WASHINGTON AND A NEW WORLD
THE Washington conference on the dollar crisis is 'to last five days. That simple fact must not be forgotten for one moment when the chances of its success or failure are assessed. It determines the very meaning of the terms success and failure. Five days is not enough time in which to settle a detailed programme for achieving the tremendous objective indicated in the joint announcement issued on July loth after the Chequers meeting—" a pattern of world trade in which dollar and non- dollar countries can operate together within one single multilateral system." Nor is five years. So even if the Ministers do reassemble after the meeting of the Board of Governors of the World Bank and Monetary Fund, which cuts into the time-table on Septem- ber 13th, it is still clear that whatever success is achieved this conference cannot ensure, once and for all, the success of the economic policy already outlined. The broad aims agreed at Chequers, and reaffirmed by President Truman on Monday of this week, imply the making of a new world, in which the United States, for the first time in its history, will explicitly recognise that its overseas trade is of universal concern, and not merely a domestic matter. It will also be a world in which Great Britain accepts a completely new opportunity to survive as a great economic power and recognises the completely new obligations which that must impose on British industry. It will take so long to build that the most the Ministers can do on this occasion is to repeat that they intend to pursue this aim—for it is so revolu- tionary, and makes so many demands on the American and British people, that it will bear repetition—and to agree upon a limited number of immediate measures, which will be not so much a complete plan as a removal of existing obstacles and a practical, as distinct from a verbal, pledge of sincerity.
The existing obstacles, which are plain for all to see, and the practical pledges, which have been freely canvassed in the past few weeks, arc hardly of the kind which can be dismissed as unimportant. It would have been enough to terrify any pre-war American statesman if he had been faced with the task of con- vincing the American business community, and the numerous and powerful lobbies into which it organises itself, that the import tariff would have to go, in order to smooth the entry of European goods into the American market. If the present-day American leaders are not frightened by such tasks, or by the need to under- take a vast programme of foreign investment in the under- developed parts of the British Commonwealth, it is only because they have come to view American policy in the vast context of such phenomena as the Marshall Plan and the end of isolationism. Similarly on the British side, it will require tremendous courage and imagination for Sir Stafford Cripps to promise that, after all, Government expenditure on welfare services may be cut down, and that, in spite of all previous denials, the pound may have to be devalued in the end. These things may not be enough to create the new economic world which both Governments are aiming at, but they will be enough to alter the face of the existing world.
In fact the most that can be hoped for from the Washington conference is a series of agreements between the two Govern- ments, all qualified by the provision that they will not settle the whole of the outstanding economic problem, and all further qualified by the fact that the Governments may encounter diffi- culty in getting the assent of their respective peoples to the necessary pract:cal measures. The chances of getting such agree- ment have undoubtedly improved in the past few days. The Idiotic recriminations between certain elements in press and politics on either side of the Atlantic are mercifully subsiding at last. President Truman's Philadelphia speech on Monday was a heartening reaffirmation of belief in an expanding world eailoiny and of determination to hold to the course already set for America. But belief and determination on both sides will have to be strong. Sir Stafford Cripps, on whom the main burden of British hopes remains pinned, is going to have an unenviable struggle with his conscience and with his party. The keystone of economic reform at this point is bound to be a cutting down of Government expenditure. Without it there can be no possi- bility that the present inflationary danger will be scotched, and without an end to inflation there is no sense in devaluing the pound, for there is little point in offering potential American buyers more pounds for their dollars if the gain is to be wiped out almost immediately by rising British prices. Retrenchment is the starting-point. It is only in this way that resources can be released to promote that expansion of trade which must constantly be sought. Yet when the Chancellor announced in his Budget speech, less than five months ago, that food subsidies must be pegged—not cut—there was an immediate outcry among his followers. Those same followers cheered the statement which he made then, and has since repeated, that no reduction in the social services can be contemplated. What will they say when—and if— he decides that that statement must be reversed ? Let there be no mistake about it, such a recantation would earn him even greater respect from the responsible few who understand the needs of the time. But what will it earn him from the more restless trade unionists, or from the handful of political thrusters who claim that such a course—and presumably honesty and realism as well—is not " politically possible " ?
Nor are the less prescient members of the Labour Party the only people in this country who are required to alter their ideas of the possible. Mr. Hoffman's sweeping invitation to British manu- facturers to break into the American market passed over a number of high obstacles. But the chance of success is there, whereas the policy of selling in the sterling area at prices held artificially high leads straight to certain failure for the businesses concerned and for British industry generally. Business men who always take the soft option are living in a fool's paradise quite as cer- tainly as are the eager recipients of " free " false teeth. Mr. Hoffman did his best to bring that truth home to them. It is equally necessary that he should present similar truths to business men at home in the United States. For on them, and on the ordinary workers and consumers in America, will fall both the burdens and the benefits of a more enlightened policy of economic co-operation with the rest of the world, which has been written down and underlined as the official policy of the United States Government.
It still remains to be seen which will be the more difficult task —to secure agreement between the Governments, including the Canadian Government, without whom no firm solution to the dollar-sterling problem can be found, or to impress the implica- tions of agreement on the respective peoples. The first step will be hard enough, as the vexed question of devaluation shows. This is not one of the questions on which principle necessarily enlightens policy. Stark truth undoubtedly points to devalua- tion. The pound sterling simply is not worth four dollars, and the chances of making it worth four dollars in a short time without devaluation are small. The Americans, despite their disclaimer of any wish to interfere, would quite certainly like devaluation to take place. There may even be persons in British official circles— circles which have counted for much in the past month of
Ministerial hiatus—who think it will have to come. But it is very difficult to prove that this is the right moment for it. If British prices continued to rise, if American buyers refused to be drawn, if other currencies were simultaneously devalued—in any of a dozen contingencies the whole move could go wrong. It is diffi- cult to see how Sir Stafford Cripps could agree to it, without requiring firm guarantees against possible failure, and it is equally difficult to see how the American Government could give such guarantees. Yet even if this, and a list of equally urgent and crucial questions, are disposed of by the Ministers, there would still remain the task of commending the results to the people—to the British producers who will be brought up against the hard realities of poverty, and to the American producers who will be confronted with the obligations of power and responsibility. The distant goal is magnificent enough. Once progress towards it gathers force, and the benefits of expansion begin to come in, it will be easy enough to get public support. It is the first stage, of progress with effort, of expansion without new benefits—the heave which gets the train going, not the momentum which keeps it going—which will be most difficult to get over.
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