London Embassy Files: Lot 59 F59: File 850 Marshall Plan: Telegram
The Chief of the Economic Cooperation Administration Mission in the United Kingdom (Finletter) to the United States Special Representative in Europe (Harriman)
285. To Harriman from Finletter. Had conversation today with Cripps in which he expressed the following views. He has two main worries about the plan at the moment.
- 1.
- He said that the UK was short of manpower to handle the administration of the plan. He said the UK was better off than many of the recipient countries in this regard, but even they would be hard put to find qualified personnel. This was in effect a criticism of the requests for detailed information which are being made on the British Government.
- 2.
- He was not satisfied with the position taken by the US that the recipient countries should themselves make the division of overall dollars available for the first year of the plan. He made the argument, which is becoming standard here, that this would put too heavy a strain on OEEC and might break it. I replied that I understood that US policy was to have the plan operated through joint collective effort of the recipient nations rather than by having the US determine who [Page 453] should get what and how much. Cripps recognized this position and did not put up much resistance against it.
We then turned to the problem of the loan-grant ratios. He insists that it is impossible for the UK to make up its mind how much to ask for in the first year or how much to settle for in the first year with the other European nations without first knowing the division between grants and loans. His argument was something like this. The UK has a definite policy as to what it will accept on loans and what it will accept on grant, the grant and loan division being, of course, roughly between consumers items and capital items. Given this policy of the UK, which incidentally is not followed by all countries, the UK would be in a position, if the presently proposed US procedure is carried out, of being awarded an amount on loans which might be beyond the amount which the UK felt it could properly accept on a loan basis. The effect of this, he pointed out, would be to compel the UK to reject part of the loan and to give to it vis-à-vis the other European countries a lesser share of the goods to be received through the ECA program. This, of course, would discriminate against the UK in favor of those countries which did not follow the UK policy of accepting only certain types of goods with credit financing. He was very emphatic about this.
Incidentally, he said it was his understanding that a recipient country would have the right to reject all or any part of the sums offered by the US on loan account. Don Bliss, who was with me, and I said that that was not our understanding. He expressed some surprise and said this question would have to be talked out, because unless his view was accepted it would mean a fourfold loss of aid to the UK on account of her scrupulousness with regard to the acceptance of credit obligations.
I then asked him what he thought should be clone. He said his number one position was that for the first year of ECA the US should fix the amounts to go to each country as well as the proportions of loans and grants to go to each country, with the understanding that this would be for one year only and that for the later years the recipient countries would be required to make the division of the total amounts between themselves by their own action. I said that I did not think that this would be in accordance with your and Hoffman’s views. Cripps said his second choice was that the recipient countries should be required to make the division among themselves, but that they should know at the time that they made this division what the allocation between loans and grants for each country would be, such latter division to be made by decision of US Government. He said that this also would be quite a strain on OEEC, but definitely better than the procedure presently contemplated as he understood it.