Show bretton woods conference laid groundwork for F or a stable international monetary system U S postwar exports depend on soundness of foreign finances by WALTER A SHEAD st sta a corres correspondent Correspond eit stripped aped 0 of all technical verbiage the proposals agreed upon by 44 united nations at the bretton woods conference and which c h ave are considered an essential part of the world peace plan to be approved at san francisco april 25 are designed to I 1 set up an international monetary fund with a working capital subscribed by 41 44 nations in gold and member currencies totaling 88 billion lion dollars of which the united states is to subscribe billions this fund is expected to stabilize and safeguard the value 0 of f foreign currencies in terms of gold gola remove trade barriers in favor ot of open or reciprocal trade agreements to provide free and open trade among member nations 2 organize an international bank tor for reconstruction and nd development i with a subscribed capital of 91 billions lions of dollars of which the united i states is to furnish billions Purpose of the bank is primarily to I 1 facilitate flotation of foreign loatis loans in in private capital markets by providing international guarantees and to make long term capital loans direct to member nations for specific projects of reconstruction and development why the need for these safeguards following world war I 1 american investors took a beating and in the late were vere caught in an epidemic of defaults by foreign debtors under the bretton woods proposals these foreign loans would be investigated by the bank and then guaranteed hs as to principal and interest by the foreign government and the bank risks then of international loans would not fall on investors themselves nor even on any one country but upon all of tife the 44 member countries obviously the objective of this guarantee of loans is to encourage a tub substantial volume of private international investment which is essential to our own economic well being great need for rebuilding france italy norway poland finland Czech czechoslovakia oslo akia a large t area of russia th the e bal balkan kan nations ns large sections of england china much afindia and burma plus the axis nations of germany and japan have been laid waste by the war their productive facilities pros proa their currencies depreciated and many years will be required for them to rebuild their ex export port industries they will require foreign capital to get under way in our own country we have a tremendously enlarged productive industrial du plant 0 our ur agricultural production has reachel reached a new high of efficiency after the war our economic policy will be aimed at full employment and full utilization of our agricultural and industrial facilities to realize these aims new outlets for the products of farm and factory must be found and these prostrate foreign countries provide a ready market providing that american exports take the form forin of american investments abr abroad oab good american delars for if these rations nations are to buy a large volume of our productive machinery our industrial du and agricultural products in the immediate postwar period american investors will have to lend part of the purchase money under brider the functions of the international bank these investors will have the assurance that these investments are sound and remunerative under under the he operation of the mona monetary fund and as distinguished from the bank for the protection of our investors ve currencies in all al these countries most be stabilized in terms 0 of r gold and at equitable rates of exchange the United Slates holds GO 60 per cent ot of the worlds gold supply economists point out there must be elimination of exchange fluctuations of discriminatory exchange practices of competitive currency depreciations ciati clat ions ons if the american dollar Is to be protected for instance how can the american farmer be protected in the world market if a sizable wheat p producing ro country such as russia and argentina can rort resort to monetary action which places thew the wheat beat pro d duccos of those countries in a preferred position with respect to american wheat exporters if the american farmer 11 to continue to io export wheat or of any other commodity and to receive a fair price jin n good american dollars for the product he sells at home he must know that thai trie the 46 during a lull in the proceedings 0 of the bretton woods conference U S secretary of the treasury henry center got cot into informal conversation with the ilon hon J L lisey minister ot of finance for or canada anaila and chairman of that nations delegation left and 31 S stepa nov ov chairman of 0 the russian delegation these chats helped to iron out many of the smaller problems world price of wheat or other commodity in terms of our own dollars will not be seriously disturbed by I 1 large arge fluctuations in the principal exporting and importing countries stabilized currencies so the purpose of the international monetary fund is to stabilize and promote a balanced growth of international trade by stabilizing the value of all currencies in terms of each other progressively remove barriers against making payments across boundary lines such as high tariffs or other trade restrictions and to provide a supplementary source of foreign exchange to which a member country may apply for the assistance necessary to enable it to maintain stable and unrestricted exchange relationships with other member countries for instance in some countries importers are not permitted to purchase dollars required to buy goods in in the united states in other countries of which germany was an example before the war foreign trade was disrupted by use of so called multiple currencies or barter arrangements range ments and during the war many new restrictions have been devised because of military necessity the operation of the monetary fund Is is intended to remove all these restrictions strict ions and set up a standard and uniform practice currency value and exchange rates so that american business may have the greatest possible freedom in int international ernat ional trade in the postwar era the same freedom Is intended to be provided for business in the other countries tor for freedom of business would be meaningless unless these other countries accorded an equal measure of freedom to their own people there has been criticism aimed at these proposals from some bankers on the grounds that they are contrary to sound and established banking practices there has been praise and approval from other bankers As a matter of record criticism from bankers at least some banking g groups has been directed at any departure from established custom that is custom and practice established by the bankers themselves for instance some banking groups criticized bank deposit insurance criticism was aimed at government on homes an farms at 20 year loans on homes when the custom had been 3 to 5 years at 4 and 5 per cent interest rates when the practice had been 6 to 8 per cent and higher these practices today however are an accepted part of our domestic economy criticism from the larger international bankers has been directed at the bretton woods proposals proposal sp no doubt because governments will control fiscal and monetary policies on an international scale and also because interest rates under these pr proposals c will be lower U S benefits most another criticism has been directed at the bank and the fund because the united states is the largest subscriber it is argued here however that from any fair standard this country should be the largest subscriber because we have more to gain than any other country we have the money to lend we have a large part of the worlds gold and we have the facilities no other nai tion has to provide export goods in the immediate postwar period last ly we have been untouched by the ravages of war insofar as our ma ferial wealth is concerned one of the most important groups to give approval to bretton woods proposals is the committee for economic development headed beaded by paul G hoffman HofT man president of the studebaker corporation this group made up of bankers economists and business leaders would even give the international ter bank further power to make loans for long term and short term stabilization purposes claiming that under the present regulations the bank does not have that clear cut power there have been some suggestions favo favoring ring the establishment of the bank but suggesting that setting up and operation of the monetary fund be delayed until conditions a broad abroad settle down to normality it is pointed out however that the bank and the fund are closely related both in concept and organization and that membership in the bank is open only to those who are members of the fund it is also pointed out that the bank is to a considerable extent dependent upon the fund for the re reason I 1 that the fund must first establish values of the moneys to be loaned by the bank it if there is to be a smooth long range planning and investment program while most sound economists agree there must be some system of international control or agreement after the war the only alternative offered has been a system of bloc agreements these are regarded by many as dangerous since such bloc agreements likely would lead to a world divided politically and economically no eventual conflict between these groups would be likely chance for leadership pointing to the leadership the united states has maintained during the war fiscal experts here declare that never before has this nation occupied such a key position or had such an opportunity to take over world leadership in the economic field governmental leaders including secretary of the treasury henry look upon the bretton woods agreements as just as essential to world peace and security as the dumbarton oaks agreements secretary maintains they are inseparable hence his urgent appeal to the congress for I 1 legislation egis which will insure this nations participation prior to the world parley at san francisco april 25 acceptance by the congress of these agreements before convening of the delegates of united nations at san francisco these leaders say would be taken as a happy augury of this nations sincerity it would give notice to all that the united states instead of choosing economic isolation which would inevitably lead to political isolation is already on record with a determination to do our part toward the attainment of world peace and security in a special message to the congress february 20 president roosevelt referring to the bretton woods proposals said it is time for the united states to take the lead in establishing the principle of economic cooperation as the foundation for expanded world trade we propose to do this not by setting up a bur by international negotiation and agreement directed to the improvement of the monetary institutions of the world an and d th the ca laws aw that govern trade the international fund and bank together represent one of the most sound and useful proposals for international ter collaboration now before us and that is what the bretton woods proposals are designed to do a product of the best minds of the 44 united nations of the world |