550.S1 Monetary Stabilization/72: Telegram
The Acting Secretary of State to President Roosevelt
33. For the President from Woodin, Baruch and Acheson. My 32, June 30, 2 p.m. After talking with Moley and Sprague and discussing a proposed joint declaration among ourselves, we feel that the situation in Europe is so delicate and the further continuance of the conference so precarious that we should take a sympathetic attitude towards proposed declaration. The declaration in itself seems entirely acceptable and goes no further than declaration already made in resolution95 introduced by our delegates. The general purposes expressed in it are wholly in accord with your letter to Chiefs of State on May 16, 1933.96 Furthermore, we feel that you should not [Page 668] be placed in position of rejecting declaration, upon the adoption of which both Moley and Sprague feel strongly that the continuance of the Conference depends. Just what effect, if any, the making of the declaration may have on exchanges is difficult to forecast, but if it should result in some strengthening of the dollar that, at the moment, would not be undesirable. If the upward tendency should be too pronounced, it may be checked, as Sprague suggested to us over the telephone, by an increase in open market transactions. Should this not be sufficient, or should the dollar, instead of rising, continue to decline, the most effective method of preventing further instability in exchange would be limited movement of gold, but this should only be done if the central banks are able at the same time to work out an understanding, however informal, permitting earmarking or export of gold in limited amount. While this would not require intergovernmental action, it would, of course, require, should the occasion arise, that the governments signify to their respective banks that they would permit such movement of gold.
We, therefore, recommend that you give your approval to the declaration and suggest that you advise the American representatives to add that, should the declaration have unintended effect and produce any undue movement in any exchange, it may be necessary to ask the central banks to cooperate, not only in the measures referred to in paragraph 5, but in taking other cooperative steps, possibly including permitting export of limited amounts of gold. [Woodin, Baruch, and Acheson.]