Foreign Relations of the United States Diplomatic Papers, 1941, General, The Soviet Union, Volume I

561.311F1 Advisory Committee/1935: Telegram

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

London, September 17, 1941—8 p.m.
[Received September 17—7:20 p.m.]

4346. Department’s 3687, September 9, 6 p.m.⁹⁹ British authorities indicate October 1 as earliest possible date for resumption wheat discussions and would much prefer October 15.¹

It appears that draft wheat agreement precipitated sharp differences within the Government. Appleby, Evans, and Steere shortly after their arrival in discussing the draft with Ministry of Agriculture officials found the strongest opposition to the reduction of production proposed for importing countries. Treasury officials including Keynes² were likewise strongly opposed on general grounds but more particularly the proposed price formula. Interviews with several Cabinet Ministers showed that Cabinet had been briefed and was impressed with the above objections to British acceptance although general recognition was voiced of the desirability of an agreement.

In all their discussions our representatives have been at pains to stress the importance attached to the agreement by our Government both as a step in British-American collaboration and as a matter of great post-war agricultural and social significance. It is believed that our views are today understood and we are not to be satisfied with limited objectives. In any event following discussions in the past week with Leith-Ross and an interministerial group of some of the points in the draft to which they objected and certain tentative proposals for modification, the British indicated that they fully intend to come to an agreement though they hope for some changes in form and content.

The principal British objections and suggestions, some of which seem to be well taken, include the following.

1. Covering note of draft. If publication visualized British Government believes considerable revision required to avoid giving highly dangerous handle to enemy propaganda suggesting Anglo-American diktat detrimental to European farmers.

2. In fact British question whether the text of agreement should not be entirely redrafted at least in respect to provisions affecting importing countries out of deference to their natural desire to be consulted rather than be confronted with a completed document for signature. The idea is that the agreement might better be taken [in] two bites, the first a five-power pact now setting out (a) the exporters’ undertakings and (b) those of the United Kingdom, including a commitment to participate in a common front in approaching the other importing and exporting countries immediately after the war for a broader second agreement based on certain principles and objectives to be agreed now. The British intimate they can go farther next autumn than they feel they can or should now (for political and war reasons) in a more precisely worded document. This merits careful consideration.

3. Treasury representatives raised the whole question of importer post-war purchasing power for increased takings of wheat implicit in agreement and stressed importance to continental countries. Our representatives recognized its importance but held that matter went far beyond scope of wheat agreement and that it must be assumed that governments would tackle this problem separately. Leith-Ross concurred.

4. The British object to the proposed price formula both in principle and in particular. They say they agree that wheat prices should be fair to producer and consumer alike but they were not fully prepared to agree that wheat prices should be in line with prices of other products. They emphasize the vagaries to which indexes may be subjected, particularly the uncertainty of monetary factors but their objections are not merely about technique. The Treasury is concerned about the cost and thinks prices should have regard for available supplies and that “rigidity” is dangerous. It would obviously like to see Britain keep a free hand for bargaining. Food Ministry and some others seemed more receptive to our viewpoint. Our representatives admitted that present formula may not be suitable or acceptable now but stressed importance which exporters attach to some formula as a guiding principle.

5. Regarding the curtailment of production proposed for importers the British would prefer a quantitative commitment as to imports. Our representatives expressed view that continental importers would find such a commitment if adequate in scope even more onerous than one on production. Final British suggestion was that they might agree to reduce “below the pre-war level” but without specifying how much. We have stressed the fundamental importance of this whole proposal.

6. Leith-Ross said his Government is prepared to help police the export quotas but felt they should not be expected to do so alone, i. e., such other importers should also agree as are needed to make policing effective. They also attach great importance to Russia’s early adherence.

7. Britain likewise attaches importance to voting powers. Leith-Ross thought voting rights might be based on wheat imports and exports. We said that we favored equal votes for all countries and thought that special importer and exporter interests could be safeguarded by rules governing voting on matters affecting importer and exporter respectively. This was not rejected.

8. Leith-Ross group had not yet considered the supplementary agreement (wheat union) but Cereals Division of Food Ministry recently invited Evans and Steere to discuss it. Ministry representatives said Ministry, British grain trade and millers fully anticipate that Government control of wheat imports will continue for several years after the war and they personally thought that central marketing machinery had many desirable features. Their chief concern was that it might remove inducement to carry stocks in this country unless steps taken to safeguard. There are some indications British will add to their wheat delegation.

Department’s air mail instruction No. 553, September 4, received yesterday and is being communicated.

Winant

99. Not printed; it contained instructions to ascertain whether September 22 would be acceptable date for reconvening the wheat discussions in Washington (561.311F1 Advisory Committee/1033a).
1. The opening session was set for October 13, but discussion of questions of substance was deferred to October 14 because of the inability of the Argentine representative to arrive before that date. For list of representatives present at these discussions, see Department of State Bulletin, October 18, 1941, p. 302.
2. Baron John Maynard Keynes, member of British Chancellor of the Exchequer’s Consultation Committee.