Sir Edgar Cohen Oral History Interview

Notice
This is a transcript of a tape-recorded interview conducted for the Harry S. Truman Library. A draft of this transcript was edited by the interviewee but only minor emendations were made; therefore, the reader should remember that this is essentially a transcript of the spoken, rather than the written word.

Numbers appearing in square brackets (ex. [45]) within the transcript indicate the pagination in the original, hardcopy version of the oral history interview.

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This oral history transcript may be read, quoted from, cited, and reproduced for purposes of research. It may not be published in full except by permission of the Harry S. Truman Library.

Opened June, 1984
Harry S. Truman Library
Independence, Missouri

[1]

COHEN: The main problem immediately after the war was that the countries hadn't the money and the resources to import freely from one another. They had a tradition from before the war, many of them, of restrictionism, and nobody would take the lead in getting trade going again. It was a very difficult situation, in fact, when the Marshall plan started, I remember. One couldn't see very far ahead, and we had had the loan, of course, from the United States in 1945-46.

We were committed to certain conditions of convertibility and non-discrimination. That gave

[2]

a breath of fresh air in Europe. It was seized after the way water is in a drought. I mean the money available to conversion was sucked in, wherever anyone could suck it because they were so short. And nobody was prepared to use it as an opportunity to restore freer trade, instead of making it an opportunity to get hold of some gold or dollars to pay off debt or to meet immediate and urgent requirements of American raw materials and equipment. But as far as that went, it was a drop in the ocean in any event. I mean the money went in a fraction of the time expected, as you remember, and we had to become inconvertible again. We had to stop it.

Apart from one or two countries like Belgium, which emerged from the war rather stronger than some, and Switzerland, which hadn't been in the war, or Sweden, which was a trading country on the periphery, nobody had the resources, or the possibility, really, of getting trade moving in a normal way. One of the things the Marshall plan did was to provide a great opportunity for that,

[3]

because as we saw it in England, the need was there and the Marshall plan should be partly used to enable people to meet the need, issue imports more freely. If we don't import more freely from you, you run into a certain amount of deficit. If you got support from the United States -- and you'd be lesser alarmed at that prospect -- within reason you get a little bit deeper into the swimming pool and see if you can't swim a bit. But without that, people absolutely are at the shallow end dabbling, you know, and very much afraid of moving.

WILSON: By your reference to trade in the normal way at the end of the war, this was thought of as an attempt to restore what had been normal commercial intercourse in the period between the wars, before the breakdown in the thirties?

COHEN: Yes. That's right.

And also, as further moves towards the reduction of other barriers and closer restrictions; that was left to the GATT [General Agreements on Tariff and Trade] in Geneva. But there were at

[4]

the end of 1945 joint Anglo-American proposals for the freeing of trade in a more generalized way with nondiscrimination and reduced tariffs. Which has still survived in the GATT in Geneva.

WILSON: Yes. This is marked on the American side, of course. Some of the persons whom I've interviewed have used the word "obsession" to describe Americans who were pushing for trade liberalization as a solution to almost all problems.

COHEN: Well, it was a necessary condition for the solving of problems on a basis of private enterprise, and they were quite right. They were quite right I think. They've had to justify what they did. But in the authority dealing with tariffs and the broad experiment on discrimination, you want a world basis for what you're doing, and that we got through the GATT. Insofar as you want to get the people shattered by the war to restore their old economies and to build up again, and be able to play a responsible part in world affairs,

[5]

it was a geographical problem of Western Europe, and that's where the Marshall plan came in. You will put up this much money to it and now see if they can't get on their feet again. You know, from others, how the United States provided equipment, raw materials, and food in an enormous quantity into Western Europe and gave these people a chance to breathe and recover. The whole thing had to be restored. Germany had to recover again.

WILSON: Some of the information which I have been given suggests that the thrust of American aid in this period, perhaps even, before the Marshall plan, viewed Europe as a cohesive trading unit rather than at a part of the world economy, and that this indeed in part defeated the effort to reintegrate Europe into the world economy.

COHEN: I think that there may have been an attempt to do things that way. It's awfully difficult for me to say without asking the individual Americans who were doing it. But I don't think it defeated anything.

[6]

I think it was a necessary step. You put it this way, that on the worldwide philosophy that the United States had, and the British shared, you would work on an issue of non-discrimination worldwide. None of these countries could afford to trade freely; they hadn't the resources. They all have what's called "balance of payments" difficulties. The demand in that country was far in excess of what they had in resources. They got Central banks to finance.

Therefore, under the system of international law that was built up in the GATT, the administration of the GATT, everybody could impose restrictions. I think what the United States felt there -- and what we felt -- our common approach was inside Europe there was a possibility, as a sort of limited "hot house" experiment, to say, "Here as against one another, we don't exercise our rights under international treaties to restrict imports from one another. This time, let's set a more generous basis among ourselves, and then when we are strong

[7]

enough, we can extend it more fully."

Then of course, the great problem later on was when the United States demanded, quite rightly, that these things should be extended to imports from the United States. But let's start now. The more you buy from one another, the more one another can buy from you. See what I mean? So let's try and break it down a bit. And we, independently, in Britain were interested in liberalizing our trade. We had always been a world trading nation and we reckoned that our industry would be healthier if it had to face some import competition. I think it was a natural. We were better equipped for export trade, and it was a natural requirement for development of the British Commonwealth, to get away from close restrictionism.

Now the difficulty of doing that is that of course you run into balance of payments difficulties if you do it too fast, and as other countries are doing it at the same time. So the American move

[8]

for liberalization coincided with our own judgment of what really was in the interest of ourselves and our neighbors, We saw it in the same way, and we had our plans by 1948-49 to start liberalizing our imports. We brought that into Europe, and in OEEC broader plans were made, which subsumed our plans, generally on the basis of liberalizing, giving percentages of your trade in manufactures, raw materials, and foodstuffs separately -- as you all moved forward steadily at the same pace. When you got to 75 percent you were beginning to get somewhere. The main difficulty was, of course, that some countries were more inflationary than others, and therefore tended to suck in more, while others tended to squeeze out more exports. That led to a balance of payments dis-equilibrium, which had to be dealt with.

The parallel contribution, you see, the United States then made under the Marshall plan was to say, "Now, you chaps liberalize your trade as hard as you can, and we will finance the union for clearing payments -- a European Payments Union -- so there

[9]

will be an element of credit between you. There will be a certain amount of gold there for your international settlement. You can settle credit, one country with another, and that will give you the financial basis on which you can be more courageous about lowering trade barriers."

WILSON: Just how strongly did the United States -- the American representatives -- carry forward the plan?

COHEN: They carried it forward all right.

WILSON: I know 500 million...

COHEN: I forget the figure, the amount they put into aid in the EPU [European Payments Union]; that must be readily available. They did put a substantial sum into the EPU of Marshall plan money. It was very well used, because the money in there enabled the Europeans to buy more from one another and hence facilitated their own industrial reconstruction, and thereby become more independent of American aid. It was money very well spent. There's no

[10]

use just giving people food and materials and machinery; they can sit back and say, "Thank you very much." It's a very pleasant way of living. But this money was used to get all producing and trading with one another on a scale which they could not otherwise have afforded, and therefore, to get their industries restored more quickly. The European Payments Union was really, I think, a major achievement of the OPEC. But it was introduced out of the efforts of liberalization of trade, which previously had been facilitated by payments arrangements of a more primitive kind, what we called "drawing rights." It was then carried forward much more effectively when the EPU multi-lateralized the credit arrangements, when each country had a settlement on a multilateral. basis, whether or not its debtors were good for the money, so to speak. But if you sold to Greece, and bought from Belgium, you could convert a part of the surplus by paying it into EPU. You settle through the EPU, and the American money was there. You couldn't have got

[11]

out of Athens.

The principle was that you could cash in your credits and your deficits, strike the net balance. If you wanted your net balance you had to surrender, you had to pay proportionately, in gold. The amount you had to settle increased according to the extent to which you had drawn up your quota of credit. The more deeply you got in, the more you had to pay; the bigger the proportion that was demanded of you. That naturally was the sanction. Equally, if you were a creditor, you had to give credit first, and the bigger your credit position, the more you could claim as a settlement in gold. The American money, you see, helped to finance it and to make it possible for the European countries to do it. It treated all countries as equally sound financially; that is to say, the American money enabled you to obtain, within limits set by EPU, a convertibility of any of the currencies involved, because you paid in your chips, your IOU's, and they

[12]

counted towards your creditor or debtor position. That meant that people didn't need to be selective as the partner trade developed. That is something that was overcome when European recovery had reached the point, had passed the point, where these countries could, on their own resources, finance these deficits. It anticipated a position that was artificial at first.

Once the position was reached, where the countries could settle these claims -- it wasn't all that difficult once countries got their industries going again -- then we reached a point where we didn't need the EPU any longer. We were able to convert our currencies from one another on a worldwide basis.

Looking back on the thing, one is bound to admit that it was a very great success. I don't think it's exaggerating it to say that it was a successful venture, carried through by a handful of extremely able men.

WILSON: Might you identify the ones that you...

[13]

COHEN: I forget the main people but there were obviously my people, a handful of them, the people who devised the European Payments Union, the people who devised the payments agreement. The payments plans, which they started with, were quite an ingenious device. What they said in effect was that, look at a country like Belgium, she came out of the war fairly well -- Belgium, you might say, well she hadn't gotten dollars, she hadn't gotten hard currency, to afford the credit. But she didn't need help from the United States, except to the extent that if she sold to people who couldn't pay in hard currency, she was making what were formerly bad debts, but if she was to sell her steel to the British, we will say, she must charge convertible money for it, because she needed that to buy from the United States. For the other half, she could balance her account subject to being paid.

Then the United States in effect said, "Well, we will give you Marshall aid, on condition that

[14]

you give as much aid to European countries immediately as you got from us." In other words, we'll convert the money for you. But the Belgians in that case would be given, shall we say, conditional aid X, and would establish drawing rights equal to X with other European countries. She would then have given as much as she received in a way which in today's conditions simply means she was paid in good convertible cash. And then she wouldn't have needed American money. America said, in other words, "We will give you money, in effect, to which you convert. Having convertible money again would be our contribution to it."

On that basis, countries were able to establish drawing rights for the benefit of countries who were in deficit with them, where those countries couldn't afford to buy as freely as they should. American aid underpinned the process by saving the creditor country from the inflationary pressure that would ensue, and indeed from the economic sacrifice it could not afford. That would have happened in supplying goods to a deficit neighbor,

[15]

instead of selling them on the world market for good money, or using them at home.

The Americans in effect said, "Well, you can have so much aid, so much absolute and so much conditional. So the other countries that need your stuff can get it from you instead of coming to us for it, but we will pay for it. We're giving you aid, the goods you want from us, but on condition that you in turn pass it on, because you don't need that much aid net."

Then the multi-lateralization of that was really the next step in the European Payments Union. The man who had a lot to do with the devising, or the planning for the conditional aid, and the drawing rights, was Ansiaux, the Belgian.

WILSON: I will see him.

COHEN: Yes. Well Ansiaux had a lot to do with that. He is a very ingenious, able man, and Ansiaux had a lot to do with it. Other people who know

[16]

a lot about it, or did know, was Sir Hugh Ellis-Rees in London, have you got his name from anyone?

WILSON: Yes. Ambassador [Henry J.] Tasca recommended him and I wrote him, but I did not receive a reply.

COHEN: I guess he's all right, he's getting pretty elderly; he's in London.

WILSON: I'll try to call him.

COHEN: See if you can call him. He lives in London. I've forgotten the address, on Georges Square; he's in the phone book, and he had a lot to do with it. In the United States [Hubert F.] Havlik had a lot to do with it; he had a lot to do with what I call the "wet metal;" he and Ellis-Rees used to work with the financial committee there. Do you know Frank Figgures from the Treasury?

WILSON: Yes, I'll see him in August.

COHEN: Well, he knows a lot about that, he was on

[17]

the Secretariat. He might tell you some. All I remember was, the drawing rights did enable countries to get help from one another, so the European trade recovered. The United States made that possible by giving aid conditionally against those rights. The difficulty sometimes was to anticipate what the deficit should be; the drawing rights might not be used.

WILSON: Germany got into some prime trouble just after the...

COHEN: We got into difficulties before we diverted sterling on the basis of the exchange rate. There was a difficulty in these artificial things, but the principle of the thing was to try to plan forward. What were the likely requirements in excess of what we could meet, or could afford?

WILSON: Let me ask two questions. As you suggested, sterling was in a somewhat unique position at the beginning of the EPU, and had a rather special relationship in the sense that they set up, I understand, the EPU unit as the dollar. And

[18]

sterling was also recognized.

COHEN: No, it wasn't as I remember, no. We had to settle in gold or dollars at the end of each month. We were treated just like everybody else. Sterling was inconvertible for this purpose. It was one of the problems of the EPU, and it is, if you like, a reason that the EPU couldn't last indefinitely. But the main reason, of course, the EPU couldn't last indefinitely is that it was a regional system, which made for regional liberalization and regional assistance. It had built-in discrimination against the rest of the world. There were problems about this, also. Of course, it did facilitate acceptance of sterling in many parts of the world. That is to say, people who ran into sterling debt could draw on EPU. I don't think as far as I can remember there's any means of identifying whether the debt of Mauritania or Italy was due to buying more from England than from buying American wool. I mean sterling-area payments were bound to come into it. These

[19]

countries accepted sterling and the money went through London. There it was. But they did not recognize that they could buy freely, or liberalize from the sterling area. But the financial ground for discrimination had gone. And some did, I think, liberalize with raw materials, because that was common sense, and they had to settle part of it in dollars. It wasn't always done. The principle of the OEEC as a code was that they must liberalize for the overseas territories, that's the colonial territories. They were in the plan, and they were at liberty, as far as I can remember, to liberalize for other countries in the financial areas. They worked apart. As far as I can remember, that's how it went, but I don't, honestly, remember exactly about that.

Some other people you could speak to may remember more clearly, but my recollection was that it was optional. But certainly sterling's position as an international currency must have made it impossible to identify the payments

[20]

position of the United Kingdom from the wider payments position of each country with the sterling area generally. Because they were always at liberty to use sterling within the principal area and in the sterling area itself they could all use sterling.

WILSON: There was some difficulty as I recall at the time the EPU was set up, because Great Britain was placed in a creditor position rather than a debtor position just at the beginning.

COHEN: We went into it; we were in a creditor position, I imagine -- about 1950. I don't remember that we were in a strong creditor position until the Korean war. The Korean war pushed us into a very strong creditor position for the reasons I just mentioned here. There was the sterling-area crisis in raw materials. There was a heavy demand for raw materials after the Korean war, at high prices to be paid to Australia and Malaya in Asia, and those high prices were paid in sterling.

[21]

WILSON: Which caused some difficulty because prices went up on imports to Great Britain.

COHEN: All these countries were in sterling deficit -- and therefore we were in a very strong creditor position with the European Payments Union. That illustrates, as I said before, that you can't distinguish them. You are either buying in London on the London Produce Exchange or the London produce markets. They are buying; and the monies were paid, even if their buying is through Malaya or Australia. They are buying and they pay sterling. You can't distinguish sterling's impact in London by the central banks of those countries. Therefore, we became a very strong creditor position. In fact, after the Korean war, when prices fell, the United Kingdom was in a debtor position on capital accounts, to the sterling-area countries. They built up these huge balances out of the Korean war. And the running down of those balances caused us consequently to run down accounts in the European

[22]

Payments Union. The reaction after the Korean war ran us into a deficit to the EPU, but we as an individual nation, so far as I can remember, were balancing our accounts fairly well in Europe all the time. The independent sterling countries -- Malaya, Southeast Asia -- the fact that these countries were running a heavy surplus against the others, put us into a creditor position. And the fact that they ran down the balances afterwards when the prices fell, threw us into a deficit position.

WILSON: What about the EPU as an instrument for European integration? That is, as you suggested, the impetus for it came primarily for...

COHEN: Primarily for the liberalization of trade more than the payments thing. The fact that it financed the freer development of trade did facilitate integration. It paved the way for the closer relations of the six, first in the Schuman plan and then more importantly in the Messina talks. It got people much more in the habit of meeting around the table

[23]

to discuss practical plans to cut their trade barriers, and they got much more used to trading among themselves. I think in that respect the EPU was very important. I don't think the payments agreements, the bilateral agreements, would have done it even though they were made. You had transferable drawing rights before; they tried to make them transferable. But they couldn't even then get the same flexibility in the multilateral trade. There were a number of reasons I think why you had some move more toward real integration through the OECD. Of course, I think it was partly political. European countries which had been occupied in the war all lost a certain amount of their sense of national exclusiveness. Put in broader terms, there were these human beings, on the one hand, and the oppressors, who didn't interfere with the Fascist reactionary-Nazi type on the other. The resistance groups were the Allies, fighting alongside them on the ground; some of the Vichy people, on the other hand, with the Germans. I think there was a general

[24]

realization that really nationality isn't quite the dividing line.

Then, through the Marshall plan, the people of good sense and good spirit and good quality of character, got into the practice of working together so much more closely in OEEC, getting to know one another. It was so much easier than it had been before the war for them to avoid unnecessary difficulties in their trade and financial arrangements. It became so much easier for them to discuss a question around the table and solve it constructively. We got away from the top-hatted diplomat putting in an aide mémoire, and got down to the position where you can say, "Why, let's get hold of two or three wise chaps and sit down at the table and get a judgment on this."

WILSON: The technical approach, yes.

COHEN: In other words, you got the spirit, the political spirit, I think, to some extent that

[25]

came after the war. Then you had the opportunity for the technical approach that came through the Marshall plan, which forced the issue in that they couldn't work the Marshall plan without doing so. But in the process they had the opportunity through meeting in these committees to do work of the kind that couldn't be done before, since these things didn't exist in the League of Nations. It was also, to some extent, due to the fact that by whatever good chances men of very high quality were here in that period of time. Not only did you on the outside put in some of the best men you had available, from your universities, as well as from administration, and your businessmen - I don't remember the businessmen too well, but no doubt they were there -- but certainly you got from the administration and from the universities particularly able men, both in Paris and in the ECA missions in the capital. But the European governments, realizing the importance of it, the vital need to make a success of it, put some of their best men into Paris, or

[26]

into the government jobs at home.

So, really the quality of men who might make a success of it were available at the table. And some of these men have since had ministerial offices in European countries; others have become heads of their departments in the Foreign Offices. All of that meant that the policies worked much better than they could have worked in other circumstances.

WILSON: Would you suggest that the quality of men sent -- I'm speaking particularly of the American side here -- people who were really aware of both the opportunities and difficulties of achieving integration, resulted in a more realistic approach to the problems? In political terms the American representatives would often talk about, "Well, why don't you just create a United States of Europe? Why don't you just set up a custom union; why don't you allow Switzerland to produce all the watches," and that sort of thing -- the planning approach. But American representatives here, in Europe, were not as simplistic, I gather, in that approach. There were problems in moving from

[27]

national economies to an international -- supranational economy?

COHEN: I think it was an education for them; let's put it that way, for them to be in Paris and hear these discussions. They were bound to realize that it wasn't as simple as it might sound. They would see it firsthand; there were still important differences of character, temperament, and of outlook and interest. As I said just now, they were remarkably reduced at the political level by the experiences of the German occupation, and the common effort of liberation. So, there were differences and differences of interest, particularly, and you couldn't overnight create these. There were, indeed, technical difficulties with the customs union as such. I think that they did sometimes still oversimplify what was wanted; I'm not sure.

To answer your question, do you really want the people who are full-time dealing with all OEEC business? We could deal with that. On the

[28]

trade front it went better. It was easier, but I'm thinking everything was not as easy as on the trade front. Everybody really had an interest in doing what OEEC wanted on trade. It paid off ordinarily for any country to buy and sell more freely. As long as a country has reasonable flexibility to pick and choose what it is doing in its customs area. Everybody's really better off with than without it. And, therefore, there is a will. to do all these things, and it wasn't oversimplified. It only got to that point when we were asked to provide equity, and then of course, a difficulty arose.

I'd expect it, in fact, to be possible that the United States members would oversimplify. They would think, "Well, we might not be able to do this or that at home, but you've got special problems. These people in Europe have got such a massive uphill climb ahead of them, surely they're not going to hold things up for the sake of protecting their apples and their pears and their canned milk products." There may be certain

[29]

people dealing with agricultural liberalization who could tell you more about this. I think, sometimes, when I dealt with American officials they have tended to think that the governments are uniquely difficult and the Europeans had bloody well get on with it. But they are not in a strong position when they carry a waiver of all the rules in the GATT.

The people, you see, who are going into attack ought to be able to defend the other side; therefore, they see the light better. But the trouble is that they can't put across at home, and, therefore, they aren't taken too seriously by those who want to resist them. I think it is their problem there, which would have been felt then. It must have been felt then, but to what extent I wouldn't know.

WILSON: This was certainly true; American protectionist policy on agricultural imports was very strong during this period. So you're suggesting that the anomaly was recognized in Europe?

[30]

COHEN: Well, we just thought they won't do it; they won't remove their restrictions in the field. They won't when it comes to the point. The vested interest of the farmers is such that they can't be able to do it. They'll buy what they need to meet their requirements, but they don't want to commit themselves to freedom of trade. The American pressures I think were a little selfish at times. It was well-known of course, that they couldn't do it themselves and they took stock of the fact that their difficulties were not altogether different in kind than those of others. Certainly, by 1950 they had not removed their own restrictions in the GATT which were legal. When they came and asked for a waiver of the GATT rules in 1955, it made it very difficult for their people in Paris to request the Europeans to do the thing in GATT they couldn't do themselves.

Whether or not it was overtly argued in Paris, it is a fact that ministers were aware of these things. It would weaken their case. But

[31]

I wouldn't like you to think I was saying that I thought that if the United States were set free, the Europeans would not have had any difficulty. But I think when you get to that point it's very difficult. You see even now, the community has problems of freeing their trade in agricultural products. They have to have common prices agreed, and they have to have arrangements for payments from one another, the extent to which they buy from outside and so on. It's been the one part of the Common Market that has caused difficulty of any kind that almost might have broken it down. Well that shows what policy resistance you get there, even amongst people who are almost entirely integrated in their economies, in every other respect. I don't think that at the time in Paris it was possible to appraise quite realistically what we now see were the difficulties you have in trading foodstuffs, and especially in raw materials.

WILSON: Were you involved in the UNISCAN arrangements? [Plan for economic union between the United Kingdom, Denmark, Iceland, Norway, and Sweden.]

COHEN: Yes.

[32]

WILSON: Tell me about that.

COHEN: They were mainly financial, you know. UNISCAN never really became much more than an arrangement for a freer transferability of sterling. To have done anything on that front would have meant either having preferential tariffs, which we certainly didn't wish to have in Britain -- it was very complicated -- and/or it would have meant a discriminatory liberalization. And I don't think, as far as I remember, that we liberalized anything on a UNISCAN basis and kept up the restrictions against the rest of OEEC; it would have been a breach of OEEC codes to do it. You've got me here on something I don't remember very clearly. There may have been in the code some provision that countries who got closer together would liberalize more quickly for one another.

WILSON: I seem to recall that was the case.

COHEN: It didn't mean you could permanently do something. You could move more quickly, but then you

[33]

must catch up afterward.

WILSON: The assumption was that FINABEL and the others, FREDELUX, which didn't actually go into effect, would be regional groupings that would then be merged themselves.

COHEN: That's how I remember it. I don't think anything came of it. It's the same philosophy, I think, that some Americans still have for dealing with the tariff preferences of developing countries. It is one of accelerating the entire production of these countries, rather than doing it permanently for them, while not for other people. You might say you would agree to reduce the tariff by 50 percent every five years. You do it at once for some countries, and take your five years for the others. It's a temporary tariff preference.

Anyway UNISCAN never did have tariff preferences. I don't think, from memory, that it ever had quota preferences. It did have freer travel because there were understandings between the central banks that made it possible to get money

[34]

out more freely. I think, in turn, that was based on fairly traditional relations between these countries, who before the war had been in the sterling area, almost surely within the sterling area before the war. The sterling area then may have had different sorts of rules and arrangements. The Scandinavian countries did substantially bank in London and the currencies were substantially linked to the pound. The UNISCAN was sort of a half-way house between the sterling area and the EPU, but they were in the EPU. I dare say some of the arrangements were made on the sterling basis and were not clearly accountable to the EPU. Wait a minute, I'm sorry, let me not go too quickly on this. I think UNISCAN was before the EPU.

WILSON: That's right, yes.

COHEN: Once we had the EPU, they would have been cleared through the Union. Before the EPU there was very close relation with the Central Bank that UNISCAN made possible. Also a certain

[35]

degree of additional flexibility in spending your money. I'm sure under EPU there were separate quotas; therefore, the money must have been cleared. It would have been impossible under EPU to justify trade discriminations as long as they had separate currencies. They did have a common quota in EPU but that is utterly different. The countries with a common quota in EPU, I think, were allowed to trade quite freely among themselves. That would be a thing like Britain and its own commonwealth sterling area members. That isn't separate from EPU at all; it is one financial unit. But you've got a separate quota at EPU. You had to bring into account at the end of each month your credit or deficit position with that country. Therefore, there would be less excuse for saying that one was less important than the other. About the most you could say you would spend money more freely on one deficit than another. You would only run a deficit more freely with a country that was in your own area. I think nearly all the OEEC countries did have separate quotas. However,

[36]

Ireland didn't.

Now taking the Irish case, Ireland never had a separate quota. Any British deficit with Ireland would have no effect on Britain's deficit position in the EPU. Therefore, it was a very logical concern to the running of the EPU if we spent money more freely in Ireland and we liberalized more freely in Ireland. I think we probably did not have restrictions on imports from Ireland. Similarly, the Irish were at liberty not to have import restrictions on us.

I'm speaking quite from memory and I beg you not to quote me if you find I'm wrong. I just don't remember clearly, but logically I don't see how it could have been otherwise. I don't see how it could have been otherwise, because it simply wasn't the case that what happened between us and the Irish had anything to do with our balance position there. And the Irish, I think, had not got a position in EPU at all. They simply drew on London for their payments. It was a matter between us and the Irish.

[37]

I don't remember how that was run; the Irish position was a reasonably balanced one anyway. They had been neutral in the war. Their agriculture had not been destroyed in any way. Industry had not been affected by the war, except to the extent they couldn't trade. But their industries had not been bombed out. So their recovery problem wasn't quite the same. Well, they were a very poor country so it didn't matter. I think apart from us and the Irish, and possibly Iceland -- there were the French colonies, of course, in the picture. The French in their trading relations in Africa would have been separate, like us with our own colonies.

WILSON: What about the problem of developing export trade to the United States in the period? I'm thinking particularly of "buy American" policies and the restrictions. on shipping of so much of ECA goods in American bottoms and this sort of thing. How seriously was this viewed?

COHEN: I can't remember much about it now. It may

[38]

sound shocking to tell you that. I do remember that the "buy American" act always must have been a cause of concern for us. It seemed illogical that when the United States was putting up so much money, they wouldn't let us pay our way if we could find some of these goods there. Logic doesn't always get across politically. But it always was a concern to us, and it was already then when we could compete successfully that the United States gave us a chance. It was particularly important when we were getting on our feet again, because if your best friend should begin to feel the self-confidence and self-reliance to contend in the world market and can't contend there except against tremendous odds in the United States, then there is doubt we will ever come out on this. All we can do is contend there among countries who got special aid from the United States to pay for what we were selling. We must be able to sell in America, and the "buy American" act was always therefore a cause of great difficulty with certain industries, such as big electrical

[39]

machinery. There was always a great problem to avoid misunderstanding or in creating confidence. But it's not the problem uniquely connected with the Marshall plan; it was only brought into greater relief by the Marshall plan. The existence of the Marshall plan made it more difficult to understand the sense of what the United States was doing. Of course, the answer to that may be that it was not meant to be sensible. It may be one of those things you can't help.

WILSON: Yes, that's right.

COHEN: In fact, some of the things I mentioned earlier in the political field and in the agriculture. Why can't you liberalize your trade in farming?

WILSON: If there is any one single, large body of materials, documents, at the Truman Library, I think first of the body of letters written to the President and to his assistants pushing for benefits to American manufacturers and shippers, under the Marshall plan. It's not

[40]

a logical thing, but normal.

COHEN: Yes, but it's a normal show. What they're saying in effect, is by all means give aid, but give it in such a way that we get a little of the benefit. That way you can afford to give more aid.

WILSON: "A little of the benefit." You're being quite generous to Americans.

COHEN: Yes, I appreciate it. Well, it's the same with aid to developing countries now, isn't it? I mean people say, "We'll give aid, but we'll tie it to our industries." Of course, the aid isn't nearly so valuable. It's still aid. I mean if you give the goods away, you say, "We'll give goods, but don't give money;" and the people who made the goods say afterwards, "Oh, it's not quite so bad as it might have been, you know. We still pay taxes to pay for it, but other people pay taxes, too."

WILSON: It does introduce distortions into the normal

[41]

trading pattern.

COHEN: Yes, it does. We did have bilateral trade agreements which gave them very similar terms you know, and which the ECA didn't like at all. They cut across the principles in this area of non-discriminatory liberalization in many ways, especially if the quotas were so large in bilateral agreements. In order to fulfill them you couldn't buy from anyone else. We used to argue -- in our two British cases it was truly argued -- and, of course, it was permissive, and if the other fellow couldn't control them, because he wasn't competitive, he had no grievance. There was always a certain suspicion that that wasn't quite how it worked out in practice.

WILSON: This came up particularly in petroleum I think.

COHEN: I don't know about petroleum; you may be right. That's a very special problem; I would not be competent in petroleum. But it certainly

[42]

came up in German trade agreements.

WILSON: Oh, yes.

COHEN: Where, I think, with all respect to the American leaders in Germany, they took a different view of things sometimes than the Americans in Paris did.

WILSON: Would you expand on that?

COHEN: Well, they were interested in getting bilateral agreements with Germany, to get the bizone of Germany, the British and American zones, on their feet. And the bizone did have a very rigorous planned trading system under the joint import-export agency, which was an extremely bilateralistic approach to things. We wished to negotiate bilateral agreements with different countries saying exactly what quotas Germany would bring in, and exactly what quotas other people would take from Germany. Well, in Paris, of course, the concern was to get the Germans to liberalize. The more you liberalize, the less maneuverability

[43]

you've got for that sort of thing. It takes a different approach to it. I'm sure if you look at your documents you will find that the outlook of, say, John Logan who ran the JEIA was quite different from the outlook of Henry Tasca.

WILSON: What about the British side of this bizonal agreement?

COHEN: I think we went along with it, you know. How far we had to, I don't know. Clint Kahn was Logan's deputy and Cecil Weir was the chief economic advisor on the British side. To be fair, perhaps there was an emphasis on bilateralism from the particular Americans there, that wouldn't have happened if they had been different Americans. I may be unfair saying that. I would take a good deal of research on that.

Ethel Dietrich could tell you all about it, because she had the task of doing the negotiating and knows all about it, and was herself very keen on liberalization of trade. She'd be a very good witness for you if you'd like.

[44]

I think John Logan -- and his background was that of banking, not in the big New York banks, but in the smaller banks, especially in the Middle West before the war -- he thought very much in terms of bilateral relation between debtor and creditor and bilateral settlement.

WILSON: The purpose being to achieve some reasonable self-sufficiency for Germany.

COHEN: Well, pay your way.

WILSON: That's right.

COHEN: If you're going to buy these things from Switzerland, you'd better know what you're going to pay them, how you are going to pay them, what you're going to pay them in. And I don't want any of these debts otherwise; they'll all come back to Washington if you don't. Build up the cautious, empirical kind. Mind you, we are dealing with a desperately war-shattered country. I'm not trying to criticize them, just trying to comment and describe what's happened there. His

[45]

approach would have been very strictly empirical. I'll feel my way and never mind all the theory in all this.

WILSON: That's a very good point, because it's pretty clear from the documents that the people in the occupation on both the American and I think the British side were much more, and perhaps almost completely, concerned with the problem of German recovery, perhaps to the exclusion of integrating Germany in a larger sense, in a long-term sense into Europe.

COHEN: The idea of integrating Germany hadn't quite come up as early as that. It was a bizone, you know, not even Western Germany. It was a bizone of Germany. We had to pump food in and this, that, and the other thing. It was a thing over and above all that belonged to the Marshall plan, or apart from them. We had to provide convertible currency for the Germans; even if we hadn't done it for ourselves, to use ourselves, they had to use it.

[46]

WILSON: Would it be fair to say that the Marshall plan was intended as a way of resolving this problem?

COHEN: It certainly helped. Germany, as I remember, had her own Marshall plan appropriation.

WILSON: That's right, yes.

COHEN: And therefore it helped, you see.

WILSON: It was intended to from the beginning.

COHEN: The Marshall plan wasn't thought of as a fund for helping Germany particularly. No, but it was used. Germany was a recipient of Marshall aid, and therefore it reduced very much the problem that otherwise fell on the shoulders of the British. It fell on the Americans to keep this country going, because we were in a very difficult financial and economic position ourselves. It was a burden to take on the Germans on any scale.

The Marshall plan, of course, enormously

[47]

expanded the resources which the American administration in Germany could draw on for German needs. I suppose the German officials were mainly concerned to see their country get minimally on its feet again. They were very harassed men; most of the German officials had been lost in the war, or removed from office before the war. There were very few left. People like the leading trade men in Germany at that time -- very liberal -- and later Ambassador to France after that. They were at first in an advisory position; they had no government authority. They were allowed to advise, advise only, as far as this going agency, but they had no status. They were given the status later on about 1951 or '52, and some agreements were made where they could establish their ministries again, and agreements were drawn up. The Germans themselves would take quite liberally this sort of agreement. It was one of the great dangers, Before the war the Germans were the leaders of bilateral agreements of various kinds. The Hitler regime was very much given to

[48]

making bilateral agreements with weaker countries under which you took the best from them and paid them off in long-term credits. It was playing a part in German operations again; they were past masters of it.

I think that some of the Americans who had the responsibility of Germany at that stage, who advised the American chiefs in Germany, were more sympathetic to that sort of behavior for a country in difficulties than was wise with Germans. Fortunately the thing didn't develop that way because Germany became very strong after the initial deficits before the Korean war, when she was desperate. She did become very strong. Erhard had already then, I think, started his "dash for freedom" really; they had begun to stock up very well before Korea.

WILSON: Yes. Yes, and were in considerable...

COHEN: Looking back now, we can reconstruct, already then before EPU, or just about when they started EPU, there was some talk of German administration. They'd already got to the point...

[49]

WILSON: Yes, in 1949, yes.

COHEN: Erhard was a liberal -- very, very courageous, foolhardy, if you like, looking back on it, liberal. Given the Korean war, Erhard's country did very well after that, because they got all the stocks which they were nearly bankrupted in EPU. EPU saved them from that. Then when the Korean war came they got all these stocks in Germany, far cheaper than other countries. You had to buy their stocks late and couldn't get out of them. Then Germany became a great creditor country during the war in 1950-51, and the initial phase of German recovery had been met, was over. Within the initial phase had it not been for that, I think it would have been riskful making Germany more bilateral. But things came out all right. Ethel Dietrich, if she's still around, could tell you a lot about this.

WILSON: Yes, we'll try.

COHEN: And would be fascinating on it. I know a lot

[50]

about her, and she was awfully keen on liberalization in Paris. We did a lot together there. But in Germany she had the task of negotiating bilaterally, and negotiated bilaterally.

I would think that the 50 percent rule on shipping would inevitably cut the cost in certain cases; it would make good sense and therefore be cost effective. To the extent that we were shipping goods to the United States to exporters, to bring a ship back empty or in ballast (we were not allowed to carry Marshall aid) was bad. Not to be allowed to carry them for some other country in Europe, if they hadn't got their ships, was bad. Carrying goods for other countries in Europe, we could have earned their currencies and to that extent had a better EPU position, and less need for credit. And if you hadn't got the ships out there, then it would come naturally that United States ships would carry the goods. We would have liked to see the thing competitive and not distorted by tying. It's neither better nor worse than other forms of tying, I'm trying to say. I think it's

[51]

unfair to say this was particularly bad because it's ships. Yes, it's bad, but all these things are bad of that kind. How bad they are depends on how much distortion they caused, and that would depend on the situation at the time. If there was a British ship coming back empty then obviously it's far more distorted on that occasion. But I don't remember the economics of it -- to what extent it was just a tail twister; I just don't remember now.

Obviously the shipping industry would cry about it; obviously they would say the extent to which we had doesn't apply because we would have had more ships on the routes if it wasn't for this, and so on. They wouldn't have addressed themselves to the Board of Trade about that; they went to the Department of Shipping, and therefore I'm not a good witness for you. I never reached the people. I don't know who would deal with that for you; the people in London would probably put you on to someone who might know about it.

[52]

WILSON: In general terms, what about the effect of the Korean war on the British position?

COHEN: Well, the main thing, of course, on that that I recall, was the great shortage of raw materials, and the revival of the Anglo-American cooperation internationally in allocating materials. And the consequent rise in price which probably would have gone up even more if we had not had some sort of allocation system.

WILSON: Well, there was some criticism in the OEEC about a special Anglo-American relationship on the allocation of raw materials.

COHEN: Well, of course, we did go back to a wartime position as one of the main users and producers of the raw materials, and we got together to allocate. That would prevent the prices from rising as fast as they might otherwise have done through free competition. To that extent, it reduced the distortion of the world economy. But there was a big distortion. It took the

[53]

form of a rather strong creditor position in sterling, but not a creditor position in the United Kingdom, because we have imported materials. In other words, we ran up heavy stocks of foreign exchange in the sterling area, and heavy liabilities in the sterling area. The sterling balances would go up as we received the foreign exchange of these countries, and eventually the raw materials. That put us in the first position which crushed on us in 1951 when the sterling area countries felt the inflation of this crisis, and spent money more freely in tariff countries. They then came on us in the foreign exchange bank.

The position in 1951 was quite critical, but in 1952 it began to get steady again as far as 1 remember. It was about then that we began first to have ideas about breaking away from the artificiality of the European monetary system, and making the pound convertible again, especially if we could get a measure of convertibility all around. We didn't in fact achieve that for some years. But the Korean war I think was the first

[54]

thing that brought home that EPU required a fair normalcy of world conditions. Anything like a revolutionary movement in the raw materials crisis would swamp the EPU and did swamp the EPU, its creditors. We weren't a great creditor country; we were a creditor currency. I think it brought home to a few people, anyway, who were greatly concerned, that it was an artificial contraption after all, and you couldn't live with it forever. There were some people who felt it a very cozy system, you know; a system of automatic credit to one another and that if the United States would have joined the EPU, what more do you want? But it's an artificial thing, and any artificial thing will work so long as the circumstances in the world are commensurate with the rules of the game. When you get any upheaval, a major tidal wave like the Korean war, it swamped. As far as economic consequences are concerned, I don't remember much out of the Korean war, other than that. You know that was quite serious for

[55]

its time.

I think it was an eye-opener towards a wider system of trade payments. It was an eye-opener in that really you either had to go into a world system or you had to work into a smaller regional system. I think we, with our traditional and our world-wide interest in trade, and our relations with you at the time, and the Commonwealth, naturally tended outwards, while the French and the Germans and their colleagues tended inwards.

When it came to the Schuman plan, we didn't join it. The reasons for that was as much, I suspect, due to the political currents. But the Schuman plan of course did prove to be the first step in the really close relationships between these countries that the plan made possible. It made possible the much more far-reaching economic union than the Treaty of Rome. We were on the wrong side of the table when it came to that, and those were probably some of the reasons for it. The balance has changed rather. Trade is on a greater scale in Europe than it was.

[56]

But looking back into those days, I don't see how we could have acted much differently. In fact, trade was different then. It just has changed. We have got a smaller trade relationship with the Commonwealth and a bigger one with Europe. Our trade with Europe now is very big indeed, with Western Europe. With the trade rate on that level we could hardly afford to stand aside while they integrate and we don't. We can't afford it, but it's a less natural economic evaluation. It's more an artificial economic solution.

WILSON: Were you concerned in any way with the problems of East-West trade in the period?

COHEN: Not very much. Not as early as that. Not as early as that. Well, as a matter of personal experience, I did negotiate the trade agreements with the Poles, the first trade agreement with them in 1948. It wasn't my general business to negotiate with them. It was done in the office really. It was a bilateral agreement. You

[57]

put it on, really, people who could travel a good deal. I was Under Secretary. I did see the Poles for the first trade agreement. It was a rather special thing of its kind; Poland was a very special case. We were very upset on what the future of Poland was going to be, and there was a certain amount of prospect that Poland might lean toward the West.

WILSON: There was, of course, increasing American opposition toward large scale trade, particularly in what were identified as strategic materials.

COHEN: I don't think you've got there. Here it was much more a question of making agreements that would enable the Poles to restore their agriculture and that sort of thing. The Poles didn't know where to turn. I had to do that trade agreement. I remember we did envisage that we might restore Poland as a supplier.

WILSON: Which was a more normal prewar situation.

COHEN: Yes, prewar trading relationship.

[58]

WILSON: Yes, and with Eastern Europe, in general, as a supplier of raw materials.

COHEN: In particular, the Germans were more the people than Hungary and Bulgaria, and Rumania, I think, in making these other special programs.

WILSON: There was thinking, for some years at least, after the war that these prewar relationships with Eastern Europe as an importer of manufactured goods and an exporter of raw materials would be reestablished.

COHEN: I think so. Each case was different from another, you know. The Poles had always been close to us; we were big importers of food, big supplies of food. Of course, the Russian hold, I suppose, on Poland was upset. The Poles had been allies in the war, and they were anti-Russian as well as anti-German. I don't recall that the United States was concerned about goods going East. But my guess is that the United States would not have been allergic at all to

[59]

doing what we could to support a continued interest in the West.

WILSON: Yes, perhaps American political leaders decided rather earlier than leaders in Europe that that was no longer possible; that the Iron Curtain had descended. I'm thinking of 1949 and, in particular, the so-called Battle Act which did restrict exports.

COHEN: Exports, yes. I can’t recall that the Poles were asking for any exports that were a problem for you. It doesn't come back to me at all that there were any arguments about that. They wanted all sorts of things from us, but I mean they were things that had no particular value to the Red Army. They were desperately beaten back by the war. They were trying to reestablish themselves in new territory, The Germans had been pushed out of West Poland, and the Russians had pushed them out of East Poland. There they were, But I don't remember that there was anything in it. In East-West trade, we would have been more forward looking, more free in our readiness to take

[60]

risks with supplying goods to Russia than you were. I think we were less anxious that they would use these things for military purposes. We were less willing to believe that some of these goods really were strategically important. I think we would not have ever wanted to send goods that were of real strategic value. I think there were differences of view as to what really was risky. If the Russians wanted certain kinds of mills for sale, or technologically advanced equipment of various kinds, and we were certain - at the border we would say - well we would say they only wanted to use it, and there is no danger in their having it. They'll find out for themselves in six months anyway. In the meanwhile, we might as well have the business, and give them more feeling of unity with us in the West, and less feeling of being alienated. Politically, it pays off. The United States was very anxious not to take any chances and there were things there, you know, machines for making tin plate that could be used, I suppose, for

[61]

tinning foodware for the Red Army in the occasion of an aggressive war. One might say well, the Red Army seems to get its food all right by its own method, and almost certainly they would want the tinplate to feed their own people, and you are driving them into opposition and alienation if you don't let them have that sort of thing. It's awfully difficult tying in; it's easy to jump backwards on these things, but I know there was differences in philosophy between us. Certainly we would have gone further and faster in reducing the list of limited goods to Eastern Europe.

WILSON: For understandable reasons.

COHEN: They also set with other people following the rules.

WILSON: And this was a substitute for the necessity of getting more, of spending more dollars?

COHEN: Well, certainly, So it came more to a head after Marshall aid, I think. I think it became

[62]

more active because the Russians I think went out more fiercely to buy the goods after the period, the active period of Marshall aid. It's more in the middle and late fifties. In any case all they wanted was really what they could get ahold of. They were offered Marshall aid, after all. Czechoslovakia wanted it and was stopped from getting aid. In trade, with Czechoslovakia we had these agreements, and with them all, but it was difficult.

They were all different. Czechoslovakia was much more a manufacturing country than Poland. Hungary was like a poorer form of Poland. Rumania had other problems. Rumania is not such a poor country; she had seized British assets. A number of them owed us money, and we didn't get it all back. They really owe it to you. You don't get anything out of Communist governments; they always felt that was out of date because they were Communists. And Bulgaria was much more German in its thinking than British before the war. In fact,

[63]

Hungary and Rumania, I think, did much more business with Germany, and Bulgaria did, than Poland. Poland was anti-German. With the others we hadn't gotten a foothold in the same way. And the Germans would do awful tricks with them. One case I remember reading about, where they would take the whole of their wheat crop, and in exchange they would supply bicycles. And they said they'd sell the bicycles to the Rumanians, and the Rumanian Government would get the bicycles for the proceeds of the wheat. It ended when the Germans, in order to sell the bicycles and get them all marketed quickly, sold them on a down term, half purchase. So there were 10 or 20 years for these fellows, you see. So the Rumanian Government then found itself being paid over a 10-20 year period with wheat which the Germans had got, had got down you see. It didn't matter. I mean they were used to this; they sort of liked trading with the Germans. But it was that sort of thing in the Germans that I had in mind when I said

[64]

there are dangers in encouraging the Germans in bilateral trade agreements, even though they might look good sense economically. You find more about the tricks of it than even anyone in the joint export-import agencies knew, because they didn't go in for that sort of skull-duggery.

WILSON: Yes, now that's a great point.

COHEN: And it was a bit tricky. They didn't, of course, come back to that spot. They got much better quality men together afterwards. Anyway they didn't have the government who wished to resort to devices like that. After all, they had managed to help pay for German rearmament. The Germans were using all their current money to buy materials for armaments, and getting the Rumanians to give them stuff.

I think after the war, the Germans didn't keep it up very long. I think Erhard disliked it very much; Erhard was very liberal minded; in a rather wooly way. It all came off wonderfully

[65]

because of the Korean war. And, of course, the Germans worked so hard always, and money they required on a big scale became available through their having gotten in on the market so well. Roughly that's how it comes back to me after all these years. If this isn't consistent with what has been told by others...

WILSON: Oh, no. No, you've been very helpful.

COHEN: One of the things that comes back to me on this in the early days when Germany was short of money, before the Korean war; they were shamelessly short of money. It reached the point where people would say, "Well, the Germans have got to buy their various things that they normally bought," you know, the usual nonsense. The Dutch said, "We can't afford to not sell our cheese at the same place; we always sold to Germany."

They worked out machinery in OEEC, which shows how effective that organization was, and

[66]

that was each case has to be looked at carefully. We'll have three "wise men" who will give judgment on them. They were a Belgian, an Italian, Catani, and a Norwegian. It was a pretty remarkable thing that individual countries recently at war, who were never closely associated before the war, would all agree: "All right, let those three men tell us, and we'll do what they say." And they accepted their judgment.

And they might say, "All right, you better take lettuces from Holland in this quantity," and the Dutch would say, "All right, if that's what you say." Being of good sense, of course, the Germans would take anything in those circumstances. They'd lend them money and say, "That's the amount you should spend on lettuces you don't really need, and no more." But the "three wise men" system would work already then. Of course, that experiment in what was really then a form of supranational government went to the devil entrusting the thing to arbitration. It was a very important step forward, very important in

[67]

clearing the way for closer integration. We can't work unless you have something like you have in that commission in Brussels.

WILSON: Was there a great deal of sort of prior negotiation to make sure that the countries they represented in the OEEC were satisfactorily represented on these commissions?

COHEN: Not that I know of. I don't remember any of that.

WILSON: It was a matter of a...

COHEN: On the main committee, every country had this man there, and it was up to the government to have a suitable man. They may have done that; I never heard of it. We put in some of the best people we got; we got enormous interest there.

I seem to remember, now that you mention it, I think the Germans did once send to Paris a German who was recognized by the Belgians as being one of the unpleasant leaders of the occupation.

[68]

And he was sent home very quickly. Well, that was the fault of the Germans or bizonal authority; I would like to know. The wrong German was sent once, I do remember that. And there were cases of pretty feeble people on committees, but usually representing countries that didn't matter very much. And you have to have, of course, enormous patience.

WILSON: I don't know about the people, but the problem of dealing with Greece which seemed not to be able to come up with statistics, or the sort of information necessary.

COHEN: That's right. The Greeks never could. They invented them as they went along. Do you know Marjolin?

WILSON: I have met him, yes. I'm going to see him.

COHEN: Well, Marjolin you must see.

WILSON: Yes, I'll see him.

COHEN: Marjolin can tell you about one or two of

[69]

their stories. It was difficult there. You see, they haven't gotten the thing; they haven't got that form of Government administration. On the other hand, what they are asking for is quite smaller. It doesn't matter quite so much. If the French didn't put a man in the field, you could deal with it, but it was serious.

WILSON: Did the people who were posted in Paris look forward to this sort of assignment, your colleagues?

COHEN: Oh, I think so. They enjoyed it. I assume they were interested. [Edmund] Hall-Patch, who did the British work, and others, were fully interested.

WILSON: I don't know whether this is a fair question, but if a person had an opportunity to stay within the Board of Trade or to serve on a committee in the OEEC, how would he look at this in the sense of a career?

COHEN: Well now, that's rather different. The

[70]

committees were fielded even then from capitals. I was never living in Paris. I used to go out at least once a month, or once every other month, attend a meeting for two days and come home again. The Secretariats engaged people; the buildup of the Secretariat to some extent had been done on -- what can I call it -- a negotiating basis. You know, the French must have the top job, or the American sometimes. Then the British are next, number two, along with an Italian. Then the Belgians who have a share of the Council; they would be able to put a man there. And then the Dutch would have a share of something else. You know you've got to get everybody either into the Secretariat, or in the chairmanship. But they all feel they've got a say in something, and that the balance of their day corresponds to their national dignity. There's a certain amount of that. Therefore, some of the top people weren't always the best. They have to give their nationality up. I think in those days probably, with Averell Harriman there, there was no question

[71]

but that men of necessary quality were put into the jobs, whatever the nationality. He wouldn't have tolerated it otherwise. In more recent times it seems to be a little bit different. You have less to say. You don't put your best American ships out. They've got to go in those ships. It has got to be a national rotation in that post because he is a type for it. You'll find that not all the chaps in the Department want it. And the other fellow has got to take it. It's a deserved nomination; it's sinecure, and you get some awful fellows. That's my main objection to that method of manning posts. The other way you'll get a capital, first-class man, is that if you don't go to a first-class man, somebody else is going to vote, and who are you going to vote for. There would be no competition. It's up to you in those days when Harriman was there. But more recently there has been a tendency, I think, to allow people to get nominated.

WILSON: Within Great Britain there were a number of

[72]

agencies which were dealing with economic foreign policy, of necessity. There certainly was in the United States. Was there a considerable rivalry between the Foreign Office and Board of Trade, and things of that sort?

COHEN: No. None as far as I can say when the departments were being newly created in those days. I certainly don't recall anything of that sort at home and I knew the Undersecretary of the Foreign Office. He was an old hand at European affairs. A very pleasant British. I can't imagine there ever was any feeling that the Board of Trade should keep out of this or the Foreign Office keep out of that. We all met around the same table, under the Treasury chairmanship. It was a happy society, really. Those who wanted to serve in Paris, if they were good enough, usually would be able to go, but there weren't all that many who easily go abroad. It wasn't easy if you're not in the diplomatic service; your wife doesn't want to be abroad, the children are at

[73]

school, and one thing or another.

I don't think there was any friction. I think there was a good spirit abroad, and I always found the people in Europe extremely pleasant to deal with. Well, the only thing really I can recall that was something that really caused sometimes a feeling, a fireworks, was at the beginning of aid. That was a United States invention; let's put it that way. They allocated the aid at first, and then they say, "Well, you allocated the aid yourselves." Hall-Patch could tell you more about it. Then, it was not quite so easy. Have you ever read Alice in Wonderland?

WILSON: Yes.

COHEN: Well, there's one story in there, and I can't remember what the thing was, when the Duchess turns on Alice, having said something quite ridiculous, and says, "Well, the moral of that, child, is the more there is of mine, the less there is of yours." Maybe that was what it was

[74]

in OEEC then. It’s much harder to get agreement on that footing. And nobody minded Britain having another ten million dollars, except who was going to find them.

WILSON: Particularly when ECA would put out one estimate for a year and then the Congress would appropriate something else.

COHEN: That's right, yes. It was very difficult then. And I think that was the only business on which I can remember them really going back into their old shells and being nationalistic and rather difficult. But yes, it was a very pleasant experience as a cooperation. Throughout the thing, the smaller countries didn't play a very active part. There were times I thought they were getting rather testy on some questions; when they wanted to have a common list of goods for the liberalizers. The whole thing would just hold everything up, you know. But on the whole the thing did go well, and as I say, I still think they established a spirit

[75]

there without which they couldn't have had the European integration - but which in its turn was quite likely to lead to it. I think the Marshall plan was one of the only things that really did come off, you know. It did come off. It's had enduring results in Europe, and a very important far-reaching effect, It came off.

WILSON: You would have thought it would have been wiser for the United States to have made national allocations?

COHEN: I can’t help wondering about that. I wasn't involved in the work; don't quote me on that. But I find it difficult to believe that it was wise to ask people to divide it up. Certainly it would be a worldwide tragedy if one went to the developing countries and said, "Well, this is the amount of money available for international development; now you divide it up."

WILSON: Oh, yes.

COHEN: They can't even divide up the posts in the

[76]

GATT.

WILSON: Yes.

COHEN: That was really asking too much of human nature, I think.

WILSON: This comes perhaps out of the sort of American tradition of, oh, passing an appropriations act for so much for flood prevention and then having the states come forward and...

COHEN: Yes.

WILSON: And they assumed Europe worked the same way?

COHEN: The United States is one nation, even though they are several states; Europe wasn't. That sort of thing could put a strain on everyone that...

WILSON: I asked the question about the kind of administrative problems because there was pretty clearly in the United States the rivalry between the Department of State and the ECA

[77]

missions, and the Department of Treasury, and so forth. And there was, for reasons which I as a fairly young person really fail to understand, the emphasis on economic foreign policy and on this as a career in the United States. This is a much more recent phenomenon than in Great Britain certainly or in European countries. We only had a Secretary of State for Economic Affairs in 1946 for the first time.

COHEN: Very interesting, yes. It's a very important wheel in that...

WILSON: Yes, it is. William Clayton was the first person in that position.

COHEN: That is very interesting.

Anglo-American alliance, 52
Ansiaux, Hubert, 15
Australia, 20, 21

Balance of payments, 6, 8
Belgium, 2, 10, 13-14
Board of Trade, British, 51, 69, 72
British Commonwealth, 7, 55, 56
British loan, 1946, 1
Bulgaria, 58, 62

Clayton, William, 77
Common Market, 31
Czechoslovakia, 62

Denmark, 31
Dietrich, Ethel, 43, 49-50

East-West trade, 56-63
Economic Cooperation Administration:

• • administrative problems, 74-76
    missions, 25
    trade policies, and, 37, 41
• Ellis-Reese, Sir Hugh, 16
  Erhard, Ludwig, 48, 49, 64
  European Payments Union, 8-13, 15, 17-18, 20-23, 34-36, 48-50, 54
  Europe, integration of, 22-27

  Figgures, Frank, 16-17
  Foreign Office, British, 72
  France, Vichy regime, 23

  General Agreements on Tariffs and Trade (GATT), 3-4, 6, 29-30
  Geographical economic zones of nations, 31-34
  Germany, trade agreements and Marshall Plan aid, 17, 42-49, 63-65
  Great Britain, trade, 3, 18, 20-21, 31, 35, 50-55
  Greece, 10, 68

  Hall-Patch, Edmund, 69, 73
  Harriman, Averell, 70, 71
  Havlik, Hubert F., 16
  Hungary, 58, 62, 63

  Iceland, 31, 37
  Ireland, 36-37
  Italy, 18

  Kahn, Clint, 43
  Korean War, effect on international trade, 20-21, 49, 52-54, 65

  League of Nations, 25
  Logan, John, 43, 44
  London Produce Exchange, 21

  Malaya, 20, 21, 22
  Marjolin, Robert, 68
  Marshall Plan, 1-3, 5, 8, 9, 13, 24, 25, 39, 45, 46, 61-62, 75
  Mauritania, 18

  Netherlands, 65, 66
  North Africa, French colonies in, 37
  Norway, 31

  Office of European Cooperation and Development, 23
  Office of European Economic Cooperation, 8, 10, 19, 24, 27-28, 32, 35, 52, 65, 67, 69

  Poland, 56-59, 62, 63

  Romania, 58, 62, 63

  Schuman Plan, 22, 55
  Southeast Asia, 20, 22
  Soviet Union:

  • domination of Poland, 58, 59
    East-West trade, and, 60-62
  Sweden, 2, 31
  Switzerland, 2, 26, 44

  Tasca, Henry J., 16, 43
  Treaty of Rome, 1957, 55

  United States:

  • "buy American" policies of, 37-39
    GATT, pressures on, 30-31, 33
  United States of Europe, 26

  Weir, Cecil, 43