Foreign Relations of the United States Diplomatic Papers, 1937, The British Commonwealth, Europe, Near East and Africa, Volume II

611.4131/326: Telegram

The Ambassador in the United Kingdom (Bingham) to the Secretary of State

London, July 2, 1937—noon.
[Received July 2—11:37 a.m.]

429. From Pasvolsky:⁶²

1. I have just had a full and frank discussion of American-British trade relations with Sir William Brown who as Permanent Secretary of the Board of Trade holds a key position with respect to trade agreement matters. Brown felt strongly that we fail to appreciate their difficulties and I felt equally strongly that perhaps because of pressure of other affairs he had failed to give sufficiently close consideration to the arguments we have been putting forward in our various communications. We canvassed thoroughly various aspects of the problem and as we concluded this part of the conversation he said that he was glad to have had the opportunity to discuss some of the possibilities that have been bothering him especially because in view of our long acquaintance neither of us needed to mince words.

2. Brown then went on to say that he dislikes preferences as much as we do and is in full sympathy with our broad objectives. The British [omission?] for obvious reasons give up the principle of imperial preference although they are fully prepared to press for a relaxation of preferences whenever possible. He said that one of the most important ideas which Runciman brought back from Washington was the assurance that we would not ask for complete abandonment of the principle of imperial preference. That served more than anything else to convince the Cabinet that they should make every effort to reach an agreement with us. At the session of the Imperial Conference at which trade matters were discussed, Chamberlain made an exceptionally moving and eloquent appeal for Dominion cooperation in making possible an agreement between the United States and Great Britain. (I had a similar description of Chamberlain’s speech from several sources.) In addition to setting forth their present ideas in the memorandum which they have despatched to Lindsay for presentation to us, they have sent to Washington an official of the Board of Trade who specializes on American matters and who will be prepared to give us detailed explanation of their position.

3. As regards the attitude of the Dominions, Brown repeated pretty much what he has already told the Embassy. South Africa is willing to play ball but Canada and Australia are difficult.

4. When we talked about Canada, Brown expressed a good deal of satisfaction with the new British-Canadian agreement whereupon I said that the haste with which the agreement was negotiated and signed was a matter of great disappointment to us. I said that the re-binding to Canada of the Ottawa margins of preference in Great Britain looked almost like a deliberate attempt to make more difficult an agreement between the United States and Great Britain. Brown replied that we must remember how difficult the Canadians are. At the time the new agreement was negotiated the Canadians were told and understood perfectly well that in view of the number of bound margins in Canada from which the British had released them they must be prepared to make the concessions needed for an agreement between Great Britain and the United States. In spite of this the Canadians took the position at the Imperial Conference that they would need compensation from us if they are to give the British what they need. Nevertheless Brown thought that something could be done on apples. He said lumber is more difficult both because of Canada and of the Scandinavian countries, repeating the arguments they have already given us.

5. As regards Australia, Brown said that their principal preoccupation at the present time is to keep Lyons from committing himself irrevocably on the subject of preferences. A statement is now being worked out at the Board of Trade which Lyons might make in the election campaign and which would still make it possible to do something in the event of his victory at the polls.

6. In view of all this I asked Brown why at the beginning of our conversation he was not more optimistic. He replied that it was partly the result of his general feeling, the frank discussion of which with me he thought was very helpful, and partly because he was frightfully tired after weeks of bickering with the Dominion representatives. He then added “never mind all that. Please believe me that we are trying and will continue to try our best.” He asked me to be sure to get in touch with him when I return to London in September on my way home. He wants to have another discussion in the light of what might transpire in the meantime.

7. My general impression, more perhaps from what was hinted than said, is that while the British are extremely anxious to have an agreement they are going to make another attempt to get us to bargain directly with the Dominions. I think we ought to maintain our position in this respect. I doubt that we can get our whole must list and will have to recede substantially, especially on dried and canned fruits. But I doubt equally that we can get much more by paying the Dominions directly. I think we can get the removal of preference on wheat. I did not discuss the matter with Brown but I gather from conversations with an Australian and a Canadian friend that there is not likely to be great opposition in their countries. The fact that we did not ask for wheat originally should make it relatively easy for us to indicate it as compensation for some recession. I think we ought to stick to our tobacco request. I understand that the Treasury is questioning the idea of increasing revenue from tobacco by increasing the duty on Empire tobacco and thus narrowing the margin of preferences against us. There is going to be a great deal of bickering on individual commodities but I think the chances for an agreement are very good. The atmosphere in London is extremely favorable in this sense and the Government is likely to come in for a good deal of unpleasant criticisms if they have to admit failure. Brown intimated that pressure for action on the part of the press and of many influential groups in and out of Parliament was what decided them primarily to send Stirling to Washington in an attempt to expedite the preliminary stages. [Pasvolsky.]

Bingham

62. Leo Pasvolsky, Special Assistant to the Secretary of State.