Foreign Relations of the United States, 1952–1954, Western Europe and Canada, Volume VI, Part 1

741.13/12–751

No. 317
Memorandum of Conversation, by the Special Assistant to the Secretary of State for Economic Affairs (Schaetzel)

secret

Washington, December 7, 1951.

Subject:

• U.K.–U.S. Economic Talks

Participants:

• Mr. D. H. Rickett, British Embassy
• Mr. Willard L. Thorp, E
• Mr. J. R. Schaetzel, E

Mr. Thorp said that he had called Mr. Rickett in to discuss briefly some of our emerging ideas on the economic aspects of the Churchill visit, and that he was particularly anxious to have a chance to talk to Mr. Rickett before the latter got away to London.

In the first place, Mr. Thorp said, we recognized the fact that all of the information we had available up to now indicated that the Prime Minister did not intend to raise economic subjects at the January discussions, and we were not disposed to disagree with this thought. At the same time, Mr. Thorp emphasized, we are most anxious to avoid the kind of confusion that arose out of the Gaitskell visit, which in many respects was a very time-consuming business for Gaitskell, who had to repeat his economic story a half dozen or more times.¹

As we see it, Mr. Thorp said, we would suggest that the economic problem broke down into three major elements. The first of these is the matter of short-term aid. In this connection, Mr. Thorp noted that Mr. Batt was proceeding to London and at the moment we see no particular reason why these talks need to become a part of the Truman–Churchill talks, unless, of course, there are some loose ends that need to be brought to the attention of the Chiefs of State.

The second element is what might be called the commodity-price problem. Mr. Thorp suggested that it might be wise to explore what might be called the collusive consumer action on prices. As an example, he referred to the recent arrangements worked out between the U.S. and the U.K. for cooperative action on steel and aluminum. Mr. Rickett agreed that this was not a barter as such but more a matter of discussion and exchange without bargaining. Mr. Thorp acknowledged that a substantial part of our interest in this subject is to create a setting of U.S.–U.K. collaboration which will result in the U.S. public viewing sympathetically the export of materials essential to the U.K.’s playing its appropriate role in the common defense effort. He suggested that it may well be that some of the things that are finding their way into a community will be things that the U.K. is already doing—an example might be the kinds of controls that the U.K. now maintains on the use of copper. He thought that the result of this study of commodities and prices might be a statement summed up at the January talks which, while not in an offset of columns denoting U.S. and U.K. action, would nonetheless give the public a picture of broad cooperation in this important area.

Finally, Mr. Thorp said that we have been thinking about the desirability of a joint look at the long-range problems of the sterling area and the U.K.—what the situation actually is; what are the significant factors; what are we doing that is strengthening or weakening the sterling area; etc. We have been thinking about the desirability of suggesting that there emerge from the Truman–Churchill talks a brief paragraph which would say that agreement had been reached on setting up this sort of study group, which would be asked to report perhaps in March. Mr. Thorp suggested that the kinds of people we had in mind were those of the Bowen, Plowden or Rickett type on the British side and Reifler, Bissell, Thorp or Stinebower on the U.S. side.

With respect to timing and organization, Mr. Thorp said that the assistance end of this was already under way and there was no reason to upset those arrangements. While there had been some thought on the part of ECA that Batt might get into the commodity and price area, that seemed to be somewhat unrealistic. On this latter area, Mr. Thorp felt it would be particularly useful to get started as early as possible, preferably the week of the 10th. At this juncture Mr. Thorp emphasized again the desirability of keeping this operation coordinated as a means of saving everyone’s time. Mr. Rickett replied that for these talks he proposed that Burns, Christelow, Knollys and himself provide the U.K. team, and that, while he would be in London the week of the 10th, the other three men would be available at any time; he suggested that they would await a designation of a point of contact by Mr. Thorp. Mr. Rickett hinted of the interest his government would have in continuing an organization of the kind Mr. Thorp suggested, a point which Mr. Thorp avoided.

Mr. Rickett said that all of these suggestions made a great deal of sense to him and he was quite confident they would be supported by his government. He said he was sorry that he had made arrangements to be in London but, on balance, he felt it was desirable for him to be present on the assistance question. He said he would come back sooner than he intended, and it was left that if this seemed desirable, we could work out a suggestion of this sort with the Embassy. In any event, he said he would see if Rowan could not come over in advance of the Churchill entourage, which would be generally helpful in going through the advance items that will need to be considered in the commodity and price field.

It was in this connection, Mr. Rickett said, that the “Paymaster” was coming along with the Prime Minister in the role of “statistician” and that the party would also include a Mr. McDougal, another statistical expert. In answer to a question, Mr. Rickett said that it was natural for the Prime Minister to have Sir Leslie Rowan in the delegation in view of his wartime service as Churchill’s private secretary, but that, in any event, it was understood that Rowan would be representing the Treasury in the talks.

1. For documentation of the U.S.–U.K. financial talks, held at Washington in September 1951, see Foreign Relations, 1951, vol. iv, Part 1, pp. 959 ff.