Yesterday, July 20, Mr. Barton of D.L.(1) was requested to attend the meeting called by Mr. Bennett, the President of Atomic Energy of Canada Limited. Also present at the meeting were Mr. Bryce, Mr. Deutsch and Mr. Bateman.

2. Mr. Bennett said that Mr. Howe was becoming seriously concerned about the commitments being assumed by the Canadian Government in underwriting contracts placed by the U.S. Atomic Energy Commission for uranium production in Canada. At present these commitments total about $500 million but, due to the rapid expansion of production in the Blind River area, it is anticipated that by 1957 they will exceed $1 billion. Mr. Howe was concerned over the possibility that the U.S. Atomic Energy Commission might, without warning, cancel these contracts in which case the Canadian Government would be seriously involved. He was considering the possibility of having the Canadian Government cease to act as middle man and instead allow the U.S. Atomic Energy Commission to negotiate directly with Canadian producers.

3. None of the officials at the meeting were in favour of this course of action. In the first place, it would put Canadian producers in the position of having to deal with a single buyer. Secondly, there would be a danger that the U.S. Atomic Energy Commission would cover future production with options to purchase which might make it difficult for the Canadian Government to arrange for exports to other countries if this should be deemed desirable. Thirdly, the Canadian Government is heavily involved in the Atomic Energy business and has established an elaborate system of controls. Under these circumstances, a decision to throw the uranium mining industry on its own would appear to be illogical and would doubtless lead to general criticism.

4. The meeting concluded that the best course of action would appear to be for Canada to continue underwriting these U.S. contracts but to tell the United States that this would only be done if agreement was given to making public the pricing formula and production figures which would enable investors to make an intelligent appraisal of the risks they were taking in developing new mines.

5. It was agreed that it would be desirable to have a meeting of the Ministers directly concerned before the matter was discussed in Cabinet. This meeting has been arranged for Friday, July 22 at 12 noon. The meeting would be attended by the Prime Minister, Mr. Howe, Mr. Harris, and you. I understand that Mr. Bryce has informed your office of the details.

J. L[ÉGER]