Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-25
CHANGE IN BRITAIN
HELD STABILITY AID
Fall of Labor Rule Called Sec
ond Step in Ending For
eign Dilemma.
By DAVID LAWRENCE.

For several months Il , foreign sit
uation" has been hanging over the
banking and credit elements Of the
United States, retarding what has con-
fidently been hoped would bring a nor
NAL condition to the domestic money
market
With the fall Of the Labor ministry
Of Great Britain. the second stage in the
clearing UP Of the foreign dilemma has
been reached The first. of course, was
the crisis in Germany. Domestic poll
tics played q part in the situation both
in Berlin and London. Reluctance 70
use the taxing power on the one hand
and q tendency to grow extravaganza In
the use of government funds on the
other hand NAV be re- rded as the
principle factors.
Great Britain. through her Labor gov
eminent. has tenaciouSly hung TO the
dole" as means Of handling the un-
employment problem. Governmental
economy and q balanced budget has
been put OF so long that 1t has finally
affected the credit of the Bank Of
England abroad Ramsay Macdonald
would have liked to have suggested some
plan to tax the wealthy and keep up
the payments to the unemployed, but
time and the critical developments Of
the last 10 days defeated him. 1t was
condition so acute that immediate
action was essential.
Published reports from abroad state
that American bankers In effect dictated
the fall OF the Macdonald ministry be-
cause. it was said, the Federal Reserve
banks. through their New York spokes-
man, refused to extend any more credit
unless the British budget we're balanced
or measures taken to bring about q
balances between expenditures and re-
ceipts. The American Government. of
course. has no connection with the
credits extended by the Federal Reserve
banks or the conditions attached to
them, since the member banks are all
private.
It is considered doubtful that the
Federal Reserve Bank Of New York
made any stipulation concerning Brit
ish internal policy, but there is prece-
dent for arguing that credit cannot be
extended where world confidence is
shaken. Thus American and British
nd French bankers told the German
Reich only this Summer that economy
measures would have TO be put in effect
II foreign credits were to De renewed.
1t is q thin line Of demarkation nova
days between intrusion in domestic
eminent can obtain credit and con-
fldence outside its borders. where
foreign investors insist upon knowing
the character of the government that
is TO repay the loans.
There is no doubt that British bank
ers themselves are in accord with the
suggestions Of foreign bankers and 1t
would not be surprising IL the true
British situation were exaggerated in
order to bring about the fall OF the
Labor ministry.
No matter, however, what the events
were that led up to the formation Ct a
coalition government in ,reat Britain.
the belief prevails that a forward step
has been taken and that the British
pound sterling now will be stabilized in
its foreign exchange because Of the re-
turn OF confidence on the part of the
world generally In the ability of the
new British government to put its finan-
ctal structure in order.
1t has been disconcerting. Of course,
TO see the Bank Of England struggling
with decline in pound sterling, but
the banking world has never lost con-
fidence in the British nor in the ability
OF new cabinet to straighten out the
domestic difficulties Some new eco
nornic experiments may be tried such
as the imposition of a new tariff for
revenue only. but the British crisis may
be said to have been passed, with q
decisive step taken to rid England of q
policy OF continued expenditure without
adequate revenues raised by taxation or
import duties
(ccpyright, 1870