Office of the Historian

840.50 Recovery/9–2048

Memorandum by the Assistant Chief of the Division of Western European Affairs (O’Shaughnessy)

secret
[Washington,] September 20, 1948.

Memorandum for the Files1

In Toeca 358, September 14, from Paris, ECA Representative Bruce strongly recommended that ECA franc counterpart funds be made available to the French Government in order to help Prime Minister Queuille avoid having recourse to inflationary financing in connection with his economic and financial program. Ambassadors Harriman and Caffery concurred in Mr. Bruce’s recommendation.2

Aside from considerations involving the use of counterpart funds to be decided by the Administrator, the proposal also had political implications i.e. whether it was sound at this juncture to bolster the Queuille government by making these funds available to it.

It is believed that

1)
the measure (as proposed) would tide over the present government while it was endeavoring to put into effect certain necessary financial [Page 660] reforms. (The release of these funds would, of course, be contingent upon certain conditions being met, as stated in Toeca 358) and
2)
refusal to accede to the French request probably would lead to the downfall of the government at a time when the Berlin situation is extremely critical and Moscow conversations are still proceeding. Such action would obviously not be in the interest of this government or of the other two concerned.

  1. Footnote in the handwriting of Wayne G. Jackson, special assistant to the Director of the Office of European Affairs: “Note: The above follows the thoughts of J. D. Hickerson when I discussed the matter with him.”↩
  2. On September 27 the ECA Mission in France delivered to the Ministry of Foreign Affairs a letter stating the agreement of the United States Government to the financial measures proposed by M. Queuille (telegrams Toeca 375, September 20, and Toeca 393, September 27; AID Files, Mutual Security Agency, 53A278, Box 9).↩