Foreign Trade and Currency Stability

Report Outline
Foreign Trade Relation and Domestic Recovery
Administration's Policy of Tariff Reciprocity
Effects of Stabilization on Trade and Reciprocity
Trade Revival of 1933 and Outlook for 1934
Special Focus

Foreign Trade Relation and Domestic Recovery

President roosevelt in his inaugural address asserted that “our international trade relations, though vastly important, are in point of time and necessity secondary to the establishment of a sound national economy.” He declared that he would “spare no effort to restore world trade by international economic readjustment, but the emergency at home cannot wait on that accomplishment.” The first attempt at international economic readjustment—the World Monetary and Economic Conference at London in June and July, 1933—had no substantial results, partly because the President was unwilling to enter an agreement for stabilization of currencies and partly because other nations were not ready to undertake economic collaboration on a broad scale. The domestic recovery program in the United States, moreover, was only just then getting under way. For the following six months that great effort absorbed almost the entire attention of the President and the public.

At the beginning of the new year the task of bringing the nation's industry and trade under codes of fair competition had been nearly completed, the public works fund of over $3,000,000,000 had been almost completely allocated, numerous crop control and marketing agreements had been made effective in agriculture, and other important steps had been taken to mitigate the evils of the depression and promote the country's economic recovery. The time was plainly approaching when more emphasis might be placed on development of foreign commerce as a necessary corollary to the measures initiated for stimulation of domestic commerce. While reciprocal tariff negotiations had been undertaken with several South American nations and two small European countries, and while there had been some bargaining relative to liquor imports, no comprehensive move had yet been made to carry out the Democratic platform's pledge of “reciprocal tariff agreements with other nations.”

Such a move was practically precluded by the prevailing uncertainty with respect to monetary policy. The dollar had declined in foreign exchange value by nearly 40 per cent, but it had not been stabilized, nor had the intentions of the administration regarding devaluation or stabilization been made known. The President's message to Congress on January 15 finally clarified his monetary aims. His request for legislation narrowing the limits of permissible devaluation to the range between 50 and 60 cents, and the Treasury's simultaneous raising of the price for newly mined gold to a level equivalent to a 60-cent valuation of the dollar, foreshadowed ultimate fixing of the gold content at that figure. Announcement of the intention to set up a large stabilization fund, moreover, gave promise that the dollar would be held fairly stationary in foreign exchange. Measurable progress was thus made toward clearing away the obstacles to proceeding with active development of a policy of foreign trade expansion.