Foreign Relations of the United States, 1951, Europe: Political and Economic Developments, Volume IV, Part 1

No. 435

ECA message files, FRC 53A278, London: Telegram

The Chief of the ECA Mission in the United Kingdom (Batt) to the Economic Cooperation Administrator (Foster) ¹

secret   priority

London , April 11, 1951—7 p. m.

Toeca 304. Toisa from Batt with full concurrence Ambassador.

(1) At my request Hitchman, HM Treas, arranged mtg with Robert Hall to enable us to ascertain substance of Hall’s report to his govt re Wash talks² and govt reaction. McCaffery accompanied me.

(2) Hall made it clear that Brit now completely satisfied with Wash assurances he stated recd on fol points:

(a) That econ aid figures presented to Congress wld be illustrative only, even though on US calculations UK share now looked like zero.

(b) That reconsideration present decision wld follow upon changed circumstances.

(c) That US will make explicit to Congress possible obligations that might arise from burden sharing exercise.

(d) That flexibility will be provided in presentations to allow for possible results (b) and (c).

(3) Hall then went on to say that while earlier Brit worries as result Webb-Thorpe-Foster interview with Franks ³ have been allayed by above assurances, able further fact developed during Wash discussions which causes new and even graver concern. Namely that US will not extend aid to country whose gold and dollar reserves are increasing regardless of burden sharing exercise or any other considerations.⁴

(4) He stated that it was not news to Brit that this line of thought was emerging in Washington, and had in fact been a major factor in US thinking re suspension of ERP aid, but it was news of the first magnitude and of a most disturbing kind to find that this concept might formally and publicly emerge as official US fon policy under any and all circumstances. News most disturbing despite personal view shared by Hall and Gaitskell that it not likely that US aid to Britain coming FY will be indicated by burden sharing exercise.

(5) Chancellor now completely occupied with budget presentations Parliament but Hall emphasized in strongest terms Gaitskell will be profoundly concerned above development, and in this context Hall outlined difficulties Chancellor wld face in explaining to Cabinet and later Parliament a US position that did not recognize possibility of real burden on UK shld overall external liabilities substantially exceed growth in dollar reserves. He emphasized Chancellor’s personal and official desire to do nothing that might raise temperature here. Hall then made most candid and revealing statement. Said Chancellor had carried the burden in persuading Cabinet to increase defense effort from 3.6 billion pounds to 4.7 billion. In winning full Cabinet over to increased effort he had argued strongly that govt’s duty to own people required strongest effort consistent with maintaining sound supporting economy, but had finally won united support when he stated that US had agreed to be participant in burden sharing exercise, which while in no way assuring that road ahead would not make grave demands on Brit people wld nevertheless provide reasonable assurance them that burden wld be borne equally.

(6) I indicated that while I had not thought Wash decision referred to (3) and (4) above so broad as Hall implied (I have seen summary of NAC action re gold and dollar reserves, of aid recipients of Dec 26, 1950), we thought Brit shld know that objective of not increasing gold and dollar reserves was not one quickly contrived by Washington under pressure of preparing for Congress presentations, but rather represented consensus of admin thinking over long period. We pointed out that this was broad view not applying to Brit alone but to all countries.

(7) Further conversation revealed, I believe, that shld US point of view toward aid not only in bilateral but also multilateral discussions and US actions re aid for fiscal 52 reflect our conclusion that under present circumstances no econ aid shld be extended to any country with rising reserves, Brit wld understand and accept our pressing such view. Brit wld not understand and accept such US action if concurrently we established in Congressional history and in public pronouncements a position which prejudiced future action under altered circumstances.

Amb and I cannot see any reason why it is to US advantage to make the gold reserve restriction explicitly binding upon our future aid policy and thus tie our hands; while absence of any explicit Congressional and public record of such unequivocal position wld greatly help in our relations with Brit.

(9) We regard Gaitskell’s stature in present govt as firmly established and consider him especially sensitive to need for maintaining Anglo-American relationship on soundest basis of amity. Our view that he can be relied upon to present US views to Brit Parliament and public in terms favorable to US if given reasonable position in principle. Regard it as most desirable in US interest to assist him in this regard.

(10) We assume last clause para 2(a) above does not preclude exception for technical assistance, OD, etc, or any possible conditional aid.

Batt

1. Repeated to Paris;
2. Regarding these talks, see the memorandum of conversation supra, and telegram Ecato 397, Document 433.
3. Regarding this interview, see telegram 4419, Document 431.
4. On April 13, Ambassador Batt was informed that his appreciation of the conversations was essentially correct, although paragraph 2(c) had not been stated quite so explicitly. (Telegram Ecato 422, ECA message files, FRC 53A278, London)