File No. 763.72119/10437

The Commercial Adviser of the British Embassy ( Crawford) to the Counselor for the Department of State ( Polk)

Dear Mr. Polk: With reference to our recent conversation, I think it may be useful to recapitulate the observations I made as to the policy of the British Government in relation to post-war economic problems.

The present object of the British Government is not the preparation of economic peace conditions to be imposed on the enemy; there is no intention of committing the Allied Governments in advance to any particular course of action at the peace conference; it is still less the intention of the British Government to prepare a boycott policy to be used instead of securing a victory on the field.
The purpose of the British Government is that the requirements of the Associated Nations during the period of reconstruction should be considered on their own merits. In addition to providing for the reconstruction of the territories which have been invaded, it will be necessary to obviate any industrial dislocation, the result of which [Page 613] would be social unrest, which might in turn delay for an indefinite time the re-establishment of the peaceful international relations which it is the object of the War to safeguard and secure. The Allies have to face a very real danger in this direction, and the Associated Governments are under a moral obligation, in the interests; of the Associated peoples, to carry on during the period of reconstruction that co-operation in the economic sphere which is being developed as a result of war conditions.
In the reconstruction process the first step is that regular employment in proper conditions of life and at a proper wage should be found for the enormous numbers of men who have during the War been removed from productive industry. As one of the essential steps in attaining this object, the British Government wish for such arrangements for maritime transport, and for such a control of raw materials, as will permit the industries of the Associated countries to be carried on with a proper insurance against fluctuations of price or shortage of supply.
A question of even more vital importance for the moment, is that of food, though, as far as Great Britain is concerned, the position will no doubt be relieved to a considerable extent as soon as it becomes possible to devote British tonnage to the importation of supplies from Australia.
It is, in fact, likely that the British Empire would be able to provide for most, if not all, of its vital requirements without help from outside, as soon as the British shipping now employed in the service of the Allies and the United States is released. The British Government, however, feel that the requirements of the Allies, and also those of neutrals, must also be considered, and that the close cooperation and mutual help which has been developed by the War among the Associated countries should be continued as far as this policy can be pursued without encroaching upon national independence.
Consideration must necessarily be given to neutral interests. The requirements of neutral powers for supplies, as far as a rough estimate can be made of them, must be regarded as an important factor in all programmes, and, indeed, every opportunity which may be furnished by the course of the War should be made use of in order to secure the adherence of these countries to the economic partnership of the Associated Governments, if only in order to extend the control over sources of supply exercised by this partnership.
If the principle is thus recognized that the only true basis for supply programmes in connection with raw materials and food is to be found in the requirements of the Allied consumers, the British Government trust that the way will have been opened to consider trade problems from a non-controversial point of view.
Immediate consultation among the Allies is necessary in order to ascertain the basis for such a policy, and to submit to the Governments concerned practical proposals for its execution. In the absence of such consultation there is danger that individual members of the Alliance may become prematurely committed to partial schemes, presumed to be in the interest of their own trade, but in fact not in conformity with the general interests of the Associated Governments, and of a nature which might lead to friction among these Governments. The British Government for their part are now constantly being pressed to lay down their economic policy for the post-War period, and soon after Parliament reassembles it will be necessary to make, in accordance with a promise which has been given, some statement on this question. It is strongly felt, however, that no complete statement as to this policy can be made until a full and frank exchange of views has taken place among the Allies, and that the final statement on the subject should be made after consultation, and, if possible, in agreement, with them, and especially after consultation, and in agreement, with the Government of the United States.
It is important, therefore, that each of the Governments now associated should, before the War ends, have in their possession an accurate knowledge of the requirements of the other associates, in order that available supplies may be, in the first place, equitably and opportunely distributed in relation to the particular needs of territories overrun by the enemy, and to the more immediate demands of the respective Associated Governments for the restoration and maintenance of their commerce and industry.

Believe me [etc.]

Richard Crawford