DEVALUING OF POUND

Press, Volume LXXXIV, Issue 25394, 17 January 1948, Page 7

DEVALUING OF POUND

ENGLISH PAPER’S COMMENT “ NOTHING TO BE GAINED AT PRESENT” (Specif Correspondent N.Z.P.A.) (Rec. 9 pm.) LONDON, January 16. “Authoritative British opinion remains quite unconvinced that there is anything to be gained at present by lowering the exchange rate of the pound sterling,” says the financial editor of the “Manchester Guardian.” “The important question,” he continues, “concerns the direct pounddollar rate.” . Asking what the pound is worth in terms of dollars, he says: “Surely, if British prices have been rising, American prices have outpaced them and it looks as if American inflation will carry the American boom at least through anothef year, if not two or three years.” He continues that if the pound were devalued, most European countries would almost certainly follow suit. The French, Belgians, and Swiss were all longing for the opportunity to cheapen their currencies against the dollar without having to take isolated action. In Europe, therefore, Britain would gain no competitive advantage. Though some Americans favour concerted European devaluation, Congress might take it as a plot to get more foreign goods into the United States. “The final crushing argument against devaluing the pound now,” adds the financial editor, “is that it would suddenly raise the question of British food subsidies and wages in a most explosive form. Prices, of food and raw materials imported from the western hemisphere w’ould be raised overnight and the Government would have to choose between increasing subsidies by a very large amount or letting the cost of living shoot up by something like 10 or 20 per cent. The political trouble that could result may be inevitable; but it will surely be postponed until we are ready to take advantage of the export stimulus.”

Commonwealth Affairs Division.The Government’s recognition of the British Commonwealth’s increasing importance is exemplified to-day by the announcement of reorganisation m the External Affairs Department. The Under-Secretary of External Affairs (Mr Lester Pearson) said Commonwealth affairs had’ been made a separate division. —London, Jan. 16.