COPY/
POLICY COMMITTEE .
Employment by M.O.I. of J. Walter Thompson.

1. It has been decided, with Treasury approval, that this firm shall be employed as our agents in Latin America, on a no-profits basis.

2. It has also been agreed in principle that they should be employed in Rumania, but only for the purpose of (a) placing advertisements, and (b) getting feature articles into the local press (see note of meeting of 19th March). The firm have been asked to put forward detailed proposals within these limits. (Note that they are asking for a substantial fee for their services).

3. It is understood that plans are now being considered for using them as the Ministry's agents in other countries also, and possibly even in London.

4. The object of this Memo. is to suggest to the Policy Committee that it would be better to refuse to employ this firm in any way except to the limited extent already approved in Latin America and Rumania, for the following reasons:

(i) A Department which gives preferential treatment to a particular firm without calling for competitive tenders or (if tendering is impracticable) consulting an impartial body of advisers, is inviting criticism anyhow. When in addition,

(a) the firm is American, and

(b) the Department is employing a man whose normal peace- time employment is as a director of that very firm, who will revert to that position as soon as he leaves the Ministry, and who is employed in the Ministry in a position in which he can use his influence in favour of his firm,

there is likely to be serious trouble ahead.

(ii) I understand that the British advertising agents know of the decision to employ J. Walter Thompson, and are highly incensed. We must, I think, be prepared for questions as soon as Parliament re-assembles.

(iii) I am satisfied that we can defend the choice of J. Walter Thompson for our purposes in South America; and, with some hesitation, I think we can do so as regards Rumania also, within the limits approved, although since the meeting of 19th March I have obtained further information which makes me doubt whether the decision to use them for feature articles was sound. But I think it would be hard to defend on its merits a decision to employ them in any other way or any other part of the world.

I recommend that the Committee should hear Mr. Bevan's evidence on this point.

(iv) It has been represented to me strongly that, owing to the close ties between the parent company in U.S.A. and, on the one hand, the London subsidiary, and, on the other hand, the various Continental associate firms, details of all their relations with this Ministry are bound to be reported to the U.S.A., whence it is highly probable that they will be reported again to Berlin immediately.

5. It is generally agreed that our publicity methods in most countries of Europe need overhauling. In particular, it seems clear that we are not doing all that we should to get British feature articles published in the local press. But it does not follow that the employment of an advertising agency is the right solution: there are other methods which will probably be found more satisfactory. Doubtless the new Director of Foreign Division will be asked to look into this question as soon as possible.

6. Meanwhile I think we should be well advised to release Mr. Rodgers as soon as possible from further service in the Ministry. I understand that Mr. Rae Smith would be very glad to have him back, and it seems reasonable to suppose that he will still be able to assist the Ministry as a Director of the firm, while his departure will extricate us from what appears to be a very vulnerable position.

(Initd.) A.P.W.

Deputy Secretary.

29th March, 1940.

PM.