future prosperity and peace in Europe lies in the setting up  
of some European system, not necessarily a Federation, but at  
any rate something approximating to the free co-operation ef cur British  
Commenwealth, and requiring for its effective working a definite measure   
of internal econemic co-operation between the States thus grouped. Without   
mutual fiscal preferences I do not see how they can establish anything in   
the nature of a stable European currency, and I fear the return of the same   
economic forces which drained Europe ef the basis ef its currency lO years   
age and led to the great slump in prices and all the evils that have   
followed. But all that is of course incompatible with any rigid   
interpretation ef the most-favoured-nation clause, and it seems to me very   
important that we should all begin thinking here as to what we really mean   
by the economic declarations in the Atlantic charter and how they are to be   
carried out in such a fashion as will really conduce to world peace,   
economic stability, and the largest measure of real freedom ef economic   
                        intercourse.                        
 
                                                            
 
 
You opened up yet another interesting question which we did not pursue,   
namely the relationship between the setting up of a European system and   
the League of Nations. I see no reason, why the League should not on its   
feet again for every kind of broad humanitarian purpose as well as for   
conference and conciliation. It was on those lines that it did good work   
before. The moment it attempted to think of itself, as a quasi federal   
authority empowered to deal by coercion with the great issues of peace and   
war, it broke down and was in fact one of the main contributing causes to   
the great world disaster. On the other hand, kept within the limits I have   
suggested, I see no reason why it should not be universal or why the United   
                 States should not join it.                 
 
                                                            
 
 
On the other hand the more difficult and contentious issues cannot really   
be universalised but have to be dealt with as a single complex of political,   
social and economic forces in any particular area such as that of Europe.   
So my answer to your question would be that there is plenty of room side   
by side for a League of Nations universal in scope but carefully limited   
in powers and subject matter, and for similar groups, European,   
Pan-American, British Commonwealth, etc. to deal with the more difficult   
questions which can only be settled, in the present state of the world at   
any rate, over a more limited field. That is after all the natural step in   
evolution from the nation state of today to the world unity of the future.   
empt after the last war to jump that step should be a lesson
 
                                                            
 
 
I fear I have wandered on at great length, but I came away  
from lunch feeling that there was so much I should still have wished to   
hear from you and suggest to you. So at any rate I have dictated some part   
   of what might have been my share in the conversation.