Regional President Speech

STANDARDS OF MONETARY CONDUCT UNDER THE BRETTON WOODS AGREEMENTS by Karl R. Bopp Credit Men's Association of Eastern Pennsylvania Bellevue-Starat f ord Hotel November 1, 1945 ( fiA* ¿e- ^ , - CCvTT^u/ / . X. 7"\ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis STANDARDS OF MONETARY CONDUCT UNDER THE BRETTON WOOLS AuhEBfflMTS I. Introduction A. Relation to remainder of program 1. Dio pi oh this p.m. on Economic and c-Lis Social Council of the United Nations. 2. Therefore devote more time to background and principles ana less to details. B. What the delegates took to Bretton Woods 1. Knowledge of experience between the wars. 2. Two years of intensive study. 3« Spirit of cooperation and compromise. II. Experience between the wars A. Pre-1914 gold standard developed i* i century of peace. B. Shattered during the war War inflations C. Unilateral stabilizations 'Ar.oo 1. Differences in rates and in time. L m. ^ 2. United Kingdom overvalued in 1925. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 2 - &• Bull speculation before and bear after stabilisation. b. Purchasing power parity. (1) External value $5, internal t4«50. (2) Solution:/ decrease prices, wages: ---- unemployment • 3* France undervalued in 1926. a* Bear speculation before and bull speculation afterward. b. Accumulation of gold and foreign balances. D. Protective and offensive economic warfare 1* Protecting home employment and Markets. a* Trade controls. b. Tariffs. c. Import quotas. d. Exchange controls* 2* quo pro arrangements. Bilateral clearing agreements. 3* Offensive weapons a. Competitive exchange depreciation. Export unemployment, b. Multiple currency systems. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 3 - E. The net result 1. Misdirection of resources on temporary basis. 2« Spreading and deepening of unemployment and depre«£gt£e». 3* Conclusions prosperity or depression are indivisible. III. Two years of intensive study A. The White monetary fund Based on Unitas 1« Began work December 1941* Published April 1943* B. Keynes clearing house Based on Bancor 1. Published April 1943* C. Discussions and revisions D. Joint statement of experts Spring of 1944 £• Atlantic City and Bretton Woods 1?. The agdrit of compromise A* The iroblem of xveomvtruction and development Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - A - 1* The conflict. a. Need for productive funds on long ten. b. United States unwilling to assume all risks. 2. The reconciliation. Joint assumption of risks even though United States furnishes the finds. B. The problems of monetary conduct - the Fund agreement 1. The problem of exchange rates. a. The conflict. (1) Stability - United States (2) Flexibility - United Kingdom b. The reconciliation. (1) Others agree not to change except to meet fundamental disequili­ brium. (2) We agree to permit change if really necessary. 2. The problem of exchange controls At The conflict. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 5 - (1) Free multilateral exchange - U.S. (2) Continuation of controls - U.K. b. The reconciliation. (1) Remove as soon as possible. (2) Report after three years. (3) Secure consent after five years. 3* The problem of access to the Fund. a* The need for a second line of international reserves. b. The conflict. (1) Others say automatically right. (2) U.S. says only if Fund agrees. c. The reconciliation. (1) The Fund must lend but only if applicant lives up to terms stod conditions. C. The miracle of Brett on Hoods 1. Forty-four nations represented ly economists and lawyers reached agreement) 2. lot a perfect document. 3* Depends on administration. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 6 - V. Current status A* In the United States 1. House of Representatives. a. Committee hearings March 7-May 11, 1945* b. Passed 345 to IS, June 7, 1945* 2. Senate a. Committee hearings, June 12-28, 1945* b. Passed 61 to 16, July 19» 1945* 3* President approves, July 21, 1945« B. Elsewhere / (K<XX^ p(A*A* Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 7 - ?I. Will it work? A* Will a spade work? It is the tool that can be used to accomplish constructive objectives or can be used as a weapon of death. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Karl R. Bopp (1945, October 31). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19451101_karl_r_bopp

@misc{wtfs_regional_speeche_19451101_karl_r_bopp,
  author = {Karl R. Bopp},
  title = {Regional President Speech},
  year = {1945},
  month = {Oct},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19451101_karl_r_bopp},
  note = {Retrieved via When the Fed Speaks corpus}
}