851.5151/1821: Telegram

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

683. For the Secretary of the Treasury from Cochran. Minister of Finance Marchandeau sent word for me to come to his office this [Page 276]afternoon at 4 o’clock. Upon my arrival he read to me a message which he wished communicated to Secretary Morgenthau at once. Rueff, who was also present, took the message in French and I took it down in English. Rueff and I then compared our copying and agreed on the following translation.

“The French Government is obliged to inform anew the Government of the United States of America that the expensive effort made by the stabilization fund, particularly during the recent period, can not longer be maintained. The French Government is therefore obliged, despite the fact that it has decided to impose from this week a new and important tax effort on the country, to choose between exchange control or the retreat of its currency. The rate at which the French Government has decided to stop is around 175 francs for one pound, with the will to lower progressively this figure in correlation with the economic improvement which it expects from its decrees.

The French Government recalls that from the first of last July taxes have been increased by 16,000,000,000 francs and that thereby it has shown its will to defend its currency by all possible means and that it remains still attached to this view within the framing of monetary liberty. It hopes therefore that in these conditions the setback which it is obliged to decide upon will appear to the Government of the United States of America as entirely in conformity with the provisions of the Tripartite Agreement.”

Marchandeau said that he would appreciate receiving Secretary Morgenthau’s reaction to the above statement as soon as possible. In answer to my inquiry as to when the rate would be moved to 175 he said “tomorrow”. This will be one of several steps taken simultaneously with the publication of certain decree laws tomorrow. When I asked whether the terms of the national defense loan would be announced tomorrow he replied that it was not sure whether they would be tomorrow or the next day. He insisted that in any circumstances it is not possible to hold the franc at its present rate and that it is absolutely necessary to let it move to 175. [Cochran.]