Full text of Diaries of Henry Morgenthau, Jr. : Volume 34 : Part 1

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DIARY

Book 34

September 25 and September 26, 1936

-BBook Page
Belgium

See Stabilization

-E-

Eccles, Marriner S.
HMJr and Eccles (in Utah) conversation concerning
Tripartite Agreement - 9/25/36, 5:10 P.M

XXXIV

96-103

-GGovernment Bond Market

HMJr tells Burgess he may have $25 million to buy bonds;
Government must fight any effort to push market down 9/26/36

281

-HHolland

See Stabilization

-LLandis, James (Securities and Exchange Commission)

Asked to "come right over" to hear about announcement of
Tripartite Agreement - 9/25/36

-P Poland

See Stabilization

-RRansom, Ronald (Vice Governor, Federal Reserve Board)

Asked to "come right over" to hear about announcement of
Tripartite Agreement - 9/25/36

Rogers, James Harvey

See Stabilization: Tripartite Agreement - 9/25/36

-SStabilization (arranged chronologically)

Tripartite Agreement
(See resume 8/16/36 to 9/22/36 in Book XXX, pages 1- 1-F)
(See also Cochran resume September-December, 1936, Book XLIII)

Conference in HMJr's office; present: Haas, Viner, Taylor,
Feis, Knoke, Williams, White, Oliphant, Lochhead 9/25/36, 9:30 A.M

a) Cochran has told HMJr that the British have told
Monick about HMJr's conversation with British

and Monick told French before Cochran could
b) Vandenberg story carried in French Economist made excellent impression

c) British statement (proposed), as presented by
Mallet, read
d) Certain changes shown to Hull by Feis

e) HMJr hopes he is doing right thing in "sitting tight";
all think "yes"

f) James Harvey Rogers trying to see HMJr; HMJr refuses explains to Hull

1-10

- S - (Continued)
Book

Stabilization (Continued)
Tripartite Agreement (Continued)
Summary of British note given by Cochran
a) Conversation with Cochran
Auriol declaration to HMJr
Chamberlain's personal and confidential message given

Page

XXXIV

11-33
34

to FDR (Chancellor has no legal right to fix pound
within the gold points)

35,141-143

a) FDR dictates reply

44-45

Burgess tells Harrison, Cariguel still uncertain how to

handle franc market in New York
Mallet discusses timing of the announcement

36
38

HMJr explains to Feis, United States is asking British
and French to change their text to make it identical
with United States; Feis will explain to Mallet
Hull thinks situation excellent - "however, we will have

47-48

to move mighty fast"

HMJr thinks time is distinctly up to the French

HMJr comments on "no signatures - just good faith"
Latest redreft given to Cochran
HMJr-Cochran conversation at 4:18 P.M
Corrected British message, approved by Hull, sent to FDR

54-57
58-71
72-77

Official announcement in Paris that there will be a
statement today (September 25)

HMJr tells Appert, French text will be received over phone

78-80,156

and asks him to come to Treasury so French and English
texts may be compared

81-83

a) Appert arrives with text

HMJr-Harrison conversation at 4:50 P.M
HMJr asks Landis and Ransom (Acting Chairman of Federal
Reserve Board) to "come right over"
HMJr-Eccles conversation at 5:10 P.M
HMJr-FDR conversation at 6:00 P.M

104,144-151
85-92
93

96-103
104

a) "By authority of the President, the Secretary of
"

the Treasury

b) British have overlooked most important thing:
right to get gold from United States
Feis-Mallet conversation: "Mallet will be down very soon"
Cochran phones at 6:35 P.M.

105,118
106-117

a) London has accepted and Chamberlain will release
statement at 12:30 London time

b) HMJr tells Cochran, Mallet will be down with Chancellor's
message in twenty minutes and asks French Minister to wait
c) Cochran transmits message to Auriol through Roueff
d) Mallet arrives
e) HMJr congratulates Auriol
f) Cochran assures HMJr, British will release same text as
HMJr sent Cochran

President of France now wants to go to bed and HMJr asks FDR

for advice "in this great emergency"
a) McIntyre thinks it a message in code

HMJr phones FDR of Chancellor's message of congratulations

114,152

119

120
124
122

- S - (Continued)
Book

Stabilization (Continued)
Tripartite Agreement (Continued)
Press conference at 7:30 P.M

XXXIV

Official announcement
French announcement

Harrison phones congratulations

British editorial comment
French editorial comment

Holland announces no change in her monetary policy

Press comment

Page

126-132
133-134
371-373
135-140
159-160
375-379,
390-399
161

162-202

Cochran transmits Auriol's message at 11:30 A.M. from

Auriol's office

Press conference - 9/26/36, 10:40 A.M

210-232
235-248
286-301
302-303
304-305

Belgian devaluation: chronology

306

Cochran again phones at 4:18 P.M
a) Cabled to Cochran
b) Cabled to American Embassy, London

Dow-Jones and United Press comment
Tokio

312

Switzerland. 318-320

Copenhagen 313
Berlin
314,389

Belgium

Rome

315

London

Vienna

317

Paris

Holland

312-368

323,362
324-325
326-330
331-342

Stock market gossip. 345
Conference in HMJr's office; present: Oliphant, Opper,
Viner, Lochhead, Gaston, and Haas - 9/26/36
a) Documents to be used in event decision is

380-381

reached to sell gold to Great Britain and

France

Switzerland will maintain present gold parity - 9/26/36.

387

Cochran cables Swiss will follow French example with
25- to 30% devaluation

404

Poland will not devalue zloty - 9/26/36

401

Belgium:

Chronology of devaluation
Message from Belgian Embassy concerning Tripartite
Agreement - 9/26/36

306,323,362

Announces no change in her monetary policy - 9/25/36

161,324-325

Zloty will not be devalued - 9/26/36

401

Will maintain present gold parity - 9/26/36

318-320,387

308-311

Holland:
Poland:

Switzerland:

Cochran cablec Swiss will follow France with 25- to 30%

devaluation - 9/26/36. 6 P.M

404

Switzerland

See Stabilization

-VVandenberg, Arthur H. (Senator, Michigan)
HMJr discusses answer with Helvering - 9/25/36

203-209

September 25, 1936

9:30 A. M.

Present in the Secretary's office this morning were Dr.
Haas, Dr. Viner, Mr. Taylor, Dr. Feis, Mr. Knoke, Dr. Williams,
Mr. White, Mr. Oliphant and Mr. Loohhead.
The Secretary said, "I talked to Cochran this morning and
the British have told Monick about what I told the British here
and Monick told the French before Cochran even could get it to
them. They phoned that at once." (See Cable 921 from Cochran,
dated September 25, 1936, 2 P. M. attached).
Dr. Feis came in at this point and said, "Sorry to be a
little late but I had to tell Mr. Hull of the status of the
negotiations. Mr. Morgenthau inquired, "How does he feel?"
Dr. Feis answered, "He really didn't have time to comment."
Continuing his remarks, the Secretary said, "What I was
saying was, I talked to Cochran. He said that the British sent
for Monick immediately and he told them what I said about the
$5.00 pound. Monick phoned it to Cochran and Baumgartner had

it before Cochran could even get it to them. The Deputy Governor of the Bank of England, who is over there, has raised the
point about gold and I told Cochran to sit tight and he had
already said he had to sit tight; that everything was waiting
on the answer to the $5.00 pound. He said, How quickly could
we act if we got the answer? I think we ought to get together
right quick 80 I can get it to the President with our changes.
"Incidentally, I am very much pleased with the Vandenberg
story this morning. The French Economist carried it in full
and it made a very good impression in the French press, and laid
the foundation for what is coming." Knoke commented, "I think
it was very timely," and, Professor Williams said, "It was an
excellent statement to come out right now."
The Secretary said to the group, "If this thing goes through
tonight, I think we laid the foundation. I think the people who
worked on it did an excellent job and I don't think the Vandenberg group can answer under a couple of days." Feis said, "They
can't answer it at all." Haas said, "They can poke jibes at
it." Mr. Morgenthau said, "They can go just like that (snappod

his fingers) at it."

The Secretary began to read Exhibit D, the proposed

English statement, which was brought in by Mallet last night.
He said, "The only change we will make in that is to transfer
the word 'peace' - that was Hull's thought." Feis said, "We
just changed the position of 'safeguard peace' 80 that no one
could give it a political interpretation. It's just a matter
of changing the position of the phrase 'to safeguard peace'.

PARAPHRASE OF TELEGRAM RECEIVED

FROM: American Enbassy, Paris, France
DATE: September 25, 1935, 2 p.m.

MO.: 921
RUSH

FROM COCHRAW.

FOR SEGRETARY OF THE TREASURY.

This morning at 10 o'clock I conveyed orally to
Baumgartner at the Ministry of Finance the message given
to me over the telephone at 3:15 this morning by Secretary

Morgenthau. While I was at the Ministry of Finance,
Monick was telephoning from London to let Baungartner
know that the British Treasury had told his of the

Secretary of the Treasury's request for clarification
of the dollar-sterling crossrate range.
As I was leaving the Ministry of Finance, Baumgartner

promised to call Monick back, and tell him to urge upon
the British the necessity for meeting the request of
the American Treasury. I had a telephone call from
Baumgartner at 1 p.m. just before the Secretary of the
Trecoury telephoned me this noon. Banegartner said that
Baley, of the British Treasury, had given Monick
END SECTION ONE.
WILSON.

PARAPHRASE OF SECTIONS TWO AND THREE OF !KLEGRAN NO. 931

of September 35, 1936, from the American Babassy, Paris.

the definite impression that the Chanceller of the
Exchequer would give assurances to Secretary Morgenthan

either by telephone or by letter, or possibly both.
Waley did not reveal the probable terms of the assurances.
At BOOR I had a telephone call from Fournier. He

said that it is urgent that he begin communicating with
us with a view to cooperation on technicalities. The
Undergovernor asked whether I could answer the questions

he had raised earlier in the week with regard to yielding
gold and the closing of the markets. In reply I told him
that until settlement of a point which we have up with
the British, nothing could be said.
I telephoned to Baungartner just now at 1:45 and
told him of my telephone conversation with the Secretary
of the Treasury. I was asked by Paumgartner to express
his Ministry's deepest appreciation of the cooperation
and attention which is being given this matter by
Secretary Morgenthau. He expressed the hope that we may

suggest very few changes in the draft declaration in view
of the urgency for speed. Baungartner told me that the
British and French agree to making the change from

*realising* to "considering" - the fourth word in the third
paragraph of the British text of the draft declaration
as contained in my telegram of September 24, 9 p.m., No. 930.

2Reference is made to the Department's telegram No. ser

of September 23, 12 midnight, containing the draft announce-

neat of the Secretary of the Treasury. May I respectfully
request that in the first restance of the draft announce
ment it would be desirable to omit the phrase "ea twentyfour hours notice". It is presumed the Searetary could
exercise such right freely, but 11 would not room advisable
to use a phrase which in the past has at least in Europe
suggested an undetermined or stabilised (unstabilised)
mometary policy - just at a time when we are trying to

inspire international stability in greater degree.
END OF MESSAGE.
WILSON.

EA:LIV

-3-

We suggest 'a common desire to foster those conditions which

will safeguard peace and best contribute to the restoration
of order in international economic relations. The Secretary
asked, "Are you all agreed on that?"
Referring to the second paragraph, the Secretary said,
"Why do you change 'of course" Oliphant answered, There
was an objection to the word 'while' and those two sentences
in Number 2 and then there are two possibilities set up in
the penciled notation."
The Secretary read, "They are ready to continue the
policy which they have pursued in the course of recent years,"
and asked, "and the suggestion is 'They welcome this opportunity to reaffirm their purpose, etc." Mr. White said, "There
was some difference of opinion. Some felt the original
British draft placed too little emphasis on domestic conditions.
The Secretary continued reading: "His Majesty's Government
share with the Governments of France and the United States the

conviction that the continuation of this policy will serve the

general purpose which all the Governments should pursue."

The Secretary asked, "What 18 'two-fold'*(he was referring
to the proposed insertion of the word 'two-fold' 80 that it
would read 'The continuation of this two-fold policy will serve
the general purpose, etc.' Viner explained, "One is considerations of internal prosperity and the other is international
stability." Taylor added, "Which introduces a new thought."
The Secretary asked, "What is the new thought?" Taylor replied,
"Calling it two-fold."
The Secretary continued reading the first sentence of the
third paragraph: He said, "We want to leave out the phrase 'on
the basis of world prices. IR Mr. White said, "We all agreed on
that."
The Secretary said, "I think we ought to make a minimum

of changes. Cochran told me definitely that they are going to
put the profit from devaluation into a stabilization fund,
that's his understanding. I also asked him about the FrenchEnglish cross-rate and he said no one had discussed it." 011phant said, "We were right in giving them that price." And
H.M.Jr. said, "Yes, I don't think we have made a mistake yet.
The idea is, we will send this to Coohran to hold until the
President O. K.'s it."
Dr. Feis left at 10:00 a. m. to show Exhibit D to Mr.
Hull as it was corrected. H.M.Jr. phoned Hull. "I am asking
Feis to go to your office with suggested changes we have made

-3-

in the final British note and I would like you, if you would,

to go over it and any suggestions you have to make, I will be
delighted to receive them. I talked to Coohran on the telephone this morning. He said that the British had informed
Monick, who was in London, of the proposition that we had made
and he had given that information to the French, namely: until
it was decided what the pound was going to be, we were going
to sit tight. I cannot understand the British. They are
awfully pleasant people to meet, but when it comes to this sort
of thing, I do not understand them. The Federal Reserve people
who are here told me that on June 16, 1933, they had tentatively agreed in London to a $4.00 pound, BO we have moved a little
bit in the last three years. There is nothing more important
and the French situation is steadily getting worse. They have
already lost $20,000,000 worth of gold today. Feis will be
over in five minutes."
The Secretary related to the group what Knoke and Lochhead

had told him last evening on possibilities of what might
happen in case the agreement did not go through.

H.M.Jr. said, "The franc, let's say, was devalued 20%.
There is confidence in the French new situation and the French
capital flows back to Paris from London and the English pound

falls, and they let it fall. That is what can happen."
Knoke said, "Theoretically, it is correct, but it is not
in the oards. Viner said, "It has possibilities. I thought

you
were asking about probabilities. Knoke's opinion is mine,
too."
H.M.Jr. said, "Please find a weakness in my armor which
I cannot answer to my own satisfaction.

Williams said, "I think the British are not planning to
play with us in this matter at all. They are going to stabilize on the franc and they feel that probably the dollar-sterling rate will not be involved. It is true if capital goes back
to France, the pound will fall and they are planning to support
the franc and if they do, the dollar-pound rate will not be
affected at all."
H.M.Jr.: "Do you feel that I can sit here with confidence

and do nothing if I do not get the assurance from the Chancellor
of the Exchequer that he is talking about a $5.00 pound?"
Williams, "That is the only thing we can do, but I think it
would clarify the situation if we would recognize that we have
no real power over them at this stage and we cannot influence
anybody.

H.M.Jr.:*Am I taking an undue risk for the American people

by sitting tight?" Williams: "You are doing exactly right."
Viner: "What do you mean by sitting tight -- refusing to sign
the declaration?" Williams, "Yes.
H.M.Jr.: "The procedure right now is that I will not make
another move. The President said last night, The sine que non
18 a $5.00 pound. Is it your judgment that we are doing the
wise thing by not making any move unless the Chancellor says,
Yes;
what
I think
so."we have in mind is a $5.00 pound?" Williams: "Yes,

Viner said, "If it started out that way, it would get

worse than you describe it." H.M.Jr., "In what are you going
to get a nose dive? What can make American commodities go
into a nose dive?" Haas replied, "That would be a very serious
European development.

H.M.Jr. said, "Let's say we have a complete breakdown in
Paris. How 18 that going to affect American commodities?*
White answered, "The immediate effect would be very, very

little; perhaps on the stock market." Haas: "It would depend
upon whether people thought the future outlook for Europe was

headed for complete chaos."

The Secretary said, "Now, Mr. White, I interrupted you
and you said, if this thing broke there are certain things we
can do. And we have been thinking about this thing for months."
Mr. White said, "There are many possibilities. We examined
each possibility. Bome are quite probable; some are less probable; some are very improbable. But we examined all possibilities to see what position we would be in and what we could do
to protect ourselves. There 16 a probability, as Viner pointed
out, there 18 a strong probability, that you will have a return and that sterling will decline somewhat. Possibly, if
there is no interference on our part, it may even go to 4.95
or 4.90. They hesitate to go lower, because they know our attitude on it. Supposing, that as a result of return of funds
from England and fear that possibly England might continue to
go down with the expectation - it hastens that movement expecting the fund doesn't want to interfere because it may feel
the profitable level is around 4.75 or 4.60. I am assuming that
this agreement is out for the movement. If it stands, that's
out. Then, what can we do about it? So long as we continue,
if we still permit gold to be taken out, whether through one
country or through two countries, we are in a very vulnerable
position to attempt to prevent sterling from declining. We can
do very little without taking risks, which I do not think we
should wish to do, because risk would involve considerable loss
80 long as we permit gold to be exported. If, however, the

-5-

British free gold market continues to operate, then our risk
does not become 80 great and we can prevent sterling from declining below the level that we want it, with small losces
possible, but the losses will be negligible in light of the
larger interest. We could do that. If, however, by virtue
of that expense, you engender, which is very likely, the expectation that the price of gold may begin to rise by virtue

we
aregold
and
of the fact that
buying
sterling in order to

protect sterling, and that there is pressure against sterling,
what you might have 18 not flight into any of the currencies
at all, but flight from all currencies. In other words then,
you would have the sterling price of gold beginning to rise.
When that happens, the thing for us to do is then immediately,
or before, to stop permitting any gold to be exported and
keeping our exchange rates at approximately the same relationship with other exchange rates, and we don't involve the same
risks, the risk being that we accumulate sterling balances.
What we would get out of those sterling balances later may
involve a risk. War might break out or anything might happen,
but if we stop exporting gold, we become in a stronger position to protect exchange rates, if we 80 see fit -- not only
the sterling rate, but several of the other rates, 80 we have
a large measure of protection there. And if it goes that far

this is less of a probability - if it goes that far, then

England becomes more concerned over the situation than we do.

She would suffer more by that type of monetary struggle than
we would and I think would soon call a halt to it and some
arrangement would be made which would settle the difficulty.
But, if no arrangement were made, and that thing persisted,
then -- not going into extreme unlikely probabilities, but remaining in the realm of possibility -- you might have a very
rapid rise in the price of gold, followed by a third eventuality, which Mr. Oliphant mentioned, that people might seriously
begin to regard gold as of no value as a monetary metal because of wide fluctuations. When that arises, which again I
say 18 unlikely but possible, you might have a collapse in the

value of gold in terms of all currencies."
Mr. Morgenthau said, "Let me put it this way. I would

like to ask you the same question I asked these other gentlemen.
You know what is going on and you have studied these things and
it is your job to get ready for this. Do you advise me to sit
tight at this moment on the $5.00 pound, or shouldn't we?" Mr.

White answered, "Absolutely, with this minor qualification that, if the difference between the success of this statement
and its failure is the question of a few points, I would want
to have opportunity to revise my position."
The Secretary said, "You are talking in general terms.
What you mean 18, if they say between $4.95 and $4.86?* White
answered, "I would think the agreement is more important than

-6-

the other, because of the possibilities. The Secretary said,
"But as to the general thing of my sitting here?" White anawered, "That you continue to sit tight. In my opinion, you
have done the right thing up to now." Haas said, "Absolutely.
I think you are right. I think you might take this view in
the negotiations. Try to put this in the terms of the British
and figure out what they would like to have happen. And, as I
see it, that if France devalues and they can get this simultaneous statement and France makes definitive devaluation,
Great Britain is back just where they were before this struggle
came. They have made no committments to us except a general
stability agreement, which they made some months ago and I

would think they would prefer to have it wind up that way."
Lochhead expressed his opinion as follows, "I can't see
where the British would come back. But, after all, they have
asked us if we would give up gold." Haas said, "They were in
trouble then." Lochhead said, "But you can't tell about that.
And if you talk about giving up gold, you have to have some
point. They don't like the French situation a damn bit."
Oliphant said, "The Vice Chairman of the Bank of England is
again over in France."

The Secretary again called Secretary Hull and read to him
the draft with the changes made by the Treasury group. He said
to Secretary Hull, "I am going to put it on the wire to the
President and see how he feels about it.

"I just thought I would tell you this: James Harvey Rogers
has been trying to see me all day. Henry Wallace just called
up and said he saw him and that Rogers saw Blum a year ago and
then he saw somebody just now and Rogers told them that they

could not expect us to go along with them on any devaluation

unless the French would make some sort of promise on the French

debt. And I just want to tell you, if you don't mind, that I

won't see Rogers, because I don't trust him and the President
doesn't either. You know of an incident that happened. He left
my office and went over to see Feis and told Feis that he could

see the confidential cables. I had told him that he could not.
Feis called me up to check and Feis said, 'He is sitting outside. Didn't you say he could see the cables?' and I told him
Rogers could not see the cables. And I just want to say I
don't trust him and the President doesn't, either, and while
this is on I am not going to see him. He is trying every way
to see me and while this is on, I don't want him in my place,
and I feel about it very strongly. That's the way I feel. May
I say, when I talk to the President, that as far as you feel,
this is all right? Thank's very much, thank you."
H.M.Jr.: "What I said we are going to do is this: I will
start reading the British note."

-7-

At this point, Cochran called the Secretary and gave
him over the phone summary of the British note as follows:

"1. Chancellor of the Exchequer recalls that he has no
legal authority to fix the pound within gold points. Furthermore,
principal
of the British policy 18 to let the pound
find
itsthe
natural
level.

#2. It is possible that the natural level of the pound
may be $5.00. It is possible, also, that it may be lower. This
is an actuality which has been many times envisaged.

(No precise allusion to $4.86 was made in the cablegram
but presumably the Chancellor had this in mind.)

"3. This being so, the Chancellor will in no way endeavor to depreciate the pound in a deliberate manner. It is
no
this.more the policy of England than of the United States to do
#4. Likewise, the Chancellor will not take advantage of
the French monetary adjustment to depreciate sterling by way
of reprisal no more than the United States will do this.
#5. The Chancellor, moreover, does not foresee any depreciation of the pound during the next few months which would
constitute monetary dumping.

#6. The Chancellor does not object to the French adjustment although he finds it somewhat too wide."
Cochran, in his telephone conversation, also gave the
declaration of Minister Auriol to Mr. Morgenthau, which follows:
"The French Government, while thanking Mr. Morgenthau for

all that he has already done, wants to give him the assurance
that it intends in no way on its side to depreciate its money
beyond the limit which will be sought under monetary law.

(Interpolation
that they will endeavor to stay at the
middle
point.)
"After simultaneous declaration despite the reservation
which this country has been obliged to make to take account of

its public opinion, they will consolidate effectively the stability of the major currencies and will constitute the starting
point for a trustful cooperation between the three great countries. It insists on the urgency for its country of a final

decision, the Council of Ministers being already in session

since 4:00 o'clock. It is now ten 'til six.

Following is a record of the conversation between Coohran
and the Secretary:

September 25, 1936
11:30 a.m.

Operator:

Your
Paris call is coming through. Do you have
his name?

H.M.Jr:

His name is Auriol.

Operator:

That's right.

H.M.Jr:

Baltimore.

Operator:

(Laughter) All right there's Secretary Morgenthau.

Overseas

Operator:

Hello Mr. Morgenthau.

H.M.Jr:

Yes.

0.0:

Thank you - we're ready.

H.M.Jr:

Hello.

Hello Mr. Morgenthau.

H.M.Jr:

Yes.

This is Cochran speaking from the Ministry of

Finance.
H.M.Jr:

I thought you'd be there.

Yes.

H.M.Jr:

I could smell you.

I thought you would suspect something.
I see.

H.M.Jr:
C:

Mr. Auriol called me over here at 4 'clock.

H.M.Jr:

Yes.

Hoping that he would be able to communicate personally a message to you.

H.M.Jr:

Yes.

But it has taken so long to get the call through that he
has had to go on te the Cabinet meeting.

-2

H.M.Jr:

Yes.

H.M.Jr:

Yes.

So I have written down the message which I am to

it began at 4 o'clock and he waited half an

hour and had to go on.

communicate to you.

H.M.Jr:

Where are you now?

I'm sitting at his desk.

H.M.Jr:

I congratulate you.

H.M.Jr:
C:

Thank you. It's not for long.
I hope you'll last throughout the day.
Yes.

H.M.Jr:

All right.

Roueft

H.M.Jr:

Who?

Roueff

H.M.Jr:

O.K.

They've offered to disappear if I have anything to
say that they shouldn't hear.

H.M.Jr:

Well give them my best personal regards.

All right. Have you received a British reply

and Baumgartner are here with me.
and Baumgartner.

yet.

H.M.Jr:

I received yesterday four cables from the British.

Yes.

H.M.Jr:

The last one being practically the same as the one
that you read to me.

-3-

That is you have - have received a message today?

H.M.Jr:

I have received nothing since 7:30 Washington time

last night.
Nothing since 7:30 last night?

H.M.Jr:

Yes.

Because Monick telephoned this afternoon - he had

been at the British Treasury -

H.M.Jr:

Yes.

He had seen the message which they were sending to you.

H.M.Jr:

Well I have not.

And he has summarized the views of the people here
and I have made a translation of it and can read their
summary if you wish.

H.M.Jr:

That would be very helpful.
Just a summary of it then.

H.M.Jr:

Yes. Go ahead.

Yes. Article 1.

H.M.Jr:

What?

The Chancellor of the Exchequer -

H.M.Jr:

Yes.

- recalls - reminds you that he has no due authority
point.
to fix the pound before going off the

H.M.Jr:

Say that again.

The Chancellor of the Exchequer recalls -

H.M.Jr:

Yes.

That he has no due authority -

H.M.Jr:

Yes.

-4-

- to fix -

H.M.Jr:

- Yes.

the pound T within the gold point.

H.M.Jr:

Yes.

Furthermore, the principal of the British policy
is to let the pound find its natural level.

H.M.Jr:

Hello

- find it's natural what
- find

H.M.Jr:

- find it's natural

- level

H.M.Jr:

H.M.Jr:
C:

H.M.Jr:

- level - yes
- level
- level

Then 2 - It is possible that the natural level -

H.M.Jr:

Wait a minute - wait a minute - you've faded out

Yes. - Paragraph two.

H.M.Jr:

Wait a minute, Cochran - wait a minute

Hello

H.M.Jr:

Wait a minute - wait a minute - they've got to do
something on this - wait a minute

Operator :

Just a moment please - hello?

H.M.Jr:

It's faded out.
Oh I'm sorry - just a minute (pause)
(Aside to someone in his office -"they listen to

Operator:
HM.Jr:

every word you say - that wasn't my operator)

-5 Operator:

I'11 call you back.

H.M.Jr:

What's that?

Operator:

I'11 call you back.

Operator:

All right.
All right.

H.M.Jr:

Hello.

Operator:

Go ahead.

H.M.Jr:

Hello Cochran.

Can you hear me now?

H.M.Jr:

Go ahead Mr. Minister.

All right my colleague -

H.M.Jr:

What?

I say mon chere colleague

H.M.Jr:

oui, oui

(laughing) Paragraph 2.

H.M.Jr:

Yes.

It is possible that the natural level of the pound -

H.M.Jr:

Yes.

May be $5.00.

H.M.Jr:

Yes.

It is possible also that it may be lowered.

H.M.Jr:

Yes.

This eventuality has been envisaged many times.

H.M.Jr:

Yes.

H.M.Jr:

No precise allusion to four eighty-six was made
but presumably this was in the mind of

-6-

the Chancellor.
H.M.Jr:

Yes.

Hello?

H.M.Jr:

Go ahead.

Paragraph 3.

H.M.Jr:

Yes.

H.M.Jr:

Go ahead - go - go ahead.

Now one - one second till I tlook at this thing -

H.M.Jr:

Surely ( Long Pause)

And this being so - referring to the above - this

H.M.Jr:

Yes.

The Chancellor will in no way endeanvor to depreciate
the pound in a deliberate manner. This is no more
the policy of England than of the United States to do
this.

Paragraph 4.

H.M.Jr:

Yes.

Likewise the Chancellor shall not take advantage
of the French monetary adjustment to depreciate
sterling by way of reprisal no more than the
United States will do this.

being so -

Paragraph 5. The Chancellor of England does not
forsee any depreciation of the pound during the
said two months which would constitute monetary
dumping.

Paragraph 6. The Chancellor does not object to
the present adjustment although he finds it
somewhat too wide.

H.M.Jr:

Now that's the summary of the cable but it's only
a summary - it's not an exact discourse.
Yes. Well do it again, SC we'll save time on it.

All right, I'll start from the beginning again.

H.M.Jr:

Please.

-7-

2. It is possible that the natural level of the

pound may be $5.00. It is possible, also, that it
may be lower. This is an actuality which has been

many times envisaged.

Then Monick put in his own parenthesis there of

parenthetical interest. He said: "No precise allusion
to $4.86 was made in the cablegram but presumably the Chancellor had this in mind." Now that is only
a parenthetical interjection by Monick.
H.M.Jr:

By Monick?

Yes.

H.M.Jr:

I see.

3. This being so, the Chancellor will in no way
endeavor to depreciate the pound in a deliberate
manner. It is no more the policy of England than
of the United States to do this.

4. H.M.Jr:

Just hold the wire a minute. Just hold it a minute.

All right.

H.M.Jr:

Hello.

H.M.Jr:

Go ahead.

4. Likewise, the Chancellor will not take advantage of the French monetary adjustment -

H.M.Jr:

Yes.

- to depreciate sterling by way of reprisal no more
than the United States will do this.
5. The Chancellor, moreover, does not foresee
any depreciation of the pound during the next few

months, which would constitute monetary dumping.

6. The Chancellor does not object to the French

Adjustment although he finds it somewhat too wide.

H.M.Jr:

Yes.

-8-

H.M.Jr:
C:

That's the text summarized by Monick to Baumgartner
here.

All right. Now what next?
Then the Minister - Minister Auriol wanted me to
transmit to you the following declaration which he
wrote out here.

H.M.Jr:

All right.
"The French Government, while thanking Mr.

Morgenthau for all that he has already done,
wants to give him the assurance that it intends
in no way on its side to depreciate its money
beyond the limit which will be sought in the
monetary law. The H.M.Jr:
C:

It what?

- The simultaneous declarations, despite the reser-

vation which each country has been obliged to make

to take account of its public opinion, will consolidate effectively the stability of the major currencies, and will constitute the starting point for a
trustful cooperation between the three great
countries. It insists on the urgency for its
country of a final decision: the Council of
Ministers be Pready in session since 4:00. It
is now ten to six. Mr. Auriol sends his warmest
personal greetings to Mr. Morgenthau."

H.M.Jr:

Yes.

That is the message which he asked me to convey to you.

H.M.Jr:

Yes. Well you'd better do it again.
All right. Minister Auriol asked me to transmit to

Secretary Morgenthau the following declaration:

"The French Government, while thanking Mr. Mor-

H.M.Jr:

genthau for all that he has already done, want to
give him the assurance that it intends in no way
on its side to depreciate its money Wait a minute - wait a minute. Go back about 20 words.

- 10 -

- for all that he has already done, wants to give him
the assurance that it intends in no way on its side
to depreciate its money beyond the limit which will
be sought under monetary law.

H.M.Jr:

All right.
And Baumgartner says here - he interposes this remark to me - that they will endeavor to stay at
the middle point.

H.M.Jr:
C:

Well, what is the middle point?
Well - of their range of devaluation. Half way between the two limits.

H.M.Jr:

Well what is the middle point?

To devalue.

Yes, but what is their middle point?
Well, I gave you those two extreme points yesterday.

H.L.

Please

- and 34 points.

H.M.Jr:

I didn't get that - please say it again.

The limits which I gave you yesterday -

H.M.Jr:

Yes.

H.M.Jr:

They're 25 -

- which they will seek for authority to devalue, by

decree, -

H.M.Jr:

Yes.

- are: The lower limit 25%

H.M.Jr:

Yes.

The upper limit 34.35.

H.M.Jr:

All right.

- 11 -

So you can figure the middle point between those.

H.M.Jr:

Yes.
be

Baungartner says their efforts will/from the beginning
to hold the rate at that middle point.

H.M.Jr:

Yes.

And, incidentally, they intend to have a stabilization
fund of 10,000,000,000 francs.

H.M.Jr:

It will be - say that again.

They
intend to have a stabilization fund of 10,000,000,000 francs.

H.M.Jr:

How many billion?

Ten.

H.M.Jr:

Ten?

Ten (Spells) t-e-n - ten.

H.M.Jr:

Ten?

Ten.

H.M.Jr:
C:

H.M.Jr:

10,000,000,000 francs?

That's right.
Yes. Well that sounds good.

Yes.
here. And over here - it's sufficient, I should say,

H.M.Jr:

Yes.

Then this declaration continues from where we interposed.

H.M.Jr:
C:

H.M.Jr:

Oh, you're not through with it yet?
I - I was starting over again.

All right.

- 12 -

That the -

H.M.Jr:

What's that?

after simultaneous declarations, despite the
reservation which each country has been obliged
to make to take account of its public opinion,
will consolidate effectively the stability of
the major currencies, and will constitute the
starting point of a trustful cooperation -

H.M.Jr:

Of a what?

- a trustful -

H.M.Jr:

Trustful?

Yes.

H.M.Jr:

(Spells) t-r-u-s-t-f-u-1?

Yes - a close together, confident cooperation.
Yes. Wait a minute.

H.M.Jr:
C:

H.M.Jr:

- between the three great countries.
Wait a minute - go back about 10 words. Go back 10
words.

All right. - and will constitute the starting point
for a trustful cooperation -

H.M.Jr:

O.K.

- between the three great countries. It insists - U
Wait a minute - wait a minute. We got a fadeout -

H.M.Jr:
C:

wait a minute.

All right.

Operator: Hello.
H.M.Jr:
There's a fadeout on that, tell her.
Operator:

All right - I'll get her right back.

- 13 -

H.M.Jr:

Have you got that?
Wait a minute.

H.M.Jr:

(Aside to some one - "What's the last you've got?)

- for a final decision, the Conncil of Ministers

H.M.Jr:

Wait
a minute - wait a minute - I'll tell you what is
the last we have.

H.M.Jr:

The
last I have is "cooperation between the three great
countries.

All right. Second begins this. On the urgency for
its country of a final decision, the Council of
Ministers being already in session since 4 o'clock.

H.M.Jr:

Yes.

Then the conclusion would be Auriol encloses warm personal greetings to Secretary Morgenthau.

H.M.Jr:

Yes.

It seems the Minister waited here for a half an hour before he went to the meeting.

H.M.Jr:

Yes.

Because this also is the one a private meeting before
which he contemplated the proposal for action, you see?

H.M.Jr:

I understand.

And so he's gone over there and they've had a very
bad day here. The gold losses -

H.M.Jr:

Now wait a minute - have you got anything else? I mean

for
me to take down or is this just going to be
general conversation?
C:

H.M.Jr:

I was just trying to describe the situation.
All right.

- 14 -

There has been a very heavy sale of dollars.
After 3:30 the Guaranty alone had sold 19 million.

H.M.Jr:

Yes. Well now let me get this. We know how much

money - Now Cochran - hello - Cochran.
C:

Yes.

H.M.Jr:

Can you hear me?

Yes.

H.M.Jr:

All right. Now let me ask you this. What is the
procedure - what is the timetable that they have in mind in
following over there.

I'm telling you and let them check me - Right.

H.M.Jr:
C:

Their - their plans are to have the Council of
are determined upon calling a special session of

Ministers

Parliament on Sunday are not permitted to have a
special session of Parliament on Monday (Pause).

H.M.Jr:

Yes.

And that the embargo on gold would be declared at
the same time this common declaration was made.

H.M.Jr:
C:

Well
now they're going to call Parliament Sunday or
Monday.
They are just going to call Parliament on Sunday.

They were trying to get the call out tonight -

H.M.Jr:

Yes.

- so Parliament could be on Monday.

H.M.Jr:
C:

Yes.
All right. Now then the embargo would go on
tonight?
The embargo would go on when they issue the

declaration.
H.M.Jr:

I see.

-15-

That's
why they so urgently desire - (squeal) declaration out.

H.M.Jr:

Urgently desire what?

So
heavy that they feel almost compelled to declare
an embargo.

H.M.Jr:

Yes.

H.M.Jr:

And
they don't want to do that now without adding
the declaration.

Well now - let me - of course - I suppose the British
message
will be coming through in about an hour or
so.

They called me over here at 4 and it had already
been passed on from London, you see?

H.M.Jr:
C:

H.M.Jr:

Yes, but it hasn't got here to Washington yet.
It has not.

I mean I can't act until I get - I can't act until I

get Chamberlain's message.
C:

H.M.Jr:
C:

That's what I told them here that I'd pass this on to
you and give you the preliminary information Yes.

I doubtedfrom
whether
you could act until you had an actual
message
the British.
Yes - now.

At
the same
situation
here.time I - I thought you could benefit their

H.M.Jr:

Well, so am I.

Yes, I know you are.

H.M.Jr:

I mean please remind them that they sent us the first
message last Friday, that we answered it Saturday
and Mr. Chamberlain stayed away on his holiday until
Tuesday.

I reminded the Minister of that when I came in this
afternoon.

- 16 H.M.Jr:
C:

Because what they're asking me to do is almost
impossible.

reminded hia - asked them if they could reply
very quickly - that the big delay came in the
five days over the weekend because the British
I

were hesitating.

H.M.Jr:

Yes. Now I mean - I have the greatest sympathy

Surely.

H.M.Jr:

I have the greatest sympathy and the strongest

Surely.

H.M.Jr:

Do you get that?

Surely.

H.M.Jr:

And I wish you'd tell them that but I've got to wait
until I hear from the British, then I've got to in turn

and the strongest desire to be very helpful.

desire to be helpful.

communicate with the President.

Yes, that's all right. I'11 explain that.

H.M.Jr:

Now what I would suggest is - I think it's very

Yes - it's exactly six o'clock here.

H.M.Jr:

Well I would suggest that you be back there in two

That I be back at the Ministry of Finance in two

helpful to save time. It's now - let's see - it's
six there, isn't it?
hours.

hours.

H.M.Jr:

And I will put in a call for you there. I mean - now

H.M.Jr:

The Ministry of Finance in two hours.
Yes, well now - hello.

Yes.

it may be -

-17 H.M.Jr:

I say to be there in two hours. You may have to
don't know when the British will come in.

wait there for an hour or two. I can't tell because I

Let me speak to my comrades here on that. (Pause)

Hello?

H.M.Jr:

Yes.

They understand you have to await the message, that

you then have to speak to the President, and we shall

be here at 8 o'clock awaiting your call until it gets

too late here, depending upon your receipt of the

message and so on.
H.M.Jr:

Yes - I mean - Usually the British tell me when the
messages come in and tell me they started to decode

but I haven't heard anything from the British Embassy -

Important.

H.M.Jr:

Hello?

Embassy and the Ministry

H.M.Jr:

I mean - I haven't heard anything from the British
Embassy here.

They have not notified you that the message has come
in yet?

H.M.Jr:

No.

I see.

H.M.Jr:

And then I've got to get it to the President, Cochran,
and I've got to talk it over so while I say to be there
at B o'clock it may be 10 o'clock before I get an
answer.

H.M.Jr:

Well, I think I'd better come here any way at 8 o'clock.
I do too. Now let me tell you what I'm doing in the
meantime.

Beg pardon?

- 18 H.M.Jr:
C:

H.M.Jr:

In the meantime we've corrected this British

declaration.

Can you just read the corrections on that now?

No because I - we've just finished it and just sent
it to be telegraphed to the President.

I sec.

H.M.Jr:

But the minute he O.K.'s it -

Yes.

H.M.Jr:

I will either - I will phone it to you to the

Embassy.
C:

H.M.Jr:
C:

H.M.Jr:

Well then I will go back to the Embassy and wait

there and I shall be there until eight.
That's the point.

So if you want to phone me the corrections there I will phone you the corrections either there or
at the Minister of Finance - French Minister of
Finance.

At the French Embassy and be there until a quarter till eig

H.M.Jr:

That's right.
And the French authorities will be here with me.
That's right. Now just - just hold the wire a minute

H.M.Jr:

and stay there till i o'clock.

- to get your answer.

H.M.Jr:

Just hold the wire - (Pause)

H.M.Jr:

Hello.

H.M.Jr:

The corrections we've made are not major corrections.

- 19 C:

The corrections are not major corrections?

H.M.Jr:

No.

They are corrections which they would accept.
What's that?

H.M.Jr:
C:

I say, they're corrections which would raise no

difficulty.

H.M.Jr:

No, no. Now, we will move just as fast as the
British will move.

You'll move as fast as the British move?

H.M.Jr:

Yes. We can't move any faster than they do.

We thought it might be helpful to you to have this
information in advance.

H.M.Jr:

It's very helpful.

And so then I shall go back to the Embassy to receive
there any form of correction you make here.

H.M.Jr:

Yes. Now just wait a minute please.

All right.

H.M.Jr:

Hello.

H.M.Jr:

Just a minute. (pause)

H.M.Jr:

Hello.

Hello - yes.

H.M.Jr:

Now you go back to the Embassy and please give

the Minister of Finance, Auriol, my very warm.
greetings -

Yes.

- 20 -

H.M.Jr:

- and tell him that we're trying to do everything

All right, sir.

possible here to be helpful.

We've tried to be helpful before and our policy here
is to be helpful again.
Yes, sir.

H.M.Jr:

Now just a moment, please.

H.M.Jr:

Hello.

H.M.Jr:

Knoke is sitting here and he has had a telephone

H.M.Jr:

message from Cariguel -

Yes.

H.M.Jr:

- asking him to use his discretion in supporting
the franc in the American market on Saturday.

Yes.

H.M.Jr:

In view of that request, Knoke wants to know whether

we should say anything to the American banks who
deal in foreign exchange.
C:

Well, if this thing is going through, it's my
understanding that you were to keep it. secret.

H.M.Jr:

They want it what?

That you were to keep it secret.

H.M.Jr:

Well, now wait a minute. Tell Baungartner and Roueff
that Cariguel called us -

Yes.

H.M.Jr:

- and asked us to use the French gold which is here
to support the French franc Saturday in America.

Yes.

H.M.Jr:

Now in view of that, does he want us to speak to the

American banks about dealing in foreign exchange?
I see.

- 22 -

H.M.Jr:

Now you ask Baumgartner and Roueff that question.

All right. (Pause)

They think that the private banks should be discouraged -

H.M.Jr:

Should what?

- should be discouraged from operations.

H.M.Jr:

All
else.right. All right. Now let me ask you something

Fournier telephoned me earlier about that this noon.

H.M.Jr:

What's that?

Fournier telephoned me this noon to see what we were

going to do if we stuck to that.

H.M.Jr:

Well, we'll do anything that they ask us to do.

Well, I had not given him a reply pending an outcome

H.M.Jr:

of this whole thing.
Well, now, please just make sure that what the Bank
of France is telephoning to the Federal Reserve in
New York is also what the French Treasury wants.

Yes.

H.M.Jr:

See?

We haven't been in conversation since telephoning
the Paris exchange.

H.M.Jr:

Well, now, but tell Baumgartner and Roueff not to have
the Bank of France phoning over any instructions which
aren't in accord with what the Treasury wants.

Well, that's right. All right - I'll make that point.
Baumgartner and Foumier had desisted from telephoning
themselves.

N.M.Jr:
C:

Yes. Well, make sure about that.
All right. Because he told me that it was urgent that
he should get in touch -

- 23 H.M.Jr:

Yes - now -

With the Federal Reserve people in regard to cooperation.

H.M.Jr:

Now one other question.

Yes.

H.M.Jr:

Ask Baumgartner and Roueff how much they want me to

tell and consult with Appert. He's just called up.
He wants to see me.

All right. (Pause)
Hello - hello - hello?

H.M.Jr:

Hello - yes.

They say that Appert is just bringing the note - just
bringing the cablegram giving the French text of the

declaration which France would make.

H.M.Jr:

All right.

And they say for other things for us to continue talking
directly this way.

H.M.Jr:

All right.

That he's not acquainted with all of these negotiations.

H.M.Jr:

He's what?

- with the message that they're not in stant communica-

tion just yet.

H.M.Jr:

No. Now, just a minute.

H.M.Jr:

Hello.

H.M.Jr:

Now we've typed this thing and let me read ir back to
you.

All right.

H.M.Jr:

"The Chancellor of the Exchequer recalls that he has

no authority -

- 24 -

H.M.Jr:
C:

No legal authority.
Just a minute. Who's paying for this call - we or the

French?

It's put in from here - I think they are.
Good - that's the - that's the only good - that's the
only dividend we'11 get out of this.
Yes. Well, I'11 see that it is arranged that way.
But I'm just joking.
Surely - surely.

H.M.Jr:

Tell them that I asked - that I'm worrying about it.
Tell them - tell them that I'm Scotch.

They got the point.

H.M.Jr:

Sure.

H.M.Jr:

They're laughing over here in the corner.
Now wait a minute "The Chancellor of the Exchequer recalls that he has
no legal authority -

Right.

H.M.Jr:

- to fix the pound within gold points.

Right.

H.M.Jr:

It is possible that the natural level of the pound

may be $5.00.
C:

H.M.Jr:

No, you omitted one sentence.
Did I?

Yes.
After "within gold points" there is another
sentence.

H.M.Jr:

Yes, well, give - what is that sentence?

Furthermore -

H.M.Jr:

Just a minute. Go ahead.

- 25 -

Furthermore -

H.M.Jr:

Yes.

- the principle of the British policy is to let the

H.M.Jr:

pound find its natural level.
Yes, that - well, now just a minute. (Pause while

Secretary speaks to some one in the office) We have

it all right. It's just that they made a mistake
here. I'm not going to read it back again.

Yes. Well, Baumgartner reminds me again that he
suggests an approximate time.

H.M.Jr:

I understand and we'11 wait - we've got to wait

until we get the official British thing.

Yes, surely.

H.M.Jr:

Anything else?

You didn't want to read any more of that, did you?
No, no. Tell Baumgartner I feel much better now that

H.M.Jr:
C:

I know he's paying for this call.

All right. Fine.
All right.

if
Then I shall go back to the Embassy, and you have the
corrections, call me there. If not, T shall be here
at 8:00.

H.M.Jr:
C:

H.M.Jr:

And give Baumgartner and Roueff my best regards.

Surely. I'll be delighted to.
All right.

Goodbye.

H.M.Jr:

Goodbye.

September 25, 1936

DECLARATION OF MINISTER AURIOL
TO MR. MORGENTHAU

The French Government, while thanking Mr. Morgenthau

for all that he has already done, wants to give him the
assurance that it intends in no way on its side to depreciate its money beyond the limit which will be sought
under monetary law.

(Interpolation that they will endeavor to stay at the
middle point).
After simultaneous declaration despite the reservation
which this country has been obliged to make to take ac-

count of its public opinion, they will consolidate effectively the stability of the major currencies and will
constitute the starting Point for a trustful cooperation
between the three great countries. It insists on the
urgency for its country of a final decision, the Council
of Ministers being already in session since 4:00 o'clock.

It is now ten 'til six.

-8-

While H.M.Jr. was reading the British note, Knoke came
back and said that Cariguel called the Federal Reserve Bank

in regard to supporting the franc and obtaining gold. The
Secretary said the time was not right to consider this until
we had fixed up the agreements. (See copy of Dr. Burgess'

memo following this page).

Mr. Mallet and Mr. Chalkley came in. Mr. Taylor, Mr.

Lochhead and Dr. Feis were also present.

Mr. Mallet said, "I brought these telegrams. They only
raveled them as quickly as we possibly could. The first one
was a message giving you a personal, confidential reply from
the Exchequer. He prefers to do it in this form, instead of
telephoning as you had suggested, in order to avoid any risk
of a leakage as to which he was equally as nervous as you."
The Secretary said, "In order to save time, may I read
this to the telegraph operator, 80 I can get it right to the
President, because the French have talked to me and they are
getting terribly nervous." (See Exhibit A attached).
Mr. Morgenthau dictated over the telephone to the telegraph operator at the White House the following personal and
confidential message from Mr. Chamberlain to Mr. Morgenthau,
and asked the operator to put it on the wire right away,
marked
"Ultra-confidential for the President from the Secretary
of the Treasury."
came in exactly an hour before I got down here and we un-

"As Mr. Morgenthau knows the Chancellor has no legal

power to fix the pound within the gold points. H18 policy
has been as often stated to let the pound find its natural
level and to smooth out fluctuations. This he would continue
to do. It may be that the natural level of the pound will
in the new circumstances be five dollars as Mr. Morgenthau

appears to assume but Chancellor would have expected it to be
decidedly lower. Adverse balance of trade somewhat increased

this year and if the flow of refugee capital from Europe which
has been for a long time past strengthening the pound were reversed it seems most likely that the pound will weaken. He
had understood that this view of probabilities was implicit in
the discussions which took place at Washington between the
United States and French Treasuries last June and he knows
that it is the view of the French as well as of the monetary
authorities at London.

"The Chancellor understands the proposed declarations to

mean that there will be no deliberate depreciation either of
the pound or of the dollar as a reprisal for the devaluation
of the franc to a reasonable legal level. He has always under-

September 25, 1936

Letter from Dr. Burgess to Governor Harrison

At 12 o'clock this morning Mr. Cariguel of the Bank of France

called me to say that they were still uncertain what they would
do to handle their franc market this evening in New York: that
they might ask us to hold the market by buying francs against

dollars at usual rate, using their gold held here to cover the
sales of dollars. He asked me if we would do that for them if
they desired. I said that of course we would. He said that he
would let us know by telephone or by cable their desires in the

matter; that it might be quicker perhaps to to it by cable. He
said that they had had a very heavy day, and on my inquiry said
they had already lost $48,000,000 of gold.

-9-

stood that it was not Mr. Morzenthau's policy to use his resources deliberately to depreciate the dollar and similarly it
would continue to be the Chancellor's intention not to intervene in the market in order deliberately to depreciate the
pound. on the contrary he would hope if need arose to be able
as in the past to check any landslide. While no one can foresee the precise rate at which the exchange can hold itself the
Chancellor would not expect in the immediate future such a
heavy depreciation as would be likely to give the United Kingdom any competitive advantage. But the future must be entirely
reserved by His Majesty's Government as by the United States
Government in the interest of their national prosperity. He
is convinced that any attempt to peg the pound artificially
at an unnatural level would be both futile and contrary to the
real interests of both countries.
"The French Government have informed him that proposal

will be that the new franc will have gold content of not more
than 49 and not less than 43 milligrammes of gold nine-tenths
fine. He regards these limits as unnecessarily wide and the
mean point between them as representing probably a somewhat

greater depreciation than is really justified but in the cir-

cumstances
he has not objected to the French proposal on this
score.

Mr. Morgenthau explained to Mr. Mallet, "We have a prifrom Poughkeepsie to the President's home in Hyde Park."

vate wire here to the President and then it's a 5-mile drive
Mr. Mallet then handed the Secretary another message to

read, but could not give him a copy because it was the only
one he had. In this message, Mr. Mallet was informed that
the British understood the French would devalue to a basis of
49 to 43. The Secretary asked Mr. Lochhead to have this checked
and come back. Mr. Lochhead returned with the information that
this worked out on the same basis of devaluation of 25% to
34.35%
The Secretary said, "I am struck by the difference, mainly in emphasis, but somewhat in substance, in this message and
the summary that we got from Paris. Is this more favorable
to mutual British and American understanding, or less favorable,
the way this reads?" Feis answered, "Developments of BritishAmerican relations must be determined by economic developments.
The summary of the Chancellor's position, as I see it there, is
that it seems to forecast a judgment that in a way economic
events will determine the exchange rate. It leaves this puzzling factor. The thing pictured by the declaration is continuing stability. There has been relative stability of the pounc.
and the dollar and in the declaration you say, We look to the
prospect of continuing that stability. That seems to be the

-10-

declaration, though the declaration continues, Though all
countries must of course take into full account the requirements of internal prosperity. The prospect that is rather
pictured in this is one of a changing pound-dollar relationship. Somewhat different from the base that has been the base

of the recent stability."

Mr. Mallet said, "I have one or two other messages. The
next 18 a telegram that I received regarding the timing of the
announcement." He read aloud: "Assuming that Mr. Morgenthau
on receipt of the Chancellor's reply agrees to the simultaneous
declaration, we understand that it is proposed that the three
declarations should be issued after the meeting of the French
Cabinet at approximately 9:00 P. M. our time, or 3 P. M. your
time, today, September 25. We propose at that hour to give to
the press terms of the French and American declarations, as
well as terms of our own, and for this purpose we should like
to have the precise wording of the American declaration at 6:00
P. M. our time, or as soon as possible thereafter. We should

not, of course, issue it to the press until after receiving

definite statement that it is being issued by the United States
Government. Please do anything you can to enable us to receive
text either through you or through the United States Embassy
in London.

Mr. Mallet added, "They go on to say to me in a later telegram, 'We now understand that the three texts are identical.
If that is the case, it will only be necessary for you to inform us to that effect'.
"Another thing, they further say, This is an amendment to
the text which I gave you yesterday. If you happen to have it
before you the easiest way to do would be to mark it straight
on. They say now, We have agreed with the French Government to
omit the first 17 words of the declaration 80 that it now begins,
'His Majesty's Government'. And one further alteration, in
paragraph 3, the fourth word reads, as you have it, 'The French
Government recognising'. Instead of the word 'recognising',
substitute the word 'judging'. Those are the only alterations.
The Secretary said to Mr. Mallet, "Here is my point. I
think I will be able to talk to the President in five minutes.
We have here a revised draft - no major changes, but some

changes. I will talk to him about this, and if he O. K.'s it,

I will immediately hand you a copy with the corrections which
we have made." Mr. Mallet inquired, "Have they in London got

the text of this note?" The Secretary replied, "No, and they

haven't it in Paris. I will phone it. I expect to telephone
it to the French. I will cable it and phone it both, in order
to save time. But I can't give you this until the President

-11-

says, All right. What his reaction to this will be I haven't
the faintest idea but I would like you, if you don't mind, to
wait in the other room. Herbert Feis has a wonderful story
on Persia, but when he starts to tell it no one will let him
finish it."
Mr. Mallet said, "I will telegraph them. I will send them
the whole text, because there have been alterations.

The Secretary said, "There are three different texts. One
from the standpoint of His Majesty's Government, and in ours
we would say the United States Government, and in the French
declaration, they would say France.

Feis said, "As the matter stands, the British proposal for

declaration and the American text of a proposed declaration
differ in detail and therefore are not identical, but the objeet towards which we have worked is that there should be
issued by all three governments a text identical, except for
the necessary transpositions in each country."

The Secretary said, "The French say they want to get it
out 9:00 o'clock our time, which is 3:00 A. M. tomorrow morn-

ing, Paris time. If we can't clear this thing until 10:00
o'clock, supposing it is 4:00 o'clock in the French morning or
in London, it doesn't make any difference. I called poor
Cochran at 3:30 'clock this morning, Paris Time. And until

I get the President and get his approval, and I have to give
it to the French and to you, and you have to get a reply back
because there may be a word or two your Government doesn't like
-- this has to be ironed out, always providing this is acceptable to the President. But if you will go in there, and you
don't mind waiting, I will be able to tell you whether we can
do business on this or not."
H.M.Jr. spoke to the President. He said: "I do not know
how much they have been able to get to you yet, but the British
have just come in here and they say that the first sentence,
starting with 'following' and ending with 'currencies' - they
want to out that out. (This refers to note marked "D" which
Mr. Mallet brought in last night). Have you had a chance to
read it? Have you any objections? The President consented to
omit this sentence, and he also made two other changes. He
asked that in two places where the word 'exchanges' is used
to make it singular - 'exchange'. (Refer to paragraphs 2 and 3).
"Now I have Chamberlain's note to me. It is on the wire and
you ought to receive it any minute." He read the whole note
aloud to the President. "The 'gram' business means that they
will depreciate the franc at a minimum of 25% and maximum of
34%." The Secretary also read Auriol's statement to the President.

By authority of the President, the Secretary of the
Treasury makes the following statement:

1. The Government of the United States, after consultation with the British Government and the French Government,

joins with them in affirming a common desire to foster those
conditions which safeguard peace and will best contribute to

the restoration of order in international economic relations
and to pursue a policy which will tend to promote prosperity in
the world and to improve the standard of living of peoples.
2. The Government of the United States must, of course,

in its policy towards international monetary relations take into
full account the requirements of internal prosperity, as oorresponding considerations will be taken into account by the
Governments of France and Great Britain; it welcomes this oppor-

tunity to reaffirm its purpose to continue the policy which it
has pursued in the course of recent years, one constant object

of which is to maintain the greatest possible equilibrium in the
system of international exchange and to avoid to the utmost extent
the creation of any disturbance of that system by American monetary
action. The Government of the United States shares with the Govern-

ments of France and Great Britain the conviction that the continu-

ation of this two-fold policy will serve the general purpose which
all the Governments should pursue.
3. The French Government informs the United States Govern-

ment that, judging that the desired stability of the principal

41
2-

ourrenoies cannot be insured on a solid basis except after the
re-establishment of a lasting equilibrium between the various
economic systems, it has decided with this object to propose to
its Parliament the readjustment of its currency. The Government
of the United States, as also the British Government, has welcomed

this decision in the hope that it will establish more solid founda-

tions for the stability of international economic relations. The
United States Government, as also the British and French Governments,

declares its intention to continue to use appropriate available resources so as to avoid as far as possible any disturbance of the
basis of international exchange resulting from the proposed read-

justment. It will arrange for such consultation for this purpose
as may prove necessary with the other two Governments and their
authorized agencies.

4. The Government of the United States is moreover convinced,

as are also the Governments of France and Great Britain, that the

success of the policy set forth above is linked with the development

of international trade. In particular it attaches the greatest importance to action being taken without delay to relax progressively
the present system of quotas and exchange controls with a view to

their abolition.
5. The Government of the United States, in common with the
Governments of France and Great Britain, desires and invites the

cooperation of the other nations to realize the policy laid down in

the present declaration. It trusts that no country will attempt to
obtain an unreasonable competitive exchange advantage and thereby

hamper the effort to restore more stable economic relations which
it is the aim of the three Governments to promote.

-12-

The President dictated to H.M.Jr. the following answer:
"The Secretary of the Treasury is glad to have Mr. Chamber-

lain's note. The Secretary can be in full accord with para-

graphs two and three, but with respect to paragraph one, it
is a matter of opinion as to whether under the new circumstances
the natural level of the pound would be at $5.00, as he thinks
18 justified, or lower as Mr. Chamberlain says he expected.
However, as long as Mr. Chamberlain understands that we believe
the $5.00 level to be the appropriate one, the future operations can be conducted after suitable conference and therefore

reserving every right to state our position as it develops in
the future and, without agreeing to Mr. Chamberlain's present
thought of a lower rate between the dollar and the pound, the
Secretary of the Treasury believes that this is not an obstacle
which need prevent the issuance of the simultaneous statements
in order to carry out their broad, useful and indeed essential
objective.

H.M.Jr.: "I think it is all right. This is the way I

feel. I think the French are going to do it anyway. Last
night and this morning we talked about what would happen if we
did not join them. I do not think for the short pull they can
hurt us; for the long pull, they might. In announcing this,
I can explain that this is not ideal; that the peace of the
forstake
that reason
wegoing
are along.
Here world
18 is the
at
andbigthat
interesting
thing.
The real
financiers
are
going to be tickled to death with this; they are going to consider this the real turning point for world peace and there is

nobody among the big financial crowd who can oriticize you and
that is where your real opposition comes from. I am almost

dazed. I have the British in the other room. I have tied up
the telephone from 2:00 o'clock on overseas. I hope you have
had a good lunch. I have had none."

H.M.Jr. then called in Feis. It was 2:00 o'clock. He
said, "The President has O. K. 'd this copy. Send it on the

wire to Cochran and you, Lochhead, read it to Cochran on the
telephone.

Feis said, "What can I tell Cochran? H.M.Jr.: "Tell
Cochran to see whether the French will agree to this draft;
that we are giving a copy to the British; that no decision
has been reached as to whether we will take any action upon
it pending further discussion with the British in regard to
the pound-dollar.
The British were called in at 5 minutes after 2:00.

As Mrs. Klotz went out to type up the reply suggested by the
President over the telephone, she asked H.M.Jr. what he was

September
25, 1936
copy from prutesh
to

The Secretary of the Treasury is glad to
have Mr. Chamberlain's note. The Secretary oan

be in full accord with paragraphs two and three,
but with respect to paragraph one, it is a matter
of opinion as to whether under the new circumstances
the natural level of the pound would be at $5.00,
as he thinks is justified, or lower as Mr. Chamberlain
says he expected. However, as long as Mr. Chamberlain
understands that we believe the $5.00 level to be
the appropriate one, the future operations can be
conducted after suitable conference and therefore

reserving every right to state our position as it
develops in the future and, without agreeing to
Mr. Chamberlein's present thought of a lower rate
between the dollar and the pound, the Secretary of
the Treasury believes that this is not an
obstacle
Simultaneous
which need prevent the issuance of the jointa statements in order to carry out their broad, useful and
indeed essential objective.

September 25, 1936

The de
of the Ireasis mr. chambulus The huntany
We are glad to have his note. That we can be in
1

full accord with paragraphs 2 and 3, but when 16 comes

with respect
to paragraph 1, it is a matter of opinion as to whether

natural

under the new circumstances the NEW
level of the pound
A

would be at $5.00, as we thinkgis justified, or lower
Mu chamberlin
as the Chancellor saye he expected However, that

Mn. chamberlin
as long as1 be understands that we believe the $5.00
appropriate
level to be the correct one, the future operations

suitable

can be conducted after appropriate conference and

therefore reserving every right to state our position
as it develops in the future and, without agreeing to
mm . chamberlines
the Chancellon's present thought of a lower rate between
The See. 7 Treas
the dollar and the pound, -A believes that this is not
need

an obstacle which should prevent the issuance of the
Simultaneous

joint statements in order to carry out their broad,
useful and indeed essential objective.

-13-

going to say to the British and he replied that he would hand
the British draft statement with our suggested changes to Mr.
Mallet and tell him to put it on the wire; that is, to oable
them and telephone it to London and that if they would come
back at 3:00 o'clock he would have an answer for them to the
Chancellor's pink message on the pound.

Dr. Feis phoned the Secretary at 2:45. (Copy of conversa-

tion follows). Mallet had asked Feis if he understood that the
Secretary wanted the British to change their draft to make it
identical with ours. H.M.Jr. explained he was asking the
British to change their text.
Appert came in at 3:00 o'clock. H.M.Jr. received him in
Mrs. Klotz's office and said, "I received yesterday the text
of the French note and the English note, which are different
in some parts and the French Government instructed me to get
in touch with you and to ask you for a cable."
Appert said he had no cable. H.M.Jr. said, "I do not understand. I am talking direct with Auriol. They told me you had a
cable for me. Cochran 18 sitting in the office of Baumgartner
and Roueff. They said you had a cable for us. For the sake of
your Government, the greatest thing you can do is to let me continue 80 I can do this thing because they want to do it tonight
and every minute counts. I really haven't the time to begin
bringing you up-to-date.
H.M.Jr. then returned to his own office, where the group was
waiting for him. He called Hull at 3:00 P. M. and said, "I wonder
if you would be willing to do me a great courtesy. Would it be
possible for you to come over for a few minutes, because I have
only one copy of the British note and one copy of the President's
suggested answer." Hull said he would be delighted to come over.

While they were waiting for Secretary Hull to arrive, Loch-

head said when he read the British note to Cochran, Cochran said
that the French wanted to add the word "monetary" between
"authorized" and "agencies".

Secretary Hull arrived about 3:15 P. M.
The Secretary said to Mr. Hull, "The British came in about

half past one, handed this to me, I telegraphed it to the President, he got it at half past two. On the telephone, he dictated a reply and I asked the British to come back at 3:00
o'clock. They are sitting outside now and with your help, we
will try to answer them. That's the situation."
Secretary Hull said, "I don't know that I can be of any
help, but how do you construe the real implications of the
Chancellor's references to the rate of the pound?"
Mr. Morgenthau answered, "I just feel that he doesn't want
to commit himself, and on the other hand, I don't feel that he
18 going to try to drive it down. And I don't think he likes

September 25, 1936
2:45 p.m.
H.M.Jr:

Hello.

Operator:

Dr. Feis.

Feis:

I'm sorry to trouble you.

H.M.Jr:

That's all right.

I couldn't - Mallet asked me one question I
couldn't answer with certainty.

H.M.Jr:

Yes.

In this draft of ours, are we asking the British
Government merely to say, "That's all right," as-

suming then that they will go ahead and the

French Government will go ahead and issue what

they drafted and submitted to us, and we'll go
ahead and issue what we drafted; or are you
asking them to go further and change their own
text to make it identical to ours?

H.M.Jr:

We're asking them to change theirs.

Right. Now, I'll convey that to Mallet at once,
although Mallet has the feeling that time won't
possibly permit.

H.M.Jr:

Pardon me.

Mallet has the feeling that time won't possibly
permit.

H.M.Jr:

Well, ah, that's his view.

All right, I'll tell him that.

H.M.Jr:

You can still tell them that that's what we want, and
we hope that they can change their draft to suit ours.

All right. I shall do it.

H.M.Jr:

See?

Right, sir.

H.M.Jr:

And then when you're free will you come over?

I'11 be over very, very soon. I may stop to grab
sandwich, but I'll come over.

H.M.Jr:

I think that's - 01 would you like me to order you

No, there are sandwiches over there.

H.M.Jr:

Oh, there are.

I ordered them an hour ago.

H.M.Jr:

Well, ah I'll pick them up and eat them over there.

something over here?

H.M.Jr:

Do you mind because I would like to get this thing the way the President suggested - I would like to get
this thing.

Right.

H.M.Jr:

And is Mr. Hull in this afternoon?

I don't know, sir.

H.M.Jr:

You might just ask.

H.M.Jr:

All right. If you'll hold on a second I'11 buzz.
All right. (Pause)

He'11 be here this afternoon.

H.M.Jr:

All right. Thank you.
All right.

-14-

the fact that the French have picked from 25% to 34% as a
margin. And that affects them more than it does us. And what
the President said is, that this thing has gone 80 far now that

he doesn't feel that he wants to stop it. He thinks there is
too much at stake. I would like something a little bit stronger from the Chancellor and I don't feel that there is enough
there to really object to. on the other hand, the thing that
surprises me is that the part of this thing the British have
not come forward with is what they did in June, and get us to
agree to give up gold. They haven't raised that at all and that
is still an ace up our sleeve, and any time they begin to push
the pound back too far, if we should decide in the next day or
two to give up gold, we could stop on a minute's notice. If
we did it for England, we would have to do it for Norway,
Sweden, or any other sterling country. If they used the gold
that
we gave up, to push the thing down, we would just revoke
the license."

Hull said, "This looks good to me." Mr. Morgenthan's
comment was, "It isn't ideal, but I have been here long enough
to forget the ideal." Hull said, "This is 80 much better than
I hoped for." The Secretary said, "I thought the President
might back off and say, No. For instance, the French have lost
$48,000,000 gold today. They are going to put an embargo
whether we do anything or not."
Secretary Hull said, "of course, we will have to move
mighty fast. I don't see why we can't go on with this, with

what little I understand of it."

H.M.Jr. said, "On this thing, I don't quite know what the
diplomatic usages are, in what form I would send this to the
Chancellor. How would I address it?" Feis said, "You would request the British Embassy in Washington to give the following
message to Mr. Chamberlain, from the Secretary of the Treasury."
Mr. Morgenthau asked Dr. Feis, "Just hand it to them?" And
Feis answered, "Yes".

And Mr. Morgenthau replied, "All right, 80 we do that.
Up to now, we have kept saying to the British and the French
during the last hour that we do not release this three-cornered
statement until we come to an agreement with the British on the
pound. Do I wait to find out that this sort of hedge is agreeable to the Chancellor before we release it?" Hull answered,
"I think, myself, you would want to do that. I do not know
what the other fellows think."
Oliphant said, "I think the Chancellor would have to decide if he wanted to join in a three-partite arrangement."

Mr. Morgenthau said, "Is this the way to put it -- if this

-15-

is agreeable to the Chancellor, then we are ready to go ahead?"

Mr. Hull answered, "Why not, that brings it together.

Mr. Morgenthau said, "Who sees anything the matter with

that? Let me read this aloud again." He read, "We are glad
to have his note. That we can be in full accord with paragraphs 2 and 3, but when it comes to paragraph 1, it is a matter
of opinion as to whether under the new circumstances the natural
level of the pound would be at $5.00, as we think is justified,
or lower as the Chancellor says he expected. However, that as
long as he understands that we believe the $5.00 level to be
the correct one, the future operations can be conducted after
appropriate conference and therefore reserving every right to
state our position as it develops in the future and, without
agreeing to the Chancellor's present thought of a lower rate
between the dollar and the pound, we believe that this is not
an obstacle which should prevent the issuance of the joint
statements in order to carry out their broad, useful and indeed
essential objective."
Dr. Feis suggested, "Keep it in the third person - the
Secretary of the Treasury is glad to have Mr. Chamberlain's
note."
H.M.Jr. said, "Incidentally, you will be very much amused.
The President said, I am sick and tired of seeing the Chancellor
of the Exchequer call you Mr. Morgenthau. The next time you
address him, call him Mr. Chamberlain.

Feis suggested that the last four lines of the draft read,

"The Secretary of the Treasury believes that this is not an
obstacle which need prevent the issuance, etc."
Dr. Feis, Mr. Taylor and Mr. Lochhead were with the Seoretary when Mr. Mallet and Mr. Chalkley came in at 3:55 P. M.
The Secretary said to Mr. Mallet, "This 18 a note I would
like you to transmit to the Chancellor please. If you care to,
I would like to have you read it now.

Mr. Mallet then said to the Secretary, "This, I take it,
18 of a very secret nature and is that safe to send in care of
the telephone?" Mr. Morgenthau answered, "I'm doing everything
by telephone. Mr. Mallet again inquired, "You think that is
safe? You would authorize me to send it on the telephone
straight through to the Foreign office?" Mr. Morgenthau answered, "Yes, you would certainly save a couple of hours. It
would save four or five hours. I don't see how we can do this
thing otherwise. The newspapers are crowding us."

Mr. Mallet said to the Secretary, "So this should go on

-16-

the telephone. Am I to say at the same time that there is
no need for them to hold up the statement for publication any
longer?* Mr. Morgenthau replied, "May I put it this way two things: (1) If this is acceptable to the Chancellor, as we
say in our vernacular 'That's that'. I don't expect an answer
from him. If this is acceptable to the Chancellor, that's
that."

Mr. Mallet said, "Perhaps that's not clear to put through
on the telephone. Mr. Morgenthau said, "How would you put it?"
Mr. Mallet answered, "If that 18 acceptable to the Chancellor,
the statement . Mr. Morgenthau interrupted and said, "If
this is acceptable to the Chancellor, then the statement which
we gave you at 1:30 could be released at a time mutually agreeable to the three countries."
Mr. Taylor inquired, "Do you want to indicate a time?" To
this, Mr. Morgenthau replied, "No. I think that's distinctly
up to the French, but if this is agreeable to the Chancellor,
then the statement which I gave you, as far as we are concerned,
we are ready to release it any time that either you or the
French suggest."

Mr. Mallet said to the Secretary, "will you expect to hear
from us, or will you expect to hear from Cochran about the time
of release?" Replying, Mr. Morgenthau said, "As for the time,
I would say Cochran - but as to this, from you." Mr. Mallet then
asked, "You would like to get an O. K. from us about this?"
Mr. Chalkley then addressed the Secretary and said, "I
think we want to enlarge the word 'acceptable'. Does that mean
acceptable as a statement of Mr. Morgenthau's? The Secretary
explained, "I feel this 18 an answer to the Chancellor. Unless
he wants to raise some new issue, this particular exchange of
notes is accomplished - finished. There isn't anything more to
say.' Dr. Feis added, "Unless he feels it necessary to continue this discussion immediately.
Mr. Morgenthau then said to Mr. Mallet, "Instead of taking

down what I want to say, you can put it in your own language
that when I hand you this note, that unless the Chancellor wishes to raise some additional questions, we are ready to go ahead
and release these statements, which is mutually agreeable. This
is a very carefully worded statement. As far as I am concerned,

you know our phrase 'That's that'. That's finished. I don't
want to say - is it acceptable? Then it means that the Chancellor
has to agree to everything I have said. We have exchanged notes
and we are ready to go ahead.

-17-

Mr. Mallet said, "I would rather expect there will be an
answer 'All is well and we are ready to release it at such-andsuch a time, but you don't want to be consulted about the time
of release, but just be informed of the time of release?" Mr.
Morgenthau answered, "It is now 10:00 o'clock in London. If
they will simply let me know what time they will release this
and will they release the statement that I gave you or not."
Mr. Mallet then said, "We haven't heard you say whether

the fresh draft of your statement is going to be released by

the other two countries." In reply to that, Dr. Feis said,
"You will probably get something fromLondon on that."

The Secretary then asked Mr. Mallet, "But do we understand

each other, that as far as this thing goes, that ends this?"

Mr. Mallet answered, "Yes, there 18 only one thing. Issuance

of the joint statement." Dr. Feis said, "Joint' is wrong. It

should be 'simultaneous' The Secretary said, 'We read this
over to Cochran, who was sitting in Auriol's office, and when
it comes to the last page, it refers to 'their authorized
agencies' They have been talking about banks of issue. They
suggested either monetary or fiscal. We put in authorized
fiscal agent. The Federal Reserve of New York is our fiscal
agent. The last three words of paragraph 3 read 'Their authorized agencies' and we made it read 'authorized fiscal agencies.'
Mr. Mallet said, "You have agreed with the French?" And
Mr. Morgenthau answered, "Yes. Cochran was sitting at Auriol's
desk. May I again add that this statement that I am handing
you has the approval of both the President and Secretary of
State. They have both signed it and approved."
Mr. Mallet said, "Yes. You would not take the essence of
that statement as saying the Chancellor agrees; that there is
no further reply to that statement necessary?" Dr. Feis said,
"I suppose the Chancellor just acknowledges it. He can't leave
it unacknowledged." Mr. Morgenthau said, "He has to say that
he received it."

Dr. Feis said, "May I put it this way - the release of
this statement 18 being taken by our Government and your Government in the face of this divergence of opinion. We noted it.

We are making a record of the divergence of judgment. If the
Chancellor agrees, he will acknowledge our note and say, 'The
Chancellor notes a divergence of opinion', and goes ahead."
Mr. Morgenthau added, "oh, yes, but he can't simply say he
never received it. As a matter of fact, what I sent to him
and what he sent to me is not given out for publicity purposes.
The only thing we give out to the public here are these statements which have been prepared."

-18-

To Mr. Mallet he said, "Were you able to get through by
the telephone?" Mr. Mallet replied, "I wasn't because I was

coming back and I got Broadnead to do it. He probably has done

it by now." The Secretary asked him, "Is everything quite
clear?" And Mr. Mallet answered, "Quite clear."

If this goes through," the Secretary said, "I think it is

the greatest move taken for peace in the world since the World
War. I don't think anything approaches this since the World
War." Chalkley remarked, "I can't remember any other simultaneous statement by three Governments." Mr. Morgenthau said, "No
I don' think it has ever been done before. I think it is the
greatest move for peace and it may be the turning point for
again resuming rational thinking in Europe. Chalkley said,
"We trust it will." Continuing, the Secretary said, "It may
be just the thing to again bring reason back to those perfectly
mad people. Let's hope so." Chalkley said, "Let's hope so.
It's this."
a great thing to feel we are working so closely together
on

Mr. Morgenthau then said, "After all, we are the only three
liberal governments left practically. The President has gone
very far on this thing. I feel he has given a great deal. We
haven't gotten everything we want by great means, but the thing
is so pressing. France lost $48,000,000 in gold today, and I
am 80 hopeful that out of this will be a turning point in really
a new era. As you say, I don't know anything like it in history."
And Mr. Chalkley said, "No."

Mr. Morgenthau added, "And the beauty of the thing is there are no signatures. It is good faith. We have confidence
in each other, and I would ten times rather shake hands than

have all the signatures in the world. Signatures haven't been
worth much. We will stay right here. We are going to call
Cochran in five minutes, and I will say that we have come to
an amicable arrangement but still we will have to wait until I
hear from the Chancellor.
At this point, (4:18 P. M.), H. M. Jr. called Cochran and
told him that the British had just left with a note to Chamberlain which they are going to telephone to the Chancellor. It
was in this telephone conversation that Mr. Coohran said the
only way to get the French text to Mr. Morgenthau was to have
the French Ministry of Finance wire it to Appert.
Record of the telephone conversation between the Secretary
and Mr. Cochran follows:

PARTIAL PARAPHRASE OF TELEGRAM SENT

TO: American Embassy, Paris, France
DATE: September 25, 1936, 3 p.m.

NO.: 370 RUSH
FOR COCHRAN.

FROM THE SECRETARY OF THE TREASURY.

The text of our latest redraft of the proposed
simultaneous declaration is given below. The proposed
revisions of the Anglo-French text submitted to us are

slight, as you will observe. You are requested to
ascertain at once whether this draft is acceptable to
the French Government, and whether its draft will be modified
in accordance therewith. This Government is giving a copy
to the British Embassy in Washington at once, with the
request that the same question be put to the British.
The text is transmitted to you now in order to avoid
possible unnecessary delay later. However, pending further
discussion with the British in regard to the pound-dollar
relationship, no decision has been reached here. The

following is the text:
His

EA:LWW

LMS 2-No. 370 to Amembassy, Paris.

His Majesty's Government after consultation with
the United States Government and the French Government

join with them in affirming a common desire to foster
those conditions which safeguard peace and will best

contribute to the restoration of order in international
economic relations and to pursue a policy which will
tend to promote prosperity in the world and to improve
the standard of living of peoples.
2. His Hajesty's Government must of course in its

policy towards international monotary relations take

into full account the requirements of internal prosperity
of the countries of the Empire, as corresponding considorations will be taken into account by the Governments
of France and the United States; they welcome this

opportunity to reaffirm their purpose to continue the
policy which they have pursued in the course of recent
years, one constant object of which is to maintain the
greatest possible equilibrium in the system of international exchange and to avoid to the utmost extent the
creation of any disturbance of that system by British
monetary action. His Majesty's Government share with
the Governments of France and the United States the

conviction that the continuation of this twofold policy
will serve the general purpose which all the Governments
should

LMS 3-No. 370 to Amembassy, Paris.
should pursue.

3. The French Government informs us that judging

that the desired stability of the principal currencies
cannot be ensured on a solid basis except after the
reestablishment of a lasting equilibrium between the
various economic systems have decided with this object

to propose to their parliament the readjustment of their
currency. His Majesty's Government has as also the
United States Government welcomed this decision in the

hope that it will establish more solid foundations for
the stability of international economic relations.
His Majesty's Government, as also the Government of

France and of the United States of America, declare

their intention to continue to use appropriate available resources so as to avoid as far as possible any
disturbance of the basis of international exchange
resulting from the proposed readjustment. They will
arrange for such consultation for this purpose as may
prove necessary with the other two Governments and

their authorized agencies.
4. His Majesty's Government are moreover convinced,
as are also the Governments of France and the United

States of America, that the success of the policy set
forth above is linked with the development of international

57
LMS

4-No. 370 to Amembassy, Paris.

national trade. In particular they attach the greatest importance to action being taken without delay
to relax progressively the present system of quotas
and exchange controls with a view to their abolition.
5. His Majesty's Government, in common with the
Governments of France and the United States of America,

desire and invite the cooperation of the other nations
to realize the policy laid down in the present declara-

tion. They trust that no country will attempt to
obtain an unreasonable competitive exchange advantage

and thereby hamper the effort to restore more stable
economic relations which it is the aim of the three
Governments to promote.
HULL

(HF)
EA:HF:LWW

September 25, 1936.
4:18 P.M.
Operator:

Go ahead.

Hello?

Hello Cochran.

H.M.Jr:
C:

Yes Mr. Secretary.

H.M.Jr:

Now are you still sitting in Mr. Auriol's chair?

No I've been demoted. I've got Baumgartner's now.

H.M.Jr:

Your in Baumgartner's - well your slipping.

Yes - yes.

H.M.Jr:

All right.

H.M.Jr:

They'11 have me out before the night's over.
Yes, well now this is what happened.

Yes.

Five minutes' ago the British left here with an
answer to Mr. Chamberlain's special private note

H.M.Jr:

to me.

Yes.

H.M.Jr:

The answer which we have given him I am 98% sure

that he can accept - hello?

You

H.M.Jr:
C:

H.M.Jr:

say that he can expect your answer?
Yes.

Surely.

If he can accept it (aside to someone in his office "Got it?" ). - The last - (aside to someone - "is this
it? K or C "to the President? H.M.Jr: the one to
Chamberlain. Oh yes. (pause)

H.M.Jr:
C:

The last part of the Sentence reads like this,
'The Secretary of the Treasury believes Yes

-2H.M.Jr:

- 'that this is not an obstacle which need prevent
the issuance of the joint statements - of the
simultaneous statements in order to carry out
their broad useful and indeed essential objectives,
see?

Did I miss some then when you were not speaking to
me or was I cut off?

H.M.Jr:

I guess you were cut off. I'll repeat it.

H.M.Jr:

The last -

There was quite a gap there when I didn't hear

H.M.Jr:

Well may be I hiccoughed I don't know.

Well the British left with the note - which you thought

H.M.Jr:

Well then I said the end - the last sentence in my

Yes.

H.M.Jr:

- to Mr. Chamberlain reads as follows.

anything.

would be 98% acceptable.

note -

Do you want me to take that down?

H.M.Jr:

No.

H.M.Jr:

No. I just want you to get the gist of it.

H.M.Jr:

Oh. Right.
'The Secretary of the Treasury believes -

- Yes.

H.M.Jr:

'that this is not an obstacle* - we're talking now
about the $5.00 pound, you see? I mean he's given
certain interpretations and 've given certain
interpretations.

Yes - yes

-3-

H.M.Jr:

So it says 'The Secretary of the Treasury believes
that this is not an obstacle which need prevent the
issuance of the joint statements - oh (pause)

H.M.Jr:

Hello

H.M.Jr:

I keep reading the wrong copy all the time.

I see.

H.M.Jr:

I'll start once more. 'The Secretary of the
Treasury believes that this is not an obstacle

which need prevent the issuance of the simultaneous
statements -

of the simultaneous - yes.

H.M.Jr:

Yes. - 'in order to carry out their broad useful

Yes.

H.M.Jr:

Now the point of this - this is an answer of a

and indeed essential objectives - hello?

confidential memorandum from the Chancellor to

myself.
C:

Right.

H.M.Jr:

I've answered him. hello?

Yes.

H.M.Jr:

I've just given this five minutes ago to the
British here.

Yes.

B:M.Jr.

They're going to telephone it to the Chancellor.
They're telephoning it to the Chancellor.

H.M.Jr:

Yes.

I see.

H.M.Jr:

Now, if he says O.K. and then if he has no

objection to the copy of the message which we
have given you for the French and have given him

over the telephone, we're ready to go but we're
not ready to go until we again hear from the
British.

-4C:

I see.

H.M.Jr:

Now they're going to telephone right away.

I see.

H.M.Jr:

And as socn as they hear they're going to come

I see.

H.M.Jr:

back and see me.

But we're still not ready to release that statement
until we hear from the British.

I see.

H.M.Jr:

Now do you want to repeat that to what's his name?

just tell you

Well let me/xuggest what's happened here.

#.M.Jr:

Yes.

And then I'11 tell them what you say.

H.M.Jr:

Yes.

The French are willing to accept completely the
amendment which you transmitted.

H.M.Jr:

What's that? Hello?

Hello - I say the French accept completely -

H.M.Jr:

Yes.

- the amendment which you suggested to the text.

H.M.Jr:

All right. Now wait a minute before you say
anything else.

Yes.

H.M.Jr:

We accepted the - that suggestion that they made.

The end of Paragraph 3.

H.M.Jr:

The last three words.

The end of Paragraph 3.

-5H.M.Jr:

Read 'Their authorized agencies'.

Yes.n?

H.M.Jr:

We've inserted the words 'Their authorized fiscal
agencies',

Their authorized fiscal agencies.

H.M.Jr:

Yes.
Yes.

That was their suggestion wasn't it?
That makes a different thing here.

H.M.Jr:

What's that?

I say they don't like that - that refers to

H.M.Jr:

Well what was the word - what

Monetary they wanted.

H.M.Jr:

taxation over here.

H.M.Jr:
C:

Well now wait a minute. The Federal Reserve in
New York is our fiscal agent.

Yes but the fiscal agent over here is the tax
collector.
(Laughter by the group)

H.M.Jr:

Well now just a minute - they're all - just hold
on and we'll settle it right now - it's down to

one word. They want monetary - is that what they

want?
C:

H.M.Jr:
C:

H.M.Jr:

Well I mean London has already accepted it as
'authorized agencies'.
Yes.

The people here would rather accept it as that
without putting in the modifying adjective.
Just leave it 'authorized agencies'

6C:

H.M.Jr:

'Authorized agencies'.

Well, as Monnick says, we strike (rolled r's)

it out. (Laughter).

Yes. Then we strike it out.

H.M.Jr:

Yes. That's - we strike out fiscal.

Yes - yes and leave it 'authorized agencies'.
All right. Now everything else is O.K?
Well they accepted your text.

H.M.Jr:
C:

H.M.Jr:

Fine.

And they telephoned this text to Monnick.

H.M.Jr:

What's that?

I say they telephoned your English text.

H.M.Jr:

Yes.

H.M.Jr:

Yes - to Monnick at London

Who in turn submitted it to the British.

H.M.Jr:

Yes.

And they are in agreement, so Monnick tells us.

H.M.Jr:

They are?

Although they had not yet when he talked with them received the cable text.

H.M.Jr:

Uh huh -

They are quite willing to accept this.
Well now - did you get our cable text?
No I haven't it yet. I just 'phoned the Embassy

H.M.Jr:
C:

10 minutes ago and it had not even begun to come in.

H.M.Jr:

Uh hugh

-7-

I'll have to go on the oral text which I understood

completely from Lochhead and checked it badk with
him.

H.M.Jr:

But the French have accepted our text as is?

As is absolutely - with all those amendments and
they preferred not to amend that phrase about -

H.M.Jr:

All right.

- peace.

H.M.Jr:

Now -

They'd rather leave it out than raise another question
now.

H.M.Jr:

Well now I imagine that the British are now talking to

Yes.

H.M.Jr:

And I ought to hear from them any minute.

Yes.

H.M.Jr:

And just as soon as I hear I'll 'phone you again.

H.M.Jr:
C:

Mr. Chamberlain.

'Phone what?

Just as soon as I hear from the British I'11 'phone you.
'phone me at the Ministry office.

I think it's better to stay there, don't you?
Yes, by all means. I'll stay right here?

H.M.Jr:

Have they got a nice comfortable chair?

Oh, yes.

H.M.Jr:

What?

Let me explain one or two methods of procedure which
we had in mind here.

H.M.Jr:

O.X.

H.M.Jr:

-8C:

They say that the statement will be given out when it's given out - by the Minister of Finance.

H.M.Jr:

Yes.

And in London by Chamberlain.

H.M.Jr:

Yes.

And what they're trying to do is to give it out here,
that is, always provided we come to final agreement.

H.M.Jr:

Yes.

At 11 o'clock.

H.M.Jr:

11 o'clock. 11 from 6 is what? That's five. It

H.M.Jr:
C:

won't be ready by then. I mean unless the British
move faster than they have any time before.
You see after Ministry - after a meeting of the
Cabinet, M. Auriol got blank authority to go ahead
but he has to consult the President of the Republic.
Yes. Well, they won't be ready by 11 o'clock Paris
time. It'11 be nearer 12 o'clock Paris time.
on I see it will be 12 o'clock Paris time.
At the earliest.

Well, we'll try and keep the President up then, if
we can.

H.M.Jr:

(Very hearty laughter) How does one keep the

President of France up? What's going on at the

Momarte tonight?
C:

I don't know - I haven't been there for some time.

H.M.Jr:

(More hearty laughter). Well there's that very nice

Russian restaurant you know that opens at 12 o'clock.
C:

Yes, I reckon I'll make an application out if I keep

H.M.Jr:

(Laughing) Well far be it from me to say how to
keep the President of France up. Hasn't Baumgartner

this job I think.

got any suggestions?

Let me see on this matter of Fournier and Cariguel.

H.M.Jr:

Yes.

-9-

I talked with Cariguel.

H.M.Jr:

Yes.

say that he had referred, I find, to Knoke simply in
line with their routine, you see?

H.M.Jr:

Yes.

Irrespective of what might be done tonight.

H.M.Jr:

Yes.

And then they would ask the Federal to take care of

the market tomorrow morning.

H.M.Jr:

I didn't quite get that.

They would leave it to the Federal -

H.M.Jr:

Yes.

New York -

H.M.Jr:

Yes.

To take care o the market - support the franc
tomorrow morning and but for the other point he
referred me to Fournier.

H.M.Jr:

Yes.

And Fournier in turn talked with Roueff here while I was
out and Fournier would like for us, if this thing
goes through, to use our good offices to influence
them to refrain from franc operations.

H.M.Jr:

Good.

Until Tuesday.

H.M.Jr:

To do what?

To refrain from operations in French exchange until
Tuesday.

H.M.Jr:

Well that's going to be a little difficult but we'11

Chamberlain is going to do the same thing in London.

do the best we can.

- 10 H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:

Well -

To - to do everything they can to stop speculation.
We'll do everything that we can but, after all,
this is a Republic.
And then
is going to do the same thing.
Did you hear what I said?
do everything they can.

We'll do everything we can. The only thing we're
worrying about is that $150,000 that belongs to
Federal Reserve of New York.

H.M.Jr:

All right, well that's the last thing I'm going to
insist on - just at the end.
(Laughing) All right. Professor Williams is sitting right
here and he's laughing.

Yes - he always was a refugee money

devaluation

and all that.

H.M.Jr:
C:

All right. Williams has come back.
Do you want me to check the French translation here?
What French translation?

I mean they'11 get out a French Yes - yes - that's a very good idea.
I mean they haven't as yet.

Yes - that's a good idea.
London - Leith Ross is checking it with Monnick.

H.M.Jr:

That's all right.

H.M.Jr:

And it was my idea of getting the French text to
you that you people could look it over there, too.

Yes. That's all right.

- 11 68
C:

It's more important that our British and American
text - are entirely accurate and identical.

H.M.Jr:

Good.

H.M.Jf:

I'll go over there, too.
All right.

If you wish.

H.M.Jr:
C:

Now if Baumgartner doesn't object you sit right
there with him.
What's that?

I'd like you to stay right in the Ministry of

Finance.

We're - I'11 stay here. And the Regents of the
Bank of France are leaving at midnight.

H.M.Jr:

All right. Now just a minute. Mr. Feis is asking -

H.M.Jr:

How are you going to get the French text over to us?
The best way to get the French text to you is to have
them wire it to Appert as they did before.

H.M.Jr:

Oh don't - don't - listen - don't - isn't there any
other way?

Well the only other way would be - well after it's
once released I can cable it in clear.

H.M.Jr:

Well, send it to Appert and let's see what happens.

Well, see, we - it will be in the press here as soon
as it is released.

H.M.Jr:

Well, send it to Appert.
It would be much quicker if we put it just in - prepare
a cablegram when it's released but I can't put the
French text into our diplomatic code - English

code book you see?

H.M.Jr:

No. Send it to Appert.

- 12 69
C:

Have them send it to Appert?

H.M.Jr:

Yes.

But you want me to check it with them -

H.M.Jr:

Yes.

Before it's released?

H.M.Jr:

Yes - yes.

All right.

H.M.Jr:
C:

Why don't they telephone it to Appert?
Just a minute - (Aside to someone in his office
"What's that"?)
Roueff just tells me that the British have him
on the other 'phone.

H.M.Jr:

Yes.

Trying to get the declaration out before midnight.

H.M.Jr:

Yes. Well, have they heard from Chamberlain?

(Talked aside to someone - can't make it out)

H.M.Jr:

Well why don't you speak to them and I'll hold
the wire? Let him speak to the British and I'll just
stay on the 'phone.
They say that your message is just being deciphered
now.

H.M.Jr:
C:

Yes.

And they were just talking on the 'phone in the
other room and in the Treasury the higher officials do
not yet have the message. It's just being decoded.
Why they telephoned it.
No, they just - there was one message that you coded
was there not?

H.M.Jr:

I see.

Feis:

Telephone and cable.

- 13 70

H.M.Jr:

I told them to telephone and cable it both.

I see.

H.M.Jr:

Look - either way - I'11 hang up now - my

hear yet as to what the British say on it.
H.M.Jr:

By using this 'phone may keep them from telephoning
so I'm going to hang up and the minute I hear some-

thing from the British I'll phone and if they hear
anything, don't hesitate to call me.

All right. Fine.

H.M.Jr:

How's that.

That's all right. If I hear first I'll put the call
in for you.

H.M.Jr:

If you hear anything call me. Don't spare any expense.

All right. Fine.

H.M.Jr:

And if I hear I'11 call you.

Sir?

H.M.Jr:

Now wait a minute - Feis wants -

There's just one thing - may I ask you yet?

H.M.Jr:

Yes.

On this thing, do you want the French text wired to
Appert tonight? I mean Why can't they telephone the French text to Appert?
Just a minute (Aside to someone in his office: "Could
you telephone the French text to Appert?") (Pause)

H.M.Jr:
C:

They can do that.
What's that?

They can do that and I would really prefer that you
people see the French text there and rather then leave the final
thing with me.

H.M.Jr:

Let's do it both ways, you check it there - the
translation -

Yes.

H.M.Jr:

- and ask them to phone it to Appert.

- 14 C:

All right. And you people will see it then.

H.M.Jr:

Right.

Fine.
Appert Ail
then.right and we'll start 'phoning it to

H.M.Jr:

O.K.

Is he
know?

H.M.Jr:

He's at the Embassy.

He's at the French Embassy?

H.M.Jr:

Yes.

H.M.Jr:

with you now or is he at the Embassy, do you

All right.
All right.

We'll 'phone it through then.

H.M.Jr:

Yes.

H.M.Jr:

Goodbye.

September 25, 1936

For Colonel McIntyre:

Will you please send the following ultra
confidential message by special messenger to the

President of the United States.
We have taken the British message which I
sent you last night and was marked #D" and have made

certain changes in it which we believe are an improve
ment. This corrected message has been shown to

Secretary Hull and meets with his entire approval.
After you have read the following message,

I would greatly appreciate it if you would telephone
me and give me your own suggestions.

own.

work come to

merriging is Secretary morgenthan.
"Following upon the decision of French Government to propose to

their Parliament an adjustment of their currency His Majesty's Government
after consultation with the United States Government and the French
Government join with them in affirming a common desire to foster those

conditions which safeguard peace and will best contribute to the restor
ation of order in international economic relations and to pursue a
policy which will tend to promote prosperity in the world and to improve
the standard of living of peoples.
2. His Majesty's Government must of course in its policy towards

international monetary relations take into full account the requirements
of internal prosperity of the countries of the Empire, as corresponding
considerations will be taken into account by the Governments of France,

the United States; they welcome this opportunity to reaffirm their
purpose to continue the policy which they have pursued in the course of
recent years, one constant object of which is to maintain the greatest
possible equilibrium in the system of international exchanges and to

avoid to the utmost extent the creation of any disturbance of that
system by British monetary action. His Majesty's Government share with
the Governments of France and the United States the conviction that the

continuation of this twofold policy will serve the general purpose which
all the Governments should pursue.

3. The French Government informs us that recognizing that the

desired stability of the principal currencies cannot be ensured on a

solid basis except after the reestablishment of a lasting equilibrium
between the various economic systems have decided with this object to

propose to their parliament the readjustment of their currency. His

Majesty's Government 'as also the United States Government welcomed

this decision in the hope that it will establish more solid founds

tions for the stability of international economic relations. His
Majesty's Government, as also the Government of France and of the

United States of America, declare their intention to continue to use
appropriate available resources so as to avoid as far as possible any
disturbance of the basis of international exchanges resulting from
the proposed readjustment. They will arrange for such consultation
for this purpose as may prove necessary with the other two Governments
and their authorised agencies.

4. His Majesty's Government are moreover convinced, as are also
the Governments of France and the United States of America, that the

success of the policy set forth above is linked with the development

of international trade. In particular they attach the greatest impo
portance to action being taken without delay to relax progressively the
present system of quotas and exchange controls with a view to their
abolition.
5. His Majesty's Government, in common with the Governments of

France and the United States of America, desire and invite the COM

operation of the other nations to realise the policy laid down in the

present declaration. They trust that no country will attempt to
obtain an unreasonable competitive exchange advantage and thereby

hamper the effort to restore more stable economic relations which it
is the aim of the three Governments to promote. #
Respectfully yours,
Henry Mozganthan, Jr.

3. ok.
Aritish told careet,

78mm 75

Following upon the desision or French Government to propose

to their Parkingent an adjustment of bhote ourseup His Majesty's
Government after consultation with the United States Government
and the French Government join with then in affirming a eongon
desire to foster those conditions which sufeguard peace and will

best contribute to the restoration of order in international
economic relations and to pursue a policy which will tend to
promote prosperity in the world and to improve the standard
of living of peoples.
2. His Majesty's Government must of course in its
policy towards international monetary relations take into

full account the requirements of internal prosperity of the
countries of the Empire, as corresponding considerations
will be taken into account by the Governments of France and

the United States; they welcome this opportunity to
reaffirm their purpose to continue the policy which they
have pursued in the course of recent years, one constant

object of which is to maintain the greatest possible
equilibrium in the system of international exchanges and
to avoid to the utmost extent the creation of any disturbance of that system by British monetary action. His
Majesty's Government share with the Governments of France

and the United States the conviction that the continuation

of this twofold policy will serve the general purpose which
all the Governments should pursue.
3. The French Government informs us that

judging

that the desired stability of the principal currencies cannot be ensured on a solid basis except after the reestablishment of a lasting equilibrium between the various
economic systems have decided with this object to propose

to their parliament the readjustment of their currency.
has,

His Majesty's Government as also the United States Governn

ment welcomed this decision in the hope that it will establish more solid foundations for the stability of
international
)

economic relations. His Majesty's Government, as also the
Government of France and of the United States of America, declare

their intention to continue to use appropriate available resources
so as to avoid as far as possible any disturbance of the basis of
international exchanges resulting from the proposed readjustment.

They will arrange for such consultation for this purpose as may
prove necessary with the other two Governments and their authorized
agencies.

4. His Majesty's Government are moreover convinced,
as are also the Governments of France and the United States of

America, that the success of the policy set forth above is linked
with the development of international trade. In particular they
attach the greatest importance to action being taken without delay
to relax progressively the present system of quotas and exchange

controls with a view to their abolition.
5.

His Majesty's Government, in common with the Gov-

ernments of France and the United States of America, desire and

invite the cooperation of the other nations to realize the policy
laid down in the present declaration. They trust that no country
will attempt to obtain an unreasonable competitive exchange
advantage and thereby hamper the effort to restore more stable
economic relations which it is the aim of the three Governments
to promote.

789
FROM: MR. GASTON'S OFFICE

The Secretary
TO:

Central News tells me it has been officially

announced in Paris that there will be a statement
today.

Trans-Radio News informs us by telephone that they

have dispatch that it has been officially announced
in Paris that a monetary agreement has been
reached between France, U.S. and Great Britain.

I am trying to get text of this.
3:45 p.m.

H.E.G. Haves

mand info

DELICE
N

79
FROM: MR. GASTON'S OFFICE
TO:

The Secretary

A P has Faris despatch that Havas agency says
France has reached agreement with Great Britain
and U S as to monetary move. Chamber of Deputies
has been called to meet Monday.
H.E.G.

3:53 p.m.
This

Swinchart of Haves

gives name info

C over Where

7PS

The Transradio bulletin is as follows:
PARIS-

French officials announced this evening
that an international monetary agreement had been
reached between Washington, London and Paris.

I told them our only response at this time
was AND comment." -EBF.

VA
3:53 ham,

-10-

At 4:40, the Secretary called Mr. Appert on the tele-

phone, told him he understood he would receive the French

text over the telephone, and asked him to come directly to
the Treasury with the French text so that it might be 00m-

pared with the English text. Text of this conversation

follows:

September 25, 1936
4:40 p.m.

Operator: Mr. Appert.
Yes, Mr. Secretary.
Appert:
H.M.Jr:

Mr Appert, I've just got through talking again to

Yes, sir.

Paris

H.M.Jr:
A:

And in a very little while they are going to telephone
you the French text Yes, sir.
- and after you have the French text Yes, sir.
- will you bring it right down here so that we can compare it with the English text.
Yes, sir.

H.M.Jr:

We've - We've agreed on the text.

You wish that I come to you with the French text?

H.M.Jr:

As soon as they telephone it to you.
As soon as it comes over -

H.M.Jr:

No,
no. They have - they're going to telephone it to
you.

They will telephone to me the text?

H.M.Jr:

Mr. Baumgartner will telephone you at the Embassy -

Yes.

H.M.Jr:

- the French text.

And then I will immediately come to your office.
If you please.

H:M.Jr:
A:

Yes, I will do it.

83
-

H.M.Jr:

Thank you very much.

Yes, sir.

H.M.Jr:

Thank you.

Friday afternoon
Sept. 25,1936

The Bank of England telephoned the Federal Reserve

Bank of New York and stated that they were fearful that
the large amount of gold might be offered in the London
market for sale on Saturday. They reminded us that we
had previously placed an order with them for gold in their
market at the rate of $34.77, but that only $12,000,000
of the original order off $25,000,000 remained unfilled.
They inquired as to whether or not we would be willing
to increase our order to take care of any possible developThe
ments in the London market on Saturday morning.

Secretary instructed the Federal Reserve Bank to notify
the Bank of England that we would purchase up to $100,000,000
of gold in their market at $34.77 or better.

-20-

H.M.Jr. called Governor Harrison at 10 minutes to 5:00.
Record of this conversation follows.
Then H.M.Jr. called Landis and also Governor Ransom,
Acting Chairman of the Federal Reserve, and asked them to come

right over. Record of these conversations follow. The Seoretary acquainted Mr. Landis and Mr. Ranson with the status of
the negotiations up to this point.
After talking to Governor Ransom of the Federal Reserve
Board, the Secretary telephoned to Chairman Eocles, who is in
Utah, and brought him up-to-date on the pending negotiations.
Copy of this telephone record follows.

September 25, 1936
4:45 p.m.
H.M.Jr:

Hello.

Operator:

Operator.

N.M.Jr:

Ask Mr. Williams and Mr. Knoke to come in here. I

don't know where they all are. And then after I
have them in here, I'll talk to Governor Harrison.
Operator: All right.
H.M.Jr:

Hello.

Operator:

Governor Harrison.

H.M.Jr:

Hello.

Harrison:

Yes, Henry.

H.M.Jr:

George.

H.M.Jr:

H.M.Jr:
H:

Yes, sir.
I have in the room here with me Williams, Knoke
and someother Treasury people. Now, you called me
and I'm calling you.
Yes.

Have you something special on your mind?

Only one thing, and I'm going to take a liberty with

you.

H.M.Jr:

Please.
RANSOM

H.M.Jr:
H:

Grafton
has
been situation.
calling me two or three times a day
about the
French
Yes.

And what's going on, and he's been getting reports from
the press, and he called me up a little while ago
to say that he just heard from a newspaper reporter
there would probably be an embargo tomorrow.

H.M.Jr:

Yes.

-2 H:

And, of course, I've been ignorant of it all.

H.M.Jr:

Right.

And -

H.M.Jr:

Your suggestion is a good one. I'll send for Mr.

Ransom at once.
H:

H.M.Jr:

If you do that, I think it would be very helpful
and in good spirit.
It's a splendid suggestion, and I'11 send for him

at once.

H.M.Jr:

Very good. That's all I had to say.
Now, this thing, if you don't mind, I'm going to
ask you to stay at your office, can you?

Yes.

H.M.Jr:
H:

And it looks
minute.

now as though it will go through any

Yes.

H.M.Jr:

And the thing that they're asking us is that we
please use our good offices to impress upon the
dealers
foreign
to buck in
this.
See?exchange that they do not try

Yes.

H.M.Jr:

Now I've been talking to Knoke about this since

last night, and I asked him to talk to you about
it this morning.
H:

H.M.Jr:

Yes.

Now, have you and Knoke come to any conclusion as

to how best to handle this?

Well, I've been talking it over here in the bank -

H.M.Jr:

Yes.

Tomorrow is a very difficult day for the reason

that all the principal officers will be out of town.

H.M.Jr:

Yes.

There won't be any but second lieutenants Rock and exchange dealers down the line.

H.M.Jr:

Yes.

And, a meeting of such a crowd is out of the question.
The only way I could do it would be either to call
each bank and talk to the senior officer whoever happens to be there on the telephone -

H.M.Jr:

Yes.

Or else try to get the top fellows wherever they may
be in the country.

H.M.Jr:
H:

H.M.Jr.:
H:

H.M.Jr:7
H:

H.M.Jr:
H:

H.M.Jr:

Yes.

If
I couldtodo
simpler
do itit.tonight, of course, it would be a lot
Yes.

I could get them; but to try to get them tomorrow
morning on the telephone that way is going to be a
difficult, tedious thing, and may delay the thing.
No, I think it ought to be done tonight.
But
if you were to let me do it tonight, it would be
a cinch.
I will as soon as the statement is released here.
Yes.

But, it ought to be released now any time.
Yes.

Nowdo
doit?you think I can help any or do you think you
can

Ithe
think
I can do it all right. I think it is really
best way to do it.

H.M.Jr:

All right.

I don't want to suggest you shouldn't do it, but I really -

H.M.Jr:
H:

No.

- think
with
me. this

is the best way to do it if you leave it

-4H.M.Jr:

I will.

All right.

H.M.Jr:
H:

H.M.Jr:

If you'll assume the responsibility?
Yes, I will.

All right. Well, then, what I will say is that
if you don't mind staying right where you are,
the minute I hear, I'll call you.

Yes, because then I can get busy.

H.M.Jr:

The minute.

Well now I wonder, may I ask another thing?

H.M.Jr:
H:

H.M.Jr:

You can ask a dozen.

In the meantime, wouldn't it be helpful - if you
don't mind doing it, if you have the time to do
it - to let Williams, or Knoke or somebody dictate
the statement to me so that if you release me to
go ahead on it, I'll know what I'm talking about.

That's all right. Surely. That's all right.

I'll give Williams a copy. As a matter of fact,
he's - they haven't finished it. Williams is
working on it with several others putting it

H.M.Jr:

into the language so that it's United States
instead of reading "The French Government", and
the minute that's finished, I811 - wait a minute.
(Pause) No, no. You want the statement that's
going to be given out to the press, don't you?
That's right.

Well, the minute that Williams hasfinished it, and
I've
O.K'd.
it - I haven't seen it yet; it isn't
finished
-

Yes.

H.M.Jr:

it
I'll tell Williams or Knoke to phone/to, where?

H.M.Jr:

Wherever you have a confidential secretary.
I'll have my own secretary here.

Well, the minute that he's got it - have you got it
Williams? He says he's only half way through it.

-5-

Yes.

H.M.Jr:

So the minute he's through and I O.K. it, even before

we give it out, I'11 let him dictate it over the
phone to you.

Yes; well that will be very helpful to me.

H.M.Jr:

How's that?

Fine.

H.M.Jr:

Now wait a minute - just a second. (Pause)
Well, you understand that when we dictate it to you,

that - that there's still a chance that it never will
be released.

H.M.Jr:
H:

Oh, I understand that, and I shall not call any
bankers until you've released me on that, but I
thought that in the meantime I might be getting
the statement so that we won't then have to do
it after you authorize me to release it.
Perfectly true. Now - now just take a minute - how
do you feel about it.
Oh, I think it's a grand thing, as I understand it.
They haven't tried to give me the works but they
gave me the substance of it and I think it's a
great thing.

H.M.Jr:

But I mean - the whole proposition - how do you

Well, as I - as I understand it - I - I'm a little -

feel about it?

a little disappointed that the best the French are
going to do is a stabilization fund within a limit.

H.M.Jr:
H:

Yes.

And - because I think that's going to make it more
difficult for them - maybe it is the best they can
do.

H.M.Jr:

Yes.

I would have liked to have seen them devalue x per

H.M.Jr:

Yes.

cent definitely.

-6And let it go at that.

H.M.Jr:
H:

Yes.

In fact, I think it would have been very much easier
on our own position because if you have a fluctuation
of
10%, you invite the very thing they are trying to
avoid.

H.M.Jr:

Yes.

Which is speculation.

H.M.Jr:

But,
prettyunder
good, the
eh? circumstances, we'll take it/ think it's

Oh, yes, I do.

H.M.Jr:

Right.

H.M.Jr:
H:

H.M.Jr:

and

I think something would have to be done.
Well, I wanted -

I think your statement is grand.
All right. Well, I want - Williams and Knoke have
been very helpful.
Well, I'm awfully glad they have.

All right - and just the minute that Williams brings

it in and I O.K. it, I'll let him phone it to you.

Thank you very much.

H.M.Jr:

And I'll take your suggestion. I'll immediately send
for Mr. Ransom.

Will you, and -

H.M.Jr:

At once.

And explain why I haven't been able to say anything.

H.M.Jr:

I'll tell him that I'm - I'm the bad fellow who
swore you to secrecy.

H.M.Jr:

Yes, all right.
I would - I'll take care of that.

92
-

All right - thank you.

H.M.Jr:

Goodbye.

Operator:

Operator.

H.M.Jr:

Get me Mr. Ransom over at Federal Reserve.

Operator: All right.

September 25, 1936
5:00 p.m.
Operator:

Governor Ransom.

H.M.Jr:

Hello.

Ransom:

Hello, sir. How are you today?
I'm fine. Are you free to come over and see me?
Yes, sir, I am.

H.M.Jr:
R:

H.M.Jr:

Well, if you'd come over I'd appreciate it.

I'll do that.

H.M.Jr:

Thank you.

H.M.Jr:

Hello.

Operator:

Mr. Landis.

H.M.Jr:

Hello.

Landis:

Hello.

H.M.Jr:

Morgenthau speaking.

Yes.

H.M.Jr:

Could you drop over at the office? I'd like to tell
you what I've been doing.

All right. Thank you very much.

H.M.Jr:

Fine.

All right.

H.M.Jr:

Thank you.

the

September 25, 1936

For Colonel McIntyre:

Would you please send the following ultra-confidential
message by special messenger to the President of the United
States.

"The following is a draft which we handed Mr. Mallet
of the British Embassy for Mr. Chamberlain at 4:00 o'clock
Eastern Standard Time.

'The Secretary of the Treasury is glad to have Mr.
Chamberlain's note. The Secretary can be in full accord with
_paragraphs two and three, but with respect to peragraph one,

it is a matter of opinion as to whether under the new cir-cumstances the natural level of the pound would be at $5.00,

as he thinks is justified, or lower as Mr. Chamberlain says
-he expected. However, as long as Mr. Chamberlain understands

that we believe the $5.00 level to be the appropriate one,
-the future operations can be conducted after suitable confer-ence and therefore reserving every right to state our position
- as it develops in the future and, without agreeing to Mr.
~ Chamberlair's present thought of a lower rate between the
~ dollar and the pound, the Secretary of the Treasury believes
-that this 1s not an obstacle which need prevent the issuance
- of the simultaneous statements in order to carry out their
broad, useful and indeed essential objective.'
"And the following is Mr. Auriol's declaration to me

which was read to me over the telephone by Mr. Cochran:
-

'The French Government, while thanking Mr. Morgenthau

for all that he has already done, wants to give him the
assurance that it intends in no way on its side to depreciate its money beyond the limit which will be sought
under monetary law.

After simultaneous declaration despite the reservation
which this country has been obliged to make to take account

of its public opinion, they will consolidate effectively the
stability of the major currencies and will constitute the
starting point for a trustful cooperation between the three
great countries. It insists on the urgency for its country
of a final decision, the Council of Ministers being already
in session since 4:00 o'clock. It is now ten 'til six. IN
Respectfully,

Secretary of the Treasury.

September 25, 1936
5:10 p.m.

Operator: Mr. Eccles.
H.M.Jr:

Thank you.

Operator:

Go ahead.

H.M.Jr:

Hello.

Eccles:

Hello there; how are you?

H.M.Jr:

Hello, Marriner, how are you?

I'm pretty good.

H.M.Jr:

Marriner, I'm calling you up in the strictest of
confidence I've got your Acting Chairman here,

Mr. Landis, and Mr. Taylor, and Mrs. Klotz - all
friends of yours sitting here. We are about 90%
sure that between now and the next couple of hours
we're going to have an agreement with the English
and the French on devaluation.
Yes.

H.M.Jr:

But we won't know for another hour or two. It'11
take the form of simultaneous, similar statements
by each Government; and the French will at midnight, or
as soon as this is released, will put an embargo on
gold, then call Parliament and ask for the approval
of this devaluation, and I suppose a vote of confidence in the Blum Government.

Yes.

H.M.Jr:

And this will - I think they're going to call

H.M.Jr:

Parliament on Sunday. But the chances are about
90% that it'11 go through, but you know how those
things are.
Yes.

And we're now waiting to hear from the English. The
French have agreed to everything. And we've been
fighting for a $5.00 pound and that's what has been

holding the thing up. And the thing - as far as the
actual agreement as to rates and all that - is very
sketchy and we - we're not signing anything. It's

-2purely a neutral agreement to try to keep the E:

Purely a gentlemen's agreement.

H.M.Jr:

Purely a gentlemen's agreement which I think is
much more valuable than any signed document.

Well if it's a question of - if it's of mutual
interest, it ought to 111 be bound any way.

H.M.Jr:

That's right. And the word that we use - we've
coined a new word - we will continue this as
long as it is in the interest of national prosperity.

Yes.

H.M.Jr:

How's that?

H.M.Jr:

That's all right.
Instead of using the words "internal price levels."

Yes - national prosperity.

H.M.Jr:

Yes.

It's/good campaign word.

H.M.Jr:

It isn't bad.

(Laughs) Who thought of that one?

H.M.Jr:

Oh, we never thought of that, you know - the campaign.
This is purely monetary.

Say, what - what - what will the price of the franc be?
Well, they're talking about devaluation between 25 and
34%, which would put the franc at around 5.
And then they'11 immediately hold it there. I mean

H.M.Jr:
E:

it will be a-

H.M.Jr:

They're - they're going to have a stabilization fund
of 10,000,000,000 - 10,000,000,000 francs.

Yes. Well that ought to be - that ought to be very
helpful.

-3H.M.Jr:
E:

Don't you think so?

It ought to be very, very helpful because to have
France forced off and no agreement -

H.M.Jr:

Yes.

- and then to have the franc drift -

H.M.Jr:

Yes.

- which couldn't help but be very demoralizing and
certainly would be terribly demoralizing to France -

H.M.Jr:

Yes.

- and it would leave both the pound and the dollar
in an uncertain situation, and particularly the pound.
That's right.

H.M.Jr:
E:

Now it would be bad because the pound would have no

basis upon which it could operate.

H.M.Jr:

That's right.

So it does seem to me - personally I - I've been
wondering just what the outcome was going to be
after watching the paper on this French situation.

H.M.Jr:

Yes.

But it does - it does look to me that a three-way
agreement
enabling
France to immediately stabilize
at
a new level
-

H.M.Jr:

Yes.

- with a stabilization fund, ought to be very, very
helpful to the entire - to not only the national
situation but to the world situation.
I think so.

H.M.Jr:
E:

H.M.Jr:

Do you - do you think England will agree to $5.00?

Well, they haven't agreed to it but, on the other
hand, they said they wouldn't fight it. That's
about what it boils down to. They've given me a confidential memorandum on that.

-4But they're going to have to &gree though, aren't they?

H.M.Jr:

No.

Well, of course, if they don't fight it, it means

the same thing.

H.M.Jr:
E:

H.M.Jr:

H.M.Jr:
E:

H.M.Jr:

Well they - they've agreed It means that they're not going to further devalue,
doesn't it?

They!ve - they've agreed very, very definitely not
to fight it, and they've also told me they're
satisfied with the present level.
They'11 support the pound at that price?
Yes.

Isn't that what it means.
No, what they say is they'11 let it sort of seek
its own level, but, on the other hand, they won't
push it down.

H.M.Jr:
E:

H.M.Jr:

Well, of course Everybody here who's worked on it thinks that That that's where it'11 stay?
They think that that's about where it will stay they think temporarily it may go up but it will
stay about there. They - they don't feel it to
be a great return of capital to France because
they're not sure of France.
They're not sure of the political situation.

H.M.Jr:

No.

It's more than the monetary there, isn't it?

H.M.Jr:

Yes.

Now later if there is a return, then the pounc may

H.M.Jr:

recede.

It might. It might go to $4.90. That wouldn't be
any tragedy.

-5-

100

Yes. Well, it may even go lower than that if they

lost a lot of capital. But even if it did go
lower -

H.M.Jr:

Yes.

If it's a natural level -

H.M.Jr:

Yes.

- we could stand it.

H.M.Jr:

I think so. We think so here. It's such an important
thing after all. The French are going to do something tonight whether we join them or not.

Well, by golly, I - I hope the British will - will -

and we can join them ourselves. I mean it looks to
me like that would help because otherwise it

H.M.Jr:

just looks like France is left out on a limb.
Well, it - the way we feel here if this goes through,
it's - it's a great stroke for liberal government.
Yes.

H.M.Jr:

And it may - it may be the turning point in Europe.
I mean it - it might pull them through.

It'11 help France. Withoutlit, the francs will
drift, won't they?

H.M.Jr:

Pardon me.

I say without/that France would just be drffting -

H.M.Jr:

Well.

H.M.Jr:

- France couldn't devalue, could they?
Well, Marriner, they lost $48,000,000 gold today.

Yes, but, France would just drift without an
agreement.

H.M.Jr:

Well, they'd go - I mean if this doesn't happen, I
would say within a couple of weeks they'd have
anarchy there.

Yes, Yes. Well then - well I wish - I wish I
was back there, but I

101

-6-

I wish you were, too, and I could come, I guess.

H.M.Jr:

I phoned you the minute that I felt that it was 90%

Yes.

H.M.Jr:

sure.

I'll give your office a copy of this, and if you want
me to as soon as the thing is signed, I'll - I'll I'll telegraph it to you.
Well, that would be - I'd appreciate having it.
What's your address. I'll - I'll telegraph it the
minute you release it.

H.M.Jr:

Send it to - in care of the Eccles Investment Company.
Well, where - where will you be tonight?

Ogden.

H.M.Jr:

Where will you be tonight.

Well, let's see. I'll be in Salt Lake tonight.

H.M.Jr:

Well, do you want me to send it there?

H.M.Jr:

Why - why not send it here and I'll get it tomorrow?
Well, then you'll get it in the papers. Every paper

in the world will carry it.

Yes, I - I know that. How soon do you think you'd
be able to wire it?

H.M.Jr:

Oh, from two to three hours.

Yes. I'll tell you what you do - you - you wite it
right here to me at Ogden and I'll arrange to have
it forwarded wherever I am.

H.M.Jr:

What address?

Just send it to M. S. Eccles, Ogden, Utah.

H.M.Jr:

M.S.?

-7E:

M.S. - Ogden, Utah.

H.M.Jr:

I get the "M". What's the next letter?

102

S S.

H.M.Jr:

M. S. Eccles.

Ogden.

H.M.Jr:

Ogden, Utah.

That's
right. And I'll leave word at the Western
Union.

H.M.Jr:;

Right.

Well, listen, tell - tell Ransom that I'll be - hello.

H.M.Jr:

Hello.

I say, tell Ransom that I'll be back there at the end by Sunday at the latest.

H.M.Jr:

He says that's all right. He doesn't say he's delighted, but he says it's O.K. with him.

(Laughs) Who says that?

H.M.Jr:

Ranson.
He says it's all right with him. He says you
can take another week.

I can.

H.M.Jr:

Yes.

Well, I'm - I'm scheduled to stop at - I'm going to
talk to the bankers over in Iowa.

H.M.Jr:

Yes.

I thought maybe I could do a little good over there.

H.M.Jr:
E:

H.M.Jr:

My
God I Haven't they stood enough punishment over
there?

I don't know. (Laughs)
(Laughs) .

-8E:

103

I - I agreed to meet with them over in Des Moines and
then I'm going over to Kansas City, and then I'm
coming on to Washington.

H.M.Jr:

All right, Marriner. When you get back, I'll look

All right.

forward to seeing you.

I'll look forward to seeing you when you get back.
All right. Goodbye.

H.M.Jr:

Thank you.

Goodbye.

H.M.Jr:

-21-

104

Shortly after the Secretary concluded his conversation
with Mr. Eccles, Mr. Appert came in and brought the French
text. (See Exhibit B attached).

Auriol sent word to Appert that the President of France
wants to go to bed tonight and cannot go to bed until he gets
our approval. H.M.Jr. became very provoked and then laughed,
and said to Appert, "As a matter of history, please tell Mr.
Auriol that we have approved the note but we are waiting for
the Chancellor of the Exchequer. The British Government is
holding this up. They just telephoned and said that they
would have word for us about 7:00 o'clock."
The President phoned H.M.Jr. at 6:00 o'clock.

H.M.Jr. said, "Mr. Hull was kind enough to come over and
help me on our answer, and we worked on it for half an hour.
The French have accepted our new draft in toto without changing
a word. I handed this thing to the British around 4:00 o'clock,
and I told them that I wanted some kind of an acknowledgment
from the Chancellor, and that they should phone it, but that
we would not release the various messages until we heard from
the Chancellor, 80 the French and ourselves are sitting here

waiting. It 18 right in their lap. The French telephoned the
British that they had accepted our draft just as it was written,
and I told the French that we were simply waiting on the British.
The French have given it all out to the papers. They now say
that they are going to meet at 12:00 o'clock in Paris, 6:00
o'clock our time, and they keep postponing it one hour all the
time, waiting on the British.

"While I have you, I want to tell you something that will
amuse you. Cochran is sitting there with the French Ministry,
and the thing they are worrying about is if this thing comes
through after 12:00 o'clock, what should they do to keep the
President of France from going to bed? My reply was, what 18
going on tonight in the Mommarte? They just howled. After
they hear from us, they have to go to the President of France
to get him to sign this decree, calling Parliamant, so the whole
thing is just waiting now on our dear friends, the British.

"Hull is just tickled pink. He thinks it is the greatest

thing that has happened. I sent for Landis and told him about
it in confidence. I also told Ransom of the Federal Reserve

Board. They told me that my statement to Vandenberg is a
peach. I called up Ecoles and told him and he 18 delighted.

A few minutes ago Gaston handed me two possible versions as

the heading to this American statement. In France, it is the
Minister of Finance that will make the statement; in England,
the Chancellor of the Exchequer. 1. By authority of the
President, the Secretary of the Treasury makes the following

-22-

105

statement, and, 2, The Secretary of the Treasury makes the

following statement in behalf of the United States Government." The President asked H.M.Jr. which one he preferred,
and he said, "By authority of the President." The President
said he agreed.

"Now the other thing which is almost unbelievable is that
the British have overlooked the most important thing and that
16 the right to get gold from us. I cannot understand why they
have not asked for this before. This is something they know
I would give them and I told Bewley if we entered into a threecornered agreement, I would then be willing to give up gold to
England. This is something they have been hinting at for
months. Your policy, and one you have taught me, is to make
them ask.

"When can I get you conveniently again? If this thing
comes through I will call you at once.
At 6:35 P. M. the Secretary talked to Coohran again and
told him that the British had advised that they would call on
the Secretary in about 20 minutes with the statement from the
Chancellor. Record of the conversation between the Secretary
and Mr. Cochran follows.

Record also follows of conversation between Mallet and
Feis in which Mallet said he would be down in 20 minutes.

106
September 25, 1936
6:35 p.m.

Operator: Yes,
I've placed my call but they're going to complete
theirs..
H.M.Jr:

All right. Tell - tell what's his name - Lochhead,
and Feis, and Taylor to come in.

Operator:

Do you want Miss Chauncey?

H.M.Jr:

No - yes - that's right.
All right.

Operator:

Operator: Hello.
H.M.Jr:

How soon is it coming?

Operator:

Right away.

H.M.Jr:

Is it on the wire?

Operator:

Are you ready?

H.M.Jr:

Yes.

Operator: Yes. (Pause)
Operator: Go ahead.
H.M.Jr:

Hello.

Cochran:

Hello,

H.M.Jr:

Yes, Cochran.

I - I can hear you now.

H.M.Jr:

Go ahead.

I'm here with the Minister now - with Mr. Auriol.

H.M.Jr:

Yes.

H.M.Jr:

And they telephoned from London that London had accepted
your
proposition,
and that Chamberlain was releasing
the statement
at 12:30.
Yes.

107

-2-

- with your approval.
Now 12:30 - what time is that?
It's just now 12:36.

H.M.Jr:

12:00 what?

12:36 here now.

H.M.Jr:

Well, now the British Embassy here phoned -

Yes.

H.M.Jr:

- and that they were just taking down the statement
over the telephone from the Chancellor and they
would be in my office in about 20 minutes.

Yes.

H.M.Jr:

I have not yet heard from them. They said they
will be here in 20 minutes.

I see.

H.M.Jr:

So if you people would please wait another 20 minutes

to half an hour, the minute they come I'll phone you.

They - they haven't communicated with you yet?

H.M.Jr:

They called me at 6:30 Washington time. Hello Did they talk with you directly?

H.M.Jr:

No, they have not.

The Embassy?

H.M.Jr:

The British Embassy called me 6:30 Washington time,

which is 12:30 Paris time.

Yes.

H.M.Jr:

And said they were taking down over the telephone
a statement from the Chancellor of the Exchequer

to the Secretary of the Treasury -

Yes.

108

-3H.M.Jr:

- and that they would be down here in about 30 minutes.

I see.

H.M.Jr:

So you - which means they'11 be here now in about 20

H.M.Jr:

minutes.

Yes, but Monick told the French that they - the English wanted to release the statement at 12:30.
Well, they won't do that -

It actually is being released in England.

H.M.Jr:

No, no, no.

Well, that - that's what they say.

H.M.Jr:

No, no.

And so they're - they're ready to give it out here when
you give the word.

H.M.Jr:

No - please. There's - there's a mistake. There's
been nothing done. They've got to wait another 20

minutes.
C:

I see.

H.M.Jr:

Now the - the English are on the way down. Now don't

All right.

H.M.Jr:

I've had no word. Everything has gone beautifully.

Yes.

H.M.Jr:

So please ask the French to be patient for another
20 minutes to a half an hour.

let them make a mistake.

I see.

H.M.Jr:

And - and the minute that this - this comes, I'll
phone you.

But - and you've given the British definite understanding that they are not to release it?

109

-4-

That's right.
But Monick said just the contrary, you see, to people

H.M.Jr:

Well, please - Mr. Monick has several times given them

H.M.Jr:

here.

H.M.Jr:

wrong information.

Yes - I'm - I'm very much aware of that.
Now please - please ask the Minister whether he won't
wait until he hears from me. Now don't let's spoil
this by not waiting for a half an hour.
Well, let me turn to him now and ask him.

H.M.Jr:

All right.

Hello.

H.M.Jr:

Hello - I've got plenty of time.

H.M.Jr:

Well let - let me speak to him now.
Take all the time that you want.

All right.

H.M.Jr:

Take all the time that you want.

H.M.Jr:

Hello, Telegraph Operator. Now Mrs. Klotz is going
to read to you an ultra-confidential message for the
President - the President, see? So you take it just
as it is. The President called me. Take it just
word for word, see? And then sign it the Secretary
of the Treasury, see? (Mrs. Klotz reads the message.)

H.M.Jr:

Hello.

H.M.Jr:

Hello.

They're - they're very much worried, you see, because

if they don't get it out very near this time it cannot
be in the papers. See?

110

-5H.M.Jf:

Well, now I can't do anything and they're no more
worried than I am.
Yes.

H.M.Jr:

Now, Mr. Mallet, the Charge in the British Embassy,
phoned the State Department at 6:30 Yes.

H.M.Jr:

- that he was taking down over the telephone -

Yes.

H.M.Jr:-

- a message of the Chancellor of the Exchequer for
me.

Yes.

H.M.Jr:

I have not seen what's in it.

Yes.

H.M.Jr:

He said he would be down here in about a half an hour.

Yes.

H.M.Jr:

And the minute he comes, I'll call you.

Fine.

H.M.Jr:
C:

Now whatI'll do is - I'll put - if you want me to,
I'11 hold this call, or - I can hold this wire open.
Let's hold this call open.
Well, who's Let's hold this line open.
Let's - let's keep this line open and the minute they

come in, I'll talk.
All right. I'll - I'll stick here and we'll keep the
line open then.

H.M.Jr:

All right. Now just a minute.

Yes.

III

-6H.M.Jr:

Hello.

H.M.Jr:

Will you please tell the Minister of Finance this:

Yes.

H.M.Jr:

That I have told the British as emphatically as I
can
that they are not to release this statement until
they hear from me.

Yes.

H.M.Jr:
C:

They
have given
not release
it. me their word of honor that they will
Yes.

And I don't give a damn what Monick says.

All right - fine.

H.M.Jr:

Now, Monick has lied a number of times.

Yes.

H.M.Jr:

And I don't care what Monick says. On this - I have
it on authority that on this checkup back and forth,
a number of the messages that Monick has given have
been absolutely misinformation.

H.M.Jr:
C:

H.M.Jr:

I know it. Well I Now tell the Minister of Finance.
I know it.

Tell the Minister up - up there that I'm just as
anxious as he is and will he - and the British have
given me their word they will not do anything until
they hear from me.

Yes. All right.

H.M.Jr:

Now I think that my word is better than Mr. Monick's.

All right. Fine.

112

-7H.M.Jr:

Now will you please tell him that.

All right.

H.M.Jr:

Now I'm right here. (Pause)

H.M.Jr:

What's that? Hello. Hello. (Pause) Hello.

Operator:

Hello.

H.M.Jr:

Mrs. Spangler.

Operator:

Yes.

H.M.Jr:

They want to keep this wire open, you see?

Operator:

All right.

H.M.Jr:

Hello.

Operator:

Yes.

H.M.Jr:

Hello, Cochran.

H.M.Jr:

I'm giving your message through Roueff to the Minister.
What's that? What's that? Hello.

Hello.

H.M.Jr:

What's that?

I'm just giving your message through Roueff to the
Minister.

H.M.Jr:

Yes; what did he say?

And he's - he's telling him now, you see?

H.M.Jr:

Yes.

They
off. - they have not given it out, and they're holding

I.M.Jr:

Well that's very - that's - that's the honorable thing
to do. Now, we're not going to give it out either.

113

-8C:

Well, we will - we'11 hold it.

H.M.Jr:

Yes.

And you - just keep the line open so that we can
get you.

H.M.Jr:

Sure, now I'm very sorry that the President of
France (laughs) can't go to bed. Appert was just coming
in here and he said they're so worried. Baungartner
told him about the President of France going to bed,
and I said I haven't been to bed in a week.
Yes; right.
And I think that over there they could think up something to keep the President of France up.

I - I really think so, too.

H.M.Jr:

Yes.

So
then let me givs you just a little idea as to the
statement -

H.M.Jr:

Yes.

- in which they are issuing this.

H.M.Jr:

Yes.

They - they say that the Council of Ministers has
approved the terms of a declaration, the text of
which
has been
conversations
- arrived at after long and friendly

H.M.Jr:

Yes.

- with the Governments of the United States of America
and Great Britain with the French Government. This
declaration
is to be published simultaneously by the
3 Governments.

H.M.Jr:

Yes.

Then the French text follows.

H.M.Jr:

Yes.

114

-9And I checked the French text, and there's - oh, just
one little change in order of words - something like

that. Nothing at all.

H.M.Jr:

Wall, we had to change the order but not the meaning
in order to make it read United States Government.

To read what?

H.M.Jr:

Well, just to change it so that it reads "United

Yes. Yes.

H.M.Jr:

Just a minute.

And -

H.M.Jr:

Wait a minute. Cochran - Cochran.

Yes.

H.M.Jr:

Mallet has come now. Mallet's outside. See?

He's there now, is he?

H.M.Jr:

So I'll tell my operator to just - to Mrs. Spangler

All right, and you'll talk to Mallet now.

H.M.Jr:

I'll talk to Mallet.

Yes.

Operator:

Go ahead.

H.M.Jr:

Hello, Cochran.

Cochran:

Yes, Mr. Morgenthau.

H.M.Jr:

Now let me (Said aside: Just a minute gentlemen.)
Do you understand that the British are going to

States Government" instead of the "French Government."

to hold this open.

release this - well, the same text that I sent to
you?

Yes, absolutely.

H.M.Jr:

You do?

- 10 C:

Yes.

H.M.Jr:

You understand that?

Yes, because they read this text from here.

H.M.Jr:

Pardon me.

I say, the French repeated our text with amendments

H.M.Jr:

Yes.

And the British said they accepted it entirely.

H.M.Jr:

They have?

Exactly.

to the British -

H.M.Jr:

All right. Now just a moment please. (Pause)

H.M.Jr:

Hello.

H.M.Jr:

Well now they think that the British are going to
release this now at once, so I say it's all right
to release it, and I'd like to try some of my very
poor French to congratulate Mr. Auriol if he would
come to the telephone.

Fine.

Mr. Auriol: Hello.
H.M.Jr.:

Bon soir, M. Auriol.

Auriol:

(Speaks French)

H.M.Jr:

Out.

(Speaks French)

H.M.Jr:

Le meilleure felicitation.

Pardon.

H.M.Jr:

(aside: I can't -)

Pardon.

H.M.Jr:

Well, - (Aside: 'What's - good luck or something?
Some one in the room answers, 'Bonne chance')

Bonne chance A:

H.M.Jr:

(Speaks French)

oui - oui (&side: 'Then a goodnight')

115

116

- 11 H.M.Jr:

Good night, Mr. Minister.

Auriol:

Hello.

H.M.Jr:

Hello.

Auriol:

Hello.

H.M.Jr:

I want to wish you the best of success.

Auriol:

Hello.

H.M.Jr:

I wish you the best of success.

Auriol:

(Speaks in French) -

H.M.Jr:

Bon soir.

Auriol:

Hello.

H.M.Jr:

M. Cochran?

Auriol:

Hello.

H.M.Jr:

Hello - M. Cochran?

Auriol:

You wish to speak to Mr. Cochran?

H.M.Jr:

Yes, who is this, please?

Auriol:

(Speaks in French) -

H.M.Jr:

Well, I just wish you great success, M. Auriol.

Auriol:

Thank you very much for your wishes.

H.M.Jr:

Thank you.

Auriol:

You want to speak to Mr. Cochran?

H.M.Jr:

If you please.

Eariol:

One moment.

117

- 12 H.M.Jr:

Cochran?

Cochran:

Yes, Mr. Secretary.

H.M.Jr:

I just wished the Minister the greatest of success,
and we'll do everything possible to help out.

Cochran:

I didn't get that - I'm sorry.

H.M.Jr:

I want to wish him the greatest of success and the
American Government will do everything possible to
try to make this move on the French part a success.

Fine - fine. I'll - I'll explain to him.

H.M.Jr:
C:

And I want to thank you for the splendid work you've for the splendid work you've done there.
Oh, please, that's nothing.
Well, now, you and the Auriol can all go out and have
a drink on me. (Laughs)

All right - fine. We'11 charge it up to you.
All right (Laughs).
And now I'll give you a wire tomorrow as to how things
go.

H.M.Jr:

All right.

Goodbye.

H.M.Jr:

Good night.

118

September 25, 1936
6:30 p.m.

Mallet:

- on the telephone.

Feis:

On the telephone?

Mallet:

Yes, and so I shall probably be coming straight down
in a few minutes - as soon as I have got it.

Right, sir.

Are you at the Treasury now?

I'll tell the Secretary.

Will you tell the Secretary?

I shall. He's in the Treasury and I'll just tell him.

You tell him that I'll be down as soon as I have
the message. It's being taken down at this minute
on the telephone.

It will probably be a matter of 15 minutes or something like that.

Yes, well, it will take me another 10 minutes to get

it down. I think I will start in about a half hour.
Right, sir. Good.

Thank you.

Right. Goodbye.

119
-23-

While Cochran was on the phone, word came to the Secre-

tary that Mr. Mallet had arrived, and the Secretary suggested
to Cochran that the telephone wire be held open until he
could talk to Mr. Mallet and get the Chancellor's reply. Mr.
Mallet came into the Secretary's office and the Secretary said
to him, "My god, the President of France is having kittens.
He sent me an emissary to ask, 'When can the President of
France go to bed?'* And Mr. Morgenthau added, "I told him
that the French ought to keep him up."
Mr. Mallet said, "This is the message I have for you:
(See Exhibit C)

"The Chancellor thanks Mr. Morgenthau for his reply. While
maintaining his own view the Chancellor takes note of the view
expressed by Mr. Morgenthau. He agrees that Mr. Morgenthau's

reply need form no obstacle to publication of the declaration.
It is proposed to publish at once 80 as to enable the text to
appear in the morning papers."

H.M.Jr.: "Monick phoned that you had released this thing
half an hour ago, and I said it was not true - that we had exchanged words of honor." Mr. Mallet said, "They may even have
released it," and Chalkley added, "I think it is conceivable,
Is it all right to tell the French to go ahead?" Mr. Morgenthau answered, "As far as we are concerned, absolutely.
He told Mrs. Klotz to tell Gaston to have the statement
mimeographed.

Mr. Mallet said, "I suppose you know what text they have

agreed on." And Mr. Morgenthau answered, "They have agreed

on my text." And Mallet said, "That's what I gathered from my
telegram." Feis explained, "We only have it indirectly from
the French. We wish we had it from you, too."
Mr. Mallet said, "When I sent my telegram giving your
reply to the Chancellor, I said Mr. Morgenthau would like word
at once, and also information when the publication would be,
and I got an answer that it prefers to publish at once." Mr.
Morgenthau said, "You talked with me and raised the question
whether we visualized the completely identical communication."
At this point the Secretary resumed his conversation with
Cochran. He said to him, "Do you understand the British are
going to release the same text that I sent to you?" And
Cochran replied, "Yes, absolutely, because they read this text
from here. The French repeated our text with amendments to
the British and the British said they accepted it entirely."
The Secretary said to the group present in the room, "It's
all over."

The President

sent 6:45 pm.

apr 120

a special messinger

has

the
ch
just Fun arrived Embassy fune

and wishes to in from
rishes
goPrez
to got Travel
me thattothe

base
a
drice
what
3.7
should dr in this great emergency

see Exhibit D"
121

-24-

122

Again resuming his conversation with Cochran, H.M. Jr.

said, "Tell them that the British are going to release this
now at once so I say it's all right to release it, and I'd

like to try some of my very poor French to congratulate Mr.
Auriol if he would come to the telephone." (The message of

congratulation is included in the full text of the Secretary's
conversation with Cochran, which immediately follows page 22.)

The Secretary said to Mr. Mallet and Mr. Chalkley, "I
wish you gentlemen success." Mr. Chalkley said, "It's the
finest day's work I have ever had the pleasure of assisting
in." And Mallet said, "It's really fine having a chance to
be in on this." Mr. Morgenthau said to Mr. Mallet, "I am
terribly happy and so is the President." Feis remarked, "This
really moved smoothly from the beginning.
Mr. Mallet and Mr. Chalkley left.
The Secretary called in Mr. Gaston and said to him, "We
will have a press conference at 7:30." Mr. Gaston congratulated the Secretary, and Mr. Morgenthau replied, "I am taking
congratulations. I am a very happy man."
He then called the White House telegraph operator and

said, "This is my last message, ultra-confidential, to the
President," and dictated the reply from the Chancellor which

Mr. Mallet had delivered in person.
At 7:05 P. M. the Secretary called the President and said,
"Well, the message just came from the Chancellor. It said,
'The Chancellor thanks Mr. Morgenthau for his reply. While
maintaining his own view the Chancellor takes note of the view
expressed by Mr. Morgenthau. He agrees that Mr. Morgenthau's

reply need form no obstacle to publication of the declaration.
It is proposed to publish at once 80 as to enable the text to

appear in the morning papers. I am thrilled - 80 thrilled I
don't know what to say."

To some comment of the President, the Secretary replied,

"Well, I am quite pleased." He also said, "Well the British
either have or are releasing it now. Cochran was on the wire
and I held him on the wire until the British came in and they
are releasing it and we will release it in 20 minutes. The
British and French will release it a little before us. After
all, it's only 20 minutes' wait. Did you get my telegram
about 20 minutes ago? I expect an answer. (See Exhibit D).
To the President's comment on this, the Secretary answered,
"Marvelous - that's wonderful. Did you send that? I would

frame that all right - all right." (The Secretary later ex-

plained that at this point the President told him that McIntyre

123

TELEGRAM
VIA SPECIAL WHITE HOUSE

WIRE----7:58PM. (RV-C)

The White House
Washington
EXECUTIVE OFFICES,

POUGHKKEPSIE, N.Y., 7:58PM. SEPT. 25, 1936.
HONORABLE HENRY M. MORGENTHAU, JR.,
SECRETARY OF THE TREASURY,
WASHINGTON, D.C.

THE PRESIDENT BAYS TELL YOU TO TELL EMBASSY TO EMPLOY ANY AMERICAN
COSTS ON THE FRENCH GOVERNMENT--NO COMMISSVISITOR NOW IN PARIS.

IONS OR LIABILITIES.
M. H. MOINTYRE,
ASSISTANT SECRETARY TO
THE PRESIDENT.

123

TELEGRAM
VIA SPECIAL WHITE HOUSE

WIRE----7:58PM. (RV-C)

The White House
Washington
EXECUTIVE OFFICES,

POUGHKKEPSIE, N.Y., 7:58PM. SEPT. 25, 1936.
HONORABLE HENRY M. MORGENTHAU, JR.,
SECRETARY OF THE TREASURY,
WASHINGTON, D.C.

THE PRESIDENT SAYS TELL YOU TO TELL EMBASSY TO EMPLOY ANY AMERICAN
COSTS ON THE FRENCH GOVERNMENT--NO COMMISSVISITOR NOW IN PARIS.

IONS OR LIABILITIES.
M. H. McINTYRE,
ASSISTANT SECRETARY TO
THE PRESIDENT.

-25-

124

had received the Secretary's message to the President advising
him that the President of France wanted to go to bed and asking the President of the United States what he, the Secretary,
should do to keep the President of France up. McIntyre, it
seems, thought this was a code message to the President and

was quite indignant that Mr. Morgenthau trusted him so little
that he had to send a message in code to the President.) The
Secretary then said, "Oh, really? Oh, really, he didn't know.
Ha! ha! And he's furious. I will leave it to you to take it
out on McIntyre. Don't you love it?"
The President made some other comment, and the Secretary

said, "Thank you, sir. If I come up, which I most likely will
Saturday noon, I may drop up, if I may. Right. Thank you."

Miss LeHand then came on the phone to speak to the Secre-

tary, and the Secretary said, "I think it's pretty good. Thank

you, Missy. That's very sweet of you." Miss LeHand evidently
suggested that the Secretary go to bed because Mr. Morgenthau
next said, "I think I will. The President of France and me."
The Secretary then said to the group, "MoIntyre thought
it was a code message and he is perfectly wild that I was trying to send something that he could not understand, 80 he
called up the President and said, 'I have this perfectly damn
fool message but I suppose it's code and why can't Henry trust
me,' and I can't even tell you what the President sent me. He
sent me the wildest message I have ever heard. He prescribed
what we should do with the President of France. He has left
absolutely nothing for the imagination. Miss LeHand came to
the phone and she said, 'I don't know what it's all about but
I haven't seen the President so happy in a long time.
Mr. Morgenthau telephoned to Secretary Hull and said,
"well, it's accomplished. And I want to thank you for your
help, and particularly for the help that Herbert Feis gave us.
I may swipe him or rather borrow him. If you are interested,
I will read you what the Chancellor said." He then read to Mr.
Hull the Chancellor's reply. "Isn't that fine? I have just
talked to the President and I have not heard him 80 happy in a
long time. It may save the little Governments over there."
Mr. Appert was announced at this point. The Secretary
said, "Bring him in." He was accompanied by Mr. Livesey,
Economic Advisor of the State Department who had been assisting
Mr. Appert in translating the French text.
Mr. Appert said to the Secretary, "I wish to express the
thanks of my Government for your very helpful action. I know
you worked day and night."

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125

The Secretary answered, "Thank you. It has been extreme-

ly difficult but the final message just came through and I spoke
to Mr. Auriol about 15 minutes ago and they are releasing it. I
think this, you will tell your Ambassador, I think if you will
keep in touch with Mr. Lochhead on the mechanics of it - and
there may be some questions, and he will help you - but we are
very, very happy here. If I may say it, it may mean the turning point in Europe." Mr. Appert said, "It will be very helpful for conditions in the world. Goodnight, Mr. Secretary."
-Viner said to the Secretary, "I have been reading the French
text of our note and we haven't finished, but there are two
points and possibly three where the sense differs somewhat. I
don't think they are vital, although I don't think we ought to
be particularly happy at the way in which it is stated. The
Secretary said, "Let it go, it's too late. The French released
theirs and the British have released their draft and for our
purpose, our text is official. And if there is a slight difference, I am sure it will not hurt."
Viner said, "I congratulate you. When they build your
monument, this will be high up on the list of your battles."
Lochhead said, "Knoke has a telephone call from the Federal
Reserve that the Bank of England has put in a call and he thinks,
rightly or wrongly, they may be worried about the sterling rate.
The Governor thinks, rightly or wrongly, they may be worried
about sterling and might pop the question whether we will take
more gold from them in Lond on at the price of 34.77. The order
18 still good for $12,000,000. Personally, I think it will be
time enough tomorrow to take care of it."
The Secretary asked, "What would you suggest?" Lochhead

replied, "Personally, I think we have an interest in not seeing sterling go too low. I think there is no reason to feel
uneasy about our gold in England. We can easily have it
shipped." The Secretary answered, "You tell them I will take
up to 100 million dollars at 34.77." (This is referred to in
more detail in a separate entry for September 25).

Knoke said to the Secretary, "Mr. Secretary, may I also
express my congratulations, and will you let me go back tonight?" The Secretary said, "Thank you. Yes, I think you
should go back tonight." The Secretary said to the group, "I
need 10 minutes to repair myself before my press conference.
During this 10 minutes, the Secretary wrote out a statement he
would read at his press conference (See Exhibit E).
At 7:30 P. M. the newspapermen came in for their press

conference, and the following is a transcript of the questions

and answers:

PRESS CONFERENCES

126

September 25, 7:30 P. II.

The Secretary distributed copies of Press Release No. 8-53 and

then read the statement aloud.

H.M.Jr.: I might say that a similar statement is being given out

simultaneously in London and by the French Government in Paris. The

Chancellor of the Exchequer in London is giving out a similar statement and Minister of Finance Auriol is also giving out a statement in

Paris and I think it rather significant and as far as I know I think
it is the first time that three similar statements by three Governments

have been given out by three Governments simultaneously.

I might just add something which I have jotted down before you

question me. I did it very hastily. "America's position is fully

safeguarded, while at the same time our action should encourage peace

and commerce. This will, in my opinion, be the turning point for
general peace in the world. Stabilization of world currencies is the
foundation that had to be first built before we could look forward to
lasting peace and real recovery in world trade."
I am at your service.

Q.- Do you consider this de facto stabilization?
A.- I don't want to answer that.
a- How far is France going?

A. Let me explain to you for background. Most of this stuff
has been coming in all day but as I understand it, you will have to
get this confirmed from abroad, but in order to give you the picture you can't take it as coming from me - the French will tonight issue a

decree which calls Parliament together. Some have said Sunday and some

say Monday but you will have to confirm it in your offices abroad. As
I understand it, they will propose to Parliament the percentages of
devaluation that they have in mind, and ask Parliament to ratify or
reject
what they propose. But you will have to get this confirmed
from your offices abroad.
Q.- Any idea of the percentage?

A.- That will have to come from the French.
Q.- Those percentages are known to this Government?

A.- Yes.

e. And they are satisfactory as far as this Government is

concerned?

A.- Yes,

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127
Q.- You know about the British attitude?
A.- Oh, yes.

Q.- How does that suit you?

A.- This whole thing- when you consider that the British have
their problem, the French have their problem, and we have airs, after
all this is something we have been looking forward to for three-anda-half years. As I said a year or two ago, America was ready and
would not stand in the way when the world wanted stabilisation. Now
the French have approached us on this matter.
Q.- Who, the French?

A.- Yes. Because they are taking the lead in this and after
several weeks, days and ni ghts, we have been able to bring the ob-

jectives of the three Governments close enough together so that it is
possible to make this kind of statement.
Q.- Can you tell us whether this depreciates Sterling in terms
of dollars to any extent?

A.- I don't look forward to any great change in the Sterling-

Dollar rate.

Q.- Mr. Secretary, this is perhaps an elementary question but
could you give in more detail how you expect it to aid commerce?
A. - You have asked me the question. We have said and I think
we have demonstrated now since we devalued that the American dollar

has gradually become certainly as strong a currency as there is in
the world and with that strength of our currency, money has sought
investment here and our exporters have been able to sell in the world's
market to advantage; they have been able to sell at a profit and they
have been able to sell in terms of a currency which was stable, and
if other countries are able gradually to get the same stability that

the American dollar has it is only natural that their trade will

expand and as these various exchange regulations and restrictions
are gradually dropped money will flow freely from one country to

another. There will be less risk in selling from one country to
another and we will have, we believe, if this is a success - and I
think the chances are excellent that it will be a success - we will
gradually have recovery of trade and I have sufficient confidence
in the acumen of the American businessman that he will got his share
in the world trade.
Q. You say here that this Government#will arrange for such
consultation for this purpose as may prove necessary with the other
two Governments and their authorised agencies." What conferences
did you specifically have in mind?

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128

A.- What we have in mind is that the various Treasuries will

talk to each other very freely. Their fiscal agents will act for them

just - an amusing incident; we wanted to say our "fiscal" agent but
the fiscal agent in Paris is the tax collector so they said No, no,

you can't call it a fiscal agent! So they are calling it the monetary

agent but here our fiscal agent is the Federal Reserve. When this
thing begins to work our fiscal agent, which is the Federal Reserve,
will talk to the Bank of England and the Bank of England will talk to
the Bank of France and they will gradually work this thing out and one

of the things that I look forward to is that this whole question of

foreign exchange will gradually come more and more into the governmental

fiscal agents and therefore/will be more and more difficult for the
international speculator to try to break down these exchanges and take
advantage of temporary weaknesses of particular Governments.

Q.- That's a warning to speculators?

A.- It's a warning to speculators.
Q. Is this the end of your 24-hour basis?
A. - Yes, and no. If you will notice, we hope and will use every
effort to make it a success, but I say here the Government of the
United States "must, of course, in its policy towards international
monetary relations take into full account the requirements of internal

prosperity." If this agreement should, in any way, affect our internal
prosperity we will take the steps necessary to correct that and the
other Governments have that same right.

Q.- Subject to that provision, is it a promise, or can we interpret it as being a promise to keep the American dollar on its present
gold basis?

A.- Let me explain something. I think the unique thing about
this is that nobody is signing anything. We have simply got con-

fidence in each other that we mean what we say and we express our con-

fidence that the British will act in good faith, that the French will

do the same, and each Government is saying in so many words that we
have faith in the other Government and the minute any one of the three

break faith, why, the agreement is off, but there is nothing to be

signed and it is purely a gentleman's agreement and I would rather
have a gentleman's agreement than all the signed documents in the world.

Q.- You mean a gentleman's agreement that the dollar will not

be devalued further?

A.- No-one has talked about dollar devaluation. It says here
"must, of course, in its policy toward monetary relations take into
full account the requirements of internal prosperity". In other words,
our internal prosperity comes first and if anything in this statement
should react on our internal prosperity, wa take care of our internal
prosperity first. That's first and foremost and has been, if I may say
so, President Roosevelt's policy to have first and last and foremost
our internal prosperity, and I think the record of the last three-and-

129

one-half years speaks for itself and if any citisen will look at it
and be honest with himself, the answer is we have taken mighty good

care of our internal prosperity. The figures speak for themselves.

Q- Are you permitting the British to take gold out of the

United States or export gold out of the United States?
A,- That bridge has not yet been crossed.
Q- Any change been made in the regulations?
record.

A.- No change, and when it does it becomes a matter of public

Q.- Is a provisional clause in the trade agreement with France

involved in this?

A.- The State Department tells me no trade agreement is

affected by this; quite the contrary. they feel - Mr. Hull can speak
for himself, but I know that he is simply delighted with it. After all,
this is a step in the same direction that he has been working on over
in the State Department and the State Department has been most helpful
in working with me and assisting me and advising me in bringing this
about. They coult not have been more cooperative.

Q.- Do you anticipate the franc will be entirely off gold for

a period.

A.- Again for background - you have to get your information from
abroad - I think they will more or less follow what the Belgians did.
You know what that is.

Q.- 28%

A.- No. I don't mean the rate but I mean they will follow that
pattern; their way of going off gold.
Q. Mr. Secretary, this agreement would place the three countries
on the same level of a competitive basis as far as currencies are concorned? The statement says that no country will attempt to obtain an

unreasonable competitive exchange advantage.

A.- That's talking to other countries that are not interested in
this. That statement - again for background - is a stop, look and
listen sign to any country that tries to - please don't quote me to wreck this by undervaluing, by further depreciation. It's a stop,
look and listen. Again, that's for your guidance; don't quote me.
e- Could you amplify this reference to quotas; the steps taken
to relax the present system of quota restrictions?

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130

A.- That, again for background, is something that one of the
other countries wanted. They wanted that in there. We are very glad
to see it in there. Very glad, because as a matter of fact, one of
these countries has already said that immediately this goes into
effect that we will benefit through lower quotas.
Q.- This is something you expect in the future?

A.- In the future, but they volunteered that; and as far as
this country is concerned, we benefit first.
Q.- But this action removes the biggest barrier you had?

A.- - This action, being in the Treasury, has to be a purely
monetary one. Quotas was something the other countries wanted to

bring in there. We were very glad to have it. This was something
they wanted. Naturally, the United States, Great Britain and France
would benefit by that but we didn't ask for this because of the
Treasury conducting this.- Quotas is not in my shop.

Q- At any time in the conferences in the last two or three
days, were the British represented by some individual?

A.- Oh yes, Mr. Mallet of the British Embassy has been here
numerous times and Mr. Appert of the French Embassy has been here.

Q- Have the currencies of the three nations ever before been
on a non-competitive basis?

A.- I don't think three countries have ever had an agreement

like this before in the world, as far as I know.
Q.- This may be a foolish question..

A.- Coming from Mr. Duffield, I don't think so.
Q.- You have referred to peace so many times. There is nothing
here that concerns you except money?

A.- There is nothing here except money, but maybe because I am

here in the Treasury I think the basis of peace is the first economic
security in terms of dollars and if, without mentioning any particular
country, they have economic security for a stable currency. they have

that as a first foundation. They can then build on that for peace
but, as long as their monetary relationships are built on a mire they
are in a very vulnerable position and that's why I feel very, very
strongly that this move abroad is a stroke for peace, which I feel very

sincerely, and I feel our work here is monetary. Still, if these

countries have a sound monetary basis - I think the agreement we went
into with China; what's happened in China the last six months; their

recovery in trade is perfectly remarkable, and the whole thing, if you

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131

will study the Chinese situation, started as she began to get a stable
currency and as China has a stable currency. she has been able to go
forward in the last six months.

Q.- You refer to the continued use of appropriate resources.
Do you refer to the Stabilisation Fund?

A.- I do.
Q.- Well, the Stabilisation Fund expires in January. Do you
think it will be necessary to extend that under this new system?
A.- Personally, I don't know of any better insurance fund that

the Government can have than the continuation of the Stabilisation Fund

and I am quite sure - certainly I will recommend - I can't speak for
the President, but I will recommend to the President that the Stabilization Fund be continued.

Herbert (Gaston). have I overlooked anything?

Mr. Gaston- I don't think so.
H.M.Jr.:- Have I said anything I shouldn't?

Mr. Gaston- I don't think so.
H.M.Jr.:- Do you want to add anything?

Mr. Gaston- I don't know of anything.
H.M.Jr.:- Have I made any bulls?

Mr. Gaston- I don't think so.
Q- Wouldn't it be possible for you to suggest, off the record,

what is the extent of the devaluation of the Franc?

A.- No. I am sorry. That's French information, and I have been
here long enough - I feel that is distinctly up to the French.
Q- I mean as to the point of realignment on the old basis.
A.- Anything on that - they may have already announced it. It
is 2:00 o'clock in the morning in Paris.
Has Lins gone? Then I can tell a story, off the record. One of
the funniest things that happened on this thing - seriously! - the

French Embassy sent down an emissary that the President of the French

Republic wanted to 8 to bed and wouldn't I please haston it so that
the President of the Republic of France could go to bed. So I told them
that they would have to think up something of their own devices to keep

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132
him up. (Much laughter).

That's off the record for Havas too. My own boys have never used
anything that I have told thom not to. I thought you would be amused.

This is just an American Treasury family story. But I think now that
the President of France is sleeping, and I hope peacefully, - but please
don't quote me - but I thought you would enjoy it.

Q.- How long have you had the French note under consideration the note in which this suggestion was offered?

A.- This has been going on since the first week of September.
Q.- But wasn't the note you received this week something more

definite?

A.- The thing started about the first week in September.
Q- Did you receive a telephone call from France?
A.- As you may have noticed, there have been several telephone
conversations. Poor Flynn, I was getting excited and he walked in and

he got an earful. I don't know what my telephone bill is going to be
but it's plenty. But this has been going on for weeks and weeks.
Q.- Quite a bit of telephone diplomacy in this?

A.- I don't know, but I notice A. T. & T. was bringing out a

new issue, maybe on the strength of my telephone conversations.

Q.- Maybe that's to help them carry on until the Government
pays its telephone bill.

133
TREASURY DEPARTMENT

Washington

FOR IMMEDIATE RELEASE

Friday, September 25, 1936

Press Service
No. 8-53

By authority of the President, the Secretary of the Treasury makes the
following statement:

1. The Government of the United States, after consultation with the
British Government and the French Government, joins with them in affirming a
common desire to foster those conditions which safeguard peace and will best

contribute to the restoration of order in international economic relations and
to pursue a policy which will tend to promote prosperity in the world and to
improve the standard of living of peoples.
2. The Government of the United States must, of course, in its policy
towards international monetary relations take into full account the requirements

of internal prosperity, as corresponding considerations will be taken into
account by the Governments of France and Groat Britain; it welcomes this oppor-

tunity to reaffirm its purpose to continue the policy which it has pursued in
the course of recent years, one constant object of which is to maintain the
greatest possible equilibrium in the system of international exchange and to
avoid to the utmost extent the oreation of any disturbance of that system by
American monetary action. The Government of the United States shares with the

Governments of France and Great Britain the conviction that the continuation
of this two-fold policy will serve the general purposo which all the Governments
should pursue.

3. The French Government informs the United States Government that,

judging that the dosired stability of the principal currencies cannot be
insured on a solid basis except after the re-ostablishment of a lasting equilibrium between the various oconomic systoms, it has decided with this object to

134

-2propose to its Parliament the readjustment of its currency, The Government
of the United States. as also the British Government, has welcomed this

decision in the hope that it will establish more solid foundations for the
stability of international economic relations. The United States Govern~
ment, as also the British and French Governments, declares its intention to
continue to use appropriate available resources so as to avoid as far as
possible any disturbance of the basis of international exchange resulting

from the proposed readjustment. It will arrange for such consultation for
this purpose as may prove necessary with the other two Governments and

their authorized agencies.

4. The Government of the United States is moreover convincod, as
are also the Governments of France and Great Britain, that the success of

the policy set forth above is linked with the development of international

trade. In particular it attaches the greatest importance to action being
taken without delay to relax progressively the present system of quotas

and exchange controls with a view to their abolition.
5. The Government of the United States, in connon with the Govern-

ments of France and Great Britain, desires and invites the cooperation of

the other nations to realize the policy laid down in the present declaration.
It trusts that no country will attempt to obtain an unreasonable competitive
exchange advantage and thereby hamper the effort to restore more stable

economic relations which it is the aim of the three Governments to promote.

--000---

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135

While the Secretary was having supper, Governor Harrison

call him and as soon as H. M. Jr. returned to his office,

he talked to Governer Harrison on the telephone.
Record of their conversation follows:

136
September 25, 1936.

9 P.M.

Geo.

Hello - hello

H.M.Jr:

Harrison:

Hello - Henry?

H.M.Jr:

Yes George.

Well I want to congratulate you.

H.M.Jr:

Thank you.

I called you as soon as I got a release.

H.M.Jr:

Yes.

And you were busy with the press then.

H.M.Jr:

Yes.

And since then I've been on the telephone trying
to reach everybody in this neck of the woods.
Well what is the reaction?

H.M.Jr:
H:

Oh excellent.

H.M.Jr:

Excellent.

Everywhere.

H.M.Jr:

Fine.

A good deal of curosity is to what the French
going to do.

H.M.Jr:

Well
I told the press that they'd have to get that
from the French.

Yes but my answer to that is I don't known and I

suppose it won't be known until they put it up to

Parliament.
H.M.Jr:

That's right.

I think that's as good an answer as I can give.
I think so.

H.M.Jr:

137

-2-

And - but the statement - they think it is fine
and it is an excellent job.

H.M.Jr:

Yes.

And there is every intention and desire on the
part of everybody with whom I talked to cooperate
100%. As a matter of fact - oh some time ago we from
put the brakes
on it banks
to protect
the here and I don't
of these
around
think any of them have to do it.

H.M.Jr:

Yes.

But I

HM.Jr:

Yes.

And I think it should relate not merely to the franc

H.M.Jr:

That's right.

but to other exchanges as well.

Because others will be weaker tomorrow perhaps even

than the franc.

H.M.Jr:
H:

H.M.Jr:

That's right.
There's no point in there starting to raise the
guilders, the Swiss franc or the pound.
That's right.
You know my opinion

is that while I don't

think the exchange market ought to be closed;

nevertheless it ought to be just as quiet as is
possible to make it.tomorrow.

H.M.H:

That's right.

And everyone with whom I've talked has assured me

that so far as they'rels concerned that's what will

happen.

H.M.Jr:
H:

H.M.J.:

Ah ha. How about some of the private banking

institutions.
Well I've - Ive got a list from these reports

that we get - the exchange does that you see - Yes

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138

- 15 or 16 figures for all of them.

H.M.Jr:

Yes.

and I'm going to cover all those.

H.M.Jr:

Yes.

And
tomorrow ['ll cover some of the smaller ones
too.

H.M.Jr:

Yes. Well has anybody attempted to buck you?
Buck me?

H.M.Jr:

Yes.

Not one.

H.M.Jr:

Have you talked to

No, I haven't. I tried to get him once but they
didn't answer but I'm going to call them. I've
still got them on my list.

H.M.Jr:

I see.

It's a slow business. It's been awfully hard to
get people tonight.

H.M.Jr:

Ah ha.

There's more of them out of town, or away or don't
answer - or out at dinner - gosh, it's a hell of a job.
(Laughter
by the- group) - but, nevertheless, there's
a good reaction

H.M.Jr:

All right.

And they seem very happy about it.

H.M.Jr:

Well I had a Press Conference which lasted 35 minutes,
which is a long one for me.

Yes.

139

-4H.M.Jr:

And I didn't have - I mean I had some of the star
reporters here from Washington and I didn't have a
single unfriendly question.

Yes.

H.M.Jr:

Now I think five weeks before an election, that is

Very good.

H.M.Jr:

What?

Very good.

H.M.Jr:

remarkable.

I mean there wasn't a single unfriendly reporter
who tried to give it - you know give this thing an
unfriendly twist.
Well I haven't had one either.

H.M.Jr:

And altogether I think it's pretty good - pretty good.

There's only one - I don't even remember who it was

to tell you the truth - who raised - he wasn't asked
about it at all but on the sentence where you say,
'The Government welcomes this opportunity to reaffirm
its purpose to continue the policy -

H.M.Jr:
H:

Yes:

'One constant object of which is to maintain the
greatest equilibrium, and so on in the international
exchanges -

H.M.Jr:

Yes.

- 'and to avoid the creation of any disturbance of

that system by American monetary action.
H.M.Jr:

Yes.

That - that word 'reaffirm' -

H.M.Jr:

Yes.

Is - is subject to a little bit of question on - on
that basis.

H.M.Jr:

Well.

But that - I didn't notice it myself.

3.M.Jr:

Ah ha.

-5-

140

But
theit.only thing that anybody has said
at allthat's
about

H.M.Jr:

Well -

It wasn't really unfriendly -

H.M.Jr:

- No

It just - you know.

H.M.Jr:

I know. Well if that's all they can find - have
the reporters been calling you?

H.M.Jr:

But nobody was looking for it - I mean everybody's

ready to take it whole-heartedly fine.
Didn't anybody - I mean - of course the press had
it all day but I suppose they didn't know whether
it was definitely coming or not.
Well they've been calling up Burgess - Burgess is
handling the press.

H.M.Jr:

Yes.

He got a copy of this.

H.M.Jr:

Well both Williams and Knoke were both helpful.

Well I'm glad to hear that.

HMJr:

Most helpful.

Well that first rate.

H.M.Jr:

Thank you.

Well I'm much obliged to you.

H.M.Jr:

Thank you.

Good job.

H.M.Jr:

Good night.

Good night to you. Get a rest tonight.
I think so.

H.M.Jr:
H:

All right.

141 Ethins

Personal and Confidential message

from we thambulain fn w.
wordenthan . Sept 25: 1936

As Mr. Morgenthau knows the Chancellor

has no legal power to fix the pound within

the gold points. His policy has been as
often stated to let the pound find its natural
level and to smooth out fluctuations. This
he would continue to do. It may be that the
natural level of the pound will in the new
circumstances be five dollars as Mr. Morgenthau
appears to assume but Chancellor would have

expected it to be decidedly lower. Adverse
balance of trade somewhat increased this

year and if the flow of
refugee capital
been
from Europe which has/for a long time past
strengthening the pound were reversed it
seems most likely that the pound will weaken.
He had understood that this view of

probabilities was implicit in the discussions
which took place at Washington between the
United States and French Treasuries last June

and he knows that it is the viewof the
French RB well as of the monetary authorities
at London.

The Chancellor understand the proposed

declarations /

142

declarations to mean that there will be no
deliberate depreciation either of the pound

or of the dollar as a reprisal for the
devaluation of the franc to a reasonable legal
level. He has always understood that it was not
M: Maganthan's policy to use his resources

deliberately to depreciate the dollar and
similarly it would continue to be the
Chanceller's intention not to intervene

in the market in order deliberately to
depreciate the pound. On the contrary he
would hope if need arose to be able as in the
past to check any landslide. While no one
can foresee the precise rate at which the
exchange can hold itself the Chancellor would
not expect in the immediate future such a

heavy depreciation as would be likely to give
the United Kingdom any competitive advantage.

But the future must be entirely reserved by
His Majesty's Government as by the United States

Government in the interest of their national
prosperity. He is convinced that any attempt
to peg the pound artificially at an unnatural
level would be both futile and contrary to
the

143

the real interests of both countries.
The French Government have informed him

that proposal will be that the new franc will
have gold content of not more than 49 and not

less than 48 milligrames of gold nine-tenths
fine. He regards these limits as unnecessarily
wide and the mean point between them as

representing probably a somewhat greater

depreciation than is really justified but in
the circumstances he has not objected to the
French proposal on this score.

apport hanghe 144

that

Ambassade

Elects

ela Republique Francaise

aux Etats Unis

Washington le

1° - Le Gouvernement francais apres s'être concerté
avec le Gouvernement des Etats-Unis d'Amérique et le
Gouvernement de la Grande-Bretagne se joint à eux pour

affirmer une volonté commune de sauvegarder la paix,

de favoriser l'établissement des conditions qui pourront
le mieux contribuer à restaurer l'ordre dans les relations economiques internationales et de poursuivre une
politique tendant à développer la prosperité dans le
monde et à ameliorer le niveau de vie des peuples.
2° - Le Gouvernement des Etats-Unis d'Amérique et
le Gouvernement de la Grande-Bretagne doivent naturelle-

ment dans la politique monétaire internationale tenir
pleinement compte des exigences de la prosperité intorieure de la republique americaine, de l'Empire britannique, de même que le Gouvernement francais tiendra natu-

rellement compte de considerations analogues en ce qui
concerne

145
2

concerne l'economie de la métropole et des posses-

sions d'outre-mer. Ils saisissent avec. plaisir
l'occasion qui leur est offerte de reaffirmer
qu'ils entendent poursuivre la politique par eux
pratiquee au cours des dernières années et dont

un des objectifs constants et de maintenir le plus
grand equilibre possible sur le marché international des changes et de ne rien negliger pour éviter
qu'aucun trouble ne soit apporté dans cet equilibre
du fait d'une action monétaire americaine ou
britannique. Le Gouvernement frangais partage
avec le Gouvernement des Etats-Unis d'Amerique et

le Gouvernement de la Grande-Bretagne la conviction

que la continuation de cette politique coordonnée
servira les buts généraux que tous les gouvernements devraient poursuivre.
30 - Le Gouvernement frangais considerant
que la stabilité désirable des principales monnaies
ne peut être assuree sur des bases solides sans
que soit prealablement retabli un Squilibre durable
entre les diverses economies, A décide dans ce but
de proposer à son parlement l'ajustement de sa
devise. Le Gouvernement des Etats-Unis d'Amérique

146
3

et le Gouvernement de la Grande-Bretagne, dans

l'espoir que seront ainel établies des fondations
plus solides pour la stabilité des relations
economiques internationales, ont accueilli
favorablement cette décision. Le Gouvernement
des Etats-Unis d'Amérique, le Gouvernement de la
Grande-Bretagne et le Gouvernement francais décla-

rent qu'il est de leur intentiendd'user des moyens
appropries dont ils disposent pour éviter dans toute
la mesure du possible que des troubles puissent
affecter les bases nouvelles des changes resultant
de l'ajustement envisage. Il est entendu que les
consultations necessaires seront assurées à cette
fin avec les deux autres gouvernements et entre

les instituts qualifies.
4° - Le Gouvernement frangais est au surplus
convaineu comme le Gouvernement des Etats-Unis

d'Amerique et le Gouvernement de la Grande-Bretagne,

que le succès de la politique definie ci-dessus
est libe au developpement du commerce international.

En particulier, il attache la plus grande importance a ce qu'une action soit entreprise sans delai
pour attenuer progressivement, en vue de leur

abolition,

1474

abolition, les régimes actuels de contingents et
de contrôles de changes.

5° - Le Gouvernement frangais, comme le Gouvernement des Etats-Unis d'Amerique, et le Gouvernement

de la Grande-Bretagne, souhaite et sollicite la
cooperation des autres nations pour la realisation
de la politique formulee dans la présente declaration. Il compte qu'aucun pays n'essaiera d'obtenir
un avantage de change déraisonnable et par la

de contrecarrer l'effort qu'entendent poursuivre
pour restaurer des relations économiques plus
stables le Gouvernement des Etats-Unis d'Amérique,
le Gouvernement de Grande-Bretagne et le Gouvernement frangais./ /.

148

1° - Le Gouvernment francais apres s'être concerts
avec 1e Gouvernement des Stats-Unis d'Amérique et 10

Gouvernement de la Grande-Bretagne se joint a eux pour

affirmer une volenté commune de sauvegarder 1a paix,

de favoriser l'etablissement des conditions qui pourrent
le mieux contribuer à restaurer l'ordre dans les relations economiques internationales et de poursuivre une
politique tendant à développer in prosperite dans 10
monde at a amelierer le niveau de vie des peuples.
2° - Le Gouvernement des State-Unis d'Amérique et
10 Gouvernement de la Grande-Brotagne doivent naturelle-

ment dans 1a politique monétaire internationale tenir
pleinement compte des exigences de la prosperirs intorieure de la republique americaine, de 1'Empire britannique, de nime que le Gouvernement francais tiendra naturellement compte de considerations analogues on ce qui
concerne

149

concerne 1'écenomie de la métropole et des posses-

sions d'outre-her. Ila amisissent avee plaisir
l'occasion qui leur est offerte de réaffirmer
qu'ils entendent poursuivre la politique pay eux
pratiqude au cours des dernières années et dont

un des objectifs constants et de maintenir 10 plus
grand équilibre possible sur 10 marché international des changes et de ne rion negliger pour sviter
qu'auoun trouble ne soit apports dans cet equilibre
du fait d'une action monétaire americaine ou
britannique. Le Gouvernement francais partage
avee 10 Gouvernement des State-Unis d'Amérique et

10 Gouvernement de la Grande-Brotagne la conviction

que 1a continuation de cette politique coordonnée
servire les buts généraux que tous les gouvernements devraient poursuivre.
3° - Le Gouvernement français considerant

que la stabilite desirable des principales monnaies
ne pout &tre assurée sur des bases solides sans
que soit prealablement rétabli un Squilibre durable
entre les diverses economies, a decide dans ce but
de proposer à son parlement l'ajustement de sa
devise. Ls Gouvernement des State-Unis d'amérique
et

1 50

et 10 Gouvernement de la Grande-Brotagne, dans

l'espoir que serent sinsi stablies des fondations
plus solides pour 1a stabilite des relations
economiques internationales, ont accueilli
favorablement cette decision. Le Gouvernement
des State-Unis d'Amérique, le Gouvernment de la
Grande-Bretagne et le Gouvernement francis decla-

rent qu'11 est de lour intentiendd'user des moyens
appropries dont ils disposent pour éviter dans toute
1a mesure du possible que des troubles puissent

affecter les bases nouvelles des changes résultant
de l'ajustement envisage. 11 est entendu que les
consultations necessaires seront assurées à cette
fin avee les deux autres gouvernments et entre

les institute qualifies.
40 - Le Gouvernement francais est au surplus
convaineu comme le Gouvernement des Stats-Unis

d'Amérique et le Goavernement de 1a Grande-Brotagne,

que 1e succès de la politique définie ei-dessus
est lide au developpement du commerce international.

En partieulier, 11 attache 1a plus grande impertance & 66 qu'une action soit entreprise same délai
pour attenuer progressivement, en vue de lour
abolition,

151

abolition, les régimes actuals de contingents et
de controles de changes.

5° - Le Gouvernement francais, come le Gouvernement des State-Unis d'Amérique,et 1e Gouvernement

de la Grande-Brotagne, souhaite et sollicite la
cooperation des autres nations pour la realisation
de la politique formulee dans la presente déclara.
tion. Il compte qu'sueun pays m'essaiera d'obtenir
un avantage de change dermisogabable et par 1à

de contrecarrer l'effort qu'entendent poursuivre
pour restaurer des relations deenomiques plus
stables 1e Gouvernement des State-Unis d'Amérique,
1e Gouvernement de Grande-Bretagne et le Gouverne-

ment francais./.

152

Ethnical C

The Chancellor thanks Mr. Morgenthau

for his reply.
While maintaining his own view the
Chancellor takes note of the view expressed

by Mr. Morgenthau. +He agrees that
Mr. Mergenthan's reply need form no obstacle

to publication of the declaration. It is
proposed to publish at once so as to enable
the text to appear in the morning papers.

DARD FORM No. 14A

FROM

PROVED BY THE PRESIDENT

MARCH 2 1926

The White House 153
Washington

SEPTEMBER 25, 1936.
TRANSMITTED AT 6:45PM.-C.

OFFICIAL BUSINESS-GOVERNMENT RATES

ULTRA-CONFIDENTIAL

(VIA SPECIAL WHITE HOUSE WIRE)
U.S. GOVERNMENT PRINTING OFFICE ####1

Exhint

FOR THE PRESIDENT,

HYDE PARK, N.Y.

A SPECIAL MESSENGER HAS JUST ARRIVED FROM THE FRENCH EMBASSY
AND WISHES TO INFORM ME THAT THE PRESIDENT OF FRANCE WISHES

TO GO TO BED (STOP) PLEASE ADVISE ME WHAT I SHOULD DO IN
THIS GREAT EMERGENCY.

SECRETARY OF THE TREASURY.

Exhibit E
154

mercian position is fully

afe
guarded
white
at
the
Jame time our action should

mcaurage
Peace and
cumerce
This will in my off in
be
the
turning
point
for
Peace in of the would
Stablingfoundation
atten of worldthat
currimes
be
2

first built before we could
look for soward forward to a

lasting
peace
re
carry
in world trade

TREASURY DEPARTMENT

TELEGRAM
OFFICIAL BUSINESS GOVERNMENT RATES

CHARGE DEPARTMENT APPROPRIATION -

social

THE

Honorable N. 8. Eccles,

September 25, 1936.

Ogden, Utah.

FOLLOWING In STATEMENT I DATE TO THE PRESS AT BETEN THIRTY

BONIGHT QUOTE

authority at the President, the Secretary of the treasury makes the
following by
statement:
1. The Government of the United States, after consultation with the
British Government and the French Government, joine with them in affirming .

- deairs to foster those conditions which safeguard peace and will best
contribute to the restoration of order in international economic relations and
to parties . pelley which will tend to promote prosperity in the world and to

improve the standard of living of peoples.

2. The Government of the United States must, of course, in its policy
towards international monotary relations take into full account the requirements
of Internal prosperity, as corresponding considerations will be taken into
account by the Governments of France and Grost Britain, it welcomes this oppor-

tunity to reaffirm the purpose to continue the policy which it has pursued in
the course of recent years, one erestant object of which is to mintain the
greatest possible equilit- = is the system of international exchange and to
svoid to the utmost excent the creation of any disturbance of that syston by
American monetary action. The Government of the United States stares with the
Governments of Franco and Groat Britain the conviation that the continuation

of thispursue.
two-fold
should

policy will surve the general purpose which all the Governments

3. The French Government informa the United States Government that,

judging that the doatred stability of the principal currencies cannot be
insured on . sell4 basis except after the re-astablishment of a lasting equilibrius between the various connomic systems, 11 has desided with this object to

propose to its Parliament the readjustment of its currency. The Government
of the United States, na also the Drittah Government, has released this

decision in the hope that 11 will establish nor solid fountations for the
stability of international economic relations. The United States Government, as also the Drittah and French Governments, declares its Intention to
continue to use apprepriate available reensFees so as to avoid as for as

possible any disturbuse of the Insia of international exchange resulting
from the proposed readjustment. It will arrange for such consultation for

this purpose na any prove with the other two Governments and

their authorised ogencies.

4. The Government of the United States is noreover convinced as

are also the Governments of France and Great Dritain, that the of
the policy set forth above is linked with the development of international
trade. In particular 11 attaches the greatest importance to action being
taken without dalay to relax progressively the present system of quotes

and exchange controls with . view to their abolition.
5. the Government of the United States, is connon with the Govern-

nests of Proces and Great Britain, de ree and invites the cooperation of
the other saliana to realise the policy laid down is the protect declaration
IN trusts that se country will attempt to obtain as unreasonable competitive
exchange sitvastage and thereby h emper the effort to rostore nore stable

emonic relations which 11 is S.A ain of the three Governments to promote.

159

156
September 25, 1936

Paris Central News

It was officially announced here tonight that
Finance Minister Vincent Auriol would issue a statement
on the French situation probably for release simultaneously
in New York, London, and Paris.

157
GRAY

LMS

Paris

Dated September 25, 1936

Rec'd 4:42 p. m.
Secretary of State,
Washington.

924, September 25, 6 p. m.
FROM COCHRAN.

Today on the Paris exchange market witnessed a wild

demand for dollars resulting from fear of embargo possibly tonight on export of gold from France. There were
a variety of rumors about prospective cabinet changes,

difficulties in connection with efforts to obtain extension of British bankers' credit to French Treasury,
calling of special session of Parliament, international
monetary negotiations, et cetera. The raising of Bank
of France discount rate yesterday confused many people,

there being uncertainty as to whether this was a step
in preparation for devaluation or indication of ortho-

dox effort to stay on old gold parity. Excitement
increased when Paris syndicate of stockholders suspended forward operations on Bourse. Rentes which had

risen from two to three francs then dropped. Bank of
France and other French shares soared upwards today.

Sterling

158
LMS 2-No. 924, September 25, 6 p. m., from Paris.
Sterling weakened. Guaranty alone sold $30,000,000.

Gold had not been removed for equivalent of 14.5 million
dollars of this amount at the close of business this

evening. Total day's gold losses certainly over
$60,000,000.
WILSON
SMS

M
159

GRAY
U

London

Dated September 26, 1936

Rec'd 9 a.m.

Secretary of State
Washington
RUSH

446, September 26, 11 a.m.

This morning's Editorial comment on the tripartite
monetary agreement is mainly Explanatory rather than
analytical because (1) the agreement came as a complete

surprise, (2) its text was not given out until shortly
before the first morning Editions WERE due to appear.
The TIMES WELCOMES the agreement in that it may

'prove to be a step, the first of several, towards the
ultimate stabilization of the world's currencies and
Emphasizes that "the risk of a destructive competition to
reduce the purchasing power of currencies is avoided and
an important preliminary step taken towards promoting the
restoration of sound monetary conditions".
The DAILY TELEGRAPH points out that this new EX-

periment in international cooperation SEEMS likely to be
as WE LCOME as it was unexpected".
The MANCHESTER GUARDIAN connects the monetary agree-

ment with the League Economic Committee's report and EXpresses the hope that "the way to European Economic
cooperation

100

U -2- #446, Sept. 26 11 a.m. from London
cooperation will become Easier".
The NEWS CHRONICLE characterizes the agreement as

"one of the very few positive contributions to world reconstruction that have been made by Governments for a very
long time."
BINGHAM
KLP

HOLLAND

UNITED PRESS - September 25, 1936.

161

AMSTERDAM

ametenda

WCNS161

AMSTERDAM, SATURDAY. --A GOVERNMENT SPOKESMAN ANNOUNCED
THAT THE PROPOSED DEVALU

TION OF THE FRENCH FRANC WOULD NOT LEAD
TO ANY CHANGE IN THE MONETARY POLICY OF HOLLAND.
IT WAS UNDERSTOOD SWITZERLAND WOULD ADOPT THE SAME POLICY.

9/25--E736P.

9.10
FORWARD FRANCS DROP IN LONDON

LONDON - DISCOUNTS ON FORWARD FRANCS HAVE
SAGGED TO A NEW LOW - DISCOUNT ON ONE MONTH

FRANCS HAS WIDENED TO 7 1-2 FRANCS PER POUND
COMPARED WITH 3 625 AT THE OPENING AND ON
THREE MONTHS TO 10 FRANCS PER POUND AGAINST

7 125 AT THE OPENING
SEP2 $1936
-0-

GOLD UP IN LONDON

11.05

LONDON- DECLINE IN STERLING HAS CAUSED
THE OPEN MARKET PRICE FOR GOLD IN LATER

UNOFFICIAL TRADING TO RISE TO THE HIGHEST

POINT SINCE AUGUST 11- - COURSE PRICE HAS
FLUCTUATED BUT IT IS CURRENTLY QUOTED AT

138S 6D PER FINE OUNCE WITH AN ACTIVE BUSINESS
BEING DONE- THIS COMPARES WITH THE OFFICIAL
POSTED PRICE THIS MORNING OF 137S 9 1-2D
-0-

1010

SEP 25 1936

LONDON EXCHANGE MARKET ACTIVE
LONDON - FOREIGN EXCHANGE BROKERS WERE

INUNDATED THIS AFTERNOON WITH HEAVY BIDS
FOR DOLLARS WHICH CAUSED SHARP APPRECIATION OF

DOLLARS IN TERMS OF STERLING AND SYMPATHETIC
APPRECIATION OF FRANCS IN TERMS OF STERLING
BUYING ON DOLLARS IS BELIEVED TO HAVE
BEEN ACTUATED BY VIEW THAT IF THE FRANC
IS DEVALUED THERE WILL BE NO FURTHER NEED TO
SELL DOLLARS FOR THE SUPPORT OF THE FRANC
AND ALSO THAT THE PRESENT EXAGGERATED OVER-

VALUATION OF STERLING IN TERMS OF DOLLARS WILL
TEND TO BE LEVELED OUT

OPINION WHETHER FRANCE IS LIKELY TO TAKE
ANY FURTHER STEPS TOWARD DEVALUATION OVER

THE WEEK END IS STILL DIVIDED IN LONDON AND
WHILE ACTION OVER THE WEEK END WOULD NOT CAUSE
SURPRISE MANY LONDON BANKERS BELIEVE THE

STEP MAY BE DELAYED ANOTHER 10 DAYS OR EVEN
THREE WEEKS

UNITED PRESS - September 25, 1936.

134

KITISH TREASURY, LONDON

Antish
ASURY STATEMENT ANNOUNCED THAT BRITAIN, FRANCE AND THE
TES DECLARE THEIR INTENTION TO CONTINUE TO USE APPROPRIATE

AVAILABLE RESOURCES TO AVOID ANY DISTURRANCE OF THE BASIS OZ INTERNAT
EXCHANGES IN CONSEQUENCE of THE PROPOSED STADJUSTMENT OF THE

THE BRITISH FIGURE PAY WHICH FI CRANK SUGGESTED THE FRANC BE STABILIZ+
REFENS TO THE SPECIMEN OF FRANCS TO THE POINO STERIENCE

185
WCNS152

ADD BRITISH TREASURY, LONDON

THE STATEMENT SAID FRANCE HAD INFORMED BRITAIN SHE HAD DECIDED TO
PROPOSE TO PARLIAMENT *READJUSTMENT OF THE FRANC.

IT WAS UNDERSTOOD THAT BRITAIN BELIEVES THE FRANC SHOULD BE STABIL

IZED BETWEEN 95 AND 105, A FIGURE BASED ON WORLD INDEXES. IT WAS
REPORTED ON EXCELLENT AUTHORITY THAT REALIGNMENT AND DEVALUATION WOUL!
BE ACCOMPLISHED IN ONE OPERATION AND THAT THE EXTENT WOULD BE BETWEEN

25 AND 33 PER CENT.

9/25--E711P.

WCNS151

LONDON, (SATURDAY)--THE TREASURY ANNOUNCED AT 12:30 A. M. TODAY
THAT AFTER CONSULTATION WITH THE UNITED STATES AND FRANCE, BRITAIN
"JOINS THEM IN AFFIRMING A COMMON DESIRE TO FOSTER THESE CONDITIONS
WHICH SAFEGUARD PEACE AND BEST CONTRIBUTE TO THE RESTORATION OF ORDER
IN INTERNATIONAL ECONOMIC RELATIONS."

THE STATEMENT REAFFIRMS THE POLICY OF MAINTAINING "THE GREATEST
POSSIBLE EQUILIBRIUM IN THE SYSTEM OF INTERNATIONAL EXCHANGES AND
AVOIDING TO THE UTMOST EXTENT THE CREATION OF ANY DISTURBANCE OF THE
SYSTEM BY BRITISH MONETARY ACTION."

9/25--E704P.

GREAT BRITAIN UNITED PRESS -September 25, 1936.
LONDON

186

add British
WCNS166

ADD BRITISH TREASURY, LONDON

IT WAS EXPLAINED THAT THE TREASURY STATEMENT INTENDED TO MAKE

CLEAR THAT BRITAIN WILL NOT DELIBERATELY DEPRECIATE THE POUND
STERLING BY WAY OF REPRISAL FOR MONETARY MEASURES PROPOSED BY FRANCE,

THE POUND STERLING TO REMAIN FREE CURRENCY NOT LINKED WITH GOLD OR WITH
ANY OTHER CURRENCY.

9/25--E748P.

add Britishi
WCNS158

ADD BRITISH TREASURY, LONDON
THE STATEMENT SAID THE THREE POWERS ARE CONVINCED OF THE SUCCESS

OF THIS POLICY, LINKED TO THE DEVELOPMENT OF INTERNATIONAL TRADE,
AND ATTACH THE GREATEST IMPORTANCE TO PROMPT ACTION WHICH WILL
"PROGRESSIVELY RELAX THE PRESENT SYSTEM OF QUOTAS AND EXCHANGE CONTROLS

WITH THE VIEW OF THEIR ABOLITION."
THE STATEMENT SAID THE THREE POWERS INVITED THE COOPERATION OF OTHER
NATIONS, TRUSTING THAT NONE WILL ATTEMPT TO OBTAIN AN UNREASONABLE
COMPETITIVE EXCHANGE ADVANTAGE WHICH WOULD HAMPER RESTORATION OF MORE
STABLE ECONOMIC RELATIONS.

9/25--E730P.

e
FRENCH BUYING DOLLARS AND STERLING

PAR!S- FOREIGN EXCHANGE MARKET AGAIN IS
VERY ACTIVE WITH THE DEMAND FOR DOLLARS AND

STERLING SHOWING NO SIGNS OF DIMINISHING- THE
GUILDER IS WEAKENING AND HAS REACHED THE POINT
WHICH SHOULD RESULT IN SHIPMENTS OF GOLD FROM
AMSTERDAM TO NEW YORK- BELGAS ARE FIRM IN THE
PARTS MARKET AT THE POINT AT WHICH SHIPMENTS
OF GOOD FROM PARIS TO BRUSSELS MAY BE EXPECTED
NOWELL INFORMED QUARTERS NO CREDIT IS

ATTACHED TO RUMORS OF FRANC DEVALUATION OVER

THE WEEK-END- THERE ARE INDICATIONS HOWEVER THAT
THE FRENCH CABINET IS LOOKING TOWARD EVENTUAL
REALIGNMENT OF THE FRANC WITH OTHER CURRENCIES
ACCOMPANIED BY MEASURES TO PROTECT THE VICTIMS

OF DEVALUATION AND TO PREVENT PROFITEERING- THIS

IT IS BELIEVED THAT PRICES MIGHT BE PREVENTED
FROM RISING BY MANIPULATION OF TARIFFS QUOTAS
AND INTERNAL CONTROL WHILE THROUGH STRICT SUPER

-VISION OF REPATRIATION OF CAPITAL AND EMBARGOES
ON THE PRIVATE OWNERSHIP OF GOLD THE STATE MIGHT

PREVENT FRENCH CITIZENS FROM REALIZING PROFITS
FROM HOARDED CAPITAL

APPARENTLY A PROGRESSIVE TAX ON PROFITS

FROM APPRECIATION OF FOREIGN SECURITIES LISTED
ON THE PARIS BOURSE IS CONTEMPLATED
L-INTRANSIGEANT HAS ANNOUNCED THAT FINANCE

MINISTER AURIOL WILL SUBMIT TO THE MEETING OF
THE MINISTERIAL COUNCIL THIS AFTERNOON A FINANCIAL PROGRAM WHICH CONFORMS WITH THE ACTUAL CIRCUMSTANCES NOW OBTAINING- HIS PROGRAM EMBRACES A

COMPLETE REORGANIZATION OF THE FINANCIAL ADMINIS
-TRATION AND OUTLINE OF TAXATION REFORM

youS.

INTERNATIONAL ISSUES STRONG IN PARIS

PARIS-U P- A BOOM IN INTERNATIONAL ISSUES
BEGAN ON THE BOURSE TODAY- THE MARKET WAS ACTIVE
A SPECIAL BOURSE COMMISSARY ISSUED AN ORDER
DESIGNED TO CURB SPECULATION ANNOUNCING THAT
SPECULATIVE MARGINAL OPERATIONS WOULD NOT BE

CARRIED OVER THE END OF THE MONTH AND THAT
PURCHASERS MUST LIQUIDATE OR PAY UP

RENTES ROSE I 1-2 POINTS IN THE FIRST HOURROYAL DUTCH WAS QUOTED AT 3285 AGAINST 3220

BANK OF PARIS 820 AGAINST 750 SUEZ 20 875
AGAINST 20 205

-0SEP 25 1936

9.13

FRENCH CABINET TO MEET AT 2 30 PM

PARIS -UP- THE CABINET WAS CALLED INTO
SESSION AT 2 30 PM BY PREMIER LEON BLUM TO HEAR
REPORTS FROM FINANCE MINISTER VINCENT AURIOL
AND BLUM ON THE FRANC CRISIS
-0ADD FRENCH CABINET MEETS

PARIS -UP- THE CABINET ALSO WILL HEAR PLANS
FOR THE 1937 BUDGET AND DISCUSS THE INTERNATIONAL SITUATION

IMMEDIATELY AFTER THE CABINET MEETING THE

CABINET WILL BE RECEIVED BY PRESIDENT AI BERT
LEBRUN AT THE ELYSEE PALACE WHERE ANY
CABINET DECREES WILL BE SIGNED

-0-

PARIS STOCK MARKET STRONG 1050
PARIS - THE BOURSE EXPERIENCED AN EXCEEDING
-LY FEVERISH SESSION WITH SPECULATION BOOSTING
QUOTATIONS ON ALL DOMESTIC BONDS AND SHARES

WITH EXCEPTION OF PUBLIC UTILITIES - INTERNATIONAL ISSUES WERE NEGLECTED

SEP251936

DURING THE SESSION THE BOURSE AUTHORITIES ANNOUNCED THAT ALL TRANSACTIONS FOR THE

END-OF-THE-MONTH SETTLEMENT MUST BE SETTLED
IN CASH ON SEPT 30 AND THAT NO CARRYOVER WOULD
BE ALLOWED

THIS CAUSED A SETBACK IN PRICES BUT
LATER IN THE DAY THE ADVANCE WAS RESUMED AND
RENTES BANK AND CHEMICAL SHARES CLOSED AT THE
HIGHEST LEVELS OF THE DAY - RENTES WERE UP TWO
FRANCS UNDER THE INFLUENCE OF NOT ONLY DOMESTIC

BUT ALSO FOREIGN DEMAND WITH THE EXCEPTION

OF THE 4 PC RENTES OF 1925 WHICH COULD NOT BE
QUOTED OWING TO THE OVERWHELMING DEMAND

THE BOURSE EXPECTS DRASTIC DECISIONS TO

BE TAKEN IN THE CABINET MEETING THIS EVENING IT IS INCLINED TO BELIEVE THAT SEVERE RESTRICTIONS WILL BE PLACED ON ALL TRANSACTIONS IN
FOREIGN SHARES AND POSSIBLY EVEN COMPULSORY RE-

GISTRATION OF FOREIGN SECURITIES IN FRENCH
POSSESSION - THERE IS ALSO TALK OF THE
PROHIBITION OF ALL HOLDINGS OF GOLD
IF THE SPECULATIVE FEVER DOES NOT ABATE IT
IS THOUGHT LIKELY THAT ONLY CASH TRANSACTIONS
WILL BE ALLOWED IN ALL DEPARTMENTS OF THE BOURSE

9E6L

ADD FRENCH SITUATION

11.01

PARIS-U P- PREMIER BLUM CANCELLED HIS
DEPARTURE FOR GENEVA SCHEDULED FOR TONIGHT

IN ORDER TO REMAIN IN PARIS DURING THE CRISIS
-0-

11.10

ADD FRENCH SITUATION

PARIS-U P- WHILE THE CABINET WAS IN SESSION
REPORTS IN THE CORRIDORS SAID THAT THE DE
C ISION

HAD BEEN MADE TO SUMMON PARLIAMENT- IN ORDER
LEGALLY TO DEVALUATE THE CURRENCY OR ESTABLISH
A GOLD EMBARGO PARLIAMENT MUST PASS THE NECESSARY LEGISLATION

-0-

11.20
ADD FRENCH SITUATION

PARIS-U P- TODAY-S CABINET MEETING HAD NOT
YET CALLED PARLIAMENT BUT WAS EXPECTED TO SET A
DATE FOR THE MEETING NEXT WEEK AFTER CONSULTA-

TION WITH THE PRESIDENTS OF THE CHAMBER AND
SENATE

-ii-

SEP951
UE
FRENCH SITUATION

12.22

PARIS-COPYRIGHT BY UP- THE FRENCH PARLIAMENT LIKELY WILL BE CONVOKED MONDAY OR TUESDAY

TO VOTE NECESSARY GOLD PROTECTION LAWS LOUIS

MALVY RADICAL SOCIALIST LEADER SAID WHILE A
CABINET SESSION OF THE MONETARY SITUATION WAS IN
PROGRESS

ADD FRENCH SITUATION

PARIS - THE GOVERNMENT COMMUNIQUE WHEN

ISSUED DID NOT REVEAL FINANCIAL PLANS BUT IT
WAS REPORTED THAT PARLIAMENT WILL BE CONVOKED
MONDAY

VINCENT AURIOL FINANCE MINISTER IS
EX-

PECTED TO REVEAL THE GOVERNMENT POSITION
IN A STATEMENT LATER TONIGHT
FRENCH AUTHORITIES WERE IN TELEPHONIC
COMMUNICATION WITH LONDON AND NEW YORK

BANKING OFFICIALS

-0-

12.25
ADD FRENCH SITUATION

SEP 25 1936

PARIS-U P- IT WAS ANNOUNCED THAT 360 000 000
FRANCS IN GOLD WAS BEING SHIPPED TODAY FROM
CHERBOURG ON THE DEUTSCHLAND FOR THE UNITED

STATES- THIS IS THE LARGEST SINGLE SHIPMENT
IN SEVERAL YEARS- ABOUT 300 000 000 FRANCS OF
THE GOLD WAS SENT BY TRAIN OVERNIGHT TO CHERBOURG AND THE REMAINDER ARRIVED BY MOTOR CAR

-0-

ADD FRENCH SITUATION
PARIS-

ILR5
SEP251936

P- LATE TO
D

AY THE HEAD OF THE
BOURSE FORMALLY REQUESTED BROKERS TO EXECUTE AS
FAR AS POSSIBLE ONLY FUTURE PURCHASES OF ORDERS
TO COVER SHORT OPERA

TIONS- OTHER PURCHASES

WOULD BE CONSIDERED SPECULATION ANTICIPATING
REALIGNMENT OF THE FRANC- THIS VIRTUALLY ENDED

ALL FUTURES- -OR MARGINAL- - OPERATIONS ON THE
BOURSE

1:16
SEP25 1933

ADD FRENCH SITUATION

PARIS - IN THE AFTERNOON STERLING RELAPSED
TO AROUND 76 30 FRANCS BUT THE DOLLAR WAS
IMMUTABLE AND GOLD TRANSACTIONS WERE REPORTED

TO HAVE BEEN HEAVIER THAN EVER INDICATING
THAT THE 5 PC BANK RATE IS PROVING INEFFECTIVE
IN CHECKING THE CRISIS
THE PRACTICAL SUSPENSION OF FORWARD DEAL-

INGS ON THE BOURSE ALSO PROVED INEFFECTIVE IN
LOWERING THE FEVER OR CURBING SPECULATION
AND CLOSING PRICES ON THE BOURSE FOR BOTH
DOMESTIC AND INTERNATIONAL SHARES WERE

GENERALLY AT THE HIGHEST LEVELS FOR THE DAY
THE INFERENCE IS DRAWN FROM THE PREVAILING

OPINION IN PARIS FINANCIAL CIRCLES THAT DEVALUA-

172

TION OF SOME SORT IS APPROACHING ALTHOUGH IT
MAY BE POSTPONED OR DISGUISED IN THE FORM OF
VARIOUS RESTRICTIVE MEASURES

THERE IS A STRONG BELIEF THAT THE CABINET

ITSELF FINDS IT DIFFICULT TO TAKE THE DECISION
- THE CABINET PROBABLY WOULD UNDERTAKE A REALIGNMENT OF THE CURRENCY IF IT COULD SECURE
ANGLO-AMERICAN STABILITY UNDERTAKINGS BUT
THESE ARE NOT FORTHCOMING FROM ENGLAND AND
PROBABLY NOT FROM AMERICA

IT IS THOUGHT THAT A SERIES OF REGULATIONS
AFFECTING MONEY AND STOCK TRANSACTIONS WERE

VOTED IN THE MINISTERIAL COUNCIL AND WILL BE
PUBLISHED ON SATURDAY BUT NO INKLING HAS BEEN
GIVEN OF THE CONTENTS OF SUCH REGULATIONS AND

FOR THE MOST PART THEY PROBABLY HAVE NOT YET
BEEN COMPLETELY DRAFTED

ADD FRENCH SITUATION

3,10

PARIS -UP- THE COUNCIL OF MINISTERS ADJOUR
-NED AT 8 15 PM AFTER DELIBERATING WITH ONLY
SHORT INTERRUPTIONS SINCE 2 30 PM - NONE OF
THE MINISTERS WOULD MAKE A STATEMENT - AN
OFFICIAL COMMUNIQUE WAS EXPECTED SHORTLY

-01936

FRANCE

UNITED PRESS - September 25, 1936.

PARIS

174

French Situation

PARIS.--GOLD SHIPMENTS TOTALLING 18 TONS AND VALUED AT 300,000,00 FRANCS ($19,799,000)--THE LARGEST SINGLE SHIPMENT IN RECENT YEARSERE SENT TO CHERBOURG TODAY FOR EMBARKATION IN THE LINER DEUTSCHLAND,

SHIPPERS SAID. THE GOLD IS DESTINED FOR NEW YORK.
THE DOLLAR OPENED TODAY AT ITS USUAL RECENT LEVEL, 15.19 FRANCS
6.583 CENTS A FRANC) AND THE POUND OPENED AT 76.83 FRANCS.
RUMORS CONTINUED TO CIRCULATE OF A POSSIBLE EMBARGO ON GOLD.
YESTERDAY'S BANK OF FRANCE STATEMENT, FOR THE WEEK ENDED SEPTEMBER

SHOWED A LOSS OF 841,000,000 FRANCS ($55,369,337) IN GOLD
SERVÉS, THE RESERVE TOTAL WAS AT A NEW LOW SINCE 1930 AT 52,691,-

0,000 ($3,469,043,712).
9/25--R837A
ADD GOLD, PARIS

THE LOSS TWO WEEKS AGO WAS 653,000,000 ($42,966,990).
IT WAS ESTIMATED THAT THE NEXT STATEMENT, OCTOBER 1, WOULD SHOW

LOSS OF ABOUT 850,000,000 ($55,955,500).
A BOOM IN INTERNATIONAL ISSUES BEGAN ON THE BOURSE TODAY AS
NVESTORS SPECULATED ON EARLY REALIGNMENT OF CURRENCIES. THE MARKET

IS ACTIVE. A SPECIAL BOURSE COMMISSARY ISSUED AN ORDER DESIGNED TO
URB SPECULATION, ANNOUNCING THAT SPECULATIVE MARGINAL OPERATIONS WOUL)
OT BE CARRIED OVER THE END OF THE MONTH AND THAT PURCHASERS MUST

IQUIDATE OR PAY UP.

RENTES ROSE 1-1/2 POINTS IN THE FIRST HOUR. ROYAL DUTCH WAS QUOTED

IT 3285 AGAINST 3220. BANK OF PARIS 820 AGAINST 750, SUEZ 20875
GAINST 20205.

9/25--R859A

WCNS38

ADD GOLD, PARIS

French Siluation

THE CABINET MET AT 3:30 P.M. TO HEAR REPORTS FROM FINANCE MINISTER
AUR IOL AND PREMIER BLUM ON THE FRANC CRISIS. IT WAS UNDERSTOOD THE
CABINET WOULD DRAFT MEASURES IMMEDIATELY TO CURB ACTIVITIES OF SPECULATORS IN EVENT OF ANY "REALIGNMENT" OF CURRENCIES.

IMMEDIATELY AFTER THE CABINET MEETING, THE CABINET WILL BE
RECEIVED BY PRESIDENT LEBRUN AT THE ELYSEE PALACE.
THE FRENCH STARTED HEDGING AGAINST POSSIBLE DEVALUATION OF THE
FRANC SHORTLY AFTER THE BOURSE OPENED FOR TRADING TODAY. INTERNATIONAL ISSUES WERE SOUGHT AS THE NATIONALS TRIED TO FIND HAVEN FOR

THEIR FUNDS. ROYAL DUTCH SHARES WENT UP 65 POINTS. FRENCH
STOCKS ADVANCED, INCLUDING BANK OF PARIS AND SUEZ CANAL.

9/25--R955A

WCNS43

French Strike Situation
EPINAL, FRANCE--THE TEXTILE STRIKE IN THE VOSGES AREA ENDED

TODAY AND 400,000 WORKERS RETURNED TO THEIR JOBS IMMEDIATELY FOLLOWING THE SIGNING OF A COLLECTIVE CONTRACT AT NOON.

9/25--TP1006A

add French Sil
WCNS55

ADD GOLD, PARIS

CABINET MEMBERS MET AT MATIGNON PALACE ON THE CALL OF PREMIER

BLUM TO DISCUSS THE FRANC SITUATION. LATER THEY WILL BE RECEIVED BY
PRESIDENT LEBRUN AT ELYSEE PALACE, AT WHICH ANY DECREES DECIDED UPON
WILL BE SIGNED.

WHILE THE CABINET WAS IN SESSION, REPORTS IN THE CORRIDORS SAID
THAT THE DECISION HAD BEEN MADE TO SUMMON PARLIAMENT. IN ORDER TO
DEVALUATE THE CURRENCY OR ESTABLISH A GOLD EMBARGO--LEGALLY-- PARLIAMENT

MUST PASS THE NECESSARY LEGISLATION. PREMIER BLUM CANCELLED HIS
RESERVATIONS FOR DEPARTURE FOR GENEVA, SCHEDULED FOR TONIGHT, IN ORDER

TO REMAIN IN PARIS DURING THE CRISIS.

9/25--R1059A
WCNS58

ADD GOLD, PARIS

IT WAS LEARNED UNOFFICIALLY THAT THE CABINET WAS PREPARING DECREE
WHICH MAY BE SUBMITTED TO PARLIAMENT IMMEDIATELY FOR RATIFICATION.
THE DECREES WOULD PROVIDE FOR A MODIFIED GOLD EMBARGO AS FOLLOWS:

1. A TAX ON GOLD EXPORTS.
2. GOLD EXPORTS HEREAFTER WILL BE SUBJECT TO PRIOR DECLARATION
OF INTENTION TO EXPORT, WHICH MAY BE AUTHORIZED OR REFUSED BY THE
FINANCE MINISTRY.

9/25--R1102A

177

WCNS73

ADD GOLD, PARIS
MEANWHILE THE PARIS BOURSE WENT THROUGH ONE OF THE MOST EXCITING
SESSIONS IN RECENT MONTHS.

PRICES SHOT FORWARD AT THE OPENING ON HEDGING BY FRENCH NATIONALS.
THEN A THE SPECIAL BOURSE COMMITTEE ISSUED ITS RULING THAT SPECULATIVE
MARGINAL OPERATIONS WILL NOT BE CARRIED OVER THE MONTH-END AND THAT

HOLDERS EITHER MUST LIQUIDATE OR PAY. THIS TENDED TO STOP SPECULATION
AND THERE ALSO WERE RUMORS OF GOVERNMENT ACTION TO PREVENT

SPECULATION. SHARES WERE DUMPED. BUYERS WERE SCARCE.

BUT THE MARKET SOON REVERSED ITS POSITION AS THE BUYERS TURNED
FROM MARGINAL ACCOUNTS TO OUTRIGHT PURCHASES. ALL PRICES SOARED AND

CLOSED HIGHER. BANK OF FRANCE SHARES CLOSED AT 7190 FRANCS. BANK OF
PARIS SHARES CLOSED AT 850 FRANCS COMPARED WITH 750 YESTERDAY; SUEZ
CANAL SHARES CLOSED AT 20875 FRANCS COMPARED WITH 20740 FRANCS, AND
ROYAL DUTCH SHELL SHARES WERE 3285 FRANCS COMPARED WITH 3,220.

9/25--R1145A
WCNS79

ADD GOLD, PARIS

TODAY'S CABINET MEETING HAD NOT YET CALLED PARLIAMENT, BUT WAS
EXPECTED TO SET A DATE FOR THE MEETING NEXT WEEK AFTER CONSULTATION
WITH THE PRESIDENTS OF THE CHAMBER AND SENATE.

9/25--R1203P

178
WCNSEO

ADD GOLD, PARIS
LATE TODAY THE HEAD OF THE BOURSE FORMALLY REQUESTED BROKERS TO

EXECUTE, AS FAR AS POSSIBLE, ONLY FUTURES PURCHASE OF ORDERS TO COVER
SHORT OPERATIONS. OTHER PURCHASES WOULD BE CONSIDERED SPECULATION,

ANTICIPATING REALIGNMENT OF THE FRANC. THIS VIRTUALLY ENDED ALL
FUTURES--OR MARGINAL--OPERATIONS ON THE BOURSE.

9/25--R1204P

French Siluation

WCNS91

ADD GOLD, PARIS
THE FRENCH PARLIAMENT LIKELY WILL BE CONVOKED MONDAY OR TUESDAY TO

VOTE NECESSARY GOLD PROTECTION LAWS, LOUIS MALVY, RADICAL SOCIALIST
LEADER, SAID.
PARLIAMENT MUST ENACT LEGISLATION TO PERMIT ANY CHANGE IN THE VALUE
OF THE FRANC. THE CABINET IS EMPOWERED TO DECREE ANY OTHER RESTRICTIVE MEASURES TO PREVENT THE OUTFLOW OF GOLD.

9/25--E1240P.

WCNS95

ADD GOLD, PARIS
IT WAS REPORTED THAT THE CONTEMPLATED TAX ON GOLD EXPORTS TENTATIVE-

LY HAD BEEN FIXED AT 33 PER CENT.
/25--E1257P.

French Situalium
WCNS121

179

ADD GOLD, PARIS

A GOVERNMENT COMMUNIQUE DID NOT REVEAL FINANCIAL PLANS, BUT IT WAS
REPORTED THAT PARLIAMENT WILL BE CONVOKED MONDAY.

VINCENT AURIOL, THE FINANCE MINISTER, IS EXPECTED TO REVEAL THE
GOVERNMENT POSITION IN A STATEMENT LATER TONIGHT. FRENCH AUTHORITIES
WERE IN TELEPHONIC COMMUNICATION WITH BANKING OFFICIALS IN NEW YORK.
THE CABINET, FURTHERING ITS ECONOMIC REHABILITATION PROGRAM,
APPROVED A 40-HOUR WEEK FOR THE MINING INDUSTRY AND ANNOUNCED THAT SIMILAR
DECREES WOULD BE ISSUED SOON GOVERNING THE METALLURGICAL AND BUILDING
INDUSTRIES.

9/25--R331P

trench Siluation

WCNS135

PARIS. VINCENT AURIOL, FINANCE MINISTER, TONIGHT WILL ANNOUNCE
THAT THE FRENCH PARLIAMENT WILL BE CONVOKED MONDAY TO EXPRESS ITS

APPROVAL OF DEVALUATION OF THE FRANC IN A GENERAL SCHEME FOR REALIGNMENT OF WORLD CURRENCIES.

9/25--E515P.
PUNS106

ADD GOLD, PARIS

THE CABINET WILL BE UNANIMOUS IN FACING PARLIAMENT IN EXPLAINING
THAT THE GOLD CRISIS NECESSITATES THE SWIFTEST ACTION.
PERCENTAGE OF THE DEVALUATION HAS NOT YET BEEN ESTABLISHED BUT IS
AT PRESENT THE SUBJECT OF CONVERSATION BETWEEN OFFICIALS OF THE

BRITISH AND UNITED STATES GOVERNMENTS. IT WAS BELIEVED THE PERCENTAGES WOULD BE SIMILAR TO THE RECENT BELGIAN DEVALUATION OF 30 TO 35 PER
CENT IN ONE OR TWO STEPS.

9/25--E519P.

180
NS137

ADD GOLD, PARIS

PARLIAMENT WILL NOT BE ASKED TO FIX THE MAXIMUM OR MINIMUM FOR
VALUATION, LEAVING IT ENTIRELY TO THE GOVERNMENT TO ESTABLISH THE
TES.

IT WAS BELIEVED THAT APPROVAL WILL BE OBTAINED FROM PARLIAMENT,
CAUSE PAUL REYNAUD PROMISED PREMIER LEON BLUM HE WOULD SPEAK

BEHALF OF DEVALUATION IN AN ATTEMPT TO SWING THE OPPOSITION TO
EVALUATION.

9/25--E523P.
CNS139

ADD GOLD, PARIS
BLUM HAS SUMMONED A MEETING AT MATIGNON PALACE OF THE CABINET MIN-

ISTERS CHIEFLY INVOLVED, NAMELY: COMMERCE MINISTER PAUL BASTID:
NATIONAL ECONOMY MINISTER CHARLES SPINASSE: INTERIOR MINISTER ROGER
SALENGRO. THE LATTER IS CHARGED WITH ELABORATE PREPARATIONS TO
AVOID DISORDER.

IT APPEARED LIKELY THAT COMMUNISTS WILL REFUSE TO SUPPORT REALIGNMENT OF CURRENCIES BUT MAY ABSTAIN FROM VOTING RATHER THAN VOTE AGAIN.
ST THE GOVERNMENT.

9/25--E528P.
WONS143

ADD GOLD, PARIS
AURIOL HAD BEEN SCHEDULED TO ANNOUNCE THE GOVERNMENT'S FINANCIAL

PLAN TO THE PRESS AT 11 P. M. BUT THIS ANNOUNCEMENT WAS POSTPONED

TO MIDNIGHT (6 P. M. EST.)

9/25--E550P.

181
WCNS142

ADD GOLD, PARIS

ALTHOUGH THE U. S. AND GREAT BRITAIN REPORTEDLY HAVE ASSURED
THE FRENCH GOVERNMENT THAT THE DOLLAR AND STERLING WOULD REMAIN PEGGED
NO AGREEMENT ON THE FRANC RATE HAS BEEN REACHED, IT WAS UNDERSTOOD.

FRANCE NOT ONLY IS NEGOTIATING WITH THE U. S. AND GREAT BRITAIN BUT
ALSO IS UNDERSTOOD TO BE SEEKING A NEUTRAL ATTITUDE FROM
CONTINENTAL COUNTRIES SUCH AS SWITZERLAND AND HOLLAND.

9/25--E605P.
ADD GOLD, PARIS

IT WAS LEARNED SIR FREDERICK LEITH-ROSS, BRITISH MONETARY AUTHORITY,
WAS IN PARIS TODAY AND HAS NOW DEPARTED FOR BASLE.

9/25--E607P.
WCNS154

PARIS.-SATURDAY--AN OFFICIAL MORATORIUM WILL

DECREED IMMEDIATELY ON ALL COMERCIAL DEBTS PAYABLE IN GOLD OR

FOREIGN CURRENCIES.

IT WAS ANNOUNCED OFFICIALLY THAT ALL STOCK EXCHANGES AND COMMERCIAL

EXCHANGES THROUGHOUT FRANCE WOULD BE CLOSED UNTIL FURTHER NOTICE.

9/25--F718P

WCNS159

Fin mm
PARIS, SATURDAY.--VINCENT AURIOL, FINANCE MINISTER
:

ANNOUNCED AT 1:10 A. M. THAT READJUSTMENT OF THE FRANC TO THE
HE

SAID

DOLLAR AND POUND STERLING WILL BE PROPOSED TO PARLIAMENT.

THAT THE U. S. AND GREAT BRITAIN HAD AGREED "TO USE ALL MEANS TO

PREVENT MONETARY DIFFICULTIES."

9/25--E733P.

WCNS160

ADD GOLD, PARIS (WCNS159.)
THE FINANCE MINISTER SAID THE GOVERNMENT WOULD ASK PARLIAMENT,
CALLED TO CONVENE IN EMERGENCY SESSION MONDAY, FOR POWER TO REQUISIT-

ION ALL THE GOLD IN FRANCE. FRENCH GOLD HAS BEEN LEAVING THE COUNTRY
AT THE RATE OF MILLIONS OF DOLLARS DAILY.
SIMULTANEOUSLY A MORATORIUM WAS DECLARED ON ALL DEBTS PAYABLE IN
GOLD OR FOREIGN CURRENCIES, AND ALL STOCK AND COMMERCIAL EXCHANGES IN
FRANCE WERE ORDERED CLOSED UNTIL FURTHER NOTICE.

0/25--9735P.

183

add lares
NS165

ADD GOLD, PARIS (WCNS160.)
IT WAS ANNOUNCED THAT THE BANK OF FRANCE IS CEASING IMMEDIATELY THE
ELIVERY OF GOLD.

THE GOVERNMENT IS ASKING PARLIAMENT FOR POWER TO REQUISITION ALL
HE GOLD IN THE COUNTRY AT THE CURRENT RATE.

AURIOL SAID, AS HE MADE HIS ANNOUNCEMENT, THAT HE HAD JUST
RECEIVED BY TELEPHONE FROM SECRETARY MORGENTHAU AND NEVILLE CHAMBER-

AIN, CHANCELLOR OF THE BRITISH EXCHEQUER, CONGRATULATIONS FOR THE
UCCESSFUL CONCLUSION OF THE MONETARY AGREEMENT.

9/25--E747P.
JCNS168

ADD GOLD, PARIS

PARLIAMENT WAS CALLED TO CONVENE AT 9 A. M. MONDAY. THE CABINET
EXPECTS REALIGNMENT OF THE FRANC TO BE COMPLETED LATE TUESDAY. IT
WAS CERTAIN THE FRENCH EXCHANGES WOULD REMAIN CLOSED UNTIL PARLIAMENT
ACTS.

THE GENERAL COUNCIL OF THE BANK OF FRANCE CONVENED IN MIDNIGHT SESSION AND THE SENATE FINANCE COMMISSION WILL MEET SUNDAY TO APPROVE
THE MONETARY MEASURE WHICH WILL BE OFFERED PARLIAMENT FOR RATIFICATION.

9/25--E752P.

THE MARKET FOR MONDAY FRANCS AT 6 58 1-4
CENTS THOUGHT TO REPRESENT OFFICIAL SUPPORT
-NO BIDS HAVE BEEN HEARD FOR TUESDAY FRANCS
so FAR THE ACTUAL VOLUME OF BUSINESS
IN THE NEW YORK MARKET IS REPORTED TO BE SMALL

SPOT GUILDERS ARE ABOUT 67 55 CENTS OFF
7 POINTS WHICH SHOULD BRING GOLD FROM HOLLAND
TO NEW YORK

GOLD FROM FRANCE 11.00
LOCAL BANKS HAVE NOT YET RECEIVED DAILY
ADVICES INDICATING THE EXTENT OF ENGAGEMENTS
OF GOLD IN PARIS FOR SHIPMENT TO NEW YORK BUT
JUDGING FROM THE ACTION OF THE FOREIGN EXCHANGE

MARKET ABROAD WELL INFORMED QUARTERS
BELIEVE THAT OFFICIAL FIGURES THIS AFTERNOON
AGAIN WILL SHOW EXCEPTIONALLY HEAVY SHIPMENTS

FROM FRANCE- IN ADDITION THERE IS THE POSSIBILITY OF ENGAGEMENTS FROM HOLLAND FOR NEW YORK
ACCOUNT

BEHAVIOR OF STERLING IS REGARDED AS SIGNIFICANT IN THE LOCAL MARKET- ADVICES WHICH NOW ARE

BEING RECEIVED LEAD TO THE BELIEF THAT THE BREAK
IN THE POUND THIS MORNING WAS CAUSED BY EUROPEAN

SELLING OF STERLING AGAINST DOLLARS INDICATING
THE TRANSFER OF EUROPEAN BALANCES FROM LONDON TO

NEW YORK- THIS IS A CONTINUATION OF THE MOVEMENT
WHICH DEVELOPED YESTERDAY AFTERNOON RESULTING

FROM THE BELIEF THAT CURRENT LEVELS OF STERLING
WOULD NOT BE MAINTAINED SHOULD THE FRANC BE ALLOWED TO SLIP

1104

STERLING FIRMER

STERLING HAS FIRMED TO 5 03 AFTER THE

LOW OF 5 01 3-4 EARLIER THIS MORNING
SPOT FRANCS ARE QUOTED AT ABOUT 6 58 3-8
CENTS- FRANCS FOR DELIVERY ON OCT I HOWEVER
ARE BEING OFFERED AT 6 40 CENTS A DISCOUNT OF
18 3-8 POINTS UNDER THE SPOT RATE
-0-

11.55
STERLING LOWER

AFTER HAVING ADVANCED TO 5 03 1-4 SHORTLY AFTER NOON STERLING HAS SLIPPED BACK AND IS

NOW QUOTED ABOUT 5 02 1-4 TO 5 02 3-8 AND
THE MARKET IS QUIETER AT THE MOMENT

FRANCS CONTINUE AT 6 58 1-4 CENTS AT
WHICH LEVEL THE SUPPORTING BID IS STILL HELD
GOLD FROM HOLLAND

12.55 SEP251936

AMSTERDAM - MOVEMENT OF GOLD FROM

HOLLAND TO THE UNITED STATES GOT UNDER WAY

WITH SMALL SHIPMENTS ON FRIDAY IN RESPONSE TO
WEAKNESS OF THE GUILDER IN TERMS OF THE

DOLLAR - IT IS ESTIMATED THAT SHIPMENTS THUS
FAR AMOUNT TO 5 000 000 GUILDERS
THERE IS INCREASING NERVOUSNESS IN THE
AMSTERDAM FOREIGN EXCHANGE MARKET BUT THE
MONEY MARKET REMAINS EASY

TOWARD THE CLOSE OF THE DAY THE STOPPAGE
OF FORWARD FRENCH TRANSACTIONS CREATED HEAVY

LIQUIDATION IN STERLING
AUTHORITIES OF THE BANK OF NETHERLANDS ALTHOUGH VIEWING THE FUTURE OF THE FRANC IN A
GLOOMY MANNER STRESS THE POINT THAT NO DE-

VIATION WILL BE MADE FROM THE OLD DUTCH POLICY

-0-

1:05 SEP 25 1936
FRENCH SELLING EASES COTTON MARKET

THE COTTON MARKET LOST 2 TO 8 POINTS
ON FAIRLY AGRESSIVE FOREIGN SELLING - BROKERS
WITH FRENCH CONNECTIONS WERE AGGRESSIVE SELLERS

OF MAY AND JULY - SOME OF THE FOREIGN SELLING
HERE IS AGAINST PURCHASES ABROAD
JAPANESE INTERESTS AND TRADE HOUSES

BOUGHT COTTON ON A SCALE DOWN - PROFESSIONALS

BOUGHT ON FEARS OF GENERAL RAINS IN THE WEST
-0-

NEW YORK MARKETS - UNITED PRESS - Sept. 25, 1936.

187

WONSIOZ

NEW YORK.--THE FRENCH CRISIS UNSETTLED THE FOREIGN
EXCHANGE MARKET HERE TODAY, THE POUND STERLING BREAKING SHARPLY

COINCIDENT WITH A DECLINE IN THE SPOT FRANC AND DUTCH GUILDER TO WELL
BELOW THEIR GOLD POINTS AND A PRACTICAL COLLAPSE IN THE FORWARD FRANC
MARKET.

THE RESULTANT DOLLAR STRENGTH BROUGHT FURTHER HEAVY GOLD ENGAGE-

MENTS FROM FRANCE. A TOTAL OF $43,532,000 IN GOLD, A RECORD FOR THIS
YEAR, WAS ARRANGED FOR SHIPMENT TO NEW YORK. THAT CARRIED THE TOTAL
ENGAGED SINCE THE CURRENT MOVEMENT STARTED AUGUST 7 TO $197,732,000.

STERLING OPENED AT $5.05 5/8, UP 1/2 CENT NET, BUT RAN INTO HEAVY
SELLING ON REPORTS FROM ABROAD THAT THE POUND WAS BEING SOLD AGAINST
THE DOLLAR. THE MOVEMENT WAS BASED ON THE THEORY THAT FRENCH DEVALUAION WOULD FREE THE UNITED STATES FROM SUPPORTING THE FRANC AND THAT
OLLARS, THEREFORE, WOULD ADVANCE. TRANSFER OF FOREIGN BALANCES
TO NEW YORK FROM LONDON WAS INDICATED AS RESULT OF THE ACTION.
REPORTS ALSO WERE CURRENT THAT THE BRITISH EQUALIZATION FUND WAS

TAKING ADVANTAGE OF THE SITUATION TO ALLOW THE POUND TO FALL TO A
LOWER AND MORE DESIRABLE LEVEL. THE UNIT DROPPED AS LOW AS $5.01

1/8, OFF 4 CENTS FROM THE HIGH AND DOWN 3 3/8 CENTS NET, AND CLOSED AT

$5.01 3/4.
SPOT FRANCS RANGED BETWEEN A HIGH OF 6.58 1/2 CENTS AND A LOW OF
6.58 1/4 CENTS. THE CURRENCY WAS WELL BELOW THE GOLD IMPORT POINT AT

THE LATTER LEVEL, BUT IT RALLIED TO CLOSE AT 658 1/2, UP 1/16 POINT NET.
SUPPORT BY THE BRITISH EXCHANGE FUND HELD THE UNIT FIRM.
TRADING IN FORWARD FRANCS VIRTUALLY CEASED. A NEGLIGIBLE AMOUNT OF
BUSINESS WAS REPORTED PUT THROUGH WITH THE 30 DAY FRANCS AT A 58 POINT
DISCOUNT BELOW THE SPOT FRANC AND THE 3 MONTHS AT AN 88 POINT DISCOUNT.

THERE WERE NO OTHER BIDS IN THE MARKET, HOWEVER. YESTERDAY THE DISCOUNTS WERE 32 AND 60 POINTS.

e
10.00
TREASURY CONTINUES CONFERENCES ON INTERNATIONAL CURRENCIES SITUATION

WASHN - CONFERENCES IN THE OFFICES OF
SECY OF TREASURY MORGENTHAU ATTENDED BY TREASURY AND STATE DEPT MONETARY EXPERTS WERE RESUMED THIS MORNING AND ARE UNDERSTOOD TO

DEAL WITH THE QUESTION OF WHAT ACTION THIS
GOVERNMENT MIGHT TAKE IN THE EVENT OR CURREN-

CY DEVELOPMENTS ABROAD IT WAS SAID

ADD TREASURY CONTINUES CONFERENCES

WASHN- IN ATTENDANCE AT THE CONFERENCES

WAS LEARNED TODAY IS PROF WILLIAMS ECONOMIC
AND MONETARY ADVISOR FOR THE FEDERAL RESERVE
BANK OF NEW YORK

TREASURY EXPERTS STILL DECLINE TO COMMENT

ON THE SPECIFIC PURPOSES OF THE SESSIONS WHICH
WERE BEGUN THURSDAY

-0-

10,46
MORGENTHAU DECLINES TO COMMENT ON
CONFERENCE PROCEEDINGS
WASHN -

ADD MORGENTHAU

WASHN - SECY OF THE TREASURY MORGENTHAU

WHO LEFT THE CONFERENCE OF STATE AND
TREASURY MONETARY EXPERTS MOMENTARILY WAS

ASKED IF HE COULD GIVE ANY INDICATION OF THE
PROCEEDINGS - THE SECY SAID THAT HE COULD NOT
COMMENT ON THE CONFERENCE IN ANY WAY AND THAT
ANYTHING TO BE MADE PUBLIC WOULD PASS

THROUGH ASSISTANT-SECY GASTON WHO IS IN
CHARGE OF PUBLIC RELATIONS FOR THE TREASURY

-0-

9/25 36

12,15

TREASURY MONETARY CONFEREES USING TELEPHONE
LOUDSPEAKER

WASHN- PERIODIC REPORTS PRESUMABLY ON
THE FRENCH CURRENCY DEVELOPMENTS ARE BEING

RECEIVED IN THE OFFICES. OF SECY MORGENTHAU AT
THE TREASURY WHERE AMERICAN GOVERNMENTAL

MONETARY EXPERTS ARE IN CONFERENCE VIA A
TELEPHONIC LOUDSPEAKER ARRANGEMENT- ALL

MORNING AT INTERVALS TELEPHONE CALLS WERE

BEING RECEIVED AT THE SECRETARY-S OFFICE AND IN
ORDER TO PERMIT THE ENTIRE GATHERING TO HEAR
WHAT IS SAID A LOUD SPEAKER ARRANGEMENT IS
HOOKED UP ON THE TELEPHONE- THE REPORTS ARE UND
-ERSTOOD TO BE COMING THROUGH THE FEDERAL RESERV

-E BANK OF NEW YORK WHEN THE LOUDSPEAKER IS
HOOKED UP THE RECEPTION ROOM ADJOINING THE SECRE

-TARY-S OFFICE IS CLEARED

-0-

1.55

190

U S-FRANCE FINANCIAL AGREEMENT HELD DIFFICULT TO REACH
WASHN -

9661 98038

ADD U S-FRANCE FINANCIAL AGREEMENT HELD
DIFFICULT TO REACH

WASHN - IT IS THOUGHT IN DIPLOMATIC
CIRCLES THAT IF THE U S AGREES TO HOLD THE
VALUE OF ITS CURRENCY EVEN THOUGH FRANCE
SHOULD DEVALUATE THE FRANC THE AGREEMENT WOULD

BE HEAVILY CONDITIONED - WELL INFORMED SOURCES
BELIEVE SUCH AN AGREEMENT CANNOT BE EASILY
REACHED

THE RECIPROCAL TRADE AGREEMENT BETWEEN

FRANCE AND THE UNITED STATES DOES NOT NAME A
SPECIFIC PERCENT WHICH CURRENCY MAY FALL BUT
MERELY GIVES BLANKET AUTHORITY FOR CANCELLA-

TION WITHIN 30 DAYS OF EITHER NATION IF THE
OTHER NATION DEVALUES ITS CURRENCY TO A
POINT DETRIMENTAL TO THE TRADE
SECY HULL DECLINED TO COMMENT ON THE

DISCUSSIONS NOW BEING HELD AT THE TREASURY

AND SAID HE KNEW NOTHING ABOUT THE MEETINGS HOWEVER SECY HULL SPENT THURSDAY IN NEW YORK

ON AN UNEXPLAINED MISSION AND IT IS THOUGHT
HE CONFERRED WITH FINANCIAL LEADERS THERE

-0-

3. 15
FRENCH FINANCIAL ATTACHE CALLS ON MORGENTHAU

WASHN -JEAN APPAERT FINANCIAL ATTACHE OF
THE FRENCH EMBASSY HERE CALLED AT SECY
NORGENTHAU-S OFFICE THIS AFTERNOON AND WAS
ADMITTED TO THE CONFERENCE OF MONETARY

EXPERTS GOING ON THERE - JEAN APPERT
UPON EMERGING FROM THE SECRETARY-S OFFICE
DECLINED TO COMMENT ON HIS CALL

-0-

SEP25 1026

UNITED PRESS - September 25, 1936.

192

WCNS64

gold
IMPORTS OF GOLD FROM FOREIGN COUNTRIES INCREASED SHARPLY DURING

THE WEEK ENDING SEPT. 18, MORE THAN THREE-FOURTHS OF THE AMOUNT COMING
FROM FRANCE WHERE THE FRANC HAS BEEN UNDER INCREASING PRESSURE.
WCNS69

ADD FRANC (WCNS64)
THE REPORT ON GOLD SHIPMENTS WAS MADE BY THE COMMERCE DEPARTMENT

AS INTEREST CENTERED ON POSSIBLE ACTION BY THE AMERICAN GOVERNMENT

IN CASE FRANCE, AS RUMORED, TAKES DRASTIC STEPS TO HALT A CONTINUED
OUTFLOW OF GOLD.

NO TREASURY OFFICIAL WAS WILLING TO BE QUOTED, BUT IT WAS REPORTED

IN FINANCIAL CIRCLES THAT THE U.S. MAY WITHDRAW FINANCIAL SUPPORT
IT HAS INTERMITTENTLY GIVEN THE FRANC AND ALLOW THE CURRENCY TO FIND ITS
OWN LEVEL.

MEANWHILE/INTER-DEPARTMENTAL CONFERENCES WERE IN PROGRESS HERE ON THE

FRENCH SITUATION. TREASURY AND STATE DEPARTMENT OFFICIALS WERE DISCUSSING THE MATTER AND POSSIBLE DOMESTIC REPERCUSSIONS
THE COMMERCE DEPARTMENT REPORTED GOLD IMPORTS OF $39,499,806 DURING

THE WEEK ENDING SEPT. 18, OF WHICH $31,429,106 WAS SHIPPED FROM FRANCE
TO VAULTS IN NEW YORK CITY./THE GOLD IMPORTS FOR THE WEEK WERE MORE THAN
THREE TIMES AS LARGE AS THOSE OF THE PREVIOUS WEEK, ENDING SEPT.
11 WHEN 286,900 OUNCES VALUED AT $12,951,958 WERE IMPORTED FROM
FOREIGN COUNTRIES.

EXPORTS OF GOLD DURING THE SEPT. 18 WEEK AMOUNTED TO ONLY $723.

IMPORTS OF SILVER DURING THE WEEK ENDING SEPT. 18 TOTALLED $1,431,390, COMPARED WITH $669,309 IN THE PREVIOUS WEEK.

9/25- 1139A

WCNS122

JEAN APPERT FINANCIAL ATTACHE AT THE FRENCH EMBASSY,
WAS AMONG THOSE WHO CONFERRED WITH SECRETARY MORGENTHAU TODAY. OTHERS

INCLUDED ARCHIE LOCHEAD, DIRECTOR OF THE STABILIZATION FUND; GEORGE
C. HAAS, CHIEF OF THE RESEARCH STAFF OF THE TREASURY DEPARTMENT:
HERBERT FEIS, STATE DEPARTMENT FINANCIAL EXPERT: HERMAN OLIPHANT,
ATTORNEY FOR THE TREASURY DEPARTMENT AND ASSISTANT SECRETARY OF THE
TREASURY WAYNE C. TAYLOR.

9/25--R343P

WONDING

PROGRESS TOWARD A MONETARY ACCORD BETWEEN THE U.S. AND

FRANCE, WITH GREAT BRITAIN AS AN INTEESTED THIRD PARTY, IS

BELIEVED TO HAVE BEEN ACHIEVED TODAY.

(READ AN INTERESTED THIRD)

9/25--R419P

194

WCNS130

ADD MONETARY CONFERENCE

THE PROPOSED ACCORD WAS UNDERSTOOD TO BE A FORERUNNER OF SOME

READJUSTMENT OF THE FRENCH FRANC---EITHER DEVALUATION OR ABANDONMENT
OF THE GOLD STANDARD BY FRANCE.
THE AMERICAN OFFICIALS AND THE FRENCH ATTACHE CONFERRED AT LENGTH
YESTERDAY AND REPORTS WERE CURRENT THAT THEY HAD PRACTICALLY REACHED

AN ACCORD BEFORE THE MEETING BROKE UP LAST NIGHT. WHEN THE CONFERENCE RESUMED THIS MORNING IT GAVE RISE TO REPORTS THAT SOME HITCH HAD
DEVELOPED OVERNIGHT REQUIRING ADDITIONAL NEGOTIATIONS.
ALL DETAILS OF THE PROPOSED ACCORD WERE HELD CLOSELY GUARDED SECRET:
BUT REPORTS WERE CURRENT THAT FRANCE WAS SEEKING SOME ASSURANCE

FROM THE U.S. THAT THE GOLD CONTENT OF THE DOLLAR WOULD NOT BE REDUCED
IN EVENT THE FRANC WAS DEVALUATED.
REPORTS FROM LONDON INDICATED THAT FRENCH GOVERNMENT HAD RECEIVED
SOME SORT OF SUCH ASSURANCE FROM THE BRITISH GOVERNMENT WITH REGARD

TO THE POUND STERLING. IT IS BELIEVED THE FISCAL EXPERTS OF THE U.S.
GOVERNMENT WERE LOATHED TO GIVE POSITIVE ASSURANCES UNTIL IT COULD BE
SEEN WHAT EFFECT DEVALUATION OF THE FRANC OR ABANDONMENT OF THE GOLD
STANDARD BY FRANCE WOULD HAVE ON THE POUND STERLING, AND THEREFORE ON

WORLD EXCHANGE.

9/25--R425P

195
NUMBAR

add French

ADD GOLD, PARIS

THE NEW GOLD VALUE OF THE FRANC WILL BE FIXED BETWEEN 49 AND 43

MILLIGRAMS OF GOLD 0.900 FINE. A STABILIZATION FUND OF
10,000,000,000 FRANCS (TEN BILLIONS) WILL BE ESTABLISHED TO INSURE TH
STEADINESS OF THE NEW FRANC.

IT WAS STATED RELIABLY THAT THE BRITISH EXCHANGE EQUALIZATION FUND
WILL CONTINUE TO BE USED TO SMOOTH OUT FLUCTUATIONS, THUS FACILITATING INTERNATIONAL TRADE.

0/25. -FRIXD

WCNS171

ADD GOLD, PARIS

IT WAS EXPLAINED IN HIGH QUARTERS THAT AURIOL'S STATEMENT FOLLOWED
DISCUSSIONS BETWEEN THE BRITISH, FRENCH AND U. S. GOVERNMENTS FOR THE
PAST FEW DAYS, WHICH NECESSARILY WERE LIMITED TO THE THREE COUNTRIES
WHICH AT PRESENT ARE THE MAIN CENTERS OF INTERNATIONAL FINANCIAL
TRANSACTIONS.

IT WAS STATED THAT TO HAVE ENLARGED THE FIELD OF THE DISCUSSIONS
TO OTHER COUNTRIES WOULD HAVE BEEN INCONSISTENT WITH THE NEED FOR SECRECY WHICH WAS ESSENTIAL FOR SUCCESS OF THE PROPOSED FRENCH MONETARY
MEASURES.

SHORTLY BEFORE THE FINANCE MINISTER MADE HIS ANNOUNCEMENT MERLE

COCHRAN, U. S. TREASURY ATTACHE, CONFERRED WITH AURIOL IN THE GREATEST
SECRECY AND LEFT THE BUILDING BY A BACK DOOR.

9/25--E814P.

196
DOW JONES - September 25, 1956.

FOREIGN EXCHANGE MARKET WAS ACTIVE IN
LONDON THIS MORNING BUT TURNOVER WAS MODERATE

AS THERE WAS SOME DIFFICULTY IN DEALINGBRITISH CONTROL BANKS HAVE INTERVENED INTERMITTENLY THROUGHOUT THE MORNING BUT AREA
OPERATING ON A LARGE SCALE- OTHER GOLD

CURRENCIES ALSO HAVE BEEN OFFERED IN ADDITION
TO FRANCS- FORWARD FRENCH FRANCS ARE DIFFICULT

TO TRADE IN AS THERE HAVE BEEN HEAVY OFFERINGS
BUT FEW TAKERS AND THE DISCOUNT CN 3 MONTHS
FRANCS HAS DROPPED TO 9 FRANCS OFFERED FROM

THE OPENING OF 7 125 WHILE ONE MONTH DISCOUNT
HAS WEAKENED TO 6 FRANCS OFFERED FROM

OPENING OF 3 625- OPINION IS GROWING STRONGER
IN LOMBARD STREET THAT FRANCE MAY SUSPEND GOLD

EXPORTS WITHIN THE VERY NEAR FUTURE PERHAPS
OVER THE WEEK END

9,12

STERLING WEAK

SUDDEN WEAKNESS HAS DEVELOPED IN STERLING

BELIEVED TO BE ON SELLING FROM ABROAD -

STERLING IS OFFERED CURRENTLY AT 5 04 1-2 OFF
9-16 CENT

10.059
STERLING 5 03 1-8

SEP251936

STERLING HAS DROPPED TO 5 03 1-8 OFF

I 15-16
CENTS WITH SOME QUARTERS EXPRESSING

BELIEF THAT DECLINE HAS BEEN CAUSED BY SELLING
BY BRITISH EXCHANGE CONTROL - SPOT FRANCS
CONTINUE TO RECEIVE GOVERNMENT SUPPORT AT

ADOUT G ca 1-4 CENTS

4:25ST
FORWARD FRANCS COLLAPSE

9€61

DISCOUNTS ON FORWARD FRANCS HAVE COLLAPSED

IN THE LOCAL MARKET THIS MORNING FOLLOWING
RECEIPT OF CABLE ADVICES REGARDING POSITION
OF THE FOREIGN EXCHANGES IN PARIS AND LONDON

TRADERS REPORT IT IS PRACTICALLY IMPOSSIBLE
TO DEAL IN FORWARD FRENCH FRANCS - DISCOUNTS
ARE QUOTED ROUGHLY SOMEWHERE IN THE NEIGHBOR-

HOOD OF 58 POINTS UNDER SPOT FOR ONE MONTH
FRANCS AND 90 FOR THREE MONTHS COMPARED WITH

32 AND 60 YESTERDAY - THIS IS A LOWER LEVEL
THAN HAS BEEN REACHED BY FORWARD FRANCS IN

ANY OF THE CRISES WHICH THE FRANC HAS FACED
THUS FAR

EXPRESSED IN TERMS OF ANNUAL INTEREST

RATES THESE DISCOUNTS REPRESENT AN INTEREST
RATE OF ABOUT 105 PC FOR ONE MONTH FRANCS
AND ABOUT 54 PC FOR THREE MONTH FRANCS

INDI CATIONS THUS FAR POINT TO HEAVY ENGAG
MENTS OF GOLD IN PARIS TODAY FOR SHIPMENT TO

NEW YORK - IN PARIS THE DOLLAR REMAINS IN
STRONG DEMAND AT THE GOLD POINT AT 15 19
FRANCS TO THE DOL WR ROUGHLY EQUIVALENT TO

6 58 5-16 CENTS - PRIOR TO THE OPENING OF
THE LOCAL MARKET HOWEVER CABLES FROM ABROAD

GIVING THE STERLING-FRANC RATES INDICATED

A FRANC QUOTATION OF 6 5758 CENTS OR WELL
BELOW THE GOLD POINT ON AN ARBITRAGE BASIS
THERE IS A STRONG BID REPORTED TO BE IN

198
WCNS134

ADD MONETARY CONFERENCE

THE FRENCH EMBASSY VEILED APPERT'S NEGOTIATIONS IN SECRECY.
"ANY ANNOUNCEMENT WILL HAVE TO BE MADE BY UNITED STATES GOVERNMENT

OFFICIALS," THEY SAID, "OR BY THE FRENCH GOVERNMENT AT PARIS. WE HAVE
NOT BEEN AUTHORIZED TO MAKE ANY STATEMENT WHATEVER REGARDING THE
SITUATION."

9/25--E455P.
WCNS142

A TREASURY SPOKESMAN, EMERGING FROM A CONFERENCE OF GOVERNMENT

FISCAL EXPERTS, REFUSED TO CONFIRM OR DENY REPORTS THAT GREAT BRITAIN,

FRANCE AND THE U. S. HAD REACHED AN ACCORD ON THE FRENCH MONETARY

SITUATION.

9/25--E535P.

WCNS153

SECRETARY MORGENTHAU WILL HOLD A PRESS CONFERENCE AND ISSUE A

STATEMENT AT 7:30 P. M.

9/25--E717P.

199

morgenthan statement

WCNS162

SECRETARY MORGENTHAU ANNOUNCED AT AN EMERGENCY PRESS

CONFERENCE THAT THE FRENCH GOVERNMENT HAD INFORMED THE U. S. IT WOULD
"PROPOSE TO ITS PARLIAMENT THE READJUSTMENT OF ITS CURRENCY."

9/25--E736P

WCNS163

ADD MORGENTHAU

MORGENTHAU RELEASED A FORMAL STATEMENT, AUTHORITY FOR WHICH

WAS GRANTED BY PRESIDENT ROOSEVELT. HE SAID SIMILAR STATEMENTS WERE
RELEASED IN LONDON AND PARIS.

UNITED STATES POLICIES IN REGARD TO THIS ECONOMIC CHANGE, WHICH WAS

BELIEVED TO MEAN A REVALUATION OF THE FRANC IN ITS RELATION TO OTHER
NATIONAL CURRENCIES, WAS AFFIRMED AS COOPERATION WITH THE BRITISH AND
FRENCH GOVERNMENTS.

9/25--E740P.

200

WCNS164

ADD MORGENTHAU

"THE UNITED STATES GOVERNMENT,* THE RELEASE SAID, "AS ALSO THE
BRITISH AND FRENCH GOVERNMENTS, DECLARES ITS INTENTION TO CONTINUE

TO USE APPROPRIATE AVAILABLE RESOURCES so AS TO AVOID AS FAR AS
POSSIBLE ANY DISTURBANCE OF THE BASIS OF INTERNATIONAL EXCHANGE
RESULTING FROM THE PROPOSED READJUSTMENTS.

"IT WILL ARRANGE FOR SUCH CONSULTATIONS FOR THIS PURPOSE AS MAY
PROVE NECESSARY WITH THE OTHER TWO GOVERNMENTS AND THEIR AUTHORIZED
AGENCIES."

9/25--E745P.

add seay

WCNS167

ADD MORGENTHAU

"THE GOVERNMENT OF THE UNITED STATES AFTER CONSULTATION WITH THE
BRITISH GOVERNMENT AND THE FRENCH GOVERNMENT, THE STATEMENT ADDED,

JOINS WITH THEM IN AFFIRMING A COMMON DESIRE TO FOSTER THOSE CONDITIONS WHICH SAFEGUARD PEACE AND WILL BEST CONTRIBUTE TO THE RESTORATION
OF ORDER IN INTERNATIONAL ECONOMIC RELATIONS AND TO PURSUE A

POLICY WHICH WILL TEND TO PROMOTE PROSPERITY IN THE WORLD AND TO IMPROVE THE STANDARD OF LIVING OF PEOPLES."

9/25--E748P.

UNITED PRESS - September 25, 1936.

201

RAN

COMMANCITY

OLKCHIE

ENFINITION

DEMALLE

ROLLAN

TOTAL

The

xm
Against

THE

RUTH

service OF THE HERCIAN FRANCE

FOOT ANTIVELY REBANDON
MIA

(HEA) missing

SECRETARY MORGENTHAU & OTHER U.S. EXCEPT MARKET COMMENT

202

UNITED PRESS - September 25, 1936.

WCNS25

Offering of Treasury Bills

SECRETARY MORGENTHAU FOLLOWED UP A STAUNCH DEFENSE OF ADMINIS-

TRATION FISCAL POLICIES TODAY WITH AN OFFER OF $50,000,000 IN TREASURY
BILLS.

THE FISCAL DEFENSE WAS MADE IN A LETTER TO SENATOR VANDENBERG, AND THE
NEW TREASURY OFFERING WAS ANNOUNCED A FEW HOURS LATER.

TREASURY OFFICIALS SAID THERE WAS. NO CONNECTION BETWEEN THE TWO.

THE BILLS, MORGENTHAU SAID, WILL BE OFFERED MONDAY TO HIGHEST

BIDDERS. THEY WILL BE SOLD AT A DISCOUNT, DATED SEPT. 28, 1936, AND
ATURING JUNE 30, 1937, WITHOUT INTEREST.

9/25--R920A