United Nations' Fund

The successor of the Keynes (British) and White (U.S.) plans for stabilizing postwar monetary exchange was last week announced to a sympathetic Congress by Secretary Morgenthau. This one is also only a plan-- still to be formally drafted and not yet agreed to by any nation--but it is not one man's or one nation's idea. It was worked out by 100-odd experts of 34 nations. Its concrete proposals:

P: An $8-billion international stabilization fund to which nations will subscribe quotas, depending on the size of their gold production and foreign trade. Approximate antes: U.S., $2 1/2 billion; Britain, $1 1/4 billion; Russia, $1 billion; China, $600 million; Canada, $300 million.

P: Every nation would subscribe its quota by giving the Fund a credit in its own currency, except that each nation would have to put up some gold -- either 25% of its quota or 10% of its gold reserve, whichever is less. (This is a compromise between the Keynes plan, which did not definitely stipulate any gold, and the White plan, which called for 50% in gold.)

P: Each country must control capital exports in accordance with the purposes of the Fund, prevent the International Fund being used for the transfer of "hot money," and make no blocked money agreements, etc. with other nations.

P: The Fund would be run by an executive committee of nine (on which the countries with the five biggest quotas would be represented) and each nation's voting power would be proportioned roughly to the size of its quotas.

P: The members would agree on the par (gold) value of one another's currency at the time they enter the Fund, and none could devalue its currency more than 10% from this original figure--and then only with the consent of the Fund Committee.

P: In case the Fund's holdings of one country's currency runs short (as U.S. dollars might, for example, if the U.S. sold a lot more goods abroad than it bought), then the Fund Committee could ration that nation's currency and recommend measures (e.g., tariff reduction) to do away with the causes of such lopsided exchange.

This plan leaves the important decision of the par value of each nation's currency to be agreed on separately--no mean problem, since the question of whether the British pound, say, shall be worth $3 or $4 will make a big difference in Britain's export trade.

The plan also sidesteps a good many other postwar financial problems as repayments of war debts and such basic economic factors as trade barriers. But its avowed purpose is merely to provide a mechanism. for orderly exchanges, assuming that some sound economic order will be established in the world. The fact that the experts of 34 nations could agree on this much was perhaps the most hopeful sign that such order is possible.

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