Evening star., 1949-08-27
What Britain Must Do

The exchange Of acrimonious plaSt anu
counterblast between some OF the more
vocal elements in this country and IN
Britain is neither edifying nor helpful.
Perhaps it is not doing any great harm,
except as it may stimulate the hopes OF
those beyond the Iron Curtain who are
watching for any signs of disruption IN the
West, but there is some danger tnat IL may
obscure the fundamental question wnicn
lies at the bottom Of the controversy.
That question is whether Britain can
and will pull out of the economic mole IN
which she has sunk.
Dispatches from London bring the In
formation that Britains gold and dollar
reserves which, at the end OF June, nao
dropped from the "safe" margin OF $2,0O0,-
600 600 to 81, ,624, 900 900, may hit new low
of 81 ,2o0, 100000 by the end OF September.
This is a most serious matter, for II that
rate of decline continues Britain will be
bankrupt in about year.
Various devices to check this trend have
been tried or discussed. For one thing,
imports which have to be paid tor IN dol
lars have been drastically limited. But
that has not been enough. Some six weeks
ago Sir Stafford Cripps, Britain's economic
boss, was saying that the answer lay in
greater efficiency in British production,
and perhaps, over the long pull, there is
some hope in that direction. But, again,
it hardly promises enough.
The grim prospect is that Britain win be
able to find but one way out and that is
to cut the living standards Of people who
already live far below the prevailing stand
ards in our own country. There has been
a hint of this in the unofficial report that
a S per cent cut in British government
spending has been decreed for next year.
Yet this, even If put into effect, would be
but q partial answer. For spending In
Britain, whether for social reforms or Tor
necessities, does not directly affect her
dollar position. If this spending contrib
utes to imitation, or to higher taxes, and
thereby raises production costs 1t Is harm
full in the dollar sense. But If Britain were
to save 5000 ,000, 900 through per cent
reduction in government outlays, that
would not by any means be reflected in a
$500, 600, 900 improvement in her dollar
position. The best that it could do would
be to result in some reduction in produc-
ton costs, and only corresponding i'm
provement in dollar assets.
This points to the conclusion that Brit
ain must travel harder road. Instead OF
wage increases, there may have to be wage
cuts. The British! workman may have to
work longer and harder. The luxuries,
even by current British standards, may
have to be ruthlessly pruned out OF the
economy. With national election in the
of1ing, it is understandable that the Labor
government should be most reluctant to
attempt such steps, and there is, OF course,
no assurance that the British people would
accept a lower living standard If the gov
ernment tried to impose it. But 1t does not
seem that there Is any alternative. Ger
tainly, when one considers that the United
States and Canada have advanced nearly
81, ,0O0, ,000, 900 to Britain since the end OF
the war, and that Britain still Is mired
economically, 1t seems clear enough that
the lasting correction must come from
within Britain, not from some other stop
gap arrangement for new dollar advances.