Presidential Papers, Doc#292 To Lewis Williams Douglas, 1 July 1953. In The Papers of Dwight David Eisenhower
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Doc #293

Document #292; July 1, 1953
To Lewis Williams Douglas
Series: EM, AWF, Administration Series
The Papers of Dwight David Eisenhower, Volume XIV - The Presidency: The Middle Way
Part II: Settling into "the long pull"; May 1953 to August 1953
Chapter 5: "So much to do in the world"

 

Dear Lew:1 Your letter of June thirtieth is clearly the product of your own studious attitude, as well as the great store of knowledge you have accumulated with respect to the important subject of sterling-dollar relationships.2 The only question that occurs to me, in its first reading, involves the first major cause you give for the unbalance between sterling and the dollar. I don't quite understand that particular sentence--a fact that is unquestionably traceable to my own ignorance rather than to the possibility that the paragraph is stated in obscure or complex fashion.3 My only reason for raising the point is that a few others may be just as hard-headed or dull as I am.

You will shortly be hearing from Dr. Hauge--I think we agreed that he would telephone you on Thursday morning. In any event, my profound gratitude goes out to you for the work you have done. I share your feeling of obligation also to the people you name in your final paragraph.4 When you talk to them, I hope you will express to them my deep appreciation.

With warm regard, As ever

1 For background on Douglas, former Under Secretary of the Treasury and former Ambassador to Great Britain, see Galambos, NATO and the Campaign of 1952, no. 47.

2 Douglas's letter and other papers concerning this matter are in WHCF/OF 116-U (see n. 3 below). In early January Churchill had suggested to Secretary of State-designate Dulles "Treasury to Treasury" talks to explore the economic problems that had developed among the free-world countries since the end of World War II. Dulles had requested an early March meeting and on February 18 had sent to the President the substance of a memorandum from the British Embassy with recommendations designed to "create conditions of freer trade and currencies" (AWF/D-H). The Secretary characterized the proposals as a "fresh and comprehensive attack on free world economic problems" (see no. 265).

Douglas participated as Dulles's deputy at meetings held in Washington March 4-7, when British Foreign Secretary Anthony Eden and Chancellor of the Exchequer Richard A. Butler discussed the proposals with U.S. government officials (State, Foreign Relations, 1952-1954, vol. VI, Western Europe and Canada, pt. 1, pp. 887-89, 921-60). On March 19 Eisenhower appointed Douglas as head of a survey commission to reexamine the nation's foreign economic policy, covering "money problems, commodities, raw materials, markets, and surpluses" (U.S. Department of State Bulletin 28, no. 719 [April 6, 1953], 498; New York Times, Mar. 20, 1953). For the text of the communiqué released at the end of the meetings see State, Foreign Relations, 1952-1954, vol. VI, Western Europe and Canada, pt. 1, pp. 962-63.

On June 1 Douglas had written Eisenhower that "various studies of many aspects of the problem are in process and will shortly be completed," at which time, he said, "my task will have been completed." Eisenhower replied on June 2 with thanks for Douglas's fine work and the declaration that "so far as I am concerned, you have one job which will never be finished as long as I am occupying this office--that job is to help keep my thinking on the rails." (Both letters are in AWF/A.)

3 Douglas's letter of June 30, which he discussed with Eisenhower at the White House on that date (see Memorandum of Conversation, June 30, 1953, WHCF/OF 116-U), was the same as his final report (July 14, in State, Foreign Relations, 1952-1954, vol. VI, Western Europe and Canada, pt. 1, p. 994; and "The Dollar-Sterling Relationship and Its Effect on U.S. Foreign Economic Policy," U.S. Department of State Bulletin 29, no. 740 [August 31, 1953], 275-79. He had written that the first major cause of the unbalance between sterling and the dollar was the "weakening of U.K. competitive power resulting from the existence of sellers' market conditions and opportunities for protected trade financed by repayment of sterling debt, and also from inflexibility in costs and immobility of resources." Although he cited the fuller convertibility of sterling as "essential to the restoration of economic freedom in large parts of the world," Douglas warned that the position of sterling "may now be too sensitively balanced to submit it to the strains and stresses of free convertibility before a number of conditions have been fulfilled." Of particular importance, he suggested, was the clarification of the U.S. position on the relaxation of trade restrictions. "For thirty years," he said, "the barriers that we have erected against imports into the United States have been incompatible with and have operated against the reestablishment of international economic health and equilibrium." Private investment of dollars in foreign countries should be encouraged, he recommended, particularly through association with government agencies, and measures should be developed to prevent the "violent fluctuations in the prices and the volume of the major raw materials that enter into international trade." Internal conditions in the British Commonwealth must also be addressed, Douglas added, and he cited a number of measures already initiated by the British government (Kaufman, Trade and Aid, pp. 16-17). Despite Douglas's sense of urgency regarding his recommendations, convertibility of sterling into all other currencies would not be fully restored until the end of 1958.

4 Douglas had thanked members of the White House staff, Secretary of the Treasury Humphrey and treasury officials, Mutual Security Director Stassen and his associates, Federal Reserve Board Chairman Martin and the officers of the board and banks, Secretary of State Dulles and State Department economic officials, and economics professors John Henry Williams and Walter W. Stewart (U.S. Department of State Bulletin 29, no. 740 [August 31, 1953], 279). For more on U.S. foreign economic policy see nos. 445 and 908.

Bibliographic reference to this document:
Eisenhower, Dwight D. To Lewis Williams Douglas, 1 July 1953. In The Papers of Dwight David Eisenhower, ed. L. Galambos and D. van Ee, doc. 292. World Wide Web facsimile by The Dwight D. Eisenhower Memorial Commission of the print edition; Baltimore, MD: The Johns Hopkins University Press, 1996, http://www.eisenhowermemorial.org/presidential-papers/first-term/documents/292.cfm

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