314. Telegram From the Embassy in Canada to the Department of State1
861. Embassy’s 809.2 In the course of a talk with ExtAff Minister Martin yesterday and at lunch today with the Prime Minister I was given to understand that they had not only backed away from the idea of any institutional arrangements but also were not prepared to agree upon a declaration of principles to be signed and made public in connection with the President’s meeting with the Prime Minister. Martin put forward much the same reasons as Minister Robinson had as recorded in the memorandum of conversation of January 4.3 The Prime Minister speaking more frankly evinced no great personal enthusiasm in the institutional idea and was impressed by the difficulties of drawing up principles that would meet the test of time or as he phrased it at one point “not be able to be used by one party against the other.”
Needless to say this led to a discussion of the Gordon budget measures which was disquieting in terms of possible future Canadian action. Pearson said that Gordon had returned from his December 5 meeting with the Economic Club of Chicago sure that after he had explained to the represented Chicago business community the reasoning behind his proposals they had acquiesced and Pearson implied that further measures were in preparation. Of course I expressed skepticism about the persuasive effect of eloquence on American industry whether located in the Chicago area or elsewhere to acquiesce in unprovoked, injurious and discriminatory measures against it to be reflected in balance sheets. I urged that the reconsideration that he had promised take the direction of removing injurious discrimination against existing American capital which had come into Canada under national treatment and that the change in the rules, if any, be directed towards future takeover or other forms of future foreign investment.
I will report further details of this conversation when I go to Washington next week; the purpose of the second paragraph of this telegram [Page 671] is once again to alert Washington to the crucial importance at this time of this important problem.