840.00R/3–1050: Telegram

The Chargé in the United Kingdom ( Holmes ) to the Secretary of State 1

secret

1357. Personal for Hoffman: Following is résumé of cordial conversation Harriman and I had with Bevin March 8:

Bevin opened with lengthy statement on difficulty of producing EPU plan which had been handed Harriman day before by Cripps.2 He explained UK’s difficulties in reconciling position with respect to Western Europe sterling area and Commonwealth but indicated that UK Govt took a positive position re necessity for a payments agreement. Although he did not refer specifically to the misunderstandings and disagreements with respect to UK German trade agreement, he was emphatic that Germany must be included in EPU and Western system. He referred to a recent conversation with de Gasperi3 in Rome in which latter “pled fervently” for UK participation in EPU saying that inclusion of Germany was essential and presence of Germany without UK was dangerous.

[Here follows a section covering discussion of Southeast Asia.]

Bevin then went into a long explanation of the UK’s desire to be as cooperative as possible but again pointed out the many handicaps which made it difficult for British to go along with all of our suggestions concerning integration. He felt that EPU was the most important item and that attention should be given exclusively to it until its adoption. He felt that too many things could not be undertaken by UK at the same time and referred to the position in Parliament. In particular he could give no assurance that anything could be done about dual pricing for the time being. Harriman stated that there was complete agreement among the State, Treasury and ECA, approved by the President, that the position of the US with respect to all these [Page 644] matters was to ask only for effective and speedy implementation of the OEEC resolution of November 2, 1949. Harriman said also that the matter of dual pricing was of real concern especially as between Germany and France and that he could not agree that the US would cease pressing for an adjustment.

[Here follows a summary of Bevin’s suggestion that a NATO Council meeting and a tripartite meeting of Foreign Ministers with the French be scheduled for the near future.]

Holmes
  1. Repeated to Paris as telegram 395.
  2. The emergence on March 7 of this British proposal concerning an EPU agreement had been anticipated by Katz in his telegram Repto 189 from London of March 4, not printed. Katz therein suggested that the kind of payments union plan expected from the British would probably assign a minor role to gold and might well lead to a serious difference between the United States and the United Kingdom on the nature of EPU (840.00R/3–450). Copies of this plan, not printed, were transmitted to the Department by Holmes in his telegram 1193 from London, March 17, not printed. Holmes pointed out that discussion of the technical aspects of this plan was being localized in Paris between OSR and the U.K. Delegation to OEEC and that the document was being considered informal and subject to possible revision before distribution to the other OEEC countries. (840.00R/3–1750)
  3. Alcide De Gasperi, Italian Premier.