600.0031 World Program/92: Telegram

The Secretary of State to the Chargé in the Union of South Africa ( Russell )

7. I am sure that you have followed with sympathetic interest the extensive progress which we have made in our trade agreement program and I am confident that you are familiar with the attitude of myself and other officers of this Government that this program represents merely the American share of a movement which must be world-wide in character. The American Government is convinced that world-wide economic appeasement with progressive reduction of trade barriers is the only alternative to military adventures on the part of certain nations. We feel some concern lest the attitude of the British Commonwealth of Nations in respect to certain aspects of commercial policy, may impede rather than facilitate this broad movement, which is gathering adherents in all parts of the world.

Specifically, we feel concern over the question of extreme imperial preferences. It would be easy for the governments of the British Commonwealth to take the position that preferences are a matter of purely domestic concern; a little analysis will demonstrate, however, that this statement is true only in a strict technical legal sense, if at all. While nominal or very moderate preferences within the Empire to demonstrate political relationship and solidarity are understandable (in fact, the American Government in its trade agreement with Canada formally recognized the principle of imperial preferences), it can scarcely be denied that a preference extensive enough materially [Page 28] to divert trade artificially from a foreign supplier to an empire supplier is thoroughly uneconomic and is indistinguishable from a prohibitive protective tariff. Such preferences not only hurt world trade by preventing its development, but, being uneconomic, will undoubtedly in the long run seriously hurt the British Commonwealth of Nations.

In view of the fact that it is understood that there will be important economic discussions at the Imperial Conference next month in London, it has occurred to us that it might be helpful if you discussed confidentially and informally our views along the foregoing lines with responsible South African officials.44 Any discussion should be on your own initiative without any reference to any instruction from the Department. We desire to give you wide discretionary authority in this matter and if, for any reason, you feel that such a presentation of views would be undesirable, telegraph the Department. Any criticism of empire preference should be friendly and be accompanied by reiterations that our country will in any event do the best it can to cooperate in trade and in every other mutually desirable way with the Empire, but that of course we will be greatly handicapped by its extreme nationalism.

Hull
  1. In telegram No. 13, May 1, 11 a.m., the Chargé in South Africa reported that there were no responsible officials present in Pretoria with whom conversations should be held as most prominent officials who handled trade matters were en route to London (600.0031 World Program/96).