Trade, Aid or Slump ?
With the protectionist pack in Congress still yappily, at his heels, President Eisenhower has received Mr. Lewis Douglas's report on the Dollar/Sterling Relationship with the demurest of toots on his horn. The ex-American ambassador to London began his work after the visit of Mr. Butler and Mr. Eden to Washington in March, when they informed the new Administration of the British Commonwealth's plan for freer world trade and payments based on restoring convertibility to sterling. But in March, President Eisenhower was new to the White House and correspondingly diffident about com- mitting himself on " this highly significant matter." So he referred the British proposals to Mr. Douglas who, because of his " sense of urgency and the need for prompt action " has come back with his report in less than four months. He says all that Mr. Butler could desire. In Mr. Douglas's view, the United States must choose between three possible courses of action : to continue indefinitely and inefficiently subsidising its surplus with the rest of the world by dollar grants-in-aid (a course that Congress has already ruled out); to face a reduction in American exports to a level consistent with the prevailing balance in world trade; or to help the Sterling Area make sterling more widely convertible. This last would entail a new approach to American import policy; to non- governmental dollar investment abroad and to U.S. commodity purchases. All of which is very strong meat. But, unfor- tunately, between March and August, the political digestion of the United States for this kind of diet has got weaker not stronger. The Douglas report has now been referred to another committee which is reviewing the foreign economic policy of the United States. Mr. Butler has many more months to wait for an answer to the questions he put in March. It is not nearly so sure that the economic pressures now at large in the world can wait even a few months longer.
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