BRITAIN SAID TO BE DEVOID OF A LONG-TERM DOLLAR GAP POLICY

Wanganui Chronicle, 26 July 1949, Page 5

BRITAIN SAID TO BE DEVOID OF A LONG-TERM DOLLAR GAP POLICY

"The Economist" Forecasts That Sterling Will Be Devalued

LONDON, July 25 (Rec. 6 pm).—“For all the flurry of Gov- | ernment activity and hurried international talks, the fundamentals of the situation still look precisely the same as they did a week ago,” says “The Economist,” discussing the problem of the dollar gap and the results of the Commonwealth financial talks in London.

“All that has happened is that the expected first steps have been taken to secure the participation of the overseas sterling area in the shbrt-term expedients of dollar economies. It has become even more apparent that, at best, these measures will take some months to exert their full effect on the dollar drain and that they will not even then suffice to arrest it. "Even within this sphere of first aid expedients, nothing more seems to be contemplated. This means that pressure on sterling is likely to be intensified, for the inadequacy of short-term measures and complacency of the British Government are creating a very bad impression abroad. “Even more disquieting is the bankruptcy of policy in relation to the longer term aspects of the crisis. Each day adds its confirmation to the first impression that the Government knows none of the answers. If it has

I any notion of where they may be I found, it is firmly averting its gaze lest it be forced to see and admit the discomforting truth that major changes within Britain's own economy are an indispensable ingredient in a prescription for a longer-term improvement. “If all such changes are ruled out, there is nothing left for the Government but to scan the trans-Atlantic horizon for any possibility of additional relief, and to devise ingenious schemes for making it look sufficiently different from former doles to stand a chance of American assent. “Nothing more, it seems, is being done. Nor, while the Government can sustain its pretence that there is no crisis, is it likely to be forced to bestir itself. “In such circumstances, the city and business world find the outlook more than ever inscrutable. But one conclusion daily gains wider acceptance—that depreciation of sterling, whatever arguments can be urged for and against it as a deliberate step, will sooner or later become inevitable.”