Confidential Report from Michael MacWhite to Joseph P. Walshe (Dublin)
(1008-70-31) (Confidential)

During my interview with the Secretary of State today, I learned that the United States Government had already anticipated the steps taken by the British Ministry last Sunday night in departing from the gold standard. During the previous week, the credits placed at the disposal of the Bank of England by the United States and France had been exhausted, and further advances from these countries were unobtainable. The Federal Reserve Bank was most sympathetic to the British demands, but in view of the increased pressure on the Bank of England and their heavier responsibilities towards the interior United States banks, they concluded it was inadvisable to comply with it. There have already been complaints amongst Members of Congress and in Middle West political and financial circles to the effect that the Federal Reserve Bank had already been tapped to the extent of upwards of a billion dollars for the relief or the prevention of banking distress in Germany, England and other European countries, but had not contributed to the relief of banking distress where it was equally needed at home.

The United States Government has no cause for anxiety as a result of the British decision which they had anticipated, and which they knew for some time to be inevitable. No vitally adverse effects to United States interests are expected. It was the uncertainty that caused all the strain and suspense. With the struggle decided and, in the opinion of the Administration decided in the right way, there are grounds for relief and confidence about the future both in England and throughout the world.

The judgement of the most competent authorities here all along has been that it was a mistake for Great Britain to try to support the pound, and that she made her initial mistake, which was one of pride, when she undertook to force the pound back to par seven years ago. Now that the artificial strain is ended and the currency at its natural level, it is expected that England will enter a period of enlarged prosperity. Commodities should rise in price. Mortgages and bonds should become easier to pay, and debtors should find their burdens easier.

According to the United States Department of Commerce, there is a very large investment of British money in this country, aggregating some $1,500,000,000. During the past few months, this investment has been steadily growing and that factor naturally affected the exchange.

The announcement that the French Prime Minister Laval is about to visit the United States to confer with President Hoover on the disarmament problem is regarded by the Secretary of State as an indication that the French Government are prepared to abandon the non- possumus attitude they have hitherto adopted on this question. World opinion was too strong to permit of an open proposal on their part for the postponement of the Disarmament Conference. The attitude of the United States Government is unaltered. They want the Conference as originally fixed, and they desire to keep their hands free in order to take advantage of every available opportunity to bring the Conference to a satisfactory conclusion. The atmosphere is considered to be much more favourable now than it was a few months ago.

The Secretary of State said that amongst the European nations, the Irish Free State was the one bright spot they had to deal with, and the country that gave them the least trouble. In reviewing the history of the Irish Government during the past ten years, he had frequently asked himself what was the secret of their success.