FINANCIAL TALKS

Ashburton Guardian, Volume 66, Issue 47, 5 December 1945, Page 3

FINANCIAL TALKS

CONFLICTING REPORTS NO ENTHUSIASM IN BRITAIN (Special Correspondent N.Z.P.A.) (Rec. 11.30 a.m.) LONDON, Dec. 4. Britain is awaiting the BritishAmerican financial agreement without any degree of enthusiasm. During the long weeks when the negotiations were proceeding in Washington, and when conflicting reports that agreement had or had not been reached, comment was largely withheld here. Although it is still regarded as premature, some comment is being made on information from Washington published by the newspapers. This is that it is proposed that .the United States shall place at Britain’s disposal credit of between £900,000,000 and £1,000,000,000. This would he repaid with interest of 2 per cent in 50 annual instalments beginning in 1950, with provision that in years when Britain’s balance of trade is shown by impartial accounting to be below the given figure, interest would be waived. It is further proposed that the United States shall lend Britain an additional £125,000,000 with which to buy lend-lease supplies that were in process of being transferred from the United States to Britain when lendlease ended. Historic Debate

Publication of the terms of the proposed loan —and it will continue to be a “proposed loan” until it is ratified by Congress—will be the signal for the start both in Britain and the United States of one of the historic post-war debates. A whole world system, it is remarked, hangs upon the success or failure of the proposals which British and American financial and economic experts hammered out during 12 weeks of negotiations in Washington. Apparently there is still some doubt whether the British Cabinet will agree to the American proposals, one of the chief difficulties being the question of the scaling down of sterling balances owed to Empire countries. If final agreement is not reached, then Britain will face the post-war world alone with the Empire. If the proposals: are accepted by Britain, then it is expected that a bill ratifying the Bretton Woods agreement will be presented to Parliament for immediate action. But there is every indication that there will be much objection to that on the. grounds that Britain will be tied too closely to the American financial machine. Discussing the reported proposals, the “Manchester Guardian” says: “The principal conditions can be guessed. “(1) Britain is to make ah attempt to obtain a drastic reduction of £3,500,000,000 balances which she accumulated as a result of war expenditure to the credit of many Empire and foreign countries. “(2) The Bretton Woods scheme is to be ratified before payment. “(3) A world trade ‘charter’ under which both American tariffs and Britisli Empire preference duties are to be lowered must be accepted in principle and laid before an international conference next year.” The paper adds: “America is pressing for Britain freely to convert wartime balances into all other currencies. The cost of yielding may be the end of sterling as international currency. As for Bretton Woods, the critical point is that a pledge to abandon foreign exchange controls within five years makes us dependent on the future wisdom and stability of the American people. We should have preferred to await the outcome of the world trade conference for some proof that they are willing to make large genuine cuts in their import tariff, which is the world’s greatest trade obstacle, before we trusted ourselves to the uncertain tide. It is no use pretending that recent events have not shaken our faith a little. On the whole however, we shall have to accept this settlement, because we cannot afford to drift into trade conflict with the United States.”

Return to Gold Standard. Christopher Hollis, M.P.,' in an article in the “Evening Standard” says: “Bretton Woods means a return to the gold standard under which Britain would be compelled to return to gold, and render itself liable to sanctions from all the world, including the Dominions, if it should even subsequently leave gold. It would return to gold when the United States holds 23 billion of the 28 billion dollars of gold in the world, and when the problem of finding goods services which are acceptable on the American market has by no means been solved.” Two unexpected issues are holding up the final settlement of the Washington loan negotiations, says the Press Association’s diplomatic correspondent. The issues raised by the Americans are regarded as sufficiently substantial to jeopardise .the talks and completely wreck the chances of agreeemnt if the Americans are adamant. The negotiations therefore are still in the balance, but London political circles are optimistic that the difficulties will be overcome, although perhaps they are not so optimistic as reports from America suggest. The British Cabinet’s attitude and comments on the new position reached Washington to-day, and next move is with the Americans.