As instructed in cable 216,¹ I called on Mr. Hoffman this morning at ECA and had 25 minutes conversation with him. I took up the loan-grant issue with him and mentioned that the diagrams requested by Mr. Bruce would be available in the next few days, and asked him if there is any indication of what the decision of ECA would be in regard to Ireland. I then read him the aide-mémoire embodied in the cable and again said that Mr. MacBride would be indebted to Mr. Hoffman if a clear idea could now be given as to whether the next quarter's allocation would be in the form of loan or grant.

Mr. Hoffman said that he would prefer not to be asked but, since I had brought the issue up, he would say (in all frankness) that they were awaiting the recommendations of the National Advisory Council on the loan-grant issue, and he expected that by Monday next he would have their decision. (The National Advisory Council is a Council on Cabinet level). For ECA protection - that is, the protection of the Administrator - he followed their recommendations on this loan-grant issue, and he regretted to say that, much though he liked the Irish, he felt that there was not a good case for a grant. Everything that could possibly be said in favor of a grant for Ireland would be said to the National Advisory Council (NAC), as well as we could say it ourselves, but it was his opinion that we are not a grant-country, and he felt that that was the opinion of the Congressional people also. I pointed out to him that the shortage of dollars would make it impossible for us to service a loan. To this he said, in the most emphatic way, that, if Ireland could not service a loan after recovery, then no country could service one. I said we could probably service it in sterling. He said one of the objects of the Recovery Program was to bring about the convertibility of all currencies, so that dollars would be available to every country. If they were not available to Ireland, they would not be available to anyone else, and, in these circumstances, he thought we would certainly not be alone in our predicament - if predicament it should be. Convertibility, he said, was one aim of ECA, and, if the program failed to bring that about, then the aid program would have failed completely. He emphasised again that Ireland is, in his opinion, a loan-country, and, much though we had his sympathy and as personally inclined as he might be to accede to our desire for a grant, he felt that, as Administrator of this investment-banker business - ECA - he could not conscientiously tell me that we would be given a grant.

He went on to say, in reply to a question from me, that, if we declined a loan, 'that would be our funeral', because there were any number of other people to accept the money if we failed to do so.

[matter omitted]

When I emphasised the difficulty my Government would be placed in if we got no grant, Mr. Hoffman replied that he realised all of the difficulties of Governments, but his was not a political organisation. Rather it was a business organisation and he could not afford to take into account that particular angle. I said it was not a political question, so far as we were concerned, but an economic one.