641.116/2500: Telegram

The Ambassador in the United Kingdom ( Kennedy ) to the Secretary of State

1901. As reported in my 1842 of September 27, 6 p.m.,8 the Ministry of Food intends, when it meets with the packers, to raise the question of payment in either “sterling or goods”. It seems to us a dubious policy for American interests at this time to consider accepting [Page 218] payment for American goods in sterling under the terms which would mean an abnormal extension of credit particularly since the Embassy is engaged in facilitating the repatriation of American sterling assets. There is also as yet no reason why a British Government department has to resort to barter to cover dollar purchases. That stage may come but it is surely in America’s broader interest to stave it off as long as possible.

Since the discussions may result in the creation of precedent case what attitude shall Steere adopt when in accordance with your 1112, of September 29, 3 p.m.10 he attends the meetings of the Ministry of Food with the packers? Incidentally the American packers are in a generally strong position and they can use their strength here in the national as well as their own interest.

I might add that we have the impression that the Ministry of Food does not know yet really where it stands with the British Treasury in the matter of allocation of dollar assets and therefore such suggestions as above are being undertaken by the Ministry of Food in the expectation that the Treasury would approve of any resulting arrangement which had the effect of saving on increasing dollar assets.

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