Foreign Relations of the United States: Diplomatic Papers, 1945, The British Commonwealth, The Far East, Volume VI

611.4131/8–1845: Telegram

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

London, August 18, 1945—8 p.m.
[Received August 18—7:35 p.m.]

8390. For the Secretary and Acheson from Clayton. I have now had a number of talks which I have separately reported with British officials both before and after the fall of Japan regarding immediate transitional and long-range financial and trade policies and programs and the wind-up and settlement of lend-lease.

The British position is undoubtedly very serious and the moving forward of V–J means that the British will have accomplished much less reconversion for import than they had hoped and planned. The same situation, of course, applies in some measure in the US. Keynes and the other British officials find it difficult to discuss financial and trade policy because the new Cabinet until Wednesday⁹³ was entirely occupied with the preparation of the King’s speech on the opening of the Houses of Parliament. Keynes hopes that in a few weeks he will be able to get sufficient clearance for further discussions with us but insists that if as a result of our pressure he urges early decisions they are likely to be the wrong decisions.

In this situation Keynes, Eady and the other officials urge a breathing spell continuation of nonmunitions lend-lease as I have reported elsewhere; broad discussions in Washington early in September on the whole range of lend-lease wind-up, clean-up, and settlement supplemented by at least fairly concrete immediate financial discussions relating to the deficits anticipated by the British balance of payments during the next 3 years. The British recognize that we will insist on discussion of commercial, cartel and commodity policy in connection with such financial discussions but are trying to maneuver us into discussing finance without requiring full trade discussions at the same time. Keynes would probably readily agree that problems of exchange convertibility and the sterling dollar pool would have to be discussed at once but Empire preferences, reduction of tariffs and other trade barriers, cartel policy and commodity policy he would like to put off into next year as much as possible.

I have indicated that it is essential that we discuss both finance and trade simultaneously; that it will be necessary for us to come to a broad understanding as to postwar trading methods and policy before we can ask the Congress for any large scale financial aid to British. I have also pointed out that the clean-up and settlement of lend-lease which Keynes so strongly urges must be associated with article VII arrangements. It was finally left that I without waiting to return home and report more fully to you and the President would take up with you steps for further discussion.

I have been informed that you will probably not arrive in London for the Council of Foreign Ministers⁹⁴ before September 10. My recommendations as to further procedure with respect to more formal discussions of the British problem are based on the assumption that you will be in London for some period following September 10 but would return to Washington before any conversations with a British delegation would be nearing their conclusion. On these assumptions I would recommend the following course:

(1) That I return to Washington 2 or 3 days after the conclusion of the UNRRA council meeting after an appointment which I have tentatively planned with the Chancellor of the Exchequer and certain aviation discussions which the British have requested. I should arrive in Washington if the UNRRA meeting goes well by the 27th. This would give me a full 2 weeks in which to report in detail to you and go over with you and other appropriate officials the main lines of policy which we would take in discussions with Keynes and his British colleagues.

(2) That without awaiting my oral report you consider requesting the President to agree to the British sending the sort of delegates which Keynes has suggested for discussions beginning early in September.

(3) That after full discussion with you prior to your departure for London we with the collaboration of the various agencies involved lay the groundwork with the British for final discussions after your return hearing the British presentation of the detailed facts of their position and in particular attempting to work out with FEA details of lend-lease wind-up and clean-up.

(4) That we attempt to arrive at basic understandings with the British on Lend-Lease, financial assistance, and trade policy in October after you have returned.

If you approve and the President so decides I should like to inform the British when I have my meeting with Dalton that we agree to their coming to Washington early in September. This will give the British some time in which to go into these matters adequately with Ministers and to formulate their own views.

In connection with my talk with Dalton I should greatly appreciate an indication of the decisions which have been taken on the lend-lease issues to which I referred in my earlier telegrams and if possible a specific statement of policy from you which I might transmit to Dalton.

In reviewing my communications to you I am a little afraid that I may have sounded too discouraged about the British attitude. I am not. I believe that the discussions ahead will be difficult but I am certain that we can and will get forward with them. [Clayton.]

Winant

93. August 15.
94. Reference is to the first session of the Council of Foreign Ministers, September 11–October 2, 1945. For documentation concerning these meetings, see vol ii, pp. 99 ff.