Confidential report from John A. Belton (for Art O'Brien) to
Joseph P. Walshe (Dublin)
(P19/34)

I have the honour to inform you that the decision of the Government to devalue the franc, although not entirely unexpected, has caused an enormous sensation in France. The big majority of this morning's press is in violent opposition to the proposed change. In fact, the only papers that support it are the 'Populaire' and the 'Petit Journal'. Even 'l'Humanité', the Communist organ and '1'Ere Nouvelle', the Radical-Socialist organ are in opposition. Mr. Blum's solemn promise made last June that there would be no devaluation is emphasised everywhere and the official statement as elaborated in the 'Populaire' to the effect that the change is not devaluation but an alignment of value with other currencies and a declaration of financial and economic peace is generally derided.

The question as to whether the Government will survive the storm of opposition in the Chamber and Senate is being seriously considered. The Centre and Right will naturally vote against the change and it is very doubtful if the Government can rely on the entire support of the Radical-Socialists and the Communists. Mr. Daladier, the leader of the Radical-Socialist Party and the present Minister for Defence is an avowed opponent of devaluation as is the majority of the Party. The Communists, though opposed, en principe, to devaluation will however hesitate to vote against a Government which they are able to influence for their own ends. Besides, it is reported that Mr. Thorez, the Communist leader, has promised his support in consideration of a mobile scale of wages being instituted which would move in accordance with the cost of living. The Government has, of course, announced its intention to prevent any injustifiable¹ increase in the cost of living, but a general increase in addition to the great increase of the last few months appears to be inevitable. If, of course, salaries, wages, commodity prices and the general cost of living increase in proportion to the amount of devaluation, the benefits of the proposed change would be lost.

The general consensus of opinion is that the franc will be fixed at approximately 105 frs. to the £.

The immediate effect would be felt most by pensioners, rentiers and creditors, mostly middle class people who are the strongest supporters of the Radical-Socialists and who will look to that Party to oppose the change.

Parliament is meeting on Monday to discuss the matter. The Government will make its case mainly that the change is not unilateral devaluation but an alignment of the franc in relation to foreign currencies. It will be stressed that export trade will immediately revive, that equilibrium will be established in financial and economic relations and the Treasury will be relieved of its present pressing difficulties.

The result of the vote cannot be foretold with any certainty and a further report shall follow shortly.