561.321D1 Advisory Committee/85
The Minister in Canada (Moffat) to the Secretary of State
[Received November 17.]
Sir: I have the honor to refer to the Department’s air mail instruction No. 629 of September 16, 1941, and to subsequent telephonic conversations with the Department on the basis of which I communicated to the appropriate Canadian authorities the substance of the Department’s telegram of September 6 [15]26 to the Embassy at Rio de Janeiro regarding the provision which was being made in the cotton program of the United States for the exportation of cotton to Canada.
I have received no reply in writing to my note addressed to the Under Secretary of State.
Thus far only two comments have been made to me in connection with the United States program. The first was a mild expression of regret that no sooner had Canada found a way of getting some dollar exchange (the Department will recall that Canada and Brazil had come to an agreement whereby Brazil would sell back to Canada for sterling one-half the American dollars spent by Canadians for Brazilian cotton purchases) than the American Government found itself obliged to take measures that in effect dried up this method of obtaining hard currency.
The second observation was to the effect that Canada had no particular objection provided the new American program did not result in raising the price of cotton to Canada. This angle has assumed particular importance since the Government has placed a ceiling on all prices; henceforth if the price of an imported component of an article rises the Canadian Government will have to take measures, either by way of tax remission, duty remission, or even Government purchase with subsequent re-sale to the manufacturer at a loss, in order to keep the price of the finished article from rising.
Respectfully yours,