840.50/8–344: Telegram
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received August 3—12:20 p.m.]
6179. Coulson of the Foreign Office has given us an informal written reply to the representations we made to the Foreign Office following the receipt of Department’s 5473, July 12 (see also Embassy’s 5765, July 2079).
The reply states that the British have two principal reasons for entering into the food contracts in question. The first is to secure their supplies of food. They state that the commodities in question will probably be in scarce supply through the whole period of the contracts and they are hoping that an assured market will encourage the maintenance of production. The foods concerned have long been strictly rationed in U.K. and it is considered vital that arrangements be made to maintain the essential quantities required.
The second reason is that the contracts will, in the opinion of the British, prevent violent oscillations in the prices of the foods resulting from unrestricted competition for short supplies, the danger of which was foreseen at the Food and Agriculture Conference.
The British do not agree that the period of the contracts should necessarily be as short as possible but consider that the duration should be determined chiefly by the length of the period in which the commodities [Page 65] in question are expected to be in short supply. On this matter their judgment rests on commercial considerations.
The reply then refers to the question of including all the countries that have supplied U.K. previously or may in the future be able to supply U.K. on competitive conditions, and states that the British are certainly prepared to consider similar contracts with other supply countries so long as these can be made on equally favorable conditions and provided that in the interim period the U.K. exchange situation permits.
The British view is that there ought to be no unwarranted delay in passing out of the transition, during which it may be necessary to maintain special measures of control to restore the balance of trade. But they do not consider the contracts in question as having any connection whatever with such measures. Rather they consider the food contracts as the most favorable commercial bargain that they can make. They regard them, not as inimical to the long run objectives which U.S. and U.K. share, but as a positive contribution to restoration of stability. While they appreciate the apprehension that bulk buying from some countries may have unfavorable effects on other countries, they do not believe that there is any likelihood that such effects will be produced by any contracts which they are negotiating or have under consideration.
The reply concludes by emphasizing that the only reason why the long term contracts in question are with British Commonwealth countries is that those countries are in the main U.K. sources of supply for the particular foods concerned.
We are sending the exact text of the reply by air mail immediately.80