840.50/3639: Telegram

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

2389. The United Kingdom–Dominions talks on Article VII question[s] have now ended after 3 weeks intensive discussions with two and sometimes three meetings a day. The British have been urged by the Dominions to resume their talks with us as soon as possible.

For those concerned with Article VII discussions—No. 7 in the series (see especially Embassy’s 56 of January 4, 5 p.m.) all indications point to the beginning of May as the earliest practicable date and Opie shares this view.

The chief Australian technicians have been changed in each of the successive United Kingdom–Dominions talks on Article VII matters. This time Nobe [?] was the chief member. Australian participation [Page 26] has been on a different basis from Canadian. Whereas the Canadian technicians have had a fairly free hand within general policy limits, the Australian technicians have been bound by rigid instructions. They have been obliged to refer back to Canberra even on points of detail and a large volume of cables appears to have passed. There is reason to think that the Australians have been willing to accept fairly wide measures but usually with some form of escape clause, especially on commercial policy. Judging from these indications it may be expected that Australia will raise far more difficulties than the other Dominions and Great Britain in the working out of Article VII agreements.

Canadian views on the form of international organization dealing with commercial policy and commodity agreements expressed in confidential conversations are on the following lines: It is undesirable to multiply separate bodies more than is strictly necessary since coordination of a large number of separate specialized bodies is more difficult than coordination of a smaller number of broader bodies with specialist subgroups. Therefore there should be one commercial policy organization which should include commodity agreements and the discussion of cartel questions as well as what commonly goes as commercial policy. There would be a commodity agreement section within the general organization. It would work out principles of commodity agreements, and proposed agreements by Governments would be submitted to it for comment. It would evaluate and make recommendations on the draft agreements. It would not have power to veto proposed agreements. If it made an adverse recommendation any Government or Governments involved could appeal to the full commercial policy organization which would pass on the controversial points. If the Governments concerned did not accept this advice the commercial policy organization might exclude them from certain advantageous commercial policy arrangements relevant to the commodities involved.

On the monetary organization, the Canadians appear to have taken the view that once the principle of a fixed fund was established the question whether the Unitas46 or the non-Unitas version should be adopted was unimportant. Though the British have not yet reached a decision the indications are, from private Dominions as well as British sources, that they will accept the non-Unitas version. Opie and certain Dominions economists have urged them to do so.

[Page 27]

An able Dominions economist discussed privately the British attitude on cartel questions. He stressed the great differences between the historical backgrounds in United States and United Kingdom on monopoly. Britain, he said, concerned itself very little about monopoly during its long period of almost complete freedom of trade, when external competition severely limited the possibilities of domestic monopoly. In the same period the United States was becoming increasingly protectionist and domestic monopolies were built up in part behind the shelter of tariff walls. Some American observers, he pointed out, believe that drastic cuts in tariffs would be more effective than any amount of legislation in restraining domestic monopolies.

In the 1930’s Britain became a protectionist country but at the same time the Axis Powers adopted increasingly autarchic policies and British bilateral and cartel policies were in part considered as methods of self defence in a world rapidly heading for war. The Axis Powers had set the pace and Britain was obliged to a considerable extent to use similar weapons. Consequently, he said, there has not been in the minds of the British such an association of cartels and monopoly with moral turpitude as has grown up in many circles in the United States where the individual participating in monopolistic arrangements is regarded almost as a felon.

In addition, of course, in Britain there has been little systematic investigation of monopoly and almost none of cartels.

We would add to this point of view that British who attempt to read the literature on American experience in regulating monopoly tend to become confused particularly by conflicting American opinions on the practical effectiveness of legislative regulation. Among some of them there seems to be a tendency to exaggerate the difficulties of control but a group of financial journalists has increasingly taken up the attack on British monopolies and on international cartels. There has so far been very limited discussion of patent questions in relation to monopolies.

Meade,47 in a private conversation, indicated that slow progress is being made by the British working on the problem of monopoly and cartel policy. So far attention has been devoted largely to the question of domestic policy which he believes must be clarified before it will be possible for the British to embark upon useful discussions of the international problem.

Meade agreed that it was desirable that British and American technicians should each give advance consideration to the issues regarding cartels which the other side regards as important. He hinted the [Page 28] difficulties were at the Ministerial level. The coalition Government, he said, contains representatives of many interests and points of view, including those favorable to monopolies and cartels as well as those favoring a strong anti-cartel line, and it is at best a slow process to work out a program acceptable to everyone.

  1. Proposed monetary unit of the Fund. See part IV of the preliminary draft outline issued by the Treasury Department April 6, 1943, Department of State publication No. 2866: Proceedings and Documents of the United Nations Monetary and Financial Conference, Bretton Woods, New Hampshire, July 1–22, 1944 (Washington, Government Printing Office, 1948), vol. ii, pp. 1536, 1543.
  2. James E. Meade, of the British Board of Trade.