The Timaru Herald TUESDAY, JULY 4, 1944. World Monetary Plans

Timaru Herald, Volume CLVI, Issue 22935, 4 July 1944, Page 4

The Timaru Herald TUESDAY, JULY 4, 1944. World Monetary Plans

THE. Devil, speaking in one of Bernard .Shaw's plays, said: “In Ihe arts of peaee Man is a bungler.” I here is plenty of evidence to justify that jibe, but with liberal experience to guide hint, there is no reason why Man should continue to bungle the arts of peace. The United Nations’ conference which has now been opened in the United States to discuss post-war international monetary co-operation is evidence that national leaders are now genuinely desirous of removing imperfections from the economic ordering of things which have unquestionably played some part in the present temporary breakdown of civilisation. The Bretton Woods meeting, if it proves at all fruitful, will help mankind, just as oilier plans being mulled over in these times are designed to do. Perhaps it may be excessively optimistic to suppose that all these proposed humanitarian international engagements for the general improvement of man’s economic lot will develop in blissful accord like love’s young dream. The ending of the war cannot mean that human nature will change quickly and completely, and that there will be a swing from competition and selfishness to a hitherto inexperienced form of universal benevolence. The run of the stream will not alter miraculously, but it is encouraging to know that the thoughts of men of goodwill are tending to move in the direction of new goals which may be reached if a spirit of unselfishness and compromise persists in the vital postwar years.

All the United Nations are represented at the Bretton Woods conference, and no country represented there will be unaffected by its deliberations if a basis of unanimous thinking on monetary questions cam be reached. New Zealand delegates are attending the conference and the Govrnment is so concerned about the people having knowledge of the plans under discussion that the External Affairs Department has issued a pamphlet on the proposed International Monetary Fund. Mr Sullivan, in his introductory note to this publication, says that the Prime Minister has already stated that New Zealand "would not make any agreement with regard to international currency or monetary policy till after discussion in Parliament.” Since this will be the altitude of all participating Governments, the deliberations of the conference are likely to be exploratory rather than conclusive. A plan devised after compromise between British ami American experts is before the conference; it has been approved by experts from other United Nations, and will, therefore, be the basis of discussion.

The first proposals for international monetary control were made about 13 months ago in reports issued in Britain and the United States. The British plan was fathered by Lord Keynes and the American by Mr Harry White. They became known as the Keynes and the White proposals. After the offerings of these economic experts had been discussed, it was found possible to devise a jointly agreed “Statement of Principles for an International Monetary Fund.” “The central framework of the joint scheme,” says the Economist, “follows the original American proposals more closely than the British. The idea of an international institution ‘creating’ international credit and lending it on overdraft to deficit countries proved too novel to win general acceptance. The alternative has been accepted of constituting a fund by initial subscription from the member countries, which would then he able to obtain from it supplies of such currencies as they needed.” Under the proposed International Monetary Fund member countries shall subscribe in gold and in their local funds quotas to be agreed, which will amount altogether to about $8,000,000,000 if all the United and Associated Nations subscribe to the Fund (corresponding to about $10,000,000,000 for the world as a whole). The obligatory gold subscription of a member country shall be fixed at 25 per cent of its subscription or 10 per cent of its holdings of gold and goldconvertible exchange, whichever is smaller.

The conflict at Bretton Woods, and it is inevitable that there will be strong conflict of views there, is most likely to centre upon the gold question. The United States is evidently in favour of having the international fund based largely upon gold. That is not surprising in view of the fact that the United States has nearly 60 per cent of the world’s gold total. Recently the Financial Editor of the Christian Science Monitor wrote: “It does not appear likely that there wilt‘be stabilisation of exchange rates divorced from gold

Whether the Keynes or the WhiteMorgenthau plan prevails, or whether the dollar sterling standard proposed by Leon Fraser, it is perfectly evident that gold is not a gone goose, but a very active ami desired metal. Some quarters feel that placing gold in circulation again would be a decidedly beneficial move.” This emphasis upon gold in United States monetary thinking will provoke widespread suspicion, which may or may not be justified. Gold at any rate will be talked about a lot at Bretton Woods, and it will be thought about a lot in all countries which hope for sustained prosperity when the war is ended.