BACK BENCHER OUTSPOKEN

Chronicle (Levin), 30 August 1946, Page 7

BACK BENCHER OUTSPOKEN

-Press Associatioii

HOPES PARTY WILL NOT RATIFY BRETTON WOODS

By Telegraph—

WELLINGTON, August 29. A t'oilhright attack by a Government back bencher 011 the Bivltou Woods proposals, \v as a feature of tlie Budget debate in the Iiouse oi' KepiTsentalives this ai'ternoon. The speaker was Mr. 11. K. Combs (Wellington Snburbs) who, like Mr. C. M. Williams (Kaiapoi; last Kriday, expressed the hope that New Zealand would iK'ver ratiJ'y tlie Bivtton Woods agreement. He based his opposition un the ground that the agreement meant a return to a thmly disgnised gold standard i'or those countries adhering to it and tli.it the Amei'iean dollar to which gold was to be linked, liad during the past twelve months shovvn itself to be dangerously unstablc in pnrchasing power. A1 ]*. Coiiibs was eongratulated by an Opposition member 011 the courage witli which he expressed his views. '

Mr. Coiulis suid in aiMition to our prugramim1 oi intviiiul oi' domestic ectnioiny, we imri also to consider cxlonial linanciul and production eeonoiny. Oue of tlie most disturbing fealurcs from his point of view, was the eildon voui that had been made in the last tuo vears t> }Uit the world baelc on tlie gold standard. Whai was proposcd was iiot a gold standard in ac tuahu y liut was so near to it and so thinly disgnised. thut it ruisoit i'ears in his mimi, and iu travelling th rough the eounliy he fotuul those i'ears not limited tc hiniself. As a puidir man repiesentiug an imporluut eoastit ueuey, he felt it iucuiulient on himself to exprcss hiniself fraukly roiu-eriiiiig wliat was known aa the 1 >i oi ti in Woods agreement. In 1910 a war was eleaned up hy a peaee treaty nnd at that lime Pnifessur Keynes said that proldems of the fnture depended upou food, coal and Iransport. That was perlinem tn the issues of today. j n lookiug after the doniestie needs of our ou ii people, we tiiust not forget the

needs of ihe peoples in other countries. Our living staiidards wero at a high level and if those of other countries could l>e raised np to our own level, we need i'ear 110 disagreemeut aniong the ju'oples of tlie world. In adhering to the Atlantie ('barter we, iu eomuion with other ceiint ries. proniised that all peoples siiouh! ha\e aceess to raw ruuterials and the opportunity to trade on eipial teruis. The Br ■ellon Woods conference. w as convened to gi\ e oilect to 1 h :■ 1 lnii ihe di\ersion of that confer-

eiu-e into the realins of world finance, led to a pmpo-al that goJd valued at IT.lied Stat.-O dollars to Ihe ounee line gold — shonid lie the only standard of \alu Weie the l uited Slates dol lar slalde we might have a stable mea snre of ' oiiiiiiodit ies but it was obvious fnnii exenls of ihe past twelve months, timi ihe ITiited Stales dollar was fluetnaling violentiy in pnrchasing power , and would today buy less tliau it did a year ago. Obviinisly with gold at-| tacheil t> such a Huctuating eurrency, Bretton Woods proposals did not otl'erj stability and if we could not obtniu stiibility witiiin tlie Bretton Woods agreement . we >liould remain oulside it. We could uot alford to quarrel with a eouiitrV stich as A ust ralia vet Australia was not joiniug Breitun Woods and if they ratilied tlie agreement and we did i not, we could be penalised for trading1 with theiu. Mr. Conibs said urder Bretton Woodtiinl tlie terms of the Aiuericai) loan agreeinent, Britain was to abandon as quicklv as possilde the sterling area which was to be wound up leatiug the world iiltaelied to a dollar at 35 dollars to au oiince of gold. "It is a wicketl proposal and d:feats all that ltas been done in the past fifty years to link tts with Britain as far as trade and excliange of wealtli is concerned, " said Mr. Conibs. Britain depended on us for food and we ou Britain for manufactured goods. ! The ties between the two countries were so strong that we could not alford any break in the flow of goods between us. Britain 's pvefereiice for tts wottld disappear ttuder the terms of the loan agreement and Bretton Woods. Tio* va'ue . ■ t ihe loan to Britain htnl | been '-111 d"-.\ n inside the twidve months since it was liist proposetl, bccause the! 1

Ameriean dollar had. been inflated and the value of the loun had largely disap poared, from Britain 's poiht- of view, l>eeause the dollars ahe borrowed would now jmrchase a smaller amount ot goods than a year ago. New Zealand could not join Bretton Woods without giving away a great deal as far as qnr reciprocal trade with Britain was eoncenied. It would there fore bc uuwise for ug to adhere to the tigreement and so atlaeh ourselves to tlie fluetuating dollar. ' "It is a' cpicstioii of being p-lain spoken and exercising your . point oi view on the grounds of coimitonsense, ' ' said Mr. Combs. - " We could purcliase for 13s 8'}d what, at .lhe pfesent rate oi exehange, would cost 128s tijd in United States. At the ofliciat raio of exehange It cost Us Id of our ihoney to buy a I'nited States! dollar but the 'dollar is. actuully wortli only about -s Jd o.f New Zealand monev. Opposition voice: The trouble ,is they won 't believe it. . ' ' Mr. L'ombs said. Ihe oflicial raio ot

exehange with the United Stgtes' dollars was artilicial but it was at that artiiicial rate that tho .Bretton Woods agreement Would tie us to tlie lluctuating dollar. That agreement . abrogated Ihe Athintic Charter by flxing thp exehange of goods in Lerms of inoney. During the war the: flow of" goods bo. tween New Zealan,d und other countrieswas satisfactorily maintained by lond lease and reverse lemlTease. That was an exeellent arrangenient and if it could liave been continued for all iime.

it would have been a piermanenl way oi giving the World equal access to rau materials. It enabled us to exehange our surpluses for goods which wero sur plus in other countries but vital to us JVIx. Cojnbs said it was the exehange oi surpluses between countries which was the paTamount need but Bretton Woods wotua nanaer tnat oy mvmg tne exehange of goods on the basis of whit was false money. 1 The test was what. the Ameriean dollar ,woulj. buy in New Zealand. The New Zealand farmer, for instance, had to pay twice as much in farm produce for ?fn Ameriean motor car as did the Ameriean farmer because prices in the United States were inflated, giving an entirely. false basi^ of exehange. He agreed with those who said atlherence to Bretton Woods would place us in a false position and personally he hoped the New Zealand Government would not allow itself to get into such a fix as that. Oikv we juincd we could be penalised if we decided to drop oul of.tlie agree uient and other countries could then be asked to bovcott us. .Mr. t'ombs added llial linked to! Bretton Woods was an- IntefnatioiiaJ Bank which liad been set up to guarantce in lcrest to Wali Btfeet linauciers on money they wished to lend to iinjiover ished countries which otherwise would not be Secure debtors from the linan eiers ' point of view." Tlie Internationul Bank was an arrangenient for convoi ling second class secufities into first class ones and we could be called upon to pay inlerest for other countries. The whule oi" the proposals amomited tn an attempt to bring the world back lo tlie gold Standard and to enabh holders of certiiicates for gold noi buried at J'"ort Knox iu Kentucky, t realise on their certiiicates. A retur

lo the gold standard, as disguised iu Bretton Woods, would put the world on skids in six years or even in 2 to 3 years, just as. the gold standard put the world on skids in 1924-30. "I say Brettou Woods is tremendously dangerous, " said Mr. Conibs. Mr. Combs Admlrea. M r. E. B. Corbett (Egmont) exjiressed admiration of _Mr. Conibs for- his courage but sugges-ted the latter should devote equal flueney to persuading his followers that all restrictions no\\ hani periug the tlow of goods between Bri tain and New Zealand, should be eliminated. Diseussing other aspects of freer trade, Mr. Corbett said our produce should be shipped to whatever country wished to buy it. There would have been uo trouble about wool hau it been destined for Uussia. The action take-n over wool for Bpain was due solelv to ap ratisun outloolc.