841.5151/5–2049: Telegram

The United States Special Representative in Europe (Harriman) to the Secretary of State

secret
priority

Repsec 27. Eyes only for Secretary of the Treasury Snyder from Harriman. Cripps has sent me message asking me to come to London to see him one day next week. From bearer of message, I gather that British Treasury and Bank of England are quietly studying exchange rate question; also, that British Government is considering making new proposal to OEEC consultative group which meets June 3 for introduction of competition in intra-European payments plan, and other steps to break present rigid bilateralism in trade and payments. I further gather that although Cripps inclined to support such latter proposal, there is division within Cabinet, and outcome not yet clear.

Cripps will undoubtedly discuss these matters with me frankly, and also your proposed visit to London. British Treasury view is that your conversations with Cripps are of the utmost importance, as there is a growing realization they must come to an understanding with US Government, which they appreciate can only be done in direct conversations between you and Cripps personally. There is some opinion in Treasury that since events are moving so fast that the earlier your [Page 395] meeting takes place, the better. Do not know whether Cripps shares this view.

Developments in British thinking are probably influenced by a series of causes: first, position you have taken in Washington; second, discussions with OEEC beginning last March, in which we here have consistently taken strong position on prompt action to free trade and payments; third, growing continental opinion that constructive steps must be taken promptly and recognition by British that they must go along to maintain leadership; fourth, fall of American prices; fifth, realization discriminatory trade policies will become increasingly difficult to maintain and would result in retaliation by US and elsewhere.

Since all this is extremely tentative, I am sending this message eyes only to you. I will discuss the situation with Dean when he arrives here.1 Because of the important implications, do you think the President would be interested even at this preliminary stage? I hope to be able to give you a clearer picture next week.2

Harriman
  1. Secretary Acheson arrived in Paris on May 21 to attend the Sixth Session of the Council of Foreign Ministers, documentation on which is in volume iii, chapter vi .
  2. Harriman and Milton Katz, general counsel of OSR, discussed the European payments problem on May 27 with Cripps and various British Treasury officials, who proposed a variety of general licensing arrangements to open British domestic markets to continental competition. Harriman limited his remarks on these proposals to repeating the desirability of competition with the dollar area. He also reported that on May 26 the British had made similar proposals to Spaak and Ansiaux, who received them coldly but took them under advisement. (Repto 4434 from Paris, May 28, not printed; ECA Telegram Files, FRC Acc. No. 53A278, Paris Repto)