Foreign Relations of the United States Diplomatic Papers, 1936, General, British Commonwealth, Volume I

611.4231/1815½

Memorandum by the Assistant Chief of the Division of Western European Affairs (Hickerson) to the Under Secretary of State (Phillips)

[Washington,] June 4, 1936.

I enclose two memoranda² covering conversations which I had with the Prime Minister in Ottawa last month. In the present statement I wish to elaborate a little bit on one or two matters which are not covered in these memoranda.

General World Trade Situation

I told the Prime Minister that the Secretary has the feeling that the United States is engaged in too much of a “lone fight” against trade barriers. I told him that in particular he felt that certain policies of the British Government were not on all fours with what we are trying to do; in particular I mentioned British clearing agreements which, in the final analysis, boil down to bilateral trade balancing. (I left with Mr. Armour³ a copy of our memorandum to the British and copies of the Secretary’s memoranda of conversations with the British Ambassador on this subject⁴ with the suggestion that he acquaint the Prime Minister in detail on this subject whenever a suitable opportunity presented itself; I stressed to Mr. Armour the fact that we do not wish to ask the Prime Minister to do anything, but merely keep him informed of our point of view.)

I told the Prime Minister that the Secretary’s position would be so much stronger vis-à-vis our own critics in this country if a number of other countries were engaged in programs similar to ours. I said that the Secretary had in particular expressed the hope that Canada could “see her way clear to get in the fight on trade barriers on a broad front.”

British Preferences

In the course of my conversation with the Prime Minister I touched on our attitude in respect of imperial preferences within the British Commonwealth. I recalled that in the Canadian agreement⁵ we had recognized the principle of imperial preferences and went on to say that in general it was the Secretary’s feeling that nobody could question the legal or moral right of the various parts of the Empire to grant nominal preferences to one another to demonstrate to the world their political solidarity. I added that the Secretary felt very strongly, however, that when a preference was substantial enough to cause an artificial diversion of trade from a foreign source to an Empire source it was not only unsound but unwise and in the final analysis would reduce the sum total of world trade. I ventured the personal opinion that in the final analysis preferences of this sort would prove injurious to the British Empire as well as to the rest of the world. (I believe that the Prime Minister nodded slightly as if in agreement with the views I was expressing.)

Canada-U. K. Trade Negotiations

The Prime Minister told me that Canada proposed to open negotiations with the United Kingdom this summer for a trade agreement to replace the one which will expire in August, 1937. He indicated that in various respects, which he did not specify, he desired changes in this agreement. It was largely because of his general statement that I ventured the above-mentioned comments on the British preferences.

Canada-U. S. Agreement

I told the Prime Minister that we hoped very much not only to make our recent trade agreement with Canada the cornerstone of our economic relationship with the Dominion, but also a stepping stone to a broader and more comprehensive trade agreement. I stated that if the present agreement works as we hoped it will and expect it to, it was my personal hope that before long it would be possible to elaborate upon it. I stressed the fact that our trade agreement will be under fire in a number of congressional districts in the campaign and that the extent to which Canada finds it possible to give the broadest possible interpretation to the agreement to that extent will our chances of building on the agreement in future negotiations be improved.

John D. Hickerson

[Enclosure]

Memorandum by the Assistant Chief of the Division of Western European Affairs (Hickerson) of a Conversation With the Canadian Prime Minister (King)

[Ottawa,] May 20, 1936.

At lunch yesterday I had a chance to talk at some length to the Prime Minister in regard to the Trade Agreement. The Prime Minister stated at the outset his very great appreciation for the efforts of Mr. Hull, Mr. Phillips, and the people of the Department of State generally, in achieving the satisfactory settlement of the whiskey embargo question.⁶ He said that he had been very worried over the whole situation and that he was frankly delighted that the matter was settled.

I told the Prime Minister that the Secretary had asked me to speak to him in a purely personal way about one or two aspects of the Trade Agreement. I stated that Secretary Hull is leading a very gallant fight against trade restrictions all over the world, and in so doing is having to face a large amount of hostile criticism. I went on to say that it is the Secretary’s belief that gradually a momentum will be developed to our trade agreement program which will gain adherents very rapidly once the people of the country begin to see that our trade agreements are helpful rather than injurious.

I stated that the extent to which other countries find it possible to cooperate in this fight against trade restrictions all over the world is naturally a matter of paramount interest to us. I added that Mr. Hull is fighting hard, not only to see that the letter and spirit of all of our trade agreements are fully observed, but that even other matters not definitely bound in our trade agreements are not complicated by burdensome restrictions, which would add to the existing network which is stifling world trade. I stated that in these circumstances the Secretary had observed with some concern the application of certain arbitrary advances for customs purposes against American vegetables. I went on to say that we fully appreciate the fact that Canada reserved her right under the Trade Agreement to impose in certain instances these arbitrary advances, but that we had been assured in the negotiations that we “would have nothing to worry about” in the actual administration of the system. We therefore had hoped that, whereas it was necessary, perhaps for reasons of policy, for Canada to reserve the right to impose these advances, in actual practice this authority might be made use of very sparingly, and with the realization that its use would complicate the task of the American Government in convincing our agricultural producers that real benefits were obtained for them in the Canadian agreement.

The Prime Minister was good enough to suggest that Mr. Armour and I come to his office later in the afternoon and discuss this matter in further detail with the Minister of National Revenue, Mr. Ilsley, and himself. This we did. Throughout we made it perfectly clear that we recognized the legal right of Canada, under the Agreement, to impose such advances in cases where such authority was reserved; we stressed the fact that it was our hope that the Canadian Government would find it possible, in the interest of a broader, sounder trade, to avoid the use of this authority except in cases of real necessity and that even then the full 80% advance, if possible, not be made. We expressed the hope that if the present Trade Agreement works out as well as we confidently expect it to, it will become a corner stone in a sounder economic policy as between our two countries, and that it may be possible in due course to expand the scope of this Agreement.

2. Only one enclosure found in Department files.
3. Norman Armour, American Minister in Canada.
4. For correspondence concerning efforts of the Secretary of State to secure the cooperation of the British Government in his international trade program, see pp. 629 ff.
5. For text of agreement, signed November 15, 1935, see Department of State Executive Agreement Series No. 91, or 49 Stat. 3960.
6. See pp. 796 ff.