550.S1 Monetary Stabilization/21: Telegram
The Chairman of the American Delegation (Hull) to the Acting Secretary of State
London, June 18,
1933—7 p.m.
[Received June 18—3:10 p.m.]
[Received June 18—3:10 p.m.]
40. For the President from Cox, Sprague and Warburg. Referring to your 42 transmitting President’s ideas concerning stabilization.
- 1st.
- Objection to general settlement concerning ultimate objective entirely valid and believe will have no difficulty in adding thereto “It is obvious that this objective can only be obtained as a result of cooperation by practically all of the nations represented at the Conference except those which are not naturally gold standard countries” or some clause to this effect.
- 2d.
- You need have no apprehension as to our being charged later with bad faith because we have made it perfectly clear that present proposal is of purely temporary nature designed to facilitate work of Conference in laying permanent groundwork. Not only does agreement to permanent groundwork require our consent therefore providing any number of opportunities for withdrawal from any proposal of lasting nature but even proposed temporary agreement contains let-out clauses, much stressed by us, to the effect that even if [Page 648] during Conference national emergency should make it necessary we can withdraw.
- 3d.
- It does not seem to have been clear from our yesterday’s cables that proposal does not limit dollar-sterling rate to narrow range. Proposal actually means middle rate of 4 dollars with lower and upper points of 3.88 and 4.12 which comes very close to your own suggestion. If you consider it essential it might be possible to change proposal so as to widen spread in gold points from 3 percent, which means 6 percent in sterling-dollar rate, to say 5 percent, which would mean 10 percent in sterling-dollar rate, or 3.80–4.20. Believe any greater spread than this would result in making it too easy for speculators to work against stabilization.
- 4.
- Fully agree with your last paragraph as to undue importance but must point out (a) that while agreement for immediate reduction of fluctuations in itself not as vital a factor as many think, it is exceedingly vital in the sense that the work of the Conference to achieve the important permanent things we want is unmeasurably hindered not only by the fluctuations but even more by the feeling on the part of the other nations that America is an entirely unknown, uncertain and perhaps indifferent factor; (b) we have every hope that if we eliminate this feeling by the proposed action we shall be able to carry our program through in rapid order. On the other hand if we refuse to cooperate in reducing fluctuations immediately it will be interpreted here as meaning, (1st) that having sent special representatives—to discuss temporary stabilization we have now changed our minds or, (2d) that the American representatives have exceeded their authority in discussing such a plan, even with all the reserves that they have made, which will cast doubt on our authority to present on whole program. Cox, Sprague, Warburg.
Hull