550. S1 Washington/467
Memorandum by the Under Secretary of
State (Phillips)
[Washington,] April 20,
1933.
The Turkish Ambassador58 left with the Secretary this morning the
accompanying aide-mémoire, which is in
reply to our invitation to the Turkish Government to exchange
views preparatory to the London Economic Conference. He referred
especially to the last paragraph in the aide-mémoire, requesting to be informed of the
[Page 568]
points of view of the
United States on the agenda, etc. etc. and expressed the hope
for an early reply thereto.59
The Ambassador talked at some length on general questions;
Turkey, he said, was a Democratic country which exercised a
stabilizing influence in the Near East. The Secretary said he
appreciated this fact and hoped that Turkey would play an even
more important role in this respect in the future.
The Ambassador said that in his aide-mémoire he had not raised the question of debts,
but his Government believed, nevertheless, that the whole
question of external debts lay at the basis of the world wide
economic problems and would, therefore, have to be included in
the London Conference.
The Ambassador also touched upon the question of the admission of
Soviet representatives to a full part of the London discussions.
Russia, he said, played such an important part in the economic
problems of the world and also, by virtue of its vast
population, should not be kept apart in any way during the
London discussions. The Secretary replied that he understood
that Russia had been invited to the Conference precisely on the
same footing as the other nations and, as far as he was
concerned, he felt the Soviet delegation in London should be
received on equal footing with the other delegations. This he
emphasized was his personal view point.
As to disarmament, the Ambassador said that his Government shared
the views of this Government in the reduction of arms on a
qualitative and quantitative basis. The Secretary said that our
delegation to the General Conference on Limitation of
Armament60
would gladly work with the Turkish representatives along these
lines.
Following an exchange of courtesies the Ambassador thanked the
Secretary for his reception.
[Enclosure—Translation]
The Turkish Ambassador (Muhtar)
to the Secretary of
State
Aide-Mémoire
I wish first of all to especially thank the Government of the
United States for their thoughtful attention in informing
our Embassy of the tenor of the note
verbale which they had remitted to it to be
communicated to the Government of the Republic.
[Page 569]
While remaining within general principles in the statement
which I have the honor to make, my Government believes that
the study of this statement would be greatly facilitated by
its division into two parts.
The first part contains a brief exposition of the economic
and financial relations existing between the United States
of America and the Turkish Republic. In this field, it must
first be noted that the present situation presents itself in
a satisfactory light, and that if, in spite of the wishes
mutually entertained, the development of trade does not make
more rapid progress, the cause must be sought in the
repercussions of the world-wide crisis, for to-day there no
longer exists any obstacle which might impede commercial
exchanges between the two countries; there do exist,
however, the difficulties created both in America and in
Turkey by the present economic crisis.
In the second part we shall endeavor to deal concisely and in
general terms with the international financial and economic
situation which marks the continuation of the world
depression, in spite of the fact that from time to time
there seem to be moments of respite. The phase which,
particularly during the last two years, appears to be
predominant in the world economic crisis is especially the
financial and political aspect; that is, this crisis
manifests itself particularly in the form of a general lack
of confidence, engendered by political and financial causes
and by the difficulties resulting for international trade
from the obstacles put in the way of its normal development
by the necessity of defending national currencies. It may be
said that during the crisis resulting from the
transformation of world economic conditions, national and
international economy, which should have adapted themselves
to new conditions, have been prevented from effecting this
adaptation by the influence exerted upon them by political
and financial elements. Lack of confidence in the political
domain and the currency problems have thus accentuated the
effects and heightened the acuteness of the economic
crisis.
The situation, analyzed and studied from this angle, leads us
to put forward certain practical considerations gained from
experience acquired in the regions where our country is
situated as well as from the knowledge gained in the
different conferences in which we have participated.
Needless to say, a large part of what we shall develop here
may contain considerations which will be or already have
been set forth by the delegations of other Powers. In
replying to the wish expressed at Washington, we shall
therefore only set forth these few points in their
generality, with the intention of treating them in detail
accompanied by explanatory statements at the World Economic
Conference in London. However, should the Government of the
United States express the wish to receive additional
explanations
[Page 570]
on
any item of our statement, we are prepared to comply with
that wish.
In the present situation, the ideas which we believe to be
practical and feasible may be set forth as follows:
- A.
- The political atmosphere must be cleared by
enabling the Disarmament Conference to reach a
practicable method of solution; also the Powers must
abstain, inasfar as is possible, from political and
economic improvisations. By this we mean that a
certain preparation should be made for any
international question which might interest, direcly
or indirectly, a large number of countries by
informing all countries in the world of it and thus
inspiring their confidence.
- B.
- Just as in the political domain and a fortiori, measures of a
general character in the economic domain should be
adopted only with the cooperation of all countries
in the world, the only exceptions being those
countries which themselves abstain from such
action.
- C.
- The movement of capital should precede the gradual
abolition of restrictive measures impeding
international trade, or at least be consequent upon
this abolition, for among the provisions which
impede trade, more than half have been adopted in
order to cope with currency problems; hence the
necessity of devising means, at the earliest
possible moment, for insuring the movement of
capital. The recovery of political confidence and
financial stability constitute the very first
requirements for the accomplishment of this purpose.
On the other hand, it must be admitted that in order
to insure harmony between production and
consumption, the purchasing power and the standard
of living of the peoples of the world must be
raised; moreover, the remedy for unemployment itself
must not be sought solely in the national domain nor
solely in the international domain, but rather in
the development which can be achieved only in a
spirit capable of taking into account both these
elements. In this domain as well, the movement of
capital can play a role of primary importance. The
cause of the advancement and the independence of the
nations are pressing realities. International
measures, regulations and relations must all be
studied and envisaged from this angle. A broad
nationalism, holding that the rights of other
peoples are as important as its own aspirations, is
as propitious for the development of international
trade and relations as a nationalism which
subordinates the rights of others to the cause of
its own expansion is fatal to the establishments of
international harmony.
- D.
- Currency difficulties, the great evil of the
present day and which we have pointed out above, can
only be effectively checked by means of the balance
of payments, for each country is obliged to increase
the volume of its exchanges by taking into account
its balance of payments, if not with respect to each
nation separately, at least in general. It is
undeniable that if creditors should facilitate
payments in kind by their debtors on the latter’s
debts, the collection of their debts and the
guarantee of payment would be found to be assured,
thus bringing about greater facility for the
movement of capital. To leave the different
countries with dislocated balances of payments and
not to aid them to right them tends incontestably to
diminish the consuming power. Those countries whose
accumulated wealth may be used as a reserve fund can
withstand the effects
[Page 571]
of a deficitary balance for a
long period of time; but those which are deprived of
this means cannot even withstand the consequences
for one year and their Governments are forced to
adopt immediate measures of conservation.
- E.
- In order to facilitate the movement of capital, we
believe that it would be highly useful to provide
for the establishment of an international credit
bank, organized with the participation, on an equal
footing, of all countries, in order that, even after
the revival of a general atmosphere of confidence,
mobile capital no longer may be employed only as an
instrument of national policy and in order that it
may be adapted to international requirements.
Needless to say, the bonds of this institution,
which would deal solely with banks, would be listed
on all exchanges (bourses)
and an international regulation would be worked out
with a view to giving to the subscribers if possible
even greater security than that given by existing
national banks, upon condition, however, that equal
treatment be accorded to all nations.
- F.
- Concerning a monetary policy, we believe, in view
of present circumstances and in view of the
proportion between the existing gold supply and
world transactions, that the only practical solution
is the universal adoption of a system tending to
base international exchange on the convertible gold
standard and abolishing convertibility in domestic
exchanges and transactions.
- G.
- With respect to the question of tariffs, we are of
the opinion that percentage reductions can be
applied to definite articles by means of bilateral
commercial treaties with special conditions
corresponding to the interests of the signatories.
With this end in view, it may be recommended to the
different countries to exert the maximum efforts
compatible with their national interests.
- H.
- In commercial treaties the most favored nation
clause may be maintained by limited correctives
while a more auspicious and more adequate formula
for the needs of the moment is sought. In order to
facilitate international trade and transactions, the
corrective which we believe important to introduce
into this clause is the following: The special
facilities which each country might deem proper to
accord to the countries whose balance is unfavorable
with respect to it, should be left without the most
favored nation treatment, because, competition on an
equal basis in any one country must be limited to
those countries alone whose balance is not
deficitary with the former, without this regulation
being extended to the countries having an
unfavorable balance.
- I.
- We consider that, in order to diminish currency
difficulties and to do away with the obstacles which
impede trade as a result of these difficulties, a
return to the era of long term credits and loans is
necessary, following on the revival of political and
economic confidence.
- J.
- With reference to the question of prices, we
consider that the establishment of harmony between
the prices of raw materials and those of
manufactured products and the grant to these latter
of a reasonable profit would tend to encourage
employment and production, just as low prices tend
to increase consumption.
- K.
- The organization of production and of trade can
only be achieved by a group of carefully studied
concerted measures. Among these measures, we have
believed it necessary to explain above those which
seemed to us the most adequate for the necessities
of the present
[Page 572]
situation. We believe that in
the future it will be possible for all countries, in
the course of readaptation, to acquire useful
knowledge from the experience and observations which
we shall be able to gain in successive international
conferences.
Following the above expose, the request which we wish to make
to the Washington Government is that it be kind enough to
enlighten us as to its points of view concerning the agenda
of the forthcoming London World Economic Conference, the
subjects which should and could be added to the agenda, and
also with respect to the situation as it appears to-day. If
the Government of the United States of America could be good
enough to communicate to us also the result of the
preliminary conversations held in Washington, we desire to
express to it at this time our gratitude.
