THE LOAN IS FIRST AID

Evening Post, Volume CXL, Issue 138, 8 December 1945, Page 6

THE LOAN IS FIRST AID

The Anglo-American agreement covering a 3750-million-dollar American loan, with deferred interest at 2 per cent., also covering AngloAmerican financial arrangements and mutual trade, and aiming at peaceinsuring multilateral trade, is subject to the approval of the Legislatures of the two countries, and does not bind Dominion Governments unless they, or their Legislatures, choose to be bound. Conditions of the loan are, in some respects, not hard and fast, and indicate a recognition by both Governments that there may be unforeseen, possibly unforeseeable, contingencies in the near or far future. Consider. I for instance, the right of a GovernI ment to control imports, as evidenced in imports-restriction, a device which, lin New Zealand, was adopted nearly I a year before the start of World War 11, and which the New Zealand Government would have adopted earlier, but for the intervention of a New Zealand General Election. Mr. Attlee. Prime Minister of Britain, points out that the Anglo-American agreement aims 'to clear obstacles away from Britain's export of manufactured goods, without abandoning British right to control imports, so long as this is essential to Britain's balance of international payments." Apparently Britain herself is to bq the judge of essentiality in this respect; Britain is to be the sole judge of whether she shall refuse to import what she thinks she cannot pay for, having regard to international payments as a whole. Under section 4 of the agreement. Britain is also given the right to apply for waiver of interest in any one of the interest-paying years, if the economic criteria set out in the section are present, and if the application has ! the support of v certificate from the i International Monetary Fund,, in

which case "the United States will grant a waiver."

If this is the interpretation of the agreement in the matter of interest waiver and control of imports, it cannot be said that Britain as debtor has parted with all independence in financial and trade policy, in return for the world's record loan. In principle, control of imports is anathema to the multilateral trade objectives of the agreement; and tariffs and subsidies are also suspect, if the multilateral objective alone be considered, without regard to unforeseeable contingencies. Eut Mr. Attlee shows that "British right to control imports" remains, along with Britain's privilege of applying for waiver of interest, even in a year when America herself may be meeting with economic heavy weather. With regard to far more general trade-restrictions, such as tariffs (including preferential duties) and subsidies and all other handicaps on trade, the spirit of; the agreement seems to be to trust the future in general, and in particular to trust the proposed "international conference on trade and employment." Whether the delegates at such a conference will be able to agree, in trade matters, to a greater degree than the three Foreign Ministers agreed, in high political matters, at the Foreign Ministers' Council, no one can predict; but at least it can be hoped that all the cards will be on the table. To the understanding economist, world trade cannot be camouflaged and rendered mysterious in the same degree as diplomacy can mystify international high policy. The mists of international commerce are more penetrable than the secrets of Foreign Offices; and if a world conference can be far-seeing enough, and courageous enough, to advance co-operatively and constructively along the multilateral trade route, much of the inertia of high diplomacy may be overcome. The best preacher of this branch of international optimism has been Mr. Cordell Hull.

So far, the loan (if ratified all round) has bought a respite for the British debtor, who is indispensable to world trade. The loan has not bought the dissipation of trade obstacles, but may buy goodwill towards a future dissipating of them. It would have been unreasonable to expect the loan to buy the disappearance of some trade restrictions (such as Empire preferential duties) while others remain. Tariffs and restrictions are too complex to be wiped out wholesale, and justice forbids piecemeal treatment of them without such a conference as America proposes, a conference preceded by early negotiations between Governments. Repudiating any suggestion that Britain would sell Empire preferences to secure an American loan. Mr. Attlee "pointed out that there was no question of unilateral surrender oC preferences. There must be adequate compensation for all parties, concerned. It must be realised that some preferences were of particular importance to the economy of certain parts of the world, as some tariffs were important in others. Elimination of all preferences would be such a step as would require the substantial and widespread reduction of tariff and trade barriers by large numbers of countries. The British Government earnestly hoped all countries participating in international meetings would make concessions in existing tariff barriers as a lead to mutual satisfaction." The loan, when it materialises, can be described as the most gigantic first-aid operation the world has seen. It is financial plasma (itself "bought in blood") from American blood donors who are discharging a moral debt and who are refinancing a very necessary ally. But the multilateral trade implications are still to be realised.