BRUSSELS FINANCIAL CONFERENCE 1920 THE RECOMMENDATIONS AND THEIR APPLICATION A Review after Two Years VOLUME I New and Enlarged Edition PRICE 5s. ECONOMIC AND FINANCE SECTION December 1922 T IMP. ALBERT KUNDIG - GENEVE, C. 10. M. 7.1923. II. LEAGUE OF NATIONS BRUSSELS FWANCIAL CONFERENCE 1920 THE RECOMMENDATIONS AND THEIR APPLICATION A Review after Two Years VOLUME I New and Enlarged Edition ECONOMIC AND FINANCE SECTION December 1922 CONTENTS. PAGE INTRODUCTION V-LVI REPORTS: Argentine Australia 5 Austria 19 Belgium ’ 21 Czechoslovakia .... 3i Denmark 57 Finland 65 Hungary 75 India 99 Japan 112 Luxemburg 129 Netherlands 136 New Zealand 148 Norway 152 Spain 153 Sweden 160 Switzerland 166 Union of South Africa . 175 United Kingdom . 193 United States of America 201 Uruguay 218 Annex J- ~ Resolutions adopted by the International Financial Conference at Brussels (1920) Annex 2- — Circular Letter and Appendix sent to the various Governments on March 20th, 1922 Annex 3. — Czechoslovakia (Report continued) Introduction BRUSSELS FINANCIAL CONFERENCE 1920. — SUMMARY OF RESULTS ACHIEVED. I The Second Assembly of the League of Nations, in September 1921, “in view of the con- tinuing gravity of the exchange crisis and its dangerous effects upon the economic position and the conditions of labour of the working classes”, requested the publication of information showing how far the States which took part in the Brussels Financial Conference in September 1920 had succeeded in putting its recommendations into practice.1 Three publications issued by the League in the spring of 1922 on currency, public finance and central banks supply a large part of the information so requested 2; and the Monthly Bulletin of Statistics 3, giving as it does month by month the note circulation, metallic reserves, rates of discount, wholesale prices, etc. of the majority of countries publishing such information, acts as a sort of running commentary on these publications. In addition, however, measures were taken to obtain special reports concerning all the States represented at the Conference. The first replies received were presented to the Assembly in September 1922 and have already been published. Since that date other replies have been received and are now published in two volumes. Volume I contains a summary of results achieved and replies from : Argentine. Netherlands. Australia. New Zealand. Austria. Norway. Belgium. Spain. Czechoslovakia. Sweden. Denmark. Switzerland. Finland. Union of South Africa. Hungary. United Kingdom. India. United States of America. Japan. Uruguay. Luxemburg. 1 For text of Brussels resolutions, see Annex 1, page 221. a “Memorandum on Currency, 1913-1921.” 7/6 “Memorandum on Public Finance, 1921.” 10/- “Memorandum on Central Banks of Issue, 1913-1921.” 3/6 For list of agents see page III of cover. 3 “Monthly Bulletin of Statistics”. 1/6 net. Published about the 15th of each month. For the special case of Austria, see: ' Provisional Economic and Financial Committee. Report and papers relative to the Financial Recon- stitution of Austria”. 5/-. ‘ The Restoration of Austria — Agreements arranged by the League of Nations and signed at Geneva on October 4th, 1922, with the relevant documents and public statements.” 2 /6 VI Volume II contains the Italian reply, which is of somewhat greater length than the others. These replies are official in all cases with the exception of those from the Argentine and the United States of America, which have been prepared on behalf of the League of Nations by the representatives of those countries who were present at the Brussels Conference. It has been thought desirable, however, to preface these statements by the present sum- mary, giving, in an objective form, data from which it maybe possible in some measure to judge the success which both those Governments which have and those which have not replied have met in their endeavours to restore the economic and financial stability of their countries. The tables in this summary have been drawn up in such a manner as to constitute as far as possible a series of replies to the series of questions which the various resolutions of the Brussels Conference pose. The Resolutions of the Public Finance Commission of the Brussels Conference laid the greatest possible stress upon the necessity of balancing the budget and limiting fresh borrowing: II. PUBLIC FINANCE COMMISSION. “The country which accepts the policy of budget deficits is treading the slippery path which leads to general ruin; to escape from that path no sacrifice is too great. It is, therefore, imperative that every Government should, as the first social and financial reform on which all others depend: "(a) Restrict its ordinary recurrent expenditure, including the service of the debt, to such an amount as can be covered by its ordinary revenue; “(c) Abandon all unproductive extraordinary expenditure; "(d) Restrict even productive extraordinary expenditure to the lowest possible amount. “If the above principles are accepted and applied, loans will not be required for recurrent ordinary expenditure; borrowing for that purpose must cease. In a number of countries, however, although the ordinary charges can be met from revenue, heavy extraordinary expenditure must at the present time be undertaken on capital account. This applies more especially in the case of those countries devastated during the war, whose reconstruction charges cannot possibly be met from ordinary receipts. The restoration of the devastated areas is of capital importance for the re-estab- lishment of normal economic conditions, and loans for this purpose are not only unavoidable but justifiable. But in view of the shortage of capital it will be difficult to secure the sums required even for this purpose, and only the most urgent schemes should be pressed forward immediately.” These resolutions make a distinction between “ordinary recurrent”, “extraordinary unpro- ductive” and “extraordinary productive” expenditure and also between “ordinary” and “extra- ordinary” revenue. It should be noted in this connection that there is a great diversity of prac- tice in various countries concerning the principles according to which any given item of expendi- ture or revenue is allotted to the ordinary or extraordinary budget. In Sweden, for example, the distinction between the extraordinary and ordinary revenue is based on constitutional considerations of historical rather than financial import; other States include in extraordinary expenditure only outgoings for capital purposes (Germany); others include exceptional expendi- ture but not investments (Czechoslovakia, which has a special investment budget); while others, again, include both capital expenditure and other more or less non-recurrent expenditure. Some countries, as for instance, the United Kingdom, do not distinguish in any way between ordinary and extraordinary revenue and expenditure. In view of this diversity, it has not been possible to arrange comparative tables setting out the expenditure and revenue classified according to the above-mentioned categories. 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