Evening star., 1933-07-02
British Fear Landslide
Without Stable Dollar
BY A. G. GARDINER

LONDON, July 1.-Never was the
elimination Of q London season more
over1owing with ceremonies and sayeties
than was the case this week. But be-
hind all the festivities was feeling that
civilization Is dancing On the brink of
volcano The specter at the feast
was the tate Of the pound, which is
perilously poised between the devil and
the deep sea.
The question exercising all minds /
whether England Is to be dragged int
imitation behind the United States or
to link her fortunes with the Cc-
tinental countries which are making
last desperate stand for the main
tenance Of the gold standard.
The decision cannot be long delayed.
The sensational slump Of the dollar in
midweek flled the financial world and
government circles with something ap-
preaching panic. It was feared that the
artificial price boom In the United
States was on the point Of getting out
OF hand, with catastrophe consequences
TO world exchange. This fear was
strengthened by abundant signs that
American investors were selling dolIars
for pounds and buying British Securities.
The boom in British Industrial stocks
was attributed, not to improved trade
prospects, but to dollar fright and the
desire Of Americans to ind q safe haven
for their capital.
Whether the rush of the dollar down.
ward will drag the European exchanges
from their moorings depends on the at
titude Of Great Britain. which is hsJt-
ing between the perils OF imitation and
the perils Of refusing imitation. The
center Of the struggle is the Bank of
England. where the representatives of
the leading European gold countries.
France, Italy, Holland, Belgium and
switzerland, are engaged in an endeavor
to prevail upon Britain to take the side
OF the Continent In the financial tug
of-war and to agree on a basis Of
stabilization, without which it is feared
the gold countries will be swept into the
vortex. It Is agreed that If the pound
follows the dollars fall, nothing can
rencies.
The weight Of the arguments fayors
Britain throwing her influence on the
side OF saving Europe from being In
volved IN currency chaos. The dangers
OF either course are enormous. On the
one hand, linking the pound to the
gold countries at the current level means
that II the dollar falls out of all pro.
portion to the rise in Americas in
ternal price level, the export trade Of
Great Britain will be reduced to
desperate straits. But the alternative
Is even more disquieting. II the Con-
tinental countries lose their anchorage
TO gold, not only would British trade
sacrifice the slight exchange ADVANTAGE
at present enjoyed, but doubt is felt
whether the depreciation Of the franc,
guil6er, and lira could be checked within
the limits preserved In the case of the
pound. II the Continental currencies
slide, the probabilities are that they
would get completely out Of hand and
that the consequent currency collapse
would destroy all hope Of trade recovery.
+ +
In the clash Of opposed policies the
British government Is being urged ON
one side to Join America In giving
preference to the policy Of raising prices,
and on the other side to stand by Eu-
rope In putting the stabilization Of cur
rencies in first place. The advocates Of
the latter course urge the government to
make a firm declaration that, while
favoring q gradual and moderate rise
In prices, such rise must be based on
genuine expansion Of demand and not
achieved artiflcially by depreciation Of
the pound. This, they say, would
stimulate . wild speculative price boom.
the immediate result Of which would be
tllusory and the ultimate effect Of which
would make the world financial chaos
infinitely worse than at present.
The immediate task Of the govern.
ment. In view Of the orthodox school, q
to prevent the European currencies from
running amuck. It Is argued that It Is
not too late for President Roosevelt To
realize the peril Of financial landslide
and to stabilize the dollar within cer-
tain limits: and il, meanwhile. the Eu-
ropean gold countries can be prevented
from abandoning gold, the situation may
De redeemed. The next few DAYS must
decide whether Great Britain ranges On
the slde OF America or Of Europe.
(Copyright, 1880