The Ambassador in France (Bruce) to the Secretary of State
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.
First was the decision on the division of ERP aid whereby Great Britain became the most favored nation, and as a result the French felt that the interests of France, as well as those of other continental countries, had been sacrificed to some extent to British claims. He said, however, that he personally realized the great importance of maintaining the economy of Great Britain on a stable basis and would not comment further on this subject except to call to my attention [Page 662] the fact that the decision made had met with a very unfriendly response from the French public and had weakened his political position.
The second incident was the devaluation of the British pound which had gone well beyond in magnitude anything expected by the French and had been handled by the British in a way which showed “a complete lack of loyalty” to and trust in the continental nations. Schneiter added that the exclusion of France from participation in the three-power conference had wounded the sensibilities of the French people and had lowered the standing of the present French Government with its people. The Prime Minister said that the way in which the British decision was communicated to his representative Petsche was lacking even in the element of personal courtesy and that the necessity of France’s taking an overnight decision on so important a matter was highly regrettable. Had not France, he said, led the fight in favor of liberalization of trade and exchanges in Europe, measures which he believed were ardently desired by the USA?
The decision in regard to the devaluation of the British pound and the way in which it was activated had perhaps negated the attempts of France to bring about such liberalization, and France might have to retreat from the measures which it had taken in this regard, many of which were unpopular with the French people. The pride of the French had been, he said, deeply wounded by the British action and their resentment was turning against a government which had been treated in such a cavalier fashion by at least one of its associates. He said that at Strasbourg the French in response to what they believed we wanted, and in spite of British objections, had done everything they could to further a European economic and political union and that now many people thought that the British were being aided by the Americans in a policy designed to run counter to the idea of such a union.
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-Poncet1 that as far as France was concerned, no agreement should be reached by the French representative without the express assent of the French Government. [Page 663] 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 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.
Sent Department 3497, repeated London 647, for Holmes, Frankfort 61 for McCloy.
- André François-Poncet, French High Commissioner in Germany.↩