851.51/12–247
Memorandum by Mr. Ivan B. White of the Division of Western European Affairs
Subject: French Dollar Position Through March 31, 1948
As projected in its presentation to Congress, the Department estimated that $328 million in assistance, coupled with the complete utilization of France’s available resources, would meet France’s minimum dollar requirements for the period December 1, 1947 to March 31, 1948.
The French Government, in commenting on this estimate, has informed our Embassy, Paris, that assistance in the amount estimated would still leave France with an uncovered dollar deficit for the period of $143 million.
Examination of the French justification for this estimate indicates that they have included in their expenditures certain items which the Department believed should be deferred. Nevertheless, it appears that [Page 809] there will be some uncovered deficit for the period, arising from the following:
1. French dollar resources on December 1, 1947.
The “Blue Book” estimate on this was $153 million. The French Government (Embassy’s telegram No. 4905 of Nov. 151) stated that its actual balance on December 1 would be only $137 million, pointing out that Department’s projection made no provision for actual October–November expenditures for administrative and miscellaneous purposes, which in practice amounted to about $16 million.
2. Expenditures for French zone for other than food imports.
On grounds the French Government had not given adequate explanation of expenditures for French zone in Germany (other than food), the Bureau of the Budget reduced Department’s request by $17 million. In view of the fact that these goods are in course of procurement, France will actually be spending dollars for these items and the amount mentioned will not, therefore, be available to meet other expenditures projected in the Department’s presentation as coming from French dollar resources.
3. Minimum Working Balance.
The Department’s projection assumed that all available French dollar resources would be utilized during the period and that the stabilization fund balance at the end of March would be zero.
The French Embassy here has pointed out that US relief expenditures, other than for Commodity Credit items, are handled on a reimbursement basis and that in the initial step the French must make purchases with their own dollars. This means that during the aid period the French must maintain a revolving fund, estimated at $40 million, to finance initially certain imports included in the US procurement program.
4. Conclusion.
The conclusion reached is that, assuming French ability to defer liquidation of certain obligations, there will still remain a minimum need for new money during the interim aid period of $70–75 million if economic retrogression is to be avoided. This uncovered deficit would be increased by the amount that Congress might reduce the interim aid appropriation.
It is suggested that all avenues of possible financing be explored, including a second gold pot distribution and plans to obtain for liquidation French-owned assets in the United States, previously undeclared.
- Not printed.↩