement by the shipper to the effect that the goods were, to the best of his knowledge and belief, for bona fide consumption in the neutral country. The steamship companies required such an affidavit because without it the vessel faced detention by England while the uncertified shipment was being taken off. The fact that the neutral shipment was uncertified might then in the British prize court be "sufficient evidence" to prove it destined to the German military.
In spite of this, there was a chance that some merchant in neutral Europe might deceive the American shipper who, after all, could give no guarantee of the ultimate destination of his goods, once they were delivered abroad. This contingency Great Britain met by inducing the European neutral governments to lay re-exportation embargoes upon articles in the British absolute and conditional contraband lists. That is, the neutrals were brought to pass laws penalizing any citizen for reselling into another country these articles when imported. A neutral government which did not take this precaution might find that the absence of a re-export embargo upon goods was "sufficient evidence" to presume their destination to the German military and the neutral's own supplies from America would then be detained in England.
The working of this system may be illustrated by the case of Holland. It is recalled that at the outbreak of the war Great Britain at once summoned to home ports all British steamers carrying foodstuffs to Europe, and that the cargoes were sold in the English markets. For example, 770,000 bushels of wheat moving to Rotterdam were so diverted to English ports. This wheat was needed by the Dutch millers.
Holland was allowed to import no foodstuffs for herself, and before the end of August the government of that country was willing to enact any embargo and give any guarantees that Great Britain wanted. On August 23 a Dutch Minister of State announced this, in an interview published in London. On the following day the London Corn Exchange asked Sir Edward Grey for permission to export grain to Holland, since the people of that country were suffering from a food shortage and would not be in a position to export any of the wheat to Germany. Sir Edward felt compelled to refuse their request, so the London despatches said, on the ground that the strength of the German army on the Dutch frontier might be so great that Holland could not guard its own food supply.
No doubt the strength of the German army was a factor that influenced Sir Edward's attitude. The strength of the Germany army on the borders of Holland did not decrease, yet he eventually did let food into Holland. If he had not, the Dutch would have starved as the Belgians did. But he waited not only until the Dutch Government laid an export embargo on foodstuffs but also until the Dutch Government agreed to act as the sole consignee of all contraband and conditional contraband moving into Holland. Merchants importing grain, flour and provisions had to transmit to the government their demands and furnish it with funds and guarantees. The government in turn guaranteed to England that all of these imports would be consumed within Dutch borders.
In the course of time the work of handling all imports for Holland became too heavy for the Dutch Government. Its departments were not equipped for commercial operations. Therefore under government auspices the Netherlands Oversea Trust was formed, composed of prominent Dutch business men. To it were henceforth consigned all goods on Britain's contraband lists except grain, flour, petroleum and copper, which still could be sent only to the government direct. The Holland-American Line, the only regular steamers between America and Holland, bound itself to accept contraband goods only when consigned to the government or the trust.(2)
Before this arrangement had been worked out in Holland and before the other European neutrals had taken measures satisfactory to Great Britain, they had all fallen into real want because of a restriction of their food imports. Throughout October the newspapers of Denmark, Norway and Sweden contained complaints about the detention of grain and food shipments by England. Under such conditions it is not strange that by early November those countries had placed the most stringent embargoes on the export of food. It appears from our note to Great Britain of December 26 that the British Government had consented, in November, to be satisfied with the guarantees offered by the Norwegian, Swedish and Danish Governments as to non-exportation of "contraband goods" when consigned to named persons in the territory of those governments, and that orders had been given to restrict interference with neutral vessels, so consigned, to verification of ship's papers and cargoes.
No one in this country worried about the restriction of our grain and provisions trade with Germany and the adjacent neutrals. We shall see that, because of the distress of the cotton planters, largely due to the impossibility of getting cotton started for Germany, there was a successful agitation in October to have the British ban taken off cotton. But no one was in distress about grain.
It is true that in the first weeks of the war grain did not move out of this country, for reasons concerned with the general maritime situation. The uncertainty of the North Atlantic lanes, until Great Britain had cleared them of German cruisers, forbade vessels to venture out. As soon as England was alone in the North Atlantic, neutral and British vessels were safe from capture. Then there were initial difficulties of insurance and especially of finance to be overcome. Bills drawn on foreign buyers were unsalable; for the London discount market, through which these would ordinarily be turned into funds by the American bankers, had temporarily broken down. Requisitioning of British vessels by the Admiralty served to reduce the tonnage available for carrying grain or any other commercial cargo.
Large purchases of our grain were made by foreign buyers in the last week of July and the first week in August. But at that time the goods could not be moved out of this country. Grain left interior centers for the seaboard, filled elevators at the ports and intermediary points like Buffalo, and lay in cars that choked the Atlantic terminal yards of the railroads. Railroads to New Orleans and Galveston stopped receiving grain for export until the situation at the ports should clear up.
Yet all this caused little worry to the farmer. The purchases of exporters and their continual bidding for grain drove up the prices paid on the farm. The world began to see that we were to feed Europe, especially when it considered Russia's participation in the war and the stoppage of her exports.
Every day the farmer saw his property in wheat grow more valuable. On July 18, 1914, cash wheat (No. 2 Red Winter) was selling in New York for 88 cents per bushel. On July 24 it was 92, on July 29 it was 98 1/2. Wheat sold from 95 cents to $1 during the first half of August. On August 17 it touched 102 1/2 and was never again below $1. On September 1, cash wheat sold for 120 1/2. Until December, when the next rapid advance took place, wheat sold in New York for prices varying between 115 and 125. With the cereal selling at 125, the farmer who still held his wheat was being paid 37 cents per bushel more than on July 18, when the New York price was 88 cents. The capital of the man who owned wheat had increased over 44 per cent.
On December 18, the price reached 130 3/4. It rose almost without interruption to 138 on January 2, to 145 1/2 on January 7, to 153 1/4 on January 14. On January 27 the price touched 160. On February 4 it was 176 3/4. From then until the last of May it fluctuated often violently between 160 and 175. This averaged fully 100 per cent higher than the 88 cents which was being paid for wheat in New York in the middle of July, 1914. Early in July, 1915, spot wheat still sold for 130, though the September option, due to the expectation of a large American crop, was below 110.
Once the financial and shipping difficulties had been removed, wheat was exported at the rate of 1,000,000 bushels per day. Countries like Italy and Greece, which had always bought heavily from the Black Sea, had to buy in America. Scandinavia, which had secured rye from Russia and East Germany, had to substitute rye and wheat from America. France found part of its harvest appropriated by the invading Germans, who also occupied all of Belgium. The various relief funds for Belgium, notably the Rockefeller Commission, began purchasing food, largely grain and flour, at the rate of $7,000,000 per month.
Obviously no one was needed to come to the rescue of the wheat farmer. His constant interest has been in the continuance of the war, just as the constant interest of the cotton farmer has been in its conclusion. Peace rumors send the grain market down. They send the cotton market up. The Turk, in closing and holding the Dardanelles, thus interning the Russian wheat supply, has been the American farmer's best hired man. The price of wheat on our markets would be reduced along with the forts at Kilid Bahr. While Wall Street prayed for peace, the Produce Exchange, a few blocks away, prayed for the war to go on.
As with wheat, so with flour. Winter patents sold in the third week in July for $5 per barrel. On August 11 the same flour was $5.25. On August 25 it was $5.75; on September 25, $6. Here the price remained until the last week in December, when it sold at $6.50. The next week the price was $6.75. Then the rise was rapid, reaching $8.25 on February 1. This about corresponded with the summit of the wheat prices. From February 1 on, the price long averaged $7.50. Compared with the price of $5 in July, 1914, the advance was very perceptible. To be sure, it did not represent clear profit, such as the wheat advance represented to the farmer or the middleman. The miller had to pay more for some of the wheat in his 1915 flour than for the wheat in his 1914 flour. Nevertheless, even the millers, who chronically complain, confessed to some degree of prosperity because of the war.
From August 1, 1913, to May 31, 1914, we exported 75,600,000 bushels of wheat, receiving therefor $71,800,000. In the August-May months of 1914-1915, the war year, we sent abroad 224,000,000 bushels and were paid $297,000,000. In these months of 1913-1914 we exported 10,200,000 barrels of wheat flour, for which we were paid $46,750,000. In the August-May period just past we were paid $85,000,000 for 14,400,000 barrels. On the other hand, high prices which foreigners paid to farmers were matched by the equally high prices paid for grain and flour by domestic users. This was one of the less cheerful sides of the boom in the export food trade.
Indeed, the concern of the government was not to see that the miller and the farmer got their rights, but to see that the miller and the grain speculator did not rob the public. On August 18, 1914, an agent of the department of justice was a visitor at Minneapolis flour mills, inquiring as to the sudden rise in the price of flour. At the beginning of 1915 both New York and the Federal Government were investigating the sensational rise in the price of wheat, and trying to discover in it the machinations of speculators. It was found that the old law of supply and demand was operating. The usual Russian supplies were cut off from neutral countries. The Allies were consuming more heavily than ever, and their own crops were short. With everyone bidding for American wheat and flour, prices naturally advanced.
It is clear, therefore, that the American farmers and millers did not suffer because they did not ship to Germany. Had they been able to do this, wheat and flour would have been higher than they were and our citizens would have made still more money than they did, for Germany's demand would have been added to that of the rest of belligerent and neutral Europe. But our grain and flour people did fairly well.
Under these circumstances, naturally, no great agricultural interests went to Washington to clamor for freedom of foodstuffs shipments to Germany. Yet the principle at issue was no less vital than if large losses had been involved. The historian of the future will find it difficult to reconcile our insistence on the movement of cotton because we needed the cotton money, with our acquiescence in the stoppage of the grain and provisions movement because we did not need the grain and provisions money.
Nor will it suffice to say that Germany, by self-denial, did pull through, in spite of stoppage of food from America. Our rights and our duty were neglected, even if neglect of our rights did not mean distress to any of our citizens and even if neglect of our duty did not result in the starvation of Germany.
Moreover, the farmer will perhaps not find himself untouched. September wheat at less than $1.10 in New York in July, 1915, meant well under $1 per bushel on the farm. The contrast with the price the farmer received for his last year's crop will be striking. The contrast will be intensified if the Dardanelles fall and Russian wheat is let loose.
Above all, the final British measure, the "blockade" of Germany, has established a new practice, a new definition of blockade which may in the future be of the very greatest harm to the farmer. This feature of the question is reserved for Chapter V.
.
FOODSTUFFS UNDER INTERNATIONAL
LAW.
THE OCTOBER ORDER IN COUNCIL
What we considered our rights in the matter of trading with belligerents was early in the war set forth in an announcement of our State Department declaring that such trade, except in contraband of war, was lawful and might go forward. On August 15, 1914, the State Department published the following:
"The existence of war between foreign governments does not suspend trade or commerce between this country and those at war. The right to continue to trade with belligerents is upheld by the well-recognized principles of international law.
"Conditional contraband consists, generally speaking, of articles which are susceptible of use in war as well as for purposes of peace; in consequence, their destination determines whether they are contraband or non-contraband.
"Articles of the character stated are considered contraband if destined to the army, navy or department of government of one of the belligerents or to a place occupied and held by military forces; if not so destined, they are not contraband, as, for example, when bound to an individual or a private concern."
This theoretical right of America to ship food to Germany, asserted August 15, was cancelled five days later by the British Order in Council whose provisions we already know. In August and September of 1913 we shipped 4,700,000 bushels of wheat to Germany; in August and September, 1914, we shipped none. In August and September, 1913, we sent to Germany 20,500 barrels of flour; in August and September, 1914, only 65 barrels. In August and September, 1913, we sent to Germany $4,100,000 of lard; in August and September, 1914, not a dollar's worth. The comparatively small sales even in 1913 are of course no measure of what Germany would have taken in the war year 1914.
Noting the disappearance of shipments from oversea, Berlin protested in early October. In a note handed to foreign diplomats in Berlin on October 10, Germany called attention to the violations of the Declaration of London by the August Order in Council and the British September 21 contraband list. The protest was directed partly against Britain's absolute disregard of the contraband list established in the Declaration, especially against making rubber, hides, skins and certain kinds of iron ore contraband. However, the chief complaint was against the British "modification" which abolished the meaning and the privileges of conditional contraband and made it as impossible for food to move into Germany as for cartridges. Finally, the protest asked neutral nations what they were going to do about these attacks upon their rights, and intimated that Germany would not engage to abide longer by the Declaration of London if Great Britain persisted in violating it.
The German protest was cabled to our government on October 22. Our answer was sent shortly after. We replied that the United States had withdrawn its suggestion, made early in the war, that for the sake of uniformity the Declaration of London should be adopted as a temporary code of warfare. We withdrew the suggestion because certain belligerents refused to adopt the Declaration without changes and modifications. Thenceforth, our reply continued, during the war, the United States and its citizens would rely for protection upon the existing rules of international law.
None of the rights of trade with belligerents is more firmly established by the well-recognized principles of international law than is the right to trade in food for the civilian population. This is a principle upheld by us in the past, and upheld with especial stress by the English Government, when Great Britain was a neutral. Continuously since the eighteenth century Britain has asserted that food was not contraband unless destined to a belligerent government or its military forces.
In 1885 China was at war with France. France declared rice contraband of war, with the purpose of starving China into submission. The declaration met with immediate, sharp and successful opposition from Great Britain. Lord Granville, British Minister for Foreign Affairs, wrote the French Government that regarding foodstuffs "there must be circumstances relative to any particular cargo, or its destination, to displace the presumption that articles of this kind are intended for the ordinary use of life."
Is there any distinction between the French act of declaring foodstuffs contraband of war, and the British instituting of measures that made it impossible to ship them to a belligerent even though they were left on the conditional contraband list?
America also interested itself in the French case of 1885. The American Minister at Berlin wrote our Secretary of State regarding it. He called attention to the fact that an immense portion of our exports consisted of foodstuffs. Every European war, he added, produced an increased demand for these exports. The French doctrine attempted to stop food even when bound for civilians. If food, he went on, can thus be captured, clothing, the instruments of industry and all less vital supplies can be cut off, on the ground that they tend to support the efforts of the belligerent nation.
"Indeed, the real principle involved goes to this extent, that everything the want of which will increase the distress of the civil population of the belligerent country may be declared contraband of war.
"The entire trade of neutrals with belligerents may thus be destroyed, irrespective of an effective blockade of ports. War itself would become more fatal to neutral states than to belligerent interests."
This letter might have been written in the same words regarding the manipulation of the British contraband list in the present war.
The next instance to the point arose in the Boer War. Lord Salisbury was asked to state the position of the British Government regarding the movement of foodstuffs to the Boers. He said:
"Foodstuffs with a hostile destination can be considered contraband of war only if they are supplies for the enemy's forces. It is not sufficient that they are capable of being so used; it must be shown that this was in fact their destination at the time of the seizure."
Yet the same British Government in 1914 chose to cancel its own clearly expressed interpretation of international law, by decreeing that provisions should not move to Germany "if consigned to a merchant or other person in control of the authorities of the enemy state."
Again, in 1904, Great Britain and the United States, acting in co-operation, opposed successfully the action of Russia in seizing a cargo of flour and railway material consigned to private concerns in Japan. In describing the representations of the British Government to Russia, regarding food shipments, Lord Lansdowne wrote Mr. Choate, then our Ambassador to England:
"The test appeared to be whether there are circumstances relating to any particular cargo to show that it is destined for military or naval use."
Further than that, Lord Lansdowne clearly stated that Great Britain did not propose to be bound by the decision of a Russian prize court, if the court did not abide by the principle already stated.
"His Majesty's Government further pointed out that the decision of the prize court of the captor in such matters, in order to be binding on neutral states, must be in accordance with the recognized rules and principles of international law and procedure."
The words of Lord Lansdowne might have been quoted in our first note of protest to England, on December 26.
In this same Russo-Japanese War in 1904, our Secretary of State, John Hay, instructed our Ambassador at St. Petersburg to make representations to the Imperial Russian Government in no uncertain terms. He was to communicate, in part, as follows:
"When war exists between powerful states it is vital to the legitimate maritime commerce of neutral states that there be no relaxation of the rule---no deviation from the criterion for determining what constitutes contraband of war, lawfully subject to belligerent capture, namely: warlike nature, use and destination. Articles which, like arms and ammunition, are by their nature of self-evident warlike use, are contraband of war if destined to enemy territory; but articles which, like coal, cotton and provisions, though if ordinarily innocent are capable of warlike use, are not subject to capture and confiscation unless shown by evidence to be actually destined for the military or naval forces of a belligerent.
"If the principle which appears to have been declared by the Vladivostok prize court and which has not so far been disavowed or explained by His Imperial Majesty's Government is acquiesced in, it means, if carried into full execution, the complete destruction of all neutral commerce with the noncombatant population of Japan; it obviates the necessity of blockades; it renders meaningless the principle of the Declaration of Paris set forth in the Imperial Order of February 29 last that a blockade in order to be obligatory must be effective; it obliterates all distinction between commerce in contraband and non-contraband goods, and is in effect a declaration of war against commerce of every description between the people of a neutral and those of a belligerent state."
What of the British treatment of our foodstuffs under the Order in Council of August 20? Was it in any respect different from the action which John Hay so resolutely opposed in 1904? It was not. England as a belligerent has followed the mischievous precedent of Russia in the same attempt which John Hay and Lord Lansdowne defeated in 1904. His Majesty's Government in 1914-1915 proceeded to a "complete destruction of all neutral commerce with the non-combatant population" of Germany, excepting what might fortuitously be smuggled via adjacent neutrals. It can be said of the English policy as well as of Russia's that it "obliterates all distinction between contraband and non-contraband goods"; and that it "is in effect a declaration of war against commerce of every description between the people of a neutral and those of a belligerent state."
It is clear, therefore, not only that the partially abandoned Declaration of London gave to this country the right to send foodstuffs to Germany, but that the common law of nations to which our government reverted, the law established by precedent and by the opinion of high authority, endorsed our right with equal emphasis.
It is not to be assumed that the problem thus presented to our government was wholly overlooked. In October of 1914 the State Department made certain representations, never published, to Great Britain. It cannot be said that this action failed of result. A new Order in Council was called forth. The Order in Council of October 29---superseding that of August 20---contained, together with some apparent modifications of terms, a variety of provisions that made the new regulations in reality more severe upon neutral trade and more subversive of established legal principles than the rulings which had called forth our protest. As in August, so in October, the Order in Council "accepted" the Declaration of London subject to the modifications in the Order.
To be sure, Great Britain has contended that the October Order in Council was an amelioration of the severity of that of August 20. In his February 10 note to us, Sir Edward Grey thus refers to the October Order:
"Your Excellency will remember the prolonged discussions that took place between us throughout the month of October with a view to finding some new formulae which would enable us to restrict supplies to the enemy forces and to prevent the supply to the enemy of materials essential for the making of munitions of war, while inflicting the minimum of injury and interference with neutral commerce. It was with this object that the Order in Council of the 29th of October was issued, under the provisions. of which a far greater measure of immunity was conferred upon neutral commerce."
But the greater measure of immunity, upon closer examination, did not appear.
So far as direct shipment to Germany was concerned, the new Order provided that hostile and forbidden destination of food and other conditional contraband---that is, destination for enemy forces---should be presumed in all cases allowed by the Declaration of London, and that the presumption should further be made,
"if the goods were consigned to or for an agent of the enemy state." (Paragraph II.)
This appeared in terms to be a material modification of the August ruling which had included among forbidden destinations not merely "an agent of the enemy state" but also "a merchant or other person under control of the authorities of the enemy state," which evidently meant anyone within the enemy's boundaries.
But unfortunately everyone within the enemy's boundaries was construed as an agent of the enemy state. That is, any consignee in Germany would have to prove before a British prize court that he was not an agent of the state. He would have the impossible task of proving this before the prize courts of a country which officially identified the civil with the military population of Germany. In his February 10 note, Sir Edward Grey clearly states this identity as the British Government's reason for putting the burden of proof upon the captured instead of upon the captor:
"In the peculiar circumstances of the present struggle, where the forces of the enemy comprise so large a proportion of the population, and where there is so little evidence of shipments on private as distinguished from government account, it is most reasonable that the burden of proof should rest on the claimant."
In view of the small English army in the early months of the war it may have seemed to Sir Edward that the forces of the enemy comprised a large proportion of the population. But, adhering to the facts, there were not 6,000,000 Germans under arms when he wrote the February note. The population of Germany being nearly 70,000,000, the chances were eleven and one-half to one that foodstuffs for Germany were destined for the civil rather than the military population.
By its perversion of the law of evidence the October Order in Council was as effective as that of August 20 in preventing any direct trade in food with Germany. We know this better than we should know it if food shipments had been sent and held up in England. We know it because no one even dared to send a shipment---until the case of the Wilhelmina in January, considered in the next chapter.
Having thus kept the ban on direct trade with Germany in conditional contraband, the Order then proceeded to make more difficult than ever the conduct of trade with Germany via neutrals and even the trade between America and neutrals themselves.
Paragraph 35 of the Declaration of London, if observed, provides that the German destination of conditional contraband, like food, shall not be the concern of England if the food is to be discharged in an intervening neutral port. The October Order replaced this with the following:
III. "Notwithstanding the provisions of Article 35 of said Declaration, conditional contraband shall be liable to capture on board a vessel bound for a neutral port if the goods are consigned 'to order,' or if the ship's papers do not show who is the consignee of the goods, or if they show a consignee of the goods in territory belonging to or occupied by the enemy."
IV. "In the cases covered by the preceding paragraph (III) it shall lie upon the owners of the goods to prove that their destination was innocent."
That is, goods moving from us to European neutrals were subject to capture if consigned to anyone in Germany, if the neutral consignee was not named, or if the shipment was "to order" of a neutral. If the goods were going to Germany the owner himself must prove that they were not for the German military. The proof, as we have seen, was impossible.
Therefore nothing was so shipped. It cannot be too strongly emphasized that the lawful procedure is for England, the captor, to prove that the German destination of conditional contraband is a guilty one; that is, a destination to the military.
We now come to strictly neutral commerce, between America and Scandinavia, for example, to which England, according to Sir Edward Grey, had conferred "a far greater measure of immunity" through the October Order in Council. The reverse is true. Every burden put upon that commerce by the August Order remained, and there was added the prohibition of shipments "to order." Shipments "to order" were not formally prohibited but they were declared subject to capture, and in the ensuing prize court the owner must then prove their innocent destination. Even if a shipper felt certain of his ability to prove this, he would be mad to ship "to order," for this would mean a delay of his goods in England for several months, until they reached their place on the calendar of the prize court. Shipments "to order" ceased as soon as the British action was known.
The ruling against neutral shipments consigned "to order" disarranged the established method of financing our exports of foodstuffs. Ordinarily the exporter draws on a Swedish buyer, for example, and sells the draft to an American bank. The bank buys the draft on condition of being allowed to retain possession of the shipping documents until the purchaser pays. The goods are then forwarded, but are consigned, not to the Swedish buyer, but "to the order" of the American bank. The bank sends the draft and the documents representing the goods to its Swedish correspondent, with instructions to deliver them to the buyer upon payment being made or assured. This general practice was prohibited by the British Order. In a large number of instances neutral buyers were put to the great inconvenience---for some an impossibility---of providing money in New York before the goods were shipped.
A pertinent case, illustrating the operation of this part of the Order, was that of five steamers, under charter to an American line and containing American packing house products consigned to Scandinavia "to order." Three of the ships sailed from New York before the October Order was announced and the other two before it was known in this country. In spite of this the steamers were forced to call at Kirkwall and were then ordered to proceed to Hull and other British east coast ports, where their long period of detention began.
These steamers were the Alfred Nobel, the Björnstjerne Björnson, the Kim, the Fridland, and the Arkansas. They were Norwegian steamers which the Gans Steamship Company of New York had taken over on a long term charter. Months went by and, in spite of all protests from the Americans interested and from the State Department, the steamers and their cargoes lay in the British ports. They were held there, inactive, at a time when they might have been earning $12 per bale carrying cotton to Rotterdam. This would have been equivalent to net earnings of $13,000 per day for the four steamers: $13,000 clear after paying charter money and operating expenses.
November, December, January, February and March passed, without it being possible to get any action on the vessels. The money of the American provision exporters was in the meantime tied up. Their drafts had been returned to them, as the goods had never been delivered. The shippers were of course co-operating with the shipowners in pressing the matter in London and in attempting to get the State Department to do something for them.
Finally, a hearing was set for April 13. On that day the attorneys of the shipowners and shippers appeared in a prize court in London. The British Attorney General moved for a delay in the case, in behalf of the British Government. He said that these cases were very complicated because of the large number of individual shipments on each boat. He said that each shipment must be investigated in America, and this took time. He said that the American shippers should have gotten in touch with, the British Government before they made these shipments "to order." He pleaded for delay.
Sir Samuel Evans, who was presiding over the prize court, granted the contention of the Attorney General. He exonerated the Attorney General of all charges of unnecessary delay and insisted that the cases were too complicated to be rushed. The judge of the prize court, following the October 29 Order in Council, which was his law, had to consider that prisoners at the bar were guilty until they could prove themselves innocent. Since the vessels sailed before the Order was known in America, the British prize court procedure established that British laws are retroactive. Eventually a hearing was set for June 7, seven months after these cargoes, destined to neutral ports, had been seized. There were more postponements and at the end of July, 1915, the cases were still unsettled.
Such was the effect of the prohibition of neutral shipments "to order."
The last feature of the October Order which we need consider is one designed to force European neutrals not to send supplies to Germany even of their home growth and manufacture. This measure is one of the most extraordinary occurrences of the war. The October Order read:
(IV. 2) "Where it is shown to the satisfaction of one of His Majesty's principal secretaries of state that the enemy government is drawing supplies for its armed forces from or through a neutral country, he may direct that in respect of ships bound for a port in that country, Article 35 of the said Declaration shall not apply. Such direction shall be notified in the London Gazette and shall operate until the same is withdrawn. So long as such a direction is in force, a vessel which is carrying conditional contraband to a port in that country shall not be immune from capture."
In plain language, if a British agent reported that Holland or Sweden was feeding Germany either with American or Swedish food, one of His Majesty's principal secretaries of state could direct British cruisers to capture food shipments from America to the offending neutral. It is no restriction of the omnipotence of these secretaries to say they might proceed to capture if it is shown to their "satisfaction that the enemy government is drawing supplies for its armed forces from or through a neutral country." Anything for Germany was presumed to be for the armed forces; for, according to, British naval practice and to the public contentions, of British Ministers, the German military and the German, civilian population are regarded as one. Since October 29 our commerce with European neutrals, has been carried on with permission of the British authorities who in the October Order were given charge of that commerce.
Neither Sweden nor any other neutral was to be allowed to send to Germany food which it raised and supply the deficiency by abnormal importations from America. After the October 29 Order reexportation embargoes on goods in the British contraband lists did not suffice to keep European neutrals innocent in the eyes of England. It was necessary for them to lay simple embargoes on the exportation of these goods, including food, even if the trade was in the neutral country's own product.
Nor did the export embargoes, when laid, suffice. Nothing did. Even after neutral governments adjusted themselves to the British August and October Orders, there occurred incessant detentions and seizures of food ships, especially those bound for Holland and the Scandinavian countries. Under conceptions of law with which no one could learn how to comply, cargoes of perishable goods were held up for months in British harbors.
Our Department of State has finally published a list of the seizures of our vessels. In the first eleven months of the war Britain seized 2,000 vessels with American cargoes destined for Europe. In his note of January 7, Sir Edward Grey stated that 773 vessels left our shores between August 4 and January 3 for Holland, Scandinavia and Italy. Of these 773 vessels, he said, there were 45 from which part or all of the cargo was thrown into prize court. Eight of the ships themselves were so treated. This gives no indication of the loss, borne entirely by neutral shippers and shipowners, due to the detention, unloading and annoyance of the many vessels about which nothing suspicious even to the English mind could be found. It gives no indication of the injury to neutral commerce through discouragement and intimidation, through the well-grounded fear that while a perfectly innocent shipment was on the high seas, His Majesty's Council might legislate some new "international" law which would make the shipment subject to capture.
In the meantime the patience of the United States Government had become. exhausted. On December 26 the Secretary of State addressed a note to our Ambassador at London, to be handed to Sir Edward Grey. The note admitted the propriety of Britain stopping contraband for the enemy. It states that in case of conditional contraband, the policy of Great Britain was unjustified by the established rules of international conduct. It claimed that the seizure of cargoes consigned "to order" to neutral countries was not legal. It quoted Lord Salisbury to show that even if our foodstuffs were destined for hostile territory, they could not be lawfully seized unless it could be proven that they were for the enemy forces. The Government of the United States admitted the right to search and detain ships bound from America
"when there is sufficient evidence to justify a belief that contraband articles are in their cargoes; but His Majesty's Government, judging by their own experience in the past, must realize that this government cannot without protest permit American ships or American cargoes to be taken into British ports and there detained for the purpose of searching generally for evidence of contraband; or upon the presumption created by special municipal enactments which are clearly at variance with international law and practice."
Finally, our note stated that American shippers and producers, deprived of established markets, were calling for relief; and that unless this were obtained, there might arise in this country a feeling contrary to that which had so long existed between the American and the British people.
Great Britain sent two answers to this protest; a preliminary answer dated January 7, and a final one dated February 10. The January 7 reply is a not uninteresting document, though neither this communication nor the one which followed it conceded in the slightest degree the American demands.
The first declared purpose of the British note of January 7 was to "clear the ground and remove some misconceptions that seem to exist." The author, Sir Edward Grey, 'then accepted the principle that a belligerent should not interfere with trade between neutrals unless such interference were necessary to protect the belligerent's national safety.(3) Great Britain, he continued, was ready to keep its action within these limits on the understanding that it retained the right to interfere in what was not "bona fide" trade between neutrals but really contraband destined for the enemy's country. Whenever its action unintentionally exceeded this principle, Great Britain, be said, was ready to make redress.
Sir Edward then told us that we were wrong in assuming that our industries were suffering from the loss of their usual market. As conclusive proof he cited the figures of export from New York to Italy, Holland and Scandinavia. In November, 1914, we exported to Denmark $7,100,000 of goods, compared with $560,000 in November, 1913. We sent $2,860,000 to Sweden, compared with $380,000. We sent $2,320,000 to Norway, compared with $480,000. We sent $4,780,000 to Italy, compared with $2,980,000. We sent $3,960,000 to Holland, compared with $4,390,000.
The note passed over, naturally, the fact that our November exports to Germany were only $40,000, compared with $48,000,000 in 1913, or that our exports to Austria fell from $1,970,000 in November, 1913, to nothing in 1914. It did not inform its readers that the figures he gave were those of our exports that started for European neutrals. How much got past His Majesty's cruisers was another story.
Moreover, the note implied that our larger exports to the Scandinavian countries consisted solely of articles destined for Germany, and hence subject to British interference. But, according to another part of the same note, Great Britain was interfering only with "contraband destined for the enemy's country." By that test Britain could lawfully have interfered with only such of the excess exports to European neutrals as represented absolute contraband---since the Declaration of London allows neutrals to receive conditional contraband unmolested---and even such a course would have assumed that all such merchandise had a German destination.
As a matter of fact, the excess of exports to European neutrals was to some degree destined for Germany. The point is that free goods and conditional contraband had a right so to move. However, much of the excess was for the neutrals themselves. They had need of larger imports from us than ever before. For example, they had formerly bought from Germany their copper products. Germany was keeping her copper at home. Therefore the neutrals needed to import raw copper---in larger quantities than before, in order to make their own copper products. Our copper exports to neutrals were the most suspicious thing Sir Edward Grey found. Similarly, we exported more cotton to the neutrals because their own mills were making cotton piece goods that had been coming from Germany, and supplying foreign markets to which Germany was denied access.
Above all, the neutrals needed more foodstuffs. East Germany usually exports large quantities of wheat flour and of rye to Scandinavia. Not only was this cut off, but the ordinary shipments of wheat and rye from Russia dropped, first because of Russia's export embargo (finally lifted) and later, to a degree, because of Germany's control of the Baltic Sea. The closed Dardanelles kept Russian Black Sea supplies locked up. Both Russian and German supplies had to be replaced by supplies from the United States.
The British note has only the following brief reference to foodstuffs:
"With regard to the seizure of foodstuffs to which your Excellency refers, His Majesty's Government are prepared to admit that foodstuffs should not be detained and put into a prize court without presumption that they are intended for the armed forces of the enemy or the enemy government. We believe, that this rule has been adhered to in practice hitherto, but, if the United States Government has instances to the contrary, we are prepared to examine them, and it is our present intention to adhere to the rule though we cannot give an unlimited and unconditional undertaking in view of the departure by those against whom we are fighting from hitherto accepted rules of civilization and humanity and the uncertainty as to the extent to which rules may be violated by them in future."
In the face of the conditions which we have reviewed, we are touched by the simple "belief" of His Majesty's Government that they had adhered to international law hitherto.
However, Britain was preparing the way to institute severer measures, should the need arise. The italicized clauses can be translated into ordinary English. They mean: "We cannot unconditionally agree to continue to adhere to the limits of law. Our enemy has departed from the rules of civilization: therefore we may insist upon having a free hand in the future."
Here was the theory that England was fighting our battle, and that of the civilized world. To assume that the United States would calmly agree to this proposition was a clear imputation that this country was not genuinely neutral and would be willing so to confess.
The obstructive tactics of the British Government were to be put to a severe test by the case of the American steamship Wilhelmina, with which we shall now deal.
