Following your instructions, I asked the Secretaries of the Departments of Supplies, Agriculture and Industry and Commerce to meet and discuss the contents of the attached German Note¹ concerning the total blockade of England. After a long discussion, we reached the following general conclusions:-

1) No matter what agreement were made with the Germans, they could not guarantee us safety against the mines with which the Irish Sea is now apparently infested.

2) If we made an agreement with the Germans and gave them a guarantee that we should not export merchandise in our ships to England, the British would probably retaliate either by decreasing the supplies now being received from them or by preventing neutral ships under their control from carrying our cargoes from distant countries; or they might use both these weapons together.

3) The continuation of our normal trade with Great Britain being of vital importance to our people, as a Government we could not agree to stop exports of our own volition. If our export trade becomes impossible through the physical destruction of our ships, that is another matter.

4) The Government, therefore, would appear to take the proper course if they refrain from taking any measures which would constitute an interference with normal commercial arrangements for the conduct of our export trade.

5) The loss of our ships through the total blockade, once it becomes effective all round, leaves us no legitimate case for complaint against the German Government. Since the beginning of the war up to now, the Germans had not actively interfered with our normal British trade.

6) For the moment at any rate, it would be better not to make any public statement, which would be an exceedingly difficult document to formulate without giving offence to one side or the other.

7) If the blockade of Britain in the Irish Sea becomes really intense, it is probable that the vessels on the Irish Register which do not belong to Irish owners will seek permission to transfer to the British Register. So long as they sail under the Irish flag, we cannot allow them to go in a British convoy or to carry guns.

Meanwhile, if you agree, I shall inform the German Minister of our general attitude, and will endeavour to secure some amelioration of the situation.

Of course, the real danger of the new German measure is that it gives the British a further opportunity of trying to bring us into the war on their side. In exactly similar circumstances, they exercised considerable pressure on Belgium and Holland.