Money: The Global Finance Men: Who They Are, How They Work

Even for men well accustomed to continent hopping, international conferences and crucial decision making, the managers of the free world’s money last week set something of a record for activity. In Uruguay, in Cannes, in Paris and in Basel, they met over the conference tables to make decisions that could affect the fate of governments, to cast their appraising eyes on the economic eddies of the West and to indulge in important shoptalk that ranged from the performance of the New York stock market to the rising prices of international hotels. Over lunches, at dinner parties and in evening strolls, they continued their business in the atmosphere of camaraderie that marks them as a most exclusive and influential international fraternity.

At Punta del Este’s Cantegril Country Club on Uruguay’s sunny coast, the central bankers of 19 hemisphere nations gathered to discuss Latin America’s economic problems and to weigh President Johnson’s program to stem the dollar drain. On the Riviera at Cannes, the Common Market Monetary Committee, including a select group known as the Club of Six (see box), met to pass judgment on the British pound and Europe’s growing inflation. In Basel, both the Bank for International Settlements and a subgroup called the Basel Club met behind carefully guarded doors to review Europe’s most pressing monetary problems and to try to guess future trouble spots.

The most important meetings, however, took place in Paris, where top monetary men from 21 nations met as Working Party III to make one of the crucial monetary decisions of the decade: whether to advance a $1.4 billion loan to Britain to enable it to prop up the pound. Britain needed the money to repay the $750 million that it has already used out of the $3 billion lent it by central banks last November, when the pound was being attacked—and to provide a cushion that would make unnecessary any further drawing.

Though there were some early doubts about whether the loan would go through smoothly, the moneymen were encouraged by Britain’s new austerity budget, the $22.4 million gain in gold and hard-currency reserves in April and the Labor government’s announcement last week of tougher credit restrictions. After a two-day meeting of Working Party III, the Dun & Bradstreet of such matters, the loan was unanimously approved. Another group of moneymen called the Paris Club then sat down to decide what mix of gold and currencies will make up the loan. The loan will be made through the International Monetary Fund, the daddy and inspiration of all the clubs. It thus raises Britain’s debt to the IMF’s maximum limit of $2.4 billion, makes the sterling rescue the biggest bailing-out operation in the IMF’s 20-year history.

Cooling Crises. The Paris meeting highlighted the vast powers of the international moneymen, whose influence in world affairs has soared in recent years. A thumbs down to Britain’s request would very probably have forced a devaluation of the pound, brought down the Labor government and had profound effects on the West’s entire monetary system. When the moneymen speak, governments listen carefully. They practically forced the Wilson government to take restrictive measures, pressured the U.S. Government into steps to correct its chronic balance-of-payments deficit and helped cool the sterling crises of 1961 and 1964.

The moneymen are the guardians of the non-Communist world’s intricate system of monetary cooperation, created at the Bretton Woods Conference in 1944 and carefully cultivated and expanded ever since. Mostly from Europe and the U.S., they manage the flow of money, pass on the credit of nations, come to the aid of failing currencies and discipline payments debtors. Their work, which is usually marked by anonymity and almost always performed out of public view, has made possible the great surge of the West’s economies since World War II.

Misty World. The world of the international moneymen is a misty one, filled with special terminology and nuances and frequently devoted to esoteric concerns. It is peopled by able and articulate men who call each other by their first names, nip off to Paris, Basel or London as a matter of routine and keep in constant touch by telephone, cable and personal visits. On a recent visit to Britain, William McChesney Martin Jr., chairman of the Federal Reserve Board, spent three hours tramping through the fields with Lord Cromer, the governor of the Bank of England, at his country home in Kent. “It makes a big difference,” says Martin, “if you feel that you can call on a colleague in another country to get some advice.”

A screen of great secrecy once separated the moneymen of each nation from those of others, but it has given way to growing cooperation. Each central bank now maintains a large foreign department to keep in touch with other banks. Last December the Paris Club set up a uniform system of confidential statistics about each country and made its findings available to all participating central banks. Today it is not uncommon for one government to give another government a few hours’ notice of a change in the bank discount rate, a practice unheard of only a few years ago. At their international meetings, monetary men dispense with the diplomatic trimmings, close the doors to the public and speak with such remarkable frankness and bluntness.

A Profession & an Art. The moneymen bear many titles, but basically they fall into three major groups. Enjoying fairly independent positions in their governments, the central bankers those who run national banking systems —feel the freest to criticize and sound alarms. The U.S.’s Martin, for example, keeps reminding Washington that the U.S. is dangerously close to inflation, and Lord Cromer has publicly lectured the Labor government. The finance ministers, on the other hand, are politi cal appointees who are less likely to pick a fight with their governments, but their greater awareness of political realities can be invaluable in international negotiations. The solid core of the moneymen—and the real heroes—are the senior advisers who have worked their way up through the monetary system, know its machinery intimately and run it with great precision.

Because of the vast wealth and international obligations of the U.S., American officials hold a certain primacy of honor among the world’s moneymen. This was undeniably the case when Douglas Dillon, as Treasury Secretary and Robert V. Roosa as his Under Secretary for Monetary Affairs were regulars at the monetary meetings. Because it will take time for their successors, Joe Fowler and Fred Deming (a new face at last week’s Paris meetings), to build up comparable reputations, the Federal Reserve’s Martin has become even more influential in monetary matters. Said Martin in Uruguay last week: “Some people in Washington attack me and say I’m more powerful than the President. The answer I give them is that sometimes I only wish it were true.” To Martin, who has been the Federal Reserve’s chairman for 14 years, central banking is both “a profession and an art.”

Overshadowed by the Boss. One of the most highly respected of the world’s moneymen is Guido Carli, 51, the vigorous, brilliant governor of the Bank of Italy, whose tough austerity measures cooled the nation’s inflation last year but won him no popularity contests.

“The first quality of a central banker,” says Carli, “is to be coldblooded. The bank governor must be a little independent of the currents and undercurrents of public opinion, to express problems in less emotional terms.” Another moneyman widely admired among his colleagues is West Germany’s Otmar Emminger, 54, who works as a director under Bundesbank President Karl Blessing. Emminger, who managed to attend five meetings last week, helped organize Working Party III, is a thoroughgoing internationalist who believes strongly in monetary cooperation be cause “we are all in the same boat.”

The Netherlands has two especially outstanding monetary experts: Nether lands Bank President Marius Holtrop, 62, a first-rate banker of conservative leanings who is now president of the Bank for International Settlements, and Treasurer General Emile van Lennep, 50, who heads both Working Party III and the Common Market Monetary-Committee. Says Van Lennep, a jonkheer whose title of nobility dates from the early 19th century: “With Working Party III, a new dimension has been added to international monetary discussions. Now we discuss the problems of countries with surpluses as well as those with deficits.”

Besides the Earl of Cromer, whose voice is powerful at home, Britain has two expert moneymen in Sir Denis Rickett, 57, the tall, urbane Second Secretary of the Treasury, and Maurice Parsons, 54, executive director of the Bank of England, who regularly attends the Paris Club meetings. France’s self-appointed chief moneyman is, of course, none other than Charles de Gaulle, whose strong views and pronouncements have overshadowed Bank of France Governor Jacques Brunet, 54, and to some extent Valery Giscard d’Estaing, 39, the bright and ambitious Finance Minister. France can also claim the most prestigious post in international monetary affairs: the managing directorship of the IMF. The post is held by Pierre-Paul Schweitzer, 52, the patrician-born, self-effacing former French civil servant who helped nurse the franc to its post-1958 stability.

Strong Loyalty. Despite their widely varying personalities and the differences in government policies, the men who manage the world’s money have in common a strong loyalty to the system and a determination to keep it running. Virtually none of them agree with Charles de Gaulle’s call for a return to the gold standard or want a rise in the price of gold. Despite De Gaulle, even the French have been remarkably consistent in going along with the spirit of international monetary cooperation. Some moneymen feared before last week’s meetings that this time might prove an exception, but the French readily agreed to the new aid for Britain. For all this loyalty, however, none of the international monetary men want to stand pat with the system as it is. Practically all of them concede the need for continued improvement—and some of them have made specific proposals for reform (TIME, April 16). They realize, after all, that the history of man’s monetary dealings, from the tortoise shell to the Eurodollar, prove that only change can assure continued vitality.