Redefining the Bonds of Commonwealth, 1939-1948: The Politics of Preference

Redefining the Bonds of Commonwealth, 1939–1948 The Politics of Preference Francine McKenzie Cambridge Imperial and P...

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Redefining the Bonds of Commonwealth, 1939–1948 The Politics of Preference

Francine McKenzie

Cambridge Imperial and Post-Colonial Studies Series General Editor: A. G. Hopkins, Pembroke College, Cambridge This informative series covers the broad span of modern imperial history while also exploring the recent developments in former colonial states where residues of empire can still be found. The books provide in-depth examinations of empires as competing and complementary power structures encouraging the reader to reconsider their understanding of international and world history during recent centuries. Titles include: Tony Ballantyne ORIENTALISM AND RACE Aryanism in the British Empire Anthony J. Barker SLAVERY AND ANTI-SLAVERY IN MAURITIUS, 1810–33 The Conflict between Economic Expansion and Humanitarian Reform under British Rule Roy Bridges (editor) IMPERIALISM, DECOLONIZATION AND AFRICA Studies Presented to John Hargreaves T. J. Cribb (editor) IMAGINED COMMONWEALTH Cambridge Essays on Commonwealth and International Literature in English Ronald Hyam BRITAIN’S IMPERIAL CENTURY, 1815–1914: A STUDY OF EMPIRE AND EXPANSION Third Edition Robin Jeffrey POLITICS, WOMEN AND WELL-BEING How Kerala became a ‘Model’ Gerold Krozewski MONEY AND THE END OF EMPIRE British International Economic Policy and the Colonies, 1947–58 Ged Martin BRITAIN AND THE ORIGINS OF CANADIAN CONFEDERATION, 1837–67 W. David McIntyre BACKGROUND TO THE ANZUS PACT Policy-Makers, Strategy and Diplomacy, 1945–55 Francine McKenzie REDEFINING THE BONDS OF COMMONWEALTH 1939–1948 The Politics of Preference

John Singleton and Paul Robertson ECONOMIC RELATIONS BETWEEN BRITAIN AND AUSTRALASIA 1945–1970

Cambridge Imperial and Post-Colonial Studies Series Series Standing Order ISBN 0–333–91908–4 (outside North America only) You can receive future titles in this series as they are published by placing a standing order. Please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address, the title of the series and the ISBN quoted above. Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire RG21 6XS, England

Redefining the Bonds of Commonwealth, 1939–1948 The Politics of Preference Francine McKenzie Assistant Professor Department of History, University of Toronto

© Francine McKenzie 2002 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 0LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted her right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2002 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 0-333-98094-8 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data McKenzie, Francine, 1967– Redefining the bonds of commonwealth, 1939–1948 : the politics of preference/Francine McKenzie. p. cm. Includes bibliographical references and index. ISBN 0-333-98094-8 1. Commonwealth countries–Politics and government. I. Title. DA18 .M38 2002 909’.0971240824–dc21 2001054576 10 9 8 7 6 5 4 3 2 1 11 10 09 08 07 06 05 04 03 02 Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham and Eastbourne

For Michael

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Contents List of Tables

viii

List of Illustrations

ix

Acknowledgements

x

List of Abbreviations

xi

Introduction: the Necessity of Redefining the Commonwealth 1

1

A Short History of Imperial Preference: the Myth of Commonwealth Unity and the Reality of National Interests

17

Defining National Trade Policy and National Interests from Mutual Aid to the End of the War

31

3

The Beginning of Wartime Consultation, 1943

91

4

Problems Making Peace: Anglo-American Competition and Commonwealth Jockeying, January 1944–August 1945

113

Imperial Preference and the Anglo-American Loan Negotiations, September–December 1945

138

Waiting for the Geneva Conference to Begin: Commonwealth and International Progress along the Way, January 1946–April 1947

156

7

The Geneva Negotiations, 10 April–30 October 1947

185

8

The Havana Conference and the Reception of the GATT Agreements across the Commonwealth

238

2

5 6

Conclusion: a Future for the Commonwealth and for Commonwealth History

260

Appendix: Cast of Characters

269

Notes

273

Bibliography

324

Index

339 vii

List of Tables 1.1 Commonwealth Trade 1.2 Intra-Dominion Trade 2.1 UK Trade with the US, Canada and the Sterling Commonwealth 2.2 Canadian Trade with US and UK 2.3 Australian Trade with US and UK 2.4 New Zealand Trade with US and UK 2.5 South African Trade with US and UK

viii

22 24 46 49 62 73 82

List of Illustrations 1 2 3 4 5 6 7

8 9

The Prime Minister Christens the Baby (The Bulletin, 1902) Lip-Loyalty vs. Loyalty that Acts (Toronto Daily Globe, 1900) Long-Distance Thinking (The Bulletin, 1943) To the Last Man and the Last Shilling (Daily Telegraph, 1942) Australia Demands an Independent Voice in Peace Talks with Japan (Daily Mirror, 1945) Is it Come to This? (Point Blank, 1934) A VISITOR says ‘New Zealanders should build up their own national destiny instead of depending so much on Britain’ (Truth, 1936) History Repeats Itself (Cape Times, 1 April 1938) The Puppet (Die Burger, 3 March 1943)

ix

7 18 58 64 66 72

75 85 87

Acknowledgements This work began as a doctoral dissertation at Cambridge (1991–95). Several people have helped me to complete this project. My former teacher, Ian Drummond, convinced me that imperial preference was a rich topic waiting to be mined. At Cambridge, David Fieldhouse was a model supervisor who kept me on track, encouraged me to plough ahead, and let the project unfold as my own. He continued to read and comment as I revised this book from Toronto. I owe him a debt of gratitude that I cannot possibly repay. In Toronto, Beth Fischer, Susan Howson, Robert Bothwell and Michael Szonyi have been paragons of intellectual generosity and models of collegiality. They devoted much time, energy and patience commenting on various drafts. I could not have completed this book without them. Of course, I alone am responsible for all errors and omissions. As I travelled across the Commonwealth and the United States doing my research, I was assisted by wonderful archivists in Ottawa, Canberra and Wellington, as well as at the Truman and Roosevelt presidential libraries. Their knowledge and expertise made my research trips successes as well as pleasures. Nicholas Lensky, Lisa Krebs, Dimitri van Kampen, Jodi Burkett and Eddie Kolla helped me as research assistants over the last few years. I would also like to thank the Roosevelt Library, the Truman Library, and Trinity College at the University of Toronto for financial assistance to carry out research to complete this project. An earlier version of Chapter 5 appeared in the Journal of Imperial and Commonwealth History in 1998. I have made every effort to trace all copyright holders of the political cartoons reprinted in the book; advice of any omissions would be appreciated. The necessary arrangements will the made at the earliest opportunity.

x

List of Abbreviations AA ADM AS AUS CO CPCP CRO CT DAFP DBPO DCER DEA DM DO DPM DUS FAO FDRL FO FP FRUS GATT GNP HC HNP IBRD IMF ITO JSM MFN NAC NANZ NARA NYT OISB PM

Australian Archives Assistant Deputy Minister Assistant Secretary Assistant Under-Secretary Colonial Office Committee on Postwar Commercial Policy Commonwealth Relations Office Cape Times Documents on Australian Foreign Policy Documents on British Policy Overseas Documents on Canadian External Relations Department of External Affairs Deputy Minister Dominions Office Deputy Prime Minister Deputy Under-Secretary Food and Agriculture Organization Roosevelt Library Foreign Office Financial Post Foreign Relations of the United States General Agreement on Tariffs and Trade Purified National Party High Commissioner Reunified National Party International Bank for Reconstruction and Development International Monetary Fund International Trade Organization Joint Staff Mission Most Favoured Nation National Archives of Canada National Archives of New Zealand National Archives and Records Administration New York Times Oxford Institute of Statistics Bulletin Prime Minister xi

xii List of Abbreviations

PRO PUS PWR RTAA SAP SMH SS SSDA SSEA TL UN US USSEA

Public Record Office Permanent Under-Secretary Postwar Reconstruction Reciprocal Trade Agreements Act South Africa Party Sydney Morning Herald Secretary of State Secretary of State for Dominion Affairs Secretary of State for External Affairs Truman Library United Nations Under-Secretary Under-Secretary of State for External Affairs

Introduction: the Necessity of Redefining the Commonwealth

In that dark, terrific, and also glorious hour we received from all parts of His Majesty’s Dominions, from the greatest to the smallest, from the strongest to the weakest, from the most modern to the most simple, the assurance that we would all go down or come through together. You will forgive me if … I rejoice in the soundness of our institutions and proclaim my faith in our destiny.1 (Winston Churchill) It took a full week after London declared war on Germany on 3 September 1939 for the governments of all of the old dominions to decide to stand by Britain. In Australia and New Zealand there was no hesitation.2 Australia simply accepted that it was bound by the British declaration, just as it had been in 1914. New Zealand made its own declaration, but with so little hesitation that, because of the time difference, it actually became a belligerent before Britain. Prime Minister Savage of New Zealand summed up antipodean loyalty to the UK: ‘Where she goes we go. Where she stands we stand.’3 In Ottawa, Prime Minister Mackenzie King insisted on consulting parliament, but support for Britain was so overwhelming that Canada declared war without a formal vote. In South Africa there was heated debate. Prime Minister Hertzog proposed neutrality, but Jan Smuts, the deputy prime minister, was able to build an alliance favouring involvement. The dominions’ declarations of war brought relief and satisfaction in London. Since the Chanak crisis of 1922, when it had become clear that Britain could no longer count on military aid from the dominions, the Commonwealth had been a moribund force in international politics. This had shaken British confidence that the dominions would 1

2 Redefining the Bonds of Commonwealth

fight alongside it as the political situation in Europe deteriorated in the 1930s. Even though the British, Australian, New Zealand, Canadian and South African declarations of war were staggered, their ultimate solidarity reassured London that the Commonwealth still meant something. Coming together to fight the Axis powers set the tone for scholarly analysis of the Commonwealth at war. The acrimony and disunity of the interwar years was over and a new chapter had begun. H. Duncan Hall wrote during the war that wartime solidarity proved the Commonwealth really was a family, an analogy he insisted had to be taken literally. Hall believed each dominion was ‘aware of the need of subordinating itself freely to the requirements of life in the family of British nations’.4 Optimism about the future of the Commonwealth lasted until the end of the war and was also evident in the writings of Lord Elton, who published a comprehensive history of the Empire and Commonwealth in 1945. The start of the war, he proclaimed, had put to rest ‘the superficial malaise of the distempered years’ of the 1920s and 1930s. This became the standard interpretation of the Commonwealth experience during the war. For instance, Nicholas Mansergh’s 1958 account concluded that unity, solidarity and cooperation had prevailed over strains and tensions.5 Scholarly optimism reflected public and official enthusiasm. British politicians were determined to turn the Commonwealth into a unified bloc in the international community, to make it a third great force alongside the emerging superpowers. Despite the daunting threat of the Axis powers, the future of the Commonwealth seemed filled with promise. The optimistic prognoses of academics, as well as public and official confidence in the Commonwealth in the 1940s, overlooked or minimized the tensions and acrimony generated by wartime association. The events of September 1939 were indeed a powerful demonstration of the dominions’ enduring attachment to Britain and the Commonwealth. But beneath the celebration of wartime solidarity, the governments of the four dominions were profoundly dissatisfied with the traditional practices of Commonwealth consultation and cooperation. The strains of wartime were so severe that many British officials believed that although it had been a tremendous feat to bring a united Commonwealth into the war, it would be an even greater feat to bring a united Commonwealth out of the war. All longed for an end to the war, but peace would bring its own problems. Redefining the Bonds of Commonwealth examines the evolution and clarification of the Commonwealth from 1939–1948 in response to

Introduction 3

pressure from the dominions to make the Commonwealth more responsive to their needs and interests. The dominions also pressed for the recasting of the Commonwealth so that membership would not compromise their status as independent nations. The main challenge for the dominions was to articulate and implement separate external policies which would make irrefutable the claims that they were independent, equal and sovereign. Foreign policy was a milestone on the road to full independence.6 The quest to entrench their independence concretely is at the heart of this study. This approach to dominions’ independence repudiates the view that the dominions gained their independence with the Statute of Westminster of 1931. While the statute did affirm the equality and sovereignty of Britain and the dominions, there is much to suggest it did not in fact make the dominions independent.7 For one thing, the word ‘independence’ never appeared in the text. There was no change in the language used to describe the dominions. The term ‘dominion’, regularly used since the 1907 Imperial Conference, implied British domination of Canada, Australia, New Zealand and South Africa.8 The term ‘Commonwealth’ had been in use since World War I, long before the dominions were independent, while the term ‘Empire’ remained in use when discussing the dominions long after 1931. Nor was the Commonwealth reorganized in recognition of the dominions’ sovereignty and equality. The ‘old dominions’ and the crown colonies, like Jamaica and Kenya, had long been differentiated in imperial organization. The two tiers remained unchanged after 1931. Moreover, dominion status was not necessarily permanent. In 1934, Britain revoked Newfoundland’s dominion status.9 Perhaps most importantly, the whole process of constitutional negotiations perpetuated confusion. Self-government was acquired peacefully. Britain and the dominions remained close allies. The only prior example of a British colony acquiring its independence was the Thirteen Colonies. The War of Independence had left no doubt that the United States was separate and free. In contrast, the only war the dominions were willing to fight was in defence of Britain, not to break away from it. Thus the Statute of Westminster did not establish the dominions’ independence or define new parameters for the Commonwealth. As Stephen Leacock, the Canadian economist and humourist, observed, ‘After reading [the Statute of Westminster] no one can tell whether the Dominions are sovereign states or not.’ He concluded that in fact the dominions were definitely not independent.10 The ambiguity surrounding the dominions’ status was not subsequently dispelled because the dominions that


pressed hardest for constitutional clarification, Canada and South Africa, did not exercise the prerogatives of independent nations rigorously or consistently, while Australia and New Zealand, not keen to redefine their constitutional relations with the UK in the first place, were disinclined to make use of their new powers. Constitutional confusion was compounded by ambiguities about the national identity of each of the dominions.11 As much recent scholarship on nationalism has shown, claims to primordial commonalities such as ethnicity notwithstanding, the sense of a unique national identity often emerges through political, economic, institutional and intellectual developments which distinguish one group of people from another.12 This sense of imagined but potent attachment was ambiguous in the dominions, where pride in a British heritage and identity suggested to many that they were derivative British societies. There were many for whom Britain was not the mother country: French Canadians, Irish-Australians, Afrikaners, along with indigenous peoples and pioneering nationalists.13 But the large British diaspora across the Commonwealth felt and cherished the tie keenly and took great pride in membership in Greater Britain. Although embracing a British heritage was part of the expression of nationalism in the dominions, the appearance of on-going attachment to Britain raised questions in the late nineteenth and twentieth centuries about the autonomy of the dominions.14 The four dominions lacked the symbols of nationhood, such as flags, currency, anthems, parliamentary traditions, and a unique head of state. These too reinforced the tie to Britain and suggested the dominions had not moved beyond a colonial status and mentality. Towards the end of the war, Escott Reid, an intellectual and early nationalist in Canada’s Department of External Affairs, lamented the failure to ‘create the usual symbols of nationhood and to remove the vestigial symbols of colonial subordination’. He proposed twenty-four symbolic changes, including referring to the monarch as the King of Canada, replacing ‘British subject’ with ‘Canadian citizen’ on Canadian passports, creating a national library and university, developing a national capital ‘of which the whole of Canada can be proud’, and rewriting and patriating the constitution.15 In the eyes of the rest of the world, Britain still dominated the association. In the field of foreign policy in particular, the dominions seemed to be adjuncts and appendages of Britain. Diplomacy had endured as the last area of cooperation, integration and subordination, persisting after proposals for an imperial commercial bloc, joint defence and common parliamentary representation all failed to win

Introduction 5

support. Although Britain had ceded control over foreign policy to the dominions in 1923, to many the Commonwealth continued to seem a bloc under British direction in world affairs.16 Though there was little concrete evidence of cooperation, equally importantly there was little evidence of fragmentation. The British were careful not to speak for or represent the dominions lest they repudiate the connection with Britain in protest. Thus British officials were scrupulous about the form, deliberately vague about the substance of Commonwealth cooperation. Because dominion governments were satisfied with British respect for the formality of sovereignty they did not make the point that they controlled their foreign policy by articulating separate views and goals. Inexperience, diffidence and domestic constraints strengthened their reluctance to implement a distinctive foreign policy. The designation of the dominions’ envoys to Commonwealth postings as high commissioners rather than ambassadors confirmed that relations between Britain and the dominions were qualitatively different from those between truly foreign nations.17 Thus the impression of diplomatic unity in the Commonwealth persisted, undermining the dominions’ claims to be independent. In the words of K. C. Wheare, the dominions’ control over foreign policy up to 1939 ‘allowed plenty of scope for argument about the precise status of the Members of the Commonwealth in international law’.18 In the eyes of the rest of the world continued association in international affairs with the mother country perpetuated the belief that the dominions belonged to the category of advanced colony. The Commonwealth had to change in response to the development and expression of distinct foreign policies in the dominions. The timing of this adaptation during and immediately after World War II was no coincidence. It was part and parcel of changing international conditions: the changing international hierarchy and the reconstruction of the international community. British decline, which the war exacerbated and expedited, and the concomitant reduction of the benefits of association, prompted the dominions to reconsider the purpose of cooperation with Britain. The dominions were forced both to rely more on themselves and to look further afield for allies. Their reaching beyond Britain and the Commonwealth coincided with a broad consensus about the need for a reconstructed international system to keep the peace. Each dominion wanted to occupy its own place in the new community. But until their oldest ally treated them as independent entities, it was unlikely that the rest of the international community would. Thus clarification of the ambiguity surrounding


Anglo-dominion relations – and the lingering belief that Britain led and dominated the Commonwealth – was a precondition of their full participation in world affairs. The dominions had to redefine their roles in the Commonwealth to eliminate inconsistencies and permit simultaneous involvement in the Commonwealth and the international community. Fear was as potent a force as pride in transforming and clarifying the Commonwealth during the war. Before the German invasion of the Soviet Union in the summer of 1941 and the bombing of Pearl Harbor in December of that year, Britain had born the brunt of the German onslaught. Defeat seemed imminent. Meanwhile, Australia and New Zealand were more concerned with the advance of Japanese troops to the south. The detection of Japanese submarines in Sydney harbour and the bombing of Australia’s northwest coast more than justified their fear. Confronted with the possibility of British defeat, the overcommitment of British military resources, and attacks upon their own territory, dominion governments felt forced to take action for their own defence, and in so doing assume the responsibilities of fully sovereign states.19 Britain might still be the mother country to many, but sentiment and history could not trump national security. Out of concern for their own well-being and the recognition that no other government could or should promote their interests or ensure their security, the dominion governments decided to take greater control of their foreign policies and widen their foreign relations beyond Britain and the Commonwealth. The result was that the dominions came to be recognized as distinct and autonomous nation-states on the world stage. Dominion autonomy took on a very real meaning. This was a fundamental part of the Commonwealth experience during and immediately after World War II. Though less visible, inspirational and urgent than fighting the Axis powers, renegotiating the mandate and precedents of Commonwealth cooperation and association would nonetheless determine whether the Commonwealth would survive World War II as surely as would winning the war. During World War II it was not easy to distinguish the foreign policies of the dominions from those of Britain. In the interests of efficiency and rapid decision-making, the dominions followed British direction in their collective war effort. This reinforced the British habit of using dominions’ resources as though they were its own. It also deepened outside impressions of the Commonwealth as a Britishdominated alliance. The persistent British instinct to guide the dominions was not limited to the wartime struggle. The example of World

Introduction 7

Fig. 1

The Prime Minister Christens the Baby20

War II inspired British leaders to formulate postwar foreign policy on the assumption that a strong Commonwealth – London-centred and UK-led – would redress the imbalance of power between Britain and its


chief wartime allies: the US and Soviet Union. The goal of harnessing the strength of the dominions to reinforce a sagging international position was most strongly associated with Churchill, but in fact, it cut across party, class and generation. Clement Attlee, leader of the traditionally anti-imperial Labour Party, from a middle-class family and ten years Churchill’s junior, accepted as ‘a fundamental assumption’ that the postwar Commonwealth should be ‘an international entity, recognised as such by foreign countries, in particular the United States and the Soviet Union’.21 By standing on the shoulders of the Commonwealth, Britain could be at eye level with the superpowers. If British efforts succeeded, other nations would continue to look to Britain as the parent country, with the dominions trapped in adolescence, not totally dependent on Britain but ultimately forever children. The perceptions of non-Commonwealth states mattered to the process of the dominions becoming independent. Prime Minister Hertzog of South Africa, whose uncompromising insistence had culminated in the Balfour report of 1926, the precursor to the Statute of Westminster, explained this to South Africa’s House of Assembly, ‘Unless our status is acknowledged by foreign nations we simply do not exist as a nation.’22 Foreign recognition had not come automatically after 1931. To nonCommonwealth nations, the dominions remained British in character and were a mere extension of the UK. Until foreign nations recognized the dominions’ independence and conducted their external relations with them according to the protocol and precedents due to sovereign nations, the dominions’ international status would remain unclear. Neither Britain nor the dominions wanted the Commonwealth to collapse as a result of the need for change. Rather, they sought ways to work together in international affairs, at least some of the time, without undermining, compromising or repudiating the independence of its constituents. The challenge was compounded because the nations in question varied widely in terms of power, experience and outlook. In addition, the common imperial past meant that Anglodominion relations first had to complete their own process of decolonization before they could address more straightforward problems of international relations.

The Commonwealth during and after the war: the need for a multicentred history For some time, relations between Britain and the old or ‘white’ dominions have been a low priority in the field of imperial and

Introduction 9

Commonwealth history.23 The classic texts by W. K. Hancock and Nicholas Mansergh, now half a century old, are still relied upon. Their durability is in part a testament to sound scholarship and the belief that the story of the Commonwealth, as well as those of its members, has been told satisfactorily. Moreover, the questions that arise in studies of the Commonwealth have fallen out of fashion, eclipsed by the issues of decolonization of the crown colonies. Finally, scholars increasingly are trained in a national tradition. So while historians do still write about bilateral relations between an individual dominion and Britain, particularly Australian scholars, their focus tends to be national, leaving little room for consideration of the Commonwealth as a whole.24 Not only does this marginalize an important part of the national histories of the dominions, it downplays the importance of the dominions to the history of the Commonwealth. A multicentred and inclusive approach is essential to understanding fully the Commonwealth experience. Redefining the Bonds of Commonwealth explores the history of the Commonwealth from five points of view.25 Juggling the various perspectives leads to certain organizational complexity, but it is essential, because each member was discrete and indispensable to the Commonwealth. It was the dominions that forced the renegotiation of the structure and mandate of the Commonwealth against British wishes. This is not to suggest that the dominions exerted a destructive influence on the Commonwealth, just that they did not accept the British conception of the ideal Commonwealth. The dominions all believed that the Commonwealth was – or should be – a useful association of nations. They wanted a Commonwealth that did not ignore their interests or undermine their autonomy. But looking to the dominions collectively brings no easy answers for the simple reason that they all had different points of view and goals. Hume Wrong, the Canadian assistant under-secretary of state, warned against the mistaken but long-standing practice of ‘lumping’ the dominions together ‘as though the Dominions tended to possess a common interest and a common policy on all matters’, a warning the historian must heed too.26 I do refer to Canada, Australia, New Zealand and South Africa collectively as ‘the dominions’ for reasons of stylistic felicity and where a group reference does not misrepresent any of the dominions. But with respect to the dominions’ views on membership in the Commonwealth, the historian must treat each dominion separately. Canada, Australia, New Zealand and South Africa had different conceptions of the Commonwealth association. Furthermore, their views


changed as the war unfolded. Dominion responses to the British entry into the war in 1939 delineate a spectrum of opinion about relations with Britain and membership in the Commonwealth, from Australia’s unquestioning acceptance of Britain’s declaration of war to South Africa’s teetering on the edge of neutrality. The spectrum shifted and narrowed during the war, with the range extending from reluctant to determined independence. This variety of opinion complicated attempts to renew and redefine the Commonwealth. Of all the dominions, New Zealand began and ended the war the most satisfied and most ‘British’ of the dominions. Britain was the focal point of its external policies, an orientation strengthened by ties of commerce, sentiment and confidence in British leadership. But satisfaction did not translate into slavish acceptance of British policies. New Zealand was an independent-minded though loyal critic of Britain.27 Moreover the wartime government took important administrative steps to give Wellington greater control over its foreign policy, such as establishing a separate Department of External Affairs, increasing its diplomatic representation abroad and, in 1947, ratifying the Statute of Westminster, the last dominion to do so. The war brought about a subtle dilution in the New Zealand–UK axis, but Britain and the Commonwealth remained the weightiest factors in calculations of New Zealand’s external policy. Australian attitudes towards Britain and the Commonwealth changed dramatically during the war, from acceptance of the British declaration of war as its own in 1939, to relentless criticism of unilateral British action by 1945. The shift was due in part to wartime threats to national security. As the Japanese moved south, and British battleships were nowhere in sight, the Australian government resigned itself to the reality that Britain could not save it. Australia’s new-found spirit of self-reliance was evident in the decision (in stark contrast to the start of the European war) to make a separate declaration of war against Japan at the end of 1941. In 1942 Australia ratified the Statute of Westminster, ‘a logical development from the step taken at the end of 1941’, signalling acceptance of responsibility for its security.28 Thereafter there were two main goals of Australian foreign policy: ensuring national security and participating widely and constructively in international affairs. This did not translate into a breach with Britain or the Commonwealth. Rather, Australian leaders hoped that association with the Commonwealth would elevate their standing and amplify their voice in the international community. Australia’s contin-

Introduction 11

ued attachment to the Commonwealth depended on its utility in furthering national ambitions. In South Africa, Smuts’ conception of the ideal Commonwealth was curiously rational and supportive. After a lifetime of struggle, first to defeat the British during the Anglo-Boer war and subsequently to entrench the independence of the dominions, Smuts believed that contact with Britain and the Commonwealth opened South Africa to the rest of the world, counteracting a creeping parochialism. Moreover he believed the Commonwealth was a force for good. But his was not the mainstream or majority view. Afrikaner nationalism, long simmering, exploded during the war. Inward-looking and anti-British, these nationalists had little use for the Commonwealth connection. Smuts had to chart a careful political course to maintain South Africa’s place in the Commonwealth. In Canada there was tremendous admiration for the Commonwealth’s wartime achievements. But suspicion lingered that Britain intended to revert to an imperial role, using the Commonwealth to serve British interests. Messages to Britain were mixed, blending praise and censure, but they were never ambiguous. Policy-makers were no longer content to hide in Britain’s shadow. Moreover there was confidence that active involvement in world affairs would strengthen the Canadian identity, rather than exacerbate internal tensions which in the worst cases had threatened national unity. Ottawa moved towards an activist foreign policy based on internationalist convictions and a global focus. There were no pretensions to be a great power, but there was no reason for a confident middle power to sit silently on the back benches. Postwar Canadian foreign policy would be far-ranging, independent and inclusive. The Commonwealth would remain a valued association, but one of many. To Britain the independence of the dominions’ identities, outlooks, interests and foreign policies was incompatible with its conception of the Commonwealth association. Unless their interests and aims were identical, what held them together? If they did not stand together, what purpose did the Commonwealth serve? A two-day debate in the House of Commons in 1944 on the uncertain future of the Commonwealth ended with the MPs’ acceptance that the fate of the Commonwealth ultimately rested in the hands of the dominions.29 But as the war neared an end, there was pessimism in Britain about the postwar prospects of the Commonwealth. Indeed Viscount Cranborne, secretary of state for the dominions, believed by 1945 that the


Commonwealth was unmanageable. He complained that the dominions were ‘beginning to show most disturbing signs of moving away from the conception of a Commonwealth acting together to that of independent countries bound to us and each other only by the most shadowy of ties’. He hoped that stern tones might help, although he admitted, ‘Whenever … we have tried this, the only result has been to irritate them and strengthen the forces of independence.’30 Thus the British hoped to continue to dominate the Commonwealth and lead the dominions, while the dominions sought greater autonomy within the association and outside of it. The battle lines were drawn: Britain on one side, the dominions arrayed against it but not in a common front. The redefinition of the Commonwealth began as an internal process, but external pressures, in particular from the US, also shaped its new form. Although the Anglo-American special relationship was unusually intimate and extensive during the war, the British could not monopolize their ally. Direct diplomatic and military links between the dominions and the United States flourished. These ties repudiatied the primacy of the connection to Britain. The Americans were receptive to the advances of the dominions, in part because they hoped it might accelerate the dissolution of the Empire and Commonwealth. American antipathy for these, and indeed all, imperial associations was long-standing and well-known.31 In Washington and across the Commonwealth, cultivating relations with the US and remaining members in the Commonwealth were seen as mutually exclusive options. As Richard Casey, Australia’s first minister in Washington, explained: The Americans are fond of saying the British Empire is disintegrating – ‘yes’, I reply, ‘it always has been – and if you want to precipitate its final ruin, offer to throw the mantle of your protection around its outlying parts. Thus you will accomplish your heart’s desire.’32 If relations between the dominions and the US threatened the integrity of the Commonwealth, they also helped to liberate the dominions from their colonial pasts. If the US worked closely and exclusively with the dominions, Washington would confirm that their independence was a practical reality. Establishing individual relations with the US was an uphill struggle because of widespread confusion about the modus operandi of the Commonwealth. This confusion was evident at the start of the war

Introduction 13

when the US wondered whether or not the British declaration of war bound the dominion governments. President Roosevelt’s legal advisers had not known whether to draw up one declaration of neutrality or five. Shortly after his appointment to Washington, Casey tried to disabuse the Americans of the most egregious misunderstandings, for instance that the UK led the Commonwealth and that the dominions were nothing more than ‘glorified colonies’. But his description of the dominions as ‘British countries’, and his explanation that the citizens of the dominions and Britain ‘spring from common stock … recognise a common king … [and] have been through good times and bad times together’ weakened his argument.33 But much as the Americans warmed to the dominions’ overtures, most policy-makers still saw them as subordinate to, sometimes even territory of, Britain. American recognition of the dominions’ sovereignty, equality with and independence from the UK would not be automatic.

The case study: imperial preference Dominion and British governments did not discuss the evolution of the Commonwealth openly or systematically during the earliest and most uncertain stage of the war. Concerns about status and identity were inappropriate while the possibility of defeat loomed. But by the end of 1942, the course of the war had changed in the allies’ favour and government officials across the Commonwealth began to think about the future of the Commonwealth and to plan for the reconstitution of the postwar world in earnest. The two issues were linked, for several reasons. It was seen as essential to redefine rules of membership in the Commonwealth that were consistent with the status and identities of the dominions, as well as the roles they hoped to fill in other international institutions. It was also seen as important not to postpone the articulation of their views until after the war. The dominions had to make the point that the wartime pattern would not be the basis for future association. As long as the UK depended on the dominions for financial, military and moral support, British policy-makers were more inclined to listen to their proposals and opinions. The dominions had to make the most of the temporary situation. Canada, Australia, New Zealand and South Africa participated in the creation of many new international institutions in this period: the United Nations Organization, the International Monetary Fund, and the International Bank for Reconstruction and Development. The branch of international reform which went to the heart of the


complexity and ambiguity in the Commonwealth was trade. As trading nations, Britain and the dominions were vitally interested in the process of postwar commercial reconstruction. The impetus to reform international trade came in part from the widespread belief that discriminatory and restrictive commercial practices had provoked ill-will between nations, ultimately degenerating into war. Trade had to be regulated and monitored to eliminate commercial rivalry as a potential source of conflict in international affairs in the future. British and dominion involvement in trade policy reform had fundamental repercussions for the future of the Commonwealth because the history of the Empire and Commonwealth was so intimately linked to trade.34 Commercial relations embodied the complexity of Anglodominion dynamics. There was extensive trade between Britain and the individual dominions and Britain remained the single most important outlet for Australian, New Zealand and South African exports well after 1945. But trade was also one of the earliest areas in which the colonies became self-governing. Adopting distinct tariff policies was part of the process by which each dominion was able to affirm its independence of Britain. The kind of relationship the individual dominions desired to have with Britain was also captured in trade policy. Bilateralism signalled an enduring desire to work with London. Multilateralism, on the other hand, revealed a desire to decrease dependence on Britain and to foster ties with non-Commonwealth countries. Thus the commercial component of Commonwealth relations captured the tension between individual and collective interests, policies and identities that was the main challenge to Commonwealth cooperation and association. The reformation of international trade practices had an even more direct effect on the Commonwealth when one of the few remaining tangible ties between Britain and the dominions came under fire: imperial preference, the most extensive functioning system of tariff discrimination in the world. As part of the promotion of freer, non-discriminatory trade, the international community, with the US in the vanguard, sought to eliminate imperial preference from the postwar world. As one of the last formal links between the members of the Commonwealth, the future of imperial preference was loaded with political significance and steeped in emotion. The Associated Chamber of Manufacturers of Australia described imperial preference as ‘a slender silken but strong girdle which bound together the 70 million Britons scattered over the face of the world’.35 A close connection was drawn between the unity of the Commonwealth and the survival of imperial preference.

Introduction 15

The future of imperial preference was decided in four different contexts: national, Commonwealth, bilateral (UK–US) and international. This work explores each of these different contexts in order to understand the fate of imperial preference and, more importantly, the impact on and consequences for the Commonwealth. The national or domestic context is important for two reasons. First, tariff policy took shape in closed national councils, in which each government established its own policy. The loci of authority resided in British and dominion capitals, not just London. Second, political history, economic development, patterns of settlement and realities of geography had a profound impact on each dominion’s individual tariff policy as well as relations within the Commonwealth. Consequently, each member of the Commonwealth must be understood on its own terms. Dominion and British representatives presented their trade policies at Commonwealth meetings. These meetings were highly politicized and emotional as the dominions’ emerging and discrete identities were pitted against their British pasts, highlighting the possibilities and limits of Anglo-dominion cooperation. The issue of trade, and the future of imperial preference more particularly, tested whether, and to what extent, Britain and the dominions could work together. Before and after Commonwealth meetings, there were Anglo-American discussions at which American negotiators launched an all-out attack on preferential tariffs, assuming that Britain had the authority to disband imperial preference unilaterally. The British refused to yield, believing their international standing, beginning with their leadership of the Commonwealth, was at stake. These discussions clarified the British conception of the Commonwealth and demonstrated that it could no longer exist as a closed subset of the international community. Finally, there were international discussions, the goal of which was to create an International Trade Organization (ITO). Rules and regulations were set out to govern commercial practices, including tariff discrimination. This was the point at which the international community and the Commonwealth intersected. In international gatherings the way in which members of the Commonwealth consulted and coordinated – or did not – would be exposed for the world to see. It became essential to rationalize membership in the Commonwealth with membership in the international community. This was a matter of some urgency. Unless a solution was devised, the Commonwealth was unlikely to survive in any meaningful way once peace was restored. This book, therefore, begins by explaining the policies of Britain and the dominions towards imperial preference, as well as their decision-making


processes, before turning to a narrative of Commonwealth, international and Anglo-American commercial negotiations, in all of which imperial preference was a controversial issue over which there was little room for compromise. The debate over preferences began in earnest in 1942; a resolution was reached in 1948. It had tremendous significance for the Commonwealth, as augury, as barometer and as test case.

1 A Short History of Imperial Preference: the Myth of Commonwealth Unity and the Reality of National Interests

Tariff personality was an essential element of self-government. It was a mark of constitutional status, a symbol of autonomy.1 (W. K. Hancock) The issue between Free Trade, on the one side, and Protection and Preference, on the other, was not a mere detail of trade policy. It was essentially a conflict between two wholly different philosophies of national life.2 (L. S. Amery) In the eighteenth and nineteenth centuries, tariff policy had been a fundamental and controversial aspect of imperial governance. Colonial outposts contested British authority to impose tariffs on goods entering their markets. Tension exploded into full-blown conflict during the American War of Independence, when control over tariffs was equated with political independence. In 1778 the British government repudiated its right to impose tariffs on commodities entering the Thirteen Colonies. The concession came too late, but London learned not to disregard the commercial interests of the remaining colonies if it wanted peace in the Empire. When the Peel government introduced free trade in 1846 Britain ceded irrevocably the responsibility for tariffs to the colonies of settlement. As D. K. Fieldhouse explains, Britain benefited by dispensing with some of its imperial prerogatives because the colonies remained within the imperial orbit.3 Control over tariff policy was one of the earliest powers of local administrations. British 17

18

Fig. 2

Lip-Loyalty vs. Loyalty that Acts4

A Short History of Imperial Preference 19

non-intervention in tariff matters subsequently became an inviolable principle of the British Empire. The Canadian government of Wilfrid Laurier conferred the first preferential tariffs on British exports in 1897. The motives were entirely consistent with local political and commercial imperatives. The political value of imperial preference was obvious to the first French Canadian prime minister who used the tariff to reassure the Englishspeaking majority of his pro-British sympathies. The British government could not prevent Canada from bestowing the unwelcome preferential treatment on its exports, but it did not reciprocate. The Canadian decision to proceed confirmed that local authority was intact, even when confronted with British opposition. Although the creation of this first preferential tariff now appears as a testament to the widening authority of the colonial government, observers at the time interpreted the gesture as a high point in imperial history. Kipling commemorated preferential tariffs in ‘Our Lady of the Snows’, a poem that lauded the ability of the dominion to reconcile its maturity with an enduring attachment and loyalty to the UK. A nation spoke to a nation A throne sent word to a throne Daughter am I in my mother’s house But mistress in my own. Kipling also celebrated the voluntary basis of their association and reciprocal goodwill. The door is mine to open As the door is mine to close And I abide in my mother’s house Said our Lady of the Snows. From its outset, imperial preference symbolized the blending of individual and collective interests, underscored with confidence that common benefits could always be found and certainty that Britain remained the centre of Empire. The contradiction between the motivations behind the introduction of preferential tariffs and the interpretation of that decision as a tribute to the Empire arose because of hostile international economic and political circumstances, also captured in Kipling’s poem.


‘Favour to those I favour, But a stumbling-block to my foes. Many there be that hate us,’ Said our Lady of the Snows. A world recession of over twenty years was nearing an end but the erection of tariffs across Europe in the 1870s and 1880s and in the US in 1890 had blocked trade. Imperial markets were therefore increasingly valuable to Britain and preferential tariffs seemed to make them secure. The end of the century was also a time of heightened political rivalry between Britain and the principal European powers, manifested in the race to claim territory in Asia and Africa. Even though imperial preference was inconsistent with the British commitment to free trade, London welcomed the additional bond with the colonies of settlement. Over the next ten years Australia, New Zealand and South Africa all extended preferences. Except in South Africa, where preferences preceded self-government, the application of tariffs affirmed the dominions’ political authority. But in the public mind, every time a dominion government extended another preference the Empire grew stronger. The myth of imperial preference was more potent than the reality. After World War I Britain began to move away from free trade, extending preferential tariffs to Commonwealth products in 1919 under the Finance Act. The government was primarily interested in the protection that preferential tariffs offered to British manufacturers. This drift away from free trade practices provoked debate and discord in the UK, with much toing and froing, but the course was not subsequently reversed. Imperial preference did not again become a priority for the Commonwealth until the Depression, when Canadian Prime Minister R. B. Bennett suggested increasing intra-imperial trade as a possible remedy for common economic ills. British and dominion representatives gathered at the Imperial Economic Conference in Ottawa in 1932 to test the viability of the imperial commercial option. These proceedings confirmed that tariff policy, and imperial preference, served individual interests. Dominion negotiators bargained single-mindedly to secure concessions which would benefit their exports, while making few reciprocal concessions.5 This came as a shock to members of the British delegation who were thoroughly disabused of the belief in collective interests prevailing over local ones. As one member of the British delegation observed, dominion representatives were ‘prepared


to ask for everything and concede nothing’. British delegates singled out Bennett and the leader of the Australian delegation, former Prime Minister Stanley Bruce, for their ruthlessness in securing as much as possible while giving little in return. ‘Both Bennett and Bruce demanded further concessions – brutally and as if they were dictating terms to a beaten enemy, as indeed they were – and all were at once conceded.’6 The results of the negotiations were as disappointing as the process. Commonwealth markets did not become more accessible. That was because negotiators created preferential margins, the difference between a lower preferential and higher general rate, by raising the duty on foreign goods rather than by lowering the rate applied to British or imperial products. Intra-imperial trade did not benefit significantly and foreign governments retaliated.7 Losing access to foreign markets undermined the prosperity of Britain and the dominions because there was insufficient demand in Commonwealth and imperial markets to consume all of the agricultural products, natural resources and manufactures that were produced.8 They still needed foreign markets (see Table 1.1). To make matters worse for advocates of an imperial commercial bloc, preferential tariffs were deliberately kept high enough to shield local manufacturers from the full force of British competition. British officials hoped that the protective function of preferences could be offset by setting up national tariff boards to determine where British goods could be granted conditions of ‘reasonable competition’, in effect to be treated as domestic producers where indigenous industries would not be injured. Canada agreed to set up such a board, but never did. The Australian board interpreted ‘reasonable competition’ to mean that domestic industries should be guaranteed a margin of profit despite higher production costs, effectively shutting out British competitors. New Zealand eliminated the domestic competitor clause in 1937.9 British complaints that the dominions violated the spirit of the Ottawa agreements were based on the mistaken belief that the dominions had suppressed their individual interests in Ottawa. This was incorrect. Dominion officials negotiated and implemented preferences according to narrowly conceived national interests. Fierce competition among the dominions for the British market further undermined the ideals of Commonwealth cooperation and complementarity. Overlapping production, agricultural commodities and natural resources meant no dominion wanted Britain to generalize concessions extended to a particular export from a particular


Table 1.1

Commonwealth Trade 1931–1938: £ million (per cent of total trade)10

Canada Imports

Exports

date

Br. Emp

UK

Others

1931 1932 1933 1934 1935 1936 1937 1938

8.5 (7.2) 7.0 (8.4) 7.3 (8.1) 9.1 (8.6) 12.2 (10.6) 14.1 (10.2) 18.1 (11.0) 13.4 (9.9)

21.8 (18.4) 88.4 (74.4) 17.7 (21.3) 58.7 (70.4) 21.6 (24.2) 60.1 (67.6) 22.8 (21.4) 74.7 (70.0) 24.0 (21.0) 78.4 (68.4) 26.5 (19.2) 89.8 (70.5) 29.8 (18.1) 116.1 (70.8) 23.7 (17.6) 98.0 (72.5)

Br. Emp

UK

Others

10.0 (7.8) 9.2 (7.8) 10.2 (8.6) 13.4 (10.1) 15.7 (10.3) 17.7 (8.9) 21.7 (11.0) 21.2 (12.4)

38.9 (30.2) 46.3 (39.2) 46.9 (39.6) 55.3 (41.7) 64.1 (42.1) 81.8 (41.4) 81.7 (41.6) 67.2 (39.2)

79.8 (62.0) 62.6 (53.0) 61.5 (51.9) 64.0 (48.2) 72.3 (47.5) 98.2 (49.7) 93.1 (47.4) 83.1 (48.4)

Australia Imports

Exports

date

Br. Emp

UK

Others

Br. Emp

UK

Others

1931 1932 1933 1934 1935 1936 1937 1938

8.0 (14.4) 6.3 (15.8) 8.2 (15.8) 8.8 (16.2) 10.2 (15.3) 12.4 (16.0) 14.1 (16.4) 16.5 (15.9)

23.8 (39.6) 17.8 (40.6) 24.1 (42.5) 25.7 (43.4) 31.4 (43.6) 34.5 (41.5) 39.0 (43.6) 47.1 (42.3)

28.8 (46.0) 19.9 (43.6) 24.6 (41.6) 23.9 (40.4) 30.8 (41.1) 36.6 (42.4) 37.5 (40.0) 48.1 (41.7)

7.1 (9.6) 6.3 (8.4) 6.8 (8.9) 6.8 (7.7) 7.8 (9.7) 9.3 (9.6) 12.3 (10.6) 13.4 (12.1)

33.5 (44.9) 37.2 (50.3) 36.6 (47.6) 42.4 (47.7) 42.6 (52.8) 48.3 (49.9) 57.8 (49.9) 62.3 (56.2)

33.9 (45.5) 30.5 (41.2) 33.3 (43.4) 39.7 (44.6) 30.3 (37.5) 39.2 (40.5) 45.7 (39.4) 35.0 (31.6)

New Zealand Imports date

Br. Emp

1931 5.2 (21.1) 1932 5.1 (22.0) 1933 4.5 (22.2) 1934 5.9 (23.4) 1935 6.7 (22.9) 1936 8.3 (23.4) 1937 10.8 (24.0) 1938 11.4 (25.7)

UK

Exports Others

12.1 (49.0) 7.4 (29.8) 11.4 (49.8) 6.5 (28.2) 10.5 (51.3) 5.4 (26.5) 12.6 (50.4) 6.6 (26.2) 14.7 (50.3) 7.8 (26.7) 17.5 (49.4) 9.7 (27.3) 22.4 (49.6) 11.9 (26.4) 21.3 (47.9) 11.8 (26.4)

Br. Emp

UK

Others

1.1 (3.5) 1.2 (3.8) 1.3 (4.2) 1.9 (5.2) 1.8 (5.1) 2.3 (5.3) 2.8 (5.5) 2.6 (5.8)

27.5 (89.7) 27.7 (90.2) 27.3 (87.2) 29.9 (82.3) 30.2 (84.5) 35.5 (80.6) 39.7 (76.5) 38.4 (84.7)

2.1 (6.8) 1.9 (6.1) 2.7 (8.6) 4.5 (12.5) 3.7 (10.4) 6.2 (14.1) 9.4 (18.0) 4.2 (9.5)


Table 1.1 Commonwealth Trade 1931–1938: £ million (per cent of total trade)10 (continued) South Africa Imports

Exports

date

Br. Emp

UK

Others

Br. Emp

UK

Others

1931 1932 1933 1934 1935 1936 1937 1938

6.3 (11.2) 5.0 (11.1) 4.7 (9.6) 6.5 (9.8) 7.2 (9.6) 8.1 (9.3) 9.6 (9.3) 9.4 (9.9)

25.5 (45.5) 20.7 (46.3) 24.7 (50.3) 32.3 (48.8) 36.6 (48.6) 39.9 (46.3) 44.0 (42.6) 41.4 (43.3)

24.3 (43.3) 19.1 (42.6) 19.7 (40.1) 27.4 (41.4) 31.4 (41.7) 38.2 (44.3) 49.7 (48.1) 44.7 (46.8)

4.3 (18.9) 3.9 (15.7) 3.3 (14.5) 3.4 (14.9) 3.6 (13.0) 3.3 (12.0) 5.1 (13.1) 4.2 (15.0)

9.9 (43.4) 10.4 (42.1) 8.7 (37.9) 9.5 (41.1) 11.7 (42.5) 11.3 (40.9) 14.4 (37.5) 10.7 (38.1)

8.6 (37.7) 10.4 (42.1) 10.9 (47.6) 10.1 (44.0) 12.3 (44.6) 13.0 (47.1) 19.0 (49.3) 13.2 (46.9)

United Kingdom Imports

Exports

date

Br. Emp

Others

Br. Emp

Others

1931 1932 1933 1934 1935 1936 1937 1938

247 (28.7) 248 (35.4) 249 (36.9) 271 (37.1) 285 (37.6) 332 (39.2) 405 (39.4) 372 (40.4)

614 (71.3) 454 (64.6) 426 (63.1) 460 (62.9) 471 (62.4) 515 (60.8) 623 (60.6) 548 (59.6)

171 (43.7) 166 (45.3) 164 (44.4) 186 (46.9) 204 (48.0) 217 (49.2) 252 (48.3) 235 (49.9)

220 (56.3) 200 (54.6) 204 (55.5) 210 (53.1) 221 (52.0) 224 (50.8) 269 (51.7) 236 (50.1)

*Figures for the British Empire exclude the United Kingdom.

dominion.11 This was especially true in negotiations involving meat, where the dominions each wanted exclusive access to the British market in the form of preferential quotas. While there were a few signs of cooperation among the dominions in persuading Britain to reduce foreign meat quotas, they soon turned against one another, fighting ‘furiously to cut one another’s throats’.12 Moreover there was no interest in promoting inter-dominion trade because their exports were competitive, not complementary.13 Hardly surprisingly, the flow of trade between the dominions remained a trickle after 1932 (see Table 1.2). The results of the Ottawa conference confirmed that dominions’ commercial self-interest prevailed over Commonwealth unity. There was, however, a crucial inconsistency. Bilateral exchanges were laid out in contractual agreements, the core of which was the provision to bind


Table 1.2

Intra-Dominion Trade 1931–1938: £ million (per cent of total trade)14

Canada Imports

Exports

date

Australia

N. Zealand S. Africa

Australia

N. Zealand

S. Africa

1931 1932 1933 1934 1935 1936 1937 1938

1.2 (1.0) 1.2 (1.4) 1.1 (1.2) 1.3 (1.2) 1.5 (1.3) 1.9 (1.4) 2.5 (1.5) 1.8 (1.3)

0.2 (0.2) 0.2 (0.2) 0.5 (0.6) 0.5 (0.5) 0.7 (0.6) 1.1 (0.8) 1.5 (0.9) 0.8 (0.6)

1.2 (0.9) 1.8 (1.5) 2.5 (2.1) 3.7 (2.8) 4.8 (3.2) 5.4 (2.7) 6.5 (3.3) 6.9 (4.0)

0.8 (0.6) 0.9 (0.8) 0.9 (0.8) 1.5 (1.1) 2.1 (1.4) 2.3 (1.1) 3.2 (1.6) 3.5 (2.0)

1.9 (1.5) 1.0 (0.8) 1.5 (1.3) 2.5 (1.8) 2.7 (1.8) 3.1 (1.6) 3.2 (1.7) 3.3 (1.9)

0.9 (0.7) 1.0 (1.2) 0.7 (0.8) 0.7 (0.6) 1.0 (0.9) 0.3 (0.2) 1.7 (1.0) 0.4 (0.3)

Australia Imports

Exports

date

Canada

N. Zealand S. Africa

Canada

N. Zealand

S. Africa

1931 1932 1933 1934 1935 1936 1937 1938

1.4 (1.0) 1.4 (2.3) 2.3 (3.2) 2.9 (4.1) 4.1 (4.9) 5.4 (5.6) 6.1 (6.7) 8.0 (7.2)

0.8 (1.3) 0.7 (1.6) 0.7 (1.3) 1.2 (2.0) 1.3 (1.8) 1.5 (1.8) 1.3 (1.4) 1.7 (1.5)

0.8 (1.1) 0.8 (1.1) 1.0 (1.2) 1.1 (1.2) 1.2 (1.4) 1.1 (1.1) 1.8 (1.6) 1.8 (1.6)

2.1 (2.8) 1.7 (2.4) 1.9 (2.5) 2.0 (2.3) 2.6 (3.2) 3.1 (3.2) 4.0 (3.5) 5.2 (4.7)

0.4 (0.5) 0.3 (0.4) 0.2 (0.2) 0.2 (0.2) 0.2 (0.3) 0.3 (0.3) 0.3 (0.3) 0.6 (0.5)

0.09 (0.1) 0.06 (0.1) 0.1 (0.2) 0.1 (0.2) 0.2 (0.2) 0.3 (0.3) 0.3 (0.3) 0.3 (0.3)

New Zealand Imports date

Canada

Australia

1931 1932 1933 1934 1935 1936 1937 1938

1.2 (4.9) 1.0 (4.4) 1.0 (4.9) 1.7 (6.7) 2.0 (6.7) 2.7 (7.5) 3.7 (8.1) 3.9 (8.8)

2.4 (9.8) 2.7 (11.7) 2.1 (10.1) 2.6 (10.3) 3.2 (10.9) 4.0 (11.2) 5.3 (11.7) 5.7 (12.9)

Exports S. Africa*

Canada

Australia

0.2 (0.7) 0.2 (0.7) 0.4 (1.4) 0.6 (1.5) 0.5 (1.5) 0.9 (2.0) 1.3 (2.6) 0.9 (2.0)

0.7 (2.1) 0.7 (2.4) 0.7 (2.2) 1.1 (3.0) 1.0 (2.8) 1.1 (2.5) 1.1 (2.1) 1.4 (3.1)

S. Africa*


Table 1.2 Intra-Dominion Trade 1931–1938: £ million (per cent of total trade)14 (continued) South Africa Imports date

Canada

Australia

1931 1932 1933 1933 1934 1935 1936 1937 1938

2.0 (3.6) 1.5 (3.4) 1.3 (2.6) 1.3 (2.6) 2.6 (3.9) 2.6 (3.5) 3.1 (3.6) 3.7 (3.6) 3.4 (3.6)

0.5 (0.9) 0.2 (0.5) 0.2 (0.5) 0.2 (0.5) 0.2 (0.4) 0.3 (0.4) 0.4 (0.4) 0.5 (0.4) 0.8 (0.8)

Exports N. Zealand*

Canada

Australia* N. Zealand*

0.9 (3.9) 1.5 (5.9) 1.0 (4.5) 1.0 (4.5) 0.8 (3.3) 0.8 (2.8) 0.3 (1.0) 1.3 (3.5) 0.4 (1.3)

*Statistics not provided because insignificant.

preferential margins. A government could not subsequently modify a preference without the consent of the beneficiary.15 The ability of the beneficiary to permit or deny changes infringed on the sovereignty of dominion and British governments.16 The British had insisted on this provision to ensure that a party adversely affected by lost preferences would receive compensation. But the underlying British goal was to control the dominions’ tariff policies, an acknowledgement that the dominion governments used imperial preference, and tariffs generally, to promote their own national economic interests.17 Mackenzie King, relegated to the opposition benches in 1932, believed that tying the dominions and the UK to one another in this way would damage their association through the possibility of interference in one another’s domestic affairs. Disagreement would arise and the ill-will generated would expose the cracked façade of imperial unity.18 Most historians agree that there was little in either the proceedings or results of the Ottawa conference to encourage imperial enthusiasts that the Commonwealth bond remained strong or that imperial free trade was viable. For Neville Chamberlain, a member of the British delegation, the conference shattered the dream – inherited from his father – of a united Empire and Commonwealth. Chamberlain’s hope that commercial ties would replace weakening sentimental ties was dashed.19 Hugh Keenleyside, of the Canadian Department of External Affairs, observed that although the conference closed with great show, there was little to celebrate. ‘The worst failure of the conference was


that it made the Empire an affair of huckstering rather than of cooperation, when it should have been both.’20 W. K. Hancock described the ‘disappointment and bitterness’ engendered by the absence of charity.21 The lesson to be learned was that the dominion governments were committed to serving their local economic interests. At the political level, the conference was widely heralded as an imperial triumph. The belief that preferences held the Commonwealth together in the 1930s was reinforced by the international environment, a period of world depression and escalating international rivalry similar to the late nineteenth century. The very fact of holding the conference was thought to be more important than the results. As Stanley Baldwin, the leader of the British delegation, explained to the opening session, the decision to exchange preferential terms was a great moment for Commonwealth cooperation because: ‘it marks the point where two roads diverge, the one leading to the development of purely national interest, the other to closer imperial unity’.22 The economic advantages derived from imperial preference were secondary to the implication of renewed political support between members of the Commonwealth. Hot on the heels of the Statute of Westminter, imperial preference suggested that ties remained strong and that practical realities reinforced a Commonwealth alignment. The myth of imperial preference endured even though the dominion and British governments subsequently traded preferences for concessions in foreign markets. In 1934 the Roosevelt administration initiated the Reciprocal Trade Agreements Act (RTAA) and set out to reduce tariffs in bilateral agreements. The Canadians, British and Australians were eager to take advantage of the new legislation. Canada and the US concluded new agreements in 1935 and 1938. Britain and the US did likewise in 1938.23 In both sets of agreements preferences were used as bargaining chips to open the American market. Negotiations between Australia and the US had still not begun by the autumn of 1939, but that was not for lack of trying on Australia’s part.24 Canadian, Australian and British eagerness to negotiate with the US and to use preferences as leverage exposed their pragmatic appraisal of what imperial preference could, and could not, achieve.25 Dominion negotiators could reconcile self-interest with loyalty to Britain. If the dominions were strong and prosperous, they would be better allies to Britain. Ultimately, however, local interests determined all decisions affecting preferences, from their inception, retention and extension to retraction. Imperial preference belongs in an account of the rise of the dominions as autonomous nations for two reasons. First, the


changing attitudes of governments towards imperial preference reveals that their primary loyalty was to their own welfare; the dominions were not appendages of Britain or part of a support-system for the UK. Second, the practice of defining policies affecting preferences to promote individual ends confirms that the dominions were centres in their own right. Imperial preference also belongs to the history of Britain as a declining imperial power. When Britain was at its economic zenith in the nineteenth century British leaders spurned preferences. They were crutches that an economic and political giant did not need. They suggested an inward focus which was inconsistent with Britain’s global reach and influence. British determination to retain preferential tariffs – and the dominions’ loyalty and support which preferential tariffs symbolized – grew in inverse proportion to Britain’s demotion in the international hierarchy. Caught in the crossfire of the dominions’ ascent and British decline, imperial preference was bound to be explosive.

The politics of preference in wartime: American opposition vs. Commonwealth attachment World War II fuelled imperial sentiment where it remained vibrant, renewed interest in the Commonwealth where it had lapsed, and generated new enthusiasm for the Commonwealth among those who had formerly had little interest in it. In the general celebration of the Empire and Commonwealth, imperial preference became a sacrosanct symbol of imperial solidarity. It also became imbued with poignancy and passion. Keith Hancock, a historian of the Empire and serviceman during the war, realized this after he learned of the death of a West Indian crew aboard a British vessel. He asked, ‘If they now offer us their lives, can we deny them an extra penny or two of preference on their sugar?’26 But members of the Commonwealth were not permitted to hold on to preferences as a cherished symbol of their historic and renewed association. Within a growing international consensus about the evils of preferential trade, the staunchest critic of commercial discrimination was the nation no member of the Commonwealth could ignore: the United States. Washington championed the cause of non-discriminatory and freer multilateral trade in the postwar world. Without such reforms, they argued, peace would never be secure. American postwar planners singled out imperial preference, the most extensive discriminatory tariff system in existence, for special censure. The US took advantage of Britain’s economic weakness to force the elimination of the discriminatory tariff system. American efforts began


one year before Washington became an official belligerent. Determined to support Britain’s war effort, in December 1940 President Roosevelt announced that America would supply the UK with a variety of items necessary to sustain its war effort without insisting on immediate repayment. He justified this act of generosity in terms of the national interest. If Britain could keep on fighting, then America might be able to stay out of the war.27 More altruistically, he compared the situation to that between two neighbours, one of whose homes was on fire. It would be short-sighted to watch a neighbour’s house burn to the ground before turning to protect one’s own home. The sensible course of action was to lend your neighbour a hose to put out the flames before they spread. They could negotiate repayment later. Roosevelt presented his solution to Congress for ratification early in 1941. The bill passed despite concerns that it was a pretext to bring the US into the war and that Britain was too wealthy to merit such generosity.28 Thus was born Lend-Lease, which Churchill described as ‘the most unsordid act’ ever performed by one government towards another. But the British were not getting something for nothing. The main condition attached to Lend-Lease was the promise of general support for the construction of a liberal and multilateral trade order, support that Britain could demonstrate concretely by abolishing imperial preferences. The first occasion to stipulate these terms as repayment for Lend-Lease was a meeting between Roosevelt and Churchill on the high seas of the Atlantic in August 1941 to define their common purpose for the postwar world. Sumner Welles, the under-secretary of state at the State Department, worded one clause of the Atlantic charter (point four) to call for the abolition of all forms of discrimination in trade, including imperial preference. British officials redrafted the clause to protect imperial preference. Roosevelt intervened to end the impasse. He accepted a version of the point which introduced the qualification ‘with due respect for existing obligations’. Imperial preference was safe, but not for long.29 Cordell Hull, US secretary of state, was determined to secure a promise to abolish imperial preference. He tackled the question head on in subsequent negotiations over the repayment of Lend-Lease. The Americans had economic power on their side but the British did not capitulate right away. Opposition centred on the seventh article, usually referred to as ‘the consideration’, of what would become the Mutual Aid Agreement. Article VII set out the goal of a freer and expanding international economy. One way to realize this would be by eliminating ‘all forms of discriminatory treatment in international commerce’,30 in other words, the elimination of preferential tariffs.


Although Churchill’s attachment to preferences was no more than ‘lukewarm’, as he pointed out in a cable to Roosevelt, ‘the issue did not turn on the fiscal aspect’. Political considerations were paramount. First, as Keith Hancock suggested, to retract preferences would repudiate the importance of the Commonwealth connection, which World War II had more than legitimized. It was too much to ask London ‘to kick its Commonwealth allies in the teeth for a point of economic principle’.31 Second, retaining imperial preference would be a measure of British strength and self-reliance, its abolition a kowtow to American leadership. The two concerns were connected. British power and prosperity were increasingly dependent upon imperial and Commonwealth solidarity. A promise to dismantle imperial preference jeopardized that solidarity. There was tremendous resentment that the US was exploiting Britain’s wartime vulnerability to weaken it in the future.32 The implications of the American demand alienated even the most committed economic liberals in the UK. Lionel Robbins, the director of the economic section of the offices of the war cabinet and an unrepentent free trader, objected to Article VII because ‘we were being asked, in circumstances of dire need, to sign away liberties and Commonwealth ties essential to our future well-being’.33 British policy-makers had to weigh their immediate concern about prestige against long-term reliance on the special relationship to prop up Britain’s world role. Britain’s ambivalence pointed to the complexity of the Anglo-American relationship. Despite the new intimacy and extent of their wartime relationship, the US and UK saw one another as rivals. They would win the war together, but commercial policy was part of a larger struggle to determine who would dominate the peace. Far more was at issue than a tariff which had not been terribly helpful to the Commonwealth and which had never effectively blocked American exports.34 State Department negotiators did not relent. Once again Roosevelt stepped in, but the result of his intervention was ambiguous this time. Roosevelt assured Churchill that accepting Article VII would not obligate Britain to abolish imperial preference after the war, but added that postwar trade discussions would be ‘bold, forthright and comprehensive’, and implying that preferences would not be exempt.35 Roosevelt’s reassurance, along with the open-ended phrasing of Article VII, persuaded the British cabinet that preferential tariffs would be excluded from postwar negotiations to liberalize international trade.36 So they accepted the terms. Hull was jubilant. He interpreted the agreement as a binding undertaking by Britain to promote commercial liberalization and a guarantee that international trade in the future


would be rid of preferences.37 From that moment the US regarded Article VII as ‘virtually a Magna Carta for postwar economic collaboration’.38 The US extended Mutual Aid to all of the opponents of the Axis powers, including the dominions. The aid was intended to increase the number of nations committed to commercial reform and hopefully bind more of the members of the imperial preference system to eliminating the offending tariff. This aid package also helped cultivate separate bilateral relations with the US, which American advisers recognized would ‘better suit the dignity of the Dominions as independent states’.39 Australia and New Zealand concluded Mutual Aid agreements with the US. Canada and South Africa exchanged notes with the US, conveying their commitment to participation in a liberal and multilateral economy. These agreements insinuated the question of imperial preference into the dominions’ postwar relations with the US and inserted the US into Commonwealth deliberations over the future of imperial preference. Redefining the purpose and the scope of Commonwealth association could never have ignored the US. Now it would take place under the direct influence of Washington. Inadvertently the Americans had stumbled upon the most effective way to challenge the Commonwealth, the residue of an imperial tradition that offended American political values. Direct American criticism provoked members to close ranks, but by sparking internal dissent and leaving divergent interests to take their natural course, the Commonwealth was weakened. The Mutual Aid agreements between the US and dominions also meant that the governments of Canada, Australia, New Zealand and South Africa had to begin thinking about their postwar trade policies. Technically they were committed to working for the establishment of a liberal, multilateral commercial order. Contrary to American hopes, however, the Mutual Aid agreements triggered the policy-making process in the dominions without predetermining the outcome.

2 Defining National Trade Policy and National Interests from Mutual Aid to the End of the War

International relations in all their phases are political problems; and international trading problems are no exception in being a politico-economic problem.1 (Redvers Opie) Foreign policy is an expression of national identity, and, because it comprises acts of a public nature, performed on the world stage, it shapes identity.2 (Hedley Bull) By early 1942, policy-makers in the US, UK and dominions had begun to concentrate on the challenges of rebuilding the international order. There was no sense that this was premature. The failure of the victorious leaders of World War I to think adequately about the peace in advance was widely seen as one cause for the renewal of war twenty years later. Successful planning was considered as important to lasting peace as defeating the Axis powers. One key part of the exercise was the definition of postwar trade policies. For Britain and the dominions that meant deciding what to do about imperial preference. The issue was as much political as economic. To understand how each government saw imperial preference, and how tariff policy was influenced as a result, one must understand the national economic and political histories of Britain, Canada, Australia, New Zealand and South Africa, as well as their involvement in the Empire and Commonwealth. Only then can one fully appreciate what preferential tariffs had come to mean for each of them. This chapter traces the formulation of postwar tariff policy from Mutual Aid to the end of the war in Britain and the dominions and fills in the historical 31


background without which the complexity of tariff policy cannot be fully understood. American tariff and trade policies also require explanation. The US was in the forefront of the movement to liberalize international trade. Through the Atlantic Charter and Mutual Aid, the US initiated the reconsideration of tariff and trade policies among members of the Commonwealth. American influence did not stop there. Britain and the dominions could not fulfil their commercial or political objectives in Commonwealth councils alone. They had to participate in international forums to which the US brought a crusading zeal to the subject of commercial discrimination. British and dominion trade policies took shape with constant reference to American policy and ultimately in direct negotiations with the US. From closed national policy-making centres, to exclusive Commonwealth meetings, to Anglo-American preparations and finally in larger international conferences America figured prominently, as a catalyst to Commonwealth negotiations, a target for exports, a partner in rebuilding international institutions, and an ally neither Britain nor the dominions could afford to lose.

The United States: awakening giant Washington’s declaration of neutrality of September 1939 kept America out of the early stages of the war but did not mean the Roosevelt administration was disinterested, impartial or inactive. If the UK was to fall, as seemed likely at the beginning of the Blitz, the burden of defending freedom, sovereignty and the rule of law in international relations would shift to the United States. America had to prepare for that possibility. The administration’s thoughts also turned to the postwar world. Where long-term peace, security and prosperity were concerned the US had never been neutral. American postwar planners tried to understand the causes of the war in order to establish a lasting peace. Hitler obviously bore much of the responsibility for this conflict, but removing individual transgressors would not eliminate the rivalry inherent in international relations. There was a growing consensus that economic forces and market policies were at the root of many conflicts, this war in particular. The nationalist and restrictive economic measures of the interwar years, introduced to combat the Depression, had given rise to deprivation, resentment and retaliation which begat beggar-thyneighbour economic policies. As markets closed and ruthless economic self-interest prevailed, international relations suffered. Reforming the

Defining National Trade Policy and National Interests 33

international economy would be essential to peace in the postwar world. As Will Clayton, the American assistant secretary for economic affairs in the State Department, observed, ‘The peace structure has to be seen as a great arch supported by two strong columns, one political and the other economic.’ Not only was it impossible to ignore the economic causes of conflict, it was short-sighted to deal with them in isolation. Economic and political realities were ‘so inextricably interwoven and mutually interdependent that one cannot be solved without the other’.3 There were two categories for economic reform: financial and commercial. Much progress was made during the war to establish financial institutions to remedy chronic problems of exchange rates and a shortage of capital. In 1944 at Bretton Woods, the allied governments finalized blueprints for the International Monetary Fund and the International Bank for Reconstruction and Development. Trade issues were more problematic. The allies disagreed about the rules to govern international trade and without progress on that front, financial solutions would lack the necessary commercial support to be effective. The State Department was deeply involved in formulating trade policy. This reflected in part the State Department’s marginalization from the conduct of high politics in the Roosevelt administration. The president made foreign policy decisions alone and regularly relied on Harry Hopkins, his personal emissary, to conduct top level international consultations. The State Department was not idle, however. From the top down, officials concentrated on external economic subjects in which Roosevelt was not interested, at least not consistently. Cordell Hull, the secretary of state, was an expert on trade policy. When Hull had been appointed in 1933, he brought to the position the belief that peace and freer trade were inextricably linked. As early as 1916 he had realized that ‘unhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war’.4 As secretary of state, Hull was in a position to translate his Cobdenite philosophy into policy.5 His first step was to introduce the Reciprocal Trade Agreements Act (RTAA) in 1934, which allowed the executive to negotiate bilateral agreements without Congressional involvement as long as no tariff was reduced by more than 50 per cent. By the start of the war twenty-one new tariff agreements were in place. Hull believed that these agreements had improved the international political climate, but they had not had time to go far enough to prevent the war.


The State Department’s commitment to trade liberalization strengthened during the war and the principles of the RTAA – reciprocity, lower tariffs and internationalism – formed the foundation for a more comprehensive postwar commercial policy. The department’s overarching objective was to eliminate deprivation by facilitating the exchange of goods. As Sumner Welles, the under-secretary of state, explained: ‘This earth is bountiful enough to afford all people a safe existence free from the fear of want. If we can insure that and give to all the heritage of the earth, we will have taken a decisive measure for permanent security.’6 American trade policy was striving for a commercial utopia. The American public did not share the government’s commitment to commercial liberalism. A December 1942 poll found that only 12 per cent of the public favoured free trade; 54 per cent wanted the United States to continue to trade with other nations but with the benefit of tariffs. Eight per cent believed the US was better off if it traded with no nation.7 Moreover, powerful protectionist lobbies forced the administration to be cautious about lowering tariffs. Consequently, the US advocated freer trade, not free trade.8 International realities reinforced the logic of this moderate approach. Free trade was a policy suited to economic powerhouses. Small and developing nations would need tariff protection for the foreseeable future. Hence Washington was likely to find international support for commercial reform if it advocated freer trade. Although Hull was willing to compromise on protective tariffs for developing nations, he censured imperial preference as the most extensive discriminatory tariff system in existence.9 Its abolition was a priority of American postwar trade policy. As the pursuit of this goal came to resemble a crusade, judgements of preference were steeped in moralistic language. The American position on the moral high road of commerce ignored the fact that the formalization of the imperial preference system at the Ottawa conference of 1932 came two years after, and partly in response to, the Smoot-Hawley tariff of 1930, which in conjunction with falling prices during the Depression effectively closed the US market.10 The US believed it was more sinned against than sinning. Whatever our offenses against the economic welfare of other countries, we did not discriminate in this way – or, at least, our transgression was small. Thus no theme in American diplomatic utterances is coated more heavily with the enamel of virtue than this.11


American intolerance of imperial preference cannot be explained in terms of commercial ideology alone. The passion and indignation that the tariff inspired only makes sense when one identifies underlying motives. There were two and they were intertwined. The US sought to eliminate empires from the international community at the same time as it sought to dominate the international hierarchy of nations. The majority of the US public held the British Empire in contempt, a view based on ‘hackneyed stereotypes derogatory to the concept of Empire and to the typical picture of reserved and superior Englishmen’.12 Better informed individuals, like President Roosevelt, denounced the British Empire as antiquated. The editors of Life Magazine agreed and in 1942 published an open letter denying that the preservation of the British Empire was an American war aim.13 Americans generally believed imperial preference was ‘an emblem of empire unity, independence, and strength’.14 Thus by attacking preferential tariffs the US was really undermining ‘a cornerstone of Great Britain’s empire’.15 The US position could also be presented in a more positive light. As Roosevelt explained to Churchill in their private correspondence, the abolition of imperial preference would be an important step towards the realization of the ideals of self-determination and self-government. ‘I have great confidence that we can organize a different kind of world where men shall really be free economically as well as politically.’16 The consequences of eliminating imperial preference from international commerce would help the US to realize its second objective. The US believed that by liberalizing the postwar international economy, American values of freer trade, unrestricted competition, and democracy would become universal and the US would be in a position to dominate the postwar world.17 But American leadership of the postwar world was not unchallenged. The Soviet Union aside, Britain was Washington’s main rival to lead the international community, a prospect that many American officials dreaded. Adolf Berle, the assistant secretary of state at the State Department, insisted that the US could not repeat the mistake made after World War I of allowing leadership to remain in the hands of the European imperial powers: ‘The Clemenceaus, the imperialists of the last war, will not be permitted to dictate the future of our next era.’18 According to Berle, only America had ‘the ultimate strength … the ultimate consistency in principle’ to shape and lead the postwar world: when all is said and done, the salvation of the world will be the building of a system more nearly like that which we have on this


hemisphere than like anything which the British are likely to produce, with their experience, their habits and their all too justifiable hatreds.19 Many American policymakers did not lightly accept, or eagerly seek out, the responsibilities of leadership. It was a role that would devolve on the US, which alone would emerge from the war prosperous and thriving. ‘All eyes look toward us now. They will continue to do so after the war. No others will be capable of challenging our position.’20 There was a tinge of humility behind American willingness to assume the burden of leadership, the duties and responsibilities of which the US had neglected in the interwar years.21 For Will Clayton, the undersecretary of state for economic affairs at the State Department, there was something inescapable about this: ‘the mantle is already around our shoulders and a devastated and terrified world is hopefully looking to us to help them back to peace and life’.22 The Roosevelt administration also believed it was in America’s best interest to do so.23 Motivated by altruism and self-interest, America would no longer be a sleeping giant in world affairs. Freer trade would also benefit the American economy. Highly diversified, with efficient industries and large commercial farms, American exporters could compete with the rest of the world. And the rewards would not be one-sided. American planners anticipated that freer trade would bring the maximum economic and political benefits to the greatest number of people.24 There was an idealistic purpose to American economic leadership: Experience with dysfunctional autarkic expedients before World War II convinced these experts that world economic arrangements – to restrict sovereignty, restore convertible currencies, expand trade, and revive international investment – were prerequisites for peace and human betterment.25 American support for freer trade alone would not suffice to reform the international economy. As one American strategist predicted, if the US could ‘win over two or three other major countries there is a good chance that these countries could dominate a conference and that many smaller countries would be swept along in the current’.26 The most effective enticement to reluctant nations would be a tangible demonstration of the benefits of liberal commercial practices: opening the American market to foreign goods. When the attractions of an


accessible American market did not alleviate the concerns of other trading nations, American officials did not hesitate to use more coercive tactics. ‘We should compel, by persuasion or economic pressure, the joint effort of all.’27 Britain experienced the full force of American persuasion because its involvement was essential to the success of American commercial plans.28 Because of Britain’s connection to the Empire and Commonwealth, it would likely bring along a number of allies. Britain was an obvious ally as well because it would have great influence over the shaping of the new international order. Furthermore, dismantling imperial preference and restoring the convertibility of sterling were necessary to bring an end to commercial discrimination. Roosevelt and Hull believed that the UK was obligated under Article VII of the Mutual Aid agreement to contribute to commercial reform by abolishing imperial preference. The president himself was satisfied this would be adequate compensation for Lend-Lease. The American public was less content with the exchange and, according to polls, expected more tangible reimbursement. In 1943, 72 per cent of Americans believed the UK should pay for Lend-Lease with goods, cash, bases and other territory. A few suggested Britain should hand over Canada.29 As the end of the war neared, the continuing flow of Lend-Lease assistance provoked a backlash. In December 1944, Bernard Baruch, then serving in the Office of War Mobilization, expressed his concern at what he saw as excessive generosity towards the UK. It looked to him as though the US was weakening itself in order to prop up Britain. Such a sacrifice, he warned, would ‘drive “Wilsonites” like myself into the position of looking like isolationists’ and the American public would wonder ‘if this action is of such a nature as to tend to liquidate American standards of living’.30 After VE day, 64 per cent of Americans still believed Lend-Lease should be repaid in full.31 Public expectations reinforced the government’s determination to make the UK stick to what it understood was a promise to abolish imperial preference. Anything less would force the US to distance itself from Britain and fuel isolationism generally. British compliance depended in part on conditions of economic equilibrium. By the late summer of 1944 Washington officials anticipated that the US would have to give Britain money in order to keep it up and running after the war.32 Giving aid to Britain would not be easy. Congress was protectionist and inclined to isolationism; the public believed the US had done enough for its ally. The administration would have to walk a political tightrope if it tried to extend aid to


Britain beyond Lend-Lease. If Britain fulfilled its Article VII pledge to participate in commercial liberalization – most obviously by dismantling imperial preference – additional aid would be more palatable to the American public. Thus American postwar financial aid became linked to Britain’s postwar trade policy. According to American officials, they would not use aid to extract a commercial quid pro quo, but rather would tell British officials that postwar aid depended on whether the UK was ‘a good credit risk’. And in American eyes a good credit risk would ‘embark on a sound commercial policy’.33 That meant getting rid of preferences. If London did not voluntarily fulfil its Article VII obligations as Americans understood them, American officials were prepared to exploit Britain’s financial weakness to bring about the end of imperial preference. Imperial preference emerged as a test case, and a precondition, for the Anglo-American special relationship as it shifted from war to peacetime. As Herbert Feis, an adviser in the State Department on international economic affairs, explained, the decision on preferences would hinge on whether there was sufficient confidence in the special relationship, ‘in the sense of conjoined destiny that will give each assurance that they would be standing together in any great future economic or political crisis’.34 The postwar dispute over preferences confirmed that there was a flipside to the special relationship.35 Once the constraints of war were lifted, rivalry and mistrust, never entirely absent, came to the fore. Changes in political leadership at the end of the war further complicated Anglo-American relations. In April 1945 Roosevelt died and with him many of the private understandings upon which AngloAmerican wartime accord rested. No one knew if Harry Truman would stay on Roosevelt’s foreign policy course, about which he knew almost nothing, or whether he would continue to pursue freer international trade. In the renewal of the RTAA legislation in July 1945 (a triannual process), Truman committed himself to negotiating tariffs on a selective, bilateral basis. This was a strictly correct interpretation of the limits of the legislation. It was nonetheless a blow to the multilateralists in Britain who counted on the US to take a bold lead on the tariff reform process. It made an already difficult task of reaching agreement on commercial policy even more remote.36 Worse news followed. In August 1945 Truman cancelled Lend-Lease as soon as the war with Japan was over.37 These decisions suggested that he was a president who was uncompromising in his obedience of the letter of the law, unlike Roosevelt who had been so adept at slipping between statutory cracks.


There was some continuity in the State Department. Although Hull retired in November 1944, he left behind acolytes, the most important being Will Clayton, then the assistant secretary for economic affairs. As the head of the largest cotton brokerage in the world in the 1920s and 1930s, Clayton had been deeply suspicious of Roosevelt’s New Deal. But he shelved his philosophical differences with Roosevelt to participate in Hull’s freer trade crusade, joining the department in 1940. Clayton proved to be even more devoted to the cause of freer trade than Hull. Thus on the eve of peace, political complications and economic obstacles did not dent the fervour with which American officials approached the task of commercial reform. They were determined to rebuild an international economy free of commercial discrimination. The opportunity was fleeting. The US would have to move quickly to achieve its objective once the war ended because with every passing day conditions conducive to international commercial cooperation receded.38

Great Britain: weary titan The decision of Britain’s wartime coalition government to accept Article VII did not indicate consensus on the subject of postwar trade policy or imperial preference. On the contrary, it initiated a vigorous and far-reaching debate which was directly linked to Britain’s standing in the international community. The objective was to remain a world power. Economic recovery was crucial. British officials valued the Commonwealth commercial network and imperial preferences because they could give British exports a temporary edge over foreign commodities while they regained their international competitiveness.39 Even more important, Britain’s ability to lead the Commonwealth would sustain its role as a world power. But the Commonwealth would not alone decide Britain’s place in the world. Maintaining harmonious and cooperative relations with the US was also essential to reinforcing Britain’s postwar role in world affairs.40 However, these two diplomatic options exerted contradictory pressure on trade policy. Relying on the Commonwealth suggested Britain should retain, even expand, imperial preference as a symbol of Commonwealth solidarity. Riding on American coat-tails would be made easier by giving up imperial preference. The government could not ignore or overlook these political considerations. However, in the first attempt to sketch out postwar trade policy government officials approached it as an economic problem. James Meade, a young economist recently returned from the


economic section of the League of Nations, had independently drafted a blueprint for a reconstituted commercial system while at the economic section of the cabinet war offices. His outline came to the attention of Hugh Dalton, the president of the board of trade, who promptly seconded him to the Board of Trade to continue his efforts. Meade, a future Nobel Laureate, was an unrepentent internationalist. He believed that national commercial problems could only be solved within a global framework. The basic premise of his International Commercial Union was that freer trade in a multilateral network facilitated the sale of British manufactured non-essential exports which needed access to as many markets as possible to generate sufficient revenue to pay for essential imports. Meade advised against hiding behind preferential tariffs or other discriminatory devices. Many of the markets British products had supplied before the war would be more self-reliant by its end and would compete with British producers for foreign markets. Furthermore, Meade argued, many preferential tariffs in the dominions were so high that they effectively made British exports uncompetitive. Contrary to political wisdom and popular belief, reducing preferential rates would benefit British exports sent to these markets.41 It was also important to open the booming American market to British exports even though Britain did not want to have to buy American products in return. To conserve its hard currency reserves, London preferred to purchase supplies from sterling countries. This short-term expedient did not diminish the importance of freer trade for Britain’s long-term commercial recovery. As Meade observed, ‘If ever there was a community which had an interest in the general removal of restrictions to trade, it is the United Kingdom.’ Thus, Meade’s plan banned quantitative restrictions and excessive export subsidies, removed restrictions on currency exchange and eliminated preferential prices, all of which were consistent with the mandate of Article VII and the objectives of American reforms. Meade made an exception for preferential tariffs. Where a special and recognizable geographical or political relationship existed between nations, there could be moderate preferences (he set the margin at 10 per cent) applied to one another’s exports. He did not foresee the abolition of imperial preference, although he believed Britain would have to scale down the tariff system as its contribution to the liberalization of trade.42 Still some members of the interdepartmental Committee on Postwar Commercial Policy (CPCP, more commonly known as the Overton committee), which was responsible for finalizing a report on postwar trade policy for the cabinet, worried that the commitment to liberaliza-


tion in Meade’s plan was too tentative to win American support. Without American backing, there was no point in creating an international commercial order dedicated to freer trade, which the committee accepted was essential for Britain’s economic recovery. They would have to offer something to facilitate and encourage the lowering of US tariffs. The obvious bait was imperial preference: ‘without this [reduction of preferential tariff] we have no prospect of reaching common ground with the US on commercial policy or indeed of avoiding a collision with them’.43 Consideration of the dominions’ views reinforced the wisdom of coming to terms with the US over preferences. Sir Alexander Clutterbuck, the representative of the Dominions Office on the Overton committee, described dominion governments as being ‘in a revolutionary frame of mind’ with respect to tariffs and preferences.44 The start of trade negotiations between the US and Australia, New Zealand and South Africa in the early years of the war confirmed that these dominions eyed the US market. Left to their own devices they were likely eventually to dismantle preferences. The British could only gain by trading preferences for advantages in new markets. ‘If we do not do this, we are quite likely to see Imperial Preferences whittled away by the Dominions in return for little counterbalancing advantages for ourselves.’45 Consequently, the Overton committee endorsed far-reaching proposals to reduce all preferential margins by 50 per cent, with a floor of 5 per cent ad valorem. The committee also recommended a ban on new preferential tariffs. Clearly the British were not proposing the abolition of imperial preference. As one Whitehall economist observed, the changes the UK was proposing to make would remove only 15 per cent of the preferences on British exports to the dominions and India, a caveat that should be pointed out to ‘those attached to Imperial Preference as a religion (but not to the Americans!)’.46 But it was certain that preferential tariffs were on the block.47 Meade’s proposal and the committee’s amendments were in Britain’s best economic interests, consistent with the dominions’ policies, and the political agenda underlying American trade policy. Nonetheless the proposal provoked criticism. Sir Hubert Henderson, the Treasury representative on the Overton committee, filed a minority report in which he asserted that freer trade would exacerbate Britain’s chronic balance of payments problems and delay economic recovery.48 Two influential Treasury colleagues, Keynes and Richard Clarke, echoed his criticism. They put forward counterarguments for bilateral trade agreements which capitalized on Britain’s


strength as an importing nation. They also recommended the intensification of trade within the sterling area because it would allow Britain to preserve its depleted dollar reserves. Because the sterling area and the preferential bloc largely overlapped, Canada being the notable exception, the shortage of hard currency strengthened the attachment to preferences.49 Doubt about the ability of the US to open its own market also weakened enthusiasm for Meade’s plan. The limits imposed on the administration’s bargaining latitude under the RTAA were cause for concern. Even if the Americans went as far as the act allowed, it would still not mean the abolition of all protective and discriminatory policies. Moreover British officials doubted that the State Department understood the need for a satisfactory quid pro quo for the contraction of preferences. In fact many US officials did, but they faced almost insurmountable domestic obstacles, such as protectionist lobby groups and isolationists in Congress. Keynes dismissed the State Department supporters of freer trade who ‘represent[ed] almost nothing but themselves’.50 American inflexibility and self-righteousness strengthened the British emotional and political attachment to preferences. To British policymakers preferential tariffs were no different from, and no more harmful than, the trade relationship that existed between the 48 American states. Why was preferential treatment within the Commonwealth anathema but inter-state trade permissible?51 As Keynes remarked, ‘To treat the Preference System as having some extra measure of original sin is … to treat the extremes as legitimate and anything in between as illegitimate.’52 The assumption that economic morality lay all on one side also showed a complete disregard for the views of economists like Meade who were genuinely committed to free trade, whereas Hull never went beyond a commitment to freer trade. As Lionel Robbins explained, ‘there was an element of dogmatism in the American case which we all found … very difficult to swallow’.53 Even more off-putting, British officials detected ulterior political motives, such as a deep-seated antipathy for the British Empire, in the American opposition to preferential tariffs. British officials attributed American animosity to stereotypes and prejudices. ‘They regarded England as a land of feudal imperialism, and the whole country run by members of the House of Lords!’54 American prejudice did not make the British task of reconciling the US to the existence of the Empire, or imperial preference, any easier. For British leaders, the Empire was not a subject for compromise. Churchill, who appreciated the special relationship with the US as none of his predecessors had, responded to


American criticism of the Empire with flourish and pugnacity. The Empire and Commonwealth, he insisted, were a model and standard for other nations to emulate. Their existence was instrumental to the survival of the free world, and would not vanish once the fighting had ended. ‘Here we are and here we stand, a veritable rock of salvation in this drifting tide.’55 Churchill’s uncompromising defence of the Empire and Commonwealth applied equally to his view of Britain’s place in the world community. British power was slipping relative to the US and Soviet Union. But recognition of weakness did not translate into resignation or apathy. The challenge to Britain’s leaders was to stave off decline, or at least to minimize its effects. Maintaining imperial preference was implicated in this goal because its preservation symbolized Britain’s ability to perpetuate its historic connections with the Empire and Commonwealth. Equally important, it demonstrated Britain’s ability to resist the pressure of a stronger ally. Even though Britain hovered on the edge of bankruptcy and needed American help, London dug in its heels in its economic relations with Washington. Britain had no intention of becoming a suppliant to the Americans and undermining its integrity as an independent international power. Relying on the Commonwealth and sterling area and repudiating American aid was an alternative that was more palatable to many politicians, mandarins, and the public, precisely because it took the UK out of the American economic and political orbit.56 The attachment to preferences spread to the cabinet. Lord Beaverbrook, a longtime champion of Empire free trade, was appalled by the proposal to trade away preferences. He argued that an imperial economic union would remedy Britain’s commercial problems. L. S. Amery, secretary of state for India, did not think imperial preference went far enough to achieve commercial self-suffiency, which in his mind was essential to the preservation of the Commonwealth and Empire. He called for an intensification of preferential tariffs in order to ‘keep the [commercial] door closed’ to the US, and, if possible, ‘to lock it even tighter’.57 Despite the attraction of imperial economic visions, on 8 April 1943 the war cabinet decided to support Meade’s general plan including the terms affecting preferential tariffs. The only proviso was for the use of quantitative restrictions to maintain a balance of payments.58 The majority decision to pursue the multilateral and liberal trade option did not, however, silence dissenters within the cabinet. Even Sir Stafford Cripps, who was not enamoured of the Empire or protection,


supported the use of some kind of restrictions in order to stave off the depression he expected would accompany the end of the war. He spoke for many when he warned: ‘we must be able to safeguard ourselves against the consequences of what I consider to be an almost inevitable and catastrophic economic collapse in America a few years after the end of the war’.59 His concern was economic. For others political calculation added up to caution, even reversal. As the war neared an end, the British commitment to Article VII, Meade’s plan, and the modification of imperial preference waned. British parliamentary debates confirmed the growing ambivalence. MPs repeatedly suggested commercial and financial cooperation with the Commonwealth and sterling area as alternatives to international solutions. One member of parliament, Sir Edward Grigg, even declared that Britain was not obliged to adhere to Article VII. When asked to clarify his meaning, he maintained that British acquiescence to the Mutual Aid agreement was not binding.60 Ill-founded though Grigg’s interpretation was, it was nonetheless popular and was strengthened as public opinion aligned itself against freer trade. Australia, New Zealand and South Africa’s attachment to preferences also diluted the British commitment to tariff liberalization. Canada alone consistently advocated the merits of freer trade. In truth, the governments of the southern dominions had not abandoned the multilateral option, but the hard realities of economic recovery qualified their commitment to it. The variety of views in Canada, Australia, New Zealand and South Africa reinforced British reluctance to move boldly on the preferential tariff front. It was imperative that the UK and dominions agree on this subject, as well as all other economic matters, to ensure the longevity of the Commonwealth and assure Britain’s place at its heart. Our position as the centre of the British Commonwealth will, if we can maintain harmonious economic relations with the Dominions, go far to provide us with the power which we require for the backing of our foreign policy.61 By the end of the war it was not clear what effect Britain’s signature of the Mutual Aid agreement would have on postwar commercial policy. Some considerations pushed the British towards free trade, others towards bilateralism, imperial preference and the sterling area. Political considerations also tore policy-makers in at least two directions. Richard Clarke, the assistant secretary to the Treasury, described


the ambivalence of British commercial policy in 1945: ‘We hope to be multilateral but we cannot be certain that we shall always be able to achieve it. It is highly necessary, therefore, that we should maintain the power and apparatus to enable us to be bilateral if events prove this to be necessary.’62 The essence of Meade’s idealistic proposal endured as the long-term policy, but international economic conditions and political developments, as well as looming bankruptcy, had to be taken into account. Thus there was a cautious approach to commercial policy. What was irrefutable, despite the ill-informed pronouncements of speakers in Westminster, was that the UK was obliged to participate in postwar discussions leading to liberal commercial practices and an organization to monitor and regulate international trade.63 Whether the talks ended in agreement, however, would be ‘a matter ultimately for a high level political bargain’.64 The electorate returned a Labour government in July 1945, only a few weeks before the war ended, but this had no effect on the nature of trade policy. The Labour Party had historically favoured unrestricted international trade. Moreover, the leading ministers in the Attlee government had cut their teeth in the coalition government: Attlee, Dalton, Bevin, Cripps and Morrison had all been in the wartime cabinet, many in portfolios dealing with the economy and the postwar world. Finally, the seamlessness of the transition was facilitated by the fact that many of the most influential advisers remained in place, in particular Meade who replaced Robbins as head of the economic section of the cabinet offices in January 1946. Consequently the Labour government carried wartime policy into the peace without serious disruption. Although the long-term commitment to liberal, multilateral trade was unaffected in theory, the new government confronted desperate economic circumstances. Postwar planners had assumed that the war would end in Europe long before it did in the Pacific. The interval would permit the government to make a gradual transition to peacetime. With the end of hostilities in early August, the new Labour government resorted to desperate measures to stave off national bankruptcy, some of which were inconsistent with freer trade objectives. The urgency of kick-starting economic recovery was more important than trade principles. It was essential if Britain was to overcome the severely weakened position in which it found itself. This was no more acceptable to the Labour Party than to the Conservatives. Government economists anticipated that the volume of British exports would have to increase by 150 per cent over the prewar volume


to restore economic equilibrium and financial independence65 (see Table 2.1). But shortages of labour and raw materials slowed down production and pent-up domestic demand after six years of war competed with production for export.66 Stafford Cripps, president of the board of trade from 1945–47, was committed to reviving exports, even if that meant extending rationing and controlling the volume of imports.67 Under his direction, the Board of Trade launched an educational campaign to encourage manufacturers to shift their production towards capital goods for export while explaining to the public that they would have to endure domestic austerity a little while longer.68 He was the ideal person to advocate deprivation. Although wealthy, he lived an ascetic life, bathing at six every morning in cold water and living on a spartan diet. He left the Board of Trade in 1947, in the midst of the first General Agreement on Tariffs and Trade (GATT) negotiations, to become minister of economic affairs and later in the year chancellor of the exchequer. His authority over all aspects of external economic

Table 2.1 UK Trade with the United States, Canada and the Sterling Commonwealth (per cent of total)69 Imports 1935 1940 1945 1946 1947 1948 1949 1950

US

Canada

11.6 23.9 29.1 17.5 16.7 8.8 9.8 8.1

7.4 12.8 18.1 15.0 13.3 10.7 9.9 6.9

St C’wealth 30.2 34.8 29.2 33.7 28.6 33.3 34.5 35.9

Exports 1935 1940 1945 1946 1947 1948 1949 1950

US

Canada

St C’wealth

5.4 8.0 4.7 3.9 5.0 4.1 3.4 5.7

5.0 7.8 5.9 3.6 3.8 4.5 4.4 5.7

43.0 52.3 47.6 45.7 38.8 41.3 45.0 41.0


policy increased with each ministerial shift. So did his determination to restore British trade and to recover the political independence that went along with it. Cripps’ plan for economic revival dovetailed with the diplomatic goals of Ernest Bevin, the new foreign secretary. Bevin set his sights on restoring the nation to its rightful place in the international community.70 He would not compromise or sell British integrity for immediate economic relief. Bevin and Cripps realized the political significance of the retention of preferences to British recovery. Despite the Labour Party’s traditional opposition to the Empire, the Attlee government relied on the imperial and Commonwealth connection to temper the most glaring effects of its international decline. Its determination to preserve Britain’s place at the centre of the Commonwealth and Empire was ‘positively Churchillian’.71 Labour’s attachment to the Empire and Commonwealth did not lessen the importance of Anglo-American relations. The Labour government, like the wartime coalition, had no desire to be dependent on American aid and thereby vulnerable to its influence. Without American financial support, however, the British economy would collapse. Therefore Cripps and Bevin had to be careful not to alienate the US and its financial assistance. Meade noted that the consequence of refusing to work with the US on financial and commercial matters would be ‘to court not only economic retaliation from the United States but also the gravest disturbance to our political and diplomatic relations with the Americans’. Britain could only avoid these disastrous repercussions if it had ‘the most cast-iron case against the arrangements proposed’.72 Imperial preference was at the heart of two overlapping goals: economic and political recovery. Economic recovery dictated that Britain should keep preferences in the short term, but trade them for tariff concessions elsewhere in the long term. Political considerations were also mixed. British prestige required the retention of preferences and that any changes made to the system emanate from Whitehall and Westminster; they could not be forced upon the UK. Retaining preferences was also bound up in the strategy to strengthen the Commonwealth and keep Britain at its centre. Imperial preference was part of a political identity which was intimately associated with a leading role in world affairs. British determination to sustain its stature as one of the great powers strengthened the reluctance to abandon preferences. Nonetheless, the Anglo-American special relationship depended on some progress being made to eliminate the discriminatory


tariff. In the end the British were prepared to negotiate over preferences. In so doing they recognized that they were also negotiating their own place in world affairs.

Canada: American cousin While American and British officials debated the exact wording of Article VII, Canadian officials watched from the sidelines. The Americans soon approached their Canadian colleagues about supporting Article VII as part of a Canadian–American Mutual Aid agreement. American officials wanted to win over as many nations as possible to their vision of the postwar economic world. They also suspected that the Canadians were upset about their possible exclusion from the reconstruction of the postwar economic community that Article VII foreshadowed. An invitation would soothe ‘wounded sensibilities’. To the Americans’ surprise, Canadian leaders were reluctant to commit themselves to Article VII. Pierrepont Moffat, the American ambassador to Ottawa, reported that Norman Robertson, the Canadian undersecretary of state, was particularly upset because the UK and US had underestimated the complexity of preferential tariffs and exaggerated their authority to determine the future of the tariff. Moffat was perplexed by the hesitation to embrace ‘a statement of economic objectives which Canada had already inferentially accepted but which for unaccountable reasons she seemed hesitant publicly to proclaim’.73 Canadian officials were bothered by the implication that by agreeing to Article VII they would find themselves beholden to the US and unable to differ from American objectives. As a nation that was still in Britain’s shadow, Canada could not afford to be placed in a subservient position vis-à-vis another nation.74 But refusing to conclude a Mutual Aid agreement was a case of cutting off the nose to spite the face because then Canada would be excluded from conferences dealing with postwar questions. Thus William Mackintosh, special assistant to the minister of finance, cautioned: ‘I think we should be very careful about rejecting a suggestion which involves an agreement to enter into conversations for we may later be complaining that we were left out of such conversations.’ Ottawa and Washington found a solution. On 30 November 1942 Canada and the US exchanged notes in which they promised to consult on postwar economic reconstruction.75 This captured the spirit of Article VII without the commitment. It also meant Ottawa had to start thinking about postwar trade policy.


The formulation of trade policy brought together a team of bureaucrats from the Departments of Finance (Robert Bryce, John Deutsch, William Mackintosh), Trade and Commerce (Dana Wilgress, Hector McKinnon), and the Bank of Canada (Graham Towers, Louis Rasminsky). These officials worked closely with their colleagues in the Department of External Affairs (Norman Robertson, Lester Pearson, Hume Wrong). Like their British colleagues, they initially approached the task as an economic problem. The goal was clear: to sell exports like wheat and other grains, fish, cattle, bacon, eggs, aluminium, copper, nickel, newsprint, planks and boards, ships, farm machinery, electrical items, aircrafts and parts, trains and parts, textiles, paints and fertilizers. The British market absorbed most of the primary goods, while most of the manufactured exports were sold in the United States. The British and American markets surpassed all others. In 1939, 41.1 per cent of exports were sold in the US, 35.5 per cent in the UK. Australia was a distant third, purchasing 3.5 per cent of exports. This pattern persisted after the war.

Table 2.2

Canadian Trade with US and UK76 (per cent of total)

Imports 1926 1935 1940 1945 1946 1947 1948 1949 1950

US

UK

66.3 57.9 68.8 75.9 73.0 77.1 68.9 70.7 67.1

16.4 21.4 14.8 8.8 10.4 7.5 11.5 11.1 12.7

US

UK

36.8 33.9 37.2 37.1 38.4 37.2 49.7 51.1 65.0

36.5 41.7 43.4 30.0 25.9 27.2 22.5 23.3 15.0

Exports 1926 1935 1940 1945 1946 1947 1948 1949 1950


Canadian interest in trade was not one-sided. Despite rapid industrial diversification during the war, Canadian consumers required many and varied imports, such as petroleum, farm machinery, cars and car parts, electrical machinery, coffee, tea, alcohol, oils, medicines, and chocolate, among others. The majority of manufactured goods came from the United States. In 1939 imports of American origin made up 66.2 per cent of the total, whereas the British share was only 15.2 per cent. The war increased this imbalance (see Table 2.2). The pattern of exports and imports revealed starkly that the US and UK were far and away Canada’s most important trading partners. But Ottawa could not rely on these two as secure markets or suppliers. Instead the government favoured a multilateral trade network in which Canada could sell a wide variety of exports on an increased scale. Expanding markets would also help Canada to increase export sales by 60 per cent above the prewar value, the target for postwar prosperity. Financial considerations reinforced the wisdom of multilateralism. Canada had to earn hard currency for its exports to offset the drain of American imports. Since the pound sterling was inconvertible during and long after the war, Canada could not use its surplus with Britain to settle its trade deficit with the US. A multilateral system which facilitated the sale of Canadian commodities in other hard currency markets would minimize currency problems and allow Canada to purchase imports ‘wherever we desire’.77 Multilateralism was one aspect of Canadian postwar trade policy; lower tariffs was the other. When it came to the specific issue of preferences, Canada favoured lowering the general rate of duty, which would genuinely reduce tariffs at the same time as the preferential margin closed. The other way to narrow a preferential margin – by increasing the preferential rate – was not appealing because the result would be ‘a substantial increase in the rates effective against countries enjoying preferential treatment’.78 Canada was committed to the contraction of imperial preference even though many of its exports benefited from preferential advantages in imperial and Commonwealth markets. For example, Canadian goods were in a stronger position in Commonwealth markets against American competitors because of their preferential edge.79 Hence a report of the advisory committee on economic policy cautioned that ‘preferences are of great importance in Canadian trade and … substantial reductions could not be regarded lightly’.80 Preferences would also be especially valuable if the multilateral, freer trade experiment failed.


But these attractions were offset by the effectiveness of preferences as bargaining chips in exchange for concessions in other markets, especially the United States. Canadian negotiators hoped to link changes in preferences to the reduction of American tariffs on primary goods.81 Canadian bureaucrats did not endorse the abolition of preferences. Rather, they advised the federal government to extract the maximum concessions for imperial preference in multilateral negotiations, as well as to hang on to those preferences that were particularly helpful. ‘We should endeavour to keep a position where, at best, we could continue to enjoy the benefits of the system, consistent, of course, with a generally liberal regime of international trade.’82 Canadian tariff policy was, therefore, not a straightforward application of the tenets of multilateralism or liberalism. Self-interest, bargaining tactics and uncertainty about the likelihood of successfully reforming the postwar trading system added up to a policy of caution. The contradictions of this approach have led historians to conclude that Canadian trade policy was incoherent.83 However, there was a consistent theme running through the several approaches to trade policy: selling exports. The ruthless self-interest of Canadian trade policy was telling. It confirmed that national interests and advantage were foremost in shaping policy. Ottawa’s unqualified promotion of its national commercial interests was a milestone on the road to political maturity. When government bureaucrats calculated the commercial value of preferential tariffs they did not take their emotional appeal into account. This set Canada apart from Britain, the other dominions, and even the US where policies on preferences were passionate and political. Lester Pearson, who was appointed Canadian ambassador to the US in 1945, observed this difference in approach: ‘whereas in Washington and London, Imperial Preferences were charged with a “high emotional and political content”, in Ottawa we were more likely to take an economic and commercial view of the question’.84 This view was widespread in Ottawa. Robert Bryce concurred that the motive in using preferences was ‘crassly commercial’.85 Simon Reisman, also of the Department of Finance, maintained that the modification of preferences was seen ‘as a constructive exercise’ and the Canadian attitude towards the exercise was eminently practical.86 Mitchell Sharp, a junior member of the same department added that there was an emotional bond to the UK, but it ‘had nothing to do with preferences’.87 Despite Canadian explanations that their view of preferences was entirely pragmatic, the commercial approach to the question of


preferences made a political statement. Treating preferences exclusively as a commercial issue implied Britain did not exercise an emotional pull over Canadian trade policy. Distancing Canada from Britain was important to Ottawa for two reasons: maintaining national unity and promoting national interests. Prime Minister Mackenzie King had come of age as a politician during World War I when the country was cloven in two. King had dedicated his political career to rebuilding the Liberal Party as a national party in which French and English Canadians would feel equally welcome and represented. He realized early on that the success of his goal depended in large part on redefining Anglo-Canadian relations. Too close a connection alienated French Canadians; too weak a connection angered English Canadians. During World War II, King needed all of his political skill to hold the party and the nation together. Canada’s cautious policy towards imperial preference was part of the juggling act King performed on a daily basis while he was prime minister. During World War II, policy-makers, led by the bureaucrats shaping trade policy, wanted Canada to be an active, effective and independent member of the international community. Before they could achieve this they would have to prove to the outside world that Canada was neither subordinate to, nor an extension of, Britain. Ottawa’s commitment to multilateralism made the point that Canada was not subordinate to Britain. There was also a practical consideration behind this decision. Multilateralism reflected Canada’s diminished confidence in the British connection. ‘Britain was no longer the reliable anchor she had been in the early years of the century, and Canada could no longer look to the mother country for direction and support.’88 The lingering international belief that Canada was an appendage of Britain impeded the realization of the goals of independence and effectiveness in world affairs, an impression reinforced by Ottawa’s persistent unwillingness in the 1930s to distinguish or differentiate Canada from Britain on the world stage. It was positively affirmed by the Canadian decision to fight alongside Britain in 1939. Even though Prime Minister King insisted on delaying the declaration of war until he had consulted parliament, thereby upholding the sovereignty of the government of Canada, the final decision was remembered more than the process. This was the act of a loyal ally, even a subordinate colony. As Ambassador Moffat observed, going to war reversed any progress that Canada had made towards establishing itself as indepen-


dent and equal with Britain: ‘despite the outward trappings of independence, it [Canada] is, at least for the duration of the war, a mere adjunct of British foreign policy as laid down from London … Whether or not Canada will recover and assert an independent foreign policy during the ultimate peace settlement is an open question.’ Moffat believed the blame for finding itself in such a position rested with Canada. For example, the King government formulated wartime economic and industrial policies to benefit Britain. He extrapolated from trade policy to the whole of foreign policy and reached the conclusion that Canada was second to Britain because Canada put itself in a subservient position.89 The issue of subordination was linked to imperial preference through the thorny question of bound preferential margins which prevented a government from narrowing a preferential margin without the consent of the beneficiary of the tariff. King had denounced bound margins in 1932, but from the opposition benches his protests had been futile. In government he moved to end this restriction on national sovereignty by advocating the unbinding of all margins. That would persuade the US that they were serious about reducing preferences and make the point explicitly that Canada acted autonomously. In contrast, retaining preferences was a sign of continued attachment and a symbol of subordination to Britain. Unbinding margins would also eliminate the need for Commonwealth consultation, which Canada’s leaders viewed with suspicion. In Ottawa, there was a lingering concern that Britain wanted to use Commonwealth meetings to restore an archaic imperial relationship which only served British interests. Churchill’s leadership during the war intensified Canadian fears that the British wanted the Commonwealth to formulate common policies and project the image of a unified bloc in international meetings, an image that would prop up Britain’s own sagging position.90 Canada’s nationalist bureaucrats did not want the Commonwealth to be ‘the old Empire under a new name’.91 Lester Pearson described the dilemma for the former colony, now a loyal ally: If we act as a unit [with the rest of the Empire], I do not see how we can always act separately and maintain the national and international position we have attained … Acting in unison as separate states is one thing; acting as a unit is quite another.92 Hume Wrong came up with a definition of the Commonwealth that better suited an independent identity and role for Canada in world


affairs. To Wrong the Commonwealth was ‘an entente cordiale of a permanent nature … not an alliance, but a system whereby a group of states, in closer consultation with each other than other groups of states, pursues generally similar objectives’.93 King went further, clarifying the method by which Canada would promote its international interests in a statement to the House of Commons on 31 January 1944. Careful not to forsake the Commonwealth, King stated unambiguously that association with it alone was inadequate to safeguard national and international security. The future of Canadian external relations lay in all-inclusive international organizations. When, however, it comes to dealing with the great issues which determine peace or war, prosperity or depression, it must not, in aim or method, be exclusive. In meeting world issues of security, employment and social standards we must join not only with Commonwealth countries but with all likeminded states, if our purposes and ideals are to prevail.94 This statement made the point that Canada had moved beyond an exclusive British orientation. Getting rid of preferences would reinforce the point. However, King’s pronouncements could not suddenly transform Canada into a constructive, effective and independent nation in world affairs. Canada first had to liberate itself from the confining association with Britain and the Commonwealth and escape its own colonial mentality. The challenge for the drafters of trade policy was to define recognizably distinct and appropriate national policies, so as to demonstrate that Canada was not simply an instrument of British policy and prosperity, and to carve out a niche for Canada in the international community. Trade policy could then clarify Canada’s national identity and interests, the nature and scope of the relationship with Britain, and Canada’s role in world affairs. It was a tall order, but one that a new generation of talented civil servants was eager to take on. Canadian officials formulated a philosophy of international relations to justify their claims to inclusion, influence and independence in international affairs: it was called the functional principle. This principle rejected the domination of world affairs by the largest powers. Instead it equated capacity, contribution and expertise with responsibility and influence.95 Where a nation made a significant contribution or had expertise, then that nation should enjoy a commensurate influence. The testing ground for the functional principle was the


wartime Combined Food Board (CFB). Canadian diplomats lobbied for membership on the executive of the CFB, a position Canada was entitled to because its contribution to the allies’ food supplies was second only to the US. The British resisted, arguing that if Canada joined, other nations, such as Australia, would also demand inclusion. Really London hoped that if it was the only Commonwealth member on the board, others would believe that Britain represented the entire Commonwealth, bolstering Britain’s standing. Despite this opposition, Canadian efforts paid off in the fall of 1943. But it was a pyrrhic victory because the Americans and British regarded the CFB as an ancillary board. They never would have given in if Canada had sought an executive role on one of the military boards. Moreover the British reworded the Anglo-American concession to deny that a precedent had been set. Canada was not entitled to inclusion as a general rule.96 This initial foray persuaded Canadian leaders that they would have to continue their efforts to distinguish Canada from Britain, especially regarding the postwar world. Autonomy from, and equality with, Britain were not the only political considerations that shaped tariff policy. While King was prime minister Canada’s relations with the US took on a new importance. King’s admiration for, and warm personal relationship with, Roosevelt reinforced his political instinct to work closely and extensively with the US. A tariff policy that extended preferential advantages to British and Commonwealth members suggested those nations were favoured above all others. The US was not more important than Britain, but it was not less important either. Canadian willingness to negotiate preferences away demonstrated that Canada valued its American ally. Economic caution reinforced the wisdom of maintaining good relations with the US. In the event that a multilateral framework for trade was not set up, the Canadians considered strengthening ties with the US, even establishing a self-sustaining North American economy, as an alternative. A continental economic rapprochement would definitely end Canada’s involvement in imperial preference and could even threaten Canadian participation in the Commonwealth.97 Withdrawal from the Commonwealth was not desirable, but there were benefits to being prepared for all possible outcomes. There were also political advantages to more extensive Canadian– American economic cooperation. For instance it would help Canada to move beyond a colonial past, which blocked its independent future. As Mitchell Sharp, a junior member of the Department of


Finance during the war, observed: ‘To be a North American nation with a dollar rather than a sterling currency and with strong ties to the United States was a sign of national maturity.’ 98 The intensification of Canadian–American relations during World War II did not stop at economic issues. Both governments also framed defence and diplomacy in a continental context. Charles Ritchie, one of Canada’s most distinguished ambassadors, confirmed that the fear of being economically and politically overwhelmed by the US did not affect the way confident, nationalist bureaucrats perceived the US in the 1940s: The US presented no threat of dominating Canada either culturally, economically, or politically. It didn’t cross the minds of these nationalists. The struggle was to escape traces of colonialism and subservience. Relations with the UK and the US were not weighed equally in terms of affecting our actions.99 Reviving and renewing cooperation with Britain would be a step back for Canada; forging and deepening ties with the US, a step forward. By extension, Canada’s policy on preferences would reveal whether it was advancing or regressing politically. Of course, the choice was not between one or the other. Rather, Canadian policy-makers had to find a balance so that preferences would be scaled back enough to nurture relations with the US, but retained in some form to preserve the alliance with Britain. This was necessary because of Canada’s desire to keep both Britain and the US as allies within a cooperative North Atlantic framework. Within such a context Canada would enjoy maximum security economically and politically and would also find the most leverage to function as an independent player on the world stage. The framework was fragile because the US–UK arm of the triangle was not always stable. Canadian policy-makers therefore consciously set out to prevent disagreement between its two most important allies by appointing themselves as helpful fixers. That meant that Canadian officials had to consider trade policy from three points of view: the American, the British and their own. The objective was to make these three trade policies as broadly compatible as possible and thereby prevent a rupture in AngloAmerican relations. National identity reinforced the need for a balanced trade policy. Although Canada was becoming North American, it endured as a nation with a British heritage. To reflect the past and present of Canada’s


national identity, trade had to cultivate both aspects of its identity simultaneously. Louis Rasminsky, a rising star at the Bank of Canada, explained the complexity of the Canadian identity. He contrasted the historical and emotional ties with the UK and the geographical and temperamental links with the US. A strong pull in either direction created strain and Canada’s ‘split personality’ manifested itself.100 Reconciling national identity and tariff policy was problematic where imperial preference was concerned. Stubborn adherence to preferences would block the development of ties with the US. The abrogation of imperial preference would damage the tie to Britain. A policy of gradually contracting preferences bridged the gulf, perpetuating old ties while strengthening new ones.

Australia: Britons of the Pacific Like their Canadian colleagues, Australian officials did not participate in the Anglo-American discussions leading to the Mutual Aid agreement of 1942. They were, however, deeply interested in the proceedings and at every opportunity encouraged the British to finalize the agreement even though Article VII had potentially serious implications for imperial preference. In wartime, however, commercial criteria were largely irrelevant to Australia’s reaction to Mutual Aid. Security considerations were foremost. The Curtin government decided ‘to show a sympathetic understanding of the American point of view’101 in the hope of winning favour with American military planners. One way of doing so was by encouraging the British to accept the Mutual Aid agreement, including the controversial Article VII. Herbert Evatt, the new Labor minister of external affairs, went so far as to show a message encouraging the British to cooperate with US trade proposals to the Americans, ‘so that they might know that the Australians were pressing the UK to sign’.102 As soon as Australia had an opportunity to demonstrate its support for American economic principles, it did so. In September 1942, Australia and the US exchanged notes which affirmed their commitment to the Mutual Aid agreement. In turn, American soldiers and supplies alleviated Australia’s security concerns. Cooperation over Mutual Aid had paid off from Australia’s point of view. However, the conclusion of the Australian–American Mutual Aid agreement was not an accurate augury of their relations for the rest of the war, into the peace, or on commercial matters.

58

Fig. 3

Long-Distance Thinking103


In Australia, postwar planning took place in the Department of Postwar Reconstruction (PWR).104 The head of the department was Dr H. C. Coombs, a young economist who welcomed the American initiative to reform international trade. However, he disagreed with American, British and Canadian assessments which assumed that lowering barriers would increase the volume of trade. To Coombs, this line of reasoning was ‘academic and unreal’.105 Instead he identified that section of Article VII that called for ‘the expansion, by appropriate international and domestic measures, of production, employment, and the exchange and consumption of goods’ as the key to international economic development. High and stable levels of domestic employment, especially in the largest importing nations, would maintain high levels of demand and raise standards of living, thereby driving the wheels of production relentlessly and increasing production and trade. The Australians called this the ‘positive approach’. The proximity of large potential markets in South and South-East Asia reinforced the wisdom of the positive approach.106 Until there was full employment and higher wages Asian consumers could not afford Australian exports. Australia was not opposed to lower tariffs; it was just that full employment had to come first. ‘Revision [of tariffs] may have been desirable all along’, Ben Chifley, the minister of postwar reconstruction noted, but ‘policies of stable full employment made them practicable’.107 Disagreement over tactics did not change the fact that Australia had much to gain from commercial reform. As a trading nation, lower tariffs would obviously help the sale of its exports, the bulk of which were agricultural commodities, wool most important, then minerals and animal hides. Consequently, PWR, backed by the Department of Commerce and Agriculture, supported the reduction of trade barriers.108 ‘If we are to progress and develop our potential resources, we have to look to a general revival of world trade.’109 For a variety of reasons, this did not translate into straightforward support for the contraction of preferential tariffs. First, preferences were considered important to industrial development. The Department of Trade and Customs argued that protection was essential to Australia’s long-term economic development.110 It was not the general rate of duty that protected Australian industries, but the lower preferential rate which was set at such a high level that it excluded British and Commonwealth competitors, let alone foreign rivals. Thus, before a decision could be made about preferences Australian officials would have to ascertain the effects of changes on industry. There was some bureaucratic inertia here, which reflected


doubt that international tariff negotiations would ever take place.111 Even without careful study, it was obvious that high rates resulted in inefficient industrial production and an unnecessarily high cost of living.112 These realities weakened the merit of imperial preference. But workers were not inclined to accept the argument that their standard of living would improve by lowering tariffs, especially if some lost jobs while industries became leaner and more competitive. As Coombs wrote, giving up preferences ‘sent cold shivers up many Australian spines’.113 Second, although Australia’s agricultural exports were plentiful and competitive, they sold primarily in Britain (see Table 2.3). Imperial preference, including preferential quotas, gave Australian goods an edge against stiff foreign competition. A history of raisin sales illuminated the benefit of preferences. Britain first extended a preference to Australian raisins in 1919; it increased the preferential advantage in 1925 and 1932. With each increase, British consumption of Australian raisins rose at the expense of American suppliers.114 The same pattern was found with respect to other commodities, as well as in other Commonwealth and imperial markets. Unless there was concrete proof that a genuine liberalization of trade would occur, giving up preferences and the security associated with them was not a policy the Curtin government would initiate.115 The government’s caution was also a response to the boisterous lobbying of farmers whose primary concern was secure access to the British market. The Country Party, although the smallest of the three parties, was vocal in defending the welfare of farmers. Premier Hanlon of Queensland was relentless in his representations on behalf of the sugar, dairy, meat, wool and fruit industries of his state and urged the federal government not to jeopardize Australia’s place in the British market.116 Coombs’ bureaucratic detachment allowed him to understand that the commercial value of preferential tariffs was overrated. In his view, preferences were only important to horticultural producers whose contribution to the national economy was ‘insignificant’.117 Politicians eager for re-election, however, could not dismiss the political appeal of imperial preference. There were offsetting commercial considerations concerning supply and demand. Australian officials concluded that UK demand for their products was not likely to endure on the scale necessary for the Australian economy to thrive. This was only partly the result of the economic ravages of wartime. The British decision to increase agricultural self-sufficiency suggested that domestic consumption of imported


food would drop in the future. In addition, the purchasing power of the British population was contracting. Australia’s dependence on the British market was so great that its fortune, or misfortune, would mirror that of the UK: ‘we cannot be prosperous unless the UK is prosperous too’.118 Because the British needed access to markets to revive its economy, which would in turn benefit the Australian economy, Australia was well served by promoting freer trade. Financial considerations reinforced the wisdom of trade liberalization. As a member of the sterling area, Australia required hard currency to purchase the commodities needed to satisfy local demand and to procure essential supplies for industrial development. Australia withdrew more from the sterling area’s collective convertible pool than it contributed. Relying on its own earnings was not sufficient. The solution was for the UK and other sterling members to earn hard currency for their exports. This meant opening the American market to their goods.119 The American market loomed large in Australian plans for peacetime trade, especially for Australia’s leading export: wool. The US wool duty, at 34 cents per pound, doubled the price of raw wool, curtailing American demand.120 The Australians had come close to receiving the full 50 per cent reduction allowed under RTAA in wartime trade negotiations with the Americans.121 Unfortunately the US broke off these talks. After the war the Australians were determined to receive the 50 per cent reduction, but realized that in order to induce the Americans to revise the tariff, Australia would have to give up some preferences. Coombs advised the government to be forthcoming with respect to the negotiation of preferential tariffs. As he pointed out, ‘To attempt to treat preferences as sacrosanct I think would merely antagonize the best disposed elements in the United States.’ Nonetheless, he advised against abandoning or modifying preferences ‘lightly’. He concluded, ‘I think we can set our price high but that we would be very stupid to insist that preference is not in the market at all.’122 Like Canada and the UK, Australia linked the contraction of preferences to American tariff reform. Unlike its Commonwealth colleagues, Australian cooperation in the liberalization exercise hinged on a single commodity. Without the maximum reduction on wool, ‘Australia would not be willing to make substantial concessions on preferences’.123 Canberra’s articulation of a trade policy that advanced national commercial interests reflected a fundamental shift in the conception of external policy in Australia. Stanley Bruce, prime minister from 1923 to 1930, had called for a greater role for Australia in shaping an imperial


Table 2.3

Australian Trade with US and UK (per cent of total)124

Imports

1926 1935 1940 1945 1946 1947 1948 1949 1950

US

UK

24.7 15.2 17.4 38.9 26.9 24.9 10.8 10.8 8.2

43.5 42.5 38.0 32.9 37.7 33.0 48.8 52.9 51.8

US

UK

7.0 2.7 18.0 19.5 19.0 11.5 7.4 6.4 8.5

43.6 52.8 65.2 33.7 27.4 36.1 37.8 42.2 36.7

Exports 1926 1935 1940 1945 1946 1947 1948 1949 1950

foreign policy.125 The appointment of Richard Casey as a liaison between London and Canberra on international matters indicated an impulse to change the way decisions were made to allow Australia greater influence, but always within a collective policy. Little came of Australia’s efforts because of British reluctance to open the decision-making process. Australian frustration with its marginalization did not translate into an independent external policy because Australia still wanted to preserve a single and strong voice for the Empire in world affairs. Australia did not champion its sovereignty and independence before 1939 because the Australian public still identified closely with Britain. Over 99 per cent of the population claimed British descent in the interwar years.126 Australians’ emotional commitment to Britain was powerful and pervasive, even though they frequently criticized, disparaged and mocked Britons.127 Many Australians regarded the Statute of Westminster as treasonous. Indeed, the word ‘independence’ did not appear in the final text of the statute because Australian representatives at the 1926 imperial conference objected to its inclusion. When the


statute went forward in 1931, Australia did not endorse it. There were several attempts at ratification, but all failed. For instance, when the attorney-general, Robert Menzies, introduced the Statute of Westminster to the House of Representatives in 1937, he described it as a ‘grave disservice’ and an exercise in futility because it attempted ‘to reduce to written terms something which was a matter of the spirit and not of the letter’.128 A majority of Australia’s elected representatives agreed and decided not to endorse it at all. Australians did not see themselves as sovereign or separate because they thought of themselves as British, a point made explicitly whenever immigration policy came under scrutiny. Australia’s goal for immigration in the 1920s and 1930s was to reinforce the country’s British character. In a 1925 debate to exclude immigrants who were likely to be slow to assimilate, Stanley Bruce justified the selection criteria in terms of preserving Australia’s British character. ‘We in Australia…claim that we are more British than the British themselves and have more of British stock in our communities than there is in Great Britain itself.’129 The close ethnic and cultural connection to Britons shaped and reflected Australia’s general approach to major questions in international affairs throughout the interwar years. In a 1938 defence debate the Labor Party advocated increased self-reliance. Menzies, well known for his unflagging commitment to Britain, refuted this line of reasoning because it presumed that Britain was a foreign nation. If a war began, as seemed increasingly likely, he argued that Australia would automatically stand by Britain because ‘only in that way can Australian citizens be loyal to Australia’.130 The outcome was that when war came, Australia’s identity and foreign policy were inextricably associated with Britain. Consequently in 1939 Australia existed as ‘a major satellite in the British imperial system’.131 World War II had a dramatic effect on Australia’s national identity and its attachment to Britain.132 The British failure to reinforce Singapore or to deliver promised aircraft to Australia to shore up its security provoked shock, dismay and revelation. National interests and boundaries obtained a clarity of conception as never before. The election of a Labor government in 1941 brought to office a party that had long championed an Australia-first approach to external policy and was willing to capitalize on the changing national mood. The decision to make a separate declaration of war against Japan in December 1941 confirmed that Australia had reached ‘a new stage in the development of her ideas about dominion status’, thereby narrowing the gap with the two more advanced dominions, Canada and South Africa.133 Thus the Canadian high commissioner would later remark approvingly, the


Labor government ‘definitely intends to pursue a policy of greater independence of action much along the lines of Canadian policy’.134 The new tone, content and leaders of Australian nationalism affected relations with Britain. Australians no longer believed that British interests should supersede those of Australia, nor that they should automatically hand over Australian resources to Britain. The fierce determination to attend to Australia’s interests first and foremost was evident in the angry reaction of Canberra to London’s appointment of Richard Casey, Australia’s minister to Washington, as the British minister to the Middle East. In 1939 no Australian government would have objected to Britain singling out one of its citizens for such a position. In 1941 Curtin tried to block the appointment. There could be no more effective person to give Australia its own voice than Herbert Evatt, Labor’s minister of external affairs. Intelligent, supremely confident in his own abilities, impassioned about the cause of Australian security and independence, he was fiercely

Fig. 4

To the Last Man and the Last Shilling135


proud of Australia. He also had a loud voice and an abrasive temperament, which he incorporated into a personal style of diplomacy that Paul Hasluck described as being of the ‘shin-kicking’ variety.136 World leaders noticed and discussed Evatt as they had none of his predecessors. Their comments were not always laudatory, but that was not the point. By war’s end Evatt had put Australia on the map. One of Evatt’s foremost goals was to end Australian subservience to Britain. He tried to accomplish this by being rude to his British colleagues.137 More seriously he insisted that Britain could not speak for Australia or make any decisions that would implicate Australia in any way. This applied to all aspects of external policy, including trade. As a general rule the Department of External Affairs did not participate in the formulation of trade policy. Arthur Tange, another officer in the department, explained, there was no desire in the DEA to model itself after the US State Department or for Evatt to emulate Cordell Hull’s interest in trade policy.138 Evatt was, however, deeply concerned with the principles of representation, cooperation and consultation which applied to trade policy. He impressed his concern about British entrapment on Australia’s representatives sent to Commonwealth and international economic conferences. Coombs, who frequently led Australia’s economic delegations overseas, regularly sent back despatches assuring the minister that nothing had been said or done to suggest Britain could represent Australian trade policy. Not surprisingly, Evatt insisted that Australia must have complete freedom to set and pursue its goals regarding imperial preference. Evatt’s pugnacity and general uncooperativeness marked so dramatic a change in Anglo-Australian relations that many of Evatt’s colleagues believed he favoured secession from the Commonwealth.139 This view misrepresented Evatt’s, and his party’s, intentions towards Britain. Labor, with the support of a large faction of Australians of Irish descent, had traditionally taken a more independent line with respect to relations with Britain than the Liberal Party, but it never favoured rupture. Evatt envisioned a Commonwealth in which fully autonomous dominions continued to cooperate with one another and Britain. He called this ‘an entirely new concept in British Commonwealth relations’,140 which in his mind did not weaken or undermine the Commonwealth. In fact, a policy of detachment from Britain and the Commonwealth would have been politically inastute because Australians continued to define themselves as British despite a growing commitment to Australia as a discrete national identity. The enduring close association between Britain and Australia was evident in the statements by


Australia’s representatives abroad. In a speech to the American and British Commonwealth Association in 1944 Stanley Bruce, the high commissioner in London, said matter of factly that ‘we in Australia are British to the core’.141 As shrewd politicians, Labor members knew they could not afford to alienate a substantial section of the electorate. They therefore also expressed their loyalty to the UK.142 Thus Curtin confirmed that there was no inconsistency in being Australian and British. Along this vein, he outlined three types of overlapping and ‘complementary’ citizenship: ‘to be a good Australian, a good British subject and a good world citizen’.143 Support for imperial preference helped to establish the Labor government’s pro-British credentials. The Labor government also appreciated the pragmatic benefits of continued cooperation with Britain and the Commonwealth. Curtin believed that a reformed Commonwealth could transport Australia to a place in international affairs which it could not attain by individual effort alone.144 Curtin’s conception of a reconstituted Commonwealth

Fig. 5

Australia Demands an Independent Voice in Peace Talks with Japan145


involved spheres of interest in which the dominion most involved or affected would be principally responsible for developing and implementing Commonwealth policies. For example, South Africa would take the lead in Africa, Australia in the Pacific. Curtin also proposed the establishment of a permanent Commonwealth council in London and wanted a seat for Australia in Churchill’s wartime cabinet. While Anglo-Australian relations were characterized by misunderstanding, squabbling, jockeying for position as well as enduring cooperation, Australia’s relations with the US were improving. Throughout the 1930s Australian–American relations had been rancorous, evident in minimal trade between the two countries.146 During the war, relations with the US blossomed.147 Military necessity awakened Australia to the benefits of cooperative and extensive relations with the US. On 27 December 1941 John Curtin, in response to desperate circumstances, appealed to the US for aid. ‘Without any inhibitions of any kind, I make it clear that Australia looks to America, free of any pangs as to our traditional links or kinship with the United Kingdom.’148 Their wartime relations soon transcended military cooperation. Australia appointed its first minister to Washington in 1940: Richard Casey. Soon thereafter the two countries entered into trade negotiations. Australian membership in the Commonwealth was complicated by the new and growing importance of the US to Australia. Australians did not want the Americans to suspect the Commonwealth acted contrary to their interests, for fear the US would become less cooperative. Thus, Australia was reluctant to participate in closed Commonwealth summits in case the Americans interpreted it as a hostile act.149 The Australian government similarly believed intransigence over imperial preference would damage relations with the US. Beneath a surface of goodwill and solicitude for American views, Australians remained deeply suspicious of the US. The animosities of the 1930s were only papered over by wartime association. The Labor Party was the source of much mistrust of the US. It had historically identified the principal enemy of the people as large American financial institutions whose interests were antithetical to those of the majority of the population.150 Moreover, the Australian wartime government had enough exposure to the US not to assume the Americans would be more inclined to listen to them or allow them more influence than their British colleagues. There was no obvious benefit in exchanging subordination to Britain for subordination to the US. Rupert Henderson, editor of the Sydney Morning Herald and confidant of


Curtin, explained why the prime minister resisted the attraction of the US. Curtin’s reasons blended fear of ‘United States imperialism’ as well as the belief that ‘Australia as an ally of Great Britain might have the dominant voice in the South West Pacific, while Australia as an ally of the United States would have a very small voice in the determination of United States policy in that area’.151 Paul Hasluck agreed that Curtin and the Labor Party valued ties with the UK and Commonwealth. He had learnt to appreciate more the ties of tradition and kinship and common allegiance, the peculiar quality of the free association of members of the Commonwealth…the cast of Curtin’s mind as a practised politician led him to see more value in an association that he knew based on loyalties and habits that he had seen applied, than on unknown or untried methods.152 Ben Chifley became prime minister after Curtin’s sudden death in 1945. He viewed the US with the same mistrust, whereas Britain looked comfortingly familar. Thus he did not intend ‘at a time when he could see Australia escaping from the tutelage of Whitehall and the City of London, to tie the first knots in a net which would restrict our future freedom’.153 But despite Chifley’s suspicion of the US, he believed it was an important ally and would remain so after the war. Trade policy reflected political considerations. The Labor government did not want American-made products to swamp the Australian market. Nor did it want to link Australia’s economic welfare exclusively with the US. Thus the Labor government, in which many ministers were ‘rabid protectionists and anti-internationalists’, was reluctant to implement economic reforms, including the contraction of imperial preference. Cabinet opinion was imbued with ‘a lot of scepticism about the rules to govern trade and about the implementation of Article VII and the effects on Imperial Preference’.154 Chifley and John Dedman, his successor as the minister of PWR, did favour economic liberalization. But they were confronted with the formidable task of persuading their party that American-sponsored economic reforms would not compromise Australia’s new found independence in international affairs or its enduring attachment to Britain. Political, sentimental, economic and personal ties to Britain encouraged a trade policy that retained preferential tariffs. Despite wartime disappointment in Britain and incipient Australian nationalism, most Australians wanted to repair and nurture the relationship. Imperial preference was a prized symbol of attachment. To tamper with it, even to advance national economic interests, provoked accusations of being


anti-British. At the same time, the Australian government did not want imperial preference to become an excuse to reinforce British leadership of the Commonwealth. They did not favour a return to prewar standards and expectations for the Commonwealth. They wanted more influence. To advocate the retention of imperial preference too forcefully could send the wrong signals to London. Australian officials also had to use imperial preference to promote their best economic interests and cultivate harmonious relations with the Americans. It was too much for a single policy.

New Zealand: most dutiful daughter The government of New Zealand greeted the Lend-Lease agreement with relief and admiration. Lend-Lease fortified Britain’s war effort, while demonstrating the possibility of selflessness in international relations.155 Anglo-American negotiations over repayment, however, provoked alarm in Wellington on a number of fronts. To New Zealand, Article VII appeared not only as a blueprint for a reformed international economic system, but as a way to allow the US to penetrate the economies of the Empire and Commonwealth. Of all the dominions, New Zealand’s trade was most dependent on the British market. Not surprisingly it was apprehensive about opening that market to more competitors.156 The proposed liberal reforms were also incompatible with the restrictive economic practices, such as import selection and price fixing, that Wellington had introduced in the 1930s to shelter its economy from external pressures and to offset the outflow of foreign reserves. By 1942 the government accepted these kinds of policies as essential and standard economic practice. Because New Zealand remained steadfast in its loyalty to Britain, it was also wary of the insidious political repercussions of economic liberalism. New Zealand’s discomfort was evident when the Americans approached the Fraser government about concluding a separate Mutual Aid agreement. Walter Nash, the minister of finance who doubled as New Zealand’s minister to Washington, insisted there had to be discussions with Britain before taking such a step. He even mentioned the possibility of concluding a trilateral agreement between the UK, US and New Zealand.157 Ultimately, the government could not dodge the proposal, even if it wished it would disappear. At the end of 1942 New Zealand and the US finalized a bilateral agreement. New Zealand’s signature neither eliminated concerns about American intentions, weakened the attachment to Britain, nor converted it to freer, multilateral trade. What it did mean was New Zealand now had to define its own stand on postwar economic issues.


New Zealand was slow to do so.158 The limited size and experience of the bureaucracy was partly responsible for the delay.159 The particularities of political culture also sidelined bureaucrats. As a general rule, New Zealanders mistrusted civil servants and looked to politicians to take the lead in policy decisions. This entirely suited the work habits, temperament and philosophy of Walter Nash. Nash was the minister primarily responsible for commercial policy. He was regarded as his country’s leading technical expert on economic questions – at least he regarded himself so.160 Consequently, he did not delegate to civil servants, preferring to do the work himself.161 In shaping trade policy, Nash did have the support of the prime minister. Peter Fraser would never have allowed Nash to implement a policy with which he did not agree, which was ideologically suspect, or which was politically dangerous.162 Moreover, as foreign minister, Fraser was firmly in charge of external policy. Nash could only pursue his international economic objectives with Fraser’s support. Nonetheless, to understand the Labour government’s trade policy one must first look to Nash, his conception of economics and the appropriate role he identified for the government in this sphere. Nash rejected the free trade philosophies of Smith, Ricardo and Mill and was instead attracted to Christian socialist beliefs about the organization and purpose of the economy and the distribution of wealth.163 As he explained: ‘God never sent any one into this world to work to the advantage of any one else able to work but living at ease.’164 Thus community, justice and equality prevailed over the individualism, efficiency and competitiveness that characterized economic liberalism. His philosophical beliefs led to a rejection of liberal trade practices. Nash wanted to replace the free hand of the market with the directing hand of God, whose agent of intervention was government. Thus Nash endorsed government involvement in the economy to ensure that the material and human resources of the nation were fully employed and the wealth generated was distributed throughout the community. ‘The economic life of a country can no longer be left to chance’, Nash argued. ‘It must be guided.’165 The expectation of a depression after the war, a fear shared by all the allies, strengthened Nash’s commitment to government intervention and restrictive policies.166 Nash wanted to encourage industrial growth to make the economy less vulnerable to cyclical fluctuation.167 But the survival of new industries required curtailing competition. The most effective way to limit competition was through import selection, or quantitative restriction as it was commonly known. A government


which adhered to the practice of quantitative restrictions set limits on the volume of imports allowed into the domestic market. The use of quantitative restrictions, was, however, controversial because they were far more obstructive to international trade than preferential tariffs. Hardly surprisingly, the Americans denounced this practice as loudly as they did imperial preference. The Fraser government tried to explain that its policies were consistent with the spirit of a liberal international economy. New Zealanders made the greatest possible contribution to international trade that they could afford while living within their means: ‘our policy is one of import selection, and … the only restriction is that set by the limitation of our overseas resources’.168 New Zealand’s use of quantitative restrictions minimized the benefits of preferential tariffs. Therefore, on commercial grounds, it seemed New Zealand ought to have had no objection to American proposals to eliminate preferential tariffs. But that was not the case. In the event that New Zealand might have to suspend import selection, preferential tariffs could shield new industries and stabilize New Zealand’s trading patterns.169 Thus, preferences played a valuable back-up role. However Wellington’s first priority was to maintain the right to use import selection. New Zealand officials recognized early on that in the battle to justify import selection they would have to fight alone because Britain also opposed quantitative restrictions. The Fraser government’s realization that the British government did not approve of or support the commercial strategy that best suited New Zealand brought this antipodean dominion’s borders and responsibilities into sharp focus. It galvanized the government into defining commercial interests narrowly, without reference to Britain. Indeed, by the end of the war Prime Minister Fraser made it clear that only Wellington could determine the nature of trade policy. As he told the secretary of state for dominion affairs at the end of 1945, ‘we must feel completely free to put forward our own particular case on each issue’.170 Britain was the main beneficiary of New Zealand’s policy of import selection. New Zealand consumers relied on British imports for manufactured products such as fertilizers, tractors, furniture, cars and other essential items. As a sterling country, New Zealand had limited access to hard currency, strengthening its reliance on Britain as a supplier. Wartime plans to diversify industrial activity would not soon alter the reality that New Zealand was primarily a producer and exporter of agricultural goods. Existing local industries, such as meat freezing, manufacture of dairying machinery, and production of fertilizer supported agricultural endeavours and were not geared to export.171 Britain’s


unequalled role as a supplier and market in New Zealand’s economic life strengthened Wellington’s attachment to preferences even though preferences were not responsible for the economic interdependence of Britain and its antipodean farm (see Table 2.4). Sheltering the domestic market from foreign pressure was one half of New Zealand’s postwar trade policy. The other half was the protection of the place of agricultural exports (wool, butter, cheese and meats) in the British market, and for this preferences were vitally important. So great was New Zealand’s concern about its place in the British market that in 1944 the government negotiated four-year bulk purchase agreements with London for mutton, cheese and wool, thus ensuring primary exports a measure of stability in the immediate postwar period.172 New Zealand’s reliance on Britain, however, was problematic. New Zealand economists forecast slow demographic growth in Britain, leading to a drop in demand.173 The production of margarine, ‘a product indistinguishable from butter at a much cheaper rate’, threatened to undercut demand for one staple export in the British market.174 New Zealand’s place in the British market was also threatened by the war and the realities of geography. Shipping shortages pre-

Fig. 6

Is it Come to This?175


vented New Zealand from getting its supplies to market. Britain was forced to find alternative suppliers closer to home. New Zealand’s concerns about the British market were compounded by the realization that there were few alternative outlets for its exports. European countries would likely uphold prewar policies of agricultural self-sufficiency. Until the standard of living rose in Asian and Middle Eastern countries, these regions would not be able to afford New Zealand’s food exports.176 The American market held out some promise of expansion for wool and butter. But here New Zealand faced prohibitive tariffs. In addition, the Fraser government knew there were many nontariff barriers to the US market.177 New Zealand’s exports stood to gain little through the reduction of tariff barriers alone. New Zealand officials also recognized that the trade reforms under consideration were oriented towards liberalization of manufactured goods and therefore would not facilitate the sale of agricultural commodities. If, by chance, America gave a forceful lead in tariff reduction, New Zealand would respond.178 But this

Table 2.4

New Zealand Trade with US and UK (per cent of total)179

Imports

1926 1935 1940 1945 1946 1947 1948 1949 1950

US

UK

20.1 12.5 12.4 23.7 16.5 18.1 10.6 9.6 7.3

45.7 50.3 46.8 36.0 47.7 42.8 52.4 55.1 60.0

US

UK

8.4 5.4 3.9 10.3 9.8 6.2 5.0 3.8 10.1

78.9 84.5 88.0 75.7 71.6 77.3 73.7 73.7 66.8

Exports 1926 1935 1940 1945 1946 1947 1948 1949 1950


outcome seemed unlikely. In the meantime, New Zealand would cling to quantitative restrictions, bulk purchase contracts and imperial preference. There were, however, offsetting considerations, the most significant of which was the importance of British prosperity to New Zealand’s economic security. New Zealand absorbed only 4.5 per cent of Britain’s exports and lacked the market depth to increase this proportion. If the volume of imports in the US and elsewhere expanded, the British economy would gain, in turn working to New Zealand’s benefit. As G. D. White of the Treasury observed, ‘If the United Kingdom is thereby enabled to occupy a more prosperous place in the new order of things, she will be a better customer for New Zealand exports.’180 Where Britain went economically, New Zealand would have to follow, sometimes reluctantly. Questions of trade, and preferential tariffs in particular, spilled over into the political sphere where the attachment to preferential tariffs was ‘talismanic’.181 The policy on preferences was steeped in larger considerations of history, sentiment and identity. Thus public opinion encouraged the government to extend preferences to the UK and expected that preferences, as an expression of a traditional connection, transcended crass commercial calculations. Much more was at stake than the sale of butter, cheese and mutton. Observers and scholars readily agreed that the attachment between New Zealand and Britain was singular. New Zealand ‘took a genuine delight in being “the most British of the Dominions”, an outlying agricultural dependency that was an enthusiastically dutiful daughtercommunity’.182 Telling evidence of the strength of the attachment was New Zealand’s refusal to ratify the Statute of Westminster because it represented ‘secession in another guise’.183 There was no desire to transform the physical distance with Britain into legal separation. New Zealand’s attachment to Britain did not mean there was no local identity. Rather, there were two strands in the national identity: New Zealand and British. For instance, Walter Nash was English and Peter Fraser was a Scot. Neither saw any inconsistency with being a New Zealander. As the historian F. L. W. Wood explained, ‘Both developed … that peculiar combination of Dominion-conscious independence with a sense of oneness with the “Mother Country” which was so characteristic an element in New Zealand life.’184 Preserving preferences was a clear sign of an enduring association. 185 Thus both main political parties, Labour and Nationalist, favoured the retention of preferential tariffs in a competition to see which was more pro-British.


Fig. 7 A VISITOR says ‘New Zealanders should build up their own national destiny instead of depending so much on Britain’186

New Zealand’s Britishness also referred to common values and political beliefs. To be British meant to be ‘free’, ‘respectable’, ‘colonial’, ‘a settler community’.187 Upholding New Zealand’s Britishness also distinguished it from its larger Pacific neighbour, Australia. Several historians have likened the relationship between Australia and New Zealand to that between the US and Canada. Canada and New Zealand, as the smaller partners, played up their Britishness to distinguish themselves from potentially overwhelming neighbours. Thus being British did not mean New Zealand was simply an extension or dependency of the UK. ‘New Zealand imperialism was not … evidence of an absence of nationalism … imperialism was an expression of an emergent nationalism.’188 Outsiders did not always understand the independence of New Zealand’s imperialism. New Zealand appeared to be a voluntarily immature nation, still tied to its colonial past. Wellington’s enduring commitment to the diplomatic unity of the Commonwealth, in which it played a supporting role, reinforced this impression. Even more telling, Britain was the sole focus of New Zealand’s external orientation. Events beyond Britain did not seem to touch New Zealanders: ‘for the great majority of New Zealanders world history was a drama to be observed from a distance without any notion of audience participation’. When New Zealand did involve itself in world affairs, it usually


followed Britain’s lead. There were occasions when Wellington did openly question British foreign policy. For instance, in the League of Nations in the troubled second half of the 1930s, New Zealand supported collective security, in contrast to Britain’s commitment to the appeasement of Italy and Germany. The flexibility of the Commonwealth allowed New Zealand to disagree and yet remain fundamentally supportive of Britain’s involvement in the international community.189 Furthermore, self-imposed limits and an enduring belief in the benefits of imperial partnership prevented different opinions from translating into divergent actions. As Malcolm McKinnon explains it, New Zealand operated within the framework of loyal dissent.190 As a result, the external belief that New Zealand was subservient to the UK persisted. World War II ‘pitchforked’ New Zealand into world affairs and amplified the independent line of New Zealand’s participation in the Commonwealth.191 A more concerted attempt to control and define its foreign policy was evident when Wellington established a Department of External Affairs in 1943. The significance of this move should not be exaggerated. The new department was simply a rechristened version of the section of the prime minister’s office that had previously dealt with imperial and international affairs.192 Whatever the original intentions were, the existence of the department led to the gradual recruitment of individuals to advise the government on external questions, although a shortage of talent and time during the war meant the Department of External Affairs scraped by, ‘living from hand to mouth’ until 1945.193 New Zealand’s shift towards a more independent stance vis-à-vis Britain was evident at the San Francisco conference of 1945 where allied delegations gathered to establish the United Nations. New Zealand opposed great power domination of the new institution, a tendency that New Zealand’s second minister in Washington described as an ‘international dictatorship’.194 Hence Wellington criticized the proposed great power veto in the United Nations. New Zealand’s representatives recognized that it was unacceptable to entrust their national interests to any great power, if only because their interests differed from those of other nations, even those with which they were most closely allied. Hence Carl Berendsen insisted that New Zealand must have ‘an eye and an ear and a voice … wherever world events are being settled’.195 Lord Halifax was one of several British officials who complained of the embarrassing ‘exhibition the Empire was making’ because of the active and vocal roles of Fraser and Evatt.196 But if


New Zealand sniped at great power domination, it did not assault it head on. Fundamentally, New Zealand accepted that there was a hierarchy of power in the international community and New Zealand’s place was quite low down. There was only so much New Zealand could do before accepting ‘the inevitable with dignity’.197 However, limited influence did not deter the government from playing its part as a small, independent member of the international community, even if it had to ‘fight pretty hard to maintain a voice in the world’.198 New Zealand’s more independent line in the international community did not diminish the value that Wellington attached to the Commonwealth. Prime Minister Fraser cherished the Commonwealth as a special and incomparable organization. However, he was not silent when he identified problems with the Commonwealth. Like the other dominions New Zealand wanted its voice heard in Commonwealth councils. But the combination of the circumstances of war and Churchill’s archaic conception of the Empire and Commonwealth meant that Britain was deaf to its entreaties. This propelled New Zealand into working more closely with Australia. The rapprochement between the two dramatically changed the way they managed their bilateral relations. Although historical mistrust, animosity and rivalry characterized their relationship,199 in wartime they found a common cause and worked together. Some sceptics, like Alister McIntosh, New Zealand’s secretary of external affairs, placed little faith in Australia as an ally, arguing that New Zealand would be better off ‘paddling our own canoe as best we can’.200 Despite his reservations, the antipodean alignment developed, enhancing their individual and joint leverage within the Commonwealth even though the strident tones and independent spirit of Australia’s relations with Britain went too far for most New Zealand officials. New Zealand’s relations with the US also broadened during the war. Wellington appointed Walter Nash as its diplomatic representative to Washington in 1941. Sending a person of Nash’s stature confirmed the importance of the American tie. The association, although belated and pragmatic, alarmed British observers. Sir Harry Batterbee, Britain’s high commissioner in Wellington, advised his government that ‘we must take our coats off if we are to regain the British position’.201 Although he was confident that the rapprochement with the Americans would fade in time, he hoped that a military triumph would immediately restore Britain to its rightful place in New Zealanders’ hearts and minds. ‘What we want, and very badly want, is a British victory somewhere and then everything will be transformed.’202


Batterbee’s concerns were overstated. There was not the slightest possibility that the US would supplant Britain in New Zealand hearts, minds, or policy considerations. New Zealanders did not see their relations with the US and UK as mutually exclusive or threatening. Rather they believed that their cooperative relations with the US facilitated good relations between Britain and the US. Wellington understood cooperation and contact to be a service to Britain and entirely consistent with New Zealand’s ‘primary connection with the British Commonwealth’.203 Moreover, Wellington’s recognition of the importance of the American connection was not the same as enthusiasm for New Zealand–American relations. Nor was there the same pressing motivation to cultivate good relations with the US as there was in Australia because New Zealand’s fear of invasion was minimal. Life in New Zealand continued to be ‘obstinately normal’ despite the war.204 Other than war brides and girlfriends, no one was sorry to see American servicemen leave New Zealand in 1944. Nor were there great expectations about the development of this new facet of New Zealand’s external relations once peace returned. New Zealand remained suspicious of the US, its economic power and political objectives. Numerous failed attempts to penetrate the American market exacerbated mistrust.205 The relationship with the US during and after the war was characterized by ambivalence, tinged with suspicion. The issue of preferential tariffs went to the heart of the many and conflicting considerations affecting New Zealand’s relations with Britain and the wider world. Although the commercial value of preferences was surpassed by quantitative restrictions and bulk purchase agreements with the UK, members of the government and opposition, exporters, importers, and the public generally, valued preferences as one of the few remaining explicit symbols of their attachment to Britain, an attachment that commercial interdependence, political identification, and voluntary diplomatic unity reinforced. This attachment was not just a testament to their past, but a reflection of the ties and identity New Zealanders wanted to perpetuate into the future. However, New Zealand’s subscription to Article VII, a decision made only after Britain gave a nod of approval, put the Fraser government on the defensive in its relations with Britain as well as with the wider world. Paradoxically, the most loyal dominion to endorse Article VII and participate in the international trade reform process by which Britain stood to gain so much was forced to confront the clash of national interests and the absence of sympathy and support on the


thorny, but vital, issue of trade. The incompatibility between British and New Zealand trade policies had fundamental implications for their political relations. This was a reality most New Zealanders in the 1940s were not happy to accept. International factors prevented them from burying their collective head in the sand.

South Africa: dual personality In the Anglo-American negotiations of the Mutual Aid agreement, Washington had suspected that Britain was taking it for a ride, using Lend-Lease aid for postwar profit as opposed to fighting the war. These same concerns surfaced in South African–American negotiations over Mutual Aid. The Smuts government could not convince the US that it was in need of assistance. In the American opinion, if South Africa could afford to pay for American supplies, it should do so. American negotiators did not believe that South Africa was making a total war effort. The amount of human and material resources that South Africa devoted to gold production detracted from its ability to provide coal for the allied war effort. Before the US would finalize an agreement, it asked the Smuts government to curtail gold production, redeploying resources to coal production.206 Washington also wanted South Africa to provide strategic materials to the US as reciprocal aid. In other words, the Americans expected South Africa to eliminate the price tag too.207 Prime Minister Smuts could sympathize with American reservations. As early as January 1943 he complained that South Africans were more interested in social security than national security.208 But he could not simply accede to American demands. First, restricting gold production would adversely affect the national economy, in turn limiting the contribution South Africa could make to the war effort. Second, shifting human resources from gold to the mining of strategic minerals would force the government to increase personal income tax to offset the loss of revenue from gold profits.209 Such an act would give the opponents of South Africa’s wartime role – in particular the Afrikaner community – ammunition to attack the government and involvement in the war. American officials appreciated Smuts’ delicate political position and continued to negotiate in the hope of finding mutually acceptable terms. The longer their discussions dragged on, the less urgent was the need to finalize an agreement. South African and American negotiators, therefore, haggled leisurely over terms, only finalizing an agreement on the eve of peace: 17 April 1945.210


Although a South African–American Mutual Aid agreement was concluded late in the day, the government of South Africa still had to define its trade policy. Smuts personally had appreciated the connection between economics and peace since 1919. He had lamented the financial terms of the Treaty of Versailles which he was sure would eventually provoke a breakdown in the international community. 211 Thus he praised the direction and cooperation of AngloAmerican economic relations during World War II. However, liberal trade practices were not obviously in South Africa’s best economic interests. In fact, the development of South Africa’s economy up to 1939, as well as the direction in which leaders wanted it to move in the future, precluded a straightforward commitment to a liberal trade policy. South Africa exported agricultural products (wool, maize, oranges and other fruit) and minerals, in particular gold and diamonds. Agricultural exports were valuable, but gold was central. In 1937 the total value of exports, excluding gold, was £38 381 000, while the value of gold bar, ore, concentrates, and coin sold that year totalled £85 574 000.212 Gold put South Africa in an enviable position. It possessed a commodity that would always have buyers. There was some concern, however, about tying South Africa’s prosperity to a single commodity.213 If the gold veins were exhausted, South Africa’s outlook would be bleak. Even though new gold fields were found in the Orange Free State at the end of the war, the government was not willing to stake South Africa’s long-term prosperity on a non-renewable resource. The remedy was to increase industrial activity. Prior to 1939 South Africa’s industrial sector was rudimentary. The government had introduced a protective tariff in 1924 to stimulate industrial growth, but it took time to have an effect. During the war South Africa’s manufacturers began to produce a wide array of goods and the numbers employed in manufacturing industries more than doubled, from 205 523 in the mid-1930s to 467 012 by 1946. 214 This was a welcome development. Efficient industrial production was undercut by South Africa’s need to import food at a high price, while it sold its agricultural exports abroad cheaply.215 The cost of living necessarily rose, in turn raising wages which made industrial production expensive. The way to overcome this disadvantage was through protection, which S. F. Waterson, South Africa’s minister of economic development, described as ‘a cardinal principle’ of his government.216 South African officials saw that preferential tariffs


increased protection, along with quantitative restrictions. Regardless of the tactic used, South Africa intended to pursue an interventionist and protective trade policy after the war to stimulate industrial growth until industry could ‘stand on its own merits both in regard to quality and cost against fair competition from oversea [sic]’.217 The government also valued preferences as an effective barrier to competitors because it feared that the South African market would be flooded with American goods in peacetime. F. J. du Toit, secretary for commerce and industries, fuelled this suspicion when he warned that South African industries had only eighteen months after the end of the war to reach a peak of efficiency before the deluge of American products would begin.218 Imperial preference was already in place sheltering the South African market. South Africa was also attached to preferences because they gave its agricultural products a competitive edge in the British market. Before the war approximately half of all exports were destined for the UK. This condition was expected to persist for most of South Africa’s leading exports: minerals, wine, fruits, wool, hides and sugar.219 However, the Smuts government was not inflexibly committed to preferences. Like its Commonwealth counterparts, it linked modifications of preferences to substantive concessions in the US tariff. Like Australia, South Africa was particularly interested in a lower American wool duty. Unless this and other concessions were forthcoming, Smuts opined, ‘we shall no doubt stand pat on our existing status quo’.220 Doubts about the sincerity of American intentions to lower its tariffs strengthened his inclination to keep preferences. Frustration over inconclusive wartime trade negotiations with the US exacerbated scepticism that the Roosevelt administration would be able to control the protective inclinations of Congress and public opinion once the accommodating effects of war dissipated. As C. J. Burchell, the Canadian high commissioner to Pretoria, explained, South Africa ‘would not be prepared to sacrifice actual existing markets in return for some purely theoretical or hypothetical tariff changes which might be held forth as a promise by such countries as the United States.’221 Until America opened its market South Africa would not make changes to preferences. It would not sacrifice ‘the substance for the shadow’ (see Table 2.5). There was one compelling reason to cooperate in the contraction of imperial preference: for as long as Britain remained South Africa’s principal market, and it was expected that would remain the case for quite some time, it was essential that the British market boom.


British prosperity would only come about through commercial liberalization which would allow Britain to sell its exports and generate sufficient revenue to buy South African imports. Moreover, South Africa’s commercial expansion into southern Africa depended on liberal trade practices. Smuts was persuaded by this logic and told the congress of the association of chambers of commerce, ‘No country has so great an interest in opening channels of trade as South Africa.’222 South Africa’s conflicting considerations resulted in a contradictory policy, combining protection and liberalization. C. J. Burchell attributed shifts in tone and emphasis in the pronouncements of South Africa’s minister of economic development to the audience he happened to be addressing. Consequently, Waterson ‘has evinced the tendency to be protectionist when speaking to an audience of manufacturers, but more moderate when addressing those whose

Table 2.5

South African Trade with US and UK (per cent of total)223

Imports

1926 1935 1940 1945 1946 1947 1948 1949 1950

US

UK

15.7 17.0 22.4 27.4 26.7 35.1 34.8 25.8 16.0

48.9 48.7 32.9 31.1 32.4 31.3 33.5 41.7 41.3

US

UK

5.2 2.3 10.2 14.6 19.9 9.9 6.3 6.9 9.8

55.9 42.5 52.7 24.6 20.3 26.9 24.5 23.5 30.0

Exports

1926 1935 1940 1945 1946 1947 1948 1949 1950


interests are allied to freer trade’. 224 Still there was an underlying coherence in this mixed message: economic security. Both protection and liberalization helped make the economy more secure even if the benefits were only short-term. As a result, South Africa would not emerge as a crusader for economic internationalism, preferring to follow the lead of the most powerful economic nations and looking to its own self-interest first. As in Britain and the other dominions, tariff policy was not only, or even primarily, an economic issue, but a political one, directly linked to South Africa’s relations with Britain, its national identity and status, and the strength and vitality of the Commonwealth. Prime Minister Smuts believed that the Commonwealth was a model and leader in world affairs. As Smuts explained, ‘I am a firm believer in the Commonwealth … as the first tentative beginnings of great things for the future of the world.’225 Smuts also supported the Commonwealth because he believed it served South Africa’s economic, political and security interests. In his mind, Britain and the Commonwealth connected South Africa with the rest of the world and prevented it from turning into a parochial state. In addition, he recognized that South Africa’s defensive capabilities remained woefully inadequate on the eve of war. The Commonwealth made South Africa’s territorial integrity and sovereignty more secure. Smuts also saw that the South African–British trading axis contributed to South African prosperity. Finally, he attributed moral and spiritual qualities to the association with the UK. To quit the Commonwealth, Smuts asserted, would be tantamount to ‘political suicide’.226 Thus in 1945 he sent Heaton Nicholls as high commissioner to London with a mandate to strengthen the bond between the Union and the Commonwealth.227 Smuts also tried to stem malaise elsewhere in the Commonwealth by suggesting that the dominions should be more closely involved with neighbouring colonies.228 Such involvement would facilitate Smuts’ own goal of extending South Africa’s influence over most of southern Africa.229 All of these considerations reinforced the prime minister’s determination to perpetuate South Africa’s ties with the UK and Commonwealth. Imperial preference was one such tie. Heaton Nicholls, despite his presence in Ottawa in 1932, concurred, believing that preferential tariffs promoted the unity of the Commonwealth and Empire.230 However, Smuts’ practical and sentimental attachment to Britain and the Commonwealth did not represent mainstream opinion. Indeed, the tie to Britain had been a source of controversy from the time


Britain seized the Cape Colony during the Napoleonic Wars. Alfred Milner, as high commissioner in the Cape Colony, had rammed through a preferential tariff scheme to benefit British exports in 1903, adding insult to the injury of defeat in the Anglo-Boer war in 1902. Because Britain remained wedded to free trade at the time, South Africa received no preferential concession in return. Thus from the outset preferential tariffs were associated with British heavy-handedness and an imperial style that disregarded the interests of South Africa.231 The preferential tariff remained in place after the Union was established in 1910. Louis Botha, South Africa’s first prime minister, embraced a policy of reconciliation with Britain. But General Hertzog, a hero of the Anglo-Boer War, could not let the memory of injuries fade away. As a result, he formed the National Party in 1914 whose supporters were primarily Afrikaner nationalists. Hertzog became prime minister in 1924 and immediately set out to dismantle the preferential link. In 1925, he cut back preferential concessions to 22 items, although South Africa still granted most favoured nation (MFN) treatment to British commodities. Nationalists welcomed the move because they interpreted imperial preference as a form of tribute to Britain.232 In 1928 Hertzog went further by negotiating an MFN treaty with Germany, which in effect revoked Britain’s preferential status. The treaty, the first concluded between South Africa and another nation without British involvement, doubly reinforced South Africa’s independence.233 Smuts promised his imperial ally, L. S. Amery, that he would propose amendments to restore imperial preference.234 But he could not stop Hertzog, who was not content only to tinker with tariffs. When Hertzog attended his first imperial conference in 1926 as prime minister, he threatened to set the veldt alight with republican sentiment unless South Africa acquired its independence. He moved quickly to solidify the independent status of the nation. In 1927 he established the Department of External Affairs and shortly thereafter sent representatives to Europe, North and South America. The following year he oversaw the design of a new national flag. Although Hertzog’s singleminded pursuit of autonomy put him squarely in the Afrikaner nationalist camp, he was not an extremist. He appreciated that there were economic, political and military benefits from association with Britain. Therefore, he asserted that South Africa had the right to secede from the Commonwealth, but despite the entreaties of his more radical followers, he did not favour rupture with Britain.235 Smuts, who watched the expansion of Afrikaner nationalism with concern, also had to be a political juggler to keep his party, the South

History Repeats Itself236

85

Fig. 8


Africa Party (SAP), intact. Despite having an Afrikaner hero from the Anglo-Boer war as its leader, it was mostly English South Africans who supported the SAP. Smuts himself believed independence was desirable and natural. But his more extreme followers, who favoured the closest of ties with Britain, were as inflexible as the right wing of the National Party and as threatening to national unity. Miraculously Smuts and Hertzog found enough common cause to bring about hereniging, or reconciliation, in 1933 and established a coalition. The gradual convergence of their parties’ ideals and outlooks had helped to bring hereniging closer. Smuts’ followers were slowly becoming ‘more South African in outlook’ whereas Hertzog’s adherents were gradually ‘reconciled to association with Britain’.237 However, the obstacle of Britain endured. Smuts and Hertzog decided to ignore this particular and unbridgeable difference. In so doing they brought together advocates of republicanism and imperialism, of protection and economic liberalism, of neutrality and participation in war. Their political alignment was fragile and depended on the controversial question of the tie to Britain not coming up. If hereniging met with relief and celebration, it was short-lived. In 1934 when Smuts and Hertzog fused their two parties into the United National South Africa Party (United Party for short), the extremes of both parties splintered. Colonel Stallard, one of Smuts’ followers, established the Dominion Party with a mandate to nurture ties with Britain. His party represented the views of a small minority and never became a significant voice of opposition to the United Party.238 Fusion also disgusted Dr D. F. Malan, a passionate Afrikaner nationalist who formed the Purified National Party (GNP). He became a formidable foe to the coalition while it lasted and to Smuts after it fell apart. At every opportunity Malan accused Smuts of sycophancy, even treachery, in espousing British interests at the expense of South Africa’s welfare. For Malan, any and every British interest was the antithesis of South Africa’s interests. Severing ties with Britain and seceding from the Commonwealth were explicit tenets in the GNP platform.239 Malan’s Purified Nationalists went so far as to associate with Nazi Germany and Nazi organizations in South Africa in the hope this would help break the connection to Britain. Once World War II began, what was left of the United Party disintegrated. On 4 September 1939 Hertzog advanced a motion of neutrality, believing that the moment had finally come to complete the evolution towards independence. Smuts opposed him, forwarding an amendment to sever all ties with Germany–in effect a declaration of war. Smuts barely succeeded in defeating Hertzog’s proposal and brought South Africa into the war at Britain’s side.


Fig. 9

The Puppet240

Smuts’ parliamentary triumph did not silence opposition to South Africa’s participation in the war. Quite the contrary. The decision to enter the war united the main Afrikaner factions, which coalesced in the Reunified National Party (HNP). Claiming to represent all Afrikaners, Malan campaigned relentlessly for withdrawal from the war, secession from the Commonwealth and the creation of a republic. In calling for the immediate creation of a republic Malan fragmented the delicate political alliance of Afrikaner groups. Hertzog had insisted all along that an alliance with Malan was contingent on delaying the formation of a republic until there was a substantial amount of support from all white South Africans, English and Afrikaner. Malan and Hertzog split on this issue at the end of 1941 with Hertzog’s supporters founding a more moderate Afrikaner Party. It was the more extreme party, however, that emerged as the main representatives of Afrikaner nationalism. The 1943 election was decisive. Although Malan’s Nationalists won only one seat, the Afrikaner Party returned no representatives. That left the field of opposition open to Malan who exploited the slightest suggestion of pro-British sympathies as treason, regularly portraying Smuts as a lackey of the British.


Given its ‘dogged prosecution of a pathological prejudice against Britain’,241 Malan’s National Party rejected imperial preference, as well as the notion of a Commonwealth economy: ‘we are opposed to the idea that the British Empire is a separate unit in the sphere of economics and trade’.242 Popular opinion seemed to agree. Hence, the Canadian high commissioner noted that South African opposition to preferences cut across party lines: ‘I should emphasise that Empire preferences are not entirely popular in this country even among the Government supporters and there is a certain section of public opinion which believes the Ottawa Agreements of 1932 were a mistake and a factor leading to the outbreak of war.’243 Eliminating preferences would remove one cause of Nationalist outrage, but it was evident that the Nationalists would not be satisfied until a South African republic was established. The Nationalists’ opposition to preferential tariffs did not translate into support for freer international trade. The National Party associated commercial liberalization with the gold mining industry, which they in turn identified with English finance and dominance of South Africa’s economic and political life.244 Hence they objected to freer trade, arguing instead for a policy of systematic protection to foster the development of new industries, in large part because that might enable Afrikaners to control a greater share of the economy, a necessary complement to controlling the political process. Consequently Malan attacked Smuts’ endorsement of liberalized trade, arguing that it promoted Britain’s commercial revival. Smuts denied that subservient solicitude motivated South Africa’s commitment to Britain’s commercial recovery. It was a South African objective, ‘not, as the Malanites might sneer, because the interests of Britain are more important than the Union’s, but because Britain has been, and will remain, the Union’s most important market’.245 Nonetheless, policies that assisted Britain were grist for Malan’s nationalist mill. Smuts’ strategy in dealing with Malan was to ignore him, but Malan’s popular support grew steadily.246 Imperial preference could never be just an economic question in South Africa because it was seen as a concrete tie to Britain. To alter it, either by weakening or strengthening the link, would reflect and precipitate changes in the political alignment between the Union and Britain. The government could not make a move on tariff policy without setting off a larger debate on South Africa’s political links with the UK and Commonwealth. The tension between pro-British advocates and Afrikaner nationalists resulted in an official paralysis where preferences were concerned. Economic considerations did not simplify the formulation of tariff policy. There were compelling reasons to keep


preferences, both to protect infant industries and guarantee the sale of South African exports to Britain. But more developed industries, like gold mining, objected to protection which impeded South Africa’s goal of securing access to new markets. Commentators from the rest of the Commonwealth regularly complained that South Africa’s trade policy was incoherent. Certainly there were internal contradictions in the economic reasoning. But domestic political considerations made official silence or vagueness desirable. Fixing a trade policy determined far more than the future of economic development. South Africa’s future in Africa, the Commonwealth and the world was at issue.

Conclusion: the politicization of trade policy The trade policies of Britain and the dominions were, to a greater or lesser degree, contradictory. But it does not follow that their individual trade policies were incomprehensible or irrational. Their external economic policies had constant themes running through them: security and prosperity. The problem arose over the practical realization of these overarching aims. Every dominion government was pledged to work towards the construction of a liberal trading system. But local needs, particular historical and economic circumstances, and the size and stage of development of each national economy precluded any member from offering unqualified support for liberal trading policies and practices. Thus the dominion governments built safeguards into their trade policies. The dominions also distinguished between shortterm needs and long-term ideals. They were not so wedded to freer trade that they were prepared to abandon immediate considerations for the sake of the larger goal. Despite the tensions between means and ends, what was evident was the heightened sense of national interests, a factor and focus that would determine the scope of Commonwealth cooperation in the future. Moreover, Commonwealth capitals were closed policy-making centres. The dominions would work cooperatively in Commonwealth and international gatherings, but only after finalizing policies at home. Thus dominion officials arrived at these meetings with long and usually well-defined lists of demands and concerns. In so doing they made the point that they were individual actors for whom Britain could not speak. These practices fundamentally changed the way the dominions approached Commonwealth and international meetings and the way they were received. The political future of the Commonwealth was foretold by those parts of their trade policies that dealt with preferential tariffs. Policies


on preferential tariffs were not shaped by economic considerations alone. Imperial preference was a highly politicized issue across the Commonwealth. In South Africa, imperial preference was an oppressive tie, a reminder of a loss of independence for over half of the white community. English South Africans over-compensated for their Afrikaner compatriots by cherishing South Africa’s British identity in an uncritical and backward looking manner. The two factions polarized the political context in which decisions about Britain had to be carried out. In Canada, the population was also divided. French and English Canadians had different attitudes to relations with Britain. Ottawa had to find a balance which offended none and which was consistent with its own national independence. It had to contend with the additional strain of the North American pull, which in wartime Canadian policy-makers saw as liberating because it prevented Britain from entrapping Canada in a neo-colonial position. Australia also cultivated a close connection with the US without losing faith in Britain as an ally. Indeed, many Australians believed they were likely to get more out of the old British connection than the new American one. Selfinterest inspired Canberra to rekindle the relationship with Britain, an approach which threatened the kind of Commonwealth the British wanted almost as much as South African republicanism. Even New Zealand, the most loyal, demographically homogeneous dominion, no longer accepted British leadership without question despite its desire to perpetuate a Commonwealth alignment and order. The diversity of the dominions’ policies on preferential tariffs reflected the variety and incompatibility of views about each government’s underlying relationship with Britain and commitment to the Commonwealth. The challenge was to establish a modus vivendi among the members of the Commonwealth without trivializing their independence or compromising their discrete national interests, but also without undermining the integrity and relevance of the Commonwealth or limiting it to ceremonial functions. In the past one solution had been to rely on ambiguity, to have the Commonwealth be all things to all of its members. But by the 1940s, ambiguity threatened the dominions’ independence and integrity. The limits and possibilities of Commonwealth cooperation across all issues were drawn more clearly than ever before in wartime and postwar Commonwealth discussions of trade and imperial preference. Those limits, however, could not be defined only privately. The dominions had to proclaim and clarify the nature and scope of the Commonwealth for Britain and the outside world. That clarity was achieved at international trade conferences.

3 The Beginning of Wartime Consultation, 1943

So much were we indifferent to the great forces that were in gestation that I don’t remember a single discussion in Cabinet on any events or tendencies in the ‘Manchurian to Munich’ period – except what I now look back on as a most unreal discussion on Munich, the implications of which were entirely hidden from us. Australia had its head in the domestic sand in those years, with a vengeance.1 (Richard Casey) Planning for peace is an essential part of the job of winning the war.2 (John Winant) 1943 was a busy year for postwar planners. In March, Roosevelt initiated practical discussion of the principles outlined in the Atlantic Charter and Article VII when he announced an international conference in two months’ time to discuss the principles and politics of food. The purpose of the Food and Agriculture Organization (FAO) conference in Hot Springs, Virginia was not simply to eliminate the shortage of food, but to test the level of commitment to postwar cooperation in the United States and abroad. Convening the conference sent out a signal that America was ready to discuss other postwar issues, including trade. The British government responded by preparing for the commercial talks which would follow the FAO meeting.3 British policy-makers had to map out a strategy for AngloAmerican discussions, which would precede a full international gathering. They had to factor the Commonwealth into their preparations. If they were going to maintain the Commonwealth as a bloc in world 91


affairs after the war and on non-military matters, they could not wait for the end of hostilities to define the basis of Commonwealth cooperation. Then it would be too late to organize a Commonwealth stand on postwar issues, and the circumstances of war that were conducive to Commonwealth cooperation would have slipped away. In fact by the start of 1943, Britain and the dominions were actively considering the form and scope of Commonwealth cooperation for peacetime. Canada and Australia were particularly dissatisfied that the UK and US monopolized most military decisions. These two dominions would not allow the wartime pattern of decision-making and consultation to persist into the peace.4 British officials were aware of the dominions’ criticisms. In a widely circulated memo Malcolm MacDonald, the British high commissioner to Canada, warned his government that dominions officials and politicians believed they had a right to be consulted. Canadians and Australians were confident that they had important contributions to make and were eager to play a part in international affairs. British neglect trivialized the sovereignty and equality of the dominions and thus increased the dominions’ reluctance to participate in Commonwealth gatherings. MacDonald prescribed two remedies: first, London should develop more contacts with dominion civil servants and politicians and second, London should discuss policies with the dominions before they took final form.5 MacDonald’s memorandum prompted other bureaucrats to propose remedies for the dominions’ malaise. One suggestion was that dominion officials should represent the Commonwealth on international bodies or at international conferences. As representatives of individual dominions they could only hope to have a voice that would be ‘occasionally audible’, whereas a representative of the Commonwealth and Empire ‘can rely on his voice carrying real weight at all time’.6 Some Whitehall officials recognized that a collective solution would not be feasible because centralized representation undermined the dominions’ national and international status, even if a dominion official represented the group. But others persisted in advocating collective representation, preferably with Britain in the lead. One official was confident that Britain could persuade the dominions to adhere to common policies by ‘the exercise of intelligent leadership on the part of this country’.7 This last comment revealed not only a pervasive ignorance of the qualities, character and ambitions of the dominions, but also demonstrated British blindness to the fact that the diversity of the dominions’ needs and objectives precluded integration into a

The Beginning of Wartime Consultation 93

single policy. It also underestimated the determination of some of the dominions not to cooperate exclusively with Britain in world affairs. There was ample evidence of dominions’ resistance to Commonwealth consultation and cooperation. For instance, at the FAO conference dominion officials displayed only ‘a certain degree of surreptitious friendliness’ towards their British colleagues. The dominions’ standoffishness was considered essential to establish an independent presence among the 42 nations in attendance. Lionel Robbins reported to his colleagues in London that there was no Commonwealth unity at this particular conference, ‘no common economic policy, no regular consultation’. If we did meet it was as it were with beards and false moustaches … It is manifestly impossible (and perhaps undesirable) to put the clock back behind the Statute of Westminster … But I wonder whether we cannot at least wind it up again to rotate to rather better purpose … things are not right; and though there is probably no logical solution, it seems worth taking a lot of trouble to make them righter than they are. There are always more or less dangerous ways of balancing on a tight-rope.8 Robbins was not insensitive to the dominions’ policies or their independent status. Rather, he believed in their autonomy so matter of factly that he could not understand why concerns about status should impede cooperation. His frustration when cooperation did not materialize stemmed from his failure to understand that the dominions and Britain were not equal in practice. Association in international affairs was still dangerous for the dominions because it compromised their sovereignty, not necessarily by British actions, but because the impression endured that Britain led the Commonwealth and the dominions were subordinate. Because the British could not count on Commonwealth cooperation or assume that consultation would culminate in common policies or an integrated strategy for international gatherings, discussion between Britain and the dominions on commercial policy was more important than ever. Hence Attlee sent an aide-mémoire to dominion capitals on 22 April 1943 outlining the main elements of British trade policy.9 This despatch emphasized the importance of conditions of freer international trade: ‘Our sympathy is entirely with those who are seeking to remove barriers to trade.’ The document denounced protectionist and restrictive devices, such as quantitative restrictions and export subsi-


dies, as instruments of trade policy. It endorsed strongly a multilateral agreement to regulate tariff and non-tariff practices in world trade, the only way to permit the restoration of British commerce. The note also laid out the main contribution Britain as a low tariff country could make to the liberalization of international trade: the contraction of imperial preference. But the British government refused to reduce or eliminate preferences simply because Washington objected to tariff discrimination; ‘special arrangements’ would be made. Nonetheless the British proposed to scale down imperial preferences as ‘part of a comprehensive scheme for the betterment of the trade of the world as a whole’. Britain planned to use the aide-mémoire as the basis for AngloAmerican discussions on postwar commercial policy. Before an AngloAmerican conference, however, there would have to be Commonwealth talks. Attlee hoped that the dominion governments would value Commonwealth consultation on commercial issues and agree to send representatives to a meeting in London, tentatively scheduled for May.10 Dominion officials were surprised that London was initiating discussion on postwar trade. Less than six months earlier, at a Commonwealth meeting in London to discuss Keynes’ proposal for an International Clearing Union (23 October to 9 November 1942), British officials had concentrated on financial regulations, showing little interest in commercial reform. At the time the dominions had urged the British to be more proactive, particularly over preferences which they agreed should be contracted. As the representative of South Africa explained, his government was ‘not wedded to the preferential tariff system’.11 Even though the dominions welcomed the British initiative in trade policy in 1943, there was some resistance to a Commonwealth conference on the subject. While Canadian officials had questions about the implementation of a tariff ceiling and concerns about the method to eliminate preferential tariff margins, Canadian and British commercial policies largely converged. The British proposals were also helpful to Canadian commercial interests because they superseded the limits of the RTAA from which the Canadians had exhausted all benefits.12 But Ottawa’s long-standing fear of the consequences and impression of Commonwealth gatherings surfaced when the American ambassador in London suggested that his government send an observer to the conference. Board of Trade officials intended to deny the request by explaining that the talks were of a ‘quasi-domestic character’.13 The description of Commonwealth meetings as being of a ‘quasi-domestic character’, which suggested that a cohesive, familial, relationship existed, did not


represent the Canadian understanding of Commonwealth gatherings.14 Canadian concerns about centralization and misperceptions seemed amply justified. The Australians were reluctant from the start to participate in the Commonwealth meeting lest their attendance alienate or irritate the Americans.15 Dr Herbert Coombs, who led the Australian delegation to the FAO conference, believed that his sudden withdrawal from Hot Springs to fly to London would trigger American resentment against the closed councils of the Commonwealth.16 The Australians still required American military aid and did not want to antagonize Washington by creating the impression of a Commonwealth bloc. They were also in the thick of trade negotiations with the US. Dr Evatt, Australia’s minister of external affairs, feared that Anglo-American discussions about future multilateral negotiations would jeopardize current Australian–American talks.17 Concern about the domestic political backlash compounded Australian hesitation. Evatt thought it likely that the Commonwealth conference would raise politically embarrassing issues about the modification of preferential tariffs. He regarded this subject as ‘political dynamite’ and to be avoided, especially with an election only a few months away.18 Despite these reservations, the Curtin government did not want to be excluded.19 Australia decided to send representatives when the British government postponed the meeting until June and the other dominion governments had all agreed to attend. In light of Canadian and Australian reactions to the British invitation to discuss the future of trade, Clement Attlee had little hope of reaching a common position on economic questions. He appreciated that the obstacle to a collective stand had as much to do with questions of status as with the details of trade policy: ‘the Dominions, who have only in the last generation successfully asserted their status as independent nations, are not likely at present to be convinced that the time has come to surrender it’.20 The bar of expectation for Commonwealth consultation and cooperation was low.

Commonwealth economic conference, 15–30 June 1943 Percivale Liesching of the British Board of Trade opened the Commonwealth economic conference with an explanation of London’s attitude towards Article VII. British policy would pursue the twin objectives of expanding production and demand and removing


impediments to trade. Although he rejected the American categorization of imperial preference as discriminatory, Liesching admitted that without substantive changes there would be no hope of concluding a commercial agreement with the Americans; without American involvement postwar economic institutions would be impotent. Concessions in the American tariff schedule alone would be insufficient to counterbalance the loss of preferences. Only within a broad-based multilateral agreement would the compensatory gains enable British negotiators to ‘seriously consider an adjustment of Imperial Preferences on the scale which might be necessary to obtain the cooperation of the United States’.21 The following day dominion representatives set out their views on postwar trade.22 Hector McKinnon of Canada agreed with the importance of freer trade and a multilateral framework. Because Canadian–American prewar negotiations had taxed the limits of the RTAA, only a multilateral process held out the promise of new tariff concessions. He believed, however, that the American administration would prefer to exhaust the possibilities of bilateral negotiations before pressing Congress to authorize multilateral negotiations. Consideration of the political realities in the US also led McKinnon to urge the British not to shy away from the question of imperial preference in their meetings with the Americans. Although he claimed that preferences were important to Canada, their inclusion in postwar talks was essential to the removal of all barriers to trade. Coombs, leading the Australian delegation, agreed that the US wanted to exhaust the possibilities of bilateral trade before moving to multilateral negotiations. Therefore he insisted that the current negotiations between the three southern dominions and the United States should be concluded. As a result, the Americans would be pushed further along the multilateral path, promoting the interests of Canada and Britain. Coombs emphasized that Article VII prescribed positive and negative mechanisms to stimulate international trade. Without positive measures, such as domestic full employment policies and rising standards of living, lowering tariffs would be ineffectual. Moreover he defended the right to use tariffs as a defensive measure to protect domestic economic conditions. Coombs doubted that many countries would be willing to give up the right to use tariffs without prior assurance that international trade would expand. Thus Coombs challenged the process and questioned the soundness of the principal objectives of Canadian and British commercial policy.


In contrast to the well-considered Canadian and Australian presentations, New Zealand and South African views remained inchoate. New Zealand’s representative, R. M. Campbell, made confused statements about imperial preference. On the one hand he proposed that the dominion and British governments consider the possibility of unilaterally and voluntarily abolishing imperial preference. This act ‘would be…comparable in importance with the introduction by the United States of Lend-Lease’. On the other hand, he mused, preferences would be a useful bargaining tool in future commercial negotiations and might be useful to retain. The South African speech was also convoluted, with Dr Holloway insisting that protectionist and open policies had complementary effects. Because the other representatives could not understand the overall trade policy of these two dominions, there was no cause for disagreement, only frustration. Commonwealth members discussed imperial preference for several days. They were particularly interested in the American stand on discriminatory tariffs. The colonial office representative speculated that American demands to modify imperial preference would not be unreasonable. The Americans had their own preferential agreements with Cuba and Puerto Rico which Washington did not want to alter. Holloway agreed with this optimistic assessment, going so far as to assert that the Americans would not make heavy demands on preferences because that would stir up political debate in the Commonwealth. Mackintosh and Coombs offered more sober counsel. They observed that the US saw imperial preference as unquestionably discriminatory and therefore subject to elimination according to Article VII. McCarthy reinforced the position of the Australian delegation leader, Coombs, by mentioning American popular hostility to imperial preference. It was futile to try to remove or minimize preferences from the postwar negotiating agenda. American determination to abolish all discriminatory tariffs could not be willed away.23 The representatives agreed that they could not avoid the modification of their preferences, but they decided to tie the elimination of preferences directly to progress in removing other tariff and non-tariff barriers.24 Nonetheless, officials considered several possible explanations to legitimize preferential tariff systems in light of widely anticipated American opposition. In their discussion, it was clear that the status of the dominions and their relationship with Britain was being defined through the justification for preferences. Holloway insisted that imperial preference was no different from the conditions of free trade between the American states, implicitly equating the dominions with


American states. Liesching, attuned to the national sensitivities of some of the dominions, discouraged this reasoning on the grounds that it ‘might tend to lessen the independent influence which each part of the Empire could exert in international affairs as a result of the possession of independent sovereignty’.25 Despite half-hearted attempts to justify imperial preference in principle and practice, British and dominion representatives did not contest the necessity of making some modifications. Without changes it would be impossible to reach agreement with the United States on postwar commercial policy. Nor was there a desire to provoke conflict with the Americans over the merits of preferences by challenging its discriminatory classification. Overton, of the Board of Trade, concluded the discussion by stressing that all of the dominion governments had supported British acceptance of Article VII in 1942, despite the ambiguous implications for imperial preference. Whatever the American attitude might be towards preferences, none of the dominions would be exempt from the consequences.26 Canadian officials remained concerned about the mechanics of contracting the preferential system. Canadian commercial interests benefited from conditions which made markets more accessible, and therefore it was important to decrease the preferential margin by lowering the general rate of duty rather than by increasing the preferred rate of duty. Canadian representatives argued that the latter method was contrary to the spirit and objectives of Article VII. The British and South African delegates noted that in cases where the general rate of duty was low, or where the preference was conveyed by levying no duty, as was the case with most preferences granted by the United Kingdom, it would be difficult to adhere to the Canadian prescription. The Canadian method was also inappropriate to those dominions which used preferences to protect domestic industries. A further problem arose at the conference which would have a profound effect on Australia’s willingness to participate in the liberalization of international trade. Australia and the US were in the midst of negotiating a new trade agreement. The Americans had offered to halve their tariffs on meat, butter and wool, goods which comprised 55 per cent of all Australian exports. Australia needed Canadian and British consent to modify the preferences on canned and dried fruits which the Americans requested as the quid pro quo for their coveted offers. But McKinnon refused to promise that the Canadian government would facilitate the Australian–American negotiations, even though Canadian bureaucrats agreed that bilateral negotiations con-


tributed to the liberalization of trade and gradually pushed the Americans closer to accepting a multilateral framework for future negotiations.27 The Australians were furious. Prior to the war, they had complied with Canadian requests to give up preferences to enable Ottawa to conclude a trade agreement with the United States. But when it was Australia’s turn at the bargaining table, Canada did not reciprocate.28 New Zealand and South Africa also wanted to pursue the bilateral and multilateral options concurrently. The US had proposed handsome concessions to New Zealand and South African exports. Not surprisingly, Wellington and Pretoria were eager to reach an accord. Holloway insisted that bilateral agreements would have benefits complementary to, though not as extensive as, those derived from multilateral negotiations. He pressed his British colleagues to define their views on bilateral negotiations. Liesching answered for Britain. He acknowledged that all tariff reductions were helpful and appreciated the eagerness of the southern dominions to conclude individual treaties with the United States. But it was urgent to advance the multilateral initiative: ‘they feared that this might also be the only chance which they would have of securing agreement to the proposals for a multilateral convention’. Moreover, the expected severity of Britain’s postwar commercial and financial conditions ruled out bilateral agreements even though a bilateral approach to trade negotiations simply could not produce the far-reaching results needed. The British delegation requested that the southern dominions postpone their negotiations while London presented the case for multilateral and comprehensive negotiations to the Americans. Afterwards the bilateral and multilateral negotiations could proceed simultaneously. The southern dominions agreed to a brief halt but were determined that the bilateral talks should reopen before long.29 The conference concluded two days later. This early conference indicated a measure of agreement among dominion and British officials, but it was already evident that they could not harmonize their specific interests which were at times in direct competition. The importance that the UK and Canada attached to the multilateral option, in contrast to the insistence of the Australian, South African and New Zealand delegations upon bilateral negotiations, illustrated one fundamental difference that arose from separate national interests. British attempts to placate the southern dominions with assurances that their negotiations were only temporarily postponed belied their real intention to persuade the Americans to abandon bilateral


negotiations in favour of ‘more drastic and comprehensive treatment such as must be discussed in connexion with Article VII’.30 There were other differences. The Canadians attached great importance to the removal of trade barriers whereas the Australians identified the first and essential step to an expansive economy as full employment. This was a dispute about methods, not final goals. The implications for Commonwealth unity were not serious, but the difference of opinion pointed to the individual interests of every nation, evident in their respective trade policies. The value that dominion representatives attached to Commonwealth discussions was mixed. Canadian officials complained that Australia objected to every detail of the British outline, the South African stand on postwar commerce was ‘not easy to define’, and New Zealand’s position was confused, although with respect to preferences Wellington seemed ‘quite unconcerned’.31 Canadian officials welcomed the compatibility of Canadian and British trade policy and endorsed the British aide-mémoire, as well as the proposal to initiate talks as soon as possible with the Americans. This set them apart from the other dominions and made them valuable allies to the UK.32 W. J. Jordan, New Zealand’s high commissioner in London, criticized British trade policy. He believed it lacked substance in part because of the weaknesses of the representatives of the Board of Trade who formulated and presented commercial policy. Jordan was also sceptical of the wisdom of cancelling negotiations between the southern dominions and the United States.33 The bulk of his memorandum addressed issues which were important to New Zealand’s trade but which had not been dealt with at the conference, particularly quantitative restrictions and the conclusion of new bulk purchase agreements with the United Kingdom for meat, wool and dairy products. New Zealand officials were not interested in the conference, due in part to the incipient state of commercial policy, which revealed the relative unimportance New Zealanders attached to the organization of international trade along multilateral and liberal lines. Their commercial interests were overwhelmingly tied to the United Kingdom. This was not likely to change in the foreseeable future. The Australian report blended criticism of Britain and praise of Australia’s contribution. The report described at length the disagreement with the British over the merits of continued bilateral negotiations versus the advantages of a multilateral format. But that was just the tip of the iceberg. Coombs derided London’s facile understanding of the forces driving international trade. Unofficial reports were more


scathing, even contemptuous, of British policies and officials. McCarthy said Overton was ‘as dumb as an oyster’; Liesching merited qualified praise, ‘but it was fairly obvious that he lacks any deep knowledge of tariffs and related matters’. James Meade was compared to an ‘inexperienced lad’ who had not thought through the issues: ‘His propounding consists of tediously rehashing the meagre details in the paper that was cabled in full.’34 But at the end of the meeting, the Australians still supported the British decision to initiate commercial policy talks with the Americans, believing there could be positive results. From a British point of view the meeting changed little. Any amendments to the Overton plan made in light of dominions’ comments might overturn cabinet’s precarious approval. Britain had not heeded MacDonald’s advice to consult the dominions while policies were still fluid. Not only was the meeting fruitless, it was downright disappointing. The British had hoped the dominions would lend the aide-mémoire their general support.35 But there was no clear endorsement. British officials admitted to their Canadian colleagues that they would proceed with commercial policy along the outline of the aide-mémoire if the Americans responded favourably, ‘even if other parts of the Empire such as Australia and South Africa should decide to stay out’.36 The Commonwealth had survived a staggered entrance into the war. Britain would now find out whether the Commonwealth could withstand division on trade policy. The limits of British authority in discussions with the US were made clear. Dominion delegates insisted that the aide-mémoire was a British document, ‘in no way engaging their responsibility’.37 Despite Canadian satisfaction with the gist of British trade policy, there was no question that the United Kingdom could present trade proposals on their behalf.38 Canberra was also determined that London must not claim to speak on behalf of the Australian government or lobby on behalf of Australian interests.39 Evatt was uncompromising that Britain should never arrogate authority to itself which detracted from Australian sovereignty. Thus Coombs reported that Dr Evatt would be satisfied that national autonomy was safe because Australia was not committed to the proposals. He even admitted to going too far in stressing ‘our freedom of action in this field’.40 Although there was no consensus on the particulars of postwar trade, British officials did not expect that the next stage, Anglo-American commercial discussions, would alienate the dominions. Harmonious Commonwealth relations depended on Anglo-American accord on all


subjects, including trade and tariffs. ‘At the recent talks with Dominion experts it became clear that, with the doubtful exception of Australia, all expected us to collaborate; and the Canadians made no secret of the embarrassment in which they would be placed if collaboration broke down.’41 Despite the growing emotional appeal of imperial preferences, their elimination or reduction would be uncontentious if American tariffs were reduced. Dominion representatives expressed some reservations about the method by which preferences would be narrowed, as well as the extensiveness of the change. But they all targeted the United States as the most important potential outlet for their exports. British analyses of the dominions’ position noted that ‘they were in a revolutionary frame of mind’.42 The dominion governments were willing to take bold action on the preference issue in order to secure improved access to the American market, as were the British.43 Armed with the aide-mémoire, an unshakeable determination to secure American cooperation in a multilateral commercial venture, and representing only itself, a British delegation prepared to sail to the United States to initiate the reform of international trade.

Anglo-American economic consultation, 20 September–16 October 1943 In contrast to the well-publicized Commonwealth conference, the Anglo-American meeting was secret. American officials were worried that news of the talks would leak, provoking recriminations and accusations which would turn public opinion and Congress against the State Department’s freer trade initiative. Consequently, British representatives prepared evasive and vague replies to potential questions about their destination and purpose. Any mention of talks would emphasize their informal and exploratory nature. They would not refer to the group as a delegation in the hope it would ‘preserve the fiction of a visit by a miscellany of officials’. The ruse persisted after landing in New York. They travelled singly or in small groups to Washington. Unfortunately Lord and Lady Keynes were not inclined to travel incognito. On the train to Washington, Keynes pontificated about politics and culture in ‘an unquiet distinctively British voice’ and Lady Keynes sang a piece by Tchaikovsky.44 Nonetheless, their arrival sparked no press comment.45 At the opening session on 20 September American representatives were cautiously optimistic about the task at hand: to think through the issues and prepare an ‘orderly agenda’ for a later date. Richard Law,


minister of state at the Foreign Office and leader of the British delegation, was less tentative in his enthusiasm for the work ahead. The problems were large; the solutions would have to be global. The timing, at the height of the war, was ideal for devising far-reaching solutions because ‘People were capable, at this moment, of sacrificing immediate advantage for the long-term gain.’ The presence of soldiers aboard the same ship as the British delegation had been a stark reminder that it was serving the interests of humanity. ‘We must not fail them.’46 Six sub-committees were organized to tackle the following issues: currency, international investment, commerce, commodities, cartels and full employment. The discussions on trade went reasonably well except when they considered preferential tariffs. No issue inspired more debate and disagreement. Liesching opened the commercial policy talks by setting out British goals broadly, emphasizing in particular the need for a multilateral solution for the reduction of tariff barriers. This was a point of some delicacy because Cordell Hull remained wedded to the bilateral approach as prescribed under the RTAA. Moreover a multilateral framework would involve Congress, which was notoriously protectionist. However, American officials present at the meeting did endorse the multilateral option. British officials were so relieved and encouraged that they showed their aide-mémoire on trade policy to the Americans.47 Harry Hawkins, one of the State Department’s leading trade experts, can only have been delighted and reassured to read in the aide-mémoire that British sympathy ‘is entirely with those who are seeking to remove barriers to trade’. The Americans disliked the exception to allow preferences where political and geographic groups existed. But this exception was qualified with an explicit promise to reduce imperial preferences ‘as part of a comprehensive scheme for the betterment of the trade of the world as a whole’.48 British and American policy-makers were not working at cross-purposes. However, there was still a lot of room for disagreement. Anglo-American talks heated up when tariffs and preferences were finally addressed. As Meade observed, ‘The battle is really joined.’49 Disagreement centred on the interpretation of Article VII. Hawkins took exception to the British assumption that the contraction of preferences was contingent on the extent to which the US, and other participating nations, lowered their tariffs. As Hawkins explained, tariffs and preferences were different kinds of barriers, ‘on an entirely different plane’. Only the first was subject to negotiation because Article VII simply proscribed preferences. The discussion turned into a pseudo-academic


discussion about the effects of lower tariffs on the flow of trade. But before the session ended Hawkins returned to the question of preferences. The Americans did not accept the British proposal to reduce preferences by 50 per cent. Only elimination would satisfy the US. The Americans reinforced their demand with a warning: unless the British abolished imperial preference the Anglo-American relationship would suffer. American officials were willing to concede that US tariffs had had injurious effects too, but these tariffs were not nearly as damaging as preferences which ‘introduced politics into international trade’.50 The next day Liesching explained why Britain would not abolish preferences. His defence was based upon the unique character of ‘British countries’. The collective Commonwealth effort in the First and Second World Wars was ample proof that their bond was strong and unusual in international relations. Liesching admitted that he could not define the Commonwealth relationship concretely to outsiders, but he assured his American colleagues that it was ‘something which went very deep in the life and thinking of the British people’. He noted that American opposition to imperial preference ignored this special Commonwealth relationship. Consequently, he warned, the Americans were shooting themselves in the foot by insisting on the abolition of preferences. The American attack on a prized Commonwealth symbol would only impede British cooperation in the commercial liberalization programme. The US would get nothing by demanding much, whereas a more moderate view could yield substantial retrenchment of the offending tariff. Liesching’s defence did not mean that preferences were sacrosanct. Far from it. But the contraction of preferences depended on the extent to which the US lowered its tariffs. The Americans’ response to the British defence of imperial preference was sharp. They insisted that preferences led to political blocs, which poisoned the international political climate. They threatened to establish a bloc of their own with Latin America. The obvious loser in a regionalization of international trade would be the Anglo-American special relationship.51 Liesching, however, was encouraged by what he believed to be a breakthrough in American thinking about the reduction of preferences. His American counterparts now seemed to accept that the elimination of preferences in one fell swoop was impossible. Instead the US would have to be satisfied with incremental reductions leading ultimately to abolition.52 Liesching’s confidence was misplaced. At a plenary meeting at the end of September, Hawkins repeated that the US target with respect to imperial preference was abolition.53


By all accounts, the discussions remained pleasant and frank. Nonetheless there was an important lesson to be learned. The disagreement over preferences was not merely procedural, but fundamental. As the war progressed the British determination to keep preferences was matched by the American conviction to eliminate them. But in 1943 the dispute had not yet hardened into intractable disagreement. Agreeing to disagree did not end the discussion of imperial preference. The meetings overall went so smoothly and saw so much agreement that the representatives decided to formalize an agenda for subsequent and more inclusive discussions of economic questions. Writing out exactly what they hoped to achieve required a legalistic precision which forced them to confront their divergent views of imperial preference. The debate resumed in late September, with American officials damning preferences ‘up hill and down dale’. British officials countered that preferences were no more trade-distorting than tariffs and were not ‘peculiarly wicked and dreadful’. Nonetheless the British proposed to slash all preferential margins by 50 per cent if the Americans accepted a tariff ceiling. The British again compared the trade relations of the Commonwealth and Empire and the ‘preferential’ conditions of inter-state trading in the United States. This comparison begged the question why the Commonwealth system was ‘sinful’, even though preferences were partial, whereas American inter-state trade was ‘virtuous’ because preferences were extended to an extreme?54 At the root of the disagreement was the exact meaning of Article VII.55 Britain had accepted the terms of the Mutual Aid agreement precisely because of the ambiguity surrounding imperial preference. That ambiguity, however, could not persist. Nor could Britain repudiate its pledge to work towards freer international trade. Moreover the Americans were not persuaded by the British argument about the specialness of the Commonwealth relationship. The British motive – to retain a political base for itself in world affairs – was transparent even though American officials realized that British representatives were genuinely attached to the Commonwealth. The Americans stuck to their interpretation that Britain was committed to removing preferences under Article VII. Some British officials privately concurred that the Americans had a strong case.56 Still the British carried the day. In the final draft of the agenda there was a reference to the elimination of discriminatory treatment, but the contraction of preferences was contingent on the reduction of American tariffs.57 However, the US was not conceding that Britain had a right to retain imperial preference. The agenda simply laid out all the


possibilities for regulations affecting quantitative restrictions, revenue duties, lower tariffs, and a host of other issues. For instance the agenda included five different formulas to reduce tariffs. The point had been to flesh out all the options and to avoid making any definite decisions. Consequently the position on preferences in the agenda was far from final. The British were deeply troubled by one regression in the talks. By the middle of October Hawkins’ optimism about the multilateral process was waning. Hawkins explained that even without a multilateral approach to tariff negotiations there was still much scope for bilateral negotiations.58 This was bad news for Britain. The final agenda did prescribe a multilateral framework but American officials were sceptical of the likelihood of Hull accepting it.59 Although differences in emphasis persisted and many questions were left unresolved, British and American postwar commercial objectives were broadly compatible.60 Richard Law reported that the British initiative had paid off. Anglo-American trade discussions postponed the work of the American commercial policy committee before it endorsed a final policy. Consequently, it would be easier to reconcile AngloAmerican differences. British representatives impressed upon their American colleagues the importance of Anglo-American accord on economic issues in order to avoid a return to the economic horrors of prewar days.61 Moreover, there was a determination to pursue the reform of postwar economic institutions together. As Law observed, ‘Whether we like it or not we and the Americans are committed to cooperation, not competition.’62

Commonwealth consultation: on the sidelines The Anglo-American discussions were also a success from the dominions’ points of view. The Commonwealth meeting prior to the AngloAmerican talks touched upon most of the issues considered in Washington, so there were no surprises. The nature of the AngloAmerican talks, informal and non-committal, was also conducive to Commonwealth concord. Moreover, because the dominions’ individual tariff policies were only beginning to take shape, dominion governments could not take issue with any specific points raised at the meeting. Rather, the dominions looked to London and Washington to lead the way in subsequent negotiations to which the dominions would bring more definitive views. Furthermore, at this stage in the war cooperation between the US and UK on postwar questions had a


beneficial, if indirect, effect on the dominions’ own wartime relations with the US. The progress in Washington served the dominions’ immediate individual national interests very well. Britain had also not overstepped its authority to explain the dominions’ policies or defend their interests. At least, the dominions did not hear that British officials had transgressed. There had been one slip when Meade defended imperial preference on the grounds that the Commonwealth was a semi-federation. His comparison of inter-state trading and the preference system implied that the political relationship between the American states was similar to that between the dominions and Britain. The comparison was not one that all the dominion governments would have found equally offensive. Indeed at the Commonwealth meeting in June the South Africans offered as a justification of preferences the family character of the Commonwealth; hence tariffs were a quasi-domestic issue, immune from external pressures. British officials had rejected this reasoning on the grounds that it obscured the independent status of the dominions. Such sensitivity for the status of the dominions could only win them points when facing a Commonwealth audience. Behind closed doors in Washington there was not the same punctilious regard for the dominions’ status. The British invocation in October of the familial nature of the Commonwealth, without any mention of the autonomy of the dominions, testified to the haste with which the British formulated their defence. More meaningfully, British officials genuinely believed that the relationship between Britain and the dominions blurred the lines of sovereignty. If asked whether the dominions were independent, British officials would have replied in the affirmative. But there was a persistent belief that the dominions’ attachment to Britain overrode the formality of independence. That it was Meade who made the comparison is particularly interesting. He was an economist and a civil servant. He had no political agenda to advance. His statements reflected the view of a well-educated, thoughtful and astute British citizen whose own family had ties to the antipodes.63 The Anglo-American meeting did create potential problems. Even though the dominions welcomed Anglo-American talks, the fact that they were excluded was problematic. How could Britain consult the dominions? This was important for the harmony of the Commonwealth and essential to the question of imperial preference which the British did not have authority to decide alone. Because the US–UK meeting did not finalize any decisions, the dominions were spared from considering the implications of British action on their


own policies. But the comfort of non-committal debate would not last. The process by which an international effort was taking shape was not compatible with the existence of the Commonwealth. This was a consideration the Americans could and did ignore. They denied that the Commonwealth had any legitimacy in international relations. But for British officials, who understood that they ignored the Commonwealth angle at their own peril, bilateral talks posed a challenge. How could London reconcile Britain’s bilateral relations with the US with the cultivation of the Commonwealth as a bloc in world affairs? Members of the British delegation in Washington decided that the dominions ought to be briefed, but were not entitled to full disclosure. Briefing sessions would stick to generalities. These exchanges should not be confused with consultation. Rather, the British would simply pass on information. The last thing the UK wanted was for dominion officials to cable their home governments with incorrect or partial information which might in turn trigger dominions’ cables to London.64 British officials wanted to unravel the Commonwealth and American strands of their external policies for the sake of expediency and success. The British delegation in Washington met with dominion officials on three occasions. The first meeting, on 22 September, was matter-offact. There was little to report as the exchanges had only begun, but Law emphasized the goodwill surrounding the talks. The only unsettling point in the meeting was when the representative from New Zealand asked if the Americans had raised the issue of bilateral trade negotiations with the southern dominions. The Americans had not. The Australian official present then expressed his concern about timing. Bilateral negotiations had to wrap up before January 1944, well in advance of the presidential election. He was worried that the time remaining for negotiations was inadequate. British officials deflected his concern to a later private meeting with Liesching.65 The next Commonwealth meeting was held just over one week later, by which time there was real news to report: the Americans had been shown the British aide-mémoire. The British were encouraged by the overlap of ideas with respect to creating an organization to oversee international trade, the use of export taxes, the strict regulation of quantitative restrictions, and the applicability of subsidies for domestic production. He admitted that the Americans were less enthusiastic about the proposed tariff ceiling and had advanced formulas of their own to lower tariffs. Imperial preference was the area of most significant disagreement. Liesching explained that the Americans


expected imperial preference to be banned under Article VII. Liesching reassured dominion officials that the British delegation had explained that the abolition of preferences was not possible politically. This British presentation to the dominions did not trivialize the impediments to agreement with the US that London expected to surface further down the road. Congress would be prickly. The dominions should not believe that ‘all was likely to be plain sailing’. But at this point there were many promising signs. The dominion officials present asked only technical questions. There was no debate or discussion.66 The reports of this meeting by dominion officials did not indicate any dissatisfaction or concern. The third and final briefing was held toward the end of the AngloAmerican talks. Liesching emphasized the benefits of conferring with the US while its policy remained fluid. An outline agenda was on the table for future meetings. Liesching was confident that the Americans now understood that Britain could not abolish imperial preferences and that their contraction was linked to the lowering of other tariff barriers. His reassurances must have been convincing because the dominions’ questions concerned cartels.67 Leslie Pressnell argues that these Commonwealth meetings demonstrated ‘all the ease, all the delicacy, all the occasional difficulties and tensions … that involved delay in formulating policy, yet gave the British representatives the reassurance of broad Commonwealth understanding’.68 This argument is not convincing. Although the dominions welcomed the tentative agenda because it suggested that Britain and the US were embarking on a joint course, there was no suggestion that the dominions should endorse the actual Anglo-American agenda. In fact Liesching fully expected that Australia would object to the draft agenda. The trade policies of New Zealand and South Africa remained so garbled that he could not predict their reaction.69 There was no reason to expect Commonwealth solidarity on questions concerning postwar trade. There is no evidence that the British even tried to define a common policy for the Commonwealth. Britain could not shape its policy with reference to the dominions’ views, if only because dominions’ views were partly known, recently realized or ill-defined. Even if London had tried, the dominions had no desire to subordinate or trivialize their objectives within a standardized Commonwealth policy. Moreover British officials had not even looked for Commonwealth consensus, if only because it was premature. London believed that the time for consultation leading to a common policy would be after the meeting with the US.70 Finally, regardless of the outcome of future Commonwealth deliberations, British


officials were prepared to advance alone if necessary. ‘This would be a difficult decision for us’, Liesching admitted, ‘but I would not flinch from it if we had the prospect of going ahead with a valid set of negotiators on the American side who were equally committed and could deliver the goods.’71 The outright clash of interests between Britain and the dominions over the resumption of bilateral trade negotiations with the US was more worrying than the absence of Commonwealth solidarity. After the first briefing session a group of Australian diplomats met with Liesching to find out when Australian–American negotiations could resume. Liesching insisted that Australian–American trade negotiations should stay on hold, so as not to detract from the Anglo-American meeting.72 In fact, British officials were resolved to terminate bilateral negotiations between the United States and Australia, New Zealand and South Africa because Washington’s enthusiasm for multilateralism was weakening. The British had to make the point forcefully that the bilateral option was inadequate. The Australians did not give up easily on their negotiations with the US. Canberra instructed its representatives in Washington to press the Americans to reopen talks.73 An impromptu meeting between American, British and Australian officials took place when Liesching and Meade dropped by Hawkins’ office and came upon the Australians requesting the resumption of negotiations. Liesching repeated the British contention that bilateral negotiations undermined the multilateral approach and dismissed the claim that their objectives were complementary. Hawkins agreed that the resumption of bilateral negotiations would compromise the multilateral option.74 By the end of the conference the South African and Australian governments had accused the British of abdicating their responsibility to facilitate the conclusion of new trade treaties with the Americans. The southern dominions pointed out that planning for multilateral postwar trade negotiations was a completely different matter and the two should be kept separate. They argued that the southern dominions had facilitated Canadian and British negotiations with the US by giving up some of the preferences they received in the Canadian and British market. Now they expected Canada and Britain to reciprocate.75 The Australians appealed to London directly to modify some of the preferences they received so that the negotiations could at last be brought to a close. The secretary of state for dominion affairs refused. Nothing would be done which might jeopardize the multilateral experiment, a message the British conveyed directly to the Americans.76 Hull told the


Australians that the Australian–American negotiations had to be cancelled for domestic political reasons. Evatt had to accept defeat, but he blamed the British as much as the Americans for thwarting the negotiations. The Australians did not soon forget or forgive British obstruction of their commercial aspirations.77 Canberra’s disappointment became a part of a new troubled chapter in Anglo-Australian relations. This conflict of interests was telling. The most obvious implication was that the policies of the various constituents of the Commonwealth were not automatically synchronized or compatible. The effect of the diversity of views, and the concomitant implications for the working of the Commonwealth, was that there would be no common policy on trade matters. How could members act together when their goals differed? Dominion officials were relentless in pursuing their national interests. British officials were equally determined not to compromise British well-being. The British could comfort themselves that by securing an American pledge to work for a multilateral tariff reduction process they had acted in the best long-term interests of the dominions. But British observers remained pessimistic about the likelihood that America would deliver on its proposals to reform international trade. A Republican election in 1944 or the return of a depression to America – both seemed distinct possibilities – meant that British advances remained highly tentative.78 There was force to the southern dominions’ insistence that the bilateral negotiations should be completed while there was still time and support for them. But where vital national interests were concerned, no government was willing to yield, even when bound to one another in a special relationship. On the way back to London, British officials stopped in Ottawa to brief their Canadian colleagues. Ottawa was delighted with the AngloAmerican talks because they signalled cooperation between Canada’s two most important allies. In addition, the Canadians threw their support behind the multilateral option even if some members of the Commonwealth – the main worry was Australia – held back. The British were discouraged by Canadian reluctance to hold more Commonwealth talks.79 In part, Canadian officials wanted to limit the number of Commonwealth conferences because these meetings were time consuming and created the impression that a Commonwealth bloc existed in world affairs. Not only did the Canadians spurn regular preparatory Commonwealth meetings and collective representation at international conferences, but they believed that they should be included in subsequent commercial meetings between the British and Americans. Robertson and Wrong of


the Department of External Affairs and two of the creators of the functional principle pointed to Canada’s status as the third largest world trader to justify their inclusion. They used arguments that had become well-honed with repetition. Canada’s special political and commercial relations with both the US and Britain warranted Canadian inclusion in future trade talks. Liesching used the usual arguments to rebut the logic of functionalism. If Canada was included, he argued, then the other dominions would demand to be admitted too. According to Liesching, he could not bring the next round of negotiations with the US to a successful conclusion if representatives of all the dominions were seated at the table. Moreover he could give no guarantee that the Americans would welcome Canadian participation.80 An unspoken reason for resisting the Canadian request was that keeping the dominions out reinforced Britain’s centrality within the Commonwealth and maintained distance between the dominions and the US. By the time British officials returned to London they believed there should be an immediate follow-up to the successful Washington talks. The blueprint for postwar trade was taking shape along desirable lines. London should capitalize on the momentum. But managing the AngloAmerican and the Commonwealth special relationships forced British officials to slow the pace of bilateral talks. Implicitly the two branches of Britain’s foreign policy were in conflict. Too much reliance on the Commonwealth alienated the Americans. Too much reliance on the US provoked dominion complaints about marginalization. Thus before proceeding too far with the US, London wanted to be sure that the dominions were on board for what would become an international movement. That meant taking stock of the developments of the dominions’ external economic policies. London also had to work out the structure and objectives of consultation and could not delay much longer. The pressure to run ahead with the US could result in leaving the dominions behind unless they defined Commonwealth consultative practices soon. Although the British were unsure how to consult with the dominions to the satisfaction of all, they were certain that presenting them with a finalized British policy would be disastrous. The British also had to take into account the growing experience, expertise and aspirations of the dominions to participate actively and directly in world affairs. Dominion officials resented not only British direction, but all great power dictation. They accepted the necessity of it at certain formative stages, but they would not go along with a proposal they had had no part in shaping. The time had come for another Commonwealth gathering. But conditions for consensus were already slipping away.

4 Problems Making Peace: Anglo-American Competition and Commonwealth Jockeying, January 1944–August 1945

The prestige of the British Commonwealth was never higher than it is to-day … The prestige is based upon a belief that in the British Commonwealth there has been evolved a unique alliance of a peculiarly tough and enduring kind whose members act together, unlike so many allies bound by explicit treaties, not because they are compelled to act together, but because they have the will to act together.1 (W. L. M. King) It is quite amazing … to see how uninformed quite intelligent and educated people are as to the status of the Dominions. I do not think it is an exaggeration to say that nine people out of ten believe we are nothing but a colony.2 (Carl Berendsen) The British did not capitalize on the progress made in commercial talks in the autumn of 1943. Churchill, realizing that dissension within the cabinet, led by Beaverbrook and other persistent ‘imperial visionaries’, detracted from the war effort, decided to shelve commercial policy. He instructed civil servants ‘to get on with the war’.3 As a result, AngloAmerican trade negotiations were stalled for most of 1944. Meade complained bitterly that if the trade proposals were now put in ‘cold storage’ they would die ‘by refrigeration’.4 Although British bureaucrats working on commercial reform were stalled, officials across the Commonwealth were busy. Canadian diplomats met with American officials several times to discuss trade policy. They brought updates to 113


Commonwealth meetings, acting as a link between the US and the Commonwealth, and at the same time tried to keep their Commonwealth allies on the path of freer, multilateral trade. Australia was irritated with its marginalization from the highest decision-making councils. Evatt actively tried to coordinate postwar policies, including trade policy, with New Zealand in the hope the US would be more responsive to the interests and views of its smaller allies. The Australia–New Zealand alignment also affected the Commonwealth dynamic by bolstering the standing and leverage of the antipodean dominions vis-à-vis Britain. The actions of the antipodean dominions warned London and Washington that they could expect difficulty in rallying support for their individual and joint goals for the reconstructed international trading system. By the time the great powers resumed their commercial discussions in December 1944, there had been a lot of diplomatic movement. Britain was in retreat, the US moving steadily forward, Canada was gravitating towards the US all the while running back as messenger to the Commonwealth, and Australia and New Zealand had forged a new axis. These developments had profound implications for the international and Commonwealth political dynamic in which governments finalized and implemented decisions about trade policy.

Canada and the United States: January–February 1944 When Canadian and American officials met in Washington and New York to consider postwar commercial proposals, their talks began auspiciously. Both governments embraced the multilateral approach to the liberalization of international trade. There were obstacles, however. American participation in such a scheme was especially problematic because the administration required Congressional approval to ratify negotiations which exceeded the limits of the RTAA, as a multilateral agreement surely would. Although American bureaucratic opinion was divided about the best way to circumvent legislative constraints, Robertson was confident that American proponents of a multilateral approach would prevail.5 Within a multilateral framework, Canada’s representatives proposed that all general tariffs (MFN) should be halved, with a floor set at 10 per cent ad valorem. This would automatically close the gap between preferential and general tariffs and ‘go a long way towards the “substantial abolition of preferences”’ which Canadian officials insisted was ‘all that could reasonably be attempted in the multilateral convention’.

Problems Making Peace 115

Furthermore, Ottawa suggested that Commonwealth governments should unbind those preferences remaining after the first round of tariff negotiations, thereby facilitating their elimination in subsequent bilateral negotiations. The Canadians expressed their willingness to enter negotiations with the Americans to this end immediately upon the completion of a multilateral convention. However, Canadian officials did not believe that preferential tariffs would vanish in one fell swoop. Elimination, they explained, would require the UK to lower MFN rates to zero on products receiving duty-free status, leaving Britain with no protection. Alternatively, Britain could raise preferential tariffs on hundreds of dominion products to the MFN level, a proposal which was ‘counter to traditional use of British Preference rates as a means of reducing tariffs and [which] would be in conflict with the main purpose of the proposed convention’.6 Despite the fact that Ottawa was the member of the Commonwealth most willing to bring an end to preferences, the Americans were dissatisfied. They rejected the Canadian suggestion to cut all tariffs with a floor of 10 per cent ad valorem, which they felt sure would provoke conflict with Congress. More discouragingly, the US predicted there would be a political outcry if American tariffs were reduced by 50 per cent, but a substantial number of preferences endured. American negotiators who gave up their main bargaining leverage before ‘achieving the objective with regard to discriminatory treatment set forth in the Mutual Aid Agreements’ would have a lot of explaining to do. The method was not the real problem for the US: the Canadian proposals did not go far enough towards the complete elimination of preferences. Washington advanced proposals of its own to bring imperial preference, described as ‘absolutely indefensible and repugnant’, closer to elimination. Where there was little domestic production of a particular item, they wanted the MFN rate reduced by 50 per cent or to the same level as the preferential tariff, whichever was lower. The US understood that Britain, as a low tariff country, faced particular problems reducing tariffs even further. Consequently, Washington also proposed that where a tariff was 10 per cent ad valorem or lower, it would either be halved or the preferential rate raised to the MFN level. Existing tariffs of 10–20 per cent ad valorem would not be reduced below 10 per cent ad valorem, provided the preferential rate was increased to that level. These suggestions would all close the gap between preferential and general rates, but would not necessarily reduce tariff barriers. For the US, eliminating preferences was more important than opening channels of trade. As Norman Robertson explained, in Washington the goal was ‘to remove


the “ocular” preference items to improve the statistical picture for (US) home consumption’.7 Appearance mattered more than substance.

Antipodean Alignment, Canberra, January 1944 While Canadian officials prepared for the Commonwealth economic meeting in February by informing themselves about US trade policy, Australia and New Zealand fortified their individual and joint bargaining positions. Evatt was increasingly frustrated by Anglo-American refusal to include their allies in discussions about the peace. The Cairo conference of 1943 exhausted what little patience he had left.8 How could London and Washington include Chiang K’ai-shek and not a representative from Australia? Evatt retaliated by organizing a five-day meeting in Canberra with officials from New Zealand to consider the postwar world in the Pacific. His objective was to ensure the Americans did not exclude the antipodean dominions from postwar decisions affecting the Pacific.9 Mid-way through the conference Evatt proposed a formal treaty, the Canberra pact (popularly referred to as the ANZAC pact), outlining the points of agreement between the two governments.10 Evatt followed up this meeting with a call to all nations with interests in the southwest Pacific to gather and consider postwar matters. This was yet another challenge to American leadership in postwar planning. The Americans did not like it. Secretary of State Hull told Curtin that he was ‘almost flabbergasted at certain provisions’ of the Canberra Pact.11 Washington’s minister in Canberra, Nelson Johnson, notified Evatt that the US did not believe the time was right to hold such a conference. Evatt was annoyed and listed a litany of complaints about the US, including the Cairo conference and the cancelled bilateral trade negotiations.12 Johnson had to go over Evatt’s head and appeal directly to Prime Minister Curtin, who assured him that Australia would not convene such a conference.13 When Prime Minister Fraser of New Zealand was asked if the ANZAC Pact was anti-American, he dismissed this interpretation as ‘stupid and untrue’.14 His government was contrite when the US asked it to explain its intentions and shifted responsibility for the document to Australia. New Zealand officials attributed the boldness of Australia’s proposals to national ‘growing pains’ and Evatt’s new-found enthusiasm for international relations.15 Still, they hoped that once the Americans had recovered from the surprise of the antipodean challenge, ‘the results will be good and useful’.16 The Americans suspected the British welcomed the initiative because it signalled the dominions’ displeasure with US leadership and demon-


strated that ‘these two members of the Commonwealth do not intend to be subservient to the United States’.17 While this insight reflected sensitivity to Britain’s fear of American encroachment in its traditional sphere of influence, the antipodean alignment created serious problems for Britain too. A bilateral agreement between two members of the Commonwealth which excluded the UK was unprecedented. Australia and New Zealand had kept London in the dark about the meeting until it was an accomplished fact. Alister McIntosh, the head of New Zealand’s Department of External Affairs, described the British reaction as ‘very sniffy’ and noted that British officials in New Zealand ‘take little pains to conceal their annoyance’. One secretary in the British high commission office in Wellington even went so far as to describe the antipodean alignment as the ‘Anzaxis’.18 The Australian–New Zealand alignment undermined Britain’s centrality within the Commonwealth. By establishing common ground, Australia and New Zealand exerted pressure to reconfigure the association to prevent their marginalization on matters and in regions of vital importance to them. Evatt admitted openly that he envisioned the Australian–New Zealand alliance as a general challenge to British authority: ‘This arrangement … will greatly strengthen the hands of both Australian and New Zealand officials in London.’19 The Pacific dominions thereby signalled their willingness to assume responsibility for individual foreign policies on matters on which ‘Britain would hitherto have been expected to speak for the whole Commonwealth’.20 In so doing, they struck a blow to the British conception of the Commonwealth as the third great power, alongside the US and Soviet Union. The effect of the antipodean alignment was soon made clear at the Commonwealth economic conference in London in February. In anticipation of the conference, Australia and New Zealand coordinated their policies. Evatt proposed they press for an international convention on domestic full employment policies and fight for the right to use restrictive economic measures.21 While making some allowance for differences of views between the antipodean delegations, New Zealand directed its officials to ‘co-operate generally with Australian representatives in support of these principles’.22

Commonwealth Economic Conference, London, 23 February–21 March 1944 As officials from Britain and the dominions gathered in London, they had a full slate of issues to consider in addition to trade policy: monetary


policy, employment levels, commodity agreements and cartel policy. Commercial policy, including tariffs and preferences, was not the most important item on the Commonwealth agenda. But it was the area where agreement eluded the representatives and which generated ‘some of the most controversial issues of the Conference’.23 The controversy surrounding preferences was evident from the opening day when Mackintosh and McKinnon of Canada briefed their colleagues on American attitudes and expectations. They began by explaining the Canadian formula to reduce general tariff rates by 50 per cent with a lower limit set at 10 per cent ad valorem, as well as the proposal to unbind all residual preferences left over from the multilateral agreement. They admitted that the Americans had rejected their scheme because it did not go far enough towards the complete elimination of preferences.24 This was a warning to those dominions reluctant to contract imperial preference. The backlash was immediate, led by Leslie Melville of Australia who decried the continued lack of emphasis on full employment policies without which smaller nations and developing countries could not open up their markets. Fisher of New Zealand and van Eck of South Africa grumbled generally but the Canadians paid little attention to them. British officials had more pointed criticisms, beginning with the Canadian formula to lower tariffs. A uniform, horizontal reduction would have the greatest impact on countries with moderate tariffs, which was unjust.25 They preferred their proposal for a tariff ceiling of 25 per cent ad valorem with an addendum to reduce moderate tariffs (between 10 and 25 per cent) by one quarter.26 The assumption behind the British proposal was that the burden of tariff liberalization rested on high tariff countries like the US, repudiating the American charge that preferential tariffs were the main obstacle to an open world trading order. Liesching did take heed of the Canadian warning about American inflexibility where preferences were concerned. He doubted whether Britain could introduce changes to preferences on a scale that would satisfy the Americans. Other practices that Britain intended to use during the transition from war to peace, such as quantitative restrictions, reinforced his pessimism about the likelihood of reaching a mutually acceptable agreement with Washington.27 Discussion about formulas to reduce tariffs and preferences continued with South Africa bringing together the best parts of the Canadian and British proposals. Van Eck modified the Canadian proposal to lower all tariffs by 50 per cent by adding 5 per cent back: a high tariff of 60 per cent would thereby become 35 per cent and a moderate tariff


of 20 per cent would fall to 15 per cent. This restored the burden of reform to high tariff countries. The Canadians and British appreciated the merits of the South African proposal but Melville did not. He objected to all three proposals because there was no distinction between high and excessive tariffs.28 Melville’s inflexible – and not always rational – stance was a product of the direction of Herbert Evatt.29 Evatt had a political point to make: that Australia would not follow Britain’s lead, or any other nation for that matter. He was suspicious that London kept Australia out of decision-making councils. Thus he believed he had to monitor and steer the conduct of Australia’s officials abroad. It was Evatt who instructed Melville to avoid making any commitments with respect to tariffs and trade.30 Evatt’s impact was not limited to being uncooperative. Melville assured his Commonwealth colleagues that his rejection of the three formulas to reduce tariffs did not represent ‘antaganism [sic] to tariff reduction or to multilateral approach’.31 But Evatt had already begun to challenge the fundamental premises of commercial reform. He denied that Article VII obligated Australia to modify preferences, citing American cancellation of bilateral trade negotiations at the end of 1943 as justification.32 Hence he rejected all progress made thus far in AngloAmerican discussions. ‘The scheme as it stands … I regard as quite out of the question at present as a practical proposal.’ He advanced another order for economic priorities: employment policy first, followed by monetary and commodity agreements. Commercial policy was so ‘low down on the list’ that it could await the end of the war for resolution.33 The Labor cabinet’s wariness of US trade proposals reinforced Evatt’s reinterpretation of Australia’s commitment to trade reform.34 The Australian understanding that it was free of all commitments, implied in Melville’s refusal to pledge his government to any specific course of action, made Americans wonder whether Australia would present the greatest barrier to postwar agreement on Article VII issues.35 As long as Australian officials were excluded from the executive level of decisionmaking, this was likely to be the case. Commonwealth views were no closer to consensus when officials turned their attention specifically to preferences. Mackintosh triggered debate by repeating the basic Canadian formula for the modification of preferences: preferential margins should be narrowed by lowering the higher general duty. The appeal of a uniform reduction in tariffs was that there would be no need for negotiations to achieve the contraction of imperial preference. Mackintosh reiterated the suggestion that


members of the Commonwealth should unbind residual preferences, allowing the government which extended the preference the unhindered right to modify that preference in subsequent negotiations. Such a move would also reassure the US by acting as a ‘symbol … of the abandonment of a system to which they took exception’. Canadian insistence that the dismantling of preferences be genuinely liberalizing testified to the importance Ottawa attached to the actual removal of barriers to markets. British representatives offered lukewarm support for the Canadian approach. They agreed in principle that it was undesirable to raise preferential tariff rates, although they could not proscribe the practice absolutely as they might on occasion need recourse to it. London accepted that there had to be inroads into imperial preference, but attached conditions and limits. No matter how far tariffs were reduced, they should keep a 5 per cent preferential margin. Unless other markets were made more accessible, preferences would stay. Finally, the UK rejected without qualification the unbinding of residual preferences ‘on the ground that this might lead to countries of Commonwealth making bargains at expense of one another and give rise to intra Commonwealth discrimination’.36 The Canadians attributed British refusal to unbind preferences to the rumblings of cabinet ministers like Beaverbrook and Amery, who opposed any diminution of imperial preference. Whatever the cause, it was evident that in the UK ‘cold feet were developing’.37 Norman Robertson, Canada’s under-secretary of state for external affairs, concluded grimly that the likelihood of Anglo-American agreement over preferences, and trade policy more generally, was ‘shrinking and receding’. Canadian officials began to assess alternatives to multilateralism, including ‘a radical continental approach coupled with a radical Canadian–British program’. Still more worrying was the possibility that Canada would have to choose economically (and by necessity politically) between Britain and the US. Confronted with a choice, Robertson believed, ‘we may have to look at the question again from the continental viewpoint’. Even if bureaucrats were willing to consider the logic of continentalism, they did not like this option. A multilateral agreement was the clear preference. As a New Zealander remarked, the Canadians ‘saw no practical alternative to such an agreement that they could contemplate with any equanimity’.38 The British were not the only ones getting cold feet. The southern dominions were all retreating from their commitment to contract preferential tariffs. Melville trotted out the usual Australian objections:


Australian industries were heavily dependent on preferences and it was unlikely that compensating opportunities in the American market would emerge from the present proposals. He pleaded for time to consider the consequences of modified preferences.39 Stalling allowed Australia to see how far the Americans would open their market and to what commodities. Only once they could gauge the effects of American actions for their exports would the government respond. New Zealand remained primarily concerned with retaining a presence in the British market. Long-term commodity agreements could replace preferences as New Zealand’s security blanket. But Britain and New Zealand had still not finalized those agreements. Until then preferences had to stay. The South Africans expressed disappointment with American insistence that the opening gambit in trade reform must be the Commonwealth scaling down imperial preference. American wilfulness undermined a cooperative impulse to implement commercial reforms.40 Despite frustration with America’s rigid opposition to preferential tariffs, Commonwealth representatives agreed on the importance of reaching agreement with the US. British officials concluded that, aside from Australia, ‘all thought we ought to go a considerable way in an endeavour to reach an understanding with the United States’.41 This conclusion overlooked the complex views of dominion governments towards imperial preference. No dominion was straightforward in its commitment to retain or dismantle preferences. Everything was qualified according to the particularities of individual economies. Infant industry protection, balance of payments problems, securing a competitive edge for exports, and the desire to conclude an international agreement with American participation, were some of the economic motives which influenced the determination to preserve or give up preferences. Ultimately, however, the lowering of the high American tariffs was decisive. Thus the Commonwealth was not the appropriate forum in which to hammer out a policy because the one crucial participant was absent. One thing was certain: Britain had to go on trying to find a basis for agreement with the US. To back out now would be embarrassing, especially after Britain’s demonstrated support for liberalization in 1943. Any breakdown in postwar commercial planning would have an unfortunate impact on Anglo-American relations. The effect on the Commonwealth would be equally unpleasant. Even if Britain refused to go forward with the US, the dominion governments would still be receptive to American offers. Staking a position behind the preferential fortress would leave Britain with ‘the wreckage of Imperial Preference


and the discredit of having gone back on our undertakings’.42 Despite growing doubt about Britain and America reaching agreement on trade matters, the political repercussions of such a failure would strip Britain of the benefit of leaning on its two closest alliances while it recovered economically and diplomatically. The only option was to try to go forward. The outcome of this Commonwealth economic conference was not heartening. A diversity of views precluded consensus. Yet this did not diminish the importance of Commonwealth meetings to its participants. For Britain and the dominions, it was preferable to work within a consultative body, or one which they could reform to become genuinely consultative, than to deal individually with the United States, a nation of unrivalled economic power whose political leaders displayed little tolerance for views different from their own. Although the individual commercial policies of the dominions and UK pushed them apart, the realities of power politics reasserted the logic of working together. While the meeting ended without the participants any closer to a coordinated or coherent policy, it was certain that continued disagreements on preferences would not prevent future consultation. It was also certain that Britain would devote more time to creating consensus and cooperation within the Commonwealth.

Meeting of Commonwealth Prime Ministers, London, 1–16 May 194443 British officials were given much food for thought about Commonwealth consultation prior to the opening of the prime ministers’ conference. There was the recent economic meeting to ponder. Ideas about the fundamentals of Commonwealth cooperation were also circulating. Prime Minister Curtin of Australia spoke repeatedly in 1943 about revamping the mechanisms of Commonwealth consultation. He called for the establishment of a permanent Commonwealth secretariat and endorsed a regional arrangement which would allow Australia to make decisions on behalf of the Commonwealth in the Pacific. Prime Minister Smuts of South Africa reinforced the regional proposal. In a speech in November 1943, he suggested that the Commonwealth should be carved into regions with the nearest dominion assuming the bulk of responsibility for nearby colonies. The British too had hopes for a reinvigorated Commonwealth. Increasingly they referred to the Commonwealth as the third great force in world affairs.


The benefits of a collective Commonwealth force in the international community were obvious to members of the Foreign Office: ‘individually the UK would be a second class power and the Dominions only third class’.44 Together they could raise one another a notch in the international hierarchy. Lord Halifax, Britain’s ambassador in Washington, outlined this collective vision in a speech in Toronto in January 1944. It provoked the ire of Mackenzie King who detected overtones of centralization and domination by Britain. Later in the month King stated in a direct retort to Halifax that Canada would work with all likeminded nations in pursuing international goals after the war. Disagreement and debate about the principles and organization of the Commonwealth continued at the prime ministers’ conference in the late spring of 1944. Britain and New Zealand criticized the Australian and South African recommendation to create regions. Cranborne explained that such a scheme would detract from a comprehensive commitment to the Commonwealth.45 New Zealand added that a regional organization would likely provoke conflict among the dominions.46 Fraser explained privately that his government was apprehensive about Australia assuming the leading role in the Pacific.47 Mackenzie King attacked the Australian proposal for regular and institutionalized Commonwealth meetings. He insisted that the Commonwealth worked best when it was flexible and undefined.48 Curtin and King seemed to be at opposite ends of the spectrum on Commonwealth organization. In fact, their disagreement was over means, not methods. Curtin’s proposals to enhance the dominions’ status and influence involved using methods that were anathema to King even if the Canadian prime minister was sympathetic to the goal. Curtin’s proposals only mildly aggravated King’s chronic concern that the Commonwealth would encroach on the dominions’ autonomy. Far more worrying was a British paper on the structure of the postwar world in which the Foreign Office explained that Britain would need Commonwealth support to hold it up in world councils after the war. The memorandum, with a clear Churchillian impress, denied that any of the dominions should be represented on the prospective world council in case ‘such a demand … provoke[d] a counter demand from the Soviet Government that one of the constituent republics of the USSR should always have a seat on the World Council’.49 The British equation of the dominions with ‘constituent republics’ of the Soviet Union confirmed that the dominions’ independence and identities were not firmly established or widely recognized.


Prime Minister King rejected the argument of the paper in its entirety. He emphasized that the bond between members of the Commonwealth remained ‘peculiarly tough and enduring’. Britain did not need to fear that the dominions would drift unless formally tied to it. Rather, a collective approach to international affairs would weaken Britain’s power. How could British foreign policy be ‘firm and decisive’ if ‘every issue must be decided on the majority vote of countries, some of which are not directly in touch with the affairs of all parts of the world at once?’ Centralized representation was also unacceptable to King because it would confuse foreign nations about the dominions’ status, thereby undermining their independence. A Commonwealth bloc would also close members off from other nations.50 King confided in his diary that his view of the Commonwealth was the opposite of Churchill’s, for whom it was ‘a religion’. King was relieved and pleased that Smuts endorsed his basic position about ‘the necessity of each part of the Commonwealth maintaining its own identity and being represented in its own right’.51 Curtin and Fraser also did not favour a loss of status or voice. If the difference between King and Curtin was over tactics, the difference between Churchill and the dominion prime ministers was over fundamentals. Against this backdrop of inconclusive discussion of the principles and mechanisms of Commonwealth cooperation, dominion prime ministers devoted one day to postwar economic issues. There was profound and growing disagreement on questions of trade. As usual, Australia voiced its dissatisfaction with what progress had been made thus far. Curtin was both obstructive and tentative, dismissing the logic of abandoning imperial preference in favour of a ‘doubtful utopia’. He claimed that his government was willing ‘to commit itself in the maximum degree that the present circumstances appear to justify’, but went on to insist that future governments should not be hamstrung by commitments ‘to adopt a course of action that might be at variance with whatever course of action they subscribed to now if famine, flood or other unforeseen circumstances made it necessary for them later to change their attitude’.52 Curtin was not about to make any commitments for the present or the foreseeable future. Peter Fraser of New Zealand also questioned the basic direction of policies and wanted guarantees that there would be compensation for the modification of imperial preference. He was ‘very ready to discuss Imperial preference but he would not be prepared to surrender it unless something better were forthcoming which would make the surrender worthwhile’. Churchill interjected in support of the protestations of


Fraser and Curtin. He explained that in negotiations in 1942 over the wording of Article VII, Roosevelt had assured him of the right ‘to safeguard the position as regards Imperial preference in its entirety’. This coated Australian and New Zealand reluctance to dismantle preferential tariffs with a veneer of righteousness. Churchill’s intervention also confirmed that despite his basic free trade instincts, he remained attached to preferences. This was made unequivocally clear to King in private exchanges with Churchill. The first occurred during a weekend break at Chequers when Churchill explained that the importance of preferences was sentimental, not economic; they ‘hung like a loose girdle around the person of the Empire’. A few days later, on his way to deliver a speech to the British House of Commons, King told Churchill that he had received a telegram from Lord Halifax advising him not to mention preferences because the Americans were closely watching the progress of the prime ministers’ conference. Halifax did not want anything to inflame American opinion. Churchill, however, saw no need for such circumspection. ‘Churchill at once said he hoped that I might say something of preferences or that, if I did not, certainly not to say anything against them.’53 Smuts adopted a more reasonable line than Britain, Australia and New Zealand. He insisted that the fates of imperial preference and American tariffs were inextricably linked. However, he was not willing to give up preferential tariffs. In fact, the prime ministers of Britain, Australia, New Zealand and South Africa all emphasized, in varying degrees, the merits of imperial preference. The prime ministers’ support for imperial preference alarmed King. He recognized that the task fell to him to keep his colleagues in line with American goals and check the drift towards defensive commercial policies. Reconciliation of some sort was essential. Without the participation of the US and Commonwealth members there would be no multilateral trading system. He warned the other prime ministers against unrealistic expectations of the US eliminating its tariffs while they offered little in return. Ultimately, however, he identified the obstinacy and emotions of both the advocates and critics of preferences as the real barrier to understanding. We must recognise that the US tended to attach exaggerated importance to the elimination of preferences in the field of commercial policy. Some of us were perhaps inclined – for different and complementary reasons – to attach a similarly exaggerated importance to their integral retention.54


King’s attempt to bridge the widening gulf between Commonwealth and American participants had no effect. King was slightly naive in his efforts. He did not seem to realize that all Commonwealth governments appraised the value of preferences according to their own national interests. If his Commonwealth colleagues were moving towards the retention of preferences, they had practical reasons for doing so. The widening gap between Canada’s Commonwealth allies and the US exacerbated a concern that had arisen during the previous Commonwealth economic meeting. Canada’s isolation as an advocate of freer, multilateral trade raised questions about whether it could pursue its economic future with the sterling members of the Commonwealth. Throughout Britain and the dominions people were beginning to promote bilateral or restrictive groupings as alternatives to a multilateral settlement, jeopardizing the commercial link between the Commonwealth and Canada, which unavoidably threatened Canada’s political membership in the Commonwealth. Over the next seven months, Canadian diplomats were busy trying to salvage their connection to the Commonwealth. The outcome depended on Canadian access to Commonwealth markets and Britain’s commitment to the implementation of an inclusive commercial system. While they attended to national economic and political interests they also tried to keep a line of communication open between the US and the rest of the Commonwealth. Ultimately, the most desirable outcome economically and politically would be to retain the closest links possible with Britain, the Commonwealth and the US.

Sterling–dollar trade: Canada and the sterling Commonwealth, November 1944–May 1945 In the months following the prime ministers’ meeting, suspicion arose in Ottawa that the sterling members of the Commonwealth were shutting out Canadian commodities from their markets. Canadian diplomats discovered little hard evidence of systematic discrimination, but believed that the mechanics of the sterling area made deliberate discrimination unnecessary.55 Sterling members sold their convertible reserves to the Bank of England and received inconvertible sterling in return for use in domestic and intra-sterling transactions. Whenever a member required hard currency, it drew on a common pool of reserves.56 While the British could, in theory, limit the amount of dollars withdrawn, blocking or redirecting trade between sterling and


dollar countries would be impolitic. When the dollar pool was small, as it was during the war, members were self-regulating about restricting purchases requiring hard currency. Because Canada was not a sterling country, its products had to be paid for in a convertible currency. As a result, sterling countries were disinclined to purchase Canadian exports, for many of which, like agricultural commodities, there were few alternative markets beyond the sterling area. The loss of sterling markets would have a profound effect on the Canadian economy. The situation was compounded because Canada needed to generate convertible currency through export sales to pay for American imports. Even if there was no active discrimination against Canadian commodities, the effect was the same: trade between Canada and the sterling area was minimal as long as there was a dollar shortage. The long-term prospects were as serious for the Canadian economy as the immediate consequences. The deterioration of trade between nations with different currencies threatened the implementation of a multilateral system for postwar international trade. With this in mind Graham Towers, governor of the Bank of Canada, prepared a pessimistic memo entitled ‘Postwar Commercial Policy Prospects: a Proposal for Averting a Breakdown in International Trade Relationships’. He appreciated the economic circumstances that made the sterling option desirable to Britain: its lack of dollars, divestment of overseas assets, loss of shipping revenue, and reduced competitiveness of exports. He also detected a political motive in London’s preference for sterling area trade: it offset the effects of British economic, military and political weaknesses vis-à-vis more powerful nations. But a closed sterling Commonwealth threatened Canada’s economic well-being. The political repercussions for Canada were also worrying. A closed sterling Commonwealth would jeopardize Canada’s membership in the Commonwealth. Robertson anticipated that if British policy unfolded along the lines of Towers’ memo, the result would be to ‘take Canada outside the British preferential system and, indeed, outside the Commonwealth’. Preserving Canada’s place in the Commonwealth was not the only motivation for action. If Britain embarked on an exclusive sterling future, there would be a clash between the US and UK. The Canadian position, balanced as it was between the two nations, would become untenable. As Towers put it, ‘Canada, dependent as we are on the UK market for our main staple exports and on the US market for our main imports will be ground between the upper and nether millstone. The economic consequences will be impoverishment all round; the political consequences are incalculable.’


Towers had a solution in mind. To alleviate Britain’s dollar shortage and balance of payments problem, Ottawa should loan Britain $1.2 billion over three years, with generous and flexible terms of repayment. In effect Ottawa would finance British purchases of Canadian exports to perpetuate channels of trade between the dollar and sterling countries during the recovery period after the war. The credit would be contingent on a British guarantee ‘not to apply, nor to encourage other countries in the sterling area to apply, greater restrictions against imports from Canada’. This arrangement would address Canadian concerns about access to sterling markets and allow Britain to stay on the freer trade path. Conveniently, national and international interests converged. Senior Canadian cabinet ministers and civil servants agreed that ‘the importance of getting a satisfactory trade situation after the war was simply tremendous’.57 They endorsed Towers’ recommendations in January 1945. Towers, along with Clark and Mackintosh, drafted three telegrams sent to London on 23 February outlining their concerns and explaining their solution. The first telegram explained Ottawa’s objections to sterling discrimination against dollar exports. The exigencies of war necessitated some contraction of trade. However, to continue to discriminate after the war would provoke a political backlash. ‘It is scarcely necessary to say that neither wartime collaboration nor nearly fifty years of preferential treatment of UK exports has prepared the Canadian public for such a development ... No Canadian Government could view it, economically or politically, save with the gravest concern for the future of the Commonwealth.’ Canada offered to continue to extend financial aid throughout 1945 in exchange for access to the sterling area. The government indicated forcefully that it would not tolerate the exclusion of Canadian exports from Commonwealth markets, which it viewed as an affront in light of Canada’s wartime generosity. If discrimination persisted, Canada would reconsider its allocation of mutual aid to the UK.58 The second telegram was worded more sympathetically. It dwelt on the need for international collaboration to implement the proposed economic reforms. However, it acknowledged the economic realities which pushed Britain towards a ‘narrow, restrictive commercial policy’. The telegram stated that the Canadian government realized that it would have to do something to make the ‘competitive solution’ feasible for the UK. In the initial postwar years, the Canadian government proposed to finance both sides of its trade with the sterling area, all to help Britain overcome the practical barriers to the implementation of freer multilateral trade.59


Mackenzie King appealed directly to Churchill in the third telegram. He criticized the lack of progress made in commercial policy since the British initiative in the fall of 1943. As time passed, the likelihood of an agreement faded while regional movements advanced towards ‘the break-up of the world into economic blocs which trade more or less freely among themselves but discriminate against outsiders’. He stated frankly the political and economic consequences of a policy of sterling discrimination: the reaction in Canada and the US would be ‘one of bitter recrimination and disillusionment’.60 British officials were not surprised to receive the three telegrams. They were well aware of Canadian anxiety about sterling discrimination against dollar products and the potential collapse of the multilateral trade order. Still they were profoundly impressed. Meade described the telegrams as ‘clearly of quite exceptional importance’. First, ‘they show how a purely bilateralist restrictive policy is likely to threaten the unity of the British Commonwealth.’ Second, the telegrams confirmed that financial assistance after the war was contingent upon ‘our attitude towards Commercial Policy and Article VII in general’. The loan proposal was attractive as long as the terms of repayment were flexible and interest charges minimal. Canadian funds would then be no more difficult to use than sterling.61 Lionel Robbins, director of the economic section of the offices of the war cabinet, was also struck by the political repercussions that would result if Britain rebuffed the Canadian overture. A rejection would force the Canadians ‘to throw in their hands with the United States’. If London turned away from Article VII, it would irritate ‘the rising volume of public opinion on the other side of the Atlantic which is calling for more rational trade policies’. A third consequence affected the entire Commonwealth: the sterling countries would not tolerate British indebtedness for long. Robbins believed that anyone who thought otherwise was living in a ‘fool’s paradise’. Commonwealth unity depended on British solvency. Policies consistent with Article VII principles would best ensure Britain’s return to prosperity. Overall the Canadian telegrams made Robbins see that by rejecting Article VII and all that it represented Britain would find itself in a ‘frightful pickle’.62 The Canadian telegrams demanded a well-considered response. Before British officials could reply, they were dismayed to learn that Robertson and Pearson had disclosed the content of the telegrams to senior officials of the US State Department. Because American exports were in the same position as those of Canada in sterling markets, Robertson thought the US should participate in Anglo-Canadian


discussions about the future of sterling–dollar trade. Although the British regarded this as ‘a démarche’, the Canadians were acting sensibly if not sensitively. The problem was larger than trade between Canada and the sterling area. A Canadian loan on its own could not finance trade between the sterling and dollar worlds. In effect the Canadians told their American colleagues that Washington would have to pay to keep Britain on a free trade path and prevent a breakdown of dollar–sterling trade after the war. The Canadians also recognized that British policy was inextricably linked with the US. The UK could not make real progress in talks with the Canadians. British officials agreed with this reasoning: ‘We feel that we must carry our talks with the Canadians in step with the Americans … we cannot risk prejudicing the latter by going ahead too far with the Canadians.’63 But British officials had other political considerations in mind. As long as the telegrams remained confidential, the British believed they had some latitude to frame their reply. But now the secret was out, London was worried the Canadian intervention would jeopardize the fragile progress that they had made with the US.64 Thus when London sent an official response towards the end of March it was ‘non-committal but friendly’. Although the UK insisted that negotiations with Canada could not outpace discussions with the US, it invited Canadian officials to come to England to discuss the subject privately and informally.65 In confidential meetings London could give the Canadians the assurance they sought.66 These meetings took place over a weekend in May at King’s College, Cambridge. Keynes’ dominance in the meetings was evident from the outset. He sat at the head of the table, with British officials flanking him on the right, Canadian officials to his left. There was an undertone of excitement, apprehension and awe of Keynes.67 He opened the meeting by insisting on secrecy. The cabinet had not yet vetted the matter under discussion. Furthermore, Keynes explained, Britain expected to make a pitch to the US along the lines he intended to outline. He wanted no leaks. With that warning, ‘like a great conductor taking over’68 he outlined Britain’s policy options: Starvation Corner, Temptation, and Justice. ‘Starvation Corner’ was a policy of draconian import restriction which would result in domestic austerity and deprivation while preserving Britain’s financial independence.69 Graham Towers advised against this option, believing that it would cripple an all-inclusive strategy for international trade.70 Keynes assured him that the British appreciated the merits of a multilateral remedy: ‘It was not true to believe that the United Kingdom could be brought to support a


multilateral system only by being bribed and cajoled. They knew that fundamentally it was in their own interests.’71 What Keynes did not share with his Canadian colleagues was his tactical conception of this option. It could be used to force the Americans to deal generously with the UK after the war: ‘as a matter of tactics it is necessary to keep alive the disagreeable, indeed the disastrous alternative, without, however, disguising from ourselves its true character’.72 ‘Temptation’ would have the UK borrow vast sums right after the war. These loans would bring immediate relief but eventual bankruptcy. The economic cost was nothing compared to the political debasement Britain would experience when it made ‘humiliating and embarrassing pleas’ to ease the burden of repayment. The option Keynes favoured was ‘Justice’, whereby nations accepted their obligations to maximize imports to make a multilateral exchange of commodities viable.73 His plans included the elimination of Britain’s debts to its allies, beginning with those incurred under Lend-Lease. Keynes also expected the Americans to grant Britain a loan of $8 billion, as well as extend a line of credit to enable Britain to introduce the convertibility of sterling within the year. He expected a much smaller loan from Canada, something on the order of $600 million. The sterling creditors would also contribute to British recovery by writing off the debts London had incurred during the war.74 Keynes expected rich nations to behave generously. As he pointed out, even with their gifts Britain would still have enormous debts to discharge. Still he believed Britons would feel in such an arrangement ‘the sweet breath of justice … to be blowing’.75 Towers responded by alerting British delegates of the economic and political realities confronting Canada. Ottawa could not divorce its response to British commercial policy from the American reaction. If Britain introduced a policy of restrictions there would be a backlash in the US. Because of the extent of continental economic interdependence, the government of Canada would have to pursue its economic future in conjunction with the US.76 Towers recommended that to make a policy of comprehensive postwar restrictions palatable, the wartime coalition government in Britain should launch a vigorous education campaign to promote awareness of the adverse economic conditions in the UK. Towers also asked the British to lift restrictions on Canadian exports to the sterling area, a gesture which he did not recommend Britain should extend to the US.77 As a result of this meeting Britain did ease disincentives against Canadian exports to the sterling area by advising colonial administra-


tors to look favourably on Canadian suppliers of essential commodities who had established themselves before the war.78 The Canadians were delighted, but as the British noted dryly, the new policy ‘doesn’t in the end mean a very great deal’.79 There was no appreciable increase in the flow of trade between Canada and the sterling area. But politically the British gesture meant a lot, recognizing Canada’s right to trade with the sterling Commonwealth. That made Canada’s membership in the Commonwealth more comfortable. There was no public announcement of the change in policy because Britain wanted to avoid an outcry in the US.80 Canada did not object. Its commitment to helpful fixing would not come at the expense of national interests. These meetings were remarkable, not because of the effect on Canadian–sterling trade, but because they revealed the way the British were thinking about the postwar world and their position in it. The British were steeling themselves for a grim economic future. But they also expected generous treatment by their wartime allies. And they were determined to preserve Britain as the great and prosperous nation it had long been. This overarching goal was made poignantly evident during a break from the meetings. After dinner one night the delegates were relaxing in the Fellows’ Garden at King’s. One of the Canadian delegates remarked on the beauty of the garden. Turning to him, Keynes replied: ‘Yes, it is beautiful, isn’t it? And we want to keep it, you know. That’s why you’re here.’81 Romantic sentiment and financial imperatives make an odd combination. In May of 1945, they could not be separated. Unfortunately, the gulf dividing Britain and the US on commercial policy had widened. The US was the nation upon which Britain would have to rely most for considerate treatment after the war, not Canada. Already new attitudes and agendas were arising which impeded the two countries from coming to an agreement. The only consolation was that American and British officials at last resumed their commercial discussions after over one year of silence.

Anglo-American commercial dicussions renewed, December 1944–August 1945 As early as the middle of 1944 Washington had realized that Britain would find itself in desperate financial straits after the war. For instance, Harry Hopkins, the president’s main adviser, was well aware of the difficulties Britain would face once it had to resume payments for imports. Hopkins noted that not only had Britain divested itself of


overseas assets, incurred huge debts to the US, Canada and sterling area, but it had lost income from services such as shipping, insurance and banking. In addition, Britain’s export markets had largely vanished during the war. Thus Britain would have few sources of income and desperately high demand for imports. Unless Washington offered immediate financial assistance, Hopkins predicted ‘England can escape post-war starvation only by the most ruthless kind of trade warfare.’ Hopkins believed the US should provide Britain with financial aid as there would be a reward: the UK would be inclined to cooperate with the US on all kinds of postwar matters, including trade.82 Others in Washington disagreed on the grounds that the US would be financing its main rival for the leadership of the international community. Financial aid to Britain also went against the general belief that Britain remained wealthy. Lionel Robbins, aware that the US over-estimated British wealth, believed London should fully disclose the extent of its financial difficulties.83 Churchill refused.84 As a result, American misunderstanding of the extent of Britain’s indebtedness persisted. Despite Churchill’s unwillingness to divulge the extent of British impoverishment, a more sympathetic attitude towards the UK had emerged in the US after Henry Morgenthau, the secretary of the treasury, returned from a visit to England in August 1944. Morgenthau had been astonished to discover the desperation of Britain’s financial circumstances. He immediately informed Roosevelt that ‘England really is broke.’ Morgenthau’s record of the conversation indicated that Roosevelt was clearly surprised by this news.85 While the US Treasury Department was thinking about Britain’s financial recovery, the State Department was frustrated over trade policy. Throughout 1944 State Department officials pressed for the resumption of discussions with their British colleagues on commercial policy. They were consistently rebuffed by the UK with the excuse that consultation with the dominions was a necessary preliminary step or that the war effort consumed all of the energy of ministers and public servants. But Britain could not evade the US forever, as Lionel Robbins observed first-hand: From what I have seen and heard already, I am quite convinced that we are playing with fire in this matter. We run a grave risk of arousing widespread suspicion of our good faith just at the moment when, for other reasons, we need that confidence in our good faith should be completely sustained.86


Despite, or perhaps because of, the delay, Hull was more determined than ever that Britain should fulfil its Article VII pledge. For Hull, Britain’s economic hardship was no excuse for evading Article VII or the commitment to abolish imperial preference. Rather, he believed, it added to America’s leverage. He advised Roosevelt of ‘the fundamental importance of predicating the extension of financial assistance … upon the adoption by the British Government of sound economic policies designed to revive the flow of international trade’. It was essential not to let the movement to promote freer trade wane. Over the course of the war the emotional attachment to preferences had deepened. Hull feared that sentiment might translate into ‘governmental action toward the extension, rather than the curtailment, of Imperial preference’.87 E. F. Penrose, the commercial expert at the US embassy in London, accused Hull of not taking ‘the statesmanlike view’ of Britain’s financial problems, instead remaining fixated on preferences.88 Regardless of the wisdom of his position, Hull insisted that Britain should deliver up preferential tariffs. Hull resigned in November 1944 before Anglo-American discussions resumed. His departure did not weaken the State Department’s determination to eliminate imperial preference from the postwar commercial system. Will Clayton, newly appointed assistant secretary of state for economic affairs, was willing to go much further than Hull ever had. In his view, ‘Free trade was to be the panacea of modern man.’89 The attack on preferential barriers became even more impassioned and moralistic. By the time Anglo-American commercial talks resumed in December 1944 British officials and politicians had begun to reappraise their trade policy in light of the gloomy economic and political realities which they would have to confront with the return of peace: … we shall for some years suffer an acute shortage of foreign exchange to meet our liabilities and import requirements … a serious deficit on our balance of payments … a hard struggle to purchase the imports on which we depend for our existence … We shall find it difficult to grant credits … We shall definitely not be able to afford uneconomic purchases for political reasons … We shall have to go slow over subsidies, and we shall have to put a stop to many forms of investment in foreign countries. Every subscription to international organisations and charities will require the coldest scrutiny.90 Britain would depend on the US for assistance to facilitate and expedite recovery, and could not afford to push the US towards an isolationist


or unilateralist position. Political imperatives tempered the effect of postwar economic circumstances on Britain’s bargaining stance. But political considerations could not disguise the fact that Britain needed special treatment during the transition period and recourse to discriminatory or restrictive measures. In addition, the government remained attached to preferences. It was soon apparent that the overlap of attitudes and policies at their first meeting in 1943 had vanished. British officials were taken aback by an American draft outline for commercial organization which called for a 50 per cent reduction of all tariffs with a 10 per cent ad valorem floor and the gradual dismantling of preferences.91 The draft further stipulated that where a small amount of trade was involved, preference should be abolished and residual preferences reduced by a uniform amount.92 Obviously American planning had gone ahead even though there had been no consultation with Britain. The British rejected these proposals but said they would continue discussions based on the Canadian formula for a uniform reduction of all tariffs. This, they assured the Americans, would eradicate the diversionary influence of preferences.93 As for the abolition of preferences, that was out of the question: we left the Americans in no doubt as to the great importance attached to preferences as an expression of Empire solidarity, and the highly adverse reaction which would be produced in public opinion here by any excessive and injudicious American pressure on the subject.94 In contrast to the heightened American commitment to freer trade, Meade was distressed at the casualness of British behaviour. He took London’s stance as evidence of unwillingness to make the trade proposals work. ‘And yet an agreement is so patently in our interests, and failure to agree with the Americans on this is so patently dangerous.’ Even Keynes was afflicted with myopia with respect to the importance the Americans attached to freer trade. In a conversation with Meade, Keynes insisted that a gentlemen’s agreement on principles and intentions would suffice to overcome Anglo-American differences. He assumed that commercial policy was a relatively low priority for American postwar planners. Meade refuted this misguided view and warned that Britain was ‘riding for certain catastrophe as the USA certainly intended sooner or later to have some real liberalisation of commercial policy’.95


The more American and British officials talked, the more room there was for conflict. In part this derived from disagreement over preferences, compounded by disagreement regarding the establishment of an international organization to oversee the rules and practices of trade. But the divergence also arose because as American and British officials looked to the future of world trade, they could no longer view their subject from an academic perspective.96 They calculated the economic and political consequences of their actions. Even though they were working towards the same long-term goal, a sense of common interests had all but vanished. Britain was reluctant to make binding promises to contribute to postwar liberalization. American officials were in retreat too. The pursuit of freer trade in an international context and through multilateral negotiations had always been problematic for the US. This approach became impossible after July 1945, when the RTAA legislation was before Congress for renewal. To solicit support for the passage of the RTAA, the new president, Harry Truman, promised that in future negotiations the US would deal with tariffs on an item-by-item basis and in bilateral negotiations. The Americans realized the bilateral basis for negotiations would deflate British enthusiasm, so they advocated a new method for negotiations whereby a group of eight to twelve nations would negotiate a series of bilateral agreements concurrently. This was the ‘selective nuclear-multilateral approach’ which they believed came closest to the original inclusive-multilateral scheme.97 Unfortunately the nuclear-multilateral approach was not well received in London. The British objected to the multilateral-bilateral scheme because it was cumbersome, slow-moving and uncertain.98 But their real concern was more fundamental. All along they had assumed commercial liberalization would be introduced multilaterally. They needed reforms on a massive scale to enable Britain to receive sufficient benefits to offset the harsh consequences of liberalization. Now the rug was being pulled out from under them. The obstacles to agreement had suddenly become formidable. Canadian officials immediately explained to American officials the disastrous consequences of their change in tactics. A bilateral and piecemeal approach was ‘hopelessly inadequate’. The western world would follow America’s lead, Ottawa argued. Other nations participating in the liberalization experiment would refrain from implementing substantial changes. Ottawa urged the US to follow a bold course to give impetus to the liberalizing movement. Equally seriously, Canadian officials pointed out that there was no incentive for the UK and


dominion governments to implement radical changes to imperial preference. There were also serious technical difficulties. The Commonwealth governments could not negotiate preferences bilaterally as the governments extending and receiving the benefit had to agree to any change and both were entitled to compensation. At the least, negotiations would be trilateral. Furthermore, the Canadians criticized the selective approach because it meant the US would have to compensate every change made to imperial preference. This the US would be loath to do, believing that the UK and Commonwealth were obligated to eliminate preferences unilaterally. They urged the Americans to press for a policy which would permit sweeping horizontal cuts.99 Their pleas came to nought as Congress would not approve any policy advocating a more far-reaching approach. With the sudden end of the war on 15 August, American, British and dominions officials and politicians had to turn to real negotiations. Robbins despaired at the insufficient progress made on commercial questions.100 Indeed, it seemed that Britain and the US had moved backwards on trade policy. Furthermore, the solidarity of the wartime alliance between the US and the UK, which had smoothed over earlier differences about the postwar world, was dissipating. Relations returned to a peacetime pattern, with national interests untempered by the constraints of a common enemy. This change in attitude was accompanied by a divergence of interests. Britain’s perilous economic circumstances necessitated a retreat from liberalization, at least in the short term. Even though Britain’s ability to participate in the promotion of liberalization had shrunk, Americans continued to expect that Britain would do its utmost for the cause. American officials did not believe Britain’s economic plight justified revoking or delaying the pledge to promote Article VII principles. The precipitate cancellation of Lend-Lease in August was shocking proof of an inflexible American outlook. The realities of economic dislocation descended upon Britain. The Americans capitalized on British financial need to secure the agreement they wanted for a new trading regime. Thus a duel began between the two. And Britain could not count on the Commonwealth to be in its corner. Commonwealth meetings throughout 1944 confirmed that there was no consensus and that attempts to forge a unified stand had the opposite effect. The role the Commonwealth would play in peacetime was not clear. The future of Anglo-American cooperation was equally uncertain. Both would be tested during the Anglo-American loan negotiations which began shortly after VJ day.

5 Imperial Preference and the AngloAmerican Loan Negotiations, September–December 1945

Imperial Preference is a subject which we are [not] even prepared to discuss with any outsider. That is the key to our own household which we cannot hand over to strangers. This is our birthright which we cannot sell for any mess of pottage.1 (L. S. Amery) The sudden end of the war brought relief and adversity to Britain. Long-anticipated economic difficulties mounted with alarming speed. The newly elected Labour government was desperate for aid to stave off a looming financial crisis. As Keynes had anticipated, the UK turned to the US for a loan. American officials were not surprised by the request, but they were not inclined to generosity. Washington believed there was now no longer a compelling reason to carry London. No matter what would result from Anglo-American financial negotiations, one thing was certain: US aid would come at a price. Securing British support for American postwar trade proposals was one obvious way of turning British weakness to American advantage. In particular, the US might be able to overcome British obstinacy over preferences by linking their commercial deliberations to the promise of financial assistance. Just as the Americans were intent on linking commercial and financial matters, British negotiators were determined to separate them. Consequently, the British delegation sent to Washington to negotiate the loan included no commercial experts in the hope that would limit the discussions to questions of finance.2 This ploy backfired. The Americans postponed financial talks until the British agreed to address outstanding commercial questions leading towards an outline for an International Trade Organization (ITO). The Attlee government could not afford to refuse. Commercial experts sailed from 138

Imperial Preference and the Anglo-American Loan Negotiations 139

London a few days later realizing they would have to lock horns with the US over the fate of preferences. Because the Anglo-American discussions now included preferential tariffs, along with a full slate of other commercial issues, Britain had to consult with the dominions. The fact that British and American negotiators were not just discussing reductions to selective tariffs, but formulas to bring an end to the system itself, made consultation even more essential. British officials acknowledged that they could not arrogate to themselves the authority to decide how preferences would be contracted. ‘Under the constitutional conventions of the British Commonwealth it is impossible for the United Kingdom to take an entirely unilateral action in a matter which involves the Dominions so deeply.’3 Commonwealth consultation would have to take place alongside the Anglo-American financial and commercial negotiations. The election of the Attlee government in July 1945 had boded well for improved Commonwealth relations. The Canadian diplomat John Holmes reported optimistically from London that although the new Labour ministers’ views on the Commonwealth were ‘inchoate and sometimes garbled’, the change of government would bring improvement: ‘there is evident a suggestion of slightly revolutionary mission about the way in which they are emphasizing “consultation and collaboration”.’4 Stanley Bruce, Australia’s high commissioner in London, was also encouraged by the change of government. Bruce expressed complete satisfaction after meeting with Ernest Bevin, the new foreign secretary, and Lord Addison, the new secretary of state for dominion affairs. ‘These talks were a refreshing experience and I am convinced that under the new Government the feeling of frustration that one had with regard to consultation under the old regime will be removed.’5 Evatt was less confident that the new government would accord Australia the respect and attention it deserved in foreign affairs. He would not tolerate the exclusion of the dominions from the decisionmaking process. He warned Addison that, ‘Full consultation on an equal footing is the only basis of complete confidence and co-operation.’6 Harmonious Commonwealth relations depended on improved consultation, in particular consultation in the early stages of policymaking. Britain would also have to treat the dominions as equals. The Anglo-American loan negotiations were an early indication of how the Commonwealth would function in peacetime. The issue of preferential tariffs forced members to address head on the fundamental problem of managing their international interests individually and jointly. What began as a bilateral meeting spun off into an ad hoc referendum on the


nature and function of the Commonwealth. Would the Commonwealth be an instrument of British power, led by London? Would it be an association of autonomous and equal nations responsive to all of its members? Would it work at all?

The negotiations: commercial and financial When Britain’s commercial negotiators arrived in Washington, they realized that their own success or failure would have a decisive effect on the financial negotiations taking place alongside them. The start of commercial talks did not, however, begin well as London and Washington renewed their dispute over the future of preferential tariffs. American negotiators appeared to accept that the contraction of preferences was linked to the reduction of tariffs. But Will Clayton, one of the principals on the US negotiating team, also called for a formula to eliminate preferences as a non-tariff matter, meaning that preferences would be dealt with in a body of rules prohibiting discriminatory practices. What Clayton envisaged was a swapping of preferences and tariffs in the first round of international negotiations and the elimination of all residual preferences subsequently. American officials pointed out the importance for Britain of agreeing either to abolish preferences on their own or to promise to give up preferences after the first round of international tariff negotiations: such a gesture was necessary to secure congressional and public support for additional financial aid to Britain.7 Britain’s negotiators refused to abolish preferences, either immediately or gradually. But the British government could not afford to be intransigent if it received no financial aid as a result. The home front had suffered terribly during the war. The Labour government had fought the election of 1945 by tapping into expectations for a better world. The government could not end the deprivation, let alone introduce social welfare policies, until the economy was up and running. To tide Britain through the rough transition period between war and peace, London needed a loan to pay for food and raw materials. Failure to secure financial aid was unthinkable. Even so, British negotiators were appalled by the suggestion of eliminating preferential tariffs. The task fell to Percivale Liesching, who headed the commercial side of the delegation, to defend imperial preference. According to his understanding of wartime agreements, the contraction of preferences and the lowering of American tariffs were directly linked. But the American proposal suggested that they would


make few compensating tariff cuts. Furthermore, since the renewal of RTAA in July, the Americans were hamstrung by a promise to negotiate tariff reductions on an item-by-item basis. Britain was not in a position to commit itself to dismantle preferential tariffs before knowing the scope of reciprocal tariff reductions. Liesching invoked Article VII to justify his stand: Article VII called for the contraction of discriminatory tariffs as part of a mutually beneficial exchange of concessions. It did not stipulate the unilateral abolition of imperial preference. The British also wanted to make full use of the potential bargaining value of preferential tariffs by exchanging preferences for lower tariffs. If the UK agreed to the American suggestion to eliminate residual preferences, the British would have nothing to offer in the first round of negotiations. Keynes interjected to illustrate the problem with his usual elegant simplicity. ‘What can you expect to get in a horse-trade if one party knows that the other’s horse would drop dead in three months?’ Liesching also denounced the hard-headed stance of American negotiators. By linking imperial preference with a loan the US was exploiting Britain’s economic weakness, the product of an unstinting war effort from which the Americans had benefited. The British public would ‘regard this as rather a ruthless exercise of economic power’.8 The British would not use the abolition of preferences to secure a loan. Lionel Robbins, who joined the British delegation in his last duty before retiring from the civil service, observed, ‘it is clearly quite impossible politically to just barter them [preferences] away for cash’.9 Finally, Liesching explained that imperial preference was a highly politicized subject because of the special relationship between members of the Commonwealth. Support through two world wars proved that the association between Britain and the dominions was qualitatively different from those between foreign nations. This relationship legitimized a tariff system that discriminated against outsiders. He admitted the Commonwealth was an enigma to foreign observers, impossible to define ‘in clear and concrete terms comprehensible to the outside world’, but a unique bond existed and preferences were its concrete manifestation.10 Although the British had done nothing but defend preferences, the nature of the US–UK discussions made Commonwealth consultation unavoidable. The Americans were pressing the British either to alter preferences drastically or to lay out rules governing the way preferences would be negotiated. These were decisions Britain could not make unilaterally. Hoping to defer commercial negotiations, the British government had given little thought to arranging for consultation with the


dominions. In fact, the British were so entirely preoccupied with securing financial assistance from the US that they had no patience for the dominions’ interests in the negotiations. Keynes went so far as to deny that Britain had an obligation to keep the dominions informed.11 Even for Liesching, who was willing to confer with dominion officials, consultation was not the top priority. Reaching agreement on commercial policy, thereby freeing the way to agreement on financial aid, was his primary mandate. He worried that informing the dominions of every twist and turn in the negotiations could jeopardize those financial negotiations.12 Managing Commonwealth consultation to ensure it did not interfere with the financial negotiations was essential. Consequently, the British team advised London to send information directly to dominion capitals, if only to keep the dominions at a distance. At the same time, dominion officials in Washington clamoured for information. The government of Australia even sent additional representatives to be on hand in Washington, an indication that they wanted immediate and on-the-spot briefings. The British had little choice but to meet with dominion officials in Washington, although they vowed that the dominions would not become a part of the negotiating process and there would be no quasi-Commonwealth conference held on the sidelines. They had to preserve their freedom of unilateral action.13 Duty to the Commonwealth would neither obstruct nor delay the conclusion of a financial agreement. But London could not avoid some kind of meeting. At the first Commonwealth briefing, Liesching disclosed some, but not all, of the details involved in the Anglo-American stand-off over preferences. He did not refer to the connection between preferences and a loan, reasoning that if the dominions were aware of this condition their governments might denounce the talks, thereby compromising the loan. Instead he focused on the problems of bilateral negotiations which arose as a consequence of the renewal of the RTAA. He referred to American formulas to link the reduction of tariffs to the elimination of preferences, but emphasized the British refusal to comply. As for residual preferences, he denied outright that the UK would tolerate their elimination without satisfactory compensation.14 He did not worry that the dominions would find out that the briefing was incomplete. Lord Halifax, Britain’s ambassador to Washington, on the other hand was displeased with their ‘half-truths’, although he agreed it was best ‘not to alarm the Dominions prematurely and perhaps unnecessarily’.15 It was acceptable to keep ‘one skeleton in the cupboard’ because full consultation would eventually take place.16


This briefing did not silence the suspicions of dominion officials that imperial preference was in trouble. The Australians demanded precise information about the future of preferences and whether any obligations associated with the financial agreement would affect them. The underlying issue was obvious: would the British enter into an arrangement which would bind the dominions, thereby violating their sovereignty? Hardly surprisingly, Liesching evaded the question, explaining that the purpose of the Anglo-American discussions was to determine ‘whether or not there would be a presumption of success for the more general commercial talks in … 1946’.17 To assuage concerns about being implicated, Liesching promised that ‘no commitment involving Dominion interests would be undertaken without proper intraCommonwealth consultations’.18 Clearly he did not regard the briefings in Washington as adequate consultation. These less than forthright assurances belied the ideal of a special Commonwealth relationship, highlighting instead the practical difficulties of reconciling individual national objectives with collective good. The British subsequently held a private meeting with Australian officials who remained deeply concerned about preferences and the tack Britain was taking generally. McCarthy led the interrogation by asking whether the British intended to eliminate unbound preferences or agree to give up the preferential treatment bestowed on British products in Australia. Liesching insisted that Britain would have to reach prior agreement with the dominion governments. He repeated that the commercial proposals under consideration were not binding because they were preparatory to an international conference.19 Thus Liesching denied again that Britain was entering into any obligations or that the outcome of the Anglo-American commercial negotiations would affect the dominions’ positions. The representatives of New Zealand and South Africa were quieter, but this did not indicate an absence of concern. When Carl Berendsen, New Zealand’s minister in Washington, cabled his prime minister after the first meeting with Liesching, he cautioned that the terms of the financial agreement might interfere with New Zealand’s freedom to receive and extend preferential tariffs.20 Liesching understood that New Zealand’s representatives, along with those from South Africa, had accepted his assurance that Commonwealth consultation would take place in order to silence Australian criticism even though they knew ‘I was hedging to some extent in my answers’.21 Lester Pearson also met with Keynes and Liesching, who told him that the financial and commercial sides of the negotiations were linked


insofar as a problem in one part of the negotiations slowed all other areas under consideration. Pearson understood that disagreement over imperial preference had stalled the loan negotiations, though he did not realize that the US had attached a commercial quid pro quo to financial aid.22 British officials frequently confided in Canadian bureaucrats, but this time they left Pearson in the dark. This exercise in Commonwealth consultation did not convince British negotiators that there was much value from the process. There was a plaintive tone in Robbins’ summaries of the Commonwealth meetings. In his refreshingly unguarded diary entries, he denied that consultation brought about greater understanding of, or sympathy with, one another’s objectives. Robbins felt only frustration at the politically motivated consideration shown to the dominions. I wish I liked the antipodean Dominions more than I do. And I wish that some of our colleagues at home did not like them so much; for they often seem to get a degree of consideration quite disproportionate to their political or economic value to us.23 Genuine consultation was more necessary than ever, however, because the British were moving closer to a definite position regarding the contraction of preferential tariffs. London knew that without the removal of ‘the bogey of Imperial Preference’ the loan was in jeopardy.24 US public opinion polls confirmed that three of every four Americans opposed a loan to Britain.25 The British did not dispute that Article VII obligated them to alter imperial preference. ‘We are committed by Article VII to the principle of elimination.’26 With their obligations as well as political expediency in mind, the British delegation devised a set of guidelines to reduce preferential tariffs at the international trade and employment conference, then tentatively scheduled for the spring of 1946. Always with the proviso that changes to preferences necessitated adequate compensatory cuts in the tariff rates of other countries, and that imperial preference would not be abolished in the first round of negotiations, the British were willing to agree that there would be (1) no new preferences, (2) no widening of existing preferential margins, and (3) cuts in the general rate of duty which would automatically eat into, and possibly eliminate, the preferential margin. There were two benefits to these proposals. First, these guidelines helped bring the US and UK commercial negotiations closer to agreement, a precondition for finalizing a loan. Second, they showed the


British were being cooperative. If the Anglo-American negotiations still failed, it would be because the Americans had been unreasonable over preferences, in which case the British believed they could be sure of the sympathetic understanding of the dominions: ‘however lukewarm some of them may be regarding present preferential arrangements, [the Dominions] would certainly rally to our support if we were threatened in this way’.27 On the other hand, the formula was likely to incite conflict in the Commonwealth because the proposal came exclusively from Britain. Where was the consultation, and on a matter which could only be determined collectively? As a matter of principle, some of the dominions would likely reject the formula or refuse to commit to it. Rejection or non-commitment could have disastrous implications for the loan negotiations. Consequently, Liesching was unsure whether he should divulge the three-part proposal to the dominions. Addison, the secretary of state for dominion affairs, now insisted on frank exchanges with dominion representatives.28 Britain would be acting in bad faith if it withheld this information. Moreover, the importance of securing the dominions’ consent for the formula was so great that the British made up for their earlier caginess by initiating a three-tiered consultative process by midOctober: in Washington with dominion officials, in London with high commissioners, and in cables from the Dominions Office to dominion capitals. By formulating general proposals about the reconstitution of commerce, and then applying to dominion governments for their support, the British affirmed the long-standing practice of leading the way, in the expectation that the dominions would follow and work with the UK as a quasi-bloc in international affairs. In 1945, however, the circumstances and attitudes that made their lead acceptable to the dominions had all but vanished. In Washington, Liesching presented the British guidelines, as well as their rationale, to dominion representatives. He explained that by sticking to generalities Britain made no irrevocable decision about a single tariff in advance of international negotiations. Furthermore, the British endorsement of the formula depended on American acceptance of the link between reductions in preferences and other tariffs, as well as of the fact that some preferences would survive the first round of international negotiations. Despite repeated assurances that the British negotiators would take no step that affected the dominions without proper consultation, he admitted that the results of exclusive AngloAmerican negotiations would influence the dominions’ bilateral


dealings with the US. He justified British action because it would help the dominions in their bilateral encounters with the Americans by preventing the US from forcing ‘settlements on each without reference to the others’. He did not envisage a Commonwealth bloc, rather ‘the correct procedure would be intra-Commonwealth talks on the side’, and he cited the 1938 Canada–UK–US negotiations as a model.29 But what he regarded as a useful precedent had provoked accusations of betrayal during the war from Australia, New Zealand and South Africa when their cooperation in facilitating agreements between the UK, Canada and the US had been unrequited. Furthermore, although the Canadians had concluded a new tariff agreement with the British, they had come away from these negotiations with a sour view of their colleagues. In contrast, working directly with the US was more rewarding.30 Referring to earlier negotiations involving the modification of preferences highlighted the conflict of national interests and personalities; it did not exemplify the ability of the members of the Commonwealth to work together for mutual benefit. The Australians pressed Liesching to clarify the British stand on the principle of preferences, residual preferences, and the extent of the modifications the British were willing to make. Liesching and Robbins reassured them that preferences were not about to disappear. However, they were honestly speculative about the long-term prospects of preferences. A global commercial regime free of preferences was not implausible.31 Robbins came away from this meeting with his earlier impression of dominion officials confirmed: ‘Each delegation true to form – Canada first rate, South Africa debonair and friendly, New Zealand banal, Australia surly and unhelpful.’32 His personal impressions reflected the extent to which the British proposals diverged from the commercial policies of each dominion. The Canadian reaction to Britain’s willingness to contract preferences blended relief and jubilation. South Africa, with its gold reserves, could afford to be less concerned about dismantling preferential tariffs. New Zealand was more interested in preserving the right to impose the quantitative restrictions upon which the stability of its economy apparently depended. The Australians, however, relied on preferences to protect new industries and they were loath to give them up just as their economy was beginning to diversify. British confidence in Canadian officials led to another private briefing with Pearson. This time British officials disclosed all information about the dispute over preferences. Pearson immediately impressed upon them the urgency of finding a solution to deal with


the principle of discriminatory tariffs. In any dispute over preferences, ‘the British, whether right or wrong, would be bound to suffer’. Pearson advised Liesching and Robbins not to emphasize the uniqueness of the Commonwealth relationship to justify the exceptional treatment of preferences because it was not an argument the Americans would find compelling. Pearson judiciously avoided any discussion of the legitimacy of the British assertions about the nature of the Commonwealth.33 Mackenzie King and Dr Evatt both happened to be in London in the late autumn and British officials were keen to include them in discussions with the high commissioners of New Zealand and South Africa about the progress of the Anglo-American loan negotiations. However, British hopes that the prime minister and foreign minister of two influential dominions might endorse the British proposal were disappointed. To begin with, King refused to attend the meeting, sending Norman Robertson in his stead. Robertson acknowledged that the proposals were of great importance and were consistent with Canadian designs for postwar trade. At the same time Robertson, on King’s instruction, would not give the proposal Ottawa’s seal of approval. King was troubled by the suggestion that the dominions supported terms they had no part in shaping. King would not delegate even the semblance of responsibility to the UK for decisions which only the government of Canada could properly make. He confided to his diary that he had been wise to remain aloof while the British created an illusion of cooperation and consultation: ‘The whole purpose of this kind of meeting was make believe and have the public think the Dominions are being consulted.’34 Dr Evatt amplified King’s criticisms. In his view the Anglo-American talks had advanced too far without adequate consultation. Planning had now reached the point where the input of the dominions could only be negligible. He correctly attributed British involvement in American-sponsored commercial reform to London’s desperate need for financial aid. He conceded that Australian participation would be forthcoming, but he expected to advance a slate of modifications, many of them inconsistent with the obligations entailed under Article VII.35 Evatt’s determination to ensure that Australia was neither slighted nor compromised, combined with an irascible temperament, antagonized British officials without earning their respect.36 The representatives from New Zealand and South Africa were in the background in London. The acting high commissioner for New


Zealand had some reservations, but was generally undismayed by the proposals. In a telegram to Fraser, he indicated that approval would be straightforward: ‘I did not think you would refuse to consider reductions in preferences against worth-while reductions in the United States and other tariffs.’37 Heaton Nicholls, South Africa’s high commissioner, expressed some doubt about whether American tariff reductions would benefit the dominions but raised no substantive objections.38 Meetings with dominion officials in London exposed the problem of Britain negotiating bilaterally with the US and bringing the dominions on board at the last minute. This process raised basic questions about representation and the concomitant implications for cooperation. From the Canadian and Australian stands, clear conventions were established: no consultation, no cooperation. The Dominions Office completed the consultative blitz with a formal notification to dominion governments of the formula the British were proposing to use to contract imperial preference. Such guidelines were necessary, London argued, because the US Congress would insist that some progress be made towards the elimination of discriminatory tariffs. The telegram claimed that the agreement on preferences was not the price for financial aid, although there was an obvious connection. London appealed to the dominions for explicit support concerning preference as the UK had ‘no authority to speak for Dominion Governments in this matter’. Until their governments endorsed the proposals, the British commitment would remain tentative. Nonetheless the British missive indicated quite clearly that London intended to uphold its end of the Article VII bargain and reduce preferences in conjunction with lower American tariffs.39 The replies from Ottawa and Pretoria to the Dominions Office seemed unproblematic. As long as negotiators dealt with preferences in conjunction with lowering tariffs, Canada and South Africa welcomed Anglo-American preparatory work for an international conference. But they insisted that British commitments did not bind them. They respected Britain’s right to pledge itself unilaterally to the agreement on the negotiation of tariffs. Having fought for the principle of independent action, they could not now reasonably curb Britain’s independence.40 The response from New Zealand indicated that the Fraser government was sensitive to the distinction between individual and collective representation, but confident that national and group interests could be reconciled. The government offered tentative approval in recogni-


tion of ‘the paramount importance of bringing the present discussions at Washington to a satisfactory conclusion’. Wellington insisted, however, that Britain should make no definite agreement without prior Commonwealth consultation.41 The Fraser government was committed to working together because if the UK went forward, New Zealand would be brought along whether it wanted to or not. The Australians denounced the vapidity of Britain’s role in the negotiations, which they equated with the appeasement of interwar diplomacy, or ‘the line of least resistance’. In future commercial dealings with the US the Australians intended to be strong where the British were now being weak.42 Disapproval of the particular commercial agreement reflected Australian concern about its sovereignty. There was also doubt that they would ever conclude a satisfactory trade agreement with the US because the American wool lobby was already pressuring Congress to keep the duty intact. The secretary of agriculture, Clinton Anderson, was from a wool state and he would not be inclined to open the American market to foreign wool.43 Without a drop in the US wool duty the Australians would not agree to modify the preferences they extended or received. This could affect almost all bilateral negotiations in which preferential tariffs were at issue. The British tried to reassure the Australians that a satisfactory bilateral agreement was attainable down the road. Many American officials acknowledged the excessiveness of the wool duty and the British encouraged the Australians to refuse to modify preferences until the Americans agreed to reduce their tariffs once the international negotiations opened.44 British assurance was disingenuous. Liesching knew that the Americans were considering excluding wool entirely from international tariff negotiations. He withheld this information to protect the Anglo-American financial and commercial agreements.45 The partial disclosure did not remove Australian concerns or ameliorate relations between the UK and Australia.46 Prime Minister Chifley sent a supplementary telegram directly to Attlee refusing to bind his government to any obligations respecting preferences. Yet he also believed that Australia was not in full control of its trade policy: ‘any undertaking given to the Americans must be given jointly by yourselves and the Dominions’.47 Australia had had no share in making those decisions by which it must live. Consequently, Chifley discouraged the British from finalizing a commercial agreement which accepted, even implicitly, the contraction of imperial preference. For what it was worth, he would repudiate any agreement which implicated his government.


Chifley went beyond trying to stop Britain from working exclusively with the US. He presented Attlee with an alternative framework for economic recovery by rekindling the idea of a closed and self-sufficient sterling area.48 In Washington Stanley Bruce also promoted the sterling area proposal as an alternative to an international or Anglo-American settlement. He warned Ben Cockram, a British counsellor in Washington, of the dangers of linking the economic future of the Commonwealth too closely to that of the United States.49 The idea of Commonwealth and sterling solidarity appealed to some members of the Attlee cabinet because Britain could retain its independence and equality vis-à-vis the US.50 James Meade lamented those ministers who had recently ‘discovered the Empire’ and dismissed Bruce’s proposal as wholly unrealistic. ‘As if the contributions which Australia could make to our balance of payments was of any appreciable significance.’51 Abundant supplies of wool would not solve Britain’s complex economic difficulties and the sterling area’s dollar shortage would engender frustration among its members.52 Moreover, an exclusive commercial policy was contrary to Labour’s traditional stand on external economic questions. At bottom, the British also realized that their economic and political welfare depended on finding agreement with the Americans over commercial and financial policy. Agreement over preferences was a precondition to both. Consequently the British delegation remained committed to the general formula, which allowed the US and UK to clear the preference hurdle in the short term. Although there would be criticism in both countries, they could present the agreement as satisfying the conflicting demands of the American and British publics. As Liesching explained, ‘the UK would be able to emphasize that there would be no reductions in preferences without balancing reductions in tariffs and Americans could emphasize that the United Kingdom had agreed in principle to the reduction of preferences pari passu with the reduction of trade barriers, and that these reductions could be progressive’.53 Political concerns remained. The British cabinet was mostly concerned about the effects on the Commonwealth. Sir Stafford Cripps, president of the board of trade, insisted that under no circumstances would British decisions sacrifice or implicate the interests of the dominions. The backlash would be disastrous if the UK were ‘accused of selling them out in order to obtain financial assistance’.54 He was not concerned only for the autonomy of the dominions or the cohesion of their alliance. If the UK found itself in a position ‘where the Dominions would not support us’, Britain’s world position would suffer badly.55


The need to secure the dominions’ support grew by early November when the US and UK concluded a comprehensive draft agreement for far-ranging international economic negotiations. Cripps was satisfied with the draft because the Americans had agreed to the contraction of preferences in conjunction with global tariff reductions. Equally important, the latest iteration did not implicate the dominions in British commitments: ‘each country remains free to judge, in the light of the offers made by all the others, the extent of the contribution it can make towards the realization of the general objective’.56 Cabinet opinion was nonetheless cautious about working so closely with the US at the apparent expense of imperial and Commonwealth allies. The first lord of the admiralty harkened back to the events of 1931 as an alternative to the present arrangement. ‘After the financial crisis of 1931 we had refused to accept American dictation and had largely restored our position by our own efforts … in developing our Empire trade. If we could not get better terms from the Americans … was it not worth considering whether we could not do the same again?’ The myth endured that imperial preference was a panacea for the Commonwealth’s economic problems, as well as the assumption that the imperial option was an effective remedy for Britain’s general ills, but senior cabinet ministers did not swallow it. Cripps and Hugh Dalton, now chancellor of the exchequer, were the most powerful economic ministers and they supported the US draft trade charter because it ‘reflected the primary objectives of policy which we wish to follow as an exporting nation’. On 6 November the cabinet agreed to proceed along the lines of the American draft trade proposal.57 Nonetheless, the cabinet did not want to be bound to the document unless ‘we should be assured of the general support of the Dominion Governments’. A new missive was sent to the dominions assuring them that their concerns about preferences were safeguarded.58 However, referring to the completed draft widened the scope for dominion criticism. The replies to the second British appeal prompted complaints on subjects other than imperial preference. The staunchest objections came from the antipodean dominions, hardly surprising given their belief that British commitments inescapably bound them. Provisions affecting quantitative restrictions, export subsidies, industrial protection, exchange control and full employment were all unsatisfactory to the Fraser and Chifley governments.59 The British responded immediately. They reminded New Zealand of the benefits of the agreement: international cooperation, freer trade and improved economic conditions among all nations. Furthermore


the British had participated fully in the drafting of the document and could not now in good conscience withhold support.60 Because the British were willing to proceed alone despite the dominions’ reservations, New Zealand was forced to insist that Britain not compromise its individual interests. ‘We will of course participate … but we must feel completely free to put forward our own particular case on each issue. We think that this freedom of action might possibly be compromised in some way by our giving the acquiescence you seek and we regret that we are not prepared to accord it.’61 New Zealand’s conception of the organization of the Commonwealth association moved closer to that of Canada, Australia and South Africa. An already inflexible Australian position hardened. Chifley’s reasons for refusing to endorse the proposals blended anti-American sentiment, concern about the future of preferences, and frustration at Australia’s marginalization.62 The preference debate was further complicated by the fact that the most valuable preference Australia received was a quota on meat. The terms of the draft trade charter outlawed all quantitative restrictions, meaning such preferential quotas would be wiped out without compensation. The Chifley government insisted that they be able to negotiate preferential quotas alongside tariffs. These technical reasons added up to a political refusal to commit to the more comprehensive commercial agreement.63 Chifley asked the British government to withhold formal recognition of the American proposals because a British pledge implied that Australia was also bound to support the rules. As Canberra explained to the secretary of state for dominion affairs, Australia would be ‘inextricably involved whether we agree or not’.64 Last-minute attempts to get the Australians on side failed. For domestic political reasons they had to be able to explain to their electors that they ‘have not participated in the discussions … are not in any way committed to the proposals and … will join the international discussions with complete freedom to raise objections and to submit alternatives’.65 Australian complaints aroused despair and irritation in London. Meade lamented that Australia was ‘making a frightful nuisance of itself … by insisting on complete and absolute freedom from any shadow of commitment on any part of it’.66 The Smuts and King governments agreed to take part in future Commonwealth and international meetings, using the American draft as the basis for discussions, but stopped short of unconditional approval.67 Such a promise would violate their independence. Thus the Canadian reply included the usual caveat: ‘This communication … in


no way committed the government to a specific course, though it created a presumption that Canada would be willing to participate in the proposed conference and in any prior negotiations.’68 Although Britain had not secured the express support of the dominions, Cripps was undeterred: ‘[His] first reaction was that this could not be allowed to interfere with our plans.’69 National bankruptcy would undermine financial and commercial links with the dominions more certainly than the decision to accept a loan and the guidelines for the contraction of imperial preference. It turned out that clearing the commercial hurdle did not help the financial side of the negotiations very much. American and British officials were stalled over convertibility of sterling, rates of interest, and the size and form of aid. Keynes and the rest of the financial delegation had to work around political realities which limited the amount the US could offer. They also had to combat obstruction from London where some ministers and officials believed Britain should deal inflexibly with the US. Keynes’ health failed, strained by having to fight ‘a war on two fronts’.70 In the end London had to send a senior reinforcement to bring the negotiations to a close. Britain received $3.75 billion at 2 per cent interest and the US erased over $20 billion worth of Lend-Lease debt. The British had hoped for more money and better terms, but the Attlee government had to take what it could get. American expectations ran high that the finalization of the loan would bring about the end of imperial preference. As Clayton observed, without financial aid Britain would be ‘driven to the only alternative which she has … further strengthening of the Empire Preference system’.71 Now that the loan negotiations were complete he eagerly awaited British initiatives to dismantle the offending tariff, believing it had been paid for twice, first with Mutual Aid and now with the loan. The British government presented the terms of the financial negotiations, along with the Bretton Woods agreement which brought the IMF and IBRD to life, to the House of Commons in early December as a fait accompli. The commercial negotiations were not subject to ratification, but the terms of the preliminary Anglo-American agreement on trade entered the debate because on 6 December the US published the trade and employment proposals. To avoid a backlash in the US, the Truman administration had presented these as an American initiative even though they were the product of a joint AngloAmerican effort. This sleight of hand did not prevent an outcry in Britain where MPs drew connections between the financial package and the commercial proposals. Many believed the loss of preferences


was the price for the loan. Passions flared at the perceived attack on a Commonwealth institution. Robert Boothby, a Conservative MP, accused the Labour government of undermining Britain and the Commonwealth: ‘there is one mandate which His Majesty’s Government never got from the people of this country and that was to sell the British empire for a packet of cigarettes’.72 The Attlee government’s defence was dispirited. Attlee assured members of parliament that the contraction of preferences was contingent on sufficient compensation by other countries which would open new markets to the UK, Commonwealth and Empire.73 Other ministers explained that the government had already expressed its support for the terms and aims of the commercial proposals in the US draft and intended to work towards their realization. Churchill spoke up in defence of his involvement in the original Mutual Aid agreement. He had received assurances in 1942 that imperial preference was safe. The Attlee government was not bound by wartime commitments to dismantle preferences. But, he cautioned, economic war with the Americans was inadvisable.74 Churchill’s assessment of the likely outcome in the event of a failure to reach a commercial agreement with the Americans was compelling; nonetheless a desultory house voted on the financial agreement shortly before the Christmas recess. The Conservatives abstained. Twenty-three Labour backbenchers opposed it, but the Labour government’s majority was so large that these internal dissidents and opposition foes could not stop the bill or push Britain off a liberal economic path.75 The commercial and financial negotiations of 1945 confirmed that the Commonwealth was an alliance of nations with separate identities and interests, even though its members espoused similar principles, a common outlook, and valued a long association. It had become axiomatic that the first responsibility of Commonwealth governments was to promote the advantage and welfare of their respective citizens. Hence the dominion governments stated repeatedly and explicitly that British actions must not commit them. The dominions argued that the Commonwealth would not function as a bloc under British direction, at least not automatically or as a matter of principle. British officials were slow to grasp the reality of this. Charles Ritchie, a veteran Canadian diplomat, described how the British ‘took for granted in the most friendly, natural way’ that cooperation with Britain, even submission, was the essence of their special relationship.76 They were shocked and dismayed that the Commonwealth would not enter the postwar world as the third great power.


If the Commonwealth was not a bloc in world affairs, it was not obsolete or ineffective. It was emerging as a limited alliance, but there were some important advantages in cooperation. The dominions enjoyed access to privileged information (even though disclosures were incomplete). They also benefited by attaching themselves to a great power. Despite its weakness, the UK was far more influential than any of the dominions. As long as it remained powerful, the dominions would cultivate their relations with Britain. Disagreements would persist because suspicion was inevitable; but cooperation would continue because the benefits of association outweighed the consequences of solitary action. Despite the dominions’ refusal to follow a British lead, they all agreed to participate in the international economic conference which American and British officials had mapped out. Participation cleared the way for an international conference to reform the world economy, a process by which the dominions all stood to benefit. By attending the trade and employment conference, the dominion governments were joining a core group of eighteen nations, called ‘the nuclear group’, invited to determine the principles of postwar trade, as well as a larger group of twenty-three nations to initiate the negotiation of bilateral tariff agreements. Inclusion in the inner circle was a position that the Canadians and Australians in particular had sought throughout the war. While the dominions might resent the British lead and were circumspect about their commitments as opposed to those undertaken by the British government, they would not lightly spurn the opportunity to influence the formation of the postwar international economy, particularly when the differences arose over the process and not the ultimate goal. Moreover dominion leaders had to accept the realities of international politics. Not only were the dominions small players, they were still largely untested and the nature of their relationship with Britain remained somewhat ambiguous. By insisting that British authority was limited, officials from Canada, Australia, South Africa and New Zealand clarified their independence. To prove their mettle, however, they would have to await the start of international negotiations.

6 Waiting for the Geneva Conference to Begin: Commonwealth and International Progress along the Way, January 1946–April 1947

It had always been understood between him (Churchill) and President Roosevelt that we were not bound to the reduction of Imperial Preference. Such preferences were the slender silken but strong girdle which bound together the 70 million Britons scattered over the face of the world. It was no more, and no less legitimate than the American tariff.1 (L. H. E. Bury) There is no quid pro quo for Empire preference and to imagine that some possible tariff reductions in the United States tariff will provide compensating advantages is more than wishful thinking – it is sheer wilful [sic] self-deception.2 (Associated Chambers of Manufactures of Australia) Throughout the Anglo-American loan negotiations of 1945, the dominion governments had clamoured for information and inclusion in the decision-making process. In 1946 the tables were turned. Now Britain encouraged consultation with the dominions, in the hope it would lead to a collective approach at the coming international commercial meetings at Geneva. (Hereafter this conference will be referred to as the Geneva conference on trade and employment, or Geneva conference for short.) However, the governments of South Africa, Canada and Australia were not eager to meet in Commonwealth forums. In part their reluctance stemmed from the need to digest the US trade and employment proposals of December 1945 in national councils; Commonwealth meetings were premature. These three 156

Waiting for the Geneva Conference 157

dominions were also unwilling to gather in London because they did not believe the Commonwealth was the most appropriate or effective forum to consider trade policy. Only the Fraser government of New Zealand welcomed the prospect of Commonwealth consultation. As a result, there were no Commonwealth or international trade meetings until October 1946. The postponement of meetings, however, did not mean that everything was on hold in the intervening ten months. In fact, the economic and political circumstances of the immediate postwar period made it difficult for American and Commonwealth governments to implement free trade practices. Moreover, with the end of the war and the defeat of common enemies, the most powerful glue holding the wartime allies together dissolved. National interests superceded international objectives and cooperation. The body of this chapter examines the three preparatory meetings in this period, two for the Commonwealth and one for all of the members of the nuclear group invited to Geneva. For the Commonwealth, these meetings were held to clarify members’ policies as the British hoped to identify areas of cooperation and agreement prior to tariff negotiations in Geneva. The single international gathering revealed how participation in international gatherings would affect the workings of the Commonwealth. Would members of the Commonwealth stick together? Would they constitute some kind of recognizable bloc? Or would Commonwealth members simply disperse in the larger gathering, finding allies wherever they could? Although little concrete happened at these meetings, the interval from January 1946 until April 1947 was a telling period in the evolution of the Commonwealth, as it shifted gears from wartime to peacetime.

Two steps forward, one step back In the State Department campaign to secure congressional support for the loan to Britain, officials repeatedly linked financial aid to the end of imperial preference. As US under-secretary of state for economic affairs Will Clayton explained, without the loan Britain would have no option but to ‘tighten and cement the economic ties which bind the British Empire’ through the sterling area and imperial preference, and the US would have lost its best chance to enlist Britain to its freer trade cause.3 In an appearance on NBC radio’s University of the Air Dean Acheson, the under-secretary at the State Department, also linked imperial preference to the loan by explaining that Britain had ‘agreed to support the American proposals to reduce and eventually eliminate


these special privileges’.4 Thus, in selling the loan at home, American officials fuelled the expectation that imperial preference was the price Britain would have to pay. Congress finally ratified the loan in July 1946 for reasons that had more to do with the burgeoning Cold War than economic arguments about the demise of preferential tariffs.5 Nonetheless Washington still expected Britain to get rid of preferences. By the end of the year, the American commitment to freer trade was beginning to flag. In the mid-term election the Republican party, traditionally the advocate of high tariffs, gained a majority in the House of Representatives and the Senate. There was some reason to remain optimistic about Congress supporting the administration’s trade reform agenda. First, the Republican leaders of the Senate, Arthur Vandenberg, Robert Taft and Eugene Millikin, were moderates on tariffs who regarded the Democrats’ trade initiative ‘in a spirit of tolerant skepticism rather than active opposition’.6 Second, Vandenberg had recently converted to internationalism. He supported the spirit of the tariff programme, even if he disputed some of its details. Finally, the leaders of Congress trusted Clayton to respect the limits of the RTAA. As long as he did not exceed statutory parameters they would not interfere with his negotiations. However, the Truman administration would have to be assiduous about cultivating domestic support for trade reform, which increasingly seemed a secondary concern after the Soviet Union, the atomic arms race, and concerns about inflation and food shortages.7 At the end of 1946, the US was still on the free trade path, but the road was bumpy and uncertain. The restraints on Washington’s leadership undermined foreign countries’ enthusiasm for freer trade. As one Canadian official observed, ‘Multilateralism is becoming a dream which no one really believes in any longer and for which very few are prepared to make an immediate sacrifice of their power to manoeuvre.’8 American commercial ‘missionaries’ thus travelled to Britain and the dominions to encourage them to keep the free trade faith despite the absence of strong leadership from the US. But the problem was larger than Washington could solve with a few pep talks. In the UK, the government’s top priority was the revival of its export trade. The decision to resume the export of manufactured foodstuffs (biscuits, chocolate, sugar, jam) on a small scale, despite continued rationing at home, highlighted the primacy of reopening channels of trade.9 Labour shortages, scarcity of raw materials and pent-up domestic demand interfered with production for export. Still, by the spring of 1946 the volume of British trade was rising steadily while imports were dropping and the prospects for continued growth were promising. The


number of people employed in export-producing sectors was increasing and overseas demand was ‘far in excess of ability to supply’.10 All the while, British officials were analysing where goods could be sold.11 There was room for expansion in South Africa and Canada, more in Australia, less so in New Zealand.12 One of the main barriers to British exports was the high rate of preferential duties. British officials thus expected that they would enter into bilateral negotiations with the dominions at the international tariff conference.13 The American expectation that the bulk of the work to reduce preferences would be carried out in negotiations between Britain and the dominions reinforced the pressure to hold intra-Commonwealth negotiations.14 Direct negotiations between Britain and the dominions conjured up unhappy memories of the Ottawa Imperial Economic Conference of 1932. Lionel Robbins, now outside the government, feared that a repetition of such a conference ‘might well endanger what was left of the Commonwealth connection’.15 The ruthless pursuit of national selfinterest could tarnish the image of the Commonwealth as a cooperative association of nations and destroy the belief that its members identified and worked towards common interests. The costs would be enormous, not merely affecting ‘future trade relations with the Dominions, but … the political unity of the Empire’. The pundits at the Financial Times warned that ‘no trade advantages, however impressive, could adequately compensate us for the loss of the sympathy and moral support we now enjoy in the Dominions’.16 The Commonwealth would suffer even more by revisiting the imperial economic conference in Geneva if the shortcomings of the historic association were exposed to the rest of the world as part of an international bargaining process. Thus British officials hoped to iron out their differences on preferences at preliminary Commonwealth conferences before appearing on the world stage. British negotiators did not focus primarily on the dominion markets. Rather, Britain expected to trade preferences for improved access to the booming American market. These negotiations would be complicated by the necessity of consulting with the beneficiary of a preference. Consequently, Britain hoped the dominions would list all the preferences they received, rank them by importance, and decide which ones they would give up if American concessions were ‘generous’, ‘only indifferent’ or ‘niggardly’.17 The progress made in Commonwealth discussions would then have a direct impact on the main set of negotiations. While the Attlee government was intent on finding out which preferences the dominions were willing to give up or modify, it was subject to a barrage of appeals from commercial lobby groups urging it to


retain imperial preference. The Empire Industries Association informed Lord Addison that it objected to ‘any reversal of the policy of Imperial Preference which has proved itself in the past and is essential to the reestablishment of every part of the Empire’.18 The British Empire Producers’ Organization and the Tobacco Federation of the British Empire went further, arguing that preferences should be increased on tobacco, wines and spirits.19 The Labour government attached less importance to these lobbyists than a Conservative government would have, but it was not immune to their collective pressure. Still, officials knew they would have to alter preferences substantially. The recovery of British trade depended on it. Political considerations further complicated British preparations for international tariff negotiations. Labour’s leaders understood that retaining preferences, and preserving the imperial tradition they symbolized, would reinforce British autonomy and greatness. Consequently, Prime Minister Attlee denied that imperial preference was doomed simply because the US objected to the tariff system. American tariffs were notoriously high, which disqualified the US from pointing ‘the finger of scorn’.20 However, intransigent self-righteousness was not an option. The challenge for British politicians was to identify a middle ground, whereby they gave enough away to satisfy the Americans while retaining enough of the preferential system to demonstrate their commitment to the Commonwealth. The key to success was the dominions’ cooperation. But in the early months of 1946 their tariff policies were not clearly in line with those of Britain, despite prodding, encouragement, even reprimands. London was least worried about Canada. The King government remained steadfastly committed to a multilateral approach to the regulation of trade practices and international negotiations to reduce tariffs. In fact, Ottawa took what steps were within its power to help Britain stay on the liberal trade path. In February 1946, Ottawa agreed to give $1.25 billion to the UK over five years. The amount was extraordinarily generous, equalling 10 per cent of GDP. Measured comparatively, it was also unequalled. The Canadian economy was one-tenth that of the US, the Canadian loan one-third of the American sum.21 The loan served Canada’s economic and political interests. The Canadian economy would benefit from a multilateral trade network. Equally important, Canadian exports would retain a market presence in Britain, thereby preventing Canada from becoming enmeshed in a continental economic framework which would result in ‘Canada … soon com[ing] out of the British Commonwealth’.22


As Canadian policy-makers prepared for Commonwealth and international trade meetings, they continued to assess preferential tariffs with a dispassionate eye. Canada would use preferences to extract concessions from the US. The government did not make any promises about retrenching preferences before negotiations began, but promised it would approach the Geneva conference with ‘an open mind, ready to co-operate and ready to do all we can to ensure its success’.23 By mid-year, however, Canadian mandarins were increasingly apprehensive about the likelihood of successfully negotiating an agreement on tariffs and trade. America’s leadership on commercial reform was eroding with every passing day and only the US was in a position to galvanize other nations to lower their trade barriers by opening its market to imports.24 William Clark, the deputy minister of finance, worried that by the time the US realized it had to act, it would be too late and ‘the pattern of trade may have hardened beyond any hope of change’. If this happened, Clark considered whether Canada would not be best served by throwing its economic lot in with the US in some kind of free trade zone. But Clark resisted giving in to what he regarded as the cynical option: …whether because of a jaunty idealism or a realization of how much the prosperity of Canada depends upon multilateralism, I try to resist it [a continental arrangement]. Officially, therefore, I continue to fight for multilateralism and I am looking for some way in which the program for achieving it can be galvanized.25 Canada continued to back the multilateral option as the most desirable outcome. However, there were other paths to prosperity in the event the campaign to liberalize international trade failed. Even though Evatt had taken ‘violent exception’ to Australia’s exclusion from the drafting of the trade proposals and the cabinet remained sceptical about the trade liberalization programme, there was no doubt that Australia would attend the Geneva conference.26 Abstention would mean ‘either complete isolation or, at best, exclusion from the inner circle’.27 Participation would allow Australia to help create ‘the most favourable conditions for Australian economic life and international trade’.28 But Canberra’s delegation would try to modify the trade and employment proposals. Some outside observers interpreted Australia’s criticism of the trade and employment proposals as an excuse to keep its own tariffs high.29 There was some truth in this, but it did not fully explain the concerns behind Australian foreign economic policy. Australian criticism grew


out of scepticism about the proposal’s likelihood of success.30 Australia’s other major concern was of a postwar depression. Canberra wanted to be able to control trading practices and relationships to try to shut out a depression or any other unwelcome economic development. Australian officials also approached the American proposals with some trepidation because they saw in them an American expansionist agenda.31 Participation in a multilateral system would necessarily weaken the economic links between Britain and Australia, and force them both to have more extensive economic relations with the US. Australia could only be overwhelmed in its dealings with an emerging superpower. However, since severing ties with the US was not possible, the alliance with Britain and the Commonwealth became a valuable counterweight against America’s crushing influence.32 The practical benefits of association with Britain were not the only, or even the most important, factor in shaping Anglo-Australian relations after the war. Britain was now weaker, economically, militarily and politically, than Australians had imagined possible. Canberra believed it was in Australia’s best interests that Britain should recover, and quickly.33 Australia contributed to that recovery by extending a small loan of A£25 million to Britain in March 1947. The cooperative financial relationship was mirrored in the political realm. In August 1946 Evatt reported that Anglo-Australian relations had never been better. Of course, he added, improved relations did not translate into subordination to Britain in international affairs. The advances made in articulating ‘clearly and firmly the view of the Australian nation’ were irreversible.34 Canberra would pursue ‘the policy of a more self-reliant Australia’ which, however, was perfectly compatible with a consciousness of Australia’s ‘kinship with Britain’.35 The Australian approach to imperial preference embodied the two strands of Anglo-Australian relations: the pursuit of national selfinterest and an enduring commitment to the British connection. Australians regarded the tariff as their ‘birthright’ and they refused to give it up in exchange for ‘a mess of American dollarage’.36 Agricultural lobby groups made it clear that they wanted preferential treatment to persist. The Victorian Dairyfarmers’ Association advised the prime minister to ‘adopt an uncompromising attitude toward the retention of preference within the British Empire’.37 At most, government officials believed concessions affecting preferences should be limited to a 50 per cent reduction in the first round of negotiations because the RTAA prevented the Americans from exceeding that limit in their tariff reduc-


tions.38 Labor ministers hoped this cap would contain a domestic backlash against the modification of preferences. A significant reduction in the US wool duty would go a long way to encourage Australia to contract its preferences. American officials well understood the importance of wool to the outcome of its tariff negotiations with the members of the Commonwealth.39 Despite the strength, organization and early mobilization of the American wool lobby, the US gave quiet, unofficial assurances of a concession.40 But unofficial reassurance was not enough to guarantee that Australia would contribute to the contraction of imperial preference. New Zealand’s attitude towards the Geneva conference was largely determined by the ban on the use of quantitative restrictions in the US trade and employment proposals. Apart from this provision, New Zealand saw the document as commendable, addressing many of New Zealand’s most pressing commercial concerns. The opportunity to expand markets was attractive too as New Zealand forecast that there was no room to increase its exports in the British market. Officials understood that the proposals would advance the twin causes of security and prosperity.41 Thus Wellington informed the State Department that it ‘welcomes the proposal to set up an International Trade Organisation’.42 But that did not mean that New Zealand would endorse the proposals. Rather, the challenge was to make the terms of the ITO congenial to its particular economic circumstances. New Zealanders recognized that their economy was vulnerable to international market forces, especially because of over-reliance on a few agricultural exports. The Fraser government intended to address this cause of economic vulnerability by increasing its manufacturing sector, ‘without pretentions to being able to change into a highly industrialized country’. This domestic economic policy complicated Wellington’s compliance with the trade and employment proposals because new industries would require protection through import selection.43 So even while trying to adapt New Zealand’s economy to suit the terms of the US proposals, the government concluded that import selection was nonnegotiable. On this question New Zealand would have to confront American opposition, to whom quantitative restrictions represented ‘the incarnation of commercial evil’.44 Their moral and ideological opposition to it matched their anathema for preferences. New Zealand’s determination to retain the right to use quantitative restrictions encouraged Wellington to scale back preferences in the hope that cooperation on one front would moderate American opposition on another.45 But willingness to contract the preferences that


Wellington extended stopped short of agreeing to give up the preferential treatment New Zealand’s products enjoyed in the British market, especially for meat, wool, butter and cheese. Nash was willing to consider a modification of these preferences if the US reduced its tariffs on meat, butter and wool.46 Until the American bargaining position was known, no one would ‘take too much risk in jeopardising our export trade’.47 In the medium term, New Zealand could rest assured that its place was secure because London and Wellington renewed bulk purchase agreements for meat and dairy products until 1950.48 Uncertainty about the likely success of international commercial liberalization, enduring sentimental attachment to Britain, high demand for agricultural commodities and the relief of being able to pay for these goods with inconvertible sterling, made the agreements sensible. It in no way signalled a retreat on the part of New Zealand from the ITO proposals, but it did indicate how difficult it would be to implement freer trade practices. South Africa was also concerned about the practical implementation of the US trade and employment proposals. The government wished to restrict imported food for the sake of domestic suppliers.49 This kind of state intervention contravened the letter and spirit of the ITO proposals. South African industries also required protection, such as preferential tariffs offered, to encourage growth and development.50 S. F. Waterson, South Africa’s minister of economic development, wondered whether South Africa was ready for the ITO proposals in light of its present stage of economic development.51 As for preferences, Smuts did not regard South Africa as being under any obligation to abolish or narrow them. Rather, Smuts believed the onus rested with the US to open its markets to make the liberalization scheme succeed. South Africa would contribute to the liberalization process only ‘in return for real American tariff concessions’. South Africa also repudiated the American notion that imperial preference was an iniquitous and exploitative remnant of Empire. The rewards of the preferential system were reciprocal. As Waterson explained, the preferential system had proven its value. Commercial liberalization had not.52 The retention of preferences, however, would create political problems. With the return of peace, the Nationalist opposition to the Smuts government deepened. Imperial preference was one of several controversial issues taken up by Nationalist MPs to harass the government. The challenges of peacetime, both domestic and international, were also taking a toll on a prime minister now 75 years old. Smuts admitted


at the start of the new year that the strains of leadership were wearing him down.53 The politically divisive climate in South Africa did not dissuade Smuts from sending representatives to Commonwealth and international trade meetings, although he was always looking over his shoulder to gauge public opinion back home. With Smuts at the helm, South Africa would remain tied to the Commonwealth. But it was not an association that entered the postwar world with a clear purpose or with any idea of when and how its members might cooperate. The limits of Commonwealth cooperation in world affairs would only become evident once the constituent governments stopped dealing with theoretical questions and applied themselves to real problems. They would not have to wait long.

Church House, London: the first preparatory meeting of the Commonwealth, 3–11 October 1946 On 3 October, in his opening address to a gathering of Commonwealth delegates and observers, Sir Stafford Cripps laid out Britain’s external economic position starkly and unequivocally. Although the president of the board of trade acknowledged that there would be debate and disagreement about some of the provisions of the US draft charter for an International Trade Organization which had evolved out of the earlier trade and employment proposals, London remained ‘convinced that something along these lines achieved by international agreement is a great hope for the future prosperity of the world’. He left his audience in no doubt that Britain attached the greatest importance to the success of the international commercial discussions which would be of ‘vast importance to the peoples of the world’. The outcome would not only decide whether prosperity or deprivation would prevail, but would also determine whether peace endured. From start to finish the minister’s speech resembled a sermon, praising the virtues of economic liberalism and denouncing the vices of ‘defensive economic measures’. Cripps also laid out the parameters and objectives of preliminary Commonwealth talks. He made it clear that under Labour’s direction there would be no repeat of the disillusioning experience of the 1932 Ottawa meeting. He made no mention of the Commonwealth acting as a bloc at the international trade and employment preparatory meeting scheduled to begin immediately after the Commonwealth conference ended. He repudiated the idea of devising common policies. Every government had to think of its national interests first. ‘Though we may have a world international perspective each one of us must be first concerned


with those whom we represent, our own populations,’ Cripps declared. ‘We shall judge all proposals put forward by the effect they will have upon our own country.’ He went on explicitly and pre-emptively to oppose any exclusive Commonwealth schemes for commercial organization. ‘The Commonwealth’, he advised, ‘must stay in the wider picture of the world as a whole.’54 His comments made clear that the objective of Commonwealth discussions was to assist in the success of the next round of international trade talks. By setting the bar of expectations so low, Cripps virtually ensured that the meeting could be a success. Over the next eight days, Commonwealth officials considered several aspects of commercial reconstruction, such as employment policy, industrial development, quantitative restrictions and state trading. The range of the dominions’ objections to the provisions of the US draft charter necessitated far-reaching discussions, with the tariff debate one of many bones of contention. None of the participating governments was keen to consider specific tariffs and preferences. The southern dominions had not yet completed their assessments of which tariffs to keep and which preferential margins to narrow. The discussion was therefore limited to raising objections, testing reactions and gauging one’s position relative to the rest of the Commonwealth. Although specific tariffs were not under consideration, delegates did consider the rules laid down in the US draft trade charter covering the negotiation and long-term fate of preferential tariffs: no new preferential tariffs, reductions in the MFN rate automatically to lower the margin of preference, and margins of preference not to be widened. As Stephen Holmes of the British delegation explained, the implementation of these rules would whittle away the preferential system. Britain conceded that the dominions were not bound to uphold these rules. Their obligation under Mutual Aid was only to paticipate in tariff negotiations. The dominions did not repudiate the rules of the agreement, but rather focused on technicalities and procedural loopholes to limit their obligation and strengthen their bargaining leverage. For instance, the dominion governments wondered about the connection between the negotiation of new tariffs and the implementation of a trade charter. Australia in particular was reluctant to commit itself to a new tariff schedule in advance of the finalization of the charter and took the lead in arguing that the elimination of preferences should be achieved gradually. According to Coombs, the 50 per cent cap on US tariff reductions justified a comparable cap on the reduction of preferences. Britain, Canada and New Zealand concurred that this was a reasonable proposition and that there was no binding agreement to force them to


eliminate preferences in one fell swoop. Dr Coombs also raised the question of whether an existing preference could be extended to a member of the Commonwealth and Empire which had not previously received it. He argued that the preference would not be new, just the recipient. In effect he was trying to justify the expansion of the preferential system, which flew in the face of American objectives. Even though the discussions about tariffs and related matters did not lead to a common policy, all delegates took away a clearer understanding of American expectations, as well as the extent and substance of British and dominion contributions to the liberalizing process. The discussions were constructive and genuinely helpful.55 Certainly the British were satisfied with the meeting. The Australian contribution was particularly reassuring. Coombs and the other members of the Australian team had not diluted their opposition but they were willing to work from within to reform the rules and the organization. The British were gratified that Canada’s policies and objectives were close to their own. New Zealand was a disappointment, having sent an unprepared delegation. The British were optimistic, however, because the New Zealanders seemed to be coming to terms with the problems involved in the commercial proposals. South Africa’s representatives, with their generally pessimistic outlook, had not surprised the British.56 Australia’s final report on the meeting typically praised its own excellent contribution. More unusually, James Helmore and James Meade of the British delegation also received praise. But the other dominion delegations came in for varying degrees of criticism. According to Australian officials, the Canadians were sensible and competent but ‘without any notable flair or very distinct influence on the course of the proceedings’. New Zealand had clearly underestimated the import of this meeting and was utterly unequipped to deal with the subjects raised. South Africans caught the most severe criticism. Australian officials concluded that ‘No economic thought in the last 20 years seemed to have penetrated the mind of their leader.’ Still the talks were deemed to be constructive. Australian delegates particularly valued the personal contacts that had been made and which they believed would be helpful in subsequent negotiations. ‘Agreement comes much more readily when personal goodwill exists on both sides.’57 In a surprising reversal of tactics, Australian officials suggested that Commonwealth delegates should continue to meet during the forthcoming international conference. South Africa and New Zealand welcomed this suggestion.58 So did the UK, which wanted to find a way to carry over a Commonwealth presence in the international community.


Canadian officials, on the other hand, had had no desire to participate in a Commonwealth bloc, fearing Britain would try to orchestrate a common policy or push for Commonwealth centralization. The Canadians were pleased that the meeting ended without any commitment or coordination. ‘The talks were informal and exploratory and were conducted amicably and objectively. While no decisions were sought or reached there was a free exchange of views which should prove most helpful in the Preparatory Committee sessions which open this afternoon.’ In addition, Canadian officials could only be delighted with Britain’s firm commitment to liberalization and cooperation with the US and by Australian ‘moderation’.59

Church House, London: first session of the preparatory committee on trade and employment, 15 October–26 November 1946 Immediately upon the conclusion of the Commonwealth meeting the doors of Church House opened to all members of the core or nuclear group of states invited to the Geneva conference. Only the Soviet Union was absent. The Soviets’ excuse was that a shortage of staff made a thorough study of the proposals impossible.60 Still, in the hope that they would attend the Geneva conference the following spring, which was Moscow’s stated intention, American officials took every precaution to ensure that the discussions in London did not alienate the Soviet leadership or open the US to accusations of causing the ‘final break in economic relations between east and west’.61 Britain and the dominions were also concerned about the absence of the Soviet Union, although that did not detract from the importance of this meeting: it was their first opportunity to meet with American representatives to discuss trade policy as a group. Committees were set up to examine employment policy, commercial policy, restrictive practices, commodity policy and the organization of the ITO itself. Preferences were taken up in the commercial policy committee, chaired by Dr Coombs. The challenges confronting Coombs were many and complex, beginning with the three rules governing the negotiation of preferences, in particular the provision that cuts in tariffs would automatically narrow the margin of preference (Article 18 (1) (b) in the updated suggested charter). The dominions’ opposition to this clause stemmed from the fact that their economies were less developed than those of Britain and the US. For many of them the preferential margin doubled as a protective barrier. Unwilling to contemplate reduc-


tions if their actions diminished protection, the dominions argued that the automatic rule would limit the accomplishments of the tariff bargaining process.62 Dominion representatives suggested instead that they focus on tariffs that were exclusively preferential, where they could be much more forthcoming with concessions. Britain sympathized with this position, although with its prior endorsement of the automatic rule it could contribute little to this debate.63 Indian officials made another suggestion to circumvent the difficulties associated with the automatic rule: raise the preferential rate rather than lower the higher MFN rate. In this way, protection would endure although the preferential margin would diminish. The suggestion received a cool response from the British whose exports to the dominions would suffer if preferential rates were raised.64 Coombs, also reluctant to endorse the Indian proposal, suggested that if the preferential rate were reduced in tandem with the MFN rate, some margin of preference might be maintained.65 Whether or not this method was adopted, Coombs insisted that ‘the parties to … negotiations must be free to engage in the negotiations in ways which are determined in the light of the circumstances of the case and in which there is no prior determination as to the nature of the bargain which they reach. The bargain should be one freely agreed upon by both sides, without any necessary prescription in advance as to the nature or form of that agreement.’ In spite of his objection to the automatic rule, he reassured the US that Canberra would not enter an official reservation against it, a gesture he said would be ‘ungracious’. Harry Hawkins of the US delegation refused to delete the automatic rule from the charter. At the same time, he misleadingly implied that enforcement of the provision might be flexible and mollified concerns that the automatic rule would preclude a ‘mutually advantageous’ settlement.66 The members of the Commonwealth came away convinced that the US had backed down. As R. J. Shackle of the UK team pointed out in a parallel Commonwealth meeting, Hawkins had admitted that ‘the USA would not stick very firmly to any rigid interpretation of the word “automatically”.’67 But Hawkins and the other American officials left the meeting convinced that they had prevailed by keeping the automatic clause in the draft charter. Clair Wilcox subsequently reported to Washington that ‘after a long struggle’ the principle of automatic reduction would become operative ‘thus removing preferences from the area of direct bargaining against US tariffs’.68 This interpretation completely misrepresented the British and dominions’ belief that the automatic rule would be enforced loosely and contradicted a


point they had made from the very outset: that they would only alter preferences in exchange for lower US tariffs. Because neither the British, American nor dominion representatives realized that their understandings diverged, they moved to other issues falsely confident that there was general understanding and that tariff negotiations could proceed smoothly. A minor objection to the US treatment of preferences in its draft charter related to wording. In the section outlining general commercial provisions (Article VIII), American drafters described the relationship between the members of the Commonwealth as one in which ‘there existed on July 1, 1939 common sovereignty or relations of protection and suzerainty’.69 A senior member of the Department of External Affairs in South Africa complained to Canada’s high commissioner that such an expression did not accurately define the constitutional position of the Union. Sovereignty resided in the South African parliament.70 However, it fell to Canadian officials to point out this inaccuracy at the Church House meeting, even if they were not sure how to define their sovereign status. As the high commissioner, Norman Robertson, observed ‘Sovereignty is as mysterious as divinity.’ Regardless of the legal or theoretical subtleties of Canada’s status, Robertson was convinced the current description was inappropriate.71 Britain was receptive to such a complaint and agreed to revert to a form of technical drafting in which groups of countries were listed rather than defined.72 The first priority of Canada’s diplomats was to defend national status. However, it was not their most significant contribution to the meeting. They made a greater impact in connection with the British concern about the impression left by Article 18 (1) (a) which called for all participants to enter honestly into ‘reciprocal and mutually advantageous negotiations’ leading to ‘the substantial reduction of tariffs … and to the elimination of import tariff preferences’. The clause went on to stipulate that no existing commitments would ‘be permitted to stand in the way of action with respect to tariff preferences’.73 British officials insisted that their obligation was only to modify the preferential system, not eliminate it. The Americans accepted this interpretation. In a private Commonwealth meeting, however, the Canadian representatives objected to this reservation to the surprise and shock of all in attendance. Instead, they argued that all prior commitments should lapse, if not immediately then at least gradually.74 McKinnon went on to explain that Canada would not continue to bind preferential margins, either the old ones or the new tariff rates agreed to at Geneva.75 In a new interna-


tional commercial regime, there would be no place for the remnants of the Ottawa system. As the Australian summary of the meeting noted, ‘In their [Canada’s] own words, they considered that the Ottawa agreement would be superseded by the new Chapter which would be so much better than the restrictive measures of the former.’76 Britain was the first to protest. Helmore pointed out to McKinnon that unbinding preferential margins was ‘tantamount to de facto denunciation of part of the Ottawa Agreements’ because the bound provisions constituted the core of the preferential system. The rest of the Commonwealth also voiced their opposition. Unbinding margins of preference would weaken the bargaining position of the recipients of Canadian preferences who intended to trade preferential advantages for lower tariffs elsewhere. If Canada persisted in its stated course, Britain and Australia threatened to retaliate by unbinding the margins they extended to Canadian exports.77 This hardball tactic was not a disproportionate response to the Canadian announcement. Ever since the negotiation of the Atlantic charter, Britain had concentrated on American opposition to preferences. It had done a reasonably good job fending off the assault, including at this meeting. The Canadian announcement represented a much more serious threat to the system because it came from within. The Canadians tried to soften the blow by promising to secure the approval of the beneficiary of the preference before enacting changes and by giving compensation for their cooperation. They also emphasized the benefits of unbinding; it would be regarded as a major concession and would divert attention away from the contraction of individual preferences. Ottawa tried to mollify its colleagues by explaining the motives behind its decision. The Liberal Party had objected to bound margins ever since they were first introduced in 1932. At that time the Liberals formed the opposition and therefore could do nothing more than denounce the provision. Now Liberal politicians had a chance to act on a long-held conviction. More urgently, the US was pressuring Canada to modify margins of preference without consulting the beneficiaries.78 The understanding of Britain and the other dominions of the reasons behind the Canadian stand did not alleviate their opposition. There was, however, a reprieve. The Canadians did not announce their intention publicly or to the other nuclear nations. But Canada’s determination to free itself of bound margins persisted. Tariffs and preferences were not the only issues that absorbed time and energy. As could only be expected, the Australians continued their


campaign for full employment provisions.79 Industrial development also figured prominently. Jawarlahal Nehru of India defended the right of industrializing countries to use protective devices to promote development. These were, after all, the same tools ‘which had brought wealth and industrial strength to other countries’, he argued.80 There was something in Nehru’s amendment. The American draft charter said nothing about industrial development and this omission confirmed that it was a document conceived from the point of view of nations with diversified industrial economies. From all accounts this meeting was a success. The delegations from the core countries tackled many difficult issues and for the most part found a basis for compromise and cooperation. Of the 89 articles in the US draft charter, the participants reached agreement on 74.81 Wideranging agreement was in part linked to the memory of the interwar years. The rivalry of the 1930s and the experience of the war were poignant enough to soften postwar expressions of national interests. ‘Filling the minds of most delegates no doubt were the painful memories of the inter-war years when a blind, spiteful economic nationalism helped to poison political relations and drag the world down into ruins.’82 The changes made to the draft charter did not upset American officials who reported that acceptance of more than three-quarters of its version was ‘a tremendous victory’.83 Moreover the American delegation believed that the new draft charter improved their earlier work while still upholding ‘the essential principles of the American position’.84 Although the American version suggested that their views had prevailed, the Canadians feared that the US had been ‘overly indulgent’; by allowing so many amendments they might have made the charter impotent. Robertson even wondered whether the international approach should be scotched, replaced by an agreement between the US, UK and Canada which other nations might subsequently join.85 This was an option that Canadian officials admitted they need not consider yet. There was little acrimony over imperial preference at this meeting. If Britain and the dominions narrowed margins of preference, the US appeared to be prepared to compensate them. The US also seemed to accept that imperial preference would emerge in a truncated form after the Geneva round of negotiations, altered but not abolished. American accommodation, however, was somewhat illusory. The selection of Harry Hawkins as one of the leaders of the US delegation confirmed that the American objective to promote freer, non-discriminatory trade remained intact. ‘His life ambition is to dismantle the US Tariff and Imperial Preference, twin objectives which he pursues with fervour but


sees with dispassionate clarity.’86 Unless there was significant progress in dismantling the tariff system, the ITO would be doomed.87 Moreover the Americans seemed to have regressed to their earlier understanding that individual changes to preferences would not be traded for lower American tariffs.88 Thus the next international gathering was sure to be more acrimonious. Within Commonwealth discussions there was debate and surprise. Canada’s announcement of its intention to unbind preferential margins following the first round of tariff negotiations shocked the other members of the Commonwealth. Britain and Australia threatened to retaliate in such a way that the preferential tariff structure would collapse because of internal weakness. The Australians did not think the Canadian delegation alone would be responsible for the demise of imperial preference. They also believed that Britain had every intention of doing away with imperial preferences, for political reasons as much as economic ones. And for all of Coombs’ reasonableness and constructive contributions in London, Canberra fully expected that the imperial preference question would incite a passionate debate back home. Although Coombs was optimistic that if the charter succeeded Australia would find little need for the discriminatory tariff as ‘the conditions which gave rise to the need for the Empire preferential tariffs are largely overcome’,89 at the same time he was anxious about doing away with it. He advised the prime minister to initiate ‘some conscious educational work … before the issue comes to Parliament’.90 Chifley agreed that ‘any interference with Imperial preference’ would be difficult to handle politically. If the UK went ahead and contracted the preferential system, Chifley observed Australia would have litle choice but to go along. However, he would ensure that all understood that Britain was to blame.91 Thus Chifley’s reluctance to commit to the rules and guidelines regarding the negotiation of preferential tariffs threatened not only the upcoming international tariff negotiations but also the harmony of the Commonwealth. Ultimately, however, there were limits on the extent to which Australia would object to changes to imperial preference because there was a rational acceptance that the discriminatory tariff was ‘on the wane’, a trend beyond the power of Canberra to check. Moreover to stick rigidly to preferential tariffs suggested Australia envisioned its economic future within a Commonwealth subsection of the international economy and that was clearly not in the nation’s best interests. ‘The time has come to start discarding it as part of the legitimate gamble for a better world.’92


This test of the Commonwealth in peacetime and in a large international gathering had been promising even though the Commonwealth as a distinct bloc made little impact on the meeting. At Commonwealth meetings held concurrently with the preparatory committee meetings, issues were clarified and technical details worked out, demonstrating that the Commonwealth had a functional value. The Church House meetings also proved to be useful in stifling the aftershock of the Canadian decision to unbind margins of preference. The leader of the Canadian delegation was content to anounce his government’s intention in a side meeting of the members of the Commonwealth and in light of their united opposition did not divulge this objective to the other nuclear countries. In general, however, the dominion delegations moved in different directions at the preparatory meeting, according to nationally defined agendas. The effect was to alter the standard configuration of the Commonwealth with the UK as the axis to which the peripheral members had direct links. From Britain’s point of view its displacement as the core of the Commonwealth was unwelcome. To those members intent on making the Commonwealth relevant to all of their interests, the trend was encouraging, confirming that the Commonwealth could reinvent itself.

Spencer House, London: Commonwealth Consultation Resumed, 11 March–3 April 1947 By the time the Commonwealth delegates next gathered they had all received lists from the US requesting concessions on particular tariffs and preferences. The American wish lists were at the centre of Commonwealth discussions in the spring of 1947, the purpose of which was to exchange information, review the lists, and consider their own requests and concessions. In addition there were several unresolved questions surrounding the actual negotiations of preferential tariffs to consider anew, such as the automatic rule and releasing bound margins. Other problematic issues required in-depth analysis for the first time, for instance the question of compensation for lost preferential advantages, while others had yet to be considered, such as intraCommonwealth negotiations. The time had come to resolve these thorny questions, products of the intertwined histories of Britain and the dominions. The outcome of the Geneva negotiations would depend on finding solutions. Unless the members of the Commonwealth participating in the Geneva negotiations could find a way to meet American expectations regarding preferential tariffs


without compromising their own interests, the liberalizing experiment would collapse. The importance of this preliminary Commonwealth meeting was not lost on the delegates. Canadian officials acknowledged that the ‘prospect of success at the multilateral tariff negotiations in Geneva will be determined in large measure at the earlier Empire discussions … where the delicate problems of preference will be the chief item on the agenda’.93 Before any Commonwealth government was willing to make any commitment to reduce preferences, it had first to assess American requests. Delegates scrutinized the US request lists on a country-bycountry basis and considered tentative responses in consultation with their Commonwealth colleagues. They also reviewed their own requests of the US. The proceedings were top secret, to prevent leaks which might prompt a domestic backlash or outside interference. The delegations did not consider the requests of countries other than the US either because they had not, or had only recently, arrived, leaving insufficient time to devise responses. Fundamentally, too, the members of the Commonwealth had little interest in the requests of countries besides the US.94 To no one’s surprise the principal and obvious American objective was to rid the world of the abomination of preferences.95 Australian officials concluded after surveying their list that US requests were ‘more of an attack on preference than anything else’. They even inferred that the Americans were encouraging them to eliminate preferential margins by increasing the lower preferential rates.96 Apparently the elimination of preferences was more important to Washington than the genuine liberalization of international trade. But no matter how generous American concessions might be, and the extent of American concessions remained unknown at this time, the Commonwealth countries had decided that they would not eliminate imperial preference at the Geneva meeting. As long as American concessions were capped at 50 per cent, the very best the US could expect was a 50 per cent contraction of the preferential system. What Commonwealth delegations had to decide was which preferences could be changed and to what extent. The discussion that followed was general, dealing with principles and tactics rather than individual tariffs. The British suggested that Commonwealth governments should eliminate entirely those preferences that were of little commercial value so that they could retain in full those preferences that were valuable. Alternatively, James Helmore of the UK proposed that negotiators could shrink margins of preference by one-third ‘with variations according to


circumstances’. Coombs would not agree to either suggestion. He pointed out that the Geneva negotiations would be the first of many rounds of tariff negotiations and therefore it was desirable to keep as many preferences as possible so they could be used in later negotiations. As Coombs explained, ‘If the Geneva negotiations were to be the first of a series of exchanges … it was desirable that Commonwealth countries should be left, at the end of the Geneva negotiations, with substantial preferences still in hand to trade against further tariff reductions by foreign countries.’ The Canadians supported the Australian tactic.97 Ultimately delegates could not agree on parameters to guide the negotiation of preferences at Geneva. However, they could all expect conflict with the Americans whose objective was obviously to bring about the demise of imperial preference. There was also certain to be conflict within the Commonwealth as members favoured different strategies leading to different end results. The British were not pleased about the inability of the delegations to agree. Even more worrying was London’s weakened bargaining position. The British obligation to extend duty-free treatment to the dominions’ exports and the pledge to the US not to increase margins of preference left British negotiators with no latitude in tariff negotiations. The only concession they could make was to reduce an already low MFN duty which currently offered minimal protection to industries that badly needed to bolster their competitive edge. British officials therefore tried to find other ways to make concessions without having to lower MFN rates. Britain’s efforts had begun in the months preceding the Spencer House meeting when London sought the approval of dominion governments for a gentlemen’s agreement whereby the UK could increase the preferential duty on Commonwealth items selectively. If the UK had the authority to raise preferential duties, binding the MFN rate would be valued as a concession ‘worth paying for’. Alternatively, Britain could revoke the general commitment to grant dominion products duty-free treatment and replace it with item-by-item guarantees. Britain would then keep the rate of preference low, ideally nil, in that way preserving ‘what is of practical value to each Commonwealth country … while freeing our hand to bargain effectively on most favoured nation duties at the Conference’. American demands affecting preferences could thus be met more fully by binding the MFN rate or by increasing the preferential rate. Obviously the former method was preferable, and British representatives promised to raise preferential rates only in exceptional cases, but they insisted that they needed to have at their disposal other ways to narrow margins.98 The British


thus proposed to walk a fine line between ‘American claims and Empire rights’ and their own domestic industrial interests.99 The proposal to increase prefential rates came as a particular disappointment to Canadian officials. While Ottawa sympathized with the British predicament, it was dismayed at the prospect of raising preferential rates.100 Ottawa persisted in this line at Spencer House. McKinnon pointed to the psychological benefit if the members of the Commonwealth emerged from the Geneva conference without having increased tariffs against one another.101 Canadian delegates were particularly concerned once they found out that London was thinking of raising preferential rates on twenty Canadian products.102 Canada found no support from the other dominions. South Africa, New Zealand and Australia all announced that they too might have to raise preferential tariff rates. Britain tried to assuage the Canadian delegation by making two promises: first, Britain would withhold information about how it intended to close preferential margins from the US, and second, it would not raise preferential rates against Canada in the first round of tariff negotiations.103 This was not the only way the UK planned to enhance its weak bargaining position. Britain and the dominions had long accepted that the country giving up some of its preferential advantage would be making a sacrifice for which it deserved compensation. At Spencer House the British made a stronger case for the rights of the beneficiary, arguing that negotiations involving preferences should be tripartite. British delegates did not dispute that the principals in the negotiations would be the country extending the tariff and the country seeking its modification, but they insisted that the rights of the beneficiary should not be trivialized, nor should the beneficiary be excluded from the negotiations. Thus they concluded that ‘it would be wrong to dissociate from … [negotiations] either the country according the margin or the country enjoying it’.104 In subsequent discussions British representatives even went so far to suggest that in some instances it would ‘be best for only the country enjoying the preference and the foreign country concerned to negotiate’.105 This would enhance London’s bargaining position as Britain was the beneficiary of preferential advantages throughout the Commonwealth. By insisting on its entitlement to compensation Britain could make concessions without having to open its market further to foreign products. This arrangement would also protect the British against a deep-seated concern stemming from the Ottawa conference of 1932, that dominion negotiators should not have free rein in tariff negotiations lest they promote their own econ-


omic interests at Britain’s expense.106 ‘That would appear to involve an undue risk that preferential margins would be sold cheaply in return for tariff concessions because the real sufferer – the country enjoying the margin – would have no say in the later stages of discussion.’107 There was no support for the suggestion that the beneficiary’s involvement was equal to that of the two principals. McCarthy of Australia insisted that negotiations in Geneva should be bilateral, although third parties could be consulted on an ad hoc basis.108 This bilateral set-up represented a return to the initial assumptions about compensating the beneficiary. Australian criticism was nonetheless muted. Australian negotiators intended to employ exactly the same tactic in their negotiations with the Americans because it would allow them to make concessions without inflicting any strain on their own domestic economy.109 There was, therefore, a loose agreement that the beneficiary was entitled to compensation, even if the margin of preference was not guaranteed.110 Of all the dominions, Canada was the most upset by the two British proposals to shore up its bargaining position. The first suggestion, to raise preferential rates, contradicted the Canadian commitment to a genuine liberalization of international trade. The second, compensating the beneficiary, justified Mackenzie King’s complaint of 1932 that binding preferential margins violated the sovereign authority of the dominion governments. Both fuelled the Canadian desire to unbind preferential margins. Before the departure of Canadian officials to London for this meeting, Ottawa identified the question of bound margins as ‘the most important question of policy to be decided in advance of the tariff negotiations opening in Geneva’. While some of the preferences Canada enjoyed in Commonwealth markets were genuinely valuable, this did not compensate for the limitations that fixed margins imposed on Canada’s negotiations. Thus Ottawa hoped that a voluntary system of preferences could replace contractual obligations.111 The Canadian cabinet concurred that if the other members of the Commonwealth did not cooperate, Canada would go to Geneva and negotiate as though all preferences had been unbound. In effect this would be a repudiation of the Ottawa agreements, which the government was reluctant to declare openly or officially, regarding it as a ‘delicate issue to be faced only if and when it arose’.112 The two British proposals deepened Canada’s determination to replace the contractual core of the Ottawa agreements with a voluntary commitment, which they believed Britain had obliquely criticized in its memorandum on the negotiation and compensation of preferences. Hector McKinnon


responded defensively to the memo, insisting that Canada never intended to act with impunity contrary to the best interests of other Commonwealth members.113 Britain was not in a position to object too strenuously when in effect it too was asking for the right to waive contractual obligations during the negotiations. Indeed all the delegations could appreciate how much more latitude they would gain if they could place their contractual obligations aside for the duration of the Geneva negotiations. McKinnon was able to report to Ottawa that preferential margins would ‘be considered as unbound’ during the tariff negotiations.114 Britain was not only interested in getting the best possible agreement with the US at Geneva. The UK also looked to the dominions to expand its export sales by lowering preferential rates, not to be confused with preferential margins, levied on UK products. In the months leading up to this meeting, British officials had busied themselves preparing lists of requests for the dominions. In many respects they were simply trying to redress the imbalance from the Ottawa conference of 1932 when Britain found itself making most of the concessions, receiving little in return. In the intervening years, the dominions had done nothing to improve Britain’s position in their markets. At last, Britain hoped the Ottawa system would be evened out, with the dominions reciprocating in some measure the duty-free treatment they enjoyed in the British market. The dominions were not pleased to receive lists from London. They had not considered the possibility of increasing trade with the UK, a market in which they were well established. British officials were not surprised by the reaction. Long before the Spencer House meeting began, they referred to intra-Commonwealth negotiations as the ‘aching tooth’.115 Along this line, Ottawa protested that it was focusing on negotiations involving MFN rates, not preferential ones. New Zealand claimed there was little scope to improve the New Zealand–UK trading relationship; some rates might be bound but the delegation held out little beyond that. Even South Africa, the dominion most eager to partake in intra-Commonwealth negotiations, claimed that negotiations with Britain would be restricted to a few items.116 The most determined resistance to intra-Commonwealth negotiations came from Australia. Canberra asserted that there was little scope for a mutually beneficial agreement; it had a point as the UK could not improve on its duty-free treatment of Australian exports. The Chifley government hoped they could defer the whole question of intraCommonwealth negotiations until after the Geneva meeting. London


insisted that it was not looking only to the US to expand its commercial opportunities, claiming it was short-sighted to assume that a more accessible American market was ‘all that is required to put the world right’. The British were not beyond making threats to impress upon their Australian colleagues the seriousness of their intention. If Australia would not cooperate, London warned, then Britain might have to revoke free entry for Commonwealth products in the British market. Finally, British representatives observed that if Australia refused to enter into negotiations with Britain and Britain’s economic hardship was not alleviated, ‘the Australian will not find the world very pleasant either’.117 At Spencer House the debate resumed. Coombs repeated that there was no basis for a mutually satisfactory agreement in negotiations between Australia and Britain. He added that Britain and Australia were at very different stages in their economic development. Britain was fully industrialized and therefore had no need for a protective tariff whereas Australia was just entering the industrializing phase and desperately needed the protective shield of preferential rates. Helmore was not moved. He insisted that the current situation, whereby the dominions received dutyfree treatment but British manufactured goods were subject to high duties, was inequitable and could not go on.118 Australia did not budge. The Dominions Office sent a cable to Chifley after the conference complaining that Coombs was not authorized to lower preferential tariffs. If the current discrepancy between British and Australian preferences persisted, there would be a public outcry. Without concessions from Australia, Britain would regard the outcome of the Geneva negotiations as unsatisfactory.119 The Australian reply repeated that there were no grounds for a mutually advantageous settlement. Australia would lower its protective tariffs only if the effects of the Geneva negotiations were to open up more markets. Even if this happy outcome was realized, the Chifley government still hoped to regulate British–Australian commerce outside the ‘rigid provisions and scope for the ITO’.120 The prospect of intra-Commonwealth negotiations renewed the dominions’ criticism of the automatic rule. If preferential duties were lowered, then the MFN duty would have to fall proportionately to comply with the stipulation that margins of preference could not grow larger. But Britain and the dominions were not entitled to compensation for the automatic reduction of the MFN rate. That flew in the face of the stand adopted by Britain and the dominions that they would exchange preferences for mutually advantageous concessions. Consequently, the automatic rule came up early in Commonwealth


discussions, first raised by Coombs who explained candidly that Australia’s obligation was limited to Article VII of the Mutual Aid agreement. He repeated that Australia would only alter preferential tariffs if there was adequate compensation from other quarters. Holloway concurred that South Africa ‘could not admit any debt to the US of unilateral reductions of preference’. British officials also wanted to circumvent the rule but were restricted in their opposition by the 1945 endorsement of the trade proposals.121 Australia and Britain favoured redrafting the clause to clear up the ambiguity surrounding their obligation. But after attempting such a re-draft the delegates decided that it would be better not to raise the issue in ‘academic discussions’. The automatic provision remained important as a matter of principle to the US. Leaving it in the charter would allow American officials ‘to say that they had secured something worth while regarding preferences both in theory and in practice’. Instead the Commonwealth delegations decided to conduct negotiations as though the automatic rule was inoperative. Some hopeful officials expected that over the course of actual tariff negotiations the US would see that the automatic rule was unacceptable and either implicitly condone its lapse or take it out of the charter.122 It is evident that neither the British nor dominion governments foresaw that the Geneva negotiations would represent the end of imperial preference. The entire British strategy was premised on the goal of making significant but reasonable concessions which would still allow them to claim at the end of the first round of tariff negotiations that ‘we … have preserved imperial preference as such’.123 New Zealand welcomed this approach because of the effect it would have on relations with Britain and Australia applauded it because Canberra would now be able to maximize its economic advantages. Canada and South Africa were equally persuaded, although for separate reasons, that imperial preference should persist in some form. But there was sure to be a sharp clash with the US on this one area of Commonwealth agreement. Although the overall tone of the conference was pleasant, there were some fireworks. Towards the middle of the conference, Cripps reported to the House of Commons that the process of tariff liberalization would not advance unless Britain and the dominions modified preferential tariffs.124 There was a furore in Canberra at what was interpreted as the suggestion that Britain and the dominions had reached an unspecified agreement regarding preferences.125 In fact, Cripps’ statement in no way trespassed upon the authority of the dominion governments. Canadian silence on this point was evidence that no offence


had occurred. Before the meeting began, Canadian officials were typically concerned that Britain would try to create an ‘Empire front’ at this meeting, to carry over into the Geneva negotiations.126 At its end, the Canadians reported happily to Ottawa that the Commonwealth conference was successful precisely because ‘it was not the purpose of the meeting to establish a Commonwealth bloc at Geneva and no commitment to this end on any matters have been made’.127 But the slightest hint that Canberra might have compromised its autonomy offended Australian leaders deeply. The British now knew from experience that they could not count on the dominions to accept their leadership and that collaboration stifled freedom of action. All of the Commonwealth participants would, therefore, approach the Geneva negotiations primarily as individual participants. Norman Robertson, Canada’s high commissioner in London, opined that the British might regret this development but increasingly accepted it without question so that ‘the old conceptions of Empire do not occur to them so readily’. He singled out Canada for teaching the British not to expect the dominions to respond positively to all their entreaties for collaboration whereas Australia deserved the credit for ‘hammering home’ the point that the inclusion of the dominions limited Britain’s freedom of action.128 Thus traditional ideas about the dominions and their relationship with the UK were dissolving. The change did not just come at the UK end of Anglodominion relations. The dominion governments now accepted the rights of sovereign states to articulate independent views in international affairs. They also accepted that in so doing they might have to fight for their interests alone. However, the Commonwealth would not be an insignificant factor during the trade and employment conference. Because of the interconnected tariff system, delegates from the Commonwealth countries would need to confer. The failure to reach agreement on either specific tariffs or general principles at Spencer House ensured that Commonwealth consultation would persist at Geneva. Those dominions eager to disentangle themselves from the Commonwealth found it a time-consuming and gradual process. Those intent on nurturing the Commonwealth connection found there was less and less ground for collaboration. Those eager to harness the Commonwealth as a collective force in international affairs found this to be an exercise in futility. Individual interests were firmly entrenched and the degree of compromise required to work together was too much to be acceptable to the member-nations of the Commonwealth.


The mood on the eve of the Geneva conference The Spencer House gathering confirmed that the Commonwealth’s contribution to the Geneva negotiations would not be straightforward. But the outcome at Spencer House was not the only sign that progress towards tariff liberalization would be difficult to achieve. In the US murmurs of criticism had grown into audible dissent. Republican members of Congress talked about obstructing the liberalizing programme. President Truman tried to nip Republican dissent in the bud by incorporating several principles outlined by Senators Millikin and Vandenberg into the trade programme.129 Administration officials knew that if Vandenberg endorsed a bill he generally carried the entire Senate with him. To secure his backing the bill had to be personally linked to him. As Dean Acheson explained, ‘This meant either stamping the proposal with the Vandenberg brand, or exacting from the Administration a concession which he thought politically important.’130 Truman more forcefully proclaimed that America’s commitment to liberalizing international trade was unshakeable in an address at Baylor University in Waco, Texas one month before the Geneva conference opened. The negotiations in Geneva, he insisted, were fundamental to lasting peace. He warned Americans that they would have to make concessions in order for the ITO to succeed. ‘If these negotiations should fail, our hope of an early restoration of an international order in which private trade can flourish would be lost,’ Truman intoned. ‘I say again, they must not fail.’131 The British commitment to trade deepened as economic hardship set in. The exceptionally severe winter of 1947 resulted in fuel shortages and work stoppages, which slowed production for export. This in turn forced the government to dip deeper into the Canadian and American loans than anticipated. In March, Hugh Dalton, the chancellor of the exchequer, warned his colleagues that at the current rate they would exhaust the loans by February 1948, long before economic recovery had taken root. ‘This is a looming shadow of catastrophe, and I will not have it said hereafter that I have left my colleagues unwarned until the 11th hour,’ Dalton declared. Inflation, which reduced the real value of the American and Canadian loans, exacerbated the depletion of dollars. Consequently, domestic austerity reached new heights with the introduction of bread and fuel rationing, a disappointment to a public eagerly awaiting a New Jerusalem. The economic downturn confirmed the importance of the ITO and trade liberalization. A Foreign Office memo put it succinctly: ‘we must export or die’.132 At the same time Britain’s ability to introduce measures consistent with economic liberalism was seriously impeded by


its deteriorating economic position. Britain approached the Geneva negotiations in a mood of ‘restrained optimism’. Whether the negotiations would yield enough results to correct their economic difficulties remained to be seen. As Helmore observed, ‘the proof of the Geneva pudding will be in the eating’.133 Adverse economic conditions also spilled over into the political arena. Britain would need to keep as many of its foreign relations as good as possible. The US and the dominions were at the top of the list.134 Given the dominions’ refusal to negotiate with Britain at Geneva, and British unwillingness to dismantle imperial preference as the US wanted, the first round of the GATT negotiations would test these close and cordial relations. The dominions remained committed to the ITO and tariff liberalization, although unevenly so. In Canada, politicians and officials were wedded to economic liberalism as something that would benefit the Canadian and global economy. But Ottawa was considering regional alignments with the US in the event the ITO failed. New Zealand accepted the necessity of an organization like the ITO although it approached the Geneva negotiations unprepared to participate in technical negotiations. South Africa too was on track, although increasingly anxious about the Geneva process. This position was consistent with South Africa’s general turning away from the international community as members of the United Nations attacked South Africa’s racist domestic policies. In Australia, the Chifley government was also on board, recognizing that an open international economy was in Australia’s best interest.135 Public opinion was easily stirred up, especially when the British trigger was pressed, a reality that Chifley could not ignore. Coombs inadvertently did exactly this when he advised the parliamentary Labor Party that imperial preference was ‘doomed’136 because Canadian and British action in Geneva would effectively destroy the Ottawa agreements. Newspapers misrepresented his statement as an indication of his own intentions, provoking the opposition parties to seek his removal as leader of the Australian delegation to Geneva. Premier Hanlon also requested his replacement by someone ‘who is convinced of the soundness and desirability of the continuance of the Preference Policy’.137 Chifley came to Coombs’ defence by pointing out that ‘having regard to the attitude of the United Kingdom, Canada, and South Africa’, Coombs’ predictions were realistic.138 Even so, before the Geneva tariff negotiations had begun, the process was mired in controversy in Australia. All would soon be sorted out. On 10 April 1947 the Geneva negotiations finally began.

7 The Geneva Negotiations, 10 April–30 October 1947

It is a tie, both symbolic and actual, in terms of trade and commerce, that links the Mother Country with the Dominions, and gives vitality and permanence to the Empire concept. But in the soberly realistic sense it is the vital bloodstream that animates the Empire, making it a living and united entity.1 (J. N. Bailey and J. J. Murdoch) The Commonwealth … was not born out of the preferential system nor does that system derive from a political relationship. It is an expression of an economic fact.2 (Stafford Cripps) In April 1947 thousands of politicians, civil servants, stenographers, cipher clerks, secretaries, personal assistants, non-governmental advisers, and media relations officers from twenty-three nations arrived in Geneva for the United Nations conference on trade and employment. This gathering was the culmination of years of planning, but by the time it opened the idealism and urgency of wartime planning had given way to cynicism, fatigue and a renewed commitment to the national interest. Still, the importance of the ITO as a multilateral trade organization was beyond question. It was the commercial counterpart of the International Monetary Fund, establishing rules and principles to bring peace to the trade dimension of international relations. Commentators reminded the public that the results of the negotiations would directly affect the interests of ordinary citizens.3 But the tasks facing the delegates were, according to Will Clayton, ‘herculean’.4 Participants would look over the latest iteration of the trade charter. Because significant work had already been done on the charter, discus185


sions on the draft were deferred until early May so that delegates could focus on bilateral tariff negotiations. The willingness of the participants to negotiate would reveal the depth of their practical commitment to liberal international trade. The members of the nuclear group of nations should already have sent lists of the products on which they would seek concessions to the governments with which they hoped to negotiate. In Geneva the two sides would proceed by stipulating what they had to offer rather than asking for concessions. Delegations would then study the list of offered concessions and respond, generally by seeking further cuts and by adding to or subtracting from their initial concessions to achieve a balanced exchange. It was at this point that the real horse-trading would begin. The tariff side of the meeting did not unfold as planned. When the Americans arrived in Geneva, they were dismayed to learn that dominion and British delegations wanted the Americans to hand over the US lists of offers first. The British and dominion delegations would then tailor their offers accordingly. The Americans insisted on a simultaneous exchange.5 By the end of the month, the United States did exchange lists with Canada, Britain and Australia.6 American–Commonwealth negotiations were the most important pairings in Geneva for several reasons. They involved the most significant volume of trade and they were expected to set an example of what the liberalizing process could achieve. Because of the American emphasis on the abolition of preferential tariffs, Washington considered its negotiations with the British and dominion delegations to be paramount; and the British and dominion interest in the US market eclipsed that of all other countries present. But the early exchange of offers between the US and the members of the Commonwealth was not promising. The Americans believed their offers were generous and therefore deserving of equally generous concessions. Even without their generosity, they believed that Britain, and to a lesser extent the dominions, were obligated by Article VII and the Anglo-American loan agreement to make significant inroads into the preferential system. American officials were therefore dismayed with the preliminary Commonwealth offers. The British list was ‘very thin’ and the Canadian offers were ‘broad and shallow’. Somewhat surprisingly, Australia was ‘the one country to make an apparently sincere effort to put forward reasonable offers’.7 Unfortunately the Australian negotiators withdrew their offers within days because the Americans had only offered to bind the current rate of duty on foreign wool. This flew in the face of Australian expectations that dated to their incomplete

The Geneva Negotiations 187

wartime negotiations. Even worse, a bill was currently before the US Congress which included a provision to impose a 50 per cent fee on imported wool. The offer to bind the duty had been a terrible disappointment. The prospect of a 50 per cent increase was intolerable. Clayton realized that if such a bill passed it would ‘certainly endanger, if not destroy, the present trade programme’.8 By 26 April, the Australian–American negotiations came to a halt and obstructed American negotiations with all of the Commonwealth delegations. Even negotiations to which the US and Commonwealth countries were not party came virtually to a standstill as wool emerged as ‘the Achilles heel of the ITO discussions’.9

The southern dominions and the American wool débâcle, May–August Australian officials had assumed the Americans would offer to halve the current duty of 34 cents per pound on wool. They believed they deserved this concession because it was the offer the US had intended to make if the 1943 negotiations had been allowed to continue. In 1946 the US had sent informal reassurance to the Australians that they would reduce the wool duty as they understood just how important this single export was to Australia. The Americans could not be surprised that the offer to bind was a disappointment. However, Washington believed the US could compensate for this by limiting their demands for Australian reductions and by making concessions on other products of importance to Australia like beef, veal, butter and mohair.10 Consequently, they informed the Australian delegation as soon as they handed over their list that the offer to bind the wool tariff ‘represented about 90% of the maximum possible concession’.11 The next day, Coombs met with Clayton to find out if he had been serious about binding the wool duty. Without a better offer, there would be ‘grave consequences’, such as the recall of the Australian delegation from Geneva, or even worse, ministerial resignations in Canberra. Clayton defended the US offer. He maintained that it safeguarded Australia’s current considerable presence in the American market. He also pointed to the overall US offers which he insisted would open the market, stimulate increased commercial activity, and raise disposable incomes from which Australia’s wool producers would ‘benefit materially’.12 Clayton’s defence did not address the real reason why the offer to bind had been made, which had everything to do with domestic politics.13


American wool production was neither efficient nor competitive. Before the war, US producers had relied on subsidies. During the war the Commodity Credit Corporation (CCC) bought the country’s wool clip and sold it at a loss. The legislation that allowed for subsidization and the activities of the CCC expired in 1947. By the time the Geneva conference opened, several wool bills had been introduced in Congress. The O’Mahoney bill (S.103) called for the continued subsidization of wool producers. The Robertson bill (S.814) endorsed the continued intervention of the CCC. Neither the principle of subsidization nor the activities of the CCC was particularly objectionable to the delegates in Geneva. But the Robertson bill became intolerable as it made its way through the legislative process. The House Committee on Agriculture amended the bill to empower the secretary of agriculture to impose a 50 per cent ad valorem fee on wool if foreign supplies adversely affected domestic producers.14 This clause contravened the principles of trade liberalization. As Dean Acheson, the acting secretary of state, pointed out, the amended version of the Robertson bill was an explicit repudiation of the spirit, principles and objectives of external economic policy that Truman had laid out in his Waco speech.15 The wool legislation undermined American leadership of the trade liberalizing programme. The Geneva conference was, after all, an American initiative. And it looked as if it was about to be destroyed by domestic politics. The Australians spoke for most of the delegates at Geneva when they described the wool legislation as ‘quite fantastic having in mind the whole understanding on which the Geneva negotiations are based’.16 Kenneth Wilson, a Canadian journalist, agreed, writing in the International Journal in the summer of 1947, that the wool situation was ‘devastating’ to the Geneva conference. It cast ‘serious doubts … on the bona fides of all US deliberations and offers’.17 Its passage or defeat would reveal the depth of America’s commitment to freer multilateral trade. Coombs and Clayton discussed the Robertson bill at their meeting. Coombs explained that he was offended by the import fee which would increase an already high duty, making wool unnecessarily costly and curtailing consumption in the US. Clayton admitted that if the O’Mahoney bill had succeeded, he would have offered to reduce the wool duty. He doubted, however, that a bill of this kind was likely to get through Congress. The challenge before him now was not to lower the tariff but to prevent its increase. Although this meeting was surprisingly cordial, it was not without gravity and potential recrimination. Clayton advised Coombs that if Australia pulled out of the conference the consequences would be ‘nothing short of a world calamity’ for


which Australia would have to shoulder the responsibility. There would likely be a backlash in the US that could result in higher tariffs against Australian products.18 Coombs immediately convened a Commonwealth meeting to consider the implications of the wool legislation and the resulting inadequate wool offer.19 He explained the magnitude of the offence in light of the history of American–Australian tariff negotiations. He also painted a disastrous domestic scenario if the US did not improve its offer. For political reasons, the Chifley government could not commit itself to an international agreement which did not enlarge exporting opportunities for wool. Australia’s commitment to the ITO was in jeopardy. In the short term, Coombs notified his Commonwealth colleagues that the Australian delegation would reconsider its initial offers to the US. He added that this was not the same as breaking off negotiations. The other members of the Commonwealth were directly affected because Australia now withheld its permission to modify the preferences it enjoyed in other Commonwealth markets. As a result, Britain, Canada, South Africa and New Zealand could not include in their negotiations with the US any preference that applied to Australian products. Australia found staunch support from the South African delegates. Dr Holloway, a senior member of the South African team, explained that the wool concession was the single most important item for his country. Unless the US improved the offer it was unlikely that South Africa would conclude a tariff agreement with the US or join the ITO. Walter Nash of New Zealand was also critical of the ‘absurd’ suggestion that the wool duty should only be bound. But he was temperate in his advice, urging the delegations to remain in Geneva, concluding the best deals possible. If the American concessions were disappointing, then the Australians should revise their initial offers until an equilibrium was found. Naively he believed that political considerations should be banned from the Geneva proceedings. The time to confront domestic factors was after an agreement had been reached. New Zealanders could be dispassionate about the wool duty and its threatened increase because their wool exports were of a different quality, and therefore in a separate category, from those affected by the Robertson bill.20 Canada and Britain were also sympathetic. They understood how important the wool concession was to Australia, both economically and politically. Dana Wilgress, who led the Canadian delegation, was reassured by Coombs’ ‘responsible and statesmanlike attitude’.21 He agreed to notify the Americans that the preferences Ottawa extended to Australian products were temporarily excluded from Canadian–American


negotiations. Britain did likewise. But the heads of the Canadian and British delegations could not hide their disappointment that their negotiations with the US were jeopardized. Wilgress had been encouraged by a few of the substantive US offers to Canada. He also believed that the American offers to bind rates or make small reductions would ensure against ‘the possibility of a return to competitive tariff increases in the future’. The British were more frank about the consequences if there were no bilateral or multilateral agreements. The British financial situation was parlous and deteriorating with every passing day. James Helmore of the Board of Trade encouraged the heads of other delegations to think of the broad picture and the long term. In his opinion, if the ITO failed, Australia and South Africa ‘will be cutting their own throats as well as squeezing the United Kingdom’. But they could not dispute that the wool stand-off profoundly affected their economic future and their political well-being and would determine whether the ITO would succeed or fail. Wool had emerged as ‘the hinge on which United States–United Kingdom–British Commonwealth trade negotiations would turn or not turn.’22 On 1 May, the Commonwealth countries met to consider how to proceed. Holloway suggested the Commonwealth governments should appeal collectively to President Truman, explaining that the wool legislation undermined the willingness of Britain and the dominions to modify preferences. Helmore disagreed that they should single out the implications for preferences. If the bill was subsequently defeated the Americans would expect substantial progress towards the elimination of preferences. Better for Commonwealth delegates to emphasize that the wool bill imperilled the entire tariff programme. Helmore also advised the three southern dominions to appeal to the US individually. If they presented themselves as a bloc, the Americans might try to force the UK ‘to choose between the suspension of the Ottawa Agreements and proceeding with the negotiations in accordance with the support which they had already given to the proposals’. Coombs agreed that separate representations were preferable in order to pre-empt an American attack on the Commonwealth as a group and that there should be no explicit connection drawn between preferences and the wool offer. The New Zealand and South African responses to the US mirrored that of Australia. The Canadian and British suspension of negotiations involving preferences revealed another layer of coordination.23 In this way the Commonwealth countries applied ‘increasing and cumulative pressure on United States’.24 Although they were careful not to present the Commonwealth as a bloc, the Commonwealth was acting in concert.


How long Commonwealth solidarity would last was uncertain. Coombs realized that by effectively blocking the negotiations of Britain and the other dominions with the US he was subjecting the Commonwealth to divisive political strain. If Australia and the US did not come to a mutually satisfactory agreement, then the other Commonwealth governments would eventually have ‘to make a most awkward choice, both on political and economic grounds’. But Australia had to take that risk. The Australians depended on the cooperation and collective influence of the Commonwealth to challenge America with any hope of success. In particular, Coombs needed the support of Canada and Britain. Others shared his apprehensions about the possible division of the Commonwealth that might follow if the Commonwealth broke down as a result of its united stand against the US. The Canadians believed that the British would side with Australia, forsaking harmonious relations with the US. British documents reveal some doubt about the course they would follow, but a clear understanding of the choice looming ahead. If Canada had to choose, it was clear that its economic future lay in North America. Certainly Dana Wilgress was critical of some of his colleagues from the southern dominions whom he believed ‘would like to see the whole effort fail for narrow and often selfish reasons of their own’.25 For the Commonwealth, the wool crisis exposed the potential for and limitations of cooperation. Overcoming the wool impasse would legitimize and demonstrate that Commonwealth consultation and coordination worked. But if the conference broke down over wool, it was likely the Commonwealth would fragment too. In the meantime Coombs sent a formal letter of protest to Clayton. Coombs denied that the binding represented a genuine concession because it did not ‘represent a real sacrifice by the binding country’. Moreover by stipulating that the duty might be raised the Americans were violating the terms of the trade proposals that they had drafted and convinced other governments to support. It was hypocrisy, Coombs argued. The offence was particularly egregious, he continued, because the duty was already exorbitant and the US was alone among industrialized countries in imposing a duty on wool. There were no mitigating considerations, such as protection of fledgling industries. The inefficiency of the American wool industry was long-standing and deeply entrenched. Coombs tried to justify a reduction as being in the best interests of American wool producers. Potential demand for American and foreign wool in the US was sufficient to keep all wool producers content and prosperous, but keeping the price of wool artificially high stifled demand. Australia had to have a wool concession. Without


it there was no basis for a tariff agreement between the US and Australia.26 Nash made the same points in a similar tone in his letter to Clayton, while the South African letter of protest was more strident, concluding that an unpleasant situation had been brought about by American bad behaviour and was embarrassing for all.27 The American delegates were frustrated by this course of events. They believed that their offers were good enough to warrant compensation by contracting imperial preference. Now Australia was scaling back its list, the only member of the Commonwealth which had seemed to make genuine concessions in the first place. Even worse, the other members of the Commonwealth were jumping ship. The decision by New Zealand and South Africa to revise their lists was particularly irksome because the US regarded their concessions as inadequate regardless of the wool concession. Even worse, Britain and Canada could not include preferences in their negotiations because the beneficiaries – Australia, New Zealand and South Africa – were unlikely to give their consent to any change. Bilateral negotiations between members of the Commonwealth and the US were brought to a standstill, all because of the wool offer. American officials wondered whether the time had come to ‘get tough with the Empire’ over imperial preference. Clayton railed against the contractual obligations entailed in the Ottawa agreements, arguing that if Australia refused to cooperate ‘then it will be necessary for these countries [Commonwealth countries] to terminate their commitments’. However, American officials understood that the only way to break up the ‘Empire bloc’ was to improve the wool offer. Some advisers therefore suggested that the delegation call the dominions’ bluff and make an offer. Then the US would hold a strong negotiating card and could insist that the Commonwealth delegations ‘negotiate in good faith’. Moreover the US could then push for the elimination of all preferences of importance. Hawkins urged a more moderate approach, reminding his colleagues that ‘we had used a rifle and not a shotgun on the preferences and had not demanded action on preferences of no importance to US trade’. However, the US delegation did not have the authority to make an offer to lower the duty on wool. But the Americans continued to press Canada and Britain for progress on the preference front. Helmore and Wilgress were told that their offers were unacceptable. It was evident to the British and Canadian negotiators that ‘the US representatives would only be content if they “brought back the head of Imperial preference on a charger”‘.28 But America had little leverage because it had no answer to the charge that the problem


was of its own making. Until it improved the offer on wool, the likelihood that the imperial preference system would recede seemed remote. Still, Clayton tried to persuade the southern dominions to make better offers on preferential tariffs and margins. He told the leaders of these delegations that if their refusal to cooperate prevented the tariff negotiations from reaching a successful conclusion, ‘they would be doing the world a great disservice and would surely incur the disapproval of world opinion’. Nash and Holloway were not inclined to accept responsibility, but they agreed with Clayton’s gloomy forecast that if the conference failed ‘the world would again revert to the laws of the economic jungle’.29 Frontal assaults on imperial preference had not worked for the US in the past and were not working now. With Clayton’s admission to Coombs that the O’Mahoney bill would have enabled him to reduce the wool duty, Wilcox observed that the smartest tactic for the Australian delegation was to wait out the legislative procedure in the hopes that the O’Mahoney bill would become law. The wait and see stance of the members of the Commonwealth pointed to a more constructive role for the American delegates: to tackle the problem at its source. Therefore, they decided to lobby against the Robertson bill and support the O’Mahoney bill. American officials drafted a telegram to Acheson urging ‘that all possible pressure be brought to bear to get satisfactory congressional action on the wool legislation’. Without ‘such remedial action in Washington’ the negotiations with the southern dominions would remain stalled, which compromised not only the tariff programme but the ITO charter. Words and telegrams were not enough. On 17 May Clayton returned to Washington to bring to bear the full force of his opposition to the Robertson bill. Australian pressure on the US escalated when Coombs returned to Canberra on 15 May.30 It was evident that the wool stand-off was the principal reason for his return home. But the Australian government downplayed this issue, not wanting to suggest that it was quitting the conference.31 Thus the official explanation for Coombs’ sudden return was his prolonged absence (three months) from Australia. His trip home would allow him to make a personal report to ministers on wool, the charter and other commercial matters.32 With Coombs and Clayton absent, the other delegations were optimistic that the wool stand-off could be resolved and the basis for agreements with the US would be found.33 In the meantime they would try to wrap up discussions on the trade charter and conclude those bilateral agreements that the wool conflict did not obstruct.34


When Coombs arrived in Canberra he found the cabinet deep in discussion about the wool situation and the best course of action. He knew from his earlier communications with the government that Chifley did not believe he could persuade Australians to embrace the ITO without a wool offer.35 Chifley was confident that if the US did not improve the wool offer his government would not be blamed for wrecking the conference. They could convincingly portray themselves as ‘the martyred David against the US Goliath’. But this was not the only political or economic consequence to consider. If Australia pulled itself out of the Geneva conference, the UK was likely to stay on. Britain would then require Australian consent to modify the preferences it received in the British market. If Australia agreed to forgo third-party compensation, ‘the political gain from refusing to reduce preferences because of the US stand on wool, would be lost’. If Australia withheld its consent, thereby obstructing a UK–US agreement, the British might abrogate the Ottawa agreements ‘with the result that Australia would lose all her preferences without compensation’.36 Although the damage would not affect all exporting sectors of the economy, the fruit industries would ‘find themselves in a hopeless position and would be unable to pay their way’.37 Because these industries were situated in politically volatile constituencies, any decision which compromised their preferences could provoke an electoral backlash.38 Consequently, Chifley argued that Australia should stick to its position even though he knew that what he asked contravened the commercial interests of the other Commonwealth participants. For the time being, however, Australia could count on the support of Britain and the other dominions, although there was growing doubt about how long they would stand together. American offers to other Commonwealth delegations might seduce them into concluding an agreement, even if that involved denouncing the Ottawa agreements.39 He was confident he could withstand the collapse of Commonwealth solidarity, whereas to contract preferences and tariffs without satisfactory compensation ‘would not be politically practical’. The cabinet agreed to stay on its present course, insisting that the US reduce the wool duty, ‘even to the extent of breakdown of the Conference’.40 By the time Coombs returned to Geneva at the end of May, there had been an important development in Washington. On 23 May the House of Representatives passed the Robertson bill by a vote of 151 to 65, in the full knowledge that this undermined the Geneva negotiations. Clayton’s efforts had failed, in part because upon his arrival in Washington he became ill with bronchial pneumonia and was forced


to rest. Clayton knew the actions of the House brought the Geneva conference close to failure because the bill demonstrated American ‘insincerity’ with respect to the liberalizing programme. But he did not give up. The Senate still had to ratify the bill in its amended form. The State Department as a whole renewed its opposition. They used their heaviest weapon: the secretary of state himself. George Marshall pointed out the adverse effect of the wool bill on the participation of the southern dominions at Geneva. No nation, he insisted, would tolerate American double standards. ‘We cannot expect them to cooperate with us in reducing trade barriers if we increase duties on their wool’, Marshall argued. ‘Without their participation, the remainder of the British Commonwealth cannot, as a practical matter, join us in a mutually advantageous programme.’ In its desperation to block the bill, the State Department called out the old and infirm but hopefully still influential to bolster their case. Thus enclosed in Marshall’s letter to senators were appeals from Cordell Hull, the creator of the RTAA who was then ill in the Bethesda Naval Hospital, and Henry Stimson, the secretary of war who had guided the US through World War II. Hull observed that if the ITO failed the results would be tragic. Stimson was more eloquent and passionate. He wrote that if the bill passed it would reveal American insincerity and demonstrate the impotence of an administration that could ‘at any time be shackled by the sort of economic short-sightedness for which all the world has paid so dearly in recent years’.41 But by month’s end the Senate passed the Robertson bill by a vote of 48 to 38. Would Truman veto the bill? There had been speculation about this from the outset of the wool crisis.42 The president had recently vetoed a labour bill which Congress had subsequently overturned. Truman had to consider whether Congress would overturn his veto a second time and the implications for his leadership if it did. In fact, Truman had decided as early as 2 May that if the wool bill was passed with the stipulation for a 50 per cent import fee, he would use his veto. For obvious reasons he could not make this decision public.43 In late June, there was strong support in the media for using his veto power because of the message the bill sent to the rest of the world. The New York Times commented that the bill served ‘notice to Australia, New Zealand and South Africa that they had better stick to cartel arrangements within the British Empire preference system’.44 American officials in Geneva were delighted by the broad consensus in the press that the Robertson bill was ‘unrealistic’, ‘in disharmony with the position of leadership of the US in world affairs’ and ‘manifests a reversion to the


isolationism of the 1920s’.45 The pressure in Geneva for a veto also mounted. John Dedman, Australia’s minister of postwar reconstruction, announced that if the president did not veto the Robertson bill, he would propose that the Geneva meeting adjourn so that the participating nations could review their positions.46 No one had to wait long to find out whether Truman would test his authority. On 26 June he vetoed the Robertson bill, justifying his decision in terms of the devastating effect the bill would have on the Geneva conference.47 Clayton was filled with admiration for the bravery shown by his president. In a letter Clayton sent to Truman on his birthday in 1955 he recollected this moment. ‘To my mind this was one of the most outstanding demonstrations of political courage that I had ever witnessed, and I have always honored you for it.’48 Congress did not overturn this veto. However, the US still needed wool legislation. Until this matter was dealt with, no one was eager to resume negotiations in Geneva. Luckily Congress moved swiftly and avoided controversy. A new bill calling for the subsidization of wool producers came forward immediately. By the end of July this bill had passed through Congress and on 5 August Truman gave it executive approval. There would be no further congressional interference in the Geneva negotiations. The Australian government welcomed Truman’s veto, although Coombs was not ‘up in the clouds’ because the veto only allowed Australian–American negotiations to resume.49 Australia was still waiting for an offer to reduce the wool duty. As a result, the US delegates delayed the resumption of negotiations with the southern dominions until they received instructions from the administration about the extent of their offer. The Trade Agreements Committee advised the full 50 per cent reduction allowed under the RTAA, but the Department of Agriculture resisted any cut at all. Secretary of State Marshall split the difference, recommending a 25 per cent reduction which was sufficient to demand that the Commonwealth countries eliminate ‘preferences of material importance to the United States’.50 Truman authorized the 25 per cent cut in early August.51 In Geneva, Clayton summoned the heads of the delegations from the southern dominions to tell them of the offer which was conditional on ‘further substantial concessions’ from the dominions. John Dedman, who had recently joined the Australian delegation in Geneva to strengthen its political clout, did not hide his ‘surprise or disappointment’ from Clayton and he told him frankly that such an offer could not justify contracting Australia’s protective tariffs on commercial or political


grounds. Clayton defended the offer, emphasizing the courage it had taken to make an offer at all in light of the recent legislative events in Washington. He also objected to the tendency to focus only on the wool concession, as though other American offers were valueless. Ultimately, he dug in his heels. It was the best the US would offer.52 While the Australian delegation awaited instruction from Canberra about how to proceed, an ill-timed broadcast on Radio Australia, which was transmitted to Geneva, announced the cabinet’s intention to seek a greater reduction. The Americans were furious as the offer had been confidential and provisional.53 There was another Commonwealth meeting to consider this latest offer. Coombs was disappointed with the 25 per cent proposal, but knew that the only sensible course was to resume negotiations which would imply accepting the offer. Holloway protested. He thought that the dominions should continue to press for a further reduction. He was realistic enough to know that the US would not make the full 50 per cent offer. But he thought firmness on their part might entice the US to drop the tariff by 33–13 per cent. Coombs was not interested in wasting time trying to extract a few more pennies.54 Wilgress, who like many Canadian diplomats enjoyed close contact and personal trust with his American colleagues and who probably had a better understanding of the American political process than many of his Commonwealth colleagues, agreed. He told the Australians that the 25 per cent offer was impressive and significant.55 In the end, the Australians did try to persuade the US to better the offer. Wool was so explosive politically in Australia that they had to make the effort to secure a more politically saleable agreement. Dedman met with Clayton in Paris, with no success.56 Coombs continued to urge the US to improve the all-important offer on wool, stressing both the economic and political importance of American generosity, also with no luck. Australian negotiators then decided to extract additional concessions from the US, turning their attention to butter. The Australians wanted the current duty of 14 cents/pound lowered to 7 cents and an annual quota of 100 million pounds. Clinton Anderson, the US secretary of agriculture, was not willing to comply with this request in full. The farthest he would go was a 10 cent duty and no quota or the 7 cent duty and a 50 million pound quota. American officials in Geneva ruled out appealing to Truman over Anderson’s head lest they alienate the secretary whose support they would eventually need to win domestic approval for the trade agreements.57 Australia agreed to give up its preference on raisins and


canned and dried fruits in Britain, Canada and New Zealand, along with other minor items. The motivation for doing so tied back into their own negotiations with the US. They believed that their cooperation was ‘necessary to secure offers of substantial concessions by USA’ on other agricultural commodities.58 Improved access to the US market for its agricultural exports made the American package of concessions irresistible. New Zealand and South Africa were also persuaded by US offers on agricultural commodities to throw a few more concessions to the US, the most significant affecting automobiles. Their negotiations concluded successfully in the final days of October.59 The dispute over wool had brought the Geneva negotiations to a standstill and threatened to cause the breakdown of the entire ITO programme. Ultimately, it tested the American commitment to a liberalizing trade policy, bringing executive vision into conflict with domestic sectional interests. The US administration prevailed but in so doing sacrificed progress in contracting imperial preference. The US squeezed out a few concessions in its negotiations with the southern dominions, but left the preferential system intact. In the end, American negotiators accepted what they could get from Australia and South Africa. But their determination to end discriminatory tariff practices was intact. Now Britain would bear the brunt of their pressure to bring about the end of imperial preference. The wool stand-off was also a test for the Commonwealth. Individual negotiations with the US were effectively suspended. This pitted individual national interests against one another. There was a real threat that Commonwealth governments eager to conclude an agreement with the US might denounce imperial preference. In the short term at least, the Commonwealth delegations deferred the pursuit of national economic advantage to give Australia and South Africa time and support to overcome the wool impasse. They went even further, actively consulting with one another, strategizing together, and coordinating tactics. This demonstrated what the Commonwealth could achieve. There were, however, limits to their accomplishments. They could not present themselves as a bloc because that would act as a red flag to all opponents of the Commonwealth association. Moreover cooperation and consultation caused strain. There was an underlying sense that the solidarity of the Commonwealth would not survive unless the wool crisis was resolved. If forced to choose between commercial cooperation with the US, and all that that meant for political alignments, and a Commonwealth trade and political bloc, it was clear the Commonwealth would fall apart. Consequently, all worked as hard


as possible to ensure it was resolved and no choice would ever have to be made. The US, Australia, New Zealand and South Africa all compromised and accepted what was possible rather than insisting hopelessly on what would be ideal. The Canadians and British also tried to ensure there was no rupture, urging the US to make a gesture and dissuading the southern dominions from a drastic course of action. Thus the Commonwealth survived this contest, and was even strengthened by the revelation that there were benefits in cooperation and consultation, but it was clear that the commitment to the Commonwealth depended on its compatibility with the larger international community. It could exist as a subset of the international order, not as an alternative.

The Anglo-American dispute over imperial preference, July–October The Geneva conference had almost broken down over the wool concession. This was bad enough. Even worse, it had fostered mistrust between the British and American delegations. American observers criticized Britain’s role during the wool crisis because the UK had not offered the kind of support they ‘were entitled to expect’60 under Article VII and the terms of the Anglo-American loan negotiations. Indeed, Washington began to wonder whether Britain really was committed to the ITO programme, in particular whether Britain would meet its obligation to dismantle discriminatory tariff practices. More cynical Americans believed Britain hoped the Robertson bill would succeed, because that way the US would be ‘beaten by dissident congressional groups’ rather than by British refusal to give up imperial preferences.61 This suspicion deepened the American determination to extract British support for freer international trade. And the most important way the UK could move the ITO agenda forward was by getting rid of imperial preference. The wool stand-off exacerbated the Anglo-American difference of opinion about the fate of preferences, but it had not created it. An Anglo-American conflict over imperial preference had been brewing since Sir Stafford Cripps’ opening address to the conference in which he made no apologies for the Commonwealth or imperial preference. He denied that other nations could indict Britain on the charge of discrimination in trade and reminded those present that ‘others also employ the preferential system’. This was not, however, a jingoistic


defence of the Commonwealth or imperial preference. While he asserted that the Commonwealth was ‘a family’ he added that the whole world was a family too. Cripps did not put any stock in an exclusive Commonwealth framework for trade or political alignments, nor did he believe the Commonwealth commercial or political network needed to be destroyed.62 In a subsequent press conference, he denied explicitly that imperial preference would become an historical relic by the end of the negotiations. When asked if a 50 per cent reduction in the US tariff would suffice to bring about the elimination of preferences, Cripps replied unequivocally: ‘No.’63 Although Britain genuinely intended to participate in the tariff negotiations, there were limits to the concessions it would make. Clair Wilcox, the vice chair of the US negotiating team, responded with a diplomatic speech in which he assured the participants that America’s commitment to the liberalizing process was intact.64 Presumably he did not believe it was either appropriate or necessary to repeat that the success of commercial liberalization depended on the end of discriminatory trade practices like imperial preference. The conflicting expectations of the UK and US clashed as soon as negotiations began. The two delegations exchanged lists of offers on 23 April. It took little time before American delegates were complaining that Britain’s concessions were inadequate, particularly those affecting imperial preferences. On 8 May, Clayton met with Helmore to convey his disappointment with Britain’s offers. In part American dissatisfaction stemmed from the calculation that British and American concessions were not balanced. Whereas American offers affected 95 per cent of British imports in the US, UK concessions affected only 34 per cent of American imports into Britain. More particularly Clayton criticized the offer to eliminate only one preference and bind fifteen others. Helmore defended British offers on two grounds. First, he rejected Clayton’s tit for tat approach. The world trade balance heavily favoured the US. The US would have to make more concessions than any other delegation to restore balance and prosperity to the world’s economy. The result might not be equal, but it would be fair. Second, Britain could not simply give up preferences that the dominions enjoyed. Helmore also advised Clayton to look for British concessions on preferences in the dominions’ lists, which was where Britain had agreed to give up the preferential advantages it enjoyed.65 Other British officials added that the UK had already gone a long way to contribute to liberalization by agreeing not to increase preferences or create any new preferences.66


Clayton refuted these assertions. He denied as a matter of principle that the outcome of tariff negotiations ultimately depended on American concessions. Not only was this unfair to the US, but it violated the legislative parameters of the RTAA and ‘represents a radical departure from the understanding arrived at between our two Governments during conversations extending over the past several years’.67 He also refused to accept that Britain was not responsible for the preferential tariffs it extended. Confronted with British disagreement, Clayton could only repeat that Britain’s offers ‘did not represent a fulfilment of their commitments with respect to the elimination of preference’.68 In private meetings of the US delegation, Clayton railed against the contractual obligations of the Ottawa agreements that prevented Britain from dismantling the preferential system. He refused to accept that the emerging wool crisis could interfere with AngloAmerican negotiations. Clayton was persuaded that if the US forced Britain to renounce the Ottawa agreements so that it could modify preferences in its dealings with the US, Australia would likely quit the conference. The consequences for the charter discussions and the tariff negotiations would be disastrous.69 In the end, Clayton accepted that until the wool impasse was cleared, the US could not ‘put the screws on the UK’ over preferences.70 Thus the wool stand-off postponed the long anticipated Anglo-American conflict over preferences.71 But it did not prevent that conflict from erupting. With the defeat of the Robertson bill in late June and the ratification of legislation that was acceptable to the ITO participants by late July, Britain and the US resumed their negotiations. They did not, however, pick up where they left off. During the pause Britain’s declining economic position further offset its ability to implement freer trade practices. Signs of Britain’s economic distress were everywhere evident. The British delegation to Geneva included 40 cars and 40 drivers because it could not afford the Swiss francs (a hard currency) to hire Swiss cars and drivers for the duration of the conference.72 Simon Reisman, a junior member of the Canadian delegation, looked no farther than Cripps’ own person for evidence of Britain’s economic woes. He described Cripps as appearing ‘tired, grey and haggard … the personification of England, exhausted and bankrupt’.73 One week after the conference began, a British analysis of its economic condition confirmed that the situation was grim, a combination of adverse factors like rising prices, a fuel shortage, losses in agriculture, slow recovery in Europe and the Far East, the cost of the occupation of Germany, and the growing shortage of American dollars.74


Britain’s darkening economic forecast could not delay AngloAmerican negotiations once the wool crisis was resolved. By mid-July talks resumed and Clayton was determined that imperial preference would not survive the conference. Clayton invited Cripps to Geneva to talk about the conference generally and imperial preference specifically, telling Cripps that ‘the time has come … to do something in a definite and positive way with respect to the elimination of empire preferences’.75 At their first meeting, Clayton complained that British concessions affecting preferences ‘amounted to nothing more than token offers’. He insisted that there had to be a balance of offers which required that the UK make more concessions. Cripps dismissed statistical comparisons, insisting that Britain had made the best offers possible. He suggested that if the Americans were genuinely dissatisfied with British offers they should revoke some of their concessions until there was a balance satisfactory to the US. Clayton replied with a threatening rejoinder by drawing a connection between the proceedings in Geneva and the Marshall Plan.76 He ‘pointed out to Sir Stafford in clear and unmistakable terms’ that Congress would not approve the aid plan ‘unless we can get firm commitments from the major European powers … that they are prepared to enter into trade negotiations looking forward to an expansion of world trade in such a manner as will be beneficial to all countries’. Preferential tariffs were neither expansionary nor beneficial to all countries. Clayton directed Cripps towards a compromise: he did not insist that Britain eliminate all preferences but he hoped the UK could set a deadline by which time preferences would vanish.77 This first meeting left the American delegation disillusioned. Wilcox described the mood as one of ‘pessimism almost approaching complete frustration’. He blamed Cripps for the unproductive results, claiming the president of the board of trade’s attitude was ‘marked by complete indifference bordering on open hostility toward the objectives of the Geneva Conference’. Wilcox added that there had been a sea change in the attitude of the British government towards freer international trade since the end of the war. It no longer had any confidence or belief in international commercial cooperation. ‘In fact the British attitude is completely negative.’ The implications for imperial preference were disastrous from the American point of view. ‘The present policy of the UK is quite apparently one of holding on tenaciously to the empire preference system’.78 At the next meeting between Cripps and Clayton there was some improvement. British officials had advised the minister between the


meetings that ‘a few total eliminations, perhaps of a spectacular nature’ would go a long way to persuading the US that they were getting a fair deal. Privately Cripps agreed that British efforts to contract preferences thus far were ‘shallow’. He was willing, therefore, to introduce a few more token changes, even ‘if necessary one or two complete eliminations of preferences where these would not hurt us too much’ to facilitate a settlement.79 While admitting no wrong on Britain’s side, Cripps told American officials that the UK should introduce a few more concessions affecting preferential tariffs. However, Cripps added that the US would have to compensate the beneficiary. This would ensure the UK respected its pledge to the dominions not to make decisions adversely affecting their interests. It also prevented the dominion delegations from giving up preferences ‘without making sure the Americans give us compensation’. After the meeting, the minister attended a press conference and delivered a radio address in which ‘he threw the full support of the United Kingdom behind the ITO Conference’.80 There could be no doubt about British support for freer international trade. Despite his obvious desire to maintain good relations with the US, Cripps came away from these meetings resolved that the US would not bully the UK into making concessions which exceeded the value of American offers. Furthermore, no preference should be narrowed if an important export suffered as a result: ‘This position to be held to even if it involves a breakdown.’81 But just as Cripps was steeling his resolve to be cooperative without being overwhelmed, the UK found itself in a position where it needed American goodwill, financial aid and sympathetic understanding. Britain’s financial downturn turned into a fullblown crisis by the end of July, in large part triggered by conditions attached to the Anglo-American loan agreement of 1945. One such condition was a pledge to introduce the convertibility of sterling within one year after the loan agreement was ratified. Britain did so on 15 July 1947. A haemorrhage of hard currency reserves followed. By month’s end Cripps disclosed the details of Britain’s financial crisis to the US. He explained that London would have to take steps to offset the crisis. One step was to suspend convertibility, which the Attlee government did on 20 August. Another step involved repudiating a second condition attached to the 1945 loan: non-discrimination in the use of quantitative restrictions. Britain hoped to use quantitative restrictions to safeguard what was left of its convertible reserves by shifting sources of supply away from dollar to sterling countries. To soften the blow, Cripps reassured the Americans that the UK remained committed to


the ITO and freer trade in spirit although it would have to postpone the practical implementation of liberal policies by at least one year. American officials did not doubt that Britain’s economic circumstances were desperate and ‘for the time being outweigh all long-term interests’.82 The situation was not entirely gloomy, however. The Americans believed they could exploit British weakness to get their way over preferences. As Wilcox explained, an Anglo-American agreement to overcome Britain’s financial crisis was contingent on ‘genuine commitment to liquidate the Empire preference system’.83 If the UK did not agree, then the US would insist that the ITO charter be as strict as possible, leaving Britain with few escape provisions to correct its economic difficulties. Moreover they would insist that Britain stick to the non-discriminatory use of import restrictions. The choice rested with the Attlee government whether the US would adopt ‘a sympathetic and helpful approach to their immediate and future problems’ or ‘a grudging, cynical and niggardly one’.84 American leverage was further strengthened as a result of the financial crisis because Britain was counting more than ever on the Marshall Plan to tide it through its hard times. No one could forget, however, that congressional support for the Marshall Plan depended on gestures from the UK that it genuinely supported the expansion of trade. British commitment to the ITO and freer, multilateral trade, shown in the contraction of preferences, became a precondition for American financial aid.85 The US delegation presented its case to British officials. Wilcox suggested the UK should eliminate some preferences completely and promise to gradually remove the rest. In addition the US wanted the Commonwealth to simplify negotiations affecting preferences. Having to pay for concessions twice – to the beneficiary and the government applying the preference – was obstructive. Hence Washington wanted Commonwealth members to adopt a broad view instead of demanding a concession for every individual preference affected. Finally, the US was willing to facilitate the elimination and contraction of preferences by accepting either the lowering of the higher MFN rate or the raising of the lower preferential rate. In exchange Washington would free Britain from fulfilling obligations in connection with the 1945 loan agreement. If London refused to cooperate, the US would not allow Britain out of its commitment to non-discrimination, might break off negotiations with the UK in Geneva, and would not promise to ratify the ITO charter. Such a decision would also imperil the Marshall Plan and damage Anglo-American relations generally.86 Despite Britain’s desperate economic conditions and its need for American help,


London refused to make further amendments to preferences. Helmore insisted that British offers were fine, a response which demonstrated Britain’s ‘complete absence of gratitude, relief and appreciation’ in American eyes.87 The Americans were far from defeated, recognizing that this was perhaps the only chance the US would have to achieve its objectives regarding tariff discrimination. ‘If we cannot now obtain the liquidation of the Ottawa system, we shall never do so,’ Clair Wilcox reasoned. There was more at stake than a political victory or the affirmation of America’s dominant position in the international community. The American commitment to freer and multilateral trade, and all that that implied for political relations, was at risk. Unless the UK cooperated, the American public and Congress would reject the ITO and abandon a freer trade policy. As Wilcox explained to Clayton, what the US trade policy needed to stay on course was ‘a front-page headline that says “Empire Preference System Broken at Geneva” ‘.88 Britain was not entirely uncooperative. Although the government could not accept a commitment to phase out preferences, it could consider additional American requests on an item-by-item basis. For instance, Attlee authorized the delegation to make an offer of free entry for fresh apples, if Canada would agree to waive its preference. This kind of gesture would be sufficient, in the opinion of British officials, to allow the Anglo-American talks to continue. Although the UK had no intention of letting the US bully it into submission over preferences, it did not want its tariff negotiations with the US or the charter discussions to end in failure.89 Meanwhile the US was reconsidering its list of requests affecting preferences. The delegation calculated that thus far British offers on preferences affected 0.04 per cent of American exports. Counting the actual offers did not improve the statistical picture as Britain agreed to eliminate only two.90 But the American deliberations were not about increasing their demands. Rather they reduced and refined them, dropping what Britain could not easily concede, proposing phased-in reductions to ease the burden, and sticking to some of their original demands for reductions and eliminations that were important to the US.91 All of this was done in anticipation of another meeting between Cripps and Clayton. That meeting was held in London on 20 August. The arguments were unchanged. Clayton asserted that the US had made generous offers which the UK had not adequately requited. He handed over a new list of requests, which included eliminations worth £6 million of imports and reductions affecting £21.5 million worth of products. He also sug-


gested that Britain could progressively eliminate preferences over a five-year period. Cripps repudiated every American claim. He dismissed any obligation incurred at the time of the loan negotiations. Furthermore, he insisted that Britain had already taken a significant step towards the abolition of imperial preference by promising not to expand the system, a fact Clayton overlooked. The current economic situation in Britain also prevented the government from doing ‘anything spectacular or substantial’ affecting preferences, Cripps explained. Moreover, his government would have a hard time selling the ITO to its public if Britain went too far in scaling back preferential tariffs. Finally, Cripps refused to accept an obligation to eliminate preferences over five years when American concessions were only guaranteed for three.92 The Americans left this meeting in low spirits. While waiting for Cripps to respond officially to their new list of demands, they filled the time reconsidering their position in Geneva. Should they terminate negotiations with the UK and concentrate on other more fruitful negotiations? Should they abandon the entire ITO project, admitting defeat because ‘the rest of the world is not ready to go along with us’?93 No one doubted the gravity of the choices ahead. Much more than the ITO would be lost if the US quit the conference or came away with so little that Congress and the public could only regard it as a failure. Cripps knew that if the UK was not more forthcoming, the US might break off negotiations entirely. That was a possibility he could not countenance. Consequently, he recommended to his cabinet colleagues that Britain go halfway to meeting the new list of American requests. He concentrated on eliminations rather than reductions, because eliminations counted for more with the US. By his calculations, the halfway mark required that the UK eliminate preferences affecting £2.9 million worth of imports. Cripps still did not believe that Britain should make unilateral offers. Consequently, he advised that Britain should seek additional concessions on rubber and vegetable oils from the colonies. These would be especially valuable because they could be big dollar earners for Britain.94 British officials briefed their dominion colleagues in Geneva the day after the Cripps–Clayton meeting. They did not disguise that AngloAmerican negotiations were at a critical juncture and that imperial preference would determine whether the negotiations would succeed or fail. The British informed dominion officials that Clayton had said ‘he could not return from Europe without having achieved the dismantling of the Imperial Preference system’.95 Australian officials cabled


home that ‘the possibility of a breakdown in negotiations’ was at hand.96 Wilgress urged his British colleagues to consider the question of preferences carefully, as a breach might result in the US turning its back on western Europe and the UK.97 Despite the gravity of the situation, the dominions offered little help. Indeed, Holloway and Coombs indicated that they were considering revoking some of their concessions in light of the American offer to reduce their wool duty by only 25 per cent. Even Wilgress, the most conciliatory of the leaders of the dominion delegations, objected to the American suggestion to close preferential margins by raising the rate of preferential duties, even though it was a painless way to accommodate the US.98 London was not put off by the dominions’ reluctance to modify preferences. The Attlee government was determined that the dominions should make more concessions affecting preferences in order to satisfy American demands and spread sacrifices out across the Commonwealth.99 Thus Canada studied the effects of the elimination of preference on clothing made from synthetic and vegetable fibres, acids, films, tinplate, fresh apples, and mining locomotives.100 New Zealand’s preferences on cigarettes, adding machines and refrigerators came under review. The South African delegation reviewed socks, barbed wire, sprayers, sprinklers and typewriters. The Australians reconsidered the preferential margins on motor cycles, cameras, cigarettes, screw drivers, prunes, peaches, apricots, pears and canned fruit.101 The deliberations were not promising. There was much indecision, toing and froing and refusal to go any further. But overall, the dominions were willing to help conclude an Anglo-American tariff agreement. Thus by early September, South Africa had agreed to eliminate the preference on socks; Australia agreed to give up its preference on dried peaches and nectarines; Canada would sacrifice its preference on fresh apples.102 British willingness to give up more preferences also testified to the importance of its larger political relationship with the US. However, British officials realized that in meeting the US halfway, they might adversely affect Commonwealth relations. By asking the dominions to make additional reductions of preferences London might be trapped in a public relations game over responsibility and culpability. While the US played up ‘their success in “cracking” the preferential system’, governments across the Commonwealth ‘will be seriously tempted to put the blame on us to justify such concessions as having been made at the instance, and in the interests, of the United Kingdom alone’.103


Newspapers in the dominions were already suggesting that the British were responsible for the demise of preferences.104 No matter how important the US was to Britain, damaging the Commonwealth was too high a price to pay. Just as Britain and the dominions were making their most concerted effort to accommodate the American position, the future of preferences was thrown into doubt, but in a completely unexpected way. Throughout wartime and postwar commercial discussions, the assumption had been that the preferential system would contract. What was at issue was the speed with which preferences disappeared and the reward for doing away with them. But on 3 September, Ernest Bevin, the British foreign minister, delivered a speech in which he suggested that in the future preferences might be enlarged. Disclaiming that his speech represented government policy, he proposed the establishment of a Commonwealth customs union. ‘I do not think we can avoid any longer common defence and acceptance of certain common economic principles if we are to avoid constant recurring crises.’105 Bevin’s speech was neither innocent nor ill-informed when considered against the backdrop of ITO talks in Geneva and the Marshall Plan deliberations in Paris. Earlier in August, the Americans had explained the advantages of a European customs union to facilitate economic recovery. They wanted Britain to play a leading role in such an organization. Doubts existed within the British cabinet about the merits of membership in a Western European economic bloc, in large part because of the consequences for the Commonwealth.106 But participation, or at least consideration of the possibility, was a precondition for receiving Marshall aid dollars. Bevin’s speech served as a reminder to the US that Britain was not dependent on American largesse.107 In the words of an Australian observer, the motivation behind the foreign secretary’s speech was ‘for political purposes to conjure up alternative possibilities’.108 There was always the Commonwealth to turn to and develop. The organization of a meeting of the sterling countries to consider the current financial crisis reinforced the portrayal of the Commonwealth as a close-knit and unified family. Indeed, Canadian officials had protested at the archaic notions about the Commonwealth that the sterling meeting revived. The British claimed no responsibility. In fact, Syers of the CRO insisted that it was his department’s policy to deprecate ‘the ballyhoo … here about the rallying of the clans’.109 Even so, the idea of the Commonwealth as a viable and self-sustaining economic and political unit gained in popularity.


Bevin probably made his speech with the meetings in Paris in mind, but his words also affected the Anglo-American tariff negotiations in Geneva. He effectively used the American attraction to a customs union in Europe to undermine their opposition to preferences. Douglas LePan explained the connection: ‘One way of justifying the preferences and of inducing the United States delegation to slacken their pressure would be to suggest that preferences are to be considered as measures looking towards a customs union, since this is the only guise under which preferences are acceptable in Washington.’ He was not sure whether the UK intended to explore the customs union seriously, but he did observe that even as ‘an informal suggestion’ it ‘would be a good debating point at Geneva and would give them more elaborate elbow room in their struggle with Clayton over preferences’.110 Bevin’s speech was framed in the context of Anglo-American relations, but it directly affected the political dynamic within the Commonwealth. Canadian officials were deeply displeased with Bevin’s message which conjured up a centralized and integrated Commonwealth. Within the week Ottawa sent word to London that there was no way Canada could join a Commonwealth economic bloc.111 In memos written only for Canadian eyes, the Canadian reaction was vented more fully. Pearson noted that the suggestion of a Commonwealth customs union had awakened the chronic fear of subordination to the UK. ‘All the old skeletons are rattling furiously in the cupboard.’ Pearson compared Bevin to Churchill, blinded by ‘the greater vision’ and insensitive to the unease provoked by their grand Commonwealth designs. What was especially galling to Pearson was the failure to recognize the economic interdependence of the United States and Canada. Ottawa would not lightly forsake the economic links with the UK and Commonwealth. But confronted with a choice, Pearson did not hesitate in opting for a continental rapprochement: you can take it from me that, in spite of a very real sympathy here for the United Kingdom in her present predicament, in spite of a genuine desire to help, and in spite of the developing economic difficulties with the US this tactic will produce no useful results in Canada … if we are forced to choose some closer economic and financial alignment, and I hope we won’t be, it will have to be with Washington rather than with London. Surely the British have enough sense to realize that and surely they have enough sense not to put Canada in any position where such a choice would have to be made. That is why this new campaign of economic and strategic


unity can accomplish nothing but harm here no matter what it may do in Australia or New Zealand.112 Despite the Canadian expectation that the antipodean dominions would respond more favourably to Commonwealth integration, the customs union proposal was no more popular there. In Australia the tariff revisions necessitated by a customs union would damage local industries.113 Fraser rejected the suggestion at the end of September because it would also destroy New Zealand’s budding industrial sector.114 The Smuts government and the South African public also discouraged a Commonwealth customs union, although they were willing to promote an expansion of intra-Commonwealth trade ‘based on the enlightened self-interest of all concerned’.115 The dominions’ responses to a Commonwealth customs union confirmed that the advantages of preferences were their flexibility and compatibility with international commercial networks. At the point where preferences precluded commercial ties with non-Commonwealth countries, the dominions unanimously turned against them. The dominions’ reaction prevented the UK from playing the Commonwealth card to enhance its leverage in its negotiations with the US in Geneva. Even had it panned out, a Commonwealth customs union would not have changed the reality that the UK had to do something to satisfy American expectations regarding the contraction and elimination of preferential tariffs. On 9 September, at a joint Commonwealth–US meeting, Britain presented its new offers, a product of Commonwealth deliberations and compromise. Helmore repeated the standard British refrain that the original US–UK offers had been balanced. Hence the US would have to pay for this improved version by agreeing to import more natural rubber. Coombs also spoke up to complain about American offers. The US would have to improve its offers on beef and butter to secure Australian consent to change a few more preferences. Representatives from New Zealand and South Africa stated their complete agreement with Coombs’ position. Wilgress was alone in trying to placate the US.116 The Americans ‘received in silence’ the Commonwealth offers and speeches.117 They did not remain silent for long. Six days later the Americans summoned all of the Commonwealth delegates to a meeting. Wilcox methodically and logically dissected the negotiations thus far. The US had been generous, he argued, but the British and dominion offers paled in comparison. He also pointed out the importance of American concessions and commitment to the mul-


tilateral cause. In frustration he observed that everyone asked for something from the US, giving little or nothing in return. But if the US did not cooperate, it was the rest of the world that would suffer. This was a wake-up call to the Commonwealth delegations to realize what was at risk. It also revealed to them the weakness of their bargaining position. The US could walk away from the Geneva conference unscathed; Britain and the dominions would be devastated. Wilcox added that the US would give the negotiations one last chance. The fate of imperial preference was ‘the one remaining obstacle to the success of the Geneva meeting’. Although the Americans understood the interconnections of imperial preference, Wilcox made it clear that he looked to the UK to act. He went on to outline a new basis for agreement. All British concessions offered thus far would stand. In addition, the US would draw up a new and longer list of secondary preferences which would be progressively eliminated over ten years (at a rate of 10 per cent a year), to begin three years hence. Wilcox allowed for flexibility in the method by which preferences would be contracted; this could be achieved either by lowering the MFN rate, raising the preferential rate, or a combination of the two. By giving Britain this choice of tactics, the US believed it was making ‘it [the contraction of preferential tariffs] easier for you [Britain] to carry out your part of the program to which we both have pledged ourselves repeatedly during and since the war’. If the UK did not accept this proposal the options left to the Americans were to suspend negotiations with the British or to conclude a ‘thin agreement that makes no real progress towards the elimination of preferences’. Either way the Anglo-American negotiations would be portrayed as a disappointment. ‘We would have to confess to the American people that our negotiations with the UK were a failure’, Wilcox explained. ‘We could not attempt to hide the truth.’ Either scenario would also likely destroy the ITO and undermine the Marshall Plan.118 This time it was the British delegates who left in silence. They were stunned at the suggestion that the US might suspend their negotiations. They were also dismayed at the prospect of being blamed for the crisis. They had always believed they had been more cooperative than the Australian and New Zealand delegations.119 More ominously, if the US blamed them for the failure of the conference the negotiations could never resume: ‘the atmosphere for any resumption of negotiations will be poisoned’.120 The long-term political repercussions would also be terrible. On 19 September Clayton took the next step by presenting Cripps with the proposal outlined by Wilcox. Cripps launched straight into a


defence of British offers. He rejected the US statistical analyses, presenting a version of his own which confirmed the truism that statistics can be used to prove anything. The statistical defence was also unhelpful because it fundamentally missed the point. The US believed that Britain was obligated by earlier agreements to dismantle preferences. The British insisted on compensation for every preference ceded. This led to a subsidiary debate about whether or not American concessions adequately compensated Britain. Clayton thought they more than did so; Cripps thought otherwise. On the flipside, Cripps also believed the UK had made more than sufficient offers. Clayton, on the other hand, regarded British concessions as ‘totally inadequate’. This top level meeting did nothing to clear the impasse. Both men refused to budge.121 Clayton arranged to meet with Bevin on 21 September in the hope that the foreign minister would be more sympathetic. Bevin arrived with Cripps, and while Bevin’s tone was gentler, he was no more willing than Cripps to make additional concessions. Clayton’s insistence that Britain should fulfil one of the conditions attached to the 1945 financial agreement, since the US had overlooked the fulfilment of convertibility and the non-discriminatory use of import restrictions, also fell on deaf ears. When Lew Douglas, the American ambassador in London who accompanied Clayton to the meeting, repeated the threat of suspending Marshall aid, or at least withholding the British share of the dollar pie, Bevin reminded them that such a move would harm the US as much as any of the Marshall aid recipients.122 It was Clayton’s turn to suggest there would be no political support for British offers as they were shaping up. In fact, he would advise Marshall to reject them. In the event that the secretary of state did accept them, Clayton would not add his weight to getting an agreement through Congress.123 Given the esteem in which members of Congress held Clayton, withholding his stamp of approval would jeopardize the agreement. British officials considered the possible repercussions of this exchange and examined their options. There were several good reasons not to give in to American demands. First, there was the Commonwealth angle. Not only were Commonwealth markets valuable, and never more so than during the current financial downturn, but giving up the imperial preference system would also suggest the UK was forsaking the dominions as political allies. Britain could not ‘appear to be sacrificing the Commonwealth to the USA – for this is the way it would inevitably be represented in the United Kingdom and the Empire’. Second, to contract preferences in response to American pressure would fuel the growing belief that the US was not treating Britain as a valued and equal


ally. It would legitimize the perception of the US taking advantage of Britain’s weakness, the result being ‘an outburst of anti-US feeling … which would do lasting harm to Anglo-US relations’. Third, doubt about the sincerity and necessity of American opposition to preferential tariffs reinforced British reluctance to give in to American demands. Cripps questioned whether the American public and Congress were really intent on the dismemberment of imperial preference. He asked, ‘is it true that Imperial Preference is such a burning political issue in the United States just now? It is hardly ever referred to in the old terms and Americans have said that it would be absurd of the United Kingdom to give up all its preferences in present circumstances.’124 C. T. Crowe lamented that it was Wilcox and Clayton who were ‘fanatics on the preference issue’, implying it was personal antipathy, not necessarily representative of the administration’s views. Certainly Clayton’s animosity for preferential tariffs was ideological as well as a product of a lifetime of experience. However, his views were not out of line with the general goals of the State Department. Conversely, there were compelling reasons to accommodate US demands. Far and away the most important consideration was to prevent a fallout with the US. That was a situation the Soviet Union would exploit, a concern the US shared. Nor did they want to jeopardize the Marshall Plan or the ITO.125 British officials hoped the dominions would support their position even though it might provoke the breakdown of Anglo-American negotiations. No dominion was more important to Britain at this moment than Canada.126 Canadian officials and political leaders were profoundly disturbed at the prospect of a collapse in Anglo-American commercial negotiations. Wilgress reported to his government that he blamed Britain for the current state of affairs. They had ‘played their cards badly’ earning a reputation across the negotiations, and not just in their dealings with the US, as ‘the most backward of all participants in the granting of tariff concessions’. However, what was especially offensive to the leader of the Canadian delegation was not British intransigence, but the Attlee government’s role in allowing a distorted understanding of what was happening at Geneva to take root in Britain and across the Commonwealth. What appeared to be at stake was ‘dependence on the United States versus dependence on the other countries of the British Commonwealth of Nations’. Consequently when American officials sought concessions affecting preferences, London was ‘in an impossible political position’. The Attlee government’s sins of commission were even worse. Wilgress reported that some British ministers fuelled the erroneous belief that ‘what is at stake


at Geneva is the whole future of intra-Commonwealth relations’. The reality was more mundane and also vastly more important.127 With this kind of analysis from its emissaries abroad, it was hardly surprising that the King government believed the onus was on the British to prevent a breakdown.128 Consequently, Mackenzie King urged Attlee to do everything possible to prevent an outcome which would jeopardize the ITO, an organization ‘which promises so much for the future well-being of mankind’.129 The British high commissioner confirmed that there was panic in Ottawa. ‘The alternative of a break, with the inevitable loss of the Marshall Plan and a crisis in our relations with the United States, is looked on here … as too appalling to contemplate.’130 Attlee was unmoved and Bevin and Cripps dismissed the Canadians’ concerns on the grounds that they did not understand the British situation.131 The other dominions were less critical of Britain’s role in the impending collapse of the Anglo-American tariff negotiations.132 The Fraser government sympathized with the British refusal to be bound to a thirteen-year commitment to dismantle imperial preference.133 Fraser endorsed the British cabinet’s decision to adhere to its previous selective offers.134 Neither did the Australian delegation think a long-term obligation was advisable. But being tied to the UK in the event of the failure of the multilateral alternative, or losing the potential benefits of an Australian–American tariff agreement were not attractive options. Thus Coombs advised Chifley not to promise to stand by Britain ‘until we have had opportunity to examine implications for Australia’.135 Australia kept its options open. When Cripps and Bevin had finalized their decision, they presented a united front to the cabinet, insisting that neither on economic nor political grounds could they support a decision to make any more concessions affecting preferences. They laid out the consequences of rejecting the American proposal bluntly: (1) the ITO might fail; (2) the UK might be excluded from Marshall aid; (3) Washington might withhold the remaining funds in the US loan to Britain; (4) and more generally ‘serious harm would consequently be done to Anglo-American relations’. They did not discount the possibility that the US might decide to terminate their negotiations, a decision the US would make ‘in haste’ but ‘regret at leisure’.136 These two powerful ministers carried the cabinet, which agreed on 25 September to reject Clayton’s proposal for the progressive elimination of preferences. Later that same afternoon, Cripps handed an official notification to Clayton that the British government believed its concessions were


‘fully adequate compensation for both the bilateral and multilateral advantages which we can expect to obtain’. Prudence also dictated that the Attlee government refuse a thirteen-year commitment. ‘In the present uncertain state of the world and in the light of experience’, the UK could not accept an obligation it might not be able to fulfil. But Britain did not shut the door to continued discussions. British authorities could foresee the resumption of negotiations leading to the eventual elimination of preferences in the near future.137 The note ended with an appeal not to let this impasse impede Anglo-American relations generally. Clayton was ‘friendly’ but did not disguise ‘his bitter disappointment’.138 To offset Clayton’s pessimism, the cabinet decided that Bevin should appeal over his head to Secretary of State Marshall to prevent an open breach in Anglo-American economic relations.139 To further soften what was unquestionably a clear-cut refusal, British officials informed their American colleagues that their government genuinely wanted negotiations in Geneva to continue.140 London also planted information with the press to counter the potential explosiveness of the message Clayton was bringing to Washington.141 Finally, Britain’s ambassador in Washington was alerted to stand by to make a last ditch appeal to Marshall if the US looked like it would break off negotiations.142 Because London was not optimistic that its efforts would assuage American anger, officials prepared two messages, one to be sent if Marshall cancelled Anglo-American negotiations without blaming the UK, the other if he suspended talks and attributed the breakdown to British intransigence.143 Despite Britain’s diplomatic efforts, Clayton, who sailed for the US the day after receiving Cripps’ reply, was furious. Norman Robertson, Canada’s high commissioner, who happened to be on the same ship, was eager to help bridge the differences between Canada’s two most important allies. He wanted to speak to Clayton about this crisis, but Lew Douglas advised him that Clayton was ‘too sour to be approachable’. By the time the under-secretary for economic affairs arrived in Washington he was ‘hopping mad’ and prepared to advise Marshall to pull the American delegation out of Geneva. Canadian officials feared the worst because of Clayton’s influence over Congress. ‘Politically it would be impossible for the administration to override him, he had been associated with the scheme throughout, it was largely his baby, and he was their chief spokesman to Congress over the whole field.’144 In fact, Clayton’s understanding of what was at risk was out of step with the way Marshall and Truman understood the deadlock. These two leaders objected to breaking off negotiations with the British


because of the effect it would have on the Cold War.145 By the autumn of 1947 President Truman had committed the US to assist peoples and governments all over the world fighting off threats to their freedom. He backed up his pledge with $400 million to Greece and Turkey, then resisting communist challenges. In his turn, Stalin established the Cominform, thereby reviving the ideological conflict with the West. Stalin also called for an end to diplomatic contact between the communist bloc and the West, the intensification of communist activities across Europe and the consolidation of a Soviet buffer zone. Washington looked to Britain as an indispensable ally. In this Cold War environment, the battle over preferences in Geneva was an indulgence neither London nor Washington could afford. Clayton’s hardening stance was also increasingly out of step with the view of other senior officials in Geneva, like Harry Hawkins and Winthrop Brown who had earlier outlined the link between the Geneva negotiations and the Cold War in a memo for Clayton. Hawkins and Brown pointed out other damaging repercussions like deteriorating relations with Britain and the dominions, jeopardizing the Marshall Plan and the end of the ITO. These two temperate advisers placed the ITO in the larger context and judged it to be ‘a landmark in economic history’ and ‘a very considerable achievement’ regardless of inaction on preferences.146 Finally, whatever the causes that might lead to the demise of the conference, the Americans would be held responsible. No matter how just their grievance or how generous their concessions, the US ‘would appear to a very substantial section of world opinion as being a powerful country that was taking advantage of the one that was down and out’.147 Back in Geneva, American officials decided to act. Brown, the acting head of the US delegation in Clayton’s absence, knew that preferences were the main obstacle to an Anglo-American agreement. Still, he believed there was ‘one ray of hope’. Though the Attlee government had rejected the latest proposal, it was willing to consider new ones. He set out to piece together an acceptable basis for an agreement. Brown met with Wilgress and Coombs to explain his determination to seek alternative solutions and to enlist their help. If they made concessions, particularly on agricultural products, then that might compensate for those that had not been forthcoming from the UK. Coombs was not keen, believing as he did that the US had still not adequately compensated Australian offers.148 Wilgress was more inclined to pitch in. But the dominions could only facilitate and strengthen an agreement; they could not substitute for a compromise primarily between the US and UK.


Subsequently, Brown and Helmore closeted themselves away for a weekend. Their discussions were non-committal, but both hoped they might find a common ground which they could recommend to their governments. By the end of the weekend, they had come up with a tentative proposal that included eliminating the preference in India on cars and parts, reducing by 25 per cent all preferential margins in the colonies, free entry for canned fruit salad in the UK, narrowing the preference applied to Southern Rhodesian tobacco in Britain, and eliminating the preference in Canada on made-up cotton goods and either tin plate or black plate. Overall, these concessions had little commercial significance but were valuable because they ‘served a useful window-dressing purpose as representing concessions over a wide area’.149 In return the US would limit the use of synthetic rubber to 25 per cent of total rubber production.150 The rubber concession could generate an estimated £4.7 million in sales from Malaya which was particularly valuable because of the scarcity of hard currency in the sterling area. The most important concession for American political purposes was the 25 per cent across the board reduction of colonial preferential margins.151 Harold Wilson, the newly appointed president of the British board of trade, believed these concessions were ‘promising’.152 The next day he presented them to his cabinet colleagues, urging them to consider them with a fresh eye, uninfluenced by domestic political and economic considerations. Wilson’s endorsement did not detract from the authority of Cripps or Bevin. Cripps had become the minister for economic affairs, a post that widened his authority over London’s economic policy. Wilson was no challenger. Indeed, he said that before he would make any decision, he would consult with Cripps and Bevin.153 Bevin objected to the concession of colonial preferences. As he saw it, preferences to the colonies represented the Labour Party’s commitment to preserving and improving the Empire, bringing self-government, prosperity and dignity to the colonies.154 Edmond Hall-Patch, Bevin’s economic adviser, recommended that he accept the terms as they would not damage British trade or Commonwealth commercial links. ‘They do not represent the end of imperial preferences nor even a damaging inroad into them.’155 Bevin rejected his advice primarily ‘on what is described as emotional grounds’. The other concessions listed were acceptable.156 London sent a message to Secretary of State Marshall explaining its objection to this one provision on the grounds that colonial revenues would suffer from a lower preferential duty which the British government could not sanction for political and economic reasons.157 This was a specious argument. British analyses


concluded that the loss of revenue would equal only 1 per cent of total colonial revenue.158 Furthermore, reductions in the price of imported goods would improve the conditions of life for colonial residents and more than compensate for the loss of revenue.159 Nonetheless, the cabinet proposed instead to substitute a 20 per cent reduction in the margin on canned fruits entering the UK for the reduction in colonial preferences, in the hope the US would still agree to the rubber concession, which Bevin could see would be beneficial to Britain’s financial recovery.160 There were also delays in securing the consent of the dominions. The Canadian concessions were problematic because lowering the preferential duty would create difficulties for local industries. Increasing the preferential rate to close the margin was acceptable to the US but contrary to the instructions of the Canadian government. In the current exceptional circumstances, however, Wilgress believed the duty could be increased on two items if it helped to achieve an Anglo-American settlement.161 Ottawa agreed.162 In addition, Australian consent for the modification of the treatment of canned fruit salad was required to finalize the agreement. Coombs travelled to Paris to telephone his government because it was impossible to place the call from Geneva. His government refused to make any additional offers affecting preferences. Brown was ‘despondent’ and Coombs was ‘very down-hearted’. Wilgress stepped forward and suggested Canada would agree to lower its preferences on raisins, gelatin and brandy in the hopes this would compensate for Australia’s inability to contribute to a resolution.163 This offer was typical of an emerging tenet of Canadian diplomacy to maintain its political and economic well-being by ensuring that AngloAmerican relations were harmonious and cooperative. It was evident by this time that Washington did not want the Anglo-American negotiations to end in failure. The Americans had realized that the only way to ensure there was a successful conclusion was for them to accept their inability to secure the elimination of preferential tariffs, either in the present or the future. Marshall and Clayton did so ‘with a clear lack of enthusiasm and, indeed, obvious discouragement’.164 However, they were prepared to work along the lines of the Brown–Helmore proposal. Clayton was mobilized in Washington to contribute to this final phase of negotiations. Clayton rejected the substitution of canned fruit for a general reduction in colonial preferences by 25 per cent and continued to press for the colonial concession.165 However, there was not a hint of breaking off the negotiations.166


Lord Inverchapel, the British ambassador to the US, also advised the Attlee government to cede the colonial concession. By making such an offer, Britain would receive more from the US. Moreover, to take colonial preferences out of the agreement now would ‘leave a rankling disappointment’.167 Whitehall mandarins agreed that the colonial preference was ‘innocuous to us and to the colonies’ and therefore the offer should stand.168 The dominions also urged the UK to agree to the reduction of the margin of colonial preferences. It was far better that Britain pay for its agreement with the US rather than rely on the dominions to whittle away a few more preferential margins, they argued.169 This pressure was decisive. Intransigence might destroy the sentimental and economic bonds of the Commonwealth. It might also turn the dominions against imperial preference, which would certainly destroy the tariff system because the ‘attack’ would come from within.170 Foreign Office advisers agreed that the damage that would be done to the Commonwealth if the UK allowed the negotiations to break down now would be ‘most serious’.171 Cripps, Bevin and Wilson therefore agreed that the cabinet should reverse its earlier decision to exclude colonial preferences from the final agreement.172 On 15 October the cabinet concurred. There were still details to iron out, but the basis for an Anglo-American agreement was now in place. One of the key players in these negotiations was gone, however. Will Clayton had devoted his public career to liberalizing international trade. His convictions had complicated the negotiations, as had his acrimonious personal relations with Cripps. His refusal to betray the trust he believed Congress had placed in him reinforced his inflexibility. In the end, however, he had come to endorse what was possible rather than what he believed was fair or right. But he did not see the agreement through to its conclusion. On 15 October he resigned. The reason he gave was the ill-health of his wife.173 In truth, she was not ill, just angry that her husband was more devoted to government service than his marriage. Clayton quit to salvage this relationship. Truman was furious, telling his staff: ‘I’d like to spank Sue … for taking Clayton out of the public service.’ (Less than two years later she sued for divorce after 46 years of marriage. They were reconciled the following year.174) Clayton’s resignation proved to be inconsequential because the framework for an agreement was already in place. The long anticipated Anglo-American dispute over preferences confirmed several facts about the importance of imperial preference to the UK and dominions, the nature of their association with one another in the Commonwealth, and their individual relations with the


Americans. It was evident that the commercial future of the Commonwealth lay in the gradual disintegration of formal ties. The dominions rejected all suggestions of systematic and deliberate expansion of Commonwealth trade because an expansion was contrary to their national political and economic interests. Bevin’s proposal for a Commonwealth customs union indicated that some British politicians continued to suffer from myopia when they looked at the Commonwealth. These misapprehensions were revealed time and again in the discussions that took place between members of the Commonwealth at Geneva. The dominions’ willingness to facilitate the final tariff agreement between the UK and US by agreeing to alter a few more preferences did not reflect a willingness to give in to British demands. An Anglo-American tariff agreement was in the best interests of their own broader foreign policy objectives, as well as their specific goal to conclude new tariff agreements with the Americans.

Intra-Commonwealth negotiations at Geneva, I: Canada–UK exchange of notes for the release from bound margins of preference, July–October Bilateral negotiations between individual members of the Commonwealth and the US revealed how Commonwealth members would work within the larger international community. There was no question that Britain and the dominions would participate fully and cultivate relations with states beyond the Commonwealth, beginning with the US. However, there was still scope for cooperation between Britain and the dominions. Habit, experience and overlapping interests perpetuated a tradition of association, all the while reinventing that tradition to better suit changing realities. However, the purpose, scope and possibilities of the Commonwealth were also revealed in intraCommonwealth negotiations at Geneva. Bilateral Commonwealth negotiations in 1947 were, in a way, a follow-up to the Ottawa Imperial Economic Conference of 1932. The negotiations and their results in Geneva confirmed that the national interests of Britain and the dominions were as firmly established as ever in the commercial realm. The difference was that in 1947, the Commonwealth loomed less large in the minds and horizons of dominion politicians than it had before the war. Consequently, dominion nationalism was not papered over with grand statements to the press or optimistic final communiqués testifying to the enduring value and bond of the Commonwealth. Instead, it was evident that the Commonwealth


would have to accept the primacy of national interest if it was to survive. Two intra-Commonwealth case studies are examined below: the Canada–UK exchange of notes and Anglo-Australian tariff negotiations. These discussions went to the heart of the enduring challenge to reconcile national interests with membership in the Commonwealth of Nations. These episodes shed light on fundamental and inter-related issues of independence, national identity, and the renegotiation of the rules and aims of association within the Commonwealth. Canadian officials had told their Commonwealth allies at the first meeting of the preparatory committee in the autumn of 1946, and again at the Commonwealth meeting in March 1947, of their intention to enforce margins of preference in the postwar trade regime only on a voluntary basis. In effect, they wanted a release from the contractual commitment to uphold fixed preferential margins because this commitment compromised their authority to set or modify the national tariff schedule. The Geneva tariff negotiations provided ample evidence of Mackenzie King’s long-held conviction that the Ottawa agreements compromised Canadian sovereignty. When the Australians, New Zealanders and South Africans refused to modify any preferences from which their exports benefited until the US improved its offer on wool, American–Canadian negotiations were effectively stalled. Like all the other negotiating teams present, the Canadians sought tariff concessions in the US above all else. This delay was deeply disappointing and frustrating. Even before this evidence of the iniquities of bound margins was exposed at Geneva, the King government had decided that it should finally extricate itself from what was seen as an intrusive and archaic form of imperial association that undermined Canada’s standing as an independent state. The tariff negotiations provided an ideal opportunity to accomplish a long-time objective without raising the cry that Canada was untying one of the bonds of the Empire and Commonwealth. Ottawa would simply let the new tariff agreements supersede the most recent Anglo-Canadian trade agreement (1937). Officials could present the lapsing of the 1937 trade agreement as a legal or technical necessity, thereby minimizing the political importance of their actions. In fact, the Geneva agreements did not automatically wipe out all previous tariff agreements. Consequently, Canada had to secure the consent of Great Britain to effect this change. Canadian officials did not initiate the necessary discussions with the UK straight away because they were not sure how to introduce this into the Geneva conference. Nor were Canadian repre-


sentatives keen to negotiate directly with Commonwealth delegates at Geneva, particularly the UK, in case Commonwealth negotiators pressed for the binding of new preferential margins.175 The wool impasse also stalled the Canadian cause, along with most tariff-related discussions, throughout the early summer months. The Canadians had their first real opportunity to present their case in connection with another issue: Britain’s limited bargaining latitude in Geneva. Recall that since most preferential rates were zero, Britain could narrow margins of preference by lowering the MFN rate or raising the preferential rate. When Anglo-American negotiations resumed in July, the US pressured the UK to narrow preferential margins. The UK hoped to comply with some of these requests by raising the rate of duty on dominion products rather than by lowering what was considered an already low MFN rate, as they had explained to the dominions at the Spencer House meeting. But before Britain could raise preferential rates minimally and selectively, the dominions had to agree to waive their rights. As Cripps pointed out, a ‘gentlemen’s agreement’ of this nature was ideal because London could raise preferential rates without having to abrogate the Ottawa agreements. A gentlemen’s agreement was definitely preferable to a full-scale renegotiation of the Ottawa agreements, another way to secure the necessary consent to raise preferential rates, which no one was keen to revisit. The third option was for London to repudiate the Ottawa agreements, but that would set off a political explosion.176 A gentlemen’s agreement, which was an informal understanding between governments, was the best way to restore flexibility to Britain’s tariff policy because it would minimize the damage that might be done to Commonwealth relations as a result.177 The Canadians excluded themselves from a gentlemen’s agreement and stated their intention to conclude a separate agreement with the UK through an exchange of notes to free both parties from their obligation to adhere to specified preferential margins. An exchange of notes was more formal than a gentlemen’s agreement and would legally alter the substance of the Ottawa agreements. The British would then be able to raise tariffs against Canadian exports in their negotiations with third parties, giving London some of the flexibility it badly needed. An exchange of notes would also restore the tariff authority of the government of Canada. Shortly thereafter, Wilgress presented the British delegation with a draft note. He reassured the British that their exports to Canada would not suffer because Canadian interests were best served by maintaining the margin for revenue purposes and to shelter indus-


tries from the full force of international competition. The exchange would coincide with the signing of the general agreement on the charter and the results of the bilateral negotiations.178 Michael Hart, a historian of Canadian trade policy and tariff negotiations, asserts that the significance of the Canadian proposal went far beyond a technical and legal modification. According to Hart, repealing the contractual commitment to maintain preferential margins ‘would amount to another Canadian nail in the coffin of Commonwealth economic cohesion’.179 Judging by Cripps’ reaction to the proposed exchange of notes, the president of the board of trade shared Hart’s understanding of the deeper significance of the Canadian proposal. Cripps had some economic concerns. For instance, he doubted that the Canadians would be able to withstand the temptation to cut preferential margins in exchange for commercial gains elsewhere. Consequently, he speculated that the Canadian proposal ‘might lead to the gradual disintegration of the system’. What Cripps most objected to, however, was the timing of the proposal. With preferences under attack from the Americans, the arrangement would only encourage the critics of imperial preference to redouble their efforts. Cripps recommended that the government approach Mackenzie King directly and explain the merits of a gentlemen’s agreement to him. Bypassing the delegation in Geneva seemed appropriate as British officials believed Wilgress was acting on the prime minister’s special instruction. But Cripps was not optimistic that an appeal would succeed. King’s ‘ideological objections to bound margins’ were well known. Failure would not be catastrophic. Britain would still regain a measure of flexibility in its tariff negotiations. Moreover, the exchange of notes would be ‘less damaging to Commonwealth relations generally than a formal denunciation of the Agreement’.180 Britain’s financial crisis, which threw the Geneva conference into a tailspin, postponed further consideration of the relative merits of the gentlemen’s agreement and the exchange of notes. It was not until late August that Attlee sent a telegram to King outlining the virtues of a gentlemen’s agreement, as opposed to the exchange of notes. His principal objection to the Canadian proposal was the encouragement it would give to the Americans by confirming that imperial preference was crumbling under pressure: ‘I fear that an agreement such as that suggested would be interpreted as the first step in a disintegration of the system and would inevitably be exploited abroad as evidence that the attack on preferences had achieved some success and that a precedent had been set’, Attlee wrote. The British prime minister also


worried that an exchange of notes would diminish the negotiating clout of the Commonwealth vis-à-vis the US. A gentlemen’s agreement would have neither of these unfortunate effects.181 Attlee did not admit, but certainly considered, the distinction between a formal agreement, such as Wilgress proposed, and an informal arrangement, which the UK favoured in the gentlemen’s agreement.182 Informality allowed more scope for cooperation and upheld the appearance of a special Commonwealth association, different from relations between foreign countries and occupying a unique place in the international community. Attlee’s appeal did not move Canadian bureaucrats. The current crisis in Anglo-American negotiations convinced Ottawa of its approach. By overturning the principle of bound margins the government of Canada showed its willingness to negotiate, which might encourage foreign delegations to make far-reaching concessions to increase the momentum of tariff revisions. Release from bound margins might also satisfy American demands for more significant concessions affecting preferences. As Dr Clark, Canada’s deputy minister of finance, observed, ‘It is hard to envisage a more propitious moment than the present for adoption of a far-reaching solution of the problems raised by bound margins of preference.’183 Wilgress was so convinced of the merits of the exchange of notes that he had informally notified Holloway that Canada wanted to conclude a similar exchange of notes with South Africa. He also told Holloway that the Canadian delegation would approach Coombs to this effect. Ottawa was especially keen to conclude agreements with these two dominions because they had shown themselves most willing to uphold the rights of the beneficiary of preferences, thereby ‘hamper[ing] our freedom of action when we come to negotiations with foreign countries’.184 Canadian bureaucrats took one month to draft a reply to Attlee’s telegram because of extensive consultation between Ottawa and officials in Geneva.185 When the Canadian government sent it on 24 September the message was clear: the exchange of notes would proceed. King insisted that the exchange did not suggest ‘an impairment of the Commonwealth ties’. Ottawa renewed its assurances that British products would not be subject to higher tariffs. Moreover this arrangement would give the British freedom to adjust their tariffs upward. Release from bound margins was also consistent with the overall aim of Canadian commercial policy to liberalize international trade. Forsaking some advantage in subsequent rounds of tariff negotiations was a small price to pay for this larger objective, King argued.186


The British delegation decided to make the best of Mackenzie King’s reply. ‘We are firmly convinced that it is much better to accept the situation with a good grace and to preserve goodwill rather than to be difficult about it and have the bound margins disappear in an atmosphere of recrimination.’187 Nonetheless there was concern in London that the British government would open itself to criticism for destroying imperial preference. British officials were prepared to counter this accusation by explaining that the initiative for the exchange of notes originated in Canada. They also planned to play up the interpretation that this was a way to retain preferences, not undo them, thereby ‘prevent[ing] foreign Governments from making much political capital out of it’.188 Britain prepared for discussions about the content and wording of the exchange of notes, while urging the other dominions to consider the merits of the gentlemen’s agreement. British officials welcomed comparable Canadian exchanges of notes with Australia and South Africa because additional exchanges would substantiate the claim that the Canadian government was freeing itself from bound margins of preference generally.189 However, progress with the southern dominions lagged far behind the Anglo-Canadian discussions. By 2 October Wilgress had not got beyond a preliminary overture with his Australian colleagues. The delay arose because of the domestic political problems facing Australia as a result of the Geneva proceedings.190 Discussions with South Africa were more promising. By mid-October Holloway received a draft text for a Canada–South Africa exchange of notes. It stipulated that those preferences that survived the Geneva negotiations would remain in effect and the Canadian and South African governments could modify them unilaterally. Otherwise their exports were guaranteed MFN treatment.191 The Canadian commitment to the exchange of notes deepened as a result of the imminent collapse of Anglo-American negotiations in early October. The King government was horrified at the prospect of a falling out between its two most important allies. Ottawa was willing to help resolve the deadlock by making additional concessions of its own, even though it could only do so by raising rates of preference. But the government did wonder whether it might avoid the necessity of raising the preferential duty on tin plate and cotton items by substituting the cancellation of the obligation to maintain fixed margins which the exchange of notes with Britain would produce. The government cabled Wilgress to inquire if it would be ‘possible to persuade the United States that it would be to their greater advantage for Canada to seek and obtain a general release from bound margins (along the lines of the proposed


exchange of notes) than for the United States to secure eliminations of margins on these two items through the raising of preferential rates?’192 The implication that the exchange represented a significant commitment to the modification of the preferential system sent exactly the kind of message British officials were determined to suppress. Indeed, throughout the discussion of the exchange of notes, British officials insisted that there should be no leaks. It would be explosive in Britain and would undermine the Geneva settlements. But on 19 October there was a premature press report. The New York Times disclosed information about the proposed exchanges of notes between the governments of Canada, Britain and South Africa. The report claimed that the objective was to abolish ‘the obligation to maintain the imperial preference tariffs under the Ottawa accords of 1931’, thereby repudiating the principle of a special advantage in their commercial dealings.193 Because of the failure to distinguish between preferential tariffs and preferential margins, Helmore was able to deny the veracity of the story. ‘So far the Press have not properly caught on to the difference between preferences and bound margins’, Helmore explained, ‘though the New York Times story … gets very close indeed in speaking of the “obligation to maintain imperial preference tariffs under the Ottawa accords of 1931”.’194 He knew, however, that his denial rested on a technicality; the conclusion about the implications for trade relations between Commonwealth countries was correct. The report sparked anxious queries from dominion governments about Canadian intentions.195 In their clarifications Canadian officials insisted their objective was to modify trade agreements with Commonwealth countries without seeking the abolition of preferences. New Zealand’s Fraser government was reassured that, ‘Whatever the outcome Canada will not … discontinue preferential treatment to Commonwealth countries.’196 To some extent Ottawa was splitting hairs. To make matters worse for the UK, the day after the story appeared in the New York Times, British officials realized that the Canadian– Australian exchange of notes would not be ready by the end of the conference, now only eight days away. Wilgress explained that the proponents of imperial preference in Australia were making the country’s accession to the Geneva agreements problematic. Ottawa realized that an exchange of notes with Australia would inflame the controversy. Wilgress also believed the Australians would be more inclined to assent to the proposal if a model agreement was first concluded with the UK, a tactic which he thought the British understood.197 Finally, because Coombs had returned to Australia before a final text was agreed upon with the UK, it had not been possible to initiate talks with the


Australians. The British did not welcome the prospect of being singled out. Consequently, Helmore suggested that the AngloCanadian agreement would not come into effect until comparable arrangements with the two dominions were ready. Wilgress balked and advised Ottawa to send an objection to the Attlee government, explaining that the Canadians were left with the options of breaking off negotiations with the British or denouncing the 1937 trade agreement. Given these alternatives the exchange of notes was a preferable course.198 Wilgress’ message jolted Norman Robertson and Hector McKinnon, the two Canadian officials who were then taking the cabinet through the tariff agreements concluded at Geneva. Robertson and McKinnon worried that if they revealed Wilgress’ message, the cabinet might not ratify the Geneva settlements. Instead, they decided to approach the British high commissioner to convey their distress at London’s ‘eleventh hour commitment’. They tried to reassure the British by expressing Ottawa’s determination to be free of the obligation to apply bound margins to Australian exports, even if they had ‘to denounce their existing trade agreement with Australia’. Canadian representatives intended to take up negotiations with Australia for a comparable exchange of notes at the ‘first opportunity’.199 Robertson and McKinnon’s intervention with the high commissioner was effective, even though Whitehall did not understand the logic or agree with the veracity of Canada’s explanation. For example, officials at the British Foreign Office denied ever knowing that an exchange of notes with Australia depended on prior agreement with the UK. Nor were British bureaucrats certain why the failure to exchange the notes would endanger ratification of the tariff agreements. Privately, British officials in Geneva blamed Wilgress’ ‘excessive caginess’ for the confusion. He did not seem to understand that the British were unwilling to take a step which might open them to the accusation that they were destroying imperial preference. Moreover Helmore believed Wilgress had ‘double-crossed’ him by taking what was ‘a personal and informal suggestion’ and blowing it out of proportion by reporting it to his superiors in Ottawa. However, since there were no obvious benefits to be derived from a protracted dispute, the British agreed to proceed with the exchange of notes. They did ask the Canadians to help minimize the potential political backlash by announcing that the release from bound margins was a policy they intended to apply uniformly throughout the Commonwealth.200 Robertson and McKinnon were delighted to comply.201


The British Foreign Office was reassured that at least the Canadians and South Africans would complete their negotiations in time for the publication of the trade agreements and charter, as well as the Canada–UK exchange of notes on 18 November.202 But in the final week of the Geneva conference the South Africans began to vacillate. While Holloway was commenting on a draft text and suggesting changes, Prime Minister Smuts of South Africa could not accept the proposal because it would radically alter ‘the whole basis of the Ottawa system’. Geneva was not the right place to introduce such a fundamental revision of imperial preference. Nor was it an appropriate question for bureaucrats to take up. And it was a subject that should be presented to the entire Commonwealth rather than be dealt with on a bilateral and piecemeal basis. Canadian officials regretted South Africa’s unwillingness to cooperate. Ottawa attributed it to ‘a misunderstanding of our policy’ as well as ‘a lack of appreciation of our determination to free ourselves of bound margins’.203 Wilgress broke the news to Helmore that the agreement with South Africa could not be finalized in time for publication with the GATT agreements and the UK–Canada exchange of notes. To appease the British, Wilgress proposed to announce their intention to reach a similar agreement with the South Africans, just as they planned to do with Australia.204 But the South Africans vetoed any suggestion of a future exchange of notes.205 The exchange of notes with Canada was far from ideal from Britain’s point of view. But it was not without merit. Even though Britain disliked the political significance of the exchange of notes, it did allow the British to raise tariffs on Canadian items, which gave London some flexibility in its other tariff negotiations at Geneva. The other dominion representatives were even less accommodating of Britain’s inability to increase tariffs. London tried to push the southern dominions to accept a gentlemen’s agreement after Canada insisted on concluding the exchange of notes. The initial discussion with the dominions began well and by 10 October London forwarded the text of an agreement to Commonwealth governments for comment. Australian comments revealed how difficult it would be to finalize the wording of an informal agreement. Whereas the British proposed that when any Commonwealth government found it could not uphold a tariff commitment without doing harm to itself, the dominion governments affected would give ‘sympathetic consideration’ to their representations, Australia proposed only to give ‘consideration’. This change was not acceptable in London.206 The Australians proposed in the final days of


the conference that notes, similar to those concluded between Canada and the UK, should be exchanged. Britain rejected this suggestion too.207 The difficulties in reaching a gentlemen’s agreement with the dominions notwithstanding, this was evidently the solution the British preferred. The reason was primarily political; an exchange of notes restored the right of Commonwealth governments to alter their tariffs unilaterally. The gentlemen’s agreement advanced British political objectives because it stipulated that consultation would precede any modifications. On the eve of South Asian decolonization the British did not want to establish a precedent for disentangling the links with the Commonwealth. ‘It is the wrong time to create the impression abroad and in the Commonwealth itself that the new multilateral agreements are weakening the links between Commonwealth countries.’ In the eyes of British officials, an informal arrangement that triggered consultation strengthened the Commonwealth connection as opposed to a formal agreement which eliminated the need for consultation.208 The tradition of consultation before action would endure once the colonies became independent, perpetuating the impression of a cohesive and intimate Commonwealth with Britain at its centre. Consequently, at Geneva the British negotiated cautiously to offset the impression of decentralization even though, as they conceded in the Canada–UK exchange of notes, they could not prevent any Commonwealth member from terminating aspects of their traditional relationship.

Intra-Commonwealth negotiations at Geneva, II: Anglo-Australian tariff negotiations, April–October Of the more than 120 possible bilateral pairings among the participating nations at Geneva, there was a conspicuous absence of intraCommonwealth negotiations. On 1 May the question arose at a meeting of the conference secretariat why intra-Commonwealth negotiations were not scheduled to take place alongside other bilateral pairings.209 The answer was simple. To the dominion delegates, negotiations with the UK, another dominion, or the colonies departed from the primary opportunity that the Geneva negotiations presented: to penetrate the American market. In addition, there was little potential to expand intra-Commonwealth trade bilaterally, for example between New Zealand and Canada, to warrant the time and energy that tariff negotiations would require. Moreover the dominion delegations were small and overworked. Increasing their burden by entering into intra-Commonwealth negotiations would tax their staffs beyond


their limit and might adversely affect potentially more lucrative bargains with non-Commonwealth countries.210 There was also a technicality that deterred the dominions from negotiating with one another in Geneva. If Commonwealth members lowered a preferential tariff rate, they would also have to lower the MFN rate proportionally to comply with the stipulation that preferential margins not be widened. But there was no incentive for the countries which benefited from incidental concessions to reward the Commonwealth government making the change. In addition, because preferences frequently doubled as protective barriers for domestic industries, modifying preferential duties was more problematic than reducing the higher MFN band of tariffs.211 Britain did not share the dominions’ lack of interest in intraCommonwealth negotiations. Australia was the dominion market with the most potential for expansion. But Australia was the dominion that objected most forcefully to intra-Commonwealth negotiations. London was not put off. The Dominions Office persisted in trying to persuade the Chifley government to enter into negotiations with Britain until the opening of the conference. It reminded Australia that the reduction of preferential rates was an important British objective, not to be overlooked in the attention devoted to the American demand to narrow preferential margins. The UK did not only look to the American market for a remedy to its export problems. Rather London sought to enlarge its trade globally. Narrowing preferential margins potentially hurt the position of British exports in dominion markets because foreign competitors would be in a relatively stronger position.212 But Britain was not just looking to include lower Australian duties as one essential part of a multilateral package that would come out of the Geneva negotiations.213 It was also trying to remedy the inequalities of the Ottawa agreements. As a result of negotiations in 1932, Australia received duty free treatment in the British market, whereas Britain faced high tariffs in Australia. These hurdles were not easy to surmount just because they happened to be preferential. Consequently, this episode in intra-Commonwealth negotiations belongs to the story of the evolution of the Commonwealth in the postwar world, and in this respect was forward-looking. But it was also a throwback to an earlier time and place when Britain had given up far more than it received. Now was Britain’s opportunity to standardize the tariff treatment the members of the Commonwealth extended to one another. The first task was to persuade Canberra to negotiate. The Chifley government objected to negotiations with Britain because it did not want to take action which suggested it was contracting the preferential


system. The Australians were also reluctant to lower protection. Britain tried to answer what was in part a concern about political appearances. British officials agreed to pare down their list of requests by taking out all items included in the lists of other nations. British negotiators also excised preferences where they wanted only a binding of the present rate, tariffs that the tariff board was likely to reduce after a domestic review process, and items which would damage Australian industries. Anglo-Australian negotiations would not then stand out. Coombs was not convinced there was a basis for an agreement because of the paucity of possible British concessions. Britain could safeguard the niche for Australia’s agricultural produce by binding duty free status.214 But this was not a genuine concession because it was in British interests to keep the price of food low. Canberra could ask the British to limit protection of their own agricultural sector. British consent to modify preferences in Australian negotiations with third parties was also helpful, although again not a genuine concession.215 It did not seem possible to conclude a balanced Anglo-Australian tariff agreement. Nor could Britain intimidate Australia into negotiating, as Australian officials did not take seriously the threat of increased duties against their products.216 Consequently, Coombs urged his government to employ an argument, already used repeatedly, that there was no basis for a ‘mutually advantageous agreement’ with the UK. However, he did not counsel a policy of intransigence, advising that the Australian delegation in Geneva should address items of importance to the UK in its negotiations with other countries. Britain would receive third party benefits when all of the tariff changes were bound together in a multilateral patchwork.217 In so doing, the need for Anglo-Australian negotiations might fade. The Australian government decided to go one step better than Coombs suggested. The crucial consideration for Chifley was whether the tariff board in Australia could retain its ultimate authority over the setting of tariffs. The implication was that any local industry adversely affected by a change made in Anglo-Australian negotiations could appeal to the tariff board which could restore protection regardless of the terms of an Anglo-Australian agreement.218 With this qualification in mind, Canberra gave in to British entreaties, although insisting that negotiations would be ‘exploratory and non-committal’ with an eye to determining only whether there was a basis for a mutually advantageous agreement. Canberra refused to accept the legitimacy of the British argument that the negotiations should correct the discrepancy in their preferential treatment of one another. Australia would never


accept ‘any one-sided revision providing for substantial further tariff reductions on our part … and with nothing to show on the other side’.219 This was not an auspicious beginning, but it was a beginning. Although the UK had narrowed its list of requests of Australia, there remained over 350 items on which they hoped to secure the reduction of the preferential rate of duty. For the most part, Britain requested minor reductions of 5 per cent to the preferential rate.220 This seemed to be a reasonable demand that would not involve great sacrifice on the part of Australian industries. What Britain could offer in return was uncertain. Coombs’ return to Canberra in connection with the wool crisis allowed him to take up the subject of Anglo-Australian negotiations with officials and politicians in Australia. Coombs outlined the merits of negotiating at Geneva, the principal one being that Australia could seek compensation for the automatic reductions of the MFN rate which would accompany lower preferential rates. Thus the reward would be doubled. In this way he turned a weakness into an opportunity. He also encouraged his colleagues in Canberra to judge the benefits of tariff negotiations, not in a bilateral context, but as part of the ‘aggregate of concessions’ made at Geneva. His advice prompted officials to consider the methods by which tariff amendments could best be made. For economic and political reasons it was preferable to offer many small concessions, with binding reductions where the commodity was particularly important, Coombs argued. The discussions in Australia implicitly acknowledged that the negotiations would proceed.221 By early June, Britain and Australia agreed to include their negotiations as part of the larger Geneva process. In negotiations Australia could seek compensation for any modifications which automatically brought down the MFN rate too. And Australia could try to apply the concessions granted in this set of negotiations to their negotiations with the US.222 Officials back in Canberra busied themselves devising a list of requests they could make of Britain in order ‘to secure what looks something like a balanced arrangement’.223 These negotiations had a long way to go before they would reach the state of readiness with which delegations were expected to arrive at Geneva. Canberra made up for lost time and by early July presented several ways in which Britain could pay for the lowering of preferred rates of duty in the Australian market. First, they could maintain duty free entry where it already existed. This was a minor sacrifice. Second, Britain could clarify its agricultural and commodity policies which would give the Australian government a better idea of how to maintain its place in the


British food market. Third, Britain could give up some of the preferences it enjoyed but Australia did not, particularly in South Africa and India. That would enhance Australia’s competitive position relative to British producers. Finally, Australia added specific requests, such as lowering revenue duties on wines, brandies and liqueurs.224 Britain was glad to meet some of these demands. By the end of July it had already sent to Australia a draft of its agriculture and commodity policies. Others, however, were ‘impossible to grant’.225 On the flipside, British officials did not believe that Australian offers to lower preferential rates would have much of an effect. They despaired that even if they complied with Australian demands in full, ‘there is no great hope of any substantial reduction at Geneva in the level of protection at the present time’. Some wondered whether it would not be better to leave the entire process of tariff revision up to the tariff board. The only tangible benefit was Australia’s decision to eliminate primage duties on items included in the negotiations. British records described them as ‘an extra and annoying charge’. However, primage fees were only ever intended to be temporary, and Britain had long complained about them. Thus London saw Australia’s concession as overdue and not necessarily something that Britain should compensate now. To make matters worse, if the US and Australia broke through the logjam over wool, Britain could reasonably expect to have to agree to the narrowing of preferential margins in Australia to meet US demands. In so doing, they would damage their own competitive position.226 Anglo-Australian discussions continued all summer, with both sides chipping away at an agreement. Australian attention was focused elsewhere, on the Australian–American stand-off. Moreover, the Australians could not persist in their negotiations with Britain because their decisions would lower the MFN rates by the application of the automatic rule. The US would no doubt benefit by some of these decisions which would in turn weaken Australia’s leverage with them. The delay was not entirely objectionable to London because only once Australia had finalized its concessions to the US would Britain understand exactly how its competitive position had been affected. It could then seek specific concessions in response to the agreement with the US. But if negotiations with the US were more important than negotiations with the UK, the Chifley government fully appreciated the value of the British market to its own prosperity. ‘The substance of the British market should not be thrown away for the sake of the shadow of possible markets in the dollar area or elsewhere.’ The importance of the British market logically necessitated that Australia do all it could to


help Britain to regain conditions of prosperity. It could do so by increasing sales to the dollar area, thereby filling up the sterling area’s dollar coffers. It could restrict dollar imports, thereby slowing the depletion of the sterling area’s hard currency reserves. It could waive a portion of Britain’s wartime debt.227 It could also help Britain sell more exports by making its market more accessible. This economic reality undercut Australian objections to concluding an agreement with the UK, although it did not dent Australia’s determination to achieve a balanced agreement. Australia and Britain only entered into formal negotiations in September. Both delegations examined one another’s offers, introduced new requests and sought ways to minimize their concessions in the hope of improving the final agreement from a national point of view. Britain was without question in an inferior bargaining position, which it tried to offset by threatening to withhold or promising to extend its consent to change the preference that Britain enjoyed when they affected Australia’s negotiations with other countries. Australian and British negotiators finalized the terms of their agreement in the middle of October, as part of the general dash to wind up negotiations before the conference ended. Britain bound duty-free treatment on Australian cheese, condensed and powdered milk and rescinded a few preferences elsewhere in the Commonwealth to equalize commercial opportunities for Australian exporters. Britain did turn down the request to improve tariff treatment in the colonies, telling their Australian counterparts to negotiate directly with the appropriate colonial administration. London had earlier delivered a statement of its agricultural policy, which was discouraging because it revealed the British intention to increase production for domestic consumption. One valuable concession, which was shared with South Africa, was the increase in the preferential margin on heavy wines. Although this violated the understanding that margins of preference would not be widened, the foreign governments affected approved the change as a reward for the preferential advantages the two southern dominions had given up. Of the 357 British requests scheduled, 70 were fully met, 149 were partly met, and 75 items benefited indirectly from the elimination of primage duties. On 63 items no change was made. The Australian delegation concluded that the arrangement was heavily weighted in favour of the UK. But they did not try to change this, acknowledging that it was impossible to achieve a balanced settlement. Thus the delegation in Geneva urged the Chifley government to endorse the agreement. The British were also satisfied. Even though


Australian tariffs remained high and Australia had refused outright to accommodate a few requests, Britain now enjoyed ‘a preferential tariff which, in all the circumstances, can be described as reasonable. It is certainly well below the level which the Australians genuinely feel they must have to protect themselves against competition from foreign countries.’ British delegates remarked with satisfaction that ‘the Australians have come a long way since Spencer House’.228 Anglo-Australian negotiations were no different from those between two ‘foreign’ delegations. They were marked by a stubborn resistance to yield advantages without securing compensation. Narrow national calculations of costs and benefits ultimately determined whether negotiations were feasible. Australia’s eventual decision to negotiate was neither charitable nor selfless, for an economically strong Britain was essential to the prosperity of Australian agricultural producers. These negotiations also exposed part of the myth of preferences. In the Australian case, preferential rates effectively prohibited certain British exporters from competing for the market. There was no tangible advantage in the margin between the general and preferential rates of duty. These negotiations also revealed the unbalanced nature of the Ottawa agreements of 1932. Britain and the dominions had not come together in Ottawa to work collectively towards a better economic future. National interests had shaped dominion and British conduct. The British and dominion governments finalized agreements in Ottawa only if they had advanced their national interests. Fifteen years later, the fundamental assumptions of intra-Commonwealth negotiations were unchanged. National interest determined whether there would be negotiations and a settlement. However, the Anglo-Australian tariff agreement did help offset the imbalance of the 1932 agreements in which Britain had given up much and received significantly less in return. During the 1947 negotiations, Australia was somewhat more forthcoming, although it adhered to the test of national interest as strictly as ever. In 1932 dominions’ nationalism had already been firmly established on bread and butter matters. After World War II, economic nationalism appeared stronger and more significant for the Commonwealth because there was no attempt to disguise or hide the reality of dominions’ nationalism behind rhetorical, emotional or political attachments to the Commonwealth. The Geneva negotiations also exposed British weakness starkly and in unexpected ways. Although Britain was a more powerful nation in the international community than Australia, because London needed Australian political and economic support, Canberra could dictate to a


large degree the parameters and nature of its relationship with the UK. Imperial preference and the tariff negotiations they engendered revealed that in Commonwealth relations the tail frequently wagged the dog. What Britain in effect fought for in its negotiations with Australia was to enshrine equality as a basic operating principle in the Commonwealth. The dominions could no longer lean on Britain without allowing Britain to lean back on them. Equality was a principle the dominions had originally defended and extracted from Britain. But they had been slow to reciprocate, in the process exploiting British weakness and vulnerability. Fifteen years later, the British were too weak to allow the exploitation to persist.

The significance of Geneva There were two types of negotiations involving Britain and the dominions at Geneva: those involving delegations beyond the Commonwealth and those involving only, or primarily, the members of the Commonwealth. Both shed light on the changing nature of the Commonwealth. The fact that negotiations with the US overshadowed all other bilateral pairings involving Britain and the dominions confirmed that the Commonwealth could not be their first or only point of reference. What these negotiations demonstrated, as did those involving the UN, IMF and IBRD, was that the wider world directly and profoundly shaped the Commonwealth. As a result, membership in the Commonwealth or international organizations like the ITO could not be mutually exclusive options because the Commonwealth was a subset of the international community, from which it could not separate itself. These negotiations also confirmed that the old Commonwealth could not be revived. Indeed, intra-Commonwealth negotiations revealed that revisiting the past could be dangerous. Consequently, British officials tried to ensure there would be no repetition of the Ottawa Imperial Economic Conference of 1932. Because of changing expectations, the Ottawa conference could never be exactly replicated, even if some die-hard imperialists continued to hope that the Commonwealth could reverse course and become a discrete, centralized and integrated family of nations. The intra-Commonwealth negotiations over tariffs, the use of quotas and the exchange of notes, as well as Bevin’s proposal for a Commonwealth customs union, confirmed the futility of such a vision. Even in intra-Commonwealth discussions the outside world poked through, affecting strategies, goals and policies.


The Commonwealth was not destroyed even though the Geneva negotiations confirmed that the Commonwealth was irrevocably a part of the international order. Throughout the conference there were parallel Commonwealth meetings to consider either the tariff negotiations or questions about the trade charter. These parallel meetings confirmed that members continued to value the Commonwealth as a forum to test ideas, devise strategies and find allies. There was one clear limit to cooperation: wherever loyalty to the Commonwealth jeopardized national interests. However, the recognition of members of the danger that the Commonwealth might fragment inspired a measure of selfrestraint. In this sense, membership in the Commonwealth encouraged accommodation and compromise, instead of narrow self-interest and intransigence, which helped Britain and the dominions to get along better in the world. Their ability to work together, within limits, and on specific questions also confirmed that there were occasions when common interests arose–or national interests did not collide. These were not necessarily enduring common interests or ones entrenched in an intertwined historical experience. Rather, new conditions created new problems and the Commonwealth proved its relevance and utility by helping its members to better meet new challenges. This optimistic assessment must not be exaggerated. If the Geneva negotiations revealed that there was a purpose for and benefit from membership in the Commonwealth, the Commonwealth on its own was inadequate to satisfy the varied and growing needs of its members. The Commonwealth would have to become a part of the world, and not exist as a world unto itself, in order for Britain and the dominions to continue to value their membership in an association rooted in their colonial pasts.

8 The Havana Conference and the Reception of the GATT Agreements across the Commonwealth

Perhaps more than any other single factor, imperial preference represents a source of friction in the commercial relations of the United States and the members of the British Commonwealth.1 (Department of State Policy Statement) Empire preference is a political concept with no economic meaning.2 (Mr Falstein) The Geneva conference was but one step in the long process of reforming international trade. Three weeks after the Geneva conference ended, over 1000 representatives from 56 countries gathered in Havana to consider the trade charter afresh. For most developing nations this was the first time they were included in discussions of the postwar trade order. They seized their opportunity and proposed over 800 amendments that diluted the liberal nature of the charter and ‘emasculated the carefully developed compromises worked out in Geneva’.3 The amendments confirmed that the developing world wanted recourse to the practices that had facilitated industrial development elsewhere in the past, but were now banned or sharply circumscribed under the ITO. In so doing, they made the point that freer trade practices could be ill-suited to rudimentary and developing economies. Reconciling the differences between developed and developing nations was the foremost preoccupation at the Havana conference.4 There were no tariff negotiations and therefore no direct challenge to imperial preference. But the debate over preferences was not entirely at an end because the principle of regional preferential blocs resurfaced in Havana in connection with developing nations. As a result, 238

The Havana Conference and the GATT Agreements 239

Commonwealth representatives were forced to consider again whether to defend or let go of the imperial preference system. On the sidelines of the Havana conference, the members of the Commonwealth reopened discussions of the implications of British membership in a western European customs union, in turn reviving Bevin’s proposal for a Commonwealth customs union, thereby provoking a general discussion of the economic future and relations of the Commonwealth. These two issues – new preferential trading blocs and British membership in a western European customs union – finish the story of the unfolding economic relationship between Britain and the dominions as it was revealed and affected by international negotiations.

Postscript to Geneva: the Havana conference on trade and employment, 21 November 1947–24 March 1948 Regional preferences The Anglo-American decision in 1945 that no new preferences would obstruct postwar trade had been a bilateral agreement. In Havana, representatives of Latin and Central America, the Middle East, and the Scandinavian countries called for the creation of new regional preferential trading blocs to stimulate economic development.5 The British delegation strongly opposed the amendment because it discriminated against the imperial preference system which could not expand. British negotiators worried the British public would demand to know why their preferential system could not grow while new preferential arrangements came into being, a question for which they had no good answer.6 British officials were far more worried about the political repercussions than the loss of any potential commercial advantage. So UK officials dug in their heels in opposition to the proposals. Although the US had originally opposed the regional preference amendment on the grounds that it was incompatible with commercial liberalism, larger political considerations soon reversed this position. Not only was the ITO essential to the regulation of international trade and foreign relations, but American leadership was at stake. If the ITO should fail, the US would be discredited. American leadership took on a new importance in the context of the Cold War, in full swing by the start of the Havana conference. Consequently, Washington’s real fear was not just that American prestige would be tarnished, but that this would strengthen the Soviet cause, putting Moscow ‘in a better position to bring other countries under their economic and political influence’, while leaving ‘the non-Russian world without a rudder in


the international economic sea’.7 Forging a trade charter with wide membership, which would act as a deterrent to communism, was more important than rigid adherence to liberal trade practices. Consequently, the US softened its position towards the amendments of developing countries, and agreed that regional preferential trading blocs should be permissible under the ITO. The British were irate at the American turn and disenchanted with the Havana conference as a whole. On 25 February 1948 Bevin, Cripps and Wilson handed an official note to Lew Douglas, the US ambassador in London, protesting that their preferential system would be treated differently, and less advantageously, than the new contiguous preferential arrangements. Britain could tolerate regional preferential blocs only if the UK could extend new preferences to its colonies. But British ministers doubted this resolution was possible and they called for an adjournment of the whole conference for three months. Otherwise, they warned, there would be no British signature on the final agreement of the conference.8 While the British were lobbying for a postponement that would likely be terminal, American officials in Havana were determined that the ITO would succeed. As Clair Wilcox wrote: ‘The Havana steamroller cannot be stopped.’9 Washington did not accept British objections as legitimate. Rather British opposition to regional preferential blocs seemed yet more proof that the UK had never been genuinely committed to the liberalization of international trade. In addition, London’s specific objection about preferences was unwarranted because the UK continued to enjoy special treatment. The British preferential system was beyond the authority of the ITO whereas the organization had to sanction the creation of new blocs. The Americans ultimately made sense of the British position in terms of London’s economic weakness and the unspoken fear that ‘Britain can never face free competition and must seek sheltered markets through preferential arrangements, discriminatory bilateral contracts, and barter deals.’ Now, realizing that the ITO charter might actually be finalized, the UK was ‘seeking to destroy it’.10 As usual, the UK turned to the dominions for support and reinforcement, explaining that the establishment of new regional preferential blocs would create political difficulties by ‘mak[ing] it much harder to defend the general freezing of the Ottawa system of Imperial Preference’.11 The British position met with a cool response, ranging from ‘opposition on the part of Australia and New Zealand’ to ‘silence on the part of Canada and South Africa’.12 Some restraints on commercial practices were better than none at all.13 American officials present


at this meeting were well satisfied with the dominions’ reactions: ‘Australia and New Zealand flatly rejected UK position. Canada and South Africa remained silent. Europeans just smiled.’14 New Zealanders were not silent for long; they took the lead in disabusing the British of any hope of support within the Commonwealth. New Zealand’s lack of sympathy arose because, as a developing nation, the amended charter was generally more to its liking.15 Wellington regarded British objections to regional preferences as short-sighted. New preferences would promote the economic growth of developing nations, increase purchasing power, and enable them to buy British exports. The British did not give up, sending personal messages to senior dominion officials explaining that there would be a political fallout in response to the discriminatory treatment of the British preferential system.16 These entreaties were also futile. In its stubborn opposition to the creation of new preferential trading blocs, the British acknowledged that they had lost the support of their Commonwealth allies, ‘even on the question of new preferences’.17 A broader definition of what constituted a preferential region defused British opposition to new preferential blocs. Delegates discarded geographical contiguity as the essential criterion for an economic region in favour of a looser definition as ‘one formed by countries with long standing political and economic ties’. The expectation was that the Empire and Commonwealth would qualify as an economic region and therefore be eligible to introduce new preferences. However, the ITO was under no obligation to recognize that members of the Commonwealth and Empire did constitute an economic region. Thus the new definition was sufficiently non-committal that British fears persisted. However, the UK could not afford to be intransigent. As Cripps (now chancellor of the exchequer), explained, the ITO would act as a focal point for the regulation of international trade, a matter of utmost importance to Britain since it ‘cannot hope to recover viability at a tolerable standard without a restoration of the triangular flow of trade’. Moreover British officials reasoned that they could sign the final act of the conference, thereby ensuring they were not blamed for its failure without necessarily ratifying the Hanava charter. This would be decided away from the pressure of their American and dominion colleagues. In the meantime, many British officials still feared the provisions affecting preferences would spark an attack on the government. The British therefore prepared a reply which denied the importance of preferences to the perpetuation of Commonwealth trade; bulk purchase agreements, long-term contracts and development programmes did more to secure the economic integra-


tion of the Commonwealth than preferential tariffs.18 This reply confirmed the demotion of imperial preference in the pantheon of Commonwealth symbols and bonds. Its value now derived from its material contribution to Commonwealth trade. Judged according to this criteria, it was dispensable. This final phase in Commonwealth discussions about the fate of imperial preference was demoralizing from a British point of view. There was no support from the dominions, the developing world or the US. Diplomatic isolation was a condition that the British could not endure. Thus London gave in to a compromise which it feared might ignite public criticism about the fate of the preferential tariff system of the Empire and Commonwealth. The UK also had to accept that in the future the preferential system, if not totally frozen, would not grow. The stagnation of the preferential system reflected the dominions’ lack of interest in the expansion of the preferential tariff network. Their economic horizons, along with their political ones, had widened beyond the Commonwealth. Turning away from larger international currents to find refuge in imperial harbours would not serve them well. Thus British delegates to Havana found themselves fighting unaided for the right to enlarge imperial preference, a stance that alienated the four dominions.

Britain and the western European customs union While British officials were trying to hold on to imperial preference as part of their historic identity, international economic and political factors were forcing British leaders and bureaucrats to consider a new kind of alignment and a new kind of identity in connection with the postwar economic recovery of Europe. Like Lend-Lease before it, the Marshall Plan was not about giving US dollars away. The American expectation was that the recipients would use US dollars to effect meaningful recovery. American officials had some ideas about how to ensure their largesse was effective. For example, American planners believed a customs union would expedite the economic recovery of western Europe without which Washington feared the appeal of communism would deepen. American officials wanted Britain to play a leading part in such a customs union. The British did not think of themselves as European even though their welfare was profoundly affected by continental forces. Of the three principal spheres of British foreign policy, Europe lagged far behind the US and the Commonwealth in impor-


tance. And as Wolfram Kaiser has pointed out, World War II and the spread of communism only deepened British detachment from the continent. Moreover, the ultimate goal of Britain’s Labour leaders was to ensure that Britain remained one of the great powers of the world. They suspected that membership in a western European customs union, even if a leading one, would make Britain a regional power, not a global one.19 However, Congress was more likely to tolerate the Marshall Plan if Britain was willing to take part in a customs union.20 Britain’s absence from European talks on economic cooperation would undermine the success of the initiative, which was not desirable for economic or political reasons. Consequently London sent officials to customs union talks with instructions to support the technical work of the meeting without committing Britain to join a customs union.21 The discussions on European recovery had begun in Paris in the summer of 1947, later shifting to Brussels. By the time the Havana conference opened, the talks were well under way. British participation raised questions about the compatibility of Commonwealth trade with a European customs union. British politicians feared that if the United Kingdom aligned itself with Europe, the remaining economic and political links with the Commonwealth would unravel. One technical difficulty, which was loaded with political significance, was the reconciliation of imperial preference with the common tariff of a customs union. The British considered the possibility of creating a Commonwealth–European joint customs union, although they were not sure whether it would violate the provisions of the ITO. They also contemplated the possibility of creating two discrete trading blocs, with the UK having dual membership. They could also harmonize tariffs between western European and Commonwealth countries. Longterm bulk purchase agreements could replace preferential tariffs, thereby eliminating the problem entirely.22 The reconciliation of a European customs union and Commonwealth preferences could only be arranged in consultation with the dominions. Since many of the dominions’ leading economic experts were in Havana, the British decided to hold Commonwealth discussions on the margins of the main conference to determine whether and what kind of resolution would be possible. At their first meeting to discuss the customs union, British officials presented their Commonwealth colleagues with the slate of options to reconcile European and Commonwealth trade, several of which revived the spectre of a Commonwealth customs union. When Bevin had first touted this possibility in September 1947, the dominions’


responses had ranged from lukewarm to chilly. The passage of a couple of months had done nothing to convince them that a Commonwealth customs union was now in their best interests. Thus Dana Wilgress informed the UK that ‘it was not Canada’s policy to take part herself in a customs union’. S. F. Waterson of South Africa emphasized the impracticality of the proposal. John Dedman of Australia reflected upon the reluctance with which his government and public viewed the Geneva tariff reforms; a customs union would generate even more controversy. Nash explained that he had already ruled out such an option. He had earlier mentioned the possibility of forming a Commonwealth customs union, but that had ‘given rise to alarm’ so that he had subsequently announced ‘that New Zealand would not take part’.23 In considering membership in a western European customs union, a British official observed that ‘No country will willingly enter into a Customs Union with another country whose political intentions and economic power it mistrusts.’24 The logic applied equally to the dominions and the proposal for a Commonwealth customs union. The dominions’ reaction in Havana confirmed that they did not trust British political intentions and had little confidence about linking their prosperity too closely to Britain’s economic future. The dominions also rejected a Commonwealth customs union because they felt it might presage political union which would infringe upon their autonomy and independence. British officials acknowledged the dominions’ fear that participation in a Commonwealth customs union would undermine their autonomy, make them subject to British direction and reverse their constitutional development because membership in a customs union ‘must entail some sacrifice by members of their political and fiscal sovereignty’. The dominions were particularly unwilling to make such a sacrifice because they regarded it ‘as a threat not merely to their economic independence, but to the newly-won nationhood of which they are so extremely jealous’.25 The prospect of British membership in a western European customs union was somewhat less objectionable to the dominions. Wilgress stated that Ottawa would not do anything to ‘discourage any plan which held out hope of promoting European stability and prosperity’. Waterson placed little faith in a customs union for Europe. He said there was ‘little evidence … that the project was a practicable one’. Nash delineated the damaging repercussions if the UK went ahead. Most seriously, British membership in a western European customs union would strike ‘a definite blow to the Commonwealth connection’ to the point that ‘other Commonwealth countries would be compelled


seriously to reconsider their position’.26 Not all British officials agreed that the consequences would be as dramatic as Nash suggested. But the fact that the other dominion delegates agreed with Nash’s prediction gave them pause.27 This meeting and others with dominion representatives confirmed British fears that the Commonwealth connection and a western European customs union were mutually exclusive options. British policy-makers tried to square the circle. Bevin and Cripps advised the cabinet to endorse the European customs union, but emphasized ‘the utmost importance’ that economic cooperation with Europe not ‘weaken our connection with the Commonwealth’.28 Ultimately, the dual objectives of European economic recovery and maintaining the Commonwealth connection proved to be incompatible. There was no question but that the Commonwealth connection was more important to Britain economically and politically and so London settled on a policy of detachment from the continent. As for the Commonwealth customs union, Roger Stevens, the head of economic relations at the British Foreign Office, told Douglas LePan, the economic adviser at Canada House in London, that the idea had ‘died a natural death’. The only outstanding question was whether to draft a paper explaining its demise for presentation to the cabinet or simply to let it lie.29 The British regretted that the Commonwealth option was not feasible. The fundamental reason for participating in a European customs union was to make Britain independent of the US. Creating a Commonwealth customs union would have served the same end by transforming the Commonwealth into the third great force in world politics. British officials admitted, however, that there was not significant support across the Commonwealth. The spectrum of opinion in the dominions had ranged from hostility to ‘an attitude of cautious enquiry’. Moreover, despite American support for a European customs union, it was less keen on the Commonwealth version because it appeared to be ‘a disguised attempt to reconstitute, maximise and consolidate the system of Imperial Preference’.30 Meanwhile the ITO was doomed. This was not immediately apparent even though the closing speeches of delegates were characterized by hesitation, criticism and general anxiety. Crucially, the participants made their ratification of the ITO contingent on American approval. But the ITO charter became unpalatable to the United States as it took on a stronger international impress.31 The Cold War also undermined the ITO’s appeal and appropriateness. Finally, the architects of the ITO in Washington had failed to educate and involve the US public and


Congress in its planning and implementation. According to Susan Ariel Aaronson, the fatal error of the key players in the state department was to favour ‘international assent over domestic approval’.32 Consequently, the Truman administration never adopted the document. Without American membership, the ITO languished and then faded away. The GATT, however, remained. It included the trade chapter of the charter and the 123 tariff agreements concluded in Geneva which had been published in November as an interim measure. The reception of the GATT agreements across the Commonwealth and in the United States The initial reaction to the GATT was slow in coming. In part this was because there was a lot of detailed and technical information to digest – the new tariff schedules covered over 1000 pages. Moreover, the royal wedding of Princess Elizabeth and Philip Mountbatten on 20 November 1947 and other more newsworthy events overshadowed the publication of the GATT.33 Still, it was obviously a significant accomplishment, certainly the most far-reaching achievement yet in tariff negotiations, so the GATT warranted some immediate press attention. By and large the initial response ranged from lukewarm to favourable. For instance, The Economist, which historically favoured liberal trade, was subdued because the GATT took only a small step towards its objective. It compared the GATT to ‘a white mouse’, one which was certainly welcome and ‘well worth putting on show, but definitely mousy’.34 Canada’s Financial Post was more fulsome in its praise, referring to the ‘epochal changes’ brought about as a result of the tariff negotiations in Geneva.35 The New York Times also reacted favourably, observing that the US tariff was at its lowest level in thirty years. The US would also benefit by the concessions and bindings which positively affected $1.5 billion of its exports.36 In the remaining dominions, the press praised the GATT schedules, primarily because they showed that on balance the concessions received outweighed the concessions made. A headline in the Cape Times said it all: ‘Few Sacrifices by Union’.37 For those who had feared that imperial preference would not survive the conference, the publication brought relief: 70 per cent of all preferences were untouched and only 5 per cent were eliminated. The Financial Post analysed the figures more closely and concluded that preferences were eliminated on only 94 items, of which approximately half involved little trade.38 Even so The Economist regarded the modifications made to imperial preference as substantive, but pointed


out that the structure of the preferential system was intact.39 The lead article in Australia’s Age agreed that despite the changes, ‘Fears that Imperial preference might be scrapped or mangled out of all recognition have not been realised.’40 Elsewhere, newspapers calculated the effect of these changes on their economies. By and large they found little impact. The Cape Times pointed out that 89 per cent of South Africa’s preferences were unaffected by the Geneva agreements.41 American negotiators had failed to rid the world of imperial preference. The reception of the American public and Congress of GATT was complicated by the survival of imperial preference. Without the endorsement of the US, the GATT would be a non-starter. Britain therefore urged the dominion governments to downplay the fact that preferences had emerged from the Geneva negotiations more rather than less intact.42 The New York Times also helped counter the appearance of a negotiating defeat for the US by emphasizing the long-term benefits which would derive from the concessions made in Geneva.43 Washington’s overriding geopolitical considerations also helped to rally support for the GATT. The US needed the British as allies in the Cold War and could not allow the preferential debate to undermine their relations at this critical juncture. Thus the Americans retreated on one political front in order to strengthen another. Cold War considerations did not blot out the expectations accompanying the long and contentious history of imperial preference in Anglo-American relations. It was still important for the US to be able to claim some kind of a victory and American officials found grounds for such an assertion in the Anglo-Canadian exchange of notes. As Win Brown explained to President Truman, ‘[The Canada–UK exchange of notes] amounts to an abrogation of the most important part of the Ottawa Agreements, and can fairly be considered to be substantial action with respect to preferences.’44 Beyond that there was little they could point to, at least in the short term. They could, however, sell the GATT as a whole to the public and Congress on other grounds, such as its flexibility and informality. Because the GATT was a provisional agreement, the endorsement of the contracting parties did not mean it overruled domestic policy. Thus if a domestic practice contravened the provisions of the GATT, the government did not have to do anything about it.45 Thus the overall package, of which the negotiations affecting preferential tariffs were but one piece, was acceptable. In contrast to American officials who had to show that significant steps had been taken towards the abolition of preferential tariffs to secure domestic support, British officials had to demonstrate that pref-


erences had survived to gain public approval. Imperial preference remained a potent political issue in Britain, fundamentally linked to the nation’s historic identity and the determination to remain a global power. However, the appearance that the GATT agreements had dented imperial preference provoked an outcry. There remained too many die-hard imperialists for there to be no negative reaction. Even before the GATT agreements were published Harold Wilson had to repudiate the accusation that the Attlee government was somehow complicit in the retrenchment of imperial preference. Wilson denied that British officials had tried to pressure the dominions ‘either to break up the preference system in general, or to agree to any concessions on preferences to which other Commonwealth countries are contractually entitled’. He also denied that Britain had agreed to a formula to narrow imperial preference. He shifted from a defensive footing to an assertive one, insisting that the tradition of economic cooperation within the Commonwealth was stronger than ever.46 There were still politicians, primarily in the Conservative Party, who lamented the effect of the Geneva negotiations for imperial preference. Oliver Lyttelton, a Conservative member of Britain’s wartime cabinet, denied that preferences were discriminatory when they ‘apply amongst countries bound together by historical or legal or social or ethnographical ties’.47 Clearly Lyttelton believed that preferences remained one of the bonds which confirmed the uniqueness of the Commonwealth association. Others defended preferences because they believed they were important to Britain’s economic recovery. Still others objected that the US was coercing the UK into abandoning preferences. Along this line, Robert Boothby, who registered his abiding faith in the preferential system, pointed out that the emergence of superpowers threatened the autonomy of smaller powers. The only solution was for Britain to develop closer economic ties with the Commonwealth and western Europe.48 There were more realistic MPs who understood that there was no future for imperial preferences. Sir A. Salter, the member for Oxford, pointed to the danger of trying to translate a sentimental connection into a commercial one. He insisted that Commonwealth trade would thrive or dwindle according to the best commercial interests of each individual member. To deny the truth of this and ‘attempt to exploit sentiments of friendship’ was imprudent because it would ‘seriously weaken the bonds of our Commonwealth’.49 Mr Mackay, the member for Hull, NW, also set out to disabuse those members who believed that there was a future in Commonwealth trade. He referred to the historical studies of Keith Hancock on this subject and concluded that


imperial preference did not create more trade. Moreover, the pattern of industrialization in the dominions confirmed that preferences were a dead end. And yet, he noted, people insisted on clinging to the ‘illusion’ of preferences. He understood that ‘patriotic motives’ were behind this tendency. ‘Words have certain connotations which people are apt to accept without thinking about them, and then we go on talking about Empire trade without analysing the position.’50 The president of the board of trade also tried to clarify the misapprehensions about the effect of concessions on the preferential system. Wilson stipulated exactly how little preferences were affected: 5 per cent eliminated and 30 per cent altered. This did not constitute a radical modification of the preferential system, he argued. He added that preferences alone could not cure Britain of its economic ills: a shortage of hard currency, dependence on the $400 million remaining from the 1945 loan, falling exports, and rationing. Finally, he insisted that the Commonwealth had not suffered as a result of Geneva because the Commonwealth relationship transcended financial gain. ‘We on this side have never believed that the bonds which have kept the Commonwealth together have been based on the cash nexus of Imperial Preference. The common traditions of this country and the Empire go far beyond the introduction of Imperial Preference.’51 Wilson was shrewd to demystify imperial preference by treating it as a commercial reality with no underlying implications for the Commonwealth. It minimized the significance of what had happened to preferences in Geneva and implied that Britain had not given up its historic identity as an imperial power or abandoned its present intention of remaining a great power in the world. However, Wilson’s assurances were somewhat disingenuous. Although preferences emerged from Geneva largely intact, no one seriously tried to equate their survival with the unity or strength of purpose of the Commonwealth. This was because, just as in 1932, the retention of preferential tariffs testified to the triumph of national interests. The British were not surprised by the dominions’ criteria for assessing the importance of imperial preference. A report prepared by the Commonwealth Relations Office on the nature of the Commonwealth relationship in the autumn of 1947 concluded that pragmatism and national advantage had always prevailed in the attitudes of the dominion governments towards imperial preference. ‘In bargaining at Ottawa and in subsequent negotiations, the attitude of the Dominion Governments, while friendly and mindful of common interests, was marked by much determination to get very full value for their concessions to the United Kingdom; and in this they were pretty successful.’52


This self-interested approach of the dominions applied to every aspect of their involvement with the Commonwealth, including foreign policy and foreign relations. The attitudes of the dominions towards imperial preference confirmed that there was not, nor would there ever be, a Commonwealth bloc in the world. The dominions had established themselves as independent and autonomous players in international affairs. As Norman Robertson noted, the British had come to expect that the dominions would play individual roles on the world stage. London did not necessarily like this, but it accepted the reality of their independence. Although the British were slow to consider how the dominions’ independence would affect Commonwealth consultation or cooperation, Robertson was certain it would have a positive effect: ‘as their minds become accustomed to a Commonwealth which behaves in this way the old conceptions of Empire do not occur to them so readily’.53 Robertson’s assessment, however, was overly optimistic about the evolution of British thinking. Although there was a clearer understanding in London of the limits of British authority, there was still great confidence about the possibility for cooperation and consultation within the Commonwealth. After the experience of Geneva, diplomats continued to conceive of British foreign policy in such a way that they could enjoy the support of the dominions even though they had abandoned the possibility of a single foreign policy for the Commonwealth.54 Thus British officials continued to adhere to the belief that the Commonwealth was not only a discrete subset of the international community, but that relations between its members were fundamentally different from those between truly foreign nations. It would take almost another decade before British officials abandoned the Commonwealth as part of the grander strategy for ensuring survival as a great power. In Canada, bureaucrats and politicians had agreed throughout the planning and negotiating stages for the ITO that they should treat preferential tariffs pragmatically. By separating preferences from political passions they made a powerful statement about the way they viewed their relationship with the UK: there should be no blurring of Canadian sovereignty or compromising of the government’s authority as a result of the Commonwealth connection. This was the message which was at the heart of the Canada–UK exchange of notes. The Financial Post picked up on this right away, observing that the release from bound margins constituted ‘one of the most significant “concessions” which Canada was able to obtain’. In so doing, Canada had restored imperial preference to the basis on which it had been initiated


in 1897, when the government of Canada retained complete and unhindered freedom to extend, amend or revoke any preferential tariff that it bestowed on imperial and Commonwealth products.55 The Canada–UK exchange identified the principles upon which the King government wanted to base its relations with Britain: reciprocal respect for sovereignty and independence. The slightest suggestion of British control, or the revival of a centralized Commonwealth directed from London, raised the hackles of Canadian diplomats and politicians. The exchange of notes confirmed that in trade, an area where British and Canadian authority had overlapped after the Ottawa economic conference of 1932, Canadian authority once again reigned supreme.56 The exchange of notes also confirmed that in the eyes of the King government, the surest foundation for the Commonwealth was a voluntary one. The Liberal Party, particularly under the leadership of Mackenzie King, had long endorsed this approach to relations with Britain and the management of the Commonwealth. Consequently, King sang the praises of Canada’s negotiators at Geneva. He confided to his diary that he was ‘genuinely amazed at the outcome of the negotiations’ which were ‘epoch-making’.57 However, once the fruits of this policy were revealed on 18 November, members of Canada’s Conservative Party who cherished the British connection as a part of Canada’s past and hoped it would be a part of Canada’s future, criticized those aspects which diminished the preferential system. John Bracken, the leader of the Conservative opposition, denounced the exchange of notes with the UK because it sounded ‘the death knell of the British preference system’. For the purpose of parliamentary discussion, he wanted to sever the exchange of notes and the GATT treaties. That way he could concentrate his opposition on the exchange of notes which was the real offence because it effectively doomed ‘our best and greatest market, the market which maintains the employment and income of thousands of Canadians everywhere’.58 Ottawa had little confidence in the GATT agreements or multilateral trade. Immediately after Mackenzie King announced Canada would accede to the GATT agreements (17 November), the minister of finance announced that Canada would have to impose import restrictions on American products to preserve its dwindling reserves of hard currency. Canada’s financial crisis was directly caused by British financial difficulties, especially the inconvertibility of sterling. The GATT clearly represented the long-term and ideal policy, but short-term conditions necessitated measures that were incompatible with freer international trade. The current vulnerability of the Canadian economy weakened


support for the GATT. One reaction to these problems was to lash out against Canada’s dependence on the American economy. For instance, J. H. Blackmore, the member for Lethbridge, claimed that the Americans were economic aggressors, whose goal was ‘to force the whole world into a condition of utter helplessness before United States industrial aggression and penetration’.59 A public opinion poll in the spring of 1948 confirmed that a large majority (69 per cent) opposed closer economic union with the US. Anti-American sentiments deepened just as a small group of senior officials were in Washington negotiating in secret the terms for a bilateral free trade agreement. King had initially been enthusiastic about the negotiations, but as they neared completion he became apprehensive about his political legacy. He recalled the 1911 election when Wilfrid Laurier had been defeated in large part because of his support for reciprocity with the US. The election had badly damaged the Liberal Party. King also worried about the difficulties a continental trade agreement might cause for his heir apparent, Louis St Laurent. King’s apprehension was also rooted in a creeping suspicion of American motives. He explained to the cabinet that he believed the US desired the agreement because it would bring political union one step closer. In typical fashion he gravitated towards the UK and Commonwealth to offset a continental relationship which was suddenly stifling: ‘personally I would rather have Canada kept within the orbit of the British Commonwealth of Nations than to come within that of the United States.’ King insisted, ‘... all my efforts have been in that direction.’ Shortly thereafter, King pulled the plug on the negotiations, believing that in so doing he was preserving the country’s independence as well as its connection with Britain. King’s concerns for Canadian independence and the British connection confirmed that he, and probably the public generally, continued to suffer from a schizophrenic condition with respect to relations with the US and UK. He shied away from any policy that even implicitly suggested that one ally eclipsed the other in importance to Canada. By keeping a balance within the North Atlantic triangle, the prime minister also believed he was positioning Canada so it could most easily safeguard its autonomy. This condition affected both imperial preference and the Canada–US free trade negotiations. The exchange of notes made the point that Canada was not British whereas the suspended free trade talks confirmed that Canada was not yet a North American nation either. The King government threw its support behind the GATT agreements, believing that they best served Canada’s commercial objectives, as well as preserved a delicate international political balance.60


Throughout the Geneva negotiations, Australia’s Chifley government had been under constant pressure from lobby groups and politicians from the Liberal and Country parties clamouring for the retention of imperial preference. These critics subjected the government to constant questions – verging on accusations – about how the Geneva negotiations would affect preferential tariffs. There were two recurring themes in the questions about changes being made to preferences: how they would affect local industries, especially the horticultural ones, and what they foretold about Australia’s international political alignments. As a result, the government was on the defensive, insisting long before the results of the GATT agreements were finalized that local industries would not suffer. As for Australia’s role in the contraction of preferences, John Dedman adopted a line that other politicians had long considered: blame others. He assured the House of Representatives that if the Chifley government had had its own way ‘we would not make any reduction at all in the Empire preferential system’. But Australia could not act alone. Rather it had to work to ensure the Geneva conference succeeded in lowering tariffs, especially American ones, which would benefit Britain in the short run and Australia over the longer haul. The minister was smart to portray Australia as a helper of the UK because he struck back by playing the same card as his critics: loyalty to Britain. Thus Australia, Dedman insisted, ‘went into these negotiations in order to assist the United Kingdom to arrive at an agreement with the United States of America’.61 The politicized climate surrounding preferences at home forced the Chifley government to proceed cautiously. But the government also knew that it would accept the GATT agreements. Australia was a trading nation that would benefit by opening up markets. A rational assessment prepared by the Department of Postwar Reconstruction identified the bottom line: ‘Unless world trade is large and stable, Australia must suffer.’ Opening the American market was especially important to stimulate the growth of Australia’s export industries and to alievate the shortage of American dollars in circulation. There was no misapprehension about the potential of the UK market. In the past there had been insufficient demand, such that Australian industries suffered from ‘the cramping limitations of inadequate markets’; it was unlikely to expand in the future. Finally, the government was genuinely confident that Australian industries had evolved and were more competitive. Consequently, they did not need the prewar level of protection to survive and flourish.62


On 29 October, even before the results of the Geneva negotiations had been made public, Dedman announced that Australia would grant provisional acceptance to the agreements. Two weeks later he gave a more detailed speech on the GATT agreements in which he observed that the criterion for judging the agreements was the effect they would have on the American market. His comments were both defensive and offensive. He defended the concessions that Australia had made in order to secure concessions for its own exports. He insisted that the small reductions in preferential margins would not harm Australia’s industries. He also defended the government against allegations of forsaking the interests of other members of the Commonwealth in order to secure concessions elsewhere. He insisted that the other dominions and Britain had always given their consent before Australia made changes to their preferential treatment. But he did not just deflect criticism. He pointed to the government’s determination to lower tariffs, which they had stuck to over wool even at the risk of ruining the conference. He also observed that the most important market for Australia was the American one and the Australian–American tariff agreement the most important result for Australia at the conference. In this respect, he admitted that the economic current had shifted and the Chifley administration would not try to go against it by building up trade with Britain. ‘It would be foolish to allow old habits of thought to hide all signposts to the future.’ On a final cool and unsentimental note he added that the preferential system had not grown in a long time and would not expand in the future.63 The next day Evatt formally accepted the GATT agreements and pledged his government’s commitment to enforce new tariff rates and uphold the rules governing international trade. Canberra had made its decision, which did not require parliamentary approval. However there was call for a debate which the government deferred until the end of February 1948. In the intervening months, the politicization of imperial preferences did not die down. The defenders of imperial preference paid no attention to statistics which confirmed that many more preferences remained than had been eliminated. Instead they argued that the GATT agreements had destroyed the tariff system.64 Slightly calmer critics toned down their opposition, believing the GATT agreements had simply diluted imperial preference, but many people warned that the ITO charter, if successful, would signal the end of preferential tariffs.65 The consequences would be disastrous economically, because imperial preference constituted Australia’s ‘very lifeblood’,66 and politically because it was ‘a birthright’67 Not surpris-


ingly, the adherents of imperial preference were supporters of the Anglo-Australian connection. The fates of the two countries were linked in their minds. A step to dismantle preferences would also be a step towards weakening a connection that was long considered essential to Australia’s well-being. As the representative for Balaclava declared, ‘Smash the British Empire to fragments, as these proposals will do, and Australia will be looking for friends in a hard world.’ For this politician what was at issue was not just economic well-being but the perpetuation of Australia’s British identity. In this vein he declared ‘when I speak of Britain’s name I include our own, because we are one people’.68 Much of the criticism focused on the bureaucrats directly involved in the negotiations because of their dispassionate assessment of the value of the preferential tariff system. Indeed, the civil servants did assess the value of preferences from a narrow, number-crunching perspective. Many concluded, such as Leslie Bury, that ‘preference is either phoney or entails paying more than we need for essential imports’.69 Politicians in the government’s ranks agreed and spoke up to this effect in parliament. They denied that preferences had any economic value, calling them ‘dead wood’.70 Supporters of the GATT also decried the politicization of imperial preference, pointing out the obvious, that ‘Opposition members hope for political gain from their references to Empire preference.’71 Although the Chifley government had long known that preferences were politically explosive, it did not bend to the power of sentimental appeals. Ultimately the members of the Labor Party were confident that economic realities would determine how voters felt about the GATT agreements. Thus the purpose of the debate was to allow the government to defend its position and give the opposition the chance to do their job: criticize government initiatives and represent the views of their constituents. This was important, but it would not change the fact that Australia was one of the founding members of the GATT. The debate wound up on 10 March without any serious challenge to government policy. Whether one criticized or defended the GATT agreements, the debate confirmed that Australian politicians thought first and foremost of the national interest. The strength of the appeal of the British connection forced politicians to choose their words and policies carefully. The Australian Labor Party kept up a practice begun during the war of cherishing the British connection without allowing it to dominate more narrowly and pragmatically defined national interests. They had to walk a fine line. In so doing, they sometimes fell on one side or the other, but they never lost sight of the delicate balance they had to strike. Even


the critics of the GATT agreements reinforced the supremacy of the national interest. They gave little real thought to British interests, defending imperial preference because it served Australia’s economic and political interests best. Thus behind the rhetoric of loyalty to Britain and the Commonwealth stood a nation deeply aware of its own interests and prepared to defend them, even against the British, as they had done in Geneva. With a member like Australia, the Commonwealth might survive, but it would not be the same. New Zealand’s reception of the GATT agreements echoed that in Australia. Wellington was concerned about secondary industries which required the protection of preference to flourish. There was hostility towards the US whose determination to rid the world of preferences was part of the quest to establish its global leadership. And there was much concern that changes to imperial preference either foretold or directly undermined the connection with Britain. The Fraser government, however, was determined to proceed with the GATT, despite its flaws. Thus on the eve of the Geneva conference Nash made a general statement on the GATT agreements. He assured the House in an upbeat address that his government favoured the results of the Geneva negotiations which would stimulate national, Commonwealth and international trade. He could not escape some questioning about preferences. Nash did not disguise the fact that changes had been made, but argued they were beneficial. On balance, he was confident that New Zealand ‘has got the best of the bargain’. Having opened the issue of preferences, more questions followed and the connection with Britain was quickly drawn. Nash did not hesitate to reassure his colleagues that there was ‘not a chance’ that the Fraser government would take any actions which might ‘breach the relations of New Zealand with the Old Country’.72 Two weeks later Nash gave a fuller report of the Geneva proceedings to parliament. Although the debate was not long or particularly acrimonious, it was evident that there was a pervasive concern about how the GATT agreements would affect relations with the UK, which politicians still referred to unhesitatingly as the ‘Mother-country’.73 The belief that the attachment to Britain and the Commonwealth had been beneficial was transposed to imperial preference which was seen as a proud legacy and a benign economic force. Consequently, some harkened back to the Ottawa economic conference of 1932 and its results which they asserted had saved Britain and the dominions from bankruptcy.74 Government members could easily answer any accusation of betraying Britain. British economic recovery depended on the liberalization of international trade and the opening of new markets.


Holding on to preferences would have worked against the very agreements Britain most needed. As one official noted, ‘As an integral part of the British Empire we are only desirous of strengthening the hands of the Mother-country in her difficulties.’75 Thus the Fraser government demonstrated its loyalty to the British connection by contributing to the contraction of imperial preference. The Labour government and the National opposition thus participated in a debate about which party was most loyal to Britain. The effects of the tariff changes on industries and trade were minimal because preferential tariffs had not been instrumental in New Zealand’s economic development. What really determined the country’s prosperity was the right to use import restrictions, which it was still in a position to do. Consequently, New Zealand had little to fear from the new tariff schedules. The contraction of preferences was also offset by bulk purchase agreements which bound New Zealand more tightly than preferential tariffs to the British market. Consequently, there was ample evidence that the economic interdependence of Britain and the antipodean outpost was as deep as ever. Politically, however, preferences meant quite a lot. The government could easily assert that those preferences remained largely intact and the few alterations made had little effect on the enduring spirit. Clearly New Zealand’s attachment to Britain remained strong. On the spectrum of dominions’ attitudes towards Britain, New Zealand was at the end that was most loyal to Britain and would remain so for some time. The Fraser government had no intention of severing or diluting the tie to Britain. However, it was also evident, in the deliberations in Geneva more than in the parliamentary debate, that New Zealand’s attachment to Britain would not lead to self-sacrifice. The popular description of Britain as the mother-country did not mean the government of New Zealand would automatically follow its lead. New Zealand was more generally predisposed to working with Britain, but like the other dominions would only do so if it served New Zealand’s interests. South Africa’s position was determined by the deep cleavage between the majority Afrikaner community and the staunch supporters of the British connection. The Smuts government lay somewhere in the middle. But in a divided political community, accommodation alienated the extremes who felt betrayed by those attempting to broker a compromise. Selling the GATT in South Africa was tricky precisely because by giving a little to the Nationalists, in the contraction of preference, and a little to the adherents of the British connection, in the preservation of the preferential system, it was possible none would be satisfied.


The government avoided criticism by postponing debate. This was problematic because the Smuts government needed parliamentary approval by the summer of 1948 in order to bring the GATT agreements into effect. Delay could jeopardize South African membership. Only two days before parliament recessed for the summer, the minister of finance introduced the GATT bill to the Assembly. The next day he elaborated on the bill, selling it on the grounds that it was not a binding agreement. If the new tariff schedules and rules to govern commerce proved to be unhelpful or damaging, South Africa could back out of the GATT on three months’ notice. Like his Canadian counterparts often had to do, the minister identified one reason that all could endorse – or at least which did not alienate one side or the other. Because of the necessity of preventing divisiveness, the minister said nothing about preferences. But others did. Ironically, the changes made to preferences satisfied the political extremes in South Africa. The spokesman for the Nationalists, Dr Stals, expressed his ‘appreciation’ of the modification of preferences between Britain and South Africa. The representative of the Dominion party could not deny that some changes had been made, but he took comfort that the amendments had not ‘breache[d] the citadel of Imperial preference’.76 Thus those who favoured the dilution of the Anglo-South African relationship could embrace the GATT, as could those favouring its retention. This debate was cut short because of time constraints. It was also markedly different from other debates in South Africa where the British connection was at issue. Usually political opponents attacked one another relentlessly and viciously. By comparison the GATT was a nonpartisan subject. Later in the summer South Africa became a contracting member of the GATT, one of the final acts of a government shortly to be ousted by an overwhelming Nationalist majority. Britain, Canada, Australia, New Zealand and South Africa were all founding members of the GATT. Their adhesion confirmed that their commercial interests were best served by a global trading network. The dominions could not seek prosperity or economic security through the Commonwealth, either in a customs union or by enlarging the system of preferential tariffs. The dominions’ gravitation towards an international economic framework came as no surprise. W. K. Hancock and I. M. Drummond both identified a global trend in the commercial policies of the dominions in their studies of the 1930s. Academic analyses, however, did not reflect thinking in London. Although British bureaucrats acknowledged that there was little opportunity to enlarge the market share of British exports in the four dominions, governments


clung to the idea of a self-sufficient Commonwealth commercial bloc throughout the 1940s. The motivation for doing so was more political than economic. Still, the enduring appeal of Commonwealth trade revealed British unwillingness to accept the dissolution of ties between members or a limited role for the Commonwealth in world affairs. Imperial preference endured in the tariff schedules of Britain and the dominions, but it was not a bond holding Britain and the dominions together. Where preferences created overlap, such that one government could not move without the consent of another, it was clear that preferences divided Britain and the dominions. By forcing the governments of the Commonwealth to come together, preferences drove them further apart. Because Britain and the dominions still valued the Commonwealth, it was best to remove those elements that were anachronistic and detrimental to the ongoing commitment of members to the Commonwealth. In order to continue to treat one another as valued allies, to perpetuate a tradition of political preference, the autonomy of the British and dominion governments had to be restored. Preferential tariffs would persist for another 25 years, but they were effectively laid to rest in 1947.

Conclusion: a Future for the Commonwealth and for Commonwealth History

My purpose in this book has been to examine the redefinition of the Commonwealth in the 1940s in response to the emergence of the dominions as independent and discrete actors in international relations. Redefining the Bonds of Commonwealth has considered a short but telling period. The case study of imperial preference reveals the dynamics and inner workings of the Commonwealth in this time. Prior to World War II, definitions of the Commonwealth relied on vague and sweeping descriptions of it as an enigmatic, familial, and unique association of nations. The difficulty in summing up the Commonwealth in a few words or by listing its basic principles and features did convey something of the intangibility of the association. Focusing on the history of imperial preference shows that the Commonwealth can also be understood in more concrete terms. First and foremost, Britain did not determine the foreign policy, or any policy, of the dominions. Through the dominions’ loud protestations, the development of external affairs departments, the training of diplomats, the articulation of individual external and commercial policies, and the branching out of foreign relations, the dominions asserted their sovereignty in world affairs. This was obvious by the Geneva conference of 1947. The formulation of tariff policies by national bureaucracies in close consultation with political leaders made the point that the dominions set their own policies, strove to advance their national interests and confirmed that the dominions did not follow Britain’s lead in international affairs. In short, there was no diplomatic unity to the Commonwealth, even though the members of the Commonwealth could, and did, cooperate from time to time. As a result, the Commonwealth that emerged after the war was openly limited in its international role. J. D. B. Miller has concluded that a 260

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circumscribed Commonwealth was exactly what the dominions wanted.1 Not only was this what they wanted; it was all that was possible among autonomous and diverse nations whose governments acted according to national principles and priorities. Limitation was an inescapable part of the process of clarification. By stipulating what the Commonwealth could and could not do, definite boundaries were drawn. Just as the replacement of an informal Empire of apparently limitless influence with a formally defined one represented a contraction of British influence in the late nineteenth century, the delineation of the Commonwealth’s purpose and Britain’s role therein reined in London’s authority and influence, both real and imagined. If the commercial negotiations of the 1940s revealed that the Commonwealth did not act as a bloc in world affairs under British direction, the details of the commercial policies of Britain and the dominions, as well as their interactions with one another during the negotiations, illustrate the triumph of national interests and economic nationalism. All parties brought national agendas to their relations with one another. They asked for much and offered little. British officials complained, sometimes lamented, that the dominions were difficult, frequently impossible, to deal with. In so doing they grudgingly acknowledged that the dominions were independent and beyond their control. In 1948, London made a formal gesture of acknowledgement of the dominions’ metamorphosis by dropping the word ‘British’ before Commonwealth and avoided the terms ‘dominion’ and ‘dominion status’ which Lord Addison pointed out were ‘regarded as disguising the equality and independence of the countries concerned’.2 These changes in nomenclature were symbolic milestones on the dominions’ road to complete and practical independence in world affairs. In fact, national interest had long prevailed over a collective approach in economic matters, particularly those dealing with preferential tariffs. A memo produced by the Commonwealth Relations Office in 1947 admitted that individual interests had always prevailed over the common good. It was the case that dominion governments were ‘friendly and mindful of common interests’. But they were also determined ‘to get very full value for their concessions’.3 What was strikingly different about the forceful expression of national interests in the 1940s, as opposed to the Ottawa conference of 1932, was that there were no grand political statements about the unity, cohesion and goodwill of the Commonwealth to disguise the presence and force of economic nationalism. After World War II there was consistency across the economic and political dimensions of interest and identity.


Commonwealth relations were not fundamentally different from those between foreign nations, although Commonwealth gatherings continued to have a clubbish feel until South Asian and African representatives began attending. The admission of new members into the Commonwealth – beginning with India, Pakistan and Ceylon in 1947–8 – forced the founding members to address constitutional and procedural issues, as well as fundamental questions about the nature and purpose of the new Commonwealth. The outcome involved more than redefining or clarifying the association. As the Commonwealth grew in size it was transformed.4 And yet, on the eve of decolonization, a sense of closeness and collegiality among officials and politicians from Britain, Canada, Australia, New Zealand and South Africa endured, although the bar of expectations of what the Commonwealth could and could not achieve was lowered. Its successes would be less spectacular and its shortcomings less catastrophic. The negotiations over imperial preference upheld one longstanding, although inconsistently applied, lesson for the management of the Commonwealth: voluntary ties worked better than compulsory ones. The tariff negotiations of the 1940s revealed that contractual interdependence actually drove members apart. The future of the Commonwealth depended on limiting and loosening the specific obligations of its members. Thus the Commonwealth relationship by consensus would be informal as well as circumscribed. Clement Attlee approved, arguing that because the needs of members were constantly changing, as was evident in the commercial realm, the Commonwealth would be stronger through the ‘avoidance of formal obligations’.5 The Commonwealth also took on an altered shape. At the start of the war it resembled a hub and spokes, without lateral connections between the spokes. By war’s end several such connections were in place, most significantly one between the antipodean dominions and another between Ottawa and Canberra, two capitals which saw one another as models, rivals and allies in the quest to lead the new middle power category of nations. Without a doubt Britain was still the most important and powerful member of the Commonwealth. In this sense, London remained central to the Commonwealth, although not at its centre. Each member was a centre in its own right. The argument that the peripheries were as central to the Commonwealth as the metropole has important methodological implications. Scholars of the Commonwealth must adopt a multicentred approach. To examine the Commonwealth from only one perspective

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is really national history; Commonwealth history should be the sum of several national historical experiences. Conversely, scholars also need to understand the importance of Commonwealth membership to the national histories of Britain and the dominions. The fate of preferential tariffs shows that the national and Commonwealth spheres are overlapping. Policies began by being shaped in a national policy-making environment, which was, however, profoundly shaped by membership in the Empire and Commonwealth. We must insert national history into the Commonwealth and reinsert the Commonwealth into national history. Other historians, most notably Nicholas Mansergh, have examined the Commonwealth from several perspectives. Mansergh describes incidents of discord and disagreement within the context of a story of cooperation and achievement. There is an underlying assumption in his work that the dominions’ metamorphosis from colonies to nations, from subordinates to partners of Britain, was straightforward.6 R. F. Holland also includes the dominions in his study of the Commonwealth. But both Mansergh and Holland have written the history of the British Commonwealth; they regard the Commonwealth as a problem and challenge in the history of British external affairs. This history of the Commonwealth has considered discord to be as significant as cooperation, and as worthy of study. At bottom, disagreement was caused by the pursuit of different, indeed incompatible, goals. For Britain, the problem of the Commonwealth during and after World War II was about finding ways to maintain the diplomatic unity of the Commonwealth to prop up Britain’s place in the world. Power politics dictated how London understood the Commonwealth and tried to manage it. From the vantage points of Ottawa, Canberra, Wellington and Pretoria, the Commonwealth threatened their status as independent states and sovereign actors in international relations. They were trying to oversee a process of practical decolonization within the Commonwealth. Because the dominions broadened their involvement in world affairs by forging more bilateral relations, participating in regional and international institutions, and formulating opinions on a wide range of issues, the connection between the Commonwealth and the international community deepened. Commonwealth history post-1945 cannot be examined in isolation from the rest of the world. The interactions between individual members of the Commonwealth and non-Commonwealth countries explains a great deal about the attitudes, policies and outlooks that were brought to bear within the Commonwealth. For instance, Australia’s involvement in the Commonwealth, in particular its attempts


to become the dominant Commonwealth player in the Pacific after World War II, reflected its security concerns about Japan. Similarly, the United States loomed large in Canadian foreign policy after the war. Indeed, there are so few studies of Anglo-Canadian relations after 1945 that the history of Canadian foreign relations after the war is usually told as Canadian–American relations. For Britain too, understanding the impact of the United States and the need to maintain the Britishinvented special relationship is essential to understand British strategies and goals and the way they were pursued within the Commonwealth. In short, historians must study the intersection of Commonwealth and international history lest they produce insular and incomplete accounts of the Commonwealth.7 There is also a need to marry Commonwealth history and international relations because the Commonwealth was an instrument of the foreign policy of its members. Distinguishing Commonwealth considerations from analyses of foreign policy and foreign relations inappropriately severs two interconnected aspects of external policy. The pressures and attractions of engagement in the world beyond the Commonwealth were clearly evident in British and dominion policies towards imperial preference and their negotiations involving preferential tariffs at Geneva. On the one hand, imperial preference protected the developing economies of the dominions and offered advantages to Britain’s weakened exports. Deciding whether or not to maintain preferences had little to do with Commonwealth visions. On the other hand, preferences were valued as bargaining chips to make the expansive American market more accessible to Commonwealth exports. Although Britain would remain the largest market for Australia, New Zealand and South African exports for many years after 1945, their long-term economic prosperity obviously depended on establishing new channels of trade. There was no possibility of creating a selfsufficient Commonwealth economy, attaining Empire free trade, or using commercial ties to deepen political, military and foreign policy connections. Rather, the economic interests and policies of Britain, Canada, Australia, New Zealand and South Africa took shape in a global context. Regional economic orientations were also increasingly evident. While regional economic alignments like the Australian–New Zealand Free Trade Agreement, British membership in the EEC, and the North American Free Trade Agreement were still decades away, their appeal was evident in the trade pact concluded between Australia and Indonesia in 1950, British participation in the European customs

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union study group from 1947–49 and the secret Canada–US free trade negotiations of 1947–48. The result was to temper British and dominions’ involvement in and commitment to the Commonwealth. International and regional attractions and opportunities meant the scope for Commonwealth trade was limited. This conclusion mirrors those of W. K. Hancock and I. M. Drummond who examined imperial economic policies, including imperial preferences, in the interwar years. But this book does more than push forward chronological parameters beyond 1939, where the studies of Hancock and Drummond end. While their conclusions about the limited impact of tariffs on Commonwalth trade are persuasive, this study has shown that the importance of imperial preference lies not only in the domain of reason, or economic calculus, but also in the realm of emotion and political symbolism. If the story of preferences was limited to economics, it would be a brief tale of disappointment. The history of imperial preference cannot be a dry, technical exercise in number-crunching. I hope this account has shown that preferential tariffs inspired great passion. Indeed imperial preference cannot be fully understood without considering its emotional force. In its long and colourful history, imperial preference ended political careers, conjured up visions of greatness, broke up political parties and inspired poets. Hugh Dalton, while a student at Cambridge, actually plastered his walls with posters about preferences. Preferential tariffs touched upon issues of power, identity and alliance, subjects about which bureaucrats, politicians and ordinary citizens had strong, sometimes visceral, feelings. Economic phenomena, important in their own right, are a prism through which to understand political relations. The entrenchment of international identities for the dominions and the expansion of their international activities did not signal the demise of the Commonwealth. A long tradition of association was valuable to the dominions as they began to develop the institutions, infrastructure, personnel and will to formulate and diversify their foreign relations. Because Commonwealth leaders, cabinet ministers, diplomats and bureaucrats had had much exposure to one another there was a familiarity and ease that could facilitate their relations and reinforce an instinct to work together. On the other hand, personal contact did not always result in good opinion. There was much mutual disdain within the Commonwealth, and contact bred frustration as often as it did cooperation. Still, the Commonwealth was a forum all knew well and could imagine deriving benefits from. The international trade negotiations of the 1940s confirmed that there were tangible advantages from


association. Britain regularly shared information with its dominion colleagues to which they otherwise would not have been privy. On some occasions Britain backed up the dominions, strengthening their leverage in dealings with other nations. The Commonwealth was also a forum to test ideas, seek allies and refine policies. The persistence of commercial and financial links, especially between Britain and the sterling dominions, demonstrated that old ties persisted alongside new ones.8 There was a future for the Commonwealth as long as it proved its worth to its members. Practical utility and mutual benefit replaced sentiment, history, loyalty and tradition as the forces holding the Commonwealth together. The reinvention of the Commonwealth was the product of the collective pressure of the four dominions. The British response to change blended incomprehension and frustration. Still, British officials continued to rely on the Commonwealth as a buttress to Britain’s world position. Britain’s enduring attachment to the Commonwealth option derived from the unshakeable conviction that international greatness was a birthright. Moreover, an historic identity as a global power could not be cast away lightly or suddenly. As late as 1964, British officials reacted warily to the proposal to establish a Commonwealth secretariat because such a move would involve ‘taking the first formal step of an administrative kind along the road which leads away from the concept of the United Kingdom as the mother country ... towards the new concept that all the members of the Commonwealth are entitled to an equal say in matters of Commonwealth concern.’ This was a step the cabinet secretary described as, ‘quite a significant thing to do!’9 British attitudes towards the dominions and the Commonwealth changed slowly, as did policies. Consequently, London continued to seek diplomatic unity with the four dominions, even though its efforts met with regular disappointment.10 The Attlee Labour government also remained attracted to economic solutions to imperial and Commonwealth problems.11 Metropolitan actors continued to believe that trade would lubricate ageing and rusty imperial and Commonwealth machinery. There was little imagination or adaptability evident on the part of politicians and policy-makers who were intent on preserving the Empire and Commonwealth as an instrument of British power. British confidence in the Commonwealth was not simply the result of myopia, inertia or refusal to accept new realities. There continued to be a powerful attachment to Britain among the general populace of the four dominions. Aside from Irish, French and Afrikaner communities in Australia, Canada and South Africa, not to mention indigenous

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peoples, the English diaspora remained deeply attached to Britain. Moreover, individual commitments remained fiercely strong. Jan Smuts and Peter Fraser were two devoted Commonwealth men. Ultimately, the reformation of the Commonwealth did not lead to rupture. Rather, the result of the efforts of the governments of Canada, Australia, New Zealand and South Africa during the tariff negotiations was to fill in the international dimension of their national identities where previously there had been blank pages or line drawings. They were unique, autonomous and sovereign states which did not disavow Britain. Maintaining close relations with Britain and membership in the Commonwealth was meaningful and confusing. At the beginning of this work, I described the stage of development of dominions’ nationalism in 1939, with New Zealand the most loyal and attached to Britain and South Africa at the opposite end of the spectrum. In 1948, the position of each dominion along the spectrum was the same; only the range had shifted. New Zealand remained the most attached to Britain economically, politically, psychologically and emotionally; Australia would make the most concerted effort to use the Commonwealth to advance its own foreign policy objectives; the United States loomed large in the eyes of Canadian policy-makers, although there was an enduring attachment to Britain that resulted in inconsistent impulses, best expressed by Prime Minister Mackenzie King who one minute sought close relations with the US, the next, lavished praise on the British connection; South Africa was verging on the election of a Nationalist government whose antipathy for the British connection was integral to its political values. There continued to be inconsistent impulses in the relations of New Zealand, Australia, Canada and South Africa with Britain because the process of decolonization was not yet complete. To understand fully the subject of dominions’ decolonization one must consider how they acquired individual civic identities. It would take more time before these countries patriated their Britishness as part of the development of a civic culture uniquely their own. They would do so at different speeds and in their own ways.12 While there are several excellent studies of dominions’ nationalism, their arguments generally do not extend beyond 1914.13 World War I galvanized the development of discrete national identities, but Canada, Australia, New Zealand and South Africa had not completely overcome colonial mentalities or a sense of attachment, however intangible, to the mother-country. The history of the dominions’ civic identities does not end in 1914, 1931 or 1939. Rather, individual identities continued


to take shape long after the Great War ended. It is futile to try to identity the precise moment when the dominions stopped being British. The difficulty in identifying such a moment, however, should not discourage historians from pursuing this subject into the 1950s, 1960s, 1970s and possibly to the present day in the case of Australia and its recent republican debate. Understanding the ways in which the four dominions acquired civic identities also requires blending various approaches and disciplines, including the history of the working class, women, first nations, political institutions, education, the arts, sports and the media. Those who would conclude from this history of the Commonwealth that its future would be one of inexorable deterioration betray their own assumption that Britain was the indispensable component of the Commonwealth, with the dominions functioning as appendages or adjuncts. From the perspective of all five members of the Commonwealth, there was reason for optimism. The Commonwealth could reinvent itself to ensure its relevance to the majority of its members. It is not surprising that a Canadian diplomat and historian, John Holmes, could see that although the Commonwealth was changed, it was not worse off for shifting the locus of authority, redefining its purpose, and decentralizing its structure. He used the image of a tree to make his point: while the trunk of the Commonwealth was weaker, the branches were much stronger. On balance, the tree was no less sturdy.14 Holmes’s optimistic assessment captured the prevailing confidence after the war that the Commonwealth could look forward to a bright, if unknown, future. The study of Commonwealth history forces one to juggle several balls simultaneously: there are multiple actors who need full treatment, as well as non-Commonwealth nations whose influence on the Commonwealth cannot be underestimated or ignored; there are different types of issues to be addressed, economic policy as well as political attitudes and relations; and there are overlapping contexts: national, Commonwealth and international. Commonwealth history does not fall into a tidy or narrow category; it is unwieldly, far-ranging, and open-ended. It exists at the point of intersection of disciplines, actors and phenomena.

Appendix: Cast of Characters Note: Names in bold attended the Geneva Conference 1947.

United Kingdom Amery, L. S. Attlee, Clement Batterbee, Harry Sir Beaverbrook, Lord Bevin, Ernest Clarke, R. W. B. Clutterbuck, P. A. Cockram, Ben Cranborne, Lord Cripps, Stafford

Dalton, Hugh Eden, Anthony Halifax, Lord Hall-Patch, Sir E. Harding, Sir Edward Helmore, J. R. C. Henderson, Hubert Hudson, R. S. Inverchapel, Lord Jebb, Gladwyn Keynes, J. M. Law, Richard Liesching, Percivale Macdonald, Malcolm Meade, James Morrison, Herbert Newton, Basil Overton, Sir Arnold

SS for India and Burma 1940–5 DPM 1942–5; SSDA 1942–3; PM 1945–51 HC to New Zealand 1939–45 Lord Privy Council 1943–5 Foreign Secretary 1945–51 AS Treasury 1945; US 1947 AUS DO 1942–6; HC to Cda 1946–52 Political Secretary to HC South Africa 1939–44, Counsellor Washington Embassy 1944–9 SSDA 1940–2, 1943–5; Colonial Secretary 1942 Mininister Aircraft Production 1942–5; President of the Board of Trade 1945–7, Minister of Economic Affairs 1947; Chancellor 1947–50. President of the Board of Trade 1942–5; Chancellor 1945–7 Foreign Secretary 1940–5 Ambassador to Washington 1941–6 AS Treasury 1935–44; AUS FO 1944; DUS, FO 1946–8 PUS, DO 1939–40; HC to South Africa 1940–1 2nd Secretary at Board of Trade 1946–52 Economic adviser Treasury 1939–44 Minister of Agriculture 1940–5 Ambassador to Washington 1946–8 Acting Counsellor FO 1941; Head of Reconstruction Department 1942; Counsellor FO 1943 Economic adviser Treasury 1940–6 Parliamentary US, FO 1941–3; Minister of State FO 1943–5 AS DO 1939–42; 2nd Secretary at Board of Trade 1942–6 SSDA 1935–9; SS Colonies 1938–40; HC to Canada 1941–6 Economic Section of the Cabinet Offices, 1940–6; Director 1946–7 Lord President of Council 1945–51; DPM 1945–51 FO 1942–6 PUS BT 1941–5 269

270 Appendix Robbins, Lionel Ronald, Nigel Shackle, R. J. Wilson, Harold

Director Economic Section of Offices of the War Cabinet, 1941–5 AUS, FO 1942 Principal AS Board of Trade 1942–7; US 1947 President of Board of Trade 1947–51

Canada Bryce, R. B. Burchell, C. J. Clark, W. C. Davis, T. C. Deutsch, J. J. Hudd, Frederick LePan, Douglas Mackenzie King, W. L. McKinnon, H. B. Mackintosh, W. A.

Massey, Vincent Pearson, L. B. Rasminsky, Louis Reid, Escott

Reisman, Simon Ritchie, Charles Robertson, Norman St Laurent, Louis Sharp Mitchell Towers, Graham Wilgress, L. D. Wrong, H.H.

Finance 1938–45; Exececutive Director of IBRD 1946–7; ADM Finance 1947–54 HC to South Africa 1944 DM Finance 1932–52 HC to Australia Temporary assistant, DEA, 1941–4; Director of Economic Relations, Department of Finance 1947 Acting HC in London Economic Adviser Canada House 1945–8 PM 1935–48 Chair Tariff Board, 1931–59 Special Assistant to DM Finance 1939–44; Acting DM Finance 1945; Director General Economic Research 1944–6 HC UK 1935–46 Ambassador to Washington; US of DEA; SS 1948–57 Bank of Canada 1940–73 2nd secretary, Washington, 1938–41; 2nd secretary, DEA 1941–4; first secretary, Washington, 1944–5; counsellor, London 1945–6; AUS 1947 Finance 1946–88 3rd secretary, London 1939–45; ambassador to Paris 1947–9 US of DEA 1941–6; HC in London 1946–9 SSEA 1946–8; PM 1948–50 Director Economic Policy, Department of Finance 1942–4 Governor Bank of Canada 1934–54 DM Trade &Commerce 1940–2; Ambassador to USSR 1942–5; Minister to Switzerland 1947–9 Assistant USSEA 1942–6; Ambassador to Washington 1946–53

Australia Bridgen, J. B. Bruce, Stanley Chifley, Ben Coombs, H. C. Curtin, John

Economic adviser in Washington 1946 HC to London 1933–45 Treasurer 1941–9; Minister PWR 1943–5; PM 1945–9 Director PWR 1943–7 PM 1941–5

Appendix 271 Dedman, J. J. Dunk, W. E. Evatt, H.V. Fletcher, Jacob Kennedy, J. J. F. McCarthy, M. E. McFarlane, S. G. Melville, Leslie Moore, Arthur C. Morton, C. E. Murphy, James F. Pollard, R. T. Tange, Arthur

Minister PWR 1945–9 AS Treasury 1939–45; Secretary DEA 1945–7 Minister of External Affairs, 1941–9; DPM 1946–9 Director Trade Relations and Treaties 1947 Assistant Comptroller General, Trade and Customs Secretary Commerce and Agriculture 1947 Secretary Treasury Economist, Commonwealth Bank Assistant Comptroller-General Customs 1935–47 Assistant Comptroller-General Customs 1947 Secretary Commerce 1934–45 Minister of Commerce and Agriculture 1946–9 First Secretary to UN 1947

New Zealand Ashwin, G. B. Berendsen, C. A. Campbell, R. M. Clinkard, George W. Fisher, A. G. B. Fraser, Peter Jordan, W. J. Laurence, G. McIntosh, A.D. Nash, Walter Shanahan, Foss Sutch, Dr W. B. Webb, Leicester

Secretary Treasury 1945 Permanent Head PM’s department 1932–43; HC to Australia 1943–4; Minister to Washington 1945–8 Adviser to Nash; Acting HC in London 1945 Secretary Industry and Commerce 1946–50 Economic adviser in London PM 1940–9 HC in London 1936–51 Research and Advisory Officer 1947, Industry and Commerce Secretary DEA 1943–66; Permanent Head PM’s Department 1945–66 Minister of Finance 1935–49 Deputy Secretary DEA 1943–55 Economic adviser to Nash Department of Economic Stabilization 1946–7

South Africa van Eck, Dr H. J.

Havenga, N. C. Hertzog, Gen. J. B. M. Hofmeyer, Jan H. Holloway, J. E. Malan, Dr. D.F. Nicholls, Heaton Norval, A. J. Smuts, Gen., J. C. du Toit, F. J. Waterson, S. F.

Chair Industrial Corporation; Chair Social and Economic Planning Council; Managing Director Industrial Devl. Corp. Minister of Finance 1948–54 PM 1924–39 Minister of Finance 1939–48 Secretary Department of Finance Leader of the Nationalist Party 1935–48; PM 1948–54 HC to London 1945–8 Chair Board of Trade PM, Foreign Secretary 1939–48 Secretary Commerce and Agriculture 1947 Minister of Economic Development 1944–8

272 Appendix

United States Acheson, Dean Anderson, Clinton Brown, Winthrop Byrnes, James Clayton, Will Douglas, Lewis Hawkins, Harry Hickerson, J. D. Hull, Cordell Leddy, John Lovett, Robert Marshall, Gen. G. Millikin, Eugene D. Moffat, Pierrepont Stettinius, Edward Thorp, Willard Truman, H. S. Vandenberg, A. H. Vinson, Fred Wilcox, Clair

AUS 1941–5; USS 1945–7 Secretary of Agriculture 1945–8 Chief, Division of Commercial Policy 1945–7 SS 1945–7 AS for Economic Affairs 1945–6; US for Economic Affairs 1946–7 Ambassador to London 1945–7 Minister Counsellor, London 1945 Chief, Division of British Commonwealth Affairs, SD 1945 SS 1932–44 Adviser General Commercial Policy, SD 1947 ASS 1947 SS 1947–9 Republican Senator 1944–56 Ambassador to Canada 1942 SS 1944–5 AS for Economic Affairs 1946–7 President 1945–53 Republican Senator 1928–53 Secretary of the Treasury 1945–6 Director Office of International Trade 1945–7

Notes Introduction: the Necessity of Redefining the Commonwealth 1 Churchill, ‘Before the Autumn Leaves Fall’, Speech at the Guildhall on Receiving the Freedom of the City of London, 30 June 1943, Charles Eade, compiler, Onwards to Victory: War Speeches of the Rt. Hon. Winston S. Churchill (Toronto, 1944), p. 162. 2 I use the term Commonwealth throughout the book to mean the association between Britain, Canada, Australia, New Zealand and South Africa. To avoid confusion, I refer to Australia only as Australia, and never as the Commonwealth of Australia or the Commonwealth. 3 Keith Sinclair, Walter Nash (Auckland, 1976), p. 202. Also quoted in Malcolm McKinnon, Independence and Foreign Policy: New Zealand in World Affairs since 1935 (Auckland, 1993), p. 33. 4 H. Duncan Hall, ‘The British Commonwealth of Nations in War and Peace’, in W. Y. Elliott and H. D. Hall, eds, The British Commonwealth at War (New York, 1943), pp. 74–6. 5 Nicholas Mansergh, Survey of British Commonwealth Affairs: vol. 4. Problems of Wartime Co-operation and Post-war Change, 1939–1952 (London, 1958). 6 The evolution of dominions’ nationalism was an ongoing process that developed at different speeds and in different ways in every dominion. Eddy and Schreuder identify the years 1880–1914 as the period when the four dominions first began to assert discrete national identities. See J. Eddy and D. Schreuder, eds, The Rise of Colonial Nationalism: Australia, New Zealand, Canada, and South Africa First Assert their Nationalities, 1880–1914 (Sydney, Wellington, London and Boston, 1988). Others, including Trevor Lloyd, identify World War I as the decisive moment: The British Empire, 1558–1983 (Oxford, 1984), pp. 276–7. Although there is a vast literature on the subject of nationalism, little attention has been paid to the way that nations acquired legitimacy as sovereign states in the international community. Christopher Waters, The Empire Fractures: Anglo-Australian Conflict in the 1940s (Melbourne, 1995) is a notable exception. Not only does Waters add to the study of nationalism by focusing on its external dimensions; he also pushes the timeframe forward. 7 Much of the literature on the constitutional evolution of the Commonwealth identifies the Balfour report and the Statute of Westminster as the principal landmarks leading to the independence of the dominions. This argument is unconvincing because many legal historians do not distinguish between de jure and de facto independence. Moreover the arguments of some legal historians are not logical. Others have helpfully distinguished between equality of status and equality of function: M. Margaret Ball, The ‘Open’ Commonwealth (Durham, 1971), Alfred L. Burt, The Evolution of the British Empire and Commonwealth from the American Revolution (Boston, 1956), Cecil J. B. Hurst, ‘The British Empire as a Political Unit’, in Great Britain and 273

274 Notes

8 9

10

11 12

13

14

the Dominions (Chicago, 1928), and Reginal G. Trotter, The British EmpireCommonwealth: a Study in Political Evolution (New York, 1932). Some assert that the Statute of Westminster removed the discrepancy between status and function. Others contend that a gap endured. Trotter, for instance, maintains that the Statute of Westminster was ahead of its time because ‘equality of function and of burden had not yet in all cases been entirely assumed’. Some dominions ‘still looked up to the mother country as at least primus inter pares’ (pp. 112–13). I agree with the interpretation of K. C. Wheare in The Constitutional Structure of the Commonwealth (Oxford, rpt. 1969) who asserts that the Balfour report only defined ‘the status of a Member of the British Commonwealth of Nations’ (p. 12). He believes that the Balfour report did not establish the Commonwealth as a distinct international association. Rather the Balfour report suggested that the Commonwealth existed as a subset of the Empire (pp. 4–5, 12). Waters also asserts that the Statute of Westminster did not mark the beginning of Australian independence except in ‘a strictly legal definition of independence’: The Empire Fractures, p. 5. Wheare, The Constitutional Structure of the Commonwealth, pp. 6–16. See David MacKenzie, Inside the Atlantic Triangle: Canada and the Entrance of Newfoundland into Confederation, 1939–1949 (Toronto, 1986) on Newfoundland’s economic and political development. John Darwin makes an even stronger claim in ‘Imperialism in Decline?: Tendencies in British Imperial Policy Between the Wars’, The Historical Journal, 23, 3 (1980), pp. 657–79. He asserts that by replacing formal ties with voluntary ones, the connection between Britain and the dominions was strengthened because potential sources of disagreement were eliminated and forces encouraging dominions’ nationalism were nipped in the bud. Stephen Leacock, Back to Prosperity: the Great Opportunity of the Empire Conference (Toronto, 1932), p. 28. Eddy and Schreuder note that colonial nationalism was characterized by ‘a special ambiguity’: The Rise of Colonial Nationalism, p. 7. Benedict Anderson has supplied a useful definition of a nation as ‘an imagined political community–and imagined as both inherently limited and sovereign’: Imagined Communities: Reflections on the Origin and Spread of Nationalism (London, rpt. 1993), p. 6. In Canada, for instance, members of the Group of Seven consciously repudiated British and European aesthetic sensibilities and standards arguing that Canada needed an art of its own to become a complete nation. The following passage appeared in the catalogue to the group’s 1920 exhibit: ‘No country can ever hope to rise beyond vulgar medicority where there is not unbounded confidence in what its humanity can do.’ Canadian art critics initially loathed their work. Hector Charlesworth, a scathing critic, described their paintings as nauseating, perverse and childlike. He also feared that the paintings of the Group of Seven would strengthen the British notion of Canadians as ‘crude and commonplace in taste and ideals’. Ironically, the Group of Seven received considerable praise in the UK. Art for a Nation Exhibit, Musée des Beaux Arts, Montreal, 1996. Several earlier studies examine the way in which being British was an affirmation of dominion nationalism. See Carl Berger, The Sense of Power: Studies in the Ideas of Canadian Imperialism, 1867–1914 (Toronto, 1970) and

Notes 275

15

16

17 18 19

20 21

22 23

24

Keith Sinclair, A Destiny Apart: New Zealand’s Search for National Identity (Wellington, 1986). Studies such as these offset a tendency to dismiss nationalisms that were ‘essentially qualified by atavistic colonial attachments, through kinship and sentiment as much as through finance, commerce and defence policies, to the metropolitian heart of the empire’. Eddy and Schreuder, eds, The Rise of Colonial Nationalism, p. 3. Escott Reid, Radical Mandarin: the Memoirs of Escott Reid (Toronto, 1989), p. 166. Memo by Reid, ‘Twenty-Four Point Draft Programme for the Abolition of the Vestigial Remnants of Canada’s Former Status of Colonial Subordination and for the Creation of Appropriate Symbols of Canadian Nationhood’, 21 March 1944, NAC: Reid Papers. South Africa led the way in this respect by introducing its own flag in 1928, although the design was a compromise, blending the Union Jack, the flags of the Transvaal and Orange Free State, and using the orange, white and blue of the House of Orange. R. F. Holland has argued that the onset of the Great Depression ended the dominion governments’ initiatives to establish independent representation abroad. They could not afford the costs of independent foreign policies, nor were they inclined to participate in world affairs during a time of growing instability: Britain and the Commonwealth Alliance, 1918–1939 (London, 1981), p. 83. New Zealand did not even have a department of external affairs in 1939 and Australia had only one office abroad: in London. Wheare, Constitutional Structure of the Commonwealth, p. 55. Canada, Australia, New Zealand and South Africa were all woefully unprepared to defend themselves in 1939. Canada alone had the luxury of geography; as a neighbour to the US, there was some certainty that the US would protect Canada. In fact, President Roosevelt made such a pledge in 1938. The governments of the three southern dominions depended heavily on Britain for their security. J. King, The Other Side of the Coin: a Cartoon History of Australia (Stanmore, 1976), p. 91. ‘The Relationship of the British Commonwealth to the Post-War International Political Organisation’, memo by SSDA, 15 June 1943, PRO: PREM 4/30/3, W.P.(43)244. Sara Pienaar, South Africa and International Relations Between the Two World Wars: the League of Nations Dimension (Johannesburg, 1987), p. 21. See, for instance, the four-volume Survey of British Commonwealth Affairs. Hancock wrote the first two volumes, Mansergh the last two. Mansergh also wrote The Commonwealth Experience (London, 1969). R. F. Holland has written more recently, although his Britain and the Commonwealth Alliance, 1918–1939 is now almost twenty years old. In ‘Back to the Future: from National History to Imperial History’, Past and Present, No. 164, Aug. 1999, Hopkins lays out an ambitious agenda for the study of the British Empire in the future. He identifies many impediments to the study of the white Empire, but still insists that Canada, Australia and New Zealand in particular need to be repositioned front and centre in imperial and Commonwealth history. See Christopher Waters, The Empire Fractures or David Day, The Great Betrayal: Britain, Australia and the Onset of the Pacific War 1939–1941 (London, 1988) and Reluctant Nation: Australia and the Allied Defeat

276 Notes

25 26 27 28 29 30

31

32 33

34

35

1

of Japan, 1942–1945 (Oxford, 1992). There is almost no interest in AngloCanadian relations after World War II. Canadian historians by and large accept some version of the forked road thesis which concludes that Canada’s relations with the United States eclipsed all others. The few historians of foreign policy in New Zealand focus on relations with Britain and the US. See McKinnon, Independence and Foreign Policy or W. D. McIntyre, Background to the ANZUS Pact: Policy-making, Strategy and Diplomacy, 1945–1955 (Houndsmills and Christchurch, 1995). Recent writing on South Africa’s foreign policy tends to focus on the years after 1945 when apartheid became the dominating issue in South Africa’s relations with Britain and the rest of the world. I am leaving out Ireland, the story of which is quite different from those of the dominions of settlement. ‘Some Comments on Intra-Commonwealth Relations’, memorandum by Wrong, 17 Aug. 1943, NAC: RG25/3263/6133–40 pt. 1. McKinnon, Independence and Foreign Policy, p. 36. Douglas Copeland, ‘Australia’s Attitude to British Commonwealth Relations’, International Journal, 3, 1, Winter 1947–8, p. 39. UK, Hansard, 399 H. C. Deb 5s, 20 April 1944, col. 400. David Day, ‘Pearl Harbour to Nagasaki’, in Carl Bridge, ed., Munich to Vietnam: Australia’s Relations with Britain and the United States since the 1930s (Carlton, Vic., 1991), p. 69. For a detailed study of American anti-imperialism during World War II, see W. R. Louis, Imperialism at Bay 1941–1945: the United States and the Decolonization of the British Empire (Oxford, 1977). Casey Diary, 28 August 1940, quoted in Bridge, ‘Poland to Pearl Harbor’, in Bridge, ed., Munich to Vietnam, p. 38. Text of address on the occasion of the Annual Feast at Eliot House, Cambridge, Mass, by R. G. Casey, Australian Minister to the United States, 20 March 1941, FDRL: Winant Papers/Box 222/Speeches by members of the British Government. My argument is not intended to refute the interpretation of Cain and Hopkins who assert that the financial sector, in particular the activities of the gentlemenly capitalists, explains both the expansion and contraction of the Empire. See British Imperialism: Innovation and Expansion 1688–1914 and British Imperialism: Crisis and Deconstruction, 1914–1990 (London and New York, 1993). Rather I use trade as a case study to examine Commonwealth political relations. Memo by the Associated Chambers of Manufactures of Australia, re. ITO–tariff negotiations and draft charter, 20 Feb. 1947, AA: A1068/ER47/1/16.

A Short History of Imperial Preference: the Myth of Commonwealth Unity and the Reality of National Interests

1 W. K. Hancock, Survey of British Commonwealth Affairs, Vol. II, Problems of Economic Policy, 1918–1939, Part I (London, rpt. 1964), p. 85. 2 L. S. Amery, My Political Life. Volume Three: the Unforgiving Years, 1929–40 (London, 1955), p. 95.

Notes 277 3 D. K. Fieldhouse, The Colonial Empires: a Comprehensive Survey from the Eighteenth Century (New York, 1966), pp. 258, 262. 4 Charles and Cynthia Hou, Great Canadian Political Cartoons, 1820–1914 (Vancouver, 1997), p. 106. 5 Tim Rooth, British Protectionism and the International Economy: Overseas Commercial Policy in the 1930s (Cambridge, 1993), p. 95. Rooth finds that the results of the Ottawa agreements strongly favoured the dominions. 6 Joe Garner, The Commonwealth Office, 1925–68 (London, 1978), p. 106. 7 Ian Drummond and Norman Hillmer, Negotiating Freer Trade: the United Kingdom, the United States, Canada and the Trade Agreements of 1938 (Waterloo, 1989), p. 16. Donald Macdougall and Rosemary Hutt, ‘Imperial Preference: a Quantitative Analysis’, The Economic Journal, 64 (June 1954), pp. 250–1. 8 Ian Drummond, Imperial Economic Policy, 1917–1939: Studies in Expansion and Protection (London, 1974), pp. 284–6; F. V. Meyer, Britain’s Colonies in World Trade (London, 1948), pp. 63–4. 9 Australia disbanded its board in 1937. 10 Statistical Abstract for the British Empire, 1939. 11 Short Note on Imperial Preference, Nov. 1947, prepared by Hardie of the Board of Trade, PRO: FO371/62327. The note described the preferences extended by the UK and the dominions. The UK granted the same preferential benefits to all exports from every part of the Commonwealth and Empire except for colonial sugar which enjoyed a larger margin of preference than dominion sugar. South Africa accorded 49 preferences to the UK, 24 to Canada, 5 to NZ, 3 to Eire, 2 to the colonies, and 1 to Newfoundland; Southern Rhodesia received exceptional preferences. Australia applied preferential duties in general to British goods; on specified goods from NZ and the rates levied on NZ goods could be equal to, higher or lower than the imperial preference rate; on specified goods from Canada and in most cases the preference was higher than the preferential rate. Canada’s preferences applied more uniformly although one or two colonies were excluded. On a few articles the preference for Australian, New Zealand, and South African goods was lower than the preferential rate. New Zealand granted preferences to all parts of the Commonwealth but the rates varied. For example, Australian goods were charged a rate lower than the preferential rate on 15 items, and higher than the preferential rate on 105 items, whereas Canadian products were charged a higher rate than the preferential tariff on 69 items. In general goods from Canada, South Africa, India, Eire and –9 th of the Newfoundland paid the preferential rate plus a surtax, normally 40 rate. 12 Drummond, Imperial Economic Policy, 1917–1939, p. 308. 13 Hancock, Survey of British Commonwealth Affairs, Vol. II, Part I, pp. 237–8. MacDougall and Hutt, ‘Imperial Preference’, p. 234. 14 Statistical Abstract for the British Empire 1939. 15 Ian Drummond, British Economic Policy and the Empire, 1919–1939 (London, 1972), pp. 206–7, 210, 213, 214. 16 Hancock, Survey of British Commonwealth Affairs, Vol. II, Part I, p. 85. 17 Drummond, Imperial Economic Policy, 1917–1939, p. 252. Drummond described the treaties with Canada and Australia as ‘defensive

278 Notes

18 19

20 21

22 23 24 25

26 27 28

29

30

31 32 33 34

measures – attempts to prevent the two large Dominions from behaving in even more inconvenient and uncomfortable ways’. Nicholas Mansergh, ed., Documents and Speeches of British Commonwealth Affairs, 1931–1952, Vol. I (London, 1953), p. 132. Max Beloff, Imperial Sunset: Vol. 2, Dream of Commonwealth, 1921–42 (London, 1969), p. 188, footnote 6. Quoted in Cross, Lord Swinton, p. 107. Rooth, British Protectionism and the International Economy, p. 71. Hugh L. Keenleyside, Memoirs of Hugh Keenleyside: Volume 1, Hammer the Golden Day (Toronto, 1981), p. 415. Drummond, British Economic Policy, 1919–1939, ch. 3 and Imperial Economic Policy, 1917–1939, ch. 6; Hancock, Survey of British Commonwealth Affairs, Vol. II, Part 1, pp. 215, 245; Cain and Hopkins, British Imperialism: Crisis and Deconstruction, p. 144. Holland, Britain and the Commonwealth Alliance, 1918–1939, p. 145; Nicholas Mansergh, The Commonwealth Experience, pp. 244–6. Mansergh, ed., Documents and Speeches I, p. 122. Drummond and Hillmer, Negotiating Freer Trade, ch. 6–8. M. Ruth Megaw, ‘Australia and the Anglo–American Trade Agreement, 1938’, JICH, 3, 2 (Jan. 1975), pp. 196–204. Drummond, British Economic Policy, 1919–1939, p. 114. Rooth claims that Britain entered into negotiations with the US reluctantly and ultimately for political reasons. It was essential to maintain harmonious relations with the US in the face of the growing menace of the Axis countries. See Rooth, British Protectionism and the International Economy, pp. 283–4, 287–8, 290–1. W. K. Hancock, Argument for Empire (Harmondsworth, 1943), p. 92. Warren Kimball, The Most Unsordid Act: Lend-Lease, 1939–1941 (Baltimore, 1969), p. 121. Cordell Hull advised Roosevelt to secure three billion dollars worth of collateral from Britain, a suggestion which exposed his belief that Britain was taking advantage of the US. See Kimball, The Most Unsordid Act, pp. 142–3, 231–2. John Hickerson, the US expert on the Commonwealth, echoed this fear when he remarked to a colleague that ‘when a Britisher asks you to consider the larger aspects of anything, it is wise to watch your wallet’. See Berle Diary, 8 Dec. 1939, FDRL: Berle papers/Box 211/Diary Nov.–Dec. 1939. L. S. Pressnell, External Economic Policy Since the War, Vol. I, the Post–War Financial Settlement (London, 1986), pp. 39–40. Richard Gardner, Sterling–Dollar Diplomacy in Current Perspective: the Origins and Prospects of our International Economic Order (New York, 1980), pp. 41–7. Agreement between the Governments of the United Kingdom and the United States of America on the Principles Applying to Mutual Aid, Cmd 6341, 1942, BPP 1941–2, IX. Michael Hart, ed., Also Present at the Creation: Dana Wilgress and the United Nations Conference on Trade and Employment at Havana (Ottawa, 1995), p. 27. Cable, Churchill to Roosevelt, 7 Feb. 1942, FDRL: Hopkins Papers/Box 136/Winston S. Churchill (folder 1). Lionel Robbins, Autobiography of an Economist (London, 1971), p. 192. Pressnell, External Economic Policy since the War, p. 278. Herbert Feis found that the sale of American exports to the British Empire was virtually unchanged after 1932. Between 1926 and 1930, 42 per cent of American

Notes 279 exports were sold in the Empire; the proportion fell to 40 per cent between 1931 and 1935; it recovered to 42 per cent after 1935. See Herbert Feis, ‘The Future of British Imperial Preferences’, Foreign Affairs, 24, 4 (July 1946), p. 664. MacDougall and Hutt also described the effect of imperial preference on the sale of American manufactures as ‘entirely negligible’. ‘Imperial Preference’, p. 256. Pressnell, External Economic Policy since the War, p. 57. Gardner, Sterling–Dollar Diplomacy, p. 62. ‘The bases of the present war, the mechanism of a progressively developing victory and of a peace based thereon’, personal memorandum of A. A. Berle, Jr., undated, FDRL: Berle Papers/Box 65/Post-War Problems: Economic and Political 1942–43; Cordell Hull, The Memoirs of Cordell Hull, Vol. II (London, 1948), p. 1153. Lynn R. Edminster, ‘International Trade and Postwar Reconstruction’, American Economic Review, 33, 1, Supplement, Part 2 (March 1943), p. 304. ‘Memorandum from Hopkins to Cox, 15 Aug. 1941 re. Lend-Lease Aid to British Dominions’, FDRL: Hopkins Papers/Box 306/US Relations with British Dominions and Possessions.

35 36 37

38 39

2

Defining National Trade Policy and National Interests from Mutual Aid to the End of the War 1 2

3

4 5 6

7

8 9

Redvers Opie, ‘A British View of Postwar Trade’, The American Economic Review, 33, 1, Supplement, Part 2 (March 1943), p. 323. Hedley Bull, ‘Britain and Australia in Foreign Policy,’ in J. D. B. Miller, ed., Australians and British: Social and Political Connections (Australia, 1987), p. 125. ‘Economic Rehabilitation, a Post War Problem’, memo by Alfred Rosenhirsch, Sept. 1942 FDRL: Cox Papers/Box 100/Post-war-Foreign; ‘The Foreign Economic Policy of the State Department’, speech delivered to Economic Club, Detriot, Michigan, 21 May 1945. Reprinted in Frederick Dobney, Junior, ed., Selected Papers of Will Clayton (Baltimore, 1971), p. 130. Hull, Memoirs Vol. 1, p. 81. Alfred E. Eckes Jr., Opening America’s Markets: US Foreign Trade Policy since 1776 (Chapel Hill, 1995), p. 141. ‘Post-War Commercial Policy’, address to National Foreign Trade Convention, New York, 7 Oct. 1941, FDRL: Sumner Welles Papers/Box 195/1941 Mr Welles Speeches. Note: these lines reproduced exactly in a memo prepared by Rosenhirsch, ‘Economic Rehabilitation, a Post War Problem’. ‘America and the Post-War World’, special intelligence report, 16 Dec. 1942. Prepared by Office of War Information, Bureau of Intelligence, FDRL: Cox Papers/Box 100/Post-War-Foreign. Gardner, Sterling–Dollar Diplomacy, pp. 12–13. Gardner, Sterling Dollar Diplomacy, pp. 12–13, 18; ‘Economic Rehabilitation, a Post-War Problem’, memo by Rosenhirsch.

280 Notes 10

11 12

13 14 15

16

17 18 19 20 21 22 23

24 25 26 27 28 29 30 31 32

Eckes, Opening America’s Markets, p. 106. Eckes denies that the Smoot–Hawley act raised American tariffs to their highest level ever. It earned its reputation as an insurmountable barrier to trade because of the effects of the Depression. As prices dropped the specific tariff rates became increasingly onerous. When calculated as a percentage of the total price, the ad valorem rate soared. Feis, ‘The Future of British Imperial Preferences’, p. 665. ‘A Pilot Study of American Sentiment Toward the British’, Surveys Division, Special Memorandum No. 47, Office of War Information, 29 March 1943, FDRL: Cox Papers: Box 100, Public Opinion Polls (2); ‘American Attitudes Toward the British’, Surveys Division, Memorandum No. 65, Office of War Information, 21 Aug. 1943, FDRL: Cox Papers, Box 100, Public Opinion Polls (1). Louis, Imperialism at Bay, pp. 147, 198. Thomas W. Zeiler, Free Trade, Free World: the Advent of the GATT (Chapel Hill, 1999), p. 22. Warren F. Kimball, ‘Lend-Lease and the Open Door: the Temptation of British Opulence, 1937–42’, in Kimball, The Juggler: Franklin D. Roosevelt as Wartime Statesman (Princeton, 1991), p. 59. Francis L. Lowenheim et al., Roosevelt and Churchill: their Secret Wartime Correspondence (New York, 1975), Roosevelt to Churchill, 11 Feb. 1942, p. 177. Armand van Dormael, Bretton Woods: Birth of a Monetary System (New York, 1978), p. 24. ‘Economic Rehabilitation, a Post-War Problem’. Berle Diary, 11 Oct. 1940, FDRL: Berle Papers/Box 212/Diary October–December 1940. ‘Economic Rehabilitation, a Post-War Problem’. Hull, Memoirs, Vol. 2, p. 1735. ‘A Speech on Foreign Economic Policy’, by Will Clayton, 21 May 1945, in Dobney, ed., Clayton Papers, p. 136. The self-interested aspect of American external economic policy is the point that Gabriel Kolko makes forcefully in The Politics of War (New York, 1968), ch. 11. His argument makes a very important point about motivations, but is one-sided. Feis, ‘The Future of British Imperial Preferences’, pp. 665–6. Alfred E. Eckes Jr., ‘Open Door Expansionism Reconsidered: the World War II Experience’, The Journal of American History, 59, 4, (March 1973), p. 923. ‘Methods of Attaining Postwar Commercial Objectives’, July 1943, FDRL: Hopkins Papers, Box 328, Postwar Planning 1943. ‘Economic Rehabilitation, a Post-War Problem’. Kolko, The Politics of War, p. 280. ‘American Attitudes Toward the British’. Confidential letter from Bernard M. Baruch, 1 Dec. 1944, FDRL: Hopkins papers/Box 335/England and Phase II. ‘Latest Opinion Trends in the USA: Lend-Lease’, 28 June 1945, FDRL: Cox Papers/Box 100/Public Opinion Material (1). For instance, Morgenthau was converted to the necessity of giving aid to Britain after his visit to the UK in 1944. FDRL: Morgenthau Diary/780/1–13, 6 Oct. 1944.

Notes 281 33

34 35 36 37

38

39

40

41

42

43 44 45 46 47 48 49 50 51 52

Credits for Great Britain: Commercial Policy, memorandum for the president from Hull, 17 Sept. 1944, FDRL: Hopkins Papers/Box 335/England and Phase II. Feis, ‘The Future of British Imperial Preferences’, p. 764. See David Reynolds, The Creation of an Anglo-American Alliance, 1937–1941: a Study in Competitive Co-operation (Chapel Hill, 1982). Article VII of the Mutual Aid Agreement Commercial Policy, 14 Aug. 1945, PRO: T230/175. Acheson wrote in his memoirs that this was a bad decision, precisely because it showed a lack of understanding for the UK’s economic plight. Truman also came to see it as a mistake. Dean Acheson, Present at the Creation: My Years in the State Department (New York, 1969), p. 122. Also see Gardner, Sterling–Dollar Diplomacy, pp. 184–5. Memorandum on Article VII. Prepared by Ambassador Winant with the assistance of Mr Hawkins and Mr Penrose, undated but appended to a document dated 13 March 1945, FDRL: Morgenthau Diary/Book 827. ‘The Balance of Gain and Loss to United Kingdom Trade from the Proposed International Multilateral Commercial Policy’, memo by Meade, revised draft, 29 Jan. 1945, PRO: BT11/2498; See also E. F. Penrose, Economic Planning for the Peace (Princeton, 1953), p. 23; G. D. A. Macdougall, ‘Britain’s Foreign Trade Problem,’ The Economic Journal, 57 (1947), p. 80. Churchill would later refer to the Commonwealth, the Anglo-American special relationship, and Europe as the three circles of UK foreign policy. The British would not make use of the European option until the end of the 1950s because it was seen to be incompatible with the Commonwealth and American connections. ‘The Balance of Gain and Loss to United Kingdom Trade’. Meade estimated that changes to preferences would adversely affect £126 million of exports to the dominions and India but would gain on £61 million. ‘A Proposal for an International Commercial Union’, Susan Howson, ed., The Collected Papers of James Meade, III (London, 1988), pp. 27–32. This and earlier drafts of the proposal are in PRO: T230/125. Draft report, C. P. C. P, no date (late Dec. 1942 or Jan. 1943), PRO: T230/171. Draft minutes of the 4th meeting of the Interdepartmental CPCP, 3 Dec. 1942, PRO: T230/171. Memo by Meade for minister of state, 10 Feb. 1944, PRO: T230/173. MacDougall to Meade, letter regarding ‘The Balance of Gain and Loss’, 15 Feb. 1945, PRO: BT11/2498. Draft report Dec. 1942–Jan. 1943, Committee on Postwar Commercial Policy, no date, PRO: T230/171. Rejoinder to Sir Hubert Henderson’s Note of Dissent to the Report of the CPCP, late Jan. 1943, PRO: T230/171. Pressnell, External Economic Policy since the War, p. 53. Comments by Keynes on the draft report of the CPCP, 31 Dec. 1942, PRO: T230/126. Meade Diary, 13 Oct. 1943; Interview with Meade, 24 May 1993. ‘Article VII Conversations on Commercial Policy’, draft paper by Keynes, June 1944, PRO: T230/173.

282 Notes 53 54 55 56 57 58 59 60 61 62

63 64 65 66 67

68

69 70 71

72 73 74 75 76

Robbins, Autobiography, p. 202. Batterbee to Machtig, 7 Oct. 1942, RHO: Batterbee Papers, MSS. N. Z. S. 13/7/2. Charles Eade, compiler, The End of the Beginning: War Speeches by the Rt. Hon. Winston S. Churchill 1942 (Toronto, 1943), p. 215. ‘A Proposal for Averting a Breakdown in International Trade Relationships’, memo by Graham Towers, Jan. 1945, NAC: RG25/89–90/029/Box47/154(s). Louis, Imperialism at Bay, pp. 23–4. W. M. (43) 50th Conclusion, 8 Apr. 1943, PRO: CAB 65/34. Letter from Cripps to Law, 30 Dec. 1943, PRO: T230/92. Hansard, UK, 20 Apr. 1944, col. 447. Foreign Office memo, 30 Mar. 1945, PRO: FO371/62420. ‘Towards a Balance of Payments’, 11 May 1945, reproduced in Sir Richard Clarke, Sir Alec Cairncross, ed. , Anglo-American Economic Collaboration in War and Peace, 1942–1949 (Oxford, 1982), p. 113. Robbins, Autobiography, p. 192. Note by Meade on Keynes’ note on ‘Article VII Conversations on Commercial Policy’, 8 June 1944, PRO: T230/173. Notes by Robbins on Article VII, 26 Jan. 1945, PRO: T230/174. Note on the Treasury Memo on End of Lend-Lease and Balance of Payments, undated, autumn 1945, PRO: T230/142. J. C. R. Dow, The Management of the British Economy, 1945–1960 (Cambridge, 1964), pp. 34–5; E (46) 21, Progress Reports on Exports, Committee on External Economic Policy and Overseas Trade, 27 March 1946, PRO: CAB 134/165. E (46) 16, ‘Export Educational Campaign’, memo by the chair of the Committee on External Economic Policy and Overseas Trade, 16 Mar. 1946, PRO: CAB 134/165; E (46) 30, ‘Capital Goods Export Policy’, Committee on External Economic Policy and Overseas Trade, 22 May 1946, PRO: CAB 134/165; E (46) 35, ‘Survey of the overseas economic situation as it affects the United Kingdom’, memo by the Economic Section of the Cabinet Offices, 2 July 1946, PRO: CAB 134/165. Annual Abstract of Statistics, 1935–46, 1938–50; Statistical Abstract for the British Commonwealth, vols 71, 2. Peter Henessy, Whitehall (London, revised 1990), p. 155; Alan Bullock, Ernest Bevin Foreign Secretary, 1945–51 (London, 1983), p. 51. David Reynolds, Britannia Overruled: British Policy and World Power in the 20th Century (London, 1991), pp. 6–7. See also Michael Blackwell, Clinging to Grandeur: British Attitudes and Foreign Policy in the Aftermath of the Second World War (Westport, Conn. , 1993). Meade’s comments on financial negotiations in Washington, 28 Aug. 1945, PRO: T230/142. US Minister in Ottawa to USSEA, memorandum of conversation with Robertson, 2 Oct. 1942, DCER, vol 9, pp. 618–19. Memo from USSEA to PM, 19 Oct. 1942, DCER, Vol. 9, p. 623. Letter from Mackintosh to Robertson, 5 Oct. 1942, DCER, Vol. 9, pp. 620–1. Statistical Abstract for the British Empire, vol. 62; Statistical Abstract for the British Commonwealth, vols 69–72. Note that financial year ended on 31 March.

Notes 283 77 78 79

80 81 82 83

84 85 86 87 88 89

90 91 92 93 94 95 96 97

‘Employment and Income, with special reference to the Initial Period of Reconstruction’, Government White Paper, Apr. 1945. Report of the Advisory Committee on Economic Policy on Trade Policy, 14 May 1943, NAC: RG2/44/W-22-3. Statistical statement indicating the value of Empire tariff preferences to Canada, approximately June 1943, NAC: RG19/3592/L-11-E. Australia (pop. 7 million) Canadian exports: $32 029 000 American exports: $61 272 000

Argentina (pop. 13 million) Canadian exports: $4 117 000 American exports: $70 621 000

United Kingdom (pop. 46 million) Canadian exports: $328 099 000 American exports: $498 661 000

France (pop. 42 million) Canadian exports: $6 973 000 American exports: $180 192 000

British Malaya (pop. 5. 3 million) Canadian exports: $2 781 000 American exports: $9 790 000

Netherlands East Indies (pop. 53 mil) Canadian exports: $1 057 000 American exports: $35 348 000

Jamaica (pop. 1. 2 million) Canadian exports: $4 211 000 American exports: $5 894 000

Dominican Republic (pop. 1. 5 million) Canadian exports: $112 000 American exports: $6 687 000

Report of the Advisory Committee on Economic Policy on Trade Policy. Wilgress to Robertson, letter, 26 May 1942, NAC: RG20/668/22168 vol. 1. Memo on Tariff Talks with Australian Officials, 29 June 1942, NAC: RG20/259/33842. R. S. Bothwell and John English, ‘Canadian Trade Policy in the Age of American Dominance and British Decline 1943–1947’, Canadian Review of American Studies, 8, 1 (Spring 1977), p. 63. Pearson to Wrong, letter, 12 Oct. 1945, NAC: RG25/89–90/029/200(s), pt. 1. Interview with Bryce, 21 Sept. 1992. Interview with Reisman, 29 Sept. 1992. Interview with Sharp, 28 Sept. 1992. Hart, ed. , Also Present at the Creation, p. 23. Nancy Harrison Hooker, The Moffat Papers: Selections from the Diplomatic Journals of Jay Pierrepont Moffat, 1919–1943 (Cambridge, Mass. , 1956), p. 342. The diary entry was from 21 Dec. 1940. Interview with Reisman. Interview with Ritchie, 24 Sept. 1992. Pearson to Robertson, letter, 1 Feb. 1944, NAC: RG25/3263/6133–40 pt. 1. ‘Some comments on intra-Commonwealth relations’, memo by Wrong, 17 Aug. 1943, NAC: RG25/3263/6133–40 Pt. 1. Hansard, Canada, Fifth Session, 19th Parliament, Vol. 1, 31 Jan. 1944, p. 42. J. L. Granatstein, The Ottawa Men: the Civil Service Mandarins, 1935–1957 (Toronto, 1982), p. 92. Memo by Berle, 15 Oct. 1943, FDRL: OF4281/Winant, John G. 1941–44. Notes of Meeting of Ministers and Officials on office of Minister of Finance, 18 Jan. 1945, to discuss immediate postwar commercial policy outlook, NAC: RG19/3437/trade policy and finance 1945.

284 Notes 98

99 100 101 102 103 104 105 106

107 108 109 110

111 112 113 114

115 116 117 118

Interview with Sharp, 28 Sept. 1992. Sharp drew my attention to a comment in his memoirs (then not published) about economic rapprochement with the US. In the published account, the comment refers to nationalists in the 1920s and 1930s. Nonetheless Sharp cited it in a discussion of Canadian nationalists in the 1940s. Mitchell Sharp, Which Reminds Me … a Memoir (Toronto, 1994), p. 9. Interview with Ritchie, 24 Sept. 1992. Louis Rasminsky, ‘Anglo-American Trade Prospects: a Canadian view’, The Economic Journal, 55 (1945), pp. 162–3. ‘ Proposed UK–USA Agreement in Consideration for Lend-Lease’, War Cabinet agendum No. 88, 10 Feb. 1942, AA:A571/61/1944/1109 pt. 8. Meade Diary, 10 June 1945, LSE library. J. King, Stop Laughing, This is Serious! A Social History of Australia in Cartoons (Stanmore, 1978), p. 159. S. J. Butlin and C. B. Schedvin, War Economy, 1942–45 (Canberra, 1977), p. 347. Coombs’ report on London talks, undated 1944, AA: A571/61/1944/1109C pt. 3. There are two special issues of DAFP for 1947 and 1948 that deal exclusively with Australian–Indonesian relations. It was clear that Canberra was eager to explore commercial opportunities until the instability in Indonesia forced them to postpone plans to expand into that market. ‘Planning the Peace: II. International Co-operation – Employment and World Trade’, J. B. Chifley, SMH, 2 Dec. 1943, p. 4. Memo prepared by commerce and agriculture for cabinet, 10 May 1944, AA: A2700/XM/Vol. 10. Bruce to Curtin, letter, 25 Sept. 1941, AA: CP596/1/Bundle 1/6100. Reference to the rivalry between commerce and agriculture and trade and customs is mentioned in a draft memo to acting secretary, department of treasury, 1947, undated, no author, AA: A1068/ER47/70/1. Letter from McFarlane to Kennedy, 14 Nov. 1944, AA: A571/61/1944/1109 pt. 4. Statement by department of trade and customs on UK Commercial Policy Proposals, Jan. 1944, AA: A571/61/1944/1109C pt. 3. Zeiler, Free Trade, Free World, p. 32. In 1923 Australia supplied 16.6 per cent of all raisins consumed in Britain; in 1927 it filled 33. 9 per cent of demand and 51. 3 per cent in 1932. History of Raisins in UK and Development of Preference, prepared by the department of commerce and agriculture, 4 Sept. 1947, AA: A1068/ER47/70/1. Note this study and others for different fruits were not prepared until 1947. Statement by department of trade and customs on UK Commercial Policy Proposals. Hanlon to Chifley, letter, 11 Apr. 1946, AA: A461/G323/1/6 pt. 1. ‘Issues for Australia, Commercial Policy’, notes prepared by Coombs, 15 Oct. 1945, AA: A571/61/1944/1109 pt. 4. ‘Australian International Economic policy’, embassy memo by Bridgen, 27 March 1947, AA: A1068/ER47/70/1.

Notes 285 119 120 121 122 123 124 125 126

127

128 129 130 131 132 133 134 135 136 137 138 139

140 141

142 143 144 145 146

Memo presented to cabinet by R. V. Keane, minister for trade and customs, 19 June 1945, AA: A2700/XM/Vol. 19. ‘The USA International Trade Policy Programme’, embassy memo by Bridgen, 25 Feb. 1947, AA: A1068/ER47/57/1. H. C. Coombs, Trial Balance (Melbourne, 1981), pp. 96–7. Coombs to Chifley, letter extract, 24 May 1943, AA: A571/61/1944/1109C pt. 2. Notes by Leicester Webb of an Interview with E. McCarthy on Commercial Policy Issues, 10 Dec. 1945, NANZ: EA1/104/4/1 pt. 4. Statistical Abstract for the British Empire, vol. 62; Statistical Abstract for the British Commonwealth, vols 69–73. Note that year ends 30 June. Cecil Edwards, Bruce of Melbourne: Man of Two Worlds (London, 1965), p. 86. Charles Price, ‘Immigration’, in Miller, ed., Australians and British, p. 22. Price concluded that 90. 2 per cent of Australians claimed British ethnicity in a 1947 census. In the 1933 census, 99. 1 per cent of the population were British subjects. See Official Year Book for the Commonwealth of Australia, No. 32, 1939, pp. 383–4. A sporting rivalry, the common insulting reference to Britons as whingeing pommies, dislike for the British class system and a sense of their own cultural inferiority resulted in a complex relationship which combined veneration and contempt. J. D. B. Miller, ed., Australians and British. Mansergh, Documents and Speeches, Vol. 1, p. 21. Price, ‘Immigration’, p. 27. Mansergh, Document and Speeches, Vol. 1, Extracts from speeches of the House of Representatives, 5 Oct. 1938, pp. 314–16. Carl Bridge, ‘Introduction’, in Bridge, ed., From Munich to Vietnam, p. 3. See David Day, The Great Betrayal and Reluctant Nation. Copeland, ‘Australia’s Attitude to British Commonwealth Relations’, p. 39. Davies to Robertson, letter, 23 June 1944, NAC: RG25/89–90/029/Box 4/4–G(s) pt. 2. King, The Other Side of the Coin, p. 139. Paul Hasluck, Government and the People, 1942–45 (Canberra, 1970), p. 629. Paul Hasluck, Diplomatic Witness: Australian Foreign Affairs, 1941–1947 (Melbourne, 1980), p. 42. Interview with Tange, 27 July 1993. J. M. McCarthy, ‘Australia: a View from Whitehall, 1939–1945’, Australian Outlook, 28, 3 (Dec. 1974), p. 326. Note that it was Australians who said Evatt was ‘probably a secessionist’. Copeland, ‘Australia’s Attitude to British Commonwealth Relations’, p. 44. Bruce at Waldorf Hotel, 12 Dec. 1944, to the American and British Commonwealth Association, FDRL: Winant Papers/Box 183/Australia – high commissioner, Bruce, S. M. Hasluck, Government and the People, pp. 131–2. Mansergh, Documents and Speeches Vol. 1, p. 565. Mansergh, Survey of British Commonwealth Affairs, 1939–52, pp. 168–9. Peter Coleman and Les Tanner, compilers, Cartoons of Australian History (Melbourne, 1973), p. 71. Australia did not extend MFN treatment to American goods until Feb. 1943 and in turn Australia received the least favoured treatment by US

286 Notes

147

148

149 150

151 152 153 154 155 156

157

158

159 160 161 162 163

164

tariff authorities until 1942, a status which even Germany after the outbreak of war in 1939 did not incur. See Megaw, ‘Australia and the AngloAmerican Trade Agreement, 1938’ for an account of the British expansion of its trade beyond the Empire in which Australian complicity was needed but never rewarded. Raymond Esthus, From Enmity to Alliance: US–Australian Relations, 1931–1941 (Seattle, 1964) is one source on American-Australian relations that depicts their transformation. Esthus probably overstates the case somewhat. This passage is regularly quoted in studies of Australian foreign policy. See, for instance, Alan Watt, The Evolution of Australian Foreign Policy, 1938–1965 (Cambridge, 1967), p. 55. Australian HC in London to PM, cablegram 172A, 23 Oct. 1942, AA: CP596/1/Bundle 1/6100. Peter Love, Labour and the Money Power: Australian Labour Populism, 1890–1950 (Carlton, Vic., 1984), pp. 20–40, 159. British financial institutions were also seen as representatives of the money power. Memo for prime minister, 30 Nov. 1943, NAC: MG26/J4/ vol. 237/H–1474/C160242–3. Hasluck, Government and the People, pp. 475–6. Coombs, Trial Balance, p. 86. Interview with Tange. James Thorn, Peter Fraser: New Zealand’s Wartime Prime Minister (London, 1952), pp. 206–7. Malcolm McKinnon, ‘“Equality of Sacrifice”: Anglo-New Zealand Relations and the War Economy, 1939–1945’, JICH, 12, 3 (May 1984), p. 62. Malcolm McKinnon, ‘The New World of the Dollar’, in McKinnon, ed., The American Connection (Wellington, 1988), p. 111. Memo of conversation, by Mr Theodore C. Achilles of the Division of European Affairs, 14 July 1942, Washington, in FRUS, 1942, Vol. I: General, the British Commonwealth, the Far East, p. 553. My impression might be due to the paucity of records in the National Archives for the 1940s. The records of the departments of industry and commerce, the treasury, customs, and agriculture have almost no information on the issues under consideration although these departments clearly had some interest in them. I discussed this problem with Malcolm McKinnon who found the same lacunae in the National Archives of New Zealand. UK HC in New Zealand, to SSDA, 16 May 1943, RHO: Batterbee Papers/MSS. N. Z. S. 13/6/1. Acting Canadian HC in London to SSEA, tel. A. 439, 3 June 1946, NAC: RG25/vol. 107/U–10–11/UK 1946. Sinclair, Walter Nash, p. 257. I am indebted to Malcolm McKinnon for explaining the inner workings of the Labour Party to me. Sinclair, Walter Nash, pp. 20–1. Sinclair claims that Tolstoy, Ruskin and the Bible were the most powerful influences on the development of Nash’s economic philosophy. Walter Nash, New Zealand: a Working Democracy (London, 1944), p. 157.

Notes 287 165 166 167 168

169 170 171

172 173

174 175 176 177

178

179 180 181 182 183 184 185 186 187

Nash, New Zealand: A Working Democracy, p. 18. F. L. W. Wood, This New Zealand (London, 1958), pp. 96–7. Nash, New Zealand: A Working Democracy, p. 114. ‘Proposals for Consideration by an International Conference on Trade and Employment’, memo by Ashwin for Fraser, 7 Dec. 1945, NANZ: EA1/104/4/1 pt. 4. ‘Proposals for Consideration by an International Conference on Trade and Employment’. Minister External Affairs (Wellington) to SSDA, second draft tel. 368, Nov. 1945, NANZ: EA1/104/4/1 pt. 4. ‘ Notes prepared by the Department of Agriculture on the possible consequences on New Zealand farming of the US proposals for international trade and employment and their relation to the aims of the Food and Agriculture Organization’, 24 Apr. 1946, NANZ: EA1/104/4/1 pt. 5. Note that Britain and New Zealand extended these agreements until 1954. ‘Suggested Approach by New Zealand to Commercial Policy Discussions’, 30 Jan. 1946, NANZ: Nash/Bundle 80/1350–7. In 1938, fruit accounted for 1. 3 per cent of total exports, dried and preserved milk 0. 5 per cent. Eggs and vegetables did not figure on the tables of New Zealand’s exports in the Statistical Abstract for the British Empire, 1939. ‘The Future Role of the Manufacturing Industries in the New Zealand Economy’, treasury memo, 1 May 1946, NANZ: EA1/104/4/1 pt. 5. Ian Grant, The Unauthorized Version: a Cartoon History of New Zealand (Auckland, 1980), p. 125. ‘Suggested Approach by New Zealand to Commercial Policy Discussions’. ‘Notes prepared by the Department of Agriculture on the possible consequences on NZ farming of the US proposals for international trade and employment’; ‘Preference to New Zealand Products in the UK market’, memo by G. D. White, 6 Feb. 1946, NANZ: EA1/104/4/1 pt. 5. One shipment of New Zealand meat to California was blocked because of a state rule stipulating that all cuts of meat had to be branded with the mark of the country of origin. ‘Notes on Commercial Policy, Commodity Policy and Control of Cartels – Based on Discussions on 24th and 26th January, Australia–New Zealand economic discussions, Wellington’, Jan. 1945, NANZ: EA1/104/4/1 pt. 3. Statistical Abstract for the British Empire, vol. 62; Statistical Abstract for the British Commonwealth, vols 69–72. ‘Preference to New Zealand Products in United Kingdom Market’. McKinnon, Independence and Foreign Policy, p. 94. Wood, This New Zealand, p. 205. McKinnon, Independence and Foreign Policy, p. 6. F. L. W. Wood, The New Zealand People at War: Political and External Affairs, 1939–1945 (Wellington, rpt. 1971), p. 128. N. V. Lough, ‘New Zealand’s External Economic Relations’, in T. C. Larkin, ed. , New Zealand’s External Relations (Wellington, 1962), pp. 116–7. Grant, ed. , The Unauthorized Version, p. 162. G. R. Hawke, The Making of New Zealand: An Economic History (Cambridge, 1985), p. 120.

288 Notes 188 189 190 191 192

193

194 195 196 197 198 199 200 201 202 203 204 205 206

207

208

209 210

211

Sinclair, A Destiny Apart, pp. 101, 108. Wood, The New Zealand People at War, pp. 24, 218–19. McKinnon advances this thesis in Independence and Foreign Policy. Wood, This New Zealand, p. 308. Sir Alister McIntosh, ‘The Origins of the Department of External Affairs and the Formulation of an Independent Foreign Policy’, New Zealand in World Affairs, 1, 1977, p. 12. McIntosh to Berendsen, 29 Oct. 1943, in Ian McGibbon, ed. , Undiplomatic Dialogue: Letters Between Carl Berendsen and Alister McIntosh, 1943–1952 (Auckland, 1993), p. 35. Berendsen to McIntosh, 11 Nov. 1943, in McGibbon, ed. , Undiplomatic Dialogue, p. 36. Berendsen to McIntosh, 10 Dec. 1943, in McGibbon, ed. , Undiplomatic Dialogue, p. 47. King Diary, mfm 219, 24 June 1945, pp. 631–2. Thanks to Kathy Rasmussen for bringing this information to my attention. Wood, New Zealand People at War, p. 380. Berendsen to McIntosh, 10 Dec. 1943. McIntosh, ‘The Origins of the Department of External Affairs’, p. 21; Sinclair, A Destiny Apart, pp. 119–20. McIntosh to Berendsen, 17 June 1943, in McGibbon, ed. , Undiplomatic Dialogue, p. 31. Batterbee to MacDonald, 28 July 1942, RHO: Batterbee Papers/ MSS. N. Z. S. 13/7/1. Batterbee to Machtig, 23 July 1942, RHO: Batterbee Papers/ MSS. N. Z. S. 13/7/2. McKinnon, Independence and Foreign Policy, p. 55; Wood, New Zealand People at War, p. 195. Wood, New Zealand People at War, p. 129. McKinnon, Independence and Foreign Policy, p. 89; McKinnon, ‘The New World of the Dollar’, p. 15. Secretary of State to Consul at Capetown (Denby), 3 Feb. 1943 and Secretary of State to Minister in Union of South Africa (MacVeagh), 19 Nov. 1943, in FRUS 1943, Vol. III: the British Commonwealth, Eastern Europe, the Far East, p. 173. Memo of Conversation, by Mr Theodore C. Achilles of the Division of European Affairs, 13 Jan. 1943 and Secretary of State to the Consul at Capetown, 14 Jan. 1943 in FRUS 1943, Vol. III: the British Commonwealth, Eastern Europe, the Far East, pp. 173–5. Smuts to M. C. Gillett, 19 Jan. 1943, in Jean van der Poel, ed., Selections from the Smuts’ papers Vol. VI, Part XVII: the Second World War (Cambridge, 1973), p. 412. Lucretia Ilsley, ‘The Union of South Africa in the war’, in Elliot and Hall, eds. , The British Commonwealth at War, p. 443. ‘Agreement Between the United States and the Union of South Africa on Mutual Aid’, FRUS 1945: Vol. VI: the British Commonwealth, the Far East, p. 291. W. K. Hancock, Smuts vol. I: The Sanguine Years 1870–1919 (Cambridge, 1962), ch. 21. Smuts encouraged Keynes to explain, in terms understand-

Notes 289

212 213

214 215

216 217 218 219 220 221 222 223

224 225 226 227 228

229

230 231 232 233 234 235 236 237

able to the average person, ‘what the financial and economic clauses of the Treaty actually are and mean’, pp. 532–3. Statistical Abstract for the British Commonwealth, 1947, p. 57. Concerns were voiced as early as 1920 that gold resources would soon be depleted. One government engineer predicted that gold production would peak in 1932, thereafter falling away. Jill Nattrass, The South African Economy: Its Growth and Change (Cape Town, 1981), p. 150. Statistical Abstract for the British Commonwealth, 1950, pp. 254–5. Canadian HC in Pretoria to SSEA, letter 242, 16 Nov. 1944, NAC: RG25/2869/1843–D-40. ; Statistical Abstract for the British Commonwealth, 1947, p. 47. Canadian HC in Pretoria to SSEA, letter 210, 18 Oct. 1944, NAC: RG25/2869/1843–D-40. Canadian HC in Pretoria to SSEA, letter 210. ‘Warning to S. A. Industry “US Out to Flood Markets” ‘, CT, 14 Sept. 1945, p. 8. ‘South Africa’s War-Time Trade: Export Prospects for Peace’,. 20 Aug. 1945, CT, p. 5. Smuts to Amery, 27 Sept. 1945. van der Poel, ed. , Selections from the Smuts Papers, VII, p. 9. Acting Canadian HC in Pretoria to SSEA, letter 315, 6 Nov. 1946, NAC: RG19/569/152-17-2. ‘Africa the Union’s Market’, CT, 14 Mar. 1944, p. 7. Statistical Abstract for the British Empire, vol. 62; Statistical Abstract for the British Commonwealth, vols 69–72. Note statistics for exports do not include gold. Canadian HC in Pretoria to SSEA, letter 254, 2 Dec. 1944, NAC: RG25/2869/1843–D-40. Hancock, Smuts vol. II: the Fields of Force, 1919–1950 (Cambridge, 1968), p. 325. Hancock, Smuts vol. II, pp. 18–19. G. Heaton Nicholls, South Africa in my Time (London, 1961), p. 380. Smuts’ speech to the Empire Parliamentary Association, 25 Nov. 1943, reproduced in van der Poel, ed. , Selections from the Smuts Papers, VI, pp. 462–3. James Barber and John Barratt, South Africa’s Foreign Policy: the Search for Status and Security, 1945–1988 (Cambridge, 1990), p. 18; Pienaar, South Africa and International Relations Between the Two World Wars, p. 145. Nicholls, South Africa in my Time, p. 244. D. E. Kaplan, ‘The Politics of Industrial Protection in South Africa, 1910–1939’, Journal of South African Studies, 3, 1, Oct. 1976, p. 79. A. E. Walker, A History of Southern Africa (London, 1958), pp. 611–12. Walker, A History of Southern Africa, p. 611. Smuts to Amery, 16 Oct. 1928, in van der Poel, ed. , Smuts’ Papers, Vol. V, September 1919–November 1934, p. 383. Alan Paton, Hofmeyr (London, 1964), p. 198. Chris Danzinger, compiler, Cartoons: South African History, 1919–1970 (Cape Town, 1977), #45. Paton, Hofmeyr, p. 198.

290 Notes 238 239 240 241 242 243 244 245 246

3

Pienaar, South Africa and International Relations Between the Two World Wars, p. 2. Hancock, Smuts vol. II, pp. 315, 499. Danzinger, Cartoons: South African History, 1919–1970, #49. ‘Little Afrikaners’, editorial, CT, 26 Jan. 1944, p. 4. Burchell to SSEA, letter no. 70, 12 May 1944, NAC: RG19/576/152–P-3. Burchell to SSEA, letter no. 78, 12 May 1944, NAC: RG19/576/152–P-3. Bernard Magubane, The Political Economy of Race and Class in South Africa (New York, 1979), p. 109. ‘Britain’s Post-War Exports’, CT, 5 June 1944, p. 4. van der Poel, ed. , Selections from the Smuts’ Papers, Vol. VI, 24 Sept. 1942, p. 388.

The Beginning of Wartime Consultation, 1943

1 Diary of Richard Casey, 29 May 1943, quoted in W. J. Hudson, Casey (Melbourne, 1986), p. 121. 2 Draft of a speech for Mr John Winant on Carrying out the Atlantic Charter, no date, FDRL: Cox Papers/Box 100/Postwar – Foreign. 3 SSDA to Dominion PMs, tel D. No. 234, 22 Apr. 1943, AA: A571/61/1944/1109 Pt. 2. 4 ‘The Relation of the British Commonwealth to the Postwar International Political Organisation’, memo by SSDA, 15 June 1943, PRO: PREM 4/30/3: W. P. (43)244; ‘The Post-War Position of the British Commonwealth of Nations’, memo by MacDonald, 23 Feb. 1943, PRO: DO35/1838. 5 ‘The Post-War Position of the British Commonwealth of Nations’. 6 Minute by Ronald, 31 Dec. 1942, PRO: FO371/35362. 7 Minute by Gladwyn Jebb, 28 Dec. 1942, PRO: FO371/35362. 8 Susan Howson and Donald Moggridge, eds, The Wartime Diaries of Lionel Robbins and James Meade, 1943–45 (Basingstoke, 1990), 5–7 June 1943, p. 56. Throughout the conference Robbins described the difficulties involved in Commonwealth consultation and their relations generally. The Australians, according to him, were particularly obstreperous. Note that Robbins kept the diary for his colleagues’ benefit. 9 SSDA to Dominion governments, tel D. No. 235, 22 Apr. 1943, DCER, Vol. 9, no. 585, pp. 638–9. 10 SSDA to Dominion PMs, tel D. No. 234. 11 Notes on Post-War Economic Talks in London, Oct.–Nov. 1942’, NANZ: EA1/104/4/1 pt. 1. Wilson to Curtin, letter extracts, 18 Jan. 1943, DAFP, Vol. 6, no. 104, p. 205. Note by Bruce of conversation with Keynes, 12 Jan. 1943, DAFP, Vol. 6, no. 98, p. 204. ‘Report of the Committee on Post-war Commercial Policy’, secret note by president of the Board of Trade, 9 Jan. 1943, PRO: T230/171. 12 Memo from USSEA to PM, 26 Apr. 1943, DCER, Vol. 9, p. 640; Report of the Advisory Committee on Economic Policy on Trade Policy, 14 May 1943, NAC: RG2/44/W-22-3. 13 Canada HC in London to SSEA, tel 1411, 24 June 1943, DCER, Vol. 9, p. 678.

Notes 291 14 SSEA to Canada HC in London, tel 1101, 25 June 1943, DCER, Vol. 9, pp. 678–9. 15 PM’s Dept to Bruce (London), cablegram 70, 29 Apr. 1943, AA: A571/61/1944/1109 Pt. 2. 16 Coombs to Melville, tel. No. E. 68, 10 May 1943, AA: A571/61/1944/1109C Pt. 2. 17 Evatt (Washington) to Curtin, tel No. E.66, 10 May 1943, AA: A571/61/1944/1109C Pt. 2. 18 Evatt to Chifley, tel. E.54, 6 May 1943, AA: A571/61/1944/1109C Pt. 2; Coombs to Melville, cablegram E.68; Evatt (Washington) to Curtin, cablegram E.72, 4 May 1943, DAFP, Vol. 6, no. 172, p. 349; Evatt to Curtin, cablegram E.2, 28 June 1943, AA: A571/61/1944/1109 Pt.1; Evatt to Hodgson, cablegram E.34, 30 Apr. 1943, DAFP, Vol. 6, no. 169, pp. 345–6. 19 ‘Brief on Commercial Policy – Pros and Cons of Participation in Commonwealth Talks’, 15 May 1943, AA: A571/61/1944/1109C Pt. 2; Hodgson to Evatt, cablegram PW 74, 6 May 1943, DAFP Vol. 6, no. 174, p. 351. 20 ‘The Relation of the British Commonwealth to the Post-War International Political Organisation’. 21 Post-War Commercial Policy Discussions, UK, India and the Dominions, 1st meeting, 15 June 1943, PRO: T230/129. 22 Post-War Commercial Policy Discussions, UK, India and the Dominions, 2nd meeting, 16 June 1943, PRO: T230/129. The opening statements of the dominion representatives are all taken from this source. 23 Post-War Commercial Policy Discussions, 5th meeting, 21 June 1943, PRO: T230/129. 24 Post-War Commercial Policy Discussions, 4th meeting, 18 June 1943, PRO: T230/129. 25 Post-War Commercial Policy Discussions, 5th Meeting, 21 June 1943. 26 Post-War Commercial Policy Discussions, 4th meeting. 27 Memo by Wilgress for the minister of trade and customs (Mackinnon) regarding talks with the Australian trade delegation 24–25 June 1942, 26 June 1942, NAC: RG20/259/33842. 28 Drummond and Hillmer, Negotiating Freer Trade, pp. 128–30; Ruth Megaw, ‘Australia and the Anglo-American Trade Agreement 1938’, pp. 198–9. 29 Post-War Commercial Policy Discussions, 10th meeting, 28 June 1943, NAC: RG19/3592/L-11E. 30 Note dealing with commercial policy in the UK, undated, in a file from Feb. 1943, PRO: T230/172. 31 ‘Report of the Post-war Commercial Policy Discussions, London, 15–30 June 1943’, 16 July 1943, NAC: RG2/44/W-22-3. 32 Evatt to Curtin, cablegram E.4, 8 July 1943, AA: A571/61/1944/1109 pt. 1. Evatt noted that of all the dominions ‘only Canada was generally sympathetic with the point of view taken by the United Kingdom delegation’. 33 ‘Post-War Commercial Policy, Note on United Kingdom/Dominions’ Discussions London 1943’, memo by Jordan, 10 Aug. 1943, NANZ: EA1/104/4/1 Pt.1. 34 Evatt (London) to Curtin, cablegram E.4, 8 July 1943, DAFP, Vol. 6, no. 241, p. 458; Fletcher to Vic, letter, 8 Oct. 1943, AA: CP596/1, Bundle 1/6100;

292 Notes

35 36 37 38

39 40 41 42 43 44 45 46 47

48 49 50

51

52 53 54 55 56 57

Coombs to Chifley, letter extract, 12 July 1943, AA: A571/61/1944/1109 Pt.1. Post-War Commercial Policy Discussions, 8th meeting, 24 June 1943, PRO: T230/129. ‘Report of the Post-War Commercial Policy Discussions, London, 15–30 June 1943’, 16 July 1943. ‘Secret talk in Overton’s room with British officials only’, 22 June 1943, PRO: T230/129. ‘Secret report of the Canadian Representatives at the Post-War Commercial Policy Discussion, London, 15–30 June 1943’, 16 July 1943, NAC: RG2/44/W-22-3. Evatt (London) to Curtin, cablegram E.4, 8 July 1943, DAFP, Vol. 6, no. 241, p. 462. Coombs to Chifley, letter extract, 12 July 1943, AA: A571/61/1944/1109 Pt. 1. Undated memo on Article VII, from Sept.–Oct. 1943, PRO: T230/92. Draft Minutes of 4th Meeting on Interdepartmental Committee on PostWar Commercial Policy, 3 Dec. 1942, PRO: T230/171. Undated memorandum on Article VII, from Sept.–Oct. 1943, PRO: T230/92. Pressnell, External Economic Policy Since the War, p. 117; Visit of Mr Richard Law’s party to Washington, 11 Sept. 1943, PRO: CAB117/76. Neither the New York Times nor the London Times mentioned the departure to or arrival of the delegation in Washington. Informal Economic Discussions, Plenary, 1st meeting, 20 Sept. 1943, PRO: CAB78/14. A. Baster, UK embassy in Washington, to Sir Alfred Hurst, Reconstruction Secretariat, letter, 22 Sept. 1943, PRO: CAB117/76; A. D. (43) 8th meeting, War Cabinet, Discussions on Agenda Under Article VII, 21 Sept. 1943, PRO: CAB78/14. ‘Commercial Policy: Introductory Note’, A. D. (43) 16, 17 Sept. 1943, PRO: CAB 78/14. Meade Diary, 27 Sept. 1943. Informal Economic Discussion, 4th meeting, Committee on Measures for Stimulating Commerce, 27 Sept. 1943, in Gen 19/17, 12 Oct. 1943, War Cabinet, Anglo-American Discussions Under Article VII, PRO: CAB78/14. Informal Economic Discussions, 5th Meeting, Committee on Measures for Stimulating Commerce, 28 Sept. 1943, in Gen 19/17, 12 Oct. 1943, War Cabinet, Anglo-American Discussions Under Article VII, PRO: CAB78/14. A.D. (43) 13th Meeting, War Cabinet, Discussions on Agenda Under Article VII. UK Delegation, 29 Sept. 1943, PRO: CAB78/14. Gen 19/33, Informal Economic Discussions, Plenary 3rd Meeting, 30 Sept. 1943, PRO: CAB 78/114. Meade Diary, 12 & 13 Oct. 1943; Interview with Meade, 24 May 1993. Liesching to Overton, tel. 4572, 20 Oct. 1943, PRO: CAB117/76. Meade Diary, 13 Oct. 1943. Gen 19/17, War Cabinet, Anglo-American Discussions Under Article VII, 8 Nov. 1943, Informal Exploratory Conversations Between Officials of the United States and the United Kingdom Regarding the Formulation of an Agenda for Discussions Looking Toward the Implementation of Article VII of the Mutual-Aid Agreement Between the United States and United Kingdom,

Notes 293

58 59 60

61 62 63

64 65 66 67

68 69 70 71

72 73

74 75

76 77

PRO: CAB78/14; A.D. (43) 19th Meeting, War Cabinet, Discussions on Agenda Under Article VII, UK Delegation, 14 Oct. 1943, PRO: CAB78/14. A.D. (43) 19th Meeting. War Cabinet. Discussions on Agenda Under Article VII, UK Delegation, 14 0ct. 1943. Meade Diary, 15 Oct. 1943. ‘Secret, US–UK Article 7 Discussions – Commercial Policy – Report on talks in Washington, 20 Sept.–16 Oct. 1943’, AA: A571/61/1944/1109C Pt.3; ‘Article 7 of the Mutual Aid Agreement’, memo by Richard Law, 18 Nov. 1943, PRO: T230/92. ‘Secret, US-UK Article 7 Discussions’. ‘Article VII of the Mutual Aid Agreement’. Meade had close family ties to New Zealand. His grandmother had eloped with a man in the merchant marine. They had 12 children and all the boys were sent to New Zealand. Meade’s mother was one of the daughters. He passed on this personal information because he wanted me to understand that there was an emotional bond and an enduring loyalty which linked New Zealand to Britain. He did not believe that the same kind of bond existed in Canada or Australia. Interview with Meade. A.D. (43) 8th meeting, War Cabinet, Discussions on Agenda under Article VII, UK delegation, 21 Sept. 1943, PRO: CAB78/14. A.D. (B.C.) (43) 1st meeting, Discussions on Agenda Under Article VII, UK Delegation, 22 Sept. 1943, PRO: CAB78/14. A.D. (B.C.) (43) 2nd meeting, 30 Sept. 1943, PRO: CAB78/14. A.D. (B.C.) (43) 3rd meeting. Discussion on Agenda Under Article VII, Minutes of meeting with representatives of dominion and India, 13 Oct. 1943, PRO: CAB78/14. Pressnell, External Economic Policy Since the War, p. 124. Memo by Liesching on Post-war Commercial Policy, 15 Dec. 1943, PRO: T230/125. ‘Article VII of the Mutual Aid Agreement’. Memo by Liesching on Negotiations on Post-war Commercial Policy, 15 Dec. 1943, PRO: T230/125. Note Liesching’s comment applied specifically to Australia standing aside. He also did not believe that Britain should put all of its eggs in the American basket until after the 1944 election, to ensure that the direction of American postwar trade policy remained on track. A.D. (43) 10th meeting, War Cabinet, Discussions on Agenda Under Article VII, UK Delegation, 23 Sept. 1943, PRO: CAB78/14. PM Australia to PM New Zealand, cablegram 170, 9 Oct. 1943, AA: CP596/1, Bundle 1/6100; Evatt to Dixon, cablegram 1314, 28 Oct. 1943, DAFP, Vol. 6, no. 317, p. 573. Meade Diary, 21 Oct. 1943. PM South Africa to PM Australia, cablegram 111, 12 Oct. 1943, AA: CP596/1/Bundle 1/6100; Australian government to dominions office, tel. 281, 28 Oct. 1943, PRO: CAB117/76. Cranborne to Commonwealth government, cablegram 347, 16 Nov. 1943, DAFP, Vol. 6, no. 328, pp. 590–1. ‘UN Economic Proposals’, DEA memo for cabinet meeting of 24 Jan. 1944, 18 Jan. 1944, AA: A2700/XM Vol. 8. Also in DAFP, Vol. 7, 1944.

294 Notes 78 Memo by Liesching on Negotiations on Postwar Commercial Policy, 15 Dec. 1943; Cripps to Richard Law, letter, 30 Dec. 1943, PRO: T230/92. 79 Gen19/48, War Cabinet, Anglo-American Discussions Under Article VII, 8 Nov. 1943. I. Note by Mr Snelling of a meeting in Ottawa on Commercial Policy and Cartels; the meeting took place on 22 Oct. 1943; II. Note by Mr Liesching of a Conversation in Ottawa on Commercial Policy, 23 Oct. 1943, PRO: CAB78/14. 80 Gen 19/48. War Cabinet, Anglo-American Discussions Under Article VII, 8 Nov. 1943. II. Note by Mr Liesching of a Conversation in Ottawa on Commercial Policy.

4

Problems Making Peace: Anglo-American Competition and Commonwealth Jockeying, January 1944–August 1945 1

2 3 4 5 6

7

8 9

10

11 12

Excerpt from speech by King to prime ministers’ conference, 11 May 1944. Cited in John Holmes, The Shaping of Peace: Canada and the Search for World Order, 1943–1957, Vol. 1 (Toronto, 1979), p. 150. Quoted in McGibbon, ed., Undiplomatic Dialogue, 30 Nov. 1944, p. 91. Interview with Meade. Also see Robbins, Autobiography, pp. 203–4. Zeiler, Free Trade, Free World, p. 37. Commonwealth briefing on Canada–US commercial talks, 4 Jan. 1944, Washington, PRO: T230/172. ‘Informal Exploratory Discussions Between Officials of the United States and Canada Regarding the Formulation of an Agenda for Discussions Looking Toward the Implementation of the Principles Enunciated in the Exchange of Notes Between the United States and Canada on November 30th, 1942’, Statement on Discussions on Commercial Policy, 14 Feb. 1944, NAC: RG20/668/22168 Vol.2. Also in DCER, Vol. 11, pt. 2, 1944. ‘Informal Exploratory Conversation Between Officials of the United States and Canada’; Commonwealth Briefing on Canada–US Commercial Talks, Washington, 8 Jan. 1944, PRO: T230/172. Trevor C. Reese, Australia, New Zealand and the United States: a Survey of International Relations, 1941–1968 (London, 1969), pp. 32–3. NZ HC in Canberra to Minister External Affairs (Wellington), 4 Dec. 1943, Robin Kay, ed., Documents on New Zealand External Relations Vol. 1: the Australian–New Zealand Agreement 1944 (Wellington, 1972), No. 40, p. 53. Johnson to Hull, 22 Jan. 1944, FRUS, Vol. 3, 1944, p. 174. See also Reese, Australia, New Zealand, and the United States, pp. 32–3, 42–3. Report of the New Zealand delegation on the Australian–New Zealand Conference, Jan. 1944, in Kay, ed., DNZER Vol. 1, p. 72. See ch. 3, ‘Preparation for Peace (1944–45)’, in Reese, Australia, New Zealand and the United States for a detailed account of the origins of the conference and an analysis of the main provisions of the Canberra Pact. Memo of conversation by secretary of state, 24 April 1944, FRUS, Vol. 3 1944, p. 193. Minister in Australia to secretary of state, 22 Jan. 1944, FRUS, Vol. 3 1944, pp. 174–5.

Notes 295 13 14 15 16 17 18 19 20 21 22 23

24 25 26 27 28 29

30 31 32 33

34 35 36

37

Johnson to secretary of state, 3 Feb. 1944, FRUS, Vol. 3 1944, p. 180. Thorn, Peter Fraser, p. 221. Charge in New Zealand (Childs) to secretary of state, 8 Feb. 1944, FRUS, Vol. 3 1944, p. 182. Berendsen to McIntosh, 21 Feb. 1944, in McGibbon, ed., Undiplomatic Dialogue, p. 65. Memo by R. B. Stewart, 1 Feb. 1944, FRUS, Vol. 3 1944, p. 178. McIntosh to Berendsen, 3 & 14 Feb. 1944, in McGibbon, ed., Undiplomatic Dialogue, pp. 61–2. Evatt to Chifley, letter, 24 Jan. 1944, AA: A571/61, 1944/1109C pt. 3. Reese, Australia, New Zealand and the United States, p. 43. Evatt to Fraser, letter, 24 Jan. 1944, NANZ: EA1/104/4/1 pt. 2. Also in DAFP, vol 7, 1944, no. 28. Minister of External Affairs (Wellington) to NZ HC in London, 16 Feb. 1944, NANZ: EA1/104/4/1 pt. 2. ‘Report on London Discussion on Article VII February–March 1944’, Melville to Curtin, memo (extracts), 21 Apr. 1944, DAFP Vol. 7, 1944, no. 113, p. 241. Melville to Evatt and Chifley, cablegram 28, 3 March 1944, AA: A571/61, 1944/1109 pt. 3. Canadian HC in London to Robertson, tel. 466, 24 Feb. 1944, NAC: RG25/89–90/029/Box 8 Vol. 1/7-J (s). Canadian delegation (London) to Robertson, tel. 560, 8 March 1944, NAC: RG25/89-90/029/Box 8 Vol. 1/7-J (s). Melville to Evatt and Chifley, cablegram 28, 3 March 1944, AA: A571/61, 1944/1109 pt. 3. Melville to Evatt and Chifley, cablegram 35, 8 March 1944, AA: A571/61, 1944/1109 pt. 3. Winant to secretary of state, tel. 2389, 24 March 1944, FRUS, Vol. 2, 1944, p. 26. Winant commented on the tight control Australian politicians exercised over their officials, in marked contrast to the trust the Canadian government placed in its officials. Evatt to Melville, cablegram 52, 15 March 1944, DAFP, Vol. 7, 1944, no. 78, p. 167. Melville to Evatt and Chifley, cablegram 35. Canadian HC in Canberra to SSEA, tel 17, 14 Jan. 1944, NAC: RG20/668/22168/vol. 2. Full Cabinet Submission by Evatt on United Nations Economic Proposals, Agendum 594, 18 Jan. 1944, DAFP, Vol. 7, 1944, p. 59. Also in AA: A2700/XM Vol. 8. Butlin and Schedvin, War Economy 1942–45, p. 653. They agree that exclusion from UK–US consultation motivated Evatt’s submission, which also revealed the frustration he felt as Australia’s influence was generally disregarded. Interview with Tange. Ambassador in London to secretary of state, tel. 2389, 24 March 1944, FRUS, Vol. 2, 1944, p. 26. Canadian delegation (London) to Robertson, tel. 560, 8 March 1944, NAC: RG25/89–90/029/Box 8 Vol. 1/7-J (s); Melville to Evatt and Chifley, 11 March 1944, telegram 40, AA: A571/61, 1944/1109C pt. 3. Pressnell, External Economic Policy Since the War, p. 135.

296 Notes 38

39 40 41 42 43 44 45 46 47 48 49

50 51 52 53 54

55

W. C. Clark to Robertson, letter, 11 March 1944, NAC: RG25/89–90/029/Box 8 Vol. 1/7-J (s); Robertson to Clark, letter, 10 March 1944, NAC: RG25/89–90/029/Box 8 Vol. 1/7-J (s); Article VII Discussions with Representatives of the Dominions and India, 3 March 1944, Committee on Commercial Policy, NANZ: NASH/Bundle 64/0592–0601. Melville to Evatt and Chifley, cablegram 40, 11 March 1944, AA:A571/61, 1944/1109C pt. 3. Article VII Discussions with Representatives of the Dominions and India. Melville to Evatt and Chifley, cablegram 40; Memo for the Minister of Reconstruction on Article VII, 26 Apr. 1944, PRO:T230/173. Memo for Minister of Reconstruction, ‘Article VII’. Representatives of Southern Rhodesia and India were in London. They attended meetings of direct interest to them. Minute by Basil Newton on UK relations with the dominions, 20 Apr. 1944, PRO: FO371/35362. Letter from Cranborne to Churchill, 11 May 1944, PRO: DO35/1854. Meeting of prime ministers, 11 May 1944, re. Post-war World Settlement, Confidential Annex, PRO: DO35/1854. Fraser to Eden, letter re Foreign Office draft for Future World Organization, 18 May 1944, PRO: DO35/1854. Curtin to Forde, cablegram 23, 16 May 1944, DAFP, 1944, Vol. 7, no. 151, p. 311. PMM (44) 4: ‘Future World Organisation: Covering Note to Memorandum Prepared for Discussion with the Dominion Prime Ministers’, 8 May 1944, PRO: DO35/1854. Meeting of prime ministers, 11 May 1944 re. Post-war World Settlement, confidential annex. See Pickersgill, ed., The Mackenzie King Record, Vol. 1, ch. 23 for King’s record of the prime ministers’ conference. See also p. 679. Curtin to DEA, cablegram 29, 19 May 1944, AA: A571/61, 1944/1109 pt. 3. Pickersgill, ed., The Mackenzie King Record, Vol. 1, pp. 676, 680. Curtin to DEA, cablegram 29, 19 May 1944; also in Statement by Mackenzie King on Commonwealth Commercial Policy at Commonwealth Prime Ministers Meeting, May 1944, NAC: RG19/3989/T-2-9-2 Vol. 1 Massey to SSEA, letter A.6610, 17 Nov. 1944, NAC: RG25/3281/6864-40 pt. 1. MacGillivray explained that Canadian goods had been discriminated against in South Africa in 1941 at the behest of British authorities. The policy had been suspended when British producers failed to fill import orders. Minor incidents suggested that discriminatory practices might be in use, but MacGillivray doubted that the South African government would reintroduce a policy of systematic discrimination against dollar goods. J. C. MacGillivray to SSEA, 11 Dec. 1944, NAC: RG 19/577/15-P-1-2, Vol. 2. The sentimental appeal of British trade in New Zealand made requests to discriminate in favour of the UK superfluous. W. A. Riddell (in Wellington) to SSEA, letter 200, 11 Dec. 1944, NAC: RG19/577/152-P-1-2 Vol. 2; Davis to SSEA, tel. 525, 14 Dec. 1944. NAC: RG25/3281/6864-40, pt. 1.

Notes 297 56

57

58 59 60 61

62

63 64

65 66 67

68 69

70 71

72 73 74 75

Susan Strange, Sterling and British Policy: a Political Study of an International Currency in Decline (London, 1971), pp. 55–9; James Foreman-Peck, A History of the World Economy: International Economic Relations Since 1850 (Totowa, New Jersey, 1983), pp. 281–2. ‘Post-War Commercial Policy Prospects’; Notes of Meeting of Ministers and Officials in Office of Minister of Finance, 18 Jan. 1945, to discuss immediate postwar commercial policy outlook, NAC: RG19/3437/trade policy and finance 1945. SSEA to SSDA, tel. 45, 23 Feb. 1945, NAC: RG25/89–90/029/Box 47/154 (s) pt. 1 tel. 45, 23/2/45. SSEA to SSDA, tel. 46, 23 Feb. 1945, NAC: RG25/89–90/029/Box 47/154 (s) pt. 1 tel. 46, 23/2/45. PM Canada to PM UK, tel. 47, 23 Feb. 1945, NAC: RG19/763/304–6. ‘Telegrams Nos 45, 46 and 47 from the Canadian Government to the Dominions Office’, memorandum by Meade, 7 March 1945, PRO: T230/174. ‘Commercial Policy and Related Questions’, memo by Robbins to Attlee, 19 March 1945, PRO: T230/174. Thanks to Sue Howson for sharing this document with me and for identifying Robbins as the author. ‘DO to UK HC in Ottawa, tel 515, 21 March 1945, PRO: BT11/2730; Pressnell, External Economic Policy Since the War, p. 205. Washington to FO, tel. 1636, 14 March 1945, PRO: BT11/2730. The indiscretion was repeated when Pearson informed Clive Baillieu, President of the Federation of British Industry, of the telegrams. Baillieu was told by a British diplomat that the contents of the telegrams were confidential. British indignation was restricted to marginal notes bemoaning Pearson’s disclosure. Magowan (Washington) to Liesching, letter, 24 March 1945, PRO: BT11/2730. SSDA to SSEA, tel 57, 21 March 1945, NAC: RG19/763/304–6. DO to MacDonald, tel 515. D. V. LePan has written an elegant and insightful account of this meeting. See Bright Glass of Memory: a Set of Four Memoirs (Toronto, 1979), ch. 2. LePan, Bright Glass of Memory, p. 78. ‘Overseas Financial Policy in Stage III’, 15 May 1945, in D. Moggridge, ed., The Collected Writings of John Maynard Keynes (Cambridge, 1979), Vol. 24, pp. 256–95. Keynes wrote this influential and comprehensive memo in March 1945. It was revised before it was submitted to the cabinet on 15 May 1945. There can be no doubt that the memo and its conclusions were uppermost in Keynes’ mind during the presentation of British options to the Canadians. See p. 271. First meeting, informal talks with Canadian representatives, Cambridge, 19 May 1944, PRO: DO35/1219/W.T.665/101. Minutes of Conversation held in King’s College 19–21 May Between the Canadian Financial Delegation and Representatives of the UK Treasury, NAC: MG 31 E6/Vol. 1/file 1. ‘Overseas Financial Policy in Stage III’, pp. 272–3. Minutes of conversation held in King’s College 19–21 May. ‘Overseas Financial Policy in Stage III’, pp. 280–2. LePan, Bright Glass of Memory, p. 91.

298 Notes 76 77 78

79

80 81 82 83 84 85 86

87 88 89 90 91 92 93 94 95 96

97

98 99

100

LePan, Bright Glass of Memory, pp. 78, 93. Second meeting, Informal discussion with Canadian representatives, 20 May 1945, PRO: DO35/1219/W.T. 665/101. Secretary of State for Colonies to Officer administering government of all colonies, regarding import restrictions from Canada, tel. circular saving (2), 16 July 1945, PRO: DO35/1219/W.T.665/101. Note by A. W. Snelling, 8 June 1945, PRO: DO35/1219/W.T.665/101. Mackintosh to Munro, letter, 1 Aug. 1945, PRO: DO35/1219/ W.T.665/101. UK HC in Ottawa to DO, tel. 1407, 28 June 1945, PRO: DO35/1219/W.T. 665/101. LePan, Bright Glass of Memory, p. 96. Memo, 20 July 1944, FDRL: Hopkins Papers/Box 335/England and Phase II. Howson and Moggridge, Wartime Diaries of Robbins and Meade, 5 July 1944, p. 173. Pressnell, External Economic Policy Since the War, p. 22. Pressnell’s source is from Nov. 1944. Morgenthau Diary, 19 Aug. 1944, FDRL: Morgenthau: Presidential Diary/ 3 March–1 September 1944. Howson and Moggridge, eds,Wartime Diaries of Robbins and Meade. See entries for 2, 5, 9, 13, 15, 20 and 31 July 1944 when American officials approached Robbins about British trade policy. Quote from 2 July. Memo for President from Hull, 30 Sept. 1944, FDRL: Hopkins Papers/Box 335/England and Phase II. In FRUS, Vol. 3 1944. Penrose, Economic Planning for the Peace, p. 203. Dobney, ed., Selected Papers of Will Clayton, pp. 1, 6. ‘The Effect of our External Financial Position on our Foreign Policy’, 30 March 1945, PRO: FO371/62420. Meade Diary, 10 Dec. 1944. Article VII Discussions, Summary report by UK officials, 8 March 1945, NAC: RG19/3989/T-2-9-2 Vol. 1. Winant to secretary of state, 8 Jan. 1945, FRUS, Vol. 6, 1945, p. 8. Article VII Discussions, Summary report by UK officials. Meade Diary, 7 & 10 Jan. 1945. Pressnell, External Economic Policy Since the War, p. 200. Pressnell also finds that competition was resurfacing at this time. This was evident in all fields of postwar organization. Postwar civil aviation, for example, had become downright nasty. ‘Views of the Executive Committee Regarding Draft Tariff Proposals for Proposed Multilateral Agreement on Commercial Policy’, 21 July 1945, TL: WHCF/CF/Box 37. Pressnell, External Economic Policy Since the War, p. 207; Winant to secretary of state, tel, 28 June 1945, FRUS, Vol. VI, p. 57. Memo by John Leddy of the Informal Talks between Canadian and American officials on commercial policy and financial policy, 9 July 1945, FRUS, Vol. 6, 1945, pp. 63–4; Memo by Leddy of Conversation between Canadians and Americans at Chateau Laurier, 14–15 July 1945, Commercial Policy, FRUS, Vol. 6, 1945, pp. 67–8. Robbins, Autobiography, p. 204.

Notes 299

5

Imperial Preference and the Anglo-American Loan Negotiations, September–December 1945

1 Cited in Louis, Imperialism at Bay, 2 Oct. 1945, p. 32, fn. 8. 2 Susan Howson, ed., The Collected Papers of James Meade Vol. IV: the Cabinet Office Diary 1944–46 (London, 1988), 16 Sept. 1945, p. 132. 3 Joint Staff Mission (JSM, Washington) to Cabinet Offices, Nabob 132, 9 Oct. 1945, in Roger Bullen and M. E. Pelly, eds, Documents on British Policy Overseas. Series I, Vol. III. Britain and America: Negotiation of the United States Loan 3 August–7 December 1945 (London, 1986), pp. 200–205 [DBPO]. 4 Memo on the Attlee government and the Commonwealth, Holmes to Pearson, Sept. 1945, NAC: RG25/3264/6133–40 pt. 2. 5 Bruce to Evatt, cablegram 87A, 4 Aug. 1945, DAFP, Vol. 8 1945 , p. 294. 6 Evatt to Oldham for Addison, cablegram 222, 9 Aug. 1945, DAFP, Vol. 8 1945, p. 304. 7 Minutes of First Meeting, US–UK Economic Negotiations: Commercial Policy Committee, 1 Oct. 1945, PRO: T236/446. Draft notes on Lord Halifax’s and Lord Keynes’ negotiations in Washington, Oct. 1945, PRO: BT11/3228. 8 JSM, Washington to Cabinet Offices, Nabob 132. References from minutes of meeting of the Combined Committee on Commercial Policy UK–US re. Imperial Preference, 2 Oct. 1945, NAC: RG25/89–90/029/Box 49/200 (s) Vol. 1. Minutes of Second Meeting, US–UK Economic Negotiations: Commercial Policy Committee, 2 Oct. 1945, PRO: T236/446. 9 Howson and Moggridge, eds, Wartime Diaries of Robbins and Meade, 3 Oct. 1945, p. 227. 10 References from minutes of meeting of the Combined Committee on Commercial Policy UK–US re. Imperial Preference, 2 Oct. 1945, NAC: RG25/89–90/029/Box 49/200 (s) Vol. 1. 11 Snelling to Cockram, 15 Sept. 1945, PRO: DO35/1216/W.R.254/78. Keynes did once surprise his colleagues by suggesting that a meeting should be held with dominion officials, but more often he claimed illness as an excuse to absent himself from the briefings. 12 A. W. Snelling to A. T. K. Grant, 3 Oct. 1945, PRO: BT11/3228. 13 Snelling to Cockram, 15 Sept. 1945; Chifley to Evatt, 25 Sept. 1945, PRO: DO35/1216/W.R.254/78; JSM (Washington) to Cabinet Offices, Nabob 132, 9 Oct. 1945. 14 Note of meeting between UK and Dominions representatives, Willard Hotel, Washington, 4 Oct. 1945, PRO: DO35/1216/W.R.254/78; Cockram to Clutterbuck, 10 Oct. 1945, PRO: DO35/1216/W.R.254/78. 15 Keynes to DO, tel 6685, 7 Oct. 1945, PRO: BT11/3228; Halifax to FO, tel, 7 Oct. 1945, PRO: DO35/1216/W.R. 254/78. 16 Halifax (Washington) to Bevin, tel. 6684, 7 Oct. 1945, DBPO Ser. I, Vol. III, p. 192, n. 4. 17 Note of a meeting with Dominion and Indian Representatives, 4 Oct. 1945. 18 Liesching (Washington) to Helmore, tel Askew 294, 7 Oct. 1945, PRO: BT11/3228. 19 Note of a talk between Liesching and McCarthy at the Willard Hotel, Washington, 9 Oct. 1945, PRO: DO35/1216/W.R.254/78.

300 Notes 20 Berendsen (Washington) to Minister External Affairs (Wellington), tel 418, 5 Oct. 1945, NANZ: EA1/104/4/1 pt. 3. 21 Liesching (Washington) to Helmore, tel 294 Askew, 7 Oct. 1945, PRO: BT11/3228. 22 Pearson to SSEA, tel WA-5169, 6 Oct. 1945, NAC: RG25/89–90/029/200(s) pt. 1. 23 Howson and Moggridge, Wartime Diaries of Robbins and Meade, 4 Oct. 1945, p. 228. 24 Memo from Meade to Lord President regarding Imperial Preference, 10 Oct. 1945, PRO: T230/142. 25 UK Embassy Washington to FO, tel. 497, 7 Oct. 1945, NAC: RG25/3760/7530-B-40 pt. 2. Meade reported that two out of three Americans were opposed to giving the UK a loan. Memo from Meade to Lord President regarding Imperial Preference, 10 Oct. 1945, PRO: T236/142. 26 Memo by Meade for Lord President regarding Imperial Preference. 27 JSM to cabinet offices, Nabob 132. 28 ‘Big Stakes in Empire Preferences’, FP, 22 Sept. 1945, p. 1; ‘We Should Maintain Empire Preferences’, FP, 15 Sept. 1945, p. 1. 29 Note of a meeting at the Willard Hotel, 11 Oct. 1945, PRO: BT11/3228. 30 Hillmer and Drummond, Negotiating Freer Trade. The authors found that Commonwealth consultation on the side was less than satisfactory. Megaw, ‘Australia and the Anglo-American Trade Agreement, 1938’, p. 2. 31 Note between representatives of UK and Commonwealth, Willard Hotel, Washington, 11 Oct. 1945, PRO: DO35/1216/W. R. 254/78. 32 Howson and Moggridge, eds, Wartime Diaries of Robbins and Meade, 11 Oct. 1945, p. 233. 33 Pearson to Wrong, 12 Oct. 1945, NAC: RG25/89–90/029/Box 49/200(s) pt. 1. 34 J. W. Pickersgill and D. F. Forster, eds, Mackenzie King Record Vol. 3, 1945–46, p. 63. 35 Evatt to Chifley, cablegram unnumbered, 15 Oct. 1945, DAFP, Vol. 8 1945, p. 508; Note of a meeting at the treasury with dominion representatives, 15 Oct. 1945, NAC: RG20/668/22168 Vol. 3; Campbell to minister of external affairs, tel 2546, 17 Oct. 1945, NANZ: EA1/104/4/1 pt. 3. 36 Winant to secretary of state, 3 Nov. 1945, FRUS, 1945 Vol. 6, p. 153. 37 Campbell to minister of external affairs, tel 2546. 38 Note of a meeting at the treasury with dominion representatives, 15 Oct. 1945, NAC: RG20/668/22168 Vol. 3. Details also conveyed to the team in Washington. See Cabinet Offices to JSM, Baboon 115, 15 Oct. 1945, PRO: BT11/3228. 39 DO to Canada, Australia, New Zealand, South Africa, tel D. 1909, 12 Oct. 1945, PRO: BT11/3228. 40 Wrong to Robertson, tel 2442, 18 Oct. 1945, NAC: RG20/668/22168 vol. 3; Canadian ambassador in Washington to SSEA, tel WA-5382, 18 Oct. 1945 (included details of South Africa’s response to D. 1909), NAC: RG20/ vol. 668/22168/vol. 3. 41 PM New Zealand to SSDA, tel 357, 25 Oct. 1945, NANZ: EA1/104/4/1 pt. 3; ‘Preferences and Tariffs’, memo for PM from secretary of treasury, 18 Oct. 1945, NANZ: EA1/104/4/1 pt. 3.

Notes 301 42 Moore to Keane, cablegram unnumbered, 20 Oct. 1945, AA: A571/61, 1944/1109 pt. 4. 43 Director General War Supplies Procurement (Washington) to Canberra, cablegram V. 6657, 17 Oct. 1945, AA: A571/61/1944/1109 pt. 4; memo by F. W. Wheeler on commercial policy, 17 Oct. 1945, AA: A571/1944/1109 pt. 4. 44 Note of a meeting in Sir Percivale Liesching’s room at the Shoreham Hotel, 25 Oct. 1945, PRO: DO35/1216/W. R. 254/78. 45 Helmore to Liesching, Baboon 181, 2 Nov. 1945, PRO: BT11/3228. 46 Incomplete memo for Coombs, 19 Oct. 1945, AA: CP43/1/Bundle 61/1945/525 pt. 2. 47 DEA Australia to SSDA, tel 352, 23 Oct. 1934, AA: CP43/1/Bundle 61/1945/525 pt. 2. 48 Chifley to Attlee, cablegram unnumbered, 23 Oct. 1945, PRO: T230/142. Also in DAFP, Vol 8, 1945. Memo by F. W. Wheeler on commercial policy. 49 Talk between Bruce and Cockram in Washington, 23 Oct. 1945, PRO: DO35/1491. 50 Frederic Hudd to SSEA, letter no. A. 508, 25 Oct. 1945, NAC: MG31/E6/ vol. 1/file 1. 51 Howson, ed, The Collected Papers of James Meade, Vol IV, 3 Nov. 1945, p. 165. 52 Statement by Board of Trade on IP/Washington Talks, 26 Oct. 1945, PRO: T230/142. 53 Note of a meeting in Liesching’s room at the Shoreham Hotel. 54 President Board of Trade to Liesching, Baboon 157, 27 Oct. 1945, PRO: BT11/3228. 55 Gen 89/4th meeting. Financial and Commercial Policy, 26 Oct. 1945, PRO: CAB78/37. 56 C.P. (45) 269, ‘Commercial Policy’, memo by president Board of Trade, 6 Nov. 1945, PRO: CAB129/4. 57. C.M. (45) 50th conclusions, 6 Nov. 1945, PRO: CAB128/2. 58 SSDA to SSEA (Canada), Circular D. 2069, 6 Nov. 1945, NAC: RG25/89–90/029/Box 49/200(s) pt. 1; Cabinet Offices to JSM (Washington), Baboon 209, 6 Nov. 1945, PRO: BT11/3228. 59 Cabinet offices to JSM (Washington), Baboon 245, 9 Nov. 1945, relayed contents of tel 375 from government of New Zealand, PRO: T236/467. 60 Cabinet offices to JSM, Washington, Baboon 250, 9 Nov. 1945, PRO: T236/467. (Baboon 250 was a copy of tel 357 sent to New Zealand. ) SSDA to Wellington, tel 362, and Canberra, tel 459, 12 Nov. 1945, AA: A461/G323/1/6 pt. 1 61 Minister of external affairs, Wellington, to SSDA, draft reply to tel 368, Nov. 1945, NANZ: EA1/104/4/1 pt. 4. 62 Memo by First, 15 Nov. 1945, AA: CP43/1/Bundle 61/1945/525 pt. 2. 63 Government of Australia to Addison, cablegram 394, 9 Nov. 1945, PRO: BT11/3228. Also in DAFP, Vol. 8 1945, pp. 579–81. DEA (Canberra) to SSDA, cablegram 407, 15 Nov. 1945, AA: A571/61, 1944/1109 pt. 4. 64 Commonwealth government to Addison, tel 394, 9 Nov. 1945, PRO: BT11/3228. Also in DAFP, Vol. 8 1945. 65 Australian government to DO, tel 408, 15 Nov. 1945, PRO: BT11/3228. 66 Howson, ed., The Collected Papers of Meade, Vol. IV, 18 Nov. 1945, p. 171.

302 Notes 67 PM South Africa to PM Australia, cablegram 102, 11 Nov. 1945, AA: A571/61/1944/1109 pt. 4. The details of this telegram were relayed to the delegation in Washington. See Cabinet offices to JSM, Baboon 262, 12 Nov. 1945, PRO: T236/467. 68 Cabinet offices to JSM, Washington, Baboon 244, 9 Nov. 1945, relayed contents of Canadian tel 257, PRO: T236/467. Cabinet conclusions, 14 Nov. 1945, NAC: RG2/16/Vol. 3. 69 Cabinet offices to JSM, Washington, Baboon 280, 15 Nov. 1945. 70 D. E. Moggridge, Maynard Keynes: an Economist’s Biography (London, 1992), p. 796. 71 Clayton to R. E. Wood, letter, 17 Nov. 1945 in Dobney, ed., Selected Papers of Will Clayton, p. 152. 72 Hansard, UK, 417 H. C. Deb, 5s, 12 Dec. 1945, cols 468–9. Canadian HC in London to SSEA, letter no. A664, 31 Dec. 1945, NAC: RG25/2110/AR405/9/3. 73 Hansard, UK, 416 H. C. Deb, 5s, 6 Dec. 1945. cols 2668–9. 74 Hansard, UK, 417 H. C. Deb, 5s, 13 Dec. 1945, cols 720–3. 75 Moggridge, Keynes, p. 816. 76 Interview with Ritchie.

6 Waiting for the Geneva Conference to Begin: Commonwealth and International Progress along the Way, January 1946–April 1947 1 2

3

4

5 6 7

8

Memo by L. H. E. Bury, DEA to Mr Wheeler, Department of Treasury, 4 June 1946, AA: A571/61/1944/1109/pt. 9. Memo by the Associated Chambers of Manufactures of Australia, re. ITO – tariffs negotiations and draft charter, 20 Feb. 1947, AA: A1068/ER47/1/16. A speech by Clayton on the Anglo-American loan agreement, delivered to the National Farm Institute, Des Moines, Iowa, 15 Feb. 1946 in Dobney, ed. , Selected Papers of Will Clayton, p. 155. Edited transcript of interview with Vinson and Acheson, 12 Jan. 1946, in Walter Lafeber, ed. , The Origins of the Cold War, 1941–1947: a Historical Problem with Interpretation and Documents (New York, 1971), p. 80. Gardner, Sterling–Dollar Diplomacy, pp. 248–50. UK Embassy Economic Summary, 10 Jan. 1947, sent to FO by saving tel no. 9 NAC: RG25/3759/7530–A-40 pt. 3. ‘Current Popular Opinion on Foreign Trade Issues’, prepared by Division of Public Studies, State Department, 21 Oct. 1946, TL: Clayton-Thorp Papers/RG59/Box 2/Foreign trade issues, opinion on. ‘Preliminary Conference on World Trade and Employment’, memo by Sharp for Dr Clark, 29 May 1946, NAC: RG19/569/memo to Clark. An American survey of popular opinion on foreign trade issues taken in the autumn of 1946 found that 83 per cent of its public believed establishing the ITO was very or fairly important. However, most of the respondents did not know what the ITO was or how it would increase trade. The

Notes 303

9 10 11 12

13 14 15 16 17 18 19

20 21

22 23 24 25

26 27 28 29

Americans concluded that ‘interest in foreign trade matters is low’. ‘Current Popular Opinion on Foreign Trade Issues’. DO to dominion high commissioners, Cypher Z. No. 6, 10 Jan. 1946, PRO: BT11/3245. E (46) 27, Committee on External Economic Policy and Overseas Trade, Progress Report on Exports, 17 May 1946, PRO: CAB134/165. ‘Overseas Missions and Trade Investigations: Review of Possibilities in Overseas Markets’, 20 May 1946, PRO: CAB134/165. E (46) 29, Committee on External Economic Policy and Overseas Trade Missions and Trade Investigations, Review of Possibilities in Overseas Markets, 20 May 1946, PRO: CAB134/165. DO to UK high commissioners in Canada, Australia, New Zealand and South Africa, tel Z No. 1, 1 Jan. 1946, PRO: DO35/1227/W. T. 980/1. DO to UK HC in South Africa, tel 58, 25 Jan. 1946, PRO: DO35/1227/W. T. 980/1. Robbins, Autobiography, p. 202. ‘Trade with the Dominions’, Financial Times, 26 Apr. 1946, PRO: DO35/1227/W. T. 980/9, PRO. Memo of a conversation with Mr A. W. Snelling of the Dominions Office, by D. V. LePan, 6 May 1946, NAC: MG31 E6/vol. 1/file 8. Empire Industries Association to Addison, letter, 8 Feb. 1946, PRO: DO35/1227/W. T. 980/9. ‘The importance of the United Kingdom Preferences to the Dominion and Colonial Sugar, Wines and Spirits, Canned Fruit, Dried Fruit, Coffee and Tobacco Industries’, memo by British Empire Producers’ Organization and the Tobacco Federation of the British Empire, July 1946, PRO: DO35/1227/W. T. 980/9. Meeting of prime ministers, 23 May 1946, PRO: CAB133/86. For a detailed analysis of these negotiations, see Hector Mackenzie, ‘The Path to Temptation: the Negotiation of Canada’s Reconstruction Loan to Britain in 1946’, in Canadian Historical Association, Historical Papers, 1982, pp. 196–220. See also ch. 11 in Pressnell, External Economic Policy Since the War. Pickersgill and Forster, eds, The Mackenzie King Record, Vol. 3, 1945–46, p. 163. Article from Evening Standard, 11 Apr. 1946 in PRO: DO35/1227/ WT980/9. Memo on the current position re. ITO, 20 May 1946, NAC: RG19/568/152–17–’ITO-General’. Memo by W. C. Clark, deputy minister of finance, to acting undersecretary of external affairs, 3 June 1946, NAC: RG19/569/letter to acting USSEA, 3 June 1946. Canadian HC to DEA, tel 49, 21 Jan. 1946, NAC: RG19/569/letter no. 49, Jan 21, 1946. Acting HC in Australia to DO, tel 42, 11 Jan. 1946, PRO: BT11/3245. Cabinet sub-committee: Trade and Employment Conference, Agendum 1019A, 11 Jan. 1946, AA: A571/1944/1109 pt. 8. Roger Bell, ‘Testing the Open Door Thesis in Australia, 1941–1946’, Pacific Historical Review, 51, 3, (Aug. 1982), p. 293.

304 Notes 30 31 32

33 34 35 36 37 38

39 40 41 42 43 44 45 46 47 48 49 50 51 52

Acting HC in Australia to DO, tel 187, 28 Feb. 1946, PRO: BT11/3245; Acting HC in Australia to DO, tel 197, 4 Mar. 1946, PRO: BT11/3245. Bell, ‘Testing the Open Door Thesis in Australia’, p. 287. Carl Bridge, ‘“Special Relationships”: Australia, Britain and the United States Since 1941’, The Trevor Reese Memorial Lecture, 1991, p. 7. See McIntyre, Background to the Anzus Pact, for a detailed examination of the impact of the Cold War and UK decline on an antipodean alignmen with the US. Memo by Brigden, extracts, 8 Apr. 1946 DAFP, Vol. 9, Jan.–June 1946, no. 176, pp. 259–62. L. F. Crisp, Ben Chifley: a Biography (London, 1960), p. 275. Evatt to Chifley, cablegram P186, 25 Aug. 1946, DAFP, Vol. 10, July–Dec 1946, no. 84, p. 143. Extract from confidential dispatch from Dalton, 21 Jan. 1946, PRO: DO35/1227/WT980/3. Victorian Dairyfarmers’ Association to Chifley, letter, 11 Dec. 1945, AA: A461/G323/1/6 pt. 1. ‘Tariffs and Preferences Insofar as Australia’s Exports are Concerned’, memo by Department of Commerce and Agriculture, 21 Aug. 1946, AA: M448/1/306. Minutes of meeting, 31 May 1946, TL: Edminster Papers/Box 7/ECEPF Minutes, 4 Jan.–26 June 1946. Keane to Chifley, unnumbered tel , 8 Mar. 1946, DAFP, Vol. 9, Jan.–June 1946, no. 121, p. 174. Proposals for Consideration by an International Conference on Trade and Employment, memo for Fraser, 7 Dec. 1945, NANZ: EA1/104/4/1 pt. 4. Minister of External Affairs to Chargé d’Affaires in Washington, tel 74, 2 Feb. 1946, NANZ: EA1/104/4/1 pt. 5. ‘Suggested Approach by New Zealand to Commercial Policy Discussions’, 30 Jan. 1946, NANZ: NASH6/Bundle 80/1352. Kenneth W. Dam, The GATT – Law and International Economic Organization (Chicago, 1970), p. 148. Suggested Approach to Commercial Policy Discussions, 30 Jan. 1946, NANZ: NASH6/Bundle 80/1352. Canadian HC in New Zealand to SSEA, letter no. 53, 3 Apr. 1946, NAC: RG19/569/letter 53. ‘Commercial Policy’, memo by Ashwin for Nash, 5 Apr. 1946, NANZ: EA1/104/4/1 pt. 5. Minister of External Affairs (Wellington) to NZ HC in London, tel 2689, 29 July 1946, NANZ: EA1/58/2/2/1 pt. 2. Acting Canadian HC to South Africa to SSEA, letter 315, 6 Nov. 1946, NAC: RG19/569/152–17–2. ‘Imperial Preferences’, CT, 23 March 1946, p. 10. Acting UK HC in South Africa to DO, 4 Dec. 1946, PRO: DO35/1227/W. T. 980/9. ‘Changes in Tariff Policy: Secret Decisions by Government’, CT, 12 Aug. 1946, p. 5; ‘Tariff Talks’, CT, 29 Aug. 1946, p. 6; ‘General Smuts on Imperial Preferences’, The Times, 5 Apr. 1946, article in PRO: DO35/1227/W. T. 980/9; Canadian HC in South Africa to SSEA, 20 Aug. 1946, NAC: RG19/3607/ITO-3.

Notes 305 53 54

55 56

57

58 59 60

61

62 63

64 65 66 67 68 69

70 71 72

Smuts to M. C. Gillett, letter, 26 Jan. 1946, in van der Poel, ed, Selections from the Smuts’ Papers, Vol. VII, #697, p. 38. ‘Speech by President of Board of Trade (Sir Stafford Cripps) at the opening of the British Commonwealth trade discussions at the Carlton Hotel, London, at 3 p. m. on Thursday, 3 October, 1946’, NANZ: IC14/5c. 6. Also in AA: A1067/ER46/1/29. British Commonwealth Talks, Tariffs and Preferences, 8 Oct. 1946, NAC:RG19/3607/ITO-21. O.E.P. (46) 2, Preparatory Committee on Trade and Employment: British Commonwealth Talks, 24 Oct. 1946, PRO: CAB134/541; Report of the British Commonwealth Trade Discussions, 28 Oct. 1945, PRO: CAB134/712. General Report by DEA on the First Meeting of the Preparatory Committee and British Commonwealth Talks, Jan. 1947, AA: A1068/IC47/81/4. O.E.P. (46) 2, British Commonwealth Talks, 24 Oct. 1946. Canadian HC in London to SSEA, tel A. 873, 15 Oct. 1946, NAC: RG25/3844/9100–A-40. O.E.P. (46) 10, ‘Preparatory Committee on Trade and Employment – First Session’, memo by President of Board of Trade, 23 Dec. 1946, PRO: CAB134/541. Acting Secretary of State to the Ambassador in the Soviet Union, 7 Nov. 1946, see attached copy of Embtel 9163, 31 Oct. 1946 from London, FRUS, 1946, Vol. 1, p. 1355. O.E.P. (46) 10, ‘Preparatory Committee on Trade and Employment – First Session’. Preparatory Committee for the Trade and Employment Conference – Report on First Session at Church House, 15–26 Oct. , 1946, PRO: BT11/3324; T. N. (47) 3, Preparatory Committee for the Trade and Employment Conference – First Session – Summary memo, 4 Jan. 1947, PRO: CAB134/713. O.E.P. (46) 10, ‘Preparatory Committee on Trade and Employment – First Session’. Preparatory Committee on Trade and Employment, British Commonwealth Talks, 9 Nov. 1946, NAC: RG19/3607/110–2. Coombs to Chifley, 22 Nov. 1946, DAFP, Vol 10, July–Dec. 1946, no. 240, see attachment, pp. 406–7. Preparatory Committee on Trade and Employment: British Commonwealth Talks, 25 Nov 1946, 15th meeting, NAC: RG19/3607/ITO-2. Meeting of the Executive Committee on Economic Foreign Policy, 27 Dec. 1946, TL: Snyder Papers/Box 34/UK trade 1946–8. Suggested charter for an International Trade Organization of the United Nations, Sept 1946, TL: Edminster Papers/Box121/London Conference 1946, suggested charter for ITO. A. J. Pick, Acting HC in South Africa to SSEA, tel 315, 6 Nov. 1946, NAC: RG19/569/152–17–2. LePan to S. D. Pierce, memo, 23 Oct. 1946, NAC: RG25/2117/AR429/3, vol. 2. Preparatory Committee on Trade and Employment, British Commonwealth Talks, 9 Nov. 1946.

306 Notes 73 74 75 76 77 78 79

80

81

82 83 84

85 86 87

88 89 90 91 92

Suggested Charter for an International Trade Organization of the United Nations. O.E.P. (46) 10, ‘Preparatory Committee on Trade and Employment – First Session’. Preparatory Committee on Trade and Employment, British Commonwealth Talks, 9 Nov. 1946. Notes of a discussion between British Commonwealth countries held at Board of Trade, 9 Nov. 1946, AA: A571/61/1944/1109 pt. 11. Preparatory Committee on Trade and Employment, British Commonwealth talks, 9 Nov. 1946. Coombs to Chifley, letter, 15 Nov. 1946, AA: A571/61/1944/1109 pt. 11. Winthrop Brown told Canadian officials that the US had included the chapter on employment policy ‘to meet the Australian views’. See Memo of Talks Regarding the Proposed World Trade Talks, carried on Between Canadian and United States Officials in Ottawa on 8–9 Aug. 1946, DCER, Vol. 12 1946, p. 1042. Wilcox to secretary of state, Confidential Report on the First Meeting of the Preparatory Meeting for an International Conference on Trade and Employment which took place in London from 15 Oct.–26 Nov., 1946, 27 Dec. 1946, FRUS, Vol. 1, 1946, pp. 1362–3. ‘Confidential Report to the Secretary of State from the Chairman of the United States Delegation to the First Meeting of the Preparatory Committee for an International Conference on Trade and Employment’, The Director of the Office of International Trade Policy (Wilcox) to the Secretary of State, 27 Dec. 1946, FRUS, Vol. 1 1946, p. 1364. Report by DEA on First Meeting of the Preparatory Committee and British Commonwealth Talks, Jan. 1947, AA: A1068/IC 47/81/4. Meeting of the Executive Committee on Economic Foreign Policy, 27 Dec. 1946, TL: Snyder Papers/Box 34/UK Trade 1946–8. Memo by the Deputy Director of the Office of International Trade Policy (Nitze) to the Under Secretary of State for Economic Affairs (Clayton), 5 Dec. 1946, see annex 2, ‘Results of the London Conference’, FRUS, Vol. 1 1946, p. 1359. Note of a meeting in High Commissioner’s Office on 2 Nov. 1946, NAC: RG25/3844/9100–A-40 pt. 1. Report by DEA on First Meeting of the Preparatory Committee and British Commonwealth Talks, Jan. 1947, AA: A1068/IC47/81/4. Confidential meeting of the Royal Institute of International Affairs, addressed by Dr H. C. Coombs on ‘The Work of the Preparatory Commission’, 2 Dec. 1946, AA: M448/1/item 306. Meeting of the Executive Committee on Economic Foreign Policy, 27 Dec. 1946, TL: Snyder Papers/Box 34/UK Trade 1946–8. Summary of Preference Issue by Coombs, for Chifley, 8 Nov. 1946, AA: A571/61/1944/1109 pt. 1. Coombs to Chifley, letter, 8 Nov. 1946, AA: A571/61/1944/1109 pt. 1. Chifley to Coombs in London, letter, 19 Nov. 1946, AA: A461/1/BI326/1/5 pt. 1. Report of the DEA on First Meeting of the Preparatory Committee and preceding British Commonwealth Talks, Jan. 1947, AA: A1068/IC47/81/4.

Notes 307 93 94 95

96 97

98

99

100 101 102

103

104

105

106 107 108 109

110

Memo Re. Trade Discussions in London, 15 Feb. 1947, NAC: RG2/vol. 111/U-40–3 (Vol. 2). Minute from Marten to Makins re trade talks and Commonwealth position on preferences, 19 Mar. 1947, PRO: FO371/62288. TN (T) (47) 1st Meeting, Working Party on Tariffs, 8 Jan. 1947, PRO: CAB134/716; TN (47) 8, ‘General Policy on Requests and Concessions’, 25 Jan. 1947, PRO: CAB134/713. Note re. Trade and Employment Conference, 5 Feb. 1947, AA: A1068/ER47/1/6. TN (P) (BC) (GSC) (47) 1st meeting, Preparatory Committee on Trade and Employment, British Commonwealth talks, 11 Mar. 1947, NAC: RG19/565/152-17-4-Preparatory Committee on Trade and Employment. SSDA to SSEA (and all other Dominion capitals), circular G. 5, 19 Feb. 1947, NAC: RG25/3844/9100–A-40 pt. 1; Draft note of a meeting of the Business Committee, Spencer House, 1 Apr. 1947, NAC: RG19/568/152–17–4. O.E.P (47) 3, International Trade Organization Tariff Negotiations: General Policy on Requests and Concessions, 13 Jan. 1947, PRO: CAB134/541. SSEA to SSDA, tel 24 Feb. 1947, NAC: RG2/vol. 111/U-40–3 (Vol. 2)/UN International Relations 1947 (Jan.–June). ‘Report of the British-Commonwealth Trade Talks, Mar. – Apr. 1947’, 24 Apr. 1947, PRO: CAB134/713. O.E.P. (47) 3rd meeting, 14 March 1947, PRO: CAB134/541; Canadian HC in London to SSEA, tel 540, 25 Mar. 1947, NAC: RG25/3845/9100–L40 pt. 1. TN (P) (BC) (47) 25, Preparatory Committee on Trade and Employment, British Commonwealth Talks, 1 Apr. 1947, NAC: RG19/568/152–17–4. ‘Reduction of Preferences – Who Negotiate [sic] and Who Receives Compensation’, note by the UK delegation, 13 March 1947, NAC: RG19/568/152–17–4. TN (P) (GSC) 47 – 5th meeting, Preparatory Committee on Trade and Employment, British Commonwealth Talks, 17 March 1947, NAC: RG19/565/152–17–4. O.E.P. (47) 3rd meeting, 14 March 1947, PRO: CAB134/541. ‘Reduction of Preferences – Who Negotiate [sic] and Who Receives Compensation’. Draft Minutes, 5th meeting of General Subjects Committee, 17 March 1947, NAC: RG19/568/152–17–4. This, at least, was the Canadian understanding of Australian preparations for the Geneva negotiations. ‘On the Relation of Fixed Margins of Preference to the International Tariff Negotiations Opening in Geneva on April 8, 1947’, Memo to Rt Hon L. S. St Laurent, Secretary of State for External Affairs, Feb. 1947, NAC: RG25/3845/9100–L-40 pt. memo to St Laurent. TN (P) (BC) (GSC) 47 – 5th meeting, Preparatory Committee on Trade and Employment, British Commonwealth Talks, 17 March 1947, NAC: RG 19/565/152-17-4.

308 Notes 111 112 113 114

115 116

117 118 119 120 121 122

123

124 125 126 127 128 129

130

131

‘On the Relation of Fixed Margins of Preference’. Cabinet conclusions, 19 Feb. 1947, NAC: RG2/A5a/vol. 2639. Draft Minutes, 4th meeting of the General Subjects Committee, 13 March 1947, NAC: RG19/568/152-17-4. Canadian HC in London to SSEA, tel 540, 25 March 1947, NAC: RG25/3845/9100-L-40 pt. 1; Commonwealth Talks on Tariffs and Preferences, London, Mar. 11th–16th, Memo for Mr St. Laurent, 16 Apr. 1947, NAC: RG25/3845/9100-L-40 pt. 1. UK HC in Ottawa to Syers, DO, re visit of American officials to Canada, 24 Aug. 1946, PRO: DO35/1227/W. T. 980/43. New Zealand Trade delegation (Nash), London, to Minister of External Affairs, Wellington, tel 9, 31 March 1947, NANZ: NASH6/bundle 90/0154–0331. DO to UK HC in Australia, tel 55, 24 Jan. 1947, PRO: BT11/3692. Preparatory Committee on Trade and Employment – British Commonwealth Talks, 27 March 1947, NANZ: EA1/104/4/11. SSDA to Australian government, cablegram 66, 3 Apr. 1947, AA: A1068/ER47/1/13/1. Draft tel to DO, Apr. 1947, AA: CP434/1/Bundle 15/9402. Draft minutes, 2nd and 3rd meetings of the General Subjects Committee, 12 March 1947, 10 a.m. and 3 p.m., NAC: RG19/565/157–17–4. Draft minutes of Business Committee, 2nd Meeting, 24 March 1947, NAC: RG19/568/152–17–4; HC London to SSEA, tel 540, 25 March 1947, NAC: RG25/3845/9100-L-40 pt. 1; O.E.P. (47) 16, ‘British Commonwealth Discussions, London 1947’, Memo by President of the Board of Trade, 22 Apr. 1947, PRO: CAB134/541; TN (47) 30, Report of the BritishCommonwealth Trade Talks March–April, 1947, 24 Apr. 1947, PRO: CAB134/713. O.E.P. (47) 12, ‘US requests on the UK tariff and the Preference Issue’, Memo by President of the Board of Trade, 11 March 1947, PRO: CAB134/541. Weekly summary No. 2, Trade and Employment Conference, Department of Postwar Reconstruction, 28 March 1947, AA: A1068/ER47/1/22. DEA to Australian HC, Coombs from Dedman, 24 March 1947, AA: CP434/1/bundle 15/9402 pt. 4. Memo Re. Trade Discussions in Geneva, 15 Feb. 1947, NAC: RG2/vol. 111/U-40–3 (Vol. 2)/UN International Relations 1947 (Jan.–June) Canadian Trade Delegation, Geneva to SSEA, tel 10, 15 Apr. 1947, NAC: RG25/3845/9100–L-40 pt. 1. Robertson to SSEA, letter no. A. 137, 19 Feb. 1947, NAC: MG26 J1/vol. 429/C-11041/389810–11. T.N. (47) 19, Attitude of US Congress toward Geneva Trade Negotiations, PRO: CAB134/713; Truman’s Statement on TAA and Geneva and an Executive Order re TAA, 25 Feb. 1947, PRO: FO371/62286. Walter Isaacson and Evan Thomas, The Wise Men: Six Friends and the World They Made: Acheson, Bohler, Harriman, Kennan, Lovett, McCloy (New York, 1988), p. 400. Address on Foreign Economic Policy, Delivered at Baylor University, 6 March 1947, Public Papers of the Presidents: Harry S. Truman, 1947 (Washington, 1973), pp. 167–72.

Notes 309 132

133 134

135 136 137 138

7

Moscow Meeting – Major Economic and Financial Questions Affecting Anglo-American Relations, Memo by R. W. Stevens, March 1947, PRO: FO371/62279. Helmore to Fraser, tel, undated, PRO: FO371/62280. Circular No. 028, covering memo by Bevin on ‘Effect of our external financial position on our foreign policy’, 12 Feb. 1947, PRO: FO371/62420. Coombs to Chifley, letter, 11 Feb. 1947, AA: CP855/S1B1. Acting Canadian HC in Australia to SSEA, letter 184, 20 Feb. 1947, NAC: RG19/569/152–17–2. E. M. Hanlon to Chifley, letter, 20 Feb. 1947, AA: A461/323/1/6 pt. 1. Hansard, Australia, First Session of the 18th parliament, Vol. 190, 26 Feb. 1947, p. 154.

The Geneva Negotiations, 10 April–30 October 1947 1

2 3 4

5 6

7 8 9 10

11 12

13

Letter from J. N. Bailey and J. J. Murdoch, Comealia Branch of the Australian Dried Fruits Association to J. J. Clark, MHR, 15 March 1947, AA: CP855/S1B1. The letter was sent on to Chifley and the Australian delegation in Geneva. Extract from speech by Cripps, Apr. 1947, AA: A1068/ER47/1/13/1. ‘How Trade Talks at Geneva Will Proceed’, Sydney Morning Herald, 9 Apr. 1947, p. 2. Report from Geneva to the Office of Public Affairs, Department of State Report No. 2, 25 Apr. 1947, NARA: RG43/250/8/34/1/Box 132/Daily Reports on Geneva. ‘Tariff Talks Delay’, C. Bingham, SMH, 18 Apr. 1947, p. 3. ‘Think US to Raise First Tariff Offer’, K. R. Wilson, Financial Post, 3 May 1947, p. 1; ‘Geneva Tariff Bargaining: Bilateral Talks Begin’, C. Bingham, SMH, 24 Apr. 1947, p. 3. Minutes of General Staff Meeting, 30 April 1947, NARA: RG43/250/8/34/1/Box 133/Minutes – US Delegation, April–June 20, 1947. Memo of conversation, 17 Apr. 1947, NARA: RG43/250/8/34/1/Box 133/Minutes–US Delegation, April–June 20, 1947. Note by Marten on Clayton’s press conference, 17 Apr. 1947, PRO: FO371/62291. Appendix II: Chronological Record of United States–Southern Dominions Tariff Negotiations, 28 Oct. 1947, NARA: RG43/250/8/35/3/Box 198/Southern Dominions – Report on Geneva Negotiations. Notes of Explanation Given to Australia by US Delegation of their Initial Offer on Wool, 23 Apr. 1947, AA: AA1974/156/20/2/18. Memorandum of Conversation: Coombs, McCarthy and Morton (Australia) and Clayton and Carr (US), 24 Apr. 1947, NARA: RG43/250/8/34/1/Box 133/US Delegation – Correspondence. For a detailed analysis of American domestic politics and wool see A. Imtiaz Hussain, Politics of Compensation: Truman, the Wool Bill of 1947, and the Shaping of Postwar U. S. Trade Policy (New York and London, 1993). In Hussain’s brief analysis of the impact of the wool bill on the Geneva negotiations he is uncritical of American actions and one-sided

310 Notes

14

15

16 17 18

19

20

21 22 23

24 25

26 27

28

29

in his presentation of the deadlock with Britain, Australia, New Zealand and South Africa. ‘A Short History of Recent Developments in USA Wool Legislation’, Summary prepared by Bureau of Agricultural Economics, Department of Commerce and Agriculture, 12 May 1947, AA: A571/61,1944/1109F pt. 1. Acheson to Truman, Memorandum for the President Re Pending Wool Legislation, 16 Apr. 1947, TL: Truman Papers: PSF/Box 141/General File Wool. Wilson to Coombs, T.33, 25 Apr. 1947, AA: CP434/1/Bundle 15/9402 pt. 4. Kenneth R. Wilson, ‘Geneva and the I.T.O.’, International Journal, 2, 3, Summer 1947, P. 244. Memorandum of Conversation, Coombs, McCarthy, Morton (Australia) and Clayton and Carr (US), 24 April 1947, NARA: RG43/250/8/34/1/Box 133/US Delegation – Correspondence. ‘Agreed notes of the Meeting of British Commonwealth Countries Held on 26th April’, 1947, PRO: BT11/3649. All information about the meeting is from this source. Nash to Minister of External Affairs, Wellington, W.N. 46, 1 May 1947, NANZ: NASH/Bundle 90/0154-0331. Carpet wool was not charged any duty and the duty on wool not finer than 44s was reduced by 50 per cent. Canadian Trade Delegation Geneva to SSEA Ottawa, tel. 38, 28 Apr. 1947, NAC: RG19/3610/ITO26. Inverchapel, Washington to FO, tel. 2749, 9 May 1947, PRO: FO371/62296. Coombs to Australian Government, tel ITO 60, 1 May, 1947, AA: CP434/1/Bundle 15/9402 pt. 2; Notes of a Meeting of British Commonwealth countries held on Thursday, 1 May, 1947, PRO: BT11/3649. Coombs to DEA, tel ITO 60, 1 May 1947, AA: CP434/1/Bundle 15/9402 pt. 2. Tel from Geneva to FO, 26 April 1947, PRO: FO371/62293; Canadian Ambassador, Washington to SSEA, tel WA-1381, 2 May 1947, NAC: RG25/3845/9100-L-40 pt. 1; Stevens to Neville Butler, letter, 2 May 1947, PRO: FO371/62295; Minutes of a Meeting of US Delegation in Geneva, 5 May 1947, FRUS, Vol. 1, 1947, p. 923; Wilgress to Robertson, letter, 12 May 1947, NAC: RG25/2117/AR429/315. Coombs to Clayton, letter, 3 May 1947, AA: AA1974/156/20/2/18. Nash to Clayton, letter, 5 May 1947, PRO: BT11/3649; Appendix II. Chronological Record of the United States–Southern Dominions Tariff Negotiations, 28 Oct. 1947. Minutes of Delegation Meeting, 5 May 1947, NARA: RG43/250/8/34/1/Box 133/Minutes – US Delegation (April–June 20 1947); Holloway to Clayton, letter, 2 May 1947, PRO: BT11/3649. Minutes of delegation meeting, 29 April, 1 & 5 May 1947, NARA: RG43/250/8/34/1/Box 133/Minutes – US Delegation, April–June 20 1947; UK Delegation, Geneva to FO, tel 389, 13 May 1947, PRO: BT11/3649. Memorandum of Conversation, Holloway (South Africa), Clayton and Carr (US), 12 May 1947, NARA: RG43/250/8/34/1/Box 133/US Delegation – Correspondence; Memorandum of Conversation, Nash (New Zealand), Clayton and Carr (US), 12 May 1947, NARA: RG43/250/8/34/1/Box

Notes 311

30 31 32 33 34 35 36 37 38 39 40 41

42

43 44 45 46 47 48 49 50

133/US Delegation – Correspondence; UK delegation Geneva to FO, tel 389, 13 May 1947, PRO: BT11/3649. Meeting of Departmental Representatives, 9 May 1947, AA: CP855/S1B2 pt. 1. Weekly summary no. 8, Trade and Employment Conference, Department PWR, 9 May 1947, AA: A1068/ER47/1/22. Geneva to FO, tel 372, 12 May 1947, PRO: FO371/62296. UK Delegation, Geneva to FO, tel 389, 13 May 1947, PRO: BT11/3649. Wilgress to SSEA, tel 65, 13 May 1947, NAC: RG19/565/152-17-7. Notes of Executive Meeting Held on Wednesday, 7 May 1947, AA: CP855/S1B2 pt. 1. Minutes of Cabinet Sub-Committee Meeting on Trade and Employment, 20 May 1947, AA: A6006/2nd Chifley Ministry Mar.–Jun. 1947. George Evatt, Representative for the Australian Canned Fruits Board, to Coombs, 3 June 1947, AA: CP855/S1B2. FO to UK Delegation, Geneva, tel 581, 3 June 1947. It was a copy of UK HC in Australia to DO, tel 376, 2 Jun. 1947, PRO: BT11/3649. Austdel Geneva to DEA, cablegram G. 38, 31 May 1947, AA: A1068/ER47/1/13/1. Austdel Geneva to DEA, cablegram G. 40, 31 May 1947, AA: A1068/ER47/1/13/1. Canadian Ambassador, Washington to SSEA, tel WA-1398, 5 May 1947, NAC: RG25/3845/9100-L-40 pt. 1; Canadian Ambassador in Washington to SSEA, tel WA-1628, 24 May 1947, NAC: RG19/152-17-2; Canadian Ambassador in Washington to SSEA, letter no. 1173, 4 June 1947, NAC: RG25/3845/9100-L-40 pt. 1; Copy of telegram dated 4 June 1947, From the Honorable Henry L. Stimson to the Secretary of State; Hull to Marshall, letter, 4 June 1947, TL: Truman Papers: President’s Secretary’s Files/Box 141/General File Wool. For example, in an appraisal to London, Inverchapel (UK Ambassador in Washington) cited a completely contradictory opinion: that Truman would not use the veto for fear of it being overturned and that he would use the veto even if he believed it would be overturned. Inverchapel to FO, No. 1096 E, 5 May 1947, PRO: BT11/3649. Memo from Stein to John Steelman re. wool legislation, 2 May 1947, TL: 0F485. ‘Britain, Canada, South Africa to End Preference Trade System’, Michael Hoffman, The New York Times, 19 Oct. 1947, p. 1. Minutes of General Staff Meeting, 25 June 1947, NARA: RG43/250/8/34/1/Box 133/Minutes – US Delegation, 21 June–30 July 1947. Dedman to Chifley, tel ITO 156, 22 June 1947, NLA: MS987/12/659-661. Appendix II. Chronological Record of United States–Southern Dominions Tariff Negotiations, 28 Oct. 1947. Clayton to Truman, letter, 3 May 1955, TL: PPF/Box 256/Birthday file 1955-57/1955 Birthday A-H. Note by Coombs on back of telegram from Dedman, no date, AA: MS987/12/663. Marshall to Truman, 30 July 1947, TL: WHCF/CF Box 51/State Department Trade Agreements 1946-1949.

312 Notes 51 52

53

54 55 56

57 58 59 60 61 62 63 64 65 66

67

68

69 70 71

Minutes of Delegation Meeting, 4 Aug. 1947, NARA: RG43/250/8/34/1/Box 133/Minutes – US Delegation, 31 July–25 Aug 1947. Dedman to Chifley, tel ITO 261, 7 Aug. 1947, NLA: MS987/12/706-707; Appendix II. Chronological Record of United States-Southern Dominions Tariff Negotiations, 28 Oct. 1947. UKdel Geneva to FO, tel. 1239, 7 Aug. 1947, PRO: FO371/62311; Dedman to Chifley, tel ITO 261; Dedman to Chifley, tel ITO 274, 12 Aug. 1947, AA: CP434/1/Bundle 15/9402 pt. 2. The delay in informing the delegation arose because of difficulties in decyphering tel. ITO 261 to Canberra. The press leak was becoming a regular feature of the Geneva negotiations, even though the bargaining took place in camera. The source of information was never revealed although it seems that some journalists, like Kenneth Wilson of the Financial Post, received information directly from the bureaucrats. UKdel Geneva to FO, tel 1286, 13 Aug. 1947, PRO: FO371/62312. Dedman to Chifley, tel ITO 269, 9 Aug 1947, NLA: MS987/12/712-713. Memo for Bevin on Trade Negotiations at Geneva, 17 Aug. 1947, PRO: FO371/62312; Dedman to Chifley, tel ITO 182, 14 Aug. 1947, NLA: MS987/12/715. Coombs to Morton, tel ITO 404, 16 Oct. 1947, AA: CP434/1/Bundle 15/9402 pt. 2. ‘Tariff negotiations with USA’, memo by department of commerce and agriculture, 25 Oct. 1947, AA: MS987/12/250-255. Morton to Coombs, tel ITO 404, 16 Oct. 1947, AA: CP434/1/Bundle 15/9402 pt. 2. Foreign Office to UKdel Geneva, tel. 838, 28 June 1947, PRO: BT11/3649. Minutes of a Meeting of US Delegation in Geneva, 5 May 1947, FRUS, 1947, Vol. 1, pp. 920-3. Extract from Speech by Sir Stafford Cripps, Apr. 1947, AA: A1068/ER47/1/13/1. UKdel Geneva to FO, tel. 39, 12 Apr. 1947, PRO: FO371/62291. Remarks of Mr Clair Wilcox, Vice Chairman, 14 April 1947, NARA: RG43/250/8/34/1/Box 132/US Delegation (Geneva – April–October 1947). Minutes of General Staff Meeting, 14 May 1947, NARA: RG43/250/8/34/1/Box 133/Minutes – US Delegation, 20 April–June 1947. T.N. (P) (47) 66, Trade Negotiations Committee, 21 May 1947, Annex B: Copy of a letter from Wilson to Wilcox, 21 May 1947, PRO: FO371/62299. T.N. (P) (47) 66, Trade Negotiations Committee, 21 May 1947, Annex A: Copy of a letter from Clayton to Helmore, 16 May 1947, PRO: FO371/62299. Memorandum of Conversation, Helmore (UK), Clayton and Beale (US), 8 May 1947, NARA: RG43/250/8/34/1/Box 133/US Delegation– Correspondence. Minutes of Delegation Meeting, 6 May 1947, NARA: RG43/250/8/34/1/ Box 133/Minutes – US Delegation, 20 April–June 1947. Minutes of Delegation Meeting, 23 May 1947, NARA: RG43/250/8/34/1/ Box 133/Minutes – US Delegation, 20 April–June, 1947. It was evident in American discussions with other delegations, however, that the American focus on preferences intensified. In discussions with

Notes 313

72 73 74 75 76

77

78

79

80

81 82

83 84

85 86 87 88 89

Burmese officials, the US informed them that they only cared that preferential margins be wiped out. If that was accomplished by raising preferential rates to the MFN level, the US would not object. Eliminating discrimination supplanted liberalization as the principal American goal. T.N. (P) (47) 74, Note by Mr Burns, ‘Reduction of Preferential Margins by Raising Preferential Rates’, 28 May 1947, PRO: FO371/62299. ‘Trade Talks Bring League of Nations Palace Back to Life’, C. Bingham, SMH, 11 Apr. 1947, p. 2. Interview with Reisman. BPWP–Import Programme 1947–1948, 18 Apr. 1947, PRO: T230-11. Minutes of Delegation Meeting, 10 July 1947, NARA: RG43/250/8/ 34/1/Box 133/Minutes – US Delegation, 21 June–30 July, 1947. There is a vast literature on the Marshall Plan. Two helpful introductions are Alan Milward, The Reconstruction of Europe, 1945-51 (London, 1984) and Michael J. Hogan, The Marshall Plan: America, Britain and the Reconstruction of Western Europe, 1947–1952 (Cambridge, 1987). Minutes of meeting of US delegation in Geneva, 18 July 1947, FRUS, Vol. 1, 1947, pp. 966; Minutes of delegation meeting, 14 July 1947, NARA: RG43/250/8/34/1/Box 133/Minutes – US Delegation, 21 June–30 July 1947; UK Delegation, Geneva to FO, tel 1022, 16 July 1947, PRO: FO371/62305. Minutes of Delegation Meeting, 14 July 1947; General Staff Meeting, 18 July 1947, NARA: RG43/250/8/34/1/Box 133/Minutes – US Delegation, 21 June–30 July 1947. OEP (47) 29, ‘Trade Negotiations at Geneva’, memo by President BT, Appendix B: The Negotiations with Foreign Countries, 22 July 1947, PRO: FO371/62309. General Staff Meeting, 18 July 1947; T.N. (P) (BC) (GSC) (47) 21st meeting, British Commonwealth Talks, Draft Minutes of the 21st Meeting of the General Subjects Committee, 15 July 1947, IC14/8F.1; Minute by C. T. Crowe to Orme Sargent, 19 July 1947, PRO: FO371/62307. ‘The Trade Negotiations at Geneva’, draft memo by president of the Board of Trade, 21 July 1947, PRO: FO371/62308. Memo of Conversation (Paris), UK Dollar Situation and ITO Conference: Discussion of Charter Points, 31 July 1947, NARA: RG43/250/8/34/1/Box 138/Trade – United Kingdom; Minutes of Delegation Meeting, 4 August 1947, NARA: RG43/250/8/ 34/1/Box 133/Minutes–US Delegation, 31 July–25 August 1947. ‘What British Get From Eliminating Preferences that they will not get otherwise’, Aug. 1947, NARA: RG43/250/8/34/1/Box 138/Trade – United Kingdom. Marten to Crowe, tel 1244, 3 Aug. 1947, PRO: FO371/62311. ‘Suggested Approach to the United Kingdom’, 6 Aug. 1947, NARA: RG43/250/8/34/1/Box 138/Trade – United Kingdom. Minutes of Delegation Meeting, 4 Aug. 1947, NARA: RG43/250/8/34/1/Box 133/Minutes – US Delegation, 31 July–25 Aug. 1947. Memo to Clayton from Wilcox, ‘Negotiations with the United Kingdom’, 6 Aug. 1947, NARA: RG43/250/8/34/1/Box 138/Trade – United Kingdom. Weekly Summary No. 25 of Geneva Conference, for week ending 5 August 1947, AA: MS987/12/109-115; C.P. (47) 230, Memo by the prime

314 Notes

90 91 92

93 94

95 96 97

98 99

100 101

102 103 104

105 106 107 108

minister, ‘The Trade Negotiations at Geneva’, 9 Aug. 1947, PRO: CAB129/20. Memo to Clayton from Wilcox, ‘Negotiations on Preferences’, 12 Aug. 1947, NARA: RG43/250/8/34/1/Box 138/Trade – United Kingdom. Meetings of the Committee on Trade Agreements, 12 Aug. 1947, TL: Edminster Papers. CP (47) 245, ‘Trade Negotiations in Geneva: US Requests on Tariffs and Preferences’, memo by president of the Board of Trade, 27 Aug. 1947, PRO: PREM8/490; CED, Issue no. 113, 25 Aug. 1947, TL: RG59/Current Economic Developments 1945–54; FO to UK Delegation, Geneva, tel 1504, 22 Aug. 1947, PRO: FO371/62313. Meeting of the Committee on Trade Agreements, 21 Aug. 1947, TL: Edminster Papers. CP (47) 245, ‘Trade Negotiations in Geneva: US Requests on Tariffs and Preferences’ and Annex A, memo by president of the Board of Trade, 27 Aug. 1947, PRO: PREM8/490 Wilgress to SSEA, tel no. G/9, 26 Aug. 1947, NAC: RG19/3610/ITO-26. Australian Delegation, Geneva, to DEA, tel ITO 293, 22 Aug. 1947, NLA: MS 987/12/725. Also in AA: AA1974/156/20/2/18. CP (47) 245, ‘Trade Negotiations at Geneva: US Requests on Tariffs and Preferences’, memo by president of the Board of Trade, 23 Aug. 1947, PRO: FO371/62313. British Commonwealth Talks, Draft Minutes of 22nd meeting of the General Subjects Committee, 21 Aug. 1947, NANZ: IC14/8 F.1. TN (P) (BC) (47) 23rd meeting, British Commonwealth Talks, Draft Minutes of the 23rd Meeting of the General Subjects Committee, 28 Aug. 1947, IC14/8F.1. UK Delegation, Geneva to FO, tel 1423, 30 Aug. 1947, PRO: FO371/62314. UK Delegation, Geneva to FO, tel 1425, 30 Aug. 1947, PRO: FO371/62314; Australian Delegation, Geneva to DEA, tel ITO 305, 2 Sept. 1947, AA: CP434/1/Bundle 15/9402 pt. 2. UK del Geneva to FO, tel 1524, 8 Sept. 1947, PRO: FO371/62315; UKdel Geneva to FO, tel 1525, 8 Sept. 1947, PRO: FO371/62314. A. G. Bottomley to Cripps, in response to CP (47) 245, 1 Sept. 1947, PRO: PREM 8/490. Titles of articles which alluded to the end of the preferential system include: ‘US Asks Preference Cuts Canada Caught in Squeeze?’, FP, 23 Aug. 1947, p. 1; ‘Did Britain Give in to US at Geneva?’, FP, 13 Sept. 1947, p. 1; ‘Empire Trade In Danger’, SMH, 14 Aug. 1947, p. 3. All of these articles attribute the threat to empire trade to American pressure. Canadian HC in UK to SSEA, tel 1423, 4 Sept. 1947, NAC: RG19/558/152–17. See Wolfram Kaiser, Using Europe, Abusing the Europeans: Britain and European Integration, 1945–1963 (Basingstoke, 1996). UK HC in Australia to DO, tel 727, 8 Sept. 1947, PRO: DO114/110; LePan to Pearson, tel 1436, 9 Sept. 1947, NAC: RG19/558/152-17. Minutes of Interdepartmental Committee on Trade and Empoyment, 9 Sept. 1947, AA: A571/61, 1944/1109F pt. 1.

Notes 315 109 110 111 112 113 114 115 116 117 118

119

120 121

122

123

124 125

126

127 128 129 130 131

LePan to Pearson, tel 1414, 4 Sept. 1947, NAC: RG25/89-90/029/Box 47 Int 31/154 (s) pt. 3. LePan to Pearson, tel 1436, 9 Sept. 1947, NAC: RG19/558/152-17. Cabinet conclusions, 11 Sept. 1947, NAC: RG2/A5a/vol. 2640. Pearson to Robertson, letter, 8 Sept. 1947, NAC: RG25/89-90/029/154(s) pt. 3. UK HC in Australia to DO, tel. 273, 12 Sept. 1947, PRO: DO114/110. Acting UK HC in New Zealand to DO, tel 295, 23 Sept. 1947, PRO: DO114/110. UK HC in South Africa to DO, tel 273, 12 Sept. 1947, PRO: DO114/110. Meeting of the Committee on Trade Agreements, 9 Sept. 1947, TL: Edminster Papers. Marten’s minute, 12 Sept. 1947, PRO: FO371/62315. ‘Statement made by Mr Clair Wilcox to Representatives of the British Commonwealth on September 15, 1947’, NAC: RG25/3845/9100-L-40 pt. 2. Robertson to Pearson, tel 1473, 17 Sept. 1947, NAC: RG25/2117/AR429/3/5; Wilgress to SSEA, letter G-11, 23 Sept. 1947, NAC: RG19/560/157-17/UK–US Trade Negotiations 1947; Canadian Trade Delegation, Geneva to SSEA, tel 224, 16 Sept. 1947, NAC: RG19/3610/ITO-26. Marten’s minute on tel 519 Askew, 16 Sept. 1947, PRO: FO371/62316. Memorandum of Conversation, Clayton, Douglas, Hawkins, Brown and Beale (US), Cripps, Wood, Wilson, Summerscale and Cohen (UK), at Board of Trade, London, 19 Sept. 1947, NARA: RG43/250/8/34/1/Box 138/Trade – United Kingdom. Note by Cripps on Meeting with Clayton, Douglas, and Bevin, 22 Sept. 1947, PRO: FO371/62317; FO to Washington, tel 9837, 24 Sept. 1947, PRO: FO371/62317. ‘The Tariff Negotiations at Geneva’, draft of cabinet paper prepared by Board of Trade (in consultation with foreign office) for cabinet discussion of Anglo-American Negotiations in Geneva, Sept. 1947, PRO: FO371/62317. Copy of brief which Cripps referred to in his meeting with Clayton, 20 Sept. 1947, PRO: FO371/62317. Meeting of the Committee on Trade Agreements, 9 and 13 Sept. 1947, TL: Edminster Papers/Box 10/Minutes of meetings 20 Aug 20–Dec. 1947. Concerns about the Soviet Union appear in US analyses of the ITO negotiations and reinforced the importance of an Anglo-American agreement; C. T. Crowe’s minute on meeting between Clayton and president of the Board of Trade, 20 Sept. 1947, PRO: FO371/62317. Crowe’s minute on Draft of Cabinet paper prepared by Board of Trade (in consultation with foreign office) for cabinet discussion of AngloAmerican negotiations in Geneva, Sept. 1947, PRO: FO371/62317. Wilgress to SSEA, letter G-11, 23 Sept. 1947, NAC: RG19/560/15217/UK–US Trade Negotiations 1947. UK HC in Canada to CRO, tel 928, 1 Oct. 1947, PRO: FO371/62318. Mackenzie King to Attlee, tel 896, 24 Sept. 1947, PRO: PREM8/490. UK HC in Canada to CRO, tel, 25 Sept. 1947, PRO: DO35/3730. Attlee to Mackenzie King, tel 859, 26 Sept. 1947, PRO: DO35/3730.

316 Notes 132 133

134 135 136

137 138 139 140 141 142 143 144 145

146 147 148

149 150

151 152 153 154 155 156 157

C.M. (47) 77th Concs, 25 Sept. 1947, PRO: CAB128/10. Fraser to Attlee, tel 212, 30 Sept. 1947, NANZ: Nash/Bundle 111/00010421/0359; Nash to Johnsen, tel 162, 20 Sept. 1947, NANZ: AAEG/950/2498/201/4/3/2 pt. 1B. Conversation between Fraser and Lord Addison, note for file, 29 Sept. 1947, NANZ: EA1/154/4/6 pt. 1B. Coombs to Chifley, tel ITO 348, 25 Sept. 1947, AA: CP434/1/Bundle 15/9402 pt. 2. Draft of Cabinet Paper, Anglo-American Negotiations in Geneva, prepared by foreign office and the Board of Trade, Sept. 1947, PRO: FO371/62317. FO to UK Delegation, Geneva, tel 1752, 25 Sept. 1947, PRO: FO371/62317. This telegram relayed the contents of the message to Clayton. CRO to high commissioners in Australia, New Zealand and South Africa, tels 688, 305 and 297, 29 Sept. 1947, PRO: PREM8/490. C.M. (47) 77th Concs, 25 Sept. 1947, 11 a.m., PRO: CAB128/10. Minute by Hall-Patch, 26 Sept. 1947, PRO: FO371/62318. Holmes to Helmore, tel 649 Askew, 1 Oct. 1947, PRO: FO371/62319. FO to Washington, tel 9917, 26 Sept. 1947, PRO: FO371/62318. FO to Washington, tels 10171 and 10172, 4 Oct. 1947, PRO: FO371/62319. UK HC in Canada to CRO, tel 934, 4 Oct. 1947, PRO: DO114/110. Meeting of the Committee on Trade Agreements, 13 Sept. 1947, TL: Edminster Papers/Box 10/Minutes of meetings Interdepartmental Committee on Trade Agreements, 20 Aug.–Dec. 1947. Memo to Clayton and Douglas from Hawkins and Brown, 24 Sept. 1947, NARA: RG43/250/8/34/1/Box 138/Trade – United Kingdom. Meeting of the Committee on Trade Agreements, 27 Sept. 1947, TL: Edminster Papers/Box 10/Minutes of meetings 20 Aug.–Dec. 1947. Wilgress to Beaudry, tel 261, 27 Sept. 1947, NAC: RG19/3610/ITO-26; Weekly Summary No. 29, week ending 3 Oct. 1947 of Geneva Conference, AA: MS987/12/116-123. Wilgress to Pearson, tel 284, 11 Oct. 1947, NAC: RG19/560/15217/UK–US Trade Negotiations 1947. C.P. (47) 278, ‘Trade Negotiations at Geneva: Tariff Discussions with USA’, memo by president of the Board of Trade, 6 Oct. 1947, PRO: CAB129/21; Australian Delegation, Geneva to DEA. tel ITO 363, 5 Oct. 1947, AA: CP434/1/Bundle 15/9402 pt. 2. C.P. (47) 278, ‘Trade Negotiations in Geneva: Tariff Discussions with USA’. LePan to Pearson, tel 1551, 8 Oct. 1947, NAC: MG31 E6/vol. 1/file 6. C.P. (47) 278, ‘Trade Negotiations at Geneva: Tariff Discussions with USA’. Bullock, Ernest Bevin Foreign Secretary, p. 112. Note by Hall-Patch for Bevin, 8 Oct. 1947, PRO: FO371/62321. Wilgress to SSEA, tel 284, 11 Oct. 1947, NAC: RG19/560/152-17/UK–US Trade Negotiations 1947. SS CRO to UK HC in Ottawa, tels Z. No. 98 and 99, 10 Oct. 1947, enclosed a copy of the tel to UK Ambassador in Washington, NAC: RG19/560/152-17/UK–US Trade Negotiations 1947.

Notes 317 158 159 160 161 162 163

164 165 166 167 168 169 170 171 172 173 174 175 176 177 178

179 180

181

182 183

UK Delegation, Geneva to FO, tel 1742, 12 Oct. 1947, PRO: FO371/62321. Roger Makins’ minute for Bevin, 14 Oct. 1947, PRO: FO371/62323. SS CRO to UK HC in Ottawa, tel Z No. 99. Wilgress to SSEA, tel 273, 4 Oct. 1947, NAC: RG19/3610/ITO-26. UK HC in Canada to CRO, tel 959, 11 Oct. 1947, PRO: DO114/110. Wilgress to SSEA, tel 280, 8 Oct. 1947, RG19/3610/ITO-26; Weekly Summary No. 30 for week ending 10 Oct. 1947 Geneva Conference, AA: MS987/12/127-130. Stone to Pearson, tel WA-3210, 10 Oct. 1947, NAC: RG2/vol. 111/U-40-3 (Vol. 2)/UN International Relations 1947 (Oct.–Dec.). Washington to FO, tel 5531, 10 Oct. 1947, PRO: FO371/62321; Memo by Wilcox for Lovett, 10 Oct. 1947, FRUS, Vol. 1, 1947, p. 1010. Inverchapel to FO, tel 5531, 11 Oct. 1947, PRO: PREM8/490. Inverchapel to FO, tel 5568, 13 Oct. 1947, PRO: FO371/62321. F. W. Marten’s minute, 13 Oct. 1947, PRO: FO371/62321. UK Delegation, Geneva to FO, tel 1738, 11 Oct. 1947, PRO: FO371/62321. F. W. Marten’s minute, 13 Oct. 1947. Memo from FO (Roger Makins) to prime minister re. state of the Geneva negotiations, 14 Oct. 1947, PRO: PREM8/490. P.M. (47) 147, Note from Bevin to Attlee, 14 Oct. 1947, PRO: FO371/62323. ‘Clayton of “State”’, NYT, 19 Oct.1947, p. 2E. Robert H. Ferrell, ed., Truman in the White House: the Diary of Eben A. Ayers (Columbia, 1991), pp. 205, 304. Coombs to Wilson, tel ITO 61, 3 May 1947, AA: CP434/1/Bundle 15/9402 pt. 2. O.E.P. (47) 8th meeting, Overseas Economic Committee, 10 July 1947, PRO: CAB134/541. O.E.P. (47) 22, Duty Free Imports, 8 July 1947, PRO: DO35/3730. Commonwealth Talks, 8 July 1947, PRO: BT11/3655; UK Delegation Geneva to Board of Trade, Askew tel 350, 20 July 1947, PRO: DO35/3730; Wilgress to Beaudry, tel 218, 30 Aug. 1947, NAC: RG25/3845/9100-L-2-40 pt. 1. Note in this telegram Wilgress summarized the history of the exchange of notes to erase the obligation to enforce bound margins at Geneva. Hart, ed., Also Present at the Creation, p. 42. O.E.P. (47) 29, ‘Trade Negotiations at Geneva’, memo by president of the Board of Trade, 22 July 1947, PRO: FO371/62309; Draft Memo by president of the board of trade, ‘The Trade Negotiations at Geneva’, 21 July 1947, PRO: FO371/62308; Pritchard to M. E. Allen, letter, 23 July 1947, PRO: DO35/3730. ‘Message from Mr Attlee to Mr Mackenzie King Dated 24th August 1947’, NAC: RG19/560/152-17-UK-US Trade Negotiations 1947. A copy of the telegram was sent from the CRO to the HC in Canada, tel 756, 26 Aug. 1947, PRO: PREM8/490. DO to UK high commissioner, Ottawa, tel 755, 26 Aug. 1947, PRO: DO114/110. Memo for Dr Clark, 29 Aug. 1947, NAC: RG19/560/152-17-UK–US Trade Negotiations 1947.

318 Notes 184 185 186 187 188 189

190 191

192 193 194 195 196 197 198 199 200

201

202 203

204 205 206

Wilgress to Beaudry, tel 218, 30 Aug. 1947, NAC: RG25/3845/9100-L-2-40 pt. 1. UK HC in Canada to CRO, tel 894, 25 Sept. 1947, PRO: DO114/110. ‘Message from Mr Mackenzie King to Mr Attlee Dated 24th September 1947’, NAC: RG19/560/152-17-UK–US Trade Negotiations 1947. Burns to Parker, letter, 12 Oct. 1947, PRO: BT11/3655. UK del Geneva to Foreign Office, tel 1673, 29 Sept. 1947, PRO: BT11/3741. In Canadian and British records, the first reference to an exchange of notes with Australia and South Africa is in a telegram from Wilgress to Beaudry, dated 30 August 1947. In this cable Wilgress chronicled the events at Geneva which led to the exchange of notes. Wilgress remarked in the cable that he had not begun talks with the Australian and South African delegations in Geneva because he was waiting for their respective negotiations with the US to make progress. One can infer from this missive, and from the dispute which unfolded between Wilgress and Helmore, that Wilgress had indicated his desire to conclude exchanges with all three delegations, to be published at the same time as the Geneva tariff schedules and the trade charter. Wilgress to Deutsch, tel 269, 2 Oct. 1947, NAC: RG19/3610/ITO-26. Wilgress to SSEA, letter G/16, 13 Oct. 1947, enclosed a draft copy of the South Africa–Canada exchange of notes, NAC: RG25/3845/9100-L-2-40 pt. 1. SSEA to Wilgress, tel. 206, 6 Oct. 1947, NAC: RG2/vol. 111/U-40-3 (Vol. 2)/UN International Relations 1947 (Oct.–Dec 1948). ‘Britain, Canada, South Africa Set to End Preference Trade System’, Hoffman, NYT, 19 Oct. 1947, p. 1. Helmore to Holmes, Askew tel 648, 21 Oct. 1947, PRO: DO35/3730. For example, Canadian HC in NZ to SSEA, tel 291, 20 Oct. 1947, NAC: RG25/3845/9100-L-2-40 pt. 1. SSEA to Canadian HC in NZ, tel 207, 22 Oct. 1947, NAC: RG25/3845/91002-40 pt. 1. Helmore to Holmes, Askew tel 651, 22 Oct. 1947, PRO: DO35/3730. Wilgress to SSEA, tel 309, 23 Oct. 1947, NAC: RG19/3610/ITO-26. UK HC in Canada to CRO, tel 993, 23 Oct. 1947, PRO: DO114/110. FO to UK Delegation, Geneva, for Helmore, tel 1941, 24 Oct. 1947, PRO: FO371/62324; CRO briefing of PM, 26 Oct. 1947, PRO: PREM8/490; UK del Geneva to FO, tel 1827, 25 Oct. 1947, PRO: DO35/3730. UK HC in Canada to CRO, tel 1002, 25 Oct. 1947, PRO: FO371/62325. Also in PRO: DO114/110. CRO briefing, 25 Oct. 1947, PRO: PREM8/490; UK del Geneva to FO, tel 1827, 25 Oct. 1947, FO371/62324. UK HC Ottawa to CRO, tel 1002, 25 Oct. 1947, PRO: FO371/62325. Wilgress to McKinnon and Deutsch, tel No. 70, 7 Nov. 1947, NAC: RG19/3610/ITO-26. UK HC in Canada to CRO, tel 1059, 11 Nov. 1947, PRO: FO371/62325. Robertson to Wilgress, tel 242, 28 Oct. 1947, NAC: RG19/565/152-17-7. South African HC in London to N. Pritchard (CRO), 15 Nov. 1947, PRO: DO35/3730. ‘Gentleman’s Agreement – Text Suggested by United Kingdom’, 10 Oct. 1947, AA: A462/604/10; ‘Gentleman’s Agreement Text Suggested by

Notes 319

207 208 209 210 211

212 213 214 215 216 217

218 219 220

221

222 223 224

225

226

227

Australia’, 25 Oct. 1947, AA: A462/604/10; Helmore to C. E. Morton, letter, 28 Oct. 1947, PRO: DO35/3730. ‘Combined Effect of the G.A.T.T. and Ottawa Agreements’, Board of Trade memo, July 1948, PRO: DO35/3730. ‘Combined Effect of the G.A.T.T. and Ottawa Agreements’. Australian Delegation, Geneva to DEA, tel ITO 56, 1 May 1947, AA: CP434/1/Bundle 15/9402 pt. 2. Wiseman to Fisher, letter, 11 Jan. 1947, PRO: BT11/3688. Draft Minutes of British Commonwealth Talks, 18th Meeting of the General Subjects Committee, 2 Jun. 1947, NAC: RG25/3845/9100-L-40 pt. 1. Weekly Summary No. 4, 11 Apr. 1947, AA: A1068/ER47/1/22. DO to Australia (Govt). tel No. 66, 3 Apr. 1947, PRO: BT11/3664. Notes of Meeting of the Delegation, 15 Apr. 1947, AA: CP855/S1B2 pt. 2. Meeting of Non-Governmental Advisers with Members of Australian Delegation, 15 Apr. 1947, AA: CP855/S1B2 pt. 2. Weekly Summary No. 4, 11 Apr. 1947, AA: A1068/ER47/1/22. Austdel to DEA, tel ITO 26, 10 Apr. 1947, AA: CP434/1/Bundle 15/9402 pt. 2; Weekly Summary No. 4, 11 Apr. 1947, AA: A1068/ER47/1/22; Meeting of Non-Governmental Advisers with members of the Australian Delegation, 15 Apr. 1947, AA: CP855/S1B2 pt. 2. UK HC in Australia to DO, tel 300, 30 Apr. 1947, PRO: BT11/3664. For Coombs from Wilson, tel 32, 24 Apr. 1947, AA: CP434/1/Bundle 15/9402 pt. 4. ‘British Preferential Duties: Submission Regarding Responses to UK Requests’, memo by W. S. Kelly, 18 May 1947, AA: A571, 1944/1109C pt. 1. Inter-Departmental Committee on Trade and Employment, 20 May, 9:45 a.m. and Minutes of Inter-Departmental Committee, 20 May 1947, 4:15 p.m., AA: A571/61/1944/1109F pt. 1. 450 Draft minues of 18th Meeting of the General Subjects Committee, British Commonwealth Talks, 2 June 1947, NAC: RG25/3845/9100-L-40 pt. 1. Draft minutes of 18th Meeting of the General Subjects Committe, British Commonwealth Talks, 2 June 1947, NAC: RG25/3845/100-L-40, pt. 1. McCarthy to Commerce, tel ITO 119, 7 June 1947, AA: CP434/1/Bundle 15/9402 pt. 2. ‘Tariff Negotiations with Australia’, Note by Burns, no date, PRO: BT11/3664; OEP (47) 29, ‘Trade Negotiations at Geneva’, memo by president of the Board of Trade, 22 July 1947, PRO: PREM8/490. Minutes of the 85th meeting of the UK delegation, 28 July 1947, PRO: BT11/3664. This comment made with specific reference to an Australian request affecting wines and spirits. O.E.P. (47) 29, Cabinet Committee on Overseas Economic Policy, ‘Trade Negotiations at Geneva’, appendix C: ‘Negotiations with Commonwealth Countries’, memo by president of the Board of Trade, 22 July 1947, PRO: PREM8/490; Minute sheet, comment by Burns, 28 July 1947, PRO: BT11/3664. ‘The External Financial Position of UK–Australian Policy’, no date, AA: A1068/ER47/8/8.

320 Notes 228

8

Weekly Summary No. 31, 17 Oct. 1947, AA: A1068/ER47/1/22; Austdel Geneva to DEA, tel ITO 386, 14 Oct. 1947, AA: CP434/1/Bundle 15/9402 pt. 2; UK Delegation, Geneva to Board of Trade, for Holmes, tel 638 Askew, 19 Oct. 1947, PRO: BT11/3665.

The Havana Conference and the Reception of the GATT Agreements across the Commonwealth

1 Department of State Policy Statement, 11 June 1948, in FRUS, 1948, Vol. III, p. 1103. 2 Australia Hansard, 3 Mar. 1948, col. 343. The speaker was Mr Falstein. 3 Hart, ed., Also Present at the Creation, p. 44. 4 John H. Jackson, World Trade and the Law of GATT: a Legal Analysis of the General Agreement on Tariffs and Trade (New York, 1969), pp. 45–6. 5 Wilgress to SSEA, tel 17, 8 Dec. 1947, NAC: RG19/3609/ITO-21. 6 Garner to Pearson, letter, 2 March 1948, NAC: RG25/3846/9100-N-40 pt. 2. 7 ‘Considerations in Deciding Course for Havana’, 30 Dec. 1947, TL: ClaytonThorp Papers/RG59/Box 4/Memoranda – copies of, July – 31 Dec. 1947. 8 Wilgress to SSEA, tel 105, 28 Feb. 1948, NAC: RG25/3846/9100-N-40 pt. 2. 9 Wilcox to Clayton, tel, 27 Feb. 1948, FRUS, 1948, Vol. I, p. 879. 10 CED, Issue No. 140, 1 March 1948, TL: RG59/Current Economic Developments 1945–1954. 11 CP (48) 84, ‘Havana Trade Conference’, memo by president of the board of trade, 12 March 1948, PRO: PREM8/1416. 12 Canadian Trade Delegation, Havana to SSEA, tel 105, 28 Feb. 1948, NAC: RG25/3846/9100-N-40 pt. 2. 13 New Zealand Delegation, Havana to DEA (Wellington), cablegram ITO 150, 3 March 1948, NANZ: NASH/Bundle 237/0001-0713/0595-0597. 14 Wilcox to Clayton, tel. 27 Feb. 1948, FRUS, 1948, Vol. I, p. 877. 15 In a meeting between Nash and the New Zealand Manufactures Federation on 14 May 1948, Nash said that the Havana charter was better suited to New Zealand. NANZ: NASH/Bundle 108. 16 For example, Joe Garner wrote directly to Lester Pearson and E. J. Williams wrote to Chifley. See NAC: RG25/3846/9100-N-40 pt. 2 and AA: A1838/1/711/1/1. New Zealand’s telegram can be found in NANZ: NASH6/Bundle 237/0001-0713/0588-0589. 17 C.P. (48) 84, ‘Havana Trade Conference’, memo by president of the board of trade, 12 March 1948, PRO: CAB129/25. 18 Robertson to Pearson, tel 279, 10 March 1948, NAC: RG25/3846/9100-N-40 pt. 2; E.P.C. (48) 16, memo by chancellor of the exchequer and president of the Board of Trade, 10 March 1948, PRO: PREM 8/1416; C.M. (48) 22nd concs, 10:30 a.m., 15 March 1948, PRO: CAB128/12. 19 Hogan, The Marshall Plan, p. 21. 20 Note on Western European Customs Union, 28 Nov. 1947, NANZ: NASH/Bundle 93/0071–0074. 21 E.P.C. (47) 6th meeting, 7 Nov. 1947, PRO: CAB134/215. 22 E.P.C. (47) 11, ‘Customs Unions: Interim Report of the Interdepartmental Study Group’, 6 Nov. 1947, PRO: CAB 134/215.

Notes 321 23 British Commonwealth Talks, Western European Customs Union, draft minutes, 27 Nov. 1947, NANZ: NASH/Bundle 93. 24 E.P.C. (47) 11, ‘Customs Unions: Interim Report’. 25 E.P.C. (48) 34, ‘Customs Union’, 23 Apr. 1948, PRO: PREM 8/1146 pt. 1. 26 British Commonwealth Talks, Western European Customs Union, 1st Meeting Minutes, Corrigenda, NAC: RG19/558/152—17. 27 F. W. Marten to R. B. Stevens, letter, 5 Dec. 1947, PRO: FO371/62754. 28 CP (48) 75, ‘European Economic Cooperation, memo by Bevin and Cripps, 6 March 1948, PRO: CAB129/25. 29 LePan to Pearson, letter, 23 Feb. 1948, NAC: RG19/558/152–17. 30 E.P.C. (48) 34, ‘Customs Union’ 1. 31 Nassau A. Adams, Worlds Apart: the North-South Divide and the International System (London and New Jersey, 1993), p. 42. 32 Susan Ariel Aaronson, Trade and the American Dream: a Social History of Postwar Trade Policy (Lexington, 1996), p. 66. 33 Washington to FO, tel. 6538, 20 Nov. 1947, PRO: FO371/62326. 34 ‘Tariffs and Trade’, The Economist, 22 Nov. 1947, p. 828. 35 ‘Expect Other Pacts Will Follow Geneva’, The Financial Post, 22 Nov. 1947, p. 1. 36 ‘Tariff Cuts Affect 60% of US Trade in 23-Nation Pacts’, The New York Times, 18 Nov. 1947, p. 1. 37 ‘Few Sacrifices by Union’, CT. 19 Nov. 1947, p. 3. 38 ‘How British Preference is Affected by New Pacts’, The Financial Post, 29 Nov. 1947, pp. 1–2. 39 ‘Trade Under the New Tariff’, The Economist, 22 Nov. 1947, p. 849. 40 Lead article in the Age, 19 Nov. 1947, rpt in J.G. Crawford, Australian Trade Policy 1942–1966: a Documentary History (Canberra, 1968), p. 75. 41 ‘Cut in Imperial Preference’, CT. 18 Nov. 1947, p. 3. 42 CRO to high commissioners in Canada, Australia, New Zealand and South Africa, tel. Z. No. 126, 18 Nov. 1947, PRO: BT11/3692. 43 ‘Tariff Cuts Affect 60% of US Trade in 23–Nation Pacts’, The New York Times, pp. 1, 15. The sub-title of the article also made this point: ‘British Imperial Preferences Reduced – New Scale Seen as a Long-Term Help’. 44 ‘Action at Geneva with respect to British Preferential System’, memo for Truman by Brown, 17 Oct. 1947, TL: WHCF/CF/Box 51/State Dept. Trade Agreements 1946–49. 45 Aaronson, Trade and the American Dream, pp. 82–3. 46 Statement by president of the board of trade re. Geneva negotiations, 29 Oct. 1947, NAC: RG25/3845/9100–L-2–40 pt. 1. 47 UK, Hansard, 466 H.C. Deb, 5s, 29 Jan 1948, col. 1243. 48 UK, Hansard, 466 H.C. Deb, 5s, 29 Jan. 1948, col. 1265–70. 49 UK, Hansard, 466 H.C. Deb, 5s, 29 Jan. 1948, col. 1281. 50 UK, Hansard, 466 H.C. Deb, 5s, 29 Jan. 1948, cols 1254–6. 51 UK, Hansard, 446 H.C. Deb., 5s, 29 Jan. 1948, col. 1328. 52 C.R. (47) 4, ‘Present Nature of the Commonwealth Relationship’, 15 Sept. 1947, PRO: CAB134/117. 53 Canadian HC in London to SSEA, tel A.137, 19 Feb. 1947, DCER, 1947, vol. 13, p. 1212. 54 Uncorrected notes prepared by G. E. B. Shannon for a lecture to new Foreign Service Recruits, 8 Dec. 1947, PRO: DO35/2793.

322 Notes 55 ‘Expect Other Pacts Will Follow Geneva’, The Financial Post, p. 1. 56 Canada, Hansard, Fourth Session, 20th Parl., 9 Dec. 1947, p. 103. 57 Pickersgill and Forster, eds, The Mackenzie King Record, Vol. 4 1947–8, p. 86. 58 Canada, Hansard, Fourth Session, 20th Parl., 9 Dec. 1947, p. 107–112. 59 Canada, Hansard, Fourth Session, 20th Parl., 9 Dec. 1947, p. 117. 60 Michael Hart has concluded that the GATT agreements represented a solution to the dilemma of balancing relations with the UK and US because it retained Canada’s commercial connections with both at a time ‘of changing loyalties and realities’. See ‘Almost but not quite: the 1947–1948 Bilateral Canada-U.S. Negotiations’, American Review of Canadian Studies, 19, 1, Spring 1989, pp. 28, 44–5. 61 Australia Hansard, 15 Oct. 1947, p. 779. 62 Agendum on GATT and ITO, the Geneva Trade Conference’, prepared by department of postwar reconstruction, June 1948, A1838/1/item 711/1/1. Although the date is June 1948, this document was obviously written towards the end of the Geneva conference or some time before 18 Nov. 1947. 63 Australia, Hansard, 11 Nov. 1947, pp. 1880–8. 64 See for instance Fadden and Anthony, 26 Feb. 1948, Australia, Hansard. 65 See for instance Menzies, 26 Feb. 1948, Australia, Hansard. 66 Australia, Hansard, First Session, 18th Parl., 3 March 1948, p. 335. 67 Australia, Hansard, First Session, 18th Parl., 26 Feb. 1948, p. 245. 68 Australia, Hansard, 26 Feb. 1948, p. 236, p. 237. 69 Bury to Coombs, letter, 11 Feb. 1948, AA: CP855/S2B1. 70 Australia, Hansard, 3 March 1948, p. 342. 71 Australia, Hansard, 3 March 1948, p. 343. 72 New Zealand, Hansard, 29 Oct. 1947, pp. 317–19. 73 New Zealand, Hansard, 12 Nov. 1947, p. 626. 74 New Zealand, Hansard, 12 Nov. 1947, p. 922. 75 New Zealand, Hansard, 12 Nov. 1947, p. 626. 76 Debates of the House of Assembly, Union of South Africa, Fifth Session, 9th Parliament, vol. 62, 23 March 1948, cols 3814, 3818, 3824.

Conclusion: a Future for the Commonwealth and for Commonwealth History 1 J. D. B. Miller, The Commonwealth in the World (London, 1965, 3rd edition), p. 229. 2 W. D. McIntyre, ‘The Strange Death of Dominion Status’, JICH, 27, 2 (May, 1999), p. 200. McIntyre argues that the idea of dominion status was sufficiently ambiguous to help bring newly decolonized nations into the Commonwealth. 3 CR (47) 4, ‘Present Nature of the Commonwealth Relationship’, 15 Sept. 1947, PRO: CAB134/117. 4 Hector Mackenzie, ‘An Old Dominion and the New Commonwealth: Canadian Policy on the Question of India’s Membership, 1047–49’, JICH, 27, 3 (Sept. 1999), p. 103.

Notes 323 5 C.P. (48) 244, ‘The Commonwealth Relationship’, memo by prime minister, 26 Oct. 1948, PRO: CAB129/30. 6 Waters, The Empire Fractures, p. 5. 7 As some have done by considering the impact of the Cold War on the Commonwealth and Empire. See John Kent, British Imperial Strategy and the Origins of the Cold War 1944–49 (Leicester and New York, 1993) and Ritchie Ovendale, The English-speaking Alliance: Britain, the United States, the Dominions and the Cold War, 1945–1951 (London, 1985). 8 It was more difficult for Canada to retain economic connections with Britain because of the proximity and attraction of the American market and American suppliers and becasue as a dollar country Canadian exports were doubly costly for dollar-starved members of the Commonwealth. See Bruce Muirhead, ‘Britain, Canada and the Collective Approach to Freer Trade and Payments, 1952–57’, JICH, 20, 1 (Jan. 1992), pp. 108–26 and Tim Rooth, ‘Britain’s Other Dollar Problem: Economic Relations with Canada, 1945–50’, JICH, 27, 1 (Jan. 1999), pp. 81–108. 9 W. D. McIntyre, ‘Britain and the Creation of the Commonwealth Secretariat’, JICH, 28, 1 (Jan. 2000), p. 135. 10 In 1948, Bevin proposed establishing a Consultative Council to facilitate daily communication within the Commonwealth on questions of foreign policy. This proposal came to naught. But as Christopher Waters points out, the proposal itself is significant, revealing that ‘Bevin had not given up his quest for unity of purpose and action within the Commonwealth.’ Waters, The Empire Fractures, pp. 131–2. The Suez Crisis of 1956, in which Australia and New Zealand supported Britain, was the last time Britain could count on these two dominions as automatic allies and represented the last time Britain tried to achieve diplomatic unity with the dominions. 11 One example of this was Bevin’s ill-fated groundnuts scheme. See also Blackwell, Clinging to Grandeur. 12 See Gerard Bouchard, Genèse des Nations et Cultures du Nouveau Monde: Essai d’histoire comparée (Montreal, 2000), a comparative analysis of the evolution of new world societies since the sixteenth century. One question that Bourchard focuses on is whether new world societies reproduce that of the mother-country or break it. 13 Most studies do not go as far as World War II. Indeed, most stop at World War I, clearly an event of seminal importance in the development of colonial nationalism. See, for example, Eddy and Schreuder, eds, The Rise of Colonial Nationalism, Berger, Sense of Power and Sinclair, A Destiny Apart. 14 Holmes, The Shaping of Peace, vol. 1, p. 141.

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Index Aaronson, Susan Ariel 246 Acheson, Dean 157–8, 183, 188, 193 Addison, Lord 139, 145, 160 Afrikaner nationalism, see South Africa Amery, L. S. 17, 43, 84, 120, 138 Anderson, Clinton 149, 197 ANZAC agreement 77, 116–17 UK reaction to 117 US reaction to 116–17 see also Australia, foreign policy; New Zealand, foreign policy appeasement 76, 149 Article VII, see Mutual Aid agreements Atlantic Charter 91 point four 28 Attlee, Clement 8, 45, 93, 94, 149, 150, 154, 160, 262 Geneva negotiations 205, 214, 223–4 Australia country party 60 immigration policy 63 Irish-Australians 4, 65 Labor party 63–4, 66–7 national identity 62–3, 65–6, 162, 267 Australia at war declaration of war against Germany 1 declaration of war against Japan 10, 63 fear of invasion 6, 10, 57, 63, 263 ‘great betrayal’ 63 Australia, foreign policy 91 as imperial foreign policy 61–2 attitudes toward Commonwealth 62, 65–7, 68, 95, 162, 173 Department of External Affairs 65 independence of 63–5, 68, 162 Labor party 63–8 marginalization in international affairs 114, 116, 119, 152, 161

middle power 92; proposals to redefine Commonwealth 65, 67, 122; role of Commonwealth in 10 relations with New Zealand: alignment with New Zealand in the Commonwealth 77, 114, 116–17 relations with UK 111: enduring attachment to 63, 65–6, 68, 90; impact of World War II on 6, 10, 63–4; imperial preference as barometer of 69, 162, 254–5; independence of 64, 65, 119, 162; subordination to 63, 65, 68 relations with US 57, 67, 90: fear of US economic power 68, 162; impact on Commonwealth 12; impact of Commonwealth connection on 67, 69, 95; suspicion of US 67–8, 162 Australia, trade policy agricultural lobby groups 60, 162 Article VII 68, 96, 119, 147 Asian markets 59, 264 convertible currency 61 criticism of UK trade policy 100–1, 149, 151, 180 domestic reaction to the GATT agreements 225, 226, 253–6 exports 59 full employment 59, 96, 100, 117, 118, 119, 151, 171–2 national interests 255–6 policy on imperial preference 59–60, 61, 68, 95, 121, 124, 173, 184; impact of wool on willingness to give up 61, 149, 194, 163; symbolism of 68–9, 162, 184, 230–1, 254–5; politicization of 60, 69, 173,

339

340 Index Australia, trade policy (continued) 181–2, 184, 194, 253; cap on concessions 162–3, 166; as protection 59, 180, 231, 235, 253 protection 59, 96, 180 quotas 60 sovereignty of 147, 149, 152, 162 sterling area 61, 150 tariff board 21, 231, 233 tariff liberalization 59, 68, 119, 161, 180 UK market 61, 232–3, 253 US market 61, 254 wool 59, 61, 163, 186, 197, 254 Baldwin, Stanley 26 Balfour Report (1926) 8 Baruch, Bernard 37 Batterbee, Harry Sir 77–8 Beaverbrook, Lord 43, 113, 120 Bennett, R. B. 20–1 Berendsen, Carl 76, 113, 143 Berle, Adolf 35 Bevin, Ernest 45, 139 Commonwealth customs union 208–9, 239, 240, 243–4 Geneva negotiations 212, 214, 215, 217–18, 219, 245 UK greatness 47 Blackmore, J. H. 252 Boothby, Robert 154, 248 Botha, Louis 84 Britain, see United Kingdom British Commonwealth, see Commonwealth Brown, Winthrop 216–18, 247 Bruce, Stanley 21, 61, 63, 66, 139 Bryce, Robert 49, 51 Bull, Hedley 31 Burchell, C. J. 81, 82 Bury, L. H. E. 156, 255 Campbell, R. M. 97 Canada colonial mentality 54 French Canadians 4 national identity 56–7, 267 Canada at war 1, 52

Canada, foreign policy attitudes towards Commonwealth 11, 53–4, 55, 94–5, 100, 111, 123, 124, 126, 168, 251 Department of External Affairs 49, 112 functional principle 54–5, 112 independence of 52, 55–6 internationalism 11, 54, 123 middle power 11, 92 national unity 11, 19, 52, 90 North Atlantic triangle 56, 111, 126, 127, 214, 218, 252 opposition to Commonwealth centralization 111, 123–4, 168, 209 relations with UK 11, 19, 51–2, 112, 251; subordination to UK 48, 52–3, 55, 56, 90 relations with US 48, 55–6, 131, 252, 263 Canada, trade policy benefits of imperial preference to exports 50 consultation with US on postwar trade 113–14, 136–7 continentalism 55, 120, 129, 131, 160, 161, 184, 209–10, 252, 264 convertible currency 50 domestic reaction to GATT 250–2 exports 49 financial crisis 251 helpful fixing between UK and US 56, 131, 205, 210, 215, 218, 225 imports 50 multilateralism 50, 51, 52, 96,111, 120, 126, 127, 129, 136–7, 160, 161 policy on imperial preference 19, 50–1, 55, 57, 96, 98, 115, 171; politicization of 51, 52, 53; imperial preference as bargaining chip in trade negotiations 224; closing preferential margins 50, 98, 170, 177, 178; view of bound margins 170, 171, 173, 178; proposals to modify imperial

Index 341 preference 114–15, 118, 119; proposals to unbind preferential margins 115, 119–20, 178, 221 sovereignty of 53, 147, 148, 152–3, 178, 222, 250–1 sterling markets 126, 127, 131–2 sterling-dollar trade 126–32 tariff liberalization 50, 94, 100, 114 UK market 49, 160 US market 49, 51 Canberra Pact, see Anzac Pact Casey, Richard 91 appointment to London 62 appointment to Middle East 64 appointment to US 12–13, 67 Chamberlain, Neville 25 Chiang K’ai-shek 116 Chifley, Ben 59, 68, 149, 150, 151, 152, 173, 180, 189 Church House conference, see Trade and Employment conference, preparatory Churchill, Winston 1, 53, 113, 129, 133 attitude towards Empire and Commonwealth 42–3, 77, 123–4 imperial preference 29, 124–5, 154 relations with US 28, 35, 42 Clark, W. C. 128, 161 Clarke, R.W. B. 41, 44–5 Clayton, Will 36, 157 Congress 158, 193, 194–5 freer trade 39, 134 Geneva conference 185, 193; meetings with Cripps 202–3, 205–6, 211–12, 214–15; negotiations with Australia 187–98; negotiations with UK 200–20 imperial preference 140, 192, 206, 213 postwar planning 33 resignation 219 Clutterbuck, Alexander 41 Cockram, Ben 150 Cold War 158, 216, 239, 242, 245, 247

impact on Geneva conference 213, 216 impact on Havana conference 239–40 Commonwealth bond 104, 113, 141 British centrality in 4–6, 8, 11–12, 44, 47, 55, 112, 117, 174 constitutional evolution 3–4, 170, 244 decentralized approach 89, 262–3 diplomatic unity 4–5, 250: limits on UK authority 260–1 as family 2, 94–5, 107, 200, 208, 260 history of 2, 8–9, 25 problems of definition 141, 260 as subset of international community 199, 236–7, 242, 263–4 Commonwealth consultation and Anglo-American discussions 94–5, 139, 141–4, 145, 148, 156 Australian dissatisfaction with 92, 95, 100–1 benefits of 122, 174, 265 Canadian dissatisfaction with 92, 100 Labour government 139, 165–6 New Zealand dissatisfaction with 77, 100 UK dissatisfaction with 93, 101, 144, 146 in wartime 2, 13, 93, 95–102,106–12, 117–22, 122–6, see also planning for postwar world, trade and employment conference Commonwealth cooperation 224 foreign policy 5, 67, 92–3, 123–4 national interests 89, 111, 143, 159, 166, 198, 220, 221, 235, 237, 249, 261 postwar world 11–12, 91–2, 99, 123–4, 139, 155, 157, 165–6, 174, 182, 198–9, 229, 236, 237, 243, 260 tariff negotiations 122, 156, 189, 190, 197

342 Index Commonwealth cooperation (continued) third great force 2, 6–8, 117, 154, 245 Commonwealth, redefining 3, 5, 13–16, 67–8, 90, 92–3, 117, 122–4, 154–5, 174, 182, 220, 235–6, 260–7 US pressure on 12, 30, 32 Commonwealth trade as bond 14, 19, 26, 248 Commonwealth customs union 208–10, 220, 243–4, 245 dominions as competitors 21–3 importance of US market 102, 175 limitations of 21, 23, 26, 102, 200, 210, 220, 229, 242, 248–9, 263, 264 national interests 20–1, 23, 25–6, 89, 99, 100, 110, 111, 126, 182, 220, 235, 249 option to multilateralism 44, 208–9 Commonwealth trade meetings in wartime 95–102, 106–12, 117–22, 122–26 see also Trade and Employment conference; see Ottawa Imperial Economic Conference Congress loan to United Kingdom 140, 157–8 Republicans in 158, 183 tariff liberalization 96, 102, 109, 114–15, 137, 148, 212 wool legislation 149, 188, 194–6 Coombs, H. C. Australian trade policy 59, 96, 100 Australia–UK negotiations 231, 232 Australia–US negotiations 187–98 Commonwealth consultation 65, 95, 101 consultation with cabinet 193–4, 214 Geneva conference 189, 190, 191, 194, 207, 210, 216, 224, 226 imperial preference 60, 61, 97, 166–7, 168–9, 173, 176, 180–1, 184

UK–US negotiations 218 Cranborne, Lord 11, 123 Cripps, Sir Stafford 45, 201 bound margins 222, 223 Geneva conference 199–200 imperial preference 43, 181, 185 loan negotiations 150, 153 meetings with Clayton 202–3, 205–6, 211–12, 214–15 UK trade policy 43–4, 46–7, 165 Crowe, C. T. 213 Curtin, John 60, 64, 66–7, 68, 95, 116, 122, 123, 124, 125 Dalton, Hugh 40, 45, 151, 183, 265 Dedman, John 68, 196 on GATT agreements 253–4 Geneva conference 196, 197 Hanava conference 244 Depression 20, 32 fear of return 111, 162 Deutsch, J. J. 49 dominion status ambiguity surrounding 3–5, 107, 155 imperial preference 84, 97 in international community 4, 93 perceived as colonies 4–6, 13, 113 subordinate to United Kingdom 4, 13, 93, 169, 170 terminology 3, 261 see also independence of dominions Douglas, Lew 212, 215, 240 Drummond, I. M. 258, 264 Eck, H. J. van 118–19 Elton, Lord 2 Evatt, H. V. 111, 161 approach to diplomacy 64–5, 114, 116–17, 119 attitude towards Commonwealth 65 attitude towards UK 57, 101, 111, 116–17, 119, 147, 162 attitude towards US 57, 95, 111, 116–17 on GATT agreements 254

Index 343 Feis, Herbert 38 Fieldhouse, D. K. 118 Fisher, A. G. B. 118 Food and Agriculture Organization (FAO) 91, 93, 95 Fraser, Peter 74, 151 Commonwealth 76, 77, 123, 266 foreign policy 70, 116 Geneva conference 214 imperial preference 124–5, 148 full employment, see Australia, trade policy General Agreement on Tariffs and Trade 46, 246 reaction to 246–59 see also Trade and Employment conference Geneva Conference, see Trade and Employment conference Grigg, Edward 44 Halifax, Lord 76, 123, 125, 142 Hall, H. Duncan 2 HallPatch, Edmund 217 Hancock, W. K. 9, 17, 25, 27, 29, 248, 258, 264 Hanlon, E. M. 60, 184 Hart, Michael 223 Hasluck, Paul 65, 68 Havana Conference, see Trade and Employment conference Hawkins, Harry 103, 104, 106, 110, 169, 172–3, 192, 216 Helmore, J. R. C. 167, 171, 175, 180, 184 Geneva conference 190, 192, 226, 227, 228 UK–US negotiations 200, 205, 210, 217–18 Henderson, Sir Hubert 41 Henderson, Rupert 67–8 Hertzog, J. B. M. 1, 8, 84, 86, 87 Hitler, Adolf 32 Holland, R. F. 263 Holloway, Dr 97–8, 99, 181 Geneva conference 189, 190, 193, 197, 207, 224, 225, 228 Holmes, John 139, 267

Holmes, Stephen 166 Hopkins, Harry 33, 132–3 Hull, Cordell 116 Geneva negotiations 195 imperial preference 28, 29, 34, 37, 133–4 resignation 39, 134 US trade policy 33, 42, 65, 103, 106 US–Australia tariff negotiations 110–11 Imperial preference as Commonwealth bond 14, 15, 27, 39, 43, 51, 89, 104, 135, 138, 154, 156, 160, 185, 212, 219, 241–2, 243, 248, 249, 259 link to US financial aid 37–8, 138, 141, 142, 143, 148, 157–8, 202, 204–5, 212, 214 proposals to eliminate 202, 206 proposals to extend 160, 167, 240 proposals to modify 40, 41, 94, 98, 105, 118–9, 140, 142, 144, 146, 148, 170–1, 173, 175–6, 226: linked to lower tariffs 61, 97, 102, 103–5, 109, 121, 140–2, 145, 160, 164, 166, 173, 175 proposals to retain 40, 104, 160, 175–6, 181 quotas 23, 60, 152, 163 regional preferential blocs 238, 239–42 residual 142, 146 UK defence of 97, 104, 105, 109, 135, 140, 141, 147, 160: at Geneva 199–200, 208–9, 223: at Havana 239 UK–US dispute over future of 15, 28, 104, 105, 108, 118, 142, 146–7, 181 UK–US agreement on negotiations of 150, 170, 172: dominions’ reactions to 145, 148, 151, 152, 170 see also margins of preference; trade policies of UK, US and dominions

344 Index Imperial preference, negotiations of automatic rule 144, 168–70, 174, 180–1, 232, 233 compensation to beneficiary 159, 171, 174, 178, 180, 203, 204 effect on Commonwealth 259 no new preferences 144, 239 preferential margins not to be widened 144, 230, 234 survival of 198, 226, 246–7, 248, 249 see also tariff negotiations independence of dominions 3, 12, 182, 244, 260, 266 ambiguity of dominions’ relations with UK 13, 155 ambiguity of Statute of Westminster 3 attachment to UK 4, 107 civic identity 266–7 effect on diplomatic unity of Commonwealth on 5, 8, 53, 94: appearance of 6 impact of foreign policy on 4 impact of imperial preference on 15, 20, 26–7, 90, 221 recognition by external governments 4, 8, 12, 13, 30, 52–3 recognition by UK 5, 95, 107, 123, 124, 182, 250 symbols of 4 terminology 3, 261 see also dominion status India 169 protection for industrial development 172 International Bank for Reconstruction and Development 13, 33, 153 International Monetary Fund 13, 33, 153 International Trade Organization 15, 138, 163–4, 180, 183–4, 185, 211, 213, 214, 216, 241 ratification of 245–6 see also Trade and Employment conferences; trade charter Inverchapel, Lord 219

Johnson, Nelson 116 Jordan, W. J. 100 Kaiser, Wolfram 243 Keenleyside, Hugh 25 Keynes, Lady 102 Keynes, Lord J. M. loan negotiations 142, 143, 153 postwar trade policy 41–2, 94, 102, 130–1, 135 King, W. L. M. (Mackenzie King) attitudes towards UK and Commonwealth 54, 113, 123–4, 152, 252, 266 Geneva negotiations 214, 223, 224, 251 imperial preference 125–6 national unity 52 opposition to bound margins of preference 25, 53, 178, 221, 223 relations with US 55 sovereignty of Canada 1, 52, 123, 147, 178 Kipling, Rudyard ‘Our Lady of the Snows’ 19–20 Laurier, Wilfrid 19, 252 Law, Richard 102–3, 106, 108 Leacock, Stephen 3 Lend-Lease 28, 69, 97 cancellation of 38, 137 repayment of 37, 131 Le Pan, Douglas 209, 245 Liesching, Percivale Anglo-American trade discussions 103, 104 Commonwealth trade discussions 95–6, 98, 99, 101, 108–9, 110, 112, 118 loan negotiations 140, 150: Commonwealth consultation on 142–3, 145–6, 147, 149 loan to UK, Australia 162 loan to UK, Canada 128, 160, 183 loan to UK, United States, see ch. 5 implications for imperial preference 133–4, 137, 140, 153, 186, 206, 212

Index 345 ratification of 157–8 Lyttelton, Oliver 248 MacDonald, Malcolm 92 Mackintosh, W. A. 48, 49, 97, 118, 119–20, 128 Malan, D. F. 86 criticism of Smuts 86, 87, 88 Mansergh, Nicholas 2, 9, 262–3 margins, preferential American reaction to Canada–UK agreement 247 Canadian intention to unbind 50, 53, 170–1, 173, 174, 178–9 Canada–Australia negotiations 225, 226–7 Canada–South Africa negotiations 224, 225, 226, 228 Canada–UK negotiations 221–9 contractual obligation to bind 23, 25 explanation of 21, 53 gentleman’s agreement 176, 222–9, 250 how to narrow 98, 168–9, 175–6, 222 importance to imperial preference system 171, 247, 251 significance for Commonwealth relations 53, 120, 178, 223, 226 Marshall, George 195, 196, 215, 217, 218 Marshall Plan, see United States, foreign policy McCarthy, M. E. 97, 101, 143, 178 McIntosh, Alister 77, 117 McKinnon, H. B. 118, 227 Canadian trade policy 49, 96, 98 imperial preference 170–1, 177, 178–9 McKinnon, Malcolm 76 Meade, James Commonwealth 101, 107, 110, 129, 150, 152, 167 cooperation with US 47, 135 UK trade policy 39–42, 43, 44, 44–5, 103, 113

Melville, Leslie 118, 199, 120–1 Miller, J. D. B. 260–1 Millikin, Eugene 158, 183 Milner, Alfred 84 Moffat, Pierrepont 48, 52–3 Morgenthau, Henry 133 Morrisson, Herbert 45 Mutual Aid agreements 40, 44, 79, 91 Mutual Aid agreements, Article VII (the consideration) 100 Australia 30, 57, 68, 119, 147, 181 Canada 30, 48, 98 implications for imperial preference 28–30, 37, 38, 39, 97, 103–5, 108–9, 119, 124–5, 133–4, 141, 144, 148, 186 New Zealand 30, 69, 78 South Africa 30, 79 UK 28–30, 39, 44, 95–6, 129, 137, 148, 166 Nash, Walter 69, 74, 77 on GATT agreements 256 Geneva conference 189, 192, 193 Havana conference 244–5 trade policy 70–1, 164 Nehru, Jawarlahal 172 see also India New Zealand colonial mentality 75 national identity 10, 74–5, 267: significance of imperial preference to 74, 78 New Zealand, foreign policy attitude towards Commonwealth 77, 123, 152 Department of External Affairs 10, 76 independence of 75–7 relations with Australia 75: alignment within Commonwealth 77, 114, 116–17 relations with UK 10, 69, 74–7, 78–9, 90, 257: imperial preference as barometer of 78, 256 relations with the US 69, 77–8, 116

346 Index New Zealand, trade policy bulk purchase agreements 72, 78, 100, 164, 257 commercial discrimination 240 domestic reaction to GATT agreements 256–7 exports 71, 72, 163 freer trade 69, 70 imports 71 industrial development 70, 71, 163 national interests 71, 257 policy on imperial preference 44, 71, 72, 74, 78, 97, 121, 124, 163–4 protection 71 quantitative restrictions (import selection) 69, 70–1, 74, 100, 146, 151, 163, 257: US opposition to 71, 163 sovereignty of 149, 152 sterling 71, 164 UK market 69, 72–3, 74, 100, 121, 164 US market 73, 164 Nicholls, Heaton 83, 148 O’Mahoney bill, see US trade policy, wool legislation Ottawa Imperial Economic Conference (Ottawa conference, 1932) 20–6, 34, 159, 165, 179, 220, 230, 236, 249, 251, 256, 261 abrogation of 171, 194 national interests 20–1, 23, 25, 177–8 Overton, Sir Arnold 98, 101 Pearson, Lester B. 49, 51, 53, 129, 143–4, 146–7, 209 Penrose, E. F. 134 planning for postwar world 13, 31, 91, 103 Cairo Conference 1943 116 importance of free trade to international peace 27, 33, 36, 165, 172, 183 understanding causes of breakdown in international relations 14, 32, 80

planning for postwar world, commerce Anglo-American discussions on 94, 102–6, 112, 113, 132–7 bilateral vs multilateral proposals for tariff reduction 38, 96–9, 103, 106, 110 Canadian–American discussions 114–16, 136–7 necessity of agreement between UK and US 39, 121–2, 125, 135 proposals to reduce tariffs 96, 118, 135 pessimism about UK–US agreement on 120 US leadership 35–9, 42, 73–4, 81, 91, 111, 116–17, 136–7, 158, 161, 183 Pressnell, L. S. 109 Prime Ministers conference 1944, 122–6 imperial preference 124–6 Rasminsky, Louis 49, 57 Reciprocal Trade Agreements Act (RTAA) 26, 33–4, 42, 61, 94, 96, 103, 114, 136, 158, 162–3 renewal of 38, 141, 142 see also US trade policy Reid, Escott 4 Reisman, Simon 51 Geneva conference 201 Ritchie, Charles 56, 154 Robbins, Lionel Commonwealth 93, 129, 144, 146, 147 economic relations with US 29, 42, 133 imperial preference 141 UK trade policy 137 Robertson bill, see US trade policy, wool legislation Robertson, Norman 170 Canadian trade policy 49, 120, 172 Commonwealth 127, 147, 182 foreign policy 111–12 Geneva conference 215, 227, 250 imperial preference 48, 115–16

Index 347 views on US trade policy 114, 115–16 Roosevelt, F. D. Commonwealth and Empire 35 death 38 foreign policy 33 imperial preference 29, 37, 125 Lend-Lease 28 royal wedding 246 Salter, A. 248 Savage, Michael Joseph 1 Shackle, R. J. 169 Sharp, Mitchell 51, 55–6 Smoot-Hawley tariff, 34 see also US trade policy Smuts, J. C. 122 attachment to UK 86, 266 Commonwealth 11, 83, 124, 152, 165 criticism by Afrikaner nationalists 86–8, 164 Geneva conference 228 imperial preference 81, 84, 125, 164–5 leadership 1, 79, 86, 164–5 South Africa party 84–6 views of international relations 80 South Africa Afrikaner nationalism 11, 84–7, 164, 257; imperial preference 84, 88, 164; republicanism 86, 87, 88 Dominion party 86 hereniging 86 national unity 79, 83–4, 86, 165, 267 Nationalist party 84, 258, 266 Purified National party 86 South Africa party 86 South Africa at war 79 cricitism of Afrikaners 79, 87 debate about entry into 1, 86–7 South Africa, foreign policy attitude towards Commonwealth 83, 88–9 Department of External Affairs 84 independence of 84, 86, 170

proposals to reform Commonwealth 83, 122 relations with UK 11, 83–4, 88, 90; impact on national unity 86, 257–8 relations with US 79 southern Africa 82, 83 South Africa, trade policy domestic reaction to GATT agreements 257–8 exports 80 gold 80 gold mining 79, 88, 89 imports 80 industrial development 80, 88 policy on imperial preference 44, 80–2, 84, 88–9, 94, 121, 125, 164, 228 proposals to reduce tariffs 118–19 protection 80–1, 82, 83, 88–9, 97, 164 quantitative restrictions 81 tariff liberalization 82–3, 88 trade treaty with Germany (1928) 84 UK market 81–2, 88 US market 81 wool 81 Soviet Union 79 non-attendance at trade conferences 168 see also Cold War St Laurent, Louis 252 Stalin, Joseph 216 Stallard, Col. 86 Stals, Dr 258 Statute of Westminster (1931) 3, 26, 93 Australian objection to word ‘independence’ 62 ratification by Australia 10, 63 ratification by New Zealand 10, 47 sterling area conserving convertible reserves 40, 42, 43–4, 61, 71, 126–7, 150 dollar pool 217, 234

348 Index sterling inconvertibility of 50, 127, 201, 203, 251 Stevens, Roger 245 Stimson, Henry 195 Taft, Robert 158 Tange, Arthur 65 tariffs and self-government 15, 17, 19 tariffs, liberalization of formulas to lower tariffs 106, 118–19 implications for international relations 183, 185, 193 pessimism about success 175, 183–4, 185 see also planning for postwar world, commerce; individual country trade policies tariff negotiations, bilateral (prewar) US–Australia 26 US–Canada 26 US–UK 26 see also Ottawa Imperial Economic Conference tariff negotiations, bilateral (wartime) US–Australia 41, 61, 95, 96, 98–9, 108, 110–11, 116 US–New Zealand 41, 99, 108, 110 US–South Africa 41, 99, 110 tariff negotiations at Geneva conference exchange of lists 174, 186 intra-Commonwealth 179–80, 229 see also tariff negotiations at Geneva and bilateral pairings tariff negotiations at Geneva conference, Australia–UK 228–9, 229–36 tariff negotiations at Geneva conference, Australia–US 186–199, 232, 233 Commonwealth consultation 189, 190, 197 effect on British and dominions negotiations with US 189, 192 strain on Commonwealth 191, 194

tariff negotiations at Geneva conference, Canada–Australia 225, 226–7 tariff negotiations at Geneva conference, Canada–South Africa 224, 225, 226, 228 tariff negotiations at Geneva conference, Canada–UK 221–9 tariff negotiations at Geneva conference, Canada–US 186, 189–90, 192, 225–6 tariff negotiations at Geneva conference, New Zealand–US 192, 193, 198 tariff negotiations at Geneva conference, South Africa–US 189, 192, 193, 198 tariff negotiations at Geneva conference, UK–US 186, 190, 192, 199–220, 222, 225 colonial concessions 217, 219 Commonwealth consultation 206–7, 219 convertibility crisis 203 dominions’ concessions 205, 207, 216, 218, 220 rubber concession 210, 217 tariffs, preferential, see imperial preference Toit, F. J. du 81 Towers, Graham 49, 127–8, 131 Trade and Employment conference (Geneva conference) Commonwealth cooperation during 190 imperial preference 190 intra-Commonwealth negotiations at 159 possibility of breakdown of 190, 194, 196, 206, 207 postponement of 157 see also tariff negotiations Trade and Employment conference (Havana conference) Commonwealth consultation 240–1, 243–5 regional preferential blocs 238, 239–42 Western European Customs Union 242–6

Index 349 Trade and Employment conference, Commonwealth preparatory Church House 165–8 Spencer House 174–82, 222 Trade and Employment conference, first session of the preparatory committee (Church House) 168–74 Trade and Employment proposals, see trade charter trade charter 151, 153–4, 165, 166, 169–70, 185, 193 amendments to 172, 238 Australian reaction to 151–2, 161, 167 Canadian reaction to 152–3, 168 industrial development 172 New Zealand reaction to 151–2, 163, 167 rules for negotiations affecting imperial preference, 144, 166, 168–9 South African reaction to 152–3, 164, 167 see also imperial preference Truman, Harry S. 219 becomes president 38 Congress 183 GATT agreements 247 Geneva conference 215–16 tariff negotiations 136, 183 veto of wool legislation 195–6 United Kingdom Labour government 45, 47, 139, 140, 154, 160 United Kingdom, economy challenges to 45, 129, 131, 132–3, 134, 138, 183–4, 190, 201, 249 convertibility crisis 203, 208 recovery 45–6, 99, 134–5, 140, 150, 151, 158–9, 183, 241 sterling debt 234 see also loan to UK United Kingdom, foreign policy attitudes towards Commonwealth 1–2, 11, 42–3, 91–2, 93, 104, 105, 107, 109–10, 123, 182, 220, 229, 250, 258–9

attitudes towards Europe 242–3 attitudes towards Soviet Union 213 Commonwealth as third great force 2, 6–8, 117, 154, 245 conflict between Commonwealth and Amerian special relationships 12, 39, 104, 108, 111–12, 207–8, 212, 213–14 decline 5, 43, 47, 132–3, 235, 240, 242 imperial preference as symbol of UK independence 160, 248 leadership of Commonwealth 4–5, 11–12, 13, 39, 44, 47, 68, 112, 182 relations with US 12, 29, 35, 37, 38, 39, 42–3, 47, 96, 104, 112, 117, 121, 133, 137; at Geneva 199, 211; as junior partner 212–13 reliance on Commonwealth 145, 150, 151, 159, 245, 250, 265–6 status in postwar world 29, 39, 43, 47, 243, 249 United Kingdom, trade policy balance of payments 41, 43 bilateralism 41, 45, 106, 110 Commonwealth customs union 239 consultation with Canada 130, 144, 146–7, 177 domestic reaction to modification of imperial preference 227, 241–2, 248–9 exports 158, 230 free trade 17, 20, 93–4 multilateralism 43, 93–4, 99–100, 103, 110–11, 131, 136, 160, 165 necessity of agreement with US 96, 130, 150, 154, 211 opposition to quantitative restrictions 40 policy on imperial preference 19, 20, 40–1, 43, 47, 94, 95–6, 104–5, 118, 120, 121, 125, 135, 138, 144, 146, 159, 160, 175–6, 225: consideration of dominion views 44, 142; limited flexibility in negotiations over

350 Index United Kingdom, trade policy (continued) imperial preference 98, 176, 222–3, 228; opposition to unbinding of preferences 120, 177 protection 20, 43–4 regional preferential blocs 239–42 retreat from liberal trade practices 120, 136, 137, 183–4, 203–4 sovereignty of 153, 229 support for liberal trade practices 203 unilateralism 110, 142, 145 use of quantitative restrictions 43, 203 Western European Customs Union 239, 242–6, 264 United Nations Organization 43 San Francisco Conference 76 United States anti-imperialism of 30, 35, 42 as thirteen colonies 3, 17 United States, foreign policy attitudes towards Soviet Union 158, 213 isolationism 195–6, 205 leadership in postwar world 35–6, 91, 158, 239 Marshall Plan 202, 204, 208, 210, 212, 213, 214, 216, 242–3 relations with dominions 12–13, 48, 107 relations with UK 133, 247: at Geneva 199, 214 United States, trade policy accessibility of US market 34, 36, 102 bilateralism 98–9, 96, 103, 106, 136 domestic reaction to GATT agreements 247 freer trade 27, 28, 33–4, 35, 36, 158 opposition to quantitative restrictions 71, 163 multilateralism 96, 98–9, 103, 106, 110, 158

policy on imperial preference 15, 27, 28, 34, 35, 38, 97, 103, 115, 125, 175, 192, 199, 211: financial leverage 37–8, 138, 141, 142, 143, 148, 157–8, 202, 204–5, 212, 214 preferential agreements with Cuba and Puerto Rico 97 public opinion 34, 37, 102, 144, 245–6 Republican opposition to liberalization 158, 183 role of State Department in formulating 33–4, 39 US leadership in trade liberalization 158, 161, 183, 188, 195 values 240 wool duty 61, 149, 186 wool industry 188 wool legislation 187, 193, 194–5, 201: import fee 188; State Department lobbying against 193, 195; veto of 195–6 see also Lend-Lease, Mutual Aid agreements, RTAA Vandenberg, Arthur

158, 183

Waterson, S. F. 80, 82, 164 Havana conference 244 Welles, Sumner 28, 34 Wheare, K. C. 5 White, G. D. 74 Wilcox, Clair 169 Geneva conference 193, 200, 202, 204, 205, 210–11, 213 Havana conference 240 Wilgress, L. D. 49 Canada–US negotiations 190, 192 Canada–UK negotiations 222–8 Havana conference 244 UK–US negotiations 207, 210, 213, 216, 218 wool dispute 189, 191, 197 Wilson, Harold 217, 219, 240, 248, 249 Wilson, Kenneth 188

Index 351 Winant, John 91 Wood, F. L. W. 74 wool, see US trade policy World War II dominions’ declarations of war 10, 13, 52, 86

1,

enthusiasm for Empire and Commonwealth 1–2, 27 setback for dominions’ sovereignty 6, 13, 52–3 US neutrality 13, 28, 32 Wrong, Hume 9, 49, 53–4, 111–12

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