The Sterling Problem

It takes a lot to upset us nowadays. But the recent worsening of our balance of payments and the drastic devaluation of the pound have caused widespread bewilderment and anxiety. We were aware in a vague way that the position was not yet sound, that there was much to do before Marshall Aid came finally to an end in 1952. But the improvement last year, as compared with the disasters of 1947, had tended to conceal the essentially precarious nature of the contemporary position; and the fact that in 1949, with Marshall Aid still in full blast, our reserves should be dwindling at a rate which, if continued, would involve substantial cuts in consumption and widespread unemployment, has come as a severe disappointment. It is improbable that the great mass of the people yet realize at all the nature of the peril which threatens them: it is the nature of the system under which we live that it tends to insulate the man in the street from the premonitory symptoms of danger. But it is safe to say that the majority of informed opinion is now thoroughly disquieted. The fact that, for a second time, we have run into acute difficulties, while actually in receipt of massive aid from abroad, must surely suggest to serious minds in all parties that, however much we may have been the victims of bad luck, the implications of our own policies are in urgent need of re-examination.