Regional President Speech

^ THE BRETTOK WOODS AGREEMENTS by Karl R. Bopp American Statistical Association Philadelphia Chapter Christian Association Building 36th and Locust Streets 6:30 P.M. December 1, 1944 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis M THE BRBTTQiN WOODS AGhEEMENTS I. The pattern of post-war international relations Dumbarton Oaks; General Assembly of United Nations 1« Security Council - political 2. Economic and Social Council - coordinating body A. UNfthA B. Food and Agriculture C. International Trade Body D. International Monetary Fund E. International Bank for Reconstruction and Development II* International finance - Bretton Woods 1. The atmosphere of Bretton Woods A. Fundamental agreement on a. Prosperity has no fixed limits - the more other nations enjoy the more each nation will have for itself. b. Prosperity, like peace, is indivisible. - Poverty wherever it exists threatens all - cannot be localized. 8« Disagreements on details of plans at the outset but recognition of necessity to give and take. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis _ 9 _ No one completely satisfied; but dis­ satisfaction equitably distributed. i. Major financial tasks A. To establish and maintain an orderly system of international currency re­ lationships B. To revive international investment III. The International monetary Fund 1. Purpose: to establish a reasonably stable standard of international exchange to v.'nich all countries can adhere without sacrificing the freedom of action necessary to meet their internal economic problems. 2. Nature of ]roblems to be solved: disequilibria in international payments A. Fundamental disequilibrium a. Affects all countries b. Solutions are (1) Restrictions (*) Change in internal value 0) Change in external value B. Temporary disequilibrium a. Origin - New Zealand illustration - Nash Digitized for FRASER b. Remedies http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis (1) Depreciate (2) Restrict purchases to available exchange (3) Provide tempoiary funds The "solutions" adopted in the intervvar period A. Competitive exchange depreciation B. Multiple currency systems C. Bilateral clearing agreements D. Exchange controls, quotas, etc. Major current proposals A. Ahe International Monetary tuna - nistory B. Key-country approach Principles of the International Monetary F'unci A. Stable but not rigid exchange rates a. Guarantee of gold value of the Fund b. Reduction and eventup.1 elimination of exchange restrictions (1) Report after 3 years Consent to continue after 5 years c. Pool or fund to tide over emergencies Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - u - (1) iiach member contributes an amount (quota) to a common pool. 25% of quota or 10% of holdings in gold. Remainder in local currency. (2) Each uiember has limited access to the pool; limitations - (a) 25% of quota per year (b) 200% of quota total (c) Repurchases (d) Uses (e) Charges - distribution of income (f) Declaring ineligible 6". Management A. Voting - 250 + - B $100,000 B. Board of governors C. Executive directors - at least 12 5 - appointed by largest quota members 2 - nonappointing American republics 5 - other nonappointing members 2 - largest "creditors" after 2 years D. Managing director 7. The key-country approach Diverse proposals - not clear cut Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis _ _ í; Principles a. Initial Unitea ¡States-United Kingdom agreement on steriin^/aollar rate. Otner currencies linkin' to one or the other. b. Large (S5 billion) ¿rant-in-aia or ¿ift or loan to Gr-at Britain. Aid to others as they aaopt policies vie consiaer appropriate. 'ities ana differences between the two 'oaches À. Similarities a. Success of both depenas upon reduction in trade barriers and sound internal financial ana economic policies. b. Dollar-sterling rate curcial. c. Chief responsibility and authority to major countries. d. Provide stabilization credits. B. Dissimilarities a. Hole of small nations. b. Fund discourages, key-country encourages formation of blocks Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 6 - 3. Fund lias plt-.ce for nonmembers of blocks. d. -j, Key currency on a product basis Wheat: U.S., Canaaa, Argentina, Australia e. Fund agreement by technicians of 44 nations. Continues war partnership. f. Fund prepares for crises wherever ana whenever they occur. IV, The International Bank for Reconstruction and Development 1. Purposes A. To promote international lending 2. Powers A. Promote private* international loans B. Guarantee loans C. Make loans out of own resources Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Karl R. Bopp (1944, November 30). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19441201_karl_r_bopp

@misc{wtfs_regional_speeche_19441201_karl_r_bopp,
  author = {Karl R. Bopp},
  title = {Regional President Speech},
  year = {1944},
  month = {Nov},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19441201_karl_r_bopp},
  note = {Retrieved via When the Fed Speaks corpus}
}