Dear Hogan,
I should, perhaps, add the following information about the financial position of the German Legation to the particulars contained in my semi-official letter 207/129A of the 1st July¹ replying to your letter F.99/19/39 of the 26th June.²

There is definite evidence that the financial position of the German Legation is becoming difficult. The German Foreign Office recently spoke to Warnock about the possibility of a clearing agreement, but, for the reasons made clear in my letter of yesterday, we instructed Warnock to hold out no hope. You will recall, of course, that the Reichsbank were recently enquiring about the possibility of sending funds to the Legation through Swiss francs.

The financial commitments of the Legation have increased. We know that just as we make remittances to our nationals stranded on the Continent, the German Legation here pays maintenance allowances to German nationals in this country who have lost their employment, are cut off from their normal sources of income or are otherwise unable to support themselves. The German allowances are on a more generous scale than ours. In the second place, the Legation puts up the army pay of the German military internees at the Curragh, who number between 35 and 40, I think. The German army pay seems to be not ungenerous, and I think that the Legation's outlay on this head might be as much as £50 a week. In addition, they meet some of the internees' bills for food, clothes, etc.

We, of course, are anxious that the Legation should continue solvent and in a position to meet these and other commitments. If it ran short of funds, an embarrassing situation would arise. We might find ourselves faced with a choice between letting the Legation shut down and trying to get its personnel back to Germany – an eventuality which would present all sorts of political considerations from our point of view – or taking some positive action our- selves to help the Legation over its financial difficulties. From this point of view, the collection of these pre-war debts by the German Legation, though it is embarrassing to the extent to which it involves the use of powers of attorney legalised by our Legation at Berlin, is, on the whole, a lesser evil.