IN 1934 the Assembly of the League voted to form a committee "to arrange for an enquiry concerning the causes, scope, methods, and results of compensation and clearing agreements." This committee was composed of competent experts of international reputation. On its own motion the committee "restricted its observations to the causes and results of these clearing agreements and to the possibility of abolishing them or of correcting their defects." Their report, published in March 1935, is excellent, as indeed is almost all the technical work done by the League of Nations. Anyone who has had practical experience with clearing agreements will agree that the report summarizes all important points of view and, in general, draws the correct conclusions from them.
If I venture here to contribute something to this theme it is only because Germany has concluded more clearing agreements and has, unfortunately, had more experience with them than any other country. For this reason Germany offers not only an excellent example of the tendencies which have caused the conclusion of such agreements but a clear picture of their results on international trade.
I should like to preface my remarks by citing a few illuminating statements from the report of the League committee. Their clarity and objectivity serve admirably to illustrate the characteristics of Germany's experience. The first relevant statement connects clearing arrangements to exchange controls, and these in turn to disorders in international trade:
The establishment of clearing agreements arose out of conditions created by the institution of exchange control. . . . Exchange control is only one form of defense against the effects of the general depression on countries whose economic and financial structure was especially vulnerable. The heavy fall in prices and the paralysis of international credit could not fail, in the absence of the regulating influence of the movement of capital, to give rise to a grave disturbance of the currents of international trade.
The report then touches on the question as to whether the creditor countries might not have adopted a
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