COSTS MUST BE KEPT DOWN: WARNING GIVEN

Greymouth Evening Star, 23 September 1949, Page 5

COSTS MUST BE KEPT DOWN: WARNING GIVEN

• WASHINGTON, Sept.*22 (Rec. 11 a.m.). —A warning to the countries which had devalued not to undermine the good effects of devaluation by allowing prices to rise in terms of their own currencies was given today by Mr Camilla Gutt, managing director of the International Monetary Fund. He appealed to them to make goods available for export by reducing home consumption, home investment and home government expenditures.

Mr Gutt said that devaluation was not by itself a remedy for trade disequilibrium. Its purpose was to increase exports.. This, called for leadership by the Governments and co-operation by their citizens.. The devaluation gains should not be offset by a rise in home production costs, which would prevent exported goods from being sold. Mr Gutt said that the countries which devalued could not afford to let the prices of their goods rise in terms of their own currencies without risking loss of markets. Dangers occurred after devaluation and a rise in prices inside the devalued countries might dissipate the benefits of lower dollar prices. What had taken place in the past five days had been a peaceful revolution, which was the first big public action towards the attainment of the Fund’s purpose. The exchange adjustment would provide a basis for a return to an expanding level of world trade on a multilateral basis —one of the Fund’s- principal objectives.