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      Part II: The Rationing System (cont'd.) Chapter 14: Cotton Declared Contraband The first deliberations upon cotton. – American and British shipments of cotton to border neutrals. – The cotton question reconsidered by the cabinet. – Warnings are received from Washington. – The United States government acquiesce; the whole controversy reviewed. The agreements that have been examined in the foregoing chapters may be called the preliminaries to the rationing system, in that they secured a general consent that the system should be tried. Bringing the cotton trade between America and northern Europe within the compass of the system was, however, an operation in itself; for a staple export of the greatest exporting country in the world could not be treated like the substances that were regulated in the agreements with the northern neutrals. Like all operations of war, this regulation of the cotton trade could, in fact, be described as a test of the national temper (for it excited the nation as much as the battle of the Marne), or as a political hazard, or as a technical necessity; but it will here be most proper to show only by what successive steps the cotton trade between America and Europe was brought under control, and in what measure the regulation of it contributed to the whole operation.
When the matter first became pressing, the officers of the contraband department were not all agreed whether or not the law of contraband was a useful auxiliary to the rationing system. The question stood thus: inasmuch as the March order was an order to stop all the enemy's commerce, and inasmuch as enforcing a rationing system was recognized to be the most equitable method of executing the order, so, there was a strong case for bringing articles of general commerce within the compass of the system, no matter whether they were contraband or not. As against this it was argued, that whatever agreements were made with neutrals, and no matter how many commodities were included in the rationing lists, detaining ships and cargoes on suspicion, and in terrorem, would always be part of the system; and that these severities were more plausibly excused, if the cargoes held and detained were contraband. These two systems were called the blockade, and the contraband, policy; but although opinions on the two were much divided, all responsible officials were agreed that cotton must be declared contraband, before the trade in it could be regulated. This declaration could only be issued, however, if careful diplomatic preparation were made for it; for, during the first months of the war, when the economic campaign was hardly begun, the British government gave undertakings about cotton, which were difficult to rescind. The reason why this undertaking was given was this. It has already been shown, that, when the press first attacked the government for not declaring cotton to be contraband, Sir Edward Grey convened a committee of technical experts from the Admiralty and the War Office, to report on the matter; and that they reported there were no sound professional reasons for making cotton contraband. The experts added a number of political reasons for not doing so; that it would anger the United States, irritate the Lancashire cotton spinners, and so on. These expert advisers were possibly thinking more of politics than of military operations, when they gave their advice, which was, perhaps, the strangest that has ever been given by professional men upon a professional subject. Stripped of technical details, the connection between cotton and explosives may be stated thus. A substance that chemists call cellulose is the basic tissue of all vegetable growths [310] that are convertible into textiles, textile substitutes, textile pulps, and celluloid films; and of all these plants and vegetables, cotton contains the most cellulose (ninety per cent.). Cellulose, by itself, is merely inflammable; but when nitrated, that is, when treated with strong nitric and sulphuric acid, it becomes a basic substance to a large group of explosives and propellants. About four-tenths of a pound of cotton are consumed in manufacturing a pound of cordite, and about a quarter of a pound of cotton is used up in every pound of ballistite. Cotton waste is certainly the form of cotton most easily handled by munition factories, but cotton in any form can be used, if additional plant is installed. The quantities absorbed into the munition factories of a nation at war may be guessed at from the following facts. Early in the summer of 1915, the ministry of munitions opened negotiations with a cotton concern known as the British and foreign supply association, and as a result of the negotiations, all the mills of the association were placed at the government's disposal. The ministry's programme was that the mills should deliver waste to the factories at the rate of fifteen thousand tons a year; and that they should raise this to forty thousand tons a year, as soon as the necessary plant had been installed.
When the government decided, in October, 1914, that cotton should not be declared contraband, Sir Cecil Spring-Rice was instructed to reassure the American secretary of state on the matter. He carried out his instructions, by sending a letter to Mr. Bryan, which contained an assurance that was given on behalf of Sir Edward Grey himself:
Cotton has not been put in any of our lists of contraband, and, as your department must be aware, from the draft proclamation now in your possession, it is not intended to include it in our new list of contraband. It is, therefore, as far as Germany is concerned, on the free list and will remain there. Being thus reassured, the cotton jobbers in the United States shipped 3,353,638 centals of cotton to Scandinavia and Holland, during the first five months of 1915: their normal shipments to these countries were about 200,000 centals. It should be added, however, that our own jobbers contributed to this trade with less justification; for, if anything was well explained to the nation at large, during the first months of the year, it was that cotton was to the munition factories what bricks are to the building trade. Scientists of the highest standing explained, by letters to the papers, how nitro cellulose is manufactured; journalists enlarged upon the explanation; and the managers of the conservative press, who were very irritated that a liberal premier was still head of the government, inflamed party rancour as best they could, by repeating these ill-digested facts in every issue of their newspapers. It can therefore be said, that, as the nation was so deeply stirred, every decent citizen was at least bound in honour not to ship cotton to a doubtful destination; and it is one of the wonders of this fierce controversy that the editors of the party press, who twice daily reviewed this cotton question with as much malice, rancour, and invective as they were masters of, never mentioned that our own city magnates were helping to inflate the cotton trade to border neutrals, and were drawing large profits from it.1 Between January and May, 1915, we exported 504,000 centals of cotton to countries bordering on Germany, which was about fifteen times as much as we exported to them in a normal five months. To all countries that did not border upon Germany, we exported less than the normal quantities. More than this, we sent a large proportion of these abnormal exports, after the March order in council had been [311] issued; we may therefore claim to have sent large quantities of a basic textile into Germany, after the government had announced unlimited economic war. The available figures are so interesting that they are worth quoting:
After the reprisals order was issued, cotton cargoes to northern Europe were on the same footing as every other cargo; that is, they were detainable, until the consignees gave good assurances against re-export. The government realized, however, that special treatment would have to be given to a trade of such importance, and so gave an undertaking, that cotton shipped before 31st March would be bought in at an agreed price, provided that contracts for sale and freight had been concluded before 2nd March. Some £2,000,000 worth of cotton were bought in by the government during the next few months; and, although the United States authorities more than once complained that we operated this agreement in a very unbusinesslike manner, this mitigation of the March order may be counted among the influences that inclined the American government to be patient. During June, however, it was universally recognized, that a general regulation of the cotton trade would have to be attempted, before the new crop came forward, and the cabinet appointed a special committee of ministers to examine the relevant issues, and to decide.
Like most committees of ministers, this committee kept no minute books or written records, so that its proceedings cannot be followed step by step; the general course of the committee's deliberations is, however, fairly well beaconed by the state papers that were laid before the committee, and by papers and instructions that were obviously influenced by the committee's deliberations. First, the committee was well apprised of Sir Eyre Crowe's view, which was that every arrangement hitherto made for mitigating the blockade had failed to satisfy the American government; and that controversy of some kind must be deemed inevitable. Sir Eyre Crowe and the contraband department were, however, doubtful whether the controversy would be appreciably aggravated by declaring cotton to be contraband. No matter what protests the American government might subsequently make, it could at least be assumed they would be more inclined to acquiesce in the arrest and detention of a cargo, because it was contraband, than because it was arrestable under an order in council (which they had not admitted to be justifiable); and nobody, either in America or Europe could any longer doubt, that cotton was absolute contraband by the strict law of nations. The committee may also be assumed to have attached great importance to the rising feeling in the country. Even little villages like Cranbrook were then sending written memorials to Whitehall. Professional opinion at the Foreign Office, and the nation at large were therefore decided. There was, however, an opposite influence, which exerted itself strongly in cabinet circles, and about this a few words of explanation must be given. Lord Grey has stated in his memoirs, in a very general way, that he was always apprehensive lest American irritation at our restraints upon commerce should become active opposition to it; but he gives very few dates or particulars, and does not explain [312] when his apprehensions were strongest. He also states: That he was not familiar with the executive details of the blockade; but makes it clear, that he considered the treatment of cotton to have been so important a matter, that he reserved it for himself and the cabinet. It will be necessary to add some particulars to this statement. It has been shewn, that, during his conversations with Colonel House, Sir Edward Grey twice offered to exert his influence to mitigate the blockade: first, when the Germans declared submarine war upon merchantmen; and secondly, when the American government were in controversy with the Germans about the sinking of the Lusitania. But these offers were not both made in order to allay American irritation, for Sir Edward Grey was careful to make Colonel House acknowledge, that the second offer was given to assist the American government in a difficulty. Presumably, therefore, Sir Edward Grey was looking far ahead, when he gave these undertakings, and was attempting to place the American government under an obligation. Even though this was not his motive, it seems certain, that, after his conversations with Colonel House, Sir Edward Grey was persuaded it would be wise to mitigate the blockade; for on 14th June, just when the American envoy was landing in America, Sir Edward sent a letter to Lord Crewe in which he urged a general relaxation.
I think on the whole (he wrote) it is better, when one is away, to leave things wholly alone, and I am very doubtful of the advantage of making suggestions when I am only half in touch with what is going on.2 But I think the Government should make up its mind whether it will not be to our advantage in the future to agree to what is called the freedom of the seas. We are more dependent than any country has ever been upon having the sea free for our commerce. It is probable that the development of the submarine will a few years hence make it impossible for us ever again to close the sea to an enemy and keep it free for ourselves. If this be so, we should make up our minds to agree in the final terms of peace at the end of this war to the immunity of commerce at sea in the future. If this premise and conclusion are right, then the practical question is to decide what concessions, conditions or guarantees we should demand in return for our consent to the future freedom of the seas if it is proposed to us either through or by the United States. We have no written record of the impression that this letter made upon Mr. Asquith, or upon the cabinet as a whole; but certainly no order was given to relax the system, or to hold up any of the negotiations that were then in progress. Nevertheless, Sir Edward Grey adhered to his opinion that the economic campaign could not be proceeded with; and, shortly after his return from leave, an incident in the daily business of the campaign gave him an opportunity of inviting the cabinet to reconsider the whole matter. The incident was this. When the first detentions of German exports were ordered, and the American purchasers of German goods first felt the pinch of the blockade, the state department lodged a sharp, hasty note about the detention of the Neches, a vessel carrying German dyes from Holland. After [313] their usual manner, the state department supported their contention that the Neches should not have been seized, by enunciating an abstract rule of law in a harsh, challenging manner:
The department desires that you inform the Foreign Office courteously, but plainly, that the legality of this seizure cannot be admitted, and that, in the view of this government, it violates the right of the citizens of one government to trade with those of another, as well as with those of belligerents, except in contraband or in violation of a legal blockade of an enemy seaport. The department must insist upon the right of American owners of goods to bring them out of Holland, in due course, in neutral ships, even though such goods may have come originally from the territories of Great Britain's enemies. If the bare, literal meaning of these words had also been the inner meaning of the note, the state department would certainly have issued an open challenge to the March order; but Sir Cecil Spring-Rice, after making enquiries, was satisfied the state department did not intend this. The telegram to London had, in fact, been shown to him, and had been drafted by a subordinate department, which did not usually deal with such matters. Sir Cecil informed the counsellor of the state department, who showed him the telegram, that judgements given by the supreme court of the United States could be quoted in refutation of the doctrine enunciated in the note: the state department did not press the matter. Notwithstanding that Sir Cecil Spring-Rice had been assured, by the American authorities themselves, that the note was harmless, and that nothing more would come of it, Sir Edward Grey made a special report to the cabinet upon this incident; and represented it as one so illustrative of the dangers to which we should be exposed, if we persisted in our policy, that the policy, as a whole, ought to be reconsidered. It would not be proper to say that Sir Edward Grey specifically recommended that economic warfare should be modified, for he said this was a question which only the cabinet could decide. Nevertheless, the paper was, in effect, a recommendation that some mitigations should be tried; for, in the opening paragraph, Sir Edward Grey stated, that if we adhered to the order in council, acted upon it, and justified it in controversy, protests would increase, and the United States would be progressively more difficult to deal with. The paper was upon policy in the gross, and not upon cotton; but inasmuch as it was circulated to the cabinet when the treatment of cotton was in agitation, it is clear that the cabinet were considering, at one and the same time, a proposal for relaxing the blockade, and another for stopping the great export staple of the United States. Furthermore, it seems tolerably certain, that, when the treatment of cotton became a pressing matter, the party inclined to moderation were temporarily in the ascendant; for Mr. Page, who was on intimate terms with Sir Edward Grey, reported in mid-July: I think that the government will make a vigorous effort to resist the agitation to make cotton contraband, with what result I cannot predict. The opposite influence was, however, very strong. The French government consistently urged that cotton should be declared contraband, and shortly after they had presented a paper, giving their views on the matter, they heard, through their ambassador, that Sir Edward Grey was recommending the British cabinet to relax the blockade. This gave them the greatest anxiety; for although they freely acknowledged, that the execution and administration of the blockade was a matter in which Great Britain was a principal, and they an auxiliary, they held that the western allies were conjointly responsible for the policy that had been adopted and proclaimed; and that no modification of it should be attempted, unless the allied governments thought it necessary. Now the French government contended (and in very impressive language), that the moment for yielding anything seemed singularly ill chosen, as the Russian armies were still retreating, and nothing had been gained in the west. Any relaxation of economic warfare would, therefore, be described by half the press of Europe as an incident in the general defeat of the allied cause; [314] for it would certainly be said, that, just as the Russian armies had been beaten by the German, so, the British government had given way before the onslaught of the German submarines, and the anger of neutrals. From all this it will be seen, that the committee deliberated upon this cotton question to an accompaniment of conflicting recommendations; it is not therefore surprising, that the final decision was one which must rather be attributed to the general course of events, and to the pressure of circumstances, than to any particular person or persons.
The actual preliminaries to the final decision were these. Early in July we received information, that the German authorities had brought the cotton industry under government control. In point of fact, the decree that the German government issued on this point was of no more significance than the regulations issued, almost weekly, about the distribution of foods, metals, fuels and propellants; but Sir Eyre Crowe, while freely admitting that too much importance should not be attached to this decree, argued that it assisted our case; and submitted a memorandum to the acting secretary of state (Lord Crewe). In it he maintained, that no concession from us had satisfied the United States; and that, as we had reason to believe that another general protest against our policy was in preparation, it would be as well to declare cotton contraband as soon as possible, and so compel the American authorities to state all their objections in one single document. Lord Crewe and Lord Robert Cecil both put it on record, that they agreed with Sir Eyre Crowe; they may therefore be presumed to have pressed this general contention inside the cabinet. Unfortunately, Sir Cecil Spring-Rice could report nothing definite or conclusive, after his preliminary enquiries. In his first reports (July 6th, 7th) he stated, that the declaration would be accepted by many as justified, and would, indeed, be justifiable by American precedents; on the other hand, it would greatly increase irritation in the south, which was already dangerously strong, and would bring most of the southern senators and representatives into line against export of arms and munitions. On the whole matter, however, Sir Cecil was inclined to think, that the declaration might safely be made, if arrangements were also made for steadying the price of cotton; and if neutral imports were guaranteed up to a certain figure. To Sir Cecil, as to so many others, therefore, an agreed ration appeared as an alleviation of restraints upon commerce, and as a lubricant to controversy. Some days afterwards he reported that the price might be kept at a good level, if a syndicate were formed to purchase two and a half million bales. If these reports had been unmodified by any others, the decision would probably have been taken fairly soon. On the following day, however, Sir Cecil Spring-Rice sent away a grave warning, that the agitation which he had foreseen in his first telegram was gaining strength rapidly. It does not appear as though Sir Cecil intended this report to cancel, or supersede, his recommendations about purchasing part of the crop, but it was certainly a warning against acting hastily. Its material portions ran thus:
Situation here is growing very serious. We are dependent for at least a year and a half upon this country for war supplies. A campaign, supported by various organisations, some of them not in sympathy with Germany, although acting on parallel lines, is being conducted against the export of munitions of war, and movement is growing in strength. In the circumstances, it is essential that we take what action is possible to conciliate public opinion, where this is possible, through material interests. Cotton interests, which dominate the south and the administration, meat interests, which dominate the central states, and standard oil combine, which have great power in New York, are as is an eminent personage, in sympathy with us. But rightly or wrongly they think that their interests are being disregarded. I beg to remind you that Crawford, of whose zeal and great ability there can be no question, was sent out as advisor to me on these questions. His opinion entirely coincides with my own, and with that of all our sympathisers [315] here, namely that something ought to be done, and done soon, to conciliate the powerful interests who consider themselves aggrieved....... With the greatest earnestness, I beg that you will take these matters into your most serious consideration, and lay them before the cabinet (15th July). As Sir Edward Grey was then so discouraged, and was pressing for a relaxation of the entire campaign, one would have imagined, that he would have seized the opportunity thus offered of urging that no restrictions should be placed upon the cotton trade. Actually, he did the opposite, and said that whatever might be done as a general concession, cotton would have to be treated as contraband, or stopped by some other means. Simultaneously, or nearly so, however, the secretary of state, and Mr. Page gave very discouraging replies to the first tentative suggestion that cotton would have to be treated as contraband. Mr. Lansing stated, that the suggestion troubled him very much, and at once instructed Mr. Page to remind Sir Edward Grey of the promise made in October, that cotton would always be on the free list; and to say, that to declare it contraband would be to break a solemn undertaking. Sir Edward therefore wired that no decision would be taken for the time being. The explanation of all this is that a gust of artificial excitement was then blowing across the American capital. The stopping of German exports had unexpectedly inflamed controversy, because it had irritated a very large number of people. German toys, for instance, are distributed to millions of Americans at Christmas; and shopkeepers all over America were announcing, that there would be none that year. This rather trivial circumstance stimulated the complaints of the textile dyers, who genuinely wanted anilene dyes, and it gave an exceptional opportunity to Senator Hoke Smith, who had now decided to make himself the head and leader of all who were dissatisfied with our policy, and to inflame the southern states, by all the means in his power. In June, he assembled a great meeting at the Hotel Biltmore, New York, and succeeded in passing an inflammatory resolution, which was transmitted to the state department; then, pressing his agitation in the southern states, he so influenced the two houses of the state legislature of Georgia, that they also passed resolutions: That the president be urged to raise the British blockade by diplomatic protest, and, if necessary, by retaliation and reprisal. It should be added, that although Senator Hoke Smith may have entertained a sincere dislike for the British blockade, he was not quite disinterested on the particular matter of cotton; for he was then in treaty with the Baumwoll Einfuhr Gesellschaft [sic] of Bremen, and was anxious to deliver them a million bales of cotton at an extremely high price. It was this agitation that so alarmed Sir Cecil Spring-Rice; and the state department were presumably endeavouring to estimate its strength, when they received the first intimation from our ambassador, that cotton might soon be declared contraband.
The secretary of state was, however, only manoeuvring to gain time, when he sent his first instructions to Mr. Page; for, two days later, he again received our ambassador, and, in company with Mr. Chandler Anderson, told him, that to declare cotton contraband would probably be the best way. This may therefore be said to have been the decisive intimation; for, having received this assurance, our authorities, were free to make the declaration, as soon as they had perfected their plans for keeping up the price. Since Sir Cecil Spring-Rice had sent in his first recommendations on this head, this matter of keeping up the price had been under review at the Board of Trade; who, on the advice of their cotton expert, Mr. Rose, were inclined to a scheme for making a considerably larger purchase than that of two million bales, suggested by our ambassador. Sir Richard Crawford's enquiries, however, persuaded him that this would not be necessary; for he had recently got into touch with Mr. Harding, [316] the chairman of the cotton committee of the federal reserve board, who was convinced that there was no danger of a slump, and that the British government could keep the price steady, by making occasional purchases at eight cents a pound, when quotations drooped. This was actually done by Mr. Rose, who went out to America in the autumn. After these conversations, Sir Cecil Spring-Rice was able to report, that President Wilson had expressed himself quite satisfied with our arrangements: raw cotton, cotton linters, cotton waste and cotton yarn were therefore declared contraband on 20th August, and the declaration was calmly received throughout America. It is interesting to ascertain why this declaration, which excited so little controversy when actually made, should always have been thought so hazardous. Why, in fact, did the cotton magnates of the south accept it so calmly, when everything had been done that could humanly be done, to rouse them? The explanation appears to be that when Senator Hoke Smith started his campaign, his editors and agents committed themselves to statements so alarming and inflammatory, that the purely technical cotton press entered the controversy, not as a partisan, but as a guide and an investigator. This press, which watches over the sales of the great American staple, is one of the best informed in the world, and its powers of investigation are enormous. Certain it is, that from July onwards, a number of articles appeared, in which the whole position was reviewed with an immense number of illustrative statistics. The first point established was that during 1914 more cotton had been sold to Germany and Austria, than had been sold to France and Russia. This very much discredited Senator Hoke's war cry, that the great slump of the previous autumn was attributable to the allies. By good fortune, these facts were first publicly agitated by a southern senator from a cotton-growing state, and the argument that he erected from them was repeated, with some insistence, by the press in the capital: If the German and Austrian fleets had controlled the ocean highways, was it conceivable that Great Britain and France would have been allowed to import their normal quantities of cotton? According to Senator Sims, the inference most proper to be drawn from the available statistics was:
That the southern statesmen, who were trying to stir up trouble with the allies, were making a great mistake; and that it was safer with sea control where it is now than with sea control anywhere else. Of course it would be unwise to state definitely, that any one particular utterance was the turning point in a controversy; but it is significant, that, from the time when Senator Sims of Tennessee so much discredited the major contention of the agitatory party, our ambassador was able to transmit a rising number of articles in the big papers, advocating moderation. Furthermore, it was frequently represented, and with great force, that if the agitation about prohibiting the export of arms munitions and contraband were passed, it would, inevitably, become an agitation for prohibiting the export of cotton, as it was no longer doubtful that cotton was contraband.
These arguments would not, in themselves, have reassured the cotton growers;
indeed, they would have alarmed them; for, if the free exports of cotton to all
belligerents had not alleviated the slump of the previous autumn, what was to be
expected after the German and Austrian markets were closed? It was on this point
that the editors of the technical cotton press intervened, with decisive effect; for
they estimated, that the munition contracts that had been placed in America had so
increased the domestic consumption of cotton, that the loss of the German market
would not be felt. This, in fact, is what actually happened: by October, the average
price of cotton was well above the eight cent level at which we had undertaken to
keep it; and in November, we intercepted a telegram, which reads like a memorial
tablet to the controversy. In it, the directors of the Baumwoll Einfuhr
Gesellschaft informed Senator Hoke Smith, that they now cancelled their
offer for a million bales, but assured him that they were open for business again as
soon as the shipping difficulty was overcome.
  
  1Public feeling was so strong that Lord Robert Cecil received letters in which he was called a murderer of his own countrymen. See 17418/f.302/16. ...back... 2Sir Edward Grey was then taking a short rest at his house in Northumberland, and Lord Crewe was foreign secretary ad interim. ...back...
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