HOW CAN AMERICA AID BRITAIN?

Wanganui Chronicle, Volume 89, Issue 226, 24 September 1945, Page 5

HOW CAN AMERICA AID BRITAIN?

CURRENT ECONOMIC VIEWS

RECONCILIATION OF STERLING AND DOLLAR BLOCS.

Recd. 8 p.m. New York, Sept. 22. Sentiment is increasing among American officials participating in the British-American financial conferences, that the Dominions should voluntarily scale down at least half of the 12*000,000,000 dollars in blocked sterling balances, representing debts owed by Britain to other parts of the sterling area, largely as the result ot British war purchases witbin the Commonwealth, says the “New York Times” Washington correspondent. Some officials express the opinion that a voluntary scaling down should be a condition to any American aid to Britain. The unfreezing of a large debt—which may reach 16,000,000.000 by the time the war accounts are closed—in order to give the sterling creditor countries at least enough dollars and other desirable currencies to buy what they need during the transitional period is regarded as one of the principal problems in the current financial negotiations.

Here it is clear the United Kingdom, busy with reconstruction work, will be unable to supply the immediate needs of other Commonwealth members. There is little doubt the current negotiations will produce an agreement, either between Britain and United States, or the United States and all the sterling area countries under which some form of aid is granted to Britain.

The prevailing American view is that unless the world’s two greatest trading nations reach an agreement enabling the world to resume multilateral trade at an early date, the alternative will be a division of the world into sterling and dollar blocs, ushering in one of the most bitter eras in economic warfare in world history. The problem of the sterling area looms large in the current negotiations, because the towering, sterling debt constitutes probably a primary obstruction to the return of normal multi-lateral trade. Among the various methods of aiding the British, the Administration is considering a scheme whereby the United States will purchase large blocks of sterling from the Dominions, Britain and herself, to be drawn upon to pay for purchases in the United States, with provision for long-term repayment. Another plan predicted the assumption that the sterling area countries would cancel half the sterling debt.

The principal problem is how th o. United States should intervene in the Commonwealth situation. Apparently, the British are fearful of offending some Commonwealth countries including some whose relationship, none too firm, would prefer not to suggest any forgiveness qf debt. f( remains to be seen whether Ihe British will American intervention towards this end.