London Embassy files, lot 59F59,500 General
Memorandum of Conversation, by the Director of the Office of International Materials Policy (Brown)
Subject: Raw Materials Prices
| Participants: | Sir Oliver Franks, British Ambassador |
| The Viscount Knollys, Minister, British Embassy | |
| Sir Sydney Caine, Minister, British Embassy | |
| Mr. Hooper, Counselor, British Embassy | |
| Mr. Hall, Treasury Department, United Kingdom | |
| Mr. Muir, Raw Materials Ministry, United Kingdom |
The Ambassador opened the discussion by expressing the pleasure of his government at the opportunity for these talks.1 He then went on to explain the very great concern which his government felt as a result of the effects of the current high prices of raw materials. These high prices were not only having inflationary effects domestically in the United Kingdom, but they were in a very real sense interfering with the capacity and the will of the British people to cary out their share of the rearmament program.
The British Government felt that some action to counteract these high prices was essential and that the present lull in their upward movement was a propitious time. The British Government foresaw a probable further substantial increase in raw materials prices in the fall, when the United States and United Kingdom rearmament programs begin to bite.
[Page 946]The British Government felt that stability of prices was important and that it should be at a somewhat lower level than the prices presently existing. Some methods should be found of limiting the range of movement of prices. The British Government felt that most producers probably disliked violent fluctuations in price as much as the consumers did. At the same time, care should be taken in any arrangements worked out not to fix the level of prices in such a manner as to limit increased production.
The British Government felt that its concern was shared by other governments in Western Europe, particularly France.
The British recognized that the talks that were about to begin were entirely informal and that there was no question of trying to agree upon positions to be jointly sponsored in the International Materials Conference or elsewhere. The discussions were an exploration and exchange of views.
The British Government felt that the place where action for stabilization of prices should take place was the IMC. It felt encouraged at the progress which had been made there and was quite agreed that price action would have to be on a multilateral basis through the IMC committees.
The Ambassador stated that this problem was the subject of very general public concern in the United Kingdom and that the Chancellor of the Exchequer was very anxious to say something in Parliamentary debate before the end of the month which would reassure the people that the government was not only concerned about the problem, but doing something about it internationally. The Ambassador felt that the question of how this should be handled was a delicate one and said he would wish to discuss it with us at the end of the talks.
Mr. Thorp said that we too were glad to have the talks and that we felt the greatest informality should be observed.
It was agreed that if any questions were asked by representatives of other governments or of the press, the answer should be that Mr. Muir and Mr. Hall were here to discuss a variety of materials problems in the ordinary course of relations between the two governments. Mr. Hall had been here four times in the last seven months and Mr. Muir twice. If specifically asked whether we were discussing the question of prices, the answer should be “of course”.
It was also reported that the French had been informally notified of the talks, and it was agreed that if they asked any questions about what was being said they should be fully informed, but that the whole matter should be treated very casually with them.
- On June 28 the British had delivered to the Department of State an aide-mémoire suggesting that informal talks should take place between the United States and the United Kingdom concerning raw materials. The United States agreed to the suggestion on June 29 with the talks scheduled to begin in Washington during the second week in July. Copies of the British aide-mémoire and the U.S. reply are in file 397.6/6–2851.↩