851.5151/1–1448: Telegram

The Ambassador in France ( Caffery ) to the Secretary of State

top secret
us urgent

231. For Under Secretary Lovett’s and Secretary of Treasury Snyder’s eyes only. Remytel 209, January 13.1 FinMin official advises that final decision on exchange system was reached this morning and has given me full outline of proposal on exchange rates and gold and French assets abroad. Schweitzer, Valensi and Largentaye2 instructed to review immediately full details of French decision with appropriate American authorities. Accordingly, I am not cabling summary. If you wish comments or observations assume you will request them by cable.

New “official” rate and free market in dollars and other “convertible” currencies clearly indicate that French did not make decisions on political grounds. I find this most encouraging.

French representatives in Washington have also been instructed to contact immediately administrative staff of Monetary Fund. Tentative plans are that question will be presented to Board of Fund early next week. Mayer and Guindey3 will raise question with Cripps4 on [Page 598] their arrival in London. Difficulties with British may arise. French are considering suggesting alternatives: (1) all transactions with sterling area be at new “official” rate for sterling, or (2) sterling be blanketed in under regime for convertible currencies. According to FinMin official British would probably favor first alternative to avoid sterling going to discount against dollar on free market.

Embassy staff will, of course, have access to free market. Please cable any instructions on exchange rate guarantees on certain Army and other official accounts, and payment of counterpart of Interim Aid into special account.

Sent Dept 231; repeated London for Gallman’s eyes only as 21.

Caffery
  1. Not printed.
  2. Jean de Largentaye and Pierre Paul Schweitzer were the French member and alternate member of the Board of Executive Directors of the International Monetary Fund. Christian Valensi was financial counselor of the French Embassy at Washington.
  3. Guillaume Guindey was Director of External Finances in the French Ministry of Finance.
  4. Sir Stafford Cripps, British Chancellor of the Exchequer.