CLEARING UNION AFTER WAR

Southland Times, Issue 25024, 9 April 1943, Page 5

CLEARING UNION AFTER WAR

British Scheme For Fostering Trade

(8.0.W.) RUGBY, April 7. The Governmen White Paper, “proposals for an International Clearing Union,” recalls the Chancellor of the Exchequer’s speech in the House of Commons on February 2 when Sir Kingsley Wood spoke of the post-war need for an “international monetary mechanism which would serve the requirements of international trade.” Described by the Government as a “preliminary contribution to the solution of one of the problems of international economic co-operation after the war,” plan in the White Paper has been prepared by the Treasury, in consultations with other departments and after informal discussions with officials of the Governments of the Dominions and India and others. It has been communicated to the representatives, of other United Nations.

The chief purposes of the plan are to provide a generally acceptable means of payment between nations to ensure that any alterations in the exchange values of national currencies will be made as a result of orderly international procedure and will not be a unilateral action. It will relieve from excessive strain any nation suffering from a temporary difficulty in meeting its obligations to make payments abroad, while at the same time subjecting it to gradual pressure towards restoring the position. All these purposes are subsidiary to the main purpose—the promotion of a steady expansion of the flow of international trade.

INTERNATIONAL BANK MONEY The White Paper proposal is to establish an “international clearing union based on international bank money called, it is suggested, ‘bancor,’ fixed but not unalterably in terms of gold and accepted as the equivalent of gold by all the members of the union for the purpose of settling international balances. The central banks of all member states —also non-members —would keep accounts with the union, through which they would settle exchange balances at par value as defined in terms of ‘bancor.’ Countries having favourable balance payments with the rest of the world would have a credit account with the union and those having an unfavourable balance would have a debit account.”

The White Paper continues: “The idea underlying such a union is simple—to generalize the essential principle of banking as it is exhibited within any closed system. The principle is the necessary equality of credits ,and debits. If credits can only be transferred within it the union can never be in difficulty in honouring cheques drawn upon it. Its sole task is to see that members keep the rules and that the advances made to each are prudent and advisable for the union as a whole.”

Some minor provisions of the plan are that all the Allied nations will be invited to become original members. The governing board will be appointed by the governments of member states and those with small quotas in convenient political or geographical groups. Member states will agree between themselves on the initial values of their own currencies in terms of “bancor.” The value of “bancor” in terms of gold shall have a quota based perhaps on imports and exports, which shall determine responsibility in the management of the union and the right to enjoy the union’s credit facilities. Member states shall agree that the payment of currency balances due from other members shall be the transfer of “bancor” in the union’s books. NON-MEMBER STATES

The governing board shall be entitled to ask and receive from each member relevant statistical and other information. Non-member states keeping clearing accounts with the union would have no right to overdrafts and no say in its management.

The White Paper points out that the clearing union might become the pivot of the future economic government of the world.