INTRODUCTORY STATEMENT OF THE CASE.

In the winter of 1782-1783, Benjamin Franklin, Minister Plenipotentiary of the thirteen United States of North America to the court of Louis XV, King of France, waited in Paris for the conclusion of peace between Great Britain and France. In November, 1782, he and his colleagues had signed a provisional agreement with British delegates embodying the terms of the treaty which would be entered into between them upon the conclusion of the French and British negotiations. During this interval of waiting, he concluded with his friend and diplomatic colleague, Gustav Philip, Comte de Creutz, the Swedish Ambassador in Paris, the third treaty of amity and commerce between the new government in Philadelphia and a foreign power.

Both Dr. Franklin and the Comte de Creutz represented governments determined to keep themselves free from European conflicts and painfully experienced in the interferences with neutral commerce which the great sea powers of Europe had committed during the almost incessant wars of the eighteenth century. The treaty which they drew and signed in April, 1783, accorded the widest recognition to the interests of neutral seaborne commerce in time of war, as had the treaty negotiated only a few months before by John Adams with the States General of the United Netherlands. Complete freedom of navigation was recognized between Sweden and the new American republic, without regard to ownership of cargo; and this was expressly extended, not only to trade between enemy ports and neutral ports, but to trade between two enemy ports, unless the latter were completely blockaded. Free ships were to make free goods. Contraband was confined within the narrowest limits, and could be seized only when consigned to an enemy port. Even then solely the contraband cargo could be seized, the vessel being entitled to proceed without hindrance. If one nation should be neutral in time of war, its ships were not to be subject to any embargo nor detained, for any public or private purpose, by the other. If ships of either nation should come within territorial waters of the other because of any urgent necessity, they were to be at liberty to supply themselves with provisions and everything necessary for the repair of the vessels, and to continue their voyages. In short, the treaty recognized and affirmed the widest

rights yet claimed by neutrals to carry on, unmolested and unhampered, their ocean trade in war time.

The thirteen United States had not long been a nation before Europe was aflame again. In the final struggle between the Napoleonic empire and British sea power, neutral commerce suffered as never before. American commerce with Europe and the West Indies had developed rapidly in the thirty years following the Revolution; and now both belligerents, after proclaiming the enemy's coasts in a state of blockade, proceeded to seize and condemn or detain all American vessels found in the proscribed areas and even on the high seas. These depredations rapidly became unbearable, and in June, 1812, the American Government, to vindicate its right to carry on trade as a neutral in time of war, declared war upon Great Britain.

One hundred years later the United States, now a great power, again found itself a neutral in the face of another European conflict. Again both groups of belligerents, in the attempt to cripple their enemies, interfered drastically with American commerce not only with the belligerents but even with other neutrals and with the belligerents. Again the United States, as long as it remained neutral, emphatically announced the historic doctrines of neutral rights. On this occasion, also, the United States was ultimately drawn into the war, but, this time, on the side which had the dominant sea power.

The chief function of sea power in war is to keep open avenues of supply for the possessor of such power, and to close them to the enemy. In the late war this process was carried to its highest development. As applied by the Allied Governments, the process was not limited to the interruption of neutral trade with the enemy, even as amplified by the doctrine of continuous voyage. The effort was made through the control of the seas, of a great part of the materials of commerce, and of the bunkers necessary to move ocean freights, to close to the Central Powers all neutral trade by land or sea and completely isolate those powers from economic intercourse with the world. When the Central Powers retaliated with the submarine campaign, these Allied measures of control were further utilized to secure, so far as possible, the neutral merchant fleets for Allied service.

The new interferences with neutral trade were rested on control of cargoes and of bunkers. If a neutral national wished to export a cargo from an Allied country, he must agree to have no dealings which might directly or indirectly benefit the enemy. If a neutral ship

needed bunkers, its owner must agree that none of his ships, wherever located, would engage in any trade beneficial to the enemy, and, later, he must agree to employ an amount of his connage in the service of the Allies. This policy finally transcended the bounds of individual agreements and necessitated international agreements between the various neutral governments and the Allies.

When the United States entered the war this policy was already well developed. It was adopted by the United States and carried even further. A comprehensive embargo against the clearance of any vessel for northern neutral countries was established and enforced against neutral ships merely entering American waters in transit and requiring neither cargoes nor bunkers from the United States. Furthermore, such vessels, once within the control of the United States, were not permitted to depart for any destination unless their owners signed agreements with the American authorities giving the latter control over the movements and employment of all of the owner's vessels, wherever situated.

Against this background of world conflict and age-old clash of belligerent and neutral interests, the present case arises. Soon after the United States entered the war and before its war trade policy was formulated, two Swedish motorships owned by the Johnson Line, a Swedish corporation, entered American waters. The Kronprins Gustaf Adolf came into New York in ballast on June 23, 1917, to repair damage caused by running aground. The Pacific called at Newport News on July 1, 1917, en route from Chile to Sweden with a cargo of fertilizer consigned to a Swedish company. Both vessels had at all times sufficient oil in their bunkers, acquired outside the United States, for the voyage from the United States to Sweden. The repair of the Kronprins Gustaf Adolf was not finished until September 27, 1917.

In the meantime, on July 9, 1917, the President of the United States issued a proclamation forbidding the export, among other things, of fuel oil and fertilizers to many countries, including Sweden, except by license. Upon inquiry the American authorities ruled that the Pacific must have a license for its cargo, and the Johnson Line accordingly applied for such a license. The United States, however, had adopted a policy, which its own War Trade Board describes as the "blockade of the border neutrals," and on November 1, 1917, the application for export license was denied. At the same time, the American authorities ruled that the requirement for export licenses applied even to fuel brought into American ports by a foreign vessel

rights yet claimed by neutrals to carry on, unmolested and unhampered, their ocean trade in war time.

The thirteen United States had not long been a nation before Europe was aflame again. In the final struggle between the Napoleonic empire and British sea power, neutral commerce suffered as never before. American commerce with Europe and the West Indies had developed rapidly in the thirty years following the Revolution; and now both belligerents, after proclaiming the enemy's coasts in a state of blockade, proceeded to seize and condemn or detain all American vessels found in the proscribed areas and even on the high seas. These depredations rapidly became unbearable, and in June, 1812, the American Government, to vindicate its right to carry on trade as a neutral in time of war, declared war upon Great Britain.

One hundred years later the United States, now a great power, again found itself a neutral in the face of another European conflict. Again both groups of belligerents, in the attempt to cripple their enemies, interfered drastically with American commerce not only with the belligerents but even with other neutrals and with the belligerents. Again the United States, as long as it remained neutral, emphatically announced the historic doctrines of neutral rights. On this occasion, also, the United States was ultimately drawn into the war, but, this time, on the side which had the dominant sea power.

The chief function of sea power in war is to keep open avenues of supply for the possessor of such power, and to close them to the enemy. In the late war this process was carried to its highest development. As applied by the Allied Governments, the process was not limited to the interruption of neutral trade with the enemy, even as amplified by the doctrine of continuous voyage. The effort was made through the control of the seas, of a great part of the materials of commerce, and of the bunkers necessary to move ocean freights, to close to the Central Powers all neutral trade by land or sea and completely isolate those powers from economic intercourse with the world. When the Central Powers retaliated with the submarine campaign, these Allied measures of control were further utilized to secure, so far as possible, the neutral merchant fleets for Allied service.

The new interferences with neutral trade were rested on control of cargoes and of bunkers. If a neutral national wished to export a cargo from an Allied country, he must agree to have no dealings which might directly or indirectly benefit the enemy. If a neutral ship

needed bunkers, its owner must agree that none of his ships, wherever located, would engage in any trade beneficial to the enemy, and, later, he must agree to employ an amount of his connage in the service of the Allies. This policy finally transcended the bounds of individual agreements and necessitated international agreements between the various neutral governments and the Allies.

When the United States entered the war this policy was already well developed. It was adopted by the United States and carried even further. A comprehensive embargo against the clearance of any vessel for northern neutral countries was established and enforced against neutral ships merely entering American waters in transit and requiring neither cargoes nor bunkers from the United States. Furthermore, such vessels, once within the control of the United States, were not permitted to depart for any destination unless their owners signed agreements with the American authorities giving the latter control over the movements and employment of all of the owner's vessels, wherever situated.

Against this background of world conflict and age-old clash of belligerent and neutral interests, the present case arises. Soon after the United States entered the war and before its war trade policy was formulated, two Swedish motorships owned by the Johnson Line, a Swedish corporation, entered American waters. The Kronprins Gustaf Adolf came into New York in ballast on June 23, 1917, to repair damage caused by running aground. The Pacific called at Newport News on July 1, 1917, en route from Chile to Sweden with a cargo of fertilizer consigned to a Swedish company. Both vessels had at all times sufficient oil in their bunkers, acquired outside the United States, for the voyage from the United States to Sweden. The repair of the Kronprins Gustaf Adolf was not finished until September 27, 1917.

In the meantime, on July 9, 1917, the President of the United States issued a proclamation forbidding the export, among other things, of fuel oil and fertilizers to many countries, including Sweden, except by license. Upon inquiry the American authorities ruled that the Pacific must have a license for its cargo, and the Johnson Line accordingly applied for such a license. The United States, however, had adopted a policy, which its own War Trade Board describes as the "blockade of the border neutrals," and on November 1, 1917, the application for export license was denied. At the same time, the American authorities ruled that the requirement for export licenses applied even to fuel brought into American ports by a foreign vessel