HC Deb 04 August 1947 vol 441 cc1001-105

3.55 p.m.

Mr. Harold Macmillan (Bromley)

My right hon. and hon. Friends felt that it would not be right to bring this Session to an end without a full discussion upon the question of Germany. It is unfortunate that the management of our public business makes it necessary to have it upon a Bank Holiday, but it is also, by a strange coincidence, upon a date which is in the memory of many of us here in this House—4th August, 33 years ago—a date which many of us will never forget. Almost a year ago we held an important Debate upon Germany. My right hon. Friend the Member for Aldershot (Mr. Lyttelton) opened it with a remarkable and impressive speech, which, I think, carried a great deal of weight on all sides of the House. On that occasion he said: … it is undeniable that no clear-cut policy by His Majesty's Government has so far emerged or been enunciated, whatever the excuse may be. He fortified himself with a quotation from the report of the Select Committee, which ran: the Jack of a clear definition of our policy in Germany as a whole, as well as in the North West German zone,"—[OFFICIAL REPORT, 29th July, 1946; Vol. 426, c. 528.] The then Chancellor of the Duchy said in reply: I would ask those who are prepared to criticise that £80 million whether they suggest that we should give up the game altogether, and come out of Germany."—[OFFICIAL REPORT, 29th July, 1946; Vol 426. 626.] That was the Chancellor of the Duchy's reply a year ago. His Majesty's Government was then a going concern, more or less. The Minister was confident, even complacent, and on 28th February last, when we had another full Debate, the same hon. Gentleman presented a Supplementary Estimate for £39 million, still with considerable buoyancy. First, £80 million, then £39 million, not to mention, of course, the £58 million which had been squandered in the great currency racket. All, alas, a great strain upon our own resources and upon our dollar resources.

Then came the decision which we on this side of the House certainly welcomed, for we pressed for it, to transfer the Control Commission to the care of the Foreign Office. So the hon. Gentleman the then Chancellor of the Duchy was pensioned off—I mean that he became Minister of Pensions, much the same thing. But he can console himself, because like other greater men, he was ahead of his time. The general misconduct of affairs by His Majesty's Government may now force us to do the very thing which just a year ago he threw in our teeth as a taunt. I will quote his words again: … give up the game altogether, and come out of Germany. That is not merely because defeated Germany is bankrupt; it is because victorious Britain, after two years of Socialist Government, is now approaching bankruptcy herself. In these conditions, in today's conditions, it is a little difficult, without a certain unreality, to conduct today's Debate. We do not know what we shall be told the day after tomorrow. We do not know what effect the Government's decisions will have upon the question which we are debating today. Nevertheless, we must carry out our task as well as we can, and we must assume that in some form or another, we shall have a continuing responsibility for German affairs.

There are some introductory remarks I would like to make before coming to my main argument on the broad problem. Conquerors have their rights, but apart from their interests, they cannot escape from their duties. It is fashionable today to attribute many of our difficulties to the formula, "Unconditional surrender." I would like to remind the House that, of course, all Members of the Coalition Government were equally committed to that formula. Personally, I am not very much impressed by the argument which attributes so much evil to this phrase. It was much misunderstood. For instance, it was my duty to be present at the unconditional surrender of an enemy country—now, I am happy to say, a friendly country. The surrender took place unconditionally in one sense, but in the first instance there were about a dozen conditions, and on the second attempt, there were about 40 highly complicated conditions. What unconditional surrender really meant was surrender on our own terms, without bargaining, without "higgling of the market."I must remind the House that the Prime Minister at that time, on 18th January, 1945, made this declaration: The enforcement of unconditional surrender upon the enemy in no way relieves the victorious Powers of their obligations to humanity, or of their duties as civilised and Christian nations."—[OFFICIAL REPORT, 18th January, 1945; Vol. 407, c. 424.] It is not so much what we say during a war; it is what we do after the war that matters.

Mr. Paget (Northampton)

Would it not have n a great deal easier and would it not have saved an awful lot of suffering, if at that time we had said what were our terms, instead of talking about unconditional surrender?

Mr. Macmillan

I have explained that unconditional surrender meant not that there should be no conditions—one cannot have a document of surrender without pages of conditions—but that we were not prepared to bargain with the governors of Germany about conditions. To that, all the Members of the last Coalition are absolutely committed. I am only trying to point out that I do not think that is what matters. It is deeds that matter. The ordinary people look to their standard of life, of employment, of food and of clothing. Those are very primitive needs which must be satisfied, as indeed we are now beginning to learn ourselves. If we cannot see that the people have these needs satisfied, a lot of talk about democracy, a new intellectual outlook, and re-education and all the rest of it seems to be rather hypocritical and rather false.

I am sure that now, at any rate, all hon. Members would agree that every humanitarian consideration requires a restoration of at least a reasonable standard of life in Germany. But, in addition, the breakdown of the Potsdam Agreement, and Russian expansionist policy for the last two years, make it necessary to strike a new political balance. Amid many dangers it is often necessary to choose the least. Militant Communism in Russia may become a serious menace or may become stabilised. Similarly, a revived militarism in Germany may be a future menace. It is not to be wondered at that the French, who three times have been the victims of German aggression, should wish to be quite sure that they will not have to suffer a fourth invasion. We must recognise that feeling in France and we must see that France has the reasonable guarantees which she deserves from our Allies in the old world and in the new.

If some would assess the dangers of militant Communism as the greater, and others would put the dangers of a revived militant Nazism as the greater, I think all must agree that the greatest danger of all would be an aggressive combination of the two, for we should always have that in our minds. Therefore, I say that the restoration of a reasonable standard of life in Germany is not only a duty but an interest of Western nations. A year ago, even a few months ago—I think even today—His Majesty's Government had no clear policy towards Germany. No answer was given to my right hon. Friend last year. Their policy seems to be one of drift in this, as in so many other affairs, and, as so often happens, drift turns to panic.

Mr. Bowles (Nuneaton)

The right hon. Gentleman referred to the fact that he was present at another unconditional surrender, namely that of Italy. He also referred to his leader's remarks. May I ask him whether he remembers that the right hon. Gentleman the Member for Woodford (Mr. Churchill) at that time, talking about the Italians, said, "We will let them stew in their own juice and then heat it up for them"?

Mr. Macmillan

This was in 1945 while he was the head of the Coalition administration. Therefore, I suppose that represented the policy of the Coalition administration. Many reasons have been given for the heavy drain of this immense expenditure—nearly £120 million in all. The responsible Minister told us last year that the heavy expenditure was due to the non-implementation of the Potsdam Agreement and the failure to sign the Austrian Treaty. It has, surely, been obvious for over a year that the quadripartite arrangements between the great Powers were not going to succeed. Of course, I know that at the General Election there was a popular and, I have no doubt, effective cry that said: Only a Socialist Government in Britain will be able to get on with a Communist Government in Russia. You have only to get rid of Churchill and Eden, and Stalin and Molotov will come eating out of your hands. This was only intended to deceive the electors. Surely, Ministers cannot have been so naïve as to have been taken in by it themselves.

Of course, as my right hon. Friend the Member for South Kensington (Mr. Law) said last February, the reason for the present state of Germany, and the reason for the immense dollar expenditure in Germany, is that the economic life of Germany has been reduced to a state approaching paralysis. The Government have succeeded in reducing the British zone of defeated Germany to an even greater degree of the frozen unworkable and dazed economy which His Majesty's Ministers have been trying to pin upon victorious Britain. The tragedy is that they are succeeding even beyond the nightmares of most of us. I do not know whether any hon. Members have read a very illuminating article by Mr. Maxwell Stamp in the "Lloyds Bank Review." It confirms a great deal of information which my hon. Friends and I have received from a great number of other sources. It is very well documented, it is objective and factual. I think it is clear to anyone who reads this article that it contains a certain number of lessons which we might do well to ponder over and apply ourselves.

Industrial production in Germany fell by the end of 1946 to 35 per cent. of prewar production. I am speaking of the British and American zones only. By February, 1947, it had fallen to 25 per cent. of prewar. The production of consumer goods, which in October, 1946, was running at about 23 per cent. of prewar, was, by the winter, reduced practically to zero. The food production of the zone is only sufficient, if it stood alone, to supply about 1,000 calories per person. Therefore, the double pressure to which we are so sadly accustomed—the shortage of food, which leads to low production, and the shortage of consumer goods, which leads to an unwillingness of the farmers to grow or to part with their food—all this vicious circle is going on at full swing.

There has been complete breakdown of any incentive in Germany, and that is perhaps the most serious thing of all. We are now beginning to learn that, whereas control may be and is a convenient way of mitigating a shortage, control cannot itself cure a shortage. Only more production can cure a shortage, and it must be worth somebody's while to produce. At the present time, the possession of money, practically speaking, gives no title to goods or services The distribution of goods, of course, is based upon a ration or upon proof of need, and, therefore, there is no incentive to earn money. In theory, the only absolutely free market in Germany under the control is that for postage stamps and that for antiques. The denazification of the German population is going on with the immense cumbrous machine of the Control Commission; the nazification of the German economic system is being maintained and made even stronger, but without the ruthless police force which is the only method of making such a system actually work.

There has been no currency reform for over two years. A year ago, it would have been comparatively simple, because there were goods and services which were available to match that currency. There is a vast mass of accumulated savings in terms of money, which are competing with current wages. This mass of accumulated money savings in German hands is in competition with wages and earnings for the reduced quantity of goods and services available. Even the black market does not afford a great outlet, for the present price of ten cigarettes on the black market is a month's work at present value, while a woollen overcoat is a year's work for the ordinary wage-earner. At the same time, the entrepreneur is strangled with controls, and his incentive really is to retain his stocks of raw materials and not manufacture goods, because he would only get more of this money that he was not allowed to use, and because of taxation, which, in some cases, is 100 per cent. or more.

The price-fixing machinery is still centred in the Control Commission in Berlin, and is very slow in its movements, and, of course, by a strange paradox, the more important the commodity, the greater the time it takes to get the necessary approval from the cumbrous mechanism in order to adjust prices to costs. Even in the bi-zonal agencies, far too much attention is paid to local interests. We must be very careful, while we may want a politically federalised Germany, that we do not get such a break-up of Germany into more or less self-contained economic units as to Balkanise Germany. We have had our lessons from the last war of the economic unit, and, therefore, political federalism must be combined with economic coordination and unity. Nor is this rigid system of control really effective. It is estimated that only about half the total production of the Anglo-American zone reaches the markets, and that the rest is somewhere squandered away in the various forms of black market.

Two years have gone. The position today is worse than it was at the end of the war. It is worse than it was a year ago, and it is steadily deteriorating. I admit, and I think we all do, that there have been weaknesses in the administrative machine. There have been weaknesses of personnel, especially in the lower ranks, but at the same time, there have been some outstanding officers serving there; for instance. Sir Brian Robertson, whose work was well-known to me when he was Chief of Staff on the "Q" side under Field-Marshal Alexander, an officer who conducted a long and difficult campaign with conspicuous success. I think the root of the trouble is not in the personnel in Germany. It is that there has been no really strong direction from London and Whitehall. In spite of our preoccupations over a great field, from which we cannot take our thoughts with our own crusts, we must now act.

There are certain principles of action which I would like to put forward for the consideration of the Government. The first is that a practical policy can no longer be mainly concerned with trying to create a united Eastern and Western Germany. We must recognise that partition now de facto. I would not recognise it de jure. I would not take it as a British or an American responsibility for the division of Germany into two parts; certainly, we must not be blamed before German eyes; but, from the economic point of view, I think we must recognise it. Nor can we retard, or take any steps to bring to an end, the Allied Control Commission in Berlin. It has a very restricted value, but I would not allow it to be impeded. So long as it is in being, it provides us with some contact with Eastern Europe and some machinery for a change should Russian policy itself change. We keep it alive, and, in my opinion, we should keep it alive.

Next, the British, American, and French zones must be joined together into some effective and workable whole, and, since only the Americans can provide the capital in Western Germany, the inclusion of Western Germany in the preparation of Europe's proposals under the Marshall Plan produces a new opportunity to Ministers which I trust will not be lost. The economic interdependence of Western Germany and Europe must be recognised. The Ruhr, the Saar, Lorraine and Luxembourg are interdependent, and, together, they form the greatest industrial unit in the world. Together, if they are prosperous, all Europe will prosper, and, if they decay, all Europe withers. International capitalism at last recognises this fact, whatever may be the opinions of hon. Members opposite, and perhaps international Communism may do the same. National Socialism or social democracy, on a national or cantonal basis, would be wholly disruptive of European economy.

Next, within the European structure, Germany must be made what I believe is now called an economically viable State, in the sense that she must be capable of buying necessary food with her industrial products. The last principle which I put forward, and one which I profoundly believe to be true, is that the French people, historically and morally, hold the key position. They can make or mar any scheme which is put forward. Anglo-American diplomacy must see that the French are brought into the picture from the start; it must overcome French apprehensions and restore and win French confidence. There has been a regrettable tendency, which is really a kind of hangover from the events of 1940, when French power was temporarily eclipsed, to leave out France, or treat her as of secondary importance. That phase is, or should be, now ended, and France must be treated as an equal partner in these undertakings.

Mr. Lipson (Cheltenham)

Could the right hon. Gentleman make quite clear how the policy which he is enunciating differs from that which the Government are at present following?

Mr. Macmillan

It differs from that which the Government have so far enunciated, but if the Government accept it at the end of this Debate, or in the course of it, I, of course, shall be very pleased. But for two years we have not had it.

If these principles are accepted by the Government then, I think, other things will follow, which I hope I shall be allowed to put before the House. They fall into three different categories—moral, political and economic. Under the moral category, we must, in my view—I do not know whether the Government accept it—put a time limit to denazification, and a large number of people who have been dealt with under that category must he readmitted to German life. One of the great troubles there is lack of administrative capacity both in industry and local government. One of the reasons of industrial indiscipline is the fear of denunciation which is still a kind of poison running right through the management and organisation of German life. Secondly, the trials of the German war criminals, and those in the arrestable categories, should be brought to a speedy end. Thirdly, the penalising of relatives, which is, I think, a most barbarous rule, must cease. The war prisoners must be returned with far greater expedition for, after all, they are, at least, able-bodied men who can help to equalise the large number of old and young refugees whom we have to accept in the zone. At the same time, of course, great pressure should be placed on the Polish Government to prevent the flow of refugees, which is a continual embarrassment to the British and American zones.

There is one thing I would like to say on the subject of propaganda. I have very little experience of what used to be called by the British "political," and by the Americans "psychological" warfare. Whether it is any good in war, I am not sure, but I certainly doubt its efficacy in peace, and, in any case, the propaganda that we are putting forward at the present time, should, in my view, be Allied; it should be objective and it should be restrained, and, if it is possible, it should retain a good deal of humility and a little humour.

Now I come to the political changes which I would like to recommend. I believe that, somehow, we must get back to a complete integrated headquarters and to an integrated regional staff. An integrated headquarters alone will not do. Let us reconstitute S.H.A.E.F.—which was only broken up to please the Russians—and the headquarters, and the responsibility which is British, American and French. I had a little experience at an Allied Force headquarters, and, in my view, an integrated staff, with its combined loyalties, is quite different from the occasional conferences of independent authorities. Unless people live together, work together, and, sometimes, play together, they do not really get that full understanding of each other's point of view, and that is the only way to run a reorganisation of the zones. It might even be possible—I do not know whether it would—to persuade General Eisenhower to undertake this task as a further work he might do for Europe. He is a man who would command the absolute confidence of the British and the French.

Germany must govern herself to a far greater extent than she is being allowed to do at present. From top to bottom, from the federal top, which, I suggest, should be at Frankfurt, to the much smaller regional councils and county councils, there must be real self-government. The traditional boundaries of Germany should be revised, as far as possible.

Regional patriotism should be allowed to flourish, but it should not be allowed to lead to economic separation. The Germans must be responsible, and must be made to feel responsible. In spite of a good deal of progress which has taken place, I fully recognise that in the local sphere, and even up to the land system, there are far too many reserved subjects, and far too many British officers in our zone in a parallel position to that of the German functionaries. That prevents any real responsibility—any sense of the transfer of responsibility. There is too much control and there are too many officials. No British or Allied officer or man should, in my view, be used to do what can be done by a German. The administration is too cumbrous.

A year ago there were 42,000 officials in the British zone alone. Later, there were 26,000, and, according to the last figure given in the Debate of 1st April, there were 20,000. The Allies should become not governors, but a small body of expert advisers, especially powerful, of course, where the question of imports of food, raw materials or machinery are concerned. The military forces can be reduced. Our real authority depends not on the soldiers there, but on the economic sanctions, on the realisation of the fact that without the imports which are sanctioned by America and Britain, Germany cannot live. That, I think, would be all that is necessary, and such a course we shall, in any case, probably have to adopt because of our own immediate difficulties. There should be no interference, and, above all, no preference or favouritism shown to German political parties.

After the last war, we tried to force liberalism upon the Weimar Republic, and we killed both liberalism and the Weimar Republic because they became associated with defeat and dishonour in Germany. In the same way, if we now try to force social democracy upon the Germans they will react as soon as they are free to do so. We must not try to force nationalisation of industry, or any particular scheme or hobby upon them. In my view, one of the great advantages——

Mr. Skeffington-Lodge (Bedford)

Will not the right hon. Gentleman bear in mind and agree that the German political parties, as they exist in Germany, have expressed a preference for socialisation in regard, for example, to the Ruhr industries?

Mr. Macmillan

Certain expressions have been made in the British zone, but I have not seen any evidence of the same in the American zone. One of the great advantages of the fusion of the zones would be that the British and American points of view would both be brought to bear on this problem, and a reasonable compromise would be reached. In my view, the Americans are rather too averse from what we call "planning," but we, also, are too keen to press our own particular nostrum. Out of the marrying of the British and American zones, we would reach a very reasonable conclusion, based upon the object of making the industries work, rather than the pressing of our particular political views upon them. There is one further point which I would beg the Government to take into account. They should be very careful about the arguments used in favour of what is called land reform. If land reform merely means following the political purpose of breaking up the large landed estates, it may easily result in a far greater difficulty in getting an agricultural surplus from the small farms which will follow, and that is common knowledge to anyone who has seen that sort of thing in any part of the world.

Finally, on the economic issues I have already given a rapid survey of what is wrong. Since, in the expressive words of my right hon. Friend the Member for Woodford, we must accept the fact that Russia has the food and we have the mouths, we must also accept the fact that Western Germany with its swollen population, requires more industrialisation and not less. Therefore, factory removals for reparations must stop at once. We asked this a year ago. We were told that these removals had stopped. I am now told on the very highest authority that they are still continuing. All we are told is that some other agreement has been made. But agreements which are made multilaterally should be kept multilaterally, and I think this removal of factories should be stopped immediately.

The other reason for the dismantling of plant, not on the ground of reparations but on the ground of dangerous war potential, is, in my view, being interpreted far too widely, and the time has come to re-examine the question and to narrow considerably the category of plant and industry which can be removed on that basis. I recognise, as we all must recognise, that some sections of British opinion—both master and man, employers and employed—may fear the competitive pressure of German exports in the future. But it must be remembered that there are risks in everything in life, and I am convinced that the risk of a total European collapse presents a greater danger today to British economy as a whole.

There must be an immediate currency and taxation reform. It is long overdue. No healthy return can be made without it. There must be a re-introduction of incentive into German life, and, as far as possible, a freer German economy. Last of all, in Germany, as in Britain, no revival can take place apart from an increase in the output of coal. There is no argument about that. We must have a practical working system, and this can only be done by a complete integration of the Anglo-American-French control. Meanwhile, food and raw materials are required, and only America can provide those. But the export of coal should be most carefully scrutinised. Of course, we all recognise the prior claims of France, Belgium and Holland, but the more effective utilisation of German coal in the. light of, and as part of, a co-ordinated organisation for European production is essential if we are to have any chance of implementing the Marshall plan.

To sum up, it appears to us on this side of the House that the Government cannot escape censure for the weakness and indecision of their policy towards Germany, and for the consequent ineffectiveness of the administration of the British zone. As I have said, I prefer to place the responsibility where it lies—upon responsible Ministers, and not upon their servants or officers. There are many distinguished officers who have been charged with the unwelcome and difficult tasks which we have in Germany. Military officers, in my short experience, do not find it easy to carry out these novel functions in the politico-economic field, and they cannot really do so effectively unless they have adequate directives and day-to-day consultations with responsible Ministers.

Mr. Platts-Mills (Finsbury)

Would the right hon. Gentleman say why he is anxious to re-establish S.H.A.E.F. and General Eisenhower, when he so disparages the capacity of military leaders in this economic and political sphere?

Mr. Macmillan

Because under that system, both at A.F.H.Q. and at S.H.A.E.F., General Eisenhower had on his staff a British representative of Cabinet rank, and an officer of ambassadorial rank representing the President of the United States, and that is the system which I am advocating.

Mr. Platts-Mills

Was not the skill of General Eisenhower and his staff directed to destroying the morale and the industry of the enemy?

Mr. Macmillan

I did not quite hear that. What I was trying to say was that day-to-day consultation is so important, and I always thought that we ought to have a resident Cabinet Minister in Germany. There is a very great difference between occasional visits, and the Minister actually living and working in the whole atmosphere of the headquarters. I was very shocked to find that the noble Lord the Chancellor of the Duchy of Lancaster had suddenly been brought back to deal with a Debate about some matter or other in another place. It was as if I had flown back from the Mediterranean in the middle of the war to take part in a Debate on town and country planning. For 18 months we had a junior Minister at Norfolk House. That has now been partly remedied, but I still do not think the Foreign Office has the power, authority or knowledge to carry out all these necessary functions without the appointment of a Minister such as I have described.

I feel that the close daily co-operation that we had between America and Great Britain in the war—a flexible comradeship upon which the success of war was based—has passed. It may be impossible wholly to reconstitute that position; it was based largely upon the personality of the Roosevelt-Churchill combination. Nevertheless, through all these months we seem to have been drifting along, rudderless, without a clear purpose and without any sure chance of landfall. Yet upon the solution of this German problem, with which is bound up the whole of the European problem, largely depends our own power to overcome the storms which threaten our country today. Even at this late hour I say: Let us put aside indecision and procrastination, and give to Europe and to ourselves the leadership by which alone the tortured world can be rescued from impending disaster.

Mr. Paget

Before the right hon. Gentleman concludes, I would like to ask him one question. He made a serious charge that the relatives of political prisoners were being victimised. Could he tell us what he meant by that?

Mr. Macmillan

I think I referred to the penalising of the relatives of prisoners as well as of the prisoners themselves. [HON. MEMBERS: "Where?"] I refer to unemployability, and so forth.

4.40 p.m.

Mr. Edelman (Coventry, West)

The right hon. Gentleman the Member for Bromley (Mr. H. Macmillan) was himself during the war a distinguished example of a Minister Resident who managed to work with our Allies in dealing with a conquered country in the interests both of the Allies and of the defeated enemy. But today I was disappointed, in listening to him, to find that, although he made many suggestions for the administration of Germany, he nevertheless failed utterly to deal with the critical economic problem which faces us there today. We all know that this winter in Germany is going to be a grim and ugly one. It is going to be a winter which, both for the Germans and for the occupying Powers, will be even more difficult to live through than last winter. The reason is that during this coming winter we at home will be faced with our own crisis: we shall have difficulty in feeding our own people, and the problem of feeding the Germans will be correspondingly greater.

I should like today to recall a sentence of the right hon. Gentleman the Member for Woodford (Mr. Churchill), when he said early in this Parliament that the problem of Germany would not be to keep Germany down but to keep Germany up; and that is the major difficulty which faces us today. The great problem which the Foreign Secretary has to confront, and with which the Ministers who represent him have to deal, is the basic fact that today the economy of our zone, even when fused with that of the Americans, is an unnatural one. Germany has been split in two, and the section which we have to deal with is a section which can be self-supporting only if it reaches an export figure of £250 million—about the total exports which were exported from that region before the war. Now, if we compare that figure with the current exports of Germany, we shall find that there is a most grave disparity. During the first five months of the year the exports from our own zone in Germany have reached only the figure of £12 million; and even if we increase the level of industry in our zone I cannot possibly see how we can raise our exports within the next five—even within the next ten—years to a degree which will enable our fused zones to be self-supporting.

Consequently, it is quite clear that, for a long time to come, the fused zones of Western Germany will have to depend on the charity either of Great Britain or of America, or of both. We ourselves have entered into vast dollar commitments for Germany. We have already provided over £180 million for food and for our Army of Occupation. In the coming year, that figure may be reduced to something like £100 million. Then, on top of that, in the next three years, in order to revitalise Germany industry, we have undertaken to expend something like £125 million in the fused zones, in order to give an injection of capital goods and raw materials to German industry. I would therefore ask today whether it is the intention of my right hon. Friend in the coming year to provide all of the sum which is required to sustain the Germans from the point of view of feeding them and stimulating their industry.

If we are to undertake that burden, we shall have to pay for the food and for those services very largely in dollars; and we shall have to make that contribution at a time when we ourselves have been considerably enfeebled. Consequently, as I listened today to the right hon. Gentleman the Member for Bromley attributing all the difficulties of the present situation to the shortcomings of His Majesty's Government, I could not help feeling that, even if we had deputed, as he proposed, a Minister Resident to Germany, even if we had carried out in detail some of the excellent proposals he has made, there would still remain the fundamental problem of our own limited dollar resources and the necessary expenditure of dollars in order to sustain Germany.

I want to suggest today that we should say quite frankly, to the Americans at Washington, that we are not in the position to feed Germany, and that we are not in the position to provide the dollars to stimulate German industry at a time when our own industry is in need of renovation and re-equipment. We must say that, I think, quite bluntly, and say to them that if they want to prevent that chaos in Western Germany which they fear, if they want to hold up the onward movement of Eastern Communism, then they must take a fair share of the burden of Germany. If we consider what the individual Briton and the individual American is contributing per head we find that, whereas per capita the individual Briton contributes something like £2 10s. per head to the sustenance of Germany, the individual American makes a contribution of only 15s. per head; and that seems to me to be an unequal sharing of the burden. If, in fact, we have a fused economic zone, if the benefits of that zone are to be equally distributed among the occupying Powers, it is only just that the burden of the zones should be shared equally by the occupying Powers; and, more than that, I believe that in the present critical situation the Americans should be called upon to provide as much food as Germany needs in order to maintain the nutritional standard of life which has been fixed for that country.

The right hon. Gentleman referred to the question of coal. Now, it has been established in Germany—it has been established in the Ruhr—that the miner's productivity was a direct relationship to the amount of food that he eats. There is a definite graph of production which shows that increased production corresponds with an increased allocation of food. If we are to have the coal which is fundamental for the revitalising of German industry, the Ruhr miner must get more food. But, on top of that, he must also feel that he is taking part in the revival of Germany. The question of socialisation is not a matter of Socialists in this country advocating a political nostrum. I am quite sure that everyone who has been to the Ruhr and seen German life, is convinced that the German coalminer does not want his coalmines to be turned back into the hands of those German industrialists who were the sponsors and the approvers and the sustainers of Hitlerism. The fact that today there is no central national Government in Germany does not mean that the coalmines in Germany should not be brought under public control. It is possible to socialise them. It is possible to invest the ownership of the property of the German coalmines in the Länder, and I believe that if that is done it will provide a tremendous boost to the morale of the German miners.

At the same time I do not think that nationalisation or even socialisation is, in itself, enough to give the Germans the feeling that they have themselves attained stability, or to give the neighbours of the Germans the feeling that they have won security. I am quite convinced that if, when Hitler came to power, the German coalmines and the iron and steel works had been nationalised, he would have had an even more effective weapon than he had at that time, when they were in private ownership. I feel it is fundamental that the control of the Ruhr should be in the hands of some international authority. In disposing of the question of the Ruhr, I suggest that ownership of the mines should remain in the hands of the Germans, but the actual administration and control of the Ruhr coal mines, and of the Ruhr heavy industries generally, should be in the hands of a consortium of the Allies. I believe that only in that way will it be possible to integrate the Ruhr economy effectively with the rest of Western Europe.

I would not dissent from what the right hon. Member for Bromley said when he spoke of the importance of our policy marching closely with that of France. One of Europe's great needs is to bring about the de-congestion of the Ruhr. It is of vital importance to Europe's security, and to obtaining a rational distribution of industry in Western Europe, that, instead of the old process of the coal of Lorraine moving to the Ruhr, that process should be reversed. The coal of the Ruhr should move into Lorraine. In other words, instead of heavy industry being concentrated in its present over emphatic form in the Ruhr, there should be a spreading out of heavy industry, and we should no longer think of the Ruhr as the industrial heart of Europe, but of the whole complex of the industries of the Ruhr, Lorraine and the Saar.

One of the terrible things apparent to anyone who goes to Germany is that the people there have literally no confidence whatsoever in the currency. They regard it as being so much paper. For the last two years many of us in the House have pressed that there should be an effective currency reform in Germany, and I should like to ask my right hon. Friend what steps are being taken in order to bring it about. We must reduce the amount of paper in circulation. Today, unhappily, the primary producer is unwilling to sell his material or his product merely to obtain in exchange a currency in which he has no faith. The result of that is that there is a vast system of barter taking place in Germany, a system which completely eludes the control authorities, and which results in a complete lack of effective knowledge by the controlling power of what is going on in the economic life of Germany. I should, therefore, like to ask what steps are being taken in order to bring about an effective reform of the German currency.

My final point is this. Recently we have had a fusion of the machinery of government in the British and American zones. The result is that, instead of having two medium-sized cumbersome machines we now have one enormous cumbersome machine centred in Frankfurt. It is a machine which has too many drivers and too many brakes, but unfortunately no accelerator. So far from bringing about a more effective direction of the economy of the zones, it has increased confusion. One of the reasons for this state of affairs is that, for every agency within the fused zones of Germany there is a parallel British control. It is as though every worker had standing behind him a man doing nothing except telling him what he ought to do. This has led to a vast complication of the vast bureaucracy in the zones. One of the major steps necessary in Germany is to simplify the administrative machine. I suggest that the first step to be taken to that end should be the removal of bi-zonal control from the lower levels. In other words, where there are certain functional agencies responsible for food, industry, and so on, the Anglo-American control should be removed completely and reserved for the top level, where we are controlling policy.

I believe that only in that way can we give the Germans a proper sense of their responsibility. After all, in the long run, if we are to get rid of the burden of Germany, if we are to save ourselves from the utter exhaustion which this parasitic encumbrance is causing, we must see to it that we lay the foundation for an administration in Germany which will be effectively self - governing and self-administrating. Unless we do that we will all the time have to act as a nursemaid to Germany; we will all the time have to act as her purveyor and provider; and all the time, while we ourselves are coping with our own gigantic problems, our humanitarian instincts will lead us to efforts far beyond our strength, because in Germany there is a hungry country which we have conquered and which requires assistance.

The only way the Germans can become self-supporting is if they are given the opportunity of supporting themselves. That process cannot begin too quickly; and I believe that it must begin now. Meanwhile, our fundamental task must be to simplify the machinery of administration, to make it more efficient, and to point out to the Americans that while our common interests in Europe demand that we remain the predominant Power in the Ruhr, they have the obligation to Europe of seeing that this winter Germany is properly fed and sustained.

Mr. H. Macmillan

On a point of Order, Mr. Deputy-Speaker. Can the Government give us any information about when and how they propose to reply to this Debate? It is not unknown for the Government to reply on Supply Days.

Mr. Deputy-Speaker (Mr. Hubert Beaumont)

That is not a point of Order and the Question is not for me to determine.

Mr. Macmillan

Then may I ask leave to move the Adjournment of the House?

Mr. Deputy-Speaker

No, I could not accept that motion.

The Minister of Health (Mr. Aneurin Bevan)

My right hon. Friend will reply at the end.

Mr. Macmillan

I am glad somebody is going to reply.

4.57 p.m.

Mr. Molson (The High Peak)

While I am glad that the Foreign Secretary is to reply to this Debate, I think it is treating the House with a lack of consideration when the very important matters raised by my right hon. Friend the Member for Bromley (Mr. H. Macmillan) are not to receive any reply from the Government until the last speech of the Debate.

Mr. Bevan

Why not?

Mr. Molson

There was a remarkable interruption from the hon. Member for Cheltenham (Mr. Lipson), who made the claim that the constructive suggestions put forward by my right hon. Friend—some of which were of a most drastic and radical kind—were, in fact, the existing policy of His Majesty's Government.

Mr. Lipson

As the hon. Member refers to me, may I say that I made no such claim at all? I merely asked for information. I asked the right hon. Member to make clear to me and to the House generally in what way the principles he was laying down were not those being followed by the Government.

Mr. Molson

I apologise. It is a well-known technique in this House——

Mr. Lipson

It was not in my case.

Mr. Molson

No, but it is a well-known technique in this House when an hon. Member wishes to put a point to ask whether that is not so, and to ask for information upon the subject. What better illustration could there be of the inconvenience caused by His Majesty's Government when an hon. Member who takes a very independent line in this House asks the Government whether, in fact, they are not seeking to follow the line advocated by my right hon. Friend, and it is not until the very last speech of this Debate that that hon. Member receives an answer.

Mr. Bevan

Why not?

Mr. Molson

Since the Under-Secretary of State for Foreign Affairs is here, perhaps I might repeat, apropos this matter, that my right hon. Friend recommended a number of extremely important matters, such as to recognise de facto that partition does exist between the Russian and the Western zones. As far as I am aware, up to the present time the Foreign Secretary has always refused to recognise that any such division exists.. Again, my right hon. Friend referred to such matters as the end of denazification, the prevention of the influx of further refugees, and the reconstitution of S.H.A.E.F. It would have been for the general convenience of the House if the Government had seen fit, since they have a number of Ministers associated with the Foreign Office, to let one of these Ministers answer some of the points raised by my right hon. Friend, instead of waiting until the concluding speech in the Debate. On the other hand, I welcome the fact that the Foreign Secretary is to speak. Most of the earlier Debates upon Germany led to nothing conclusive, because the Minister replying was the Chancellor of the Duchy of Lancaster who was not a Cabinet Minister; he could not deal with matters of policy, and was able to answer us on each occasion only by saying that this, that and the other thing had been laid down in the Potsdam Agreement—he was, of course, at that time under a directive to carry out the Potsdam Agreement.

Since the Foreign Secretary has become responsible for our administration in Germany, I am glad to notice that matters affecting policy have crept into his speeches. He dealt with this matter at some length in the last speech he made upon this subject, but again, unfortunately, his main speech on that occasion was the last in the Debate. He said then that those matters which he had not been able to deal with, he would be glad to deal with by correspondence, and I availed myself of his courtesy in that regard, asking him for elucidation on one or two points. While I am greatly obliged to the right hon. Gentleman for the care and courtesy he always shows in dealing with matters raised in correspondence, it hardly forms part of our Parliamentary discussions when questions can only be raised in correspondence after a Debate is over.

I have now another criticism to make, that in the steps the right hon. Gentleman has taken he has been a little too tender towards the feelings of our three Allies. I was surprised when he told "me that the "Supplementary Principles governing the treatment of Germany," which he referred to in his speech on 15th May, and which he had laid before the Moscow Conference, still remain his long-term policy for Germany. That was a very good opening gambit with Mr. Molotov when he went to Moscow, but since Mr. Molotov has treated his Supplementary Principles in the way that he treats most of the right hon. Gentleman's proposals, I should have thought that these proposals might now be taken to have fallen to the ground. I do not see why this country should continue to be bound by them, when, in fact, they have been rejected by our Russian Allies.

I come next to the matter of the quadripartite machinery. This was a clumsy expedient to give effect to the assumption and principle of the Potsdam Agreement, that Germany should be treated as a single economic unit. The right hon. Gentleman is on record as having said several times that Russia has declined to treat Germany as a single economic unit. Therefore, the very reason for this clumsy expedient has now come to an end. One day I attended a meeting of the Coordinating Committee, and almost every matter was obstructed by the Russians. We were even refused permission to allow letters written in Danish, which we were able to censor in Danish, to be sent by Danish-speaking people from Germany into Denmark, on the grounds that the Russians had no Danish-speaking censors. It was because of the refusal of the Russians to treat Germany as a single economic whole, that the Anglo-American zones were fused for economic purposes. I should now like to urge most strongly, on the lines of my right hon. Friend, that a great effort should be made to bring in the French zone.

Even before the Marshall offer was made, it was already apparent that there was need for a revision of the Level of Industry Plan. It was necessary for three reasons. In the first place, it was necessary for the survival of Western Germany. In the second place, it was necessary if Britain and the United States were to obtain repayment of the vast sums they have advanced since the end of the war to keep the head of Western Germany above water. It has been calculated by the "Economist" that if Western Germany is even to pay its way, it will be necessary for exports from Western Germany to be increased to 65 per cent. above the prewar level. In the third place, it is necessary for the recovery of Western Europe that there should be an increase in the level of industry permitted to Western Germany. Although these things were all abundantly clear before the Marshall offer was made, it has surely become a matter of extreme urgency now that the Marshall offer has been made; if it were desirable before that France and the French zones should be brought in with the other two zones, surely it has now become an essential part of the response which Western Europe must make to the Marshall invitation.

If we are to obtain substantial assistance from the United States in order to re-equip and revive Western Europe, then manifestly Western Europe must first make the fullest possible use of its own resources. The Foreign Secretary was abundantly right when he refused to be associated with Mr. Molotov's idea, that every country should ask for just what they wanted and then a common list of all the mendicants should be given to the United States. The Foreign Secretary said that, on the contrary, there must be intergration of Western European industry, and Western Europe must try to set its house in order. Surely, as the hon. Member for West Coventry (Mr. Edel-man) said, there is the greatest possible opportunity for a revival of the industry of Europe as a whole, if you integrate the industries of Belgium and Luxemburg, of Lorraine and the Saar. Those, I believe, are the lines on which we should go, and that is a solution both for Western Germany and for Western Europe, and I believe it gives us the best answer we can give to the Marshall offer.

A word should be said here about the attitude of France in this matter. France is faced with an economic crisis at least as grave as our own and at least as pressing. Of recent years it has come to be true of France what used to be said of Austria, that although France's position is desperate, it is not serious. I regret that at the present time, when it is so manifestly necessary for all the resources of Germany to be integrated with those of the other countries of Western Europe, if Western Europe as a whole is to be an economic unit capable of paying its own way, there should be so little co-operation on the part of France. For example, if one looks at the Monnet Plan, almost the only reference to foreign industry of any kind is a repetition of the claims that coal from the Ruhr must be made available to assist the industry of France.

There is, of course, a great difference at present between the capacity of Germany to produce under the Level of Industry Plan and what is in fact being produced. Germany is allowed to produce 7.5 million tons of steel a year and is only producing 3 million tons. There are three main causes of that—hunger, destruction and hopelessness. That hopelessness is largely due to reparations. So long as the Germans feel that there is hanging over them a danger of the Allies coming down, dismantling their equipment, and removing it as reparations to foreign countries, you cannot expect cither the workers or the employers there to throw themselves wholeheartedly into increasing production. I was glad to hear my right hon. Friend say—I think it was the first time it has been said from the front Opposition Bench—that the idea of recovering reparations from Western Germany must now, in general, be abandoned. Western Germany today has a greatly increased population as compared with the war, a very large proportion of her industry has been destroyed. So if there is to be that increase in productivity which alone can enable her to maintain her own people, to repay what has been advanced by Britain and the United States of America in the last two years, and to give the people of Germany a reasonable prospect of a better standard of living in the future, then there will have to be an end to the idea of reparations.

I cannot exaggerate the depressing and deterrent effect of such reparations, for I saw it, last summer, when I, with some hon. Gentlemen on the opposite side of the House, watched the dismantling of the Hüttenwerke steel works and their removal to foreign countries. I do not object to the removal of that small category of industrial equipment which is not capable of being used for any peaceful purpose, although I would say that Russia is the last country to which I would like to see a war-making capacity being transferred. So far as the industry of Western Germany as a whole is concerned, I believe that our attitude should be that the sky is the limit. I believe that to be the only basis upon which there can be a revival of Western Germany, a survival of Western Europe, and I believe that should be made the basis upon which Europe as a whole will answer the Marshall offer. With the financial and economic assistance of the United States of America, and with the close integration of the industry of Western Europe as a whole, there should be a reasonable hope that Europe can yet revive and pay its way.

5.16 p.m.

Mrs. Ayrton Gould (Hendon, North)

I propose to confine my remarks to Austria, not to Germany, and after hearing so many allegations about what the British Government have not done in Germany, it is a real pleasure to be able to state without fear of contradiction some of the things we have done in Austria. One of the troubles of the Labour Government is possibly that we are rather too diffident about talking of the good things we have done for other countries. On thing we have done for Austria was to give them ten million pounds last winter without which they would definitely have gone under as a people. That ten millions was given partly as credit, partly as a grant, and in spite of our own economic difficulties some of it could be used in dollar form. That ten millions was given when nothing else had come through, before the American loan, and it enabled the Austrian people to live. Heaven knows, it was not very well, but they were enabled by Britain to live from January to May, and they were even able to buy a certain amount of Ruhr coal. It is well this should be remembered, both by the British and by the Austrians. We did this in the hope of helping, what most of us had regarded all through as a friendly people, because it must not be forgotten that although, of course, there were Nazi Austrians, just as there were"18B people in this country, the mass of the Austrian people were friendly to the Allies. They have always been friendly to Britain, and they do not like their history, which is a bitter one.

Their history is that in 1938 they were invaded by Hitler. Austria was occupied by Germany, and that occupation was recognised by the British Foreign Office. The British Government of that day assented to it. We must remember that in 1938 the British Government were all out for appeasement. It was only a little while after the occupation of Austria, that Munich happened. The Labour Party denounced appeasement, as it always has denounced it, but the Government in 1938 carried it out with what most of us think was disastrous results.

Mr. Beverley Baxter (Wood Green)

On a point of Order. Is this discussion to range over Munich and the acts of the parties in the past? Are we to be allowed to deal with the Labour Party's attitude to disarmament in this country before the war?

Mr. Deputy-Speaker (Mr. Hubert Beaumont)

I am watching very carefully and thought the hon. Lady was merely illustrating a point. It would be out of Order to proceed further on the subject mentioned by the hon. Gentleman.

Mr. Baxter

No one who speaks subsequently, can deal with the Labour Party's attitude at Munich?

Mr. Deputy-Speaker


Mrs. Ayrton Gould

I only instanced that because I want to ask my right hon. Friend the Foreign Minister to pursue a different policy in regard to Austria, and because I regard one thing that we are doing as the final act of appeasement. I deplore that we are doing it, and I hope that"my right hon. Friend will agree to alter it. The position is this: Although we are accepting, and have accepted almost from the end of the war, Austria as a friendly country, she still has no diplomatic status in our eyes. Her minister here is an alien visitor. He is not a recognised diplomatic minister of an Austrian Legation. I think that this is very unfortunate. Although I do not propose to deal with the quadripartite control now I deplore quadripartite control just as much in Austria as it has been deplored in Germany. America has recognised Austria diplomatically. Let me quote the declaration made by the State Department of America on 28th October, 1946: The United States has accordingly regarded Austria as a country liberated from forcible domination by Nazi Germany, and not as an ex-enemy State, or a State at war with the United States during the Second World War. It goes to to say: In order to clarify the attitude of the United States Government in this matter, the United States Government recognises Austria for all purposes, including country comparable in status to other liberated areas and entitled to the same treatment, subject only to the controls reserved to the occupying powers in the new Control agreement for Austria, June 28th, 1946. I hope that we shall follow the lines that America has taken, because the position of Great Britain at present is an anachronism. We do not speak of the peace treaty with Austria; the Treaty proposed is "The Treaty for the Establishment of an Independent Austria," showing that we accept the fact that Austria is a liberated country and not an ex-enemy country with which we must conclude a peace treaty. In spite of that, the Austrian Government have not diplomatic status here—even the furniture that belongs to them is held by the Custodian of Enemy Property, as it was when war broke out. Germany annexed the Austrian Legation and made it part of the German Embassy in this country in 1938, so naturally when war broke out the whole of the property of the German Embassy and the Austrian Legation was taken over by the Custodian of Enemy Property. But I suggest that the time has come when this should be put an end to as far as Austria is concerned. I particularly ask my right hon. Friend to take this step, because I think that it would be a very real help and encouragement to the Austrian people, at a time when they sorely need such help and encouragement.

The British Government have done their utmost to end the occupation of Austria, and it is not our fault that there are still occupying forces there; but neither is it Austria's fault; and she is suffering terribly because these Forces are there, and because, since there are occupation forces of all the four countries making up the Allied Control, our forces must necessarily stay. Indeed, the Austrians would be the last people who would want British forces to leave, when the forces of other countries were still in occupation. What we have to try to do is to get rid of all the occupation forces; to get the treaty signed; but, so far, in spite of all the good endeavours of my right hon. Friend the Foreign Minister, that has not been possible. The result is that the Austrian people are suffering sorely from the occupation. They have been through a winter of bitter suffering from cold and hideous lack of food and, although the rations are rather better now, and certainly better than they are in Germany, they are still dreadfully inadequate. Austria cannot get any real industrial economy working because she is, like Germany, divided into four zones and because, not through our fault, it is impossible for her to make an effective industrial agreements or to carry on her industry and exchange her commodities from one part of the country to the other, or to carry on any export trade; all because this miserable quadripartite control exists separating the four zones from each other.

On 7th May of this year, the Austrian Parliament issued a statement in which they requested the Government at once to approach the Allied Military Council with a view to securing relaxation of the Control Agreement, until such time as the treaty is ratified. There are a number of things that would make a tremendous difference to the well-being of the people—I cannot say to their state of happiness, but I can say to the mitigation of their misery—if they could be carried out. Some of them in our own zone we could carry out as a British Government. Others could only be carried out—like the removal of the occupation forces—by agreement of all the countries in control.

There are some things that could be done in our own zone. For instance, they have asked for the immediate suspension of every kind of requisitioning of Austrian foodstuffs, as well as other, goods for the occupation forces. That we certainly could do in the British zone. They have asked for the immediate release of schools, hospitals, convalescent homes, spas and hotels for the benefit of the Austrian population and the national economy; they have asked for the repatriation of the prisoners of war and they have asked that the Austrian Government should not be hampered in concluding free and economic treaties with other countries. We could do our best with that although we cannot achieve it alone. They also ask that Austria should be granted the right to issue visas to those who enter Austria; also that all goods produced by firms and concerns, on Austrian territory should be without exception subject to Austrian law, and the Austrian rationing regulations; Austrian control to be conducted exclusively by Austrian officials in order to put a stop to illegal exports of trade; and the abolition of the censorship on Press, mail and broadcasting.

Some of these things can only be done by a whole of the quadripartite control, and I know we try to secure their achievement; but there are a number of them that we could get done in our zone by altering our own control, and I would urge the Foreign Secretary in the strongest possible way to consider instructing the officials of the Allied Control Commission in the British zone to review all these matters in the British zone so as to see what can be done in order to help the Austrian people. Remember they are our friends and they are suffering gravely from what is no fault of theirs. We should see what we can do to mitigate conditions in our part of Austria, and I ask my right Friend to do both of these things—to have a review made in our zone to discover all the ways in which mitigation can be granted, and to see that diplomatic status is immediately granted to the Austrian Government here in Britain.

5.53 p.m.

Professor Savory (Queen's University of Belfast)

I am sure the House has listened with the greatest possible interest to the speech of the hon. Member for North Hendon (Mrs. Ayrton Gould) and the sentiments she has expressed will, I feel sure, meet with approval on this side of the House. I also propose to deal with an Austrian question. We have had several discussions in this House with regard to South Tyrol, and I cannot help' believing if a free vote had been taken of the majority of this House it would have demanded the redress of a very serious grievance which was inflicted by the Treaties of 1919 when this purely Austrian, German speaking district was torn from its mother Tyrol and annexed to Italy on strategic grounds, the idea being that Italy could only be defended on the Brenner. Strong sentiments were expressed here which were not confined to one side of the House, and I think we were all agreed in demanding that something should be done. We were to a certain extent reassured when we saw in the Treaty between Austria and Italy that Annexe 4 was inserted and that the conditions, prima facie, seemed to be satisfactory.

However, everything depended on how those conditions were going to be carried out. Everything depended on the good will with which the Italian Government were going to exercise the powers which the Treaty had conferred. In the last impartial census of which I have a figure, that of 1910, the German speaking Tyrolese totalled 224,388. The Ladin population, which is strongly allied and extremely friendly with the Tyrolese and has been so throughout its history, totalled 19,606, making a total of Tyrolese and Ladin speaking people of 243,994, whereas there were only 7,124 Italians. The Tyrolese population in its own country, the purely Tyrolese district—that is to say as far as the Salurn Gap, because I am not including the Italian speaking Trentino, which the Tyrolese never wished should be restored though it had, of course, been part of Austria—was overwhelmingly in favour of returning to Austria.

Let us take the principal questions as they are laid down in the Clauses in the Treaty, and see how they are being carried out. Clause 3 (a) says that: The Italian Government undertake to revise in a spirit of equity and broadminded-ness the question of the options for citizenship resulting from the 1939 Hitler-Mussolini agreements.

Mr. Paget

On a point of Order. We are discussing the Vote on Germany and Austria, which is Vote 7. The Tyrol is now part of Italy. Can the question concerning the Tyrol come up on the German-Austrian Vote?

Mr. Deputy-Speaker (Major Milner)

The hon. and learned Gentleman is quite right in raising that query, but I think it will come under the Foreign Office Vote, Class II, Vote I, if not under the second Vote.

Professor Savory

While the Treaty has been ratified by Italy, it has not yet been ratified by us. We, therefore, have a very great responsibility to see that this Clause is carried out. I am dealing with this Clause 3 which states that, the Italian Government undertake to revise in a spirit of equity and broadminded-ness the question of the options for citizenship resulting from the 1939 Hitler-Mussolini agreements. It will be remembered that in the year 1939 Hitler and Mussolini made a deal in accordance with which either the Tyrolese speaking inhabitants were to opt for Austria, in which case they were to leave Italy or opt for Italy when they would be completely Italianised and renounce all further claims to Tyrolese citizenship. Under threats, as I maintain, that if they did not opt for Austria they would be deported to Southern Italy, 70,000 of them actually left the country and migrated to the Northern Tyrol, Bavaria and other provinces. The Tyrolese people naturally desire, if this question is to be revised in the spirit of equity and broad-mindedness, in accordance with that Treaty, that these 70,000 people should be allowed to return to their mother country. They themselves desire to return. They complain that they were forced out of the country and they want to go back.

Further, there were in addition 40,000 optants who though they had signed in favour of Austria never for one reason or another actually left the country. At the last minute it was too painful for these mountain peasants to leave the land of their fathers, where their ancestors had been settled for at least 1,000 years, and they remained in the country. Now the Allied Military Government had decided that these people should be naturalised as Italians and they were given naturalisation certificates. They were to be put upon the register of voters but the Italian Government have refused to honour this arrangement of the Allied Military Government and have refused to allow these people to be put on the register. They still regard them as pure Austrians and refuse to accept them as Italian subjects. Therefore, unless these 70,000 people can be brought back and the 40,000 who had not gone away can be given rights of citizenship, there is a grave danger that the native Tyrolese will be swamped in their own land. Here it is relevant to refer to the clause of the Treaty concerning equality of rights which says: The German-speaking citizens will be granted equality of rights as regards the entering upon public offices with a view to reaching a more appropriate proportion of employment between the two ethnical groups. It was hoped that this Clause would be interpreted in a fair spirit, but the information which I am constantly receiving from South Tyrol is to the effect that it is impossible for these people to obtain employment. To give an example, 200 of these Tyrolese applied to the railway administration at Bozen at the end of last year to obtain employment. They were highly qualified and there could be no objection to them whatever, but the prefect of Bozen determined to obtain information from the Carabinieri. The Carabinieri have always been extremely hostile to the Tyrolese population and 90 per cent. of them cannot speak German but only speak Italian. When these reports came in they were all the same: "So-and-So is pro-Austrian"; "So-and-So is anti-Italian"; "So-and-So is German speaking and has Tyrolese sentiments"; and so on. According to my information the result was that not a single one of them has obtained employment and this is the unfortunate way in which this clause in the Treaty—which seems so fair and reasonable—is being interpreted by the Italian Government.

Mr. Skeffington-Lodge

On a point of Order. The speech to which we are listening appears to deal primarily with the policy of the present Italian Government in regard to the Tyrol. Is it in Order for the hon. Gentleman to continue on those lines when in point of fact the Debate, as we understood it, was to deal with Germany and the affairs of Austria?

Mr. Deputy-Speaker

I am advised that this is a matter which comes within the purview of the Foreign Office, but the hon. Member for Queen's University, Belfast (Professor Savory), will forgive me for saying that he does appear to be going into considerable detail, some of which is possibly not within the Vote. It might be better if the hon. Gentleman would make his points in general terms.

Mr. Cecil Poole (Lichfield)

Surely the Vote of the Foreign Office which we have before us this afternoon includes only expenditure relating to Germany and Austria, and in as much as the Tyrol has been part of Italy since 1918, no expenditure which devolves on them can fall within the province of this Vote? I suggest, with respect, that if the hon. Member is to talk about minorities excluded from Austria it would be open to other hon. Members to discuss similar matters such as Hungarian minorities excluded from Hungary, for example.

Mr. Deputy-Speaker

The matter is certainly not altogether clear, and perhaps the hon. Gentleman will indicate to me how he brings this particular subject within the scope of the Vote?

Professor Savory

In this respect, Mr. Deputy-Speaker. We are parties to this agreement, we have approved it, the Foreign Secretary has again and again given his blessing to it, and he has looked upon it as one of the triumphs of the diplomacy of the Foreign Office that it was actually incorporated in this Treaty at our instigation. We, therefore, have a very great responsibility, and the Foreign Office will not deny this because——

Mr. Deputy-Speaker

That may be so, but the point is, how does the hon. Gentleman bring the matter within the scope of one of the services connected with Germany and Austria?

Professor Savory

It is intimately concerned with Austria, Mr. Deputy-Speaker, because it was one of the concessions which were made to her and one of the means by which we attempted to pacify her and to reconcile her to her condition. I think, therefore, that what I am saying is really strictly relevant to the Vote, and as this is the last opportunity that we shall have before the Treaty is ratified by this country it is very urgent that we should be allowed to consider the question today. It is the last chance that we shall have for discussion and it is a matter on which some of us feel very deeply.

Mr. Poole

If the hon. Gentleman is advancing the reason that we have made this concession as part of a deal that we have done with Austria, then I submit that it will be equally in Order to discuss the partition of Poland as a gesture made to Poland, and there would be no limit to these matters which could be discussed under the present Vote. I suggest respectfully that the point is that there is no money in this- Vote which has been devoted to the problem of the Tyrol and that, therefore, the hon. Member is out of Order.

Mr. Deputy-Speaker

I cannot agree with the hon. Gentleman that Poland is an analogy. We are discussing matters there is always the question of the Foreign Secretary's salary which covers a multitude of matters; but I hope that the hon. Gentleman will not go into too many relevant to Germany and Austria and details as I agree there is some slight doubt whether the points he is raising come within the province of the Vote before the House.

Professor Savory

I shall not detain the House very long, but it is a matter which I feel that we are entitled to discuss. My last point is that according to clause 2 of the agreement we are told: the populations of the above-mentioned zones will be granted the exercise of autonomous legislative and executive regional powers. That is a very strong phrase which might be used to apply to a very extended kind of autonomy and if, in a country such as Italy, you are to be dominated in respect of your autonomy by a military police like the Carabinieri whose numbers have recently been greatly increased, then I contend that this autonomy, which should be both legislative and executive, becomes a vain word. The whole point of the fears of these unfortunate people is that they are being swamped in their own land. Sixty thousand Italians have been brought into the country; they have been given preference with regard to housing and licences for trade and have received every possible favouritism.

The Tyrolese people look with great apprehension to the future. Hitherto, they have had an overwhelming majority, but if, as I have pointed out, both the 70,000 people who left the country under pressure, as I maintain, and the 40,000 who, though they opted for Austria, did not leave the country, are to be deprived of the vote given to them by the Allied Military Government and if at the same time we have this immense influx of, Italians, then I am afraid that all the efforts of the right hon. Gentleman to secure this concession from Italy will be rendered nugatory. I have, therefore, on this last possible occasion, ventured to bring this question to the notice of the House. I feel that it is a matter upon which we are entitled to see that justice is done and that this arrangement which seems so liberal should be carried out not merely in the letter but far more in the spirit. If this is really the case, let us hope that there will be a sincere and profound reconciliation between the Italian sovereign power and the Tyrolese inhabitants of this very lovely and most charming part of the world.

5.50 p.m.

Mr. Skeffingron-Lodge (Bedford)

The hon. Member for Queen's University of Belfast (Professor Savory) must forgive me if I do not follow up his speech, about which it is obvious he felt very strongly, and regarding which I may say without appearing to be patronising that he is obviously extremely well informed. I want to bring the House back to the problem of Germany and its future, which I regard as the most pressing problem which we have to tackle at present, in foreign policy.

We have had several Debates about Germany and I do not think, frankly, that they have got us very far. Time seems to me the very essence of the issues which are at stake. Here we are, more than two years after assuming control of Germany, still without any definite policy, and even blind to the fact that Germany is on the dole, without hope, and a drag on the rest of the world. The destructive activities of the occupying powers are still more in evidence than the constructive ones. That point was admirably brought out by the right hon. Member for Bromley (Mr. H. Mac-millan), despite the fact that he unfortunately tried to make some political capital out of that consideration. The result of stressing rather the destructive than the constructive side of the problem is that Germany is actually nearing flash point. Were it not for certain influences which have kept our late enemies going they would now be in a state of irretrievable moral and spiritual collapse.

What has saved the Germans from that fate so far? Partly it is, I think, the revival of religion in Germany. Church leaders there are heard with increasing attention and respect. Perhaps that is because they are free to speak in a way in which many other people may not be free to speak. Some of them are speaking in a very statesmanlike way. I believe that the churches and the trade unions, taken together, are probably the chief instruments in which lie the great hope for saving the soul of Germany. Total war has brought total destruction and defeat in that country. I profoundly disagree with the right hon. Member for Bromley when he brushes on one side the due and full consideration of the policy of unconditional surrender as a prime factor responsible for the present situation. In passing I would refer to a part of that policy which was even more wicked, namely the policy of saturation bombing which was bound up with it, and which has left us with this legacy of distress, disaster and misery, a veritable drain on our financial resources.

The mass demonstrations which have taken place in our zone should, I suggest to the Foreign Secretary, be taken as evidence that docility and self-discipline have limits, even in Germany. "Give us bread or coffins" is the slogan of the hour today in many industrial quarters of the British zone. That brings me to the point that the key to the solution of a short-term settlement is mainly the provision of food. I want to put a practical and sensible proposition to my right hon. Friend. I suggest to him that the Ruhr, Hamburg, Bremen and Berlin should all be declared distressed areas and that until stocks are built up in readiness for next winter, they should be given priority of treatment in relation to all food. It is obvious that the country areas and agricultural hinterland to our zone can more easily fend for themselves, and it is on them that any cuts which may be inevitable should be imposed.

While I am glad that in his last speech on the subject of Germany, my right hon. Friend did not put all the blame on the Germans for the present situation, I respectfully suggest that he has not all along put enough stress upon the vital, overriding factor of a grave and prolonged general deficiency of supplies. To blame shortages upon hamstrung German administration does no good in any case. It sounds a plausible thing to say, but does it mean that we can shift our responsibility. Not a bit of it.

Mr. Lipson

The hon. Member is referring to the shortage of supplies and I think he said something about Berlin. Can he say where these supplies come from? I would like to know.

Mr. Skeffington-Lodge

I shall deal with that point later in my speech. It is very much bound up with the implementation of the Marshall plan as the hon. Member will readily understand. I have said that food in the short run is the key to putting things in Germany on a better footing. It makes me feel thoroughly ashamed that there are those in our own country, who grouse and growl under our own rations and our own standard of living, when in Germany the distress through undernourishment at the present time knows no bounds. The argument that we won the war and that it does not matter very much what happens to our late enemies is pure short-sighted and wicked selfishness. Let me read an extract from a letter which I received only last week from a German mother. She says: We housewives who have to bear the brunt of such worries do not know any longer what to set on the table for our families. When you cannot even give a piece of dry bread or a cold potato to your hungry little ones, and when your husband is always cold and complaining because of chronic fat shortage you go to bed at night not wanting to wake up next morning. The frightful tiredness and hopelessness of it all is breaking my spirit. I am only one of thousands who often cry when their children look up at us pitifully with famished eyes for the food which we cannot find to give them. So food does of course come first. But long-term policy must not be delayed in its application and settlement a day longer than is necessary.

Here, short of clearing out of Germany altogether—and I sometimes think that our good name might best be revived if, under conditions agreed with America, we actually did this—vigorous steps should be taken during this crucial summer. The official price system in the British and American zones has largely broken down and the resulting chaos can only be resolved by reforming the currency, as was pointed out by my hon. Friend the Member for West Coventry (Mr. Edel-man) in his very able speech this afternoon. This question of the currency seems to have been discussed for months and months. Meanwhile the rot has gone deeper and the black market has spread its tentacles even further.

The fusion of the British and American zones took place some ten months ago. We must face the fact that so far it has proved a fiasco. The export and import programme alone proves that. The export target is £87,500,000 or £7,500,000 worth of goods a month. In the first three months of this year it reached only £7,750,000, the programme being held up by the coal output on the one hand and a complete failure to provide manufacturers with incentives to produce on the other, and also the lack of a satisfactory pricing system.

Mr. C. Poole

Surely the hon. Member will admit that the import and export programme of this country also falls very far below what was the target during exactly the same period, and also, I suggest, for precisely the same reason—that we had an unprecedented winter?

Mr. Skeffington-Lodge

While I recognise that, we were led to understand that a fusion between the American and British zones would lead to developments which would be far more satisfactory than the previous position and this target was actually agreed on for the zone. Germany has, so far, fallen very short of that target.

Mr. Platts-Mills

Is it not right that in Britain we have not fully fused with the United States, as I am sure we have done in the zones?

Mr. Skeffington-Lodge

In reply to that interjection, I hope that we never shall fully fuse with the United States in any direction. In regard to this import and export programme and the falling short of the target which was set, here is just one example of where food and raw materials are urgently needed and where America alone can assist. The situation is further complicated, as has been pointed out in speeches from the other side this afternoon, by the crass folly of expecting any export targets to be reached as long as we allow the removal of vital pieces of machinery for reparations and proceed with the wholesale dismantling of heavy industrial plant for what are claimed as "security" reasons. We are also allowing British manufacturers to interfere through the Board of Trade where they think German exports might threaten our own. That is an unfortunate policy.

The whole long catalogue of mistakes would not however be complete if I did not mention the prisoners of war who are still held here, who are still held in the Middle East and who are still held by our Allies. Without their early return to Germany there seems to be little hope of reviving Germany morally, physically or economically. Apart from those who wish to stay here in our under-manned industries—and all along I have been in favour of allowing them to do so—not only in agriculture but in coal and in other spheres where they have experience and where we are short of British labour, they should all go home, if possible by the end of this year, in order to rehabilitate their own country.

I would ask my right hon. Friend to realise that the policy hitherto adopted of teaching democracy to the Germans by keeping most of the real power firmly in the hands of our own militarised bureaucracy is simply to ensure that no worthwhile Germans are actually anxious to co-operate. One of the features of life in Germany today is that very few outstanding men have come forward to collaborate and co-operate with us and to help in rebuilding the German economy. I suggest to my right hon. Friend that this policy must be changed. Likewise we must at all costs stick to the idea of public ownership for the Ruhr mines and heavy industries. The German people want this, they have said that they want it through the political parties so far established in Germany, and they want it because they realise that socialisation offers the only means of really putting them effectively back to work again. I ask the Foreign Secretary to impress this on the Americans who seem at the present time to be striving against the implementation of this policy.

I ask my right hon. Friend also to allay the natural fears of our ally, France, and if necessary even to provide guarantees to her against her—as I think—ill based fear of German military revival. My view is that Germany and the world are completely sick of war and that Germany is so physically exhausted that even if the will to war-were there—and I do not believe it is—it could not possibly be realised in fulfilment for 15 or 20 years ahead at least. We must somehow live down the fact that we are rapidly becoming hated conquerors in a decaying land which scorns the moral values that Britain represents. How can this best be done and a fresh start be made? Only, I contend—and this is basic to my argument—if the spirit of amnesty, reconciliation and forgiveness possesses us all in full measure. Public opinion in this country is simply longing for peace with Germany. Let His Majesty's Government strive harder than ever to obtain it, at least where our own authority runs. I ask my right hon. Friend to let that great big heart of his, caring as it does for all humanity judging by some of the things he says, play its full part in the making of all decisions regarding the future of Germany.

6.9 p.m.

Mr. E. L. Gandar Dower (Caithness and Sutherland)

No one in this House this afternoon can have failed to realise how deeply the condition of Germany and Austria affects us all. I wish to limit my remarks to Austria because I can speak on that with better knowledge. I have had the privilege of being there twice in the last 12 months and of seeing the improvement which has taken place. I would like to support the remarks of the hon. Member for North Hendon (Mrs. Ayrton Gould). Certainly the requests by the Austrian Government for greater latitude and better diplomatic representation are requests which we should now be able to accept. The House will be pleased to know that Vienna shows a great improvement on what it was a year or so ago. Four or five shops are now open to every one which was previously open, and the food supply is definitely better. The slow and sheeplike actions of the Viennese population, caused by starvation, have disappeared to a large extent, and so far as that is concerned, we can congratulate ourselves on the progress which has been made.

But the basic troubles of Austria remain. There is still almost a complete absence of rolling stock, a shortage of coal, bar that which is obtained from the Ruhr in small quantities, and a great absence of motor transport. I would support the remarks which have been made from the other side of the House about the untoward spring weather having had a great effect on European economy besides on our own. In Austria, they suffered badly from it. There is no doubt that the quadripartite government is the main stumbling block towards the recovery of a united Austria and the building up of trade. Even our better co-operation with America has still not brought that flow of trade we all desire to see. Relatives living in different districts are unable to exchange their goods. Recently, we empowered the Austrian Government to plan their own economic matters, but this is merely lip-service if the country is controlled by no fewer than five governments. The House realises that we would be glad to get out of Austria, but that such withdrawal could only be pari passu with our other Allies. The grant of neutrality to the port of Trieste has very much improved the prospect of Austrian economy, because a small State like Austria, with its six and a half million population, must have an outlet to the sea if it is to survive. In Carinthia, there are still border troubles with Yugoslavia, and political factions, of red and white hue, play hide and seek across the border to the embarrassment of the Control Commission and Austria herself.

I am disappointed to see a rise in the cost of the Control Office, and in the allowances for the Allied Commission in Austria. At a time when we are seriously embarrassed financially, to add £297,000 to the Control Office and £570,000 to the Allied Commission is indeed sad. I would ask the Foreign Secretary to give an assurance that all feeling—and there was a little of that when we first entered Vienna—of competitive show-off between the quadripartite nations has vanished. I do not feel that we were the greatest sinners, but we were swept up in the general movement. I would also like an assurance that, what I found in Vienna, a kind of claustrophobia through being surrounded by our Ally, has gone. When I was there, neither troops nor members of the Control Commission were able freely to go into the country.

The House is seriously concerned that the Marshall Plan should be a success, and it must have given every hon. Member pleasure to note that Austria boldly accepted to play her part in that great scheme. In doing so there is an undercurrent of anxiety in Austria, because Russia has been unable to see her way to accept co-operation in the plan. Austria feels that by acceptance she is running the risk of permanent disintegration, which would be a very serious matter for the country as a whole. It is noticeable that the flow of raw materials into Vienna for rebuilding that noble city has suffered since that Russian declaration. Finally, there is the problem of displaced persons, the numbers of which in Austria are out of all proportion to the size of the country. I hope that every effort is being made to recruit from that source valuable manpower for our home economy.

6.16 p.m.

Mr. Platts-Mills (Finsbury)

I know that the hon. Gentleman the Member for Caithness and Sutherland (Mr. Gandar Dower) will not expect me to follow his review of the situation in Austria, and I hope he will forgive me if I return to the original analysis with which the right hon. Gentleman the Member for Bromley (Mr. H. Macmillan) opened the Debate today. The right hon. Gentleman used an apt description when he referred to the miserable, hideous, picture in speaking of the nightmare in Germany today. It is indeed. There is the paralysis of which every hon. Member who has spoken has reminded us, and there is a breakdown in morale that covers all sections of the community which are honest. There is no breakdown among the racketeers, the black marketeers, the Nazis, and the like. There is a breakdown in incentives, and there is the nazification of industry, which is being intensified. I have said before, and I have pressed it—and I have often been treated somewhat lightly by the Foreign Secretary' for doing so—that I intend, humbly and respectfully, continually to lay evidence before the House of the way in which the great Nazi industrialists are developing their hold on the industrial Ruhr. I look forward to the emphatic and enthusiastic support of this side of the House when I continue along that course. This nightmare is completed by the partition that now exists in Germany, a partition which, I am afraid, is intended to be the partition of Europe.

As my hon. Friend the Member for Bedford (Mr. Skeffington-Lodge) said, we are building out of this nightmare a hatred of Britain. This nightmare turns to a dream, because the consequences which the right hon. Gentleman the Member for Bromley drew from this nightmare were so confused as to be -dreamlike to a degree. The right hon. Gentleman gave us a masterly precis of "Lloyds Bank Review," for which we are grateful, but the essence of the analysis and conclusion of that Review is precisely the analysis and remedies put forward by Wall Street. His Majesty's Government, I regret to say, are now following that course, so why should the right hon. Gentleman complain of it? There was more in the analysis than was correct. The Ruhr is a great industrial centre, but I doubt whether it is the greatest industrial centre in the world. It is a geographical and statistical question, and if the right hon. Gentleman will allow his gaze to move to areas in Germany eastward of the Ruhr, he will find centres which are not only potentially greater, but are actually greater centres of industry.

One of the demands which the right hon. Gentleman made was that the Ruhr should be made viable. For every one of these new adjectives there is a new verb. We are entitled to demand a new verb, and I want to know where the party opposite, and some other people, want it to "vi" to. The desire of the Opposition—and all too readily we see the Foreign Secretary falling in with it—and of Mr. Marshall, and those at present ruling in America, is that the Ruhr should be restored, that we should do it by way of denying to the miners and industrial workers of the Ruhr that one step which will enable us to increase production, thereby denying the Election pledges that took us to office in this House. That desire can be summed up in four steps. The first is that we should cancel socialisation. Can my right hon. Friend deny that that is his project in the Ruhr today? It has not been said officially, but it is accepted on our part by leaders of the United States in these matters, and I challenge my right hon. Friend to deny that we have abandoned it, or that we have postponed it for so long that we might almost call it abandonment. The next step is the re-establishment of German monopolistic control in the Ruhr. They now hold the Ruhr in a closer grip than under the Nazi regime. The third is that we should place all this power of the Ruhr under the domination of the United States and under the financial control of the United States. Those are the real purposes of the Marshall Plan. The final step is that we should make the reconstruction of Europe dependent on the acceptance of the trade of the Ruhr.

The hon. Member for Bedford could not see any sign of a plan in what the Government are now doing. I should have thought it was crystal clear what the plan is. He suggested that we should declare these areas of Germany to be a "distressed areas. The essence of a distressed area, as I understand the phrase—although we have another phrase for it now—is that great capitalists should invest money in the area. The Ruhr would be a distressed area for Wall Street, and the analogy which the hon. Member wants brought into play is already being carefully worked out. We are going forward to the re-establishment of a hegemony of the Ruhr and rule of the Ruhr over as much of Germany as we can reach, and its rulers are to be political leaders from Austria.

Mr. Skeffington-Lodge

I think my hon. Friend rather misinterpreted what I said. I advocated that certain towns should be declared a distressed area in regard to food supplies only, which was part of the short-term policy with which we have to deal. It was not in regard to everything else, as my hon. Friend now implies.

Mr. Platts-Mills

Perhaps I followed the suggestion too closely, or too widely. I followed his contribution with interest, and I do not want to go into the whole of the details of the food problem; but I suggest that all the problems would be clearer if we were clear in our own minds on this dominant question of the socialisation and democratisation of Germany. What to all of us is the nightmare of Germany, and the fantasy of dreamland of the right hon. Member for Bromley, is this re-establishment of the hegemony of the Ruhr and acceptance of the dominance of the Ruhr as the price of all future help from the West. It is a hideous terror for the rest of Europe.

6.22 p.m.

Mr. Spearman (Scarborough and Whitby)

The hon. Member for Finsbury (Mr. Platts-Mills) has a strange talent for uniting the views of hon. Members on either side of the House. I think it is a very good plan that we should have this Debate on the present condition of Germany in the same week as we have the Debate on the future difficulties of this country, because in so many respects the problems are similar, and, indeed, are inter-connected. I think we would all agree that the great financial burden placed upon this country by the present conditions in Germany are an important, though they certainly are not a principal, cause of our own difficulties. I think that most of us would agree that the failure of Europe to revive has contributed to our own difficulties. That, of course, is due to a great extent to the conditions of Germany. '

The hon. Member for Bedford (Mr. Skeffington-Lodge) told us that the Foreign Secretary has a great heart. Germany is the heart of Europe but, in recent decades, unlike the Foreign Secretary's, it has been an erring heart; all the same, it is responsible for supplying the lifeblood to Europe. I do not believe that without a prosperous Germany we can possibly have a healthy Europe. He would seem a poor sort of doctor who dealt with a patient with a bad heart by cutting out the bad heart. He would try to make the best he could of it. More particularly, I think those factors which are contributing so largely to present conditions in Germany, the impeding controls exercised by a bureaucracy unable to handle them effectively, are the very factors which in this country have brought about our great difficulties at the present time.

I do not, for one moment, think that the conditions in Germany have been unavoidable. Of course, we all know His Majesty's Government inherited a very difficult situation, and one that called for great statesmanship, but I am quite sure that matters need not have deteriorated as they have. I was in Germany a year and a quarter ago, and again two months ago, and I am certain that they have gone from very bad to much worse. As I am as critical of His Majesty's Government on this matter as I can be, it is fair to say that the new plan for transferring control to the Foreign Office has not had time to be tested. In fact, one could go further and say it has made a fair start. The Foreign Secretary enjoys a respect which is not confined to the benches of this House, whether Socialist or Conservative. In my travels as far West as America and as far East as Germany I have always heard high tribute paid to him, and I think his principal assistant, the Chancellor of the Duchy, has made a really fine performance in creating again a measure of hope in Germany.

People with little food and no hope can do no good at all. At the same time, the very fact that hope has been raised, lays a greater responsibility on the Government to see that it is implemented. I believe the failure of the Government in Germany was due far more to the policy they have dictated than it is to the mistakes in the administration they have chosen. It is obviously impossible to cram into a few minutes all the causes which occur to one. The first and obvious one is the appalling shortage of food and coal. Quite obviously, men cannot work without food, and especially they cannot win the coal which is required. Without coal, iron and steel cannot be produced, and without both industry cannot revive. But even if we doubled the ration of the average German, I am sure there still would not be a state of affairs in Germany today which could be looked upon as satisfactory in any way.

I wish to refer to two causes which I believe are largely responsible. The first is the confusion that still exists between those who are trying to build up Germany in the belief that that is essential for the economy of Europe, and those who are trying to destroy Germany in the belief that that is necessary for the security of Europe. All of us here have had some experience of two wars created by Germany and, therefore, are sympathetic to apprehension of Germany. Still more can we be sympathetic to our Allies and neighbours, the French, who have suffered three times and been nearer to the centre than ourselves. At the same time, while understanding their apprehensions, and assuring them of our sympathy, we can surely expect them to listen to rational arguments on the subject, and perhaps to learn something from those who can more easily look at it objectively than they can themselves.

After 1918, it took 20 years for Germany to rebuild her shattered factories and her equipment to make war. Yet there was comparatively little destruction in Germany in 1918. It would take more than twice as long to build up again the factories and equipment which would be capable of making her a menace. The factories do not exist in any numbers today and if we are talking about destroying those that remain we are preparing not for a war of the future, a possible war of 1975, but for the war of 1939. Surely we can deal with that by inspection? A comparatively small body of competent inspectors could surely examine conditions in Germany and make sure in advance of any step that required to be taken. I suggest that if we had people examining all the oil imported, and produced there and inspectors examining the distribution of electricity, we should know pretty well what was being done in Germany.

The real danger of another war is not what might, after decades, come out of Germany, but rather if the Germans, becoming so despondent, handed themselves over to the Communists, and if those German Communists, able, thorough and intelligent men should then exploit the Russian people, and however unwilling the Russian people might be, so exploit the vast resources of their country that they might be a real menace. Perhaps I might quote from the "Yorkshire Post" of Saturday, in which it was stated, in reference to a communique which had just been issued by the United States: It indicates that war material is being manufactured for a foreign Power without the sanction of the United States Military Government. The report continues: the material produced in the factories was passed on to Teltow in the Soviet occupation zone. I would, therefore, suggest that whatever fears there might be of Germany becoming an effective aggressive force again, they are far less likely to be realised through Germany building herself up than are the fears of what might result from Germany being kept down in poverty and starvation.

I suggest that the second principal cause for the present conditions in Germany is the distortion of the economy of that country. My right hon. Friend the Member for Bromley (Mr. H. Macmillan) said that the position had deteriorated terribly in the last, two years. When we took over after the war there were considerable supplies of raw materials. To-day they have run down to almost nothing. There is no incentive for man or master in Germany. We have substituted ineffective controls for the market economy. We have taken away the carrot that tempts without putting in its place the stick that drives. We must have one or the other.

I realise that this is not the time or place to expound the market system. Perhaps I might be allowed to explain what I mean by those words. Under that system prices rise according to the demands of consumers. This has two results. First, it diverts men and materials into those industries in which they are most needed, and the greater rewards call out greater effort and enterprise. Secondly, it protects scarce materials. Higher prices caused by demand are much more effective in causing economy in scarce materials than plaintive appeals from Ministers to use less, or an attempt to control such materials by rationing, which is so often upset by black market operations. Under the system of controls, on the contrary, one of two things happens. It may be that all prices are fixed, in which case, in an economy where there are greater demands than goods available, every single thing has to be rationed. If everything is rationed at an artificially low price money loses all object. There is no incentive to anyone to earn more. If some things are rationed but not everything, there is a most wasteful diversion of men and materials to unnecessary industries. For instance, we have seen examples in this country of how men are attracted away from the industries which are so urgently needed into such luxury trades as the making of lamp shades.

In Germany and in this country we have the same situation. Ministers have said that we must control essentials and let luxuries look after themselves. That must be a self-defeating policy, when obviously if we do that we are diverting men and material resources to the production of luxuries that are not really wanted, but are more profitable. It is clearly impracticable to fix the price of necessities and let luxuries look after themselves, unless that is implemented by a degree of authoritarian control and direction of labour which would be intolerable in a free country. In Germany today there is no incentive. The industrialist, my right hon. Friend the Member for Bromley pointed out, pays taxation at a rate which, on occasions, is over 100 per cent. He cannot get raw materials for a great many of the things he needs, and owing to failure to reform the currency, money is worth little to him. I hope that the Foreign Secretary, in winding up the Debate, will explain why this most urgent currency reform, suggested nearly two years ago, has not yet been entered upon. Apparently, it is only for technical reasons, the difficulty of printing, etc. Is it tolerable that we should be in this condition today because the Government have neglected to get a matter like this done?

Moreover, controls in Germany are much more serious in many ways than in this country, because they come from a variety of sources. I was given an instance the other day of a British official who wanted timber for an important project, and was given an A.1 priority. He had to get a permit from four different Departments. He got a permit from the first one at once, but it took him several months before he got the others. By the time he got the last permit the first had expired. If we are to have controls they must come from one source of power, not from four.

So far as the workers are concerned, again there is no incentive. Not only is there a very old-fashioned taxation system which hits them very hard; there is no point in their earning money when they cannot do anything with it. Moreover, they can earn much more unproductively in the black market. When I was last in Germany, an official gave me an instance of a worker who gave up the hard work he had been doing, for which he had been earning 50 marks a week, in order to keep two hens which he was lucky enough to find. They were rather good hens and laid six eggs a week. He sold these six eggs for 60 cigarettes and exchanged the cigarettes for 300 marks. Therefore, the eggs—which, after all, he had not produced himself—gathered more remuneration for him than that which he received for work which might have been productive to the economy of the country. There must be very much wrong with the economy of a country when such a thing can be tolerated.

I would like to make it plain that most of us who are critical of controls, whether in this country or in Germany, are not advocating the relaxation of all controls. We realise that when there are shortages the relaxation of all controls can only be undertaken at the cost of great hardship. I am not at all sure whether even that hardship would not be better in Germany compared with the present state of stagnation. It would be far better to relax the controls so gently that the market economy of the country was allowed to work. The market economy can work with controls but not if it is choked by them, as it is in Germany and. alas, as it is becoming in this country.

Conditions in Germany are a very significant object lesson to us here. I hope that the Chancellor of the Exchequer, in particular, is examining those conditions because I think that some good may come out of great evil, if, by realising what has gone wrong in Germany, he saves us from the same fate in this country. In Germany the disease has gone so far that it may be it can only be cured by a major operation. In this country I believe we are moving very slowly but quite steadily in the same direction. However, the disease has, as yet, such a small hold that it is well within the power of the Government to control and obviate it. I do not think that they have very much time in which to do that. We may benefit very much from the object-lesson of Germany if our rulers will look at that point. I have asked for two things to be done. First, I asked that we should give up this mistaken idea that by destroying factories in Germany and by destroying the economy of Germany we shall make ourselves secure. Second, I asked that we should take the most active steps to regain the price structure in that country, unless we are prepared to adopt, completely authoritarian measures of control and are capable of carrying them out. In order to do that we must have with no delay, a currency reform and a modernisation of the taxation system.

In 1931 in this country we faced the grave menace of poverty and unemployment because, in fact, there was more goods and we had more men than we knew how to employ. Rightly or wrongly, we adopted restrictive measures to deal with that situation. To day I believe we are faced in this country by a peril infinitely greater, for the very opposite reason. We are short of men and material. Now these restrictive practices would be quite fatal. It seems to be quite extraordinary that in this time of crisis due to shortage of men and materials we should have several million people doing nothing in Germany. I ask that we should make full use of those people so they can save themselves by their own efforts, and instead of contributing to our poverty as they are doing now, they can contribute to our prosperity as they ought to do.

6.45 p.m.

Mr. William Wells (Walsall)

The hon. Member for Scarborough and Whitby (Mr. Spearman) has given the House an admirable object-lesson in the art of killing two birds with one stone. He has carried us back to 1931 and forward to the economic Debate to take place on Wednesday. He has castigated the Government on three main grounds, as I understood his speech. First, he said that what had gone wrong in Germany was due to the policy of the Government rather than to the administration of the officials. It did not emerge quite clearly what he thought was the policy of the Government. He said that there was a confusion between those who wish to build up the German economy and those who wish to destroy it. He himself appeared very emphatically to belong to the school of those who wish to build up the German economy, from which the implication would necessarily emerge that my right hon. Friend would wish to destroy it.

I would point out to the hon. Member when he makes accusations such as those, and when he says that it is the fault of this Government that the economy of Germany has been distorted, that Hitler had quite a lot to do with both of those things. In 1945, when we went into Germany we did not go into a country with an economy working beautifully according to the best precepts of Adam Smith. We went into a country with an economy working according to the precepts of Speer as mitigated by the practice of Air Chief Marshal Harris.

Mr. Spearman

I did say that the Government had inherited a very difficult situation which, under their guidance, had deteriorated a very great deal in the last two years.

Mr. Wells

Yes; I quite appreciated the hon. Member's point, but it did not seem to be clear what the hon. Member thought the policy of the Government ought to have been in relation to building up the economy of Germany. He seemed to neglect those steps which have been taken by the Government so to build it up. Take, for example, the question of the fusion of the zones and the very important departure of policy that has been made with regard to the economic council, and the executive committee working under the economic council. There we have an institution being worked by the Germans. It is an effort to give them responsibility in framing their own economy. That seems to be the most essential kind of step that has been taken to get the Germans to operate some sort of economy of their own. In regard to this point, I would like to ask my right hon. Friend what decisions the economic council have made up to now; how is it working; and are the Länder cooperating in the work of the economic council?

Then the hon. Member for Scarborough and Whitby appeared to criticise the Government on the ground that it held some antiquated belief that in order to restrict the danger of German economy becoming the basis of German aggression we had to have an occupation force. The logic of his argument appeared to me to be that all the Allies should walk out of Germany tomorrow, leaving behind a corps of inspectors to carry on the good work. What possible good could be done by a corps of inspectors, however capable and competent, unless they can be sure of the co-operation of the Government of the country? It seems to me that the co-operation of the German Government would not be forthcoming. Such was the experience in Germany after the last war, and such, I imagine, would be the experience we would have today.

The third thing which I gather the hon. Member thought the Government ought to do was to re-organise the currency. I cannot see what is the use of that when there is nothing which the currency could buy.

Mr. Spearman

It ought to have been done two years ago, when there was something to buy.

Mr. Wells

If it had been done two years ago, what difference would it have made? Admittedly, for a month or two, while stocks had lasted, they would have had a royal time, but the fundamental fact of the German economy was that no production was going on, they were living on their fat and eating up stocks. By the time we had re-organised the currency, which is not an easy thing and takes some time, these stocks would have disappeared. Everybody knows that the economy of Europe will not function satisfactorily, unless the German economy also functions satisfactorily, but everybody knows also that what lurks in Germany is the danger of building up another war machine, and the whole problem is not whether we are to decide to destroy Germany or build it up, but to decide how we can possibly build it up without constituting a danger to the peace of Europe.

My hon. Friends on this side of the House have said sufficient about the all important factor of building up the Ruhr for there to be any object in my going further into that matter, nor indeed, do I see that there is much that one can usefully say about that subject at a time when Anglo-American discussions are about to take place. I would only say this to my right hon. Friend. Let the Government tonight, as others of my hon. Friends have urged them to do, give an assurance that the Krupp and Thyssen influence will not be reinstated, if this Government can possibly avoid it, because it is perfectly clear that, on account of our present situation, we cannot maintain our present expenditure in Germany, and, inevitably, therefore, our influence in this country must diminish in the coming months and the influence of the other occupying powers must proportionately increase.

I would ask two questions of my right hon. Friend. Could he give us a clear statement what is the present policy with regard to dismantling, and what is happening today in the Krupps works? I believe that engines, which are very much needed for European recovery, are being built, but we would like to know whether any plan has been made, and is being carried out, for the transfer of these vast works, which give employment to the whole town of Essen, from war purposes to peace purposes, or whether they are merely being left as they were when I last saw them—a mass of ruins in the centre of an unemployed and hostile population. In my view, there are three essential factors which must guide our policy in Germany today. We must reduce the cost, because of the overriding need of this country to cut down our dollar commitments. Secondly, we must convince the ordinary Germans that there is a place for them in a peaceful Europe. Thirdly, we must reassure our Western Allies that we shall put their interests first, even above the political unity or the economic welfare of Germany.

6.55 p.m.

Colonel Lancaster (Fylde)

I think it is very appropriate that we should be having this Debate today under the shadow of our two-days' Debate on the economic situation. Just as we are seeking to solve our own problems, it must be obvious that, without a solution of the problems of Western Europe, whatever we are able to do in this country can be only of very short effect. The hon. Member for Fins-bury (Mr. Platts-Mills), in dealing with the speech of my right hon. Friend, drew, I think, a completely false analogy from what he said, and, indeed, misquoted him. What my right hon. Friend said, and rightly, was that it was unwise to consider Germany and the Ruhr in isolation, and that they were only part of a much wider integration of industrial resources, those of Lorraine, Luxembourg, the Saar, the Ruhr and Westphalia. Unless we play our part in achieving that wider integration, our efforts in Germany would only be of limited value.

The hon. Member for Walsall (Mr. W. Wells), and also the hon. Member for Finsbury, expressed some doubt as to whether the old "steel baron" influence might again control the economy of the district. I was in Essen quite recently, and I went to particular trouble to find out if there was any connection of the Krupp family with either the works or the coalmines, and I was assured by our own control officers that no such connection at present existed. I join with other hon. Members who have said that the underlying cause of the sense of frustration which one finds throughout that region is due to lack of direction and uncertainty about the further destruction of their existing potential. To come back again to Krupps works in Essen, which one hon. Member described as a mass of twisted metal, there are at this moment only three small parts of this works in existence, and it is nothing less than tragic to realise the effect which will be created in Essen if it is decided to dismantle what remains of the works. In Essen, 670,000 people have no other outlet for their energies than the Krupps works, and that outlet cannot be supplied by what remains of the existing factories in that district.

I want to refer to one of the possibilities that lie within our own zone. It is one which cannot be looked at in isolation, but will fall most particularly to our responsibility in regard to the organisation of that area. There is one bright aspect that, whereas in this country one might be optimistic to suggest that the level of coal production could rise in a short period from, say, 200 million to above 225 million tons, in the Ruhr there is the physical possibility of raising production from the present level, of about 220,000 tons a day, to something of the order of 350,000 tons a day. Surprisingly, there has not been the physical destruction of their pits which one might have anticipated, and there is not such a shortage of essential materials, as might have occurred. The underlying problem is obvious; it is the lack of food, and, in great part, the lack of accommodation for the necessary workpeople. Food, of course, will lie, to an enormous extent, within the purview of such financial assistance as we can get from America. Accommodation, in great measure, will have to be by way of supply, both from ourselves and America, and the efforts of the Germans themselves.

The part that we can play is, in a measure, a very limited one. We can only give guidance and administrative direction. We can only influence the Germans—it is the Germans themselves who will have to carry out the work of producing coal, steel, or whatever it may be—if we can bring to that task a body of personnel who are of a quality, and have the knowledge, to influence the Germans themselves. In my submission, this becomes abundantly important at a moment when it appears that the Americans and the French will be joining with us in attempting to solve this problem. We can be perfectly certain that the Americans and the French will supply men of the highest grade, and if we, at this moment, lag behind, we shall not only be failing in our share of the work to be done, but we shall be failing in the estimation of our Allies as to the part we are capable of playing, not only there but elsewhere.

I was deeply concerned to find that the one Englishman of outstanding ability on the technical side in the Ruhr was being withdrawn. I have not been assured that anybody of like qualifications will replace him. At this moment, we cannot afford to give them other than of our best. In the nature of things, there are a great many men out there who could not claim to be men of very outstanding ability. They have carried out a good job of work to the best of their ability under difficult circumstances, but no one with a knowledge of the industrial problems there, would suggest that they rank, either with the existing German personnel, or, indeed, as I have said, with the type of man whom both the French and the Americans will put into that area. Although it may appear to be at the cost of our own industries, unless we can supply, both on the technical and the administrative side, men of sufficient ability to infuse the Germans, not only with the will to get things done, but with the necessary direction, for which they are looking, to enable them to do it, we shall fall behind, and we shall fail so far as our contribution is concerned. I would ask the Foreign Office to exert their influence with the National Coal Board to see that men of the highest qualities are sent out there, and to recognise that, if we attempt to do in the Ruhr what we are attempting to do in this country—to put second-class men into first-class jobs—we shall fail there, just as much as we are failing here.

Mr. Platts-Mills

Will the hon. and gallant Gentleman cast his mind back to the opening passage of his speech when he charged me with misquoting the right hon. Member for Bromley (Mr. H. Macmillan)? I have listened with great attention and restraint to the hon. and gallant Member's speech, but have been unable to gather from it in what way I have misquoted his right hon. Friend.

Mr. Speaker

We are very short of time, and I urge hon. Members to be as short as possible. I do not think that these interruptions are necessary. After all, the hon. and gallant Member made his speech, and he is responsible for it.

Mr. Platts-Mills

Ought the hon. and gallant Gentleman, Mr. Speaker, to make the allegation of a misquotation without, at least, attempting to support it? He at first charged me with drawing a false analogy, which, quite likely, is only his own opinion, but then he went on to say that I had misquoted the right hon. Member for Bromley, which in my submission is a matter of quite a different character, and I would ask him for an explanation or for some indication of what was the misquotation. As the allegation is on record, the hon. and gallant Gentleman should, in my respectful submission, Mr. Speaker, be allowed to answer my question.

Colonel Lancaster

If I may take up half a minute of the time of the House, I would point out that what I said was that my right hon. Friend had referred to the integration of Luxembourg, Lorraine, the Saar, Westphalia, and the Ruhr, and that the hon. Member for Finsbury in his speech had limited what my right hon. Friend said only to the Ruhr itself. That, I think, was completely wrong. He will see it in HANSARD tomorrow.

7.7 p.m.

Mr. Paget (Northampton)

I feel that the difficulties in Germany are of a fundamental character, and cannot be accounted for by charges of Ministerial incompetence, or by requests for a new currency policy, when, as my hon. Friend the Member for Walsall (Mr. W. Wells) pointed out, there is nothing to buy with the currency. The fundamental cause of the trouble was that the war went on for too long, and there, I believe, the right hon. Member for Bromley (Mr. H. Macmillan) was a great deal nearer the point when he discussed the question of unconditional surrender. I fully agree with him that unconditional surrender means nothing at all. It is a contradiction in terms, but very often it is the most meaningless phrases which are the most mischievous. On this particular occasion, that phrase prolonged the war far longer than was necessary, and we are now reaping some of the trouble caused by it.

The war should have ended after the victories of Alamein and Stalingrad. I agree that, at that time, it was very difficult, and would have needed very great statesmanship. Indeed, it is only rarely that one finds a great leader who is sufficiently a statesman to realise that it can be almost as fatal to win a war too much as to lose it. Such a statesman was Bismarck. Unfortunately, we had a great leader who was a poor statesman. He continued the war to a point at which we had achieved that which, for 300 years, we have fought wars to prevent. We had established a single military Power dominant in Europe. We should have realised that we could no more afford the total defeat of Germany than we could afford the total defeat of Russia, and we are now finding that out.

In addition to the appalling destruction with which we had to cope, and to which that extra year of total war added, we discovered methods of making the mischief worse. We found in Germany a situation in which industry, which had grown up with the people, each supporting the other, had been destroyed. In those circumsances even wisdom might have found it nearly impossible to rebuild that economy. We devoted our ingenuity not to coping with the appallingly difficult economic problem which we had on our hands, but to devising methods of adding to that destruction. That is what the Potsdam Declaration did. We truncated Germany. We cut off the agricultural from the industrial, and we proceeded, in the industrial part, to destroy yet further that terribly devastated industry. Within that framework no policy could have succeeded.

I do not suggest that the policy pursued was a clever one; I do not think it was. I do not think it was good sense to have a denazification policy which, in those chaotic circumstances, removed every official with the administrative ability to be a sub-postmaster. When the whole of the production is left to a capitalist system, it is not really essential so to arrange the capitalist incentives that not only can nobody possibly make any money, but that the amount which they lose is precisely proportionate to the amount which they produce. By so doing, one reverses the ordinary incentive upon which a capitalist system works. Upon those knock-kneed foundations we have a superstructure of administrative incompetence working upon vertical systems, which would have made failure reasonably certain even in the most propitious circumstances. But when all this is said and done, I believe the reward of virtue and wisdom would have been precisely the same as the reward of stupidity and any disorganisation, because in those circumstances we would still have run out of food and raw materials. There would still have been no working capital to make that truncated Germany a going concern. Once we had the destruction brought about by the war, and added to that Potsdam, no administrative ability could have done anything with the proposition, and we must realise that a mere administrative correction will not do us any good at all. We must have something far more fundamental than that.

There is a fundamental and radical solution. I do not suppose for one moment that it will be adopted. That solution is the re-creation of a united Germany; but that can be brought about only on one condition, namely, that the Russians go back to their frontiers. The Russians will not go back to their frontiers unless they know that they will have to fight if they do not go back. Within the structure of power politics, no negotiations have any reality unless at some point the participants are prepared to say, "This is the point where the ultimate sanction of power operates." Somehow the settlement of Europe has got to be achieved. U.N.O. cannot work until this settlement of Europe is achieved, because U.N.O. is a system of Great Power concert. It has nothing to do with collective security. Great Power concert cannot operate until there is political equilibrium, until people have confidence in political boundaries and in the independence of political States. Until that state of affairs has been created, U.N.O. cannot possibly operate. That state of affairs cannot be achieved until the Russians go back to their frontiers.

After the Napoleonic Wars, our ancestors were faced with just this problem, when the settlement of Vienna introduced the Concert of Europe which maintained substantial peace for a century. That was introduced at the Congress of Vienna solely because there came a point at that Congress when Talleyrand persuaded the Great Powers to say to the Russians, "Go back to your frontiers or else. …" It may be that that sort of time must come if we are to have a settlement of Europe. More wars have been created by people being determined to avoid wars, than by being prepared to face up to where their really vital interests lie. It may be that the settlement of Europe is where our vital interest lies, and that the best way of avoiding the steady drift into a Russian war, which may happen in the future, is to be prepared to face that issue soon, provided the Americans are prepared to come along with us.

Mr. Crossman (Coventry, East)

Are they?

Mr. Paget

I do not know. But that may well be the situation, because I am certain that whatever else Russian policy can do, the Russians cannot accept a war now. They must accept any alternative to war within the next five or six years, and if they were convinced that we were resolutely determined that they should go back to their frontiers, they would go, and the threat of war would then recede. I know it may be said that we have got a trifling number of troops who could be swept into the sea. We should say to the Russians, "Perfectly true; we always begin our wars that way; but if you attempt this clash you know what the inevitable end will be." We could get the settlement of Europe if the Russians would go back to their frontiers, and we should get that stability which would make the U.N.O. system work.

The alternative to that policy is to get out of Germany. We cannot carry on because we cannot afford to do so. In those circumstances, I regard the socialisation of the Ruhr industry as pure lunacy. Neither a socialist industry nor any other industry can exist without working capital. Working capital pays the wages, and wages fill the workers' bellies. If we are unable to do that, the industry collapses, and that is what would inevitably happen in Germany. But if the industry collapses, the people to take it over will be the people who can find the working capital—and they are the boys over in Pittsburg. The effect of socialising the Ruhr industries today would be within a year to have them taken over by the Pittsburg steel people from America, and one would have an American-financed and controlled industry in a cheap labour area undercutting our production for any length of time that we can see ahead. The all-important thing which we will have to do when we clear out of Germany is to provide a successor. We have not got the working capital. We cannot carry on there. We have got to prepare a successor. We must look to the succession. That successor must be strong enough to be able to maintain the Ruhr situation and prevent its falling into the hands of a competitor who is going to destroy us. Therefore, I would urge——

Mr. Crossman

I have listened very attentively to what the hon. and learned Gentleman has said, but I do not follow him. Is his argument that the only alternative to our total evacuation in Germany is a threat of preventive war against Russia? Is that his argument?

Mr. Paget

I am saying that a request to Russia to go back to her frontiers may be the only way to obtain a European settlement. A full European settlement I regard as the only satisfactory long-term solution.

What I am saying is that since we have got to go, we have to create a successor in the Ruhr area, the only effective succession would be a European corporation which would take over the Ruhr Valley, in the same way as the Tennessee Valley Authority took over its area—an authority in which would be vested the total assets of those industries, before we turned them over to it. It could be a corporation in which the French, the Benelux, the Swedes, the Danes—ourselves and the Americans could all be shareholders to develop the Ruhr as a public corporation for the benefit of the States dependent upon Ruhr production. We have got terribly little time to do that. We cannot get it working before we shall be compelled to move out, but we should create the authority before we have to leave the Ruhr. I urge the Government to get the thing in preparation.

7.23 p.m.

Mr. Lipson (Cheltenham)

I agree with my hon. and learned Friend the Member for Northampton (Mr. Paget) that the war went on too long, and that that is the fundamental cause of the present state of Germany, but I would go still further than he has done; I think that the fundamental cause of the trouble is that the war ever started at all. I cannot agree with him that the reason why it went on as long as it did, was the policy of unconditional surrender. I do not think that the Allies were responsible for the continuance of the war longer than it was necessary. The only person who was responsible was Hitler. Hitler had it as a definite policy, that if he and the Nazis were overthrown, they would bring down Germany with them, and it is for that reason that he was determined to go on fighting to the bitter end. I do not believe it would have made the slightest difference to the date at which Germany surrendered if there had not been that policy of unconditional surrender. After all, our Prime Minister had made it clear that unconditional surrender did not mean that we were going to act in a way that was contrary to our traditional way of treating a fallen foe. Certainly I do not believe we could have got a satisfactory peace if we had tried to approach Hitler to end the war after E1 Alamein and Stalingrad, because it would have meant that the Nazi régime would have remained in power in Germany and the Fascist régime in Italy, and, personally, I could see no hope of a stable and peaceful Europe so long as the Nazis and Fascists were in power.

Nor can I agree with my hon. and learned Friend that it would be right for America and ourselves to approach the Russians today and say, "Go back to your frontiers or else …" I think, after all, we ought to have some sense of morality in our foreign affairs, and that we ought to ask ourselves why the Russians are where they are, so far as their frontiers are concerned. Is it not a fact that Russia is there by agreement with the Allies? Is it not a fact that that agreement was made at a time when we realised we needed Russia's help to win the war? Is it not a fact that Russia gave generously of her strength to help to win the war? Where is the morality now of saying that Russia cannot stand up in the next five years to a combination of the United States of America and ourselves, thereby confirming all the suspicions Russia has regarding the United States of America because the United States have more knowledge of atomic bombs? Is that the way to obtain a peaceful Europe?

Mr. Paget

There is no agreement with the Russians to the effect that they should remain permanently beyond their frontiers.

Mr. Lipson

I think the territory that Russia has acquired as a result of the war is by agreement with the Allies. [HON. MEMBERS: "No."] If I am wrong, perhaps, the Secretary of State will in his reply correct me. But, anyhow, I am quite sure that, if we want those frontiers corrected, that is not the way to do it. Suppose we go to the Russians and say, "Go back to your frontiers or else …" I do not know whether Russia would be prepared to do that. Personally, I think it is very much of a gamble, and my reading of the Russian character is, that they would reply, "All right. Or else …" Then we should have to face that. Perhaps, some other hon. Members might welcome that, but I do not think the country generally would wish a war with Russia on an issue brought about in that particular way.

Like everybody else, I regret very much the present state of Germany. I think that there is regretfulness in all quarters of the House that Germany is in such an unhappy state, and that that feeling is generally felt throughout the country. It is not true to say, as the hon. Member for Bedford (Mr. Skeffington-Lodge) said, that the people of this country do not care what is happening to their fallen enemy. That is not fair, or true of the British people. We are sorry for the present plight of Germany, but I think we ought to have a sense of proportion and of fairness. After all, we have done, despite our own difficulties, a great deal for our fallen enemies. I think it is just as well to remind the world that, at a time when we are short of food and dollars, we have allowed food to go to Germany that we have badly needed ourselves, and that we have spent on Germany dollars when we would very much rather have spent them on our needs at home. We are not a vindictive or sadistic people, and if there is anything we could do to improve the status in Germany, I am sure we would do it.

Where I join issue with the critics is, that I have not yet been convinced by anything I have heard that the real blame for the present state of things in Germany is the Government's. I cannot see that, really, there is all that difference between the policy the Foreign Secretary has been trying to pursue—and if he has not succeeded, it is not altogether his fault, and I think we ought to recognise that—and the policy that has been put forward by his critics. We have to recognise that in Germany—as generally in a settlement after a war—we are not acting alone. If we were acting alone, of course, we could do just what we liked, and we personally would be held responsible when things went wrong. But if we have allies we have to be loyal to those allies, and we have to work with them to win peace for the world; and we have to work with our allies in peace just as it was necessary to co-operate with them wholeheartedly to enable us to win the war. Inevitably, there will have to be an agreed policy. After all, it is very often difficult to get three individuals to agree about anything, as we see in this House on occasions, so one can well imagine how difficult it is to get agreement between the representatives of four nations, with quite different outlooks. There are bound to be prejudices. Therefore, we must keep a sense of proportion and fairness in these matters.

I cannot believe that the question whether or not Germany is to be industrialised once again is as simple as it seems to many hon. Members. It is very easy to take the line that many people in this country do, because, after all, Britain was not invaded by the Nazis. If we had been invaded by the Germans three times, almost within a generation, we should probably feel differently about where the risk for the future lies. We ought to remember, too, why we are in Germany at all. We are there primarily for security reasons, otherwise there would be no reason for our presence there. We should keep the question of security before our eyes the whole time. In any event, that is how France feels about the problem—a feeling we can understand—and as we are all agreed that there must be co-operation with France, we ought to attach due weight to her opinions.

The hon. Member for Scarborough and Whitby (Mr. Spearman) suggested, as the alternative to pursuing a policy of complete German industrialisation, that she would go Communist. I do not know why he draws that conclusion. Have the Germans, through their experience in the Russian zone, acquired such a love of Russia and Communism that they are likely to go Communist? I do not know, but I should have thought it doubtful. Indeed, on the evidence already adduced it seems to me to be absurd. The hon. Member went on to tell us that the other day, in a factory in the American quarter of Berlin, some work was being done for a foreign Power. In fact, they were making precision instruments. Well, they make precision instruments just outside my own constituency, too. To assume from that that there is already a danger of going Communist seems to me rather far-fetched. Also, it is no good suggesting having inspectors to deal with the question of security in Germany, because this was happening in the American zone under the very noses of the American occupying authorities for a long time, and only at long last have they found it out. When the security of a nation is at stake, one must have regard for more serious matters than that.

I cannot feel that when the account of this Debate is read in Germany it will have a good effect on the Germans, because speaker after speaker has said that the Government are entirely to blame for the present state of affairs in Germany. Have not the German people themselves a contribution to make towards their own recovery? We in Britain realise that we have a contribution to make towards our own recovery from our present troubles. It is unfortunate that that impression should be allowed to get abroad. It will not encourage the Germans to greater efforts if they feel that they are already doing all they can in trying to restore the prosperity of their country. We are told that even now, apparently, German farmers decide for themselves how much of their produce they should hand over. I think that, if there was any evidence that they were not handing their produce over, very strong measures should be taken to deal with them, because we have the right to expect that whatever is produced in Germany should be fairly distributed for the good of the German people as a whole. We might take a lesson in this regard from what Russia did to the kulaks. We should tell the farmers that they must hand over a reasonable proportion of their produce, and, if they do not co-operate, take away their farms and put them in the hands of those who will run them for the common good.

I conclude by asking one question, to which I hope I shall receive a reply from the Foreign Secretary. We were all very pleased when we heard that Dr. Birley, the former headmaster of Charterhouse School, had been sent out to Germany, because we are very concerned about what is likely to happen to German youth. A satisfactory solution must be found of the problems created by the breakdown of the Nazi regime, or something else may arise in its place and afford the possibility of trouble in the future. I do not think Dr. Birley has been long enough at work yet to be able to say anything about the progress made, but it would be reassuring to a great many people in this country if some information could be given on that point. I can assure the critics of the Government that the purpose of my speech has not been necessarily to defend the Government. I always try to be fair and to maintain a sense of proportion. I am sure I am speaking for the majority throughout this country when I say that I hope that at the earliest possible date, a decent standard of living may be brought about for the German people.

7.37 p.m.

Mr. Maude (Exeter)

I am sorry that I cannot follow the hon. Member for Cheltenham (Mr. Lipson) in the few minutes for which I propose to address the House. I desire to make two points about which I feel strongly, both of which arise out of my recent visit to the Ruhr with the hon. and gallant Member for Fylde (Colonel Lancaster). I sat with him listening to all sorts of officials for many hours, during which I did my best to understand the complicated technical discussions, and I can assure hon. Members that it will be well worth their while giving the most serious attention to those parts of my hon. and gallant Friend's speech in which he referred to personnel. Whereas he afterwards went to Essen, I stayed in Dusseldorf, where I spent three hours with the present prime minister of Land Westphalia and the town clerk of Dusseldorf. The present prime minister of Land Westphalia was then the lord mayor of Dusseldorf and a Socialist. We had a three hours' conversation, alone—I cannot go into all the details of it, of course—as a result of which I asked him and the town clerk to communicate with me if they were in any grave difficulties on administrative matters, when I would see if there was anything at all that could be done. I wondered whether sometimes they understood the machinery themselves.

Some weeks ago I received a letter, about which I have communicated with the Department of the Chancellor of the Duchy of Lancaster, and as I have not received a reply, I wish to raise the matter now. It is on the question of medicines. The town clerk wrote me a long letter enclosing a report from Dr. Braun, the medical officer of health of Dusseldorf. Dr. Braun reported on the short supplies of all those things about which one can feel intensely interested immediately I mention them; that is to say, pain curers, cotton wool; and plates to mend fractures, which comprise but a small fraction of the list sent to me, which was appalling, if it was true. I then went through the dreary round on the telephone, trying to find out exactly what was the procedure to deal with that in London, and I received great courtesy from countless officials. Nevertheless, I came to the conclusion that the probability was that, possibly as a result of the Americans and the British working together—because, after all, there have to be joint councils now—there was not that speed which there should be. Also, I was inclined to think that it is not dealt with at a high enough level, thus not receiving—as we all know from experience in and of the Civil Service—that urgency of attention which is absolutely essential. I say that without any criticism of the Civil Service.

The Control Commission officials whom I saw were of the highest calibre. I should hate it to be thought that there were not men and women in Germany with a real sense of calling and an absolute, devotion to the job. I have noticed in the Press in the last few days a tendency to speak as though nobody in Germany thought it was worth while, and so on. That was not my experience. I thought those civilian officials whom I met were admirable. I also met some Army officers, who seemed to be first-class in trade and industry. I thought those persons of whom I am now thinking felt rather lost, as a Government official does. Like several hon. Members in this House, I have been a Government official, a long way from London, and one does get a nasty feeling that one is lost, as though people at home do not care and do not understand. I hope that I may have some sort of answer about the medicines, and that those who have done their duty expertly and well, who want to go on doing their duty, will receive a pat on the back tonight. I hope that something will be said to show that we are not going to allow the machine to run down, as the Germans think it is running down—that is to say the personnel deteriorating—but that these people who go out there, will have proper remuneration and promotion.

7.41 p.m.

Mr. Bramall (Bexley)

I am glad to have this opportunity to say something on a subject about which I feel very strongly, because of my association for a year with Germany as a member of the Control Commission, and my constant contacts with and visits to Germany since then. I am glad that I have been saved the trouble, by the hon. Member for Cheltenham (Mr. Lipson), of answering the mischievous speech of the hon. and learned Member for Northampton (Mr. Paget). We have done some pretty quixotic things but an economic crisis as a prelude to war is a quixotry of which even we would not be capable. I also dissent from the impression he gave that there is nothing much which can be done about Germany because the destruction is too great. The destruction in regard to everything which makes for the amenities of life is absolutely staggering, but the astonishing thing is the small-ness of industrial destruction. Had the necessary economic measures been taken earlier, there is no reason why German industry should not have again stood on its feet. I believe that there is still time, but, in the words of the Lord President of the Council, we are at the twelfth hour.

I believe that the demoralisation of the German people, particularly the political demoralisation, has reached such a point that it is very difficult to set them on the road to democracy. On the other hand, I believe that we can still bring economic prosperity to Germany, or some sort of working economic system, if we take the necessary measures in time. The right hon. Gentleman the Member for Bromley-(Mr. H. Macmillan) said that the fault was not in administration but in the Government's policy. I believe that to be totally wrong. I believe that the Government's policy, so far as statements of policy go, has been substantially right, but I am convinced that they have been misled by their officials, and that their officials have persistently failed to carry out their policy.

I believe that to a very substantial degree, the officials in Germany are people who hate and detest this Government. Many people in the last few weeks have told me the same tragic tale—I have no doubt that this is something hon. Members on the opposite side will applaud, although I cannot applaud it—namely, that Control Commission officials make no secret, not only to their friends in the Control Commission, but to their German acquaintances and the Germans with whom they do business, of their complete contempt for this Government, and their complete unwillingness to do its bidding. I believe that these people are making every difficulty for the Government in carrying out their policy. I believe that the way it occurs is that whenever a question comes up for decision, such as currency reform, land reform, or the level of industry, they are always willing to put forward every difficulty in the way of settlement, and to put forward objections to any particular line of solution.

The problem of currency reform has been raised. It is totally untrue to say it is a question of no importance because there is no production. Of course, there is production. Although production is totally inadequate, things are being produced. The point is that the goods are not going into the right channels, and are not being sold for money. Either they are handed over to the workers so that they can barter them for food, or they are used by the employer to barter for raw materials. This can be settled only by currency reform. Already two years have gone by, and for 18 months it has been abundantly clear that we must have currency reform. I know the difficulties of my right hon. Friend, who will say, if he deigns to reply to this part of the argument, that we have to reach agreement with the Russians, that the Russians will not tell us what they have printed and that the Russians will not agree to common printing. All that is true, but are we to wait indefinitely?

Suppose that the Russians do not agree for 10 years, are we still to go on with an unreformed currency? We must reach a point when we say that this problem is so vital that we must solve it; but all the officials are doing is to put difficulties in the way of solution. The reason is that they consult with German officials who know perfectly well that if this currency reform is carried through, it will mean a great reduction in the standard of living of the richer classes. Too much is being said today about the economic position of "Germany," that "Germany" is suffering from this and that. The position in Germany, as I know it from my personal experience, is that one-third of the German population—the industrialists, the black marketeers and the richer peasants—are, if anything, better off than they were before the war. They pay no taxes, because their incomes are undeclared. They continue to enjoy the use of their property by bribery, sometimes of British officers—I could give instances to the Under-Secretary, if he wants them, of people retaining their houses without having people billeted on them. They still run their cars, and they still get their petrol allocations. It would be unpleasant to mention names, but I could mention them if I were challenged.

Mr. H. Macmillan

The hon. Member says that he has instances of bribery which he could give to the Minister if he required them. I venture to suggest that if he has these instances, it is his duty to give them whether he is challenged or not.

Mr. Bramall

I know that the right hon. Gentleman is a great exponent of sense of duty and high moral tone, but I do not think I need instructions from him about my duties. I have probably taken up as many cases regarding Germany as any Member of this House. The position is that these people are still living at a very high standard.

Mr. Macmillan

That is an extraordinary statement.

Mr. Bramall

I think it was extraordinary for the right hon. Gentleman to try to point out what my duty was in this respect. The remaining 60 per cent. of the population—the members of the population who are dependent upon their wages and salaries—are living at a desperately low standard. When I was last in Germany in December, the calculation was made by the trade unions at that time that the workers' expenses were only covered by their wages up to 47 per cent., and that for the remaining 53 per cent. they were compelled to draw on savings. Everyone will admit that that is an impossible economic situation to be maintained, and that is why this currency reform is so vitally important. Unless there is currency reform it is not possible to even out the burden at the present time. This gap in the standard of living between the two classes is steadily increasing.

The greatest condemnation that can be made—not of the Government because I do not think it is a matter of policy but of the failure of the administration in Germany—has been the fact that they have failed to settle these problems and take any steps to close that gap and have failed to solve the problems which the working sections of the Germans are looking to us to solve. They have failed to give a decision on the nationalisation of the coal mines, which is not just an economic question. It is a question of enormous political significance to the miners in the Ruhr, on whom we are dependent for getting coal. Surely, we do not have to tell Members on this side, who have known throughout the years the importance which our own miners attached to nationalisation of the mines, what that means to the German miners.

Further, no decisions have been taken on land reform. I know that we should consult the German parties and all the interests affected, but does that mean that consultation should go on for month after month, for year after year, without reaching any conclusion? Surely, we ought to have some, sort of a decision? Decisions have been made in the Russian and American zones. I do not agree with the type of land reform which has been carried out in either of those zones, but at any rate decisions have been taken there, the people know where they stand, something has been done. In our zone there is the continuing desperate hopelessness of seeing no decision arrived at, of seeing that nothing has been done. No conclusion has been reached about handing over responsibility to the Germans themselves. This point, which is of vital importance, has been stressed by other speakers in the Debate. The German authorities are continually producing plans for solving problems, and the degree to which they can solve them is limited, as they are very dependent on outside resources. But they must be allowed to play their part, as the hon. Member for Cheltenham (Mr. Lipson) said, in rebuilding their own country.

It is not so much that they will not assist in rebuilding as that they are not given the chance. Let me give an example. One of the biggest industrial problems in Germany, during the past winter, was whether they should get as much coal as they could into industry, and leave the civilian population to freeze—many, indeed, did freeze to death—or whether they should sacrifice a certain amount of coal for industry for a domestic ration. The German economic authorities in the British zone took the decision, rightly or wrongly, that they must have a domestic coal ration. Immediately, the British authorities said, "You must not do that." We came along paternally to turn them aside into the path of rectitude.

Either we have to run the place entirely by ourselves, say to the Germans, "We shall treat you as a colonial people, who cannot run your own affairs," or we must leave them to make their own mistakes. The Government must make a firm decision to allow political and economic responsibility to the Germans. At present, the most distressing feature in Germany is the complete cynicism there about democracy, the extent to which the German people are disillusioned about the prospect of ever getting any hope from a system which they call democracy. They say, "We are being ruled by people who call themselves democrats, and therefore the present system is a democratic system." They see democracy producing no responsibility, nothing but cold and starvation. As has been said, we have done a great deal for Germany, and have sacrificed much. Does it not make it all the more tragic that we have made these sacrifices, and have done so much that we were not called upon to do for a defeated enemy, and have yet produced so little?

7.55 p.m.

Mr. Vane (Westmorland)

The speech of the hon. Member for Bexley (Mr. Bramall) has confirmed the view that our control Commission in Germany is a service which has many shortcomings. The hon. Member for West Coventry (Mr. Edelman) spoke of the coming winter in Germany as being grim and ugly, because of the shortage of food supplies, and I should like to speak on this same subject; it not only interests the Germans, but the British too; it is the British taxpayer who pays. Questions have been asked, both during Debates and at Question time, but to date we have been given no information by the Government about their plans except that of a most general kind. I hope that we shall be given today a great deal more detailed information than we have been allowed to have in the past.

As time is short, I will try to condense my speech, and I apologise if, consequently, it becomes rather like a series of questions. First, I would like to ask whether the Foreign Secretary can give us any hope that trade with the Eastern Provinces will yield largely increased quantities of grain this winter over the quantities which were imported into our zone last winter. I hope that it will be so. After our recent attempts to arrive at a trade agreement with Russia, I understood that there were one million tons or more corn available in Russia this year. Will that quantity now be available for Germany under the Potsdam Agreement, or will the quantity be half a million tons, or, if not, how much?

There is also the other side to this question, the encouragement being given to the German farmer to increase his production. When I was in Germany, at Whitsun, I was favourably impressed by the standard of German farming in difficult conditions—the shortage of machinery, fertilisers, and so on. But the bigger farmer, on whom we must depend for the bulk of food supplied to the market, is at present farming under the shadow of expropriation, that proposal which, from time to time, is given the exalted title of "land reform."

On 5th February, I asked the then Chancellor of the Duchy of Lancaster, who was replying to a Debate on Germany, to tell us something about these proposals, but we were not allowed one word. Since then, my hon. Friends and I have asked a series of Questions, and have been given most evasive answers. The"most specific reply we have yet received was from the Foreign Secretary, on 15th May, after returning from one of his journeys abroad. The right hon. Gentleman then said: There is another matter on which we reached agreement, and that was complete land reform for Germany by the end of the year. That gets rid of the foundations of the old German General Staff and breaks up the land. I think it will make for greater efficiency and particularly for reorganisation."—[OFFICIAL REPORT, 15th May, 1947; Vol. 437, c. 1733.] That is almost worthy of the late lamented Chancellor of the Duchy of Lancaster. I am sure that everyone will agree that everything should be done to see that the old German General Staff is not allowed to continue as a semi-secret society of peasant farmers. But when we come to the statement about breaking up the land making for greater efficiency and reorganisation, I do not know what it means, and I do not think the right hon. Gentleman knew what it meant, especially as it has been said that only 2,000 or 3,000 farmers in the zone would be affected.

Since we were unable to get the information we required from the Government, we had to try to get it from Germany, and I got in touch with a distinguished professor of agriculture who, in the past, was a well known Liberal. I obtained some useful information from him, and passed it on to the Chancellor of the Duchy. Because he was a Liberal and more likely to be prejudiced in the interests of three acres and a cow than in the interests of the larger farmers, I hoped he would not think that it was Tory propaganda. I hope now that the House will excuse me if I read a paragraph which, I think, for the first time, gives the House something more than the vague statements which have been made on this important question by the Government: In the Western zones there is also legislation proposed prescribing the splitting up of farms of over 100 hectares, but without precise directives how big the new holdings are to be. Generally speaking the number of large farms is so low in Western Germany that the law would make no great change in the agricultural structure. In certain regions effects will however be greater, particularly in East Holstein. The effects on the volume of food marketed are difficult to predict. Where a greater number of farms are split up there will certainly be a decrease of deliveries for a transitional period, at least. Whether such decrease will be permanent or not seems to me to depend on the size of the new holdings. The size-group with the highest turnover has always been the larger type of family farm. In my opinion only a general shift to small self-subsistence holdings (under 10 hectares) would definitely and permanently diminish market deliveries of all types. To get more food out of German farming now, when we urgently need it, a really substantial increase of the supply of fertilisers, machinery, and general equipment of all kinds, is more effective than any land reform policy. All land reform is a long-term matter. It ought to be carried out according to the most reliable long-term forecast of all factors involved. I hope that the right hon. Gentleman will be able to tell us that these factors are being taken into account. Even if hon. Members do not agree with everything in that letter, I am sure that all of them will agree that it is remarkably good English to be written by a foreigner.

As we were still able to obtain no information from the right hon. Gentleman, we had to search further in Germany in order to obtain a copy of the draft ordinance about which they have been so secretive. We succeeded, and I think that the introductory paragraph really shows the sort of way in which right hon. and hon. Members opposite have been thinking of this whole matter: Whereas it is expedient to reduce the political and economic power attaching to the ownership of large estates by limiting the amount of land which may be held by any single owner and also to provide opportunities of land settlement and agricultural employment for a greater proportion of the population. Since they are only going to concern themselves with 2,000 or 3,000 farms, the amount of land which they will get will be very small, and insufficient to settle any large number of families on the land; especially if they follow the technical advice and make the holdings of sufficient size. Hence this is no solution of the refugee problem. Further, although it is very hard to credit, the Government are intending to split up the woodland property on the same lines. I cannot believe any technical advice could support this proposal.

I think, too, when hon. Gentlemen have suggested that the Control Commission is rather unwilling to give anything in the nature of orders, they might be pleased to hear the covering note with which this ordinance was sent to the Zonal Advisory Councils: 4th June 1947. Attached at Appendix 'A' below is the text of a draft ordinance concerning agrarian reform which it is desired to promulgate at the earliest possible date. "As this matter is regarded as of particular urgency it is hoped that any comments which the Z.A.C. may wish to make will be forthcoming at their next plenary session on nth and 12th June. It gave them seven days to consider that. Whereas, one always welcomes a rapid decision, I should have thought that an administrative matter of this sort would take a great deal more than seven days if it were to be considered properly, and if experts were to be consulted; and so I charge His Majesty's Government with treating this most important subject simply on the basis of political expediency. I think that that may be putting it low. The question of food deliveries to the German people is surely not only important to them but to the British taxpayer as well, and instead of bringing forward evidence to explain to us that what they are doing is in the interests of increased food production, they have simply brought forward these vague suggestions about reorganisation and splitting up the land, and have been unduly secretive over the details of their proposals. I consider that at the best they are putting political considerations too high, and, at the worst, which I believe to be the case, I think His Majesty's Government are finding themselves in the invidious position of not only having undue pressure brought to bear on them from the least reputable trade union leaders at home, but are also under pressure from the German trade union leaders as well.

8.5 p.m.

Mr. Bechervaise (Leyton, East)

Perhaps the hon. Member for Westmorland (Mr. Vane) will not mind if I do not follow him in his argument. I want to bring the discussion back to Austria, and particularly because an hon. Member on the other side said that the condition of Austria and of the people generally had improved during the last 12 months. I have not been in Austria during the last 12 months, but I have my contacts there, and my impression is, particularly with regard to the industrial work in Vienna, that conditions have not improved taking into consideration that its people have been living on 1,250 calories intake. Although there has been an attempt to raise it to 1,550 calories, that certainly has not been maintained in Vienna.

What good can it do even to the Balkans if they keep these 6,500,000 people in the condition they are today. I want to point out precisely what the average worker and his family are living upon. I that that it will be found that conditions generally have not improved, and the prospect is not inviting. Here is a country with a population much less than that of London controlled by four zones. It is true that three of the zones are, more or less, co-operative, but one zone is, more or less, barred. The Allied Peace Commission has been sitting, and the people at first lived in hope that something was to be done, but, as time went on, they have got into cynical despair. It is true that in the Russian zone there are considerable industries, including the oil works, but I am sure that cannot be the only reason why the Allied Peace Commission has been held up. In September, 1946, Austria was producing, roughly. 40 per cent. to 41 per cent. of their own food. In May of this year, it had dropped to 31 per cent. That means that all the time Austria is living more or less as a pauper.

There are large bodies of people, displaced persons, and, incidentally, there have been thousands coming forward via Hungary—who are adding to the difficulties of Austria. Many of these people, it is true, work; many of them, however, do not work, and they, too, are living on Austria. The whole position seems to be completely farcical in view of the fact that the Allies had agreed that, at the earliest possible moment, Austria should have complete political and economic control of its own area. Yet the years have gone by, and this small State is confronted with difficulties intensified by the occupation. It is true that food production could be increased in Austria, and I raised the question with the Chancellor of the Duchy about nine months ago as to what improvements were being made, and whether we were encouraging research and the importation of fertilisers and seeds. It does not appear that there has been any improvement in Austrian agricultural pursuits. Fertilisers are lacking; seeds are lacking. It is obvious that if Austria is to be self-supporting, its agriculture will have to be developed.

Furthermore there are in this country Austrian doctors and Austrian lawyers who apparently refuse to return to Austria to assist her in her plight. This Government should take upon themselves the responsibility of insisting that those people who have found a refuge here, and who were accepted in periods of stress, should now return to their own country and assist Austria to get on her feet. Also, the peasants should be compelled to play the game. There is no doubt that the peasants are fairly hale and hearty, and while I have no doubt that the Control Commission and the Austrian Government do their best to see that the collections of foodstuffs for the people of the towns is thorough, it is well known, not only to the Control Commission but to Government and to local government, that the peasants are not playing the game. Only recently thousands of head of cattle were sent into Vienna and there was not a meal on one of them. They had to adopt measures for fattening them. These and other transactions should be eliminated and those peasants who will not play the game should be dealt with pretty harshly.

There is one thing which confuses me and perhaps my right hon. Friend will assist me. Austria has agreed to come into the Marshall Plan. Presumably those countries which are accepted in that scheme will have to make their contribution as well as participate in it. How on earth is Austria thoroughly to participate, whilst a large and valuable area is dominated by the U.S.S.R., who are resolved that they will have nothing to do with the Marshall Plan. It is obvious that they will see to it that part of Austria which they control will not participate. It would be a great help not only to me but to other Members of the House if my right hon. Friend could tell us how that will work out. There has been criticism of the Control Commission in Germany, but as far as the British Control Commission in Austria is concerned I think it is recognised that they have played an important role and have performed their duties conscientiously. However, I feel that the time has arrived when there should be a review and a considerable reduction of personnel in the Control Commission in Austria. They have done their job and done it thoroughly, but now some economy might be exercised there.

With regard to the troops, it would appear that Marshal Tito has soft pedalled on the area between the Karawanken Mountains and the River Drau, but it would appear, on the other hand, that the Soviets are obviously trying to keep that matter open. The few troops we have there would be non-effective if anything happened and they might as well be withdrawn, because we would need at least six divisions to look after the frontier of Styria and Carinthia. I submit if the area has to be policed, it could quite adequately be policed with armoured cars and the reduction in those forces would quite possibly ease our position here at home. I think I will leave the subject there. I have been asked to finish, and I am sorry if I have kept on longer than I should. I hope the Minister will give us some idea of what will happen not only in Austria but in Germany who are to participate in the Marshall Plan, while the U.S.S.R. have refused to do so and at the same time are controlling considerable industrial areas in those two countries.

8.15 p.m.

Mr. Douglas Marshall (Bodmin)

In the very few minutes which are left to me, I should like to say that throughout this afternoon my impression has been that this has been an uneasy and rather unreal Debate. We do not know what is going to happen on Wednesday and Thursday and we are, therefore, working to a certain extent in a vacuum. What appears certain is that after what I thought was a constructive and grand speech by my right hon. Friend the Member for Bromley (Mr. H. Macmillan) no answer was given by the Government so that we have been left without any facts upon which to argue, and the Government will afford us no facilities until next Session to answer the points which they are likely to make at the end of the day. I am very dissatisfied with that position.

The whole question of Germany and what will happen there will directly affect the lives we live in this country, and I do not think any hon. Member on any side of the House will disagree about that. My criticism of the Government is primarily as to their timing. They always take about 18 months before suddenly deciding to do something which they should have done 18 months before. As will be seen in col. 81 of the OFFICIAL REPORT for 16th August, 1945—which I intended to read but cannot for lack of time—my right hon. Friend the Member for Woodford (Mr. Churchill) put very clearly the point at issue and the facts which have come to pass. They are apparent for all to see and, once more, his prophecies were right. I have not the time to develop the question of the shattered state of the cities of Germany, the inadequacy of their food position, the slender soap ration, the rise in tuberculosis, or to go into the matter of the tawdry, prostituted life in Germany today. We all know that something has to be done, but let us be mindful of two things. Clearly, first of all, Germany caused the war—that we must remember. Secondly, a great deal of this trouble has been built up by the Soviet's refusal to co-operate in Berlin. That is where the indictment chiefly lies, and it is fair and proper to remember it.

How are we to get over this point? Quite frankly, I agree with every word that was said by my right hon. Friend the Member for Bromley but I just cannot develop the point, because I have not the time. I believe, however, that the only method by which we can possibly get at the problem is to reach an agreement between the three Western Powers and work on a S.H.A.E.F. principle. When discussing Germany in this House, I have mentioned many times the fact that, personally, I feel we should develop the German plains for the training of our Armed Forces, thereby keeping an occupation force. I still have that fear of Germany, and although I do not believe that we can have detailed control of the industrial life of Germany, it is my opinion that we should and could control the periphery. I do not believe that Germany should be allowed the capacity for building deep-sea ships or to run deep-sea shipping, but, if the criticism is that Germany cannot afford to ship in vessels belonging to other Powers, let us be mindful of the fact that prior to the outbreak of the 1939–45 war German shipping and shipbuilding were subsidised. By exercising control of these ships, we should at least know the imports and exports of the country. I have no more time at my disposal, and I thank you very much, Mr. Deputy-Speaker, for allowing me these few moments.

8.18 p.m.

Mr. Richard Law (Kensington, South)

I am sorry to have cut short the speech of my hon. Friend the Member for Bodmin (Mr. D. Marshall). It is a pity that the exigencies of debate have prevented him from developing the argument that he touched on so concisely and clearly. I do not think we could have any objection to speeches like that of the hon. Member for East Leyton (Mr. Bechervaise) or of my hon. Friend the Member for the Queen's University of Belfast (Professor Savory), who, earlier in the day, reverted to the problem of Austria. This Debate covers both Austria and Germany. The Austrian problem is vitally important to this country. I believe—and I agree with my hon. Friend the Member for Bodmin—that the German problem in particular affects the lives of every one of us in this country, and therefore I propose to devote my not very lengthy remarks to some aspects of that problem as they have emerged in the Debate.

This has been a very interesting Debate. It has also been very depressing and very dispiriting. Such a debate at such a time could hardly be otherwise, but it has been extremely interesting. There have been some very interesting speeches, notably the opening speech of my right hon.

Friend the Member for Bromley (Mr. H. Macmillan). Incidentally there has been no kind of a reply to it except for the rather woolly declamation of the hon. Member for Finsbury (Mr. Platts-Mills). What struck me as particularly interesting speeches were those of the hon. Member for Bedford (Mr. Skeffington-Lodge) and the hon. Member for West Coventry (Mr. Edelman). As the House will remember, the hon. Member for Bedford said, among other interesting remarks, that two years after the occupation we were still without any definite policy for Germany. The hon. Member for West Coventry—I hope to refer to him again—said that our German policy suffered from too many drivers, too many brakes and no accelerator. Those speeches are very encouraging, because they show that the eyes of hon. Members opposite are being to some extent opened upon some aspects of the policy of the Government which they support. I do not expect that it will be very long before hon. Members opposite begin using the same kind of language about the domestic policy of this Government. It may be that they have already used it upstairs, although I would have no definite knowledge of that.

I would like to refer to the speech of my hon. Friend the Member for Scarborough and Whitby (Mr. Spearman). He has spoken in a great many of these debates on Germany and he has always made an extremely thoughtful and careful contribution. I suppose there is no Member of the House who has taken a more sincere and genuine interest in this problem than he. However, there is one statement he made on which I would take issue with him, if he were here. He said that the new plan for the administration of Germany under the supervision of the Foreign Secretary had made a good start. How on earth does he know that? Nobody else knows that in this House, because the Foreign Secretary so far has not deigned to inform the House of the position. It is a most remarkable innovation in our procedure, which the Foreign Secretary has developed, of coming down to the House, hearing criticisms of the Government's policy, and nothing happening, no statement of any kind, until the end of the Debate. My hon. Friend the Member for Bodmin made this point, and it is a valid one.

In the last major foreign affairs Debate the Foreign Secretary, with great reluctance apparently, was dragged to the Box to reply to my right hon. Friend the Member for Warwick and Leamington (Mr. Eden). He read a typewritten statement of one page, which was something of an advantage, perhaps, because he usually reads a typewritten script of about 80 pages. Then he never uttered a word, and the Government never uttered a word, until the end of the Debate. Today the Foreign Secretary has not even done that. It is only now, in a few minutes time, that he will give the House any indication of the Government's present policy. The Foreign Secretary ought to realise that this is a Supply Day and that his Vote is under consideration. How in the world can the House of Commons function if on a Supply Day the responsible Minister does not even bother to give an outline of his policy and to reply to any criticism made of the present situation in Germany early in the Debate? I suggest to him that it is really an abuse of Parliamentary procedure.

The hon. Member for Bedford referred to the Foreign Secretary in these terms, "That great big heart of his which cares for all humanity." It does not seem to me that the Foreign Secretary cares very much for the House of Commons, and I hope that in future he will treat the House of Commons with a little more respect. It may be that the whole problem is so new to him that after hearing my right hon. Friend's speech, he had to go away and think. I hope that is not the reason. If it is so, it means that the hopes which have been placed in him, and in this transfer of responsibility for the German problem to his final charge, have been misplaced. I am afraid that the real reason is not that, it is that the right hon. Gentleman is more accustomed to the procedure of the Trades Union Congress than he is to the procedure of the House of Commons.

Dr. Morgan (Rochdale)

Poor, patronising admonitions.

Mr. Law

I do not see how it can be patronising, except in the eyes of certain hon. Members opposite, occasionally to stand up for the rights of the House of Commons. I would revert again to the speech of the hon. Member for Scar-borough and Whitby. My hon. Friend said that it was in some ways a fortunate coincidence that this German Debate was to be followed so soon by the economic debate on Wednesday and Thursday. He said, in perfect truth, that what is happening in Germany today ought to be an object-lesson to us here. Indeed, anybody who listened to the opening speech of my right hon. Friend the Member for Bromley might have been forgiven if he had supposed that his criticism of Government policy was directed not to the Government's policy in Germany but to the Government's policy in this country as well. And indeed the parallel between the two conditions is remarkable. As far as Germany is concerned, of course, there are exaggerations. It is rather as though one went into one of those halls of mirrors which I remember going into at fairs as a child. One sees oneself immensely magnified and distorted and grotesque, but still the image is unmistakably oneself.

The same thing applies very much to our policy in Germany and our policy here. It is the same policy in Germany which is producing the same results. The policy is very much exaggerated and the results are very much worse, but, if I may vary the metaphor, it all comes from the same stable. Everything Germany is suffering from, we are suffering from. There are shortages of food in Germany, and there are shortages here. There are shortages of coal hi Germany, and there are shortages of coal here. There are shortages of consumer goods, exports, hope and, above all, shortages of policy in both countries. The fundamental cause of the German economic problem is the same as the fundamental cause of the economic problem in this country.

That fundamental cause is, of course, the war. And the contributory cause of our difficulties in Germany is the same as the contributory cause of our difficulties here. That contributory cause is the policy of His Majesty's Government. The Government are pursuing in Germany exactly the same policy that they are pursuing here. They are pursuing a policy of control and restriction, and are getting themselves bogged down by the same rigid insistence on party dogma. The same sort of thing is happening here as is happening in Germany.

Let me take the question of control and restriction. My right hon. Friend the Member for Bromley dealt with that when he quoted from the "Lloyds Bank Review" article by Mr. Stamp, and he explained how the German economy was completelyparalysed by control and restriction. Incidentally, the hon. Member for Finsbury said he agreed with my right hon. Friend about denazification of German industry, and then he went on to show quite clearly that he had not agreed with it at all and that, indeed, he had not understood it. However, it is a fact, whether you are speaking of this country or of Germany, that if you remove incentives, if you destroy the free operation of the market, you get a condition of paralysis from which it is impossible to get any revival of industry.

We talk here a great deal, and with justice, about the difficulties Germany is in through lack of food and lack of coal, and those difficulties are indeed, as we all recognise, immensely great. But the fundamental cause of the paralysis of the German economy is just that cause to which Mr. Stamp draws attention, the fact that both prices and wages were stabilised by Hitler in 1936 and have remained stabilised under the control of this Government ever since That means, as I think hon. Members recognise, that money has ceased to have any function whatever to perform. It means that there is no incentive, either for the manufacturer or for the working man to produce goods. It means that the whole incentive is the other way—the incentive is for both the industrialist and the working man to refrain from producing goods. Until the German economy is denazified, and as a condition of denazification that there must be currency reform, until currency reform is instituted, there is no possible chance of reviving a German economy.

It is not only in their attitude towards control that this Government are pursuing the same policy in Germany as here. It is their attitude towards the dogmas in which they have been brought up in their political lives. There is, for example the question of denazification. It must surely be clear to hon. Members opposite—it is clear I know to some of them, but it must be becoming clear to all of them—that if denazification is continued indefinitely, it is bound to defeat its own purpose. It may remove Nazis and supposed Nazis from any kind of control of Germany, but it also means that a vested interest is being built up against our Government of Germany, and it means that all the most efficient elements in German life are removed from any part in the reconstruction of Germany. That applies especially now in the field of agriculture. Food production is one of the major problems to be faced, and how on earth are we to get maximum production of food from our zone if the wholesale process of denazification is going on among German agriculturists? As far as I know that process is going on. I know that the last time I raised this subject in the House some six months ago, the then Chancellor of the Duchy said it was going on, and said it was a very good thing that it should be going on. It may be a good thing for many reasons, but it is not a good thing if it is one of the principal objectives of the Government to raise the production of food inside our zone; and I take it that that is one of our main objectives. Agrarian reform, may or may not be a good thing in the long run. But it is certain that splitting up large and moderate estates now, is not going to have a beneficial effect on agricultural production. It is certain that it is going to have a retrograde effect, and agricultural production will go down.

Then there is the question of nationalisation to which more than one hon. Member has referred. It may be that there is a demand among the German political parties for nationalisation of coal and the heavy industries generally. I understand there was a demand among the coal miners of this country for nationalisation for the British coal industry. Whatever one may say of the virtues of nationalisation, in this country one can definitely say it has not produced the coal it was expected to produce by those who favoured it at the General Election.

Mr. Skeffington-Lodge

Give it time.

Mr. Law

The hon. Member says "Give it time." But I would ask him to cast his mind back to the same time after the first world war, to the twenties, and he will find that after the release of the mines from Government control there was a tremendous spurt in the production of coal. [An HON. MEMBER: "What about the six months' strike?"] I wish I could have a categorical assurance that there was not going to be a six months' strike in this country now. Let me put this point to hon. Members opposite, and in particular to the hon. Member for West Coventry, who had the grace to say that nationalisation by itself was not the cure-all that some people thought it, or words to that effect. But he insisted on the nationalisation proposals of the Government going through in Germany. At the same time he said it was absolutely necessary that the Americans should take over some of the burden that we are carrying, and that if they did not take over some of that burden we ourselves could not carry on with it single handed. He hoped that we would make it quite clear in Washington that we would have to hand over some of that burden to the Americans. I think what he is saying is probably very sound sense, but if he wants Americans to accept that burden, and if he is sincere in that, it is fantastic at the same time to insist that the Americans should adopt a policy, namely, nationalisation, that we know is anathema to them.

I am sorry to refer to the hon. Member for Finsbury again, but he is a member of the Labour Party, at least I think he is; at any rate, he was elected as such at the General Election. He made a rather woolly reply, the only reply which has been given, to my right hon. Friend the Member for Bromley, and said that my right hon. Friend's conclusions were so vague and dreamlike that they did not really make much sense. I am not quoting his exact words, but that was the gist of his argument. It is quite clear that he did not understand the suggestion my right hon. Friend made. In the few minutes that remain to me I would like to amplify that suggestion. My right hon. Friend was suggesting that that in the Marshall offer, with the refusal of the Russians to co-operate in the Marshall plan, and with the acceptance of Western Germany as part of the field of the Marshall plan, we had a unique opportunity, which we have neglected, of surveying anew the whole field of our policy in Germany, of surveying it not from the point of view of any Department in this Government, but from the point of view of the Governments of the United States, France and Britain together. The Marshall plan has given us a unique opportunity of doing that. My right hon. Friend went on to suggest that, that being so, we might well adopt the form of organisation which was known as S.H.A.E.F., which we adopted with so much success in the war. The only difference now would be that whereas S.H.A.E.F. was an Anglo-American institution, the new S.H.A.E.F., which my right hon. Friend was proposing would be an Anglo-American-French institution.

I am quite sure that the hon. Member for Finsbury did not understand what my right hon. Friend meant by the S.H.A.E.F. organisation, and I dare say that there may be other hon. Members who are not clear about it either. What it means in effect is that there is one head of a combined organisation who takes decisions affecting the three Western zones of Germany, that there is one Control Commission, made up of three different nationalities. And this new organisation, with a common loyalty and a common purpose, is likely to be far more effective than three separate organisations trying to run the three zones.

I think the House will agree that there are definite advantages in the S.H.A.E.F. set-up. In the first place, there can be obtained, with the minimum of friction and delay, a clear-cut decision. Look at what has been happening about the level of industry plan, for example. There is a long wrangle between ourselves and the Americans, we publish our findings in a demi-official way, by so doing we upset our French partners, and we then have to withdraw our findings and arrange a meeting in Washington some distance ahead. All that kind of delay would be cut out if we had the "S.H.A.E.F." organisation. It has advantages for Germany, because now in Germany, in the combined zones, the Germans have to deal with three separate sets of authorities. Not unnaturally they find that baffling and confusing. Then there is a saving in manpower. It is quite obvious that if there was such a combined organisation there would be a tremendous saving in what one might call the overheads of manpower. There would not have to be three officers doing every single job right the way down the line. It could be done through one officer, who might be American, French or British.

Finally, it seems to me that the great advantage of the S.H.A.E.F. system, as it was proposed by my right hon. Friend, is that it does fully take account of the special position and the special difficulties of the French. We all know that the French have a special attitude towards this problem which differs from the American attitude and even from our own. The French have had, at the hands of Germany, a particularly bitter experience, and they must look with some suspicion on our efforts to build up, as we must build up, the German economy. They must fear that that economy may get beyond our control, and may become a threat to France herself. The only way we can bring France into the control of Germany, with full satisfaction to herself, and with all those safeguards to which she is entitled, is by developing this S.H.A.E.F. organisation, as it was outlined by my right hon. Friend at the beginning of the Debate this afternoon. I hope that the Foreign Secretary, if he replies to nothing else, will be able to assure the House that even at this late hour the suggestion which my right hon. Friend made will have the fullest consideration by him.

8.45 p.m.

The Secretary of State for Foreign Affairs (Mr. Ernest Bevin)

I should be the last person to show any discourtesy to right hon. Gentlemen opposite or to the House, but I think that it is a very desirable thing to hear what everybody has to say and then to try to answer any criticisms that may have been advanced. I thought that that was the purpose of a Supply Day. To ask me to reply to criticisms before they are made seems almost to be asking for the impossible. Therefore, I have adopted the policy in Debates on international affairs either to make an opening statement and set forth policy or, if a Supply Day is taken, to try to answer at the end. I think that is a perfectly legitimate thing to do.

Mr. Law

Would it not have been possible for some other Minister to have intervened earlier in the Debate so that we would have known the general line of Government policy?

Mr. Bevin

I did not know what the right hon. Gentleman wanted to know. I thought that hon. and right hon. Gentlemen opposite knew all about it. I thought they were going to tell us all about it. It was because I thought that they knew all about it and I was anxious to learn, that I took this line. In order not to disappoint the right hon. Gentleman, may I deal with the last point about S.H.A.E.F.? Really, I never heard more muddled thinking in my life. In one breath I am told to develop democracy in Germany, to give Germany responsibility, help them to get into power, help them to manage their own affairs, and at the same time I am asked to perpetuate a military dictatorship over them by S.H.A.E.F. Remember, S.H.A.E.F. was a military dictatorship. No one had a word to say when General Eisenhower held that position. No citizen in any of the countries could say a word. General Eisenhower was the supreme commander. A supreme commander is right in war; I do not think it is the right system when we begin to build for peace.

Mr. H. Macmillan

There are three now.

Mr. Bevin

Let us assume that there are three—that makes a trinity. We have also built underneath and around it—and we intend this to supersede it—the local government for which hon. Gentlemen opposite asked, and which they condemn us for trying to build. In the administration of Germany we have been trying to hand more and more power over to the Germans. The Americans, as well as ourselves, have been very keen in this field. With regard to the breakdown of machinery, about which hon. Members opposite complained, my own view is that with the very great shortages in the world we handed over certain functions probably a little too quickly. After all, Germany had been under the Nazi regime. I am now told that it is wrong to de-nazify. According to the right hon. Gentleman the Member for South Kensington (Mr. Law), I should not put these people out of office. I should allow them to go on. But they were under the Nazis. They had the very highest offices in the State. We had to remove them, and I ask the House to remember that we had to bring back many men to take charge who had been in concentration camps for a considerable time. Therefore, I do not feel disposed to go back to the S.H.A.E.F. organisation. I think it is right to go forward, not backward. I think the right thing to do, probably, is to take steps, stage by stage, until ultimately we have got a proper Government for Germany, a Government with which we can deal. That may be a long way ahead, but we shall reach it in time.

I have heard something today—and I forget which hon. Member said it—which shocked me. I want to say at the outset how much it shocked me, and I hope it will shock the country. He was telling us that Germany was so down and out, or so demoralised, that I could act on the assumption that Germany could not fight, at any rate, for 15 years. I do sincerely hope that our action will not be based on a policy which presumes that the strength of Germany is to be so rebuilt, and our security so endangered that we have the danger of another war in the West in 15 years. I should be extremely sorry if this House took that view. The reason I mentioned this is because this problem of Germany has to be dealt with on two objectives, very carefully worked out.

It has been said that it has all been influenced by the words "unconditional surrender," to which, by the way, the right hon. Gentleman the Member for Bromley (Mr. Macmillan) said the Coalition Government agreed. We never heard of it until it was over. I do not know whether even the right hon. Gentleman the Member for Woodford (Mr. Churchill) ever heard of it until it was said. Those words were said at a particular conference and went out to the world, and the first I saw of them was in the morning Press. That is an historical fact. Those words became the cry of the world. I do not say that we would have repudiated them at that stage of the war. I would not have done it; I am not going to be accused now of doing it. It has never crossed our minds since we have been in office and have been dealing with Germany. Moreover, I do not think that, if those words had never been heard, it would have made any difference as to how the war ended. I believe that Hitler made up his mind either to win or to bring Germany down in a shambles, and he brought Germany down in a shambles. I do not think it makes any difference at all; so we will not quarrel over that, or say any more about it. I just want to put on record the historical fact that it has certainly never crossed our minds to repudiate it.

Our minds have been influenced by an attempt to get economic unity in Germany. This was worked out with tremendous care. The right hon. Gentleman the Member for Woodford was on the same committee as myself in doing it, and he sat with me long, long hours, I am afraid. In that task we went forward with two objectives. One was to give a decent. reasonable standard of life to Germany and at the same time to make sure of our own security. That was done by what was known as the Armistice and Postwar Committee, on which the work was carried out in very great detail, and from which, so far as I am concerned, we have never deviated.

Mr. Law

The right hon. Gentleman mentioned my right hon. Friend the Member for Woodford. Was he not referring to myself?

Mr. Bevin

I am sorry; I meant the right hon. Gentleman the Member for South Kensington. I got a bit mixed up. Therefore, when we went to Potsdam, after the Election when hon. Gentlemen opposite were counted out, we then had to take on this job. The question of reparations was raised—and all those other problems which had been discussed before I arrived there—and all through those discussions, in the three or four days that I was there, we had in mind the maintaining of a decent level for Germany, and, at the same time, the question of security. The basis of those considerations was, in fact, decided at Yalta, followed up, as I say, by Potsdam.

What has happened? Can any hon. Member of this House, from whatever bench, Left or Right, say that I have not stuck hard and fast in the struggle to maintain the economic unity of Germany with a view to building a decent Europe? But, first of all, the French objected—and I have no complaint to make about that—to the central agencies for Germany. Hence, they never operated. The other principle was that the East of Germany should contribute their food to the West, and that the West should contribute their goods to the East, and so get as near a balance of payments in Germany as we possibly could. Russia did not co-operate; hence, we have been left with self-contained zones. It is now suggested that, at this stage, His Majesty's Government should take the unenviable decision to recognise that Europe was now permanently divided—whether we were asked to do it or not. I think the right hon.

Member for Bromley said it should not be Britain's initiative to do it, yet, somehow, we should go on as if it is done. I do not think I am misinterpreting what he intended to convey.

Mr. H. Macmillan

It is such an important point of historical accuracy that I must correct the right hon. Gentleman. What I said was that I thought we must accept, and, indeed, might at some time have accepted that, in fact, there was a de facto partition of Germany—not of the world—but that we should not accept it de jure, and that we should not accept the responsibility for having caused it, but that we must, from the practical and economic point of view, accept it as a de facto situation.

Mr. Bevin

There is not much difference between what the right hon. Gentleman said and what I said. De facto and de jure have a very close relation. If one proceeds on the assumption that it is an accomplished fact, then it is very difficult to retrieve; one cannot go back. That is the situation. I tried for six weeks in Moscow to avoid accepting that position, and I say quite frankly that I am not accepting it now, and that I am not going to act between now and November as if that were the situation, and that we should proceed accordingly. When the Moscow Conference adjourned, it had under consideration certain proposals. We agreed to meet again in November to discuss those proposals, the basis of which is the economic unity of Germany. Until I have gone through that Conference, I am not going to take the step, which is fraught with so much danger for Europe and the world, without finally having come to the conclusion that there is no other course.

Mr. Molson

Job is not in in it compared with the right hon. Gentleman.

Mr. Bevin

No, he may not be, but the life of the nation is not summed up in three months, and does not depend on the taking of a step in three months. We waited months and months—from 1935 to 1939—for hon. Members opposite to take the step. Therefore, if I have to wait three months before the die is finally cast, I think it is a statesman's business to do so, and I do not propose to follow the temptation which has been put to me today.

Mr. Molson

Will the right hon. Gentleman give way?

Mr. Bevin

I am sorry; I have only a short time. Therefore, on the question of the economic unity of Germany, I—and, indeed, His Majesty's Government—will make a supreme effort at the November Conference. That does not mean that we have done nothing. As I have announced to this House before, and as has been conveniently forgotten today, I took the line in Paris that if there could be no unity we must make our zone pay and relieve ourselves of this liability. Then came the fusion, and we invited the French to join. What power have I to make the French come in? Some people appear to assume that we only have to talk to the French and they will come in. But the French have great political difficulties to overcome. Then it is said that we ought to do everything possible to remove French apprehension. What more can His Majesty's Government do than they have done? First, in connection with the Ruhr, we tried one scheme, but we were told that the policy of the French then, in 1945, was to detach the Ruhr. His Majesty's Government have been against the detachment of the Ruhr. We have at the same time, been concerned with how to give security to the French.

Then the question of the Saar was raised. We have gone as far as we could, within the terms of Allied agreements, to give France satisfaction on the question of the Saar, even to the extent of introducing a new currency area to assist her in her difficulties. We are also considering an adjustment of the reparations problem in relation to the Saar, in order to meet the French position. In addition, we signed the Treaty of Dunkirk. That treaty was signed with great solemnity and, I hope, with the full and everlasting support of the British people—a thing which ought to have been done after the 1914–18 war; if it had been, it might have changed the course of history.

I have noted that opinion is moving. The first discussion took place on the level of industry required to give Germany a standard of life; I proposed the provision of some yardstick, which was given as 11 million tons of steel. That would have given about the standard which existed prior to the Hitler regime, when working for peacetime purposes, and before the acceleration in preparation for the war. That figure of 11 million tons was also intended to enable—and I am satisfied that it would—the carrying out of rebuilding and rehabilitation, and it would not have endangered security. But what were we faced with? For nearly a year we were faced with what was known as the Morgenthau policy of the United States. That policy was to pastoralise Germany, and, therefore, the figure in respect of steel production was put as low as 5.8 million tons. This is not a question only of how much steel is to be produced. It is a measure, the yardstick, by which all other industries are measured throughout the whole territory. That, in our view, was so low that it would not only have meant preventing Germany from recreating itself, but, in the end, would have been quite impracticable. We worked away, and finally there was a Four Power agreement for 7,500,000 tons capacity as a basis. That 7,500,000 tons involved the destruction of factories far below a level which I think is necessary to maintain a decent life in Germany. It also involved us in this very fine definition of what is wartime industry and what is peacetime industry. At one moment it may be production for war and at another time it may be production for peace, all from the same factories.

Therefore, we have been persistently pressing the French and the United States of America and Russia for a higher level. In Moscow the Russians suddenly proposed. between 10 and 12 million tons, and the United States thought of 10, 12 or 13 million tons as the basis—for the first time. The French, while recognising the figure had to be placed higher, were not willing to go to that length. The Moscow Conference broke down, and the United States and ourselves have been working out an entirely new plan. That plan is based on—for our zone—just over 10 million tons. Now, it is said that the destruction of factories in Germany is a devastating thing. We did agree—and I think it was quite right—to take what are called Category I war plants and get rid of them as quickly as we could. To keep the thing hanging about, neither moving it nor doing anything with it, merely letting it deteriorate, and not to meet the legitimate obligations of those who have a right to reparations, is a mistaken policy. Therefore, we agreed to clear that lot right out of the way by the end of June, 1948. But when the new plan was evolved and agreed, then there was to be a review of what are called Categories 2, 3 and 4—which alters the whole standard of German production.

It is said we go on and discuss it, and refer it back, and so on. It did not get referred back, really, on that basis at all. There came forward at about this time the discussions on an entirely new basis of the Marshall proposal; and, therefore, the French, who were engaged in this problem, felt that they should be consulted and have their say about what the final solution should be. In that we have agreed, and the matter is postponed for the time being. But I did notice that in a speech in the Chamber in Paris this week M. Bidault seemed to be making, for the first time a rather different approach to the whole German problem from any I have seen from the French angle up to now. Therefore, I am hopeful, when these new discussions take place, and we know whether the French are coming in with us, to combine the three zones or whether on the other hand we are to have economic unity, that we shall be able to determine what the final situation is.

Reference has been made to the' Marshall Plan."I keep repeating: There is no" Marshall Plan ";there never has been; Mr. Marshall's speech was a very simple statement. He wanted to deal with Europe as a whole, and he wanted to deal with it on the basis that Europe—and this is the answer to the hon. Member for Finsbury (Mr. Platts-Mills), for instead of the United States rushing forward to dominate Europe, the reverse is the case—should ascertain what it can do for itself and, having ascertained that, tell the Americans what they can do for Europe. I do not detect in that any note of domination from Wall Street, or anywhere else. The hon. Member says that so often, and so many times, that he makes himself believe it, and hopes that other people will also. In any case, at the Paris Conference I did not find a single Government, including Soviet Russia, not willing to take credit from the United States. They objected to the form of determining what we could do by ourselves, and getting supplementary aid. It was on that that the Conference broke down, and not on the principle whether or not we should have credit from the United States. I want to make that quite clear.

What part must Germany play in this? Obviously, with the November Conference and the future of Germany as a State to be determined, we cannot now deal with Germany in this category as a State. Therefore, we decided to utilise the commanders-in-chief, with their organisation, and asked them to submit to us at the Paris talks what, in their view, Germany's contribution could be, not only to herself but to Europe. With those figures, the Paris Conference is taking that into account, in common with all the other countries who are parties to the Marshall discussions now going on in Paris. I think I have said sufficient to indicate that we have tried to preserve the position of not recognising Germany as a State in the discussions—contrary to all that has been said in the Press—but merely taking the zone and the information available there and out of that, together with the Benelux countries, Italy, France and the rest, and ourselves, determining the total production of which we are capable, and what we can contribute over the next four years to a restoration of equilibrium in the world. That is the way in which Germany fits into the economic discussions, and I think His Majesty's Government have pursued a sound policy.

Now I have been told in the Debate that we ought to have more production, more food and more raw materials; but in the same breath complaint is made about the expenditure of dollars. Can anyone in this House tell me where I can get this food and raw materials except from dollar countries? I should like to discover it. In the last two years we have had virtually two famines. We have had the failure of the monsoons in India, and we have had two droughts. During the last two years, since the close of the war, the world has been terribly short of food. The only part of the world where there has been abundance has been in the Western hemisphere. I could not say, if I were a capitalist, as was whispered under breath just now, that Providence did that because it happened to be a capitalist country. It was a fact that the Australian harvest and the great expansion in her production had to be used in total for the Eastern hemisphere because of the failure of rice. The Allocations Committee, which has been operating in Washington, has been pestered to death for food for Germany, and they have not been held up because of lack of dollars during this year. I realise that it was a great cost on our dollar pool, but that has not been withheld. The fact is that we could not get it, and, therefore, even in our own case we were faced with a situation last year of having to introduce bread rationing—because we could not get grain for ourselves. And so the combination of this cereal position has been really disastrous for the world.

I should like to make one point clear in this connection. His Majesty's Government have been urging the shipment of more food to Germany, and in so far as it lies within their power to obtain raw materials, or in so far as they can obtain them without dollar purchases and without involving a dollar drain from the sterling area, they are ready to make their contribution, but what they cannot do, when this present scheme runs out, is to spend any more dollars for this particular purpose. Therefore, it does involve discussions and a review, in order to devise other plans.

With regard to production, contrary to what was said this afternoon, production was rising. In coal, we had reached 238,000 tons a day when the food shortage made itself felt. You can criticise Governments or administrations, and say what you like about them, but it is frightfully difficult to get people to turn out a hard day's work when they are fed below 1,000 calories. You simply cannot do it, and that is the brutal fact. At the present moment it is 1,250, and we are trying to build it up to 1,550. In preparation for the winter, we are endeavouring to put in stock piles to guarantee 1,550. We are aiming, if funds and food supplies warrant, to get 1,800 as a minimum. There would be more for the heavier and more manual workers, such as steel and coal workers—a calorie value of 2,800. That is for the man, but the family is still on the minimum of 1,800. And so, with the greatest effort in the world in organisation, with a food standard of that kind it is almost impossible to get maximum production. The House should face that. We are now engaged in discussions with the United States to remedy this situation. As to indigenous resources in Germany, it was said that they would return roughly about 1,000 calories. That figure was too high, and planning for next year has rather taken another basis—the building up of the amount that can be produced by a planned internal agricultural economy so as to reduce to as small a margin as possible the sum that has to be paid for food from abroad while leaving the dollars or other currency we have for raw materials for manufacture.

I have been asked about the return of prisoners of war to Germany—a subject in which everybody is interested. The retention of these prisoners in this country is a great advantage, even to Germany. By using German prisoners in our own agriculture we increase the total world supply, which lessens our having to draw so much from abroad and allows more for other people. I hope there will not be any wrong idea about this problem. Further, these prisoners are looked after, and the housing problem in Germany is so bad that when they get back they have to be absorbed gradually, and accommodation built up if the best use is to be made of them on their return. Physically, these prisoners are not being injured; I do not think anyone would say that German prisoners in this country were being injured, or that their lives are any worse than they would be if they were now in the Ruhr. We are building up as fast as we can all the resources that are available in that country.

I have been asked about socialisation. I have been charged, with great authority, by the hon. Member for Finsbury who said that I had sold the pass. I can only say that, old as I am, and whatever charges are brought against me, I have never sold the pass to anyone. Our policy is the same as it always has been—the public ownership of the Ruhr industries. It is not a theoretical problem. Who will own them if the public do not? Are they going back to the syndicates? Will any Member opposite tell the country that the factories should go back to the Krupps family, or any suchlike family? Are they to be handed over to international capital? What is France going to say? What will happen from the point of view of security, if there is no control? No, I can see the building up of these industries under a new management, on good lines, but the actual vesting of the property should, I think, be in public hands.

Mr. Molson

The right hon. Gentleman says that they should be in public hands. Are the factories to be the property of Germany, or an international consortium?

Mr. Bevin

That has to be determined. Members opposite smile easily, but unintelligently. There are certain interests, and not all in America, which have asked us for time for discussion. I should not have been doing my duty if I had not allowed time. We have postponed the matter to try to get discussion of this problem. I do not desire the House to commit me to this, but there are two or three ideas floating about. In the management of these great mines, public ownership by the Landtag is one view; public ownership by the zones, if there is not a united Germany, is another view; and, on top of that, international control—a sort of three tiers: one, management; one, ownership; and one, control; or it may be mixed. The views have to be heard in order to work this thing out. The policy of the French has hitherto been a four Power control of the Ruhr. I have taken the view that I should not be a party to four Power control of the Ruhr unless there were four Power control over all German industry, whether it was the Eastern zone or the Western, and on that it has broken down. Now the French seem to be moving, in the light of M. Bidault's speech, along another line. It is not our business as an occupying Power to assume that we can force our views on all these countries, but we have a right to our ideas, and our idea is that, in some form, it has to remain in public hands.

I am asked about de-nazification. We have de-nazified in the coal industry. The other matters are still being discussed under the Four Power arrangement. I issued a statement reassuring the Germans on this point some time ago. At Moscow, all four Powers agreed to instruct the Allied Control Council to set a date for the whole process of de-nazification to finish. I am now awaiting that date, and a waiting that decision, and after that any matter of this kind is to be left to the Land Government.

Therefore, I can only say a word to the Germans themselves—I have not time to refer to Austria and the Tyrol, but I will write to my hon. Friend on that matter—we have no desire to perpetuate any spirit of revenge so far as the German people are concerned. We believe that, by careful handling, Germany can be turned from a war-like, aggressive nation, into a peaceful nation, entering into the comity of peoples of Europe as a whole. To that end, we shall work. The quicker

the Germans themselves accept that view and work with a will—as was said to Italy, "Work their passage back," as well as being helped back—the quicker we shall obtain our objective.

Question put, "That this House doth agree with the Committee in the said Resolution."

The House divided: Ayes, 298; Noes, 102.

Palmer, A. M. F Silverman, J. (Erdington) Vernon, Maj. W. F
Pargiter, G. A. Silverman, S. S. (Nelson) Viant, S. P.
Parkin, B. T. Simmons, C. J. Wadsworth, G.
Paton, J. (Norwich) Skeffington, A. M. Wallace, G. D. (Chislehurst)
Pearson, A. Skefhngton-Lodge, T. C Wallace, H. W. (Walthamslow, E.)
Platts-Mills, J. F. F. Skinnard, F. W. Webb, M. (Bradford, C.)
Poole, Cecil (Lichfield) Smith, H. N. (Nottingham, S.) Weilzman, D.
Porter, E (Warrington) Smith, S. H. (Hull, S. W.) Wells, P. L. (Faversham)
Porter, G. (Leeds) Sorensen, R. W. Wells, W. T. (Walsall)
Price, M. Philips Soskice, Maj. Sir F. West, D. G.
Pritt, D. N. Sparks, J. A. Westwood, Rt. Hon. W
Proctor, W. T. Stamford, W. White, H. (Derbyshire, N. E.)
Pryde, D. J. Stephen, C. Whiteley, Rt. Hon. W.
Pursey, Cmdr. H Stewart, Capt. Michael (Fulham, E.) Wigg, Col. G. E.
Ranger, J. Strachey, J. Wilcock, Group-Capt. C. A. B.
Rees-Williams, D. R. Strauss, G. R. (Lambeth, N.) Wilkes, L.
Reeves, J. Stross, Dr. B. Willey, F. T. (Sunderland)
Reid T. (Swindon) Stubbs, A. E. Willey, O. G. (Cleveland)
Rhodes, H. Swingler, S. Williams, J. L. Kelvingrove)
Ridealgh, Mrs. M Sylvester, G. O. Williams, Rt. Hon. T. (Don Valley)
Robertson, J. J. (Berwick) Symonds, A. L. Williams, W. R. (Heston)
Rogers, G. H. R. Taylor, H. B. (Mansfield) Willis, E.
Ross, William (Kilmarnock) Taylor, R. J. (Morpeth) Wills, Mrs. E. A
Royle, C. Taylor, Dr. S. (Barnet) Wilson, J. H.
Sargood, R Thomas, D. E. (Aberdare) Wise, Major F. J
Scollan, T Thomas, Ivor (Keighley) Woodburn, A
Scott-Elliot, W. Thomas, I. O. (Wrekin) Woods, G. S.
Segal, Dr. S. Thomas, George (Cardiff) Wyatt, W.
Shackleton, E. A. A. Thorneycroft, Harry (Clayton) Yates, V. F
Sharp, Granville Thurtle, Ernest Young, Sir R. (Newton)
Shawcross, C. N. (Widnes) Tiffany, S. Younger, Hon. Kenneth
Shawcross, Rt. Hn. Sir H. (St. Helens) Titterington, M. F. Zilliacus, K.
Shinwell Rt. Hon. E Tolley, L.
Shurmer, P. Tomlinson, Rt. Hon. G. TELLERS FOR THE AYES:
Mr. Snow and Mr. Popplewell.
Agnew, Cmdr. P. G. Head, Brig. A. H, Peto, Brig. C. H. M.
Assheton, Rt. Hon. R. Headlam, Lieut.-Col. Rt. Hon. Sir C. Pickthorn, K.
Baldwin, A. E. Hinchingbrooke, Viscount Pitman, I J
Beamish, Maj. T. V H Hope, Lord J. Poole, O. B. S. (Oswestry)
Bennett, Sir P Hudson, Rt. Hon. R. S. (Southport) Raikes, H. V.
Birch, Nigel Hulbert, Wing-Cdr. N. J Ramsay, Major S.
Boles, Lt.-Col. O. C. (Wells) Hurd, A. Rayner, Brig. R.
Boyd-Carpenter, J. A. Jarvis, Sir J Reed, Sir S. (Aylesbury)
Bracken, Rt. Hon. Brendan Jeffreys, General Sir G. Reid, Rt. Hon. J. S. C. (Hillhead)
Braithwaite, Lt-Comdr. J. G. Joynson-Hicks, Hon. L. W. Ross, Sir R. D. (Londonderry)
Buchan-Hepburn, P. G. T. Kerr, Sir J. Graham Sanderson, Sir F
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n) Lambert, Hon. G. Shepherd W. S. (Bucklow)
Challen, C. Lancaster, Col. C. G. Smith, E. P. (Ashford)
Channon H. law, Rt. Hon. R. K. Spearman, A. C. M.
Clarke, Col. R. S. Legge-Bourke, Maj. E. A. H Stanley, Rt. Hon. O.
Clifton-Brown, Lt.-Col. G Lindsay, M. (Solihull) Strauss, H G. (English Universities)
Cole, T. L. Lloyd, Selwyn (Wirral) Stuart, Rt. Hon. J. (Moray)
Crosthwaite-Eyre, Col. O E Low, Brig. A. R. W. Sutcliffe, H.
Crowder, Capt. John E Lyttelton, Rt. Hon. O. Taylor. Vice-Adm E A. (P'dd't'n, S.)
Darling, Sir W. Y. Macdonald, Sir P. (Isle of Wight) Teeling, William
Digby, S. W Mackeson, Brig H. R. Thomas, J. P. L. (Hereford)
Dower, Lt.-Col. A. V. G. (Penrith) Macmillan, Rt. Hon. Harold (Bromley) Thorneycroft, G. E P (Monmouth)
Dower, E. L. G. (Caithness) Macpherson, N. (Dumfries) Touche, G. C.
Drayson, G. B. Marples, A. E. Vane, W. M. F.
Dugdale, Maj. Sir T. (Richmond) Marshall, D. (Bodmin) Walker-Smith, D.
Fletcher, W. (Bury) Maude, J. C. Wheatley, Colonel M. J.
Fraser, H. C. P. (Stone) Mellor, Sir J. White, Sir D. (Fareham)
Fyfe, Rt. Hon. Sir D. P. M Molson, A. H. E. Williams, C. (Torquay)
Galbrailh, Cmdr. T. D. Morris-Jones, Sir H. Williams, Gerald (Tonbridge)
Gammans, L. D. Morrison, Maj. J. G. (Salisbury) Willoughby de Eresby, Lord
Gomme-Duncan, Col. A. Mott-Radclyffe, Maj. C. E. Winterton, Rt. Hon. Earl
Gridley, Sir A. Nicholson, G. York, C
Grimston, R. V. Nield, B. (Chester)
Hannon, Sir P. (Moseley) Orr-Ewing, I. L. TELLERS FOR THE NOES:
Hare, Hon. J. H. (Woodbridge) Peake, Rt. Hon. O Mr. Drewe and Major Conant.

It being after Half-past Nine o'Clock. Mr. SPEAKER proceeded, pursuant to Standing Order No. 14, as modified by the Order made upon 12th November, to put forthwith the Questions:

"That this House doth agree with the Committee in the outstanding Resolutions reported in respect of Classes I, to X of the Civil Estimates, and the Revenue Department Estimates, the Navy Estimates, the Army Estimates and the Air Estimates."

[For details of the remaining Resolutions, see OFFICIAL REPORT, 31st July, 1947; Vol. 441, c. 748–754.]