Greymouth Evening Star. WEDNESDAY, SEPTEMBER 21, 1949. Last Desperate Effort

Greymouth Evening Star, 21 September 1949, Page 4

Greymouth Evening Star. WEDNESDAY, SEPTEMBER 21, 1949. Last Desperate Effort

’THE British Government’s decision to depreciate sterling by 30 per cent against the dollar has been well described as the last desperate effort of a desperate .Government to.stave off disaster. Devaluation is largely a palliative, not a complete remedy for Britain’s economic ills. The purpose is to make Britain’s task -easier, but whether the advantages will outweigh the disadvantages only time will tell. But one thing is certain. If stability is to be reached between the dollar and sterling, there cannot be constant tinkering with the exchange; rate. Britain must this time sxicceed. ; The political aspect cannot be overlooked. Devaluation is one more way of hiding from the people the real effects of the dire plight into which they have been led by the Socialist administrators. “We are) determined,” boasted Mr Herbert Morrison, Socialist leader, at Bournemouth three years ago, “that we are not going to be caught: unawares by blind economic forces under this Administration.” They were caught by the coal crisis of February, 1947, by the dollar crisis of July, 1947 (staved off by Marshall Plan Aid) and now by the dollar crisis of 1949. The British Socialists have obviously been blinder than the economic forces which they profess to control. The present trouble began with the sudden contraction of American demand for sterling imports, accompanied by a fall in prices and a corresponding loss of dollar earnings. But, as Sir Stafford Cripps has since admitted, the progress which Britain was making last year and in the early part of this depended on a high level of American demand, which, as he has also since admitted, was inherently* improbable. Against that contingency he jnade inadequate preparations. The results are now plain for the world to see. ’ The detailed effect of the devaluation decision have already been adequately explained. One of the main points that Sir Stafford Cripps has made is that the only alternative was an immediate fall in the standard of (living and growing unemployment, for factories would have had to cut production or stop production for want of raw materials. The kernel-of the trouble is that Britain’s costs are too high, and for that Government policy is largely to blame. As a result, the American demand for British goods has declined. The effect of devaluation is that, if British export prices to the dollar area are now automatically reduced by 30 per cent. British dollar imports _ are going to be, in sterling, correspondingly dearer. This must be felt in the cost of living, and m the already high cost of production. It is difficult to see how, if the present trend in British policy continues, the adverse results which devaluation is meant to avoid can in reality be avoided, in the long-term view. ' . What was most disturbing about bit Stafford Cripp’s speech was ffis failure to o-ive a single measure that will effectually hold Britain’s economy. There was not one single note of inspiring leadership. In ! order to maintain her dollar imports at I the present level —and the vital need is, for dollar-import raw materials and food— ‘ Britain must expand her export of goods | to America by 30 per cent, and, what is ; .more important, sell them on that market. .What Britain is suffering from is a surfeit of Socialist policies, with their penal taxation, controls and threats of nationalisation against all and sundry and their -contemptuous attitude towards private enterprise generally. The British Government has been recklessly extravagant. The Socialists promised far more to the •people than they (the people) were able t<7 afford. That is the root cause of the •dollar crisis. The basic position is similar in this country, where there is a .growing body of opinion that the financial machinery of the present Government will work only while the prices of our export of surplus production continue to rise. Obviously, the end of the upward trend •has been reached.