Herbert W Armstrong

The British pound continues, as do all major currencies, to shrink in relation to the strong U.S. dollar. Experts predict that the pound, now about $1.11, may reach equity with the dollar as early as February. Even though the British economy has improved considerably in recent months, it seems that nothing is able to arrest the decline of the pound. The decline is particularly galling, especially in the aspect of national pride and prestige. Here are excerpts of a report on the "Plunging Pound" published in the January 17 WALL STREET JOURNAL:

In 1864, during the U.S. Civil War, the British pound hit an all­ time high of $9.92. It's been downhill ever since.

The drop has never been sharper than it has been lately, as the pound sterling approaches the once-unthinkable level of one pound to one dollar. Newspaper cartoonists are having a field day. One drew a combination one-pound-one-dollar note depicting George Washington (smiling) and Queen Elizabeth II (frowning). In another cartoon, the queen implores Sir Isaac Newton, whose portrait is on the one-pound note, "Do something! You're supposed to know all about gravity."

But unlike past sterling crises, the plunge this time neither is being caused by grave financial problems nor is causing them.... Indeed, apart from a 13% unemployment rate, much of the recent economic news has been relatively good. Inflation remains modest at about 5%, Britain's balance of payments is in the black, its foreign debt is low, and exports, especially to the U.S., are climbing....

All currencies have been dropping against the almighty dollar, of course, but the pound has fallen most.... But the pound has even fallen 8% against the mark and 8.7% against the franc in the past year. And in yet another indignity, it has sunk below 1-to-1 exchange against the Russian ruble. On Tuesday, the Soviet state bank set the official exchange rate at 99.38 kopeks to the pound, down from 1.13 rubles a year ago.

Explaining the pound's special weakness, currency experts advance two main reasons: uncertainty about the price of oil, on which the British economy has become heavily dependent, and concern that British industry, despite its recent progress, remains a poor competitor in international markets. In addition, the 10-month-old strike by British coal miners has slowed the U.K. economic recovery....

Sterling long ago ceded its role as the dominant world currency to the dollar. But the decline of the pound — whose history as an official currency dates back to William the Conqueror — has been nonetheless painful: It symbolizes Britain's decline as world power. "It's unpleasant to be told you're not what you used to be," notes Charles P. Kindleberger, an American economist and author of "Manias, Panics and Crashes," a history of financial crises.

In its feature in-depth article entitled "The Pound: Pride Goeth Before a Fall," the January 17 LOS ANGELES TIMES also stressed the symbolic importance of the pound's fall. The article also traced the interesting history of what had once been the world's most sought-after currency.

The British pound was once as strong a national symbol as the queen or the Royal Navy. For generations, the pound, backed by gold and silver bullion in the vaults of the Bank of England, was a benchmark against which other currencies were measured.

In the outposts of empire — Shepheards's Hotel in Cairo, the Raffles in Singapore — the pound reigned supreme. It was the reserve currency for dozens of countries, not only in the empire and the Commonwealth but in many others whose currencies were linked to the pound.

On the eve of World War II, the pound was equivalent to $4.68, and people who remember that find it difficult sometimes to get used to the new pound, a pound that is now valued at only $1.12. Already, some New York hotels are giving only a dollar for the pound.

For many, this is yet another reminder that Great Britain is not as "Great" as it used to be. It is no longer the powerhouse of the world; even its monetary mystique has passed into history. This has not come about overnight. All through the six bruising years of World War II, the pound held relatively firm against the dollar. When the war ended, the exchange rate was $4.03.

The first major devaluation came in 1949, when the rate fell to $2.80. Like the empire itself, the pound has been on the decline ever since, with only an occasional — and temporary — upswing.... Almost as if to underscore the decline of the pound, the British treasury is replacing the classic green-paper banknote...with a coin not much larger than the British penny. And not surprisingly, the coin has proved to be highly unpopular [as has the American Susan B. Anthony dollar coin]. "It just doesn't seem like a pound," one Londoner was heard to complain at a supermarket.

Actually, the pound came in coins before it was a bank note. Beginning in about AD 775, the Saxon kingdom in England issued a coin stamped with a star and known as the "sterling," the Old English word for star. The coin was minted in silver — 240 coins to the pound — and large transactions came to be reckoned in "pounds of sterlings," later shortened to "pounds sterling." After the Norman conquest in 1066, the pound was divided for accounting purposes into 20 shillings and 100 pence. In medieval Latin, the words for pound, shilling, and pence were libra, solidus and denarius, which gave rise to the symbols "£" "s" and "d" that are still in use....

In the 19th Century, London became the world's leading financial center. Sterling became the reserve currency for many countries, not only those in the British Empire but also many others in Scandinavia, the Middle East and the Far East. These countries maintained their currencies in a fixed relationship with the pound sterling and tended to keep their foreign exchange reserves in the form of sterling balances in London.

A Labor Party government under took the devaluation of 1949 and another, under Harold Wilson, engineered the next one, reducing the pound to $2.40 in 1967.... In 1970, Conservative Prime Minister Edward Heath allowed the pound to float, to seek its own value in relation to other currencies, and it has been doing so ever since.... The continuing plunge of the pound has prompted Ladbrokes, the bookmakers, to quote odds of 6 to 4 that the pound will reach parity with the dollar by February.

Still, the pound's declining value against other currencies does not sadden all Britons. Tourist-related business is booming, and British exporters find their products much more competitive in the international marketplace.... However, columnist Jon Akass observed in the popular Daily Express, "The one-dollar-pound would be a numbing blow at our self-esteem."... In some political circles there seems to be a lingering feeling that the $1 pound could have a negative impact on the Thatcher government. The pound has been a symbol of national virility, and the Labor Party may well try to use "the dollar pound" as an anti-government slogan in the next election.

A thoughtful Londoner, a professional man who usually votes as an independent, put it this way: "I don't care what the economists say. When you see the pound down to the rate as the dollar, it's simply humiliating."

Significantly, the plunge of the pound is occurring at the same time that Britain has at last agreed to divest itself of Hong Kong — a major world financial market — and has even agreed to open discussions with Spain over the future ownership of Gibraltar, the very symbol of British stability and steadfastness.

The Kennedy "Outrage"

Our South African office sent us some additional on-the-spot material this week regarding the visit of Senator Ted Kennedy. Among the many articles, the following steaming editorial from the national SUNDAY TIMES (January 13) entitled "An Arrogant Talent to Outrage" stood out:

For eight days [Senator Kennedy] has outraged South Africans of all political persuasions.... He has also...produced a unique if temporary show of unity from most whites and many blacks, whose devout wish was that the Kennedy circus should find another country to play in.

That unity was based not on support for the Government or its policies, but on a mounting sense of outrage at the breathtaking arrogance of a foreign politician who is not only singularly unqualified to teach South Africa about morals, but whose behaviour towards both this country and his own government proves that he has nothing to teach us about manners, either....

Senator Kennedy's...blatant if highly-selective courting of television coverage, his disdainful treatment of [Zulu] Chief Gatsha Buthelezi, his tunnel vision in seeking, seeing and then pronouncing on only that side of South Africa which reinforced his prejudices, his attack on his own government's representative in South Africa [Ambassador Herman Nickel], all betray the insensitive arrogance of a man who once believed he could survive the scandal of Chappaquiddick and then run for President of the United States.

In the U.S. press, columnist Patrick J. Buchanan said the one good thing the Senator's trip did accomplish was to unite the Boers and the Zulus for the first time in history — meaning over the issue of disinvestment. Mr. Buchanan wrote two columns on the blind-sightedness of crusading liberal politicians such as Mr. Kennedy, who routinely attack imperfect democracies such as South Korea and South Africa, but go easy on the totalitarian states. In his January 18 column, Mr. Buchanan wrote:

Somewhere in the middle '60s, liberalism, the political belief of such anti-communists as Harry Truman and John F. Kennedy, lost its moorings. Probably, it was the nervous breakdown liberalism suffered over Vietnam.... In any event, by 1972, when Sen. George McGovern's cohorts took over, the party was an institution permanently disabled. Somewhere, it had lost its sense of history, its sense of perspective, and permanent damage had been done to its capacity to differentiate friend from foe, a capacity indispensable to the survival of any species.

To see how that natural function has been impaired, consider the liberal's treatment of several countries.... In 1953, South Korea was in ruin. Today, however, the same South Korea is an economic dynamo, unrecognizable from three decades ago. Its people enjoy a measure of material prosperity and personal freedom unknown to any Asian people prior to 1945, exceeded today only by Japan, an economic superpower. The country is, quite simply, a modern miracle, an enduring tribute to the character of its people, and to the vision and steadfastness of its patron, the United States.

Does the modern American liberal, in politics and the press, rejoice in this enormous achievement — especially measured alongside the wretched little tyranny communism has produced to the north? He does not. Half the news columns and network commentary done today about South Korea are caustic attacks upon the government there for its alleged mistreatment of political dissidents or its shortcomings on human rights....

What is it that impels men of Kennedy's mindset, in politics and press, to search out with diligence and condemn with passion, failure and flaws in nations like South Korea that wish to be aligned with the United States — while bending over backward to give the benefit of the doubt to enemies of everything we are supposed to believe in?

Measured by living standards, the quality of life, per capita income, freedom of religion, travel, assembly, speech, press, etc., blacks in South Africa are far better off than they were 30 years ago, far better off than blacks in... neighboring countries.... Yet, today, Western liberalism is virtually clamoring for a declaration of economic war against South Africa — which wishes desperately to remain part of the West — while calling, with equal fervor, for more, much more, aid to [Marxist] Angola [and] Mozambique....

For those who profess to despise us, the liberal seems to possess an inexhaustible reservoir of patience, understanding, good will. Upon those who would cast their lot with the United States, however, he imposes the most exacting of standards.

It should be noted that just as Senator Kennedy could not or would not understand the complexities of the country he was visiting and lecturing, neither did his hosts fully understand where he was "coming from," philosophically. He gave a clue when he called for, in one speech, "full and equal citizenship, not in a span of generations, but in a reasonable span of years." He further urged his listeners to "take a chance on your common humanity."

To further explain the Senator's mindset, he is such an impassioned believer in the primary idealistic democratic principles of liberty and equality that any society which professes democratic ideals yet falls short of attaining these two principles — to the level of the United States — meets his stern disapproval. Cultural, historical (and, of course even biblical — such as the birthright promises) reasons for lack of equality are dismissed as irrelevant.

To those in South Africa who protested that many blacks in their country lived better than poorer American blacks in the ghettos, Kennedy had a pat answer: at least the latter had the right to vote. The Communist nations and other totalitarian societies are not judged in the same light, nor receive from the liberal the same condemnation since they do not claim to be democratic. Many liberals furthermore defend the policy of urging greater, rather than lesser cooperation with the Soviet Union, out of concern for overall world peace and the fear that a nuclear World War III could erupt from a breakdown in communications.

In his January 16 column, Buchanan again and rather heatedly struck out at the liberal mindset, concluding, ominously, what would happen to the U.S. and the West in general, should Mr. Kennedy and others like him attain political power:

Observing Sen. Ted Kennedy in South Africa last week, adopting his patented posture of heroic defiance — this time against apartheid — one realizes how little the man has grown in 25 years.... Kennedy endlessly reenacts the same old morality play. In it, the senator comes on stage as Young Lochinvar, hurls his verbal thunderbolts at the forces of reaction, demands strict adherence to some grand abstraction, and exits to thunderous applause. To witness this boring exercise, repeated year in and year out, with only the backdrop changing, is to realize how irrelevant liberalism — of which the senator is today's finest expression — has become....

Apartheid is not the worst situation facing Africans today. Not remotely. If it were, they wouldn't be pouring into South Africa from such "liberated" zones as Mozambique. Nor is the condition of dissidents there as perilous as in most of the rest of Africa. Just last week, in Zimbabwe, Joshua Nkomo, once the toast of the United Nations, had his limousine machine-gunned by the followers of his wartime comrade-in-arms, now Prime Minister Robert Mugabe....

Indeed, the plight of women in traditional Moslem societies comes closer to our definition of slavery than the condition of the black workers of Soweto. Yet, no responsible legislator demands — as the senator demands of South Africa — that Saudi Arabia declare emancipation and equality for Arab women, or face economic sanctions.

Why? Because the West needs Gulf oil. Because the Kingdom of Saudi Arabia is a de facto ally.... Because the beneficiaries of such mindless Utopianism would be Arab radicals of the Khadafy stripe.... [Why can't the critics see the same thing regarding southern Africa, which has been called the "Persian Gulf of minerals"?]

What Sen. Kennedy seems oblivious to is the inapplicability...of his liberal nostrums to most of the world we inherited, and the disastrous consequences that must ensue when we try to implement them. Surely, President Thieu and Lon Nol were not ideal allies. But that was the hand history dealt us; and Kennedy and his friends threw it away. Who is better off now that their...campaign against these "repressive and corrupt" dictators finally succeeded?...

Do they ever ask themselves what ever became of the people of Vietnam and Cambodia? When they read of Soviet warships berthing and MiG-23s and Bear bombers being based at Cam Ranh Bay do they ever ask themselves if, perhaps, they were mistaken?

How would Americans deal with an alien and underdeveloped civilization and culture inside their country that had more numerous adherents than one's own, South Africans ask. Well, we know the answer to that, don't we? There was no talk of "one man, one vote," or "power sharing" or "proportional representation" when the American minority ran into the Iroquois nation or the Sioux confederation....

God help the West if leadership of the United States ever passes to men of such mindset.

Does Senator Kennedy have designs on the White House in 1988? An article in the January 4 ARGUS newspaper of Cape Town asked that question in advance of his controversial trip.

Does the senator from Massachusetts still desire the presidency after one brother had been murdered while in office and another slain while seeking it?... Only Edward Moore Kennedy knows deep down today whether he can, after more than 15 years, overcome Chappaquiddick prejudices and win over the American electorate if the winds of liberalism should indeed swirl again toward Washington again before he is too old.

The blood of a remarkable dynasty flows through his veins and... he should, for better or worse, be regarded still as a prospective president and leader of the free world.

It would appear that the race is indeed on for the White House in 1988. Mr. Kennedy is pouncing on what he believes to be President Reagan's most vulnerable foreign policy program, that of "constructive engagement" with South Africa. This policy was quietly conducted with considerable success during the first Reagan Administration. The Republicans are now hard put to defend it for fear of being labelled racists.

Going into 1988 it would also appear that the Republican Party leadership could be torn between moderates and conservatives. If the rather charismatic Kennedy could patch together his own badly split party, he might indeed squeak by, as did his brother John in 1960, into the presidency.

— Gene H. Hogberg, News Bureau