The purpose of this essay is to consider some of the central issues of international monetary policy in the light both of pre-war experience and of the post-war plans concerning foreign exchange and finance. For the facts of recent history and the conclusions to which they point, our principal source is a League of Nations report entitled International Currency Experience: Lessons of the Inter-War Period. For the post-war plans, reference will be made to the agreements adopted at the Bretton Woods Conference.

Our discussion is concerned with relations between independent national currencies. It may be well to state at the outset that the system of relations here envisaged is not of the gold-standard type if that means immutable exchange rates with domestic monetary and economic policies subordinated to the balance of payments. Changes in exchange rates are accepted as a legitimate method of adjustment, and the conditions in which such changes are appropriate will be our first topic (Sections I and II).We shall then comment on “cyclical” fluctuations in the balance of payments for which the method of exchange adjustment is unsuitable (Section III); on the importance of foreign investment for the successful functioning of the international currency mechanism (Section IV); and on the interrelationship of monetary, commercial, and employment policies (Section V). One of our main preoccupations will be to determine the international monetary framework compatible, on the one hand, with the pursuit of national policies for the maintenance of employment and, on the other, with the fullest possible development of international trade.