Foreign Relations of the United States: Diplomatic Papers, 1942, General; the British Commonwealth; the Far East, Volume I

561.311F1 Advisory Committee/1070a: Telegram

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

Washington, February 12, 1942—9 p.m.

547. Your 6255, December 28, midnight,² and 76, January 6, midnight.³

A. After receipt of instructions awaited since meeting of November 26, the United Kingdom Delegation stated on January 29 that their Government is unwilling to conclude a definite wheat agreement at this stage for reasons previously indicated, although the problem presented by Russia and other non-represented countries was especially stressed. The United Kingdom Delegation suggested that arrangements be made for convening later a wider conference and that the progress made at this meeting be recorded for reference to the future conference.

B. The United States Delegation, after consultation with the delegations of the other three exporting countries, accordingly proposed at the meeting of February 9 that the five countries represented adopt the following “Memorandum of Agreement” which each Delegation has agreed to submit to its Government for consideration:

• “1. Representatives of Argentina, Australia, Canada, and the United States, wheat exporting countries, and of the United Kingdom, a wheat importing country, met in Washington on July 10, 1941 to resume the wheat discussions which were interrupted in London at the outbreak of war in September 1939 and to consider what steps might be taken toward a solution of the international wheat problem.
• 2. These discussions extended over a period of many months. They have made it clear both that a satisfactory solution of the problem requires an international wheat agreement, and, that such an agreement requires a conference of the nations willing to participate which have a substantial interest in international trade in wheat. With a view to facilitating the work of such a conference, the Washington wheat meeting has recorded the results of its deliberations in a draft convention, which is attached to this memorandum, for consideration at such time as further international consideration of the subject may be possible.
• 3. The Washington wheat meeting has recognized that it is impracticable to convene at the present time the international wheat conference referred to above. Accordingly, they have agreed that the United States should convene a wheat conference of the nations having a substantial interest in international trade in wheat and willing to participate, as soon as, after consultation with other countries, it deems the time propitious, to which the preparatory work of the Washington meeting embodied in the attached draft will be submitted for consideration.
• 4. In the meantime there should be no delay in the provision of wheat for relief in war-stricken and other necessitous areas as soon as the termination of hostilities permits. Likewise it is imperative that the absence of control measures over the accumulation of stocks in the four countries now producing large quantities of wheat for markets no longer available should not create insoluble problems for a future conference. Accordingly, the five countries present at the Washington wheat meeting have agreed to regard as in effect among themselves, pending the conclusions of the conference referred to above, those arrangements described in the attached draft convention which are necessary to the administration and distribution of the relief pool of wheat and to the control of production of wheat other than those involving the control of exports.
• 5. If the conference contemplated above shall have met and concluded an agreement prior to the termination of hostilities, no further action is needed by the countries represented at the meeting. However, if this is not the case, it will be necessary, in order to prevent disorganization and confusion in the international wheat trade, to institute temporary controls pending the conclusions of the conference. Accordingly the five countries agree that at the termination of hostilities and pending the adoption of a wheat agreement by the conference referred to they will regard as in effect between them those arrangements in the attached draft convention which relate to the control of production, stocks, and exports of wheat and to the administration thereof.
• 6. Failing any other arrangement, the five countries will continue as the price of wheat the average f. o. b. prices paid by the United Kingdom for wheat imported during the 30 days prior to the cessation of hostilities from the principal country of supply, the corresponding basic prices for the other countries being calculated by taking into account appropriate quality differentials and the average rates of exchange prevailing during the 30 days in question, provided that on the request of any country having a substantial interest in international wheat trade the prices of wheat shall be determined in accordance with the price arrangements described in the attached draft convention and that so long as the United Kingdom is the only importing country participating in this arrangement the concurrence of that country in such determination shall be required.
• 7. The provisions of this memorandum will be superseded by any agreement adopted by the proposed wheat conference or by any arrangements which the five countries and other interested countries may make to deal with the period pending such a conference. In any event they are to terminate at the end of 2 years from the termination of hostilities.”

C. The “attached draft convention” referred to in the above Memorandum is the draft agreement which has been under consideration by the wheat meeting and which is now completed except for a few outstanding points. The price provisions thereof are different from those previously proposed by the delegations of the four exporting countries. The basic provision of the now proposed price Article (paragraph 2) under which decisions would require a two-thirds majority vote, including the vote of the United Kingdom, reads as follows:

“The Council shall fix basic minimum and basic maximum prices of wheat c. i. f., United Kingdom ports, which (a) return reasonably remunerative prices to producers in exporting countries yet are fair to consumers in importing countries, (b) are in fair relationship to prices of other commodities, and (c) give appropriate consideration to changes in exchange rates and transportation costs.”

D. It is believed that postponement of a definitive agreement until such time as it might be considered by a wider conference fully meets the United Kingdom position regarding non-represented countries. Furthermore, the draft convention attached to the Memorandum would, as suggested by the United Kingdom Delegation, make available the results reached at this meeting as a point of departure for the work of a future conference. In addition the Memorandum provides for the establishment immediately of a relief pool of wheat and for general control of wheat production during the war period. It also provides upon the cessation of hostilities, pending the conclusion of a definitive agreement, for further temporary wheat controls and for the continuation of the wheat prices prevailing immediately prior to such cessation. These provisions are deemed essential by the exporting countries to prevent post-war confusion in the wheat trade which would further complicate the problems of a future conference in the event such a conference were not called until after the war. The provision for continuing the prices at the end of the war is based on a suggestion which Salter made in earlier discussions (W. W. M., Minutes, 37/41).

E. You may inform the appropriate British authorities that the President has been consulted regarding the difficulties encountered in the wheat discussions and the views of the United Kingdom Delegation and that he has indicated his support of any efforts that might be made to obtain worthwhile results at this time. It is believed that the above proposal would represent substantial progress toward a solution of the problem and fully meets the United Kingdom position. You may also say that in view of the already prolonged discussions it is believed that the wheat meeting should be brought to a conclusion as early as possible and that the above proposal was put forward with this consideration in mind.

Hull

2. Ibid., p. 554.
3. Not printed.