The Dominion WEDNESDAY, DECEMBER 9, 1931. THE POUND AND THE DOLLAR

Dominion, Volume 25, Issue 64, 9 December 1931, Page 8

The Dominion WEDNESDAY, DECEMBER 9, 1931. THE POUND AND THE DOLLAR

in any inquiry « to the 00 ‘wiffi a sure instinct the public has summed up J jery complex I’ttt.OOO for Opened an .tee ctosed'with I deficit of 903,000,000 dollars or about £180,000,000, “A for the time at least, the Atnencan GovernindS not only was Britain, facing huge budgetary deficits, but was borrowing money fbr the dole and the Road Fund and raiding reserves for other purposes. Quite apart from the balance of trade, this unhealthy conditfoiTof Government finance was enough to sound the alarm an 1 Start Great Britain, however,'has recognised the error of ways, has stopped all borrowing for current expenses, « bdane ng her Budget out of revenue, and has kept payments to the Sink g Funa ata high figure. She is also grappling with the new and prickly problem of an adverse trade balance, • involving an u " ea sy excursion among protective tariffs. In short her whole national policy is being directed toward the single end of living within her Fncome. When that correct and conscientious po iCy begins to produce results, no one can doubt the effect on the estimation .in which the pound sterling will be held, and on the reputation of London as a safe repository for foreign balances. .. P In the United States the world can observe the opposite policy in operation. For Ion? after the Wail Street crash, AntencansJned to carry on as if nothing had happened. ’ Spending was to go on as before, wages and prices were to be kept up or propped up somehow. Gradually the American world of business and production has had to abandon an untenable position but the Government still discourages the deflationary, process’ and itself sets the example. As it cannot maintain its rate of spending out of income, it has had recourse to capital. Of course the United States has immense resources and reserves and may not be seriously prejudiced by what is only a temporaty expedient but possesses great wealth and was prejudiced. At any rate there can be no doubt now which of the two nations is following the sounder financial policy, one which in the end must result in the raising and stabilisation of the pound sterling- ■