246. Message From Prime Minister Wilson to President Johnson1
Dear Mr. President:
You will have heard by now of the measures which we introduced on Tuesday2 with the object of steadying confidence. They have already had some effect and I hope that it will continue.
Politically this has been a very difficult operation indeed. Deferment of important social projects, introduction of building licensing, tightening up of hire purchase terms and exchange control, and so on, make a tough package. Many of my colleagues were resistant to what I considered necessary and, since the announcement, there has been a lot of unrest among our supporters in Parliament and outspoken opposition by the Trades Union Congress. The support of the Confederation [Page 500] of British Industries and the recognition by our Financial Times, with its specialized leadership, that the measures showed the Government’s determination to put the strength of Sterling before politics, are things that count both ways for a Labour Government—particularly when it is far from certain that there is a case of objective economic grounds for more than a minor degree of deflation. But I am determined to face up to our overriding problem of maintaining confidence to the limit.
Unfortunately there may be more breakers ahead. For example, a single month’s bad trade figures could cause a dangerous run.
Beyond this I am very concerned about the wider outlook for international liquidity, and in particular by the French veto on Secretary Fowler’s call for an international monetary conference. If this is carried any further we shall have a situation in which the French will be trying to blackmail the rest of the Free World in a matter vital to economic expansion.
I know how deeply pre-occupied you are with Vietnam, as I am with Aden and Malaysia, but I believe that these economic problems, and in particular the threat that hangs over us, are also of great importance for the Free World and that we must keep in close touch on them. Sir Burke Trend will be explaining our position in more detail to Mr. Bundy and we shall always be ready, at whatever level is appropriate, to get together with you.
With all good wishes,
- Source: Johnson Library, National Security File, Country File, UK, Vol. 6. Top Secret.↩
- Following 2 days of heavy losses by the pound, the British Government on July 27 announced a third, emergency budget with heavy spending cuts in all areas, including defense. Prime Minister Wilson met with Ambassador Bruce that day and indicated his desire for a meeting with the President. Bruce reported: “I told him frankly that I had no idea whatever as to how such a proposal would be received, but it would seem to me it should be explored further before he took it up officially.” (Department of State, Bruce Diaries: Lot 64 D 327)↩
- Printed from a copy that bears this typed signature.↩