121.840 Welles, Sumner/126: Telegram

The Chargé in France ( Murphy ) to the Secretary of State

340. From Welles: Your telegram No. 481, March 13, 6 p.m., to London. The following is the text of the memorandum which I handed to Reynaud on March 9:

“The base of the economic foreign policy of the United States is as follows:

1. Sound international trade relations are an indispensable foundation of economic well-being within nations and of enduring peace among nations. International trade can fulfill this vital role satisfactorily only when it enables each nation to have an adequate access to the resources of the entire world, rather than merely to those confined within its frontiers, and to find outlets for its surplus production, on terms of mutual benefit and on the basis of nondiscriminatory treatment.

2. International trade cannot prosper when its flow is diverted and distorted by attempts at exclusive bilateralism or discriminatory arrangements.

It cannot prosper when its flow is obstructed by the barriers of excessive tariffs, of quantitive regulation, and of controls of foreign exchange transactions. All these are instruments of economic warfare. The world’s recent experience has clearly demonstrated their destructive effects on peacetime international commerce—and hence, their depressive influence on standards of living and general economic wellbeing within nations, as well as their significance as breeders of international illwill, animosity and conflict.

3. If, after the termination of present hostilities, the world is to build the foundation of stability and peace, which would eliminate resentments and fears and open the way to economic progress, the process of international trade must be restored to a sound basis.

This will require a gradual elimination of excessive and unreasonable barriers to the flow of goods across national frontiers; the acceptance of the rule of nondiscrimination in commercial treatment through the implementation of the most-favored-nation principle; and the creation of conditions in the fields of foreign exchanges and of credit necessary to a multilateral functioning of the trade process.”