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BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
To

Chairman Eccles

ffrnm

Date

nay 19,

Subject:

»T. Burke Knapp

Dean Acheson made a speech in Cleveland, llisaiasippi, about
ten days ago, which has aince been widely interpreted aa evidence that
the Administration was contemplating a new poatwar ^Lend-Leaae* program.
I find very little grounda for thia interpretation in the apeech, although Mr. Acheson does atate;
*The facta of international life alao mean that the United
Statea ia going to have to undertake further emergency financing of foreign purchaaea if foreign countries are to continue
to btgr in 1948 and 1949 the commodities which they need to
auatain life and at the same time rebuild their economies.
Bequests for further United Statea aid may reach ua through the
International Bank, or through the Export-Import Bank, or they
may be of a type which existing national and international
institutions are not equipped to handle and therefore may be
made directly through diplomatic channels. But we know now that
further financing, beyond existing authorisations, ia going to
be needed. Jfo other country is able to bridge the gap in
conanodities car dollar a •*
Mr. Acheaon, after atating that it ia generally agreed that
until the various countries of the world get on their feet and become
self-supporting there can be no political or economic stability in the
world and no lasting peace or prosperity for any of us, went on to present five ^imperatives* for our foreign economic policy* Aside from
the one concerning emergency financing quoted above, he listed the following four:




1* *They mean first that we in the United States must take as
large a volume of imports as possible from abroad in order
that the financial gap between what the w o r M needs and what
it can pay for can be narrowed. There ia no charity involved
in this. It is simply common sense and good business. We are
today obliged from considerations of self-interest and
humanitarianiam to finance a huge deficit in the world's budget*
The only sound way to end this deficit financing ia by accepting increased quantities of goods from abroad. There can never
be any stability or security in the world for any of us until
foreign countries are able to pay in commodities and services
for what they need to inqport and to finance their equipment
needs from more normal sources of investment.*

To; Ghairnan Eccles




-2 -

2. *This leads directly to a third imperative for our foreign
policy. Since world demand exceeds our ability to supply, we
are going to have to concentrate our emergency assistance in
areas where it will be most effective in building world political
and economic stability, in promoting human freedom and democratic
institution©, in fostering liberal trading policies, and in
strengthening the authority of the United Nations*11
3. ^The fourth thing we must do in the present situation is
to push ahead with the reconstruction of those two great
workshops of Europe and Asia ~ Germany and Japan — upon
which the ultimate recovery of the two continents so largely
depends. European recovery cannot be complete until the
various parts of Europe's economy are working together in a
harmonious whole. And the achievement of a coordinated
European economy remains a fundamental objective of our
foreign policy**
4.
The final point covers extension beyond June 50, this year,
of certain wartime powers enabling the Government to exercise
export control over a limited list of commodities and transportation controls adequate to insure the movement of bulk products
such as wheat and coal to foreign countries*