Foreign Relations of the United States Diplomatic Papers, 1940, The American Republics, Volume V

710.FEAC/184

Statement To Be Made Orally by Mr. Welles at the Meeting of the Inter-American Financial and Economic Advisory Committee of July 11, 1940²⁰

Washington, July 11, 1940

In accordance with my remarks of last week,²¹ I shall this afternoon make a strictly confidential statement as to the direct action which the United States proposes immediately to take on its part in order to deal with the pressing economic problems which the disturbances of international relations have brought in recent months to the nations of this hemisphere. The disruption of the channels of trade and the loss of foreign markets has meant a loss of foreign exchange and of purchasing power which has placed a strain on the economies of all the nations of this hemisphere. Not only must the economic activity of the hemisphere be maintained at the levels already achieved, but the productive capacity of the area and the standard of living of its populations must be increased in order to satisfy the legitimate aspirations of the several nations. It is the opinion of the Government of the United States that, in order to attain these ends, the nations of the Western Hemisphere should join together in a comprehensive program of vigorous economic cooperation, including measures for effective joint action with respect to the export products of the American republics, for the development of a healthy orientation and greater diversity of production within the hemisphere and for the avoidance of undue fluctuations in rates of exchange and the strengthening of monetary and exchange systems and institutions.

The United States has already utilized its existing agencies to enter into cooperative arrangements with a number of the American republics in connection with programs for the development of their national economies, and to assist their central banks in monetary and exchange matters. Moreover, progress has already been made in this Committee in forging tools to carry out certain phases of economic cooperation on an inter-American basis. This Committee has recently created the Inter-American Development Commission to carry out the work of planning and promoting the development of productive facilities in the American republics, and it prepared the framework for the establishment of an Inter-American Bank to foster cooperation in the spheres of long term development and of money and foreign exchange. The Government of the United States is taking steps to implement the Inter-American Bank Convention and urges that the Governments of the other American republics cooperate so that this important institution may be placed into operation as rapidly as possible.

Useful as these organizations can be in the long run, there remains the immediately pressing situation confronting the American republics as a result of the curtailment and change in character of important foreign markets. It would seem obvious that the American republics should endeavor to resume the normal current of trade with Europe as soon as possible. Thoughtful policy would not suggest either a boycott on the part of Europe or a blockade on the part of the Americas. At the same time, it is recognized that trade to be sound must exclude politics or political interference and that the parties to the trade should have equal bargaining power.

In order to place itself in a position to cooperate effectively with the other American republics in dealing with the immediate economic problems facing the Western Hemisphere, the Government of the United States is now taking steps to obtain legislation enabling the Export-Import Bank to extend both the volume and character of its operations. When such legislation has been enacted the Government of the United States will be in a position, through the Export-Import Bank, to expand cooperative efforts with other American nations in the fields of long term development, and monetary and exchange matters. In addition, the proposed legislation would broaden the scope of Export-Import Bank activities to enable it to carry out a wide range of transactions including operations directly involving the important commodities of the hemisphere. Among other things, the Export-Import Bank would be in a position to assist in the temporary financing and storage of export products until they can be marketed in an orderly fashion, and in some cases it is possible that eventual repayment may be made if necessary in commodities.

With such additional facilities at its command, the United States will be in a position to cooperate actively in the development of commodity agreements with a view to assuring the nations of this hemisphere equitable terms of trade with the rest of the world.

In order that rapid action may be taken to alleviate pressing economic situations in the Western Hemisphere, and that sound development programs may be undertaken it is of the greatest importance that the nations of the hemisphere make known to the Inter-American Financial and Economic Advisory Committee their pressing needs and the plans which they have prepared for economic development. This will permit the Committee to cooperate speedily and effectively with the governments in dealing with such needs and programs.

20. A confidential statement concerning the program for Inter-American economic cooperation given to the session of the Inter-American Financial and Economic Advisory Committee, July 11, 1940. Not printed in the Committee’s minutes. See Pan American Union, Actas de las sesiones del Comité consultivo económico financiero interamericano (Washington, 1939–1945, 18 vols., mimeographed), vol. vi, p. 836.
21. See ibid., pp. 802–804 and 822–823.