Indianapolis Times, Indianapolis, Marion County, 27 March 1952 — Page 24

- British Out to Halt Loss Suiits

* Of. Dollar Reserves

By R. H. SHACKFORD Scripps-Howard Staff Writer

LONDON, Mar. 27 Great Brit ain and the sterling area are still suffering a catastrophic drain of

gold and dollar reserves which unless stopped this spring, threat ens another devaluation of the pound sterling For nearly a year the drain has heen a hemorrhage Tory Chancellor of the Excheq iter Richard A. Butler has applied a tourniquet, hoping to stem the flow in time- to save Britain from bankrurtcy, the sterling area from distintegration as a trading and financial unit, and the pound sterling from conversion into an unstable, unwanted currency. If Mt Butler's tourniquet doesn't work, Britain either will have to stop doing business with the rest of the world because of

inability to pay her debts once ber reserves are gone, or look to America , for another whopping loan. No British officials are

counting on a loan, especially in an American election year, The major objective of Mr. Butler's budget was to reverse the trend that has been alarming ever since the effects of the Korean War began to be felt (early in 1951. The British government's internal revenue this coming year will exceed government expenditures by some 500 million pounds ($1.4 billion); But that's in pounds.

Outlook Desperate

Aas always, trade. The

Britain's existence, depends on foreign outlook there is grim. Ever since the war Britain has been importing far more than she has been able to export. The defi cit has to be paid out of golf and dollar reserves. American ald has helped in the past. Since last June, Britain has had to dip into her gold reserves to the extent of $2 billion to pay for this deficit. At the end of February reserves were down to $1.7 billlon—below the minimum danger point of $2 billion most financlers figure is rock bottom for| safety. Unless the drain is stopped it is obvious that by early fall Britain's reserves will be gone, Two ways of changing this picture face Britain, eliminating any possibility of the United States granting another big loan to do 80: ONE: The long range objective -—+t0 increase Britain's and the sterling area's exports to the dollar area enough to pay the cost of imports. But the postwar years have shown this to be a slow and difficult job for Britain. The lower cost, mass-produced American products—and now those of Germany and Japan--are tough competitors. But Mr. Butler has set out to do this by internal fiscal reforms in taxation which. he hopes will inspire more Britons to work longer and harder and thus produce more goods for export. TWO: The short range objec-tive-—to pull in the belt and cut imports.

over a lot of which Britain has no control—high duties by other countries,

not allowing them, That would be a disastrous long-range policy for a country like Britain, but in an emergency like this, it is the only alternative. Mr. Butler has ordered imports cut by more than 500 million pounds. By the end of the year he hopes to eliminate the gold and dallar deficit and thus save the

pound from further devaluation.

His task is difficult. In the first two months of this year, gold and dollars disappeared from the

treasury at the rate of $63 million § compared with $58 mil-|

a week,

INCINNATI

BURGER

PLEAS

soared

Increasing exports depends on a great many factors,

for example. But im-| ports are something Britain can control quickly and effectively, by!

lon a week in the last quarter of 1651 and $46 million in the third quarter of 1951.

; Drain Continues

continues at an However, the effect ordered by the ‘hurchill government in Decem hould start to slow down the drain in the coming weeks Britain's all-time low in gold ind dollar reserves came In June, 1941, when Britain's fortunes of wir also were lowest, down then to only $261,950,000 Ironically her all-time high was reached in June, 1951 just before the beginning of the pres ent crisis. Then reserves had thanks to Marshall ald help--to $3,867,000,000, Fven if Mr. Butler's works, bankruptcy may avoided. Mr. Butler himself has adimited that the future was uncertain, the consequences of failure dire, and

Thus the lo ilarming rate

of import cuts

het

budget not he

the entire future of Britain at take, When all the technicalities are

brushed aside, the problem comes back to the one that has plagued Britain ever since the war-the dollar gap. 8he has not been able to earn enough dollars by her exports to pay for the things she must buy-—mostly food and raw materials-—from the United States and Canada.

Fires Himself SPENCER, W. Va. (UP) Rus sell Wetzell has lost his job as water hoy for a road construction crew. Wetzell was the water boy for a state prison road gang. He was sent to get some water for his mates and just kept on going

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