World Currency Cop

PER JACOBSSON

THE currency cop of the world is a massively built man (6 ft. 1 in., 220 lbs.) with the shoulders of a riot-squad member and the broad, ranging mind of Sherlock Holmes. His name: Per Jacobsson (pronounced yah-kub-son). His job: managing director of the International Monetary Fund. Jacobsson is an expert at pleading, cajoling, and onoccasion forcing nations to follow wise economic policies. Thanks to the Fund --and booming production in Europe --Jacobsson reported last week that "Europe's monetary troubles have been successfully overcome, from a whole series of emergencies, on to stability, to external convertibility." Now, says he, the Fund has an even bigger job ahead. It must spread monetary law and order to the rest of the world, particularly to underdeveloped countries, which are suffering from fiscal foolishness and gyrating currencies. To help him, the 68-country Fund last week agreed to increase national contributions, up the Fund's bank roll $9.1 billion to $15 billion.

Established in 1944 to shore up the currencies of its members, the Monetary Fund long had negligible influence on the world's currencies ; the job of reconstruction needed before currency stabilization proved too big. But by 1956, the year Jacobsson took over, the Fund got its first big chance to show what it could do when Egypt seized the Suez Canal, then blocked oil, food and other vital supplies from Europe, and touched off a disastrous run on the British pound.

The Fund quickly lent Britain $561.5 million. This, plus stern measures to cut spending, enabled Britain to stabilize its currency so successfully that it has al ready paid back $200 million of the loan.

AN even more heroic rescue was required in 1 958 for France. Weakened by the wars in Algeria and Viet Nam and poor fiscal management, France was close to financial collapse when Jacobsson hustled to the rescue. He arranged a package of $655 million in credit from the Fund, the European Payments Union and the U.S. With the loan went some detailed recommendations on how France could put its fiscal house in order. It did so well that after De Gaulle came to power he was able to devalue and stabilize the franc. At other times, Jacobsson rescued the Danes, Dutch, Japanese, Turks, Spanish, Peruvians, and Argentines.

Although he spends his time helping to manage the world's currencies, Jacobsson is still at heart an oldfashioned, classical economist who believes in free rather than planned economies. Born in 1894 in the village of Tanumon Sweden's west coast, he studied at the University of Uppsala. Says he: "I got my training in economics before 1914--before economics was turned upside down." He also got a lot of it from doing. From 1920 to 1928 he was a League of Nations economics consultant, trying to make the economies of eastern Europe work. After two years in business in Sweden, he returned to Basel in 1931 as head economist for the Bank of International Settlements, from which he was chosen to head the Fund.

OUT of it all Jacobsson reached some definite convictions. He dislikes all direct government controls over business, favors only indirect measures such as regulation of credit and tax incentives. At the same time, he wants nothing of the old gold standard, beloved by many classicists who would like the world to adopt it again. He distrusts the arbitrary external "discipline" of the gold standard. It is far better, he believes, for countries to discipline themselves. He is especially pleased that many Fund member-borrowers who would deeply resent any fiscal criticism from such stable-currency countries as the U.S., Britain and West Germany cheerfully accept the fatherly advice and sometimes a fatherly spanking from "their" Fund.

For relaxation, Jacobsson reads history and mysteries, plays golf, and has found time to write three standard works on economics plus two fast-paced detective novels (nom de plume: Peter Old-feld). He and his Irish-born wife have three daughters: a Minneapolis housewife, an economist in Basel, and the third married to Dr. Roger Bannister, the British four-minute miler.

As for the challenge of the underdeveloped countries, Jacobsson does not pretend to know everything they need. But he is certain of some things they do not need. He opposes the U.S. plan to set up an International Development Association (IDA) to lend soft currencies (TIME, Aug. 10), since he feels that some nations do not need a lot of the aid they are now getting. He has seen far too many instances when too much foreign money poured in too fast has simply resulted in waste and inflation. The world would do better, he says, to worry less about the need for more capital and more about wiser application of capital already being supplied.

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