840.50 Recovery/8–147: Telegram
The Ambassador in France (Caffery) to the Secretary of State
3065. For Lovett from Clayton and Caffery. We believe there is reason to draw some encouragement from our conversations the past few days with a number of delegates to the Paris Conference on European Economic Cooperation. It was noted that members of the Executive Committee did not hesitate to wade into such questions of substance as multilateral elimination of quota restrictions and progressive reduction of tariff barriers with a view to reaching a customs union.
On the monetary front, Governor Monick of the Bank of France showed us a draft formula, already considered at a ministerial level in the United Kingdom, France and the Benelux countries, under which the participating countries would undertake:
- 1.
- To make the necessary internal financial and monetary measures (budget balancing, realistic exchange rate),
- 2.
- To establish transferability of their respective currencies for all current transactions among themselves (thus eliminating intra-European exchange controls except for capital movements),
- 3.
- And, ultimately, to establish convertibility into gold or dollars of net accruals of member currencies.
- (It is, of course, at this point that the United States comes into the picture and we have cautioned our friends that Washington has been thinking largely in terms of commodity assistance).
In considering the foregoing it should be kept in mind that the home governments which have not been exposed to the contagion of the Paris meeting may not be as advanced in their thinking as are their respective delegates, and that any joint monetary plan might in its earlier stages be limited to such countries as Britain, France, Benelux and Italy.
Finally, a thought-provoking consideration was advanced by the Netherlands delegate who said that, if it should prove possible to have an assistance agreement concluded between the US and the participating countries as a group such an arrangement would prove to be a powerful catalytic agent in welding the western European economies into a unit.
[Page 343]Sent Department as 3065, repeated Berlin as 283 and to Moscow and Rome by pouch. Copy held Paris for Douglas. [Clayton and Caffery.]