851.51/9–1047
Memorandum by Mr. Ridgway B. Knight of the American Embassy in France1
Memorandum of Conversation Between Mr. Lacoste, Minister of Industrial Production, and Messrs. Wolverton, Macy, Keogh, and MacChesney
Mr. Lacoste started by defining briefly the scope of his Ministry, which he said was the Ministry of and for industry. Its primary interests are the basic power generating industries: coal, electricity, gas, motor fuels; but, he added, his Services were also interested in iron and steel, light industries, and even the manufacture of luxury products. He said that domestic commerce also fell within his realm while of course foreign commerce came within the field of the Ministry of National Economy.
Answering a question by Mr. Wolverton as to the measures taken by France to increase her coal output, Mr. Lacoste drew the attention of the Committee to the fact that during the pre-war period French production was never adequate for her needs and that she had had to rely constantly on imports of coal to satisfy one-third of her needs. He said that during the German occupation coal production had been reduced very materially but that since France’s liberation production has increased from about 70% of the 1938 figure, to a quantity now slightly in excess. He said that as both financial resources and time [Page 743] had so far been lacking to re-equip the mines, the simplest solution had been used: man-power. Miners had been given special food rations and various other incentives. Now, he said, the French miners’ output was 75% of the pre-war per capita production “which compares favorably with that of other countries”. “Now, unfortunately,” said the Minister for Industrial Production, “our available man-power will be seriously reduced. The Polish Government has called upon Polish miners in France to return to Poland, and France is about to lose her German prisoners of war. To counterbalance this state of affairs, the French Government has launched a recruiting drive to obtain additional miners in France. The results have been fairly encouraging, but now France has reached the point where, in order to increase production, she must at last re-equip her mines.”
Speaking about equipment of all kinds, Mr. Lacoste drew attention to the fact that France’s industrial plant had not only suffered severely during the war when, in addition to destructions, maintenance was impossible; but also that even in pre-war France equipment had a tendency to be antiquated and in poor repair. He said that this unfortunate condition also prevailed throughout the rural areas where the peasants lacked not only modern mechanical agricultural equipment but also chemical fertilizers. “It has been my personal experience,” declared Mr. Lacoste, “that French businessmen, workers, artisans and peasants are anxious to work and just as capable as before the war, whenever they have the equipment to do so. What is lacking is this very equipment.”
Answering various questions about France’s electricity production and requirements, the Minister stated that France had long had a program to increase her generating capacity and that this program was being pushed with the utmost vigor. He drew attention to the new Genessia dam, the largest in Europe, which will start operating this year. In addition to this very large undertaking, he said that the current phase of this program largely centered on the development of a number of hydro-electric sites in the Massif Central and in the Pyrenees. Mr. Lacoste said that now that France’s power companies had been nationalized, the various companies were being integrated together for more efficient production. He mentioned that this year it would be possible to release 20% of the personnel. Along technical lines, he said that old plants were being modernized and more particularly that steam generators were being rebuilt to supply more power from the same amount of coal consumed. He mentioned that the peak daily load in 1946 had been 84 million kwh; that in 1947 this had increased to 90 million kwh; and that if capacity could be increased to 100/120 kwh, this would take care of all of France’s needs, based on her present industrial and other electric equipment.
[Page 744]With reference to nationalization of French industries, Mr. Lacoste emphatically stated that the French Government’s policy was merely to nationalize basic industries considered throughout Europe as “public services”: coal, electricity, gas, railroads; and that on the contrary it was French policy not to nationalize all fields calling for competition.
Mr. Keogh then asked whether France’s fiscal and tax policies might not be retarding her industrial come-back. Mr. Lacoste answered that for the time being he did not think so, as France’s available coal, iron and foreign exchange did not permit re-equipment at a faster rate than the present one. However, he also said that he was sure that these fiscal and tax policies would exert such a retarding influence if the wherewithal was available. “I favor a complete overhaul of the entire fiscal and tax set-up, and, gentlemen, this may be close at hand.” Mr. Keogh also asked whether the French Government’s wage and price policy did not exert the same influence. Not answering the point directly, Mr. Lacoste said that of course it had been found necessary to increase wages periodically, which put additional masses of paper money into circulation at a time when there weren’t sufficient consumer goods to absorb the supply of currency. This in turn resulted in increased prices and in the vicious circle which all have noted in France’s economy.
Answering a question by Mr. Macy as to hoarded money, including gold, the Minister said that while of course this was out of his field, it was his belief that gold as well as paper currency was being hoarded throughout the country, and to a large extent by the peasants. “If we manage to stabilize our currency, this will of course result in the return to circulation of these hoards both in paper and in specie.”
- Transmitted to the Department as enclosure 2 to despatch 9585, September 10, from Paris.↩