The British Take the Lead

U.S. citizens got their first look last week at the newest governmental plan to solve the No. 1 postwar problem: unemployment. The plan came not from Washington but from London. Issued there in the form of an official White

Paper by Lord Woolton, Minister of Reconstruction, it may well turn out to be a historic document, not only for the English, but for Americans. The reason: Winston Churchill's Government became the first major democratic government to shoulder a broad, new, postwar governmental responsibility: the prevention of depressions.

Soon the U.S., along with other governments, will almost certainly have to make similar undertakings. But the U.S. will be handicapped by Washington's late start. For the Woolton paper is the result of more than two and a half years' exacting work. During that time, the New Deal has done little. Innumerable Congressional and administrative-bureau "postwar-planning" committees are making snail's progress in a dozen different directions, without policy guidance from the top.

Revolutionary? The White Paper is a basic undertaking. It attacks problems fundamental to democracies. It is not a one-man brain wave: the British Treasury and Minister of Labor Ernest Bevin helped frame it. Last week, the Daily Herald (labor) called it a "revolutionary manifesto." But if it were, it could only be such because of its new assumptions of the responsibilities of democracies. Financially, it is conservative.

The White Paper accepts the idea of government deficits in lean years (which the New Deal has practiced), but sticks to budget-balancing over the trade cycle as a whole. It does not promise full employment. Instead it aims simply to "maintain" (i.e., stabilize) employment and to encourage trade expansion.

The White Paper lists four requirements to achieve this end:

P:Greater exports than ever before (even by restricting home consumption), since Britain has had to sell the great bulk of her foreign investments, which formerly paid for a large part of her imports.

P:Stabilizing, where possible, the amount of private investment from year to year.

P:Public works carefully adjusted to compensate for swings of private investment.

P:Pumping out consumer purchasing power whenever private investment falls off.

O Pioneers. Of the generally conservative means then proposed to achieve stabilized employment, one is fairly new: manipulation of the interest rate by the Treasury, as well as the banks, to increase or decrease private investment. Another has been much talked of but seldom tried: increasing taxes in prosperous times, decreasing them in slumps.

The first British criticisms of the plan concentrated on the improbability of the Government's recognizing a boom or a depression, and then taking the proper steps in time; and on the likelihood that the means proposed would be inadequate.

Lord Woolton made it clear that, even if his proposals are accepted, the British Government knows that it is pioneering, that it expects to meet difficulties and adopt new techniques.

Nonetheless the White Paper says flatly that the Government is willing to take "the responsibility for taking action at the earliest possible stage to arrest a threatened slump. This involves a new approach and a new responsibility for the state."

Said Lord Woolton to the press: "We have discarded, and I hope forever, the old theory that you can cure unemployment by deflation, by lowering standards of living. That idea belongs now with the medical theory that you could cure a patient by bleeding him."

Said Ernest Bevin with Laborite emphasis: "We have found that we can no longer starve people to death quickly enough to restore the balance inside a free market."

Choice for the U.S. Actually, the postwar patterns of the U.S. and Britain will be far from identical, partly because Britain must live on her exports, and partly because even British liberals are cartel-minded, while the U.S., liberal and conservative alike, is antimonopoly-minded. But both have been faced by the same overhanging problem: shall Government shoulder the responsibility of providing jobs or shall private industry do it, under the widest possible free enterprise? In the White Paper, Britain gave its answer.

But the first comment on it in the U.S. emphatically drove home the probability that the U.S. must find a different answer. The Wall Street Journal hotly damned the White Paper as a plan "to make Britons slaves." Said the Journal: "It remains to be seen whether [Parliament] will acquiesce in such a degree of authoritarianism, in so nearly a complete abandonment of the private-enterprise economy."

Chimed in Manhattan's Journal of Commerce: "American conditions will call for a different plan, one in which the major reliance is placed upon free enterprise rather than upon state controls."

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