Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-08-21
BY SIR ARTHUR SALTER,

initiated preparations for the great
World Conference foreshadoWed in thu
telephone conversations between Mr.
Stimson and the British Prime Minister
The world depression becomes intensi.
fled as it Is prolonged, and it is in.
creasingly dominated by the worlds
financial position. AS this is written
world trade is still declining, both in
volume and value; prices are still fall.
ing; unemployment figures are still
rising; debtor countries still upon the
gold basis have an increasingly precari,
GUS reserve position: default is follow,
ing arrangements with creditors and il
likely to extend further.
Nevertheless, there are some signs Of
hope and several indications that the
decision to proceed with world con-
ference Is not just counsel of despair
but founded on reasonable chance Of
success.
Lausanne is the most definite Of
these reasons for hope. 1t puts ar
end to the system of PREPARATIONS. II
is now certain that Germany will never
pay, or be expected to pay, any fur
Their sums in respect of war damage
that can interfere with the restoration
Of her credit or embarrass her ex-
change or be disturbing factor in the
exchanges and the trade of the world
For after moratorium of three years
the maximum she is ever required to
find in year is $44,000,000, less than a
tenth of the impracticable requirement
Of the Young plan; and even this mod
est sum is safeguarded by conditions
protecting her credit.
Credit Is Protected.
And unless Germany herself is so ILL
advised as to refuse to ratify so favor
able settlement, she is protected from
the adverse effect upon her credit and
reputation in the world that unilateral
default would have involved.
The significance of Lausanne is not
that it relieves Germany of intolerable
payments which she would otherwise
have made, but that, if ratified. it
achieves this relief by consent and not
through default and offers some hope
to the world that those debts, both
governmental and commercial that
have become intolerable through fall
ing prices and restricted trade, will be
similarly revised by consent.
But If the reparations agreement
needs war debts agreement COR agree
mentS) to complement 1t and complete
its success, it already means much. 1t
means that the European governments
have been able to face economic facts
realistically, to act responsibility as cred
ttors in dealing with a situation obvi-
cusly needing to be dealt with and to
coliaborate sinsso doing.
And this Is not the only sign of
hope. The success with which the
British conversion proposals Covering
some S0,000,000.000 of internal debit
have been launched is another. And in
a different sphere the Belgian-Dutch
proposals (Which will be described
later for progressive diminution of
tariffs are at once welcome sign of the
new realization that trade barriers must
be reduced and, in my view, an indica-
ton Of one Of the most promising meth
DDS by which this result may be at
tanned.
1t is at this moment, too, that the
important American experiment in
monetary policy is reaching its inter-
esting stage. 1t Is foolish to say, as
some do, that the policy of the Federal
Reserve authorities of pumping money
into the market by the purchase OF
securities has failed. Such a policy in
any case must require a considerable
time beforce it can Show its results
And in this instance the new resources
had first to counterfeit the effect OF
boarding and then that of the outflow
OF gold through the withdrawal of for
eign balances; while any surplus left
over was then bound to be first utilized
by the banks to make their situation
more liquid.
Hoarding Is Arrested.
boarding now seems to have beer
arrested; the outflow of gold has beer
arrested; since the unstable foreign
balances have been reduced to small
dimensions, no serious renewal can be
threatened so long as there is no flight
from the dollar" which is now un.
likely, and the banks have made them
selves much more liquid
Unless, therefore, the American citi-
zen defeats the policy by lack of con-
fidence, all the conditions should now
be assured for monetary action doing
all that such action can in its nature dc
to arrest and reverse the downward
movement Of prices. Its success depends
upon the responsiveness of the demand
Tor money and SO upon the general eco
nomic prospects.
Before we come to the world economic
conference itself we must glance briefly
at the others. The disarmament con-
ference, If it succeeds when it recon-
venes next Winter, has treble contri-
button to make 1t will relieve the bur-
den on every budget; it will improve
the conditions under which the war
debt negotiations will proceed; above all
it will relieve the political tension which
Is the chief obstacle to the rebirth oil
confidence. The best policy for all those
who are working for either peace or the
return Of prosperity is to press for the
adoption of the best-which In genera
terms means the maximum-of all the
proposals, such as the American anC
the British.
Then there is Ottawa, in session a.
this article Is written. The vital neec
here Is that. II the members Of the Brit.
1sh commonwealth make their mutua
relations closer and stronger, they shall
do so in way which will make then
better. and not worse, members Of 6
world community. The real test OF sue,
cess at Ottawa. as at every other confer,
ence of this period Is whether it result.
in the total volume of trade bein,
greater and not less.
This Is not an impossible goal The
procedure and organization of imperia
consultation may be improved; co-ordi,
cation Of monetary policy may be ar.
ranged; and certain division of func'
ton agreed, each undertaking not Il
foster certain manufactures or proc
esses-all with much benefit and n,
evil consequences. But obviously Can
ada cannot afford to destroy her trade
with the United States, nor Grea
Britain with the Argentine. Europe anc
the East. And in particular Grea
Britain cannot afford to lose what l
likely to be the best opportunity sh'
has had this century of bsrgainint
down other countries :ariffs-and L
bargain one needs to be iust as free Il
take tarif OF as to put one on.
Committee Is Appointed.
1t is with this background that W
must now look at the proposals of Lau
same for new conferences. The first
a purely European scheme. A specia
committee has been appointed to con
slider how the exchange restrictions an
trade barriers which are strangling Eu
ropes trade can be removed. This com