Finance—Public & Private
Why Have We Borrowed Abroad ?
A NATIONAL Government has come into office pledged to Economy and presumably also to the reduction rather than the increase of debt. How comes it, then, that it has been deemed advisable to commence by borrowing the equivalent of something like £80,000,000 in francs and dollars in France and the United States respectively ? That, I think, is a question which will be puzzling a good many and it is worth considering because the explanation throws some light upon the problems with whieh Great Britain is faced at the present time.
The first point to be comprehended is that the con- nection between balancing the Budget and borrowing abroad is not a direct but an indirect one, and, further, that the Cabinet has to deal with two distinct problems, the one being concerned with establishing an equilibrium in the National Balance Sheet and the other with the question of restoring our trade balance, the loss of which has led to what is sometimes described as an " Exchange " crisis, and which in this case was a crisis which imperilled the stability of the £ sterling. I will deal with these points separately and briefly.
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