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Anglo-American Financial Rivalry in the 1920s

Published online by Cambridge University Press:  11 May 2010

Frank C. Costigliola
Frank C. Costigliola
Affiliation:
University of Rhode Island
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Abstract

Based on British and American primary sources, this article analyzes Anglo-American differences in the reconstruction of the international monetary order. London wanted a worldwide gold exchange standard to bolster its relatively weak financial position. The U.S. pushed instead for the gold standard. Winston Churchill returned to the gold standard largely because he feared economic isolation from the Dominions, especially South Africa, which had accepted private American advice to return regardless of Britain. Anglo-American wrangling continued over the Genoa proposals, loan regulation and war debts. Heavy gold exports were a primary factor in Federal Reserve rate increases in early 1928.

Type
Articles
Information
The Journal of Economic History , Volume 37 , Issue 4 , December 1977 , pp. 911 - 934
Copyright
Copyright © The Economic History Association 1977

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References

1 For general accounts, see Allen, H. C., Conflict and Concord: Anglo-American Relationship Since 1783 (New York, 1960Google Scholar); Barnet, Correlli, The Collapse of British Power (New York, 1972)Google Scholar; Parrini, Carl P., Heir to Empire: United States Economic Diplomacy, 1916–1923 (Pittsburgh, 1969)Google Scholar; Kolko, Gabriel, The Politics of War (New York, 1968)Google Scholar; and Collier, Basil, The Lion and the Eagle (New York, 1972)Google Scholar.

2 Charles Kindleberger argues “that the 1929 depression was so wide, so deep and so long because the international economic system was rendered unstable by British inability and United States unwillingness to assume responsibility for stabilizing it.” Kindleberger, , The World in Depression (Berkeley, 1973), pp. 291–92Google Scholar. Some of Britain's “inability” to assume responsibility may well have stemmed from the triumph of the American version of the postwar financial order.

3 Alanson B. Houghton to Calvin Coolidge, August 19, 1925, Alanson B. Houghton Papers, Corning, New York.

4 Herbert Hoover to Benjamin Strong, August 30, 1921 (not sent except in draft form) enclosed in Hoover to Charles Evans Hughes, August 30, 1921, Herbert Hoover Papers, Herbert Hoover Presidential Library, West Branch, Iowa, Commerce Official File [hereafter COF], Box 284.

5 Despite some disagreement on war debts, loan regulation and other matters, officials of the Washington administration and the Federal Reserve Bank of New York [hereafter FRBNY] shared a broad consensus on America's proper role in Europe. The Republican administration approved and quietly supported the FRBNY's approach toward Britain discussed in this article. For the activities of the central bankers, see Chandler, Lester V., Benjamin Strong, Central Banker (Washington, 1958)Google Scholar; Clarke, Stephen V. O., Central Bank Cooperation 1924–31 (New York, 1967)Google Scholar; Sayers, R. S., The Bank of England 1891–1944 (London and New York, 1976), pp. 153–385Google Scholar; SirClay, Henry, Lord Norman (London, 1957)Google Scholar; Boyle, Andrew, Montagu Norman (London, 1967)Google Scholar; Meyer, Richard Hemmig, Banker's Diplomacy (New York, 1970)Google Scholar; Moreau, Emile, Souvenirs d'un Gouveneur de la Banque de France (Paris, 1954)Google Scholar; and Costigliola, Frank C., “The Politics of Financial Stabilization: American Reconstruction Policy in Europe, 1924–30,” Ph.D. dissertation, Cornell University, 1973Google Scholar.

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7 The debt controversy simmered throughout the 1920s and in 1926 exploded in acrimonious debate. For the British position see Minute by Foreign Minister Austen Chamberlain, January 3, 1925, on letter from Sir Esme Howard to Chamberlain, December 17, 1924. Public Record Office, London [hereafter PRO], Records of the Foreign Office, FO 371/9684; Chamberlain to Howard, January 13, 1925, ibid.; speech by Winston Churchill, March 24, 1926, copy in PRO, Treasury, Chancellor of the Exchequer's Office, Miscellaneous Papers, T 172/1521. The American position is expressed in Garrard B. Winston, “American War Debt Policy,” June 1928, National Archives, Records of the Department of the Treasury, Country File (Record Group 39) [hereafter NA 39]. See also Alanson B. Houghton to William R. Castle, September 28, 1925, Houghton Papers.

Britain looked to the Empire and the development of tropical commodities such as rubber to bolster its economic position relative to the United States and other competitors. A prime purpose of Britain's rubber control scheme was to keep prices high and extract a large number of dollars from the world's chief rubber consumer, the United States. In 1925 Colonial Secretary L. S. Amery assured Winston Churchill that a proposed modification of the rubber scheme would not prevent Britain from “getting the full advantage from the exchange point of view of making America pay handsomely.” Amery to Churchill, October 19, 1925, PRO, T 172/1486. Secretary of Commerce Herbert Hoover vigorously opposed this rubber plan. See Brandes, Joseph, Herbert Hoover and Economic Diplomacy (Pittsburgh, 1962), pp. 84–128Google Scholar; Hogan, Michael J., Informal Entente: The Private Structure of Cooperation in Anglo-American Economic Diplomacy, 1918–1928 (Columbia, 1977), pp. 191–208Google Scholar; Chalk, Frank Robert, “The United States and the International Struggle for Rubber, 1914–41,” Ph.D. dissertation, University of Wisconsin, 1970, pp. 44–162Google Scholar.

8 Roskill, Stephen, Naval Policy between the Wars, vol. I (London, 1968)Google Scholar; Bright, Charles C., “Britain's Search for Security, 1930–36: The Diplomacy of Naval Disarmament and Imperial Defense,” Ph.D. dissertation, Yale University, 1970, pp. 1–32Google Scholar; Newton, Christina E., “Anglo-American Relations and Bureaucratic Tensions, 1927–30,” Ph.D. dissertation, University of Illinois, 1975Google Scholar.

9 Memorandum by R. L. Craigie, “Outstanding Problems Affecting Anglo-American Relations,” November 12, 1928, PRO, FO 371/12812. Emphasis in original.

10 Mitchell interview with Charles Evans Hughes, November 11, 1941, Houghton Papers. Hughes was exaggerating somewhat. In the postwar decade Americans and British did work out compromise cooperative arrangements with regard to control of ocean cables and American access to oil-rich mandates. See Hogan, Informal Entente. As new heirs to a position of world leadership, American businessmen were quite willing to settle for an initial foot in the door.

11 Quoted in Dayer, Roberta Allbert, “The British War Debts to the United States and the Anglo-Japanese Alliance, 1920–23,” Pacific Historical Review, 45 (Nov. 1976), p. 577CrossRefGoogle Scholar.

12 For American expression of these goals see Herbert Hoover to Benjamin Strong, August 30, 1921 (not sent except in draft form), enclosed in Hoover to Charles Evans Hughes, August 30, 1921, Hoover Papers, COF, Box 284; Hoover to Warren G. Harding, January 4, 1922, Hoover Papers, COF, Box 91; Hoover to Harding, January 23, 1922, Hoover Papers, Commerce Personal File [hereafter CPF], Box 21; John Foster Dulles, “America's Part in an Economic Conference,” January 19, 1922, John Foster Dulles Papers, Princeton University Library, Princeton, New Jersey; Owen D. Young to Albert Shaw, July 14, 1928, Owen D. Young Papers, Van Homesville, New York; Chandler, Lester V., Benjamin Strong, Central Banker (Washington, 1958), pp. 247–90Google Scholar. For the British view see speech by David Lloyd George in Mills, J. Saxon, The Genoa Conference (London, 1922), p. 10Google Scholar; Memorandum by Federation of British Industries, “The Trade Depression,” October 12, 1921, PRO, T 172/1315.

13 Parrini, Carl P., Heir to Empire, United States Economic Diplomacy, 1916–1923 (Pittsburgh, 1969)Google Scholar; Moggridge, D. E., British Monetary Policy 1924–1931 (Cambridge, 1972), pp. 16–36Google Scholar.

14 For war debt statistics, see Moulton, Harold G. and Pasvolsky, Leo, War Debts and World Prosperity (Washington, 1932), p. 431Google Scholar. Churchill to Otto E. Niemeyer, April 9, 1927, PRO, Sir Richard Hopkins' Papers, T 175/11; “Mr. Churchill's Exercise,” January 29, 1925, PRO, T 172/1499B; Churchill to Niemeyer, February 22, 1925, ibid.

15 The thrust of American economic policy in the 1920s was to eliminate or minimize barriers to the free flow of goods and capital across frontiers. Specifically Americans sought to contain Bolshevism, rehabilitate Germany, stabilize foreign currencies, establish a stable financial system, discourage discriminating tariffs, promote disarmament, encourage productive foreign loans and expand the international operations of American corporations. See Costigliola, “Politics of Financial Stabilization,” pp. 1–38 and passim; Leffler, Melvyn, “The Struggle for Stability: American Policy toward France, 1921–1933,” Ph.D. dissertation, Ohio State University, 1972, pp. 278–355Google Scholar and passim; Link, Werner, Die amerikanische Stabilisierungspolitik in Deutschland 1921–32, (Dusseldorf, 1970Google Scholar).

16 See, for example, Strong to Andrew Mellon, May 27, 1924, Files of the FRBNY; speech by Garrard B. Winston, October 26, 1926, National Archives, Records of the Department of the Treasury, Secretary's File (Record Group 56) [hereafter NA 56]; speech by Julius Klein, May 13, 1925, Julius Klein Papers, Baltimore, Maryland; Thomas A. Lamont to Charles A. Kittle, November 24, 1922, Thomas W. Lamont Papers, Baker Library, Cambridge, Mass., file 80–16; Burgess, W. Randolph, ed., Interpretations of Federal Reserve Policy (New York, 1930), p. 287Google Scholar; speech by John Foster Dulles, January 19, 1922, Dulles Papers. For gold stock statistics, see Board of Governors of the Federal Reserve System, Banking and Monetary Statistics (Washington, 1943), p. 536Google Scholar.

17 Hoover, Herbert, American Individualism (New York, 1923)Google Scholar. See also Hogan, Informal Entente.

18 Hoover to Harding, January 4, 1922, Hoover Papers, COF, Box 284; Hoover to Harding, January 23, 1922, ibid., CPF, Box 21; U.S. Department of State, Foreign Relations of the United States 1922 (Washington, 1938)Google Scholar [hereafter FRUS], I, p. 393.

19 Hoover to Mellon, January 6, 1923, Hoover Papers, COF, Box 367; Hoover, “Memorandum,” February 4, 1923, ibid., CPF, Box 29; Hughes to Richard Washburn Child, October 18, 1922, National Archives, General Records of the Department of State (Record Group 59) (hereafter NA 59) 462,00R296/1. This conflicted with British policy, as expressed in the Balfour Note, which called for cancellation of war debts and reparations and blamed the U.S. for the obligation's continuance. See New York Times, August 2, 1922, pp. 1, 4; Dayer, “British War Debts,” pp. 588–89. Ultimately, the U.S. negotiated war debt agreements providing for repayment in full of principal and partial remission of interest. Britain's settlement in 1923 was the harshest. See Moulton and Pasudsky, War Debts, 80–91.

20 For accounts of the Genoa Conference see Parrini, Heir to Empire, pp. 154–71; Clarke, Stephen V. O., “The Reconstruction of the International Monetary System: The Attempts of 1922 and 1933,” Studies in International Finance, No. 33 (Princeton, 1973), pp. 4–18Google Scholar. Felix, David, Walther Rathenau and the Weimar Republic (Baltimore, 1971), pp. 147–81Google Scholar; Traynor, Dean W., International Monetary and Financial Conferences in the Interwar Period (Washington, 1949), pp. 67–87Google Scholar; Mills, J. Saxon, The Genoa Conference (London, 1922)Google Scholar; Siddique, Abul K. M., “The International Monetary and Economic Conferences of the Inter-War Period,” Ph.D. dissertation, Yale University, 1970, pp. 79–116Google Scholar; Sayers, Bank of England, pp. 156–62.

21 Speech by David Lloyd George, April 3, 1922, quoted in Mills, The Genoa Conference, p. 10.

22 Parrini, Heir to Empire, pp. 151–71.

23 Memorandum by R. G. Hawtrey, “The Genoa Currency Proposals,” February 4, 1925, PRO, T 172/1499B.

24 In 1920 the pound sterling sank to a low of $3.38. Board of Governors of the Federal Reserve System, Banking and Monetary Statistics (Washington, 1943), p. 681Google Scholar.

25 Memorandum by Hawtrey, R. G., “The Genoa Currency Proposals,” February 4, 1925, PRO, T 172/1499B; Sir Henry Clay, Lord Norman (London, 1957), pp. 137–39Google Scholar. For the actual currency proposals see Mills, The Genoa Conference, pp. 360–72.

28 Otto Niemeyer to Churchill, March 20, 1925, PRO, T 172/1499B. Both Americans and British were well aware where potential deficits and surpluses lay.

27 Strong recalled this decision in a conversation with Arthur Salter, May 25, 1928, Benjamin Strong Papers, Federal Reserve Bank of New York Archives, New York; for Strong's opposition in 1922, see Clarke, “The Reconstruction of the International Monetary System,” pp. 14–15.

28 Washington's fears on this point were illustrated when Britain issued the Balfour Note and during the Dawes and Young Plan negotiations. See Clay, Lord Norman, pp. 173–75; Werner Link, Die amerikanische Stabilisierungspolitik in Deutschland 1921–32, pp. 141–43; Alanson B. Houghton to William R. Castle, September 28, 1925, Houghton Papers; speech by Charles E. Hughes, December 29, 1922, U.S. Department of State, FRUS 1922, II, pp. 199–202; Henry L. Stimson to Owen D. Young, April 8, 1929, NA 59, 462.00R296/2773; Stimson to O. D. Young, April 15, 1929, ibid., 462.00R296/2787.

29 The importance of these factors in influencing American opposition to the Genoa proposals became apparent in 1928 when the British redoubled efforts to get the Americans to accept them. See Strong to George L. Harrison, July 6, 1928, Strong Papers; Niemeyer to Churchill, March 20, 1925, PRO, T 172/1499B; Memorandum by R. G. Hawtrey, “Recent Price Movements,” March 1, 1927, PRO, T 176/5; Strong to Montagu Norman, August 30, 1927, Strong Papers; Strong to George L. Harrison, December 24, 1927, FRBNY Files; Strong to Norman, March 27, 1928, Strong Papers; Strong to Harrison, July 8, 1928, ibid.; memorandum of conversation between Strong and Arthur Salter, May 25, 1928, ibid.; memorandum by George L. Harrison of conversation with Salter, February 26, 1929, FRBNY Files; John B. Stetson to Frank B. Kellogg, March 11, 1929, NA 59, 860c.51/713; Stetson to Kellogg, March 12, 1929, ibid., 860c.51/714.

30 For a comprehensive statement of the American interests involved, see Edwin W. Kemmerer to Charles E. Hughes, June 24, 1924, NA 59, 462.00R296/386; Arthur N. Young to Hughes, June 9, 1924, ibid.

31 SirClay, Henry, Lord Norman (London, 1957), pp. 179–86Google Scholar; Boyle, Andrew, Montagu Norman (New York, 1967), pp. 143–48Google Scholar; League of Nations, The Reconstruction of Austria (Geneva, 1926)Google Scholar; Salter, Arthur, Memoirs of a Public Servant (London, 1961)Google Scholar; speech by Arthur Salter to International Chamber of Commerce, June 23, 1925, copy in Economic and Financial Section, File 113, League of Nations Collection, United Nations Archives, Geneva, Switzerland.

32 Committee on Finance and Industry, Minutes of Evidence (London, 1931)Google Scholar, paragraphs 6094, 4085; “Mr. Churchill's Exercise,” January 29, 1925, PRO, T 172/1499B.

33 R. G. Hawtrey “Monetary Policy,” October 31, 1923, Otto E. Niemeyer Papers, PRO, T 176/13; Niemeyer to Norman, June 23, 1923, Niemeyer Papers, PRO, T 176/13; Norman to Niemeyer, November 20, 1923, ibid., T 176/5; “Mr. Churchill's Exercise,” January 29, 1925, PRO, T 172/1499B; article by John Maynard Keynes, in The Nation, copy in PRO, T 172/1499B; Keynes, “The Economic Consequences of Mr. Churchill,” in Keynes, , Essays in Persuasion (New York, 1963), pp. 244–70Google Scholar; Memorandum by Lord Bradbury, “The Coal Crisis and the Gold Standard,” August 4, 1925, Niemeyer Papers, PRO, T 176/16.

34 Niemeyer to Norman, June 23, 1923, Niemeyer Papers, PRO, T 176/13. See also Niemeyer to Norman, November 20, 1923, ibid., T 176/5.

35 Norman to Niemeyer, November 20, 1923, Niemeyer Papers, PRO, T 176/5. From 1920 to 1923, the Federal Reserve System successfully contained inflation despite a 50 percent increase in the nation's gold stock. U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1957 (Washington, 1960), p. 649Google Scholar.

38 Moreover Norman was reluctant to throw down the gauntlet and directly attack American price stability. He wanted to develop a league of at least partially independent central banks which would cooperate to promote financial stability and growth. Hopefully the Bank of England would be the focus of such association. Norman realized that such grand plans, or even Britain's return to gold, were dependent on co-opting the enormous financial power of the United States. Although he was often at odds with American financial policy, Norman tried to paper over these differences and gain the maximum possible American assistance. This pattern emerges from the extensive correspondence between Norman and New York Reserve Bank Governors Strong and George L. Harrison in the Strong Papers and FRBNY Files.

37 Link, Die amerikanische Stabilisierungspolitik in Deutschland, pp. 223–40; Clarke, Central Bank Cooperation, pp. 58–67.

38 Strong to Andrew W. Mellon, May 27, 1924, FRBNY Files; Strong to Pierre Jay, April 23, 1924, Strong Papers; Strong to Norman, June 3, 1924, ibid.; Strong to Norman, July 9, 1924, ibid.; Strong to Norman, November 4, 1924, ibid.; Clarke, Central Bank Cooperation, p. 76.

39 R. G. Hawtrey to Churchill, “The Gold Standard,” February 2, 1925, PRO, T 172/1499B; Niemeyer to Churchill, March 20, 1925, ibid.; Strong to Norman, March 25, 1925, PRO, T 172/1500A; Norman to Strong, April 15, 1925, Strong Papers; Strong to Norman, April 27, 1925, ibid.; Norman to Strong, May 11, 1925, ibid.

40 Memorandum by Strong of conversation with Norman, July 22, 1925, Strong Papers.

41 Norman to Niemeyer, December 4, 1924, PRO, T 172/1500A; Norman to Cecil Lubbock, January 6, 1925, ibid.; Strong's testimony before the House Committee on Banking and Currency, April 1926 in Burgess, Interpretations of Federal Reserve Policy, pp. 266–68; Chandler, Benjamin Strong, pp. 308–9.

42 Niemeyer to Norman, December 8, 1924, PRO, T 172/1500A; “Mr. Churchill's Exercise,” January 29, 1925, PRO, T 172/1499B.

43 As one Colonial Office report graphically put it: “The per capita [annual] purchase of the West African native was 12 shillings, while the highly sophisticated citizen of the USA bought … at the rate of 9 shillings per head.” Memorandum by McDougall, February 23, 1926, PRO, T 172/1534.

44 While total American foreign trade doubled in the 1921–25 period as compared with the 1910–14 period, U.S. trade with Australia and New Zealand tripled. American exports to South Africa increased 2½ times while imports from South Africa spiraled upward nearly fourfold. U.S. Department of Commerce, Statistical Abstract of the United States 1928 (Washington, 1928), pp. 462–67Google Scholar. During the 1920s the Dominions stuck up direct financial and political ties with New York and Washington. W. H. Clegg to Benjamin Strong, February 4, 1925; H. T. Armitage to Strong, December 5, 1927, FRBNY Files. The cumulative effect of such developments, noted Foreign Office American expert Geoffrey Thompson, was “to entice the Dominions away from Britain.” Minute by Geoffrey Thompson, December 1, 1928, on memorandum by Secretary of State for Dominion Affairs Leopold S. Amery, “Anglo-American Relations,” November 26, 1928, PRO, Cabinet 24/199.

45 Churchill's statement is quoted in a memorandum prepared six years later: M. P. A. Hawtrey, “The One-Power Standard,” November 27, 1928, PRO, Cabinet 24/199.

46 See Kemmerer, Edwin W. and Vissering, Gerald, Report on the Resumption of Gold Payments by the Union of South Africa (Pretoria, 1925), p. iiiGoogle Scholar. Kemmerer conducted most of the investigation.

47 See Kemmerer and Vissering, Report …, especially paragraphs 331, 1259, 1262, 1332, 2061, 2071, 2072, 2076, 3300–3306, 4331–4332.

48 Clegg, W. H., “Currency,” The Monthly Journal of the Johannesburg Chamber of Commerce (March 1925), p. 16Google Scholar.

49 This quotation is from a memorandum prepared in 1926 by State Department Economic Adviser Arthur N. Young to explain the dislike of the British for Kemmerer. July 14, 1926, NA 59, 860c.51A/4. Kemmerer was fully cognizant that his proposals ran counter to vested British financial interests. See Kemmerer to W. W. Cumberland, February 21, 1925; Fred W. Wilson to Kemmerer, October 31, 1924; John Parke Young to Kemmerer, October 22, 1924; all in Edwin W. Kemmerer Papers, Princeton, New Jersey.

50 De Kock, Gerhard, The South African Reserve Banks 1920–1925 (Pretoria, 1954), pp. 76–77Google Scholar. See also Dalgaard, Bruce Ronald, “South Africa's Impact on Britain's Return to Gold, 1925,” Ph.D. dissertation, University of Illinois at Urbana-Champaign, 1976Google Scholar.

51 Governor General of Australia to Secretary of State for Colonies [L. S. Amery], January 8, 1925, PRO, Treasury, Finance Files, T 160/463; Amery to Governor General, January 22, 1925, ibid. A Treasury memorandum emphasized that if Australia returned to gold and sterling depreciated, “the Australian pound would remain tied to the dollar.” Memorandum, February 20, 1925, ibid. See also Giblin, L. F., The Growth of a Central Bank (Melbourne, 1951), pp. 11, 26Google Scholar; Holder, R. F., Bank of New South Wales, A History (Sydney, 1970), II, pp. 615–16Google Scholar; Kemmerer and Vissering, Report …, paragraphs 468, 1472.

52 “Mr. Churchill's Exercise,” January 29, 1925, PRO, T 172/1499B. Also printed in Moggridge, British Monetary Policy 1924–31, pp. 260–62.

53 Ibid. In British Monetary Policy 1924–31, Moggridge dismisses Churchill's “exercise” as not a statement of belief, but merely a device to elicit from his advisers strong arguments in favor of an immediate return to gold. Moggridge's evidence for this assertion is shaky. He relies on memoir accounts of Churchill's “style of decision-making” which deal not with the 1920s, but with the World War II years. Furthermore, the observers cited by Moggridge explain that Churchill tested his technical advisers most severely when he intuitively opposed their recommendations. Moggridge, British Monetary Policy, p. 66; Salter, Lord, Slave of the Lamp: A Public Servant's Notebook (London, 1967), pp. 248–50Google Scholar; Leith-Ross, Frederick, Money Talks (London, 1968), p. 118Google Scholar; Grigg, P. J., Prejudice and Judgement (London, 1948), pp 175–76Google Scholar; Wheeler-Bennett, J., Action This Day: Working with Churchill (London, 1968), pp. 27–28, 185–87, 191–92, 233Google Scholar; Macmillan, Harold, Winds of Change, 1914–39 (London, 1966), pp. 204–5Google Scholar. More importantly, “Mr. Churchill's Exercise” is not an aberration in the Chancellor's files, but rather only one of several memoranda which fundamentally questioned the conservative deflationary policies pursued by Norman and Niemeyer. See Churchill to Niemeyer, February 22, 1925, Richard Hopkins Papers, PRO, T 172/1499B and the Niemeyer-Churchill exchange in April-May 1927, especially Churchill to Niemeyer, April 20, 1927, T 175/11; Grigg, Prejudice and Judgement, p. 193. Churchill was intellectually more at home with Keynes than the latter's essay “The Economic Consequences of Mr. Churchill” would suggest.

54 “Mr. Churchill's Exercise,” January 29, 1925, PRO, T 172/1499B.

55 Churchill to Niemeyer, February 22, 1925, PRO, T 172/1499B.

56 Harrod, Roy F., The Life of John Maynard Keynes (London, 1951), p. 350Google Scholar.

57 Churchill to Niemeyer, February 22, 1925, PRO, T 172/1499B.

58 Young, Kenneth, Churchill and Beaverbrook (New York, 1966), pp. 66–75Google Scholar; Middlemas, Keith and Barnes, John, Baldwin, A Biography (London, 1969), pp. 262–63, 302–6Google Scholar.

59 As late as March 16, 1925, Niemeyer questioned the wisdom of Britain, already in debt to the United States, “borrow[ing] more,” especially on the Americans' rigorous “‘business terms’.” Niemeyer to Norman, March 16, 1925, PRO, T 172/1500A. In discussions with Churchill, whom he wanted to win to the gold standard policy, however, Niemeyer withheld misgivings or objections that he shared fully with Norman who was also committed to gold. In a similar pattern Norman vented to Strong doubts and hesitations which he did not display to his British associates. The effect of this was to distort the apparent options facing British leaders.

60 “Niemeyer's Commentary on Churchill's ‘Exercise’,” February 2, 1925; Norman's Commentary, February 2, 1925, PRO, T 172/1499B. Also printed in Moggridge, British Monetary Policy, pp. 267–72.

61 Niemeyer to Churchill, “The Gold Export Prohibition,” February 2, 1925, Hopkins Papers, PRO, T 175/9. In the “long run” to which Niemeyer appealed, the operation of the gold standard would, at least according to classical economic theory, eliminate the trade depression in Britain. But, as Keynes put it, “in the long run we all are dead.” Harrod, Keynes, p. 341. More immediately, neither British nor American financiers reckoned fully with the rigidities of prices and wages which jammed the “automatic” machinery of the gold standard.

62 Niemeyer to Churchill, March 1925 (no day given), Niemeyer Papers, PRO, T 176/5. See also Norman's Commentary on Churchill's “Exercise,” February 2, 1925, PRO, T 172/1499B.

63 Speech by Winston Churchill, “Gold Standard Bill,” May 4, 1925, copy in PRO, T 172/1520.

64 Churchill and Norman were soon bombarded with complaints that London's financial stringencies were making the Dominions financially dependent on America and so threatening Britain's lifeblood of trade. See Board of Trade Secretary Sydney Chapman to Niemeyer, June 24, 1925; Robert Howe to Churchill (no date but mid-1925); Niemeyer to Churchill, July 21, 1925; Niemeyer to Churchill (no date but probably early July 1925), all in Niemeyer Papers, PRO, T 176/17; Clay, Lord Norman, p. 220; Clarke, Central Bank Cooperation, pp. 99, 102.

65 Committee on Finance and Industry, Minutes of Evidence (London, 1931)Google Scholar, paragraphs 3360–63, 3466–67, 7622, 7633–35.

66 Norman to Niemeyer, March 21, 1925, PRO, T 172/1499B. For the effects of monetary policy on the British economy, see Howson, Susan, Domestic Monetary Management in Britain, 1919–38 (Cambridge, 1975), pp. 30–63Google Scholar; Moggridge, British Monetary Policy, pp. 98–158; Sayers, Bank of England, pp. 211–34.

67 See Notes 7 and 8.

68 For a summary of the public debate, see Literary Digest, 90 (July 31, 1926), p. 507.

69 See statements by Winston Churchill and Walter Runciman in Parliament, December 10, 1924, copy in PRO, FO 371/9683; Boyle, Andrew, Montagu Norman (New York, 1967), pp. 149–59Google Scholar; Clay, Lord Norman, pp. 172–78; Middlemas and Barnes, Baldwin, pp. 136–48.

70 Minute by R. L. Craigie, August 7, 1926, PRO, FO 371/11197. Chamberlain initialed his approval of this policy.

71 Craigie's memorandum of conversation with Niemeyer, October 11, 1926, PRO, FO 371/11198.

72 Niemeyer to Foreign Office, October 1, 1926, PRO, FO 371/11220; Arthur N. Young to Frank B. Kellogg, October 12, 1928, NA 59, 462.00R296/2691; DeWitt Clinton Poole to Kellogg, October 11, 1928, ibid., 462.00R296/2404; memorandum by Henry L. Stimson of conversation with S. Parker Gilbert, September 26, 1929, ibid., 462.00R296 Bank for International Settlements/17; Edwin Wilson to Stimson, June 3, 1930, ibid., 462.66R296 Bank for International Settlements/114

73 Frank Costigliola, “The Politics of Financial Stabilization: American Reconstruction Policy in Europe 1924–30”; Chandler, Benjamin Strong, Central Banker, pp. 381–422.

74 Arthur Salter to Niemeyer, April 14, 1927; Dwight Morrow to Salter, September 2, 1927; Norman to Salter, September 6 and 8, 1927, all in League of Nations Collection, Economic and Financial Section, File 123; O. Ernest Moore, “Memorandum of Conversation between Strong and Salter,” May 26, 1928, Strong Papers.

75 By the late 1920s, several nations had in effect adopted the gold exchange standard by holding pounds or dollars instead of gold as reserve for their currencies. However this development was haphazard and not subject to the coordinating and stabilizing control envisioned at Genoa. For American and French opposition to the renewed British effort see Strong to George L. Harrison, July 6, 1928, Strong Papers; Niemeyer to Churchill, March 20, 1925, PRO, T 172/1499B; Memorandum by R. G. Hawtrey, “Recent Price Movements,” March 1, 1927, PRO, T 176/5; Strong to Montagu Norman, August 30, 1927, Strong Papers; Strong to George L. Harrison, December 24, 1927, FRBNY Files; Strong to Norman, March 27, 1928, Strong Papers; Strong to Harrison, July 8, 1928, ibid.; memorandum of conversation between Strong and Arthur Salter, May 25, 1928, ibid.; memorandum by George L. Harrison on conversation with Salter, February 26, 1929, FRBNY Files; John B. Stetson to Frank B. Kellogg, March 11, 1929, NA 59, 860c.51/713; Stetson to Kellogg, March 12, 1929, ibid., 860c.51/714.

76 On the creation of the BIS, see Costigliola, , “The Other Side of Isolationism; The Establishment of the First World Bank,” The journal of American History, 59 (December 1972), pp. 602–20CrossRefGoogle Scholar.

As the crisis of the 1930s worsened, the BIS accepted the development of the gold exchange standard while attempting to defuse the danger of a run on the dollar or other reserve currencies. Dulles, Eleanor Lansing, The Bank for International Settlements at Work (New York, 1932)Google Scholar.

77 Strong to Owen D. Young, August 17, 1928, Strong Papers; Armistice Day Address by Calvin Coolidge, November 11, 1928, printed in Commercial and Financial Chronicle, 177 (November 17, 1928), pp. 1759–61.

78 Strong to Pierre Jay, August 4, 1927, Strong Papers; Strong to Jay; July 21, 1927, ibid.; Strong to Emile Moreau, August 10, 1927, FRBNY Files.

79 Strong to Pierre Jay, March 26, 1928, Strong Papers; Strong to Walter W. Stewart, August 3, 1928, ibid.; Strong to Owen D. Young, August 17, 1928, ibid.; Burgess, W. Randolph, “The Money Market in 1928,” The Review of Economic Statistics, 11 (February 1929), p. 24CrossRefGoogle Scholar; memorandum by Carl Snyder, “Purchasing Power of Gold,” May 28, 1929, copy in Documents Divers of the League Financial Committee, 77, League of Nations Collection. Monthly gold stock figures can be found in Banking and Monetary Statistics, p. 537.

80 Charles S. Hamlin Diary, March 7, 1928, XIV, Charles S. Hamlin Papers, Library of Congress, Washington, D.C. See also Department of Commerce, Annual Report 1928 (Washington, 1928), p. xviiiGoogle Scholar.

81 Statement by Governor J. U. Calkins of Federal Reserve Bank of San Francisco, Minutes of the Conference of Governors of Federal Reserve Banks, April 30-May 2, 1928, p. 24, Federal Reserve Board Archives, Washington, D.C. FRBNY Deputy-Governor J. Herbert Case agreed, ibid.Fleisig, Heywood, in Long Term Capital Flows and the Great Depression: The Role of the United States, 1927–1933 (New York, 1975)Google Scholar, emphasizes the importance of gold flows rather than stock market speculation in determining policy (pp. 22, 120). For Federal Reserve Board discussions, see Wicker, Elmus, Federal Reserve Monetary Policy 1917–33 (New York, 1966), pp. 116–23Google Scholar, 129; Chandler, Lester V., American Monetary Policy 1928–41 (New York, 1971), pp. 42–46Google Scholar; Hamlin Diary, April 18, 1928, and May 27, 1928, XIV, Hamlin Papers.

82 Strong to Owen D. Young, August 17, 1928, Strong Papers. Strong acknowledged to Walter W. Stewart, American adviser at the Bank of England, that tight money would put a “damper upon speculation.” “Most importantly,” Strong continued, a restrictive monetary policy would restrict foreign borrowing in America and force foreigners to draw down their dollar balances to pay for purchases and debt service. This “would greatly strengthen our position as to possible demands upon our gold reserves.” Strong to Stewart, August 3, 1928, FRBNY Files. Chandler quotes this passage as part of a long citation, but does not analyze its significance. Chandler, Benjamin Strong, pp. 460–62.

83 Wicker, Federal Reserve Monetary Policy, pp. 123–28; Chandler, American Monetary Policy, pp. 46–53.

84 On the battle between the New York Bank and the Federal Reserve Board, see Chandler, American Monetary Policy, pp. 5–8, 54–70.

85 Moggridge, British Monetary Policy, pp. 236–37. British Treasury official R. G. Hawtrey feared that because London was still the center for most of the world's commodity markets, Norman's efforts to depress British prices had the perverse effect of lowering world prices and so leaving Britain's relative position unchanged. Memorandum by R. G. Hawtrey, “Recent Price Movements,” March 1, 1927, Niemeyer Papers, PRO, T 176/5; memorandum by Hawtrey, July 12, 1928, ibid., T 176/16.

88 On the gold question see memorandum by George L. Harrison of conversation with Arthur Salter, February 26, 1929, FRBNY Files; John B. Stetson to Kellogg, March 12, 1929, NA 59, 860c.51/714; Jeremiah Smith to Harrison, September 4, 1930, Young Papers; Owen Young to Norman, September 4, 1930, ibid.; Harrison to Norman, September 4, 1930, ibid.; Norman to Harrison and Young, September 6, 1930, ibid. On the Kindersley loan plan see Norman to BIS, February 2, 1931, transmitted by consul H. Merle Cochran to Joseph P. Cotton, February 11, 1931, NA 59, 462.00R296 Bank for International Settlements Special Reports/4; Clarke, Central Bank Cooperation, pp. 179–80.

87 Clarke, Central Bank Cooperation, pp. 201–18.

88 Kindleberger, World In Depression, pp. 233–38, 243–45.

89 M. Merle Cochran to William R. Castle, May 5, 1932, NA 59, Bank for International Settlements Special Reports/49, 462.00R296; Gardner, Lloyd C., Economic Aspects of New Deal Diplomacy (Madison, 1964), pp. 106–7, 176–91Google Scholar.

90 Hull, Cordell, The Memoirs of Cordell Hull, 2 vols. (New York, 1948), pp. 85, 519, 526, 530, 975–76, 1151–53, 1476–77, 1614Google Scholar; Gardner, Richard C., Sterling-Dollar Diplomacy (Oxford, 1956)Google Scholar; Kolko, Gabriel, Politics of War (New York, 1968), pp. 280–94Google Scholar; Kolko, , The Limits of Power (New York, 1972), pp. 59–69Google Scholar. After World War II, the United States reversed its earlier position and sponsored the gold exchange standard of Bretton Woods. America's affinity for a gold-centered international financial system declined, however, in pace with its gold reserves. See Eckes, Alfred E. Jr., A Search for Solvency: Bretton Woods and the International Monetary System, 1941–71 (Austin, 1975)Google Scholar.