THE WARTIME DIARIES OF LIONEL ROBBINS AND JAMES MEADE, 1943-45 Also by Susan Howson THE COLLECTED PAPERS OF JAMES MEADE (editor) DOMESTIC MONETARY MANAGEMENT IN BRITAIN, 1919-38 THE ECONOMIC ADVISORY COUNCIL, 1930-1939: A Study in Economic Advice during Depression and Recovery (with Donald Winch) Also by Donald Moggridge BRITISH MONETARY POLICY, 1924-1931 THE COLLECTED WRITINGS OF JOHN MAYNARD KEYNES 30 volumes (editor with Elizabeth Johnson) KEYNES MONEY AND POWER (editor with P. L. Cottrell) THE RETURN TO GOLD, 1925 The Wartime Diaries of Lionel Robbins and James Meade, 1943-45 Edited by Susan Howson Professor of Economics University of Toronto and Donald Moggridge Professor of Economics University of Toronto Palgrave Macmillan ISBN 978-1-349-10842-8 ISBN 978-1-349-10840-4 (eBook) DOI 10.1007/978-1-349-10840-4 Selection and editorial matter © Susan Howson and Donald Moggridge, 1990 Chapters L 3 and 4 © Lady Robbins, 1990 Chapter 2 © James Meade, 1990 Softcover reprint of the hardcover 1s t edition 1990 All rights reserved. For information, write: Scholarly and Reference Division, St. Martin's Press, Inc., 175 Fifth Avenue, New York, N.Y. 10010 First published in the United States of America in 1991 Library of Congress Cataloging-in-Publication Data Robbins, Lionel Robbins, Baron, 1898-1984 The wartime diaries of Lionel Robbins and James Meade, 1943-45/ edited by Susan Howson and Donald Moggridge. p. cm. Includes index 1. World War, 1939-1945-Economic aspects. 2. Robbins, Lionel Robbins, Baron, 1898-1984-Diaries. 3. Meade, J. E. Games Edward), 1907- -Diaries. 4. World War, 1939-1945-Personal narratives, British. I. Meade, J. E. Games Edward), 1907- . II. Howson, Susan, 1945- III. Moggridge, D. E. (Donald Edward), 1943- IV Title D800.R58 1990 940.54'8141-<1c20 90-48160 CIP Contents List of Abbreviations vii Introduction 1 1 Lionel Robbins: Hot Springs and after, May-June 1943 8 2 James Meade: The Law Mission, September-0ctober 1943 92 3 Lionel Robbins: Bretton Woods, June-August 1944 156 4 Lionel Robbins: The Loan Negotiations and the ITO, September-December 1945 221 Index 249 List of Abbreviations BIS Bank for International Settlements BLPES British Library of Political and Economic Science BoE Bank of England Archives BoT Board of Trade CPRB Combined Production and Resources Board CU Clearing Union DO Dominions Office FAO Food and Agriculture Organization FO Foreign Office HMG Her Majesty's Government HMSO His/Her Majesty's Stationery Office IBRD International Bank for Reconstruction and Development ILO International Labour Office IMF International Monetary Fund ITO International Trade Organisation JMK The Collected Writings of John Maynard Keynes LSE London School of Economiu and Political Science OPA Office of Price Administration OSS Office of Strategic Services PM Prime Minister QRs quantitative restrictions RAF Royal Air Force RCAF Royal Canadian Air Force SF Stabilisation Fund UNO United Nations Organization UNRRA United Nations Relief and Rehabilitation Administration vii Introduction Lionel Robbins and James Meade both served as economists in Whitehall during the Second World War. They joined the Central Economic Information Service in the summer of 1940. Robbins, Professor of Economics at the London School of Economics since 1929, had been in Cambridge, where the School had been evacuated on the outbreak of war. Meade had just made his way with his wife and three children across falling France from Geneva, where he had been working for the Economic Intelligence Service of the League of Nations since 1937. Previously, Meade had been Fellow and Lecturer in Economics at Hertford College, Oxford. Robbins also had an Oxford connection: he had been Lecturer (1924-5) and Fellow and Lecturer (1927-9) in Economics at New College. Meade had attended his lectures. A few months after Robbins and Meade joined the Central Economic Information Service, it was split into the Central Statistical Office and the Economic Section, of which Robbins became Director in September 1941. Meade succeeded him as Director at the end of the war, officially taking over on 1 January 1946 when Robbins returned to LSE. Meade followed Robbins to the School. as Professor of Commerce with special reference to international trade, when he resigned from government service in 1947. Meade later became Professor of Political Economy at Cambridge (1957-67). A great deal of Robbins's and Meade's work in the Economic Section from 1942 focused on post-war reconstruction, domestic and international. They were both intimately involved in the preparation of the White Paper on Employment Policy (Cmd 6527, May 1944): Meade wrote the first draft of what became the White Paper in March 1943/ Robbins actively promoted and strongly defended this aspect of the Section's work, in the Section and elsewhere in Whitehall. According to Meade, Robbins's wisdom and diplomatic skills were, along with the presence of Lord Keynes in the Treasury (194(}-46) and the fad that the Sedion worked for a powerful Minister, Sir John Anderson (Lord President of the Council, 194(}-43), the main reason for the influence of the Section during the war.2 Robbins and Meade were not so diredly involved in the drafting and development of Keynes's 'dearing union' proposals for post-war international payments, since that was a Treasury initiative. They were both strongly convinced of the need to build a multilateral world economic system after the war: Meade responded to Keynes's plan by putting forward a complementary 2 Wartime Diaries of Robbins and Meade plan for a 'commercial union' in July 1942.3 Keynes also produced a proposal for international commodity price stabilisation known as 'commod'. These plans became the basis of the British contributions to the wartime Anglo- American discussions on international monetary and commercial policy. These discussions eventually led to the establishment of the International Monetary Fund, and might have led also to the establishment of an International Trade Organisation if the development of the commercial policy proposals had not been repeatedly stalled by divisive disputes within Britain's wartime Coalition Government under Prime Minister Winston Churchil1.4 As a result, Lionel Robbins and James Meade both actively participated in the Anglo-American wartime conversations on post-war policy, Robbins in his role as Director of the Section and Meade because his 'commercial union' proposal was enthusiastically taken up by the President of the Board of Trade, Hugh Dalton, who arranged for Meade's part-time secondment to the Board of Trade in 1942-3. The origin of the series of conversations, which began in the late spring of 1943, lay in 'Article VII' of the Mutual Aid, or Lend-Lease, Agreement between the US and the UK, signed on 23 February 1942, by which, as the 'consideration' for US wartime aid in the form of lend-lease, Britain committed herself to agreed action ... open to participation by all other countries of like mind, directed to the expansion, by appropriate international and domestic measures, of production, employment, and the exchange and consumption of goods ... ; to the elimination of all forms of discriminatory treatment in international commerce, and to the reduction of trade barriers.5 The series included discussions in Washington on Keynes's clearing union plan and on the US Treasury's proposal for a 'stabilisation fund', developed by Harry Dexter White, in June 1943 after the United Nations Conference on Food and Agriculture at Hot Springs, Virginia; conversations on monetary, commerciaL commodity and employment policy and international investment in September-October 1943, again in Washington; further monetary discussions before and during the United Nations Monetary and Financial Conference at Bretton Woods, New Hampshire, in June-July 1944; and finally, and least amicably, the protracted negotiations in Washington in September-December 1945 for the US post-war loan to Britain. Robbins was a member of the official British missions to North America for all four sets of discussions (and a UK delegate to both Hot Springs and Bretton Woods). Meade, in his Board of Trade secondment was a member of the 'Law Mission' - headed by the Minister of State at the Foreign Office, Richard Law - to Washington and Ottawa in the autumn of 1943. Both kept diaries of their visits to the USA and Canada, diaries which between them cover all the major official talks, negotiations and conferences in North America preparing the way for the post-war international monetary system, Introduction 3 commercial regime and post-war financial settlement between Britain and the United States. Hence this volume. President Roosevelt of the United States in March 1943 suddenly proposed a United Nations conference on food and agriculture, which was held at the Homestead Hotel in Hot Springs, Virginia, a couple of months later. The Conference, at which the 44 allied and associated nations were represented, agreed to establish an interim commission to draft a constitution for a permanent Food and Agriculture Organisation (FAO), which came into existence in 1945. Richard Law was the chairman of the UK delegation, which consisted of J. P. R. Maud and J. C. Drummond (Ministry of Food), R. R. Enfield (Ministry of Agriculture and Fisheries), C. L. M. Clauson (Colonial Office), Robbins, J. H. Magowan (Board of Trade), Sir Kenneth Lee (Ministries of Production and Supply) and E. Twentyman (British Food Mission, Washington). Law later reported to the British War Cabinet that this very able delegation had taken control of the conference, utilising the ideas of Keynes's 'commod' scheme for international buffer stocks which had been approved by the Cabinet at the beginning of May.6 By the time of the conference, Keynes's plan for an international clearing union, which had been approved by the Cabinet the previous year, had been published as a White Paper on 7 April. when the US Treasury had also published Harry White's plan for an international stabilisation fund. Publication had followed communication and correspondence between the two Treasuries which had started the previous summer.7 The American administration took the opportunity of the Hot Springs Conference to discuss the plans with representatives of a number of countries, including Britain, in Washington in June 1943. Robbins's 1943 Diary (Chapter 1) records these discussions as well as the Hot Springs deliberations. Anglo-American monetary discussions resumed in Washington in September-october 1943 as part of wide-ranging talks under Article VII covering commercial policy, international investment, cartels, commodity policy and employment policy, as well as the Keynes and White plans. As Professor Pressnell has recently remarked, '[these] informal. non-commital talks ... were the most important Anglo-American exchanges on economic issues not only during the war but also for many years before and since'.s Besides Richard Law, the 'Law Mission' included Lord Keynes, Sir David Waley and Frank Lee (Treasury); Percivale Liesching, R. J. Shackle and Meade (Board of Trade); Robbins (Economic Section); Nigel Ronald (Foreign Office); C. L. M. Clauson (Colonial Office); P. W. Martin (Ministry of Food), L. P. Thompson-McCausland (Bank of England seconded to the Treasury for the Mission); and three officials (Baster, Hasler and Snelling) who acted as secretaries. Their work began on board ship as they crossed the Atlantic where much of the preparation for the talks took place. Meade's Mission Diary (Chapter 2) covers the delegation's deliberations; the Anglo-American conversations on commercial policy, in which as author of the British