International Monetary and Economic Conferences

The international monetary and economic conferences were a series of assemblies held between 1867 (first) and 1933 (last), unless the Bretton Woods Conference of 1944 is included. The first four conferences in the 19th century were held with a view to reaching agreement on matters relating to international relationships between national monetary systems. After World War I, the scope of the conferences was expanded to matters of financial stability, then trade and economics more broadly; the last two iterations, in 1927 and 1933, were branded World Economic Conference. The latter conference in London, however, ended in significant failure, and the formula of periodical international conferences was subsequently abandoned in favor of the permanent international financial institutions of the post-World War II order.

Background

The conferences were a manifestation of a decided tendency towards securing reforms by concerted international action. The disorganized state of the European currencies in the mid-19th century, which became more serious in consequence of the great expansion in trade and industry, came into notice through the great gold discoveries and their effect on the relative price of the two precious metals gold and silver. Both by its situation and its currency system, France was the first country to aim for the establishment of a currency union, in which French ideas and influence would be predominant. A preliminary step was the formation of the Latin Monetary Union, whereby the currencies of France, Italy, Belgium and Switzerland were – in respect to their gold and silver coins – unified.

Paris Conference (1867)

The first International Monetary Conference was held in 1867 in Paris. The Paris Exhibition of 1867 furnished the occasion for summoning the conference, to which the principal countries of the world sent representatives. The guiding spirit of this assembly was the French statesman Félix Esquirou de Parieu, who had originated the Latin Monetary Union. By his advice a scheme was approved recommending the adoption of the single gold standard, decimalisation of currencies, and the coordination of the various currencies with the French currency system.

Difficulties as to the mode of bringing these principles into practical operation were discussed, and full liberty had to be given to the several nations to carry out the proposals in the way that seemed best. The result proved that the obstacles were insurmountable, for example the British government could not obtain the assent of a Royal Commission to the pegging of the sovereign to the 25-franc piece, and the course of political events soon completely altered the relative position of the leading countries, even in their monetary relations. Germany and the United States reformed their currencies, without reference to any international considerations.

Paris Conference (1878)

The second International Monetary Conference opened on August 10, 1878, also in Paris. Leon Say was the president of the conference.

A great fall in the relative price of silver as measured in gold, in progress since 1873, had affected the relations of silver-using countries, and disturbed the level of prices. Indian interests as well as those of United States producers of silver suffered, while the management of all double-standard currencies became a task of increasing difficulty. The government of the United States invited the representatives of the leading powers to meet in Paris for the purpose of considering: first the desirability of retaining the unrestricted use of silver for coinage, and second the adoption of international bimetallism, by the acceptance of a ratio to be fixed by agreement.

Eleven nations sent delegates, Germany being the only great power unrepresented. After somewhat protracted discussion and the presentation of a large number of documents, the European states accepted the United States' proposition “that it is necessary to maintain in the world the monetary functions of silver,” but declined to bind the discretion of particular states as to the methods to be employed. They further declared it impossible to enter into an agreement for a common ratio. The conference, therefore, separated without any result being obtained.

Paris Conference (1881)

A third International Monetary Conference was opened on April 19, 1881, again in Paris. Negotiations lasted until July 1881, failing to achieve a cooperative outcome.

In consequence of the continuing fall in the value of silver, this conference was convened by the joint action of France and the United States. It was more influential than the second conference since Germany sent representatives, as did Spain, Portugal, Denmark and India. The characteristic of this conference was the greater strength of the support given to the bimetallic proposal by France and the United States, together with the opposition of the delegates of the smaller European countries, and the refusal of Germany to promise any cooperation. The inevitable consequence of this situation was the adjournment of the conference to obtain fresh instructions, which, however, were never furnished.

Brussels Conference (1892)

After several abortive attempts, the fourth (and last) of the 19th-century International Monetary Conferences was brought together at Brussels in November 1892 on the initiative of the United States. A full representation of the powers attended, but delay arose from the absence of definite proposals by the United States government. These, when they were presented, proved to be only a reaffirmation of the bimetallic policy, and showed no advance. The conference, therefore, proceeded to consider the plans of Levy, Baron de Rothschild and Sotbeer for the more extended use of silver. Such devices, being merely alleviations, failed to gain any effective support. Appeals to England and Germany to grant some concessions likewise failed. Thus, like its Paris forerunners, the Brussels conference adjourned, but never resumed its sittings.

After 1892, the currency problem passed into a new stage in which action was national rather than international, and the convening of monetary conferences was suspended until the aftermath of World War I.

Brussels Conference (1920)

Palace of the Nation in Brussels

The International Financial Conference was held from September 25 to October 8, 1920, also in Brussels, at the Palace of the Nation, and attended by 86 delegates from 39 countries. It was convened in the context of severe economic, social, financial and sanitary dislocation immediately following World War I, especially in Central and Eastern Europe. Its trigger was an international petition published in January 1920 and signed by prominent individuals that included Gustave Ador, Gustav Cassel, Robert Cecil, Herbert Hoover, J. P. Morgan Jr., Richard Vassar Vassar-Smith, Gerard Vissering, Paul Warburg, and other signatories from Denmark, France and Norway. Because of the general sense of impending failure, national governments decided that delegates would not officially represent them, so that the governments would not be overly tainted if the conference came to nothing. Even so, nearly three-quarters of the delegates were government officials, the rest being central and private bankers, while the other participants including some non-financial businesspeople and academics.

With hindsight, the conference was rather successful at defining a set of general principles for postwar stabilization around shared aspirations to fiscal discipline, free trade, and sound monetary policy led by independent central banks, a "standard of financial orthodoxy" on which the delegates reached a remarkably broad consensus. While the medium-term objectives were clear, the delegates also stated that the return to the gold standard should only be envisaged after proper financial stabilization and structural adjustment. These principles guided, in particular, the early activity of the Economic and Financial Organization (EFO) of the League of Nations that was being established at the same time. Jean Monnet, at the time the deputy secretary-general of the League, was instrumental in the preparation of the conference, which specifically called for the EFO to prepare a report on how the national would implement their recommendations. That report was duly published in 1922 and has been viewed as an early predecessor of surveillance reports issued decades later by the International Monetary Fund.

The conference was chaired by Swiss President Gustave Ador and relied on an on-site secretariat composed mainly of League staff and housed in the nearby Academy Palace. Discussions were held simultaneously in French and English. Technical materials for the conference included documents prepared by the staff of the League of Nations, including a reference volume on Currencies after the War and papers on themes such as Coal Statistics, Currency Statistics, Exchange Control, International Trade, or Public Finance. These were complemented by five papers commissioned by League Secretariat official Walter Layton from some of the most recognized economists of the era, namely Sweden's Gustav Cassel, the United Kingdom's Arthur Cecil Pigou, the Netherlands' Gijsbert Weijer Jan Bruins, France's Charles Gide, and Italy's Maffeo Pantaleoni.

Genoa Conference (1922)

Political leaders at the Genoa Conference

Main article: Genoa Conference (1922)

The Economic and Financial Conference was attended by representatives from 34 European countries in the ancient Palazzo San Giorgio of Genoa, form April 10 to May 19, 1922. Unlike the previous iteration in Brussels, it was attended by heads of government, which enhanced its authority but also the risks of politicization and grandstanding, at a time of contention on the unresolved issue of German war reparations. Germany and the Soviet Union predictably expressed loud dissent and stole the limelight by negotiating a separate bilateral agreement on the conference's sidelines, the Treaty of Rapallo.

Even so, the conference further cemented the policy consensus on principles formed at the Brussels gathering two years before. The EFO's report to the conference provided the first official articulation of the gold exchange standard and also tackled novel fields for international financial cooperation such as capital flight, tax evasion, and double taxation. The conference also found agreement on the principle that financial stability must come first before trade restrictions could be beneficially lifted, even though no convergence was achieved on trade liberalization measures as the EFO had recommended.

Geneva Conference (1927)

The World Economic Conference was held at the Calvinium in Geneva, from May 4 to 23, 1927, and attended by representatives of 46 member countries of the League as well as the United States, the Soviet Union, and a few other non-members. Initially suggested in 1925 by France's Louis Loucheur, it was the first of the series that was formally sponsored by the League, in the wake of the success of the EFO-led stabilization loans, particularly in Austria and Hungary, and of the Dawes Plan which had temporarily mitigated the challenge of German war reparations. Under the chairmanship of former Belgian Prime Minister Georges Theunis, the participants, altogether 194 national delegates and 157 expert advisers, were not formally representing the respective governments, as in Brussels in 1920 and unlike at Genoa in 1922. The scope was broad both geographically and thematically, as conveyed by the official name "World Economic Conference" mirroring Salter's preference for an international reach in line with the League's own, against Loucheur's preference for a European focus. Financial considerations remained central, as the delegates unanimously stated that "Financial reconstruction is the basis of economic reconstruction". Efforts to restrain cartels were debated but without success given the extent of differences between countries.

London Conference (1933)

Geological Museum building, London

Main article: London Economic Conference

The World Economic Conference of June 1933 was held in the new Geological Museum building in London, which had just been completed and in which the museum collection had not yet been installed. Like that of 1927 it was formally sponsored by the League, but its idea had originated outside of the League framework at the Lausanne Conference of 1932, and EFO staff had severe misgiving as they correctly anticipated it might end in disaster. In the event, it crystallized the impossibility of taking forward the orthodox agenda of the Brussels, Genoa and Geneva conferences under the new financial and political circumstances following the European banking crisis of 1931 and the takeover of Germany by the Nazi Party. The conference program piously invoked the aim of free international movement of "goods, services, and capital" but gave no mandate to the EFO or any other institution to enforce it, prompting U.S. president Franklin D. Roosevelt to lambast the London program as "the fetishes of so-called international bankers".

Epilogue: Bretton Woods Conference (1944)

The international monetary and economic conferences ultimately failed because they lacked a commitment device to ensure compliance with whatever principles were agreed. Furthermore, in the interwar era conferences, the most sensitive issues among great powers - namely, inter-allied war debts and World War I reparations were kept off the international conferences' agenda and addressed instead in a separate cycle of gatherings, including the Hague conference on reparations in 1929-1930, which led to the creation in 1930 of the Bank for International Settlements, and the Lausanne Conference of 1932. In this context, the Bretton Woods Conference of July 1944 can be viewed as both the last of the cycle started in 1867, as its official name of "United Nations Monetary and Financial Conference" indicated, and the start of a new era in which permanent international financial institutions would ensure a better governance of the global monetary, financial and economic system.

See also

• Tripartite Agreement of 1936
• London Agreement on German External Debts

References

• This article incorporates text from a publication now in the public domain: Charles Francis Bastable (1911). "Monetary Conferences". In Chisholm, Hugh (ed.). Encyclopædia Britannica (11th ed.). Cambridge University Press. This work in turn cites:

Russell, Henry B. (1898). International Monetary Conferences: Their Purposes, Character and Results With a Study of the Conditions of Currency and Finance in Europe and America During Intervening Periods , And In Their Relation to International Action. New York: Harper & Brothers Publishers – via Internet Archive..