During the Great Depression, international relations faced several challenges, including issues with exchange-rate stabilization. When Franklin Roosevelt was president, one of the main problems was the destabilization of exchange rates due to various countries abandoning the gold standard. As a result, currencies fluctuated widely, leading to economic uncertainty and hindering international trade.
To address this problem, many countries sought to stabilize exchange rates through cooperative agreements. One such agreement was the World Economic Conference, scheduled for 1933, aimed at coordinating global economic policies and stabilizing exchange rates. However, FDR refused to participate in this conference for two primary reasons:
1. Domestic Policy Priorities: Roosevelt prioritized addressing the domestic economic crisis as his administration implemented the New Deal, a series of domestic initiatives to revive the U.S. economy. Focusing on domestic policies, he believed, would have a more direct impact on recovery rather than participating in international conferences.
2. Monetary Policy Differences: FDR had reservations about the approach to exchange-rate stabilization, primarily based on his belief that other nations must reflate their economies to stimulate growth, rather than adhering to strict monetary policies like returning to the gold standard. He advocated for a departure from pre-Depression monetary norms and adopting more expansionary policies to combat the economic slump.
Instead of participating in international efforts for exchange-rate stabilization, Roosevelt focused on domestic economic recovery through policies aimed at stimulating production, reducing unemployment, and increasing consumer purchasing power. These efforts, such as the National Industrial Recovery Act and the Agricultural Adjustment Act, were intended to restore confidence, stabilize prices, and increase employment within the United States.
Overall, FDR's refusal to participate in international exchange-rate stabilization efforts during the Great Depression was mainly due to prioritizing domestic economic recovery and advocating for a departure from pre-Depression monetary norms to combat the crisis.