Support for Britain

"If a general has to capture a hill, it is better to take it in one go rather than attack three or four times. You lose fewer men that way." Thus, last week, International Monetary Fund Director Per Jacobsson explained the fund's $1.3 billion loan to Britain to prop the Suez-battered pound. Instead of help in drib lets, Britain asked for and got the largest loan permissible under the fund's rules.

Britain may immediately draw $561,-470,000 in dollars to shore up its gold and dollar reserves--down $279 million last month to $1.9 billion, lowest figure since the 1952 payments crisis caused by the Korean war. The balance of $738,-530,000 in currencies of fund members is available to Britain during the next year should she need it.

"Essentially Sound." Said Director Jacobsson: "The trading position of the United Kingdom has been and continues to be essentially sound." The new "pressure was not caused by weakness in the current account, but reflected a decline in confidence." The fund's "support on a massive scale" would "effectively contribute to restoration of the strong balance-of-payments position."

The next day the loan began to have its hoped-for effect. The pound steadied in the London money market, rose from $2.78 1/4 to $2.78 5/8 Speculators who had been selling the pound short in the belief that it might be devalued, began withdrawing from the attack. Further indirect support is almost certain in the shape of a U.S. Export-Import Bank loan, possibly as high as $700,000,000, to help finance Britain's foreign trade.

U.S. Help. The save-the-pound operation would have been impossible without firm support from the U.S. Treasury, the wealthiest and most powerful of the fund's 60 members. But it involved no new out lay by the U.S.; Washington had already subscribed the money to the fund as part of its quota, just as Britain had subscribed $1.3 billion, and now the U.S. simply made the cash available. This way of helping Britain suited Treasury Secretary George Humphrey; he did not have to ask Congress for the money. The U.S. decision to use the fund as the main instru ment for supporting Britain was also in line with President Eisenhower's decision to handle the Middle East crisis through the U.N. In both operations, the U.S. turned to the world organizations instead of tackling the problems unilaterally.

For the other member nations in Eu rope, the fund could also lend support. If necessary, France could draw up to $525,-000,000; The Netherlands, $275,000,000; Austria, $50,000,000. But Director Jacobsson did not think the need would arise. The size of the loan to Britain would help stabilize the sterling area with which France and other West European nations are associated, make it unnecessary for them to withdraw their quotas.

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