Chapter 15: The Agreements for Operating the Rationing System

The agricultural policy of neutral governments, and the difficulty of reaching agreement on figures. – Why the rationing figures could not be fixed by pure calculation. – The Dutch rations of forages, animal fats, etc. – The Danish rations of animal and vegetable oils. – The peculiarities of the rationing system.

The first parent agreements, which have already been described, were supplemented by a number of others: (i) with the Netherlands overseas trust and the Danish manufacturers guild, (ii) with associations of companies such as the Norwegian and Swedish cotton spinners, (iii) with purely private companies, such as the Arendal Smelteverk or Mustad & son, the largest oil extractors and refiners in Norway, and (iv) by a number of agreements with the American companies that controlled the Scandinavian supply of certain contraband materials; typical of these was the Vacuum Oil company of New York. It would be worse than fruitless to examine this mass of agreements seriatim; when arranged in tabular form, however, with the object of each agreement roughly described, the table, or digest, does convey some notion (vague and unsatisfactory it is true, but a notion nevertheless) of the system as a whole. It shows, in the first place, that although the mass of agreements that constituted the system was a barrier to the overseas trade of Germany, the barrier was never complete or even. Denmark and Holland may be said to have been rationed in contraband, for the rationing agreements with the Netherlands trusts, the guild, and the Raad put the entire countries on a ration. A glance at the table shows, moreover, that the Norwegian system differed from all the others, and about this a word of explanation is necessary. Why it was not possible to establish a single importing trust, or a single guaranteeing body, in Norway has already been examined. It might, certainly, have been possible to conclude a rationing agreement with the Norwegian government; but this was thought inadvisable by Mr. Findlay and his staff, who were convinced, that a rationing agreement thus concluded would be indifferently operated by the Norwegian authorities, if policy demanded that they should be easy with the Germans. For this reason, Mr. Findlay concluded a large number of particular agreements with those firms and associations who distributed the substances that we most desired to ration. If the table of Norwegian agreements were alone consulted, it might be doubted whether Norway was ever as much within the rationing system as Denmark or the Netherlands: actually the country was as effectually placed on a national ration as any other country.

Table XXX: Tabular Digest of the Rationing System
I. – Netherlands rationing system
No.	Date of agreement	With whom concluded	Substances rationed by agreement
1	1.IX.15	Netherlands Overseas Trust	Cotton.
2	23.IX.15	Ditto	Maize and rye, linseed, oil cake and meal, animal and vegetable oils and fats, oleaginous nuts and seeds, lard, mineral oils, petroleum and its products, gas and fuel oil, raw wool.
3	28.VI.16	Ditto	Supplementary to No. 2, commodities added: cocoa beans, tin, hides and leather, tanning materials, asbestos, paraffin wax.
4	2.IX.16	Ditto	Rice.
[318]
II. – Danish rationing system
No.	Date of agreement	With whom concluded	Substances rationed by agreement
1	23.VIII.15	Industrieraad	Cotton.
2	24.IX.15	Industrieraad & Merchants Guild	Cotton.
		Danske, Petroleums Aktieselskab and its affiliated companied in Norway and Sweden.	Petroleum and petroleum products, benzine, naphtha, etc.
3	29.II.16	Industrieraad & Merchants Guild	Animal and vegetable oils and fats, oleaginous seeds, cocoa, corkwood, graphites, hemp, jute, nitrate of soda, rubber, hides, leather tanning materials, tin, nickel, antimony, copper, ferro alloys, malt, coffee, fresh and dried fruits.
4	8.VI.16	Danish Trade Associations	Phosphates and superphosphates.
5	28.IV.16	International Harvester Corporation, Chicago	Agricultural machinery and binder twine.
6	19.V.16	Danish Trade Associations	Turpentine.
7	19.VII.16	Industrieraad	Cotton (supplementary to No. 2).
III. – Norwegian rationing system
No.	Date of agreement	With whom concluded	Substances rationed by agreement
1	31.VIII.15	Norwegian Cotton Mills Association	Cotton.
2	29.IV.16	Ditto	Supplementary to No. 1.
3		Mustad & Sons, also with their establishment in Sweden.	Copra and oil-producing substances for margarine factories.
4	26.VII.16	Ditto	Supplementary to No. 3.
5	24.IX.16	Aktieselskabet Lilleborg Fabriker and Aktieselskabet Damp Olie Mölle.	Copra, linseed, rapeseed and oils produced therefrom, glycerine.
6	5.X.16	Ditto	Supplementary to No. 5.
7	17.XII.15	Norwegian Automobile Club	Rubber tyres.
8	2.X.16	Ditto	Supplementary to No. 7.
9	29.XII.15	Aktieselskab Valloe, Oljerfinerie.	Petroleum and products.
[319]
10	11.III.16	Bergen, Kristiansund and Aalesund Margarine Manufacturers	Oils, fats and seeds used in margarine manufacture.
11	11.III.16	Stavanger, Kristiansund and Haugesund Margarine Manufacturers	Ditto
12	11.III.16	Trondjhem, Melbo and Tronsö Margarine Manufacturers	Ditto
13	12.XI.15	Norwegian Tanners Association	Hides and tanning materials.
14	28.III.16	Christiania, Drammen Tonsberg Fredrikshald Margarine Manufacturers	Oils, fats and seeds used in margarine production.
15	18.III.16	Oljegrappen av Maskingrossisternes forening	Lubricating oils.
16	28.IV.16	International Harvester Corporation of Chicago	Agricultural machinery and binder twine.
17	18.IX.16	Norwegian Pulp Makers Association	Resin.
18	5.X.16	Norwegian Soap Makers Association	Vegetable and fish oils, resin.
19	25.IX.16	Norwegian Colour Merchants Association	Paraffin wax, turpentine, varnishes, shellac, linseed oil, rapeseed oil, resin, animal and vegetable oils.
IV. – Swedish rationing system
No.	Date of agreement	With whom concluded	Substances rationed by agreement
1	24.VI.15	Swedish Cotton Spinners Association	Cotton.
2	28.IV.16	International Harvester Corporation of Chicago	Agricultural machinery and binder twine.
3	8.VIII.16	Swedish Government	Lubricants.
4	3.VII.16	Ditto	Cotton - supplementary to No. 1.
[320]
V. – Scandinavian rationing system1
No.	Date of agreement	With whom concluded	Substances rationed by agreement
1	24.XII.15	Alfred Olsen & Company	Lubricating oils.
2	4.VIII.16	Ditto	Supplementary to No. 1.
3	23.XII.15	Asiatic Petroleum Co.	Petroleum and products.
4	13.III.16	Ove. C. Ege of Copenhagen	Lubricating oils.
5	7.IV.16	Bloch & Behrens	South American wool.
6	29.XII.15	Skandinavisk Petroleums Aktieselskap	Lubricants and paraffin wax.
7	22.X.15	Vacuum Oil Co.	Lubricants, oils and paraffin wax.
8	13.IV.16	American meat packers	Meat products.
9	3.V.16	Cudahy Meat Packing Company	Ditto
VI. – Swiss rationing system
No.	Date of agreement	With whom concluded	Substances rationed by agreement
1	26.I.15	Swiss and French Governments	Petroleum and its products.
2	17.V.15	Ditto	Supplementary to No. 1.

Switzerland was never formally rationed, even in cotton, although the bare principle was admitted by the société de surveillance, and in large measure acted upon, in that all importations sanctioned were compared with normal figures. Even the countries that were rationed as countries were not rationed in the same commodities; for the Netherlands supply of metals was regulated by a set of agreements that fixed no ration, but which ensured home consumption. Finally, Sweden was always a gap in the barrier; for the Swedish government resisted the system no matter whether it was administered through particular, or general, agreements. Yet even on this point, it would be far too sweeping to say that the Swedish import trade was outside the operation of the system; for although the Swedish government resisted the system, they did, nevertheless, make some important concessions to it.² More than this, many of the agreements controlled all Scandinavian trade in certain products.³ Finally, it will be seen that the system, which, as conceived, was to be a permanent regulation of neutral trade, was more like an organic growth than a fixed system of control, in that the first agreements only served as stocks or scions for many others that were grafted on to them. This tabular digest, therefore, shows, which perhaps is the most important point to be remembered, that, when the bare [321] principle of rationing neutral countries was converted into a workable system, then, that system was as complicated, and as irregular, as its animating principle was simple and logical. Nevertheless, if this uneven barrier is juxtaposed in the imagination, to the unsteady, precarious advances of the enemy's system of economic coercion, the great advantages that we had secured, after eighteen months of economic war, can hardly be questioned. The barrier that we erected was of materials that varied in strength; its arrangement was irregular and untidy; but, at least, it was capable of being perfected and reinforced; and at least it was a barrier removable only when we chose to remove it: the enemy's greatest gains were all in jeopardy, whenever the United States challenged their system; they were equally in jeopardy, if the British system of trade defence improved. Some few words of explanation should, however, be added about the matters on which agreement was easily obtained, and about those other points, which provoked long and arduous negotiation.

i) The agricultural policy of neutral governments, and the difficulty of reaching agreement on figures

It will be seen, by referring to the table, that the cotton trade of northern Europe was regulated by agreements with the Netherlands trust, with the Industrieraad, and by agreements with the Norwegian and Swedish cotton spinners associations. The quantities to be allowed under these two classes of agreement were estimated by entirely different methods: agreements with private associations could only be drafted after returns of stocks in hand, and estimates of domestic sales, had been inspected; whereas the quantities of cotton to be consigned to the Netherlands trust, or guaranteed by the Industrieraad, could only be calculated from the import and export returns of the Netherlands and Denmark. Notwithstanding that the systems of calculation were so different, and notwithstanding that the loss of the German piece goods had made the operations of the northern textile industries very unsteady, the agreed figures were easily arrived at; for there is no suggestion of arduous bargaining in any of the original records of the cotton agreements. The same may be said with regard to the rations of metal: our figures were substantially accepted, after a few adjustments had been made, to allow for special contracts by railway, shipbuilding, telegraph and telephone companies. In contrast to this, the rationing of grains, meat stuffs, fats, and other agricultural products was an exceedingly difficult matter; and in order to explain the difficulties encountered, it will be necessary to state briefly what was then known about the state of agriculture in the border countries.

In the first place, there was no doubt whatever, that the governments of all these countries were very anxious about the approaching winter, and were endeavouring to keep stocks in the country. The decrees issued by each government would fill a volume; but as all were issued under the same apprehensions, and for the same purpose, a few examples, chosen at random, will show the character of the legislation.

Cattle and meat are staple exports of Holland, so that the government could not prohibit their export altogether. Nevertheless, by a royal decree of November, 1914, the export of fresh, dried, salted, and smoked bacon, of tried, and untried, pork, and of beef-grease, was prohibited. By a later decree, burgomeesters were instructed to make returns of stocks, in order that licences might be granted by a central bureau. This was simple in comparison with the regulations controlling the export of cheese, another Dutch staple. By two decrees, issued in October, 1914, the export of cheese and butter was prohibited. The magnates of the dairy industry were, however, invited to form a committee for advising on licences; and, on their recommendation, a central bureau for cheese and butter exports was assembled at the Hague. This bureau granted licences to all firms who bound themselves to place twenty per cent. of their total stocks on the home market. During April and May the percentages [322] were altered: dairies in the northern provinces were bound to keep only fifteen per cent. of their stocks for home consumption; if they held a variety known as Edam cheese, then, ten per cent. only need be held. In October, however, the proportion was raised to forty per cent., for all provinces, with an exception in favour of Leyden and Delft cheeses. The same intricate regulations were issued, almost monthly, with regard to eggs, milk, rye, barley, hay and so on. In Denmark, Norway and Sweden there were similar regulations, though not, perhaps, so methodically conceived and drafted. From all this, it will at once be apprehended how ill the rations, as at first calculated, were adjusted to the existing state of agriculture in northern Europe. The estimated ration of any commodity was the average import, less exports to the enemy, for the normal years 1911, 1912 and 1913: the year 1915 was abnormal; and it was fruitless to ignore the abnormalities.

ii) Why the rationing figures could not be fixed by pure calculation

On a first inspection of the matter, therefore, it could be admitted, and those who negotiated the agreements did admit, that neutral countries so anxious about their domestic stocks, should be granted an extra allowance of forage, grains, winter feed, oil cake, and of the oil-bearing seeds from which cake is manufactured. This, however, was only one side of the question; for although our knowledge about the exports of northern neutrals to Germany was scrappy and incomplete, what we did know sufficed to make us certain, that, notwithstanding all these regulations about stocks for home supply, the northern neutrals were increasing their exports of all those meats and foodstuffs, which were so closely controlled. The total exports were not known: we had, however, secured weekly returns of the Danish produce that was sent to Germany by Vamdrup, which were at least a measure of the total, and we also possessed weekly returns of some of the Dutch meat exports. Now in the first months of the summer, we noticed that more than a million kilogrammes of Dutch pork had gone over to Germany, in the week 25th April to 1st May; the figure was maintained during the weeks following. There were, moreover, good grounds for supposing, that the Dutch authorities hoped to maintain these exports indefinitely; for, in a new decree, the Dutch minister for agriculture announced, that the quantities for which licences would henceforward be granted would be calculated on the quantities exported during the very period, when exports rose from less than half, to more than a million, kilogrammes. In addition to this, we were in possession of figures which implied, without actually proving, that the Dutch colonial exports to Germany were rising. During April, for instance, the Dutch imports and exports of coffee, copra, coconut oil and linseed were discovered to have been:

The returns of the Vamdrup traffic showed the same tendency in Denmark; there was a decline during April and May, but this was soon reversed, and the heavy increases were maintained. There was fragmentary, but quite good, evidence that the Norwegians were increasing their exports of fish and fish products to Germany, and these indications were confirmed by similar indications from Sweden. On 1st May, the Swedish newspaper Dagens Nyheter published tables of the Swedish imports and exports during the first quarter of the year. The return was obviously incomplete as it contained no figures for metals or lard, the commodities about which we were in controversy with the Swedish government; it was, however, quite explicit on some points, notably that the export of herrings had been quadrupled, and of ham and cattle very much increased.

[323] If the rationing system, as actually operated, had been regulated by any legal principle, these indications of a rising volume of domestic exports from border neutrals to Germany would have been of no relevance; for there was no question that this rising commerce was in domestic produce. But as the rationing system was animated by pure policy - the policy being to press the economic campaign with as much energy as possible - so, these domestic exports were very relevant; for it was beyond all doubt, that all the forages, winter feeds, and oil-bearing substances that were to be rationed stimulated exports that we desired to diminish. Even the exports of fish from Scandinavia were affected; for fish refuse is an agricultural manure. The more liberally the Scandinavian countries were supplied with forages and winter feed, therefore, the better could they dispense with their herring catch, and leave their forage crops unmanured, in the expectation that imported foods would make good the falling yield of the unmanured fields. If, therefore, the rations were adjusted to the known shortages in neutral countries, actual and prospective, then, there were good reasons for making rations generous: if, however, they were adjusted solely to the major purposes of the economic campaign, then, there were equally good reasons for insisting that rations should be calculated from normal years. In other words, the policy adopted had to combine two opposites; and even now the difficulty of estimating a proper ration of all these forages is not fully presented. Whatever could, or could not, be inferred from our occasional, and interrupted, inspections of the exports from border neutrals to Germany, there was no doubt whatever that their domestic exports to Great Britain were sharply declining. The value of Swedish agricultural products that were exported to Britain, butter, eggs, meats and so on had fallen from £2,537,244 to less than half (£1,150,693); Norwegian fish exports had fallen from 1,420,472 to 1,161,866 cwts.; Danish meats, lard, bacon and eggs had fallen even more sharply:

The Dutch butter, cheese, mutton and pork exports to Great Britain were between a half and third of normal; the bacon exports had fallen to a thirtieth of normal (6,760 cwts. as against 185,718 cwts.).

These declines were a serious matter. There was, it is true, no shortage of food in Great Britain, but there was already a distinct shortage of freight, and freight rates were rising. It was, therefore, a cardinal point of our economic policy to encourage all imports that could be carried to Great Britain by the short sea routes, and it was precisely these imports that were declining so fast. It was evident, moreover, that a rationing system, mathematically calculated and sharply operated, would accentuate the decline still further. The movement of Danish, Dutch and Swedish agricultural produce from the British to the German markets was, after all, a movement caused naturally by the exceptional prices obtainable in Germany, and it was virtually impossible to check or reverse it: the most that could be done would be to balance it; and this was only possible by allowing neutrals to accumulate very considerable stocks of exportable produce, and by inducing them to place some proportion of the surplus on the less profitable, British, market. If this were to be brought about, then, generous rations of forages would have to be allowed. In conclusion, it will be instructive to give a few typical illustrations of the contending demands which had to be adjusted.

[324]
iii) The Dutch rations of forages, animal fats, etc.

When reduced to tabular form, in which they can be seen at a glance, the Dutch and the British contentions stood thus:

As the British ration was calculated from figures about which there could be no doubt, it would seem, on a first inspection, as though the Dutch claim that they required such large additions to the normal could not have been justified. Nevertheless, the Dutch representatives did give so good a defence and explanation of their figures, that great concessions had to be granted. Even the immense differences about oil nuts and seeds were so explained, that the Dutchman's principal contention was admitted. The whole matter turned round the production of margarine. This butter substitute, which we, in Great Britain, needed in increasing quantities, is a compound of vegetable oils, animal fats, and sterilised milk. The animal fats may be obtained by hydrogenating whale oil and fish oils. Our imports of margarine had risen by half a million cwts. during the year 1915, and the Netherlands was the only country with the plant and apparatus necessary for maintaining the supply. M. van Vollenhoven showed by reference to statistics, that if the additional supply was to be given, then, a very large additional import of oil seeds would have to be allowed. Our negotiators were not, it is true, persuaded that M. van Vollenhoven's high figure was to be conceded; but at least they made considerable alterations to their first estimate.

Agreement on this point, however, only accentuated disagreement upon another. The figure finally conceded was about eighteen per cent. below the figure first presented by M. van Vollenhoven. It followed from this, therefore, that, inasmuch as the total quantity of oil seeds to be imported was less than the Dutchman had calculated, so, there would be less oil seed residue available for making up into oil cake and winter feed. As the export of live cattle had been prohibited the Dutchmen argued, first, that they would need far more oil cake and winter feed than were imported in a normal year, and secondly, that even their high estimate ought to be increased by eighteen per cent. Again, a considerable concession was made to the Dutchman's claim, before agreement could be reached.

iv) The Danish rations of animal and vegetable oils

These differences were, however, insignificant in comparison to the differences between the British and the Danish figures which stood thus:

Here, it would seem, were figures which could not conceivably be reconciled; but the great differences were, in part, explainable by the different methods of calculating them. The Danish representatives made their estimate from returns [325] that were given to them by the firms and industries that dealt in the commodities: our negotiators were not prepared to admit that rations could be calculated from anything but the national statistics of imports and exports. Yet, even though we could not agree to the Danish method of calculation, it cannot on that account be dismissed as unfair or improper: the firms that gave these returns were firms whose transactions the Raad and the Guild were prepared to guarantee; and we had accepted the guarantee that was offered after careful enquiry into its strength, and value. It should be added, also, that the differences were not so great for commodities that were not affected by the commotions in the agriculture of northern Europe.

Again, the discussions turned round the domestic production of margarine and butter substitutes, and although it cannot be said that the Danes had prepared their case as carefully as the Dutchmen, it is yet true that they set up a tolerably strong one. They argued, in the first place, that the entire national dietary was altered: the breads and farinaceous foods consumed by the poor people were of different, and less nourishing, materials, and there was, in consequence, a natural demand for more fats and greases. To meet it, the Danes had increased their margarine making plant, and the firms in the trade hoped to produce some sixty thousand tons of margarine during the year. Nor was this all: the soap-making factories in the country had been growing steadily during the past five years, and a great stimulus had been given to them, by the decline in the German exports of soap. The Danes did not, it is true, justify all their figures to our satisfaction, but at least their contentions shook our original calculations.

In conclusion, a word should be added about the actual working of the system. When in operation, as far as it ever was in operation, the steady and regular returns of cargoes inspected at the Downs and Kirkwall, together with the returns of cargoes cleared from Great Britain, gave us all the materials necessary for compiling accurate statistics of neutral imports. The statistical departments of the war trade department digested these returns with great rapidity and reported, month by month, to the Foreign Office and the contraband committee, how much of an agreed ration had been imported; when the limit was approached, the firms or guilds responsible for operating the agreement were notified. These notifications do not appear to have been seriously disputed: in fact, the practical operation of the system was the only thing about it which was simple, yet even this was not effected by a single administration; for Switzerland, being very dependent upon French and Italian imports, was rationed by an interallied commission which collected the relevant statistics through an independent organisation.

v) The peculiarities of the rationing system

What is perhaps most remarkable in these long negotiations is that the rationing principle should have been accepted so readily by the representatives of neutral nations; for ostensibly nothing could have been more incompatible with all that is understood by neutral rights, sovereignty and the like, than that a neutral country's trade should have been reduced to a figure calculated by statisticians, who were working in the service of a belligerent government. And when it is remembered how often a debatable point of maritime law has been made the substance of diplomatic controversy; when it is reflected, that restraints upon neutral commerce incomparably smaller than the restraint of rationing twice set the neutral powers of Europe against us, and once provoked the United States to make war upon us, it will seem strange indeed that this tremendous innovation was agreed to without dispute. This, however, is an accurate account of what occurred; for M. van Vollenhoven's written undertaking, that the trust would reduce the imports of Holland to the amount required for home consumption was given quite readily and [326] willingly; and the Danish delegates passed all the rationing clauses of their agreement, without comment of any kind. Nor does it appear that the bare principle of rationing was seriously contested during the more difficult negotiations conducted at Berne. The explanation is that the rationing principle did not then appear as harsh and arbitrary as it looks in retrospect; and that neutral merchants probably thought of it as a measure, which would give more freedom to neutral trade, by establishing a simple distinction between enemy and neutral commerce; for neutral traders, as a community, were not striving to maintain trade of any particular volume, but were endeavouring only to be subjected to a plain regulation, which, if obeyed, would enable them to fulfil their contracts and to strike new ones.

Our own interest in securing agreement to a rationing system hardly needs explanation; for to ourselves, as to neutrals, rationing seemed a path that led away from the undergrowths of controversy into more open ground. It was, in appearance, the only rational, regular, method of enforcing the March order, and the only method of putting the Board of Trade's economic policy into harmony with the policy pursued by the Foreign Office and our French allies. In addition, it was hoped that the system, when properly in operation, would prove a lubricant to the recurrent friction between the United States and Great Britain, in that it would turn controversy away from abstract principles and conceptions of law, and focus it upon questions of detail and matters of business. It will therefore always be a curiosity of maritime history, that the rationing principle, which was, to all appearances, as severe an encroachment upon the immunities of neutral commerce as any attempted for three centuries, was yet a principle which belligerents and neutrals endorsed, and put into operation, without any of that antecedent adjustment of conflicting opinions and interests, which constitutes negotiation.

It is, however, significant that this ready, unconditional, assent was only given, when the neutral negotiators were the representatives of trade guilds and similar associations, that is, when they were men concerned only with securing their revenues, and with making or completing contracts of purchase or sale. The principle was less easily digested, when a neutral government was a party to the negotiation, for then the undertakings given, or required to be given, were subjected to political scrutiny, and juxtaposed to the abstract principles of neutrality, national freedom, and national honour. This was the case at Berne; where the Swiss government did not, it is true, object to the bare principle of rationing, but objected, in the strongest terms, to having any responsibility for operating it, on the grounds that they were determined to be, independent and neutral; and that they would never allow their administration to be supervised by the representatives of foreign powers. The negotiations at Berne showed, therefore, that the rationing system was acceptable and workable only if it were made a matter of pure business, and that it was not one which a corporation with political responsibilities could easily operate. This rather vague warning received in Berne was, moreover, repeated with greater emphasis during the negotiations in Stockholm, which, though undertaken for the same ends and purposes as the negotiations undertaken elsewhere, were yet unsuccessful, because business was throughout subordinated to a policy that made all accommodation impossible.

²See Nos. 3 and 4 of the Swedish rationing system. ...back...

³See Scandinavian rationing system. - Section V of table. ...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).