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HEARINGS ON BRETTON WOODS ENABLING LEGISLATION
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BEFORE HOUSE BA2IKING 'AND CCJBR^NCY • OQMMITTEE .
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. /,.;•• :::Marcb-S2> 1945 - 10:50 A.M.
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;.:..,.• .••;: ;..:..(Twelfth:day of hearings)

Mr.- Leon-Eraser, President :of the First National Bank of New York,, "began
by making a statement, in favor, qf the Bank and opposing the Fund and recommending
that the stabilisation job be done by a monetary department set up in the: Bank.
Hi3 chief obj.ectdons,to the Fund',plan were that it does not include reasonable
safeguards over the use of the funds, that it is too .big, that it is: interpreted
differently here and in England, that two institutions would overlap and conflict,
that there ar.e:not enough competent men to run two institutions, that-the problem
of stabilization is not, world wide but-.arises in particular countries at.particular times% and that the-.primary means of stabilizing a currency is by taking the
necessary .internal-measures. He also said there was no provision in the Fund plan
to require the necessary internal measures, that the Fund permits too,-much in the
way of exchange restrictions over capital and s.corce currency transactions, that
most countries simply accepted the • Agreements because. American and.British experts
agreed c:a them and that they would be quite willing to accept reasonable changes'.
He went on to say the plan "breathes the spirit of true British patriotism" and that Lord Eeynes has said he wanted a plan which provided for fluctuating currencies, impersonal borrowing, and loans to Britain's customers. The
Russians, furthermore,; will maintain their exchange controls and unbalance their
trade

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In connection with the Fund's lending methods Mr*- Eraser .stressed the
waiver provision and the looseness of the restrictions. In his opinion the Bank
should; provide for consultation and exchange, of. information on'monetary matters
and all members should promise to avoid monetary warfare. • The/Bank'would make' ' :
stabilization loans only after careful investigation and' with a United States veto
over the use of dollars. The Bank could lend for seasonal purposes and in emergencies-. He said he thought the Bank's capital would be adequate for both jobs
but could be enlarged later if necessary-. The Bank would insist when -making' a- :
stabilization loan1 to a particular country that it take wise corrective measures.
Mr. Eraser said the plan should not be too detailed, and inflexibile and should not
attempt to write, a blueprint to cover, all future possibilities. Up, Eraser said
he thought the dollars would,soon be exhausted from the1present Fund and we' would
either have to put in more or: be held morally, responsible for the breakdown.
Mr. Eraser suggested it was. very, important to have a committee here in
the United States with which the American representatives could consult beforetaking certain actions and to whom they would report.
;••< i : Mr. Fraser agreed with Representative Wolcott (R.Mich.) that there were
no affiliations.between the.Fund.and Bank in the present, plans except that membership in the Fund, is aprereq.ui.site for membership, in the Bank and the'Fund provides
for cooperation.with other agencies,. •
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• .; ;. Representative Brown. (D, Ga.) .asked why Lorti'-Keynes signed the Agreements
and. Mr, Fraser said.the. Fund was;obviously a good thing for the'United Kingdom and
that Lord Keynes had:said it was.the opposite of-the gold standard. 'Mr.:Eraser
said he .did not thirik :the.opponents of the bill all got their ammunition1 from Lord
Keynes as Representative.Brown-suggested. He said he.did not :think the Americandelegates .should have signed because the Fund is too loose and would -only postpone
stabilization. '.When .Representative Brown asked if Mr. Fraser .agreed- with the • '•
Committee
for [Economic Development ..statement that 'the .Fur) f1 is vital-Mr"* Eraser said



- 2no but the principles of the Fund were vital. He-could not say whether the 3ar£k
allowed stabilization loans as Representative Brown said the Committee for Economic Development report suggests-; but: he thought the Bank'would not need more than
2 billion dollars to make stabilization loans. In answer to further questions byRepresentative Brown he said he thought that amount would last practically forever
and very little of it would'be used but that, the Fund would1not last because it
was too loose. Representative Brown-asked if Mr. Fraserrs main objection was that
the United States had no veto and Mr. Fr&ser-• said no. When Representative Brown
asked how he would tighten, the Fund-he ••said oy requiring a country to take the
necessary internal measures.

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Representative Brown then suggested that even if the-United States contribution to the Fund were lost the Fund might be valuable to the United States by
creating markets.. . Mr-. Fraser replied that if we wanted to subsidize our exports
we should do so. openly' and then said there would be a tremendous demand for United
States goods in. any case.- When Representative Brown asked if our trade was not
dependent, on stable currencies' Mr. Fraser said we exported a good deal before the
W O T when currencies were unstable and simply made our contracts in dollars and
that the Fund plan was for unstable currencies. He mentioned statements that the
United Kingdom would be able to go ahead and change its rate in spite, of the objection of the Fund. , ..- • • ••,: .
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Representative Brown asked if many foreign countries were in a position
to buy from us now and Mr. Fraser mentioned the Latin American countries, the
neutrals, Holland, France, and Belgium and said many of them were much better off
than ten years ago and the difficulties they had could be handled by long-term
loans, relief, and extension of Lend-Lease after': the war. • "
Representative Barry (D.-.-N.Y.) asked if our exports-had not doubled from
1929-1938 when currencies were unstable and Germany and Russia were using all sorts
of measures to compete with us.and Mr. Fraser agreed.
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Representative Crawford (R. Mich.) then quoted Chairman Eccles as saying
foreign countries had 2&|- billions of gold and dollars. He went on to say that
France needed goods net money and that it was primarily the United Kingdom which
needed'"money. Mr. Fraser commented that the two were closely related. Representative Crawford then asked if- our Lend-Lease..policy ha'd not enabled foreign countries
to accumulate gold and dollars and Mr. Fraser agreed. When Representative Crawford
asked which of our agricultural exports would be stimulated under the Fund plan Mr.
Fraser said'it would be manufactures first end that the resulting expansion of our
exports would in any case be temporary. Representative Crawford" said if we were
going to subsidise exports .we should make.it clear. :
Representative Crawford then asked if foreign countries could control
our exports and imports under the Fund-plan.and Mr. ;Fraser said only when the dollar was declared scarce and mentioned, that perhaps foroign countries would have to
take defensive measures with or -without the Fund but that -we should not sigh an
agreement in advance permitting them to do so. When Representative Crawford outlined the functions of the Fund, Bank, and Export-Import Bank as described by Mr.
White,. Mr. Fraser said private institutions would probably finance trade in the
usual way and that the theory wa3 the Fund should be used only in- emergencies.
Representative Crawford said he understood the Fund was not intended to operate for
five years and Mr.: Fraser.commented that it was inconsistent to say the Fund should
not be used in the transition period and then say it Should bft set up at once'.
Represent at ivo Crawford read at length; from the Committee for Economic Development.
report and asked,Mr.. Fraser what, he.thought of it. Mr.; Fraser said it resembled ..
his idea but seemed to imply a large Fund would be needed which h& did not believe

was true.