(by Private Notice) asked the Chancellor of the exchequer whether he has any statement to make as the result of his recent conversations with the French Minister of Finance.

I am glad to be able to inform the House that a comprehensive agreement has been arrived at between the British and French Treasuries which will secure, in the field of finance, a cooperation which corresponds to that already announced after the last meeting of the Supreme War Council in other fields of activity. The proposed financial agreement was the subject of discussion between myself and Monsieur Paul Reynaud, the Minister of Finance in France, when he visited this country a short time ago; in Paris last week we were able to carry matters further, and have reached a conclusion as to the arrangements necessary to carry out our purpose. I propose to circulate in the OFFICIAL REPORT a Summary of the points agreed upon; but the House may be glad to have two or three of the main features stated now.

In the application of the principle of monetary solidarity between the two countries, it is agreed that it is in our common interest to avoid, during the war, alterations in the existing rate of exchange between the pound and the franc. We have further made mutual arrangements which will enable each country to cover its requirements for the currency of the other country and to utilise such currency freely as agreed between us, without any question between ourselves of having to find gold. Thus, sterling held by the French monetary authorities will be available for expenditure throughout the sterling area and francs held by the United Kingdom monetary authorities will be available for expenditure throughout the French Empire. Neither Government will raise a foreign loan or credit except in agreement with, or jointly with, the other Government. Neither Government will impose fresh restrictions on the imports from the other country during the war for protective purposes or for exchange reasons. The two Governments will share certain items of expenditure incurred in the common cause, such as financial assistance to other countries and the cost of the Armed Forces of their Polish ally, in proportions which have been worked out between us. It is intended to have frequent meetings between the two Treasuries to settle technical questions and to examine more general problems, such as those of price policy in the two countries and the position of the Allied Governments as regards their resources in gold and foreign exchange. The whole arrangement will remain in force until six months after the signature of the peace treaty.

I think the House will warmly welcome this new proof of the reality of close co-operation between France and ourselves, and I would wish to take this opportunity of expressing my appreciation of the friendly and understanding spirit in which all these questions have been dealt with by Monsieur Reynaud.

May I ask the right hon. Gentleman whether joint steps have been taken to control the expansion of currency in the two countries? He did not mention that point.

I think, perhaps, if the hon. Gentleman would be good enough, he should wait and see the actual summary of the agreement which will be circulated in the OFFICIAL REPORT.

Following is the summary of points agreed upon between the Chancellor of the Exchequer and M. Paul Reynaud:

1. 1. The two Governments have agreed that it is in the interest of both countries to avoid alterations in the existing official rate of exchange between the pound and the franc.
2. 2. The francs required by the United Kingdom (including those for the B.E.F.) will be provided against payment in sterling, and the sterling required by France (including that required for the purchase of raw materials in the British Empire) will be provided against. francs. Both countries will for the duration of the war be in a position to cover the whole of their requirements in the currency of the other country by payment in their own currency without any question of their having to find gold.
3. 3. The sterling held by the French monetary authorities will be available for expenditure throughout the sterling area, and the francs held by the United Kingdom monetary authorities will be available for expenditure throughout the French Empire.
4. 4. The question of sharing equitably the expenses necessitated by the conduct of the war which the two Governments have to defray in gold and dollars will be kept under review.
5. 5. The United Kingdom and French Treasuries will have frequent meetings to review the position of the Allied Governments as regards their resources in gold and foreign exchange.
6. 6. Neither Government will raise a foreign loan or credit except in agreement with (or jointly with) the other Government.
7. 7. Neither Government will impose fresh restrictions on the imports from the other country during the war for protective purposes or for exchange reasons.
8. 8. The two Governments will maintain contact as regards their policy in regard to prices.
9. 9. Finally, the two Governments will share certain items of expenditure in the common cause such as financial assistance to other countries and the cost of the armed forces of their Polish ally. The contribution of the two Governments will be fixed on a basis which will take due account of the national wealth of each. In general, the French contribution will be 40 per cent. and the United Kingdom contribution 60 per cent. of the total.
10. 10. These arrangements will remain in force till six months after the signature of the Treaty of Peace.