740.5/9–2350: Telegram

The Secretary of State to the Acting Secretary of State

top secret

Secto 42. Following tripartite meeting this afternoon1 and at French request Acheson and Marshall met bilaterally with Schuman and Moch.

Moch made presentation of problems involving activation of ten new divisions by July 1, 1951.

[Here follow details concerning the French military budget of calendar year 1951.]

He pointed out that he must present his military budget by the end of October and that it must be voted before end of year.

American aid already promised and contemplated consisted of end items many of which could not be delivered in time for him to meet his deadline for ten new divisions. Yet it had been generally agreed during today’s meetings that rapid activation of European divisions was essential.

[Here follows detailed comment by Moch on the amount of financial help needed by France to begin placing contracts for certain [Page 1395] defense weapons and to cover costs of basic infrastructure and essential raw materials.]

Acheson, while agreeing on urgency of solving French problem, said it raised many technical questions of both military and financial nature. For instance French military program must be approved by US military if US was to finance it. Secondly, US financial experts from various government agencies including Treasury and ECA must meet with French experts to clarify complex financial question. If both sets of experts agreed it might be possible to meet some of the French gap from already appropriated funds. It must be remembered, however, that most appropriated funds must be devoted to getting US military production pipeline going. It seemed that in order to finance rest of French financial gap we would have to go back to Congress. In order to lose no time, financial questions might be discussed by Petsche when he came here in early October.

Moch suggested that for military aspects he might join Petsche here about October 10 in advance of Defense Ministers’ meeting.

Acheson thought that sets of both financial and military experts should meet prior to arrival of Petsche and Moch. There must be a real understanding on our side between Treasury, ECA, State and Defense as dollar financing of foreign budgetary deficits presented many real problems of an inflationary nature to US.

After further discussion in which Spofford pointed out that some of Moch’s problems re production of twelve ton tanks and bazookas might be taken care of under HPPP, the following plan was tentatively adopted:

The Nitze group2 should continue its present work with special emphasis on these problems;
About October 1, French military and financial experts should come to Washington for parallel bilateral discussions;
About October 10 they would be joined by Moch and Petsche who would meet with Acheson, Marshall and Snyder3 prior to meeting of Defense Ministers on October 16.

[Here follows a brief discussion of the Indochina question, which the Ministers agreed to continue in their next meeting, September 23.]

Department pass Paris. Sent Department Secto 42, repeated Paris unnumbered.

  1. September 22.
  2. Paul H. Nitze was Director of the Policy Planning Staff, Department of State. For a reference to discussions by Nitze, Alphand, and Franks in New York, see p. 386, footnote 1.
  3. John W. Snyder, Secretary of the Treasury.