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BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

December 3, 1947
Chairman Eccles
From

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MESSAGE:
Attached is the proposed
National Advisory Council action with
regard to the communication to the
Canadian Government .

Attachment




The National Advisory Council requests the Department of
State to communicate the sense of the following to the Canadian
Ambassador for the immediate information of his Government:
The United States Government is opposed to the granting
of subsidies or other artificial inducements for the purpose of
stimulating gold production. It opposes such measures partly because of their irrational and unpredictable effects upon the use
of gold as a regulator of monetary systems, and partly because
of the heavy burden continuing to fall on the United States
through foreign countries1 offerings of gold*
In particular, this Government considers that subsidies of the type currently being proposed for introduction
by the Canadian Government are not permissible under the Articles
of Agreement of the International Monetary Fund, because they
are tantamount to the payment of a higher price for part of new
gold production*
Accordingly, the United States Government has
instructed its Executive Director on the International Monetary
Fund to use his best efforts to persuade the Monetary Fund to
declare that gold subsidies tantamount to the payment of higher
prices for gold by member governments are contrary to the
Articles of Agreement*
This Government is giving further consideration to
the measures most appropriate to deal with the problem of
other forms of artificial stimulants to gold production.
Among other things, this Government is contemplating the
desirability of shortly issuing a public statement of policy
along the above lines.




December 39 1947