Money
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In Washington late this month, 2,000 men from 102 countries will gather to discuss what is probably the world's most fascinating, most widely, talked about—and most misunderstood—subject: money. Ever since the ancient Lydians set up the first effective monetary system, money has been at the heart of men's lives and business, the fuel of their ambitions, the symbol of wealth and power in almost every society. It has not only made possible but helped to create the vast and complicated structure of modern civilization. Adam Smith called it "the great instrument of commerce," but few who have tried to define it over the years did better than the poet Bion 2,100 years ago: "Money is the sinews of affairs."
As they prepare for their annual meeting in Washington, the men who make up the powerful International Monetary Fund—which aims to stimulate world financial cooperation and prevent monetary crises—are aware that those sinews are more sorely strained than at any time in the postwar period. Perhaps more than ever before, money has become a subject of worldwide concern, debate, even bitterness. Reason: the free world faces the grave possibility of a shortage of money to use in financing its rapidly growing international trade and investment, partly because it has leaned too heavily on a couple of powerful currencies. The result is the loudest clamor in 20 years for a reform and updating of the world's monetary system—that motley of treaties and gentlemanly agreements through which the major nations have agreed to finance their commerce with one another.
Bickering & Complaining. No one need look far to see that the world's money system is not working smoothly. The affluent nations of the West are bickering with each other over the system's inadequacies and how they should be corrected; the poor nations are complaining that the system works to their disadvantage. Britain's money problems—the pound has faced crisis after crisis—have forced the country into a recession. Charles de Gaulle has hit at the U.S. by exchanging for gold the dollars that France has acquired, thus helping to force the world's richest nation to cut back its spending abroad to stem the outflow of dollars. Such terms as gold outflow and balance of payments have become a part of daily language, a subject for the editorialists and cartoonists; Al Capp's current Li'I Abner strip is based on a scheme to solve the U.S. balance-of-payments problem.
One basic trouble is that the world has no truly international currency to bankroll its expanding volume of commerce. In order to support most trade and investment, it uses several substitutes: gold and two so-called "reserve" currencies, U.S. dollars and British pounds. But world trade is growing so fast that the reserves cannot keep up with it: since 1959, free world reserves have expanded only from $57 billion to $68 billion, while exports have risen from $101 billion to $156 billion.
Reserve Primacy. In the rising chorus of voices for reform—joined last week by the IMF and Federal Reserve Board Chairman William McChesney Martin Jr.—the strongest and most influential belongs to the chief financial strategist of the monetary world's most powerful member: Henry Hamill Fowler, 57, the 58th Secretary of the