740.00113 European War 1939/443: Telegram
The Ambassador in the United Kingdom ( Winant ) to the Secretary of State
[Received 11:24 p.m.]
4258. The Foreign Office, through Ronald, has informed the Embassy of the appointment of a subcommittee as the result of the informal meeting held on July 24 (your 3400, July 22, midnight, and Embassy’s 4155, July 25, 5 p.m.)37 between Finance Ministers of Allied Governments and representatives of the Dominions and of the appropriate United Kingdom Government authorities, and has asked whether the United States would wish to be associated in any way with the informal meetings of the subcommittee.
The purpose of this informal subcommittee was explained as follows. From informal talks which have taken place with Finance Ministers of a number of Allied Governments now established in London, it appeared that great importance was attached by them to the postwar currency situations of their countries. They felt that if no consideration were given in advance to the currency problems that would arise immediately their territories were cleared of the enemy, confusion would result.
It was found that the Allied Governments established in London were looking to the British Government for technical advice on such questions, for example, as the amount of currency that might be appropriate [Page 195] to postwar needs in their countries. The complexity of the problems was fully recognized and its importance appreciated by the British Government. The Allied Finance Ministers were accordingly invited to submit memoranda giving any views they might have on these postwar currency problems from the points of view of their own countries. It was suggested that these memoranda might form the basis of informal discussions at a meeting.
The subject was discussed at the informal meeting on July 24, referred to above, and it was decided that the British Government should informally acquaint us and the Soviet Union through Maisky38 with what was contemplated, and should inquire whether we and the Russians would wish to be associated in any way with the work of the informal subcommittee.
Accordingly, Under Secretary Law has fully acquainted Ambassador Maisky with the matter and asked whether the Soviet would like to send a representative to participate, or to send an observer. In case it did not wish to adopt either course, it would be supplied with all memoranda dealing with the work of the informal subcommittee.
In summing up the economic aspects of the discussion at the meeting on July 24, Keynes paid a tribute to the papers which had been submitted by the Allied Finance Ministers. He was struck by the fact that in none of the countries concerned had the note issue reached astronomical levels as in the last war. The papers showed that the inflation now occurring in Europe was much more due to shortage of goods than to superabundance of currency. The volume of goods and the volume of currency would therefore have to be considered together and some sort of uniform policy would be essential. He thought there was a striking uniformity between the problems and their solution in the different European countries. Some unification of the currency would be needed, requiring in some cases the adaptation of the existing unit of currency and in other cases new units. Referring to warnings of great potential inflation immediately after the war he thought that price controls would have to be maintained in the early period. There was also a series of other problems not identical in different countries but sufficiently similar to be usefully discussed in a subcommittee.
On the international aspects of currency problems Keynes said that the British had given great thought to them and had made progress, he thought, but they considered—and he thought the Allied Governments would agree with them in this—that the wise thing would be for the British first of all to discuss this with their American friends, who would be so greatly concerned with the matter.[Page 196]
Memoranda submitted to the British for the meeting on July 24, will be obtained and sent together with a brief summary and analysis.39
Will you please inform us whether and if so in what way you wish the Embassy to be represented at the informal meetings of the subcommittee, or whether you only wish to receive detailed information on its proceedings and on any memoranda submitted to it through the British?
We assume the Department will inform the Treasury.