was one to which iron and steel producers were willing to adhere. To the surprise of the public Walker D. Hines, the Director-General of Railroads, almost immediately announced that in making his purchases of steel rails and other iron and steel products he did not consider himself bound by the schedule of prices that had been agreed upon. In a statement given to the public on April 10, 1919, he said: After repeated consideration of the steel and iron prices proposed by the Industrial Board, I am still of the opinion that those prices are too high and therefore that the Railroad Administration cannot approve them as reasonable prices. It has been perfectly clear to me throughout the discussion of this matter, and I think it is now generally understood, that no power was conferred on the Industrial Board to impose any prices upon the Railroad Administration, but that it retained the power and also was under a duty to exercise its own judgment in respect to this important matter. Throughout the discussion in the Industrial Board itself, Mr. Powell, the representative of the Railroad Administration, indicated that the final approval of any prices so far as the Railroad Administration was concerned rested with the Director-General himself. Mr. Powell, during the discussion, objected that not only the prices on steel rails but the prices generally were unreasonably high, and before the Committee announced its action, he positively stated that the Railroad Administration would not agree to buy at the proposed prices. In view of these considerations I cannot do otherwise than announce definitely that I must decline to endorse these prices as being reasonable, either for the present or for the future To the extent that the Railroad Administration finds it necessary to make purchases, it will continue to make them on the best terms obtainable by fair and just methods, with full recognition of the principle that a Government agency with large purchasing power must be particularly careful not even to attempt action which could be regarded as oppressive. This attitude on the part of the Railroad Administra tion not only defeated the attempt of the Industrial Board to fix iron and steel prices, but discredited the entire effort to stabilize prices through a Government agency working in connection with the voluntary cooperation of producers. As a result the Secretary of Commerce a few days after the stand of the Railroad Administration was made known announced the dissolution of the Board and the abandonment of the undertaking. Immediately afterwards publicity was given to an opinion of the Attorney-General declaring that the attempted action of the Board was illegal as being in violation of the Sherman Act and statutes regulating the purchase of supplies by Government agencies. A feature of this episode that attracted no little attention was the evidence that it afforded of a lack of unity of policy and programme on the part of the Administration. Although the President had, according to the announcement of the Secretary of Commerce, approved the constitution and purposes of the Industrial Board, one of his most important representatives refused to cooperate in the project. The whole incident was not a little like that of the attempt, hereafter described, on the part of a committee of the Council of National Defense to fix the price of coal which was immediately repudiated by the Secretary of War. merce CHAPTER VI THE MOBILIZATION OF FOREIGN TRADE Conditions demanding rigid control of foreign trade-Importation of necessary raw materials — Shortage of shipping Supplying the Allies and rationing the neutrals - Prevention of trading with the enemy Legislation establishing Government control-Of exports under the Espionage Act - Of imports under the Trading-with-the-Enemy Act- Administration of exports control first vested in the Secretary of ComThe Exports Council Exports Administrative Board Creation of the War Trade Board and War Trade Council Their powers and duties Organization and activities of the War Trade Board-Control of exports Control of imports - Control of trading with the enemy Control of bunkerage Negotiation of trade agreements with European neutrals Control of exports of money, of insurance, and of enemy patents and trade marks Withdrawal of trade restrictions after the armistice The Russian Bureau Incorporated of the War Trade Board. Closely analogous to the necessity for the mobilization of industry for war purposes was that of the mobilization, in the sense of the establishment of rigid control, of foreign trade. This was due to a number of circumstances. In the first place, many of our industries were directly dependent upon imports from abroad for their raw materials. If assurance was to be had that supplies of such materials would be forthcoming in sufficient quantity, it was essential that the Government should take steps to see that they were imported. In the second place, the amount of ocean tonnage available for the use of the United States was utterly inadequate to meet our needs. This arose partly from the increased demand for ships for the transportation of troops and supplies, and partly from the destruction of vessels resulting from the unrestricted use of submarines by the enemy. This destruction was so great that it was not until near the cessation of hostilities that new ships were built by ourselves and the Allies in sufficient quantity to offset losses. With a constantly increasing demand for ships we were thus confronted during the greater part of the war with a constantly diminishing supply. This meant that every possible precaution had to be taken to insure that such ships as were available should be devoted to the transportation of those commodities which were most essential for the supply of our war and general needs. Third, a rigid control over exports was essential in order to insure that no American goods should reach the enemy either directly or indirectly through neutral countries, and that such of our goods as were available for export should go to those of the Allies as were most in need of them, or to those neutrals who would undertake to give to us or the Allies reciprocal advantages. Finally, the United States, following the example of Great Britain and the other Allies, adopted the policy of prohibiting trading by American firms not only with all firms belonging to the enemy, but with all firms, no matter of what nationality or where located, that were favorably disposed to or maintained trading or other relations with the enemy. The only way in which these conditions could be met and these policies carried out was by the Government's assuming complete control and direction over all our foreign trade. The first step was taken by the passage of the so-called Espionage Act of June 15, 1917, which, among other things, conferred upon the President full power to control all exports from the United States. Title VII, which relates to this matter, reads as follows: SEC. 1. Whenever during the present war the President shall find that the public safety shall so require, and shall make proclamation thereof, it shall be unlawful to export from or ship or take out of the United States to any country named in such proclamation any article or articles mentioned in such proclamation, except at such time or times, and under such regulations and orders, and subject to such limitations and exceptions as the President shall prescribe, until otherwise ordered by the President or by Congress: Provided, however, That no preference shall be given to the ports of one State over those of another. SEC. 2. Any person who shall export, ship, or take out, or deliver or attempt to deliver for export, shipment, or taking out, any article in violation of this title, or of any regulation or order made hereunder, shall be fined not more than $10,000, or, if a natural person, imprisoned for not more than two years, or both; and any article so delivered or exported, shipped or taken out, or so attempted to be delivered or exported, shipped, or taken out, shall be seized and forfeited to the United States; and any officer, director, or agent of a corporation who participates in any such violation shall be liable to like fine or imprisonment, or both. SEC. 3. Whenever there is reasonable cause to believe that any vessel, domestic or foreign, is about to carry out of the United States any article or articles in violation of the provisions of this title, the collector of customs for the district in which such vessel is located is hereby authorized and empowered, subject to review by the Secretary of Commerce, to refuse clearance to any such vessel, domestic or foreign, for which clearance is required by law, and by formal notice served upon the owners, master, or person or persons in command or charge of any domestic vessel for which clearance is not required by law, to forbid the departure of such vessel from the port, and it shall thereupon be unlawful for such vessel to depart. Whoever, in violation of any of the provisions of this section shall take, or attempt to take, or authorize the taking of any such vessel, out of port or from the jurisdiction of the United States, shall be fined not more than $10,000 or imprisoned not more than two years, or both; and, in addition, such vessel, her tackle, apparel, furniture, equipment, and her forbidden cargo shall be forfeited to the United States. |