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Sunday, May 23, 2004

Letter from Bernard Baruch to President H S Truman, April 20, 1945, on his visit to London and meetings with the prime minister Winston S Churchill and others

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[From Baruch papers, Princeton University, Seeley Mudd Library]


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:

  1. 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.
  2. Insist firmly they do the same thing.
  3. 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:

  1. by requiring the British to specify in detail what they want the money for, and
  2. 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

The above material has been researched by David Irving for the third volume of his Churchill biography, "Churchill's War", vol. iii: "The Sundered Dream."

© Focal Point 2004 F Irving write to David Irving