Memorandum by John Leydon (Dublin)
(Most Secret)

Trade with Great Britain

In the course of conferences and discussions which the secretaries of the Department of Supplies and the Department of Agriculture had with officers of various Ministries in London on 12th, 13th and 14th instant, it was evident that in considering the facilities which might be afforded to us in the matter of supplies of feeding stuffs, fertilisers, raw materials for industries, etc., the question of the extent to which such commodities would be utilised in the production of an exportable surplus of produce, etc., required in the United Kingdom was influencing the general policy in that connection.

2. The shipping position had now become so critical that, with a view to conserving space, the matter of giving preference to the importation of finished produce, such as beef, rather than feeding stuffs had to be considered and there was also the question of utilising in the United Kingdom itself the bulk of such feeding stuffs as it might be possible to import.

3. Certainly it would be exceedingly difficult for the British Government to grant facilities either as regards purchase, provision of foreign exchange or shipping which would result in the farmers of Éire being in a better position in regard to their raw materials generally than farmers in the United Kingdom. It is true that the British Government strongly desire a maximum production in these islands of the various essential food stuffs which are normally imported in large quantities but in the present emergency it is imperative that such production should be achieved mainly, if not wholly, by the use of home-grown foods.

4. There is the further important question of whether the prices obtainable in the United Kingdom for the various classes of our exportable produce would be at a level adequate to compensate our farmers for the cost of imported raw materials. Moreover, the British authorities are strongly opposed to agreeing to any facilities for the importation to Éire of raw materials for conversion into produce which may not in fact be urgently required by them.

5. The whole position in this connection is very obscure and it is most important that it should be examined immediately both in relation to price levels and to the quantities of our various agricultural products which the United Kingdom would be prepared to take from this country.

6. As a case in point, the present position in regard to bacon exports may be instanced. The price is satisfactory. Our quota was fixed at 40,000 cwts. per month but we now find we could export 55,000 cwts. per month after providing for our own needs. The Ministry of Food have, however, stated that they cannot possibly accept more than quota already fixed as they have very heavy stocks of bacon on hands which notwithstanding the increase in the ration is not moving into consumption rapidly enough to maintain stocks at the desired level having regard to storage space and the keeping quality of the commodity.

7. Butter might also be mentioned. The existing stocks in the United Kingdom amount to about 60,000 tons or, approximately, 2 months' supply at present rate of rationing. Having regard to the extent to which the use of margarine has been popularised and the rationing regulations, it is not at all clear to what extent the United Kingdom Authorities will arrange for the importation of butter in future. Whilst it is probable that they will raise no difficulty about taking our relatively small exportable surplus, there is every likelihood that the price which they will be prepared to pay will not be satisfactory.

8. The position appears to be that in order to decide what lines our agricultural production can most profitably follow, an understanding with the British Government is essential both as regards the quantities of our various products they are prepared to take and the prices they are prepared to pay. Such an understanding entails also an understanding about the quantities of various feeding stuffs, fertilisers, etc. we are to import, and the shipping facilities to carry them. This indicates the necessity for a comprehensive agreement which, as it will involve major issues of policy, seems to require the intervention of Ministers.