ENDING STERLING CRISES

Press, Volume LXXXIX, Issue 26963, 12 February 1953, Page 12

ENDING STERLING CRISES

Plan For Submission To U.S.

OUTLINE ALREADY GIVEN O.E.E.C. (From a Reuter Correspondent.) LONDON, February 3. Two senior British Cabinet Ministers, the Foreiga Secretary (Mr Anthony Eden) and the Chancellor ol® the Exchequer (Mr Richard Butler) will fly to Washington ’in late February or early March to put before the new Republican Administration there a plan for ending recurrent crises between the dollar and the non-dollar worlds. Their talks will be on a technical level, supplementing the general review which the British Prime Minister (Mr Churchill) had during his recent visit to New York with President Eisenhower. The new British plan was shaped at the Commonwealth Prime Minister’s economic conference in London in November and December. An outline of its provisions has already been put before ■ the Western European nations through the Organisation for European Economic Co-operation, of which Mr Eden is chairman. Britain has assured her Continental partners that the forthcoming BritishAmerican economic talks in Washington would be at first only exploratory. The other O.E.E.C. countries have been told by Britain that no firm decisions would be taken at the Britieh-American discussions without the European countries being consulted. The British assurance has been given to the various O.E.E.C. nations bjr the heads of British diplomatic missions.

Thus, Britain’s O.E.E.C. partners will not, for example, be faced with any sudden decision amounting to a fait accompli in connexion with any plans she may have for sterling. • Allaying European Fears The British assurance is Seen by observers in London as an attempt to allay fears said to have arisen in some Western European countries that Britain might seek a separate economic solution with the United States of existing trade and monetary problems without reference to the overall O.E.E.C. programme. The other O.E.E.C. countries will be informed of the results of the projected Washington talks, and their co-operation will be sought in making any further progress towards freer world trade. The sterling area, the largest trading unit in the world, with an annual export-import turnover of £12,000,000,000, has m recent years faced recurrent economic crises. These crises have forced its members, who include all the Commonwealth nations except Canada, which is in the dollar area, to take emergency measures to restrict trade and the use of foreign exchange.

The British Government now intends to discuss with the World Bank arrangements to give effect to its decision to make sterling .available for lending by the bank for projects designed to improve the sterling balance of payments. The Commonwealth plan, details of which are still secret, envisages positive international action for the progressive removal, as circumstances permit, of import restrictions imposed for the purpose of bringing a country’s external accounts into balance.

Action will be required by both creditor and debtor countries. The rate of progress in removing discrimination will depend upon the advance towards equilibrium between the United States and the rest of the world.

The Commonwealth economic conference agreed that it was important, not only for Britain and the sterling area, but also foi' the world that sterling should resume its full role as a medium of world trade and exchange. An integral part of any effective multi-lateral system is the restoration of the convertibility of sterling. But that can only be reached by progressive stages. The Commonwealth Prime Ministers will meet in London again in June, 1953, immediately after the Coronation x of Queen Elizabeth 11. Britain will then be able to give them the reactions of Europe and the United States to the Commonwealth plan. The nations which have sponsored the plan are: Britain, Canada, Australia, New Zealand, South Africa, India, Pakistan, Ceylon and Southern Rhodesia.