851.5151/1760: Telegram

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

404. For the Secretary of the Treasury from Cochran. Reference is made to the Department’s 148, March 14, 2 p.m., which arrived after the conversation by telephone between the Secretary of the Treasury, Mr. Dunn, Mr. Feis, Mr. Wilson and myself had ended.

[Page 273]

At 8:00 o’clock Wilson telephoned Blumel who arranged for Blum as Minister of Finance to receive me at his home.

When I met Blum alone in his apartment at 8:45 this evening I told him that I had come on a strictly confidential errand as personal representative of the Secretary of the Treasury.

I told him that Secretary Morgenthau desired that I learn from him in such capacity whether he desired that we propose officially to him a certain question. I explained that no approach had been made to the British Treasury and that nothing would be done further unless he might desire to receive an official communication from us.

I then read to him in French a translation of the following message which I had received by telephone:

[Here follows text of message quoted in the fifth paragraph of the memorandum supra.]

I added the following in explanation: “In applying exchange control it shall in no way interfere with provisions which now exist in the trade treaty between our two countries or impair its value”.

Blum asked me to convey to Secretary Morgenthau his most appreciative thanks for this message which showed such keen and sympathetic understanding of the present French situation and which message came as a source of great comfort and relief to him. He said that he would guard it strictly confidential and personal as conveyed.

Blum reminded me that he headed the Government which entered the Tripartite Agreement and that he personally was responsible for the part of the drafting thereof. He said that he desires that this be preserved. He assured me that he will make every effort to avoid exchange control.

He is not sure that he or any prime minister who may succeed him will be able to avoid such measure. He said France might be on the eve of a war. If war should come the internal value of the currency was not important. What counts in war is that the country have gold and credit. He is not willing to see the gold reserves of the Bank of France used endlessly and hopelessly through the stabilization fund to maintain the exchange value of the franc. Loans cannot go on indefinitely and Blum feels that London is tired of France’s borrowing there. Blum is studying possible means of checking flight of French capital and may call upon us for assistance towards this end. He will consider every possible alternative before admitting that exchange control is demanded by the situation. He does not wish that Secretary Morgenthau feel that he has any preconceived plan which involves exchange control.

Consequently Blum does not desire that an official approach be made to him or to the British by us now. He will watch developments and if he thinks circumstances warrant our undertaking to discuss [Page 274]the possibility of reconciling with the tripartite arrangement some measures of exchange control which would entirely respect the terms and value of the Franco-American trade agreement he will communicate confidentially to me the message which he desires relayed to Secretary Morgenthau. He told me that for the present he will not acquaint his collaborators with the message received tonight. I left nothing in writing with Blum. [Cochran.]