12 APRIL 1940, Page 30


At last we have an official declaration of faith in the vexed question of the fall in free sterling. Sir John Simon assures us—many of us were already convinced—that the recent slump from 3.90 to 3.45 in the rate for unofficial sterling in New York is really a measure of the effectiveness of the new regulations for tightening up the control. As the proceeds of Empire exports of commodities, such as jute, tin and rubber have been drawn into the official market the demand for free sterling has been correspondingly reduced. In anticipation of this the foreign holders of sterling who con- stitute the sellers in the free market have been in a hurry to dispose of their holdings and the rate has given way.

I agree with the Chancellor's view that this fall in unofficial sterling is of little importance in that by far the greater part of sterling transactions are carried through at the official rate through the control or under various clearing and payment agreements. There is consequently nothing to be said for the proposal put forward in some quartezs that the Treasury should give support in New York or, even worse, block the assets belonging to foreigners which com- prise the source of free sterling sales. The trouble is that the fall in the New York rate is a bad advertisement for Great Britain in neutral countries and has even caused mis- givings in some quarters at home. One wonders why this . official explanation of the position has been postponed so long, since the adverse comment has been going the rounds for at least three weeks. So far our financial propaganda has not been distinguished by its promptness or its cleverness. The War Loan success was scarcely capitalised at all, the new minimum prices for gilt-edged brought confusion for at least 24 hours instead of confidence, and now the Chancellor embarks on a piece of financial education three weeks after the need for it was plain for all to see. There is room for a little enterprise in this section of the Ministry of Information. * * * * •