Evening star., 1950-01-29


supplied to the British during and
after the war by India, Egypt and
many other countries.
To pay off those war debts. even
though slowly, is today a great
burden for the British. Whether
or not Uncle Sam is now to be
propositioned to take over this
burden, the possibility does throw
q spotlight on an important ele-
ment in the whole problem OF
Britain's economic troubles-as
well as those of her creditors.
Cloud Over Economy
Ever since the war Britain in
its financial relations with the rest
of the world has been bankrupt
in the sense that it's obligations
have exceeded its capacity to pay.
Despite the assistance Britain has
received through the Breton
Woods program, interim aid, the
Anglo-American financial agree
ment of 1945 and the ERP, the
country's reserves of foreign ex-
change are dangerously low. In
part these reserves are low be-
cause of the rate at which Lon
don has permitted India and some
of the other owners of the war
time-accumulated sterling funds
to use them in the purchase of
British goods, which otherwise
might have been exported there
or elsewhere against payment in
foreign currencies. During the
war the Indians and others gave
up goods for London bank bal
ances and got no goods in ex-
change; now the British in re-
leasing those same balances, are
giving goods and getting no other
goods back in exchange. This
the British call "unrequited ex-
ports" There has been strong
pressure on the British govern
ment from within the country to
slow down the rate of honoring
of the piled-up foreign bank bal
ances, and a few weeks ago the
Chancellor of the Exchequer an
nounced that payments would be
slowed down.
For years now the huge total
Of the blocked sterling balances
has hung like a cloud over the
British economy. yet no solution
has been found, When after
World War the British. like
others, owed large war debts to
the United States Treasury and
found the annual payments bur-
densome. they simply stopped
paying and, presumably, we have
stopped dunning. But the more
than $4,000, 600, 900 which Britain
today repeatedly owes to owners
Of the London bank balances and
cannot pay off are not so readily
to be Cancelled for political con-
siderations. The Indians and
others want to buy things with
their money; in fact, want to buy
things here, If possible. They
would like to get dollars for their
blocked sterling balances. so that
they may buy American goods.
But Britain has no dollars to give
them.
Who owns those $4,000, 900 600
or so of blocked balances? India
and Pakistan, although they have
been allowed to spend substantial
portions Of those sterling hold
ings since the war, still have to
their credit more than $2,240,-
900, 900 in London. Other mem
bers of the commonwealth hold
important amounts, notably Aus
tralia, whose balances in London
have been growing rapidly in re-
cent years, to a total last June
Of about 81 ,O00,000,000. Fire, a
commonwealth country, owns
a bit less than that in London
banks. Egypt accounts for more
than $500, 900 900, it is believed.
Part of Dollar Talks
These balances have been the
subject OF Anglo-American official
discussion ever since the war
Prior to Breton Woods the
United States Treasury Depart
ment recognized them as a
potential troublemaker. During
the Anglo-American loan nego-
tiations in 1945 the sterling
balances were exhaustively ex-
amined and in the loan agree
ment itself the British govern
ment undertook to make settle
ments with the countries which
owned those accumulations; yet
settlements have not been made
due to the unwillingness Of the
owners of the balances to cancel
any part of them or even to agree
to long-term funding thereof.
More recently, the sterling
balances were part Of the agenda
of the Anglo-A American Canadian
financial talks in Washington last
September and since then have
been under continuous discussion
IN Treasury and State Depart
ment circles. The Americans
have told their British counter
parts that 1t is up to Britain to
work out a plan for handling the
problem. No overall plan has YET
been presented to the American
Government and, according to
British officials, none exists, al
though the problem has beer
urgent since 1945. Until Febru-
ary's British election is out of the
way and 1t is known who will be
Chancellor of the Exchequer after
February, no move is likely. Then
some in Britain think, Secretary
of the Treasury John w. Snyder
may go to London to talk about
the subject.
1t is simple enough to say that
Britain ought to honor It's own
money and let the foreign owners
Of the London balances spend
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