The admitted purpose of the embargo was to force neutral countries contiguous to Germany to suspend trade with her as an enemy of the United States. The sentiment of the Senate, barring the objections of a few members like Senator Townsend, who protested against the embargo's "injustice," was that the United States had full control over its own trade, and, especially in time of war, could restrict it as its foreign interests required. No international law was involved in American legislation which determined the disposition of American exports, even if that legislation had a direct bearing on the prosecution of the war. The Administration refused to see any analogy between this embargo policy and the questions raised by the blockade controversy between the United States and Great Britain when the former was a neutral. American belligerency had necessitated a change of basis in the Government's attitude.
The President went to some pains to explain to the country what the export embargo meant. He created a Board of Exports Control, or Exports Council, composed of Herbert C. Hoover, the selected head of the food administration body, and a number of leading Government officials. This board's duty was to prevent a single bushel of wheat or the smallest quantity of any other commodity from leaving an American port without the board's license and approval. This check on exports, the President pointed out, regulated and supervised their disposition, and was not really an embargo, except on consignments to Germany.
"There will, of course, be no prohibition of exports," he said. "The normal course of trade will be interfered with as little as possible, and, so far as possible, only its abnormal course directed. The whole object will be to direct exports in such a way that they will go first and by preference where they are most needed and most immediately needed, and temporarily to withhold them, if necessary, where they can best be spared.
"Our primary duty in the matter of foodstuffs and like necessaries is to see to it that the peoples associated with us in the war get as generous a proportion as possible of our surplus, but it will also be our wish and purpose to supply the neutral nations whose peoples depend upon us for such supplies as nearly in proportion to their need as the amount to be divided permits."
Nevertheless the proclamation that came from the White House on July 9, 1917, disclosed an exercise of presidential authority without precedent in American history in that it contemplated, with British cooperation, the virtual domination of the country's trade with the whole world. It provided for the absolute governmental control, by license, of the exports of essential war commodities to fifty-six nations and their possessions, including all the Allied belligerents, all the neutrals, as well as the enemy countries. These commodities embraced coal, coke, fuel, oils, kerosene and gasoline, including bunkers, food grains, flour and meal, fodder and feeds, meats and fats, pig iron, steel billets, ship plates and structural shapes, scrap iron and scrap steel, ferromanganese, fertilizers, arms, ammunition and explosives. By the control of coal and other fuels the Government was bent on obtaining a firm grasp on shipping. And the point was, as stated in the preamble of the proclamation, "the public safety requires that succor shall be prevented from reaching the enemy."
Europe hailed the establishment of the American embargo as signalizing a "real blockade" against Germany. The Paris "Temps" succinctly expressed the prevailing view in the Allied countries:
"The Allies, despite the patience of their diplomats and the vigilance of their navies, have failed to make the blockade sufficiently tight. A new measure was needed; the United States has now supplied it. By forbidding indirect assistance the United States has introduced a new and efficient condition. If the Allies firmly apply the principle, as public opinion strongly demands, President Wilson's proclamation will have been one of the decisive acts of the war."
The need for sending foodstuffs and like necessaries to the Allies, as pointed out by the President in explaining the embargo, called for shipping facilities of a magnitude that demanded the immediate attention of Congress. Exports there would be in unexampled quantities, but their destination must largely be to the Entente countries, consigned in armed ships. Coastwise craft were drafted for transatlantic trade; ships under construction for private concerns were subject to acquisition by the Government; every craft afloat adaptable to war service—ferryboats, private yachts, motor boats and the like—were listed for contingent use; and the thousand or more merchant ships of American registry demanded an equipment of guns and ammunition to enable them to run the submarine blockade.
The seized German and Austrian ships helped to supply the needed tonnage, but they did not go far. War conditions, created by the recognition that the United States would practically win the war for the Allies by keeping their countries generously supplied with all necessities required the construction of a huge trade fleet of steel or wooden ships at a cost of a billion dollars. The Government, through the Shipping Board, reserved the right of preempting the products of every steel mill in the country and of canceling all their existing contracts with private consumers, so as to divert the use of steel products for the trade fleet. The acquisition of every shipyard in the country was also contemplated as a contingency. Tentative estimates provided for the construction of thousands of steel and wooden cargo ships aggregating between five and six million tonnage within the coming two years.
The shipbuilding program was undertaken by General Goethals, builder of the Panama Canal, as general manager of a new Government body called the Shipping Board Emergency Fleet Corporation, and William Denman, its president. Conflict immediately arose between them regarding the expediency of building steel or wooden ships to meet the emergency, and the whole project was imperiled by their personal differences. General Goethals favored a steel fleet and planned to apply the available balance of an appropriation of $550,000,000 to the construction of fabricated steel ships of standard pattern. Early in July contracts for 348 wooden ships, aggregating 1,218,000 tons, and costing some $174,000,000, had been made or agreed upon and contracts for a further 100 were under negotiation. Of steel ships seventy-seven had been contracted for or agreed upon, amounting to 642,800 tons, at a cost of $101,660,356. This was a good beginning, as it represented a program under way for providing 525 ships of all sorts. The remainder of the Goethals program called for steel ships, of which he promised 3,000,000 tons in eighteen months. Another feature of the Goethals policy was the immediate commandeering of private ships in the stocks, whether owned by Americans, Allies, or neutrals. Acute friction arose between General Goethals and Mr. Denman, mainly over the question of the former's negotiations and plans with the steel interests. In the end President Wilson intervened by accepting the invited resignations of both, and placing the shipbuilding in the hands of Admiral Washington L. Capps, a naval ship constructor of renown, and Edward N. Hurley, former chairman of the Federal Trade Commission.