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78 Mr S. M. Bruce, High Commissioner in the United Kingdom, to Mr John Curtin, Prime Minister Designate

Cablegram 5779 LONDON, 4 October 1941, 6.30 p.m.

Received 5 October 1941
I hesitate to worry you almost before you are in the saddle [1],
but I feel that I should send you something of a background to the
proposed agreement dealt with in Dominions Office telegrams 591
[2] and 592 [3], particularly as you will see from these telegrams
that it is proposed to take action early next week.

While conversations referred to in paragraph 2 of Dominions Office
telegram 591 were initiated for the purpose of dealing with Lease
Lend, they have now widened out into something bigger, namely the
whole question of Anglo-American post war economic co-operation.

These discussions showed that there are questions of major policy,
including issue of Imperial preferences, that have to be faced.

These questions also emerged in drafting the fourth of the eight
points in the Atlantic Charter-and were got over by inserting
'with due respect for their existing obligations'-and at a meeting
of Allied Governments September 24th (see No. 50 [4]).

The position now is that decision as to the Empire's post war
economic policy must be taken in the near future. This raises
definite issues whether the United Kingdom post war policy is to
be one of bi-lateral arrangement, using her bargaining powers to
the maximum, aided by such devices as exchange control, or a
policy of multilateral agreements with the greatest possible
elimination of Trade discrimination.

While the United Kingdom['s changed] [5] position due to her war
effort and the realisation of a large proportion of her overseas
investments might point to the necessity of the former policy, it
is being increasingly recognized that such a policy would:

a. be disadvantageous to the economic interests of the United
Kingdom and
b. be fatal to the realisation of the principles set out in the
Atlantic Charter.

The reason for (a) is that the U.S.A. will emerge from the war so
strong financially and economically that a fight with her based
upon bilateral bargaining could hardly be successful particularly
as the U.S.A. would probably be able to organise a Pan-American

The reasons for (b) are because:

1. Political co-operation could hardly be maintained side by side
with bitter economic warfare.

2. The realisation of Roosevelt's freedom from want and improved
labour standards, economic advancement and social security,
referred to in the fifth point of the Atlantic Charter, could be
brought about only by British Empire-American co-operation based
on achieving the objectives in our own country, and in co-
operation to assist other countries to follow this line. Another
reason from the point of view of countries with undeveloped
resources, such as Australia, is that only under a policy of
expanding world trade could they hope to find a market for
products of their increasing primary and secondary industries.

My own impression is that responsible opinion here and in the
United States realises the need for broad visioned and generous
[economic cooperation between the British Empire] and U.S.A. and
progressively a practical basis upon which it can be given effect
will be thrashed out.

The above will give you some background, but I suggest you should
see a letter and two memoranda [6] I sent to Menzies on July.

18th, and also a letter I wrote to Fadden on September 25th [7] as
soon as it arrives.

With regard to the immediate issues raised by Dominions Office
telegrams, the following is the position: for political reasons in
the United States, the President is most anxious that an agreement
down the lines of draft contained in Dominions Office telegram 592
should be arrived at at an early date.

In order to meet this wish of the President, and yet not to
prejudge Imperial preference and bilateral possibilities, the
United Kingdom Government has put forward the proposed redraft of
Article VII which is intended to avoid committing the United
Kingdom Government until it has had an opportunity to fully
consider the great issues involved and consulting the Dominions
with regard to them.

As you will have no opportunity of dealing with this matter before
the United Kingdom Government has to make a further move with the
U.S.A., I suggest you might telegraph in reply to Dominions Office
cable 591 saying that you would have no objection to the redraft
of Article VII, but that you consider it essential that there
should be early consultation between the United Kingdom and
Dominions Governments on all issues involved, particularly in view
of the conversations contemplated by the final sentence of the
redraft of Article VII. [8]

1 The decision of the two Independent members of the House of
Representatives to transfer their support to the Australian Labor
Party led to the defeat of A. W. Fadden's budget proposals on 3
October. Fadden resigned as Prime Minister the same day and Curtin
was commissioned to form a new A.L.P. administration which took
office on 7 October. Dr H. V. Evatt became Minister for External
Affairs and Attorney-General.

2 Dispatched 30 September. On file AA: A989, 43/735/50/1. It
reported that Anglo-American discussions had taken place on the
nature of the 'consideration' due to the U.S. Govt in return for
the granting of Lend-Lease aid to the British Empire. President
Roosevelt had 'agreed that we should be given a measure of
protection at once by exclusion of anything in the nature of war
debts or delivery either of cash or of goods which had a merely
economic significance', but had 'asked in return that we should
enter into some commitment as to the character of our postwar
international economic policy'. This commitment was to be embodied
in a preliminary agreement, Article VII of which would 'provide
against discrimination in either the United States of America or
the United Kingdom against importation of any produce originating
in the other country'. The U.K. Govt feared that to accept Article
VII as drafted would prejudge its right to maintain an Imperial
protection system and proposed to suggest a less specific formula
providing for 'joint and agreed action by the United States and
the United Kingdom, each working within the limits of their
governing economic conditions, directed to securing as part of a
general plan the progressive attainment of balanced international
economies, the avoidance of harmful discriminations, and generally
[the] economic objectives set forth in the joint declaration made
by the President of the United States of America and the Prime
Minister of the United Kingdom [Winston Churchill] on 12th August,

3 Dispatched 30 September. On file AA: A1608, N41/1/1. It
transmitted the full text of the draft agreement prepared by the
U.S. Govt.

4 Dispatched 24 September. On file AA:A1608, C23/3/2, i. It
reported that a meeting of Allied govts in London had unanimously
approved the Atlantic Charter.

5 Words in square brackets have been inserted from Bruce's copy on
file AA; M100, October 1941.

6 The letter has not been found. Copies of the memoranda, which
were submitted on 11 August to the U.K. War Cabinet committee on
post-war external economic problems and AngloAmerican co-
operation, are on file AA:A103, 1941.

7 On file AA:A989, 43/735/245, vi.

8 On 8 October Curtin dispatched a message to the U.K. Dominions
Secretary, Lord Cranborne, in the terms suggested by Bruce. See
cablegram 658 (AA:A3196, 1941, 0.15805).

[AA:A3195, 1941, 1-19889]
Last Updated: 11 September 2013
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