Foreign Relations of the United States, Diplomatic Papers, 1933, General, Volume I

550.S1/9231/7

President Roosevelt to the Secretary of State ³²

Washington , May 30, 1933.

Dear Mr. Secretary: I have the pleasure of appointing you Chairman of the Delegation which is to represent this Government at the Monetary and Economic Conference, which is scheduled to open in London on June 12th. The general subject matter for the Conference discussions is contained in the report of the Preparatory Commission of Experts, of which a copy is attached. While this report may be taken as a useful presentation of the matters which require consideration, the opinions expressed therein are in no way to be considered as binding upon the American Government.

The American Delegation is instructed to set forth the American policy as outlined in the attached memorandum of instruction. In consultation with your colleagues you are authorized to use your best judgment in deciding upon minor variations in form or substance that may arise in the course of discussion. If, however, decision must be reached on matters not covered in the attached memorandum, or if major changes of substance in matters covered by the memorandum seem to you necessary, you are instructed to refer decision to Washington.

It will, of course, be necessary for the Delegation to use its best judgment as to the most effective means and procedure for bringing about a speedy and successful outcome of the Conference. I wish to urge upon you that delay in conferences of this nature usually makes it more difficult to secure results and that agreement on main principles should be reached as expeditiously as possible.

There is one other thing which I wish to point out; namely, that neither you nor any other member of the Delegation is to carry on, formally or informally, any discussion of either war debts³³ or disarmament.³⁴ These two problems will be handled by me in Washington, and any questions in regard thereto should be referred to Washington.

I need not emphasize the importance to the welfare of the American people of the mission you are about to undertake. You may be assured that in your effort you may rely upon the full cooperation of myself and the whole American Government.

Sincerely yours,

Franklin D. Roosevelt

[Enclosure 1]

Instructions as to Organization of the American Delegation to the World Monetary and Economic Conference

The Secretary of State shall be the Chairman of the American Delegation.

The Honorable James M. Cox shall be Vice Chairman of the Delegation and shall become Chairman if the Secretary of State should leave the seat of the Conference.

The Chairman shall make all appointments to Committees and other assignments of duty to the Delegates and other members of the Delegation.

The Executive Officer³⁵ shall be charged with the duty of keeping in touch with foreign delegations and with the duty of collecting and distributing all information which becomes available to members of the American Delegation. Each member of the Delegation, who engages in a negotiation or conversation of importance, will as soon as possible dictate a memorandum thereof for immediate transmission to the Executive Officer. The Executive Officer will communicate such memoranda as soon as possible to those members of the Delegation concerned. The Executive Officer will be charged with responsibility for communicating the content of telegrams received to the member or members of the Delegation particularly charged with the subject matter of the telegram.

In order to preserve the secrecy of the codes of the Department of State in a foreign country, it is ordered that the Chief Code Clerk shall deposit one copy of each telegram received in the Code Room safe, and deliver one copy immediately to the Executive Officer, who will see to the proper distribution of its contents. All telegraphic communications sent by the Delegation will go out over the signature of the Chairman of the Delegation, and must pass through the office of the Executive Officer.

The Director of Experts³⁶ shall have general charge of the conduct of the work entrusted to the experts.

The Secretary of the Delegation³⁷ shall have charge of the expenditure of the appropriation for the expenses of the American Delegation. Such expenditure is subject to the rigid rules of the General Accounting Office of this Government, and, in order to avoid disallowances of the Delegation’s accounts by the General Accounting Office, the members of the Delegation are instructed not to incur any expenditure without the approval of the Secretary of the Delegation. Among the expenditures authorized will be the provision of three automobiles for the use of the Delegation on official business and a bus service between the hotel and the meeting place of the Conference. In the use of the local telephone service, any messages, other than messages on official business, will be at the charge of the person making the call.

[Enclosure 2]

Memorandum on Policy for American Delegation

Summarizing the verbal instructions which I have given you concerning your procedure at the Economic Conference, I wish to draw your attention particularly to the following cardinal points:

1. The work of the Conference should be conducted as expeditiously as possible. I can see no reason why its work cannot be completed by the middle of August. If this should prove impossible, the Conference should continue its labors without interruption until they are concluded, at the latest, September 15th. I believe that it would seem indefensible to the millions of people whose hopes are pinned on the successful outcome of the Conference to adjourn for an August vacation as has been suggested.

2. The Conference should confine itself to finding promptly the solution to a few major problems and not diffuse its efforts over too wide a field. It should proceed as rapidly as possible to adopt the general principles of a solution for these problems, appointing immediately such committees as may be necessary to work out the details.

(a) The execution of some of the plans agreed upon at the Conference may require continuing permanent organizations. Proposals for such organizations should, however, not be permitted until after the major decisions of principle have been taken by the Conference.

3. The major problems which should at once be taken up by the Conference are the following:

(a) The tariff truce for the duration of the Conference.

(b) The establishment of the general principles of a coordinated monetary and fiscal policy to be pursued by the various nations in cooperation with each other, for the purpose of stimulating economic activity and improving prices.

(c) The removal of foreign exchange restrictions.

(d) The laying of the groundwork for an adequate and enduring international monetary standard.

(e) The working out of a basic agreement for the gradual abolition of artificial barriers to trade, such as import quotas and export subventions, and for the reduction of tariff barriers.

(f) The working out of a basic agreement or agreements for the control of production and distribution of certain basic commodities.

In order to crystallize the American policy in regard to these six major problems, I submit to you the following six resolutions, which I should like to see adopted by the Conference with such modifications as may be necessary to meet the wishes of the other nations. The resolutions have been drawn with a view toward meeting the points of view of those nations with whom we have had preliminary discussions at Washington, and it is my hope that no very radical changes will be found necessary.

The first resolution is for the establishment of an agreement between all governments that no further additions will be made to the existing obstacles to international trade—or the so-called tariff truce.

Whereas, international commerce throughout the world is throttled by the obstacles imposed by governments, and

Whereas, these obstacles have steadily increased in variety and potency, and

Whereas, the increase of such obstacles acts to destroy international commerce and to cause new maladjustments and new price difficulties, and

Whereas, these economic and price disturbances in turn excite national animosities and make international cooperation of all kinds difficult, and

Whereas, it is essential that all governments seriously mark their desire to go no further along the path of trade restrictions and to find the means of reducing promptly and effectively the present restrictions,

Now therefore, be it Resolved, that the governments agree

(1) That during the period of this Conference they will consider themselves as joined in an agreement to be carried out in good faith that each government should refrain from creating or making any material upward modification in tariff rates, or imposing any new or enhancing any existing restrictions against the importation of goods which would place additional obstacles in the path of international commerce.^* And the governments would likewise agree that during the period of this truce they will introduce no additional direct or indirect subvention for the expansion of their export industries nor any new discriminatory trade methods nor any additional measures to promote dumping.

(2) That the Secretary-General of the Conference shall make public the list of governments adhering to this truce.

(3) That in the event that any government in joining in this truce shall make any reservation of any nature whatsoever, such reservation with sufficient indication of its meaning in detail shall be published by the Secretary-General of the Conference along with the announcement of adherence. Each signatory government shall remain the judge of the significance of the reservations or limitations put forward by any other signatory government. During the period of the truce each signatory government agrees to communicate any changes in its tariffs or other laws or decrees affecting the international movement of goods one week before such changes may be put into effect.

The second resolution, which relates to the establishment of the general principles of a coordinated monetary and fiscal policy to be pursued by the various nations in cooperation with each other, for the purpose of stimulating economic activity and improving prices, is the following:

Whereas, industry and trade in nearly all the major countries of the world have fallen to unprecedentedly low levels, and

Whereas, as a consequence thereof, millions of people throughout the world have been thrown out of employment and unwillingly have become an ever-increasing burden upon those who still have employment, and

Whereas, the emergency is of such a nature as to demand that all nations and all peoples cooperate to the fullest possible extent in combatting the depression by all available means and in close consultation and harmony with each other, and

Whereas, abundant credit and wise encouragement of private enterprise through government expenditure are essential in bringing about an improvement in prices and an increase of business activity, and

Whereas, such government expenditure shall not necessarily be included in the budget for recurring expenses but may properly be financed by borrowing, provided that the service of government debt so incurred is taken care of in a balanced budget for recurring expenses.

Now therefore, be it Resolved, that all the nations participating in this Conference agree

(a) That a close cooperation toward these ends between governments and between their respective Central Banks should be undertaken;

(b) That a primary step in such cooperation should be the carrying out of a policy of making credit abundantly and readily available to sound enterprise; this may be done by open market operations, where consistent with national policy, or by such other means as may suit the particular requirements of an individual market; and

(c) That an acceleration of the process of recovery should be sought by means of a synchronized program of governmental expenditure in the different countries along parallel lines, designed to stimulate the natural sources of employment, to re-start the wheels of industry and commerce, and to restore the willingness of the individual again to assume the normal risks of trade without which any recovery is impossible.

It is not the sense of this resolution that all nations should agree necessarily to attack the problem in the same way, but rather that the efforts already being made by many nations should be coordinated, and that other nations should be stimulated to make similar efforts.

It should be borne in mind that in the development of such a program care must be exercised lest the cost of a particular kind of work undertaken be inordinately increased whether on the part of suppliers, landowners or wage earners particularly concerned.

And be it further Resolved.

(a) That the Issue Banks of the various nations be requested to send at once to London a representative or representatives for the purpose of immediate consultation with each other, and

(b) That a committee be appointed by this Conference to study the various methods of governmental expenditure which have been in use or under consideration by the various nations, with a view towards making a report to be sent to each of the nations for its guidance in working out its own program in the future.

The third resolution, which relates to removal of exchange restrictions, is the following:

Whereas, it is generally conceded that the free flow of trade is today impeded and, in many cases, rendered impossible by the restrictions which various nations have been compelled to place upon dealings in their respective exchanges, and

Whereas, it is an essential to world recovery that the free flow of world trade be reestablished,

Now therefore, be it Resolved, that all the nations participating in this Conference agree

(a) That all exchange restrictions of whatsoever nature should be removed as soon as possible;

(b) That it may be necessary as a condition precedent to the accomplishment of this end, that the external debt structure of some countries be re-organized;

(c) That to this end the various Governments undertake to urge upon their nationals the immediate formation of the necessary creditors’ organizations both for the funded debt and for the so-called floating debt of such countries whose debt structure require reorganization; and

(d) That a committee be appointed by this Conference to study and determine as quickly as possible which countries require such reorganization of their debt structure, and also to determine what other measures may be necessary in the various countries to reestablish the independent stability of their exchanges and to diminish fluctuations in exchange arising from purely speculative operations and from the temporary movements of short time money from market to market. The work of this committee to be in appropriate consultation with the respective governments and creditors’ organizations.

The fourth resolution, which relates to the laying of the groundwork for an adequate and enduring international monetary standard, is the following:

Whereas, confusion now exists in the field of international exchange, and

Whereas, it is essential to world recovery that an international monetary standard should be reestablished,

Now therefore, be it Resolved, that all the nations participating in this Conference agree

(a) That it is in the interests of all concerned that stability in the international monetary field be attained as quickly as practicable;

(b) That gold should be reestablished as the international measure of exchange values;

(c) That the use of gold should be confined to its employment as cover for circulation and as a medium of settling international balances of payment. This means that gold, either in coin or bullion, will be withdrawn from circulation; and that contracts, public and private, shall be made payable in the various currencies without reference to gold;

(d) That in order to improve the workings of a future gold standard a uniform legal minimum gold cover for the currencies of the various countries which shall adopt the gold standard shall be established, and that this legal minimum reserve shall be lower than the average of the present reserve requirements;

(e) That the Central Banks of the various nations be requested to meet at once in order to consider the adoption of such a uniform minimum reserve ratio and that a metal cover ratio of 25% be recommended for their consideration,

And further,

Whereas, silver constitutes an important medium of both international and domestic exchange for a large proportion of the world’s population, and

Whereas, the value of this purchasing medium has been impaired by governmental action in the past, and

Whereas, it is necessary that the confidence of the East should be restored in its purchasing medium, which can only be done if the price of silver is restored to equilibrium with commodity price levels,

Now therefore, be it Resolved, that

(a) An agreement be sought between the chief silver producing countries and those countries which are large holders or users of silver to limit arbitrary sales upon the world market;

(b) That all nations agree to prevent further debasement of their subsidiary silver coinages;

(c) That all the nations agree to remonetize their subsidiary coinages up to a fineness of at least 800 when, as and if consistent with their respective national budget problems; and

(d) That it be recommended to the Central Banks that they agree that 80% of their metal cover shall be in gold and 20% shall be optionally in gold or in silver, provided that silver is obtainable at or below a price to be agreed upon as corresponding to the general commodity price level; and that the governments agree to modify their respective laws to this effect.

The fifth resolution which is designed to lay the foundations for a gradual reduction and removal of artificial barriers to trade, is as follows:

Whereas, various nations have been constrained, on the one hand, to impose restrictions upon imports in the nature of tariffs, quotas, embargoes, etc. and, on the other hand, to subsidize exports, and

Whereas, this tendency has resulted in nationalistic action in all nations, which, if carried to its logical conclusion, will result in the almost complete elimination of international trade and a return to a medieval isolationism, and

Whereas, it is agreed that this tendency must be arrested if a world recovery is to be achieved and a decent standard of living widely maintained,

Now therefore, be it Resolved, that all the nations participating in this Conference agree

(a) That it is against the common interest for any nation to adopt or continue a policy of extreme economic nationalism and to raise additional trade barriers and discriminations;

(b) That embargoes, import quotas and various other arbitrary restrictions should be removed completely as quickly as possible; and

(c) That tariff barriers should be reduced as quickly as possible by reciprocal bilateral agreements or by multilateral agreements to a point where trade can once more move in a free and normal manner; and

(d) That care should be taken in making bilateral or multilateral agreements not to introduce discriminatory features which, while providing an advantage to the contracting parties, would react dis-advantageously upon world trade as a whole.

32. Identic instructions, varying only in the phrasing of the first sentence, were delivered to other members of the American delegation, namely, James M. Cox, Vice Chairman; Key Pittman, Senator from Nevada; James Couzens, Senator from Michigan; Samuel D. McReynolds, Congressman from Tennessee; Ralph W. Morrison, of Texas.
33. For correspondence relating to intergovernmental war debts, see pp. 826 ff.
34. For correspondence relating to the Disarmament Conference, see pp. 1 ff.
35. William C. Bullitt, Special Assistant to the Secretary of State.
36. Herbert Feis, Economic Adviser, Department of State.
37. James Clement Dunn, Chief of the Division of Protocol and Conferences.
38. Explanation to be made by American Delegation in regard to Agricultural Bill. [Footnote in the original.]