840.00R/3–1950: Telegram

The United States Special Representative in Europe ( Harriman ) to the Secretary of State

secret

Repto 1500. 1. Katz asked Hall-Patch1 to call Saturday morning March 18 to explain to him our concern over British paper.2 I joined them for latter part discussion.

2. Katz referred to earlier conversation with Ellis-Rees3 reported in Repto 13664 and again stressed our concern to maintain concerted effort toward constructive result and avoid degeneration into adversary manoeuvre and recrimination. If British paper were put forward formally in Payments Committee OEEC, there was every prospect creditors would find it unacceptable and debtors, while purporting go along, would qualify participation by insisting on equal right impose discriminatory QR’s and other special arrangement. This would mean major set-back for European cooperation. While we are not yet ready state detailed ECA position, it should be clearly understood that if UK pressed its paper as formal British position there would be risk serious Anglo-American controversy.

3. Hall-Patch indicated he shared these apprehensions, and told us that British Government was preparing a new document to submit to Payments Committee. His second document would be confined to explanation of sterling system and special problems which it faced with respect to EPU. The first paper had already been handed to Stikker, French, Ansiaux,5 and Secretariat as well as OSR and would [Page 645] probably be given to Italians and Dutch. He suggested that for the time being serious discussions of problem be limited to this group. We pointed out that discussions should be basis special difficulties of sterling and various possible solutions rather than taking British first paper as formal British proposal on which issues might be joined. He indicated understanding of the importance of this approach.

4. I expressed gratification at his attitude. I felt sure that Bevin shared our concern to find solution which would contribute to the bringing together of all Western countries as part of overall worldwide objectives, but had been frankly apprehensive lest attitude Cripps and pressure Bank of England might lead to rigid and one-sided UK position. If special problems of sterling could be examined concretely and various possibilities explored at technical level, there was much more hope for adjustment differences of opinion on constructive and practical basis with due regard to broad picture.

5. Hall-Patch returning to London today. He expects new British document for Payments Committee to be ready early next week. By middle next week we should have idea how far British Government prepared take approach indicated above.

6. Suggest pass Treasury eyes only Snyder.6

7. I am sending this eyes only, as I am disturbed by leak New York Times March 15 on paper7 handed me by Cripps for confidential discussions. The carrying on of negotiations on this extremely sensitive and highly political subject will not at this stage be assisted by press controversy. I feel strongly our present public tactics should be to accept at face value King’s speech8 and British Ministers assurances of their intention to cooperate development EPU. When difficulties arise in negotiations, we should emphasize as far as possible differences within OEEC rather than clash with US Government.

Sent Department Repto 1500; repeated London Repto 240; pouched Paris Repto 104. Eyes only SecState for Hoffman. Pass SecState eyes only SecState. London eyes only Douglas and Kenney. Paris eyes only Brace and Bingham.

Harriman
  1. Sir Edmund Leo Hall-Patch, Permanent U.K. Representative on the OEEC, Chairman of the OEEC Executive Committee.
  2. EPU proposal handed to Harriman by Cripps on March 7 and referred to in paragraph 1 of telegram 1357 from London, supra.
  3. Possibly Sir Hugh Ellis-Rees, British Under Secretary of the Treasury in 1948.
  4. In Repto 1366 of March 11, not printed, Katz summarized his conversation of March 8 with Ellis-Rees when the latter handed him a copy of the EPU proposal (840.00R/3–1150).
  5. Hubert Jacques-Nicolas Ansiaux of Belgium, Chairman of the Payments Committee, OEEC.
  6. John W. Snyder, Secretary of the Treasury.
  7. British EPU plan. See telegram 1357 from London, March 10, supra.
  8. Speech by King George VI at the opening of Parliament on March 6.