Government of the United States are laboring as to the principles applied by British prize courts in dealing with the cases which come before them.

I have, etc.,

E. GREY.

On the 18th of August England, after frequent declarations against declaring cotton contraband, included it in the list by the following proclamation:

[The New York Times, Aug. 18, 1915.]

British proclamation, August 21, 1915, declaring cotton contraband of war:

Now, therefore, we do hereby declare, by and with the advice of our privy council, that during the continuance of the war, or until we do give further public notice, the following articles will be treated as absolutely contraband, in addition to those set out in our royal proclamation aforementioned: Raw cotton, cotton linters, cotton waste, and cotton yarn.

And we do hereby further declare that this our royal proclamation shall take effect from the date of its publication in the London Gazette. (The New York Times, Aug. 22, 1915.)

The following communication was to clear up an alleged misunderstanding over the Neches:

NOTE VERBALE FROM THE BRITISH EMBASSY.

BRITISH EMBASSY, Washington, August 6, 1915.

Comments have reached His Majesty's Government from various quarters that a misapprehension seems to have arisen with regard to the British note of July 31 concerning the steamer Neches, which it was asserted had been interpreted as stating that the cargo of the vessel had been seized as a reprisal measure against Germany's submarine policy.

Sir Edward Grey has requested me to explain that the misunderstanding arises no doubt from the brevity of the note. The note admits no illegality of procedure. The seizure was not meant in the nature of a reprisal but was based solely on the British contention of the absolute legality of the Orders in Council as explained. in the note of July 23, to which the Neches note refers.

It is also explained that in stating that the British Government. does not yet know what steps neutrals have taken against German submarine policy, no reférence was intended to the action of the United States Government but to other neutrals, who have lost more ships than the United States but of whose action nothing is known by the British Government.

It should be further explained that in making reference to the German submarine policy the British Government only desired to point out that from its standpoint it was hardly just or reasonable that it should be asked by neutrals to abandon any of its legal rights while Germany commits illegalities both on Great Britain and on 84610°-H. Doc. 2111, 64-2, pt 2-10

neutrals, though it is admitted and regretted that interference with German trade however legal may be inconvenient to neutrals.

One of the chief claims of the British right to blockade neutral ports was the increased exportation as proof of reexport to Germany. The following communication is pertinent:

[Memorandum.]

AMERICAN EMBASSY,
London, June 3, 1915.

The American ambassador presents his compliments to His Majesty's secretary of state for foreign affairs and has the honor to acquaint him that he is in receipt of a communication from the consul general in London, in which he requests that he may be informed regarding the amount of raw cocoa and preparations of cocoa exported from Great Britain to Holland, Denmark, Sweden, Norway, and Italy during the four months ending April 30, 1915, as compared with the same period of 1914 and 1913. Mr. Page ventures to hope that should no inconvenience be found in so doing, Sir Edward Grey may be so good as to cause him to be furnished with the desired information in this connection.

THE BRITISH SECRETARY OF STATE FOR FOREIGN AFFAIRS TO AMBASSADOR PAGE.

FOREIGN OFFICE, August 13, 1915.

YOUR EXCELLENCY: I have the honor to refer to the memorandum which you were good enough to communicate on the 3d June last, in which you informed me of the desire of the United States consul general in London to be furnished with figures showing the amount of raw cocoa and preparations of cocoa exported from Great Britain to Holland, Denmark, Sweden, Norway, and Italy during the four months ending April 30, 1915, as compared with the same period in 1914 and 1913. Your excellency will remember that I had the honor to communicate to you tabular statement of these figures on the 16th ultimo.

His Majesty's ambassador at Washington reported on the 22d July that the acting counselor of the State Department had referred in conversation to the unfavorable impression created at Washington by reports as to the increase in British exports to northern European neutral ports since the outbreak of war received from Mr. Consul General Skinner, these reports having given figures showing increases in the British exports of some commodities to those countries. I am therefore communicating to Sir C. Spring-Rice statistics showing what the exports of the United Kingdom were in comparison with those of the United States during the first five months of this year, in order that this impression may be removed as soon as possible; but as I hear that statements, no doubt inspired by German agents, are being circulated in America to the effect that His Majesty's Government are trying to stop the legitimate trade of the United States with neutral countries in order to capture the trade for the British Empire, and are therefore allowing goods to be exported from the United Kingdom which they have not allowed to be imported into the same countries from the United States, I think

it well to inform your excellency immediately of the true state of the case, and with this view to invite attention to the following data and figures:

The increased reexport of cotton from the United Kingdom to Norway, Sweden, Denmark, and the Netherlands during the months of January to May, 1915, as compared with the same period in 1914, amounted to 503,995 centals of 100 pounds. The United States exported to the four countries mentioned during this period in 1915 as much as 3,353,638 centals, as compared with 204,177 centals during January to May, 1914, an increase of 3,149,461 centals, or six times the increase in the export of cotton from the United Kingdom.

The above figures for the United Kingdom are taken from the official customs returns; those for the United States have been carefully compiled by the war trade department from the manifests of those vessels which actually arrived with cargo from the United States in Scandinavian and Dutch ports during the five months. February to June, 1915, as compared with five-twelfths of the total recorded exports from the United States to those countries in the year ended June 30, 1914. It has been necessary to adopt this method, as the Monthly Summary of Foreign Commerce, issued by the United States Government, gives very few details with regard to American trade with those countries. It is evident that some shipments must have taken place from the United States to Scandinavia and the Netherlands which could not come within the scope of even the most circumstantial compilation of statistics drawn up from the manifests of examined ships alone, and I would therefore lay particular stress on the fact that the figures thus obtained by the war trade department are necessarily understatements of the total amounts actually shipped. But even from the figures thus obtained it is possible to show conclusively how much greater the increases in the American exports to Scandinavian countries and the Netherlands have been than those of Great Britain during the first five months of this year, not only in the case of cotton but in that of almost every other important commodity.

Reexports of rubber from the United Kingdom to Scandinavia and the Netherlands declined from 17,727 centals of 100 pounds in January-May, 1914, to 16,693 centals in January-May, 1915; on the other hand, exports of rubber from the United States to the same destinations increased from 1,579 centals to 5,040 centals. Larger reexports of rubber to the United States from this country have indeed taken place, but all other reexports of rubber have declined during this period, as the following figures show:

It will, therefore, be seen that this country has actually been supplying more rubber to the United States at the expense of other neutrals, while American exporters have taken advantage of this to ship increased quantities of rubber to Scandinavia and the Netherlands.

In the case of lubricating oils, the increase of United Kingdom exports to Scandinavia and Holland was 703,370 gallons; the increase of the United States exports during the same five months was 3,857,593 gallons, being five times as great as the British increase. The increase in the reexports of unmanufactured tobacco from the United Kingdom to the same countries and over the same period was 2,937,244 pounds; the corresponding United States increase was 6,081,848 pounds. The British increase is mainly due to the diversion of tobacco grown in the British Dominions from continental to United Kingdom ports. The reexports of manufactured tobacco from the United Kingdom have actually declined, while exports of this commodity from the United States to Scandinavia and the Netherlands have hitherto been relatively insignificant. It is therefore altogether improbable that the United States can have lost trade in tobacco in consequence of the measures taken by His Majesty's Government.

United Kingdom reexports of cocoa have risen from 2,976,143 pounds in January-May, 1914, to 14,504,013 pounds in JanuaryMay, 1915, an increase, in round numbers, of 11,500,000. Exports from the United States for the same months have risen from 12,300 pounds in 1914 to 16,016,000 pounds in 1915, an increase of 16,000,000. These figures speak for themselves.

In the first five months of 1914 the United Kingdom reexports of coffee to the same countries amounted to 80,407 hundredweight, and the exports from the United States to 7,376 hundredweight. In the corresponding five months of 1915 the United Kingdom reexports were 263,488 hundredweight, while the imports from the United States were 285,760 hundredweight, showing that the United States exports, which were formerly much less, are now greater than those of the United Kingdom.

In the case of rice, the increased reexport from the United Kingdom, which amounted to 193,458 hundredweight for the period under review, was entirely due to the diversion to the United Kingdom ports of the large trade in Indian rice formerly carried on through Hamburg and other continental ports. The exports from the United States have increased from 262 hundredweight in January-May, 1914, to 27,800 hundredweight in January-May, 1915, an increase of 27,538 hundredweight.

The United Kingdom increase in the export of wheat flour to Scandinavia and the Netherlands during January-May, 1915, compared with 1914, was 47,045 hundredweight: the United States increase was 2,555,593 hundredweight for the same period.

For the same period the United Kingdom increase in the export of barley to Scandinavia and the Netherlands was 249,512 hundredweight; the United States increase, 2,016,892 hundredweight.

I could point to many other instances of similar proportionate increases in the exports of the United States to Scandinavia and the Netherlands as compared with exports to the same countries from

the United Kingdom during the last five months. In respect to the great majority of articles for which figures of United States trade can be given the increases in this trade are greater, and in some cases very considerably greater, than the increases in the United Kingdom trade.

In many cases increases in United Kingdom reexports are due to the facts that the products of British Indian and colonial products which formerly went direct to continental ports, such as Hamburg, Rotterdam, or Copenhagen, are now sent to the United Kingdom and thence distributed to old customers in Scandinavia and the Netherlands. Among such may be mentioned pepper, cinnamon, and other spices (largely the product of the British East Indies), Indian tea, palm kernels (mainly from British West Africa), and copra (mainly from the Straits Settlements and Australia). The direct trade of British overseas Dominions with the port of Hamburg alone is very great in normal times.

In many other instances our reexport trade for the first five months of this year shows a large decline. The following statement gives a few examples of such decreases in reexports from the United Kingdom to all destinations:

Everything in the statistics I have quoted tends to show that the mercantile community of the United States has made profits proportionately equal to or greater than those of the mercantile community of Great Britain in respect to all those demands which have inevitably arisen in Scandinavia and the Netherlands as a consequence of the closing of German ports. The total volume of the trade of the United States with these countries has increased 300 per cent, as Your Excellency will see from the accompanying table, taken from the United States official Monthly Summary of Foreign Commerce, which shows the comparative value of the total exports of the United States to Scandinavian countries and the Netherlands during the first five months of 1914 and 1915. The value of the total increase in those exports during this period amounted to $145,658,000.

I have, etc.,

E. GREY.