technique of economic warfare

7/28/2019 Technique of Economic Warfare

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TI-I& TECWNIQU," 01-' ~ ( ' O N O M I C ' W A ~ I = A R E -

M O N O G ~ A P H SUBJECT No. 1- 100

The technique of economic warfare, byMaj W. J . Pritchard, CB. Command andGeneral Starf College. 31:May 49

This DoculUentIS A HOLDING OF THEARCHIVES SECTIONLIBRARY SERVICES

FORT LEAVENWORTH, KANSASDOCUMENT NO. N-2253J 70 COpy NO. -L

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THE TECHNIQUE OF ECONOMIC wARFAREMonograph Subject Number 1-100

31 May 1949

WILLIAM J. PRITCHARDMajor" C.E.0-42258


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TABLE OF CONTENTS

SUBJEC T 8 1PROBLEM . 1ASSUMPT IONS ' 1 FACTS BE.ARIl'iIG ON THE PROBLEM.. . . . . . . . . . . . . . . . . . . . . . . . 1.DISCUSSION- In t roduc t ion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

The Naval Blockade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3The Paper Blockade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4The Rationing Sy s tem . . . . . .. . . . . .. . . . . . .. . . . . .. . . . . 6Tile avicert '. 6The Crew MemBer Black Lis t . . . . . . . . . . . . . . . . . . . . . . . . 6The Ship's W arr an t . . . . . . .. . . . . . .. . . . . . . .. . . . . . .. . . 7German Expor t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Block:ade Running . . . . . . . . . . . . . . . . . . . . . . . . . 7Sm-u.ggl ing. .. .. .. . 8Close-In Ne-utra ls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.Financial Pro b lem s . . . . .. . . . .. . . . .. . . . .. . . . .. . . . .. . 9Reasons for Failure to Gain Object ives . . . . . . . . . . . . 9

CONCLUSIONS..... 10 R E C o p ~ m N D A T I O N S 10

A N J ~ E X No. 1 ~ D i ~ e c t i v e ~ 11Jl.1\TNEX~ N 2 ttB bl" h It 12 . ~ o g r a p y

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COMiVLA.ND ...1\l\jD GENERAL STAFF COLLEGEDEPARTMENT OF OJ)ERATIONS AN-D TRAININGFort Leavenworth, Kansas31 May 1949

File No.- - 'SUBJECT: The Technique of Economic Warfare.1 . PROBLEM.--To review the techniques of economic warfare employ

ed and developed by the U. S. A. and Great Britain duringWorld War II and to make certain recommendations to improvetheir application both in peace and war.

2. ASSmvWTIONS.-a.A certain nation, or coali t ion of nations, will turn aggres-

sor in the foreseeable future.b.All nations are now and wil l continue to practise certain

economic w ~ r i ~ a r e measures.b.Certain nations wil l desire to remain neutral in t ime of

war ei ther from a prof i t or a fear standpoint, or a combination of both.

d.The United Nations will continue to exis t and the SecurityCouncil will not hesitate promptly to employ means a t i t sdisposal against an aggressor.

3. l"ACTS BEARING ON THE PROBLEM.-Ia.Economic warfare has been p r a c t i ~ e d by a ll nations for a t

1least 400 years.b.No office of central control or coordination of economic war-

fare existed prior to World War II nor does one exist now inthe U. S. A.

c.Effective stockpiling of strategic materials was not accomplished prior to World War II , nor was i t SUbject to central

2control.4. DISCUSSION.--lfo most Americans eco:nomic warfare is in a class,

chronologically speaking, with atomic warfare. Vfuereas theyfeel that atomic warfare is an offspring of modern scienceand is a subject characterized by mystery and violence, theylikewise feel that economic warfare is an offspring of modern economic developments but their conception of i t is per-

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haps more vague. ' V ~ h i l e being lul led into a false sense ofsecurity by i t s abil i ty to out-produce a ll o-eher, nations.America has been the object of economic penetre:'Gion by theother nations, notably Germany. Germany likewise made greats'brides in the application of economic penetration measuresto the nations to the south of the U. S. A.Broadly speaking, economic warfare embraces practically a llaspects of war aimed a t the destruction of the economy ofthe enemy. Timing and magnitude of economic pressures aimedat a nation range from economic itpenetrationli in peacetimeto al l -out economic Hwarfare lt during open host i l i t i es .During peacetime, economic penetration goes hand in handwith power poli t ics in influencing the course of businessand the economy of another nation. As an aggressor girdsfor war, the objectives of his economic penetration as a pre

3,4lude to economic warfare might be:a. The destruction of mili tary, economic and pol i t ical power

of non-cooperating nations.b. The buildup of his influence both poli t ical ly and commer

cially in neighboring nations to obtain the desired cooperation when needed.

c. The buildup of his foreign trade with emphasis on exportsor imports as diotated by his needs.

d. The shaping of his economy towards self sufficiencyin order to conduct mili tary operations indefinitely.To achieve these objectives a nation becomes involved in secret negotiations, trade concessions, economic pressures, andfinancial skullduggery r e ~ l i r i n g varying degrees of diplo

1matic, economical, financial , and finally mili tary act ivi tytSuch act ivi t ies, short of the l a t te r , may buildup to majorproportions the solution to which requires mili tary action.Between warring nations economic penetration developes intoeconomic warfare. In fact the n ~ m e economic warfare is usedby most students and writers to include economic pressuresexerted both in peace and war.Military action, in teamwork with,diplomatic, financial and

e c o n ~ i c pressures, becomes an implement of persuasion where-2


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and when needed. Each has i ts place ei ther alone or in comb-ination with any or a ll of the others in a c h i e v l l ~ g the com-mon goal--the destruction of the economy of the enemy.In considering the technique of economic warfare from anelementary viewpoint i t is convenient to think of Germanyjust prior tp and during World War II , --during this timeshe developed a great industrial machine for producing theimplements of war. Great quantities of raw and semi-finished materials from a l lover the world were required(in addit ion to local sources and stockpiles) to maintain theoutput of th is machine. As i t devoured i t s neighboring nat ions, i t grew in strength and turned i t s at tent ion to

~ ~ l d domination. In sodoing i t drew Great Britain and theUnited s tates into the war. To suppress this aggressor,the Allies knew they had to a t t a o ~ from t t ~ e e angles:

a. Direct combat with the product of this war machine.b. Strategic bombing of the indust r ia l machine i t sel f .c. Deny the supply of materials necessary to feed the ind

ustrial machine, i.e.,-economic warfare.I t waS up to the mili tary forces to conduct ,direct combatwith the product and to bomb the machine i t se l f , but i t was up to those who conduct economic warfare to deny i t l i fe-sustaining materials.The methods and means of preventing Germany from obtainingi t s sorely needed supplies from a l l parts of the world involved mili tary, diplomatic, economic, and financial p r e ~ -sures;; on Germa.ny proper a.nd also on neutral nations, both

~ l r o p e a n and elsewhere, who were sources of her supplies.ifThe major means employed by U. S. A. and Great Britain dur

ing 'World War II in their economic warfare against Germanyare revie'\'\fed hereinaftera

a. The Naval Blockade.and i ts Effect on Neutrals.--In the ini t i a l stages of th e war, the naval b l ~ c k a d e as an instrument

- 1of economic warfare was the cornerstone 0 f our overall effor t .Germany's basic deficiences in those goods needed to keep her

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war machine a t to p production required her to expend greatefforts to maintain the required level of imports i'rom a l lover the world. She produced sufficient quantities of only 4 out of the 34 raw materials needed, and had to lllport

I23 of these items. The blockade then had something to bi teinto! However, our navies could only res t r ic t Germen vesselswhich l e f t many large loopholes for goads to flow throughin the person of the neutral nations. The question was-whether or not to extend the blockade to the neutrals .The r ights of neutrals were pratected by international lawswhich had been developed during several centuries throughIthe Napole!nic wars and World War I . These laws presupposedthat the neutrals had sufficient power to protect theser ights , however, when America declared war, the greatestneutral had l e f t the fold. The r ights of neutrals begana downhill sl ide from then on .To blockade a neutral in order to force i t to cease tradewith Germany not only would be a violation of neutral rightsbut might force i t to join forces with the enemy. Furthermore, the Allies needed goods produced by most neutralsand hence must keep the door open.

),Fortunately as the war progressed the enforcfent of the naval blockade required very few ships and men because theAllied navies were covering every sea l ~ l e on the globe 1nsuring that goods and materials continued to flow to Allieddestinations. The blockade then became a by-product. Shipsthat were suspected of carrying contraband were sent into

5certain ltcontrol ports" -V'fhere they were delayed and systemmatically searched. Since the close-blockade of certain enemy ports and coastal areas was no longer necessary, theblockade developed into a long-distance blockade of sourceports and areas.

b. The Paper-:.. l o c k a d e . - - S i n c e the A 11ies were able to effectively res t r ic t German shipping, and large quantities ofsupplies continued to flow through neutral loopholes, i t

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became increasingly necessary to take drast ic steps toplug these loopholes. A strong weapon with which to contro l imports and exports of neutral nations and to influencecertain individuals both within and without their governments was necessary. A refusal to allow imports of petroleum pro&lcts to Spain resulted in a curbing of her exportsof tungsten to GermanYJ s i m i l ~ r treatment of Switzerlandand Sweden resulted in reduced aid .to Germany.The influence on certain individuals in neutral countriesinvolved the uSe of the black l i s t :

ttThe Brit ish statutory List tt"The American Proclaimed L ~ s t t t

These l i s t s included not only Germany's agents and nationals knovvn to be operating outside their homeland, b ut alsoEuropean and Latin American neutrals, and certain Alliedci t izens who.;were aiding Germany. These p ~ o p l e wer'e labeled enemies and were treated as such. Their property wassiezed when i t came within reachJ the Allied nations wouldhave no dealings with them; facil i t ies were refused themand their ,shipping; transport of their goods and correspondence likewise was refused.The importance of dealing firmly with the neutrals wascovered in a speech made by Secretary of State Cord"ell Hull9 April 1944 in which he emphasized the necessity of get

Iting tough:In the two years following Pearl Harbor" while we weremustering our strength and helping to restore that ofour Allies, our relat ions with these(European) neutralnations and their att i tude toward our enemies were conditioned by the position in which we found ourselves. Wehave constantly sought to keep before them what they,of course, know--that upon our victory hangs their veryexistance and freedom as independent nations. We havesought in every way to reduce the aid which their t ~ a d e with the enemy gives him and to increase the strengthwhich we might draw therefrom That period, :f believe, is rapidly drawing to a close.I t is clear to a l l tha t our strength and that of ourAllies now makes only one o-utcome of the war possible.That strength now makes i t clear that we are not askingthese neutral nations to expose themselves to certain destruction when we ask them not to prolong thewar, with i ts c o n s e ~ l e n c i e s of suffering and death,by sending aid ~ o the enemy.

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We can no longer acquiesce in these nations' drawing upon the resources of the all ied world when theya t t he same time contribute to the death of troopswhose sacrifice contributes to their salvation as wellour 01iVl1. Y.Je have scrupulously respected the sovereignty of these nations; and we have not coerced, norshall we coerce, any nation to join us in the fight .We have said to these countries that i t is no longernecessary for them to purchase protection againstaggression by furnishing aid to our enemy- ...whether i tbe by permitting off ic ia l German agents to car ryontheir activi t ies of espionage against the Allies within neutral borders, or bJT sending to Germany the essentia l ingredients of the s teel which ki l l s our soldfuers,or by permitting highly skilled workers and factoriesto supply products, which no longer iss11e from thesmoking ruins of German factories. We ask them only,but with insistence, to cease aiding the enemy.

The cornerstone of the paper blockade against the neutrals1waS the"rationing s y s t e m ~ The Allies agreed. to allow imports up to a certain vah.une .Any imports in excess ofthese amounts was considered as being destined to Germany.Although some neutrals refused to accept such agreementsit became necessary for the Allies to impose them nevertheless.Navicert. The ltnavicertU developed as the resul t of protests of American shipowners against t-;he delays and in -conveniences resulting from the diversion and search oftheir ships prior to Pearl Harbor. A tlcomil1ercial passport yt was thereby granted before shipment, certifyingtha t the cargo was not contraband and thus need not be

1 ,5diverted to a control port for search. Those neutrals whorefused to sllbmit to the navicert program found the i r shipsbeing siezed, d e ~ a y e d and burden of proof tha t cargo wasnot contraband placed on the shillS owners. Even thoughthe cargo was f inal ly proved non-contraband the time los tin l i t igat ion proved too costly and caused ship o ~ m e r s toseek navicerted cargoes. Those who : ~ ; e r s i s t e d in violatingthe system were blacklisted.

member blackl is t . To control the passage of Germanagents other pro-german individuals who signed on ascrew Inembers to gain passage, a special l i s t of blackl is t -ad crew members was prepared. A ship not only was forced

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to carry navicerted cargo but i t s crew l i s t must l ikewise be scrutinized before the navicert is issued.

~ h i p t s Warrant.--As a final control on ships of Alliedand neutral nations, the ship's warrant was added to thel i s t of control instruments. Without a ship's warrant, noship c01J.ld use American or Brit ish shipping fac i l i t iesfor repairs, towing, docking, pi lo t service nor could i tobtain fuel , water or supplies a t any port under Alliedcontrol. Fmrthermore, i t could not obtain lllsurance, adefinite necessity for the protection o f t he ship ownerand the shipper. Finally, an unwarranted ship would besuspected of' carrying contraband, VICe_LId be siezed, sentpartto a controVand searched thoroughly. Few got by for longeGerman Exports.--In destroying the economy of Germany i tbeoame necessary to sever her commercial t ies throughoutthe world, particularly in Latin America. The paper blockade becaInet he instrument to control the exports of neutralnations to make sure that German goods were not beingexported thro"lJgh them to support her commercial interestsabroad, or to obtain much uesired foreign exchange.

B l o c k a ~ e Running.--In desperation Germany built severalhigh speed oil burning cargo ships designed to bring in

much needed rubber, t in , tungsten ore, and certain foods;to deliver machinery, optical glass, looomotives, spareparts and weapons to Japan. The development of AscensionIsland and the invasion of North Africa placed the Alliesin a position to plug this gap. Then Germany tOOK to theundersea lanes, converted I ta l ian submarines into cargocraf t handling approximately 400 tons each. Unfortunatelywhen Italy surrendered these I ta l ian submarines gave t hem-

(selves up and also m ~ u h intel l igence as to routes, sourcesand destinations of the German sUbmaring program. llowever,the Germans persisted as evidenced by one submarine whichgave up af ter VE day--i t contained 110 tons of t in, 4 tonsof molybdenmn, 8 tons of wolfram, 8 tons of rubber, and

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1one ha l f ton: of q u i n i n e ~ The development of high speedcargo submarines since World 'War I I indicates that max-immn effor t to combat this type of blockade running willbe necessary in the future .?muggling.--The blockade machinery was set up to preventlarge bulk cargoes from reaching the enemy, but there werenumerous highly essentia l comrnodities such as diamonds,

Iplatinum, drugs, quartz crysta ls , and mica which max-imum amounted only to a few pounds to a ton or two. Theseitems 'were smuggled "by every. conceivalble method and routea t astronomical costs . To gain control of th i s loopholethe Allies made an effor t to control the sources by precLe..t.Siv8 buying. Wh.ere the source was not subject to suchcontrol , the Allies contracted with middlement to cornerthe markets. In other cases, the Allies set up tradingposts and paid for these conunodities in much needed goods,which were desired more than the enemy's cash. Anotherstep was to place operatives within the smuggling r ~ n g s

' to t ip off the key personnel, methods, routes, sources,and destina"tions. This intell igence res"i.l1ted in moreeffective control part icUlarly in the search of ships.

Dealing with Close-In N e ~ t r a l ~ . - - T h e blockade in effectwas a remote control on shipping from distant SOUllces andon eJq:>orts from the European ne!J_trals. There remained yetthe p r o b l ~ n of curbing the trade between Germany and i t sneighboring neutrals--Spain, Portugal, Switzerland, Sweden9nd Turkey. Thiscc.eefinitely required the establishment ofa blockade within a blockade and following methods were used

1,6ynth varying degrees of success:(l)--Outbid the enemy agents to keep goods out of their

hands.(2)--Use of blackl is t a.gainst businesmmen and businesses.(3)--Use of blockade as a means of pressure on netttral gov

ernments to 'persuade them to take of f ic ia l action againstwar-important exports to the enemy.

In deciding which method to use, the following factors werecons ~ L d e r e d :

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(l)--Would i t force the neutral to join the enemy?(Z)--Yvould i t affect adversely their cooperation regarding:

conducting rel iefact ivi t ies for the Allies; furnishingintelligence; exchanging prisoners; underground activities1

(3 )--Would i t cut off our source of needed. neutral produc-tis?d. ~ i n a n c i a l P r ~ b l e m s . - - B y virtue of Allied financial super

iority, strategic goods were kept out of German hands, butin over-running Europe Germany had consf'icated large amountsof gold, foreign exchange and evidences of ownership of largerdeposits abroad. Our major purposes in waging financial war

1fare was with respect to these items and were:

(l)--To prevent Germany from using financial resources theyhad accumulated in te r r i tor ies not dominated by Allied armies.

(2)--To break t ies between Germany and foreign businesses,(3)--To make i t hard and' costly for people outside enemy

terr i tory to collaborate with him in any way.(4)--Prevent enemy's effor t to transfer or conceal assets

abroad for use af ter defeat.Measures used to combat:

(l)--Domestic control of foreign funds, property and exchange transactions.

(2 )--Blacklists on businesses and businessmen'4i;;( 3 ) ~ - E c o n o m i c p r e s s u r e s of a l l types.

e. R e a s o n ~ ~ : fai lure to gain objective.--Economic warfarein World Vvar II failed to gain i ts objective for these rea

lsons:(l)--The blockade didnt take effect for two years.(2)--The Germans had made extensive preparations for this

sort of threat .(3)--The abil i ty of modern technologists to dispense with

need for stlch large quantities of certain materials .(4)--The f ail-ure of the Air Force to effectively knock out

certain German factories, the equivalent product of whichthe economic warfare interests had blocked from neutralsources.

(5)--The f'ail:;tre to stop Gar man imports from neutralsr1'

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ear l ier and more completely than was done.5. CONCLUSIONS.-

~ That the Angilio-lunerican economic warfare" although notfully effective, was a valuable auxil iary weapon whichforced Germany to divert in apprecialle quanti t ies manpower" military effor t and industr ia l capacity from her

p r ~ m a r y objectives and weakened her abil i ty to obtain afull scale convergence of effort against the Allies.

b. That neutral nations did contribute major support to Germany. Those didtant neutrals from a profi t vieWTJoint andthose close-in neutrals from both prof i t and fear viewpoint.

o. That the outcome of the Nuremburg t r i a l s indicates thatthe r ights of Q neutral under international law to tradewith an aggressor no longer exis t and that in the futureno nation would have a r ight to remain neutral.

d. The techniques developed under the "paper blockade" appear to be ideal for the use of the United Nations Securi ty Council during peacetlme to enforce collectivep r ~ s s u r e on an aggressor. No appreciable addition wouldbe reqUired of the exist ing civil ian administrative organizations, nor would military force be required exceptas a l as t resor t .

6. R E C 0 1 ~ m N D A T I O N S w - -a. That a Coordinator of Eoonomic VVarfare be appointed as

a special adviser to the Prt3sident of -the Uniobed Stateswith power to coordinate and direct those act ivi t ies dealing with the aspects of economic vva.rfare nOYf being accornplished in varying degrees by several departments of the

g o v e r n m e n t ~

b. That the United Nations Security Council adopt the measuresof the "paper blockade tl as an early step in dealing with anaggressor nation. C h : ~ " ~ J

WILLIAMMajor, CANNEXES: 1 - Directive.

2 - Bibliography. -10CONCURB.ENCES: (Omitted)


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.AI'JNEX No. 1COllilliUU'JD M ~ D GENERpJJ STAFF COLLEGE

DEP iUlTNIENT OF OPERA.T IONS AND TRAIN INGFort; Leavenworth" Kansas22 November 1948

MONOGR..l\PH SUBJECT NUMBER 1-100Regular Course, Phase V, 1948-49

William J. Pritchard Major 0-42258STUDENTFACULTY ADVISOR Lt. Col. W. B. Rosson 210 Sheridan 21196, - - -

Ihe Technique of' Economic WarfareHEFEHENCES: Jack, Studies in Economic VJarfare; Salter , Allied ShippingControl; CondlIl'fe, The ReconstructiOi1'Of World ' fraa8; Eidwell andUpgren"; t1A trade PolICy for Defense l t , Forefgn i\.ffalrs, Jan 1941;Gordon, Barriers to World Trade; Janeway, "Economic 'Warfare", Fortune, Au.g 1941; DleboIu,- "'rKs-Wartime Use of Shipping U , Foreign:A:rra:'irs, July 1941; Berle,ttFood and Foreign Policy", DepartmentoT S t a ~ e Bulletin, l l i ~ y 31, 1941; U.S. W'ar Trade B o a r d ~ o ~ f W a ~ - ~ e B o a ~ ~ - J u n e 15 , 1917 - June 30, 1919NOTE TO STUDENTS:

1. The references above are furnished to give the student enoughmaterial with which to begin his research. I t is anticipated that thestudent will make use of a ll other available sources in order to giveadequate scope to his sUbject arld, when a p p r o p ~ i a t e , to complete development of the subject to date .2. The scope suggested below is intended as a guide only, wld is notto be construed as a limitation on the student 's perusal of the subject.

SCOPE:1. Indirect economic warfare.

a. Erribargoes and boycotts as poli t ical vreapons.b. Restriction and freezing of credits .c. Export competition.2. The blockade as a weapon: modern supplementary teclmiqu.es.

a . Naval and aerial patrols; the problem of convoys.b. Bombing harbors, production centers, and other economicallyimportant objects. .c. Disrupting the enemy's transportation system.d. Moral blockage and propaganda.The elimination of loopholes.a. Diversion of enemy trade with neutrals.b. Black l i s t s and the rationing of neutral trade.c. Extension of the concept of contraband.

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AlffiEX No. 2BIBLIOGRAPHY

1. Gordon, David L.; Dangerfield, Royden, The Hidden Weapon.New York: Harper and Brothers, 1947, / ' 2. Janeway, Eliot" llEconomic Warfare"" Fortune, Vol. XXIV,NO.2, p. 101, August 1941. - - - ~ . - - -

3. Abbott, Charles C, ItEconomic Penetration and Power Poli t ics",H a r v a : . . . ~ . -Business H.eview, Vol. XXVI, No.4, p.410" July 1948.

4. Abbott, Charles C, ltEconomic Defense of the United States ofAmerica tt , Harvard Business H.eview, Vo. JG1:VI, No.5, p.613,September I948. . ~ - - -5. Jack, D. J."Studies in Economic Warfare. New York: The ChemicalPubl ishing'-Co., ":rn:c;;- 1941.6. Gordon, Margaret S., Barriers to World Trade. New York: TheMacmillan Company, I TU ;7. Bidwell, Percy Vi., Upgren, Arthur R., t1A Trade Policy forNational Defense it , Foreign Affairs, Vol. 19, No.2, p.282,January 1941.

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BHIEFC } r } , ~ A ~ : r D MT 1) STATl'F COLLEGE

DEP j\11T),TI1\rr OF' OPEY(j\ TIONS ANP TR) I1\'I!,TGFort Leavenworth, Kansas

31 May 1949File No.__SUBtTFTT: The Technique of Ec onomic Warfare1 . PROBLEM.--To revi.ew the techniques of economic warfare e ~ p l o y -

ad and developed by the U.S.A. and Great Britain duringWorld War II and to rrake certain recommendations to improvethe i r applica.tion both in peace and war.

2. A S 3 U M P ~ r I O N S .-.! . A certain l19.tion, or coali t ion of na.t ions, VIall tu.rn aggres-

Bor in the foreseeable future.2,- All nations are and wil l continue to practise certain econ

ornic measures.. Certain nations wil l desire to remain neutral in time of war

either from a prof i t or a fear standpoint, or a combinationof tlJe two.

. The United :Nations will continue to exis t and the SecurityCouncil wil l not hesi tate to employ means a t i t s disposalagainst an aggressor.

3. FACTS B T t ~ l \ R I N G 01'1 THE PHOBLEM:.- . / Economic warfare has been practlsed by a l l nations for a tleast 4.00 years

.2.. No office of central control or coordination of economic warfare existed prior to World irar I I nor does one exist now inth e U.8. i\.

c. Effective stockpiling of strategic materials was not accomplished prior to 7"orld 1Car I I , nor was it subject to centralcontrol .

4. D I S C l ~ S I O N . - - E c o n o m i c w a r ~ a r e , a l t h o l ~ h considered by most Am-erica.ns to be something new, i s an old weapon wielded by a l lnations in the i r attempts to influence the economy of othernations and thus gain poli t ical or mil i tary advanta.ge.

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Back in 1601 Que en Elizabeth issued a proclamation whichra.ther clear'ly d e s c r i b e ( ~ the Clnplication and ,purpose ofthe blockade in the conduct of economic warfare aga.instKing Philip I I of Spain:

The stopping, h:i.ndran.ce and impeachJng of a l l commerceand t ra ff ic with him in his te r r i tor ies of Spain HndPortugal wil l quickly in l iklihood give an end to thesebloudi unnatural warres which disturb the generallpeace and quiet of a l l these parts of Christendom.By the application of these ms asures Great Britain certainly gamed poli t ica l and military' Hdvantage over those countr i e s . Her seapower has guaranteed that advantage over thecenturie s In modern time, economic warfare, often referr",d to as econernic penetration in peacetime by many stUdents, has for i t sobjectives:

! . The destruction of military, economic and pol i t ical powerofanothe r nation or fa t ions

l?. The building of influence, both poli t ical ly and commercial-l:Jr in neighboring countries in order to guarantee the i rcooperation when needed

.. The buildup of foreign trade with emphasis on imports orexports as needed.

2,- The shaping of own economy towards self-sufficiency in order to conduct a. future war of indefinite duration.In an effor t to accompltsh these ends a, nation resorts tosecret negotiations, trade concessions, econom.i.c pressuresand f inancia l skullduggery. Often these act ivi t ies lead towar a t vhich time the emphasis turns to an a l l out effor t ,with the aid of militaY"'J force, to isola te a n ~ ' , a g g r e s s o r from his global sources of needed supplies, am a t the sametime, to destroy his export t rade and ruin his commercialposition in the world. Even i f he loses the war i t is notdesired tha t he 1Nin th e peace.

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Looking at war f1:'0111 the overall picture, three concurrentcourses of action must be implemented:

.?;_ Defeat of his milita ry forces.J2.. Crush his industrial war making mach inery by strategic bomb

ing .. Cut off his g ~ L o b a l sources of' supplies, "which he must have

in order to economic warfare measures.} ~ e t h o d s and techniques employed to accomplish the l a t te rcourse of a et.lan:

must import 23 out of 3h raw naterials , a worthwhile targetpresented i t s e l f to Naval blockade. However, due to the hugeloopholes through neutral countries, the restr ic t ion of Gar

. man shipping was not enough. Al though neutra.l sh ips werestopped, sent to control ports to be searched for contraband,much i l l will was created, but to apply the blockade to neut ra l shipping involved the fol10\\1ng co ns ide ra t ions :

!.. The neutral might be forced to ,join the enemy.2 The . A ~ l i e s rnigpt lose a much needed a:> urce of goods... TIle cooperation of neutrals might be lo s t regarding the

furnishing of intel l igence, exchanging prisoners of war,Conducting re l ie f ac t iv i ties , and lmderground act iv i t ies .

Q. llie r ights of neutrals under internat ional law.Paper blockade.-Since the . A l l i ~ s the sea lanes and manysources of raw matirials, the close-in bl ockade of certainports and coastal areas was withdrawn to a long-distanceblockade. Very few ships or nen were required. HEnce, thecontrols developed into agreements between the neutrals andthe Allies in p"oportion to the amount of economic press urebrought to bear in each case.Rationing system.-This was agreement allowing neutrals toimport quanti t ies considered to be needed for the i r existance.

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Quantities in excess of these quanti.ties were suspected ofbeing destined to Germany.Navicert.--Ahbagreement whereby cargoes were cer t i f ied as being non-contraband before shipment. Navicerted cargoes neednot be stopped, or detained for search.Ship' 6 Warrant . -An agreement whereby ships carried inmividua1 warrant papers cert i fying that the ship was end had notbeen engaged in carrying cOntraband. Thus a ship must carrywarrant papers plus a nmcerted cargo for safe voyage.Ul1V'Jarranted ships were subject to a l l of the devious delaying methods, were refused a l l fac i l i t ies such as repairs ,docking, towing, pilot service, could get no water, fuelor supplies in AJ.lied ports.Crew Memper Black List . -To eliminate the passage of enemyagents, every ship, before taking on a navicerted cargo mustsubject i t s crew l i s t to the authori t ies for checking againstthe Dlack l , ist . Thus, the ship, i t s crew and i t s cargo wascert i f ied before each voyage.In order to destroy the enemy' sexpor t trade and ruin hiscorrunercial position in the world, i t was necessary to applysimilar agreements as the rationing system to the exportsof neighboring neutra ls . All exports were carefully scrutinized to assure that goods were not flowing out of Germanydisguised as neutral prod ucts.Blockade Running.--High speed, o il burning, cargo vesselswere employed to ru n the blockade and bring in much neededgoods such as rubber, t in , tungsten ore, and to deliverlocomotives, optical glass, machinery, spare parts a.ndw e a p o n ~ to Japan. With the invasion of North Africa and thedevelopment of Ascension Island, the Allies were able to closeoff this loophole by Naval and Air pat rol l ing. The Germansthen resorted to highly uneconomical submarine cargo vessels.

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Smuggling.--Small bulk goods such as industr ial diamonds,platinum, drugs, quartz crystals , and mica could not becontrolled by blockade methods. These items were smuggledby every conceivable method and roote. Control of thisloophole was beamed a t the source where pre-elusive buying,deals with m i d d l e m e n ~ , a n d bartering with needed productiongoods kept large quantities out of the hands of the enemy.Another step wasthe placing of intelligence agents in thesmuggling rings where th ey tipped off the key operat ors,sources, routes and omstinations.Close-In Neutrals.--To curb neutral trading across theirborders vIi th the enemy, the Allies employed th e followingpressure methods:

a. Outb id the Enemy agent s.. Use of black l i s t against businesses 8,nd business men.. Use of blockade as means of pressure to persuade neutral

govemm.ents to ta.ke or f ic ia l action to curb war-importantexports to the enemy. (Blocka.de 'wi thin a blockade.)Financial Controls . - - To prevent Gernany from using con

~ t i c a t e d assets in terr i tories not dominated by Allied/,,/

Armies and to prevent transfer abroad for Use af-ger defeat,

to make it di ff icu l t for outsiders to collaborate with theenemy, and to break business t ies abroad, the Allies useddomestic control of foreign funds, property and exchangetrans actions, blacklists ani economic pressure s .Reasons for failureSt-Ilelayed effect of blockade; Enemyanticipation of blockade's effect; modern technologicaldevelopments; ,imports from neutrals; inctdequate destructionof industry By .A.ir Force.

5. CONCLUSIONS.--!.!. Economic warfare was a valuable auxiliary weapone

~ . N e u t r a l nations contributed major support to the enemy..Results of Nuremburg traalis confirms trend tha t rights of

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of neutrals to trade with an aggressor are void. Nonation should be neutral in 8,ny future VTorld War.

d . Paper blockade t echniquGs are ideal for use of UnitedJ\Iations Security Council in the application of collect.-ive pressure on a would be aggressor. Cost to implement isne gligible

6. HECOlliLMENDATIONS . - !.Appoint a Coordinator of Economic Warfare as ~ ecial ad-

visor to the President with power to coordinate and dir-ect those act ivi tes dealing with, the a s ~ cts of economicwarfare now baing a.coomplished in varying degrees by theseveral departments of the government.

b.United Nations Securi ty Council adopt the measu.res of- the paper blockade as an early s t ep in suppressing anaggressor nation.

technique of economic warfare

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