Evening star., 1944-07-02
Money Farley
Sterilization Fund
Key to Stability
By Sisrid Arne

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are gathered at Breton Woods, N.
H., to try to reach an agreement not
to cut each Others threats in none
tary matters come the peace.
The means they seek is dry and
technical, a world stabilization fund
but it could well be the first
brick in that shining edifice the
Atlantic Charter outlined, world
peace.
It's hoped a sterilization fund
would help Henry Ford keep his
thousands at work, help Anaconda
keep its copper mines running, Gen.
eral Electric and General Motors
happy with orders, wheat farmers
out of debt and in the long run
prevent a third world war.
Under present tentative plans ap-
proved by international money ex-
perts 1t would cost the United States
about $2,500, 100000 Omitted States
participation is subject to congress
sional approval) The experts want
a total Of $4,000, ,000, 900 in 1t. $10,-
600 ,000, 900 when the Axis countries
join.
Proposed Activities.
What will 1t do If 1t goes into ef-
feet as now outlined?
1t will not make loans for recon-
struction.
It will trade In just one thing,
the various currencies Of the world,
dollars, pounds, pesos, francs, lire
and so on.
An American company sells $780,
900 worth of turbines to England.
1t wants payment in dollars, because
| it couldn't spend English pounds
here.
So the English purchaser goes to
an English bank and buys dollars
to pay his bill. He doesn't carry
them off in sack and mail them
to the United States. The bank
simply credits the American con-
Germ. which can either write checks
on the account to buy in England
or can ask payment. If it wants
payment the English bank transfers
the 100000 credit to an American
bank.
But the pound might be worth
$3.50 when the American concern
took the order and have slipped to
s4.25 by payment date. So the Eng
lish buyer has to spend more pounds
to get 100000 in dollars That
might easily cancel half his expected
profit.
Turn it around for an American
house buying English woolens.
There are other sad twists.
That gold hoard at Fort Knox is
part of the picture. It's worth some
81 million dollars. 1t could be worth
nothing. This is why:
Acquiring Gold Hurt.
In week there may be 1000 deals
between the United States and Eng
land tin normal trading times. At
the end of the year the deals won't
be quite even.
Suppose the English bought s40O,-
600 worth more here than we bought
there They ship 100000 worth of
gold here to settle the accounts.
That happened so much in the
'20s and '30s between the United
States and many countries that we
cornered the worlds gold. Nice for
US? No.
The countries which were losing
gold to us had to cheaper" their
money-that is, give it lower value
in relation to the dollar. Francs
worth 20 cents slipped to 10. Pounds
worth s4.89 dropped below 81.
That made it easier for us to buy
abroad because dollars bought more
pounds and francs with which to
buy merchandise.
Nations kept shipping us gold be-
cause We continued to sell more
abroad than we bought. Their
monies continued to slip in value
It became too expensive for them
to buy here They went without or
bought from each other, and the
bread lines here began to form to
the right.
Then the real frenzy began. Ger
many was the villain She would
say to Bulgaria. for instance: Wen
take your wheat, but you have to
spend the money in Germany"
Maybe Bulgaria wanted some
American autos, but her money was
blocked" in Germany.
Then Germany thought of another
twist: IF you buy canaries for
example,, your money will be worth
as many reichsmarks as though you
bought cameras" In that way
fGermany unloaded her plentiful
canaries even though the Bulga-
rians had rather have cameras.
Money experts want to fix money
rates so that all countries will be
free to buy what they wish.
This is the way they propose the
stabilization fund work:
/. AS each country enters, its
money will be fixed at certain
price in relation to gold.
2. Each nation can buy from the
fund when the particular foreign
currency it needs is difficult to get.
8. If a nation thinks 1t must
cheaper" its money, it can do SO
once and only for 10 per cent. The
fund can permit a further cut If 1t
decides the cut is essential.
Might Cut Trade Temporarily.
Suppose a money becomes scarce
in the fund. American dollars are
the most likely to do that because
many nations will be buying here
for reconstruction.
The experts propose the fund ap-
portion the remaining dollars among
the other nations. They won't be
able to buy here beyond the dollars
they get This could cut our export
trade. but perhaps for only a short
period because the other nations
will continue to sell to us. AS we
pay our bills a new dollar account
will build up.
More Importantly, we wouldn't be
draining other countries of gold and
running the world into another de-
preston. Besides, we have two other
ways to keep our trade flowing: We
can buy more abroad, perhaps
through cutting our tariffs, and we
can make some long-term loans