840.515 Gold Bloc/22
The Economic Adviser (Feis) to Mr. C. E. Smets of the Economic Relations Section of the League of Nations
Dear Mr. Smets: I am greatly obliged to you for your letter of the eighteenth19 and for its interesting enclosures with regard to the preparatory work for the Joint Committee on Compensation and Clearing Agreements.
As Gilbert has no doubt again informed you, this Government considers the matter under study of great importance not only because of the fact that the developments in this field are vitally affecting American trade and financial interests, but also because they seem to be seriously modifying both the course of trade throughout the world and the method of conducting trade and of arranging payment therefor. For these reasons, as has been indicated, we are desirous of participating in the work of the Committee. Naturally, as we have asked Gilbert to indicate to Stoppani, we didn’t want to undertake participation unless it were so arranged that it could be effective—by which I mean that the American participant would have reasonable opportunity to [Page 613] present his own judgments to the Committee and to have them reflected in the report. It may be, as your memorandum20 indicates, that the time for such participation would be after the preliminary work of securing information has been carried pretty far forward and the collected material is before the Committee and its collaborators for analysis and report. If effective American collaboration is desired and is arranged for this Government is ready to send a representative over at its own expense.
On reading the memorandum it occurs to me that, probably unintentionally, the scope of inquiry is outlined in such a way as to give a freer invitation for the presentation of material and arguments in support or justification of existing agreements than for appraisal of the development as a whole. I may be unfair in this statement and ask you to consider it as a personal one. At all events, I think that it would serve a useful purpose if besides the request despatched to those countries having such agreements for the information designated in the memorandum, a request was also despatched to all governments (or at least to those not having any such agreements) asking such questions as the following:
- (1)
- Have the clearing and compensation agreements which have come into existence affected the course of your trade relationships with other countries, and if so, how?
- (2)
- Have they affected the problem of commercial treaty making, and if so, how?
- (3)
- Have they produced discriminations in the treatment of creditors of different countries, and as among bondholders of different nationalities?
- (4)
- Has the system the same tendency as seems to be characteristic of trade restriction methods to be self-extending, that is, does it by its nature tend to force countries wishing to abstain from such agreements to enter into them in the effort to protect their interests?
- (5)
- Have they limited the power of governments to purchase the best available markets?
These are frankly a part of the questions the development has put before us here, and its importance would seem to be great enough to warrant most careful examination and perhaps are more likely to be thrown upon them by countries which are not parties to these compensation agreements than by countries which are.
I would appreciate any further information in regard to the program of the inquiry that your Section may be in a position to send me.
With best wishes,
Sincerely yours,