STRICTLY ECONOMIC BASIS

Otago Daily Times, Issue 26545, 21 August 1947, Page 7

STRICTLY ECONOMIC BASIS

Talks on Dollar Crisis AMERICA REFUSES TO DISCUSS POLITICAL ASPECTS . \ ' / - Rec. 9>.m- WASHINGTON, Aug. 20. Members of the British mission visiting Washington to discuss dollar crisis are showing anxiety over the United refusal so far to discuss political aspects of the problem.) ■ The British consider that the collapse of the sterling exchange rate would have political repercussions no less serious than its economic results. Diplomatic quarters are quite seriously discussing the possibility of the present international balance of power j being upset by such a development. The Ameri/pan delegation is insisting, however, on handling the problem within a rigid economic framework. Meanwhile the conference to-day decided to establish small committees to tackle individual aspects of the British crisis, including possible means of providing, interim aid to Britain. The conference had planned a full session to-day, but this was cancelled partly because the Americans are demanding complete details on many varied aspects of British economy with which the British mission is not fully equipped. Support Needed for Conversion of Sterling

Rec. 9 p.m. LONDON, Aug. 20It is authoritatively indicated in London that the question of sterling de valuation and a higher gold price is out of the question for the present, although the force of circumstances might bring them up again later, says Reuter's financial Correspondent There is still no answer to what is« going to happen to sterling when, unless the United States Treasury itself supports it, more Sterling is offered in, New York than Britain has dollars to buy. It is stated that, although there has’ been a legitimate inference that the visit to Washington of the deputy governor of the Bank of England, Mr Cameron Cobbold, was connected with the fact that, failing United States assistance, it would be his role to restrict or rescind the Bank of England’s standing instruction to buy all sterling offered in New York, this also was out of the present picture. British Treasury returns issued yesterday disclosed that in the week ended on Saturday Britain drew 40,000,000 dollars from the Canadian toan. This was in addition to the 150.000,000 dollars already known to have been drawn from the American loan <on August 11.' The draw on Canada was exceptionally heavy compared with that of the previous fortnight, when only 10,000,000 dollars were drawn. f , Uncertainty In London The financial correspondent of The Times says that London is in a state of profound uncertainty while awaiting the decisions-from the dollar conference in Washington, the economic co-operation conference in Paris, and the International Trade Organisation in Geneva. The odds are that the Washington talks will not get very far without fresh decisions by the British Government in the sphere of domestic policy. The stage of expert examination seems bound to give place soon to a stage of major policy de T cisions, and members of the sterling area must perforce co-operate if it proves inevitable. Others must realise that enjoyment of transferability for the gross sterling proceeds of their goods and services does not entitle them to take up a temporary short position in sterling. fcThe parliamentary correspondent of The Times says that the second interruption of Sir Stafford Cripps’s holiday—to meet Mr William Clayton, •the United States Under-secretary of State, to-day—emphasises the difficulty the Government is meeting ,in carrying out its plan to tackle the economic crisis while so many questions affecting it are sub judice in Washington and elsewhere. The departments con-

cerned in the new export drive and the realignment of food imports, which, are major aspects of the plan, must await decisions at Cabinet level before they can make firm plans. Nor can plans to increase food production be made realistic until the nature of the food imports, particularly feeding stuffs, are ascertained. Adverse Balance of Purchases fl Many of these questions cannot be answered until, the outcome of the Washington talks on the terms of the loan agreement are known. Should the United States delegation adhere strictly to the interpretation of the

terms, the British Government’s task becomes incomparably more difficult British purchases in the United States for the year ended June. 30, 1947, totalled 1,540,000,000 dollars, as against earnings in the United States from exports amounting to 340.000,000 dollars On food imports alone from the United States, Britain spent 385,000,000 dollars Altogether, 220,000,000 dollars were spent in Canada, mostly on wheat; 260.000,000 dollars, principally on oil and sugar, were spent in Central America, and 135.000,000 dollars on meat and some cereals in South America. To achieve the Government target of reducing these imports by £12,000,000 a month with the convertibility and non-discrimination obligations of the loan operating against it, would clearly entail far heaviesacrifices than the Government has yet publicly contemplated. The Daily Telegraph’s political correspondent says that a scheme, for an all-round reduction in rations is in preparation for submission to Cabinet during the next few weeks. The foods affected include bread, meat, cheese, and fats.