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Report, Background Memoranda on the Visit to the United States of Vincent Auriol, President of the French Republic

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GECRET 2 It is US policy that economic aid should not be extended to a country if the result is an increase in its reserves, except where the effect of withholding aid would be to hurt the defense effort. Negotiations are presently under way to determine the amount of financial assistance that France will receive during the remainder of fiscal 1951. 3. As Secretary Acheson stated in the talks with the French last October and again in January, we believe that we cannot become directly involved in the local budgetary deficits of other countries. We believe that only by means of an increase in essential imports into France can US financial aid serve to provide increased local currency resources for the French Government. Such imports, by absorbing purchasing power, will serve as a most effective device to combat rising prices. In the same way, France may shift some part of the burden of rearmament to the other NATO countries in real terms only by developing an import surplus in her overall trade with those countries, rather than the large and increasing export surplus which has characterized French trade with Western Europe during the past eighteen months. Recommendation If the French raise this subject, they should be informed of the US position. CECRET

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Context sent to Scholar

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    "ocrText": "GECRET\n2\nIt is US policy that economic aid should not be extended to a country\nif the result is an increase in its reserves, except where the effect of\nwithholding aid would be to hurt the defense effort. Negotiations are\npresently under way to determine the amount of financial assistance that\nFrance will receive during the remainder of fiscal 1951.\n3. As Secretary Acheson stated in the talks with the French last\nOctober and again in January, we believe that we cannot become directly\ninvolved in the local budgetary deficits of other countries. We believe\nthat only by means of an increase in essential imports into France can\nUS financial aid serve to provide increased local currency resources for\nthe French Government. Such imports, by absorbing purchasing power, will\nserve as a most effective device to combat rising prices. In the same\nway, France may shift some part of the burden of rearmament to the other\nNATO countries in real terms only by developing an import surplus in her\noverall trade with those countries, rather than the large and increasing\nexport surplus which has characterized French trade with Western Europe\nduring the past eighteen months.\nRecommendation\nIf the French raise this subject, they should be informed of the\nUS position.\nCECRET"
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