Within the past month Britain has passed through its gravest financial crisis since 1949, and only last-minute support from foreign governments prevented the collapse of the precarious international payments system on which all world trade rests - ours, Britain's and everybody else's.
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Background: Within the past month Britain has passed through its gravest financial crisis since 1949, and only last-minute support from foreign governments prevented the collapse of the precarious international payments system on which all world trade rests - ours, Britain's and everybody else's. The crisis was caused by the imbalance in the British balance of payments. that is, the British were buying much more abroad than they were selling abroad and didn't have the gold to make up the difference, and that is still - believe it nor not - the only way such a difference can be made up. The crisis was aggravated by the measures the new Labour government took XXX to solve the crisis, and, worst of all, the declining confidence (by people who deal in money) was in the government's ability to handle its problem.
??? severe was the reaction to Labor's hints it would increase social welfare benefits in the Spring while still unable to meet its bills around the world, For a while there was serious talk of devaluing the pound, that is reducing the amount of gold which one pound sterling would buy, ad there are still those who say what has been going on is only a prelude to devaluation. Now the crisis, as a crisis, has died down, and so has talk of devaluing. But balance of payments problems are not exclusively British. We have some of our own. And talk of changing gold prices - which means changing the values of currencies in relation to each other - persists. The fact is there isn't enough gold to go around at today's prices. Trillions of dollars in total world trade is carried on in more billions in gold.
It's difficult and sometimes frightening field for a layman. So we sent our reporter Richard Hunt to discuss it with an acknowledged expert, Dr. Franz Pick, editor of Pick's World Currency Reports.