Sounding the Alarm

Britain is on the brink of bankruptcy, but the British people, who have lived so long in peril that they have become inured to crisis, seem the last to realize it. For one thing, the crisis in its present dimensions affects the nation as such, rather than the people as individuals; only later will they feel the result of inequalities in a worldwide exchange of goods far from the British hearth. Last week, in a speech that rang with the fervor of olden days, Winston Churchill did his best to shake the British out of their complacency. The crisis is "scarcely less vital," said he, than the dire days when the Nazis rained bombs over London.

The Trap. "I have never seen a people look better or more carefree," the Prime Minister told the British Press Association luncheon in London. "What I wonder is whether they have realized the treacherous trap door on which it all stands. It is an alert that I am sounding; yet it is more than an alert--it is an alarm. We have never been beaten yet, and now we fight not for vainglory or pomp but for our survival . . .

"Thanks to the unpopular measures that have already been taken by the Chancellor, we have reached in the last six months a position of equipoise. Our head is above water, but it is not enough to float. We have to swim . . . and we have to swim against the stream. At the moment, we can say we are holding our own . . . but we cannot be satisfied with that. We cannot live from hand to mouth and from month to month in this world of change and turmoil. We must create by long and steady systems of trade and exchange throughout our Empire and Commonwealth, and throughout the wider world, reserves of strength and solvency which enable us to rise solid, steadfast and superior . . . Thus and thus alone can we stand firm and unbroken against all the winds that blow."

The Truth. One prompt result of Churchill's words was a spate of speculation that Britain's bank balance was lower than even the bankers suspected. Pundits in the financial district wondered whether dollar reserves might fall so low that the pound would be devalued again. Cripps devalued the pound in 1949 when Britain's dollar reserves fell to $1.3 billion; they rose to $3.8 billion at the end of June 1951. By the end of last March they were down to $1.7 billion again. After Churchill's speech, the Financial Times sternly demanded "the whole truth." Next day the House of Commons was packed, as members gathered gloomily to hear the worst.

It failed to materialize. Imperturbable Chancellor Rab Butler proceeded to paint a picture that differed substantially in tone from Churchill's dark hues. "Since the end of March," he reported, "our gold and dollar reserves have fallen by less than $28 million. This loss in nearly 2 1/2 months compares with a loss of $935 million in the last three months of 1951 and $635 million in the first three months of 1952. We are holding the position, and have had a welcome and definite respite in the loss of our reserves."

Said the Daily Express: "After the Churchill thunderburst comes the Butler rainbow." Bankers in the City grumbled that cabinet ministers ought to speak from the same script. Actually, Churchill was trying to stir the home folks, Butler to reassure the rest of the world, and both were in a way right--Butler in saying that the decline has not worsened, Churchill in saying that the situation is still perilous.

This file is automatically generated by a robot program, so reader's discretion is required.