GREAT BRITAIN: The New Siege

Thirty bowler-hatted London bankers trooped solemnly into No. n Downing Street last week, on an unprecedented summons from Chancellor of the Exchequer Macmillan. the liveliest man in the government of Anthony Eden. Urbane Harold Macmillan (who delights in his new Threepenny Opera nickname of "Mack the Knife") wanted to impress on London's top bankers the thin edge on which the British economy now rests.

Any new burst of inflation, he feared, would shake foreign confidence in the pound, and bring a new drain on the nation's gold reserve. In his drive to control credit, Mack the Knife has raised the government's rate on bank loans to 5½%, the highest level since 1932 Depression days, and twice the discount rate of the Federal Reserve Bank of New York.

Underlying all of Britain's headline troubles in hanging onto her colonies is a completely undramatic crisis in stabilizing her economy. Prime Minister Eden, who will go to any lengths to avoid a colorful phrase, has in a rare burst of exhortation called it "the new Battle of Britain." Three weeks ago he warned: "We are all in it. and upon its outcome our homes, our jobs and our children's future depends." Unless Britain wins the battle, he told a Lancashire audience, "we are in mortal peril of poverty by stages."

Unheeded Call. For a people with an unrivaled record of subjection to calls to greatness, austerity and sacrifice over the past 17 years, Britons have been singularly unmoved by Sir Anthony's outburst. They can see nothing so dramatic and decisive as a new Battle of Britain—only a new declaration of siege. They are enjoying summer holidays, TV sets and a respite from shortages. And plain Britons, listening in puzzlement to Eden's suddenly urgent cries, may search the acts of his government in vain for signs of a bold lead in preparing for battle.

To bring the British economy into healthy balance and end inflation might have called for expansion of national productivity on a scale such as West Germany has achieved. But British workmen, though 99% employed, adhere to their old habits of featherbedding; and many British employers shy away from free competition, and prefer obsolescence to bestirring themselves.

Inching, Pinching. At the moment, the government's credit squeeze has leveled off last year's frightening import rise, narrowed the trade gap to a monthly $45 million, and restored gold reserves. But with retail prices up ten points over last year, it has not stopped inflation. Last week the inching, pinching process of deflation brought violence and strikes to Britain's smoke-stained Midlands.