Regional President Speech

THE HRETTQM 1001» INTERNATIONAL Karl R. Bopp Mannheim Cricket Club January 22, 1945 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis EHE BRETTON WOODS INTERNATIONAL FINANCIAL AfiRF.iaiFUTfi I. Bret ton Woods A« Physical acconaodation 1. The 1ft. Washington Hotel a* Prices b. When "the guests” arrive 2. Crawford House - 5 miles away B. Stenographic problems 1. Flinsies - alternatives - 472 dociaaents 2. Furniture and supplies 3« Clerical force from Washington 4. Miaeographing C. People 1* language difficulties a. Non-craulative b. "All-in-all” c. Maletin 2* Customs difficulties a* lung - N.H. a Puritan state? b. 43 CMnann - to show face c. 3 Russians plus secretary at Atlantic City Keilh&u Varvaressos Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 2 - II« The problems of international finance A. Erolutionof problems 1* Disruption of the last war 2* Mistakes in the return to gold a. England in 1925 b. France in 1926 3« Abandonment of gold a. Competitive exchange depreciation b. Exchange controls c. Quotas d. Clearing agreements e* Bilateral agreements B« Lessons from this experience 1. Action of one affects all 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 - p overty jWher ever it exists» threatens all - cannot be localised 2. Necessity of establishing a reasonably stable standard of international exchange to which all countries can adhere without sacrificing the freedom of action necessary to meet their internal economic problems. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 3 - 3. International pressures calling for relief a. Fundamental disequilibrium - Change in exchange rates b. Temporary disequilibrium - Draw on international reserve 4. Make sure that pressures are genuine HI« The International Monetary Fund A. Nature of the Fund s/j* Each member contributes an amount - (S«0 "quota" - to a common pool* |.\«e 1 2 3 8* Stable but not rigid exchange rates 1. No change without consultation a. Penalty for unauthorized changes 2* Conditions for change a. 10% change unilateral b* 10% - 72-hour notice c* Other changes C. Protections to the Fund 1. ffrsirant.— of gold value Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - u - 2. Limited access to the Fund a. 25% of quota per year b. 200 % of quota total c. Repurchases d. Uses e. Chargés - distribution of income f. Declaring ineligible 3. Reduction ana eventual elimination of exchange restrictions a. Report after 3 years b. Consent to continue after 5 years D. Management 1. Voting - 250 + __ $100,000 2. Board of governors 3. 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 U* Managing director IV. The key-country approach Diverse proposals - not clear cut A. Principles 1. Initial United States-United Kingdom agreement on sterling/dollar rate. Other currencies linked to one or the other. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 5 - 2. Large ($5 billion) grant-in-aid or gift or loan to Great Britain Aid to others as they adopt policies we consider appropriate B. Similarities and differences between the two approaches 1. Similar it ie s a. Success of both depends upon reduc­ tion in trade barriers and sound internal financial and economic policies. b. Dollar-sterling rate crucial. c. Chief responsibility and authority to major countries. d. Provide stabilization créaits. 2. Dissimilarities a. Role of small nations. b. Fund discourages, key-country en­ courages formation of blocks c. Fund has place for nonmembers of blocks. d. Key currency on a product basis Wheat - U.S., Canada, Argentina, Australia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 6 - e* Find agreement by technicians of 44. nations. - Continues war partnership. f. Fund prepares for crises wherever and whenever they occur. V. The International Bank for Reconstruction and Development A. Purposes 1. To promote International landing B. Powers 1« Promote private international loans 2. Guarantee loans 3. Make loans out of own resources Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Karl R. Bopp (1945, January 21). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19450122_karl_r_bopp

@misc{wtfs_regional_speeche_19450122_karl_r_bopp,
  author = {Karl R. Bopp},
  title = {Regional President Speech},
  year = {1945},
  month = {Jan},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19450122_karl_r_bopp},
  note = {Retrieved via When the Fed Speaks corpus}
}