During the past few days I have had two long conversations with Keynes who leaves for America tomorrow as part of the delegation for private talks with regard to Article 7 (see Dominions Office telegram
D.No. 614, August 31st ).
The two questions that Keynes will principally deal with are exchange and currency agreement and post war lending, although as a member of the delegation he will be concerned with all the subjects to be discussed.
With regard to exchange and currency Keynes is not unhopeful of reaching agreement with White who will be the principal representative of the United States Treasury. He feels some doubt as to the attitude of the American administration even if such agreement is reached, owing to the great hostility to any arrangement in many influential quarters in the United States.
With regard to post war international investment the United States Treasury have apparently formulated proposals but they have not yet been seen. Keynes feels that in America generally consensus of opinion is in favour of some arrangement aimed at common good, although there are certain sections that would like to retain for exclusive American benefit, by selective lending, overwhelmingly strong financial position that America will be in on the termination of hostilities.
With regard to commercial policy Keynes feels that it is desirable to go quietly and not to be too ambitious in first contact owing to the danger that political repercussions may react detrimentally on the whole discussions. Buffer stock scheme may be seriously discussed at the meeting but it is not yet quite certain.
In my conversations with Keynes I strongly urged the desirability of bringing the question of maintenance of full employment in the United States and the United Kingdom into the forefront of the discussions and tried to emphasize the line Coombs has already taken with Keynes. His first reaction was rather that everything that was to be discussed, i.e. exchange currency, commercial policy etc., was aimed at this result, and it was evident that he feared that if a body were set up to examine ways and means towards maintenance of full employment such body would tend to butt in on these questions. (He expressed similar apprehensions to me prior to the Food Conference.) I argued against this attitude, pointed out that the Food Conference had specifically dissociated itself from dealing with these ancillary matters and indicated that it would be quite possible to steer a full employment conference in the same way.
Towards the end of the discussion Keynes came round considerably to my point of view and asked apparently with the desire of further discussing the matter with him, whether Coombs was still in Washington. I told him that Coombs had returned to Australia and Keynes was obviously disappointed.
In view of our great interest in the matters that are going to be discussed in Washington and above all the importance of the full employment issue, I feel, if at all practicable, it would be desirable to send Coombs on some mission there while the discussions are taking place. If this were practicable, time for him to arrive would be about the middle of October. If Coombs cannot go, I suggest it would be a good idea if McDougall, who is due back in Washington during October, were specially briefed to take up this question of full employment with Keynes.