POST-WAR WORLD

New Zealand Herald, Volume 81, Issue 24955, 26 July 1944, Page 6

POST-WAR WORLD

ECONOMIC RELATIONS PROSPECTS FOR SUCCESS (Special Correspondent) (Becd. 8.30 p.m.) LONDON'. July 2-1 "A premising beginning has been made, even although many vital questions still appear to remain unanswered," says the Times in a leader on the Bretton Woods monetary conference. "That 34 nations, welded together by common purposes in war, have been able to agree on the desirability of setting up these two novel institutions (the international monetary fund and . the world bank) in order to give unity to their purpose in peace is a heartening achievement." The Times says the next step is to ensure that the ultimate community of purpose—the existence of which is not in doubt —shall not be frustrated by disagreement on methods. It is of the opinion that the commercial policy required to make tho monetary arrangements fruitful, stable and conducive to the expansion of world economy should form the next subject for serious international study. Chances of Success The fund and the world bank, continues the article, represent in a now form an attempt to solve the international economic problem, in the way in which it was solved during the 10th century, and in which its solution was sought in vain after the last war. Ts this third attempt likely to succeed where the second met failure? Before the last war, international loans went to undeveloped find underpopulated areas which could supply valuable food stocks and raw materials required by the lending countries. After the present war, international credits, short-term or long-term, will be required and will be demanded mainly by developed countries devastated by the war, and by over-populated areas anxious to industrialise themselves. And the new lending countries, unlike their predecessors, are unlikely to be eager to import the products of their capital investment, Nffw Conditions ol Lending Witt international lending in theso new conditions he ablo to serve its former purpose? Will it lead to international equilibrium in the semi-auto-matio way of the 19th century, or wall it be necessary for all countries, singly and jointly, to engage in a much fuller measure of planning and direction m their international economic relations? j These are vital questions for Britain ! and the British Commonwealth, and, above all, for war-devastated Europe. The conference, concludes the Times, cleared the way for the creation of these two essential instruments to do internationally what hitherto ill the main has been done or left undone nationally. The framework is there. The methods to be employed within it remain for further debate. Breakdown ol Gold Standard The Daily Telegraph, in a leader, says nothing between the two wars' contributed more to the world's economic distress than the breakdown of the gold standard, coupled with the failure to set up anything in its place, 'this is due partly to tardiness in realising that a system which worked reasonably well in the 19th century is no longer applicable t-o the altered circumstance ot the 20th. , Now that this has become well and universally understood, nations are showing a 'heartening and timely willingness to agree to a workable alternative That is the outstanding significance of the Bretton Woods conference. At the same time, it is important to remember that Bretton "Woods docs no more than provide the machinery, and that much more is necessary if we are to enjoy the advantages of prosperous and expanding trade. Two Separate Objectives It should be made clear, says the Dailv Telegraph, that the fund and the bank are directed toward two entirely separate objectives. The purpose of the fund is to combine stability and flexibility in exchanges and thus facilitate the" adjustment between domestic and international conditions oi trade without resort to deflation on the one hand, or unregulated devaluation on the other. To get rid of these causes of economic disturbance will be an immense gain. . The aim of the proposed bank rs to give a smooth flow of investment in warscarred and undeveloped countries, and hasten their rehabilitation. Ihe pattern of things to come is gradually taking shape.