Bank of England is worried by inflation and parity crisis

ternational currency crises are vividly revealed in this week's Bank of England Quarterly Bulletin.

Antidote

The Bulletin stresses that a floating rate is not a panacea for British capitalism. It provides no simple antidote to a deficit in the balance of payments current account, the Bank says.

The immediate effects of the depreciation of the currency are to worsen the balance of payments through the terms of trade and to increase inflationary expectations.

SOCIALIST LABOUR

LEAGUE LECTURES Liverpool given by Peter Jeffries Sunday June 17 Marxism and the study Sunday June 24 Trade Unions and political struggle in Britain Sunday July 8 ¡hartism, yesterday and Sunday July 15 The Revolutionary Party and the British working class Stanley Halls Ipper Parliament Stree SOCIALIST LABOUR LEAGUE LECTURES Barnsley Given by Gerry Healy National Secretary Socialist Labour Leag Sunday June 17 materialist concepti Sunday June 24 Dialectical Materialism arxist theory of knowl Sunday July 8 ry and Practise Marxism Sunday July Role of the evolutionary Party The Red Lion Worsborough Near Barnsley 7.30 But the previous system, the Bulletin concludes, was even more vulnerable to crises of The February-April quarter was hit by two related crises —one over the fate of the dollar and the other over the currency parities established at the Smithsonian conference in Washington in December, 1971.

This centred on the introduction by the Italians of a two-tier system of exchange rates in January (which led to the floating of the Swiss franc; the publication of a US trade deficit of over $6 billion; and the continued rapid rise domestic prices in the United States.

The result was massive sales of the dollar, despite enormous efforts by the West German authorities to deter capital inflows.

SOCIALIST LABOUF

LEAGUE LECTURES Manchester given by Peter Jeffries Sunday June 17 Marxism and the study Sunday June Trade Unions and political struggle in Br. tain Sunday July 8 ¡hartism, yesterday and Sunday July 15 The Revolutionary Party and the British working class Black Lion Blackfriars St/Chapel S1 near Salford Bus Station 7.30 p.m.

SOCIALIST LABOUR

LEAGUE actures given by Cliff Slaughte (SLL Central Committee) The Socialist Revolution in Britain:

Political tasks facing the British working class. Marxism and the revolutionary role of the working class. Lessons of the history of the working class in Britain. 2. The roots of capitalist crisis: Marxism and the contradictions of capitalism.

Britain and the world crisis. 3. The state and revolution.

Reformism and revolution in Britain. The fight for democratic rights today means preparing for working-class power.

Basic reading:

Perspectives for transforming the SLL into a Marxist Analysis of the Crisis.

Problems of the British Revolution (Trotsky).

Death Agony of Capitalism and the Tasks of the Fourth International, Communist Manifesto.

Sunday June 17, 24, July 8 Stockingfarn I Community Centre, St ickingfarm 7.30 ists could take were capable of removing deep-rooted doubts about the durability of their exchange structure - because this reflected the lack of any basis in value of their paper currencies ever since August 15, 1971, when Nixon took the dollar off gold.

By the end of April every major currency in the world except sterling, was substantially revalued against the US dollar - and sterling, of course, has since taken the same road.

This ab: ence of confidence in paper cur ency lay behind the continuing astronomical rise in the price of gold, which only two years ago was less than $40 an ounce.

In the home economy, uncontrolled inflation has dominated. Commodity import prices have been rising strongly since mid-1972, and particularly so during the first quarter of this year.

Manufacturing wholesale prices went up nearly 10 per cent in October-December and a further 6 per cent in January-April. Almost all of this, the Bank of England's Bulletin points out, has yet to pass through to retail prices.

During what it admits was a period of rapid rise in commodity prices', the Bulletin states Secret deal angers some workers at sit-in factory summon OVER 2,000 engineers who have been occupying their factory for 13 weeks in Eccles will hold a key meeting tomorrow following talks between union officials and employers.

The men-who work for L. Gardner and Sons, the diesel engine manufacturerswill hear proposals from local AmalgamA 'MINI-WATERGATE' investigation was necessary to speed up inquiries into the Poulson case Liberal MP Mr John Pardoe said yesterday.

'The same techniques of the Watergate investigation should be applied to this kind of issue.' Pardoe • said he was worried that excessive wage claims were being successfully resisted'.

bointed out all along, prices have soared while wages have been held down by the state.

Despite this, Britain's external trade deficit reached a new peak in March and, although this was said to be 'exceptional', the Bank's Bulletin reports that worsening terms of trade are still pronounced and that the 'expected benefits' of sterling depreciation last June had 'scarcely begun to be felt'.

Meanwhile the deficit on the current account of Britain's balance-of-payments which emerged in the second half of 1972 grew further in the first quarter The visible trade deficit increased, after seasonal adjustment, from some £230m in the fourth quarter to about £350m.

As there was a fall in the surplus on invisible accounts as well, the deficit on the current account widened from under £50m to some £200m.

While exports at current prices went up 13.5 per cent above the average for the second half of 1972, imports went up 16 per cent.

And the terms of trade, which had already become markedly less favourable to British capitalism during the latter part of 1972 as sterling depreciated against other currencies worsened further.

Import prices rose on average by about 10 per cent over the ated Union of Engineering Workers officials on their dispute.

Shop stewards yesterday kept the nature of the proposals a strict secret.

'We can say nothing at this stage. The situation Is very daters: The meeting wil 6 for Ankers. The meeting will be for about the reported wall silence which is hampering Fraud Squad inquiries.

The issue was not as important as Watergate because it did not involve central government. But he believed that the Establishment and the Press had not delved enough.

9675% age increase of about 5 per cent per quarter over the previous six months.

The average increase in export prices, on the other hand, was only some 3 per cent-much the same as in the earlier period.

And, although exports have grown, the problem of lack of investment is still not overcome.

The Bulletin reports that demand has strengthened since the previous quarter-but the volume of manufacturing investment then was the smallest for five years.

Inflation And it points out, too, that the improvement in industrial investment has been 'more to replace machinery than to increase output'.

The main problem, however, remains inflation and the Bank warns that the government must be ready 'at any time' to take 'prompt action to bring the rate of growth back to a sustainable level'.

So the fundamental crisis continues to grow. No solution has been found for currency stability, inflation, • the balance-ofpayments problem or investment doubts.

Only by the most ruthless attack on working-class rights and conditions can the ruling class hope to prolong the life of their system. all workers but not for the scabs who have been working during the dispute,' he said.

A mass picket outside Gardner's involving other factories in the Manchester area was postponed yesterday because of the mass meeting.

Some workers said they angry that the result of negotiations were being Kept The dispute began when management attempted to introduce a bonus system. Workers suspended piecework which is their right under the Manchester piece agreement, but management retallated by laying men off.

Press,