In January 1921, at his first Dáil meeting after his return to a country gripped by the War of Independence, de Valera introduces a motion calling on the Irish Republican Army (IRA) to desist from ambushes and other tactics that are allowing the British to successfully portray it as a terrorist group, and to take on the British forces with conventional military methods. This they strongly oppose, and de Valera relents, issuing a statement expressing support for the IRA, and claims it is fully under the control of the Dáil. He then, along with Cathal Brugha and Austin Stack, bring pressure to bear on Michael Collins to undertake a journey to the United States himself, on the pretext that only he can take up where de Valera had left off. Collins successfully resists this move and stays in Ireland.
The British government’s proposal of a Truce and negotiations over Ireland’s future is a result of both domestic and international factors. The British have been unable to defeat the Irish struggle for independence and there is a danger that the longer it continues the more radicalised it is becoming. In March 1921 Southern Unionist leader Lord Midleton also points to the strengthening of the independence movement, telling David Lloyd George and Hamar Greenwood that the resistance is now three times stronger than in July 1920. The following month Greenwood himself is talking of pacification taking years rather than months. British government policy in Ireland is also creating problems for it both internationally (especially in the United States) and in Britain itself. At the same time Britain is facing growing independence struggles in Egypt and India. It also faces an increasingly difficult financial situation. British foreign trade suffers a substantial collapse in 1921 as its exports fall by 48 percent over a twelve month period, its imports drop by 44 percent, and unemployment rapidly increases. The Economist describes 1921 as one of the worst years of depression since the industrial revolution began.
There is a substantial debate in the British Cabinet about whether or not to proceed along these lines. An example of this is the May 12, 1921 Cabinet meeting. Greenwood appears to have revised his view about how long pacification will take. He is opposed to the Truce proposal at this stage, feeling that the republicans are being worn down. Health Minister Christopher Addison disagrees and favours a truce. Winston Churchill, who has been in favour of the substantial escalation of coercion, now supports a truce partly because things are getting “very unpleasant as regards the interests of this country all over the world; we are getting an odious reputation; poisoning our relations with the United States.” Herbert Fisher, who is a historian and head of the Board of Education as well as a politician, also worries, “the present situation is degrading to the moral life of the whole country; a truce would mean a clear moral and political gain” and that if the IRA accepts the truce it will be hard for them to start up again, it will also “create a big rift in Sinn Féin ranks, the moderate Sinn Féin would have to come out into the open.” This meeting rejects the idea of a truce. In June, however, a memorandum from Nevil Macready states that beating the republicans will require coercion being carried out to the maximum and if this is done the cabinet will have to stand by 100 executions a week. Such a policy is a political impossibility. In this situation, Lloyd George proposes an Anglo-Irish conference and negotiations.