No. 173
Editorial Note

On June 29, the Embassy in France sent to the Department the translated texts of two notes from French Finance Minister Maurice Petsche concerning the construction of additional airfields and lines of communication in France and further outside financial aid for French rearmament. The first of these notes, transmitted in [Page 405] telegram 8187, reminded the United States of the recent decision of “Inter Allied Headquarters” to develop defense plans and to station aviation units in Western Europe which “required urgent execution of additional ‘priority’ infrastructure including airfields and lines of communication” in France. As yet, however, the United States Government had failed to give the American representative on the NATO Council of Deputies the necessary instructions so that a provisional formula for apportioning the financial burden of the infrastructure construction could be worked out. (751.5–MAP/6–2951)

The second note, transmitted in telegram 8198, once more sought to draw American attention “to exceptional gravity of problems posed by Fr mil program.” The need to increase military efforts in Indochina, steadily rising prices for strategic raw materials on the world market, and the sudden demand by SHAPE for the installation on French territory of expanded lines of communication, airfields, and headquarters had threatened to undo the bilateral financial and economic arrangements between France and the United States that had been concluded at the end of 1950. As a result of this situation the equilibrium of the 1951 French budget had been “seriously endangered,” and, because of the continual uncertainty as to the amount of dollars at its disposal for imports, the French Government had found and continued to find it difficult to set up an import program for any sufficiently long period of time. The lack of equilibrium in the French budget due to unexpected demands of rearmament and defense had created a very real threat of early and rapid inflation which could best be fought, Petsche maintained, by an increase in the volume of goods available to consumers. The most effective method of increasing consumer goods at this stage of French economic revival, Petsche believed, was through a sharp increase in imports. A successful import policy, however, required a significant increase in foreign aid to France, not just from the United States but from all of the member countries of the Atlantic Pact who should in some way or another share equally the economic and financial burdens of defense and rearmament. Moreover, it was not enough that foreign aid be granted France “from day to day. It is indispensable that its total amount be determined definitely for a sufficiently long period of time. Experience proves that an import policy has no healthy effect on prices unless domestic producers and consumers are assured that it will be carried out for a long time, that it will be based on carefully planned programs and that it will not be changed continually by chance or circumstance.” Such conditions, the French note concluded, seemed neither exorbitant nor impossible of realization. (751.5–MAP/6–2951)