CFM files, lot M–88, box 158, Secretary’s briefing book

United States Delegation Minutes of the Sixth Meeting of the Foreign Ministers of the United States, United Kingdom, and France Held at Washington, September 14, 1951, 9:30 a.m.

Tripartite Min–6
Mr. Acheson (U.S.)
Mr. Morrison (U.K.)
M. Schuman (Fr.)
Also Present
U.S. U.K. France
Mr. Harriman Mr. Gaitskell M. Mayer
Mr. Lovett Sir Oliver Franks M. Alphand
Mr. Foster Sir Edwin Plowden

[Here follows a table of contents.]

Communiqué and Declaration

1. Mr. Acheson suggested, and it was agreed, that the Communiqué on the Tripartite Meeting should be embargoed for release at 3:00 p. m. today.1 Considering the revised draft of the communiqué, the following changes were agreed. On page 1, paragraph 1 the concluding date of the talks was changed to September 14. On page 2, paragraph 1 M. Schuman suggested a revised wording for the last sentence. Instead of “forming part of the joint defense forces under the North American Treaty Organization” it should read “integrated within the framework of the forces placed at the disposal of the North American Treaty Organization”. He proposed this revision since the original draft implied that Germany would be participating in NATO. His suggestion was accepted subject to minor revisions in the English text. On page 3, the last paragraph, the third line from the end was deleted and after the phrase “new and resolute effort” the phrase was inserted “in the meetings of the Austrian Deputies”. On page 4, paragraph 1 the phrase “of possible revision of the treaty and this question” was deleted, and the word “which” inserted. This change was based on M. Schuman’s point that the Ministers did not propose formally to revise the Italian treaty. On page 4, the last paragraph, the first sentence was revised to read “the three Ministers on behalf of their Governments and peoples restate their fidelity to the purpose contained in the UN Charter that international differences should be settled by peaceful means and not by force or threatened [Page 1288] force”. This revision was based on Mr. Morrison’s feeling that the original draft was too narrow in its meaning.

2. It was also agreed to release at that time the Three Power Declaration on the goals of European union and German participation therein.2

Economic Questions

3. Mr. Gaitskell said that a discussion of the economic problems facing the three countries appeared desirable prior to Ottawa3 since the question would certainly come up there. The UK was faced with a contrast between the economic realities in Britain and in Europe, and the military requirements of the Medium Term Defense Plan, to say nothing of subsequent plans which have been proposed by General Eisenhower.4 The UK was especially dependent upon foreign trade and balance of payments. These were matters of greater importance now than before the war since British reserves had diminished. The rise in the price of imports had caused a burden roughly equal to that embodied in the extra burden of defense. They were aware of the problem when they undertook the defense program; but the recent deterioration in prices was bringing about a substantial deficit in the balance of payments. This deficit might reach 400 million pounds sterling this year. It was conceivable that this deficit might be financed by drawing on the sterling block or possibly from EPU, but this could not be done at this time. Moreover, there was a gap as between the dollar and sterling areas. In the fiscal year 1951–52, there would be a dollar deficit of over 1 billion dollars. He would not go into the various steps which the UK was considering in order to meet this situation, but he did wish to point out how this situation affected the defense program. Of the approximately 2 billion pounds involved in the 4.7 billion program, about 1.3 billion had already been placed. These orders naturally fell primarily to the engineering and steel industries. But the products of these same industries were necessary for the expansion of trade essential to improving the balance of payments. The British would soon be faced with the problem of whether exports or defense programs would have priority. They had not reached that point yet, but they were faced with the probability under present circumstances that anything beyond the 4.7 billion program would become impossible. In addition to the two gaps—UK imbalance in sterling trade and the dollar deficit—there was a third gap between the existing defense programs and the Medium Term and other programs. [Page 1289] This third gap was a major cause of concern. The 4.7 billion program was not enough to provide equipment for the interim forces for NATO and forces elsewhere in the world. This deficiency was approximately 1.5 to 2 billion pounds. A further gap existed between this and the Medium Term Program. General Eisenhower’s latest plans would mean an even greater gap. He did not see how the UK could do any more than it was doing, and it was doubtful that it could even carry out the 4.7 program on schedule. He was submitting problem to the meeting, but he did not have a solution.

4. M. Mayer said that a parallel existed between the British situation and that of France with respect to ability to obtain foreign exchange. In the plans as presently set up or under contemplation, there was a certain amount of excessive optimism concerning the economic capacities of Britain and France. France was now working on a 45 hour work week, and in certain industries even 48 to 52 hours. France had hot completed its reconstruction from the war, especially in the fields of housing and public works. Moreover, the assistance it had obtained to modernize its industrial plant under ECA was to be terminated. One of the bottlenecks was power. Another was the steel industry which needs coke and was importing it even from the US. As a result of its inability to obtain fuel, it was operating at only 85% capacity while the German industry was working at 100% capacity. As to balance of payments, France needs raw materials from the dollar area and is having difficulty in its export trade. Because of the defense program, there are fewer products available for internal consumption and this makes it difficult to fight inflation. He anticipated that the dollar gap for 1952 would be between 500 and 600 million dollars.

5. In addition to these problems the war in Indo-China was causing a severe strain on France, not only financially but in trained cadres. France would have, therefore, to determine the maximum limit to which it could go in trying to equip its armed forces and subdivide its aid between its forces in Indo-China and Europe. If it did not do this, it may face such dangerous inflation as to undermine its basic economic stability. He noted that the economic and financial body of NATO had studied this problem and would report at Ottawa. France would propose to NATO that a new global review of the capacities of the various NATO countries would be undertaken. Such a review would set up a goal which could be reached and which the people could understand without destroying the basic economy of the member countries. This global review would also seek the best way to integrate the effort of the US and other NATO countries, especially with respect to the placing of orders in industries in Europe for armaments: needed by US and other troops in Europe. This last problem had not [Page 1290] been studied sufficiently and new ideas might emerge, especially as to how and where to place these orders and how best to use the European industrial and steel industries. He, therefore, hoped that persons appointed would be especially qualified to examine this problem and would be capable of broad political judgments as well. They would make the analysis and submit their ideas to NATO for an overall review and division of responsibilities.

6. Mr. Acheson said that the US Government was giving very careful attention to this problem which both Mr. Gaitskell and M. Mayer had discussed during the past few days.5 The US attitude is that because the Governments face difficulties there should be no slackening of the effort to defend Western Europe. Ways must be found to proceed with the military program and to solve the difficulties facing the various countries. It would be obviously unwise to bring about the destruction of the economic stability of various member countries in order to provide defense since that would be self-defeating. The proposal for a high-level study was being called “Operation Wisemen” in the US Government.6 He thought that there should be discussions in order to reach agreement on the resolutions to be submitted to NATO. Perhaps the three Deputies and the Financial and Economic Board could begin immediately on this problem. Mr. Acheson indicated that he might ask Mr. Harriman to assist in this matter.

7. Mr. Gaitskell approved this general procedure and thought that the delegations could get together informally at Ottawa to discuss this further. He noted that both technical and political decisions were necessary and at times the people with technical information and political judgment were not the same.

8. Mr. Foster agreed with Mr. Acheson’s general statement. He noted briefly the three gaps: balance of payments, internal, and the difference between economic production and military requirements. The last seems somewhat like the immovable object and the irresistible force. He thought that the situation was roughly comparable to that faced in 1948 and agreed that high-level discussion was needed to consider the problem.

  1. For the text of the communiqué, see p. 1306.
  2. See Tripartite D–5, p. 1306.
  3. For documentation on the NATO Council meeting at Ottawa, September 15–20, see pp. 1309 ff.
  4. For documentation on the Medium-Term Defense Plan, see pp. 1 ff.
  5. For documentation on Gaitskell’s discussions with various American officials in Washington on September 6 and 7, see volume iv.
  6. For documentation on the work of the Temporary Council Committee (TCC) of NATO, sometimes referred to as the “Wisemen,” see pp. 1 ff.