Foreign Relations of the United States, 1949, Western Europe, Volume IV

841.51/10–1949

Memorandum by the Secretary of State¹

confidential

[Washington,] October 19, 1949.

This very interesting report of Gene Rostow’s bears on the question I asked the other day—Where did we go wrong? What did we miscalculate or overlook?

Answer:

As I look back on the situation the fault lay primarily with me in this way.

As we foresaw the talks, discussion of devaluation was a possibility but an improbability. It was left to the British. It seemed quite impossible that the British would tell us when and how much.

When to our great surprise they did just this and it turned out that action was imminent, we were told under restrictions which made impossible any discussion within the Department. We also were not told the moment, only the range, until the last, since the British had not decided.

Frankly, I did not grasp the significance of the amount of devaluation and the connection of it with our talks upon the Europeans. Probably I should have understood this and insisted that the French be brought in. I think that the British would have refused. Would any of you have foreseen the consequences?

How could the British have done otherwise than they did? Did they take advantage of us?

What do we learn from this?

D[ean] A[cheson]

[Annex]

Memorandum by the Special Aide to the Executive Secretary of the Economic Commission for Europe (Rostow) to the Executive Secretary of the Economic Commission for Europe (Myrdal)²

personal    confidential

[Geneva,] 12 October 1949.

Subject: Devaluation and European Cooperation

In the course of my conversations in Paris yesterday (13th October) [sic] certain aspects of recent developments were emphasized, which I might call to your attention.

1. In the first place, all those with whom I spoke felt that the way in which the devaluation of sterling was handled constituted a severe set back to the cause of European cooperation. In fact, it was widely feared that this episode greatly weakened the momentum achieved at Strasbourg. One highly placed and very keen observer, whose judgment has been proved excellent over a period of many years (and, be it said, a long-standing cooperator with Britain and the United States), thinks that at the present time it would be impossible for anyone to stand up in the Chamber of Deputies and talk about European economic cooperation without being greeted with laughter. This man quoted a French peasant’s view to the following effect: “Those British always know how to look after themselves. That is what you can expect from them every time—a kick in the backside.” The contrast to the way in which French devaluation a year ago was conducted, after lengthy discussions with the British, will rankle for a longtime.

2. The apparent implications of the affair, in the light of obvious policy leaks to the American press from the State Department, support the hypothesis that some part of the American Government at least favours a policy of continental European cooperation, with Britain more or less free of Europe and linked to the United States. This policy is regarded as both ridiculously impractical and extraordinarily dangerous: impractical because, as the events following devaluation demonstrated, the continental economy and the British economy are indissolubly linked; and dangerous because Western Europe, without Britain, would inevitably be dominated by Germany.

3. This cycle of events has put American policy in a peculiar light. The United States has, of course, been pushing through the Marshall Plan in the direction of closer European cooperation and even integration and union, at least in the field of monetary policy and arrangements. A purely Anglo-American approach to European monetary problems seems not only inconsistent with such a policy, but the gravest possible menace to its fruition.

4. All the people with whom I spoke felt that very vigorous efforts would have to be made promptly by both the United States and Great Britain to overcome the negative results of the Washington Conference. In fact, one person went so far as to say that he thought Cripps’ retirement was indispensable to the reconstitution of Anglo-French relations.

1. Addressed to Messrs. Kennan, Thorp, Rusk, and Webb.
2. Rostow’s memorandum was transmitted as an attachment to a letter to Secretary Acheson, dated October 12, not printed, in which he wrote that the “… British devaluation looks in Europe almost like the Anglo-German Naval Treaty of 1935, or other episodes of a similar character, which have the capacity to shake confidence and alter policy in a fundamental way.” Rostow did not see how United States foreign policy could safely rest on any premise other than “… complete and intimate Anglo-French cooperation on every issue …” (841.51/10–1949)