WAR-TORN BRITAIN: Some Plain Aspects of

The Sterling-Dollar Problem

By R. D. Blandy, CMC, OBE

rHROUGHOUT the South Pacific area, particularly in Australia md New Zealand, one frequently lears opinions expressed against the >fficial policy of channelling trade to md from the Sterling Area at the expense of trade with the Dollar (or lard currency) Area. “Why should VE be made to suffer because of the }ld Country’s economic troubles?” s a typical protest. To acquire a nore sympathetic understanding of British policy it is necessary to ixamine the causes.

The causes of the critical economic md monetary sickness from which he Sterling Area is suffering are egion and include the fact that trade, like War and Peace is now tactically “indivisible”. However, he progressive reasons may be briefly ummarised as follows.

Britain created the Sterling Area >etween two World Wars to protect Sterling Currency and its Satellites

from economic effects deriving from World War I.

Britain is the fountain-head of the Sterling Area and, this being so, Sterling and its Satellites stand or fall by Britain. But, owing to Britain’s steadily multiplying economic troubles, she can no longer “carry” the Sterling Area as formerly; and the other component parts thereof, particularly the British Common wealth, must now take a greater share and responsibility in the pro

tection of the system from bank ruptcy. This means that concerted economic planning and co-ordination have become of the utmost urgency.

The basic origins of the troubles now affecting the Sterling Area are broadly and progressively as follows: — • The loss of the American Colonies, which under British Sover eignty would to-day have provided the Sterling Area with huge markets and sources of raw materials (as well as huge British defence potential) • The building up, under con ditions of “export prosperity” of a top-heavy population in Britain. • World War I, with its heavy loss to Britain of treasure and of the ex

*Mr. Blandy, now retired, was British tesident Commissioner in New Hebrides or several years.

port markets. From these, up to 1914, she derived most of her wealth and a surplus of foreign exchange, so that she was not only able easily and cheaply to import the 5/6 balance of the food, required to feed her top-heavy population, and her new materials, but also to invest

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ports” which used to complete h balance of payments and ke< Sterling stable. This has led to tl necessity greatly to increase tl volume of her physical exports i pay for her balance of food and ra materials—and she is trying to c this in the face of trade barriers, ij creased industrial competition and rising inflationary world market. • Finally, the additional (inflatioi ary and unproductive) burden c hurried re-armament throughout th Commonwealth. jDRITAIN became a great Powe ** int( : r alia, by building up a larg population. Her present problem i to keep that large population and s remain a Great Power (and a adequate force in the defence o Western Democracy), in spite of he imported food and raw material difficulties (alleviated, but not solved by help from the United States).

The alternative is to reduce he population to an “economic” leve and thus become a second-rate Power with all that that implies to “Westen Civilisation” and to the Common wealth. It is, then, clearly imperativi that we save Britain from this lattei course.

The only ready solution seems tc

be —and this appears already to be taking shape—the formation of a Front” consisting of the various units of the British Common wealth which by ties of blood, iiffection and the instinct of self preservation (all or any of them) sincerely desire to retain British world-wide greatness, prestige and in fluence. [ The British Front would co ordinate its “total economy” and Foreign Policy, and would gain huge strength by speaking and acting as one great unit. Such a procedure would require much initial give-and take, and possibly sacrifices; but its ultimate success should bring pros perity, peace and stability, not only to the peoples and countries of the Commonwealth, but to the world in general.