ECA message files, FRC 53A278, Paris: Telegram
The Chief of the ECA Mission in France (Labouisse) to the Administrator for Economic Cooperation (Bissell)1
Toeca 1335. Fol is translation of ltr which Amb Harriman recd from FinMin Mayer yesterday and which he has asked me to transmit to Wash:
Begin translation. Ministry of Finance, Paris October 22, 1951. My dear Averell, I am writing to you personally to bring to your urgent attention the extremely serious situation in which the French Govt will very shortly be placed with respect to our possibilities of imports from the dollar area.
It is my understanding that the conversations which had been decided upon in principle at the time of my visit to Wash2 and had been scheduled to take place in Paris on October 20 or thereabouts have been postponed for an indefinite period and for reasons of which I am unaware.
I believe that during our last conversation I expressed myself clearly on one point: Namely, that the 1951–1952 import program is a key element in any econ and financial policy, since it will condition the possible level of French production and the armament effort.
Inasmuch as we had no idea early last summer what decisions Congress might make, my predecessor had taken the risk of authorizing for the third quarter of 1951 an import program which is currently under way; in addition, there is the increase in coal imports as a result of additional requirements, which will be met to within about 300,000 tons.
As was expected, these purchases have resulted in a substantial decline in our reserves. Excluding gold holdings of the Bank of France, our reserves are now down to $165 million.
You will appreciate that I cannot wait any longer before drawing up the 1951–1952 import program. It will now be advisable to limit the program to our real possibilities in the absence of any precise assurance with respect to the additional dollar resources which we can expect from the United States Govt and in view of the fact that the talks which were supposed to be devoted to this matter have been postponed without my being able to see the reasons for the delay or have any idea of when more info will be forthcoming.
I felt it my duty to lay the matter before you because of your dual role as chairman of the temporary comite of experts3 and as [Page 431] head of the Mutual Security Administration, which succeeds ECA. At the same time we cabled Henri Bonnet to ask him to press home the point that we have recd no reply to the memo which we submitted in both Paris and Wash at the end of Aug on the probable situation of our dollar balance of payments during the year 1951–1952.
Obviously I shall be forced to propose to the govt a considerable reduction in our purchases. There is no need for me to stress the serious internal consequences of such decisions, which will also affect our defense effort to a certain degree. Such decisions are all the more regrettable for the reason that any reduction in imports will have an unfavorable effect on the domestic price level, which on the contrary warrants an increase in imports.
I have already ordered my staff to draw up a reduced program and to study the consequences which such a program implies.
The memo of Dec 18, 1950 provided $200 million in US aid toward fulfillment of the French defense program. This aid was to cover the first half of calendar year 1951 and was specified as supplementing Marshall aid. In the memo and the conversations which preceded it, the United States Govt had also made a moral commitment to continue this aid up to an amount of approx $200 million for the second half of 1951, subject to congressional approval of the necessary appropriations.
Since this condition is now realized, I consider myself justified in referring to the commitment made to the French Govt and on the basis of which the French Govt asked and obtained from Parliament the voting of substantial appropriations and fiscal resources under the French military budget for 1951.
I am also obliged to point out that since July 1, 1951, France has recd no econ aid funds whatsoever from the United States.
I feel that you will have no objection if I send copies of this letter to Messrs Bruce and Labouisse. I have already called their attention to these same questions. Believe me, my dear Averell, Yours most sincerely, R. Mayer. End translation.