611.4131/9–2445: Telegram
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received 9 p.m.]
9904. 1. Liesching in conversation with Penrose said the United Kingdom group would work intensively during voyage on detailed position they will take on basis of ministerial instruction. They are expecting United States group to make concrete suggestions on short cuts and on methods by which as far as practicable selective tariff cuts may be negotiated multilaterally. They remain apprehensive of delays involved in selective method and consider that opportunities for reduction of trade barriers will decline seriously if the procedure for reducing tariffs is cumbersome and slow. It seems likely they would be disturbed at idea of fixing date for international conference on trade policy far into 1946. They would like an earlier date.
2. The United Kingdom officials do not seem to have reached definite conclusions on the synchronization of discussions on tariffs and discussions on non-tariff barriers but it is unlikely that they will be prepared to give final undertakings on the non-tariff provisions until some conception is reached of the extent of the tariff cuts.
2. [sic] The developments in financial talks in Washington are being followed closely in United Kingdom and commercial talks will attract equal attention. Beaverbrook54 press attacks Keynes for statements on multilateral trade and on preferences but its viewpoint is unlikely to gain ground provided (a) balance of payments solution is obtainable and (b) an appropriate strategy of negotiation is followed in regard to interrelationship between commercial and financial talks.
[Page 135]3. Regarding (a) little comment is needed in view of United Kingdom delegation’s statements in Washington. Liesching in conversation referred to above again emphasized that proposals would continue to be judged by their contributions to the restoration of equilibrium. This point and its implications with respect to loans have been frequently made in informal talks and private conversations here.
4. As regards (b) it is clear that the main reason for earlier United Kingdom hesitation to enter into negotiations on commercial policy commodity agreements and cartels at the same time as the financial negotiations was the fear that we intended to use financial necessities of United Kingdom as a means of trying to force on them our views on the other questions. Though the atmosphere has improved there is still some uneasiness here on this point. Earlier cabled news reports that United States would demand instant and complete abolition of preferences in return for financial aid created public opposition here. Even that section of United Kingdom opinion which is most opposed to preferences would be antagonized if a demand for their abolition were put in this form. On the other hand results in line with our policy should be obtainable if reductions on preferences are linked with reductions on tariffs and if position is taken that article VII involves obligation to make greater proportionate reductions in preferences from the start and their abolition later. This approach will appeal to all parties except the Amery55 group of Tory imperialists and the Beaverbrook clique who are fighting for Empire preference, an exclusive sterling area and bilateral bargaining since in the minds of the public here the Ottawa measures in 193256 are regarded largely as a response to the Smoot-Hawley Tariff in 1930.57
5. The great majority in United Kingdom agree that the success of any financial remedies depends in part on trade policies. It can be pointed out that this view is also implicit in the United Kingdom position that any proposal must be judged by the extent to which it provides means of attaining future equilibrium in the balance of payments.
6. However as far as United Kingdom public and parliamentary opinion are concerned it is of greatest importance that statements on the interrelationships between financial and commercial measures shall not carry any implication that the United States is using the financial negotiations as a means of forcing United Kingdom to accept United [Page 136] States proposals on commercial commodity and cartel policy. In existing conditions here the strategy that holds best prospect of lasting success of broad United States policies would be to treat each of the broad groups of questions on the agenda on its own merits and endeavor to reach a solution the intrinsic soundness of which is recognized on both sides.
7. A second reason in favor of this approach is that if balance of payments difficulties can be overcome there will be no need of pressure to persuade the United Kingdom to support drastic cuts in trade barriers. It may be predicted that Liesching and his group will criticize United States proposals on trade barriers for not going far enough rather than for going too far.
8. All sections of the United Kingdom public and political parties feel that the serious external financial position of United Kingdom is the result of the scope and intensity of the United Kingdom war effort. The United Kingdom public has been prepared for difficult times ahead. Food and clothing conditions are even more stringent here now than during a large part of the war period. The fuel shortage this winter will involve greater hardship than at any time during the war. Austerity is still preached and accepted as inevitable for some time to come. With increasing realization of future difficulties there is no serious demand for scrapping of economic controls. Adverse criticism is confined mainly to rate of demobilization and reconversion. The indications are that the United Kingdom public would be prepared if necessary to endure scarecrow conditions for some time to come.
- William Maxwell Aitken, Lord Beaverbrook, publisher of the Daily Express and Evening Standard. ↩
- Leopold S. Amery, Conservative Member of Parliament, formerly British Secretary of State for India and Burma.↩
- Reference is to the system of bilateral treaties inaugurated at the Imperial Economic Conference, held in Ottawa in 1932, whereby various Commonwealth members extended preferential treatments on tariffs to one another. For texts of agreements, see British Cmd. 4174, Summary of Proceedings, pp. 19–94; British and Foreign State Papers, 1932, vol. 135, pp. 250–264, 799–800; ibid., 1933, vol. 136, pp. 501–520.↩
- Tariff Act of 1930, approved June 17, 1930; 46 Stat. 590.↩