It is noticeable that a very large part of the cargoes condemned by the British Prize Court, as actually intended for the enemy though consigned to other pretended destinations, consists of goods from Latin America. For example, in August 1917 the Court condemned quantities of coffee, seized on a score of neutral steamers and ostensibly consigned to Scandinavian and Dutch merchants, but in fact shipped by a German firm at Santos for the parent house in Hamburg. Two months later, it was stated in court that nearly £400,000 worth of wool, shipped from Buenos Aires to the Swedish Army Administration at Gothenburg, had been seized by the British as being in fact destined for Leipzig. At the same time the Court condemned a number of manufactured rubber articles which had been found concealed in a passenger's clothing. On a later occasion, coffee and cocoa valued at nearly £200,000 were condemned, being part cargo of a Swedish ship bound from California to Gothenburg. They were consigned by a new and insignificant firm in San Francisco to various persons in Scandinavia, but were in fact on their way from Guatemala to Hamburg through Sweden.
The elaborate webs spun by German traders and revealed by intercepted correspondence were exposed in the Prize Court. Their methods were to find persons in neutral countries as nominal consignees, to act as intermediaries for getting the goods to Germany; to set up bogus companies for the same purpose; to use false names, or names of persons having no genuine interest in the consignment, and to manufacture false documents in order to give the appearance of neutral business. This was done to evade capture by deceiving the belligerent searchers. In some instances these methods succeeded. Quantities of coffee, consigned to Scandinavia, managed to elude the allied warships and reach Hamburg.
These are cases of import into Germany. The reverse process, export from Germany through neutrals, follows similar lines. German goods, falsely labelled and described as Swiss or Dutch or Scandinavian manufactures, have found their way across the Atlantic in neutral ships.
The Post Office has also served as a channel of secret trade. Pictures in the Press have exhibited the odd ingenuity of these devices: how coffee from Brazil to Germany was found concealed in rolls of newspapers, and how thin slabs of rubber were sent by post as photographs, also how quantities of jewellery have been despatched from Germany for South America in letters and in bundles of samples or journals. Goods so sent from Germany through the Post Office are mostly such as combine small bulk with high value—especially drugs and jewellery.
These partial examples, although each instance may seem small enough, indicate collectively a good deal of enemy trade which has found devious routes under stress of war. These manœuvres may seem at first sight merely trivial curiosities or at all events to have no more than ephemeral importance, since they were improvised to overcome temporary obstacles. But, apart from their intrinsic interest as episodes in one phase of the war and as evidence of the efficacy of Sea Power, these devices merit practical attention in view of proposals to fasten economic fetters upon Germany by the terms of peace, and in view of the odium which may tell against German commerce for years to come. German business men are preparing to meet these difficulties by continuing the method of exporting through neutral agents, and are proposing in some cases to transport to a neutral country the work of completing manufacture, in order that goods so produced may appear to be indisputably of non-German origin; and the Foreign Trade Department at Berlin has advised German merchants to employ, for some years after the war, travellers and agents who can pass as French or English. It would be unwise to underrate any instance of German inventive persistency.
Before the United States came into the war, that country was the channel of much German trade with Latin America. That road is now closed. The United States Government has gone further. It refuses coal in North American ports to ships proceeding from South America to neutral countries in Europe, unless the innocence of the cargo can be conclusively proved. This regulation shows that the United States authorities have knowledge that the ultimate destination of much South American cargo, particularly from the Argentine Republic, has been Germany. The blockade becomes more stringent through the co-operation of the United States and of Brazil, and through the action of the statutory list of "persons and firms with whom persons and firms in the United Kingdom are prohibited from trading." British commerce is a big and living thing, and the prohibition hits very hard any firm placed on this Black List. One finds here not only Teutonic names, but also innocent-sounding Latin names: for if a Latin-American is found to be acting as agent or cloak for a German trader, he finds himself pilloried on the Black List beside the German. There are obvious ways of evasion. The name of a clerk or door-keeper or a lady type-writer may appear as consignee. A varied ingenuity has to be met by constant watchfulness, and the list is regularly altered and kept up to date. The Black List has been much criticised for omissions, which are sometimes due to motives of expediency. But the bitter complaints about its injustice are unsolicited testimony to its efficacy. A striking example of its working was manifested in September 1917. After the outbreak of war, such of the Chilian nitrate works as were owned by Germans were unable to sell their nitrate or even to obtain jute bags, the supply of which is in British control. The unsold stocks went on accumulating, until one by one the German nitrate works were compelled to close down. Long negotiations between Santiago and Berlin found at last a remedy for this waste. It was agreed that the large deposits of Chilian gold in Germany should be set against the German-owned nitrate in Chile. The Chilian Government bought the nitrate, and paid the German owners by drafts on Berlin, which were met out of the Chilian money deposits in Germany. Thus Germany received Chilian gold in exchange for the inaccessible nitrate, while the Chilian Government received nitrate in exchange for its inaccessible gold. Chile then sold the nitrate for American gold to the largest manufacturer of explosives in the United States. Thus, one result of the blockade and the statutory list is that this German nitrate goes to make munitions, to be hurled at the Germans on the French front from American guns. The German Government, by sanctioning this sale of explosive material to its enemies, gave evidence of its earnest desire to stand well with Chile. On the other hand, Germany was impelled to this agreement in order to obviate grave financial loss to Germans and especially to save a big Hamburg firm from disaster.
The active entry of Brazil into the war has in great part superseded the action of the statutory list in that country: for Brazil has taken decisive measures towards Germans within her borders. All enemy enterprises are in the hands of government receivers. All contracts for purchase of coffee or other Brazilian products by Germans are null and void; and in cases where payments had been made by the German purchasers, all such payments must be handed over to the official receivers. The United States also publishes a Black List of firms with whom her citizens are forbidden to deal. Evasion of allied watchfulness becomes more and more difficult: yet ingenious, and sometimes successful efforts are made to find loopholes in the wall of the blockade.
There are now in Buenos Aires nearly 150 Turkish firms—Levantines of every denomination, Mohammedan, Christian, Jewish. Some of these are long-established and well-reputed houses. But most of them have sprung up during the war. Some of them, starting with exiguous capital, have made large fortunes in a year or two of trade. This has been done by supplying to German black-listed firms goods imported direct from Manchester and Bradford. Through the close co-operation of the German bank with German trade, these Syrians and Armenians are enabled, by the Germans standing behind them, to pay cash against documents in place of the usual sixty to ninety days' credit, and thus have a great advantage over the British or allied trader. The British authorities now permit export only to certain registered Turkish firms. The restriction does something to limit the abuse of this kind of trading.
Besides these ingenious efforts to keep open communication with Europe, there is another side of the commercial war. In the neutral states of Latin America the German business man is as ubiquitous and energetic as ever, nay more so as he has greater difficulties to contend with. So far as he can, he sells from accumulated stocks of German goods, for the German importing houses before the war had gathered great stocks, especially in Chile. Where this resource fails, he repairs his stock by buying anywhere. Up to April 1917 he bought largely in New York. Now he buys where he can and what he can—American goods, French goods, British goods—anything to hold the market until the ocean shall be free once more to German keels carrying German goods.
From the Argentine Republic 6000 young Englishmen came home to serve Britain on the fields of France. The young German would have found difficulty in getting home, even had he wished to do so; so for the most part he stayed in the River Plate. Other Germans have been released from military service and sent out as commercial travellers; for the German Government regards this too as National War Service. Thus today there are three German commercial men in the River Plate to one Englishman. The resources and confidence of the German traders are surprising. They have bought great quantities of wool in the River Plate—not so much indeed as is generally supposed; for German emissaries, in order to force up the price of wool to the Allies, have methodically made specious but fictitious offers of high prices to sheep-farmers all over the Argentine Republic. Yet, even so, German traders hold large quantities both of wool and of grain. These have been purchased partly for selling at enhanced prices on the spot, but principally with a view to after-war trade and the supply of raw materials to Germany. These purchases are proof of firm belief in the future. Moreover, both in Chile and in Argentina the interned German ships await their after-war cargoes for Europe. And when the Chilian or Argentine asks whether the German will be free to use these ships when peace comes, the Englishman cannot reply. The ships are there, proof of Germany's future power to trade.