File No. 763.72112/3980
[Enclosure]
Minutes of Meeting Held at the Office of the
British Ministry of Blockade, Lancaster House, on June 21,
1917
- Present:
-
Chairman:
Sir
Adam Block, K. C. M. G., Controller of
the Finance Section of the Ministry of
Blockade
-
France:
M. J. Lacoste Seignouret
-
Italy:
M. Paolo Conte
-
Russia:
M. Serge P. Ermolaieff
- U. S. A.: Mr. B. Beal
The chairman stated that the meeting should be regarded as
entirely unofficial. Lord Robert
Cecil, Minister of Blockade, had, however,
authorised him to consult the members of the meeting with regard
to certain proposals for tightening the financial blockade of
the Central powers. Copies of the proposals which were, of
course, subject to modification, were in the hands of those
present, who would, no doubt, consult their respective
Governments with regard to them. Unanimity and concerted action
on the part of all the Governments was essential in action based
upon the proposals.
It must be understood that so far the proposals had not been
officially approved by His Majesty’s Government, and
consultation with London bankers would also be necessary.
The action taken in the past with regard to the financial
blockade by Great Britain and by France had not been altogether
similar. In the main, the British authorities had not placed
neutral banks upon the financial black list except where they
had used their London accounts in connection with enemy
transactions.
[The principle now invoked is similar to that already adopted and
in force in regard to goods. As Lord Robert
Cecil stated in the House of Commons on March 27:
“We can legitimately deprive the neutral country of certain
advantages, and in consideration of our granting goods and other
things that the neutral country wants from us, we ask them to
restrict their trade with our enemies.”
Mutatis mutandis this principle should
apply to the financial blockade, and the Allies should be free
where considered advisable, to
[Page 900]
bargain, not with neutral countries but
with individual banking institutions in neutral countries, using
as a lever the use of the Allies’ banking facilities and the use
of British-owned and other Allied cables. The weapon is a most
trenchant one, seeing that the Allies now hold the financial
centres and money markets of the world, and it is most essential
that the weapon should be used, subject always to diplomatic
considerations and to the balance between injury done to the
enemy and injury done to ourselves.]1
The French authorities have at times already exercised their
power in this respect and have placed certain neutral banks upon
their financial black list on the ground that they were heavily
engaged in enemy transactions.
It may be noted further that whenever the British or the French
authorities have taken action against neutral banks, either for
involving the Allied banks in enemy transactions, or as in the
case of the Banco Hispano Americano for merely having relations
with the enemy, the result has almost always been that such
neutral banks have been prepared to sign very stringent
agreements as a condition of being removed from the black list,
and of resuming relations with London and Paris.
The proposals now submitted represented a uniform and united
extension on a large scale of the method employed by the French
authorities in certain individual cases.
The recent fall of the mark in neutral European countries was,
doubtless, in large part, due to the fact that Germany could no
longer employ resources in the United States of America and
South America, and her more favourable exchange with the United
States of America, to acquire neutral European currencies
wherewith to pay for her imports from neutral European
countries.
It was believed that the steps proposed would lead to still
heavier depreciation in the mark, injure Germany’s economic
position seriously, and make it more costly for her to obtain
supplies from neutral European countries.
It was believed that if the five countries acted in concert,
neutral European, banks could not afford to refuse the
limitations on transactions with and for the enemy suggested in
these proposals, at the cost of losing access to the money
markets of Paris, London, Milan, New York, and Petrograd. It
should, however, be carefully noted that by the announcement
proposed, the five Governments only “hold themselves at liberty”
to take the action in question. This afforded a safeguard in the
event of any general refusal on behalf of
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neutral banks, or of inconvenient
diplomatic pressure, or of it being desirable for an exception
to be made in respect of any particular bank to whom any of the
Governments are peculiarly beholden.
The chairman then put forward the considerations outlined in the
attached general memorandum with regard to the suggested
extension of the financial blockade.1
M. Ermolaieff pointed out that with regard
to condition (1) in the proposals it would appear difficult to
prohibit the granting of commercial credits to the enemy by
neutral bankers, and M. Conte expressed his
agreement.
The chairman assented to this view which was generally held.
Those present expressed a wish that a memorandum summarising what
had passed at the meeting might be supplied to them for
communication with their respective Governments.
EXHIBIT A
Suggested Extension of Financial
Blockade
Notice to be issued in the Swedish press, say, one clear week
before the operative date. Similar notice, mutatis mutandis, to be issued in the press of other
neutral countries.
The Governments of France, Great Britain, Italy, Russia, and the
United States of America, have decided that it is inexpedient
for banking houses in their respective territories to continue
to have dealings with any banking house in Sweden which engages,
directly or indirectly in—
- (1)
- The granting of any loan, credit or overdraft, or the
increase of any existing loan, credit, or overdraft, to
an enemy of any of those five countries;
- (2)
- The subscription to or purchase of any loan issued by
an enemy of any of those five countries;
- (3)
- The purchase from, or sale to an enemy of any of those
five countries of any currencies other than the
currencies of countries at war with any of those five
countries;
- (4)
- The transfer of money, credit, or securities between
an enemy of any of those five countries and any neutral
country other than Sweden;
- (5)
- The purchase from, or sale on behalf of, an enemy of
any of those five countries of any bond or certificate
issued by the Government of, or by any corporation or
company in, any of those five countries; or of any
dividend warrant or coupon payable in any of those five
countries; or of
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any bill, cheque, or draft payable in any of those
five countries;
- (6)
- The collection, discounting, or negotiation on behalf
of an enemy of any of those five countries of any bond,
note, bill, cheque, draft, dividend warrant, or coupon
payable in any of those five countries;
- (7)
- The transmission of any message, letter, advice, or
document of any kind, by any means whatever, between an
enemy of any of those five countries and any neutral
country other than Sweden;
it being understood that in each and every case
“enemy” for this purpose includes any person, firm, or company,
wheresoever domiciled, whose name appears in a published list of
those with whom the subjects of any of those five countries are
forbidden to have dealings.
. . . . . . . . . . . . . .
