Cablegram 148[A] LONDON, 3 September 1943, 8.40 p.m.
During the past few days I have had two long conversations with
Keynes who leaves for America tomorrow as part of the delegation
for private talks with regard to Article 7 (see Dominions Office
D.No. 614, August 31st ).
The two questions that Keynes will principally deal with are
exchange and currency agreement and post war lending, although as
a member of the delegation he will be concerned with all the
subjects to be discussed.
With regard to exchange and currency Keynes is not unhopeful of
reaching agreement with White who will be the principal
representative of the United States Treasury. He feels some doubt
as to the attitude of the American administration even if such
agreement is reached, owing to the great hostility to any
arrangement in many influential quarters in the United States.
With regard to post war international investment the United States
Treasury have apparently formulated proposals but they have not
yet been seen. Keynes feels that in America generally consensus of
opinion is in favour of some arrangement aimed at common good,
although there are certain sections that would like to retain for
exclusive American benefit, by selective lending, overwhelmingly
strong financial position that America will be in on the
termination of hostilities.
With regard to commercial policy Keynes feels that it is desirable
to go quietly and not to be too ambitious in first contact owing
to the danger that political repercussions may react detrimentally
on the whole discussions. Buffer stock scheme may be seriously
discussed at the meeting but it is not yet quite certain.
In my conversations with Keynes I strongly urged the desirability
of bringing the question of maintenance of full employment in the
United States and the United Kingdom into the forefront of the
discussions and tried to emphasize the line Coombs has already
taken with Keynes. His first reaction was rather that everything
that was to be discussed, i.e. exchange currency, commercial
policy etc., was aimed at this result, and it was evident that he
feared that if a body were set up to examine ways and means
towards maintenance of full employment such body would tend to
butt in on these questions. (He expressed similar apprehensions to
me prior to the Food Conference.)
I argued against this attitude, pointed out that the Food
Conference had specifically dissociated itself from dealing with
these ancillary matters and indicated that it would be quite
possible to steer a full employment conference in the same way.
Towards the end of the discussion Keynes came round considerably
to my point of view and asked apparently with the desire of
further discussing the matter with him, whether Coombs was still
in Washington. I told him that Coombs had returned to Australia
and Keynes was obviously disappointed.
In view of our great interest in the matters that are going to be
discussed in Washington and above all the importance of the full
employment issue, I feel, if at all practicable, it would be
desirable to send Coombs on some mission there while the
discussions are taking place. If this were practicable, time for
him to arrive would be about the middle of October. If Coombs
cannot go, I suggest it would be a good idea if McDougall, who is
due back in Washington during October, were specially briefed to
take up this question of full employment with Keynes.