EMPIRE & INDUSTRY

Hawke's Bay Tribune, Volume XXII, Issue 153, 14 June 1932, Page 10

EMPIRE & INDUSTRY

ECONOMIC CO-OPERATION INVESTMENT AND MONETARY POLICY SUGGESTIONS BY BRITISH INDUSTRIALISTS By the Inward Vancouver mail delivered yesterday, came to hand a copy of the ‘‘Empire and Industry” booklet published by the Federation of British Industries. It deals with its subject comprehensively in eight sections covering all matters relating to Empire economic cooperation, and contains suggestions which will be invaluable to the delegates attending the Empire Economic Conference at Ottawa. In view of the deep attention that has been given of late by New Zealanders to the monetary system, and also the scheme formulated by individuals and organisations within the Dominion, the republication here of Section IV. ” Investment and Monetary Policy,” will be helpful to those who are seeking a solution of the problem. It reads as follows:

‘‘lf the idea of Empire Economic co-operation is to be prosecuted successfully, it is essential that the wisest utilisation of the financial resources of the Empire should engage the attention both of Governments and financial interests. The Federation has issued separately its detailed views upon these questions, but desires to incorporate in the present report its main conclusions on matters of principle. FLOW OF CAPITAL. •‘The Federation, as an industrial body, cannot dogmatise on this subject. It does urge, however, that all Empire Governments should agree to the fullest exploration of the possibilities of the conscious direction of the investment power of the Empire towards the development of Empire resources. This subject cannot brook delay. In the past the flow of capital from Great Britain into Empire countries has proved more advantageous to Great Britain than has investment in many foreign countries. The capital invested has been generally safer than when placed elsewhere. It is significant to note that no less than 145 million pounds of foreign loans issued in London have been in default with interest payments during the course of the ten years period 1922-31. During that period no loan to an Empire country has remained in default.

DEVELOPMENT AND INTERCHANGE. ‘‘This, however, is only one of the advantages. Investment overseas also both stimulates the purchasing power of the countries towards which it is directed, and, if made part of a scheme of complementary development and mutual commercial inter change, promotes the general prosperity of both the lending and borrowing countries. The fact that Empire countries to-day obtain a much larger share of their imports from Great Britain or other Empire countries than do comparable foreign countries is one of the consequences of that earlier policy. The Federation is convinced that if Governments of the Empire agree to prosecute n policy of economic cn-operation for inter-Empire industry, inter-Empire investments will become of increasing benefit to this country and to the Emare ns a whole. The no dbilitv of in-

stituting a preferential system of stamp duties on new issues and transfers deigned to favour investment within the Empire is worthy of study. In this counection the Federation would refer to the recommendations of the Report on Empire Monetary and Financial Policy, which was drawn up by a joint committee of the Federation of British Industries and the Empire Economic Union and published on October 14. 1931. INTERNATIONAL MONETARY STABILITY. “The Federation is in complete agreement with the main recommendation of the MacMillan Committee that international action should be taken to secure monetary stability. The Federation trusts that His Majesty’s Governments throughout the Empire will decide unanimously to promote this aim. “Any radical improvement in the general world economic position presupposes a solution of financial and monetary problems. All methods of international action to secure this must be explored. “Recent events have, however, indicated the extent to which political considerations affect the international financial policy of certain countries and their central banks. The Federation believes that as a first step every effort should be made to create a financial and monetary system revolving round sterling. If the Empire could be made the basis of this system great advantages for Empire trade would result. INTER-EMPIRE EXCHANGE. “Inter-Empire exchange difficulties would disappear. Since the volume of Empire trade bears such a high relation to the total of world trade, the partner nations of the Empire should be enabled to secure for themselves the benefit of greater stability of prices and give by their success an encouraging example to the world. The desirability of a careful consideration of this subject is increased at the moment because various foreign countries appear likely to be attracted to a strong monetary system attached to sterling. Great Britain is particularly interested in many such foreign countries for investment and marketing reasons. The Federation trusts, therefore, that the closest investigation of the possibilities of instituting such a system will be made first within the Empire, and secondly in conjunction with those foreign countries which have close trading relations with the Empire.