Evening star., 1949-05-01

In tise end The lEl!teSs States
wAs compelled 10 aatetNvss and
stAaallsr tsar economies os tie va
raoass cetIntEae agss ey cae Fsyst.
Ia 1879. wv SeAli wrftn Austria IN
lss&. Hungary Sas ssAa!ases alsa
in 1894 Germany had is Dawes
Plan. Poland wHAs dealt With IN
1927 In tAe etsa t!ss COLLAPSE al
1929 and tle eSofoaiic anarchy
o! The laSl-lsSs g>eg lssi occurred.
In order to avert yes sllfrsssee
Of economic chaos similar ta that
Of The lsse-sl peglCsd and TIE vESs-
rsognic anarchy 81 Tie 1881 1879
period which followed uiilsaah!nE
the pound sterling from sold the
Breton WoSds agreement ~aA
devised Thls agreement resulted
In the establishment oI the Inter
national Bank leg Reconsii acs sien
and Development and the Inter
national Monetary Fund
Aione.sr, Fund Aims
The International Monetary
Fund WAS 10 aAsiSi IN the estae-
llshment o. . maltiAteial sySlsTn
OF payment of trade balances
=. hrlns about all elimination
Of foFeign eSchAnge restrictions
which hamper the groSth OF
world trade and pfumete
exchange stability, TO maintain
orderly exchange arrangement.
among members and 10 avoid COM
pctisive exchange valuations
Article " OF the International
Monetary Fund. in effect, Fe-es-
tabllShed the gold standard in .
new and flexible form This AT
ticle provides that The par
value Of the currency Of each
member shall be expressed in
terms of gold as . common de-
nomlnator or In terms OF the
United States dollar Of the weight
and finenesS IN effect on july ].
is44"
Although the par values are
thus fixed. these articles provide
that TO correct q fundamental
diSeouilihrium" any member
country may. after consultation
with the fund. change the par
value OF Its currency Any pro-
posed change which does not ss-
ceed 10 per cent OF the lnitiaiiy
established par value must. under
the articles. be approved forth
with-~"the fund shall raise no oo-
/ lection" TO II. Is the language.
When any proposed change en-
ceeds 10 per cent, the fund may
either concur or object" hu, its
attitude must be declared within y
specific period depending upon
the amount of the proposed
change.
Thus a flexible sold standard
was established under the Inter
national Monetary Fund Wheth-
er or not the fund wiii succeed IN
promoting stability and orderly
exchange arrangements amonE its
members and avoid economic
chaos Is still problemAtical Ger
tainly the time Is ncsr when =
test is TO be made. for The world
Is now rapidly moving from q var
economy OF scarcity 10 q peace
economy Of abundance and ways
and means must be found some-
how 10 circulate the abundance.
As early as February. le4s. a
fund authority stated that there
were indications that In some
countries the exchange rate VAS
becoming q restraining factor on
exports and was adding to din
culties In earning convertible
Unto gold euTTencies. This au-
thority also stated that the fund
stood willing 10 act promptly
whenever q change In the par
value OF a currency became neces-
sary because the countTy's export
position Was threatened, The
firkt annual report OF The fund
stated that II was expected that
changes in par values would b
necessary when the export eapA-
cities Of various countries had In
creased and the buyers mafkft
was superseded by sellers mar
ket when these countries develop
production 10 point si1sfs they
have export kuTpluses for ssls
Gold Price Basis
Apparently the time for de-
valuation has arrived. But ths
initiative does not lie vlth the
fand--any meufber country DE-
string n reYaiuasinn of ita cur
rency must take the firEt step
In is<s. European production
increased IL per cent. agrieul-
tural output was up Is PER cent.
and preliminary ECA figures place
Europe's income at I3s billion.
compared with 100 billion IN isS7.
Ali OF this increase has gone back
into expanding Europes means Of
production. thus greatly expand
ting industrial productive capacity
on the continent. Already over
all supply has caught Up with
demand and many countries are
developing export Elrpiah<s.
! All this brings close the time
when q postwar period Of adjust
nsent similar 10 that Of 1904
must be faced. Whether or not
the impact OF such an adjustment
viii be successfully cushioned BY
the artanciaiities introduced into
the economy Of the world is highly
prohlenatseai.
Paul Hoffman. the EcA brad.
has Indicated that financial sta
blisty ansong ECA nations must b
achieved this year. He kas6 that
lack Of consertinsiity Of eaiTreneiss
Ia the worst Of al trade barriers.
This obviously implies that de-
valuation Of many European cur
rencsea wIii be accomplished -
1913. since rsYaiuataon necessarily
precedes free ccnsestanalisy. OF
course. free consersshaliiy h~twesn
hard and soft etTFenry ma