494. Memorandum of Telephone Conversation Between Secretary of the Treasury Fowler and the Under Secretary of State (Ball)1
SUBJECT
- Southern Rhodesia
Ball said we are under great pressure from the British and all the African nations to go as far as we can down the British path. We have looked at the law and told Michael Stewart when he was here that under the law the President had authority to do something about our exports to SR but to take action with regard to imports would require application of trading with the enemy and this would mean a declaration of emergency or declaration of war. It would be very awkward to have a trading with the enemy act applied to SR. It would be difficult to do something about exports without also doing something about imports. Ball said he has asked the Dept to study this. If we stop our exports it would be quite a net loss. We would not be able to curtail imports and even if we did they would be imported from other countries. Also there would be an effect on our own investments not so much from expropriation but from the fact that the SR Govt might take some action that would interfere with repatriation of earnings. Ball thought SR would probably do so whether or not we act on the export control line.
Ball said we had already taken a certain number of actions which have more visual than actual effect. Ball said in talking with the President at the Ranch he had told him before making a definite recommendation with regard to the export-import laws he would discuss it with Fowler.
Ball said the Zambians are under great pressure from the other African nations to stop trading with SR. If they do so the SR would probably cut off the power and this would create a great mess. If there is an economic war the impact on sterling would be tremendous. Ball said when Stewart was here he asked us to be prepared to give them support. Ball said he had replied that we were in no position to make any commitment of this kind and they should not count on it. Fowler agreed we were in no position to help in this way. Ball said PM Wilson had complained in London to Bruce that Ball had not been nearly as responsive as they had expected the US Govt to be and that Ball had thrown cold water on any idea that we would help them if they got into trouble there. Fowler said we could not take on this kind of undertaking. Ball said we had made that clear.
[Page 842]Ball said we do have this immediate question of whether we move on export licensing. The practical effect will not be very much. They can buy 90% of it from the South Africans.
Fowler said he was working on something that might be offered as a substitute. It is to change the Federal Reserve Board Regulations and any other pertinent executive order documents to take SR out of the less developed country status and priority status it has on bank lending and anything else. It is mainly cosmetic but to the extent it is effective it is effective our way. (FYI. This was a hint dropped by John Stevens as something we might consider.) Ball thought this would be very good. Ball said the politics of this thing are complicated. The American Negro community regards this as a test case of the bona fides of the Administration. The President will be under a lot of heat but his inclination is the same as both Ball’s and Fowler’s. We don’t like doing things that are costly just for a political effect.
Ball said he thought it would be better if they made a joint recommendation to the President. Fowler asked how long he had to thrash out this question. Ball suggested they shoot for being able to move on this Tuesday2 morning. Ball said he would see that our material is in shape on the export problem and he would get up a memo which could be incorporated into a joint memo with Fowler’s. Ball said Solomon would be working on it in State. Fowler said Trued would be in charge but is out of town until Monday.