President Reagan is prepared to endorse a study of a new "Bretton Woods" conference on global monetary and trade problems if the issue is raised, as expected, by French President Francois Mitterrand next week at the economic summit in Williamsburg.
A high administration official said that unless there is an objection from the other heads of state, Reagan is prepared to suggest that the finance ministers of the seven summit countries study the possibility of such a conference, which would look toward changing the international monetary system.
Bretton Woods is the small New Hampshire village that was the site of the 1944 conference that established fixed-exchange rate rules for the postwar international monetary system that lasted until 1971.
It also created the International Monetary Fund and the World Bank.
Until now, the United States, West Germany and Britain have sloughed off demands for a new conference as impractical. But many smaller countries see a conference as an opportunity to create new rules for trade and finance that will help the Third World.
New York banker Felix Rohatyn, who suggested a global conference more than a year ago, said in a telephone interview that "if they agree on a study of a 'Bretton Woods,' that single thing would make Williamsburg worthwhile. It would at least raise the question of whether we are following the best possible system."
A new global conference would closely mesh with recent efforts promoted by Treasury Secretary Donald T. Regan to emphasize the inter-relationships among trade, finance, and debt problems.
Regan, who along with Trade Ambassador William E. Brock recently organized a first-ever joint meeting of trade and finance ministers, began talking earlier this year about some new global approach, without calling it "Bretton Woods."
A major reason advanced for a new "Bretton Woods" is the growing burden of Third World debt. Poor countries now owe commercial banks and official agencies a debt variously estimated at between $500 billion and $700 billion, with little prospect of paying it back unless terms are eased.
According to an idea now being floated by the Reagan administration, there would be just the study--no commitment at Williamsburg actually to convene a "Bretton Woods" conference, or to an agenda of items to be discussed, except in the broadest possible terms. Yet, such a study could well be a first real step in a process leading up to a global conference on all the inter-related economic global issues.
Some experienced summit-watchers were skeptical yesterday that a "study" would be useful.
But others argued that a study would be useful, if Mitterrand accepts it, as a way of defusing French-American tensions. Moreover, it was suggested, once it gets rolling, a study might actually produce a positive result. "I think Mitterrand will buy it. It's the best he can get," Rohatyn said.
The prospective Williamsburg debate over a "Bretton Woods" conference looms as the one remaining potential confrontation at a summit for which advance preparation has swept most other contentious matters, such as East-West trade, under the rug.
Mitterrand on May 9 delivered to foreign and finance ministers assembled in Paris a surprise demand for "a new Bretton Woods conference," without which he said there is "no salvation" for the international economic system.
He implied that if he didn't get his way, he might take France out of the summit process after Williamsburg. Since then, Mitterrand has fired additional salvos at the United States, citing high interest rates here and an overvalued dollar as principal causes of France's current economic troubles.
The 1944 Bretton Woods conference linked the world's major paper currencies together by tying them to gold, priced at $35 an ounce. This system of "fixed" exchange rates began to break down in the late 1960s because of inflation.
It was abandoned in 1971, when President Nixon broke the link between the dollar and gold. By 1973, the major nations had agreed on a much looser arrangement under which exchange rates fluctuate according to supply and demand in exchange markets.
Under the floating system, the French franc, reflecting the weak French economy, has lost nearly half of its value against the dollar in international markets.
The Reagan administration, which defends the floating rate system, is not interested in going back to fixed rates. But there has been increasing pressure from others for some new and high-level discussion of international monetary problems.
"We all want more stable currencies," said a Japanese official yesterday, "but nobody knows how to get there."
There have been particularly wide gyrations in the yen-dollar relationship, causing difficulties for businessmen in both countries. As a result, Japanese Prime Minister Yasuhiro Nakasone reportedly is now also an advocate of some new global economic conference.