No. 140 NAI DFA Secretary's Files S1/4

Minutes of the fourth meeting of the conference between the representatives of the Irish Free State and British Governments

London, 3.00 pm, 15 October 1932

PRESENT:
UNITED KINGDOM IRISH FREE STATE
The Rt. Hon. J.H. Thomas, M.P.,
Secretary of State
for Dominion Affairs
Mr. Eamon de Valera, T.D.,
President of the Executive
Council and Minister for
External Affairs.
The Rt. Hon. Neville Chamberlain,
M.P., Chancellor of the
Exchequer.
Mr. Seán MacEntee, T.D.,
Minister for Finance.
The Rt. Hon. Sir John Simon,
G.C.S.I., K.C.V.O., O.B.E., K.C.,
M.P., Secretary of State for
Foreign Affairs.
Mr. James Geoghegan, K.C., T.D.,
Minister for Justice.
The Rt. Hon. Viscount Hailsham,
Secretary of State for War.
Mr. Conor A. Maguire, K.C.,
T.D.,
Attorney-General.
The Rt. Hon. Sir Thomas Inskip,
C.B.E., K.C., M.P.,
Attorney-General
THE FOLLOWING WERE ALSO PRESENT:
Sir Edward Harding, K.C.M.G.,
C.B., Permanent Under
Secretary of State for
Dominion Affairs.
Mr. J.W. Dulanty,
High Commissioner in London.
Mr. S.D. Waley, M.C.,
Principal Assistant
Secretary, Treasury.
Mr. J.J. McElligott, Secretary,
Department of Finance.
Mr. Seán Moynihan, Secretary
of the Executive Council.
Mr. J.P. Walshe, Secretary,
Department of External Affairs.
Mr. J. Leydon, Secretary, Depart-
ment of Industry and Commerce.
Mr. Joseph Brennan, Chairman
of Currency Commission.

Secretaries

Mr. R.B. Howorth, C.B., C.M.G.
Mr. J.E. Stephenson.
Mr. H. Brittain.
Mr. W.D. Wilkinson, D.S.O., M.C.

CLAIM IN RESPECT OF OVER-TAXATION.

MR. MacENTEE said that he had one point to make with regard to the question of over-taxation. He understood Mr. Chamberlain to say that the measurement of taxable capacity by income tax was not accurate in the case of Ireland owing to the method of taxation of the farmers. He could not see how that applied. On the contrary, his view was that on that basis of payment Ireland had paid more than her due share relative to her capacity. It was universally agreed that the rents paid by the farmers in Ireland had been uneconomic rents beyond their capacity; and, they were paid to the landlords who were assessed for income tax on the full amount of those rents. So far as this was done the amount paid in income tax by the landlords was very excessive relative to the Country's taxable capacity. This argument was reinforced by the views of the Childers' Commission.

Looking at the matter from another angle, during the period of excessive rents, the population of Ireland was continually declining. Mr. Geoghegan had that morning referred to the question of the maximum taxable capacity of the individual as being the amount of his income in excess of the bare amount required for subsistence. But the conclusion to be drawn from the continuous decline of population was that, under conditions then existing which, in the Irish Free State representatives' view, included over-taxation, the Irish people were unable to find subsistence and had to leave their country. In other words, so far as those people were concerned, there was no 'taxable capacity'.

MR. CHAMBERLAIN felt that it would not be useful to pursue the argument under that head. He had endeavoured to give an account of the reasons for which the calculation of Mr. Childers had not been accepted by the United Kingdom representatives, though he appreciated that those reasons might not appeal to the Irish Free State representatives.

MR. MacENTEE observed that they had brought forward one strong argument which had not been met; they regarded the admitted poverty of Ireland as a very big factor in the situation from this point of view.

MR. THOMAS said that there was nothing incompatible with the arrangements made in 1926, namely, that on a give-and-take basis the claims of both sides were wiped out. In making those arrangements the question of over-taxation was no doubt fully considered.

MR. MacENTEE said that, so far as the Irish representatives were aware, the question of over-taxation had never been taken into consideration in this way, although it had for long been a major political issue in Ireland, and the view that Ireland had been over-taxed had received full support from all sides in Irish politics.

In reply to further questions MR. MacENTEE explained that in referring to the Childers' Commission, he had done so on the footing that the views of Mr. Childers, as a British representative and Chairman of a Royal Commission, were, he thought, likely to afford common ground as between the Treasury and Ireland. Mr. Childers represented the minimum, from the Irish point of view, not the maximum claim. There had been subsequent investigations carried out in Ireland which had taken the matter further. He referred to the work of Professor Oldham1 of the National University who, working on figures given by Mr. Sexton2 in 1893 of £290,000,000, had assessed the gross amount of over-taxation in 1912 as £330,000,000, and by a subsequent further investigation after the war had brought it up to £399,000,000.

ABANDONMENT OF THE GOLD STANDARD.

MR. MacENTEE said that the basis of their claim was on clear figures, namely, of the amount of Irish Free State investments in British Government securities which amounted to approximately £70,000,000 and in British industrial securities which might be put at £130,000,000. The effect of the abandonment of the Gold Standard was to write down the value of these securities by 25%. While he admitted that there was no legal claim, he felt that it was not in accord with the British tradition of paying 20/- in the £ that this loss should be thrown on the Irish Free State.

As regards the question of possible loss sustained by British investors in Irish Free State securities on the same basis, he thought that that would prove a small item compared with the Irish Free State loss.

MR. THOMAS suggested that the people who had invested their money in British securities were, on the whole, 'shaking hands with themselves' now.

MR. MacENTEE replied that if the people had invested in dollar securities at the same time, they would now be able to realise those dollar securities and, if they desired, buy with the proceeds an increased nominal amount of sterling securities as a result.

LORD HAILSHAM enquired whether that applied in the case of industrial investments in the United States.

MR. MacENTEE agreed that industrial investments had depreciated everywhere, and he admitted that an investor in an industrial security might be regarded as taking the ordinary commercial risks. He thought, however, that an investor in a British Government security might reasonably have regarded himself as taking no risk of loss.

MR. THOMAS suggested that, on the whole, if Mr. MacEntee canvassed the opinion of people in the Irish Free State they would regard themselves as having benefited by the abandonment of the Gold Standard.

MR. MacENTEE denied this view. He said that the argument that prices had been maintained at a stable level on the sterling basis only means that in fact the Irish Free State was confined to the sterling market for the purchase of goods; they could not purchase outside that market without serious loss.

MR. DE VALERA said that while in all the circumstances it was perhaps not correct to describe the abandonment of the Gold Standard as 'repudiation', the effect of it on the Irish Free State was the same as that of repudiation. He still felt that, if the matter were gone into fully, it would be found that the Irish Free State had sustained a substantial loss. The amount which they could be shown to have lost was of a definite character, while the various sets-off referred to by Mr. Chamberlain were quite unascertainable in amount.

He felt, however, that it was unlikely that the meeting would be able to reach a definite conclusion on the question.

THE ROAD FUND.

MR. DE VALERA said that he was aware that his claim for a revision of the Road Board's allocation of grants had been submitted with the agreement of the Treasury to the arbitration of Sir Henry Strakosch. The question now was whether that arbitration should be allowed to proceed, or whether the matter should be taken into the proposed comprehensive settlement.

COINAGE.

MR. DE VALERA said that here again Free State interests were being prejudiced by what they regarded as an inequitable agreement. The British case, he knew, was that binding agreements could not be re-opened; but if there was really to be a comprehensive settlement the re-opening of such agreements was surely not to be regarded as an un-heard-of thing.

CURRENCY.

MR. THOMAS said that the Free State had become entirely at liberty immediately it had been set up to make whatever currency arrangements it thought best. It had, in fact, found it convenient to continue using British currency notes; the introduction of the Irish Free State note issue had only followed after a period of years.

MR. DE VALERA said that the Free State's use of British currency notes after the Treaty was a matter of necessity, not of convenience; in practice it was quite impossible for a new State to issue its own notes at once without a preliminary period for investigations, preparations etc.

MR. MacENTEE said that British traders would, in fact, have been greatly inconvenienced if the Free State had issued its own currency notes within, say, six months after the Treaty.

MR. DE VALERA said that whatever the reasons might have been, British notes had remained in circulation and the profits had accrued to the British Treasury. In his memorandum he had claimed the full amount of those profits. If, however, the British Treasury could prove its right to any part of the sum he was willing to compromise.

MR. THOMAS said that he regarded the Free State claim under this head as so far-fetched that he had thought at first that it must have been accidentally inserted in the memorandum.

MR. DE VALERA explained that there was a difference between the claims included in his first memorandum3 (that transmitted with his letter of 12th October)4 and those included in his second.5 The first memorandum dealt with the immediate items of controversy. Here a settlement was urgently necessary. When, however, it had been suggested that advantage might be taken of the negotiations to make a comprehensive settlement, he had gone further afield; his second memorandum was accordingly an indication of the many items which he thought must be included if there were to be a genuine comprehensive settlement. He was anxious to avoid leaving 'loose ends' behind. If these were left they would only be the cause of controversies at some later date.

There could be no question of settling all these miscellaneous items in the course of a few hours' conversation. The enquiries of the Childers Commission had, he believed, occupied three years. The Free State delegation were at the disposal of the British Government, and were ready to examine any and every point in detail, with minds open to conviction.

MR. CHAMBERLAIN asked whether Mr. de Valera meant that there should be an examination of these miscellaneous items in order to see how far they could constitute a set-off against the Land Purchase Annuities.

MR. DE VALERA said that this was not his meaning. He thought that matters had come to a stage where, if there was to be a financial settlement at all, it must be the ultimate financial settlement envisaged by the Treaty. The Free State contention was that the agreements of 1923 and 1926 were invalid; but even if they were wrong in this view, and those agreements were valid, they could only be regarded really as provisional settlements. The ultimate financial settlement was still to be made.

MR. CHAMBERLAIN enquired whether the reference was to Article 5 of the Treaty.

MR. DE VALERA assented.

MR. CHAMBRELAIN said that it was definitely the United Kingdom view that this article had been implemented by the Boundary Agreement and the Financial Settlement of 1926.

Might he refer to the argument which had been used by Free State Ministers earlier that day - namely, that when those agreements had been under discussion the United Kingdom had been ignorant of the Irish case in the matter of over-taxation in the past; that accordingly this case had not been taken into account in making those agreements; and that it ought to be taken into account now.

He (Mr. Chamberlain) would, of course, be glad to hear that case now, though he was not prepared to modify his view regarding the final character of the 1926 settlement. It was not the case, however, that the Irish arguments had never been considered by United Kingdom Ministers before. He had before him a Free State memorandum in four pages, of October 1921, which had been considered by United Kingdom Ministers before the conclusion of the Treaty. The gist of that memorandum was that this country was at that date in debt to Ireland to the amount of £727 millions; and it set out the data and arguments of the 'over taxation' case.

MR. DE VALERA said that he remembered the memorandum: it had been prepared at a time when the Irish representatives had thought that the political Treaty would be accompanied by a dissolution then and there of the financial partnership.

MR. CHAMBERLAIN pointed out that the claim then made was much higher than that which Mr. de Valera was now pressing. The document, at any rate, proved that the Irish claim had been known here ever since October, 1921.

MR. DE VALERA said that whatever might have been intended in October, 1921, the Treaty had made provision for the ultimate financial settlement. The Free State delegation were now prepared with their statement of set-offs and counter-claims under Article 5.

He knew that Lord Hailsham did not share his view of that article, but he (Mr. de Valera) could not read it as excluding the case in which the Free State counter-claims might exceed the United Kingdom claims, and payments on balance might be due to the Free State. Any interpretation excluding this possibility would be most inequitable; it would mean that the authors of the Treaty had pre-judged the financial settlement.

MR. CHAMBERLAIN reminded Mr. de Valera that a document was in existence which proved a knowledge among the Treaty negotiators on both sides that the Irish counter-claims might be as high as £727 millions. The Free State share of the public debt of the United Kingdom was estimated at the time of the Treaty at £158 millions. What had happened in 1925? Ministers on both sides, with this knowledge in their possession, had agreed that the whole Irish liability in respect of the public debt should be waived - and the counter- claims with it. The settlement might be loosely described as a set-off of a debt of £158 millions against a more indefinite claim estimated by Mr. de Valera's advisers in 1921 at £727 millions (though this was not a figure which the British Treasury could accept).

He (Mr. Chamberlain) had wondered whether the Free State Ministers would now produce any new arguments to support their case. He had heard nothing but the old familiar arguments; and had been compelled, in reply, to give reasons for considering some of the figures involved as fantastic; but none of this could alter the fact of the final character of the existing financial settlement.

SIR JOHN SIMON said that with all the facts in mind both sides had agreed in 1925 to cry quits. There could be no difference of opinion between reasonable men that that was what had happened.

MR. DE VALERA wished to repeat his view that a nation could not be bound by an Agreement like that of 1926 without ratification by its Parliament. The trend of modern practice was all against the United Kingdom view that such documents became binding immediately on their signature by Ministers. The modern view was that if, in a particular case, ratification was held to be unnecessary the fact should be expressly stated in the instrument itself.

He could not accept Sir John Simon's view that in 1925 both sides had in fact called quits, for the Free State had ever since been making annual payments in respect of what was part of the British public debt.

MR. THOMAS reminded Mr. de Valera that the Free State delegation had been proved wrong in their assertion that British Ministers had not been aware of the Irish case in 1921. He understood that Mr. de Valera had now shifted his ground, and was claiming that the Irish case could not have been considered, because the consequences of the Treaty were so unfair to Ireland. This however, was surely not a tenable position.

MR. DE VALERA said he was referring to 1925 and 1926.

MR. THOMAS referred to the great number of conferences with the Irish Government since the Treaty and thought it inconceivable that the Irish negotiators did not have the present Irish claims, for example, that in regard to over-taxation, in their minds at those conferences, just as much as at the present meeting.

MR. CHAMBERLAIN read the words of Article V of the Treaty and pointed out that Article II of the Boundary Agreement released the Irish Free State from the same liability as was imposed on it under the Treaty article. Any counter claim could be made only against that liability, and since the liability no longer existed, it was no longer possible for a counter claim to be put in. The Irish Free State could of course have put in a claim (not a counter claim) on other grounds, but in the 1926 Agreement the whole matter had been closed, and it was necessary to make it clear that no such further claim could now be entertained.

MR. GEOGHEGAN thought that if he personally and others who supported the Treaty had so interpreted the Treaty in 1921 events would have taken a different turn. They expected that the Irish Free State had at least a chance of a net payment to them under the Article.

SIR JOHN SIMON asked what was the liability referred to in Article V; was it gross or net? He felt sure that it was net. The settlement of 1925, therefore, similarly dealt with a net liability - that is, with both sides of an account.

MR. DE VALERA asked whether it was the British view that under Article V the Irish Free State could ever have been judged to have money owing to her.

SIR JOHN SIMON agreed that there was some difference between a counter claim and a set-off. The latter was something closely connected with the subject-matter of the original claim and could properly be set-off in reduction of that claim, whereas a counter claim related to an entirely separate matter. Article V, no doubt, contemplated that a counter claim could be lodged, but the Boundary Agreement must be regarded as wiping out both the gross claim and anything which the Irish Free State might set up in reduction or in overtopping of that claim. In fact, in agreeing to Article II of the Boundary Agreement the Irish Free State no doubt regarded a bird in the hand as worth several in the bush. From their debt liability there was no hope of escape. On the other side they might make an impalpable and shadowy counter claim, to which no figure had been put. Ireland's problem, therefore, was whether it was worth while to get rid of a real burden of definite amount, even though that entailed giving up unmeasured claims on the other side of the account which might, in certain circumstances, exceed that amount.

MR. GEOGHEGAN argued that if Article V dealt merely with claims relating to the national debt it involved an assumption that Great Britain was bankrupt. Were there not on the other side assets to consider, like the Crown Colonies and British warships?

MR. MAGUIRE pointed out that the wording of the article supported the Irish contention.

MR. DE VALERA preferred to consider the interpretation of Article V as it would have been given in 1921, rather than in 1925, and it would then surely have permitted of Ireland being credited for her over-taxation. It would have been truly absurd for Irish negotiators to have made an agreement which gave up so large a claim as the £727,000,000 claimed in 1921 and not provided for its overtopping the British claim.

MR. MAGUIRE added that although figures were presented in 1921 during the Treaty discussions, the Treaty merely arranged how the question should be dealt with in the future. No investigation of the figures was then carried out. Indeed the Irish Fee State complaint was not that any wrong decision had been given in regard to their claim in respect of over-taxation, but rather that it had never been investigated at all. Even in 1925 the Irish Free State had not presented their claim under Article 5 in answer to the British claim for a debt contribution. It was unnecessary to go into the history of the matter. Everybody knew that the Boundary Agreement had been arrived at in a hurry, and neither side had ever considered the financial case fully. The British figures relating to Article V had never been accepted.

MR. THOMAS, summing up the position at which the Conference had arrived, said that when both governments agreed to meet they also agreed to see if it were possible to arrive at a settlement that would be a settlement of the differences outstanding between them, that is, in relation to the Land Annuities and other payments which were being withheld. The Irish Free State representatives now said that they had withheld the monies because they did not think that payment was legally binding, and that even if it were there still remained the question of equity involving the general financial relations between the two countries going back to the Act of Union. The British government replied that so far as they were concerned they not only believed that the payments were legally binding under agreements, which should be maintained, but that if the Irish Free State Government were really anxious to submit some other factors that ought to be taken into consideration in connection with the items in dispute, they, that is the British Government, would examine them and see whether there was anything in the equitable claims of the Irish Fee State that would warrant their taking a different view of the matters in dispute. The Conference had previously dealt with the disputed items and to-day they had examined all the facts at their disposal regarding the bigger claim on the moral side. With a sincere desire to put the most generous interpretation on that claim, the British Government did not feel that the Irish Fee State had put forward any new factors. Apart from questions which had arisen since 1926 (for example, claims in connection with the gold standard and the currency note issues) all the matters raised had been settled by previous agreements. After two days of friendly and frank discussion the position was that on the one hand the Irish Free State did not regard themselves as legally bound in connection with the items immediately in dispute, while on the other hand, the British Government thought they were so bound. On the other items no new arguments had been brought forward which would warrant the British Government in believing the existing financial arrangements to be unfair. In such a situation, what did Mr. de Valera suggest that the Conference should do? It would be a sad blow to the British Government if, after two days of such frank expressions of opinion, in which each Government had been guided by a single-minded desire to do the right thing by their own countries, the settlement which each side so sincerely desired could not be reached. No-one would attempt to deny that the existing position was not to the advantage of either party, and both desired to see it ended, but it was idle for either side to pretend that they were nearer a practical solution, and he would ask Mr. de Valera how he would suggest that they would get out of the impasse.

MR. DE VALERA said that while he could not, of course, accept Mr. Thomas's deductions from the facts, he agreed generally with his concluding remarks, and in particular that it was not likely that either side would be able to convince the other. In the circumstances it seemed to him that there were only two possible alternatives, either there might be a decision to approach the whole problem from a different angle, or there might be resort to arbitration. The position with regard to arbitration had developed into a very difficult one, and the legal position was also very complex and involved. In the result the Irish Free State had, until recently, paid to the United Kingdom Government large sums of money in respect of which public opinion in the Irish Free State repudiated liability. He could only suggest that the question should be referred, as he had already offered, to an independent arbitrator, and that each side should then endeavour to make its case to the arbitrator. Generally speaking his idea was that the whole matter should be treated as though there had been a dissolution of partnership. The arbitration would then relate to the division of the partnership assets; the question to be determined being whether, apart altogether from the agreements, the Irish Free State ought in justice to pay any money to the United Kingdom.

MR. THOMAS said that with regard to the land annuities and the other disputed payments named in the first Memorandum, he wished the Irish Free State representatives to understand that he was in a position to examine the questions at issue from an impartial standpoint, in as much as at the time of the Irish Treaty he was not a member of the British Government, and was in Opposition. After giving the matter most careful consideration, and after making all allowances for historical and other factors, he had come to the definite conclusion that the arguments and considerations which had influenced those responsible for what was done, both at the time of the Treaty and at the time when the subsequent agreements of 1923 and 1926 were made, would have influenced him in exactly the same way and guided him to precisely the same conclusions.

With regard to the wider issues raised in the second Memorandum and in the arguments which had been used at the Meetings, he felt that the knowledge which was available on the subject to-day differed very little from the knowledge which was available to those who had negotiated the Treaty and the subsequent agreements. It must be admitted that the figures which had been named in regard to the contention that Ireland had been over-taxed in the past were, in the main, guess work, and that it would be most difficult, if not impossible, to establish at the present time to the satisfaction of any Court, the actual annual figures of a period so long ago as 100 years. The figures which Mr. Geoghegan had named could, no doubt, be totalled, but their correctness could not, in his view, be proved.

What troubled him (Mr. Thomas) was that this was the fourth occasion on which an attempt had been made with all sincerity on each side to surmount the difficulties, and that after an exhaustive examination the representatives of the two Governments were no nearer a settlement than when the questions at issue had been discussed in Dublin earlier in the year.

MR. DE VALERA observed that each side sincerely and conscientiously held to its own point of view, and this did not make an approach any easier. He felt unable to add anything to what he had already said. In his considered opinion it was unfair and unjustifiable that the Irish Free State should be called upon to pay anything to the United Kingdom.

MR. THOMAS recalled that at an earlier stage of the dispute there had been a tendency for each side to talk at, rather than to, the other side. It soon appeared that the real issue turned on the question of validity of the 1923 and 1926 agreements. He (Mr. Thomas) had then suggested that this question should be referred to arbitration, and the United Kingdom Government had accordingly offered arbitration on the lines contemplated at the Imperial Conference of 1930. The Government of the Irish Free State had accepted arbitration, but had refused to be limited as regards the choice of the arbitrator to some person within the British Commonwealth of Nations. The United Kingdom Government had maintained their view that the arbitrator must be a person from within the Commonwealth, and had given their reasons which it was unnecessary for him to repeat. At the same time the United Kingdom Government were prepared to vary in certain other respects the arrangement contemplated by the Imperial Conference. The Irish Free State Government had found themselves, however, unable to accept the suggested compromise. The position seemed to be the same to-day, with this difference: that the United Kingdom Government, in order to demonstrate their anxiety for a settlement, had decided to agree that the present discussions should proceed on the widest possible basis, so as to ensure that if the Irish Free State had any new point to make, or new argument to urge, there would be an opportunity for their representations to be considered. On behalf of the Government of the United Kingdom, Mr. Thomas said that he was prepared to renew the same offer, namely to refer to arbitrators selected from within the Empire the question whether these agreements are valid or not. That was the only suggestion which he felt able to make.

MR. DE VALERA said that this proposal had been ruled out by the Irish Free State Government on the previous occasion when it had been made, and that Government was not prepared to reconsider the decision then reached.

MR. MacENTEE said that whatever the 1926 agreement might be, whether valid or invalid, it was not in fact what it purported to be - a final financial settlement. If the present Conference broke up without any agreement being reached he wished to warn the United Kingdom representatives that they would most certainly be faced in the future with the same claims and the same arguments which had been made on the present occasion. Whether the agreements of 1923 and 1926 were valid or invalid agreements, there had in the view of the Irish Free State representatives never been any final financial settlement.

SIR THOMAS INSKIP thought that it was common ground that a certain number of points had been finally settled by the agreements in question.

MR. MacENTEE was not prepared to admit that this was so. No future Government in the Irish Free State would ever acquiesce in the view that the Agreement of 1926 was a final settlement of the Free State's financial relations with Great Britain.

MR. CHAMBERLAIN enquired whether the Irish Free State would be convinced by and would accept an arbitration award.

MR. DE VALERA said that arbitration of the kind suggested by Mr. Thomas, namely, that based on the recommendations of the Imperial Conference of 1930, would settle nothing. Pubic opinion in the Irish Free State was definitely opposed to the idea of arbitration of that sort, as a result of their experience of the Boundary Commission's award. It was out of the question to hope that the award of an arbitration tribunal, such as Mr. Thomas had suggested, would meet with general acceptance in the Irish Free State. If there was to be arbitration each side must be at liberty to select its own arbitrators from wheresoever they desired.

MR. THOMAS said that the representatives of the Irish Free State were constantly stressing the importance of public opinion in Ireland. They must, however, bear in mind that English public opinion felt very strongly in regard to this matter and was a factor which no United Kingdom Government could disregard. While it was true that the Imperial Conference Resolution was couched in somewhat vague terms it did recognise the fundamental fact that the members of the British Commonwealth of Nations had adopted this particular method of settling their disputes because they were all members of one family, and because they objected to the suggestion that it was not possible to find within the Commonwealth impartial and judicial persons who could act as arbitrators in cases of dispute between members of the Commonwealth.

MR. DE VALERA said that he could very readily conceive of circumstances in which it might be very desirable to call in persons outside the Commonwealth to arbitrate on disputes between members of the Commonwealth. Why was it necessary to have this artificial restriction? On the analogy of family quarrels, surely experience indicated that an outsider was often a better peace-maker than a member of the family. On general principles, therefore, if this question was being discussed at the present time by an Imperial Conference, he would strongly oppose any restriction of choice on the ground that there would be nothing to be gained by it, that it would tend to limit resort to arbitration, that it would be most unwise therefore and would do more harm than good.

MR. THOMAS observed that Mr. De Valera's original objection to the proposal was to the effect that in the case of a tribunal, the members of which were drawn from within the Commonwealth, the scales would be weighted against the Irish Free State.

MR. DE VALERA said that this was one of his arguments against the proposal, but it was not the only argument. He repeated that there was the strongest possible feeling in the Irish Free State against a tribunal of this character. This feeling was directly attributable to the Feetham Award,6 which was regarded in the Irish Free State as unjust and indefensible in the highest degree.

MR. CHAMBERLAIN said that the impression left on his mind was that the Irish people were so constituted that they would never accept any decision by any tribunal, however composed, which was not in accordance with their views.

MR. DE VALERA recalled the historical background and contended that the lands to which the Land Purchase Annuities related were the rewards given in the past to military adventurers from England and elsewhere. As a matter of State policy, the British Government had found it desirable to convert that land rewards into money, and it was manifestly unfair to ask the citizens of the Irish Free State, from whom the land had been taken, to pay compensation to the persons who had deprived them of it.

SIR THOMAS INSKIP enquired whether if an award was made by an arbitration tribunal composed of persons from outside the Commonwealth and that award was in favour of the United Kingdom contention, the Irish Free State would refuse to accept it.

MR. DE VALERA said that the circumstances were such as to make it necessary to acquiesce in such an arbitral award, but it would be regarded as an unfair and unjustifiable award. Speaking for himself, he felt so strongly on the matter that he could only say that if he was in a position to resist and had behind him sufficient force to ensure success, he would not assent to any payments being made to the United Kingdom, and would not therefore take the risk of arbitration at all.

MR. THOMAS observed that Mr. de Valera's statement showed how very difficult the whole position was. As he understood it, Mr. de Valera now said that if the arbitration awarded went against the Irish Free State, it would be regarded as unfair and would be resisted and repudiated with all the force that might be available.

MR. DE VALERA said that he did not accept Mr. Thomas's interpretation of his statement, but, feeling as he did with regard to this matter, he could not take the risk which would be involved in agreeing to submit to arbitration, by a tribunal composed as Mr. Thomas suggested, the question of the validity of the agreements.

MR. DE VALERA added that he could not undertake that if a payment of money were still to continue from the Irish Free State to Great Britain any such settlement would be regarded as final. Whether the settlement was by arbitration or by agreement, he would do his best of course, but could not guarantee final acceptance by the people of the Irish Free State if payments to Great Britain were to continue.

MR. CHAMBERLAIN asked Mr. de Valera whether his position was that there would be no settlement satisfactory to the people of the Irish Free State which resulted in any monetary payment from Ireland to Great Britain.

MR. DE VALERA said that that was so.

MR. THOMAS said that on the other side the view in this country was equally strong. No British Government, whatever its political complexion, and certainly not the present Government, could accept that situation.

MR. DE VALERA said that at times Governments had, for the sake of small things, cut across the lines which could lead to peace. He realised, however, that there were limits to which Governments could go in advance of public opinion. His view was that if there were to be any payments of money from the Irish Free State to Great Britain there would be a constant demand for revision.

In reply to further questions, he said that if the United Kingdom Government wanted a final settlement with no question of re-opening at any time, it would have to be a settlement which left the Irish Free State owing nothing to England; otherwise any future Irish Government would be likely to re-open it.

MR. THOMAS said that he did not believe that any British Government could, for one moment, admit such a claim as that.

MR. MacENTEE suggested that if Great Britain were at any time in similar circumstances her position would be the same. The Irish Free State were trying to wipe out a long-standing dispute that had lasted for many years. They wished to have no further irritants. The peoples of Great Britain and the Irish Free State ought to be able to live side by side in friendship. They were asking the United Kingdom representatives to see their point of view. They were only explaining that so long as there was money being paid in respect of Irish land there was bound to be irritation.

MR. THOMAS said that his considered view was that there was no justification for wiping out the money payments; nor did he believe that an impartial examination of the facts would support such a view.

MR. MacENTEE suggested that in the circumstances there could not be any impartial examination at a Conference such as the present. Representatives on both sides were strongly confirmed in their particular views on the matters at issue.

LORD HAILSHAM said that it was quite true that the losing side in an arbitration often felt the award to be unjust. It would not necessarily follow, however, that the grievance so rankled as to lead to repudiation or a claim that the award should not be implemented. The United Kingdom had always felt that they had been unfortunate in arbitrations, but they had never attempted to re-open any settlements so reached.

MR. DE VALERA said that the arbitrations to which Lord Hailsham had referred were for the British Government relatively unimportant matters. He asked whether there was anyone who thought that the continental peace treaties could survive. When the issues were so serious and of such vital importance it was impossible to guarantee that no question of re-opening would ever arise. The greater the burden the greater the feeling of injustice and the stronger would be the tendency to re-open any settlement. Of course the re-opening and revision of agreements was not unheard of in international relations.

MR. THOMAS said that the United Kingdom representatives would report to the Cabinet the result of the discussions. In addition, they would circulate their observations on the second memorandum put in by Mr. de Valera.

He felt that he ought to say that the United Kingdom representatives deeply regretted that they found themselves unable to report any progress.

As regards the published documents, these would, he suggested, consist of Mr. de Valera's first and second memoranda and the two United Kingdom notes in reply. Any additional memorandum sent in by the Irish Free State representatives could be added thereto.

MR. DE VALERA enquired what was the position of the United Kingdom representatives. He said that they had asked his opinion and he had given it frankly. He would be glad if they would tell him what they would regard as a satisfactory settlement.

SIR JOHN SIMON enquired whether Mr. de Valera's view was that the only obstacle was the actual payment of money by the Irish Free State to the United Kingdom.

MR. DE VALERA said that from the immediate point of view, the financial arrangements were the issues of importance. He agreed that there were political considerations in the background. As in 1921, he had an open mind on the question of association. Whether there was to be an association would depend on the conditions attached thereto. One of the matters which would have to be considered was the division of Ireland. He felt sure that so long as the partition of their country lasted that the majority of Irishmen would take advantage of any opportunity to re-open that question.

MR. CHAMBERLAIN asked if he was correct in understanding Mr. de Valera to mean that his position at the next election was not yet settled. Would a settlement of the financial question get rid of any difficulty over that?

MR. DE VALERA replied that, in the words of Parnell,7 to try 'to put bounds to the march of a nation' was a vain thing. There would always be people who would attempt to secure the freedom of the Irish people. If they felt that the freedom could be secured within the association all he would say was 'go and try'.

MR. THOMAS said that he thought it was agreed by both sides that the documents to be published as a result of the negotiations should be:-

The two Irish Free State Memoranda.

The two United Kingdom notes in reply to those Memoranda.

Any further considered statement which the Irish Free State Government might wish to submit.

The documents would thus be five in number.

MR. THOMAS added that he would inform the Cabinet of the result of the negotiations; he would be compelled to say that they had unfortunately found themselves unable to make any progress.

MR. DE VALERA said that he would like to know with what intention the United Kingdom delegates had entered the negotiations.

MR. THOMAS replied that they had been empowered to enter into negotiation with the Free State representatives, to listen to any arguments presented to them, and to see whether those arguments justified any mitigation of the existing financial agreements.

He wished to add that, notwithstanding all that had taken place, the United Kingdom Government were prepared to renew the offer regarding arbitration which they had previously made. They would not seek to interpret the answer which had been given that afternoon as a refusal to accept arbitration.

MR. DE VALERA thought that what Mr. Thomas had said regarding a possible mitigation of the existing agreements showed that they had not been travelling on the road to a settlement. The United Kingdom Government's instructions to its delegates apparently only meant that if any new points had been brought to light in the last two days which had been overlooked in 1923 and 1926, the British Government would be prepared to consider them. That really amounted only to a repetition of the United Kingdom thesis that those agreements were binding documents. They were back again at the well known point of difference. MR. THOMAS said that all the points which had been brought up by the Free State Ministers during the last two days had been examined.

MR. MacENTEE suggested that the examination had been superficial. Further, all the arguments had come from the Free State side and nothing had been suggested from the British side which could possibly lead to any modification of the Irish attitude towards the agreements.

It was only fair to add that, even supposing that the United Kingdom Ministers had succeeded all along the line in convincing the Free State Delegation of the justice of their case, little would have been achieved. The plain fact was that the Free State could not afford to make the payments.

MR. MAGUIRE thought that Mr. Thomas's reference at the meeting last week to the possibility of a comprehensive financial settlement was rather inconsistent with what he now told them regarding the instructions he had received from the United Kingdom Cabinet.

MR. THOMAS replied that if convincing claims had been brought forward of sufficient amount to wipe out the whole of the disputed payments he would have felt bound to consider them. As it had turned out, nothing could have been more unconvincing than the claims which had been brought forward on behalf of the Free State.

MR. DE VALERA said that, although he feared it would be a waste of time, he would let Mr. Thomas have the considered statement of the Free State case which had been referred to. This would constitute the fifth Paper of the documents to be published.

MR. THOMAS said that he proposed that the publication should be a Parliamentary White Paper. Presumably both Mr. de Valera and he would have to make oral statements in their respective Parliaments during the next few days. The White Paper, however, ought to be an agreed document, and it would not be published here until Mr. de Valera had seen it and given his consent. What was said in Parliament and the Dáil should not prejudice this.

MR. DE VALERA suggested publication of the White Paper in about a week's time.

MR. THOMAS agreed.

He added that it only remained for him to express, on behalf of his colleagues, their sincere regret at the failure to reach agreement, together with their appreciation of the courteous manner in which the Free State case had been presented. The negotiations had done nothing to bring together their respective points of view, but he thought that they had led to a great increase in their personal respect for each other.

MR. DE VALERA said that the Free State Delegation too regretted very deeply the failure of the negotiations. He had the feeling that some fate continued to prevent that improvement in the relations between the two peoples which men of good will on both sides wished to bring about. He had not abandoned his view that there was no reason why the two nations should not live in harmony, or his hope that one day their relations would again become closer. He feared, however, that the result of their failure that day would be, for a time, at any rate, to drive them further apart.

He was most happy to reciprocate what Mr. Thomas had said regarding the manner in which the negotiations had been conducted.

The meeting concluded at 5.45 p.m., after it had been agreed to issue the following Press Communiqué:-

'The negotiations with the Irish Free State Delegation were resumed at 2, Whitehall Gardens, S.W.1, at 11 o'clock this morning, and continued this afternoon.

Mr. de Valera was accompanied by the same members of the Irish Free State Delegation as yesterday. The Government of the United Kingdom was represented by the same Ministers as yesterday with the addition of the Secretary of State for Foreign Affairs (Sir John Simon).

It was unfortunately found impossible to reach an agreement and the negotiations came to an end'.

1 Charles Hubert Oldham (1860-1926), barrister, founded Protestant Home Rule Association, Principal of Rathmines School of Commerce, appointed first Professor of Commerce, University College, Dublin (1909), Professor of National Economics, University College, Dublin (1917-26).

2 Thomas Sexton, Nationalist (Parnellite) MP (1880-96).

3 Not printed.

4 See document No. 135.

5 Not printed.

6 Richard Feetham (1874-1965), judge, Chairman, Boundary Commission (1924). See DIFP Volume II, Nos 336-69.

7 Charles Stewart Parnell (1846-91) MP (1875-91), Leader of the Irish Parliamentary Party (1880-90), advocate of land reform and of self-government (home rule) for Ireland.


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