HC Deb 19 July 1946 vol 425 cc1611-46

Motion made, and Question proposed, "That this House do now adjourn."—[Captain Michael Stewart.]

2.54 p.m.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

I propose to raise this afternoon the question of some of the conditions attached to the American Loan which we have now got. I am not altogether surprised that the Chancellor of the Exchequer is not here. I think he is deeply grateful for that provincial engagement and I do not think he is at all sorry to cast what I think may prove quite a heavy burden upon his very able lieutenant the Financial Secretary to the Treasury. I do not think the Chancellor of the Exchequer wants to answer the questions I am about to put, of which I have given him full notice. I think he has fled to the provinces——

Mr. Turner-Samuels (Gloucester)

Does the hon. Gentleman really believe that?

Mr. Boothby

Yes, I do; because in sharp contrast to the great respect and courtesy with which he has treated this House in connection with the Budget, so far as the American Loan is concerned, I will not say he has treated us with contempt, but he has certainly brushed us aside from start to finish. He denied us the promised opportunity to discuss the Bretton Woods Agreement; and for the Loan Agreement we were allowed four days to do what it has now taken the Congress of the United States of America seven months to do——

Mr. James Callaghan (Cardiff, South)

They are giving it; we are taking it.

Mr. Boothby

The hon. Gentleman says that they are giving it and we are taking it. Nevertheless, we might have had a little time to discuss the matter rather more fully before we accepted it.

On the conditions that attach to the American Loan, there are four questions which I want to ask the Financial Secretary. First of all, how are we now going to deal with the problem of our sterling debts? I would like to know if there is any tacit understanding between His Majesty's Government and the Government of the United States of America regarding the method by which we are going to repay our sterling obligations. We cannot use any part of the Loan for this purpose. On the other hand, we cannot afford to dig into our gold and dollar reserves to any considerable extent without fatally weakening our economic and financial position. I think we must realise on both sides of the House, whether we think it is a good idea to accept the Loan or not, that the obligation to establish full convertibility of sterling within one year from now, from which there is no escape, is bound to impose a very heavy strain and burden upon us in this country. When we are all waving our hats in the air about American films and Virginian cigarettes, and that lithe bit of extra petrol, I think we ought constantly to bear in mind the situation which will confront us one year hence, when we take the first plunge into the icy sea of free convertibility and multilateral free trade.

Mr. Spearman (Scarborough and Whitby)

Does the hon. Gentleman realise that that only applies to future commitments? It does not apply to the past.

Mr. Boothby

Yes, but it means that from that moment we shall have to match imports with exports. What is the actual position now? I estimate that annual payments for interest and amortization of our sterling obligations, if paid in full on the basis of two per cent., would amount to about £70 million a year. Add to that £70 million the £30 million which we are ultimately obligated to spend in discharging our debt to the United States, and we get a figure of something in the neighbourhood of £100 million a year of external payments which, at some not very far distant future, we shall have to make. In those circumstances, we shall be driven to increase the volume of our exports from this country not, as I see it, by 75 per cent. above the 1938 level, but by at least 100 per cent. if we are going to get through—and that under conditions of free currency convertibility, unplanned promiscuous trade, and cut throat competition.

How are we going to do it? That is the question I want to ask my hon. Friend the Financial Secretary to the Treasury. I think it is extremely doubtful if we shall ever again be able to export the raw materials and semi-raw materials from this country which we did in the 19th century, and upon which we largely built up our export trade. Even before the war our exports of coal, cotton, textile goods, and iron and steel had all fallen by approximately 50 per cent. as compared with the period before 1914. Between the two world wars they fell by approximately 50 per cent. Do the Government really expect that process to be reversed? Our coal export has now fallen to zero. Do they anticipate being able to export coal in any substantial quantity again over the next 10, 15, or 20 years? I confess I doubt it. Therefore, we shall have to do this job mainly—I should say perhaps almost entirely—through the export of manufactures from this country.

I repeat, how are we going to do it? In August, 1944, Lord Keynes wrote a letter to "The Times," in which he said there was nothing in the Bretton Woods Agreement which would prevent our requiring a country from which we imported to take in return a stipulated quantity of our exports. That letter was instantly contradicted by an American correspondent of "The Times." Whether it was true or not at that time there is no doubt that is not true today, because under the conditions attached to the Loan Agreement all quantitive restrictions of imports into this country must be non-discriminatory.

There is no doubt about that. This clearly means that we cannot use quotas for the purpose of improving our own trade position either in Empire or foreign markets. This is what alarms me most. If I may summarise the position as I see it, we now find ourselves obliged to build up a colossal export trade. At the same time we are not allowed to make the clearing and payments agreements with foreign countries which would automatically have provided the finance for our trade. Secondly, we shall have to pay our sterling creditors not in goods, but in gold or in dollars, which they can use for the purchase not of British but of American goods We are not allowed to control imports with the object of expanding our economy and our trade by ensuring that the demand for necessities is satisfied before the demand for luxuries is met. Any limitation of imports into this country must be applied generally over the whole field and must, therefore, be restrictive rather than expansionist in character. Thirdly, and perhaps most serious, we are not allowed to impose any restrictions or controls on the import of food into this country with the object of increasing our own agricultural production.

I do not think hon. Members have really grasped the full implications of these proposals. Indeed, I do not blame them because they have not had time to grasp them. The thing was "whistled through" before anybody had an opportunity to realise the full horror of what was happening. Next, we are not allowed to negotiate reciprocal trade agreements for the mutual assurance of markets, which I believe should be the basis of the whole of our overseas trade policy. On the face of it, these are debarred by the commercial stipulations attached to the Loan, under which foreign purchases or sales shall be influenced solely by commercial considerations, and there is to be no discrimination among sources of supply in respect of any imported product.

Mr. Blackburn (Birmingham, King's Norton)

That Agreement has not yet been negotiated. There is plenty of opportunity for other countries to object to it.

Mr. Boothby

But we are committed in principle to all these things. We have signed the Agreement. I do not want anybody to be in a position to say later on that we got this money under false pretences. Last, but not least, we are committed in principle to the elimination of Imperial Preference. It is common ground between us, and admitted on all sides, that we have got to build up this terrific export trade. There may be some disagreement about the total figure. Some people may not think that it will have to be as much as no per cent., above the 1938 level, but I personally think that is a minimum figure. But whatever it may be, we must go ahead and build up this tremendous export trade.

I want to ask this simple question. Where are we going to find the markets? In Germany, Austria, or Russia under her closed economy? I would be very glad if they would take some herrings, but I very much doubt if they will—at any rate, not at a price for which the fishermen in Scotland will fish for them. Shall we find the markets in the United States? Again I doubt it. As the greatest creditor nation in the world, the United States of America ought to accept a substantial import surplus. Is there the slightest indication in any part of these agreements that they have any intention in the United States of accepting an import surplus? On the contrary. They are now preparing for a tremendous export drive, designed to achieve an export surplus of 3,000 million dollars a year, and they will naturally concentrate upon the best and most valuable markets in the world today—the markets of the British Empire and South America, our own great markets in days gone by.

I do not propose to ask the Financial Secretary how His Majesty's Government propose to escape from the dilemma which now confronts them, but I ask him specifically whether there exists some secret understanding between us and the American Government as to how we are going to deal with our sterling obligations, which amount to £3,500 million; and the extent, if any, to which they are going to be scaled down. I hope he will not give an evasive answer as the Chancellor of the Exchequer has hitherto given to this question.

We really have been kept in the dark about too many things connected with monetary policy in this country for too long; and we have a right to know. I do not want to see us suddenly confronted with another "monetary Munich," and told to pass it at 48 hours' notice. We want—and I think we deserve—much fuller information about the negotiations that are about to take place, both in Washington and with our sterling creditors, than we will be given if the policy hitherto pursued continues to be adopted. I do not say that the Chancellor of the Exchequer or some Member of the Government should come down and tell us precisely what is happening in the day-to-day negotiations; but I do think they should make periodic reports of the position to the House, and tell us what attitude they have taken up. So far as what is perhaps the most important economic problem confronting this country—the problem of our sterling debt—is concerned, we have not the faintest idea what the views of the Government are, or indeed if thy have any views at all. We understand only that they were told quietly in Washington where they got off. I think at least we might be told whether there is any truth in that statement or not.

My second question relates to the projected wheat agreement with Canada. I understand this agreement was ready for signature when the Minister of Food went to Ottawa the other day; and then suddenly it was not signed. Why was it not signed? Was it because of pressure applied in Washington? Was it because objection was taken to the draft Canadian wheat agreement, on account of the fact that it violated certain conditions attached to the Loan, or might be held to violate these conditions? If so, did we agree in Washington to hold it up, or to abandon it altogether? Now that the Loan is through Congress, are we going to sign the Canadian wheat agreement? It will look a bit queer if we do it this week or next. We would like the Government to tell us perfectly frankly and candidly what they are going to do. The Minister of Food told us specifically that negotiations had been completed with the Canadian Government, that he was determined to sign the agreement, and he said something to the effect that he would bet that we would sign it. Then he went to Ottawa, and suddenly it was not signed at all; then came the crisis of the Debate on the Loan in Congress; then the Loan went through; and now there is silence. I think this House has a right to know what are the Government's views about it. Do they agree with the United States Government, that the projected agreement with Canada does violate conditions attached to the Loan? If not, are they going ahead with it and going to sign it? Why did they hold it up? One other question in connection with this. Can the proceeds of this Loan be spent outside the United States? I do not think that question has ever been quite clearly settled and cleared up, either on this side or on the other side of the Atlantic. It is a rather important point.

My third question is very similar to the second one, and relates to the projected trade agreement with Denmark. As I understand it, this provides for a quota of Danish bacon and butter given by us, in return for certain concessions in respect of our manufactured goods. On the face of it, this violates the principle, and, indeed, the practice, of the conditions which we have now signed. Are we going on with this Danish agreement, or are we going to chuck the negotiations? Does this apply also to New Zealand and Australia?

Mr. Mayhew

Which particular part of the agreement does this violate?

Mr. Boothby

The part of the agreement which entitles us, in exchange for granting a quota to Denmark in respect of bacon and butter, to special concessions for our manufactured goods in the Danish market. It is that kind of reciprocal agreement that is, whichever way the agreement is examined, against the terms, and the principles laid down.

Mr. Paget (Northampton)

Which clause is this?

Mr. Mayhew

I do think it is time hon. Gentlemen ceased making this point in their speeches. There is no agreement we have signed outlawing this. We have signed an agreement for discussion at next year's trade conference. These are two very distinct matters. It seems to me that hon. Members should cease making this point.

Mr. Boothby

I do not see why we should, because it is part of the terms of the Loan that we accept all these conditions as matters of principle. We said we would negotiate in detail—for example, Imperial Preference versus tariffs, concession for concession. But if the hon. Member reads the Agreement carefully, he will see that in principle we have agreed not to do the very thing I was outlining just now. I have not got a copy of the Agreement with me, but I could show the hon. Member various paragraphs which confirm this view. In one of them we agree in principle that certain things are desirable, and that certain other things are undesirable; and that we will work in cooperation with the United States to achieve those which are desirable, and to eliminate those which are undesirable.

My fourth and final point is this. The price level in the United States of America has risen steadily since these Loan negotiations took place, and it continues to rise day by day. It has already cost us over 100 million dollars off the Loan. Suppose it goes on rising, which is no: an impossible assumption? It may reduce the value of this Loan by half, so far as we are concerned; and at the same time I would remind hon. Members that world prices generally are now being raised against us—in the Argentine, even in Canada. Prices are beginning to rise all over the world, and what does that mean? It means that we shall have to export a still higher volume of manufactured goods in order to meet our obligations.

Mr. Mayhew

Will the hon. Gentleman allow me once more? Surely the increase in prices in America and throughout the world will mean that our supplies of foreign exchange are increased for the same volume of exports? The hon. Member was saying earlier that we neeeded to increase the volume of our exports by 100 per cent. over 1938, but will not that problem be eased by the rise in prices in foreign countries and not the opposite?

Mr. Boothby

But we have also to import a very great deal; and I was talking about the price we shall have to pay to buy the things we are going to buy in the United States with the Loan. This is the sole purpose of the Loan; and the prices we are now to be asked to pay are enormously greater than they were at the time when the Loan negotiations took place. I think that is a very serious thing; and I ask the Government how they propose to deal with the situation and whether, if prices continue to rise against us, the Loan will enable us to buy the goods we need in the United States of America? Clearly it will not benefit us if the price level continues to rise, What are they going to do about it? Are they going to hold the sterling-dollar rate at 4.03 to the £? I do not know when that rate was settled, but I am perfectly certain that it has very little relevance to the situation at the present time, and that it will have less relevance six weeks hence. Is it contemplated that we can revalue sterling, if prices continue to rise, in order to get better value for our own exports? These are very serious matters. It is no good hon. Members pretending that this enormous price rise does not affect the value of the Loan. Of course it affects the value of the Loan. It means already that we shall get 100 million dollars less goods than we should have got at the time of the negotiations.

Mr. Paget

What I do not follow is how that can be corrected by revaluing sterling. The Loan will buy the same number of machines or wheat or whatever it is, whatever its value in sterling, because this is a dollar Loan.

Mr. Boothby

We have raised the Loan in terms of dollars——

Mr. Paget

Exactly.

Mr. Boothby

—but nevertheless, if we revalue sterling, it does mean that in future we shall get for our own goods—this is what matters—a greater number of dollars and therefore of goods from the United States of America.

Mr. Paget

Yes, but the amount of goods we shall get for the Loan will be exactly the same.

Mr. Boothby

The argument which has been addressed to the House and the country by hon. Members on both sides is that this Loan is only temporary, and that we can only discharge our obligations under the Loan if we maintain a much higher volume of exports year by year in the future. What is worrying me, and the question I am addressing myself to, is whether we shall be able to discharge our obligations under this Loan. If prices continue to move against us in the United States of America, there will be no hope of discharging these obligations.

The truth of the matter—only we will not face it—is that we have taken on a fantastic obligation which we might just manage to carry through if we had the tools to do it; but we have allowed ourselves to be deprived of those tools. In so far as they are intelligible, the conditions attached to this Loan allow the Americans to use the bargaining power of their money; and take away from us the right to use the bargaining power of our own market, which is our main asset. If it is right for the United States to discriminate in the granting of loans, it is right for us to discriminate in granting our custom, which is the best thing we have to offer to the world. Although we have been forced today to pay lip-service to this global and monetary view of trade by the Americans, the fact remains that, in the words of Ricardo, all commerce is really a trade of barter. It is, and should be, nothing more or less than the mutually advantageous exchange of goods. I do not know why hon. Members should be so frightened of barter. The Treasury shrinks from the word like a shying horse; but nevertheless it is the essence of trade, and the more you keep money out of the business the better. No comprehensive world plan of trade has been evolved, or is likely to be evolved at the forthcoming conference. How can you have it in the world as it is organised today, with totalitarian Russia occupying one-sixth, and the rest divided between countries with planned national economies of varying kinds and degrees? Are we not to be allowed any regional plan? And if so, what about the Philippine Trade Act signed this year by the United States? That is a regional plan which involves preference. I would conclude by quoting a leading article which appeared in "The Times" the other day which, after saying that we had to accept the Loan and carry out its terms, a statement which I read with some dismay, goes on: It is a matter of necessity for Britain that in the bargaining envisaged by the Washington agreement each concession from the British side shall be squarely and assuredly balanced by e sure prospect of greater trade elsewhere. In this cooperative design no merely doctrinal arguments, unproved in practice, can in fact exclude the regular provision for essential British supplies, and payment for them, which the present Imperial preferences and the proposed agreements with Canada or Denmark intend to secure, and which the barest British interest demands. That is the minimum. What I fear is that the Government simply intend to use this Loan to indulge in a kind of illicit spree, at the expense of the future. That is what I gathered from the observations of the Chancellor of the Exchequer on the priorities he is giving, with consumer goods taking a high place, when we are in this desperate situation, and having this terrific job to do. The chance to get hold of some ready cash quickly in order to cover up for the time-being the deficiencies of their own administration, and the steady fall in output per man hour in this country, was too great to be resisted by the Government: They have got the ready cash for the moment to enable them to cover up what would otherwise be the almost intolerable position which will be disclosed in the next few months, largely due to their own inadequacy. After that the deluge, which, the Tories will have to try to get out of. They will not get away with it as easily as all that.

The choice before us is very simple, and is not obscure. Sooner or later we shall have to repudiate some of the general obligations which we have undertaken in the White Paper, whether they have been specifically negotiated or not. We have a moral obligation to do our best to carry them out; but either we shall have to repudiate a number of these conditions which we have accepted in principle, or, later on, we shall have to repudiate our debts. One or the other. For my part, of these two unpleasing alternatives, I prefer the former; because I believe that in the long run it will do the least damage to Anglo-American relations.

3.20 p.m.

Mr. Blackburn (Birmingham, King's Norton)

The House will agree that it is a great advantage to the party opposite to have the hon. Member for East Aberdeen (Mr. Boothby) in its ranks. His views are not orthodox from the party point of view and, therefore, they are able by way of criticism to take advantage of the kind of argument used last night by the right hon. Gentleman the Member for Southport (Mr. R. S. Hudson) regarding private enterprise getting wheat over to this country, and today of the diametrically opposed argument advocating barter and reciprocal trade agreements. While I am sure the House enjoyed the speech of the hon. Member for East Aberdeen, it was hardly fair of him to suggest that the Chancellor of the Exchequer ran away from him. The Adjournment was only allocated during the last three or four days and the hon. Gentleman, being ex- perienced and much sought after, knows that Members are not in the habit of agreeing to address public meetings in their constituencies without at least having a month's notice. I think, therefore, that the hon. Member ought to withdraw that remark.

Mr. Boothby

By tradition, the House takes absolute priority over all other engagements.

Mr. Blackburn

I am sure the hon. Member would not suggest that a very important matter like that raised today ought to be answered on an Adjournment Debate.

Mr. Boothby

Certainly.

Mr. Blackburn

It is a point of great importance and, obviously, as the hon. Gentleman regards his speech of great importance, it ought to be carefully studied. The second point I wish to make before I come to my main purpose is to refer to the remark made by the hon. Member for East Aberdeen on the famous Loan Debate, a phrase which went round the world: to sell the British Empire for a packet of cigarettes.''—[OFFICIAL REPORT, 12th December, 1945; Vol. 417; c. 469.] He referred to cigarettes again today. I do invite his attention to the fact that the Chancellor of the Exchequer in his announcement on Monday of the granting of the Anglo-American Loan did not mention cigarettes at all as one of the purposes for which that Loan is to be used.

Mr. Boothby

Tobacco, of which cigarettes are made.

Mr. Blackburn

I have here in my hand the statement of the Chancellor of the Exchequer and I have read it very carefully. Unless my eyes fail me, tobacco is not mentioned and there is no mention of cigarettes. I should like now to come to the main point of what I intended to say. First, I think the most important item relates to the purposes for which this Loan is to be used. A little play has been made upon the way in which the Loan was announced by the Chancellor of the Exchequer. I am certain that the Chancellor did not intend the order in which he announced the purposes for which the Loan is to be used, to be regarded as an order of priority, and I hope the Financial Secretary to the Treasury, when he comes to reply, will make it quite clear that the Chancellor of the Exchequer has not yet made any announcement as regards the priorities in respect of the way the Loan is to be used. I hope that he will go one stage further than that and tell us that capital re-equipment is regarded by the Government as the first priority of all.

I have no doubt what was the tenor of what the Chancellor said, but it would be valuable to this Debate if my hon. Friend made it clear once again, because there is misapprehension on the subject in some quarters. I have held meetings recently in my constituency. I held a meeting for housewives on bread rationing, and instead of finding irate housewives there, I found that they were very much more concerned with what we were going to do with the Loan. In particular, they were anxious that the Loan should be used not for the purchase of luxuries for the well to do, such as the total abolition of petrol rationing, which 100 Members opposite advocated in a Motion——

Lieut.-Colonel Sir Thomas Moore (Ayr Burghs)

Which would be used for workmen's buses perhaps.

Mr. Blackburn

—but that it should be utilised for permanent benefits which will enable us to compete with the cut-throat competition which we have to meet throughout the word from other nations who have great advantages over us, because they did not go through the bombing or the blitz, and they did not fight in the late war as long and as bitterly as we did.

I therefore hope that at some stage—I am not for a moment suggesting that it should be done now—we shall get a clear-cut plan which can be put to the British people, and which will enable them to see what use is being made by their Government of this Loan for which we are paying, and are bound to pay, so heavy a price. Personally, I am convinced that if we never repay one dollar of this Loan, the United States of America would already have received, in the liquidation of the sterling bloc, the equivalent of 1,000 million dollars.

I would like to follow the point put by the hon. Member for East Aberdeen about the reciprocal trade agreements which he advocated. I do not know whether he represents the party opposite in advocating such agreements. The hon. Member speaks with great authority, but one wonders whether he carries with him the authority of the Front Bench of his own party. I would strongly urge on the Government the great value of long-term trade agreements and long-term bulk purchases. In a remarkable speech, which those who heard it will not, I hope, forget, my right hon. Friend the Foreign Secretary said at Blackpool—and I regard it as an Election pledge—that the Labour Party stands for bulk purchase. It seems to me that we should take advantage of the present world sellers' market to have long-term bulk purchase agreements which will safeguard the people of this country against the day when an economic blizzard may come. My right hon. Friend the Lord President of the Council, at Bournemouth, said that the Government were setting up economic planning machinery to enable them to guard, in advance, against an economic blizzard which might well start in the United States of America.

Mr. Boothby

Surely, the hon. Gentleman would agree that bulk purchase must, of necessity, be limited to certain standardised articles, and cannot cover the whole field. He will also agree that it is desirable that in exchange for these purchases we should be able to ensure a market for our own goods.

Mr. Blackburn

I have always taken the view that reciprocal bulk purchase agreements are the ideal method for conducting this kind of trade by a Socialist Government. I am trying to deal with this matter quite fairly. I do not think it is clear whether reciprocal bulk purchase agreements are out or not, but I think it is a somewhat academic point. We are the greatest market in the world for goods, and that must create a background of good will which will enable us to be in a position to negotiate logn-term bulk purchase agreements with other countries. You can have a Constitution, but what matters is the way in which it works. It is impossible, by any rigid set of rules, to impose what I might describe as "international free enterprise." If the necessary good will is created by ourselves, we shall be able to enter into the proper planning of our foreign trade over a period of years, and that will safeguard us. I think many of us must have been struck by that remarkable last statement—I hope it will not be considered bad taste to mention it —made by Mihailovitch, who said, "I and my work have been carried away by the gale of the world." I am sure that many of us must be afraid that the work of any Government in this country, however good, may well be carried away by the gale of the world in the events which may unfold themselves during the next two, three, four or five years. How many people have any confidence that we shall not have a disastrous world slump in the next five years? I hope the Government will take all proper steps to guard against that.

3.30 p.m.

Mr. Lennox-Boyd (Mid-Bedford)

I do not wish to detain the House for long, but I wish to refer to an aspect of this Debate in the hope that the Financial Secretary, when he replies, will be able to deal with it in some detail. Let me say, at the outset, that I entirely agree with the concluding words of the hon. Member for King's Norton (Mr. Blackburn). Personally, I think we must view this Loan as a fact, that it has come to stay, and that recriminations about it and charges of bad taste on either side will do far more harm than good. The Loan having arrived, let us hope that it will be used in a statesmanlike way. In order to protect ourselves against the gales of the future, which may arise in the country of origin of this Loan, it is essential that we should protect ourselves in the Imperial sphere, where we are our own master and intend to remain so.

I am sure that the House is grateful to my hon. Friend the Member for East Aberdeen (Mr. Boothby) for the pertinacity which has secured for us this Debate today. In particular, I believe that those of us who are anxious about the failure to sign the Canadian Wheat Agreement, and one or two other rather strange events of the last few weeks, are glad of the opportunity which has now arisen for the Financial Secretary to deal with this particular point. We cannot discuss this Loan in isolation, because the United States is not the only great nation which has given a loan to the United Kingdom. Canada has just given us a substantial Loan and it will not be necessary for my hon. Friend to initiate a Debate on conditions attaching to that Loan, because the Dominion of Canada has attached no conditions to it. Canada has given us a great Loan, without any conditions, as her contribution to the brotherhood of the world.

In order to put this Loan into perspective, we should remember the other Loans which have been given by the Canadian Government, during the last few years, to our country. Canada, a country of 12,000,000 people, no larger than the combined cities of New York, Chicago, and Philadelphia, has been prepared to attach no conditions to her Loan, and she also lives in a world full of strains and stresses. In 1942, Canada made us a Loan of 700 million dollars, bearing no interest until 1951. This year, the Dominion has made another Loan of 1,250 million dollars, with no conditions attached save the same conditions of interest and repayment as are attached to the American Loan. Three years ago, the Dominion of Canada made us a gift of 1,000 million dollars. At the same time, she remitted to us altogether charges totalling 425 million dollars, which would have fallen on the taxpayers of this country for the air training scheme in Canada.

Also in 1943, three years ago, they repaid all the capital expenditure that we had incurred along with them in establishing munition plants in the Dominion. At the same time, throughout the whole period of the war, they supplied us in mutual aid with goods to the value of 2,000 million dollars, making their contribution to our financial position, the total gifts and loans, 5,500 million dollars, and these were without conditions. I hope that these people who are cynical about the bonds which unite the British Empire will take a lesson from that fact and realise that in a world where the Dominions are free states, free to negotiate their own future without any guidance or hindrance from this country, gifts and loans of that kind can still be given.

As for the Loan itself, millions of Americans—and this is the great misfortune of it—think that they have been extraordinarily generous; millions think they have made Great Britain a present. Thousands of others—and those the most informed—think that they have been very shrewd and have, by the abolition of the sterling bloc and the dollar pool, already got far and away more than they will ever get by any interest or repayment which we may be able to make. As to our people, they are very much divided on this matter and the Debates that have taken place in Congress have made their own divisions and feelings of national resentment no less harsh, to put it mildly, than they were before. But as I said at the start, the Loan is now a fact and I do not think we can do any greater disservice to Anglo-American relations than to recriminate about it. What we have to do now is to use it sensibly and also to see that we do not surrender anything else which it is not to the British Imperial advantage to surrender. We have given up, as the House well knows, the dollar pool and the sterling area—the one area in this world of anarchy, chaos and uncertainty on which we could rely. We have given that up and deprived ourselves of insulation against any crisis that may come in the future. The American Committee on Economic Development only a few months ago said: The present position has in it all the menace of another 1929 boom and collapse.'' Yet we have given up that sterling area which enabled us to look the dollar proudly and successfully in the face. We have surrendered a very great deal, but there is one thing which we have not yet surrendered. It is the principle and the fact of Imperial Preference, and the purpose of my intervention in this Debate is to ask the hon. Gentleman if he will add to those other assurances that have been given by his colleagues on Imperial Preference—that preference which, after the economic collapse in the late '20s of this century mainly, and I think almost alone, enabled us to survive the worst of the storm, that preference which short-sighted people called the cause of the world depresion instead of, as it was for the British Commonwealth, the cure of the world depression.

I might say at this stage that I believe that history will never charge us with having used our Imperial resources or preferences selfishly. Any charge that may be made against us will not be that we have used our position ruthlessly or selfishly but rather that we have failed to use it fully and failed to develop our Imperial resources as a whole. As a right hon. Gentleman on this side of the House said lately, there is today an ominous shadow over the field of Imperial Preference. It is to lift that shadow if they can that we look to His Majesty's advisers today. We have very little on which to go; we know nothing of what went on in regard to the Canadian Wheat Agreement, although we have our suspicions. We have only the Government's published White Papers and statements made in this House. We have here the proposals for consideration by an international conference on trade and employment. They were transmitted by the United States Secretary of State and they envisage the setting up of an international trade organisation. One of the objects of that trade organisation—and this is the policy of the United States Government—is to be the elimination of all forms of discriminatory treatment in international commerce and the elimination of preference. This is their policy. We know perfectly well that the late President Roosevelt said that he intended to initiate an economic policy that would treble American exports and give 60 million more Americans jobs, industrial or otherwise.

So this is the policy they hope to achieve; this is the policy of the United States, but it is most certainly not the policy of Great Britain, and I hope it is not the policy of His Majesty's Government. We shall look for an assurance on that point. We were seriously disturbed at the close of the last year—I think the date was 7th December—by a statement made by the Prime Minister that agreement had been reached with the United States on the broad principles Of commercial policy. Does that mean toe elimination of Imperial Preference? That is one of the principles in this statement, which is the American statement of policy. This all links up with the Loan, and it has been made even more clear by the American Secretary to the Treasury, who said that the passage of the Loan has assured the success of the trade talks which will shortly open. I imagine that he would not have said that unless he had some reason to believe that a consequence of our acceptance of the Loan was that we had undertaken, in the words of the Prime Minister, to agree on the broad lines of commercial policy with the United States, and one of the broad lines, as we see it in this White Paper, is the elimination of all preferences, including Imperial Preference. The United States Secretary to the Treasury has gone even further. He said lately that Britain has promised, in addition, to avoid trade contracts which will discriminate against American pro- duction. The President of the United States has said that Great Britain has agreed to abolish barriers blocking trade vital to America.

We are entitled, in this House, to have some reassurances in order to put these statements by the American Government in their proper perspective, and to have a renewed assurance from the hon. Gentleman that Imperial Preference has not been given away and that we have given no undertaking of any kind to eliminate it. We have had, lately, some partially reassuring statements by the Colonial Secretary and the Chancellor of the Exchequer, but I think the greatest reassurance we have had takes the form of that treaty to which the hon. Member for East Aberdeen referred—the American Treaty with the Philippines of April of this year. We believe, and I should be grateful if the Financial Secretary will deal definitely with this point, that the fact that America has signed an agreement with a country which is about to become a sovereign independent country absolutely knocks the bottom out of any argument that we are under a moral obligation to abrogate Imperial Preference. We could not have any such obligation in the light of this Treaty.

Perhaps I may give one or two details of this Treaty. We have always claimed that Imperial Preference within the British Empire is a family affair. Indeed, the very phrase "family affair" was first coined, I think, by the Chairman of Ways and Means in America some years ago when refusing to protest against the Canadian grant of a preference to the United Kingdom. The British Empire is joined together by sea. The Russian and American Empires are joined together by land and railways. That is a purely geographical fact, and we have just as much right to unite our own Empire by tariff agreements as they have to unite their own Empires. It is no more their concern what agreements we make with the Dominions and Colonies than it is our concern that the cities of Moscow and Leningrad give 100 per cent. preferences to the Crimea or that New York gives a 100 per cent. preference to California. We have always taken the line that it is a family affair, and that we must be allowed to settle that on our own, and that, if we give full access to the raw materials in our own Colonial Empire, no one can have any grievance because of our trusteeship.

But the United States have gone further, and, in this agreement with the Philippines, America has made a preference agreement with a foreign country, for the Philippines will shortly become a foreign country. They have given 100 per cent. preference to the Philippines for the next eight years, and, after that, a series of elaborate preferences for the next 20 years. For 28 years, they have signed this agreement, on the very verge of the opening of trade talks. They have made it with a people just liberated from the horrors of the Japanese occupation. It is not likely that they will propose to go back upon it. They are now entering upon trade talks with us, having signed the Philippines Agreement and accepting the principle of preference, not within their own territories, but with a foreign country. They have agreed to an elaborate system of quotas from the Philippines for their production into the United States. We would like information on that point. The hon. ember for East Aberdeen mentioned quotas and said he thought that we were precluded, by this White Paper, from agreeing to quotas in future. The United States has, in this Treaty, definitely promised the Philippines quotas for the next 28 years.

Now what is the justification that is put forward? The President of the United States, in defending this proposal—which really needs no defence and it would be very difficult for us on these Benches to criticise—has referred to the unprecedented situation in the Philippines. He also added: The political independence of the Philippines is totally inadequate without economic stability. Well, that has been our argument throughout, justifying Imperial Preference in the Colonies and Dominions, that it was no good to sign the Statute of Westminster giving the Dominions political independence if we prevented them from building up their economy by trade preferences. Equally so of the Colonies.

If I might develop this argument—then I will willingly give way to the hon. Gentleman—in the American Congress various speeches have been made which have received very little publicity in the English Press, and extracts from which I think ought certainly to be enshrined briefly in our HANSARD. When this was discussed in the American Congress only a few weeks ago, these were the sort of remarks made. The representative from Ohio, Mr. Jenkins, said: At probably no time in the history of the world has one, country shown such fine disposition toward another country which was one of its possessions. If that is a generous act, to give preference, that is the only right we are asking too, and we are entitled to claim the same tribute with regard to our own preference.

The representative from Tennessee, Mr. Romolu, said: When you vote for this bill, you will be telling the world that America keeps her promises. … You will be showing all the peoples of the world that the United States … has no desire to abuse its power or to exploit the weak. and he is defending an Imperial Preference. In rather more elaborate and romantic language, Mr. Stephan of Nebraska ended his speech with these words, which, though biblically inaccurate, I think are anyhow legitimate comment: Two thousand years ago, St. Paul asked: Am I my brother's keeper?' Today—20 centuries later—we have found the answer. We are our brother's keeper, and the Filipino is, in word and in deed, our brother. We must keep him fed. We must keep him clothed. We must keep him housed. We must keep him economically strong. We must keep him alive. We must keep him free. And without getting into the same inaccuracies as that representative, we are entitled to claim that most of those ideals are achieved in the British Empire, and in part achieved by our own system of Imperial Preference.

I hope, fortified by extracts of that kind, the Financial Secretary and the Chancellor will go to the forthcoming trade talks with America determined to keep our Imperial Preference, and to use to them some of the arguments that have been used to justify this agreement with a foreign country.

We believe, in conclusion, that our best contribution to this disturbed world is to keep our own house in order in our own Empire. We believe it remains the last bulwark of stability and order in the world, and that in a desperate desire to spread the blessings of international trade all over the world, we may revert to the errors of the last century and the earlier part of this, and by depriving our Empire of the right to make its own agreements, not only bring about the dissolution of that Empire, but do the gravest possible disservice to the world as well.

3.48 p.m.

Mr. Paget (Northampton)

The hon. Member for East Aberdeen (Mr. Boothby) covered a great deal of ground in a very short time but, in his desire to paint as black a picture as possible of the prospects arising out of this Loan, I think that he sacrificed some degree of accuracy and, indeed, indulged in a great deal of contradiction. Indeed, he pointed out with great force that we are committed to make sterling freely convertible 12 months from the date when the Loan comes into operation. That, of course, only applies to the current transactions. He then went on to say, "So, of course, in 12 months we have to accomplish the task of making our imports pay for our exports." Well, it is just to give us more time to accomplish that task that we have accepted this Loan.

Mr. Boothby

I hope I said, "and exports pay for imports."

Mr. Paget

One of the reasons why we have accepted this Loan is that in the process of converting from peace to war and to a new form of economy as a debtor instead of a creditor nation, we need time. This Loan will, at the end of this year, and for some years to come, give us time to fill precisely that gap between our imports and our exports; so I feel that that was not a very good point.

Then the hon. Member made a tremendous point that from now onwards we were prevented from making bilateral trade agreements or from making bulk sales and purchases. That again is not so. There is nothing in the Loan Agreement to prevent that. That matter is dealt with in paragraph 9 of the Loan Agreement, and I think that the hon. Gentleman will agree that there is nothing in the Loan Agreement to prevent that. There may be, and this is a matter for some dispute, because the proposals, which are really little more than an agenda for a trade agreement, are somewhat vague and susceptible to many different interpretations. But any restrictions of that sort, anything which might affect the Canadian Wheat Agreement or the Danish Agreement do not exist now.

They only might exist after the proposals for the international trade agreement have become a fact.

On that, the hon. Member pointed out that in the circumstances of the world today, an international trade agreement, making all world trade free, which is substantially the basis of this Agreement, is impossible. I agree. I think that that is what will turn out to be the case when they get down to the Conference. I think that this trade agreement will turn out to be manifestly unworkable, when they come down to confer I believe that the international trade conference will come to nothing at all. After all, we are agreed to support this Agreement, only on the basis that everybody else does. The Russians are not even in Bretton Woods yet. I do not see how this can conceivably come into operation without the Russians, and we have seen in other directions just how cooperative they are. I feel that the hon. Member's fears, which are based upon the trade agreement, are, to say the least of it, somewhat premature.

I come to the next proposition, which is that even if there is a trade agreement, however it is dressed up, however Bretton Woods is dressed up; I believe that in effect bilateral trade agreements are inevitable from the very nature of things. One country must always, in given circumstances, be able to afford to buy goods in one place, and not be able to buy them in another. Whether that comes about by varying exchange rates, through the short currency clause in Bretton Woods, or whatever way, countries can only afford to buy imports from countries which are prepared to take their exports. That is a hard economic fact. However much one goes round the mulberry bush one will get there in time. Exports may go to one place and then to another place, but in the ultimate total it must work out in that way. I do not think that any system of trade agreement can really overcome that. The answer, as the hon. Gentleman said, is that foreign trade is barter, and if the trade is to go on we must finally get down to the balance of barter.

I come to my final word because I wish to be short. The hon. Gentleman said this was a spree at the expense of the future. That was an argument which impressed me very much indeed during the original Debate but I was convinced by the speech made by the hon. Member for Chesterfield (Mr. Benson). I think owing to the refusal of the Americans to accept repayment and the lunatic economic policy which the Americans are pursuing, that inevitably this thing will break down. On the other hand, I feel that by the circulation of goods resulting from this Loan we shall not be in a weaker but in a great deal stronger position—I think the world will be in a great deal stronger position—to face that inevitable breakdown. That was a complicated and difficult economic argument of the hon. Member for Chesterfield. I recommend hon. Members who are impressed by this aspect of the matter to read that speech. Although I was worried at the time—I eventually abstained from voting on other grounds—it was that speech which convinced me upon that issue. I recommend hon. Members to read that speech.

3.57 P.m.

Lieut.-Colonel Sir Thomas Moore (Ayr Burghs)

My hon. Friend approached the matter rather from the angle of the economist. I want to approach it from a more human angle. During the last six months of discussion of this Bill in the United States we have learned two lessons. We have learned to see ourselves as others see us, and the picture has not been palatable. Those who have followed the Debate in the American papers must have received many shocks, but I suppose they were probably a good astringent for us after the somewhat misguided ideas that we have had about saving civilisation. The second lesson is the vast benefits that are accruing to America in the breakdown of the dollar pool and the opening up of the sterling area to American trade, as compared with the benefits we get. It has been customary during this short Debate to refer with some scorn to what the Chancellor said the other day as to the priorities the Americans are going to send us. He made a statement about that. I was here and I heard it.

The order of priority was apparently Spam—of course, in its generic term covering tinned goods—tobacco, films, and petrol. They were all mentioned by the Chancellor. I think our affection for Spam has worn a bit thin. Personally, I have not noticed any marked regret among housewives since its disappearance some months ago. Cigarettes undoubtedly are in short supply, but it was said re- cently that Rhodesia is more than willing to assimilate her tobacco growing to suit our tastes. We have had a visit from the Greek Prime Minister during the past few days during which I understand he came to terms in regard to the production of large quantities of Greek tobacco. Well, we have changed our taste in tobacco once, during the first great war; we can change over again, if necessary. Films are a very doubtful benefit, as everyone will agree, especially in view of the enormous development of the film industry in this country, the rebirth of the French film industry and the slight which many of us feel at the interpretation which Hollywood places on life. I do not think from what I can see—and I read the Loan Agreement through again last night—that we have secured anything like the advantages which the Americans have gained. I think it is wise and proper that we should say so. Many harsh things have been said during the last six months which have gone quite unnoticed.

It being Four o'Clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Bing.]

Sir T. Moore

I cannot agree with my hon. Friend the Member for Mid-Bedford (Mr. Lennox-Boyd), who said, "Let byegones be byegones." I think we ought to make it clear to the American nation, and certainly to some of the leaders in the American Congress, that we accept this Loan with great reluctance. Indeed, there is a fear, of which many Members in this House are well aware, that this Loan is a political racket, just as bread rationing is another one. I do not say I share that view, but I know that that view is widely held in this country among thinking people. They say the only conclusion to be drawn from yesterday's Debate is that bread rationing was proposed simply to make sure that the Loan would be received. They say the Loan was accepted in its present absurd form in order to give to the hard pressed people of this country some compensation for the tragedies and miseries of having to endure a Socialist Government. A strong man in financial difficulties stands on his own feet. He faces his creditors, reduces his standard of living, alters his way of life, makes sacrifices, and then he pays his debts and pays his way. The weak man who is determined to get money at any price and on any terms goes to the moneylender. In this case the Government have chosen the soft way and have gone to the moneylenders to get their money on any terms and at any price, and I consider it to be a degredation of our history and our grandeur.

Let us remember another thing which, apparently, we sometimes forget, namely, that for 55 years we shall be subject to American criticism and interference in every facet of our foreign, Imperial and domestic policies. We have already seen it. Take the question of Palestine, for instance. We were told in Congress the other day that we would not get the Loan unless we allowed 100,000 Jews to enter Palestine. That is our foreign affairs. We have also had Imperial Preference bartered in the Loan. That is our Imperial policy. We have had criticism of our Government's social and economic experiments. That is our domestic policy. This must go on, and we have to endure it. The Government must make it clear that this Loan is not purely for the benefit of Britain but for the benefit of America, and that Britain is still a proud country and will not tolerate any unnecessary interference in her affairs. Owing to the pronounced inflationary tendency in the United States, during the last few months, to which my hon. Friend the Member for East Aberdeen (Mr. Boothby) has referred, we are informed that the dollar value of the Loan has now depreciated by £100 million. What are the Government going to do about that? How are we going to counterbalance it, and what plans have we in view?

I want to reinforce a question which was put earlier. Must this money be spent only in the United States or not? It was not made clear during the last Debate; I put the same question then, and I will put it again. Is that money to be spent only in the United States? If so, the Americans have it both ways, because they not only get the profits on our purchases but, of course, they get the two per cent. interest on the Loan. I am convinced that if we had stood firm on the policies of justice, decency and economic soundness in our negotiations, which, unfortunately, are now at an end, with the United States, they would have been glad to press this Loan on us free of interest without the onerous forms and conditions, which Canada so willingly did without. I am sorry that last year this Government was elected. There will be toil, tears and sweat before we have finished with it

4.5 p.m.

Mr. Beverley Baxter (Wood Green)

In the very few minutes I have before the Financial Secretary winds up the Debate, I want to say I am very glad of one thing. While we have spoken frankly, on both sides of the House, there has been no real recrimination of any sort against the American Government or the American people. Hon. Members on both sides of the House bitterly resented many things that were said in the debate in Congress, which should not have been said and which make it all the harder to keep a judicial mind towards this very controversial matter. It must be obvious that we on this side of the House are not a united party on this issue. I do not mean the speeches today, which have been sung in peculiarly good harmony with each other. When the Loan was first debated, acting against the advice of our leader, more than 70 of us voted against the Loan; the Front Bench, with two exceptions, abstained, and I believe there were three or four who voted with the Government supporters, but, on the other hand, there were Government supporters who bravely and honestly voted with us. That division in our party still exists.

On Monday, when the Chancellor announced the conclusion of the Loan debate in America, my right hon. Friend the Member for West Bristol (Mr. Stanley), speaking with that honesty which characterises his whole character—and I mean that most sincerely; he is a man of fine character—stood up, I thought rather gratuitously, and said that on his part he welcomed the Loan because he thought without it this country might have reached economic disaster. From the back benches I put the point that it seemed to me it was a prelude to disaster, but that was received with groans from the other side, whereas my right hon. Friend was received with respectful silence. We talk an awful lot about the Loan. I want to put this point. Suppose the Americans had come to London to negotiate this whole transaction. Not that anybody ever comes to London. We go to Moscow; we go to Potsdam; we go to Teheran; we go to Washington: we are the greatest goers that ever was.

Captain Sir Peter Macdonald (Isle of Wight)

And to Paris.

Mr. Baxter

And to Paris. We are always on the move. Any businessman knows he has to get the other fellow on his own ground if he is to talk to him.

Mr. McAllister (Rutherglen)

May I remind the hon. Gentleman of one occasion when somebody came to London and I wanted to make this point? In 1937 the New Zealand Government representative came to London to get a £7 million loan.

Mr. Baxter

We cannot start going through the whole of the past of the country. I am talking now about foreigners.

Mr. McAllister

I was talking about the Tory past.

Mr. Baxter

We are as bad as hon. Gentlemen opposite.

Mr. McAllister

The party opposite are worse.

Mr. Baxter

I am not making a party point. This is apparently a national weakness which we have all got. Suppose the Americans had come and had accepted, quite properly, the abundant Government hospitality accorded to those who come to London, and then got down to business. Suppose the Americans said, "We have a proposition to put to you. We want you to place a billion pounds' worth of orders with us, which will take care of our unemployment problem for five years, and we want to charge 2½ per cent. We, of course, will make a profit on the deal. We will get a lot of it back in Income Tax. In addition to that, we want you to do away with your dollar pool, with your tremendous realisation of Empire free trade, and to eliminate Imperial Preference. Tell us, John Bull & Co., what will you do? If you will do that we will do something for you. Sell out your Empire, break up your economic unity of the Empire, and we will lower our tariffs to you in the United States. Thus the world will be happier, international trade will flow like the Mississippi, and all will be well." The business man who would agree to that ought to be locked up in Colney Hatch. The financial firm that did business like that would go into bankruptcy in six months. They should pay us 10 per cent. interest per year on this Loan for what it really means to them, and I say to the Government that, if they do not intend to eliminate Imperial Preference, they should not create the impression, by saying that they will discuss it, that they do intend to do so. Those of us who have travelled extensively in the United States do not want again to hear our honour impugned because we do not carry through what we say. The Government should take a stand now on this. There is nothing the United States can offer, no concession, that would justify one move towards the elimination—and it is the word "elimination" not "reduction," it is a word that cannot be qualified—of Imperial Preference.

I want to say this to the Government benches opposite—and the Financial Secretary will let me know it I am encroaching on his time: As a Canadian I feel, perhaps, some pride in my own native country because of what she has done, which has been so generously alluded to today, and I feel the right, as an outer Empire man proudly living here, to speak with some emotion on this subject. If the Government try to eliminate Imperial Preference a number of us will conduct such a nation-wide campaign in this country as will light the very beacons on the hills. We will attack them in the market place, in the towns and the cities, we will rouse this whole country against them in such a crusade as will overcome this Government, because we will not have it.

Ribbentrop said once over here, "What is the British Empire? It is held together merely by moonbeams." He thought that you could only have chains to hold an Empire together, but moonbeams cannot be cut But if moonbeams cannot be cut, a cloud can come across the face of the moon, and the moonbeams are gone That cloud is appearing now. Therefore I say this, and I am very grateful to you, Sir, for giving me these few minutes to speak on a subject to which I have given much thought and feeling: The reduction of tariffs in America to us means nothing whatever. The whole of American commerce is tuned to American life. Their advertisements, their goods are all tuned intimately to each other. They will not take our motor cars, they will not take our films, to any extent. They cannot take much more Scotch whisky than they are drinking now. Textiles, yes; for well-dressed men—but in America the women are well dressed, not the men, and that is not a big market. America says, "We want to trade on a basis of equality in your Empire." The verb "to trade" in America means "to sell," it does not mean to sell and buy. Under the American economy they cannot import. That is the truth about America, and this Government must stop imagining, with over-simplification, that we can make any compensation at all by our exports to America for cutting down Empire unity.

In conclusion, I think it was my hon. Friend on the Front Bench who mentioned that the States of the Soviet Union and the States of America are earth bound, held together by the ground, whereas ours are separated by water. I can remember 1914, when the world was very big, when oceans were oceans; but even so, the call of the blood was enough, and we came across the vast seas because the Empire was bound together, if you like, by moonbeams. Today oceans have become lakes, lakes have become ponds, distance has disappeared The Empire now is physically an economic unit, with every country a few hours away from its companions.

The Empire saved us, itself and the world twice in 25 years. Is there anyone who thought it would emerge from a second world war really intact? It came out stronger, closer knit, with this wonderful sterling bloc, the dollar pool, Imperial preference, and with love for the Mother Country and the Colonies. Now the Government, with this Loan in these terms, are threatening the existence of this marvellous historic accomplishment of the British people. My hon. Friends on this side of the House at all times will raise the wind, whirlwind, if the Empire structure is attacked.

Mr. McAllister

Does not the hon. Gentleman agree that it is natural and right for a Canadian, such as himself, to express the pride we all feel in the British Empire, but it is nauseating in the extreme that the hon. Member for Mid-Bedford (Mr. Lennox-Boyd) and other Members on that side of the House should identify love and respect for the Empire with respect for the British Tory Party? Does he not remember that in 1939 the Tory Party and the City of London imposed on the New Zealand Labour Government harsher terms for a loan than the Americans are imposing on us for this Loan?

Mr. Baxter

I think that was wrong and wicked, and I said so at the time—I could not agree more.

4.16 p.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall)

The House will agree, I think, that we have had an excellent Debate. I have very little time to reply, but I make no complaint about that. One goad thing about an occasion of this kind is that it gives the hon. Member for East Aberdeen (Mr. Boothby), and one or two others who feel almost as deeply and strongly as he does on this matter, an occasion to blow off steam. It was not really essential that anyone should be here for the Government to reply to this Debate; it was enough, it seemed to me, that certain hon. Members should have an opportunity to voice their views once again on this matter. Before I go any further, I would take exception to what the hon. Member said about my right hon. Friend the Chancellor of the Exchequer. This Debate, so far as we knew until about two or three days ago, was not to take place until next week. There was another subject down for the Adjournment today, and so my right hon. Friend and I had every right to stick to the arrangements which we had for today. Fortunately for my right hon. Friend his was such that he had to keep it, but I felt that mine was perhaps not so pressing and should give way, and here I am.

I agree with what the hon. Member for Mid-Bedford (Mr. Lennox-Boyd) said, that it is regrettable now the Loan is through that there should be any recriminations, doubts and queries about the bona fides of the United States. That is to be deprecated now that the Loan is definitely a fact. We have to remember that in spite of the obligations, and in spite of the limitations, and I use the word advisedly, which the acceptance of the Loan may bring, that the opposite view which has not been stressed today must not be lost sight of. If there had been no loan, it would probably have led to an extensive trade war between ourselves and our great Allies across the Atlantic. Few of us would have contemplated that with any feeling of equanimity.

I should like to underline if I might the tributes that have been paid to the generosity of the Canadian Government and Canadian people for their assistance in these difficult times. It is a most warming feeling to realise how the sister Dominions of the Commonwealth and the Colonies have rallied round the Mother country at this time and are willing to help us in every way. I should like to say before I go any further that there is no suggestion whatever and no fear on the part of the Government that this Loan will threaten what hon. and right hon. Gentlemen opposite refer to as the bonds of Empire. Neither my right hon. Friend nor I see any reason why the Loan should in any shape or form lessen the good will, good feeling and trading relations that bind us to our sister Dominions within the Empire and to the Colonies in the various parts of the world

Mr. Baxter

It is the commitments that accompany the Loan, not the Loan itself.

Mr. Glenvil Hall

I know, but, as I said, there is no truth in it as will be shown in time. The trouble about these things is that we are working largely in the dark. I ought to make it quite plain that many of the points made by the non. Member for East Aberdeen (Mr. Boothby) cannot be refuted or proved correct this afternoon because it is all hypothetical, but we do feel beyond any doubt that he will be proved wrong and the Government will be proved right. Whatever the outcome, the plain fact remains that this House, with the party opposite abstaining, washing its hands of the whole thing——

Mr. Boothby

Not all of us.

Mr. Glenvil Hall

No, not all the party, but officially the party abstained. Not-withstanding that we have now got this Loan and the first instalment of it has been drawn upon. The hon. Member for East Aberdeen asked me one or two questions and some of them were repeated again during the speeches made by those following him. He wanted to know if there were any secret understanding between His Majesty's Government and the Government of the United States regarding the methods by which we are to repay our sterling obligations, and the extent if any by which they are to be scaled down. This is not the hrst time he has put that query for if my memory serves me right, when he led the well-remembered crusade against the Loan in its earlier stages, he put it almost in the same terms to my right hon. Friend the Chancellor of the Exchequer. Therefore, it gives me great pleasure to tell him, so that he need not ask the question again, that there is not the slightest truth in the suggestion of any secret understanding between this Government and the Government of the United States. We have nothing to hide and there has been no secret pact or secret understanding.

Mr. Boothby

I should like to make it clear that my question was only prompted by an observation made in the United States, as the hon. Gentleman knows.

Mr. Glenvil Hall

I realise why my hon. Friend put it, but lots of things are said in the United States which will not bear the sunlight of examination, and if I may say so, this was one of them.

I have been asked certain questions about the Canadian wheat contract. As the House know, negotiations have been proceeding between representatives of this country and representatives of the Canadian Government on this matter, and all I can say at this juncture is that it is hoped final agreement will be reached quite soon. The United States have been made aware of these negotiations. There is nothing to prevent our continuing them, We have every expectation that they will be completed in the near future.

In this connection, perhaps I should remind the House that in the Canadian Loan Agreement the Canadian Government, quite properly, stipulated that Canadian exports should be treated not less favourably than might be provided under any agreement come to at Washington. That perhaps allays one of the fears expressed by the hon. Member for Mid-Bedford (Mr. Lennox-Boyd).

Another question asked me by the hon Member for East Aberdeen was what would happen now that price controls are apparently off in the United States, and if the dollar begins to depreciate. The House will realise that this country cannot make the United States Government pass an Act imposing price control. To that extent we shall be in the hands of the United States authorities. Although the Loan has been granted to us, it does not necessarily mean that we shall have to draw upon the whole of it. We shall have to see how things go, but, frankly, what has happened in America, and is happening at the moment, is a disturbing feature. We have no possible means, at the moment, of judging at what level prices will settle down. All we can say is that we have a credit of 1,000 million pounds, and that we propose, over the years, to utilise it, or a proportion of it. We are watching with the utmost care what is happening to prices in the United States.

Mr. Gammans (Hornsey)

Has any decision been reached as to what percentage of the Loan will be spent on capital equipment, and what percentage will be spent on consumer goods? Is the hon. Gentleman aware of the danger of living off the seed corn?

Mr. Glenvil Hall

No final decision has been taken as to priorities or the percentage which is to be spent on petrol, newsprint, machinery, or anything else. During the last six months we have been acting—perhaps too hopefully in the mind of some, although our hopes have now been realised—on the assumption that we would get the Loan. Provisional priorities have been established. I have not time to go into all those now, but the House can take it that we want to utilise this money for the benefit of the country in the best possible way, and in the right direction

Mr. Blackburn

Is capital equipment the first priority?

Mr. Glenvil Hall

It is one of the first priorities. We shall utilise some of the money for machine tools and other things, but the housewives in this country do want a little variety in their diet; for instance, one of the priorities is tinned fruit.

A number of other questions were put to me during the Debate, one dealing with the Philippines, another with Imperial Preference, and another with the sterling area. Although Members opposite may not believe me, this Loan will not abolish the sterling area. All it does is to lay down certain stipulations as to what is to happen to dollars and sterling within that area. There is to be freedom for both. The Loan does not, pso facto, abolish the sterling area. I have not been in touch with the Board of Trade, but we will take note of the agreement which has been made between the Philippines and the United States and, doubtless, when we come to meet them in conference, as we shall, this will play its part in the discussion. We are going into that discussion with our hands pretty well free within the broad limits of the White Paper. We are not committed to details in any way and, I think, the hon. Mem- ber for East Aberdeen will find that many of his fears, legitimate though they may be on the surface, will not materialise, and that in spite of all the difficulties we shall find that now we have the Loan great benefit will accrue to this country and the world from it.

It being Half past Four o'Clock, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.