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ping German and Austrian oversea exports has been successful can best be judged by looking at the statistics of German and Austrian imports into America.

12. The normal imports into the United States of America from Germany and Austria, before the war, for the seven months March to September inclusive, are valued approximately and in round figures at 124,000,000 dollars (£24,800,000). From March to September inclusive, this year's imports into the United States of America from those countries were valued at approximately 22,000,000 dollars (£4,400,000). This sum includes the goods which were already in neutral ports in the way of shipment or in transit when the further measures adopted by the Allied Governments were announced in March, and also a considerable proportion of those which have been allowed to pass in the circumstances mentioned in paragraph 14. A certain amount is also to be accounted for by goods received from Germany and Austria by parcel post, which it was not originally possible to stop effectively. Steps have now been taken to close this channel to enemy exports. The latest returns available, those for September, show that over 92 per cent. of the German exports to the United States of America have been stopped.

13. The above figures allow of but one conclusion: the oversea exports of Germany and Austria are very near extinction. It is of special interest to note that in the main these exports have not been merely diverted to the neutral countries adjacent to Germany. The imports which those countries have received from Germany have not in fact exceeded the normal quantities of previous years.

14. The object of the policy being to injure the enemy, the Allied Governments have in certain cases permitted the export of goods which had been ordered before the 1st March, and had been either paid for prior to that date or ordered before that date on terms which rendered the neutral purchaser liable to pay whether the goods reached him or not. It is clear that in these cases no harm would be done to the enemy, or pressure put upon him, by not allowing the goods to pass. On the contrary, he would, if that were done, both receive his price and retain the goods and their possible use. The total value of the goods with which the Allied Governments have undertaken not to interfere in such cases up to the end of 1915 is approximately £3,000,000. If the goods allowed to pass under this arrangement were deducted from the total enemy exports to the United States of America, it would be

seen that the amount of German exports which serve to increase the resources of the enemy is almost negligible.

IV. German Imports

15. As regards German imports, however, the problem is much more complicated. Its central difficulty is that of distinguishing between goods with an enemy destination from those with a genuine neutral destination. A belligerent who makes use of his naval power to intercept the commerce of his enemy has to justify his action in each particular case before a prize court, which is bound by international law and not by the ordinary law of the country in which it sits. It is not sufficient for him to stop a neutral vessel and remove from her such articles as he may believe to be intended for his enemy; it is necessary subsequently to demonstrate in a court of law that the destination of the goods was such as to justify the belligerent in seizing them. If this is not proved, the goods will be released, and damages may be awarded against the captor. It must also be remembered that, in order to justify the seizure of a particular consignment, it is necessary to satisfy the prize court of the enemy destination of that consignment, and evidence of a general nature, if unaccompanied by proofs directly bearing on a particular case, is not enough. All this applies as much to goods seized as contraband as it does to those seized for breach of blockade.

16. In earlier wars the production of the necessary proof was a comparatively simple matter. Owing to the difficulties of inland transport before the introduction of railways, goods for the enemy country were usually carried to ports in that country and the ship's papers showed their destination. When, therefore, the ship had been captured, the papers found on board were generally sufficient to dispose of the case. In the old cases of contraband, the question at issue was usually not where the goods were in fact going to, but whether their nature was such as to make them liable to condemnation in view of the destination shown on the ship's papers. Even in the American Civil War the difficulty of proving destination was usually not serious, because the neutral harbors through which the supply of goods for the Confederate States was carried on were in normal time ports of comparatively small importance, and it could be shown that in normal times there was no local market for goods of such quantities and character.

17. The case has been far different in the present war. The goods which Germany attempts to import are consigned to neutral ports, and it need hardly be said that the papers on board convey no suggestion as to their ultimate destination. The conditions of modern commerce offer almost infinite opportunities of concealing the real nature of a transaction, and every device which the ingenuity of the persons concerned, or their lawyers, could suggest has been employed to give to shipments intended for Germany the appearance of genuine transactions with a neutral country. The ports to which the goods are consigned, such as Rotterdam and Copenhagen, have in peace time an important trade, which increases the difficulty of distinguishing the articles ultimately intended to reach the enemy country from those which represent importation into the neutral country concerned for its own requirements. If action had to be taken solely on such information as might be gathered by the boarding officer on his visit to the ship, it would have been quite impossible to interfere to an appreciable extent with German imports, and the Allied Governments would therefore have been deprived of a recognized belligerent right.

18. In these circumstances, unless the Allied Governments were prepared to seize and place in the prize court the whole of the cargo of every ship which was on her way to a neutral country adjacent to Germany, and to face the consequences of such action, the only course open to them was to discover some test by which goods destined for the enemy could be distinguished from those which were intended for neutral consumption.

19. The first plan adopted for this purpose is to make use of every source of information available in order to discover the real destination of sea-borne goods, and to exercise to the full the right of stopping such goods as the information obtained showed to be suspect, while making a genuine and honest attempt to distinguish between bona fide neutral trade and trade which, although in appearance equally innocent, was in fact carried on with the enemy country.

20. For this purpose a considerable organization has been established in the Contraband Committee, which sits at the Foreign Office, and works in close touch with the Admiralty, Board of Trade, and War Trade Department. Nearly every ship on her way to Scandinavian or Dutch ports comes or is sent into a British port for examination, and every item of her cargo is immediately considered in the light of all the information which has been collected from the various sources open to the government, and which, after nearly a year and a half of war, is very considerable. Any items of cargo as to which it appears that there is a reasonable ground for suspecting an enemy destination are placed in the prize court, while articles as to the destination of which there appears to be doubt are detained pending further investigation.

21. If, however, this were all that could be done, there is little doubt that it would be impossible to effect a complete cutting off of the enemy's supplies. For instance, there are many cases in which it would be difficult to establish in the prize court our right to stop goods, although they or their products, perhaps after passing through several hands, would in all probability ultimately reach the enemy. To indicate more plainly the nature of these difficulties would obviously be to assist the. enemy and the neutral traders who desire to supply him; but the difficulties exist, and, in order to meet them, it has been necessary to adopt other means by which neutral may be more easily distinguished from enemy trade, and the blockade of Germany made more effective than it would be if we relied solely on the right to stop goods which could be proved to be intended for the enemy.

V. Guarantees by Importers

22. Importers in neutral countries adjacent to Germany have found that the exercise of our belligerent rights to some extent impedes the importation of articles which they genuinely need for the requirements of their own country, and consequently they have in many cases shown willingness to make agreements with this country which on the one hand secure their receiving the supplies which they need, while on the other guaranteeing to us that goods allowed to pass under the terms of the agreement will not reach the enemy. The neutral governments themselves have as a rule considered it inadvisable to make agreements on such points with His Majesty's Government; they have on the whole confined their action to prohibiting the export of certain articles which it was necessary for them to import from abroad. Inasmuch, however, as in most cases they reserved the right to grant exemptions from such prohibitions, and as trade between the Scandinavian countries themselves was usually excluded from the scope of such measures, the mere fact of the existence of such prohibitions could not be considered a sufficient safeguard that commodities entering the country would not ultimately reach Germany.

23. In some neutral countries, however, agreements have been made by representative associations of merchants, the basis of which is that the associations guarantee that articles consigned to or guaranteed by them, and their products, will not reach the enemy in any form, while His Majesty's Government undertake not to interfere with shipments consigned to the association, subject to their right to institute prize proceedings in exceptional cases where there is evidence that an attempt has been made to perpetrate a fraud upon the association, and to pass the goods ultimately through to Germany. The first of these agreements was made with the Netherlands Oversea Trust, and similar agreements, either general or dealing with particular commodities of special im· portance, such as rubber and cotton, have been made with bodies of merchants in Sweden, Norway, Denmark, and Switzerland. The details of these agreements it is impossible to give more fully, but the general principle is that the associations, before allowing goods to be consigned to them, require the would-be receivers to satisfy them, by undertakings backed by sufficient pecuniary penalties, that the goods will not leave the country, either in their original shape or after any process of manufacture, and notwithstanding any sales of which they may be the subject.

In some cases these agreements provide that the associations shall themselves be bound to detain or return goods believed by His Majesty's Government to be destined for the enemy; so that it does not follow that cargoes allowed to proceed to a neutral port will necessarily be delivered to the consignees.

24. The existence of such agreements is of great value in connection with the right of seizure, because the fact of articles not being consigned to or guaranteed by the association, or being consigned to it without the necessary consent, at once raises the presumption that they are destined for the enemy.

VI. Agreements with Shipping Lines 25. Delays caused by the elaborate exercise of the belligerent right of visit and search are very irksome to shipping; and many shipping lines who carry on regular services with Scandinavia and Holland have found it well worth their while to make agreements with His Majesty's Government under which they engage to meet our requirements with regard to goods carried by them, in return for an undertaking that their ships will be delayed for as short a time as possible for examination in

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