2&
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BRITISH BBBA98T*
March Srd, 1999
Mo. S6I
By Lord,
. X have the honour to enclose herewith for
Your Lordship*s information copies of the text of a
statonent made recently by the Secretary of the Treasury
both "before the Committee on Coinage, Weights and
Measures of the House of representatives and before a
Sub-Committee of the Banking and Currency Committee of
the Senate*   Enclosed with the statement are copies of
.. the balance sheets of the United states Stabilisation
Fund as of June SOth and December 51st, 1958• Mr*
Horgenthau was giving evidence in connexion with the
President's request to extend the life of the
Stabilisation Fund and of his powers to alter the gold
|& eontent of the dollar*   Mr* Morgenthau was Questioned
on his statement by members of both committees* The
principal point of interest which emerged was that as
regards American monetary policy he said, as he has
said on previous occasions, that there was no present
Intention of using the power to depreciate the dollar
further, that the power should however be retained as a
weapon in case other great commercial countries should
at any time start a raoe la currency depreciation, and
that he would gladly meet such countries more than half
way if they should suggest a stabilisation agreement*
*If the principal commercial nations** he is reported aa
saying,/
The Right Honourable
The Viscount Halifax, K.O.»
ate*,      etc*» ate*
RCL:TKB:DH
ill
INDEX
%    _ M
If:
saying, "would agree to fix a stable taste for their
currencies* nothing would be store helpful to business.
Unfortunately that prospect seems to be remote.   But are
have been working om It all the time, and if there
should be any alight inolination-dn-the pafrt of-%fie
leading ooranerelal powers to join 1ft euoh an undertaking ,
X will drop whatever I as doing and meet them more then
half way".
2. There does not appear to hove been any serious
opposition in either of the eoiamltteea to the extension
of the life of the Stabilisation Fund, but Senator Glass,
who is Chairman of the Sub-Committee of the Senate
Co rani t tee on Banking and Currency, threatens a determined
fight against the proposal to prolong the President's
power farther to devalue the dollar.   What the outcome
of this will be is- still uncertain.   At.the same time I
must point out that even if the President's power to
alter the gold content of the dollar within certain
limits ie allowed to expire, the Secretary of the treasury
will still have power under Section 8 of the Gold
Reserve Act of 1934 to fix the price for the purchase
of gold abroad at such a level as *he may deem most
advantageous to the publie interest".
3. A full transcript of the hearings before
the committees will no doubt be printed In due course
but may not be available for some little time yet.
There is still to be a further hearing before the Rouse
Committee at which Mr. lorgenthau ia due to appear.
4. The silver purchase question referred to in
the third part of Mr. Horgenthau' s statement has been
the subject of a rather brief debate in the Bouse of
Representatives/
B^nmlatlTM on a notion to reduce a Ulnt
appropriation applicable to expenses in connexion with
the purchase of foreign silver.   The motion* which
would have prevented the further purchase of foreign
silver, was defeated by 155 votes to 196}   tat this
should not fee taken as necessarily reflecting the reel
strength of the respective parties* einee the notion
seems to tewe been unexpected^ end it was in any ease
felt by some members of the House at least that if the
silver policy is to be changed this should be done by
an amendment of the Silver Purchase Act rather than by
cutting down an appropriation item for the Mint.
5. Copies of this despatch and of the
enclosures are being sent to file Majesty's Treasury
and the Department of overseas Trade.
Z have the honour to be9
with the highest respect,
Ky Lord,
Tour Lordship's Most obedient,
humble servant*