WORLD ECONOMICS

Evening Post, Volume CXVI, Issue 70, 20 September 1933, Page 10

WORLD ECONOMICS

WORK OF CONFERENCE

SURVEY BY MR. FORBES

AMERICA'S ATTITUDE

An outline of the work of the World Economic and Monetary Conference, with particular reference to the attitude of tho United States, was given by the Prime Minister (tho Rt. Hon. G. W. Forbes), when speaking at the civic reception tendered the members of tho New Zealand delegation in the Town Hall last evening.

"One realised the difficulty that would be found in securing a common agreement among the sixty-four separate nations which signified their intention to send representatives, in regard to the action to be taken to adjust monetary and tariff differences," he said. "As, however, one of the main objects of the Conference was the raising of the world price levels, it was felt by the New Zealand Government that a matter of this kind was of such vital concern to the Dominion that it was desirable we should be represented. As a result of this decision, the Hon. Mr. Masters and I were deputed to attend the Conference in London. TARIFF TRUCE PROPOSED. "The hurried calling of the Conference immediately following the discussions of the British Prime Minister and the President of the United States naturally created the impression that 'some agreement had been reached on a policy of rehabilitation to be placed before the Conference, and the belief that a lead would bo given by them to the Conference on the main issues to be decided was strengthened when the United States Government took the initiative by proposing a tariff truce among the nations of the world for the period of the Conference. "In listening to the statements of their economic difficulties submitted by the delegates from the various countries, one could not help being impressed by the similarity, of their troubles, whatever difference there was being one of degree only. If there could bo any consolation in the fact that in comparison our troubles in New Zealand were light, that consolation was amply provided by these statements. "The atmosphere of the Conference at the opening was distinctly hopeful. The King's speech and the address of the Rt. Hon. Mr. Ramsay Mac Donald, who assumed the presidency of the Conference, were most inspiring, striking a very high note. "The Conference had opened and had been sitting for about three days by the time the New Zealand delegation arrived in London. We were informed on inquiry that the period for delivering opening addresses would bo closed in a day or two, and that the statements being submitted were very brief, in most cases not exceeding ten to fifteen minutes. Although a number of countries had not submitted statements, I felt that tho New Zealand position, if stated, would clearly show the effect of the depression on a country which depended so- much on tho overseas marketing of its primary produce, and would provide a strong argument for the raising of world prices. I therefore made the statement, which was well received and favourably commented upon. "As soon as the general discussion was ended, the Conference was reaolved into two main committees, one to deal with monetary and financial questions, and the other with economic matters. These two committees set up a number of subcommittees to deal with special subjects, and in this way the work was carried on. Mr. Masters and I had seats on most of the sub-committees, particularly those in which New Zealand was directly interested, and were assisted by the other members of the delegation. Owing to the smallness of our numbers the time of each member of the delegation was fully occupied in attending to the work of the various committees. DIVERGENCE OF VIEWS. "In the Monetary and Financial Committee it was soon made apparent that there was a divergence of views as to tho most effective measures to ensure a return to more normal prosperity. One view was that the first step to recovery was to establish stable monetary standards. To bring that about those holding that opinion considered that there should be immediate stabilisation pf exchange rates, and that those countries which had gone off the gold standard should return to it as soon as practicable. This view was supported by a number, of European countries, headed by France. Another group, headed by Great Britain and supported by the Dominions and the Scandinavian countries, maintained the view that a general policy of cheap money and liberal credit ' would be likely to lead to an increase in trade and business, and to an absorption of unemployed and to stimulate demand by thu resultant increased purchasing-power. A third group, consisting of debtor countries, some of which were finding it impossible to meet their obligations (cases were quoted where the interest on the'external debt' exceeded tho total value of their exports), urged that an adjustment of indebtedness so as to lighten the burden of external debt charges should precede any other measure of rehabilitation. POLICY OF THE UNITED STATES. "Before the committee settled down to a discussion of these views, it was recognised that it was inadvisable to have a public discussion before some measure of agreement was arrived at between the countries principally concerned. A small private committee was therefore set up, and several attempts wero made to come to an agreement on a common policy of currency stabilisation. Tho President of the United States, however, made it quite clear that his country would not undertako tho stabilisation of the dollar, as in their opinion it would interfere with their plans for the relief of their Own people. This failure to arrive at an agreement on this question gave the European countries forming tho gold bloc great concern, as they placed this question before all others as a rehabilitation measure. They were strongly of opinion that unless this stability was assured it was futile to discuss the question of reciprocal trade, or the lowering of tariff barriers, subsidies, or the removal of embargoes. CONFERENCE RESOLUTIONS. "The sub-committee on Immediate Monetary^Policy discussed the question of a continuance of the investigation, and on a vote being takon, decided by 25 to 15 to carry on With it. Tho subcommittee then took up firstly, the question of indebtedness, and after some discussion a series of resolutions were adopted which, stated briefly, were:— "The improved position which it is hoped to bring- about by tho measures now before the Conference would strengthen tho debtor countries and enable them more easily to meet their debt payments. "Debtor countries should make every possible effort to meet the service of their debts and to fulfil their contracts. It is desirable to set up organisations to represent holders of foreign stock so that in the event of a debtor country getting into difficulties it would be possible, to get into touch with, the holders of this stock and to make such

arrangements as may be necessary to meet the situation. Governments are recommended to encourage tho creation of such organisations. CENTRAL BANKING. "Central banking was another matter considered, and this subject was particularly interesting to us in view of tho legislation to establish a central bank in New Zealand. This discussion was carried on by leading authorities and representatives of many central banks in other countries. The universal opinion was that tho necessity of a central bank as part of tho financial machinery of a country admitted of no argument, and that tho unsettled stato of currencies and exchanges throughout the world made its functions moro than ever necessary. The value of consultation between central banks and the interchange of information on monetary movements and policy was considered to bo very great. The knowledge thus secured by a central bank enabled it 'to carry out its financial policy, with some degree of confidence, and with a greater chance of success than if it lacked that information. Further, tho co-ordination of central banks was considered essential to monetary stabilisation.

"Resolutions on monetary (Standard, silver and monetary reserves were also adopted by the Conference."