Report on Bretton Woods

At Bretton Woods last summer, Government delegates from 44 nations drew international currency and banking plans to promote postwar prosperity, while top flight U.S. bankers sat on the sidelines.

When such notable figures as Winthrop Aldrich and Dr. B. M. Anderson sniped at the plans, it looked as if the bankers would have no more than scant praise for any part of the Bretton Woods doings.

But this week the American Bankers Association, in an official report, went about halfway to endorse the work of the Government delegates.

The bankers found "much that is desirable in the objectives and in certain features" of the Bretton Woods plans.

The A.B.A. report also agreed with Washington spokesmen that "total rejection of the Bretton Woods plans might delay and endanger future progress toward international understanding in this and other fields." But the bankers did some rejecting themselves. To one half of the plan -- the Monetary Fund -- they applied the strongest word of condemnation in their language: unsound. Then they presented, as an alternative, their own proposals for attaining Bretton Woods's far-reaching objectives:

P: The International Bank for Reconstruction and Development (to make or guarantee long-term loans) should be adopted (with some changes).

P: The International Monetary Fund (for exchange stabilization and expansion of international trade) should be scrapped.

The bankers would give its stabilization functions to the Bank. The Bank would then arrange stabilization agreements between member countries, and make stabilization loans based on individual needs and credit standing.

P: The existing U.S. Export-Import Bank could have its lending power raised from $700 million to $2 billion to supplement the lending activities of the proposed Bank for Reconstruction.

P: The Johnson Act and other measures now barring private American loans to certain foreign countries should be repealed.

In general, the Fund was bad, said A.B.A., because it introduces lending methods "contrary to accepted credit principles." But when the A.B.A. technicians arrived at the Bretton Woods Bank, they found themselves on what seemed to be familiar and reassuring ground. With satisfaction, the report cited three of the Bank's lending principles:

1) loans must be for specific purposes;

2) loans must offer promise of repayment;

3) the lender has a veto power covering all major transactions.

The Chairman. The A.B.A. report was the work of three banking associations with titles as impressive as their memberships. But the philosophy of the critique is largely that of Missouri-born Wilson Linn Hemingway, 64, president of the Mercantile-Commerce Bank & Trust Co. of St. Louis.

As 1942 president of the A.B.A., Hemingway advised bankers to think in world terms. Said he: "How can the world be restored except by use of money and credit in a way that has never been dreamed of before--generously and wisely. As a great creditor, the national responsibility of the U.S. is to render this service to mankind."

How it renders it is another question. Banker Hemingway and friends hold that it must be only through what they consider sound banking practice.

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