Evening star., 1952-09-07
Warming From the Fund

In its report for the year ended April go the
international Monetary Fund has confirmed
what numerous other agencies and individuals
have been saying for some time past about the
economic health Of the free world. The diagnosis
is SOLDERING one. The sum of it is that many
nations are attempting to live beyond their
means" and that the resulting inhationary pres
sures have thus far frustrated all efforts to attain
the Funds objectives.
Those objectives, as set forth in 1914 when
the 54-nation Fund organization was founded at
Breton Woods, New Hampshire, are to cut down
on exchange controls, discriminatory trade prac-
tces and similar restrictions in order to establish
stability in the field of international currency.
But such stability obviously is still very much
lacking and unless corrective measures are
taken the present uneasy monetary equilibrium"
is likely in the Funds opinion, to deteriorate to
a point that could be extremely dangerous
The Fund-which is now holding it's annual
meeting in Mexico City-has reported that the
countries chiefly affected by this situation,
notably Britain and France, face difficulties
primarily because of having been obliged to take
on heavy rearmament burdens while at the same
time undertaking to maintain or improve their
domestic economic and social standards In the
process, particularly because Of their need to
import from dollar areas without being able to
export to those areas enough goods to pay their
own way, they have been spending more than
they possess, and to keep going they have had to
rely on large-scale American aid and emergency
trade restrictions.
Without specifically saying so, the Funds
report depicts rearmament as the chief villain
of the situation, and in that respect it tends to
give ammunition to such people as Britain'S
Aneurin Bevan, who would like to slacken the
pace and reduce the scale OF the Western defense
build-up. Yet, given the very real threat Of
Soviet aggression, that bud-up is imperative
and there is nothing in sight to encourage the
hope that the United States and its Allies will
be able-with safety-to make any drastic cut
in their common military effort for some years
to come. The outlook in that particular depends
primarily on the men Of the Kremlin.
What then is to be done about coping with
the economic dangers that have been aggravated
by rearmament? In his recent report to the
President William H. Draper, jr., United States
Special Representative in Europe, has observed
that our country which has huge export sur
plus. must greatly increase its imports from
overseas. In addition he has declared that our
friends abroad for their part, must do much
more than they have been doing to eliminate
their mutual trade barriers, expand their produc-
tivity, integrate their economies and in general
with projects like the Schuman Plan-speed up
their effort to return to selfsupporting position.
Mr. Draper'S proposals are not new, of course.
The International Monetary Fund Is in favor Of
much the same sort Of program. So is the
Organization for European Economic Co-opera-
ton. The trouble is that not enough action has
been taken as yet to do what everybody agrees
needs to be done. The longer. 1t is delayed, the
greater will grow the danger about which the
Fund has warned.