The Anglo-American Mutual Aid Agreement Viewed through Keynes as a Negotiator

The Anglo-American Mutual Aid Agreement Viewed through Keynes as a Negotiator

    

- Amid the Conflict/Cooperation between the Two Powers

Toshiaki Hirai (Sophia University)

1. Introduction

2. Pre-Lend Lease Act

3. Lend Lease

4. The Financial Negotiation with the US

4.1 The Major Moot Points

4.2 The Process Leading up to the Anglo-American Mutual Aid Agreement

Keynes’s Skeleton Plan (June 21, 1941)
On the latter part of “Article 7”
The Process Thereafter

4.3 Development after the AAM － Changed financial situation of the U.K. (Problem of increased sterling debts)

5. Keynes’s Observations on High Officials and Political Institutions

5.1 The Top Officials

President Roosevelt
Morgenthau, Treasury Secretary
The Feeling of Those Close to the President

5.2 Political Institutions － Fragile Relations between the Departments

6. Conclusion － On Keynes’s stance

[Appendix] Discussion with American Economists

[Abstract]

The main purpose of this paper is to examine the process of negotiation of the mutual aid agreement between the UK and the US during the years 1941 - 1943, and to clarify what sort of stance Keynes as a representative of the UK took throughout it.

Firstly we will explain the Lend Lease Act (March 1941), and proceed to how, after the Act, the UK came to conclude the Anglo-American Mutual Aid Agreement with the US (February 1942) through complicated negotiations. We will then assess Keynes’s fundamental stance, recognizable throughout these negotiations. This problem differs markedly in nature from the problem of the post-war international monetary system. The problem here was how to procure resources from the US amidst the financially and militarily dire situation – quite different from the atmosphere in which proposals for the future could be discussed.

Relations between the UK and the US were basically cooperative, and yet episodes of conflict often occurred due to geopolitical interests. Among other things, the UK took for granted the maintenance of the Sterling Bloc as the symbol of the British Empire, so that even if the UK got aid from the US, it aimed at a financial agreement which should as far as possible not interfere with the Bloc.

The fundamental line which Keynes took in the negotiation runs thus: The UK should always endeavour to keep resources at her own disposal. It is essential that the UK would be ready to preserve its independence by being able to use its own resources at any time when necessary. Keynes himself took maintenance of the Sterling Bloc for granted.