Show j bretton woods conference laid groundwork 1 for a stable international monetary y system U V S postwar exports depend on soundness of foreign finances by WALTER A SHEAD a w nu st staff ff correspondent stripped aped of all technical veri biage the proposals agreed upon by 44 united nations at the i bretton woods conference and which are considered an essen bial part of the world peace plan s to be approved at san francisco april 25 are designed to j I 1 set up an international mone t tary ary fund with a working capital subi scribed ascribed by 44 nations i in gold and member currencies totaling 88 bil lion dollars of which the united i states is to subscribe billions this fund is expected to stabilize and safeguard the value of foreign currencies cies in terms of gold remove 1 trade barriers in favor of open or reciprocal trade agreements to pro vide free and open trade among i member nations 2 organize an international bank tor for reconstruction and development with a subscribed capital of 91 billions of dollars of which the united states is to furnish billions purpose of the bank is primarily to facilitate rotation flotation of foreign 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 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 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 the 44 member countries obviously the objective of this guarantee of lo loans ansIs is to encourage a substantial volume of private international investment which is essential to our own economic well being great need for rebuilding france italy norway poland finland czechoslovakia a large area of russia the balkan nations large jarge 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 du plant our agricultural production has reached i 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 ja prostrate foreign countries provide a ready market providing that american exports take the form of american investments abroad good american dollars for if these 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 the 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 in vectors ve currencies in all these countries must be stabilized in terms of gold and at equitable rates of exchange the united states holds go 60 per cent ot of the worlds gold supply economists point out there must be elimination of exchange fluctuations t of 0 discriminatory exchange practices of competitive currency depreciations ciati 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 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 to receive a fair price in good american dollars tor for the product he sells it home he must know that the A P 4 7 41 jt 0 o ayat glup f R W n V during a lull in the proceedings of the bretton woods conference U S secretary of the treasury henry center got into informal conversation with the hon J L ilsey minister of finance for Canada and chairman of that nations delegation left and M S chairman of 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 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 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 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 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 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 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 farms at 20 year loans on homes when the custom had bad 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 no doubt because governments will control fiscal and monetary policies on an international scale and also because interest rates under these proposals 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 I 1 large arge part of the worlds gold and we have the facilities no other nation has to provide export goods in the immediate postwar period lastly we have been untouched by the ravages of war insofar as our material wealth is concerned 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 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 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 that the fund must first establish values of the moneys to be loaned by the bank 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 off offered ered has been a system of bloc agreements these are regard edby 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 legislation which will insure this nations participation prior to the world parley pt at san francisco april 25 acceptance by the congress of these agreements before cai 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 I 1 to do this not by setting up a but by in international terria negotiation and agreement directed to the improvement of the monetary institutions of the world and the laws that govern trade the international fund fend 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 ol 01 the 44 united nations of the world |