BRITISH SCHEME

Gisborne Herald, Volume LXX, Issue 21064, 8 April 1943, Page 4

BRITISH SCHEME

CLEARING UNION

WORLD MONEY BASIS PRINCIPLES OUTLINED (By Telegraph—-Press Assn.— Copyright.) (British Official Wireless.) (11 am.)/, . RUGBY, April 7* A Government White Paper "proposals for an ' International Clearing Union” recalls a speech of. the Chancellor! of the Exchequer Sir Kingsley Wood in the House of Commons: on February 2, when, he spoke of the post-war need for an . "international monetary mechanism which wi,ll serve the requirements of international trade.”

Described by the Government as. a "preliminary, contribution, to the solution of one, of the problems of international economic co-operation after the, war,” the plan, outlined 1 )P ilie' White, Paper bars'.been.. prepared .by the in, c'ppsullatioq. with other depart!neats.q'nd, after informal disc.ussfqhs, with officials, of the Gov -irnments of the Dominions, India and; others. .It ,has, been compuinicated !o, the. JJQPBSfentaiives of the other United Natipfts.

The chief purposes of the plan are: To provide a generally acceptably means of payment between, nations; 1.0 ensure, that, any alterations in the cxehaiige values of national' currenciep fire made, as, the result of an orderly, international procedure and not' by unilateral action; 1 to relieve from the excessive' strain that; any nation $ suffering arising from temporary difficulties, fii meeting, its obligation? i.o make payments abroad while, at the same time subjecting it to gradual pressure towards, restoring thp position of balance. All these purpose's art subsidiary to the- main purpose—the promotion, steady expansion and flow of international trade.

International Bank Money

The White Paper proposal is to establish an “international clearing union based, on, international, bank money called, it is suggested, "Bancor” fixed, but not unalterably, in terms of gold and accepted as the equivalent of gold py, al;l members of ihe uniqn for the purpose of settling international balances. The cpntrajl banks; of alf.member States—and alsp !)on,-members —would keep with the union through . which, they would .settle exchange balances at par value, as defined in terms. of ’■Bancor.” The countries having a favourable .balance qf payments,with. i;he rest of tfie world; would haye a credit account' \yith the union, those having an uftf.avQwrab.le, balance wohlql have a debit account.

The White’ Paper continues: “The idea underlying such a union, is simple—to generalise the essential principle of banking; as it is exhibiteq within any closed system,. The principle is the. necessary equality of credits and debits. K credits cap only be' transferred _ within, it, the union can never be in difficulty >ri honouring the cheques drawn upon it; Its sole task is to see that members, keep to the rules and that the acu v&nces iriacic to each are prudent ahd advisable' for the union as a whole.’

Allies as Members

Some minor provisions, of the. plai] -are that all Allied nations will be invited to,, bgcpme original members; Governing boards shall be appointed by the Government? of.member States and those with, smaller quotas, in convenient; political or geographical! groups..

Member States will agree between themselves to the, initial value.-; o? their own currencies in terms o? “Bancor.” The value of “Bancor’ in terns of gold shall haye a quotg based, perhaps,■ on imports- and exports, which shall determine the responsibility in the. management of the union and' the right to enjoy the union's credit facilities.

Member States shall agree to accept payment of currency balances due from other members. by : the transfer of “Bancor” in the union/s books. T h( i governing board sliall be entitled to ask and receive from each membeij relevant statistical' and other information. Non-rhembor States keeping clearing accounts, with the union would'have'.no, right to overdrafts, ancj no say ip tlid management.

The White I’aper points, out that the clearing- union might becqme, the pivot of the future economic government of the world: