A E[amon], a Chara:
The accompanying Memo.¹ in reply to theirs of Nov 16th² was handed in at Downing Street to-day at 12.30.

About half-an-hour later Jones rang me up and asked could he see me immediately. I told him to come on to Hans Place where he arrived about 1.15. He said Lloyd George was in despair about the document. Birkenhead and Chamberlain also considered it impossible. It did not accept the Crown or the Empire. It brought them back to where they were 6 weeks ago. He instanced further, naval facilities, trade, Ulster. He suggested the document should be withdrawn or substituted, as Lloyd George's only idea of a reply to it was a letter ending the negotiations.

I said it could not be withdrawn or substituted. It was in my judgement a great advance on our side towards peace. As to the Crown and Empire we had indicated a method of association which was honourable to both sides. As to Naval facilities it was their Admiralty's fault - not ours - if the matter was in a fog, for they had sent us contradictory or at least inconsistent memoranda. We asked them now to exactly define the facilities they needed and we would seek to find an agreement with them. As to trade I held our proposal was quite reasonable, although I admitted to him as my own opinion that it was not so great an issue as others. As to Ulster I said we had made a great offer.

He said that Lloyd George complained that he had asked us about specific guarantees on patronage, no taxation of their raw materials nor export tax, and that there was no reference to them in the draft. I said our draft offered them guarantees when they put up claims for them. It was for them to say what guarantees they required. Our offer in the draft went further than these specific offers. He agreed that Lloyd George had misunderstood this part; it was also possible there was some misunderstanding on other points. He suggested, as from himself, therefore, that myself and Mr. Collins might meet Lloyd George and Birkenhead and see whether anything could be done in the way of removing any misunderstandings.

I said I saw no objection, but I must discuss it with my colleagues. Mr. Collins, at this point, came into the house and I asked him to come in. Jones repeated the purport of his conversation with me, and Mr. Collins replied to him on the same lines as I had done. In the course of the conversation I suggested the British Government was trying to get a blank cheque from us - a thing that would play Craig's game. Jones was taken aback at this view which he denied. It is really not my view, however, that they are doing so. They hoped to meet Craig on Thursday under an agreement with us that would enable them to defy him and his backers. Owing to the crux over the Crown and Empire, they feel their position weakened if not gone. In view of your letter of October 25th I cannot discuss the alternative with them.

Mr. Collins, Mr. Barton, and myself have arranged to meet Lloyd George and Birkenhead and possibly Chamberlain at 10, Downing Street to-morrow. We shall argue the acceptability of the arrangement re Association we have proposed, but I have little hope of any good result.

If the conversation fails, I presume Lloyd George will send a letter terminating the negotiations, and to this we shall reply, and then leave London for home, unless you think the time has come for you to cross over here. On that point, until after our conversation with the British representatives to-morrow I could form no judgement.