DRASTIC CHANGES POSSIBLE

Ashburton Guardian, Volume 68, Issue 136, 20 March 1948, Page 5

DRASTIC CHANGES POSSIBLE

BRITAIN’S POLICY ON STERLING Pressure from Neighbours (N.Z.P A.-Reuter—Copyright). NEW YORK, March 19. “Britain may be forced by pressure from her West European neighbours and the United States to abandon her efforts to maintain her position as banker for the British Commonwealth and > other sterling-area countries,” says the Paris correspondent of the “New York Times.” "This opinion is held by many of the best-informed experts Avho have been attending the second Paris conference on the European recovery programme.. “Among the steps the British may be urged and eventually forced to take are the definite blocking of existing sterling balances to reduce.the ability of India, EJgypt, and other non-European countries to buy British goods that might otherwise go to Europe, the cessation of the conversion of sterling into dollars for sterling area countries, and the extension of sterling loans to France and possibly other Continental countries. “Britain in effect Avould be required to declare herself bankrupt and to start over again Avith a drastic shift in the orientation of her economy anti financial system away from the Commomvealth towards Europe.” The correspondent, after contending that there is a basic.inconsistency betAveen Britain’s participation in the European recovery programme and Britain’s position as banker for the sterling area, continues: “Abolishing the sterling area in its present form will not alter the underlying problems of the sterling-area countries, Instead of furnishing dollars by Avav of Britain, the United States may ha\ r e to take over direct responsibilities that Britain, as the centre of the sterling area, has formerly shouldered for countries like India, Egypt', Australia and NeAv Zealand.”

The, correspondent adds" that a growing body of opinion in the State Department and in the Continental governments sees the British struggle to defend sterling “as the greatest menace outside Communism- itself to the success of the European recovery programme.”