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Part II: The Rationing System

Chapter 9: The Operation of The March Order in Council

An estimate of the total restraints imposed upon neutral trade. – Details of the coercive procedure. – Suspicions about particular consignees. – Why the Netherlands Overseas Trust could not be universally adopted. – Agreements with the shipping companies proceeded with. – The Norwegian oil agreement. – The general submission to the order and obedience to its provisions.

Though highly significant as a rule of war, the March order in council introduced no novelty in the point of procedure. Germany's overseas imports would have been virtually stopped when the contraband lists of December were published, if the contraband committee and the Foreign Office authorities had then been able to collect reliable evidence about the ultimate destination of each particular cargo, or packet of goods, reported to them from Kirkwall and the Downs. The order in council merely enunciated a doctrine, and laid no additional evidence before the authorities responsible for enforcing it; those authorities, therefore, continued to discriminate between cargoes that were to go on, and cargoes that were to be detained, by applying exactly the same tests as they did before the order was so much as rough cast. In the words of Sir Edward Grey: The order in council does not, in itself, seize a single cargo. What will make a difference are the instructions to the fleet.

These instructions were approved by the cabinet on 10th March, and were, in effect, that the order in council was to be used as an engine of pressure, for securing better guarantees against the re-export of doubtful cargoes.

      The object to be aimed at, ran the general instructions, should be to induce vessels not to carry goods for Germany. Vessels should therefore be detained long enough to make them feel the inconvenience of carrying such goods, and the advantage of not doing so, but they should be given the benefit of the doubt when the case is not clear.

The contraband committee and the fleet were, however, specifically authorised to act on suspicion; for, by the sixth article of these instructions, they were empowered to hold up cargoes of food-stuff, cotton and nitrate, if they so much as suspected an enemy destination. They were, moreover, to hold these cargoes until the contrary was proved, and were left free to decide what constituted proof. Goods on the prohibited lists of Scandinavian countries were to be allowed to go on, unless the Foreign Office reported that the prohibitions were not being enforced, or that the importations of a particular commodity were abnormally large. The Netherlands list of export prohibitions could, however, be ignored, as the agreement with the N.O.T. was considered to be a sufficient guarantee. In conclusion, specially lenient treatment was to be given to cargoes destined for Italy, as the transit trade through Italy was then virtually stopped.

In plain language, the new instructions were a licence to be more rigorous, and to be particularly severe to cargoes with a Swedish destination, for the Foreign Office were satisfied that the Swedish government were not enforcing their export regulations. The easy treatment of Italian cargoes was, presumably, ordered because the Italian ambassador presented a project of alliance a week before the order was published. The system of discrimination that had been applied since the war began was, in fact, left unaltered.

But inasmuch as the new order empowered the authorities to stop and requisition all goods of enemy origin, it was deemed necessary to entrust this supervision of the enemy's export trade to a new specially constituted body: the enemy exports committee. The instructions to this new committee were substantially the same as those to the contraband committee; for they were authorised to hold up suspected cargoes, until certificates of neutral origin were produced. Their procedure was [250] modelled on the contraband committee's: the manifests of outward-bound vessels were reported to them daily, and, when necessary, the committee demanded certificates of neutral original [sic] through the Foreign Office. The business transacted by them was, however, much less burdensome than the daily business of the contraband committee. Between five and six cases were considered daily by the exports committee: the contraband committee were daily scrutinising between twenty and thirty reported manifests, some of which contained more than five hundred entries.1

i) An estimate of the total restraints imposed upon neutral trade

Before reviewing the particular consequences of the new order, it will be as well to get some measure of the total restraint that was imposed upon neutral trade after the instructions were issued. This is, perhaps, best done by a tabular statement of the detentions before and after the order. In the gross, these detentions were the organ of pressure; for it was by detaining ships rigorously that we obtained guarantees against re-export from neutrals to Germany; and it was explained in the general instructions, that we relied upon this total restraint to induce neutrals to comply with our wishes. The table is rather striking.

Total number of
cases considered
by contraband
    Orders issued involving    
detention of ships,
unloading of cargo,
or prize courting.
Proportion of
B. to A.
January 198   54 27 per cent.
February 210   46 22       "
March 314   97 31       "
April 351 157 45       "
May 493 205 41       "
June 451 207 45       "
July 517 218 42       "

The total restraint imposed can, however, only be estimated by comparing the detentions ordered with the traffic of each border neutral. Tables of these two quantities give the following results:

1. The Netherlands
The total number of arrivals from overseas in
      March was 140 of which 26 were detained.
April " 176 " 37 "
May " 199 " 48 "
June " 156 " 65 "
July " 186 " 51 "

2. Denmark
The total number of arrivals from overseas in
      March was   95 (approx.) of which 19 were detained.
April " 105 " 31 "
May "   91 " 35 "
June "   73 " 43 "
July "   59 " 44 "
3. Norway
The total number of arrivals from overseas in
      March was 78 of which 10 were detained.
April " 43 " 18 "
May " 43 " 26 "
June " 48 " 27 "
July " 38 " 34 "

4. Sweden
The total number of arrivals from overseas in
      March was 71 of which 35 were detained.
April " 64 " 51 "
May " 79 " 38 "
June " 46 " 41 "
July " 46 " 39 "

The consequences of the new system of coercion were, therefore, that nearly half the neutral ships plying between America and northern Europe were detained for periods that varied between a week and a month; but that a certain section of the Dutch traffic enjoyed special privileges. It is of course impossible to make a quantitative estimate of the coercion thus exercised. Some notion can, however, be given of the aggregate loss, which would be the sum of the following totals.

(i) For vessels on time charter (of which there were a great number):
      Total number of days detained x daily charter rate.

And (ii) For vessels working in the service of their owners:
      Total number of days detained x ships daily charges

(a sum which often included the cost of supplying hundreds of passengers with a first-class hotel fare). The total would certainly be many millions of pounds.

The coercive effect of the order can, however, only be fully apprehended if the system is inspected in its details, for it will be seen from this inspection of particular cases, that, what the committee demanded, became, later, the governing conditions of a covenanted agreement with the great shipping companies.

ii) Details of the coercive procedure

(a) The case of the Hans B. On 1st May, 1915, a Danish steamer, the Hans B, was brought into Kirkwall. She was carrying 7,000 tons of maize from the Argentine to Malmö to consignees about whom nothing suspicious was known. The first consignee, Mr. Ove Klenau, of Malmö, was a middleman for the Buenos Ayres merchants; the second, the Skanska Landtmanns Kentral Forening, were, apparently, a firm of agricultural agents. Messrs. Lambert brothers, the ship's city agents, were a respectable trading house. There had, however, been a certain amount of gossip about the vessel's previous voyage between South America and Göteborg; for it had then been reported that the vessel had discharged a grain cargo into small coasters, and that one of them had gone to Germany. The committee therefore determined to hold the vessel, until everybody concerned had purged, or confirmed, the suspicions attaching to them. Telegrams were sent to our ministers at Stockholm and at Copenhagen.

Messrs. Lambert, who were also told of our suspicions, at once answered that neither they, nor the captain of the ship, could say what had happened to the previous cargo, after it had been transhipped. The Hans B was therefore held until our ministers had received satisfactory explanations from the merchant to whom the previous cargo had been consigned. After three weeks, he produced [252] papers proving that every parcel in the earlier cargo had been delivered in Scandinavia. It was, apparently, a custom of the Scandinavian grain trade, that the cargoes of corn and forage were carried across the Atlantic to the larger Scandinavian ports, and then distributed, through the smaller coastal towns and villages, by light draft vessels, barges and motor lighters. The story about transhipment to Germany was, it would seem, the malicious gossip of a trade rival.

(b) The case of the Henrik. The Henrik was one of the large vessels of the Norwegian America line. On 27th March she was brought into Kirkwall and the cargo reported. It was what is called a general cargo: there were 187 entries on the manifest, some of which were synthetic; the last of all, for instance, read thus: 153 cases of machinery weighing 194 tons, forges, chucks, carburundum and two boxed motors Spiero Winge Company, Christiania. For the rest, the ship was carrying: copper scrap, hides, flour, lard, syrup and an immense number of miscellaneous articles: cans of axle grease, rubber pipes, centrifugal washing tubs for steam laundries, carpet sweepers, shoes, parts of machinery, and gardening tools.

The contraband committee were suspicious about a few items only, and their suspicions were reasonable. First, a great deal of lard was then passing into Scandinavia, so that there was a general presumption against the lard consignments. Secondly, some of the trade marks upon the parcels of machinery were doubtful; V.L. was the mark of a certain Mr. Loewener of Copenhagen, whom the censor reported to be a forwarding agent. The committee therefore decided to put the lard into the prize court, and to make enquiries about the doubtful consignees. The answers to these enquiries certainly strengthened suspicions, but supplied nothing approximating to legal proof, that the cargoes held would be forwarded to Germany. Mr. Paus2 and Mr. Phillpotts both agreed, that the consignee of the copper was a shifty fellow; and Mr. Findlay thought, that Messrs. Christessen and Thorgessen, the lard purchasers, were little better. Our minister added, that there was no market for pure lard in Scandinavia, but that another quality, called neutral lard in the grease trade, could be used in the margarine factories.

There was a clause in the general instructions to the fleet and the contraband committee, that passenger steamers were to be treated leniently, and were not to be held, if only a small proportion of the cargo was suspicious. The committee did not consider that these instructions bound them strictly, for the Henrik was ordered to discharge the lard. This naturally involved the owners in great loss and inconvenience: first, a suitable port had to be found; secondly, practically the whole cargo, amounting to several thousands of tons, had to be unloaded and then reloaded, the wharfage and harbour dues being all charged to the owners. More damaging than this, however, were the indirect and consequential losses of the Norwegian company. Their trade with America was conducted on the assumption, that their steamers would sail at regular intervals; that the company's agents could accept bookings for passenger accommodation; and that they could safely conclude contracts for freight, weeks, and even months, before any particular vessel sailed. The sudden withdrawal of a great steamer from the service of the line threw all into confusion, and even exposed the company to claims for non-fulfilment of their engagements. In the words of the ship's London agents: Detention through being held up is completely ruinous to our itinerary. The pressure thus exerted against the company was made particularly severe by the detention of another great steamer, the Romsdal, on the same pretext.

The Henrik was only released after being detained more than five weeks (27th March to 6th May); the Romsdal was held for about a month. During all this time, the company, and the Norwegian government promised, that no suspicious [253] parcel of goods should be delivered, until the British minister at Christiania was satisfied that the consignees would not re-export them. The committee were obdurate; it will, however, be convenient to postpone examining what the committee demanded, and what the company offered, until the conditions exacted from the shipping companies are under review.

(c) The case of the London. This vessel was an oiler, and had been chartered by a certain Mr. Alfred Olsen of Copenhagen. She was brought in by the northern patrol; her manifest was reported to the contraband committee on 11th May, from which it appeared that the cargo was to be transhipped to a number of Swedish and Norwegian ports. The names of the Swedish consignees were not given. Mr. Alfred Olsen had, however, been at some trouble to clear his cargo of suspicion; for he had caused it to be laden under consular supervision, and had secured a statement from the Danish minister in the United States, that every consignee had declared that the oil, when delivered, would be consumed in Scandinavia. More than this, our own minister in Copenhagen pronounced himself satisfied, that the ultimate destination of every consignment was Scandinavia. He admitted, that Danish importations of oil were, at the moment, rather heavy, but he had recently discovered, that the Danish oil jobbers were endeavouring to make themselves the general distributors for the whole Scandinavian market. Notwithstanding all this, the contraband committee determined to hold the ship; their minute may be quoted verbatim.

      The contraband committee have, within the last month, allowed the steamship Roma and the steamship Paris to proceed to Scandinavia with a total of 16,722 barrels of oil for Sweden, and 1,737 barrels for Denmark. It is well known that Germany is short of lubricating oil, and it is difficult to believe that such large consignments can be genuinely wanted for home consumption in Sweden and Denmark. Although the committee is aware that there is a prohibition of export it is felt that the temptation to smuggling is very great. All the consignments destined for Sweden on the London have no consignees given. Olsen is merely an agent for the Sun company. The committee have therefore decided to place the whole of this consignment, with the exception of item 6, which may proceed, into the prize court under the notice placed in The London Gazette on 15th March for the reason that they are not satisfied as to its destination.....

There was the usual delay about finding a suitable port and wharfage for the cargo that was thus ordered to be discharged, and, during the interval, Mr. Alfred Olsen presented a list of the ultimate consignees to our minister in Copenhagen; to this he added a declaration from each, that the oil would be consumed in Scandinavia. The committee now doubted whether the cargo would be condemned in the prize court, and ordered that it should be requisitioned: but the crown's right to requisition neutral cargoes, though asserted in the prize court rules, was doubtful, and the procurator-general was persuaded, that, even though the right were eventually upheld in a general way, it could not be exercised against the London's cargo, to which neutrals had proved their title. The ship had now been held for three weeks, and Mr. Alfred Olsen estimated his loss at 400,000 kronen; for, as has been said, the vessel was time chartered. The procurator-general therefore asked for a written declaration from the contraband committee, that the London was not being held on his account. On receiving the assurances of the Danish consignees, the committee allowed the ship to go on; but, when the order for her release was given, she was actually discharging the suspected cargo. Some 357 barrels of oil were left behind when the ship sailed on 7th June, after 27 days' detention.

It was certainly a very high proceeding that a committee bearing no responsibility for the consequences should have thrust such barriers and obstructions into the course of neutral trade; should have turned so many millions of tons of goods from their destinations; should so peremptorily have ordered that the property of many powerful companies was to be held at pleasure; and should have imposed enormous fines upon the shipping magnates of foreign states. The proceedings [254] seem the more severe when it is remembered that the committee were mulcting these great Scandinavian companies, because third parties, who were unknown to the directors and shareholders, were suspected. If our legal right to impose these charges had ever been contested, it is difficult to say how the matter would have been decided; but the great justification of all this pressure and duress is that the shipowners regarded the whole matter substantially as we did: they protested that they were unjustly punished for deceptions to which they were no party; they presented appeals in misericordiam; but they never contested our bare right to prevent goods from passing to the enemy. In all the negotiations undertaken with them, I can find no syllable about our legal rights in the matter: the shipowners merely negotiated for security against these detentions, and we for guarantees that would be satisfactory. It will, therefore, be convenient to review the points at issue, and to explain the difficulties that obstructed a settlement.

In the cases of which particulars have been given, the ships were detained on three distinct pretexts. The Hans B was held because a general suspicion attached to her; the Henrik because some few consignments were going to doubtful purchasers; and the London because large quantities of oil had already been imported into Scandinavia. Nearly all the orders for detention that were issued during the summer of 1915 could be grouped into these three divisions: detentions on the ground of general suspicions, or of suspicions supported by statistics; and detentions because particular persons were suspected. The negotiations with the shipping companies were for the purpose of enabling them to purge these suspicions rapidly.

It was clear, however, that there was no universal remedy. No declaration by owners in the predicament of those who had chartered the Hans B could possibly deter the contraband committee from holding the ship, until their enquiries were completed. It was a matter of experience that plausible explanations would at once be offered, and as certificates of ultimate destination produced by British traders were universally deemed worthless, it was not to be expected that declarations by an unknown neutral merchant should be thought more reliable. In such cases, neutral shipowners could only clear themselves of suspicion by the long and laborious process of proving themselves trustworthy, and this was only to be done by making their relations with the contraband committee, and with other responsible authorities, more intimate and friendly. There was, however, always a barrier to these friendly relations: the committee could not state their whole case, for, by doing so, they would have put every dishonest trader on his guard, and would have stopped up many sources of information; also, the committee would, in some cases, have proclaimed how vague were the suspicions upon which they acted. Small shipowners and traders were thus often at the disadvantage of those who are fighting with shadows. Nevertheless, there had been a substantial advance towards an accommodation. At the instance of Sir Cecil Spring-Rice and his advisers, many American shippers and Scandinavian shipowners had been persuaded to load their cargoes under consular supervision, and to obtain a consul's endorsement of the manifest. The procedure only guaranteed that the cargo was properly declared, and did not, in itself, clear the contraband committee's suspicion that the consignee was ready and able to evade the prohibition; but at least the new procedure supplied the contraband committee with better statements of cargoes and their destinations. The records of commercial transactions cannot be compared with the records kept in government offices; for persons engaged in buying and selling are not at all concerned with precedents. Traders accept or refuse business relying, largely, upon what they know, or can discover, about their customers. Enormous transactions are sometimes completed by telephone conversations, and when distance makes written communication necessary, the records kept are often of a kind that no government official would ever rely upon; badly worded telegrams, bills of lading so ill completed that they are difficult to understand, incomprehensible bills of exchange and unintelligible insurance contracts. [255] These slovenly documents secure the end proposed, that the goods shall be delivered and paid for, and a merchant who kept records as carefully as a government department keeps them would simply increase the overhead charges of his business to no useful purpose. Many detentions had, in consequence, been ordered because the entries in the manifests, though quite sufficient to ensure that the entered goods would be safely delivered, were deemed an unsatisfactory description of the goods themselves; and the suspicions thereby excited had often been aggravated by discrepancies about trade-marks, which, though generally due to nothing worse than to slovenly clerical work in the shipping offices, and of no importance to the buyers or sellers, were always reported with great particularity by the customs officers at Kirkwall and the Downs. The new procedure of lading under consular supervision may, therefore, be said to have assisted towards a general relief, by inducing commercial men to keep better documentary records of shipments and transactions that were subsequently scrutinised by a severe, meticulous committee.

iii) Suspicions about particular consignees

It will have been understood, from the cases that have been examined, what penalties were imposed upon great shipowners, if so much as one consignment in a ship's manifest were under suspicion. Great ships were then removed from the service in which they were engaged; thousands of tons of goods, admitted to be innocent, were withheld from the purchasers; and enormous wharf charges were imposed upon the owners. The best adjustment would have been that the whole ship and cargo should have been allowed to proceed, on an undertaking being given that the suspected packets should be returned to us, on a later voyage. This was, however, difficult to arrange, in that, by the law of all Scandinavian countries, every cargo that passed the customs came automatically within the operation of the export decrees. If we had insisted that suspected consignments should be re-delivered to us, we should have been obliged to petition each neutral government, almost daily, for exemptions from their prohibitions; and this would have agreed ill with our complaints that the prohibition decrees were not sufficiently comprehensive, or that they were being evaded.

A great Danish shipowner, Captain Cold, was the first Scandinavian magnate to come to an agreement. His original agreement was made after he had conferred with Sir Eyre Crowe in London, and with the British embassy in New York. It was an informal agreement, which enabled Captain Cold's managers and agents to be sure that they were complying with the October order in council; and its principal provisions were therefore in respect to contraband cargoes: Captain Cold undertook to make enquiries about all Danish recipients of contraband, and to forbid his agents in America to accept any cargo, until they have been informed by him that the purchasers were above suspicion. As an additional security, Captain Cold's agents in New York were to inform the British consul-general, that the enquiry had been made; and that the goods would be shipped on a specified date, by a specified steamer. The arrangement was necessarily superseded in March, when all German goods were proclaimed seizable; but it made that advance without which no other was possible: a neutral shipowner had entered into friendly intercourse with the coercive authorities in Great Britain, had convinced them of his good faith, and had come to an arrangement, which they and he collaborated to make effective.

iv) Why the Netherlands Overseas Trust could not be universally adopted

This first agreement with Captain Cold was not, however, immediately recognised as a model that could be copied with advantage. It was rather hoped, that the restraints upon neutral traffic would be more systematically imposed by establishing bodies similar to the Netherlands Overseas Trust in other countries, and, ostensibly, there seemed to be good grounds for supposing it.

[256] When the order was published and put into operation, vessels bound to the Netherlands were almost a privileged traffic, for they alone were released or detained on a regular system: if their cargoes were consigned to the trust they were passed on, if not, they were held. It is true detentions were numerous; but the vessels that were allowed to go on without delay constituted a regular, ordered traffic of ships, whose owners were fulfilling their contracts and keeping their time tables. It was this regularity that ship owners and traders were demanding, and only the Netherlands magnates and, in a lesser degree, Captain Cold enjoyed it. More than this, it was at once patent that if additional restraints were to be imposed under the order in council, then, they could be imposed by agreement with the trust: the existing agreement provided only for the detention of contraband, and therefore needed to be enlarged or superseded by a new agreement, which would enable us to stop all goods of German origin and destination. Dutch commerce and industry are connected so closely to the German industrial system, that many points of detail had to be considered before satisfactory tests of what constituted Dutch, and what German, goods could be devised; but it was patent, from the outset, that a satisfactory arrangement would be concluded, and that the trust would operate it loyally. The preliminary agreement about the Dutch export trade was settled rapidly and without friction. During April, Mr. Van Vollenhoven visited the Foreign Office authorities, and drafted the main heads of a new agreement in collaboration with them; it was some weeks before this agreement was perfected and put into operation, but no doubts were entertained that it would be satisfactorily concluded. Seeing, therefore, that the trust was an institution which discriminated between enemy and neutral trade in a manner satisfactory to ourselves and to neutral merchants, and that it made the discrimination a mere matter of business, it was natural that the Foreign Office authorities urged the northern neutrals to set up similar bodies in their own countries, when they notified them, that the existing agreements with regard to contraband would have to be adjusted to the provisions of the new order in council, and made more embracing.

This proposal was discussed during March and April at the three northern capitals, and our ministers reported that there were grave objections and difficulties. The trust was, in fact, a body adapted to the peculiarities of the Dutch trade, and was not an institution that could be copied universally; Mr. Andersen, the King of Denmark's personal friend, and Captain Cold each showed how difficult it would be to subject Danish traffic to regulations on the Dutch model. Denmark was a distributing country for all Scandinavia, and a large proportion of Danish imports were actually Swedish and Norwegian imports; the free port of Copenhagen was an immense Scandinavian warehouse, where goods were stored before their final distribution. If a Danish trust were to be an effective organ of control, therefore, it would have to secure guarantees against re-export from Norwegian and Swedish, as well as Danish, consignees, and this would only be possible if it were made into a general Scandinavian trust. The Norwegian magnates might be persuaded to co-operate, but there was little or no hope that the Swedes would do so; even Norwegian assistance would only be secured after long negotiation, as the Norwegian and Danish merchants were bitter, suspicious rivals. Mr. Prior, a high official of the Danish department of commerce, and Mr. Andersen thought that an international company, financed by Great Britain, France and Russia, might serve the purpose, if the merchant guilds and trading banks collaborated with it. This, however, was a project that required long and careful preparation.

The objections of the Norwegian magnates were equally strong. Mr. Henrikson, their representative, pointed out that the trust had regulated Dutch trade in contraband because Dutch overseas trade is very concentrated. An overwhelming proportion of Dutch traffic enters and clears at Rotterdam, for which reason it was comparatively easy to control and regulate Dutch trade from a single institution, [257] well connected to the main commercial centre. In contrast to this, ships in the Norwegian trade enter and clear from ports widely separated, and ill-connected by road and railway. A Norwegian trust would certainly have to be established in the political capital, Christiania, and it would be a matter of extraordinary difficulty to devise a system of guarantees, which could be enforced, from the capital, against importers in the northern provinces.

Some Norwegian magnates were less critical; indeed a representative of the Norwegian government visited Holland, and reported well on the Dutch system, but the Norwegian government disliked our proposal. Mr. Henrikson had only drawn our attention to one particular point of contact between the Swedish and Norwegian economic systems: there is a very heavy transit trade through Norway; and a Norwegian trust, exacting guarantees from Swedish consignees, would inevitably have caused political friction between the two countries. There was, during these months, a revival of the old warlike spirit in Sweden. It was being said, almost openly, at the court, and in the clubs and restaurants frequented by the generals and the nobility, that the tremendous victories of the German armies in Russia were giving Sweden the opportunity that she had been waiting for. The Norwegians doubted whether the Swedish nation and the Swedish parliament would ever agree to active intervention, but the government authorities at Christiania did not disguise from Mr. Findlay that they were anxious: they were, in consequence, very reluctant to take measures that would, in their opinion, inflame Swedish excitement.

The Norwegian and the Danish governments did, therefore, consider our proposal carefully, and gave us very good reasons why they could not at once adopt it. The Swedish authorities peremptorily refused to discuss it at all: they claimed, instead, that the March order in council, being an illegal doctrine, did not supersede the December agreement, and that all detentions made by virtue of the new order were violations of the agreement. They made this chicanery sound ugly and threatening by placing severe restraints upon the transit traffic to Russia. Mr. Howard reported that it would be futile to urge the proposal.

Seeing, therefore, that there was but little hope of enforcing the March order by a universal system, designed upon the model of the Netherlands trust, the Foreign Office authorities had no choice but to encourage industries and shipping houses to make agreements that would, in their operation, ease the restraints that were being imposed, or at least, make them regular and foreseeable.

v) Agreements with the shipping companies proceeded with

The Danish and Norwegian shipping directors expressed themselves willing to conclude these particular agreements, and from Christiania, Mr. Findlay reported, that agreements with all the companies engaged in the Atlantic trade would prove the substitute for a receiving trust. These agreements were not, however, signed at once, and during the spring of 1915, that is the first three months during which the order was in operation, only three agreements were registered: (i) a new agreement between Captain Cold and the contraband committee, (ii) an agreement between the government and the Norwegian America line, and (iii) an agreement between the government and the East Asiatic company (Danish).

It has already been explained, that the contraband committee were willing to allow neutral ships to pass freely, if it could be arranged that consignments about which they entertained suspicions would not be delivered. This was secured differently in the three agreements. Captain Cold undertook to refuse delivery of all consignments of goods on the Danish prohibition list, if our authorities were doubtful about them, and to store these suspected consignments in his warehouses, until both [258] he, and the British minister, were satisfied. With regard to goods not on the prohibited export list, Captain Cold promised, that he would refuse to deliver any consignment, if the British minister notified him that it was suspicious; and that he would hold the goods, until the consignee had given guarantees satisfactory to himself and the minister. This undertaking was given with respect to all consignees, of goods carried in Captain Cold's steamers, Danish, Swedish and Norwegian. This agreement was between Captain Cold and the contraband committee, with whom Captain Cold preferred to treat because he had a strong inclination to the naval member of the committee, Captain Longden. The real guarantee was Captain Cold's proved honesty, and his friendly relations with the committee.

The other two agreements were prepared at the Foreign Office, and served as a model for those concluded later. On 18th April, Mr. Andersen had a long interview with Sir Eyre Crowe, and informed him that he was ready to agree:

      To any conditions His Majesty's government liked to make as to the carriage of German goods if, in return, his vessels might be allowed to proceed without interference from our cruisers.

The words are striking proof how little the shipowners cared about legal theory, and how earnestly they desired that their commerce be subjected to known regulations. At another meeting, Mr. Andersen's manager, and Mr. Parker of the contraband department, prepared the heads of an agreement. The great obstacle to be overcome was that, by the common law of all Scandinavian countries, the courts would give an order for the delivery of goods, if the consignees could show that they had been paid for. The legal advisers to the British legation reported, however, that this general right could not be enforced against shipping companies, if they redrafted their bills of lading. Mr. Mygdal therefore undertook to insert three special conditions in all bills of lading issued by the company:

      (i) That the directors reserved the power to withhold, in their own discretion, delivery of any cargo carried on board their vessels, calling at Danish, Swedish or Norwegian ports, if they were not satisfied that the ultimate destination of the goods was neutral. (ii) That the goods thus withheld would, at the option of the consignee, be landed and sold by the company for consumption in Denmark, or stored in Denmark until the end of the war, and (iii) that the company might, at their own discretion, demand such securities against re-export as they thought adequate before delivering goods to a particular consignee.

The remainder of the agreement provided for collaboration between the company and the British authorities. The company engaged themselves to refuse lading for goods, unless the consignee had been approved by the head office at Copenhagen. If a newly established, or doubtful, firm asked for cargo accommodation on the company's vessels, the directors promised to grant it only, if a deposit of money, or a bank guarantee were given to them, and they further promised to give the Foreign Office full particulars about these consignees at the earliest possible moment. In addition, Mr. Mygdal undertook that the company's ships would carry no copper, rubber, nickel, petroleum, lubricating oils or hides for Norway or Sweden, no matter how reliable the consignees might be deemed. In return for all this the Foreign Office undertook: To discuss freely any subject which might in future rouse their suspicion.

A copy of this agreement was at once sent to Christiania, and was there signed, with a few unimportant alterations, by a director of the Norwegian America company. The first success of the policy which the Foreign Office was compelled to follow as an advance towards a more general system was, therefore, that the carrying power available for the indirect trade of Germany was substantially reduced, in that three great companies virtually withdrew their ships from all participation in it. Whether this automatically reduced the volume of supplies that was passing to Germany from the American continent may be doubted; for as those supplies had themselves been reduced, less transport was needed to carry them. It cannot be doubted, [259] however, that these agreements did eventually shorten German supplies; for this provisional policy of debarring the Atlantic carriers from carrying German goods, was followed consistently during the year, and Mr. Findlay persuaded the directors of nearly all the large Norwegian lines to sign agreements on the model prepared by Mr. Parker in April.3

vi) The Norwegian oil agreement

Another agreement, which was equally the outcome of these pressures, was concluded at about the same time. It was of some importance; for it deflected a large quantity of oil and grease from the German market, and so accentuated that shortage of fats which was the first notable success of the economic campaign.

In addition to being ordinary lubricants, oils of all kinds are a staple for the soap and tallow industries, for any oil can be reduced to a grease by chemical process. The most important of these processes is that of hydrogenation, when the oil is treated with a substance called the catalytic agent, which accelerates chemical action in the oils. Nickel is the best known catalyst for oils, but a substance known as kieselguhr has been found very good: kieselguhr is a very light, porous earth, which is found, amongst other places, at Stavanger in Norway.

Fish oils, which are here being considered, are obtained by boiling the fish, or, in the case of whale oil, the blubber: all fish oils can be reduced to grease, and pure whale oil is particularly valuable, in that it is used as a hardener for steels. Metal that is to be made into cutting and boring tools is plunged into great vats of boiling whale oil, and then cooled: the most familiar objects prepared in this way are the drills used by road builders, ordinarily called navvies teeth. After the oils have been reduced to greases, glycerides can be extracted from the greases by a second process; these glycerides are an essential component of a large group of explosives.

Being great hunters of the whale, and great fishermen, and having a good catalytic substance ready at hand, in their own country, the Norwegians have for long been pre-eminent as refiners of whale and fish oil, and as manufacturers of the products. The early industries appear to have amalgamated with other, kindred businesses; for, in 1913, the Norwegians were exporting oily substances that are not extracted solely from the whale and fishing catch. Here are the relevant figures:

Imports in
of kilogs.
Substance. Exports in
of kilogs.
Great Britain
738 Stearine, etc. 618 Germany
Great Britain
Great Britain
8,272 Tallow, oleo-
margarine, etc.
Glycerin 125 Germany

[260]The Norwegians were not, however, entirely free; for they hunt the whale in the Antarctic under concessions from the British government, and it was estimated, at the beginning of the year 1915, that 80,000 of the 100,000 tons of oil which was to be refined, saponified, and hydrogenated, in the Norwegian factories during the course of the year would be extracted from whales slaughtered under British licences. Notwithstanding this, the Norwegian government maintained that whale oil was a domestic product, and hesitated to prohibit its export: our authorities claimed that whale oil and blubber obtained under a British concession could only be exported under licence; a number of Norwegian whalers were therefore seized and held at the beginning of the year.

The agreement finally concluded was not, however, an agreement between the British government and the Norwegian oil factories. The Cornhill committee,4 after examining the matter, discovered that the largest of all the Norwegian oil companies, the Norske Fabriker, was connected to Sir William Lever's soap factories by a sort of commercial alliance. The Norwegian concern was independent of the Sunlight business, and Sir William Lever had no control over it, but he was powerful enough to damage it; for the Norwegian factory needed vegetable as well as fish oils, and these it ordinarily purchased from him. Sir William Lever withholding linseed and cotton oils, and the contraband committee arresting and holding whalers, were, therefore, a combination that the Norwegian magnates did not dare to resist; and at the end of April, the Foreign Office were able to approve an agreement, whereby the Norwegian company engaged themselves to buy 30,000 tons of oil from Messrs. Lever Bros. and to sell to them all oils produced in their factory, and all fats hydrogenated by them. The agreement was particularly valuable to the Norske Fabriker, in that their great trade rival, the Vera Company, was not party to it, and was therefore still exposed to all the pressure that we could exert by detaining whalers, and by refusing of export licences for oil and blubber obtained under British whaling concessions.

vii) The general submission to the order and obedience to its provisions

If the only consequences of the order in council had been those described, it would follow that the immediate set-back had been greater than the immediate gain. On the credit side the consequences would be: three agreements with Scandinavian shipping directors, and a supplementary agreement with a blubber company; on the debit side would be: an immense dislocation of the trans-Atlantic trade, with all the friction consequent upon it; a proposal for a better regulation of trade, examined and found unworkable; and an aggravation of the Swedish controversy. The aggregate result would therefore be equivalent to a heavy adverse balance on the profit and loss account of our achievements. There is, however, another consequence, far more difficult to estimate, because it is recorded in no particular document or bundle of documents, yet far more significant than all that has been described, in that it constitutes a voluntary submission, not by one, but by many thousands of commercial magnates, to the regulations of the new order in council. Some weeks previously Sir Cecil Spring-Rice had reported a tendency to get contraband on to a business footing, and both he and his advisers had laboured untiringly to encourage it. The results of their endeavour are recorded in the many thousands of messages that reported the daily business transacted with those commercial and shipping magnates, who disregarded legal rights and niceties, ignored political controversy, and adjusted their business to this new regulation, by negotiating with the British embassy in Washington and the authorities at Whitehall. In the aggregate, these incidents of daily business constituted an admission that trade between America and Europe was being adjusted to this new rule of war.

[261] A brief tabular digest of the transactions reported from America during three weeks (which have been selected at hazard) will illustrate the tendency towards a de facto recognition of the order in council, which no legal controversy ever checked. It is an illustration only, which is all that can be attempted.

Date.   Number
  of Telegram.
Substance of Telegram.
April 22     25 from Boston Bankers report upon the Boston agents of s.s. Rigi.
422 from Washington   State Department's assurances about cotton cargo of s.s. Carolina.
23 433 " " State Department's request that special consideration be given to f.o.b. contracts.
24 442 " " Reports explanations by Messrs. Wolff about cotton on s.s. Marie. Representative of State Department present at interview.
26 451 " " Further explanations by Messrs. Wolff and representative of the State Department.
457 " " Association of Marine Insurance Companies give an explanation about certificates of insurance for cotton cargoes.
27 468 " " Treasury Department file policies and papers relating to s.s. Navajo's cotton cargoes.
May 10 558 " " State Department enquiries whether recent arrangements with N.O.T. may be applied to certain cargoes of German origin required in United States of America.
564 " " State Department ask that cargoes in which Tunnell and Company and Brown Brothers and Company are interested be given favourable treatment.
568 " " Requests more information about colonial regulations, for communication to certain business houses.
585 " " Further conversation with a representative of the State Department about cotton cargo in s.s. Navajo.
12 588 " " Guaranty Trust Company request information about treatment of cargo in s.s. Kioto.
590 " " State Department enquire what proofs N.O.T. require with regard to cargoes purchased from Germany before 1st March.
591 " " Conversation with State Department about form of consular certificates of lading.
592 " " Conversation with Commissioner of Navigation about owners of s.s. Gargoyle.
[262] 13 597 " " State Department give information about cargoes purchased by the Apollinaris Company.
June 3 836 " " State Department give information about cargoes in which Messrs. Lorsch & Company are interested and ask for favourable treatment.
837 " " State Department submit the case of N. Nathan with full particulars.
838 " " State Department submit the case of Leubrik Elkus with full particulars.
840 " " State Department submit the case of Hamburger & Sons with full particulars.
841 " " State Department submit the case of Shackman & Company with full particulars.
842 " " Elberton Cotton and Copress Company. Particulars of their cotton shipments.
4 742 from New York Explanations of Chile Exploration Company with regard to purchase of machinery.
854 from Washington Messrs. Gaston Williams & Wigmore, N.Y., ask that they may be given His Britannic Majesty's Government's opinion upon a purchase of Austrian ships that they are contemplating.
     from Washington
State Department submit the case of N.Y. Merchandise Company with full particulars.
5 879
from Washington State Department submit case of Stern & Bendix with full particulars.
881 " " State Department submit case of Gottschalk & Daviss with full particulars.
6 883 " " Messrs. Patterson Boardman & Knapp give particulars about cargoes purchased by them.
8 756 from New York Messrs. Soloman Brothers give full particulars about their recent shipments of cotton linters.
757 " " Similar particulars given by American Linters Company of Boston.

The transactions thus tabulated all had their origins in the order in council; for the particulars given by the state department were, for the most part, presented to prove that the cargoes were not detainable under the order; or that they were within the scope of the cotton agreement; or that they should be purchased under the conditions recited in the third and fourth articles. More than this, the state department associated themselves with a great proportion of these requests for favourable treatment, and it was, presumably, at their instance that particulars about purchases and [263] insurance policies were so freely given. It must be remembered, moreover, that this brief statement is no accurate measure of the practical recognition given to the order, which can only be calculated by inspecting the registers of the contraband department: for one week in May there are over a hundred entries in the contraband register for America, and each one records a transaction initiated and concluded on the assumption that the order in council was in force, and that it would remain in operation.

It would be just as easy to exaggerate, as it would be to belittle, the significance of all this; probably the best estimate will be made by drawing an analogy from military history. Military historians, consulting the documentary records of an old campaign, often become aware of a circumstance that is attested to in no document: that, during some particular period of the campaign, the relative strength of the two armies must have been changing rapidly; that the discipline, endurance and fighting spirit of the one must have been rising, and of the other declining, from the corrupting effects of some bad influence. This analogy must serve to illustrate the importance of this voluntary submission of so large a part of the American export traders to our latest regulations. It gave our regulations solidity and cohesion, and it added a deadening accompaniment, the dull roar of business, to the shrill, piercing notes of political controversy. Certain it is, that at the very moment when our achievements seemed so unimportant, our advance towards our objectives so imperceptible, and the obstacles ahead so formidable, the economic forces that we were controlling were tested against the enemy's and were proved to be incomparably the stronger.5

1The average number of entries on the manifest of a ship carrying a general cargo was in the neighbourhood of 1,300. ...back...

2Assistant Commercial Attaché, Christiania. ...back...

3     (i) The agreement with Captain Cold.
(ii) " " " The Norwegian America Line.
(iii) " " " The East Asiatic Company.
(iv) " " " The Garonne Line (Norwegian).
(v) " " " The Norway-Mexico Gulf Line.
(vi) " " " The Norwegian Africa and Australia Line.
(vii) " " " The Thor Thoresen Line.
(viii) " " " The Nordensfjeldske Dampskip skelskab.    ...back...

4A committee of city men, presided by Sir Austen Chamberlain: the committee advised on financial matters. ...back...

5See Chapter XX, Progress of the enemy's economic campaign. ...back...

A History of the Blockade of Germany
and of the countries associated with her in the Great War:
Austria-Hungary, Bulgaria and Turkey.

by A. C. Bell (Historical Section, Committee of Imperial Defence).