851.5018/9–2447
Memorandum of Conversation, by the Associate Chief of the Division of Western European Affairs (Wallner)
| Participants: | The Acting Secretary |
| The French Ambassador | |
| Mr. Wallner |
In a conversation lasting over an hour, the Acting Secretary and the French Ambassador discussed the food and financial crisis in France and the possibilities of meeting it within the next few months.
Food was the first subject, and Mr. Bonnet spoke of the absolute necessity for France to obtain further allocations of wheat and his intention to ask the IEFC for 500,000 additional tons. He said that every avenue was being explored but that it had not yet been discovered where the wheat was coming from. Mr. Lovett said he did not know how or where the French could obtain extra allocations of wheat by December. Mr. Bonnet suggested that one place it could be found was in the large amount of wheat earmarked for the British and American zones of Germany, adding that the French people could never understand how it was that the German people were getting larger bread rations than they. Mr. Lovett replied that bread now formed a larger part of the German ration than it did of the French, that the total German ration was much lower than the French and, in his opinion, it would not be feasible to reduce the wheat allocations for the combined German zones. The French Ambassador did not insist further on this point, but he did indicate some skepticism that, the Germans would really be worse off this winter than his own people.
Mr. Lovett then referred to the intensive studies now under way in this Government for determining what substitute foods, such as dried fruits, etc., could be procured to take the place of wheat. He offered the information in confidence to the Ambassador that the President was giving serious consideration to calling on the American people for voluntary restrictions, such as two meatless days a week, for the purpose of lowering the prices of meat and poultry and freeing for export the grain that might otherwise be used to feed stock. He assured the Ambassador that the latter’s concern over the food crisis in western Europe did not exceed the Secretary’s and his and that every means was being looked into to meet the emergency. He added that he could say nothing further at this time since the President had just returned and final decisions had not yet been taken.
Turning to the financial crisis, the French Ambassador reviewed the perilous situation which France would face when she ran out of dollars next month. He said that France had stopped importing raw materials and was using all her remaining dollars for wheat and coal. He said [Page 759] he was hopeful that dollars might be found to continue these essential imports but pointed out that unless the importation of raw materials, such as cotton, etc., could soon be resumed, French industrial production would slow down to almost nothing before the Marshall Plan could be implemented and so affect, as far as France was concerned, the production assumptions upon which the Marshall Plan was based. He said that by adding together all the bits and pieces of dollar assets France might, if she could get an Export Import Bank Loan, be tided over and be able to resume purchase of raw materials before the Marshall Plan came into effect.
Among the bits and pieces he mentioned the German looted gold, unpaid items owed by the US Army to the French Government on procurement account, and finally the earmarked Japanese gold now in Tokyo. Mr. Lovett replied that he thought the first two items were on the way to rapid settlement but that the complications involved in the latter might delay matters so that a decision could not be reached in time to be of any assistance during the interim period. Mr. Bonnet pointed out that the Tokyo gold amounted to more than $37 million and that he must press the Acting Secretary for a rapid decision on this problem. Mr. Lovett promised that the matter would be looked into immediately and requested Mr. Wallner to see that this was done. Mr. Lovett then referred to the Ambassador’s suggestion concerning an Export Import Bank Loan and said that to his regret he would be obliged to disappoint him. He explained that he had called upon the directors of the Export Import Bank only last week with the same thought in mind and that he had been turned down. The directors had told him that under the present franchise and their agreement with the Appropriations Committee of Congress they could make no further loans to France, which had received a large amount already from the Bank and which simply had no further collateral to offer.
Mr. Lovett took pains throughout the conversation to impress upon the Ambassador the Secretary’s and his awareness and deep concern, which they had set forth at length to the President, regarding the implications for the US and for the world of the food and financial crisis in western Europe.