Foreign Relations of the United States, 1948, Western Europe, Volume III

840.50 Recovery/2–748: Telegram

The Ambassador in France (Caffery) to the Secretary of State

secret
us urgent

Paris, February 7, 1948—5 p. m.

703. For State and Treasury.

1. Le Norcy has informed us that an informal meeting of representatives of signatory countries to multilateral compensation accord (France, Italy, Belgium, and Netherlands) is being planned for around February 25 in Paris. Purposes of meeting would be (a) to attempt to devise more practical procedure for use of “second category” offsets (those increasing certain balances or creating new balances), (b) to evaluate possible results of immediate injection of small amount of external aid into offset system, and (c) to initiate study for preparation of report on manner in which ERP aid could most effectively promote intra-European trade. This latter purpose would include exploration of possible extension of existing offset mechanism in connection with ERP.

2. Before making final arrangements, Le Norcy is anxious to know whether US administration perceives objections to early recommendations on use of American assistance or preferably whether US could give some encouragement to study. Our tentative comment to Le Norcy were that there may be difficulties in an early formal CEEC recommendation but that a technical report in view of experience should be useful. Please advise urgently.

3. In view of NAC decision on multilateral clearing mechanism,¹ we assume you will wish study by European countries to proceed. If meeting is scheduled, we might as technical advisors, suggest exploration of use of offshore purchase program and of counterpart in local currencies of American assistance. Your comments are requested.

4. A full meeting of delegates is scheduled to be held at Basle in March to deal with problems directly concerning offset operations and tentatively to review in larger group possible results of February meeting. Le Norcy is confident that small amount of offsets will take place in February even though BIS was not assisted by meeting of delegates. He commented that a real difficulty was that governments of countries concerned had in many cases not encouraged central bank to do everything possible. As a result authorities of central banks were very cautious in conserving key balances. This is particularly true of Scandinavian countries. In Le Norcy opinion, it would be most helpful if responsible government authorities were made aware of importance attached to this concrete evidence of European cooperation.

Sent to Department as 703; repeated to Bern as 7.

Caffery

1. At its meeting on November 8, 1947, the National Advisory Council on International Monetary and Financial Problems concurred in the recommendation that “the voluntary adoption of a multilateral clearing mechanism on the part of some or all of the participating countries would be regarded favorably by the United States as a significant effort toward self-help on the part of those countries …” (Lot 60 D 137 Box 1)