SUSPENSION OF MARSHALL AID TO BRITAIN

Otago Daily Times, Issue 27573, 15 December 1950, Page 7

SUSPENSION OF MARSHALL AID TO BRITAIN

Dollar Deficit Eradicated

New Zealand Press Association—Reuter—Copyright LONDON, Dec. 14. Marshall Plan aid to Britain will be suspended from January 1, 1951. This was announced yesterday in the House of Commons by the Chancellor of the Exchequer, Mr Hugh Gaitskell. The announcement means that Marshall Plan aid to Britain has come to an end a year and seven months earlier than expected. Mr Gaitskell said that Britain’s economic progress and the strain on American economy through the defence programme were the reasons for the step. He added, however, that American aid to Britain would not be completely terminated.

The Chancellor said that originally Marshall aid was timed to finish in July, 1952. No other Marshall aid country so far has been able to announce it can do without American assistance. Informed sources said the use of the word “suspended” meant that, should some unexpected emergency arise, the position could be reconsidered, and Britain might be able to fall back again on more aid. The decision to suspend Marshall aid was reached in talks recently between Mr Gaitskell and Mr William E. Batt, the Aid Administrator in Britain. Mr Gaitskell said that, apart from the disappearance of Britain’s dollar deficit, another reason for doing without assistance was because the United States defence programme had put a greater strain on American economy. By the end of this year Britain will have received a total of 2,694,300,000 dollars from the United States since Marshall aid began in April, 1948. Authoritative sources said that the ending of Marshall aid was not expected to have an apparent effect on the pockets of the ordinary person in Britain, but the nation would have to watch its dollar expenditure even more carefully than before. Control of im-

ports costing dollars would be .tightened up. Britain would remain a full member of the Organisation for European Economic Co-operation, the body responsible for the practical working of Marshall aid. The suspension of Marshall aid would not affect Britain’s share in building up the defence of Western Europe under the Atlantic Treaty organisation. Mr Gaitskell said certain Econominc Co-operation Administration programmes, particularly those for fostering overseas development for the production of scarce materials for the interchange of technical knowledge to encourage greater productivity, would be maintained, and Britain would continue' to be eligible under those programmes. The Chancellor added: “Suspension of aid under the European Recovery Programme does not mean that the recovery of British economy is complete or that the financial resources of the sterling area are adequate. Both Governments recognise that part of the improvements in the position of the sterling area is due to external factors which may well be temporary.” He expressed the profound sense of gratitude which Britain felt towards the American people.

Move Should Earn Britain Goodwill In Congress

New Zealand Press Association—Copyright Rec. 8.30 p.m. WASHINGTON, Dec. 13. Intense official and economic activity preliminary to United State* home-front mobilisation has now begun as a result of the threat of another world war overshadowed by the announcement of the end of Britain’s famous “dollar gap.” This twin development was implied in the suspension of Marshall Plan aid to Britain. Britain’s agreement to the suspension of aid is expected to earn her much goodwill in Congress when it next considers other forms of aid.

The next occasion on which Congress considers forms of aid to other countries will probably be when it discusses funds for increased military aid to the North Atlantic Powers, but officials said it would be a mistake to think that Britain’s loss of dollars through the suspension of Marshall Plan aid would be offset by what Britain would receive under the military aid programme. The prospects are that Congress will limit aid under the programme to actual rearmament projects and the materials and machinery required'for them, in addition to arms and equipment. President Truman and Mr Attlee agreed last week that the maintenance of healthy civilian economies in the Allied countries is vitally important to rearmament efforts. It is thought unlikely that Congress will allocate military aid dollars to compensate Britain for the indirect loss of export dollars resulting from the division of part of Britain’s industrial effort from her export drive.

Officials said that the bilateral Anglo-American discussions on United States aid to British rearmament which began last July have been replaced since September by multilateral discussions within' the North Atlantic Treaty organisation aimed at pooling the free world’s rearmament efforts. The North Atlantic Treaty organisation would decide what should be contributed and what should be taken from that pool, and the United Kingdom would probably be the second largest contribtor of arms and materials after the United States. President Truman and Mr Attlee last week agreed that Britain and the United States should expand the production of arms, “which can be used by the forces of all the free nations.” A further improvement in Britain’s dollar position therefore almost entirely depends on what Britain can earn by her own exports to dollar countries in addition to any dollars earned under the European Payments Union system from European countries.