Memorandum by the Assistant Chief of the Division of Western European Affairs (Culbertson)

Yesterday afternoon I asked several men from this Department, the Departments of Commerce and Agriculture, and the Tariff Commission, to come in for the purpose of discussing what steps might be taken at this time with a view to analyzing the effect of French devaluation12 on Franco-American commerce covering both American exports to France and French imports into the United States. I told them of the two telegrams which had been received by the Department of Commerce from the Acting Commercial Attaché with regard to the latter’s conversation with Spinasse, French Minister of National Economy, in [Page 94] which the Minister had asked for an informal list of American exports to France to which the French Government could give consideration for possible immediate action as practical proof of the French Government’s intention to carry out a liberalization of its program.

Although the discussion covered a wide range of angles to the problem, it was the consensus of the whole group that it would not be possible at this time and probably not for several months to determine with any accuracy what effect devaluation will have upon American exports to France, or imports from France; and that any recommendations or proposals which could be drawn at this time might be completely inaccurate in the light of information which will be available some months hence. Everyone felt that it would be a mistake to make any démarche with the French at this time, irrespective of how informal it might be. Commerce and Tariff Commission will, however, follow the situation very closely during the course of the next few months, in order that they may be in a position to furnish accurate information with regard to the actual trend.

The American Consul General at Paris has estimated that French production, by virtue of currency devaluation, gained a competitive margin in France of about 30 percent. This margin has, however, in many instances, been reduced by about half as a result of the operation of French social legislation which increased wages and other charges on French industry.

The Consul General also calls attention to the fact that France is largely dependent upon foreign sources for raw materials, which, of course, means that with higher costs for raw materials, domestic prices must necessarily rise fairly rapidly and thus a competitive position may be reestablished in a very short time.

P[aul] T. C[ulbertson]
  1. Under the tripartite stabilization agreement of September 25, 1936; see vol. i, pp. 535 ff.