SALES OF GOLD “DANGER SIGNAL”

Gisborne Herald, Volume LXXIV, Issue 22439, 20 September 1947, Page 5

SALES OF GOLD “DANGER SIGNAL”

BRITAIN PURCHASES DOLLARS "PINCERS MOVE IN BATTLE OF GAP” (N.Z.P.A.—Reuter— Copyright.) (10.30 a.m.) LONDON, September 19. “There will be more sales of gold,” said the Chancellor of the Exchequer, Dr. Hugh Dalton, at a press conference today, discussing Britain’s use of £20,000,000 from her gold reserve to buy dollars as announced on September 15.

It was also likely there would be more purchases of dollars from the International Monetary Fund from which Britain this week drew 60.000.000 dollars.

CRISIS LIKELY

The Chancellor said the selling of gold to purchase dollars should be regarded as a danger signal. He added that Britain had not approached the International bank, but he did not deny she might.

Tiie bank to now had limited operations to what it termed concrete projects, and Britain would wish to approach the bank only in respect of developmental projects involving the purchase of machinery, etc., for dollars.

Britain had delayed approaching the Monetary Fund until she had defined her plans for closing the gap in the balance of payments. The suspension of sterling’s convertibility did not mean the dollar crisis had ended. The crisis would continue—though he hoped with diminishing intensity—until Britain was living within her dollar income.

Dr. Dalton said there would be more sales of gold and probably more purchase dollars from the fund. These would be further danger signals to all engaged in British production and to all countries in the sterling area because they shared the gold and dollar reserves pool. The fact that Britain had been able to draw dollars from the fund showed that the governors of the

GOVERNMENT TO

Dr. Dalton said the subsidies in Britain was one question the Govern•■ment was going to consider. The reactions on prices would be considerable .-if the subsidies were suddenly swept " v away. The trouble was that there was so much inflation elsewhere that Britain was in danger of being dragged along. Dr. Dalton, replying to criticisms of the American loan, said it had been of the greatest value in tiding Britain , over an extremely difficult period and he was very appreciative of American assistance. He greatly appreciated Mr. Chifley’s decision that Australia’s current gold production should

be sold to Britain. Dr Dalton could not say whether there would-be an autumn Budget, but if there were he would have to make some positive proposals to the House of Commons. Britain would keep in touch with members of the sterling area, he said. It was generally recognised that the sterling countries had the common task of checking the diminution of gold and dollar resources as soon as possible. That could be done only by spending fewer dollars and earning more dol-

lars. How that could be done would be worked out in detailed discussions between the countries concerned. Dr. Dalton said there were many ways that Britain could dovetail and integrate her national economy and re-

TO CONTINUE

fund regarded Britain’s disequilibrium in the balance of payments as temporary. The sales of gold and the withdrawals from the fund were part of a pincers operation in the battle to close the gap in the balance of payments.

REVIEW SUBSIDIES

quirements with several European countries.

The Foreign Secretary was anxious as soon as the time was ripe to begin consultations on ‘the projects we have been working on for some time.” Dr. Dalton added he and Mr. De Valera have been discussing means of co-operating to reduce the dollar drain.

Dr. Dalton said he wished particu larly to tell the American press that Britain’s 1946-47 production was a record in a large group of lines and was exceedingly good and creditable to the managements and workers. The production of pigiron, steel ingots and castings, agricultural and similar machinery had been running steadily substantially above the prewar output. Merchant shipbuilding was double and rayon production nearly double the pre-war figures. “These facts adequately answer the gloomiers.” he said. Stock Exchange conditions were much steadier this morning, but business was still below normalBritish Government stocks held their overnight levels. Miscellaneous industrial leaders were again marked higher, but there were few transactions. Copper shares were narrowly irregular- South African gold and other mining issues were very quiet. Oils were inclined to firm.