840.50 Recovery/7–3047: Telegram
The Under Secretary of State for Economic Affairs (Clayton) to the Under Secretary of State (Lovett)
3026. For Lovett’s Eyes Only from Clayton. Monnet and I dined together last evening, no one else present.
Monnet says that France is the key country in the implementation of the Marshall proposals, that two things must be done to bring about a satisfactory understanding between France and the United States in connection with such proposals: (1) The German problem must be settled; (2) France must put her financial and monetary house in order.
[Page 1012]We both agreed that no final settlement of the German problem could be made until after the CFM meeting in November but, meantime, conversations should be taking place on a rather high level and technicians should be at work.
I told Monnet that my own view is that the German problem, vis-a-vis France has three aspects: (1) security; (2) the political and economic power which the Ruhr gives Germany in her relations with her neighbors and (3) competition. I added that I sympathized with France regarding (1) and (2) but that I had no sympathy whatever for her position regarding (3) if I understood that position correctly; my understanding being that France would like to see the level of heavy industry in the Ruhr forcibly curtailed through the power of the victor in order that corresponding industries could be built up in France and other European countries either by removal of equipment from the Ruhr or otherwise.
Monnet said that while certain individuals in France probably had ideas on (3) such as I had indicated, he did not believe that the French Government or the French people entertained such ideas.
Monnet said that of course the French zone would be merged with the British and the American. I said that my view is that all Western Germany should be put under one administration with all zonal boundaries completely eliminated; that the Ruhr should not be internationalized or detached from Germany but that there should be an overriding international authority of which Germany would be a part, clothed with power of allocating production as between domestic and foreign.
I was delighted to have Monnet make his point number (2). He said that he is giving much thought to the subject, that he has discussed it several times with Bidault and has undertaken the responsibility of preparing a memorandum for the French Government on the steps which should be taken. He said in this connection that he thought it was highly important that a portion of the aid given to France by the US under the Marshall Proposals should consist of gold which could be used as a stabilization fund. I told him that this would be extremely difficult, that it was much easier to justify and support a program which supplies food to hungry people, coal to help heat their houses and operate their industries, cotton to clothe them, etc., than it was to supply gold, but that I certainly would not say categorically that it could not be done if a workable plan for putting the French financial, monetary and fiscal house in order could be devised.
I believe that Monnet is very close to Bidault and has considerable influence in matters of this kind.