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Show THE RICH COUNTY REAPER, RANDOLPH. UTAH Bretton Woods Conference Laid Groundwork for United Nations' Parley o Stable International Holds Hope of World Monetary System t S. Postwar Exports U, f Russia Important Factor in Outcome of Peace Conference; U. S. Delegation Working For Successful Formula. Depend on Soundness Of Foregn Finances By WALTER A. SHEAD ' By BAUKHAGE WNU Staff Correspondent. Stripped of all technical verbiage, the proposals agreed up- News Analyst and Commentator. WNU Service, Union Trust Building, Washington, D. C. I walked down the cool, twilit corridor of the senate office building and out into the warm spring sun. As I crossed the threshold, the light on the bright white marble steps United Nations at the Woods conference and Bretton considered are which ap essenof world the tial part peace plan to be approved at San Francisco ; April 25, "are "designed to on by 44 Set up an international monewith a wording capital subfund tary scribed by 44 nations in gold and member currencies totaling 8.8 billion dollars of ; which the United States is to subscribe 2.75 billions. This fund is expected to" stabilize 1.- and safeguard the value of foreign currencies in terms of gold, remove trade barriers in favor of open or reciprocal trade agreements to provide free and opep frade among member nations. 2. Organize an international bank for reconstruction and development with a subscribed capital of 9.1 billions of dollars of which the United States is to furnish 3.175 billions. Purpose of the bank is primarily to facilitate flotation of foreign loans in private capital markets by providing international guarantees and to make long-tercapital loans direct to member nations for specific projects of reconstruction and developm ' ment. Why f " the need for these safe- Following World War I guards? American investors took a beating, and in the late 1920s were caught in ! j an epidemic of defaults by foreign debtors. Under the Bretton Woods proposals, these foreign loans would be investigated guaranteed as terest by the and the bank. national loans, by the bank and then to principal and inforeign government Risks then," of interwould not fall on 'investors themselves, nor even on any one country, but upon all of the 44 member' countries: Obviously the' objective of this guarantee of loans is to encourage a substantial volume of private international investment which .is essential to our economic well being. Great Need for Rebuilding. France, Italy, Norway, Poland, Finland, Czechoslovakia, a large area of Russia," the Balkan nations, ' large sections of England, China; much of India and Burma, plus the Axis nations of Germany and Japan, have been laid waste by the war, their productive facilities prostrate, their currencies depreciated, and many years will be required for them to rebuild their export industries. They will require foreign capital to get" under way. In our own country we have a tremendously enlarged productive industrial plant. Our agricultural production has reached a new high of efficiency. After the war our economic policy will be aimed at full employment and full utilization of own our agricultural and industrial facil- J ities. To realize these aims new outlets for the products of farm and factory must be found and these prostrate foreign countries provide ready market providing that American exports take the form of a investments abroad good dollars for if these nations are to buy a large volume of our productive machinery, our industrial and agricultural products in ' American American the immediate postwar period, American investors will have to lend part of the purchase money. Under functions of the international bank, these investors will have the assurance that these ' investments are sound and remunerative. Under the operation of the monetary fund, as distinguished from the bank, for the protection of our investors, currencies in all these countries must be stabilized in terms of Sold and at equitable rates of exchange. The United States holds 60 per cent of the worlds gold supply. Economists point out there must be elimination of exchange fluctuations, of discriminatory exchange practices, of competitive currency depreciations, 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 producing country such as Russia and Argentina can resort to monetary, action which places the wheat producers of those countries in a preferred position with respect to American wheat exporters? If the American farmer is to continue to export wheat or any other commodity, and receive a fair .price in good American dollars for the product he sells it home, he must know ' that the the , During a lull in the proceedings of the Bretton Woods conference, S.' Secretary of the Treasury Henry Morgenthau (center) got into informal conversation with the Hon. J. L. IIsey, minister of finance for Canada 'and chairman of that nations delegation (left), and M. S. StepaU. nov, chairman of the Russian delegation. many of the smaller problems. world price of wheat or other commodity in terms of our own dollars, will not be seriously disturbed by large 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 the United States. In other countries, of wfyich Germany was an example before the war, foreign trade was disrupted by use of multiple currencies, or barter arrangements, and' during the war many new restrictions have been devised because of military necessity. v The operation of the monetary fund is intended to remove all these restrictions and set up a' standard and uniform practice, currency value and exchange rates so that American business may have the greatest possible freedom in international trade in the postwar era. The same freedom is intended to be provided for business in the other countries, for freedom of business would be meaningless unless these other countries accorded an equal measure of ' freedom to their own people. aimed There has been criticism 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 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 guaranteed loans on homes and loans on homes farms; at been 3 to 5 custom had when the 5 per cent interest 4 and at years; been rates, when the practice had These and cent higher. 6 to 8 per an acpractices today, however, are econcepted part of our domestic omy. Criticism from the larger international bankers has been directed at no the Bretton Woods proposals, conwill doubt because governments on trol fiscal and monetary policies bealso and scale, international an cause interest rates under these proposals will be lower. U. S. Benefits Most. Another criticism has been directed at the bank and the fund because subthe United States is the largest however, scriber. It is argued here, fair standard, this that from any be the largest subshould have more to we scribe? because country. We other gain than any we have have the money to lend,s world gold and a large part of the naother no facilities we have the m tion has to provide export goods period. the immediate postwar by the have been untouchedour maas ravages of war insofar concerned. terial wealth is so-call- 20-ye- ar These chats helped to iron out One of the most important groups to give approval to Bretton Woods proposals is the Committee for Economic Development, headed by Paul G. Hoffman, president of the Stude-bakcorporation. This group, made up of bankers, economists and business leaders would even give the international bank further power to make loans for long-terand shortterm stabilization purposes, claiming that under the present regulations, the bank does not have that clear-cu- t power. There have been some suggestions favoring the establishment of the bank, but suggesting that setting up and operation of the monetary fund be delayed until conditions 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 reason thht the fund must first establish values of the moneys to be loaned by the bank if there is to e be a smooth 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 regardedby many as dangerous, since such bloc agreements likely would lead to a world divided politically and ecoEventual conflict benomically. tween 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 Morgenthau, look upon the Bretton Woods agreements as just as essential to world peace and security as the Dumbarton Oaks agreements. Secretary Morgenthau maintains they are inseparable. Hence his urgent appeal to the congress for legislation which will insure this nations participation prior to the world parley at San Francisco April z5. 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. conIn a special message to the gress 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 supergovernment, but by international negotiation apd agreement, directed to the improvement of the monetary institutions of the world and the laws that govern trade . . . the international fpnd and bank together represent one of the most sound and useful proposals for international collaboration now before us.? And that is what the Bretton Woods proposals are designed to do , a product of the best minds ol the 4 United Nations of the world. er m long-rang- , , blinded me and for a second I groped downward blindly. As I stood a moment recovering my equilibrium the thought flashed through my mind that this experience was very much like the longer one which preceded it. I had been talking with. Vice President Truman, Senators Connally, Vandenberg .and others about the forthcoming meeting in San Francisco of the United Nations. I recalled Trumans nervously energetic speech as he assured me that he was giving his time to just one thing: acting as liaison between the President and the senate to keep the chief executive and the legislative leaders as nearly in step as possible. I recalled Senator Vandenbergs expression as I left him plunged deep in the thousand extra tasks and worries which his function as Republican member of the delegation had plunged him. He .had said: "If San Francisco doesnt succeed it will be the greatest moral blow the world has ever experienced. I thought of Connallys careful policy of withholding public comment or quotation concerning the coming conference, except carefully thought out statements or speeches such as the one he will make in the senate before the conference. His is the delicate task as senior administration representative on the delegation of maintaining a balance between the views of the Republican' members represented on the delegation, the administrations viewpoint, and his own and other personal views. After all, as senate majority leader he is responsible for helping to carry out a policy which not of only a majority, but the senate will accept. . I also thought of the wide variance of views expressed by members of both houses not 'directly connected with the negotiations and of the great reticence of many who hesitate to express any view at this time. And I thought of the isolationists; a very few who admit that position and others whose doubts and suspicions battle with what they feel has been the strong trend for wholehearted cooperation which the various polls and other media of public expression appear to ... of the official Russian mind, I cannot understand the hysterical attacks in the Russian press on Walter Lippman, for instance, who has been in the first ranks of those who urge unity; attacks on Russo-America- n' Senator Vandenberg against whom they throw their whole book of antifascist vocabulary when he is on record as supporting a three-powtreaty for disarming the axis which would be the basis of the chief thing Stalin wants an agreement of the only two great powers besides his own country, which would guarantee Russian security. I do not understand all this. I do not accept the propaganda which tries to say that communist government is democracy. But there is one thing which sold me on playing ball with Russia. That is the patient, earnest and convincing argument of former Secretary of State Cordell Hull, who certainly has no more love for communism than he has for fascism, who was never accused of wandering with his head in the clouds or of trying to reform the world, or square the circle, and he although he has faith wouldnt try to move a mountain without a bulldozer. His argument boils down to this: Russia and America need each other. Russia knows this. There are fewer obstacles to a practical unbetween the countries derstanding than ' there are reasons why we should work together for mutual benefit. er Sponsors Provision d For Adjustments 'Though it is generally agreed that the support of the American people of any international' organization of which Russia is a part depends on the conduct of the Kremlin between now and the end of the' San Francisco conference, Senator Vandenberg goes farther than that. He says that the support of the necessary of the United States senate for any organization which recognizes international organization depends upon inserting into the document which defines it, what he calls an "escape clause. That escape clause would permit the readjusting of certain conditions now existing, certain sore spots which he feels may become cancers. The escape clause would permit the United Nations to escape from any restriction which prevented what they feel is the righting of wrongs. Injustice, says Vandenberg, "is a strait jacket and you cant keep the world in a strait jacket. Of course, there are a lot of Polish register. These kinetic thoughts moving votes in Vandenbergs constituency now in harmony, now in friction, and a member of congress is such seemed suddenly to have generated by virtue of, and the powers he exa. blinding light that burst into the erts are delegated by, the people shadows of the complacent assur- who put him in office. Nevertheless, ance which had enveloped me and ho is not speaking merely for his left me a little dizzy. What a tre- Polish constituents when he talks mendous opportunity seems to be about including in the jurisdiction of y offered to a world; what the United Nations, the administera fatal possibility if the effort fails.' ing of justice. That is the trademark he wants to put. on any Fear of Russia , which comes out of San " Shades Future Francisco. susOther of is such It clear that doubt and members the delegation picion as may have arisen as to the have trademarks of their own. But possibility of failure of achievement as nearly as I can judge all are of world cooperation arises chiefly willing to make considerable sacrifrom one thing: fear of Russia. Next fice of their personal views, rather is the feeling in some quarters that than shake the worlds morale with Churchills inability always to get failure to produce anything along with Stalin bodes ill for The safety record of the railharmony and some feel that the United States instead of trying roads in the present war is much to bring the two closer together better than that in the First World should identify American interests war, the Interstate Commerce commore closely with Britain as opposed mission reports. to those of Russia. This is true, the commission points Then there is still the unhealed out, despite the fact that there has sore which President Roosevelts been a substantial increase in the personal emissary, Edward Flynn, last few years in the number of accihas been trying to heal, the friction dents arising from the operation of between the Vatican and the Krem- trains and the number of casualties lin. resulting therefrom. It appears, the commission Lastly and perhaps more idisturb-in- g is what appears to be unilateral says, "that for each class of peraction toward small countries on son the fatalities were much greatthe part of Russia in spite of the er in World War I than they were in World War II, the total for all Yalta agreement. classes being 10,087 in 1917 and Now those persons like Vice President Truman, who take the more 9,286 in 1918, compared with 5,337 positive and more hopeful view, feel in 1942 and 5,051 in 1943. In the two that some of these factors have been decades prior to our entry into the that granted present war, notable progress was built into bogey-methey exist as facts, that Churchill made in reducing railway, acciind Stalin dont always see eye to dents, and especially those resulting eye and that even less sympathy ex- in casualties to passengers and emists between the Catholic church and ployes. In 1932 and again in 1935 but the head of the Communist party, a single passenger was reported as none of these situations need affect killed in a train accident, although the creation of an international or- 18 and 24 respectively in those years were killed in the train-serviacciganization. As to fear of Russia. Well, frankdents, as in getting cm and off ly. I cannot understand the workings cars. two-thir- ds two-thir- ds . out-and-o- ut war-wear- tri-par- ty T n, ce |