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H. Hostilities nearly broke out at week-end: now looks hopeful again.

The armies are poised.

& Mr Macdonald mght. be sent out to see the King.

Mr K. seems determined now not to back Phonmi militarily if it

goes wrong.
b) Berlin.
H. Rumours of attack on K.

Thompson’s 3rd talk. No progress. But Gromyko seems patient – no

date threatened for Treaty. He may invite Roberts to talk:

may be time for him to participate: want him to indicate tht. if

G. is interested in details (dealings with D.D.R., status of

W. troops) we have things to suggest. This cd. be done w’in

limits of T.’s brief. As asking Gore what U.S. thinks. Wd like

to open it up a little.

Tho’ R. may now be willing to let it drift along – for reasons we don’t

know.
c) Leipzig Fair.


F.E. We shall have to say publicly we don’t favour it.
P.M. Let firms go if they want to. Minimum gesture to N.A.T.O. In fact

W. Germans will be heavily represented & do much business.


H. But they (E. Germans) make big propaganda thing of it.
P.M. We don’t boycott Moscow Fair.

Conform to N.A.T.O. formula. But don’t seek to discourage

individual firms.
P.T. No public announcement here until after one made by others

e.g. W. Germany & France.


P.M. Call attention (written Answer) to this N.A.T.O. statement.
3. West Indies. [Enter D.
R.M. We must dissolve Fedn: concede independence to Trinidad: reserve

possibility of smaller Fedn of small islands – setting up interim

organisation to hold assets of existg. Fedn pro tem.

Collapse must now be admitted: and we must make new start.


H.B. Financial implicns must now be studied – C.O./Ty.
P.M. Deductions re C. Africa.
4. Antarctica: S. Georgia Whaling.
R.M. Scots enterprise can’t be run at profit & want to sell to Japs. The

latter will prob. take over Norwegian enterprise: & Island

will then be full of Japs. tho’ we wd. retain sovereignty.
D. Shd like to consult A. & N.Z. before announcement. No reason to

x/ think they will object.


J.M. Looks as tho’ we shall drop out of whaling altogether. Salveson’s

will sell 1 unit to Japs., and will prob. sell their other unit soon.

They lost £200.000 in 2 yrs. at S. Georgia.
C.S. If we don’t let them sell, they will demand subsidy.
H.B. We won’t bind the tax, wh. we reduced to help Br. whalers.
H. Will make our sovereignty claim less easy to defend – Argentines etc.,

claim this island.


Approved subject to x/.
5. Germany: De-concentration of Krupps.
H. No-one will take it over or buy the shares.

Real ques: timing. Do we hang on until C. Market clears?

Fr. & U.S. may press us to settle this.
S.Ll. Ty. view: better do it when we are finally deciding wtr. to enter

Iron & Steel Community. Wd seem more logical then.


E.H. Agree: we shd. then be participatg. in the control.

In logic: can’t get out of this w’out 3 Power agreement.

better really tht. K. shd. hold this than have cash to

put into somethg. worse – e.g. atomics. At least he is

now under E.C.S.C.

But diffy is emotional. Fr. v. ready to accuse us of handing this back.

Hail. Enough unpopular things already.
H.W. Don’t want it mingled with G. purchase of arms.
P.M. Do nothing: say nothing: take a leaf out of French book.

Agreed: no action pro tem.


6. Farm Price Review.
H.B. No deep divisions betwn. us: but one point for Cab. guidance.

Last year £350 m. Looks likely £339 M. for Estimates - £60 above

last year. Cab. wanted tough review this year: and short-term

economies consistent with pledge. Of latter para. 2(2) is only

runner.

On review, if we insist on minimum we cd. save £14½ m. to



Exchequer. This is as far as we cd. go. M/Ag. wants, however,

to remove the 0.8d on milk given last year on condn tht. farmers

worked out a plan – they haven’t. But redn in milk price wd.

benefit consumer, not Exchequer: & our saving wd. be only

£8 m. Therefore, I say we must at same time abolish milk

subsidy, costing £8 m. to Ty. That wd. give saving of £16 m.

to Ty.

If we do nil. on milk, retail price wd. be 8d for 8 mos. & 8½d for 4 mos.



If we do my plan, result for consumer will be the same. If we don’t

w’draw subsidy, price mght. rise to 8½d in at least 1 further

month.
C.S. This issue doesn’t affect farmers – nor Review on wh. we agree.

If we cut the 0.8d, milk price wd. be 8d thro’ year. If we add H.D.’s

point price will go up tho’ farmers get less. Favour making

consumer pay more of real price. But this wd. put extra cost,

for milk he doesn’t consume: wd. be represented as tax of

½ pint for 4 months.


P.M. } 2.400 m. gall. produced: 1600 m. drunk. 300 is allowed as margin

H.B. } for drought. Exch. subsidy for another 100 m. So we finance

2.000 m. at guaranteed prices. Ques. is wtr. consumer shd. pay

for the other 100 m.


S.Ll. I want the £8 m. – leader in to-day’s Times.
D.E. This removal of 0.8d will accelerate switch to beef. Will that cost Ty more?
H.B. From Ty. angle I wd. sooner the 0.8d were not removed.
Agreed (I think) in favour of Ty.

C.C. 12(62). 8th February, 1962.
1. Jamaica. [Enter M.R.
R.M. Conference going well. Date of independence, now outstanding.

The 2 have agreed on 6/8.

They want to continue monarchical basis.
Agreed: 6.8.62 may be accepted.
P.M. Admission to C’wealth. Begin to avoid use of term ‘sponsor’.
2. Parliament.
I.M. S.O. 9 debate from 7-10 p.m. may be staged to-day: on Nuclear

Tests. Better perhaps than having a full debate later.


P.M. H.W. to go first and P.M. to reply.
E.H. Immediate debate is bad for internatl opinion. It’s not “urgent”.

Mr K. has said he hasn’t made up his mind.

Hope we can tell Speaker that we wd. think this undesirable: wd. give

impression tht. U.K. was windy.


I.M. Decisive vote from H/C. on same day wd. re-assure U.S. opinion.

Also wd. get it all over in one day – before announcement in Press.

Wd avoid build-up of opinion: marchers etc.
E.H. Bad debate, however, because ill-prepared. Second prong won’t come

out well to-day.


Agreed: put issue to Speaker with bias v. need for

debate to-day.


I.M. Business for next week.

Monopolies – shd. a cabinet member reply?

Shipping – M/T. and H. Hallett.
3. Railway Wages.
S.Ll. B. raised bid to 3%: more guarded about further award later in year:

also said Guilleband was guide for a good employer in funds.

He will stand on 3%. Unions have now asked to see P.M.
P.M. Unwise to refuse. Propose to accept, in lr. makg. clear tht. I can’t

negotiate. Shall offer to see them next week – Wednesday

3.45 p.m.

E.M. Must stand behind B. now: can’t offer more than 3%.


S.Ll. Must give them aide-memoire which can be publd. Can’t afford to

have misunderstandg. of what P.M. said.


P.M. Can’t offer more than 3%. Shd we suggest arbitn? Shd we rather

encourage them to look to the future: e.g. more discn in autumn?

Agree, however, we shd have agreed report of mtg. for publn.

Not aide-memoire, which wd. be regarded as ultimatum.

Cab. cd. consider a draft on Tuesday a.m.

[Enter D.

4. Kenya.
R.M. Approachg. diff. stage. Conference opens Wed. next. Wd expect it to

be followed by independence by mid. ’63. But fears in K. are

growing – tribes that they will be over-ridden: Europeans loss

of their interests.

Believe better to go by stages: can’t look far ahead. Only if Conf.

succeeds shall I be asked to fix provisional date for

independence. Not yet in posn to suggest decisions covering all

phases.
H.B. Grave financial dangers. K. heading for bankruptcy – high services/

low taxation: loss of confidence. £30 m. p.a. support from U.K.

is estimated. Can’t guarantee to underwrite their errors after

independence.

Compensn for settlers. £140 m. estimate for land alone. Can’t say

anything at Conf. to encourage assumptn we accept liability to

compensate. If we made loan to K. Govt. for this purpose, we

shd never be repaid.

Only hope is to convince Africans tht. bankruptcy is inevitable unless

confce can be restored – esp. of Eur. settlers on whom economy

depends.
K. Agree we must move by stages. But end para. 8 is v. important:

must have some external check (on analogy of U.S.).

Para. 9. Settlers. Can you rely on v. ext. check to safeguard their

rights. If these aren’t intrenched, how m’tain settlers’

confidence? If you can’t, economy is not viable – either qua

prodn or qua exports. Are we ready to concede indep. to country

whose economy isn’t viable?

Minimum therefore = constitn which can’t be undermined by legal

means. Need for early review of finance/sources of revenue.

If we can’t get constitn with these s’guards., no hope for internal

economy to work or investment to be attracted. What do we do

if, at end of Confce, we believe this is posn? We can’t hand over

to a Govt. which has little chance of preservg. order and no chance of avoiding bankruptcy.

H. Why need independence follow s. govt so quickly? Surely, this

time-table is too short. Cd be extended for 1 more year.

But more serious ques. is: can any pol. soln be found which will

give confidence. Just poss., prs., if all s’guards. can be

secured. But look at rpt. of offls. ⅔rd of Eur. mght. go. They

contribute 50% of revenue & Asians another 20% (?). This

suggests, not chance but certainty, of ruin. If this were made

known, Parlt. wd. not agree to early independence. Shd we not

proclaim to world what will happen if we yield it prematurely.

Tell U.N. we are forced to stay & invite their support.


R.M. Accept financial danger. But econ. consequences of all-out clash with

Africans mght. be worse.


Hail. Is not collapse quite certain if independence conceded in ’63?
I.M. We were equally told tht. S. Cameroons wd. collapse & Ch. wd. move

in. It didn’t happen. Reason: infrastructure of Br. colonies is

sounder than elsewhere. Adminn is good. Danger not nearly as

great as Congo. We have built well.

Date: no commitment. Cd be pushed to later in ’63.

Compensation. I have always said we wdn’t. Paramountcy of native

people has always bn. there.

Much turns on wtr. Mboya emerges as leader of K.A.N.U. (Kenyatta

is finished.) If he does, & makes alliance with K.A.N.U., there

is ground for hope.


R.A.B. Much in H.’s view. But Br. policy has remorselessly proceeded to

implant W’minster democracy - & we can’t go back on that.

But believe we cd. insist on retaining troops.

Fear a constitn will break down. We must reserve power to

resume direct rule, during period of s. govt. Believe that shd.

be expended & full independence p’poned.


H.W. By mid ’63 only 50% of K.A.R. officers will be African.

Suggest we be ready to provide cost of 50% Eur. if local Govt.

will keep them.
S.Ll. If £30 m. p.a. aid is involved, with £25 m. of real aid: and if forecast

of Eur. w’drawal is sound – we cd. present this on solely

economic basis. Viz., independence must be delayed, not on

pol. grds., but purely for economic reasons.


F.E. Sure we can present convincing economic case.
I.M. If we took that line, other countries wd. at once offer to pay the

difference, i.e. the cost of independence.


D. If troops are key to confidence, wd. U.N. force do the trick?
H.B. At this stage key ques. is wtr. Eur. rights can be properly

entrenched in constitn – not removable short of revolution.


E.H. Is it realistic to suppose tht. this wd. last after independence. Only

hope for the country wd. be strong central Govt. on Nkrumah

model.
Hail. Why not a longer period of s. govt. e.g. 5 years.
R.M. Can’t take such a decision in advance. Will depend on strength of

pressures for & against independence later on.


H. The risks to the economy will become public at Conference

(R.M. Yes). When they do, public clamour v. early

independence.
S.Ll. Even U.N. mght. be sensible in this case.
I.M. $64.000 Question: Can we govern by force in order to impose a proper

delay on independence? I believe not.


P.M. Run-down of economy because lack of Eur. confidence has already

begun.
H. Wd U.N. under-write (not financially) a longer period of s-government.


Hail. Cd we declare trusteeship of some kind for 5 yrs.
J.H. Believe only hope is to prolong s. govt. under internatl tutelage of

some kind. [I am interested party.]


P.M. High standard of govt. due to Eur. settlers & paid for by their export

earnings. This must be expected to drop.


E.H. E. African Fedn?
R.M. Receding, now Nyerere eclipsed.
D. Other C’wealth countries in Africa mght. covertly influence K. leaders

to accept delay.


P.M. Any C’wealth body overtly wd. have to press for early independence.
C.S. If, despite econ. advantages, independent K. cd. not tolerate Br. troops,

does it not follow they will not tolerate Eur. settlers on the

best land?
R.M. Can’t retain base. Mght. have some ‘facilities’ wh. wd. secure contd

presence of Br. troops.


Hail. Tho’ after independence they cd. not be used.
H.W. Certainly not to m’tain differences of standards. African income now

is (average) £50 p.a.


P.M. First outbreak of violence wd. be Somali secession. Wd we use Br.

troops to resist that.


H. U.N. joint trusteeship with U.K. for 5 yrs?
R.M. Ready to consider that.
E.H. Wd require agreement of U.N. Afro-Asians bound to oppose it.
Hail. Cd we say we intended to govern for 5 more years but invite U.N. to

associate some other countries with us.


R.M. C.P.C. to review posn in light of atmosphere at Conference.

M’while, consider trusteeship ideas.

Keep in mind possibility of adjourning Conference for

independent economic survey, by or with aid of

Int. Bank. (That wd. take 12 months.)
P.M. Endorse that as immediate aim.

C.C. 13(62). 13th February, 1962.
1. Berlin. [Enter M.R.
H. Agreed in W’ton tht., tho’ no progress, we shd. try to keep talks going. Thght. Roberts – or prs. Kroll – might play a part.

Will report at next Cabinet.


R. threat to air corridor. Was attempt to interfere with its working.

U.S. & we have rejected R. request, & it was w’drawn.

But Fri. they practised a.a. fire to 6.000 ft.

Possible they will now try a land probe.


2. Disarmament.
H. K.’s response to our initiative – mtg. of 18 at summit.

U.S. reaction: unwise: better F. Ministers shd. start: but have in mind Summit mtg.if favourable prospects open up.

Proposed reply: our procedure is wiser, but Summit later prs. if favourable progress made.
P.M. Mr K. (phone conversation) is keep tht. we shd. take practical line. 18 is too many. Dief., however, thght. K. had overtrumped us. We must take practical line for a time: but take care – for if others indicate readiness awkward to stand out. We might suggest mtg. of 3 F. Ministers first as condn of attendance of Heads of Govt. at mtg. of 18.
3. Congo.
H. U.N. wish to put troops into 2 places when Union Miniere operates. (O.K. if Tsombe agrees.) Their professed reason: mercenaries there who can pop to and fro’ across frontier territory. Real reason: to bring pressure on U. Miniere to pay more of revenue to Adoula. If so, use of force for pol. ends. R.W. askg. for advice, telling him to urge T. to agree with U.N. now these troops shd. be unemployed. If resisted by Katangano, U.N. troops wd. fight.
P.M. Our line: try to get T. to agree. No need for us to interfere if he can arrange this with U.N.
4. Incomes Policy: Railwaymen’s Wages.
S.Ll. Claims ahead: gas want to give 4%: I.C.A. want to break the line.

(prs. 2½% but from ⅓.)


P.M. I must try to hold 3% for rlways. Awkward if gas goes ahead.
M. Must hold gas back – we cd. stand a strike.

E.M. Gas had already had 6% since rlways last rise.


P.M. Can’t let gas follow bad precedent of electricity.
S.Ll. Avoid creating any class of underpaid, who must now catch up.
J.H. That wd. restore comparability in its old for.
P.M. Will discuss my proposed line with Ministers concerned to-morrow – ll.30.
J.H. Gleam of hope idea won’t be v. useful to the steady element in Unions.

Believe we are faced with risk of strike.

Further offer wd. mean a strike in autumn or 5% for 1962.
P.M. Can say i) 3% is above the 2½% & marks their difft posn. 2) They are free to ask later in the year for more: can’t commit ourselves: but if progress m’while in rationalisation etc., negotns wd. begin in better spirit.
P.T. V. serious if they feel encouraged to think they will [Enter R.A.B.

Get another 2% in autumn.


S.Ll. Any advance beyond 3% will open flood-gates in private sector.

[Enter D. Exit E.M.


5. Federation of Rhodesia etc.
P.M. Sosco. 6. Reachg. another point of crisis.

Course contemplated in its concludg. paras. means end of Federation.

Kaunda cd. not be outbid by Banda.

We had bn. realising Fedn cdn’t continue in present form. But had bn. hoping to substitute some looser form. Banda now declare he will go in the other direction.

Agree with para. 8. But Banda won’t be here until April: we have a little time. Doubt therefore wtr. we shd. go as far as para. 10. Rather let D.S. & R.W. try to devise plan for dealing with situation. cf. R.W. speech of y’day.
H. Earlier demands of 2 northern territies was African majorities & right to secede. Plan for this was worked out by Monckton.

R.W. was willing to concede secession in 5 yrs. (with immediate transfer of some powers) in return for independence. This is virtual acceptance of Monckton.

Alternative: remove Nyasaland. That wd. break - Fedn unless you tied N. Rh. into Fedn as act of Sate, with right to secede reserved to a much later date.

We can’t give snap decision on Sosco. 6.

R.M. Endorse para 6. But wrong to press R.W. at once i) his speech of y’day. ii) … iii) we must consider what we do after break-up. Banda previously was ready to co-operate with Fedn after secession. Try to get him back to that.
S.Ll. Financial implicns also need study.
R.M. Para 3(b) is only new factor in B.’s attitude.
I.M. B. is amendable to influence in Ldn. Don’t accept para. 3 until we have discussed. Real chance we cd. bring him round to acceptance of a new form of Fedn with the Rhodesias.
H.B. Don’t be rushed. N. ‘going it alone’ wd. need financial help.
P.M. Personal tel. encouraging R.W. to act in time, not too late.
K. R.W.’s point (dissoln of Fedn only with consent of Fed. Govt) based on Jennings. L.O. to consider. [Exit S.Ll.


C.C. 14(62). 15th February, 1962.
1. Berlin. [Enter M.R.
P.M. R. challenging our rights in air corridor. Last week-end, we braved

it out. Another test likely now.


H. They are putting up fighters this morning – harassing tactics.
H.W. A no. of fighters are in corridor. But R. claim to corridor ends to-day.
P.M. Getting rough – anxious period. Hard to see who is in control and

what is object. How does it square with re-action to disarmament

initiative.
H. Have sent message to Gromyko, warning him of risks.
2. Parliament.
I.M. Business for next week.
3. Government Expenditure. [Enter B-C., E.P., P.M.G.
S.Ll. £1470 m. 5 yrs. ago 1958/59: 2.000 m. next year 1963/64. We are

not static. Believe p’mme Ty. now suggest is necessary restraint.

We shall spend more, & tax more: ques. is by how much.

Ty. proposals do no more than reduce p’mme by £40 m.


H.B. In 61/62 12½% increase. Ty. want 6% in 1962/3 – agreed. Other

Ministers want it to rise to 10% in 1963/4: Ty. want to keep it

at 6%.
P.M. On incomes we may have more success than expected last July.

Rlway. unions seemed responsible – don’t want to be militant.

Will that in itself limit inflation? Not sure we shall get it yet:

and even if we do its only restraint, not a stop: there will in any

event be injection of substantial purchasing power.

What about 2½% pledge? Degree of our failure on that will increase

need for economies elsewhere – or at least pressure for it - & we

ought therefore to be cautious on investment. Must therefore, for

pol. reasons, leave alone economic watch control on investment

with failure to contain current expre w’in 2½ pledge.

If some Ministers decline to toe this line, others will ask for their

sacrifices already made to be re-opened.

On balance I wd. prefer to achieve stability as base for expansion

later.
R.A.B. Ty. may be pessimistic on future. But leave this aside.

Concentrate on political. In 2 wks. – shall be shown not to have

fulfilled 2½% pledge. If we can’t be convincing on long-term

control we shall be in trouble in H/C. – reacting on City &

f. opinion - & shake to sterling.

We must therefore show we are getting stability first.

I wd. therefore be ready to do school meals (6d).

Capital. H.O. have agreed to cut 3% - means defending 3 in a cell etc.

If some of us are willing to do this sort of thing, all shd. co-operate.

Conclude: we must be able to make strong statement on 27/2.
F.E. Support that view. If pay pause succeeds, won’t be hard to re-phase

investment p’mme.


H.W. Support R.A.B. view: that is why I accepted - £50 m. on defence.
I.M. R.A.B. is right in analysis of Party feeling.

But, whatever we do, we shan’t meet 2½% pledge. How are we

to explain that? Unless we say: bigger prizes to win if incomes

policy succeeds. That success wd. make all these figures look

v. small. Wrong therefore to do anythg. wh. mght. prejudice

success of incomes policy. Cd support school meals & proposal

on agriculture. Wrong to touch welfare milk.

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