Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Collection: Paul A. Volcker Papers Call Number: MC279 Box 25 Preferred Citation: Bretton Woods, 1984-1985; Paul A. Volcker Papers, Box 25; Public Policy Papers, Department of Rare Books and Special Collections, Princeton University Library Find it online: http://findingaids.princeton.edu/collections/MC279/c150 and https://fraser.stlouisfed.org/archival/5297 The digitization ofthis collection was made possible by the Federal Reserve Bank of St. Louis. From the collections of the Seeley G. Mudd Manuscript Library, Princeton, NJ These documents can only be used for educational and research purposes ("fair use") as per United States copyright law. By accessing this file, all users agree that their use falls within fair use as defined by the copyright law of the United States. 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I take it your purpose is not blind support for everything the Bretton Woods institutions are doing, but rather a simple conviction they will remain important indeed indispensable \,L„ v.) .0 Noro, .`L to world growth and stability. .-A/',0/1- co ."„\si" There is no doubt in my mind that each of these institutions -- the IMF and World BAnk -- face conditions )17cy aid_ 2-- and circumstances that justify review. Ih'irra-k4 K.(:(4?#;e e Pafazt„ic e I well remember , in the early 1970' s with the 67 breakdown of fixed exchange rates, the "crepe hanging" at the IMF -- "Bretton Woods was dead." -- At the same time, the role of the Bank seemed clear, and it launched a large expansion. II. Now, 10 years later, how times have changed! -- IMF took the lead in dealing with the threat to growth and stability implicit in the international debt crisis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -2- -- IMF took lead in dealing with the threat to growth and stability implicit in the international debt crisis. It had money and policy prescriptions. Most of all, it had the respect and competence needed to play a unique, central coordinating role in a complicated effort involving many parties, public and private. Instead of withering away, the Fund turned out to be the right organization, at the right time, in the right place -- even though none of it could have been foreseen. -- By its nature, the World Bank was less centrally involved in "phase I" of the debt problem -- crisis management. (There has, of course, been adaptation and assitance.) Now, as we move into stage II, roles may change again -- How can these institutions support self-sustaining growth, with less private capital from abroad? Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -3- How can they contribute to conditions -- beyond emergency programs -- to facilitate flow of private capital? More complex and less exciting -- it is for Ci/.,-• long pull. t ;e • c' 7.„4- May also be more important, and involve greater changes in accustomed way to do business and to manage economies. IV. We tend these days, when we think of these institutions to think of international debt problem. Could look quite different a few years from now. Maybe -- will be -- other areas where we have to draw on strength of these unique, international institutions. „ cif y Gt ctii` ;"( d/ , / 7 4- International monetary system not a model of perfection! No have policies of industrial countries! Particular issues of "non-debt" development. V. None of this has political support and attention needed. Welcome your efforts. 1A/tow/1 Ata2W _citt4aa44 ,r&vaci(32 to;t:trA 9 aitv/, (hid' 6w1 Ata Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis THE B R ETTON WOODS COMMITTEE 1616 H STREET, N. W., SUITE 400 WASHINGTON, D. C. 20006 TELEPHONE (202) emice,31,11' TELEX 248924 CIG December 13, 1984 The Honorable Paul A. Volcker Chairman Board of Governors of the Federal Reserve System Constitution Avenue and 21st St. N.W. Washington, D.C. 20551 Dear Chairman Volcker: On behalf of the founding members of the Bretton Woods Committee, we want to bring you up to date on our progress in organizing and to invite you to the Committee's first meeting on January 22. Our concept was born out of the near defeat in the House of Representatives over a year ago of the Administration's IMF quota increase request. The appearance for the first time of organized and heavily funded opposition to IMF and development bank funding added impetus to our effort. The enclosed prospectus explains in detail what we propose to do. We have invited over two hundred prominent Americans -- company chief executives, retired political leaders, union and public interest group officials -- to become members of the Committee. The Committee will analyse policy issues regarding the World Bank and Fund and the issues surrounding them, and share its conclusions with the executive and legislative branches of the U.S. government and the American publ'c. We envision mounting a public education program on the work of these institutions. While we come to this effort with an understanding of the important role these institutions have played over the last four decades, we remain informed and unbiased observers of these institutions, with no direct relationship -- financial or philo- sophical -- to them. We will reach our own conclusions which may or may not differ from those of their leaders. We have raised sufficient seed money to see us through the our organizational phase from companies, foundations, and private individuals. Ultimately, the Committee will rely on smaller annual contributions from our members. Former Presidents Gerald Ford and Jimmy Carter will be honorary co-chairmen. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis IP A •• We have scheduled the first meeting of the Committee January 22, 1985, from 11:00 a.m. to 4:00 p.m. at the Regent 'Hotel in Washington, D.C. During our luncheon, we will hear from Mananging Director Jacques De Larosiere of the IMF and President Tom Clausen of the World Bank. We would be honored if you would join us for the lunch and the remarks of our speakers. Would you be kind enough to have someone on your staff let us know if you will be able to attend. We look forward to remaining in close touch with you in this endeavor. With best regards. Sincerely yours, [-IAVLA.f M Henry Fowler Charls E. Walker Co-Chairman Co-Chairman Enclosures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis St THE BRETTON WOODS COMMITTEE 1616 H STREET, N. W., SUITE 400 WASHINGTON, D. C. 20006 TELEPHONE (202) 842-3711 TELEX 248924 C1G PROSPECTUS The health of the international financial system continues to be uncertain. While the threat of extensive Latin American defaults seems to have been averted, the system is still at risk and economic growth remains low. No quick or easy solutions are visible on the horizon. It is not only developing countries that feel the pressure. In an economically interdependent world, the United States suffers substantial economic injury when developing country markets shrink or are closed. The net flow of capital to developing countries shows signs of declining again this year. This not only creates instability and breeds unrest in borrowing countries, but in the end directly reduces U.S. exports, jobs, and profits. The United States has a strong interest in seeing developing countries grow at a faster rate than now seems likely. Capital flows, along with effective domestic adjustment policies in these . countries, will be the key to achieving that goal. Increased capital flows to developing countries, as well as more effective adjustment policies by more countries, will be needed if the sit- uation is not to worsen. Continuing to rely solely on a strategy of damage-limitation may result in increased economic and social turmoil and narrowing U.S.