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

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


Repto 3068. Eyes only for Hoffman and Secretary of State. Purpose this message is to give fuller report promised in Repto 2994, March 81 regarding meeting of ministers forming consultative group of OEEC held March 4–8. It should be stressed that no minutes are kept of these meetings and that documents prepared to serve as basis of discussion are considered top secret for personal use of participating ministers, and are destroyed after decisions have been reached. Discussion [Page 375] centered upon means of implementing principles approved by Council at February 17 meeting embodying organization’s plan of action for 1949–50 (REPTO 2759, February 181 and document C(49) 122).

I believe discussions brought out very clearly importance both from substantive point of view and from that of avoiding duplication of debate that American views on questions at issue be taken into account by group before formalizing its own views. Fact is that prior to my presentation of our point of view as described below, Cripps had been able, in spite of partially successful opposition from Belgians, French and perhaps others, to secure in considerable measure adoption by group of British point of view based notably upon need for drastic nonselective reduction of dollar imports and development, more or less regardless of cost factors, of new sources of supply in nondollar areas of goods normally imported from dollar area. I believe that this experience may lead group to favor even closer and more constant participating by United States representative in its future discussions.

Final document approved by consultative group and given to press is contained in REPTO 2983, March 83 (CGM(49)8 revised). Executive Committee is entrusted with initiating action in accordance with document and submitting proposals for necessary supplementary decisions to Council.

This document reflects my own participation in discussions of consultative group on March 7 and 8 as well as participation at expert level of OSR representatives (Katz, Bonsai and Livermore). Before detailing extent to which document reflects our thinking, I will summarize ideas which I set forth to group.

I said that I believed document which was before group at time I was invited to participate in debates was extremely dangerous in its potential effects on (a) very important segment of American public opinion desiring sound trade relationship between United States and Europe to be achieved through Marshall Plan, and (b) less important but vocal elements of American public opinion which were opposed to Marshall Plan and would gladly misinterpret OEEC attitude.

I said that our objective for 1952 of a Europe independent of extraordinary outside aid involved important adjustments on part, not only of recipients of such aid but also of givers; namely, United States. It is, therefore, important that we must fully participate in formulation of OEEC policies. As supporters of ITO Charter and of progressive lowering of trade barriers leading to expanded world trade, we are [Page 376] opposed to restrictive policies and especially to creation of autarchic Europe which might result from literal application of principles contained in document then before group.

I stressed fact that United States productivity per inhabitant was three or four times that of Europe and that a basic new approach to problem of European productivity and hence of European contribution to world trade was essential. I emphasized dynamic expansive possibilities. I recognized that, of course, restrictions in dollar imports were necessary but I said that these should be studied on highly selective basis and that to base a policy for a future which we hoped would be one of expanded world trade on a multilateral basis, upon the necessities of today might well be disastrous both in substance and in its effect upon American public opinion. I added that the enthusiastic support of a majority of that public opinion was, of course, essential to continuation of Marshall Plan aid.

I laid particular emphasis upon need for realistic examination of European costs and pricing policies. I said we could not accept thesis apparently advocated by Cripps to effect that new non-dollar sources of supply should be developed regardless of cost or effect on trade with dollar area. Cripps pointed out in this connection that interim long-term report left no doubt of fact that there would be still important dollar deficit in 1952 and that consequently drastic measures would be needed. It was, however, sense of meeting that these drastic measures should not be autarchic in nature. I made it as clear as possible by reference to preamble of foreign assistance act that our congress and people expected they would by 1952 have contributed to creation of world trade conditions and particularly European trade conditions considerably less restrictive than those existing at time [ERP?] was initiated.

At my suggestion, Secretary General was requested by group to prepare for its May meeting a report on conditions which should exist and measures which might be taken to promote flow of private and government capital.

With regard to colonial and backward area development, I said emphasis should be on developing new sources of exports to increase dollar earnings rather than on finding substitute sources of supply to avoid dollar spending.

Following is summary of important changes introduced in published document referred to above as result OSR intervention.

Preamble was strengthened in direction of more constructive action-and emphasis on expansion of world trade.

In proposal 2(A) “measures to increase productivity to reduce or eliminate trade barriers” were added. Paragraph (E) on costs was [Page 377] originally a separate Swedish proposed resolution which at our suggestion was introduced here with scope widened to include reference to prices.

Proposal 3. In paragraph (A) we secured addition of phrase “after taking account of all available dollar resources and will take all necessary measures to achieve this end.” Paragraph (E) reflects our emphasis upon “the re-establishment of multilateral world trade on an expanding basis” and the importance of “lowest possible prices and least possible disturbance of traditional channels of trade”. In paragraph (H) we added coal as one of the products to which special attention should be given.

Proposal 4. In proposal 4 we successfully advocated emphasis on multilateral concept of trade in paragraph (A) and (C).

In the case of proposals 5 and 6, we introduced in paragraph (B) concept that resources available should be used “on an economic basis”. At our suggestion paragraph (D) was added which asks Executive Committee to review agricultural development plans of participants in addition to certain industrial categories. Paragraph (F) also reflects our emphasis upon eventual goal; namely, “conditions of expanding multilateral world trade”. Simiarly, paragraph (G) was added because of our interest in development in dependent overseas territories of “materials which are in world short supply or may be expected to be in world short supply under conditions of expanding economic activity”. This concept is in contrast to original concept which placed emphasis on development in these territories of substitute sources of supply for goods now obtained in dollar area.

  1. Not printed.
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  3. Not printed. For further information on the meeting and the “Plan of Action” adopted there, see Keesing’s Contemporary Archives, June 11–18, 1949, p. 10037.
  4. Not printed.