| SECRET April 20, 1945. Dear Mr.
President: This is to report to you on the
discussion with the Prime Minister which I
undertook on behalf of our late President.
The assignment given me was not to
negotiate any agreements, but to explore
informally and personally with Mr.
Churchill a number of peace problems and
to give him my views thereon. Having in
mind my long and intimate friendship with
the Prime Minister, extending over thirty
years, President Roosevelt felt that a
frank, candid interchange of thoughts
between us would be mutually helpful to
our two countries. In addition, in this report I would
like to include certain observations on
peace policies and peace machinery noted
on my trip abroad and, along with them,
several recommendations for new action.
These findings are based on conversations
with almost every figure of importance in
England and our military commanders in
Europe, including General Eisenhower. Pessimism Broken 1. I was told by the English that the
most important result of my trip was to
break the pessimism that has gripped much
of the British Government and to impress
upon them the need for re-examining their
position in more realistic -- and
therefore optimistic --- light. They had
been groping for a post-war loan or gift
of $5 to $8 billions. I left them prepared
to do more for themselves and to ask less
of us. Ready to Control Exports 2. There was wide acceptance of the
importance to England of eliminating the
sweated, subsidized, war--gearing
competition of Germany and Japan. The
British with whom I talked were con-vinced
they could become the heirs to much of
former German and Japanese markets which
would swell British exports, increasing
profits and raising the living standards
of her workers, while at the same time --
the most important factor -- contributing
to preventing the enemy from attempting
another war of aggression. Empire Preferences 3. Their attitude on Empire preferences
and the sterling bloc underwent a sharp
shift when I showed them how through the
use of our priority power we could
override any trade barriers, if necessary.
I feel certain we can gain a considerable
relaxation of these restrictions whenever
we stand ready to make a proposal to them
either in the form of a "cylinder head'
loan or through the promise of priorities
on our production which will give them an
even start with us in world trade and in
producing for their civilians at home. Preferences are of no avail without the
goods to sell. For at least three to five
years, perhaps seven, England will be
unable to supply her colonies and
dominions the things they will want, and
still meet the demands of the English
people at home, all of whom will have more
money than ever to spend. Priorities for Peace parenthetically,
Mr. President, right here is likely to be
your greatest difficulty in turning from
war to peace -- how to balance domestic
demands (stimulated by accumulated
savings) with needs abroad to implement
the peacemaking. Create Peace Council 4. Our greatest single weapon in the
peacemaking lies in the wise exercise of
the priority power allocating our
resources. So it can be used most
effectively, may I suggest the erection of
an Advisory Peace Council to the
President, as outlined in the attached
memorandum. Before going to England I
brought it to President Roosevelt's
attention and he said he would put it into
effect. In my opinion, it is the most
important single action that can now be
taken. Fear of Russia 5. Russia unquestionably is the gravest
fear of British officialdom. The Prime
Minister was reassured by Mr. Roosevelt's
last message to Stalin -- that we intended
to insist that the Russians observe their
agreements. I believe we can get along with the
Russians, as I expressed it to many of the
British, by doing three things: - Keep our obligations,
written or implied, promptly,
absolutely and meticulously, making
certain the Russians are kept
thoroughly posted as to what we are
doing and why.
- Insist firmly they do the same
thing.
- Do our homework before going to
conferences so that agreements are free
of ambiguity and so that we have
concise grasp of the policies We wish
pursued.
One function of the Advisory Peace
Council, as I envision it, is to get this
homework done for the President. It might be well to point out to the
Russians that before the war, business
interests acquired great respect for the
manner in which Russia kept all contracts
and observed all credit arrangements. This
has been increased by her in-comparable
military accomplishments during the war.
It would be tragic for the Russians at
this point to permit doubts of their
motives to mar this splendid record --
tragic for both them and us since it would
react against all who want peace. I have no fear of the spread of
Bolshevism in this country -- jobs and
higher living standards are the proven
anti-toxins. I have more concern over the
thin faith of some in their own country's
greatness and future. German Decision Vital 6. Because of this fear of Russia,
British officials are wavering between an
economically weak Germany and rebuilding a
strong Germany as a buffer against the
Soviets. I believe we can determine this
point, but only if we are prepared to take
the lead in bringing decision. This
requires a focus point within our own
government for examination and
decision-making, and is another reason for
my suggestion as to the Advisory Peace
Council. This point cannot be emphasized too
strongly -- what is done with Germany is
the key to the whole peace. The more
quickly the long-range fate of Germany is
settled, the better. Without it there can
be no effective agreement on reparations;
no occupation or control of Germany which
will not split apart on disagreements
between the occupying authorities and the
machinations of the Germans; no easing of
Russian suspicions of the Western powers
so lasting Allied unity can be
achieved. Set up Supreme Council 7. The Advisory Council at home may
have to be followed by the grouping of the
many commissions now scattered through
Europe into a single Supreme Council for
Peace and Reconstruction in Europe. Ready for Economic Council 8. After repeatedly broaching the idea
-- only to have me tell him it was foreign
to our traditions --' Mr. Churchill
admitted that he had abandoned his
cherished idea for an Anglo--American
military alliance. You will find the
British more willing to go ahead with the
provision for an Economic Council in
Dumbarton Oaks. Mandate Question 9. The British seem determined not to
yield any part of the Empire, Hong Kong
included, or even the areas mandated to
them. Mr. Churchill, personally, offers us
a free hand with the Pacific islands we
have conquered. They see us dominating the
Pacific and are planning on a relatively
smaller fleet, while building up their
air. Air Policy 10. When we determine our own air
policy, I think we can get together with
the British on a basis that could keep
intact the great Air Transport Command
network. An air policy for the United
States is overdue, Churchill Faces Early
Election 11. I was informed early British
elections are likely. Mr. Churchill seems
strong enough to win, though his chances
might be imperilled by our insistence at
this time on certain decisions. I am not
here suggesting we should concern
ourselves with the British election
outlook -- but pass this on only as
information. Outlook was Gloomy As background for my trip may I cite
these facts: For some time British
officials have been bemoaning that the
United Kingdom would end the war "busted".
They have been seeking a post--war loan or
gift from US of $7 billions. They have
feared that unless they could export on a
greater scale, they would be unable to
obtain the foreign exchange with which to
purchase the food they need to import, and
to service the $12 billions in debts
accumulated with the Dominions, Egypt and
others. This pessimism was robbing the British
of self-reliance and threatened to leave
them clinging upon us for existence. Such
dependence would endanger our own
post--war prospects and expose the British
to recriminations within our country --
recriminations harmful to the cause of
world peace, and which can be prevented by
the course herein suggested.. Met with Cabinet I had a number of talks of the most
intimate sort with Mr. Churchill.
including two weekends at his home at
Chequers and several sessions at 10
Downing Street, he arranged a series of
conferences for me with members of his
government and other important British
figures. he seemed to be using me to break
down the gloom within his own government
and to invigorate the outlook of those
around him. At one conference he figuratively put
me 'into the ring' with most of the
British Cabinet including Deputy Prime
Minister Clement Attlee Sir John Anderson,
the Chancellor of the Exchequer; Lord
Keynes Lord Beaverbrook Lord Catto, the
Governor of the Bank of England; Lord
Cherwell ,and Brendan Bracken, Minister of
Information and Churchill's former
secretary. Another conference was with
Britain's leading bankers and
industrialists, including Lord Rothschild,
Lord McGowan, Chairman of Imperial
Chemicals the head of the Stock Exchange
Sir Robert Pearson; Edwin Fisher of
Barclays' Bank; Olaf Hambro of Hambro's
Bank; Lord Aldenham of Westminster
Bank. Still other conferences were with
Empire representatives of Australia, New
Zealand and South Africa; with the Labour
Party leaders. Herbert Morrison and Ernest
Bevin; with Mr. Churchill's Army, Air and
Naval Staff. There also were numerous talks with
individuals including Foreign Secretary
Anthony Eden; Lords Camrose and Kemsley,
influential newspaper publishers; Lord
Leathers and W. S. Robinson, the prominent
Australian, and others. Our Position Strengthened In all these talks I was careful to
make clear that the views I expressed were
personal -- those of a private citizen of
the United States -- not the President's.
However, the British could not help but
feel that the views thus voiced were
considerations that would have to be met
in any negotiations with our country. To
that extent, I feel, the American position
in future negotiations has been
strengthened. Empire Stronger At all these talks I impressed upon the
British my own confidence that the Empire
could emerge from the war stronger than
ever --' physically, economically,
politically and spiritually. No one who
had seen the destruction in London and
British towns or the privations Of the
English people could help but have the
greatest admiration for their fortitude in
surmounting the trials of war. or could
doubt that when the physical dangers of
war were removed, this same fortitude
would carry them to greater heights than
ever in peace. I, for one, refused to
accept the depressed valuation some placed
on the Empire. New British Markets Physically, the Empire would remain
intact -- not having lost a foot of
territory --' and relieved of much of her
armaments burden by the security of peace.
Economically, I showed them how the
elimination of Germany and Japan as export
competitors would swell British trade ,
both in volume and. profits. Britain's
asset values would be enhanced, her credit
position strengthened and the elevation of
the living standards of her workers made
possible. In the savings accumulated by
all of the British people, I pointed out,
lay the basis of an expanded home market.
This particularly touched Mr., Churchill'
a imagination and he referred to it
several times later, asking whether
'through the savings of her people hasn't
Britain already paid off part of the cost
of war?' Develop her Colonies Some of Britain's industries, I
emphasized, needed modernizing as do some
of ours. Many parts of her Empire still
lie undeveloped, waiting to be converted
into new assets of enormous value by
courage anti enterprise. England had to
give leadership to the Empire. Gift Wanted From the session with the British
Cabinet it seemed clear that Keynes and
the Bank of England want us to give them
five to eight billions as a gift, although
honeyed not to appear so. I brought to
their attention that if the United States
gave Britain any such aim, we would have
to do the same in different proportions
for Russia, France, China, Norway,
Denmark, Holland, Belgium, Yugoslavia,
Greece, perhaps even Italy and others.
Where did they expect us to get it all? I
recounted the huge sums we had expended
for war and that we were not a bottomless
pit. It was vital to the whole world for
America to remain strong or all the
nations would go down. It was necessary for all to rely more
on themselves than on others. America
would be in a position of having to
satisfy the war--deferred demands of not
only our own people but of many of the
nations of the world. We could not do as
much politically, as might seem possible
economically, and I thought they should
know that. Ask Less of Us The swing to a brighter outlook on the
part of the British quickly made itself
evident. Ambassador Winant reported it to
me. At the end of my frist week in England
I went to a luncheon meeting at Lord
Rothschild's where large business and
financial interests were represented. By
that time, the British tone was changing
and few doubts were voiced as to England's
ability to do more for herself and ask
less from us. Mr. Churchill personally seemed
impressed. he told me he did not intend to
promise his people a rosy, easy future but
to tell them that 'sweat and thrift' would
bring them through the transition to peace
as triumphantly as blood, sweat and tears
had brought them through the war. I got
the impression that will be his
re--election platform. "Cylinder Head" Loan At a dinner only a few hours before Mr.
Roosevelt's death, Mr. Churchill made this
highly significant statement: Instead of England asking for as much
help as they had anticipated doing, he
felt he could quote a remark of mine to
the effect that when we had the old style
automobiles which could not be cranked, we
could get the engine started again by
putting just a little bit of gasoline in
the cylinder head. And, added Churchill,
'Perhaps that is all we need.' While all with whom I talked certainly
were not fully converted, a dent in the
prevailing pessimism was made and the net
result of my talks, I am sure, has been to
impress upon the British they have far
greater resources than pictured by some of
their 'poor mouth' officials. For the
future, in handling this matter of a
post-war loan or gift, I would recommend
pressing this same approach: - by requiring the British
to specify in detail what they want the
money for, and
- by requiring them to re-examine
their position in the light of the
greater resources at their command; the
benefits they can derive from
eliminating German and Japanese
competition from modernizing British
industry; from the potentialities of an
expanded home market and vigorous
colonial development.
No Military Alliance A second significant remark was made by
Mr. Churchill at that dinner on Thursday
night. It was this -- that he had been
convinced that no military alliance was
possible between Great Britain and the
United States -- but that America, as I
had assured him, would be willing to go
into an organization to maintain and fight
for peace together with the other nations
of the world, and that our flags might not
fly alongside each other but would be
there together, and that he accepted that
idea. Earlier during our talks, Mr. Churchill
had repeatedly broached the idea of an
Anglo-American military alliance something
he has long cherished. I told him such an
alliance was foreign to all our traditions
and any effort to achieve it would only
stir needless recrimination between two
nations which are natural allies Rigid
Control Essential Unless we take the lead in bringing
them to decision, the wavering of the
British over an economically weak Germany
or a strong German buffer against Russia
is likely to persist. In addition to the fear of Russia,
there is the inevitable tendency to leave
difficult matters undecided until after
the coming elections. I believe there is
enough appreciation among British
officials and industrial and financial
leaders of the fact that if Germany and
Japan are not strictly controlled, Britain
will have slight opportunity to recuperate
economically, to enable us to carry
Britain along with us on the German
question. I showed the British that no
matter how much America loaned England,
that help would be quickly lost if the
German and Jap economies are rebuilt to
compete with sweated exports in world
markets. It was vital that all of the
United Nations complete their own
adjustments back to peace first --e this
was the principal 'reparations' benefit
they could get. If Britain seized -- with
vigor and enterprise --e the export
opportunities that would open out of an
effective control of the enemy economies,
the American loan or gift being talked
about would not be needed or only a small
part of it be necessary. To bring the British to decision on the
treatment of Germany, we must make up our
own minds as to what we want done. It will
not suffice simply to say 'we want an
economically weak Germany." Decision is
needed as to how much industrial capacity
can be left safely to Germany -- industry
by industry -- how much steel, chemicals,
and so on. How much of a reorganization of
her economy is needed to insure Germany
never again making war on us? Since there
is no 'normalcy' other than war-making for
Germany to go back to, reorganizing her
economy is unavoidable. Without such prior determinations,
industry by industry, there can be no
deciding the amounts of reparations to be
collected, or the possible quantities of
deliveries in kind of various
products. To Mr. Churchill I made the point that
continuation of this air network under the
control of some combined staff was the
closest thing I could imagine to a
military alliance. His Air people were
rather struck by the idea but I never got
any further reaction from him. I think we
should develop this possibility. Air policy Needed At least preliminary negotiations on
the matter of air bases and air transport
should be undertaken quickly. To be
effective, this requires the formulation
on our part of an air policy. I heard it
said several times the British have an air
policy, but we do not. Mandated Areas The British and the French are willing
to permit inter-'national inspection of
their mandated areas by whatever
inter-'national organization succeeds the
League of Nations. They refuse to give up
any of the territories now held under
mandate. They argue that huge sums have
been spent developing these lands. that
the League of Nations, which entrusted the
mandates to them, is dead. Many Americans.
I pointed out , would interpret this
position as meaning in effect that Britain
and France had mandated these areas into
their Empires. As for the islands we had wrested from
the enemy, Mr. Churchill unequivocally
stated he had no desire for any of them.
As far as he was concerned, he would give
us a free hand. he thought we should
control the Pacific, I asked him whether
he expected us to turn back islands for
which we had sacrificed blood and treasure
to countries that could not defend them --
but got no comment. I emphasized this as strongly to the
business and Conservative Party leaders as
to the Labour Party leaders, Bevin and
Morrison, I cited not only the low wages
in England but the need to raise the
standards of all India, of rubber
plantation workers, of the peanut grower:
in Africa. Instead of asking us to lower
tariffs, I suggested they raise their
standards and make tariffs
unnecessary. Churchill's Sincerity Through all our discussion, I was
impressed by the Prime Minister's
frankness and sincerity. During all the
years we have been friends -- in war, and
peace, and war again -- I have never known
him to make a 'sharp' or ignoble proposal.
I found him overworked, preoccupied with
winning the war. Mr. Churchill's frankness can perhaps
best be illustrated by his famous
statement that he had not become his
Majesty's first minister to preside over
the liquidation of the British Empire. For
my part, I sought to be equally frank,
taking the position, as ex pressed in my
report on War and Postwar Adjustment
Policies, that 'no American should accept
a portfolio to liquidate American
living Through all our talks I saw no
irreconcilable difference which would
prevent the harmonizing of these two
aims. In conclusion, the first need is for a
focus point within our government for
examination and decision-making in all the
many peace problems. Through some such
body as the Advisory Peace Council an
integrated program can be formulated for
recommendation to the President embodying
the minimum we will insist upon and the
maximum we are prepared to give for it,
Thus there will be brought to bear on the
conditions of peace that we shall require
our full military and economic
strength. Bernard M
Baruch | 
write to David
Irving