August Crisis

In the granite and sandstone U.S. Treasury Building in Washington the grim conferences went on last week, late into the evenings. At breaks in the meeting, weary men, wilted by the heat, discouraged by the bleak facts they carried in their minds, walked the corridors with troubled step. They wished they did not have to say what was on their minds, but they also hoped that everyone in the Western world would understand its importance.

What had brought them together was the crushing fact that Great Britain, once the great leader of the Western democracies, was broke. This was no mere phrase: like a man whose savings have dwindled away, Britain simply has not got the money to buy what she needs, much less to maintain her vital role in the world.

Closing the Bank. But if it was Britain that was broke, why was the conference in Washington? Why not in London? The conferees hoped that the answer to that question would be grasped from Portland, Me. to Portland, Ore. For in the world of 1947, Britain's predicament, no matter what its cause, was of as much concern to the U.S. as to Britain herself. Out of self-interest, if for no other reason, the U.S. could not afford to see her go.

The Washington conference was generaled by U.S. Treasury Secretary John Wesley Snyder, a rather unimaginative banker, and by Sir Wilfrid Eady, whose thin face, horn-rimmed spectacles and realistic command of facts make him the embodiment of the British civil servant. The details of the talk between them and their experts the world did not hear. But it heard much of the $3,75DEG million loan to Britain, and of "discrimination" and of "convertibility" (see INTERNATIONAL) . The conferees could bring about no full solution of the crisis; that was for the U.S. Congress and for Parliament, if a solution could be found. What the conferees could do they did. They suspended convertibility, froze what was left of Britain's loan, and in effect closed the bank, as Franklin D. Roosevelt did on the first day of the New Deal.

Producing the Goods. These were obviously temporary measures. The problem now was how to reopen the bank and keep it in as healthy a condition as possible. Under the present state of world affairs, this called for more than just financial aid to Britain. It meant that the U.S. would probably have to take over Britain's share of keeping Germany alive. Since money is nothing if it is not backed by goods, it also meant that Britain would have to increase her own lagging production.

U.S. policy, as defined in the Marshall approach, is based on the premise that the U.S. stands ready to help Europe if Europe will help itself, i.e., get more coal out of British mines and the Ruhr, produce more steel in Germany, and generally bring the Continent back to economic health. But the crisis of August 1947 also proved that the U.S., which produces more goods than any other nation in the world, could not afford to let its friends slip into bankruptcy.

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