The Provisional Government of the French Republic agrees to indemnity and hold harmless the Government of the United States of America, its agents, servants or employees in respect of any such claim. 3. The arrangements set forth herein will be contingent upon mutually satisfactory settlement of all lend-lease and other war accounts; upon the availability, within the terms of such settlement, of 17.5 million dollars for deposit by the Government of the United States of America with the United States Maritime Commission; and upon the conclusion of an agreement for the purchase and sale of up to 75 Liberty ships referred to above between the United States Maritime Commission and the Provisional Government of the French Republic. For the Government of the United States of America: W. L. CLAYTON For the Provisional Government of the French Republic: WASHINGTON, May 28, 1946 U.S. LETTER RELATING TO SHIPPING CLAIMS The Assistant Secretary of State to the French Commissioner-General of the Plan for Modernization and Re-equipment DEAR MR. MONNET: DEPARTMENT OF STATE WASHINGTON MAY 28, 1946 This will confirm my understanding with you as to the method by which, subject to the provisions of the special agreement relating to shipping claims dated May 28, 1946, the United States will establish with the United States Maritime Commission the credit of $17,500,000 in favor of the French Government. A sum of $17,500,000 will be drawn for this purpose from funds heretofore paid by the French Government to the Foreign Economic Administration but not taken into account in arriving at the net amount due the United States set forth in paragraph 2 of the Memorandum of Understanding signed today by our two Governments. MEMORANDUM RELATING TO TROOP PAY AND MILITARY PROCUREMENT The representatives of the Government of the United States of America and the representatives of the Provisional Government of the French Republic have accepted the recommendations contained in the joint United StatesFrench Report of the Troop Pay and United States Armed Forces Procurement Subcommittee. The aforementioned report, and the Memorandum of Agreement between the Government of the United States and the Provisional Government of the French Republic Regarding Expenditures of the United States Armed Forces in French Territory, contain the arrangements and procedures for the settlement of past and future troop pay and procurement of the United States Armed Forces referred to in paragraph 4 of the Memorandum of Understanding of this date between the Government of the United States and the Provisional Government of the French Republic Regarding Settlement for Lend-Lease, Reciprocal Aid, Surplus War Property and Claims. 1. The War Department has submitted the attached report (Memorandum I) showing the U.S. dollar liability to France for net troop pay as approximately $29 million and for open market procurement not eligible for reciprocal aid as approximately $2 million, both for the period from D-Day to December 26, 1945. 2. The net troop pay was small in amount because of the large volume of local currency returned to the Army by Army personnel and by others enjoying the privileges of the PX and other Army service organizations. The detailed reasons explaining the modest amount of troop pay were discussed by the Subcommittee and are embodied in the attached memoranda by the War Department and the French representatives (Memoranda II and III). 3. The French and U.S. representatives on the Subcommittee agree that the extremely small amount of U.S. dollar liability on troop pay account was a result far different from that which had been anticipated at the time when the financial agreements concerning lend-lease and civilian supplies were made with the French in 1943 and 1944. It was agreed by both sides of the Subcommittee that the small amount of U.S. dollar liability on troop pay account is a factor to be considered in making the over-all settlement of the war accounts. 4. In view of the above, the French representatives on the Subcommittee have agreed to recommend that the War Department report (Memorandum I) be accepted as the basis for the settlement of the troop pay account as a part of the over-all war settlement. 5. The French Government has estimated that U.S. Army procurement through the official French office of Aid to the Allied Forces (AFA) amounted, for the period from September 2, 1945, to December 26, 1945, to five billion francs, or approximately $100 million at the old rate of exchange. (See attached Memorandum IV.) The U.S. liability to the French for procurement since December 26 has been estimated at $20 million to April 1, 1946. Both the U.S. and French representatives on the Subcommittee concur in these estimates of U.S. Army procurement with the understanding that the actual dollar liability of the U.S. for such procurement will be determined on the basis of the French Government's presentation of appropriate documents in a form acceptable to the U.S. Army, as has been, or may be, agreed upon between the U.S. Army and the French authorities. 6. The U.S. has a liability of $96 million for the francs in the possession of the U.S. Army after the date of conversion. The French have an obligation to convert into dollars any part of the francs not used, in accordance with the provisions of Paragraph 8(C) below. 7. Against the U.S. obligations the U.S. has advanced to the French on troop pay account $120 million. The net result, therefore, is as shown in the following table: U.S. Liabilities to French (millions of dollars) 1. Net troop pay for period up to Dec. 26, 1945 (at old rate of exchange) 2. Direct open market procurement prior to Dec. 26, 1945, not eligible for reciprocal aid. 3. Procurement through French (AFA) from Sept. 2 to Dec. 26, 1945.. TOTAL French Liabilities to U.S. 1. Advances to French on troop pay.... 2. Obligation to convert into dollars excess francs held by Army. 120 176-96 TOTAL Net estimated U. S. liability to French.... 196-216 31-51 1 This estimate is based on the assumption that net troop pay between Dec. 26, 1945, and April 1, 1946, will not exceed $20 million. 8. Suggested procedure for settlement. In order to avoid difficulties with the over-certification of troop pay, it is recommended that the following procedure be adopted for the settlement of the cash accounts by the U.S. and French Governments: (A) The U.S. Army will apply the over-certification of net troop pay dollars (approximately $91 million) and a small sum of additional dollars (approximately $7 million) to pay for the francs which the Army held on December 26 after the change of the rate of exchange (approximately $96 million) and non-reciprocal aid open-market procurement (approximately $2 million). For additional currency needs of the U.S. Armed Forces the U.S. will pay in dollars. (B) The U.S. Army will pay the French Government for military procurement after September 2, 1945, either in dollars or by tendering the francs which it holds, to the extent that such holdings are in excess of its current needs for troop pay. (C) The French Government will repurchase against dollars, at the rate at which they were sold to the Armed Forces, the francs presented by the U.S. Armed Forces, but in order to avoid net troop pay negative in amount, this obligation will be subject to the qualifications to be contained in a revised currency agreement. (D) In order to minimize the transfer into dollars of francs now being held by the Army in excess of its current needs, practical steps will be taken for using these francs for the repayment of the U.S. Army liability for military procurement as estimated in paragraph 5 above. 9. The French have submitted a statement on the Mendes-France Agreement and a proposal for its liquidation (Memorandum V). MEMORANDUM I Statement by the War Department on Troop Pay and Procurement France Troop Pay and Procurement (Use of French Franc Currency by the U.S. Army-D-Day to C-Day) 5. Total Net Francs Spent Locally. 6. Francs Spent by Ủ.S. Army for Direct Local Procurement to 2 September 1945 Chargeable to French as Reciprocal Aid.... MEMORANDUM II War Department Statement on the Major Reasons for the Modest Level of Net Troop Pay 1. The mechanical limitations of the official accounts, maintained strictly pursuant to US/UK/French currency agreement of 15 August 1944. Thus, U.S. Army monthly French franc Currency Reports reflect: a. 11 On the disbursements side, only French francs used for pay and allowances to U.S. military personnel and such civilians actually paid by the military establishment. b. On the receipts side, all cash collections taking in French francs for services rendered through all Army facilities (such as PX's, messes, clubs, canteens, salestores, commissaries, etc.) and administrative services rendered (such as personnel transfers, money orders, War/Savings bond purchases, currency conversions, etc.) not only for U.S. military personnel but also for the following groups, aggregating several hundred thousand individuals: (1) U.S. civilians, employed by other U.S. departments and agencies, obtaining francs from sources other than WD dollars and from other than U.S. Army disbursing officers; (2) Members of the military forces of the Allies, obtaining francs from the French Government itself and/or from non-dollar sources such as sterling, Belgian francs and other foreign currencies; (3) French civilians employed by or affiliated with the U.S. and Allied military establishments, obtaining francs directly from the French Government itself. 2. The U.S. Armed Forces' observance of the overall policies of the French Government designed to preserve to the maximum extent, and revive as rapidly as possible, their domestic economy after five years of Axis occupation. a. Implementation by the U.S. Armed Forces of this basic French policy was predicated upon MEMORANDUM No. II "Relating to Currency" of 15 August 1944, and the "Memorandum of Agreement between Supreme Commander, Allied Expeditionary Forces, and the Military Delegate under the Ordinance of 14th March 1944, of the French Committee of National Liberation;" Section IV, paragraph two thereof reading in part, troops will be encouraged to make the maximum use of military canteens;" and paragraph three which reads, "Troops will be encouraged to reduce to a minimum their drawings on pay. Every effort will be made to induce them to invest." Accordingly, Allied troops were officially encouraged to spend a minimum in France. ... |