THE POUND CONTINUES TO SLIDE TORY REFLATION POLICY COLLAPSES

THE BIG BANKS' decision to raise interest rates by 1 per cent virtually puts paid to the Tory policy of 'reflation' based on cheap credit for business and consumers.

While Chancellor of the Exchequer Anthony Barber was defending his devaluation of sterling and claimino success for his economic policy in ti House of Commons, City gentleme were making nonsense of the whole debate.

Aid the pound continued to slide on the foreign exchange markets with the devaluation in Paris reaching 7 per cent. The rot continued yesterday and was only kept in check by central bank intervention to support the pound in a number of financial centres.

All talk about sterling's strength and the size of the reserves was exploded by Barber's admission that almost £1,000m had fled the country in a matter of days. This hot money, which had sought temporary refuge in London, is now rushing elsewhere and is unlikely to be attracted back by the rise in interest rates.

Much of the reserve holding of the Bank of England and other central banks consists, in tact, not of gold but of dollars which have been forced on them by American policy.

Pound at lowest point THE POUND sank to its lowest point since the "float' on the London foreign exchange market yesterday afternoon. Quoted at 2.4525 to the dollar this represented an effective devaluation of 6 per cent. Reverberations of the pound's devaluation continued to dominate world financial centres.

China revalued its currency MEETING-SUNDAY DEFEND THE DOCKERS' RIGHT TO WORI DEFEND BASIC DEMOCRATIC RIGHTS DEFEND THE VIETNAMESE REVOLUTION MAKE THE TORY GOVERNMENT RESIGN SUNDAY JULY 2 Acton Town Hall Acton High Street, Speakers:

G. HEALY (SLL nat onal secretary)

(London YS secretary)

CLIFF SLAUGHTER (SLL Central Committee)

CORIN REDGRAVE LARRY CAVANAGH against the Hong Kong dollar, which is tied to sterling, for the second time in two days. South Africa is to let the rand float in line with sterling. Sterling weakened in Zurich and in Copenhagen.

SEE AND (Liverpool docks steward, OUR POLITICAL Barber's French counterpart, Valery Giscard d'Estaing, showed a more realistic grasp of things when he said in the French National Assembly on Wednesday:

"The scale of speculative movements of capital is such that they can in a few days bring down a national currency. This is likely to go on as long as the international community has not become conscious of the need to adopt new rules concerning speculative capital movements and th international monetary system itself. The absence of any kind of convertibility introduces an element of uncertainty and paralysis, and we have been able to gauge the effects in the past few days.' Not only are a whole number of currencies ready to go, including some, like the French franc, which seem temporarily strong, but the dollar is heavily under attack. The announcement of the United States balance of payments figures for the first half of this year will bring a new run on the dollar which will force Nixon to take action as he did last August.

Those measures, especially the ending of dollar convertibility, aimed to pass America's problems onto other countries by forcing them to reduce their balance of payments surpluses.

This has now shown up in the figures for Japan's balance of payments in May, with the surplus showing a massive drop from the $1,183m of last year to only $22m this, despite a rise in exports.

The dollar declined heavily in forward DAILY ABOUT Road ye from the Solidarity march with work-in printers dealings in Tokyo and raised the possibility of another yen revaluation before the end of the year. Bankers feared that forward exchange dealing might have to cease.

The Brandt cabinet, soon to have to face a general election, has split on the measures needed to counter the effects of sterling devaluation. Economics Minister Karl Schiller is considering resignation following the measures adopted by his colleagues to impo:• stiffer exchange controls. They fear that the capital influx will force a mark revaluation, harm German exports and spark off renewed inflation.

The Swiss franc continued to float while the pound weakened in Zurich. • While other countries try to defend themselves as best they can from the storm released by sterling devaluation the effect on effect on the British économy will be sharp and not long delayed.

The rise in interest rates makes it more costly for industry to hold stocks or invest in new capital equipment. It is bound to mean more closures and unemployment_and spreading depression: So much for Barber's reflationary policy!

Prime Minister Heath refused to disclose what he proposed to discuss in his meeting with TUC leaders on Tuesday, but later in Thursday's House of Commons debate he called on trade unions to pursue reasonable wages policy. situation by the devaluation ota new leadership and the building ot the bound will make it impossible reach some patched up agreement on the programme of the Fourth International. NIA NIAY COMMITIEE basis of reflationary measures. The bankers have seen to that.

The Labour Opposition showed itself completely unable to comprehend the depth or source of the crisis. Both Harold Wilson and Denis Healey, its main economics spokesmen, claimed that sterling was basically strong, gave Barber credit where it was due for successfully carrying out the operation of 'floating the pound' and engaged in cheap witticisms which distracted attention from the crisis.

As reformists who want to make capitalism work, they dare not admit that the system is heading for collapse. The measures which they called for to deal with the situation such as price-wage restraint. brineine back the Consumer Council (1) and keěping British beef in Britain only revealed their crass narrowmindedness and reformist illusions.

It was only equalled by the Communist Party's 'Morning Star' which proclaimed last Saturday that devaluation was 'A Fiddle to Rob Yau' and succeeded in producing several thousand words without mentioning the international and insoluble nature of the capitalist crisis.

Neither the Labour nor Communist parties can face the reality of the situation. The old reformist and parliamentary compromises are finished. The need is to mobilize the strength of the working class to force the Tories to resign and bring back a Labour government which is held to socialist policies.

This can only be done by the creation the revolutionary nartt Britain or