Doodling & Disequilibrium

One solid week of conferences and reports was too much for the 63 governors of the World Bank and Monetary Fund. By the time their first annual meeting droned to an end in Washington's Wardman Park Hotel, they were doodling, yawning and fanning themselves with the agenda.

But their boredom was a good sign. It meant that nobody was mad at anybody else--something rare in international finance. The British, who were shoved around by the U.S. at the Savannah conference (TIME, April 1) until they could barely see straight, actually went home happy.

Hugh Dalton, Great Britain's scholarly, well-groomed Chancellor of the Exchequer, had been chosen chairman of the joint boards of governors, to succeed U.S. Treasury Secretary John W. Snyder. London had been chosen for next year's meeting place.

Big Words. What gave the British their solidest satisfaction was a ruling of the Fund governors on the meaning of "fundamental disequilibrium," a gobbledygook economic cruncher imbedded deep in the Bretton Woods charter.

To forestall such competitive revaluations of currency as had brought chaos to international trade in the '30s, Fund members have pledged themselves not to make revaluations except to rectify fundamental disequilibriums in their economies. But what is a fundamental disequilibrium? Does it, asked the British, cover "unemployment of a chronic or persistent character" caused by an unfavorable export-import balance?

Yes, said the directors. In effect, this was a U.S. concession made to allay British fears over their vital export trade, which might easily be ruined, as it was in the late '20s, by pegging the pound too high. Even though revaluations of more than 10% would still require Fund approval, some economists groused that the Fund's chief club against the practice of "exporting unemployment" had now been whittled down to twig-size. But it was an easy concession for the U.S. to make. With wages and other costs skyrocketing, the U.S. might wake up any day and find its own dollar priced too high, might want to devalue it to boost exports.

Small Prospects. The soundness of the broad interpretation of "fundamental disequilibrium" would be a long time in the proving. Fund Managing Director Camille Gutt told the conference that stabilization of the world's currencies is "not immediately feasible." Values may be set on the more stable currencies "within the next few months." But for many of the war-sick economies of Europe and Asia a valuation was at least a year away.

World Bank President Eugene Meyer was cheerier. The bank was now open for business. A line was already forming at the loan window; for reconstruction and development projects, France wanted $500 million, Czechoslovakia $350 million, Poland $600 million, Chile $40 million. But the first loan would probably not be made for months.

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