840.50 Recovery/10–1248
The Director of the Office of European Affairs (Hicherson) to the Coordinator of Foreign Aid and Assistance (Labouisse)
The following is submitted as of possible assistance in talking with ECA.
France is unquestionably in the throes of galloping inflation, with little prospect that the present coalition government can either agree upon or get acceptance of the drastic measures necessary to stop it. This situation is unquestionably increasing the chances of De Gaulle coming back to power.
Until the current series of crises began last July the Third Force had been making really good progress toward putting France’s house in order. Industrial production, particularly steel production, had been increasing at a rapid rate. The clarity with which the Communists had revealed their hand, both in their opposition to ERP and the political strikes of 1947, had resulted in a large proportion of non-Communist labor breaking with the Communist controlled CGT. The franc had been partially revalued on a temporary basis. To these favorable factors has been added an excellent harvest.
The unfavorable factors are political and psychological. The new Constitution, thanks to Communist efforts in its drafting, makes it very difficult to have any stable government in France. The French are temperamentally selfish, individualistic and reluctant to cooperate with anyone, French or otherwise. French democracy, at least since 1870, has been handicapped by the multitude of splinter parties and instability within the larger parties. Since the First World War the French have been devitalized, since the Second World War they have been demoralized and exhausted, and for the last year they have been in a state of acute jitters.
[Page 667]The primary need in France is the restoration of confidence—confidence in their government, in their security and in the franc. We are in the process of helping them, through ECA and security arrangements, toward restoration of confidence in their money and security. There is little anyone outside France can do toward obtaining a French Government in which anyone can have confidence.
It is very doubtful whether De Gaulle is the answer. His previous administration was not notably successful. De Gaulle devotes much energy to promoting the mystical (and illusory) idea of France as a great power and brags that he has no real program. He talks about economics as a woman talks about carburetors. His advisers are ill-assorted, incompetent, self-seeking and unstable.
The best argument against our attempting to assist or expedite de Gaulle’s return to power is furnished by increasing evidence that the Communists are seeking to do exactly that, in the belief that de Gaulle will not be able to solve France’s economic problems and that the resultant collapse will bring them into power.
Moreover, the non-Gaullist, non-Communist majority of the French people would look upon our open support of the General as a totally unwarranted interference in French internal affairs and would not hesitate to hold us responsible, not only for his possible final failure, but for every false move which he might make. (His past record leads one to believe that there will be many).
We will also be put in a position of having brought to power an individual whose ideas on many of the important issues of world policy differ radically from ours. (The German question, colonial policy, European defense, etc., are examples).
All this adds up to the unpleasant fact that there is no apparent alternative to our continuing for the present our policy of assisting the French Government even though it seems to be losing rather than gaining ground insofar as ECA objectives are concerned. We must recognize that Congress is going to be most reluctant to authorize aid to France on the present scale unless the situation in France has materially improved by next March or April. We must be careful in warning the French of a possible reduction or cessation of ERP for France lest, in their present state of jitters, they merely throw up their hands and give up. At the same time we can and should warn them that, while the form and composition of the French Government is a matter concerning which we can offer no advice whatsoever, they have darn well got to produce something workable, relatively stable and strong enough to deal effectively with French economic problems by next March or April or American aid will in all probability be reduced.