611.4131/1704½
Memorandum of Conversation, by the Chief of the Division of Trade Agreements (Hawkins)
In response to an indication from Mr. Overton that he would like to discuss the status of the trade-agreement negotiations on a purely informal basis, I had lunch with him today and the various aspects of the matter were gone into rather fully.
Mr. Overton remarked that, while he had put all of our arguments before his principals in London in order that they might have our viewpoint fully in mind in considering their forthcoming offers, he did not anticipate any great improvements in the offers already made. He stated that he felt the British had gone just about the limit and expressed the hope that we would not press them into taking action which would have the result of causing real injury to British interests. He said that an agreement which resulted in injury rather than benefit to them would not be advantageous even from our own standpoint; that an agreement to be useful must be fair and advantageous to both sides and not disadvantageous to either.
I replied that I entirely agreed with the view which he expressed; that we on our side definitely did not want to obtain undue advantages or to have an agreement which proved to be one-sided to the disadvantage of either party. I said, however, that the real question is whether our requests are in fact excessive in view of what we are offering. I said that I had within the last few days looked into the whole situation again and had arrived at the definite conclusion that if the British Government did not substantially meet our outstanding requests and we maintained the offers already indicated, the agreement would be definitely one-sided in favor of the British and would not represent a fair balance of advantage; that if Mr. Overton would examine the situation impartially he could not fail to agree with this. In brief, I subscribed fully to Mr. Overton’s view that the agreement must be a fair one and that neither must seek undue advantage; that the reason we feel the British should substantially meet our requests is to prevent just this.
[Page 43]Mr. Overton replied that there is obviously a difference of opinion as to what represents a fair and equitable adjustment. He then went on to say that he thought the British problem was in some respects more difficult than ours. He said the manner in which the British tariff is being built up has a good deal of support throughout England and that any drastic steps to tear down the newly erected tariff rates would meet with a good deal of disfavor. In contrast to this he said that it is part of Secretary Hull’s basic policy to bring about a moderation of the excessive tariffs built up by previous administrations and that what we do in the trade agreement merely represents a step in the direction which is considered desirable anyway. I pointed out to Mr. Overton that even if his statement of the Secretary’s basic policy is correct, the surest way to defeat everything he is trying to do would be to sign a one-sided agreement. The whole trade-agreements program would not survive the signing of such an agreement with as important a country as Great Britain. This remark brought the discussion to its starting point, namely, to the question as to what constitutes a fair and equitable agreement.
Mr. Overton then stated that it is not to be expected that his Government would fully meet every one of our important requests. I told him that in that case the only suggestion I could make would be that any such deficiency be compensated for by improved offers on other items; that the desideratum offered should represent in general the substantial equivalent of our requests. In the case of some of the items, however, he would realize that it would be very difficult to compensate for failure to grant the concessions which we asked.
Mr. Overton said that the Cabinet is meeting tomorrow on the question of the offer to be made to us, a subcommittee of the Cabinet having prepared a report and recommendations for consideration. He expects that he will be informed of the Cabinet’s decision about Thursday. He emphasized that in reaching its decision, the Cabinet will have before it all of the arguments which we have presented to him and which he in turn had transmitted to London. He said again, however, that he did not expect much improvement in the British offers.
In the course of the discussion Mr. Overton referred to the sacrifices which the British are making in consequence of the modification of their preferences in the Colonies and in Canada. In the latter connection, he referred to our request for the abolition of the preference on anthracite coal. He said that this was a particularly difficult question for them in view of the situation of the British coal mining industry. I replied that it was equally difficult from our [Page 44] standpoint; that in view of the situation of our coal mining industry some kind of arrangement would have to be worked out.
I referred in the course of the conversation to the fact that the British answer45 to our proposal on lumber was causing us a good deal of concern and that there seemed to be no solution in sight. I said that it is absolutely essential that some solution of this problem be found. Apparently the British have no solution in mind other than the specific duty which they have already suggested. Mr. Overton did indicate, however, that the specific duty might be considerably lower than the 28 shillings per standard which they had previously mentioned. He mentioned the figure of 21 shillings.