Memorandum by the Assistant Chief of the Division of British Commonwealth Affairs (Foster) to the Director of the Office of European Affairs (Hickerson)
Canadian Dollar Problem
The following is a summary of the developments of the past two weeks:
On September 18 Mr. Clifford Clark (Acting Minister of Finance in the absence of Abbott, who is still in London) visited Washington with the intention of talking with you, Thorp, and Southard of the Treasury.1 He spent an hour or so with Southard in the morning, and in the afternoon he met with Messrs. Ty Wood, Nitze, Jackson, Rosenson,2 and myself. We compared notes afterwards and found that the talks in State and Treasury were very similar.
I attach a copy of the memo relating to the State meeting,3 which you may wish to read. In brief, Clark (who was accompanied by Hume Wrong) emphasized the gravity of the Canadian problem and said that his Government was going to be compelled in the near future to apply import restrictions against the radios, refrigerators, etc., from the U. S. He scarcely mentioned the loan angle. He wanted to know whether we could give him any indication whether Canada was being included in our framing of the Marshall plan (not in terms of direct aid but as a partner in the reconstruction of the U. K. and western Europe). If Canada was included in our thinking, and he appreciated that we couldn’t say what Congress may do, his Government would apply the least drastic remedies to the present emergency and would declare them to be temporary. But if Canada was not included and if we felt that a “multilateral” trading world of comparative free trade and comparatively interchangeable currencies was a thing of the past, Canada would be obliged to apply very drastic and long-term remedies.[Page 125]
Mr. Ty Wood underlined to Mr. Clark and Ambassador Wrong that we were deeply concerned by the Canadian problem and anxious to do what we could to assist; he added, however, that there was no magic cure available to us in Washington. He said that the ITO and the Marshall plan would simply have to be made to succeed but he said he thought it would be a mistake for Canada to rely on either for any immediate solution of her problem. Even under optimum conditions the effect of the ITO and the Marshall plan might not be felt for a long time, perhaps years.
We feel that the meeting served two useful purposes. It brought us up to date on details concerning the problem and Canadian thinking about its solution. Secondly, it acquainted the Canadians with the fact that there is no easy remedy available at present at this end. As to the loan, it would have to be appropriated by Congress (which I suspect will be somewhat astonished to be asked to lend $500,000,000 to Canada); and as to the Marshall plan, it is in a very early stage. There isn’t much sign that Congress will give us in the Marshall plan, even if it is adopted, any great degree of flexibility in placing procurement in Canada or making US dollars available to the U. K. and western Europe for purchases in Canada.
On September 25 I talked with Hume Wrong for an hour about the problem. I attach a copy of my memo of conversation,4 which I recommend you read if you have time. This meeting served chiefly to set the record straight concerning the word which Hume had sent us, after the Clark meeting on the 18th, that he and Clark understood that “the next move was up to the U.S.”.
Ray Atherton arrives in Washington on Monday morning, September 29, for a week’s consultation. On Tuesday morning at 11.00 the following are meeting in Mr. Ty Wood’s office to talk further about the problem: Wood, Atherton, Southard (of the Treasury), Wayne Jackson, Nitze, Rosenson, and myself. I think you should be there: you’d get the latest developments at first hand and I think the group needs your wisdom. (Incidentally, Hume Wrong said, after the Clark meeting, “I think we need to have Jack’s imagination brought to bear on the problem”.)
P.S. As you will note in my memo of conversation with Hume, he told me that within a matter of weeks there will be a very high level approach, possibly by the P. M. to the President, about the Canadian [Page 126]problem. No doubt the approach will relate to a loan and to inclusion in the Marshall plan.
- Willard L. Thorp, Assistant Secretary of State for Economic Affairs, and Frank A. Southard, Director of the Office of International Finance, Treasury Department.↩
- C. Tyler Wood, Deputy to the Assistant Secretary of State for Economic Affairs; Paul H. Nitze, Deputy Director of the Office of International Trade Policy; Wayne G. Jackson, Special Assistant to the Director of the Office of European Affairs; and Alexander M. Rosenson, Assistant Chief of the Division of Financial Affairs.↩
- Memorandum dated September 18, 1947, not printed.↩
- Memorandum dated September 25, 1947, not printed.↩