840.50/10–1244: Telegram
The Ambassador in Canada (Atherton) to the Secretary of State
[Received 8:08 p.m.]
48. The subject of state trading as raised in the Department’s A–142, September 27, 5:55 p.m.98 was discussed today with Angus99 of External Affairs who will give definite answers in a few days.1 Beyond [sic] in the meantime he said basic Canadian policy does not contemplate conclusion of bulk purchase agreements extending transition period. The bacon contract for example was for 2 years and will expire in 1945. It contains no provision for prior termination or alteration should bacon come into long supply and other countries are in a position to sell on competitive terms. There was no definition of surplus in the contract. Britain agreed to purchase and Canada agreed to sell 900,000,000 pounds and any additional quantity if available at stipulated prices during the 2-year period. Use of resulting sterling is not covered in the Canadian contracts. Angus said Canada has operated with Great Britain on the Hyde Park principle.2 Through mutual aid, through greatly increased expenditures in Great Britain, in behalf of Canadian Armed Forces, and through other devious means Canada has sought and has succeeded remarkably well in keeping down her sterling balances.
Angus said lumber contracts would be between British timber controller and individual Canadian producers. From the Canadian side this would not be state trading and Canada would not necessarily know the provisions of the contracts. Although lumber deal has not yet been completed certain information is available from press releases et cetera. The objective of the deal is to provide for shipments of [1.2 billion] feet for each of the 2 years after the close of the European phase of the war. Timber controller Williamson has stated that this will amount to from one-quarter to one-third of total Canadian production.
The Minister of Trade and Commerce has stated that the United Kingdom officials are dealing direct with producers and further than [Page 90] [that?] the value “considerably exceeds the average annual value of pre-war total exports.” He also said that the deal covers hard and soft woods, pit props, and other lumber products. Apparently the deal is on the basis of current prices but the contracts will “provide for adjustments in price in accordance with variations in costs of production”.
In 1938, 44% of Canadian lumber exports were to the United Kingdom and 38% to the United States. The main competition in the United Kingdom market was from Scandinavia, the Baltic countries and Russia. In terms of post war trade the Canadian lumber interests are particularly fearful of Scandinavian competition with them. The deal apparently covers shipments in excess not only of pre-war exports to Great Britain but of current exports as well. The Government is definitely using the program as a means of reassuring the lumber industry that demand for its production as well as its place in the British market will be maintained after the war. Angus stated his conviction that lumber will be in acutely short supply for a long time to come.
The Canadian timber controller’s office has been advised by the Embassy that negotiations with the British are in progress and that conclusions have not yet been reached. We will continue to follow these talks and report further.
- See footnote 87, p. 77.↩
- Henry F. Angus, special assistant to the Canadian Under Secretary of State for External Affairs.↩
- Despatch 1569, October 13, from Ottawa (not printed), reported that an officer of the Embassy had been called that day to the Department of External Affairs by Mr. Angus to receive definite replies to the questions posed in the Department’s instructions; but that, as these replies did not add any information to that contained in the Embassy’s telegram 48, a further telegram was not being submitted at that time (840.50/10–1344).↩
- See statement released to the press by the White House April 20, 1941, regarding an agreement between President Roosevelt and Canadian Prime Minister Mackenzie King with respect to the exchange of defense articles with Canada, Department of State Bulletin, April 26, 1941, p. 494.↩