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Multinational Corporate Speculation During the Exchange Crises of 1971 and 1973

  • Economics
  • Political Science


Multinational Corporate Speculation During the Exchange Crises of 1971 and 1973 By Benjamin Klein *, Los Angeles I. Introduction The international monetary world is now a very different place from what it was just a few years ago. The fixed exchange rate system established under the Bretton Woods agreement of 1943 was shattered by the exchange crises of 1971 and early 1973. It has been frequently claimed that these crises, and therefore the breakdown of the established monetary order, were produced to a large extent by the large multinational corporations. It is these corporations that have replaced in the popular mind and in the press the legendary "gnomes of Zurich" as the villains to be blamed for our international financial instability and as the ultimate controllers of our destiny. These corporations it is claimed can and do shift enormous sums of money across national borders and thereby precipitate exchange crises. No nation, nor even the entire international monetary system, can withstand these massive flows of funds and therefore these corporations can and do force unwanted changes in the values of individual currencies and in the entire structure of international monetary arrangements. The vast financial power of these firms, alleged to be largely beyond the control of governments, has therefore severly weakened our international monetary independence. The nations of the world, it is maintained, can no longer make policy decisions without considering the possible actions that will be taken by the managers of the large quantities of highly mobile money controlled by the large multinational corporations. This increasingly common view has been reinforced by the publication of a major study of the U. S. Tariff Commission on multinational firms ^ The relevant portion of the study (Chapter V, "Multinational Firms in International Finance," pp. 453-549) has been reported upon and quoted extensively in the press and excerpts have already been reprinted in und

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