611.42321 SL/5–753

No. 970
Memorandum of Conversation, by the Deputy Assistant Secretary of State for European Affairs (Bonbright)



  • Mr. Lester B. Pearson
  • Mr. Ignatieff, Canadian Embassy
  • Mr. Merchant, EUR
  • Mr. Bonbright, EUR

The Canadian Secretary of State for External Affairs called on Mr. Merchant this afternoon and they had a 45-minute conversation. Mr. Pearson’s main points centered around (1) the St. Lawrence Waterway and (2) US trade policy.

St. Lawrence. Mr. Pearson stressed that this was a very big issue in Canada today and, after broadly hinting that elections would be held in Canada in the first half of August, he expressed the strong hope that work could be started by that time even if it was “just a shovel full.” He was very much worried lest a favorable decision by the Federal Power Commission be immediately followed by injunctions and court proceedings which would prevent work from starting and drag on interminably.
Trade Policy. Mr. Pearson indicated that this was becoming a very real issue in Canada and a source of real concern to his government. In response to Mr. Merchant’s question he stated that extension of the reciprocal trade agreement act for a year would help, as would the failure of certain restrictive proposals (i.e., the [Page 2087] Simpson Bill). Fundamentally however, he felt that the situation required more positive evidence that the new US Administration would fight for and carry out liberal trade policies. He said that our action with regard to cheese and dairy products had been hurtful (and in his view a violation of GATT). Canadians also feared adverse action on oats, milk, and metals (particularly lead, zinc and copper). In connection with the latter he pointed out that a number of marginal mines had been opened which would have to close down if they could not sell their products in the American market. Mr. Pearson thought that the election campaign would have a good many anti-American features reminiscent of the 1911 campaign when Sir Wilfred Laurier was defeated on the reciprocity issue. He personally wished that it might have been possible in the last two or three years for Canada and the US to have worked out a bilateral trade treaty. This was impossible now and Canada could not envisage a bilateral arrangement with us which left the British out. He spoke strongly in favor of the program presented by Mr. Butler1 and indicated that if a convertibility fund were set up, Canada would be prepared to contribute to it. He thought that if the Butler proposals failed the British will have no choice but to draw back and concentrate their efforts on the sterling area. This would have serious repercussions not only to Canada, which needed fuller access to UK markets, but to the free world generally. He admitted that Canada was going through a period of unusual development and prosperity but felt that this was deceptive in that Canada’s economic health was really dependent on others. He concluded that a memorandum on this subject was being left with the President.2
  1. For documentation on the economic program presented by British Chancellor of the Exchequer Richard Butler during his visit to Washington, Mar. 4–7, see Documents 375 ff.
  2. This memorandum entitled “International Economic Problems”, prepared by the Canadian Government, was handed to President Eisenhower by the Prime Minister during their conversation at the White House on May 8. The minutes of that meeting are printed infra. The only copy of the memorandum found is an undated draft located in Canada Embassy files, lot 63 F 87, “320 Canada–U.S., Prime Minister’s Visit”.