PROSPECTS FOR U.S. LOAN

Press, Volume LXXXII, Issue 24869, 8 May 1946, Page 7

PROSPECTS FOR U.S. LOAN

PREPARATIONS IN BRITAIN ALTERNATIVE SCHEME READY (N.Z. Press Association—Copyright) (Rec. 10 p.m.) LONDON, May 7. “Plans have been drawn up to enable Britain to make quick changes in her economy if the United States loan is not granted,” says the Press Association. “Civil servants have lofmulated a shadow scheme which has been pigeonholed ready for use, but it has not.yet been examined and approved by Cabinet. “Westminster is slightly more optimistic concerning the loan prospects. There is an impression that within three or four days the loan will be granted. “Without the loan Britain would have immediately to put into operation measures for expanding her exports and contracting the home consumption of exportable goods. American films and tobacco would be among imports with which Britain would dispense.’’

In Washington to-day, the Leader of the Senate (Senator A. W. Barkley), the Speaker (Mr Sam Raybum), and the Leader of the House of Representatives, (Mr J. W. McCormack) held a conference with Mr Truman, after which Senator Barkley said that he was brought up to date on the present status, of the British loan measure. He added that the prospects were good tor disposal of the matter by the senate this week. , He reiterated his opposition to any amendments. The special correspondent of the New Zealand Press Association in London says there is a growing possibility that the loan may not be approved by Congress. There is real danger, it is stated, that it will go through. “Failure to secure the loan, it is generally agreed, would delay British reconstruction by several years, seriously affect the standard of living, and necessitate fundamental changes Tn the commercial and monetary policy,” says the correspondent. "The Government, it is reported, already has made a start with plans to meet the situation if the loan is not ratified. “Although these plans have not yet reached a high level, it is thought one of the first steps would be an interim Budget involving further taxation. It is noted by ‘The Times* city editor, however, that the loan agreement has a leas ardent following in Britain now than when it was first concluded. ‘The average manufacturer in particular, he says, impressed by the difficulties and restrictions in the way of re-equipment outside the development areas, and by the continued low productivity of labour, has begun again to have doubts on future production costs and hanker after a degree of insulation from American competition within the sterling area. Many of those who originally doubted whether .the sterling area could be held together in the event of Britain turning down the loan do not fear the same danger if it should be turned down by Congress.’ “Whether the Chancellor of the Exchequer (Dr. Hugh Dalton) has the possibility of an interim Budget and further taxation in mind, however, seems somewhat unlikely, judging by his comments at the week-end. Speaking at Durham, he said he hoped to be able to make a further reduction in income tax, particularly for wage earners and small income people, by increasing the personal allowance rate paid on taxable incomes and increasing the allowance for earned income. “ ‘I would like to see a state of affairs in which no income tax was paid by those who are living without any sufficient margin for a reasonable standard of existence,’ said Dr. Dalton. He added that before long he hoped to remove the purchase tax from a further large range of articles. “Dr. Dalton's remarks suggest there was some support for the view that there will not be further inflation in Britain. Although there are many warnings that Britain is on the brink of still further inflation, it is reported that people are spending no more than is accounted for by increased supplies of goods coming from the factories. “The position is somewhat paradoxical. however, for although It is certain that many incomes have fallen since the end of the war because of the dislocations of reconstruction, the Ministry of Labour Gazette shows that weekly wage increases totalling £831,300 affecting 3.320,000 workers occurred during the first quarter of this year. In March alone 418,000 working people received increases totalling £112,000.

"Farm workers may be among those who shortly will receive increases in wages. The Central Agricultural Wages Board has recommended a rise of 10s in the men's minimum .vage, bringing it up to £4 a week. The women s minimum wages recommended are £2 10s to £2 IBs at 18 years, and £3 at 21 years. ‘The proposals are subject to confirmation. It is estimated that the approximate cost will be between £2O 000.000. and £25.000,000. “There is fear that rising wages ana lack of goods may add pressure to inflationary tendencies, but that the out. look for increased supplies of «oods is fairly bright, is indicated by Mr J. W. Belcher. Parliamentary Secretary to the Board of Trade.

“ 'The country is looking up,' he said. ‘Our situation at present is very much better than we even hoped it would be. From now on women are • oing to find in the shops all those things they want In greater quantity and greater variety than one would have expected three to four months ago.’ ”