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Capitalist International? In the past most bankers have been closely nationalistic. All look askance today upon the Socialist International and the Communist International. But sound conservative Gates McGarrah proceeded to prescribe for the world's fiscal ills last week three steps which amount to laying the corner stone of a Capitalist International. The prescribed steps:
1) All nations should scale down taritt walls and scrap import quotas which Mr McGarrah called "the new method of interfering with trading relations [which] has resulted, in many cases, in rendering the working of most favored-nation clauses and other provisions in commercial treaties practically inoperative.
2) No nation should persist in efforts to bolster up its currency by blocking international exchange across its frontier —something which all the Balkan nations and many another are now doing.
"Exchange control . . ." earnestly warned Mr. McGarrah. "forces trade into a kind of straitjacket, leaving little or no room for the play of economic forces . . that normally tend to re-establish equilibrium."
3) All nations should prepare for "monetary reconstruction . . . which will be as indispensable after the world crisis as after the World War."
"Inherent Power." Touching short-term credits, which he seemed to regard as one of the sorest spots in the entire Depression, Mr. McGarrah estimated such credits outstanding at the beginning of 1931 totaled 50 billion Swiss francs ($9,647,500,000) and that frightened lenders suddenly called home 30 billion Swiss francs ($5,788,500,000) of their short-term loans.
"It is unnecessary," said the Work Banker, "to emphasize the havoc wrought by this vast movement of liquid funds . . . which was increased rather than reduced by the warning implied in Mr. Hoover's proposal ... or to dwell upon the stagnation resulting from the magnitude of the sums immobilized. They nave contributed each their part to the persistent fall of prices and they have accentuated the deflationary forces which are oppressing world economy. "
The most remarkable thing is that economic systems have been able to withstand such dislocating forces—a fact that seems to indicate their inherent power resistance."
Justice 6 Stability. To end the Basle business last week a BIZ dividend of 6% was voted to BIZ stockholders who are the central banks of 25 countries and the J. P. Morgan group.
When BIZ was organized an additional bloc of stock was set aside to be bought within two years by other nations, providing each buyer was a state on the gold standard and could meet certain other reliability tests.
Up to last week BIZ had discovered no such nation, had turned down numerous applicants. Therefore, despite the fact that not all the original stockholders remain on the gold standard, they were permitted last week to buy the outstanding BIZ stock, will receive the extra slices ot BIZ dividend melon to which their privileged purchase entitles them.