Place dried morels in a large bowl and cover with 4 cups hot water. Allow to steep for 15 minutes or until fully rehydrated and soft. Drain, reserving the soaking liquid.
Place the rehydrated morels in a colander or strainer and gently rinse under cool running water to remove any remaining grit or debris.
Drain again briefly, then coarsely chop the mushrooms and set aside.
Heat the butter over medium heat in a large pot. Add the onions and stir, cooking until they become translucent, about 2 - 3 minutes.
Add the mushrooms and continue to cook, stirring frequently, for about 2 more minutes.
Sprinkle the flour over the mushroom-onion mixture and cook for another minute or two.
Add the sherry or marsala, stirring continuously. Add the beef or veal stock and carefully pour in the reserved mushroom soaking liquid, making sure that any grit or debris is excluded.
Add the tomato paste, stirring well to dissolve.
Bring to a low boil, reduce heat to a steady simmer and cook for 20 minutes or until reduced and slightly thickened.
For a richer taste and texture, add the cream and cook for 10 minutes more.