840.70/10–3044: Telegram
The Chargé in the United Kingdom (Gallman) to the Secretary of State
[Received October 30—5:32 p.m.]
9364. From EITO Delegation.
1. Williams advises that on V–Day WPB proposes to terminate all control with respect to locomotives and rolling stock. If this is the case, it would seem that we would lack the machinery to carry out any recommendations that might be made under Article VII, section 2, subsection (a) of draft agreement and would not be able to honor any commitments we might have made to carry out such recommendations without setting up new machinery.
If, for example, some European nation were to place larger orders in the United States than EITO felt it should have, there might be [Page 842] no means for preventing delivery. Likewise, if foreign orders should exceed all productive capacity, our Government might have no means of enforcing EITO’s recommendations regarding priority of delivery or proportionate delivery to the several continental nations.
2. Unless means of financing were found for some countries, the provisions of Article VII, section 2 and Article VIII, section 4 for a fair allocation of equipment (except such as might become available without necessity for payment) as contemplated by Article VII, section 2, subsection (d) and possibly under certain circumstances subsection (b) on the basis of need would be impossible to carry out. It was not intended that if these provisions contain binding commitments, they would be interpreted to require member countries supplying the equipment also to make available the financing. In other words these provisions contemplated the existence of but did not provide for appropriate financing.
Under these circumstances the question arises whether in the absence of international machinery for financing, the United States would wish to enter into commitments intended to permit the fair allocation of equipment exported to Continental Europe if it will be impossible to give effect to them without providing financing.
3. Having this situation in mind, we are inclined to feel that if the opportunity should arise to reach a compromise with the Soviets involving the sacrifice of specific commitments covering recommendations made under Article VII, section 2 in return for satisfactory commitments covering recommendations for movement of traffic of common concern, we should be disposed to accept such a compromise. Obydin who has been “indisposed” asked to see Noel-Baker personally this morning and later cancelled the appointment. We are awaiting new information of new arrangements for their meeting. If this should mean the Soviets are prepared to compromise, we believe something along the lines above indicated may be the most practicable. Urgent reply requested. [EITO Delegation.]