Foreign Relations of the United States, 1955–1957, Western Europe and Canada, Volume XXVII

34. Memorandum of a Conversation Between the Secretary of State and the French Ambassador (Alphand), Department of State, Washington, January 22, 1957¹

Washington, January 22, 1957

SUBJECT

• French Economic Difficulties Arising from Suez Crisis

Ambassador Alphand referred to a recent conversation between Ambassador Dillon and Ramadier in Paris regarding French economic difficulties arising from the Suez crisis.² He said that French gold reserves had dropped $600 million in the last year and are expected to decline another $300 million by this summer. The Ambassador referred particularly to Vice President Nixon’s speech of December 6 in which he described the Vice President as indicating that the United States was ready to help its friends in the present critical economic condition in which they find themselves in Europe.³ He said that he did not feel that the French government would require aid which would call for Congressional action since France’s difficulties were temporary. His government was thinking rather in terms of Exim Bank loans, increased PL 480 sales and other possible means of economic support. The Ambassador said that he hoped that the State Department could assist the Embassy in determining the best manner of proceeding in this case. He handed the Secretary a memorandum explaining the present French situation.⁴

The Secretary said he thought that the Export Import Bank would provide the most suitable means of offering support to France and he referred particularly to recent Export Import Bank loans made to the United Kingdom for which the latter had put up collateral. The Ambassador said that the French Government was interested in lines of credit to cover specific imports from the US and while he realized it was not US policy to make Export Import Bank loans for the purchase of consumable goods, he believed that there was no regulation which would prevent extension of such credits. The Secretary said that Secretary Humphrey had informed him it was not US policy to offer credits for the purchase of immediately consumable items. The Bank could consider credit for such durable articles as planes, which he understood the French airlines were desirous of purchasing. Alphand said the main need is for raw materials and that the planes required by Air France make up a small part of the total needs. He emphasized the fact that the problem is not immediate but that the French Government is trying to look ahead. He said that he hoped that France could count on the State Department’s help.

The Secretary said that he felt that the French Government should send financial and economic people to Washington to talk to the officials of the Export Import Bank and present a detailed program. The Department of State would be glad to help in any way it can and has no objection on political grounds to the extension of Export Import Bank credits. Such credits, however, must be justified primarily on financial and economic grounds. As for the Vice President’s speech of last month the Secretary said that the French Government should not take that speech too literally. He felt that it was not practicable to request economic aid from the Congress at present and he repeated that he thought the most likely approach lay in possible arrangements with the Export Import Bank. He saw little if any possibility of extending surplus commodity sales under the PL 480 program and in reply to a suggestion by the Ambassador he said that France could expect very little relief in the form of additional offshore procurement. The Secretary said that the Department would be glad to give advice in this matter and to state that it saw no political objection to a loan but that the Department did not wish to bring political pressure on the Bank for this purpose.

The Ambassador said that he would recommend to his government that a thorough study of France’s economic problems be made and that technical experts be sent to the United States to discuss them with the appropriate authorities in Washington.

1. Source: Department of State, Central Files, 851.00/1–2257. Confidential. Drafted by Elbrick.
2. A report of this conversation was transmitted to the Department of State in telegram 3401 from Paris, January 14. (Ibid., 851.10/1–1457)
3. For text of Nixon’s address at the National Automobile Show dinner of the Automobile Manufacturers Association in New York, December 6, 1956, see Department of State Bulletin, December 17, 1956, pp. 943–948. The Department learned, in telegram 3256 from Paris, January 4, that Alphand had reported that he had had a conversation with Nixon in December during which the Vice President had intimated that the United States would give substantial economic aid to France. (Department of State, Central Files, 751.5–MSP/1–457) In telegram 3523 from Paris, January 22, Dillon noted that Alphand had overemphasized Nixon’s remarks. (Ibid., 751.5–MSP/1–2257)
4. The aide-mémoire, January 22, is ibid., 851.00/1–2257.