841.5151/7–1049: Telegram

The Secretary of the Treasury (Snyder) to the Secretary of State

top secret


2681. From Snyder for Acheson eyes only. RefEmbtel 2680, July 9.

Nothing in developments yesterday changed general views expressed reftel. Morning meeting devoted to exposition by Cripps of proposed import cuts to be announced Parliament Thursday. Neither Abbott1 nor I implied concurrence with or willingness to accept responsibility for cuts proposed by British. In conversations with Attlee this noon I propose to emphasize this position more strongly.
Tentative schedule of British import cuts from dollar countries amounts to approximately $400,000,000 against projected program, including cotton, tobacco, metals, newsprint and a wide range of other-commodities. This does not involve cancellation of existing contracts: Program has not been fully agreed within the British Cabinet, but at present it appears that cotton and tobacco purchases will not be materially changed from present levels of actual purchases. Cut in Canadian purchases may seriously affect Canadian position, (Contents this paragraph highly secret.)
Early afternoon representatives of 3 governments met to draft communiqué intended to be issued last night. Cripps, Abbott and I joined group at 4 o’clock, and worked out revisions until 5:45. This long session required mainly because British wished to insert sentence implying that neither US nor Canada considered devaluation of pound as an appropriate measure to cope with present British difficulties. I stated strongly that since question of devaluation had only been touched upon during discussions, I could not subscribe to a sentence giving such implication. Cripps countered with statement that if meeting of 3 Ministers adjourned without some type of reassuring statement, inference would be drawn by people that Abbott and I had put [Page 802] great pressure upon Cripps to devalue. He deemed it essential that something be said. After considerable discussion Abbott and I accepted statement saying merely that devaluation of sterling was not explored during discussions.2 We consented only on explicit understanding that Abbott and I could say to press, in words of our own choosing, that if matter was not discussed it was because we had always considered that IMF was appropriate forum for discussions of exchange rates.
Arrangements will be made this afternoon for continuing talks at technical level to explore facts. Technical exploration will take place both in London and Washington. Douglas, Harriman and I shall instruct our representatives to put on agenda for these discussions questions which will place upon British burden of proof for showing that their present and contemplated policies are sufficient. Our intent is that discussions should be as broad as possible. Agreed that these discussions will prepare groundwork for conversations at ministerial level immediately preceding Fund and Bank meetings in Washington. We do not expect that either technical or ministerial discussions will bear conclusive results and do not foresee manner in which we can influence British to early action.
Nothing in afternoon session relieved my discouragement concerning attitude of Cripps and his associates. While they purport to be striving toward multilateral trade and non-discrimination, it is apparent that they consider attainment of these objectives to be subservient to requirements of maintaining stability and thus protecting rigidities not only of UK but, now, of sterling area as a whole. It is difficult to see how any fruitful results can be obtained so long as British refuse to take fundamental steps which will shake out the rigidities and make their economy more flexible. However, I believe we can make use of the forthcoming conversations to stress strongly that such steps are necessary if continued economic cooperation between our countries is to bear fruit.
  1. Douglas C. Abbott, Canadian Minister of Finance.
  2. For the text of the final communiqué, released to the press on July 10, see the New York Times, July 11, 1949, p. 3, or Department of State Bulletin, August 8, 1949, p. 197.