POWERS TO MEET

New Zealand Herald, Volume LXX, Issue 21515, 12 June 1933, Page 6

POWERS TO MEET

ECONOMIC CONFERENCE PROBLEMS FOR DELEGATES FUTURE MONETARY POLICY [TARIFFS'/AND WORLD TRADE The momentous importance of the IWorld Economic Conference, to bo opened in London this afternoon, will be marked outwardly by such a gathering of world statesmen as can find a / parallel only in the Peace Conference following the Great War. While the mingling in common accord of statesmen from many lands has become a commonplace since the formation of the League (fij Nations, the pending conference will be notable for the strength of the delegations taking part. Not one, but several, Ministers of State ;will represent each of the great Powers. To Britain falls the privilege of providing the venuo for the historio gathering, / which will be held in the new Geological Museum building in Kensington, London, and to Britain again is accorded further honour from the fact that the proceedings will be •officially opened by the King. Thus today will be launched a series of deliberations for which all the world has been long preparing and upon which the hopes of millions will be focussed. Agenda for Conference 'A draft' agenda for the conference was compiled by a Preparatory Commission of Experts of the League of j Nations as early as last January, and ; communicated to members of the League. In its work the commission was guided by the terms of reference transmitted to it by the League Council and by preliminary discussions recorded in the Final Act of the Lausanne Conference. This conference had invited the League to convoke a world conference "to decide upon the measures to solve the other economic and financial diffi- j culties which are responsible for, and • may prolong, the present world crisis. The agenda as formulated by the commission embraces discussions under the following heads: —Monetary and credit policy; prices; resumption of the movement .of capital; restrictions on international trade; tariff and treaty policy; and organisation of production and trade. The problem of inter-Gov-ernmental indebtedness has not been included, although the commission expresses the opinion that it is essential this question should be settled. Principal Problems Outlined In outlining the general programme of the conference, the commission states that the principal questions to be considered must be the restoration of an effective international monetary standard to which countries that have abandoned the gold standard can wisely adhere; the high desirability of some increase in the level of world prices, one. remedial method needing consideration being tbe development of a general policy, of easy money; the abolition of exchange restrictions, which is an essential condition of world recovery; and the greater freedom of international trade. " There should be a general understanding about measures to ensure a better working of the gold standard in the future," states the commission in its annotations to the agenda. Steps must be taken to restore internal equilibrium and at all costs inflationary increases of note circulation to meet Government deficits must be avoided. In countries which have left the gold standard .efforts should be made to avoid a competition between States to acquire a temporary advantage in international' trade by depreciating the external value of their currency below such a point as is required to reestablish internal equilibrium. Banks and Politics It is suggested that the -conference should emphasise the importance of the monetary organisation being so arranged as to make central banks independent of political influence, and that it should emphasise the need of introducing greater elasticity in the primary cover regulations of central banks, particularly so as to muko the reserves more fully available to meet fluctuations in the balance of payments. After reviewing the disequilibrium between prices and costs, the commission states that a policy aiming at the restoration pf currencies on a healthy basis, financial reconstruction, greater freedom in the movement of goods and some immediate measures to give evidence of its practical application, would be a decisive step toward a revival of confidence bringing about an increase in effective demand. A recovery cf sound international lending would have a helpful effect on prices. Quotas and Licences Apart from the instabilty of exchanges, some of the major obstacles to capital movements are the control of foreign exchanges and, in certain cases, the burden of debts. It is essential that these obstacles be cleared away. The resumption of capital movements throughout the world should be effected through the normal credit channels. Restrictions on international trade, whether prohibitions, quotas or licences, have become exceptionally widespread • and constitute an almost insurmountable barrier to international exchanges. They threaten international trade with complete paralysis. The abolition of these measures constitutes tho most urgent problem from the point of view of bringing world economy back to a more normal condition. One object of tho conference, states the. commission, must be to reach a general agreement for the reduction of tariffs and to maintain more moderate tariff policy in the future. It suggests a customs truce as a preliminary measure. There is profound disorganisation of production and distribution, it states, and in this connection joint action by Governments is necessary for the recovery of an economic system threatened by bankruptcy.