"THE foundations of the United Kingdom's normal economic life are a high degree of industrial specialization, a substantial dependence upon imported foodstuffs and raw materials, and the maintenance of a volume of export trade and of other sources of foreign exchange earnings adequate to pay for those imports." This statement, taken from the United Kingdom official publication, "Statistical Material Presented During the Washington Negotiations" in December 1945 may be trite, but its fundamental importance is not thereby diminished. In the immediate future, the deficit on Britain's balance of payments on current account presents one of her most formidable problems, and it is understandable that economic policy should be preoccupied with the internal and external adjustments which can be made in the British economy adequate to restore equilibrium. But this ought not to obscure the fact that a transitional period must lead to something; the solutions adopted for immediate problems are bound to affect the future situation.
This fact underlay much of the controversy in Britain about the American loan. The main purpose of the loan is, of course, to assist Britain's balance of payments problem in the transition period. To the United States, believing that a multilateral commercial system is the best long-term objective, it was not unreasonable that another "important purpose" of the loan should be "to promote the development of multilateral trade and facilitate its resumption," and that for Britain this should mean membership in the International Monetary Fund and participation in discussions on commercial policy. To the isolationists in Britain, who consider that bilateralism is either necessary or desirable (if not both), these conditions of the loan are sufficient to vitiate its main purpose.
In an article in FOREIGN AFFAIRS,[i] Sir Henry Clay has examined, in a setting of long-term trends, some of the factors in Britain's international economic position. Though not himself espousing the isolationist cause, the general tenor of his analysis is against the practicability or desirability of British participation in a multilateral system. Full justice cannot
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