611.0031/2565
Memorandum by the Secretary of State
The Canadian Minister,7 accompanied by Mr. Wrong, Counselor of the Legation, came in upon my invitation. I commenced the conversation by stating that I expected to leave for South America later in the week; that Prime Minister Mackenzie King will probably not return from abroad prior to my departure, and that before leaving I felt I might invite the Minister to come in and to transmit to Prime Minister King my greetings and good wishes; that also I might comment on or rather sum up briefly the present and prospective status of the reciprocal trade program, together with the general program for economic rehabilitation and thereby the establishment of conditions of permanent peace.
I then said that while we are still in the beginning stage with this general movement, I do feel that surprising progress, really surpassing original expectations has been accomplished; that of course the success of the program depends upon its steady, even though gradual, progress and its support by an increasing number of important countries, [Page 787] especially during the six to twelve months ahead; and that unless this program and movement is thus sufficiently supported and advanced during coming months it will probably be too late for its success. I then referred to the gravitation of most continental European countries straight in the direction of increasingly uneconomic conditions, steadily narrowing economic policy, and rapidly increasing armaments, upon the theory of either self-defense or of self-preservation from economic stress and ultimate war. In this connection, I emphasized the fact that few if any statesmen in Europe appear to be either considering or seeking any other alternative for this direct road to political, military, and economic suicide; that this country and Canada and others on this continent have offered a very definite and comprehensive alternative course; that the problem is whether adequate support can be secured for it within sufficient time to prevent either a military catastrophe in Europe, or, if not that, an economic catastrophe, which will be inevitable within another year or two under the wholly uneconomic policies that are being practiced, with unproductive war supplies constituting the largest single factor in commerce and in employment; that it is all-important that nations friendly to the program to restore economic peace and military peace should bestir themselves and render almost indispensable aid in three vitally important questions without unusual delay:—that one step, of course, is the entering into mutually profitable trade agreements based upon the doctrine of equality or the favored-nation policy—the second, which is more important at this stage than the dollars and cents involved in trade agreements by themselves, is the great necessity for friendly nations to preach on every possible occasion the soundness and the need for the adoption of our program of economic liberalization, without running serious risk of fatal delay, as stated—and third, that each friendly government should by all means keep its twin objective of the restoration of conditions of economic well-being and of peace before its own people and the peoples of other countries;—and to that end it would be severely handicapping if these very same countries should pursue the narrow, cut-throat methods of bilateral trading alone, so as to impair, if not to discredit, the whole long view movement and program to promote economic welfare and peace; that, furthermore, if one or two more years go by with entire inaction by such countries as Great Britain and others and with corresponding obstruction of such efforts as the United States might make, it must be patent that such countries as Japan, Italy and Germany, with either actual or implied force behind their movements, would be dominating virtually all phases of international finance and commerce; and that, therefore, it is extremely urgent that friendly nations should go forward [Page 788] as nearly simultaneously as possible. I then said that I recalled how zealously the Canadian Prime Minister, Mackenzie King, expressed himself along these lines and that I assumed the Canadian Government was still as much interested in this program of economic liberalism as it was when our trade agreement was signed.
The Minister, who had kept quiet up to this time, promptly spoke and in the most earnest terms reiterated the interest of his Government and his statesmen in this movement, and he repeatedly said that if he had been in my chair he could not have stated the situation more to his exact notion than as I had just stated it; that he felt this was the earnest view of his Government and that he desired to assure me that if any act or utterance of his Government at any time should not be in exact harmony with this policy and program it would be on account of extreme exigencies and of the most temporary nature. The Minister was thus referring to what he knew I had in mind, namely, the recent obnoxious and objectionable bilateral trade arrangement entered into between Canada and Germany.8 I stated that I knew the Canadian Prime Minister and his Government were of course continuing to adhere strongly to this economic program; that I feared, however, there were two dangers attending the situation and its future progress,—one of which might be a tendency on the part of the various nations supporting this program to make too many exceptions to the policy involved, thereby impairing if not discrediting the integrity of the whole movement; second, that, as stated, a few months of undue and unnecessary delay, while this whole program and movement are hanging in the balance, could prove disastrous. The Minister again made elaborate protestations in behalf of Mackenzie King and in behalf of the Canadian Government, reasserting the strongly favorable attitude of both to the program, and I again thanked him and expressed my gratification.
I then said that a number of countries abroad had, I feared, been more or less seriously impairing the program’s integrity and obstructing its progress by failure both to observe it and to preach it and thereby keep it alive; that many of us in this country for two years have been desperately striving to preserve the life of the whole program, as a substitute for militarism and big armaments and possible war; that, unfortunately, we have not had any too much aid and cooperation; and that we cannot go along indefinitely without wider cooperation. The Minister again assured me of the strong support of the Canadian Government and its deep interest in the program’s success.
[Page 789]I then remarked that, of course, the Minister knew that, along with other governments which have been offending in numerous instances, I could not help but have in mind the recent purely bilateral agreement entered into between Canada and Germany, which constituted the most aggravated form of narrow bilateralism and which is just the opposite of the central policy of equality on which our program of economic restoration is bottomed; and that I, of course, was rather surprised and really seriously disappointed when I read an account of this agreement in the Canadian press some days ago. I said that, as the Canadian officials knew, we have had a desperate fight in this country against the powerful forces of extreme economic nationalism and embargo tariff and that it has revolved around the Canadian Treaty and our concessions therein, especially relating to cattle; that just at the crisis of this fight, when the opposition forces are seeking to unify the farm belt against the Canadian Treaty, the Canadian Government’s entering into the worst form of a bilateral arrangement has placed us in a difficult attitude, for the reason that our critics throw in our faces the statement that even our nearest neighbor is no more interested in the reciprocity program than to accept its benefits, while rejecting its burdens or responsibilities, although all the while proclaiming its support of the program; that our fight is so difficult and so close that one or two occurrences such as this Canadian-German agreement could very easily tip the scales in favor of the embargo tariff forces in this country, to say nothing of the unfortunate psychological effects in other countries upon this entire movement. I referred to the fact that this country has probably sacrificed opportunities for $100,000,000 of trade by purely bilateral methods entirely repugnant to the favored-nation and other policies embodied in our program; that if, as stated, many of the countries favorable to the program persist in the pursuit of these bilateral practices wholly repugnant to the program, its success would naturally either be imperiled or destroyed. I from time to time expressed my admiration for Mackenzie King and my certain knowledge that he was as much interested in this program as I am and that his Government is wholeheartedly for it, but, I added, that the Canadian Government and her statesmen favorable to this program might not know or appreciate the dangerous fight we are obliged to carry on in this country, and they might not have fully appraised the dangers of too many exceptions and violations of the favored-nation and other policies on which our program is based.
I think upon the whole that the Canadian Minister and his associate, Mr. Wrong, felt rather uncomfortable throughout the conversation. The conversation, so far as I could judge, was in the best of good nature and good humor, with no sort of disposition on the part [Page 790] of either of us to impugn motives or to express ourselves to the point of provoking any real argument.