241. Telegram From the Embassy in the United Kingdom to the Department of State1

4857. For Secretary from Bruce. Pass to White House. I would like to emphasize how essential I think it is that the US exercise more than usual caution and restraint in whatever official statement or comment we make initially about the UK budget.

I recognize that in view of the attention which this budget is attracting, and the importance it is expected to have on the future of sterling, the US will be pressed to provide its official views at the earliest possible moment. I also recognize that in view of the present uncertainties in the exchange markets, we will want to state our opinion with promptness, and in a manner that will be as helpful as is possible under the circumstances toward removing the doubts about sterling.

Nonetheless, I think we should take care to avoid responding too quickly and too enthusiastically to the British proposals. Such a response [Page 488] might not appear genuine to the rest of the world, and we might engender suspicions that the US and Britain had jointly planned the budget and our response, which would be most unfortunate. Particularly, with the experience of last autumn surcharges, many of the Europeans and others are only too ready to suspect the Anglo-American Special Relationship in matters such as this; consequently in our endeavors to be helpful we might induce a contrary reaction.

Moreover, a precipitous comment could have a harmful and unfair effect on the govt here. From what I have heard of the procedures followed in the past by Chancellors of the Exchequer in presenting a budget, the mere allegation that a Chancellor had indicated in advance to other than his Cabinet colleagues details recalls fate of Hugh Dalton, whose offhand remark to a friendly journalist on an inconsequential feature of the message he was to deliver in a few minutes, led to his subsequent resignation and political degradation.

In view of the unusual circumstances, and frankness, with which Callaghan has dealt with our officials in the past few days, I urge upon you the need of not arousing speculation on linking US approval of the budget with any hint of prior knowledge of any of its provisions.2

  1. Source: Johnson Library, National Security File, Country File, UK, Vol. 3. Secret; Flash; Nodis.
  2. No U.S. statement was issued.