No. 271 NAI DT S11846

Confidential report from John W. Dulanty to Joseph P. Walshe (Dublin)
(No. 54) (Secret) (Copy)

London, 23 August 1940

Confirming my telephone conversation, I had a meeting today at his Office with Sir William Brown who was accompanied by Mr. Stephenson of the Dominions Office, and Mr. Willis who recently returned from the Ministry of Supply to the Board of Trade.

Sir William Brown said that he had hoped to be able to have given me a draft of the proposed trade agreement. Unfortunately it had not been possible to do this, one reason being that whilst his Committee was engaged on framing the draft the Cabinet were considering a modification of cattle prices which would have affected the terms of the proposed agreement.

There had been on his Committee considerable argument about the cattle prices. He, together with Mr. Stephenson, and the representative of the British Ministry of Agriculture had had to do stout battle all the time against the representatives of the Treasury and the Ministry of Food. The Ministry of Agriculture, being the producer, was all out for as good a price as it could get from the Ministry of Food. The latter were, as might be expected, always trying to buy at the lowest possible price, and in this they had the unremitting support of the Treasury.

They had, however, decided – as Lord Caldecote had already informed me – to meet us on cattle prices in such a way as to pay us the current price plus the sum of half a million pounds per annum.

They felt that it would be advisable for us to set up an Export Board to whom the British would pay the half million pounds and to whom our Government would give directions as to its distribution. Sir William Brown then passed to what he described as the provisional tentative arrangements which we had made, subject absolutely to a comprehensive agreement being accepted by both sides. These provisional arrangements included joint chartering, bulk purchasing, war insurance arrangements and so on. To these they would propose to add the granting of facilities by our Government to the British in transhipment in our territorial waters of cargoes from big vessels to small. This was intended, as we knew, to help to relieve the congestion in the British deep water ports.

He next mentioned Supply questions such as flax, where the prices he thought were settled already; pit props where the prices were to be agreed, and said that they were anxious to secure an agreement about wool prices with us at the earliest possible moment. His information was that we were sending smallish consignments at low prices which were interfering with their price structure, and the Board of Trade had been asked by the Ministry of Supply to prohibit all wool imports and thus end the disturbance to their price structure. On the schedule of agricultural produce such as bacon, eggs, cheese etc., their proposals would be much on the line already discussed with us.

After expressing disappointment that we were still without even a draft of the agreement I said I thought we could finish the discussion there and then if this suggestion of transhipment were to be pressed. They would remember that when the Ministers were over here Mr. Lemass said quite definitely that it was a question which would have to be reserved, and referred to the importance of the Governments being completely excluded from any such proposal. I did not at that stage propose to offer any observations on the other matters which it was proposed to put into the agreement because I felt sure my Government would not look at any document asking for the transhipment facilities mentioned.

Sir William Brown said I might take it that if the transhipment point were to be abandoned there would be no agreement.

At this point Mr. Stephenson asked if he might say something 'off the record.' He said that his Minister had met with considerable opposition from his colleagues in the Cabinet on the proposed agreement and he knew that Lord Caldecote had secured the Cabinet sanction by presenting what he described as a list of 'colossal benefits' which would accrue to the British if this agreement were approved. At the head of this list of colossal benefits, said Mr. Stephenson, they had put this question of transhipment. And he said that just as I was emphatic about the exclusion of the transhipment arrangement, he, with Sir William Brown, was equally emphatic that the whole proposals would fall to the ground if the transhipment request were refused.

They urged that the proposal was for a contingency which they hoped might not arise. It was navigationally impossible to carry out this transhipment except in sheltered water. They had already experimented with parts of the Bristol Channel but had not succeeded. Sir William Brown said that the contingency was now more remote than it was in April. I asked him what he meant by this. He said that in April they had thought that their western ports would be very much more severely damaged by air attack than had proved to be the case. If the future held nothing worse for them in this regard than what they had already experienced the necessity for implementing that part of the agreement would most likely never arise. Transhipment would be purely a commercial transaction and the executive arrangements would be made between the shipping companies concerned.

If the business were so entirely commercial I enquired why they wished to include in an agreement between Governments a matter which if it arose would on their own showing be clearly one not for Governments but for shipping firms. What did they mean by the expression 'facilities' they suggested we should provide? Sir William Brown replied that facilities would be more a matter of goodwill than of executive action. Government action would really be inaction. But it might be that Local Authorities near the sheltered waters in question would approach our Government representing the risk to their area of the proposed transhipping and if our Government could soothe these Authorities he did not think any more could be asked of us.

Sir William Brown said that it was not the intention to publish the agreement as a whole: certain parts of it might have to be announced for trade requirements but there would be no publication of the part referring to transhipment. I said that suggestion made the proposal less acceptable – if that were possible.

Finally, I pressed Sir William Brown strongly to let me have a document for submission to my Government setting out exactly what they had in mind. He said he would do his best to let me have such a document to-morrow (Saturday).

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