800.515/1054: Telegram
The Chargé in the United Kingdom (Bucknell) to the Secretary of State
London, May 13, 1944—6
p.m.
[Received 8:58 p.m.]
[Received 8:58 p.m.]
3914. For those concerned with Article VII questions. No. 9 in the series. In an informal conversation Keynes said that the opposition to the monetary plan was a minor offshoot of the opposition to the commercial policy plan as latter is conceived by members of Parliament and the public who hold no accurate information on it and entertain the most erroneous notions of its nature. Keynes thought the debate on the monetary plan showed almost incredible stupidity. There were vague suspicions that the monetary plan might have some connection with the commercial policy plan. There had, however, already been a sharp reaction against the House of Commons on the matter. Keynes said the agitation against the monetary plan was instigated by two or three people only. He does not believe that it should be taken too seriously and thinks the monetary plan can be got through.
- 2.
- When asked why there was not greater appreciation by Parliament and the public of the vital importance to Great Britain of reduction of obstacles to trade, Keynes said that outside civil service and ministerial circles it was vaguely assumed that the commercial policy talks and the commercial policy plan had to do only with trade between Britain and the United States. In Britain the United States is not regarded as a leading potential market for British goods and there is more concern to obtain wider entry to other markets. United States tariffs are considered as of great importance in a multilateral framework but the reduction of United States tariffs without reduction in the obstacles to entry into the markets of other countries makes only a very limited appeal and would not be a sufficient inducement to Britain to enter into commitments that would drastically limit its freedom of action. The aspect of the commercial policy plan which [Page 42] would have the greatest appeal to Britain was its multilateral scope and that had not yet been revealed to Parliament and the public.
- 3.
- When asked whether he thought that Empire preferences were the main reason for the difficulties at the ministerial level regarding the commercial policy plan, Keynes replied that no doubt that played some part but much more important was the form in which the paper on the commercial policy discussions was drawn up. The central difficulty was that in the document the exposition at a number of points started out with flat prohibitions of certain measures and practices and only later introduced qualifications and limitations which indicated that the measures and practices could be resorted to in specified conditions and were not really “prohibited” at all in any absolute sense. This form of exposition might appeal to American opinion but the circumstances here were quite different. It was understood by the British that Lend-Lease would come to an end the moment hostilities ceased. Such a sudden move would obviously create serious difficulties unless some temporary substitute were found. It was obvious, however, that the United States could make no commitments concerning any substitute measure until after the elections.
- 4.
- In these circumstances the form of exposition adopted in the commercial policy document with its emphasis on the prohibitionary aspects of the plan had quickly run into grave difficulties when brought to the ministerial level after the return of the technicians from Washington. The absence as yet of any specific measures to fill the gap between the end of Lend-Lease and the reestablishment of British export trade is a matter of grave concern here and makes prohibitions of quantitative controls appear a remote and academic ideal.
- 5.
- Keynes believes that the substance of the commercial policy plan could be entirely preserved in a redrafted document which would do much to allay the fears that had been aroused in ministerial quarters by the existing draft. He said that in the drafting of the monetary plan he had constantly kept political factors in mind and frequently had slipped in phrases which without making any difference whatever to the substance of the plan spiked the guns of hostile critics or allayed the fears of honest doubters. He thought the Board of Trade drafters of statements on commercial policy had acted too much like civil servants and not enough like politicians.
- 6.
- Regarding the Monetary Conference, Keynes said, and this point was also made by Ronald in an informal conversation this morning, that it was impracticable for any leading Minister to leave the country now because of the second front and that therefore the British view was that the Conference should be intermediate between a purely technical conference and a fully political conference entering into [Page 43] final commitments. Asked as to his views on procedure regarding the international investment plan, Keynes replied that he expected to go to Washington himself and that he hoped that parallel with the monetary talks there would be purely technical United Kingdom–United States talks on the bank for reconstruction and development. He thought that if these talks made sufficiently rapid progress the subject might be thrown into the Monetary Conference before the latter ended.
- 7.
- Ronald like Keynes stressed the overwhelming concentration of the attention of leading Ministers on second front matters. He said further that in such circumstances commercial policy had the appearance to them of being academic. In the Foreign Office, however, they realized fully that the appearance conflicted with the reality in this matter. This morning Ronald was about to seek information as to the results of discussions with the Dominions Premiers on Article VII. He thought it probable that the discussions would be inconclusive.
- 8.
- We are assured from reliable sources that all the technicians who took part in the Article VII talks together with practically all civil servants in the Foreign Office share our views as to the urgency and importance of rapidly pushing forward the Article VII talks and economic reconstruction plans generally; that they have put forward their best efforts to make progress within the Government; and that they have not backtracked from the general positions they took in the informal talks in Washington. Obstacles to advance lie in ministerial circles.
- 9.
- From the conversation with Keynes referred to above and from other indications, it seems probable that future progress with long term economic reconstruction depends partly on parallel progress on systematic and comprehensive lines in planning to deal with transitional difficulties and especially those which will arise if Lend-Lease ends suddenly. Precise indications are not yet available of detailed British views on transitional measures in the economic field but we shall try to obtain further information at the civil service level. Keynes called attention to paragraph 12 of the paper given to the Department on the International Development Bank59 in which the proposed international institution is conceived as helping to bridge the gap between the limited amount of rehabilitation that UNRRA can accomplish and proposes [purposes] of the International Monetary Fund.
- 10.
- A short separate message will follow on points concerned with international transport. In future we propose to include comments on this subject in the Article VII series of messages.
- 11.
- Please bring this message to the attention of the Ambassador when he arrives and also of Gallman.60
Bucknell