French-Iberian Affairs files, lot 58D309, Economic aid, 1951–55
Memorandum of Conversation, by the Acting Secretary of Defense (Lovett)
| Participants: | Acting Secretary Lovett |
| Rene Mayer, Minister of Finance and Economic Affairs | |
| Jean Daridan, Minister Counselor, French Embassy | |
| Thierry De Clermont-Tonnerre, Secretary General for European Economic Cooperation, Paris | |
| Colonel Samuels, OSD |
The visitors were introduced to Mr. Lovett at 11:00 a.m. Mr. Mayer1 congratulated Mr. Lovett on his appointment as the new Secretary of Defense. Mr. Mayer and Mr. Lovett both expressed their regrets over the resignation of General Marshall.
Mr. Mayer repeated the same discussion of the financial conditions in France which he had outlined to General Marshall during his visit on the 10th of September.2 He again explained the dollar gap resulting from the necessity of importing raw materials, chiefly coking coal, and the Production Program in France which is geared primarily to (a) re-equipment, (b) construction—consisting primarily of housing and bridge building, and (c) production for France’s war machine—the European Army and the Indochina forces. No dollar-earning exports result from this program.
Mr. Mayer also repeated his description of the need for additional aid to Indochina. He stated that approximately one-third of France’s defense budget is being used for the support of forces in Indochina.
He again paid tribute to the Associated States of Laos, Cambodia and Viet Nam, because of their participation in the recent San Francisco conference to sign the Peace Treaty with Japan. He again mentioned that this is proof that the Associated States are oriented to the West. They came to this conference in spite of the fact that India and China did not send representatives.
Mr. Mayer expressed hope that something could be done so that France could procure necessary copper from the United States. He stated that the fact that France has been willing to pay prices above ceiling prices on copper is proof that France needs this copper for war production.
Mr. Mayer mentioned the subject of infrastructure and the proposed breakdown of percentages and amounts of money that each NATO country should contribute which was given to him by General Marshall on the 10th of September. Mr. Mayer felt that the 26 percent indicated for France was too high. Since the host country is expected to provide the real estate in the Infrastructure program, which is in addition to the funds shown in the proposed breakdown and the fact that most of the airfields will be located in France, that France’s monetary contribution should be decreased from 26 percent to 20 percent.
[Page 428]Mr. Mayer stated that he had discussed the problem of dollar shortage and also the copper problem with Mr. Hoffman of ECA and Mr. Wilson.
Mr. Lovett responded by stating that he understood the serious problem involving the dollar gap resulting from France’s unfavorable balance of trade. Mr. Lovett thought that this situation could be relieved partially by our so-called “off-shore procurement” program. He felt that certain items such as spare parts for aircraft and trucks and items of transportation could be efficiently produced in Europe. He felt that the maintenance of Europe’s defense force once established should be provided from European production. Mr. Lovett and Mr. Mayer agreed that studies should be made along these lines in an effort to build up Europe’s production capacity with this in view.
Mr. Lovett expressed sympathy for the great cost of the Indochina forces but could foresee no immediate solution to increasing aid from the United States. He explained the great amount of time required to get appropriations from Congress or to transfer moneys already appropriated for one purpose to some other purpose.
As for the problem of France procuring the desired amount of copper, Mr. Lovett stated that that problem was one which came under the Office of Defense Mobilization, headed by Mr. Wilson.
Mr. Mayer expressed gratitude for being given the opportunity of discussing his French problems with both General Marshall and again with Mr. Lovett.
The conference was concluded at 12:05 p.m. and the visitors departed.