Part I (cont'd.)
Chapter 5: The Operation of the First Contraband Agreements
First conferences between the British and French authorities. – What classes of contraband trade remained to be controlled; the importance of derivative contraband. – What was known about the overseas imports of the border neutrals in the first months of 1915. – What was known about the exports of the border neutrals during the first months of 1915. – The German exchange system was stimulating trade between Germany and the border neutrals. – The contraband committee and its procedure during the first months of 1915. – Evidences of a general hardening of purpose among the British authorities. – The first Anglo-Swedish controversy, January to February, 1915. – First evidences of a tendency towards special agreements with private firms; the copper agreement.
When the last of the agreements described in a previous chapter had been signed, the naval and administrative machinery for intercepting the enemy's sea-borne supplies was working efficiently. Admiral Jellicoe returned to Scapa, with the bulk of the grand fleet, on 7th November; soon after, a new cruiser squadron, formed of converted liners, and thoroughly adapted to the work in hand, was spread upon three patrol lines, which intersected the stream of traffic to northern Europe. Our naval control of the northern exits to the North sea was thus reasserted. In the south, a French squadron under Admiral le Cannelier was watching the western entrance to the Channel; and the two allied governments had agreed to a convention for apportioning captures and prizes between the allied navies.1
More important, perhaps, than this formal agreement, was a visit that Mr. Hurst and Admiral Slade paid to the French authorities during the last days of the year. The October order in council had been issued rather hastily, without consulting the French, who felt the slight, and were disturbed that an order of such importance should be issued before their practical objections to it had been carefully considered. But, notwithstanding their misgivings, they had loyally issued a decree in exact conformity with the October order, and the visit of our representatives went far to relieve the French apprehension that we were indifferent to their opinions. The allied representatives successively discussed the recent contraband agreements; the note of the Scandinavian powers, and whether it should be answered; how the naval forces in the Mediterranean should avoid duplicating the examination of vessels engaged in the Italian traffic; and what additions were needed to the contraband lists. This last subject was one upon which the British and French representatives were most divided. The French experts made out a strong case for declaring nitrates to be contraband. Our representatives could not agree that so grave a measure should be taken for purely technical reasons. They pointed out, that Chile supplies nitrates to all Europe; and that a contraband declaration so destructive to Chilean trade would be followed by serious political consequences. The British proposal was that the supply should be controlled by special agreements with the shipping firms that lifted the nitrates. Nothing was decided; but the mere juxtaposition of these conflicting opinions, in friendly conference, was of great service. Lieutenant Guichard, the French historian of the blockade, attributes the Anglo-French divisions on the conduct of the economic campaign, not so much to differences upon particular questions, as to French incomprehension of the British sentiment commercial du blocus, and to the British mistrust of economic measures of war, which were no more than applied reason. As it was impossible that policies with such different starting points should ever be completely reconciled, it was of the highest importance that the authorities on each side should appreciate the other's standpoint.
A closer union between the allies was the more necessary in that the mere interception of contraband was, in itself, becoming an operation of unprecedented compass. In most of our great maritime wars, it has been possible for the British government to arrest contraband without exercising severe restraints upon trade; for, in the seventeenth and eighteenth centuries, international lawyers interpreted the accepted doctrine as a right to include quartermasters stores, ordnance, and dockyard equipment, in the contraband clauses of a commercial treaty. Contraband was thus defined in a general way, and in particular treaties between the great maritime powers, so that its interception was an operation with very limited objectives, which was only enlarged into general projects of economic coercion by blockades and reprisals. In the last week of the year 1914, the government published a contraband proclamation, which, virtually, swept away these old restrictions, and turned the limited project of the Admiralty war orders into a very much more embracing measure of war (see Appendix II).
This progress or expansion was quite inevitable. For the best of reasons, and with every justification, we declared a large number of the primary metals, propellants and foodstuffs to be contraband. In addition, three of our agreements with northern neutrals contained a clause in which we asserted a right to stop half-finished products, and manufactured goods, if they were composed of contraband materials. In the Danish agreement, there was a clause in which we claimed the right to check abnormal imports of contraband, if they released domestic imports of the same substances. As a considerable proportion of the general trade between modern states is in commodities which come within this general description of half-finished and manufactured goods; and as the re-export trade, which grows automatically as a nation's commerce increases, is closely related to the disposal of surplus imports, a right to control ordinary commerce was, in effect, both asserted and acknowledged in these agreements. For the sake of brevity I shall henceforward call goods of the first class derivative, and goods of the second class substitute, contraband. The names given to them are, however, of less importance than their bulk and value; for a glance at the trade between Germany and her northern neighbours will show how much contraband of this description was normally exchanged between them and how many complicated tasks were still incompleted when these agreements were signed.
In the first place, the distinctions drawn in these agreements are largely obliterated by the operations of modern commerce. Supply can never be exactly adjusted to demand, so that countries that normally import foodstuffs and raw materials, generally re-sell small surpluses during the course of a year's trade; and it is impossible to trace the origins of commodities that have been in the country for many months, before they are sent out again. If they were subjected to abstract tests, these second sales would be classed as re-exports; actually they are not counted so; for countries with no mines reckon iron and other metals among their domestic exports. Secondly, raw materials are converted into particular articles by successive operations, and it is only in a few cases possible, and even then difficult, to trace the movement of contraband substances through the successive stages of modern manufacture. Metals imported into the great engineering industries are generally converted in situ; but it is virtually impossible to trace the origin of such contraband ingredients as are sold in miscellaneous trades. To take a single example, hardware and clothing stores need supplies of metal and aluminium, and textile fabrics; but through how many hands have the materials passed, before they reach the export warehouses in the finished state? And who could trace the origin of the metals that are used in such things as cream separators, dairy churns and agricultural implements; indeed were these articles to be considered derivative contraband at all?
 A large number of these untraceable exports were included in the normal trade of the northern neutrals. The principal articles of Danish export, live stocks, meat, fish and dairy produce, were assuredly domestic exports; yet even amongst these there were doubtful articles. A substance called premier jus was ordinarily exported, and, according to our information, the demand for it was rising. Premier jus is a compound foodstuff which might certainly be made up from pure Danish produce; but it might just as easily be manufactured from imports. Again, although the Danish exports of hides were, in the main, domestic, some articles in the general category were of doubtful origin, as for instance, dyed skins and leather, all which were declared contraband in the latest list.
The difficulty was even greater with regard to the Danish textile industries, for the Danes grouped all their textile exports under one single heading. It was therefore most difficult to decide anything about the trade itself, or about its contraband ingredients, imported from overseas; for textiles would include such things as canvas tents (absolute contraband by the eighth article) and clothing or fabrics for clothing, which were made conditional contraband by the third clause of the conditional list.
It was, however, more and more apparent that if the agreements were to be enforced, then their enforcement would not be solely contingent upon the interception of sea-borne supplies, in that British goods were the essential ingredients of a great number of trades in derivative contraband. The materials used in the Danish textile industry were, possibly, impossible to trace; but it was not to be doubted that wool and cotton, produced or woven in the British empire were amongst them. The same held good in respect to the Danish exports of fatty substances. This trade could not properly be called a commerce in either derivative or substitute contraband, because we had not then placed vegetable oils, an essential ingredient, upon the contraband list; but it was patent that the Danish export trade of cocoanut and soya oils was nourished by produce of the British empire, and by British shipping. The regulation of this trade was a task still uncompleted, indeed practically unattempted.
The agreement concluded with Norway was less precise than that with any other Scandinavian power, and contained no clause about derivative or substitute contraband trade. But if the general right to control these kinds of contraband exports were to be asserted at all, it was obvious that it would have to be asserted against Norway. The Norwegian exports of fish, fish oil, and timber, were of the same character as the Danish exports of live stock; and might be called purely domestic: this could not, however, be said of the Norwegian exports of saltpetre, nitrates, calcium carbide, copper and iron, which could obviously be very much increased by heavy imports of the same substances.
The agreement with Sweden contained no clause for the regulation of trade in substitute contraband. Trade in derivative contraband was, however, provided for quite clearly in the third clause; and a great deal of the normal export trade from Sweden to Germany was made up of commodities which came within the definition.
The successful execution of every operation of war is more or less contingent upon exact and sufficient intelligence, and, in the first months of the year 1915, our knowledge of the commercial transactions between neutrals and the enemy was much restricted. It is true that some sources of commercial intelligence had become more productive. As a reinforcement to our consular staffs, specially trained observers had been appointed to posts from which they could watch the movements of neutral trade; and the information supplied by the military censors was considerable. Intelligence of foreign trade will always be fragmentary, however, unless it is supplemented by a detailed analysis of a country's imports and exports, and in most cases, this was lacking. In the winter of 1914 neutral governments forbade the publication  of export statistics, fearing the vexatious questions that might be provoked when the figures were inspected abroad. Neutral import statistics were, however, still obtainable, and a special staff in Whitehall was compiling quarterly returns of overseas imports to northern Europe, and circulating them to the departments interested. It will, therefore, be as well to review the facts supplied from these various sources of information, and to show what inferences were drawn from them, and how those inferences affected our conduct and policy.
No doubt could be entertained about the accuracy of these figures, and although they were only issued in statistical tables every quarter, they were compiled from week to week and from month to month, so that, during the first quarter of the year 1915, our authorities were kept informed of the daily and weekly deliveries, which made up the following totals (see Table XIX). These figures showed, beyond all doubt, that the agreement with the Netherlands government and the overseas trust had been a more effective instrument of control than the purely political agreements with the Scandinavian powers. Indeed the committee for the restriction of enemy supplies reported: A greater measure of success has attended our efforts for restricting enemy supplies through Holland than through any neutral country.
 It was quite impossible to conclude, however, that, because the Netherlands imports of contraband had fallen, and because similar Scandinavian imports had risen, the Scandinavians were, therefore, increasing their contraband traffic with Germany. Many other facts had to be considered conjointly. In the first place, a large proportion of the normal Netherlands trade had been a transit, or re-export, traffic. Any regulation or diminution of this transit commerce reduced the imports, of the Netherlands, as it would not reduce the imports of Scandinavian countries; for the bulk of goods normally imported into Norway and Sweden was for home consumption only. Moreover, there were good reasons for anticipating rises in some of the Scandinavian imports. The grain crops in Norway and Sweden had been poor; indeed, as the Norwegian grain harvest was twenty per cent. below the normal, it was, on the whole, surprising that the increased weight of imported grains was not greater. There were certainly rises in the metal imports of Sweden and Denmark and Norway, but these rises did not, in themselves, support more than a very general suspicion; for reports from other sources implied, that these rising imports of copper, lead and other metals hardly sufficed to make good the shortages that were the outcome of a heavy German buying in the early autumn. There was an admitted metal shortage in Denmark during the first quarter of the year; and the Swedish authorities themselves drew our attention to their heavy imports of copper and other metals, and explained, that large contracts for electrification schemes had been signed before the war, and that the state was interested in their execution. In addition, every suspicion based on these import figures had to be tempered by the known facts about the metal shortages in Germany and Austria-Hungary, which were severe enough to raise a strong presumption that neutral re-exports to the central empires had been much reduced.
Our knowledge of the export trade of neutrals was mainly about the great trades upon which they depended for their revenues. We knew, approximately, what were the movements of Danish meat stuffs, of Norwegian and Swedish ores, and of Norwegian fish and timber; but the trade in miscellaneous products, so closely related to the regulation of derivative contraband, was almost completely concealed.
With regard to Holland, the available evidence seemed to prove that the bulk of the Netherlands trade with Germany was in meat stuffs, live stock and dairy produce. The growing shortage in Germany was evidently making a good market, for the weekly deliveries were heavy. In the early weeks of January they were as follows:
All this was a genuine Dutch trade, about which we had no right to make representations; but it was obvious such heavy exports of domestic produce would, inevitably, provoke heavy imports of foreign meats, and of fodder. The Dutch government and the Netherlands Overseas Trust could guarantee that no item of their complementary imports would be re-exported; but could our authorities, on that account, resign all thought of concerting new projects of restriction?
 As far as we could tell, the old transit trade between the Netherlands and Germany was now very restricted; for our observers reported that the traffic at Maastricht had practically ceased. On the other hand, it was by no means stopped, for Sir Philip Oppenheimer was repeatedly communicating the manifests of vessels that carried cargoes between Rotterdam and Mannheim. These cargoes were all transported by virtue of dispensations from the prohibitions. Finally, there was a growing trade in cocoa and oily substances between the Netherlands and Germany. This trade was, however, the derivative of a group of British export trades, and its control or suppression was not contingent upon our measures for intercepting contraband.
What was known of the Danish trade with Germany provoked the same reflections as the Netherlands traffic. The available figures were figures relating to a genuinely Danish trade in meats, lard and dairy produce; but the lard exports were enormous, and it was fairly obvious that the country was draining itself of its domestic lard and obtaining high prices for it. Even if the imports from America were not re-exported (Sir H. Crofton Lowther was satisfied that the Danish authorities were honest) those imports were nevertheless filling a vacuum artificially created.
As far as we knew, the Norwegian ore trade with Germany was increasing. This was natural; for we had attempted to purchase all the copper raised in Norway, and the negotiations had come to nothing. The difference in the price of copper in England and Germany had proved to be insuperable obstructions to a bargain. On the other hand, our authorities had evidence before them, that the new substitute trades were springing up in Norway, as they were in Holland and Denmark; for in the early months of the year, our consul at Stavanger sent us a long list of goods recently shipped to Germany, and large quantities of grain and groceries were upon the list. The groceries were practically a new trade, and it seemed incredible that native grain should be shipped out of the country, when all the prefects and district governors were under strict orders to collect domestic stocks. Moreover, even though we claimed no right to intercept exports of genuine Norwegian produce, the rising figures of exported whale oil, herring, and fish refuse for fertilisers, suggested that we ought not to abandon our policy of purchasing Norwegian produce, merely because it had received one set back. Thanks to our minister the foundations of this policy were well and truly laid in the first months of the year. Profiting by the Norwegian inclination to Great Britain, Mr. Findlay persuaded the directors of a large number of metal companies to explain the nature of their business to him, and to inform him of the contracts they were executing and negotiating. None of these conversations had ended in a business agreement; indeed they rather served to illustrate the complexities and ramifications of German trade with northern Europe, and to show how impossible it would be to sever it by a single agreement; nevertheless, Mr. Findlay's policy of piecemeal investigation and of particular agreements was better adjusted to the exigencies of the time and the peculiarities of Norway than any other. In its preparation, it created intimacies and friendships between the British legation and the business men of Norway; and the two most important agreements concluded in the first months of the year were its first results.
As far as our authorities could judge, the Swedish export trade had escaped from the constraint of the December agreements more completely than the export trade of any other neutral. There was a regular movement of miscellaneous cargoes between Sassnitz and Trelleborg; and between Göteborg, Malmö and the north German harbours; but the following details will show, that it was almost impossible to decide whether even the most objectionable consignments were being carried in contravention to existing agreements. On 4th January, the steamer Ludwig carried a cargo of vegetable oil, salted hides, oranges, coffee and cocoa to Hamburg; during the following week cargoes of iron, steel, preserved meat, tin, candles, coffee, aluminium, brass scrap, light skins, salt herrings and tar were carried to Lubeck and Stettin. The consignments of aluminium and brass scrap were the only questionable  items of this traffic, for the cocoa and tin had probably been exported from Great Britain under licence. Nevertheless, it was by no means certain that even these deliveries of aluminium and brass scrap were objectionable, for large stocks of such metals are accumulated, in every industrial country, by engineering firms engaged on big contracts and anticipating others. It could, however, be predicated with certainty that these metal exports would, sooner or later, be replaced by imports from overseas, which the Swedish authorities could guarantee to be for use in the country in perfect good faith. The new imports would be consumed in the Swedish industries, in the same way that American lard was being consumed in Danish kitchens, and American fodder in the Dutch meadows; local consumption did not, in itself, stop a complementary trade in similar articles. Notwithstanding all these doubtful questions, however, our authorities were satisfied that a considerable proportion of the trade between Sweden and Germany was made up of what we could call objectionable transactions. During February we observed a movement of the following goods towards Germany:
Our authorities were convinced that most of this trade was being executed by virtue of permissions and licences that were not compatible with the undertakings made in the December agreements. The weight of evidence thus seemed to justify the conclusion, that a great deal of the Swedish export trade was objectionable. Nevertheless, other facts were strong evidence that the export prohibitions were being honestly enforced; and a controversial writer could use the reports that the restriction committee issued during the first months of the year 1915, to support two conflicting contentions; for after calling attention to all that was suspicious in the movements of trade between Germany and Sweden, the committee also reported, that huge stocks of cotton and raw material were held in Malmö; and that the Swedish officials were enforcing the regulations with great severity. Nothing could better illustrate the uncertainties of the position than that the committee should have included these two contradictory conclusions in its reports, which are perhaps the most judicious, and scientific, surveys of a doubtful subject that have ever been prepared in war.
Our anxieties with regard to Switzerland were of another kind. The transit trade to Germany had certainly ceased; and the country seemed short of all its essential supplies. It was to us a matter of the last importance, that a small neutral country like Switzerland, which blocked a gateway into south-eastern France, should remain strictly neutral, and that its Government should not be tempted into political adventure; for which reason Sir Edward Grey more than once expressed grave anxiety at the reports of the growing distress in the country. Our anxieties were the stronger in that, as far as we could tell, the French authorities had yielded to the savage clamour of their newspapers, and were treating the Swiss with unreasonable harshness. When Mr. Hurst and Admiral Slade visited the French capital, the French authorities explained their policy very freely, and Mr. Hurst reported, that as far as he could understand, the French regarded all Swiss consignments as suspicious, and were not operating the agreement that one hundred and fifty railway wagons should be allocated to the transport of Swiss goods. But the Swiss government's applications for supplies only emphasised this conflict between what policy advised, and what the conduct  of economic war demanded. Licences were granted for the export of small consignments of copper, but no general regulation of the Swiss trade was attempted for the time being.
The case of Italy was peculiar, and showed that a neutral government's higher policy was perhaps the influence that resolved all difficulties. In March, the Italian government first made definite proposals for a political alliance; and this obliged us to facilitate, rather than to impede, their imports of raw materials. But even before the Italian intentions were thus declared to us, our observers were satisfied that the Italian legislation of November had stopped all contraband trade with the central empires. None of the doubts and suspicions that the restriction of enemy supplies committee entertained when they reviewed the state of Scandinavian trade, are to be found in their reports upon Italian commerce during January and February.
Our information about neutral trade with Germany was, therefore, sufficient to excite suspicions and anxieties, but insufficient to support any charge of bad faith against neutral governments. To judge fairly of their honesty or dishonesty it was necessary to decide, whether the dispensations that they all claimed a right to grant were being granted on a scale sufficient to constitute a real re-export trade in contraband or not. Our information on this most important question was very fragmentary; and even at this distance of time, it is still impossible to make a quantitative estimate of this licensed trade in contraband between neutrals and Germany. Facts subsequently made public do, however, show that the difficulties of neutral governments must have been far greater than we imagined; for the enemy were endeavouring to maintain their trade with neutrals as resolutely as we were endeavouring to stop it, and had entrusted the task to a highly competent body of men. When the German mobilisation was completed, and the German armies were on the march, the war minister asked Herr Rathenau to call upon him, and when he did so, empowered him to form a war supply department. The duty of this department was to secure and to distribute supplies essential to the armies in the field. It therefore became a controlling and distributing agency for every government establishment, or private firm, that was supplying the forces. Herr Rathenau at once assembled a number of export committees, and made them responsible for some particular branch of industry, rubber, coal, textiles, etc. Over these committees there was a central board, of which Herr Rathenau was chairman.
This department probably instituted the exchange system of which we received fragmentary reports during the first part of the year. The system appears to have been, that every German licence to export was valid only, if the licencee obtained an undertaking, that some commodity required in Germany would be exported from the border neutral in return. The Italian authorities were our best informants about the workings of this system; for they, being anxious that we should entertain no suspicions of their good faith, freely communicated details of the transactions that they were compelled to allow. The dispensations granted by Italy were admittedly considerable; in return for 18,000 tons of German scrap iron, which the Italians could not do without, the Germans obliged them to release a large quantity of macaroni and foodstuffs; later, they were obliged to barter for the import of 70,000 tons of coal on a strict system of exchange. But these and other dispensations caused us less anxiety than those granted by Scandinavian powers, because the Italian government informed us frankly, while the Scandinavian powers and Switzerland did not. Our authorities made a tentative proposal that dispensations should be published; but the Swiss president refused to entertain it; and Sir H. Lowther reported that the Danes would never agree. We were, therefore, compelled  to judge of the system from very inadequate information, which sometimes strengthened, and sometimes weakened, the inferences that were being drawn from other facts. The contradictions in the evidence presented almost daily can, indeed, only be understood by juxtaposing the intelligence obtained from two different sources upon the same subject. The facts collected about the Swedish trade have already been reviewed; they suggested strongly that the flow of mixed cargoes from Sweden to Germany was a licensed trade incompatible with the undertaking that Swedish export prohibitions would be maintained. But, when challenged by our minister, the Swedish foreign minister answered that he would show Mr. Howard a full list of the dispensations granted. Mr. Howard's report ran thus:
I went carefully over the exemptions granted to Germany, which included some twenty-five to thirty items; the majority being, as he promised, for very small quantities and special cases. There were two items of importance to us, the first being three consignments of jute sacks, amounting in all, to about 60,000, which had been allowed to go to Germany on the guarantee that they would be returned filled with goods required by the Swedish firm that sent them. The other was a shipment of about 30 tons of copper, which his excellency explained, was sent out in exchange for parts of machinery required by the Swedish government...... There was, also, a parcel of hides, but these were sent to Germany to be dyed, and under guarantees that they would be returned...... The exemptions to Norway and Denmark, which, I admit, I looked at less carefully, also showed no items of great importance, beyond a considerable number of hides to Denmark and some lubricating oil in no great quantities...... By far the larger number of exemptions were granted for Great Britain and Russia......
Reports that were equally difficult to reconcile with those sent in by our special observers were being received from other ministries.3
It is, even now, impossible to make a judicial review of these conflicting reports. Probably neutral governments had signed the agreements in good faith, and had not foreseen what pressure the Germans would exert against them. The commodities normally bought by the northern neutrals from Germany in a single year were considerable. Denmark's purchases amounted to 1,389,069 tons; Norway's to 584,630; Sweden's to 1,102,342; Switzerland's to 4,281,505; very few articles in this commerce amounted to ten per cent. of the total, either in value or in weight,4 and the bulk of the trade was in half-worked goods, and, such miscellaneous products as clothing, furniture, pianos, and so on. Herr Rathenau's policy had, as it were, collected this mass of goods into one great bartering pool, and seven million tons of commodities constitute a powerful bargaining lever. If neutrals granted dispensations on an increasing scale during the first months of the year, they probably did so because they were literally forced to it, and not because they were unfaithful to their engagements. It cannot be doubted, moreover, that Herr Rathenau's policy secured the armed forces the supplies that they needed, and as  those supplied must have been considerable, it follows that the trade licensed by neutrals must have been fairly large. But as the whole question can only be reviewed in outline, the known facts of the growing shortages in Germany must be remembered conjointly with what is known about neutral re-exports of contraband. Even if we regard the licensed trade of neutrals as a leakage through the barrier that we had just erected, we still have overwhelming evidence, that the volume of trade that was stopped was many times greater than the volume that ran through the gaps.
To officials who are engaged in the conduct of war, suspicious facts will always be of more importance than reassuring ones; and the intelligence collected about neutral commerce supported suspicions that compelled the contraband committee to adopt a very rigorous procedure. They had now before them a list of about three thousand firms, who, at one time or another, had done business with the enemy; and during the first months of the year, practically every ship was detained if it was bearing consignments to any firm on the list. This procedure may be said to have aggravated every grievance that neutrals sustained against us; it inflamed the controversy with the American administration; embittered our relations with Sweden; and gave serious anxiety to Mr. Findlay in Norway. When doubtful interpretations of law were excused us, our detentions were quite honestly regarded as breaches of good faith; but our officials were so persuaded of the justice of our case that they were even inclined to censure ministers abroad for being influenced by neutral grievances, which were so strong that they almost endangered good relations.
It has already been shown, that our procedure of detaining ships on a general suspicion was substantially the American procedure during the civil war. The practice seems, indeed, to be inevitable, for officials who are conducting an economic campaign will hardly escape from that universal rule of war, which compels all commanders to act upon guesswork. But even if this be admitted, it may still be doubted whether it was wise to allow neutral grievances to accumulate so rapidly, and to be so unresponsive to complaints. The practice, and the bitter sense of injury that it provoked can, however, only be appreciated by reviewing the procedure.
The list of suspicious firms in northern Europe was the basis or starting point of the whole procedure, and it would obviously be impossible to examine the evidence upon which every suspicion was founded. Selection of some kind is necessary, and the best method of selection would appear to be one that displays the weaknesses and frictional consequences of the procedure. Its successes were apparent in the notorious shortages in Germany, which have already been reviewed in some detail.
A large number of the copper cargoes that were despatched to Sweden in the first months of the year were consigned to the Svenska Metallverken of Vesteras. At the beginning of the year 1915, we had learned, merely, that this company was highly suspicious, and that the destination of its output needed careful watching. This report came from Sweden, and cargoes of metal in the Antares, Norheim, New Sweden, Canton, Soerland and Sigrun were seized and unloaded because they were consigned to the firm. After these detentions and arrests had been ordered, however, our authorities obtained copies of letters exchanged between the firm and Messrs. Kleinwefers, of Crefeld, a large engineering concern. The letters left no doubt, that the Svenska Metallverken were doing a great deal of business with Germany, but the transactions of which we now obtained the details were not objectionable. The firm had ordered four rolling mills from Messrs. Kleinwefers, who answered, that if the contract was to be executed, the Swedish firm must send them 1,000 kilogrammes of copper, 500 of tin, and 50 of antimony. The Svenska Metallverken therefore petitioned the authorities for the necessary export licences, which the  government were quite unable to refuse, as the company were a contracting firm in one of the state's electrification plans. Later, the firm forwarded a detailed statement of the work that they had in hand, together with a schedule of the raw materials that they required to execute it, and even the Admiralty, who as a rule took a severer view than the Foreign Office officials, admitted that the firm had exculpated themselves.
The Swedish firm of Forsberg and Mark were also under suspicion, and large consignments to them were stopped. The Foreign Office were, however, always doubtful whether the suspicions we entertained against them should be acted upon too vigorously; for, as the house had first been denounced by an English copper firm, it was at least possible that the denunciation was tainted with commercial jealousy. Messrs. Forsberg and Mark had, moreover, visited the British legation at Stockholm, and offered that their books should be inspected. The contraband committee appear, however, to have thought it their duty to make no discrimination. A considerable consignment to the firm was therefore stopped and unloaded; but, soon afterwards, the censor intercepted a telegram, which showed that the arrested copper was for consumption in Sweden. It was released; but its release did not relieve the original grievance, for the authorities at Kirkwall had recently issued an order, that all reloading and re-shipping of arrested cargoes was to be done at the consignees or the shippers expense. Neutral firms who were endeavouring to complete contracts, and were in great need of the released consignments, were in no position to contest the order by a long and intricate action in the courts of a foreign power.5 A few weeks later, the firm was posted on the British metal exchange for exporting copper to Germany in contravention of the export prohibitions; but even then, the Foreign Office authorities were doubtful whether a strong case could be made out against the firm. The Swedish government had only recently enlarged their prohibitions of copper export to include every commercial variety of the metal, and Mr. Alwyn Parker, still thought it possible that Forsberg and Mark had made the shipment in good faith. The firm normally did so much business with Germany, that it was only proper to refuse to allow British goods to be exported to them. It was, however, another thing to arrest their copper on the strength of suspicions that were weakened as often as they were reinforced.
The procedure was, moreover, most difficult to apply with equal justice to all, because the contraband committee considered, that a doubtful consignee cast suspicions upon the shipper; and the complications of this practice were considerable. Here is an example. Early in January, the sailing ship Socotra put into Queenstown in very bad weather, and was there detained and searched. It was found that she was carrying a cargo of linseed from the Argentine; the agents for the cargo were Messrs. Hardy Muhlenkampf, and the consignees, Messrs. Goldstuck Heinze of Amsterdam. There could be no doubt whatever about the nature of Messrs. Goldstuck and Heinze's business. They were a firm with no national affinities; for they had headquarters at Paris, Rotterdam, Amsterdam and Christiania, and branch houses in France, England and Russia. One of the principals had been born in Libau, and subsequently became a Frenchman; another lived permanently in his native town of Dresden; another was at Frankfurt on Main; the director of the English branch was an Austrian; a Belgian was in charge of the Antwerp offices, and a German of the offices at Rotterdam. Messrs. Goldstuck and  Heinze were, in fact, descendants, by tradition and occupation, if not by parentage, of those great financial houses in central Europe, who, from time immemorial, have financed and profited from every armed conflict. Historians inform us, that the opposing armies at Pavia and Marignano were both paid and equipped from Frankfurt, Mainz and Milan; and that a great central European firm subsequently acted as financial agents to Napoleon and his enemies.6 Research would probably disclose houses of the same constitution, acting with the same impartiality, in each intervening convulsion. Our authorities decided, however, that Messrs. Goldstuck and Heinze were an enemy firm, and forbad their London agents to use the port of London.
Messrs. Hardy and Muhlenkampf were now infected by the suspicion that attached to any firm who consigned to Goldstuck and Heinze, and the suspicions were strengthened by the contradictory letters they wrote about the cargo. On hearing that Goldstuck and Heinze was an enemy firm (they may be excused for not associating them with any particular government or nation), Messrs. Hardy and Muhlenkampf first stated, that the linseed would be consigned to the Netherlands Overseas Trust; soon afterwards they said that it would go to the Aktieselskabet at Lilleborg. Mr. Findlay reported well of this firm, which at once gave guarantees against re-export, but Messrs. Hardy and Muhlenkampf's behaviour appeared so shifty, that the Socotra was still held, and enquiries were made about them. The replies were baffling: Mr. Muhlenkampf had originally been a German; he subsequently became an Argentine citizen, and our consul at Rosario reported that the firm were generally supposed to be sending maize and linseed to Germany, through Antwerp. Mr. Hardy lived at Antwerp, and from the Hague, Sir Alan Johnstone reported that he was a patriotic Belgian. We learned, subsequently, however, that Mr. Hardy had moved to London, where a very respectable firm lent him temporary quarters. A gentleman who gave the Foreign Office a great deal of information about suspected houses, reported upon him favourably, saying that Monsieur Hardy and his partner ranked as a first class firm, and that nearly all grain shippers had done business with Messrs. Goldstuck and Heinze at some time or another. The police were now instructed to call upon Monsieur Hardy and to inspect his books; they did so and reported that he gave them all the information in his power, and that there was nothing incriminating in the papers at his office. The Socotra was now allowed to sail after having been held for one month.
Even when suspicions seemed irrefutable, unexpected facts might explain them away. The Danish ship Uffe was held, because she was carrying consignments to a firm whose chairman had been fined, by the Danish courts, for breaking regulations. But the Danish minister produced evidence to show that the court had never doubted the chairman's good faith. When tried, he had proved conclusively, that the re-shipment for which he was fined had been made when the government's regulations were by no means explicit. The court had, nevertheless, inflicted a maximum penalty upon him, to show that no excuses would be entertained, and the Danish authorities naturally thought it hard that they should be penalised for having acted with exceptional severity, in order to meet the British government's wishes. The cargo was allowed to go on; but even the Danish minister's assurances were not conclusive; for we discovered later, that the Korn og Federstoff Kompagni whose director had been fined, and to whom the cargo was consigned, was a branch of the Corn Products Company in Hamburg.
These examples have been chosen to show the dangers of the system; and it should not be imagined that they are typical of the procedure. In some cases, the evidence was overwhelming; as, for instance, when our authorities obtained papers  which showed, conclusively, that the cargoes were to be shipped to Germany. In other cases, neutral shipping firms were themselves so suspicious, that they refused to handle goods to certain consignees, notwithstanding that they were their own countrymen. Also, it would have been impossible under any procedure whatever to allow enormous consignments of copper to pass freely into the hands of such a person as Mr. Hugo Tillquist, who, as far as we could discover, was a sort of middleman in copper, and the agent for a large German concern. It must be remembered, moreover, that the detentions, which have just been described in some detail, were made when the evidence available was still only a first deposit of the vast mass subsequently collected. Every day, the censor's office was collecting new facts, and, as the volume of evidence swelled, discrimination became easier. It nevertheless remains true, that by detaining vessels and unloading cargoes on the strength of suspicions that were subsequently cleared, and by refusing compensation, the contraband committee did accentuate grievances and mistrust. And, although it would be quite unfair to judge the sentiments of the contraband committee from such impersonal documents as their minutes, these minutes, nevertheless, contain vague indications that some sections of the administration, or some powerful persons in it, were urging suggestions that were as absurd as they were dangerous; and that the contraband committee could not entirely evade the pressure that was thus exerted upon them. I find, for instance, that Mr. Leverton Harris proposed, on 20th December, that such articles as copper and rubber should be detained whenever possible, even where there is no strong evidence of hostile destination; and that this was printed in the contraband committee's minute book. The Foreign Office replied, that our policy should be one of confidence in the effective operation of the prohibitions of exports enacted in the several neutral countries. It seems unlikely that Mr. Leverton Harris's proposal was purely his own, and at least it suggests a desire to act severely.
Again, the headquarters staff of the Foreign Office certainly considered that our ministers in Scandinavia were over sensitive to these neutral complaints about interruptions to trade. Anybody who reads the papers without prejudice or passion will assuredly be impressed by the severity of the official minutes. When Mr. Findlay reported on the growing exasperation in Norway, he wrote: A consistent policy on general lines, ought to be adopted and followed. His meaning was that the detentions, which caused so much uncertainty and commotion amongst Norwegian business men, were regarded by them as the outcome of a capricious severity. Even though the procedure was more regular than Mr. Findlay and his Norwegian friends imagined, it was at least natural that they should think of it as he described it. The Foreign Office at once answered: I share your opinion that a considered policy on broad lines is advisable. Our policy is being framed on such lines, and is being carried out accordingly. Mr. Howard's representations were read with equal impatience. When he reported that the Swedish press was unanimous in its criticism of our note to America, Sir Eyre Crowe minuted his despatch very severely. When Mr. Howard made further representations - which at this date read like dispassionate surveys of public opinion in Scandinavia - Sir Eyre Crowe complained bitterly, that he had never answered M. Wallenberg by pressing for an enlargement of the prohibition lists. Mr. Howard might possibly have made out a better case on this head; nevertheless, Sir Eyre Crowe's criticism seems to be beside the point. Our minister was reporting upon the political consequences of these long detentions. Even though he had scored a controversial point or two, in his conversations with M. Wallenberg, he would, presumably, have been equally impressed by the irritation in Sweden, and would have reported it in the same language.
 These minutes would certainly not be worth mentioning unless they were illustrative of what may be called a secondary cause of the severe procedure that we had adopted. Neutral complaints about the irregular detentions of ships were strongest at one of the darkest moments in British history; and officials who have spent their lives in the service of the state are more sensitive to a great national peril, and more conscious of their responsibility to avert it, than citizens who can console themselves for bad news, by reading the braggadoccio of the patriot press. These surveys of neutral opinion were probably read with such intense irritation, because it seemed intolerable that very rich Scandinavians, and even richer Americans, who had never followed any nobler occupation than that of buying and selling, should obstruct the British government's determination to assist the hard pressed armies in the field. But after thus reviewing the influences that were forcing the administration to treat neutral commerce severely, and, after admitting that a general stiffening of purpose was inevitable, it is only bare justice to add, that these neutral complaints cannot be dismissed as the recriminations of traders who have unexpectedly lost the profit of a dishonest transaction. Their grievances were substantial: their shipping directors agreed to send their ships to Kirkwall for examination, and complied as far as they could, with the clause in the October order about named consignees: this acquiescence to our wishes was then used as a sort of fulcrum for exerting more pressure upon them; for their ships were detained in the harbour at which they had called voluntarily, and the consignees whom they named became our excuse for imposing new restrictions. Finally, it must be remembered that modern commerce is operated by houses that cannot sever their connexions with the markets upon which they have depended for a generation or more. A table of the commodities normally exchanged between Scandinavian countries and Germany shows, that the complex of exchanges that constituted the traffic between Germany and her northern neighbours, was part of a larger system, from which it could not be separated by a single agreement. In the list of goods exchanged, only a few items can be said with certainty to be exports of pure Scandinavian origin. It was therefore possible for many neutral consignees to give quite honest assurances, that the goods they were receiving were for home consumption, and for our authorities to discover that they had been sent on. The guarantors could assure us only about the particular transactions for which they were responsible, and those transactions could never be much more than small sections of an immense system of circulation.7
The procedure that the contraband committee felt obliged to adopt therefore made the previous system of demanding particular guarantees more rigorous than ever; for, although cargoes were occasionally released to suspected firms, the enquiries were long, and the guarantees, when given, were inspected very critically. As the Swedish government had been confident, that the first contraband agreements would supersede the old system; and that their vessels would only on rare occasions be detained for more than a few hours, while the ship's papers were being inspected, they were proportionately disappointed, when they discovered that about one-third of the total traffic to northern Europe was still subjected to delays. There were, however, some mitigations. In the first place, the most dangerous consequences of declaring copper to be contraband were relieved by a first agreement with a great American copper syndicate. This eased the apprehensions of the American copper magnates, and transferred further negotiations on the same question from the state  department to the great business houses. The Dutch traffic was comparatively free, as the agreement with the trust was working admirably. A considerable number of Danish cargoes were certainly stopped; but Captain Cold, the director of the greatest shipping line under the Danish flag, opened negotiations with the Foreign Office at the end of the year; and the anticipation of a general settlement probably checked the protests that the Danish manufacturers would otherwise have compelled their government to make. Also, although the irritation in Norway gave Mr. Findlay considerable anxiety, he still had enough influence with the great shipping magnates of the country to prevent the growing exasperation from becoming a political controversy between the British and Norwegian authorities. Acting on his advice, the Norwegian war insurance department demanded guarantees from certain lines, before they granted policies. This slightly eased the restraints that we should otherwise have imposed upon Norwegian shipping during the first months of the year. With Sweden the case was different. The detentions of metal consigned to Sweden were particularly severe; and no particular agreements with shipping lines tempered the procedure. In January and February the British government thus became engaged in a controversy which alternatively smouldered and blazed up for the rest of the war.
It has generally been supposed, that political antagonism was the motive force of the controversy. Political antagonism was undoubtedly an indirect influence; for, although the entente powers had not then proclaimed that they intended to make the world safe for democracy, the writings of their publicists, and the utterances of their statesmen, resounded with a democratic clamour, which must have been distasteful and jarring to the Swedish court and nobility. Apart from this, any Swedish government was bound to be apprehensive of a great alliance of which Russia was a member. There is, however, no evidence whatever that the first controversy with Sweden was in the least influenced by this latent antagonism. Nobody could have been more observant of political tendencies in Sweden than Mr. Howard; and he never mentioned them in his reports on the questions at issue. Nor were the central authorities conscious, at first, of any political influences; for, on the eve of the controversy, the restriction of enemy supplies committee reported that:
The Swedish government was showing every disposition...... to meet the wishes of the British government, and loyally to carry out their assurances in respect of re-exportation, and to maintain their prohibitions of export according to their list.
It was not until many weeks later, when the controversy was more acute, that their reports became harder. The Foreign Office appear to have been of the same opinion, for at the end of December, they informed Mr. Howard, that the agreement was based on mutual confidence; and that if we lost confidence in the Swedish government, the whole agreement would fall to the ground. The origin of the long dispute was, simply, that the Swedish government protested against the detentions of December and January, and stood firmly to their protest.
Between 8th December, when the agreement was signed, and the end of the month, some ten Swedish cargoes were either detained or unloaded and M. Wallenberg realised that the agreement was not working well. He appears to have been reluctant to raise a controversy at once, for his first proposal was that a Swedish government department should become the consignee for all metals imported into the country. This proposal was, however, accompanied by another, that the Swedish government should cancel a decree recently issued, which gave us an assured right to transit goods to Russia through Sweden. M. Wallenberg explained that if the order were abolished, transit traffic between Russia and the allies would run more freely, and that the abolition of the decree would not weaken or alter the export prohibitions. The Foreign Office could see no reason for connecting the two proposals, and were very suspicious of the second. When they refused to consider these proposals the  Soerland was being held at Kirkwall, and M. Wallenberg informed the French and British ministers at Stockholm that the agreement had broken down: some 2,700 tons of copper, consigned to Sweden in five British, two Swedish, and five Norwegian, ships, were then being detained. In M. Wallenberg's opinion a ship was automatically stopped if she was carrying rubber or copper and the stoppages were ordered without any regard to the Swedish prohibition list. The Swedish government therefore regarded the whole procedure as an elaborate method of impugning their good faith. Though emphatic, M. Wallenberg was still courteous and conciliatory, and stated, that he was quite ready to consider a new agreement; he insisted, however, that he could agree to nothing, unless the British authorities accepted the Swedish prohibition list as a full and satisfactory guarantee against re-exportation.
The Swedish authorities thus took their stand upon a contention that challenged the bare principles of our procedure. We considered it necessary to detain vessels if we suspected the consignees: the Swedish government maintained, that their regulations were being enforced against the firms about which we were suspicious. In order to make his protests more impressive, M. Wallenberg handed our minister a memorandum, in which the Swedish government gave us formal notice, that any detention of commodities and materials on their prohibited list would be regarded by them, as a breach of the December agreement; and that our rights with regard to commodities that were not on the list must be decided by universally recognised rules of law. The contention was not well received but a good case could be made out for it. The commercial intelligence that had forced us to stop ships on suspicion had come to us in a flood, and those responsible for the Swedish agreement of 8th December had not insisted that a clause empowering us to hold vessels until suspicions were cleared should be inserted in it. The agreement thus contained no article by which we could justify our procedure, whereas M. Wallenberg could support his memorandum by quoting the first clause, which was explicit.
Whenever the Royal Swedish government placed upon their list of prohibited exports, any raw material or article considered as contraband by the allies, which the Swedish government desire to see imported for bona fide consumption in their country, the allied governments will not interfere with the importation into Sweden of such goods, except in so far as is necessary for examination or verification in an English or French port, of the ship's papers and of the description of the cargoes......
The Swedish government's case was, in many respects, so strong that they would have been well advised, if they had delayed a measure that might have very much embittered the controversy. In the first days of January the King of Sweden opened parliament, and said, in the speech from the throne, that the belligerents were practically disregarding all the known rules of international comity; simultaneously or nearly so, the government forbade the transit of all arms and ammunitions through Sweden. When questioned, M. Wallenberg stated that the decree was issued in order that the government should be impeccably neutral: our authorities judged the measure to be clearly unfriendly, as it was intended to restrict the supply of arms to Russia. Nevertheless, Sir Eyre Crowe thought it best to make no protest, as the Russian ambassador in London was anxious that the dispute with Sweden should be settled as quickly as possible. At the moment Swedish opinion was, undoubtedly, very heated. The first British reply to America had just been published; and the Swedes thought that we were drawing very unfair inferences from American exports to Scandinavia. Mr. Howard was impressed by the general indignation, and warned the Foreign Office that it was not a mere partisan clamour: To sum up, he wrote, though liberal papers are less aggressive in tone than the conservative, the Swedish press, as a whole, shows a striking concensus of opinion.
The Foreign Office's reply to the Swedish memorandum was drafted by Sir Eyre Crowe. In view of the Russian government's anxieties lest the recent decree about munitions of war should prove a preliminary to other more obstructive measures, the reply was written in a conciliatory style. Sir Eyre Crowe first reminded the  Swedish government, that we had virtually announced how we should deal with suspected cargoes, in the proposals that we had originally made to them; and maintained that nothing in the existing agreement could be construed as a cancellation of this first announcement:
His Majesty's government have maintained, and would, if opportunity had been offered, have made clear before 8th December, the position that, by virtue of the wording of the first paragraph of the memorandum of 8th December as quoted below, they reserved the right to seize consignments of contraband goods in cases where the British authorities had in their hands clear proof that such consignments were, at the moment of shipment, intended not to be imported into Sweden for bona fide home consumption, but to reach the enemy, and that the ostensible Swedish destination was not the genuine destination......
Sir Eyre Crowe then assembled such facts about leakages as we could vouch for, in order to answer the Swedish contention, that their regulations were, in themselves, sufficient to frustrate the plans of dishonest firms. At the moment the available evidence was not very strong, for the most conclusive reports about the metal shipments from Göteborg and Malmö had not then been received. We had, however, collected enough testimony about the copper shortage in Germany to show that there must, inevitably, be a movement of copper and metals towards the German markets, unless the bordering countries made their prohibition lists very explicit and embracing. The strongest argument in Sir Eyre Crowe's memorandum was, indeed, that the Swedish prohibition list was faulty in respect to copper. The Swedish tariff law, and the official statistics of trade and navigation distinguished between thirty-five varieties of copper shipments, whereas there were only five headings, or categories, of copper in the prohibition list:
In mentioning these facts the memorandum continued, His Majesty's government can only repeat that they do not mean in any way to reflect on the perfect loyalty of the Swedish authorities in enforcing their prohibitions of export. All they mean to point out is that the most rigid application of those prohibitions still affords important loopholes for a free flow of contraband traffic. The argument they wish to place before the Swedish government, in the full confidence that it will be seen to be reasonable and convincing, is that the degree of security which they may fairly claim is not, in fact, afforded, and that on any proper construction of the memorandum of 8th December there is upon them no obligation to allow the unimpeded importation of copper into Sweden unless and until there is real security against importation in any form.....
This suggestion that the prohibition list be expanded proved to be a temporary solvent of the difficulties; for although he had been extremely stiff, when making his protests, M. Wallenberg had at least intimated, that he did not wish to stand immovably upon bare principles; and that he would always be ready to consider suggestions for a practical working agreement. The immediate upshot was that the Swedish foreign minister agreed to consider all the additions to the prohibition list that the British government thought essential. A very long list was presented soon afterwards, and M. Wallenberg accepted it with certain reservations.
If anybody compares the complaints of the government authorities in Sweden and America with the complaints of neutral merchants, during the first months of the year, he cannot fail to realise, that, even if an agreement had been reached upon disputed rules of law, the uncertainties and anxieties of shippers and consignees would probably have been as great as they were before. Agreements between governments could never be sufficiently intricate or technical to give the merchants of a particular trade the certainty that they desired. They wished to know, only, whether a particular cargo, sent on a particular day, would reach its destination, for, lacking this knowledge, they could neither fulfil existing contracts nor seek new ones; and government agreements about export prohibitions, gave them no guidance.  It was therefore natural, that a conviction should have been spreading among American and Scandinavian traders, that government protests would increase rather than mitigate their difficulties, and that, if they were to overcome them, they must themselves negotiate with the belligerent powers, and discover what undertakings, if given by them, would relieve them of the uncertainties that obstructed their business. In November, Sir Cecil Spring-Rice reported a general tendency to get contraband into a business basis. Soon after Congress assembled, the feeling strengthened, for he then reported: For the present the feeling is that the moment of discussion is past, and that what remains for us to do is to make separated and isolated agreements with the different interests concerned. The first agreement for regulating deliveries of copper to northern Europe was concluded under the influence of this growing tendency; for it was devised by a group of British and American traders in the metal.
On behalf of the two great American concerns, for which they acted as agents, two city firms undertook to ship copper only to neutral countries, where the export was prohibited; in addition, they engaged themselves to send all shipments to the actual consumers of copper, and so to relieve our authorities of their anxieties about those neutral middlemen, and forwarding agents, whose operations were so difficult to trace. Alternatively, the shippers undertook to consign their copper to a recognised London merchant, or to a banker who was approved by the British government. Sir Eyre Crowe considered this a most valuable addition to our instruments of control. It was, however, very badly received in America, where publicists pointed out, that, as it would be so much easier to ship to a London firm than to a Scandinavian industry, so, the agreement was an elaborate instrument for cornering the market - the more objectionable in that the signatories were presumably those recognised firms who could receive unlimited consignments.
This severe criticism does not appear to have influenced congress, and it did not
deter other American producers from becoming party to the agreement during the
course of the year. It was certainly an agreement of very great importance; for of
all controversial questions, those which related to copper were perhaps the most
irritating, and the most burdened with political consequences: the high values of
the shipments, the power and influence of the American producers, made
stoppages of copper particularly dangerous. The agreement gave the contraband
committee a rule for mitigating the detentions and confiscations that caused so
much friction at the beginning of the year, and, by doing so gave an additional
impulse to the policy that Sir Cecil Spring-Rice and Sir Courtney
Bennett were elaborating in Washington.
1Signed 9th November. ...back...
2This was the condition of affairs in mid-February. The evidence was clearer in the following months. See post, p. 327 et seq. ...back...
3It should be added that these two sets of reports were not written at the same moment. M. Wallenberg showed this list of dispensations in January; as far as I have been able to judge, the German exchange policy was not really effective until rather later. ...back...
5When they issued this order the local
authorities may have been within their rights. The Prize Court Rules laid down
that the owners of a ship might claim compensation if one of their vessels had
been brought in as a prize and then released (Order V, Section 2).
6See Lucien Romier: La France à la veille des guerres de religion; also Conti: Das Haus Rothschilds, 2 vols. ...back...
7See, inter alia, Sir H. Lowther's
telegram 33, Confidential, 5th February, 1915: