Foreign Relations of the United States, 1958–1960, Western Europe, Volume VII, Part 2

342. Letter From Prime Minister Macmillan to President Eisenhower⁰

London, June 1, 1958.

Dear Friend: I have been brooding for some time about the economic and financial position in the free world, and I venture now to send you some thoughts in the hope that we might have a talk about these problems when we meet.

I think that you and Foster have always consistently felt that our military defences, however strong, against communism would never be sufficient by themselves. Indeed, the more the communists see that they will not get anywhere by military aggression, the more they will turn to other methods—diplomatic pressure, subversion and of course economic infiltration. We cannot altogether complain about the last. Indeed it should be the field in which we would want to meet, and defeat, the communist challenge. Believing in the virtues of the democratic way of life, we ought to be able to show the rest of the world, including in the end the communist countries themselves, that democracy can give the best results.

Conversely, a defeat for the West on the economic front would provide the communists with as valuable and conclusive a victory as any they could win by military means. By this I mean that there are many countries, either actively aligned with the West or “uncommitted” or “neutral” whose will to resist would be fatally weakened if they became subject to great economic distress, with severe unemployment and the like. Then there are others whose choice will be determined, or at least influenced, by the extent to which the West will help them in their development plans to increase their standard of living and prosperity.

Clearly the most favourable economic climate for us to meet the communist threat is that of a steadily expanding level of world trade, in which the underdeveloped countries would feel that the future would hold increasing opportunity for them. It is easy to propound this simple fact. I have been wondering how we could work out some imaginative initiative which would demonstrate our concern for the prosperity of the free world and confirm our recognition of the principle of interdependence in the civil field equally with the military. I recall that in our last talks in Washington¹ and at the N.A.T.O. meeting in Paris, we were worried lest this concept of cooperation in the free world was getting too much emphasis on the military side.

I know that you and your colleagues have been giving much thought to your own economic problems, especially as to the duration and depth of the so-called recession. Curiously, the first effect here of the pause in American business is favourable, since we benefit from the decline in the fall in commodity prices which follows any reduction of United States demand. Some of the primary producing countries are already in difficulties and these are likely to increase. And the secondary effects are bound to be adverse for us all—perhaps soon.

Naturally, we are confident that the American economy will go forward again, both in the short and in the long run. Ours may be all the healthier, I believe, for the pause we have imposed in the effort to halt the inflation. But stability at a comparatively low level of activity cannot be the political answer to the economic problems of the free world. We certainly must all go forward again—but steadily, and as far as possible having regard to the economic stability of our friends and of the uncommitted countries.

It would be a great thing, I suggest, when your economy is about to go forward again, and when ours is likely to follow suit, if we could show the rest of the free world that we care for their interests too.

I hope that this does not sound like a suggestion that the United States should again step up its economic help. I really do not mean that. What we should all do is to make a better use of the resources that can be made available—which is what we are trying to do in our military planning.

There are two main questions. One is how to organise and control the economic aid which can be given, especially to the underdeveloped countries; to supervise how this is shared out, so that these countries can plan ahead without extravagance.

The other is how to make sure that enough financial credit is provided for a steady expansion of trade. It would be a tragedy if the productive capacity of the free world was held back simply because we had failed to provide the financial machinery. Work and production are the best defences against communist subversion. Of course, the sterling system is at present an indispensable part of the world credit system and is playing a particularly important part in the maintenance of world trade. With its present surplus, the United Kingdom ought to be able to take a fair share this year in helping with this problem of international liquidity. In other words it will be a buffer for the rest of the sterling area, so that they will be less likely to be drawn into a decline in world business.

I have, as yet, no precise proposals to put before you. But I feel, instinctively, that in the period which lies ahead the struggle against communism will shift more and more into the economic field. So long as we maintain the alliances and do not lower our guard, they cannot launch a hot war. But the cold war in all its forms will grow in intensity.

Anyway, the real purpose of this rather rambling letter is to ask for your thoughts on the possibility of attracting the interest (and therefore the allegiance) of the free world to some positive and helpful demonstration of interdependence in economic matters, to match the military alliances we have already made.²

With warm regards,

Yours ever,

Harold³

0. Source: Department of State, Presidential Correspondence: Lot 64 D 204. Top Secret. Transmitted to the President under cover of a June 1 note from Ambassador Caccia.
1. For documentation on Macmillan’s visit to Washington October 23–25, 1957, see Foreign Relations, 1955–1957, vol. XXVII, pp. 788–839.

2. In a memorandum for the record, June 27, John A. Calhoun, Deputy Director of the Executive Secretariat, wrote:

   “Following consultations with Messrs. Dillon, Reinhardt and Elbrick, it was recommended to the White House that no reply be made by the President to the above letter since the subject was thoroughly covered in his talks with the Prime Minister. General Goodpaster informed me June 26 that the President agreed with this recommendation.” (Department of State, Presidential Correspondence: Lot 66 D 204)

   For a memorandum of conversation between Eisenhower and Macmillan on this topic, see Document 344.

3. Printed from a copy that bears this typed signature.