London Embassy Files: Telegram: Lot 59 A 543, Box 1388 File 580 Marshall Plan
The Administrator for Economic Cooperation Administration (Hoffman) to the Embassy in the United Kingdom
Ecato 169. 1. Considerable uncertainty seems to exist on question of how 300 million dollars investment guaranty funds will be divided among participating countries and whether guaranty funds are part of or in addition to annual allotments now being proposed by OEEC.
2. We have made clear to OEEC, and we assumed through OEEC to participating countries, that 4,875 million of program funds is total money which ECA will have to spend during fiscal year 1949. Consequently, 4,875 million includes grants, loans, and guaranties. Since OEEC is recommending division of total 4,875 million among participating countries, OEEC recommendation for any particular country covers grants, loans, and guaranties. In answer to London’s Toeca 132, repeated to Paris as Torep 84,1 we are at loss to understand how British could think that there was any money over and above their annual allotment from which we could give them an extra sum to cover guaranties unless we took this money away from other country. We can only assume that British position on this subject was a matter of bargaining tactics.
3. In view of foregoing, you should make clear to all relevant participating countries that their annual allotments, as recommended by the OEEC and approved by ECA Washington, will contain grants, loans and guaranties. By previous arrangement with OEEC, the division of annual allotments among grants, loans and guaranties will be worked out through bilateral negotiations between US and each individual participating country. Just as we have determined grant-loan ratio, we will shortly determine loan-guaranty ratio after we have had an opportunity to examine annual program in Washington. For example, if total UK annual allotment is 1,200 million, we may decide that it should be divided into 800 million of grants, 300 millions of loans and 100 million of guaranties. We will make same tripartite division [Page 483] within total annual allotments of all other participating countries which we feel should be participants in guaranty program. Portion of total allotment placed in guaranty category will be available only for that purpose and if participating country does not approve sufficient number of guaranty projects to absorb guaranty proportion of its annual allotment, difference will revert back to Ecato be used by ECA for whatever purposes and” in whatever country seems to us most appropriate at time.
4. In determining which countries are eligible for guaranty funds, we will probably use as our main criterion principle that countries, which should not assume over-large loan obligations should have their ECA loans reduced by shifting part of such loans into guaranty portion of annual allotment. At present, we feel that these countries will be UK, France, Italy, Netherlands and perhaps two or three others-but final determination must await examination of OEEC annual program here.
5. Above procedure should provide adequate incentive to countries, to approve guaranty projects because otherwise their total annual allotments will be reduced. It is quite likely that if any of guaranty portions of total allotments of countries listed in para 4 above are uncommitted by Jan 1, 1949, we will recapture such uncommitted portions of annual allotments and make these available to those countries which have already programmed up to full amount of their guaranty quotas. This message except last two sentences in para 2 sent to all ECA missions except China.
Sent London Ecato 169; rptd Paris Torep 783.
- Not found in Department of State files.↩