The U. S. Tries Again

After three months of conferences with 28 nations, the U.S. last week presented its revised, still tentative plan for postwar currency stabilization. Instead of easing, the new plan reinforces the fundamental point of the plan to which many a United Nation has objected: the U.S. insistence that gold play the dominant part in the operation of a world stabilization fund.

When British Economist John Maynard Keynes presented his proposal for a world bank (TIME, April 15), the U.S. Treasury's hard-working economist, Dr. Harry D. White, was ready with a tentative U.S. proposal (TIME, April 19).

Give & Take. Chief difference in the plans lay in the role gold should play. Keynes would relegate it to a secondary role, letting prewar world trade fix the shares (and voting power) of each nation in the bank. Dr. White would base each nation's credit and voting power in the $5,000,000,000 stabilization fund at least partly on the amount of gold that each contributed.

Chief revisions are:

>The U.S. would relinquish the power (in the first plan) to veto a change in the value of the currency of any nation participating in the fund. The revised plan requires only a three-fourths vote (instead of four-fifths) to alter exchange rates, and the U.S.'s vote could not exceed 20%.

>Each participating nation would be required to pay 50% of its share to the central fund in gold (the balance in currency or securities) instead of 25% as under the original plan. It would also be required to pay its share in full at the outset, instead of making down payment of 50%. Thus the revised plan quadruples the amount of gold each country would have to contribute.

Defect and Correction. Dropping the veto power was a graceful bow by the U.S. to the wishes of other United Nations, which disliked U.S. control of world currencies. Upping of gold requirements was a hardfisted move to correct a defect in the original plan and safeguard the central fund against loss of its gold reserve.

As the fund would be required to pay out gold to any creditor nation demanding it, a heavy run on the central fund could conceivably exhaust the reserve, make the fund unable to meet its gold commitments.

But the price of such protection might prove too high, in terms of success of the plan. Under the new gold requirements, a dead-broke, gold-barren postwar nation, such as a reconstituted Austria or Czecho-Slovakia, would find it impossible to participate in the plan, unless the U.S. lends them the necessary gold, in effect underwrites the fund from its $22 billion hoard.

For & Against. For this reason, Britain strenuously opposed upping of the gold percentages. But Dr. White and dour Treasury Secretary Henry Morgenthau, went ahead anyway. They intend to keep right on going ahead, plumping for their plan before a conference of Federal Reserve Bank officials in Chicago this week, before Congressional committees. Both feel that there are no insurmountable differences between the U.S. and British viewpoints. But the revisions seem to push the U.S. and Britain farther apart.

Many a financial wiseacre, pondering the gold changes which, in effect, quadrupled the size of the one great obstacle, wondered how Dr. White and Secretary Morgenthau planned to hop over it.

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