Foreign Relations of the United States, 1947, General; The United Nations, Volume I

Lot 65A987, Box 101

Memorandum of Conversation, by the Chief of the Division of Commercial Policy (Brown)

top secret

Paris, July 31, 1947.

Participants:	Sir Stafford Cripps
	Mr. Clayton
	Mr. Brown
	Mr. Helmore, Board of Trade
	Mr. Lintott, Board of Trade
	Mr. Gunter, Treasury1

Sir Stafford made the following points:

1. The British would be out of dollars in October, probably early in the month. They were announcing most drastic measures of retrenchment next week.²

2. This meant that they would have to be free to adopt any measures necessary to get the bare essentials they needed, including any form of discrimination.

3. In such straits it was impossible for them to sign, or hope for Parliamentary acceptance of, any agreement which limited their freedom of action under (2) in any way.

4. It was true that they would still be bound by the Anglo-American Financial Agreement, but that only prevented discrimination against the United States, whereas the General Agreement on Tariffs and Trade would apply to sixteen countries, including Canada. They would approach us separately on the Financial Agreement.

5. They are fully prepared to go ahead with the Charter and the World Conference on the ground that the situation would be clearer by the end of the year and much clearer by the time the Charter came into effect, probably about next August. At that time, they could probably accept reasonable rules against discrimination.

6. It was brought out that it was impossible for the United States and for others to put tariff concessions into force without general provisions, and that the concessions agreed here could not be put on ice. Sir Stafford recognized, therefore, that their inability to put the General Agreement provisionally into force before the end of the year would mean that Geneva would produce no substantial tariff reductions. If the United Kingdom did not participate, many others would also stay out.

7. They were entirely willing to act on tariffs and preferences. Nondiscrimination was all that concerned them.

8. They wanted the Charter and the General Agreement.

It was suggested that some modification of the rule against discrimination might be possible.

Sir Stafford replied flatly that this would not help—either the rule would mean something or it wouldn’t. If it did, his Parliament would not, and should not be asked to, accept it. If it did not, it would be a hoax.

It finally developed that the United Kingdom could go ahead with the General Agreement, if the effectiveness of the rule of nondiscrimination were postponed until the Charter came into effect, and not otherwise.

We pointed out that if any Agreement, so weakened, were possible for us, it would have to be very satisfactory in other respects.³

[Here follows discussion of other matters.]

1. John W. Gunter, U. S. Treasury Representative in the United Kingdom.
2. For documentation involving United States concern over the British financial crisis, see Vol. iii, pp. 1 ff.
3. Much of the information contained in this memorandum was sent to the Department in telegram 802, August 1, not printed. In addition, Clayton added: “Since my return to Geneva I have discussed with Wilcox and others possible ways of meeting this dilemma. We believe that only way to solve British problem without losing most of our objectives is to provide in general agreement on tariffs and trade that nondiscriminatory rule will not become effective until August 1948 or earlier in event of coming into force of ITO charter.” (560.AL/8–147)