When I last reported to the House on the matter of the dispute between Great Britain and ourselves on financial matters the position, Deputies will remember, was this: There were two directions in which it might be possible to find an amicable settlement. One was by way of arbitration. As regards arbitration, the British Government had signified its readiness to arbitrate on the question of the land annuities provided the Tribunal was of the character outlined in the 1930 Imperial Conference Report. They wanted to restrict the personnel of the Tribunal to persons who were citizens of the States of the British Commonwealth. They made that a matter of principle. We, on our side, could not admit any such restriction. It was no less a matter of principle with us that our nominees should be selected without restriction, that there should be no limitation of our choice. An amicable settlement by way of arbitration was, therefore, practically ruled out.
The remaining way was by negotiation. When I met Mr. MacDonald, just on the eve of the imposition of the special tariffs, I made it clear that we were prepared to seek a solution by way of negotiation, but urged that if negotiations were at all to be protracted, it was desirable that they should be carried on in an atmosphere of peace rather than in the atmosphere of hostility which would be undoubtedly begotten by the imposition of tariffs by them, and by the counter measures which we would necessarily have to take. The British Prime Minister agreed, provided that we handed over the annuities which, as you know, we had put to a Suspense Account. I pointed out that we could not do that, that the moneys were in the Suspense Account, and that they were immediately available the moment a settlement was arrived at. The conversations on that occasion resulted, as you know, in no agreement being reached, in the British imposing next day, or I think it was that night, their tariffs and later in our taking our counter measures.
The position remained like that for some time until some time during the recess a proposal was made to me that, as a difficulty had arisen with regard to the land annuities, we should be prepared to show our good faith by putting the disputed moneys in the Bank for International Settlements during the progress of the negotiations. I signified acceptance of that proposal and my acceptance was conveyed to the British Government. This happened whilst the Ottawa Conference was still going on. Nothing came of it, and on Mr. Thomas's return from Ottawa I brought officially to his notice that we had accepted that proposal. I got a reply indicating that the British would not accept the proposal. But there was, in a summary of the position, an indication that another way was still left open, namely that of negotiation directly on the basis of the present position without any preliminary tariff truce. In order that no way of trying to secure an amicable settlement should be left unexplored I consented to negotiation on that basis. That was about the time I was going to Geneva. When in Geneva I was informed that the British Government was prepared to enter into negotiations on that basis and the suggestion was made that I might avail of the opportunity which would be afforded by my passing through London on my return to have a preliminary conference with British Ministers. That conference, as you are aware I am sure, was held and it was decided that representatives of the two Governments should meet in London if possible on the 14th October, "in order to see whether it is possible to arrive at a comprehensive settlement of the future financial relations between the Irish Free State and the United Kingdom."
