A E[amon], a chara:
Jones saw me since my last and I was asked to see Lloyd George this afternoon.

I have just seen him. He showed me the letter the British Cabinet sent to the 'Ulster' Ministers and their reply.

The British letter was to the effect that as they considered they could arrange with us on the points of difference (this is not the phrasing; I had only a hurried reading of it, but the effect) Ulster should come in under an All-Ireland Parliament, their present powers as a subordinate legislature being retained - (the area was left open for a possible reconsideration). In the alternative the Ulstermen were told that if they refused this and insisted on being represented in the British Parliament, their area would be delimited and the part that desired to remain in the British Parliament would have to bear the same taxation as England.

The 'Ulster' reply was a voluminous one - 4 pages about Loyalty, the Crown, the Empire and representation in the British Parliament - things they would never give up, and never under any consideration come under an All-Ireland Parliament. Then - the climax. They proposed 'Ulster' should be formed into a Dominion and pay none except a voluntary contribution to England.

This reply has simply astounded all the principal members of the Cabinet, except Lloyd George. Even Bonar Law, they say, is a bit knocked out by it. Lord Derby on the ground of this reply offers to go to Liverpool to the Unionist Conference to speak against the Ulster crowd if they don't retract.

This meeting on Thursday is a critical one for the Unionist leaders - as it will be a fight between the Die-hards and themselves, who are mustering all their forces for the occasion.

Lloyd George and his colleagues are sending a further reply to the Ulstermen - refusing their Dominion proposal, but offering to create an All-Ireland Parliament, Ulster to have the right to vote itself out within 12 months, but if it does a Boundary Commission to be set up to delimit the area, and the part that remains after the Commission has acted to be subject to equal financial burdens with England.

Lloyd George intimated this would be their last word to Ulster. If they refused, as he believed they would, he would fight, summon Parliament, appeal to it against Ulster, dissolve, or pass an Act establishing the All-Ireland Parliament.

I told him it was his proposal, not ours. He agreed, but he said that when they were fighting next Thursday with the Die-hards and 'Ulster' in front, they were lost if we cut the ground away behind them by repudiating the proposal.

I said we would not do that, if he meant that he thought we would come out in public decrying it. It was his own proposal. If the Ulstermen accepted it, we would have to discuss it with him in the privacy of the Conference. I could not guarantee its acceptance, as, of course, my colleagues knew nothing of it yet. But I would guarantee that while he was fighting the 'Ulster' crowd we would not help them by repudiating him.

This satisfied him. They are to send this letter on Monday. Birkenhead, Chamberlain, and Derby will go to the Liverpool Unionist Convention, and if the 'Ulstermen' refuse, start in on 'Ulster'. Until after that there is not likely to be much development.

Before I left I told him that as I was helping him over the 'Ulster' difficulty, he should help us over 'the Crown and Empire', when it came up.

He is most anxious it should not be known that we met, for the reason that the 'Ulster' crowd and the Morning Post would, before the Thursday meeting, raise the cry that he was 'conspiring' with me against 'Ulster'. So please confine this strictly to the Inner Cabinet.