Foreign Relations of the United States, 1949, Eastern Europe; The Soviet Union, Volume V

Secretary’s Memoranda, Lot 53 D 444, March 1949

Memorandum by the Secretary of State’s Special Assistant ( Carter ) to the Secretary of State ¹

top secret

[ Washington ,] March 3, 1949.

In accordance with the Department’s authorization, I saw Mr. McCloy² of the International Bank at 10:45 this morning. He asked me to express his very real appreciation for the Department’s accedence to his request. I explained to him the security aspects of the attached papers³ and he said the information would be kept personal and confidential by him.

He then volunteered that he had asked the British Government for a similar opinion and that H.M.G. had had views generally in accordance with the Department’s. H.M.G. felt that while no military aggression was to be expected, a coup along the lines of Czechoslovakia was a distinct possibility, although considerably more difficult to engineer. If done, it would be timed in accordance with developments on the North Atlantic Pact. Mr. McCloy also said that H.M.G. would work [look?] with cordiality on a proposal to extend a loan to Finland.

Mr. McCloy then asked me the Department’s reaction to such a loan. I told him that I was not in the substantive field, but my impression was that we would offer no objection to a Finnish loan. He asked me to check this with the Secretary and the substantive people in the Department and let him know as soon as possible the Department’s view. The initial loan would be on the order of 30 million dollars, with possibly more later on. McCloy said that if there would be any tendency on the part of the Department to object to such a loan, he should know immediately so that he can gear the operation properly in the International Bank. He stressed the importance of knowing this and the importance of his knowing the basis on which our decision is reached. What he meant was that, assuming no change in present conditions, would we or would we not object to such a loan; and conversely, if a coup or other totalitarian aggression occurs, would we or would we not object to such a loan.

(Mr. Battle⁴ will follow up on this and inform Mr. McCloy in the event I have departed.⁵)

M[arshall] S. C[arter]

1. The source text bears the following notation in Secretary Acheson’s own hand: “C. H. [Carlisle H. Humelsine, Director of the Executive Secretariat] should see that this properly cleared. DA.”
2. John J. McCloy, President of the International Bank for Reconstruction and Development.
3. The papers under reference here were presumably Hickerson’s March 1 memorandum to the Secretary of State (supra) and undated paper summarizing recent information on reported Soviet military moves in Northern Europe, not printed.
4. Lucius D. Battle, who succeeded Brigadier General Carter as Special Assistant to the Secretary of State.
5. On March 5, the Secretary of State appointed Brigadier General Carter to be Deputy to the Chairman of the United States Correlation Committee in Europe on Foreign Assistance Programs (Lewis W. Douglas, Ambassador in the United Kingdom).