London

ON THE WORLD TODAY

THE February crisis jolted many Britons. For a year the Labor Government had been waging publicity to prod everyone to work harder, but few listened. Having done without so many good things during six war years, people expected swift improvement. British vaudeville comedians wrung chuckles out of Sir Stafford Cripps’s continual warnings of still harder times ahead. Labor came into office, and miners and other workers looked upon the nationalizing of industry as the end of a long struggle.

The phony economic war is over, but the longer battle of Britain is beginning. The nation is aroused to its economic peril. Many a trade-unionist and socialist is thinking today, “We first have to prove that nationalization will work.”

A year after the war’s end. Prime Minister Attlee had put bread on the ration list as a cushion against the threatening wheat shortage. There had been an outcry from the Conservative minority led by Churchill, and from housewives weary of queuing.

Last October the Cabinet rejected coal rationing. To ration coal was a much graver measure than rationing bread, because it meant reducing many industries to short-time work, and lowering production and wages. So the Government, shunning unpopularity, continued to let fuel merchants allocate coal until coal stocks at the electricity stations in February shrank below the safety margin and the current had to be turned off. The ensuing disaster compelled the Government to look again, less timidly this time, at fuel and power rationing, realizing that unless consumption is restricted, another national collapse next winter is certain.

The Government exposed itself to criticism by refusing to ration coal last autumn and by gambling on a mild winter to see the country through on depleted coal reserves. Churchill and almost all newspapers gambled too — on the people’s short memory — when they attacked the Government for this omission. Having upbraided Attlee for rationing bread, the Conservatives forfeited the right to denounce the Government for failing to ration coal. But that did not deter the Conservatives from taking the Government to task.

Its failure to ration coal was not the Labor Government’s only blunder. It had accepted what proved to be an underestimate of electricity consumption made by its experts. It had restored peacetime railroad passenger services, including luxury trains, without giving coal transport absolute priority. It had encouraged manufacturers to glut the shops with electric heaters and stoves which the public eagerly bought and used until soaring consumption forced generating plants to close down. Touring the country in 1946, Emanuel Shin well, Minister of Fuel and Power, made “no coal crisis” prophecies which freezing Britons remembered this winter.

The mines run down

Labor took office in 1945. Between 1913 and 1945 Britain’s coal production dropped from 287 million tons to 183 million. In the same years British coal exports fell from 94 million to 8.2 million tons, and the number of miners slumped from 1,170,000 to 706,000. This is only part of the story. The rest is a tale of 500,000 miners unemployed, 1650 mines shut down between 1918 and 1946, poor wages and squalor in the mining villages.

What caused this decline? Between the wars German, Polish, and other competitors captured some of Britain’s foreign markets, and world trade restrictions reduced others. The jobs of the miners grew insecure, and less dangerous occupations beckoned with higher pay. During the recent war the rising average age and fatigue of the remaining miners lowered coal output per man from 1.14 tons per shift to one ton.

After the Labor Government came in, though the number of miners shriveled a little more, coal production rose last year by 6 million tons, from 183 million to 189 million. The Government has set 200 million tons in 1947 as the indispensable minimum. Consumers have used coal faster than it has been dug, and in 1946 the nation dipped into its coal reserves to the tune of 5 million tons.

Miners put more energy into their work because they knew that one of their most cherished aims was to be fulfilled on January 1, 1947, when the privately owned mining industry was taken over by the state. Under the now nationalized industry the new Coal Board has the equivalent of 600 million dollars af its disposal for modernizing backward mines, though this investment can yield extra coal only after some years.

Wanted: more power

Will Britain’s fuel dilemma continue until atomic energy replaces coal? The whole problem is aggravated by the shortage of the electrical generating plants on which an immense part of industry and households and offices rely. Britain has acquired almost no new generating equipment for nine years, and three or more years will now be needed to begin installing new generators.

Meanwhile the burden on power stations is unbearable. In 1938 they produced a peak of 24 billion units. Without additional equipment this load increased to 41 billion in 1946, and early this year rose another 15 per cent.

To avert too great a drain of electricity at any given time, laborers in British factories will work staggered hours, some plants starting at six in the morning, others at eight or ten, and so on, with a number working late into the night. To save coal, a segment of industry will be reduced to short-time production.

This fuel and power crisis has laid bare Britain’s economic weakness. She is paying dearly in that imponderable factor which counts in all diplomatic negotiations — prestige. Exposure of her economic decline has reduced Britain’s role in world affairs to that of a second-rate power.

Faced with a bad shortage of manpower, the Government has had to decide how many men could be spared from industry and agriculture to keep the armed forces up to essential strength. It has planned that by March 31, 1948, 1,087,000 Britons will be under arms, with another 450,000 civilian workers supplying munitions.

These 1,537,000 men (at present the figure is much higher) will still be unavailable to production a year from now, when lack of manpower will continue to be one of the great dangers to British economy.

For the year ending March 31, 1948, moreover, the budget will carry 899 million pounds sterling expenditure for the Army, Navy, and Air Force, a crushing outlay for a debtor nation.

Is this the last word? Foreign Secretary Ernest Bevin, the most powerful personality in the Cabinet, is likely to resist demobilization beyond the announced level. He knows that further weakening of Britain’s armed forces would enfeeble her diplomacy.

The nation’s economic plight has thrust stronger arguments into the hands of Labor leaders and intellectuals who are clamoring for a cut in Britain’s foreign commitments (especially in the estimated 300,000 British troops in the Middle East) in order to release soldiers for civilian production at home. Everyone knows that Britain is keeping big armed forces with an eye to Russia. But Russia was hit much harder than Britain by the war, and is just emerging from a catastrophic crop failure. Russia’s plight reinforces the arguments of those who are urging the British Government to demobilize more men.

What has Labor lost?

Inside Britain the winter’s breakdown has dealt the first blow to the Labor Government’s popularity. Until the electricity muddle no Government since Disraeli’s in 1874 had been in office as long as the Labor Cabinet without losing a single by-election.

It does not follow that disillusioned citizens who cooled towards the Labor Government have rushed into the Conservative camp. Many have become abstainers. Others believe things would have been worse if the Conservatives had been in office, because widespread labor disputes might have been heaped on existing troubles.

The Labor Government has publicly declared that the nation cannot afford shorter hours of work unless these can be shown to increase output. This is the Government’s answer to the trade-unions’ demand for a forty-hour week. There would be a risk of extensive strikes if such a warning were addressed to the tradeunions by Conservative rulers.

Labor has lost some of the floating middle-class vote. This has been partly offset by a solidifying of the workers’ loyalty to their Government. By pillorying the Government, Churchill and almost the entire press intensified Labor’s devotion to Attlee and company.

Housing was the top issue at the 1945 general election, and the Labor Government’s record in this field will weigh heavily with British voters. Stiff taxes in Britain remove an incentive to work. People expected the standard income tax rate, equivalent to 45 cents on the dollar, to be lowered in April, but any substantial easement now is improbable because the industrial stoppage and unemployment this winter have reduced taxable wages and profits.

Can Britain make ends meet?

The 1947 Economic Survey published by the Government told the people that food, clothing, furniture, and other consumers’ goods will remain scarce this year. With one fourth of all British manufacturing industry producing only for export, and with this ratio bound to continue for many years, the craving of the British people for more and more commodities on the home market will remain unsatisfied.

Last year renewal of capital equipment and maintenance amounted to no more than in a normal prewar year, despite six years’ arrears. For 1947 the Government has planned only a 15 per cent increase in this re-equipment and maintenance program. This means that the dilapidated machinery of Great Britain will be replaced by modern installations much too slowly. For it is only by sweeping technical renovation that Britain can hope to keep abreast of competitors in the world market.

Britain’s loss of authority in international affairs is a continuing process likely to be accelerated by the country’s inability to pay its own way. The pivot of this difficulty is Britain’s balance of payments. Can she earn enough by exports to pay for imports before the American and Canadian credits run out?

The drain on what remains of these dollar loans is dangerously rapid. It had been estimated that the United States loan of $3,750,000,000 would last until 1949, but Government economists are now saying it will be exhausted before mid-1948.

The Government originally set itself the task of expanding Britain’s 1947 exports to 50 per cent above the 1938 level, but this target has now been lowered to 40 per cent, and it is uncertain whether even that figure will be reached. The aim of enlarging exports to 75 per cent, above the 1938 index by the end of 1948 stands, but its attainment, always doubtful, is today believed impossible.

How can Britain bridge the gap bet ween the exhaustion of t he American loan and the continuing foreign trade deficit? The negotiation of another big American loan in 1948 will be difficult because it is an election year in the United States. Without another loan Britain must restrict her imports.

Under the American loan agreement, pounds sterling must become freely convertible this July. Does that not threaten Britain’s dollar position and her chance of maintaining enough imports from North and South America to feed her people and supply raw material to her industry?