Evening star. [volume] (Washington, D.C.) 1854-1972, 1945-09-16
Britain Bargains Hard
For American Looms
Observer Says Depreciation of
Pound Is Possible
By Raymond Moley

Pound Is Possible
By Raymond Moley
Two noole lords, Halifax and Keynes.
came over the Atlantic in low spirits
but high expectations. They have come
to Washington to ask for loans in high
figures, perhaps the highest in British
history
In their discussions with our State
and Treasury officials they will also meet
counter claims, which will be unusual in
British experience.
Americans have vital and permanent
interest in the British proposals and
our counter proposals.
Probably the first of the British pro-
posals concerns lease-lend The United
Kingdom had hoped that the uncondi-
tional surrender of our common enemies
might bring unconditional cancellation
of lease-lend obligations. The somewhat
abrupt termination of lease-lend by
President Truman, without a sweeping
| cancellation of past obligations, was a
| shock felt round the world. Its rever-
beration in London were especially
strong
The British had built up good deal
| Of food and raw material imports on
this system. They expected. after the
war, to proceed with this arrangement
| into relatively smooth period of trans
| ltlon. The President. by law, was re-
| CURED to bring it to an abrupt end. So
| the two lords will be very DESTROYS that
some means be found to provide a con-
| tinuation which would be aside and apart
| from an additional loan
The terrific foreign debt which now
hangs over Britain is another factor in
which American help is needed. Britain
was the greatest creditor nation. 1t is
now the greatest debtor. John Bulls
debts to other nations amount to some
thing more than $4,000 100000 There
are those who estimate the total amount
at s20,000000, 900 or more. This debt acts
as a paralyzing influence on her trade,
for you can't combine frozen debts with
liquid trade. If exchange is frozen in
England, exports must be rigidly con-
trolled, A long-term loan of from t1lree
to six billion dollars from us is antici-
pated.
Moreover, Britain expects every Amer
lean to recognize as a moral duty the
exercise of moral restraint in the
foreign markets in behalf of Britain.
British policy is not only to restore pre-
war foreign trade, but to increase the
amount so per cent.
The counter demands of the United
States are also stiff. A condition prece-
dent to unconditional cancellation of
Lease-Lend obligations is that Britain
abolish her Empire preference system.
Our argument is that. since Lord Keynes
argued at Breton Woods for the bless
ings Of unrestricted foreign trade, the
place to begin is at home Expressly
mentioned in Breton Woods were only
import and export quotas. American
exporters argue that, under the En-
plre preference system, one -quarter of
I@the people and territory of the world is
almost closed to them. To the urging
/ Of President Truman and Secretary
! Wallace that we make jobs through for
elgn trade, American business can reply
| that our Government should clear the
way
This counter-proposal is a hard one
for Britain to yield. Britain fed in a
big way from free trade in 1882. She
claimed that she was driven of the gold
| standard and into sheltered markets
because the United States and France
deserted her. She needs these Sheltered
markets" to begin the restoration of her
foreign trade. She needs this shelter"
because Britain cannot hope to compete
with American efficiency in production
now and with Germany's possible eff
cheney later. The Empire preference
system had its pragmatic test in the
early 1905 1t enabled Britain to
emerge from the depression.
Under the conditions that prevailed
for eight years before the war. more
over, Britain built up a strongly car
tellized economy. She says she needs
cartels. especially in the raw-material
field, against the threat of overproduc-,
ton of wool, cocoa and other commodi-
ties, But the Washington administra-
ton is strongly opposed to all cartels.
The basic factor in the maneuvering
| in Washington has not been widely dis,
cussed. 1t is the danger that Britain,
under the Labor government, may re-
sort once more to the depreciation of
the pound. This can take place before
the Breton Woods plan goes into effect
If it is done, Britains advantage against
more efficient producers will be very
great. 1t might produce the conditions
of 1888, when we were compelled to fol-
low the lead and depreciate the dollar.
all over. again. That would be infa-
tionary here. and business. government
and labor are united on a fear of inf1a-
ton.
This is Britain's trump card. The
noble lords, Halifax and Keynes, may be
expected to use it with realism and
skill. Britain's economic position may
be weak in terms of money and credits,
but her bargaining power is still for-'
midable.
Or the Stooeunote?
From the st. Louis Post-Dispatch.
Since every Jap Emperor chooses q
name for his regime. Hirohito may be