Academic journal article Canadian Journal of History

Trading with the Enemy: British Business and the Law during the First World War

Academic journal article Canadian Journal of History

Trading with the Enemy: British Business and the Law during the First World War

Article excerpt

After four months of the Great War, Sir Maurice Hankey, the Secretary to the Committee of Imperial Defence, advised His Majesty's Government that "drastic means must be taken to prevent British subjects succumbing to the temptation of continuing their trade with [the enemy] ..."(1) The Home Office, concerned with criminal activities, turned its attention to indirect trading with Germany through the neutral countries adjacent to the German empire. Indeed, official statistics indicated that exports to the adjacent neutral substantially throughout the first year of the war over the comparable prewar figures.(2) In July 1915, Edwin Montagu, H.H. Asquith's protege and Financial Secretary to the Treasury, confided to the Prime Minister his conviction that trade with Germany was occurring on a large scale in London.(3) While not all of this export trade was illegal by 1916 the Board of Trade, a department of state traditionally friendly to trade and traders, could charge "that this country had been supplying the enemy through neutral countries."(4) The Foreign Office found it difficult to explain the bloated export trade to the Northern Neutrals -- Holland, Denmark, Norway, and Sweden -- "on any other basis than that of enemy destination."(5) The principal lobbying group for British businessmen, the Association of Chambers of Commerce, could not deny that illegal trade might be going on and felt constrained to remind businessmen of their duty to place patriotism above profit and of the existence of the Trading with the Enemy Act.(6)

Hence it is important to examine the serious allegations that British businessmen flouted their country's laws prohibiting trade with the enemy in the First World War, emphasizing the experience of two important categories of businessmen: those engaged in the export trade and those with alleged connections to Germany.(7) Both the business community and the Liberal government were imbued in 1914 with a strong laissez-faire tradition in a state that was dependent upon exports to pay its way in the world. More than any other great power, Great Britain, the merchant state, required peace and a stable international business order for prosperity. Finding itself at war with its best European customer, the British government thus pursued economic warfare policies marked at first by moderation and referred to as "business as usual."(8) As the war became a struggle for survival of enormous dimensions, however, public sentiment and hard-liners in parliament contributed to a climate of opinion in which the business conventions of the nineteenth century including the sanctity of property and contract, were severely tested. As a result, not only did the state intervene in the affairs of businessmen to an unprecedented degree, but business ethics themselves were significantly eroded by the advent of total war.

Viscount Esher, an influential behind-the-scenes figure in policy-making circles, reflected the dominant Liberal ideology and British experience in war when he wrote in January 1915 "that the English people have to be merchants while they are soldiers, and that trade and maritime force are dependent on each other."(9) Britain's traditional economic weapon against a continental enemy was naval blockade, but the government had permitted a limited trade when it had served British interests, such as during the Crimean War. British adherence to the 1909 Declaration of London -- which broke down wartime trade into three categories: absolute contraband (prohibited), conditional contraband (prohibited if for enemy government use), and non-war or free goods -- endorsed this regulated approach to economic warfare. Thus the door was left open for limited trading with an enemy. In 1912, the C.I.D.'s Desart Committee offered ambiguous advice about cutting off all trade with the enemy: it recommended a complete embargo at the commencement of war but an easing of restrictions thereafter "to suit the circumstance of the moment. …

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