The Press FRIDAY, AUGUST 29, 1947. U.S. and the Dollar Crisis

Press, Volume LXXXIII, Issue 25275, 29 August 1947, Page 6

The Press FRIDAY, AUGUST 29, 1947. U.S. and the Dollar Crisis

The irritation- shown by the “ Eco- , “ nomist ” with the attitude of the United States to Britain’s economic crisis, as reported in the cable news on Tuesday, is understandable; and what it has to say is the more im- . pressive because it is out of chari acter with that journal’s usual calm i survey of international economic I trends. The virtuous complacency with which many American politicians and publicists regard Britain’s plight cannot fail to be irritating to those who understand her difficulties and how they have been created. For, if for no other reason than self-interest, Americans must I study the problem in relation to the long-term effect of the crisis on the economy of the United States itself. They must consider whether a shortsighted view now will not expose their own fortunate economic circumstances to serious risk. More enlightened Americans, and, fortunately, the more responsible and knowledgeable newspapers, see this risk clearly, and in recent times have gone to considerable pains to explain it to the American people. They have emphasised that it is as much in the interests of the United States to find a generous solution as it is to those of Britain and other countries affected by the dollar shortage, since a world in which international trade is brought to a standstill would disastrously react on the internal economic and industrial circumstances of the United States. Newspapers like the “ New “ York Times ”, the New York “ Herald-Tribune ” and the “ Christ- “ ian Science Monitor ” have all intelligently reviewed this situation editorially and have printed articles by economic correspondents seeking to educate the American public. A striking leading article in the “ Christian Science Monitor ” of August 7 emphasises the global background of Britain’s crisis. The article boldly tackles the question of the reluctance of Americans, with their prejudice against any form of socialistic enterprise, to aid a Britain saddled with a Labour Government. It points out that the present crisis is a direct result of that situation which the British faced so squarely eight years ago, and that though the crisis has not* brought Britain nearer to free enterprise concepts or more into line with efforts for more freedom for world trade, the situation in which Britain is a necessary ally of the United States has not changed. Americans who were once reluctant to aid a Socialist Government in Britain now face the need to do so. Is this irritating? [asks the “Christian Science Monitor”]. Then let us remember the discussions of the British loan somewhat more than a -year ago. At that time the figure most often mentioned for the loan was five to six billion dollars. Congress’s attitude soon made it apparent that a smaller figure would have a better chance for approval. So a loan of 3,750.000,000 dollars was agreed upon. But the actual purchasing power of that loan has shrunk because of price rises, to about 60 per cent, of that figure. In other words, Britain has had to meet what looked like a six-billion-dollar need in 1946 with a loan equal to less than half that amount in 1947 purchasing power. What is needed now is the broadest possible view of that problem, and a concerted attack upon it, an attack bigger than party, an attack transcending indeed the usual narrow and short-sighted concepts of national self-interest. The world’s economic plight—of which Britain’s crisis is a part—must b e re " cognised as the yet unwon phase of World War 11.

In similar vein the New York “Herald-Tribune” emphasises that the dollar problem is a common problem. What Americans want (and cannot have, of course) is for Britain to have enough dollars to continue taking American surpluses and otherwise supporting a free and fruitful international trading system without the United States itself having to supply the dollars. But Britain has not got the dollars, and the question is what America really wants her to do about it, Relaxation of the convertibility and nondiscrimination clauses in the loan agreement, the “ Herald-Tribune ” points out, can merely postpone exhaustion of Britain’s dollar balances. “Both clauses make sense only on “ the assumption that the original “credit would suffice to restore a “ practicable international market; “since it has not done so, neither “means much in the present con“text”. What the United States really needs is that its dollar loans, present or potential, should result in an economy productive enough to repay the loans and gp on buying from the United States what ig essential to her to sell. The “ Herald- “ Tribune ” comments that the problem is as much that of the United States as it is Britain’s.

If [it says] the credit becomes merely a political stick with which each country seeks to beat the other over the head, the experience will be valueless; if, on the other hand, it is looked upon as an experiment offering the basis to a more scientific approach to what is, in fact, not merely Britain’s problem but a common problem of the two nations, then some useful results may fie achieved. This healthy trend in economic thinking in the United States may ultimately be the answer to the “ Economist’s ” outburst. There is happy evidence in the latest newspaper exchanges that thoughtful Americans are taking the trouble to examine their own responsibility for the crisis and are asking themselves what sacrifices Americans have made to offer the help that Congress has so far extended to Britain. Americans, they point out, have criticised Britain for mismanaging the use af the loan, for spending too much of it on luxuries such as tobacco and moving pictures; but these expenditures at least did not deprive Americans of either luxury; and much of the expenditure of the loan has been not on consumer goods but on essential machinery and on feeding Germans in the British zone. And though exports of have influenced the rise in United States

food prices, Americans actually ate a great deal more per caput in 1946 than in 1939—f0r example, 15 per cent, more meat, 14 per cent, more fresh vegetables, and 22 per cent, more eggs. “In actual nutrition”, says one writer, “ Americans on the “ average have sacrificed precisely “ nothing 1 If such honest self-analysiS is sufficiently widely read and understood, there is hope that it may even yet penetrate to Congress and influence the thought and action of a majority of the complacent gentlemen who sit there.