At¹ the Dinner given to the new British High Commissioner in Canada, Sir Francis Floud, last night Mr. J. H. Thomas, detaching himself from several others, came across the room to speak to me just before the company went in to dinner.

He said he was glad to be able to tell me that the suggestion about the exchange of commodities was making progress and he thought the outlook much more promising than was the case about a week ago. I said that Sir Edward Harding had already told me that there were some difficulties, though he added they were not political: I could not help wondering what the difficulties could be. Mr. Thomas said that the Board of Trade had not been too responsive to the suggestion. Not that Mr. Runciman himself would not be glad to make some arrangement of this kind but that the position was complicated by matters arising out of other trade agreements. Mr. Thomas had sent to Mr. Runciman an official letter a few days ago and had enclosed with this official letter a private letter saying that he (Mr. Thomas) was anxious to enter into an arrangement on the lines of the proposed exchange of cattle for coal. He hoped Mr. Runciman's reaction would be favourable.

At the conclusion of this conversation Mr. Thomas's own words were 'I think the omens are better'.

As I was leaving the hotel after the dinner Mr. Thomas again joined me and said how he hoped some arrangement might be arrived at on this exchange of commodities suggestion. He said he felt sure that the President would be delighted. As Mr. Thomas seemed to me unnecessarily emphatic - reasonable allowances being made for the effect of the dinner - I said the President's position was that which I had described in my first conversation with Mr. Thomas. I reminded him of my earlier information that I was in Dublin when the question of certain trade arrangements with Germany was being discussed and that it was thought to be more than a neighbourly act to acquaint the British Government of the discussions which were then proceeding, so that if they were interested they might put in tenders, so to speak, for consideration along with the German offer. Mr. Thomas was sceptical about this. He said that he knew for a fact that the President was most anxious to make an economic settlement. He had not told his colleagues in the British Cabinet but Lord Granard had approached him - he was not clear in his recollection as to whether it was after Lord Granard had had a recent talk with the President or not - and assured him that the President would be very willing indeed to arrive at some economic settlement. Mr. Thomas said that he had not said very much in reply to Lord Granard but that he, Mr. Thomas, could not help feeling that Lord Granard was not talking, so to put it, off his own bat. I pointed out to Mr. Thomas that it was impossible for the President to control the expressions of opinion offered by people in Ireland. Mr. Thomas must have experienced many cases of wholly unauthorised opinions being put forward in all good faith. To this he cordially assented.

He then passed to my reference to our considering possible German proposals. He doubted whether Germany would make any proposal really worth our while to consider. Germany he thought was more anxious for British goodwill than it was for Irish goodwill and if the Germans did make any offer the terms, he felt sure, would be much more advantageous to the Germans than to us. I offered no comment on this observation. Mr. Thomas then said to me 'I know what I am talking about because it is, after all, our business to know what is going on.'