British blacklist

On 23 December 1915 the British Trading with the Enemy (Extension of Powers) Act, 1915, received royal assent. It gave the government the right to forbid British subjects any dealings with persons and firms in neutral countries if, because of their enemy nationality or their connections with the enemy, they were considered dangerous. The names of such firms were to be published in a list that soon came to be called the blacklist.

A gap in the law

The existing British bans on trading with the enemy, extended throughout 1915, rested on an old principle of English law: whether someone was an “enemy” depended on where they lived or did business, not on their nationality. A firm founded by Germans but operating, say, in Argentina or Chile was therefore a neutral firm in British law. Yet German capital was invested in Chilean nitrate mines, in the coffee trade in Brazil and in meat and grain on the River Plate, and the goods of German merchants in South America were often carried in British ships and insured by British companies. The profits from these businesses could support the German war effort, and the branches of German firms abroad were regarded as centres of propaganda and intelligence.

The French, uneasy about British economic policy and the growing suspicions of their own public opinion, asked for the two allies’ regulations to be better coordinated. In September 1915 the Foreign Office instructed its ministers and consuls in neutral countries to examine whether a complete ban on trade with local German firms would not cost British shipowners more than it gained. Most replied that the fears of losses were exaggerated. According to the British official history of the blockade, the view was spreading ever more widely in government departments that the German trading organisation abroad had not merely to be paralysed but destroyed.

The act

The bill came before the House of Commons in mid-December and was well received. Some members at once demanded that even the Netherlands Overseas Trust, which they considered riddled with German influence, be put on the blacklist. On 22 December the bill was considered by the House of Lords. The Lord President of the Council, the Marquess of Crewe, explained that merely changing the definition of “enemy” would achieve nothing, because those concerned would easily get round the law by acting through neutral front firms. Nor did the government want to restrict British exports more than necessary. That was why, instead of general rules, it had chosen a list of specific firms, drawn up on the basis of information from the spot and constantly added to. At the government’s request the Lords passed the bill that same day, adding only that it applied to bodies both incorporated and unincorporated, so that there could be no doubt that it also covered companies. The Commons agreed to the amendment the same day, and the next day the bill became law.

A ban on trade with a listed firm was announced by royal proclamation. The list could be varied and added to by order of the Lords of the Privy Council on the proposal of a secretary of state, without waiting for a meeting of the Council with the king. Anyone who traded with a listed firm was as liable as for trading with the enemy. The act did not apply to firms operating solely in the British dominions or to domestic matters. The first part of the list appeared only at the end of February 1916, by which time the Ministry of Blockade had been set up. In the neutral countries, especially in the United States, the blacklist later provoked more indignation than many far more questionable steps taken by London.