Foreign Relations of the United States, Diplomatic Papers, 1944, General: Economic and Social Matters, Volume II

800.24/9–2144

Memorandum by the Secretary of State to President Roosevelt

Washington, September 21, 1944.

There is transmitted herewith a copy of a policy document on the future of the Combined Boards for your information in the event that this question, on which you have previously corresponded with Mr. Churchill, may arise for current discussion. This document has been approved by the Executive Committee on Economic Foreign Policy and is intended to serve as an instruction to a United States committee for conversations on the future of the Combined Boards with a British committee.

C[ordell] H[ull]

[Enclosure]

No. ECEFP D–54/44

September 20, 1944.

executive committee on economic foreign policy committee on wartime trade controls

The Future of the Combined Boards

It has been and is the long term objective of this Government to work toward an expansion of private international trade on a multilateral basis without discrimination or undue restriction. Wartime trade controls and governmental participation in trade have been introduced for the purpose of effective prosecution of the war in all its phases. All such controls and governmental participation cannot be eliminated as soon as the war ends. Steps should be taken, however, to set limitations on such controls, consistent with the solution of major national and international problems arising during the transition from a wartime to a peacetime economy. Among other things, this calls for a reexamination of the scope of operations of the Combined Boards.

Present Work of the Combined Boards

The three boards in question—the Combined Food Board, the Combined Raw Materials Board, and the Combined Production and Resources Board—were set up to secure the most efficient disposition, in the light of war needs, of the resources of the non-Axis world.⁹¹ All supplies and facilities were to be regarded as a pool and related to total requirements. As a result, almost every Board recommendation has foreign trade implications. New trade patterns have been set up. Export and import markets have been established which often do not coincide with a preestablished or normal basis. Such dislocations are, of course, inevitable in wartime.

Recent Examination of the Future of the Boards

Preliminary discussions concerning the Combined Boards were brought to a head when on July 20, 1944, Sir Ronald Campbell addressed a letter to the Under Secretary, requesting the opinion of this Government on the future of the Combined Boards. This letter has been acknowledged and copies sent to the U.S. members of the three Boards mentioned above, with the suggestion that the U.S. members meet with their British and, in appropriate cases, Canadian colleagues⁹² in order to obtain a preliminary statement of the recommendations of those immediately concerned with the operation of the Boards. Sir Ronald Campbell’s inquiry has underlined the urgency of reaching a judgment with respect to the American position. The lack of a clear definition of the future status and of the proper sphere of current operations of the Combined Boards has led to uncertainty on the part of the operating officials.

Preliminary Position of the United States Concerning Membership on the Boards

Abolition of the Boards, so long as war needs exist, cannot be considered. Direct enlargement of membership has been considered, but seems inadvisable at this time because of reasons of security, because the primary responsibility for meeting supply problems must fall upon the United States and the British Empire, and because working relations cannot now be readily established with a large group of countries. It may become advisable, however, to place on certain important committees of the Boards representatives of other countries when their peculiar position as important producers or consumers should be taken into account. This has already been done on occasion, and in the future consideration should be given to the principles and methods by which added representation may be given.

Preliminary Position of United States Concerning Scope of Operations

It is believed that the scope of operations of the Boards should be redefined. Put in the most general terms, the Boards should restrict their allocation recommendations to cases of (1) items which are in short supply and which are needed for direct war purposes or for the maintenance of essential civilian economies, related to the war and to the transitional period, and (2) to items the transportation of which involves so substantial a use of shipping that uncontrolled movements might lead to undue waste of shipping facilities. The Boards should themselves be able to decide what items, within these limits, they consider will require their recommendation of future allocations. In deciding upon what items are not in short supply, the Boards should appraise what would be the net annual global position, after the removal of allocation recommendations. But even in the case of a short item, the Boards should recommend allocations of only that part of the supply which is necessary for the war effort, or the maintenance of essential civilian economies, related to the war and to the transitional period, and should not feel it necessary to recommend allocations of the total supply in all countries. They should keep in mind that, so far as is consistent with the prosecution of the war and the adjustment of scarcities in the transitional period, the urea of free movement of commodities and products in international trade should be progressively enlarged.

This position is taken because it is believed that the Boards were set up to handle specific war problems and, by the very nature of their organization, are not designed to handle other than wartime problems. In the period of war mobilization the control mechanisms upon which the Boards relied were directed toward a limited common objective. As the war supply problems ease, the need for the type of combined economic operation carried on by the Boards decreases. The Boards have been appropriately limited in membership. As more nations become free, this limitation will increase concern about United States-British Empire domination. In the near future it will not be easy to justify United States-British Empire decisions concerning the allocation of supplies of other nations. Furthermore, the dislocation of trade patterns, occasioned by the war and made effective through the Boards, creates opportunity for discriminatory national advantage. Within the British Empire differences of opinion, which are suppressed in wartime, will arise and it will not be to the interest of the United States to become involved unnecessarily in these disputes, as it would if it remained a senior partner on the Boards.

However, it is felt that informal consultation and interchange on common industrial and agricultural production problems of a technical nature may be useful in the transition to peace as well as in war. Therefore, the Boards with their statistical and technical staffs and background of experience may continue to act as convenient forums for such informal discussion and interchange.

Corollaries of the Preliminary United States Position

This position that the Boards should restrict their activities to questions of short supply and transportation has a number of corrollaries. It means:

(a) That the Boards should not recommend allocations of long supply items, except when transportation considerations make them necessary;

(b) that the Boards should not use allocation recommendations of items in short supply to increase exports of long supply items;

(c) that the Boards should not make recommendations for the purpose of controlling foreign prices of items in long supply, or of items in short supply that are not necessary to the war or to essential civilian economies;

(d) that the Combined Boards should not recommend allocations of capital goods for export for long-term reconstruction and industrialization, except where such goods are both in short supply and an allocation is necessary to meet direct war needs or to maintain essential civilian economies in the transitional period;

(e) the several member governments would be generally expected to advise the appropriate personnel of the other member governments in advance of effecting substantial cutbacks in procurement or development procedures in third countries.

Transitional Surpluses

If the scope of the Boards’ operations is to be gradually contracted, the question arises as to what steps need to be taken to handle transitional problems, particularly those of surplus commodities. It is recognized that the Combined Boards have statistical and technical facilities concerning many commodities and products, and these should be maintained in operation. It is recognized also that the problems of transitional surpluses can be advantageously studied by the technical staffs of the Combined Boards.

Although the Boards are inadequately constituted to deal with surplus situations, the problem of surpluses will come before the technical staffs dealing with commodities. The exchange of information between the technical staffs should be continued as long as the Boards continue in existence or until some international mechanism is established to deal with post-war commodity problems. The United States officers of the Combined Boards, with the assistance of other interested agencies, should draw up and submit a statement of findings to the Executive Committee on Economic Foreign Policy for the Committee’s consideration and recommendation of action where surpluses are found. Until the United States position is established United States members of the Boards and the technical staffs should not undertake to formulate solutions of surplus problems with, the representatives of other nations.

91. For documentation relating to the establishment of the Combined Boards, see the records of the First Washington Conference, December 22, 1941–January 12, 1942, to be published in a subsequent volume, Foreign Relations, The Conferences at Washington and Casablanca, 1941–1943.
92. Canada was a member of the Combined Food Board and the Combined Production and Resources Board.