“Dollar Crisis Can Only Cause Harm ”

Press, Volume XCIX, Issue 29366, 19 November 1960, Page 13

“Dollar Crisis Can Only Cause Harm ”

LONDON, November 18. The “Guardian” today claimed that the crisis over the United States dollar could only cause harm to the rest of the world.

It warned that if a worse crisis was to be averted more might be needed than the goodwill implied in the cuts in European bank rates.

‘‘The Germans, with the huge export surplus, have an especial responsibility,” the Manchester newspaper said, ‘‘They should announce without delay their plans for increasing aid to underdeveloped countries. They ought also, if necessary, to agree to contribute to the cost of supporting American forces in Germany.” Commenting on the possible effect of the dollar, crisis on the Atlantic alliance, the ‘‘Guardian” said: ‘‘President Eisenhower’s decision to recall the families of American servicemen stationed in Europe must be seen against the background of the massive gold outflow from the United Sttaes reserves. “This decision, and the other cuts that are foreshadowed in American military spending abroad, are bound to give rise to fears about the future steadiness of the Atlantic Alliance. “If the families are to return home, it will be asked, how much longer will it be possible for the Administration to resist domestic pressure to bring back the troops as well? The danger is easily exaggerated. “The operational crews who man the Strategic Air Command bases, for example, are no longer stationed permanently in Britain, and their families are already in the United States. The forces who provide tactical support for

N.A.T.O. troops in Europe still have families with them. But their contribution is less vital. “Nevertheless, the return of servicemen’s dependents to the United States is likely to lessen America’s sense of commitment to Europe.” the “Guardian” argued. The “Financial Times” believed that the outlines of a United States strategy to “save the dollar” have now become visible.

“Although Mr Kennedy (the American President-elect) may change the emphasis of President Eisenhower’s strategy it is doubtful if he will alter its main outlines, which in fact correspond very closely with a speech that Mr Kennedy himself made during his election campaign,” said the newspaper.

After saying that it remained to be seen whether United States programmes for saving foreign currency would be sufficient, the “Financial Times” said: “But it is in the British interest to do nothing to increase the severity of the cutbacks. There is little that the United Kingdom can do to stop purely speculative money leaving the United States, but it can do a great deal to discourage the other kind of ‘hot’ money that moves in response to interest rate changes.”