550.S1/1097: Telegram
President Roosevelt to the Acting Secretary of State
[Received 3:55 p.m.]
23. For Hull and Delegates. Your 95.18a I do not think the two constructions of language about the dollar are incompatible. In other [Page 681] words through internal control we can seek to keep its domestic purchasing power fairly constant and at the same time maintain a gold and silver bullion reserve against currency. If every other nation would do the same the world would have in effect a managed gold standard.
The original instructions to delegation contained a clause which in effect meant that all gold should eventually be government owned and not privately speculated in or shipped back and forth between nations. This plan involves of course a moral obligation on governments not to debase their paper currencies below the agreed on bullion reserve basis and also suggests that the ideal of foreign trade is a balance between exports and imports thus preventing material losses or gains of gold between nations.
As I have intimated I see no reason why we cannot eventually distribute some of our gold to such nations as agree to receive it on fixed condition that it will be permanently held by them as bullion reserve.
Establishment of such policy by a nation means notice to world that it will not debase its currency below a definite collateral basis. This would give definite stimulus to world trade.
I wish the delegation would also confidentially explore the possibility of establishing a unit of measure in which international trade transactions would be conducted. While this would not affect national currency values it would simplify mental processes of trade by giving a unit which at all times would mean the same thing in grains of gold. A similar silver unit is a possibility.
For your information and that of MacDonald I purposely made language of my message a bit harsh because I felt at this distance that Conference was getting into stage of polite resolutions about temporary stabilization only and that it was time to be realistic and work towards main objectives.