The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
BREITOM WOODS AflMePlTOTS
fey
Karl R. Bopp
Sunday Breakfast d a b
The Midday Glub
March 7, 1Ì45
I.
Place of the Bretton Woods Agreements
CJ<vc<*c^Jif4cV ^
A* Must attack international problems on all
fronts.
Intertwine.
B.
Progress in different fields varies.
1«
Political? collective security-plane
well advanced,
2m Economic - mutual aid.
C.
II.
a.
Trade relationships.
Started hut no formal plans.
b*
International finance.
Bretton Woods.
The need for give and take.
Financial aspects of the flow of trade.
A*
Meed reasonable stability - no more in
stability than domestic prices (stable
exchange rates).
B.
Meed reasonable assurance that receipts for
exports to any part of the world may be
void to p»y for imports from any part of
the world.
C.
Need credits U****
1.
Long term for constructive projects.
to tide over emergencies.
2. Short term
- 2 -
til*
IV*
Lang-term credit - The International Bank for
Reconstruction and development
A.
Widely accepted - can dispose of briefly.
B*
Purposes.
1*
Need for long-term capital for special
projects*
2.
Reluctance of individual Investors to
provide «accept at very high rates*
3*
International benefit: therefore,
international sharing of risks*
The Fund.
A*
Purposes*
1*
General purpose to reduce and, if possible,
eliminate financial obstacles to world
trade*
2»
To create a permanent institution of
international monetary cooperation*
3*
To promote exchange stability*
a«
Evils of freely fluctuating exchange*
(1)
Risks
(a)
Importer doesn't wish to
grigr in exporter's currency.
-
3 -
(b)
Exporter wants his own
currency.
(c)
Can cover vdth insurance
but this adds to the
cost of trade.
(2)
Causes shifts of labor and
resources perhaps only
temporarily.
(3)
Creates speculative movements.
Capital flights - hot money.
su— ---—
—
Sterling parity in 1925
British vs. American Coal in Brazil
June 1924 June 1925
■
0 !
vjt
.43
$4.87
39s.
8.85
9.50
1
English-American...
price....
•
Sterling equivalent
*4.32
(39s.)
(8.85)
8.42
"
Net profits in England 10 cents a ton
(1925)> turned to loss of 55 cents.
Reduce miners wages.
Why? Without C. of L. reduction?
TStfrlBTS.
c.
The Fund Agreements.
Members agree to maintain stable rates
except when change is really
necessaxy*
i
?
J
-
U»
u -
To remove exchange controls.
a.
Meaning so-called multilateral
system of payments*
So that exporting country can spend
proceeds in any part of the world.
b.
Evolution of exchange controls as
self-protective measures.
(1)
(2)
(3)
{U )
(5)
c.
Franc undervaluation.
Competitive exchange depreciation.
Import quotas.
Bilateral clearing agreements.
With export-surplus neighbors*
Multiple currency devices.
High price for monopoly goods*
Low price for competitive goods.
Fund members agree to remove on
current transactions as soon as
possible. Recognize it can't be
done at once by all*
Not on capital (hot money).
To provide additional monetary reserves.
a*
The problem of temporary difficulties.
Walter Nash of New Zealand.
Overcoming without being forced to
measures destructive of national
or international prosperity*
b*
The Fund — a pool of International
means of payment*
c. Initial
transactions.
- 5 d.
V.
All agree not to resort to Fund
except in accord with its purposes.
If in accord, have limited line of
credit on which they can depend else would resort to destructive
practices.
Conclusion.
A.
The Fund is a compromise among 44 nations.
B.
Mot a perfect document.
One person, bat not 2001, could write better.
Will be modified in the light of experience.
C.
Any institution with possibility and power
for good may do harm if perverted.
1.
2.
3«
Good faith of members.
Quality of management.
Technical provisions.
D.
U. S. has opportunity for leadership.
Position of the State Department.
E.
Franklin statement.
@FedFRASER