Toward Economic Internationalism

...and, finally, a unit which will stabilize currencies...

...this might require irrigation projects...

...Profits on these projects may be much too small to attract private business from abroad...

...Such studies, to be sure, were made before...

...In othpr words, at borne it is the law, and nothing else/ which makes money valuable...

...This principle ia easily stated, difficult to carry into effect...

...All these problems call for a careful plan for each country, a plan which has to consider such things as the country's climate, the birth rate, trade relations with other countries, the changes which will come if any one of the larger projects are carried out...

...Since that time we know that it may be ours too...

...If other countries could produce meat and wool cheaper or if the demand for these two products dropped in the countries which bought these from abroad, Argentina would have a depression...

...Money, or rather currency, of any country is to be given n vulue agreed upon amongst nil countries who are members of the fund...

...It could do this ss a rule only if it hsd previously sold more abroad than it bought so thst savings existed which could be turned into gold...

...The standard would be the wealth of the country and not the changing balance between exports end imports...

...Since that time Brazil's welfare is very much tied to coffee...

...The prevent plan calls for a rationing of money used in internntional trsde...

...However, they were made from a different viewpoint...

...These payments have to be made partly in gold, partly in the currency of the country...

...Capital from abroad developed these few...

...It means study of each country where money might be invested...

...The countries which got the gold loans could not buy raw materials abroad because the loan was here to keep the relation between paper money and gold fixed...

...In voting the members who made larger contributions would have a greater voting power than those with lesser contributions...

...These two emergencies have led to a kind of rationing of money each country may issue...

...in fact, they would gain in the process...

...F.ach country has to pay part of its share into the Fund...

...Some countries are over* crowded, others would soon feel the pinch of a labor shortage if industrialized, and also would not be able to consume the goods new industry turns out...

...The result in international trade is that the money of each country becomes a commodity, which may be bought and sold...

...that the difference between the poor and rich countries can and should be wiped out by making the poor richer...

...In the end therefore the fund would probably be made up of fsirly equsl contributions...

...The traditional thought about money is peculiar...

...Within each country money in fart is nothing but s token issued by the government or a government-con* trolled hank...

...The natural resources development unit is known under the name of International Investment Bank, while for the currency unit the term International Monetary Fund is used...

...It did it to fill needs on world markets...

...Each country had to have in its possession an amount of gold which corresponded to the amount of paper money...

...An increased contribution of one country to the fund would decrease the contributions of other members...

...If s country wanted to print more paper money it had to have mors gold...

...The monetsry conference wss not a conference about money...

...Gold in n modest wny would still piny iU pert but it would resse to be the only standard...

...But both are needed because the work of each will create problems neither will be able to solve alone...

...To arrive st this stage means avoiding disruptions in world trsde which would occur if we sllow the ill fated experiments of the twenties snd thirties to be repested...

...An increase of wealth of each country will increase its contribution to the fund...

...This is to be done by estimating the total amount of money of all countries of the Cnited Nations which is used in international trade...

...This new economic theory says that the wealth of each country can be maintained or increased only by developing its production for the purpose of increasing the living standards of its people rather than catering to the needs of one or more countries abroad by exporting goods...

...First capital was used to exploit Brazil's natural rubber...

...If it approaches exhauslion of its quota other members msy interfere and compel an adjustment...

...The higher the contribution to Fund and Bank the greater is the influence upon the administration of these organisations...

...The share of each country in this total is to be determined on the basis of the country's ability to produce and consume, which is, or ought to be, our modern yardstick for measuring wealth...

...It will not buy much from abroad, however, because the number of people who can afford to buy imported goods is limited...

...The other end of the problem may turn out to be much more difficult...

...Their money becomes less valuable, and sooner or later the point is reached where the country has to buy goods from abroad at considerably higher prices...

...These payments have as a rule to tie made in the money of the country where the debt is due...

...Large-scale unemployment was the consequence...

...The security of investments would have to be guaranteed by the governments establishing the bank...

...Argentina, however, could only buy as many goods from abroad as it got for its wool and meat or had saved from sales during prior years...

...The purpose of all these meetings is to build an international organisation for the postwar world...

...In the thirties almost every country in Europe found out thst in-nation was the lesser of two evils...

...France and Russia represented the interests of countries which ssw their industries destroyed by the war and therefore face the necessity sfter the war of buying more abroad then they could pay for in exports...

...The joint guarantee of countries like the United States, England, and the British Dominions, would, it is believed, be enough to tempt investors large and small all over the world...

...In addition, the fund would serve as a world bookkeeping anit for the trsde between nations It would thus in time make problems known which otherwise would remsin Inside informstion of s few speculators on the stock exchanges of the world...

...Yet it is the safest way to make these countries good steady customers of the more industrialised nations...

...On the other hand, countries which sell much less than they buy from abroad get into another kind of fix...

...For if one country can't sell and buy, all the others will sootier or later he in very much the ssme situation...

...But this is seldom the case...

...The First World War msde the defects of this system show up...

...If planning is successful, however, the result in the long run would be to end breakneck competition in one commodity between countries which depend upon its export, to increase the demand for goods of all kinds all over the world, and this would mean final victory in the battle for full employment...

...Before 1929 we in America felt that this waa just Argentina's hard luck...

...However efficient its managers, they almost certainly will fail if the International Monetary Fund is not hers to aid...

...The controversies which for a long time jeopard ixed the success of the conference came from a desire of some of the United Nations—notably France and Russia to increase their margin of freedom from control by increasing their quote in the Fund...

...The government compels its people to accept the token as payment for goods and services...

...After the British occupation, Egypt was developed largely to produce cotton...

...The needs of countries like Brazil and Egypt, and many others, are in the first place to develop their home markets...

...This might require electrification in a way similar to TVA...

...Just as important as keeping a country in a position where it ran sell and buy is to see lo it that its people share in the profits from trade and industry...

...It was a conference about international trade and economic plsnning...

...Its aim is to do away with the ides thst the money of a country is a commodity which may go up and down in price at the whim of a government or of a few powerful banking houses...

...It might bo necessary to better the lot of small and medium farmers...

...The big idea of the fund ia that if the rich countries use their savinga for investment in the poor countries, the weslth of the latter will increase without decreasing the wealth of the former...

...It is a huge country, of great resources, only a few of which have been developed...

...Experts are assuming thst this total is something like eight billion dollars...

...Other consequences are that the country whose currency Haft4 increased in price may not be in a good position to sell its products abroad because these have become more expensive, not because labor costs have increased but because the money in which wages are paid has become more valuable...

...The costs of warfare had been so great that savings had been completely used up in s number of countries, such as Greece, Germany, Austria, Poland, and Hungary...

...To avoid depressions and to help increase the wealth of the masses in each country is the key task of international cooperation after the war...

...Foreign capital then invested in Brazil for the purpose of producing coffee...

...It places limitations upon ths freedom of each member of Bank and Fund concerning trade policies and currency management The margin of freedom for each country is ss targe as its quota in the Fund...

...The task of the International Investment Bank will lie huge, the responsibility of its administration great...

...This measure turned out dissstrously...

...Before the First World War we had a system whereby money issued wss treated as a substitute for gold...

...The additional contribution will be determined by the majority of governments which are members of the fund...

...The first result of this scarcity is an increase in the price of the currency...

...The International Investment Bank would have the double task of attracting money in countries with sufficient capital and savings to invest abroad, and to decide upon the way to invest the money...

...They are to be independent of each other...

...The monetary conference is here to build up organisations which will help develop natural resources and industries in underdeveloped countries, stabilize the prices of certain key commodities such a wheat, coin, tin, rubber...

...It is different if the money of any country has to be used to pay debts abroad...

...In the twenties the well-to-do countries, such as America, tried to get these bankrupts back to normalcy by lending gold and curtailing their purchases abroad...

...Take, for example, Brazil...

...His theory is that wealth is just as indivisible as peace and freedom...

...Therefore, the country from which payment is to be made has to exchange its own money for the money of the creditor country...

...Creation of th* International Monetary Fund and of th* International Inveitment Bank i* a ttep toward a better world...

...This system worked quite well for about a hundred years, during which no war in Europe lasted longer than a year...

...Russia's success should mean a recognition of the need of all countries which have suffered destruction to count for s time upon the good will of thee* who have been fortunate enough to keep their industries intact...

...This drives the cost of living up, and the country soon is face to face with inflation...

...that this can be done without making the rich less wealthy...

...If more money of one country is demanded than the bank of that country issues, the money of that country becomes scarce...

...If a country, say Argentina, could Bell its export products wool and meat-it could buy the goods it could riot make at home...

...Investment in each country which would be developed by the bank means that for a considerable time these countries would buy more from abroad than they sell to other countries...

...Toward Economic Internationalism By Francis Hauser THE International Monetary Conference at Bretton Woodi ia a link in a chain of conferences between the United Nations, following the food and relief conferences (UNNRA), and the conference of the International Labor Organisation...

...A group of liberal economists on either side of the Atlantic inspired by John Maynard Keynes, used the,experience to build up new economic doctrines...

...Then, when it appeared that it was more profitable to get the rubber from the Dutch East Indies and Malaya, foreign capital withdrew, and Brazil's rubber industry was ruined...

...hoary Morgentbon jr., who shores with John Moyaord Keynes of Fngfond fhe honor of moling raw Br at tan Woods Monetary Conference «J I I C C I I I...

...This economic idea differs from the leading economic thought of yesterday, which measured a country's wealth in terms of sales, and less attention was paid to the distribution of wealth...

...Tied up with the fight for higher quotas was a bid for power...

...If a few only make money, whereas the masses consist of underpaid workers and tenant farmers, the country may do a thriving business selling goods abroad...

...Consequently, the relation between gold and paper money was changed in each country whenever this seemed to be in the interest of that country...

...This would not necessarily be bad if and when the needs of countries abroad and the needs of the peoples in the country to be developed were the ssme, and if the latter could hope to earn living wages, and earn them steadily...

...This also would have to be done by agreement between the members of the fund...

...Thus Britain, France and in the end America went "off gold...

...Russia's concession to Increase Its contribution to the Bsnk for sn increase in its quota in the Fund therefore adds to Russia's influence in the management of both Bank and Pund...

...In the years between the wars we learned a few new things about economics in that university of hard knocks called depression...

...It may be that industries are needed to make cloth and apparel for homo consumption...

...The International Monetary Fund is an attempt to avoid a similar disaster after this wsr...