File No. 652.119/8

Mr. Balfour, for the British Special Mission, to the Secretary of State

Dear Mr. Secretary: You will remember that at our conference yesterday we touched on the question of the difficulties which Spain [Page 1200] was making in regard to the export of iron ore to Great Britain and of the assistance which the United States Government could render us in inducing the Spanish Government to take a more friendly attitude. It may be useful if I summarize the position in writing.

Until the declaration of the German submarine blockade, Spanish ships brought iron ore to the United Kingdom and took back coal. They have since been taken out of this trade and have been put into safer trades such as that of carrying coal from the United States. In order to obtain Spanish ore we had, therefore, to use Allied ships, diverting them from other essential work. They were sent with coal to France and Italy and brought back ore on their homeward voyage. Spain then, however, refused to allow our ships to load ore unless they brought coal for her and relied on her power to obtain coal from the United States in the event of our refusing. As the need of coal for France and Italy is urgent not only for ordinary civil purposes but also for munitions work, we could not take colliers from the French and Italian trade without very seriously prejudicing our belligerent position.

An agreement known as the Cortina agreement has, indeed, been signed with the Spanish Government. Its terms are, briefly, as follows:

  • Article 1. The British Government undertake to licence 150,000 tons of coal, including coke and patent fuel, per month to Spain, with a possible increase of 30,000 tons a month if Allied interests permit.
  • Art. 2. The Spanish Government undertake to allow the British Government or British firms to time-charter 400,000 tons dead weight of Spanish shipping. If this total amount is not time-chartered the obligations of the British Government under article 1 are proportionately reduced.
  • Art. 3. The Spanish Government undertake not to prohibit or hinder or place duty on the export of iron ore, and to allow the export of pyrites and lead under the conditions at present in force.
  • Art. 4. The Spanish Government will not hinder the acquisition on voyage or time-charter by the British Government or British interests of Spanish vessels for trade between Spain and the United Kingdom except for 100,000 tons retained for Spanish use. The British Government will allow the chartering of other neutral vessels to trade between Spain and the United Kingdom, France and Italy on certain conditions.
  • Art. 5 grants an option of purchase of Spanish vessels laid up in British ports from February 7.
  • Art. 6. The British Government agree to the purchase by the Spanish Government or firms of the steamships Brasilian and Frankenwald for the Spanish coasting trade during the war. Retransfer to any third party can only take place with the consent of the British Government.
  • Arts. 7, 8, 9, and 10 deal with the importation into Great Britain from Spain of potatoes, forage, oranges and wine.
  • Art. 11 states that no licences can be given at present for the export of sulphate of ammonia to Spain but future urgent needs of Spain will be borne in mind.
  • Art. 12. Subject to home requirements the British Government will licence 300 tons of tin plates a month and will agree to the direct importation into Spain from the United States of a further quantity by vessels of the Compania Transatlántica. In return the Spanish Government will place no difficulties in the way of exportation to the United Kingdom and her allies.
  • Art. 13. Subject to home requirements and those of the Allies the British Government will allow 120 tons a month of ferro-manganese to Spain and will increase this quantity if the Spanish Government show that the export of steel to the United Kingdom, France and Italy is above the average.
  • Art. 14 is general and states that each Government will do their best to provide the requirements of the other.

The agreement was signed by both parties but is subject to ratification. So far the Spanish Government have delayed ratification owing, it is thought, to pro-German opposition and the British Government doubt, in fact, whether it will ever take place. The Spanish Government state that the agreement must be submitted to the Cortes.

The position has now become even more serious for, according to a Reuter message from Madrid, the Spanish Government have issued a prohibition of the export of metals. This would most gravely affect the Ministry of Munitions particularly with regard to lead and copper which are urgently required from Spain. Even if iron ore and pyrites are not included in the prohibition, the position would still be one of gravity.

The United States Government will readily understand that the regular supply of Spanish iron ore is absolutely vital to the conduct of the war and that it is, therefore, essential that the Cortina agreement should be put into force without delay or, at any rate, that strong pressure should be brought on the Spanish Government if further difficulties are placed in the way of the export of iron ore and pyrites to the United Kingdom and France.

In these circumstances the British Government would very greatly appreciate it if the United States Government would intimate to the Spanish Government, in any manner that seem proper to them, that they are entirely in accord with the views of the British Government with whom, they understand, an arrangement has been made by which British coal can be supplied to Spain on certain conditions. It might be pointed out that in view of this and of the extreme importance to the Allies of economizing tonnage, the United States do not see their way to allowing the export of coal to Spain, now that ample provision has been made for the necessary supplies to be obtained from the United Kingdom which entails a much [Page 1202] shorter sea voyage. It might, perhaps, also be hinted that other essential supplies from the United States would be dependent on a satisfactory attitude of the Spanish Government in regard to the shipment of iron ore and pyrites to Great Britain.

I need not emphasize the point that the support of the United States Government in this matter is of the first importance, and I should like to assure you that if the United States Government could see their way to take action on the above lines, it would be a source of extreme gratification to the British Government.

Believe me [etc.]

Arthur James Balfour