BRETTON WOODS

Otago Daily Times, Issue 26226, 9 August 1946, Page 2

BRETTON WOODS

Sir, —You conclude your comments on the Bretton Woods proposals by saying, “in the end, of course, Bretton Woods will be what the controlling nations make it, but in the meantime its possible effect on New Zealand’s trade economy and the system of Empire preference as a whole must demand the closest scrutiny." Sir, you sum up the position correctly. The proposals put forth and approved at Bretton Woods are of vital importance to all countries. They' can, if used and applied justly, do much to advance international trade and prevent the evils that bring about war. They differ in effect and are far more reaching than any proposals put forward at the International Monetary Conference of 1867, 1878, 1881,’ and 1892, or during the present century, inso far that they can, by the aid of a world bank and the International Monetary Fund, be put in almost immediate operation. The success of the proposals will demand a high standard of knowledge of finance and moral integrity from all legislators if the proposals are to be of benefit to the peoples of the world. Dealing with the proposals and making an analysis, Professor Simkin and Mr H. R. Rodwell say they can " quite categorically assert that the International Monetary Fund does not mean an open or disguised return to the gold standard." It is difficult to accept this statement seing that ” on joining the fund the member nation is required to fix the exchange value between its own currency and gold.” Having done this the nation can, if it desires, “ alter the gold value of the currency (or what Is the same thing, its exchange rate) ‘within 10 per cent, limits either way at its own discretion, and can apply to the fund for permission to make further changes." If these statements have ’kny sensible and logical meaning it would appear that countries will have a paper currency linked to gold and Us external and Internal exchange value managed and controlled by a co-operated process of agreement between the Government of a country and the International Bank. There certainly can be no moral objection to such a procedure for it would be possible to prevent a country or countries from devaluing their currencies to the extent that Germany and Japan did previous to the war, for trade aggression, and which had much to do with bringing about the world trade destruction.

In New Zealand the Labour Party and the National Party are pledged to a managed currency and many members are opposed to the proposals and several parliamentary members are said to have openly stated they will vote against ratification. The National Party has decided to allow its members a free hand. It is to be desired that the question is not made a party one for its importance far exceeds party interest. If the proposals are ratified the most important point that affects New Zealand and her future is. at what ratio the New Zealand pound will be fixed, first with sterling and secondly with gold If the New Zealand pound is under-valued as at present, then the prospects for the workers and industry are anything but bright. On the other hand, if- oui New Zealand pound is brought to par with sterling and trade is allowed to flow into International channels we shall do much to advance world prosperity. It appears that the dollar is to be devalued and brought to par with sterling, and sterling is to be the international money unit as in the past. The agreement may not go far enough to satisfy the monetary utopian or the supporter of British Imperialism or American isolationism, but it is certainly a great advance on what has been done in the past towards bringing about a monetary unit that will be a basis for fair and just trading between nations of the world. —I am, etc., C. M. Ross. North-East Valley, August 5.

Sir, —It is not a little surprising that such an indefatigable exponent of Douglas Credit as “ Truth ” should have been so indiscreet as to agree that the Bretton Woods’ plan would use gold to prevent, a country from devaluing its currency at will. For the Douglasites have always strenuously maintained, in the - face of all reason and experience, that additional notes could not devalue a currency, but actually increased the amount of money, and, moreover, that gold had only an imaginary value. It is precisely for the purpose of stabilising currencies that some plan founded on gold is necessary to the wage workers. For when a country devalues its currency to compete with foreign goods on the world market, prices on the home market increase in terms of that currency, so that the same nominal wages buy less goods, and the worker must submit to a lower standard of living. It is this power to lower the real value of wages behind the backs of the workers that the Bretton Woods plan would reduce immeasurably and place within strict limits.—l am. etc., H. Gow. Balclutha, August 4.