John W. Dulanty's record of a statement by Neville Chamberlain to the British-
Irish meeting on 15 October

NOTE ON MR. CHAMBERLAINS STATEMENT ON

THE IRISH FREE STATE MEMORANDUM NO. 2¹

(At the Morning Meeting on the 15th October, 1932)

MR. CHAMBERLAIN said that the claims in the Free State Memorandum might be divided into two separate categories. The first category was that of claims whose sole basis was that certain agreements between the Irish Free State and Great Britain were not valid. Of course they did not accept that. The second category consisted of claims which are not based upon any alleged invalidity of agreement but were rather claims addressed to the British sense of fairness and natural justice.

The atmosphere in which the British looked at what he would call the generosity claims was not improved by the fact that other claims were based on legal technicalities.

In their view Article 5 imposed a liability upon the Irish Free State which was a strictly nett liability. They thought that any question of counterclaim or set off by the Irish Free State was entirely disposed of by the later agreement, and it was clear that if the agreement of 1926 were valid no claim could arise. He added that the question of the Irish Free State claim did not in their view turn entirely upon the validity of the agreement of 1926. After these general observations he proceeded to take the points seriatim in the Irish Free State Memorandum.

OVER-TAXATION.

MR. CHAMBERLAIN said in their view Ireland in the earlier years before 1853 so far from being overtaxed was definitely undertaxed. They based their case on an examination which had been made in the British Treasury which had evidence available to it not available to Mr. Childers. There were a number of factors in the calculations of Mr. Childers which were entirely fallacious.

It was assumed that the income of the non-agricultural people was not larger than that of the agricultural population altogether - an error of con- siderable magnitude. In the richer country the income tax formed a larger part of the Revenue than would be the case in the poorer country. Mr. Childers' calculations were erroneous and they undoubtedly gave a less tax- able capacity to Ireland than was correct.

Mr. Childers could not take account of the progressive character of British taxation since Mr. Childers had made his calculations. This was much more marked than it was before.

Ireland had always been exempt from Railway Duty, Spirit Duty, Estate Licences, Inhabited House Duty etc.

The way in which Income Tax was levied on the farmers in Ireland was one which gave them great benefit. Their assessment was arbitrarily fixed at one-third of their rent. Altogether too low an assessment.

The Treasury therefore believed that Mr. Childers' figures were not sound and that they could not be taken as a basis for any reliable calculation; in any case the alleged over-taxation could only be considered from 1853 because before that date there could not be any reasonable doubt that Ireland benefited by under-taxation.

GOLD STANDARD.

This appeared to be a claim on the ground of fairness and natural justice of the Financial Agreement in 1926.

MR. CHAMBERLAIN thought it was an extraordinary thing to put forward a claim for a transaction long after that date. Insurance to cover adverse results on an agreement did not seem to him the right way to proceed. It might be put in as a separate claim just as though Ireland were a separate country. There was however no legal liability; but, taking the claim on its merits there was no loss at all to Ireland but a profit. The assets of the Irish Free State were sterling. The liabilities were also sterling and so one must be set off against the other. The reduction of the disparity between costs of pro- duction and prices had been beneficial. Countries which had abandoned the gold standard, including certain of the Dominions, have proved to be better off than those who remained on the gold standard. It must have been to Ireland's advantage and the British really should have a claim against Ireland. Even foreign countries did not put forward seriously their claims for alleged losses.

ROAD FUND.

MR. CHAMBERLAIN said

this had been a matter of agreement between the two Governments and had been referred to the arbitration of Sir Henry Strakosch. They were open to accept Sir Henry's award and there as there- fore nothing to dispute about.<

TOKEN COINAGE.

MR. CHAMBERLAIN referred to an agreement under which the British Government agreed to redeem some of the silver in the year 1929 and the remaining £600,000 by ten yearly instalments, beginning in April 1930. The British had done what they had promised. Was the validity of the agreement disputed?

MR. DE VALERA replied that the whole purpose of the Conference was to arrive at a financial settlement between the two countries. From the Irish point of view the present relations were not satisfactory. His hope was that all these items which are a source of friction might be settled. The validity of the Agreement was not challenged.

MR. CHAMBERLAIN said that the Irish Free State Memorandum says that the Government of the Irish Free State claimed that the British Government was liable.

MR. DE VALERA rejoined that the claim was on the basis of fair play and natural justice.

MR. CHAMBERLAIN stated that the agreement was in force. They had maintained the position in regard to other countries and they had no liability. Their own British banks were carrying a lot of redundant silver at a loss.

CURRENCY.

The circulation of British Notes at the time was a measure taken purely for the convenience of the Irish Free State. It was not the desire of the British, indeed it was against their desire that British Treasury Notes continued to circulate in Ireland after Ireland could have set up its own Note of Issue. Malta and Gibraltar did not ask for a share of the profits and in his opinion this was not an equitable claim.

NATIONAL TEACHERS' FUNDS.

There was no legal claim here but an appeal to the British sense of fair play. This could not be considered alone. Following a remark by MR. MacENTEE, MR. CHAMBERLAIN said the Irish were aware that there was a deficit on taking over the fund but that they did not know how much it was. Whatever the force of the Free State arguments might be it was clear that this question could not be considered alone but should be taken into account with similar questions.

NATIONAL HEALTH INSURANCE.

The British position on this was that the monies voted out of the British Exchequer and returned to it were not grants in aid. They were surrenderable votes and the surplus was quite properly returned to the British Treasury. It was impossible to go back on that now.

VERSAILLES TREATY.

MR. CHAMBERLAIN said of this that in 1923 an agreement was made under which the Free State agreed to make itself responsible for the collection of these debts and they were to be remunerated for this. Presumably the Irish Free State Government made that agreement in the belief that they would not be at a loss but their receipts not being sufficient they asked the British to share the loss. He thought there was no possible justification for such an argument but he believed that the British had been intending to have some discussion on the matter.

QUIT RENTS.

Here it was a question of date. The British Law Officers had advised them that the later date was the correct one and they had acted on that advice. There was no legal question arising here but it was one of these moral cases.

MR. MacENTEE suggested that there was a constitutional point involved.

MR. CHAMBERLAIN said that it was a new point. If it rested upon the legal interpretation then they would argue it, but otherwise there was no justification.

DEAD NOTES.

MR. CHAMBERLAIN quite agreed that in any general settlement the question of allocation under this heading might well be included.

POST OFFICE SAVINGS ACCOUNT.

MR. CHAMBERLAIN thought it was a curious thing to claim for a share of assets without accepting a share of the liabilities. They would not agree to a transfer of assets without liabilities.

MR. MacENTEE thought it could be regarded as part of the National Debt.

MR. CHAMBERLAIN said that what might be included in the National Debt covered a great multitude of items.

DOUBLE TAXATION.

MR. CHAMBERLAIN thought that the question of Estate Duty should not be treated alone. They must deal with income tax also. They would be prepared to discuss the two things together.