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United States Department of State / Foreign relations of the United States diplomatic papers, 1937. The British Commonwealth, Europe, Near East and Africa

United Kingdom ,   pp. 1-135 PDF (51.1 MB)

Page 6

is, I believe, expected to spend the coming weekend in Washington as
a guest of the President at the White House, is not planning to come
to Ottawa.
  Respectfully yours,                           NORMAN ARMOUR
    Merrorandcum by the A88istant Secretary of State (Sayre)
                                 [WASHINGTON,] January 26, 1937.
  Immediately after dinner at Mr. Dunn's"1 house, Mr. Runciman 12
and I withdrew to the study to go over the prospective trade agree-
ment between the United Kingdom and the United States. I opened
the conversation by trying to make clear to Mr. Runciman the heart
of the program upon which the United States is engaged. I sought
to point out the two contrasting alternative commercial policies which
might dominate the world,-the policy of dealing in preferences
leading to clearing agreements and to bilateral balancing, with all
that these entail, on the one hand, and the policy of equality of treat-
ment embodied in most-favored-nation dealing on the other. I sug-
gested that these two policies were continually warring with each
other in different parts of the world and that the world is not big
enough to hold them both,-that one or the other must ultimately
prevail. I cited Germany as an instance of a country following the
former policy and pointed out how in Latin America the consequences
of her policy come into square conflict with our own, injuring our
trade in Latin America as a result. I went on to say that I felt it of
the most vital importance that England and the United States should
stand together and that if England agreed with us it would go far
toward insuring the ultimate triumph of the policy of equality of
  Mr. Runciman seemed to have but a foggy and hazy notion of what
I was driving at and I felt that I was making no real progress. He
said that the United Kingdom had made only three clearing agree-
ments, namely with Turkey,18 with Italy,1 and with Spain; 15 and
that these clearing agreements, much as one might criticize them,
were the only way Britain had of insuring the payment of British
creditors. I pointed out that any nation which promised preferential
treatment to Britain or any other country was unable thereafter to
promise equality of treatment or to enter into a trade agreement based
  ' James C. Dunn, Special Assistant to the Secretary of State and Chief
of the
Division of Western European Affairs.
  ' President of the British Board of Trade.
  ' Signed September 2, 1936, League of Nations Treaty Series, vol. cLxxn,
p. 289.
  loSigned November 6,1936, ibid., vol. cxvn, p. 183.
  u Signed January 6,1936, ibid., vol. C=vi, p. 283.

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