Ten years ago you could have stopped a dozen people in the street and hardly found one who understood the word “inflation”; now you could hardly find one who didn’t. Economics, in a general as well as a domestic sense, have forced themselves into everyone’s life. Speaking to the American Chamber of Commerce in London the other day, Mr. Gaitskell said the possibility of an American recession, however slight, and the growing world shortage of dollars were the most serious factors in the international scene, more alarming than what has happened in Syria. Certainly our economic troubles take second place only to the great war between East and West.
There are two separate but interlocking parts to Britain’s economic predicament. The first, and as Mr. Gaitskell considers, the more important is the precarious value of the pound compared with other currencies. The virtual devaluation of the franc and the refusal of Germany to raise the value of the mark, in spite of the continuous tremendous strengthening in the German economy, has led to a flood of currency speculation directed against sterling. Similarly, the consistent surplus in the United States’ and Germany’s overseas exports as against their own imports or foreign investments has led the rest of the world to draw heavily on its holdings of sterling.
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