24 JANUARY 1920, Page 7


I 0 more important proposal has been made lately 1.11 than that contained in a Memorial presented simul- taneously by well-known citizens in many countries to their Governments. In all these different countries the Memorial is practically identical in form. It invites the various Governments to co-operate. in setting up an Inter- national Financial Conference to draw up a plan. for remedy- ing the widespread finanoial chaos. This chaos is of course chiefly due to the abnormal, indeed astounding, state of the exchanges. Among the British signatories are Mr. Asquith, Sir Charles Addis, Lord Bryce, Lord Robert Cecil, Mr. Clynes,. Mr. F. C. Goodenough, Mr. Edward Grenfell, Lord Inchcape, Sir Robert Kindersley, Mr. McKenna, and. Sir Richard Vassar-Smith.

Mr. Keynes in his book, which is being so much talked about, made it a principal charge against the Paris Peace Conference that while the " Big Four " talked incessantly about the rearrangement of nationalities and frontiers, the real problem before them, the financial rehabilitation of Europe, was not touched upon at all. There is only too much truth in the criticism. It is easy enough to say that if the various countries of Europe would only get to work they could soon recover their prosperity. Unhappily some of them cannot even begin to get to work. They cannot afford under the ruinous condition of the exchanges as they are now to buy raw materials or to buy manufactured goods in exchange for their own. We in this country know the disadvantages and difficulties of ttading with America because the exchange is against us, and yet the exchange is only very little against us as compared with the experiences of other countries. The American dollar, which before the war was worth about 2d., is now worth almost 5s. 6d. Such an exchange does not cfipple7us, and in one sense it is even a good thing that we should not import a great many American manu- factured articles which we cannot afford. But look at the exchanges elsewhere. The German mark, which used to be worth ls., is now worth about a penny. The French franc, worth 9id. or 10d. before the war, is now worth less than 6d. Worst of all is the Austrian Krone. Kronen are now worth three a penny instead of more than 10d.

The Memorialists suggest that the International Financial Conference ,should represent Great Britain, France, Italy, Japan, and America, together with the British Dominions, the European neutral countries, Belgium, Germany, Austria, and the exporting countries of South America. They lay down some excellent doctrines, but they do not put forward any definite scheme. That after all is reason- able enough. It would be the work of the Conference to produce the scheme. The aim would be to arrest " the continuous growth in the volume of 'outstanding money anti financial obligations." Of course economy is one of the -best of financial medicines, and it is suggested that a condition of financial help should be that any country assisted should adjust its expenditure to its taxation. Here perhaps we see the hand of Lord Robert Cecil, who has often demanded that the British Departments should be rationed financially—a very sound suggestion. It is essential that inflation should be checked. The printing- presses which turn out the paper money must work short time. When all, has been said, economy and production— everything which would restore. Europe to a normal state —depend upon the restoration of the exchanges ; that is to say, upon credit. The signatories to the Memorial are convinced that this problem is quite beyond the powers of the bankers. The Governments must step in, though they must be most careful not to shackle trade or to interfere with it in any unnecessary way. Their business would begin and and with restoring credit.

It is plain that countries with a favourable exchange can help a good deal, and countries with an unavours.ble exchange can help much less, and in some cases not at all. This means that the countries- which are in a position to help most are the United-States, the richer neutral countries of Europe, and the large • Republics of South America, We should feel considerable embarrassment in making any appeal to the United States. Sir George Paish's financial campaign in the United States does not seem to have been regarded with much favour, and it is very un- pleasant to invite rebuffs. Fortunately the matter has at last been settled for us by leading Americana themselves. The American signatories to the Memorial make an excep- tionally powerful list, and include such names as Mr. Taft, Mr. Hoover, Mr. Pierpont Morgan, and Mr. Root, as well as a host of well-known men among the bankers and captains of commerce. 'Leading men in. America are evidently prepared to act with their customary generosity and good sense. We say " good sense " because evidently the lInited States cannot enter fully again into trade with Europe till Europe is in a position to respond.

We are glad to see that the signatories insist upon the importance of fixing the indemnity which Germany shall pay. Almost ever since the signing of the Armistice we have asked that this should be done. It is merely a matter of business that we should give the Germans an incentive to work hard and pay off whatever debts they can. Can a worse incentive be conceived than the feeling that the harder they work the more they will have to pay ? Yet that is exactly the feeling which we have allowed to fester in German minds. We ought to. say in effect to Germany : " Such-and-such is the precise amount which you will have to pay. The International Financial Conference has care- fully inquired into all the facts, and it has come to the conclusion that it is well within your capacity to pay that amount. Now get to work. Under the system of credit which has been arranged there is nothing to stop you. The sooner you earn the necessary amount and pay it over to us, the sooner you will recover your complete independence, your comfort, and your self-respect."