Foreign Relations of the United States, 1947, The British Commonwealth; Europe, Volume III

Lot 122 Box 19 B, Folder D–l

Memorandum by the Deputy Director of the Office of European Affairs (Hickerson)¹

confidential

[Washington,] August 11, 1947.

discussion

1. In your Harvard speech you stated that “The role of this country should consist of friendly aid in the drafting of a European program and of later support of such a program so far as it may be practical for us to do so”. Subsequently, the British and French sent out invitations to the Paris Conference and accompanied the invitations with a set of proposals. Point No. 4 of the proposals states in part: “Information relating to the resources and needs of Germany shall be requested from the Commanders-in-Chief, members of the Control Council.” Point No. 5 states: “The Committee of Cooperation shall seek the friendly aid of the United States in drafting the report, as suggested by the Secretary of State of that country.”

2. No official approach has been made by us to the Paris Conference, or by any of the participating powers, to follow up the point on “friendly aid” (except that questionnaires were sent to the zone commanders in Germany). The Conference adopted an organization plan which contains practically the same language as used under points 4 and 5 of the British and French proposals. In addition, during his discussions with French officials in Paris, Mr. Clayton was asked what means we had in mind for extending the “friendly aid”, and this question has been touched upon unofficially in other places. At the recent meeting in Paris between Messrs. Clayton, Caffery, Douglas and Murphy, it was agreed that the time had arrived for taking some action to carry out the offer of friendly aid. It is probable that an official approach will be made to us in the near future and our course of action should be prepared and agreed upon in advance.

3. Obviously, the concept of “friendly aid” does not include full participation in the Conference. Further, it would be undesirable to take any action now which could be construed, either by the European countries or the U.S. Congress, as approval of any part of the program being developed by the Conference because it might be regarded as a commitment on our part which could later prove embarrassing. It is, however, of extreme importance that the plan which emerges from the Paris Conference be generally acceptable to the U.S. The consequences of a wholly unacceptable plan would be disastrous. Steps which could be taken to assist the Conference while avoiding any U.S. commitment are set forth in the following paragraphs 4, 5, 6 and 7. The steps suggested in paragraphs 4, 5, and 6 could be taken at once and before a first draft of the program is completed. Paragraph 7 refers to action to be taken with respect to a first draft program.

4. The Conference should be informed along the following lines:

a. The basic essential of the U.S. suggestion was that the European countries themselves should devise a program and carry forward effective measures for bringing about European economic recovery. The U.S. will not assist in formulating the program nor, while in the process of formulation, will the U.S. comment on the adequacy or desirability of specific schemes or measures under consideration.

b. There are certain basic objectives that should be achieved in connection with any program if it is to have a reasonable chance of support from the American public and Congress, including, but not limited to, the following:

(1) The program must be designed to bring about the greatest practicable increase, within the European countries concerned, in production of materials needed to fill their basic requirements and to limit requests for supplies from the U.S. to those necessary to fill deficits which those countries cannot, with reasonable effort, themselves satisfy.

(2) Further, the production program of a participating country should not be based only on its own needs but rather on the contribution that can be made to filling the needs of all participating countries.

(3) The participating countries should adopt financial and monetary programs designed to correct as soon as practicable existing financial and monetary weaknesses and to accomplish stabilization of currencies, establishment and maintenance of proper rates of exchange and generally to restore confidence in currencies.

(4) The participating countries should adopt measures looking to the most effective distribution and use of their own resources and the resources obtained from outside sources, including measures to enforce farm collections and to prevent diversions of products into black markets.

(5) The participating countries should take steps to facilitate the greatest practicable interchange of goods and services among themselves, reducing and seeking to eliminate dependence on exchange controls, quota restrictions, compensation and barter agreements and other obstacles to a free flow of goods.

(6) The program should provide for the greatest possible European self-help and should be such as to warrant the belief that its carrying out would give reasonable assurance of European ability to maintain its economy without continued support from the U.S.

c. The points made under Item B above are given in the spirit of friendly aid to the Conference and as an indication of the type of action which the U.S. believes necessary to achieve European economic recovery. It should be clearly understood that, even if the participating countries adopt all the suggestions outlined above, there is no commitment on the part of the U.S. to accept or implement any plan.

5. The U.S. should make it possible for the Conference to ask for technical factual information from U.S. representatives such as statistical information, advice as to the physical possibility of producing certain goods in the U.S. (e.g., an indication of the length of time it would take to fill orders for locomotives).

6. The Conference should be able to obtain some information about the needs and potentialities of the bizonal area in Germany. Since the agreement on the bizonal level of industry is of special importance to the relationship between the German economy and the balance of the European economy, U.S. representatives should be prepared to submit to the Conference the level of industry plan as soon as agreement has been reached after the impending London talks. The method of presentation should be closely coordinated with the French to assure the greatest possible French support for the plan in the Paris Conference. The plan should be presented as the U.S. and British view as to the type of German economy we believe desirable to enable Germany to make a real contribution to European recovery and at the same time to cease being a financial burden to the United States and Britain. It should be pointed out that our main objectives are to expedite the recovery of Europe as a whole, to minimize the financial outlays which the U.S. is being called upon to make, and to insure against a militant Germany in the future. We should be prepared to listen to the views of other powers and to discuss them in a cooperative spirit. In the latter connection, the rate at which the revised level of industry is to be put into effect and the decision as to which industries are to receive priority in reactivation will obviously be of major importance in connection with the contributions that western Germany and the other European countries can make to each other and to the general restoration of Europe. It is particularly these aspects which it is believed should be discussed with the countries participating in the Paris Conference. Unless exceptional circumstances dictate otherwise, it will normally be best to speak frankly about our guiding policies in Germany and the measures we have adopted or would like to adopt in furtherance thereof. If we proceed in this way, there is a good chance that we shall obtain considerable support for the early carrying out of the revised level of industry plan from the countries at Paris.

7. When the Conference has produced a first draft of a program, U.S. representatives could go over it informally with representatives of the Conference, seeking explanations and clarifications of points that are not clear and generally assisting in putting the program into form which could be understandable to those in the U.S. who would study it for substance. It would have to be made clear that such drafting assistance was not to be construed as approval or endorsement of the program but was merely to facilitate its presentation to the U.S. Government, including the Congress.

8. The matter of procedure for communicating with the Conference requires consideration. The United States must present a united front when talking to other powers. It would be undesirable to have two independent groups of U.S. representatives, one representing our interests in the over-all European recovery and the other representing our interests in Germany alone. As our interests in Europe are broader than, though inclusive of, our interests in Germany, it would appear that the State Department should head the U.S. representation and should coordinate the necessary assistants supplied by the War Department and OMGUS and, if any, by the civilian agencies. The OMGUS representatives need not be top ranking officers, but they should be capable and thoroughly familiar with the level of industry plan and with the general economic situation in the bizonal area.

9. The State Department should immediately select its head coordinator and the necessary civilian assistants. They should be sent to Paris and assigned to the staff of the Embassy. They should not form any official or unofficial liaison with the Conference independent of the Embassy. This staff, aside from being of assistance to the Ambassador in connection with paragraphs 5 and 7 above, would be able to study the program as information regarding it is made available to the Embassy. This would mean that less time would be required for evaluating the program after it has been completed and presented and, therefore, it could be presented to Congress sooner. In addition, the staff could advise the Ambassador if the program being developed was clearly inadequate, in which case we would be able to consider whether further positive action by the U.S. was appropriate.

10. It would not appear necessary for OMGUS representatives to be sent to Paris for the moment, but OMGUS should be instructed to be prepared to do so on very short notice. The OMGUS representatives should be further instructed to be prepared to carry on discussions along the lines set forth in Paragraph 6 above, taking the necessary guidance from the head coordinator referred to in Paragraphs 8 and 9 above.

11. The British should be consulted before final instructions are given concerning the course of action suggested in Paragraph 6 above. However, the U.S. governmental position on that course of action should be agreed immediately.

Recommendations

I. That you approve the interpretation of the “friendly aid” referred to in your Harvard speech as including the steps outlined in Paragraphs 4, 5, 6, and 7 above.

II. That you approve sending instruction to Ambassador Caffery to present to the Committee of European Economic Co-operation an informal memorandum covering the points set forth in Paragraphs 4, 5, and 7 above.

III. That you approve the attaching of additional staff to the Paris Embassy for the purpose outlined in Paragraph 9 above.

IV. That you seek agreement with the War Department on the course of action outlined in Paragraphs 6, 8, and 10 above.

V. That, if you and the War Department approve the course of action outlined in Paragraph 6 above, you approve consultation with the British on this matter through Ambassador Douglas in London.

1. This memorandum was addressed to Secretary Marshall through Under Secretary Lovett.