The Mischief-Maker

Reforming the world's monetary structure has proved to be a complex and frustrating task, and last week it became even more so. Top finance officials of the free world's ten richest na tions have struggled with the problem for more than a year, and all their studies only created a need for more talk. At their last meeting a month ago, they seemed to be making headway toward a compromise plan to create a new kind of international monetary reserve, thus allowing available financing to keep pace with expanding world trade and investment. As they met again in Paris last week, that powerful Group of Ten (Belgium, Britain, Canada, France, Italy, Japan, The Netherlands, Sweden, West Germany and the U.S.) bumped into a famous immovable force: Charles de Gaulle.

Hard Line. The collision shattered what hope there was that the ten industrial nations, which account for 70% of global trade, could avoid a stalemate on the mechanics of averting a clearly threatening crisis a few years hence. At De Gaulle's personal order, France not only returned to its hard line of a year ago that the only sensible basis for a world money system was gold--a view shared almost nowhere else--but now also insisted that any plan for world monetary reform should wait until the U.S. brought its inflationary trend under control and corrected its balance-of-payments deficit.

De Gaulle's lonely stand dismayed even some senior officials of the French government, for it isolated France from its Common Market partners and reneged on a year-old French proposal for a gold-based collective reserve unit, dubbed Cru. Washington felt that De Gaulle's maneuver was dictated by the belief--or even the hope--that the dollar drain caused by the Viet Nam war, now between $400 million and $500 million a year, will make it impossible for the U.S. to stanch its payments deficit this year.

Dangerous Plaything. About the only gainers from the French show of intransigence are the world's underdeveloped nations, many of whom resent the Group of Ten as a white rich men's club trying to dictate monetary reform to the rest of the world. They not only want the 103-member International Monetary Fund to control the issuance of new reserves, but also demand vastly increased rights to borrow from the IMF to cover their recurrent financial difficulties. Continental countries, however, regard such a system as potentially inflationary and therefore a dangerous plaything in the hands of countries prone to mismanaging their own economies. There, at week's end, the impasse lay--with solutions farther out of reach than ever. And as far as anyone could figure out, the chief result of De Gaulle's new stand was to make mischief for the U.S.

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