Foreign Relations of the United States, 1949, Western Europe, Volume IV

ECA Telegram Files, FRC Acc. No. 53A278, Paris Repto: Telegram.

The United States Special Representative in Europe (Harriman) to the Economic Cooperation Administrator (Hoffman)

secret

Paris, March 4, 1949—3 p. m.

Repto 2915. Reference Repto 2914¹ replying to Torep 3548 March 2.²

1. OSR plans shift major emphasis work of OSR and OEEC to creative aspects of ECA job. These include achievement fiscal and financial stability, expansion and multilateralization European trade and payments as described paragraph 3, development of new cycles trade and private investment based on development dependent overseas territories, coordination of European private and public investment projects, and production plans with particular reference to implications for both intra-European and Western Hemisphere trade, productivity and marketing method, problem of surplus population in certain parts Europe, and constant review consumption levels to avoid drastic and sudden reduction when ERP ends. Division of dollar aid in annual programs must take proper place in context this larger creative job. We will keep you fully and currently informed.

2. This shift will involve reorientation OSR, OEEC and country missions, and may involve corresponding reorganization and reassignments personnel where necessary. Letter to Hoffman on this subject follows.³

3. In regard objective maximum practicability freedom of European trade and transferability of European currencies, discussions now actively in process in OSR policy board concerning ways and means translate objective into concrete course of action. Discussions include inquiry into relationship investment programs and production plans of participating countries to internal disequilibrium in Europe, removal restrictions on trade, relative prices and exchange rates, and further development intra-European payments system. Have also begun exploratory conversations this subject with Secretariat OEEC. In view sensitiveness and difficulty exchange rates question, delighted learn of interdepartmental discussions described Torep 3548 and look forward development US Government position to guide us. Pending such policy, we will naturally proceed with great care and reserve. To gain maximum advantage from these discussions and avoid crossing wires, we feel sure you appreciate need keep OSR fully informed and channel all communications on these matters through OSR.

Harriman

1. Not printed.
2. Not printed; it reported that careful consideration was being given to the formulation of U.S. policy concerning a European payments plan and exchange rates. Systematic discussions were being held among ECA, the Departments of State and Treasury, the Federal Reserve Board, and the Executive Director of the International Monetary Fund. (ECA Telegram Files, FRC Acc. No. 53A278, Paris Torep)
3. Not printed.