751.00/9–2249: Telegram

The Ambassador in France (Bruce) to the Acting Secretary of State

top secret
priority

3947. For the personal attention of Secretary and Under Secretary. Please pass to Foster ECA. The Premier sent for me this afternoon. Schneiter, Acting Foreign Minister was present. Queuille said he intended to talk absolutely frankly, stated that he felt his position and that of the government was less favorable today than it had been even during crucial period last year. Last year, he had possessed certain advantage in that economic situation of country was so desperate that he could carry through measures which were evidently for best interest of country as a whole by threatening to pose them on a vote of confidence. Such a situation no longer exists. Although the economic position of the country is better than it was a year ago political considerations of an international character, aside from immediate difficulties in regard to the budget for 1950, and demands for a rise in wages are of such a nature that the government had greatly lost prestige and he cannot rely on maintaining it in power, if France is subjected to any further disappointments and unexpected shocks. He went on to say that there had recently been three major incidents which had caused a large amount of questioning and, in the case of the last two, of bitterness in the country.

[Here follow sections concerning the division of ERP aid and the devaluation of the British pound, in which Bruce reported Queuille’s feeling that French interests had been sacrificed for British or not considered sufficiently. These sections are printed in Volume iv .]

The third incident and the one to which he attached the greatest importance, as being that likely to be final straw that would break the French Government’s back, was the question of the devaluation of the German mark without any provision being made for bringing about a single price for German coal for domestic use and for export. He had heard this afternoon of the result of the meeting on the exchange rate in Germany. He understood that the meeting had broken up after US representative had insisted upon a 25 percent devaluation and had stated an unwillingness to discuss the price of coal.

He had accordingly instructed François-Poncet that as far as France was concerned, no agreement should be reached by the French representative without the express assent of the French Government. He said that he had understood that even the Germans had initially only asked for a devaluation of 20 percent and that he and his advisers were astounded that the Americans were insisting upon a higher rate than the Germans themselves had demanded. He stated that his government [Page 452]felt that a devaluation of 10 to 15 percent was a proper one but they had unwillingly decided, in the interest of bringing about agreement, to accept a 20 percent devaluation provided a unitary coal price for export and domestic German consumption was coupled with it. Beyond this he said neither he nor any other head of a French Government would be able to go.

He said that the French had loyally supported programs designed to improve economic conditions in Germany, even when important segments of French opinion were opposed to such actions. He stated emphatically that he was absolutely unwilling, and in this feeling he was supported by his Cabinet unanimously and would be by French public opinion, to consent to a set-up whereby because of this drastic devaluation and a subsidy in effect out of Marshall Plan funds, the Germans would be given an unfair competitive advantage, not only over France but other European nations. He said that for a long time his government had done everything possible, not only to honor its agreements in connection with Marshall Plan, but had even taken dangerous steps, to bring about a freer and more effective economy in Europe and that politically he had sponsored a friendly attitude towards Germany which it had been very difficult to persuade the French people to endorse.

Now he had come to the end of his ability or his government’s to make a further concession of such a nature which was so obviously both to the advantage of Germany and to the disadvantage of France. I might say in conclusion that I have never seen Queuille (who is usually so calm) so disturbed and apprehensive. There is no question but that he regards the situation as being of the utmost seriousness for France and for the position of his government.1

Sent Department 3497 [3947], repeated London 647, for Holmes, Frankfort 61 for McCloy.

Bruce
  1. On September 21, de Margerie had handed Byroade an aide-mémoire, outlining the French position on devaluation of the mark in substantially the same terms. A copy of the aide-mémoire and an English translation are in file 862.5151/9–2149.