Will Clayton, Negotiating the Marshall Plan, and European Economic Integration

Diplomatic History

Volumn 35, Issue 2, 2011, Pages 229-256

  Healey, Timothy ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 79952368652     PISSN: 01452096     EISSN: 14677709     Source Type: Journal    
DOI: 10.1111/j.1467-7709.2011.00948.x     Document Type: Article

References (117)

1. See, in this regard, William Clayton's appearance before the House of Representatives Committee on Banking and Currency examining the Anglo-American Financial Agreement, May 21, 1946, 79th Cong., 2nd sess., 193.
2. William Lockhart Clayton (1880-1966) was appointed assistant secretary of state for economic affairs in December 1944 and became undersecretary of state for economic affairs in 1946, a position specifically created for him. He first entered the Roosevelt administration in 1940, occupying a number of senior positions, which included management of the acquisition of strategic war materials and the subsequent disposal of surplus stocks.
3. See Paul Nitze, "Foreword," in Gregory A. Fossedal, Our Finest Hour: Will Clayton, the Marshall Plan and the Triumph of Democracy (Stanford, CA, 1993), viii; Richard C. Patterson to William Clayton, September 23, 1945, box 24, Clayton Papers, Woodson Research Center, Rice University, Houston, Texas (hereafter CP Rice).
4. Greg Behrman, The Most Noble Adventure: The Marshall Plan and the Time When America Helped Save Europe (New York), 2007.
5. William Clayton, "The Foreign Economic Policy of the State Department," speech to the Economic Club of Detroit, May 21, 1945, reprinted in Selected Papers of Will Clayton, ed. Frederick J. Dobney (Baltimore), 1971, 131-34.
6. The terms of the Atlantic Charter, Lend-Lease Agreement and the Anglo-American Financial Agreement included conditions that sought to bind Britain to America's trade proposals, though these conditions were hedged with qualifications which reduced their effectiveness and were to cause considerable friction. See Thomas Zeiler, Free Trade, Free World: The Advent of GATT (Chapel Hill, NC), 1999, 23-26.
7. William Clayton, "Speech to the National Farm Institute," Des Moines, February 16, reprinted in Selected Papers of Will Clayton, 1946, 159.
8. Alan P. Dobson, among others, has made the point that the United States realized it could not "go it alone" in constructing a multilateral trading regime in the postwar era and that the "US needed Britain's co-operation if a multilateral liberal economy was to be created."
9. Alan P. Dobson, Anglo-American Relations in the Twentieth Century (London), 1995, 83-84.
10. Britain lost an estimated $29 billion out of its total prewar wealth of $120 billion, made up of physical damage to property of $6 billion, loss of shipping of $2.9 billion, internal divestment of $3.6 billion, and external divestment of assets of $16.8 billion. See Richard N. Gardner, Sterling-Dollar Diplomacy: Anglo-American Collaboration in the Reconstruction of Multilateral Trade (Oxford, 1956), 178. The volume of exports had dropped by 1943 to 29 percent of the level in 1938: in 1945 they were still only 46 percent of the prewar level. See T. Balogh, "Britain and Overseas: The International Aspect," in The British Economy 1945-1950, ed. G. D. N. Worswick and P. H. Ady (London, 1952), 477. In financing its war effort Britain had run up an accumulated balance of payments deficit of $40 billion, about half of which had been met by borrowings under Lend-Lease, with the remainder being met by borrowings from sterling area countries (about $16 billion), and the sale of overseas assets. In 1945, Britain, therefore, faced the daunting task of repaying its debts at a time when much of its capacity to earn foreign exchange had been destroyed. Its task was immeasurably helped by an act of unparalleled generosity on the part of the United States when it forgave Britain's debts under Lend-Lease, though the situation for Britain as a debtor nation remained precarious (see Sir Alexander Cairncross, "Economic Policy and Performance," in The Economic History of Britain Since 1700, ed. Roderick Floud and Donald McCloskey, vol. 3, 1939-1992, 2nd ed. (Cambridge, England, 1994), 37).
11. Dobson, Anglo- American Relations in the Twentieth Century, 82.
12. Zeiler, Free Trade, Free World, chapter 3.
13. The nature of the difficulties facing Western Europe in 1947 is widely accepted. See, for instance, Michael J. Hogan, The Marshall Plan (Cambridge, England, 1987), 30. A notable departure from the accepted view on Europe's plight is provided by Alan S. Milward, in The Reconstruction of Western Europe 1945-51 (London, 1984). He argues that Western Europe was not in danger of economic collapse in 1947 and that the shortage of dollars to buy essentials was due largely to ambitious programs of countries already experiencing recovery (see ibid., 5-19).
14. Alan S. Milward, "Was the Marshall Plan Necessary?"Diplomatic History 13 1989: 231-53.
15. William Clayton, "The European Crisis," May 27, 1947, U.S. Department of State, Papers Relating to the Foreign Relations of the United States, 1947 (Washington, DC), (hereafter FRUS), 1972 3: 230.
16. FRUS, 1947, 3: 232.
17. Dean Acheson, Present at the Creation: My Years at the State Department (London), 1970, 231-32.
18. Clayton, "The European Crisis,"FRUS, 1947, 3: 232.
19. Ivan White, European Recovery Program Oral History, 1962, box 18, Clayton Papers, Hoover Institution, Stanford University, Stanford, California (hereafter CP Hoover).
20. Hogan, The Marshall Plan, 36-41, for discussion of the influence of lower-ranking officers on Clayton in this period, particularly with regard to European economic integration.
21. William Clayton, "Speech Delivered to the Economic Commission for Europe," May 2, Dobney, Selected Papers of Will Clayton, 195-97, 1947.
22. Alan Bullock, Ernest Bevin: Foreign Secretary, 1945-1951 (London), 1984, 405.
23. Georges Bidault was French Minster for Foreign Affairs from 1944 to 1948 and from 1953 to 1954.
24. Ben Moore to Claire Wilcox, July 28, 1947, FRUS, 1947, 3: 239.
25. See "Memorandum Prepared for the Use of the Under Secretary of State for Economic Affairs," June 1947, FRUS, 1947, 3: 247-49.
26. See "Interview of William Clayton by Ellen Clayton Garwood," September 28, 1958, Speeches of Will Clayton, box 2, CP Hoover. As a separate matter, Marshall had given Clayton specific directions to raise with the British his concerns about the management of Ruhr coal which was under British control.
27. In particular, Clayton had also been involved since April 1947 in the Second Preparatory Conference in Geneva discussing the establishment of the ITO.
28. See "Leading Personalities in the United States, 1947," British Embassy, Washington, November 7, 1947, FO 371/61112, Public Records Office, Kew, United Kingdom (henceforth referred to as PRO).
29. Keynes had extensive dealings with Clayton in 1945 in negotiations over the loan to Britain. See J. M. Keynes to Hugh Dalton, September 26, 1945, in Donald Moggridge, ed., The Collected Writings of John Maynard Keynes, vol. 24 (London), 1982, 503.
30. Hugh Dalton, High Tide and After: Memoirs 1945-1960 (London), and, for a portrait of Dalton, his career, characteristics, and personality, see Roy Jenkins, The Chancellors (London, 1998), 428-58, 1962, 256.
31. Clayton and United Kingdom Ministers, June 24, 1947, FRUS, 1947, 3: 268 and 276; FO 371/62405 UE 5388, PRO.
32. FO 371/62405 UE 5388, PRO. Bevin indicated that the first priority was food. He felt that if Europe had a stockpile of food of six to eight weeks then industrial production would progressively increase.
33. Bevin argued that the Soviet Union expected the United States would encounter an economic slump and withdraw assistance from Europe. Britain would be left vulnerable and the Soviets could then dominate Europe. See FRUS, 1947, 3: 271.
34. See FO 371/62405 UE 5388, PRO; FRUS, 1947, 3: 271.
35. Bullock, Ernest Bevin, 415.
36. This argument was advanced by Sir John Henry Wood of the Board of Trade. See FRUS, 1947, 3: 274-275; Bullock, Ernest Bevin, 414.
37. Meeting Clayton and United Kingdom Officials, June 24, 1947, PREM 8/495, PRO. Some members of the British government continued to have doubts about Britain taking up Marshall Plan aid. In October 1947 a number of ministers questioned whether Britain might be better off reopening the loan agreement. This was because the Americans were conscious that they had made mistakes, both in providing too little and imposing too rigid and rapid a timetable. A majority of ministers, however, felt this approach would prejudice the prospect of obtaining a gift under the Marshall Plan and were concerned that more severe conditions might be imposed under revised loan arrangements. See Memorandum by Minister for Economic Affairs, "The United Kingdom and Marshall Aid," October 7, 1947, PREM 8/495, PRO.
38. Clayton and United Kingdom Ministers, June 24, 1947, FRUS, 1947, 3: 270; FO 371/62405 UE5388, PRO.
39. FRUS, 1947, 3: 272.
40. Clayton and United Kingdom Ministers, June 25, 1947, FRUS, 1947, 3: 276.
41. He cited discussions with Senator D. Milliken, Chairman, Senate Finance Committee, for the basis of this view. Ibid., 281.
42. The Economist (London), June 14, 1947, 923.
43. Duff Cooper to Anthony Eden, June 12, 1945, T 236/779 OF 120/51/1, PRO; Hogan, The Marshall Plan, 46, 64.
44. Minute by Sir Edmund Hall-Patch of the Foreign Office, June 30, 1947, FO 371/62552, PRO.
45. Sean Greenwood, "Ernest Bevin, France and 'Western Union': August 1945-February 1946," European History Quarterly 14 1984: 319-37
46. Hogan, The Marshall Plan, 109-19.
47. P. Dixon to Bevin, June 25, 1947, FO 371/62552, PRO.
48. Bevin (FO 371/62398, PRO) and Hall-Patch (August 7, 1947, FO 371/62552, PRO) on how the Board of Trade and the Treasury effectively blocked efforts to have this matter looked at objectively.
49. Clayton and United Kingdom Ministers, June 25, 1947, FRUS, 1947, 3: 281.
50. The World Bank announced its first loan of $250 million to France on May 7, 1947. See FRUS, 1947, 3: 708.
51. See Clayton, FRUS, 1947, 3: 269; Claire Wilcox to Clayton, FRUS, 1947, 1: 954; Bullock, Ernest Bevin, 410.
52. Clayton to Wilcox, FRUS, 1947, 1: 955.
53. Clayton to Lovett, August 1, 1947, FRUS, 1947, 3: 342. Robert A. Lovett became undersecretary of state on July 1, 1947, as replacement for Acheson who had returned to his law practice.
54. Clayton to Lovett, August 6, 1947, FRUS, 1947, 3: 343.
55. Lovett to Clayton, August 11, 1947, FRUS, 1947, 3: 350-51.
56. Lovett to Clayton, August 14, 1947, FRUS, 1947, 3: 356-60.
57. Clayton to Lovett, August 25, 1947, FRUS, 1947, 3: 377.
58. Lovett was concerned at the amount of aid likely to be sought and because even at the end of the period Europe would not achieve rehabilitation. See Lovett to Marshall, August 24, 1947, FRUS, 1947, 3: 372-75.
59. See "Minutes of Meeting on Marshall Plan," August 22, 1947, FRUS, 1947, 3: 369-72.
60. See FRUS, 1947, 3: 370, 374-75.
61. Clayton, "GATT, The Marshall Plan and OECD,"Political Science Quarterly, 78 (1963), reprinted in Dobney, Selected Papers of Will Clayton, 211-17.
62. Lovett to Clayton, July 10, 1947, FRUS, 1947, 3: 325.
63. Lovett to Clayton, August 11, 1947, FRUS, 1947, 3: 350-351.
64. Lovett to Clayton, August 26, 1947, FRUS, 1947, 3: 386.
65. Hogan, The Marshall Plan, 61. The Monnet Plan of 1947, the brainchild of Jean Monnet, set out a national modernization plan for France, involving the government in consultation with industry in all sectors of the economy. It served France as an "economic blueprint" for the next thirty years.
66. William I. Hitchcock, The Struggle for Europe: The Turbulent History of a Divided Continent. 1945-2002 (New York), 2002, 76.
67. Hogan, The Marshall Plan, chapter 2, for a more detailed discussion of the attitude of individual European countries to the establishment of a customs union.
68. Hall-Patch, Foreign Office, August 16, 1947, FO 371/62552, PRO, in which he reports that the French were "painfully aware that neither Benelux nor Scandinavia would join a European Customs Union unless the U.K. gave the lead."
69. British Delegation to European Reconstruction Conference to Foreign Office, August 20, 1947, FO 371/62552, PRO; Hogan, The Marshall Plan, 66.
70. Sir Edwin Plowden to Lord President of Privy Council, August 8, 1947, CAB 124/1050, PRO.
71. As previously noted, the British ambassador to France had sent advice to the then Foreign Secretary Anthony Eden, in June 1945, concerning future economic ties with France in which he discussed prospects for European economic integration and the need for Britain to provide the necessary leadership. See Duff Cooper to Anthony Eden, June 12, 1945, T 236/779 OF 120/51/1, PRO. This message was discussed at length by officials from the Foreign Office, Treasury and the Board of Trade. The arguments were long and complex but broadly support the view that the Foreign Office saw advantages in closer Western European economic integration, while the Board of Trade and Treasury tended to see it as a "very difficult proposition." See "Minutes of Meeting on Economic Relations with France and Western Europe," July 25, 1945, T 236/779, PRO, and Hall-Patch to Bevin, August 7, 1947, FO 371/62552, PRO, in which he refers to the successful efforts by the Board of Trade, with the support of the Treasury, to block an objective examination of establishment of a customs union.
72. See Sir David Waley to Sir Wilfrid Eady, Treasury, October 23, 1946, T 236/779. PRO, who argued that a full customs union would be against the interests of the dominions and colonies, dislocate domestic production in the countries concerned that had been built up under tariff walls, and completely abolish imperial preferences.
73. Board of Trade, June 30, 1947, FO 371/62552, PRO.
74. Ibid and Waley to Eady, October 23, 1946, T 236/779, PRO.
75. Plowden to President of Privy Council, August 8, 1947, CAB 124/1050, PRO.
76. Hall-Patch to Bevin, August 7, 1947, FO 371/62552, PRO. See also, on Hall-Patch's career, G. C. Peden, The Treasury and British Public Policy, 1906-1959 (Oxford), 2000, 383.
77. Hall-Patch to Bevin, August 7, 1947, FO 371/62552, PRO.
78. Report by British Delegation, Geneva (ITO/GATT negotiations), to British Embassy, Paris, on discussions with Clayton, August 18, 1947, FO 371/62416, PRO; British Delegation, Paris, to Foreign Office, August 20, 1947, FO 371/62552 UE 7566, PRO.
79. John Balfour, British Embassy, Washington, to Foreign Office, August 13, 1947, FO 371/62552 UE 7362, PRO.
80. See British Delegation, Geneva, to British Embassy, Paris, August 18, 1947, FO 371/62416, PRO; Hogan, The Marshall Plan, 66.
81. See record of conversation between Roger Makins, Foreign Office, and Lewis Douglas, August 15, 1947, FO 371/62552, PRO.
82. Record of reasoning for France's support for customs union, Foreign Office, August 4, 1947, FO 371/62552, PRO.
83. Memorandum, August 16, 1947, FO 371/62552, PRO. Hervé Alphand was then director of economic affairs at the French Foreign Ministry.
84. Oliver Franks to Foreign Office, August 19, 1947, FO 371/62552, UE 7560, PRO.
85. Harold Wilson to the Prime Minister, August 18, 1947, FO 371/62416, UE 7709/168/53G, PRO.
86. Annotation by unidentified official (possibly Wood).
87. Annotation by another unidentified official (initials A. T. C.).
88. Franks to Foreign Office, August 19, 1947, FO 371/62552, UE 7560, PRO.
89. Hall-Patch, August 16, 1947, FO 371/62552, PRO.
90. Franks to Foreign Office, August 19, 1947, FO 371/62552, UE 7560, PRO.
91. See FRUS, 1947, 3: 281.
92. See "The Marshall Plan and Integration," Sir David Waley to Sir Wilfred Eady, June 16, 1947, T 236/1887, PRO.
93. See "Briefing Notes for Foreign Secretary for Discussions on Marshall Plan," n.d., which appears to have been prepared before the meeting with Clayton of June 24, 1947, CAB/124/1050, PRO.
94. See FRUS, 1947, 3: 281-282.
95. See British Delegation, Geneva, to R. W. B. Clarke, July 7, 1947, T 325/22, PRO.
96. Foreign Office to British Delegation, Paris, July 26, 1947, FO 371/62415 UE6449/168/53, PRO.
97. See Balfour to Foreign Office, August 13, 1947, FO 371/62552 UE 7362, PRO.
98. Alan P. Dobson, The Politics of the Anglo-American Economic Special Relationship 1940-1987 (Brighton, England), 1988, 104.
99. Sir David Waley to Sir Wilfrid Eady, October 23, 1946, T 236/779, PRO.
100. The absence of this provision would have precluded free trade areas and customs unions from establishing preferential treatment between members, thereby effectively precluding the possibility of establishment of such closer economic entities.
101. Kerry Chase, "Multilateralism Compromised: The Mysterious Origins of GATT Article XXIV,"World Trade Review 5 (2006): 1-30.
102. Chase makes the point (14) that the problem faced by America on this matter was that by "taking a firm stand against preferences at Havana while simultaneously negotiating a preferential arrangement with Canada would appear hypocritical," hence its "stage manag[ing]" of the introduction of the enabling provision by third-party countries (in this case Syria and Lebanon).
103. Daniel Yergin and Joseph Stanislaw, The Commanding Heights: The Battle for the World Economy (New York), 2002, 7-8.
104. The nationalized industries were: coal, iron & steel; railways; utilities, including power generation; and telecommunications.
105. Tony Judt, Postwar: A History of Europe Since 1945 (New York), 2005, 160.
106. Hogan, The Marshall Plan, 65
107. Judt, Postwar, 70.
108. Judt, Postwar, 117.
109. Hogan, The Marshall Plan, Chapter 2 and particularly page 57.
110. FRUS, 1947, 3: 383-89.
111. Clayton reported to Lovett on his discussions with Kennan and Bonesteel, at which "a comprehensive review of the Paris Conference" occurred and a "mutual exchange of ideas enabled us to agree on a common position which we stated orally to the Conference's Executive Committee." Clayton to Marshall and Lovett, August 31, 1947, FRUS, 1947, 3: 391-96.
112. Annotations by unidentified officials to a message from Sir H. Knatchbull-Hugessen to the Foreign Office re talks with the Belgium Prime Minister, August 31, 1947, FO 371/62416, PRO.
113. Hogan, The Marshall Plan, 79, 80, notes that the participants' report included a declaration by the French on the benefits of a customs union and invited the participants to join a customs union once their currencies had been stabilized.
114. The history of America's efforts to secure the elimination of imperial preferences is complex and subject to controversy. In brief, it can be said that in return for wartime assistance (Lend-Lease) Britain undertook to support the United States' trade liberalization proposals (an undertaking reinforced under the Anglo-American Financial Agreement). However, the undertaking to eliminate imperial preferences, which was part of the trade proposals, was to a degree "hedged" in a way that created ambiguity and failed to secure an unconditional commitment from Britain. In this matter Clayton seemed to believe that the undertaking given by the British was much more "water tight" than it was: he certainly portrayed it to Congress in this way (see Statement by Clayton to Senate Committee on Banking & Currency, 79th Cong., 2nd sess., March 5, 1946, 116). In any case, by 1947 the parlous state of Britain's balance of payments, particularly after the disastrous and ill-fated introduction of sterling convertibility, dictated that strict enforcement of the elimination of controls on trade was no longer realistic.
115. Acheson, Present at the Creation, 231.
116. Hitchcock, The Struggle for Europe, 147-45, 151.
117. Harold Wilson, "William L. Clayton Lecture," Fletcher School of Law and Diplomacy, Tufts University, November 28, box 18, CP Hoover, 1971.