Friday, June 23, 2017

UK-US talks on commercial union

‘Spent the morning at the Embassy [. . .] making final revisions to the text of the joint Anglo-American statement on Commercial Policy, the Agenda Outline (derived from this statement and for communication to the Russians, Chinese and eventually the other United Nations). [. . .] It is clear that each side must now do two things: (i) prepare the way by technical studies to see, for example, which of the tariff formulas are practicable and by what means; (ii) obtain certain major decisions or guidances on policy from their Ministers (on our side particularly on the subject of preferences).’ This is from the rather dry diary (though with touches of humour) kept by James Meade, a Nobel Prize winning British economist born 110 years ago today. The diary documents early discussions between the US and the UK on a future international commercial union, which would lead, in 1947, to 23 nations agreeing the General Agreement on Tariffs and Trade.

Meade was born in Swanage on 23 June 1907, and brought up in Bath, England. He was schooled at Lambrook and Malvern College before entering Oriel College, Oxford in 1926 to study classics; however, he then switched to philosophy, politics and economics. In 1930, he was elected to a fellowship at Hertford College where he taught economics, a relatively new subject at the time. In 1933, he married Margaret Wilson, and they had three children. 

In 1937, Meade joined the Economic Section of the League of Nations in Geneva as editor of the World Economic Survey, but in 1940 returned to England where he worked in the economic section of the War Cabinet Secretariat. There he was joined by Lionel Robbins and John Maynard Keynes; together they tackled economic problems ranging from the rationing system to the pricing policy of nationalised companies. From around 1942, they focused on post-war reconstruction, domestic and international. In particular, Meade was involved in international discussions for a ‘commercial union’, which would lead, in time, to the General Agreement on Tariffs and Trade.

In 1947, Meade returned to academic life at the London School of Economics. In the early-mid 1950s, he published his most important contribution to economics, The Theory of International Economic Policy (two volumes). From 1957, he was Professor of Political Economy at the University of Cambridge until his retirement in 1969. Thereafter, he remained at Cambridge, as a senior research fellow of Christ’s College. His many offices and honours included: the chairmanship of an Economic Survey Mission to Mauritius in 1960, presidency of the Royal Economic Society from 1964 to 1966, and chairmanship of a committee of the Institute of Fiscal Studies from 1975 to 1977. In 1977, Meade was awarded, jointly with the Swedish economist Bertil Ohlin, the Nobel Memorial Prize in Economics ‘for their pathbreaking contribution to the theory of international trade and international capital movements’. He died in 1995. Further information is available from Wikipedia, the Nobel Prize website, The British Academy, or various obituaries, such as those in The New York Times and The Independent.

For a short period, in the latter part of his time working for the government and while involved in the negotiations for a commercial union, Meade kept a diary. This is now held in the library archives of the London School of Economics. In 1990, it was published (as edited by Susan Howson and Donal Moggridge) by Macmillan Academic and Professional in The Wartime Diaries of Lionel Robbins and James Meade, 1943–45. The book is still in print and available as a hard copy or e-book for around £50 from Amazon or Palgrave. Some pages can be read freely online at Googlebooks. Here are several extracts from Meade’s diary as reproduced in the Palgrave book.

16 September 1943
‘Spent the morning and afternoon working in the Embassy, first on a revision of the Aide-Memoire on Commercial Policy (now to be called the Introductory Note on Commercial Policy) and on the Illustrative Outline. We have altered the order in which the points are to be dealt with - taking Quantitative Import Restrictions, State Trading and Subsidies before Tariffs and Preferences, and ending up with International Institutions. The idea behind this manoeuvre is not to suggest a frontal attack on the American tariff quite so brutally. [. . .] It seems that all is going well from our point of view on procedure. Our ideas that there should be frequent plenary sessions to stress the interdependence of all the subjects, and that the agenda should cover four main topics - namely Money, Investment, Commod and Commercial Policy - were more or less accepted with the reservation that there should at a later stage be two more committees on International action against Unemployment, and International Cartels. [. . .] Before supper I went to a cocktail party at Magowan’s house, at which all (or most) of the American and British delegations were present plus a number of other people from the Embassy etc. I exchanged words in the course of the evening with the Keynes’, the Butlers, R. L. Hall and Margaret Hall (who in a most affected manner declared that she felt like kissing me), Hawkins, Feis, the Pasvolskys, Dennis Robertson, Sir George Sansom (? pre-war commercial attache at Tokyo - at any rate a great authority on Japan and the Far East), and Law. Dennis and I had a talk with Sansom on the problem of low-cost Japanese competition. It was most refreshing to meet a British diplomat who really knew the Far East who held the commonsense view that we should have been generous and liberal in our economic treatment of Japan but adamant with her politically and militarily (except just the opposite). He and Dennis and I are to have dinner together one day to discuss these problems. I had a talk with Law who was most anxious that we should go ahead in an enthusiastic and positive manner to discuss the international implications of post-war unemployment policy. I argued strongly that, in view of the delicate position on the discussion of these problems at home, it really was out of the question that we should give any very positive lead on this subject. What a role to have to play, - to apply the soft pedal on this of all subjects! After the cocktail party I went on to supper with Di to Mrs Wheatcroft (a ‘British Mum’ evacuated with Margaret who works in the Embassy and was a great friend of Margaret’s). The evening consisted in a display of short snippets (none complete) of toy cinema films and a demonstration of chemical experiments (some of which worked) by her son and Billy Hart (aged 12 and 13).’

29 September 1943
‘A morning free from meetings, which I spent at the Embassy clearing up many odd points with Liesching, reading papers etc. I also spoke with Robbins on the subject of the British attitude on the currency problem. He seems to realise clearly that the question whether the Fund deals in national currencies or in Unitas is really of secondary importance. We must not allow there to be a break on such a senseless issue. Had lunch with two men from the State Department, Phelps and Gay, who wished to discuss the problem of state trading. I argued that we should set certain price rules and criteria for state trading which would correspond to the price rules with private enterprise as modified by permitted subsidies and tariffs. After lunch I saw Rasminsky for twenty minutes. He has come from Ottawa to talk with Keynes and others on the currency discussion. He is in exactly the same sense of perplexity as myself. Why must the British fight so on a point which is of so little substance as the monetisation of Unitas? In the afternoon another meeting of the Anglo-American group on commercial policy. First we discussed export taxes and restrictions, on which subject the Americans accepted our suggested rule without any difficulty. Then I introduced the general subject of the formation of the Commercial Union and of its institutions. The Americans are in very much the same mind as ourselves on these issues; but they want it to be made compulsory for members of the Commercial Union not to extend the advantages of membership to non-members. Later I dined with Galbraith and his wife at the Cosmos Club and then went on to their home in Georgetown to talk. He is the ‘relentless’ type of radical, believes that Russia should be permitted to absorb Poland, the Balkans and the whole of Eastern Europe in order to spread the benefits of Communism, that the outlook for American politics is very black because even if the Roosevelt administration wins the next election the liberal New Dealers are now all a crowd of tired, cautious and conservative liberals, etc. I think he may be a little embittered at the punishing experience he had at OPA where there was a witch-hunt against liberal College professors of which he was the main victim. He is off to New York to join the editorial board of Fortune.’

18 October 1943
‘Spent the morning at the Embassy with Liesching and Shackle, making final revisions to the text of the joint Anglo-American statement on Commercial Policy, the Agenda Outline (derived from this statement and for communication to the Russians, Chinese and eventually the other United Nations), and the similar Agenda of the Cartels group. Lunch with Hawkins, Pasvolsky and Liesching at the Cosmos Club, where we discussed future procedure on Commercial Policy. It is clear that each side must now do two things: (i) prepare the way by technical studies to see, for example, which of the tariff formulas are practicable and by what means; (ii) obtain certain major decisions or guidances on policy from their Ministers (on our side particularly on the subject of preferences). Then we shall be prepared to renew our meetings, by next January or February. Meanwhile, and after our next series of meetings, we must decide how to introduce the subject to other nations. For this, it was agreed, the Agenda Outline, posing the questions covered by our joint statement, will be very useful. After Hawkins had left we had some further conversation with Pasvolsky about the extent to which we should in the near future give a lead to the other Europeans and smaller United Nations. Pasvolsky was inclined to argue that when approached by them we should ask them what they wanted instead of telling them what they should do. His reason was mainly that they should not be in a position later if anything went wrong to maintain that they had no responsibility. There is no doubt some force in this; but 1 think that we must nevertheless give a very strong lead. In Commercial Policy in particular these countries just are not in a position to say what they want until they have some idea what the USA and UK are likely to do; and even if they could be persuaded to say what they wanted without knowing what we intended, they would be very likely to say quite the wrong thing, whereas with a little prompting they might quite genuinely be persuaded to ask for the right things. [. . .]

Went to a cocktail party at the Brighton Hotel, at which drinks on a copious scale were provided for the entertainment of the Board of Trade permanent delegation in Washington by us visitors from the Board at home. Miss Dalgleish mixed strong and frequent drinks. The party went through the symptoms of incipient alcohol poisoning, which I observed as an impartial spectator, confining myself to tomato juice. Liesching made a good pep-talk speech telling the Washington delegation what good people they were; and every effort, unsuccessful but only just unsuccessful, was made to get Liesching laid out on the floor. The party broke up and I returned, with Joan Carmichael and Mary Williamson, to a late supper at 2820 N. Street.’

19 October 1943
‘Spent the morning partly at the Embassy writing notes for our report to ministers on the result of our commercial policy talks, but mainly in sorting papers, arranging money matters, signing declarations about income tax etc. in preparation for our departure. Lunch with Bernstein of the US Treasury, with whom I discussed the prospects of the monetary plans from the point of view of American Congress and public opinion. Bernstein said that they would have the Federal Reserve Board with them and seemed hopeful that they might persuade some of the American bankers that a scheme was essential. Nevertheless he was clearly very impressed by the political opposition which they would have to be prepared to face. I asked him whether he was satisfied with the progress made in the Anglo-American discussions on this subject. He said that he was very satisfied, and that they had never considered that getting agreement with the British would prove any very real obstacle. But he added that he was sorry that tempers had not always been good during the talks. He is still evidently smarting somewhat from Keynes’s ill manners. But he added sweetly that he thought we should not have considered their ideas so sinister as we did, if only they had had a real opportunity to explain the workings of their ideas. (Visions of Bernstein preparing another hundred questions and answers on the Stabilisation Fund!) Went back to the Embassy in the afternoon to work on my notes for our report to ministers on commercial policy. Took Di and Joan Carmichael to supper at the Washington hotel and to the cinema to see Fred Astaire dancing, which is certainly a very pleasing sight.’

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