851.5151/964a: Telegram

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

348. For Cochran from the Secretary of the Treasury. This afternoon Mallet, Chargé British Embassy in Washington, transmitted to me from Sir Warren Fisher19 a most secret note of which following is a paraphrased summary.

[Page 547]

A note from the French Treasury was presented by Mr. Monick and the Chancellor has given it consideration.

This afternoon Mr. Monick was informed of the Chancellor’s readiness to give assurance that if there should be a reasonable change in the value of the franc counter measures would not follow, such as a further depreciation of the pound as a reprisal or the imposition on French goods of discriminatory duties. On the contrary His Majesty’s Government would continue their effort to bring it about that the Sterling exchange rate would not undergo undue fluctuations the prevention of which was the reason for creating the exchange equalization fund.

Furthermore Mr. Monick was told that the Chancellor did not believe it possible to give a guarantee that the pound sterling should be linked to gold within points that were fixed. The Chancellor was not prepared under existing conditions to place a limit upon his power to act independently, by entering into a formal agreement such as the French note proposed. The Chancellor must be governed in any undertaking which he might give not only by the considerations contained in the French note (he realizes fully the weight of these considerations) but also by the opinion he may form from time to time of the credit policy which stable international relations and domestic recovery might make necessary.

While the Chancellor feels unable to enter into any formal agreement for the reasons that just have been given, he is desirous of assuring Mr. Morgenthau that his action will continue to be directed to those ends which Mr. Morgenthau jointly with both His Majesty’s Government and the French Government have in prospect.

The view has been expressed to the French Government by the Chancellor that the maintenance by each country of the greatest possible stability in monetary relations and appropriate considerations at all times of the effect of its decisions upon other countries afford both a more practicable and a more desirable basis of cooperation at this stage than any convention of a more formal character, and the Chancellor hopes that this view will commend itself to Mr. Morgenthau.

You will observe that the British reply is in main substance the same as our reply to the French Treasury, which would seem to afford an adequate basis for continuing the discussion between the three Treasuries. Therefore I communicated with Mallet and expressed this judgment to him adding that the spirit of the British communication was very acceptable.

I think it important that the Treasuries of the three countries should be completely informed of the course of all conversations. For that reason I told Mallet that I planned to inform you of the text of the note from Sir Warren Fisher to me and to authorize you in turn to pass this information on to the French Treasury. Mallet approved. Please therefore inform the French Minister of Finance, that the British have informed me of their reply to the French note and of my reaction to it. In addition if you believe it helpful you [Page 548] are authorized to pass on to the French Treasury all or part of the paraphrased text of the British note to us. [Morgenthau.]

  1. Permanent Secretary of the British Treasury.