840.50 Recovery/7–2849: Telegram

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


Repto 5434. Eyes only Harriman, Hoffman, Foster, Bissell. Re Repto 5378 and Torep 6693.1 Held meeting policy board this morning to discuss issues reference cables and develop common OSR understanding and approach. Reached following conclusions:

At unofficial meeting heads of delegations tomorrow morning Bonsal2 and Gordon3 will limit themselves to observing proceedings and will offer no suggestions. If requested to comment, they will merely indicate that OSR is awaiting OEEC recommendations.
Our objectives should be: first, to find ways and means to bring about a quick division of the dollar aid with minimum controversy, and second, for OEEC to concentrate on problems of disequilibrium underlying new British submission. First objective could be achieved in several different ways, e.g. (I) set aside new British submission and divide aid on previous basis; (II) reduce new British submission to residual minimum by rigorous screening; (III) examine new British submission on basis agreement that in no event should aid for any country exceed last year’s figure, except special cases such as Portugal and Turkey. In effect, this would mean screening downward from last year’s figure as starting point, after giving a respectful nod to the new UK submission. Second objective would represent attempt to turn the present confusion to good account. Secretariat of OEEC has been quite disturbed by implications of discussions of British position among UK, Canada, and US in London and planned renewal of such conversations in Washington in September. They have pointed out that this transfers examination of many of basic problems of European equilibrium from OEEC to Anglo-American-Canadian forum. They were troubled by fact that when faced by crisis, UK turned not to its associates in western Europe but bilaterally to the US. It might now be possible to treat new British submission as occasion for OEEC study of underlying UK problems as part of deeper issues of reconstruction and readjustment western Europe. If this should prove possible, it might be means to turn OEEC’s primary attention to the questions of trade and financial policy with which they must come to grips before [Page 409] the next session of Congress, and which we have been trying to hammer home in so many different connections during the past few months. This, incidentally, is what we had in mind by the “second problem” in paragraph 2 of Repto 5378.
We will leave the initiative with OEEC and its constituent delegations and for the time being will not seek any meetings whether formal or private and informal with them. When members of delegations or the secretariat approach us, we will be guided by foregoing objectives and possibilities in discussions with them.

  1. Neither printed; they reported that in a supplementary request for economic assistance the British had indicated to the OEEC that their estimated trade deficit had risen from $1,114 million to $1,518 million, and that this had greatly disturbed the other delegations at the OEEC meeting. OSR and the Washington headquarters of ECA agreed that OEEC and not ECA should deal with the problem of this supplementary submission. (840.50 Recovery/7–2649, 7–2749)
  2. Philip W. Bonsal, Foreign Service Officer on temporary duty with OSR.
  3. Lincoln Gordon, Director of the Programs Division of OSR.