Full text of Diaries of Henry Morgenthau, Jr. : Volume 34 : Part 2

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September 25, 1936. 203
9:01 a.m.

Operator:

Mr. Helvering - go ahead.

H.M.Jr:

Hello

H:

Hello

H.M.Jr:

Good morning.

H:

Good morning Mr. Secretary. How are you?

HM.Jr:

(Laughing) Well I'm kind of washed out but I think
I can hold on for another day or two.

H:

(Laughter)

H.M.Jr:

Did you see my answer to Vandenberg in this morning's
paper?

H:

No I haven't.

H.M.Jr:

Well get yourself a New York Times and New York

H:

H.M.Jr:

Tribune.

Well I'll be glad to do that.
Yes. I think it's pretty good.

H:

All right. Are you up home?

H.M.Jr:

No I'm in Washington.

H:

Oh are you?

H.M.Jr:

Yes. Now I've got an idea and I'd like you to
have some of your people work on it for me and
that is this. I don't know whether I'm going to
do it but I may want to give a speech on the taxes
along these lines. My thought is - who is going to
pay for recovery and who is not going to pay for
recovery, see?

H:

H.M.Jr:

Yes.

Now who's going to pay for recovery - I'd like your
staff to go back as many years as they can and take let's say either from 12 to 24 depending upon how
they can do it of the richest men - I mean men with
incomes of over a million, see?

-2-

204

Yes.

H:

H.M.Jr:

And go back, if we can - oh I don't know - 10 years
if we can in their income taxes and show how much
they have paid and how they've evaded it and then
bracket it under the different income tax laws,
you see?

H:

Yes.

H.M.Jr:

Let's say, as an example, there was a 1924 Income

Tax Law. Well under that year Mr. A - his income
was so much; so much went into a Holding Company,
so much and so forth and this is the way he paid it,
you see?

H:

Yes.

H.M.Jr:

Make a little chart for each person. In 1925

H:

Yes.

H.M.Jr:

Do I make myself plain?

H:

I get it - yes.

H.M.Jr:

And how he evaded it.

H:

Yes.

H.M.Jr:

Mr. A paid so much, you see?

But I want to go back - say for 10 years on - oh
somewhere between 12 and 24 men of over a million
dollars -

H:

Yes

H.M.Jr:

-income.

H:

All right.

H.M.Jr:

Then I want to take a group that way of men between

H:

Yes.

HM.Jr:

$500,000 and a million - hello?

And men between $100,000 and $500,000.

205

-4H.M.Jr:

Do you get me?

H:

Yes.

H.M.Jr:

H:

H.M.Jr:

Now I'd like to pin this on you personally rather
than over here and let you take your group and get
them together this morning and divide it up and
see if you can grind something out.
Yes.

And when you've got it give me a telephone - I'd
like them to work day and night on this.

H:

All right.

H.M.Jr:

Now how does it hit you?

H:

Why I think that's a fine idea.

H.M.Jr:
H:

H.M.Jr:

I mean it's my own idea Yes, well you take those big ones and then the small
group as a comparison will show pretty good I think.
In other words, I was thinking of one man in Chicago
who could and does dodge an income tax as a lemon
grower. His income was $6,000,000.

H:

(Laughter)

H.M.Jr:

You know the man I mean?

H:

No I don't.

H.M.Jr:

Well, I saw it - he's got himself down as a lemon

grower and his income is $6,000,000 - Wayne Taylor

is sitting here and he's trying to think who it is
and I won't tell him.
H:

(Laughter)

H.M.Jr:

But then I'd take, for instance, some of these people -

H:

- Yes.

let's use as an example the Star Publishing Company.

206

-4H.M.Jr:

Do you get me?

H:

Yes.

H.M.Jr:

Now I'd like to pin this on you personally rather
than over here and let you take your group and get
them together this morning and divide it up and see
if you cangrind something out.

Yes.

H:

H.M.Jr:

And when you've got it give me a telephone - I'd
like them to work day and night on this.

H:

All right.

H.M.Jr:

Now how does it hit you?

H:

Why I think that's a fine idea.

H.M. Jr:

I mean it's my own idea -

H:

H.M.Jr:

H:

Yes well you take those big ones and then the small
group as a comparison will show pretty good I think.
In other words, I was thinking of one man in Chicago
who could and does dodge an income tax as a lemon
grower. His income was $6,000,000.
(Laughter)

H.M.Jr:

You know the man I mean?

H:

No I don't.

H.M.Jr:

Well I saw it - he's got himself down as a lemon
grower and his income is $6,000,000 - Wayne Taylor
is sitting here and he's trying to think who it is
and I won't tell him.

H:

(Laughter)

H.M.Jr:

But then I'd take, for instance, some of these people let's use as an example - that start a publishing
company -

H:

- Yes

207

-5H.M.Jr:

- and trace the income of that company and the
methods that they use of evading and I'11 always

refer to that as corporation A, you see?

H:

Yes.

H.M.Jr:

Corporation B

H:

Yes.

H.M.Jr:

I won't mention their names but I want to take
these groups and then particularly the groups of
people of $10,000 and under. Then I'll take -

H:

The bulk group?

H.M.Jr:

Yes they're going to pay for recovery, they should
pay for recovery - they can afford to pay for
recovery but the group that isn't going to pay is
the income of $10,000 or under.

H:

Yes.

H.M.Jr:

See?

H:

Yes I think that's a good idea.

H.M.Jr:

Now that hasn't been done and then I would show
it this way - company A under 1924 was acting
under the Tax Act of 1924 and in 1925 it was changed
and in 1926 I don't know how - I don't know my years.

H:

Yes well -

H.M.Jr:

But I would - bunch it as the law was changed, you see?

H:

Yes.

H.M.Jr:

I would show progressively how this thing happened

and I'd like to go back - now I say 10 years I want them to use their horse sense to adjust this

idea so that it will work out all right.
of course,

H:

H.M.Jr:

Yes - well/the '21 act covers 124.
Well I don't - you see those are the things that I don't

know that if - if - as - I'd show it - take some men not every year - but show it - how it - their
income was affected as the Income Tax Law was
changed.

208

-6
H:

Well do you want one - one notation under each
law?

H.M.Jr:

That's the point.

H:

Yes.

H.M.Jr:

I want to do it as the law - let's see - is there -

was there a 1921 Act?

H:

Yes, that covered up to the 1924 Act.

H.M.Jr:

All right. Then let's say from 1921 to 1924.

H:

Then we - then the law was changed in '26.

H.M.Jr:

All right. From 1921 to 1924 - this group of

124 people who had a million dollars more income -

this is the way their income was handled and this
is the way they evaded it and so forth and so forth
and in 1926 the law was changed and this same group this is the way they paid. And then when was the
law changed again?

H:

H.M.Jr:

Well the '28 Act.

All right. Now in 1928 - let's take the same group.
Instead of explaining the Act I want to do it an
entirely new way - explain how it affects certain
individuals in these big groups - in these big
brackets, you see?

H:

Then you want to take the average income they had
as it would affect - would be affected under the
'36 Act.

H.M.Jr:

Yes.

H:

Ah ha.

H.M.Jr:

Yes.

H:

H.M.Jr:

All right.
Now I'd like a little - full speed ahead on that

and let them work day and night on this thing and

see what they can get.
H:

Yes. Yes. All right.

209
7

H.M.Jr:

But how does it hit you?

H:

Oh that's a wonderful idea, I think, Mr. Secretary.

H.M.Jr:

O.K.

H:

H.M.Jr:

That's one+of the things that our board's been
struggling all over the country.
I know but they - they've all gone at it the wrong
way - they're trying to explain the Acts.

H:

Yes.

H: M.Jr:

I - this

H:

What I mean is that's the thing there razaing me
about how to answer all the time and this is a good
idea to answer it.

H.M.Jr:

Well isn't this as good a way to answer it as you know?

H:

Well it's the best I've heard of.

H.M.Jr:

Well that's a compliment.

H:

Yes.

H.M.Jr:

Thank you.

H:

Yes. All right I'll get them right off.

H.M.Jr:

But - full speed on this.

H:

All right.

H.M.Jr:

Thank you.

September 25, 1936
11:30 a.m.

210

Operator: Your Paris call 18 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:
H.M.Jr:

Thank you - we're ready.
Hello.

C:

Hello Mr. Morgenthau.

H.M.Jr:

Yes.

C:

This is Cochran speaking from the Ministry of

Finance.

H.M.Jr:

I thought you'd be there.

C:

Yes.

H.M.Jr:

I could smell you.

H.M.Jr:

I thought you would suspect something.
I see.

C:

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

H.M.Jr:

Yes.

C:

C:

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

H.M.Jr:

Yes.

C:

But it has taken 80 long to get the call through that he
has had to go on to the Cabinet meeting.

-2 H.M.Jr:

Yes.

C:

- It began at 4 o'clock and he waited half an

211

hour and had to go on.

H.M.Jr:

Yes.

C:

So I have written down the message which I am to
communicate to you.

H.M.Jr:

Where are you now?

C:

I'm sitting at his desk.

H.M.Jr:

I congratulate you.

H.M.Jr:

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

C:

Yes.

H.M.Jr:

All right.

C:

Roueff and Baumgartner are here with me.

H.M.Jr:

Who?

C:

Roueff and Baumgartner.

H.M.Jr:

O.K.

C:

C:

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.

C:

All right. Have you received a British reply
yet?

H.M.Jr:

I received yesterday four cables from the British.

C:

Yes.

H.M.Jr:

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

-3 -

212

C:

That is you have - have received a message today?

H.M.Jr:

I have received nothing since 7:30 Washington time

C:

Nothing since 7:30 last night?

H.M.Jr:

Yes.

C:

Because Monick telephoned this afternoon - he had

last night.

been at the British Treasury -

H.M.Jr:

Yes.

C:

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

H.M.Jr:

Well I have not.

C:

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:
C:

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

H.M.Jr:

Yes. Go ahead.

C:

Yes.

H.M.Jr:

What?

C:

The Chancellor of the Exchequer -

H.M.Jr:

Yes.

C:

Article 1.

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

H.M.Jr:

Say that again.

C:

The Chancellor of the Exchequer recalls -

H.M.Jr:

Yes.

C:

That he has no due authority -

H.M.Jr:

Yes.

-4 C:

- to fix -

H.M.Jr:

- Yes.

C:

the pound within the gold point.

H.M.Jr:

Yes.

H.M.Jr:

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

C:

Hello -

C:

C:

- find it's natural what?
- find

H.M.Jr:

- find it's natural -

C:

- level

H.M.Jr:

H.M.Jr:
C:

H.M.Jr:

- level - yes
- level
- level

C:

Then 2 - It is possible that the natural level -

H.M.Jr:

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

C:

Yes. Paragraph Two.

H.M.Jr:

Wait a minute, Cochran - wait a minute -

C:

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?

K.M.Jr:

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

Operator:
H.M.Jr:

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

213

-5Operator:

I'll call you back.

H.M.Jr:

What's that?

Operator:
Operator:

I'll call you back.
All right.
All right.

H.M.Jr:

Hello.

Operator:

Go ahead.

H.M.Jr:

Hello Cochran.

C:

Can you hear me now?

H.M.Jr:

Go ahead Mr. Minister.

C:

All right my colleague -

H.M.Jr:

What?

C:

I say mon chere colleague

H.M.Jr:

214

C:

oui, oui
(laughing) Paragraph 2.

H.M.Jr:

Yes.

C:

It is possible that the natural level of the pound -

H.M.Jr:

Yes.

C:

May be $5.00.

H.M.Jr:

Yes.

C:

It is possible also that it may be lowered.

H.M.Jr:

Yes.

C:

This eventuality has been envisaged many times.

H.M.Jr:

Yes.

H.M.Jr:

C:

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

-6the Chancellor.

215

H.M.Jr:

Yes.

C:

Hello?

H.M.Jr:

Go ahead.

C:

Paragraph 3.

H.M.Jr:

Yes.

H.M.Jr:

Go ahead - go - go ahead.

C:

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

H.M.Jr:

Surely (Long Pause)

C:

And this being so - referring to the above - this
being so -

H.M.Jr:
C:

Yes.

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

C:

Paragraph 4.

H.M.Jr:

Yes.

C:

Likewise the Chancellor shall not take adventage
of the French monetary adjustment to depreciate
sterling by way of reprisal no more than the

United States will do this.

C:

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

C:

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

C:

Now that's the summary of the cable but it's only
a summary - it's not an exact discourse.

C:

Yes. Well do it again, so we'll save time on it.
All right, I'll start from the beginning again.

H.M.Jr:

Please.

H.M.Jr:

216
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?

C:

Yes.

H.M.Jr:

I see.

H.M.Jr:

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

C:

All right.

H.M.Jr:

Hello.

C:

Hello.

H.M.Jr:

Go ahead.

C:

4. Likewise, the Chancellor will not take advan-

H.M.Jr:

Yes.

C:

- to depreciate sterling by way of reprisal no more
than the United States will do this.

C:

tage of the French monetary adjustment -

5. The Chancellor, moreover, does not foresee
any depreciation of the pound during the next few

monthe, 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.

217

-8C:

That's the text summarized by Monick to Baumgartner

here.

H.M.Jr:
C:

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

H.M.Jr:

All right.

C:

"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:

It what?

C:

- The simulteneous declarations, despite the reser-

vation which eachcountry 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 being already 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.

C:

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

C:

Secretary Morgenthau the following declaration:

"The French Government, while thanking Mr. Mor-

H.M.Jr:

genthau 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 Wait a minute - wait a minute. Go back about 20 words.

-9-

218

- 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

C:

be sought under monetary law.

H.M.Jr:

All right.

C:

And Baumgartner says here - he interposes this re-

mark 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?

C:

To devalue.

H.M.Jr:
C:

Yes, but what is their middle point?
Well, I gave you those two extreme points yesterday.
They're 25 -

H.M.Jr:

Please

C:

- and 34 points.

H.M.Jr:

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

C:

The limits which I gave you yeeterday -

H.M.Jr:

Yes.

C:

a which they will seek for authority to devalue, by

decree, -

H.M.Jr:

Yes.

C:

- are: The lower limit 25%

H.M.Jr:

Yes.

C:

The upper limit 34.35.

H.M.Jr:

All right.

- 10 C:

So you can figure the middle point between those.

H.M.Jr:

Yes.

C:

219

Beumgartner says their efforts will be from the
beginning to hold the rate at that middle point.

H.M.Jr:

Yes.

C:

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

H.M.Jr:

It will be - say that again.

C:

They intend to have a stabilization fund of 10,000,000, -

H.M.Jr:

How many billion?

C:

Ten.

H.M.Jr:

Ten?

C:

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

H.M.Jr:

Ten?

C:

Ten.

H.M.Jr:

10,000,000,000 francs.

C:

That's right.

H.M.Jr:

Yes. Well that sounds good.

C:

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

000 francs.

here.

H.M.Jr:

Yes.

C:

Then this declaration continues from where we interposed.

C:

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

H.M.Jr:

All right.

H.M.Jr:

- 11 C:

That the -

H.M.Jr:

What's that?

C:

220

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 mejor currencies, and will constitute the

starting point of a trustful cooperation -

H.M.Jr:

Of a what?

C:

- a trustful -

H.M.Jr:

Trustful?

C:

Yes.

H.M.Jr:

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

C:

H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:

Yes - a close together, confident cooperation.
Yes. Wait a minute.
- between the three great countries.
Wait a minute - 80 back about 10 words. Go back 10
words.

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

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

All right.
Operator: Hello.
C:

H.M.Jr:

There's a fadeout on that, tell her.

Operator:

All right - I'll get her right back.

221

- 12 H.M.Jr:

Have you got that?
Wait a minute.

H.M.Jr:

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

C:

C:

H.M.Jr:
H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:

- for a final decision, the Council of Ministere
Wait a minute - wait a minute - I'll tell you what is
the last we have.

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.
Yes.

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

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

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

And so he's gone over there and they've had a very
bad day here. The gold losses Now weit a minute - have you got anything else? I mean

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

C:

I was just trying to describe the situation.

H.M.Jr:

All right.

- 13 C:

H.M.Jr:

There has been a very heavy sale of dollars.
After 3:30 the Guaranty alone had sold 19 million.
Yee. Well now let me get this. We know how much

money - Now Cochran - hello - Cochran.

C:

Yes.

H.M.Jr:

Can you hear me?

C:

Yes.

H.M.Jr:

C:

H.M.Jr:
C:

222

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.

Their - their plans are to have the Council of

Ministers
are determined upon calling a speciel session of
Parliament on Sunday are not permitted to have a
special session of Parliement on Monday (Pause).

H.M.Jr:

Yes.

C:

And that the embargo on gold would be declared at

H.M.Jr:

Well now they're going to call Parliement Sunday or

the same time this common declaration was made.

Monday.
C:

They are just going to call Parliament on Sunday.

H.M.Jr:

Yes.

C:

- so Parliament could be on Monday.

H.M.Jr:

Yes. All right. Now then the embargo would go on

C:

The embargo would go on when they issue the

H.M.Jr:

I see.

They were trying to get the call out tonight -

tonight?

declaration.

- 14 -

223

C:

That's
why they 80 urgently desire - (squeal) declaration out.

H.M.Jr:

Urgently degire what?

C:

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

H.M.Jr:

Yes.

C:

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

H.M.Jr:

Well now - let me - of course - I suppose the British

message will be coming through in about an hour or
so.

C:

They celled 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 doubted whether you could act until you had an actual

message from the British.
H.M.Jr:

Yes - now.

C:

At the same time I - I thought you could benefit their

H.M.Jr:

Well, so am I.

C:

Yes, I know you are.

H.M.Jr:

situation here.

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

C:

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

224

- 15 H.M.Jr:

Because what they're asking me to do 18 almost
impossible.

C:

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

H.M.Jr:

Yes. No I mean - I have the greatest sympathy
and the strongest desire to be very helpful.

C:

Surely.

H.M.Jr:

I have the greatest sympathy and the strongest

C:

Surely.

H.M.Jr:

Do you get that?

C:

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

desire to be helpful.

communicate with the President.

C:

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

H.M.Jr:

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

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

C:

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

H.M.Jr:

Well I would suggest that you be back there in two

C:

That I be back at the Ministry of Finance in two

hours.

hours.

H.M.Jr:

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

C:

The Ministry of Finance in two hours.

H.M.Jr:

Yes, well now - hello.

C:

Yes.

it may be -

/

225

- 16 H.M.Jr:

I say to be there in two hours. You may have to
wait there for en hour or two. I can't tell because I
don't know when the British will come in.

C:

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

C:

Hello?

H.M.Jr:

Yes.

C:

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 -

C:

Important.

H.M.Jr:

Hello?

C:

Embassy and the Ministry

H.M.Jr:

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

C:

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

H.M.Jr:

No.

C:

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 8 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

C:

Beg pardon?

C:

meantime.

226

- 17 H.M.Jr:

In the meantime we've corrected this British

C:

Can you just read the corrections on that now?

H.M.Jr:

declaration.

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

C:

I see.

H.M.Jr:

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

C:

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.

C:

At the French Embassy and be there until a quarter till
eight and stay there till 1 o'clock.
That's right.
And the French authorities will be here with me.

H.M.Jr:

That's right. Now just - just hold the wire a minute

C:

H.M.Jr:

H.M.Jr:

- to get your answer.
Just hold the wire - (Pause)

H.M.Jr:

Hello.

C:

Hello,

H.M.Jr:

The corrections we've made are not major corrections.

C:

227

- 18 C:

The corrections are not major corrections?

H.M.Jr:

No.

C:

They are corrections which they would accept.

H.M.Jr:

What's that?

C:

I say, they're corrections which would raise no

difficulty.

C:

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.

C:

We thought it might be helpful to you to have this

H.M.Jr:

It's very helpful.

H.M.Jr:

C:

information in advance.

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.

C:

All right.

H.M.Jr:

Hello.

C:

Hello.

H.M.Jr:

Just a minute. (pause)

H.M.Jr:

Hello.

C:

Hello - yes.

H.M.Jr:

Now you go back to the Embassy and please give

C:

Yes.

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

228

- 19 H.M.Jr:

- and tell him that we're trying to do everything
possible here to be helpful.

All right, sir.

C:

C:

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.

C:

Hello.

H.M.Jr:

Knoke is sitting here and he has had a telephone

H.M.Jr:

message from Cariguel -

C:

Yes.

H.M.Jr:

- asking him to use his discretion in supporting

C:

Yes.

H.M.Jr:

In view of that request, Knoke wants to know whether

the franc in the American market on Saturday.

we should say anything to the Americanbanks who

deal in foreign exchange.

C:

H.M.Jr:

Well, if this thing is going through, it's my

understanding that you were to keep it secret.
They want it what?

H.M.Jr:

That you were to keep it secret.
Well, now wait a minute. Tell Baumgartner and Roueff

C:

Yes.

C:

that Cariguel called us -

- and asked us to use the French gold which 18 here
to support the French franc Saturday in America.

H.M.Jr:
C:

Yes.

H.M.Jr:

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

C:

I see.

American banks about dealing in foreign exchange?

K

229

- 20 H.M.Jr:

Now you ask Baumgartner and Roueff that question.

C:

All right. (Pause)

C:

They think that the private banks should be discouraged -

H.M.Jr:

Should what?

C:

- should be discouraged from operations.

H.M.Jr:

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

C:

Fournier telephoned me earlier about that this noon.

H.M.Jr:

What's that?

C:

Fournier telephoned me this noon to see what we were

else.

H.M.Jr:

going to do if we stuck to that.
Well, we'11 do anything that they ask us to do.

C:

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.

C:

Yes.

H.M.Jr:

See?

C:

We haven't been in conversation since telephoning

H.M.Jr:

C:

the Paris exchange.

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 Fournier had desisted from telephoning
themselves.

H.M.Jr:

Yes. Well, make sure about that.

C:

All right. Because he told me that it was urgent that
he should get in touch -

230

- 21 H.M.Jr:

Yee - now -

C:

With the Federal Reserve people in regard to coopera-

H.M.Jr:

Now one other question.

C:

Yes.

H.M.Jr:

C:
C:

H.M.Jr:
C:

/

tion.

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?
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:
C:

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

H.M.Jr:

All right.

C:

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

H.M.Jr:

He's what?

C:

- with the message that they're not in constant commun-

H.M.Jr:

No. Now, just a minute.

H.M.Jr:

Hello.

C:

Hello.

H.M.Jr:

Now we've typed this thing and let me read it back to

ication just yet.

you.
C:

H.M.Jr:

x

All right.
"The Chancellor of the Exchequer recalls that he has
no authority -

231

- 22 C:

No legal authority.

H.M.Jr:

Just a minute. Who's paying for this call - we or the

C:

H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:

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'll get out of this.
Yes. Well, I'll see that it is arranged that way.
But I'm just Joking.
Surely - surely.
Tell them that I asked - that I'm worrying about it.
Tell them - tell them that I'm Scotch.

C:

They got the point.

H.M.Jr:

Sure.

C:

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 -

C:

Right.

H.M.J.:

- to fix the pound within gold points.

C:

Right.

H.M.Jr:

It is possible that the natural level of the pound

may be $5.00.

H.M.Jr:

No, you omitted one sentence.
Did I?

C:

Yes. After "within gold points" there is another

H.M.Jr:

Yes, well, give - what is that sentence?

C:

Furthermore -

H.M.Jr:

Just a minute. Go ahead.

C:

sentence.

232.

- 23 C:

Furthermore -

H.M.Jr:

Yes.

C:

- the principle of the British policy is to let the

H.M.Jr:

pound find its natural level.
Yes, what - 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.

C:

H.M.Jr:

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

C:

Yes, surely.

H.M.Jr:

Anything else?

C:

H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:

until we get the official British thing.

You didn't went to read any more of that, did you?
No, no. Tell Baumgartner I feel much better now that
I know he's paying for this call.

All right. Fine.
All right.
Then I shall go back to the Embassy, and if you have the
corrections, call me there. If not, I shell be here
at 8:00.
And give Baumgertner and Roueff my best regards.

H.M.Jr:

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

C:

Goodbye.

H.M.Jr:

Goodbye.

C:

Goodbye.

C:

233
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.

F:

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

H.M.Jr:

Yes.

F:

In this dreft of ours, are we asking the British
Government merely to say, "That's all right," assuming 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.

F:

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

H.M.Jr:

Pardon me.

F:

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

H.M.Jr:

Well, ah, that's his view.

F:

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.

F:

All right. I shall do it.

H.M.Jr:

See?

F:

Right, sir.

H.M.Jr:

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

F:

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

234

-2H.M.Jr:

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

F:

No, there are sandwiches over there.

H.M.Jr:

Oh, there are.

F:

I ordered them an hour ago.

H.M.Jr:

Well, an -

something over here?

H.M.Jr:

I'll pick them up and eat them over there.
Do you mind because I would like to get this thing the way the President suggested - I would like to get
this thing.

F:

Right.

H.M.Jr:

And is Mr. Hull in this afternoon?

F:

I don't know, sir.

H.M.Jr:

You might just ask.

F:

H.M.Jr:

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

F:

He'll be here this afternoon.

F:

H.M.Jr:
F:

All right. Thank you.
All right.

235
September 25, 1936.
4:18 P.M.

Operator:

Go ahead.

C:

Hello?

H.M.Jr:

Hello Cochren.

C:

Yes Mr. Secretary.

H.M.Jr:

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

C:

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

H.M.Jr:

Your in Baumgartner's - well your slipping.

C:

Yes - yes.

H.M.Jr:

All right.

C:

They'11 have me out before the night's over.

H.M.Jr:

Yes, well now this is what happened.

C:

Yes.

H.M.Jr:

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

C:

Yes.

H.M.Jr:

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

C:

that he can accept - hello?
So that he can expect your (newer.

H.M.Jr:

Yes.

C:

Right.

H.M.Jr:

If he can accept it (aeide 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

236

-2H.M.Jr:

-'that this 1s 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?

C:

Did I miss some then when you were not speaking to

H.M.Jr:

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

H.M.Jr:

The last -

C:

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

me or was I cut off?

anything.

H.M.Jr:

Well may be I hiccoughed I don't know.

C:

Well the British left with the note - which you thought
would be 98% acceptable.

H.M.Jr:

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

C:

Yes.

H.M.Jr:

- to Mr. Chamberlain reads BR follows.

C:

Do you went me to take that down?

H.M.Jr:

No.

C:

No.

H.M.Jr:

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

H.M.Jr:

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

C:

- Yes.

C:

H.M.Jr:

'that this is not an obstacle' - we're talking now
certain interpretations and I've given certain

about the $5.00 pound, you see? I mean he's given

interpretations.

C:

Yes - yes

237

-3H.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

C:

Hello

H.M.Jr:

I keep reading the wrong copy all the time.

C:

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 -

C:

of the simultaneous - yes.

H.M.Jr:

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

C:

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?

C:

Yes.

H.M.Jr:

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

C:

Yes.

H.M.Jr:
C:

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

H.M.Jr:

Yes.

C:

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.

238

-4C:

I see.

H.M.Jr:

Now they're going to telephone right away.

C:

I see.

H.M.Jr:

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

C:

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.

C:

I see.

H.M.Jr:

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

C:

Well let me Just tell you what's happened here.

H.M.Jr:

Yes.

C:

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

H.M.Jr:

What's that? Hello?

C:

Hello - I say the French accept completely -

H.M.Jr:

Yes.

C:

- the amendment which you suggested to the text.

H.M.Jr:

All right. Now wait a minute before you say

C:

Yes.

H.M.Jr:

We accepted the - that suggestion that they made.

C:

The end of Paragraph 3.

H.M.Jr:

The last three words.

C:

The lest three words.

anything else.

The end of Paragraph 3.

239

-5H.M.Jr:

Read 'Their authorized agencies'.

C:

Yes.

H.M.Jr:

We've inserted the words 'Their authorized fiscal

C:

Their authorized fiscal agencies.

H.M.Jr:

Yes.

C:

Yes.

H.M.Jr:

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

C:

agencies'.

H.M.Jr:

What's that?

C:

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

H.M.Jr:

Well what was the word - what

C:

Monetary they wanted.

H.M.Jr:
C:

taxation over here.

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:

Well I mean London has already accepted it 88
'authorized agencieg'

H.M.Jr:

Yes.

C:

The people here would rather accept it as that

H.M.Jr:

without putting in the modifying adjective.
Just leave it 'authorized agencies'

240

-6'Authorized agencies'-

M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:

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

it out. (Laughter).

Yes. Then we strike it out.
Yes. That's - we strike out fiscal.
Yes - yes and leave it 'authorized agencies'.
All right. Now everything else is O.K?

C:

Well they accepted your text.

H.M.Jr:

Fine.

C:

And they telephoned this text to Monnick.

H.M.Jr:

What's that?

C:

I say they telephoned your English text.

H.M.Jr:

Yes.

C:

Yes.

H.M.Jr:

Yes - to Monnick at London

C:

Who in turn submitted it to the British.

H.M.Jr:

Yes.

C:

And they are in agreement, so Monnick tells us.

H.M.Jr:

They are?

C:

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

H.M.Jr:

Uh huh -

C:

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:

Uh huh.

C:

H.M.Jr:

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

241

-7 I'll have to go on the oral text which I understood

C:

completely from Lochhead and checked it back with

him.

H.M.Jr:
C:

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.

C:

- peace.

H.M.Jr:

Now

C:

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

Mr. Chamberlain.

C:

Yes.

H.M.Jr:

And I ought to hear from them any minute.

C:

Yes.

H.M.Jr:

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

C:

'Phone what?

C:

Just as soon as I hear from the British I'll '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 e nice comfortable chair?

C:

oh, yes.

H.M.Jr:

What?

C:

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

H.M.Jr:

O.K.

H.M.Jr:
C:

H.M.Jr:

242

-8-

j

C:

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

H.M.Jr:

Yes.

C:

And in London by Chamberlain.

H.M.Jr:

Yes.

C:

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.

C:

At 11 o'clock.

H.M.Jr:

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

C:

H.M.Jr:
C:

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.
oh 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:

H.M.Jr:
C:

H.M.Jr:

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

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

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

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

this job I think.

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

C:

Let me see on this matter of Fournier and Cariguel.

H.M.Jr:

Yes.

243

-9C:

I talked with Cariguel.

H.M.Jr:

Yes.

C:

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

H.M.Jr:

Yes.

C:

Irrespective of what might be done tonight.

H.M.Jr:

Yes.

C:

And then they would ask the Federal to take care of
the market tomorrow morning.

H.M.Jr:

I didn't quite get that.

C:

They would leave it to the Federal -

H.M.Jr:

Yes.

C:

New York -

H.M.Jr:

Yes.

C:

H.M.Jr:
C:

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

C:

Until Tuesday.

H.M.Jr:

To do what?

C:

To refrain from operations in French exchange until

Tuesday.

H.M.Jr:
C:

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

do the best we can.

Chamberlain is going DO do the same thing in London.

244

- 10 H.M.Jr:
C:

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.
is going to do the same thing.
And then
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 belonge to
Federal Reserve of New York.

H.M.Jr:

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

C:

Yes - he always was a refugee money

H.M.Jr:

All right. Williams has come back.

C:

C:

H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:
C:

here and he's laughing.

devaluation

and all that.

Do you want me to check the French translation here?
What French translation?

I mean they'11 get out a French Yee - yes - that's a very good idea.
I mean they haven't as yet.
Yes - that's & good idea.
London - Leith Ross is checking it with Monnick.

H.M.Jr:

That's all right.

C:

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

H.M.Jr:

Yes. That's all right.

- 11 -

245

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

C:

H.M.Jr:

Good.

H.M.Jr:

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

C:

If you wish.

C:

H.M.Jr:

Now if Baumgartner doesn't object you sit right
there with him.

C:

What's that?

H.M.Jr:

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

C:

Finance.

We're - I'll 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.

C:

H.M.Jr:

oh don't - don't - listen - don't - isn't there any

C:

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

H.M.Jr:
C:

H.M.Jr:
C:

other way?

Well, send it to Appert and let's see what happens.
Well, see, we - it will be in the press here as soon
88 it is released.

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.

246

- 12 C:

Have them send it to Appert?

F.M.Jr:

Yes.

C:

But you want me to check it with them -

H.M.Jr:

Yes.

C:

Before it's released?

H.M.Jr:

Yes - yes.

C:

All right.

H.M.Jr:
C:

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.

C:

Trying to get the declaration out before midnight.

H.M.Jr:
C:

H.M.Jr:

C:

Yes. Well, have they heard from Chamberlain?
(Talked aside to someone - can't make it out)

Well why don't you speak to them and I'll hold
the wire? Let him speak to the British and I'11 just
stay on the 'phone.
They say that your message is just being deciphered
now.

H.M.Jr:
C:

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.

-

247

- 13 H.M.Jr:

I told them to telephone and cable it both.
I see.

C:

H.M.Jr:

Look - either way - I'll 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.

C:

All right. Fine.

H.M.Jr:

How's thet.

C:

That's All right. If I hear first I'll put the call

H.M.Jr:

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

H.M.Jr:

All right. Fine.
And if I hear I'll call you.

C:

Sir?

H.M.Jr:

Now wait a minute - Feie wants -

C:

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

H.M.Jr:

Yes.

C:

C:

H.M.Jr:
C:

C:

H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:

On this thing, do you went the French text wired to
Appert tonight? I mean Why can't they telephone the French text to Appert?
Just a minute (Aeide to someone in his office: "Could
you telephone the French text to Appert?") (Pause)
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 than leave
the final thing with me.
Let's do it both ways, you check it there - the
translation Yes.

- and a.3k them to phone it to Appert.

248

- 14 -

All right. And you people will seit then.
H.M.Jr:

Right.

C:

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

H.M.Jr:

O.K.

Is he with you now or is he at the Embassy, do you
know?

H.M.Jr:

He's at the Embassy.

C:

He'8 at the French Embassy?

H.M.Jr:

Yes.

C:

H.M.Jr:

All right.
All right.

C:

We'll 'phone it through then.

H.M.Jr:

Yes.

H.M.Jr:

Goodbye.

C:

Goodbye.

249
September 25, 1936
4:40 p.m.
Operator:

Mr. Appert.

Appert:

Yes, Mr. Secretary.

H.M.Jr:

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

A:

Yes, sir.

H.M.Jr:
A:

H.M.Jr:
A:

H.M.Jr:
A:

Paris.

And in e very little while they are going to telephone
you the French text Yee, 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.

A:

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

A:

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

H.M.Jr:

you.

A:

They will telephone to me the text?

H.M.Jr:

Mr. Baumgartner will telephone you at the Embassy -

A:

Yes.

H.M.Jr:

- the French text.

A:

And then I will immediately come to your office.

H.M.Jr:

If you please.

A:

Yes, I will do it.

250

-2H.M.Jr:

Thank you very much.

A:

Yes, sir.

H.M.Jr:

Thank you.

September 25, 1936
4:45 p.m.

251

H.M.Jr:

Hello.

Operator:

Operator.

H.M.Jr:

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

Operator:

All right.

H.M.Jr:

Hello.

Operator:

Governor Harrison.

H.M.Jr:

Hello.

Harrison:

Yes, Henry.

H.M.Jr:

George.

H:

Yee, sir.

don't know where they all are. And then after I
have them in here, I'll talk to Governor Harrison.

H.M.Jr:

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

H:

Yes.

H.M.Jr:

Have you something special on your mind?

H:

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

H.M.Jr:
H:

H.M.Jr:
H:

Please.

Grefton has been calling me to or three times 8 day
about the French situation.
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.

-2H:

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

H.M.Jr:

Right.

H:

And -

H.K.Jr:
H:

252

Your suggestion is 8 good one. I'll send for Mr.

Ransom at once.

If you do that, I think it would be very helpful
and in good spirit.

H.M.Jr:

It's E splendid suggestion, and I'll send for him

H:

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?

H.M.Jr:
H:

H.M.Jr:

at once.

Yes.

And it looks now as though it will go through any

minute.

H:

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 in foreign exchange that they do not try
to buck this. See?

H:

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:

Yes.

H.M.Jr:

Now, have you And Knoke come to any conclusion as

to how best to handle this?

H:

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

H.M.Jr:

Yes.

H:

Tomorrow 18 a very difficult day for the reason

that all the principal officers will be out of town.

H.M.Jr:

Yes.

253

-3 H:

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

H.M.Jr:

Yes.

H:

And, a meeting of such a crowd 18 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.

H:

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

H.M.Jr:

Yes.

H:

If I could do it tonight, of course, it would be e lot
simpler to do it.

H.M.Jr:

Yes.

H:

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

H.M.Jr:
H:

a cinch.

H.M.Jr:

I will 8.8 soon as the statement is released here.

H:

Yes.

H.M.Jr:

But, it ought to be released now any time.

H:

Yes.

H.M.Jr:

Now do you think I can help any or do you think you

H:

I think I can do it all right. I think it is really

can do it?

the best way to do it.

H.M.Jr:
H:

H.M.Jr:
H:

All right.
I don't want to suggest you shouldn't do it, but I really
No.

- think this is the best way to do it if you leave it

with me.

254

-4H.M.Jr:

I will.

H:

All right.

H.M.Jr:

If you'll assume the responsibility?

H.M.Jr:

Yes, I will.
All right. Well, then, what I will say 18 that
if you don't mind staying right where you are,
the minute I hear, I'll call you.

H:

Yes, because then I can get busy.

H.M.Jr:

The minute.

H:

Well now I wonder, may I ask another thing?

H.M.Jr:

You can ask a dozen.

H:

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.

H:

H.M.Jr:

H:

H.M.Jr:

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
into the language 80 that it's United States
instead of reading "The French Government", and
the minute that's finished, I'll - 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 hae finished it, and
I've O.K'd. it - I haven't seen it yet; it isn't
finished -

H:

Yes.

H.M.Jr:

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

H:

I'll have my own secretary here.

H.M.Jr:

Wherever you have a confidential secretary.

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

255
5H:

Yes.

H.M.Jr:

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

we give it out, I'll let him dictate it over the

phone to you.
H:

Yes; well that will be very helpful to me.

H.M.Jr:

How's that?

H:

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:

H.M.Jr:
H:

H.M.Jr:

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.
But I mean - the whole proposition - how do you
feel about it?

H:

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

H.M.Jr:

Yes.

H:

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

H:

I would have liked to have seen them devalue x per

H.M.Jr:

Yes.

cent definitely.

-6H:

And let it go at that.

H.M.Jr:

Yes.

256

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

H:

avoid.

H.M.Jr:

Yes.

H:

Which 18 speculation.

H:

But, under the circumstances, we'll take it and think
it's pretty good, eh?
Oh, yes, I do.

H.M.Jr:

Right.

H;

I think something would have, to be done.

H.M.Jr:

Well, I wanted -

H.M.Jr:

H.M.Jr:

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

H:

Thank you very much.

H.M.Jr:

And I'll take your suggestion. I'll immediately send

H:

will you, and -

H.M.Jr:

At once.

H:

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

H:

H.M.Jr:
H:

H:

H.M.Jr:

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

swore you to secrecy.

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

257
-

-

H:

All right - thank you.

H.M.Jr:

Goodbye.

H:

Goodbye.

Operator:

Operator.

H.M.Jr:

Get me Mr. Ransom over at Federal Reserve.

Operator:

All right.

258
September 25, 1936
5:00 p.m.
Operator:

Governor Ransom.

H.M.Jr:

Hello.

Ransom:

R:

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:

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

R:

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.

L:

Yes.

H.M.Jr:

Could you drop over at the office? I'd like to tell

L:

All right. Thank you very much.

H.M.Jr:

Fine.

L:

All right.

H.M.Jr:

Thank you.

H.M.Jr:

you what I've been doing.

September 25, 1936 259
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?

E:

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.

E:

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.

E:

Yes.

H.M.Jr:

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

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

E:

Yes.

H.M.Jr:

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

-2-

260

purely 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 18

E:

Well if it's a question of - if it's of mutual

H.M.Jr:

much more valuable than any signed document.

interest, it ought to be bound any way.
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 pros-

perity.
E:

Yes.

H.M.Jr:

How's that?

E:

That's all right.

E:

Instead of using the words "internal price levels."
Yes - national prosperity.

H.M.Jr:

Yes.

E:

It's a good campaign word.

H.M.Jr:

It isn't bad.

E:

(Laughs) Who thought of that one?

H.M.Jr:

H.M.Jr:

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

H.M.Jr:

Say, what - what - what will the price of the franc be?
Well, they're talking about devaluation between 25 and

E:

And then they'11 immediately hold it there. I mean

H.M.Jr:

They're - they're going to have a stabilization fund

E:

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

E:

34%, whichwould put the franc at around 50.

it will be a -

of 10,000,000,000 - 10,000,000,000 francs.

-3H.M.Jr:

261

Don't you think 80?

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

E:

H.M.Jr:

Yes.

E:

- and then to have the franc drift -

H.M.Jr:

Yes.

E:

- which couldn't help but be very demoralizing and

H.M.Jr:

Yes.

certainly would be terribly demoralizing to France -

H.M.Jr:

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

E:

Now it would be bad because the pound would have no

E:

basis upon which it could operate.

E:

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.

H.M.Jr:

E:

H.M.Jr:

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

H.M.Jr:

- 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.

E:

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

E:

H.M.Jr:

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.

262

-4 E:

But they're going to have to agree though, aren't they?

H.M.Jr:

No.

E:

Well, or course, if they don't fight it, it means
the same thing.

H.M.Jr:

Well they - they've agreed -

E:

It means that they're not going to further develue,
doesn't it?

H.M.Jr:

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?

E:

H.M.Jr:

Yes.

E:

Isn't that what it means.

H.M.Jr:

No, what they say is they'll let it sort of seek

its own level, but, on the other hand, they won't
push it down.

E:

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.

E:

They're not sure of the political situation.

H.M.Jr:

No.

E:

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

H.M.Jr:

Yes.

E:

Now later if there 18 a return, then the pound may

H.M.Jr:

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

recede.

any tragedy.

263

-5E:

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

H.M.Jr:

Yes.

E:

If it's a natural level -

H.M.Jr:

Yes.

E:

- we could stand it.

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

H.M.Jr:

I think so. We think 80 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 -

E:

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.

E:

Yes.

H.M.Jr:

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

E:

It'11 help France. Without it, the francs will
drift, won't they?

H.M.Jr:

Pardon me.

E:

I say without that France would just be drifting -

E.M.Jr:

Well.

E:

- France couldn't devalue, could they?

E:

Well, Marriner, they lost $48,000,000 gold today.
Yes, but, France would just drift without an

H.M.Jr:

Well, they'd go - I mean if this doesn't happen, I

H.M.Jr:

agreement.

would say within a couple of weeks they'd have
anarchy there.

E:

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

-6-

264

H.M.Jr:

I wish you were, too, and -

E:

I could come, I guess.

H.M.Jr:

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

E:

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.

E:

Well, that would be - I'd appreciate having it.

H.M.Jr:

What's your address. I'll - I'll telegraph it the

H.M.Jr:

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

E:

Ogden.

H.M.Jr:

Where will you be tonight.

E:

Well, let's see. I'11 be in Salt Lake tonight.

H.M.Jr:

Well, do you want me to send it there?

E:

E:

H.M.Jr:

Why - why not send it here and '11 get it tomorrow?
Well, then you'll get it in the papers. Every paper

in the world will carry it.

E:

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.

E:

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

it forwarded wherever I am.
H.M.Jr:

What address?

E:

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

H.M.Jr:

M.S.?

-7 E:

M.S. - Ogden, Utah.

H.M.Jr:

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

E:

S S.

H.M.Jr:

M. S. Eccles.

E:

Ogden.

H.M.Jr:

Ogden, Utah.

265

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

E:

Union.

H.M.Jr:

Right.

E:

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

H.M.Jr:

Hello.

E:

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.

E:

(Laughs) Who says that?

H.M.Jr:

Ransom. He says it's all right with him. He says you

E:

I can.

H.M.Jr:

Yes.

E:

Well, I'm - I'm scheduled to stop at - I'm going to

H.M.Jr:

Yes.

E:

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

H.M.Jr:

My God! Haven't they stood enough punishment over

E:

I don't know. (Laughs)

H.M.Jr:

(Laughe)

can take another week.

talk to the bankers over inTowa.

there?

266

-8 E:

I - J 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

E:

All right.

forward to seeing you.

E:

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

H.M.Jr:

Thank you.

E:

Goodbye.

H.M.Jr:

267
September 25, 1936
6:30 p.m.

Mallet:

- on che telephone.

Feis:

On the telephone?

Mallet:

Yes, and 80 I shall probably be coming straight down

F:

Right, sir -

M:

Are you at the Treasury now?

F:

I'll tell the Secretary.

M:

Will you tell the Secretary?

F:

I shall. He's in the Treasury and I'll just tell him.

M:

in a few minutes - as soon as I have got it.

You tell him that I'll be down as soon 88 I have
the message. It's being teken down at this minute
on the telephone.

F:

It will probably be a matter of 15 minutes or some-

F:

thing 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.

M:

Thank you.

F:

Right. Goodbye.

M:

September 25, 1936
268
6:35 p.m.
Operator:
H.M.Jr:

Yes, I've placed my call but they're going to complete
theirs.

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:
Operator:

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

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.

C:

I - I can hear you now.

H.M.Jr:

Go ahead.

C:

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

H.M.Jr:

Yes.

C:

And they telephoned from London that London had accepted

H.M.Jr:

Yes.

your proposition, and that Chamberlain was releasing
the statement at 12:30.

269

-2C:

H.M.Jr:
C:

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

H.M.Jr:

12:00 what?

C:

12:36 here now.

H.M.Jr:

Well, now the British Embassy here phoned -

C:

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.

C:

H.M.Jr:

Yes.

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

C:

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.

C:

They - they haven't communicated with you yet?

H.M.Jr:

H.M.Jr:

They called me at 6:30 Washington time. Hello Did they talk with you directly?
No, they have not.

C:

The Embassy?

H.M.Jr:

The British Embassy called me 6:30 Washington time,

C:

C:

H.M.Jr:

which is 12:30 Paris time.

Yes.

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

to the Secretary of the Treasury -

C:

Yes.

270

-3 H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:
C:

- and that they would be down here in about 30 minutes.
I see.
So you - which means they'11 be here now in about 20

minutes.

Yes, but Monick told the French that they - the English wanted to release the statement of 12:30.
Well, they won't do that It actually is being released in England.
.

H.M.Jr:

No, no, no.

C:

Well, that - that's what they say.

H.M.Jr:

No, no.

C:

And 80 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:

H.M.Jr:

I see.

Now the - the English are on the way down. Now don't
let them make a mistake.

C:

All right.

H.M.Jr:

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

C:

Yes.

H.M.Jr:

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

C:

I see.

H.M.Jr:

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

C:

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

271

4H.M.Jr:

That's right.

C:

But
Monick said just the contrary, you see, to people
here.

H.M.Jr:

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

C:

Yes - I'm - I'm very much aware of that.

H.M.Jr:

Now please - please ask the Minister whether he won't

wrong information.

wait until he hears from me. Now don't let's spoil
this by not waiting for a half an hour.

C:

Well, let me turn to him now and ask him.

H.M.Jr:

All right.

C:

Hello.

H.M.Jr:

Hello - I've got plenty of time.

C:

H.M.Jr:

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

C:

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.

C:

Hello.

H.M.Jr:

Hello.

C:

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?

-5H.M.Jr:

272

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

C:

H.M.Jr:

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

C:

Yes.

H.M.Jr:

- that he was taking down over the telephone -

C:

Yes.

H.M.Jr:

- a message of the Chancellor of the Exchequer for

me.
C:

Yes.

H.M.Jr:

I have not seen what's in it.

C:

Yes.

H.M.Jr:

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

C:

Yes.

H.M.Jr:

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

C:

Fine.

C:

Now what I'll do is - I'll put - if you want me to,
I'll hold this call, or - I can hold this wire open.
Let's hold this call open.

H.M.Jr:

Well, who's -

H.M.Jr:

C:

H.M.Jr:
C:

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.

0:

Yes.

273

-6H.M.Jr:

Hello,

C:

Hello.

H.M.Jr:

Will you please tell the Minister of Finance this:

C:

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.

C:

Yes.

H.M.Jr:

They have given me their word of honor that they will

C:

H.M.Jr:

not release it.

Yes.

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

C:

All right - fine.

H.M.Jr:

Now, Monick has lied a number of times.

C:

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 misirformation.

C:

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.

C:

Yes. All right.

H.M.Jr:

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

C:

All right. Fine.

274
H.M.Jr:

Now will you please tell him that.

C:

All right.

H.M.Jr:

Now I'm right here (Pause)

H.M.Jr:

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

Operator:

Hello.

C:

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.

C:

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

H.M.Jr:

What's that? What's that? Hello.

C:

Hello.

H.M.Jr:

What's that?

C:

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

H.M.Jr:

Yes; what did he say?

C:

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

H.M.Jr:

Yes.

C:

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

H.M.Jr:

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

275

-8C:

Well, we will - we'll hold it.

H.M.Jr:

Yes.

C:

And you - Just keep the line open 80 that we can
get you.

H.M.Jr:

C:

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. Baumgartner
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.

C:

I - I really think so, too.

H.M.Jr:

Yes.

C:

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

H.M.Jr:

Yes.

C:

- in which they are issuing this.

H.M.Jr:

Yes.

C:

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

H.M.Jr:
C:

Yes.

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

H.M.Jr:

Yes.

C:

Then the French text follows.

H.M.JT:

Yes.

276

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

C:

that. Nothing at all.

H.M.Jr:

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

To read what?

C:

H.M.Jr:

Well, just to change it 80 that it reads "United

States Government" instead of the "French Government."

C:

Yes. Yes.

H.M.Jr:

Just a minute.

C:

And -

H.M.Jr:

Wait a minute. Cochran - Cochran.

C:

Yes.

H.M.Jr:

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

C:

He's there now, is he?

H.M.Jr:

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

C:

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

H.M.Jr:

I'll talk to Mallet.

C:

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

to hold this open.

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

C:

Yes, absolutely.

H.M.Jr:

You do?

- 10 -

277

C:

Yes.

H.M.Jr:

You understand that?

C:

Yes, because they read this text from here.

H.M.Jr:

Pardon me.

C:

I say, the French repeated our text with amendments

H.M.Jr:

Yes.

C:

And the British said they accepted it entirely.

H.M.Jr:

They have?

C:

Exactly.

H.M.Jr:

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

H.M.Jr:

Hello.

C:

Hello.

to the British -

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.

C:

Fine.

Mr. Auriol: Hello.
H.M.Jr.:
Bon soir, M. Auriol.
Auriol:

(Speaks French)

H.M.Jr:

Oui.

A:

(Speaks French)

H.M.Jr:

Le Meileure felicitation.

A:

Pardon.

H.M.Jr:

(aside: I can't - )

A:

Pardon.

H.M.Jr:

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

Bonne chance A:

(Speaks French)

H.M.Jr:

oui x oui (Aside: 'Then a goodnight')

- 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:

Auriol:

I wish you the best of success.
(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:

Auriol:

Yes, who is this, please?
(Speaks in French) -

H.M.Jr:

Well, I just wish you great success, Mr. 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.

Auriol:

One moment.

278

279

- 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.

C:

H.M.Jr:
C:

H.M.Jr:
C:

H.M.Jr:
C:

Fine - fine. I'll - I'll explain to him.
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'll 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.

C:

Goodbye.

H.M.Jr:

Good night.

C:

Good night.

3c

September 25, 1936.
9 P.M.

H.M.Jr:
Geo.

280

Hello - hello

Harrison:

Hello - Henry?

H.M.Jr:

Yes George.

H:

Well I want to congratulate you.

H.M.Jr:

Thank you.

H:

I called you as soon as I got a release.

H.M.Jr:

Yes.

H:

And you were busy withthe press then.

H.M.Jr:

Yes.

H.M.Jr:

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:

Oh excellent.

H.M.Jr:

Excellent.

H:

Everywhere.

H.M.Jr:

Fine.

H:

H:

H.M.Jr:
H:

A good deal of curiousity is to what the French
going to do.
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 know and I
suppose it won't be known until they put it up to
Parliament.

H.M.Jr:
H:

H.M.Jr:

That's right.
I think that's as good an answer as I can give.
I think 80.

281

-2And - but the statement - they think it 18 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 to protect the
of these banks around here and I don't
think any of them have to do it.

H:

H.M.Jr:

Yes.

H:

But I

H.M.Jr:

Yes.

H:

And I think it should relate not merely to the franc
but to other exchanges as well.

H.M.Jr:

That's right.

H:

Because
the franc.others will be weaker tomorrow perhaps even

H.M.Jr:

That's right.
There's no point in there starting to raise the

H:

guilders, the Swiss franc or the pound.

H.M.Jr:
H:

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 tomorrow.
as quiet as is possible
to make
it

H.M.Jr:

That's right.

H:

And everyone with whom I've talked has assured me

that 80 far as they're concerned that's what will

happen.

H.M.Jr:

Ah ha. How about some of the private banking

H:

Well I've - I've got a list from these reports

institutions.

that we get - the exchange does that you see -

H.M.Jr:

- Yes

282

-3 H:

- 15 or 16 figures for all of them.

H.M.Jr:

Yes.

and I'm going to cover all those.

H:

H.M.Jr:

Yes.

H:

And tomorrow I'll cover some of the smeller ones

H.M.Jr:

Yes. Well has anybody attempted to buck you?

H:

Buck me?

H.M.Jr:

Yes.

H:

Not one.

H.M.Jr:

Have you talked to Laval.

too.

H:

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.

H:

It's a slow business. It's been awfully hard to

H.M.Jr:

Ah ha.

H:

There's more of them out of town, or away or don't

get people tonight.

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.

H:

And they seem very happy about it.

H.M.Jr:
H:

Well I had a Press Conference which lasted 35 minutes,
which is a long one for me.
Yes.

H.M.Jr:

283
-4And I didn't have - I mean I had some of the star

H:

Yes.

H.M.Jr:

Now I think five weeks before an election, that is

H:

Very good.

H.M.Jr:

What?

H:

Very good.

reporters here from Washington and I didn't have a
single unfriendly question.

remarkable.

H:

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.

H:

There's only one - I don't even remember who it was

H.M.Jr:

H.M.Jr:
H:

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 Yes:

'One constant object of which is to maintain the
greatest equilibrium, and so on in the international
exchanges -

H.M.Jr:

Yes.

H:

- 'and to avoid the creation of any disturbance of

H.M.Jr:

Yes.

H:

That - that word 'reaffirm' -

H.M.Jr:

Yes.

H:

Is - is subject to a little bit of question on - on

H.M.Jr:

Well.

H:

But that - I didn't notice it myself.

H.M.Jr:

Ah ha.

that system by American monetary action.

that basis.

-5-

284

But that's the only thing that anybody has said

at all about it.

H.M.Jr:

Well -

H:

It wasn't really unfriendly -

H.M.Jr:

- No

H.M.Jr:

It just - you know.
I know. Well if that's all they canfind - have

H:

But nobody was looking for it - I mean everybody's

H:

H.M.Jr:

H:

the reporters been calling you?

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.

H.M.Jr:

He got a copy of this.
Well both Williams and Knoke were both helpful.
Well I'm glad to hear that.
Most helpful.

H:

Well that is first rate.

H.M.Jr:

Thank you.

H:

Well I'm much obliged to you.

H.M.Jr:

Thank you.

H:

Good job.

H.M.Jr:

Good night.

H:

H.M.Jr:
H:

H.M.Jr:

Good night to you. Get a rest tonight.
I think so.

H:

All right.

H:

September 26, 1936. 285
11:48 a.m.

H.M.Jr:

Hello

Operator:

Mr. Knoke: - Go ahead.

H.M.Jr:

Knoke

K:

Yes Mr. Secretary.

H.M.Jr:

Don't tell me you put the price of sterling up
again - I can't stand it.
No - I - I haven't done anything but the price has

K:

lifted itself - it's 4.97 about.

H.M.Jr:
K:

H.M.Jr:

(Loud and long) No

But the fact 16 I think you could call it 4.99 and
you wouldn't get any, only I wouldn't Listen - we'll close the market at four - wait a
minute. (Aside to someone in his office. 4.99 -

H.M.Jr:

Is there somebody paying $4.97?

K:

Well $4.97 was bid - yes - about five minutes ago.

H.M.Jr:

Well what do you recommend?

K:

Well I - I wouldn't go beyond that. If you want to make your bid at the closing $4.97 - I think you can
do it.

H.M.Jr:

Make my bid what?

K:

$4.97.

K:

$4.97. it is.
Yes but then call it a day after that.

H.M.Jr:

Then we'll call it a day - and a damn good one.

K:

(Laughter)

H.M.Jr:

And listen -

K:

Yes.

H.M.Jr:

-2H.M.Jr:
K:

K:

H.M.Jr:

286

I've struck off my list Russian Bodka.
You did? (Laughter)
Yes - I don't think they'11 give you any more after
this.

K:

No, from now onI take Norwegian caviar.
on I see.

H.M.Jr:

Yes.

K:

All right, sir.

H.M.Jr:

Yes.

H.M.Jr:

I hope it will agree.
I hope so. Well -

K:

Then we'll do that.

H.M.Jr:

Now - now that it's out and I've done - done it - is

K:

You mean the statement?

H.M.Jr:

Yes.

K:

Well - all I can - I wouldn't have done it,

K:

it all right?

Mr. Secretary.
H.M.Jr:
K:

But now it's done.

Now it's done - I - I think you may get reactions
which you won't like.

H.M.Jr:

That's - from where?

K:

Well - from Moscow.

H.M.Jr:

Good - swell.

K:

All right sir - if that is -

H.M.Jr:

Sure - fine - grand.

K:

All right.

-3 H.M.Jr:

Let them explain.

K:

I hope it won't get the Chase into trouble.

H.M.Jr:

237

No, no, no, no, no, no, no, no, no, no - No
no, no, no, no, no, no, no, no, no

K:

But -

H.M.Jr:

Say listen I'll make more money for the Chase

than they'll ever make out of Russia.

But Mr. Secretary let me point out one thing that
you have - that hereafter you'll have to talk about
the Stabilization Fund -

K:

H.M.Jr:

No.

K:

You have refused heretofore.

H.M.Jr:

No - only in great great emergencies.

K:

I see.

H.M.Jr:
K:

H.M.Jr:
K:

It's all right. Take my word for it.
All right, sir. As long as you're not afraid of
Moscow, it suits me.

I never have been yet. O.K. Well thanks very much $4.97.

$4.97. Mr. Secretary, I never had a chance last
night to express my appreciation of the very great

kindness I had in Washington.
H.M.Jr:

Well I appreciate your assistance.

K:

Thank you.

H.M.Jr:

We'll do it again some time.

K:

All right, sir.

H.M.Jr:

Goodnight.

September 26, 1936
11:50 a.m.

.M.Jr:

Hello

Operator:

Mr. Knoke. Go ahead.

H.M.Jr:

Hello - Knoke.

238

Yes, sir.

K:

H.M.Jr:

I just went to get the thing straight. There

seems to be a little mixup between Lochhead and

myself - hello?
Yes.

K:

H.M.Jr:

Did I understand correctly that the British gave
you an order to buy three million pounds Sterling

K:

at $4.90 because they knew about the Russian order?
No - no - no

H.M.Jr:

They did not know about it?

K:

No. They called in for the purpose of telling
us that they would like to - they would not want to
see Sterling go below $4.90.

H.M.Jr:
K:

H.M.Jr:

Oh. But they did not know about the Russian order.
They did not know about it.

All right. Well - I just wanted - there was a
little mixup - they - I thought you said they gave
you the order because they did know about the

Russian K:

Oh no - no - no - no.

H.M.Jr:

O.K.

K:

Yes sir.

H.M.Jr:

Look

K:

Yes.

H.M.Jr:

The Secretary of State isn't worrying about Moscow
80 don't you.

-2K:

No, I expect to see a good polo game this
afternoon without giving any thought to Russia.

H.M.Jr:

All right and, as far as I'm concerned, they

239

better behave themselves.

K:

(Laughing) Yes.

H.M.Jr:

Yes.

K:

All right, sir. Oh, by the way, Cariguel is calling

againknow
and he
Iindon't
- wants to keep in touch with me tomorrow,

H.M.Jr:

Fine.

K:

Would you be at the -

H.M.Jr:

I'm at Beacon 211

K:

Beacon 211.

H.M.Jr:

New York.

K:

Yes.

H.M.Jr:

Yes.

K:

All right, sir.

H.M.Jr:

I'm available any time.

K:

Beacon 211

H.M.Jr:

Beacon, New York, 211

K:

Thank you.

H.M.Jr:

All right.

K:

Good night, sir.

H.M.Jr:

Good night.

290
September 26, 1936
12:15 p.m.
Operator:

Go ahead.

H.M.Jr:

Knoke?

Knoke:

Yes, sir.

H.M.Jr:

Be
surebid.
that the newspapers know that sterling closed
at 4.97

Knoke:

Yes.

H.M.Jr:

Will you arrange that with Burgess?

Knoke:

Ah -

H.M.Jr:

You want - I mean that the - that the official

Knoke:

That - that - I'll do it through the banks. I'll because
official -you see there's no - no such thing as an

H.M.Jr:

I know but I'm very anxious that the price is to be
the last one. The first we had here was $4.94.

Knoke:

Yes.

H.M.Jr:

I want - I'm very anxious to have it - that it goes
out into tomorrow morning's paper that it W&S 4.97.

Knoke:

Yes. All right, I'll talk to Burgess.

H.M.Jr:
Knoke:

Will you surely take care of that?
Yes, I will.

H.M.Jr:

Thank you.

September 26, 1936

231

At 10 minutes of 9:00. H.M.Jr. told Mrs. Klotz that he had informed Burgess that he could have $25,000,000 to buy bonds; that we

should not follow our usual policy of staying under the market, but
that we should fight any effort to push the bond market down; that we

were the only market in the world of any importance that was open and
what we did in the Government bond market would show our confidence in
this new agreement and would set the financial tone for the whole world,
The Secretary remarked to Mrs. Klots, "What we buy today will

look very cheap a week from now."

George Harrison told H.M.Jr. this morning that he talked to the
bankers last night and they said that this move will re-elect Roosevelt;
that it is the greatest political move that has been made; that the only
person he had trouble with was Frank Altschul, but that after great
argument with Frank Altschul, he (Altschul) sent cables to his London
and Paris branches telling them to lay off speculative dealings in foreign exchange tomorrow.

At 9:10 the Dow-Jones ticker reported sterling at 4.94. Mr.
Lochhead told the Secretary not to worry, but H.M.Jr. decided to call
Knoke and talk to him about it.
He said to Knoke, On the Dow-Jones ticker it just said that
sterling was $4.94. Isn't this just a nominal figure? Who did business

on that basis? Here is the thing I want you to think about. If it goes
out in all the papers that the pound was $4.94, that will react in our
disfavor. Is there anything we can do to put the pound up? I do not

like it at $4.94.

"I will buy $1,000,000 worth of sterling at the best price you can

buy it at, right now. This is a public relations matter. You say that
the British gave the Federal Reserve an order to buy 3,000,000 pounds

at $4.90 or $15,000,000 worth of sterling, and I said that I will buy
$1,000,000 worth of sterling at the best price you can buy it.
"I am very pleased that the Bank of England is delighted that we
have given them an order to buy up to $100,000,000 of gold."

H.M.Jr. called Knoke at 9:25. "I hear that Holland wants to
know whether we will renew our offer to buy $10,000,000 worth of gold.
The answer is, Yes. How are you doing on the order for $1,000,000 worth
of sterling?" Knoke reported that he had bought 50,000 pounds at $4.91.
Knoke also reported that the Russian Government has an order in

to sell 1,000,000 pounds sterling at best. H.M.Jr. inquired, "Why
didn't you tell me that before? That is what As pulling sterling down.
I knew there must have been something causing it. Pull out all buying
orders and communicate with the Chase and tell them that you will buy
that 1,000,000 pounds sterling."

-2-

292

He then talked to Governor Harrison. He said, "Knoke should have
told me immediately this morning that the Russians have an order in to

sell 1,000,000 pounds sterling at any price, but ne didn't do it. I

told him to pull out all of our orders on foreign exchange and deal
directly with the Chase Bank. I want to buy that 1,000,000 pounds

sterling. Will you follow it for me personally, please? They are try-

ing to break down this agreement and I am calling the President and want
to ask him whether I can give this out publicly. The Communist Govern-

ment is trying to break this thing. I want to buy that 1,000,000 pounds
sterling at whatever price is necessary."

H.M.Jr. spoke to the President at 25 minutes of 10:00. "Everything clicked all around and everybody is so happy. There is not a sour
note anywhere. Harrison spoke to 15 or 20 bankers last night and told
them to lay off, and the only one he had trouble with was Frank Altschul
and he finally got him to agree. He talked to the bankers and they all
said that this is going to re-elect you. Sterling dropped to $4.94 so
I told them that we would have to go after it. I kept saying, What is
the matter with sterling? Then the English came in with an order for
$15,000,000 at 4.90. Still I could not get what was the matter. Then
I discovered that the Russian Government gave the Chase Bank an order

to sell 1,000,000 pounds sterling at any price. I then told the Federal
Reserve to withdraw all of our support in the market and deal directly
with the Chase and buy that million pounds sterling. If they sell it,
I want your permission to announce that the Russian Government tried to
break this thing and that we bought the 1,000,000 pounds sterling that
they had ordered dumped on our market. Before I actually do it, I want
to call you back once more. The negotiations are going on right now between the Federal Reserve Bank and the Chase. Those bastards want to

break this thing so that Blum cannot get his support. In talking to

Paris this morning they said that the only people who are fighting Blum
on this is the Communist party. We are the only market that is open
and they are trying to break the market here."
H.M.Jr. called Governor Harrison at 9:45. He asked, "Is Knoke
with you? Have we cleaned that up? Are they through over there? Is
it true that the Russian Government used the Russian State Bank? Do
you mind if I call up the Chase myself?" Harrison said it was the
Russian State Bank and they had 1,000,000 pounds to sell in our market
"at best".
H.M.Jr. then said to Governor Harrison, "I am going to give this

out. I have the President's authority. If you want me to, I will call

up Funk, of the Chase, and tell him what I am going to do. I want to
serve notice on the world that we are not going to let anybody 'bust
this thing." Governor Harrison objected strenuously to Mr. Morgenthan's
making this transaction public. However, H.M.Jr. assured him that he
would get permission from the Chase Bank before he did anything and that
when he did he would not give out the name of the Chase Bank.

283
-3-

H.M.Jr. next spoke to Knoke. He said to Knoke, "Now, 60 after

it and see what else there is in the market. It ought to be easy to

clean it up now." Knoke advised the Secretary that he had bought
900,000 pounds sterling from the Chase, 100,000 pounds sterling already

having been disposed of.

Immediately after this call, H.M.Jr. called Mr. Aldrich of the
Chase, but he was out. He asked for Mr. Campbell and he was out. He
then was connected with Mr. Schmidlatt who was the executive officer next
in rank.

H.M.Jr. asked him, "Would you mind sending for Funk while I am
talking to you?" Schmidlatt asked, "Who is Funk?" H.M.Jr. answered,

"Funk is your foreign exchange man." Schmidlatt said, "Then I will also

send for Rovensky."

H.M.Jr., speaking to Mr. Schmidlatt, said, "The Federal Reserve
has just bought from you, for account of the Treasury, 900,000 pounds
sterling. The Chase said this was an order that the Russian State Bank

had given them to sell 'at best's We appreciate the cooperation. What
I would like to do is to an nounce to the press that the Russian State
Bank placed an order to sell 1,000,000 pounds sterling 'at best' I
will not quote the Chase. I appreciate the courtesies between the Chase
and the Federal and that is why I am calling you personally. This is of

such importance I cannot help but feel that they did this for political
purposes. It will have a more healthy effect to announce that they
placed this order and I bought it." Mr. Schmidlatt said, "You are not
going to announce the fact that we did this?" H.M.Jr. said, "I would
not think of mentioning your name."

Schmidlatt said, "Why should we not discourage this?" H.M.Jr.
answered, "I would much rather that you do it and then we would know

what is going on." Schmidlatt, "You don't want us to discourage it?"
H.M.Jr., "If you refuse it, it will go some other place and I would not

be able to trace it. I want you to handle it and we will take it."

Schmidlatt said, "Funk and Rovensky just came in. That was an order
for 900,000 pounds." H.M.Jr., "Was it not an order for 1,000,000?*
Schmidlatt answered, "Their aggregate order was 1,200,000. We sold
900,000 to the Federal and 300,000 to the market. We will continue in

that way." H.M.Jr. said, "What I am going to do, unless you object, is
to tell the press that the Russian State Bank gave an order in New York

to sell 1,000,000 pounds sterling at best." Schmidlatt said, "I do not
see how we can interfere if you keep our name out of it." H.M.Jr.
inquired, "Don't you think it is a good move?" Schmidlatt said, "I

should think it will act as a deterrent. I think it is all right."

H.M.Jr., "Thank you very, very much."

H.M.Jr. called Knoke at 7 minutes after 10:00. Knoke said, "I
am bidding 4.94 1/2 and I have not bought anything. There are only two
items in the market, which are absolutely speculative. One from

204
Csechoslovakia for forward delivery. I think we should stop this transaction." H.M.Jr. asked, "Is it 30 or 90 days?" Knoke answered, #30
days. It is 50,000 pounds. It is Petcheck & Company, who is a gambler."
H.M.Jr., "No, don't buy that.' Knoke, "I have called four banks and none
of them has any sterling to offer." H.M.Jr. asked, "Should I say anything to the press about Petcheck." Knoke replied, "No. Absolutely no."
H.M.Jr. then called Governor Harrison. "I talked to Mr. Schmidlatt
who had Funk and Rovensicy in his office. He is entirely satisfied and
he thinks that it is a good move. I said I would not mention the bank.
His reply was, "Do you want us to stop doing this business?' and I said,

'No, because if you do I will not know that it is being done. Harrison

answered, "I have been scouting around. Lasard called me up and said

that they did not have a single order to buy or sell. They bought 15,000
pounds on an outstanding order that they have. I understand the total
purchases have been between 80,000 or 90,000 pounds. The reason I am

mentioning this to you is that it is not the transactions nor the sales,
but just what the bids and offers are priced at in the market."
H.M.Jr. said, "As long as I have a clearance from the Chase, I want

to do it." Harrison said, "I do not want you to get the idea that the

price of sterling has come down because of selling. I do not object to
your statement to the press." H.M.Jr. said, "I want to give notice to
the world that we will not let Russia or anybody else wreck this thing."
Harrison: "As long as the Chase is satisfied, I am satisfied."

H.M.Jr. called the President at 10:20. He said, "I have just
talked to the Chase and have a clearance from them. They had an order
from the Russian State Bank to sell 1,000,000 pounds sterling 'at best'

and I am going to say so. We paid 4.92 1/2 for the sterling offered
by Russia and sterling is now 4.94 1/2, and with the exception of one
little order from a speculator in Csechoslovakia every other order in
New York is for buying. The stock market is up 2 points. Cotton is up.
Wheat is just the same, and corn is fractionally off. The Government
bond market is very bullish. With your permission, I am going to announce

this and I am going to tell them that for the first time since the stabil-

isation fund exists, I am going to tell them what I have done. Harrison
did everything to stop me from doing this. He said it would be a breach

of confidence if I did this to the Chase. I told them I would talk to
the Chase and I did."

H.M.Jr. here gave the President the gist of his conversation with
Schmidlatt. The Secretary then said to the President, "That answers
Hearst. When would you like to see me?" The President asked H.M.Jr.
to come over ith Mrs. Morgenthau to tea at Hyde Park tomorrow afternoon.
H.M.Jr. then called Mr. Knoke and told him to bid 4.95. Knoke
said he told four banks to let him know whether there is any sterling
bid and there is none.
Press Conference at 10:40.

285

Sept. 26, 1936

In a radio address, May 13, 1935, on
"The American Dollar", Secretary Morgenthau said:
"You have heard the argument thet we should

stabilize by declaring that we will not change the
If we launched
present gold content of the dollar
out alone on such a course, it would put us right back
where we were in 1932.
"We realize the importance of world prosperity,end
will evade no opportunity to essist in that direction except the ever-present opportunity to donate
prosperity at our own expense
"The world should know that when it is ready to
seek foreign exchenge stabilization, Washington will not

be an obstecle.

Before we make any commitments, we must

be be sure that we will not lose what we have just
regained. We are not unwilling to stabilize. . Our hands
are untied."
In a press release May 18, 1936, at the completion
of conversations with representatives of the
Chinese Ministry of Finance, Secretary Morgenthau said:

"I believe that only through full end frenk

exchenge of views similar to that which he s just taken
place between the representatives of the Chinese

Ministry of Finance and ourselves will it be possible to
improve the internal stability of national currencies
and with this achieve a greater international

stability."

On Sept. 4, at Springfield, 111., after a

long-distence telephone conversation with Secretary
Morgenthau at Was ington, D. C., President Roosevelt
said:
"I have been telking to the Secretary of the Treasury
in regerd to new finencing. I might add that the obligations
of the government- of the United States- are on e sounder

basis of credit than ever before in its history."
(N.Y. Herald- ribune version).

On Sept. 15 the New York Times and other

papers, reporting e "hite House press conference, used
as a lead a statement (New York Times version):
"President Roosevelt indicated again today that the

world situation might cause him to restrict his
campaign activities. He seid that e projected trip to the
Pacific Coast was being held in abeyence to see what
developments occurred between now and the first of Octo

236
PRESS CONFERENCE

September 26, 10:40 A. M.

H.M.Jr.: I would like to read you gentlemen paragraph 5 of my

statement of last night - just draw your attention to it - in which

I said "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 realise 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".
Now, I found this morning, on making inquiries, that somebody
was driving down the pound sterling and they succeeded in driving it
down to 4.91.

Q.- From what?

A.- From yesterday's 5.02. On making inquiries, I found that

the Russian State Bank had given an order to sell 1,000,000 pounds

sterling at best, which means at any price. When I learned this, I
bought their sterling. I bought what they wanted to sell. I bought
with the Stabilization Fund's money the sterling the Russian State
Bank was using to depress sterling with. This is the only case, the
only incident today, of any Government, any bank, or any individual

trying to artificially influence the foreign exchange markets in the
United States and I point out that both London and Paris are closed
and I sincerely hope that this incident will not be repeated.
Q.- Mr. Secretary, could you give us a little explanation what

the gain to Russia would be?

A.- You will have to ask the Russians that.
If you don't mind, I would like very much to get this on the

wire before the markets close.

Q- May we come back and see you?

A. - Yes, you may come back and see me. and I will give you all

the time you want.

207
PRESS CONFERENCE

September 26, 11:13 A. M.

H.M.Jr.: This is just to give the New York Herald-Tribune

an opportunity to ask some questions.

Mr. Kittner: Yes, we have a lot of questions, but it's more

for information.

H.M.Jr.: All right.
Q.- I asked you before, what would be the gain to Russia,

and you said you didn't know.

A.- I sai d you would have to ask the Russians.

Q.- Off the record, or for background, or something, couldn't

you answer it?

A.- No. I am sorry, I can't go beyond that.
Q- The monetary gain would be pretty small.

A.- Yes.

Q.- There wouldn't be any, as a matter of fact, if it was

maintained at $5.00. Isn't it something deeper than any monetary
gain?

A.- I really don't want to get into it. I am getting on

pretty ticklish ground. You people are smart. You can put 2-and2
together.

Q.- Do you think the State Department could throw any light

on this?

A.- I wouldn't say that.
Q.- Do you think it was a mistake to recognise Russiat (laughter).

A.- I made a flat statement and I really can't add to it. You

fellows are smart, you can draw any conclusions you want.

Q.- Do you think possibly Russia is acting with some other

Government?

A.- I don't know that. I don't know.

All I know is as

Herbert Lehman says, #I am just a businessman".

q. At what hour did you discover that the pound sterling was

dropping?

-2-

238

A.- If you don't mind, why do you ask that?
Q- I just wondered what the hour was.

A.- I would say, after the market was open about 3/4 of an
hour.

Q- And then you gave your order as soon as you discovered
who was acting, or very soon thereafter?
A.- Immediately.

Q.- At what price did you buy?

A.- I will tell you this: at a price where the United States
Government already has a handsome profit - at a price which gives the
United States Government a handsome profit.

Q- I wonder why Great Britain didn't step in and do her own
buying

A.- This is our market and she is closed. London is closed
and this is our market.
Q.- Could not the Bank of England have given orders to buy over
here if they wanted to?

A.- They could but I think it is up to each country, and we have

a Stabilisation Fund which was created for this purpose, to even out
sharp differences, sharp swings. That's what the word "stabilized"
means, to even out any sharp swings. That's just exactly what the
Stabilization Fund was created for.

Q.- What would have been the effect of this move if you had not

purchased sterling, as far as stabilization of France, Great Britain
and this country.

A.- You have the significance of this. I can't answer. It's
too ticklish. You have it right there, but don't bring me into it.
O. K.T

Q- Sure.
Did you get the whole amount that the Russian Bank offered?

A.- If I didn't, I got alrost all of it. I got practically all.
Q.- Who got the rest?

A.- There is no way of telling, but I got the bulk.
Q.- It was on the market and you bought it?

-3-

239

A.- I do n't want to go into details. It was there, they
offered it, and I got it. It was offered at any price and I took

it and I got the bulk.

Q- Does this affect the hopes of your "gentleman's agreement".
men.

A.- As far as the gentlemen are concerned, we are still gentleQ.- Do you expect any more tests to come today?

A.- If they should, we are ready. As I said before, I hope that

no-one will try this again and if anybody does, maybe we will have to
crack them over the knuckle. I guess you'd better not say that.

&- How far are you willing to go on this thing?
A.- The limit.
Q- Which is what?
A.- $2,000,000,000 less $5,000,000. and you can do your own
arithmetic.

Q- Aren't there any profits in there yet? I should think there

would be some profit.

A.- There is.
Q.- I should think you would use that.

A.- Yes, I can use the profit. Let's just say we will use the

limit and then there are profits. I think that's about all there is.

There is a statement coming on - but don't put this on the wire - a
country has sent a cable offering its full cooperation to the State
Department. The State Department is sending it over and is asking

us to release it and Herbert will have it - a very fine statement of
cooperation.

300
Q. Could we use it without naming any particular country?
A.- Oh, no, the country will ba named.
Q.- Could we use it now?

A.- No. just wait. It will be coming over in a half hour or

so. But they called up to say there would be a message and Mr. Hull
asked us to release it from the Treasury Department.

Q- Have you discussed this with the President?

A.- Frequently. I have talked to him twice today, and I have
talked to him every day, and I have talked to him in practically
every freight yard and railroad station in America, and I have talked
to him at 11:00 o'clock at night and in the wee hours of the morning.
Q.- Did you talk to Paris and Great Britain this morning?
A.- No, but on every move I have been in consultation with the
President and he has been perfectly magnificent. He has dropped
whatever he was doing in order to give this matter first consideration.
Day and night, if I called him, he has been available. He has been
perfectly magnificent in the support that he has given me and I just
could not have accomplished this thing without his assistance and
support.

E.- Did you talk to him specifically before you gave the order

this morning?

A.- Don't ask me that. There has not been a day in two weeks
that I have not talked to him at least once on the telephone or there
has been a telegram, and we kept the telegraph wire at the White
House burning with messages constantly.

Q- Then you expected this move for two weeks?

A.- I told the boys last night it started about the first week

in September.

Q.- Did the President express any comment on this move by the

Russian State Bank?

A.- I can't quote him but I have been in constant communication
with him any time, day or night, that I wanted his advice and help.

and I have gotten it, and he let everything else drop for this.

Q.- I wondered whether you were in telephone communication

with the Finance Ministers of the two countries, Great Britain and
France this morning?

301
A. - No, I have talked to Mr. Cochran, who represents - in
Paris - he is the First Secretary of the American Embassy - and
to Mr. Wilson, who is in charge there - Charge of the American
Embassy - and they both told me that this move has gotten an excellent reception in France.

Q- How about Great Britain?

A.- No. I have nothing. What I - going to do now is, I am
going back to the farm this afternoon, and the President asked Mrs.
Morgenthau and me to come to see him tomorrow, so I will see him
tomorrow.

Q.- On this general subject?
A.- Yes.

302

TELEGRAM SENT GRAY

MED

September 26, 1936
1 p.m.
AMEMBASSY

PARIS
371

TO COCHRAN FROM SECRETARY OF THE TREASURY.

The Secretary of the Treasury has requested ME to

cable you the following record of his press conference
this morning.

Quote Morgenthau said that action was taken after
he learned that someone is driving down the pound sterling.
In making the announcement he pointed out that a tripartite agreement between France, Great Britain and this
Government SEEKING to stabilize world currencies had

invited "the cooperation" of other nations. HE said
that he had learned this morning, however, that "some-

one is driving down the pound sterling." The sterling
was quoted at $5.02 yesterday and has sunk rapidly to

$4.91. "On making inquiries I found that the Russian
State Bank had given orders to sell 1,000,000 pounds

sterling 'at best' which means at any price," Morgenthau

said. "When I learned this I bought their sterling. I
bought what they wanted to sell with our Stabilization
Fund money, the sterling the Russian State Bank was using

to depress the pound. "This is the only incident to
date

303

MED - 2 - #371, September 26, 1 p.m. to Paris
date of any Government or any bank or any individual

attempting to try to artificially influence the foreign
Exchange markets in the United States." Morgenthau

pointed out that both London and Paris markets are closed.

"I sincerely hope that this incident will not be repeated,"
Morgenthau said. Someone asked the Secretary "What

profit the Soviet could hope to gain by this maneuvering".
Morgenthau replied: "You will have to ask the Russian
Government". The three fold "gentlemen's agreement"

aiming at EVEntual stabilization of world monetary conditions and resulting Equilibrium of trads, contained the
following paragraph which was carefully re-read by Morgenthau at an Emergency press conference this morning:

"The Government of the United States, in common with the
Governments of France and Great Britain, desires and

invites the co-operation 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 homper

the Effort to restore more stable Economic relations
which it is the aim of the three Governments to promote.
UNQUOTE.

Please give substance but not Exact phrasing to
Auriol.
HULL
S

304

September 26, 1936
TO: AMERICAN EMBASSY, LONDON
FROM: THE SECRETARY OF THE TREASURY

I am sending you below record of what took

place at the press conference this morning. Please
immediately give a copy to the British Treasury.
Quote Morgenthau said that action was taken
after he learned that someone is driving down the pound
sterling. In making the announcement he pointed out
that a tri-partite agreement between France, Great
Britain and this Government seeking to stabilize world

currencies had invited the cooperation of other nations.
He said that he had learned this morning, however, that
"someone is driving down the pound sterling". The
sterling was quoted at $5.02 yesterday and has sunk
rapidl$ to $4.91. On making inquiries I found that
the Russian State Bank had given orders to sell 1,000,000
pounds sterling 'at best' which means at any price,"
Morgenthau said. "When I learned this I bought their
sterling. I bought what they wanted to sell with our
Stabilization Fund money, the sterling the Russian
State Bank was using to depress the pound. This is
the only incident to date of any Government or any

bank or any individual attempting to try to artificially

305
-2-

influence the foreign exchange markets in the United
States." Morgenthau pointed out that both London and
Paris

markets are closed. "I sincerely hope that this

incident will not be repeated," Morgenthau said. Someone
asked the Secretary "What profit the Soviet could hope

to gain by this maneuvering". Morgenthau replied: "You
will have to ask the Russian Government." The three-fold
"Gentlemen's Agreement* aiming at eventual stabilization

of world monetary conditions and resulting equilibrium of
trade, contained the following paragraph which was carefully re-read by Morgenthau at an emergency press conference

this morning: "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 truststhat 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.

306

Chronology of Belgian Devaluation

March 18, 1935: exchange
Regulations
for controlwere
of gold
transactions
put and
into foreign
effect.
March 19th:

Cabinet resigned.

March 21st:

The belga began to drop sharply.

March 25th:

New cabinet formed.

March 30th:

Law was passed providing for ultimate devaluation
of currency to not more than 75% and not less than

70% of its existing gold parity, and for the

creation of an exchange equalization fund from

the profit arising out of devaluation.
March 31st:

The initial rate was fixed at 72% of former gold
parity.
The belga was stabilized at 16.95 cents as compared

with former rate of 23.54 cents.

The belga fluctuated uneasily from March 15th to March 21st,

declined slowly to March 24th, then rapidly to April 1st, at which
point it WAS stabilized.

307
September 26, 1936
12:15 p.m.
Operator:

Go ahead.

H.M.Jr:

Knoke?

Knoke:

Yes, sir.

H.M.Jr:

Be sure that the newspapers know that sterling closed
at 4.97 bid.

Knoke:

Yes.

H.M.Jr:

Will you arrange that with Burgess?

Knoke:

Ah -

H.M.Jr:

You want - I mean that the - that the official

Knoke:

That - that - I'll do it through the banks. I'll because-you see there's no - no such thing as an
official

H.M.Jr:

I know but I'm very anxious that the price is to be
the last one . The first we had here was 4.94.

Knoke:

Yes.

H.M.Jr:

I want - I'm very anxious to have it - that it goes

out into tomorrow' morning's paper that it was 4.97.
Knoke:

Yes. All right, I'll talk to Burgess.

H.M.Jr:

Will you surely take care of that?

Knoke:

Yes, I will.

H.M.Jr:

Thank you

ANSLATION

308
BELGIAN KMBASSY

Washington,

September 28, 1936.
No. 3479

Mr. Secretary,

Upon the order of my Government, I have the honor

to inform Your Excellency of the following:
1) The Belgian Government has learned of the
declarations by which the Governments of France, Great

Britain and the United States have considered it opportune to express their intentions with regard to the
monetary and economic problems existing at the present

time, and joins with them in affirming a common inten-

tion of safeguarding the peace, of favoring the establishment of conditions which will contribute to the
restoration of order through the international economic relations and to pursue a policy with a view to
developing world presperity and improving the standard

of living of all peoples.
2) To this effect the Belgian Government is docided to modify in no way the monetary policy which it
has carried out during the last year and a half and
which has had the effect of assuring the complete

stability of the Belgian franc on the international
exchange market, avoiding any disturbance of that
market.

Hic Excellency
The Secretary of State,
Department of State,
Washington, D. 0.

309

2
market.

3) The French Government, considering that the do-

sirable stability of the principal currencies cannot be
assured on a solid basis without a previous re-establish
ment of a durable equilibrium between the various national economies, has decided to propose for this purpose

to its Parliament the adjustment of its currency. The
Belgian Government, as well as the Governments of the

United States and Great Britain, considers that this
decision is of a nature to establish on more solid

foundations the stability of international relationships. It is ready to take part as often as it may be
necessary or useful in the consultations which may be
called, either between the interested Governments or
between the competent institutions.
4) The Belgian Government, as well as the Governments of France, Great Britain and the United States,
is moreover convinced that the success of the policy
above outlined is bound up with the development of
international commerce.

Particularly, it attaches the greatest importance
to the initiation of an action without delay with a
view to reducing progressively the existing systems of
contingents and control of exchange with a view to

their final abolition.
5) The Belgian Government, as well as the Governments of France, Creat Britain and the United States,

considers that the collaboration of the other nations
fes the realization of this program above mentioned is
highly

31G

highly desirchis. For this purpose, the Belgian Govemmont will remain always willing and ready to wring its
entire collaboration.
For the Ambassadors

PRINCE BE LYONE

sa VN a oe
PECHEIVER OE IBEVENKA
OFFICE

OFFICIAL COMMUNICATION TO

THE SECRETARY OF STATE

311
DEPARTMENT OF STATE
WASHINGTON

In reply refer to
WE

September 28, 1936

The Secretary of State presents his compliments

to the Honorable the Secretary of the Treasury, and

encloses a copy, in translation, of a note No. 3479
of September 26, 1936, received from the Belgian Embassy, relative to the policy of Belgium with respect
to the monetary and economic problems raised by the
decision of the French Government to recommend to the

French Parliament the readjustment of its currency.

Enclosure:
From Belgian Embassy,
September 26, 1936,

in translation.

8. 34
JAPAN-S MONEY POLICY

SEP 26 1936

TOKIO - JAPAN-S CURRENCY POLICY T IS
UNDERSTOOD WILL NOT BE AFFECTED BY DEVALUATION

OF THE FRANC - THE YEN WILL CONTINUE TO

BE LINKED TO STERLING - FINANCIAL AND INDUSTRIAL CIRCLES BELIEVE DEVALUATION WILL NOT
AFFECT JAPAN-S TRADE OR INDUSTRIES

-0-

DENMARK

DOW JONES

- September 26, 1956.

COPENHAGE T

COPENHAGEN EXCHANGE RULING

8,42

COPENHAGEN -UP- - THE ROYAL EXCHANGE SUSPENDED

FOR TODAY ALL DEALINGS IN FOREIGN EXCHANGE
EXCEPT IN ENGLISH

NORWEGIAN

SWEDISH AND

FINNISH CURRENCIES

-0-

SEP261936

313

GEERMANY

BERLIN

UNITED PRESS - September 26, 1936.

314

OR

Berbe
05 (if was PARKULES

NOT

GERMANY

35 10 INTERNATIONAL F LOVE

TAMAR

2
1

ITALY DOW JONES - September 26, 1956.
ROME

3

ITALY-S POSITION ON 3-POWER PACT 8.30

ROME - IT IS NOT EXPECTED THAT ITALY
WILL DEVALUE THE LIRE UNLESS IT IS DONE

IN AGREEMENT WITH OTHER GOLD CURRENCIES - IT

WAS POINTED OUT THAT THE LIRE ALREADY IS TO
A LARGE EXTENT DEVALUED EXTERNALLY

-0-

ADD ITALY-S POSITION 8.37

ROME - FINANCIAL EXPERTS LATER SAID THAT
-VERY LIKELY THE ITALIAN GOVERNMENT EVENTUALLY
WILL FOLLOW IN FRANCE-S FOOTSTEPS IN DEVALUING ITS CURRENCY PROVIDED AN AGREEMENT

IS FIRST REACHED WITH THE UNITED STATES
BRITAIN FRANCE SWITZERLAND AND HOLLAND AND BY
A GENERAL REVALUATION FOR THE STABILIZATION OF
CURRENCY-

THE BANK OF ITALY ORDERED ALL BANKS AND
EXCHANGE AGENCIES TO CEASE TRADING IN FRENCH

FRANCS EXCEPT IN EMERGENCY CASES FOR
INSTANCE TOURISTS WHO REQUIRE LIRAS FOR FRANCS

- IN SUCH TRANSACTIONS THE BANKS WILL
DISCOUNT THE FRANC AT APPROXIMATELY 25 PC

-0SEP261936

DOW JONES - September 26, 1936.

8.29

HEAVY LIQUIDATION IN FRANCS

VIENNA -UP- THE EXCHANGES IN CENTRAL

EUROPE HAD HEAVY LIQUIDATION OF FRENCH FRANCS
WHILE THE AUSTRIAN SCHILLING ADVANCED
THE FRANC WAS NOT QUOTED ON CENTRAL
EUROPEAN BOURSES AND OTHER GOLD CURRENCIES
WERE NOMINAL

-0-

316

AUSTRIA
VIENNA

317

UNITED PRESS - September 26, 1636.

WCNS36

VIENNA.--THE "BLACK" EXCHANGES IN CENTRAL EUROPE HAD HEAVY
LIQUIDATION OF FRENCH FRANCS TODAY WHILE THE AUSTRIAN SCHILLING
ADVANCED.

THE FRANC WAS NOT QUOTED ON CENTRAL EUROPEAN BOURSES AND OTHER
GOLD CURRENCIES WERE NOMINAL.

9/26--R953A

WCNS29

VIENNA.--THE ANGLO-FRENCH-AMERICAN AGREEMENT, COINCIDING WITH
REMOVAL OF LEAGUE OF NATIONS FINANCIAL CONTROL IN AUSTRIA, GENERALLY
WAS GREETED HERE AS A MOVE TOWARD WORLD STABILIZATION WHICH WILL

ULTIMATELY BE OF BENEFIT TO EVERYONE.

9/26--R928A

8:33 SEP20
LEAGUE CURRENCY ACTION

GENEVA -UP- THE LEAGUE OF NATIONS COUNCIL
CAUTIOUSLY ADVOCATED DEVALUATION TODAY AS

A MEANS OF CLOSING THE GAP BETWEEN PRICE
LEVELS OF GOLD STANDARD AND STERLING COUNTRIES
THE COUNCIL ACCEPTED REPORTS FROM ITS
FINANCIAL AND ECONOMIC COMMITTEES ON CURRENCY
PROBLEMS

-0-

ADD LEAGUE CURRENCY ACTION

GENEVA -UP- THE REPORTS POINTED OUT THAT

BEFORE AN INCREASE IN WORLD TRADE IS POSSIBLE
NATIONS MUST ESTABLISH INTERNAL EQUILIBRIUM THIS WILL MAKE POSSIBLE GENERAL ECONOMIC
RECOVERY THE REPORTS SAID
IN DISCUSSING THE ECONOMIC REPORT
ANTHONY EDEN OF GREAT BRITAIN ADVOCATED
-INTERNATIONAL CONSULTATION- WHICH WOULD LEAD
TOWARD THE REMOVAL OF -UNNECESSARY HINDRANCESTO TRADE

-0-

GENEVA

UNITED PRESS - September 26, 1936.

319

WCNS30

GENEVA.--DEVALUATION OF THE FRENCH FRANC WAS DUE TO THE CONVICTION
THAT ECONOMIC IMPROVEMENT IS INSEPARABLE FROM POLITICAL IMPROVEMENT,
FRENCH FOREIGN MINISTER DELBOS TOLD THE LEAGUE ASSEMBLY TODAY.

"THIS CONVICTION LED US TO UNDERTAKE WITH THE GOVERNMENTS OF GREAT
BRITAIN AND THE UNITED STATES THE CONVERSATIONS WHOSE CONCLUSIONS YOU

HAVE JUST HEARD ABOUT," HE SAID.

9/26--R930A

DOW JONES - September 26, 1936.

320

8.27
SWITZERLAND TO MAKE GOLD PAYMENTS IN
DOLLARS

SEP261936

ZURICH-UP- THE NATIONAL BANK OF SWITZERLAND
HENCEFORTH WILL MAKE GOLD PAYMENTS IN DOLLARS
INSTEAD OF FRENCH FRANCS BECAUSE THE DOLLAR

HAS A DEFINITE RELATION TO GOLD GENERAL
MANAGER E WEBER STATED TODAY

-0-

8'.35

ADD SWITZERLAND TO MAKE PAYMENTS IN
DOLLARS

SEP26 1936

ZURICH -UP- SWITZERLAND IS RESOLVED TO
MAINTAIN THE PRESENT PARITY OF THE SWISS
FRANC GENERAL MANAGER WEBER SAID
THE BANK MANAGER SPEAKING FOR

PRESIDENT OF THE INSTITUTION WHO IS IN BERNE
SAID THAT SWITZERLAND IS NOT AFRAID OF A
NEW SPECULATIVE ATTACK ON THE SWISS
FRANC - THERE WERE THREE REASONS FOR THIS LACK
OF FEAR HE SAID NAMELY
I - RECENT MONTHS HAVE PROVED THAT THE
SWISS FRANC IS INDEPENDENT OF THE FRENCH AS
SHOWN BY THE FACT THAT SWISS GOLD STOCKS
INCREASED CONTRARY TO DEVELOPMENTS IN FRANCE

2 - FOREIGN CAPITAL IN SWITZERLAND IS
RELATIVELY UNIMPORTANT

3 - THERE ARE NO POL:TICAL REASONS IN
SWITZERLAND IN ALARM CAPITAL

-0-

SEP261938

9.04

SWISS

FRANC TO BE DEVALUED

ZURICH-UP- THE FEDERAL COUNCIL DECIDED TODAY

TO DEVALUATE THE SWISS FRANC FOLLOWING SIMILAR ACTION ON THE FRENCH FRANC IN PARIS
-0-

9.45
ADD SWISS TO DEVALUE

BERNE - BY REUTERS - THE SWISS FEDERAL
COUNCIL HAS ISSUED THE FOLLOWING STATEMENT

AFTER A MEETING HELD THIS MORNING - -AFTER
HAVING TAKEN COGNIZANCE OF THE FRENCH DECISION TO DEVALUE THE FRENCH FRANC BY ABOUT 30
PC THE SWISS GOVERNMENT CONSIDERS THAT IN
THE INTEREST OF NATIONAL ECONOMY SWITZERLAND
IS EQUALLY COMPELLED TO ALIGN ITS CURRENCY

WITH THE LEADING CURRENCIES OF THE WORLD - THE
GOVERNMENT WILL SUBMIT ITS PROPOSALS TO BOTH
CHAMBERS OF PARLIAMENT ON MONDAY - THE STOCK
EXCHANGE WILL BE CLOSED MONDAY AND TUESDAY-

-0-

SWITZERLAND

322
UNITED PRESS - September 26, 1936.

WCNS20

BEANE
ZURICH.-- THE FEDERAL COUNCIL DECIDED TODAY TO DEVALUATE THE

SWISS FRANC, FOLLOWING SIMILAR ACTION ON THE FRENCH FRANC IN PARIS.

9/26--R912A
WCNS35

ZURICH.--THE NATIONAL BANK OF SWITZERLAND HENCEFORTH WILL MAKE
GOLD PAYMENTS IN DOLLARS INSTEAD OF FRENCH FRANCS BECAUSE THE DOLLAR

HAS A DEFINITE RELATION TO GOLD, GENERAL MANAGER E. WEBER TOLD THE
UNITED PRESS.

9/26--R951A

WCNS32

PLEASE MAKE DATELINE ON DEVALUATION OF SWISS FRANC, BERNE,
INSTEAD OF ZURICH AND ADD:

AN OFFICIAL COMMUNIQUE SAID THAT THE FRENCH PLAN FORCES SWITZERLANI
TO ADJUST THE SWISS FRANC TO THE LEADING INTERNATIONAL EXCHANGES.
THE COUNCIL DECIDED ALSO TO CONVOKE PARLIAMENT ON MONDAY TO FIX
THE RATE OF DEVALUATION.

9/26--R942A

8.26
BELGIUM
TO ADHERE
TO 3-POWER
nowed PACT
BRUSSELS
-UP- BELGIUM
DECIDED
TODAY TO

ADHERE TO THE TRI POWER MONETARY AGREEMENT AND

WILL NOT FURTHER DEVALUE THE BELGA
IT WAS OFFICIALLY ANNOUNCED THAT BELGIUM

WOULD JOIN THE UNITED STATES AND GREAT BRITAIN
IN REFRAINING FROM MEASURES THAT
04936
SEP
HAMPER THE SUCCESS OF FRANCE-S FRANC DEVALUATION PROGRAM

DOW JONES - September 26, 1936.

AMSTERDAM MARKET QUIET - US ISSUES IN DE-

8.26
AMSTERDAM - TRADING ON THE BOURSE EARLY TO-

MAND

DAY WAS QUIET WITH A SLIGHT REACTION IN DUTCH
BONDS AND A GOOD DEMAND FOR AMERICAN ISSUES
GOLD SHIPMENTS TO NEW YORK AND BRUSSELS
CONTINUE

-0-

SEP261936

324

HOLLAND
AMSTERDAM

325

UNITED PRESS - September 26, 1956.

WCNS21

AMSTERDAM. -- THE STOCK EXCHANGE OPENED QUIETLY TODAY WITH A
MAJORITY OF QUOTATIONS SLIGHTLY LOWER. DUTCH GOVERNMENTAL BONDS WERE
VIRTUALLY UNCHANGED.

9/26--R913A

LONDON GOLD PRICE

12.15

LONDON - WHEN LONDON GOLD MARKET IS

REOPENED THE STERLING PRICE FOR GOLD IN
OPEN MARKET WILL BE CALCULATED UPON THE 9 STERLING

sweets

-DOLLAR RATE THUS REVERTING TO THE PRAC-

TISE IN VOGUE PRIOR TO AMERICAN SUSPENSION

OF GOLD IN THE SPRING OF 1933 IN THE INTERVAL
SINCE THEN THE PRICE HAD BEEN CALCULATED UPON
THE STERLING-FRANC RATE
THE DOLLAR RATE OF 4 92 WHICH WAS QUOTED
AT THE OPENING OF THE LONDON FOREIGN EXCHANGE
MARKET TODAY BEFORE SUSPENSION OF

DEALINGS IN EXCHANGE WOULD INDICATE A GOLD

PRICE OF APPROXIMATELY 141S PER FINE OUNCE
COMPARED WITH OFFICIAL POSTED PRICE OF 137S 9
1-2D ON FRIDAY - NO BUSINESS WAS TRANS-

ACTED AT 4 92 HOWEVER AND IT IS IMPOSSIBLE TO
SAY WHAT THE EXCHANGE RATE WILL BE WHEN THE

GOLD PRICE IS NEXT FIXED

-0ser ZU 1938

NO GOLD PRICE TODAY - NO LONDON EXCHANGE
DEALINGS TODAY

LONDON - IT WAS OFFICIALLY ANNOUNCED THAT
THERE WOULD BE NO GOLD PRICE FIXED OR DEALINGS
IN THE GOLD MARKET TODAY

AFTER QUOTING DOLLARS AT 4 90 TO 4 92
AND AMSTERDAM 7 28 TO 7 31 IT WAS OFFICIALLY
ANNOUNCED THAT THERE WOULD BE NO FURTHER DEAL-

INGS IN FOREIGN EXCHANGES TODAY

-0-

SEP 26 1936

8.35

ADD NO GOLD PRICE FIXED
LONDON - BULLION BROKERS SAY THAT UNTIL
FOREIGN EXCHANGE DEALINGS ARE RESUMED THEY WILL

BE UNABLE TO FIX A GOLD PRICE AS IT IS IMPOSSIBLE TO CONVERT AMERICA-S FIXED DOLLAR

PRICE FOR GOLD INTO STERLING WHILE NO STERLING-DOLLAR RATE IS BEING QUOTED
-0-

LONDON MONEY MARKET CALM

LONDON - THERE WAS A LARGE TURNOVER IN
MONEY MARKETS DUE TO HEAVY PAYMENTS FOR

TREASURY BILLS BUT THE LATEST DEVELOPMENTS
FROM PARIS FAILED TO MOVE THE MARKETS WHICH
EXHIBIT CUSTOMARY CALM

-0-

8.43

LONDON REACTION TO FRENCH MOVE

LONDON - THE DECISION TO SUSPEND FOREIGN
EXCHANGE DEALINGS RESULTED FROM A HINT FROM
HIGHER AUTHORITIES TO THE FOREIGN EXCHANGE

COMMITTEE BUT DEALERS ARE REMAINING AT THEIR
OFFICES AT THE REQUEST OF THE COMMITTEE -

IT IS POSSIBLE THAT DEALINGS WILL NOT BE
RESUMED UNTIL AFTER THE FRENCH PARLIAMENT HAS

RATIFIED DEVALUATION BILLS TO BE INTRODUCED
MONDAY

8.47

THERE WAS SOME DISAPPOINTMENT EXPRESSED

HERE THAT HOLLAND AND SWITZERLAND ARE APPAR-

ENTLY AS YET UNWILLING TO FOLLOW FRANCE-S LEAD WHILE BOTH THESE COUNTRIES HAVE AMPLE
TECHNICAL RESOURCES FOR THE PROTECTION

OF THEIR CURRENCIES IT IS POINTED OUT THAT
THEIR GENERAL ECONOMIC POSITION IS LIKELY TO
FURTHER DETERIORATE AND THAT THEY CANNOT
THEREFOR RESIST DEVALUATION FOR LONG

WITH THE THREE KEY NATIONS AMERICA
GREAT BRITAIN AND FRANCE MOVING TOWARDS STA-

BILIZATION THERE IS RENEWED HOPE OF ULTIMATE
GENERAL CURRENCY STABILIZATION

WHILE FRANCE DID NOT GET ALL THAT IT SOUGHT

FROM AMERICA AND BRITAIN IT IS GENERALLY
AGREED HERE THAT FRANCE OBTAINED MORE THAN
EXPECTED HERE AND THE TERMS AND STATEMENTS

ISSUED BY THE TREASURIES ARE WELCOMED AS A
MOVE TOWARDS WORLD BETTERMENT

STOCK BROKERS ANTICIPATE SOME WEAKENING IN

BRITISH FUNDS AT THE OPENING MONDAY BUT

THE ONLY INDICATION OF THE EXTENT SO FAR IS
THAT PRIVATE TRANSACTIONS IN NEW LONDON
COUNTY COUNCIL 3 PC BONDS WHICH ARE EXPECTED
TO OPEN MONDAY WERE TODAY QUOTED AT 1-4

TO PAR PREMIUM AGAINST 9-16 TO 3-4 PREMIUM
FRIDAY - IT IS ALSO ANTICIPATED THAT THERE
MAY BE SOME WEAKENING IN OIL SHARES AND OTHER
SPECULATIVE FAVORITES RECENTLY BOUGHT HERE BY

PARIS BUT SHOULD THERE BE ANY SHARP

DECLINE IT IS EXPECTED THAT BRITISH INVESTORS
WOULD QUICKLY COME INTO THE MARKET TO PICK
SUCH STOCKS UP AND THAT THERE WOULD BE A

QUICK RECOVERY - IF NO GOLD PRICE IS FIXED
MONDAY DEALINGS IN KAFFIRS ARE LIKELY TO
BE NOMINAL

-0-

GREAT BRITAIN
LONDON

UNITED PRESS - September 26, 1936.

330

WCNS11

LONDON.--FOREIGN EXCHANCE DEALINGS WERE SUSPENDED HERE TODAY IN
VIEW OF THE FRANC DEVALUATION PROGRAM.

PRIOR TO THE SUSPENSION, THE DOLLAR HAD BEEN QUOTED AT APPROXIMATELY

$4.91 FOR STERLING. AT THE TIME OF FIXING THE GOLD PRICE YESTERDAY THE
DOLLAR WAS $5.05-1/2 ALTHOUGH IT WEAKENED LATER IN THE DAY.
TRANSACTIONS IN GOLD ALSO WERE SUSPENDED.

9/26--R844A

WCNS28

LONDON.--THE BRITISH EQUALIZATION FUND WILL CONTINUE SMOOTHING
OUT FLUCTUATIONS OF THE NEW FRENCH FRANC AND FACILITATE INTERNATIONA
TRADE, RELIABLE SOURCES SAID TODAY.
IT WAS EXPLAINED THAT THE BRITISH TREASURY STATEMENT--ANNOUNCING
PLANS OF COOPERATION WITH FRANCE AND THE UNITED STATES--IS INTENDED
TO MAKE CLEAR THAT GREAT BRITAIN WILL NOT DELIBERATELY DEPRECIATE

STERLING FURTHER. IT IS PROPOSED THAT THE FRANC AND STERLING REMAIN
FREE CURRENCIES, NOT LINKED TO ANY OTHER MONETARY UNIT.

9/26--R928A

8.39 SEP26
BLUM CONFERS WITH AURIOL

1936

PARIS -UP- PREMIER LEON BLUM CONFERRED ALL
MORNING AT MATIGNON PALACE WITH AURIOL

CHARLES SPINASSE THE MINISTER OF NATIONAL
ECONOMY AND OTHER CABINET OFFICERS
BANKS TODAY REFUSED BY ORDER OF THE

MINISTRY OF FINANCE TO CONVERT FRANCS INTO
FOREIGN CURRENCIES - AMERICAN BANKS CONTINUED
TO TAKE TRAVELERS CHECKS AT THE OLD RATE
PROMISING ADJUSTMENT NEXT WEEK WHEN THE NEW

RATE IS FIXED

-0-

840
ADD FRENCH SITUATION

PARIS -UP - CABINET MINISTERS DREW UP THE
TEXTS OF PROJECTS TO BE PRESENTEDSEP261936
TO PARLIAMENT MONDAY FOR REALIGNMENT OF CURRENCY

AS WELL AS A SERIES OF INTERNAL MEASURES

DESIGNED TO PREVENT A BID EFFECT ON PRICES
AND SALARIES

ALL FRANC EXCHANGE OPERATIONS SUSPENDED

PARIS - THERE WAS A COMPLETE SUSPENSION
OF ALL FRANC EXCHANGE OPERATIONS HERE AND

BANKS WERE UNABLE EVEN TO SELL FRANCS AGAINST

DOLLARS AND STERLING TO TOURISTS WHOSE REQUIREMENTS WERE MET BY TEMPORARY SMALL LOANSSINCE THE LONDON AND AMSTERDAM EXCHANGES WERE

CLOSED ONLY THE SWISS AND THE SMALLER
EUROPEAN CENTERS COULD OPERATE AND THEIR

TRANSACTIONS WERE NEGLIGIBLE - AS A RESULT
PRACTICALLY THE ENTIRE WORLD-S MONETARY

EXCHANGES WERE HALTED IN ORDER TO FACILITATE
THE FRANC DEVALUATION

SINCE PARLIAMENT IS UNLIKELY TO HAVE
COMPLETED VOTE UNTIL MONDAY NIGHT OR TUESDAY

A CONTINUATION OF THESE CONDITIONS IS EXPECTED
UNTIL TUESDAY MORNING AT THE EARLIEST OR
WEDNESDAY AT THE LATEST

A FAVORABLE VOTE IS PRACTICALLY CERTAIN
FOR THE COMMUNISTS ARE DISPOSED TO INSIST ONLY
ON THE PROPER SAFEGUARDS FOR THE WORKERS

AGAINST PRICE RISES AND MEASURES AGAINST

PROFITEERS BUT HEATED DEBATES ARE INEVITABLE
WITH OPPOSITION INSISTING THAT THE GOVERNMENT
IS BREAKING ITS PLEDGES AND RESORTING TO DEVALUA
-TION TO SAVE ITS ENTIRE PROGRAM FROM SHIPWRECK
REYNAUD IS QUOTED AS SAYING THAT THE EXPERI-

MENT IS DELICATE BECAUSE IT IS TARDY AND BECAUSE
OF THE CONDITIONS UNDER WHICH IT IS UNDERTAKEN
THERE IS NO DOUBT THAT THE GOVERNMENT

IS PREPARING AN ELABORATE SCHEME TO AVERT
SUFFERING AND FOIL SPECULATORS AND HOARDERS-

NO DETAILS OF THE REQUISITIONING OF GOLD

HOLDINGS ARE AVAILABLE BUT IT IS ALREADY
QUESTIONED WHETHER THE BIG HOLDINGS ABROAD

CAN BE TRACED MUCH LESS SEIZED - IN CERTAIN CASES THESE ARE UNDERSTOOD TO BE PLACED
IN POSSESSION OF BRITISH COMPANIES FORMED
EXPRESSLY FOR SUCH A PURPOSE BY FRENCH
OWNERS - SHOULD THE PRESENT GOVERNMENT CON-

TINUE HOWEVER IT PROBABLY WILL NOT HESITATE
TO TAKE MOST ARBITRARY MEASURES IN THE
TREATMENT OF CAPITAL AND CAPITALISTS SUSPECTED
OF PROFITEERING

-0-

9:15

SEP201006

FRENCH REACTION TO DEVALUATION

PARIS - DOUBTS HAVE BEEN RAISED IN SOME
FRENCH QUARTERS AS TO WHETHER THE EXTENT
OF THE

PROPOSED DEVALUATION OF THE FRANC WILL
BE SUFFICIENT TO RESTORE THE FRENCH ECONOMY FORMER FINANCE MINISTER LAMOUREUX SAYS THAT A

25 PC TO 33 PC DEPRECIATION WOULD HAVE MET THE
REQUIREMENTS OF TWO YEARS AGO BUT THE FINAN-

CIAL SITUATION HAS BEEN AGGRAVATED SINCE THEN
AND HE CLAIMS THAT THE PROPORTION WHICH HAS
BEEN ADOPTED WILL NOT RESTORE EQUILIBRIUM

ADD FRENCH DEVALUATION

Hyo

PARIS - THE FRENCH CABINET HAS DECIDED
UPON VARIOUS MEASURES COMPLEMENTARY TO

DEVALUATION INCLUDING AN ORDER FOR DECLARATION
OF ALL SPOT AND FORWARD TRANSACTIONS IN THE
EXCHANGES BETWEEN SEPT 20 AND 26 - COMPENSAT-

ION FOR PURCHASERS OF THE RECENT ISSUE OF SIX
AND 12 MONTHS TREASURY BILLS - ABROGATION OF
THE LAVAL DECREE LAWS AFFECTING VETERANS PENSIONS AND A 10 PC DEDUCTION FROM COUPONS OF

THE PUBLIC DEBT - VARIOUS CUSTOMS DUTIES WILL
BE REDUCED INCLUDING THOSE ON IMPORTS OF
SUGAR AND OILS
THE MEASURES ALSO PROVIDE FOR GOVERNMENT

REQUISITION OF ALL GOLD
FINANCE MINISTER AURIOL SAID THE GOVERNMENT WAS ELATED OVER BELGIUM-S ADHERENCE TO
THE ANGLO-AMERICAN-FRENCH AGREEMENT - -WE
EXPECT MANY MORE NATIONS TO ANNOUNCE ADHERENCE

TO THE - HE SAID

3

10.18
ADD FRENCH DEVALUATIO

335

SEP261 1936

PARIS -UP- DESPITE THE PROFOUND IMPEICATIONS
OF THE GOVERNMENT-S ACTION THE POPULACE GENERALLY RECEIVED NEWS OF THE DEVALUATION
APATHETICALLY AND THERE WAS NOT THE SLIGHTEST
DISTURBANCE IN ANY PART OF THE COUNTRY
AFTERNOON NEWSPAPERS PRINTED FACSIMILIES

OF THE OLD 100-FRANC BANKNOTE OF THE DAYS
BEFORE THE FIRST DEVALUATION BY THE POINCARE
GOVERNMENT EIGHT YEARS AGO - BESIDE THIS

WAS PRINTED A PIECE OF THE NOTE ONLY 12
PER CENT AS BIG REPRESENTING THE DECLINE IN
GOLD VALUE AS IT WILL BE WHEN THE PRESENT
DEVALUATION IS COMPLETED
FRANC DEVALUATION

-I REGARD THE DECISION OF THE FRENCH GOVERNMENT TO DEVALUE THE FRANC AS A DECIDEDLY
CONSTRUCTIVE MOVE - ONE BANKER STATES

-IN FACT I REGARD IT AS A PRELIMINARY
MOVE TOWARDS INTERNATIONAL CURRENCY STABILIZ-

ATION EITHER BY GENERAL AGREEMENT OR DE FACTO
-THE FACT THAT THE MOVE IS BEING ACCOMPLISHED QUIETLY AND WITH NO CHANGE IN GOVERNMENT

INDICATES TO MY MIND THAT THE SITUATION IN
FRANCE IS BETTER THAN WE HAD EXPECTED

-SO FAR AS ITS EFFECT HERE IS CONCERNED

I FEEL IT HAS BEEN FULLY DISCOUNTED - IT
DOES NOT SEEM LIKELY THAT IT WILL INDUCE ANY
IMPORTANT GOLD EXPORTS IMMEDIATELY ALTHOUGH

IT SHOULD DO so LATER - AND I SHOULD REGARD
EXPORTS AS HEALTHY - NO ONLY CAN WE AFFORD

TO LOSE BUT WE WOULD BE BETTER OFF BY LOSING
FROM A BILLION TO TWO BILLION DOLLARS OF GOLD-

ADD FRENCH REACTION TO DEVALUATION 10.16
PARIS - ON THE OTHER HAND CHARLES RIST
OUTSTANDING FRENCH ECONOMIST AND FORMER

OFFICIAL OF THE BANK OF FRANCE RECENTLY
ESTIMATED THAT - A 25 PC CUT WOULD BE THE MINIMUM
NECESSARY

SEP261936
THE LABOR LEADER HOUHAUX COMMENDS HE

REALIGNMENT OF CURRENCIES IF IT MEANS THE
INAUGURATION OF ECONOMIC PEACE AND MONETARY

10.20
ADD FRENCH REACTION TO DEVALUATION

EQUALITY BUT IT INSISTS THAT SPECULATION BE
SEP 28 1936
PREVENTED FROM GAINING SCANDALOUS PROF

AND THAT THE CONSUMING CAPACITY OF THE

WORKING CLASS BE PRESERVED - ON FRIDAY HE
PUBLICLY DEMANDED A SLIDING WAGE SCALE AND
THE GOVERNMENT IS BELIEVED TO BE CONTEMPLATING
ADOPTION OF SUCH A PLAN - EMPLOYERS ALREADY
HAVE DENOUNCED IT AS THREATENING TO CANCEL
THE STIMULATING EFFECTS UPON BUSINESS WHICH
DEVALUATION IS EXPECTED TO BRING
EVIDENCE INCREASE THAT THE DECISION WAS
FORCED BY THE ALARMING SHRINKAGE IN THE FRENCH

GOLD RESERVE AND THAT THE DEFINITE DECISION
WAS TAKEN ONLY ON FRIDAY ALTHOUGH NEGOTIATIONS LOOKING TOWARD AN INTERNATIONAL REALIGNMENT HAD BEEN CONDUCTED OVER THE PAST

FOUR MONTHS - ONE CABINET MINISTER STATED AFTER

THE MEETING OF THE MINISTERIAL COUNCIL-

-AURIOL-S EXPOSE OF THE SITUATION WAS so PERTINENT THAT NO DEBATE WAS POSSIBLE - IT WAS A
QUESTION NO LONGER OF DOCTRINAL CONTROVERSIES

BUT ONE OF SOLVING A PROBLEM IMPOSED BY
FACTS-

FRANCE

337

PARIS

UNITED PRESS - September 26, 1936.
WCNS3

PARIS--THE FRENCH GOVERNMENT DECIDED TODAY TO DEVALUE THE FRANC-POSSIBLY BY ONE-FOURTH OR ONE-THIRD OF ITS CURRENT VALUE--THROUGH AN
AGREEMENT WITH THE UNITED STATES AND GREAT BRITAIN THAT MAY BRING WORLDWIDE CURRENCY ADJUSTMENT.

9/26--R834A
WCNS4

PARIS.--BELGIUM DECIDED TODAY TO ADHERE TO THE TRI-POWER MONETARY
AGREEMENT AND WILL NOT FURTHER DEVALUE THE BELGA.

9/26--R835A
WCNS41

ADD DEVALUATION, PARIS
DESPITE THE PROFOUND IMPLICATIONS OF THE GOVERNMENT'S ACTION, THE
POPULACE GENERALLY RECEIVED NEWS OF THE DEVALUATION APATHETICALLY AND

THERE WAS NOT THE SLIGHTEST DISTURBANCE IN ANY PART OF THE COUNTRY.

9/26--EC1004A
ADD DEVALUATION, PARIS
POPULAR SUPPORT OF THE GOVERNMENT ACTION WAS HEIGHTENED BY ACTION

OF THE CABINET TODAY IN DRAFTING MEASURES TO PREVENT HARDSHIPS ON THE
SMALL MONEY CLASSES, AS WELL AS TO CARRY OUT THE DEVALUATION ITSELF.
THE MEASURES, ANNOUNCED BY AURIOL AFTER A CABINET MEETING, INCLUDES:
ABROGATION OF THE LAVAL ECONOMY DECREE CUTTING PENSIONS OF WAR
VETERANS BY 10 PER CENT.

9/26--EC1005A

10.21

1936

FRENCH CABINET ADOPTS SLIDING WAGERS
PRINCIPLE

PARIS - THE FRENCH CABINET HAS ADOPTED THE

PRINCIPLE OF A SLIDING WAGE SCALE TO OFFSET
LOSS OF PURCHASING POWER BY WORKERS BECAUSE OF
PRICE INCREASES FOLLOWING DEVALUATION

-0-

339

WCNS24

ADD DEVALUATION, PARIS
THE GOVERNMENT COMPLETED TWO BILLS WHICH WILL BE PRESENTED TO THE
FINANCE COMMITTEES OF THE CHAMBER AND SENATE TOMORROW. THE

FIRST FIXES THE GOLD CONTENT AT 43 TO 49 MILLIGRAMS WHILE THE
SECOND EMPOWERS THE GOVERNMENT TO REQUISITION GOLD AT THE PRESENT RATI

BANKS TODAY REFUSED, BY ORDER OF THE MINISTRY OF FINANCE, TO
CONVERT FRANCS INTO FOREIGN CURRENCIES. AMERICAN BANKS CONTINUED TO
TAKE TRAVELERS CHECKS AT THE OLD RATE, PROMISING ADJUSTMENT NEXT
WEEK WHEN THE NEW RATE IS FIXED.
ALL MARKETS IN THE NATION HAVE BEEN CLOSED UNTIL AFTER PARLIAMENT
DEBATE ENDS, PROBABLY TUESDAY NIGHT.

PARLIAMENT WILL MEET IN EXTRAORDINARY SESSION MONDAY TO LEGALIZE
THE DEVALUATION AND GIVE THE GOVERNMENT POWER TO REQUISITION ALL GOLD

AT THE CURRENT RATE. THE BANK OF FRANCE ALREADY HAS CEASED GOLD

DELIVERIES TO INDIVIDUALS so THAT TECHNICALLY FRANCE IS OFF THE
GOLD STANDARD.

MEANTIME FINANCE MINISTER AURIOL CONFERRED WITH H. MERLE COCHRAN,

ATTACHE OF THE U.S. TREASURY, WHO WAS SMUGGLED IN AND OUT OF THE

BUILDING, GIVING RISE TO REPORTS THAT THE U.S. AGREEMENT WAS THE FINAL
MAJOR FACTOR IN PERMITTING THE GOVERNMENT MOVE.

9/26--R918A

340
WCNS113

PARIS.--A WORLD-WIDE MONETARY TRUCE WHICH WOULD END THE BATTLE
OF CURRENCIES AND PROMOTE INTERNATIONAL TRADE APPEARS IN PROSPECT.
GOLD STANDARD COUNTRIES, INCLUDING SWITZERLAND RALLIED TO THE IDEA
AFTER FRANCE HAD DECIDED TO DEVALUE ITS FRANC APPROXIMATELY ONE-THIRD,

WITH THE FULL CO-OPERATION OF THE UNITED STATES AND GREAT BRITAIN, WHO
PROMISED NOT TO TAKE ADVANTAGE BY LOWERING THE VALUE OF THEIR OWN

CURRENCIES. THE OLD "GOLD STANDARD BLOC" THUS WAS VIRTUALLY BROKEN UP
THE FRENCH GOVERNMENT LOOKED TO SIMILAR ENGAGEMENTS BY ALMOST EVERY

IMPORTANT COUNTRY IN THE WORLD. IT WAS FELT HERE THAT WITH THE THREE
GREAT MONETARY POWERS ADOPTING A COMMON FRONT, NO NATION COULD STAND

OUT AGAINST A GENERAL LEVELING OF MONETARY VALUES, BASED ON PURCHASING
POWER IN EXCHANGE FOR EXPORTS.

RUSSIA, IT WAS BELIEVED, NEEDS FOREIGN TRADE TOO BADLY TO STAND
ALONE IF THE OTHER NATIONS COMBINE.
THE FRENCH GOVERNMENT'S MOVE MAY MEET OPPOSITION IN PARLIAMENT,
BUT THE POPULAR FRONT GOVERNMENT BELIEVED THAT IT HAD ENOUGH SUPPORT

TO WIN. THE GOVERNMENT AT ONCE STARTED CONSIDERING MEANS OF
CUSHIONING ANY HARDSHIPS WHICH MIGHT FALL ON THE FRENCH PEOPLE.
WCNS101

ADD DEVALUATION, PARIS' (WCNS99.)
THE DEVALUATION MEASURES WILL BE EXPLAINED IN DETAIL TO THE FINANCE
COMMITTEES OF THE SENATE AND CHAMBER OF DEPUTIES AT SPECIAL MEETINGS
ON SUNDAY, PRIOR TO THE CONVENING OF PARLIAMENT ON MONDAY.
FROM THE PROPOSED LATITUDE IN THE NEW VALUE OF THE FRANC BETWEEN

43 AND 49 MILLIGRAMS OF GOLD, IT APPEARED EVIDENT THAT FRANCE INTENDS
TO EMBARK ON A PERIOD OF MANAGED CURRENCY. THIS AGAIN WOULD BE FOLLOW-

ING THE POLICY OF THE UNITED STATES IN THE PERIOD BEFORE THE DOLLAR
FINALLY WAS PEGGED AT 39.06 CENTS AS COMPARED TO ITS FORMER GOLD VALUE.

9/26--E311P.

WCN399

ADD DEVALUATION, PARIS (WCNS42)

3+1

THE COOPERATIVE ASPECTS OF THE THREE-POWER ACCORD, ESPECIALLY THE
STATEMENTS OF SECRETARY MORGENTHAU IN SERVING NOTICE THAT AMERICA WAS

SUPPORTING THE AGREEMENT WITH ITS FULL RESOURCES, WERE EMPHASIZED IN

A STATEMENT TO THE PRESS BY PREMIER LEON BLUM IN BEHALF OF FINANCE
MINISTER AURIOL.

"FOR THE FIRST TIME IN HISTORY," PREMIER BLUM SAID, "A DECLARATION
HAS BEEN MADE SIMULTANEOUSLY BY THREE COUNTRIES, SIGNIFYING THEIR
WILLINGNESS TO UNDERTAKE A COMMON EFFORT TO RE-ESTABLISH NORMAL ECONOMIC

AND MONETARY RELATIONS IN ORDER TO EFFECT PACIFICATION ON THE MATERIAL

PLANE BEFORE TACKING THE POLITICAL PACIFICATION WHICH ALL DESIRE.
"THE DECLARATIONS OF MR. MORGENTHAU TO THE PRESS ARE MOST SIGNIFICANT IN THIS REGARD.
"THE THREE NATIONS WANT TO RALLY ALL COUNTRIES TO THIS ENDEAVOR,

WHICH IS BOUND TO EXERCISE CONSIDERABLE INTERNATIONAL INFLUENCE. I
AM DELIGHTED TO SEE THAT SWITZERLAND ALREADY HAS DECIDED TO ADHERE.
"CERTAIN NEWSPAPERS HAVE GIVEN THE IMPRESSION THAT THIS DECLARATION

SOUGHT TO CONCEAL THE REAL FINANCIAL SITUATION, BUT I FORMALLY
DECLARE THAT THIS FINANCIAL ALIGNMENT WAS NOT HURRIEDLY ACHIEVED BUT
WAS THE RESULT OF CONVERSATIONS STARTED LAST JUNE.

"AT NO TIME," BLUM CONTINUED, "DID WE CONSIDER A UNILATERAL
MONETARY OPERATION. MOREOVER, WE ALWAYS SAID THAT SUCH A MONETARY

OPERATION COULD ONLY BE ACHIEVED ON AN INTERNATIONAL BASIS FOR A
RAPPROCHEMENT OF THE PEOPLES AND WITH A VIEW TOWARD THE GENERAL

PACIFICATION WHICH WE ALL DESIRE."
IN CONVERSATIONS ALONG THE PARIS BOULEVARDS THERE WAS SOME
EVIDENCE OF FEAR THAT PRICES WOULD SKYROCKET, HURTING SMALL
WAGEEARNERS ESPECIALLY, AND THAT SMALL INVESTORS WOULD SUFFER.

THIS FEAR WAS PARTICULARLY EVIDENT AMONG THOSE WHO LOST HEAVILY IN
THE 1928 DEVALUATION.

BY HIS DECLARATIONS AND BY PREPARATIONS OF HIS GOVERNMENT, BLUM
SOUGHT TO ALLEVIATE THESE FEARS.

342

ARGUING THAT ABUNDANT MONEY AND LOWER INTEREST RATES SHOULD RESULT

IN LOWER COSTS OF PRODUCTION, HE ASSERTED THAT "THERE IS NO REASON

WHY RETAIL PRICES SHOULD RISE."
AS A SPECIFIC MOVE TO COUNTERACT PRICE INCREASES, BILLS WERE
PREPARED EMPOWERING THE GOVERNMENT TO LOWER TARIFFS AND INCREASE IMPORT

QUOTAS AT ITS DISCRETION. THESE MEASURES WILL BE PRESENTED TO
PARLIAMENT ON MONDAY AND WILL BECOME EFFECTIVE IMMEDIATELY AFTER THEIR

PASSAGE. UNDER THEM, IF PRICES OF ANY CLASS OF GOODS ROSE ABNORMALLY,
THE GOVERNMENT COULD PERMIT HEAVY SHIPMENTS OF FOREIGN PRODUCTS TO
FLOW IN.

FINANCE MINISTER AURIOL ANNOUNCED THE GOVERNMENT HAD DRAFTED

ADDITIONAL MEASURES TO PROTECT THE SMALL MONEY CLASSES, AND PREVENTING
PROFITEERING:

1.--SALARIES WILL BE ADJUSTED ON A SLIDING SCALE IN ACCORDANCE WITH
LIVING COSTS.

2.--RELIEF WILL BE PROVIDED FOR SMALL INVESTORS AND HOLDERS OF
SHORT-TERM TREASURY BONDS.

3.--THE LAVAL DECREES REDUCING WAR VETERANS' PENSIONS BY 10 PER CENT
WILL BE ABROGATED.

4. ---ALL EXCHANGE TRANSACTIONS BETWEEN SEPT. 20 AND 26 MUST BE REVEALED TO THE GOVERNMENT.

THESE MEASURES WERE EXPECTED FURTHER TO EASE THE GOVERNMENT'S TASK

IN PUTTING THE DEVALUATION MEASURE THROUGH PARLIAMENT, AND IT WAS CONSIDERED A CERTAINTY THAT IT WOULD BE APPROVED.
THE MOST IMPORTANT COMPANION MEASURE TO THE DEVALUATION BILL IS
THAT PERMITTING THE GOVERNMENT TO REQUISITION ALL GOLD AT THE OLD

VALUE. THIS WILL PREVENT HOLDERS OF GOLD FROM PROFITING BY THE
REVALUATION.

DOW JONES - September 26, 1936.

343
FOREIGN EXCHANGE 8.45SEP201936
NO BUSINESS IS BEING DONE IN THE LOCAL
FOREIGN EXCHANGE MARKET BUT NOMINAL RATES

BEING QUOTED INCLUDE 4 90 TO 4 95 FOR STERLING
AND 4 42 CENTS TO 5 CENTS FLAT FOR FRANCS
-OTHER NOMINAL QUOTES ARE - 25 58 FOR SWEDEN

24 88 FOR NORWAY 22 10 FOR DENMARK - PREVIOUS
CLOSE ON THE FIVE CURRENCIES LISTED ABOVE

WERE STERLING 5 01 7-8 FRANC 6 58 1-2 CENTS
25 88 FOR SWEDEN 25 23 FOR NORWAY AND 22 42
FOR DENMARK

4.06
STERLING 4 94
THERE IS NO DEALING IN FOREIGN EXCHANGES
IN THE LOCAL EXCHANGE MARKET WITH THE EXCEPTION OF STERLING WHICH IS CURRENTLY QUOTED

AT 4 94 AS COMPARED WITH 5 00 QUOTED EARLY
LAST EVENING

-0STERLING ACTIVE

A CONSIDERABLE VOLUME OF BUSINESS IN SPOT

STERLING IS BEING DONE IN THE LOCAL FOREIGN
EXCHANGE MARKET WITH RATES CURRENTLY QUOTED

AROUND 4 92 1-2 TO 4 93 - A SMALL AMOUNT OF
BUSINESS IN CANADIAN DOLLARS IS GOING THROUGH

AT A DISCOUNT OF 1-8 OF I PC - MARKET FOR
FUTURE STERLING IS NOMINAL WITH QUOTED RATES
AT ABOUT 5-8C DISCOUNT FOR ONE MONTH AND
I 1-4C FOR THREE MONTHS
THERE HAS BEEN SPORADIC BIDDING FOR FRENCH
FRANCS AT AROUND 5C BUT EXCHANGE TRADERS BE-

LIEVE THAT NO BUSINESS HAS BEEN DONE

GUILDERS

SEP2610610.19

A SMALL TRANSACTION IN DUTCH GUILDERS IS
REPORTED TO HAVE BEEN DONE THIS MORNING AT

66 67 CENTS OFF 59 POINTS - SMALL AMOUNTS ARE
NOW BEING OFFERED AT 66 90 CENTS
ALTHO NORMALLY THIS WOULD CONSTITUTE

A MAJOR DECLINE IN GUILDER EXCHANGE THE
QUOTATION IS FAR ABOVE WHAT MIGHT BE EXPECTED
HAD THE DUTCH GOVERNMENT GIVEN INDICATION
IT WAS PREPARED TO FOLLOW THE EXAMPLE OF
FRANCE AND SWITZERLAND

-0SWISS FRANC

10.25 SEP26 1936

ADVICES FROM SWITZERLAND THUS FAR HAVE NOT

INDICATED THE EXTENT TO WHICH THE SWISS
FRANC WILL BE READJUSTED FOLLOWING THE LEAD
OF FRANCE - ASSUMING HOWEVER THAT THE SAME

LIMITS WILL BE ADOPTED AS IN THE FRENCH FRANC
IT WILL MEAN THAT THE DOLLAR VALUE OF THE
SWISS FRANC WILL BE SOMEWHERE BETWEEN

24 44 CENTS AND 21 44 CENTS - THIS COMPARES WIM
THE FORMER PAR OF 32 67 CENTS

345

16,009

STOCK MARKET GOSSIP

CANVASS OF SOME OF THE

LEADING HOUSES

INDICATES THAT SHORTLY BEFORE THE OPENING
THEY HAD NO LARGE AMOUNT OF ORDERS EITHER WAYSOME FIRMS REPORTED A FEW SELLING ORDERS
AND OTHERS A BALANCE OF BUYING - BROKERS SAY
THAT THERE ARE FEW ORDERS OF ANY KIND FROM
ABROAD

SOME STREET COMMENTATORS REGARD THE TRIPARTITE CURRENCY AGREEMENT AS THE MOST IMPORT-

ANT NEWS FOR WALL STREET SINCE THE ARMISTICE NATURALLY THE TRADING FRATERNITY IS SOMEWHAT

JITTERY BUT ALL AGREE THAT AS A BUSINESS AND
MARKET FACTOR IT IS EXTREMELY CONSTRUCTIVE

IN THE LONG RUN - BROKERS BELIEVE ITS POLITICAL
ASPECT so FAR AS FRANCE IS CONCERNED IS AS
IMPORTANT AS THE FINANCIAL SIDE BECAUSE
WITH THE UNITED STATES AND ENGLAND STANDING BY
FRANCE THE FRENCH PEOPLE WILL FEEL CONFIDENCE
IN THEIR GOVERNMENT-S PROPOSALS

SOME TRADERS EXPECT THAT THERE MAY BE
TEMPORARY BEARISH EFFECT ON SOME COMMODITY

MARKETS GROWING OUT OF THE EXCHANGE SITUATION

COTTON IS MENTIONED AS ONE LIKELY TO BE AFFEC-

TED AS IT IS so CLOSELY ALLIED WITH THE POUND
STERLING

-0-

346

GOLD FROM FRANCE

IN ADDITION TO THE 43 532 000 DLS OF GOLD

o

ENGAGED FRIDAY IN PARIS FOR SHIPMENT TO NEW

YORK AN ADDITIONAL 12 655 000 DLS WAS TAKEN
YESTERDAY MAKING A TOTAL OF 56 187 000 DLS
TAKEN FOR SHIPMENT FROM FRANCE FOR NEW YORK

ACCOUNT YESTERDAY - A TOTAL OF I 125 000 DLS
ALSO WAS ENGAGED FRIDAY IN HOLLAND FOR EXPORT
TO NEW YORK WHICH HAD NOT BEEN REPORTED YESTERDAY

-0-

NEW YORK MARKETS

UNITED PRESS - September 26, 1936.

347

WCNS5

NEW YORK.--THE FRENCH FRANC WAS QUOTED NOMINALLY AT 4.42 TO 5
CENTS IN FOREIGN EXCHANGE MARKETS HERE TODAY. NO BUSINESS WAS BEING
DONE IN ANY CURRENCY.

9/26--R837A
WCNS13

ADD FOREIGN EXCHANGE, NEW YORK

THE FRANC QUOTED ABOUT FITTED IN WITH THE LEVEL WHERE IT IS
INTENDED TO STABILIZE THE UNIT UNDER THE DEVALUATION PLAN. FRANCS

CLOSED LAST NIGHT AT 6.58 1/2 CENTS, COMPARED WITH ITS PARITY AT THAT
TIME OF 6.63 CENTS.
NOMINAL QUOTATIONS ON OTHER CURRENCIES WERE:

POUND STERLING $4.90 TO $4.95, AGAINST A PREVIOUS CLOSE OF

$5.01 3/4.
SWEDEN 25.58 CENTS OFF 51 POINTS FROM YESTERDAY'S CLOSE.

NORWAY, 24.88 CENTS OFF 36 POINTS.
DENMARK, 22.10 CENTS OFF 34 POINTS.

9/26--R846A

WCNS23

NEW YORK.--THE POUND STERLING SOLD AT $4.94-1/2 IN FOREIGN EXCHANGE
TRADING TODAY, DOWN 7-1/4 CENTS FROM THE PREVIOUS CLOSE OF $5.01-3/4.
FOREIGN EXCHANGE BUSINESS IN GENERAL WAS PARALYZED, NO TRANSACTIONS
BEING RECORDED IN OTHER UNITS.

9/26--R915A

048
WCNS25

NEW YORK.--THE STOCK MARKET WAS UNRUFFLED BY THE ANNOUNCEMENT

FRANCE WOULD DEVALUE THE FRANCE ON MONDAY. INITIAL PRICES WERE
MIXED IN A NARROW RANGE WITH DEALINGS LIGHT.
LEADING STOCKS WERE SUPPORTED.

TRADING INCREASED IN VOLUME WHEN THE MARKET GOT INTO ITS STRIDE.
BONDS DECLINED FRACTIONALLY. U.S. GOVERNMENTS WERE DULL WITH PRICES

DOWN SMALL AMOUNTS.

COTTON FUTURES FIRMED 4 TO 7 POINTS AT THE OPENING.
RAILROAD SHARES GENERALLY WERE HIGHER. so WERE THE LEADING

INDUSTRIAL SHARES. UTILITIES WERE IRREGULAR.
STEELS GAINED FURTHER AFTER THE OPENING. MOTORS STRENGTHENED.
BROKERS REPORTED ONLY SMALL ORDERS BEFORE THE OPENING.

9/26--R922A
WCNS26

ADD FOREIGN EXCHANGE, NEW YORK (WCNS23)

THE FRENCH FRANC WAS QUOTED NOMINALLY AT 4.50 CENTS TO 5 CENTS,
BUT NO BUSINESS WAS CONSUMMATED. THAT RANGE DISCOUNTS THE FRANCE
DEVALUATION WHICH IS SCHEDULED TO TAKE PLACE MONDAY. YESTERDAY'S

CLOSING FRANC QUOTATION WAS 6.58-1/2 CENTS. PARITY WITH THE DOLLAR
WAS 6.63 CENTS.
THE DUTCH GUILDER WAS QUOTED NOMINALLY AT 67 CENTS, OR DOWN 54

POINTS FROM YESTERDAY'S CLOSE. PARITY OF THE UNIT WITH THE DOLLAR IS
68.06 CENTS.
IT WAS IMPOSSIBLE TO GET EVEN NOMINAL RATES ON OTHER EUROPEAN
CURRENCIES.

9/26--R925A

349
ADD FOREIGN EXCHANGE, NEW YORK

IN LATER TRANSACTIONS A SMALL AMOUNT OF BUSINESS WAS REPORTED PUT

THROUGH IN STERLING, RANGING BETWEEN $4.92 AND $4.94. NOMINAL QUOTATIONS ON THE FRANC AND THE GUILDER WERE WITHDRAWN.

9/26--EC1009A

WCNS53

NEW YORK. .--FRENCH MUNICIPAL AND RAILWAY BONDS BROKE AS MUCH AS

8 POINTS ON THE BOND MARKET TODAY. CITY OF SOISSONS 6S OF 1936 SOLD AT

155 1/4, OFF 8 POINTS, WHILE NORD RAILWAY 6 1-2S OF 1950 DROPPED 5
1-2 POINTS TO 120.1-2. THERE WAS NO TRADING IN FRENCH GOVERNMENT
OBLIGATIONS.

9/26--R1036A
WCNS77

NEW YORK.--A $1,000 FRENCH GOVERNMENT BOND, SERIES 7/-1/25 OF
1941, WAS SOLD ON THE STOCK EXCHANGE TODAY AT 140, OFF 6-1/2
POINTS FROM THE PREVIOUS CLOSE, A NEW LOW FOR THE YEAR.
THE UNSTAMPED GOVERNMENT ISSUE, 7S OF 1941, WAS OFFERED IN

RAPID SUCCESSION AT 158, 157, 155, 153, 151 AND 150, THE LATTER
REPRESENTING A 10-POINT DECLINE.

EARLIER TRANSACTIONS IN CITY OF SOISSONS 6S OF 1936 WAS MADE AT

155-1/4, OFF 8 POINTS. SIX BONDS WERE TURNED OVER IN NORD RAILWAY,
OFF 5-1/2 POINTS.
POLISH BONDS DROPPED AS MUCH AS 4 POINTS, BUT OTHER FOREIGN FUNDS WERE
GENERALLY ONLY FRACTIONALLY CHANGED.

9/26--R1222P

350

The Markets

WCNS59

NEW YORK, --BULLISH INTERPRETATION OF THE FRENCH AND SWISS
DECISION TO DEVALUE THEIR CURRENCIES SENT THE STOCK MARKET SOARING TODAY

IN THE MOST ACTIVE TRADING SINCE JULY 27.
LOSSES SUSTAINED EARLY IN THE WEEK WHEN THE MARKET WAS DISCOUNTING
THE FRENCH DEVALUATION WERE WIPED OUT.

THE LIST OPENED QUIET AS TRADERS CAUTIOUSLY FELT THEIR WAY. THEN
SHORTS RUSHED TO COVER. BEFORE THE FIRST HALF HOUR WAS OVER PRICES HAD

BEEN BID UP MORE THAN 3 POINTS IN THE MAIN LIST AND AS MUCH AS 8 POINTS

IN A STOCK LIKE ALLIED CHEMICAL. THE TAPE FELL BEHIND.
BUYING LIGHTENED BEFORE THE END OF THE FIRST HOUR AND PRICES REACTED

FROM THE HIGHS. WHEN THE LIST HAD CONSOLIDATED ITS POSITION IT SET OFF
ON ANOTHER ADVANCE JUST BEFORE THE CLOSE THAT CARRIED THE AUTOMOBILE
ISSUES TO NEW HIGHS ON THE MOVEMENT AND BROUGHT SHARP ADVANCES IN

RAILROAD ISSUES. STEELS MOUNTED. UTILITIES WERE DULL AT SMALL GAINS.
OILS, MERCANTILE SHARES AND SPECIAL ISSUES WERE FIRM.
OTHER MARKETS MOVED IRREGULARLY. BONDS WERE MIXED WITH FRENCH
ISSUES DROPPING TO CONFORM WITH A NEW GOLD CONTENT OF THE FRANC.
DOMESTIC CORPORATION BONDS WERE HIGHER. U.S. GOVERNMENTS WERE FAIRLY

ACTIVE AND STEADY AFTER AN EARLY DECLINE.

9/26--R1124A

351
WCNS61

ADD STOCK MARKET, NEW YORK

VERY LITTLE BUSINESS WAS DONE IN FOREIGN EXCHANGE MARKETS.
AT THE HIGHS OF THE DAY THE MARKET SHOWED GAINS ON THE WEEK AND THE
AVERAGES WERE NEAR THE HIGHS SINCE 1931 MADE EARLIER IN THE MONTH.
WHILE THE MARKET WAS ADJUSTING TO THE INTERPRETATIONS OF WALL STREET
ON THE DEVALUATION PLANS, BUSINESS NEWS CONTINUED HIGHLY FAVORABLE.
FRENCH MARKETS WERE CLOSED TODAY. THE LONDON STOCK EXCHANGE
OBSERVED THE USUAL SATURDAY CLOSING. COMMODITY MARKETS ABROAD WERE

HIGHER IN THEIR RESPECTIVE CURRENCIES BUT RELATIVELY UNDER YESTERDAY
BECAUSE OF A DROP IN RATES. DOMESTIC COMMODITY MARKETS WERE MIXED AND
QUIET.

BROKERS CONSTRUCTED THE FRENCH MOVE AS FAVORABLE. HORNBLOWER &

WEEKS, STOCK EXCHANGE HOUSE, ADVISED CLIENTS BEFORE THE OPENING:
"WE REGARD THE OVERNIGHT DEVELOPMENTS AS FAVORABLE AND THINK STOCKS

ARE A BUY."
BANKERS BELIEVED THE MOVE WAS HIGHLY FAVORABLE IN THAT IT ELIMINATEI
A TROUBLOUS SITUATION IN WORLD CURRENCIES. THEY REGARDED THE PLANS TO
DEVALUE AS A STEP TOWARD EVENTUAL STABILIZATION OF WORLD CURRENCIES.

SOME OF THEM ANTICIPATED HEAVY LOSS OF GOLD BY THE U.S. WHICH THEY
CONSTRUED FAVORABLY.

9/26--R1130A
ADD STOCK MARKET, NEW YORK

PRICES WAVERED A BIT AT MID-SESSION AND VOLUME LIGHTENED. ANOTHER
BUYING RUSH JUST BEFORE THE CLOSE WAS BELIEVED TO HAVE BEEN INFLUENCED
BY INTERVENTION OF THE UNITED STATES TREASURY DEPARTMENT TO PREVENT

A RUSSIAN RAID ON THE POUND STERLING.
R1133A

352

NEW YORK.--FRENCH BONDS BROKE ON THE STOCK EXCHANGE TODAY ON

DECISION OF THE FRENCH GOVERNMENT TO DEVALUE THE FRANC, WHILE U. S.
GOVERNMENT BONDS WORKED IRREGULARLY HIGHER IN ACTIVE TRADING. DOMESTI
CORPORATION ISSUES STRENGTHENED IN LINE WITH STOCKS.
TRADING WAS AT THE MOST ACTIVE PACE SINCE FEBRUARY 8, APPROXIMATING

$9,330,000, AGAINST $7,475,000 YESTERDAY.
JUST BEFORE THE CLOSE, A SINGLE SALE WAS EFFECTED IN THE FRENCH

GOVERNMENT 7-1/2S OF 1941. IT SOLD AT 140, OFF 16-1/2 POINTS AND
A NEW LOW FOR THE YEAR. THE UNSTAMPED 6-1/25 OF 1941 WERE OFFERED AS

LOW AS 150, OFF 10 POINTS. A SINGLE SALE ALSO WAS TRANSACTED IN

CITY OF SOISSONS 6S OF 1936 AT 155-1/4, OFF 8 POINTS. NORD RAILWAY
BONDS, 6-1/25 OF 1950 OPENED AT 120-1/2 AND THEN SOLD DOWN TO 120, OFF
6 POINTS NET. POLAND 7S OF 1947 DROPPED 4 POINTS, BUT THE FOREIGN
LIST OTHERWISE WAS STEADY.

GAINS IN U.S. GOVERNMENT BONDS RANGED TO 6/32NDS OF A POINT AND

LOSSES TO 3/32NDS. THE NEW TREASURY 2-3/45 OF 1956-59, WHICH REACHED
A NEW LOW YESTERDAY, RALLIED TO CLOSE AT 101.4 UP ONE-THIRTY SECOND ON
THE DAY.

RAILROAD BONDS LED THE ADVANCE IN THE CORPORATE LIST, AMERICAN

TYPE-FOUNDERS 5S AT 146, UP 4 POINTS FEATURED INDUSTRIALS.

9/7 --E1248P F

8.40

SEP26 1936
RESERVE REQUIREMENTS AND MONETARY AGREEMENT

WASHN - WHETHER THE REVALUATION OF THE

FRANC WILL LEAD TO A LARGE GOLD EXODUS FROM
THE UNITED STATES AND THUS PROMPT THE FEDERAL
RESERVE SYSTEM TO LOWER MEMBER BANK RESERVE
REQUIREMENTS WAS ONE OF THE MOST IMP SEP 26 1936

QUESTIONS RAISED BY THE TRI PARTITE MONETARY"
AGREEMENT ANNOUNCED LAST NIGHT

SECY MORGENTHAU IN HIS LETTER TO SENATOR
VANDENBERG POINTED OUT THAT ONE OF THE
REASONS THE RESERVE BOARD RAISED RESERVE RE-

QUIREMENTS WAS TO -IMMOBILIZE- GOLD IMPORTS so
THAT THEY COULD BE RELEASED AGAIN IF THE NEED

AROSE - THE RESERVE BOARD ITSELF GAVE THIS
AS ONE OF THE REASONS FOR ITS ACTION - THE
ANSWER TO THE FUTURE OF RESERVE REQUIREMENTS

WILL DEPEND UPON THE SIZE OF THE GOLD OUTFLOW

11,43
MORGENTHAU SAYS HE WILL GO THE LIMIT

OF STABILIZATION FUND TO MAINTAIN TRI-PARTITE
AGREEMENT

WASHN -

SEP 20 1936

354

DOW JONES - September 26, 1936.

TREASURY BUYS STERLING FROM RUSSIA 11.03
WASHN-UP- SECRETARY OF THE TREASURY HENRY

MORGENTHAU JR ANNOUNCED TODAY THAT THIS COUN-

TRY HAS PURCHASED I 000 000 POUNDS STERLING
OFFERED ON THE EXCHANGE MARKETS BY THE RUSSIAN
SEP261936
GOVERNMENT -AT ANY PRICE-

11.11
STABILIZATION FUND USED TO BUY STERLING
WASHN - SECRETARY MORGENTHAU TODAY ANNOUN-

CED THAT THE STABILIZATION FUND WAS USED TO
BUY ONE MILLION POUNDS STERLING TO OFFSET A

SALE OF A LIKE AMOUNT BY THE RUSSIAN STATE BANK
THE SECRETARY SAID THIS WAS THE ONLY
ATTEMPT TODAY MADE BY ANY GOVERNMENT INDIVIDUAL OR BANK TO DRIVE-DOWN THE POUND OR
OTHERWISE TAKE ADVANTAGE OF THE TRI-PARTITE
CURRENCY AGREEMENT BETWEEN GREAT BRITAIN

THE UNITED STATES AND FRANCE - HE SAID THAT
THIS MORNING IT WAS DISCOVERED THAT SOMEBODY
WAS TRYING TO DRIVE DOWN THE POUND AND

SUCCEEDED IN DRIVING IT TO 4 DLS 91C FROM 5
DLS 02C - ON MAKING INQUIRY THE SECRETARY
SAID HE HAD LEARNED THAT THE RUSSIAN STATE
BANK HAD GIVEN AN ORDER TO -SELL ONE MILLION
POUNDS STERLING AT BEST THIS HE POINTED OUT THE RUSSIAN BANK

WISHED TO SELL AT ANY PRICE
-WHEN I LEARNED THIS- THE SECRETARY SAID
- I BOUGHT WITH THE STABILIZATION FUND MONEY THE
STERLING THE RUSSIAN STATE BANK WAS USING TO
DEPRESS STERLING

-THIS IS THE ONLY CASE OF ANY GOVERNMENT

BANK OR ANY INDIVIDUAL TO TRY TO ARTIFICIALLY
INFLUENCE THE FOREIGN EXCHANGE MARKETS IN THE

UNITED STATES - I SINCERELY HOPE THIS INCIDENT WILL NOT BE REPEATED - THE SECRETARY
SAID

IN CALLING ATTENTION TO THE INCIDENT TODAY
THE SECRETARY REFERRED TO THE POINT NUMBER

FIVE IN THE JOINT STATEMENT ISSUED BY THE THREE
AGREEING NATIONS ON CURRENCY ADJUSTMENT

THIS POINT IN THE STATEMENT SAYS THAT
THE GOVERNMENT OF THE UNITED STATES -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 PROMOTESECRETARY MORGENTHAU OPENLY EXPRESSED HIS

RESENTMENT AT THE ATTEMPT OF THE RUSSIANBANK

TO UPSET THE PLANS OF THE THREE LEADING
WORLD POWERS TO ADJUST WORLD CURRENCIES -

THE MANNER IN WHICH HE SAID THAT HE HOPED THE
INCIDENT WOULD NOT BE REPEATED SEEMED MORE

LIKE A WARNING THAN A MERE STATEMENT

IT IS APPARENT THAT THE TREASURY SECRE-

TARY IS PREPARED TO USE THE STABILIZATION FUND
TO THE FULLEST EXTENT TO MEET ITS PART OF THE
COOPERATIVE AGREEMENT BETWEEN THE THREE
COUNTRIES

THE SECRETARY WAS GIVEN NO OPPORTUNITY BY

THE PRESS AT THE SPECIAL CONFERENCE CALLED
THIS MORNING TO DISCUSS DETAILS OF THE EXCHANGE
MOVES MADE TODAY SINCE THE PRESS UNCEREMONI-

OUSLY LEFT THE CONFERENCE TO GET THEIR STORIES
ON THE WIRE BEFORE THE CLOSE OF THE FOREIGN
EXCHANGE MARKETS - AS THE REPORTERS LEFT THE
CONH ERENCE ROOM THE SECRETARY PROMISED TO AWAIT

THEIR RETURN FOR FURTHER DISCUSSION OF THE DEVELOPMENTS TODAY

-0-

SEP 26 1936

no, 1000.

WCNS155

ADD BRITISH TREASURY, LONDON
THE TREASURY STATEMENT ANNOUNCED THAT BRITAIN, FRANCE AND THE

UNITED STATES DECLARE THEIR INTENTION TO CONTINUE TO USE APPROPRIATE
AVAILABLE RESOURCES TO AVOID ANY DISTURBANCE OF THE BASIS OF INTERNAT
IONAL EXCHANGES IN CONSEQUENCE OF THE PROPOSED READJUSTMENT OF THE
FRANC.

THE BRITISH . FIGURE AT WHICH IT WAS SUGGESTED THE FRANC BE STABILIZED, 95 TO 105, REFERS TO THE NUMBER OF FRANCS TO THE POUND STERLING
(APPROXIMATELY $5).

9:25 --E720P.

SEP26 1936

ADD MORGENTHAU

11,45

WASHN - DISCUSSING THE RUSSIAN STATE BANK
ORDER TO SELL A MILLION POUND STERLING AT
ANY PRICE SECY MORGEHTNAU SAID THAT IF THERE
ARE ANY MORE ATTEMPTS TO UPSET THE CURRENCY

PROGRAM OF THE UNITED STATES GREAT BRITAIN
AND FRANCE THE U S TREASURY IS READY AND

WILL GO THE LIMIT OF THE 2 000 000 000 DLS
STABILIZATION FUND
HE SAID THAT THE TRANSACTION TODAY
IN WHICH THE TREASURY STOOD READY FOR A
STANDING ORDER TO BUY ALL THAT THE RUSSIAN
STATE BANK WOULD SELL RESULTED IN A -HANDSOME

PROFIT- - HE POINTED OUT THAT THE
STABILIZATION FUND WAS CREATED TO -EVEN
OUT SHARP SWINGS- IN FOREIGN EXCHANGE AND THAT

SINCE IT IS UP TO EACH COUNTRY TO DO ITS
BIT AND SINCE THE LONDON AND PARIS MARKETS
WERE CLOSED IT WAS UP TO THE FEDERAL TREASURY

OF THE U S TO STOP IN TODAY
THE SECY REVEALED THAT HE HAD TALKED WITH
PRESIDENT ROOSEVELT ON TWO OCCASIONS THIS

MORNING AND THAT THE PRESIDENT HAS GIVEN FIRST
CONSIDERATION TO THE CURRENCY PLAN WHICH WAS
ANNOUNCED BY THE THREE NATIONS YESTERDAY

-1 COULDN-T HAVE CARRIED THIS THROUGH WITHOUT

HIS ASSISTANCE- THE SECY SAID
THE SECY ALSO TALKED THIS MORNING WITH

HIS REPRESENTATIVE IN PARIS AND LEARNED THAT THE
TREASURY MOVE TO OFFSET THE RUSSIAN ACTION

RECEIVED AN -EXCELLENT- RECEPTION IN THE
FRENCH CAPITAL

-0-

120

ADD MORGENTHAU

WASHN - SECY MORGENTHAU DECLINED TO GIVE

ANY INTIMATION AS TO WHAT HE THOUGHT THE RUSSIAN

BANK SOUGHT TO ACCOMPLISH BY ITS ACT THIS
MORNING NOR WOULD HE GIVE DETAILS ON HOW IT
WAS DISCOVERED THAT THE RUSSIAN BANK WAS

BEPRESSING STERLING - HE STATED THAT HE
LEARNED THAT SOMEONE WAS DRIVING STERLING
DOWN ABOUT 15 MINUTES AFTER THE MARKET

OPENED THIS MORNING AND THAT HIS ORDER TO BUY
ALL THAT RUSSIA HAD TO OFFER WAS PROMPTLY
PLACED

-0-

59

UNITED PRESS - Se tember 26, 1936.

is

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HOPE THAT THISLINCHER WILLINOT

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ONEXARY CONDITIONS AND RESULTING.EQU 11

PATIENT

TRADE, CONTAINED THE ROBERWI CAMEFULLY
BY,

SINTHALIAT FRESH CONFERENCE THIS MORNING:
THE GOVERNMENT OF THE UNITED STATES, IN COMMON WITH THE GOVERNMENTS

FRANCE AND FREET WRITAIN, DESIGN AND INVITES THE CO-OFERATION OF THE
OTHER MICNE TO REALIZE INY PO! FOR 1 19 DOWN IN THE PRESENT DECEASATION

IT THE NC COUNTY any AT TO ORDAIN VN HDREAGONABLE
COMPATIN FUT EXCHANGE ADVANTAGE hut NAMER THE

EFFORT ae KESTONE WHICH
9F TAKE

S.A.

IN HEADING THIS ONGTATION THE DEL
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Is THIS MORNING UNPRED
STORY BE ASKED CONRESPONDENTS

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THE

MORGENTHAU & U. S. COMMENT OTHER THAN MARKETS

UNITED PRESS - September 26, 1936.

; 31

WCNS49

SECRETARY MORGENTHAC HAS CALLED A PRESS CONFERENCE FOR

10:40 REPEAT 10:40 A.M.

9/326--R1028A

WONDER

ADD MORGENTHAU

A SECOND PRESS CONFERENCE WAS HELD BY THE SECRETARY SHORTLY AFTER HIS

FIRST ANNOUNCEMENT. AT THIS, HE EXPRESSED THE OPINION THAT THE AGREEMENT BETWEEN THE THREE COUNTRIES WAS NOT AFFECTED BY ANY OUTSIDE MOVES

AS FAR AS THEY ARE CONCERNED.

"WELL, AS FAR AS THE GENTLEMEN ARE CONCERNED, WE'RE STILL ALL
GENTLEMEN," HE SAID.

9/26--R1146A

362
WONDOI

ADD BELGIUM

SECRETARY MORGENTHAU, EXPRESSING "GREAT GRATIFICATION,* RELEASED
THE FOLLOWING NOTE FROM THE BELGIAN EMBASSY WHICH HAD BEEN TRANSMITTED

TO HIM BY THE STATE DEPARTMENT:
"THE BELGIAN GOVERNMENT HAS LEARNED OF THE DECLARATIONS BY WHICH
THE GOVERNMENTS OF FRANCE, GREAT BRITAIN AND THE UNITED STATES HAVE
CONSIDERED IT OPPORTUNE TO EXPRESS THEIR INTENTIONS WITH REGARD TO THE
MONETARY AND ECONOMIC PROBLEMS EXISTING AT THE PRESENT TIME, AND JOINS
WITH THEM IN AFFIRMING A COMMON INTENTION OF SAFEGUARDING THE PEACE,
OF FAVORING THE ESTABLISHMENT OF CONDITIONS WHICH WILL CONTRIBUTE TO
THE RESTORATION OF ORDER THROUGH THE INTERNATIONAL ECONOMIC RELATIONS

AND TO PURSUE A POLICY WITH A VIEW TO DEVELOPING WORLD PROSPERITY AND

IMPROVING THE STANDARD OF LIVING OF ALL PEOPLES."

9/26--E132P.

WCNS86

BELGIUM TODAY INFORMED THIS GOVERNMENT THAT IT WOULD

COLLABORATE IN THE THREE-POWER "GENTLEMEN'S AGREEMENT* TO SEEK

STABILIZATION OF WORLD CURRENCIES.

9/26--E125P.

363

WCNSTO

ADD MORGENTNAU, (WCNS68)

"I SINCERELY HOPE THAT NO ONE WILL TRY THIS AGAIN," MORGENTHAU SAID.
HE REVEALED THAT FLUCTUATIONS IN THE POUND WERE NOTED APPROXIMATELY THREE-QUARTERS OF AN HOUR AFTER NEW YORK MARKETS OPENED.

IMMEDIATELY AFTER THE DROP WAS DETECTED, HE SAID ITS CAUSE WAS
LEARNED AND ACTION DECIDED UPON.
THE SECRETARY DISCLOSED THAT THIS GOVERNMENT MADE MONEY BY THE

OPERATION. HE SAID:
"WE BOUGHT IT AT A PRICE WHICH GIVES THE UNITED STATES GOVERNMENT
A HANDSOME PROFIT."

HE POINTED OUT THAT IT WAS UP TO THIS GOVERNMENT TO ACT IN THIS
EMERGENCY AS ENGLISH MARKETS WERE CLOSED AND OUR OWN WERE THE ONLY ONES
AFFECTED.

"WE HAVE A STABILIZATION FUND WHICH WAS CREATED JUST FOR THIS
PURPOSE--TO EVEN OUT SHARP SWINGS," THE SECRETARY SAID.
HE STATED THAT THE BULK OF THE RUSSIAN OFFERING WAS PURCHASED BY
THIS NATION.
HE GRAVELY WARNED ALL COUNTRIES THAT THIS GOVERNMENT WAS WILLING TO

"GO THE LIMIT" TO PROTECT FINANCIAL EQUILIBRIUM AND AVERT SHARP
CHANGES IN WORLD EXCHANGE.

364

HE POINTED OUT THAT BY THIS HE MEANT HE WAS WILLING TO USE THE

ENTIRE $2,000,000,000 STABILIZATION FUND TO MAINTAIN CURRENCY PEACE.
MORGENTHAU PRAISED PRESIDENT ROOSEVELT FOR HIS EMERGENCY ASSISTANCE

IN THE CRISIS. HE REVEALED THAT HE HAD TALKED WITH THE PRESIDENT TWICE
TODAY AND SAID:

"I HAVE SPOKEN WITH HIM IN ALMOST EVERY FREIGHT YARD OF EVERY
STATION IN AMERICA DURING ALL HOURS OF THE DAY AND NIGHT.
"HE HAS LET EVERYTHING HE WAS DOING DROP TO GIVE THIS MATTER HIS
FIRST CONSIDERATION.

"HE HAS BEEN PERFECTLY MAGNIFICENT. I COULD NOT HAVE ACCOMPLISHED
THIS WITHOUT HIS ASSISTANCE."
THE SECRETARY SAID HE HAD SPOKEN WITH ATTACHES AT THE PARIS
EMBASSY HERE AND HAD LEARNED THAT "OUR MOVE HAD RECEIVED AN EXCELLENT

RECEPTION IN FRANCE."

9/26--R1157A

WCNS71

SECRETARY MORGENTHAU SAID THIS NOON THAT HE WILL LEAVE WASHINGTON

TODAY FOR HIS FARM IN NEW YORK STATE AND THAT HE WILL SEE THE PRESIDENT
AND DISCUSS THE NEW MONETARY ACCORD TOMORROW.

9/26--R1158A

12.10
HULL COMMENTS ON MONETARY AGREEMENT

WASHN - SECY OF STATE HULL SAID THAT HE
APPROVED HIGHLY OF THE MONETARY AGREEMENT

BETWEEN FRANCE ENGLAND AND THE U S AND SAID
THAT THE AGREEMENT SHOULD GREATLY

FACILITATE THE REDUCTION OF EXCESSIVE PHASES
OF QUOTA EXCHANGE CONTROL AND OTHER EXCESSES
IMPEDIMENTARY TO COMMERCE BETWEEN NATIONS

HE ALSO SAID THAT IT SHOULD AID TRADE
AND COMMERCE AND TOOK THE OCCASION TO STRIKE

AT CRITICS OF THE TRADE PROGRAM - ONLY
YESTERDAY THE SECY ISSUED A WRITTEN STATEMENT
DIRECTLY AIMED AT GOV LANDON FOR THE GOVERNOR-S
CRITICISM OF RECIPROCAL TRADE AGREEMENTS

-0-

SECRETARY HULL

UNITED PRESS - September 26, 1936.

356

Hill Statement

WCNS65

THE MONETARY ACCORD AGREED UPON BY THE UNITED STATES, GREAT

BRITAIN AND FRANCE IN CONNECTION WITH THE DEVALUATION OF THE FRENCH
FRANC SHOULD PROVE A BOON TO INTERNATIONAL TRADE AND WORLD ECONOMIC

RECOVERY, SECRETARY HULL SAID THIS MORNING.

9/26--R1140A

add Hall

WCNS69

ADD HULL (WCNS65)

HE INTIMATED THAT WORLD EXCHANGE STABILIZATION HAD BEEN BROUGHT A
STEP NEARER BY THE MONETARY ACCORD AND SAID THIS ADVANCE TOWARD

STABILITY SHOULD GREATLY FACILITATE THE REDUCTION OF IMPORT QUOTAS,
EXCHANGE CONTROLS AND OTHER IMPEDIMENTS TO WORLD TRADE.

HULL COUPLED HIS PRAISE OF THE MONETARY AGREEMENT WITH A

REPLY TO CRITICS OF HIS RECIPROCAL TRADE POLICY WHICH, HE SAID,
WAS IN HARMONY WITH THE MONETARY AGREEMENT, AN "INDISPENSABLE PART OF
ANY PROGRAM FOR FULL AND STABLE BUSINESS RECOVERY."

9/26--R1148A

GENERAL

UNITED PRESS - September 26, 1936.

7

WCNS19

PERTINENT POINTS IN CONNECTION WITH FRANCE'S DECISION TO DEVALUE
HER CURRENCY INCLUDE:

1.--THE UNITED STATES AND GREAT BRITAIN AGREED TO "USE ALL MEANS TO
PREVENT MONETARY DIFFICULTIES.*

2.--THE FRENCH GOVERNMENT WILL SEEK DEVALUATION LEGISLATION FROM AN
EXTRAORDINARY PARLIAMENT SESSION CALLED FOR MONDAY. DEVALUATION PRO-

BABLY WILL BE 1/3 OR LUXR OF THE PRESENT FRANC VALUE MEANING A CUT IN
THE GOLD CONTENT FROM 65.05 MILLIGRAMS OF GOLD OF 0.900 FINENESS PER

FRANC TO 49 OR 43 MILLIGRAMS. STERLING FRANC RATIO WILL BE AROUND
100 TO 114 FRANC FOR THE POUND AGAINST 77 NOW AND THE DOLLAR WILL BE
WORTH AROUND 20 FRANCS COMPARED TO ABOUT 15.19 TODAY. THE FRANC WILL
BE AROUND 5 CENTS COMPARED WITH 6.58 1/2 CENTS YESTERDAY.

3.--FRENCH MARKETS ARE CLOSED UNTIL END OF PARLIAMENT DEBATE. BANK
OF FRANCE GOLD SALES TO INDIVIDUALS ARE ENDED AND THE GOVERNMENT WILL

SEEK PERMISSION TO REQUISITION ALL GOLD AT THE PREVAILING RATE, MEANING VIRTUAL ABANDONMENT CF THE GOLD STANDARD.

4.--A SPOKESMAN FOR THE NETHERLANDS GOVERNMENT SAID HOLLAND WILL
NOT DEVALUE CORRESPONDINGLY TO FRANC DEVALUATION.

SWITZERLAND, IT IS UNDERSTOOD, WILL FOLLOW HOLLAND.

GERMANY PROBABLY WILL NOT DEVALUE AS HER MANAGED CURRENCY IS NOT

SUBJECT TO INTERNATIONAL TRADING.

9/26--R903A

368

WCNS50

HIGHLIGHTS OF THE WORLD CURRENCY SITUATION:

SWITZERLAND DECIDES TO FOLLOW FRANCE IN DEVALUATING CURRENCY.

BELGIUM AGREES TO JOIN U.S., GREAT BRITAIN AND FRANCE IN UNDERSTANDING POINTING TOWARD WORLD STABILIZATION. ITALY AND OTHERS
EXPECTED TO FOLLOW.

FRENCH CABINET DRAFTS MEASURES TO EASE HARDSHIPS OF DEVALUATION.

FORMAL BILL CUTTING GOLD CONTENT OF FRANC BY ABOUT ONE-THIRD TO BE
PRESENTED TO PARLIAMENT MONDAY.

STOCKS AND BONDS HIGHER IN NEW YORK. FOREIGN EXCHANGE PARALYZED.

FRANCS QUOTED NOMINALLY AT 4 1/2 TO 5 CENTS, COMPARED WITH YESTERDAY'S
6.58 CENTS. ALL FRENCH MARKETS CLOSED AND GOVERNMENT PREPARES TO

REQUISITION ALL GOLD.

9/26--R1030A

369

11:05 (Standard Time)
Saturday, September 26, 1936

MEMORANDUM

Mr. Knoke of the Federal Reserve Bank of New York telephoned and advised

that he had advanced the bid price on sterling as requested to 4.95 from the
previous price of 4.94 1/2. 50,000 pounds were sold by the Chase Bank to us

at 4.94 3/4, representing commercial business, probably cotton bills from the
South. He also stated that the Bank of Canada had telephoned and stated that
they were in the market for about 50,000 pounds sterling and Knoke informed

them that it did not look as if they would be able to obtain this without paying
higher than 4.95. Knoke also advised receipt of a telephone call from Cariguel
of the Bank of France who was anxious to know if, when they started operating
on Tuesday, they would be able to obtain from us gold to cover any dollar

balances they might acquire in the process of stabilizing their exchange at the
new level.

On the question of selling 50,000 pounds sterling to the Bank of
Canada, as they are a central bank the Secretary thought that it might
be well to sell them the 50,000 pounds at 4.95. Mr. Lochhead thought
that as long as we were paying 4.95 for sterling in the market, we

should not sell at the same price, but should offer it at a slightly
higher price, say 4.95 Knoke felt that we should not sell to them

at all since we were buying sterling in an endeavor to keep the price
up. The Secretary agreed with Knoke, but jestingly remarked to him
that he was getting very bullish on sterling.

ek

370

GRAY

U

London

Dated September 26, 1936
Rec'd 9:15 a.m.

Secretary of State
Washington
RUSH

447, September 26, noon.
FOR THE SECRETARY OF TREASURY

BEfore leaving for Paris this morning Monick, French
Financial Attache, requested the Embassy to send the following message:

"Now that the agreement regarding currencies has

been concluded I cannot but recall the conversations which
I had in Washington with you -- conversations which have
formed one of the fundamental Elements of this agreement,

which I hope will have the happiest results in the realm of
'fair EXECUTION'. I also wish to present my congratulations
and to send respectful remembrances."
BINGHAM
KT.P

371
GRAY

U

Paris

Dated September 26, 1936

Rec'd 9:51 a.m.

Secretary of State
Washington

926, September 26, 11 a.m.
FROM COCHRAN.

At about one o'clock this morning the Minister of
Finance of France gave to the press the French text of
the declaration on monetary policy which was being made

simultaneously with the American and British corresponding
declarations. At the same time an official communique

was issued of which the following is a translation.
"The Council of Ministers has approved terms of a
declaration the tenor of which has been decided upon after
friendly conversations among the Governments of the United

States of America, of Great Britain and of France.
Taking note of this declaration, the Council of
Ministers has approved the terms of a monetary bill which

has as its ESSEntial object the adjusting of the value of
the franc to the present Economic situation.
The text provides in particular that the gold value
of the franc shall be constituted between 49 and 43

millegrams gold of 0.900 fineness. It provides
that until
new

372

U -2- #926, Sept. 26, 11 a.m. from Paris
new order an Exchange stabilization fund ENDOWED with

ten billion francs shall assure the control of the relations
between the franc and foreign currencies by maintaining

the parity of the franc in relation to gold within the
above mentioned limits.
Pending adoption of the bill by the Chamber, the Bank

of France is taking the necessary provisions to check

speculative maneuvers. The franc market will be strictly
controlled. The security and commercial Exchange will be
closed for SOME days."
The JOURNAL OFFICIAL of this morning September 26,

carries three decrees dated September 25, issued in
connection with the above mentioned development in French

monstary policy. There follow translations of the vital
provisions of Each:
FIRST D&CREE

"The Senate and the Chamber of Deputies are convoked

in extraordinary session for September 28, 1936."
SECOND DECREE

"Article I. The payment of commercial bills and

other corrercial obligations Expressed in gold or in forsign currencies becoming due as from September 26, 1936,

may be withheld upon the written request of the debtor;
the date from which the payments can be demanded will be
fixed

373

U -3- #926, Sept. 26, 11 a.m. from Paris
fixed by a decree of the Minister of Finance.

Article II. A protest cannot be drawn up before the
date fixed by the decision Envisaged in the preceding
article, as concerns commercial bills whos E payment has

been withheld under the conditions prescribed in the said

article.
Article III. During the same time, the interest of
the debt corresponding to the bills and other
commercial obligations referred to in the preceding decree
will be calculated at the rate of discount of the Bank of
France".
THIRD DECREE:

"The Security and Commercial Exchanges will be closed

beginning with September 26, 1936, and up to a date which

will be fixed by decree of the Minister of Finance."
Reagan and I have agreed that this one cablegran COVERS

the official developments. Please, therefore, provide
Commerce with copies.
WILSON

WWC

374

GRAY

U

ROME

Dated September 26, 1936

Rec'd 10:05 a.m.

Secretary of State
Washington

386, September 26, noon.

The newspapers this morning prominently publish ac-

counts of the French decision to devaluate the franc and

a full translation of the French text of the identic
declaration issued yesterday EVENING. There is as yet
no comment.
PHILLIPS
KLP

375

GRAY

U

Paris

Dated September 26, 1936

Rec'd 10:15 a.m.

Secretary of State
Washington

927, September 26, noon.
FROM COCERAN.

AGENCE ECONOMIC this morning carries perhaps the most

complete account so far available of the remarks of
Minister of Finance Auriol to the press upon the occasion
of issuing the declaration of monetary policy and the

official communique. A translation of this article
follows.
"After having read the declaration and communique

which were published this morning the Minister of Finance
indicated that he had just had a telephone conversation
with Washington during which Mr. Morgenthau, Secretary of
the Treasury, had wished the operation SUCCESS.

The Minister added that the greatest importance should

be attached from all points of view political, Economic and
financial, to the understanding reached between the three
great democracies.

This understanding they propose to all the other

nations of the world.

The

376

U -2- #927, Sept. 28, noon from Paris
The Minister Especially thanked the two friendly

governments for their collaboration and particularly
Mr. Morgenthau and Mr. Neville Chamberlain.

HE also rendered homage to the unlimited devotion of

his principal collaborators.
The Minister invited attention to the importance of
the invitation addressed to the other nations with the
view of cooperating for the realization of the policy
formulated in the common declaration.

Mr. Vincent Auriol indicated that the adjustment
decision followed long conversations which had taken

place very discreetly since the monta of June.
The government, he added, did not want alignment with-

out security or unilateral devaluation both of which were
forms of monetary war. (END OF SECTION ONE)
WILSON

WWC:KLP

377
GRAY
U

Paris
Dated September 26, 1936

Rec'd 10:30 a.m.

Secretary of State
Washington

927, September 26, noon (SECTION TWO)

However, the understanding reached represented on the
contrary the opening of a prolonged Era of monetary PEACE,
compared with Economic PERCE, the ESSENTIAL basis of PEACE

among nations.

The Minister recalled that at the time of the discussion which took place in the Chamber of Deputies on

June 16th last,he had rejected the principle of Exchange

control which leads to autarchy or to isolated devaluation,
which would have still more reenforced the measures of

defense of the other nations.
Today the prime fact is that the understanding reached
between the three great democracies and the three large
banks of issue was an understanding which reestablishes the

Equilibrium of the principal Economies.
'To realize this, M. Vincent Auriol proceeded, it

was necessary to adapt our currency, to adjust it to the
level of the others. The natural consequence will be the
resumption of our Economic activity and higher pricements
move-

378

U -2- #927, Sept. 26, noon (SEC. 2) from Paris
ments which may develop will be reduced because the
Government intends to maintain social peace through appropriate measures'.

The Minister indicated that from a moral point of

view he would propose: (1) the requisition of gold at
the present rate, (2) measures in favor of small incomes
of pensioners and war veberans, (3)adaptation of salaries

to the cost of living, the Government intending at the
same time to prevent any unjustified increase in prices

by utilizing more largely the full powers which it holds
in the customs field.
WILSON

KLP:CSB

5

379

U

GRAY

Paris

Dated September 26, 1936

Rec'd 11:30 a.m.

Secretary of State
Washington

927, September 26, noon (SECTION THREE)

Finally the Government envisaged with particular care
the situation of Departments and Communes and public bodies.

In this connection it had concluded a convention with the
Credit Foncier providing for the reduction to 5 per CENT
of loans granted to public bodies.

In the same order of ideas the rate of interest of
private mortgages would be reduced to 6.30 per cent.
The Government in order to facilitatethEir operations

will place a sum of two billion francs at five per cent
interest at the disposition of public bodies. Five hundred millions will be granted under the same conditions to
the Credit Maritime; and 500 millions more for mortgage
loans.

"The Government, concluded M. Vincent Auriol, is

persuaded that Parliament and public opinion, setting aside

the restrictions agreement interior politics, will aid in
the Government's task of Economic rEconstructions end its

work of pacification and will thus far respond to the confidence and to the hopes of the nations'".
Please provide Commerce with copies. (END MESSAGE)

380
September 26, 1936
11:45 A. M.

Mr. Oliphant, Mr. Opper, Dr. Viner, Mr. Lochhead, Mr.
Gaston and Mr. Haas were in the Secretary's office to discuss
the documents to be used in the event decision was reached to

sell gold to Great Britain and France. (Copies are attached.)
Dr. Feis joined the group later.
Mr. Oliphant said, "I think the thing to do would be to
have the letter approved the way it went over to Cochran with
two verbal changes." The Secretary asked, "This is 1-A?" Mr.
Oliphant replied, "Yes. And that's the press release stating
that we will sell gold to those countries on the list which
you publish from day to day, which countries are offering to
sell to us, to use the language of the statute, 'when you deem
advantageous to the public interest. IN

Mr. Morgenthau then inquired, "And this goes through the

stabilization fund?" Mr. Oliphant replied, "That's not controlled." Mr. Lochhead explained, "You can use it any way at
all." The Secretary then asked Mr. Lochhead, "Which way do
you want?" And he answered, "Frankly, I think it should go
through the stabilization fund at the present time." Mr.
Morgenthau remarked, "And this leaves it possible to do it
either way. What else?"
Mr. Oliphant said, "A letter to the Federal Reserve Bank
of New York and a corresponding letter to the Assay Office relating to carrying out this plan for the purchase of gold."
The Secretary said, "What else?" Mr. Oliphant replied,

"Then there comes the necessary license and that is a license
to the Federal Reserve Bank of New York." Opper said, "And

that's on the basis that it will not be done through the stabilization fund."
Mr. Morgenthau asked, "What else?" Oliphant said, "Then

the third thing, in case you want to conduct these operations
through the stabilization fund, there is a letter to be approved
by the President for the sale of gold, and a letter of authorization to be approved by the President for the purchase of
gold."
Mr. Morgenthau said, "Have you index of what I have here?"

Mr. Oliphant replied, "Yes." The Secretary then said to Mr.
Opper, "will you be in my office at 12:15 with these things
and an index and if Jake Viner has any suggestions, do it in
the next 30 minutes."
Dr. Viner said, "I would like to do it right now. What this
thing says is that the United States will also sell gold or ear-

-2-

381

mark gold for the account of an exchange equalization or
stabilization fund of those countries. Now if some
country
Interrupting
comes along without a stabilization fund
him, the Secretary said, "Now go into Oliphant's office and

do your fighting because I am awfully tired. I just want to
tell you that at 12:15 I want you in that room waiting for
me.
"This press story that the Russian State Bank offered to

sell 1 million pounds sterling at any price -- every paper in

France supported Blum except the communists and if they can
break this agreement, it can keep Blum from popular success
and the only market open was here and they were trying to do

it here. Every paper in France was favorable to the announce-

ment."

The Secretary then said to the group, "George Harrison
tried every way to stop me from doing this with the Russian
State Bank and I finally got the bank in New York which was

handling it and they said, Sure, as long as you don't mention
my name. Do you want us to stop doing business with Russia?
And I said, No, you keep right on because if it goes somewhere
else I can't find it. You keep on and be ep us informed."
H. M. Jr. then called Mr. Knoke and a record of their
conversation follows:

382
September 26, 1936.
11:48 a.m.

H.M.Jr:

Hello

Operator:

Mr. Knoke: - Go ahead.

H.M.Jr:

Knoke

K:

Yes Mr. Secretary.

H.M.Jr:

Don't tell me you put the price of sterling up

K:

No - I - I haven't done anything but the price has

again - I can't stand it.

lifted itself - it's 4.97 about.

H.M.Jr:
K:

H.M.Jr:

(Loud and long) No

But the fact is I think you could call it 4.99 and
you wouldn't get any, only I wouldn't Listen - we'll close the market at four - wait a
minute. (Aside to someone in his office. "4.99 -

H.M.Jr:

Is there somebody paying $4.97?

K:

Well $4.97 was bid - yes - about five minutes ago.

H.M.Jr:

Well what do you recommend?

Well I - I wouldn't go beyond that. If you want to make your bid at the closing $4.97 - I think you can
do it.

K:

H.M.Jr:

Make my bid what?

K:

$4.97.

K:

$4.97 it is.
Yes but then call it a day after that.

H.M.Jr:

Then we'll call it a day - and a damn good one.

H.M.Jr:

K:

H.M.J:
K:

(Laughter)

And listen Yes.

-2-

383

H.M.Jr:

I've struck off my list Russian Vodka.

K:

You did? (Laughter)

K:

Yes - I don't think they'11 give you any more after
this.

K:

No, from now on I take Norwegian caviar.
Oh I see.

H.M.Jr:

Yes.

K:

All right, sir.

H.M.Jr:

Yes.

H.M.Jr:

K:

H.M.Jr:

I hope it will agree.
I hope so. Well -

H.M.Jr:

Then we'll do that.
Now - now that it's out and I've done - done it - is

K:

You mean the statement?

K:

it all right?

H.M.Jr:

Yes.

K:

Well - all I can - I wouldn't have done it,

H.M.Jr:

But now it's done.

K:

Now it's done - I - I think you may get reactions
which you won't like.

Mr. Secretary.

H.M.Jr:

That's - from where?

K:

Well - from Moscow.

HM.Jr:

Good - swell.

K:

All right sir - if that is -

H.M.Jr:

Sure - fine - grand.

K:

All right.

-3-

334

H.M.Jr:

Let them explain.

K:

I hope it won't get the Chase into trouble.

H.M.Jr:
K:

H.M.Jr:
K:

No , no, no, no, no, no, no, no, no, no - No
no, no, no, no, no, no, no, no, no
But -

Say listen I'll make more money for the Chase
than they'11 ever make out of Russia.

But Mr. Secretary let me point out one thing that
you have - that hereafter you'll have to talk about
the Stabilization Fund

-

H.M.Jr:

No.

K:

You have refused heretofore.

H.M.Jr:

No - only in great great emergencies.

K:

I see.

H.M.Jr:
K:

It's all right. Take my word for it.
All right, sir. As long as you're not afraid of

Moscow, it suits me.
H.M.Jr:
K:

I never have been yet. O.K. Well thanks very much -

$4.97.

$4.97. Mr. Secretary, I never had a chance last
night to express my appreciation of the very great
kindness I had in Washington.

H.M.Jr:

Well I appreciate your assistance.

K:

Thank you.

H.M.Jr:

We'll do it again some time.

K:

All right, sir.

H.M.Jr:

Goodnight.

385
September 2€, 1936.
11:50 a.m.
H.M.Jr:

Hello

Operator:

Mr. Knoke. Go ahead.

H.M.Jr:

Hello - Knoke.

K:

Yes.sir.

H.M.Jr:

I just want to get the thing straight. There

seems to be a little mixup between Lochhead and

myself - hello?
K:

Yes.

H.M.Jr:

Did I understand correctly that the British gave
you an order to buy three million pounds Sterling

at $4.90 because they knew about the Russian order?

K:

No - no - no

H.M.Jr:

They did not know about it?

K:

No. They called in for the purpose of telling
us that they would to - they would not want to
see Sterling go below $4.90.

H.M.Jr:

Oh. But they did not know about the Russian order.

K:

They did not know about it.

H.M.Jr:

All right. We'll - I just wanted - there was a
little mixup - they - I thought you said they gave
you the order because they did know about the

Russian K:

Oh no - no - no - no.

H.M.Jr.

O.K.

K:

Yes sir.

H.M.Jr:

Look

K:

Yes.

H.M.Jr:

The Secretary of State isn't worrying about Moscow
so don't you.

-2-

K:

No, I expect to see a a good polo game this
afternoon without giving any thought to Russia.

H.M.Jr:

All
right and, as far as I'm concerned, they
better behave themselves.

386

K:

(Laughing) Yes.

H.M.Jr:

Yes.

K:

All right, sir. Oh, by the way, Cariguel is calling

againknow
and he
Iindon't
- wants to keep in touch with me tomorrow,

H.M.Jr:

Fine.

K:

Would you be at the -

H.M.Jr:

I'm at Beacon 211

K:

Beacon 211.

H.M.Jr:

New York.

K:

Yes.

H.M.Jr:

Yes.

K:

All right, sir.

H.M.Jr:

I'm available any time.

K:

Beacon 211

H.M.Jr:

Beacon, New York, 211

K:

Thank you.

H.M.Jr:

All right.

K:

Good night, sir.

H.M.Jr:

Good night.

387

GRAY

U

Bernz

Dated September 26, 1936
Rec'd Noon.

Secretary of State
Washington

74, September 26, noon.

I am informed that the Federal Council which is now

in session will today issue e. statement to the Effect that
Switzerland will maintain its present gold parity. I
learn confidentially from National Bank official that this
statement will be issued in conformity with the similar
one by Holland.

There is a great deal of nervousness in Swiss banking

circleo and a general uncertainty as to ultimate course
of Swiss franc. There was unusual activity this morning
on the Zurich bourse and banks are strictly refusing all
forward or speculative transactions in foreign Exchange
under authority of DECREE of June 19, 1936. No dealings

by banks in French france. Dollar sterling rates fluotucting below gold point. Drafts on NEW York 3.08 middle point.
All American Consulates in Switzerland report having COVERED

their fronc balances this morning.

In banking circles it is said that most foreign
accounts

388

U -2- #74, Sept. 26, noon from Bernc
accounts in Switserland are in dollars or sterling and
that these did not react this morning. Furthermore
bank balances in Swiss currency abroad are inconsiderable

and consequently no large transfers of currency are EXpected.

WILS ON
CSB

389
PARAPHRASE OF TELEGRAM RECEIVED

FROM: American Embassy, Berlin, Germany

DATE: September 26, 1936, 1 p.m.

NO.: 291
FROM FLACK FOR TREASURY.

NO. 55.

Today Schacht is addressing a miners group in
Saarbrucken. While it is known that Government quarters
are giving consideration to the French revaluation move,

it is doubted if a decision concerning German action
will be made until France has made it law, and until
Schacht gets back to Berlin.

A close collaborator of Schacht's, in a recent
conversation, stressed the quota relationship of Germany
to France above the benefits of meeting French devaluation.

However, it is difficult to see how Germany can withstand
meeting the new level of the French currency, especially
if such action is taken by Holland and Switzerland.
DODD.

EA:LWW

390

GRAY

LMS

Paris

Dated September 26, 1936

Rec'd 1:20 p. m.

Secretary of State,
Washington.

929, September 26, 2 p. m. (SECTION ONE)

The decision of the French Government to devaluate

the franc subject to Parliamentary ratification; che
convoking of Parliament for an extraordinery session on
September 28 and the other measures which accompany the

readjustment of the franc in the new monetary accord have
provoked, as was to be expected, intense interest and
lengthy comment in the French press.

The following excerpts taken from a cross section

of the press from left to right conveys fairly accurately
the reaction of the non-important political groups to
present developments.

of particular interest is the opinion of the Communist HUMANITE which has hitherto been active in Government

support. This paper on September 25 referring to the
large exports of gold reported by the Bank of France
remarks: It is all the more certain that we are witnessing
a now offensive against the franc and against the credit
of the state and that a press campaign is being waged
(END SECTION ONE)

WILSON

391

GRAY

LMS

Paris

Dated September 26, 1936

Rec'd 12:15 p. m.

Secretary of State,
Washington.

929, September 26, 2 p. m. (SECTION TWO)

in favor of devaluation or at least in favor of an alignment of international currencies and prices". "It goes
without saying, adds HUMANITE, that our Communist Party

remains and will remain firmly hostile to any endeavor to
undermine the Front Popular and will demand that the most
severe measures be taken against the instigators of such
dangerous action". Today's HUMANITE in commenting on the

decisions taken claims that the real reason for such
measures is the Government's armament program entailing

an expenditure of 14 billion francs over the four-year
period. Maintaining that the Communist Party is all in
favor of "making the rich pay" by affecting a progressive
tax on large incomes, HUMANITE adds that the failure of the
Government to adopt this democratic solution forced it

to resort to more drastic measures. Claiming that the
representatives of capitalism intend by these new measures
to reduce the share of the labor and middle classes in

the national income and to reduce to practically nothing
the salary increases obtained under the Matignon accords,
HUMANITE

392

LMS 2-No. 929, September 26, 2 P. m., Sec. 2, from Paris.
HUMANITE concludes: "Some people believe that the labor

classes will remain passive but they are mistaken. True
to the Popular Front program we will do everything to

prevent the standard of living of the French laboring
classes from being interfered with."
WILSON

PEG:KLP

393

GRAY

MED

PARIS

Dated September 26, 1936
RECEIVED 5 p.m.

Secretary of State,
Washington

929, September 26, 2 p.m. (SECTION THREE)

Reflecting the views of M. Blum's Socialist Party,
LE POPULAIRE considers that the three governments concerned have COME to an agreement to End the war of

currencies and to proceed to an alignment of their

currencies with the triple purpose of permitting,
under a regime of reconquered stability a renovation of
international trade, a renewal of confidence among
the nations and the consolidation of PEACE. LE
POPULAIRE considers that from the French point of

view the alignment of currencies is in reality a
new Evaluation of the franc and that there is no
question of a unilateral "devaluation". It is in
short " a treaty of financial peace". LE POPULAIRE,

after predicting a rapid revival of foreign trade
with England and the United States, concludes in an
obvious Endeavor to dispel the doubts of its readers
that from a domestic point of view SEVERE measures will

be taken by the Minister of National Economy to prevent a
monstary

394

MED - 2 - #929, September 26, 2 p.m. from Paris
monetary alignment from causing too great an increase

in the cost of living. Finally and as an obvious sop to
the working classes, LE POPULAIRE declares that the

Government has no intention of carrying out this

operation to the detriment of the working classes; it
proposes in fact to adopt measures in favor of the small
rente holder, of the small subscriber to bond issues,
of public and private salaried Employees, all in order
to protect the workers against any reduction of their
purchasing power.

The opinion of the ERE NOUVELLE (Herriot's organ)

is of interest inasmuch as it is distinctly hostile to
the movement. This paper claims that during all the
time that secret
WILSON

SMS:NPL

395

GRAY

INS

Paris
Dated September 26, 1936

Rec'd 3:15 p. m.

Secretary of State,
Washington.

929, September 26, 2 p. m. (SECTION FOUR)

negotiations were taking place with the two other countries
involved (following the advent into power of the Front
Populaire Government) public opinion was constantly assured
that the Government was resolved to maintain intangibility

of the franc. In reality however the Blum Cabinet was
secretly preparing for devaluation holding the Government's
inflationary policy resulting from such measures. ER NOUVELLE puts the blame on those "who would not resist the
demagogic campaign against the policy of budgetary defla-

tion which called for sacrifices but which was also a
policy of recovery".
The Radical Socialist OEUVRE which is Left Moderate

in its political tendencies does not anticipate any real
opportune moment to these monetary measures by the Com-

munists despite this anti-devaluation policy. When
Parliament meets this paper considers that the Communist

faction will only insist upon compensatory measures in

favor of the categories of citizens most directly affected
by

396

LMS 2-No. 929, September 26, 2 p. m., Sec. 4, from Paris.

by devaluation. It concludes that only slight difficulties
will be encountered by the Government in the Chamber on

Monday but that the attitude of the Senate justifies a good
deal of serious doubt.
WILSON
CSB

397
GRAY

MJD

Paris

Dated September 26, 1936.

Rec'd. 5:15 p. m.

Secretary of State,
Washington.

929, September 26, 2 p. m. (Section Five)
The representative organ of the Right wing of the

Radical Socialists considers that the greatest victims
of devaluation are to be found in the ranks of the middle
classes, the rente holders, and those receiving pensions.

After recalling the repeated declarations of the Front
Popular that it would never devalue, this paper considers
that these measures could have been avoided by a general

stablization of currencies.
The independent republican and moderate MARTIN points

out that the Government's communique Endeavors to conceal

the surgical operation on French money with its designation as an "alignment of currencies" which sounds better
than the ominous word "devaluation". LE MARTIN claims

that one can only align oneself to something stable and C.S

neither the pound nor the dollar has been stablized, the
franc will Eventually have to follow the fluctuations of
those currencies and in so doing will become a "satellite
of those two wandering currencies".
WILSON

398

GRAY

MED

PARIS

Dated September 26, 1936
RECEIVED 8:20 p.m.

Secretary of State,
Washington

929, September 26, 2 p.m. (SECTION XIX)
The conservative Right organ, the ECHO DE PARIS,

speculates upon the Effect on Parliament of these measures.

It wonders whether the parties of the majority will accept
with good grace what they have always considered as "a

leap into the unknown". This paper foresees a debate of
great importance which may produce within the present

parliamentary majority violent reactions heralding a
possible rupture. In short that devaluction night have
an immediate Effect on France's domestic policy and EVEN
upon the fate of the Blum Government.

LE JOUR likewise speculates on the political con-

SEquences of devaluation. It claims that it is an open
secret that the decision reached had met with strong
resistance on the part of SOME of the Cabinet members.

The Socialist Ministers were in favor of performing the
operation without calling a special session of Parliament
thereby facing it upon its reconvening with a fait accompli.
This course according to LE JOUR was strongly opposed by

the radical Ministers and Blum VISS "forced to submit to

their will".
SMS:NPL

WILSON

Gray

JS

399

PARIS

Dated September 26, 1936

Rec'd 9:48 c.m., 27th

Secretary of State,
Washington, D.C.
929, September 26, 2 p.m. (SECTION SEVEN)

Enphasizing the importance of next Monday's
parliamentary session LE JOUR doubts whether the

Government will be able to withstand the combined

assault of the national parties and of the opponents of
devaluation belonging to other parties outside of those
forming the mass. It considers that the life of the
Cabinet depends'upon the Senate's decision which is

doubtful owing to the Minister of the Interior's attitude
in the labor conflicts and also owing to the attitude of
the Communist group. It also considers that a number of

Radical Socialists will not follow their group in giving
the Government a favorable vote.
Finally the ACTION FRANCAISE maintains that Blum

had already COME to an agreement with the Communists in

order to gain their vote but that in the EVENT of the
possible fall of the Government he had also mads provision
for the Exact terms of his defeat with his EVEntual
successor among whom are mentioned the names of Reynoud

Mandel Flandin or Chautemps. Please furnish copy to
Treasury. Copies to London, Berlin, GENEYA, Rome, Bern,
The Hague. (End message).
CSB

WILSON

400

PARAPHRASE OF TELEGRAM RECEIVED

FROM: American Embassy, Paris, Franca

DATE: September 26, 1936, 4 p.m.
NO.:

931

FROM COCHRAN. FOR THE SECRETARY OF THE TREASURY.

I told you in my telegram No. 908 of September 23,

1 p.m., that information regarding our yielding gold
on a reciprocal basis was asked for by Fournier, the
Undergovernor of the Bank of France.
Certain information was given to me provisionally
in your telegram No. 367 of September 23, midnight.

I have not made use of this information, and have held

it in strict confidence.
At noon today the Bank of France telephoned to me

to ask if I could tell them anything on this point; in
my telephone conversation with Secretary Morgenthau at

12:30 I told him about this inquiry. *************
I have told the Bank of France that with regard to this
matter they should speak directly with Nolke, while I
cable to you. With respect to the telegram No. 367 of
September 23, does the Treasury have any further instructions for me?
WILSON.

EA:LWW

401

GR.Y

MED

WARSAW

Dated September 26, 1936
RECEIVED 3:40 p.m.

Secretary of State,
Washington

106, September 26, 5 p.m.
Associated Press correspondent in Warsaw was this

morning "informed by the Chief of the Press Bureau of

the Acting Prime Minister and Minister of Finance
that regardless of any action that may be taken by

France for the devaluation the franc, the zloty will
not (repeat not) be devalued. This official stated that
the Bank of Poland has reserves adequate to maintain the

present Exchange value of the zloty and that it has only
small holdings of French francs. HE said that Poland

would derive no benefit from devaluation of the zloty,
which on the other hand if it should maintain the present
value of its currency and if at the same time the franc
should be devalued, the Effect would be to reduce in terms
of zlotys Poland's indebtedness to France.
August Zaleski, President of the Bank of Cc.amerce and

former Minister of Foreign Affairs, was noncommittal when

I asked him this afternoon whether in his opinion the
zloty

402

MED - 2 - #106, September 26, 5 p.m. from Warsaw

zloty would follow the franc if the latter were
devalued. HE declined to forecast whether the zloty
would or would not be devalued. Copies mailed to
Paris and London.
NIELSEN
SMS:NPL

403

GRAY

MED

GENEVA

Dated September 26, 1936
RECEIVED 3:40 p.m.

Secretary of State,
Washington

371, URGENT, September 26, 6 p.m.

Supplementing my telegran of this morning from Bern

the press reports that a meeting of the Federal Council
closing at 2 p.m., issued a statement in complete contradiction to what was known during the morning. Text follows:
"Having heard the decision of the French Government to

devalue the franc about thirty percent, the Federal
Council bEliEVE that the interest of national Economy
overwhelningly denands that Swiss Exchange should also

be in line with great world Exchanges. It will report
Monday to Parliament. Stock exchanges will be closed

Monday and Tuesday". It is also reported that the Dutch
Minister was called to the meeting of the Federal
Council.
WILSON

SMS:NPL

404
PARAPHRASE OF TELEGRAM RECEIVED

FROM: American Embassy, Paris, France
DATE:

September 26, 1936, 6 p.m.

NO.:

933

FROM COCHRAN. FOR THE SECRETARY OF THE TREASURY.

At 4:30 Baumgartner telephoned to me to say that

through their diplomatic channels they were informed

the Swiss will follow France's action, with a 25 to
30 percent devaluation.
WILSON.

EA:LWW

405
PARTIAL PARAPHRASE OF TELEGRAM RECEIVED

FROM: American Embassy, Paris, France
DATE:

September 26, 1936, 7 p.m.

NO.: 934
FROM COCHRAN.

Guaranty invoiced to Guaranty 167,200,000 francs;
Lazard to Bank of Manhattan $2,443,000; Lazard to Lazard

$2,246,000; National City Bank to National City Bank
one hundred and twenty thousand one hundred and twenty

millions francs; all DEUTSCHLAND. Guaranty to Guaranty

167,073,000 francs; National City Bank to National City
Bank 149,839,000 francs all SCYTHIA. I was told by Manager

Pierce of the National City Bank that he appreciated the
manner in which free delivery of gold is being ensured to
them by the Bank of France on account of yesterday's dollar
sales against francs. An independent sentiment was expressed by Vice President Lee of Guaranty. Gold had been

earmarked by the Bank of France officials, for the Federal
Reserve "under instructions of" the operating ParisAmerican banks, which gold these operators had not been

able to remove physically from the Bank of France last
night to make up for the francs which they had bought

with dollars - but had as yet not been able to convert
into gold and remove from the Bank of France. Shipment

to New York on the first available vessel is specified
in the entries; thus in any embargo proceedings, such gold

would be considered Central Bank gold. All of Guaranty's
gold

406

-2gold is being shipped today, but some of the vessels

carrying the gold do not leave until after midnight tonight.
Up to the present no de jure embargo has been placed on

gold, but there is practically a de facto embargo. There
has been suspended the convertibility of banknotes into
gold. However, I have been informed by the Bank of France

that the minimum amount of francs against which it will

from today deliver gold is raised to five billion - thus
any possible operations are eliminated. An exchange of
letters at 3 o'clock this morning between the Ministry
of Finance and the Bank of France arranged for this step.
Following instructions from the Bank of France and
syndicate of Paris banks, Paris American bankers tell me

that they are today refraining from all deals in gold,
foreign exchange and conversion from one currency to

another. If a client does have dollars and requires france
for immediate personal needs, the bank will give such

limited amounts of france at a rate to be fixed later.
A client having a foreign currency account such as dollars
may transfer such account to New York through a dollar
draft. Exchange transactions are thus almost eliminated
in Paris and London today.
END SECTIONS ONE AND TWO.
WILSON.
EA:LWW

407
U

GRAY

Paris

Dated September 26, 1936
Rec'd 11:14 a.m.

Secretary of State
Washington

932, September 26, 5 p.m.
FOR SECRETARY OF THE TREASURY FROM COCHRAN.

NEW telephone in my apartment is Galvani 7092.
WILSON
KLP

408
PARTIAL PARAPHRASE OF TELEGRAM RECEIVED

FROM: American Consul, Geneva, Switzerland
DATE:

September 26, 1936, 9 p.m.

NO.:

362

One. Secretariat officials are not yet aware of any
definite plan for the discussions in the Second Committee
following the announcement respecting French devaluation.

Loveday thought the British genuinely wished to be helpful
and would follow the French lead as far as possible.
Stoppani feels that emphasis should be placed on

the following points: (one) that this is a first step
which should be followed by removing as quickly as pos-

sible the restrictions on trade; (two) the necessity of
encouraging the small "weak" countries in such an endeavor; (three) the necessity for an atmosphere of good

will in which the foregoing can be carried out.
Charon and Loveday agreed with this and the latter
added that it was also important that the French move be
well received abroad.
Two. A friend informed me - on a purely personal

basis - that Morrison, who is with the British Delegation
here, had said to him that the financial move of the
three powers announced today had in it also the political
motivation of making up a group "which would make the
Fascisti

409

-2Fascisti block behave"; I was asked whether such political
aims were in mind in Washington. In reply I said that
my personal opinion was that the announcement on our part

was purely to aid international economic rehabilitation,
involving of course our own interests.
It is quite possible that the remark of Morrison was
a casual and careless private expression. However, I am
reporting it, as to me it does not seem impossible that
in the abnormally charged political atmosphere of Geneva
something like this may become the core of a rumor and

be reflected in the newspapers.
GILBERT.

EA; LWW