Part II: The Rationing System (cont'd.)
Chapter 13: Negotiations for a General Agreement with the Swiss
The Swiss economic system. – The first agreement virtually settled little or nothing; the Swiss copper shortage. – The great shipping firms refuse to carry Swiss cargoes. – The German exchange system as applied against Switzerland. – The negotiations for a general syndicate, or receiving trust. – Why concluding an agreement could not be treated as a matter of pure business. – The French alterations to the original draft, and the Swiss government's objection to them. – The Swiss government's additional proposals.
Even though it involves a certain amount of repetition, it will here be convenient to recapitulate, briefly, those peculiarities in the Swiss economic system, which obstructed a general regulation of the contraband trade between the Swiss federation and Germany. Switzerland's great sources of revenue are: her exports of such foodstuffs as condensed milk, chocolate and cheeses; her exports of specialised silk and cotton embroideries; and her export of cheap watches: and, although all these trades may be called national, they are each fed with contraband materials that were then obtained from the countries at war. First, the artificial foods were made in industries that are situated in the northern cantons of Vaud, Fribourg, Berne, Zoug, and Zurich; and all the mechanical plant used in the manufacture of them was driven by German coal. Even if this motive power were left out of consideration, it could not be said, that the cheeses and condensed milks were independent of foreign contraband, for a large proportion of the winter feed that is given to the Alpine cattle was imported.
The same was true, in an even higher degree, of the great textile industries; for the coal, silk, cotton, and wool, which were the essential ingredients of those industries, were drawn from Germany, France, Great Britain, and Italy in the following proportion:
These raw materials, having been mixed, churned, combined, and recombined, in the Swiss factories of the north-eastern provinces, were sold, all over the world as broderies, plumetis and soieries; and there was no traceable connection between the first ingredients and the final products. The confusion was even greater in respect to the watch trade, about which it was only possible to say, that a large part of the metals required in it were bought in the German re-export market.
 From this, it will be understood, that, if the principle of derivative contraband, which had been inserted in our first agreements with neutrals, had been applied against Switzerland, then, it would have been necessary to purchase all the foodstuffs, textiles, and watches that were sold in the German market, and, at the same time, to stock the country with coal, metals, wool, silk, and cotton, or, failing this, to treat the country as an enemy. As neither alternative was thinkable, it was necessary to regard a great mass of Swiss exports as outside the operation of any agreement. There remained the engineering and chemical industries.
The factories and workshops of these trades are also situated in the north-eastern cantons; and although it is possible to trace a connection between the iron, steel, and copper that goes into an engineering house, and the machines that come out of it, there were peculiarities of this Swiss trade that obstructed a logical regulation. First, German coal was the motive power of all these industries, and, after long and careful enquiry, it was decided that British coal could not be substituted for it. The German Ruhr coal, transported by the Rhine, could be delivered in Switzerland at forty-six francs a ton: Cardiff and Newcastle coal, which would have been twice transhipped on its way to Switzerland, could not have been sold at a cheaper rate than sixty-four to seventy francs per ton. It was, moreover, exceedingly doubtful whether the French general staff could allocate the lighters necessary for transporting the coal up the Seine, or the rolling stock necessary for carrying it from Besançon to the frontier. The assumption preliminary to any contraband agreement with these Swiss metal industries was, therefore, that the German government had the power to insist, that a certain proportion of whatever was made in Switzerland should be delivered in the central empires.
Secondly, the Swiss industrial system resembles the national, in that it is more a mixture, than a true compound, of French and German concerns, as some of the largest of the engineering houses have affiliated companies in France, Austria, and Germany. It therefore followed, that some of these houses could not be denied materials from the allied markets, merely because they were delivering goods in Germany; for this would have been injuring a parent stock, whose branches were a useful part of the allied system. A concrete example will best illustrate these complications.
The house of Brown Boveri and Company was unquestionably a Swiss company; the companies immediately affiliated to it were, however, in France: the compagnie electro mécanique, at le Bourget; and the société d'applications industrielles, in Paris; in Germany: the Motor Aktiengesellschaft; the Elsässische Kraftwerke, and the Brown Boveri Company of Baden; in Austria: the Brown Boveri Aktiengesellschaft of Vienna; and in England: the Brown Boveri of London. A company whose roots were so spread was certainly exposed to coercion; it was, however, no easy matter to apply the coercion skilfully, and to get good results from it. Even the French authorities, who were more inclined than ours to conceive plans that were mere derivatives of some rational concept, and having conceived them, to execute them ruthlessly, admitted that their project of pressing this great house could not be proceeded with. Another circumstance made it peculiarly difficult to regulate the Swiss contraband trade: the largest engineering houses were simultaneously executing large munition contracts for the allies and for Germany. The compagnie des aciéries at Schaffhausen, for instance, was a branch of the Georg Fischer Metalwerke [sic] of Baden; and, after drawing coal and metal supplies from allied and enemy countries indiscriminately, was selling: thirty-two per cent. of its goods in Switzerland; forty-eight per cent. in allied countries; and eighteen per cent. in Germany. The British war office authorities were so anxious that the deliveries to the allies should not be delayed, that they pronounced strongly against any interference with the company, thinking it preferable that a certain proportion of British metals should go on to Germany, than that any part of their own contracts with the company should be unexecuted.
 Finally, the Swiss industries were engaged in a trade that was a natural corollary to the European composition of the industries themselves: the trade was called the trafic de perfectionnement, and its nature was this. As the Swiss engineering industry, taken as a whole, is complementary to the engineering industry of Germany, the great houses of the two countries have arranged for a rational distribution of work between themselves. Raw materials bought by Swiss engineering-houses were thus worked up, in the first instance, in the Westphalian industries, because the plants there established could do the work more quickly and cheaply than the Swiss houses. This was called the passif de perfectionnement. Conversely, certain highly specialised Swiss houses could execute fine work for the Westphalian firms, from whom they received raw materials. This was called the actif de perfectionnement. The component parts of this traffic, actif and passif, were a complicated mass of sub-contracts and trade agreements, and a flow of metal consignments, which moved across the frontier and back again. Our authorities were much concerned with the passif; for the Swiss engineering magnates never disguised, that metal consignments allowed them by the allies would go to Germany for perfecting. The Swiss maintained, however, that their contracts with the German houses were a sufficient guarantee that the metals would be returned. Our authorities, with much evidence of the metal shortage in Germany before them, were naturally apprehensive lest the metals should be requisitioned by the German government, after they had passed the frontier.
It has been explained, in a previous chapter, that the Foreign Office made a temporary accommodation with the Swiss government, by receiving an undertaking from them, that their prohibitions of export would be permanent. The federal authorities added, however, that particular applications to export goods on the prohibited list would have to be considered. It will now be instructive to show how little this regulated matters.
After the notes had been exchanged in December, and the declarations of policy subsequently made by the Swiss government had been received, both parties were still virtually standing upon two irreconcilable contentions. The Swiss could maintain, as indeed they did maintain, that, as the Hague convention did not compel neutral governments to prohibit the export of contraband, so, the federal council had already done more than they were obliged to do by the rules of international comity, and were free to grant what export licences they chose. On the other side, the British government could argue, that they had an acknowledged right to stop contraband from reaching the enemy, and that the declarations of the Swiss government virtually made every contraband cargo with a Swiss destination suspect; for, to their reservations on the matter of prohibited exports, the Swiss soon added the declaration: La possibilité d'importer des matières premières n'a de valeur pratique pour l'industrie suisse que si elle peut disposer de ses produits. To this general suspicion was added the suspicions that attached to the numerous firms with German affiliations, whom we regarded as suspect consignees, and whom the Swiss regarded as national concerns, entitled to receive goods from all parts of the world, and obliged to render account of their operations to the Swiss government only. This, indeed, was the footing upon which the allied and the Swiss governments stood after the first contraband agreement had been negotiated, and if the known, admitted, rules of international law had been the only judgement seat before which these opposing contentions could have been laid, no accommodation would have been possible. It will be instructive to review the mischievous consequences of this unsettled controversy.
 From the outset, the Foreign Office authorities recognised how dangerous it would be to exercise our right to intercept cargoes without relaxation; for, as suspicion attached to most of the Swiss cargoes, little or nothing would have been allowed to pass:
The alternative to an agreement, wrote Mr. O'Malley, in a review of the whole position, is to starve Switzerland and to bring widespread ruin on many of her industries...... To starve Switzerland is a visible and blatant exercise of sea power. In my humble opinion, one result of the war will be a revolt of land powers against British sea power, which will be far more determined than any we have had to face so far. On this ground anything which will now in part obscure the exercise of our power is very desirable.
During January, the Swiss minister in London represented, that the condition of Swiss industries, and the growing unemployment, were making the population very unsteady; he added, that the excitement consequent upon the distresses in the country might make it difficult for the authorities to maintain that strict neutrality which they wished to adhere to. Soon afterwards, it was reported, that the Swiss minister in Rome had made an even more threatening statement, from which it was inferred, that the federal council had sent identic instructions to their representatives abroad.
When, however, Monsieur Carlin was pressed to explain exactly how we could relieve the distresses of which he complained, it transpired that the Swiss government were anxious about copper supplies, and that, if we would promise that a consignment of 1,385 tons should be allowed to enter Switzerland, we should be giving all the relief in our power. The federal government guaranteed, unequivocally, that this copper should not be re-exported, but again they reminded us, that re-exporting was so much a part of their economic system, that they could give no general promise for the future. The Foreign Office were inclined to think that Monsieur Carlin had exaggerated the political consequences of the shortage; for our minister at Berne was convinced the Swiss authorities could not abandon neutrality, without provoking something like civil war between the French and German cantons. Nevertheless, both he and Mr. Skipworth, the commercial attaché, confirmed Monsieur Carlin's strongest representations about the growing distresses of the country. The Foreign Office therefore agreed, that the immediate relief asked for should be granted. The Admiralty, however, criticised this decision severely, and circulated figures showing that the firms who would receive this copper had already imported more than their normal supplies. Many weeks later, figures collected by Mr. Skipworth proved, that Swiss imports and exports of copper had fallen away prodigiously, and so confirmed the warnings given by Monsieur Carlin and his government. Economic warfare resembles warfare in the field, in that the conduct of it has to be determined from disconnected reports, and incompleted observations: comprehensive statistics are very rarely available at the moments when controversy is keenest; indeed, it is because they cannot be consulted, that suspicions are strong, and accusations of bad faith are readily accepted. During January and February, the Foreign Office could not refute the Admiralty, by inviting them to examine figures upon which no doubt could be cast, and so, were compelled to rely upon their judgement that severe interceptions and detentions of Swiss cargoes would raise dangerous commotions in the country.
This general agreement, that 1,385 tons of copper should be allowed to pass our patrols was, however, a mere introduction to a succession of irritating incidents. Thinking, probably, that they were under no obligation to give exact particulars about the firms to whom the copper would be distributed, as they themselves guaranteed it would not be re-exported, the Swiss government only mentioned three houses. In point of fact, more firms than this were affected, so that, when the new houses notified what shipments were due to them, and what trade marks  would be found on their consignments, our authorities at once suspected artifice and fraud; and even when these new suspicions had been purged, the doors of our administrative system were by no means open to the passage of the copper.
It had been agreed that two hundred tons of copper, which were then being detained by the French authorities at Marseilles, should be reckoned a part of the total consignment allowed. The Swiss authorities, therefore, applied to the French government for a licence to export this copper, but were informed that the military had requisitioned it. Requests for an equivalent quantity were, therefore, lodged with the British war trade department, and when the requests and the explanations attached to them had been very critically examined, the Swiss minister was informed, that the French army authorities had requisitioned the copper at Marseilles by mistake, and that it would be released.
And even after these fusillades of applications and explanations had been discharged, the allowed consignment was detained at Gibraltar. The greater part of it was shipped in the steamer Strathtay, which left New York in the middle of April. The suspect firm of Aubert Grenier contrived to load a consignment of their own on the same steamer, and the Swiss authorities, on learning this, telegraphed to New York, ordering that the Aubert Grenier copper be unloaded, if possible, and if that were not possible, that it should be consigned to them. The French authorities intercepted the second part of this telegram only, and were persuaded, that the Swiss government were engaged in a discreditable manoeuvre to secure more copper than had been allowed them: by good fortune our deciphering staff decoded the whole message, from which it was patent that the Swiss government's intentions were strictly honourable. But the message also proved, that a suspect consignment had been loaded in the steamer, and orders were at once issued, that the steamer should be held at Gibraltar, and the Grenier copper unloaded, which was exactly what the Swiss authorities had striven to avoid.
The Swiss government were, however, confronted with a difficulty greater than the difficulty of persuading a number of able and conscientious civil servants, that they needed copper, and that they would not allow it to be re-exported. It has already been explained, that the Admralty [sic] representatives on the contraband, and restriction, committees vigorously criticised any concession to Switzerland. As the Admiralty were determined, that any cargo with a Swiss destination should be subjected to the severest scrutiny, the head of the trade division warned the big steamship lines in the Atlantic trade, that they would be well advised to refuse all contraband cargoes with a Swiss destination. Simultaneously, or nearly so, the Italian companies on the Atlantic route learned that a number of Swiss firms were suspect; in view of the Admiralty's warning, the Italian companies refused cargoes. During the first months of the year, the Swiss authorities were thus menaced with a stoppage that would have resembled a blockade, if it had been continued; and for a peculiar reason this proved of grave prejudice to our credit. The Admiralty did not inform the Foreign Office that they had warned the steamship companies, so that, when the Swiss minister protested against this universal refusing of Swiss cargoes, the Foreign Office replied, in all good faith, that the British government had nothing to do with it. The Foreign Office were thus committed to a statement that the Swiss government soon learned to be untrue; for they cannot have remained ignorant of the Admiralty's letter during their long correspondence with the shipping companies. It is not, therefore, surprising, that, when some weeks later, we were in treaty with the Swiss authorities, we found them reticent, and watchful, and very apprehensive lest our real and avowed intentions were quite different.
 Meanwhile, Mr. Grant Duff and Mr. Skipworth were watching the growing paralysis of Swiss industries with rising anxiety; for they soon had evidence before them, that it was driving the big engineering houses into the orbit of the German system:
It would be something of a disaster, wrote Mr. Skipworth, if the largest Swiss engineering works went over to the enemy, and there is nothing to prevent their doing so, unless they can be induced either to remain neutral or to work for the allies...... The above works cannot be kept going with the raw materials which exist in this country...... Germany is apparently in a position to supply, at any rate steel, in any quantities required, witness the almost daily consignments arriving here, or going through to Italy. If, therefore, these works cannot get the materials necessary for carrying on their normal work, they will be obliged in their own interest, to fill their works with other work, which will almost certainly take the form of ammunition for Germany for which the latter will supply the raw materials.
Mr. Skipworth then explained, in very grave language, that symptoms of the tendency were already visible. During the last fortnight, the head of a locomotive works, a federal engineer, and the director of a very large engineering house had each informed him, that, as copper supplies could not be counted upon, he was seeking new contracts from Germany. Unfortunately, these intimations became a stimulus for new severities; for the committees in Whitehall, on receiving the names of those firms which were seeking contracts with the enemy, at once recommended, that all licences should be refused to them; and that all metal consignments addressed to them should be held up. This, indeed, was the damaging consequence of an unsettled controversy, that it gave a baneful momentum to acts of coercion, which proved more damaging to ourselves than to the enemy. It was thus a piece of singular good fortune, that the German authorities were themselves following a course of conduct, which debarred them from profiting by our mistakes, and seizing the advantages that offered.
It can easily be understood, that this review of our own difficulties is substantially a review of those matters that gave the German authorities cause for anxiety; for they, like ourselves, were conscious that the Swiss industries were a central European, rather than a purely Swiss, concern, and they, like ourselves, were particularly anxious, that such quantities of metals, chemicals, and dyes, as they could spare, should be used in industries that supplied their own markets.
The German government were, therefore, the first to insist on guarantees from the Swiss. After negotiations of which we have no record, the Swiss authorities succeeded in dissuading the Germans from making coal supplies a matter of bargain: why the Germans were ever persuaded to lay aside such a powerful coercive weapon is a mystery. The plan finally agreed to was a compound of the German exchange system, and of a rigid, inelastic, system of particular guarantees. The Swiss government established a bureau fiduciaire, which sent experts to every firm that applied for a licence to buy metals from Germany; these experts examined the firm's books, and reported on its transactions. In addition, the bureau fiduciaire received bank guarantees, and securities for fulfilment of conditions. The bureau then became responsible to the German licensing board, that all guarantees against re-export were being observed, and that the commodities required in exchange for the licence granted would be duly delivered. We know very little about the operation of this system, but the little we do know is significant. It rested with the German authorities to state, in each licence granted, what goods were to be exported to Germany in exchange, and how the goods that were manufactured from metals supplied by Germany should be disposed of. The Germans seem to have insisted upon very burdensome conditions; for a large and representative deputation of Swiss magnates went on a special journey to Berlin to beg that the system might be relaxed, and that some consideration might be given to the needs of the Swiss  market. We have no information about the reception that was given to this delegation; but even lacking it, we can say, with certainty, that the Germans wasted an exceptional opportunity by being so harsh and unbending: during eight whole months, the commercial links between Switzerland and the allies were so weakened, by friction and misuse, that an enterprising, and supple, German minister might have severed them altogether, and replaced them by a chain of his own forging: instead of doing this, the Germans instituted a system of trade control, so arbitrary, so inquisitorial, and so exasperating, that it obstructed all commercial operations between Germany and Switzerland, and endangered a large number of them.
In order to mitigate the pressure that was then being exerted by both belligerents, the Swiss established a metal trust; and although our representatives were very criticial [sic] of this body, as it was then constituted, they yet considered that it might serve as an imperfect, experimental, model of a general receiving trust. Sir Francis Oppenheimer was therefore instructed to go to Berne, to negotiate a settlement.
Three draft projects were examined during the negotiations that followed. The first was prepared by Sir Francis Oppenheimer, shortly after he reached Berne, and was agreed to generally by the Swiss government; the second was this first project with some additions made by the French authorities; the third closely resembled the first. The system of regulation that was finally agreed to was common to all three drafts, and it will be convenient to explain it at once.
First and most important, was the list of those trades that were classed as national; for the produce of these industries was deemed domestic produce, no matter where the raw materials were obtained. In the final project, these trades were thus classified: chocolate; condensed milk; silk, raw and half worked; clocks and watches; cotton and silk embroidery; ribbons, woollen clothing, women's clothing. A considerable proportion of Swiss commerce was thus only affected incidentally, and by way of repercussion, by the general settlement. It was, however, stipulated that all exchange goods demanded by the German licensing bureau should be goods manufactured by these national trades, or goods that had been produced in Switzerland from materials obtained in the country whose government insisted on the exchange. The industries that came within the operation of the plan were to receive their materials from a general importing trust, which was to obtain from abroad all the raw materials, and the finished, and the half finished, goods that were required by the Swiss industries. This supervising body was to bind itself, that all raw materials received by it should only be exported, or re-exported, according to the conditions stipulated by the country where the materials were obtained. Although it was in no sense to be a government organ, this superintending body was, nevertheless, to be recognised as the federal council's expert adviser on all matters relating to prohibited exports. More than this, the federal council were to grant the superintending body the right to initiate prosecutions, by laying incriminatory matter before the Swiss judiciary. Syndicates of particular industries were to collaborate with the supervising trust, and, having received their supplies, were to distribute them to particular firms.
The trafic de perfectionnement was regulated by defining the perfecting processes, and by allowing a certain amount of metal, but no more, to go into the traffic: casting, rolling, drawing, forging, and pressing into sheets were the allowed processes; the quantities of metals allotted to the traffic were: copper 300 tons per annum; zinc 300; tin 100; lead 100; nickel 50. It was stipulated, in addition, that all consignments in this traffic should pass the frontier by way of Waldshut, Bingen or Romannshorn, where they could be checked. Sir Francis Oppenheimer was persuaded, that the traffic must be allowed, and that the danger of a leakage was not great. The German firms were so occupied with munitions contracts, that  they were becoming less and less inclined to roll and press for the Swiss industries; also, the Swiss customs authorities, being accustomed to the traffic, would at once report any abuses. Finally, which was perhaps most important of all, the quantities of raw materials and goods that were to be consigned to the superintending body were to be calculated from the quantities normally imported into the country. These were the essential points of the project that was presented to the federal council in April; they were agreed to, with very little alteration, so that it is rather surprising, that the negotiation was only concluded when the autumn was well advanced.
The obstacles to an agreement, were, however, formidable; for the federal authorities were still obliged to reassure those sections of Swiss society which were apprehensive of the negotiations, and powerful enough to obstruct them; also, it seems highly probable, that the German and Austrian ministers at Berne pressed the Swiss government severely. It will, therefore, be as well to review the difficulties with which the federal council contended, as far as they can be understood.
First, the Swiss general staff would have preferred to bring the country's industries entirely within the orbit of the German economic system; and, if the matter is reviewed dispassionately, it must be admitted, that the Swiss generals would have preferred this out of no sentimental preference for Germany, but for reasons that were entirely patriotic and creditable. The Swiss army had been mobilised in the early days of the war, and a great force was still stationed along the frontier. Now, it must have been patent to the Swiss generals, that, if they were eventually obliged to defend their country, they would only do it successfully, by collecting as large a stock of arms and munitions as they could, before the storm of invasion burst upon them. As the Swiss army was armed upon the German model, with Mauser rifles and Krupp guns, and as the Swiss engineering houses were largely complementary to the German, the Swiss general staff, quite property, considered that the interests of the army would be best served, for the time being, by strengthening the economic links between Germany and Switzerland, or, at least, by doing nothing to weaken them.
It was probably because the Swiss generals feared German retaliation, and dreaded its consequences to their munition houses, that they so much disliked the economic agreement with the allies. As far as is known, the German government never retaliated upon Switzerland for concluding an agreement with the allies; but this does not, in itself, prove that the fear of it was unreasonable. For it must be remembered, that, even in those state papers which the German authorities exchanged among themselves, high and responsible officers of state maintained, that our contraband agreements, indeed that our whole system, was a flagrant contravention of the law of nations. As they were honestly convinced of this, it is only to be supposed, that their diplomatic representatives were instructed to be harsh and unyielding; and certainly the few indications that can be collected about German diplomacy in the matter show, without exception, that the German ministers in neutral countries were uniformly truculent, threatening, and unreasonable. M. Loudon's scrutiny of every word and phrase that could possibly compromise his government; M. Wallenberg's admission that his difficulties with our government were as nothing to his difficulties with the German; the German minister's peremptory protests at Bucharest, are each either an echo, or a repetition, of the menaces that were repeatedly lodged in all neutral chancelleries.
These threats were, moreover, being made at Berne, while the German armies were driving the Russians before them, and were marching into the heart of the Russian empire. Just after the first draft agreement was presented to the Swiss authorities, the Germans burst the Russian line at Gorlice; three weeks later, Przemsyl was  abandoned; during the last weeks of the negotiations Warsaw fell; in the same period, the allied armies soaked the soil of northern France with their blood to no useful purpose. Foreign military experts were, at the time, persuaded, that, although the Germans were not likely to defeat the western allies outright, they would yet sign a good peace treaty, before the coming spring; and all neutrals bordering upon Germany were very apprehensive, lest the waves of a last German onslaught upon the allied lines in France should roll across their own frontiers. It was therefore natural, that the Swiss general staff, conscious that the authorities of the great military power on their northern border could stop the country's coal supplies by a mere executive order, and aware that they had only with difficulty been dissuaded from doing so, should have dreaded an economic agreement, which they knew would exasperate the German staff. In the words of a French representative, La situation militaire pèse lourdement. It seems probable, moreover, that not only the Swiss staff, but Monsieur Frey, who conducted the negotiations on behalf of the federal council, dreaded German pressure; for Monsieur Frey visited Berlin, during the early months of the year, where the German authorities communicated their wishes in the intimidating style that they used, whenever contraband agreements were under discussion. This does not excuse M. Frey's conduct during the negotiations; but at least it explains hesitations, reticences, and obstinacies, which often exasperated the allied diplomats. Monsieur Frey and M. Hoffmann, the minister of foreign affairs were, in fact, negotiating on behalf of a small, but high-spirited, nation, whose troops were guarding a frontier that abutted upon the greatest military empire in the world, and whose frontier fortresses almost overlooked an enormous battlefield.
It had always been intended that the final agreement should be between the French and British governments on the one hand, and the superintending body on the other. When, therefore, the Swiss federal council had approved the first project, in a general way, Sir Francis Oppenheimer went to Paris to explain it to the French authorities, and to invite their collaboration. The French authorities did not alter the draft very much, but such alterations as they made were certainly alterations, which, if agreed to, would have placed additional responsibility upon the federal council. It will be convenient to review these additions briefly; for although they amounted, in all, only to a few sentences, they made a great commotion.
First, it was stipulated that the allied governments should themselves determine what articles were to be consigned to the superintending body; secondly, the clauses in which it was stipulated, that the supplies granted should not exceed the quantities normally imported, were re-drafted and made more precise; thirdly, the allies asked that they should be consulted, before the president and secretary-general were appointed. More important than this, however, were two clauses in the covering note that was to be exchanged between the allied representatives and the federal counsellor: by the first, the federal council were scrupulously to guarantee that all the engagements in the documents should be fulfilled; by the second, the Swiss authorities were to promise, that they would seize aluminium consigned to Germany, if the German authorities requisitioned metals in the trafic de perfectionnement.
The federal authorities informed us that these alterations constituted un changement radical de tout le système, and were emphatic, that they could only be responsible for establishing the superintending body; and that they would never guarantee its operations:
Whereas, previously the trust was to be created as a private association, thus leaving the federal government independent and neutral, the government is now involved by the demand that it shall guarantee the obligations that the trust undertake.
 The Swiss government continued, that public opinion in the country would not tolerate an agreement that would be regarded as an attainder against the country's independence:
If the federal council assists in establishing a body with such wide powers as those conferred upon the SSE, they cannot agree that a supplementary control be exercised by the representatives of foreign powers.
The Swiss authorities were only stating the bare truth, when they warned us that large sections of the nation were watchful and suspicious; for our own minister reported precisely the same thing. Our representatives were, however, suspicious in their turn; for they had good reason to believe that the Swiss federal council, or some members of it, were themselves inciting the press against the entire negotiation. Sir Francis Oppenheimer, at all events, was persuaded that Monsieur Frey, while actually conducting the negotiation, had written articles in the Neue Zürcher Zeitung, and had divulged a number of confidential conversations, in order to make the articles well informed and weighty. It is only fair to add, that Monsieur Hoffmann complained, on his side, that our representatives influenced the Swiss press improperly. Probably, therefore, the Swiss authorities were more nervous than they need have been about the additions to the second draft, and thought, quite honestly though quite wrongly, that the phrases of which they complained were the heralds to some vast plan of economic coercion.
Our representatives were embarrassed by the criticism that was directed against
them, in that it synchronised with a new contention that was advanced by the
Swiss authorities, and to which we could not possibly agree. During the spring,
we allowed considerable quantities of rice and maize to be imported into the
country from overseas, on a guarantee being given that they were for domestic
use. The federal authorities now demanded that these consignments of rice and
maize should be exported to Germany and Austria as exchange goods. As we
calculated, that the rice alone would feed a considerable body of troops, for six
months, this was a demand that could not possibly be acceded to. The Swiss
authorities represented, on the other hand, that we were adding unreasonably to
their difficulties by refusing. According to them, Switzerland was bound to import
dyes, metals, and sugar from Germany and Austria, to the monthly value of
twenty-two million francs, and it was a matter of the greatest difficulty to collect
goods of an equivalent value, which the central powers would accept in exchange.
This demand was pressed upon us at a time when the Swiss press was attacking
the whole negotiation fiercely. Simultaneously, or nearly so, M. Hoffmann
made a speech to the Swiss parliament, which our representatives thought to be a
preliminary intimation that the negotiation would fail. Our representatives were,
therefore, inclined to suspect, that this continuous criticism of words and phrases
had, all the while, been intended to disguise an intention to stand unshakably firm,
and to break off the negotiation, if we refused to yield upon this question of
exchanges. Nevertheless, each side suspected the other somewhat unjustly. All the
phrases upon which the Swiss authorities had been so sensitive were removed
from the final agreement; and the Swiss withdrew their demand that rice should
be made an article of exchange. They asked that some additional article of
contraband should be placed on the list of goods in the exchange traffic, and
undertook that some four thousand waggon loads of miscellaneous goods, which
had been bought by the government of the central empires, should, for the time
being, be used in the exchange circulation. This was the compromise finally