BRITISH REACTIONS

Evening Post, Volume CXV, Issue 123, 27 May 1933, Page 13

BRITISH REACTIONS

AS SEEN BY AN AMERICAN

WAY FROM DIFFICULTY

Although the United States' abandonment of the gold standard was not unexpected in England, it is not aiiy more welcome for having been, so long anticipated. Whatever may tie the domestic effect of the gold export embargo, it lias confronted British business men and politicians Svith a highly embarrassing situation, writes the London correspondent of the "Son Francisco Chronicle" in that journal. The British public still have not the slightest appreciation, of the growing indignation caused in tho United States during recent weeks by the currency depreciation in other nations; and both the public and the Press naturally refuse to admit tho existence of ■ any similarity whatever between tho circumstances in which Britain went off gold in 1931 and those of the present moment when the United States does so. ■ \ • • " /In a summarised form the explanation almost universally current here runs somewhat as follows:—"When we left gold in 1931 it i was only after wo had paid out hundreds of millions in gold and raised credits abroad. It was only when we were forced off that we bowed to the inevitable. The United States has deliberately abandoned the gold base at a time, when it could easily have maintained it; when it has far more gold than w« bad, has a favourable trade balanco, and does /not hold largo foreign, deposits withdrawable on' demand." '■ ■ Yot there has been less talk than might be expected of the necessity for Britain to counter the dollar's depreciation by depreciating sterling even further. The Beaverbrook and Bothermere Press, it is true, ad-vise immediate inflation, but weightier organs counsel & wait-and-spe policy. In this they echo the feeling in governmental circles, which is virtually au admission that Mr. Mac Donald has no choice other than to recognise the dollar's depreciation as an accomplished fact. This means, of course, that the bargaining weapon placed in the Premier's hand by the unstabilised status of sterling has been snatched away from him. AT A DISADVANTAGE. In Whitehall there is , a certain amount of resentment .over the fact that President Boosevelt chose to let the dollar go off gold just at this time —for Whitehall agrees with the Press in regarding this development as a deliberate stroke of policy designed to place Mr. Mac Donald and Edouard Herriot at a disadvantage ia their talks with the President. It is still repeated—although with1- lessened conviction—that the British Prime Minister cannot possibly conclude a bilateral agreement with President Koosevelt for do facto stabilisation, of the dollar-pound ratio, and that he cannot even agree to -an Anglo-French-Ameri-can pact.l' Nothing short of a world-wide protor col, tho British assert, can produce world. currency stabilisation; and,that, they say, cannot be achieved until after the Economic Conference has reached an agreement on trade policy generally. No effort is mado to deny-1 the : fact that with sterling around 3.90 it would be easier for Britain to meet tho June debt payment than with the pound at 3.12, or that acceptance of a partial payment in silver would greatly ease the British burden. It is likowiso admitted that the Bank of England's spectacular acquisitions of gold in recent months have rather vitiated the argument that further payments would drain tho country's gold reserve. On tho other side of tho ledger there are the fact 3 that a 50 -per cent, rise iii tho pound's valuo would, if maintained, seriously injure British export trade, and that Argentina has already begun a warning that if the rise in tho pound is to be maintained new Anglo-Argentine trade agreements are off. Caught between the pressure to keep the pound low from those sections of Ills own peoplo that give the Government its chief backing, and from President Boosevelt, who now has tho power to keep the vaJue of the pound high, Mr. 'Mac Donald may well be forced to compromise against his inclination. OVERCOMING OBJECTIONS. If President Roosovelt elects to ask tor a temporarily stabilised ratio between two or three important currencies, it is rather difficult to see just how the British Prime Minister is going to avoid acquiescing. Thus, if the President were willing to adopt a new ratio of, say, 3.75 dollars to the pound, Mr. Mac Donald might find it possible to overcomo some of his objections to continuing tho debt payments. , The exact figure is a matter of give and take, but if Washington really intends '.to do anything so jlrastie sis do-

finitely to lower the dollar's gold content, thoro can be no doubt that Britain will accept the challenge and depreciate sterling to a point wher9 its exchange ratio seems satisfactory to British opinion. Concerning the probable effect inside the United States of the abandonment of tho gold standard, most British seem to feel that this will bo favourable if nccompanie.di as they anticipate, by currency or credit expansion. Aine rica'a internal problem, as viewed in London, seemed to resolve itself chiefly into au effort to ease tho incidence of debts contracted when the dollar was much lesa valuable than it is today. Providing inflation can be controlled —aud the British think it can—there is a growing body of opinion that holds that in the long run the United States may find its way out of the depression by this means. * Nor would this school be averse to a corresponding inflation in England, as they believe it would raise commodity and other prices and lessen the real burden of paving off British internal debts. Finally, virtually every school of British economists pays at least lip service to the ideal of stable ratios between currencies—always with the implication that tho ratios adopted arc acceptable to Jhis country,.