Dear Walshe,

I enclose a rough note following our conversation the other day. It may be of some use to you on the question of the blockade.

I have not, as you will see, made any reference to the shipping arrangement. On consideration, I feel that having regard to the attitude adopted by the British about the implications of the arrangement actually made, I doubt whether it is worth while starting an argument about it.

I have also omitted any mention of the fact that, in the course of the enquiries made in connection with these various items, it was frequently stated by British officials that the matter was one which should be taken up ‘in the highest quarters’ or through ‘diplomatic channels’. I do not know that this really helps very much.

I think the reference to ships might be dealt with as a separate matter, whether you deal with it simultaneously or not, and I enclose a draft covering this particular point. I think McElligott ought to see whatever is being said about foreign exchange.

[Enclosure]
MEMORANDUM

During the twelve months before the war and the twelve months after the war began various discussions took place between officials of the Irish and British Governments about the provision of various essential supplies for Irish requirements. In times of peace such supplies were for the most part purchased through British sources and were carried on British ships to Irish Ports. As a result of these various discussions, arrangements were made for maintaining supplies to Ireland on a basis which the Irish Government regarded as reasonable and satisfactory having regard to the exigencies of war conditions. These arrangements, generally speaking, involved a substantial measure of co-operation between the two Governments. Towards the end of 1940, however, it became clear that the British Government were not prepared to facilitate the continuance of the arrangements in question and for the past six months there has been an increasing difficulty in obtaining essential supplies. The following paragraphs indicate briefly the position regarding the most important items:-

2. PETROL: Some months before the war the Irish Government agreed with the British Government that, in the event of war, they would introduce a rationing scheme for petrol and would curtail normal consumption to approximately the same extent as that contemplated in Great Britain. On the other hand, the British Government agreed to make themselves responsible for providing Irish requirements of petrol under the rationing scheme. Relying on this arrangement, the Irish Government at the outbreak of war agreed to the transfer to the British Register of seven tankers which were then on the Irish Register and which would have been more than sufficient to carry to this country the whole of our normal requirements of petroleum and petroleum products. In December, 1940, it was intimated to the Irish Government that it would no longer be possible to maintain supplies of petroleum and petroleum products on the basis previously in operation. It was also stated that in future it would not be possible to provide more than 50% of normal Irish consumption. In fact, for the first four months of 1941 the amount of motor spirit imported into Éire was only 40% of normal consumption and it was not possible during that period to make petrol available for ordinary private motor cars except a very limited number of cars owned by Doctors, Veterinary Surgeons, Clergymen, etc. The amount available for commercial vehicles and road transport services during these months has been quite inadequate. As a result, there has been serious dislocation, hardship and unemployment. The petrol rationing scheme in Great Britain still allows the distribution of about 70% of normal consumption and private motor cars have been continuously receiving supplies of petrol. The total consumption of petroleum and petroleum products in Éire is only a very small fraction of the consumption in Great Britain.

3. TEA: Early in 1940 an arrangement was made between the Irish and British Governments under which it was agreed that the British Government would provide all the requirements of tea for this country. The bulk of Irish tea requirements had normally been purchased through British sources but, as a result of the arrangement between the two Governments, the direct importation of tea from countries of origin to Éire was stopped. Towards the end of 1940 a rationing scheme for tea was introduced in Great Britain under which only 85% of the normal consumption of tea was made available. In January, 1941, the tea allocation to Éire was reduced by the British Government to 85% and further reductions were made in rapid succession until at the end of March, 1941, the allocation for Éire was reduced to 25% of normal consumption. There has been no reduction below the 85% in Great Britain. The tea ration in Great Britain is now two ounces per week per head of the population, whereas in Éire the allowance is one half-ounce per head per week. The total normal pre-war consumption in Éire was 23½ million lbs. per annum whereas the total normal consumption in Great Britain was over 400 million lbs. per annum.

4. FERTILISERS: An arrangement was made since the beginning of the war for the purchase through the British Fertiliser Control of Irish requirements of fertilisers and raw materials for fertilisers. The British Fertiliser Control has refused for some months past to make any further fertilisers available for Éire.

5. ANIMAL FEEDING STUFFS: Arrangements were made for the purchase of animal feeding stuffs through the British Ministry of Food. No supplies have been made available for some time.

6. RAW MATERIALS: Arrangements were made at the beginning of the war for the purchase, through the British Ministry of Food, of supplies of oil- bearing seeds and nuts, and crude oils, for the production of various oils, etc., which are required for the production of margarine and soap. In December, 1940, the Ministry of Food refused to make any further supplies available. In the case of various raw materials required for industrial production in Éire, supplies have, generally speaking, been unobtainable since the beginning of 1940.

7. CEREALS: Owing to lack of ocean-going ships, no wheat, maize or other cereal has been imported into this country for some months. Until then, this country’s requirements of cereals were, by arrangement with the British Government, purchased through the British Ministry of Food but the British Government, having obtained control of most of the neutral tonnage available, have since the end of last year refused to place any tonnage at the disposal of the Irish Government.

8. FOREIGN EXCHANGE: Foreign assets belonging to this country exceed in value £200,000,000. These are practically all held in the form of sterling securities. It would have been possible before the war to convert some of these holdings into dollar assets but as an alternative, an arrangement was made whereby the British Government undertook to provide foreign exchange for normal trade requirements for Éire. The British Treasury, however, refused at the beginning of this year to make any dollars available for the purchase of ships required for the purpose of importing essential supplies to this country.

MEMORANDUM

My Government note with satisfaction from your letter of …………. that your Government are prepared to enter into negotiations for the acquisition by the Irish Government of two cargo ships. My Government would prefer to purchase these vessels rather than charter them and they would be glad to be furnished with full particulars of the vessels. They would also be glad to know whether the necessary foreign exchange to enable them to purchase these vessels can be made available to them; they have not at present at their disposal dollar resources to enable them to finance this transaction.