The Press TUESDAY, JULY 21, 1953. Convertibility Waits On the U.S.

Press, Volume LXXXIX, Issue 27097, 21 July 1953, Page 8

The Press TUESDAY, JULY 21, 1953. Convertibility Waits On the U.S.

The disappointingly brief reference in a recent Ottawa message to a political speech by Mr Lester Pearson, the Canadian Minister of External Affairs, is the first authoritative hint that the United States Government is taking anything more than a detached, if sympathetic, interest in the British Commonwealth’s so-called plans for the convertibility of sterling. Mr Pearson’s statement was positive enough: “ The Canadian Govern- “ ment had been working for months “with other Commonwealth coun- “ tries and the United States on

“concrete plans to make the pound “ free and convertible again ”. This should be encouraging, because it implies a degree of American acceptance of the plans, and of some

American contribution to their operation, which President Eisenhower and his colleagues were understood to have studiously avoided. When Mr Eden and Mr Butler went to Washington in February to put before the American Administration the proposals which came out of the Commonwealth economic conference last .December, they received so little encouragement that the convertibility “ plan ” had to be fundamentally changed. The Commonwealth spokesmen asked for no positive commitments by the Administration, of course; the most they could have expected would be an assurance from President Eisenhower and his colleagues that the Administration would commend the proposals to the Congress and the American people. Had such an

assurance been given, it is extremely unlikely that the plan would have been so hastily and so drastically modified.

The contribution sought from the United States was large—a lowering of tariff barriers, relaxation of restrictive customs procedures, American co-operation in commodity schemes which would stabilise the markets for Commonwealth raw materials, increased American investment abroad, American backing for an exchange stabilisation fund or, alternatively, American support for wider and more vigorous use of the International Monetary Fund’s machinery for this purpose, and, finally, American agreement on a higher price for gold. It is known that President Eisenhower referred various aspects of these proposals to expert committees. He has also set up a bi-partisan commission .of inquiry, consisting of six members of Congress and five representatives of business and industry, to study America’s external trade and to

recommend such changes as it thinks desirable. Little has been heard of the work of these committees; and it is possible that they have been more active than is generally supposed, not only in seeking information, but also in discussing with the Canadian and other Commonwealth Governments the implications of the Commonwealth plea for a positive American policy that will enable the other States of the non-Communist world to live by trade instead of aid. Nevertheless, all the evidence available to the public discourages the belief that the United States may, within a reasonable time, adopt the liberal trade policies which would justify the Commonwealth and Europe in moving quickly to full convertibility instead of advancing slowly and cautiously towards a strictly limited., kind of

convertibility. There is no doubt where President Eisenhower’s personal inclinations lead; but equally there is no - doubt that many members of his Administration and most Congressmen have yet to be

converted to his views. The findings of at least one of the President’s investigating committees are regarded as a foregone con-

clusion—against more liberal trade policies. The Reciprocal Trade Agreements Act was renewed for a year, it is true; but only after the President had given an assurance •that no new agreements would be entered into in the interval. Moreover, the Tariff Commission has recently been increased from six members to seven; the new member is an avowed protectionist; and there is now a Republican majority o(j the commission, with fairly strong protectionist leanings. Until the American mood changes, the Commonwealth countries cannot afford to take the risks involved in disavowing their present restrictions on trade and payments.