THE MONEY PROBLEMS OF HARD-PRESSED. NATION

Press, Volume LXXXIV, Issue 25448, 20 March 1948, Page 6

THE MONEY PROBLEMS OF HARD-PRESSED. NATION

BRITAIN'S ECONOMY

[By N.ZJ’.A. Special Correspondents.] 11l

LONDON. March s That the British authorities have erred in trying to separate Britain’s internal financial arrangements from her external problems. ls suggested by. Professor Dennis Kobertson, Professor of Political Economy in the University of Cambridge, m his concluding replies to a series of questions on the crisis facing the nation put to him by Em-

He continues his reply to question No. 7 herewith. Question No. 7 was: Should the financial system of the Western wotid collapse, in the form of nations being unable to meet payments for vital necessities, what will be the conseQl Can e ßritain, with all her gold spent and loans exhausted, survive on a oasis of barter of goods she makes for food she must have? We are discussing [says Professor Robertson] the second part of this question, which I put last time in a rather different form. Now first, if I did not suspect that the answer for the near future was a most gloomy one, I would not have written as I have about our need tor Marshall aid. Having regard to the character of our surviving imports, it seems to me all too possible that lack of dollars should inflict on us both a severe decline in nutritional standards and a severe problem ot unemployment through shortage of materials on which to work. Second, Sir Stafford Cripps puzzled us all a bit last autumn by telling us that by the end of 1948 Britain would be running square on her balance of payments on current account with the world as a whole, though she would still be on the wrong side with the dollar countries to the tune of £250,000 000 a . year. That seemed to mean that we were actually planning to part with £250,000,000 worth of goods a year to people outside the dollar area in excess of what these people were sending us; which seemed a queer thing for a nation in straitened circumstances to plan to do. I suspect that now there is no real hope or danger, whichever way you like to put it, of this happening. But this funny “plan” will have done no harm if it has helped to keep us keyed up to the idea that we must be prepared to export the full value of what we want to import, so that if our deals do come to grief it shall not be through reluctance to supply. •

Imports and Exports Third, while I should hate to say a word which might embarrass our very skilful and tough negotiators, I do not think an economist can avoid repeating what has been -said a hundred times—it was said again a few weeks ago by that very patriotic statesman. Sir Arthur Salter, in the House of Commons—namely, that the character respectively of our imports and our exports puts us in a relatively weak bargaining position. It seems to me better to say that frankly than, by talk about “exploiting the advantages of a large market,” alias large masses of potentially very hungry people, to risk giving long-run policy a push in the wrong direction. For the moral of all this is surely, first, that we must not be proud about accepting

Marshall aid. and second, that a world in which we have to place so much reliance on bilateral deals is a world from which We should make it our objective to emerge. Question No. 8: Would it be fair to say that Western capitalism has broken down under the impact of two world wars, and there is very little hope of effective repair? 8. Only remains, with its big words capitalism and breakdown, tempting the don in me to ask for more precise definitions, and seducing the economist, perhaps, to stray beyond his proper field. But if I must give a short answer, it will be, "No, it would not be Iflir to say this.” it may be no longer relevant, though at the moment I write this it is difficult to forget, that it was capitalism that built up over 30 years the Argentine railways, whose equivalent the planned’ economy is now preparing to gobble up in as many months. But it is from capitalist firms and factories that we nope to see flowing into Europe and the sterling area the fertilising tide of Marshall aid; and it is from capitalist enterprises, though in some cases shepherded or chivvied by Socialist governments, that will issue far the greater part of whatever we do manage to send in return for our keep. Shifting the Onus If anything must be said to havo 4 broken down it is, I think, not capitalism. nor for the matter of that Socialism, but something a little harder to describe in terms are familiar to the ordinary man. It is the idea that a country dependent on foreign trade can' allow a complete divorce between its internal and external monetary arrangements. It is the notion that central authority can abdicate from what, even in the heyday of laissez-faire, was held to be one of its primary functions, the safeguarding of the country’s standard o* value, and can yet prove an efficient administrator of the country’s external economic relations. It would be an exaggeration to say “Look after the pounds, and the dollars will look after themselves”; but it may be the beginning of wisdom to act as if that were true. Here is a sentence writ-, ten last month, a propos of the new policy of talking prices down, by a better journalist than myself, which drives the point home, though in language more polemic than I feel I. ought to use. “The Government has poked its fingers into every corner df economic life, but in the one field where its authority is undisputed and unchallengeable it shifts the onus on to the citizen.” If anybody is going around with a kit of tools wanting to repair some* thing, here is something for him to repair. (Concluded.)