No. 146 NAI DT S10389 (Annex)

Minutes of the conference between representatives of the United Kingdom and Ireland
(Secret) (I.N. (38) 8th Meeting) (Copy)

London, 11.00 am, 4 March 1938


Secretary's Notes of the Eighth Meeting of the Conference held in the Prime Minister's Room, House of Commons,
on Friday, 4th March, 1938 at 11.00 a.m.

The Rt. Hon Neville Chamberlain,
M.P., Prime Minister.
Mr. Eamon de Valera,
Prime Minister and Minister
for External Affairs.
The Rt. Hon. Sir John Simon,
G.C.S.I., G.C.V.O., O.B.E.,
K.C., M.P., Chancellor of the Commerce.
Mr. Sean F. Lemass,
Minister for Industry and
The Rt. Hon. Sir Samuel Hoare,
Bt., G.C.S.I., G.B.E., C.M.G.,
M.P., Secretary of State for
the Home Department.
Mr. Sean MacEntee,
Minister for Finance.
The Rt. Hon. Malcolm MacDonald,
M.P., Secretary of State for
Dominion Affairs.
Dr. James Ryan,
Minister for Agriculture.
The Rt. Hon. Sir Thomas Inskip,
C.B.E., K.C., M.P., Minister for
Co-ordination of Defence.
Mr. J. W. Dulanty, C.B., C.B.E.,
High Commissioner for Éire.
The Rt. Hon. W. S. Morrison, M.C.,
K.C., M.P.,
Minister of Agriculture and Fisheries.
Secretary Sir R.B. Howorth, K.C.M.G., C.B.



The Draft Trade Agreement and the Position of Northern Ireland

MR. CHAMBERLAIN said that after the conclusion of the Meeting between United Kingdom and Éire Representatives on the previous evening1, he and his colleagues had discussed the new situation which had arisen and the best way of meeting it. He was sure that Mr. de Valera would fully understand that he (Mr. Chamberlain) was making no complaint but he felt that it was only right that Mr. de Valera and his colleagues should know how very disappointed all the United Kingdom Representatives had been with the conclusions which had been communicated to them on the previous evening by Mr. de Valera in regard to the attitude of Éire on the question of Defence and on the proposal for differential tariff treatment for Northern Ireland. He and his colleagues were all the more disappointed as it had appeared to them that the conversations had been going on fairly smoothly, and that it looked as if there was a good prospect of the ship being brought safely into port. However, it was no use crying over spilt milk, but he feared that he must ask Mr. de Valera once more whether what he had said on the subject of possible differential tariff treatment for Northern Ireland was his final word.

MR. DE VALERA said that the Éire Representatives had also discussed the position among themselves, and Mr. Lemass would indicate the economic difficulties and reactions which were felt to the proposal. He regretted that Mr. Chamberlain should have used the word 'complain' or even that there should have been any idea whatever that he (Mr. de Valera) had given the United Kingdom Representatives any reason to think of that word.

MR. CHAMBERLAIN pointed out that he had expressly disclaimed any intention of making any complaint. No such idea had ever entered his mind.

MR. DE VALERA, continuing, observed that at an earlier stage in the discussions he had stated that he had been turning over in his mind the possibility of a customs union for the whole of Ireland, but all the roads of approach seemed to him to be blocked by the Partition barrier. Moreover, it had been represented to him that there were great, if not insuperable, legal and administrative difficulties in the way of a customs union. In reply Mr. Chamberlain had said that he would be prepared to investigate the possibility of some tariff arrangement between Éire and Northern Ireland which would be beneficial to the latter. He (Mr. de Valera) had then pointed out that the consideration of such a proposal would involve discussions on points of detail and would necessarily take a very long time. He certainly had never accepted the proposal in principle and had never had any idea of any arrangement at the moment other than an exchange of preferences between Éire and Northern Ireland. He did not think that anything that he had said could justify any other conclusion.

MR. CHAMBERLAIN said that the United Kingdom Representatives accepted Mr. de Valera's statement without the least qualification. There had been a genuine misunderstanding. He and his colleagues had somehow obtained the impression that the free entry into Éire of products and manufactures of Northern Ireland origin was not unattractive to the Éire Representatives. Mr. de Valera on the other hand, had intended to convey that what he was prepared to discuss was some arrangement for an exchange of preferences between Éire and Northern Ireland.

MR. LEMASS said that up to the present he had had no opportunity of examining in detail with his officials the proposal that the products and manufactures of Northern Ireland should be given free entry into Éire, but he assumed that in any case such an arrangement would not apply to goods subject to the revenue duties, or to goods and products subject to quantitative regulation schemes.

MR. MACDONALD thought that what was contemplated was duty free entry into Éire from Northern Ireland of goods other than those subject to revenue duties. The quantitative restriction arrangements would operate separately.

MR. LEMASS, continuing, said that he would like to summarise certain economic objections which appeared to arise. Firstly, a number of Northern firms, some 20-25, had established factories in Éire in order to escape the Éire import tariff. He was advised that these firms would inevitably have to close down if the proposal was accepted.

MR. CHAMBERLAIN asked whether Mr. Lemass could give any estimate of the amount of employment provided by the factories in question.

MR. LEMASS said that the employment was considerable. Among the industries concerned was that engaged in the manufacture of shirts and collars.

MR. CHAMBERLAIN observed that if the amount of employment given in the factories was considerable this meant that much capital must have been invested in them, and that it was therefore very improbable that the owners would readily face the loss of their capital which closure of the factories would mean.

MR. LEMASS did not agree, and thought that the owners would be forced to close the factories because of the impossibility of successful competition with the comparable industries in Northern Ireland if tariff protection disappeared.

MR. CHAMBERLAIN pointed out that the same result would follow a union of Éire and Northern Ireland. MR. DE VALERA said that in this event Éire would be prepared to make sacrifices and might indeed have to contemplate payment of compensation to those firms in Éire which would have to close down.

MR. LEMASS said that the second important reaction would be extensive undercutting by the flour and bread industries of Northern Ireland of the similar industries which had been established in Éire in pursuance of the Éire Government's policy of self-sufficiency in such matters. In fact that policy, to which the Éire Government attached very great importance, would probably have to be abandoned. Thirdly, the Éire Government had been compelled to impose restrictions on firms outside Éire opening branch factories within Éire. Legislation had been passed on the subject which made it necessary for an external firm to obtain a licence from the Éire Government before it could open a factory in Éire. That legislation would have to be repealed. Fourthly, there were a number of trades and industries other than those which he had already mentioned which would be very detrimentally affected by the proposal, for example, industries engaged in manufacturing ropes, twine, and paper, and the distributive trades. If the Éire Government accepted the proposal they would at once be faced with very considerable agitation on the part of the many interests which would be affected, and it would be particularly embarrassing to have to meet a situation in which the economic grievances were closely associated with political criticisms.

There were some directions in which it might be possible for Éire to make economic concessions to Northern Ireland without injury to Éire's own industries, but these would need very careful consideration and examination. The fact that hours of work and other labour conditions were more favourable to labour in Éire than in Northern Ireland would strengthen the tendency for industry to migrate from Éire to Northern Ireland. Speaking generally, industry had in the past developed mainly in the North-East corner of Ireland where the people had perhaps a greater aptitude for industrial pursuits than had the people in other parts of Ireland. The establishment in Éire of industry had been handicapped by the difficulty of securing suitable labour, much of which had had to come from off the land and had had to be specially trained.

The Government of Éire would be prepared to go a long way in the direction of the proposal if Partition could be ended, or even if some step could be taken which would mean the end of Partition within a measurable time, but from the purely economic point of view he himself was satisfied that for Éire to agree that the manufactures and products of Northern Ireland should be given free entry into Éire would give rise to well nigh insuperable difficulties.

SIR SAMUEL HOARE said that Mr. Lemass had suggested that, if given time, he might be able to indicate certain special privileges of an economic character which Éire might be able to offer to Northern Ireland and inquired what kind of privileges Mr. Lemass had in mind.

MR. LEMASS said that it would be very difficult for him to give any indication without making further inquiries. If the Éire Government saw some prospect of the ending of Partition they would, of course, bear this situation in mind and would refrain from encouraging the establishment of industries in Éire which would be likely to give rise to difficulty after Partition had disappeared. This was a matter which might very well form the subject of discussion between representatives of Éire and Northern Ireland, with a view to reaching some accommodation.

MR. CHAMBERLAIN said that the impression left on his mind by what Mr. Lemass had said was that if the only objections in the way of acceptance of the differential tariff proposal were of an economic character, there should be no insuperable difficulty in surmounting them, and that the ways and means of so doing could probably best be discussed between the representatives of Northern Ireland and Éire. If, however, in addition to the economic objections there also remained political difficulties of an insuperable character, then he recognised that the position was different and, while it was perhaps not for him to make representations to the Éire representatives on what was their special responsibility, he felt that it was his duty to point out that he had put forward this proposal for differential tariff treatment for Northern Ireland because he was satisfied that the present was a very good time for breaking down the barrier of suspicion and ill will between Éire and Northern Ireland. He could not too strongly emphasise that if Mr. de Valera and his colleagues desired the union of all Ireland they could only hope to bring this about, not by the use of force or by the exercise of economic or other forms of pressure, but by cultivating the goodwill of the people of Northern Ireland, and in particular by demonstrating to them that their suspicions of the good faith and fair dealing of the Government and people of Éire were unfounded. He had greatly hoped that this proposal would have been a first and very important step towards the realisation of a better state of things. He recognised that, if Éire could have accepted it, it would have involved her in some sacrifices, which in themselves would have constituted a fine gesture to the people of Northern Ireland. It was not, however, only public opinion in Northern Ireland which had to be considered. A gesture of this kind would also have had a very striking effect on public opinion in Great Britain, and Mr. de Valera and his colleagues should reflect that possibly their most hopeful way of influencing public opinion in Northern Ireland would be through the influence of public opinion in Great Britain. The people of Great Britain had naturally not the same strong prejudices as existed on both sides of the border in Ireland. Moreover, the views of British public opinion on the whole Irish question were much less emphatic than they had been in the past. While, as he had stated on several occasions during the conversations, Great Britain would never tolerate any form of pressure on Northern Ireland to unite against her will with Éire, regard must be had to the fact that if public opinion in Great Britain came to the conclusion that on the whole Northern Ireland was adopting an unreasonable and indefensible attitude towards Éire, the fact that British public opinion took this view must have very important repercussions on public opinion in Northern Ireland.

SIR JOHN SIMON said that if the differential tariff proposal could have been adopted, the result would have been to establish a very special relationship between the two separate parts of Ireland. He had tried, to the best of his ability, to understand the intense and sincere feelings in Éire against the Northern Ireland contention that Ulster was an integral part of the United Kingdom, and was not a part of a United Ireland. If it was possible to accept a plan such as this, which made a start on the road towards a better understanding, it would not be difficult to bring home to public opinion in Great Britain the fact that Éire and Northern Ireland were not only geographically united but had many other common bonds and interests. Public opinion in Great Britain would, he felt sure, appreciate considerations of this kind, notwithstanding that they were based on sentiment rather than logic or material interests.

MR. DE VALERA said that it was exactly from the point of view which Mr. Chamberlain and Sir John Simon had expressed that he had endeavoured, though up to the present without success, to secure improved relations and better feeling between Éire and Northern Ireland. It was extremely difficult to establish any satisfactory contacts with Northern Ireland and it was due to this that Éire had been forced to undertake her industrial development programmes without previous consultation with Northern Ireland. It was most difficult for the Government of Éire to mention the question of free entry when Northern Ireland had made no kind of gesture. If he did so, he would be accused by his own supporters of running after Northern Ireland and trying to win them, and he would be mocked by the people of Northern Ireland for having made most valuable concessions without receiving anything in return.

MR. LEMASS said that there were a number of problems including unemployment insurance, transport, etc., in regard to which it would be very advantageous if Éire could get into close touch with Northern Ireland. At present there was no official contact between the two Governments. As an example of the disadvantages of the present lack of contact, he mentioned the strike on the Great Northern Railway, part of which was in Northern Ireland and the other part in Éire. The Éire Government made efforts to settle the strike in Dublin and the Northern Ireland Government made entirely separate efforts to settle the strike in Belfast, without any consultation or cooperation of any kind.

SIR SAMUEL HOARE said that failure to make contact was not the fault only of Northern Ireland. Neither side during the last 15 years had shown any disposition to make contact with the other.

MR. CHAMBERLAIN said that as a result of the discussion he did not propose to press Mr. de Valera and his colleagues any further on the proposal that there should be a differential tariff treatment for Northern Ireland. That proposal must accordingly be treated as withdrawn. It was also clear that there could be no agreement on the subject of defence, whether bilateral or unilateral. The last thing the United Kingdom Ministers wished to do would be to thrust upon the Éire Government a burden which that Government thought that it could not bear and which accordingly it might have to repudiate at some later time. All hope of an agreement on defence must therefore be abandoned.

There remained the question of the trade agreement, and the possibility of further consideration being given as to ways and means of assisting Northern Ireland which, in the events which had happened, had been placed in a difficult position. The United Kingdom Government now proposed to invite Mr. Andrews2 to come to London accompanied by his experts and to examine the draft trade agreement in detail in order to ascertain whether any provisions were likely to be seriously injurious to Northern Ireland, and also whether there were any further concessions which would make the agreement tolerable and acceptable to Northern Ireland. He did not anticipate that Mr. Andrews would adopt an unreasonable attitude and United Kingdom Ministers would certainly not encourage him to be unreasonable. It was imperative that the Government of Northern Ireland should now be consulted in the matter as clearly no useful purpose would be served by the United Kingdom making a trade agreement with Éire if that agreement was at once denounced in Northern Ireland. After seeing Mr. Andrews, the United Kingdom Ministers proposed to confer again with Mr. de Valera and his colleagues and endeavour to reach a settlement on the trade agreement.

MR. DE VALERA enquired how long the discussions with Mr. Andrews were likely to take.

SIR SAMUEL HOARE said that it was hoped that Mr. Andrews would arrive in London tomorrow morning, Saturday, March 5th, and that the discussions with him would occupy the whole day.

MR. DE VALERA pointed out that the meeting of the Éire Cabinet had been fixed for Wednesday next, March 9th, and could not be postponed.

MR. CHAMBERLAIN thought that the United Kingdom Ministers would know the reactions and requirements of Northern Ireland by Tuesday, March 8th, and that meetings with Mr. de Valera and his colleagues could be resumed on that day.

MR. MACDONALD said that the interval might be profitably devoted to further discussions on certain outstanding points on the draft trade agreement which did not directly concern Northern Ireland. While therefore reserving the position of Northern Ireland, perhaps Mr. Lemass would look into the possibility of making concessions to Northern Ireland by way of the special privileges, etc., to which he had referred. A meeting of the United Kingdom and Éire representatives concerned with the trade discussions might take place that afternoon to continue the examination of the other outstanding questions on the draft trade agreement.

MR. LEMASS said that he was not quite sure what Mr. MacDonald had in mind. The extent to which the Éire representatives could go in making a trade agreement or in giving special privileges to Northern Ireland must depend on whether partition was or was not to be terminated.

MR. MACDONALD said that his proposal was to continue the exploration of those other outstanding questions on the trade agreement which had already been examined, but in regard to which no conclusion had yet been reached, such as the position of eggs and poultry, and fish.

MR. CHAMBERLAIN observed that in publicly defending any trade agreement that might be arrived at, each side would naturally have to take the line which suited it best with its own public opinion. There was of course no question of both sides agreeing to take exactly the same line.

MR. LEMASS pointed out that there were certain economic questions at issue between Northern Ireland and Éire, agreement on which would involve legislation. So far as Northern Ireland was concerned that legislation would have to be passed by the Parliament of Northern Ireland and not by the Parliament of the United Kingdom.

SIR SAMUEL HOARE said that he would be very grateful if Mr. Lemass would let him have, entirely without prejudice, a list of the subjects on which it might be possible for Éire to make concessions to Northern Ireland. Such a list would be of very great assistance to him in his discussions with Mr. Andrews. He fully realised that it would not be possible for Mr. Lemass to supply a list mentioning every conceivable item, but he might be able to supply a list giving a number of subjects by way of illustration.

MR. LEMASS said that he was quite willing to supply such a list to Sir Samuel Hoare, without prejudice and on the clear understanding, of course, that the Government of Éire would be in no way committed to making concessions in regard to any matters mentioned on the list.

MR. CHAMBERLAIN said that it seemed to him that the important thing was to try and reach some agreement in principle on any special concessions to be made to Northern Ireland. There was no need to go into details at the moment and these could be worked out afterwards at leisure.

MR. DE VALERA enquired when it was proposed to hold the next meeting of the Conference.

MR. CHAMBERLAIN suggested that the next meeting should be held on the morning of Tuesday, March 8th.

MR. DE VALERA observed that if in the interval substantial progress was made a meeting on Tuesday morning left very little time for an agreement to be concluded. If after the discussions with Mr. Andrews and the further discussions on trade between United Kingdom and Éire representatives, it seemed possible that a basis of agreement was in sight, perhaps the heads of such an agreement could be drawn up for acceptance at the full meeting of the Conference on Tuesday morning.

MR. CHAMBERLAIN said that it might be possible to arrange for a meeting of the Conference on the evening of Monday, March 7th, but he was satisfied that no useful purpose would be served by trying to arrange such a meeting before Monday evening. Steps would be taken to notify Mr. de Valera and his colleagues on Monday morning, March 7th, if there seemed any prospect of a meeting being held on the evening of that day, say at about 6 p.m. at the House of Commons. If for any reason this was found impossible then the next meeting would have to take place on Tuesday morning, March 8th, at No. 10, Downing Street, and Mr. de Valera and his colleagues would be notified as early as possible of the time proposed for this meeting.

MR. MACDONALD suggested that the resumed discussions on trade should take place at a meeting to be held at the Dominions Office that same afternoon at 4 p.m.

The proceedings then terminated.

1See document No. 145.

2John Miller Andrews (1871-1956), Unionist politician, Northern Ireland Minister of Labour (1931-7), Northern Ireland Minister of Finance (1937-40), Prime Minister of Northern Ireland (1940-3).

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