Foreign Relations of the United States, 1949, Western Europe, Volume IV

London Embassy Files, Lot 58F47, 500 Marshall Plan: Telegram

The Acting United States Special Representative in Europe ( Katz ) to the Administrator for Economic Cooperation ( Hoffman )

confidential
priority

Paris , July 29, 1949—9 p. m.

[Repto 5468.¹] 1. Following are highlights discussion mtg heads delegations OEEC July 29 to consider UK memo.²

2. Hirschfeld, Netherlands, stated UK memo endangered accomplishment division aid and threatened serious repercussions whole program of European Economic Cooperation. Said OEEC had been proceeding on assumption that dollar aid available would be substantially less than last year and that UK had taken lead in urging Submissions below last year’s levels. He asked whether UK still accepts principle that its dollar aid must be less than last year, including conditional aid and what light UK could shed on further changes in 48–49 due to future UK policies and developments growing out of recent London talks to be continued in Sept.³

3. Cattani, Italy, expressed substantial agreement with Netherlands.

4. Hall-Patch, UK, pointed out that earlier UK submission emphasized tentative nature of figures. When apparent that basic assumptions as to reasonable measure economic activity in US were wrong, UK considered its duty report change of facts to OEEC. Although UK had urged submissions below 48–49 level, its advice not followed and most countries submitted larger programs so that, as of before UK supplemental memo, total submissions were 7% above 48–49 allocations. UK willing take whatever cuts necessary after screening all programs on uniform basis. Cannot say now what will come of Sept talks on pound–dollar situation. Problem now is division European aid. Amount aid available probably not sufficient to carry out hopes of ERP. Origin present difficulties may be scaling down total requests in 47 at urging of US. European economy now faced with serious crisis.

Figure of 1,518 millions in UK memo represents adjustment of current deficit rate of 2,400 million and amounts to only 28% of all submissions. Since last year UK got 26% of total, present submission not out of line. One cause UK predicament is extent success achieving ERP objectives by covering 75% of dollar imports with exports.

5. Cattani stated serious implications British crisis also threatened other countries but these should probably be considered in broader framework than division of aid. Situation calls for complete reexamination European economic situation.

6. Alphand, France, stated cannot reasonably refuse consider British request but in fact impossible do intelligent screening in view magnitude problem and factors such as deficit non PC sterling area which OEEC cannot screen. Attempt to screen UK request would lead endless discussion and prevent prompt division of aid.

7. Bauder, Switzerland, made effective plea for facing inescapable responsibility of considering British memo on its merits no matter how difficult the task. Also stressed need OEEC consideration fundamental problems of trade, currency and general relations with Western Hemisphere, saying earlier tackling of these might have eliminated present crisis.

8. After informal discussions with interested delegations in which OSR did not participate, Snoy, Belg, presiding, proposed procedural as follows: UK submission to be screened by programmes comite solution in usual manner; all screening results to be reported to Council for further guidance before consideration division of aid. This agreed by all, Hirschfeld pointing out that real difficulties merely postponed, and Guerra, Portugal, reminded meeting that possible resubmissions other countries would have to receive similar consideration.⁴

Katz

1. The text printed here is from telegram Repto 723 to London, a repetition of Repto 5468 to the Department of State.
2. Presumably a reference to the supplementary British request described in footnote 1 to Repto 5434, July 28, p. 408. An outline of this memorandum was transmitted in Toeca 1300 from London, July 22, not printed (London Embassy Files, Lot 58F47, 500 Marshall Plan).
3. For documentation on the economic discussions by the United States, United Kingdom, and Canada in London in July and in Washington in September, see pp. 799 ff. and pp. 832 ff., respectively.
4. In telegram 1054 from Brussels, July 29, not printed, Millard reported that Spaak had referred to the British submission as “ill-timed and difficult to comprehend.” Spaak had warned Cripps that he should be more alive to the trends of opinion in the United States regarding the Marshall Plan, for there was “a growing feeling of concern that European nations not cooperating among themselves and otherwise not pulling their weight.” According to Spaak, Cripps seemed oblivious to his suggestions, and now the British crisis hung over all of Europe and the Marshall Plan. (840.50 Recovery/7–2949)