Finance—Public & Private
The City and the Conference
To appreciate or, at all events, to understand the attitude of the City towards the World Economic Conference it is necessary to realize that perhaps nowhere is there a clearer conception than at the centre of the world's finance of the main causes responsible for the prolonged world depression. Nowhere more than in the City is there keener sympathy with the many millions of unemployed all over the world who are looking to this Conference to find the way out of the present disastrous conditions.. It is a Conference, however, of politicians and statesmen rather than of bankers and financiers, although the latter are supposed to loom in the background as advisers to the respective countries concerning knotty points which may arise connected with finance and the stabilization of currency.
POLITICAL CONTROL.
Now, rightly or wrongly, - politicians are not too favourably regarded by bankers and business men at the present time. The Great War itself, which is the root cause of the loss of capital and world-wide dis- organization responsible for the present chaotic con- ditions, was certainly not the work of bankers, financiers or business men. Moreover, one of the major con- sequences of the War has been the increased control over Money Markets and industrial activities by states- men and politicians working through the Governments of different countries. I honestly believe that in almost every country a diagnosis of the situation would show that very much of the dislocation of business and the cramping of private enterprise has been due to Government policies and often to policies linked with extravagance in National Expenditure. Yet, such is the grip which Governments have obtained over finance and business that it is becoming increasingly difficult to restore conditions giving fresh impetus to those forces of private enterprise which in the past proved to be the creators of new wealth.
GROWTH OF DEMOCRACY.
Strangely enough, too, this very increase in Govern. meat control and restrictions and the cramping of liberty of private enterprise have been accompanied by a growth in the power of the forces of Democracy. But unfor- tunately the increased power has preceded increased knowledge on the part of the electorate in many countries, and, not least in our own, Democracy has been led into wrong paths by vote-seeking politicians, with results which have cost the country dearly as a whole, but which have reacted with special severity upon Democracy itself as represented by the workers.
WAR DEBTS.
I suppose no more forcible illustration of the dis- astrous effect of politics upon the world financial situation could be furnished than that which is supplied by the problem of War Debts. Before this article appears in print we shall have reached a decision with regard to the June instalment on the War Debt to America. At the moment of writing no gesture has been made on the part of Congress in America either as regards accepting a token payment for the present instalment or as regards a final revision of War Debts. And yet for some few years now there has been a world-wide recognition that, quite apart from questions of equity, world conditions have made the payment of these War Debts if not an actual impossibility a process severely detrimental to debtors and creditors alike, the position, moreover, being greatly worsened by the fiscal policy of the United States— dictated by politicians—in blocking by high tariffs the payment of War Debts through goods and services. This, as I have said, is a fact universally admitted. Yet when more than a year ago we desired to press the United States for a Conference to revise the Debt agree- ments we were completely prevented from so doing, not because of any question of the justice of the demand or because the facts were not clearly recognized, but because the Presidential election was looming in the distance in the United States, and the question of War Debts was made a purely political issue divested entirely of its con- nexion with world depression. When the Presidential election was concluded and the pressure was renewed for a Conference the matter was again delayed. Why ? Not because the need for the Conference had become less urgent, for the world situation was manifestly becoming worse. No, the explanation offered on this occasion was that by reason of the domestic political arrangements in the United States the interregnum of some months between the outgoing and incoming Administrations made it impossible to consider the matter. And when the new Administration came into Office, and when it was quite clear that for the speedy success of the Economic Conference it was essential that the War Debt problem sl'ould be cleared out of the way, and that the United States with -its huge stores-of gold and a favourable trade balance should meantime- hold, the fort with a stable monetary staildard,- thereby aiding -Great Britain also to return to of at 'a fairly early date, what was the actual
- THE PROBLEM STILL SHELVED.
' First that the -War Debt problem was completely shelved so fai as Washington was concerned, and secondly, that so far from having :upheld the golds tandard in America the Administration at Washington had plunged the world into fresh chaos by departing from gold and repudiating gold clauses in all loan contracts. And for both of these untoward circumstances the cause is to be found in local politics in America. ' The complete ignor- ance of the constituents over the vast areas of the United States was responsible for Congress refusing to face the War Debt problem, while President Booievelt's sudden abandonment of the gold standard was due to the pressure brought Upon him by the inflationist section of the Democratic Party. ." • (Continued on page 890.) course- Of events ? -- -Finance—Public -and- Piivate (Continued from page 888.) • THE UNITED STATES' " LEAD."
' These, then, are some of the reasons-'why the City i; unable at present to-feel very hopeful- with regard to the . outcome of the Economic Conference.- I do not know whether many- of the readers of this -article may him. listened to the interesting discUSS'ion on the Conference which _took place on Sunday afternoon between Mr. Walter Lippmann,- eeonornist'and 'publicist in the I "cited States, and Mr. J. Maynard Keynes in this country. It , was an admirable discussion any not-the least interesting feature was the frank -recognition by Mr. Lippmann ()I' the need for clearing -up this problem of War Debts. think, however, I am fairly interpreting the main point in Mr. LipOmann's arguments when I say that in reply ' to: Mr. Keynes's recognition --of the immensity . of the problems • to be presented to the 'Conference and the difficulty of obtaining anything like unanimity of agree. Ment, . Mr. Lippmann took the view that the aim of the Conference should -not. be, so much to secure unanimous agreement-on the part of Governments as to ensure that the principal .countrieS such. as the United- States, Great Britain and France shOttld give a strong lead to the world by shaping a forward policy of their own, that policy, among otherthings, to cover some agreement with regard to exchange stabilization and a general increase ill credit facilities.. Great Britain, France and the 'United States, said Mr. Lippmann; .must use their great power to raise prices to relieve debtors and the unemployed " and generally .to enhance the capacity of their own people to 'buy goods?' Mr. Lippinann then .very: naturally pointed to President Roosevelt as having himself given a great • lead in thiS direction, though in 'the light of the deliberate policy of forcing down the value of the dollar and of restraining the U.S. - delegates to the - Economic Con- ference from exercising any power to negotiate tariff or trade agreements, to say nothing of excluding War Debts from the Conference, it is hard to escape the conclusion that the policy of the .United States, whether sound or unsound, was devised with the one sole object of expanding American trade; : . ; A DOUBTFUL POLICY.
I am afraid, however,that it has yet to be demonstrated that the policy which is now being pursued in the United States will, in the long run, bring about enduring pro- sperity even there, though failure to do' so would be a kind of secondary disaster reacting upon other countries, for no small part of the world depression since- 1929 is directly attributable to the Mistakes made by America with regard to the conductOf her financial affairs:, The primary essential- 'for success in the World Economic Conference is that there shOuld be a will to co-operate in bringing- -about • not national-- but world improvement, and, therefore, I believe thatit is of the utmost importance (Continued on page 891.) - that the United States should give clearer evidence than she has done at present of her sincere desire to contribute. to that end. ,
ARTIIUR W. KIDDY.
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