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405 A meeting of the Board of Governors of the Federal Reserve &Ysteni was held in Washington on Monday, March 13, 1944, at 10:30 PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Goldenweiser, Director of the Divi— sion of Research and Statistics Mr. Dreibelbis, General Attorney Mr. Thomas, Assistant Director of the Division of Research and Statistics Mr. Myatt, General Counsel Mr. Gardner, Chief of the International Section, Division of Research and Statistics Miss Bourneuf, Associate Economist in the Division of Research and Statistics This meeting was cpiled for the purpose of reviewing recent de— l'elopments in connection with the plan for international monetary sta— btlilation and to determine what, if any, instructions the Board might to give to its staff in connection with their participation in diSCUSsions of the plan. Before the meeting there had been 'erlt, to the members of the Board copies of (1) a preliminary draft (14ted February 1944 of a proposed "Joint Statement by Experts of the / i1 41teti atid Associated Nations on the Establishment of an International k(Itietar7 Fund" and (2) a memorandum dated March 10, 1944, from Mr. 3/3.3/44 -2- Gold-ellaveiser to which was attached a brief statement relating to the P°8iti°ris taken by the Board's representatives at discussions of the 1 1)t.(113(38ec fund. Ur- Szymczak suggested that the question before the Board was Thether it would be willing to accept the plan in principle in substant414 its present form or whether it would want to suggest changes. Therewas general agreement on the part of the members of the Board that if plan were to come into existence it might not be possible t(* the Board to propose any fundamental changes at this time as that It°11341 require renegotiation of the whole plan as thus revised and Pe411311r create indefinite delays. toeff In a discussion of the extent to which the fund might be used ect capital movements, the opinion was expressed that the trans40tio , c -8 in the fund should be limited to movements of commercial funds .k11 ch 'Over a period, there should be a balance between the differand that movements of capital funds should be accomplished (line other manner, such as through the medium of an international tIllent bank or some other channel. The discussion of this point et%4 sized again the belief that the proposed stabilization fund 44(40 be l'egarded as only a small part of the program that would be ‘114ed to meet the international financial problems of the postwar 14N. "and that, if the fund were to be successful at all, there would qtivt to be decisions on several other more important matters such as 3/13/44 -3lang-term foreign investment policies, lend-lease, rehabilitation, and tcl'eign trade. Possible objections to the plan in its present form were menticted 2 and Mr. Goldenweiser said that the United States would be justiNd . ln contributing to the fund in the hope that, notwithstanding its °°l1-zed defects, in the long run it would contribute effectively to 4 flinct i°ning world and therefore would be in the long-term interest Of his country, that if the fund would bring about effective currency etab1141ati0n for a period of from 5 to 10 years, which was entirely P°88ible2 it would be worth whatever contribution the United States 444ft be called upon to make, that some such plan was the only hope for 14441 izlng the exchanges after the war, and that the question was one the alt - ternative courses of action that might be pursued. 4 majority of the members of the Board agreed that, in view of the }3°ard's fundamental interest in the problem of international move— 41e4t8 ' Ct funds and the effects of such movements on monetary and credit e°11dlitic418 in this country, the Board should have a voice in the selec 404 or the American member of the board of directors of the fund. In a further discussion, inquiry was made whether the Board : : 4 111dtake a position with respect to the plan at this time and whether, '40t, it Was called upon to do so. In this connection it was sugh4ted that it might be difficult for the Board's representatives to to participate in the discussions of the plan without creating 408 3/13/44 -4thei2Pression that the Board was being kept informed of developments arid was therefore in general agreement with what was being evolved. Mr. Goldenweiser suggested that about all the Board could do at this t4'Jae Would be to say that the plan seemed to be about as good as 4)144 be worked out under the circumstances, but that it raised a number mItch more fundamental and important questions with which the stabiliza4'311 '411nd would not be prepared to deal, and that the Board did not be- the fund could be effective in accomplishing the results hoped without some solution of these other questions. If that were done, he 444, the Board's representatives could say in further discussions th/it the Board had no specific suggestions to make with respect to the 151411 bilt regarded it as only a part of a much larger and more important 121tIlre(41 He also said that the question of the timing of discussions 15()liCY-rnalcing level was one which the technicians should not under- tttice to determine. Reference was made to the fact that the discussions of the plan to theirtthis Point had been strictly on a staff level and that none of terested heads of agencies of the Government had in any way comktted, IlImself to what had been done. It was felt that in these circ 4_ 11 es the Board was not called upon to take a position with respect matter at this time, but that the members of the Board should corittrole tiltt to follow developments, and that if and when Chairman Eccles th representatives of the other agencies at the policy-making 3113/44 —5— el he would be prepared to say that the Board would undertake to N)ress an opinion on the matter when the other interested agencies of Gov erhment did so. At the conclusion of the discussion it was understood that Mr. G°1denweiser would say to the Treasury staff representatives participat— ih the discussions of the plan that the Board was interested in the fluid ental issues, of which the stabilization fund was only a Part, and that it should be understood that the Federal Reserve repre— aentatives participating in the discussions were not speaking for the 114'lid any way. At this point Messrs. Goldenweiser, Dreibelbis, Thomas, Wyatt, arid G ardner and Miss Bourneuf withdrew from the meeting, and the ac— ticll stated with respect to each of the matters hereinafter referred to wa then taken by the Board: The minutes of the meeting of the Board of Governors of the deraj .R eserve System held on March 11, 19/44, were approved unani— Letter to Mr. Leland, Chairman of the Federal Reserve Bank of eitt eago reading as follows: era, "At the completion of the examination of the Fed194 : Reserve Bank of Chicago, made as of January 15, by the Board's examiners, a copy of the report of t,7 e . nation was left for your information and that of who dlrectors. A copy was also furnished President Young, in h tmented on his review of the report of examination ls letter of February 23, 1944. 410 3/13/44 _6_ "The Board will appreciate advice that the report haS been considered by the board of directors. Any comments you may care to offer regarding discussions with !:espect to the examination or as to action taken or to pe taken as a result of the examination will also be appr eciated." Approved unanimously. Thereupon the meeting adjourned. Secretary.
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