The Grey River Argus TUESDAY, September 20, 1949. DOLLAR ASCENDANCY

Grey River Argus, 20 September 1949, Page 4

The Grey River Argus TUESDAY, September 20, 1949. DOLLAR ASCENDANCY

'J’HE formal announcement on Sunday night by the British Government, that the pound had had its nominal exchange value, in terms of the dollar, knocked down by nearly one-third 123 cents —seems to have been unexpected onlf as regards the size of the cut. The actual devaluation had long since occurred, and the decision to give it technical effect was taken by the Cabinet bcfoie the Chancellor, Sir Stafford Cripps, and the Foreign Secretary, Mr Bevin, went to Washington for the purpose of setting the stage for the operation. Devaluation is nothing new. It dates back many centuries. It is the history of currencies. A shilling in Britain, for instance, used to buy in the fifteenth century much more than a pound buys to-day. Yet the pound was the anchor of currencies throughout the nineteenth century, to mention no more lengthy period. The first European war marked the shifting of the centre of gravity across the Atlantic. The second world war exemplified it especially through the agency of Lend-lease. This repetition of the sterling devaluation of about a generation ago demonstrates how the fulcrum of finance, indeed also industrial capitalism, is located in the United States. There the currency has the backing o f not only a mammoth industrial mechanism, but much the greater part of the gold stocks of the ■world. Singly these things would be potent, but combined they are omnipotent. We live in a commercial civilisation, which most people reckon to be eternal; and, while its term may be already measured or limited, by little noted factors now operating, the dominance of American capitalism, both technically and morally, is the greatest economic factor of international effect.

Sir Stafford Cripps admits that, so depleted had the reserves of sterling become that, without an economic and trading reversal, the currency would soon have collapsed. The alternative to arbitrarily equating it now with the dollar on the basis of real value backing would have been to allow industry to decline until both capitalists and workers alike should be ready to produce at prices which would mean grim poverty. The Government has chosen to avert that stagnation and to distribute as fairly as possible the writing down of assets that is essential in some shape or form. There are people who say that fair distribution is only a secondary object and the primary one is maximum production. "What these people mean is production with minimum return, at least for the actual producer-—the worker. It is the very system of international industrial and finance capitalism which dictates such a remedy—a cure that may be as bad as the disease. America not only has had great accumulations of finance, and gold, but unexampled technical progress this century, during which Britain has been knocked back by war and other adversities. It is only that the British systtfn has intrinsic values which the American system lacks which dictates to the dollar area the wisdom of maintaining the sterling area. They could be combined, but the result might be an unworkable thing. Is it fair, however, to expect that by sacrifices the workers of Britain should with extra, output, at less remuneration attempt, to offset all the advantages in resources, technique, and man power possessed by America? - The money, finally, is not the only thing. Exchanges '

in the final analysis must continue to be based on the value of goods, rather than paper. If the British gain a hold of the North American market, they may be expected to hang on. They have never for a century had there the hold now being sought. American costs are rising. Big strikes for better' Day and pensions and social security arc in prospect. Britain must have due regard to her assets other than industrial. She has employed these pretty fully indeed. Emigration is indicated. It is certain that capitalism has no future there to compare with its past. Social security is a popular idea. Many are looking for the bright side. They point to the rise in the price of gold. For Britain it contrasts with a fall in the price of exports to the hard currency area. A country cannot indefinitely give away a lot more than it gets back. if America admits a lot more goods than heretofore she will export so much more. She has a lesson to learn in this respect. After all, Britain is attempting something new. There are in Europe and elsewhere markets, but not dollars. Britain is going after dollars because she needs dollar goods. It is the- mark of American industrial and economic ascendancy, since those needs are to be met only on American terms. It is as well to recall the time that these Dominions were told to devalue in terms of sterling. To-day sterling in turn is devalued in terms of dollars. Whose turn next?