No. 127 NAI DT S10389 (Annex)

Minutes of the conference between representatives of the United Kingdom and Ireland
(Secret) (I.N. (38) 4th Meeting) (Copy)

London, 12 noon, 19 January 1938


Secretary's Notes of the Fourth Meeting of the Conference held at 10 Downing Street, on Wednesday, 19th January, 1938, at 12 Noon

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.
Secretary Mr. C. N. Ryan, D.S.O., M.C.

THE CONFERENCE had before them a draft outline for a defence agreement which had been circulated to the members before the Meeting.

A copy of this document as amended at the Meeting is attached as an Annex to these Minutes.



MR. DE VALERA said that, owing to the pressure of various other engagements, he regretted he had been able to do little more than glance through the document. He had not so far had any opportunity of giving it careful consideration in conjunction with his colleagues. He thought, however, that a fundamental difficulty would arise immediately. The people of Éire would demand to be the arbiters of what should be done in regard to defence, but it would be represented by them that the United Kingdom was really the judge.



MR. CHAMBERLAIN pointed out that in the document the United Kingdom Government had specifically refrained from constituting itself the final arbiter. He agreed the point did arise as to who was to have the last word on the question of the adequacy of the defensive arrangements. Responsibility for this, however, was not placed by the document on the United Kingdom Government, or even on some impartial body. At the beginning of Clause 3 it was placed squarely on the Government of Éire and the only qualification was that later in the paragraph there was an undertaking that the Government of Éire would invite the Government of the United Kingdom to consult with them.

MR. DE VALERA said that the difficulty arose from the fact that the United Kingdom, by reason of its relatively greater strength, would be able to insist on their own interpretation of what was adequate if a difference of opinion should develop between the two Governments.

MR. CHAMBERLAIN said that the United Kingdom Delegation has not the least intention to convey any suggestion of that kind. The criticism which they anticipated from their people would be that a decision on adequacy had been left solely to the Government of Éire, and the answer, which they would have to make would be that this was so, but that that Government could be trusted.

MR. DE VALERA suggested that a further answer could be found in as much as the United Kingdom realised at the back of their mind that, in a situation of vital importance to them, they would be able to take a quick way to ensure that the measures which they desired were carried out.

MR. CHAMBERLAIN said that if that view was held by Éire nothing could prevent the apprehension about United Kingdom intrusion into Éire affairs except the patent unwillingness of the United Kingdom to do so.

MR. DE VALERA said that the absence of anything in the nature of a specific contract would make a great difference in the way in which a defence agreement would be regarded by his people. They would be very suspicious of any form of specific undertaking.

MR. CHAMBERLAIN observed that they had already gone a long way in their negotiations and it was clearly possible to go further. It would be a pity if there was to be a breakdown owing to suspicion. The document prepared by the United Kingdom Government was intended to mean that the Government of Éire should be final judge in the matter of adequacy. All the United Kingdom Government asked was to be allowed to offer advice, and they were then ready to leave the decision whether to take it or not to the Government of Éire.

MR. DE VALERA said that he was anxious to make sure that any document on which they might agree was on the face of it as satisfactory as possible from the point of view of his people. Unless there was something explicit in the document, the people of Éire would ask who was to determine whether the conditions as regards adequacy were satisfied and would hold that Éire had been committed to the United Kingdom. It was of the utmost importance that all possible sources of friction should be eliminated.

MR. CHAMBERLAIN said that he was about to propose an addition in the last sentence. He suggested that after 'the Government of Éire' there should be added - 'shall be the final judge of what is adequate, but before coming to a conclusion'.

MR. DE VALERA said he thought that insertion would go a long way towards avoiding friction. He was disturbed at the prospect that the United Kingdom might want Éire to undertake certain additional measures which the Government of Éire would consider to be beyond their means. He had no very strong objections to the general tone of the document but he would like to see Éire's position safeguarded as far as possible. The document might be represented as placing Éire in an important treaty relationship with the United Kingdom.



Turning to Clause 4 he said that this dealt with the transitional period after the ports were handed over, but before the Government of Éire provided the actual forces to defend them. He thought this period should be as short as possible and deprecated any idea that the process of handing over would be unduly prolonged. He was not personally in a position to judge how long this period should be, but perhaps the Minister for Co-ordination of Defence would have some observations.

SIR THOMAS INSKIP said that the actual exchange presented no very difficult problems. This paragraph, however, referred to personnel not to armament. At present the garrison in the three Treaty Ports consisted of nearly 600 men of the Royal Artillery and Royal Engineers and an additional 50 or 60 would be required to bring the forces up to fighting establishments. Some additional to these numbers would probably be necessary when the defence of the ports was placed on a perfectly satisfactory footing and the provision of some aircraft and small naval craft would also be required.

MR. DE VALERA said that when the Delegation returned to Éire their colleagues would naturally question them in regard to the draft agreement, particularly in reference to the magnitude of their liabilities. He recognised that the United Kingdom was much more experienced in this type of problem and it would be a great help to him if he could be furnished with a statement of the forces and equipment which, in the opinion of the United Kingdom, would be required for the Government of Éire to carry out the terms of the agreement.

SIR THOMAS INSKIP said that this information could be quickly supplied in regard to the Treaty Ports, but the agreement also covered the defence of the whole coast of Éire. This was important in view of the possibilities for submarine refuges afforded by the western seaboard of Éire.

SIR SAMUEL HOARE said that it would be necessary to keep in mind that the problem facing the Government of Éire was somewhat different to that with which the United Kingdom would be faced if they had to carry out the same task. Under modern conditions it was difficult to localise war. If the British Government were faced with the problem of defending the Irish Ports they would do so behind the general protective cover afforded by the Grand Fleet of the British Navy.

MR. DE VALERA said that, in framing the contemplated defence programme for Éire, it was necessary to assume that the relations between the two countries were friendly and that the Government of Éire would naturally wish to effect such economies as were possible from a joint consideration of the problem. He would like to know how far the ground was covered by the United Kingdom forces and to be given an indication of the best way in which Éire could fill the gap. Action would be taken by the two countries separately but in view of certain common potential dangers, it was only prudent to take steps to minimise the possibility of over-lapping measures.

MR. CHAMBERLAIN drew attention to the terms of Article 6 of the 1921 Treaty in which it is provided that until coastal defence is taken over by the Irish Free State the defence by sea of Great Britain and Ireland was to be undertaken by Great Britain. Under the new conditions this undertaking would be abrogated.

MR. DE VALERA said he would like to see Articles 6 and 7 of the Treaty completely wiped out and their place taken by the agreement now under discussion.

He had always read Articles 6 and 7 together but he understood that at some discussion with representatives of the Irish Free State Government some years ago the view had been taken that they were quite independent. At the time he had considered this ruling to be arbitrary.

MR. CHAMBERLAIN said that he thought the question of facilities at ports must be associated with the question of defence by sea. No navy could defend a coast without using its ports.

MR. DE VALERA reverting to Clause 4 of the draft agreement said that an arrangement which provided for the handing over of the ports on a particular date would be very satisfactory from his point of view, but if this was impracticable he would like to have the various defence functions handed over as and when desired by the Government of Éire. As soon as any agreement was signed he would like to get possession of the fortifications and thereafter the handing over might be done by stages, subject to the proviso that full possession should be taken after as short an interval as possible.

SIR THOMAS INSKIP observed that it was for Mr. de Valera to say when the Government of Éire would be ready to replace, man for man, the present garrisons. On the assumption that they had trained gunners and engineers to man the defences the handing over could be done in a relatively short time.

MR. MacENTEE thought that there need not be much delay in the provision by the Government of Éire of land forces, but he anticipated some difficulty in regard to the naval and air forces.

SIR SAMUEL HOARE said he thought as drafted this Clause did perhaps look more formidable than was really their intention. It was only meant to refer to expedients to be adopted in a purely interim period and had no long-term significance.

MR. CHAMBERLAIN said that he did not see in this Clause any insuperable difficulty which could not be got over. The draft agreement was not to be published forthwith and there would be time to consider necessary and desirable adjustments. As he saw it the procedure to be adopted would be that the Government of Éire would first take over the guns, munitions and material on the spot. They would not, of course, take over the personnel but would replace them by their own personnel as soon as they could do so. In the meantime they would gradually re-equip and supplement the armament of the ports in accordance with any decisions which they might reach. Even if it was impossible to state at once what would constitute the transitional period, it seemed quite clear that it could not, in any event, be a long period.

MR DE VALERA said that there was a reference in the Clause to naval and air forces, and the Clause itself applied not only to the ports but to the whole coast-line of Éire. If Clause 4 could be confined to the forces at the ports then the position would become much easier, but he was definitely anxious at the magnitude of the scheme envisaged in defending the whole of the coast-line.

MR. CHAMBERLAIN suggested that Mr. de Valera's difficulties would be met by confining Clause 4 to the ports, and said that he was prepared to accept this limitation.

SIR THOMAS INSKIP observed that the word 'development' might convey the wrong implication and suggested that 'allocation' might be more suitable.

MR. DE VALERA proposed to substitute for the first three lines of Clause 4 the following:'Pending an intimation that the Government of Éire is in a position to

undertake the defence of the ports'. He added, however, that he was more anxious to settle on general principles than on the actual drafting, which could be left to a later stage. In dealing with principles there were two big difficulties which he had to face. First, he must be certain that it was the Government of Éire who would be responsible for interpretation on the question of "adequacy" and he must make sure that in any agreement this was presented in a way which carried conviction to his people. Secondly, he would have to contend with those sections of the people of Éire who would be opposed to any full or close co-operation with the United Kingdom so long as partition continued.



Turning to Clause 5, Mr. de Valera said he would like to end the paragraph at 'defence plans' in the third line.

SIR THOMAS INSKIP observed that, though in form this Clause covered undertakings by the United Kingdom Government, in substance that Government only acted if invited to do so. It gave them no right to say that the Government of Éire were not giving them enough invitations in regard to training or the other matters referred to in the Clause.

MR. CHAMBERLAIN suggested that the last two lines should be replaced by: 'and any other matters connected with defence.'

MR. DE VALERA accepted this suggestion. He added that he understood that in the past some Éire officers had been sent for courses of instruction both to this country and to the United States. He would like it to be understood that the Government of Éire considered that the conclusion of any agreement on the lines of the discussion should not in any way fetter their freedom to send their officers to whatever countries they thought fit. They were anxious to be able to do this without causing friction with the United Kingdom Government. If they continued to send officers to the United States and to France, it would be a demonstration to his people that Éire was still a free agent in such matters.

MR. CHAMBERLAIN said that no objection could possibly be raised to the Government of Éire sending officers to the United States, but he thought the position would be a little different if they sent officers regularly to Germany.

SIR SAMUEL HOARE pointed out that there was a great difference between sending individual officers on specialist courses or for the purpose of making particular enquiries, and sending batches of officers at regular intervals to receive their normal training. A United Kingdom Minister was at present in Germany investigating their air raid precaution arrangements. He thought that the Government of Éire would find it highly convenient, indeed almost necessary, in order to secure satisfactory training, for their personnel to be trained by those providing the equipment and accustomed to its use.

MR. DE VALERA asked the Prime Minister whether he thought it was really necessary for this undertaking by the Government of the United Kingdom to be included.

MR. CHAMBERLAIN said he was looking at the question, as was Mr. de Valera, from the point of view of the appeal which this document would make to the people of his own country. The Éire Delegation, broadly speaking, thought that, from their own point of view, the less reference that there was in the document to co-operation the better. On the other hand, the point of view of the United Kingdom Delegation was exactly the reverse.

MR. DE VALERA said he recognised the existence of these two stand-points and appreciated that there might be some difficulty in reconciling them.

DR. RYAN suggested that Clause 3 might be regarded as covering the purpose of Clause 5.

MR. CHAMBERLAIN said that this was a case in which the desiderata lay in opposite directions. The United Kingdom Delegation had already modified the draft agreement on a number of detailed matters to meet the views of Mr. de Valera and he felt that they must press for the retention of Clause 5 as now amended.

MR. DE VALERA said that the powers of his delegation were limited. There was some difference of opinion inside his own Cabinet. Some of his colleagues held that unless there was to be full co-operation in regard to partition, no commitments should be entered into regarding full co-operation over defence questions. If the defence agreement was couched in the general form of effect being given to it on the initiative of the Government of Éire, he thought he might get agreement with his colleagues. Otherwise he anticipated difficulty in his Cabinet, his Party, and with the Dáil. He had had a long experience of propaganda and he could see that a good deal of useful propaganda from the point of view of the Government of the United Kingdom, could be derived from this document. This fact alone might lead certain sections of the people of Éire to consider the arrangement less attractive for their own country. However, he would like to take back with him an outline of the agreement in a reasonably final form, and his Government would then have an opportunity of examining it.

SIR THOMAS INSKIP said that the attitude referred to by Mr. de Valera depended upon the assumption that the good faith and intentions of the contracting parties were valueless. Clause 5 conveyed at any rate some appreciable advantages to the Government of Éire. By it, for example, they were placed in a position to ask the United Kingdom for information and help regarding all the most up-to-date scientific equipment of value in war and the United Kingdom was not in a position of refuse disclosure. This would enable the development of the defence forces in Éire not only to proceed much more quickly but much more cheaply than would otherwise be the case.

MR. DE VALERA agreed that might be so but one of his difficulties was that the people of Éire might not be appreciative of such a gift at the present time. However, he would undertake to go as far as he possibly could to meet the point of view of the United Kingdom. He would like any agreement which they might reach to cover the ground as far as possible from the publicity point of view, so that additional statements could be avoided which were liable to cause misunderstanding and friction between the two sides.

MR. CHAMBERLAIN observed that whilst he did not go so far as to say that Clause 5 as drafted and amended was vital to any agreement, he was anxious to get as near as he possibly could to its present form.



MR. DE VALERA said he had no strong objection to this clause. The question of including some reference to matters of quality and price had occurred to him, but he did not think it would be appropriate to include such a reference in a document of that character.

MR. MacENTEE suggested that the clause might form part of the Trade Agreement.

MR. CHAMBERLAIN said he thought this would be inappropriate as the questions concerned were quite different.

MR. DE VALERA observed that if the negotiations for a trade agreement went through satisfactorily, then on general trade grounds the Government of Éire could justify making their munitions and equipment purchases in the United Kingdom, except of course in the case of very special types of equipment for which they might have to go elsewhere.

MR. CHAMBERLAIN suggested that the qualification 'so far as possible' gave the Government of Éire sufficient discretion as to the interpretation they could place upon this clause.

MR. DE VALERA then asked the Prime Minister if he would be so good as to amplify the special value which the United Kingdom Government placed upon the inclusion of Clauses 4, 5 and 6 in the draft agreement.

MR. CHAMBERLAIN explained that he felt the problem of defence would prove a difficult, perhaps the most difficult, matter of all the various subjects to be covered by a general settlement on which to conclude mutually satisfactory arrangements. At the present time the people in the United Kingdom were intensely interested in all questions affecting the security of the country. The defence question in relation to Ireland was dealt with fully in the 1921 Treaty, which contained articles giving the United Kingdom specific responsibilities and rights. Any agreement which the United Kingdom Government might reach with the Government of Éire under this heading would be very closely examined by many sections of the community, to see if the Government had given away anything which it was considered essential to maintain. Personally, he felt that if the United Kingdom Delegation were satisfied with the terms of a draft agreement, they would be able to carry their views through the Cabinet and Parliament, but he did not want to have important sections of the community distressed by genuine doubts, anxieties and suspicions. He thought that would be a great pity and would create a most unfortunate atmosphere. Any features of an agreement which would serve to allay those anxieties and to create a spirit of trust and friendship were of great value. The reason why he attached such importance to Clauses 4, 5 and 6 was that they did to some extent effect this purpose.

MR. DE VALERA thanked the Prime Minister for his statement, and said that he fully appreciated it. In considering any drafting alterations they would bear his views in mind.



MR. DE VALERA then referred to the reference in Clause 2 of an attack 'on the communications' of Éire. If this was intended to refer to attacks by submarines on supplies in Irish waters he could accept it, but the term seemed to him to be of rather wide application and might be stretched to cover communications with Japan.

MR. CHAMBERLAIN said that the examples of attack referred to in this Clause were all connected with the purpose of aggression. It was implicit, therefore, that the attack referred to was a local one, whereas cutting communications with Japan could not be regarded as local.

MR. DE VALERA thought it might be necessary to repeat the word 'purpose'. He had no qualms about the drafting so far as it concerned direct attack, but he thought that no form of attack could be more direct than an interruption of vital communications. The people of Éire were prepared to defend their own country and to prevent it being used as a base for an attack on the United Kingdom, but they could not be committed to operations in a distant area. He would prefer to see the phrase in regard to communications omitted.

MR. CHAMBERLAIN said that the phrase had only been put in to indicate that the people of Éire might be subjected to grave aggression, without an actual enemy landing in their country, through attacks on their trade with the United Kingdom, or even with other countries. The whole of their overseas trade might in fact be stopped. He suggested that 'an attack on their trade' should be substituted for 'an attack on the communications of that country'.

MR. DE VALERA approved this amendment.

Discussing the next step, he repeated that he was anxious to get a statement of the action which the United Kingdom would take if they had the responsibility for implementing the draft agreement in so far as Éire was concerned. He was anxious, so far as it would prove possible, to make sure that in an emergency, steps which would have been taken by the United Kingdom, if the responsibility had been theirs, would not be left undone. Consequently, he was anxious to consider what provision should be made of personnel and equipment. He would like to have an indication of the requirements in these respects together with an estimate of their cost.

SIR THOMAS INSKIP said that he would be able to furnish proposals, and to include a broad estimate of the cost. Those in regard to the ports could be available quite soon, but proposals related to the other aspects of defence would take a little longer. He would proceed on the assumption that the British Fleet and Air Force were in being and were fulfilling their normal roles.

MR. MacENTEE observed that the rate at which their defence organisations could be developed would have an important bearing on their budgetary position. He would be very glad to see the estimate of requirements which the Minister for Co-ordination of Defence was going to be good enough to furnish, and he thought that it should be framed on the basis of co-operation against a common attack.

MR. MacDONALD said that fresh copies of the draft outline for the defence agreement would be ready in the afternoon incorporating the amendments made that morning. He suggested that these should be regarded as drafts for further consideration and that both Delegations should take them away for this purpose. Further communications in regard to them could be made though Mr. Dulanty.

[SIR THOMAS INSKIP left the Meeting at this point.]



MR. DE VALERA enquired whether there was anything to report in regard to the financial agreement.

SIR JOHN SIMON said there had not been much further progress up to the present. The gap between the views of the two Delegations was serious and he was bound to say that they could not regard the offer of a lump sum of £8,000,000, which only represented two years purchase of the value of the special duties, as providing a basis for settlement. He thought that contact should be maintained between the two sides, and that the problem should be kept constantly before the Delegations.

MR. MacENTEE said that the reaction of the contemplated defence programme for Éire upon the financial issue must not be overlooked. There were in Éire a large number of people who thought that the country should maintain a strictly neutral position and felt that the best chance of their being able to do so was to remain in a patently helpless position from a military point of view. This was not the view of the Éire Government, which attached great importance to the provision of the necessary defence requirements. But in order to do this some budgetary relief was essential and this could not be made if the lump sum payment in millions of pounds was to run into two figures. He begged that a strict evaluation of the amount brought in by the special duties should not be taken as a basis for a settlement. He thought that some abatement of certain claims, even if they were just, might be made in order to create an atmosphere of goodwill and friendship which had been wanting in the past.

SIR JOHN SIMON said that he was fully seized with the importance of taking a broad view. He thought that the position should be dealt with by a single transaction and not regarded as a series of separate issues. This aspect should be kept steadily in mind. On the financial issue he was personally not convinced that the method of payment by a capital sum was the best, but that was a technical point which could be left to the technical experts. He was not taking a narrow Treasury view of the financial issue and he did not contemplate dealing with it on a strict accounting basis. In any case it was important to keep in view that this issue should not be dealt with in isolation. Other aspects of the negotiations would not be without effect on the financial problem. He thought that they should make as much progress as possible with those negotiations and observe the direction in which they were leading. He hoped that the Secretary of State for Dominion Affairs shared this view.

MR. MacDONALD said he entirely agreed with the Chancellor. He referred to the fact that at present the Government of Éire had not got the information on which to form an estimate of the sum involved by a defence programme. The cost of that programme was bound to be reflected in the view which they would take in regard to the other questions under consideration.

MR. DE VALERA said that before they left Éire his Delegation was given powers to conclude agreements provided that they did not accept any charge in respect of the land annuities, enter into any definite defence commitments or agree to continue the United Kingdom rights in respect of the Treaty Ports. If they were to achieve any useful progress in Éire in the interval before discussions between the Delegations were resumed, it would be a great help to them to be able to take back a rough outline of a scheme of settlement. They had been disappointed in regard to the question of partition, information was not yet available to deal with the question of defence, progress was difficult in the financial discussions, whilst consideration of the details regarding a trade agreement would take some time. In these circumstances it would be difficult for him to achieve much progress in influencing his colleagues in Éire towards a general settlement in the interval elapsing before the Delegations resumed meetings.

SIR JOHN SIMON said that the financial discussions were going on at present between the officials of the two Treasuries. The essence of the position could be explained quite briefly. The annual payments which, rightly or wrongly, were claimed by the United Kingdom amounted to £5 million of which just over £3 million was made up by the land annuities. He quite understood the attitude which Mr. de Valera's Government was bound to take, but after subtracting them from the full amount of the claim there remained an annual sum of £1.9 million in regard to items which they had discussed at the meeting the previous day. Some of these annual payments were for a shorter term than the land annuities, but under no form of calculation could they be capitalised at a sum remotely approximating to £8 million.

MR. MacENTEE stressed again the great importance of the political advantages to be derived from a single payment which would mark the beginning of a new chapter in the relations between the two countries.

MR. CHAMBERLAIN pointed out that the Éire Delegates were urging the United Kingdom to make very large financial concessions in order to bring about a fresh era in the relations between the two countries whilst at the same time saying that the people of Éire would object to the slightest manifestation of such relations in the defence agreement.

MR. DE VALERA said he had hoped that progress would have been made towards the solution of difficulties in regard to matters which would have ended the objections of the people of Éire to full co-operation with the United Kingdom.

MR. CHAMBERLAIN said that certain steps could be taken. A suggestion had already been made for a method of approach to a financial settlement. As a start all labels in respect of specific items should be wiped out and consideration should be given to the possibility of reducing or abolishing the present special duties in return for some payment. The Éire Delegation preferred that the payments should take the form of a lump sum. Up to that point there was no difference in principle between them. The difficulty arose in regard to the size of the sum. So far as the United Kingdom Delegation was concerned, they recognised that if it proved possible to get agreements which would be of mutual advantage in regard to defence, trade, and agricultural questions such agreements could properly be taken into account in assessing the lump sum payment. Even so it might be that the lump sum would still be too large for the Government of Éire to accept. In that event, he thought the next step was to consider whether there were any items covered by the lump sum which the Government of Éire would be prepared to meet by annual payments, thereby reducing the lump sum to manageable proportions. That seemed to him as far as it was possible to go for the present, until further information about the defence programme was available.

MR. DE VALERA said that under existing conditions, the Government of Éire was faced with a difficult internal security problem. The Northern Boundary was undoubtedly a danger point. Some sections of the community in that area were armed and these arms were not under Government control. The same considerations applied to the Treaty Ports. In order to guard against dangers which might arise from these conditions the Éire Government was put to considerable expenditure, and there was a definite limit beyond which their resources could not be stretched. He was aware how much the farmers had suffered in the last four or five years, but he was not averse to placing burdens upon the people of Éire and telling them they must be faced, provided that he was completely satisfied that the burdens were justifiable. So far as a general settlement was concerned he did not want to give his people an opportunity to say that he had merely transferred their burden from one head to another.

SIR JOHN SIMON explained that the kind of financial settlement which the United Kingdom had in mind did not provide for payment in respect of the land annuities. Of the annual sum of £5 million claimed by the United Kingdom £3.1 million represented the land annuities leaving a balance of £1.9 million per annum in regard to other items. In so far as the United Kingdom was collecting £4 million per annum by means of the special duties, it might be argued that they were securing an offset to some extent against the default on the land annuity payments. If, however, the lump sum payment to be made by the Government of Éire was related to the total claim of the United Kingdom less the sum representing the land annuities, the Government of Éire could truthfully say that they were not paying anything 'in meal or malt' in regard to the land annuities. The way in which the various items amounting to £1.9 million per annum should be capitalised was a technical question but it could be worked out and agreed by the experts of both sides. He thought the amount of this capitalised sum should be ascertained. This figure could then be considered without attaching any labels to the various items from which it was built up. He felt that this was the way to approach the problem though he was bound to add that it did not, according to his calculations, lead to the conclusion that a figure of £8 million could be regarded as adequate.

MR. DE VALERA said that Sir John Simon's statement did not quite give the whole story. The United Kingdom Government had taken away a large number of assets whilst expecting the Government of Éire to continue paying charges. Moreover, they had given the Government of Éire no credit for the land annuity payments which had been made in the past.


The Conference adjourned at this point until 3 p.m.

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