Mr. Dulanty came to luncheon this afternoon and I had a long talk with him afterwards about the I.F.S. situation.

The talk began by a reference to Mr. James Dillon, Vice President of the United Ireland Party, who had been a speaker at the Institute of International Affairs last week. Mr. Dulanty said that he had had several hours talk with Mr. Dillon on Saturday afternoon and that Mr. Dillon had given him some interesting impressions as to the position of the parties opposing Mr. de Valera. The chief of these impressions were that Mr. Cosgrave was a 'spent force'; that Mr. McDermott had no special aptitude for politics or knowledge of the Irish people so that he (Mr. Dillon) was, in effect, the mainstay of the Independent Party, and that General O'Duffy, who had started with a strong position as the idol of the Army and of the Civic Guard, was now rapidly qualifying to be the only person in the Free State who had a chance against Mr. de Valera. Indeed, Mr. Dillon had said that the size of attendance at the meetings of the United Ireland party was becoming almost embarrassing. (Mr. Dillon, it appeared, had originally recommended General O'Duffy to the Cosgrave Party as one of the leaders of the opposition to Mr. de Valera on the ground that it was 'unsafe to leave him outside'!)

Mr. Dulanty had apparently asked Mr. Dillon whether he shared the general view that if a General Election were held in the near future, Mr. de Valera would be returned to power. Mr. Dillon had replied that, if there were an Election in the next three or four months, the United Ireland Party would, he thought, have quite a good chance. On the other hand, he saw no particular reason why Mr. de Valera should seek an Election before the natural end of the present Irish Free State Parliament, and many reasons why he should not. If, however, he did not, and if the situation continued as at present, it might well be that, when the normal time came for a General Election, no party would be capable of ruling the Irish Free State - the economic position would have deteriorated so much. (At this point Mr. Dulanty mentioned that Mr. Dillon was pretty well qualified to speak for Southern Ireland in that he was the head of a chain of provincial stores (rather analogous to Selfridges) operating in western Ireland.)

The talk then went on to a general survey of the situation and the causes for it, and covered a good deal of familiar ground. The impression which I got was that Mr. Dulanty is very unhappy about the position in the I.F.S., that he sees no really substantial chance of 'replacing' Mr. de Valera during the next few years, and that he feels that the time has now gone by when Mr. de Valera could be persuaded to accept the 'Commonwealth' idea.

Nevertheless Mr. Dulanty was obviously anxious that the position both here and in the Free State should not be regarded as one of 'stalemate'. He seemed confident that, if matters were allowed to drift, we should get, in a few years time, to a position when there would be no alternative to the birth of a Republic, accompanied by a good deal of unpleasantness and rancour.

Mr. Dulanty urged that the following points in particular were worthy of consideration by the Government here, if they had a real desire not to allow such a situation to develop:-

(a) In connection with Northern Ireland, Mr. de Valera had constantly taken the line that even if he possessed powers of coercion, he would not exercise them. Would it not be possible, Mr. Dulanty said, for a Minister in the United Kingdom Government to make some similar gesture with regard to the possibility of Northern Ireland joining the 26 counties, e.g. by a statement to the effect that, whilst the United Kingdom Government would never put any pressure upon Northern Ireland to join in a United Ireland, nevertheless if it were Northern Ireland's own wish to become part of a United Ireland within the British Commonwealth they (the United Kingdom Government) would put no obstacle in the way. (At one stage in our talk Mr. Dulanty went rather further and hinted at the possibility of a statement to the effect that the United Kingdom Government would welcome the establishment of a United Ireland within the British Commonwealth, but later on he appeared to realise that any statement of this kind was not within the realm of practical politics.)

(b) Mr. Dulanty reverted to a suggestion (which, he said, he had made to the Secretary of State at the time of the last exchange of despatches with Mr. de Valera) to the effect that the best course would be to indicate publicly and quite clearly to the I.F.S. that should they become a Republic, certain consequences (which would be indicated) would inevitably follow as night the day.

Mr. Dulanty said that he was disappointed that the reply of the United Kingdom Government to Mr. de Valera's despatch had not, as he had hoped it would, taken this line. He still thought that a public statement to this effect might do considerable good.

(c) Mr. Dulanty mentioned (rather, it struck me, as an afterthought) that he thought it would be very welcome if, in the course of the informal negotiations which he was now having with the Minister of Agriculture, Mr. Walter Elliot could make certain concessions, e.g. in regard to fat cattle (the position of store cattle was, he said, all right), or the bacon quota, which would help the I.F.S. producer. He referred, in this connection, to the recent conclusion of the Trade Agreement with Soviet Russia, and said that it seemed to him most unfortunate that such an Agreement should be possible, whilst trade relations with the I.F.S. remained in their present position.

(d) Lastly, Mr. Dulanty asked me whether I thought that another 'Round Table' Conference, the object of which would be to review the whole position, would be a possibility. As to this, I said that it seemed to me that past experience had shown that such a Conference was not likely to be useful unless some principle were adopted as the basis of negotiations. In other words, was there to be a 'Commonwealth' basis or a 'non-Commonwealth' basis? If the former, would Mr. de Valera accept; if the latter, I did not think that any Government here could possibly enter into a Conference founded on such a principle.

Mr. Dulanty suggested that it might not be necessary to lay down before-hand the basis of a Conference. If such a Conference should, by some means or another, be held, and if unfortunately it should break down by it becoming apparent that Mr. de Valera would not accept a 'Commonwealth' basis, he thought that the effect would certainly be to help the parties in opposition to Mr. de Valera at the next General Election.

I told Mr. Dulanty that I should like to report the gist of our conversation to the Secretary of State, and he made it clear that he had no objection to my doing so. I explained, however, that I was very doubtful whether any progress could be made on any of the lines which he had indicated. He replied that he realized this, but nevertheless he would like the suggestions considered.

In this connection Mr. Dulanty asked me the direct question whether he would be right in assuming that the policy of the Government here was to allow matters to drift. On this I was, of course, non-committal but I said that it seemed to me that Ministers here were in a real difficulty. There were two parts of the controversy - (a) political and (b) economic. So long as there was no prospect of a settlement on the political side, the difficulties in making any progress on the economic side were obvious; faced with many other pre-occupations, the Government here might well feel, under present conditions, that to attempt to find a solution of the I.F.S. problem was rather in the nature of 'beating the air'.