How Long?

Once again, all good bankers have had to come to the aid of Britain's pound. After an emergency $3 billion international loan in 1964 (still not paid back), and another $1 billion res cue in 1965, the Bank for International Settlements and eleven countries last week had to renew the billion-dollar bundle for Britain. The pound, which two weeks ago had dropped to a 15-month low of $2.78 27/32, rallied to $2.79 2/32. But in the finance ministries and central banks of Europe and North America, money managers were asking: "How long, O Lord, how long?" Ex actly how long does the world have to continue to prop up the pound?

Lackadaisical Management. The im mediate reason for the newest pound crisis was a rumor that the British sea men's strike was about to produce an inflationary pay increase. In addition, Britain has been hurt because other countries have lately battled inflation by boosting their interest rates, thereby drawing money out of Britain. Also hurting Britain is the U.S.'s drive to moderate its balance-of-payments defi cit. U.S. companies are repatriating their funds from abroad, including some held in Britain, and are borrowing more overseas; this year U.S. firms will in crease their borrowing in Europe by one-third, to $1.5 billion, leaving less money for Europeans to invest in the United Kingdom.

Of course, there are even more basic reasons for the travail of Britain's not-so-sterling currency. Low productivity and lackadaisical management have con tributed to a chronic trade deficit, which last month increased 14% from the April level. The British appear to care more about mod than money. Mourned Chancellor of the Exchequer James Callaghan: "It seems we are talking to those who are deaf. In the end, the government cannot achieve success. Only the country can do that."

The Limit. Disillusioned and impatient, many foreign bankers do not care to answer any more SOS calls from London, even though they have a stake in the pound as an international reserve currency. Says one leading European central banker: "What we did once again was to buy time for the British. What use they will make of it remains to be seen, but we are quite pessimistic." Another banker puts an "absolute limit" of one year on continuing to bail out Britain. The French, who chipped in $100 million to last week's rescue for purely political reasons because they do not want to antagonize Britain while they are dealing with the NATO crisis and other problems, would very likely say non the next time. One of the U.S.'s biggest bankers forecasts that there will be no help at all in the next crisis.

Unless Britain can learn to support itself or rally further outside support, the prospect is stark. Perhaps in six months, perhaps in a year, the British will almost certainly have to face up to the agony of devaluation.

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