851.5151/1807: Telegram

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

644. From Cochran. After talking by telephone with Secretary Morgenthau at 6 p.m. I requested an appointment with Minister of Finance Marchandeau30 and was received by him at 7 p.m. with Rueff present.

I congratulated Marchandeau upon being back in office and told him that I wanted to keep in touch with him as during the past with the view to exchange of information as envisaged by the Tripartite Agreement. I told him that we are naturally anxious to know just what this week’s move in the franc meant and what the attitude of the Government is in the circumstances.

The Minister denied that there was any split in the Cabinet. He said that after Daladier’s Government received the practically unanimous vote of Parliament it was ridiculous to think that there should at this early date be a lack of harmony among the 19 members of the Government charged with carrying out the program for which Parliament gave authorization. He said the decline in the franc these past few days had resulted entirely from speculation based on lies.

I told him that for the franc to fall so far in such a short period of time without the market seeing a firm defense by the French control tended to confirm the theory of the speculators that the Government was ready to accept a rate of 175 to the pound next week.

The Minister reminded me of the demonstration of confidence during the first few days of the Government. He said that in this favorable atmosphere it has been planned to work out their program slowly and not to announce any measures until after the first of May. The movement of capital into government securities had rendered the Treasury’s situation such that no immediate borrowing from the Bank of France or through a long term loan was necessary. This speculative campaign has changed their plans. Marchandeau was [Page 275]meeting with his experts when I was at the Ministry and he will work through Sunday. He will on Monday morning submit his proposals to a Cabinet meeting which has been advanced to that date. In the afternoon there will be a council of Ministers. After one or the other of the two meetings Daladier will make his announcement of policy and of specific measures.

By these statements and acts the Government hopes to restore the confidence that prevailed before the attack. In previous instances the stabilization fund with its gold has been the sole weapon of defense. The Minister said that this time they had decided not to use their diminished gold resources so extravagantly but to depend upon other means. Even at that considerable sums had been spent the past 3 days supporting the currency.

The Minister would not mention any specific level at which he desired the franc. He insisted that Monday’s statements should drive back the rate. In answer to my inquiry as to whether 175 or any other limit had been in mind as the proper extent for the franc to sink, he responded emphatically that there was no basis whatever for speculation on the 175 level and that there was most definitely no intention on the part of this Government to manipulate a deliberate depreciation in the franc or to accept without counter attack a franc pushed down to the present level.

The Minister told me that the statement of Bank of France as of April 21 will show that there was no new advance to the state and that the current week will also witness no drawing on the Treasury’s credit with the bank.

Plans for the national defense loan will probably be completed on Monday but no issue attempted until atmosphere improves.

Marchandeau said it was impossible to give me details of his plans now since they are still in the course of formation and will likely be modified in the ministerial meetings Monday.

In our conversation the Minister referred to an interview of Daladier appearing in this evening’s press wherein the Prime Minister said inter alia “the Government is unanimous in its monetary policy, unanimous in affirming its fidelity to the Tripartite Agreement”.

Repeated by telegraph to Butterworth at London. [Cochran.]

  1. Appointed Minister of Finance in the Cabinet formed on April 10 by Édouard Daladier.