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

Conference files, lot 59 D 95, CF 100

No. 333
United States Delegation Minutes of the First Formal Meeting of President Truman and Prime Minister Churchill, The White House, January 7, 1952, 11 a.m.–1 p.m.¹

top secret
TCT MIN–1

Washington, January 7, 1952, 11 a.m. to 1 p.m.

Present:

• U.S.

  • The President
    • Mr. Short
    • Mr. Charles Murphy
    • Mr. David D. Lloyd
  • Secretary Acheson
    • Mr. Matthews
    • Mr. Perkins
    • Ambassador Gifford
    • Mr. Bohlen
    • Mr. Knight
    • Mr. Thorp
  • Secretary Lovett
    • General Bradley
  • Secretary Snyder
    • Mr. Willis
  • Mr. Harriman
  • Mr. Charles E. Wilson
  • Mr. Manly Fleischmann

• U.K.

  • Prime Minister Churchill
  • Mr. Eden
  • Lord Ismay
  • Lord Cherwell
  • Ambassador Franks
  • Sir Norman Brook
  • Sir Roger Makins
  • Sir Leslie Rowan
  • Mr. Schuckburg
  • Mr. Pithlado
  • Mr. Gore-Booth
  • Mr. Mallaby
  • Mr. Powell
  • Mr. Rickett
  • Mr. McDougall
  • Meeting was joined by following for consideration of Item 2:
  • Field Marshal Sir William Slim
  • Admiral Sir Roderick McGrigor
  • Air Marshal Sir William Elliot
  • Sir Kenneth McLean
  • Mr. R. Hall

[Here follows a table of contents.]

1. Economic Position and Problems of the UK, including:

a. Steel and other raw materials.

b. UK defense program.

At the President’s invitation, the Prime Minister made a general statement to introduce discussion of this topic. He said that the balance of payments figures for the fourth quarter, which would be announced this afternoon, would reveal a deficit of $940 million. This, however, should also be viewed in the light of current forecasts according to which the British dollar reserves, now at $2.3 billion, would drop to one billion and a quarter by June. Mr. Churchill pointed out that the Labor Government had decided to devalue the pound when the UK dollar reserves had last dropped to one billion and a quarter. The present Government, however, is not even discussing or thinking of devaluation.

Mr. Churchill said that the anxious prospects which face the Conservative Government result from its heavy inheritance, of remorseless and irresistible events—at least, they were such to the previous government. The present government is clear as to its duty. It is determined to see that the UK with its own resources takes care of its internal problems and difficulties. He, the Prime Minister, is not here to seek aid in order to improve the comfort and welfare of the British people. The British people themselves will accept the necessary sacrifices required by the British internal situation, and the British Government will adopt the necessary measures. The Prime Minister added: “This is the UK’s form of a declaration of independence.” The Prime Minister pointed out that the figures which he had just given took into account the various control measures which had been adopted by his government since it came to power barely two months ago.

Mr. Churchill said that he was governed by two principles. First, the British Government will submit to Parliament whatever measures needed for Britain’s “internal independence”. Second, the UK considers that the defense task against Communist tyranny is a common one and therefore Britain is not abashed to accept help in this field. Mr. Churchill expressed the hope that the US will find it to its own interest as well as in the UK’s to assist Britain in its defense work, including measures to assist the UK in increasing its exports as an important requirement to permit Britain to do its full defense share. He stressed that the UK “was not a beggar” but did not want to starve. The British Government does not want “to cut unduly” its rearmament program. However, this had been developed and expanded without much consideration by the previous government. He defined the current program of 4.700 million pounds as a “pot shot” and pointed out that the same program could now cost 5.200 million sterling because of the intervening price rise.

Referring to rearmament programs, the Prime Minister said that in his entire experience he had never seen one that did not lag in its first year, improve in its second, and do much better in the third year. In this case the lag in the first year of Britain’s program has tended to give some relief to the British treasury but this favorable financial element has been initially annulled by the price rise. The Prime Minister closed the presentation by emphasizing Britain’s desire and determination to make the greatest possible contribution to the common defense effort.

The President told Mr. Churchill that he had been most happy to hear what he had had to say about Britain’s determination to do its full share. He then referred to the similarity between the budget difficulties of the UK and of the US and of the problems common to both of balancing military requirements with other considerations.

The President then stressed the interest of the US in securing Britain’s full cooperation in order to build a position of strength so that it would be possible to talk to the Soviets in a language which they can understand, and added: “We want to be strong enough to enforce the peace”.

The President then referred to the dangers which threatened the free countries in Korea, in Indochina, in the Near East, and in Europe and referred to the necessity of obtaining their full assistance from all the North Atlantic Pact countries in order to contain the global threat which we have to face.

Referring to raw materials difficulties, the President designated Mr. Wilson for any detailed discussion.

The President then said that even with the tremendous resources and manufacturing capacity of the US there was a limit beyond which the US could not go. For this reason the US cannot go it alone and needs the cooperation not only of Britain but of all the other free countries.

With reference to raw materials, Mr. Churchill declared that the UK was seeking steel for its arms production and to maintain its critically needed exports. With reference to coal production in the UK, he said he knew of the unfavorable comparisons being made between coal production in the UK and in the US. However, the UK is making every effort in this field. Incentives are being provided to the coal miners who are now the highest paid type of labor in the UK. The British Government is seeking to import foreign labor and is doing its best to overcome the strong objections of the labor unions. Mr. Churchill expressed the strong belief that UK coal production will increase.

Mr. Churchill indicated that Lord Cherwell was in possession of details of the British financial situation and designated Lord Cherwell and Sir Leslie Rowan for any discussions which we might wish to have on coal.

Mr. Churchill then said that he had been much interested by Mr. Fleischmann’s recent statement on raw materials made to British officials in Washington.²

The UK is in a position to help the US with some metals but, of course, in a situation such as the present one, it is never possible to be sure that the advantages granted by one side to the other will be exactly equal. The UK can buy 20,000 tons of tin so that the US would not have to pay an “undue price”. This tin operation would “nearly account” for 500,000 tons of steel. Mr. Churchill added that nearly another 500,000 tons of steel had already been accounted for. He stressed, however, that the British request was for a total of 1,250,000 tons of steel, including the eight or nine hundred thousand now in course of discussion.

With reference to equipment, he said that not much had been received to date and that Britain found herself in a very “unarmed” position at present. He expressed the hope that the four metals and equipment could be discussed in greater detail. Mr. Churchill concluded by stressing the importance of the “last increment” in bringing to fruition previous expenses and efforts. Often the last ten percent is necessary to make the previous ninety percent already spent really effective.

Mr. Wilson stated that the greatest needs of the US in the fields of raw materials were for copper, nickel, aluminum and tin. If the UK has any copper, nickel or aluminum which it does not need now because of the lag in its defense program, the US could use them most advantageously during the next nine months. After that time he hoped the increase in US facilities would meet its own needs. If the US could receive such assistance during the next nine months, it would permit a great increase in US production schedules and he expressed the strong hope that mutually advantageous arrangements in the field of raw materials could be made.

With reference to steel, Mr. Wilson said that the UK request was a large one and that it would have to be broken down into types of steel needed by the UK before the US could profitably consider Britain’s bid, the US supply situation being considerably tighter in some categories than in others.

The President then emphasized his special interest in nickel, aluminum, tin and copper and his hope that the UK and the US would work out mutually advantageous arrangements in the metals field.

Mr. Churchill referred again to the magnitude of Britain’s defense effort. “There is no point,” said he, “in going beyond the limits of the possible”. Re Britain’s initial program of 3 billion 600 million pounds, the UK had hoped to receive 550 million pounds in aid from the US. (He made it quite clear that there was no US commitment on this score.) What assistance would the UK recieve from the US in connection with the expanded program of 4.700 million pounds which, in fact, represents 5.200 million at present prices?

It was then decided that a raw materials working group would meet at 2:30 this afternoon with a view to reporting, if possible, to the heads of government when they met at 5:00 p.m.³

Lord Cherwell, Sir Leslie Rowan, Lord Knollys and Mr. Rickett were designated on the British side and Messrs. Wilson, Fleischmann and Thorp, by the US. (These lists are not all-inclusive.)

Mr. Churchill said that he would be back in Washington on the 15th and if necessary this subject could be taken up again at that time.

Mr. Eden made the point that British public opinion thinks that the UK’s troubles are “a measure of the UK’s virtues” in the way it has pushed forward with its rearmament program. He referred to Britain’s concrete achievements in this field as being well ahead of those other European countries, many of which were still in the planning and blueprint stage.

Lord Cherwell then spoke on Britain’s economic situation after initially mentioning that he had not known that nickel was on the list of raw materials urgently needed by the US. British reserves would have to be built up in order to avoid the recurrent crises since the war and the sterling and dollar areas should work more closely together towards this end. He pointed to the continuing great importance of the sterling area as half of the world’s trade is still carried on in sterling. In terms of real value (i.e., gold) the British reserves were only a little over a quarter their pre-war level. Pre-war British reserves were 4 billion and British imports also amounted to 4 billion dollars. Now reserves of 2.3 billion had to be contrasted with imports of about 12 billion dollars. US programs were now much larger and small changes, for example, in the US stockpile program, can “wreck the British apple cart”. The UK and the US would have to concert their purchases in the future as it was impossible to go along indefinitely as has been the case since the war with recurrent crises and the need for US loans, Marshall aid, etc.

Lord Cherwell underlined the vital importance of exports for the UK. “People must be fed before they can fight.” Britain’s rearmament effort will come to nought otherwise. He said that, while British exports in physical terms were 160% of the pre-war figure, Britain was importing, also in terms of goods, less than pre-war while its population was 5% higher. This is due to the deterioration in the terms of trade whereby prices of imports have increased much more than prices of British exports. He recognized that part of the trouble for the sterling area resulted from over buying on the part of various members of the Commonwealth but expressed the hope that the UK would be able to dissuade them. In order to have a rearmament effort resting on a sound basis, Lord Cherwell said that the UK would have to divert a good deal to exports and that if the UK cannot obtain assistance for its rearmament effort it would have no course open to it but to rearm more slowly.

Mr. Truman said these financial and aid questions could be discussed more thoroughly at a luncheon being given the next day, January 8, by Mr. Snyder for financial officials on both sides.⁴

2. Organization of the West for Defense, including:

a. Possible reform of NATO.

b. TCC Report.

Mr. Churchill referred to a general need for economy and simplification of the superstructure and requested Foreign Minister Eden to address himself to this topic.

Mr. Eden expressed his apologies for talking on this subject in front of such NATO veterans as Mr. Acheson and Mr. Harriman while he himself was but a newcomer. He said nevertheless that the British Government had reached certain conclusions and that these would be provided in writing to the United States representatives in order to facilitate work. In essence, the UK desires a body in permanent session which would take the place of the Deputies. This would be known as the NATO Council which would be headed by a permanent Director General. Sessions of the Council attended by Cabinet Ministers would be presided over by a rotating chairman who would be elected for one year. The Director General would be in charge of establishing the agenda and of making all preparations for the full meetings of the Council.

Mr. Eden reported that he had been “depressed” by the number of people attending Council sessions at Rome (nearly 400).⁵ In order to avoid such mass meetings, he asked whether it would not be possible to divide up the business of the Council between committees of Foreign Ministers, Defense Ministers and Finance Ministers, meeting separately. He stressed the special importance of small Foreign Ministers meetings, with each Foreign Minister bringing only two or three advisers. This kind of gathering is essential in his opinion for informal, frank and profitable exchanges between the Foreign Ministers. The British also would like to see an integrated staff absorb the functions of the present FEB and DPB. Mr. Eden added that his government thought that a permanent organization should have a permanent home where all meetings would be held and expressed the British Government’s natural hope that NATO’s permanent home would be London where a number of NATO organizations now maintain their headquarters.

Mr. Acheson stated that based on the preliminary copy of the UK position which he had read, it was apparent that US and UK ideas were very close to each other.⁶ The broad purpose of both the US and UK proposals were as stated by Mr. Eden: pull together the various separate staffs. However, there is one point of disagreement as the US does not favor the merger of the DPB with the FEC. Instead, the US desires to achieve the same result by having all present NATO agencies merged within the new permanent group. Referring to the problem of the chairmanship, Mr. Acheson pointed to two aspects thereof—who should be chairman of the Council and who should be chairman of the permanent group. The present system of rotation for the chairman of the Council presents the danger that for one or several years the leadership in NATO might be weak. Therefore, the US wonders if the Director or Secretary General should not preside over all meetings of the Council. Should this be difficult, there might be a rotating chairman but who would be in the chair for full meetings of the Council attended by Cabinet Ministers. The Secretary General would be in the chair of the permanent group, provide continuity and prevent the chair from falling into weak hands. Referring to the problem of location, Mr. Acheson admitted that London was indeed the seat of several NATO organizations but pointed out that Paris was also the seat of several, including SHAPE. He referred to the TCC Report’s recommendation that SHAPE should work very closely with the civilian side of NATO. Mr. Acheson expressed the view that these various proposals should be carefully studied by all branches of the US Government.

At this point, Mr. Harriman pointed to the military side of NATO and to the TCC’s recommendation that more responsibility be given to SHAPE, the Standing Group and to the Military Committee. He pointed to the importance of the logistical problem and stressed the need for strengthening the logistics support of SHAPE.

Mr. Lovett also emphasized the importance of developing a sound logistical set-up to back up SHAPE. He said that the US would be very glad to explore this problem with the UK. He expressed general agreement with what Messrs. Acheson and Harriman had said.

Mr. Harriman then referred to the future of OEEC, which in his opinion should be continued as to a limited extent it obtains the economic cooperation of certain important non-NATO European countries. Mr. Harriman said that the headquarters of both the NATO and the OEEC should be in the same place as otherwise a vast amount of economic work would be duplicated.

Mr. Eden expressed the desire to think over the suggestions of American representatives. The thought of having the permanent Director General act as Chairman of the Council meetings, including those attended by Cabinet Ministers, made him somewhat uneasy.

Answering Mr. Eden’s expression of concern that it might not be wise to have the Director General in the chair when Cabinet Ministers attend the Council, Mr. Acheson referred to his second proposal, which was also Mr. Snyder’s suggestion, which provided for a rotating chairman for full Council meetings while the Director General would chair the Permanent Group and as such would be responsible for organizing and preparing the full Council meetings.

The President proposed, and it was accepted, that Mr. Acheson and Mr. Eden would meet separately and discuss NATO reorganization.⁷

Mr. Churchill referred to the brilliant Report of the TCC and to Mr. Harriman’s great contribution thereto and asked the latter to speak.

Mr. Harriman referred to the problem of the actions which would have to be taken at the NAC meeting at Lisbon on the TCC Report and its recommendations.⁸ He said that various agencies of the United States Government were studying this report, in particular the Department of Defense and the State Department. National comments are due in mid-January and the Executive Bureau will consolidate them, for the TCC which will meet again prior to Lisbon. The military comments will be consolidated by the Military Committee.

Mr. Eden underlined the great importance placed by the British Government on the aspects of the burden-sharing problem contained in the Report’s recommendations said that these were vital to the UK and expressed the fervent hope that these recommendations would be accepted.

Lord Cherwell immediately followed with a quotation from the TCC Report’s conclusions that “If this dollar deficit were not covered, so that adequate reserves can be maintained, the UK would be forced to take action which would undermine the foundation of its programmed defense effort”.

Mr. Churchill then paid homage to the “enormous defense burden” which the United States had shouldered and again gave his assurance that the UK will do all that it can. He then pointed to Britain’s contribution since 1939 and to her constant efforts which had drawn heavily on the capacities and way of life of the 50,000,000 people in the UK. After the war, the UK did not follow the advice of the US and negotiate a Lend-lease type of settlement with her creditors. As a consequence, a great deal of the loans received by the UK from the United States after the war went to discharging Britain’s debts towards her sterling creditors, such as India and Egypt. Thus, Britain’s wartime financial difficulties were continuing in time of peace. Britain’s trade had increased greatly but her exports would have to increase still more. The Prime Minister stated frankly that a point had been reached where the “United Kingdom cannot pretend it can carry a greater burden than it can” and concluded by expressing the hope that he would be able to convince the United States Government that the UK is doing its maximum.

The President answered that he hoped the United States has not been an ungrateful child. He recalled that during the period 1866–1914, Britain, France and Germany had invested tremendous sums in the United States running into the tens of billions of dollars which permitted the great economic development of the United States. A good part of these dollar assets had been used up by these countries during the First World War. The balance in the possession of the Allies was used up in the Second World War, while the remaining German assets were confiscated by the United States Government. On the other hand, the United States had put in the War about 400 billion dollars and since the War, the United States had contributed about 60 billion dollars towards rehabilitation. The United States wants to keep the free world free and believes therefore that this rehabilitation of the free world is the most important task of the Twentieth Century. However, it is necessary to remember that the United States has a democratic political system with elections and that maybe Mr. Churchill’s visit will be a campaign issue in this year’s Presidential elections. The President pointed out that the United States has political, as well as financial, problems and that if Mr. Churchill and he do not handle things well, there might be a new American administration in the fall opposed to what Mr. Churchill stands for and not in sympathy with the goals of the United Kingdom which he had expressed.

Mr. Churchill responded that the UK is in a more fortunate position in that it had finished with elections for a few years. In the meanwhile the British Government intends to do its duty whether popular or not.

Mr. Truman expressed his high appreciation for the friendship of the UK and the Commonwealth which countries, together with the United States, constitute the bulwark of the free world.

Various arrangements were then made concerning a press release and the handling of the press.

1. The minutes were drafted by Knight on Jan. 8. They are the same in substance as those dictated by David D. Lloyd, Administrative Assistant to the President, which are at the Truman Library, David D. Lloyd files.
2. Not further identified.
3. For a record of the meeting of the working group on raw materials, see Document 335. For a record of the meeting at 5 p.m., see Document 337.
4. For a report on the luncheon at the Department of the Treasury on Jan. 8, see Document 341.
5. For documentation on the Eighth Session of the North Atlantic Council, held Nov. 24–28, 1951, see Foreign Relations, 1951, vol. iii, Part 1, pp. 693 ff.
6. This paper has not been further identified.
7. No record of a meeting between Eden and Acheson on this topic has been found in Department of State files.
8. For documentation on the Ninth Session of the North Atlantic Council, held at Lisbon, Feb. 20–25, see vol. v, Part 1, pp. 107 ff.