Foreign Relations of the United States, 1964–1968, Volume XII, Western Europe

86. Memorandum of Conversation¹

Washington, November 25, 1968, 3 p.m.

SUBJECT

• Franco-American Relations in the Aftermath of the Monetary Crisis

PARTICIPANTS

• His Excellency Charles Lucet, Ambassador of France
• Eugene V. Rostow, Under Secretary of State for Political Affairs

Under Secretary Rostow called in Ambassador Lucet today to offer some personal and unofficial reflections on the trend of events in Europe, and particularly on the political meaning of the recent meetings in Bonn.

Rostow said he had never been able to understand one aspect of French European policy, namely the assumption that France could indefinitely control or manage the Germans. As the Ambassador knew, we strongly favored the Franco-German rapprochement, and tried never to do or say anything to weaken it. That relationship was fundamental to any hope of a European future. But to us the natural and prudent way to organize Europe was on the foundation of the Entente Cordiale, which we could support on the basis of parity from the background, within a strong NATO and OECD context. To Rostow, speaking personally, the political implication of the crisis was clear. Germany wished to assert its economic primacy.

We knew of course of French sensitivity to the thought that we treated Britain differently from France. The issue had been raised again recently in a discussion in Paris of our response to the German proposals for a commercial arrangement between the E.E.C. and the non-member countries of Europe. A French official had remarked that we hadn’t reacted that way to EFTA. Rostow thought, speaking for himself, that in the right political setting, the issue of differential treatment of Britain and France, which was largely illusory, could be overcome, even in the nuclear field, without affecting NATO arrangements.

Lucet said he was returning to Paris today, and would discuss Rostow’s reflections with M. Debre.

With regard to the monetary crisis, Lucet expressed great appreciation for American action and statements.² He said it had been a good week for Franco-American relations. Rostow said that M. Debré could know that we had suggested last summer that the Germans consider revaluation,³ in order to safeguard the system, and head off pressure on the pound and the franc. We attached great importance to constructive action in response to paragraph 8 of the Bonn communiqué.⁴ If something positive could be done along those lines—a clearing account, perhaps—we could use the opportunity of this crisis as effectively as we had that of last March, when we liberated the banking system from the gold pool.

Rostow also suggested that this might be a good time for France to take a new look at the SDR proposals. Lucet said it was his impression that the French position on this question was not fixed. Rostow said that whatever happened, SDR’s would be necessary because of the shortage of gold.

Lucet mentioned French interest in a new Bretton Woods monetary conference. Rostow said there was great interest in many places in such an idea. But what would such a conference accomplish? The Group of Ten could carry out the mandate of paragraph 8 of the Bonn communiquéand the IMF had already started an important study of the management of the new system, in which gold, SDR’s and foreign exchange would all be used as reserves. We attached very great importance to the potentialities of that study. We were in favor of the continued reform of the system, but saw no need at the moment for a conference. We remain opposed to any consideration of changing the dollar price of gold. Lucet said he saw no reason for such a change.

1. Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL FR-US. Drafted by Rostow. The meeting was held in Rostow’s office.
2. A mounting German trade surplus created pressure on the French currency. On November 19 France cut its budget, and on November 23 President De Gaulle announced that France would not devalue the franc. In a national address the next day, De Gaulle blamed the budgetary problems on the spring unrest and announced further budget cuts. For text, see De Gaulle, Discours et Messages, Vol. 5, pp. 354-357. A November 24 message from President Johnson expressing confidence in the French currency helped stabilize international markets. For texts of messages exchanged between Presidents Johnson and De Gaulle, November 24, see Department of State Bulletin, December 16, 1968, p. 628.
3. Germany rejected proposals for a revaluation of its currency.
4. For text of the communiqué, November 22, see Department of State Bulletin, December 16, 1968, pp. 627-628.