Foreign Relations of the United States, 1950, Western Europe, Volume III

611.41/1–2450

Memorandum of Conversation, by the Director of the Office of British Commonwealth and Northern European Affairs (Labouisse)

secret

[Washington,] January 24, 1950.

Participants:	The Secretary
	Sir Oliver Franks, British Ambassador
	Henry R. Labouisse, BNA

Sir Oliver Franks came in at his own request. He said that the principal purpose of his visit was to enquire whether the Secretary had anything further to say on the Spaak question. The Ambassador wished to advise Cripps before the latter’s departure tomorrow for Paris.

The Secretary recalled that at his meeting on Friday with Sir Oliver he had indicated that he would give further consideration to the British request that we ask Spaak to withdraw his candidacy for the OEEC position; he said he had subsequently spoken to Mr. Hoffman and it had been agreed that Mr. Hoffman would see the Ambassador to convey the joint views of the Secretary and Mr. Hoffman; and he concluded that he understood Mr. Hoffman had informed the Ambassador that we did not consider it appropriate for us to raise this question with Spaak. Sir Oliver said that Mr. Hoffman had so informed him but that he had not understood that Mr. Hoffman was also speaking for the Secretary. However, he now considered his question answered.¹

The Secretary emphasized that we still wished a strong political personage to steer the OEEC, but that we continued in the view that the exact nature of the position as well as the personality to fill it were matters for the European countries to determine.

Sir Oliver then said he had had a satisfactory talk with Messrs. Hoffman and Foster² on Sunday concerning the ECA policy with respect to the use of funds on the basis of merit. Sir Oliver feels that the present ECA position, as expressed by Messrs. Hoffman and Foster, will not cause any real difficulties in Paris. He seemed to feel that this was largely a matter of presentation and that the ECA would stress the reward, rather than the penalty, aspect of the policy. He expressed to the Secretary his appreciation for this turn of events.

Sir Oliver then said that he would like to comment on the negotiations on the MDAP bilateral. He expressed the view that most of the difficulties had been removed, although there were two unsettled points which were before the British cabinet today for decision. These two points were (a) the amount of local currency expenditures to be undertaken by the British and (b) the question of diplomatic privileges for military personnel. He personally felt that these were not very important issues and therefore hoped that a satisfactory solution could be found. If, on the other hand, the word he receives from London tomorrow as a result of the Cabinet meeting does not pave the way for an immediate satisfactory solution, he said that he would take the matter up with Mr. Perkins.

The Secretary then said that there were a few other items of an urgent nature which he wished to call to the Ambassador’s attention as he felt that they would require some action before the British elections and, unless satisfactorily resolved, might cause serious difficulties. He then proceeded to outline the problems listed in Tab A of Mr. Perkins’ memo of January 24 to the Secretary, with the exception of item No. 6, “European Integration”.³ Sir Oliver made notes on these items and thanked the Secretary for calling his attention to them, saying that he realized the importance of working out satisfactory solutions and hoped something could be done.

Sir Oliver then said there were two questions he should like to ask, which related generally to the tripartite conversations,⁴ the sterling balances and our policy with respect to Asia. They were as follows:

1. Did the Secretary think it would be helpful if the British made some affirmative proposals on the sterling balances and related problems?

2. Have we any views as to timing?

The Ambassador was told that we considered it important that the British make some affirmative statements as to what the problems are and what they intend to do about them. This is particularly true of the sterling balances, which are primarily British problems. Although we can continue to discuss this matter informally and unofficially, in the final analysis it is important that the British give us some idea of what measures they can or intend to take. On the question of timing, it was impossible to make any definite statement until all the facts are known. If, after further consideration, it should appear that some Congressional action would be necessary, it was not probable that it could be obtained this year.

Sir Oliver asked if we had under contemplation any overall assistance program for Asia. The Secretary said that we were not working on any such program at present. He suggested the possibility of pressures for some such program. If this should happen, the matter of dealing with certain of the sterling balances, might be related to such a program. In summary, it was said that we should have some definite ideas of what possible measures the British had in mind with respect to sterling balances—and the sooner the better.

It was agreed that there were no further questions which the Secretary or Sir Oliver presently had in mind which would necessitate a further meeting before Sir Oliver’s departure on Friday.

1. Memoranda of conversation for Secretary Acheson’s discussion with Ambassador Franks on January 20 and with Mr. Hoffman on January 23, neither printed, are in files 411.409/1–2050 and 1–2350.
2. William C. Foster, Deputy Administrator of the Economic Cooperation Administration.
3. Supra.
4. Presumably Franks was referring to the American-British-Canadian talks which took place in Washington during September 1949; for documentation on these ABC talks, see Foreign Relations, 1949, vol. iv, pp. 803 ff.