Office of the Historian

611.4131/1845

Memorandum of Conversation, by the Assistant Chief of the Division of European Affairs (Hickerson)

[Washington,] October 18, 1938.

Mr. Overton of the British Trade Delegation came in to see Mr. Sayre by appointment at 3:30 this afternoon. He stated that he had, since his and the Ambassador’s last conversation with Mr. Sayre, been trying to work out a tobacco formula which would be acceptable to both Governments. He stated that our present proposal constitutes a “moral commitment” which his Government will probably feel that it is unable to give in view of all the circumstances surrounding the tobacco preference. He stated that the attached tentative formula had been approved by the permanent officials of the interested governmental departments in London, but had not been passed upon by the Cabinet. He thereupon handed Mr. Sayre and Mr. Hickerson copies of the attached formula, and stated that he would be glad to have comment upon it.

After reading the formula Mr. Sayre stated that, as he had previously informed the Ambassador, we do not rule out changes in language in our draft formula so long as its substance is covered. He stated, however, that the present British draft falls considerably short of meeting the substance of our proposal. He went on to say that he could, of course, give only a preliminary reaction to this draft, but that it appeared to him that there was little hope that the Secretary and the President would consider it acceptable. He added that he hoped very much that on reconsideration the British Government would find it possible to accept the substance of our draft. He stated that he would, of course, if the British desired, place a British counter-draft before the Secretary and the President along with the British replies to our other proposals regarding the trade agreement, but that he would be less than frank if he did not point out that he felt that [Page 65] the President and the Secretary would feel strongly that any proposal, to be acceptable to them, must cover the substance of our own proposal which is now before the British Government.

[Annex]

Tentative Tobacco Formula, October 17, 1938

In the course of the discussions leading to the Agreement signed this day, the United States Government have asked for a reduction in the preference accorded in the United Kingdom to Empire tobacco. The Government of the United Kingdom have recognised that this request is one to which the United States Government have attached much importance but they have been prevented from entertaining it by the existence of Agreements with several Governments within the British Empire which guarantee continuance of the present margin of preference until August, 1942.

The two Governments note that the increase in the importation into the United Kingdom of Empire tobacco in recent years has not led to a diminution in the importation of United States tobacco and the Government of the United Kingdom undertake that, if there is a material change in this position during the currency of this Agreement, they will be prepared before decisions are taken as to the level of the preference after August, 1942, to examine afresh the possibility of making some reduction in the margin of preference.