The Exchange Stabilization Fund (ESF) is a branch of the United States Treasury Department which manages a portfolio of domestic and foreign currencies for the purpose of foreign exchange intervention. This particular arrangement (as opposed to having the central bank intervene directly) allows the US government to influence the exchange rate without affecting domestic money supply. The United States Department of the Treasury is a Cabinet department, a treasury, of the United States government established by an Act of U.S. Congress in 1789 to manage the revenue of the United States government. ... The examples and perspective in this article or section may not represent a worldwide view. ...

Background

The U.S. Exchange Stabilization Fund was established at the Treasury Department by a provision in the Gold Reserve Act of 31 January 1934. The fund began operations in April 1934, financed by $2 billion of the $2.8 billion paper profit the government realized from raising the price of gold to $35 an ounce from $20.67. The Act authorized the ESF to use its capital to deal in gold and foreign exchange in order to stabilize the exchange value of the dollar. The ESF as originally designed was a creature of the Executive Branch not subject to legislative oversight. This page may be a duplicate of Executive Order 6102. ...

The Gold Reserve Act authorized the ESF to use such assets as were not needed for exchange market stabilization to deal in government securities. The Fund had no statutory authority, however, to engage in other activities that it began to undertake. The principal such extraneous activity it devoted itself to was lending dollars to politically favored governments. Government debt (public debt, national debt) is money owed by government, at any level (central government, federal government, national government, municipal government, local government, regional government). ...

In 1938-40, Director of the Division of Monetary Research Harry Dexter White, worked on a proposal for loans to Latin America and participated in plans for an Inter-American Bank, which did not materialize. The plan for an Inter-American Bank, however, inspired White’s first draft of the subsequent plans for the International Monetary Fund and the World Bank that White prepared in 1941 at Secretary of the U.S. Treasury Henry Morgenthau’s direction. Harry Dexter White (left) and John Maynard Keynes (right) at the Bretton Woods Conference Harry Dexter White (October 1892–August 16, 1948) was an American economist and senior U.S. Treasury department official. ... The logo of the International Monetary Fund (IMF) The International Monetary Fund (IMF) is an international organization that oversees the global financial system by monitoring exchange rates and balance of payments, as well as offering technical and financial assistance when asked. ... Logo of the World Bank The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means... The United States Secretary of the Treasury is the finance minister of the Federal Government of the United States. ... Henry Morgenthau Jr. ...

The selection of countries to which the ESF extended loans was obviously a political decision, made by the Treasury. Harry White’s memoranda supporting loans to various countries included Nationalist China, Mexico, other Latin American countries, and Russia The Chinese Nationalist Party (Traditional Chinese: 中國國民黨; Simplified Chinese: 中国国民党; Hanyu Pinyin: ; Wade-Giles: Chung-kuo Kuo-min-tang; Tongyong Pinyin: Jhōngguó GuómíndÇŽng), commonly known as the Kuomintang (KMT), is a conservative political party currently active in the Republic of China (ROC) on Taiwan. ...

External links

• The ESF Website