Direct Approach To U.S. For Dollar Finance Urged

Gisborne Herald, Volume LXXVII, Issue 23271, 5 June 1950, Page 4

Direct Approach To U.S. For Dollar Finance Urged

A new approach by New Zealand, in common with other British Commonwealth countries, to the dollar problem was suggested by the distinguished economist, Professor D. B. Copland, Vice-Chancellor of the Australian National University, in a broadcast last night.

“New Zealand should assume the risks of financing it herself by’ direct approach to the United States of America, in common with the Commonwealth countries as a whole, with a view to negotiating loans, on a Government to Government basis.

The advantages of this course would be, first, to give the country concerned immediate relief from its dollar problem and. second, to give it command of much-needed capital goods from the dollar area, thus stimulating its own development and relieving the United Kingdom of part of its responsibility to finance the dollar deficit.

Would Help Britain

"This would be a contribution to the difficulties of the United Kingdom, an added help to the economic development of the borrowing country and a means of promoting a close relationship with the United States. There would bo nothing prejudicial to the long or short-term interests of the United Kingdom, to the relations between New Zealand or any other Dominion and the United Kingdom, or to the welfare of the Commonwealth as a whole.

‘‘For the United States the proposal should be attractive. At present the maximum receipts from 23,000,000,000 dollars assistance made available from the United States under E.R.P. is only 200.000,000 dollars in interest. Loans to the sterling countries could earn perhaps 4 per cent, and only 4,000,000.000 dollars would have to be advanced to get the same return. This would be a convenient way of resuming investment on terms somewhat like pre-war. “But the problem is not one of economic interest alone. It would enable the United States to build up a most fruitful association with the British Commonwealth whilst strengthening the United Kingdom and sterling as an international currency. After the Napoleonic Wars a famous British Foreign Secretary, Canning, said in relation to the South American States, then in revolt against Spain and Portugual, that he had called into existence a new world to redress the balance of the old. Nothing could be more appropriate than similar action at the present time. How Payment Would Be Made

“Many questions of doubt will arise in your minds about this proposal, and I cannot answer them all now. But there is one of which I should say a word. You will want to know how the interest on a loan can be paid and the capital repaid if there is a continued shortage of dollars. Will there be a long-term and persistent shortage of dollars? You must remember that the United States of America is developing rapidly at the rate of 2£ per cent, per annum, that in 30 years her national income will be double what it is now, and that she is short of some essential materials, such as oil, rubber, metals, coffee, tea, meat and probably wool. “The world is not standing still even if our thinking is, and U.S.A. imports are bound to grow at a much greater rate than her exports or her national income. The increase will, moreover, come from the young and raw material producing countries more than from most others, and this will provide the means of payment. “It is a risk, but a reasonable risk, and no greater than the risks assumed in the past by many countries and most prosperous individuals. We should ask ourselves the question not whether we can afford to take the risk, but whether in all the circumstances we can afford not to take it. If we do not take the risk then we have a poor and inadequate development and we do not associate ourselves with the expanding forces in the world.”