FATE IN BALANCE

New Zealand Herald, Volume LXX, Issue 21540, 11 July 1933, Page 9

FATE IN BALANCE

ECONOMIC CONFERENCE ADJOURNMENT PREDICTED BUREAU AGAIN ADJOURNS LORD BEAVERBROOK'S PLAN By Tclecrnpli—Press Association —Copyright (Received July 11, 1.5 a.m.) LONDON. July 10 The Bureau of the Economic Conference, after a meeting which lasted an hour ami a-half this morning, adjourned till 3 p.m. to-morrow. 1 It is awaiting uncompleted reports from two financial sub-committees. Lord Beaverbrook contributes an articlo in tho Daily Express entitled 'Now can we have Empire free trade?" He advocates a customs union between Britain and her Crown Colonics, "since hopes of tho World Economic Conference have been exploded." A message from Washington states that in an interview i\lr. Louis M. Howe, President Roosevelt's secretary, predicted that the conference would bo adjourned shortly to permit of a study by special committees of the many problems involved.

CURRENCY POLICY GOLD COUNTRIES' ATTITUDE NEED FOR CO-OPERATION (Received July 10, 5.5 p.m.) Times Cable LONDON. July 10 Tho Times, in a leading article, says that if tho gold countries persist that they cannot oven discuss monetary questions, then tho other countries must themselves decide upon measures for restoring trade and raising prices in currencies no longer tied to gold. The continued co-operation of tho Continental countries is essential to tho full success of the conference, but failure to achieve it cannot be allowed to prevent tho rest of tho world endeavouring to achieve useful results. Monetary agreements between tho Empiro and other countries whoso trado mostly is on a sterling basis would bo a step toward that stabilisation, which should be tho ultimate objective of an international currency policy

Accepting .the inevitability of a general restoration of tho gold standard, the commission of experts which prepared a draft agenda for the Economic Conference discussed tho specific measures which must first be taken in different groups of countries. Tho experts said: —Countries with a free gold standard and with abundant monetary reserves should: (1) Pursue a liberal credit policy, characterised by low money rates in tho short-te.rm market and a reduction of long-term money rates by conversions and other operations as far as feasible; (2) as far as market conditions and central bank statutes permit, maintain an open market policy designed to provide a plentiful supply of credit; (3) allow gold to flow out freely; (4) permit the greatest freedom possible to outward capital movements to facilitate sound foreign investments. In countries which have left tho gold standard efforts should be mado to avoid a competition between States to acquire a temporary advantage in international trade by depreciating tho external value of their currency below such a point as is required to re-estab-lish internal equilibrium. Under present conditions exchange rates are liable to be constantly disturbed by speculative movements to the disadvantage of international trade. In a period prior to the adoption of a r.ew parity it is advisable for tho authorities regulating the currencies concerned to smooth out, so far as their resources permit, day-to-day fluctuations in the exchanges clue to speculative influences by buying and selling foreign currencies. The success of such measures would bo enhanced by the co-operation of other markets. Discussing the stops which should be taken in countries which have introduced exchange restrictions, whether they have abandoned the gold standard or not, tho commission said: "It is realised, however, that this ultimate aim cannot in all cases bo immediately attained. In such circumstances the restrictions applied to foreign trade should bo relaxed or abolished in the first instance, even though it may bo necessary to maintain them for a timo with regard to capital movements. "Such relaxation may, in certain cases where the external value of tho currency has depreciated, necessitate the abandonment of existing parities. In a number of cases exchange restrictions would seem to defeat their own ond; for, whenever tho official rate of exchange is maintained at a higher level than tho economic rate, a form of import premium is given to all importers and a form of export duty imposed on all exporters. "Experience seems to have proved that, when a careful policy of gradually relaxing restrictions is pursued, internal confidence in the currency can bo maintained, although, of course, in such circumstances, the necessity of effecting budgetary equilibrium and of resisting inflationary tendencies will prove to be of paramount importance. "In such cases it would seem particularly valuable to maintain close relationship between these countries, the financial organisation of the League of Nations and the Bank for International Settlements, in order to devise and apply the appropriate policy in each case."

SUBJECTS TO DISCUSS SUB-COMMITTEE'S LISTS British Wireless RUGBY, July 9 There were no meetings of tho coinmissions or si ib-committees of tlio Economic Conference yesterday. Imports aro being prepared for presentation to the bureau, which is to meet to-morrow morning. ]t will receive lists of subjects which, in tho opinion of tho sub-committees, can be usefully studied, and make recommendations as to tho arrangements which should be mado for tho further business of the conference. Special interest attaches to tho decision mado on Friday by tho sub-com-mittee of tho Monetary and Financial Commission, that all matters on the agenda should be subject to discussion. These deal with immediate measures of financial reconstruction, and include questions of credit policy, price levels, limitation of currency, fluctuation, exchange control, and problems of ;u----debtedness. After a debate which lasted tho greater part of the day, tho sub-com-mitteo decided by 25 votes to 15 that none of tho subjects on the sub-com-mittee's agenda should bq excluded from future discussion. Tho newspapers anticipate that when tho sub-committee's proposal is laid before the bureau further representations will bo made by tho delegations from the gold countries. Tho delegates of 13 of the countries which participated in tho vote are represented on tho bureau. Seven of them voted for the resolution and six against it.