WORK OF CONFERENCE

Otago Daily Times, Issue 25589, 17 July 1944, Page 6

WORK OF CONFERENCE

VITAL PROBLEM OF QUOTAS OPA.) WELLINGTON, July 15. ' A report on the latest developments at the United Nations’ monetary and financial conference at Bretton Woods has been received by the Acting Prime Minister, Mr D. G. SulliVan, from the leader of the New Zealand delegation, Mr W. Nash. The full text of Mr Nash’s message is as follows: “The committee set up to consider proposals for an international monetary fund has met continuously during the first week and drafting subcommittees are at work on the text, which will incorporate the various views and amendments put forward in the discussions. \ “Good progress has been made In the last few days, however, and from conversations hwitbu.tlie.-United States and other .leaders, •myt.topinion is that the prospect of Substantial agreement on the recommendations being reached at this conference are reasonably good. The United States attitude towards the fund may necessarily be influenced by domestic political considerations, ana considerable opposition to United States participation in , the proposed scheme has been expressed in congressional and banking circles.

Russian Demand

<• The most important issue not .yet formally discussed is the aggregate amount and distribution of quotas. It was decided at the outset to postpone consideration of this question in the hope that certain serious difficulties would be satisfactorily removed in the meantime. The main difficulty is the Russian demand for a quota substantially in excess of that originally allocated to it, 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 a sublet of some comment in the press over hG “ ft is reported that Russia has asked for a quota approximating the United Kingdom’s. As the quotas affect the voting strength, this means some delay in making other decisions—for example, about the machinery of management, and a consequent retarding of the work of other committees. 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 alternate proposal is that the quotas may be reviewed at intervals of five years and considered at any time at the request of the member concerned.

Major Issues

“ other major issues still under conBideration are:— “1. Commencement of the fund s operation: There are differences of opinion whether the fund should become operative immediately or as soon as possible ’ or after the immediate post-war transitional period ends. It appears that the United States delegation would like to see the fund operating as soon as possible. Another point' is that the United Kingdom favours a five-year period following the fund’s establishment before it be obligatory to remove war-time exchange restrictions, or tp consult the fund concerning their further reten«2. The 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 should be dealt with outside the fund, as the amount involved is much too large for the fund to handle. Lord Keynes, at the press conference, announced that the United Kingdom’s block sterling balances would amount to £3,000,000,000 at the end of the year, and asserted that the British Government would have to make special long-term arrangements with creditors to settle these war-time debts with exports and imports of British goods. “3. Scarce currency: Considerable discussion has taken place as to the conditions under which member countries shall be entitled to buy another country’s currency for their own. The most pressing practical difficulties may arise if any currency, for example, dollars, becomes ‘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 the other members should be free to impose restrictions on imports from ‘scarce’ currency countries. The risk ®f scarcity may be diminished by the fund borrowing currency from member countries or purchasing currency for gold. These proposals may be accepted. • r ‘ 4. Exchange rates: Highly-placed leaders of the United Stateß delegation are reported to hold the view that

the proper approach to the rates problem is to agree 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. Condition:: under which the wider variations may be made are still under discussion.

Summary of Discussions

“ Other points of interest arising out of last week’s meeting can be briefly summarised:- (a) Considerable stress has been laid on the power ox the fund to waive the 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 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 the 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) authorisation of members to exercise such controls as are necessary to regulate international capital movement has been approved.”