The Secretary of the Treasury (Snyder) to the Secretary of State
London, July 9, 1949—3 p. m.
2680. From Snyder for Acheson, eyes only.
- Will transmit soonest detailed report current conversations with British and Canadians, which in general give little basis for optimism regarding vigorous attack by UK Government on fundamental problems underlying present critical situation.
- Conversations have confirmed impression gained from Douglas conversations with Bevin, i.e., that we now seemed to be facing squarely a fundamental difference between US and UK in approach to problem of economic recovery and stability. In short, Cripps seems to want to propose what is essentially international state planning in a positive manner as a method of coping with recurrent dollar crisis of UK.
- This approach is evidenced by his answer yesterday to my question of what the UK had considered as possible avenues for solving the long-term problem of the disparity between the dollar and non-dollar world. While he agreed that the UK had to make greater efforts to become competitive he viewed this as a problem of selected industries and not an over-all problem. He thought in terms of a reduction of US tariffs, as being consistent with our creditor position. He did not believe that devaluation of sterling would be helpful and said that, while he would not rule it out, he would consider it only as part of an over-all plan. The major part of such a plan—and this is what he emphasized—seemed to be international planning to insure stability on a status quo basis, rather than the kind of flexibility required to shake out high costs and restrictive elements which contribute to present difficulties. For example, he talked at some length about the possibility of price supports for rubber and other raw materials, in order to protect the British terms of trade. He used the argument that since the sterling area in effect bought wheat for rubber, it was unjust to support the price of wheat without supporting the price of rubber.
- Cripps has proposed and I have agreed that a communiqué be issued this afternoon stating that the 3 governments have agreed to explore possibilities of a long-run solution to what appears to be a fundamental problem of disparity between the dollar and non-dollar areas. Communiqué will make reference to fact that 3 governments have agreed that talks will soon begin at expert level to ascertain facts and explore in preliminary way possible methods of approaching problem. Announcement will include statement that talks will probably lead to discussions at government level in Washington in August or September at which time thorough exploration will be undertaken for purpose of determining whether a mutually satisfactory solution can be found on the basis of the facts. Communiqué will thus be in accord with our prior agreement of advisability of later conversations in Washington, but will not commit US Government implicitly or explicitly to approach which apparently motivates Cripps’ proposals or to any specific solution.
- Final conversations will be held during lunch at Chequers with Attlee tomorrow, Sunday. Would be happy to receive any views you think should be communicated to UK Government at that time.1
- In telegram 2381, July 9, to London, not printed, the Department of State agreed that the situation seemed discouraging and that the problem was not one “of a few price supports or tariff cuts”. Snyder was then advised that it seemed “dangerous for experts to explore approaches without more detailed agreement on US policy than has yet been developed”. (841.5151/7–949)↩