World Economic Conference of 1933
The World Economic Conference of 1933 (or the London Monetary and Economic Conference) was a meeting of the major economic powers to coordinate strategy for dealing with the Great Depression. It met in London in June 10 to July 28, 1933, but collapsed after President Franklin D. Roosevelt sent a "bombshell message" that indicated the U.S. would not agree to the main proposal.
The Conference had been planned with support from President Herbert Hoover. The agenda had been agreed to in meetings between Roosevelt and the prime ministers of Britain and France who met with FDR in Washington in May 1933.
The European powers, especially France, proposed immediate agreement on currency stabilization under a gold standard. The head of the U.S. delegation Secretary of State Cordell Hull worked out a compromise to stabilize the US dollar, the British pound and the French frank. On July 3 FDR without warning issued a statement that rejected the compromise and destroyed the conference. He refused to renounce freedom to devalue the dollar, insisting that its purchasing power, not its gold content, needed stabilizing. Hull was humiliated. Another delegate, Senator Key Pittman of the silver mining state of Nevada spent his time trying to arrange subsidies for the silver industry. The conference adjourned July 28, a total failure.
Historians have long been puzzled as to Roosevelt’s motivation in killing the conference--he had consulted with no one. The general assumption is that he believed the U.S. was tired of international activity, especially since the system of repayment of World War I loans to the U.S. had broken down. Roosevelt feared that an international agreement might prevent him from taking the U.S. off the gold standard and limit his flexibility to inflate the dollar.
Roosevelt’s erratic actions alienated many of his supporters. For example, James P. Warburg, head of one of the great New York banking houses, was one of the few Wall Streeters to join the New Deal. FDR put him in charge of planning the American role at the conference. FDR’s rejection of the gold standard alienated Warburg, who became the first of many to break with the administration. A successful polemicist and writer, Warburg became a leading spokesman for the conservative Liberty League.
The British and French were horrified at the collapse of international cooperation; Nazi Germany was delighted. The long-term result was that the major countries went their own way and increasingly turned to "autarky" -- that is, policies that insulated themselves from the rest of the world. The U.S. for the first time entered a period of isolationism, disconnecting itself from the momentous events in Europe, where in Germany Adolf Hitler had just come to power (January 1933).
- Dallek, Robert. Franklin D. Roosevelt and American Foreign Policy, 1932-1945 (1979)
- Freidel, Frank. Franklin D. Roosevelt: Launching the New Deal (1973) ch 22
- Moley, Raymond. After Seven Years (1939) pp 196-69, Moley had been a top FDR advisor and repudiated the New Deal.
- Morrison, Rodney J. "The London Monetary and Economic Conference of 1933: A Public Goods Analysis" American Journal of Economics and Sociology, Vol. 52, No. 3 (Jul., 1993), pp. 307-321 in JSTOR
- Nichols, Jeannette P. "Roosevelt's Monetary Diplomacy in 1933," American Historical Review, Vol. 56, No. 2 (Jan., 1951), pp. 295-317 in JSTOR, by leading historian