Agreement on American cotton

The British chronology of the war records under 18 March 1915 an agreement between the British government and American cotton interests under which cotton was to be declared contraband. The documents of the time, however, show something else. In March 1915 the British did indeed conclude an agreement on cotton with representatives of American exporters, but it concerned letting through or buying up cargoes contracted before the new restrictions. Cotton became contraband only in August 1915.

Cotton and the war

Cotton was the chief wealth of the American South, and a large part of the crop went for export, including to Germany. The outbreak of war wrecked this trade and its prices. In the autumn of 1914 the British government assured Washington that cotton would not be placed on the contraband list, and indeed it did not appear on successive British lists. American exporters, on the advice of the State Department’s trade adviser Robert F. Rose, therefore began buying cotton for German customers, chartering ships and concluding freight contracts. The Dacia, seized by the French, was also carrying cotton from Galveston to Bremen.

The situation was changed by the Anglo-French declaration of 1 March, which announced the stopping of all goods bound for Germany. Cotton was still not contraband, but it could no longer reach German buyers. Exporters who had concluded contracts in good faith faced heavy losses. Banks refused to finance shipments, and insurance against seizure by the British cost as much as 30 per cent of the value of the cargo.

Talks in Washington and London

On 3 March Rose brought to the British ambassador, Cecil Spring Rice, the exporter L. Wolf, who had cotton in Galveston for German customers and ships chartered for Aalborg and Copenhagen. The ambassador passed their request on to London. The next day the Secretary of State, William Jennings Bryan, instructed the ambassador in London to support the exporters’ efforts, with the reservation that the United States did not recognise Britain’s right to issue the declaration of 1 March. Spring Rice gave assurances that his government did not wish to harm the planters of the South, since the British cotton industry depended on their crops.

On 8 March the British Embassy announced that rules had been agreed in London for cotton shipped to neutral ports. Cotton for which contracts of sale and freight had been concluded before 2 March was to be let through or, if stopped, bought at the contract price, provided the ship sailed no later than 31 March. Cotton insured before 2 March was to be treated in the same way, as long as it was put on board by 16 March. Every such shipment had to be declared before sailing and certified with documents at a consulate. Ships and cargoes bound for enemy ports could not continue their voyage.

In the following days the terms were eased. On 15 March, the day the British retaliatory Order in Council was announced, the embassy extended the agreement to ships that had sailed before the formalities could be completed. On 17 March it announced that a contract of sale or a freight contract would suffice, rather than both. In the version later cited by the State Department, cotton insured before 2 March could also be loaded until 31 March. The agreement thus took its final shape at roughly the date under which the British chronology recorded it.

A private agreement

Washington took care that the agreement should not have an official character. When in May a British memorandum presented it as a concession to the United States government, the State Department protested. The British Embassy then explained that the terms had been agreed in London by British officials with a private representative of American cotton interests. Rose and his associate had acted in the talks on behalf of the exporters, not the government. The Foreign Secretary, Edward Grey, confirmed that London regarded the agreement as private and not binding on the US government.

The agreement did not end the disputes. By mid-May the British had stopped 28 ships with more than 200,000 bales of cotton. Most cargoes were bought up under the terms of the agreement, and the exporters complained of delays in payment. On 19 May the Chancellor of the Exchequer, David Lloyd George, admitted in the House of Commons that cotton was not formally contraband, but that the measures applied since 11 March cut Germany off from it as effectively as such a declaration would.

Cotton becomes contraband

In Britain, however, pressure was growing for cotton, from which guncotton (PL) was made, to be officially placed on the contraband list. In July Grey warned the United States ambassador that the government would do so before the new crop came in, and at the same time would try to ensure that Britain bought large quantities of cotton at a good price. The proclamation of 20 August 1915 declared raw cotton, linters, cotton waste and cotton yarn absolute contraband. Only then did what the British chronology links with March actually happen.