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British ports. Several agreements of this kind have been made; the general principle of them is that His Majesty's Government obtain the right to require any goods carried by the line, if not discharged in the British port of examination, to be either returned to this country for prize court proceedings, or stored in the country of destination until the end of the war, or only handed to the consignees under stringent guarantees that they or their products will not reach the enemy. The companies obtain the necessary power to comply with these conditions by means of a special clause inserted in all their bills of lading, and the course selected by the British authorities is determined by the nature of the goods and the circumstances of the case. In addition to this, some of these companies make a practice, before accepting consignments of certain goods, of enquiring whether their carriage is likely to lead to difficulties, and of refusing to carry them in cases where it is intimated that such would be the case. The control which His Majesty's Government are in a position to exercise under these agreements over goods carried on the lines in question is of very great value.

VII. Bunker Coal

26. Much use has been made recently of the power which the British Government are in a position to exercise owing to their ability to refuse bunker coal to neutral ships in ports in the British Empire. Bunker coal is now only supplied to neutral vessels whose owners are willing to comply with certain conditions which ensure that no vessels owned, chartered, or controlled by them trade with any port in an enemy country, or carry any cargo which proceeds from, or is destined for, an enemy country. The number of owners who accept these conditions increases almost daily. The use of this weapon has already induced several shipping lines which before the war maintained regular services between Scandinavian and German Baltic ports to abandon their services.

VIII. Agreements in respect of Particular Commodities

27. Special agreements have been made in respect of particular articles the supply of which is mainly derived from the British Empire or over which the British Government are in a position to exercise control. The articles covered by such agreements, the object of which is to secure such control over the supply of these materials as will ensure that they or their products will not reach the enemy, are rubber, copper, wool, hides, oil, tin, plumbago, and certain other metals.

IX. Rationing

28. Though the safeguards already described do much to stop entirely all trade to and from Germany, yet, in spite of all of them, goods may and do reach our enemies, and, on the other hand, considerable inconvenience is caused to genuinely neutral trade. It is to avoid both evils that His Majesty's Government have for months past advocated what is called rationing, as by far the soundest system both for neutrals and belligerents. It is an arrangement by which the import of any given article into a neutral country is limited to the amount of its true domestic requirements. The best way of carrying this arrangement into effect is probably by agreement with some body representing either one particular trade or the whole commerce of the country. Without such an agreement there is always a risk that, in spite of all precautions, the whole rationed amount of imports may be secured by traders who are really German agents. These imports might go straight on to Germany, and there would then be great practical difficulty in dealing with the next imports destined, it may be, for genuine neutral traders. If they were to be stopped, there would be great complaint of injustice to neutrals, and yet unless that be done the system would break down. Accordingly, agreements of this kind have been concluded in various countries, and His Majesty's Government are not without hope that they may be considerably extended in the future. Even so the security is not perfect. An importer may always let his own countrymen go short and re-export to Germany. The temptation to do so is great, and as our blockade forces prices up is increasing. But the amount that gets through in this way cannot be large, and the system is in its working so simple that it minimizes the delays and other inconveniences to neutral commerce inseparable from war. Of the details of these arrangements it is impossible to speak. But their principle appears to offer the most hopeful solution of the complicated problems arising from the necessity of exercising our blockade through neutral countries.

X. Results.

29. As to the results of the policy described in this memorandum the full facts are not available. But some things are clear. It has already been shown that the export trade of Germany has been substantially destroyed. With regard to imports, it is believed that some of the most important, such as cotton, wool, and rubber, have for many months been excluded from Germany. Others, like fats and oils and dairy produce, can only be obtained there, if at all, at famine prices. All accounts, public and private, which reach His Majesty's Government agree in stating that there is considerable discontent amongst sections of the German population, and there appear to have been food riots in some of the larger towns. That our blockade prevents any commodities from reaching Germany is not, and under the geographical circumstances cannot be true. But it is already successful to a degree which good judges both here and in Germany thought absolutely impossible, and its efficiency is growing day by day. It is right to add that these results have been obtained without any serious friction with any neutral government. There are obvious objections to dwelling on the importance to us of the good will of neutral nations; but anyone who considers the geographical, military, and commercial situation of the various countries will certainly not underrate the value of this consideration. There is great danger when dealing with international questions in concentrating attention exclusively on one point in them, even if that point be as vital as is undoubtedly the blockade of Germany.

XI. Conclusion

30. To sum up, the policy which has been adopted in order to enforce the blockade of Germany may be described as follows:

(i) German exports to oversea countries have been almost entirely stopped.

Such exceptions as have been made are in cases where a refusal to allow the export of the goods would hurt the neutral concerned without inflicting

any injury upon Germany. (ii) All shipments to neutral countries adjacent to Germany are carefully scru

tinized with a view to the detection of a concealed enemy destination. Wherever there is reasonable ground for suspecting such destination, the goods are placed in the prize court. Doubtful consignments are detained

until satisfactory guarantees are produced. (iii) Under agreements in force with bodies of representative merchants in several

neutral countries adjacent to Germany, stringent guarantees are exacted from importers, and so far as possible all trade between the neutral country and Germany, whether arising overseas or in the neutral country itself, is restricted.

(iv) By agreements with shipping lines and by a vigorous use of the power to

refuse bunker coal, a large proportion of the neutral mercantile marine which carries on trade with Scandinavia and Holland has been induced to agree to conditions designed to prevent goods carried in these ships from

reaching the enemy. (v) Every effort is being made to introduce a system of rationing which will

ensure that the neutral countries concerned only import such quantities of the articles specified as are normally imported for their own consumption.

ARRANGEMENT BETWEEN THE UNITED KINGDOM AND HONDURAS REFER

RING TO ARBITRATION MATTERS RELATING TO THE MASICA INCIDENT 1

Signed at Tegucigalpa, April 4, 1914

TERMS OF REFERENCE Whereas on the 16th June, 1910, an affray took place in the village of La Masica, in the Department of Atlántida, Republic of Honduras, between a squad of soldiers of the Government of Honduras which at the moment of the affray was under the command of the Mayor de Plaza of that Department, Don Joaquin Medina Planas, and a party of three British West Indian subjects, named Alexander Thurston, Wilfred Robinson, and Joseph Holland, which affray resulted in the death of Alexander Thurston, the wounding of Wilfred Robinson, and the beating of Joseph Holland;

And whereas a court of enquiry opened at La Ceiba on the 29th August, 1910, made investigations into the circumstances attending the above-mentioned incident and pronounced a decision thereupon;

And whereas in view of the result of these investigations and the decision referred to, the Government of Honduras, basing themselves on the agreement concluded at Tegucigalpa on the 13th August, 1910,2 between the Honduranean Minister for Foreign Affairs, Don R. Rivera Retes, and his Britannic Majesty's Chargé d'Affaires, Mr. Godfrey Haggard, have refused to accept any responsibility in regard to the event mentioned;

And whereas the Government of Great Britain consider that the re

1 Great Britain, Treaty Series, 1914, No. 10. 2 See Annex, p. 101.

sults of these investigations and the decision of the court give them good ground for claiming from the Government of Honduras a reasonable indemnity;

And whereas both governments, being desirous of removing as soon as possible this source of disagreement between them, have resolved to submit the above question to the arbitral decision of His Majesty the King of Spain;

Now therefore they have authorized duly and properly their representatives, namely:

The Government of His Britannic Majesty: Charles Alban Young, Esquire, Envoy Extraordinary and Minister Plenipotentiary of His Britannic Majesty to Honduras; and

The Government of Honduras: his Excellency Señor Dr. Don Mariano Vásquez, their Minister for Foreign Affairs, to conclude the following arrangement:

I The question whether, under the principles established by international law, and taking into consideration the agreement of the 13th August, 1910, above referred to, any responsibility attaches to the Government of Honduras in respect of the affray and the injuries inflicted on the above-mentioned British subjects in the circumstances as disclosed before the said court of enquiry at La Ceiba, shall be submitted to the decision of His Majesty the King of Spain.

II

Within four months of the signature of this arrangement, the Government of His Britannic Majesty shall present to the Royal Arbitrator and to the Government of Honduras a memorial in support of their case. The presentation of the British memorial to the Government of Honduras shall be effected by its presentation to the Honduranean Minister in Guatemala by His Britannic Majesty's Representative in Guatemala.

III

Within four months of the presentation of the British memorial to the Government of Honduras, that government shall present to the Royal Arbitrator and to the Government of His Britannic Majesty an answer. The presentation of the answer to the Government of His Britannic Majesty shall be effected by its presentation to His Britannic Majesty's

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