condition of trade with neutral countries, and it is stated that, through the action of His Majesty's Government, the products of the great industries of the United States have been denied long established markets in European countries which, though neutral, are contiguous to the seat of war. Such a result is far from being the intention of His Majesty's Governinent, and they would exceedingly regret that it should be due to their action. I have been unable to obtain complete or conclusive figures showing what the state of trade with these neutral countries has been recently, and I can therefore only ask that some further consideration should be given to the question whether United States trade with these neutral countries has been so seriously affected. The only figures as to the total volume of trade that I have seen are those for the exports from New York, for the month of November, 1914, and they are as follows, compared with the month of November, 1913:

Exports from New York for November, 1913 [and] November, 1914, respectively.

It is true that there may have been a falling off in cotton exports, as to which New York figures would be no guide, but His Majesty's Government have been most careful not to interfere with cotton, and its place on the free list has been scrupulously maintained.

We do not wish to lay too much stress upon incomplete statistics; the figures above are not put forward as conclusive; and we are prepared to examine any further evidence with regard to the state of trade with these neutral countries, which may point to a different conclusion or show that it is the action of His Majesty's Government in particular, and not the existence of a state of war and consequent diminution of purchasing power and shrinkage of trade, which is responsible for adverse effects upon trade with the neutral countries. That the existence of a state of war on such a scale has had a very adverse effect upon certain great industries, such as cotton, is obvious; but it is submitted that this is due to the general cause of diminished purchasing power of such countries as France, Germany, and the United Kingdom, rather than to interference with trade with neutral countries. In the matter of cotton, it may be recalled that the British Government gave special assistance through the Liverpool Cotton Exchange to the renewal of transactions in the cotton trade of not only the United Kingdom but of many neutral countries.

Your Excellency's note refers in particular to the detention of copper. The figures taken from official returns for the export of copper from the United States for Italy for the months during which the war has been in progress up to the end of the first three weeks of December are as follows:

. Nineteen thirteen: Fifteen million two hundred two thousand pounds. Nineteen fourteen: Thirty-six million two hundred eightyfive thousand pounds. Norway, Sweden, Denmark, and Switzerland are not shown separately for the whole period in the United States

returns but are included in the heading "Other Europe" (that is, Europe other than the United Kingdom, Russia, France, Belgium, Austria, Germany, Holland, and Italy). The corresponding figures under this heading are as follows:

Nineteen thirteen: Seven million two hundred seventy-one thousand pounds. Nineteen fourteen: Thirty-five million three hundred forty-seven thousand pounds.

With such figures the presumption is very strong that the bulk of copper consigned to these countries has recently been intended, not for their own use, but for that of a belligerent who cannot import it direct. It is therefore an imperative necessity for the safety of this country while it is at war that His Majesty's Government should do all in their power to stop such part of this import of copper as is not genuinely destined for neutral countries.

Your Excellency does not quote any particular shipment of copper to Sweden, which has been detained. There are, however, four consignments to Sweden at the present time of copper and aluminium which, though definitely consigned to Sweden, are, according to positive evidence in the possession of His Majesty's Government, definitely destined for Germany.

I cannot believe that, with such figures before them and in such cases as those just mentioned, the Government of the United States would question the propriety of the action of His Majesty's Government in taking suspected cargoes to a prize court, and we are convinced that it cannot be in accord with the wish either of the Government or of the people of the United States, to strain the international code in favour of private interests so as to prevent Great Britain from taking such legitimate means for this purpose as are in her power.

With regard to the seizure of foodstuffs to which Your Excellency refers, His Majesty's Government are prepared to admit that foodstuffs should not be detained and put into a prize court without presumption that they are intended for the armed forces of the enemy or the enemy government. We believe that this rule has been adhered to in practice hitherto, but if the United States Government have instances to the contrary, we are prepared to examine them, and it is our present intention to adhere to the rule, though we cannot give an unlimited and unconditional undertaking in view of the departure by those against whom we are fighting from hitherto accepted rules of civilization and humanity and the uncertainty as to the extent to which such rules may be violated by them in future.

From the 4th of August last to the 3d of January the number of steamships proceeding from the United States for Holland, Denmark, Norway, Sweden, and Italy has been seven hundred and seventythree. Of these there are forty-five which have had consignments or cargoes placed in the prize court while of the ships themselves only eight have been placed in the prize court and one of these has since been released. It is, however, essential under modern conditions that where there is real ground for suspecting the presence of contraband, the vessels should be brought into port for examination: in no other way can the right of search be exercised, and but for this practice it would have to be completely abandoned. Information was received by us that special instructions had been given to ship rubber from the United States under another designation to escape notice, and such cases have occurred in several instances. Only by search in a port can such cases, when suspected, be discovered and proved. The

necessity for examination in a port may also be illustrated by a hypothetical instance, connected with cotton, which has not yet occurred. Cotton is not specifically mentioned in Your Excellency's note, but I have seen public statements made in the United States that the attitude of His Majesty's Government with regard to cotton has been ambiguous, and thereby responsible for depression in the cotton trade. There has never been any foundation for this allegation. His Majesty's Government have never put cotton on the list of contraband; they have throughout the war kept it on the free list; and, on every occasion when questioned on the point, they have stated their intention of adhering to this practice. But information has reached us that precisely because we have declared our intention of not interfering with cotton, ships carrying cotton will be specially selected to carry concealed contraband; and we have been warned that copper will be concealed in bales of cotton. Whatever suspicions we have entertained, we have not so far made these a ground for detaining any ship carrying cotton; but, should we have information giving us real reason to believe in the case of a particular ship that the bales of cotton concealed copper or other contraband, the only way to prove our case would be to examine and weigh the bales; a process that could be carried out only by bringing the vessel into a port. In such a case, or if examination justified the action of His Majesty's Government, the case shall be brought before a prize court and dealt with in the ordinary way.

That the decisions of British prize courts hitherto have not been unfavourable to neutrals is evidenced by the decision in the Miramichi case. This case, which was decided against the Crown, laid down that the American shipper was to be paid even when he had sold a cargo c. i. f. and when the risk of loss after the cargo had been shipped did not apply to him at all.

It has further been represented to His Majesty's Government, though this subject is not dealt with in Your Excellency's note, that our embargoes on the export of some articles, more especially rubber, have interfered with commercial interests in the United States. It is, of course, difficult for His Majesty's Government to permit the export of rubber from British Dominions to the United States at a time when rubber is essential to belligerent countries for carrying on the war, and when a new trade in exporting rubber from the United States in suspiciously large quantities to neutral countries has actually sprung up since the war. It would be impossible to permit the export of rubber from Great Britain unless the right of His Majesty's Government were admitted to submit to a prize court cargoes of rubber exported from the United States which they believe to be destined for an enemy country, and reasonable latitude of action for this purpose were conceded. But His Majesty's Government have now provisionally come to an arrangement with the rubber exporters in Great Britain which will permit of licenses being given under proper guaranties for the export of rubber to the United States. We are confronted with the growing danger that neutral countries contiguous to the enemy will become on a scale hitherto unprecedented a base of supplies for the armed forces of our enemies and for materials for manufacturing armament. The trade figures of imports show how strong this tendency is, but we have no complaint to make of the attitude of the Governments of those countries, which so far as we are aware have not departed from proper rules of neutrality.

We endeavor in the interest of our own national safety to prevent this danger by intercepting goods really destined for the enemy without interfering with those which are bona fide" neutral.

Since the outbreak of the war the Government of the United States have changed their previous practice and have prohibited the publication of manifests till 30 days after the departure of vessels from the United States ports. We had no "locus standi" for complaining of this change, and did not complain. But the effect of it must be to increase the difficulty of ascertaining the presence of contraband and to render necessary in the interests of our national safety the examination and detention of more ships than would have been the case if the former practice had continued.

Pending a more detailed reply, I would conclude by saying that His Majesty's Government do not desire to contest the general principles of law, on which they understand the note of the United States to be based, and desire to restrict their action solely to interferences with contraband destined for the enemy. His Majesty's Government are prepared, whenever a cargo coming from the United States is detained, to explain the case on which such detention has taken place and would gladly enter into any arrangement by which mistakes can be avoided and reparation secured promptly when any injury to the neutral owners of a ship or cargo has been improperly caused, for they are most desirous in the interest both of the United States and of other neutral countries that British action should not interfere with the normal importation and use by the neutral countries of goods from the United States.

I have, etc.,

(Dip. Corr. 41-44.)

E. GREY.

No. 13. Summary of proclamation of the German Federal Council, January 25, 1915, in reference to foodstuffs.

Available supplies in the empire of wheat, rye, both unmixed and mixed with other products, also unthreshed, are seized for war. Grain company limited, and wheat, rye, oats, and barley flour are seized for the municipality or district where the products are found. Flour in transportation is to be seized for the municipality in the district of destination.

Exempted from seizure are supplies belonging to the Government's naval or military departments, municipalities, war grain company, central purchasing company, or individual amounts of flour of threshed grain not exceeding together 220 pounds.

Attached supplies may not be touched, and legal proceedings in their regard are null and void. The feeding of animals with such supplies is particularly forbidden. Owners must take the necessary steps to conserve their supplies.

Sales to the war grain company and to municipalities are allowed. Sales from one municipality to another require the consent of higher administrative authorities and must be reported to the central distributing bureau. An agriculturist may, however, give his employers nine kilos of breadstuffs per month each, and may keep sufficient seed for sowing.

The Admiralty mills are to fulfil deliver flour. Dealers and private flour bought from January 1 to 15.

contracts for February, 1915, and mills may sell up to half of the Bakers may prepare three quar

ters of the average daily consumption of January 1 to 15. The same applies to flour not seized.

Infringements are punishable with one year's imprisonment or 10,000 marks fine. Persons having, on February 1, supplies of materials mentioned, and oats, must report the amount and ownership. The supplies of seeds must be particularly given. The war grain company and the central purchasing company need not make a report. The Government and military supplies must also be reported. Bakers and mills must report how much is used from January 1 to January 15 and the changes in stores. Verification by officials is permitted.

Competent authorities will regulate the process of dispossession. An adequate price must be paid, but the stores not reported are not paid for when taken. The person dispossessed must look after the materials until the dispossessor is ready to take the same over. For this the person dispossessed obtains recompense. Attachment and dispossession apply also to straw of unthreshed grain.

The war grain company on request is bound to supply to the municipality a part of all grain allotted to the district of the latter or to transfer the title in said grain. It is also bound to take over seized flour at the request of the municipality for the latter as far as possible and to oversee the sale of the same. It is also bound, at the wish of the municipality, to keep the quantity of the grain in the district up to the amount assigned and to give it to be milled by the district mills.

The mills will grind the grain given by the war grain company and by the central purchasing company or by the municipality.

Payment for grinding is set by the Government officials. Mills may deliver the flour and their property only to the war grain company or to the municipality. The war grain company may furnish flour to the municipalities, army or navy authorities only. The price is subject to regulation by the Government officials.

Bran from such grain is to be delivered per Government orders, and price fixed for same. An imperial distribution office is established to apportion with the help of the war grain company the existing supplies until the next harvest.

A body composed of sixteen members of the Bynfesrat (sic) [Bundesrat, i.e., Federal Council] and one member each of the German Agricultural Advisory Boards and the German National Chamber of Commerce and the Municipal Association. The municipalities must furnish to this body facts regarding their grain supplies.

Municipalities will regulate the amount used of supplies in their district, particularly the amounts given to bakers and retailers, but within the limit set by the central distributing bureau. Municipalities can also prescribe all rules and regulations for making and selling bread. Municipalities receive a bonus of ten per cent. of the value of the amount returned of the unused quantity allotted them for any stated period. These bonuses to be used for food for people. Municipalities will fix the prices for flour assigned by them.

The foregoing regulations do not apply to the grain and flour imported after January 31, 1915. Imported grain and flour may be given over by importers only to the war grain company, the central purchasing company, or the municipalities.

Cities and communities of more than 5,000 souls are to take measures for conservation of meat and arrange for the supply of preserved