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Schweitzer lobbied skillfully,.but the muscular push for creation of the SDRs was supplied by U.S. Treasury Secretary Henry Fowler (TIME cover, Sept. 10, 1965). Almost from the day he took office in 1965, Fowler decided that reform of the monetary system was the major task facing free-world finance ministers. Accordingly, he became a vigorous missionary among industrial nations, lining up converts on flying trips abroad.
This week, Fowler, as well as Schweitzer, is scheduled to fly to Stockholm, where IMF's 20 directors and Finance Ministers from the ten leading industrial powers are to try for a final agreement on the SDR pact. If, as expected, De Gaulle finds himself without enough support to continue stalling things, the document will soon reach member countries for ratification. If all goes well, the SDR plan could be ready to go into operation early next year. Yet Schweitzer warns: "Before the SDRs are activated, the U.S. must drastically improve its payments deficit. The SDRs are no miraculous cure for the monetary problems of the world. The cure for these ills is the kind of discipline the British have just shown."
Last Chance. The Federal Reserve and U.S. Treasury have certainly promised the six other members of the gold pool something close to that. "This is our last chance to bring our fiscal affairs under control," warns Allan Sproul, retired president of the New York Federal Reserve Bank. That brings the argument back to those election-year bugaboos, higher taxes and less spending. Despite the massive size of the federal budget, most economists agree that large cuts will mean not just trimming fat but getting at the lean, drastically affecting some programs. There are many theories and arguments on what should be cut. One detailed example is the proposal of former Treasury Under Secretary Roosa, now a Wall Street investment banker, who would slash $1 billion each from farm subsidies and space, $2 billion from harbors, rivers and highways. Many businessmen and bankers would jettison the $4.5 billion farm program in toto, however unlikely that may be because of political considerations.
As the nation revamps its economic priorities, some broader goals should change as well. How, for instance, can full employment, stable prices, sustained economic expansion and balance of payments equilibrium all be maintained? At any given moment, attaining any one of those four is likely to conflict with the other three. Which is most important? Full employment and expansion have had a long run, but at a rising cost in inflation; payments have been in balance only once (1957) in 18 years. Since that imbalance is the key plague of the monetary system, righting it must have high priority. "There is nothing fundamentally wrong with the system," says Pierre-Paul Schweitzer, "but no system can cope with the size of the U.S. payments deficit that got out of control in late 1967."
Gold's new split-level house is beginning to serve as a medium-term solution for the Western world's monetary troubles. For the longer run, the world is moving toward a money system that resembles an international bank much like the Federal Reserve System, with close coordination of money and policy.