HC Deb 31 July 1947 vol 441 cc753-87

9.46 p.m.

Colonel Crosthwaite-Eyre: (New Forest and Christchurch)

I beg to move, That the Regulation of Payments (General) (No. 3) Order, 1947 (S.R. & O., 1947, No. 1483), dated 12th July 1947, a copy of which was presented on 16th July, be annulled. In doing so, Mr. Speaker, I should like to have your Ruling on two points—first, whether we might take at the same time the two following Prayers on the Order Paper—— That the Regulation of Payments (Sweden) Order, 1947 (S.R. & O., 1947, No 1497), dated 14th July 1947, a copy of which was presented on 16th July, be annulled. and That the Defence (Finance) (Definition of Sterling Area) Order, 1947 (S.R. & O., 1947, No. 1413), dated 7th July 1947, a copy of which was presented on nth July be annulled. and, secondly—the point which I have submitted to you privately—whether, since some of the Orders could not be debated because a further consolidation Order was put down, we might debate that particular Order and all the Orders arising from it in addition to those which actually appear on the Order Paper.

Mr. Speaker

If it is for the general convenience of the House, I am quite prepared to suggest that these Orders might be taken together. As regards the second point, I think that the hon. and gallant Gentleman knows that I gave a rather special Ruling about this, and the Debate can be wider than is usual on the consolidation Order.

Colonel Crosthwaite-Eyre

Thank you, Mr. Speaker. I do not think that a more opportune moment could have been chosen for presenting this Prayer, because in the Press today we have seen reports of the last drawing on the American loan which leaves us with only £250 million. We are told that the recent drawings are entirely due to convertibility, and that whereas the adverse balance of trade is in the neighbourhood of £50 million a month, our drawings in respect of the loan are now on the average £200 million. It is quite apparent that there is some grave leakage taking place between what we actually need for ourselves and what we are forced to draw by our commitments. We on this side of the House would suggest as our first cause for inquiry the fact that when the Government are faced with a problem of this nature—and when they admit on every possible occasion that it is our hard currency resources which stand between us and starvation and that without them we could not obtain even the ordinary materials we need for our everyday work—to have these liabilities imposed upon us under the orders we are discussing tonight is something which any Government must be prepared to face and justify before this House.

We would go further and say, with deep respect, that a Government which is prepared to enter into these agreements—as will be shown in the course of this Debate, during which a dozen separate agreements are to be mentioned—which vitally affect the economic welfare of this country, refusing to allow any time for their consideration but in fact taking steps to ensure that they shall not be debated unless they are raised as they have been tonight on a Prayer, and a Government, moreover, which justifies these agreements and put them into practice, is guilty of behaviour which is un worthy of a Government appealing to the nation for an over-all economic effort.

We suggest to the Government, first, that when, as I hope to show and as my hon. Friends will show, these commitments were entered into, commitments which are far beyond anything which the public of this country realise, not to afford this House any opportunity of hearing from the Financial Secretary or from the Chancellor of the Exchequer reasons why those agreements had been entered into or any justification of them, is putting a burden upon the Opposition which we should be the last to bear. It is surely making us, not what we should be, people designed, perhaps by accident and perhaps by fortune, to look after the job of opposing His Majesty's Government, but, in the circumstances which are imposed upon us, the watchdogs of the public interest.

Before we discuss these orders we must go back for one moment to the terms which were imposed upon us by the Anglo-American Financial Agreement. That is the basis of the situation in which we find ourselves today. In my judgment which we may wish to pass upon His Majesty's Government, we must realise what we undertook, under that Agreement. If the House would look at Articles 8 and 10 of that Agreement, they will find what we undertook. Perhaps I might read from Article 8, paragraph 2, which is as follows: The Governments of the United States and the United Kingdom agree that not later than one year after the effective date of this Agreement, unless in exceptional cases a later date is agreed upon after consultation, they will impose no restriction on the payments and transfers for current transactions. If one looks at Article 10 one finds there: The Government of the United Kingdom intends to make arrangements with the countries concerned therein "— I would call the attention of the House to the phrase which will come in later— varying according to the circumstances of each case for an early settlement covering the sterling balances accumulated. The settlement with the sterling areas will be on the basis of I dividing the accumulated balances into three categories;"— again I call the attention of the House to these words— (a), balances to be released to assist convertibility into any currency for current transactions; (b), balances to be similarly released by instalments over a period of years beginning in 1851; and (c) balances to be adjusted as a contribution to the settlement of war and postwar indebtedness and in recognition of the benefits which the countries concerned might be expected to gain from such a settlement. The Government of the United Kingdom will make every endeavour to secure an early completion of this agreement. That article puts upon His Majesty's Government a very definite task. In the obligations they undertook under the Bretton Woods Agreement and the International Monetary Fund, they have to try to focus those obligations. Article 19 of that agreement, lays down exactly what current transactions should be and makes it clear that any current transaction entered into for the purposes of trade is to be one for which His Majesty's Government must be responsible in convertible currency. That is the situation with which His Majesty's Government were faced when they tried to put this agreement into practice.

As regards blocked sterling—which is a matter very dear to the heart of this House—His Majesty's Government had a very clear duty. They were told they had to do three things: one, to make a certain percentage convertible; two, to ensure that a certain further percentage should be convertible after 1951; and, three, to make an adjustment of the total balances due according to the benefit that the countries concerned had received from the war effort of the Allied nations. In fact His Majesty's Government have paid lip service to that theory. On 18th February of this year the Chancellor of the Exchequer said: … in all negotiations about sterling balances account must be taken of the comparative war effort of the parties."—[OFFICIAL REPORT, 18th February, 1947, Vol. 433, c. 974.] A fortnight later I asked him a further question in which I asked if the word "must" meant what the right hon. Gentleman implied, to which he very rightly replied, "Yes." In fact His Majesty's Government have done absolutely nothing to make an adjustment of the sterling balances before they granted convertibility.

Let us look at one or two of the cases which have occurred. There is the case of the Argentine, a country well renowned for the war effort it put forth, a country which His Majesty's Government were no doubt only too glad to see in the parade of victory. What do His Majesty's Government think they actually contributed to the war effort? Yet we acknowledged those war debts in full and allowed our British assets—that brought us in £4 million to £5 million in Argentine currency a year—to be swept away in the payment of sterling balances. His Majesty's Government no doubt had a good reason for that, but they have yet to tell the House what it was. There is also the case of Egypt, another country which as all hon. Members know, is renowned for the part it played in the war effort. We have acknowledged 100 per cent. under the temporary payments agreement of that which we nominally owe. Not only that, but we have made large sums available from that reserve convertible to pay to Egypt for those very imports which His Majesty's Government are telling us or will shortly be telling us we cannot ourselves afford to buy.

I would like to take the cases of Norway and Uruguay to point the moral of what I am saying. In the case of Norway we have a country that did fight with us and did make a great effort to participate in the war effort. In Uruguay, we have a country which quite honestly, as far as I know, did nothing except provide us with materials at whatever price they could command. But in both cases the sterling balances have been acknowledged 100 per cent.

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

May I interrupt the hon. and gallant Gentleman? His words, of course, will go a long way. He has referred to Uruguay. I would like to remind him that Uruguay is a great friend of this country and did assist us materially during the war.

Colonel Crosthwaite-Eyre

I am more than fully prepared to accept what the Financial Secretary says. Indeed, the Financial Secretary knows that I have studied with considerable care what I am saying tonight, but I would ask the House to consider this. We have two countries, Norway and Uruguay, both treated in the same manner. I have read both the payments agreements and both the Statutory Rules and Orders implementing those agreements, and as I understand it—the Financial Secretary may contradict me—both those countries are treated in the same way. I do ask this of the Financial Secretary: Which contributed most in privation, suffering and genuine effort to the war effort? If he will tell me that Uruguay provided the same as Norway, I should be the first to withdraw. If he does not, then I can only say that what I said before the Financial Secretary interrupted me is still true and I put it to the House. Let us go a bit further——

Mr. Glenvil Hall

I do not want to deal with this when I reply so perhaps, as it is fresh in everybody's minds, I might deal with it now. When I intervened I was referring to the first remark about Uruguay made by the hon. and gallant Member. I would remind him and the House that Uruguay is a relatively small country, and when it was by no means clear that Germany was not going to win, she drove the "Graf Spey" out—a very brave and gallant thing to do, and of the utmost use to this country and to the Allies.

Colonel Crosthwaite-Eyre

The last thing I would wish to do in this Debate is to try to raise a question such as the Financial Secretary has raised. [An HON. MEMBER: "You raised it."] If I have given rise to any Member of the House believing that I was talking about the question that the Financial Secretary has raised, then let me be the first to apologise. What I would say is that if we talk of Uruguay driving out the "Graf Spey," what do we think of the Norwegians? [An HON. MEMBER: "You were not talking about them."] That was the point I was trying to make. If any hon. Member of this House, on that side or this, likes to make in his own mind a balance between the war efforts of the two countries concerned, then he is so entitled. I tried to make one, and the Financial Secretary objected to it.

I now come to a rather more important question. [HON. MEMBERS: "Hear, hear."] If any hon. Member opposite thinks that the question of sterling balances is unimportant——

Mr. King (Penryn and Falmouth)

If the hon. and gallant Member will allow me——

Colonel Crosthwaite-Eyre

I have given way before, and this is rather a complicated argument. I would like to get on with it. We come on to the second part, which is current transactions. His Majesty's Government were asked under the Orders I have mentioned to make the proceeds of current transactions convertible, but they have gone far outside those Orders. In these present payments agreements, and in the Statutory Rules and Orders which we are now debating, they have not only made balances available but they have made the gross balances available. By that, what His Majesty's Government have done is not to say that over a certain period we will take the transactions in order to assess whether we owe some other country something or whether that country owes us something, but that every single financial transaction is separate, and therefore everything that a foreign country receives from us in the way of sterling, because of our exports or, internally, because of our imports, is a matter for a separate decision; and it is perfectly possible, as we read these payments agreements, as we read the answers which the Financial Secretary has given, for any country to cash in on everything it imports to this country without taking into consideration whatever it may receive from this country.

The Financial Secretary, in an answer he gave not so long ago, confirmed that view by saying that those who run out of sterling because of the measure of convertibility which we have now introduced will not be penalised in any way against those who keep their sterling in order to pay from time to time for the exports that we make to them. I will not go further into that because the hon. Mem- ber for East Aberdeen (Mr. Boothby), who I believe will Second this Motion, will deal with it more fully.

On these negotiations obviously there are two types of country. There are those with whom we have a surplus and those with whom we have a debit. In the case of those with whom we have a surplus, I would ask him direct questions. In the first case, Norway. In one of these Orders we are discussing we have an estimated credit balance during the year of £11 million. Under our payments agreement we are bound to hold £5 million of that, which leaves us with £6 million that we cannot demand from the Norwegians in terms of gold. I ask him in the second place if in the case of Czechoslovakia, we have an estimated credit balance of £8 million. We can only keep £1 million in Czechoslovakia which gives us £7 million to draw back from Czechoslovakia. In the case of these two countries we have £12 million which we can draw back to this country in terms of gold. I ask the Financial Secretary the direct question, what is the policy of His Majesty's Government in this respect? Can we draw back that exchange, can we draw back that gold, and use it to finance our trade with America? Or, if we were so to do, is it not a fact that the whole of our export trade with those two countries would fall to the ground? I hope the Financial Secretary will give an answer to that, because it bears very much on what I am going to say now.

If one considers the case of the Argentine one gets the exact reverse. This year, as far as the trade figures can be computed, we shall have an adverse balance with them of £74 million. I hope hon. Members opposite will think of that sum. That sum is liable to be increased, because the Argentine have taken very great care to shut out those exports of ours which are most likely to penetrate into the Argentine. There is no hon. Member opposite who does not know that we must have meat from the Argentine. It is not a matter of discussion. We must have it. We have to incur that expenditure, and yet the Argentine are cutting out those very things with which we can reduce the adverse trade balance.

Mr. Rhodes (Ashton-under-Lyne)


Colonel Crosthwaite-Eyre

Textiles, or the goods I mentioned, and that figure of £74 million for the first five months of this year may very well be increased. What is the policy of His Majesty's Government on this matter? Under the present order we are asked to approve under the present payments agreement to meet the whole of that £74 million in convertible currency. Are we to make£74 million available to the Argentines on this basis, and give them dollars for it? If so, without any disrespect to any hon. Member, it is no wonder that we are drawing on the American Loan at the present rate. Further, we not only agree to make convertible all these adverse trade balances, but equally, for some reason of which I hope the Government will tell us, we agree under this particular Order to make convertible whatever currency with which the Argentine may buy from Paraguay.

I will mention two other countries. With Spain we have the same sort of convertibility agreement. There we have an adverse balance, as far as I can judge from trade figures now produced, of £9 million. The Financial Secretary said on 23rd April that it may go up to £25 million. So far as I can see, it will reach nowhere near that amount. There again we are prepared to pay out this incredible amount from limited dollar resources to Spain. In Egypt, which I understand will be dealt with later in the Debate by another hon. Member, under this agreement, which only lasts for six months, we are literally to pay out £42,500,000 of convertible currency.

Finally, we have the statement made by the Chancellor two days ago, in which he said that all moneys received from the International Monetary Fund in terms of sterling or sterling area currencies would be convertible. I hope that the Financial Secretary will tell us whether the Chancellor was correct in that statement. Some doubt has been cast upon it in the last 48 hours. If it is correct, it means that £530 million becomes convertible at will by other countries. If one thinks for just one moment that our sole balance of hard currency at the moment is £250 million under the American Loan, it will be seen that that would bankrupt us before we knew where we were.

I would ask the Financial Secretary whether the Chancellor is correct in stating that the whole of these moneys are governed by Article 19 of the International Monetary Fund. If that is so, how does he balance that with Article 5 (3, a) and, if he takes Article 5 (3, a) what is the value of Article 5 (4)? I am afraid this is very complicated, and that it sounds like a conundrum, but no doubt the gentlemen who advise the Financial Secretary will be able to solve it very quickly.

In what I have said tonight I have tried only to do one thing, that is, to ask the Government for a clear statement of our convertibility. It is a subject which must be discussed in this House. There is no one on either side who, looking at the figures of what we are withdrawing from America, and what we are letting in ourselves, can but wonder if we can, in fact, undertake the burden which His Majesty's Government have laid upon us. I ask the Government to give us a clear statement. We are not trying to make party politics out of this. We are merely asking that in these days. when every Member of this House is trying to see what is to come, that at least His Majesty's Government give us a clear lead about that which they have undertaken. We know full well in this House that of all those on whom we count for help, the Americans are our best friends in these times of trouble, but we know that unless the Government are prepared to tell us the truth and the whole truth, we cannot possibly hope for the help which we would otherwise get. It is in this sense and in this frame that I move this Motion.

10.13 p.m.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

I beg to second the Motion.

I think that Members on both sides of the House will agree that my hon. and gallant Friend the Member for New Forest and Christchurch (Colonel Crosthwaite-Eyre), who so ably moved this Motion, showed himself to be the master of a subject which is of the greatest possible interest. It is no use pretending that we can be thrilling or exciting about these payments agreements. It requires a cold towel round the head for some considerable time to master this extremely complicated subject. After what my hon. and gallant Friend has said, I propose to confine myself solely to the issue of convertibility which is raised, and the consequences of that convertibility. That is what really matters—can we face this or can we not? That is the question I should like to examine. It will be agreed, I think, that under these agreements we are discussing now all funds acquired through current transactions become convertible into dollars and, therefore, into gold, whereas large amounts of old sterling acquired prior to the agreements become convertible by means of a special release to which these special agreements which we are discussing give effect. It is not the net but the gross sterling balances that become convertible.

Foreign countries, I suggest to the House, will be very strongly tempted to convert into dollars at once any sterling receipts that they get because their need for dollars is very great. It is almost as great as our own. Even if there is no genuine surplus on current trading accounts, this can be done if British payments for imports mature before foreign payments for our exports. Sometimes, owing to seasonal causes, we have to pay first and the foreigner pays later. The temptation if we have to convert our payments into dollars will, under present conditions of the world, be almost irresistible. Therefore, foreign countries concerned will be able from now on to use our very slender dollar resources in order to husband their own dollars, and the drain upon sterling will continue indefinitely and at ever increasing speed.

We must always bear in mind that it is their monetary authorities, not burs, who will determine whether or not a balance originates from current transactions. Nor need these foreign countries apply the principle of reciprocity. If the balance of trading turns against them, they can denounce these agreements at the shortest possible notice. Prior to this, payment was made by us in goods and now—this is really the issue which confronts the House tonight—there is no longer any need for them to buy British goods. In fact, it might well be to their advantage to cut down British imports in order to obtain convertible sterling which is more valuable to them at present than British goods. This is what actually has been done by the Argentine. Sterling obtained from the International Monetary Fund, as my hon. and gallant Friend suggested, will also be convertible even if not from a current trading transaction. I think there is no doubt, from my reading of the agreements, that this is the case. It it is the case, if sterling obtained from the International Monetary Fund, the fund established under Bretton Woods, is also to be convertible into dollars, a fantastic situation arises because we shall then be making our contribution to the fund not in sterling, which was originally contemplated, but in dollars. Not only that, but we shall be paying interest on it as well. In that case, sterling may very easily become a scarce currency and if it is declared a scarce currency by the International Fund, why, then, foreign countries will be given full permission to discriminate against British goods. We shall get all the disadvantages of having a scarce currency without any of the advantages.

I now come to what I am afraid some hon. Gentlemen on both Aides of the House will say is a bee in my bonnet. I wish to say that the agreements we are discussing tonight shackle us more firmly and more relentlessly than ever to the gold standard, and it is an infinitely more rigid gold standard than the one that prevailed before 1930 because of our much more rigid wage structure, because of our very great social services and, last but not least, because of the cheap money policy. In practice what these agreements do is to make sterling convertible into dollars and therefore into gold. Of course, in so doing it enormously increases the danger of sudden withdrawals of foreign balances from London which, for some considerable period when we were right off gold—detached altogether—was completely removed. I would like to remind hon. Gentlemen opposite that it was the withdrawal of balances from London that brought about the fall of the Labour Government of 1931. It was the withdrawal of balances from Paris that brought about the fall of the Blum Government a few years later, and it may well be that the withdrawal of balances from London which they are so carefully arranging tonight may bring about their own fall rather sooner than they anticipate.

We are now financing the world dollar deficit. That is what we are doing under this payments agreement. Our own balance of trade deficit does not account, I suggest, for more than a quarter of the speed of our present loan withdrawals, and everybody has been saying, "Why is it that the loan is being exhausted so quickly?" That is why. The loan is being exhausted so quickly because we are financing the world dollar deficit, and, of course, the release of old sterling under the sterling balances agreements which we have made, to which this payments agreement which are are now discussing relates, has enormously increased the speed of the loan withdrawals. It is estimated by an eminent economist—and I should like to press this home on the Financial Secretary—that, if we applied the terms of the Argentine Agreement generally over Our other sterling balance creditors, we should be withdrawing sterling from London—not in the form of current transactions—all of which would be converted into dollars and therefore into gold, at the rate of £120 millions a month—if we applied the terms and conditions which we have given to Argentina to the other countries in the sterling area. This convertibility of sterling is imposing upon us an unbearable burden, which we are simply not capable of carrying, and a far more intolerable burden than Article 9 of the Loan Agreement which has been so much criticised. It must contract our trade. We cannot afford to lose dollars at this rate, and the only way we can stop this loss, if we pass this agreement tonight, is to cut down our imports from those particular countries.

Similarly, they want all the dollars they can get, and the way to get dollars from their point of view, is to get convertible sterling, and, therefore, importing from us as few things as they possibly can in order to obtain as much sterling as they can to convert into dollars. The whole effect of this agreement must, therefore, be contractionary rather than expansionary, so far as trade is concerned. It is the end, for the time being, Of bilateralism, and thus we are deprived of the only two assets we have—our own home production and skill, and the value of our own home market. We can thus compete no longer. As long as the holders of sterling were entitled to withdraw their balances by the purchase of British or sterling area goods, we had a chance of getting through: now, I think we have no chance of getting through.

I suggest, in conclusion, that this is just one other part of what seems to me to be an insane attempt on the part of the Government to relate the national economy to a 19th century doctrine which was half dead in the later 19th century and finally crashed in 1910—a system in which nothing else counts but the cash nexus, in which there were no sympathies, no loyalties, no preferences, but free multilateral trade and cut-throat competition, and I suggest that the only purpose of this agreement tonight can be to facilitate a revival of that free multilateral trade. I say to the Government tonight that that revival is not, in fact, going to take place, and, if it did, we are no longer in a position to compete in a free world market at competitive prices: All these arrangements which the Government are bringing forward to the House will, I want most seriously to suggest, be very short lived. Whether they be Article 9, non-discrimination, these payment agreements, the gold standard, Bretton Woods, or anything else, they will all fall to the ground; they will have to be abandoned. I think that these particular payment agreements—and I am guilty of the very dangerous thing of prophecy—and the agreements which we have reached with regard to the sterling balances, will have to be repudiated by His Majesty's Government before the end of this year. I do not think that we can possibly keep on. It is sheer, stark insanity, in our present position, to embark upon this ludicrous course which we have undertaken.

This country can stand up to most things. I think it can even stand up, for quite a long time, to the present Government, and even to some measure of Socialism, but, if there is one thing to which it cannot stand up, it is sheer boneheaded stupidity, and that is what we are complaining about tonight. I do not think that the right hon. Gentleman the Financial Secretary to the Treasury can bring forward one single argument to show that we in this country, who are now, perhaps, approaching the supreme economic crisis of our history, are in a position to embark upon a policy which is designed to lead us back to free convertibility and free multilateral trade, and I challenge any hon. Member on either side of the House to refute that statement.

10.27 p.m.

Mr. Hollis (Devizes)

My hon. Friend the Member for East Aberdeen (Mr. Boothby) has spoken about convertibility, and I, if I may, will speak a very few sentences about the sterling balances themselves. It is not common in history for nations to commit suicide with their eyes open. We on this side of the House, at any rate, and, no doubt, many hon. Members opposite, do not understand why this nation should commit suicide with its eyes open. If that intention is to be carried through, it is necessary to take what meagre opportunities come to us to raise these matters on the Floor of the House, especially when we remember the way we were treated over the American Loan, and the difficulties which the Government have always thrown in our way in raising these questions.

The sterling balances consist of two types. In the first place there are the balances which have nothing at all to do with the war, but which were held by various countries in London before the war, as backing for their own currencies. It was never intended that the moneys—some £700 million—should ever be called in at all, and there is no kind of reason, morally, why, therefore, we should, at this moment, tolerate any sudden calling in of these monies, which would inevitably throw both this country, and indeed, the whole world into chaos. The rest of the sterling balances consist of the moneys that were piled up in London for the goods which were sent by other countries to this country, in order that this country should carry on the war. But, from the very first, the late Government made it perfectly clear that, not for one second, did we admit that we were in debt to these other countries for the whole of these sums of money. These moneys were largely used—in Egypt, India, and other countries, and, in a general way, in the whole world—for the defence of those countries by British arms.

Those sterling balances were piled up to that tremendous figure for one specific reason, and one reason alone. It was that the British Empire alone defied the menace of Nazi aggression from the first day of the war to the last. Many other countries had passed resolutions about standing up to aggression and about collective security before the war. All the other countries came to join in the battle against Hitlerism before the war ended. We need not enter into any sort of competition with other countries, but should lay down the principle that we are not liable, simply because this country fought the war from beginning to the end, and that, therefore, in our agony after the war, we should have to pay the whole cost of the war. We are under no sort of moral obligation to regard the figure put forward as the full sterling balance. There is no obligation on this country to assent, for instance, to such a proposal as that laid down by the Egyptian Finance Minister, that Egypt will not accept any scaling down of sterling balances in any circumstances, and that it is Egypt's right to be paid in full. We are entitled to ask the Government to repudiate entirely such an opinion as that of the Egyptian Finance Minister and to say that we do not accept such an obligation at all.

What we are entitled to ask today is that, while this country is in this extremely difficult position, we do not wish to repudiate any obligations, even such as some of us oppose when presented to us, but we are entitled to ask the Government to take full advantage of every legal right we have in our time of difficulty. For instance, my hon. Friend the Member for East Aberdeen spoke about the question of convertibility. The hon. and gallant Member for New Forest (Colonel Crosthwaite-Eyre) quoted Article 7, but according to Article 7 we are under obligation to make sterling convertible unless in exceptional circumstances, that convertibility was postponed. But what are exceptional circumstances if the present circumstances are not exceptional? Looking at the general state of the world, whether we look at the unexpected rise of American prices or the prices in other countries, such as the Argentine. I cannot imagine what can be exceptional circumstances if the present circumstances are not exceptional. We are entitled to ask the Government to say firmly and frankly to the rest of the world, in the first place, that exceptional circumstances have arisen and, therefore, they ask to be freed from Article 7 and, in the second place, the abolition of what is called the discrimination of trade is an impossibility and they ask to be freed from Article 9. If the American Government will not free them, they should call the attention of the American Government to Subsection (6) of Article 9, which gives other countries the right to declare their currency a scarce currency. If they will not free us from Article g voluntarily or by negotiation, we shall have no alternative but to declare that the dollar is a scarce currency. I hope the Financial Secretary will respond to the appeal to reply, and give us a greater account of the Government's policy than has been given before. It is utterly irresponsible that these measures of such vast importance should be rushed through in this hole-and-corner manner so that it is impossible for the country to know what is going on.

10.34 p.m.

Mr. Walter Fletcher (Bury)

I would like to start by saying there is some danger in thinking of the effects of these Orders in terms of money only. We have in the last hour voted £1,500 millions practically "on the nod," without its being regarded as anything abnormal, and I think we have become almost drunk with figures. I would like to try to turn the effect of these deals not into figures, but into materials and trade. What must be the result of these Orders? First of all, to take dollars away from us and give them to others, which means to put others ahead in the queue for the vital raw materials we need in the next year or two to keep our factories going. I would like to drive that home with all the force I can command. We take cotton, metals, food, from our own people and give them to Egypt the Argentine, and to other countries. That is, in itself, a vital step. But at the same time we give a double option to those countries either to take the dollars or our unrequited exports, unrequited exports which are ill-requited services when we think of what we did for those countries during the war. I am not going to try to make a comparison of war efforts, but if we sit down and think unexcitedly and calmly of what the real war efforts were, we know who took the option at that time with regard to which side of the fence they were coming down. Hon. and right hon. Members know perfectly well the truth of this, and will recall events before El Alamein. They will know perfectly well that what we are doing now is to promote many of the countries who made the least effort to help in the world war effort. There can be no doubt in my mind about the difficulties in which the Government find themselves in these negotiations. But they have not used all the weapons at their disposal. During the war there were created different forms of financial machinery, such as the semi-block sterling—of which the Financial Secretary to the Treasury knows a good deal—which put some control into the hands of the Government so that greedy countries, which wished to take advantage of our situation after the war, were prevented from doing so

Let us be quite frank about the matter. We are in the most difficult financial position in which any country has ever found itself, and for the best possible reasons. It is no good puffing ourselves up and pretending that we are not in that position. There was once a cry in this country about the folly of trying "to look the dollar in the eye." There is equal folly, at the moment, in trying to pretend that our financial position is better than it really is. Had we, in approaching these countries, taken as our motto the words from Shakespeare: I am dying, Egypt, dying! —and financially that seems to be our position—we might have obtained from that tough and difficult country a rather different result. I am going to ask the Financial Secretary, when he replies, not to confine himself to figures, but to think also in terms of food and raw materials. There is an option in the Bretton Woods clause that consideration may be given to war effort which the Ministries of Food and Supply and the Board of Trade might well take into account when negotiating bulk contracts on long-term. In contracts it is usual now to put in a clause which gives the option of adjusting prices and conditions according to the conditions which may be prevailing in two or three years' time, or towards the end of the currency of such contracts. Surely, that was in the mind of America and the other signatories at Bretton Woods in putting into the Agreement the proviso that special consideration should be given in negotiating sterling and other balances. To stick too closely to the letter during these negotiations, not to have complete frankness—even brutal frankness—is to have a result which will end in stopping the wheels of our factories turning and in reducing our diet. We are almost being asked to make sacrifices and to accept conditions even worse, and yet negotiations are carried through which will allow those who gain the advantage to see us declining and themselves going up in the world, when the opposite should, with justice, be the result.

10.40 p.m.

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

I think the hon. Member for East Aberdeen (Mr. Boothby) was quite right when he said that this subject is a very technical one, and one which is extremely difficult to understand. There are, I know, not quite as many experts on finance in the House as there are on foreign affairs. Nevertheless, we have quite a number. I do not know what an expert is, but someone told me the other day that he was a man who knew more and more about less and less; and the longer I have anything to do with finance, and some of these Orders and these monetary agreements I begin to feel that I must be an expert, because the thing is inclined to become more and more complicated and more difficult than ever to understand.

This subject, however, does permit the prophet to come into his own and we have not only tonight, but on previous occasions had prophets of woe who have said that the most terrible things were going to happen—[HON. MEMBERS: "They are."] Fortunately, up to now they have not—[HON. MEMBERS: "You wait."] I would say that some of the points that have been raised would be better dealt with, I think, in the Debate next week, when the Prime Minister himself will be making a statement and we shall have two whole days in which to consider the situation. It is not for me—far from it—to say that the situation is not a very serious one. It is, indeed, extremely serious. But I have not the time, and, if I may say so, it is not for me tonight, in replying to Prayers on these three Orders, to range over the whole field of the Exchange Control Act, the Bretton Woods Agreement, the International Monetary Fund, and the Financial Agreement of 1945 between ourselves and the United States. I will, however, in the course of the observations I shall offer to the House, touch on some of these in replying to the more important arguments and criticisms which have been put forward from the other side of the House this evening. What I would ask the House to do, first of all, is to put this thing in perspective. Those of us who were in the House when the war broke out will remember that in 1939, and very properly so, a total prohibition was placed through the Defence (Finance Regulation) on the making of any payment except with Treasury consent to any resident who was not within the sterling area.

The prohibition applied to payments by a United Kingdom resident to a resident outside the sterling area and to any payment by one resident outside the sterling area to another, if the payment was made through a United Kingdom bank account. It was an extremely rigid control. It was eased, as the House will remember—and I want it particularly to remember this—by a succession of bilateral agreements with the chief countries outside the sterling area. They all had one common feature and that was that sterling held by the country concerned would only be available for spending in the sterling area, as the hon. Member for East Aberdeen reminded us tonight, or for transfer to a resident in the same country as the person who desired to transfer. That was the bilateral system, and, as I understand the argument from the other side tonight, it is that that bilateral system should continue. Unless I am mistaken the burden of some of the criticisms coming from hon. Members opposite was——

Mr. Drayson (Skipton)

What about all the arguments?

Mr. Glenvil Hall

I do not want to say anything which is not correct but, listening, as carefully as I could to the arguments from the other side, I tried to discover what the Opposition would have done which the Government have not done in the circumstances facing us. I start from this basis: as I understand them they desire that the bilateral agreements, which limited anyone not living in the sterling area to making any payments they had to make within the sterling area, or between one resident and another both outside the sterling area——

Mr. Boothby

Bilateral agreements extended into regional agreements, but definitely regional agreements within the sterling area. "Bilateral" means only two.

Mr. Glenvil Hall

What we have done in effect is to make regional agreements supersede the bilateral agreements. Now we are coming to the multilateral system for which I will presently offer a defence, and, I hope, a very good defence before I sit down. Those who were in the House last year, and I think most hon. Members were here last year, will remember the debates on the Anglo-American Financial Agreement. It was then decided, as a result of the coming into force of the Agreement between ourselves and the U.S.A., to abolish the bilateral system and to allow the free movement of sterling as from a fixed date, provided that the transfer was a current transaction.

Some of the observations made by the hon. Member for East Aberdeen overlooked the fact that the transaction must be a current one. It would be quite impracticable for the Exchange Control here to have examined, under the new multilateral system, every proposed transfer to see whether it was or whether it was not a transaction of a current kind. It was therefore essential that arrangements should be made with all the non-sterling area countries under which the competent authority of that particular country would undertake to carry out the supervision. It was necessary to establish that when a transfer took place, it was on a current transaction and not one of the capital kind, or from reserves. Those are the transferable accounts referred to in the Regulation of Payments Order which is now being prayed against and which I must point out is a really consolidating Order. If it lapsed it would not mean, as I think some speakers have assumed it would mean, that the whole system of transferable accounts would lapse with it. It would only hit a certain number of countries, most of them small countries, and it would be a going back on obligations we undertook when we signed the Anglo-American Financial Agreement of 1945.

So far as the United States is concerned—and a good deal has been said about the United States tonight—the system of transferable accounts which is embodied in this White Paper was not applied to that country. There is no exchange control in the United States—a happy country in more than one direction. It has no controls of any kind which could, or do, distinguish between transfer of a capital kind and current transactions. These arrangements could not, therefore, be applied to the United States and the countries which come within her orbit—or, rather, the orbit of the American dollar. For the United States the system of American accounts was introduced, and sterling on those accounts has been saleable for dollars at our official rate, either in New York or London, for some time; and sterling on those accounts does enjoy, in addition, the right of transfer to transferable accounts. This, as I have indicated, has been extended to a number of other States, not all, but some of them South American States. The domestic legal counterpart to the agreements with other countries to which I have referred as bi-lateral and now multi-lateral—or multi-lateral in incidence—is and has been the Payments Order. A number of these have been issued and, although I do not want to make a point of this, I think it is true to say that the majority have not been queried by the Opposition. It seems curious to me that when we come, as we do in this Order, to a loosening of all the controls, that the Opposition should raise so much criticism——

Mr. Boothby

Not all; most.

Mr. Glenvil Hall

—of our action. This Regulation of Payments Order which is before the House tonight does, quite definitely, loosen the regulations which have in the past, as I say, been extremely tight. Now only a very small proportion of countries—I think it is less than 1 per cent. —remains to be brought into the orbit of the agreements which we have made, and which are consolidated in this particular Order.

What is the object the Government nave in view in making these agreements embodied in this particular consolidating Statutory Rule and Order and the one dealing with Sweden, which was made, as the House will see, a few days after the Consolidation (No. 3) Order was made? This country in the old days was the financial centre of the world.

Mr. Boothby

Good old days.

Mr. Glenvil Hall

They were in some ways and for some people, as the hon. Member for East Aberdeen says. For others they were not so good. But it is true that, in those days, London was the financial centre of the world. It is our hope that London will regain its place as a great business and financial centre, and there is no reason why—unless some hon. Members on the other side of the House and others cry us down too much—we should not reach that happy state at an earlier date than some people imagine. It is part of my case tonight that these agreements which have been made, and the loosening which this Order evidences, are a stage in our progress back to normal. The object we have in view is a simple one, namely, to bring back sterling to its old historic position in the world. It is obviously not in the interests of this Government, or of the country, that the present system of controls should continue indefinitely. As I have already said, it is obvious that the rigid controls of the early bi-lateral agreements had to come to an end.

Mr. Boothby

Do I understand that His Majesty's Government consider taking off any more controls? Is that the way we are going into the crisis?

Mr. Glenvil Hall

I was not saying that because it is not true that we are taking off all controls. We are not. But it is our policy to reduce the controls. One of the reasons which has made it necessary—and this is well known to hon. Members opposite as well as to hon. Members on this side—and why we have had to take this matter a stage farther, is our obligation under the Anglo-American agreement of 1945, that, as from 15th July, to make sterling convertible——

Mr. Hollis

Except in exceptional circumstances.

Mr. Glenvil Hall

Yes, I take that point, except in exceptional circumstances.

It is a matter of opinion whether exceptional circumstances have arisen so far as this matter is concerned. It is essential in our view that, to bring the world back to normal, we must take steps to relax the financial controls which have existed and before any widespread relaxation can take place it is desirable, and in fact necessary, that some agreement should be come to with the countries which had wartime accumulations of sterling standing to their credit—accumulations known as sterling balances. Unless when convertibility came about—and we undertook to bring it about on 15th July—something had been done to deal with these sterling balances, they would, as the hon. Member for East Aberdeen has said, have become unmanageable and out of hand. The hon. Member said, I believe, that they had already done so and I say they have not. We have made agreements with most of those who had sterling balances here. We began with Argentina and we have made agreements with other countries. The hon. Member for Devizes (Mr. Hollis) wanted to know if the Government agreed with the Egyptian spokesman who said that Egypt intended to get the whole of her sterling balances. My right hon. Friend the Chancellor of the Exchequer has expressed his view on more than one occasion on this subject, and I need not say any more on that score tonight.

What is the quantitive effect of the multilateral use of sterling which this Order envisages? It is quite impossible for me to say. We do not know what the effect will actually be of the freeing of sterling in this way. What we believe is that it was essential as a step. We still control the amount of sterling flowing into the hands of residents outside the sterling area. We have in this country—and no one on the other side of the House mentioned this tonight although it is a very real fact—not only a real exchange control at present under the Defence Regulations and shortly under the Exchange Control Act passed earlier this year, but also an import licensing system which, I think I can claim, is pretty watertight. The sterling currently earned by foreigners together with freed accumulated balances is liberated under these agreements. The liberation of these sterling balances, does constitute a considerable sterling spending power, of which I hope this country will have its share through the goods and the services which we will sell.

What other countries will do with the sterling which goes to them in these two ways it is impossible for us here to say, but I think I am entitled to assume that they will use it to buy goods from us, goods from other countries and, let us face it, because there is nothing wrong with it, also from the United States. It may be true that in some cases, unless we increase our exports, some of them will use much of the sterling which has been liberated for goods which they will purchase in the United States. Insofar as that does occur it will, quite frankly, be a drain on our dollar resources.

On the other side, I would ask the House to remember that we have now, within the limitations which I have indicated, the fact that sterling will be acceptable all over the world because it can be spent anywhere. That is a great advance and one which should not be overlooked or under-emphasised. To maintain and increase this general acceptability of sterling has been and is a fundamental aim of the policy which His Majesty's Government are now pursuing. At the same time, as I said a little earlier, we have to remember that the obligation which we assumed under the convertibility arrangement is a very real one, and we must not minimise it amongst ourselves or to the country.

The hon. Member for East Aberdeen and other speakers indicated that in their view the drain on our dollar resources would be too much, that, in fact, many of these countries would immediately transfer their sterling into dollars and that they would not spend the sterling on goods from this country. That is the prophecy of the hon. Gentleman and some of his friends and whether that prophecy will come true or not we do not know but it is prophesy only and not certain and, in my view, I do not think it certain at all. It is my view and I believe that of most right hon. and hon. Members on this side of the House, that we have far more friends in the world than some Members on the Opposition side of the House are inclined to believe. But what we must do, I think, is to limit and control the amount of sterling made available to the rest of the world and to see that British goods and services are available to mop up as much as possible of it as we can. Another thing we must not do is to lend to people who have no sterling to buy from us or have misused the sterling balances they have by spending them elsewhere. I would emphasise once again that under the exchange controls we have all demands for credits to residents outside the sterling area are very closely scrutinised and, normally, unless there are special reasons for it they will not——

Colonel Crosthwaite-Eyre

Does that statement mean that the answer which the right hon. Gentleman gave to the House a fortnight ago is now superseded?

Mr. Glenvil Hall

Many answers have been made in the House a fortnight ago. I am afraid that for the moment I do not charge my memory with the reply the hon. and gallant Member has in mind.

Colonel Crosthwaite-Eyre

I asked the right hon. Gentleman about that in my speech.

Mr. Glenvil Hall

I am sorry but I cannot remember. There were a number of observations in the hon. and gallant Member's speech and I cannot remember the particular one to which he now makes reference. But our main defence—and this is the reply to the hon. Member who sits for East Aberdeen, who believes that this country is on the brink of ruin—must be the export drive, coupled with a denial to ourselves of all but the most essential of imports.

Mr. Boothby

A drab, dry prospect.

Mr. W. Fletcher

Does the right hon. Gentleman refer in his remarks about exports to both requited and unrequited exports?

Mr. Glenvil Hall

Under convertibility and other agreements certain of our exports may, of course, be unrequited. There is not the slightest doubt about that. But, as the hon. Member for Devizes said, no one here wanted to go back on agreements come to or obligations entered into, or to repudiate moneys that are legitimately owing. With some of the nations who have sterling balances here and who obviously are entitled to some at any rate of the money owing to them we cannot indefinitely go on retaining the sterling balances accumulated here to their credit, and very properly so, over the war years. Therefore, it may be true that some of the moneys that may flow from this country will be unrequited, but, we are in this situation that we have to meet our obligations. These have been built up during the war and since. Arrangements have been made and signatures put to agreements and those agreements have to be honoured. That is what I am asking tonight in requesting the House to agree to this particular Payments Order. It is no more and no less than to regularise agreements which have been made, which in the view of the Government, are essential and which will help to make sterling once again a currency which can be used throughout the world. That being so, I hope the House will agree that it is reasonable that this Prayer should not be acceded to, but that we should tonight agree to this Statutory Rule and Order.

Mr. Assheton (City of London)

Before the right hon. Gentleman sits down I wonder if I might put two questions. The first is: Has the startling pace at which the American loan is being drawn upon in any way been influenced by the convertibility agreements? The second question is: Will the right hon Gentleman give us a categorical assurance that His Majesty's Government will not use our gold resources in a desperate effort to maintain an impossible position?

Mr. Glenvil Hall

Quite obviously those questions would be better put when we come to discuss this matter next week. I can answer them, but it is not my job necessarily to answer every question put to me. The option lies with me either to answer them or not, and I propose to exercise that option if I think it right. So far as the drain on the loan is concerned, it may be due in part to the convertibility arrangements which came into operation on 15th July. It is quite likely that some of it is partly due to that: it would be surprising if it were not. As to whether the Government would allow a drain on its gold in the way suggested by the right hon. Gentleman that, of course, has yet to be seen, but I am sure that if my right hon. Friend the Chancellor of the Exchequer were standing here, he would reserve to the Government the right to decide what to do when that event arises—if ever it does.

Mr. Assheton

Am I right in thinking that the right hon. Gentleman cannot give such a categorical assurance?

Mr. Glenvil Hall

I can give the right hon. Gentleman this assurance: That in no circumstances would I bind the Government in advance to a certain line of action before we know what the circumstances of that period will be.

11.12 p.m.

Colonel Crosthwaite-Eyre

I have listened to many speeches by the right hon. Gentleman and he has always been most careful to answer matters we have raised, and I have never heard from him a speech in which he has failed to answer every one of the questions we had put. I did try—and I think the right hon. Gentleman would be the first to recognise it—to put to him a series of questions which he could answer without damage to any particular section of this country. He has chosen to ignore the whole lot. Those who were in the House when I first spoke will appreciate that I said nothing which was a reflection on His Majesty's Government. But he has done absolutely nothing in reply to this Debate to tell us what is the present situation, or what their past policy was. The right hon. Gentleman, for instance, talked about sterling balances. He made no reply to the questions I raised with him as to why the. Chancellor of the Exchequer had made those remarks—and the right hon. Gentleman was present when the Chancellor made them. Why have His Majesty's Government done nothing to implement them? That is a fair question and one raised not by this side of the House but the other.

There is not one Member of this House who is willing to accept these sterling debts at their face value. We ail of us propose to try to the best of our ability to ensure that final settlement of the debts represents a fair reflection of what we and the other country concerned did in the war. That is a question which I raised with the right hon. Gentleman. He never made one statement to try and justify any one of these agreements. The right hon. Gentleman wishes to interrupt?

Mr. Glenvil Hall

I was only going to say that these questions hardly arise under this particular Statutory Rule. They would arise—if they arise at all—and I am not complaining about it—on the actual agreement with the country concerned. It would have been open to the hon. and gallant Gentleman to have raised these points on the Egyptian Agreement or the agreement with whatever country he had in mind, but hardly on a consolidated Order of this sort.

Colonel Crosthwaite-Eyre

With due deference, I did ask that question. We raised this question of sterling balances on the General Payments Order No 2 and subsidiaries, and General Payments Order No. 3. The two great countries which we have mentioned this evening are Argentina and Egypt, both of which are covered by the Motion now before the House. To take refuge in what the right hon Gentleman has said is to deny the House the one answer that it must have. Is the Chancellor of the Exchequer sincere when he says that before he acknowledges all these debts which are going to make all the difference to our economy, he is going to achieve a just balance between what we did and what the other countries did? If he is, why did the right hon. Gentleman refuse to refer to these agreements tonight? I do not think the right hon. Gentleman, with all respect to him, has any other answer to make. All he can say is that the Chancellor of the Exchequer has made answers to hon. Members on this side and on that which will give this House the impression that he has the intention of making a fair adjustment of old sterling or the sterling balances so that there shall be a just contribution, but when he comes to the agreements, which would never have come before this House for consideration if it were not for Prayers such as have been put down tonight, he has no argument and no statement to substantiate what the Chancellor has said. That is the bitter truth with regard to old sterling.

If we come to new sterling, the Financial Secretary has said nothing that alleviates any of those doubts or questions we have raised. I raised the question of the Argentine and Egypt. I raised the question that when we had a balance of £250 million left, we were to pay the Egyptians £42,500,000 and the Argentine £74,000,000 in the current financial year, both of which are entirely due to the agreements entered into by His Majesty's Government. The Financial Secretary saw no reason to refer to either of these in the remarks he made. All he said was that we were loosening up sterling. If that is what His Majesty's Government calls loosening up sterling, no wonder we are losing all that hard exchange and currency that is between us and disaster. It is not for me, as I was saying in my first speech, to try to make an honest inquiry of the Government.

Mr. Mitchison (Kettering)

Will the hon. and gallant Member allow me——

Colonel Crosthwaite-Eyre

Perhaps I may be allowed to finish. I raised two further questions with the right hon. Gentleman. I asked him about the £100,000,000 we are losing in these two countries, and what was happening in regard to the surpluses we were entitled to receive. He refused to answer. He refused to answer further whether, in fact, we could cash in, or whether, if we did, we would lose the whole of our exports. I went on and asked this question, which to us must be of the highest importance, whether all sums drawn in sterling from the International Monetary Fund, according to the Chancellor of the Exchequer the day before yesterday, are convertible, and that sum is £530,000,000. He cannot deny that was so under Article 19 (5) of the International Monetary Fund. I pointed out to the Financial Secretary that doubt has been cast upon that by Article 5 (3) (a). I did warn the House that it is somewhat technical, but it depends upon what view you take. Where you have only £250,000,000 and have this liability of £530,000,000, it seemed to us the least the Financial Secretary could do was to give me an answer. He has refused to give this House one answer to any of the questions referred to him. We tried to refer them to him in the spirit of non-partisanship. All he has done is to make a long and rambling speech covering a great many points but not one of those raised by myself or my hon. Friends. He has done nothing whatsoever either to tell us that "His Majesty's Government are satisfied with the agreement or to give any other reason. Therefore, my hon. Friends and I will divide against this Order.

11.22 p.m.

Mr. Benson (Chesterfield)

I have listened to the whole of the Debate with great care and it never occurred to me that the innocent purpose of the Opposition was the extracting of information. The bulk of their questions, and they have asked a lot, have been entirely rhetorical, and what was not rhetorical was made up of the wildest exaggerations of the possibilities of this agreement.

Mr. Boothby

Wait and see.

Colonel Crosthwaite-Eyre

Does the hon. Gentleman speak as the Financial Secretary?

Mr. Benson

Do I speak as the Financial Secretary? Surely, the hon. Gentleman does not need to ask that. I am entitled to speak in this House as well as any other Member. I say quite definitely that the statements made by hon. Gentlemen opposite have been the wildest exaggerations. What they have done has been to take any theoretical possibilities of what might happen under this agreement and present that as the inevitable picture of what must happen. Well, it is just nonsense. And not satisfied with that, they drag in a number of extraneous matters and factual errors. The hon. and gallant Gentleman the Member for New Forest and Christchurch (Colonel Crosthwaite-Eyre) suggested that the sterling in the International Monetary Fund might be drawn upon by other countries for the purpose of buying dollars. It may not.

Colonel Crosthwaite-Eyre

I was quoting the Chancellor of the Exchequer, not myself.

Mr. Benson

The hon. Gentleman made a definite statement, that £500,000,000 in the Fund was an ever-present liability. The sterling in the International Monetary Fund may be used for the purpose of buying British goods and services and nothing else. It may not be used for the purpose of buying other currency. That is laid down quite definitely in the rules of the Fund. Everybody knows it or ought to know it.

Colonel Crosthwaite-Eyre

Except the Chancellor.

Mr. Benson

Great play has been made with the sterling balances. The hon. and gallant Gentleman seemed to think it was incumbent on the Government while making this payment arrangement relating entirely to current payments to settle also the whole question of the sterling balances. As a matter of fact, there are a few minor sterling balances, very small ones, which have been paid in full. There is the Argentine sterling balance which has been settled by the sale of the Argentine railways; but the Egyptian sterling balance has not been settled. Does the hon. and gallant Member suggest that it has? The Egyptian sterling balance has been left in abeyance for further negotiation six months hence. All other large sterling balances are awaiting negotiation. How can the Financial Secretary deal with sterling balance settlements on arrangements which deal with current payments? It is fantastic for the Opposition to expect that he should.

The purpose of this Debate has been to make an attack upon the American Loan which hon. Members opposite have never liked. [HON. MEMBERS: "No."] Oh, yes it is. The American Loan, and the restrictions of that loan, have been put forward by practically every speaker as one of the main causes of our present difficulties. [Interruption.] It is true that in our present circumstances the Agreement as to transferability of sterling on the 15th of this month is a rather onerous burden. But I suggest that if we had not had the American Loan, we would have been in a far worse position in the last 12 months than we shall be in the next. For heaven's sake, let us get some sense of proportion and some sense of balance. The hon. Member for East Aberdeen (Mr. Boothby) has used this Debate to raise King Charles's head, to make an attack on multilateral trade, and to advocate Empire trade and bilateralism, as he always has done. I am not going to deal with that. I will only quote from a speech by the late Lord Keynes in another place. He said: Imperial preference and bi-lateralism is an attempt on the part of this country to buy with things which other countries do not want the goods which they have not got. I leave the hon. Gentleman with Lord Keynes. The right hon. Gentleman the Member for the City of London (Mr. Assheton) tried to extract a pledge from the Financial Secretary that in no circumstances would our gold reserve be used. Does he know how much that reserve is?

Mr. Assheton

I do not know.

Mr. Benson

Does he know how rapidly that gold reserve has been accumulating during the last twelve months? Has he any current information about it?

Mr. Assheton

Does the hon. Member know?

Mr. Benson

No, I do not know, and no one, apart from the Treasury and the Bank of England, does know. To ask for a pledge of that kind is to ask for a pledge regarding something of the value of which the hon. Gentleman has no idea. Moreover, if we are never to use our gold, we might as well dump it in the Atlantic. What is the good of having the gold reserve?

Mr. Assheton

I referred to using it for a specific purpose.

Mr. Benson

What purpose?

Mr. Assheton

To implement certain obligations being discussed now.

Mr. Benson

The right hon. Gentleman made no limitation of that kind. [Interruption.] If I am wrong in that, I am sorry. The purpose of our accumulation of a gold reserve is the defence of sterling; and it would be completely sterilised unless we use it when sterling required assistance. To suggest that the gold reserve should not be used for the purpose of operating and implementing these agreements is to defeat the very purpose for which a gold reserve is acquired. Really, the case put up by the Opposition against these Orders is, as I said at the beginning, pure exaggeration and it has been used for purely party purposes. We entered into a solemn agreement with America to get the Loan. Hon. Gentlemen may not like the Loan, but that does not matter. We are facing an extremely difficult position, and the goodwill of the United States is likely to be of very great value to us. I suggest that facing the world as we do, dependent on the world as we are, one of the greatest assets we can have is the fact that the world can rely upon us to maintain our word and to meet our bond and not to try to shuffle out of it when times are bad.

11.31 p.m.

Miss Jennie Lee (Cannock)

The hon. Member for Chesterfield (Mr. Benson) has brought some perspective and

balance to this Debate. Many of us resented the tone of hon. Gentlemen opposite when they were badgering the Financial Secretary to the Treasury. It is too serious an issue for us to be trifling with it, and hon. Members opposite ought to know that this is not an occasion when answers can be given to some of the questions they have raised. I think that the best and most useful remark made by the Financial Secretary was that the Prime Minister in next week's Economic Debate will deal with this problem of convertibility, for I think it would give a wrong impression in the country, and wrong impression in America, if it was thought that only a few Members on the other side of the House were anxious as to how convertibility is going to affect the fortunes of this country.

I do not want to go into that argument tonight. I hope I shall have an opportunity at a later time, but I think it does nothing but good to our relations with America that the American public should be helped to understand that the lifeline which many of them thought they were throwing to Great Britain in the form of dollar credits is tied round some quite impossible terms so that other countries are also holding on to that lifeline in a way which certainly very much reduces its value to us, without necessarily saving the other countries. I hope that next week, in the main Debate, this most serious issue for our own future welfare and our relations with America will be opened again in the House from all sides as it was discussed originally when some of us did express from these Benches our uneasiness about the terms of the American Loan.

Question put.

The House divided: Ayes, 24; Noes. 177.

Division No. 346] AYES. [11.34 p.m.
Bennett, Sir P Fraser, H. C P. (Stone) Stoddart-Scott, Col. M
Carson, E. Hannon, Sir P. (Moseley) Taylor C. S (Eastbourne)
Channon, H. Hollis, M. C. Teeling, William
Clarke, Col. R. S. Lloyd, Selwyn (Wirral) Thornton-Kemsley, C. N
Crowder, Capt. John E Lucas-Tooth, Sir H. Wheatley, Colonel M. J.
Davidson, Viscountess Marsden, Capt. A. White, Sir D. (Fareham)
De la Bère, R. Mellor, Sir J. TELLERS FOR THE AYES
Dower, E. L. G. (Caithness) Molson, A. H. E. Colonel Crosthwaite-Eyre and
Fletcher, W. (Bury) Neven-Spence, Sir B Mr. Boothby.
Adams, W. T. (Hammersmith, South) Baird, J. Blenkinsop, A.
Allen, A. C. (Bosworth) Balfour, A. Blyton, W. R.
Alpass, J. H. Barton, C Boardman, H.
Anderson, A. (Motherwell) Bechervaise, A. E. Bowdan, Flg.-Offr. H. W.
Attewell, H. C. Benson, G. Bowles, F. G. (Nuneaton)
Awbery, S. S. Bing, G. H. C. Braddock, Mrs. E. M. (L'pl, Exch'ge)
Brooks, T. J. (Rothwell) Holman, P. Roberts, Goronwy (Caernarvonshire)
Brown, George (Belper) Hoy, J. Robertson, J. J. (Berwick)
Brown, T. J. (Ince) Hubbard, T. Rogers, G. H. R.
Buchanan, G. Hughes, Hector (Aberdeen, N.) Ross, William (Kilmarnock)
Burke, W. A. Hutchinson, H. L. (Rusholme) Scollan, T.
Champion, A. J. Hynd, J. B. (Attercliffe) Segal, Dr. S.
Cobb, F. A. Jay, D. P. T. Shackleton, E. A. A.
Cocks, F. S. Jeger, G. (Winchester) Sharp, Granville
Collindridge, F. Jones, D. T. (Hartlepools) Shawcross, C. N. (Widnes)
Collins, V. J. Jones, P. Asterley (Hitchin) Shawcross, Rt Hn. Sir H. (St. Helens)
Colman, Miss G. M. Keenan, W. Shurmer, P.
Corbet, Mrs. F. K. (Camb'well, N. W.) Kenyon, C. Silverman, J. (Erdington)
Crawley, A. Lavers, S. Skeffington, A. M.
Crossman, R. H. S. Lee, Miss J. (Cannock) Smith, C. (Colchester)
Davies, Edward (Burslem) Leonard, W. Smith, S. H. (Hull, S. W.)
Davies, Ernest (Enfield) Lewis, J. (Bolton) Snow, Capt. J W.
Davies, Harold (Leek) Longden, F. Solley, L. J
Davies, Haydn (St. Pancras, S. W.) Lyne, A. W. Sorensen, R. W.
Davies, S O. (Merthyr) McAllister, G. Stamford, W.
Deer, G. Mackay, R. W. G. (Hull, N. W.) Stephen, C.
Delagry, H. J. McLeavy, F. Stewart, Capt. Michael (Fulham, E.)
Diamond J. MacMillan, M. K. (Western Isles) Swingler, S.
Donovan, T. Macpherson, T. (Romford) Sylvester, G. O
Driberg, T. E. N. Manning, Mrs. L. (Epping) Taylor, H. B. (Mansfield)
Dugdale, J. (W. Bromwich) Mathers, G. Taylor, R. J. (Morpeth)
Dumpleton, C. W. Medland, H. M. Taylor, Dr. S. (Barnet)
Dye, S. Middleton, Mrs. L. Thomas, D. E. (Aberdare)
Ede, Rt. Hon J. C. Mitchison, G. R. Thomas, I. O. (Wrekin)
Edwards, N. (Caerphilly) Monslow, W. Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)
Edwards, W. J. (Whitechapel) Moody, A. S. Thorneycroft, Harry (Clayton)
Evans, John (Ogmore) Morgan, Dr. H. B Tiffany, S.
Farthing W. J. Morris, Lt.-Col. H. (Sheffield, C.) Titterington, M. F.
Fernyhough, E. Morris, P. (Swansea, W.) Vernon, Maj. W. F.
Field, Captain W. J. Murray, J. D. Walkden, E.
Fletcher, E. G. M. (Islington, E.) Nally, W. Walker, G. H.
Foster, W. (Wigan) Nichol, Mrs. M. E. (Bradford, N.) Wallace, H. W. (Walthamstow, E.)
Fraser, T. (Hamilton) Nicholls, H. R. (Stratford) Weitzman, D.
Gaitskell, H. T. N Oliver, G. H. Wells, W. T. (Walsall)
Ganley, Mrs. C. S. Orbach, M. West, D. G.
Gibson, C. W. Palmer, A. M. F. White, H. (Derbyshire, N. E.)
Gilzean, A. Pargiter, G. A Whiteley, Rt. Hon. W.
Glanville, J E (Consett) Paton, J. (Norwich) Wigg, Col. G. E.
Gordon.-Walker, P. C Pearson, A. Wilkins, W. A.
Grey, C. F. Platts-Mills, J. F. F. Williams, D. J. (Neath)
Griffiths, W. D. (Moss Side) Porter, E (Warrington) Williams, J. (Kelvingrove)
Hale, Leslie Pritt, D. N. Williams, W. R. (Heston)
Hall, W. G. Proctor, W. T Willis, E.
Hamilton, Lieut.-Col. R. Pryde, D. J. Wills, Mrs. E. A
Hannan, W. (Maryhill) Ranger, J. Woods, G. S.
Hardman, D. R. Rankin, J. Yates, V. F
Hastings, Dr. Somerville Reid, T. (Swindon) Younger, Hon. Kenneth
Henderson, A. (Kingswinford) Richards, R.
Henderson, Joseph (Ardwick) Ridealgh, Mrs. M. TELLERS FOR THE NOES:
Herbison, Miss M. Robens, A. Mr. Simmons and Mr. Popplewell.

Question put, and agreed to.