At Grips With The Crisis
NOTHING could do more to stimulate confidence in the ultimate success of the Economic Conference than the arrangement regarding War Debt payments announced in the House of Commons on Wednesday. The passage on Debts in the President's opening speech has aroused some criticism, but there was full justification for it. As long as no prospect of determining the final liability of the European debtors to the United States and to one another was in sight doubt and hesitancy inevitably overhung the Conference. As long as the pay- ment of large sums for which no gold is available and goods are not accepted (since they are kept out by inflated tariffs) impended, so long the problem of stabilizing exchanges was bound to prove insoluble. As a result of this week's negotiations with Washington the War Debt question has not, of course, been settled, but it has been put in the way of settlement. The " token " payment of $10,000,000 dollars in silver (roughly 10 per cent. of the amount due) offered by the British Government has been accepted by President Roosevelt in a spirit of cordiality for which deep appreciation must be expressed, and immediate assent is given to the proposal that conver- sations should be entered on forthwith in regard to a final settlement. There is, of course, another side to that hope- ful picture. Mr. Roosevelt, as he is careful to point out, has no authority to close definitely with America's debtors. He can only negotiate a settlement and urge Congress, six months or more hence, to ratify it. At the best that will be no easy task. The average American still thinks the debtors should repay what they borrowed, and the President has already lost much of the authority he was able to wield over the Legislature during his first weeks in the White House. The negotiations in any case will involve haggling, and to settle even with the President alone may prove less simple a business than it sounds at• the moment. The natural basis is the payment of a lump sum representing an agreed proportion of the amount outstanding, to be raised by the flotation of a dollar loan in New York. That as regards this country. There remain the obligations of the other European debtors both to America and to us. But the first settlement negotiated will no doubt set the standard for the rest on Lausanne princi- ples. And the negotiation of that first settlement is at last in sight.
That is the first entry, and by far the most important, in the credit side of the Economic Conference's ledgers. The second is the speech delivered by Mr. Chamberlain- on Wednesday. Whatever may be said of his detailed proposals—and on the currency side, at least, there is a great deal to be said for them—they supplement valuably the " annotated agenda " framed for the Conference by its Preparatory Commission. Mr. Chamberlain declared wisely for the ultimate resumption of a gold standard, subject to the fulfilment of conditions he has formulated more than once before. He argued for a rise in commodity prices as an essential preliminary, and appealed for " open market operations " by the banks as a means for providing cheap money and easy credit. The appeal for an abolition of exchange restrictions, all absolute import and export prohibitions and all excessive tariffs is welcome, but the Chancellor was on thinner ice when he attempted to dis-_ tinguish between " arbitrary " import quotas, which he condemns, and the soi-disant scientific or regulative quotas which this country is assiduously cultivating; and his definition of reasonable tariffs as those which enable the home producer to compete on equal terms with the foreigner means simply that the benefits of all natural advantages making for cheap production are to be denied to the consumer. But the speech was a valuable cou- tribution and left the outlook for the Conference dis. tinctly clearer.
There is not much reason for declaring it clearer in any other respect as yet, except in so far as the actual assembly of the responsible statesmen of the world with a common purpose is a reason. Within limits it is. The common purpose does exist and the majority of the delegates are men who, in that they represent either an absolute Government or a Cabinet secure of a Parlia- mentary majority, are capable of giving effect to any agreement they sign, though it is disturbing to find that so many of them are as yet without authority to sign any agreement at all. The problems they have to solve are most of them complex and baffling, but for the most urgent tasks an accord between three or four of the principal States would suffice. Conversations have been going on outside the Conference, but obviously with the blessings of the delegations of the countries concerned, with a view to stabilizing a definite relationship between the dollar, the pound and the franc. If that could be achieved an immense step back towards firm ground would have been taken. The difficulties, of course, are great. America has let the dollar go with a view to raising commodity prices internally, and, like every other nation with a depreciated currency, she will be always on guard against a return to a figure which might_ injure her export trade. But to fix a reasonable parity between the pound and the dollar— in the light of criteria such as are discussed in another article in this issue—is no impossible task. Neither is it beyond the wit of financiers to give the franc its fixed place in the scheme. Finality may not be possible now, particularly finality in the relation of all three currencies to gold, but even a provisional agreement would sub- stantially improve the general outlook.
But no agreement of any lasting value is possible till some decision is reached about the function of gold. If it is to be used in the future as in the past to settle balances of international payments, not as the chief medium for such payments, then stability is possible. But that condition can only be realized if the channels of international trade are to be cleared and the relatively free exchange of commodities restored, and the principle of the payment for goods by goods (or services)becomes the normal practice once more. That involves the resolute destruction of the barriers each nation has built up round its frontiers. It means exposing protected indus- tries to external competition, and nations are as reluctant to do that as they are to expose themselves physically by abandoning ships or guns and reducing the personnel of their armed forces. An instructive enough example of the obstacles to be faced was seen lately in the outcry of certain recently protected trades in this country when Mr. Runciman announced as part of a commercial agreement with Germany the reduction of the duties behind which they were sheltering. Yet those obstacles must be faced. There is no other way. The world has seen what it means for international trade to come near disappearing. To put it in the simplest form, it means the creation of 30 million unemployed. Particular interests in every country will inevitably resist the only policy—the policy of freer trade—that can bring hope to the world as a whole. If the statesmen yield to them, and accept the fatal principle of national self-sufficiency, then that hope fades away into air.
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