Volume 2 1922~1926

Doc No.

No. 366 NAI DT S4730

Draft note of proceedings of a meeting in 11 Downing Street

LONDON, 11 am, 3 December 1925

Right Hon. Sir John Anderson.   Mr. O'Higgins.
Mr. Upcott.   Mr. O'Hegarty.
Mr. Whiskard.    
Mr. Waterfield.    

The principle having been already agreed that the Free State Government should accept liability for payment for all material damage done in the Irish Free State, and Mr. Cosgrave having offered an annuity of £250,000 for 60 years in settlement of this liability, the Conference considered what relation this offer bore to the total amount of liability undertaken.

Mr. Upcott said that the present capital value of the said annuity, calculated at 3 % interest, was £6,236,000. The liabilities which the British Government had already incurred, or would have to incur under existing agreements, on account of damage to property in the Irish Free State, were as follows (the calculation being necessarily provisional and approximate):

British share of Pre-truce awards of Compensation (I.) Comm. (prior to 1st July, 1924).   3,720,500
British share of defended Decrees.   178,500
War Compensation awards and ex-gratia payments.   20,000
British share of Reinstatement awards outstanding (before 1/7/24).   375,000
Balance outstanding under £900,000 Agreement.   524,800
    £4,868,800 1

The total thus fell short of the capital liability which the Free State had offered to assume, by about £1,500,000, and the British representatives suggested that, in order to square the account, the Free State Government should be deemed to have undertaken to repay the second moiety (£1,500,000) of the compensation payable to the Irish Railways under the Irish Railways Settlement Act, 1922, which might be regarded as within the scope of the undertaking. Mr. Cosgrave, however, could not see his way to accept this suggestion. He preferred that the Free State should be regarded as having assumed liability for repayment of the above sums, together with interest at 5% on the amounts already paid by the British Government to 31st December, 1925 (subsequently ascertained to be £268,174), making a total of approximately £5,100,000.

The discussion then turned on the offer of the Free State Government to increase all payments made by them on foot of post-truce claims (including cases 'reported' as well as cases in which awards were given) by 10%. Mr. Whiskard pointed out that the British Government had been obliged to promise a measure of additional compensation to those 'loyalists' in Southern Ireland who had suffered really exceptional hardship, which could not be brought within the scope of the Damage to Property Compensation Acts, and though the cost of this undertaking could not yet be calculated, it would certainly exceed the 10% increase offered by the Free State Government in such cases. The British Government would prefer that the Free State should place a lump sum at their disposal to meet these exceptional cases, instead of paying a flatrate increase of 10% on all awards, which would be much more expensive to the Free State. Mr. Cosgrave, however, preferred to adhere to the 10% increase, but offered to discharge the capital liability to be issued by the Free State as above mentioned by an immediate payment of £150,000, to be followed by the proposed annuity of £250,000 a year for 60 years commencing on 1st April, 1926. If these payments were capitalised at 4 %, the resultant figure of present value would be approximately equivalent to the capital liability referred to above. While some objection might be taken to this method of computation, Mr. Cosgrave felt that he could justify it to the Dáil more easily than any other which could be suggested.

The British representatives agreed to recommend the Chancellor of the Exchequer to accept this proposal.

It was agreed that payments should be made as follows:

£150,000 on the 1st January, 1926, and the first payment of the annuity on the 1st April, 1926, and the second and succeeding payments on the 1st April in each subsequent year up to 1985.

That the initial payments as they fall due from the Irish Free State under this Agreement should be set off against the outstanding liability of the British Government under existing agreements, which would henceforward cease to be payable in cash.

An explanatory account being rendered by the British Government as soon as possible after the 1st January next and periodically thereafter.

1 The total as originally printed is incorrect.