You will be aware that the reaction in France in regard to the events of last week has been very strong. In its note of protest to the German Government, the French Government has stated that it cannot recognise the legitimacy of the occupation of Moravia, Ruthenia and Slovakia and that it cannot accept that 'the state of fact recorded in the agreement of the 15th March between the German and Czech statesmen is given a foundation of right by this agreement'. The Government after the first day of uncertainty immediately asked for special powers to enable it to take by decree up to the 30th November next, the 'measures necessary for the defence of the country'. Although hotly debated by the Socialists and Communists in the Chamber, these powers were eventually granted by 321 against 264. In the Senate, as was anticipated, they were passed without delay by an overwhelming majority. M. Daladier has indicated that among the measures which he intends to take on the basis of these powers, a general modification of the 40 hour week so as to enable the defence industries to work at full pressure will figure prominently. He rejected a demand for a Government of National Union because the Socialists made it a condition of such a Government that he should leave.

Public opinion is mainly preoccupied with the direction in which Germany will move next. It is felt that unless she consents to arrest her advance towards the East, she must inevitably subordinate both Rumania and Hungary. Hungary is regarded as an extremely doubtful quantity and if anything as favourable to Germany in spite of the recent change in the Government there. The Nazi party is considered to be extremely powerful and likely to become more so and German consent to the occupation of Ruthenia by Hungary might bring her completely on the German side. On the other hand, in so far as the common Hungaro-Polish frontier is to be taken as meaning cooperation between these two countries rather than as representing the recovery by Hungary of a frontier which she regards as particularly hers some resistance to Germany will be expected. A further factor in regard to Hungary is the position of Italy which is thought to be particularly interested in Hungarian independence. Rumania will it is felt sure, resist if French and British support are forthcoming. The future position of Rumania, therefore, depends primarily on the consultations being undertaken by the British Prime Minister. In this connection it was commonly reported yesterday that there is a division of opinion in the British cabinet as to the line on which a definite stand should be taken up. It was suggested that one section of the Cabinet favours putting that line on Russia, the Dardanelles and Egypt and that the other and larger section which includes Lord Halifax, is in favour of making a stand on a line West of Rumania and taking in the Balkan countries. If she is not sure beforehand of the full backing of France and England there is little doubt that Rumania will give way in one form or another. At the same time it is confidently believed that during the visit of Mr. Gafencu¹, the Rumanian Foreign Minister, to Warsaw last month an understanding was come to envisaging the constitution of a block of countries including Bulgaria which would oppose German expansion, it being agreed that if necessary for Bulgar support, Rumania would consent to transfer to Bulgaria part of Transylvania. Poland is regarded as favourable to France and England and to resistance in Germany. Russia, because of the recent British attitude of friendliness towards her is again counted upon as a major element in the present conjuncture. Italy's position is regarded as uncertain and there is a definite tendency to believe that if it should come to a general war, she would not back Germany fully or for long. The argument used is that Italy has gained very little from the existence of the axis and that German hegemony over Rumania and Hungary would considerably worsen Italy's situation. It has been suggested in the 'Journal' that if France were quickly to make an offer to Italy to constitute Djibouti as a free port, to give her further shares in the Djibouti railway, some seats on the Suez Canal Council and a more equal regime for the Italians in Tunis, she might bring Italy completely around to her side. It is felt, however, that the Italian standpoint will not be fully known until Mussolini speaks on the 26th March when it is expected he will deal, at least in principle, with Italian claims against France. The American reaction is finally regarded as of the greatest importance and the coincidence of the imposition by the U.S.A. of increased tariffs on German imports is thrown into high relief.