The Third Way

A Manhattan hostess learned last week that there is a "key countries approach" to postwar monetary stabilization. Said she: "I am furious. It took me all spring to pair off Lord Keynes and his bancor, and Harry White and his unitas. Now this has to bob up."

New generally to the U.S. public, the "key countries approach" has long been promoted by U.S. bankers. For several months U.S. bankers have been discussing it as an alternative to Keynes and White, whose plans, they feel, would put politics (central banks and fiscal agencies of government) in control of the world's money.

Last week the public caught a brief glimpse of the bankers' substitute idea in a critique of the bancor-unitas duet published in the July issue of Foreign Affairs, written by money-wise, respected John Henry Williams, 56, vice president of Federal Reserve Bank of New York and Dean of Harvard's Graduate School of Public Administration.

Money Student Williams is afraid that the Keynes and White plans would be mere facades behind and around which the various countries of the world would resume the old cutthroat practices of autarchy, blocked currencies, unilateral trade agreements. Dr. Williams sees nothing in Keynes's and White's ideas to oblige countries to keep economic faith with each other. He thinks it more realistic to start with something less grandiose, requiring no international governing board and emphasizing monetary stability within each country in order to get it internationally.

Dr. Williams proposes that the "key countries"--U.S. and Britain and others later--begin by fixing the postwar ratio of the pound to the dollar and by establishing a method to keep that ratio stable. (The 1936 Tripartite Agreement would not be the model.) He would postpone for the present any attempt to relate European currencies to this dollar-pound fixture.

With U.S. and Great Britain committed to maintaining a high level of income and sound currency within their respective countries, Dr. Williams believes that exchange stability and reasonable economic well-being in the other countries large & small will probably "present no major difficulties."

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