Evening star., 1950-02-05

or wines, usually at prices above
their worth. The importer Of
those articles has the choice of
buying them or keeping his money
idle at home, since his own gov
ernment won't allow him to spend
it in any other country. If the
exchange restrictions were re-
moved, the importer-under the
ECA proposal-could spend his
francs or his lire anywhere in
Western Europe, or even in India
or Australia. Instead of perfume,
he could buy farm machinery,
steel, jute or wool. Trade would
perk up. His currency would thus
become convertible" into any
other European currency, although
not into the United States dollar.
In other words, under ECA's cur
rency plan for Europe, trade and
payments determinations within
the ERP area would be done away
with in the end, although discrimi-
nation by ERP lands against
American goods and services would
unavoidably continue.
How ECU Would Work
Although the Marshall Plan
was designed to give Europeans
the dollars to spend for American
goods they want, it was early
recognized that such goods could
often be had in Europe itself at
lower price, provided the prospec-
tive buyer were furnished dollars
in place of his unwanted currency.
ECA therefore has encouraged
"offshore" buying in Europe as
we'll as elsewhere. In effect it
handed over dollars which France,
for instance, could spend for,goods
which the Belgians were unwilling
to sell for paper French francs.
Actually, the dollars were paid by
ECA directly to Belgium in that
case. Under the name "condi-
tional aid" this system was for
malized in the Intra- European
Payments Plan for 1948-9, replaced
last July by revised plan evolved
after long wrangling. Although
sweetened by American millions,
that plan has not been successful
enough; so ECA has now drawn
on the ideas of the late Lord
Keynes, who in 1943 published a
detailed scheme for an interna-
tional clearing union in which
each member country would have
a quota of drawing rights payable
in new monetary unit to be
called the "bancor."
The proposed European Pay
ments, Union (EPU) would not be
exactly like that suggested by Lord
Keynes, which emerged from the
Breton Woods Conference consid-
erably changed and now exists as
the international Monetary Fund.
1t would not be worldwide, but
mainly European. 1t would have
a nestegg of gold or equivalent
American dollars furnished by
ECA. Its accounts would be kept
not in "bancor" but in units called,
say, "ecus." All current trade
among ERP countries and their
affiliated monetary areas" would
be cleared through the ECU. The
latter would be very much like a
bank in which the members have
checking accounts up to certain
quotas" If member like Greece
wants to buy some goods in Britain.
Tor example, it draws a check in
ecus against it's account with ECU
and gives it to Britain. That coun-
try in turn may spend the ecus
anywhere else in the ERP area,
under the plan, and any other ECU
member will be perfectly willing
to accept the ecus, whereas no one
might be willing to receive any
more Greek drachmas.
British Stalling
Obviously, ECU begins to step
into the field allotted by United
States and international policy
to the World Fund created at
Breton Woods. ECU would have
things to say about exchange-rate
changes in member countries:
about the curbing of imitation:
about discrimination.
At this writing ECU is far from
being assured of adoption. One
group of ERP countries led by
Belgium believes in gold settle
ments and wants ECU, set up now.
Britain seems to be stalling for
various reasons: The election this
month; the well-rooted preference
for bilateral arrangements; the
desire to see sterling used as wide
~ as possible to settle balances,
fortified now by the Uniscan ar
trangement with Scandinavia.
Some hesitate about ECU for fear
OF being swallowed in the infla-
tionary folds of the sprawling
sterling area. Others hesitate for
fear of greater United States in
f1uence on the continent.
Here, too, views are divergent as
to the pros and cons of Mr.. Hoff-
mans clearing union, while over
the country export interests see
small advantage to themselves if
Europe knocks out the inner walls
and partitions, but leaves the
outer barriers undisturbed for
American products to hurdle when
ECA stops giving dollars away.
Last fall in Paris, Mr.. Hoffman
practically begged the OEEC to
ntegrate Europe in a dramatic,
unmistakable way so as to "give
new impetus to American sup
port" for ERP until 1852.
Now, after another Paris trip,
what can he show? They have ap-
pointed as the long requested
high-level OEEC "conciliator'' not
Mr.. Hoffman's man, but Britain's.