Minutes of a meeting held in James J. McElligott's office, Department of Finance

(1) E.R.P. Assistance
Mr. McElligott stated that a record of the recent delegation to Washington was being prepared and would shortly be circulated. He recounted briefly the outcome of the visit. E.R.P. funds to the extent of $10 million would be available in loan form only for the June Quarter of 1948. A more favourable attitude might be taken by the E.C.A. in determining later this month the allocation of funds for the September Quarter as between grant and loan, but an even division seemed the best we could hope for. The American approach was that we could afford to repay a loan on the assumption that the convertibility of sterling would be restored. If they were prepared to take this risk, they could not see why we should hesitate. The tentative suggestion had been made that we might accept a loan on the basis of repayment in sterling or Irish currency. They gave an attentive hearing, however, to the arguments of the Irish delegation regarding, inter alia, the meagre and uncertain dollar resources of Ireland, the necessity for throwing no further strain on the limited reserves of the Sterling Area, which even at the end of the period of E.R.P. will be hard pressed to meet current obligations and the undesirability of the discrimination as between the Six Counties and the rest of Ireland which would result from giving aid on less liberal terms to us than to Britain.

It was gathered confidentially from British Ministers in Washington that they had grounds for expecting that the proportion of E.R.P. aid for Britain offered in loan form would be 20% in the September Quarter, as against 25% in the current quarter.

Mr. McElligott mentioned that, without prejudice to the question of taking a loan, preliminary inquiries had been made as to the probable terms of a loan. It appeared that in our case a loan might be for 30 years or perhaps longer at a rate of interest of around 3%, interest accruing from the time of drawings. Repayment would not have to begin nor would interest have to be paid over until after 1952. Repayments of principal would be on a rising scale towards maturity.

Doubt had been expressed by the E.C.A. whether there was still time to arrange a loan for the current quarter. A formal agreement with the Export-Import Bank would be necessary and there were documentation requirements to be complied with. It was explained that in our case reimbursement would be sought and that if we took a loan it should be feasible to secure it after the conclusion of the quarter in respect of the aggregate of vouched transactions within the approved programme. No admission was made by the E.C.A. on this point but the need for speed on our side was urged if we wished to avail of the loan.

The first step towards putting ourselves in a position to secure a loan would be to secure the Administrator's approval of our revised programme for the current quarter. Mr. Boland said that this could be arranged within a few days.

Mr. McElligott invited the views of the meeting on the advisability of availing of the loan offered for the current quarter. It would be for the Government to decide this question in the light of Departmental submissions. He himself thought that, with the future course of E.R.P. uncertain because of the interaction of American politics, there were grounds for bagging all we could now. It would not be essential to take the whole of the $10 million offered and he had in mind that we might possibly take a lesser sum. He admitted that possibly some tactical advantage might be lost by taking a loan in face of our very recent protestations of our inability to repay and our moral rectitude in financial matters. The point was also made that to take a loan might prejudice the possibility of a reasonable grant allocation in future quarters. Not to take a loan, however, would be inconsistent with our stand against drawing on the Sterling Area Pool. There was also the point that the Americans indicated that a decision on our part to take a loan for the current quarter would not prejudice the grant v loan issue in succeeding quarters.

It was agreed that the pros and cons of taking a loan should be set out in a memorandum to be submitted by the Department of Finance to the Government, a draft of which would be circulated beforehand to the various Departments concerned.¹

The necessity for the conclusion of the bilateral Agreement with the U.S. and its ratification by the Dáil before the 3rd July next was adverted to. A difficulty foreseen was that it would probably not be possible to inform the Dáil when the Agreement was before it for ratification of the probable future division of E.R.P. funds between loan and grant. The Agreement would have to be presented simply as an essential condition of our continued eligibility to receive aid in either form.

(2) Negotiations with British Government
Mr. Boland mentioned that a promise had been made to supply the British well in advance of the negotiations with a memorandum of the matters we wished to discuss. This memorandum was not yet available although the negotiations had been arranged for the 17th and 18th June. Mr. McElligott indicated that a preliminary perusal of the memoranda prepared by the Departments of Agriculture and Industry and Commerce gave the impression that we were asking for a lot from the British but had little to offer in return. Mr. Leydon pointed out that, at present, the trade advantages were all on the side of the British, and that we wished to have grievances redressed, e.g., the prohibition against imports of certain Irish products; it was for the British, and not for us, to state their counter-claim. Mr. McElligott said that if we could not be more forthcoming in the matter of increased food exports, etc. the British might well seek compensation in the financial sphere, e.g., by restricting our recourse to the Sterling Area Pool. It was also suggested that any reluctance on our part to accept the maximum aid offered to us by E.C.A., whether by way of loan or grant, including the proffered loan for the current quarter, might cause unfavourable reactions from the British side on the course of the trade negotiations.

[matter omitted]