Manawatu Evening Standard. TUESDAY, AUGUST 18, 1931. BRITAIN’S FINANCES.

Manawatu Standard, Volume IV, Issue 220, 18 August 1931, Page 6

Manawatu Evening Standard. TUESDAY, AUGUST 18, 1931. BRITAIN’S FINANCES.

The Labour Administration in Britain now appears to be thoroughly alive to the paramount need to balance the national accounts next year. There was evidence last week that Mr Ramsay MacDonald, who had left London for Lossiemouth, when Parliament adjourned, was not prepared to pay the attention to the Economy Committee’s report that the situation demanded. According to the London Daily Mail, one of the chief reasons why Mr MacDonald hurriedly returned to London was the receipt of a letter from city bankers “couched in the plainest terms and urging drastic retrenchment in order to re-estab-lish Britain’s credit.” Prominent bankers were reported to have taken part in the subsequent deliberations between the Prime Minister and the Chancellor of the Exchequer, the outstanding result being the immediate summoning of the Cabinet Sub-Committee, instead of at the end of August as previously decided. This is a change of front on the part of Mr MacDonald which has been welcomed, and no doubt plain speaking by the city’s financial interests played a very substantial part. Meanwhile the Labour organ, the Daily Herald, has been at pains to deny any differences between the Ministers who, it affirms, are agreed upon the imperative need of balancing the Budget, which it describes as an “integral part of world financial security.” This is also held to be another and possibly important reason why Mr MacDonald suddenly decided to face the facts of the situation. Just a few weeks ago he informed the German public, and incidentally the world at large, that there was nothing seriously wrong- with Britain’s finances. The Bank of England had then been meeting serious drains upon its stocks of gold, but by raising its discount rate and pui’chasing French credits to arrest the flow of gold from London it brought a more normal state to the money mai’ket. A leading feature of the British financial system is the undertaking- to meet every legitimate demand in gold, and recent events have re-emphasised the strength of British finance. But if Mr MacDonald is to justify his statement, then it is demanded of him that he will take the necessary steps to maintain equilibrium in the national finances. The recent warnings of Mr Snowden of the danger of financial drift and the peril to industry in increasing the burden of taxation have not found a l-esponsive echo in Mr MacDonald’s statements on the matter. At the end of

last month the London Times, in surveying Britain’s position, said plainly that the nation was living beyond its income. It urged immediate and i-igorous pruning in Governmental expenditure, so that the storm would be weathered. The Cabinet Committee is now engaged in this task and is expected to have its plans finalised to place before Cabinet on Wednesday. Liberal and Conservative advice is also being sought in the task, and this may be accepted as a political move so that the Labour Administration will be able to “save its face,” when the general election comes, by throwing the responsibility for any economies effected on Parlliament. This, however, does not blind the people to the fact that the chief responsibility is the Government’s. Mr MacDonald now professes to be happier about the situation. The Government, lm affirms, means action in facing the situation. That is all to the good of the nation, but the means to accomplish the end—a balanced Budget —are causing speculation. If there are toi be still greater burdens on industry, and the pressing need for economies passed over lightly, then the Government will be but postponing the issue.