HC Deb 12 April 1943 vol 388 cc941-2

But this is not the whole story. The aid that we receive from the United States and Canada solves almost completely our financial problems in North America, but in the rest of the world we have to fend for ourselves. For all the local costs of the war in North Africa, except at the Algerian end, throughout the Middle East and in India and Burma we are primarily responsible. The Forces of the Dominions and increasing numbers of United States Forces are also engaged in these areas, and they meet the specific expenses of their own contingents. There are also certain large military works for which the United States has taken financial responsibility. Apart from this, it is we who are carrying the financial burden of the general costs of the war over these large areas. Egypt and other countries of the Middle East are not being asked to make any contribution. Japanese aggression has made a new situation in India, and this has involved greater burdens to India itself, but the greater part of the additional costs of the defence of India, and in particular the cost of that defence when it is carried on outside her own frontiers, falls upon us. When, as we hope in due time, an Army moves forward from India to the aid of our stout-hearted Ally China, it will be at our expense. Moreover, India has become a major arsenal for materials of war from the Middle East, and for reasons of shipping this fact is of the utmost value to the cause of the United Nations. Here again we in Britain carry the financial liability of practically the whole of this considerable cost.

I have given this account, not for a moment in any spirit of questioning or complaint, for we judge these matters only by the progress we all make towards victory, and not by any assessment of the contributions any of us may make; but it does mean that a financial situation of some difficulty is being created for us in the future of which we should be aware. Our exports, as I have said, cannot buy us more than a trifle towards these external costs. The rest we have to borrow from those countries who are making common cause with us and whom we are defending, and we are incurring a considerable obligation about repayment. The sterling balances thus created in favour of India, which represent, of course, sterling obligations for us, have been used by India to pay off what she has borrowed from us in the old days, but when all this has been discharged she will still have much in hand. Altogether, to meet the local costs of the war all the way from Tunisia to Burma, we are borrowing between £400,000,000 and £500,000,000 a year, and we are borrowing it from the countries concerned. No one but ourselves plays any part in shouldering this debt. There remain our net external costs for what we purchase in South America and the neutral countries and for the chartering of ships from the European Allies. This brought the total of what the White Paper calls our overseas disinvestment in 1942 to £630,000,000. I do not expect that the total during the coming year will be materially different.

The Committee will understand why, in the face of such a situation, I have so often emphasised the problem of our post-war balance of payments. The internal costs of the war in every country, even when they are covered by borrowings, have to be met in the main out of current effort and output. External obligations are altogether another matter. They will bring problems far more difficult to resolve, and we shall have to face a grave deterioration in our external wealth. But we are not dismayed, and it is not the first time that we have had to face and have successfully overcome such difficulties. Robert Hamilton, writing in 1814 in "An Enquiry concerning the National Debt," described how everything we held dear was then at stake and he expressed the determination of the nation at that hour of peril and crisis when he said: No exertion can be too great, no pressure of increasing burthens is to be regarded, no dread of exhausting our resources entertained. Old, but true again to-day.

Britain is proud and privileged once more to throw everything she can into the common effort until the surrender of the enemy is final and complete.