ECONOMIC FUTURE OF THE WORLD DEPENDENT ON DOLLARS

Evening Star, Issue 26153, 15 July 1947, Page 6

ECONOMIC FUTURE OF THE WORLD DEPENDENT ON DOLLARS

(Written by GEOFFREY COX for the 1 Evening Star.’) The news of new cuts in imports of petrol, newsprint, and tinned foods into the United Kingdom is the first sign of Britain’s approaching dollar crisis. The present cuts are not grave. Basic foodstuffs are unaffected, and raw materials and machinery for industry are still to.be bought where they can. The new cuts amount in fact to a trimming away of such small frills as been added to the British economy since the end of the war. But the core of the economy is left untouched. Only if the Marshall plan fails, or if no further dollar credits are forthcoming, will the imports of food and raw materials have to be extensively reduced.

These new cuts have not unduly depressed the British public. Perhaps the fact that they have come in the midst of the best summer for many years is one reason for this curious buoyancy in public opinion. We have had a superb, if late, spring, and a good summer—so far. May, 1947,. was one of the great spring months of all time. Owing to the late snows, the trees and flowers and spring blossoms all appeared in a rush bringing an air of richness and freshness to the country, malring it a refil vintage spring. Apple blossom time and Maytime, lilac time, and cherry blossom time were all virtually simultaneous. And even the summer has so far behaved itself excellently. There has been enough sunshine to guarantee the best fruit crop for many years, enough rain to rouse the flagging wheat and barley. It is indeed a great pity that travel facilities have not been sufficiently well restored to allow many'tourists to Britain this year. They would have seen the country in many ways at its best. The second test match against the South Africans was played under such ideal conditions—sun, just enough wind to keep the red and gold M.C.C. flag stirring on the pavilion, and the English batsmen in good form. Wimbledon, if it has once again demonstrated that British sport is still lagging, was played, under good conditions, hampered only by occasional thunderstorms. One has on all sides the feeling that the British people are getting their first real holiday since 1939, that the country is getting some fat on its .jierves at last. BRIGHTER FOOD HORIZONS There are signs, too, of some improvements in' the food situation. Mr Strachey, in his recent speech in the House of Commons, was able to announce that there are now sufficient food stocks in this country to carry us through until the European harvest is gathered. Thore are prospects of substantial grain imports from Russia, and from a whole range of European countries —Denmark, Poland, Holland, Hungary—food imports, even though still only a trickle, are beginning to flow more to The new development plans for the colonies for growing 'ground nuts and other foodstuffs in East and West Africa on a massive scale will not bring' in results , for' some years yet. But they are a beginning in a direction which has been acclaimed- by people,-as far apart as the Communists arid Lord Beaverbrook. THE SHADOW But what of the underlying fact that, despite all these advances, the basic problem of the shortage of dollars has not yet been solved? Despite the improvements which are being steadily made in the British economic position, the hard fact remains that early in 1948 there just will not be enough dollars to pay for the basic food imports and the raw materials, and there will be no way of earning enough dollars. This is, of course, not a purely British problem. It is a world problem. Every country outside the Western Hemisphere is equally short of dollars, even wealthy countries like Sweden and Switzerland.

And it is not surprising when one

RUSSIAN VIEWPOINT

learns that half of the income of the whole world is, according to official figures here, going to citizens of the United States.' It is not all being consumed by them. Out of this income comes the loans on which Britain and extensive areas of Europe have been to a large degree living since the war. But the fact that the title to that share of the world’s income rests in the hands of] the people of the United States explains vividly why shortage of dollars is as critical to-day as was tlio general shortage of purchasing power during the slump of the thirties. Only action to keen the dollars moving into the pockets of potential customers of United States goods can check another slump.

It is this belief in the imminence of another slump in the capitalist world which undoubtedly conditions much of Russia’s attitude towards Western Europe and the Marshall plan. M. Stalin has stressed, in all his recent interviews with American visitors such as Governor Stassen, his belief that America is heading for another such slump. M. Molotov’s attitude in Paris can be partly explained by the belief that the Marshal planis aimed as much at avoiding a slump in America as at aiding ailing economies in Europe. It is clear also that Russia, believing that such a slump will come, is primarily concerned with developing her own economy and that of the nations who are geographically and economically close to her.

It was clear from M. Molotov’s statement at the close of the Paris talks, that much of Russia’s concern about a common economic plan for Europe is that such a plan might draw oountpies like Poland and Czeclio-Slovakia out of their present close economic contact with Russia and into ‘economic schemes linked with Western Europe and America. Her trade : arrangements with these countries are part of Russia’s, insurance policy against another world slump, and it is clear, and to my mind understandable, that she wants to hold to them rather than to the uncertain prospect of American aid. For it must be stressed here • that American aid, as outlined by Mr Marshall, is still a very uncertain factor. The; ‘ Manchester Guardian’s ’ city editor, in a lengthy- article this week, comes to the conclusion that it will be extremely difficult to get Congress to vote funds on any substantial scale, and. that the other means of financing aid, through the World Bank or through private financiers on’ Wall Street, iare quite inadequate to the needs of the hour. There is also a school of thought here which argues that a Republican Congress would sooner see a slump in America, and with it conditions which would mean the ousting of Truman and the election of a Republican President, than the voting of further loans for Europe to avoid. a slump. Be that as it may, one important development has occurred as a result of the Marshall speech. Six weeks ago the British Government was emphasising its intention to seek no further credits from America. Mr Dalton, at; the Margate Conference of the Labour Party, was emphatic on that point. Now, to-day, everyone takes it for granted that we would take a further loan from America, albeit under the Marshall plan, with eagerness. ‘ And even if the Marshall plan comes to nothing its discussion. will have had the effect of conditioning public opinion here to accept another .loan,-