611.4131/383
Memorandum by the Second Secretary of Embassy in the United Kingdom (Butterworth), Temporarily in the United States
Sir Frederick Phillips, Under Secretary of the British Treasury, called to see Secretary Hull at 11:00 o’clock, A.M., accompanied by Secretary of the Treasury Morgenthau, Mr. Mallet, the Chargé d’Affaires of the British Embassy, Mr. Wayne Taylor76 and Mr. Butterworth.
After the usual pleasantries, Secretary Hull explained in detail the origin, purposes and prospects of the American trade agreements program, particularly emphasizing the importance of an Anglo-American agreement, the urgent need of action, and the extraordinary beneficial effect the conclusion of such an agreement would have in mobilizing some forty nations behind a definite policy of economic appeasement, which in turn would facilitate political appeasement. Secretary Hull also referred to Mr. Eden’s recent speech at Geneva77 and expressed gratification of his references to the most-favored nation clause which he hoped would find reflection in the British treatment of third countries.
In the course of the discussion which followed, Mr. Mallet took occasion to emphasize that the initiative in the matter of the Anglo-American negotiations now lay with the Department of State; that the British Government was awaiting the conclusion of the proposed Canadian-American negotiations78 and also the receipt of a list of non-Ottawa items which, he alleged, had been promised some three weeks ago. It was indicated to Mr. Mallet that the British Government were somewhat shifting the point of emphasis on the question of the delays which had ensued; that prior to and during the recent Imperial Conference in London the British authorities had emphasized [Page 67] that it was the pending Australian elections which were the main source of delay; that at that time no mention had been made of American-Canadian negotiations which, even now, were not technically in the stage of negotiations but were explorations to ascertain whether it would be possible to conclude a supplementary American-Canadian trade agreement on a fifty-fifty basis.
Secretary Hull particularly stressed that the United States had no intention of paying two for one in the matter of an Anglo-American agreement; that whereas, in order to alleviate certain political difficulties which it had been represented that Mr. Mackenzie king was facing, the American Government was willing to conclude an American-Canadian supplementary agreement, it could not give compensation in that agreement for any releases which Canada made to the United Kingdom in order that the United Kingdom should be in a position to negotiate in turn with the United States; that “the countries which made the Ottawa Agreements must themselves be responsible for the relaxing of their provisions.”
For his part, Mr. Mallet stressed the desirability of obtaining the non-Ottawa list, which, he said, would require study beyond the termination of the Australian elections on October 23rd, and he particularly emphasized that his Government was most desirous of doing what it could to accelerate the process of negotiations. Sir Frederick Phillips likewise expressed this view, and it was agreed that Mr. Mallet and the Acting Commercial Counselor should see Mr. Sayre the next day and discuss the matter with him in detail.
Incidentally, in the course of Secretary Hull’s exposition of the aims and purposes of the American trade agreements program, the Secretary of the Treasury stated that he “stood shoulder to shoulder” with Mr. Hull in this matter.
In response to a query, Sir Frederick Phillips summarized his view of the position of world trade briefly as follows:
World trade by any standard of measurement was now found to be increasing, but the rate of increase was far too moderate and slow. Due largely to the rise in the prices of primary products, the producers of these raw materials had acquired a purchasing power which was being reflected in the demand for finished goods and, in the absence of a decline in prices, this process of mutual beneficial trade should continue and increase. Sir Frederick Phillips saw as the main difficulty in the way of world trade the exchange and quota systems which had been erected in the first place, not as a means of regulating trade per se, but in order to protect the currency position of particular countries. While he did not expect any abrupt relaxation in these controls, he hoped that, with the return of the world markets from being a buyer’s to a seller’s market, these countries would gradually, despite [Page 68] the fear of war and the vested interests which had grown up behind the control systems, relax their barriers in order to obtain a larger share of current trade. He expressed full agreement with Secretary Hull’s view that it was important that Great Britain and the United States should take the lead in facilitating the removal of obstructions to freer trade, and he also concurred in the urgency of the need of action.
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