Secretary.
I understand that the German Minister is coming to see the Taoiseach in a day or two to talk about Dr. Masaryk's visit and our attitude as regards Czechoslovakia. This particular point has cropped up in connection with the payments arrangement which we are negotiating with the German Government and there is a concrete reason for our trying to get a satisfactory solution of it in the fact that it would be a pity if this arrangement, out of which we expect to get at least £60,000, on foot of our financial claims against Germany, were to be held up at this stage.

2. You will remember that in the Emergency Order which we made about the collection of outstanding German debts in this country, we defined the term 'Germany' as meaning 'the territory of the German Reich (including Austria)'. I still think that this was the best formula to adopt at the time. Even if we recognise the German Reich as including part of the former State of Czechoslovakia, it was obviously desirable not to give public advertisement of the fact in an Emergency Powers Order. The Germans, however, have taken exception to the definition adopted in our Order on the ground that it implies an acceptance on our part of the recent denunciation by the British Government of the Agreement of 1938 under which the Sudetenland was incorporated in the Reich. The German authorities argue – quite rightly if their premises were sound – that such an action on our part would be a breach of neutrality, in view of the universally recognised rule that neutrals continue to recognise during the course of a war the territorial position which existed at its commencement.

3. It is necessary, in connection with this whole matter, to be quite clear as to what extent to which we had, on the 3rd September 1939, recognised the incorporation of the former State of Czechoslovakia into the German Reich. I don't think there can be any doubt whatever but that we had officially and de jure recognised the German annexation of the Sudetenland which was officially sanctioned by the Four-Power Agreement concluded at Munich in 1938. If other proof of this were lacking, the Germans would only have to point to an official statement issued by our Government Information Bureau on the 3rd November 1938 announcing the renewal of our trade agreement with Germany. That announcement made it quite clear that the term 'Germany', for the purposes of the renewed agreement, would include the recently annexed portions of Czechoslovakia, in other words, the Sudetenland. De jure recognition of a territorial change could hardly be given in a more formal and definite manner than by its recognition in an inter-governmental agreement. Whatever else may be the case as regards this matter, therefore, I don't think we can possibly deny that, on the 3rd September 1939, we had recognised the incorporation of the Sudetenland in the territory of the German Reich. As a curious commentary on this, I may perhaps mention in passing that in the course of the talk which Mr. Frank Gallagher¹ and I had recently with Mr. Backer and Mr. Morgan, of the United States Office of War Information in London, Mr. Backer stated most specifically that the automatic return of the Sudetenland to Czechoslovakia was no part of the plans of the United Nations and that it had already been decided that its future was to be settled by plebiscite.

4. The position as regards Bohemia, Moravia and the rest of Czechoslovakia is by no means so clear. It is hardly necessary to go over the events which resulted here from Hitler 's midnight agreement with Hacha and the German march into Prague on the 15th March 1939 – Dr. Kostal's surrender of the Consulate to the German Legation, his subsequent change of mind, his temporary retirement into private life and his re-emergence as Czechoslovak Consul after the beginning of the war and the establishment of the Czechoslovak National Committee. I have a clear recollection of the events of that period and, if I am not mistaken, our aim throughout was to avoid being drawn to one side or the other. We certainly did not recognise the German Protectorate or the new State of Slovakia de jure. Our omission of Dr. Kostal from the Diplomatic List and the minor conversations we may have had with the German authorities from time to time about matters affecting interests in Bohemia or Moravia could hardly be held to be more than the mildest recognition de facto. I see from a minute of the 13th December 1939 to Mr. MacWhite on file 227/23 that we refused to allow a Slovak Consul to come here on the ground that 'the formal recognition of Slovakia and the establishment of a Slovak Consulate here would, having regard to the circumstances of the present conflict and the avowed aims of the belligerents, be hardly consistent with this country's attitude of strict neutrality.'²

5. It will be clear from all this that our position on the 3rd September 1939 was that we had recognised Germany's annexation of the Sudetenland de jure, but that we had given Germany's appropriation of the rest of Czechoslovakia (and the establishment of the new State of Slovakia) at the most a very faint recognition de facto. To my mind, this is the official attitude to which we should now firmly adhere. It is the attitude most consistent with the values which a small State like ourselves might rightly be expected to defend and it is, incidentally, the attitude which we are likely to find most expedient and least embarrassing from the point of view of our relations with both sets of belligerents. Applying this attitude to the particular problem which has arisen as regards the proposed payments agreement with Germany, I would propose to inform the German Minister that, in the administration of the Order, we will construe the term 'Germany' so as to include the Sudetenland, but that as regards the rest of Czechoslovakia, the Order can only be applied to debts arising during the period of Germany's actual occupation of those territories which will mean, in practice, only debts arising in the period between the 15th March and the 3^rd September 1939. I should be glad to have your authority for informing the German Minister on these lines.

6. The attitude which I suggest would, of course, give us a ready reply to any complaint the German Minister may have about Dr. Masaryk's visit and the manner of our reception of him. The answer would be simply that, as we had not, on the 3rd September 1939, recognised de jure the situation created by the entry of German troops into Czechoslovakia in March 1939, to treat Dr. Masaryk now as if Czechoslovakia had completely ceased to exist would be a departure, so far as we are concerned, from the status quo existing at the outbreak of war and would, to that extent, be inconsistent with our neutrality and with the very principle upon which he himself relies in saying that we ought to continue to regard the Sudetenland as part of Germany. I think that the German Minister himself – who, I believe, regards it a mistake on Berlin's part to be too sticky about points like this at the present time – is quite prepared to accept this point of view as entirely reasonable.