Money: Breaking the Ice

Everyone wanted something as the world’s money managers gathered in Washington last week for the annual meeting of the International Monetary Fund. African financial chiefs approached the IMF with requests for more support. Asian delegates asked the U.S. Government to underwrite the proposed Asian development bank. Among the 2,000 moneymen from 103 nations who crowded into the Sheraton Park Hotel, such bankers as the U.S.’s David Rockefeller and Robert Roosa, Britain’s Viscount Harcourt and Italy’s Ettore Lolli swapped shop talk and negotiated private deals.

The U.S., which usually finds itself in the role of the giver at such sessions, this time wanted something itself. It wanted what President Johnson called, in his address to the powerful members of the IMF, “a new and imaginative look” at the subject of world money reform.

Some Digs. Not everyone was eager to oblige. The U.S. and Britain urged immediate action to head off the danger of a deflationary shortage of international monetary reserves, but orthodox bankers from the Continent demurred. They argued that, first of all, the U.S. and Britain must bring their balance of payments in order.* Calling for monetary discipline,” Germany’s Bundesbank president, Karl Blessing surprisingly supported the French’ “What the world needs,” said he, “is not so much the general reform of the international monetary system as an improvement of national policies of adjustment. If all leading countries were to aim at balance-of-payments equilibrium the need for reserves would be small.”

Despite these digs, the Europeans generally moved toward accepting Treasury Secretary Henry Fowler’s call for urgent talks on reform, which perhaps will lead to creation of an international currency to supplement dollars, pounds and gold (TIME cover, Sept. 10). The rich nations in the so-called Group of Ten instructed their Deputy Finance Ministers to start negotiating now on “an intensified basis.” Though the continentals had hoped to restrict the talks to the clubby Ten, they now seem to agree that, at some time in the near future, the 30-nation IMF executive board should be brought in. Even those agreements, while not earthshaking, would have seemed impossible just two months ago—before Joe Fowler went to Europe to try his friendly persuasion.

Net Gain. Fowler forecast last week that progress toward change will be achieved by next spring, and that the talks will be widened to include the smaller IMF members outside the Ten. That estimate is optimistic, but even France’s Finance Minister Valéry Giscard D’Estaing admitted: “The ice floe on reform has at last broken. People are now ready to talk business.” Perhaps it was symbolic that, in their off-hours Fowler and Federal Reserve Chairman William McChesney Martin played a brisk match of tennis against Giscard and his deputy, André de Lattre. Score: 6-3, 6-3, for the Americans.

* Britain reported last week that it ran a payments surplus of $78 million during the second quarter, its first surplus in two years, but is likely to register a deficit in the usually adverse third quarter. The U.S., after running in surplus during the second quarter, expects to dip back into deficit in the third, but President Johnson said last week that the Government is prepared to take “further action” to close the gap, probably by extending and tightening the so-called voluntary restrictions on loans and investments abroad.