840.50 Recovery/9–1547: Telegram
The Ambassador in France (Caffery) to the Secretary of State
3780. For the Secretary and Lovett from Clayton, Caffery and Douglas. Some of the criticisms of the program which is being formulated [Page 433] by the Paris Conference arise, we believe, from the opinion held by a few that the European participating countries should designate without regard to national frontiers the productive facilities that should first be brought into production. This view sounds plausible enough at first but its implications, we think, are far-reaching. First, it inevitably requires for its execution an international organization to select the plants that will be given priority; second, it inevitably requires an international organization to allocate the necessary raw materials for the operation of plants enjoying priority; third, it inevitably requires an international organization to allocate among several or all of the participating countries the products of plants facilities to which priority has been given. The evidence is clear, we think, that the 16 participating countries would not accept this sort of system and organization. Moreover, even if they were prepared to agree to such a system, organization, and procedure, in our opinion, interminable arguments would ensue among many of the participating countries as to which plants would be first brought into production, how raw materials and in what amounts should be allocated to them, and to which countries the products of these plants would be allocated. Finally, such a procedure and organization would, we think, in effect result in a planned economy to a dangerous degree. It is almost certain to lead to international cartels which would stimulate nationalism and tend to frustrate the ultimate restoration of natural economic forces. We believe it much more prudent and much wiser to seek from the participating countries or most of them commitments among themselves and later with US to reduce trade barriers including the establishment of appropriate exchange rates. This course will, in our opinion, more effectively bring about a community of economic interest and responsibility based on natural economic forces.
We realize, of course, that a very limited list of commodities are now being allocated, and must during the period of shortage continue to be allocated, such, for example, as coal and food, but to enlarge the present limited list would, we believe, be impossible to achieve agreement upon and ultimately might produce the situation which we have described.
As to screening of the various nationalistic programs, we think, that not as much has been done by them collectively as might well have been done. We are, however, disposed to the view that the requirement when measured against the available supplies of essential materials inescapably produce[s] the necessary screening.
In our opinion, the most important considerations are those involving the basic principles to which we have referred. [Clayton, Caffery, and Douglas.]