Expert Opinion

Senator Bob Taft of Ohio last week read a funeral oration over the still alive-and-breathing International Monetary Conference (TIME, July 17). He gave the press a statement: "I have been asked . . . what the terms of the agreements now being negotiated at Bretton Woods are to be and whether they have been or will be approved by Congress. I can't answer the first of these questions because of the secrecy which surrounds the Bretton Woods conference, but I can say that in my opinion no agreement for an international monetary fund on the terms [proposed] will be ap proved either by the Senate or the House." On the first count, Senator Taft must have been too busy to inform himself.

For in fact the proceedings of the conference have been almost as public as the proceedings of Congress. But the second point was the more important, be cause Bob Taft is one of the most responsible of Republican Senators, and his statement had to be taken seriously.

Bob Taft's reasons why the proposal should be defeated were typical of the recent uninformed criticism by conservative U.S. bankers. Examples:

"Nearly all the real assets in the fund will come from this country." (The fact: the U.S. will contribute $2,750,000,000 to the $8,800,000,000 fund, will be the biggest, but still a minority, stockholder.) "They will be dispensed by a board the control of which is held by countries whose currencies are much weaker than ours." (The fact: the U.S. will have 28% of the votes in the fund, a proportion which will be increased automatically when dollars are borrowed from the fund by other nations.)

"It will not be long before all of our assets are gone and the fund is entirely made up of weaker, worthless currencies." (This could not happen quickly; total borrowings from the fund are tentatively to be limited to 25% a year. But Bob Taft overlooked a bigger fact: if dollars and gold are drained out of the fund they will drain into the U.S. to pay for American goods. In short, the threat is that the hard money assets of the fund will be spent in the U.S., particularly if American tariffs prevent settlement of these debts in goods. Other countries will be as interested as the U.S. in preventing this.)

Walter Lippmann shrewdly pointed out one basic flaw in Taft's reasoning: that other nations may actually refuse to accept the direct U.S. loans which are Taft's alternative to the Fund-Bank proposals.

For in direct loans, the U.S. would remain in a position to call the tune for each debtor. The other nations, mindful of the effects of the whimsical U.S. lending tariff policy of the prewar decade, might well prefer exchange controls and bilateral barter agreements among themselves to the acceptance of "humiliating" credit terms, and those loans which do not "fit their internal needs and their sense of national dignity."

Since most U.S. citizens and bankers do not understand the fund or its operations any better than Senator Taft, there is a good chance that Congress will turn the proposals down as a deep-laid scheme to rob the U.S.

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