840.50 Recovery/7–947: Telegram
The Ambassador in France (Caffery) to the Secretary of State
2725. For the Secretary and Lovett from Clayton. At a meeting this morning with Jean Monnet, head of the Cabinet Planning Commission, and Alphand of the Foreign Office, I reviewed with them, along the same lines as in my talks with Bevin, our views regarding the European economic situation and its relation to the Secretary’s Harvard address.
Monnet gave me a copy of a draft questionnaire which the French Government plans to present to each participant in the Paris Conference as a basis for developing a joint report to the United States. Draft is being transmitted by separate telegram. Monnet said that United Kingdom should frankly admit to conference its responsibility for failure of coal program in UK and Ruhr and that France should likewise take responsibility for failure of its agricultural program.
During conversation French raised three questions of special interest to Department:
(1) Monnet said that a member of his government was of the opinion that, while in some countries such as Great Britain (a) US grants for basic commodity imports and (b) international bank loans for reconstruction and modernization might be sufficient to assure recovery, in some other European countries, such as France, public finances were in such disorder that inflation could be arrested and production and distribution normalized only through massive imports of consumers’ goods. Inquiry was made as to whether, in addition to grants and loans, a “stabilization fund” could be established for this purpose.
I replied that the only measures we had in mind were, (a) and (b) above; that I believed that budget balancing was the principal additional instrument to be used to arrest inflationary trends; and that we recognized that in some cases such as that of Great Britain and France [Page 316] the supply of essential consumers’ goods had fallen to or below the danger point.
(2) Alphand raised the question of a possible conflict between provisions in the draft World Trade Charter and measures which participating countries might adopt to improve interchanges among European nations. He pointed out that European trade at present is largely conducted under a series of bilateral agreements which stipulate both import and export undertakings for specific commodities.
I replied, (a) that we regard bilateral and barter arrangements as restrictive to trade developments; (b) that on the other hand we approved of measures leading to a customs union in the Belgo–Dutch–Luxembourg pattern; and that I was confident that the Trade Charter as completed would not conflict with any European plan for interchanges if such a plan was based on sound economic principles.
(3) The French referred to the opening of the conference on July 12 and to the Secretary’s statement of extending “friendly aid in the drafting of the European program”, and inquired as to the means we had in mind for extending this aid. In reply I emphasized the European character of the plan and said that our drafting assistance would depend on what was requested of us.
Monnet suggested the desirability of establishing an agreed channel of liaison between the conference and the US, expressing the fear that otherwise the conference might be receiving divergent interpretations of the Department’s views.