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TOCUMART ISJTHA J ^ P E R T Y
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COPY
33 (3.1) .
C A B I N E T.
ATTITUDE OF THE UNITED STATES GOVERNMENT TOWARDS
MUTUAL TARIFF CONCESSIONS WITH CANADA-
Copy of despatch from Sir Ronald Lindsay
(Washington) to
the Secretary of State for Foreign Affairs.
(Circulated by direction of the Secretary of State
for Foreign Affairs.)
Waitehall Gardens, S.W.i.',
January 30th, 1931..
Circulated, to tne Cabinet b y direction oi
S DOCUMENT IS THE PROPERTY*OY
NORTH A M E R I C A
J a n u a r v 14, 1931.
CONFIDENTIAL.
I A 319/319/45]
Sir R. Lindsay
SECTION 1.
No. 1.
to Mr. A. Henderson.—(Received
January
14, 1931.)
(No. 2077.)
Washington, December 31, 1930.
I FIAVE read with much interest S i r W i l l i a m C l a r k ' s despatch No. 267 of
the 12th December, 1930, to the Secretary of S t a t e for Dominion Affairs, r e g a r d i n g
the C a n a d i a n attitude towards questions a r i s i n g out of the recent Imperial
Conference.
2. I n p a r a g r a p h s 8 and 9 of that despatch S i r W i l l i a m C l a r k refers to the
probability that the C a n a d i a n Government will seek to provide itself with lines
of retreat in case the forthcoming Economic Conference at Ottawa should prove
abortive, and mentions, as one such possible line of retreat, a " rapprochement
with the United States of A m e r i c a . " He states, i n this connexion, t h a t " a few
passing and not very precise press references to a desire on the p a r t of the United
States Government for a measure of mutual tariff concessions w i t h C a n a d a hardly
w a r r a n t the assumption that the United S t a t e s of A m e r i c a is ready to modify its
traditional policies for the sake of its northern n e i g h b o u r . "
3. W i t h this statement I entirely agree. I do not, in fact, observe that any
important p a r t of the electorate in the U n i t e d States tends to cry out against
protection a s the genesis of its ills. So far a s w h a t may be termed the opposition
parties are concerned (i.e., the Democrats a n d the " insurgent " Republican group
in the a g r i c u l t u r a l west), the former " low tariff " plank of the Democratic p a r t y
has practically disappeared, while the farmers as a whole demand more protection,
not less. W h i l e orthodox Republican newspapers and spokesmen t r y to make
political c a p i t a l by asserting that if the Democrats were returned to power they
would make heavy reductions in American tariff rates, the Democratic leaders,
with very few exceptions, dislike the suggestion. They are a f r a i d of its effects
on the voters in the distressed a g r i c u l t u r a l a r e a s a n d in the wet i n d u s t r i a l urban
areas, and to some extent in the " liquefying " south. Indeed, I think it likely
that in the next ten or fifteen y e a r s the Republicans will do more tariff reducing
than the Democrats w i l l do, or would do if they were in office; but neither
Republicans nor Democrats at the present time would take the political risk
involved in reductions in the a g r i c u l t u r a l r a t e s in which C a n a d a is most
interested.
4. So far a s the Republicans are concerned, their efforts a r e being now
directed towards making the U n i t e d S t a t e s a closed market for a g r i c u l t u r a l
products—diversifying agriculture, reducing the a c r e a g e under crops t h a t now
produce an exportable surplus, so as to m a k e the import duties really effective
and have prices determined by the i n t e r p l a y of demand a n d supply on the
domestic market. T h a t has been President Hoover's ambition for many years
(indeed, a little while ago he enunciated the view to me with the utmost clarity),
and the Federal F a r m Board have been preaching that doctrine since their estab­
lishment. They know, of course, that the U n i t e d States cannot consume all the
raw cotton she produces, but in the case of wheat they believe the goal is not far
distant. M r . Legge, the chairman of the board, said a s much to the commercial
counsellor the other day, when S i r J o h n Broderick took M r . P a r k e r Moloney,
the A u s t r a l i a n M i n i s t e r of M a r k e t s , to see him. He said they were striving to
get out of the world's wheat market, and, t u r n i n g to S i r John, he added that the
United States authorities would have no inclination to criticise any arrangements
which H i s M a j e s t y Government might decide to m a k e for the purpose of g r a n t i n g
preferential treatment to Empire-grown wheat or other a g r i c u l t u r a l produce.
The aim of the board was to induce A m e r i c a n farmers to produce j u s t enough,
or less than enough, wheat, corn, & c , for the requirements of t h i s country.
Satisfactory progress w a s being made in t h a t direction, and they would soon, he
w a s confident, " p a s s out of the world p i c t u r e . " Then the tariff would enable
them to resist the depressing influence of world surpluses.
[334 o - 1 ]
Sir,
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Meanwhile, it: is interesting to. note t h a t the F a r m Board favour a
..tem:pOTa.r^:,embaf.go on w h e a t . In a letter to Senator Capper, made public on
the 25th instant, M r . Legge used the following l a n g u a g e :—
" The wheat situation seems to be getting worse every day. The spread
between Chicago and W i n n i p e g is running from 26 cents to 28 cents a bushel,
and, inasmuch as the millers a l w a y s pay a premium for that Manitoba wheat,
any further decline in the market will probably result in wheat being
imported from C a n a d a .
Probably the most effective method of dealing
with this would be a temporary embargo on wheat imports, which would
seem justifiable in view of the fact that we will have a burdensome surplus
without importing a n y . "
Senator Capper is prepared to introduce an Embargo B i l l " i f the fears of
seriously competitive imports m a t e r i a l i s e , " while certain Congressmen are urging
the Tariff Commission to increase the duty from 42 cents to 63 cents a bushel.
6. It is reasonable, I think, to conclude from the foregoing that proposals
for " a measure of mutual tariff concessions" between the United States and
C a n a d a would meet w i t h a frigid reception from the present Republican
Administration in W a s h i n g t o n if it involved a reduction of American duties on
C a n a d i a n wheat, a n d i t is difficult to see what measure that did not include
concessions in the wheat duties could have useful political reactions for the
C a n a d i a n Government.
If the Democrats have a policy for the relief of
American wheat growers without resort to protective duties, they have never
proclaimed the fact, nor has it been possible to observe a desire on the part of
any important political group in this country to make tariff concessions of any
kind to Canada. They all desire to live on neighbourly terms w i t h Canada and
to export their goods to the C a n a d i a n market, but much more substantial practical
pressure than now exists will be required before either of the two leading parties
will consider modifying American a g r i c u l t u r a l policy in C a n a d a ' s favour.
7. Moreover, the modification of the American tariff rates for the benefit
of Canada alone would seem to require a prior revision of the whole commercial
treaty policy of the U n i t e d States i n a u g u r a t e d in 1923. U p to that time the
U n i t e d States Government had placed upon the " most-favoured-nation " clauses
included in their commercial treaties the "conditional " interpretation, that is
to say, that privileges extended by the United States to one p a r t i c u l a r foreign
country could not be claimed under a " most-favoured-nation " clause by another
country, except in return for the same or an equivalent concession. They would
have been able, for instance, to negotiate a reciprocity treaty with C a n a d a in 1911
without r a i s i n g difficulties with other countries with which they had concluded
" most-favoured-nation " treaties.
I n 1923, however, under the guidance of
M r . Charles E. Hughes, the United S t a t e s Government announced their intention
for the future to seek complete unconditional equality of treatment for American
trade, and, in return, to offer unconditional equality of treatment to the trade
of other countries. A s a logical preparatory step to the execution of that new
policy, the tariff preference till then granted by B r a z i l to A m e r i c a n products was
voluntarily abandoned, and negotiations for new treaties were begun with a
number of European a n d L a t i n A m e r i c a n countries, several of which have since
been successfully concluded, e.g., those with Germany, A u s t r i a , Czechoslovakia,
Roumania, &c. Every one of those treaties, I believe, contains a provision for
reciprocal unconditional " m o s t - f a v o u r e d - n a t i o n " treatment in customs matters.
The new departure which they represent was the outcome of a series of studies
made by the U n i t e d States Tariff Commission after the w a r on reciprocity and
commercial treaties.
The commission, in a report dated 1919, recommended,
inter alia, that " so f a r as concerns general industrial policy and general tariff
legislation, each country—the United States as well as others—should be left free
to enact such measures as it deems expedient for its own w e l f a r e ; but the measures
adopted, whatever they be, should be carried out with the same terms and the
same treatment for all n a t i o n s . " The commission then went on to say that some
allowance should be made for exceptional treatment, not inconsistent, under
certain circumstances, with the principle of equality of treatment, and it
instanced the following special circumstances in which the concession of special
rates of duty might be regarded as not in conflict with the principle :—
(1) W h e r e one country has a long frontier line in common with another,
e.g., S p a i n and Portugal, C a n a d a and the United States.
I;,-'(2):
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Where special political ties a n d : s p e c i a l responsibilities exist, eSg., the
United States and H a w a i i formerly, the U n i t e d States and C u b a - a t
e^:;;r;/u;i- jjfihfolkA sd-i ixws )S;uaJ iM ^mtatii d.)5S off?
present.
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8. It is noteworthy, however, that when the S t a t e Department (in a letter
addressed to the New York representative of an A r g e n t i n e newspaper i n 1923)
explained the American position, it made no mention of the exceptional circum­
stances created by the existence of a common frontier.
The following extract
from the letter specifies the only circumstances which it then apparently regarded
a s justifying concessions not granted to the other most favoured nations :—
" The Department contemplates making s i m i l a r overtures in the near
future to other L a t i n American countries for the negotiation of new treaties,
or the modification of existing treaties, in harmony with this principle
(i.e., unconditional equality of treatment), excepting, however, as in the
recent exchange of notes with B r a z i l , the special treatment which the U n i t e d
States accords, or hereafter may accord, to Cuba, and the commerce between
the United States a n d its dependencies a n d the P a n a m a Canal Zone."
9. The existence of this new policy and of the numerous commercial treaties
based upon it complicates current American tariff difficulties with France. The
Americans, in other words, find it inconsistent w i t h their announced commercial
treaty policy to yield to French demands for special tariff preferences, and
although the long common frontier argument might conceivably be brought
forward in favour of a special arrangement w i t h Canada, it seems highly
improbable that the S t a t e Department would w i l l i n g l y raise so thorny a question.
10. I am sending a copy of this despatch to the H i g h Commissioner for
the United Kingdom at Ottawa.
I have, &c.
E. C. L I N D S A Y .
C A B I N E T ,
- ^ ^ ^ ^ ^ ^
84(31)
Copy No
THE HAIG STATUS.-,
Memorandum "by the Pirst Commissioner of Works.
1 regret to have to trouble my colleagues for an
opinion on this matter, which is indeed a small thing in itself
hut happens to he one of those little things which arouses the
sentiment of the people of this country.
The question of the statue in memory of Earl Halg
has been one which seems to have been fated to surround itself
with difficulties
0
It will be within the recollection of my
colleagues that the resolution of Parliament praying His
Majesty to give directions for a monument to be erected to
Earl Haig was only passed after a division in which most of us
voted in favour of an amendment to refer the matter to a
Select Committeeo
The amendment w a s , however
9
lost and it fell
to my predecessors, first of all Lord Peel and then
Lord Londonderry, to endeavour to give effect to the resolution
of the Commons,
The next difficulty arose as to the question of a
site, b u t , on the advice of the Royal Pine Art Commission, the
late Government decided to over-rule the objections of
the Westminster City Council to the site selected between
the Scottish Office and the Royal United Services Institution
in the centre of Whitehall,,
A site having been selectedj,
the next question to be settled was that of the sculptor.
Normally, the practice of the department would have been to
have selected an artist of established reputation to
undertake the commission.
My predecessors, however, felt
that public opinion was in favour of a Msa*tee* competition,