Your 1424. [1] My 1363 Trade Treaty. [2]

Hull saw me and McCarthy this afternoon, December 2nd. He had
Hawkins present. After I had presented the Australian Government's
strong desire to proceed with negotiations, he verified the fact
that wool was the most important commodity upon which we hoped for
a reduction of duty. He expressed his fear that an interference
with American duties upon wool would produce adverse domestic
political reactions at the present time. He briefly stated the
past history of the use of wool as a focal point in tariff
controversy. He referred to the number of 'wool states' and in
consequence the number of Senators affected. Whilst he expressed
his personal view favouring a more moderate duty, he emphasised
the greater importance for matters of world wide concern of
avoiding placing weapons in the hands of political opponents. He
said that Australia was as much interested as America was in large
plans for peace and postwar settlement, all of which were involved
in the American domestic political scene. He also expressed the
view that to bring forward, in the present circumstances, a trade
agreement which would be strongly resisted might jeopardise the
whole system of trade agreements which would be to the detriment
of both Australia and America.

He said that as things stood, until the political scene cleared,
he regretted that he could not sanction the conclusion of a
Treaty. He spoke vaguely of the possibility of a change in
political conditions in the summer or fall of next year. He said
that if there were any alteration in domestic politics presenting
more favourable conditions he would gladly reconsider the
question. Hawkins said that there was no more ground work which
could be usefully done in the meantime, that negotiations had
reached such a stage that further discussion would be to bring
them to
finality.

Hull said that he was sorry that he could not take a view which
would enable him to meet the wishes of our Government with which
he had the fullest sympathy, but he was sure that we would realise
that his decision was influenced by the widest considerations.

It was clear that Hull did not wish to enter into any discussion
upon the attitude of the U.K. He did not refer to it himself in
the course of his answer and when Hawkins introduced the question
he put it on one side, and confined the consideration of the
matter wholly to its bearing on the political security of the
administration. I saw no reason to doubt that Hull was expressing
his real reason for declining to sanction the conclusion of an
agreement with us at present. The political situation has been
steadily deteriorating for the administration and grave concern is
felt over the prospects for the congressional elections and much
anxiety about the presidential.