PROBLEM OF TRADE

Evening Post, Volume CXL, Issue 56, 4 September 1945, Page 7

PROBLEM OF TRADE

CO-OPERATION OR RETREAT?

(Special ,P.A. Correspondent.) LONDON, September 3. The total surrender of Japan sees Britain after six years of war to the day, a debtor nation instead of a creditor, with a mission on its way to Washington to seek a way of tiding over its financial difficulties, which have been intensified by the cessation of lend-iease. Facing what has been described as an economic Dunkirk, the British people find that the first fruits of, peace are the prospect of continuing wartime restrictions for an indefinite period and the necessity for a tremendous burst of energy for the export trade to supply other nations with goods which Britain cannot yet afford for itself. But Britain's industry is not yet geared for peacetime production. It has to be re-equipped.and worked by men brought back from overseas, and raw materials must be imported. Time is required, but the country's position is aggravated by the ending of lend-lease, which was of such inestimable aid to Britain throughout the war. It enabled her to shut down the manufacture of exports which she must otherwise have continued in order to pay for imports to prosecute ■the war. It also enabled her to put more than 900,000 more men in the field. FOREIGN CREDITS NEEDED. Today Britain, in addition to being faced with an adverse balance on the lend-lease account, also requires dollars during the next year to buy some American food, tobacco, raw cotton, and machinery for industrial re-equip-ment. The British mission will meet President Truman's Administration in Washington this week to work out a plan that will be equally in the interests of Britain and - America.- . The tension caused by the ending: of lend-lease has eased following the President's reference to arrangements being made to bridge the gap and his declared confidence that the two countries will work out plans satisfactory to all. There are two schools of thought as to the line which the British mission should follow. One maintains that Britain must keep in with America at any cost, not only for immediate economic reasons,. but also because British-American collaboration is essential for the future peace and security of the world. The other holds that to tie the country to America's dollar economy would be fatal, and would reduce Britain to a mere client of American capitalism, involve her in the next American slump, and make it impossible for her to carry through a programme of full employment and social reform. It would be better to develop foreign trade through bilateral agreements with countries ready to exchange goods for goods, this school argues. COMPROMISE PREDICTED. The "Observer" expresses the opinion that a compromise between these two views will be found—at least, on paper^followed by a period of trial which will show how far the compromise is workable. The suggestions in America that a loan should be granted to Britain have not aroused any enthusiasm here. A typical view on this question is expressed by Mr. L. S. Amery, former Secretary for India, in the "Sunday Times." He says that any arrangement with America should be purely temporary and self-liquidating. Nothing "would be more fatal than to enter upon any long-term commitment, whether in the nature of a loan, even! if the interest were free, or of commercial or monetary agreements which would limit our freedom to defend our home markets or to build up for future prosperity by the deliberate fostering of inter-Empire trade, by mutually beneficial trade treaties or by conservation and expansion of the sterling area." A similar warning note is sounded by the "Economist," which says that the risk attaching to the forthcoming negotiations has been widely misunderstood in Britain. The danger is not that further American assistance will not be forthcoming, but that it will be forthcoming only on terms that postpone indefinitely the prospect of achieving independence of further assistance. There is support for the view that Britain's trade with America should be cut down in future to a minimum, but that it should be encouraged and expanded with the Empire countries and those countries that are willing to take British goods in return.

After the first shock of surprise, Britain is now telling itself that the sudden ending of lend-lease is salutary in that it brings the country face to face with a position that must be dealt with.

"President Truman's decision has given us an opportunity for a decisive break with the Churchillian method of maintaining British-Ameri-can friendship by postponing awkward decisions," says the "New Statesman and Nation," and comment from other quarters declares that Britain must not complain but act.

Two facts stand out in Britain's favour. One is that the country is led by a new and virile Government with a fresh mandate from the country, and the other is that there should be no lack of employment for several years to come.