Numbers appearing in square brackets (ex. ) within the transcript indicate the pagination in the original, hardcopy version of the oral history interview.
Opened June, 1987
Oral History Interview with
August 14, 1970
by Theodore A. Wilson
WILSON: Perhaps I could begin by asking you to deal with your own role?
FIGGURES: I personally was involved in these affairs one way or another from the summer of 1947. The affair began, of course, with the Marshall speech. And, as you know, immediately there was a European reaction from the Foreign Secretary Ernie Bevin and Bidault. An immediate meeting was called in Paris and they decided to invite a committee to work in Paris. It's called by various things. It was formally CEEC. I was a young principal in the Treasury at the time. We immediately established an interdepartmental committee here, covering the total range of departments concerned in the affair, to provide the machinery which could brief the delegation going to
the Paris conference and do whatever was necessary in connection with the exercise.
I was made the secretary of that committee and so I participated primarily as a backstop on the U.K. delegation up to the point when that committee reported. That committee reported, as I remember, towards the end of September. There then was a visit from that committee to Washington to take the report to explain the report to the administration and members of the Congress who were preparing now the main report at the Washington end.
There were, as I remember, some three or four committees, one with the international, one dealing with domestic repercussions. I forget precisely what they all were. They all of them reported and they were all extremely influential projects. I was part of that team which went to Washington. I went there primarily to explain in Washington what had been happening in the financial subcommittees in Paris with which I had been closely connected even though I had not actually been present. Two of us in fact were in to explain. The other one was
young Frenchman in the same position as me who was named Pierre-Paul Schwertzer. And we went over to explain these affairs.
Then our interdepartmental machinery continued, but I was then posted to Washington in two capacities. Firstly, as the alternate U.K. director of the International Bank, and, secondly, as a reinforcement of the Treasury delegation in Washington which was expected would have to be built up as part of the Washington end of the developing European recovery program. Now, some few months after that the OEEC was founded. Marjolin became Secretary-General and Marjolin asked if I could be seconded to OEEC as one of his staff -- which I was -- and I went there as Director of Trade and Finance. That wasn't precisely the title when we started but that's what it became. And I stayed there for three years on Marjolin's staff, being concerned in those three years with the development primarily of the Payments Committee and of the Trade Committee but also involved in the preparation of what were called the long-term programs. So I was involved in
liberation of trade and so on. That lasted until 1951.
So my involvement in this affair was as a very junior British official and then as an international official in what was an extremely exciting international secretariat. It was a very seminal period in European affairs -- from 1948 to 1951.
WILSON: Yes. You had approached the problem which we're studying from several viewpoints then -- from London and from Paris and from Washington. Geographically and also from different political perspectives. If I might interject some questions?
FIGGURES: Go ahead.
WILSON: I wonder if I could draw upon your experience -- to go back to the early period when you were in the Treasury -- and ask what the view then was, or what the expectations were about the approaches to be used to solve the problems, particularly Britain's economic problems? The impression I have received both from documents and from talking with some people,
was that at the end of the war the machinery of Bretton Woods, these new international financial institutions, were thought to be sufficient to eventually work out the problems in international economic life. Is that a correct statement?
FIGGURES: Well, now, again I must be very careful, because you're calling on personal experience and I was not in the Treasury at that time. I was a soldier.
WILSON: I see.
FIGGURES: I joined the Treasury in July, 1946. One of the first things I had to do was sort of "get up" on what people had been doing during the war, but I'm not able to report on what the views were in '44-'45 from firsthand experience. I really wasn't close to it and it's a long time since I've read the records.
I do think one has to distinguish some three or four separate problems. There was a purely U.K problem arising from the facts that we had been at war; we had abandoned all sorts of other things we had become dependent on the flow of lend-lease to balance the account. A frightful problem was created when lend-
lease came to an end, I won't say prematurely, but certainly much earlier than anybody ever expected it would. This created a particular problem for the United Kingdom which in this sense wasn't a war-shattered economy as was Holland or France or Germany, but which was an economy whose mechanism had been disrupted by war. I don't think anybody expected the Bretton Woods institutions were going to solve those problems of the U.K. There was a reasonable expectation that they would have been solved either by a flow of lend-lease for a bit longer, or by the American loan. Again, there was really little miscalculation of what was needed on both sides, but a terribly serious miscalculation was made on how the United Kingdom could have come to grips with it. I mean, for us, the amount of the American loan didn't produce anything at all to get the United Kingdom going again. It just provided a premature liquidation of the sterling balances which supported various currencies. A fairly costly -- very costly affair.
That was a problem -- which I don't think was caught up in the international institutional set-up.
There secondly was, and this was really quite different, I should judge, a profound miscalculation of what was needed to get the whole of the Western European economy going. There was an expectation that if you measured the physical damage and if you put the physical damage right you had done the trick. Now clearly you hadn't. Europe had problems rather like ours -- only perhaps worse in that the whole of the channels of trade payment, the whole of the institutional structure had been disrupted and it was a major effort to get it going again. That was not covered by the Bretton Woods institutions. These, you will remember, had been specifically excluded. Thus, the efforts to get it going by temporary arrangements -- the Economic Commission for Europe, the Emergency Economic Committee. There was a whole range of affairs, both on the European scale and then the international ones, UNRRA and so on. There was a total miscalculation of how much was needed to be done. It was only, I think, in 1947 that both we and you began to appreciate, came to appreciate, that the problem was enormously more
complicated. I have the impression that work done in the State Department in the planning staff there, which of course, lay behind the Marshall speech, and things which we were doing here, probably on our own, were coming to some sort of conclusions. The Marshall speech was made, as I remember it, in June. In July we had the machinery established. We had the report written in September. You've gotten congressional committees reporting by November-December. You promoted legislation and got it through by -- what was it -- the following May. This on any reckoning was about as fast as anybody has ever moved on this sort of approach. And it must have been because minds -- working basically separately -- I don't think there was any enormous amount of cross-fertilization at the time --had come to appreciate that the calculations made in '43, '44, '45 were wrong, that what was needed was of a wholly different order of magnitude.
There was no doubt, a tremendous shock, both in Washington and in Europe, when the Franks Committee of the CEEC made its first summations of what were required in four years. I don't think it was in anybody's
expectation that it would come to that. This was the first time we suddenly started talking about billions.
WILSON: Yes, yes. The report had it spelled out too.
FIGGURES: Had it spelled out. This happened in the month of August and was a pretty shattering blow for everybody.
WILSON: Very good. That's very helpful. When the CEEC was created, what was your view of its possible future, or the development which it might take? The unusual feature of the Marshall speech, of course, is the request that Europe cooperate, that European nations get together and spell out what they needed. Much has been made of this -- and other American efforts -- as being evidence of serious U.S. desire for European unity, or at least integration.
FIGGURES: Well, I think there can be no doubt that this was the American position throughout this period. Whether, I wonder if really it lay behind the suggestion that the CEEC be made a permanent institution. I suspect
some people said the CEEC as such should become that. But it takes a little more to create a permanent institution than that. But really, from quite early on, the problem of what was called "the continuing organization" was very near the top of the agenda and there were very serious and basic discussions about what sort of organization that should be. A great deal of this is in the public domain. A great deal of it isn't and no doubt will only fully be known when all the governmental papers are exposed, which for that period in this country is another seven or eight years. The positions were in a sense predictable though they were not really quite so polarised as was sometimes expressed in the public press. Nobody was wanting to create a supranational authority. Nobody was wanting to create a European organization which would give orders to governments. After all, there are no such political structures anywhere. There were arguments about how influential the organization as such should be and in these things it always turns out that the organization, if it's in the slightest creative, really becomes quite influential. That's certainly what happened in OEEC.
WILSON: The secretariat played a very important role?
FIGGURES: Yes, it played a very important role but normally these things generally happen by the grace of putting a few capable chaps there and then finding it is very difficult for governments to reach certain conclusions on their own. They always need assistance. I mean if it's two governments they don't need anybody's help, or three, or perhaps even four. But once you go beyond a certain number, it is difficult after all for governments to be informed without some third party to help them.
WILSON: One of the problems which has arisen this summer, as you might expect, has been "caricaturing" of the British position by certain of the persons I've interviewed on the Continent -- particularly on this issue of European unity. Some of the people I've interviewed have been --are now -- clearly committed to the idea of supernationalism and they have read back (which is reasonable for them to do) into those early days what have been their hopes in the past few years.
FIGGURES: There is a reality in this position. In the years 1947-1948 most of the European states who were members with us of OEEC had had an extraordinarily troubled ten-year previous history in which many of them had been occupied militarily; in effect, in one form or another, they had suffered military defeat, and had had their societies under very considerable strain if not destroyed. They were not in a position where they had great confidence in the capacity of “the state” to safeguard the welfare of the citizens. In one way or another they had all failed. there were a few lucky ones who had managed to stay away from it. Our experience had been different. On the contrary, our society had survived. It had been under the most tremendous stress, but a democratic society had survived. It had thrown up one of its greatest leaders, and the House of Commons had certainly had one of its greatest experiences. It had fought a great war under cover of a House of Commons leader. It was in no position to say, “We have no confidence in the state to serve the purposes of this country.” Elsewhere it was reasonable to say, “We’re not strong
enough to do these things on our own, let's do them with other people."
The idea was of preserving the national identity, while working with other people. Now, insofar as some discussions of that particular time well may have been colored by thoughts of this kind, there is reality in this. I must say I do think on the other hand that I wasn't really conscious at the time that there were many governments in Europe who were terribly anxious to abdicate their political responsibilities and hand the thing over to somebody else. And this is after all in the end what matters. So that there is here a bit of caricature. These people who are voting in favor of majority voting on issues of magnitude are still very rare. There isn't majority voting inside the Treaty of Rome in respect to new issues. There's only majority voting to give force to decisions already taken.
WILSON: That's a good point. That's very helpful, because I'm naturally trying to understand the American role in this, and some people, despite the fact that they recognize that the first purpose was recovery and that anything else took second priority, have made
such statements as "we wish the United States had blackmailed us." It could have. Americans could have said, "Okay, you must do these things, you must go this far down the road to unity or we will stop aid," and so forth. And some of these people say they would have welcomed that.
FIGGURES: That may be so. Maybe they would have, but, of course, this isn't real. The United States' program was an act of the most extraordinary enlightened self-interest, but nonetheless it was self-interest. The United States' interest was to prevent Europe becoming a sink. If Europe was a sink, the frontiers of East and West would move west; it could have been extraordinarily dangerous for the U.S. if the Russians had seized hold of the very powerful resources of Europe. What's happened in Europe in the last twenty years has shown how considerable these resources were. The U.S. wasn't in a position to say, "Do the thing this way, or I don't help you." The main purpose of the U.S. was to get Europe on its feet. Governments are very unwilling to take positions of "I know better than you about your business." They may think they do when they study the matter, but it's quite
another thing to get out and say, "We know it is better done that way and you go and do it." When you say this, you take a tremendous responsibility. So that while an individual officer may be willing to make such statements, I'm fairly sure that no government is willing to see its officers act that way; I know of cases where American officials spoke out of turn, rather along these lines, and suddenly found themselves posted to a different part of the world, because it really isn't convenient for a government to be saddled with the responsibility of saying certain things.
WILSON: That's very helpful. There is a stereotype of the U.S. Government and of Americans who serve abroad as being just this kind of, doing this sort of careless, didactic work.
FIGGURES: A certain number do. But my experience is that when the authorities find out about it, it fairly quickly indicates that this isn't the way to behave.
WILSON: It wasn't the case in this period, then?
FIGGURES: Oh, there were individuals who did think so but equally there were other individuals, very powerful and influential, who clearly thought that all their foreign aid experience suggests that you would actually increase your power if you increased the extent of your integration. But that's one thing to say that and another thing to say therefore you must do it and we won't give you the money unless you do. The ECA authorities did use, or rather offered to use, their financial resources to help us in certain ways. For example (nothing ever came of it) at various stages we were having difficulty in proceeding forward with liberalization of trade and people would develop statements such as "What a tremendous risk I am exposed to if I do this." One day Harriman came along and said, "Well, look, I am prepared to recommend that 200 million dollars be put on one side available as a relief fund to assist anybody who gets into difficulty because he has liberalized trade." Well, that was always a sensible thing to do. Nothing did happen of course. These disasters never do happen. When you make that sort of proposal you
stop other people from talking nonsense, you see. But that's not the same sort of thing as "do this or you'll get less money."
WILSON: To pursue this in another way, I wonder whether part of the explanation why there was not this sort of preachment was that there was early a united position on the part of Americans about how to achieve these goals.
FIGGURES: Well, of course, it is true . This is one of the reasons why the United States Government is as nervous as all governments are about being too didactic. There wasn't total agreement within the American administration. For example, when we were creating the EPU, advancing the liberalization of trade, this did involve some degree of discrimination against United States goods. This was extremely unwelcome to the U.S. Treasury which was very, very committed to the principle of total multilateral arrangements and to the Department of Commerce. Not to the Department of Agriculture as I remember it at the time. You had different concerns in
Agriculture. The actual ins and outs of this I don't know. We saw certain signs of it but there must have been quite a bit of pulling and tugging of this kind.
WILSON: That's very good. That's one of the apparent contradictions. I was thinking of -- just what was State Department pressure for liberalization, Cordell Hull's program, continued by Treasury? You had GATT; yet you also had developments going on in Europe which would -- in the short term at least -- contradict GATT. Developments which were supported by the ECA at least.
FIGGURES: That's right. Of course, I think that this was wise and valuable. Again I'm getting on a personal hobbyhorse. We had two unnecessarily different approaches to the world in these early postwar days. The International Monetary Fund was totally black and white. But if you weren't able to be perfect, put on the shining white armor and go convertible, you stayed under your bloody awful nonconvertibility rules. And so did the GATT. You
either had no quotas or you were beyond the pale . This wasn't really very helpful. In OEEC we were less cut and dried because we were the sinners. But the way to cure this society isn't to say let us all renounce sin but to seek whether we can't do a bit . Oh, of course, quotas are very bad. It would be nice if everybody would agree to abolish them but can't we make some inroads in them. Of course, not being convertible is very troublesome, but while we're waiting for the promised land, couldn't we do something to convert a bit better. Now many inside both the United States administration and the international institutions believed that what we were doing was very damaging. They believed -- I'm sure they believed this totally honestly -- that the approach which we were taking was living trouble and would mean we would never get rid of evil. And in some sense of course you can look at the world today and say they were quite right. I don't think they are right. We did in fact nearly get rid of it. I think we gained a very considerable advantage wherein divided Europe should liberalize trade vis-a-vis itself. Then it came to the point
of liberalizing vis-a-vis the dollar, except for a few things like agriculture and so on. But if we had to wait until we could go the whole hog we might never have moved, because the steps to jump in the deep end would have been intolerable. Now, there were certain European governments who were afraid of these approaches. The Belgians, for example, were not at all sure that the whole approach wasn't wrong. Their need for quota restrictions was less than other people's and they found themselves hostile to our approach. But it was inside the American administration, I think, that there was most of this trouble and this must have had significant effect upon the way your people behaved.
WILSON: Added to that, of course, was the contradiction in American tariff policy. This is a little confusing. What approach did you take when you were being pressed by Treasury or Commerce for absolute purity and then...having all this…
FIGGURES: Well, on the tariff issue, the tariff issue was frightfully confused through the whole of this period. There was pressure from some that we ought to deal
with tariffs in OEEC. And others said no, not at all. I expect it's certainly true the British played a very big role in saying, no, no, we won't have this, tariffs are for GATT. I think the Americans supported that position. It was a very extraordinary affair. Of course, in the end the tariffs had gone, the quotas came off, and I remember a French man saying, "We made a great mistake in this. We made a great mistake, because we found we had negotiated the tariffs in part because we relied on the quotas and we found we had lost the quotas." However, tariffs remained significantly outside this particular field.
WILSON: Many people think, and I think the documents as well would suggest, that the European Payments Union was perhaps the single most significant achievement of the OEEC. I wonder if you would agree with that or might comment on that?
FIGGURES: Well, having been, I suppose one of the major architects of it I obviously think rather well of it. I think it must be counted important; it was as far as we could get until one could move to
convertibility. It did stand us in good stead for six, seven years and under cover of it we were able to cope with all sorts of other things; push on with the liberalization of trade, but it took quite a bit of doing. Yes, I think that probably as the single institution it was most important. But looking back on the whole affair I don't think I would rank it as the most important thing that happened in OEEC. I think the most important thing was that we did develop techniques and habits of confrontation of policy, of self-criticism of policy by each other, to degrees which we never thought of before and which have now been developed into the structure of international life. They have gone into the practice and work of the community, and so on; and they have played, I think, a very significant role in making the last twenty years a very different twenty years from that which preceded it. I don't think I would put anything as concrete as EPU, important though it was, quite on a par with something that changes the nature of governmental behavior and changes the nature of international policy between a significant number of states.
WILSON: Please correct me if I'm wrong, but from this I'm drawing a picture of the first sessions of the CEEC, perhaps also of the OEEC, when persons from Great Britain, France, Belgium, and other countries found it very awkward to divulge what had been "secret" information, found it very difficult to deal with problems -- to get outside their "national skins". Was that the case?
FIGGURES: I expect it was. The dollar bids started it. And it was a very critical decision by the United States authorities when they said, contrary to what anybody had expected, that they wanted a recommendation from OEEC on how the aid should be divided. This was absolutely critical. You, no doubt, are talking to the people from your side; Linc Gordon, for example, what's his name, the chap who became Ambassador to Greece?
WILSON: Henry Tasca?
FIGGURES: Henry Tasca came a bit later.
WILSON: Oh, Henry Labouisse?
FIGGURES: Yes, Henry Labouisse. This was a tremendously important decision and, of course, the chaps on the European side who were primarily concerned with this you're also seeing no doubt. Eric Roll, Malagodi, Guillaume, Guidry, Stepparis is dead, Spirienbug he's now the Dutch Ambassador to the Community in Brussels. These people were involved in doing this. Now, in order to do it, they called upon each state to produce a team which came in and was cross-examined by them. Now, it was to find out what the need was, was it the same. This was the first authorization. And then alongside that we devised the first intra-European payments arrangement, with drawing rights, and we had to say what the drawing rights were. So that each state had to produce its justification for its intra-European balance and what was it that it was going to be a debtor on this account. Again they had to come in and justify it to us so that we then produced proposals -- two things, proposals for American aid and proposals for drawing rights when the two groups came together. It has never stopped, never stopped. How often you get worked over depends upon how well you're doing. The United Kingdom, which had been borrowing
rather a lot of money, has been raked over very steadily. Countries which have neither run excessive surplus positions nor excessive debtor positions will get covered in discussion once a year. But it all flows from that and we've perfected the technique.
I'm not sure that it's the problem of disclosing the secret information though that in itself was not unimportant. It is learning how to cross-question, because this problem, you see, is just as acute inside a small informal body. Nobody wants to say, "Look, I think you ought to do this," because doing this is something pretty important. You ought to put up your taxes, you ought to raise your bank rate, you ought to change your exchange rate. These are things which you don't want to say and nobody feels sure about this. Because none of us understands the institutional setup of the other chaps so well that we're sure we know better. So I would say that both sides have been learning the technique.
WILSON: Very good. It's been suggested that for some pursuits there was a model to use in applying remedies to institutions -- the Keynesian model -- and that many
Americans and some British and some others were such pronounced Keynesians that they used these doctrines at every point. Was that at all important?
FIGGURES: Yes, I think what you've said was very important. What was most important, of course, was the belief throughout the whole of this period that the state has got both responsibilities and powers in economic life. And this in itself was part of the Keynesian doctrine. It was true, I think, that there was an intellectual power in the analysis, the national income concept, which was for a period of years irresistible. But I don't think that means that all of the discussions were Keynesian.
WILSON: If I might add one other question on the subject. There has been the suggestion that in these negotiations, in the activities which went on in OEEC, there was present recognition of a special relationship between the United States and Great Britain and that Great Britain took advantage, or made use of this relationship to not do certain things which the majority of the membership of
OEEC thought desirable. Is there anything to this?
FIGGURES: I don't recognize this. I mean I don't know what things and I don't think there was a special relationship. There were special relationships between the United States and United Kingdom. That was perfectly clear. There is an extremely important military and quasi-military relationship which arises from the fact that they played a role in the development of the atomic bomb together as in the development of intelligence. That had no role whatever in OEEC.
WILSON: Perhaps an example would be what has been called by some people the "myth of sterling," the problem of sterling in its relationship with European currencies, its relationship with…
FIGGURES: I think this is throwing all sorts of things far forward. I think that when we were devising EPU, there's no doubt the British were concerned that the relations shouldn't damage what we call the international role of sterling. There were all sorts of reasons for this, some of them prestige, but also the fact that there were a hell of a lot of
balances and if those balances ceased to be formally useful in international payments, someone would want to cash them and this would have tumbled all sorts of applecarts. But this certainly wasn't a position which the United Kingdom held alone. I mean there were plenty of other European countries who were equally concerned that that shouldn't be undermined. Now, then, of course, when you come to the end position, if you're talking to somebody who is quite probably opposed to reserve arrangements for any currency, probably is anti-dollar, well he can find a period when he can say the British and Americans hung together to defend this outdated concept of reserve currencies. There is a consciousness in this country that there was a special relationship with the United States. One may move around in Washington and hear people say, "What is it? I've never heard of it." Of course, that depends on who you talk to. You talk to the atomic energy people, the intelligence people, they know what you're talking about.
WILSON: I have the impression that some Americans misunderstood the role of sterling. They talked about
the sterling bloc as something that was compulsory.
FIGGURES: Oh, certainly. This was part of the mythology of the past. There are not many people who think that now, but there were quite a lot who thought it then, even some well-placed in the American Government, people who thought the sterling system was going to be used as a method of ensuring permanent discrimination against American trade. And no doubt we had over here some people who thought it might be used for that purpose.
WILSON: You suggest these differences did not manifest themselves in any serious way in policy?
FIGGURES: I don't think so. I'm thinking of it, you see, in the three years when I was not a British official, when I was an international official, and I must sa