WORLD MONETARY FUND.

Kaikoura Star, Volume LXIV, Issue 56, 20 July 1944, Page 2

WORLD MONETARY FUND.

REPORT FROM MR. NASH. WELLINGTON, July 14. “A report on the latest developments at the United Nations’ Monetary and Financial Conference at Bretton Woods has been received from Mr Nash,” said the Acting-Prime Minister (the Hon. D. G. Sullivan) to-day. The full text of Mr Nash’s message is as follows: —

‘ ‘ The committee of Commission 1, set up to consider proposals for an international monetary fund, have met. continuously during the first week, and drafting sub-committees are at work on a text which will incorporate the various views and amendments put forward in discussions. At a press conference last week, Mr Harry D. White expressed the fear that the meeting might have to adjourn till July 20 without reaching complete agreement, in which case, he said, there would have to be another conference later. Good progress has been made in the last few days, however, and my opinion is, from conversations with United States and other leaders, that the prospect of substantial agreement on the recommendations of the Government being reached at this conference are reasonably good.

UNITED STATES DOMESTIC POSITION, “The United States attitude towards the fund may necessarily be influenced by domestic political considerations and considerable opposition to United States participation in the proposed scheme has been expressed in Congres sional and banking circles.

“The nyost important issue not yet formally discussed is the aggregate amount and the distribution of quotas, it having been decided at the outset to postpone consideration of this question in the hope of certain serious difficulties that have arisen being satisfactorily resolved in the meantime. The main difficulty is the Russian demand for a quota substantially in excess of that originally allocated to them, combined with strong reluctance on the part of the United States delegation to accept any proposal involving any considerable increase in the aggregate beyond 8,000,000,000 dollars. This difficulty has been the subject of comment in the press over here. It is reported that Russia has asked for a quota approximating the United Kingdom’s. As the quotas affect voting strength, this makes some delay in making other decisions; for example, about machinery and management, and a consequent retarding of the work of other countries.

REVIEWS OF QUOTAS.

.‘ The preliminary plan provides that the quotas may be reviewed from time to time, but only by a four-fifths vote and with the consent of the country concerned. An alternative proposal is that the quotas may be reviewed at intervals of five years and considered at any time at the request of the members concerned.

“Russia has also supported a proposal which would permit countries damaged by war activity to reduce their gold payments by a quarter to a half, depending on the extent of the damage caused by the enemy. OTHER MAJOR ISSUES. ‘ ‘ Other major issues still under consideration are:— 1. Commencement of fund’s operation. “There are differences of opinion whether the fund should become operative imnipdiately or ‘as soon as pos sible, ’ or after the immediate post-war transitional period ends. It appears that the United States delegation would like to sec the fund operating as soon as possible. Another point is that the United Kingdom favours a five-years period following the fund’s establishment, before it is obligatory to remove war-time exchange restrictions or to consult the fund concerning their further retention. 2. Problem of block balances: “It has been proposed that one of the purposes of the fund should be ‘to promote and facilitate the settlement of abnormal indebtedness arising out of the war.’ This is strongly opposed by the United Kingdom, the United States, the Netherlands, and France. The consensus of opinion is that such balances sho'uld be dealt with outside the fund as the amount involved is much too large for the fund to handle. Lord Keynes, at a press conference, announced that the United Kingdom’s block sterling balances would amount to £3,000,00(1,000 sterling at the end of the year, and he asserted that the British would have to make special long-1 term arrangements with their creditors to settle these war-time debts with the| export and import of British goods. ! 3. Scarce currency: ‘ ‘ Considerable discussion has taken place as to the* conditions under which the member countries shall be entitled to buy an | other country’s currency for their - Most pressing practical difficultie: arise if any currency, for example, dol-|

lars, become ‘scarce’ so that the available supply in the fund is> insufficient to meet all requirements. The United States propose that the fund should, in such cases, be empowered to allocate currencies and that other members shall be free to impose restrictions on imports from scarce currency countries. The risk of scarcity may be diminished by the fund borrowing currency from member countries or puichasing currency for gold. These proposals may be accepted. 4. Exchange rates: “Highly-placed leaders of the United States delegation are reported to hold the view that a proper approach to the rates problem is to agree to maintain the present rates for a stated period and to set a

specific date to maintain the present rates for a stated period and to set a specific date for their reconsideration. Under the draft plan, members will be free to vary the exchange rate up to 10 per cent. Conditions under which wider variations may be made are still under discussion.

‘ ‘ Other points of interest asising out of last week’s meetings can briefly be sunynarised as follows:—(a) Considerable stress has been laid on the power of the fund to waive conditions limiting the right to draw on its resources; (b) the necessity of every member furnishing the fund with the fullest statistical information that can be made available is accepted,* but a decision as to the future scope and nature of the information that it shall be obligatory to furnish is postponed pending a further report; (c) the wording of a clause empowering the fund to make representation to members relative to the effect of other than domestic, social, or political policy is still under discussion; (d) the authorisation of members to exercise such controls as are necessary to regulate international capital movement is approved. “Discussion of the proposals for a bank for reconstruction and development will begin this week. The United Kingdom and the United States experts have reached a tentative agreement on a draft. There is a great pressure upon which may mean many loose ends at the termination of the conference, but if the quota question can be settled satisfactorily, many other outstanding difference would be more easily resolved.”

NEW ZEALAND OPPOSES QUOTA AGREEMENT. NEW YORK, July 16. The United Nations’ Monetary Conference at Bretton Woods, has tentatively agreed to the following quotas for the International Monetary Fund to stabilise world currencies after the war:—

South Africa .. .. 100,000,000 There are snjaller contributions for the remaining countries, the total for 44 countries being 8,800,000,000 dollars.

The correspondent says last-ditch opponents were China, Egypt, France, India, and New Zealand. An American delegate said the reservations of these five were based on their failure to accept the inevitable fact that their position in the post-war world would not be as high as they would like.

Dollars. United States .. .. 2,750,000,000 United Kingdom .. 1,500,000,000 Russia .. 1,200,000,000 China .. 550,000,000 France 450,000,000 India 400,000,000 Canada 300,000,000 Netherlands 275,000,000 Belgium 225,000,000 Australia 200,000,000 Brazil 150,000,000 Czechoslovakia .. 125,000,000 Poland 125,000,000