(Copy of memorandum handed by Mr. Opie of the British Embassy 
to Mr. Cochran of the Treasury Department at 6:15 p.m. March 30, 1940 
and explained by Mr. Opie as constituting a message from the 
Chancellor of Exchequer to the Secretary of the Treasury)
 
          The following is the substance of a telegram 
received today expressing the views of His Majesty's 
Government on the reasons for, and the significance 
of, the fall in the dollar/sterling rate in the free 
market in New York, and on the criticism which that 
fall has invoked. 
 
            The only practicable correctives that could 
be undertaken to prevent the fall in the rate are:-
 
          (i)   Direct intervention in support of the 
          rate, thus providing an official demand 
          for sterling on which the market could 
          rely, and 
               (ii)  measures designed to limit the supply of 
          sterling by immobilizing sterling held 
          by neutrals.
 
Action of the first kind would be to give away with 
our left hand reserves of foreign exchange which we 
are trying to conserve with our right. The second 
course would not only prejudice the international 
status of sterling as a currency, but it would also 
seriously penalize willing holders of sterling for 
the sake of preventing a withdrawal of balances now 
in foreign hands. 
 
     There is no sign at present of any mass with-
drawals, and the volume of sales in the free market 
accounts for only a small fraction of the total 
transactions in sterling.  The fall in sterling is
mainly due to our recent measures of export control 
 
                                         which