Britain and the Marshall Plan

205 Pages·1988·19.349 MB·English

by  Henry Pelling (auth.)

BRITAIN AND THE MARSHALL PLAN
Also by Henry Pe/ling
*THE ORIGINS OF THE LABOUR PARTY
THE CHALLENGE OF SOCIALISM
AMERICA AND THE BRITISH LEFf
*LABOUR AND POLITICS, 1900-1906 (with Frank Bealey)
THE BRITISH COMMUNIST PARTY
MODERN BRITAIN, 1885-1955
AMERICAN LABOUR
*A HISTORY OF BRITISH TRADE UNIONISM
*SOCIAL GEOGRAPHY OF BRITISH ELECTIONS, 1885-1910
*POPULAR POLITICS AND SOCIETY IN LATE VICTORIAN BRITAIN
BRITAIN AND THE SECOND WORLD WAR
*WINSTON CHURCHILL
*THE LABOUR GOVERNMENTS, 1945-51
*A SHORT HISTORY OF THE LABOUR PARTY
• Published by Palgrave Macmillan
Britain and the
Marshall Plan
Henry Felling
Fellow of StJohn's College, Cambridge
M
MACMILLAN
PRESS
© Henry Mathison Pelling 1988
Softcover reprint of the hardcover 1st edition 1988 978-0-333-46780-0
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First published 1988
Published by
THE MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
Typeset by Wessex Typesetters
(Division of The Eastern Press Ltd)
Frome, Somerset
British Library Cataloguing in Publication Data
Pelling, Henry
Britain and the Marshall Plan.
1. Western Europe, Economic development.
Financial assistance by United States,
1947-1951
I. Title
338.91'73'04
ISBN 978-1-349-19611-1 ISBN 978-1-349-19609-8 (eBook)
DOI 10.1007/978-1-349-19609-8
Contents
List of Plates vi
Special Abbreviations used in the Text vii
Preface viii
1 The Origins (to June 1947) 1
2 Formulation and Enactment (June 1947-April1948) 11
3 ECA and OEEC: The First Year 27
4 The London Mission: The First Year 44
5 Europe and the Sterling Problem (1948--49) 64
6 'Dollops of Dollars' (1949-50) 87
7 The Beginning of the End (Late 1950) 103
8 The Aftermath 115
9 Conclusion 125
Appendix A: US Economic Co-operation Act, 1948 129
Appendix B: Economic Co-operation Agreement 153
Between the Governments of the United
Kingdom of Great Britain and Northern
Ireland and the United States of America,
with Annex and Note, London, 6 July 1948
Special Abbreviations Used in Notes and References 166
Notes and References 167
Index 182
v
List of Plates
1 General Marshall greets Ernest Bevin at the United Nations
Assembly, Paris, September 1947 (BBC Hulton Picture Library)
2 Bevin signs the Bilateral Agreement, July 1948 (Photo Source)
3 Averell Harriman, Special Representative, ECA, with Thomas
Finletter in London, December 1948 (US National Archives)
4 Paul Hoffman, Administrator, ECA, addresses British Foundry
Team in Washington, April1949 (US National Archives)
5 Bevin signs the North Atlantic Treaty in Washington, April1949.
Behind his right shoulder is Sir Oliver Franks, the British
Ambassador (Photo Source)
6 The Sterling Crisis, July 1949: a Session at Downing Street ends.
Sir Stafford Cripps (centre) with John Snyder, US Treasury
Secretary (left) and Harold Wilson, President of the Board of
Trade (right) (US National Archives)
7 W. John Kenney takes oath of office as Finletter's successor,
Washington, July 1949 (US National Archives)
8 Dean Acheson, Ernest Bevin and Robert Schuman at the start
of three-power talks in London, May 1950 (BBC Hulton Picture
Library)
9 Paul Hoffman pays a farewell visit to Attlee at the end of his
Marshall Plan service, October 1950 (US National Archives)
vi
Special Abbreviations used
in the Text
AACP Anglo-American Council on Productivity
AFofL American Federation of Labor
CEEC Committee for European Economic Co-operation
CIO Congress of Industrial Organisations
ECA Economic Co-operation Administration
EEC European Economic Community
EPU European Payments Union
ERP European Recovery Program(me)
MSA Mutual Security Agency
NATO North Atlantic Treaty Organisation
OEEC Organisation for European Economic Co-operation
TUC Trades Union Congress
UN United Nations
WFTU World Federation of Trade Unions
vii
Preface
For the present work my principal debt is to the custodians of official
papers both in Great Britain and in the United States. In Britain
most of my research has been undertaken at the Public Record Office
at Kew; in the United States at the National Archives in Washington
DC or the Federal Records Center at Suitland, Maryland. The
Federal Records Center contains the papers of the Economic Co
operation Administration's headquarters in Washington and its princi
pal outstation, the Office of the Special Representative in Paris. In
addition, I am very grateful to Mr Rhea Johnson, Director of
the Office of Public Inquiries at the Agency for International
Development, for enabling me to see the papers of the London
Mission of the ECA, and for providing me with a spare desk in his
office for this purpose over a period of two months.
I also offer my thanks to the staff of the Harry S. Truman Library
at Independence, Missouri, where many of the papers of members
of the Truman administration are housed, together with numerous
transcripts of interviews; and to Dr Lewis Heib, Head of Special
Collections at the University of Arizona, for access to the Lewis
Douglas Papers. Mr W. John Kenney, the second Chief of the
London Mission, was good enough to see me and to discuss his role
in 1949-50. Charles Bourne and Mary Page Gready both undertook
research assistance in the United States. My Cambridge colleague
Dr P. F. Clarke kindly read the entire manuscript before it went to
press, and I have benefited from his suggestions.
For the whole of the period of my work on the book I have been
a Fellow of StJohn's College, Cambridge, and have had the advantage
of residence and commensality there. But my task was also materially
assisted by a four-month grant from the Woodrow Wilson Inter
national Center for Scholars at Washington, DC. I must add that the
statements and views expressed herein are not necessarily those of
the Wilson Center.
HENRY PELLING
viii
1 The Origins
(to June 1947)
1
It is sometimes thought that the economic weakness of Britain in the
era after 1945 was due to her exceptional efforts in the Second World
War. In fact, however, the decline in her position can be dated much
earlier. The competition of other industrial powers - particularly
Germany and the United States-had already made itself felt in the
late nineteenth century, although British exports reached a peak in
the years just before the First World War. Between the wars the
staple export industries, in particular coal and cotton, suffered
severely, and as the official war historians pointed out, 'the nation,
even in advance of war, was already beginning the process of overseas
disinvestment'. 1 A balance was maintained only on the basis of
income from the remaining investments and other 'invisible' assets,
notably shipping. On the other hand, the British Treasury was greatly
concerned about the capacity of the country to survive another long
war. One major problem was that the United States, Britain's major
supplier in the First World War of food and munitions, had passed
neutrality legislation to prevent her involvement in the affairs of
Europe.
When war broke out in 1939, the British Treasury at once secured
powers to mobilise foreign investments, so that they could be used if
necessary for the purposes of the war effort. 2 The self-governing
countries of the Commonwealth, with the exception of Canada which
was financially too closely tied to the United States, but with the
addition of India, Egypt, the Irish Republic and all the British
colonies except Hong Kong, agreed to impose a similar control. They
thus found themselves components of a currency pool known as the
'sterling area'. Committed as nearly all of them were to the British
cause in the war, they supplied goods and services to the United
Kingdom, for which they expected repayment partly by supplies from
Britain, and partly by the realisation of British assets. Much of the
payment, however, was necessarily postponed until after the end of
the war: by the end of 1945 the sterling and dollar balances had built
up in London to the total of £3500 million.3
1