TRADE REVIVAL.

Auckland Star, Volume LXVI, Issue 230, 28 September 1935, Page 4

TRADE REVIVAL.

THE EXCHANGE HURDLE

The League of Nations Secretariat has published an "Inquiry Into Clearing Agreements." Having conducted an exhaustive investigation of prevailing economic conditions, the economic and financial organisation of the League recommends the abolition of the system "as soon as possible." At the same time the admission is made that the clearing system may have helped in certain cases to prevent an even more serious collapse of trade than might otherwise have occurred as a result of introducing foreign exchange control.

Briefly, the report suggests that the best, though not the only, solution would be the complete abolition of exchange control facilitated by measures designed at once to promote permanent arrangements in regard to financial debts and a less restrictive commercial policy which would afford minimum guarantees for export. Should such complete abolition be impossible, commercial transactions should at any rate be freed from the obstacles placed in their way by exchange control.

Pending these measures of recovery, says the report, all proposals and all action designed to counteract, directly or indirectly, the grave drawbacks to international commercial relations resulting from the application of an artificial exchange rate in order to relieve the situation of the debtor country should be encouraged. -All measures reducing import restrictions and opening the way to the export of increasing quantities of goods from debtor States should also be encouraged—even in the interest of creditor countries with a sound currency—first, in order to ensure the payment of their exports, and, secondly, in order to promote general recovery. Measures designed to leave the conditions—including exchange conditions—under which imports and exports are effected to the initiative of the parties concerned should also bo encouraged. The more definite this tendency towards a return, to normality becomes, the sooner it will be possible to replace clearing agreements by less vexatious arrangements, such as transfer and payment agreements, and finally to abolish them.