Greymouth Evening Star. TUESDAY, JUNE 13, 1950. Britain’s Problems

Greymouth Evening Star, 13 June 1950, Page 4

Greymouth Evening Star. TUESDAY, JUNE 13, 1950. Britain’s Problems

PROM an economic point of view, Bri- * tain’s worst legacy of the war is the crushing burden of unpaid sterling balances which, at the end of hostilities, had reached' the staggering total of some £2,300,000, 000 .in .the sterling area alone. The biggest creditors are India and Egypt and political developments in these countries since the war have not made Britain’s problem any easier. In fact, Egypt has indicated in no uncertain terms that she expects full payment from Britain, without any ‘‘tags.” • . This deadweight of debt is, in the first instance, largely a Commonwealth matter, but it is becoming increasingly obvious that it must ultimately affect the whole world. Britain, since the war, has released about £750,000,000 of the blocked sterling balances, but this has been possible only because of Marshall Aid, and with the end of that plan in sight the problem must become even more acute. There is no mystery about the way in which the sterling balances debt arose. In fact Britain’s partners in the war effort were pleased to give Britain all the credit that she wanted to put forwarcl her maximum effort towards final victory. In other words, the sterling balances largely represent the cost, in hard cash, o materials and services supplied to Britain by Allied nations during the war. The British armies in the Western Desert and India, for example, were maintained m those countries at a staggering cost. Cash was not exchanged at the time and Egypt and India allowed Britain a more or less unlimited overdraft, which at the end of hostilities had reached such a figure that it was hopeless to expect Britain to meet the debt and the credit balances had to be “blocked.” Britain, beset with other post-war financial problems, including the dollar gap, has made a real effort to reduce her indebtedness to the sterling area, but at the same time as she released about £750,000,000 of the blocked balances, the sterling debt was increased by almost the same amount by new claims, through sterling investments outside of Britain, trade surpluses with Britain and the savings of emigrants. And so the problem remains and Britain cannot It is easy to be critical of those countries, such as India and Egypt, who are reminding Britain of an obligation incurred in the stress of war, but one can realise the position of the creditor countries. They are urgently in need of capital rood’s and desire to import to the limit of their resources, but find that they run up against the “blocked” balances which they hold in Britain. New Zealand is comparatively short of sterling funds and for that reason it is comparatively easy for the Government to tell the people that we cannot afford all the., imports we would like. Would it be so easy if New Zealand also had millions m a “blocked” balance? . There is a large body of opinion now urging that Britain is morally entitled to some relief from her burden, which was incurred as much for her partners in the war as for herself. Moreover, these “war debts” are stifling a return to orderly world monetary management and they are one of the main problems to which the International Chamber of Commerce is giving attention. A leading American newspaper has already made the suggestion that the United States must ultimately come to the assistance of Britain in regard to the sterling debt and although the official reaction has not been at all favourable at this juncture, the suggestion has at least had the effect of bringing the. whole subject into the open with the hope that some solution may yet be found which will be equitable to all parties involved.