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Poll of Economists on the
Recommendations of the Economists' Committee
on the Bretton Woods Program
Excerpt of letter sent to Senator Robert F. Wagner and Congressman Brent Spence,
Chairmen, respectively, of the Banking and Currency Committee
of the Senate and of the House, by Seymour E. Harris
ECONOMISTS' COMMITTEE ON
THE BRETTON WOODS PROGRAM
February 12, 1945
Dear Sir:
I submit herewith a statement of 224
economists in support of the Bretton Woods
program. This statement is sponsored by 33
economists listed on the attached sheet and
is signed by those whose names will be sent
to you later. This statement was also submitted to all living ex-presidents of the
American Economic Association, nearly all of
whom replied. Of the 18 who replied, 16 approved the statement and only 2 disapproved.
It may interest you to know that substantially more than one half of the economists who were polled — all economists listed
by the American Economic Association as
primarily interested in international economic relations and three related fields —
replied to this poll. Approximately 90 per
cent of those who replied approved and 10
per cent disapproved.
HOUSE OF REPRESENTATIVES
COMMITTEE ON BANKING AND CURRENCY
WASHINGTON
26 February 1945
Dear Professor Harris:
I was very much interested in your poll
of economists to secure their views on the
Bretton Woods program. The results shown
have made a good impression.
Some criticisms have been made of the
poll on the grounds that it does not represent an unbiased sample. The explanation of
procedure in your original letter more than
satisfied me on that score. Nevertheless, the
House Committee on Banking and Currency
would very much appreciate it if instead of
relying on 450 economists specializing in
international trade and three related fields,
you would poll all economists who are members
of the American Economic Association.
I hope your committee can let us have
the results before our hearings end.
Sincerely yours,
Chairman
In accordance with the wishes expressed by Congressman Spence
in the letter reproduced above, we are polling all members of the American
Economic Association. Note, however, that this poll is taken by the
Economists' Committee on the Bretton Woods Program and not by the
American Economic Association.
Whether or not you have already been polled, we would appreciate it very much if you would sign the enclosed card and return it to
us within a few days of receipt.
The following statement is sponsored by: Professor Angell (Columbia), Professor
Black (Harvard), Professor Clark (Columbia), Professor Condliffe (California), Professor De Haas (Harvard), Professor Ellis (California), Professor Ellsworth (Wisconsin),
Dr. Galbraith {Fortune), President Gideonse (Brooklyn), Professor Graham (Princeton),
Dean Griffin (Michigan), Professor Haber (Michigan), Professor Haberler (Harvard),
Professor Harris (Harvard), Dr. Hart (Committee for Economic Development), Dean
Hoover (Duke), Professor Knight (Chicago), Professor Leontief (Harvard), Professor
Machlup (Buffalo), Professor Mason (Harvard), Professor Mitchell (Columbia), Professor Newcomer (Vassar), Professor O'Leary (Cornell), Dean Preston (Washington),
Professor Riefler (Princeton), Professor Simons (Chicago), Professor Smithies (Michigan), Professor Snavely (Virginia), Professor Sprague (Harvard), Professor Viner
(Chicago), Professor Whittlesey (Pennsylvania), Professor Wilcox (Swarthmore),
Professor Woosley (North Carolina).
(Six of these thirty-three sponsors hold wartime jobs with the Government, and
four are consultants for Government agencies in addition to holding full-time teaching
positions.)
RECOMMENDATIONS OF ECONOMISTS
FOR UNITED STATES APPROVAL OF THE
BRETTON WOODS MONETARY AGREEMENTS
We, the undersigned economists, urge the Congress to accept
the "Bretton Woods" agreements providing for an International
Monetary Fund and International Bank for Reconstruction and
Development. Our main reasons follow:
1. If expanding international trade is to make its much needed
contribution to the prosperity of the United States and of the
world, exchange relations between currencies must be established
on a stable and orderly basis and there must be a steady flow of
international investment to increase the productive efficiency of the
countries of the world. Action is, of course, required in other no
less important fields such as trade barriers and commodities in
world surplus. Although the Monetary Fund and the International
Bank do not furnish a complete solution to the international economic problems, they will contribute substantially towards solving
the exchange and investment problems.
2. The experience of the interwar period has demonstrated
that neither the operation of the international gold standard nor the
independent action of national governments will achieve workable
exchange arrangements. The nineteenth century gold standard is
too inflexible to allow countries the independence of domestic
action which they now demand; and the policy, so widely followed
in the thirties, of disregarding international considerations in order
to achieve freedom of action in the domestic sphere only served to
contract international trade and, in the end, to make every country
poorer.
3. In the field of investment, the last twenty-five years have
shown the need for international action. While international invest"
ment did reach a substantial volume during the twenties, the
investment was in many cases ill-advised; rates of interest were
high and many countries resorted to borrowing in order to balance
their international accounts without increasing their productive
capacity. The collapse of the thirties brought repudiation, deflation
or depreciation; and many borrowers and lenders resolved to eschew
the dubious benefits of international investment in the future.
Conditions of foreign lending must be substantially improved if
international investment is again to make its indispensable contribution to the prosperity of the world economy on which, to a large
degree, our own welfare depends.
4. The proposed Monetary Fund provides a program for
avoiding competitive currency depreciation, the arbitrary and dis*
criminatory control of foreign exchange available to pay for current
imports, the "freezing" of funds due for current transactions, and
related forms of economic warfare. This is in line with the funda-
mental United States trade policy of free enterprise with a minimum
of administrative interference, discrimination, bilateralism, and
international "barter." The Bretton Woods agreements are essential to keep the door open for later application of this fundamental
policy through international negotiations dealing with tariff dis*
criminations, "administrative protection/' import quotas, cartels,
raw material controls, etc. The clauses in the Bretton Woods agree*
ments which permit limited devaluation, continued control of
capital movements, "rationing" in emergencies of particular currencies officially declared to be scarce, and a gradual removal rather
than abrupt termination of wartime currency and exchange con-*
trols are necessary modifications for reaching the fundamental
objectives.
5. The proposed Bank for Reconstruction and Development
aims at increasing security of international lending, not merely
through the Bank's guarantee, but by making the government of
the borrowing country directly responsible to the Bank. Since the
Bank rather than any particular government is made the direct
representative of creditors, the debtor country's government can
be called upon to take responsibility without loss of dignity or risk
of conflict.
6. Under the Monetary Fund, barring outright repudiation of
debts by some debtor government, the risk of financial loss is very
small. Under the Bank agreement, loans are to be safeguarded not
only by the scrutiny of the Bank but by authorizing each govern*
ment to prevent its currency from being lent if it thinks the trans*
action dangerous; and under the guarantee, all losses are to be shared
among all member countries in proportion to their subscriptions.
The advantages of the agreements far outweigh the financial risk
incurred by the United States.
7. The good will acquired by accepting the agreements,
supported by the influence which the United States can legitimately
exert through its large voting power in the Fund and the Bank, will
be of great advantage in the settlement of other international issues.
8. Bretton Woods represents the first attempt of the United
Nations to reach agreement on vital economic issues. The present
drafts could undoubtedly be improved as regards details. But in
view of the fact that over forty governments are involved and in
view of the complexity of the problem, the extensive concessions
made by others to the United States at Bretton Woods, and the ill
will we would incur by insisting on reservations, it is very doubtful
whether another agreement could be reached at all or, if reached,
whether in the end it would be a better one. If the present pro*
posals were not ratified by the leading countries of the world, the
outlook for genuine international collaboration in the economic
field and even for world peace would be indeed gloomy. It is there*
fore a matter of urgent necessity that full support be given to the
agreements by all United Nations.
@FedFRASER