550.S1 Monetary Commission/9: Telegram
The Chairman of the American Delegation (Hull) to the Acting Secretary of State
[Received June 23—2:45 p.m.]
61. To the President from Warburg. After very interesting debate in gold subcommittee this morning section (c) of our fourth resolution revised as follows:
“That all [under?] modern conditions monetary gold is required not for internal circulation but as a reserve against central bank liabilities and primarily to meet external demand for payment caused by some disequilibrium on the foreign account. It is consequently undesirable to put gold coins or gold certificates into internal circulation and powers should moreover be given to the proper authorities to enable them in case of need to take over gold in the hands of the public.”
I stated that this was somewhat weakening our statement because it leaves internal bullion redemption optional with each country and that therefore it might delay our return to gold if we were not convinced that conditions were so firmly reestablished as to protect against danger of hoarding pointing out that if France continues bullion redemption it facilitates hoarding not only for French people but for any one else who can buy francs and then convert them into gold bars. French take position that impossible change their law without causing panic which probably correct. Therefore recommend that we agree to revision which entirely consistent with what we want except that it does not compel others to remove bullion from circulation if they want to continue it. Have made our reservation as to practicability perfectly clear and think can probably tie whole matter up tighter in redrafting of next section which deals with operation of [Page 655] central banks. Our second resolution71 regarding monetary policy introduced yesterday without speech. Are planning to get in our heavy work in Drafting Committee rather than in public discussion. Our fifth resolution as you know introduced yesterday which leaves only third resolution concerning removal exchange restrictions which we shall also probably introduce through Drafting Committee next week. MacDonald stated to Bureau this morning that in his opinion work of first 2 weeks had far exceeded expectations. Press on the whole rather decent over yesterday’s developments. [Warburg.]