Ee i =~ DECEMBER 15, 1967—PACIFIC TRIBUNE—Page 4 What happened to the pound? © : By NORMAN FREED EOPLE are concerned about the reasons for and conse-" quences of the devaluation of the British pound. A group of people have asked me questions. on it, and here are the questions and my answers. What happened? On November 18 the British Labor Government ° devaluated the British pound from $2.80 to $2.40, U.S. dollar, or by 143 percent. Before devaluation about 12.5 British pounds could pur- chase an ounce of gold; it will now take about 14.6 pounds to. purchase an ounce of gold. (An ounce of gold: is fixed by the USA at $35.00) . It will now: take more British money (pounds) to purchase goods in Canada, USA, West Germany, Japan etc. Brit- ish goods at a given price, in pounds, will cost less: in Can USA etc. Pee : What is the aim of devaluation? The economic aim of any de- valuation of currency is to re- duce the prices of goods for ex- port. Everything being equal it could result in inereased export trade. This advantage has eva- porated in the “sterling block” because they have devaluated their currencies. The advantage in the “dollar block” could be realized provided no measures are taken to counteract this in terms of prices on the world market. At any rate, at best, it will take some time before this advantage is realized, if at all. There is another side to this question. Devaluation results in increasing the price of goods for imports and this is immediate. This may reduce imports which is one of the aims of devalua- tion, but there are limits and you cannot reduce it to zero, particu- larly in a country such as Great Britain which requires a great volume.of imports of both food and industrial raw materials. The immediate: effect. will be no sub- stantial increase in, exports, no substantial decrease in imports, but increased prices for the peo- ple and a reduced standard of living. ee The overall aim of devalua- tion, therefore, is to bring into a general favorable balance ex- ports over imports, to correct the deficit in the balance of pay- ments. For years Great Britain has had a growing deficit in the balance of payments. The re- serves in gold and foreign money have been declining at an alarm- ing rate. British debts to foreign “bankers increased. It reached a stage where there was a “run on.the banks” in London. For- eign holders rushed to change their “bad money” (pounds) to “better” money or gold. By de- valuation, payments. in real terms will be less to‘holders of - British money than had been promised. This..in fact consti- tutes a partial bankruptcy. ‘What were the real causes for devaluation? Great Britain has a growing balance of payment deficit. The main reason for this is that it spends huge sums of money each year to maintain foreign bases, a global navy, armed forces in West Germany, East of Suez and elsewhere. Great Britain con- tinues to pursue these policies disregarding the fact that the actual breakup of the British co- lonial empire deprived it of the super profits which it formerly pumped out of the hides of the colonial people. The British economy because of super profits from colonial exploitation lagged behind in the renewal and modernization of industry and was unable to with- stand the growing competition on the world market on the part of other imperialist powers. And, because money capital knows no nationality or patriotism, Brit- ish mongpolies, seeking a high- er rate of profit, exported capi- tal instead of investing it in Great Britain to modernize in- dustry. The British labor government permitted the monopolies not only to export its capital, but to import without any serious re- strictions of luxury goods and no restrictions were placed on the sending out of profits by U.S. monopoly controlled enter- prises in Great Britain. Will devaluation solve the crisis? The answer from what we have indicated is obviously, no. In addition to devaluation the British Labor Government had . advanced an “austerity” program at home... It cut. government spending, raised interest rates, reduced instalment buying, rais- ed corporation taxes, tried to prevent: wage increases and price increases, These steps will not resolve’ the crisis, The British working class will not accept a cut in real wages, The solution cannot be found at the expense ' of the British people. It requires a radical course to bring about a lasting solution in Britain’s ba- lance of payments. The pound known lemanded and agreed but it is never known how they to by the British Labor Govern: of flesh demanded and ment as the price for the $1.4 billion loan by the International Monetary Fund will only aggra- vate the problem, at best it may result in a temporary reprieve. What could a real labor- socialist government do? The first step could be to liqui- date its foreign military bases and bring home all armed forces from outside British borders, It -could officially realize that the “British Empire” ain’t what it used to be. and adjust to the changing realities of the present world relation of forces. It could establish a state mon- opoly in foreign trade, restrict the import of luxury goods for the rich. It could restrict the export of capital and profits of foreign monopolies and direct capital investments to modern- ize industry. It could break with the U.S. dirty war in. Vietnam and break with the U.S. trade restrictions, get more of its oil requirements from the Soviet Union and Rumania and develop _ to way mutual trade with the socialist countries. - It could nationalize: the credit and banking system and basic “industries, providing the labor force with a real stake and in- centive to increase productivity of labor and benefit from its fruits, and stop the brain drain to U.S. monopolies. Through such a radical course it could solve the crisis permanently to the benefit of the majority of the British people, world peace and . ‘effect mean the devaluation = stability. : What will be the effects of; devaluation on the capital pe world? «5s A French financial expert has declared with justification it: known how such things star -end.” ‘ This is the third devaluation. tradiction between the immeti since 1931. The 1931 devaluation arose out of the worst economic... crisis of capitalism. The 21949 devaluation was an attempt ;_rency-money system in the flation and balance of paymen’ deficits in a number of leadin capitalist countries, mainly ca05” ed by monopoly profiteering @" “war inflation.” The war iis tion emanates from the U.S. W of aggression against Vieln and affects all capitalist CO! tries. This crisis has caus great anxiety in the U.S. and Canada. A huge balance of paymy deficit is characteristic of UA U.S.—the citadel of imperial Canada is very much influent by developments in the \* U.S. gold reserves this year * dropped to the lowest level sin A ‘1939, The New York Times 42 ] ing with the devaluation "oy, forced to admit that the PO". was the first line of defence @ the dollar and now the @0 7. unprotected as the basic caPUN™ ist world trade currency. t will happen to the dollar 1S cult to prophesy. Despite . categoric statements that dollar will be kept at its PIS* value the pressures " and may force a change if © fixed-price of gold which will GURDZ the dollar. : . This time, the crisis has the form of a currency & - The instability of the credit _. talist- countries reflects __concilable contradiction of | talism in its state money © gtage.ofsdevelopment. The growth of social production ji0 the private appropriation ™n handful of monopolies of (is Products of labor is the © nc bring about a reactionary partial--cause. The curbing of mOoPOP ji stabilization of imperialism fol-. and moving in the direcllOY lif lowing World War II. The 1967 devaluation coincides with gef- eral slumps in the economy, if!- public ownership and cont i socialism—is the most 24a). road ahead, hs alf dewhurst Railway layo Mass layoffs on the railways proceed apace from the Atlantic to the Pacific. Already better than 2,500 have been dismissed from the car repair shops, main- tenance of way crews, express and freight sheds and offices, running crews, and railway stores. Union officers estimate that the total will reach 8,000 before rail managements finish their layoff binge. Indefinite layoffs on such a mass scale are in the nature of a national calamity. For many of those affected they are a per- sonal tragedy. The very fact that rail man- agements refuse to indicate the nature of the layoffs is sufficient evidence that what is actually taking place once again is a drastic reduction of the perma- nent work force. Technical inno- vations, automated processes, contracting out of repair work and services, and assembly-line methods make the dismissals possible. The pattern followed in the layoffs make it perfectly obvious that they are part of a joint policy of the privately-owned CPR and the publicly-owned Se5p9-- SEISIRT DIIOAS-= Koh ky oe ia nig a ae ONR. The current traffic slow- down provides the rail manage- ments with a glorious opportu- nity to carry through their job- slashing, speed-up, machine-ver- sus-man policy for the sake of higher dividends for the bond and share holders. They must not be allowed to get away with this cynical and callous job-slashing policy. The fact that one of the partners in this crime against the railway workers is the publicly-owned CNR places an added responsi- bility upon Parliament and gov- ernment to nip the plot in the bud. The working people and, in. the first place rail workers and their unions, must insist that ‘parliament and the federal gov- ernment intervene into the rail- way layoff situation with a de- mocratic alternative. Such an alternative must have as its starting point the basic principle that technological pro- gress must not be carried through at the expense of those who labor by hand and brain. Rather, its fruits must accrue to those who work and to the coun- try as a whole. at 439 MioaG First and foremost an end must be put to the layoffs pend- ing a democratic solution to the whole transportation mess which includes the crisis in the rail- ways. Those already laid off must receive supplementary benefits to their unemployment payments equal to wages at the time of lay-off. As a start the supplementary payments can be drawn partly from the job secu- rity fund already established which the two railways pay into at the rate of one cent per hour worked. That fund is reported to stand at over $7 million at - the present time. Secondly, parliament must be made to take an adamant stand for a change in CNR policy from that of operating as a pri- vate enterprise company (which is the basis of its bond with the CPR) to one of operating as a genuine public enterprise. This would mean of course that par- liament must insist also that democratic direction of the CNR be instituted in keeping with the change in policy; ie, a board of directors which in- cludes representatives of the trade unions, farm and consum€r organizations. : A change in CNR policy could well be emphasized by the cafi- celling of dividend payments pending the overcoming of the railway crisis. A new CNR policy should uti- lize the new techniques, high€T mechanization and the rise 1n labor productivity as the basis for shorter hours of work with the same take-home, or high€r pay, and of guaranteeing a high degree of job security. Such @ new policy should end the cof!- tracting out of repair work and services; it should provide for voluntary retirement at 60 at full pension after 25 years of ser- vice; it should rule out lay-offs and make provision for retraifi- ing programs at company. eX- pense with workers receiving their regular pay during the r®- training program. ~ As a follow-up the goverfi- ment should be pressed to lay down and carry through a corm- prehensive transportation policy along these lines: Transportation — whether Dy rail, road, air, water or pipleline — to be provided on the pasis!) Serving the country and imp a 4 ing services everywhere 4 lowest possible cost thro fully-integrated _publicly-® transportation system. To begin with the CPR 2%” subsidiary the CPA must Pe a. tionalized as a prime °° gy towards an all-in publicly" transportation system. This public-ownership wi not be a repetition of the Pe (1 CNR form where the weight concern is for the st From top to bottom deme” a, practices and control m ut ; vail, directed to serve the Fag interest pot the coupon clip? Only such a fighting policy i serve the interests of ™ i workers and the countty © 36 whole. BY i meg alterniative is the ee ation of the present imm licy being jointly followed DY | e managements of the CPR oq CNR, where under the bana” efficiency” railway wo being subjected to speed-UP Intensification of the lab0 cess to increase the rate ? ‘fit of the companies.