WASHINGTON AND FRENCH FISCAL STABILITY

The Implementation of the Marshall Plan, and the establishment of NATO, opened new phases in the diplomatic relations between the United States and Western Europe. Both initiatives institutionalized an American role in the internal politics and economics of the European nations. In the case of the Marshall Plan, the new American role took the form of a “Mission” to each recipient nation, which had as its function the supervision of the expenditure of counterpart funds in local currency accrued as a result of American dollar assistance. In France, as elsewhere, francs in the counterpart fund could not be expended without the express approval of the Marshall Plan Mission, although they were for all intents and purposes French treasury funds. Similarly, the Mutual Defense and Assistance Pact, which followed upon the establishment of NATO, involved a Military Advisory and Assistance Group, which took up residence in Paris to oversee the use of American armaments. This in itself might have been less onerous, but the French soon began to press Washington for actual subsidies to their military budget. The subsidies involved the Americans in the direct influence, if not supervision of, the entire French budgeting process, civilian and military.

To be sure, the French had their own agenda for the uses of American aid.