89. Letter From Foreign Secretary Lloyd to Secretary of State Dulles 0

Dear Foster: We have such a multitude of things to deal with that it is very difficult to keep track of them or to deal with them all on a personal basis between us. I think, however, that you should personally know how very much worried Harold and I are about the decision to reject the British bid to supply two turbines for the Greers’ Ferry Dam project in Arkansas. I hope you will forgive me if I put to you quite frankly what is in our minds.

Surely it is all wrong to offer a contract to tender when the whole transaction is later made into a farce. While no doubt the decision was made in good faith, the British public really cannot be expected to believe that the whole security of the United States might be imperilled by the purchase of two turbines from an ally like the United Kingdom.

If this were an isolated matter I would not trouble you with a message. Indeed in many ways 1958 has been a good year for economic co-operation between us particularly over world issues such as increasing the resources of the Bank and Fund. Also the United States continues to be a great and growing market for British goods. But there have been a disquieting number of cases involving the interest specifically of the United Kingdom, where United States action can only seem to us to be something of a retreat from interdependence. For instance, the adverse discriminatory effect of the United States wool tariff quota on United Kingdom exports has become increasingly evident. The United States proposal to make available nuclear fuel for United States export reactors on terms likely to prejudice the development of normal trade is bound to hurt us more than anyone else.

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There is also the continued indifference of the United States Defense Department to offers of British aircraft engines, despite the world standing of the latter, and even when the available British types have no United States competitor.

I would like to think that you would look at this situation in the perspective I have set out. These things may seem small, measured against the United States economy as a whole, but for Britain, which lives by trade, such things as these hit us at our most sensitive point.

I do not want to exaggerate the importance of this one decision. I hope very much it is not going to be an unfortunate precedent but we have worked so hard together to get really close and effective co-operation between our two countries in the field of foreign affairs that I feel that I must tell you personally of our great disappointment at this development. The effect upon public opinion of all shades has been deplorable.1

Yours ever,

Selwyn 2

Enclosure

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Letter From Prime Minister Macmillan to President Eisenhower

Dear Friend: I expect you are as much worried about the Greers Dam turbine contract as I am. Representations have been made in the normal way by Harold Caccia to Foster and also to Jock Whitney by our trade people. I am not going to argue the pros and cons because I know so well how difficult these questions are.

What really worries me about this turbine contract is the injury that so small a thing can do to the cause that you and I have so much at heart of Anglo-American co-operation and understanding and the liberalism and interdependence with which your name will always be associated.

I do not know whether it is too late or whether your machinery allows some re-opening of the question. If so I can only tell you that it would do a great deal of good if the decision could be reversed.

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In any case, I personally will do everything I can to reduce the impact of this upon our folk here rather than exaggerate it. You can rely on me for this. But of course it would be very much more effective if the decision could be reconsidered.

With warm regards,

As ever,

Harold Macmillan 4
  1. Source: Department of State, Presidential Correspondence: Lot 66 D 204. Top Secret. Attached to the source text and also dated January 27 were a memorandum from John A. Calhoun to Mann instructing E to draft a reply to Lloyd’s letter and a transmittal note from Minister at the British Embassy Hood to Dulles. The latter bears the handwritten notation, “Sec saw.”
  2. Dulles’ February 1 response described the procedures followed in the Greers Ferry case; assured Lloyd that this decision did not set any precedent, as all future cases would be decided on their own merits; and noted that Dillon had discussed the nuclear fuel decision with Ambassador Caccia. (Telegram 6967 to London; ibid.)
  3. Printed from a copy that bears this typed signature.
  4. Top Secret.
  5. Printed from a copy that bears this typed signature.