SMUGGLING FROM NEUTRAL COUNTRIES
Considerable aid was afforded to Germany by her trade with neutral countries. First, there was a good deal of direct re-exportation of materials imported from abroad. Then there was an exportation of domestic products, and the filling up of this deficit by importation from abroad, mainly from the United States. Mr. J. L. Moore of Harvard University, thought that smuggling deserved to be added to the source of German supply from the outside, and he mentioned the fact that a member of the Commerce Department of the Swiss Government was convicted of this offense and served a prison sentence. His exposition of how neutrals aided Germany is given in the following passage from the New York Times:
"To direct and indirect re-exportation must be added, finally, smuggling, which has always been a factor in the evasion of blockades. In Switzerland a member of the Commerce Department of the government was recently convicted of this offense and is serving a prison sentence.
"That this aid was precious to the Central Powers and enabled them to stave off starvation and consequent submission can be corroborated in various ways. First, in spite of the enormous volume of imports from the neutrals Germany was on the verge of starvation during the last winter, the economic crisis reaching its critical stage coincidentally with the political crisis in the Reichstag at the beginning of July. The most potent cause of this political upheaval was the economic destitution which cast its melancholy shadow over the whole nation and increased the desperation of people and Reichstag till it exploded in a violent outburst of wrath against the government. Secondly, the general impression of press and people in Germany and Switzerland is that the most sensational part of the speech of Erzberger, which brought the crisis into being, consisted of an exposé proving the futility of the submarine policy and impugning the judgment of the officials responsible for its inauguration, inasmuch as the entrance of the United States into the list of Germany's enemies, which resulted therefrom, was likely to result in a curtailment of the imports obtained through the neutrals, and without a continuance of these imports Germany could not hold out long."
SURPRISING INCREASE OF NEUTRAL SHIPPING
The shutting off of the German commercial fleet from trade and the employment of Allied shipping under government contract offered an exceptional opportunity to small neutral countries to advance their shipping business. This opportunity was eagerly seized. Norway reported the establishment in 1915 of no fewer than 488 shipping firms. This was followed in 1916 by an increase of 459. Some of these Norwegian firms paid dividends as high as 400 per cent. Statistics from Sweden also show a significant expansion. Swedish firms of inconsiderable capitalization before the war became important companies, able to undertake transatlantic trade on a large scale. It seems likely that these Swedish transatlantic lines will constitute a formidable competitor to the old established German companies—now that the war is over.
Corroborative evidence on the shipping situation in neutral powers is found in the following passage taken from the New York Journal of Commerce:
"Of great importance for an estimate of the future of our shipping combines is the progress which the two largest Danish lines—the Forenede, which sails to North America; and the Estasiatisk Kompagni, which, as the name suggests, runs lines to East Asia—have made during the war. The Forenede, for instance, made in 1916, with a stock capital of 30,000,000 crowns, a net profit of no less than 40,000,000 crowns, of which a good 10,500,000 crowns was allotted to the reserve and emergency funds. The collective reserves of this company amounted to more than 26,000,000 crowns at the end of 1916: and its bank credits totaled 44,000,000 crowns.
"The large Dutch shipping firms have likewise made enormous profits. The following table presents their results for 1916 (the Dutch florin, or guilder, is worth $0.402 United States currency at normal exchange):
| Shipping Firm | Stock Capital, Florins | Net Profits, Florins | Reserve and Emergency Funds, Florins |
|---|---|---|---|
| Holland-Amer. Line | 12,000,000 | 26,500,000 | 10,200,000 |
| Stoomvaart Mij. Nederland | 19,000,000 | 18,600,000 | 8,800,000 |
| Kon. Nederl. Stoomboot Mij | 15,050,000 | 19,000,000 | 7,800,000 |
| Rotterdamsche Lloyd | 15,000,000 | 15,100,000 | 12,600,000 |
| Kon. Holland Lloyd | 10,000,000 | 10,900,000 | 2,000,000 |