611.4131/154: Telegram

The Secretary of State to the Ambassador in the United Kingdom (Bingham)

125. The attitude of the British Government as reported in your No. 184 of April 7, 1 p.m., is disappointing. The British authorities [Page 657] do not appear sufficiently to appreciate the possible full consequences of the continuance by the United Kingdom and other important commercial countries of the narrow and restrictive commercial policies which they recently have been pursuing. I believe there is a chance that fuller consideration may produce a change in their present judgment, and induce them to undertake the step I have suggested—namely, a public announcement to the effect that the British Government plans to bend its effort, as circumstances may permit, towards the long-run objective of lowering trade restrictions and putting trade arrangements back on a basis of equality. I intend to continue the effort here to secure full consideration from them for the wisdom of some such step. I desire to do likewise in London. Please therefore take advantage of all opportunities to present these views to the British Government for their consideration. I suggest that at what you judge to be a suitable and propitious opportunity you talk again with Eden and Runciman, and leave with them an informal memorandum in summary of your remarks, setting forth the underlying reasons which have led this Government to bring the matter before the British Government, somewhat as follows:

“The disturbance and protracted curtailment of international trade has created most serious problems of internal adjustment for every country. These problems are far from solved, and it may be judged that they are shaping both the economic and the political policy in many countries of Europe along lines calculated to produce distinctly grave consequences.

The economic consequences either immediately or ultimately to be expected from the restriction of international commerce may be clearly seen in present facts and tendencies that menace our era—namely, in the great unemployment, the increasing burdens on Government finances incidental to the constant extension of Government into economic life because private industry cannot meet its difficulties, the diversion of international trade from channels of economic benefit to channels of political influence, the growth of special and preferential commercial agreements which are an unsatisfactory and weak basis for a restricted trade that is constantly at the mercy of political chance and changes.

These conditions have stimulated an opinion that countries cannot depend upon being able to buy and pay for necessary raw materials through the processes of international commerce, which was previously the means by which these materials were procured. Correspondingly the belief has strengthened that supplies of these raw materials must be assured either by (a) the creation of self-sufficiency irrespective of all economic calculations, (b) the acquisition of territorial control and/or (c) the directing of purchases of raw materials solely to areas willing to supply them on a barter basis, again irrespective of economic costs.

If trade continues to be determined and restricted by these conditions and beliefs, existing economic difficulties may be expected to continue, and the policy of discriminations will be further entrenched [Page 658] at the very time that world efforts must be exerted to rebuild international trade along the opposite lines of equality and permanent economic benefit.

Underlying economic conditions and tendencies are an important cause of present political tensions and mistrusts which are indicated by the vast increase in armaments and of fighting forces that has now taken place. Furthermore, as these armaments and fighting forces are increased, economic arrangements in all countries are becoming increasingly dependent upon the perpetuation and operation of great armament industries and upon the maintenance of enormous military establishments. The political ideal in which this country has developed largely under the inspiration of British history is one that contemplated a world of independent liberal and thriving democracies serving general welfare by widespread commerce. The world that appears to be emerging from the conditions outlined is one in which the living and working arrangements of great sections of each people are devoted, under strict governmental control, to furnishing the means for great military organizations directed by a dictatorial plan, subordinating conditions of economic welfare to calculations of national might. It is these tendencies which are forcing great peace-loving nations like Great Britain and the United States greatly to increase armaments also. It is because of our belief that the British Government views these developments with the same general disquietude that this Government does, that we believe that a common ground exists for concerting economic policies along lines that may affect desired change.

At present the world is left in grave doubt as to whether the important surplus-producing and trading nations have completely accepted present trends, as to whether they too have committed themselves to policy of attempted self-containment and economic isolation, or as to whether they contemplate plans for moving as early as possible towards a restoration of normal international trade and equality of trade opportunity. This is the reason for considering whether there is not some possible way by which countries who still possess this broader long-run objective may not immediately acquaint other nations now of their ultimate wish and intention. To postpone all possible initiatives aimed at remedying underlying economic conditions until present political difficulties are all settled may be tantamount to doing nothing ever; for these economic conditions themselves aggravate the political difficulties.

A new hope of general economic improvement, through a rebuilding of international commerce, is necessary to turn the judgment of many peoples away from the growing belief that only by force of arms will they be able to create a satisfactory condition for themselves. This new hope would arise if the Governments of the important trading countries could definitely make clear that they intend, as circumstances permit, to direct their policies towards the reestablishment of international commerce. Would this not serve as at least one important preparatory step facilitating the composition of political difficulties?

The weight of these considerations seems to the American Government so genuine that it is venturing to present its analysis to the British Government. In view of the great size and influence of the British Commonwealth of Nations—its commerce, liberal tradition, [Page 659] and wish for peace—the announced support of the United Kingdom for a broad economic objective would go far towards creating a certainty that this might be made into world policy, and into a new direction for international economic relations. On the other hand, if British commercial policy is further directed along lines which, though without intention, produce discriminatory situations and which furthermore do not in any way encourage, now, even the general idea of striving for eventual lowering of trade barriers, then the efforts of this Government and of other governments to that end must obviously be handicapped. Even though there may be no disposition whatsoever to do so, British commercial policy might well impede and discourage the gathering momentum of any movement in the other direction.

The American Government fully realizes the great economic difficulties which the British people have faced, and so ably dealt with. It appreciates that in any transition of commercial policy looking forward to a gradual lowering of trade barriers on a basis of equality, the British Government would have to reckon with troublesome internal problems. The American Government has been dealing each day with such difficulties. It was in fact because of this current experience that this Government in the prior oral presentation which it has made suggested the fullest possible latitude as to the time when the British Government might be able to take any actual significant steps towards lessening restrictions, and as to the particular ways in which this might be achieved. The suggested program does not contemplate such drastic readjustment of trade barriers as would subject the industries of any country to unreasonable and excessive competition.

If no determined movement along liberal economic lines can be developed now it is hard to retain assurance regarding future prospects. Anticipation must reckon with the possibilities of a still more extreme movement toward self-sufficiency in many countries irrespective of economic costs, still more complete and arbitrary restriction of international trade, continuing unemployment, renewed surpluses leading to enlarged Government subsidies for export, the further governmental organization and regimentation of economic life, enlarged absorption of labor and production into armed forces, increased Government expenditures for military purposes, threatening universal currency depreciation—with an ultimate outcome which reason rejects.”