Memorandum of Conversation, by the Secretary of State


Participants: The President
Prime Minister of Canada, Mr. Louis St. Laurent
Secretary Acheson

After luncheon at the Blair House on Saturday, February 12, the President and the Prime Minister retired for a general discussion. Secretary Acheson was present.

The Prime Minister reviewed briefly the situation confronting his Administration. He said that in the economic field Canada’s former position, of selling largely in Europe and buying largely in the United States, probably could not be recovered.

The Prime Minister said Canada must hope to balance its payments with the United States by producing more of the goods which it could sell to us. If Canada would, as seemed hopeful, develop petroleum resources and its own coal supplies, he thought it would relieve a burden on U.S. resources and free dollars for other purchases. He said Canada hoped for closer trade relations with the United States.

On the political side, the Prime Minister stated that his Administration faced a general election within eighteen months and he expected that the election would not be postponed to the end of this Parliament’s life.

The Prime Minister made specific suggestions on U.S. orders for some military items in Canada. He stressed the importance of furthering adoption of common equipment by the two forces. This meant, he said, the purchase of many items by Canada in the United States with the help of our forces—but this took dollars badly needed. He said Canada herself could concentrate on a few items which it could produce economically if orders were in volume. He asked if the United [Page 395] petition. Unitl it becomes clear whether it will be feasible to negotiate, after the Canadian elections, a far-reaching arrangement, it is believed that we should not undertake limited tariff negotiations.

The President said that the Prime Minister’s suggestion deserved most careful examination and directed Secretary Acheson to institute a study. (Secretary believes this should not be through NSC)

The Prime Minister said he was greatly disturbed over the possibility that ECA might end the financing of British wheat purchases in Canada. He said this would have a disastrous effect on the Western provinces and on the whole Canadian-British and Canadian-U.S. trade. It was explained to the Prime Minister that the problem centered on whether the present law was continued which made financing impossible of wheat declared surplus in the United States and on whether wheat became surplus here. It was also pointed out that the wheat agreement had a direct bearing and that Canada could be very helpful by assisting in getting British cooperation for an agreement. If no agreement occurred and the world prices fell, the United States Government would be in a difficult position in acquiring wheat under price support procedures and still financing sales in Canada instead of supplying its own wheat. The Prime Minister said he understood and would try to be helpful. (Labouisse, Nitze and Thorp1 should note this)

The St. Lawrence project was briefly mentioned and the Prime Minister stressed Canada’s great interest in it. The President assured the Prime Minister that his demonstrated desire for the project continued.

The Prime Minister said he recognized the legal commitments in the Newfoundland base agreements2 and did not propose to change them. He suggested the possibility of an exchange of notes by which the parties might express the intention, for the present, to exercise undoubted legal rights in certain ways which would not push the rights to the limit. He referred to some management of imports for post exchange, duty free, which would control bootlegging. He also mentioned some treatment of military personnel who violated the law when not discharging duties compatible with regard to Canadian sovereignty. The President expressed a desire to facilitate examination [Page 396] of this proposal in a sympathetic way and directed Secretary Acheson to see that discussions were had.3

In response to a general suggestion for reduction of trade barriers, it was agreed that we had to proceed slowly to avoid raising fears on both sides of the border. We should always be glad to discuss any points raised.

The meeting ended with mutual expressions of esteem.

D[ean] A[cheson]
  1. Henry R. Labouisse, Coordinator of Foreign Aid and Assistance; Paul H. Nitze, Deputy to the Assistant Secretary of State for Economic Affairs; and Willard L. Thorp, Assistant Secretary of State for Economic Affairs.
  2. Reference here is presumably to the Leased Bases Agreement of March 27, 1941, between the United States and the United Kingdom (Executive Agreement Series 235; 55 Stat. 1560). The commitments made in that agreement were under review by Canada because the territory of Newfoundland was scheduled to become a part of Canada on April 1, 1949.
  3. An exchange of notes effected In Washington on July 19 and August 1, 1950, modified the 1941 Leased Bases Agreement, by substituting an entirely new Article IV regarding jurisdiction, and modifying Article VI as it related to the new Article IV; for texts, see Department of State, Treaties and Other International Acts Series No. 2105; or United States Treaties and Other International Agreements, vol. i, p. 585. For information regarding a 1949 agreement respecting Newfoundland military air bases, see p. 417.