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Chapter 7 The American Challenge Dollars and Multinationals

1. The response to these layoffs is reported in Olivier Brault, "Indépendance nationale et investissements américains: la politique française à l'égard des investissements directs américains sous les présidences du général de Gaulle et de Georges Pompidou" (mémoire de maîtrise, Université de Lille III, 1986), 35-36. [BACK]

2. L'Express, 30 May 1966, 45. [BACK]

3. Le Monde, 1 February 1963. [BACK]

4. This interpretation of the general's interest and responsibility can be found in the account of one of his closest financial advisers, Alain Prate ( Les Batailles économiques du général de Gaulle [1978], 18). [BACK]

5. As a condition of returning to power in the late spring of 1958, de Gaulle had promised to respect the treaty. Moreover, several members of his cabinet strongly supported the treaty—some had actually signed it. See Edmond Jouve, Le Général de Gaulle et la construction de l'Europe, 1940-1966 (1967), 1:211-13. In part the general was keeping his word and honoring his nation's commitments. In addition de Gaulle acted to promote the Europe of the Six in order to eliminate the British-sponsored free-trade area. The Six

were in danger because the British hoped to derail the fledgling European community with their own scheme. With the help of Chancellor Adenauer in late 1958, de Gaulle opted for the Six and killed the British project. France's immediate entry into the Common Market strengthened its future and weakened pressures from outside the Six for a wider free trade area (NARA, 840.00/1-659, 6 January 1959, Butterworth to Sec. of State). Moreover, de Gaulle feared that France would be left behind should he delay France's entry. It seems likely that in 1958, despite certain misgivings about the Rome treaties, he entertained hope of constructing his kind of Europe—since in his words the community existed only "on paper"—and he did not want to start from an inferior position. [BACK]

6. Television address of 30 January 1959 in de Gaulle, Discours et messages 3:78. [BACK]

7. De Gaulle, Memoirs of Hope, 134-35. [BACK]

8. Rainier Hellmann, Puissance et limites des multinationales (Tours, 1974), 72. [BACK]

9. For one thing, it is difficult to ascertain the "nationality" of capital. A considerable fraction of American money arrived via Swiss or Belgian subsidiaries, which means that most estimates err by understating quantities. Only gross investments entered official figures, making calculations even less reliable. And how these estimates were made varied from one statistical agency to another. Nor is the distinction between "direct" and "portfolio" investment always clear. [BACK]

10. Report of the Ministry of Industry in "Les Investissements étrangers dans l'industrie française," Perspectives, 9 October 1965, 2. Data on direct investment on a country basis can be found in the annual volumes U.S. Department of Commerce, Bureau of the Census, Statistical Abstract of the United States (Washington, D.C.). [BACK]

11. Erick Schmill, Les Investissements étrangers en France (1966), 44. [BACK]

12. Data on sectoral investment can be found in numerous studies. See for example Louis Manuali, La France face à l'implantation étrangère (1967); Gilles Y. Bertin, L'Investissement des firmes étrangères en France 1945-1962 (1963); Jacques Gervais, La France aux investissements étrangers (1963); Erick Schmill, Les Investissements étrangers en France ; Christopher Layton, Trans-Atlantic Investments, The Atlantic Institute (Boulogne-sur-Seine, 1968); Allan W. Johnstone, United States Direct Investment in France (Cambridge, Mass., 1965). [BACK]

13. Hellmann, Puissance et limites, 75. [BACK]

14. New York Times, 25 and 27 March 1963. [BACK]

15. Quoted by Rosine Dusart, "The Impact of the French Government on American Investment in France," Harvard International Law Club Journal 7 (Winter 1965): 85. [BACK]

16. Henri Nouyrit, "L'Implantation des capitaux américains dans la C.E.E. vue de Bruxelles," L'Economie, 22 January 1965, 11-12. [BACK]

17. Press release published in Agence France Presse économique, 24 January 1963. [BACK]

18. Quoted by Johnstone, United States Direct Investment, 27. [BACK]

19. "Business en France," Le Monde, 15 June 1965. [BACK]

20. Cited in Brault, "Indépendance nationale," 48. [BACK]

21. Maurice-Bokanowski announced these criteria in the summer of 1965 (Hellmann, Puissance et limites, 77 ). [BACK]

22. Paul Lemerle, an economist working for the plan, told Fortune that "France must not go so soft as to let important economic decisions be made on the other side of the Atlantic. . . . The U.S. already has responsibility for strategic decisions affecting the peace of the world; it is excessive for them to assume economic power of the same order" (Richard Austin Smith, "Nationalism Threatens U.S. Investment," Fortune, August 1965, 130). [BACK]

23. Jonathan Wise Poller, "Indépendance nationale et: investissement étranger, une étude de cas: la politique française à l'égard des investissements américains, 1945-1967" (mémoire de maîtrise, Fondation nailonale des sciences politiques, 1967), 94-97. [BACK]

24. Jean Meynaud and Dusan Sidjanski, L'Europe des affaires (1967), 75. [BACK]

25. For opposition to Libaron and other American investments in agriculture, see Le Monde, 25 January and 5 March 1963. Richard Grenier, "U.S. Investments in France," The Reporter, 6 June 1963, 25; Ardagh, The New French Revolution, 93-95; Polier, "Indépendance nationale," 54-63. [BACK]

26. Le Monde, 25 January 1963. [BACK]

27. Ardagh, The New French Revolution, 95. [BACK]

28. Polier, "Indépendance nationale," 97-103. Georges Vieillard, "L'Affaire" Bull (1969) is a collection of documents on the affair by the former director compiled in 1965. Henri Stern, La Crise de la compagnie des Machines Bull (1966), is a report drawn up by the local CFDT union. The legal aspects can be found in Robert D. W. Landon, "Franco-American Joint Ventures in France: Some Problems and Solutions; the Compagnie des Machines BullGeneral Electric as an Illustrative Example, Harvard International Law Club Journal 7 (Spring 1966): 238-85. [BACK]

29. Pierre Lelong, "Le Général de Gaulle et les industries de pointe" in "L'Entourage" et de Gaulle, ed. Gilbert Pilleul (1979), 191-95. [BACK]

30. Brault, "Indépendance nationale," 44 n.4. [BACK]

31. Bull's operations were divided into four new corporations. GE raised its offer to $43 million and won a majority equity interest in the new sales and service corporation as well as a 49 percent share in the manufacturing and in the market research and advertising corporations. A fourth corporation working for national defense remained entirely French, but it failed to develop. [BACK]

32. Georges Villiers, "Le CNPF s'adresse aux industriels américains," Patronat français no. 253 (July 1965): 30. Also Georges Villiers, "Face à la concurrence américaine, les entreprises européennes devront souvent concentrer leurs moyens," Patronat français no. 243 (1964): 2-15. [BACK]

33. "Pour ou contre les investissements américains en France?", Entreprise no. 472 (1964): 41-51. [BACK]

34. Smith, "Nationalism Threatens," 131. [BACK]

35. Jean Luc, "Les Investissements étrangers," Le Journal des finances, March 1963; "Faut-il refuser les investissements américains en Europe?", Entreprise no. 387 (1963): 13; Paul Deroin, "Les Investissements américains en France," L'Economie, 12 February 1965, 10-12. Also Manuali, La France, 67; Smith, ''Nationalism Threatens,'' 128-29; New York Herald Tribune, 10 December 1964. [BACK]

36. Pascal Arrighi, "La Puissance américaine et l'Europe," Le Capital, 2 December 1964. Among the experts who favorably assessed American investment yet counseled vigilance were Gervais ( Investissements étrangers ), Manuali ( Implantation étrangère ), and Bertin ( Investissement ); Schmill ( Investissements étrangers ) was far more critical of de Gaulle for politicizing the issue. [BACK]

37. Maurice Duverger, "Le Grand Dessein," Le Monde, 10 January 1963. [BACK]

38. Pierre Drouin, "Les Américains ont-ils les dents trop longues?", Le Monde, 13 May 1964; Alain Murcier, "Business en France," Le Monde, 15-18 June 1965. On the food industry see the issue of 23-24 April 1967. [BACK]

39. Le Monde, 5 January 1967. [BACK]

40. L'Opinion, 2 December 1966. [BACK]

41. To the query, "In your opinion, everything considered, are American investments in France a good thing or a bad thing for our country?", 39 percent said they were good, 27 percent answered "bad," and 34 percent had no opinion in 1970. The principal nay-sayers were those identified with the Communist party as well as farmers and workers (''Investissements américains: les Français sont pour," Les Informations industrielles et commerciales, 9 March 1970). Opinion surveys from the mid-1970s indicate that French attitudes toward multinationals were similar to those of most other Western Europeans except that the French people expressed more anxiety—for political reasons—and declared themselves slightly less favorable. The French, more than other nationalities, also tended to identify multinationals with America and while praising them for their technical and managerial leadership also criticized them as "uncontrollable'' (Jacques Attali et al., L'Opinion européenne face aux multinationales [1977], 47, 71, 75). [BACK]

42. Brault, "Indépendance nationale," 158-63. [BACK]

43. Quoted in Hellmann, Puissance et limites, 76. [BACK]

44. Serge Mallet, "Un certain Antagonisme," La Nef no. 26 (1966): 148. [BACK]

45. Gaston Defferre, Un nouvel Horizon (1965), 99. [BACK]

46. JO, débats, Assemblée nationale, 26 November 1964, 5588. Another example in which the left criticizes the timidity of Gaullist anti-Americanism is L. Perceval, "Une Société américaine dans le Bas-Rhone-Bas-Rhône-Languedoc," Economie et politique no. 104 (1963): 88-90. The Gaullists (Maurice-Bokanowski in Le Monde, 25 June 1965) chided Defferre for trying to outbid them on this issue. After failing to lead the left in the presidential campaign, Defferre continued to chastise de Gaulle for failing to protect France from American domination. According to Defferre, building European union rather than issuing Gaullist rodomontades was the answer (Defferre, "L' Indispensable Europe," 151-59). [BACK]

47. In 1970, under Pompidou's presidency, American investment again became a political issue when Ford abruptly shifted the site of its new plant from Charleville (Ardennes) to Bordeaux where the prime minister, Jacques Chaban Delmas, was a candidate in a legislative by-election. Servan-Schreiber, representing Nancy, led the attack on what seemed like a flagrant manipulation of foreign investment for political advantage. Chaban-Delmas's rival for the seat from Bordeaux wired a warning to the American Embassy that the United States risked losing its best friends if it continued to interfere in domestic French affairs. Chaban-Delmas won, but the affair lingered on for years (Brault, "Indépendance nationale," 156-57). [BACK]

48. François Caron, who used the records of the Comité des investissements étrangers, states that in the chemical industry the search for a French partner was usually fruitless ("Foreign Investment and Technology Transfers: The Case of the French Chemical Industry in the 1950s and 1960s as Viewed by the Direction des industries chimiques" in Overseas Business Activities: Proceedings of the Fuji Conference, eds. Akio Okochi and Tadakatsu Inoue [Tokyo, 1984], 271). Also see Polier, "Indépendance nationale," 174. [BACK]

49. "Business en France," Le Monde, 18 June 1965. [BACK]

50. Polier, "Indépendance nationale," 106. [BACK]

51. Conseil économique et social, "Investissements étrangers en France dans le cadre de la communauté européenne," report to committee on investments and planning by Louis Charvet, 10 May 1966. [BACK]

52. For example, Jean Boissonnat, "L'Argent étranger," La Croix, 25 May 1966; Alain Murcier, "Business en France," Le Monde, 18 June 1965. Other experts who took this position are Schmill ( Investissements étrangers ), Bertin ( Investissement ), Jean-Jacques Servan-Schreiber ( Le Défi américain or, in the English version, The American Challenge, trans. Ronald Steel [1968]), and C. Goux and J. F. Landeau, Le Péril américain: le capital américain à l'étranger (1971). [BACK]

53. A summary of this report is "Les Investissements étrangers dans l'industrie française," Perspectives, 1-9. A commentary is Michel Herblay, "Investissements américains, la France sait-elle ce qu'elle veut?" Direction no. 123 (1965): 1134-37, 1164-73. [BACK]

54. Maurice-Bokanowski in Le Monde, 11 June 1965. [BACK]

55. Jacques Rueff, the economist and advocate of the gold standard, had written his views about monetary reform to de Gaulle in 1961. Views of de Gaulle's advisers on money matters can be found in Paul Fabra, "The Money Men of France," Interplay, January 1968, 37-40. The first ministerial discussions of the problem came in July 1963 (Prate, Batailles économiques, 208-9). [BACK]

56. De Gaulle, Discours et messages 4:125. His comments came at his 29 July 1963 press conference. [BACK]

57. De Gaulle, Discours et messages 4:332. [BACK]

58. Interview with Rueff in The Economist, 13 February 1965, 662. [BACK]

59. At a veritable summit meeting of French and American business leaders that included Georges Villiers, Wilfred Baumgartner (former minister of finance), Roger Blough (U.S. Steel), and Douglas Dillon (former secretary of the treasury), the French echoed the Gaullist arguments about inflation and asked the Americans to attend to their balance of payments deficit ( L'Express, 16-22 May 1966, 53). [BACK]

60. Prate ( Batailles économiques, 221) presents data on dollar conversions from 1959 to 1967 when the Bank of France stopped such exchanges altogether because of shortages in the balance of payments. [BACK]

61. Maurice Ferro, De Gaulle et l'l'Amérique (1973), 397-98. [BACK]

62. Examples are L'Aurore, 11 January 1968, and Le Nouvel Observateur, 28 February 1968. [BACK]

63. Prate, Batailles économiques, 213 n. [BACK]

64. A former official at the quai d'Orsay, who later served as the governor of the Bank of France, observed that it was de Gaulle's foreign policy rather than

his assessment of financial problems that led him to intervene in monetary affairs (Olivier Wormser, "Le Général de Gaulle et la monnaie," Etudes gaulliennes nos. 3 and 4 [1973]: 148). [BACK]

65. This section depends on the accounts of Edward L. Morse, Foreign Policy and Interdependence in Gaullist France (Princeton, 1973), 219-51; Prate, Batailles économiques, 201-35; and Kolodziej, French International Policy under De Gaulle and Pompidou, 183-210. [BACK]

66. De Gaulle, Discours et messages 4:231. These remarks were made at his press conference on 27 November 1967. [BACK]

67. De Gaulle instructed French negotiators at Stockholm that the conditions for approval of the SDRs were specific American commitments to solve their payments deficits; new voting procedures in the IMF that would give the Six veto powers; and maintenance of stringent rules on activating the drawing rights (Prate, Batailles économiques, 226). France secured only the veto powers for the Six ( The Economist, 6 April 1968, 57-58). [BACK]

68. Remark made in March 1968 (Prate, Batailles économiques, 229 n.). [BACK]

69. Kolodziej, French International Policy, 205. [BACK]

70. Morse, Foreign Policy, 250. [BACK]

71. Direct annual investment in France between 1963 and 1966 (in millions of dollars), according to U.S. Department of Commerce figures ( Statistical Abstract of the United States ), fell from 210 to 149 while it rose from 304 to 646 in West Germany, from 114 to 169 in Italy, from 70 to 146 in Belgium and Luxembourg, and from 70 to 173 in the Netherlands. [BACK]

72. Le Monde, 6 January 1966. [BACK]

73. Prate, Batailles économiques, 215. [BACK]

74. Cited by Brault, "Indépendance nationale," 68. [BACK]

75. Interview with Debré in Entreprise no. 552 (1966): 27. [BACK]

76. Combat, 24 May 1966. [BACK]

77. A view expressed by the Direction des industries chimiques (Caron, "Foreign Investment," 274-75). [BACK]

78. A thorough analysis of the new procedures adopted in 1966-67 is Charles Torem and William L. Craig, "Control of Foreign Investment in France," Michigan Law Review 66 (February 1968): 669-720. [BACK]

79. According to Raymond Marcellin, the minister of industry, reported in La Vie française, 25 November 1966. [BACK]

80. For example, Debré and Marcellin, the minister of industry, disagreed over the request of Mobil Oil, which intended to use by-products from its existing refinery, to build a fertilizer plant with a French associate in the Seine-Maritime. Marcellin echoed worries of the chemical industry about the financial and technical power of the giant American corporation. Debré was more receptive and Pompidou had to adjourn any decision for a year ( L'L'Indépendant, 23 November 1966). [BACK]

81. Robert B. Dickie, Foreign Investment in France: A Case Study (Dobbs Ferry, N.Y., 1970), 74-87; Brault, "Indépendance nationale," 126-53; Caron, "Foreign Investment," 270-73. [BACK]

82. New York Times, 23 January 1967. [BACK]

83. "M. Debré répond aux informations," Informations industrielles et commerciales, 18 November 1966, 30-35. [BACK]

84. Combat, 24 May 1966. [BACK]

85. Diana Pinto, in an unpublished paper of May 1983, has analyzed the commercial success of Le Défi . [BACK]

86. Servan-Schreiber, The American Challenge, 30, 14.

87. Ibid., 277. [BACK]

86. Servan-Schreiber, The American Challenge, 30, 14.

87. Ibid., 277. [BACK]

88. Le Monde, 29 November 1967. [BACK]

89. French legislation adopted in 1967 on capital movements made no distinction between investments made by community-based companies and those from outside the Common Market. The European Commission started legal action in 1968 and the following year brought France before the European Court of Justice on the grounds that its legislation violated community rules on the right of establishment and the free movement of capital. The commission was not satisfied with explanations from Paris that French restrictions did not prohibit direct investment coming from companies in other community countries as long as these companies were truly European and not subsidiaries of non-European, i.e., American, firms. The commission pointed out that France was obligated to give nationals or companies of other member states identical treatment to that granted French citizens or French firms. It regarded any company as duly constituted within the European community if it had its administrative or legal headquarters within the territory of the Six. The Treaty of Rome, the commission held, made no distinction with respect to the origin of capital or nationality of shareholders—which the French considered essential for determining the legality of an investment. Thus according to the commission's interpretation most subsidiaries of American firms qualified for community protection under the Rome treaty.

In 1971, after years of maneuvering, the French government, in order to avoid a court decision that would have definitively established equality among European and non-European companies situated within the Common Market, modified its legislation to conform to community practice. Companies from outside the European community still had to give prior notification for investment but for insiders such notification was an automatic authorization ( Financial Times, 24 April 1969; Hellmann, Puissance et limites, 79; Brault, "Indépendance nationale," 96-97). [BACK]

90. Paris-Presse l'Intransigeant, 30 April 1969. [BACK]

91. In early 1971 Prime Minister Chaban-Delmas claimed that in two years his government had rejected fewer than ten requests by American companies to make direct investments (Hellmann, Puissance et limites, 81-82). [BACK]

92. L'Express (2-8 March 1970) and Le Monde (20 February 1970) report this survey. [BACK]

93. Quoted in La Croix, 31 July 1970. [BACK]

94. Combat, 26 February 1970. [BACK]

95. Data presented to the interministerial committee on foreign investment stated the ratio between American and European requests for authorization as 45/64 in 1965 and 50/53 in 1966 ("Communiqué," Service de l'information du ministère de l'économie et des finances, 12 January 1967). [BACK]

96. Service de l'information du ministère de l'économie et des finances, "Evolution des mouvements de capitaux privés entre la France et l'extérieur . . .

de 1968 à 1973," Etudes et bilans, February 1975, 11. Cf. Brault, "Indépendance nationale," 75. [BACK]

97. According to Gilles Y. Bertin ( L'Industrie française face aux multinationales [1975], 14-15) until 1972 the U.S. still contributed about half the total (direct and portfolio) of foreign investments in France, but America's share declined vis-a-vis-à-vis the EC after 1966. From 1967 to 1969 the U.S. and the EC contributed about equal shares of total investment. [BACK]

98. Les Informations industrielles et commerciales, 19 November 1965. [BACK]

99. Smith, "Nationalism Threatens," 126-31, 228-36; Myra Wilkins, The Maturing of Multinational Enterprise (Cambridge, Mass., 1974), 345. [BACK]

100. Meynaud and Sidjanski, L'Europe des affaires, 78-79; Layton, Trans-Atlantic Investments, 44-48. [BACK]

101. Manuali, Implantation étrangère, 11-13. [BACK]

102. Dickie, Foreign Investment, 20. [BACK]

103. For example Benelux received $47, West Germany $37, France $30, and Italy $16, according to Meynaud and Sidjanski, L'Europe des affaires, 77. [BACK]

104. Bertin, L'Industrie française, 50-51. [BACK]

105. France's share fell in this decade from 28.7 to 21.2 percent. West Germany's share advanced from 35 to 41.7 percent (Hellmann, Puissance et limites, 41-42). See note 71. [BACK]

106. There were other reasons such as a falling rate of return on investment, Washington's efforts at curbing the outflow of private capital, e.g., the Interest Equalization Tax adopted in 1963 and mandatory restraints enforced after 1967. [BACK]

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