File No. 656.119/19
The British Embassy to the Department of State
The British Ambassador is instructed to submit herewith a summary of proposals which the British Government desires to lay before the Netherlands Government as a basis for a comprehensive shipping arrangement. The British Government has been influenced in drafting these proposals by the following considerations.
Dutch estimates of requirements recently submitted have been found to be exaggerated by at least 100 per cent, making it advisable to re-consider the whole basis on which shipping negotiations with the Netherlands Government have hitherto been unsuccessfully conducted. Moreover, it appears that the Netherlands Government is at the present moment being subjected to the severest pressure by the German Government in connection with the export of coal from Germany. It is indeed reported from confidential sources that the German Government are refusing to supply coal to Holland, unless Dutch miners are sent to the German mines. As the Dutch coal situation is serious, there is some danger that this demand will eventually be acceded to, unless Dutch coal requirements can be supplied from other sources. In addition to this demand, the German Government appear to have demanded that the Netherlands Government should provide a credit to the German Government of 60 gulden in exchange for every ton of coal exported to Holland in excess of 100,000 tons, this credit to be used for payment of German purchases in Holland.[Page 1127]
Dutch requirements of British coal, which would, it is understood, relieve them from this German pressure, are between one and two hundred thousand tons a month. By supplying Holland with this quantity the British Government would appear to have an opportunity not only of obtaining Dutch shipping for the service of all the countries associated in the war against Germany, but also of rendering more difficult the financing of German purchases of Dutch agricultural produce.
The Dutch requirements of British coal being as large as they are, the enclosed proposals would probably operate to provide for the service of the Commission for Relief in Belgium the greater part of the tonnage which they require (their requirements being understood to be approximately 180,000 tons gross).
It will also be observed that care has been taken in drafting these proposals to safeguard the interests of trade between Dutch colonies and United States ports.
The British Ambassador is directed to submit these proposals to the United States Government immediately, and to express the earnest hope of His Majesty’s Government for an early expression of their acquiescence. The British Minister at The Hague has been instructed not to submit the scheme to the Netherlands Government until he learns that it has been approved by the Government of the United States.
In emphasizing the urgency of this matter, the British Ambassador is also instructed to point out that coal is the only remaining important commodity which Great Britain can offer in exchange for concessions from Holland, and as the arrangement proposed will tie their hands in respect of this commodity, the other desiderata of those associated in the war against Germany—namely, the stoppage of Dutch exports of native produce to the enemy, and the continuance of the supply by Holland of margarine and other commodities indispensable to the Allies—can only be secured by the exercise by the United States Government of their control over important American products needed by Holland.
The proposals in question are annexed.
[Received August 31.]