War of Sterling

Great Britain last week gave a drastic twist to the screws of her financial machine, barred English bank notes abroad from re-entry into the United Kingdom. In effect, she declared worthless for the duration all British paper money in non-sterling countries. U. S. holders of pound notes were given six days to exchange them, but France and other occupied nations were allowed only 24 hours.

The object of this maneuver was to outwit Adolf Hitler. Large quantities of British paper money arriving in South America, the U. S. and other neutral countries had warned Britain of what was going on. In Poland, Scandinavia, The Netherlands, Belgium and France, before they were conquered, citizens hoarded sterling notes. Hitler had evidently found means to extract some of these hoarded millions from their owners and perhaps had augmented the supply by turning his own mints to counterfeiting. At any rate he was using British money to finance his war on Britain. Britain's move turned this prized valuta into crisp, imposing, worthless souvenirs.

The effect of eleven months of war on Great Britain's economy was indicated by the Board of Trade's report for July. Imports totaling -L-87,008,000 were up 11% from July 1939, while domestic exports valued at -L-31,189,000 were down 22%. Allowing for depreciation of approximately 20% in the exchange value of the pound (which would increase the value of imports), this indicated a fall of 9% in the volume of imports--no great tribute to the effectiveness of the German U-boat and air blockade. The excess of imports over exports for the eleven war months was $2,183,200,000, or $832,000,000 more than for the corresponding period in 1938-39. Considering the depreciation of the pound, this also was not great. Since British exports to Europe have practically ceased, the export figures showed that Britain had kept a remarkably good hold on the rest of her world markets.

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