detriment to the preferential requirements and interests of Spain.

4. The Government of His Catholic Majesty, who, in order to meet the wishes of His Britannic Majesty's Government, sanctioned by Royal Decree of the 16th June last the export of 40,000 tons of potatoes without any concession in return, are prepared to increase that amount, if asked to do so by His Britannic Majesty's Government, so far as may be compatible with the requirements of Spanish home supplies.

5. Always within the limits imposed by those requirements and by the agricultural resources of Spain, the Government of His Catholic Majesty are animated with the best intentions as regards the export of forage.

6. The Government of His Catholic Majesty undertake to place no difficulties in the way of the export of tinned goods. to the United Kingdom. subject to the exigencies of home consumption in Spain; and, subject in general to the same requirements, they will place no obstacles in the way of the export of other food substances to the United Kingdom.

7. In return for these concessions and advantages, which demonstrate the conciliatory spirit animating the Government of His Catholic Majesty, His Britannic Majesty's Government will accord the following facilities:

(a.) His Britannic Majesty's Government will allow an annual importation of 50 per cent. of the quantities of sweet oranges imported into the United Kingdom during the year 1916, 50 per cent. of the quantity of eating grapes, raisins, and almonds imported during the year 1914, and 25 per cent. of the quantity of bananas imported during the year 1914, and an unlimited quantity of onions, so long as any form of prohibition on the importation of fresh fruits into the United Kingdom is maintained.

In view of the particular desire expressed by the Government of His Catholic Majesty, His Britannic Majesty's Government are prepared to reserve for the transport of fresh fruit 20 per cent. of the space in vessels loading iron ore in ports in the east and south of Spain, provided that the fruit shipped on these vessels be consigned only to persons holding import licences in the United Kingdom.

In order to avoid undue delays and waste of tonnage it is to be understood that if the fruit is not ready for shipment alongside the vessels into which it is to be loaded when they are ready to receive it, the ships will be free forthwith to complete their cargoes with ore. It is further understood that the shipment of the fruit will be effected as rapidly as possible with a minimum loading of 150 tons per running day of twenty-four hours.

(b.) So long as the prohibition on the importation of wines and spirits is maintained, His Britannic Majesty's Government will grant licences for the importation into the United Kingdom each year of 50 per cent. of the quantities of wine imported from Spain in 1913, and of 50 per cent. of the spirits imported in 1916.

(c.) His Britannic Majesty's Government, except when it is absolutely impossible owing to the shortage of production, will grant licences for the export to Spain of 300 tons of tin-plates a month, and will do their best to arrange for the importation direct to Spain from the United States by Spanish vessels of a further equal quantity of tin-plates in each month. In view of the arrangements which exist between His Britannic Majesty's Government and the tin-plate manufacturers in the United States, those direct exports will be subject to the control of His Britannic Majesty's Government.

(d.) His Britannic Majesty's Government, with the reservations mentioned in the preceding paragraph, will permit the export to Spain of 120 tons of ferro-manganese a month.

In the event of the Government of His Catholic Majesty being able to show that a quantity of steel exceeding the average of recent years has been exported from Spain to the United Kingdom, France, or Italy, the quantity of ferromanganese to be exported from England to Spain shall be increased proportionately, subject always to home requirements in the United Kingdom.

(e.) If in future the production of sulphate of ammonia in the United Kingdom offers sufficient margin to allow of export to Great Britain's Allies or to neutrals, His Britannic Majesty's Government will give preference over the last mentioned to any reasonable demands for sulphate of ammonia from Spanish importers.

8. Nothing in the foregoing shall affect the fulfilment of any other arrangement or contract arrived at between the two countries in respect of specific articles.

9. The two Governments undertake to solve in common accord any doubt which may arise in regard to the interpretation of the meaning of the above clauses.

In the belief that these mutual concessions will tend still further to improve the commercial relations between the two countries in accordance with the desires of both Governments,

(No. 2.)*-The Secretary of State for Foreign Affairs to the Spanish Ambassador in London.

Your Excellency,

Foreign Office,

December 6, 1917. WITH reference to my note of to-day's date regarding the commercial arrangements with Spain, I have the honour to inform your Excellency that, as regards the third paragraph of Clause 3, it is understood that the obligation of His Britannic Majesty's Government to license coal for Spain is only intended to meet purely Spanish requirements, on the assumption that the whole output of Spanish coal will be reserved for these requirements. By Spanish requirements is meant coal for consumption in Spain, her Colonies, African Possessions, and the Spanish Protectorate in Morocco, and coal for Spanish and other vessels engaged in bona fide Spanish trade which require coal in Spanish ports.

As regards Clause 7 (a), it is understood that the appointment by His Britannic Majesty's Government of a sole buyer of dried fruits in Spain will not have the effect of lowering prices, as compared with those prevailing in previous years, to such an extent as would deprive the Spanish exporters to the United Kingdom of a reasonable profit.

As regards point (d) in Clause 7, His Majesty's Government, despite the fact that Spain has already during the current year received more than the quantity of ferromanganese due to her from this country under the abovementioned clause, are prepared to grant export licences for an amount of ferro-manganese to Spain not exceeding 30 tons per month, until the two Governments agree that the balance has been worked off on the basis of the export permits for ferro-manganese granted by His Majesty's Government to Spain from the 1st January, 1917. His Majesty's Government will, however, be prepared to consider any application for export licences for supplies of ferro-manganese beyond the quantity stated above, should home requirements in the United Kingdom permit of such export.

His Majesty's Government take note of the assurance offered by the Government of His Catholic Majesty of their readiness to enter at once into negotiations for a financial arrangement.

I have, &c.

A. J. BALFOUR.

A Note, containing identic terms in the Spanish language, signed by Señor Alfonso Merry del Val, was addressed to Mr. Balfour on the same date.

EXCHANGE OF NOTES between Great Britain and Spain embodying a Commercial and Financial Agreement between the two Countries.-Madrid, April 8/18, 1919.*

(No. 1.)-The British Ambassador at Madrid to the Spanish Minister for Foreign Affairs.

Your Excellency,

His Britannic Majesty's Embassy, Madrid, April 8, 1919. I HAVE the honour to inform you that I am now in a position to sign the Financial and Commercial Agreement which has formed the subject of our recent discussions.

This Agreement runs as follows:

ART. 1. The Governments of His Majesty the King of Great Britain and Ireland and the British Dominions Overseas, Emperor of India, and of His Majesty the King of Spain agree to prolong sine die the Commercial Agreements in force, so long as one of the parties does not give the other two months' notice of their termination.

2. His Catholic Majesty's Government renounces the right granted to it in the above Agreements to be reserved. 20 per cent. of the cargo space in ships loading iron ore in the southern and eastern ports of Spain for the transport of fresh fruit, on the condition that the fruit in question is consigned exclusively to licensed persons in the United Kingdom.

3. His Catholic Majesty's Government grants to His Britannic Majesty's Government an advance in specie of 75,000,000 pesetas in the manner, the conditions and the period indicated in the memorandum annexed to this Agreement.

4. His Britannic Majesty's Government undertakes to abide by the clauses of the Commercial Agreement of the 6th December, 1917, respecting coal, but cannot bind itself indefinitely in regard to the supply of bunker coal overseas. It will place no obstacles in the way of the shipment of coal destined for Spain, and so long as that article is subject to an official price "tasa" in the United Kingdom, and that price is not higher than it is at present, the price of coal destined for Spain, as at present fixed, shall not be increased. If increased it shall in no event be higher than that at which coal is sold to the most favoured nation.

5. His Britannic Majesty's Government will allow the free importation of oranges into the United Kingdom.

The Agreement was denounced by the British Government on May 15, 1920, and ceased to have effect on June 15, 1920, see page 443. + Page 432.

6. This Agreement and the accompanying memorandum to which reference has been made in Article 3, together with the answer of his Excellency the British Ambassador, will be held to constitute a supplement to the notes exchanged on the 6th December, 1917,* and accordingly to form per se the Commercial and Financial Agreement in force between Spain and the United Kingdom.

With respect to Article 4, I can, however, sign it ad referendum to His Majesty's Government, and my acceptance of it must be deemed to be subject to their approval.

Inasmuch, moreover, as the concession embodied in Article 5 of the proposed Agreement dealing with fruit was intended by Lord Curzon of Kedleston, as was confirmed to your Excellency by Señor Merry del Val, as a set-off against the inability of His Majesty's Government to accept all your original proposals respecting coal, I deem it my duty to reserve, and I have the honour to do so hereby, their right to reconsider, should they accept Article 4, the unlimited importation of Spanish oranges into the United Kingdom agreed to in Article 5.

Awaiting your Excellency's reply, I avail, &c.

ARTHUR H. HARDINGE.

Memorandum.

HIS Catholic Majesty's Government opens a credit of 75,000,000 pesetas in favour of such bank or banks in the United Kingdom of Great Britain and Ireland as the Lords Commissioners of His Britannic Majesty's Treasury may hereafter designate.

2. The above credit of 75,000,000 pesetas will be at the disposal of the bank or banks designated upon presentation of bills of exchange drawn as follows:

30,000,000 pesetas, or any part thereof, on or after the 8th April, 1919.

20,000,000 pesetas, or any part thereof, on or after the 15th April, 1919.

The balance, or any part thereof, on or after the 22nd April, 1919.

3. The bills so drawn shall be at ninety days' sight. His Catholic Majesty's Government will accept all drafts Irawy against it in conformity with this Agreement.

Any bill drawn in accordance with this Agreement may be renewed on maturity one, two, three, four, five times by delivery of new bills at ninety days' sight.

* Page 436.