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United States Department of State / Foreign relations of the United States, 1947. The British Commonwealth; Europe

Europe,   pp. 196-654 PDF (168.7 MB)

Page 240

Joe, Bill Phillips 2feel that you should have a detailed account of
the situation insofar as we have been able to follow it.
  It gradually became increasingly clear last spring that a new ap-
proach would be needed. The balance-of-payments situation was
obviously deteriorating. Paul kept pushing for adequate information
and analysis of this problem (he sent you a copy of his memorandum).
The first comprehensive study in the Department was a report prepared
for a special SWNCC subcommittee (copy enclosed)3 which Van Cleve-
land 4 and I pulled together on the basis of such information as we
could collect at that time. This report led directly to Acheson's Missis-
sippi speech (written by Joe Jones) which put the problem clearly
before the people and Congres.5
  In the meantime, Congressional reaction to the Greek-Turkish pro-
gram indicated strongly that such a piece-meal approach to the prob-
lem of foreign aid could not be continued much longer. The next request
would undoubtedly have raised an insistent demand for the total bill.
For this reason the Korean legislation, although badly needed, was
  The third element was a growing recognition of the serious character
of the crisis in Western Europe. When Kennan was first appointed to
the Policy Planning job he decided to concentrate on this area. He felt
that the failure to reach agreement on Germany at Moscow was due
primarily to Soviet anticipation of continued deterioration in France,
Italy and Western Germany plus hope for a U.S. depression. It was
essential to improve the Western European situation in order to pre-
vent further weakening in our bargaining power.
  This was the Departmental frame of mind when Mr. Clayton came
back from Geneva. He prepared a memorandum shortly after his re-
turn outlining the basic elements of a new approach to the European
problem. These were incorporated in a paper which the Planning Staff
sent to the Secretary proposing this approach as a basis for further
study. Kennan heard nothing further from it until he read the news-
papers shortly thereafter, and realized that the basic elements had
been presented at Harvard. The Secretary has tremendous power of
decision and his batting average is phenomenally high. He made up
his mind on most of the major decisions of the war in just as short a
  2Probably Paul Nitze, Deputy Director; J. Robert Schaetzel, Special Assistant
  to the Director; Joseph Coppock, Adviser; all of the Office of International
  Policy, and William T. Phillips, Special Assistant to the Chief of the
  Resources Division.
  'For text of report, see p. 204.
  'Harold Van Buren Cleveland, Assistant Chief, Division of Investment and
  Economic Development.
  'For text, see Department of State Bulletin, May 18, 1947, pp. 991-994.

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