BRITAIN PUT ON HER METTLE BY NEW STERLING SITUATION

Evening Star, Issue 26154, 16 July 1947, Page 5

BRITAIN PUT ON HER METTLE BY NEW STERLING SITUATION

(N.Z.P.A. Special CorVespotidpiil.,) I Hoc. H a,ni.) LONDON, July 15. What is the result likely to be cf the coming into effect of sterling convertibility whereby sterling becomes once more an international currency which can be freely exchanged into ajl other currencies r That question is being asked today on the anniversaryjfof the American loan to Britain coming into force, one stipulation of which was that sterling should be freely convertible as from July 15. “ All that one need say at this stage,” says the financial editor qf the 4 News Chronicle,’ 44 is that if the burden, which to-morrow imposes upon us is heavier than expeqted it may advance the date of our dollar 'starvation by a few weeks. If it is lighter .than expected it will not appreciably delay that date. Meanwhile we are now in the presence of the extraordinary paradox that at the moment when external bankruptcy stares us jn the face sterling is the hardest currency in tne world. “ Possession of sterling gives a title to dollars, therefore sterling is dollarliard.. Some countries aro needing to restrict imports because they are short of sterling. It is. an utterly unreal situation,’’ , _ _ Saying that the British decision to go forward with the freeing of sterling ip spite pf the. growing, dollar shortage has been aii act of faith, the 1 Manchester Guardian ’ remarks that the American purpose—of ensuring that sterling exchange restrictions Would not be used in the future as a nieans of giving British or Empire goods an advantage over American not seem reasonable at tips time of approaching crisis. “ But we must not and we shall not try to defeat .it by ambiguity,” says the paper, The ‘ Manchester Guardian ! adds that sterling receipts from current business —as distinct from, 'sterling assets or balances arising out of past transactions or from capital movements—wifi be free for current purposes anywhere. Britain is counting on the hope „ that countries outside the ster- , ling area will pot heavily convert their sterling into dollars, CUSHIONING THE SHOCK. Recently . agreements have been negotiated with a largo number of countries for two main purposeg--r-nrst ? that suppliers must not use their efferent earnings to .pay for them purchases in America while .they use their