The British Secretary of State for Foreign Affairs (Bevin) to the Secretary of State 1

I have been giving further thought to the German problem. I am convinced that this must be tackled again without delay and dealt with as a whole. I do not consider that it is wise, or indeed possible, to try to separate the political and economic sides of the problem.
On the economic side we are confronted with the present state and future development of the German economy and with the relationship of the German economy to the remainder of Western Europe; and the latter, in turn, links up with the question of liberalisation of [Page 628] trade, European payments, and possible closer economic regional groupings in Europe, which were discussed at the recent O.E.E.C. meetings in Paris.
You will have heard that as far as a European Payments scheme is concerned some serious, but we hope not unsurmountable, difficulties emerged from the expert examination in Paris, among them the relationship between a European Payments Union and the Sterling system. We are going into this further and will later have informal discussions with representatives of Mr. Harriman’s mission. We are anxious to co-operate, and we shall make every effort to devise proposals which will enable the Sterling Area to play its part in a satisfactory scheme of European payments.
In the meantime, we know that suggestions are being made to our European colleagues that they should make progress with Payments arrangements with or without the United Kingdom, and also with the so-called “Finebel,” which may amount to much the same thing. We are not clear what the “Finebel” plan is at the present stage. We, of course, appreciate the pressure of the Congressional time-table and the preoccupation and anxieties of the United States Administration and E.C.A. about the next appropriation for the European Recovery Programme. At the same time, we fear that the short-term advantages may obscure the long-term dangers of such a course to the relationship both of the United Kingdom and Germany to the rest of Western Europe.
As far as the United Kingdom is concerned, we believe that if a limited Payments scheme is now set up, a process will have been started which may lead to a permanent division between the Sterling Area, and perhaps Scandinavia, on the one hand and the “Finebel” Countries on the other.
In the second place, the establishment of a limited Payments scheme involves a decision on the relationship of Germany to that scheme. I believe it is premature to force this decision now, since it would be taken in a particular context without consideration of the problem as a whole, and in any case before we have had an opportunity to review the problem in its entirety with our French colleagues during your hoped for visit to London.
For these reasons I took the occasion of my recent journey through Paris to tell the French Ministers of our preoccupations and to suggest that they should not force the issues posed by “Finebel” pending discussion with us both.
I hope you will agree with my general outlook. Sir Stafford Cripps and I hope to see Monsieur Stikker in London in the coming week, and we shall go over the ground with him from the same point of view.
We must, I fear, take time or we shall be forced into decisions which will have the effect of making such a division in Europe that will rule us out. I am trying to avoid this. Another division economically will mean a great set-back politically.
  1. The message was left at the Department of State on February 13 by Sir Frederick Hoyer Miller, Minister in the British Embassy, with the request that it be delivered to the Secretary of State and that copies be made available to the Treasury Department and to Paul Hoffman of ECA.