HC Deb 10 May 1944 vol 399 cc1923-69
Lieut.-Colonel Elliot (Glasgow, Kelvingrove)

I beg to move, That this House considers that the Statement of Principles contained in Cmd. 6519 provides a suitable foundation for further international consultation with a view to improved monetary co-operation after the war.

Mr. Loftus (Lowestoft)

On a point of Order. May I ask you, Mr. Speaker, whether it is your intention to call the Amendment standing in my name and those of other hon. Members: In line 3, at end, add: 'Provided that under any final scheme or proposals, His Majesty's Government retain adequate powers to enable them to maintain the policy of cheap money and control of the internal price level.'

Mr. Speaker

Certainly not at the present moment. If hon. Members wished for a Division it might be called at the end.

Lieut.-Colonel Elliot

The Motion which I and certain other hon. Members have placed on the Order Paper is intended to raise in a form which I hope will enable the widest Debate to take place the subject of monetary policy, and, in particular, the joint statement from the experts in Command Paper 6519. We are, obviously, at the opening of very important discussions which will affect and influence our affairs in the years ahead, and it is vital that the House of Commons should have the earliest possible opportunity of taking part in those discussions. Indeed, the House has consistently pressed the Government to allot a day for this purpose, and Members have shown by the range and variety of the Motions they have tabled on this subject how very keen is their interest in the matter. I think it will also be agreed that it is a good thing that the discussions should take place in the first instance on a private Member's Motion, though we take it that the Chancellor of the Exchequer will also take part in to-day's Debate—at least we very much hope so. The signatories to the Motion cover a fairly wide range of opinion in this House.

It has been said by one hon. Member that the Motion limits the Debate to some extent, but I think not, except for the purpose of concentrating arguments on one single aspect of affairs, and I would like to emphasise that fact. The discussion on this aspect does not mean and cannot mean that we exclude the others. We are, in fact, discussing the mechanism for foreign trade, but I would say most strongly that in my view commercial policy is not involved in that discussion of mechanism, nor is the House at all bound by the conclusions it comes to on the mechanism of foreign trade as to the way in which foreign trade and commercial policy should subsequently be handled. We are discussing, if I may use a metaphor, the unifying of the gauges of the international railway lines. The question of the control of the trains, the management of signal boxes and shunting yards, and still more the direction of the traffic flow, will come at its appropriate place, and therefore I hope we shall not be regarded as attempting to commit the House to anything in any way modifying the very clear and explicit declarations which have been made by the Prime Minister, and pressed upon the Prime Minister by the House, as to the continuation of many special trade arrangements which this country has entered into with other Empire countries and, indeed, with countries outside the Empire altogether.

Taking it as a discussion upon mechanism, I should like to draw attention to the fact that the United States Department of Commerce, in its recent statement, which I commend to hon. Members, summed up the matter very clearly after a fairly long and interesting discussion of these matters in the following words: By way of final conclusion, based on the experiences of the entire inter-war period and strongly reinforced by events towards the end of the period, it is clear that whatever may be the other requirements stability in international economic relations generally and in foreign exchange rates in particular cannot be achieved solely or chiefly through technical financial arrangements but must be firmly based on vigorous and regularly functioning domestic economy. That is a point I should like to consider again, in view of the contention put forward in some quarters that we are attempting to commit the House upon general trade policy, a matter which is certainly far from my mind, and, I am sure, far from the minds of the hon. Members who are associated with me in this Motion. If we are to discuss monetary policy I contend, in the first place, that we are greatly indebted to the experts who have examined this subject over a period of many months and who have brought before us this joint statement, the White Paper. I think it is for the House of Commons now to give a directive. Otherwise, our servants will not know our minds, and in such cases they may easily do things of which we should greatly disapprove.

Therefore, I say that we have put down a Motion which brings the matter before the House in a form in which the House may come to a conclusion, and it is the only reason for which I would deprecate the forms of some of the other Motions—namely, that the House welcomes the publication of this Paper. We go further than that. We say that the House of Commons should not act as a reviewing agency for the White Papers put out by the Government, but that it is for the House of Commons to pronounce upon them. I think the House should say, "Do we consider this a basis for further discussion or not?" There is only one thing we can say about a Paper of this kind and that is, Does it provide a basis for discussion or does it not? We all know that in negotiations of any kind, whether national negotiations or trade union negotiations or negotiations in private business, to say that a Paper does not provide a basis of discussion is a very serious step. It means that the whole of the work has to be torn up and is rejected. I ask the House to consider very seriously before saying that a Paper of this kind does not provide a basis for further discussion. Our Motion states that the Paper provides a suitable basis for discussion, and on that I think we should certainly ask, and I hope can receive, the assent of the House of Commons as a whole.

What is the White Paper? What are the proposals which are laid before us? It is a very intricate Paper and it discusses both technical and general questions. I hope that I may be excused from entering too deeply into the finer technical aspects of the proposals, because, frankly, there are many other Members who speak with far greater authority on that than I can myself, and, furthermore, I think at this moment we should not go too deeply into those finer technical aspects but draw general conclusions from the information laid before us in this Paper which the House is being asked to consider. I would say, in the first place, that this Paper consists _of two sets of proposals, short-term and long-term proposals. I want to stress that, because I think that it has been slightly overlooked in the general criticism which has fixed itself entirely upon the long-term plans which do not come into operation over a period of several years and indeed may well have to be modified before they come finally into operation.

If I may crystallise the matter in a sentence, inevitably weakening the accuracy of my description as I do so, I should say that the short-term proposals are to peg and restrict and the long-term proposals are to peg and derestrict. That is the essence of the two sets of proposals which the experts are submitting for the next step, namely, approval. The short-term proposals are contained in Clause X. They are headed "Transitional arrangements." I prefer the words "short-term," because I do not know of anything in the world that is not transitional, and I have no reason to suppose that the whole plan will not prove to be as transitional as the short-term plan. In the first place let me point out that the short-term plan involves only one thing —that the countries concerned state to each other in clear terms what they reckon the value of their currency to be and undertake to inform them if they change that value by 10 per cent. and to seek their consent if they change it by more than 10 per cent.; but during the whole of this shoat-term period all the restrictions which are in force just now, and these restrictions modified and adapted to suit changing circumstances, run on without any suggestion that anything contrary to either the letter or the spirit of the monetary agreement is being suggested. I think that is a point to which we should give very close attention.

The matters which have to be settled before we pass on to the long-term proposals are formidable indeed. At the top of page 10 the House will see that the Fund is not intended to provide facilities for relief or reconstruction or to deal with international indebtedness arising out of the war, and that it shall not become fully operative until it is satisfied as to the arrangements at its disposal to facilitate the settlement of the balance of payments differences during the early postwar transition period by means which will not unduly encumber its facilities with the fund. That is expanded in the foreword by the United Kingdom experts who further say that the drafting of this Clause, as experts on both sides understand it, allows during the transition period the maintenance and adaptation by the members of the sterling area of the arrangements now in force between them, and goes on to say: nor is the scheme intended, when the obligation of free convertibility has been accepted, to interfere with the traditional ties and other arrangements between the members of the sterling area and London. It is worth while bringing those words to the notice of the House and asking for their comment upon them when we are considering the attitude which we are to take to the proposals to-day, especially the definite undertaking that a member need not assume full obligations of membership until satisfactory arrangements are at its disposal to facilitate the settlement of its balance of payments arising out of the war. Any of us who have been contemplating the difficulties of this country, realise that if to-day we could say that we have made satisfactory arrangements to settle payment difficulties after the war, that would be a very considerable landmark in our financial and economic history. When we have to add to that, that we also have to be satisfied that we have made new arrangements for relief and reconstruction, it will be seen that the word "transitional" means looking at the thing, as one might say, from a sub specie aeternitatis point of view. It is true that the long-term proposals involve a certain goal towards which we are supposed to be moving in Great Britain, and Britain being Britain and our commercial history being what it is, when we undertake an obligation, we undertake it with the object of moving in good faith towards that end and not using the unavoidable difficulties merely as ways by which we can evade the moral obligation altogether. Therefore, I think, although we might thoroughly recommend the Motion to the House on the short-term proposals, in view of the fact that we shall not arrive at the long-term proposals for a long time, I do not think that would be fair particularly in view of comments such as have been made by Mr. Balogh in his letter in "The Times" of this morning. He indicates that in his view the House of Commons would be committing itself in some way to non-discriminatory treatment of its overseas trade if it passed this Motion. Therefore, I say, that both longterm and short-term proposals are of very great interest and importance, and require very careful consideration.

We are speaking here of the foundation of further discussions. I think it might well be asked in further discussion whether three years, which is the term suggested for inquiries as to the termination of all restrictions, would commit this country to the suggestion that at the end of three years it was reasonable to bring these restrictions to an end everywhere. I should certainly ask that our experts in their renewed discussions should consider whether three years was not altogether too short a term to be inserted into a Paper of this kind, and whether some longer term should be considered. The main proposal is however for the establishment of an International Monetary Fund. Since these things are so extremely bedevilled with technicalities as to be scarcely intelligible to the ordinary man, I want to use a metaphor in dealing with them. The metaphor I choose is that the nations propose to open a currency shop, and stock its shelves with their currencies. They will have their goods, their currencies labelled in clear figures and they will undertake not to change the figures at all on those labels without letting other people know and not to change them extremely without asking the consent of the other people in the shop.. If they do not succeed in getting the agreement of the other members of the shop to an alteration of the figures, they can then walk out of the shop, taking their currencies with them.

Mr. Shinwell (Seaham)

Will my right hon. and gallant Friend clarify the point that there is one particular country which has not got all its currency in the shop?

Lieut.-Colonel Elliot

No country need put all its currency into the shop. I merely say that they will open the shop and stock it with their currencies up to a certain amount. All metaphors, to some extent, are misleading and all analogies are inaccurate, but I am trying to put it in terms which appear to me to be intelligible to the ordinary man. I admit there are inaccuracies, but I very much hope that we shall get away from the pure financial jargon of this business, which it is very difficult for the ordinary man to understand, and carries with it so many extremely theological implications. The word "gold," in the minds of many men creates either the vision of a personal deity, or of a personal devil. I think it would be as well to avoid both of these theological conceptions when we are asking whether the labels should or should not be marked in clear figures, or in cabalistic signs unintelligible to most. When we have to ask a shop assistant the price of goods and the shop assistant interprets that price for us, we have an uneasy feeling that, if we could have read the price it would have been something different from what the shop assistant said it was. The same object of clarity is desirable in currency. Currency should not be subject to repeated and unpredictable changes. If these objects can be secured without other still greater disadvantages then, obviously, they are objects of great advantage to this country. It is true that for a great nation like Britain, it may be said that the safeguards are illusory.

Mr. Hammersley (Willesden, East)

Before the right hon. and gallant Gentleman leaves his interesting metaphor about the shop may I ask whether the important thing in this shop is that there should be available for sale those various currencies at those marked prices, which are needed? Would he say whether the currency which is chiefly required—dollars—will be in adequate supply?

Lieut.-Colonel Elliot

That, I think, is one of the great objects of this Paper. There is a very strong clause, Clause VI, which is intended, at any rate, to deal with that particular point. If certain currencies are not available—it may be taken, very largely, to refer to the currency of the United States—then the most drastic terms come into play. They are so drastic that it might be our suggestion to our experts that they could not be put into force in any circumstances. They amount to a blockade of a country which is unwilling to allow its currency to be available either through lending or taking goods in exchange. But I do not wish to pursue that point too far. I can only say the currency should be available in the shop, and that if it is not available, then steps of one kind or another must be taken either to provide that currency or to terminate the whole system as Clause VI suggests. No doubt the existence of such a provision may lead to the country in question taking steps before that situation arises and realising that something has to be done about it. I am sticking at the moment to the wide general aspect of the very far-rending proposals brought before us. Obviously, to a great trading nation such as ours the existence of a clear and well-defined ratio, not merely between us and the United States, but between us and all the countries of Europe is highly desirable. There are many countries whose currencies have been smashed to pieces owing to the war, and which will have to be established again. We shall have to re-establish the many trade relations which we had before the war, and I stress the point that if stable arrangements could be come to, they would be of advantage to this country.

We must examine the advantage as well as the disadvantage. I think the man in the street would say one thing: "Does this tie us up to gold?" I think that is the first fear that would strike him. He has an uneasy feeling that he was tied up to gold years ago and that it was not very satisfactory and had to be liquidated at very short notice. Those who advance that view say "Yes. The pound has been given a fixed ratio to the dollar, and the dollar has a fixed ratio to gold. Things equal to the same thing are equal to one another." That, I think, would be rather a short-sighted view. First of all, we can unilaterally devalue up to 10 per cent. at any time, and thereafter, we can devaluate to any extent by consent. We have to give two days' notice for an extra 10 per cent., but the application for devaluation might be granted for a figure far above that after approval by the fund. [An HON. MEMBER: "It might even be recommended."] Yes, that is so, but I am taking it at its worst. How in fact are we tied up to gold by this? I say that a great deal depends on who are the managers of the Fund and on what basis they are elected. It is also true to say that the White Paper does not deal with that point. I certainly think it is one of the reasons why we should continue further examination of the proposals and insist on fair representation. The fund is to be governed by a board on which each member shall be represented and by an Executive Committee—whose voting power shall be closely related to their quotas or shares. The membership and the voting power of this Committee would obviously be of the very highest importance to this country and it should be laid down that the Empire should have parity in voting power with other great commercial countries such as the United States.

Mr. Shinwell

This is a point of great importance. In Clause VII, relating to management, with which my right hon. and gallant Friend is now dealing, the point is made, as far as it can be made, quite clear: The distribution of voting power on the Board of Directors and the Executive Committee shall be closely related to the quotas.

Lieut.-Colonel Elliot

I should say on that, that in the first place the voting power of the British Commonwealth should be equal to the voting power of the United States whatever the quota. I also have looked at that very carefully. I took it for granted that those words "closely related" were put in for a specific object. The voting power should not be in an arithmetical relationship to the quota.

Mr. Woodburn (Clackmannan and Stirling, Eastern)

Would my right hon. and gallant Friend agree, in regard to the subject he is discussing now—the question of gold—that there is a different voting provision in the next paragraph and in Clause IV, paragraph 5?

Lieut.-Colonel Elliot

I beg the House to realise that I am anxious not to follow up so closely on the smaller points. I am really, at the moment, dealing with the bigger questions, as far as I can see them. This question of how far we tie ourselves to gold, is one of the bigger questions. The question of the management, the directorship, of this Fund is another big question. In short, I do not think we are tied to gold by this if the management is properly run. There are two ways in which to ensure that the management is properly run—we must have adequate voting power and we must trust to a reasonable selection to men of good will on the Committee.

But this is a question of international co-operation. That is one of the catch phrases of the present time, but if we cannot get it on a subject such as this, it is not merely a question of the Gold Standard, or international trade on which we shall collapse; it is a question of a general collapse that will creep, like paralysis, all over the world. Either we can co-operate internationally or we go down. If we can co-operate, then this is an avenue along which we can go and in which men of good will and reasonableness can work these complicated proposals. The linking of gold and the management of the Fund certainly do not exhaust the questions which I should like to ask, and which I should like our experts to continue to inquire into, when they are negotiating. There is the question of whether the Fund is large enough. The sums suggested, in comparison with the huge volumes of international trade, or even the huge tides that run in international trade are relatively small. There may be an outflow by us under it of £80,000,000 in one year, but our Exchange Equalisation Fund is many times that. It may well be that the Fund is not large enough. That is an argument which could be advanced and thrashed out in the discussions which our experts have to have. Personally, I think the sums are substantial and ought to give a substantial easement to many of the smaller countries during the post-war period.

There is also the point—I hope I am not worrying the House—of whether the scheme is strong enough to ride out a tornado, to withstand what used to be called an economic blizzard. I had some experience of that. I happened to be sitting in the room of the Financial Secretary to the Treasury, as Financial Secretary, when the great economic blizzard of 1931 struck this country. I still remember that last week before we went off the Gold Standard. Before that, we had raised, first, £50,000,000 and then £80,000,000. The first £50,000,000 was swept away in a fortnight, and the next £80,000,000 soon went out with the tide that was running stronger and stronger against us. We thought that we could hold the rate of exchange which had been given, but during the last week, on the Wednesday, the run was £5,000,000; on the Thursday it was £5,000,000; on the Friday it was £18,000,000 and on the Saturday, which was a half-day, the run, up to the close of business, was £10,000,000. I remember sitting watching those figures in the Treasury room. We were down to our last few hundreds of thousands of pounds when I heard the clock strike on the Saturday for the closure of business and knew that we had the week-end in which to make the arrangements which finally took us off the Gold Standard. I had the task of piloting through the House of Commons, on the Monday, the Bill which took us off the Gold Standard. All that will be fresh in the minds of my right hon. and hon. Friends here, who, will remember that there was considerable confusion of opinion in. the House at that time, and that, even at the end, 112 Members were found to vote for remaining on the Gold Standard, although we had no gold.

Mr. Austin Hopkinson (Mossley)

The right hon. and gallant Gentleman is using expressions which he ought to define more clearly. He has spoken of an "economic blizzard" and the process of going off the Gold Standard. May I submit to him that what is called an "economic blizzard," is simply the definite and eventual result of living beyond one's income, and that going off the Gold Standard is acknowledging that one is a bankrupt?

Lieut.-Colonel Elliot

I think there is a Jewish proverb which says that the Talmud contains everything in the world but took 600 years to write. I do not wish to extend my remarks to anything like that extent of time. One of the reasons for putting down this Motion was to focus discussion. I am trying to deal with the argument of whether it is a good thing to unify the gauges of international railways, and to examine problems which I came across in a practical way, as one engaged in that work during a testing time. As to what the cause of an economic blizzard is, I will leave that to those skilled in weather prophecy, a subject which sometimes causes a fall in one's reputation. As I was saying, there was a storm: it blew with fearful violence and swept away the great resources which we had raised. It involved us in a great loss of prestige—let us recognise that frankly. We may not have noticed it in this country, but there were many small Powers and people abroad, who had lodged money with this country. I remember suffering a little in my conscience when I learned that the Sandwich Isles had deposited money with us. They trusted Britain and London, and did not withdraw their money. Then we had to tell them that their deposit was worth only two-thirds of what it had been worth when they lodged the money.

Sir George Schuster (Walsall)

I cannot sit quiet and hear the right hon. and gallant Gentleman tell the world that our going off the Gold Standard resulted in a loss of prestige of sterling. I was in India at the time and my experience was that it resulted in a gaining of prestige by sterling, and that every depositor of sterling credit found that he could buy just as much goods as before. He might not have got as much gold but he did not want gold.

Lieut.-Colonel Elliot

I do not want to enter into a controversy with the hon. Member, but I did not say that it had led to a loss of prestige of sterling. I said that it led to a loss of the prestige of this country. The fact is that sort of thing is something which we want to avoid doing again. I, also, well remember the experience in India. I was sitting in the Treasury rooms watching the run from this country to Bombay. The Parsees were running on us like tigers, tearing the gold from us. The moment there was the change, they swung round like an indicator, saying, "Here is money for jam." They all began to rush back again, buying pounds sterling as fast as they had been selling them. They must have cleaned up millions. I do not want to run the finances of this country for the purpose of putting vast fortunes into the pockets of Parsee speculators.

However, I was asking the Chancellor whether he was sure that the proposed arrangements can stand a sudden and violent assault of that kind. It is true that gradual devaluation would avoid this, and that arrangements could be made which would avoid a sudden storm. These arrangements of mankind are supposed to be conducted with reason, but very frequently they are conducted with no reason. My experience of devaluation is that it is not a thing which is undertaken quietly, peacefully, and after a great deal of thought. A sudden storm comes upon the country. It may he the result of past happenings, but that does not alter the fact. The storm comes, and the country finds itself knocked off its standards. Such a country might desire to retain membership of the group which has been suggested; it is a pity it should be allowed no latitude, except that of being able to withdraw altogether from the scheme. An arrangement might be come to whereby a country might well remain associated although it could not have the facilities of the scheme until it came back into full membership. It might be regarded as having suffered from force majeure and exonerated under the provision that a Government cannot get rid of the responsibility of the rulers to see that their public comes to no harm. If the proposals, which I have mentioned as briefly as I can, do not tie us to gold, or ask us to undertake tasks beyond our strength, and give us power to supervise them in a way in which we can have confidence, then I think we may say that they will do as a basis for further discussion. If we can receive an assurance from the Chancellor on these points, and from right hon. and hon. Members generally, then I think the House may be satisfied.

There is a further point. I spoke at the beginning of my remarks, about the fear that this was, in some way, fettering our discretion on commercial policy and it is to this point finally that I want to address myself. The Amendment which has been put down to the Motion shows the uneasiness of the House upon that point, and I think we should again wish to be assured by Members generally and by the Chancellor, in particular, that such a suspicion is a misreading of the proposals which are here laid before us. I should have thought that nothing could interfere with the very explicit assurance given by the Prime Minister as to Empire Preference, that the right of choice which this country has exercised, is in on way fettered by any of the discussions now taking place and that it is intended to maintain that stoutly as one of the points of British Commonwealth policy.

Mr. Graham White (Birkenhead, East)

Right of decision?

Lieut.-Colonel Elliot

I think the right of choice is inherent in any scheme, say, for bulk purchase or in an Investment Board, which is a very frequent proposal. I would say that this right of choice is not interfered with and, to use again the metaphor of the railways, we are laying down a firm permanent way but we do not say that signal-boxes or shunting guards yards are to be left out of the arrangement.

Mr. Shinwell

There is going to be a collision.

Lieut.-Colonel Elliot

The surest way to produce a collision is to say that any train can run freely in any direction at any time over any permanent way, and make no arrangements for signal boxes and shunting yards whereby the traffic can be properly directed. I am sure the producers of this document do not intend that, if they are sensible men. If they are not sensible men, then is the time for the ordinary man in the street, the man in the House, the man on the benches, to say "That is my reading of it." We are discussing the yardstick, the just balance. We desire the right of choice to be exercised, but not by the yardstick. We do not intend that unmarked weights of different gravities should be placed in the pan of the scales as a way for regulating our trade. If we want to regulate our trade, we must regulate it frankly and fairly so that everyone can see how it is done.

I have had much to do with the administration of commercial agreements and agricultural agreements and have many times had to interpret the extremely complicated formula, home farming first, Dominion farming second, world farming third. If it was suggested here that I was advocating some scheme by means of which all that would be swept away into limbo, I should not support that at all. But, as one who had had to negotiate these things, I say to the House that it is essential to remember that there comes a period at which negotiation has to be concluded, agreements have to be made, trade has got to go on. It is useless to say we have nothing to do with Argentine beef or Australian mutton. There comes a time when these things have to be allowed for in trade, but the time for discussing these things is not now. What we are discussing now is the yardstick, the arrangements by which, let us hope, when we come to an agreement about trade, these goods and services can flow freely along well understood and properly recognised channels. if the promoters of such a scheme regarded it as a step back towards the 19th century, the Gold-standard-Freetrade-world, I should not recommend it and the House would not support it. No House that could be elected would support it. If it is a step forward towards the 20th century, I think these are steps that we ought to take, and can take. In- ternational co-operation is an ideal which everyone supports in theory but very few people will do anything for in practice.

Mr. Stokes (Ipswich)

Will the right hon. and gallant Gentleman explain what he means by the 19th and 20th centuries?

Lieut.-Colonel Elliot

I thought I had given a clear definition of it. I have said that I regard the 19th century as a Free Trade-Gold Standard century, and I regard this as a step away from that conception of things. This is neither Free Trade nor unfree trade. This is the mechanism of monetary exchange. The question of Free Trade and the right of choice must be discussed at a later date. I am very anxious that we should not, even by implication, find ourselves led away into commitments upon that. I am emphasing the fact that we are not, at the moment, discussing these matters, so that we shall not afterwards be taken to be committed to them. I am sure that is a sound and logical way of approaching the matter.

Mr. MacLaren (Burslem)

If we are not to discuss whether there is to be a free economy or a controlled economy, the right hon. and gallant Gentleman should not be so insistent on reminding us that the Prime Minister has forestalled us from discussing any alternative.

Lieut.-Colonel Elliot

I was merely giving that as one example of reservation. That is a point reserved. We are accustomed to negotiations to say that a point is reserved. I regard that point as reserved. I should not go further. I am sure the hon. Member for Wolverhampton East (Mr. Mander) would not have gone along that line if he thought the point had been settled. It is not settled, but I am claiming that it is reserved. I hope very much that we shall be able to allow the monetary discussions to go forward. I can imagine nothing more curmudgeonly or more likely to injure the interests of the country, than that we should tear up the White Paper and say it does not afford a basis for discussion. In the future we shall have many great negotiations to carry on. It would be a poor start if we said that this first technical examination is not worth carrying any further. I ask the House to declare that it is now a moment at which we can usefully carry forward the discus- sion, and in that sense I move my Motion.

Sir John Wardlaw-Milne (Kidderminster)

My right hon. and gallant Friend in an extremely interesting and able speech has made it quite clear that the object of the Motion is to declare that the House is prepared to consider this White Paper as a suitable foundation for further discussion. I cannot think that anyone can suggest that is not a Motion couched in wide terms. There is no doubt that, just as after the war, there will have to be an international organisation of some kind to ensure peace, so there will require to be an international organisation for the purpose of promoting and encouraging trade between the nations. We have a considerable advantage in the position we are in now because some of the economic myths of the nineteenth century are now rather discredited.

Mr. MacLaren

I wish this nineteenth century business could be stopped. If we are going to refer to dates, the eighteenth century was much more Protectionist.

Sir J. Wardlaw-Milne

The hon. Member suffers from one disadvantage, that he cannot bear to wait till the end of a sentence. I was not referring to Protection at all. I was going to explain that the point that I was referring to, the myth, was the exploded idea that we benefited by what was called, in pre-war days, afavourable balance of trade; that you benefited if you traded at the expense of other nations. We realise to-day that we can only prosper if other nations are prosperous and, therefore, the more imports we can have, with due regard to our home production, the better will be our standard of life, and that our exports are merely useful for the purposes of securing imports. The contrary view is the myth to which I referred. We have the great advantage that we, and other nations, start consideration of our economic future by having dropped that. It seems clear to me that a financial and currency system promoting the greatest possible exchange of goods is necessary, and it is from that point of view that I, at any rate, and I am sure others also, will have examined the proposals of the White Paper. I am afraid it is necessary, and, I think for the very reasons my right hon. and gallant Friend gave it is desirable, that the House should be quite definite in criticism of the proposals where we feel that criticism is necessary. It would not be of the slightest use to say this is a very good foundation for further discussion without, to some extent, dealing with the points where we believe our experts will have to pursue matters further with their opposite numbers among other nations. At the same time, while I may be definitely critical of some of these proposals, I recognise that it is a definite step forward that we have been able to get agreement to this extent, and I am all in favour of the House making it plain that we want these discussions to go on until a satisfactory system can be achieved.

Any system proposed must involve international credits, but the flow of trade after the war is bound to be extremely uneven in view of the differing economic and geographical position of the different nations. The main point from which I have examined the scheme is, Does it ensure that countries that fall out of equilibrium can restore their position? I think that is the first important point to discuss because, if the scheme will not work in that regard, it is bound to fail. The Fund starts with a total fund of eight billion dollars. It occurs to me, as it occurred to my right hon. and gallant Friend, that it is not a very large sum, or even the ten billion dollars subsequently envisaged, with which to facilitate the international trade of the world. I think it will require to he a larger figure very shortly after its inauguration. There is another point that I am not clear about and I should like to know what the view of the Chancellor of the Exchequer is about it. He may have read it quite differently from the way I did. I am not quite clear whether these different currencies are to be deposited in currency in the central Fund or to be held in the central banks of the different nations. Some people have told me it is clear to them but it is not so plain to me. I hope the point may be cleared up because, even if the Fund is to operate in existing currencies held by it, the total amount required will entirely depend on the extent of 'bilateral equilibrium between any two nations, and without that equilibrium, of course, the scheme will fail. It is suggested that the United States will provide 25 per cent. of their quota in gold and 75 per cent. in dollars. I noticed in a Press report that Mr. Morgenthau suggested that the United States will supply 2,250,000,000 dollars, and he suggests that this country should provide 1,250,000,000 dollars.

Let me come to a point which was raised in an interruption of my right hon. and gallant Friend's speech. There is a reference on page 6 of the White Paper, para. II, Sub-section 3, from which it appears that the contribution of any country is not limited to 25 per cent. in gold. I am a little worried whether, for example, the United States could not deposit the whole of their 100 per cent. in, that metal. I see nothing in the White Paper to prevent their doing so. That is a point which has to be cleared up. It seems to me that they have the right to deposit the whole 100 per cent. in that way if they choose. On the face of the White Paper gold is to play a very restricted part because while that metal may be used to redeem a member's currency, no nation is bound so to redeem it. Again, under the terms of the White Paper a member nation is not bound to subscribe more than 10 per cent. of its quota in gold. I do not know that that 10 per cent. of our gold holding will worry us very much for we have no gold to spare. I am very uncertain, however, about the suggestion of any country replacing its deposits of national currency, especially if, under the Clause which I have referred to, the United States can provide gold instead of currencies to any extent she may desire and when her quota is exceeded she pays 50 per cent. further in gold. In the White Paper it is stated that any country whose quota is exceeded can redeem its currency to the extent of 5o per cent. in gold. That, to my mind, brings us very nearly to the position of being tied up to gold. I am bound to say that I think this provision will have to be considered more carefully.

The position as I see it is this. After the war the currencies of several countries are bound to be over-abundant in the Fund. Only one, the United States currency, is likely to be scarce. I do not think it is any use our going on with this scheme without recognising that fundamental point, that the one scarce currency will be that of the United States. In all likelihood, so far as we can see events after the war, every other currency in the Fund will be over-abundant. Therefore, what is likely to happen? At a very early date the currency rate for the United States will be changed by 10 per cent. Events will force that. Then will come events which will force a further 10 per cent. by permission, and only if other nations can sell freely to the United States can disequilibrium be corrected. That brings us to an important point and we must look at it very carefully. No one can say what will happen after the war, but at the same time we see pretty clearly that there is bound to be a scarcity in any Fund of this kind of United States currency, and it is difficult to see how it can be corrected except in one of these two ways.

Mr. Spearman (Scarborough and Whitby)

. It is very likely that there will be a shortage of United States currency, but it is by no means certain. Their costs may rise very much more than ours, and there are more than several thousand million dollars in America of foreign money which may be taken out. I do not think we are right to assume it will necessarily be so.

Sir J. Wardlaw-Milne

My hon. Friend will realise that I agree that nobody can tell what may happen. God forbid that I should attempt to lay down the law or prophesy the future, but so far as we can visualise trade after the war and the conditions of the different countries, we are bound to look at the probability that United States currency in any fund of this kind is likely to be short and the currency of other countries over-abundant. The real difficulty is that the only way in which the United States can restore harmony in the Fund is either by providing dollars or by providing gold if my interpretation of Paragraph II (3) is correct. There is no other way of doing it. Even if she wishes to help in every way there is a difficulty. Paragraph III (7, b), quoting it roughly, states that if a member's holding exceeds its quota, the Fund, in selling exchange to that country, shall require one-half of the net sales of such exchanges to be paid for in gold. It says, "shall require"; it is mandatory. That seems to me to be one of the difficulties which will prevent the United States, even if she wishes, restoring harmony under this plan in the currencies of the Fund. Much, of course, will depend on the action of the people of the United States in considering these matters politically and as a whole. I want to emphasise that, so far as I can see it, the whole success of this scheme depends upon the Fund holding the scarce currencies. It is no use the Fund always having ample supplies of currencies which are bound to be over-abundant. It is the holding of scarce currencies which will enable the Fund to work. Therefore, with ail respect to my hon. Friend's view, we must look at what will be the situation in the United States.

That brings me to this fundamental point in connection with the whole scheme. Does the scheme enable one nation to discharge its debt to another by means of a claim upon its own money or on its own exports if we like that description better? Does the Fund enable that to be done? If it does, it is the one thing we all want. If it does not, how can it be corrected and in what way can the scheme be altered to enable it to do so? There are certain other matters which I think are worthy of notice. It is clearly stated that the Fund is not to be used to meet large exports of capital but is to provide facilities for the normal flow of trade. That is a very important provision for this country and for all countries which have suffered impoverishment by enemy action or by special war efforts. It is very difficult to see how this can be carried out unless the United States will permit much freer imports than in prewar days, or alternatively is allowed to invest in industrial holdings here, which is the very thing the plan wants to avoid. If it did result, as it well might do, in forcing the United States to invest in capital enterprises here, it might lead to a dangerous political situation and disagreement between ourselves and the United States, which is the last thing we want to bring about. It would be a very different result from that for which the United Nations are fighting.

The difficulties of these proposals are immense, but I do not want to appear to emphasise too far criticism of them, because I welcome the fact that a valuable effort has been made to obtain agreement. It should be the basis of further effort. The only alternative to an agreed multilateral system would be for this country, or any other, to import goods only from the countries that would take its exports. That would deny expansion, destroy enterprise and bring about distress and unemployment at once. Nobody is in favour of a system of that kind. Another point that I want to put to the House why this scheme should be welcomed as a basis for further discussion is this. To end the war without an instrument which will prevent the disruption of foreign exchanges might well mean monetary collapse and would court world disaster.

I cannot too strongly emphasise the danger of ending the war without some scheme by which an agreed arrangement for the exchange of trade between the nations is brought about. If those nations also which are now under the heel of Germany have it made clear to them that at the end of the war they will not be in danger of a collapse of their currencies such as happened after 1918 it might strengthen them in their resistance to Germany and help bring about the surrender of the enemy. If we eventually secure an agreed scheme as a result of further discussions it must I think only be the forerunner of something else to follow. There would have to be a scheme for stability of prices, for the removal of all unnecessary trade barriers and for the rebuilding of the devastated areas and their return to prosperity.

In the Budget Debates I ventured to say that our greatest contribution would be to put our own house in order. Nothing in this scheme or in the proposals which may come forward are intended to prevent, and certainly must not in any way prevent, our full control of our internal monetary policy. We must have a long-term period after the war of low interest rates and a consistent policy of consumption expansion and the promotion of individual enterprise and initiative. The securing of full employment in prosperous industry is alone the basis for our future economic position and for our ability to help others. In the past we have been a great maritime Power. In the future we must be a great Power based on sea and air. We are in Europe but we are not of Europe. We want to cooperate with the Continent, help it, trade with it, rebuild it and restore it, but the foundation of our future strength, economically as well as politically, lies in unity within our own Empire and in close collaboration with the United States. I believe that with that close collaboration and by promoting an economic and financial policy internally so that we ourselves shall be prosperous, while we do our best to promote and extend trade between nations to bring prosperity to them, we can lead the world back to prosperity and do much to ensure it.

Colonel Sir A. Lambert Ward (Kingston-upon-Hull, North-West)

The House has listened with great interest to two most informative speeches, the one from the right hon. and gallant Gentleman the Member for Kelvingrove (Lieut.-Colonel Elliot), and the other from the hon. Gentleman the Member for Kidderminster (Sir J. Wardlaw-Milne). I am inclined to think that, on the whole, the mild approval of the scheme which they have voiced will be re-echoed both in the House and in the country. My attitude is somewhat the same—very mild approval of the proposals in the White Paper. The first thing we have to do among ourselves is to decide whether we think that some form of international fund or clearing union will help us in the future. If we decide in the affirmative, the next thing we have to decide is whether the scheme adumbrated in the White Paper is the best in the circumstances. As the scheme is the result of the deliberations of no fewer than 31 nations, a great deal of give and take on all sides is necessary before an agreement can be come to. What is agitating my mind to some extent is the question whether we are giving a good deal more than we are taking in this scheme. Perhaps when we consider the decisions come to and the agreements arrived at as a result of the deliberations of 31 nations, it is rather astonishing that the proposals are as little disadvantageous to this country as, on the face of it, they appear to be, but it seems to me definitely that the Fund is, to a very great extent, anchored to gold. That being so, the currencies of the nations which comprise this scheme must also, to a very great extent, be anchored to gold.

The question at once arises in my mind, Is the scheme sufficiently elastic to offset deflationary, and also inflationary, tendencies, in the face of the world demand for commodities? If not, I am rather doubtful whether it is not condemned from the outset. At the same time one has to remember that one thing is quite certain. If we want America to play her part in furthering a scheme of international finance and co-operation, a certain amount of attachment to gold is almost inevitable. Without America, unless America is prepared to play her part, any scheme of this kind will be just as futile as was the League of Nations when America refused to take a hand in the game. If we want America to play her just part, we cannot avoid some attachment to gold. America having laboriously acquired practically the whole of the gold in the world, it is scarcely reasonable, unless she wishes to see this gold stock, so laboriously acquired, reduced to the value of scrap, for her not to co-operate. Unless America plays her part, the scheme is doomed to failure from its very inception.

We are inclined to look at this scheme as an end in itself, whereas it is nothing of the kind. It is only a means to an end, to enable world trade to be carried on in the difficult circumstances of the future. Reading American papers, one is forced to the conclusion that, although America appears to be very largely committed to this scheme, public opinion is far from unanimous with regard to it. On the other hand, if America wishes to export or to do any trade at all, that country must make either dollars or gold available to would-be purchasers. As far as I can see, there are only three ways by which that can be done. She can give the gold or the dollars to the purchasers who require them. Secondly, she can lend them. As my hon. Friend the Member for Kidderminster said just now, American loans or American money coming largely into the industries of this country might easily lead to a very serious situation. On the other hand, money can be lent on Government security without interfering in industrial concerns to any large extent. It is possible that gold or dollars can be lent by America to other countries in the world and thereby provide the necessary purchasing power for those countries.

The third way, which is by far the best of them all, is for America to consent to take payment for her exports either in goods manufactured in this or other countries, or in services. That is by far the most satisfactory method that can possibly be devised for providing purchasing power for American goods in other countries of the world. Candidly, unless America is prepared to do that, and if the disequilibrium in the balance of trade goes on, no clearing union or international fund would stand the strain for more than two or three years. In 1939 America was more or less in the position we were in all through the 19th century and the first decade of the 20th century. England was then the great creditor nation. By means of our exports of coal, cotton, iron, steel, etc., to say nothing of the invisible exports which we obtained through our shipping and banking facilities, gold was pouring into this country all through that time. By far the greater part of it did not come to this country in the form of gold. It came here in the form of food and raw materials. All the same, after that had been paid for, there was still a considerable favourable balance in this country which could be, and was, invested abroad.

There is a great difference between our policy then and American policy recently. We were prepared to lend that money to other countries, to enable them to develop themselves internally. Excepting for three or four years between 1921 and 1927, America was unwilling to do so. It is true that the greater part of the, money which we lent abroad all through the 19th century was lost. It has been estimated that something like £4,000,000,000 lent by this country to foreign countries was definitely lost. We lent money to South America, Brazil, Guatemala, Mexico and to the Confederate States of America. The whole of that was thrown away. A great deal of the money which we lent to the United States and other countries for the building of railways did not show very much return until a good many years afterwards. A great many people are of the opinion that because that money was lost it was a great mistake to have invested it abroad, and that it would have been much better to have invested it in this country I do not hold that opinion. I believe that had our financiers not been prepared to send the money abroad at the risk of losing it, the trade of the world would have come to an end in the middle of last century, England having collected the whole of the gold in the world and nobody having any money left with which to buy goods of English manufacture.

Mr. Mathers (Linlithgow)

No doubt the hon. and gallant Member means British.

Sir A. Lambert Ward

Yes, British manufacture, of course. It seems to me that the one good effect of the discussions which have been going on up to the present has been to show to people generally that it is not entirely the duty of a debtor nation to establish equilibrium in the balance of payments. After all, the creditor nation does owe something towards the establishment and maintenance of world trade. You cannot blame a debtor country altogether, but at the same time it requires a Fund something like that which has been adumbrated in this White Paper to smooth out inequalities which may take place from year to year. As I said before, a constant disequilibrium of the balance of trade cannot be dealt with by any Fund It will have to be dealt with by itnernal adjustments within the countries concerned.

One of the principal points in this White Paper is in sub-paragraph 2 of Paragraph 1, where it says that one of the objects of the Fund is to facilitate the expansion and balanced growth of international trade and to contribute in this way to the maintenance of a high level of employment and real income, which must be a primary objective of economic policy. I think we will all agree on that point. It is emphasised in the paragraph of the Atlantic Charter which advocates the removal of all trade barriers which are inconsistent with existing obligations. To carry that out something bold, some bold scheme, must be inaugurated here and now. The constructive suggestion which I have to put forward is that, for the first 12 months after the cessation of hostilities, a moratorium on all tariffs should be declared. It is possible that "moratorium" is not the exact word to use, but I have used it because possibly it will raise the least objection in the minds of my Protectionist friends. This suggestion is only for 12 months, during the time when we shall be suffering from the great disorganisation of world trade. Something must be done to facilitate the rehabilitation of international and world trade.

I know that objections will be raised. People will say that this proposal would lead to the flooding of certain markets with goods from abroad, but I do not believe there will be sufficient goods in any country for 12 months after the war to flood the market of any other country. The difficulty will be to find the goods, and to trade with them. It is only by removing tariff barriers that anything of the kind can possibly be carried out. An- other objection is that it might create a vested interest in Free Trade, but if it is understood that this policy is only to apply for 12 months and that, after that, a complete reconsideration of the situation will be undertaken, I do not think it is possible that any such vested interest can possibly be acquired. In my opinion it is only by a freer exchange of commodities that the object of this international Fund can possibly be implemented. The removal of tariff barriers would go a long way in the direction of promoting postwar reconstruction and rehabilitation.

Mr. Stokes (Ipswich)

The speech to which we have just listened and which I was very glad to hear, is surely a sign of the times. It seems yet another conversion to the policy of Free Trade, or, at least, freer trade.

Sir A. Lambert Ward


Mr. Stokes

My own fear is that the conversion may be a temporary one. Anyhow, my hon. and gallant Friend having tried it temporarily, may find it of permanent value and may support it in the future. I agree with the two interesting speeches with which the Debate was opened, and I agree particularly with those who spoke on the danger of returning to the Gold Standard. I do not pose, and never have posed, as a financial pundit. I view this problem simply from the commonsense point of view of the man in the street. I am bound to tell the House, if hon. Members do not know it already, that the man in the street is extremely puzzled by what is going on and is extremely suspicious. I might summarise it by saying that it strikes the ordinary person that this scheme is a cunning way of re-introducing into the European monetary system the hoards of gold at present locked up in America, and the ordinary man in the street does not like the idea at all.

If I know anything about him he is going to oppose it absolutely to the hilt, more especially when he realises that this gold does not belong to the American Government but to financiers who are entirely irresponsible so far as any Government control is concerned. As the hon. Member for Kidderminster (Sir J. Wardlaw-Milne) pointed out, the scheme is virtually a return to the Gold Standard, and while that may not be so clear, it means in my view and the view of others, a more rigid adherence to the Gold Standard than ever before, though it may not be so easy to perceive. If that proves to be so what does it mean? If we accept it we shall be in for a long period of deflation and unemployment, as happened last time. It will mean the end of cheap money. As I understand it it means a rising Bank Rate, and the depreciation of the value of the savings of the ordinary man-in-the-street. That is what will happen as a result of the scheme if it is adopted. I do not like it at all.

What interests me is the kind of reception it has had in the Press. So far as I have observed, the Press of the country by and large have considered on the whole that it is not a bad plan. I cannot myself agree with that view at all. Amongst what I term the monetary reformers of my acquaintance, with whom I discuss these things and try to understand what they tell me, though I confess that sometimes it is difficult, I find the scheme almost wholly rejected. As far as the Government are concerned I find it is all shrouded in mystery. I have been endeavouring to probe the Chancellor for about the last year to know what is going on. He either says that he does not know or that nothing is happening. I will not call it worse than a terminological inexactitude, but neither of these points of view of the Chancellor was strictly accurate. Quite obviously the production of this White Paper means that a large number of experts must have been employed with the knowledge of the Treasury since last year, but try as we may at Question Time and on other occasions, we cannot elicit any information from the Chancellor. I had a question down to-day as to who were the experts employed by the British Government in the formation of this plan. I am not allowed to know who they are. That makes me more suspicious. I am not interested in the somewhat idiotic answer, as it seemed to me, that their names cannot be given because they are employed by the Government. That seems to me in an important matter of this kind a reason why I should know who they are.

What I suspect is that the Treasury have decided that there must be a currency plan of some sort, and that a bad currency plan is better than no plan at all. If that is the case I am wondering who decided that. Is it the Chancellor, is it Lord Keynes, or the Minister of State who, so far as I have noted his observations in the Press, seems to bow the head on every possible occasion, and the knee on many occasions, to the desires and wishes of America? I think it is high time we made it quite clear to our American friends where we stand on this, as indeed on other issues. As a result of all this people are very suspicious of what is going on.

I would like to ask the Chancellor or whoever winds up the Debate one or two questions. As the hon. Member for Kidderminster said, it is not made plain in the White Paper who will manage the Fund. Quite obviously to anyone who has studied the White Paper America will have a predominant voice. What is not made plain—and I shall be told that it needs a certain proportion of votes to carry any policy through—is that all the small nations will hang on to America because they will need her help. In the event America will carry the day. I do net like that. It is said, "You can always withdraw from the Fund if you wish." I think Clause 8 provides for that. In practice will that be so? May be possibly for some of the smaller nations, but it will not be a very easy policy for any of the larger nations, whatever difficulty they may find themselves in. It seems to me that the scheme is designed, in fact, to prevent the devaluation of sterling, however much we may want to devalue it at any given time. When that matter arises on this irresponsible body who is to decide whether devalution is necessary or not? It will be a matter of opinion, and the experts will line themselves up. Those who do not want devaluation will satisfy themselves, and probably the majority, that even a 3o per cent. necessary devaluation is not needed at any one time. I am deeply suspicious of the whole thing.

I would sum up by saying that we shall be handing over the sovereign rights of our own people to the irresponsible control of a lot of unnamed international financiers. I do not want that. I want to know what the Prime Minister thinks about this. I wish he was here. I do not very often agree with him on many things, but I pay tribute to his recognition of the trap into which he himself was led in 1925. He returned to the Gold Standard then. He was man enough and wise enough to admit what a ghastly failure it had been, and how wrong all the experts were. In case the House forgets what he said, may I read what he said in this House on 21st April, 1932? There were his words: When I was moved by many arguments and forces in 1925 to return to the Gold Standard I was assured by the highest experts, and our experts are men of great ability and of indisputable integrity and sincerity…that we were anchoring ourselves to reality and stability; and I accepted their advice. I take for myself and my colleagues of other days whatever degree of blame and burden there may be for having accepted their advice. But what has happened? We have had no reality, no stability. The price of gold has risen since then by more than 70 per cent. That is as if a 12-inch foot rule had suddenly been stretched to 19 or 20 inches… Look at what this has meant to everybody who has been compelled to execute their contracts upon this irrationally enhanced scale. Look at the gross unfairness of such a distortion to all producers of new wealth, and to all that labour and science and enterprise can give us. Look at the enormously increased volume of commodities which have to be created in order to pay off the same mortgage debt or loan… Are we really going to accept the position that the whole future development of science, our organisation, our increasing co-operation, and the fruitful era of peace and good will among men and nations; are all these developments to be arbitrarily barred by the price of gold? [OFFICIAL REPORT, 21st April, 5932; col. 1662, Vol. 264.] I appeal to the right hon. Gentleman that he should be like all wise men, and should not commit the same mistake twice. If we accept this scheme involving, as it does, I think, a return to gold, then we shall be exactly where we were on the last occasion, and he and his Government will be held responsible for the evils which follow. I am somewhat puzzled that at this stage in the war there should be what I term this ugly rush back to discuss money. There has not been much discussion of money during the war except for ways and means and tricks for getting it out of the people's pockets. Since we went to war and before the problem has been how to link the skill, ability and labour we have in this country with the raw materials waiting to be fashioned into the things we need. We hear all too little of that at the present time as regards the post-war era, and now we are concentrating on what I call this ugly money business. I would have preferred to see a little more vision. I look forward to a far different scheme from what, it seems to me, amounts to a return to the old mechanical accountancy system. I ask, Are people going to put up with the old system? Must the production of our wealth be limited by the monetary rights of those who happen to be in possession of monetary tokens or credits at the present time? To take what used to be known as the favourable balance of trade, that is a contradiction that has to be explained to be exploded. I have never understood how any Government or any responsible industrialist or banker had the nerve to say that there was a favourable balance of trade when we sent more goods out of the country than we brought into it. It seems to me absolutely wrong. But that is what was aimed at.

As I have criticised this scheme I want to put forward an alternative suggestion. It seems to me, as the hon. Member for Kidderminster said, that the important thing about the exports of any country should be that those exports should be in exchange for imports, whether of goods or services. Then I would urge that in the post-war period we absolutely refuse all private dealing in foreign currencies, that currencies are not to be regarded as a commodity for buying and selling by the gamblers, quite irrespective of the trade done. Then, would it not be possible, in order to ensure that goods and services are taken in exchange for exports, so to arrange matters, as again I think the hon. Member for Kidderminster suggested, that an exporting country should not be paid in the currency of the exporting country but the currency of the importing country? If as a result there pile up tokens or rights to the goods and services of the importing country, and the exporter does not choose to exercise those rights, who is worse off? Nobody. The bankers and financiers would not have acquired the right to buy up the capital assets of the other nation, and that is all to the good. That is one thing, as the hon. Member for Kidderminster said, that we want to prevent. In fact, a policy of the kind I have suggested I would describe as a form of Lend-Lease continued in the peace-time era. I cannot see why, if we manage to arrive at a method of applying the necessary materials and efforts for war on a Lend-Lease basis, when we are busy destroying, we should not shed ourselves of the shackles of this international finance, as it is called, and make the same quantities of goods and services available for the benefit of all the world in peace.

I suggest that we have now come almost to the cross-roads in this matter. We either abandon the Gold Standard for good and say that we are doing so, that we shall not have anything to do with it at all again, and so release production capacity to the full in peace-time as in war, or the alternative, as I see it, implied but very cleverly concealed in this plan, is to chain ourselves to gold and surrender to an irresponsible body, the sovereign right of the people. Therefore; I do not stand for it. May I repeat to the House a doggerel which I do not think inappropriate? I used it on one other occasion: Sing a song of plenty, a planet full of fools, Everybody starving by sound financial rules, The banker's in the counting house counting out his money, The laud is overflowing with bread and milk and honey, The shops are full of good things, the factories likewise, But the banker slams his books and says 'We must economise.' I think that sums up our pre-war financial system. I am reminded also of the jest in a Priestley play of to-day. The characters all go down into a vast new city, and the manager of one of the banks is among their number. He is seen by one of his friends surrounded by people who occupy this new city. They are standing roaring with laughter, and when the banker comes back out of the city through the open gate, someone says, "I did not know you were a raconteur. I saw those fellows roaring with laughter at what you were saying. What were you telling them?" He replies, "I was explaining our financial system."

So it was before; so it must not be again. I conclude with this remark. What is wanted is a recognition that the land and the natural resources of the earth are to be used as God's gift to the whole human race, and the distribution and use of them must not ever again be restricted by an artificial monetary system based on gold.

Mr. Graham White (Birkenhead, East)

I cannot compete with my hon. Friend the Member for Ipswich (Mr. Stokes) by reciting a verse to the House, but I was somewhat surprised and a little entertained by his condemning the Motion moved by my right hon. and gallant Friend the Member for Kelvingrove (Lieut.-Colonel Elliot), for two of the reasons which led me to support it. My hon. Friend complained, not for the first time, that he did not know, and had been unable to find out, what had been going on.

Mr. Stakes

I did not say anything of the sort. I was condemning the plan, not the Motion.

Mr. White

I will deal with that later; but my hon. Friend complained that he did not know what was going on. He said that he had put questions to the Chancellor of the Exchequer, and that generally there was an air of mystery about the matter. There has been criticism of the way in which this matter has been handled; it was expressed in our previous Debate. It was said that it was wrong to have two schemes, one by British experts and another by American experts. We had the answer to-day, in a scheme which is agreed on principle—not a final scheme. It is agreed, we understand, not only by the experts responsible for the direction of these matters in the United States and in our own country, but by the experts of all the countries which have been asked to consider this matter. That is a remarkable fact.

I rise to support the Motion which has been proposed by my right hon. and gallant Friend the Member for Kelvin-grove. Like my fellow-Members I find myself, for various reasons, in considerable difficulty in discussing this matter at all. The three previous speakers have made bold to say what they think are the views of the man in the street on these matters. That is one of the difficulties of Parliament. A very heavy and unusual responsibility lies upon us. These are matters for experts. They come into a specialised field. I very much doubt whether go per cent. of the people give any thought to these matters directly or have any views on them, although they may suffer directly in times to come from any mistakes that we may make. I have no doubt that, looking at this Motion in its simplest terms, the man in the street will be 100 per cent. for it. My right hon. and gallant Wend the Member for Kelvingrove rightly pointed out that we are not discussing a matter of policy, we are discussing a piece of mechanism which will make easier or more difficult the carrying out of policy, and which would be quite futile if considered in isolation. It should be considered only in relation to matters of much greater moment, our efforts to increase the use which we can make of goods and services to the benefit of man throughout the world. The people of this country are asked whether they wish this country to co-operate with other countries in trying to devise some mechanism which will enable a free flow of goods from one country to another, and there can be only one answer to that question. If they are asked whether His Majesty's Government, having taken steps to set these inquiries on foot, should be told by the House of Commons to withdraw from this matter, the answer would, surely, be in the negative, too.

Perhaps the one thing we can say in regard to these principles is that there is no question as to whether we should invite the Government to continue in the negotiations, and to give further consideration to them on the basis of this statement. It would have been a capital blunder if we had refused to enter into negotiations with other countries. It would be a disaster if we were to withdraw now. It would be equally a disaster if we were compelled by circumstances to withdraw from the scheme after it had been instituted. But, if it is worth while considering at all, we need not be so pessimistic as to contemplate being driven out of the scheme afterwards.

I could not help thinking of another White Paper which has been discussed in this House. This matter should be considered as part of a much wider and bolder programme for a world economy after the war. It might have been a good idea if this White Paper had been prefaced by the Government—following the example of Sir William Beveridge and his colleagues —setting out some two, three, or four assumptions on which this scheme might have been intelligently considered and reasonably expected to work. The first assumption is one which is not mentioned in the principles set out in the White Paper, namely, that we shall have, as a result of the conflict in which we are now engaged, secured freedom from the fear of war. Nothing that we can do after the war to rehabilitate international trade would make much headway in the face of the appalling obstacles to monetary development and control caused by fear of war. Those who have any recollection of the financial history of the last 20 years will recall that that fear was one of the most potent factors in promoting disorder and was a contributory cause of the conflict in which we are now engaged. A second assumption which is necessary, as a foundation for the working of the mechanism now proposed, is that all the nations which are members of any proposed scheme shall be willing to co-operate together, in the same spirit in which they worked and cooperated in the Lend-Lease Agreement.

My hon. Friend the Member for Ipswich said that he was disturbed at the ugly consideration of money. I myself, in these grim, harsh days, have derived considerable comfort and encouragement from the fact that we have been giving, in spite of this war, a tremendous amount of consideration, affecting all fields except one, to the question of what we can do when the war is over. We have considered matters relating to national health, social security, and the rehabilitation of other countries. To all these we have given a great deal of thought, and that is no bad thing. I am glad to see us turning to the question of international trade, because we could do none of those things if we could not set the wheels of trade with other countries going. It is not an ugly subject at all; it is a matter of first importance.

I will deal now with the one matter to which, during this war, we have given a great deal less thought than we did in the last war. That is the question of the formation of some kind of international society and a world organisation. Before the end of the last war we had a very cut-and-dried idea of what we were going to make of the world through the League of Nations. The Prime Minister reminded us a few days ago that the scheme has not been tried, but we had a cut-and-dried scheme. On this occasion, we have not given much thought to such a scheme. I think it is just as well that we have not—

Mr. A. Hopkinson

Surely, after our experience of the League of Nations, it would have been futile to do so.

Mr. White

My hon. Friend has been very good, and has mentioned the point that I was developing. I was going to say that, possibly, we are on wiser ground to confine our thought and atten- tion to the material conditions which are the essential foundations of any superstructure of world society which we may in time erect upon them. It is a fundamental condition of any policy that we may finally adopt for the restoration of international trade that the countries which may join in this scheme should be prepared to abandon isolation and to cooperate on the basis of raising the wellbeing of all people. It is just as well to remind ourselves that we are, in fact—

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