HC Deb 02 July 1937 vol 325 cc2329-32

Order for Third Reading read.

Motion made, and Question proposed, "That the Bill be now read the Third time."

11.15 a.m.

Mr. Pethick-Lawrence

Before we part with this Measure, I propose to say a few words, and they will be very brief, because I have no desire to cover again the wide range which has been traversed in the exceedingly interesting Debates we have had during the previous stages of this proposal. I want rather to sum up the position as it will be when the Bill is passed. In the Debate on Monday, on the Money Resolution, the Chancellor of the Exchequer described the old Gold Standard as a measuring rod. That, I agree, is a correct description, because contrary to the opinion of many people, the old Gold Standard was not self-acting but indicated when action should be taken if the principles on which it was based were to be adhered to. I will give another analogy which, I think, is appropriate to the actual facts. There used to be a practice, which I hope is no longer carried out, on the part of certain dog fanciers who were very particular about the shape of the ears of a dog. They used to put a piece of cardboard of the shape they wanted the ears to be alongside the ears of the puppy and then cut the ears of the dog to the shape of the cardboard. That analogy more closely fits the working of the old Gold Standard.

The tissues and sinews of the life blood of the trade and industry and commerce of this country had to adapt themselves to the card which was set up by the Gold Standard, and the life of the country was subordinated to this particular arrangement. I am not saying that there was not a time when it worked well, but gradually it became less and less suitable for modern conditions, and I suggest that it is inconceivable, or nearly so, that there should be a return to it to-day. It would be very much worse at the present time, because of the large upset which the movement throughout the world of the huge cash balances now presents. I say nearly inconceivable, because, from my experience in life, I have learned that there is scarcely any suicidal folly which the human race may not practise if its leaders take it in that direction.

In the course of our Debates the question has been raised as to whether the amount of gold which exists at the present time is just sufficient, or superabundant, to support the credit structure of international financial operations, but there is a question which, I think, has to be asked prior to that, and it is this: Is gold at the present time the basis of our credit structure and is it really required for that purpose? If I were asked that question I should not be prepared to answer it with a direct yes or no. As I see it, in the matter of currency and credit the world is passing through a transition stage from the old system to something new, just as a walker gradually passes from resting on his right foot to resting on his left, and when he is in the transitional stage it is difficult to say on which foot his weight rests. But what will the new standard be? Before I attempt to answer that I should like to make this observation. A great European statesman, when he was discussing the factors which brought success in war, said that he was of the opinion that the imponderables were more important than the ponderables. I suggest that if this is true of war, it is true to a still greater extent of currencies.

The imponderable causes in the case of these financial operations are moral, psychological and political, and they may be all summed up in the word "confidence." We have seen how even the most careful arrangements of the Tripartite Agreement come to grief, at any rate temporarily, when lack of confidence prevails, as it has done in one of the countries subject to that agreement. When that comes, no mechanical device can sustain exchange equilibrium. The question is whether the provisions of this Bill and whether any future arrangements can provide a substitute. I venture to answer that question by saying that ultimately it may very well prove that sterling itself rather than gold will provide a solution to this problem. I have great faith in the genius of the British people. Their genius for finance has been marked all down history.

I believe that in the control of the world's monetary system this nation has a great part to play, because of the recognised honesty and confidence which the world is able to place on our judgment in these matters. But it is of the utmost importance that those who control this system should be world-minded, and should recognise that any action they take should not be solely concerned with this country or even with the British Empire, but that to a large extent they should take their action in trust for the world as a whole.

The powers which the Bill confers on the Government are very considerable. This large additional sum which the Bill proposes shall be used for the Exchange Equalisation Account is going to increase the influence which the Government of this country will have in dealing with these large currency questions. Looking back on the record of this Government, I am bound to say that in trade matters and in a number of other matters, they have not shown a full sense of their world responsibility. In many respects they have taken a narrow view of the interests of this country. The real interests of this country cannot be decided on economically exclusive grounds, but only by taking into full account the international repercussions of what they do.

The Financial Secretary to the Treasury (Lieut.-Colonel Colville)

When the right hon. Member says "economically exclusive grounds," he will realise that we are by far the largest purchasers of overseas goods in the world.

Mr. Pethick-Lawrence

That does not affect the point I was making. In my view, the Government have not always, particularly in trade matters, taken that wide international view which undoubtedly is of great importance at the present time. I will conclude with the observation that if there is a wide international use of the powers that the Government are seeking in this Bill, and if the Government are going to grasp the opportunity here provided to take the lead in monetary matters throughout the world, I believe that sterling may have the most important rôle to fill in the future development of this immensely important question; but if the Government take what I would call a parochial view—even though the parish may be the whole of the British Empire—if they think merely of the results to the people of the British Empire in the immediate future, they will be sacrificing a tremendous opportunity, they will be injuring the ultimate prospects of the British Empire, and they will be failing in their duty to the civilisation of the world as a whole.

Question, "That the Bill be now read the Third time", put, and agreed to.

Bill read the Third time, and passed.