Despatch from John W. Dulanty to Joseph P. Walshe (Dublin)
(No. 106) (Secret)

At the end of the conversation which I had with Mr. MacDonald and reported in my Secret minute No.104¹ of yesterday's date I said that I had had a conversation with the representatives of the Ministry of Agriculture and the Board of Trade on the subject of the coal-cattle trade arrangement. It seemed to me, I said, that since both sides were willing and ready to arrange a renewal there would no difficulty in my Government having taken the action they had in issuing a Cattle Order restricting imports of cattle to the United Kingdom for the year 1937. I had, however, been reflecting on the note sounded by the Board of Trade representative in which he said that the normal negative attitude of the British Treasury on proposals affecting loss of revenue is now one of a granite-like refusal to look at any proposal which involved a reduction of revenue. I ventured to suggest that it might smooth the passage of the Coal-Cattle Pact if Mr. MacDonald spoke to the Chancellor of the Exchequer on the lines that the coal-cattle trade Agreement was not exactly a subject for controversy between the Board of Trade and the Treasury or the Ministry of Agriculture and the Treasury but that there were aspects more important than the mere departmental aspects.

Mr. MacDonald concurred and said that his own wish was that the coal-cattle trade arrangement should be merely a renewal of the existing arrangement or at the most only a slight extension. He was not keen on any ambitious extension of the arrangement because it was his firm hope that when we had settled, as he thought we would settle, the constitutional points, we could proceed immediately to a general trade Agreement of a much more comprehensive character. He said again that, the constitutional question resolved, a financial settlement and a general trade Agreement, together with the handing over of the ports, was the next task - a task which he thought should be finished before the Imperial Conference. I asked how far this opinion represented the opinion of his colleagues. He shrugged his shoulders and said that it represented his own opinion and that it would not be his fault if his opinion were not shared by his colleagues.