611.4231/880
Memorandum by the Acting Chief of the Division of Western European Affairs (Hickerson)
Major Herridge came in to see me late yesterday afternoon and we had a long talk about the economic situation of Canada and the United States. I informed Major Herridge that we previously told him there didn’t appear to be any prospect of our being able to institute conversations at this time with Canada looking to a comprehensive trade agreement but that we had been investigating the possibilities of a provisional agreement. Major Herridge said that he was, of course, very much interested in this and that he would like very much to see our two countries conclude a provisional agreement at the earliest possible date; he added that he understood fully that it would not be possible to tackle the problem of a comprehensive agreement on a broad scale for some months.
I informed Major Herridge in confidence that the American Government is seriously considering the taking of steps as an emergency matter because of drouth conditions in the middle west to import Canadian hay and oats free of duty under certain safeguards to prevent price speculation in these products. I added that if we take this action it will, of course, be because we need these products but it seemed to me that it would be desirable for both countries to use this action as a stepping stone to a provisional trade agreement. I continued that we have received a large number of complaints from American growers of fresh fruits and vegetables, but particularly soft fruits (peaches, [Page 848] pears, plums, apricots, etc.), on the Pacific Coast against the Canadian seasonal dumping duties. I pointed out that the regular Canadian import duties on these products range from 20 to 30 per cent and that the additional dumping duties practically stifled the trade. I went on to say that if we take the above-mentioned action respecting Canadian hay and oats, I hoped that the Canadian Government would remove the dumping duties on American fruits and vegetables for the remainder of the season. I added that in my opinion such action on the part of the two countries would be well-received and would create popular support in both countries for a provisional trade agreement.
Major Herridge said that he was greatly interested in this matter, that he desired to think it over and consult with Ottawa and that he would get in touch with me Thursday respecting it. He then asked me whether I could tell him anything about the Canadian products with which I thought we might be able to deal in a provisional trade agreement. I told him that we were studying this matter now and that I could only give him one or two indications of my personal views because our study was still in a wholly preliminary stage and had not been approved by any responsible officer. I then mentioned three products: whiskey, certified seed potatoes and alsike clover seed, as possibilities. Major Herridge said that a reduction in our duty on whiskey would help out in the balance of payments but that it would not be worth a great deal to Canada in the matter of working up popular sentiment for a comprehensive trade agreement. I replied that we had heard so much from Canada about the unfavorable trade balance as between our two countries that I assumed that any reduction we might be able to make on whiskey would be exceedingly helpful in that regard and duly appreciated by the Canadian Government