THE OTAGO DAILY TIMES SATURDAY, SEPTEMBER 6, 1947. THE EMPIRE AND THE DOLLAR

Otago Daily Times, Issue 26559, 6 September 1947, Page 6

THE OTAGO DAILY TIMES SATURDAY, SEPTEMBER 6, 1947. THE EMPIRE AND THE DOLLAR

The Empire economic talks which have been arranged to follow the meeting of the International Fund Board in London will offer an unrivalled opportunity of strengthening in peace the bonds of unity that were forged in war. Once again the Empire will be asked to make sacrifices on behalf of Great Britain, and if these are accepted a greater and more powerful Commonwealth will emerge from the present economic crisis. The whole purpose of the discussions will be to explore possibilities of overcoming the “ dollar gap” until long term planning enables Great Britain to resume its rightful place among the leading industrial nations. The United Kingdom is facing bankruptcy; that fact cannot be blinked. If it fails to weather the crisis, either through the failure of the Dominions to shoulder further responsibilities or through any other cause, the whole of the sterling area—if not the whole world —will be plunged into economic chaos from which it might take years to recover. The American loan is almost exhausted; the whole of Great Britain’s remaining resources in gold and securities would tide the nation over a few months only of economic adversity; the Marshall Plan is still a nebulous formula which cannot affect immediate problems, and any loan that could be secured from the International Bank would be a temporary palliative. The suspension of the convertibility of sterling into dollars has done something towards arresting the drain on the fast-dwindling dollar reserves, but the problem of maintaining the value of sterling is one which the whole sterling area, and the Empire in particular, will have to solve. The only formula for success in the task that lies ahead is contained in the old adage to work more and spend less, and the principle can be profitably applied in Great Britain as well as the countries of the Empire. There are, however, many ways in which the Dominions can assist if they are prepared to make the necessary exertion and sacrifices instead of accepting the dangerous belief that Great Britain will somehow “ muddle through.” The assumption can confidently be drawn that one of the first requests that the British Government will make will be for an all-round decrease of dollar spending by countries of the Commonwealth. All the Empire partners have been overspending in the United States because of a lack of supplies elsewhere, but this trend will have to stop. Great Britain must, however, be given every encouragement to dispose of a maximum of her exports in “ hard ” currency countries, §nd thus reduce the present unfavourable trade balances. The most positive contributions that the Dominions can make, however, is the supplying to Great Britain of greater quantities of food and raw materials at prices lower than those quoted by the United States. This would provide a way around the obnoxious “ non-discrimi-nation ” clauses in the Loan Agreement and would confer two direct benefits. In the first place, a considerable saving of dollar expenditure on food imports could be immediately effected, and in the second, a diversion of expenditure away from the dollar area would be created which would eventually lead to a decline in the present exorbitant prices for American goods.