File No. 658.119/241
The Secretary of State to the Ambassador in Great Britain ( Page)
7182. For Sheldon [from War Trade Board]:
No. 308. Your No. 264, Embassy No. 8940, March 7, 7 p.m.1 We have been in conference with British and French Embassies relative to purchase of one-third of Swedish iron ore proposed to be obtained [Page 1217] by Allies under pending agreement. This Government has now reached the decision which has been communicated to these Embassies and is substantially as follows:
We have serious doubt as to the advisability of Associated Governments purchasing the 2,450,000 tons of iron ore, since depriving Germany of this amount apparently would not affect her for several years in view of the surplus which she has undoubtedly acquired and in view of the fact that her ability to accumulate this surplus indicates that her current rate of consumption has not much exceeded the amount which she will continue to get under the proposed agreement. Thus any benefit to be derived by us depends, first, on the prolongation of the war for several years, secondly, on our ability to renew iron-ore division on same or more favorable terms during these years. We greatly doubt ability to renew agreement covering this ore at a time when it would operate to inconvenience seriously Germany’s operations. Holding as we do this view on the general proposition, and since the United States would itself be unable to utilize more than a small portion, if any, of the proposed purchase, the United States is not willing itself to purchase one-third of the proposed allotment. We are, however, prepared to finance Great Britain and France to the extent of one-third of the entire purchase price, in the event that Great Britain and France should feel this purchase to be desirable.
Since expressing the foregoing decision we have received a cable from Morris stating that the Swedish Minister of Foreign Affairs had informed him in the strictest confidence that Germany had strongly protested against the restriction of her supply of Swedish iron ore. The Minister stated that he believed Germany had a two years’ supply of low phosphorus ore on hand but refused to accept the restriction as a matter of prestige.
In view of this information and of our opinion as to the little practical importance of the restrictive clause in the pending agreement, we desire to suggest for the serious consideration of yourself and the Foreign Office, the advisability of giving Sweden to understand that if she represented to us that her two principal assets for bargaining purposes were (1) ships and (2) iron ore and that she must reserve iron ore wherewith to bargain with the Central Powers, then we would acquiesce in the elimination of the restrictive clause in the present agreement, provided this agreement were then promptly ratified. We suggest you obtain Morris’s views on the foregoing suggestion.
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