851.5151/946: Telegram

The Chargé in France (Wilson) to the Secretary of State

831. For Secretary of the Treasury from Cochran. Upon request of Minister of Finance Auriol I called upon him this afternoon. Baumgartner and Rueff15 were also present. Minister of Finance said that we had been the first to offer our cooperation to him. He said that at the time we had our conversations shortly after he entered office “the way was barred.” He said that now it had been ascertained through Monick’s conversations in Washington and London16 that there seemed a good chance for agreement of a type that could be found acceptable in France. He said that his Ministry had drawn up a provisional draft of a pre-stabilization agreement for submission to the United States and Great Britain. If these three countries are in agreement France would then endeavor to procure the adherence of the two gold-bloc countries the Netherlands and Switzerland.

The immediate question of the Minister of Finance is to know whether Mr. Morgenthau would prefer that the draft document be submitted to him through me secretly and unofficially in advance of a copy thereof being submitted through Monick secretly and unofficially [Page 542] to the British Government or whether Mr. Morgenthau may prefer that the two copies be submitted simultaneously. Auriol would be glad to be able to say to the British that he had obtained the approval of the Americans to the proposition before submitting it to the British. On the other hand he does not want to give the British any cause for criticism of his approach. He is anxious that the entire affair be expedited in order that a decision may be reached with respect to drafting the French monetary law which would be necessary if the agreement is consummated. Since there is a meeting of the Council of Ministers on Monday September 7 Auriol would be very appreciative if he could have an indication of Mr. Morgenthau’s wishes on this one point before Monday. The submission of the propositions officially would be taken up only if and after unofficial approval is obtained.

After leaving the Minister’s office Baumgartner and Rueff talked more freely with me in regard to the nature of the so-called agreement. It seems that it is what might be called an “agreement of intention”. It would involve a declaration by the three Governments. The British and American would be expected to maintain their respective currencies at approximately their present rates. A lowering of the French franc would be envisaged. The second point in the agreement calls for cooperation between the three banks of issue of the contracting countries, each central bank assuming the task of holding its respective currency within certain limits subject to certain conditions. The third point would be something in the way of declaration that this step having been taken toward monetary stability the way would be open to lowering trade barriers.

Please do not accept the above as an entirely accurate description of the component parts of the agreement since I have not seen the document. I sought this information from the two permanent members of the Ministry in order that I might give enough description of the document to enable Mr. Morgenthau to determine what his attitude should be in regard to the point immediately in question.

I should add that in answer to my query Baumgartner informed me that the part of the agreement with respect to matters of commercial policy is not interdependent with the points of fixing rates and supporting the currencies. They have drafted something which they think would meet the approval of the Secretary of State whose interest in lowering trade barriers has of course been well known to them and has been conveyed fairly recently by the French Ambassador in Washington. As I have indicated in earlier cablegrams Auriol’s [Page 543] main idea is to include French devaluation in a scheme of “world monetary peace which would lead to world economic peace.” [Cochran.]

  1. Telegram in three sections.
  2. Wilfred Baumgartner and Jacques Rueff, Director and Assistant Director, respectively, of the General Administration of Funds, French Ministry of Finance.
  3. July 23–28.