1. I submit herewith a draft prepared by the Secretary of the Note to be delivered to the American Minister (or Counsellor) in response to Mr. Chapin's démarche of the 9th September. The phrase in brackets in paragraph 3 is put forward as a possible means of meeting the point which you mentioned yesterday afternoon in connection with this paragraph.
2. Paragraph 6 of the enclosed draft makes the point mentioned by Mr. Boland during the discussion here on Friday night, viz., the risk that, if American aid may be used for purchases in the USA, only, European countries will not be able to secure all the supplies they require and, due to the strong demand for the limited supplies available, will see prices soar. The question propounded for the consideration of the American Government is in three parts -
   1. Availabilities: the insufficient availability of cereals (twenty to twenty-five million tons) as compared with the demand (thirty million tons) during the four years of the programme is alluded to both in the draft final report (see paragraphs 79 ff.) and in the report of the Food and Agriculture Committee (see, e.g., par. 15 of summary given in appendix C);
   2. Danger of American over-exporting: Attention had been called to this danger by Mr. Herbert Hoover; and
   3. Strain on American production: The point here is that, while Europe will only require a certain range of goods from the United States, other countries (e.g., Canada), whose balance of trade with the USA is unfavourable, could, if some of the American aid were spent there (e.g., for the purchase of wheat) continue to buy in the USA products (e.g., wireless sets and motor cars) which they have always purchased in the USA, and the whole range of American production would thereby be stimulated.

[Draft note]

1. The Irish Government understand that the matters referred to by Mr. Chapin when he called to see Mr. de Valera on the 9th September have since been discussed between Mr. Clayton and the Executive Committee of the Paris Conference, and that a procedure has been agreed upon which Mr. Clayton has felt able to accept as likely to meet the immediate difficulties.
2. In these circumstances, the particular points raised by Mr. Chapin would seem no longer to call for the individual comments of the Irish Government. However, the Irish Government would like to take the occasion of Mr. Chapin's démarche to communicate confidentially to the United States Government the following views which they have formed with regard to the work of the Paris Conference and the problems with which it is concerned. They are encouraged to do so by the belief that, in view of Ireland's geographical and economic situation, they are in a particularly favourable position to view the problems involved from a detached and objective standpoint, and their concern for the economic and political stability of Western Europe arises from considerations similar to those which actuate the Government of the United States.
3. Convinced as they are that an extraordinary measure of external aid is absolutely essential if the efforts of the Western European countries towards recovery are to bear fruit, the Irish Government (although Ireland does not stand in immediate need of special aid) take this opportunity to record their deep appreciation of the offer made by the United States Secretary of State in his speech of the 5th June. Realising the sacrifices which must be involved for the American people, they venture to express their profound admiration of this great act of constructive world statesmanship.
4. The views of the American authorities as conveyed by Mr. Chapin are obviously entitled to the greatest weight, and the Irish Government expect that the report of the Paris Conference will, while giving a faithful and realistic picture of the present situation in Western Europe and the measures required to redress it, take the fullest account of these views. The Irish delegate to the Conference has been instructed accordingly.
5. The Irish Government for their part fully subscribe to the principle of mutual aid and co-operation between the countries represented at the Paris Conference. They feel bound to say, however, that, in the situation as it is, they would be inclined to attach far more importance to the unanimous acceptance of the general principle by the States concerned, and to the effect which that acceptance could not fail to have on the future development of their mutual relations, than to any effort to give the general principle immediate expression in an organisational form such as that of a Customs Union.
6. The Irish Government fully realise that the execution of whatever plan is proposed by the Paris Conference must be subject to the limitations imposed by the factor of availability of supplies. They venture, however, to propose for the consideration of the American Government the question whether the problem of availabilities would not be eased, the danger of American over-exporting of particular products averted, and, by being more evenly distributed, the inevitable strain on American production lessened, if, as a counterpart to the plan prepared by the Paris Conference, the United States Government would convene a Conference of the overseas countries from which Europe's essential supplies are normally drawn to consider what contribution they can make towards enabling the European dollar aid which the American taxpayer would be asked to provide to be used in such a way as to prevent the undue strain on price levels in the United States and maintain a balanced flow in the export trade of the United States.
7. The Irish Government agree that the primary requirement of the European economic situation is an increase of national productivity and production, and that the purpose of the intensive effort to be made in this regard must be to enable Western Europe, as soon as possible, to stand on her own legs without special aid from the outside world. Even after that effort has been accomplished, however, with the assistance of whatever aid the United States decides to provide, Europe will continue to be, as she was before the war, a very substantial net importer - particularly of foodstuffs and raw materials - from the rest of the world. To pay for these imports, upon the supply of which European viability, after the completion of the proposed plan, will depend, European exports must be assured of finding overseas outlets yielding acceptable means of payment for the goods which Europe requires to import. Unless a due equilibrium between Europe's imports and exports can be assured, the problem of European viability will remain unsolved, and, in the view of the Irish Government, therefore, the problem how best to ensure a proper balance in the trade exchanges between Europe and the rest of the world when external aid has ceased, is a problem calling for the immediate and careful consideration of all the countries concerned.