On 17th August German Minister presented a note regarding blockade.² It suggested Government action to prevent Irish citizens and ships entering danger areas and said German Government was prepared to exempt from blockade ships flying Irish flag carrying essential supplies to us on condition of guarantee against transshipment. Hempel was authorised to negotiate special agreement on latter lines and strongly urged early reply.

As we have explained to Hempel, we appreciate regard for our interests implied in offer of special agreement, but even from the strictly practical point of view difficulties connected with insurance, the possibility of chartering neutral shipping prepared to fly Irish flag and other matters make immediate reply impossible. From the political point of view we must have regard to the conformity of any special agreement with our strict neutrality and to the possible use against us of German official statements about Holland and Belgium's attitude to British blockade such as those of 6th December, 29th February and 1st March. As regards transshipment, we do not allow it and there is no intention of changing this policy.

Government are much concerned at prospect of disturbance of Cross-Channel trade. In so far as legality of German measures is doubtful, we must reserve all our rights. Practically measures will hit us more than Britain because our exports to Britain are only 2½% of her imports but are 85% of our export trade and therefore of vital importance to us. Politically attacks on our trade will have bad repercussions internally and externally. These and other considerations make it likely that Germany would lose more than she would gain by attacks on Cross-Channel trade. We strongly urge therefore that our trade with Britain be exempt from blockade measures. The L.M.S. mail-boat is a case in point. It is of British registry but vast bulk of passengers are Irish. Use your knowledge of what the effect would be on public opinion here to impress on German authorities that particularly as mail boat carries only passengers and mails, to attack it, even though it is a British ship, would be a major blunder. The Rosslare-Fishguard boat also British has already been machine gunned twice. Perhaps the most immediate question however is that of German attacks on Irish registered ships. We are anxious in interest of our neutrality and relations with Germany that German forces should be given orders not to make specific attacks on ships flying Irish flag, including those engaged in Cross-Channel trade. As we have explained to Hempel this course is strongly commended by following considerations.

One. Our exports are a small fraction of British imports and an even smaller fraction of British imports are carried in Irish ships. For the first seven months of this year the figures are 2½% and ½% respectively. We are giving details of these figures to Hempel. For Germany the material interest involved is infinitesimal.

Two. Political repercussions of frequent attacks on Irish ships would be deplorable. Though other losses would be suppressed attacks on Irish ships would be headlined in British and American newspapers as violations of our neutrality. Irish opinion in America and elsewhere abroad would be dismayed. Propaganda against our neutrality would be given a powerful weapon. The political and propagandist disadvantages from Germany's point of view would be out of proportion to any material result achieved.

Three. Bad prices and smaller purchases are likely to cause reduction of certain exports particularly store cattle in near future. Farmers will suffer. Absence of attacks on Irish ships would lessen risk of blockade being regarded by public opinion here as responsible for hardships due to other causes.

Four. We have striven to keep our export trade on normal peace-time lines. We do not allow transshipment or re-export or acceptance of abnormal war contracts. Irish ships are not armed and do not sail in convoy. This policy calls for some reciprocity on German side. It will be difficult to maintain if even Irish exports in Irish vessels are attacked.

We have only 10 vessels over 1,000 tons of which 8 are less than 1,500 tons and one of the remaining two is a passenger ship. Of the ten, four are mainly in Spanish and other trade outside Irish Sea. We appreciate German Government cannot guarantee against mines and damage by raids on British ports. But we do expect that they will abstain from directly attacking Irish ships at sea by air or submarine. We would agree that there should be no disclosure of any kind about the exemption and that it should not be abused by increases in frequency of sailings, etc.

Please see Woermann at once and speak to him on lines of foregoing.