Federal Republic of Germany 705



    At this point Mr. Anderson said he would like to see the President
go to the NATO conference in Paris in December and talk to the confer-
ence on fiscal problems. He went on to say that in reporting his mission
he thought it was important to dispel two ideas the press had created-
that the talks had not been coordinated as between Treasury and State,
and that we had not made clear to the Germans (as in fact we had) that
support costs would be the central subject of the discussion. He also
thought it should be made clear that we did not brush aside the German
suggestions. In fact, we welcomed them but told them they did not give
a full solution. General Persons said the press is carrying statements that
Secretary Anderson wrongly views this problem as a long-range prob-
lem whereas, as the Germans state, it is really quite temporary and tran-
sitory. He thought this should be corrected.
    The President thought that we might do well to build a backfire
against the propaganda the Germans are putting out. The danger is that
we must not go so far as to get a protectionist drive started. He would be
quite ready to tell the Germans and Italians that we may put a higher
Buy American differential back into effect.
    Secretary Anderson said that Kobbold had told him he thought one
possibility in the Ford action is that they are doing this to get their
money out of the United States in anticipation of real trouble here. When
Mr. Anderson indicated skepticism over this, I asked him if he did not
think this was true. He said he did not. I volunteered the view that I did
not see how it could be anything else, and that the Europeans, who have
a long experience in this kind of thing, certainly recognize it is just that.
Mr. Dillon said he was not sure on this score. I stated that another reason
is certainly to take advantage of lower labor costs and higher profit rates
abroad. Mr. Dillon agreed with this. General Persons asked whether De-
fense is cutting down its procurement abroad. I told him this was called
for in the President's directive. He asked specifically about purchases of
drugs in Italy and I said I would check this.
    After reading over the proposed text for release, the President
asked if we should not put in a paragraph indicating that conversations
in Bonn, Paris and London, as well as other reports reaching us indicate
a considerable nervousness about American fiscal policy in the months
ahead under the new administration, and a concern over inflation. Mr.
Anderson said this is entirely correct, but would question when and
how to say it.




    6For text of the President's statement on the Dillon-Anderson trip, see
American
Foreign Policy: Current Documents, 1960, pp. 364-365.