Sir Alexander Cairncross 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 It may not be published in full except by permission of the Harry S. Truman Library.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 September, 1980
Harry S. Truman Library
Independence, Missouri

[1]

CAIRNCROSS: May I just make clear what my own background in this was?

WILSON: Yes.

CAIRNCROSS: I went back into Government service in late autumn of 1946. I was in the Board of Trade for three years up to about November 1949, and then I went to Paris for the year 1950. By January 1951, I was back in academic life.

In the Board of Trade my responsibilities really didn't have a great deal to do with the general state of the world economy. I was advising much more on domestic economic policy. Therefore,

[2]

I although I saw some of the negotiations at a distance and was familiar with the preparation of some of the British Government papers that were submitted to OEEC, I would not at this distance be able to say much on half the questions that you put here, the very general questions.

When you ask me about the political, economic, and social climates which we might have been able to introduce, I think you will find that much better in the documents than in anything I can say. For instance, I remember the preface to the second report of the OEEC, which was written by Sir "Otto" (R.W.B) Clarke, as you know. That gave a very good sketch of the situation when Marshall aid was first announced. A lot of the questions here are of a general kind that might be answered by a good economist but would not require particular involvement in what was happening at the time.

WILSON: We're attempting to get an impressionistic

[3]

view on the part of persons in Europe, those who took part and those who would have seen things at a distance as well. You were involved basically with matters involving the domestic economy. Were you involved both at the time you were with the Board of Trade and at the time you were director of the Economics Division of the OEEC?

CAIRNCROSS: Yes.

WILSON: With what you called the American productivity drive, the drive for an increase in productivity?

CAIRNCROSS: Again I saw that this was happening, but I was not immediately involved in it. They were sending teams out to the United States. I did see a lot of that and was very sympathetic to what it involved, but I didn't take part in setting up any of these teams; I had no responsibility for them. Most of them reported after I left, in 1950 or later. I don't recall many reporting before 1950.

[4]

WILSON: That's right, yes.

CAIRNCROSS: Throughout 1950 I was in Paris, and had a lot of things to worry about apart from that.

WILSON: Perhaps it might be desirable to have you comment on your service in Paris. Are there any points that you would like to make?

CAIRNCROSS: A good many things happened there in 1950. We had to reach agreement on a program to be submitted as a basis for aid, and that program was set out in the annual report of the OEEC. So, if you look through the succession of annual reports you get the product of the thinking that was going on in Paris in the period before. I got landed in this very abruptly because I was just about to go off at the end of 1949 to be a professor, and rejoin my University of Glasgow, when Stafford Cripps asked me if I would go to Paris for six weeks to see the second report through. They wanted somebody to take over from

[5]

the then head of the economic division; that was Donald McDougall. I went for six weeks, thinking that would be all; then, in fact, I stayed for the whole year.

During the year the war in Korea broke out, and at the end of the year there was the crisis over Germany which was one of the most important events of that time, I served with Per Jacobsson on a two-man committee sent by OEEC to Germany to report back to the managing board of the European Payments Union, and our report was the basis of the assistance that was given to Germany at the end of 1950, lasting into 1951.

That was a significant phase of the history of OEEC, because it was the first occasion of successful self-help among the European countries. The U.S.A. stood back from participation in this move, and left the European countries to rescue the Germans from their balance of payments predicament. Although there were some anxieties, as

[6]

a whole I think it was a very successful move, and stood OEEC in good stead. It enhanced the standing of the OEEC in Germany. It was a difficult operation because the Germans themselves might have taken exception to the way in which the whole enterprise was conducted and resented the questions that were put to them. In practice they didn't do that; they were long-suffering and answered our questions. In addition it became gradually clearer that they were expanding; that this was just a slight wobble on the upward path, so there was no reason for anxiety; we were backing a winner.

So far as the Marshall plan itself was concerned, I did a little piece on OEEC some years back which is reproduced in my Factors in Economic Development, analyzing the experience. I think what most interested me was what this involved as an exercise in European cooperation. The Marshall plan, of course, was designed to get

[7]

Europe out of a hole at the end of the war, an immediate predicament that we were all in. It had long-term consequences that were not foreseen at the time, consequences in making European countries work together, and building up instruments of international administration.

If you're looking at EEC, for instance, and the Schumann plan and all that followed in the fifties and early sixties, that goes back, I believe, to experiences that the countries had in the postwar period in their joint efforts in Paris to make a go of reconstruction with American help. I doubt whether it would ever have been set on foot if there had not been an injection of aid which compelled the countries to get agreement on programs and on methods of common working, compelled them because, as a practical matter, the aid could not be distributed, could not be settled, until the European countries themselves had signed a general statement of their aims and objectives. You, therefore, had a means of bringing countries

[8]

together and of setting up the international secretariat associated with this. It's quite true that some things of that kind were known say, in Geneva, with ECE, and with the World Bank, and the International Monetary Fund; they were in business. But the International Bank only did a limited amount. Its functions were decidedly limited and the IMF was very much in the background in the early fifties. I don't think it amounted to very much until after the postwar reconstruction.

WILSON: Were you in Paris at the time the controversy arose over the attempt to strengthen the powers of the secretariat? The matter of the possible election of Paul-Henri Spaak went to the secretariat, and American pressure for the strengthening...

CAIRNCROSS: I don't think I can recall much of that. This kind of thing came up from time to time, but I don't remember that suggestion.

[9]

There was a controversy between, if you like, the Continental approach and the British approach to the secretariat. The normal Continental reaction was to have a strong secretariat, with powers of initiative -- pushing governments to agree to certain things; whereas, the British tendency was to use the secretariat more as would be done in the British Government, as the people who kept the records and organized and ministered to the departments of ministers who sat on committees. In practice OEEC was neither the one nor the other. Robert Marjolin, as head of OEEC, was very much a public figure. Robert did command a power of initiative but he wasn't a political figure. He was an administrative figure, but with some power to urge governments to take certain course. The secretariat was perhaps more limited than you would have met on the Continental view of what was required.

When it came to carving up aid between the countries concerned, the solution that was hit on

[10]

involved the appointment of a number of officials, four wise men, who were sent off out of Paris and had to reach agreement and come back with answers.

WILSON: Your comments bear out statements by some other persons who have been interviewed. There has been a suggestion that the United States came late to the realization that OEEC should be used to achieve some measure of economic integration, and that then, with the outbreak of the Korean war, the United States gave up almost completely this idea and turned to you, particularly in the matter of raw materials. This concerned particularly the British need for raw materials. The U.S. and Great Britain made bilateral agreements. Might you comment on this?

CAIRNCROSS: I’m a bit hazy about what was going on at that time. There were, certainly, immediately after the opening of the Korean war, all the

[11]

discussions about the position of countries like Sweden. The setting up of NATO followed this rather promptly.

WILSON: Right.

CAIRNCROSS: Yes, but with the setting up of NATO with different membership, there was a problem about what was to be done about Switzerland, Sweden and the neutrals. Could they have the same secretariat as OEEC? That was one issue. There were long discussions in which Harry Lintott was the man principally involved. If you wanted to get anything on that, that was the period of about '50-'51 though he was there much longer, he might be your best man. He is retired now; he was the High Commissioner for Canada. I think he conducted most of these negotiations about the issue of neutrality.

On integration, my most vivid memory, I think, would be of Lincoln Gordon intervening

[12]

in the Economic Committee around February 1950, when we were discussing the attitude of OEEC to economic integration. He suggested you could solve the problem by using the word "closer" and calling for "closer integration." This was a solution that recommended itself to everybody and stopped the debate. We volunteered "closer economic integration," but the meaning of that was very obscure.

If I can come back to the secretariat for a moment, there was at the beginning of 1950 some feeling that ECE managed to produce authoritative analyses of the economic position in Europe that were extremely readable and got to the heart of the matter. However, the manifestos, which were what they came to be, which were published by OEEC as annual reports, did not show this characteristic of penetrating economic analysis.