With reference to your minute (S.11393) of the 17th November,¹ relative to the development of this country's foreign trade in the circumstances of the present war, I am directed by the Minister for External Affairs to say that the proposals made in the memorandum attached to your minute seem to turn mainly on questions of supply, shipping and foreign exchange, which are outside the immediate province of this Department.

The aspect of the proposals which is of direct concern to this Department is the question of the effect which the proposed development of our trade would have on our relations with the present belligerents, particularly Germany. An increase in the volume of our normal trade with Britain is less likely to lead to difficulty with Germany than a change in its character. It is virtually certain that the German Government would take strong exception to any development here such as the production for export of munitions or similar war supplies which were not previously manufactured in this country or the re-consignment to Britain of foreign goods imported ostensibly for use in this country. The German Government would not have the same grounds for objecting to an increase in the volume of our cattle, pig, poultry and other normal exports, and, in view of what is known of their attitude, it is considered unlikely that a mere increase in the volume of our normal exports would cause them to alter their present policy towards our trade with Britain.