The Press MONDAY, OCTOBER 6, 1952. New Zealand And The I.M.F.

Press, Volume LXXXVIII, Issue 26854, 6 October 1952, Page 6

The Press MONDAY, OCTOBER 6, 1952. New Zealand And The I.M.F.

The council of the Canterbury Chamber of Commerce had a useful discussion en Thursday about New Zealand membership of the Inters national Monetary Fund and the International Bank, The discussion and the cuuneil’s decision should help to clear away seme of the canfused ideas that are commonly held in New Zealand about the fund and the bank, it was decided to ask the Associated Chambers of Commeree to prepare a reasoned argument for and against the proposal that New Zealand should join these international institutions, to which more than 50 nations now belong, so that the whole question can be reconsidered by the Associated Chambers. The Canterbury council members strongly supported New Zealand membership; but the argument in favour of this course was too narrowly framed, being largely concerned with New Zealand’s selfinterest in belonging to the International Monetary Fund. To regard the fund merely as a soqree from which to draw capital is to misunderstand and to undervalue its purposes and functions. The fund is required by its charter to fill two roles, corresponding very roughly to those of a banker and an umpire. In the one role the fund engages in transactions with its members to supply them with additional means of international settlement; in the other the fund is required by its, charter to administer and enforce certain “rules of the game” laid down in the eharter itself for the regulation of international monetary affairs. The main purpose of these “ rules of the game ” is to further certain basic objectives, to which signatories to the agreement are committed. These objectives are in brief (quoting from Article 1 of the fund agreement), “to facilitate the “ expansion and balanced growth of “international trade, and to con“tribute thereby to the promotion “ and maintenance of high levels of “ employment and real income “to promote exchange stability, “to maintain orderly exchange “ arrangements among members, and “to avoid competitive exchange de- “ predation "; “to assist in the estab- “ lishment of a multilateral system “of payments in respect of current “ transactions among members and “in the elimination of foreign ex- “ change restrictions which hamper “ the growth of world trade ”, and “to shorten the duration and lessen “ the degree of disequilibrium in the “ international balances of payments “ of members Same authorities believe that a major cause of the rather disappointing achievements of the fund has been the attitude of its members towards the “ rules of the game ”, Some members have tended to regard the eharter less as a solemn undertaking which they should constantly strive to fulfil than as something to be “ got round ” whenever it conflicts with their interests. New Zealand could help to promote a proper attitude towards the charter (which it helped to write) and to further the international co-opera-tion in a most vital field which the fund seeks to promote. New Zealand has a vital interest in the wider purposes of the fund which far transcends the direct benefits that the Dominion might draw from it.

Actually, the interest shown at the meeting of the council of the Canterbury Chamber of Commerce appeared to be rather in the sister institution of the International Monetary Fund—the International Bank. Membership of the fund is. necessary, of course, for access to the bank. But it is the bank which lends money for specified objects; and it was access to such funds that speakers seemed to have in mind. Though the achievements of the fund have disappointed many, the bank’s success is increasingly gaining recognition. Reviewing the annual report of the bank’s executive directors, presented last month at the annual meeting at Mexico City, the “ Financial Times ” said the bank had become “ a powerful “force in the international capital “ market ”, helping to fill to a very important extent the vacuum left by the partial breakdown between the wars of the private international capital market. Its work in capital development has not been confined to the provision of finance; continuous study of the problems of capital development in the backward countries, and in the more industrialised countries as well, is enabling the bank to make an increasingly important contribution to the progress of “ ideas ”, In all, the bank has helped, or is now helping, to complete some 250 individual projects in 27 different countries. The total cost of the projects in which the bank is participating is new stated to be well beyond 3,000,000,000 dollars.

Some members who went to Mexico City in a mood of anxiety about the future of the International Monetary Fund were gratified to find the fund’s board of governors planning greater activity for it, and determined that, within the rigid limits set by its Bretton Woods articles of agreement, the fund will develop more flexible policies. It was suggested at Mexico City that the fund would respond to demands of European members for closer cooperation with the European Payments Union and would bolster that organisation by making its assets more freely available. No-one can forecast the future of the fund or the bank; but recent evidence—particularly the two weeks of vigorous discussion at Mexico City—makes it apparent that members of the institutions are determined that the most comprehensive and ambitious international monetary convention ever achieved shall not wither from inanition. The council of the Canterbury Chamber of Commerce is undoubtedly correct in its belief that New Zealand should join the

fund; and it must be hoped that the belief will grow that New Zealand should join not for what it can get from the fund and bank but to contribute something to their worthy objects and purposes.