ALLIES’ FINANCES

Gisborne Herald, Volume LXVI, Issue 20133, 30 December 1939, Page 5

ALLIES’ FINANCES

ECONOMIC ACCORD POOLING OF RESOURCES LONDON, Dec. 20. With Britain and France now practically operating from the one cashbox for their wartime purchases, it is suggested that a permanent federation might grow out of the present arrangement. Some writers look 10 the inclusion of other nations in the scheme, which endures for the duration of the war and six months afterward.

The new financial and economic agreements not only pool the domestic and foreign wealth and the resources of both Empires; they, make the franc and the pound virtually one currency.

France will spend her sterling holdings within the British Empire, and not sell them for dollars or other currency, and Britain will do the same within the French Empire with her francs. This ensures that neither will weaken the currency of the other in dealings with a third Power. Fixed Exchange Kate The exchange rate remains fixed, which permits importers and exporters to plan their business well ahead; without disturbance. Both countries also agree on what each will import or sell, and in what quantities. Neither country shall restrict the import of the other’s goods merely to protect the exchange, but each can place a duty on luxuries. With highpriced French textiles, for example, it is preferable that they should be exported elsewhere than to Britain, so as to build up foreign credits.

The financial writer of The Times says that the new agreement far exceeds a mere exchange and clearing arrangement. It does not yet include a formal plan to share actual war costs, but this subject will be constantly reviewed.