P.M.

i) In spite of Keynsian policies, Admn is finding diffy in getting
  economy moving.  Row with steel is popular, but rather
  demagogues.  The steel cos. cd. have done it more sensibly -
  by items instead of average increases & not doing it so soon. 
  Even so, some shadow of New Deal - risk of losing co-opn of
  business.
 ii) Defence.  Mr K. is in diffies:  better armed v. Govt. agencies because
  keeps his counsel in narrow circle.  Disappointed at out-turn of
  tests ques:  but looks as tho' R. will do another series.  After that
  U.S. might be ready to give it up.
  Nuclear strength of R. & U.S. has got much too large.  To catch
  up R. must have devoted enormous resources.  A nuclear
  exchange wd. kill 100 m. Europe, 130 in U.S. & 200/250 m. in
  U.S.  What will happen to credibility of deterrent when that is
  more widely known.  Will Govts. be willing to risk that sort of
  destruction?  If not, this is instrument wh. will never be used.    
  This is what causes them to think of larger conventional forces -
  as reply to e.g. nipping out Hamburg.
  U.S. have eliminated pre-emptive R. war - by protection of sites
  & Polaris as 2nd strike.
  But, unlike previous Adminn, this one believes tht. some day all
  this nuclear business must stop.
  K.'s emphasis, in speeches & interviews, are largely on his
  domestic problems.  This must reflect recognition of huge cost,
  in resources of nuclear effort.
iii) Summit Mtgs.  I'm anxious to concentrate this year on C. Market.
  Mr K. understands this - & recognises its importance to us.
  He accepts tht. pro. tem. we shd. avoid mtgs. which wd.
  exacerbate de G.
iv) Berlin:  W. Alliance.   U.S. annoyed with Fr. and G.  Cross at thought
  tht. U.S. will be said to have sold Germans.  Tried to make Mr K.
  realise tht. this is price of power.  But not sure any progress will
  be made on Berlin - not a settlement anyway:  perhaps
  modus Vivendi which works on.  That wd. give us respite until
  we are ready to go forward on tests.  Avoid Summit failure.
v) General relations with U.S. are good.  Won't be affected by our entry
  into C. Market.  Depends, not on our power nor on our nuclear
  capabbilty, but on fact tht. they can trust us as they can't trust
  French etc.
vi) Irritants - tariffs.  Protection is traditional in U.S. & has now extended
  to the South.  Pressure to let Tariff Commn have final decision.
  He must accept some of their recommendations, or he may lose
  his jurisdiction.
  On shipping I have promised to send him a memo.

R.A.B. 

Opinion here is not sure what U.S. motive is in pressing for our entry
into C. Market.  Must be political, not economic.  Suspicion
therefore that our sovereignty may be impaired
Press - brought out well tht. we are defending C'wealth interests.

P.M.        

vii) Colonialism.  Co-ordination W'ton/N. York.  [Enter  Hailsham, M.R.
Congo:  Anglo-U.S.-Belgian co-ordinated policy.   

Taken from C.C. 31(62) - Meeting held on 3 May 1962