I had a call on the telephone today from Mr. J.H. Thomas.

He said that he rang me up to tell me how sorry he was personally that matters had not ended more satisfactorily on Saturday last.¹

Certain of his colleagues, he said, thought on Friday night that there was not much hope of the negotiations reaching a successful issue.

I said that it was difficult to see how they could have expected a successful issue when they showed so conspicuously their disinclination to make any advance on their previous position. What, I enquired, did Mr. Thomas and his colleagues expect at the Conference?

He said that their expectation was that the President would re-state his claims in much the same way that he did in fact re-state them, except that he thought they would be supported by much more material than was in the past produced. It was true Mr. de Valera had had to come to these negotiations at rather short notice, but he was himself rather disappointed at the way in which the case had been submitted. (He thought that, with the exception of the President, the members of the Delegation must not have had time to master their brief.) Then Mr. Thomas continued that he expected the President would say that it did not appear on the points of (a) validity of agreements and (b) the liability for the Irish to pay the Land Annuities, there was much chance of agreement. This being the case he thought Mr. de Valera might say that without compromising his position on the legal basis of these two questions he would represent that the economic circumstances of the time prevented the Irish Free State from making the payments. Had the case been put to the British in this way Mr. Thomas said he had no doubt that they would have readily consented to examine the question and see in what way and to what extent relief to the Irish Exchequer could have been provided. He had made a hint of this in his own remarks at the Conference and he had further asked Mr. Chamberlain to say something which would strengthen the hint, but to his disappointment the Irish Free State side made no response to his hint for what might be described as an equitable, as distinct from a purely legal, revision. In reply to my inquiry, he said it was not for them to propose anything: he therefore limited himself to 'hinting'.

He would have to make a statement in the House of Commons tomorrow (Tuesday), and so as not to embitter the relations between the two countries he would avoid any harsh expressions. He took it that the President would follow up his words of Saturday evening by actions, and that the tariff war would be intensified. He would have no option but to retaliate on any attack which the Irish Free State Government might think fit to make.

Dark as the outlook was, he wished to say that if there was any point at any time which Mr. de Valera would like him to examine with a view to an improvement of present conditions he would be only too anxious to do this.

This conversation he said was to be regarded as confidential.²