Chapter 32: The American Embargo, and the Closing Agreements with the Border Neutrals

Why the United States government did not press their negotiations with the border neutrals. – The United States proclaim an embargo; the immediate consequences. – The fortunes of the war affect neutrals differently. – Why the allies continued to negotiate with the Swiss after submarine war began. – The state department present written conditions to the northern neutrals. – The condition of the border neutrals at the end of the year; the United States relax their embargo. – Negotiations with Norway during 1918. – The Danish and the Dutch negotiations.

Congress passed the law for controlling exports on 15th June; the first of the proclamations foreshadowed by the bill was issued on 9th July; and on 24th July, the state department presented a note to all neutral governments, in which they explained what ends the government of the United States intended to pursue. The negotiations consequent upon this declaration were, however, only terminated in September 1918, more than a year later. The final operation of closing up the blockade was, therefore, set back by many obstacles that had not been foreseen. As first conceived, the operation was simple, and no difficulties were anticipated; for it was confidently expected, that, if the Americans stopped their exports of corn, oil, and metals to the border neutrals by midsummer (which in effect they did), then, all would be satisfactorily concluded by the end of the year. It will, therefore, be as well to give a general preliminary review of the circumstances that protracted these negotiations so much, and thereafter, to show their particular effects.

i) Why the United States government did not press their negotiations with the border neutrals

First, it seems well established, that President Wilson watched congress and the state department setting up their organs of economic coercion with great jealousy; for, when the war trade board was established, he unexpectedly circumscribed their powers, by forbidding them to present sine qua non conditions to any neutral representative, or to refuse their proposals outright, without receiving authority from him. The United States negotiators were thus at the disadvantage of being in treaty with persons whose powers were greater than their own; for the envoys of border neutrals were empowered, from the beginning, to state, without qualification, which of the conditions presented to them could, and which could not, be accepted.

Secondly, as soon as it was known, that the United States government intended to control their exports, the Scandinavian governments formed a rough economic union, whereby each party to the union had a first preference on the exports of the other parties. This Scandinavian concert did not make good the shortages consequent upon the American embargoes of meat, corn, and oil; but it certainly enabled the three northern neutrals to resist the American demands for longer than had ever been deemed possible. This was quite unexpected. The Scandinavian conferences had been assembled at regular intervals since the war began; and we had come to regard them as meetings, which served to lubricate diplomatic friction between Scandinavian powers. Nothing that had occurred in the past gave us any reason to suppose, that more importance should be attached to the conferences of May and November, than had been attached to their predecessors. Actually, the promise of mutual assistance, which was announced in the official communiqué, was a more substantial undertaking than had ever been given before. The economic experiment to which the three governments committed themselves was not, in any [628] sense, an act of antagonism to the United States and to Great Britain; but it was an interesting, and in a certain degree a successful, experiment for supporting the policy of waiting upon events for the longest possible time, a policy upon which the three governments were certainly agreed. When the negotiations were fairly started, our statistical department estimated, that the border neutrals had stocks in hand which would only last for about six months; once again, therefore, statistics proved ill guides to a nation's resisting power.

Thirdly, neutral governments were inclined to draw things out, in that the military disasters of the entente powers continued in an unbroken succession, and so raised a presumption in some quarters, and a hope in others, that a general peace would be established before the spring. During the first weeks of the negotiations between the United States and the border neutrals, the Italian armies were defeated at the Caporetto; in the east, the German armies stormed Riga; the German navy advanced into the Baltic, carried the islands at the mouth of the gulf of Riga, and so, made the communications of their army secure. In December, the Russian government fell, and the new Russian authorities asked for an armistice. Simultaneously, the Rumanian government sued for peace. There may have been neutral ministers who doubted whether even those disasters would bring the entente powers to terms; but those who doubted, and those who did not, were alike convinced, that the German successes in the east put great surplus forces at the government's disposal, and so, made the invasion, or coercion, of small neutrals an easier operation than it had been since war began. The Danes and the Netherlander were particularly threatened, and their governments were proportionately disinclined to sign agreements that were certain to excite German resentment, at a time when that resentment was exceptionally formidable.

Fourthly, owing to the long resistance of the neutrals, the negotiations could not be continued as they were begun. The first plan was that the United States should withhold exports of corn, meat, and oils, and then secure a better regulation of neutral exports to the enemy. Towards the end of the year, however, the shipping authorities of the entente reported an immense shortage of tonnage, which could only be made good by putting more Danish, Swedish, and Netherlands vessels into the allied service. This, in itself, enlarged the original negotiations, and served as a notice to neutrals, that the entente powers might be driven to make concessions in order to satisfy their need for tonnage.

There was another influence which made for delays: it was that although the American ministers and officials were often very haughty and imperious in conference, they were all animated by an extraordinary anxiety for the good reputation of their country, and were, in consequence, most sensitive to a charge, no matter how contemptible the persons who made it, that the United States were dealing oppressively with countries that could not defend themselves by force of arms. This pride in American conduct affected officials of every rank and station. No report from an American minister abroad was so promptly, or so elaborately, answered as a report that the United States were being reproached for injustice. In the latter stages of the negotiations, the Americans' care to protect their reputation for fair dealing turned very much to the neutrals' disadvantage; for the department of state, losing all patience, threatened to publish their conditions, whether neutral governments agreed to the publication or not, in order that all men in Scandinavia might judge for themselves, whether the United States were dealing harshly with their countries: this was the last thing that neutrals ever desired. At the outset, however, this honourable anxiety to be fair and generous inclined the American government to relax on points, which, in our opinion, should have been firmly adhered to; it was certainly an influence that combined with others to make the negotiations long and unsatisfactory.

[629] Finally, some account must be given of a circumstance that may have inclined the Americans to deal cautiously with the northern neutrals, although there is little documentary proof that it did so. It has been shown, in the last chapter, that, before the American authorities decided to co-operate with us in the economic campaign, they asked us whether we thought the border neutrals would be attacked by Germany, if they were forced to restrict their trade with the enemy still further; and whether the allies would go on a footing with the United States in assisting the border neutrals, if this should occur. Now the answer we gave to this, that there was little fear of it, was an honest reply: we did not think that the Germans would invade Denmark or Holland, as they would only use up their fighting forces, with no compensating economic advantage, if they did so; nor did we think the Germans would break with Norway, as the consequence would be that they would lose their supplies of Norwegian nickel, pyrites, and canned fish, and that the allies would establish a naval base on the Norwegian coast, and so strengthen their hold upon the North sea. On the other hand, after the Americans received our answers, and decided to wage economic war with their full strength, they learned, bit by bit, that this question of rendering aid to the northern neutrals had engaged our attention far more than our answers suggested.

Lending aid to the border neutrals was twice enquired into during the summer and autumn of 1916: once when the Danes communicated their fear of a German attack and, secondly, when the Norwegians did the same.¹ In both cases, our naval and military authorities reported, that we should get no benefit from it, if these countries went to war; and that, if the Danes did so, we should not be able to help them. The military experts never altered their opinion; for whenever these questions were raised afresh they answered as they had done before. The high naval command, on the other hand, were by no means so consistent, and their fluctuating opinions so influenced the instructions that were given to our ministers abroad, that our doubts and hesitations were not concealed from the Americans, and were communicated to them in the worst possible manner. These changes of conduct were most noticeable in the case of Norway.

An alliance between Norway and the allies was never officially proposed, far less considered; but, from the beginning of the war, the high naval authorities in Norway had gossiped and talked about the war in the North sea in a manner that must have given the German staff considerable anxiety; for the Norwegian and Danish naval officers had always said, openly and without disguise, that the time must come when the British fleet would establish a base in their country. If only officers of junior rank had indulged in this wild talk, no importance would have been attached to it; but a far more important person than they, the Norwegian commander-in-chief, expressed the same opinions and with as little reserve; for as soon as the United States declared war, the Norwegian commander-in-chief sought out Admiral Consett and said that the American fleet ought to be based in Norway; he then enlarged upon the advantages: it would close up the blockade of Germany and so on. It is quite safe to assume that what the Norwegian admiral said to Admiral Consett he said to others; he was a brave, honest man, but barbarously outspoken. The American minister at Oslo must therefore have been subjecting official assurances of Norwegian neutrality to a close scrutiny when his government broke with Germany.

When the United States declared war, our government were negotiating agreements for securing neutral shipping; and this caused the question of Norwegian participation to be examined again; for it was thought that the Germans might retaliate so severely upon the Norwegians, that public opinion in the country would force the government to declare war. M. Vogt, the Norwegian minister in London, thought this possible, and twice discussed the contingency with Lord Robert Cecil. The [630] outcome was, therefore, that the naval and military staffs were again asked to examine the matter, and that M. Vogt suggested to his government, that officers from the Norwegian navy should be sent to London, to confer with the British naval staff. (12th-30th April.) When the question was thus raised for the second time, the army staff repeated what they had said in November: if the Norwegians declared war, it would be pure loss to us, as we should be obliged to supply them with arms and equipment, which we could put to a better purpose. The naval staff, on the other hand, reversed their previous opinion: Norwegian participation would straighten German supplies considerably, and it could now be encouraged, without danger, as Norway could be protected against German attacks, by stationing an American squadron in the country. When the Admiralty prepared this second appreciation, Admiral Mayo was in London, and the naval staff discussed the matter with him. The American admiral agreed, and, presumably, reported to Washington accordingly. During the month of May, therefore, the second month of American belligerency, the American authorities learned that plans for Norway's participation were being considered in London. As the naval and military staffs advised two opposite policies, the matter was not further pressed for the time being: also, the Norwegian government declined our invitation to send a naval mission to London, saying that they did not fear a rupture with Germany; that the Germans would certainly learn that the chiefs of the Norwegian and British navies were conferring; and that this would be of great prejudice to the Norwegian government.

A few weeks after this the matter was raised for the third time, in a manner so pressing that Norwegian participation could no longer be treated as a question of pure strategy. Late in May, the German naval forces captured the Norwegian steamer the Thorunn, took her to Germany, and refused to release her. This capture was a violation of the promises that were given to neutrals, when the Germans made their last declaration of submarine war; for the Germans then undertook that neutral vessels would be unmolested, if they were carrying supplies to their own countries, and if they kept to certain approach channels, which were delimited with great exactness. The Thorunn was in the approach channel, and she was carrying corn and forage to Norway, when she was captured. This excited great anger, which was much stimulated, soon after, by one of those strange incidents that inflame the popular fancy. On 20th June, a German, whom the police suspected, was arrested and his belongings ransacked: some fifty bombs, fuses and detonators were found in a case that was addressed to the German legation. What he intended to do with them was never ascertained: but the common people and the press were so roused, that Mr. Findlay wondered whether the Norwegian government would not, in the end, be forced to declare war; for to him, it seemed that the people resented the submarine war so strongly, that some fresh incident might leave any government powerless to resist the popular fury. Mr. Findlay therefore recommended, in very urgent and impressive language, that the British government ought, henceforward, to make such preparations as could be made, no matter whether Norway's participation pleased or displeased them; for our minister was certain, that, if Norway declared for us, and then suffered the calamities that had befallen the other small countries that were allied to us, we should be utterly discredited in northern Europe. On receiving these reports from Christiania, the government appointed a cabinet committee,² and instructed them to look into the whole matter.

The committee, indeed, the whole government were much disconcerted, when they learned that the Admiralty had again altered their opinion, and now thought that it would be a burden to us, if Norway entered the war upon our side. Nevertheless, as the committee had been assembled to consider what ought to be done, if the Norwegians declared war (no matter whether we wished them to do so or not), [631] they recommended that every possible preparation should be made for establishing an advanced base at Kristiansand, and that the United States authorities should be asked what they intended to do, in order that the two navies might work together in harmony. When Sir Cecil Spring-Rice was instructed to make these enquiries, he at once answered, that, if he did so, it would make a bad impression, as the United States government had asked for information on this very point, a few weeks before and were then given answers that they would find hard to reconcile with the enquiries now being addressed to them. Nevertheless, as it was deemed impossible to leave the United States authorities quite ignorant of our preparations, the findings of the committee were communicated to them, with the greatest secrecy, by Lord Reading's mission. Some time in September, therefore, that is two months after the United States government stopped their exports to northern neutrals, and became a party to the economic campaign, they learned that we were prepared for a Norwegian declaration against Germany, and that we looked to the United States to give us substantial aid, if the need arose. The same thing occurred with regard to the Netherlands: our military policy, and the forecasts of our expert advisers were only communicated to the president and his ministers after they had embarked upon a policy of economic coercion. Until we know, from authentic documents, what President Wilson and his advisers thought about the revelations thus made to them, nothing positive can be asserted on the matter; but it is assuming nothing extravagant or unlikely to suppose, that the state papers communicated by Lord Reading's mission were in White House regarded as a warning to be very critical of British assurances that the policy to which America was then committed could be persisted in without danger.

ii) The United States proclaim an embargo; the immediate consequences

As has been said, the United States government issued the first proclamation for prohibiting exports on 9th July. It was drafted on a model that served for all subsequent proclamations of the same kind. After reciting the legal powers recently conferred on the executive by act of congress, and stating, that whereas the public safety required that succour should be prevented from reaching the enemy, the proclamation forbad the export of grains, foodstuffs, metals, fuel, oil and lubricants to an enormous number of countries.³ In this proclamation, therefore, the United States enunciated a principle upon which they subsequently refused to compromise: that any export of an important commodity might become succour to the enemy (no matter what its immediate destination might be), unless precautions were taken to prevent it.⁴ When the state department issued this proclamation, they had ready a memorandum explanatory of the United States policy, and they intended it should be circulated to all neutral governments, as soon as the proclamation was made operative. It would be interesting to see the original draft of this memorandum, [632] which has never been published; for we only know, that it was prepared by Mr. Hoover, that President Wilson objected to it, and that the memorandum finally issued differed materially from the memorandum originally prepared. The reason for this was that President Wilson had already assured several neutral ministers, that the United States would deal very easily with their countries, and insisted that these assurances should be repeated in the memorandum. For this reason, the paper, as finally drafted was only presented to neutral ministers after some delay.

In the opening paragraphs, the American government explained, that exports to neutrals could only be allowed, after the United States authorities were satisfied, that the nations who were associated with them in war had been supplied with everything that the United States could supply. As these nations were already pinched for necessaries of life, it followed that the exports ordinarily sent to neutrals would be reduced; neutral governments were therefore urged to do everything in their power to stimulate their national agriculture and fisheries, and to supply themselves from alternative markets. The memorandum then continued, that, notwithstanding the difficulties, the United States would endeavour to supply neutrals with food and primary commodities; but that they could no longer allow, that the imports of normal years should be the standard of what was needed. Instead of this, the United States authorities proposed to calculate how much protein, fat, and carbohydrates were required per head of population; how much protein, fat, and carbohydrate was contained in the food produced in neutral countries; and to supply the deficit if they could. The calculations made up to date proved that the food produced in some neutral countries was in excess of what the population required. The United States government then announced, that, as all primary commodities were essential to the conduct of war, so, they could not consider that neutrals would have acquitted themselves of all obligations to the United States, merely by paying for the goods that they received from them. Some service in return, either to the American people, or to the allies, would be required of them. The memorandum then explained that no exports could be allowed, unless the United States government were satisfied that the supplies thus despatched would be of no benefit to the enemy. The passages in which this stipulation was explained may be quoted verbatim; for they contain an elaborate endorsement of a doctrine that we had for long been upholding.

      It is obvious that the prevention of supplies of all kinds reaching the enemy is of vital interest to the United States, and therefore the shipment of foodstuffs from Denmark to Germany is of the utmost concern to the American people. It appears a right assumption in consequence that the royal government will undertake to exclude any suggestion that American protein, fat or carbohydrate or other materials, either directly or indirectly, reach Germany from Denmark.
      It is held strongly in the United States that conversion to the enemy's use is not along the direct transmission of original American commodities, but also the conversion, directly or indirectly, into other commodities exported to Germany or used in manufacture of such commodities, or substitution directly or indirectly for products of Denmark which may be exported to Germany. A case in point is the import of feeding stuffs from the United States to Denmark and the re-export of protein and fat values to Germany created by their use. And in fact the retransmission of food values in these circumstances is even a greater disaster to American interest than if the original feeding stuffs were sent straightway to the enemy, as it thus means not only that American products but Danish labour are being supplied to the enemy.

When this memorandum was circulated, the export embargo was in full operation, but several administrative changes were made during the weeks immediately following. The first committee was succeeded by an exports administration board, which was succeeded by an exports licence council; this, in its turn, was succeeded by the body to whom all subsequent negotiations were entrusted; the war trade [633] board, presided by Mr. Vance MacCormick.⁵ A second exports proclamation was issued on 27th August, whereby the export of textiles was forbidden. We, on our side, at once took steps to make good our promise to go on a footing with the United States: the agreements with the Norwegian flour importers, tanners, and oil and colour makers were denounced, and an order in council was issued forbidding all exports to Scandinavian countries, Holland and Switzerland, with a few unimportant exceptions. By these successive steps the embargo upon the border neutrals was completed.

The United States authorities had intended from the beginning, and, indeed, the memorandum made the intention clear, that the neutrals should make the first move towards an accommodation. The war trade board did not, therefore, present any written conditions to the neutral representatives in Washington; but waited to hear what they had to propose. Mr. MacCormick and his colleagues did, however, have frequent conversations with Dr. Nansen, who represented Norway, with M. Brun who represented Denmark, and with the Netherlands minister, van Rappard. In these conversations, Mr. MacCormick stated, in a general way, that the United States would demand something like a complete stoppage of neutral exports to Germany; and the neutral ministers each and all stated, that this would never be agreed to. Both sides were, in fact, waiting upon events; for on 17th October, nearly three months after the memorandum had been presented, the state department despatched an instruction to their representatives abroad in which they stated: that the governments of the border neutrals had not given the information which they had been asked to give; that they had continued to furnish aid to Germany; and that, in the circumstances, the war trade board declined to raise the embargo. During these first three months, the United States ministers abroad were not reporting any economic distress in neutral countries; but all were stating that there was great confusion and uncertainty. From Norway and Switzerland, however, the ministers reported that Great Britain's reputation for commercial tyranny was being transferred to the United States; which was immediately answered by an elaborate and crushing refutation.

iii) The fortunes of the war affect neutrals differently

For the first three months of the embargo, therefore, the conduct of the border neutrals was similar, and the war trade board were still waiting for the embargo to force them to open a negotiation. Thereafter, the fortunes of war compelled the neutrals to steer upon rather divergent courses, without dissolving the rough concert which still guided their conduct.

First, a disaster at sea gave the Norwegians an exceptional opportunity of persuading the Americans to abate their conditions. Since Mr. MacCormick had first informed Dr. Nansen, that the United States would demand that no more fish and minerals should be exported to Germany, the Norwegians had consistently answered that the Germans would attack them if they agreed. Mr. Findlay was inclined to make light of these apprehensions, as he was then satisfied, that, when the Norwegian authorities had last been in controversy with the Germans, they had represented themselves as exposed to dangers, which were none at all. Nevertheless, although the [634] Norwegian estimate of the dangers to which their pyrites industries were exposed had probably been deliberately exaggerated in order to frighten us (who were so much concerned that those industries should work smoothly), Norway was exposed to great dangers, and the German staff gave the country a sharp reminder of it. Since April, the ships in the Anglo-Norwegian trade had been running from Bergen, under British escort. On 15th October, two minelaying cruisers, the Brummer and the Bremse, sailed from Wilhelmshaven under orders to raid the convoy. Their captains executed their orders with great skill and great severity; for, after passing unobserved through the eighty-four British cruisers and destroyers, which had been sent out to intercept them, they reached the convoy in the early morning of the 17th, and utterly destroyed it, sparing nothing. Neutral ships, survivors in boats, rafts carrying the wounded and the dying, were all destroyed without discrimination or mercy.⁶

The news that their ships had been destroyed, and their seamen shot down as though they had been armed enemies, roused the Norwegians; and both the British and the United States ministers in Christiania thought, that, if a trade agreement had then been prepared and presented, the Norwegian government would have agreed to the severest conditions about German trade. This is more than doubtful; for as soon as the popular indignation abated, Mr. Schmedemann, the American minister, noticed that conferences between M. Ihlen and the German minister became more frequent and intimate. The German authorities were, at this time, guardedly offering neutrals an alternative to accepting the United States proposals. It is true they had little to give; for their highest offer, divulged much later, was that they would increase their exports of potash and salt, in return for more fish and agricultural produce. The poverty of the German offer was, however, only known later. In their opening conversations, the German ministers made a vague offer of more corn: as the German conquests in Rumania and southern Russia raised a hope that this offer might be made good, the Norwegian ministers were, for the time being, inclined to explore the German intentions carefully, before agreeing to the conditions upon which the United States would raise the embargo. The immediate consequence of the German naval raid was, therefore, that the Norwegian authorities concealed their anger, and drew closer to the Germans for the time being.

In Sweden, the government of M. Swartz fell in September; and was succeeded by a liberal government under M. Eden. The causes and the consequences of this change will be described later: it must here suffice to say, that it exerted no influence upon the United States policy; for the new government was as firm as the old, that Swedish iron ore must continue to be exported to Germany. As the war trade board had not then decided to abate this condition, they determined to continue the embargo without modification against Sweden, and to refuse all negotiation with the Swedes, until agreements with the other border neutrals were nearer completion. During this third month of the embargo, however, the Americans issued their bunker regulations. They were very rigorous, and, as a large number of owners were unable to comply, 750,000 tons of Dutch and Scandinavian shipping were held in American harbours as a consequence. This very much affected later negotiations with the Netherlanders; but, for the time being, van Rappard merely repeated what he had said before: that the Netherlands could sign no agreement, which would debar them from exchanging Dutch agricultural produce for German coal.

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iv) Why the allies continued to negotiate economic agreements with the Swiss after unrestricted submarine war began

Even before the Americans co-operated in the economic campaign, therefore, the extraordinary circumstances of the times forced us to follow an economic policy which was, virtually, a policy of waiting upon events. There was, however, an exception to this; for our Swiss policy did not thus come to rest until the year was well advanced. So long as the Swiss textile industries were, strictly speaking, re-export industries; so long as the Swiss factories were making fuzes and munitions that were of utmost use to us; so long as it was doubtful whether the Germans intended to leave this traffic alone or whether they contemplated interfering with it; so long as it was doubtful how much the Germans could coerce the Swiss, and how far the Swiss could resist them; so long as Swiss cattle was despatched to Germany, France and Austria; so long as Swiss condensed milk was sent all over Europe in tins supplied by the British tin plate industries; and so long as Great Britain supplied the lubricants, and Germany the coal and iron that were used by the industries that thus supplied friends and enemies, no single negotiation could dispose of every matter that called for regulation. For these reasons, the questions that were settled with such difficulty during the year 1916 merely introduced kindred questions into the allied council chambers, a few months later: as during the previous year, the Swiss negotiators, could offer no settlement upon any point, until they had ascertained what the Germans intended.

During the year 1916, when supplies of forages were falling, the Swiss cattle raisers reduced their stocks slowly, and it was not until the end of the year that the policy of the graziers was clear: it was to keep up the herds until the very last minute; to export a big block of surplus cattle in the first half of the year 1917; and to keep a reduced stock of the milk yielding cattle at home. When this was ascertained, it was deemed highly important that the additional cattle that were to be sent across the Swiss border, during the first months of the year, should not pass straight to the central empires; for which reason, the allied ministers at Berne notified the Swiss, that they would start a negotiation upon it, and the Swiss authorities answered they were willing to consider the matter.

Our first proposals were that the Swiss should export as much cattle to Germany as they were obliged to export, under their last agreement; that the allies should buy whatever was left over, during the spring and summer; and that a large proportion of the Swiss exports of condensed milk (nine tenths) should be sent to allied countries, as it was Great Britain who supplied the tin containers. As these proposals did not conflict with the last agreement between the Swiss and the Germans, the allied ministers hoped they would be agreed to rapidly; but in this, they were disappointed. The Swiss answered that they could not agree to this scheme of purchase, unless more forage was supplied to them. They argued thus: if the allies intended to buy the whole exportable surplus outright, then, perhaps, the question of forage could be left over; but as they intended only to buy gradually, month by month, so, their proposals were that cattle should be kept in the country for longer than the graziers intended, as it was beyond all doubt that the surplus stock could be sent to Germany very rapidly. For this reason, the Swiss claimed, that they must be given more oil cake and oil seeds, to feed the stock that would thus be artificially held in the country; and that this could best be done by the Italians, who were then holding Swiss forages at Genoa. To this claim the Swiss added another: that their rations of maize must also be raised, as the releasing of a few loads of oil cake would only tide over a crisis, and would not provide forage for the additional herds that would be kept on the pastures.

These counter proposals from the Swiss provoked other proposals from the allies. The Italians argued, that the oil cake that was being detained at Genoa was there held, because the Italian decrees operated against it; they denied that the Swiss [636] had any property in it. Moreover, the Italians asked that the Swiss should deliver them a large quantity of timber, and the Swiss, on realizing that the Italians urgently needed the timber, answered that they would only allow it to be despatched, if the Italians undertook to send them a guaranteed quantity of copper sulphates and super phosphates. In addition (as though these difficulties were not enough) the French grew lukewarm about the whole plan, and this was very unexpected, as the French minister in Berne had first suggested it. The French authorities argued, that every head of cattle that was imported into France under this project would cost twice as much as the cattle delivered on the home market in the ordinary course of trade, and that they would have to allot so many extra railway waggons for the additional forages, and for the carriage of this expensive cattle, that the scheme would dislocate the French economic system more than the German. After they had considered the French objections our authorities invited M. Denys Cochin to London to confer with them; but the conference only accentuated the differences. The French desired to make the Swiss agree to export thirty thousand head of cattle to Germany, and no more, and to give the allies an option on the remainder. The contraband department were convinced that the Swiss would never agree to this limitation clause; but, as it was a settled point of policy, that the French should be given the chief place in all dealings with Switzerland, M. Denys Cochin was urged to negotiate direct with the Swiss for what he thought would be better conditions.

Monsieur Denys Cochin did, certainly, carry a point that we thought would never be conceded; for the Swiss agreed not only to limit their exports of cattle to Germany, but to reduce them to the low figure of twenty thousand head. The explanation of this is that when M. Hoffmann assured the allied ministers that they would never formally agree to limit their cattle exports to Germany, they were still uncertain what ends the Germans would pursue in the negotiations that they were obliged to open with them in April; and that, when M. Denys approached them, the German intentions were clearer. The position was this. In the last agreement with the Germans, the Swiss agreed that factories that were making munitions for the allies should not be allowed to use German coal. By hard bargaining, the Swiss succeeded in getting the Germans to agree that only finished fuzes should be treated as munitions of war, and that the trade in half worked aluminium, copper, steel and brass should go free. As a result, the contracts that were placed and supervised by Mr. Sawyer, the ministry of munitions representative in Switzerland, were not interfered with, and the allies were bound only to supply coal and coke for the fuze making industries. Contrariwise, lubricants that were supplied by the allies were allowed to be used in the ordinary Swiss metal factories. The allies were so much the gainers by this arrangement, that the Swiss were always nervous lest the Germans should ask for some compensating advantage for themselves, and what they most feared was that the Germans would insist that more meats and food stuffs should be put into the exchange traffic.⁷ In the Swiss view, the Germans would almost certainty demand [637] this, if they learned, or even suspected, that the Swiss had limited their cattle exports to the central empires in order to placate the allies. For this reason M. Hoffmann and his colleagues assured the allied ministers at Berne that they would not agree to a formal limitation. At the end of April, however, when M. Denys Cochin approached them, the Swiss ministers were relieved of some of their apprehensions, for their negotiations with the Germans were then well advanced, and they were satisfied that the Germans intended to hold the advantages they had secured under the previous agreement, and to bargain only for more aluminium and calcium carbide. More than this, the Swiss probably realized that they were in treaty with a power whose economic strength was on the wane. The first sign of this was the severe fall of the mark upon the foreign exchanges; this was followed by restrictions in the imports that were allowed to be brought into Germany from Switzerland; and this was followed by a falling off in German deliveries of coal and iron. With these indications of growing weakness before them, the Swiss felt freer to bargain hard with the Germans; and, when they realized that the Germans were extremely anxious to be given more aluminium and calcium carbide, they became very stiff that more coal and iron should be sent, and insisted that no more food stuffs should be put into the exchange traffic. Being confident that they would gain their point, the Swiss ministers suddenly, and to us very unexpectedly, agreed to Monsieur Denys Cochin's main proposal. In the agreement that was finally concluded the Swiss undertook to sell all their surplus cattle to the allies, with the exception of twenty thousand head, which they were free to sell in any market. In the matter of forages, the allies granted the Swiss the quantities they asked for; but, as the submarine campaign was then raging (which made it doubtful whether tonnage could be obtained for carrying these additional cargoes), the Swiss were left free to reduce their herds more rapidly than was provided for in the agreement, if the extra forages were not delivered. If additional quantities of cattle were thus freed for export, the allies were to have the first option upon them. Furthermore, the Swiss undertook to send four fifths of their exports of condensed milk to allied countries, and to export to them the same quantity of cheese as had been exported during the years 1911, 1912 and 1913. The Italians agreed to supply as much oil cake as would be required to keep the herds fed, until the cargoes of overseas forages arrived in Switzerland; and the Swiss granted the Italian demand for timber. [638] This may, perhaps, be called the most successful of all the negotiations for regulating a border neutral's domestic exports of food; for, whereas the submarine campaign made all similar agreements inoperable, or nearly so, this Swiss agreement was punctually executed during the rest of the year.

These negotiations for regulating Swiss exports of cattle and cheeses were conducted concurrently with another, equally difficult, negotiation upon Swiss exports of certain textiles. Stripped of its technical details (and they were highly technical), the issues to be decided were these: the Swiss argued, that some classes of textile exports could be proved to be of no military value, and to be useless for making good a shortage of clothing; for which reason they claimed, that the allies should agree to the tests that were to be decisive on the point of military, or no military, value, and should grant the société suisse greater liberty to export these classes of goods.⁸ After much discussion by experts in the textile trades, this was agreed to; and the Swiss were given liberty to export two thousand tons of cotton tissues, broderies and plumetis to the central empires, which would have been held in Switzerland, if the statutes of the society had remained unaltered. The Swiss claims on this head, though difficult to investigate, were of less intrinsic importance than what they claimed on another matter. At the beginning of the year, it was patent to all observers that although the Germans were resisting the economic campaign fairly well, the German economic system was suffering from the strain that was imposed upon it. No section of the German industries suffered more than the textile trades, for after the wool and cotton imports had been cut off, German textile factories were compelled either to execute contracts for the government, or to close down. This decline in the textile exports of Germany gave the Swiss an opportunity for passing some of their own textiles into markets that the Germans had been forced to abandon. To do this, however, they required more liberty to transit their goods through Germany than the existing regulations allowed them. These proposals, together with some others for increasing the quantities of metals in the traffic de perfectionnement, excited grave misgivings; for, although nobody in the allied service could say, outright, what powers of requisition were granted to the German authorities by their countless decrees and regulations, it was yet thought certain, that the German government could requisition textiles that were manufactured from cotton and wool supplied by countries with which they were at war, when they passed through Germany. These misgivings were the stronger, in that the Swiss could give us no positive assurance, that these goods would not be requisitioned, but only a declaration that they thought it unlikely. In the end, the Swiss were granted the right to send textiles to the Netherlands and Denmark, by way of the Rhine, on the condition that they were consigned to the Netherlands trust and the Danish guilds.

Even when these difficult matters were settled, the allied authorities were still confronted with a state of affairs that called for regulation. As the year advanced, we became aware that a rising number of lathes, and other metal objects were being despatched to Germany from factories that received their lubricants from allied countries and America. There was no disguise or subterfuge in this; and the Swiss authorities let us know they would never agree that what they were thus allowing to be exported were munitions of war. As it was patent that we should not persuade the Swiss to accept our interpretation by mere argument, this traffic in lathes, machine tools, and brass could only be settled by coercion; and, just as the allied authorities had been driven to consider whether bald coercion of the Netherlands, Denmark, Norway and Sweden would effect anything useful, so they were compelled to consider the same thing in the case of Switzerland.⁹

[639] Sir Horace Rumbold and Mr. Craigie considered the matter and advised against it. The exports that we considered to be objectionable were exports of machine tools, of lathes, and of goods that are called electro chemical and electro-metallurgical objects; and it could easily be proved that the German factories that received them contributed in some way or another to the military strength of Germany: on the other hand, these factories were not munition factories in the strict sense of the word, and it was more than doubtful whether the German armies would suffer, if all these factories lost their Swiss supplies and closed down. The same could be said about the Swiss exports of aluminium and calcium carbide: they could, perhaps, be stopped, but the Germans would, at the most, be inconvenienced, as other sources were open to them. If, however, the thing were attempted then only some comprehensive scheme of coercion would be suitable for the purpose, as it was not to be imagined, that the Swiss would ever agree willingly to stop exports that yielded a revenue of four million pounds sterling. Coercion, on this scale, could only be exercised by stopping all Swiss supplies of lubricants, of forages, or of food. The first two methods were impracticable: a stoppage of lubricants would stop deliveries of munitions; and a stoppage of forages would make the agreement about cattle exports inoperable; a stoppage of imported foodstuffs was thus the only possible method. With regard to this, the first thing to be remembered was that there was a nine months stock of food in Switzerland: coercing the country would, therefore, be a protracted struggle, and the point principally to be considered was what would be the political consequences of nine months of harsh economic war? Mr. Craigie was convinced that they would be very damaging, for the following reasons. The balance of power in the Swiss economic theatre had altered since the negotiations of the previous year. The military reputation of the Germans, and the terror that their armies inspired, were still unimpaired, but the German economic system was weakening and the Swiss knew it. This, in itself, was bringing the Swiss under our influence, and they were the more inclined to lean on us, and to be accommodating on particular points, in that the German intentions made them uneasy; for the Germans were abandoning the policy of the previous year, and were seeking for distant, rather than for immediate, objects. Realizing that their economic strength was, momentarily, on the wane, the Germans were laying plans for acquiring a predominant interest in new Swiss factories. In addition, all through the summer, German agents were making such persistent enquiries about schemes for electrifying the Swiss railways, that the Swiss hastily passed legislation for debarring anybody but Swiss citizens from exploiting Swiss sources of electrical energy.

There was another circumstance that was adversely affecting German influence in Switzerland: it was, that, while the terror of an economic conflict with Germany was declining, the fear of a German invasion was rising, for it was plain to all, that, if the Germans decided to turn the allied lines in France by making another great flanking movement through a neutral country, the moment when they would do it was fast approaching, as the overthrow of the Russian and Rumanian armies was releasing large forces. Moreover, every Swiss citizen could understand, without prying into the state archives, that his fears were the fears of the general staff; for an extra division was kept under arms on the frontier during the summer and autumn of 1917. This dread of a German invasion raised the credit of the army for the time being, and the growth of a purely military influence was very much for the country's good, as the Swiss army leaders have always been the apostles of national unity.¹⁰ Under this new guidance, ordinary Swiss citizens were casting away some of their partisan hatreds and sympathies, and were realising it was not [640] very creditable to them to be so passionately anxious for an allied, or a German, victory when their own country was gravely threatened. It was, for example, during these anxious months, that the colonel of a German speaking regiment, which was then quartered at Bâle, ordered his bandmaster to play the popular music of French Switzerland, in the public park, every Sunday night: the programmes were received with tremendous enthusiasm, and the regiment was loudly cheered when it left Bâle for another part of Switzerland. This was assuredly a sign of the times, for a year previously, Swiss officers had openly doubted whether it was wise to quarter German speaking regiments in French Switzerland, as the spiteful jibing about Boche, and anti-Boche made enmities between the soldiers and the townsmen.

The inference that Mr. Craigie drew from all this was that German influence in Switzerland had passed its point of greatest strength, and was at last declining; for which reason he contended it would be in the last degree unwise to embark upon a policy of bald coercion, as the only certain consequence would be that the Swiss would appeal to the Germans for help, and no matter whether the help supplied were effective or not, this would enable the Germans to tighten their hold on the country, at the very moment when they were obliged to ease it. Mr. Craigie was not, however, in favour of leaving matters entirely as they were: if sweeping projects were abandoned, and if the Swiss were relieved of all fear that they would be revived, opportunities would arise for regulating particulars matters to our advantage. The growing shortages in tonnage, cargo space, and cereals, would force the Swiss to petition us from time to time; conditions might be attached to such favours as we granted, and if this piecemeal policy were consistently followed, there was a good chance that we should force the Swiss to reduce their exports to the enemy as the year advanced.

Mr. Craigie's recommendations were approved by the contraband department, and the date when they were thus received and endorsed may be called the date when our treatment of Switzerland conformed to our treatment of the other border neutrals (1st September, 1917). By this time, however, the United States were fairly embarked upon the economic campaign, and as we had always regarded the French as the principals in Swiss affairs, we advised the United States authorities to look to them, rather than to us, for guidance.¹¹ Now although the French experts agreed with Mr. Craigie and Sir Horace Rumbold, that Switzerland required very special treatment, it does not appear that they ever warned the United States, specifically, against making the sweeping proposals to Switzerland that were thought proper to be made to the other border neutrals. For this reason the war trade board prepared a draft agreement for Switzerland that did not differ materially from the drafts that were presented later to the other neutrals; for the United States demanded that no more food or machines be exported from Switzerland to the enemy. By good fortune, however, the war trade board did not immediately present these conditions, but entrusted the negotiation to Mr. MacCormick and Dr. Alonzo Taylor, who sailed for Europe with Colonel House's mission in September.

It is a striking illustration of the peculiar hazards of economic warfare, that whereas for three successive years, German victories in the field had made the Swiss very fearful of any arrangement that could be regarded as favourable, or helpful, to the allies, a new German victory had the very opposite effect, and brought the Swiss government more under allied influence than they had ever been before. Late in October, the Austrians attacked the Italians on the Caporetto, and drove the second Italian army before them in rout and confusion. In order to close the gap thus opened in their line, the Italian armies retreated, and took up a new position [641] on the Piave. This disaster made the Swiss fear of an invasion very acute; for anybody with a map in his hand could see that the new Italian position could more easily be turned by a movement through the St. Gothard pass, than forced by a frontal attack across a river line. The Swiss general staff were, moreover, particularly apprehensive, as their intelligence service reported, that five Austro-German divisions had been removed from the Piave front, and could no longer be located. The danger to which their country was exposed cemented the growing union between the cantons, and determined the Swiss government to lean entirely on the allies, and to reject all German offers of an economic agreement. Switzerland was then very short of bread corn, and the German minister at Berne was making a vague offer of cereals; but M. Hoffmann and the Swiss minister for war refused to entertain it, as they were convinced the Germans would only release corn to their country on conditions that would prejudice Swiss neutrality. In many circles it was openly said, that the Germans were likely to demand that some exceptional facility be given to their armies in return for continued deliveries of coal and iron. Affairs were in this posture when the American representatives arrived in Paris with their draft agreement.

The reasons that Mr. Craigie had given, a few weeks before, why we should not embark upon any sweeping plan of coercion were thus stronger than ever; and the French experts, were as persuaded as our own that the United States authorities ought to be dissuaded from proceeding with their project. It is, therefore, very much to the credit of the American representatives, that, although they had been given no very clear guidance on the matter, and although the advice now pressed upon them conflicted with their notion of enforcing a general revision of neutral trade with Germany, they allowed themselves to be persuaded. The agreement that was signed on 5th December was rather a confirmation of the existing agreements, than a new regulation of Swiss trade. A clause was inserted whereby the war trade board was empowered to start a negotiation, later, upon cotton exports, if circumstances demanded it; but the statutes of the société de surveillance were not altered; and a scale of rations, which did not differ materially from those already allowed by the French rationing committee, was attached to the agreement. From early December, therefore, Switzerland was not included in the American embargo, and cereals and oils were regularly despatched into the country.

v) The state department present written conditions to the northern neutrals

Meanwhile the state department decided to press the negotiation with the other border neutrals, by presenting them with written conditions. This decision was probably taken because it was during the latter part of October, that the first reports were received that the shortage of fuel and lubricants in Denmark was becoming serious, and that, if it continued, the Danish authorities would be compelled to make a coal agreement with Germany, as their supplies of water and electric light were threatened. These first written proposals were not by any means drafted on a uniform model; for the Netherlands government, who were then represented by a special commission,¹² were given a set of general principles to serve as a guide; whereas the Danish authorities, the second recipients of a written proposal, were given the heads of a draft agreement. Moreover, the two sets of conditions differed materially: the principles for negotiation that were communicated to the Netherlanders contained such severe stipulations about similar products, and released exports, that the United States were virtually demanding that no more meat and dairy produce [642] should be exported to the enemy.¹³ The Danes were only asked to reduce their exports to certain stipulated figures; but, in the document presented to them, as in the document presented to the Netherlanders, the principle of released exports was firmly maintained, as the Americans stated that Danish horses would be released for export, if motor oil were allowed to go into Denmark. For this reason, the war trade board stated that no oil would be licensed for export to Denmark, unless the Danes forbad the export of all horses.

The Norwegian negotiation opened at about the same time and rather inauspiciously. As winter approached, Sir M. Findlay and Mr. Schmedemann were both so confident they could persuade the Norwegian government to stop all exports to Germany, that it was decided to entrust the negotiations to them. A general instruction was therefore sent to the French and British ministers empowering them to offer a termination of the embargo:

      In return for a cessation of all exports direct or indirect to enemy countries, and a continuance of existing exports and facilities to the allies.

If an identic instruction had been sent to Mr. Schmedemann, negotiations would have been transferred to Norway; but it was never sent, because President Wilson refused to agree. On 19th November, with the draft instructions to his minister before him, the president wrote to Colonel House, and to the secretary of state:

      As we are fighting a war of principle, I do not feel that I can consent to demand of Norway what we would not in similar circumstances allow any government to demand of us, namely, the cessation of exports of her own products to any place she can send them. I am convinced that our only legitimate position is that we will not supply the deficiencies which she thus creates for herself if the exports are to our enemies.

It would be interesting to know outright, and as a matter of certainty, whether the president thus intervened, because the revelations of Lord Reading's mission made him anxious: the intimation, so secretly given, that the allies might be obliged to establish a base at Kristiansand; the raid upon the convoy, which seemed to bring the contingency nearer; and the president's sudden order that the Norwegians were not to be pressed too hard look like a succession of causes and effects, but it cannot be asserted, positively, that they were so.

As a result of this confusion, no empowering instruction was sent to Mr. Schmedemann, and Dr. Nansen, profiting by the president's intervention (which he had probably engineered himself after the disaster to the convoy), presented a draft agreement to the war trade board. In this paper, Dr. Nansen proposed that the Norwegian government should export certain stipulated quantities of foodstuffs and minerals to Germany; and it was upon this document that negotiations were begun. It should be added, that the president's intervention must have relieved the Norwegian envoy of a load of anxiety; for his own private opinion was that a total stoppage of exports to Germany would have to be agreed to, if the allies insisted.

[643] By the middle of November, therefore, the United States authorities had so far advanced the negotiations with the border neutrals, that certain specified conditions were being examined by both sides. On the other hand, the embargo had then been in operation for four whole months, and there were still no indications that the neutrals were preparing to yield. The Netherlanders ignored the statement of principles presented to them, and attempted to negotiate for a temporary arrangement, whereby certain ships were to be released for a single voyage. The Danes withheld their reply. The Norwegian intentions were even more difficult to penetrate. At Washington, Dr. Nansen answered all counter proposals to his draft very promptly, which implied that his government was anxious to come to a composition; but from Christiania, Mr. Schmedemann reported, that the government would draw things out for as long as they possibly could, and that this would probably be until the early spring. This was confirmed by what transpired in a debate in the Storthing, when the president of the chamber openly referred to the Scandinavian policy then being pursued, and to the assistance that was being given to Norway by Denmark and Sweden. The Norwegian prime minister enlarged upon this, and was so well supported, that a motion for a vote of censure was withdrawn. Norwegians of all classes and opinions were, indeed, united in thinking that the allies' conditions ought not to be granted, for so long as resistance to them was possible. Only a small circle of Norwegians, the shipowners, had benefited by coming within the British orbit, for they had received all the profits that were derived from the high freights that were given for vessels in the allied trades, and from the insurances that were always promptly paid, when ships were sunk. The enormous destruction of Norwegian shipping had bereaved a large number of families, and as this, in the popular fancy, was thought to be the price paid for the national sympathy with the allied cause, so, there was a growing opposition in the country to any more compliance with what the allies demanded. And in order to remind the Norwegians that the German conduct towards them was still oderint dum metuant, and that good reasons for hating and fearing would never be lacking, the German navy again raided the Anglo-Norwegian convoy (12th December). This second raid was as successful, and as skilfully executed, as the last; all the ships of the Bergen-Lerwick convoy were sunk, and again the raiding vessels were never sighted by our intercepting forces.

vi) The condition of the border neutrals at the end of the year; the United States relax their embargo

By the end of November, therefore, it was patent to the American government, that the northern neutrals would resist the embargo for longer than had been expected. At about the same time, the state department were receiving reports upon a matter on which they were always extremely sensitive: from Norway Mr. Schmedemann reported, that unemployment was growing in all these industries which were being deprived of American oil and lubricants; from Amsterdam, the American consul-general reported a strong revulsion of feeling against the United States, and deprecated any imitation of Great Britain's forceful methods. From Copenhagen, the reports were even more serious: the commercial attaché considered that Danish resistance to the embargo was more or less inevitable in view of the German danger, and that, as fuel was already very short, this long resistance would necessarily force the Danes to conclude a number of:

      Individual and class agreements with Germany to export what commodities they can, to render whatever other assistance they can, for example man power, in return for oil and coal. This I take to be the concrete example of the oft quoted and in some quarters sneered at expression, being driven into the arms of Germany. Why then disregard the plain signs of disaster and wait for disaster itself.

In conclusion, the commercial attaché recommended a line of conduct which had much to recommend it: To relax the embargo upon oils and fuels, before the Germans had taken advantage of the shortage in Denmark; to wait for the next shortage [644] from which the Germans might benefit, and then: To cash in on the result. We, on our side appreciated the position similarly; but our anxieties were more with regard to Sweden than to the other neutrals; for we were particularly anxious that the new Swedish government should not be endangered by the disturbances consequent upon a general shortage. We did, however, substantially confirm what the United States ministers were reporting to Washington, for, in the last days of November, we warned the American ambassador, that we were anxious about the growing distress in neutral countries, and fearful lest this long stoppage of exports should provoke an incident.

At the end of the year, therefore, the United States authorities were confronted with a position that bore no resemblance to what had been predicted at midsummer. They had then been assured, that the border neutrals would be compelled to come to terms if the embargo were enforced; and it had never been suggested to them, that the neutrals might strike bargains with the central empires, rather than agree to the conditions offered them. In this perplexity, the war trade board decided to answer the reproaches then being levelled against the government of the United States by releasing a few cargoes of kerosene, coffee, sugar, and chocolate, as a Christmas gift to neutrals. It was hoped that the supplies of oil thus sent would make the neutrals independent of the Austro-German supplies for a few weeks longer; and that the whole transaction would make it plain to the Scandinavian peoples, that American sympathy for their difficulties had not been alienated by the obstinate, enigmatic behaviour of their governments. The Christmas ships were therefore despatched, and the Christmas idea put into operation; but it is more than doubtful whether the United States derived any benefit from the experiment. Their ministers transmitted courteous acknowledgements from the Scandinavian governments; but in the reports upon the Christmas idea there is no mention of any popular manifestations of gratitude to the United States authorities. The Scandinavian peoples were now on rations for most of the necessaries of life; prices were high, and unemployment was growing; nevertheless those peoples, as a whole, continued to trust their governments. It should be added, however, that the release of these Christmas cargoes was not what some persons believed it to be, a cunning manoeuvre for inciting the Scandinavian peoples against their governments. The papers published by the American government make their motives quite clear: they disliked being accused of oppression, and their pride in the good conduct of the United States commanded them to clear their reputation, without departing from the policy that they still felt themselves bound in honour to pursue. The new year, therefore, arrived with the embargo unrelieved, and with the resistance of neutrals unabated; but, thereafter, the conduct of each neutral government differentiated itself, still further. It will, on that account, be as well, for the sake of clearness, to deal with each negotiation separately, saying only, by way of preliminary explanation, that every neutral government was guided principally by the course of the war on land.

vii) Negotiations with Norway during 1918

As the Norwegian government had never objected to Norwegian shipping being used in the allied trades, the negotiations with Norway were more straightforward than those with any other government; and, by the end of the year, Dr. Nansen and the war trade board were negotiating upon a draft agreement, which was subsequently only altered in points of detail. By this draft, Norway was to be free to export 48,000 tons of fish and fish products annually to Germany; exports of calcium carbide, ferro silicon, calcium nitrate, and molybdenite were to be reduced to certain specified figures, while no antimony, bismuth, manganese, mica, tin, or wolfram were to be exported to Germany. In return for these undertakings, Norway was to receive an assured ration of foodstuffs, propellants and textiles.

[645] The rations to be allowed to Norway never obstructed the agreement; for the American computation of the amount of food required per caput populi, was found, upon examination, to give substantially the same results as our own computation of average imports. It was otherwise with the clauses about calcium carbide, and ferro silicon; for, during four whole months, Dr. Nansen and the war trade board bargained like traders in an eastern bazaar about the quantities to be inserted in the final agreement. It would be wrong to belittle the extraordinary apprehensions of the Norwegian authorities about these articles. In the longest of his explanatory notes, Dr. Nansen maintained, that, if his government reduced their exports of these commodities to the figures fixed by the war trade board, they would prejudice their neutrality. The Storthing, which examined the first American proposals in secret session, were satisfied that they could not be agreed to without danger. In their conversations with Mr. Schmedemann, the Norwegian prime minister, and M. Ihlen did not disguise that it was only fear of Germany, which prevented them from signing the agreement in December. More than this, they admitted openly, that they were constantly pressed by the German minister at Christiania to give some assurances about their exports of these substances, more particularly about their exports of calcium carbide. Obviously, therefore, these substances, with which only expert metallurgists and chemists are familiar, were of extraordinary importance to Germany; and the reason for it is probably this. As has been explained, great hopes were once entertained that the loss of all their supplies of ferro-manganese would put the German gun factories into extraordinary difficulties. It did not do so; for the Germans invented an alternative process for hardening steel. The process has ever since been a trade secret of Krupps; but an artillery officer, who was captured on the western front in 1917, informed us that calcium carbide was much used in it. We know nothing more than this, which, however, is sufficient to prove that the Norwegian authorities had ample reason for supposing, that, if the export of these steel-hardening substances were reduced to too low a figure, the Germans would inflict the severest punishment upon their country.

The Norwegian apprehension of danger was thus well founded; but their ministers are not much to be congratulated on their manner of treating with the United States authorities. At Washington, Dr. Nansen was guarded and conciliatory; but at Christiania, M. Ihlen and M. Knudsen never attempted to persuade Mr. Schmedemann that their country was exposed to a real and serious danger of reprisals at sea, on a scale not attempted before, and merely fusilladed him with petulant remarks, such as: They must starve a little longer. Naturally enough, this only persuaded Mr. Schmedemann that the Norwegians were deliberately procrastinating; and the advice that he uniformly gave to the Washington authorities was that they should be more peremptory than ever. At Washington, however, Dr. Nansen succeeded in getting a number of counter proposals considered - all on the subject of pyrites, molybdenum and calcium carbide; but not even he could cool the temper of the state department, when they heard that M. Knudsen, in a formal interview with Mr. Schmedemann, informed him, that the American draft agreement would not be acceptable until the spring. The secretary of state now lost all patience, and telegraphed to Christiania that the United States government could not tolerate the misrepresentations that were then current in Scandinavia, and that they intended to publish an account of all that had been offered and refused by each party. As the German minister was, at the time, very insistent about exports of calcium carbide, the Norwegian authorities were terrified lest the last offer they had made should be divulged. M. Ihlen called on Mr. Schmedemann twice in a single day, and begged that the Americans should only publish their own conditions, and should divulge nothing of the Norwegian offer. The Americans agreed to this, and did actually allow the leading organs of the American press to publish the rations offered to Norway; but, as nations do not often allow themselves to [646] be incited against their governments by a foreign power, this discovery of the American conditions merely inflamed the party divisions in Norway, and did not, by any means, provoke a unanimous movement of opinion. The government organs found good reasons for showing that the American conditions ought not to be accepted; the opposition newspapers proved the opposite. By the end of January, however, the Norwegian government had persuaded the war trade board to allow an export of ten thousand tons of calcium carbide. Thereafter, the danger of signing an agreement seemed less than the danger of resisting it any longer, and, on 21st February, the points in dispute were so near a settlement, that the secretary of state allowed the Kim to bunker for Norway. This virtually ended the long embargo. The war trade board did not, however, draft the final text of the agreement, until they had received our comments upon it, and had incorporated our suggestions, which were: that the doctrine of similar and derivative products should be inserted in the text; and that the general agreement should be supplemented by subsidiary ones with those associations, whose agreements had been denounced, when the American embargo was declared.

The principal stipulations of the agreement finally signed (30th April) were as follows:

The rationing schedule, which, as has been explained, did not differ materially from the rations calculated by our statisticians, was agreed to by the Norwegians, who gave the usual undertakings about re-export.

The exports allowed to Germany were:

• Fish and fish products 48,000 tons. (The quantity proposed in the first American draft was 40,000 tons.)
  
• Calcium carbide 10,000 tons. (A complete stoppage was proposed in the first American draft.)
  
• Calcium nitrate 8,000 tons. (A complete stoppage was demanded in the first American draft.)
  
• Ferro-silicon 2,000 tons. (A complete stoppage was demanded in the first American draft.)
  
• Iron ore 40,000 tons.
  
• Zinc 1,000 tons.

The war trade board thus yielded in the matter of ferro-silicon, calcium carbide and calcium nitrate; but they successfully maintained their demand for no exports of certain highly important substances; for the Norwegians agreed that no nickel, chrome, pyrites, molybdenum, wolfram, mica, tin, or antimony should be exported to Germany. The doctrine of similar and derivative products was asserted in two places: first in the rationing clauses, and later in the second article. With regard to goods on the rationing schedule, the war trade board only attached the condition to them:

      That no article imported into Norway under the provisions hereof shall be exported to other than allied destinations, nor shall any article released by such importation be exported to other than allied destinations.

With regard to American goods exported to Norway the war trade board inserted a far more sweeping condition:

      No articles, including those mentioned in article III [rationing schedules] of this agreement, which are obtained grown, or produced, in whole or in part, by the use of any implements, machines, machinery, coal, gasolene, kerosene, oils, lubricants or other auxiliaries, or articles hereafter imported from the United States, or hereafter imported from any country associated with the United States in the war, or whose importations shall be facilitated by the war trade board's licence for bunker coal, and ship's stores or by the licence and authority of any country associated with the United States in the war, shall be directly or indirectly exported from Norway to any country or ally of any country with which the United States is at war (including territory occupied by the military forces of such country). The foregoing shall be taken also to include any country, whether previously allied or neutral, all, or a portion of whose territory is now occupied by Germany or her allies, excepting only France, Italy and Belgium.

[647] It will be seen that there was a considerable interval between the date upon which disputed points were settled and the date upon which the agreement was signed: the reason for this was that the project of establishing a base in Norway was being examined afresh, and in circumstances that gave the Norwegians great anxiety. In September, 1917, a conference of allied admirals decided, that the best method of combating the submarine campaign during the coining year would be to lay a great minefield across the northern entrance to the North sea, from the Shetlands to the Norwegian coast. This project had been approved, and preparations were at once made for completing the minefield in the first half of the year 1918. Unfortunately for us, every naval officer in the allied, or the Norwegian, or the German, service could judge for himself, that this great minefield would not be an effective barrier unless it were permanently patrolled; and that this could only be done, if a base were established on the Norwegian side. Secrecy in the handling of the official papers could never stop naval officers of every nation from following this line of reasoning; and, as far as can be judged, the Norwegian authorities were warned almost simultaneously, by the Germans, and by their own commander-in-chief, that this minefield, or rather the measures that would sooner or later accompany it, were a danger to Norway. Nor were they much deceived; for, late in the year the Admiralty presented a state paper to the government, in which they recommended that a base should be seized at Stavanger, as this would be the only point from which the barrage could be patrolled during the coming spring. This, it will be seen, was an old project revived in a very menacing form; for, whereas it had hitherto been assumed that our naval forces would never enter Norwegian waters except as allies, bringing succour, the plan was now that we should invade the country, manu militari, and that at least one peaceful town should be laid in ashes, if the Norwegians had the spirit to resist us. The northern neutrals committee disliked the plan; they thought it probable the Swedes would assist the Norwegians, which would involve us in a Scandinavian war, and the military representatives on the committee adhered to the opinion that they had consistently given: that the British army could not enter Scandinavia, as an ally or an enemy, without endangering our position elsewhere. Nothing was decided, therefore, and certainly no project for invading Norway was ever sanctioned; nevertheless, the implications of what the allies were planning were so obvious, that the Norwegian government kept a careful watch over everything that was proposed, accepted, or refused at Washington: every time the United States negotiators appeared unyielding, the question automatically examined on the Christiania side was, whether the allies were insisting upon some condition that they knew would be refused, in order to find an excuse for executing their other designs by force of arms. For these reasons, the Norwegians did not sign the agreement without safeguarding themselves against the danger which gave them so much anxiety; for on 9th March, when the negotiations were virtually terminated, they presented a declaration to all foreign ministers at Christiania: That they would maintain their neutrality by force of arms if needs be; that they would never negotiate for any object that might prejudice their neutrality; and that they had never been approached for assistance or for permission to establish a base on Norwegian territory.¹⁴

[648]
viii) The Danish and the Dutch negotiations

By the end of the year 1917, the Danish and the Netherlands governments were both considering draft agreements which had been presented to them at Washington and in London.¹⁵ As has already been explained these agreements differed in form: the Danish agreement provided for a reduction of agricultural exports to agreed figures; the Dutch agreement was less detailed, and was more a statement of principle, but in this document, as in the one presented to the Danes, a regulation of domestic exports was provided for. These clauses in the two agreements were not, however, of any importance: the Danish agreement was signed so late that it did not in itself advance the economic campaign; the Dutch agreement was not signed until after the armistice had been declared.

If a regulation of domestic exports had been the principal end of these negotiations, then agreements might have been concluded in the early months of the year 1918, notwithstanding that there were serious obstacles in the way. This, however, was no longer the chief object; for, at the end of the year, the allied transport council reported that 2,200,000 tons of additional shipping would be required to carry what the allied countries would need, if they were to prosecute the war during the coming year. This meant that the chartering agreements with neutrals would have to be enlarged, and proposals on this head were inserted in the draft agreements presented to the Danish and to the Netherlands authorities. The purpose of the negotiations was thus completely changed by the long resistance of the Danish and Netherlands governments. As first conceived, the negotiations were to close the last gap in the blockade:¹⁶ as finally pursued the negotiations were to secure agreements, whereby our own maritime communications with overseas countries might be better maintained, a subject with which this history is not concerned. It was, moreover, the new tonnage clauses which the Danes and the Netherlander hesitated to agree to; [649] and the United States authorities had their own reasons for going warily. It has been explained that a cabinet committee was appointed to enquire into the military policies of the northern neutrals; and that what the committee recommended probably made the president reluctant to press the Norwegians hard. It may be assumed, without disregarding the rules of probable conjecture, that the president was equally uneasy about the committees' recommendations with regard to the Netherlands; and that the disclosures made to him on this point made him determined to agree to nothing, until it was certain that there would be no military consequences to it. Our economic and military experts had never thought that the Germans would invade the Netherlands to mitigate the consequences of the economic campaign; but an invasion of the Netherlands was thought so probable, in certain contingencies, that elaborate preparations had been made to meet it, and these preparations were being perfected during the summer and autumn of the year 1917.

The first enquiry into the matter was made in June, 1916, when the British armies were preparing to attack on the Somme; for the British high command then had information that the Germans intended to overrun Zeeland, and to seize Flushing, if they were forced to give ground anywhere to the north of Lille. Notwithstanding that the British armies were then so much engaged on the western front, the general staff made preparations for sending an expeditionary force to the Schelde; and the Netherlands government thought the danger so serious, that they strengthened their forces, during the first weeks of the British attack, and only dismissed the reservists whom they had called to the colours, when it was evident that the Germans were not likely to be dislodged from their positions in northern France.

The British campaign for the following year raised the question afresh, and far more acutely; for that campaign was undertaken for the express purpose of driving the Germans from the Belgian coast, and of obliging them to abandon their submarine bases at Zeebrugge and Ostende. If this were done successfully, or even if the German hold upon Belgium were made precarious, it was thought highly probable that the enemy would compensate themselves for the loss, by seizing the mouth of the Schelde, and reconstituting their submarine bases in those waters. The preparations of the previous year were therefore elaborated, and the naval and military commands laid plans for sending an expeditionary force to Walcheren, and for despatching naval forces to the Helder. A state paper in which the project was described was laid before the cabinet committee, who recommended that the naval and military staffs should perfect their plans: and that:

      So soon as there are definite signs that the Germans contemplate seizing the mouth of the Schelde, steps should be taken to sound the Dutch government as to their attitude in regard to co-operation by us.

This, and the recommendations with regard to Norway were communicated to the president, and to Colonel House, in September, 1917; so that both of them must then have realised that our official answers to their question, whether the northern neutrals might be involved in the war, by no means revealed our whole opinion on the matter, and that we were actively preparing for contingencies that we had described as remote and improbable only a few weeks before. It may also have weighed with the [650] American authorities, that, as the year advanced, the Netherlanders became as suspicious of the British intentions as they were of the German. An agent of the War Office visited Holland, with the greatest secrecy, in October, 1917, and contrived to discuss the occupation of Walcheren with some Netherlands officers. The Netherlanders did, it is true, communicate a few facts about their plans for defending the western Schelde, but this was probably done in order to get more information for themselves; for, as soon as this visit was over, the Netherlands government cleared the island of Walcheren of everybody except those who permanently lived there, and showed so unmistakeably that their preparations were directed as much against Great Britain as against Germany, that the Admiralty thought it would be imprudent to pursue the matter further. It is possible the Americans never learned about the secret visit of our agent; but the Dutch apprehensions must surely have been known to them; and this may have made them suspicious of our assurances that they could press on ruthlessly with the economic campaign, without fear of any military complications resulting. This, of course, cannot be stated positively; certain it is, however, that the United States authorities never pressed their negotiations with the Netherlands; for it was not until March, 1918, that they agreed to requisition all Netherlands shipping in America and British harbours, jure angariae. This was only agreed to, because the Netherlands government made it clear, from the beginning, that they did not object to the requisitioning of their ships, provided that a considerable proportion of the requisitioned vessels should be put into the East Indies trade.

This brought 638,000 tons of additional shipping into the allied service. When the requisitioning was completed, the Americans allowed one hundred thousand tons of bread grains to be carried to the Netherlands; thereafter, they licensed cargoes for the Netherlands as the need for them became apparent; but the country never received the goods upon the rationing schedule, which had been drawn up before the negotiations began.

The Danish authorities refused an accommodation, until they were quite certain that the German forces had been defeated both by land and by sea: on 18th September, they signed an agreement that was of little or no consequence to the economic campaign.¹⁷ The long resistance of the Danes provoked angry comments at the time, yet it is difficult to say that it was anything but wise. The tonnage agreement presented to them was one of the measures that we were taking for thwarting the German campaign against commerce. When this agreement was communicated, every minister and official in the Danish service knew that it was upon the campaign at sea that the Germans were counting for final victory; they knew, also, that the campaign had been checked, but not defeated, in the previous year, and that the Germans were still seeking a decision with the greatest resolution and fury. Was it surprising, therefore, that the Danes husbanded their resources, and refused to put tonnage at our disposal, until the issue was better decided; congratulations on a very skilful pilotage in very difficult waters seem more appropriate, than the contemptuous judgments that were often passed upon their conduct.

²The northern neutrals committee: Chairman, Lord Carson. ...back...

³The countries were: Abyssinia, Afghanistan, Albania, Argentina, Austria-Hungary, Belgium, her colonies, possessions or protectorates, Bolivia, Brazil, Bulgaria, China, Chile, Colombia, Costa Rica, Cuba, Denmark, her colonies, possessions or protectorates, Dominican Republic, Ecuador, Egypt, France, her colonies, possessions or protectorates, Germany, her colonies, possessions or protectorates, Great Britain, her colonies, possessions or protectorates, Greece, Guatemala, Haiti, Honduras, Italy, her colonies, possessions or protectorates, Japan, Liberia, Leichtenstein [sic], Luxemburg, Mexico, Monaco, Montenegro, Morocco, Nepal, Nicaragua, The Netherlands, her colonies, possessions or protectorates, Norway, Oman, Panama, Paraguay, Persia, Peru, Portugal, her colonies, possessions or protectorates, Rumania, Russia, Salvador, San Marino, Serbia, Siam, Spain, her colonies, possessions or protectorates, Sweden, Switzerland, Uruguay, Venezuela and Turkey. ...back...

⁴The commodities were: coal, coke, fuel oils, kerosene and gasoline, including bunkers; food grains, flour and meal therefrom, fodder and feeds, meat and fats; pig iron, steel billets, ship plates and structural shapes, scrap iron and scrap steel; ferro-manganese; fertilisers; arms, ammunition and explosives. ...back...

⁵The composition of the Board was:
      Mr. Vance MacCormick, representing the State Department.
      Mr. Albert Strauss, representing the Treasury.
      Dr. Alonzo Taylor, representing the Department of Agriculture.
      Mr. C. M. Woolley, representing the Department of Commerce.
      Mr. J. B. White, representing the Department of the Food Administrator.
      Mr. F. C. Munson, representing the Shipping Board. ...back...

⁶It should be said, in extenuation of the German conduct that a neutral under enemy convoy may be sunk jure belli, if the armed escort resists capture. There is, however, an unwritten law of the sea that merchantmen may be allowed to launch their boats before their ships are sunk. Firing on survivors from sunken ships might possibly be justified by the military analogy of sending cavalry to cut up routed troops, who have no power of resistance. Seamen of all nations would, however, be reluctant to disregard the customs of the sea about survivors in boats: the fact that the Germans did so shows that they were on a punitive expedition. ...back...

⁷The following figures show how great was the allied predominance in the Swiss factories, and how little the German economic agreements with Switzerland disturbed it:

The traffic in finished machinery and parts of machinery was equally in our favour.

The following figures are even more remarkable; for it must be remembered that the iron and steel came almost entirely from the central empires:

	Deliveries of half-finished articles in
	Iron and steel		Brass, bronze, copper		Zinc and aluminium, nickel, etc.
Entente powers, Feb. 1917	2,279,861	kilogs.	1,426,753	kilogs.	Not known.
Central empires    "     "	34,983	"	1,740	"	"   "
Entente powers, March 1917	3,081,858	"	1,046,487	"	513	kilogs.
Central empires    "       "	157,642	"	81,579	"	263,298	"
Entente powers, April 1917	1,618,813	"	1,925,904	"	28	"
Central empires    "       "	156,898	"	54,459	"	1,935,252	"

...back...

⁸The test was called the dynamo metric test. ...back...

⁹See chapter XXVII. ...back...

¹⁰See: Histoire Militaire Suisse, prepared under the direction of the Swiss staff, a most creditable and honourable piece of work in which the Swiss historians teach the lesson of national unity without departing from scientific method or scrupulous accuracy. ...back...

¹¹See U.S. Foreign Relations, 1917. Supplement II, p. 838. ...back...

¹²Van Eelde of the Cereals Office; van der Houwen van Ordt, Vice-President of the Netherlands East Indies, and Joost van Vollenhoven of the Netherlands Overseas Trust. ...back...

¹³The draft ran:
      The exports administrative board therefore wishes to point out to the Holland government commission clearly that it cannot license for export foodstuffs, fodder and other materials and commodities when such articles are to be used:

1. For export to the central empires;
   
2. For release of other foodstuffs or commodities to be so exported;
   
3. For the reproduction of dairy products to be so exported instead of for the sustenance of the people of Holland;
   
4. For the production directly or indirectly of any articles or the transportation thereof destined for the central empires, and above all for the transport through or across Holland territory of war materials of enemy origin and ownership being sent directly to the enemy army and to the enemy trenches.

¹⁴The subsequent fortunes of this project were these. The Americans and the British laid the minefield during the summer; a few U-boats were lost in it, but it did not prove a dangerous obstruction, and the German submarine commanders passed it in great numbers. On realizing that the barrier was being passed, the Admiralty staff reported that the enemy were going through Norwegian territorial waters at the eastern end of the barrage; and pressed a project upon the government for forcing the Norwegians to mine their territorial waters. The Admiralty so far succeeded in their plans, that our minister was instructed to request the Norwegian government to complete the mine barrier; he was instructed to be peremptory, and not to allow himself to be involved in long negotiations. The Norwegians now appealed to president Wilson, who expressed such dislike of these violent courses that the project was dropped. Until the German official history is completed it cannot be said, for certain, how and where the German U-boats passed the barrage; but there is no reason for supposing that the Admiralty's statement that the U-boats were using Norwegian territorial waters was accurate. See Michelsen, U-bootskrieg, p. 85. ...back...

¹⁵The Danish negotiations were conducted at Washington. The Dutch negotiations were conducted mainly in London by: M. Snouck Hurgronje and M. van Vollenhoven. ...back...

¹⁶As an illustration of the changes which unforeseeable circumstances may make in the best conceived plan the original scheme of the United States negotiations may be quoted verbatim:
      To sum up, it is proposed that:
      1. The United States of America should intimate to each of the border neutrals that, unless certain changes are made in their exports to Germany, the United States of America would feel obliged to refuse licences for the more important exports to the neutrals in question, such as foodstuffs, fodder, metals, oils, lubricants, and fertilisers. Whilst we would adopt the same action, it is suggested that the United States of America should take the lead in this matter - this course appearing to us to have the great advantage that the neutral countries, who at present are exporting food to this country, would be less likely to divert their supplies to Germany than they would be if the public in these countries were given to understand that we were active in cutting off their supplies of food and fodder. In this connection it may be mentioned that Denmark and Holland exported food to us last year to the extent of over 40 millions sterling. Whilst we are quite prepared to dispense with this food, except Dutch margarine, if it is not exported to this country it will doubtless find its way to Germany. In order to avoid the delay which would be likely to occur in obtaining the adhesion of the other allies to this policy it is suggested that action should be taken by the United States of America and ourselves at once.
      2. In the case of Sweden, while asking for the stoppage of all exports to Germany, we should press principally for the cessation of the export of iron ore and the grant of free transit to Russia.
      3. Norway should be asked specially for the stoppage of exports to Germany of fish, canned goods, pyrites, nickel, and other metals, ores, and concentrates.
      4. As regards Denmark and Holland, we principally desire the cessation of exports to Germany of fish, agricultural produce, and the stoppage of transit trade between Belgium and Germany, and vice versa.
      5. If the United States are prepared to assist us in taking the necessary financial steps to prevent a serious break in the exchange rates with the border neutrals we should offer in principle, and subject to agreement as to price, to buy whatever commodities would otherwise have gone to Germany.
      6. Each neutral should be asked to guarantee that no impediment should be put in the way of exports to the allies.
      7. On receipt of the neutral replies, which should be asked for within a very short time, the United States and the allies would consider what, if any, modifications they could make in their original demands.
      8. If it be found that any existing agreements between any allied and neutral countries hinder the adoption of this policy steps will be taken to modify or terminate those agreements.
      9. It is understood that wherever any export to a neutral is made as the price of any service or other concession the United States and the allies may decide to allow that export to continue.
      10. In order to facilitate the execution of this policy a small joint blockade council shall be immediately formed in London, who shall, in particular, consider all points arising under paragraphs 7 and 8 hereof. The blockade council will also consider how best to deal with exports to border neutrals from neutral countries, such as South America.
      11. As far as shipping is concerned, efforts are being made to secure that the negotiations now proceeding with neutrals will secure for the allies the use of as much neutral shipping as possible. The United States of America could no doubt largely assist us in this direction by insisting, in the case of Sweden and Holland, upon the resumption of sailings. ...back...

¹⁷The agreement was in three parts: the part relating to rations and general exports was signed by the guild and the Chamber of Commerce: the part relating to shipping was signed by the Shipping Committee (Fragtnavn): the part relating to exports of agricultural exports was embodied in identic letters from Mr. Vance MacCormick to M. Brun, and vice versa.
      The principal stipulations were:
            265,000 tons deadweight of shipping to be chartered to the U.S.
            200,000 tons deadweight of shipping to be chartered to Great Britain.
      Rations agreed to, and products clauses added on the model of the Norwegian agreement (Articles I and II).
      Exports to Germany of butter, eggs, milk and cheese to be reduced to an annual aggregate of 24,200 (Chairman of war trade board to Danish minister, paragraph 2).
      Thirty per cent, of the exportable surplus of butter, bacon, milk and cheese to be sent to Norway and Sweden.
      Twenty-five per cent, of the exportable surplus of eggs to be sent to Norway and Sweden.
      Exports of cattle to Germany not to exceed 226,000 head per annum.
      Exports of horses to Germany not to exceed 2,500 head per month. ...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).