Foreign Relations of the United States, 1949, Western Europe, Volume IV

ECA Telegram Files, FRC Acc. No. 53A278, Paris Toeca: Telegram

The Chief of the ECA Mission in France (Bingham) to the Administrator for Economic Cooperation (Hoffman)

secret
priority

Paris, June 30, 1949—7 p. m.

niact

Toeca 1051. For Huse from Brown.

1. Following is text of press release which we plan issue 3 p. m., Paris time Friday, July 1:¹

Begin Text. The ECA special mission to France announces that the administrator of the Economic Cooperation Administration has agreed to the proposal of the French Government to utilize 20 billion francs of the counterpart of American aid for the effective retirement of national debt held by the French banking system, as is specifically provided for in Article IV of the Economic Cooperation Agreement between the Governments of the United States and France, dated June 28, 1948.

This release reinforces the French Treasury in meeting floating debt maturities which arise from a reduction in the French franc balances of foreign banks. This very desirable trend in France amounted to over 20 billion francs in the first six months of 1949. In addition to this improvement, the first half of the year should also witness a decrease in the floating debt held by the Bank of France and the domestic banking system. This should be compared with 1948, when the French Government borrowed about 60 billion francs from the banking system, although direct recourse to the Bank of France itself was brought to a halt.

The present release of 20 billion francs of counterpart should also be viewed as coupled with recent measures to finance accumulation of foreign currencies by the French exchange stabilization fund and to begin the creation of an appropriate relationship between internal credit policy and the balance of payments. Thus, it is seen that the objectives of the European Recovery Program are on the way to realization. Through her use of American assistance France is providing herself with real reserves—her working stocks of materials have been restored, production has reached record levels, the desired tempo of the modernization plan has been maintained, a high level of war damage reconstruction has been carried out, internal financial stability is in sight, and now through an increase—though still small—in earnings from her exports of goods and services, a beginning is made on reconstituting France’s international exchange position. Much, of course, remains to be accomplished; nevertheless, the fact that real economic progress has been made is undeniable. End Text.

2. Mission’s press release will be coordinated with French Government release. You will note that our release will not incorporate any statement by French Government, since French will issue own release. However, you may wish to consider including in your release some statement already made by French, for example, along lines last two paragraphs fourth semiannual Monnet plan report.

3. Please cable any comments you may have urgently.

4. Formal exchange of letters on release will take place July 1.

5. Text French Government release will be cabled soon as available.² [Brown.]

Bingham

1. The detailed technical discussions leading to this announcement were reflected in telegrams Toeca 1028 and 1029 from Paris, June 24, and Ecato 736 to Paris, June 27, not printed (ECA Telegram Files, FRC Acc. No. 53A278, Paris Toeca).
2. Not printed.