Clearing House Follies An interesting and forthright report on the
recent, mushroom growth of exchange clearing agreements was presented to the League Council this week by an unusually authoritative Committee. Clearing agreements are a by-product of exchange restrictions. When a, country, Germany for example, progressively restricts payments abroad by its citizens, especially for debts incurred, it is only natural that the creditor nations, such as Switzerland, should impound the sums due to Germany in payment for her exports, and apply them to the discharge of German debts to Swiss nationals. A clearing agreement compels all transactions between the two nations concerned to pass through this offsetting mechanism. The system has certain superficial attractions it _makes a minimum of trade possible and inculcates in the clearest possible way the lesson that imports pay for exports. But these attractions are specious. The Committee's report shows that clearing agreements rarely increase, and usually diminish, the total trade passing, and that they force it into unnatural channels by producing an absolute equality of imports and exports between each pair of countries. Much the most interesting part of the report,' however, is its barely:veiled advocacy of devaluation, together with the removal of all restrictions, for the European debtor countries. In English eyes, this has for long been the obvious solution for the present deadlock. But on the Continent, still haunted by the bogy of inflation, such views are still dangerous heresy. It is significant of the rapid change of opinion that is in progress to find them in an official report with French and Dutch' signatories.
Previous page
