Memorandum of Conversation, by the Assistant Secretary of State (Berle)

Participants: Mr. Marriner S. Eccles, Federal Reserve Board;
Mr. Ronald Ransom, “;
Mr. Ernest G. Draper, “;
Mr. M. S. Sczymczak, and others; “;
Mr. A. A. Berle, Jr.

I lunched at the Federal Reserve Board today at the invitation of Governor Sczymczak. Substantially the entire Board joined us at lunch. They asked the state of affairs in regard to the informal conversations going forward with reference to monetary stabilization.

I said that Dr. Gardiner, who was also present, had attended substantially all the meetings and no doubt had reported direct. On [Page 1076] Thursday, May 27th, an informal meeting had been held between Harry White of Treasury, Gardiner of Federal Reserve, Coe of BEW52 and several of us in the State Department. At this time Treasury had given as its program: (a) an informal general meeting with various of the experts in town, to be held June 8th, and to discuss the proposed plans of stabilization; (b) at the close of this, an American session to determine what plan or modification of what plan should be finally worked out as the American position; and (c) thereafter, informal conversations with the British to see whether we could square our position with theirs.

I noted that Treasury was of course handling the matter. Governor Eccles asked whether we were committed to the plan. I said we were of course in the hands of the financial experts of the Government; and that while we had a great interest, plainly we would expect agreement by the financial authorities before we would be in a position to commit ourselves. I added that the Department hoped that the financial experts of the Government, namely, the Federal Reserve and Treasury people, and others interested, could reach common ground as rapidly as possible, since we knew that the British were already unhappy at the long delay. We should need not only to find a common front on an American position, but we should also have to have in mind the methods by which and the points on which we could reach agreement with the British.

There was general discussion of the plan of the Board; and the consensus, appeared to be that the Federal Reserve could not accept the White Plan or any variation of it unless it were assured that legislation would be passed permitting the Federal Reserve Board to deal with the domestic consequences of any such plan. Thus, the White Plan might involve a large increment of gold into the United States and the power of the Federal Reserve to raise reserve ratios so that the resulting growth of deposit should not become embarrassing, would have to be increased.

I said that this, of course, was a matter for them to consider, but I thought that everything indicated the necessity of their getting together with the Treasury and reaching a general agreement.

Governor Eccles inquired whether State would be prepared to undertake to bring the two together. I said I thought not; we had no primary function in the matter, and I thought that Governor Eccles and Secretary Morgenthau could probably work out something together but, if not, it would have to be done through the White House. We naturally had ideas about the foreign affairs aspect of stabilization, and individual views as to possible plans, but we could not take [Page 1077] primary responsibility in a technical matter in which other bodies were given primary responsibility by law.

Governor Eccles said that when Secretary Morgenthau had expounded the White Plan before various of the Congressional and Senatorial representatives, he had unhappily disregarded the Senate Committee on Banking and Currency, which had made trouble; and that, on that occasion, he had not invited the Federal Reserve people to be present. In a sense, this was fortunate, since Federal Reserve had certain points it would wish to urge itself before it became committed to the plan.

A. A. B[erle], Jr.
  1. Board of Economic Warfare.