I want to describe in this report, as clearly and briefly as I can, the position in which this Conference now finds itself.

The general attitude of mind of the delegations here, in face of the economic difficulties confronting Western Europe over the next few years, is one approaching desperation. The fact is - and the reports of the Technical Committees have made it only too clear - that without outside aid of a magnitude which only something like the Marshall plan can supply, Europe is headed for economic collapse and social revolution in the near future. Even if this outside aid is forthcoming, it is more than doubtful whether Western Europe can stand on its own legs after 1952 without reduction in living standards which Governments already faced with dangerous internal Communist drives can only contemplate with the utmost dismay. It would be difficult to exaggerate the extent to which this realisation of the general position of Western Europe is [to] shrink from the idea of a Western European bloc - Norway and Sweden in particular - have come to be noticeably influenced by it since the beginning of the Conference.

The second point is this. During the past ten days there has been close contact with the Americans in connection with the work of the Conference. They have been shown the reports of the Technical Committees and the first drafts of certain sections of the final report. Most of these conversations with the Americans have been conducted by the Executive Committee, but the Chairmen of the Technical Committees have also taken a part. Mr. O'Connell,¹ for example, saw the Agricultural Attaché at the American Embassy in connection with the report of the Committee on Food and Agriculture.

The attitude of the Americans in these conversations is extremely 'tough'. The British and Italian delegations expressed to me quite independently their dismay and resentment at the dictatorial tone which the Americans are inclined to adopt. Generally speaking the Americans have expressed themselves as being completely dissatisfied with the results of the Conference to date, and that on two main grounds. The first is that the reports of the Technical and Balance of Payment Committees mount up to a figure for the proposed American aid (about 30 billion dollars) far higher than Washington ever contemplated or Congress would be likely to accept. The Americans want the figure brought down to something nearer 15 billions for the four year period of the proposed aid programme. The second American objection is that the first drafts of the final report do not disclose any firm determination on the part of the participating governments to abolish obstacles to trade between themselves and [to] work together towards the solution on a collective basis of the long term economic problems of Western Europe. They lay particular stress in this connection on the necessity of something being done to meet the views of that section of opinion - principally Republican opinion - in the United States which maintains that a European Customs Union is the only practical solution of the European economic problem. To illustrate the 'toughness' of the American attitude, I might mention that the American negotiators rejected in toto the report of the Conference's Technical Committee on Timber on the ground that it asked for large timber supplies without giving adequate information what they were to be used for.

The British, Italian, Portuguese and other delegates have expressed to me the view that, irritating as the attitude of the American negotiators is, their criticisms are undoubtedly actuated by a desire to ensure the support of Congress and American public opinion for the aid programme and that, that being so, the Conference has really no other course open to it than to take serious account of them. There is no other reasonable course. What I want to emphasise is that, from now on, the work of the Conference will consist not so much of negotiations between the sixteen countries represented here as between the Conference itself and the American negotiators - that is to say, William Clayton² and Ambassadors McCaffrey³ and Douglas,⁴ who are to be joined today by Messrs. Kennan and Bonestal⁵ of the State Department. There is a further point. The American attitude being what it is, the final report is apt to contain much which the participating governments themselves would never agree to if they had a completely free choice but which many of them will agree to rather than endanger the acceptance of the report by Congress and American opinion and expose themselves to the charge of frustrating an initiative upon the success of which the welfare and happiness of the 200 million people in Western Europe has now come largely to depend.

The sections of the report dealing with the Customs Union idea and with the development of inter-European trade are now about to be taken up by the Conference. I will submit the texts as they become available. I don't anticipate that they will suggest anything in the nature of definite commitments, but they are certain, in my opinion, to indicate a general willingness, if not to accept, at least to consider American views about Europe's trade and the way to achieve European economic viability. Whether the texts suggested can be reconciled with our views and policies remains to be seen. But it would be desirable, I imagine, that they should be considered not only from that point of view, but also from the point of view of what is said earlier in this report, as well as of our broad national interest in preserving and encouraging this present Western European grouping and facilitating the grant of the American aid required to save Western Europe from collapse.

A final word. The question what steps should be taken in connection with the adoption and signature of the final report is to be discussed by the Co-operation Committee at an early date. General opinion seems to be in favour of the full Conference being re-convened. In accordance with the Taoiseach's decision, I am continuing to advocate the view that the signature of a report of this consequence is a matter not for officials but for Foreign Ministers and I will express that view at the Co-operation Committee's meeting. If the Conference of Ministers were to be re-convened, I imagine that the meeting would be about the 10th September.