561.311F1/123: Telegram
The Acting Secretary of State to the Chairman of the American Delegation to the Monetary and Economic Conference (Hull)
81. For Morgenthau from Tugwell. Your 78, June 29, 1 p.m. I feel we should insist that the agreement to reduce acreage should be unconditional for first year subject to relaxation only if the wheat crop proves exceedingly short, as per my last cable. The agreement as to reduction for the second year would then be conditional on satisfactory arrangements with European importing countries. If we make reduction this fall conditional on agreement by European importers, the subsequent negotiations might be so protracted as to prevent any effective action. Does this agree with your view of the situation in the light of your informal contacts with importers?
What does Bruce mean by realistic agreements? We had thought of two possibilities. First, that importers would agree that as world wheat prices rose, they would reduce their wheat tariffs by an equivalent amount, thus letting world prices rise without advancing their internal prices to producers. Second, more definite measures would involve the relaxation of quotas on wheat imports or milling percentages in countries such as France and Germany so as to permit immediate increases in wheat imports this year. What measures have importing countries suggested?
On exports, we agree to limit exports to 75 million bushels this season and 150 million bushels next season, or else to 100 this season and 125 next season. Use these figures as final concession in your bargaining. [Tugwell.]