Wrongful Use of Dollar Credits Claimed
N.Z.P.A. Special Correspondent— Copyright LONDON, Sept. 3. Signs of an intensive inquest into the reasons why the British Treasury’s calculations about the effect of the convertibility on the dollar loan went so seriously astray are beginning to emerge. The first indication of this came when Mr Roy Harrod, editor of the Economic Journal, delivered a radio address, in which he claimed that not one-half of Canadian and American dollar credits'were used Tor the'purpose for which they were primarily intended. This was followed by an article in the Financial Times analysing the increasing momentum of payments during July, and expressing the opinion that insufficient steps had been taken to ensure, that all sterling balances held in Britain before July 15 were blocked, and that only current transactions after that date were convertible into dollars. Balances Blocked The Financial Times claims that, out of 3,559,000,000 held in balances before July 15, only 1,700,000,000 were definitely blocked at that date, and that the remainder were covered either by “ gentlemen’s agreements ” or other arrangements, which the Chancellor did not specify. In spite of this, some of the sterling area countries found from their own point of view the. best of reasons for converting more sterling than usual, and other countries which had modest balances it had not been considered necessary to freeze, took advantage of what was widely supposed would be a very
short-lived opportunity of obtaining dollars. Simultaneously with the appearance of this report, the New York HeraldTribune’s European edition accused the “ stuffy doctrinaire, Mr Hugh Daltin ” of complacency, and laleged that he had ignored danger signals which had been apparent on both sides of the Atlantic. Suspension of Convertibility “If Britain had put all her cards on the table and made a specific request for the suspension of convertibility, it would have been granted,” says the Herald-Tribune correspondent. “ Instead, the. British merely spread before the Assistant Secretary of State, Mr W. L. Clayton, a set of figures which made it entirely clear that the strain on the British dollar position after convertibility would prove intolerable. Mr Clayton, who was waiting for the British to make a specific request for aid, said nothing. The British were hamstrung by Mr Daiton ” of complacency, and alleged and the fear of rebuff on the other, and took this silence for "refusal. Thus idiotically disaster was allowed to happen. This was followed up to-day by an article by the. financial editor of the Evening Standard, claiming that economists and financial experts have reached the conclusion that only half of the total loan was used for the benefit of Britain—the remainder was drained away by other countries to spend on goods they want. The Standard says Treasury officials consider that this was an over-statement, but agree that one-third of the loan went in this way. It demands a clear statement and explanation by the Chancellor of the Exchequer, and that any further efforts to revive convertibility should be dropped.
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Otago Daily Times, Issue 26558, 5 September 1947, Page 5
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497Wrongful Use of Dollar Credits Claimed Otago Daily Times, Issue 26558, 5 September 1947, Page 5
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