File No. 658.119/379
The Chargé in Great Britain ( Laughlin) to the Secretary of State
[Received May 23, 5.30 a.m.]
10171. War Trade Board [from Sheldon]:
No. 627. Your 494, Department’s 7775, May 17, and your 505, Department’s 7784, May 17. I am sending you separate cable regarding the [tonnage] negotiations. With reference to the cereal ration proposed for Sweden, please remember that the amount of 250,000 tons was calculated in January as being the requirements for the balance of the cereal year. You were informed of this and while you pointed out in your cable No. 155, Department’s 6748, March 2,1 that you considered this ration among others excessive you nevertheless gave me authority to agree should it be advisable so to do for political reasons. I would point out further that in the announcements made in the Swedish press at the War Trade Board’s instigation early in April there appeared the figure of 250,000 tons as well as many of the other figures proposed as rations. You will therefore see the difficulty that we have had in the resumed negotiations of cutting down of these figures. I think now, however, that we have arranged with the Swedes that they will accept a formula somewhat on the following lines: bread cereals to include if required 50,000 tons cereals other than wheat and rye, delivery subject to special arrangement, 250,000 tons. The special arrangements mentioned will [Page 1232] be contained in a separate letter providing that not more than 150,000 tons shall be imported before October 1, 1918, and the balance, namely, 100,000 tons plus any unimported part of the 150,000 tons, to go toward the requirements for the cereal year 1918–1919. Any amount beyond that required for the Swedish needs to depend on the 1918 Swedish harvest. Regarding your objection to the Wheat Executive arranging for the firm purchase by Sweden of cereals, there has been a concerted attempt to require all neutrals to make their cereals purchases through the Wheat Executive, and as the supplies available in the Argentine under the control of the Wheat Executive are considered sufficient for the prospective neutral requirements, it was thought preferable by the British Foreign Office and Treasury to let the Wheat Executive handle not only the actual purchases, but attend to his payments, thus obviating neutral competition for exchange in the countries exporting the wheat. See Cravath’s cable to Crosby and Leffingwell No. 195, Embassy’s No. 10092, May 17, 9 a.m.1
As regards molybdenum, a contract already exists between Swedish interests and the Central Powers to supply ore containing not more than 15 tons of molybdenum of Swedish native origin before October 25, 1918. If such amount be produced it was thought advisable here to agree to consent to this on the condition that no further supplies should be furnished the Central Powers in any form from the date of our agreement until the end of the war whether or not the agreement shall have been terminated and the Swedish Government will effectively prohibit the importation into Sweden of molybdenum until the end of the war. The amount of carbide, ferrosilicon, and pulp which may be exported to the Central Powers is unquestionably the best arrangement that could be obtained and undoubtedly will be materially less than would otherwise have been exported. It has been arranged, furthermore, that the export of (a) sulphite pulp shall not exceed 89,000 tons, (b) sulphate pulp, 88,000 tons, and (c) paper and paper products, 59,000 tons. Should the export of (a) exceed 60/89 parts, of (b) 67/88 parts, and of (c) 27/59 parts [of the export in 1917] the textile import rations shall be reduced as follows: For every 10 tons of sulphate or sulphate pulp exported in excess of fixed quantity the textile rations October imports shall be reduced by 1¼ tons and for every 10 tons [of] paper or paper products in excess of fixed quantity the textile rations shall be reduced by 5 tons.
As regards your statement that the iron ore arrangement amounts practically to no limitations on Germany, I do not see how you arrive at this view. See my No. 552, Embassy’s 9967 [9987], May 10.2 [Page 1233] The amount of the specially low phosphorous ore containing less than 2.01 per cent is reduced by one-half and in addition Germany would only get 350,000 tons between this category and that containing .1 per cent. The British and French feel very strongly that the reduction of iron ore to Germany and especially the reduction as regards the low phosphorous categories is also of the utmost importance. It is evident that they are willing to give way on any other point rather than on this. Their experts and secret service men have been working long on this subject and unquestionably are well documented.
As regards your inquiry as to the financial arrangements I would point out that the Swedish Government undertakes to arrange for a monthly credit for expenditure in Sweden during the currency of the agreement of 6,250,000 kroner divided between France, the United Kingdom, and probably Italy. Cravath has cabled the Treasury today more details on this point. This is the amount that the Central Powers obtained. If we should attempt to insist on the arrangement suggested in the latter part of your No. 505 it would undoubtedly wreck the agreement. I would point out, however, that the credit arranged for the other Governments and the fact that the Swedes are expected to pay for their purchases of wheat in kroner at the par of exchange would tend to reduce the present premium on the kroner over the dollar.
In general the British, French, and Italian Governments are extremely desirous of concluding the agreement as it now stands. I have explained in the tonnage telegram the impossibility of getting more than 400,000 tons and the reasons therefor. I most earnestly urge you to give your approval to the proposed agreement and that you consider this matter immediately and cable me your decision forthwith. The expected imminence of the renewal of the offensive on the western front makes it very desirable that the agreement should be concluded this week. From telegrams which the Foreign Office are sending Reading and the French to Tardieu you will see how important they think it is to act quickly.