851.51/2–446: Telegram

The Secretary of State to the Ambassador in France (Caffery)


573. For the Ambassador. The Dept has followed with interest and has found of value your series of telegrams concerning the efforts of the new French Govt to cope with the serious financial and economic situation in France.

In view of the fact that your telegrams and subsequent press reports have indicated both a desire on the part of the French for a large scale Brit type loan from the US and a fear that, due to the change in the French Govt, the credit policy of the US Govt might be more restricted than otherwise, the following outline of Washington [Page 410] thinking on this matter is given for your confidential background info and for your comment.

An approach to Congress for a credit to France along lines of Brit loan is not practicable.
The Depts views on French credit needs have not been adversely affected by the change in the French Govt. On the contrary, the Dept is hopeful that the new French financial and monetary policies will be implemented in such a manner as to strengthen materially France’s financial position and to increase the prospects for the future servicing of credits from the US.
Principal reliance for future reconstruction credits is placed in the facilities of the International Bank for Reconstruction and Development.
Pending the organization of this institution, France will have available, in addition to its own resources in gold and foreign exchange, the recently granted Ex-Im Bank credit of 550 million dollars.
The US Govt will also explore the possibility of the need for another Ex-Im Bank credit for this interim period. Present indications are that an amount up to one half billion dollars might be available.
The Dept and Treasury will also want to discuss with the French representatives the settlement of amounts due for civilian relief supplies (Plan A)15 and for North African supplies. In as much as it was originally planned that these sums would be settled by cash payments, Dept would appreciate receipt your views question whether French Govt will request long term payment plan along lines 3–C credits.16

The Dept suggests that, in your discretion, you informally discuss with Gouin,17 Bidault18 and Philip19 the following:

The US Govt is prepared to discuss French reconstruction needs in accordance with the exchange of letters of Nov last.
The hope is expressed that discussions which began some months ago in regard to double taxation and equality of treatment for American property losses in France may be concluded at the earliest possible moment.
The following tentative agenda is suggested for the overall financial and economic discussions:
US Companies in France
Commercial Policy
“Proposals for Expansion of World Trade and Employment”
General return to Private Channels of France–US Trade
Quantitative or exchange restrictions on imports and exports
Financial Arrangements
French need for credits and proposed utilization
Lend-Lease Surplus Property and Claims
Settlement or Lend-Lease
Disposal of Surplus Property
Payment for Supplies
Civilian relief supplies (Plan A).
North African supplies
Normandie20 and other claims
Motion Pictures
The US Govt is following sympathetically the efforts of France to solve its financial and economic problems and desires to give every appropriate assistance to the development of a sound reconstruction program.
The discussion of the financing of such a program should include a thorough exploration of (a) France’s own exchange availabilities (b) measures which France might adopt unilaterally to obtain a reasonable amount of direct foreign investment and to aid in the rapid recovery of her important tourist trade and specialized export industries (c) utilization of credits already granted by US (d) possible recourse to International Bank for long term reconstruction needs (e) need for an additional Ex-Im Bank loan pending availability of (d) above.
In this connection it should be pointed out that principal reliance will necessarily be placed on the International Bank for large scale reconstruction loans. The US Govt has made the largest subscription to this organization and it is anticipated that the larger part of the securities issued by or guaranteed by the Bank will be floated in US.

The Dept would appreciate the receipt of a telegraphic report in regard to reaction of the French Govt to the foregoing as well as your own comments.

  1. Plan A related to the provision of civilian relief supplies for liberated areas by the combined Allied military authorities in Western Europe and the Mediterranean under financial arrangements agreed to by the United States, United Kingdom, and Canada. For documentation, see Foreign Relations, 1945, vol. ii, pp. 1059 ff.
  2. The 3(c) agreements (from section 3(c) of the Lend-Lease Act of 1941, 55 Stat. 32, as amended) provided for a continued flow of industrial equipment and supplies to certain European countries after the end of the war in Europe even though use of such materials was no longer related to the defense of the United States. For texts of agreements between the United States and France respecting mutual aid, signed at Washington on February 28, 1945, see 59 Stat. 1304.
  3. Félix Gouin, President of the French Council of Ministers and Minister of Defense.
  4. Georges Bidault, French Minister for Foreign Affairs.
  5. André Philip, French Minister of National Economy and Minister of Finance.
  6. For documentation on the requisitioning by the United States of the French vessel Normandie on December 16, 1941, see Foreign Relations, 1941, vol. ii, pp. 533 ff.