Memorandum by the Director of the Office of European Affairs (Dunn)21

There seems to me to be one big gap in our preparations for dealing: with the late-war and early post-war problems of Europe. It relates to the problem of reviving industrial and other economic activity in the liberated areas.

The military program of civilian supply is naturally designed only to provide “the minimum essential needs of peoples uncovered by military operations or as a result of such operations.” UNRRA is similarly and very properly limited to providing minimum essential relief needs. Beyond this is a gap to the point at which the International Bank for Reconstruction and Development enters the field of long-term loans.

Revival of economic activity in the liberated areas will be of great importance to continuing military operations, to economy of overseas shipping and supply, to political and social tranquillity and to the future economic pattern of Europe. The sudden severing of the economy of these countries from the German war machine, into which they have been geared for the last four years, will make the problem one of great magnitude. It is an economic and political, not a relief, problem.

It is the supply aspect of this problem which General Eisenhower raised in his letter of July 1 to the Joint [Combined] Chiefs of Staff. [Page 320] Mr. Mitchell’s draft telegram22 tentatively suggests some first steps toward setting up machinery to deal with the problem.

One difficulty in devising suitable machinery is that so little thought has been given here to the nature and elements of the problem and the means, as distinct from the machinery, for dealing with it. What thought has been given to it so far has related principally to coordination of supplying the requirements of the paying countries. Little if any thought has been given to the problems of supplying credit for both the non-paying and other governments, credits for private industry, stimulation of inter-European trade, or persuasion and assistance to the liberated countries in adopting liberal rather than restrictive commercial policies.

This whole problem is different from that of UNRRA but even more important and seems to have been sadly neglected in comparison. Should not steps be taken urgently to organize thought about it, first within this Government and then in consultation with the British and Russian Governments and the Governments-in-exile?

James Clement Dunn
  1. Mr. Dunn was also a member of the Policy Committee, the Coordinating Committee, and the Committee for Economic Policy in Liberated Areas.
  2. Draft telegram not printed, but see Mr. Mitchell’s memorandum printed supra regarding the proposed position of the State Department on the Eisenhower letter.