Memorandum by the Secretary of State

The British Ambassador called and said that he desired to refer back to our conversation of some days ago in regard to conferences between our respective governments looking towards some degree of cooperation to promote our trade agreements program and a broad economic program generally for international business recovery. The Ambassador said that, speaking solely on his own initiative, he was in fear that we might provoke controversy with his government in regard to ship subsidies, debts and other conditions, which sooner or later would call for conference and settlement, or at least a better understanding between the two countries.

I at once interrupted the Ambassador and assured him that that was not what I had in mind at this time. I then stated that the scope and specific purpose of my suggestion was that international business and general economic recovery was extremely urgent from the standpoint of both peace and satisfactory conditions of prosperity; that the trade agreements program which this Government has been carrying forward was worldwide in its application and was better calculated than any other plan or program to bring about world economic rehabilitation; that no two nations were more interested in promoting better conditions of peace and prosperity than our two countries; that suitable steps would not be taken and the necessary efforts would not be put forth to carry into operation the necessary economic program for international, financial, exchange, credit, and trade restoration to normal, unless the United States and Great Britain took the lead. I then sought to state further that Great Britain had not thus far cooperated in these respects; that while this Government was taking its political life in its hands to hold up and carry forward our vitally important and urgent program for international economic recovery from the long viewpoint, the British Government had not indicated any interest whatever in this long view and the program involved, but had instead been confining its chief attention to the narrow and shortsighted economic view which in the main contemplates purely bilateral bargaining and bartering transactions under more or less compulsion of clearing arrangements, in which a country with an unfavorable trade balance in most instances, as in the case of Great Britain, was in an excellent position to engage. I repeated that the British Government had a perfect right to do this now and in the future, but that my appeal was to the extreme danger of Germany or other countries breaking forth in a military way unless their unemployed people, as well as other unemployed [Page 634] people, were put back to work, et cetera, et cetera; that it was in these circumstances that I was directing the attention of the British Government to what my Government considers an extreme emergency situation from the standpoint of both peace and stable prosperity. The Ambassador said he was very glad to be set right about the matter; that he had not quite caught my full purpose.

I added that, of course, as we went along, the question of ship subsidies, debts and other unsatisfactory conditions, would be discussed, attacked, and, I hoped, solved satisfactorily to all concerned. The Ambassador raised the question as to the readiness of our two governments to discuss even some phases of the proposed program for international business recovery, such as exchange stabilization. I replied that nations would never feel absolutely and entirely ready to sit down and deal fully with that problem, but that I considered it as all important, unless we were willing to take the great risk of letting the German nation get ahead of us with a military rampage over Europe, and high time that our two countries were proceeding at least to put out to the world educational utterances and activities with respect to the fundamentals of the proposed program and also to enter upon preliminary consideration and discussions of the problems which ultimately would have to be dealt with; that this would within itself inspire business confidence and contribute to business improvement. I emphasized to the Ambassador that I had not conferred with either the President or the Secretary of the Treasury about the exchange stabilization problem, but that I was only speaking from my own standpoint in connection with our trade recovery program, adding that of course a chief purpose, if not the chief purpose, of exchange and other mechanisms of like nature, was to facilitate and make possible the movements of commerce. I finally added that it was not my idea at this stage to enter into any controversial questions with the British Government; that my proposal as already explained did not on its face undertake anything deemed controversial, but that it was a simple statement calling attention to what is considered the extreme urgency for economic rehabilitation among the nations and hence for the wholehearted, unimpeded cooperation of our two governments in support of the long view program and, naturally, the abandonment of conflicting trade practices of a purely bilateral nature which made impossible satisfactory or real cooperation in support of the long view policies.

I again repeated that of course the British Government had a right to take either course that it might desire, but that I felt constrained very earnestly to emphasize the conditions and the views which I had expressed to the Ambassador.

[Page 635]

I told the Ambassador that I was simply bringing this matter to his attention in this oral and informal way, that I was sending no note upon the subject, but that I would prepare an informal memorandum setting forth the clearing and like practices already referred to which would be given to him in a few days.

C[ordell] H[ull]