1. The Canadian Wheat Board is now closing its accounts with respect to wheat delivered by producers to the Board during the five-year pool period which ended on July 31, 1950; the final four years of which coincided with the term of the Canada-United Kingdom Wheat Agreement.⁶⁰ Before determining the amount of participation payments to be paid to producers, it is felt that the United Kingdom authorities should be advised of certain attitudes in Canada respecting the "have regard to" clause.

2. While prices were established for deliveries during the two final years of the Agreement, there are very many wheat producers and others in Canada who feel that it would be in accordance with the provisions and the intent of the Agreement for the United Kingdom Government to make an additional payment in respect of either or both of these two years.

3. Clause 2(b) of the Agreement reads as follows:

"The actual prices to be paid for wheat to be bought and sold within the crop year 1948-49 shall be negotiated and settled between the United Kingdom Government and the Canadian Government not later than the 31st December, 1947, and prices for wheat to be bought and sold within the crop year 1949-50 shall be negotiated and settled not later than the 31st December, 1948. In determining the prices for these two crop years, 1948-49 and 1949-50, the United Kingdom Government will have regard to any difference between the prices paid under this Agreement in the 1946-47 and 1947-48 crop years."

4. When prices for 1948-49 and 1949-50 were being negotiated, the United Kingdom was faced with a serious shortage of dollar exchange and the Canadian Government was reluctant to add to these difficulties by pressing for a level of prices which would carry out the intent of Clause 2(b) of the Agreement. Moreover, there was some uncertainty as to what level of prices would be appropriate; in the event the prices set were below those which it was possible in those years for the Wheat Board to secure from other customers. The announcement made by the Canadian Government on January 19, 1949, after consultation with the Government of the United Kingdom, indicates the tentative nature of the price fixed for 1949-50:

"Representatives of the United Kingdom and Canadian Governments have had discussions on the price to be paid by the United Kingdom for Canadian wheat in 1949-50, the fourth and final year under the United Kingdom-Canadian Wheat Agreement of 1946.

"After taking into account all relevant considerations, including but without attempting to reach a final settlement of the United Kingdom obligations under Clause 2(b) of the Agreement, the two Governments have agreed upon a price of $2.00 per bushel.

"The two Governments have also agreed that their representatives shall meet not later than July 31st, 1950, to settle any obligations of the United Kingdom which may then still be outstanding under Clause 2(b) of the Agreement. The extent to which any such obligations will remain will depend largely upon the actual prices ruling for wheat during 1949-50."

5. In May of 1950 the Minister of Trade and Commerce (Mr. Howe) discussed with members of the Government of the United Kingdom what further settlement of the "have regard to" clause would be appropriate, and at that time the United Kingdom representatives felt that it would be reasonable that all obligations under the "have regard to" clause might be considered to have been taken care of. Mr. Howe said that this was a matter which could only be settled by the Canadian Cabi­net on his return. Mr. Howe subsequently advised the Chancellor of the Exchequer (Sir Stafford Cripps) that the Canadian Cabinet was in accord with the conclusions in the agreed record of the meeting, and it is understandable that the United King­dom authorities should consider that the matter was disposed of, although these conclusions do not in fact go beyond saying that the question respecting the "have regard to" clause would have to be settled by the Canadian Cabinet.

6. The Canadian Government does not however claim that there is any further obligation in a strictly legal sense and is making no representations on that basis. The Government feels, however, that the United Kingdom authorities should real­ize fully that the wheat growers of Canada and most of the community of the prai­rie provinces believe there is some continuing obligation under the "have regard to" clause which has not been discharged. The statements made by several United Kingdom Ministers in Canada were calculated to create the impression among the wheat growers that they would receive adequate returns under the United Kingdom Agreement. It should not be overlooked that the wheat producers of Canada have given support over a long period of years to policies specifically designed to ensure that the people of the United Kingdom would be able to obtain vitally needed sup­plies of wheat at reasonable prices. From September 1943 on, wheat was provided on the basis of $1.25 per bushel under Mutual Aid. When Mutual Aid came to an end the Canadian Government unilaterally and of its own volition gave priority to shipments to the United Kingdom and placed a ceiling on export prices of $1.55 per bushel. The Canada-United Kingdom Agreement assured that a steady flow of supplies and stable prices would continue.

7. If a further payment of a reasonable amount were made under the "have regard to" clause, the position would still be that the purchase of wheat under the Agree­ment had been a favourable arrangement for the United Kingdom Treasury. Since all of any such payment would be paid to wheat producers, it would, in the opinion of the Canadian Government, indicate to these producers that their confidence in the United Kingdom market and in the United Kingdom Agreement has not been misplaced.

8. The Canadian Government would be prepared to discuss an arrangement whereby all or most of such a payment would come out of the unused portion of the 1946 loan so as to avoid any strain on the immediate dollar position of the United Kingdom.⁶¹ From the United Kingdom standpoint we feel there would be great importance in retaining the good will and support, for policies of cooperation in the future, of something like a quarter of the Canadian population which is traditionally well disposed to the United Kingdom. This same section of the Canadian commu­nity, if left with a deep and abiding sense of grievance, might in future be some political obstacle to the kind of cooperation between Canada and the United King­dom that successive Canadian Governments have been able to secure overwhelm­ing support for in times of stress in the past. It is the view of the Canadian Government that a payment under the "have regard to" clause which Canadian wheat growers would consider fair to them would constitute a profitable investment by the United Kingdom in Canadian good will.

⁶⁰ Voir/See Volume 16, Documents 713-723.

⁶¹ Voir/See Volume 12, Documents 796-809.