INTERNATIONAL FINANCE

Press, Volume LXXXII, Issue 24814, 2 March 1946, Page 2

INTERNATIONAL FINANCE

BRETTON WOODS PROPOSALS ADDRESS TO ACCOUNTANTS’ i CONVENTION

Economic and financial problems sometimes yielded to the right spiritual approach, and a spirit of co- . operation and willingness to sacrifice; would be necessary ior the success of the proposals of the Bretton Woods I conference on international finance, I said Dr. G. C. Billing, senior lecturer in economics at the University of Otago, when he gave an address to the victory convention of the New Zealand Society of Accountants. Steps to improve society were more | likely to be sure and steadfast if they j were made within a national state > than if they depended on co-operation | in the sphere of international rela-1 tions, said Dr. Billing, but a brilliant exception to the generalisation was provided by the International Labour Organisation, which had lasted between the wars and the recent war and continued its work towards bringing higher and more standard:'od conditions of employment throughout tne world. Compared with that organisation’s steady progress, the picture provided by attempts at economic and financial co-operation, except during military struggles, had been bleak, and the United Nations Organisation was not lively to succeed more than its predecessor unless some definite machinery for co-operation in tne financial and economic fields was built i into the structure at present being erected. “It could hardly be said that any of the most significant forward steps in 20 years following the 1914-18 war m international finance was made with complete assurance,” he continued, “and some appear to have been constructive, ana others of more doubtful value.”

The world had changed so much that the old international gold standard was not workable and had been widely abandoned. A successful system could hardly be envisaged until further rules were accepted, one of the chief of which was that to maintain anything like international stability creditor countries with a foreign surplus must be willing to invest their surplus abroad and take as imports goods which borrowing countries could furnish as interest payments. International Fund The projected situation for an international monetary fund presupposed certain facts, said Dr. Billing. Britain would no longer be a creditor country, but so much of the world’s trade was done through London that the importance of that centre, would be maintained. The United States, and to a lesser extent Canada, would probably be the only large countries with a foreign surplus available for loans, and the post-war system could not function unless those countries were prepared to make the loans and accept imports as interest payments. .Otherwise deficit countries who were short of dollars would again be forced to the gloomy resource of bi-lateralism and restriction. It was of great importance that Britain should weather the storm, said the speaker. Britain would, as things stood, have to resume the obligation of converting sterling balances into other currencies within a year, whereas other countries would presumably have five years in which to relax restrictions on exchange movements. Criticism of the Bretton Woods proposals had in the main been confined to the monetary fund, but that did not mean that the Bank for Reconstruction and Development could be regarded as of less importance, safd Dr. Billing. Indeed it was safe to assume that if the monetary fund did not materialise some workable alternative would take its place. Without some institution such as the proposed International Bank for Reconstruction and Development it was probable that the international capital market would be crippled. There were two main- difficulties, the possible reluctance of private investors to take up a foreign loan and the possibility that the United States and Canada might be reluctant to shoulder by themselves the risks of reestablishing the system of international investment.

New Zealand in the past had been more dependent on international trade than any other country and would possibly be more so in the future, so that it could hardly afford fo remain out of an international trade organisation, and it was required in the Bretton Woods proposals that the organisation and the International Monetary Fund should have a common membership. That fact would no doubt receive consideration when the time came for the ratification of the proposals to be considered by New Zealand.