851.51/10–2247: Telegram
The Ambassador in France (Caffery) to the Secretary of State
secret
Paris, October 22, 1947—5 p.m.
4532. The Finance Ministry today conveyed to me the following additional information regarding France’s dollar crisis, reported in my telegrams number 44931 and 4496, October 18:
- 1.
- Meeting of the Council of the Bank of France was held this week at suggestion of Finance Minister Schuman to consider problem finding dollar exchange to finance additional coal imports during November and December. Coal import program second semester 1947 provided for shipments from US 7.2 million tons, of which 1.7 million to be shipped November and December. French supply ministries have now learned it might be possible to ship 3 million tons under available allocations during those two months. Problem is where to find the additional dollars 26 million required for FOB plus freight costs this additional quantity.
- 2.
- No decision has been reached regarding foregoing and decision will probably not be made until beginning of November. This decision will be a part of broader policy question whether to cede additional gold to stabilization fund from remaining reserve Bank of France.
- 3.
- Both Finance Ministry and Bank of France are inclined to believe that additional cession, other than the technical one [that?] will be necessary to transfer restituted German looted gold from Bank of France to stabilization fund, would be extremely dangerous, vis-à-vis inflationary trends. They are, therefore, exploring all possibilities stopgap measures mentioned section one my telegram 4496. If combination of measures proves sufficient to meet existing anticipated gap, additional coal imports probably will not be made. Latest information available to Finance Ministry from Washington indicates only remote possibility of obtaining any Japanese-held gold this year. Finance Ministry is exploring, however, possibilities (a) of obtaining increase in ceiling Belgo–Franco payments agreement, which would automatically eliminate need additional dollar payments to Belgium this [Page 785] year and (b) possibility UK waiving dollar settlement item five, section three, my telegram 4493. Finance Ministry remarked that if UK would go ahead with earlier tentative commitment to make convertible into dollars 16 million pounds of French-held sterling, this measure, combined with others mentioned above, would just about bridge the December dollar gap.
- 4.
- Finance Ministry concerned over prospective hiatus in commodity arrivals first months 1948 due to inability to place orders closing months 1947. It believes, however, that gap can be reduced once there is definitive affirmative knowledge concerning US financial assistance first quarter 1948. Such knowledge would permit Bank of France to resume issuance forward exchange contracts even though at the moment no dollars were actually earmarked in the exchange stabilization fund for their liquidation.
Tomlinson has seen this telegram and requests that Treasury be informed.
Caffery
- Telegram 4493 not printed.↩