Attention has recently been called to the extent to which German
operations against shipping have recently tended to fall with
increasing severity on the shipping of neutral countries.

The figures of shipping of the three Scandinavian countries
Norway, Sweden and Denmark show that during the first three months
of the war the total number of ships sunk was 213 of a total
tonnage of 63,000 tons. The number of reported deaths was 50.

During the month of December 28 Scandinavian ships were sunk of a
total tonnage of 51,000 with 133 reported deaths. In the present
month up to date 12 ships have been sunk of a total tonnage of
23,000 and reported casualties 53.

In earlier stages, German operations were limited to vessels
trading with this country but more recently indiscriminate Warfare
has been practised not only as a result of mine-laying but also by
submarine attacks on merchant vessels trading between neutral
ports. Germany's violations of international law and of the rights
of neutrals on the high seas are thus becoming steadily more
numerous and more flagrant while at the same time she continues to
derive great benefit from our scrupulous observance of
international law in the matter of iron ore shipments from Narvik.

By so doing it seems to us that Germany is piling up a fresh case
against herself which is quite distinct from the case we have
previously made out to show that she violated Norwegian
territorial waters.

These violations by Germany of international law on the high seas
may well be held to justify us in maintaining that we too should
be liberated from the strict letter of the law in those cases
where our vital interests are concerned, so long as our action
does not endanger the interests of any neutral state or its
citizens.

The attitude of the smaller neutrals is we know to hold us to the
strict application of international law as regards neutral rights,
while they themselves perforce acquiesce in Germany's illegalities
as practised against themselves. This may be suspected in view of
the terror which Germany's threat inspired in most of them. But
the smaller neutral States themselves should realize as indeed
they probably do, though fear prevents them from acting upon it,
that their security depends upon our victory, and that, should we
go under, Germany will show no respect for property or rights of
the weak neutrals.

We have never contemplated taking any action in Norwegian waters
which would cost a single Norwegian life. At the same time many
Scandinavian sailors have been killed by German action in flagrant
violation of international law. Yet we are prohibited from even a
technical infringement of that law and thus compelled to allow
quantities of iron ore to reach Germany which provide her with raw
material necessary to create more armaments to be used against
ourselves and neutrals alike.

We have, as you know, decided not to proceed at present with the
decision to send British warships into Norwegian territorial
waters to intercept the shipment of iron ore. At present the
position is that we have told the Norwegian and Swedish
Governments that we have in response to their request delayed the
execution of this decision, while making it plain to them that we
consider ourselves entitled to expect them to submit proposals to
us for achieving this object by other means. If, as is probable,
they do not come forward with adequate proposals we will be
careful to consider the situation thus created and examine, inter
alia, whether violations by Germany of international law on the
high seas are or are not sufficiently flagrant to liberate us from
the restrictions to which we are at present submitting in the case
of transit of iron ore from Narvik to Germany through Norwegian
territorial waters.

In case we should decide on a review of all relevant
considerations to take action we are studying whether instead of
patrolling Norwegian waters we might not preferably lay mines in
Norwegian territorial waters and declare the minefield. The object
of such a step would be to force ships carrying iron ore out into
the open sea, where they could be intercepted. If the Norwegians
were to sweep up the field another could be laid at a different
point and this also declared. An advantage of this proposal is
that there should be less risk of damage to Norwegian or other
shipping in Norwegian waters and less likelihood of incidents with
Norwegian forces.

While no detailed proposal has as yet been put before the War
Cabinet we are anxious to give you earliest information of the
problem which we expect to be considered in the course of the next
few days.