PRESENT
IRELAND
Mr. J.A. Costello, T.D.
Taoiseach
Mr. W. Norton, T.D.,
Tánaiste and
Minister for Social Welfare
Mr. Seán. MacBride, T.D.,
Minister for External Affairs
Mr. James. Dillon, T.D.,
Minister for Agriculture
Mr. P. McGilligan, T.D.
Minister for Finance
Mr. D. Morrissey, T.D.,
Minister for Industry and Commerce
THE FOLLOWING WERE ALSO PRESENT:
Mr. F.H. Boland,
Department of External Affairs
Mr. J.J. McElligott
Department of Finance
Mr. G.P.S. Hogan,
Department of Finance
Mr. Seán O'Broin,
Department of Agriculture
Mr J. Nagle,
Department of Agriculture
Mr. J. Leydon,
Department of Industry and Commerce
Mr. J. Williams,
Department of Industry and Commerce
Mr. T. Murray,
Department of Industry and Commerce
Mr. T. O'Neill,
Department of Industry and Commerce
SECRETARIAT
Mr. P. Lynch,
Department of the Taoiseach
GREAT BRITAIN
The Rt. Hon. Sir Stafford Cripps,
K.C., M.P.
Chancellor of the Exchequer
The Rt. Hon. P.J. Noel-Baker, M.P.,
Secretary of State for
Commonwealth Relations
The Rt. Hon. T. Williams, M.P.,
Minister of Agriculture and
Fisheries
Mr. A.G. Bottomley, M.P.,
Secretary for Overseas Trade
Sir Eric Machtig,
Commonwealth Relations Office
Mr. E. Rowe-Dutton, Treasury
Mr. S.L. Holmes,
Board of Trade
Mr. R.H. Franklin,
Ministry of Agriculture and Fisheries
Mr. R.M. Nowell,
Board of Trade
Mr. K. McGregor,
Board of Trade
Mr. N.E. Archer,
Commonwealth Relations Office
Mr. G.O. Hoskins,
Ministry of Food
Mr. S.E.V. Luke
Mr. J. Dutton,
British Cabinet Office
At 9.30 p.m. on Sunday, 20th June, 1948, the Anglo-Irish trade discussions were resumed in
the Taoiseach's suite at the Piccadilly Hotel, London.
Sir Stafford Cripps circulated draft Heads of Agreement (attached)1 on food and
agricultural products. In reply to Mr. Dillon, Sir Stafford said that in suggesting a limitation of
50,000 in the number of Irish cattle to be sent to the Continent, the importance of directing
Irish cattle to hard currency areas had been taken into account.
In regard to the details of these draft Heads Sir Stafford said that he considered
these were necessary so as to put a complete picture of the Agreement before the British
farmers. He added that the Agreement would, in due course, be registered at the United
Nations Organisation.
Mr. Dillon saw no objections to the draft Heads in the form presented and he, Mr.
Williams, British Minister of Agriculture, and officials of the Department of Agriculture, the
Ministries of Agriculture and Food, retired to consider details of the draft.
Sir Stafford then referred to the industrial aspects of the proposed Agreement. He
circulated draft Appendix A (attached)2 prepared after Friday night's discussion. He
suggested, however, that acceptance of this formula might suggest greater relaxations of the
restrictions at present in force under Article 1 of the Anglo-Irish Trade Agreement, 1938, than
were likely to take place.
Sir Stafford said that his Government, having considered a list of the goods which
Ireland wanted to have imported into the United Kingdom, but which were at present
restricted under the terms of Article IX of the U.S. Loan Agreement had found that in nearly
every case the terms of Article IX of the Agreement would apply. The formula which he had
circulated in Appendix A might, he thought, give an impression of a greater relaxation than
would, in fact, be the case. The British Delegation would be quite prepared to accept the
formula but personally he did not consider it would be wise on the part of the Irish
Government to do so. He thought its acceptance would result in disappointment.
In reply to the Taoiseach, he said that under the new formula the large bulk of Irish
industrial exports would remain excluded due to Article IX of the Loan Agreement and to
other gold and dollar considerations. Sir Stafford said that the only categories of goods
which would be admitted under the new formula would be goods in those categories which
were at present subject to the 100 per cent export condition in Great Britain.
In reply to Mr. MacBride, Sir Stafford said that it would be unwise to have specific
reference in the formula to the restrictions enforced under Article IX of the U.S. Loan
Agreement. Any such specific mention would merely arouse the criticism of U.S. Congress.
In reply to Mr MacBride, Sir Stafford said that any modifications of (i) or (ii) of
Appendix A for the purpose of facilitating the entry of Irish goods into Great Britain vis-à-vis
goods from other countries would not be possible. Any one country could not be allowed
import as much as it liked into the U.K. as this would involve discrimination. In reply to Mr.
Morrissey he said that the actual 'let out' provided by the new formula as against Article 1 of
the 1938 Agreement would, he thought, be comparatively small. He agreed with Mr.
Morrissey that in practice the new formula would be little improvement on Article 1 of the
1938 Agreement.
The Taoiseach expressed disappointment that the position would be that the new
formula (Appendix A) would be of little benefit to Ireland.
Sir Stafford replied that the hard facts of the position were that no matter how good
Britain's intentions might be to accommodate Ireland in this matter discrimination in favour of
Ireland would be absolutely discountenanced and impossible under the terms of Article IX of
the U.S. Loan Agreement.
The Tánaiste reminded Sir Stafford of the extremely limited volume of Irish industrial
exports compared with the volume of British production. Sir Stafford said he fully appreciated
this point but if Great Britain were to allow in even a small amount of Irish goods of a kind
which, say, the U.S. or Canada produced [in] much greater volumes the position might be
that in order to take the small volume of goods from Ireland costing sterling, Great Britain
would be forced to pay gold or dollars for a huge volume of similar goods from hard currency
areas.
Mr. Noel-Baker pointed out that the hands of Great Britain were tied in this matter. To
accommodate Ireland to the utmost the British Government had gone as far as they possibly
could go; they were prepared to allow into the U.K. goods of a kind which, if manufactured in
Britain, would be subject to the 100% export proviso. This was a considerable concession in
principle and further than this it would be impossible to go. Sir Stafford Cripps referred to the
necessity for examining the list of goods which Ireland would like to import into Britain. An
examination of this list would reveal the nature of these goods and the possible
commitments to hard currency areas involved if goods of this nature generally were to be
admitted into Great Britain. Although the list might be small in quantity it would, he thought,
cover a very wide range. An investigation of this range would be necessary.
Mr. McGilligan pointed out that in view of the position as stated by the Chancellor he
would prefer to retain Article I of the 1938 Agreement and have it modified by an
understanding rather than accept the new formula which, as Sir Stafford Cripps had pointed
out, would not materially alter the present position but would convey an altogether mis-
leading impression. 'For us to re-write Article 1 of the 1938 Agreement' said Mr. McGilligan,
'and in doing so to accept an interpretation of that Article which we have always rejected
would be most difficult politically.' Sir Stafford Cripps agreed with Mr. McGilligan that this
attitude was quite reasonable.
Mr. Noel-Baker suggested that Article 1 of the 1938 Agreement might be retained,
but that a communiqué agreed by the two Governments might be issued explaining that the
U.K. Government contemplated a relaxation of the existing interpretation of Article 1. Sir
Stafford Cripps added that this communiqué could not be issued until they had adequate
time to investigate the list of articles which the Irish Government would like to have exported
to Britain.
Mr. MacBride suggested that the communiqué might state that Great Britain had
agreed to review the provisions of Article 1 of the 1938 Agreement with a view to facilitating
the importation into Great Britain of certain industrial commodities at present restricted. He
thought furthermore that the communiqué might contain a statement that the Irish
Government did not accept the U.K. interpretation of Article 1.
Mr. McGilligan said that Article 1 of the 1938 Agreement should be retained in
preference to the formula (Appendix A) circulated by Sir Stafford Cripps.
It was agreed that a statement on these lines and the retention of Article 1 of the
1938 Agreement after a review of the list of commodities at present excluded from Great
Britain would probably lead to satisfactory results.
Sir Stafford Cripps said that the Irish Delegation could consider the advisability of
publishing such an announcement or whether some other procedure for recording the
understanding suggested should be adopted. In any event the British Government would act
on the principles enunciated in the formula which he had circulated.
Sir Stafford Cripps then circulated Appendix B3 relating to the imposition by the Irish
Government of quantitive restrictions on U.K. imports.
Mr. MacBride circulated an Irish draft covering this question (Appendix C).4
Sir Stafford Cripps saw objection to the terms of the Irish draft in so far as it adopted
a unilateral approach by the Irish Government. The British Government required provision
for consultation before any quantitative restrictions were imposed. He reminded the
Conference that this Article would appear in an agreement which would be registered with
U.N.O. He thought that while the list of goods involved was being considered that steps
could be taken at the same time to provide machinery for enforcing an import licensing
system. He reminded the Conference that it was only in respect of goods covered by this
Article that prior consultation with the British Government would be necessary before
imposing restrictions. The restrictions which can already be imposed under other Articles of
the 1938 Agreement would continue and no necessity for prior consultation would exist.
The Taoiseach suggested the addition of a formula from Article 40 of the Havana
Charter, which was accepted.
Sir Stafford Cripps agreed with Mr. McGilligan that the draft Article referred only to
goods in the free list covered by Article 5 of the 1938 Agreement; all other goods might be
restricted without prior consultation.
Mr. McGilligan raised the question of achieving import restrictions by means of
duties.
Sir Stafford Cripps said that the British Government did not like this approach. Once
duties were imposed they had a tendency to remain in existence. Great Britain was most
anxious to exclude tariffs from the machinery necessary to correct the balance of payments.
In reply to Mr. MacBride Sir Stafford Cripps said that only £3m. worth of goods or so were in
the category which Great Britain wanted to have controlled by quantitative restrictions. It
would be open to the Irish Government to exclude any or all other imports by means of
tariffs. Mr MacBride suggested that it might be better to omit this Article out of any published
agreement and Sir Stafford Cripps agreed that this could be done by putting the Article in the
form of an 'expression of intention'. He saw no objection to Mr MacBride's suggestion that
the Article might contain a definition of 'quantitive restrictions'.
Sir Stafford Cripps circulated a draft 'Appendix D' regarding action by the Irish
Government to control dumping.
The Taoiseach considered that the opening words of this article might be taken from
Article 40 of the Havana Charter for an International Trade Organisation. Mr. Holmes
suggested that there were objections to extracting a part of specific articles of the Havana
Charter. He thought that if the Charter was to be quoted at all it should be quoted in full.
Furthermore, he said that Article 34 would be more suitable as Article 40 was designed to
meet conditions somewhat different from dumping. It referred not to unfairness in regard to
low prices but to unforeseen circumstances such as mistakes in the selection of tariffs etc.
The Tánaiste said that the desire of the Irish Government was to have power to act
as rapidly as possible against dumping.
Sir Stafford Cripps pointed out that under the 1938 Agreement a great range of
goods could be restricted immediately. The area in which some delay might occur was
comparatively small. He agreed with Mr. McGilligan that the Irish Government would be
entitled to restrict by quantitative restriction all commodities except those on the free list,
under Article 5 of the 1938 Agreement, and that the scope of the Irish Government under
that Article was now being extended.
The Tánaiste thought that such commodities as boots and shoes would not be
covered by the Irish freedom to restrict under Article 5.
Sir Stafford pointed out that dumping could be dealt with without the necessity for
Article C (Appendix C). In reply to Mr. MacBride he said that the principle of giving Ireland
unilateral powers for dealing with dumping could not be accepted. It would be a dangerous
precedent and might get Great Britain into difficulties with certain foreign countries which
might use unilateral powers unscrupulously.
Mr. Morrissey pointed out that Article 14 of the 1938 Agreement was quite
satisfactory from the Irish point of view if a means for adopting speedier action under it could
be devised.
In connection with the distinction between dumping and flooding Sir Stafford Cripps
said that flooding could be prevented under Article 5 in the case of all goods except those on
the 'free list'. In addition a new Article gave power to impose quantitative restrictions on
certain articles at present on the 'free list'; that the only commodities now outside Ireland's
right to restrict would be those on the 'free list' in respect of which Ireland might wish to
impose quantitative restrictions but in the case of which prior consultation with Great Britain
would be necessary. In these circumstances the Chancellor thought that the new Article C
(Appendix C) was not really required. It was agreed that the matter should be further
considered and that the possibility of adopting Article 34 of the Havana Charter instead of
Article C should be considered.
Mr. McGilligan said that in return for Article 1 of the 1938 Agreement the Irish
Government had made certain concessions under Article 5 and 10, particularly in regard to
protective duties in which a ceiling was imposed. It was undertaken that these restrictions
would be, in due course, substituted by customs duties. When this was done the customs
duties would be subject to review by the Prices Commission. The Irish Delegation felt that
this involved some hardship to Irish manufacturers. There had been correspondence with
the Board of Trade regarding a ceiling imposed by Article 10, said Mr. McGilligan and the
Irish Government was anxious that the Article should be modified to enable higher duties to
be imposed. This had already, he said, been accepted in principle. It had been proposed
that the Irish Government's discretion in regard to duties should be limited by relating to the
value of imports from Britain in 1938 of all the goods on which duties were to be imposed the
aggregate value of the imports from Britain in the same year of the goods enumerated in
Part I of Schedule II of the 1938 Agreement, although, he said, agreement had not already
been reached as to what this percentage should be. The Irish Government would like the
percentage to be 50%. They were anxious that a decision should be reached and embodied
in the Agreement on the lines of Appendix E (attached).5
Mr. Holmes referred to the necessity for careful consideration of this proposal.
Mr. McGilligan replied that the principle of raising the ceiling imposed by Article 10
had already been accepted by the Board of Trade and that negotiations with manufacturers
had already opened in the matter. Sir Stafford said that the principle was accepted subject to
settlement of the percentage question. This would be examined as a matter of urgency by
the British Government.
Mr. Holmes recalled that this point was not on the Agenda for the Trade Discussions
which had already been circulated.
Mr. McGilligan referred to the question of raising the duties on biscuits. Sir Stafford
Cripps reminded Mr. McGilligan that the British Government were not in favour, as a general
rule, of increasing tariffs.
Mr. McGilligan said that the Irish Government was not very happy about Article 12 of
the 1938 Agreement which gave the British Government the right to suggest the order of
priority for classes of goods to be reviewed under Article 8. He suggested that the contents
of Article 12 might be transferred to Article 8.
Mr. Noel-Baker said that there were precedents for this Article in Agreements
between Great Britain and Australia and New Zealand and that the suggestion would be
examined.
Mr. Dillon having returned from his discussion with Mr. Williams, the British Minister
for Agriculture, said that before the war Ireland enjoyed the preferential rate for exports to
Great Britain. He would not, of course, suggest that Britain should in present circumstances
impose a 10% tariff against agricultural produce from Denmark or elsewhere. The Irish
Government had no intention of pressing for the granting of the 10% preference in view of
Britain's economic circumstances at the moment, but they were anxious that if preferential
treatment should be revived at any time in the future Ireland should enjoy the 10%
preference.
waiving of preference. Mr. Holmes said that the British Government were most anxious to
retain all existing preferences that could be retained.
Sir Stafford Cripps agreed with this and said that the British Government would
consider whether the preference to which Mr. Dillon referred might be regarded as a
suspended preference which could be revived when circumstances permitted without
infringing the terms of the Havana Charter.
Mr. Morrissey asked Sir Stafford Cripps about the 'forward' position regarding coal
supplies. The Irish Government wanted an assurance that they could obtain in future years
the same quantity of coal as they had been promised for this year. In addition, Mr. Morrissey
said, he would like a promise of 250 tons a week of foundry coal. He would like an Article
added to the Agreement, on the lines of Appendix F attached, relating to coal supplies.
It was agreed that arrangements should be made with Mr. Morrissey to discuss this
with the Minister of Fuel and Power.
The Taoiseach raised the question of Article 17 (3) and said that he would like to
have the figure of £1,300 already accepted in correspondence substituted in the new
Agreement for the existing figure of £750. This was agreed.
It was also agreed that the new Agreement should contain an Article on the lines of
that set out in Appendix G.
At midnight, when the other British Ministers had left, Mr. MacBride asked Sir
Stafford Cripps for some general information about the Sterling Area pool. He would like to
feel that all members of the sterling area group were receiving similar treatment. Sir Stafford
made a statement reviewing the hard currency position of Great Britain and the sterling area.
He said that Australia and New Zealand had not yet been given the information which he
had communicated to the Irish Delegation and that the survey which he proposed to make of
the hard currency reserves of Great Britain and of the other members of the sterling area
should be regarded as very strictly confidential.
On the 31st March, 1948, the hard currency reserves of Great Britain stood at a figure
of £552m. These reserves for the most part consisted of gold. By the end of the quarter
ending 30 th June, 1948, it was expected that the figure for reserves would be £450m. It was
hoped that some reimbursement of this decline in the reserves would be met from E.R.P.
funds; this reimbursement might be $300m. An additional sum might be in the form of a loan
rather than a grant. The present attitude of the British Government was that dollar loans
under E.R.P. should be used only for capital purposes. The net result would be that at the
end of the present quarter Great Britain would have depleted the March figure for reserves
by about £20-£40 m.
To conserve reserves the British Government had cut out all purchases involving
dollar expenditure except essential raw materials and machinery required for economic
reconstruction during the past eight or nine months. There was no dollar expenditure on
food.
The oil supply created special difficulties. The Irish Delegation would no doubt be
familiar with the present problems in regard to world oil supplies. The British Government
could not contemplate with equanimity the purchase of oil for dollars and its sale for soft
currencies. The British Government had cut down to a minimum the use of oil in so far as
that was possible.
During the past six or nine months allocations of hard currency had been made
available to other sterling area countries and this agreement had worked satisfactorily so
long as there was some hard currency available for allocation from the sterling area pool.
The British Government had hoped to maintain the present standards of living and the
limited convertibility of sterling if this could have been reconciled with maintaining reserves in
the sterling pool at their level of six months ago. Unfortunately these hopes had not been
realised. The price factor had worsened and the present position could not be held without
further economies.
Sir Stafford gave figures for the deficit in the Irish dollar balance of payments. He
mentioned a deficit of £2m. a month including Canada. It was subsequently pointed out by
Mr. McElligott that this figure referred to a particular month and was excessive as an
average for the past nine months.
Sir Stafford gave a figure of a deficit with Belgium of £¼m. a month.
Mr. McElligott explained that this deficit was also related to a particular month and
that the average deficit was much lower.
Sir Stafford said that hitherto these deficits had been met by transfer of gold.
India and Pakistan were granted, he said, allocations of hard currency for the first six
months of the year but would have to be denied further drawings from the Pool. India had
drawn from the I.M.F. $28m. and paid it into the Pool.
Australia had been running a small hard currency deficit but had, at the same time,
been selling to Great Britain all the gold Australia produced.
New Zealand had also been running a small hard currency deficit, but expected to
correct it in the near future.
Ceylon had been showing a surplus on dollar balance of payments.
The Colonies had shown an over-all surplus.
South Africa had been paying Great Britain in gold for its dollar requirements and in
addition had made a loan in gold of £80m.
Sir Stafford said that the position so far as Ireland was concerned was that an
application for admission to E.R.P. had been submitted. The U.S. had refused to allow Great
Britain to take any part of the sterling area into account when making its application for
admission to E.R.P. with the exception of the Colonial Empire – the only part of the sterling
area which is in credit on dollar account. The U.S.A. had refused to allow the countries which
were debtors on dollar account to be taken into consideration.
Another factor of difficulty was that Britain is now obliged to pay Canada in U.S.
dollars because Canada has run out of U.S. dollars. Otherwise Canada would not be able to
pay for its imports from the U.S. In this connection he said that the U.S.A. had now agreed to
allow off-shore purchases in Canada to be made under E.R.P. The problems regarding
Canada were aggravated by the facts that the other sterling area countries had a
considerable deficit with Canada and that drawings on the Canadian loan to Britain had
been suspended
Sir Stafford said that 'We rather felt that as Éire is in a position to draw dollars under
E.R.P. she should so obtain them from the U.S.' so far as possible even if that meant taking
a loan. He expected that dollars would be required by Ireland only for expenditure which
could not reasonably be cut down.
He said he felt that the future servicing of any loan Ireland might obtain under E.R.P.
would be a charge which might reasonably be made against the sterling area dollar pool. 'If
the E.R.P. loan is not enough for Éire's essential requirements obviously we would have to
stand behind Éire and try and help her out just as we stand behind ourselves.'
Continuing, he said that in regard to Britain's position he felt it would be necessary to
impose a cut on dollar raw materials. No more cuts in food from the U.S. were possible and
it would be necessary, he thought, to turn to Canada. This raised difficulties because the
present price trend suggested that it might be necessary to pay more dollars for less food. A
cut in raw materials could not but have an effect on Britain's dollar earning capacity. Such a
cut would involve very difficult calculations. There was a limit beyond which it would not be
possible to cut imports without adversely affecting home production. The policy has been
laid down that nothing must be done which would draw on the existing reserves of the
sterling area. These would have to be maintained so that their present volume would be
available for expenditure to meet the conditions which would exist in world trade when the
Marshall Plan came to an end. It would be very difficult to get a satisfactory balance between
the Eastern and Western Hemispheres, and after the end of the Marshall Plan a most grave
period of economic re-adjustment would exist in America. A 'gift market' would then be cut
off from American manufacturers. He emphasised that the maintenance of the stability of
sterling, which he regarded as essential, would depend on the retention of suitable reserves
for the difficult days which would follow the end of the Marshall Plan.
Mr. MacBride said that Ireland felt as Great Britain did that a loan under E.R.P. was
in many ways objectionable particularly when applied to consumption goods.
Sir Stafford did not think we should refuse a loan. The British position was different.
They had grant aid and moreover they already owed U.S.A. £3¾m. on foot of the 1945-46
loan.
He went on to say that the idea of America offering a loan was sheer lunacy. He
referred to the vast amount of dollar lending since the end of the war – about ten billion
dollars. The provision of new loans under E.R.P. was merely adding to the lunacy.
Mr. MacBride said that the Irish Government had been advised that Ireland's
allocation for the coming quarter under E.R.P. might be cut down as low as £10m.
Sir Stafford said that Great Britain was considering having no imports of dollar
tobacco next year. As much as possible was being obtained from Rhodesia where the
current year's crop had been purchased.
Mr. MacBride said that apart from tourism, emigrants' remittances and the small
volume of export trade to America Ireland had no dollar earning assets, but had a much
better chance of earning hard currencies other than dollars.
Sir Stafford stated that Great Britain wanted to retain at all costs the multi-lateral
nature of the sterling area. He added that in 1951 Great Britain would have to start making
repayments to the U.S.A. on the original dollar loan.
Mr. Noel-Baker said that if Great Britain had received no grant under E.R.P. it would
have been necessary to look for a loan.
Sir Stafford said that Britain's relation with Ireland was difficult as far as dollars were
concerned. India, which is unable to get any E.R.P. allocation, would be jealous of a country
which got such an allocation, and in addition got dollars from the sterling area pool. In this
connection he emphasised the fact that Ireland was the only sterling area country a party to
the European Recovery Programme.
The Americans, he said, had stated very strongly that Marshall Aid must not be used
for the benefit of the sterling area as such. Both the U.S.A. and the present British
Government's political opponents had complained that the rest of the sterling area had been
allowed to use so much of the 1945-46 loan. He said that Britain did not propose to build up
the hard currency reserves of the sterling area during the operation of E.R.P. to more than
£500m. in dollars. Any fortuitous earnings of dollars above this figure would help Britain vis-
à-vis the convertibility of sterling.
Mr. MacBride asked whether Ireland could rely on the support of Great Britain in
making its demands for Marshall Aid.
Sir Stafford said that Britain would be glad to help but doubted whether she could
usefully do anything in this regard at Washington. Whatever could be done would be done
through the O.E.E.C. He said that Britain had already suggested that Belgium should get a
larger allocation than was being offered. This step had been taken in the interests of
Western Union.
In reply to Mr. Dillon Sir Stafford said he had no idea why the Americans decided to
cut the E.R.P. allocation which had been recommended for Ireland. In reply to an
observation by Mr. MacBride, he said that Britain was most anxious that the sum total of
Marshall Aid should be so used as to develop to the utmost the flow of international trade in
Western Europe. There would be no point in Britain having dollars if no one else had them.
Mr. MacBride said that it was essential for Ireland to secure the maximum amount of
dollars to enable it to increase agricultural and industrial production. A cut in Ireland's
allocation under E.R.P. would inevitably mean a cut in production.
Sir Stafford said that Britain had made great strides during the past year in
redirecting import trade. He remarked that the recent Irish Agreement with France was
supplying the French with sterling which they very much desired.
Mr. Dillon asked whether this was helpful from the British point of view.
Sir Stafford said 'yes, provided you get useful imports'; if France had been unable to
secure the necessary amount of sterling Britain might have had to lend some sterling.
After discussion between Mr. McElligott, Mr. Rowe-Dutton and Sir Stafford Cripps,
Mr. McElligott said that the average Irish dollar expenditure was only £9m. a month dollars
for U.S. and £.22m. a month dollars for Canada.
Mr. McGilligan said that the Irish Government would probably be questioned in
Parliament regarding their arrangements with the British Government for dollar currency
after the 30th June, 1948, and he asked whether the information communicated by Sir
Stafford could be submitted to the House.
Sir Stafford said that it could not, that the information he had given was most
confidential.
Mr. McGilligan recalled Sir Stafford's statement at a previous discussion relating to
Ireland's position vis-à-vis the International Monetary Fund.
Sir Stafford said that he would have to modify what he had said on that occasion as it
might convey a misleading impression. He thought a correct statement of the position would
be this: If Ireland was not taking Marshall Aid then an application for membership of the
International Monetary Fund might be made. A sum of £15m. in dollars might be expected
from the Fund over a period of four years. If Ireland desired to secure admission to the
International Monetary Fund Great Britain would put up the subscription. As a choice
between the membership of the International Monetary Fund and adherence to E.R.P. the
Chancellor said that there was no question but that the choice should be in favour of E.R.P.
If Marshall Aid were taken Ireland would have difficulty in getting anything from the
International Monetary Fund. Sir Stafford admitted that he had given a somewhat different
impression in a recent statement to the Irish Delegation.
Mr. McElligott said that Ireland would require about £20m. in dollars over a period of
twelve months. In regard to alternative markets to which Sir Stafford had referred Mr.
McElligott enquired the sources which he would recommend for such essentials as maize
and wheat. Mr. McElligott said that up to £9m. in dollars could be saved if maize and wheat
could be obtained from non-dollar sources. He did not think that the dollar estimate of £20m.
– reduced to £11m. by obtaining maize and wheat from a non-dollar area – could not be
further reduced. For revenue purposes existing imports of tobacco were essential for Ireland.
Mr. McElligott then read the remaining terms on the list, apart from tobacco.
Mr. Dillon asked whether there was any chance of getting maize for sterling. Sir
Stafford Cripps said that Britain had got maize from the Argentine for sterling but that this
sterling had been the proceeds of British Railways. Argentine maize was however very
expensive. In addition Britain had secured Danubian maize and barley and other coarse
grains for sterling. He did not know whether Eastern European countries would be prepared
to accept sterling from Ireland for these cereals.
Mr. Dillon said that if Ireland got sufficient quantities of wheat it would be possible to
grow a very large amount of barley for beer which should be of considerable interest to
Britain.
Mr. Dillon asked whether it might be possible for Britain to lend Ireland some Maize.
Sir Stafford said that Britain had very considerable stocks of Russian and Argentine maize
and that he would consider the possibility of a loan.
In reply to Mr. MacBride he said that the figure given of £500m. as the lowest level
for hard currency reserves, was more a psychological level than a danger level. At any lower
figure confidence in sterling would be endangered although technically they might carry on
with £400m. He informed Mr. MacBride that if Ireland informed Great Britain what it hoped to
obtain in any quarter from E.R.P. Great Britain would finance Ireland up to that limit subject,
of course, to an understanding regarding repayment.
Mr. McGilligan remarked that the Irish allocation had been cut to one-third.
Sir Stafford explained that if a loan were accepted under E.R.P. it would not be
necessary to explain to the Americans the specific purpose for which the loan might be used.
Mr. McElligott asked whether Ireland would be credited with the unexpended balance
of £3.5m. in dollars remaining from the allocation which had been ear-marked for the nine
month period ending the 30th June, 1948.
Mr. Rowe-Dutton said that while Britain would compliment Ireland on having
economised on its dollar expenditure, the fact that savings to the extent of £3.5m. had been
possible showed that the original estimate for the nine months had been on the high side. He
did not think that any crediting of this unexpended balance would be possible.
Mr. McElligott asked would it not be bad to penalise Ireland for its parsimony, and Mr.
Norton referred to the fact that Ireland could have bought dollars 'forward'.
Sir Stafford Cripps said that Britain would advance dollars to Ireland up to the limit of
what Ireland was likely to get from E.R.P. If Ireland could not keep within that limit Britain
would do its best to help. It would, he emphasised, be impossible to say to India for instance
that Britain had given dollars to Ireland in addition to E.R.P. funds.
Mr. McElligott said that surely the basis of a formula might be found in the fact that
Ireland was not asking fresh dollars but the unexpended balance for the period ending 30 th
June, 1948, to which he had already referred.
Sir Stafford said that as far as this unexpended balance was concerned the virtue
achieved of economy would have to be its own reward. 'It pays to be economical', he said.
He added that in the first instance if Ireland estimated that it was going to get £x m. under
E.R.P. then Great Britain would back Ireland to that extent.
Mr. MacBride said that the position revealed certain difficulties. Ireland looked on the
sterling pool as its banker and did not like to find that there was nothing to be had from the
bank. Ireland would like a declaration that the bank accepted its liability.
Sir Stafford replied that Britain would pay to the sterling area whatever dollars
accrued above the level of the reserves.
Mr. Norton asked whether in the event of the amount of dollars accruing under E.R.P.
falling short of Ireland's essential requirements Ireland would receive sympathetic
consideration. Sir Stafford said 'yes, provided you do everything possible to economise.'
Mr. McGilligan referred to the difficulty which the Delegation had in committing
absent Ministers to accept the position stated by the Chancellor. It had already been
recognised by the British that if we claimed E.R.P. aid from the Americans on the basis of no
draw from the Pool, we would not later be told we had lost access to the Pool.
Sir Stafford said that the Pool would advance dollars in anticipation of E.R.P. aid to
be received by Ireland, on the understanding that she would do her utmost to get the
maximum aid. 'If despite your efforts, you fail to get adequate aid for essential requirements,
we will still stand behind you.' He repeated the difficulty as regards India, whose delegation
was already in London and who were bound to ask 'Have you promised Ireland any dollars?'
Consequently the assurance he gave could not be publicised.
Mr. MacBride summed up the position by saying that it would be necessary:
- to agree on a ceiling for expenditure;
- to agree on economies;
- to get as much as possible from E.R.P. and other sources.
Mr. Noel-Baker suggested that consultation with the British authorities regarding
alternative sources for raw materials and feeding stuffs might be helpful, and it was arranged
that such consultation would take place on the 21st instant.
Mr. Rowe-Dutton stated that reference throughout the discussion to hard currencies
referred specifically to gold and dollars. In effect this involved U.S.A., Canada, Argentine and
Belgium. It was decided that the form of the agreement should be considered from the point
of view of publicising the fact that Great Britain was advancing dollars, which would be
reimbursed from E.R.P.
The Taoiseach expressed the appreciation of the Irish Delegation for the kindness
and consideration that Sir Stafford Cripps had extended to them at a time when he was so
occupied with other heavy business.
In thanking the Taoiseach for his remarks Sir Stafford said that Britain was most
anxious to secure every improvement in its relations with Ireland.
The discussion ended at 1.30 a.m.