550.S1 Agenda/6: Telegram
The Secretary of State to the American Representatives on the Preparatory Committee of Experts for the Monetary and Economic Conference ( Day and Williams )2
57. The discriminations and difficulties arising out of compensation and clearing agreements, established in connection with exchange controls, have been increasing. They have been coming into existence in increasing number in South America under the pressure of various European governments. They operate to force trade in artificial directions and often to given arbitrary price advantages to foreign producers competing with American producers in foreign markets, and lead to unfairness in the discharge of accumulated or current debt as between American creditors and other creditors.
All these conclusions were concurred in at a meeting of officials of State and Commerce Departments Thursday. This Government has steadily held the view that these bi-lateral agreements were injurious hindrances. It has striven to combat their extension and abstained from endeavoring to secure them in such countries where the American position enabled it to bring pressure. As a step towards that end you are urged to bring the subject up in the discussion of the Experts Committee and if possible have it entered as an item on the agenda for the Conference.
The suggestion has been made that agreement might be entered into at least by the leading trading countries, that they will not enter [Page 453] into any new bilateral agreements of this kind, that after a designated period of time (say 1 year) they will end the agreements now in effect, and that they will support the principle of non-discrimination of treatment under exchange controls. It is to be anticipated that countries which proceed to stabilize their currencies will wish to end these agreements as soon as possible.
- The Preparatory Committee of Experts was meeting in Geneva.↩