Transcript

Memorandum to
War Cabinet on trade blockade
Catalogue reference: CAB 1/22 f1-2


(handwritten) Sir E. Carson
(stamp) MISCELLANEOUS 521 RECORDS
Printed for the War Cabinet. January 1917.
CONFIDENTIAL.
MEMORANDUM IN REGARD TO THE PRESENT POSITION OF THE
BLOCKADE, JANUARY 1st, 1917.
     All the evidence available tends to show that, with some minor exceptions, practically no goods coming from overseas are getting through to Germany. For this purpose, fish caught by any of the northern neutrals and landed in a northern country is regarded rather in the light of home produce than in that of goods from overseas. The chief minor exceptions are certain colonial goods, such as tobacco, coffee, and cinchona from the Dutch colonies, and wines and spirits, as to which we have had a good deal of difficulty with the French. It is possible that, in addition to these, there may be some slight leakage by way of Sweden, because we are much hampered by the Swedish laws in getting information as to the export trade from Sweden to Germany. With regard to the other three northern neutrals, we have fairly complete returns, partly official and partly those furnished to us by our own agents, and these all go to show that practically none of the export trade from the northern neutrals to Germany consists of overseas goods.
     2.  As for Switzerland, the position is not quite so satisfactory. Italy still sends in to Germany, through Switzerland, a good deal of fruit, and, until very recently, and perhaps still, a considerable amount of silk. There is also a certain amount of trade from Switzerland in goods coming from other countries which are sent to Austria and Germany in order to be made up and returned to Switzerland. The Swiss position is difficult and complicated, because it is under the control of a Committee representing Italy, France, Russia, and ourselves, and there is a good deal of bickering between the different nations, which has not improved the efficiency of the blockade. But on the whole it may be said of Switzerland, as of the northern neutrals, that the blockade is, apart from the few Italian exports, practically complete as far as goods originating outside Switzerland are concerned.
     3.   This result has been mainly brought about by the policy of rationing, and an Appendix (A) shows, with respect to the northern neutrals, how far that policy has been carried in the more important goods. In the case of Denmark and Holland, as well as Switzerland, and, to a considerable extent, in the case of Norway, agreements have been entered into by which the amounts of imports of military value allowed into those countries has been limited by agreement, and where this has been done no difficulty arises. In Sweden, on the other hand, we have only been able to secure agreements in the case of cotton and lubricating oil. With respect to all other articles, we have had to ration Sweden by reference to a figure based on pre-war imports, which we have thought represented her reasonable home requirements, and the same course has been followed in the other neutral countries, where no ration has been agreed. This is quite a satisfactory method of proceeding, in the case of goods coming from the British Empire, because there we can, without any difficulty, limit to any amount we think proper the imports into the neutral countries. But with respect to goods coming from other oversea neutrals, and principally North and South America, more difficulty occurs, since we have no right in international law to restrict trade of that kind, unless we can show that any particular consignment is destined for Germany. To some extent this difficulty has been got over, as far as the United States is concerned, by the institution of what is called the "navicert" system. Under that system the Embassy at Washington offers to receive applications from any intending shippers from the United States who wish to know whether a particular consignment proposed to be sent by any of them to a neutral country is likely to meet with difficulties in getting through our patrols. This is a great advantage to the shipper, who is able to decide whether he will make a shipment before he has engaged shipping space and entered into the necessary financial arrangements for the transaction, and it has always been put forward in the United States from this point of view. But it is also of great advantage to the blockade, because before the Embassy replies, and grants what are called letters of assurance to the intending shipper, the Embassy communicates with London and we are enabled to refuse such letters if, for any reason, we think the shipment undesirable, including, of course, the case where the shipment would cause an excess beyond the ration. The actual method of procedure is that on an application in respect of a shipment being received by the Embassy, the Embassy telegraphs it on to the Contraband Department of the Foreign Office. It is there considered, and if for any reason it is thought undesirable, the word "Nolo" is telegraphed; if it is all right, the word used is "Accipe;" and if for any reason further enquiries are thought necessary, the reply is "Pendens."
     4.   There are, however, a good many cases which are not covered by this system, whether because the American shippers have not availed themselves of it, or because the shipments come from some South American country. In those cases, our only plan is to detain the goods as long as possible, and, if necessary, put them in the Prize Court. The latter expedient has to be rather carefully employed, because mere excess is no ground for condemnation. Indeed, there are several cases which are likely to come into the Court at an early date, in which our only substantial reason for Prize-Courting the goods has been that they are in excess of the ration, and we are advised that there is no hope of securing a successful result in these cases. They mostly arise with regard to Sweden, for the reasons already explained, and negotiations are now pending with the Swedish delegates, the main object of which is to fix by agreement rations for the goods which are more important from a military point of view. This will involve allowing Sweden to have the right to import larger quantities than she has had in the past year, though probably the lack of tonnage will prevent her from exercising that right. It will also involve certain concessions with regard to black lists and so on, which are not in themselves very desirable. But, in view of the great legal difficulties we are in, and also in view of the immense importance of securing increased transit to Russia, which Sweden controls, I think it is well worth while to make an agreement if we can. If we succeed in doing so, then the imports to all the neutral countries bordering on Germany will be governed mainly by agreements, and as far as overseas goods are concerned the blockade should be substantially complete, provided the agreements are properly enforced.
     5.   There is, however, one big gap in the complete blockade of Germany, namely, the import into that country of the home products of the neighbouring neutrals, and for some time great efforts have been made to limit, and if possible, completely stop these imports. The possibility of doing so differs in each country, and depends upon the special circumstances applicable to it. In Sweden, the principal normal exports to Germany are iron ore, wood pulp, bacon, and a certain amount of eggs and butter. I see very little prospect of being able to interfere substantially with the iron ore which Sweden digs out of her own soil and carries across the Baltic to Germany, and in some cases down the coast of Denmark and Germany to Rotterdam, under conditions which prevent the fleet from touching it. The only possible way of stopping it would be to threaten to cut off some other import into Sweden of which we have complete control. Unfortunately there are not many of such imports. We were advised that we had a great lever in our coal, but when we began to limit our exports of coal to Sweden, Germany increased hers, and though our coal is better that German coal, the difference in quality was not enough to give us any very substantial means of pressure. There are other articles, such as jute and wool, which we substantially control, but we cannot use them to any very great extent, because Sweden has, on her side, considerable means of pressure upon us. We use a great deal of her iron ore, and some of her other manufactured products, such as ball bearings, which are apparently essential for our munitions. But far more important than even these is the fact that she controls the transit to Russia, and we receive perpetual appeals from the Russian Government not to do anything which may imperil that transit. Till lately, indeed, the Russian Government were very much afraid of Sweden's intervention in the war. She has some 500,000 troops, who are said to be well trained and well equipped. That danger, however, has apparently passed, owing largely to the circumstances of the war, and partly to the admirable diplomatic work done by our representative Sir Esme Howard. He has had a difficult task, because, as is well known, a very considerable and very influential section of Swedish opinion is strongly anti-Russian, and to that extent pro-German, while the King, owing to his marriage, has the same bias.
     6.   We have been able to cut off the butter export by cutting down our import of margarine materials into Sweden, a branch of trade which we control almost entirely, so that the Swedes have been forced to eat their own butter.
     7.   With regard to bacon, we have no very effective means of dealing with it, but fortunately the amount is small.
     8.   As to wood pulp, the only means of restricting its export is by limiting the import of sulphur, which is essential for the manufacture of the kind of wood pulp which is mainly exported to Germany. But,unfortunately, the Swedes have command of a sufficient quantity of the Norwegian pyrites to enable them to supply Germany with a considerable quantity of the pulp in question. I am myself rather sceptical as to this being a matter of any great importance, though our scientific advisers are inclined to think that it is only this "chemical wood pulp," as it is called, which is convenient for the manufacture of nitro-cellulose, now that Germany has no more cotton for that purpose. It is, however, probable that though chemical wood pulp may be the most convenient, any form of wood pulp would really do, and of course Germany has an inexhaustible supply of forests from which wood pulp can be made.
     9.   Norway normally exports among other things three articles of great importance to Germany, fish, pyrites, and nickel, and we have made great attempts to cut off each of these articles from Germany.
     10.   With regard to fish, as the Cabinet know, we entered into a very large scheme of purchase, part of which was that we were given an option on all the fish caught and landed in Norway after the 18th August last, except that the Norwegians might export 15 per cent. of it if that quantity was not caught by the use of any British materials. This agreement was bitterly resented in Germany, and is thought to be one of the causes of their attacks on Norwegian shipping. It is unfortunately true that the Norwegians have not fully carried out the agreement, and that a certain amount of fish has been wrongfully exported to Germany.
     11.   With regard to pyrites, the Norwegians are unable to manufacture copper suitable for electrical purposes, and have consequently had to import a large quantity of copper for their rapidly developing electrical works. By a series of purchases and other transactions in the United States, we have the command of the greater part of the world's supply of such copper, and we have agreed with the Norwegians that they shall not export any of their native copper, or pyrites containing copper, to any belligerent country, except in return for an import from that country of an equal weight of copper, and we further agreed that since they wanted immediately a large quantity of electrical copper, they should, before they exported any copper to Germany, give us the option of taking in return a very large quantity of pyrites containing some 3,000 tons of copper. The result would have been, if the agreement had been rigidly carried out, to stop altogether the export of pyrites to Germany, at any rate for some considerable time. But, as a matter of fact, we have reason to believe that a certain amount of pyrites, which in the trade is regarded as non-cupreous, containing only 1/2 per cent of copper has been exported to Germany in breach of the agreement.
     12.   With regard to nickel, all that we have been able to do is to arrange with the nickel owners that, in return for a considerable payment, they will limit their export of nickel to Germany to a comparatively moderate amount.
     13.   These various measures have carried our pressure in Norway as far, I think, as it can be safely carried. The Germans have made great efforts to induce the Norwegians to break their agreements and, as I have said, there is some ground for thinking that the agreements have not been perfectly kept. We are now putting pressure on the Norwegians by cutting off their coal supply from us, on which they completely depend, to compel them to carry out their agreements to the full. But we certainly have reached a point beyond which it would not be, in my judgment, very safe to go in view of the advice from our military and naval authorities that it is undesirable that Norway should come into the war on either side.
     14.   From Denmark there have been undoubtedly very large exports to Germany of agricultural produce. Denmark is, from a military point of view, absolutely at the mercy of Germany which, with a comparatively small force, could easily overrun the whole country and carry off all the live stock and crops, which are of considerable amount. This fact has been made use of to the full by the Danes, and they have contrived out of their military weakness to make very large commercial profits. So long as they were convinced that Germany was going to be victorious it was almost impossible to do anything with them, though the population is overwhelmingly anti-German. Recently, however, their temper has very much changed. Whereas at the beginning of last year and down to June they were exporting much larger quantities of agricultural produce to Germany than they did before the war, and much less to us, they have now, in compliance with repeated remonstrances from us, greatly modified their attitude.
     15.   The most recent figures are shown in Appendix (B).



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