233. Memorandum of a Conversation, Department of State, Washington, February 1, 1956, 1 p.m.1
SUBJECT
- U.S. Cotton Disposal Policy
PARTICIPANTS
- The Secretary
- Mr. Selwyn Lloyd, British Foreign Secretary
- Sir Leslie Rowan, Second Secretary of the Treasury
- Livingston T. Merchant
After lunch in the Secretary’s office this afternoon Mr. Lloyd raised with the Secretary the question of U.S. policy toward disposal of cotton on the world markets. He said that the British had left us a note on this subject2 but that he wished to underline the importance which the British Government attached to the problem. He stated that the uncertainty as to U.S. intentions in this regard is resulting in the [Page 651] futures market becoming virtually inoperative. On the other hand, if the uncertainty is resolved by a decision to dispose of cotton on a large scale, then the British fear is that the result will be to ruin the market for all other cotton producers. The Secretary said he was familiar with this problem and pointed out that he considered it essential to do something about it. He said that we cannot keep an umbrella over the rest of the world. The U.S. used to dominate the world cotton market but now plays only a limited role in it. Sir Leslie Rowan who was present interjected a remark concerning the evils of the two-price system.
The Secretary agreed that it created problems and pointed out that our own textile manufacturers were now pressing for higher tariffs and quotas by reason of the fact that foreign manufacturers were able to acquire their raw cotton cheaper than could be done in this country.
Mr. Lloyd concluded by saying that this particular problem troubled the British more than any other single economic matter. The Secretary said that we would study the memorandum which the British had left on the subject.