841.51/10–1949
Memorandum by the Secretary of State
1
confidential
[
Washington
,] October 19, 1949.
This very interesting report of Gene Rostow’s bears on the question I
asked the other day—Where did we go wrong? What did we miscalculate or
overlook?
Answer:
As I look back on the situation the fault lay primarily with me in this
way.
As we foresaw the talks, discussion of devaluation was a possibility but
an improbability. It was left to the British. It seemed quite impossible
that the British would tell us when and how much.
When to our great surprise they did just this and it turned out that
action was imminent, we were told under restrictions which made [Page 848] impossible any discussion
within the Department. We also were not told the moment, only the range,
until the last, since the British had not decided.
Frankly, I did not grasp the significance of the amount of devaluation
and the connection of it with our talks upon the Europeans. Probably I
should have understood this and insisted that the French be brought in.
I think that the British would have refused. Would any of you have
foreseen the consequences?
How could the British have done otherwise than they did? Did they take
advantage of us?
What do we learn from this?
[Annex]
Memorandum by the Special Aide to the Executive
Secretary of the Economic Commission for Europe (
Rostow
) to the Executive Secretary of the Economic
Commission for Europe (
Myrdal
)2
personal confidential
[
Geneva
,] 12 October 1949.
Subject: Devaluation and European Cooperation
In the course of my conversations in Paris yesterday (13th October)
[sic] certain aspects of recent
developments were emphasized, which I might call to your
attention.
- 1.
- In the first place, all those with whom I spoke felt that the
way in which the devaluation of sterling was handled constituted
a severe set back to the cause of European cooperation. In fact,
it was widely feared that this episode greatly weakened the
momentum achieved at Strasbourg. One highly placed and very keen
observer, whose judgment has been proved excellent over a period
of many years (and, be it said, a long-standing cooperator with
Britain and the United States), thinks that at the present time
it would be impossible for anyone to stand up in the Chamber of
Deputies and talk about European economic cooperation without
being greeted with laughter. This man quoted a French peasant’s
view to the following effect: “Those British always know how to
look after themselves. That is what you can expect from them
every time—a kick in the backside.” The contrast to the way in
which French devaluation a year ago was conducted, [Page 849] after lengthy
discussions with the British, will rankle for a longtime.
- 2.
- The apparent implications of the affair, in the light of
obvious policy leaks to the American press from the State
Department, support the hypothesis that some part of the
American Government at least favours a policy of continental
European cooperation, with Britain more or less free of Europe
and linked to the United States. This policy is regarded as both
ridiculously impractical and extraordinarily dangerous:
impractical because, as the events following devaluation
demonstrated, the continental economy and the British economy
are indissolubly linked; and dangerous because Western Europe,
without Britain, would inevitably be dominated by
Germany.
- 3.
- This cycle of events has put American policy in a peculiar
light. The United States has, of course, been pushing through
the Marshall Plan in the direction of closer European
cooperation and even integration and union, at least in the
field of monetary policy and arrangements. A purely
Anglo-American approach to European monetary problems seems not
only inconsistent with such a policy, but the gravest possible
menace to its fruition.
- 4.
- All the people with whom I spoke felt that very vigorous
efforts would have to be made promptly by both the United States
and Great Britain to overcome the negative results of the
Washington Conference. In fact, one person went so far as to say
that he thought Cripps’ retirement was indispensable to the
reconstitution of Anglo-French relations.
