The Secretary of State to the Ambassador in Great Britain ( Dawes )
38. President Hoover desires the British Government to be sounded out regarding its possible readiness to call an international conference on the world silver situation. As a basis for this suggestion and as a reason why it might appeal to the British and other Governments is the belief that the existing world-wide business depression is influenced very adversely by the present low price of silver, especially on account of its effect upon trade in certain countries, for example, China, where silver is the chief measure of the people’s wealth and purchasing power and the monetary standard. The conference could discuss, among other things, whether an international agreement is advisable for the discontinuance of debasing silver coinage and selling government-owned silver.
It seems desirable to me for you discreetly and informally to take up this matter in London.
In order to avoid giving an impression that there is a desire to induce the withholding by the Government of India of silver sales to China while the dumping of silver by American producers is proceeding in China, it should be made clear that the above suggestion is quite separate from any thought of a loan to China. If and when a loan comes up, this question must be examined separately and on its own merits.
Apparently the American Government may soon be asked to call an international conference on the silver situation. President Hoover considers as between the British and American Governments, however, that it would be less appropriate for this Government to call a silver conference than for the British to do so since (a) this Government [Page 609] has been neither selling silver nor debasing its silver coinage and (b) the market determining the silver price is London.
You are informed of a recent discussion of this matter between Premier Bennett of Canada and President Hoover, in the course of which conversation the President suggested that the British instead of the American Government might more appropriately take the initiative. Further, there is reason to think that the British Cabinet either has been considering the silver situation or shortly will consider it.
This suggestion comes after lengthy consideration by President Hoover and has no connection with the Pittman silver report, which still is before a Senate committee and, therefore, has not been brought to the official attention of the Executive.