Lot 60 D 137 Box 1 (18358)

Minutes of the Twenty-second Meeting of the National Advisory Council on International Monetary and Financial Problems, Washington, April 25, 194645

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Present: Secretary Fred M. Vinson (Chairman), Treasury Department
Mr. William L. Clayton, State Department
Mr. Emilio G. Collado, State Department
Mr. Henry R. Labouisse, State Department
Mr. Thomas B. McCabe, Office of Foreign Liquidation Commissioner, State Department
Mr. Herbert W. Parisius, Commerce Department
Mr. Marriner S. Eccles, Board of Governors, Federal Reserve System
Mr. J. Burke Knapp, Board of Governors, Federal Reserve System
Mr. William McC. Martin, Jr., Export-Import Bank
Mr. August Maffry, Export-Import Bank
Mr. Rifat Tirana, Export-Import Bank
Mr. E. M. Bernstein, Treasury Department
Mr. Harold Glasser, Treasury Department
Mr. Frank Coe (Secretary), Treasury Department
Mr. A. M. Kamarck (Assistant Secretary), Treasury Department

1. Proposed Credits to France

Presentation of Preliminary Results of Technical Committee’s Examination of French Financial Needs—Mr. Bernstein explained that the statement of Preliminary Results (U.S. Top Committee—French Negotiations Document No. 1) had been prepared and agreed to by the Technical Committee.46

Surplus Property Credit—Mr. McCabe summarized the current status of surplus property negotiations with the French: At the present time, there is over $1 billion original value in surpluses in France. If the French made an offer now for purchases in bulk, they might get a credit of several hundred million dollars worth. Sales are very active to other countries, and if the French stall there may not be more than $100 million left by the time the negotiations are completed. There is some opportunity for the French to purchase surpluses in the United States, but the total probably would not be as high as $100 million.

Political Considerations—Mr. Clayton said that for political reasons the State Department feels that as liberal assistance as is reasonably possible should be given to France at this time. In the discussion Mr. Clayton referred to an internal State Department memorandum47 which stressed the political importance of the loan, as viewed by the political officers of State. He said the Department wished an early decision, and believed that a decision against a substantial loan would be a catastrophe.

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Economic Considerations—Mr. Bernstein pointed out that the French goal of reaching the 1929 standard of living in 1948 was a modest one; 1929 was a generation ago and a country should be able to achieve that level with a modest effort. Further, the European industrial needs that used to be met by Germany will have to be filled by someone, probably by France and the U.K. if Germany is not to meet them again.

The Coal Problem—Mr. Eccles emphasized that France is so short of coal that existing facilities are not being adequately used. The question of coal supply, therefore, should be considered along with the financial problem. Mr. Bernstein agreed, calling attention to the conclusion of the Technical Committee that the coal supply is crucial.

Mr. Clayton said that coal is such a critical item that it must be assumed that the French will get the coal they need. In response to a request from Mr. Vinson, Mr. Collado informed the Committee that the State Department would prepare a memorandum for the Top Committee on this subject.

Amount of Assistance—Mr. Clayton said that French needs of over $2 billion might be met by an Export-Import Bank loan of $650 or $750 million and war settlements of $650 million in 1946–47 and that this would leave the World Bank with $800–$1000 million to be met by the World Bank in 1947–48. Mr. Collado felt that this was a large amount for one country to expect the World Bank to meet out of the perhaps $2 billion of lending that the World Bank would be able to do in 1947 and 1948. Mr. Bernstein pointed out that the World Bank would have $700 million in cash by June 30, 1947, which could be used for lending and replenished from the market.

War Settlements—Mr. Labouisse estimated that the French might receive $240 million of assistance from surplus property and ship credits. The French obligation on account of Plan A and cash reimbursable lend-lease totaled $315 million which might be cancelled or funded. The French had already paid $245 million on their cash lend-lease obligations. This amount might be re-allocated and considered as payment on inventories, post-VJ–Day shipments and Schedule II items. The remainder, or $130 million out of the $245 million, might be applied against the French 3(c) credit. Mr. Vinson requested that a memorandum be prepared on this subject.

Source of Loan Funds—Mr. Martin questioned the adequacy of the Export-Import Bank’s funds to make as large a loan to France as Mr. Clayton envisaged. Mr. Clayton thought that the funds could immediately come from the billion dollars which had been earmarked for Russia (for the discussion on this point, see below). Mr. Martin pointed out that with the present Export-Import Bank commitment [Page 434]and counting on cancellations and repayments, it might be possible to loan the French as much as $300 million. Mr. Clayton said that the nature of the negotiations that we started with the French were such that they obviously concerned more than $300 million.

French Internal Finances—In response to a question from Mr. Eccles, Mr. Bernstein said that it is easy to exaggerate the importance of internal financial developments. The French have done a remarkable job of production so far; they have pushed their coal production above 1938 in spite of their internal financial maneuverings in the past year. Monetary excesses may retard increases in production in France but they will not stop them.

[The remainder of this document is scheduled to be printed in volume I.]

  1. Also designated as meeting No. 4 of the U.S. Top Committee on French Financial Negotiations.
  2. These committee documents, not printed here, are in Department of State file 851.51.
  3. Not found in Department files.