WASHINGTON, 1 August 1944,
SUPPLEMENTARY NOTES ON THE MONETARY CONFERENCE [1]
1. It is important to stress that the Conference did not discuss international financial (and economic) collaboration in any broad way. Discussion was confined to individual pieces of the machinery which, was finally blue-printed in the Final Act. [2] Roosevelt’s direction to Morgenthau virtually prevented us or anyone else opening a debate on the general principles on which the Joint Statement of Principles tested-
‘In formulating a definite proposal for an international monetary fund both you and the other (American) delegates will be expected to adhere to the joint statement of principles of an international monetary fund announced April 21st, 1944.’ [3]
2. This fact together with the terms of the invitation [4] explains to some extent the closeness of the final document to the Joint Statement, and the weak tactical position of ourselves in seeking to have the employment agreement discussed, and of various Latin Americans in introducing proposals affecting commodity and commercial policy.
3. The procedure also underlines the value for Australia (assuming that the subject is one in which we want to assist in getting a final proposal) of participating in early ‘expert’ discussions before we enter a full scale conference. In this Conference the balance of forces was all against any radical departure from the prior agreement between officials of the United States and United Kingdom unless one of these two took the initiative (as in fact U.K. was obliged to do over exchange rates following House of Commons criticism).
4. A second conclusion one can draw is that, within limited fields, we should respect the power of the Latin Americans, 19 strong and enjoying United States tolerance, to force their own requirements through a conference of 43 heads. The only sensible counter is the undemocratic method of avoiding votes, which was the system generally used in the Conference. But on some issues such as management and voting, location of head office, gold depositaries, where U.S. and U.K. were not in agreement and the matter was forced to a vote, El Salvador and Panama carried mathematically twice the firepower of Australia. The decision to allocate two Directors to Latin America indicates what may prove to be an unfortunate defensive regionalism among economies with whom Australia, New Zealand and others have extensive common interests. I can offer no ready suggestion as to how best to meet the situation, except perhaps through more direct and continuing contacts.
5. I would refer you to Brigden’s paragraphs 7 to 9 [5] on the Latins. In addition I would add that United States tactics seemed to be to keep Latin American quotas down, which also keeps their voting strength down, but to flatter their status and win their support on other matters such as those mentioned in 4 above by giving them a loud voice on the Executive. United States officials placed an emphasis on formal voting strength and election technique which appeared quite exaggerated to those British and Dutch delegates who have had some experience of the relative importance of expertise and persuasiveness, in management of this type of institution.
6. Presentation of the schedule of quotas after 15 of the original 19 days had gone by caused a dramatic interlude. One subject after another, especially where determination of voting was required, was ‘deferred’ pending decisions about quotas. Tempers were becoming frayed at the suspense, especially among some Europeans, India and others. From memory, I don’t think many Latins showed any uncertainty. After a series of individual interviews with Morgenthau in which offers and responses were made in private, a quota committee of 15 presented its list. Given the ceiling on the total, Australia has not done badly relatively to some others.
7. After China, India, France, Greece, Australia and some others had registered disappointment or flat reservation, the U.S.
spokesmen [6] stepped in to stop the rot. Throughout the previous technical discussions the Americans had been at pains to stress the stabilising functions of the Fund, and the irrelevance of war devastation and reconstruction needs. But on this occasion Vinson, in an atmosphere saturated with emotion, declared the greatness of China, France and other Europeans, described their war sufferings and promised that their needs would not be forgotten. These sentiments, followed by an appeal for United Nations solidarity which to my sceptical mind was misplaced in a technical conference of officials, got the schedules of quotas accepted with formal reservations only.
8. Nash was nettled that New Zealand, unlike many countries including Australia, did not receive an increase over the figure stated in the American draft [7] circulated last year, and hinted at some behind the scenes activities in which New Zealand was not a party.
9. The employment resolution [8] had a fair spin, but never had a real chance since it was relegated with a mob of stray hobby horses from Mexico, Norway and others to Commission III which was postponed until almost the last week. There was no time to work effectively on the delegates from Latin America and the Middle East who were strongly represented on the Commission. Odd suggestions kept cropping up to the effect that presentation of an employment agreement implied a slur on national willingness to carry out an employment policy. Stolid opposition came from the U.S. delegates (Treasury and State Department) from the outset, and their argument that the terms of reference did not allow treatment of our proposal was supported by Canada. One or two American officials in private conversations were quite frank about the political difficulties raised by our proposal but Pasvolsky [9] and Livesey [10] (particularly the first) hedged by maintaining a rather abstract argument about the extent to which national policies could properly (in five days) be established as matters of international concern.
10. Ronald [11] for the U.K. supported us strongly at all times in open session, and Nash was helpful. Nash had left before the final session when the resolution went to the vote.
11. U.K. was very worried about the Committee dealing with Mexico’s bimetallic ‘silver’ proposals, which was loaded with silver countries with U.S. holding the balance and threatened by an aggressive letter from a large number of silver Senators and Congressmen. However, a very tame resolution came forth. On the initiative of the U.K., a resolution to make entry of Germany and Japan into the Fund dependent on membership of a world political organization was squashed. Similarly the U.K. played an active part in ensuring that recommendations for action in respect of axis assets in neutral territories and looted property did not ignore the work which is allegedly being done already in this field by an inter-allied committee. The U.K., too, succeeded in eliminating from the resolution on commercial policy and commodity policy anything which specifically recommended an international conference, upon which some Latin Americans had set their hearts.
A. H. TANGE
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1 Tange sent these supplementary notes with a covering letter to Hodgson. He emphasised that they did not constitute a formal report and that they were for departmental use only.
See the letter dated 1 August on file AA:CP10/1, bundle 1, [13].
2 In Proceedings and Documents of the United Nations Monetary and Financial Conference, Bretton Woods, New Hampshire July 1-22, 1944, vol. 1, Department of State, Washington, 1948, pp. 927-42.
3 See Document 191, note 1.
4 Document 166.
5 An unsigned and undated copy of ‘The Bretton Woods Conference’ is on the file cited in note 1.
6 A marginal note read ‘White & Vinson’. Dr Fred M. Vinson, Director, U.S. Office of Economic Stabilization and Dr Harry D.
White were Vice-Chairman and Member, respectively, of the U.S.
Delegation.
7 See Documents on Australian Foreign Policy 1937-49, vol. VI, Document 98, note 3.
8 See Documents 221, 224 and 234.
9 Dr Leo Pasvolsky, Special Assistant to the U.S. Secretary of State and Technical Adviser to the U.S. Delegation.
10 Frederick Livesey, Adviser, Office of Economic Affairs, U.S.
State Department and Technical Adviser to the U.S. Delegation.
11 N. B. Ronald, Acting Assistant Under-Secretary of State, U.K.
Foreign Office and Member of the U.K. Delegation.
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[AA:CP10/1, BUNDLE 1, [13]]