Foreign Relations of the United States, 1950, Central and Eastern Europe; The Soviet Union, Volume IV

441.62A31/3–1450: Telegram

The Acting Secretary of State to the Embassy in the United Kingdom ¹

secret

Washington, March 14, 1950—7 p. m.

1154. For Amb. Fol is text Aide-Mémoire which will be handed to Brit Amb Mar 15 re UK–Ger trade negots:

“Ref is made to the Brit Amb’s conversation with SecState on Mar 2, 1950 re the negot of a revised UK–Ger trade and payments agreement and to the memorandum which the Amb handed to the Secy at that time. Since the date of that conversation, the U.S. Govt has obtained from London and from Frankfort further info concerning the proposed agreement.²

The U.S. Govt believes it is more desirable to make its views known to the Brit Govt at this time than to await the discussion of any agreement in the HICOM after it has been elaborated. Therefore it wishes to make the fol observations:

1. The US Govt shares the Brit objective of a considerable expansion in the volume of trade between the two countries. In particular, it hopes that there will result a liberalization of treatment of imports from Ger into the UK in view of the current economic situation in Ger.

2. The US Govt believes that arrangements between the two countries shld be based upon the principle of reciprocity with equality of treatment both with respect to trade and payments.

3. The US Govt wld view with concern any arrangements which were such as wld result in accumulation by Ger of sterling balances which cld not be used for current payments for goods and services.

4. The US Govt attaches great importance to maintenance of the principle of gold and dollar settlements in an agreement between two countries of such great commercial importance as the UK and Ger, and believes that the abandonment of this principle in the agreement now under negot wld be prejudicial to the consideration of plans for a European Payments Union. It is believed that the objectives of the Brit Govt, as they have been explained to the Department of State by the Brit Amb, cld be achieved by such widening of the present swing margins as wld be consistent with the greater volume of trade resulting from the liberalization of the trade between the UK and Ger. The US Govt also recognizes that it may be appropriate to make collateral provision for a reasonable postponement of settlement dates without abandoning the principle of gold and dollar payments if development of trade under the agreement makes such action necessary.

5. The US Govt believes that explicit provision shld be made in the agreement for its reexamination in the light of the European Payments Union promptly fol conclusion of negots respecting the Union.”

We will confirm when aide-mémoire is actually delivered.³

Webb

1. Repeated to Frankfort for McCloy as 1657 and Paris as 1103.
2. Telegraphic messages containing this information are in file 441.62A31/3–250 through 3–1450.
3. In telegram 1758, March 17, to Frankfort, not printed, McCloy was informed that the aide-mémoire had been handed to Ambassador Franks on March 15. The Ambassador “was advised US desirous negots UK–Ger trade and payments agreement be concluded without prejudicing discussions EPU and US/UK differences be settled before matter reached HICOM and without publicity.” (441.62A31/3–1750) The negotiations continued in Germany along with conversations in Washington, with the British informing the United States on April 24 that the existing payments agreement with Germany would be continued until a new agreement could be concluded. Documentation relating to these developments is in file 441.62A31/3–2750 ff.