European Recovery Programme: Continuing Organisation

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European Recovery Programme: Continuing Organisation

European Recovery Programme:  Continuing Organisation.

E.B. 

Memo. by Ldn. Cttee approved by E.P.C.
Involves re-orientn of our economy – some loss of U.K. independence over economic life.  Need to inform Doms. of this.  Much too for C.O. to study.

R.S.C. 

Endorsed.  Profound change in overseas econ. policy.  Favour it as only chance.  But commits us to close assocn with W. Europe & to considering their interests as well as our own in econ. matters.  Must weave that into our relations with Doms. & for some (e.g. Canada) consequences may be awkward.
No real choice, but must have our eyes open to what we are doing.

P.M. 

Cd. remain separate in B. Comm. but wd. involve lower standard of life.
Room for economy dependent neither on Soviet nor on U.S. – can give high standard – but must be integrated with W. Europe, and overseas dependencies of all.  Means accepting planned economy for Europe.  Ques. for us:  are we ready to say that our planning shall now extend to Europe.

T.W. 

Diff. to oppose this.  Drastic action needed to get viable.
But realise what it may mean.  Para. 11.  May not happen soon.
But may be argued we shd. grow more grain & reduce our imports & leave Europe to send us more meat.  Might threaten our agric. expansion p'mme.  Control allocation of coarse grains might well tend in that direction.  Wd limit our freedom to buy.

H.W. 

May suffer in short run, in imports of food & materials;  but will strengthen our posn in long term.
But no alternative, apart from F.O. angle.

P.M. 

Unemployment?

H.W. 

Diff. to say – depends on Marshall supplies.

H.M. 

Genl. agreement:  for, if W. Europe goes economically, it will go politically too & situation will then be grave.
But must have eyes open to risks.  Hope they may be mitigated.
Shd. make most careful plans & have organn to make it success.
French, Italy are bad administrators – and Govt. bad too.
Much therefore will rest on our planning & intelligence organisation.  We must get inside & make the internatl show work.
Suppose, even so, Fr. & Italy collapse.  May be vital that we shd. be able to pull out.  Keep that in mind.
Morals & publicity leadership of Europe must be taken care of – on lines of U.K. publicity.  Encourage Fr. & Italy to do it for themselves:  but U.K. Ministers cd. also appeal to foreign publics in speeches.

N.B. 

Shall have trouble with B'brook Press.  And need for active consultn with Doms. before they see our view on this.
In fact, most of this will be of long-run benefit to Doms. as giving them Europe as market for their expanded prodn.
My advisers want to avoid dramatic commn to Doms.  Go slowly.
Don't propose hasty Conference.

C.J. 

Endorse general principle.  Col. developmt. depends on healthyEurope.  Fr. has exclusive economic attitude to her Colonies – shall have to break that down.  Respect for Col. Govts:  avoid  impressn of exploitation.

P.M. 

New to me tht. there will be immediate hardships for U.K. as result of this.  Will it?

R.S.C. 

Our standard has bn. higher than Europe.  And we've bought our imports widely & well.  They may press now for a larger share.  Needn't interfere much with us, esp. if the cake becomes larger.

H.W. 

Coarse grains – we have pirated market.  Allocn will prob. cause quick drop, recovering later.
Timber – we have pirated.  Shd. be little worse off.

A.B. 

Assume this doesn't affect Ruhr steel?

E.B. 

No commitment.

A.B. 

Short-run worsening.  From preventg. undue concentn of hardship in any one country.  We may have to agree to econ. assistance for pol. reasons – e.g. for N. Italy.
Must be in short-term price for long-term benefits.
Doms. shd. be brought in at earliest stages – on planning & formulating policy.
Present this optimistically – not as forced on us by R. intransigence.
As Socialists we shd. have liked to do this years ago.
Emphasise positive aspects of W. Union, throughout.

A.W. 

No other way.
But mistake if accompanied by consumption cuts.
Will our standards of living or investment p'mmes have to be cut in early consequence?  If so, can cuts be made before this?
Future.  How will the area pay for its imports?  We managed to pay pre-war.   But Germany cdn't.  Will that diffy. arise again?  What consequences will it have for us?

R.S.C. 

This scheme won't affect our standards soon.  Those will turn on Marshall Plan.  Longer-term:  if Doms. etc. increase their prodn, hope for corr. increase of prodn in Europe:  & exchange of goods w'in this enlarged sterling area.  Take no more from dollar area than they will buy from us.

A.V.A. 

Risk of undercutting B. sales because lower wage rates in Europe.

P.M. 

That is why E.B. has suggested equalisation of social services.

G.A.I. 

Does this mean we shd. slow down our importn of f. labour?
If unemploymt. may arise here.

A.B. 

How quickly can Doms. be associated with this?

G.T. 

Europ. recovery essential to ours.  But keep Doms. in, & bring them along with us.

A. 

Not wholly convinced.
Need to intensify supply from Doms. & Colonies – if Europe can't be viable at end/Marshall. 
Some of the 16 are weak partners.  Must see that our organn is available, as H.M. suggests.
Support T.W.'s point.  Livestock is our proper road of agric. expans. Doms.  Essential they shd. be brought in from beginning.
Need for great care in presentn.

N.B. 

Intentions.  Telegram to go to-day to Dom. Govts.
E.B. to meet High Commrs. this week.
Send gloss on speech to be made by E.B. on 15/3.

E.B. 

Remember Doms. differ.  Canada won't join in this.  They will follow U.S. lead, in or out.  I don't want U.S. to play too big a part: don't therefore want to force U.S. on by urging Canada to support this.
Australia & N.Z. will support it.  Cdn't they second some good economists to work with us in Ldn.
Dom. liaison is good on defence:  But not good on pol. and economic ques.
This = opportunity for getting Dom. liaison perfected, prs. on defence  analogy.
Disturbed at talk of lowering standards.  My object in this is to raise them.  The 0rds. calculn depends on vigour with wh. we push idea of new sterling group in Europe.  
Purpose of this memo.  To commend a Continuing Organn.
Is it 4 years or perpetual?  Argument for latter:  otherwise can't play Europe & it becomes mere charity.
French administration not so bad (?).
High Commrs. in Doms.  Can it be overhauled?  Too much reliance in past on telegrams.  Need for discussion.  Liaison with Doms. must be improved.
Sent Franks to U.S.  But done nothing comparable in Canada.
S. Africa also needs review.
Liaison betwn. Doms & Continuing Organn might be misunderstood  in Doms.  And each Dom. country must be considered separately on merits.
If U.S. Administrator apptd in Ldn., might get financial & economic experts posted to Dom. High Commrs. in Ldn. Steel.  Don't know what will happen.  My aim, however (in German talks) is to review over-capitalisation of B., Belgian & German industry.  Revive international cartel (!) "was done well pre-war."

T.W. 

Para. 11 contemplates drastic changes.
Para. 9 of Annex.
Not my pessimism.
Hope these expressions of opinion will never be published.
Memo. approved.

Taken from C.M. 20(48) - Meeting held on 8 March 1948.