The Grey River Argus MONDAY, February 21, 1949. INFLATION BEING ARRESTED

Grey River Argus, 21 February 1949, Page 4

The Grey River Argus MONDAY, February 21, 1949. INFLATION BEING ARRESTED

•THE secret talks at Geneva regarding European trade maj be no offset to the general EastWest deadlock, but they do illustrate the need of economic cooperation. The West looks oi food to the East, and it is said that a cautious approach is being macle by asking what might be forthcoming in that respect from the Soviet bloc, In other days trade was reckoned a road to peace, but politics has now come uppermost, hence thd Berlin blockade. Britain has a special interest in food, no mattei whence it may come, and in the wheat talks, which may come to naught, she has been, looking foi cheaper supplies.’ Mr Bevin, in his latest reference to the Atlantic Pact project, which he thinks could form a lasting peace guarantee, sandwiches with it a , declaration that countries with food to sell cannot count on a higher price from Britain than she judges to be right. This declaration may be timed for a possible change in the international trade situation. It is said that price rises have halted in many places. Sales resistance is even detected in New Zealand. Our labour shortage is officially reported to have passed the peak. Wool prices are steadier. Even gold is said to have receded in price on the free market. The most* significant development, however, • would seem, to be the growth of unemployment in the United States. While this is not causing alarm, the. public is being told that if they arc jittery it could turn from “disinflation” into de" pression. This is reasonable, because production nowhere could be now interrupted except by human maladjustments, when the world is so short of essential goods. There is not going to be a full food supply for the world generally for years yet. Ou the other hand, inflation of prices has universally gone nearly to the dizzy limit, and a halt has been overdue. It evidently is arriving in at. least the United States. If it does come, it will have a worldwide effect. If Americans cut export prices, others will follow their example. Britain therefore may have reason, now that fresh dollar resources cannot be expected to continue, unless earned, to count instead on a cheapening of her imports. The Argentine at present can sell exports to better advantage in Europe than in Britain, but the screw for these might be possible through the agency of the Marshall Plan. Moreover, food from Eastern Europe could exert an effect on the price .structure. Britain is counting already on an increase in her supply from France. The. first effect of a price recession in the United States would be exerted on manufactures rather than primary produce, but it would possibly extend eventually to other prices, because cheaper implements and other requisites would enable farmers to lower their expenditure, and hence their prices. The main obstacle to a correction of inflation is the political one, the disagreement between the totalitarian and the nontotalitarian blocs. The idea of the Atlantic Pact, which would embrace lesser regional defensive measures, is an accumulation of strength that would guarantee peace, as Mr Bevin so strongly hints. The Russians may aim to encircle the Baltic, but they scarcely aim to go further, in the

meantime, by direct action, it is suggested that a Scandinavian pact would 1)0 preferable for the Western nations to the present, prospect of Norway linking up with the Atlantic Pact. The Berlin situation indicates that the Soviet at most counts on a very slow process of attrition to gain ground, the airlift being very costly.. It has long been considered that the Russians had originally planned to get into SchleswigHolstein, and so reach the North Sea littoral, but they were in this at least forestalled, although they got to Berlin in time to remain. The terrain within the Soviet sphere is amongst the best grain country of Europe, and it is a potential bargaining instrument. It nevertheless is blunted by politics, and can be sharpened only by a new approach to a general understanding. There must be a universal acceptance of moral freedoms for individuals and groups, as a base on which to build that intercourse in trade and culture and other things without which antagonisms can only extend and deepen. Unity used to be the cry in 1945 at San Francisco, for the sake of security, but unity now for the sake of security is becoming in practice regional rather than universal. There is little to encourage those who talk of a world parliament or a worl'd government. Meantime, economic factors are possibly less subject to domination

than political factors, and instead exercise an influence in the direction of co-operation. Since the war inflation has coincided with the lack of goods, and it must be assumed that in various categories the shortage is being slowly made good. Where there is the greatest need, howeyer, this readjustment is definitely slowest, as in European and Asiatic areas. It can only be trusted that the process will slowly extend, as the Americans say it is doing in the areas to which they arc sending help.