LETTERS
LETTERS Will bretton Woods Conference Solve International Financial Problems? From ALEXANDER BAIRD To tht Editor: In his attempt to invalidate ray analysis of the Bretton Woods Monetary...
...What is most inconsistent about th* tentative agreement* reached at Brett** Woods is the fact that although th* aha was free trade, the question of tariffs at well as many other obstacles to inter, national trade were ignored...
...Since the rest of the world, has no equivalent to offer for American goods, the major part of what Mr, Halasi calls "exports" will probably remain unpaid for...
...There is hardly need to polemize with Mr...
...Halasi breaks down an open door by explaining that a rigid stabilization of currencies was not intended in the agreement...
...It ia obvious then that there will be a one-way traffic of commodities into the Soviet Union and that far from holding a promise of mutual trade between the I'SA and the I'SSR, the size of the Russian quota is really the amount of the check she intends to draw on the United States Treasury...
...Hence, while the Big Powers will be relatively free to interpret the elastic and contradictory clauses as they please, the small countries will hsve to comply with the directives of the big quota bosses...
...Under such an arrangement it is obvious that currencies will still reflect supply snd demand to some extent although extreme fluctuations will be smoothed out in the course of the Fund's operation...
...Only lack of span prevents me from making this list at basic contradictions longer...
...So long as principles of decency are not accepted by all th* United Nations, indiscriminate American generosity would be unpardonably shortsighted...
...23, 1944...
...Although voting power is proportionate to the quotas assigned, the United States can easily find itself outvoted...
...The principles of the Atlantic Charter have been dangerously strained with unilateral and arbitrary decisions concerning whole nations becoming every day's practice...
...Second, if the export of American commodities is to be paid for by American taxpayers, it is not trade but charity...
...In my article I wrote clearly, "It is true that proposals were drafted which provide for decreasing the quota of the member countries in proportion to their future inability to repay thejr limited overdrafts in the Fund and vice versa, although the second possibility is most unlikely...
...This "modest" sum is one-fourth or one-fifth of the anticipated postwar budget of the United States...
...Halasi implies...
...For it would be naive to assume that any small country would openly oppose a powerful coalition controlling the purse-strings of international credit or that the ruling elite will at all times deal fairly with the problems of the financially and politically weaker countries...
...I share his humanitarian views but 1 think it is far wiser to admi this fact than to devise economic formulas for charity by assuming that the American economy can be kept running only by making generous gifts abroad...
...He also accuses me of having stated that such a contribution would destroy prosperity...
...Thus, the problem is one of relief and not of commerce...
...Consequently, through its membership ia to* Fund the power over tariffs, for instpe...
...Since control of the machinery set up by the Bretton Woods Conference is concentrated in the hands of the countries awarded the largest quotas, the Big Powers will have the decisive voice in all eases—including their own...
...Specifically, this could mean a decision of the Fund's Directorate forcing the United States to cut down her exports and to receive imports...
...Yet, and this is the most characteristic aspect of the actual economic and political agreements, the position of small quota countries is infinitely weaker than that of large quota countries...
...Halasi scornfully points out my concern over what he considers the modest amount of the United States contribution to the Fund and Bank, i.e., $6,000,000,000...
...While not being opposed to generosity, I see no reason for justifying it by sn apriori mixture of Keyneaian economics of control with obsolete 19th century conceptions of free trade and tariffs...
...Th* people of this country sre most anxious to finance a lasting peace and real world prosperity but they should not be lured into financing another war by the fake promise of imaginary econoinic^MH- > vantages...
...An exchange rate is the result of internal as well as external operations...
...The distribution of quotas at the Monetary Conference was primarily a result of political and military pressure and not of economic considerations...
...that although intending to free exchange* si much as possible, sanction was given t* even the moat rigid forms of foreiga exchange control...
...From ALEXANDER BAIRD To tht Editor: In his attempt to invalidate ray analysis of the Bretton Woods Monetary Conference, Albert Halasi has attacked statements I never made (New-Leader, Sept...
...1 merely said that since the amount of money in question can come only from further taxation or borrowing it will decrease the accumulated purchasing power in this country...
...While I am not exactly a 19th century Manchestarian I can only repeat what 1 wrote, "The power over the fixing of exchange rates is virtually divided be tween the United States, Russia, Great Britain, China and France...
...But while Russia is nearly self-sufficient, Britain is not and will have to increase her foreign trade by about 50 per cent over her prewsr level if she is to maintain that equilibrium in her balance of payments so necessary to her former high standard of living...
...My reference to the independence of domestic monetary policies proclaimed by the British delegation has also been misconstrued...
...will pa'<s into hands othei than thot* of the American people...
...Greed is the last thing thst could be reproached to the Americsn delegation at Bretton Woods or to the American people...
...Thus the vital issue of tariffs was by pa.ised by the Conference...
...The Russians, for exsmple, have announced that they will be unable to balance their imports with exports In -the foreseeable future...
...Halasi'* misinterpretations than with refuting his arguments...
...But since the participating countries can by-pass the Fund in their external operations and have been promised independence in their domestic affairs, it will be almost impossible for the Fund to keep its members in line...
...This country issiot likely to shrink from its financial responsibility toward the rest of the world...
...My reply, therefore, is more concerned with correcting Mr...
...Yet, where are the- foundations of (he lasting peace that the people of thit country are supposed to pay for so gen...
...In short, I have expressed myself neither against nor for the tariffs as Mr...
...My critic is of the opinion thst the American people might produce a national income so high thst they will not spend it sll and that a crisis can be everted only by an increase i. American exports...
...To be specific, Russia's prewsr share in world trade was only one-thirteenth or one-fourteenth of the British, yet the Russian quota is almost equal to the British...
...Halasi states that "(he Bretton Woods agreements do not imply tariff reduction by the United States" and indirectly accuses me of protectionism...
...Halasi's almost biblical disertation on the danger of greed in international relations...
...First, the anticipated national income of $140,000,000,000 is merely an estimate without any economic or political guarantee...
...Yet tat problems cannot be by-passed and ** long a* new forms of economic and political relations are not devised, any attempt to stabilize exchange rate* means starting n vital job at the wrong end...
...And once the supply of dollars is exhausted it is difficult to see how exchange fluctuations csn be kept within limits...
...My criticism was not that the agreements either were or should have been intended to stabilize currencies rigidly, but that to long at the Fund hat no control over the do-mettic policiet of member countriet, it will be unablt to ration credit effectively or to prevent the rapid outflow of dollart from the Fund...
...erously T The shadows looming at least in eastern Europe and the Far Fast are too dark not to be noticed...
Vol. 27 • December 1944 • No. 51
