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

841.5151/6–2549: Telegram

The United States Special Representative in Europe (Harriman) to the Secretary of State

top secret
priority

Paris, June 25, 1949—7 p. m.

Repsec 32. Eyes only for the Secretary from Harriman. Please give this message no circulation except as indicated by Secretary after he has seen it.

Reference Department’s No. 2163 to London; repeated Paris 2249, and London’s 2444; repeated Paris 470.¹

1. Concur in views expressed by Douglas reference message above. I assume that when Douglas proposed Canadian participation Snyder-Cripps talks, he did not suggest Canadian representative should sit in all of the meetings but only at appropriate times.

2. Agree validity Douglas argument regarding desirability postpone British announcement their figures, yet I want to point out continent is generally becoming aware of deterioration of British position and yet until figures are published, it is difficult to discuss frankly with continental governments problems which they face as a result.

3. I interpret, perhaps wrongly, Bevin message to you² as indicating Snyder will be faced with demand that United States Government strongly support publicly present sterling-dollar rate. I believe the clue to the interpretation lies in the words “unless firm action is taken”. I have in the past held the view that it would be well not to attempt to influence British to devalue until they had felt the pressure lower world prices on their export producers. I had thought this would create healthy incentives to increase productivity and to reduce costs. Devaluation, I had thought, would be of more permanent use after than before these pressures had had their corrective effect. I am now of the view that the British position cannot be dealt with if all of the present rigidities in the Crippsian concepts are maintained. Something must give and at the present time it is the British reserves. I therefore feel that the British should now consider devaluation along with other steps they and we might take. My impression is that Cripps is as rigid as ever in his determination to maintain the sterling rate. It seems that his ideas of remedies are further austerity and controls on the British economy with perhaps some further assistance from the fund and/or the United States. Also I cannot avoid the thought that he may hope to high-pressure us into acceptance of his ideas of a closed discriminatory sterling area expanded to include the continental countries as far as possible. Perhaps, needless to say, I would view such a course as politically and economically disastrous.

4. It seems obvious Snyder-Cripps talks would naturally and should begin by Cripps analyzing British situation as he sees it, and offering his proposals for dealing with it. I believe Snyder should be prepared to take firm position on United States attitude. I think we should face the real possibility that no agreement can be reached at this time. I recognize all of the dangers including those pointed out in Bevin’s message but feel that fundamentals are at stake and that we would therefore not be justified in yielding. In addition, I feel that action of kind desired by Cripps likely be futile in short-run as well as disastrous in long-run. On the other hand, if we find British Government is prepared earnestly to seek an agreement with us consistent with our fundamental objectives, I hope that Snyder will be prepared to talk through both immediate steps and long-range program.

5. I plan to go to London Monday morning to talk things out with Douglas. We will telegraph you our joint opinion after our discussion, but I thought it might be useful to make the above comments in the meantime.

6. I hope that I can have some word from you by then as to whether you wish Douglas and myself to discuss with Bevin the serious implications of Cripps’ uncompromising position at Brussels meeting (reference Repto 4885³) with the hope we can induce British Government to accept a compromise payments plan which would at least avoid the increased difficulties coming from an OEEC impasse.

Repeated London unnumbered (eyes only to Douglas).

Harriman

1. June 24, not printed; in it Douglas, inter alia, agreed that Bevin’s message requesting Anglo-American consultations on July 8 or 9 with Canadian representation was inconsistent with the announcement of restrictions on July 5 on the one hand, and with Cripps’ statement that discussions would be held with the United States before restrictions were imposed or announced. (841.5151/6–2449)
2. Transmitted in telegram 2163, supra.
3. Not found in Department of State files.