851.5151/838: Telegram

The Ambassador in France (Straus) to the Secretary of State

467. From Cochran.3 I saw Ministry [Minister] of Finance4 at 6:45. He had just come from Chamber session where Government declaration was made5 and from a talk with Caillaux, Chairman of Senate Finance Committee.

I said we knew his Government was opposed to an independent national devaluation. I brought up the question as to whether the situation and Blum’s promises to his constituents would not assume another aspect if he could be assured that in case France devalued to a reasonable extent the other two main currencies would not undercut the franc.

He is not willing to enter a separate triangular agreement on these terms which would involve devaluation of the franc and maintenance of an approximate status quo by Americans and British.

He is personally willing to suggest to his chief and to his colleagues the idea of a monetary peace or truce envisaging a leveling out of currencies according to some common measure, most reasonably the world price level, provided this would be adhered to by the United States, Great Britain, France, the Netherlands, and Switzerland, and that he be permitted to give advance information thereof to the Russians since the ruble is now attached to the franc. The plan would not be to have a general conference but for the United States to [Page 536] approach each of the above countries individually and informally as we have today approached the French and learn whether agreement can be reached between the two currencies involved, that is dollar vis-à-vis pound, florin, et cetera, and then each of these countries agree with each other country. Some Saturday when there is no stock market the general agreement of all of these leading monetary powers to a general international monetary truce carrying the agreed rates would then be announced to the world. There would have to be some stipulation in the agreement to the effect that rates of the currencies involved would not be subsequently altered except with the consent of the other parties to the agreement.

He asked if Great Britain would reach an agreement with us, saying that the main struggle is between sterling and the dollar. He thinks we should first get some understanding with the British and that we should also approach the Dutch and the Swiss so that France is not singled out. He wants to keep unity within the three remaining gold bloc countries6 if possible. He cannot approach the British or be quoted as even personally favoring or suggesting or inspiring any devaluation scheme.

He was inclined to desire to tie in peace and economic measures but I told him monetary stabilization was enough to attempt at once and that situation was too urgent to permit delays that would be involved in discussing trade, raw material, supplies, et cetera. I reminded him that we already have fair trade agreements with the gold bloc countries including his own. He would be glad to have American reaction to his suggestion communicated informally to him. He cannot be quoted in any way. He would have to withdraw from the Cabinet if any leak involving his position above indicated should develop.

He talked this afternoon with Caillaux who is an advocate of “alignment of currencies.” In Chamber debate this afternoon Reynaud7 gave his usual arguments advising the Government to devalue at once or be forced into exchange control within a few days. He thought England and the United States would be receptive to the alignment of currencies idea.

In conclusion, I should add that Auriol fears a currency depreciation race and was concerned about Germany and Italy. I told him I thought the minor currencies would be taken care of after the major currencies were adjusted.

Proceeding to Basel at 10:50 tonight. Will be back in Paris 6:45 Monday morning. [Cochran.]

  1. Telegram in three sections.
  2. H. Merle Cochran, First Secretary of the American Embassy in France; Mr. Cochran was charged primarily with duties regarding financial matters of interest to the Treasury Department.
  3. Vincent Auriol.
  4. On June 6 the French Premier, Léon Blum, who had formed the first Popular Front Government on June 4, announced the program of the Ministry to the Chamber of Deputies.
  5. The so-called gold bloc at this time consisted of Belgium, France, the Netherlands, and Switzerland.
  6. Paul Reynaud, party leader of the Democratic Alliance in the French Chamber of Deputies and former Minister of Finance.