Cablegram 86A LONDON, 1 May 1943
SECRET
Your telegram No. 64 of the 29th April [1]-I can best reply by giving you in broad outline the background to the position which has now been reached. While it has always been recognised that economic questions and all the points raised in Article VII would eventually have to be treated as a whole, it was felt desirable here that before this stage was reached informal discussions should take place between the United Kingdom and the U.S.A. on individual subjects.
In pursuit of this programme thought was sufficiently advanced here over 12 months ago with regard to Currency and Exchange, such thought being embodied in the Clearing Union Plan, for informal discussions to be undertaken. Work was well advanced on the Buffer Stock Plan and it was contemplated discussions on the Clearing Union Plan would be followed by informal conversations on it.
For various reasons, of which you have been informed, it was found impossible to initiate these preliminary conversations and as you know the Clearing Union Plan and Stabilisation scheme were published recently [2] without their having taken place. Such publication brought economic questions to the forefront and precipitated suggestions that the time had come when they should be considered by the United Nations as a whole. This atmosphere was strengthened by the President’s announcement of the holding of the Food Conference.
In addition to this nebulous thought certain practical considerations emphasised the necessity for early action with regard to economic questions:-
(1) To avoid public controversy and the creation of contending groups with regard to the two currency and exchange plans.
(2) To prevent the Food Conference wandering into fields beyond its intended scope by showing that matters, e.g. Commercial Policy, vital to the implementation of any proposals they might put forward were being dealt with separately.
Apart from these general considerations there were certain specific ones which led the United Kingdom to think that the time had arrived when the question of post-war Commercial Policy should be taken up with the U.S.A.:-
(i) That if the matter were further delayed there was a danger of U.S.A. opinion crystallising into a definite policy which might be unacceptable to us, but which it would be difficult to resist without causing friction.
(ii) That the renewal of the Trade Agreement[s] Act by Congress was the moment to raise the issue before the President had taken any action under his renewed powers.
With regard to your specific questions:-
(a) The above is my broad answer. More specifically, the United Kingdom is in line with your last sentence and are now endeavouring to work out such a programme which they regard as covering the whole Economic field. They consider the time has come for the initiation of discussions on all aspects, including Commercial Policy, but that any commitments on Commercial Policy must be governed by the Currency and Exchange mechanism upon which agreement is reached, in view of the financial position in which the United Kingdom will be on the termination of the war.
(b) United States of America will be fully informed of the proposed discussions. The line taken will be that set out in my telegram No. 172A of the 23rd October 1942. [3]
(c) In view of the possibility of the U.S.A. opening this question at any time after the President’s powers have been renewed by the passing of the Trade Agreement[s] Act by Congress, it is desired, if possible, that the third week in May should be adhered to.
I suggest on this point the best course would be to wait for a day or two to ascertain the replies from the other Dominions.
Although formal notification has not yet been sent, I have learnt privately that Canada is accepting.
If other Dominions are accepting I suggest we should not press for postponement.
(d) Type in my view should be responsible senior Civil Servant, or practical Economist. The most essential qualification, however, in my view, is knowledge of the Government’s point of view with regard to post-war economic policy and a good working understanding of Australia’s economic and social conditions.
I gather that the object of the meeting will be to enable the United Kingdom to put forward their views with regard to the various questions concerned and after hearing reactions of the Dominions to them to recommend modifications if necessary. The primary object would be that whoever was sent could go back to Australia to convey the information he had aquired to the Government.
A great deal of good and clear thinking has been done here but on a level below the Governmental, hence the desirability of the exchange of views with the Dominions being on that level.
(e) This is a possible alternative but in view of the calibre of some Dominion Representatives on the economic side in London I hope it will not have to be restored to. If It is I would greatly welcome expert assistance from Australia of the type suggested under (d) if it is at all practicable for you to send it.
BRUCE
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1 Document 167.
2 See Document 98, 2 and 3.
3 On file AA:M100, October 1942.
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[AA:M100 1943]