550.S1 Monetary Stabilization/60: Telegram
The Chairman of the American Delegation (Hull) to the Acting Secretary of State
[Received June 29—11:58 p.m.]
80. For Woodin and Baruch. My attitude with respect to Sprague message is one upholding general statement by Britain and the United States. Sprague and I agreed tentatively with British representatives upon a statement to be approved by the President and to be made by Great Britain and the United States on the one hand and the gold standard countries on the other hand. I quote this statement for your information.
“Joint declaration by the countries on the gold standard and by those which are not on the gold standard.
- 1.
- The undersigned governments agree:
- (a)
- That it is in the interests of all concerned that stability in the international monetary field be attained as quickly as practicable.
- (b)
- That gold should be reestablished as the international measure of exchange value it being recognized that the parity and time at which each of the countries now off gold could undertake to stabilize must be decided by the respective governments concerned.
- 2.
- The governments whose currencies are on the gold standard reassert that it is their determination to maintain the free working of that standard at the existing parities within the framework of their respective monetary laws.
- 3.
- The governments whose currencies are not on the gold standard take note of the above declaration. They reaffirm as indicated above that the ultimate objective of their monetary policy is to restore under proper conditions an international monetary standard based on gold.
- 4.
- Each of the undersigned governments undertakes to use whatever means they may consider appropriate to limit exchange speculation whether against its own or against other currencies. They agree to discuss with their respective central banks this undertaking with a view to finding the best means of making it effective.”
The French later this afternoon balked at 2 points in the above, namely, in paragraph 3 they want to insert after the word “note” something indicating mild approval. The British would positively not agree to this and Sprague and I think our position should be the same. In paragraph 4 the French are insisting upon wording which will not rest the action solely upon limiting exchange speculation but want to secure agreement for joint action by central banks against “violent fluctuations”. To illustrate what they want I quote their own original draft:
“In the meantime the governments whose currencies are not at present on the gold standard undertake that they will use their resources in agreement with their banks of issue to limit abnormal movements of their exchanges due to speculation. In connection with the above declaration the banks of issue in the countries of signatory governments will cooperate from now onwards with a view to maintaining monetary stability.”
The matter rests exactly here until tomorrow at eleven when the French meet with the British again. We are insisting upon the draft tentatively agreed upon by Britain and ourselves and although various threats are rumored it is our belief that the French will yield.
2. With respect to Sprague’s suggestion of “unilateral action” I believe it to be sound if some monetary corrective is needed but you are the best judges of whether the American situation will be favorably or adversely affected, thereby taking into consideration the always [present?] danger that even such a temporary project if known might be regarded as the beginning of permanent stabilization.
I have arranged for Acheson to telephone me early in the morning and shall keep in touch with Woodin and Acheson at Woodin residence New York and with Baruch in Washington.
Address reply to me at the Embassy. Moley.