751.13/3–1552: Telegram

No. 511
The Chargé in France (Bonsal) to the Department of State


5611. MSA/E for Draper. Pass also Harriman, Lovett, Snyder and Wood.

[Page 1186]
Amb Draper, accompanied by Labouisse and myself, paid courtesy call on PriMin Pinay afternoon March 14. Amb said he was returning to Wash this weekend for few days and he wld be glad to carry any msg PriMin might wish to send.
Pinay was most appreciative Amb Draper’s visit. Said he accepted present job not because he liked or wanted power but because he felt he was needed. Pointed out heavy burdens facing France for reconstruction, investment and rearmament. He emphasized drain of operations in Indochina which “is not a French war but a fight on behalf of the free world against Communism,” and pointed out that France is spending in Indochina at an annual rate equivalent to more than 50% of France’s total investments in that area.
Pinay said his govt wld continue policies of predecessors in internal field, mentioning Schuman Plan, EDF, and NATO. Specifically stated wld honor commitments made at Lisbon, but said it most important that US act promptly to carry out its undertakings so as to enable France to do her part.
Pinay referred to importance US expediting off-shore proc program, and especially urged that we find way to help finance Fr mil production so as to prevent curtailment of production. In this connection, Pinay made point that a new atmosphere of confidence is appearing in France and that it was a main objective of his govt to strengthen this confidence. He feared the serious consequences to “this young and fragile plant” if it shld prove necessary to cut back production and possibly increase unemployment.
Pinay stated that there exists in Fr opinion generally a deep-rooted fear of inflation and that memories of what happened to the currencies of Germany and of certain central European countries after World War I are being recalled in connection with the present situation. He expressed the view that further deterioration in the direction of inflation cld quite easily produce grave difficulties including public disorders.
Amb Draper expressed his sympathy with the Fr position. He summarized situation with respect to our $200 mil undertaking, but added that, in all frankness, he must point out his strong doubts that much if anything cld be done to take over additl Fr production. He referred to Pleven’s statements on this subj of last Monday and merely undertook again to bring the Fr concern over this matter to the attn of the Wash authorities.
As to his prospective program (which we understand will be presented to the Assembly on Tuesday next), Pinay said the broad lines were known but not the details. He said that one of France’s problems has been the need to finance by heavy taxes the costs of investment, reconstruction, NATO def, the operations in Indochina, [Page 1187] etc. These heavy taxes made prices higher and this in turn injured Fr’s trade position. He said he intended to balance his budget, but wld not increase taxes. He wld try to make savings in the admin of the govt; “there wld have to be readjustments in investments and reconstruction”; and he wld make every effort to encourage payment of taxes due. He laid great stress on the importance of a moral awakening and of instilling in all Frenchmen the full sense of their civic responsibilities. He attributed the low morale of Fr to the shocks and dislocations of the two World Wars and to the occupations, but expressed his belief in the country’s ability to recover stature promptly. He believes he has made a real start in this direction and appears to have confidence that he can carry it through.