HC Deb 06 July 1948 vol 453 cc210-342

Order read for resuming adjourned Debate on Question [5th July], That this House re-affirms its support of the objectives of the Convention for European Economic Co-operation signed in Paris on 16th April, 1948, and having regard to the need for the achievement and maintenance of a satisfactory level of economic activity without extraordinary outside assistance, approves the Economic Co-operation Agreement between the Governments of the United Kingdom and the United States of America initialled ad referendum in Washington on 26th June, 1948, and the draft exchange of notes between the Governments of the United Kingdom and the United States of America on most favoured nation treatment for Western Germany and Trieste."—[Sir S. Cripps.]

Question again proposed.

3.21 p.m.

Mr. Eccles (Chippenham)

Hon. Members who listened to the Debate yesterday will have received the impression that we on this side of the House, in considering the European Economic Co-operation Agreement, can not put out of our minds the failure of the American Loan. Our friends on the other side of the Atlantic will, I am sure, understand that any hesitations we have about accepting their second offer of aid arise from the fact that His Majesty's Government have spent, within 18 months, 4,000 million dollars without doing any lasting good to our country. If, in spite of this experience, the Americans again put their hands in their pockets, and we again take their money, all of us ought to be clear exactly what we are doing. The Debate yesterday showed that we were not clear.

The text of this Agreement would take a prize for obscurity. The words are open to as many interpretations as a corrupt passage in a mediaeval manuscript. This obscurity is, without doubt, deliberate, for both Governments gain by it. Hon. Members in all parts of the House congratulated His Majesty's Government on securing a new and large supply of dollars with the minimum of hard and fast obligations. We must admit that that is an ad vantage of great value to a debtor whose philosophy is repugnant to his creditor. But the obscurity in the text has also great advantages for the Americans. United States officials are left free to interpret as they wish the sort of actions which we ought to take to fulfil the spirit of the Agreement. That freedom is essential to them in a year of the Presidential election, for none of them can tell what will be the temper of the new Congress which will have to decide whether we are to have a second appropriation of Marshall Aid.

This Agreement is full of what the Americans call "weasel words." These are words which can bite you later, if it appears to those who have to interpret them that you have not done what you were expected to do. It may well be that six months from now the text of this Agreement will have been given by Mr. Hoffman and his colleagues a quite different meaning from that which right hon. Gentlemen opposite honestly believe the text to mean today. I must say that His Majesty's Ministers are adepts at deluding themselves about the facts of international life. They have been all too ready to give the impression that Marshall Aid is now a certainty for four years. If the Chancellor of the Exchequer cares to refer to Column 42 of HANSARD of 6th April last he will find that he, too, gave that impression. Four years is a comfortable stretch in which to play another round of subsidised Socialism.

The truth, however, is very different. Europe has a firm offer of aid for one year only, and a quarter of that year has already gone. E.R.P. is on trial, and next January a new Congress will begin a searching inquiry into the progress made by the participating nations. That new Congress will be looking for results, solid encouraging results. Therefore, I want to direct my remarks not to the past, or even to the present situation, but to the action which Western Europe is expected to take in the future in return for Marshall Aid. I hope the House will allow me to be blunt about what is expected of Western Europe. Why should we hide from ourselves the fact that the grand strategy of Marshall Aid has changed since the Harvard speech? At that time we were thinking about increasing production and paying for imports. A year ago the problem was still economic—how to get the agriculture and industry of Europe going again. The Russians and their satellites had been invited to join E.R.P. Even after Mr. Molotov walked out the experts in Paris contemplated a large and increasing trade between us and the rest of Europe. There was then no suggestion that any of the participating countries could, or should, undertake a rearmament programme on top of expanding their civilian production.

In the last six months, however, all these peaceful assumptions have gone down before the ugly mystery of Soviet policy. We cannot now assume that trade will steadily expand between us and the rest of Europe. Armaments must now come into the picture. I was in a factory the other day to which a Russian delegation had just paid a visit in an endeavour to place orders for machines to make tanks, as a counterpart to the feedingstuffs we are getting from them. The directors of that factory had had no guidance from His Majesty's Government; they did not know whether to take the orders or not. These are things which must now be cleared up owing to the change in the general strategy of Marshall Aid. The over-riding object today is to be strong enough to turn back the tide of Communist aggression. We must admit that E.R.P. is no longer a plan for economic recovery in a friendly world; it has become one of several weapons in Western civilisation's struggle for survival. We see at once that Marshall Aid is not now self-sufficient for its purpose. Dollars alone will not defeat the Communist menace. The United States will have to put behind E.R.P. military guarantees and military assistance. Even then that will not be enough. Dollars and atom bombs together will fail unless Western Europe's faith in the free way of life wins the battle of ideas, and routs those fifth columnists, whether Communist or Fascist, which are now at their dirty work inside all the participating countries and all their dependent territories.

I believe the Americans will put military assistance behind E.R.P., but I am not so sure about our faith in Western civilisation. I have recently looked at the Socialists on the continent of Europe, and there is no clear line to be drawn between their principles and those of the Communists. If they continue to attack private property and private enterprise and fail to defend the individual against the State, where, then, will come the urge and the courage to resist the corrupting doctrine of the Soviets, which is poison to the whole conception of E.R.P.? Americans know very well that politics and strategy have replaced economics as the main ingredient of E.R.P. Since the breakdown of the Foreign Ministers' Conference and the February coup in Czechoslovakia, the Americans have been asking themselves how they can help Western Europe to forge and carry out a joint foreign policy. They regard E.R.P. as the economic end of that joint foreign policy. If I am right about this, they will judge the progress made during the next few months by the preparedness and willingness of Western Europe to stand and act together against totalitarian influences from wherever they come.

In effect, His Majesty's Government have been given an opportunity by the Americans to show to what extent and by what means they are willing to lead Europe into a closer union and towards a joint foreign policy. Washington knows well that Great Britain is far the strongest of the participating countries. They know that what we are prepared to do towards joint European recovery will determine what the other countries are able to do. For that reason both Washington and Moscow are supremely interested in how we act in the next few months. This leads me to ask on what principles are the participating countries going to promote European recovery? The text of the Agreement shows very clearly that there are two rival, conflicting methods by which the Union of Europe might be attempted. The main agency can be either free enterprise or state planning.

The Americans have long preferred the way of freedom. They would like trade barriers to be removed and currencies to be made convertible so that opportunity would be open to all in Europe to develop large scale production and to exchange of goods in response to the demand of individual consumers. That has always been the American view, and I would remind hon. Members opposite that it has this to be said for it; in the world of hard reality it works. We can find many references to this view in the Agreement, where the United States' negotiators have inserted like ancient landmarks, half-smothered beneath the accretions of a later age, the old signposts to a liberal economy. It was clear in the Debate yesterday that hon. Members opposite do not want to see those signposts, but I wish to draw attention to one or two of them for they are known to be important to the Americans.

The Economic Recovery Act itself says that E.R.P. is to foster free enterprise, and the agreement we are discussing binds His Majesty's Government to use their best endeavours to promote industrial and agricultural production on a sound economic basis. What is meant by sound economics? We all mean different things. But next Spring whose interpretation will count? Not that of the right hon. and learned Gentleman sitting opposite, but Mr. Hoffman's, We know what Mr. Hoffman and his colleagues mean by sound economics—free enterprise.

May I now refer to the signpost in Article II (3), which warns us in obscure fashion that there are practices which the Americans do not like to see in use either by private or public undertakings? Some of those practices are defined in a note of interpretation at the end of the document. The first is declared to be "fixing prices, terms or conditions to be observed in dealing with others." As regards fixing prices, what happens if some Senator or Congressman recalls that the British Minister of Food fixes the price for the whole of the West African cocoa crop and his colleague does the same for sisal? Another practice we are asked to prevent is the allocating or dividing of any territorial markets. How will that square with the Government's arrangement with the oil companies for dividing markets by countries? Oil is one of the commodites of supreme importance to E.R.P. The third obnoxious practice is "discriminating against particular enterprises." That may be obnoxious to the Americans, but it is the breath of life to a Government which shuts down small firms making artificial limbs, in order to create a monopoly, and to a Government which by order of the Board of Trade creates a tight ring in the willow and basket industry.

I ask the House how can a Government, which is about to nationalise the steel industry, laugh off the words in Article II (3) which condemn the fostering of monopolistic controls? This and many other signposts in the text of the Agreement were not put there for a joke. They make it clear that the Americans believe in European recovery under a free system and so do we on these benches.

Mr. Fairhurst (Oldham)

Is the hon. Gentleman suggesting that we should turn round and refuse to sanction the Agreement; and, secondly, is he of opinion that we should give the Americans the right to dictate our economic policy in the future?

Mr. Eccles

I will answer the hon. Member by the remaining part of my speech. We on this side of the House and the Americans both dislike the alternative method of integrating Europe, which was acclaimed by the hon. Member for Central Southwark (Mr. Jenkins) and others, namely that of stringing together a number of Socialist plans into one bigger and better Socialist plan. It might be as well if I defined what sort of planning I think would be disastrous, since I am in favour of planning of some kind. It is a mistake to think that the Americans are against all planning. I am sure they are in favour of planning on the military side, including the production of weapons. They could not very well object, since under Article V they are asking us to plan the production of certain raw materials to meet their own strategic requirements.

What they do object to—and so do we on this side of the House—is the Government's going into ordinary business, limiting competition and creating monopolies, so that the productive citizen is turned into a civil servant and the general public are over-taxed in order to give everyone a more or less equal share of a low output whether he works well or badly. That is what we object to. We consider that that sort of planning is not democratic at all but that it is, in essence, totalitarian. Therefore, I want to ask the Government whether it is their intention to lead Europe in a nationalisation race. If it is, and if they are going to put State ownership in front of practical schemes to expand production, then E.R.P. is certain to fail.

This brings me to inquire about the plans which the Government may have for closer European union. I entirely agree with what was said yesterday by the hon. Member for North-West Hull (Mr. R. Mackay) that hitherto the Government have done next to nothing about closer union. We want to hear a great deal more about what is going on in Paris at the O.E.E.C. Reports from the scene of action are far from satisfactory. We had expected to hear by this time that the combined board technique was being used with vigour and effect. On this side of the House we have some experience in this kind of joint planning. I might remind the House that my right hon. Friend the Member for Aldershot (Mr. Lyttelton) was the chief architect on this side of the Atlantic of the Combined Boards, which worked very well in the war.

That experience was gained in the most difficult circumstances. Those of us who worked this machinery rejoice that men like Mr. Harriman and Mr. Finletter, for whom we conceived such respect and affection, are again on the job. Why are the British making such a poor response? It is an open secret that the Americans are accusing His Majesty's Government of being backward—"palsied" is the word that was used to me—in setting up and operating the machinery for joint European recovery. Right hon. Gentlemen might say that they hesitated to put the full weight of Britain behind E.R.P. because of their fears that it would react badly upon our Imperial interests. That would be an explanation which we could understand, but it is not put forward, and it would not be valid if the Dominions and Empire had been brought into consultation a great deal earlier.

The truth about the weakness and hesitation in Paris is comparatively simple, and Congress will find it out. It is that there are not now enough first-class civil servants available. The best brains are being squandered on the domestic experiments of Socialism. The men are now employed to plug the holes in the unseaworthy contraptions that emerged from the nationalisation Acts. Many of them had experience of joint planning in the war. Now they are overworked, chasing Socialist fancies and policing Socialist controls. If His Majesty's Government want to convince the House and the world that they mean business about E.R.P. they will have to close down their domestic sideshows and concentrate upon world peace, which is the greatest cause today.

I must add that, however good their intentions, the Socialist Parties of Europe cannot be trusted to expand production and to make a promising redistribution of population. They are all monopolists by practice and doctrine. Limiting production in one place and avoiding unemployment in another is the very stuff of their policy. I can give the House examples of how the Socialist Parties are already going about the integration of their economies. The French and Italian Governments have reported upon their efforts to plan jointly certain industries. In that report, I notice that they have arrived at a well-thought out understanding to limit competition in vegetables. I have seen, in a Dutch report on the working of Benelux, that undesirable corn-petition between Belgian and Dutch industries should be eliminated. Is Socialist Europe going to give us better and bigger cartels? It looks extremely like it.

Mr. H. D. Hughes (Wolverhampton, West)

Is the hon. Member indicating that either the Italian or the French Government is dominated by the Socialist Parties?

Mr. Eccles

They are dominated by planners, and by Left Wing planners. Whatever the foreign Socialists are doing, I can tell the hon. Gentleman what the Socialists in this House are doing. Let me refer to a speech by the Foreign Secretary that was reported a few days ago. He said: We cannot carry out the new European recovery system we are evolving unless we are quite sure that the capacity of each, industry is such as to give effect to the plan in its totality. We cannot leave it to the Prudential Assurance and to the financiers.

Hon. Members

Hear, hear.

Mr. Eccles

I wonder if those cheers will reach the ears of those who drafted this Agreement, and who might well ask the Foreign Secretary whether he is quite sure that the National Coal Board can give effect to the exports of coal which have been put into the Paris document by our people and endorsed by His Majesty's Government.

How far is this State planning and subsidised destruction of free enterprise to go? There is just one part of the recovery programme to which my hon. Friend the Member for Banbury (Mr. Dodds-Parker) referred yesterday, and which must become a test of the Government's intentions to fulfil the Economic Recovery Act. The Chancellor of the Exchequer suggested that we should have to take 25 per cent. of our share of the 5 billion dollars in the form of a loan and that the loan would have to be tied up with projects that earned their keep. What we want to know—

The Chancellor of the Exchequer (Sir Stafford Cripps)

indicated dissent.

Mr. Eccles

If the Chancellor of the Exchequer did not suggest that, he should have done so, since the terms of—

Sir S. Cripps

Perhaps the hon. Member will allow me to repeat just what I did say. [HON. MEMBERS: "Speak up."] I can generally be heard in the House. If hon. Members will keep quiet they will get it. What I said was that we thought that we should not take a loan except for some purpose which would enable us to get a return upon it which would allow us to pay the interest.

Mr. Eccles

I apologise for getting it wrong. The right hon. Gentleman's thoughts may be what he has said, but the facts are that this loan has to be negotiated through the Export-Import Bank who must apply their rules. They will apply them to projects which are either capital or—

Sir S. Cripps

It has been specifically stated by the Administrator that that is not so.

Mr. Eccles

We might then ask the Chancellor of the Exchequer why it is that he has not succeeded with these negotiations, if the matter is as simple as he says. We want to know what projects will get these loan moneys. We want to have an assurance that private firms can submit through His Majesty's Government to the E.C.A. capital projects for this loan finance. We would object very strongly on these benches if all the equipment and machinery coming across the Atlantic were tied up to State undertakings in this country, in Western Europe and in the dependent territories. I particularly ask the Economic Secretary to reply to that question.

The more one examines this Agreement the clearer it becomes that we and the Americans will have to think furiously about the interpretation of almost every Article in it. With their eyes open, they have given or lent £330 million to His Majesty's Government which can be wasted, as the Chancellor of the Duchy wasted the American Loan, on the Socialist experiment. The Americans have taken that risk, but they have taken it, to use their own phrase, on a "look-see" basis. We, too, will take the risk and we will redouble their vigilance in watching what happens to this programme. I cannot refrain from asking myself, would it not be unparalleled irony if Marshall Aid turned out to be the weapon which gave the mortal stab to the system of private enterprise in Western Europe? It might happen. We know that E.R.P. will enable a number of European Governments to remain in office who would tumble into oblivion if they had to cut their imports to the level of their dollar earnings. Among these reprieved Governments is our own.

Why then shall we vote for this Agreement? If the Minister of Health were here, I would tell him—

Miss Jennie Lee (Cannock)

And he would reply.

Mr. Eccles

—using his words, that the vermin on these benches do not relish the prospect of living on the earnings of their younger brothers and sisters in America. I take the reason for our support for E.R.P. to be this. If E.R.P. were rejected, there would be millions of unemployed in this country and Western Europe, and there would be semi-starvation for as many more. Who would gain from that chaos? Only the trouble makers and all those who hate a strong British Commonwealth of Nations. No responsible man could advocate a course of action which thrust upon us such a danger of a war from without and a revolution from within. The peace of the world now requires a joint foreign policy for Western Europe, and if that policy is to be effective it must be nourished by E.R.P.

Then I shall be told that Britain herself cannot recover or contribute to the recovery of Europe until our people are brought up against realities and shaken out of their Socialist slumbers. It will be said that E.R.P., like the American Loan, will merely postpone the day of awakening. It may be so. It may be that the Government will go on drifting, waiting for something to turn up, like a fall in the prices of our imports; but, then the full responsibility for that disaster, should it come, will be seen to rest fairly and squarely on the British Labour Government. Having first had the American Loan and now Marshall Aid, they will not be able to fix the blame for their own incompetence upon the outside world. [An HON. MEMBER: "Or the weather."] I ask my hon. Friends to be patient. Let these Ministers hang themselves, and then they can be buried in silence and their ghosts will not haunt us hereafter.

If we opposed the Government's Motion we should be failing in our duty to Europe and we should be voting for a crisis in this country in which we would all become revolutionaries overnight. The next chapter in our history would be fought out between the totalitarians advancing on each other from the extreme Left and the extreme Right. We do not want a revolutionary situation of that kind. As a people we do not progress by fits and starts but by constitutional evolution. Let us be grateful for E.R.P. because it gives us an opportunity to make history according to our natural bent, and let us hope that in the Lobby tonight against the Government's Motion there will be found no one but the Communists and their fellow travellers.

3.56 p.m.

The Economic Secretary to the Treasury (Mr. Douglas Jay)

The hon. Member for Chippenham (Mr. Eccles) finished his speech by telling us that he is going to vote for this Motion. The outstanding feature of this Debate so far has been that almost every hon. Member has told us that he proposes to vote for the E.R.P. Agreement, whatever he may have said in criticism of it. Since E.R.P. is a cardinal element in our economic policy, on which a vast deal of thought, time and effort has been expended in the last nine months that, at least, is gratifying to us. The hon. Member for Chippenham has now added his support, though I cannot believe that his speech will be very helpful to Anglo-American relations. Whether it was intended to be or not, I do not know. But some passages in it sounded to me like a sort of bid for American support for the British Tory Party. I suppose the hon. Member's trouble is that he thinks that the British Tory Party will never revive until it gets political support from outside. For instance, the hon. Member told us that in his view there was no distinction between Socialists and Communists in Europe. Well, one distinction is that all the Socialists support E.R.P. and all the Communists oppose it. I should have thought that at least he would have noticed that.

Some of the hon. Member's language suggested to me that he bitterly regrets that a Labour Government has been able to make this successful Agreement, and a lot more was exceedingly reminiscent of some of the language used by the hon. Member for Finsbury (Mr. Platts-Mills) yesterday. The hon. Member for Finsbury has, I thought—and perhaps the hon. Member for Chippenham as well—failed to realise that the programme of which this Agreement forms a part is an essentially European and not a British or American programme. This is a common plan freely agreed upon among the Western democracies to meet a common European problem of recovery from six years of war, and it began with an invitation to all European nations freely to join in. The hon. Member for Finsbury said that in signing this Agreement we in this country were "abandoning the last vestiges of our political freedom," and the hon. Member for Chippenham sounded as if he was going to say something like that at one moment or another. I should have thought that that kind of language was very much more applicable to other events in other parts of Europe.

Among his other distortions, the hon. Member for Finsbury also represented E.R.P. as a sort of conspiracy by American businessmen and other reactionary interests against the interests of Europe. How then does he explain the fact that organised American labour has continuously and strongly supported E.R.P. from the beginning? It is equally fantastic to suggest that E.R.P. is an attempt by the United States to get rid of goods which she does not want. There has always been a certain tendency in human nature to abuse those who are making one gifts, and I thought I detected that ancient and not very agreeable tendency in the argument of the hon. Member for Finsbury yesterday that E.R.P. is mainly an American attempt to find markets for unwanted goods. The plain truth is, as the hon. Member for Montrose Burghs (Mr. Maclay) said, that the United States problem today is much more one of inflation than deflation, and that the grants which are to be made to Europe will certainly mean a real sacrifice by the American people. That is the fact, and I think it should be said.

I also thought it was a pity that the right hon. Member for Aldershot (Mr. Lyttelton) yesterday stooped so far as to argue that Britain's dollar shortage and the present balance of payments problem were somehow largely due to the actions of the present Government. As I have said, E.R.P. is a common European plan, and it is designed to meet a common European, and not a merely British problem. Britain's need for aid, as the right hon. Gentleman must know, springs basically from the same causes as the needs of other European nations. Indeed, if it were really all due to the present Government, it is most remarkable that 15 other European nations should have been in the same difficulty at the same time; and, still more so, that two or three of them should have been in such acute difficulties that they had to have advance aid last winter and spring to carry them through.

In actual fact, as the hon. Member for North-West Hull (Mr. R. Mackay) pointed out in his exceedingly interesting speech, Europe's dollar shortage started before the war; and the British balance of payments problem has certainly existed since 1925, if not earlier. But the intensity of Europe's present economic problem springs, I suggest, from two main causes: first, the losses of the war and, secondly, the food shortage of the last three years, which was itself partly due to the war and partly due to the harvest failures of 1947. It is really hardly surprising that after fighting for six years the most destructive war in the history of mankind, Europe should find itself impoverished and hungry. It is not surprising that Britain, which almost alone among the Allies, fought for the whole six years from start to finish, should find itself most impoverished. I need hardly remind the House that in the course of the war Britain lost more than half of her merchant shipping, more than half of her overseas investments, and that, in addition, we incurred external debts of something like £4,000 million and sustained vast physical damage in our own country.

Sir Arthur Salter (Oxford University)

Does the hon. Gentleman say that we lost half our shipping in the sense that we had only half the shipping at the end of the war that we had at the beginning? Has he not left out replacements?

Mr. Jay

Of course there were replacements. All those sacrifices were surely a contribution to the salvation of Europe, just as much as the contribution which the American people are making magnanimously today; and if the right hon. Member for Aldershot thinks that record is humiliating, I think his speech is more humiliating to him that to anyone else. In going on to remark that no Labour Government was likely ever to make loans or grants to friendly countries, the right hon. Gentleman must have forgotten that we have given credits to various Allies since the war amounting to over £100 million, and grants to U.N.R.R.A. of nearly £150 million, and that without any questions about the political regimes in the receiving countries.

The second main cause of Europe's difficulty is the post-war world shortage of food and the movement of prices against us. If hon. Members opposite will not accept this from me I would refer them to an admirable speech by their own hon. Friend the Member for Louth (Mr. Osborne) on 11th March, in which he set out those facts, if I may say so, very fairly. The movement of the terms of trade against Western Europe is the main economic problem of Western Europe today. It is actually true, in the case of Britain at this moment, that if the prices of our imports had risen since 1938 by no more than the prices of our exports, we should be £350 million a year better off than we now are on our balance of payments. That is an amount comparable to our present gap, and comparable also to what we may receive under E.R.P. Were it not for this movement of prices against us, therefore, we should have just about closed the gap by now through our export effort, and through the economies in imports which we have made.

The hon. Member for Chippenham threw out some remark about reckless expenditure of American credits. I must remind him, if he is really suggesting that the party opposite would have been more economical in unessential imports in the last three years, that their propaganda throughout that period and throughout the country has been precisely the opposite. Had he really forgotten, when he made his remark about the present Chancellor of the Duchy, that when my right hon. Friend raised the tax on tobacco in the Budget 15 months ago, and made a big saving in dollars as a result, the party opposite voted against it? It was my right hon. Friend who raised the tax, and it was the Opposition who voted against it.

Mr. Oliver Stanley (Bristol, West)

The hon. Gentleman, I am sure, naturally wants to be fair. He will admit that the reason given for raising the tax was to try to stop the import of tobacco. We suggested that it would be bette done by some system of import licences rather than by a tax, and events have proved that we were right.

Mr. Jay

I think, as a matter of fact, that the Opposition also voted against the rise in the tobacco tax again this year in spite of the lessons in between. If they are now advocating a system of tobacco rationing, that is the first we have heard of it.

Mr. Stanley

Read the Debates.

Mr. Jay

I could go on to petrol and newsprint and a number of other things if there were time. Just as Marshall Aid has been designed to meet a common European problem, so we must for our part put it into practice through a common European plan. The hon. Member for Chippenham asked me on what principles we mean to operate that plan. The main principles, as I see it, will be these: first, that the dollars received must be used to the greatest possible extent for recovery and re-equipment rather than for increased consumption, though do not let us forget, as I think some critics have forgotten in the last three years, that the first necessity for economic development is the food and raw materials needed by the workers who are carrying it out. Secondly, the plan can only succeed if it is a co-operative one on a European basis, and not a set of discordant national efforts.

The hon. Member asked, what the O.E.E.C. in Paris is now doing, and I will try to give him the best answer possible. The practical operation of the programme, as we see it, will be as follows. First, a series of co-ordinated import programmes will be worked out by the participating nations together, through the O.E.E.C. at Paris. Those programmes will be based on the production programmes of the individual countries; and they will, therefore, imply an attempt at co-ordinating those production programmes also. The first shot, as the hon. Gentleman knows, at such joint planning was made at the Paris Conference a year ago, and we ourselves in the matter of coal exports, for instance—though this, apparently, he did not know—have effectively carried out our part of that programme. The O.E.E.C. is now working on precise import programmes for the year which began on 1st July.

I am sure the House will realise that though this is only the beginning of the task of the O.E.E.C., it is an extremely elaborate and ambitious administrative job. The hon. Member was quite wrong in thinking that we had not got the best brains in the Civil Service engaged in this part of the work. We give it the very highest priority, and I do not think the team we have in Paris is in any way inferior to any which we had on this sort of work during the war. Nevertheless, it will involve a great complication and development of our own planning machinery; and though we believe this can be done, we do not think, frankly, that it will be done easily.

Secondly, we look forward to the simultaneous building up of sound financial policies in all the participating countries on the lines set out in Article II of the Agreement. We ourselves have the biggest Budget surplus in British history, firmly controlled exchanges, and an efficient system of rationing and price controls. We shall welcome very warmly similar developments elsewhere in Europe.

Several hon. Members on both sides of the House, including the hon. Member for South Nottingham (Mr. N. Smith) yesterday asked who is to be the judge of the "valid rate of exchange" which under Article II we are bound to use our best endeavours to maintain. The answer is that we shall be the judge, subject only to the obligations we have already undertaken under the International Monetary Fund. The hon. Member for South Nottingham, appeared to think that the Government had in some way induced the Press of this country to refrain from mentioning Section 115 (b) of the American Act, which covers the same ground as this Article. There is no truth whatever in this.

Mr. Norman Smith (Nottingham, South)

Has the hon. Gentleman seen today's OFFICIAL REPORT? If so, he will be aware that it states, Sir S. Cripps indicated assent."—[OFFICIAL REPORT, 5th July, 1948; Vol. 453, c. 86.]

Mr. Jay

I am glad that the hon. Member has raised that point, for I was just about to say that I have seen the OFFICIAL REPORT today. Evidently there was a misunderstanding, because what my right hon. and learned Friend intended to indicate was emphatic dissent.

Mr. Stanley

May I ask the hon. Gentleman, purely as a matter of interest, how his right hon. and learned Friend would indicate assent because we have never yet seen him do so?

Mr. Jay

I think I must refer the right hon. Gentleman to the Official Reporter who apparently took him in that sense.

Thirdly, we mean to work out co-ordinated plans for the development of the resources of the European democracies and their colonies. We have ourselves, of course, pointed the way with our own Overseas Food and Colonial Development Corporations; and we shall seek at Paris to harmonise these with the policies of the other countries. For these purposes we shall not exclude private finance for investment from the United States, such as the United States Government undertakes to guarantee for projects approved by us under Article III. If private investment from abroad is permitted in British Colonial territories, however, we shall see that exactly the same safeguards and conditions are applied as in the case of British capital.

The hon. Member for Chippenham asked whether investment in private companies in this country or the Colonies would be excluded under E.R.P. We have no intention of making any rigid exclusions; and if the project was a good one we should certainly approve of it. The House should not expect to see a great deal of private investment of this kind in the Colonies from American sources; but any infusion of fresh capital into the Colonies, with safeguards, will be welcomed as enabling us to press forward with our already ambitious plans for development and for the resulting improvement in the welfare of the people.

Viscount Hinchingbrooke (Dorset, Southern)

Do I understand the Economic Secretary to say that we must not expect private American investments in the Colonies? What other form of American interests is there? Or is it intended that they shall develop large government monopolies?

Mr. Jay

What I said was that I did not want to raise expectations that that would occur on a large scale. The one obvious alternative is investment by the International Bank for Reconstruction in, for instance, one of our development corporations. That is a project which we have actually discussed and which may develop.

Fourthly, we shall try to build up during the aid period the maximum export of sterling area goods to the United States. Article V provides for the allocation to the United States of a reasonable share of United Kingdom and Colonial produce. Several hon. Members have expressed anxiety about this provision. I think the answer to their anxieties is threefold. First, all these goods sold to the United States will be paid for in dollars over and above those covered by the 5 per cent. set aside for this purpose in the special sterling account in the Bank of England. Secondly, no programme for such exports can be put into operation without the agreement of the United Kingdom. Thirdly, the effect of any such arrangement will be to expand our dollar markets and our dollar earnings, which is and must be a cardinal objective of our policy in any case during these years. As I see it, there should be great mutual benefit to both countries as a result of that arrangement.

Next, we are already discussing with the O.E.E.C. countries the possibilities of a European payments plan which should help to get trade and goods moving more smoothly in Europe. That will certainly take time, however, and details are far from settled. Finally, we shall seek to achieve closer long-term economic union with the other European countries. To this end we are already studying in Paris long-term production and development programmes and also longer-term possibilities such as the approach to a Customs Union.

Mr. Vernon Bartlett (Bridgwater)

Could the hon. Gentleman tell us to what extent this discussion between the Western European countries is going on outside purely official circles—to what extent, for example, are the big business concerns, who will have to conciliate their interests in order to make a Western European Union effective, now being brought together under Government encouragement?

Mr. Jay

The Governments, of course, are discussing that in the O.E.E.C. in Paris. We ourselves keep in contact on all these matters as a matter of course with British industry. Presumably other Governments are doing the same

Mr. Bartlett

With Chambers of Commerce and so on?

Mr. Jay

Yes. We are very much in sympathy with the argument put forward by the hon. Member for North-West Hull yesterday and with many of his objectives, but it is of no use expecting to see spectacular results of this kind in a few weeks. The economic life of a Continent is something that grows over time. It is not a collection of mechanical parts which can be taken to pieces and put together in a new fashion overnight.

The House will observe that E.R.P. has in fact brought to Europe a tremendous experiment in economic planning. The hon. Member for Chippenham said that the Americans were trying to impose private enterprise upon Europe but I think that the experience, strangely enough, will be the other way round. The truth is that if we had not had our own import programming and planning machinery ready at this stage, we should have had to invent it for E.R.P., as was rightly pointed out yesterday by, I think, the hon. Member for Central Southwark. Indeed, if certain hon. Members had had their way three years ago and destroyed the machinery of planning and control, not merely should we have been ruined in the interval, but we should have had to improvise it now.

Viscount Hinchingbrooke


Mr. Jay

As it is—[Interruption.] I am afraid we have not the support of the noble Lord, but at least we have this machinery ready at our hands. Some other European countries, who were recently inclined to proclaim their belief in de-control and private enterprise, until E.R.P. brought them up against the facts of economic life in the modern world, are now very glad indeed to draw on British resources and experience. We are very happy that they should do so.

Mr. Dodds-Parker (Banbury)

How does the Economic Secretary propose that private enterprise firms should put their cases before an individual tribunal, and not just be fobbed off by a Government Department, as has happened hitherto? How can a private enterprise firm receive E.C. Aid in order to get private enterprise going? How can the individual firm put its case before those who give the aid?

Mr. Jay

I do not think the hon. Member's questions arise strictly out of E.R.P. Presumably the relationship of firms to Governments will remain the same in the various countries as they were before. After all, this is an inter-governmental organisation.

As I see it, the success of this whole venture will depend mainly on Europe's own productive effort—and do not let us belittle or ignore the great achievements of the British people so far since the war. Today we in Britain are producing more than ever before in our history and 10 per cent. more than before the war, a recovery better than that of any other European country which took a major part in the war. Our total industrial production is 20 per cent. above 1946; and our exports are now 35 per cent. in volume above prewar, and are at almost the highest level in value ever recorded.

When the right hon. Member for Aldershot said yesterday that we were worse off in every respect than when the war ended, he must have forgotten that production is more than 20 per cent. higher, and exports have more than doubled in volume since the end of the war; and also that our gold reserve today, in spite of the experiences of the last 18 months, is slightly larger than it was in August, 1945. We are exporting coal today to more than 20 countries, and also fulfilling our E.R.P. obligations there. In the last nine months we have increased cotton production by 20 per cent. and cotton exports by 40 per cent. So, while a great deal remains to be done by both sides of industry, credit should be given to the British people for what they have done already.

I believe, therefore, that we can be at once proud of the British people's achievements to date and thankful for the chance of further recovery which the American people have given us. If there is any hope for humanity today, it lies in this constructive plan, backed by the democratic forces of two continents. I have not much patience with those of little faith and small minds who can only belittle and besmirch the American people's gesture. This gesture really is the "most unsordid act in history." To give during war, with the instinct of self-preservation driving one on, is one thing. To give when the fighting is over, and to give for peace, reconstruction and human progress, is surely an even greater and finer gesture. If there is anyone left in this House, who really wants to reject this gesture, and see Britain suddenly contract out of this great constructive scheme at this stage. I ask him to reflect once more, looking round the world at this moment, whether this is really the time for Britain to pick a gratuitous quarrel with the other great democracies on both sides of the Atlantic.

4.22 p.m.

Mr. Clement Davies (Montgomery)

We are asked by the Motion before the House to approve of two agreements—the European Economic Co-operation Agreement, which was made in Paris in April, and the Agreement which has been initialled between ourselves and the American Government. I should have thought those two agreements raised issues of such international importance and covered such a wide purview that this was not the moment when we should approach these matters from a domestic point of view. I should have thought this was not the occasion when we should be raising what I might call strictly party issues on one side, or the other.

I have had some difficulty in following the attitude that is obviously adopted by some hon. Members who have already spoken. I have some difficulty in following the attitude of the hon. Member for Chippenham (Mr. Eccles). I should prefer the approach to this matter which was made in the first instance by the right hon. Member for Aldershot (Mr. Lyttelton). The one question before us, surely, is: Do we, or do we not, approve of these two international agreements? If we do not approve, by al, means let us say so, give reasons, and vote against giving approval to His Majesty's Government for what they have done.

But, if we do approve of them, why be querulous at this moment in regard to matters which may be contained in them? The hon. Member for Chippenham warned us that this might not be as good as we think it is and that it will last possibly only for a year, that we are only certain for one year at any rate. He further warned us that in six months' time there might be a new Government in the United States of America which would give a very different interpretation to this Agreement from that which is now given. So what? What then happens? If he were using that as an argument for not entering the agreement at all, I could understand it, but if he ends by saying, "Nevertheless, I am going to vote in favour of this and I strongly approve of it," why raise a matter of this kind at that stage?

Quite rightly the hon. Member for Chippenham said that when we first began to approach this matter we were moved by mere economic considerations and all that really mattered was whether we could get sufficient support from America to cover that situation. Now he says much bigger questions have arisen, questions of military co-operation and military preparations, which would cost an enormous sum of money and, that being so, this is nothing like enough to meet the new situation which has arisen. Again, I could understand him saying, "Thank you for nothing. This will not go any distance whatever." But he ends by saying, "Nevertheless, having made all that rather carping criticism, I still think we must have this Agreement and I am very grateful for it, and especially am I grateful to America for her generosity.

My approach to this question is first 10 ask what is our own position today? The Economic Secretary to the Treasury very rightly emphasised the tremendous, remarkable and quite extraordinary efforts which have been made by the people of this country since 1945, after having come through the biggest war in all history. Very rightly he called attention to the great increase in production in spite of worn out machinery, plant driven to nothing, difficulties of transport, shortage of shipping and a tired people limited in the amount of food they are getting. There is not much change in the type of food, hut, nevertheless, production has gone up and we have been able to increase our exports.

But the position still remains grave and causes anxiety. I agree that we have spent large sums of money on building, re-equipment and new plant, but can anyone say that we have now provided ourselves with that kind of modern plant and machinery, transport and other facilities, which will enable us not only to provide for our home markets, but to be able to compete successfully with competitors from other countries? What is our true position? As the Chancellor said yesterday, our reserves have been dwindling terribly rapidly towards a danger point, and in fact they are on the danger point today and not very far away from that disastrous moment when they would be below what would be absolutely safe for us. Further, it is becoming increasingly difficult for us to find markets In the meantime, the prices of our imports are going up, and in spite of machinery and any help we can get, the gap, which we expected would be closing, still remains very wide.

The Economic Secretary referred to the fact that we had balanced our Budget and had now budgeted for the biggest surplus in history. May I remind him that as yet that is only on paper, nothing more? If the dwindling of our reserves goes on until we have passed the danger point, if prices continue to rise in the countries from which we import, thus making the cost of our exports higher and the prices which we shall have to demand from our customers higher and our chance of selling them, therefore, less, the Chancellor of the Exchequer admitted, in introducing the Budget, that that Budget would not balance, it could not balance. Although he made no specific reference to it in the course of his Budget speech or in dealing with the Finance Bill, nevertheless, he had it at the back of his mind that there was a possibility of America coming forward with this generous aid and that if this Agreement were made in the time in which it has been made, the chances were that the figures which he put forward in his Budget speech would be justified and would be met. That is our position.

The Economic Secretary very rightly then asked to what this is due. Primarily and in the main, of course, it is due not only to the recent war through which we have passed, but to the fact that we never recovered our old position after the numerous sacrifices we made in the 1914–18 war. I need not now dilate upon those sacrifices, but be it remembered, and I wish to emphasise this because of certain words that have been used with regard to our now taking money and not occupying the proud position we have occupied, that the sacrifices we made in both those wars were not made even primarily on our own behalf, but on behalf of all the free nations of the world. The unfortunate thing is that the sacrifices that had to be made by the Allied nations in both those wars were not equally borne. I am mentioning this not in any way to belittle the generosity of America at the present moment, or even last year in regard to the Loan: I am only mentioning this to draw specific attention to the extent of the sacrifices which this country has made.

President Roosevelt said, I think in 1942—and it was again emphasised by President Truman in 1945—speaking of this equality of sacrifice, that the fair thing would be for each country to devote the same fraction of its national resources to the war so that in that way the financial burden of the war could be distributed equally among the United Nations according to their ability to pay. That leaves out of account those sacrifices and losses which cannot be evaluated in money; it is dealing only with the money situation. If that were done there would be coming to this country in repayment of the monetary sacrifices which it has made a sum of no less than £5,800 million, and there would be coming from America into that pool for equal distribution of the money sacrifices no less than £7,600 million. Again, I would say that that is in no way belittling what America is now doing for the whole of Europe or for us, or for what she did in giving us the Loan, but it does show what we have gone through in almost bleeding ourselves white on behalf of the free nations of the world.

Another cause of our difficulty, which was slightly touched upon by the Economic Secretary, is the dollar shortage which is our main difficulty at the present moment. That is not entirely due to the war, nor is it entirely due to the methods of American Governments in maintaining high tariffs. For a long period America has been in a position in which she is capable of exporting a great deal, but she does not need to import. Therefore, those who were buying her exports could repay her not with other goods which they could send into America, but only with gold. So it was that when the war broke out America had become a tremendous hoarder of gold, which really meant that there was a dollar shortage at that time which the other countries of the world could only meet by handing over gold. That is due to the fact that America with her enormous capital, has such vast resources that inevitably she has less need to import than almost any other country in the world, and with her growing wealth, new machinery and things of that kind, she is better able to export than almost any other country in the world.

I am merely pointing that out lest any one should think that this dollar shortage or this inequality between the United States and other countries is a temporary matter. It is a matter which will go on for a considerable time, and it will require other agreements and other adjustments between the United States and the other countries of the world before this major question can really be solved. This is only a temporary expedient for the time being.

Having said that, let me then turn to what will be our position if we do not take advantage of the aid which is now being offered to us. I think that has been agreed upon by all sides. The right hon. Gentleman the Member for Aldershot gave a number of figures yesterday. May I put the position in a more general form? First, if we do not have this aid, there will have to be not a postponed, but an immediate cut in our food rations, and a very serious one. There will have to be an immediate cut also in many of our raw materials and in a lot of the machinery which we are now getting from the United States or from other dollar countries. In the case of tobacco, it will not be a matter of high duties or of licences. I should imagine we shall have to put a complete prohibition on any tobacco coming from the United States.

What would follow from that? Everyone agrees that not only would we at once get a lowering of the standard of life, but also a great addition to the already growing army of unemployed. It is just as well that we should recall what the figures are. It must be remembered that there is already a hidden figure of unemployed in one sense of nearly one million people in the Armed Forces. Not only are those people taken away from production, but they require some hundreds of thousands to keep them going in clothes, ammunition, etc. But even at the present moment, there are about 300,000 in the unemployed army. That is serious enough at a time when there is a shortage of labour in some of our major industries upon which we are so absolutely dependent, such as the mines and agriculture. Is there anyone who is prepared to face that situation? I would like to put that to anyone who is prepared to go into the Lobby and say, "I will not vote for this Agreement in any circumstances."

Mr. Beverley Baxter (Wood Green)

The right hon. and learned Member has cited the case of tobacco and he has cited the necessity, perhaps, for reducing the food ration and then he says that this will all lead to a great increase in unemployment. I would like him to show what the cutting of tobacco would have to do with that.

Mr. Davies

I should have thought the hon. Member would have followed me with regard to that. First of all, the cut in the food would lower the standard—

Mr. Baxter

The right hon. and learned Member did not say the standard, he said lower employment.

Mr. Davies

If the hon. Member will look at HANSARD tomorrow he will see that I did say that. I am perfectly certain I said that. With regard to the cut in raw materials and the cut in machinery, that would certainly lead directly to unemployment, and also to those other matters. Is the hon. Member, who has put his name down to the Amendment, prepared to say to these people, who have gone through so much, who have made these enormous sacrifices from 1939 to 1945, having lost their young people, a loss which can never be evaluated in money, who stood alone for 12 months and who have gone on for these three years making these tremendous efforts, "Because I do not like the terms of this Agreement I will make a cut in your food: you and your family will have to lower your standard of living"? Is he prepared to tell them, "You will have less food"?

Lieut.-Colonel Sir Thomas Moore (Ayr Burghs)

Is not the right hon. and learned Gentleman aware that this is merely postponing the evil day?

Mr. Davies

Even if that were so, and I do not believe it is, it is better that the evil day should be postponed for six or 12 months than that these people should go through this. I am not one who is prepared to tell them, "I am expecting you to make a greater sacrifice, after all you have been through," and that is the position today.

I would emphasise that the American offer has quickened the desire of the free countries of Western Europe to come together. It is extraordinary that even the war did not bring home to these people the necessity for co-operation, even for war purposes. They did not seem to realise that if they are to exist as free nations they must stand by one another. Even war, or the threat of war, did not bring home that realisation to them. The extraordinary thing is that an offer made to them, as was made by Mr. Marshall, has done more than anything else to bring them together. That, to my mind, is a mighty step forward towards world peace and better understanding. In itself it is something which we cannot lightly ignore.

Let us remember that the main effort in dealing with this situation must come from these people themselves. They alone can pull themselves out of the difficulties in which they are at the present moment. The aid that is being offered will not solve our problems. At the most, it is only temporary assistance. It is not intended to do more than give us a chance of using our resources to the full in order that we may, through our own efforts, be able to bring ourselves back to life.

Are there any terms within this Agreement which are derogatory to our sovereignty, or our honour or even to the pride of this country? I have gone through them, and the House has listened to them. I defy anyone to put his finger upon one of those terms and say that it is derogatory to our sovereignty, or to our honour or to our pride. It is not a matter of shame that we are receiving this assistance. This is an acknowledgment by the Western world of the tremendous sacrifices made by the old country. This is no matter of shame; it is a matter of pride in this country that we stripped ourselves of our all, not only in defence of Europe and ourselves, but of America, as America realises, because she would have been the next. In those circumstances I have no hesitation in saying that this Agreement is one which should be signed, and one for which we should express our gratitude and our satisfaction.

4.45 p.m.

Mr. Pritt (Hammersmith, North)

This is a wide field. I do not wish to take too long over it, but will confine myself to a portion of it, and leave out anything that has already been largely discussed. The first thing one has to realise is that it is not much use looking at the Agreement alone. One must look at the Act of Congress, and at the terms and the prospects of Congressional appropriations under which the Agreement is going to work. The Chancellor of the Exchequer did just mention one section of the Act in his speech, which was mainly a speech which could be well understood if one considered only the terms of the Agreement itself.

I feel I must first say a word about generosity. A good many people have been talking about it, and I think it is necessary to be clear as to how much generosity we can really expect. I do not wish to tread on any tender feelings, and there seem to be a great many. I do not want to say anything against the American people. I think I understand them. I am sure that I like them, and I think they are as generous as ourselves or anybody else. But we are not dealing with the American people, except in a limited sense. We are dealing with the American Government, and in doing so we are dealing with the American ruling class. Both the Chancellor of the Exchequer and the Economic Secretary want us to believe in the generosity of that ruling class. I remember the day when the Chancellor of the. Exchequer would almost have split in half at the mere thought of such a notion. I am not sure whether the Economic Secretary would have done the same. I am not sure what his Socialist background is. I know he is an eminent economist and a very bad prophet.

This American ruling class is like most other capitalist ruling classes, but rather more so. It is highly concentrated; it is, after all, the class which cut off Lease-Lend just at the very moment when, according to the Economic Secretary, generosity was natural and easy, and nobody should have been surprised to meet it. It did apply what I think I may call the good old ordinary commercial trick of lending us a lot of money and then raising its prices so as to make it worth something like two-thirds of what they were lending us. It is worried to death about the Soviet Union and hysterical about Communism—its definition of Communism, so far as I can discover, is anything or anybody anywhere on the left of Mr. Henry Wallace's right hand—and it is naturally, like most other people, concerned to serve its own interests; to sell its surplus goods; to avoid building up too powerful competitors; and above all to contain and weaken the Soviet Union, about which it is so hysterical, and anybody who is linked up with that country.

If it is so generous, why has it taken three years to become generous? We know how it behaved in 1945 over Lease-Lend and since then over the loan. Is it being generous to those who fought with it? A fair share of the generosity is to be lavished on Germany and Italy who fought against it, and moves in the Congress to include Spain expressly were only put on one side when it was pointed out that this was rather tactless and that Spain could be brought in in due course without any necessity for saying anything about it. Everything that it has done up to now is consistent with its one dominant thought of preserving capitalism and opposing what it calls Communism.

Why has the ruling class increased its generosity, shall we call it, from 1945 to 1947–1948. Remember that the Marshall Plan is now 13 months old, although it has not begun. It is not quite fair to say that it has not begun; perhaps it is better to say that it has scarcely begun. This change in its attitude is due to its increasing anxiety over its own problems and the feared growth of the Socialist world. The generosity is described by some speakers as a readiness to give away large quantities of their goods—3 per cent., I think, of their national production. I agree that that is quite a bit. The right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) rather put his finger on that when he reminded us that a quarter of a century ago they were already faced with the problem that if they did not want to give away their goods and tried to sell them, nobody could buy them. What on earth could they do?

This readiness to give away large quantities of goods to those who fought against them and to those who fought with them is due to the fact that if they do not give them away they will be choked to death by the slump, which would start almost at once instead of in perhaps six or 12 months time. The very curious thing is that if one examines the Act itself one cannot find a trace of the expression of generosity. If one looks at the statements made in America to American business men to try to persuade them, there is not a trace of phraseology about generosity. There is a touch of pleasant altruism in the Agreement which must be passed by this House, but the Act itself, which is what governs in America, has nothing of the sort.

The truth is, of course, that they cannot live and prosper unless they do give this aid. Some people have suggested that they could give it to their own people and raise their standard of living. There is nothing more utterly destructive of capitalism, or more fundamentally contradictory of the very tenets of capitalism, than such a gift. I remember in the tragic years in this country, when hon. Members opposite were really running things, and the place was choked with food and nobody could buy it. A scheme was introduced to give away potatoes for nothing because the growers could not sell them, since those who needed them had no money. They gave them away in the constituency of the right hon. Member for Bishop Auckland (Mr. Dalton), but they found that capitalism could not even give away potatoes. How on earth can it give away vast millions of dollars from the people of America, of whom 20 million or 30 million have a standard of living that would not be tolerated in this country for five minutes?

If they wanted to give anything away to their own people they could have started 40 years ago. What were they actually doing to their people? Almost on the very day when Secretary of State Marshall was making the first speech to found the Marshall Plan they passed the Hartley-Taft Act. The Hartley-Taft Act is very different from the "Hartley Shawcross Act." We must not confuse the two. I call it the "Hartley Shawcross Act," not because the right hon. and learned Attorney-General was the author of the Act but because he very efficiently put it through this House. That Act was passed to put the trade unions somewhere near where they ought to be in order to strengthen the working class of this country and enrich them. The Hartley-Taft Act was designed to take away from the trade unionists of America and to put them back by 50 years, just in order that they should have not a greater but a smaller share of the national production. Only the more naive of us have said, "It is very simple, you know. They must be acting generously to the British, because it would be so easy to give it away to their own people."

Mr. W. J. Brown (Rugby)

Does the hon. and learned Member suggest that the survival of capitalism in America depends, or does not depend, upon whether they can give away 3 per cent. of their total industrial production? What nonsense.

Mr. Pritt

The thought may be nonsense, but it did not originate in any brain except that of the hon. Member—

Mr. Brown


Mr. Pritt

That is enough. Having recognised the genuine generosity of the American people and the generosity of the American ruling class, which is just as great as that of any capitalist ruling class in the world and would certainly not give away 3 per cent. if it did not suit them, let me examine some of the difficulties with which we are bound to be faced through this Agreement and the Act upon which it is made. First there is the point, which is present in everybody's mind though I do not think it has been mentioned, that next January there will be a new Congress which may not be of the same view, perhaps, as this Congress and which may give us less appropriation or no appropriation, either because it thinks that the Communist menace is less or because it thinks that the Communist menace is greater and that it is no good trying to help us. We may get nothing at all—

Mr. Brown

Then we shall escape from the danger of this generosity.

Mr. Pritt

If we get nothing at all then, at any rate, it is not worth signing this Agreement on that basis. It might be a good thing in the long run. At any rate, it will not be any good signing the Agreement if that sort of thing is likely to happen. There is another way in which they may cut us off. Under Section 118 of the Act, if the Administrator, Mr. Hoffman, thinks that we are not fulfilling our duties under the Agreement, and if he thinks that the only way to put that right is to cut it off, he will cut it off.

There is yet another way under the same Section, and this is really serious. It is much more serious than the other way. If at any time the Administrator thinks that, because of changed conditions, assistance is no longer consistent with the national interest—it does not say "consistent with any impulses of generosity"—he can cut off everything, including goods already scheduled and agreed for delivery. That means that every time we want to do anything such as nationalising steel or anything else, we must say to ourselves, "I wonder what the Americans will do to us if we do that?" The right hon. and learned Member for Montgomery thought that there was no danger to our sovereignty. Of course, there are different views about sovereignty.

Mr. Blackburn (Birmingham, King's Norton)

Surely, it is not right to refer to the Act, because the Act is merely the thing which operates the Agreement? What concerns us in this House is the Agreement.

Mr. Pritt

If the hon. Member, who has at any rate been called to the Bar, really thinks that, I can only recommend him to consult a mental specialist. Under the Act Mr. Hoffman has these rights and duties, and the Agreement cannot alter the Act. Moreover, if the hon. Member takes the trouble to read the Agreement he will not have to read more than a few lines in Article I, I think, to discover that the Agreement is expressly made subject to the Act.

Mr. Blackburn

We are not—

Mr. Pritt

If the hon. Gentleman's first interruption is as silly as that, I will not give way to his second.

The next thing I want to consider is something which has been mentioned in the House though not very much has been said about it. The Act which governs this Agreement is an Act which makes it absolutely impossible for us to continue any serious amount of trade with Eastern Europe. I want to make that clear, because trade with Eastern Europe is the only alternative method which we can use to get along. It is the only way that we can offer to ourselves as an alternative to binding ourselves to America under this Agreement.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

Does the hon. and learned Gentleman include trade with Tito?

Mr. Pritt

I should have thought that the hon. Gentleman generally talked something faintly resembling sense in this House. To get back and read what the Act says, it is not very clear at first sight, but terribly clear at second sight: The Administrator is directed to refuse delivery in so far as practicable to participating countries of commodities which go into the production of any commodity for delivery to any non-participating European country, which commodity would be refused an export licence to those countries by the United States in the interests of national security. Suppose we want to sell to the U.S.S.R., shall we say, timber-cutting machines.

Mr. Blackburn

We are not accepting the Act, but the Agreement.

Mr. Pritt

The Act governs the Agreement. Suppose we do that in order to get timber with which to build houses. We have to see first what goes into the commodity—timber-cutting machinery—and the answer is, very largely, steel. We then have to say to ourselves, "Is the United States refusing export licences in the interests of national security for timber - cutting machinery for the U.S.S.R.?" The answer is that it may or may not be at the moment, but, by the time we have fulfilled our contract to manufacture the machinery, it may well be doing so; and thus, if there is any danger of the U.S.A. doing so, it will be very unwise for anybody to make a contract, or for any Government to encourage anybody to make a contract. If they do so, they will be very rash, for, if they go forward making some timber-cutting machinery, by the time it is ready for delivery, they will be unable to send it.

We thus have to say, in effect, that we cannot sell commodities which go to the making of this particular commodity—timber cutting machinery; in other words, steel. I know that in a way this could be varied by the Administrator, who could give permission to do it; but it means, roughly, that in contemplating any deal with one of these European countries, we have to make up our minds to do one of two things. Either we have to send nothing at all which contains staple things like steel and copper, or make up our minds not to demand from the United States under the Marshall Plan any steel or copper or anything else similar that might help us to manufacture things for the U.S.S.R. In other words, we have either to give up trading with Russia, or make up our minds that we will take nothing from the United States except goods which could not possibly go into the things which we send to Russia. It would be rather cramping if we had to limit ourselves to tobacco and foodstuffs—

Mrs. Leah Manning (Epping)

Does not the hon. and learned Gentleman think that even foodstuffs might go into our pedigree cattle which we are now selling to the U.S.S.R., and would thus benefit the U.S.S.R.?

Mr. Pritt

I am obliged to the hon. Lady for this additional argument, but I hope she will not tell Mr. Hoffman.

It may be true that the Americans might be friendly. They may say, "We do not want to send timber-cutting machinery to Russia ourselves, but we will let you send some." On the other hand, the declarations of important officials in the United States have tended to show that they are proposing to apply this provision mainly to potential war supplies, and that they regard almost everything as coming within the definition of potential war supplies. And I suppose they are quite right.

Passing from that to the question of what goods we are to get, I note that the Agreement does not tell us in the least what we are to get. We have lots of statements and promises, but the Agreement is, after all, the only thing that can give us rights, and it gives us none. It may be that "The Economist," no Socialist paper, was quite right in diagnosing that we shall get any product which fails to find a domestic market in the United States. The answer to the question of what we are going to get is simply that the United States and its ruling class will decide. As between ourselves and Germany, who will decide which of us comes off best? The statement has been made from fairly reliable sources that five-sixths of the rolling stock to be supplied under the Plan is going to Germany, and less than one-sixth to us. The United States decides all that, and it is extremely important. I remember being told the other day by an English visitor to Italy that he was in Italy when the first Marshall Aid shipments reached that country. They had been selected by the United States, and they consisted of automobiles, refrigerators and marmalade—three of the principal products of Northern Italy. If one was not aware of the facts, one might think it was an accident, but, if one knew the American ruling classes, one would not think that at all, but would see that it was a deliberate attempt to destroy competitors. The effect of it was to cause a rise of unemployment in Milan of 140,000 in one week.

I am very tempted to consider the very great extent to which the United Kingdom—which includes the Colonies—is to have its production directed in accordance with the schedules of the United States. I do not want myself to see the Colonies administered in our interests; I want to see them administered by themselves in their own interests; but I certainly do not want to see a Socialist Government agreeing that they are to be administered in accordance with the interests of the American ruling classes, and that is plainly what comes about under this Agreement. Think of what may happen to our production if the United States can take every single item and say that we must increase our production of all sorts of things, taking our efforts away from the production of other things, and, when we have produced them, the American ruling classes will not want them and we shall be completely ruined. We shall be subordinating our whole Colonial structure, and, in effect, our whole economic future.

I should like to say a word on one little personal matter. I very much resented the accusation made yesterday by the hon. Member for North-West Hull (Mr. R. Mackay) against the hon. Member for Finsbury (Mr. Platts-Mills) of distortion. I notice that in this House it is becoming a little common that, when we get unpalatable facts flung at us, hon. Members start talking about distortion.

Mr. W. J. Brown

It is better than saying that the speaker is "barmy."

Mr. Pritt

I have studied it in HANSARD at my leisure, and I cannot see any foundation for the charge; but I do think that it is rather amazing that charges of distortion should come from the hon. Member for North-West Hull who qualifies as a saint in that respect by deliberately giving statistics to the House yesterday of the appalling destruction of production in Russia, but not giving a single digit to show how their system had recovered. It is interesting, too, that he chose to assert that the U.S.S.R. cannot supply us with cotton, whereas it has been supplying it to us since 1946. I suggest that it is not necessary to sign so humiliating an Agreement as this. It is perfectly true that the Government's anti-East European policy has led them up to the point at which they would naturally make and sign such an Agreement, but, even now, I do not see the necessity for signing any such Agreement.

The right hon. and learned Member for Montgomery (Mr. C. Davies) said, what people often say, that it is no good asking the British people to sacrifice more. I was at a conference at which members of the Labour Party were present, a week or so ago, where exactly that line was developed by a Right Wing Labour speaker. It produced a storm of indignation, not from Left Wingers but from ordinary Labour people, who said that, if it was necessary to put up with sacrifices, they had put up with many sacrifices in the past and would put up with lots more in the future. I object to English people being described as tender plants. It is rather sad to have it suggested that this great people cannot live without Marshall Aid, when so many people in Eastern Europe, who started with a lower standard of living and who still have a lower standard of living than ours, although a better standard than they had, are able without Marshall Aid to improve their standard of living and their production month by month and year by year. They manage to achieve a real spirit of enthusiasm for work in their own country, so as to produce what the Chancellor of the Exchequer and many other people frequently describe, with complete truth, as one very important element in the solution of our troubles, namely, greater production.

Our production figures have increased, but we could increase them far more if the Government would capture the imagination of the working people and give them the impression that this is their country and that it is more worth while working for than it was before. The right hon. and learned Member for Montgomery seemed to think that we might have more unemployment if we brought something like a million men from the Army, and thus freed 400,000 workers who are supplying the Army. We cannot disband the whole Army, of course, but we can cut it down considerably. But in truth we should then have an enormously greater labour force either to supply ourselves with more goods, or to increase our exports. If the Government do those things, and leave the country free to trade with Eastern Europe, which now, at any rate, it is very easy to do, we shall either get on without Marshall Aid at all, or, by showing the United States that we can get on without accepting either the synthetic generosity of their ruling class or the real generosity of their people, they will soon want, not to give us things on the onerous terms contained in this Agreement, but to transfer them to us on less onerous terms.

5.14 p.m.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

The hon. and learned Member for North Hammersmith (Mr. Pritt) has given us a characteristic, strange, and rather twisted speech; and, after a sustained eulogy of the Soviet Union, he concluded by advising us to cut down our Army. I think he might tender that advice to Moscow as well.

Mr. Pritt

About six months ago, the Red Army had been reduced to its normal size of just two years' classes. The expenditure on military matters of all kinds in the U.S.S.R. is less than it was before the war, whereas in the United States it is at least 14 times as great.

Mr. Boothby

So that, by comparison with the U.S.A., the Red Army is an insignificant remnant! It is a great relief to all of us to know that, if it is true. I am sorry I cannot persuade the hon. Member for West Fife (Mr. Gallacher) to remain in the Chamber. He should not be so touchy.

Mr. Gallacher (Fife, West)

Tell the House why you joined the Army and how soon you got out of it.

Mr. Boothby

I never joined the Army at all. I am not talking about that. I am merely saying that, if the Red Army is really as insignificant as the hon. Gentleman says, many of us will sleep much more easily in our beds tonight; but I am not sure that it is entirely true. The hon. and learned Gentleman went on to make a passionate attack on the United States of America. All I can say is that this anxiety in the United States to preserve Capitalism and this great fear of Communism, to which the hon. and learned Gentleman referred, seems to be fairly prevalent and widespread. If Capitalism is such an awful thing as he makes out, I sometimes wonder why the United States seems to be so attached to it, and so reluctant to see it tampered with or interfered with in any way. For my part, I am not sure to whom the hon. and learned Gentleman refers when he talks about the ruling class in the United States of America. Next time he goes to New York and gets into a taxi, if he asks the driver how his ruling class is getting on, he will be very lucky if he gets off without a thick ear.

Mr. Pritt

Two months ago I had a very entertaining political conversation about the ruling class with a taxi driver in America, with which I am sure that the hon. Gentleman would not have agreed.

Mr. Boothby

The taxi driver must have been a Marxist; but there are not very many of them about. He may have been a new convert to the party of Mr. Henry Wallace, but they also are in a small minority. I have never known an American readily accept the conception of a ruling class in the United States—and I have met a lot of Americans. The hon. and learned Gentleman, although he may put that sort of thing over quite easily in this country, will find considerable difficulty in putting it over in the United States. He went on to say that if there was a real danger of war, under the terms of this Agreement we might find ourselves under the necessity of not exporting timber-cutting machinery, steel and copper to the Soviet Union. All I can say is that, if there is a real danger of war, I do not think we ought to export timber-cutting machinery.

Mr. Pritt

I am sorry to interrupt again, but I never mentioned the danger of war. I was not even thinking of it. I was thinking of the absolute right under the Act to cut us off whenever they liked.

Mr. Boothby

I am subject to correction. My recollection is that the hon. and learned Gentleman said that if the Government of the United States took the view that a dangerous situation had arisen, they could direct us not to export timber-cutting machinery to the U.S.S.R. However, I am content to rely on the OFFICIAL REPORT. Anyway, I think we should start this new and hopeful trade with the Soviet Union with rather less explosive materials; and, if the hon. and learned Gentleman will persuade his Russian friends to send us a little of those coarse grains which we require so much, I can promise him that I could do them a very nice line in cured herrings.

Mr. Pritt

Our exports have been so slight that several months ago they had an absolute right to cut off from us the next 200,000 tons of coarse grains, but they definitely refused to use that right, and are shipping them. What more could they do?

Mr. Boothby

If they are dissatisfied, I can still do them a nice line in cured herrings. I have been interrupted by the hon. and learned Gentleman several times, and I have not yet started my speech. The hon. Member for West Fife can now go, so far as I am concerned.

Mr. Gallacher

I certainly would not be sitting here if I had your record.

Mr. Boothby

And I certainly would not be sitting here if I had yours. So that makes us all square.

We got no marks from the Chancellor of the Exchequer yesterday for intelligence. We were not even given credit for having done our "prep." We were ordered, somewhat peremptorily, to produce our homework over which we had sweated throughout the weekend and then he solemnly parsed it for us, line by line, for one hour and 20 minutes. It was a relentless performance; and I think he might have given the boys credit for having done a little more homework over the weekend, because some of us really had read this Agreement. I do not think that parsing of that character could be repeated without considerable risk; and I certainly do not propose to repeat it.

I will content myself with asking one or two questions, to which I hope an answer will be vouchsafed; but, before doing so, I would like to quote one very remarkable passage in the Chancellor of the Exchequer's speech yesterday. He said that: these facts proved we could not hope to maintain either our present standard of living or our present level of production unless we were able to get some of that outside aid which has been so generously offered by the U.S.A. to Europe."—[OFFICIAL REPORT, 5th July, 1943; Vol. 453, c. 44.] I ask the House to compare that observation with almost any of the remarks made by the Chancellor of the Duchy of Lancaster when he was Chancellor of the Exchequer two years ago—in the days when the song was still in his heart. I think it is a little ingenuous of the right hon. and learned Gentleman to come down now and say we could not possibly get through without this aid because he had absolutely no right to expect it—absolutely none whatsoever. It came as a result of a speech at Harvard in which Mr. Marshall thought aloud, after reflecting at some length on a speech made by the Leader of the Opposition at Zurich. That is how all this started; and, although I grant it is very lucky for us, I do not see why the Chancellor of the Exchequer ever should have counted on it.

The questions I want to put are these. We had a little exchange yesterday about what was a valid rate of exchange. I still do not know what it is. The right hon. and learned Gentleman says he is to be the sole judge of that. What about section 2 (b) of Article IV which says? The Government of the Drifted Kingdom will thereupon deposit in the special account a commensurate amount of pounds sterling computed at a rate of exchange which shall be the par value agreed at such time with the International Monetary Fund. It looks to me as if the boys of Bretton Woods are still to have some say in the question as to what a valid rate of exchange is to be.

I come now to the elucidation of one or two points in the Interpretative Notes at the end of the Agreement, particularly those dealing with business practices and arrangements referred to in section 3 of Article II. That Article is the one where we undertake to take the measures which we deem appropriate to prevent business practices and arrangements affecting international trade which restrain competition, limit access to markets, or foster monopolistic control. What is the meaning of this? We say that we will do our best to prevent fixing prices, terms, or conditions to be observed in dealing with others in the purchase, sale, or lease of any product. How can we do a deal of any kind without fixing the price? I confess I cannot see. There is another question also arising from these Interpretative Notes. We say we will do our best to prevent: Excluding enterprises from, or allocating or dividing, any territorial market or field of business activity, or allocating customers, or fixing sales quotas or purchase quotas. That is pretty comprehensive. Are we now to become "trust-busters" in the simplest sense of that term? I think we are entitled to know. I do not think Lord McGowan would approve of this very much. Some years ago he said, with considerable truth, that: There are few today who would recommend a return to unrestricted competition either at home or in export markets. … The fact is that the very size of the big unit means that its prosperity is directly related to the prosperity of the nation. The only solution is to regulate production and prices and to control competition in the interests of all parties. In section 3 (d) of the Interpretative Notes we now agree to take measures to prevent the limitation of production or the fixing of production quotas; and in (e) and (f) we give undertakings which appear to me to necessitate the immediate reform of the Patent Laws of this country. I am not saying that this is necessarily a bad thing. It may well be desirable; but it is important. It may be that a lot of smaller firms in this country are today denied access to the bounties of modern science and technology. I do not know, but it is a large undertaking. I do not see how we can fail to carry it out under the terms of this particular note.

I approach this general problem from a slightly different angle from the approach of the hon. Member for Chippenham (Mr. Eccles), who also realised the significance of these Interpretative Notes, but approached it from a slightly different point of view. I myself should view with considerable apprehension any proposal to eliminate international cartels for the basic industries of Europe. I say that quite frankly. In my belief—it is a belief I have long held—it was the absence of an effective international cartel for coal, iron and steel in Europe which led to the ruin of those industries in the 1920's.

For years, every ton of coal cut in Europe was sold below production cost, although the standard of living of the miners of every country in Europe was pitiably low during that period. The policy of cut-throat international competition in Europe between Germany, Poland and ourselves, proved absolutely disastrous to all concerned. The truth of the matter is that the natural evolution of the competitive system, at least so far as the heavy industries are concerned, does lead inevitably towards concentration; and the large-scale organisations which are so prevalent at the present time are the inevitable outcome of modern technology. Hence the breakdown, in the United States, of the old traditional Jeffersonian Liberal laissez-faire philosophy; the triumph of Hamiltonian economics based on the concentration of financial and industrial power; and the emergence of this great mass production which is so great a menace, and could, in other circumstances, be so great a blessing, to the whole world.

I am myself absolutely convinced that the only hope for Western Europe lies in the integration, international control and direction of the basic industries of Western Europe. I believe that to be profoundly true. It is the essence of any European Economic Recovery Programme; and, as I see it, these Interpretive Notes to some extent menace the possibility of achieving it. It does not demand nationalisation; but it does surely demand the fixing of prices and production quotas, and the allocation of markets—the very things which we pledge ourselves in these Interpretative Notes to take measures to prevent.

Mr. Blackburn

Would the hon. Member deal with the point which the hon. Member for Chippenham also overlooked which is: Whenever such practices or arrangements have the effect of interfering with the achievement of the. … programme.

Mr. Boothby

I was coming to that point, and was about to say that it could be the saviour. However, the hon. Member for King's Norton (Mr. Blackburn) has saved my doing that. I hope it is a saviour. But I wish to say quite clearly, at the risk of being dubbed a black reactionary, that I believe unrepentantly in international cartels in certain circumstances, under certain conditions, and subject to certain safeguards, which are quite easy to apply. I always have. I feel that, if we are not to be allowed to have them in Europe in the basic industries, it will be a deadly blow to the ultimate prospect of European recovery.

Apart from this curious reversion—not to the 19th century, but this time to the 18th century—I can find nothing—and I have read this Agreement until I am dizzy—in it to which serious objection can be taken. Sir Oliver Franks has done a grand job in Washington, and deserves the hearty felicitations of this House. Some of the terms are perhaps a little undignified. Articles IX and X are not, perhaps, couched in the language we could have wished; but we have to bear in mind that this is a Master Agreement, applying to many other countries besides ourselves; and, if it had been a purely British Agreement, the terms of these two Articles might well have been a little less crude. Even so, they are unexceptional. We are getting a lot of money; and beggars cannot be choosers.

There is not one condition in this Agreement which we cannot fulfil, and to that extent it differs markedly from the American Loan. There is no threat, in this document, to the sterling area or to the principle of Imperial Preference, and I defy any hon. Member on either side of the House to find it. I agree with the right hon. Member for Aldershot (Mr. Lyttelton) that Article III, which foreshadows increased American investments in Britain and the Colonies, is most warmly to be welcomed. That is of intense value.

I come now to the wider aspect. I want to be quite clear upon this point. Those who vote against this Agreement tonight will not in fact be voting against the Agreement, to which serious objection cannot be taken. They will be voting against the whole conception of Marshall Aid; and it would be much better if they were to face up to that, because that is the real issue, and here is the real divergence of opinion.

Mr. Cove (Aberavon)

The hon. Gentleman has changed his mind.

Mr. Boothby

I have never been opposed to Marshall Aid.

Mr. Cove

The hon. Gentleman voted against the Loan.

Mr. Boothby

I voted against the Loan because it imposed conditions which I did not think we could carry out; and which, in the event, we have failed to carry out. I am going to vote for the Agreement tonight because it does not impose conditions we cannot carry out; and because, on balance, in our desperate situation, it is good to have this assistance now. That is a fair position to take up.

But those who think that Marshall Aid will, by itself, enable the nations of Western Europe to become, in the words of this Agreement, "independent of extraordinary outside economic assistance," are the victims of an illusion. I agree profoundly with the leader of the Liberal Party in saying that the disequilibrium between the United States of America and the rest of the world is the fundamental economic problem of the twentieth century. For it there is no short-term solution. The Chancellor of the Exchequer and the President of the Board of Trade, in their hearts, know that very well. We can ease the position if we take correct action, but by ourselves we cannot solve the fundamental problem.

Nor is it of any use to cast blame upon the United States of America for conditions which exist and which are unalterable. The only thing one can blame the United States for, legitimately, is their continued reluctance to face, or even to comprehend, the realities of the existing situation. They still think that we can go back, all of us, to the free international economy of the 19th century, which they call "normalcy." But we cannot. We cannot because the conditions are fundamentally and entirely different to those which prevailed in the 19th century. I am reminded, when considering the American attitude in this matter, of the story of the young American girl who was picked up by a "tough guy." After she had thanked him for taking care of her purse, she gave him the name and address of her mother; and asked him if he would be good enough to take her in his car to her mother's address. He looked at her in some bewilderment, and said: "Baby, you don't understand. It ain't that kind of a world any more."

That is the real position that confronts the United States Government in this matter of trying to get back to the international economy of the 19th century. It ain't that kind of a world any more. And they do not yet understand. We can only hope that they will, before it is too late. As the Leader of the Liberal Party said, the United States today are the creditors of the world. They still have ample scope for internal development and investment. Everybody wants their goods, and they are under no compelling necessity, as we were in the 19th century, to take any goods from the rest of the world. I agree with the leader of the Liberal Party that this is an unprecedented phenomenon; and it is not a temporary phenomenon.

Let us look for one moment at the record. It is really rather astonishing. During the first world war the United States loaned the Allies 17 billion dollars, nearly all of which was subsequently repudiated. That enabled them to increase the value of their exports six times. In the twenties they made commercial loans to Europe amounting to over 10 billion dollars. That enabled them to stage the biggest boom yet achieved in their history. Five billions of this "international money" was withdrawn in the crash of 1930 and 1931, with disastrous results for the whole world. Thereafter, the United States proceeded to buy and bury about 17 billion dollars' worth of useless gold, in exchange for valuable exports to the rest of the world, which enabled them to stage the recovery of 1936 and 1937.

They were heading for another crash in 1939, from which they were saved, from an economic point of view, by the second world war. Thanks to Lend-Lease, their exports recovered to 5 billion dollars in 1941, 8 billion in 1942, 12 billion in 1943, and over 14 billion in 1944. With what result? Prosperity quite unparalleled in all history—a prosperity far greater even than that which they enjoyed in the twenties. Since the war they have gone on devising expedients in order to get rid of their available surplus. The Loan was one. The Marshall Plan is another.

I hasten to say that I agree with the leader of the Liberal Party in saying that nothing can detract from the spontaneous and characteristic generosity of the American people. They are naturally a very generous people. Nevertheless, it is absolutely essential, if their free economy is to be maintained during the next 10 or 15 or 20 or 30 years—so long as they remain the great creditor nation of the world—to devise ways and means to give a lot of their stuff away, without upsetting too many of their own nationals.

Sir Arthur Salter (Oxford University)

Surely, my hon. Friend does not contend that at this particular period, and in relation to this assistance, it was either a motive of the American Government and Congress, or a need of the American economy, to stimulate their exports by financial assistance of this kind? I agree with him as to a long-term disequilibrium. But in relation to this proposal it is very important that we should recognise the truth of what the Economic Secretary said just now, and that is that apart from the burden on the American taxpayer, the effect of these exports, made possible by this aid, upon the American economy now, will be definitely adverse, in aggravating inflation and depriving American consumers of much they would otherwise buy and use themselves.

Mr. Boothby

I am not saying their motives are anything but admirable. I have already said that. I acknowledge their generosity. Even so, their need is great. It exists at present. Very soon it will intensify; because the unsatisfied internal demand caused by the war will gradually be met in the United States. It is not met yet, I agree. However, when it is met—and it will be met over the next two or three years—the need will be there, greater than ever. The long-sighted people in Washington see that just as well as we do. Therefore, though I agree that the motive is generous, and that the need is not great at the moment, I say that the need is implicit in the situation which will become apparent, with increasing intensity, during the next two or three years.

In a sentence, their problem is how to match the productivity of the United States system of mass production with adequate purchasing power. That is the root of their problem. Our problem is precisely the reverse. Before the war we were running an annual trade deficit of £50 million. It was concealed by the dollar income from our accumulated investments overseas, and from our Oriental Empire. The investments are all but used up; and the Oriental Empire is in partial liquidation. Moreover, the United States of America have developed their own synthetic rubber plants and their own tin plants.

The immediate task is to marry these two problems, in the hope that we may arrive at a long-term solution in the course of time. The immediate truth is that, despite austerity, and despite the much proclaimed and much vaunted export drive, we are at present losing the battle. The terms of trade still turn against us. The disequilibrium not only continues, but increases.

I have already told the House on several occasions how I think we can get out of this mess; and I am not going to repeat the argument after having spoken for the best part of half an hour. We have, in my view, to create out of the sterling area a trading area big enough to enable us to breathe and live; and to provide the United States with a really good field for capital investment, which is what they want. Some advocate an Imperial Economic Union, and disparage Western Europe; some advocate a Western Economic Union, and disparage the Empire. I advocate both, because I believe we most desperately want both—and that Europe and the British Empire require both.

What is beyond dispute is that something has to be done; we cannot survive in isolation, confronted as we are by the vast closed economy of the Soviet Union, and the equally vast free economy of the United States. There has been far too much talk in recent months and far too little action, in Paris, in London and everywhere else; on the part of Ministers, and everyone who is responsible. Indeed, only one piece of effective action, from a long-term point of view, has been taken during the last year, and that is by the Minister of Food in East Africa. It is not without significance that it has been received with hurricanes of abuse and derision from almost every quarter; and yet, from the long-term point of view, it represents perhaps the greatest hope of all. I say that even if it costs ten times as much to clear the East African jungle as the original estimate, it will still be worth it, from our point of view, a thousand times over.

We have to persuade the Americans that it is in their own interest to underpin rather than undermine sterling; and to allow us to apply the principle of discrimination for the purpose of reviving and reconstructing the sterling area. The "Economist," in a recent issue, stated that if the dollar shortage was likely to be permanent, the Marshall Plan should be regarded as a transition to some different pattern of international economic relationships. I profoundly agree. The alternative is simply another dose of relief. If that happens, we shall repeat precisely the story of the American Loan. We shall get through it; and at the end we shall be worse off than we were when it started. One thing alone is certain. The pattern of international economic relationships which ultimately emerges will bear very little resemblance to the pattern of the nineteenth century.

5.42 p.m.

Mr. M. Philips Price (Forest of Dean)

The hon. Member for East Aberdeen (Mr. Boothby) has given the House an interesting statement of his views, and one in very marked contrast to the speeches of many of the Members of the Opposition in the course of the Debate today and of yesterday. He has shown a wide appreciation of the issues involved, and has not tried to make party politics. The hon. Member for East Aberdeen is always rather an independent; he sails his own ship, flies the Jolly Roger and occasionally raids into his own fleet. I certainly think that he is entitled to be heard by the House because it was he who led the opposition to the terms of the American Loan. I happened to be out of the country at the time when the House discussed that Agreement. Had I been here, I am certain that I should have been sorely tempted to support him. I think that he has been proved to be right in that event.

The Agreement which we are discussing today is of quite a different calibre from those terms which appear in the American Loan. One thing which we can notice is that the development of the opinion of the United States in regard to world problems has undergone a most extraordinary change in recent years. They have gradually realised what a role they have to play in the world today. An agreement of this kind is always liable to be criticised both on this side of the Atlantic and on the other side. It is always easy here to raise feelings against the United States on the ground that we are becoming a colony of the grasping American usurer, and becoming the forty-ninth State of the Union. It is equally easy over there to represent an Agreement of this kind as an agreement by which a simple and innocent Uncle Sam is being cheated and fooled by a scheming John Bull.

The real facts are that sensible men on both sides of the Atlantic have now come together, seen what the real issues are, and produced this. When I look at the history of America, both the distant and the more recent, I marvel at the enormous strides made by American public opinion, particularly in recent years. This Agreement is the last stage of a great historic epic in which it is seen how a great people, having spent over a century in conquering a continent, have now gradually realised that they are part of the world and that they cannot prosper without that world. For over a century, they did not need the rest of the world. Not only that, but they relied much on the British Navy all through the nineteenth century. The British Navy was the advance defence of the American continent against despotisms from Europe which tried to penetrate into Central and South America, and which conflicted with the Monroe Doctrine.

Today, when we have been gravely injured by two world wars, we find it very hard to play the role which we once played, and America has come to realize that she must relieve us of much of that burden. So we have seen this extraordinary development. From the days of Washington, who led a small struggling Republic; through Lincoln who saved the American Union; to Wilson, who, in the first world war, showed America that she must play a role outside her own shores; to Roosevelt, who not only showed that but persuaded his countrymen to see it as well; and, finally, to Marshall, whose name will be connected with this great act of statesmanship.

Those are the changes through which American consciousness of her world responsibility has passed. She has made many mistakes. In 1945, she made a mistake over the Loan. Even now she may still think that normality will reappear again in Europe after a few years. Hon. Members on both sides of the House, correctly I think, stated today and yesterday that the dollar shortage is likely to last for a generation, and the conditions created by the second world war will not be easily wiped out. Of course, the United States cannot replace this country in the rôle she played through the nineteenth century, and, to a gradually lessening extent, up to the second world war. We lent money all over the world and became ready to receive interest on those loans and investments and to take it in kind. We became a great commercial, banking and shipping centre on these small islands off the West coast of Europe, the centre of the great sea routes. A great continent like the United States, self-supporting and self-sufficient, cannot play that rôle. The only alternative is to make this gift and loan on very easy terms.

We have to consider how we can best use the funds which are coming to us under Marshall Aid. We have to ask ourselves first whether we have yet been asked to observe conditions which are unreasonable. I feel, after reading through this Agreement, that the provisions are merely those which we are now trying to carry out, even without this Agreement, in order to balance our Budget and to have a surplus to try to create conditions against inflation—in other words "disinflation," as the Chancellor of the Exchequer says, in contradistinction to "deflation." I can see nothing in Articles II or III which is contrary to what we are now trying to do.

There may be some misgivings over Article V (2) (b) which may mean penetration of American capital into the Crown Colonies. Naturally we have to be rather careful about that. We have a definite colonial policy which we are carrying out and we have to see to it that the interests of the natives are fully safeguarded, and of course there must be no conditions permitted to American capital over there which are not demanded from any enterprises in this country. I think, however, it will be possible by carefully watching the conditions under which American capital may operate under this Article, with good will to come to a satisfactory arrangement.

The fundamental condition of success of this great plan is the state of Europe and the need to create co-operation and self help in Western Europe and, if possible, throughout all Europe. That was well put by my hon. Friend the Member for North-West Hull (Mr. R. Mackay) in his speech yesterday. Unless Europe exchanges its products within itself and tries to satisfy its own demands before asking for American assistance, this plan cannot possibly succeed. I know that my hon. Friend went a little far when he argued in favour of a United States of Western Europe, a united parliament and united government. I do not go as far as he does, because I think we must try to walk before we can run. Certainly I think I know enough about the old Continent of Europe to know that it is full of prejudices and feelings which may be easily aroused and which have accumulated throughout the centuries. We cannot expect to have united government there overnight.

The task is to try to create in Europe inter-governmental machinery which has the authority to act on agreed lines. The Council of the Organisation for European Economic Co-operation in Paris is the kind of machinery which is needed and we would like to hear more about its activities. I put a Question to the Chancellor of the Exchequer on 29th June asking what is being done to counteract the tendency which is undoubtedly there for inter-European trade to decline. Owing to exchange difficulties and a hundred and one hindrances inter-European trade is making heavy weather. The answer I got from the Chancellor was that the Council for Economic Co-operation are studying the matter and hope to take action soon. We need that action to be taken as soon as possible.

The condition under which Marshall Aid and this Agreement can succeed is that Europe should help itself first. We must solve the problem of the movement of the population within Europe and of adequate labour supplies at the right places, currency stability and transport and also the sharing out of the activities of various industries. For instance, we should not make things which France can make better and France should not make things which we can make better. We should come to agreement that we should share out markets in that way. Various agreements of that kind can be made.

Then there is the important document published by the Economic Commission for Europe in Geneva. That Commission is an all-European Commission, including the States of Eastern Europe and Russia. Russia, curiously enough, still takes part, in spite of her truculence politically, under U.N.O. The Commission has produced an extremely important survey of the prospects for Europe and the economic situation. The survey shows that Europe cannot have health again economically unless the European Recovery Programme concerns itself with Eastern Europe as well and provides the 16 countries with the means of balancing payments. That report shows that the 16 Marshall countries had an adverse trade deficit of 6,500 million dollars in the year 1947 and, to cover that deficit, they will have to increase exports by 50 per cent. more than in 1938. It is impossible for the 16 Marshall countries to do that if, at the same time, they are to invest a portion of their production, and a large portion, in reconstruction, re-equipment and capital goods.

It therefore means that all these 16 Marshall countries must use a portion of the American Aid, not just for food and raw materials but to build up their industries in capital goods. If that is done, it is possible that in the long run Western Europe may become less and less dependent on the American continent. For instance, supposing European agriculture was mechanised more than it is now, she might become much more self-supporting in foodstuffs. This country is the only European country with a really mechanised agriculture. Tractors in Western Europe are double what they were before the war, but that does not do more than replace the loss in livestock and draught animals from which the Continent has suffered and it means nothing for the improvement of the general state of agriculture. That is one thing which the 16 countries must tackle as soon as possible.

As the report of the Economic Commission for Europe also shows, unless the natural exchange between East and West Europe is re-established, Europe as a whole cannot find health again and they point to the fact that the loss of Germany as a great industrial productive unit has had disastrous consequences for the continent. Before the war Eastern Europe exported foodstuffs and raw materials to Central Europe and received from Germany industrial goods in return. Germany has gone as an industrial producer, for the time being at any rate, and Russia cannot take her place. Not only does Russia not take her place in supplying Eastern Europe with industrial goods, but Russia is drawing industrial goods from Eastern Europe instead. That is going on now Czechoslovak trade with Western Europe was 80 per cent. of the total trade in 1947 and in Hungary it was 63 per cent. The natural trend was that way to the West. Although it is not Russia's fault, having suffered so much during the war and having had so much of her production plant destroyed, she is having to draw from her satellites industrial goods which should be coming from Germany, or from us, or some other industrialised country. That shows what a serious position Eastern Europe is in.

My hon. Friend the Member for Hanley (Dr. Stross) made a speech yesterday in which he referred to Russia's economic treaties with her satellites, and said that they were activated by the best possible motives. I do not doubt that they are, and I do not accuse Russia of deliberately trying to sponge on her satellites—she has no option as things are today. The real lesson that until Western Europe, and particularly German industry, is made to play a part again, we cannot possibly have a healthy Europe in this respect. Poland, the Balkans and Hungary are dependent on the imports of industrial and capital goods. Russia cannot supply them. They can only be supplied from the West. If the United States do not want to supply them, or cannot supply them, she must make it possible for the countries of Western Europe to do so again. One wonders whether recent events in Yugoslavia may not have something to do with the realisation of the fact that these countries in Eastern Europe cannot be served by Russia alone, and that contacts with Western Europe are essential to their health.

These, then, are the deductions that must be drawn. The industrial strength of Western Europe must be re-established so that it can once more set in process that natural exchange between Eastern and Western Europe. Above all, we must ourselves develop our commercial exchanges with Russia, and the interesting thing to note in this connection is that, in spite of the truculent behaviour of Russia, she has, at any rate until recently, always shown herself ready to come to commercial agreements. I do not agree with what the hon. and learned Member for North Hammersmith (Mr. Pritt) says, insinuating that although Russia has sent us raw materials, food and feedingstuffs, we are not carrying out our side of the agreement. The facts are, of coarse, that we have sent her some of those industrial goods that she requires, and that we have made offers up to 80 per cent. of the total amounts that she requires, but that Russia has not yet accepted because, I understand, she is bargaining over prices, and is no doubt bargaining hard. And so, it is not our fault.

That is all in the right direction, but I have one small fear. There is nothing in the Agreement to indicate that the United States are going to make difficulties for our trade with Russia and in regard to our sending goods to Russia, but there has been a speech by Mr. Hoffman, the Director of E.R.P., suggesting there may have to be some control over exports from this country and other countries in Western Europe if they are made from materials supplied under the E.R.P. arrangements. That is understandable if it is a question of supplying Russia with military material, and it is quite right, but if it will make difficulties in our supplying Russia with, for instance, light railway equipment for exploiting her forests, which she very badly needs, or machinery and equipment for her timber mills, that would be a matter which we should have every reason to object to. I do not know whether there is anything in it, but there have been these rumours and this speech to indicate something on those lines. We ought to be clear on this point, and I hope it will be cleared up in due course. The Agreement is one step in the recovery of Europe, but it is only one step. It must be followed by others; by mutual self-help in Western Europe and the reestablishment of that natural exchange between Eastern and Western Europe without which the Continent cannot survive.

6.5 p.m.

Mr. Beverley Baxter (Wood Green)

I understand it is the decision of Mr. Speaker not to call any of the Amendments which appear on the Order Paper. I am sorry because I should have liked to go into the Division Lobby for the Amendment which is down in the name of myself and some of my hon. Friends, to leave out from "House," to the end of the Question, and to insert: while recognising the generosity of the United States in devising and financing the European Recovery Plan, and while desirous of co-operating to the full in attaining world recovery, cannot agree to terms which tend to weaken the bonds of Empire and fake from the British Commonwealth of Nations the initiative and responsibility for its own development. As it is, I intend, unless argument convinces me otherwise before the end of the Debate, to vote against the Government's Motion. I realise that, is in the case of the Debate on capital punishment, I shall find myself in somewhat strange and unusual company, although perhaps tonight the company will not be so numerous as upon that other occasion.

I am sorry that I shall not have with me tonight my hon. Friend the Member for East Aberdeen (Mr. Boothby) who led the attack upon the American Loan with great courage and eloquence. Tonight he appears to be leaving the camp, and whereas on the last occasion he would not sell the Empire for a packet of cigarettes, now that the price of cigarettes has gone up, he seems to have changed his mind. It is very easy for anyone who is in opposition to put down an Amendment against something which is being done by the Government of the day and which many of his own friends feel is necessary, because, if the thing turns out right and Marshall Aid proves as great a benefit to the world as its backers are now saying, his small Amendment is forgotten; whereas if things go wrong he can always say, "Look how right I was." I know there is that temptation, but I ask the House to believe that we did not put down the Amendment with anything like that in mind.

I know the responsibility of Ministers and how difficult the negotiations have been—so difficult in fact that they practically broke down, if they did not actually break down at one stage. Therefore, I do not intend in what I have to say merely to wave the British flag or to acclaim the spirit of the Empire, but rather to argue logically why, in my opinion, it is a mistake at this time to accept the aid which is being offered to us. It is a habit of too many of us in this House, and perhaps of too many people in the country, to recognise nothing but the great difficulties which faced us when the war ended in 1945. Certainly they were enormous difficulties, but there were also enormous opportunities.

We have spent too many midnight hours studying the troubles which beset us, and far too little time seizing the opportunities which the end of the war gave us. Our prestige was high throughout the world. It had never been higher, and the feeling towards us in America was never warmer. In the war the dream of Empire economic unity, which everyone said before was impossible, had come to pass. It might have been impossible in its entirety to achieve in peace, but economic unity came to pass during the war, and we saw, for instance, the dollar pool in London with London administering the dollar balances for the whole Empire. I do not want to make a partisan speech, but the Government were too conscious of the difficulties and far too unconscious of our opportunities.

I think it is time we considered the position at the end of the 1914–18 war, the Kaiser's war, and the position at the end of Hitler's war, and really asked ourselves whether our situation was so very much worse this time. In 1918, we had accumulated a debt to America of something over £1,000 million. Throughout the war we had maintained the pound at, I think, 4 dollars and 70 cents. It was a false backing, but we had to do it. Not long after the war had ended Mr. Baldwin went to Washington, the debt was funded at £760 million, and we agreed to pay interest at £38 million a year, or some such figure. We owed America this great sum. When that war was over the false support of the pound was withdrawn; it went down even to a point where it was a little over 3 dollars in 1922. That was the situation then. What was the situation at the end of Hitler's war? When victory came our gold reserves were roughly the same as they were at the end of 1918. There was not very much difference. It is true that in the recent war we had had to dispose of over £1,000 million worth of foreign investments, and I shall have something to say about that a little later.

At the end of this war we had no debt to America. Thanks to Lend-Lease, and to paying first with our overseas investments, we ended with no debt to America. What then was the situation? Why was it so terrible? I have said that our gold reserves were about the same. We drew from our foreign investments before Hitler's war £170 million per annum. Our sale of them brought that down to £60 go million per annum—a drop of £110 million. That was the loss which came to us as a result of having to part with a large amount of our overseas investments. But against that £110 million we can put the £38 million which we promised each year under the Baldwin set-up. I do not consider that that difference constitutes such a national tragedy as we have come to believe. I agree that our country had its industries and towns badly damaged, but the Americans will not rebuild our cities and towns—

Mr. Ellis Smith (Stoke)

While I agree with the hon. Member's outline up to now, ought he not to say that our productive capacity and manpower were strained this time very much more than they were last time, and that we ended the recent war with far less resources than last time?

Mr. Baxter

I would say that our productive capacity in the recent war was increased, and not decreased.

We have heard that if we do not accept Marshall Aid, unemployment will come and disaster will follow; that this Aid stands between us and national tragedy. I want to come back for a moment or two to the period when we returned to the Gold Standard. The best experts in the City said, "Unless we go back to the Gold Standard we are ruined. The pound cannot look the dollar in the face." So, we went back overnight. I think it was a most unhappy decision. I know it is embarrassing to us on the Conservative side to say that, but I still think it was a very unhappy decision. It was the result of finance and industry being at war with each other. Finance won that battle and industry suffered. We were back on the Gold Standard, and after a time things began to go badly. There was a drain from America and Paris which became greater and greater, but we dared not go off the Gold Standard. Everyone knew that if that happened our fortunes would be broken.

But the strain became intolerable and the one Sunday night Mr. Ramsay MacDonald, who was then Prime Minister, summoned editors to Downing Street. He sat there with Mr. Baldwin, Mr. Snowden and Sir Herbert Samuel, as they were then, and revealed to us the secret and sensational news that we were already off the Gold Standard, and that next day an Indemnity Bill would be rushed through the House of Commons. Mr. MacDonald said, "I do not know what will happen, whether there will be panic, whether there will be food riots, but at any rate we leave it to you gentlemen of the newspapers to try to rally the public as much as you can." We came out and, with the natural ease of journalese, wrote: "The pound is no longer backed with gold; it is backed by the character and resources of the British people and the British Empire." The Government's decision had not the slightest effect on the people. Nobody took a £5 note and asked for gold. People were rather proud to hear that the pound was backed by the character of the British people and the resources of the British Empire.

That began the climb of this country to recovery, and that is why, when I hear today that if we do not take the Marshall Aid we shall have disaster, I say that it is the voice of the City, the voice that says the pound must always face the dollar. I say again that the American economy needs a strong British Empire, that American policy needs a sound sterling. To imagine that if we do not accept these terms America would not find methods of doing business with us is absolutely absurd. A country which is a centre of the British Empire such as we are, does not, like a beggar at the gate, have to hold out its cap. To take the first gift is bad enough. One resents it, and feels a sense of shame. It is easier to take the second gift, and the third time it is easier still. We are developing the spirit of the dole, and I say to my hon. Friend the Member for East Aberdeen (Mr. Boothby), whom I praised for his gallant lead about the American Loan, that this time he is leading the beggar to the gate—

Mr. Boothby

There are quite a lot in front of me.

Mr. Baxter

It is not fair that any of us who oppose this Agreement, should not say what we would do if we did not accept this aid. If I were asked, "Would you take the responsibility of not accepting it if you were the head of the Government?" my reply would be, "I would not take the aid." I will say why. I see that the right hon. and learned Member for Montgomery (Mr. C. Davies) has left us. He was in a very emotional frame of mind this afternoon. What is this vital commodity which the Americans are going to withhold from us if we cannot pay for it? There is no secret about our imports from America. Dairy produce costs £40 million a year, other foodstuffs about £23 million a year, tobacco £31 million, machinery £21 million, oils and fats including petrol £33 million, films £35 million or some such figure as that, raw cotton £18 million, grain and flour £19 million, meat £8 million—

Mr. Jenkins (Southwark, Central)

In what period?

Mr. Baxter

A normal year. They may be last year's figures, I am not sure. They were telephoned to me and I assumed that they were the figures for imports for last year. Is there no way in which we can replace any of these? What about tobacco? We are the only country in the world which exclusively smokes Virginia tobacco in cigarettes. They do not smoke it in the United States. What about Rhodesia and what about Canada, which is now growing some of the best tobacco in the world? What about Turkey? Once the people cannot have Virginian cigarettes they will not be so fastidious about smoking blended tobacco.

I ask hon. Members in all parts of the House to consider for a moment the spectacle which we present to the world today. With all our Colonies and with our close association with the Dominions we say that we cannot support life in this country without the American dollar. To my mind that is a shameful thing for us to say because it is not true. America was never our natural source of foodstuffs until we went on the dole. It is not even today our natural source of foodstuffs.

Mr. Anthony Nutting (Melton)

Not until Europe was split in two.

Mr. Baxter

That happened as well. We can reconstruct in both Europe and the Empire. The Empire can feed us and supply us with almost every essential that we need. If we had not misspent the tragic years when the loan was available which resulted in this Government going to sleep, and if we had developed our resources under successive Conservative Governments, a united Empire would have come to our aid now. There are no bouquets to be handed round in regard to Empire development. We have not had Governments who have risen to the greatness of the heritage left to us by our ancestors.

Now we are going to hand over the control of our trade not absolutely but dangerously to the United States, and to a gentleman named Mr. Hoffman. If anyone doubts Mr. Hoffman's intentions and how seriously he takes his job, let me quote what he said in answer to a question in New York. He said this with the intention that it should be published: Our function comes more closely to that of investment bankers for recovery than any other function. In other words, we have the perfect right, if a programme of a given country in our opinion will not produce results in terms of recovery that makes worth while the investment of American dollars, to refuse to invest the American dollars, which we will. That is understandable from an American standpoint; it is not agreeable from ours.

Are we going to be masters of our own agriculture when this Agreement goes through? Shall we be allowed to increase the number of pigs or shall we hear from Mr. Hoffman, "No, that is for Denmark." Is the same thing going to happen when we increase our production of eggs? Are we going to be told every time that we propose to increase production that it comes under this Agreement and we cannot do it? We are not going to be masters in our own agriculture. Are we going to be masters in the factories? Since we cannot be masters on the farm are we going to be masters in industry? Again, are we to be faced with the same situation when we will be told, "You can do this but you can't do that." True we shall consult, but the very fact that we have to consult suggests that the American dollar is going to call the tune, and what is going to happen in the Colonies? There is nothing to stop American capital investing in the British Empire, and it is the best investment that American capital can make. Now we are to specialise the position of the American investor. The American Administration is going to be able to advise our Colonies what they should produce to meet the requirements of American economy.

Mr. Michael Astor (Surrey, Eastern)

My hon. Friend raised one important point which he did not clear up. Is he suggesting that, without American aid, the British Empire today could feed this country?

Mr. Baxter

That is what I have been trying to suggest. I have said that America is not the natural bread-basket or meat supplier of this country and I say that it would be possible to replace American products. There cannot be bad crops all the time. There are difficulties at the moment, but the United States is not the natural provider of food for this country. We could develop our own agriculture as well as that in the Dominions and Colonies as we should have done long ago.

I do not want to detain the House much longer, but there are one or two points which I wish to make. I have said that we are not masters in the farm or in the factory and we shall not be masters in the Colonies. We are opening our gates and those of the Dominions to the American dollar. We have heard in every speech in this Debate about the generosity of the American people. It is true that there is more kindness per square yard in the United States than in any other country in the world, but there is also the American Administration which mixes realism with idealism. Without idealism the American people could not do this; without realism the Administration could not afford to do it. It is a very happy combination, and I only wish that there was the same combination here.

I do not take the "Economist" and, therefore, my theories will not have the familiar ring of most of the speeches made here on economics. I consider that the dollar shortage is a permanent thing. The United States by its very conception cannot import. It is not an importing country but a huge exporting, manufacturing country. If that is so, we must always have the dollar shortage. This is an attempt to bridge something which has no ending on the other side. This shortage will go on for ever and ever. What America really needs is a strong and independent British Empire into which she can export her capital without conditions, just as after the Civil War we exported our capital to the United States without asking conditions from her Government. It is sufficient that her capital will be put into the British Empire and not that the Americans shall have a special type of privilege and citizenship, unless, of course, as this Agreement suggests, we make an open partnership between the English-speaking peoples.

I want to end with this statement. There are difficulties ahead, but I do not see ruin. I do not agree with those who say that ruin will stare us in the face if we reject this offer, unless, of course, there is a war. I do not believe that this country should surrender its right of selling to any nation to which it wishes to sell. I do not believe that if we want to do trade with Eastern Europe Mr. Hoffman should say that we must not do it. That is a matter which should be left to our judgment. I abhor Communism, but I would do business with Russia. The only thing that will cure the ills of Europe is trade. That is all. I do not believe that we should hand this matter over to Mr. Hoffman or to anybody else. We can only get back by the hard way, by hard work and longer hours, if necessary. It might be that if we did not take this Aid, we might have to work an hour longer a week to pay for what we want in America. Perhaps an hour a week would do it. It is worth thinking about.

I do not agree with the right hon. and learned Member for Montgomery who said: "You can't ask the British people for a sacrifice now." One of the deplorable features of our life since 1945 has been the atmosphere of timidity instead of vigour and vitality of leadership such as we had during the war. I only wish we had it now. I want to see the Government of this country keep its own control over its own destiny. That is why I have put down the Amendment. The Government are proposing to hand over the control of the Empire, and our responsibility for Empire development, to somebody else. The Financial Secretary to the Treasury shakes his head. In the disastrous American Loan and in the Bretton Woods Agreement there was a clause saying that Empire preference should be scaled down and finally eliminated. Has that point been overlooked?

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

We are talking about the Agreement. Where in the Agreement are those terms?

Mr. Baxter

That is an answer. On the other hand, will the right hon. Gentleman say whether the Bretton Woods Agreement still holds good? Are we still committed to the elimination of Imperial Preferenece? Would the right hon. Gentleman answer that question? Are we committed to the gradual elimination of Imperial Preference or not?

Mr. Glenvil Hall

Surely the hon. Member was present when we discussed the Geneva Agreement. He must know what the situation is. It is not for me now to go into that matter.

Mr. Baxter

I know there was a hard fight but I do not believe for one moment that the Americans have lost their objective in their minds. Later on tonight I shall see Mr. George Drew, Premier of Ontario, momentarily unseated, although his party was victorious. He has come here to induce British industry to open up in Canada in a big way. George Drew dreams in his waking hours, and perhaps in his sleep, of building up the British connection in Canada. Mr. R. J. Menzies is on his way here from Australia with some great Empire plan. I do not know what it is, but he is very enthusiastic about it. Mr. R. G. Casey was here from Australia and talked to a few of us in St. Stephen's Club on what was needed to meet the threat to the white man's dominion of Australia, and he referred to the lack of interest here in the matter.

Since 1945 I do not think we have had one real Empire Debate, yet it is to the Dominions that we have to look for leadership. Look at the sacrifices and at the wisdom of Canada. She is finding some way out of her difficulties, even her dollar difficulties, so that she can supply this country. That is good idealism and good wisdom. Where is the leadership here? Tonight, if we carry this Motion, we shall open the sluice gates. Already the United States is offering a Customs Union to Canada. Here in Britain we have a government of abdicationists. Burma has gone. India has practically gone. The Government do not seem to bother about Newfoundland. Are we quite sure that Canada will not go into the dollar economy—I mean the American dollar economy—not by the will of her people but because we here say that we will only adhere to one idea, that the pound must look the dollar in the face? I say that this House sometimes has to look history in the face. I believe that tonight is one of those occasions.

6.36 p.m.

Major Bruce (Portsmouth, North)

Many of us on this side of the House appreciate the sincerity with which the hon. Member for Wood Green (Mr. Baxter) has addressed us, even though we may not agree with some of the interpretations which he appears to have placed on the Agreement. Indeed, many of us doubt whether he has been referring to the Agreement at all, in many ways.

We would like to pay one tribute to the hon. Gentleman, who, apart from the hon. Member for East Aberdeen (Mr. Boothby), has been among the first on the Opposition Benches since the commencement of the Debate to admit frankly and honestly to the general public outside this House that the Government did have difficulties to face after the war. That is something which has not been admitted, except in very general and vague terms, by the right hon. Member for Aldershot (Mr. Lyttelton). It is true that—

Mr. Lyttelton

The hon. Gentleman should read in HANSARD what I said.

Major Bruce

I am coming to the right hon. Gentleman presently, and also to what he said. I would like to repeat that the hon. Member for Wood Green did give some indication. He mentioned that we had sold 1,118,000 dollars worth of investments during the war. He said that we have suffered some damage. But he did not say that we had also incurred more than £3,000 million of debt, and that the total amount of the wealth of this nation had been diminished by about 25 per cent. I do not mind the hon. Gentleman saying those things. I admire him for his honesty.

Mr. Baxter

We did not incur debts in dollars to the United States.

Major Bruce

I readily concede that to the hon. Gentleman. The position was stated by the right hon. Member for Woodford (Mr. Churchill), in his usual stirring terms, in the speech he made on 16th August, 1945, soon after the end of the war had been announced. He said: For this and many other reasons the United States stand at this moment at the summit of the world. I rejoice that this should be so. Let them act up to the level of their power and their responsibility, not for themselves but for others, for all men in all lands, and then a brighter day may dawn upon human history."—[OFFICIAL REPORT, 16th August, 1945; Vol. 413, c. 80.] There was not an hon. Member in this House who begrudged the United States the moment of her triumph and the predominance of power that she possessed at that time. Whereas this nation had emerged after considerable effort with 25 per cent. of its national wealth lost, much physical damage and destruction, and a grave reduction of its potential productive capacity, the United States had suffered no damage worth speaking about and had increased her productive capacity. Very few of us question the motives behind what the right hon. Gentleman said. We do not mind, and we never shall mind, that the United States, for perfectly good and valid reasons at a certain moment of time, sat at the summit of the world. The Debate has made it clear that the Conservative Party intend not to use that utterance as a sincere tribute to the United States, but to use it purely as a political weapon. They intend, in their praise of the United States, purely to endeavour to obtain political support there for the policies of their party.

Apart from the speeches of the hon. Member for Wood Green and the hon. Member for East Aberdeen, the Debate from the Opposition Benches has not been a Debate upon Marshall Aid at all. The Opposition have not been the slightest bit concerned with Marshall Aid. They have presented no constructive proposals to the Government or to the House as to how best to follow up Marshall Aid and as to how best to re-organise Europe in order to ensure its accomplishment, except the somewhat barren utterance that there must be a return to free enterprise. I note that the hon. Member for Chippenham (Mr. Eccles) has retracted from the philosophy he set out in his recent pamphlet "Forward from the Industrial Charter" after having been rapped over the knuckles by the "Financial Times" for his pains.

The Opposition have tried to use the Debate simply to make the maximum political capital out of this country's dependence on the United States. Apart from the hon. Member for Wood Green, there has been no frank mention of the sufferings which this country had to endure inevitably as a consequence of the war. It would have been rather nice, in the presentation of a fair and frank picture to the nation, whatever political polemic in which one might indulge, for some right hon. Gentleman on the Front Bench opposite to have mentioned something in detail of the initial difficulties which this country had to face. But, no, they were so swayed by their party passions that they indulged in the kind of utterances of the right hon. Gentleman the Member for Aldershot yesterday. He said: That we should be reduced, largely by the ineptitude and mismanagement of our Government to a position where we are almost entirely dependent on the goodwill of the United States is a matter which grieves and humiliates every British subject who thinks straight about these matters. The right hon. Gentleman the Member for Aldershot has no shame. He feels no humiliation. No Tory ever feels any shame. What the right hon. Gentleman really wanted was that the people of this country should feel some sense of shame so that with the propaganda which he and his kind are all the time putting over, they will blame that shame and humiliation on this Government. That was the whole purpose of the right hon. Gentleman. So he went on to say: Actually we are in a far worse case—

Mr. Lyttelton

Would the hon. and gallant Gentleman do me the courtesy of reading the sentence following that last quotation?

Major Bruce

Certainly: I am not saying at all that the Socialist Government succeeded to an easy heritage in 1945, but—

Mr. Lyttelton

It was nice of the hon. And gallant Gentleman to read it.

Major Bruce

—but what I am saying is that almost every action which they have taken since has aggravated our position and has damaged our national fortunes. Today, we should not be discussing this: we should be emerging from some of our post-war difficulties; actually we are in a far worse case than we were when the last shot was fired."—[OFFICIAL REPORT, 5th July, 1948; Vol. 453, c. 74.] I gave the right hon. Gentleman the opportunity of withdrawing that remark and I reproached him with the seriousness of the statement he was making. Actually, of course, that is completely untrue, and the right hon. Gentleman knows that it is completely untrue. Indeed, if the right hon. Gentleman were prepared to examine some of the statistics which have been made available, he would know that quite the reverse is true.

As the right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) pointed out in his speech, this country has actually accomplished much since the end of the war. The right hon. Gentleman may not know, or it may not suit his own political party, that the country has done as well as it has done, but if we rely, as I think we are entitled to rely, on some of the figures which have been published by the Economic Commission for Europe, which were referred to by my hon. Friend the Members for West Wolverhampton (Mr. H. D. Hughes) last night, it is rather significant that of all the countries in Europe involved in the war this country should have attained a greater productive increase compared with 1938 than any other country and has done very much better compared with 1938 than this country did under a Tory-Liberal Coalition after the last war compared with the production levels in 1913. This is made quite clear in the economic survey presented by the Economic Commission, but the right hon. Gentleman says that we are in no better position today. Perhaps the right hon. Gentleman does not know—

Mr. Lyttleton

Perhaps the hon. and gallant Gentleman will refer to the fact that we have borrowed £1,000 million sterling from United States and have spent it.

Major Bruce

I am coming to that. Actually it is about £995 million. Yes, I am coming to it.

Mr. Lyttelton

Well, I hope so.

Major Bruce

The right hon. Gentleman probably does not know either, that despite the initial inferior position in which we found ourselves, there has been a gross capital formation in this country in the years 1946 and 1947 of very considerable dimensions and a net capital formation of something like £2,000 million. The right hon. Gentleman probably has not been up to the distressed areas or the former distressed areas. Probably he does not like to remember some the conditions in the distressed areas before the war under a Government of his administration. He does not like to remember some of the descriptions, for example, in "The Times" of 20th March, 1934, which said that the problem of the distressed areas in Durham and various other parts of the country was completely hopeless. If the right hon. Gentleman goes up to the distressed areas today—

Mr. Lyttelton

What about 1931?

Major Bruce

—he will see that very great progress has been made since the end of the war. Then there is agriculture, to which I see the party opposite are now paying some attention. It has not always been so. I quote from the "Daily Express," a paper not unfriendly to the party opposite. On 2nd May, 1935, it said: In 1932 there were working in the fields of Britain 697,400 labourers. Today there are only 687,700. In two years the number of men working on the soil has been brought down by 10,000. Ten thousand men driven from the soil, hounded out of the rural districts into the great cities to join the queue of those who seek work in the factories. What a terrible picture of failure this is! What opportunities thrown away. Opportunities to build up in Britain a thriving agriculture having at its very doors, the richest and biggest market for agricultural goods in the world!

Mr. Lyttelton

Would the hon. and gallant Gentleman like to go back to after the war and tell the House how many fewer acres there are under cultivation under this Government than there were at the end of the war?

Major Bruce

I am perfectly willing to debate agricultural statistics with the right hon. Gentleman at any time. The right hon. Gentleman is as aware as anybody else that after the intensive cultivation of the war, a good deal of land has had to be rested. Everybody knows that, but if the right hon. Gentleman thinks that the record is nothing to compare with the abysmal record of his party, he is very much mistaken, and if he is not careful I will quote Lord Beaver-brook in even further support. It is not only that; it is a whole series of other things which have been done since 1945. Anybody, other than those who are politically purblind, knows very well—

Mr. Odey (Howdenshire)

Will the hon. and gallant Member allow me to interrupt?

Major Bruce

—that this country has accomplished a very great deal. The right hon. Gentleman and the hon. Member for Chippenham emphasised that the main reason for failure, according to them, was the fact that my right hon. Friend the Chancellor of the Duchy of Lancaster had wasted and frittered away the American loan because of his cheap money policy. It is interesting, therefore, to read a pamphlet emanating from the party opposite in 1944, which illustrates roughly the policy my right hon. Friend carried out, and which represents one piece of wisdom in an otherwise dull pamphlet. This pamphlet, called "Work" said: One important form of assistance which the Government can afford to industry and employment is to keep interest rates steady and low, and ensure conditions which will render plentiful credit available to sound borrowers. In the interests of the whole people it must do this continually. … This is exactly what the Chancellor of the Duchy has done, and it is exactly the policy put out by the Conservative Party in 1944 as being the desirable thing to do after the war. Of course, the right hon. Gentleman will say immediately, "Well, we did not believe in doing it to excess." This is one of the statements which the right hon. Member for West Bristol (Mr. Stanley) comes out with periodically. What the Tory Party mean by excess is that they do not like cheap interest rates being pushed to a point where there is full employment. It is when there is full employment that they say the cheap money policy is pushed to excess. The burden of the argument of the right hon. Gentleman and of practically every hon. Member opposite, apart from the two I have mentioned, has been to decry everything that has been done.

If one examined the record of the Party opposite in relation to their own balance of payments, one would probably get some clue to what would have happened had a policy been followed out according to their way of thinking. A few weeks ago an interesting question was asked by my hon. Friend the Member for Coatbridge (Mrs. Mann) in which the Chancellor was asked to re-value, in effect, the imports and exports of this country in the year 1938 and to give a figure of what the visible deficit would have been in terms of trade between ourselves and other countries based on the level of prices prevailing in 1947. My right hon. and learned Friend gave a figure of £1,160 million. If one applies that to the balance of payments in the year 1938, and makes other valuations on a comparable basis of the invisible exports and imports, at that time one finds that, instead of having an unfavourable balance—which they did in 1938 of some £44 million—if they had to have the same unfavourable conditions of trade that we have to endure today as a result of American dominance and a world shortage of dollars, their deficit, without having lost anything in the war and without having suffered any damage, would have been in the neighbourhood of £644 million, whereas our deficit last year, despite all the damage we have sustained, was only £675 million. So the right hon. Gentleman would not have been in a much better case either.

More than that, even though the party opposite in 1938 had this comparatively small deficit with the United States, at the same time it had over 1¼ million unemployed, and if at that time it had had any assistance from the United States, the unemployment figures under their policy would have gone up to about four million.

Mr. Joynson-Hicks (Chichester)

I wonder if the hon. and gallant Gentleman would kindly indicate why, if everything is so satisfactory now and the policy of the Government is so successful, there is any need for Marshall Aid?

Major Bruce

The need for Marshall Aid has been explained adequately, not only by my right hon. and learned Friend but also by the hon. Member for East Aberdeen (Mr. Boothby) and my hon. Friend the Member for North-West Hull (Mr. Mackay). It arises quite clearly, not as a purely British phenomenon but as something which is needed by all Europe because of the devastation it has sustained.

The next argument that the right hon. Gentleman made yesterday was in relation to this country's attitude to other countries which are not of our political persuasion. The right hon. Gentleman wondered what the position would be it the rôles of the United States and this country were in reverse—if a Socialist Britain was assisting a capitalist America. Underlying the whole speech the inference was that this country would not behave with the same generosity which so many hon. Members have quite rightly attributed to the citizens of the United States. Yet the right hon. Gentleman could not see fit to mention that during these two years, despite the difficulties we have undergone, despite the fact that we have had to borrow money, we have made over £547 million available to other countries in Europe, we have made advances to Allies of about £130 million and to the International Relief Organisation, £11 million.

Mr. Lyttelton

The hon. and gallant Member misses the point. What I said was that I did not think the Socialist Government were prepared to extend assistance on a big scale to Governments in whose political system they did not believe. I happen not to like the political system in Spain, and if the hon. and gallant Gentleman will examine the pronouncements of his party on trading with Spain, he will see the justice of my remarks.

Major Bruce

I am concerned not only with what the right hon. Gentleman said, but also with what he deliberately omitted, and he deliberately omitted to say—whether by accident or design—that this country had seen fit to render assistance to other countries of Europe. I think it well that it should go on the record. We have made £90 million available to Greece, we have made £25 million available to the Polish Resettlement Corps and to Polish resettlement, and we have made £119 million available to Germany, of which £58½ million was in dollars. To U.N.R.R.A. we have made £172 million available by loan, making a total of some £547 million. Everybody knows, and the right hon. Gentleman opposite knows if he cares to think about it, that these sums have not been given in relation to any political faith or persuasion abroad. These have been given by our people to relieve genuine suffering in other countries. It is over £500 million and the right hon. Gentleman was talking of the loan to the United States of America, which was £1,000 million, so we have already lent half of what we have borrowed elsewhere, which is not the action of a parsimonious people who are merely concerned with the political persuasions of those to whom they lend.

On this side of the House we have no war against little children, no matter to what political parties their parents may belong. We should be extremely proud that we have been able to help, but it was significant that the right hon. Gentleman omitted to point it out. He was so keen on making his prejudiced, party case, in which he desired to prove that the necessity for Marshall Aid was due entirely to the machinations of the Government, that he neglected in ordinary fairness to mention this. In fact, what the Tory Party have been doing these last two years is conducting a smear campaign up and down the country—a smear campaign—

Mr. Brendan Bracken (Bournemouth)


Major Bruce

I am glad hon. Members opposite are getting self-conscious.—[An HON. MEMBER: "A tinker's cuss."]—Every time this country has had from overseas during the last 2½ years news of some good achievement, one thing has been perceptible immediately from this side of the House. One watched the faces of right hon. Gentlemen opposite when we concluded the Canadian Wheat Agreement. Their faces dropped and they were dismal, because they did not like any good news at all. In the same way, when an agreement was concluded with the Russians for a supply of coarse and other grains for this country, the faces of right hon. Gentlemen opposite dropped immediately. Only when there has been bad news has there been the faintest sign of pleasure and elation in the party opposite. They have completely abandoned any objective way of looking at any problem. Their attitude is well exemplified by the week's slogan from the Conservative Party "Weekly News Letter" of 29th March, 1947. Their delightful slogan in this Letter which is circulated to all Conservative party officials, shows how they regard the electorate to whom they wish eventually to appeal for their fates.

Mr. E. P. Smith (Ashford)

On a point of Order, Mr. Speaker. Has this any connection with the matter we are discussing?

Major Bruce

With respect, Mr. Speaker, I was answering some of the contentions put forward yesterday by the right hon. Member for Aldershot. I am sorry that he should be embarrassed by his party's weekly slogan, but I am not at all surprised. This was the slogan in their "Weekly News Letter" for 29th March, 1947: Empty heads put them in, Empty bellies will put them out. That is the hope of the party opposite. They hope that, whether by outside pressure or by anything adverse to this country which happens abroad, the screw will be applied on our people. That much is implicit in their slogan.

With my hon. Friends on this side of the House, I have very great faith in the people of our country. Despite the machinations of the party opposite and the squalidly useless nature of their contributions in this Parliament, I am confident of the ability of our people to surmount these obstacles. I sincerely hope that the House will support my right hon. and learned Friend in his endeavour to get satisfactory arrangements concluded to bring Marshall Aid into full effect, not as an opiate, but as a spur to action, which I think the people in this country are fully capable of making.

7.3 p.m.

Sir Stanley Reed (Aylesbury)

I hope with your permission, Mr. Speaker, and the tolerance of the House to follow a course which has been conspicuously absent for the last half hour—that is, to say something about the question of Marshall Aid which is now before us. I regret that I have nothing really new to say, but there are one or two points which I should like to put and to emphasise to the Financial Secretary.

I shall vote for the Motion which is before the House, without the slightest doubt in my mind that I am doing the right and correct thing. I shall do so, frankly, with a sense of great anxiety and a sense of some humiliation that we have been brought to the stage when we must accept Marshall Aid, or, I think, cease to be an independent and great Power. I do not know whether the Financial Secretary is younger or older than me, but perhaps he will remember a very amusing essay by J. M. Barrie many years ago on, "The perils of not smoking." I want to speak first of all on the perils of not accepting the Marshall Plan as it is put before us today.

The figures which my right hon. Friend the Member for Aldershot (Mr. Lyttelton) placed before the House early in this Debate have never been challenged. He said that, without Marshall Aid there would very soon be an 8d. meat ration, there would be at least one-third cut in sugar and fats, serious cuts in bacon, eggs and cheese, and about 1,500,000unemployed."—(OFFICIAL REPORT, 5th July, 1948; Vol. 453, c. 67.) I wonder how many Members of this House who are able to have two meals a day in the refreshment department look at the rations in their household when they go home at the end of the week. If, when they look at those rations and see the amounts on which tens of thousands of people in the country areas have to live, they contemplate any cuts in those rations, they will see the supreme folly of thinking that these cuts could be made without imposing on our people hardships which are almost inconceivable, and without inducing a state which would shatter our social system and probably undermine, if not overthrow, the whole basis of our constitutional working and the foundations of our freedom.

When we are told that a rejection of the Agreement now may possibly entail its revision later with the new Government in the United States, I would ask this House to consider what will be the outlook of the new Government and their attitude towards any possible revision. I accept the Agreement with all its conditions, with the assurance from the Chancellor, which was endorsed by those who speak with the great authority of practical experience, that it does nothing to affect our power to pursue a policy of Imperial preference and does not in any substantial measure undermine our financial independence. But we shall upset the plan unless we are quite clear in our minds exactly what the plan is.

There has been much talk of the magnanimity and generosity of the American people; we endorse both and are profoundly grateful. But the American people do not look upon this as a gesture of magnanimity or as an expression of generosity. From the American standpoint it is regarded as an investment in the recovery of the economy of countries in Europe, in which they consider they have a vital interest. If we look upon this aid as having anything but this importance, we shall lead ourselves up the garden path and eventually have a very sharp awakening.

Because it is an investment, the American people will want it treated as an investment, and subject to the same control—or, rather, the same examination—as any business investment in the annual or the half-yearly balance sheet. I hope that I shall not forfeit any good opinion which I may have amongst my hon. Friends on this side of the House, by saying that, because it is an investment—subject, I believe, to an annual appropriation by Congress, not the State Department, every year—I welcome the conditions which are attached to it and the fact that two of their most distinguished Administrators are now in Europe, one in Paris and one here to watch exactly how the funds liberated by this investment are used.

There is a very great reason why there should be a scrutiny of the user of these funds, because of past experience with the £1,000 million American Loan as it melted away like hailstones in the sun. But I will not say that it was frittered away; the Financial Secretary can probably produce a very good accounting statement as to how that loan was expended, and of the extent to which our sterling obligations in the sterling group affected the whole calculation. The House cannot forget, however, that the Chancellor of the Exchequer assured us that ample provision had been made for the convertibility of sterling, but that within five weeks he had to shake the whole financial status of the sterling group by saying that that could no longer be done.

On those and other grounds, we are entitled to ask that there shall be the utmost watchfulness on the user of these funds, to see that they are scrupulously applied to the purpose for which they are intended. Watchfulness, I would emphasise, should be our keynote in the whole administration of this Marshall Aid. Now, I have confidence in the Chancellor of the Exchequer in exercising that close scrutiny, if—I emphasise, if—he is allowed to pursue his own policies without being pushed away from them by pressure from any section of his own party. However, I will say this—and it will be the only word which is in any way polemical or partisan in my speech on this matter—the Chancellor cannot have it both ways. He cannot call on these people for hard work, savings and economies, and at the same time say that those who should benefit should be only the extravagant and the "spivs," and that the man who is thrifty shall be penalised at every stage by taxes, Estate Duties, and now the capital levy. I regret to say that the Chancellor's action there has knocked the bottom out of the National Savings Movement—the Movement to which I have, year in and year out, devoted such energies as I could, in a constituency which has one of the highest records of any community in the kingdom for National Savings throughout these years.

I hope that my right hon. Friends on the Opposition Front Bench will regard it as a particular and careful duty, day in and day out, to watch the expenditure of the aid given under this Marshall Plan, to see that not a single dollar is wasted. It is the responsibility of this House not to press upon the Government policies and actions which will divert any part of this loan from its most productive purposes. If we honestly search our hearts, which of us can say we have not pressed on the Government certain actions which should not have been pressed, in view of the paramount necessity of economising on our dollar and sterling obligations?

I abhor the lack of large newspapers as much as anybody in this House, but not because I think that several more columns should be devoted to a fuller reporting of murder cases, or to printing three photographs of the latest arrived film actress, or devoting another page or two to what are called "comic strips." I want to see a much more liberal allowance of petrol, because I know how it affects the whole social life in country districts; and speaking from a personal point of view, instead of having to crawl home by the slowest train in the world, at one o'clock in the morning, I might travel in more comfort by car. Also, I am a heavy smoker, and I object to paying 4s. for 1s. 10½d. worth of tobacco; it is even less than that now, because tobacco today burns so much more quickly. But I do not want to see—and, if I may say so, I do not want to see any hon. Member of this House urging—larger newspapers, more petrol and more tobacco while the country and the people are going short of meat and the raw materials for our industries.

I ask whoever winds up this Debate from the Government and the Opposition Front Benches to make a far more serious attempt than has been made so far to bring home to the country as a whole the stark truths of the economic position. As I go up and down my constituency, and about the country elsewhere, nothing depresses me more than to find, in all classes of the community—none is exempt—a feeling of complacency which has no relation at all to the realities of the situation. We have been so debauched by Lend-Lease and the American Loan that we have not begun to realise the real nature of the effort needed by the whole community, without exception, if we are to win our way to economic independence on that 4th July two or three years hence, of which my right hon. Friend the Member for Aldershot spoke.

In these pleasant days it is not unsatisfactory to hear that there was a record attendance at Wimbledon; that there was the largest ever known gathering at Henley; that last Saturday was a great day for English sport. Sport! Was ever a word more misapplied? Ah! these will not win our way back to Independence Day three years hence, if that path is to be firmly trodden. On speakers for the Government, now and in the immediate future, rests a very great responsibility. Our people have to be told, in their passion, and their just passion, for social security that they cannot have it without paying for it in work, economy, and in raising our industry to the highest possible level. How many of them realised, until the figures were given, that our general insurance will cost us £452 million a year? How often was it said that under the National Health Service Act medical assistance was to be free—free from the cradle to the grave? Can anything be free in this country, or any other? It must be paid for in some way? That latter will cost us £152 million. All those responsibilities, which we all share, which we are all glad to see, and which we all hope will be for the enduring benefit and happiness of our people, have to be paid for by industry; and if they are not paid for by industry, the whole system of our life will be shattered beneath our feet. Can anybody seriously urge that today these stark facts are appreciated by the general body of the community?

I hope I shall not be out of Order in referring in a sentence or two, to the effect of unofficial strikes. If only those dockers who paralysed the trade of London for three weeks, out of a sense of loyalty—and that sense of loyalty was strong—could be made to appreciate their loyalty to the community as a whole, and what would be the effect on that community of that £20 or £30 million of our trade lost and totally irrecoverable. Never will I, inside or outside this House, speak a word of criticism of the mining community; miners have a hard, difficult and dangerous job to do. But have they been brought to realise, and do they realise today, that it is on their efforts, their industry, their regularity and their productivity that the whole basis of full employment depends, and that without coal, we shall have an increasing volume of unemployment, with all that that means to people, where unemployment has bitten into their souls because of their dreadful lessons of the inter-war years?

Nobody can pretend for one moment that Marshall Aid, however wisely administered and however carefully followed up, is a complete solution of this economic disequilibrium which has arisen out of the period during the war years, or that it can immediately or soon readjust that tremendous gap between the productivity of the Americas—not only North America, but South America—and that of Western Europe, which she must have but cannot find the means to pay for. But this aid is an opportunity. It does give us time to readjust our economies to these changed conditions. I believe it may give us an opportunity so to narrow that gap that it is not oppressive, and possibly even to close it. But if we do not face this emergency in this spirit, if we waste one single dollar of what comes to us under the Marshall plan, I am sorry to say that our last state will be worse than our first and we shall sink irrevocably into a decadent and dependent nation.

7.20 p.m.

Mr. Solley (Thurrock)

The hon. Member for Aylesbury (Sir S. Reed) referred to the dockers. I number among my constituents some of the Tilbury dockers. If they had heard him give his vote of confidence in the Labour Chancellor of the Exchequer, they would have said, had they used legal tags, Res ipsa loquitur—the thing speaks for itself. They might also have said, had they earlier in this Debate heard another Conservative speaker, the hon. Member for Chippenham (Mr. Eccles) give his reasons for his support of the Marshall Plan, that they would oppose it for precisely those same reasons. The hon. Member for Chippenham said, in effect, that in his view the Marshall Plan was designed to prevent the consolidation of Socialism in Europe—he did not put it in that language but that was the purport of what he said.

Mr. Astor

He said Communism.

Mr. Solley

He used the word Socialism. He went on to say that, over and above that, it was an instrument for the creation of a war machine which would ultimately be used against the Soviet Union. I believe that I am fulfilling the mandate of the people who sent me to this House, including the dockers of Tilbury, when I say that I cannot possibly support a policy which will lead to a third world war or the obliteration of Socialism in Europe.

Reference has been made to the precise terms of the Agreement with which we are asked to concur. I ask hon. and right hon. Gentlemen to consider the nature of some of the obligations to which we are asked to agree. In Article I (1) we are told that the U.S.A. will only give assistance which is approved by it, and that such approval is subject to the American legislation dealing with this matter. We have heard from hon. and learned Members, in particular the hon. and learned Member for North Hammersmith (Mr. Pritt) whose speech, so far as the legal interpretation of these documents is concerned cannot be challenged in any quarter of the House, of the difficult obligations which are contained in this American legislation.

We are entitled to ask with what sort of contracting party we have to contend on the other side. We must bear in mind that we shall not have as the opposite contracting party the millions of American citizens who wish us well. I am not one of those who would, for a moment, deny the tremendous bond of sympathy between the common man in this country and the common man in the United States. But as the opposite contracting party we shall have the financiers and politicians who were responsible for the Hartley-Taft Act, a piece of anti-strike legislation in comparison with which our Trade Disputes and Trade Unions Act, 1927, might be regarded as a beneficial piece of legislation by a progressive Government. We are dealing with financiers and politicians who are responsible for the notorious Mundt-Nixon Bill, of which Mr. Henry Wallace, in his Madison Square Gardens speech of 11th May, said: It is the greatest threat to tree trade unions, academic freedom, scientific development and the progress of mankind which the enemies of progress in the United States have ever conceived. That is the political character of the opposite contracting party—not the people of the United States, for whom I have the greatest respect, but the Government of Wall Street financiers and capitalist politicians.

Those are the people with whom we have to contend. Therefore, let us look very closely at those obligations which we are undertaking and at the rights which we are giving to the opposite contracting party, bearing in mind that we are dealing with that sort of people and not with the common people of the United States. In section 2 of this same Article the Government of the United Kingdom, reaffirms its intention … to continue to adhere to the purposes and policies of the Economic Co-operation Act of 1948. Hon. and right hon. Gentlemen will notice that the operative words are "to continue to adhere," implying, as is the fact, that at all material times we have adhered to the purposes and policies of the American legislation. The words are carefully chosen. In the preceding section the Economic Co-operation Act is referred to inter alia as including the terms and the conditions thereof. In Section 2 we are asked to adhere not merely to the terms or conditions of the Act but to the purposes of the Act and the policies of the Act.

Before we concur, we must ask ourselves what are the policies, what are the purposes of the United States Government to which we are asked to consent tonight? I can think of no greater authority than is contained in the words of President Truman himself in his message to Congress on 19th December last. He said: It is essential to realise that this programme (E.R.P.) is much more than a commercial operation. It is a major section of our foreign policy. Day in, day out, its operations will affect and be affected by foreign policy judgments. To that we, a Labour Government, are asked to adhere. What is the foreign policy of the United States Government? I would rather produce as evidence the words of an eminent progressive American statesman than give my own opinion, although I agree completely with what he says. Mr. Henry Wallace, on 12th January last wrote in the "New Republic" as follows: Steadily during 1947 our help to foreign lands has been in the spirit of fighting Russia, not in the spirit of helping starving humanity. Steadily the military men, the Wall Street Press and the State Department have been waging psychological warfare against the American people to blind them to the fact that our unilateral help to Europe intervenes in the internal politics of nearly every Western European nation; that the ordinary European worker looks on it as naked Imperialism and that in the end the cold war will end in bombs and expeditionary forces. With the Truman Doctrine in Greece as its core, the so-called European Recovery Programme is a plan to interfere with the social, economic and political affairs of countries receiving aid. We are saying: We will help you if you have our kind of Government and subordinate your economy to ours. That is not "Pravda": that is not a Communist speaking. That is a gentleman whom I myself heard upstairs in this building, declare his undying faith in the capitalist creed. That is the policy of the United States Government as he describes it. I say to hon. Members of this House, and in particular to Labour Members, Are you prepared to affirm tonight your continued adherence to the purposes and policies of the United States Government as described in the reference which I have just given to the House?

This matter does not end even there because some of these purposes, apart from the general and main purpose of foreign policy, have been described quite fully by different American authorities. For example, as far as the Empire is concerned, we have the evidence of ex-Assistant Secretary of State Mr. Clayton on 20th January of this year, as follows: E.R.P. will eventually result in a complete elimination of the Empire preferences of Britain and other nations. If we want any further evidence about that the United States House Select "Kunkel" Committee's report of 6th March of this year stresses, I quote the actual words: The desirability of obtaining a guarantee from the British of equal access for American private capital to development possibilities in the British dependencies and Colonies. They are going to get it if this Motion is passed.

Then there is a further policy to which we are asked to adhere, that to which Mr. Truman referred when he presented E.R.P. to Congress. He had this to say about shipping, and as I represent a dockside constituency I am concerned with what he did say on this subject. He said: Because of world steel shortages, sale or transfer should be linked with a reduction or deferment of the projected shipbuilding programme, consistent with their long-range maritime requirements. Putting that into ordinary straightforward English, he was asking us to make new Jarrows in England. I wonder what sort of reception I shall get from the ship repairers of Tilbury and the Port of London when I go to them and I find, as will probably be the case, mass unemployment as the result of this policy.

There is another aspect of American policy to which we are being asked to adhere. It is to allow them to control the policy of this country. For example, Mr. Richard Bissell, who is assistant to Mr. Hoffman, said on 24th April of this year that the purchase of E.R.P. goods should be carried on as largely as possible through private channels rather than through the building up of foreign purchasing missions. That same "Sunkel" Committee, to which I have referred, said with regard to the national programme of this country, trying of course to appease the possible distress of the Americans: The nationalisation programme (in Britain) is being carried along with reasonable slowness. I have no doubt its slowness will become such that if we accept this programme—

Viscount Hinchingbrooke (Dorset, Southern)

Hear, hear.

Mr. Solley

—the hon. Gentleman apparently approves, and I notice he is one of the supporters of the Marshall Plan—the slowness will become such that it will end up at a dead stop. Mr. Hoffman himself, according to the "Daily Herald" report of 14th May, said: If a plan came to us asking for dollars to modernise the steel industry, and the British Government announced a nationalisation scheme for that industry, help might have to be denied. As I am being asked to concur in that sort of policy, I must ask myself a number of questions. Is this in accordance with the Socialist programme of 1945 as set out in "Let us Face the Future"? Is this a policy which is in the best interests of the constituents whom I have the honour to represent? It is with great distress and after much consideration that I have to answer both those questions in the negative. For the political background which I have put before the House, I have not sought a single authority except those given from the present Administration of the United States, from the President downwards or from eminent progressive American statesman such as Mr. Wallace. I sought no evidence to make my case from any other quarter, and in the light of that, I cannot see how it is in accordance with Socialist policy to support this programme.

Outside the political implications, as a commercial plan it seems to me, on the basis of pure capitalistic economy, that this plan must necessarily fail. It is attempting to do what in my submission is quite impossible. Our present shortage of dollars is not anything new. We were running an adverse trade balance in 1939, and even then we saw the results of a disproportion in the ratio of imports from hard currency areas to the exports to those areas. This is the result of the growth of capitalism in the United States and in South America and so on. It seems to me that this plan could not possibly succeed, not even by way of ameliorative effect, because its real effect would be to increase the competitive capacity of the United States in all the markets now open to us. Therefore, its effect, in a comparatively short time, would be to disestablish us in many of the markets to which at present we have access.

Apart from the political implications of the plan, with which as a Socialist I cannot possibly agree, from the purely capitalist point of view, it is a plan which I should expect even Tory business men on the opposite side of the House to oppose in their own interests. I say that E.R.P. will leave our industries exactly where it found them—in fact possibly in a worse condition. I do not believe that the bankers and financiers who designed E.R.P. intended to do anything else. I believe it is a disaster of the first magnitude for this country to sell its grand and great heritage for a mess of pottage. We ought to think twice before we accept it, and we Socialists ought to think more than twice.

7.36 p.m.

Sir Arthur Salter (Oxford University)

I hope that people both outside this House and in other countries will understand as well as hon. Members in this House understand what it is that the hon. Member for Thurrock (Mr. Solley) represents and of whom he is the mouthpiece, although he sits here not as a Communist, but as a member of the Labour Party.

Mr. Solley

It is Mr. Wallace and President Truman.

Sir A. Salter

I hope that they will value what he says as accurately as we shall do. He asks what manner of contracting party it is with whom we are here dealing? I shall attempt to reply to that question in a few moments, and I can devote the more time to it because there is nothing in the way of serious argument from the hon. Member which I need to answer. He seemed to regard it as an outrage that it was required as part of this arrangement that we should endeavour to act in such a way as to further its purposes. He told us that the disequilibrium in the balance of payments was due to the fact that the dollar countries were exporting more than non-dollar countries were and he said that the real trouble was that there was capitalism in America. I suppose he meant that capitalism in America had resulted in the making of more goods than otherwise would have been made. How can we deal with arguments of that character? He then asked what kind of person or body of persons we were dealing with in America. One would have thought from what he said that we were being offered a transaction with the nature of a Shylocklending arrangement.

I do not think that anybody in this House can have heard the exposition by the Chancellor of the Exchequer of the character of this scheme, and the nature of the conditions with which this scheme is associated, without realising several things. First, that this assistance is absolutely indispensable unless, as the Chancellor said, we are to have both an immediate and severe lowering of the standard of living and large unemployment through shortage of raw materials. Secondly, the conditions associated with this scheme are magnanimous, quite apart from the generosity of the aid itself. The consideration shown to the parties who are the beneficiaries under this scheme is indeed remarkable. Just as in the history of financial arrangements between Allies and sympathisers in war, Lend-Lease was beyond precedent both in scale and generosity, so this Marshall proposal is beyond precedent in peace. There has been nothing like it or to compare with it. The hon. Member for South Nottingham (Mr. N. Smith) did indeed attempt to suggest there was something of a precedent in our financial actions and policy as a creditor country in the 19th century, and in support, gave us an exposition, not for the first time, of those "Alice in Wonderland" economics which always entertain the House, but, I fear, sometimes bemuse and deceive some of his more innocent and ignorant colleagues.

But if we put aside nonsense of this kind, it is certainly true that in its scale and in its character this proposal has no equal in its generosity, constructive purpose and magnanimity. I hope very much that, while there will be opposition on the part of the Communists and the few fellow travelers—

Mr. Solley

In the remark about fellow travellers, does the right hon. Gentleman include those in both parties who are being taken for a ride by Wall Street?

Sir A. Salter

I do not think that I need define further what I mean by fellow travellers. It is pretty evident to everyone here. What I was about to say was that I hope that they will be alone in opposing this Motion.

Hon. Members


Mr. Scollan (Renfrew, Western)

I should like to ask whether no Member of this House is to be allowed the freedom of his independent opinion without being dubbed a fellow traveller or a Communist?

Sir A. Salter

I was addressing my remarks to people who certainly are not fellow travellers. I was expressing a hope, which I am entitled to express, that certain Members who are, of course, perfectly free to speak and vote as they like—Members who are about as far from either Communists or fellow travellers as it is possible for men to be—will not on this occasion join with them in a kind of unholy alliance. That is my hope. I agree that some of these Members are actuated by a feeling that there is something humiliating in the receipt by us of aid of this kind. I would respectfully suggest that whatever there is of humiliation does not come from this proposal but from the situation which makes this offer essential to us. I would say to those who have certain anxieties about the Empire and Imperial Preference that there is absolutely nothing in this assistance Agreement, in the conditions and interpretative arrangements, which adds in any way whatever to the obligations and restrictions to which we are already subjected.

Sir William Darling (Edinburgh, South)

Does the Minister say that?

Sir A. Salter

That is my view. I would like to know what the Government say about it.

Mr. Baxter

Is the right hon. Gentleman aware that in the Bretton Woods Agreement, one of the clauses agreed to by this House was that Imperial Preference should be scaled down with the idea of eventual elimination? That was in the Agreement. That was fought out at Geneva. I think that the Government did very well in resisting that, but does the right hon. Gentleman really think that America has dropped the intention to achieve that object?

Sir A. Salter

That is not quite what I said. I said that whatever may be the obligations and restrictions to which we are at this moment subject, they are, in the matters which the hon. Gentleman has in mind, in no way added to or aggravated by this Agreement as I read it. I believe that to be true. It would therefore be extremely regrettable if we had a composite Lobby composed of the Communists and fellow travellers on the one hand, and people who, in every other possible respect apart from this question, are divided as far as possible from them in their general political attitude.

The hon. Member for Thurrock spoke about the political purposes of America in this matter as if political purposes are in themselves evil. I would not suggest, as the Foreign Secretary seemed to suggest a little time ago, that the motive of America is purely humanitarian and that there is no political purpose. Of course, there is a political purpose. Without that political purpose this Act would not have gone through. But what is that political purpose? It is the same political purpose that we had in fighting the recent war—to save our own liberty, our own freedom, and to help others to save theirs. That is the purpose, the sole political purpose, as I see it, of this great constructive scheme of America's. To talk of it as undue and unwarranted interference with other countries, or as American Imperialism, seems to me a gross distortion.

Having been led into saying rather more about the speech of the hon. Member for Thurrock than I had intended when I started, I do not wish to conduct a prolonged argument this evening in favour of this Motion. It is indeed quite unnecessary. It is obvious that I shall have the pleasure which I do not have too frequently nowadays, of finding myself one of a great majority in the Lobby when I vote tonight. I hope, for the reasons I have given, that the minority will not be artificially and misleadingly increased by the union of opposites. But there are one or two things which I should like to add.

There was a little interchange, a difference, between the Economic Secretary to the Treasury and my hon. Friend the Member for East Aberdeen (Mr. Boothby) as to the motives of America in putting forward this scheme and as to the alleged need of America to have this scheme now for the purpose of maintaining or increasing American exports. It is most important that it should be realised that in this matter the Economic Secretary is clearly and obviously 100 per cent. right. I agree that there will be a long-term disequilibrium of the balance of payments between the dollar and non-dollar countries which will be serious, and that the time may come when it will be in the interests of America to sell more exports than she will be able to sell having regard to the ability of other countries to pay for them at that moment. A time may come when America will have an interest in directing her policy to maintaining her exports above the level which otherwise they would reach. But that time is not now.

There can be no question whatever that if America had said to herself—whether Congress, the Government or the country as a whole—"Will it be of benefit to our economy as it now is to stimulate exports by this assistance, or will it not?" the answer is certain. Seeing that it will be a disadvantage in relation to her inflation, that it will increase her prices and will prevent American consumers, who offer a very big market at this moment, from consuming many of the things they would wish to but which will now be exported with the aid of this assistance, they would have rejected this Act. It is in spite of that, and in spite of the heavy burden of taxation, that they have done this for the wider purposes, the purposes expressed in the Preamble to this Agreement.

Mr. Scollan

Does the right hon. Gentleman believe that there is no long-term economic advantage to the United States in view of the fact that they bought the whole of the territory of Alaska from Russia for £5 million and that they will have bought the whole of the British Empire for £1,500 million?

Sir A. Salter

I will not now argue about the accuracy of that description of America's activities and policy. I agree that America will have a long-term advantage in the recovery which it is hoped to secure with the aid of this proposal. But I am sure that had the problem been regarded as one of economic advantage, the adverse immediate effects on the American economy at this moment would undoubtedly have led to a rejection of this Act. What has led to this American proposal is, first of all, the political purposes which we have already discussed, reinforced by the humanitarianism of America. I hope that the statement of the Economic Secretary, with which I entirely agree and which was authoritative and clear, will have the effect of preventing not, indeed, Communists and those who speak for them, but those who honestly but mistakenly use the same argument, but are mistaken as to the real position, from repeating that argument.

Having said that, I agree that the time is likely to come, seeing that this disequilibrium will last much longer than the period of Marshall Aid, that it will be of advantage to America to direct her policy in various ways towards closing or diminishing what may be a considerable gap in the balance of payments. When the time arrives, it will substantially help the solution of the problem if it is found possible to make arrangements by which a great deal of American capital is attracted into colonial development.

If one looks round for opportunities for really productive investment on anything like the scale appropriate to the developing production of America, and tries to find the regions of the world where the two essential conditions can be found—opportunities for development, and a suitable political framework which will ensure the investor that his project will have a reasonable chance and that he will not be robbed of its fruits by confiscation—the colonial areas of our own and other Marshall countries are among the most important. I was sorry that the Economic Secretary seemed rather to deprecate this kind of investment, and held out very little hope of a development of that kind on a large scale. I think there are very great opportunities, and that it will be in the interests of both the American economy and also of the Colonies themselves, because they cannot possibly, otherwise, get as rapid and as free development as they need in their own interests. It is also in our own interests, because we cannot ourselves provide the very large capital for export which is required. Our Government and the Colonial Governments and the American Government will, I hope, look increasingly to this possibility in future.

There are only two other things I want to say. First, the Chancellor of the Exchequer said that he hoped, with the aid of the Marshall assistance, that he would be able to maintain our reserves at about their present figure. I hope he will, but I do not see very much prospect of it. On the basis of our present achievements and of such action as has been taken and has so far been announced, I see very little prospect, even with Marshall Aid, of maintaining our reserves at approximately their present figure of a little under £500 million. Nor can I see how, even with Marshall Aid next year, we can, on any policy which we are now pursuing or on any line of action which we can now observe, get over 1949 without a crash, by which I mean without such a shortage of dollars as will make it impossible for us to import adequate raw materials to keep our industry in full production.

In that connection, I should like to say that we must not entertain illusions as to the future attitude of the American Congress and Government. They have indeed been astonishingly magnanimous in their relations with countries whose policies are very different to their own. As an Englishman, I cannot but look, not only with admiration but with a certain sense of shame, on the contrast between our conduct and the way in which, in a Presidential year, America has kept the whole of her foreign policy and the whole of her Marshall Aid policy on a bi-partisan basis and has not allowed them to be interfered with to any substantial extent by internal political differences, even in such a year. When I contrast that with the Labour Party's attitude to The Hague and the efforts to convert the only possible kind of union between Western Europe, namely, a union of free Governments, into a union of Socialist Governments, I think that we cannot but regard the difference between the American position and ours not only with admiration but with some sense of humiliation.

Magnanimous as Congress has been in offering her aid to other Governments, whether Socialist or not, we must not be misled into thinking that we shall not have a very critical examination of the progress which we have made when it comes to the appropriation of the sums for next year. I think that the general American attitude is something like this: "It is a matter for Great Britain and other countries whether they have Socialist Governments or not. We think they are mistaken. We think they would do much better with another kind of Government and policy, but we are not going to make any aid we give conditional upon the enforcement of our views in that respect. We must now see how, with their system, they are getting on. After the period of the first year, have they made such progress as could reasonably be made in that time? Have they contributed as much as could reasonably have been expected to the progress of other countries? If not, we must expect that there will be a very considerable impact on the appropriations next year and on the chances of this scheme being continued for its normal four-year period."

Mr. Scollan

May I ask the right hon. Gentleman whether it is not the case that, in the proposed Agreement, any new capital projects proposed or projected by this Government will have to get the approval of the American Government to satisfy them that no part of Marshall Aid is being used in the new capital programme?

Sir A. Salter

If Marshall Aid is required for a capital project here, as I understand it, the assent of those who administer that aid will be required to that project as a useful one designed to secure the objective which Marshall Aid was intended to promote. That does not mean that they will necessarily reject any kind of projects which they might, in their own country, prefer to manage in a different way. Certainly, their permission has to be sought for the financing of a project at their expense, to see whether it is likely to assist the purposes for which the money is provided. I cannot conceive anything more reasonable, more natural or more inevitable than that. We must, I think, expect that the continuance, and also the extent if there is continuance, of this Marshall Aid will depend a very great deal upon the way in which we and other participant countries are able to make progress, and to show progress, in the period which elapses between the present allocation and the further appropriations of next year.

8.0 p.m.

Mr. Fairhurst (Oldham)

The Economic Secretary this afternoon gave the answers to a number of points which I had intended to raise, but I think some very interesting points were brought out by the hon. Member for Wood Green (Mr. Baxter) which the Minister who replies tonight ought to attempt to answer. Then again the hon. Member for Chippenham (Mr. Eccles) and the hon. and learned Member for North Hammersmith (Mr. Pritt) found a measure of agreement. One suggested that a new American Administration could very easily look upon this Agreement with different eyes from those of the present Administration. The other suggested that the ruling class in America could do the same thing. In other words, both suggested that a new Administration could destroy the whole basis of this Agreement.

We ought to be assured that this Agreement will not interfere with any development of the present Government's policy in their effort to rehabilitate the economic life of this country. The more I examine this Agreement the more do I find that there are possibilities that American intervention could definitely retard, restrain or prevent this British Labour Government from pursuing a policy which it may have in mind. I instinctively think about steel and the nationalisation which is to come. The Government ought to reassure the House, first of all, that they will not be prevented by such intervention from pursuing a certain policy. Some time ago when this House was discussing the state of the nation I said that very few Members of this House were happy when the decision was taken to accept the American Loan, that it was a bitter pill to swallow for a nation which had crippled its economy in playing a major part in destroying European Fascism. I am no happier with regard to this present grant in aid and loan. The more I look at it the more convinced I am that it is possible for a hostile Administration in America to destroy its whole basis.

The Economic Co-operation Agreement is the easiest way out for the time being, but it is certainly not the only way out. It is almost unnecessary for me to remind the House that much of the economy of Europe was smashed, dislocated and distorted between 1939 and 1945 that Russian territory suffered ravages that even we cannot appreciate in this country, and that American economic progress suffered little or no damage during those years. Her cities were not smashed; neither was her industry dislocated nor her farms ravaged. I acknowledge to the full the part our American friends played in achieving final victory, but there was no comparison between the positions of Europe and Britain, on the one hand, and the U.S.A., on the other hand, when the war ended.

The handicap which Europe and Britain found themselves carrying in the next race after the war—the national self-sufficiency stakes—was unfair. The high ideals of wartime gave way to the hard economic facts of peace. Mutual suffering in war has not proved itself strong enough to carry the nations through an interim period of rehabilitation, and in many parts of the world today there are people still struggling for life with hope deferred. We in this country, difficult as some things are, do not fully appreciate the fact that in the world there are still millions of people who are very hungry. We must be aware that the world is tending to move into one of two ideological camps; and that the one which we have set up, a middle course and a progressively saner one, is likely to be destroyed between the meeting of the irresistible ram of Communism and the immovable post of Western Capitalism.

In my opinion, time is not on our side in this affair. We find victors and vanquished trying to plan their future economic salvation with a currency battle raging at the same time, as to what metal unit shall be the world's monetary equator. I feel like saying, "To Hades with Shylock the dollar; to the stake with the golden calf, and damnation to high politics." But even if we said that, we should find that all three were still with us. However, if the world could adopt some international measure of value which could be made constant, so far as it was a medium of exchange, and national values could be related thereto, I feel that the economic wants of all countries could find a common denominator which would play a big part in developing world trade as we all desire it.

I am satisfied that we are slowly winning in our battle with economic adversity. The question we have to answer, bearing in mind my previous observations, is: Can we accelerate the march to economic victory by becoming a signatory to the Aid Agreement, or are the conditions so onerous that the hard way is preferable and in the long run more satisfying? Does acceptance inevitably force us into the camp of an Imperialist American sphere? If the answer is "No," then this Aid Agreement can have an immeasurable value to the British nation.

What ought to be the policy of Britain? First of all, it should be a closer knitting of the fabric that binds Britain and her Colonies—a Commonwealth and Empire economic policy—setting ourselves out to achieve, ruthlessly if necessary, self-sufficiency to the highest degree in this land of ours. That means applying ourselves to the basic economic problems of this country—coal, steel, textiles and food. It means explaining to our people in this country the vital importance of every individual unit in the country, and that all people have their responsibilities in the not distant future and even now. It means that we should develop coal, textiles, agriculture, and engineering to a still higher point of efficiency than that of the present moment, because our salvation, as I see it, must in the end depend upon ourselves. If American Aid is likely to be used in any way other than to develop our physical life and our principal industries, it could very easily be lost.

Turning to agriculture, the Opposition have a new policy and we ourselves are now operating an agricultural policy, but I would say with regard to both those policies at the present time that they are not sufficient, they are not dynamic enough, they are not going as far as we could go in this country if we set ourselves ruthlessly to build up and develop our agriculture as we ought to develop it. When all is said and done, no matter how we co-ordinate our Empire and Colonies, I am satisfied that we can lift our own agriculture to a far higher point of efficiency than that of the present time. It may take a few years, but it must be done. We owe that to our people.

The same thing applies to coal, to textiles and to engineering. I think there lies the answer to all the questions we have been discussing yesterday and today—developing the vitality of our people and making them fully appreciative of their individual responsibilities, no matter in what industry they may be working If we can do that and can instil into our people the urge and the urgent necessity to put their backs into bringing this country of ours through this period, we shall not need to look forward to a possible re-enactment of what we are discussing now in another five or six years.

Those are the points I have to offer. I would say this—that raw materials for this country and a high level of employment are inter-dependent, and their inter-dependence suggests that American aid is urgent and necessary. So far as the European countries are concerned, it is vital and urgent that they should have, as soon as possible, all the capital equipment they desire and need to enable them to build up their economic life. Here is a point where Marshall Aid could be very useful indeed.

The last point I have to make is this. I have tried to think out what would be the effect in America itself if this Agreement did not go through. America has a productivity whereby she could soon fill her granaries and her store-houses with surplus goods. If she could not get rid of that surplus, what would be likely to be the reaction throughout the length and breadth of the world? Could we look forward again to what happened years ago—10 million unemployed in America, and the effect that would have on the British Empire and the rest of the world? I do not think American capitalism will see this Agreement through the same eyes as the position was seen in those days. That is a reason why I feel American capitalism itself, in its anxiety to maintain its own productivity, will not attempt in the future to find ways and means of smashing the Agreement once it is made.

8.15 p.m.

Major Haughton (Antrim)

During the course of this two-day Debate hon. Members, particularly on the other side, have drawn heavily on the sayings of very prominent American citizens—indeed the most prominent American citizen and politician—to prove their points. Personally, I am not in a position to draw upon the sayings of men of such eminence, but my father was born in America and I have many family connections and not a few business connections there. It is because of information coming through those sources that I have tried to study the terms of this Agreement with the utmost care and have followed the Debate through two days with the most intense interest, tinged with some little anxiety.

I am afraid that this nation, having obtained this immense loan and having been saved from the cuts in the standard of living and from the austerities which the Chancellor himself warned us we would have to face if the loans were not forthcoming, will heave that sigh of relief which comes instinctively to the individual who has obtained an overdraft which has saved him from domestic bankruptcy. I do not know if the Chancellor or any hon. Member of this House has ever been in debt. I have, and I have gone through all the emotions, sufferings and anxieties, and the subsequent relief when it is all over. The relations between the person who gives aid and the beneficiary of that aid can never be easy, especially when that aid may be brought to an end at six months' notice. It is very important that the people on both sides of the Atlantic should appreciate how the Agreement looks from the other person's point of view.

Marshall Aid, as has been said so often in this House—and I do not think it could be said too often—represents a far-sighted act of generosity which is without precedent in peace-time. There have been examples given of immense loans which have been made by America, but I think I am right in saying that there has been no precedent for a loan of this kind in peace-time. Another thing which is important is that it involves a radical change in America's traditional policy, and we must expect her to be very vigilant. We cannot blame her if she is vigilant and watches the result of the loan. Americans will judge regimes by results. They are, as we know, sceptical of Socialism, but if Socialism can deliver the goods there need be no quarrel over it. Some Socialists may feel that the Americans have no right to apply that test, but I do not think it matters very much, because the ultimate test will be the test of efficiency, and if we fail in the utilisation of this loan, we shall face ruin.

The hon. and gallant Member for North Portsmouth (Major Bruce) took back-benchers on this side of the House to task because they had not applied themselves during their interventions in this Debate to the Agreement itself and I am, therefore, going to apply myself now to Article VIII. That is the Article which deals with publicity. I think, as the Chancellor passed over that Article very swiftly and very briefly yesterday, I may be excused if, even at this late hour, I read one particular section of Article VIII: The Governments of the United States and the United Kingdom recognise that it is in their mutual interest that full publicity be given to the objectives and progress of the joint programme for European recovery and of the actions taken in furtherance of that programme. It is recognised that wide dissemination of information on the progress of the programme is desirable in order to develop the sense of common effort and mutual aid which are essential to the accomplishment of the objectives of the programme. In his speech yesterday the Chancellor of the Exchequer, in dealing with Article IV, said that the figures would be forthcoming each month in the bank returns. I think we are all agreed that those of us who cannot claim to be experts in high finance are hardly able to pick out the significance of the figures of this vast undertaking from the monthly figures in the bank returns.

What I dread more than anything else is that the publicity which, under this Article VIII, must be given, will not ring true. I have in my hand one of the weekly publications of the Government. This states that the health services are to be free, but goes on to say who will pay for them. It says that there will be no fees of any kind to pay in connection with the National Health Service, and then belies that statement in another column. Statements about the progress of Marshall Aid will be analysed not only by the people of this country but by the people in America, and especially by the publicity experts associated with the isolationists over there.

Therefore, it is important that we should give attention to this question of publicity. Everything published in this country about the progress of the Marshall Plan will be studied, analysed, criticised, and republished in America. Our copywriters may or may not be able to disguise from British people unpleasant and unpalatable facts, but they certainly will not be able to pull any wool over the eyes of the publicity experts in America. Moreover, American advertising, as we know, and American propaganda are very different in conception, in phraseology and in presentation from ours. American copywriters always try to see things from the point of view of the persons who read their copy. My object in concentrating on this particular Article is to make a plea tonight that this publicity, which is part of the Agreement, and which has to be undertaken, shall not be issued without consultation with the publicity experts on the other side, so that there may be general understanding of how the Agreement is working out.

8.22 p.m.

Mr. Bing (Hornchurch)

In other circumstances I should, perhaps, take advantage of following the hon. and gallant Member for Antrim (Major Haughton) but I have only a little time at my disposal and so, perhaps, he will excuse me if I plunge immediately into one or two main points. The difficulties in which we find ourselves at the moment are the measure of our sacrifice in our common effort during the war; and that the United States are now in a position to offer us aid is, to no inconsiderable degree, due to the aid which was given them in that common struggle, not in money, but in physical destruction and human life, not only by the Allies on the West but by the Allies on the East as well. It is because there are Americans who recognise this that we should do very poor service to their generosity, if we did not examine this Agreement carefully to see that it does not contain within itself the seeds of discord that could divide us from those who offer it and frustrate the objects of the grant—the maintenance of peace and the general improvement of the conditions of the world.

I feel that as a contribution to an understanding of the situation the speech of the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) was peculiarly unfortunate. It was an attempt to call in the discordant elements of the New World to redress the electoral balance of the Old. Of course, there are a lot of people who would agree with the right hon. Gentleman and his hon. and learned Friend the Junior Member for Brighton (Mr. Marlowe). Indeed, one could say that the Junior Member for Brighton foreshadowed, as it were, a speech made by a representative in Congress. Representative Ellis, speaking in Congress on 29th March, said: It is morally wrong to give our American dollars to support Communism's twin brother, Socialism, throughout Europe … We have been manoeuvred into the proposition of having our debtor nations dictate our course. Our foreign policy is dictated by Bevin and Harold Laski, the master mind of Socialism in England … I might observe that it might be a good thing for this country if, instead of supporting workmen who will not work to the utmost in England, we let the Socialist experiment which is going on there, demonstrate its utter incapacity to succeed. Ammunition for speeches like that is supplied by speeches of the sort on the other side of the House.

Lieut.-Colonel Sir Thomas Moore (Ayr Burghs)

Those speeches in America were made first.

Mr. Bing

What, then, are the obvious reasons why Marshall Aid might fail? There is the threat of the sort that we know, the pressure of the creditor nation. Let us look to the more dangerous type of pressure which may well occur. When one comes to examine the Marshall Aid proposals one finds a number of inner contradictions in the whole scheme which make some of us on this side extremely doubtful about its possibility of success. I have time to deal with only one or two of them. Let me deal with what is, perhaps, the most obvious one. If one reads President Truman's speeches and reads the reports of the 16 nations in Paris one sees there is one point which all make with great authority and great determination, and that is that it is absolutely necessary to restore European economy, to restore the economy of Europe as a whole.

Let me give one example from the points made by the 16 nations. They talk of coal production. During the war, the coal production in the Ruhr was at the rate of about 120 million to 140 million tons a year. Polish coal production was running at 100 million tons during the same period. Polish coal, for a variety of technical reasons, is much more available to Europe than is Ruhr coal. Therefore, there is just as much need to ensure the recovery and redevelopment of the Polish coal mines as for redeveloping the Ruhr coal mines. Quite true, the Polish coal mines cannot be redeveloped by the use of Marshall Aid. They can be developed only by trade between East and West. Unless that trade takes place, unless there is that exchange of capital goods, the whole basis upon which this Plan is based falls down. It is true, too, that there are in Eastern Europe just those raw materials and foods which we require in order that we can escape from the difficulty which we are in owing to our deficit in dollars—wood, timber, coarse grains, meats of various sorts, which we obtain from the United States at the moment.

The danger and difficulty is this, that for one reason or another, Marshall Aid has been represented—and, indeed, is now represented by hon. Gentlemen opposite—as a kind of Lease-Lend in the cold war against the Soviet Union. I do not believe in any sort of war against the Soviet Union, but I would say to hon. Gentlemen opposite that in any case this is not the way in which to wage it, because we cannot make the Marshall Plan work if we are going to try to fit it into a cold war against the Soviet Union. Hon. Members may not take it from me, but perhaps they will take it from someone who stands politically to the right of some of them—Mr. Walter Lippmann, the great American commentator, the kind of superior Garvin by now of the United States. He said: Secretary Marshall and the State Department are, therefore, faced with an important decision. If the programme which they are presenting to Congress is to work, they must give their moral and political support to the policy of the sixteen nations to say that 'Certainly the participating countries intend to do what they can to encourage' the 'resumption' of trade with the Soviet orbit. They cannot at the Council of Foreign Ministers accept a final division of Germany and of Europe, followed by a separate 'peace' with a Western German puppet State, and an aggravation of the cold war. That is not the opinion of one of the fellow travellers to whom the right hon. Member for Oxford University (Sir A. Salter) referred. That is the opinion of a man who probably has been closer to the bankers and great industrialists of the United States than any other individual.

It may well be that on this dilemma the Marshall Plan will founder. It is bound to founder if it is coupled with a cold war with the Soviet Union. One can see that this difficulty occurs to thinkers. This week's "Sunday Times" suggests that Mr. John Foster Dulles, who might well be Secretary of State if Mr. Dewey succeeds in being elected to the Presidency of the United States, said that it would be all right if one could substitute colonial production for the production of Eastern Europe and get the plan working that way. The whole of Article V makes nonsense of any such idea. The object of the article is that colonial territory shall be developed to produce those types of goods which America does not produce. The object of trade with Eastern Europe is to find a substitute for the goods which America produces but which we cannot afford to buy.

If the Colonies are to replace Eastern Europe as a market, the standard of living in the Colonies must be raised. We cannot trade with an area which is impoverished. If there is one way as we all know from history and experience in which an area is likely to be impoverished it consists in merely exploiting its raw materials and not putting back into that country the capital and profits made from its exploitation. To exploit the Colonies is not only morally wrong but—an argument which may have more weight with hon. Members opposite—it is economically unsound.

One final point. This Debate has been in a large way academic. We have been discussing the terms of the Agreement but what we really ought to look at are not the terms of the Agreement but the power which lies behind it. What we are concerned with is not the letter of the law but the power which the United States may have to enforce any decision they take, and, secondly, the bargaining power which we have to resist that decision if we do not agree with it. These are the realities of the situation from which we cannot escape so long as the United States can cut off aid, and so long as we are not in a position to say that we can do without it, obviously they must be in a position to dictate to us whatever terms they choose. Therefore, I hope that the House will first of all reject as defeatism the conception that we can never do without Marshall Aid and the theory put forward by hon. Members opposite that whatever happens a time will come when we shall need further aid. We must be determined at the earliest possible moment to do without aid of any sort.

We ought to realise that even at the best, Marshall Aid is not the final solution. It may be a solution at the very best for four years. At the worst it may be a solution for only one year, and we ought now to be putting ourselves in a position to deal with that situation if it turns out to be only a solution for one year. It is threatened by its many contradictions in itself. There is the question which depends not on the supply of money but on certain specific commodities which have to arrive in the right place at the right time in order that the plan of the 16 nations can go forward. The plan envisages a development of production in Europe comparable to the development of American production between 1940 and 1944. This is only possible if the capital goods required arrive on time. The Krug and the Nourse reports and Harriman Committee report all suggest that while there is an absence of controls in America, those vital commodities may not be available. Bearing all these things in mind it seems to me that we should adopt a practical plan for doing without Marshall Aid at the earliest possible moment.

Mr. Gallacher (Fife, West)


Mr. Bing

I only differ from the hon. Member for West Fife (Mr. Gallacher) in point of time.

I suggest that there are tour methods which we might review effectively to get rid of the necessity of depending upon Marshall Aid. First, we must seek by some means or other to narrow the gap which at present separates us from the countries of Eastern Europe. Without their aid Marshall Aid will not work and without Marshall Aid their assistance will be essential. Whatever the difficulties are, there must be a new attempt and approach to deal with that situation. We must reduce non-productive expenditure overseas. We must have a real balanced economy in the Colonies. Unless we have that, there is a complete failure of any real Colonial development. The profit from capital that goes into the Colonies must stay there.

Finally, we must realise that economic dependence on another country is as grave a threat to the independence of this country as defeat in war. Therefore, we ought to be prepared to take exactly the same economic measures and trample on vested private interests to secure the independence of this country from an economic threat, in exactly the same way as to secure its independence from a military threat. Our national survival is at stake. The hon. a Gentleman's supplementary ration or anything of that sort ought not to stand in the nation's way.

8.39 p.m.

Mr. William Teeing (Brighton)

I was one of those who voted against the American Loan, and I must say that I have never regretted doing so. However, tonight I have every intention of voting in favour of the Marshal Plan. It seems to me that one would not be justified in not doing so if, first of all, we remember what the right hon. Member for Aldershot (Mr. Lyttelton) said yesterday, when he pointed out what might happen to this country if we did not get the Marshall Plan. Furthermore, others have pointed out to us the likelihood not only of vast unemployment in this country, but throughout Europe which might ensue. Things have got so bad now in this country that it would not be possible for the country to face it. Moreover, we should realise that the present Administration in the United States is extremely friendly and wants in every way to make this plan work. I feel sure that we can take it, in that sense, at its face value; but we must remember that there is always the possibility that in times to come other people may be in control, and there may be other ideas in different parts of the United States.

If that is so, I feel that if we clear up every possible issue at the present moment, and discuss them publicly, and let it be known what is understood by both parties at the time the Agreement is made, then whatever party might be in power, or whatever group might feel strongly about it in the United States in the coming years, they would not dare to go against anything that was publicly stated in this House and in the States as being part of the Agreement today.

That is really why I have risen to speak at this moment—more to ask the President of the Board of Trade a question, to clear up a point, than to make a speech. Could he possibly say something tonight about the Far Eastern position, and the Japanese side, in regard to the Marshall Plan? Is Japan being brought into it at all? He will perhaps remember—the House certainly should—that when the Chancellor of the Exchequer was making a statement last week about the Marshall Plan the hon. Member for Norwich (Mr. J. Paton) asked him a question: Could my right hon. and learned Friend elucidate a little more the provisions of the most-favoured-nation clause? It has been reported in reputable newspapers that other nations concerned in E.R.P. have accepted a clause which applies also to Japan and Korea. The Chancellor replied that as tar as this Agreement is concerned, it has nothing to do with either Japan or Korea."—[OFFICIAL REPORT, 29th June, 1948; Vol. 452, c. 2027.] When further pressed by the hon. Member he seemed to me to be rather unhappy about it. I now understand that only two nations have been brought into this matter, or have agreed to accept that most-favoured-nation clause. Still, it does show that the United States are thinking of bringing it in, and when we remember that there is, as yet, no peace with Japan, and that we certainly will not have one until after the elections in the States—and from the present trends in the United States there is little likelihood of a peace with Japan even after that for some little time—it becomes a slightly worrying position, especially when we remember that a few weeks earlier I put a Question to the Chancellor of the Exchequer, who, in reply to a supplementary question from me, said: On the question of cotton and textiles, nobody has given way. We have not been able to come to an agreement. This was followed by a further supplementary by my hon. Friend the Member for Bury (Mr. W. Fletcher): Is the Chancellor satisfied with the theory that if the raw material which is to be processed in Japan comes from a certain country, it remains a product of that country? To which he made the alarming reply: No, I am not satisfied. On the other hand, the people who have got the decision as regards dealing in Japanese goods may take that view and insist upon it."—[OFFICIAL REPORT, 1st June, 1948; Vol. 451, c. 816.] Therefore, I should like to know if anything has been said or discussed about the position of Japan in these negotiations. It is vitally important for our textile industry; it is vitally important for Yorkshire and Lancashire. If we are to be in a position to implement and make a success of the Marshall Plan, then we must have Malaya and our Eastern Empire carrying on and being able to function. If Japan is in the background as in any way a satellite of the United States, taking any part in the working of Marshall Aid, it might easily be the sort of leakage against this country that would cause intense trouble, and might be very much the same as the convertibility clause was in the actual American Loan, the danger of which so many of us did not realise at that time. I hope that the right hon. Gentleman will try to say something about that aspect if he can.

8.44 p.m.

Mr. Francis Noel-Baker (Brentford and Chiswick)

In allowing me to catch your eye at this stage, Mr. Deputy-Speaker, you have faced me with the formidable task of telescoping into a very few minutes a speech which I intended should take a good deal longer. I must, therefore, apologise to the House if I have to select, in a rather disjointed way, some of the things I was intending to say.

There are one or two specific points to which I very much hope my right hon. Friend the President of the Board of Trade may be able to give an answer to when he winds up. The first one is this. I think a good deal of concern has been caused to my hon. Friends, and perhaps to hon. Members in all parts of the House, by the recent statements of the American Administrator, Mr. Paul Hoffman, with regard to the intention of the American Government to prevent participating States in Europe from exporting certain categories of goods to certain parts of Europe. The definition of those so-called war potential goods, which has already been laid down by American legislation, covers not only jet engines and munitions in the direct sense, but also apparently machinery and capital goods.

I believe it is quite possible that this limitation might become a very serious limitation on the right of His Majesty's Government to seek to alter existing trade patterns in Europe, and could be, in some circumstances—perhaps, for example, by a Republican Congress and a Republican President—progressively expanded in such a way as to make impossible one of our principle hopes for diminishing expenditure in the dollar area by intensifying our trade relations with Eastern European States. I should, therefore, like to suggest to my right hon. Friend that it might be wise at an early stage to get some definition of this war potential limitation, rather than to risk misunderstanding, and possibly resentment, later. I should be grateful to my right hon. Friend if he could make a brief note of that.

Secondly, I want to ask my right hon. Friend at what stage we are to get some fuller information on the way in which aid that will be coming to this country under this Agreement will be used to ensure that its objects will be fulfilled. There are a great many questions closely connected with this Agreement upon which we have hardly touched during this two-days' Debate, and it seems to me that very soon we shall need some concrete information, not only on the way in which the expected aid is to be used by His Majesty's Government, but also on the way in which the O.E.E.C. in Paris will function. So far, we have heard very little from the Government Front Bench, apart from general and optimistic predictions about its work, to indicate the way in which it will tackle the enormous problem that now faces it.

To illustrate the problems that are now facing the O.E.E.C., and which are becoming increasingly urgent, I should like to quote two sets of figures. In 1938, 28 per cent. of the total United Kingdom imports came from those countries which are now European participating States in E.R.P. In 1947, last year, that figure of United Kingdom imports from the Marshall Plan countries in Western Europe had been cut down to only 18 per cent. Of that 10 per cent. reduction, 4 per cent. was accounted for by the collapse of the German economy; and the remaining 6 per cent. reduction was due, not specifically to the low production levels in Western Europe since the war, but to the general destruction of the trade system in that area. In improving trade relationships among themselves, the participating countries, working through the O.E.E.C., have obviously, therefore, got a very great deal of work to do; and it will be important that we should be told very soon, and given more detailed information about, the way in which they will tackle that particular job.

It had been my intention to make some general remarks about the possibilities of expanding trade between this country and the nations of Eastern Europe, now behind the "Iron Curtain." Some of what I would have said—although I did not agree with all his remarks—has been covered by my hon. Friend the Member for Horn-church (Mr. Bing). It seems to me that the basic problem now facing the participating States in Western Europe is whether during the next four years they can find a way of disposing of their exports so that those exports will generate in adequate quantities, at tolerable prices, and in appropriate currencies, the supplies that must be imported if Western Europe is to be self-sufficient.

Part of the answer to that problem certainly lies in the integration of Western European economy, and in the development of the Colonial resources of Western Europe. Part certainly lies in increased trade inside the British Empire and inside the sterling area. But I believe that a substantial part of the answer to that problem also lies in greatly increased trade relations between the West and East of Europe—a hitherto relatively unexploited area which could serve as a most important source of supply of food and materials which countries in Western Europe are now compelled to buy for dollars. I urge my right hon. Friend to make some mention of the plans to increase East-West European trade by bilateral agreements, and also by encouraging and supporting the work of the United Nations Economic Commission for Europe, a body which I hope the Government will treat as complementary to and not in any way competitive with the O.E.E.C. organisation in Paris.

There is one final point I should like to make, which ties up with this general argument about increased trade between this country and participating nations and the States in Eastern Europe, and it deals specifically with the situation in Western Germany. As an economic entity Western Germany is, or was immediately before the war, in an identical situation to the United Kingdom. The Western zones of Germany have a population of about the same size as our own, are equally dependent on importing supplies of foodstuffs and raw materials and have their economics based, like ours, on rich coal deposits with practically no other natural resources. Before the war, Western Germany was able to live on the agricultural and raw material supplies from Eastern Europe and the Eastern zone of Germany, in very much the say way as this country depended on the food supplies and raw materials from the Empire and other overseas territories.

If the Marshall Plan were to have the effect of preventing Western Europe from expanding its trade relations with Eastern Europe, and if it limited our own possibilities of expanding trade between this country and Eastern Europe, we should find that both Western Germany and the United Kingdom would be in precisely the same position of having to attempt to pay for their vital imports by exports of similar types of manufactures into precisely the same export markets. If the Marshall Plan were to make difficult trade relations between this country and Eastern Europe and between Western Germany and Eastern Europe, it would have the effect of increasing the competition which a reviving German industry would present to this country.

Finally, I want to welcome this Agreement, and look forward with great expectations to the development of Western European economic integration and the revival of trade relationships throughout Europe without which the progress envisaged in this Agreement cannot be achieved.

8.54 p.m.

Mr. Oliver Stanley (Bristol, West)

I heartily sympathise with the hon. Member for Brentford and Chiswick (Mr. F. Noel-Baker) on having to telescope into a comparatively short space, the more lengthy speech he was going to make. We shall look forward to hearing the rest of it another time. Fortunately, I can think of many Parliamentary opportunities to which the speech he was in the course of making will be quite relevant.

In the two days' Debate, we have had a number of points of particular emphasis raised by varying speakers, but through all the speeches, or nearly all, there has been at least two things in common. In the first place, nearly every speaker has united to pay tribute to the American action which has resulted in this Agreement testifying to its far-sightedness, its generosity and its lack of the more sordid motives. The only exception to that rule has been the little group of whom the hon. Member for Finsbury (Mr. Platts-Mills) was, I think, the first if not the principal speaker. According to them the offer by America is actuated only by the vilest and most selfish motive, that if we need help—and I think we are all agreed that we do—there is only one source from which we can expect to get really disinterested help, and that is from Soviet Russia. Well, if they really believe that, I think there has been no such example of credulity since Little Red Riding Hood.

I should like to join in the tributes which have been paid to the statesmanship and unselfishness of the American people, but I would just express a doubt whether we are wise, when we are paying our tribute, always to put it in terms of references to American generosity and, above all, in coupling with it statements, however well justified, about the time when we stood alone. It would seem to imply that the Americans, in offering us this aid, are thinking of the past, that what they are doing is some reward for the services we rendered in the past, some kind of charity which they might be giving to somebody who, at some time or other, has been of service to them. I do not believe that that is the American attitude at all.

I believe that the Americans, in offering this aid, are thinking not of the past, but of the future. They are giving this opportunity because they believe that we—and, in this case, I mean Western Europe—have a survival potential as well as a survival value. They are offering us aid not for what we did in the past, but because they believe that by what we can do with it now we can survive and, by our survival, be of use to the world and to them. We should keep that well in mind, because I am convinced that if that is the American view and they are disappointed in that view—if they find that the help which is offered does not seem to be leading to a restoration of our prosperity and, therefore, to the certainty of our survival—whatever our claims on their generosity, that assistance will come to an end.

The other theme which has been noticeable in all the speeches was that although most of us believed that acceptance of this help is necessary today, all of us regret that that necessity should exist. I think the only speaker on any side of the House in whom I detected complete complacency was the hon. Member for Stafford (Mr. Swingler), who appeared to think that all was for the best in the best of all Socialist worlds. All of us must regret that we are under the necessity to accept help, however frankly that help may be offered to us. The Chancellor, in proving the necessity for accepting this help, was careful merely to point out the need in most general terms. He outlined the existing, although diminishing, dollar gap, but did not attempt to reduce that gap to terms that will be understood by ordinary people.

The ordinary man, when he is told of a deficit of £300 million or £400 million a year, does not find it easy to visualise what immense sums of that kind mean to him in his ordinary life. The Chancellor made it plain that, taking the deficit of the last quarter, we should be involved, were it not for this Marshall Aid, in an annual deficit of £428 million. I quite appreciate that we all hope the next quarter may see some improvement on these figures. The Chancellor of the Exchequer also made quite plain for the first time that no more assistance could be expected from drawing upon our reserves—that those reserves had reached the limit of safety, and if further reduced it would compromise not only our own position, but the position of the whole of the sterling area. Any gap, therefore, which was not made up by this Marshall Aid would have to come, in the first place, from cuts in our imports.

My right hon. friend the Member for Aldershot (Mr. Lyttelton) attempted to show to the House what that £400 million deficit means if it had to be filled by cuts in the imports we now get from the Western Hemisphere. He pointed out, on the authority of the Lord President of the Council, that it would mean, in the first place, 1½ million unemployed. He suggested—and this was not denied—that it would mean a reduction in the meat ration by a half, and the loss certainly of all the little varieties which do something to make our diet less monotonous. It would mean the loss of all tobacco except the 20 or 25 per cent. which, at present, we are able to draw from Empire sources. I cannot help feeling that the economic dislocation caused through the closing down of factories because of lack of raw materials would have such an effect upon our national income that it would be quite impossible to maintain the present amount of revenue which is raised by taxation, and that the drastic reduction of expenditure, which would necessarily follow, would inevitably endanger the whole of our social services.

When my right hon. Friend the Member for Aldershot commented on all these possibilities—so far uncontradicted—and pointed out that that was the pass to which we had been brought by three years of Socialist rule, his remarks were very much resented by hon. Members opposite. In reply, the Economic Secretary got quite shrill about it. We were told that it was most unfair and that we ought to look at world conditions. We were told to look at other countries—at Belgium, France and Sweden, countries which had not the benefit of a Socialist Government and yet were in the same predicament as we were. I cannot recollect that when hon. Members opposite deal, as they very often do, with the period between the wars they always ask their audiences to consider world conditions. Nor in any Socialist speech which I have read criticising the position of Britain under a Conservative Government in the 'thirties, have I seen it stated, "But look at France under the Popular Front and think how much worse it was."

I am perfecly prepared to meet hon. Members half way. If they resent unfair blame they will also resist unfair credit. Therefore, I hope that in future the theme of their week-end speeches will be strictly objective. Let them by all means claim credit for what, admittedly, they have done. Let them tell the people, as the Lord President of the Council has said, that they have succeeded by their own efforts in keeping unemployment down to 1,500,000. Let them tell the people that, by their own efforts, they are now providing something like two-thirds of our rations, and that they are finding enough money to be the basis of certainly half our social services. They are quite entitled to take the credit for that and I should not for a moment deny them the opportunity.

But let them go on, and say "Everything over that that you enjoy, you are getting not from the present Socialist Government and Socialist economic planning, but from the Government of America and from the people of America, people who cling obstinately, but fortunately, to a worn-out economic system." The Prime Minister I noticed was speaking in the country the other day, I think it was on Sunday week. He made a reference, a kindly reference, to America. He said that despite their faults it was a country with whom we could work. On occasions he has said that, it is a country from whom we could expect help. He went on to say, I think a little smugly, that despite their present obsession with out-of-date economics he hoped, in fact he was sure, that in time they would see the light. He must be keeping his fingers crossed and praying that at any rate they will not see the light before 1952.

The primary question which all of us tonight have to decide for ourselves is whether the terms of this actual Agreement which we are now discussing—not what has gone before or previous engagements into which we have entered, but this Agreement—are in themselves so oppressive and so damaging that their acceptance must outweigh the very obvious advantages which we get from acceptance of the Marshall Aid Plan. My submission is that if the consequences were of such a damaging character we should be entitled to reject the Agreement and, by rejecting the Agreement, to refuse the Aid. I disagree entirely with the hon. Member for Central Southwark (Mr. Jenkins), who proved to his own satisfaction that this Agreement imposed upon the Governments concerned the adoption of a Socialist system. If that were so, it would be a gross interference with our national sovereignty, and as such I hope he would resist it in the Lobby.

The Chancellor of the Exchequer yesterday explained the terms of the Agreement to us very fully. Obeying his injunction to take the White Paper in my right hand and, with my left hand, to open it at the proper place, I was able to follow his explanations with comparative ease. He only, in the course of this explanation, permitted himself one digression. He had a little argument with himself, from which he emerged unexpectedly successful, on the respective meanings of disinflation and deflation. It was an interesting little metaphysical discourse reminiscent of the old school, the sort of thing one reads in Duns Scotus or St. Thomas Aquinas, the same masterly lucidity of exposition, the same great wealth of imagery and the same total unimportance of the conclusion. However, I am perfectly prepared to learn from him, and I can assure the President of the Board of Trade that when next one of those little childhood fairy tales is proved, like most fairy tales, to be completely without foundation, I will refer to him as having been thoroughly "disinbunked."

The particular parts of the Agreement to which I wish to refer in detail are those which could be supposed in any way to limit the relationship between this country and the Dominions and the Colonies. I do so because it is a question which is quite clearly of great importance and which also quite clearly raises considerable doubts. Some of my hon. Friends feel that the terms of this Agreement do impose some limitations on our dealings within the Empire, according to the Motion which they have put on the Order Paper. Those sentiments found expression in an obviously sincere speech by my hon. Friend the Member for Wood Green (Mr. Baxter). He apologised to the House because he feared that owing to the fact that he did not read the "Economist" his arguments would be unfamiliar to the House. Many of us read other journals as well as the "Economist" and I can assure him that his arguments did not strike us with any unpleasant sense of unfamiliarity.

I have looked through this Agreement and I have not been able to find anything which in my view imposes restrictions upon our dealings with the Dominions or with the Colonies. I cannot for instance find that Article II, which deals with the question of the freeing of trade, adds anything to the commitments which we have already undertaken. On the contrary, I have a rather hopeful feeling that the much less detailed and in some ways more perfunctory reference in this Agreement may indicate some departure by the American Executive and the American people from what I believe to have been the fundamental fallacy underlying the Geneva and Havana Agreements. It is something which has already been referred to by speakers on both sides of the House.

The trouble about both those Agreements was that although they were completed in the postwar period they were conceived in the prewar period. I remember as far back as 1942, if not 1941, preparations for those conferences already being started. At the time they were conceived no one could have had and no one did have the clear picture of the postwar economic situation which we can see today. No one, certainly I admit not I, at the time this discussion first started had foreseen the colossal economic domination with which America was going to emerge from the war, an economic superiority so great that any attempt under those circumstances to return to the ideals of free trade could only mean a swamping of the world markets by American exports, without a possibility of the rest of the world being able to find commodities or articles which America needed, and with which, therefore, she could be paid. And a return, therefore, to a system of that kind could only mean the indefinite continuance of the Marshall Aid assistance.

Again I find in Article III nothing which really might be described in the terms used by my hon. Friend the Member for Wood Green (Mr. Baxter) when he said that it gave to the American citizens a privileged position in the Colonial Empire. I really think that if he looks at it again he will see that it is nothing of the sort. All that Article III does is to say that if now, as before the war, American citizens are entitled, allowed and indeed encouraged in the Colonies, under the existing crcumstances they will be able, because of the dollars made available, to withdraw from the Colonies the profits which they make. Without Article III, inconvertibility would prevent any American investor getting the proceeds of his investment. Finally, I cannot see that Article V really does give to the Americans the opportunity to dictate colonial development in their own interests or, as was rather more jejunely put by the hon. and learned Member for North Hammersmith (Mr. Pritt), that in future the Colonies will belong to the American ruling class. I think if the hon. and learned Gentleman looks carefully at Article V he will see that it is so hedged around with safeguards that His Majesty's Government are entitled to refuse any proposal put up to them by the Americans which they do not think is in the interest of this country and the Colonies.

I was relieved too by the explanation given by the Chancellor. In the first place as I read the Article, I think it is section 3, I certainly thought from the drafting that the percentage of the increased production which the Americans would be entitled to draw for stock-piling purposes would not be paid for by them but would be given in consideration of the assistance afforded. I thought anything which imposed perhaps a long-term drain on Colonial resources against no payment would be very damaging. Although I still cannot see how the words can mean anything but what I suggest, I understand categorically from the Chancellor of the Exchequer that, in fact, the goods drawn under that article for stock-piling will be paid for in dollars.

Secondly, I was glad as to the reassurance that this is to be a long-term policy. The danger as I saw it was that we might be encouraged to speculate on a particular kind of production to promote the American stock-pile. Stock-piling, in a phrase familiar to the Chancellor of the Exchequer, is after all a "once for all" transaction. Once that stock-pile was completed there would be no demand for the increased production and obviously a considerable economic shock would have been administered to the Colonies. I gather that is not so, and that we are entitled to look at it from a long-term basis and refuse any agreements which are not provided for in the American absorption of the new increased production which we create.

I want to deal only with one other point and that is what I consider might be the real danger to our Imperial unity, not arising from this Agreement but arising out of the matter which we have been discussing. That danger is an overemphasis on the importance of the recovery of the union of Western Europe. I yield to no one in my belief in the tremendous importance of such recovery. I believe that it is essential to us and that recovery cannot be brought about except by our co-operation. But I do not wish either to overlook the far greater importance to us of the maintenance of that existing area of freer trade, that existing area of freer currencies, the British Empire. When we are talking solely in the terms of Western Union, we may run the risk of doing something which will help the cause of Western Union but which may be damaging to the economic unity of the Commonwealth.

I hope that it will be possible when the Dominion Prime Ministers are over here to discuss with them the possibility of having some counterpart in Empire economics of the sort of machinery which has been set up under O.E.E.C. There seems to be a great danger that though there is a constant and, as we are told, excellent machine for discussing the economic details of Europe, there is no such constant machine for discussing the Imperial side. There must always be a risk, when we have to give a decision on what part we shall play in some European problem, that its effects upon the Imperial problem have not been fully considered.

Finally I am afraid that I cannot accept the suggestion of the hon. Member for Wood Green that it would be possible, situated as we are today, to abandon this help and to fight through for ourselves. That is a thing which I think we should all like to do. It is a thing about which people on both sides of the House, if only the gap were smaller, would say, "Let us do it." But in the face of a gap of between £300 million and £400 million, I do not see how we could recommend that policy seriously to the country. If we think of the effect of the drastic cuts which are necessary, and set against them the fact that whatever measures—and the hon. Gentleman suggested some good ones—are taken for recovery they are bound to take time, I do not see how we could take the responsibility of advising the people of this country that they should accept that ordeal for that length of time. I do not believe that we should survive.

Mr. Gallacher

We would survive.

Mr. Stanley

Therefore, we have to choose between the certainty of disaster and the possibility of success. I hope that the President of the Board of Trade will deal with my last point. Everybody on all sides of the House has said that Marshall Aid in itself is not enough; it solves no problems; it merely gives us another opportunity, an opportunity which we hope will last for four years. What all of us want to know from the Government is how we are to use the four years which American generosity has given to us.

9.24 p.m.

The President of the Board of Trade (Mr. Harold Wilson)

Now that the right hon. Gentleman has finished his argument with the hon. Member for Wood Green (Mr. Baxter), I hope that he will allow me to say that for the greater part of his speech I think most of us on this side of the House were in complete agreement with him. There were one or two remarks which he made which I think he felt should be common form on such an occasion and in which, of course, we cannot follow him. I think that he was right in summing up the general view of the House as expressed in this most useful two-day Debate on the Motion standing in the name of some of my right hon. Friends and myself.

The Debate has emphasised three main themes, all of them set out in the speech with which my right hon. and learned Friend the Chancellor opened it. First of all, we have discussed the terms of the Agreement; secondly, a number of hon. Members, at least, have stressed the need for a positive policy of economic co-operation in Western Europe, which is, after all, the heart of the European Recovery Programme; and, thirdly, we have discussed in different ways—and this has cut right across party lines—the need for the aid and the reasons why, at the present time, we find ourselves, together with many other nations in Europe, in the position of requiring this aid as a basis for our own recovery programme.

If I might begin with the terms of the Agreement, I think the whole House, with one or two exceptions, has endorsed my right hon. and learned Friend's tribute to the far-sighted generosity of the American people, and also his statement of the extent to which the great European experiment in co-operation and recovery has been made possible by that generosity. Equally, most speakers, with just one or two exceptions, have endorsed his statement that the Agreement, in all the circumstances, and I use his own words, is "a wise and reasonable agreement," which will leave us masters of our own affairs. Indeed, I think the right hon. Gentleman who has just spoken concluded his speech very much along those lines.

I should like to deal with one or two points which have been made and with some of the questions which have been asked. Perhaps the most comment has been on Article II, and my hon. Friend the Member for South Nottingham (Mr. N. Smith) and the hon. Member for Finsbury (Mr. Platts-Mills), each in his own way expressed doubt—if doubt is a state of mind ever to be associated with either of these hon. Gentlemen—about Article II. They suggested, first of all, that this would mean continuous interference by the American Administration, or, as one hon. Gentleman said, the American ruling class, in our own domestic affairs, continuous interference with our legislative programme and in the ways in which we mobilise our resources. The obligations we have accepted under Article II represent obligations solely to use our best endeavours to fulfil the various objectives set out in Article II. No one need boggle at that. We are committed to using our best endeavours▀×

  1. "(a) To adopt or maintain the measures necessary to ensure efficient and practical use of all the resources available to it, including—
  2. (b) to promote the development of industrial and agricultural production on a sound economic basis; to achieve such production targets as may be established through the Organisation for European Economic Co-operation;"
[Interruption.] I suggest that the hon. Gentleman should read the Agreement and stop inventing things which are not in it.

All these objectives are covered by the general obligation to use our best endeavours to achieve them. Every one of these objectives is one which this Government, and any Government in present circumstances, would naturally have to have in mind and would naturally use their best endeavours, whatever they were, to achieve. Therefore, we have accepted no new obligations in re-stating what these objectives are and in saying that we will use our best endeavours to achieve them, but doubts have been expressed about items in it.

The question has been asked about the valid rate of exchange, and it has been asked more than once after the Economic Secretary's reply. Who is the judge of what is a valid rate of exchange? I repeat once again—we are the judges. We have a valid rate of exchange and we shall continue that way. The hon. Member for East Aberdeen (Mr. Boothby), to use his words, took up Article IV (2, b) and said that the "Boys of Bretton Woods" had the power to intervene in this matter of what is a valid rate of exchange. Of course, Article IV (2, b) simply means that our obligation is to maintain "a special account in the Bank of England" to translate the total volume of dollar aid we receive into sterling at an appropriate rate of exchange, and, of course, an appropriate rate of exchange is naturally that par value agreed at such time with the International Monetary Fund. We are required to have a valid rate of exchange. Since we shall always have a rate of exchange registered with the International Monetary Fund, it would obviously make nonsense to use another rate of exchange for this purpose under this article. That article means no more than it says, and the hon. Gentleman's fears that the International Monetary Fund—"The Bretton Woods boys," to use his own phrase—will have some special power of interference in our financial affairs are completely without foundation.

There have been some fears expressed about our obligation to create or maintain an internal financial stability. It is a fact, that few, if any, countries in the whole world today can claim to have equalled the internal financial stability achieved by this country in the past two or three years, with the position where we have not only a balanced Budget but one with a powerful disinflationary surplus. Some hon. Gentlemen see a danger that under this paragraph someone in America will have the power to interfere with our domestic expenditure—that they will have power to query our food subsidies, or social security schemes or something of the kind. Of course, nothing of that kind is possible under this paragraph. The payments to which I have referred and all payments in our national expenditure are, of course, seen by the Government as part of our essential internal financial, stability, and are matters completely within the control of this House.

Another question which has been put is about our obligation to communicate to the Government of the United States detailed proposals for specific projects contemplated by the Government of the United Kingdom to be undertaken in substantial part with assistance made available. The senior Member for Oldham (Mr. Fairhurst) was slightly worried about this and one or two other of my hon. Friends have assumed that this means interference with our domestic legislative programme. One of my hon. Friends, for instance, asked whether this could mean a detailed discussion or even a veto on any plans which the Government may have in mind for the steel industry.

I can tell him quite clearly what this means. This obligation simply relates to individual projects. It involves no interference with our national sovereignty in terms of legislation or economic planning in any form, but it refers to individual projects—using the word "projects" somewhat as a term of art. If, for instance, this country, or one of the Colonies acceding to the Agreement, were to go in for some capital development scheme—perhaps a harbour project or a hydroelectric scheme or a scheme for a new plant, or anything of that kind—which would be wholely or mainly carried through with E.R.P. assistance, then we are required, under this paragraph, to send details of the project and of its value in economic terms. That is not an unreasonable demand at all.

Mr. Scollan

Would my right hon. Friend please explain this? Suppose there were a Government capital project which was going to cost about £10 million, how would we decide, when we are receiving E.R.P. aid, that part of the E.R.P. which is not substantially in that economic project?

Mr. Wilson

My hon. Friend seems to be following a rather hypothetical case.

Mr. Platts-Mills (Finsbury)

The whole Agreement will be hypothetical from now on.

Mr. Wilson

If we were as a special case to go in for some new scheme, a hydro-electric scheme, for which we should require to put in specially a new request for additional aid, then, in that particular case, on the details of that case alone, we should have to give full details of the scheme we had in mind; and it is only right, proper and natural that we should do that.

Several hon. Gentlemen have raised doubts about the commitment on monopolies. The hon. Member for East Aberdeen and, I think, the hon. Member for Chippenham (Mr. Eccles) asked about our commitments in this respect. The hon. Member for East Aberdeen, who had some considerable fun about having done his homework, wanted to know whether we are to be "trust busters" under this Agreement. If he had really done his homework in reading the Agreement, or, alternatively, listened to the Chancellor of the Exchequer, I do not think he would have asked that question. In fact, we assume no obligation in regard to monopolies or cartels, other than those that we assume for ourselves under the Monopolies Bill which recently passed through this House without a Division.

All that, to use the American phrase, we are "obligated" to do is to take measures which we deem appropriate and to co-operate with other participating countries to prevent business practices or business arrangements whenever such practices or arrangements have the effect of interfering with the achievement of the joint programme of European recovery. We take no powers to bust trusts or cartels under this. We do take powers to deal with abuses by international cartels, but the obligation we assume in this is merely to take those measures which we deem appropriate. We are judges in this matter. We have to take those measures only when these practices or arrangements have the effect of interfering with the joint programme of European recovery.

I should like to turn from Article II to Article V, because I think that that one has been the subject of most of the discussion during the Debate. The right hon. Member for Aldershot (Mr. Lyttelton) asked a question about this. He wanted to know whether Article V (2) (c) would involve the risk of the recurrence of the wartime difficulties, which, I think, are only too well implanted in his mind, as in the minds of many others who had to deal with this problem, about exports of goods containing Lease-Lend materials and materials like Lease-Lend materials. It does not, in fact, have any effect at all of that kind. Article II (1) (a) (i), which has also been referred to, equally has been so drawn that that risk does not, in fact, arise. My hon. Friend the Member for West Wolverhampton (Mr. H. D. Hughes) also asked whether the text of Article V in our case is identical with Article V in the French Agreement. I can tell him that I understand that the text is identical in the two Agreements.

The right hon. Member for Aldershot and a number of other hon. Gentlemen put questions about the stockpiling position under the Agreement, and I think it is right that I should deal with this point fairly fully. The United States Government are concerned, not unnaturally, at the running down of their stocks, and lest there should be depletion of their natural resources which are at present being exploited—a number of metals, minerals, essential for the fulfilment of the Aid Programme. There are some of those goods that they want to buy for strategic stockpiling. There are some in respect of which they foresee a continuing shortage unless new sources of supply are developed. They want our co-operation in building up essential resources in the Empire, both to avert shortage and as a contribution to our own economic recovery. They are anxious—and rightly anxious—that in cases where American firms want to engage in new projects contributing to those ends they shall be free to do so just as United Kingdom firms are free to do so.

I think that the right hon. Member for West Bristol (Mr. Stanley) summed up this point very well, as indeed did the right hon. Member for Aldershot yesterday. I think that both said that they would welcome assistance in development of this kind. We shall need assistance in development of this kind because of our own national shortages of resources. As the Economic Secretary said this afternoon, we shall judge any scheme on its merits in terms of the dollar costs involved, and we certainly should undertake to give in all appropriate cases national treatment for American firms playing a part in the development.

Arising out of this point, a number of hon. Members went into the question of the development of trade with Eastern Europe. The hon. Member for Finsbury and the hon. and learned Member for North Hammersmith (Mr. Pritt) made a great point of this argument. In fact they suggested that this Agreement was totally unnecessary, and what we ought to do instead was to develop trade with Russia. I would only say on that, that the record of this Government in reestablishing and restoring trade with the Soviet Union and other countries in Eastern Europe is not one for which we should in any sense feel ashamed.

Mr. Pritt

I very gladly accept the proposition that the Government are entitled to considerable credit for trying to establish trade with the U.S.S.R., but there is no way out of the fact that this Act of Congress will kill their trade with Eastern Europe if they sign this Agreement.

Mr. Wilson

That is not the fact at all, as I hope to show later. The fact is that we cannot hope to substitute trade with Eastern Europe with what we need to get under this Agreement. The hon. and learned Member for North Hammersmith talked about getting cotton from Russia. Of course, we have got cotton from Russia—I got some last year; but does he suggest that any cotton we got from Russia, whether in terms of types or quantity, could replace the cotton we get from the U.S.A.?

Mr. Pritt

I was using that argument as a criticism of what was said by one hon. Member who talked nonsense about it. It is no part of my argument that it is a substitute for American cotton.

Mr. Wilson

If that was all there was in it, I need not bother to pursue the point further. The hon. Member for Hornchurch (Mr. Bing) made a strong plea, as did the hon. Member for Brent-ford and Chiswick (Mr. F. Noel-Baker), for trade with Eastern Europe. The hon. Member for Hornchurch talked about the position of the Polish coalmines, and the fact that they would not get mining machinery under Marshall Aid. It is not the fault of the 16 Western nations or the U.S.A. that Poland is not receiving aid under this plan.

A number of hon. Members, particularly on the other side, have seen in this Agreement a further threat to Empire trade and to the close economic links between the Commonwealth countries. One or two have seen a threat to the Imperial Preference system. As the right hon. Member for Aldershot said, nothing in this scheme in any way affects preference. He said that he had no misgivings on this matter. The negotiations at Geneva which led to the elimination of preference on a relatively small proportion of our Commonwealth trade in return for concessions in other countries' tariffs, which we regard as of equal value, have already been debated in this House. That chapter is closed, and is likely for the present to remain closed. It will only be opened again if we and the other Commonwealth countries were offered real tariff concessions of such value to our industries and to the Commonwealth industries as to justify further changes, but I see no sign of that happening.

There is nothing in the Agreement, and there has been nothing in the policy of this Government for the last three years, which has in any way weakened the economic links of the Commonwealth. The economic links of the Commonwealth are closer today than they have ever been. In spite of the distortion and the disruption of trade because of the war, we are now taking a considerably higher proportion of our imports from within the Commonwealth—particularly from the Dominions, which were not affected so seriously by the war as some of the Colonies—than we were taking in 1938.

Yesterday my right hon. and learned Friend paid tribute to our fellow members of the sterling area for what they have done, and are doing, both in making supplies available to this country, which saves dollars, and also in their forbearance and economies in dollar expenditure for themselves. The talks which His Majesty's Government will be having with Mr. Chifley—whose visit to this country this week we all so welcome—are directed to this purpose of strengthening the economic bonds of the Commonwealth, to enable this great area of free trading nations to play the great part they can play, not only in their own recovery but in the recovery of the whole world. We are also looking forward to an exchange of views with other Commonwealth Prime Ministers later this year.

It is a fact, in which I think hon. Members in all parts of the House will agree, that the steps necessary for further development within the Commonwealth on the scale required and at the speed required cannot be undertaken entirely with the limited resources available to this country, and to other Commonwealth countries. It is a matter of common agreement, I think, that European recovery depends, first and foremost on the joint programme of co-operation which is being worked out in Paris; and secondly, on the steps that the European nations are taking to build up their own industries and agriculture.

I agree with the view expressed by a number of hon. Members on many occasions, that the development of so far undeveloped territories in Africa and elsewhere can do more than any other single thing to redress the world balance of payments. And I agreed with the hon. Member for East Aberdeen when he said that there is nothing incompatible with the programme of closer Western European co-operation and a programme of even closer co-operation within the Commonwealth. Pressed on—as we are pressing on with the Colonial development, and as we hope to press it on more and more as resources become available—this programme can, in a measurable period of time—say, a decade or so—completely alter the balance of world payments.

What we are doing now in Colonial development is a record, I think, which stands without parallel in the history of any Government in this country. I do not intend to go into it in any detail, because the House will debate it much more fully later this week; but it is a fact—and the whole House recognises it—that what we are trying to do is limited, above all, by our available resources. There is so much to do in this country in the matter of replacement of our damaged capital, and replacement of the machinery of industry, and there is so much to be done in the development of our export trade, that there is not as much available in the form of steel, of railway equipment, of port equipment, of electrical equipment, of farm irrigation, of civil engineering equipment and the technicians and workers to work them, as we should like to carry through all the schemes that should be carried through in our overseas territories.

It is because of that that maximum development in these areas does require two things which this Agreement can vouchsafe to us: first, the additional resources which can be provided out of the E.R.P.; and secondly—a thing which has been stressed much less, but which is of the first importance—European co-operation in the development of overseas territories associated with European nations. The Government of Southern Rhodesia have recently been pressing on with a programme of development of their mines and of their railway system in order to help in dollar saving and dollar earning, not only with the movement of coal, but also, of course, with chrome and copper. What is holding them up from getting on as fast as they would like, in spite of the maximum assistance that we have been able to give them, is, first of all, shortage of railway equipment, and secondly, of course, the port difficulties associated with clearing and shipping the goods they can produce.

The need for co-operation with other European countries is well exemplified by the work that is now going on between this country and Portugal to get the necessary work done in Beira. There is another point I should like to refer to, and that is the development of European co-operation, and particularly, of course, the work which is going on in Paris for settling the problem of the balance of payments between the West European countries. In the last three years, following a period in which West European trade was so seriously shattered by the war, trade has been built up to a figure not much below the 1938 level. But this has been achieved only by means of credits extended by stronger or more fortunate countries to weaker countries, and these credits are either exhausted or nearing exhaustion, and there is a danger that intra-European trade may begin to fall away with participating countries using Marshall Aid to buy from the Western Hemisphere goods which they could buy from Western Europe if the problems of currency could be solved. One of the main problems of O.E.E.C. will be to try to devise some means for expanding European trade. In the short run we are trying to overcome barriers to the movement of goods, but in the long run we must have a multilateral system of trading to increase the flow of goods and services in the West Europe areas.

We shall consider and are considering any ideas to solve this problem. Any scheme to increase European trade now is likely to call for more contributions from some of the stronger countries to some of the weaker countries. We have ourselves rendered considerable assistance, but at the same time we have had to pay gold or dollars to our creditors in Europe while lending money to our debtors. Other countries should join with us in giving credits, and we shall have to be prepared to carry our fair share of the burden, provided other countries do the same.

Mr. Eccles

Are off-shore purchases allowed in Europe, and if not what objection do the Americans take to that?

Mr. Wilson

These things are being discussed in Paris at this moment, and I do not think it would be helpful if I went into these questions while they are under discussion. It is a matter being discussed between various European countries and the Americans, and I prefer not to go into it in any detail.

Let me conclude by referring to a point which has been the theme of most speeches made, and that is the need for this Aid. Some Members have attempted to make party capital out of the nation's need, and have suggested that the need for American aid is the result of mismanagement by this Government over the last three years. The fact is, and it is recognised by everybody on this side of the House, that we are today as a nation paying the price for the war, and above all the price we do not grudge of having stood alone. The Chancellor of the Exchequer showed the main need for this Aid is to maintain the essential minimum reserves of the sterling area.

We should not need that Aid today if we had not spent our gold and dollar reserves as well as our dollar securities in the early months of the war before Lend Lease enabled the burden of the war to be shared. During that period we gave up £600 million of our gold and dollar reserves and £420 million of our dollar securities, making 4,000 million dollars of reserves and securities. Then there is a loss of our invisible earnings since 1938. Our position on the invisible account has deteriorated to the tune of £450 million a year alone. Then there is terms of trade, which are now nearly 25 per cent. worse to this country than they were before the war. There is also the inability to obtain as many goods as we would wish from the non-dollar areas; 34 per cent. of our goods came from Europe in 1938, and only 21 per cent. are coming from Europe today. So, in agreeing on the need for American aid let us put responsibility where it should be for needing this aid. It lies solely on the war, and the aftermath of war.

It is particularly right that in stating the need for this aid no one should seek to denigrate the effort which has been made by our people. Production is well above the prewar rate. The United Nations Economic Commission for Europe has made it clear that our recovery in industry and agriculture is unexampled in Europe, and is also far in excess of anything which was achieved by this country in the same period after the First World War. Last year, our national exports, in spite of the difficulties of the fuel crisis, and so on, would have been sufficient, against the 1938 background of invisible earnings—world prices, shipping income, and so on—to have shown a better result or the international account than was actually achieved in 1938. Our effort for the first half of this year far exceeds what was done in 1947, and if our present rate of export, in relation to our imports, could have been achieved against the 1938 background we would have been showing, not a deficit of £70 million on the international account, but a credit balance of £200 million, even valued at 1938 prices.

It is not that our record is not a great one: it is rather that the task of the nation in the light of our war losses is infinitely greater. Because of that the right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) was right today when he said that not only is there nothing in this Agreement which is derogatory to our sovereignty, honour and pride, but that it is not a matter of shame

that we should be receiving this aid at this time. It is rather a matter of pride in the part this country has played, and the very heavy burden which we under-took as part of the common task to win the war.

This is a statesmanlike and most generous lead on the part of the American people; it is a recognition of the fact which the right hon. and learned Gentleman the Member for Montgomery stated today, but it is more than that. It makes possible the one thing which is required for the recovery of Europe, and that is a common effort by the people of Europe, working together to increase their own production, to balance their economic budgets, and to develop the resources of the Empire and Colonial territories for which they are responsible.

No one need denigrate the effort we have made, but in taking this aid we must all realise that it must be regarded as a means of enabling us to stand on our own feet in the shortest possible time. It means bigger production for us than anything we have so far achieved, far greater than before the war. We have nothing to be ashamed of, but in accepting this aid we have to realise that in the next four years, if we are to be in a position to pay our way abroad, we shall need greater production efforts and greater economic successes than anything we have achieved in the last three years.

Question put.

The House divided: Ayes, 409; Noes. 12.

Division No. 254.] AYES. [10.0 p.m.
Acland, Sir Richard Bennett, Sir P. Byers, Frank
Adams, Richard (Balham) Benson, G. Carmichael, James
Adams, W. T. (Hammersmith, South) Berry, H. Carson, E.
Agnew, Cmdr. P. G. Binns, J. Castle, Mrs. B. A.
Alexander, Rt. Hon. A. V. Blackburn, A. R. Challen, C.
Allen, A. C. (Bosworth) Blenkinsop, A. Chamberlain, R. A.
Allen, Scholefield (Crewe) Blyton, W. R. Champion, A. J.
Alpass, J. H. Boardman, H. Channon, H.
Amory, D. Heathcoat Boles, Lt.-Col. D. C. (Wells) Chetwynd, G. R.
Anderson, A. (Motherwell) Boothby, R. Clarke, Col. R. S.
Anderson, Rt. Hn. Sir J. (Scot. Univ) Bossom, A. C. Cluse, W. S.
Assheton, Rt. Hon. R. Bottomley, A. G. Cobb, F. A.
Astor, Hon. M. Bowden, Flg. Offr. H. W. Cocks, F. S.
Attewell, H. C. Bower, N. Coldrick, W.
Ayles, W. H. Bowles, F. G. (Nuneaton) Collindridge, F.
Ayrton Gould, Mrs. B. Boyd-Carpenter, J. A. Collins, V. J.
Bacon, Miss A. Bramall, E. A. Colman, Miss G. M.
Baird, J. Bromley-Davenport, Lt.-Col. W. Comyns, Dr. L.
Balfour, A. Brook, D. (Halifax) Conant, Maj. R. J. E.
Barstow, P. G. Brown, T. J. (Ince) Cook, T. F.
Barton, C. Buchan-Hepburn, P. G. T. Crawley, A.
Battley, J. R. Bullock, Capt. M. Cripps, Rt. Hon. Sir S.
Beamish, Maj. T. V. H. Burden, T. W. Crossman, R. H. S.
Bechervaise, A. E. Burke, W. A. Crowder, Capt. John E.
Ballenger, Rt. Hon. F. J. Butler, H. W. (Hackney, S.) Cuthbert, W. N.
Daggar, G. Herbert, Sir A. P. Marshall, S. H. (Sutton)
Daines, P. Herbison, Miss M. Mathers, Rt. Hon. George
Dalton, Rt. Hon. H. Hewitson, Capt. M. Maude, J. C.
Davies, Rt. Hn. Clement (Montgomery) Hicks, G. Mayhew, C. P.
Davies, Edward (Burslem) Hinchingbrooke, Viscount Medland, H. M.
Davies, Haydn (St. Pancras, S.W.) Hobson, C. R. Medlicott, Brigadier F.
Davies, R. J. (Westhoughton) Hogg, Hon. Q. Mellish, R. J.
de Freitas, Geoffrey Holman, P. Middleton, Mrs. L.
Delargy, H. J. Hope, Lord J. Mikardo, Ian
Diamond, J. Howard, Hon. A. Millington, Wing-Comdr. E. R.
Digby, S. W. Hoy, J. Mitchison, G. R.
Dodds, N. N. Hubbard, T. Molson, A. H. E.
Dodds-Parker, A. D. Hughes, Emrys (S. Ayr) Monslow, W.
Donovan, T. Hughes, Hector (Aberdeen, N.) Morley, R.
Drayson, G. B. Hughes, H. D. (W'lverh'pton, W.) Morris, P. (Swansea, W.)
Drewe, C. Hutchison, Col. J. R. (Glasgow, C.) Morris, Hopkin (Carmarthen)
Driberg, T. E. N. Hynd, H. (Hackney, C.) Morrison, Rt. Hon. H. (Lewisham, E.)
Dugdale, J. (W. Bromwich) Hynd, J. B. (Attercliffe) Morrison, Rt. Hon. W. S. (Cir'cester)
Dumpleton, C. W. Irving, W. J. (Tottenham, N.) Mort, D. L.
Durbin, E. F. M. Isaacs, Rt. Hon. G. A. Mott-Radclyffe, C. E.
Dye, S. Janner, B. Moyle, A.
Eccles, D. M. Jay, D. P. T. Nally, W.
Ede, Rt. Hon. J. C. Jeger, G. (Winchester) Naylor, T. E.
Eden, Rt. Hon. A. Jenkins, R. H. Neven-Spence, Sir B.
Edwards, A. (Middlesbrough, E.) Johnston, Douglas Nichol, Mrs. M. E. (Bradford, N.)
Edwards, Rt. Hon. Sir C. (Bedwellty) Jones, Rt. Hon. A. C. (Shipley) Nicholls, H. R. (Stratford)
Edwards, John (Blackburn) Jones, D. T. (Hartlepools) Nicholson, G.
Edwards, Rt. Hon. N. (Caerphilly) Jones, Elwyn (Plaistow) Noble, Comdr. A. H. P.
Edwards, W. J. (Whitechapel) Jones, J. H. (Bolton) Noel-Baker, Capt. F. E. (Brantford)
Elliot, Lieut.-Col. Rt. Hon. Walter Jones, P. Asterley (Hitchin) Nutting, Anthony
Evans, Albert (Islington, W.) Joynson-Hicks, Hon. L. W. O'Brien, T.
Evans, E. (Lowestoft) Keenan, W. Odey, G. W.
Evans, John (Ogmore) Kenyon, C. Oldfield, W. H.
Evans, S. N. (Wednesbury) Key, Rt. Hon. C. W. Oliver, G. H.
Ewart, R. King, E. M. O'Neill, Rt. Hon. Sir H.
Fairhurst, F. Kinghorn, Sqn.-Ldr. E. Orr-Ewing, I. L.
Farthing, W. J. Lancaster, Col. C. G. Paget, R. T.
Fernyhough, E. Langford-Holt, J. Paling, Rt. Hon. Wilfred (Wentworth)
Field, Capt. W. J. Law, Rt. Hon. R. K. Palmer, A. M. F.
Fleming, Sqn.-Ldr. E. L. Lawson, Rt. Hon. J. J. Pargiter, G. A.
Fletcher, E. G. M. (Islington, E.) Lee, F. (Hulme) Parker, J.
Fletcher, W. (Bury) Lee, Miss J. (Cannock) Parkin, B. T.
Forman, J. C. Leonard, W. Paton, Mrs. F. (Rushcliffe)
Foster, J. G. (Northwich) Leslie, J. R. Paton, J. (Norwich)
Fraser H. C. P. (Stone) Levy, B. W. Pearson, A.
Fraser, Sir I. (Lonsdale) Lewis, T. (Southampton) Peart, T. F.
Fraser, T. (Hamilton) Lindgren, G. S. Perrins, W.
Freeman, J. (Watford) Lindsay, M. (Solihull) Peto, Brig. C. H. M.
Fyfe, Rt. Hon. Sir D. P. M. Lipson, D. L. Pickthorn, K.
Gage, C. Lipton, Lt.-Col. M. Pitman, I. J.
Galbraith, Cmdr. T. D. Logan, D. G. Ponsonby, Col. C. E.
Gammans, L. D. Low A. R. W. Poole, O. B. S. (Oswestry)
Ganley, Mrs. C. S. Lucas-Tooth, Sir H. Popplewell E.
George, Lady M. Lloyd (Anglesey) Lyne, A. W. Porter, G. (Leeds)
Gibbins, J. Lyttelton, Rt. Hon. O. Prescott, Stanley
Gibson, C. W. McAllister, G. Price, M. Philips
Glanville, J. E. (Consett) MacAndrew, Col. Sir C. Price-White, Lt.-Col. D.
Goodrich, H. E. McCallum, Maj. D. Prior-Palmer, Brig. O.
Gordon-Walker, P. C. McCorquodale, Rt. Hon. M. S. Proctor, W. T.
Granville, E. (Eye) McEntee, V. La T. Pryde, D. J.
Greenwood, A. W. J. (Heywood) McFarlane, C. S. Raikes, H. V.
Grenfell, D. R. McGhee, H. G. Ranger, J.
Grey, C. F. McGovern, J. Rankin, J.
Griffiths, D. (Rother Valley) Mack, J. D. Reed, Sir S. (Aylesbury)
Griffiths, Rt. Hon. J. (Llanelly) McKay, J. (Wallsend) Rees-Williams, D. R.
Grimston, R. V. Mackay, R. W. G. (Hull, N.W.) Reeves, J.
Guest, Dr. L. Haden Mackeson, Brig, H. R. Reid, T. (Swindon)
Guy, W. H. McKie, J. H. (Galloway) Renton, D.
Haire, John E. (Wycombe) McKinlay, A. S. Rhodes, H.
Hale, Leslie Maclay, Hon. J. S. Richards, R.
Hall, Rt. Hon. Glenvil Maclean, F. H. R. (Lancaster) Ridealgh, Mrs. M.
Hamilton, Lieut.-Col. R. McLeavy, F. Robens, A.
Hannan, W. (Maryhill) Macmillan, Rt. Hon. Harold (Bromley) Roberts, Emrys (Merioneth)
Hardman, D. R. McNeil, Rt. Hon. H. Roberts, Goronwy (Caernarvonshire)
Hare, Hon. J. H. (Woodbridge) Macpherson, N. (Dumfries) Robinson, Roland
Harris, F. W. (Croydon, N.) Macpherson, T. (Romford) Rogers, G. H. R.
Harris, H. Wilson (Cambridge Univ.) Mainwaring, W. H. Royle, C.
Harrison, J. Maitland, Comdr. J. W. Salter, Rt. Hon. Sir J. A.
Hastings, Dr. Somerville Mallalieu, J. P. W. (Huddersfield) Sanderson, Sir F.
Haughton, S. G. Mann, Mrs. J. Sargood, R.
Head, Brig. A. H. Manning, C. (Camberwell, N.) Scott-Elliott, W.
Headlam, Lieut.-Col. Rt. Hon. Sir C. Manning, Mrs. L. (Epping) Segal, Dr. S.
Henderson, Rt. Hn. A. (Kingswinford) Marples, A. E. Shackleton, E. A. A.
Henderson, John (Cathcart) Marquand, H. A. Sharp, Granville
Henderson, Joseph (Ardwick) Marshall, D. (Bodmin) Shawcross, C. N. (Widnes)
Shepherd, W. S. (Bucklow) Teeling, William Westwood, Rt. Hon. J.
Shinwell, Rt. Hon. E. Thomas, D. E. (Aberdare) Wheatley, Rt. Hn. John (Edinb'gh, E.)
Shurmer, P. Thomas, George (Cardiff) Wheatley, Colonel M. J. (Dorset, E.)
Simmons, C. J. Thomas, Ivor (Keighley) White, C. F. (Derbyshire, W.)
Skeffington, A. M. Thomas, I. O. (Wrekin) White, H. (Derbyshire, N.E.)
Skinnard, F. W. Thomas, J. P. L. (Hereford) While, J. B. (Canterbury)
Smith, C. (Colchester) Thorneycroft, G. E. P. (Monmouth) Whiteley, Rt. Hon. W.
Smith, E. P. (Ashford) Thorneycroft, Harry (Clayton) Wilcock, Group-Capt C. A. B.
Smithers, Sir W. Thornton-Kemsley, C. N. Wilkins, W. A.
Snadden, W. M. Thurtle, Ernest Willey, F. T. (Sunderland)
Sorensen, R. W. Tiffany, S. Willey, O. G. (Cleveland)
Sparks, J. A. Timmons, J. Williams, Gerald (Tonbridge)
Spearman, A. C. M. Titterington, M. F. Williams, J. L. (Kelvingrove)
Stanley, Rt. Hon. O. Tolley, L. Williams, W. R. (Heston)
Steele, T. Tomlinson, Rt. Hon. G. Willis, E.
Stewart, Michael (Fulham, E.) Turner-Samuels, M. Willoughby de Eresby, Lord
Stokes, R. R. Ungoed-Thomas, L. Wills, Mrs. E. A.
Strauss, Henry (English Universities) Vernon, Maj. W. F. Wilmot, Rt. Hon. J.
Stress, Dr. B. Viant, S. P. Wilson, Rt. Hon. J. H.
Studholme, H. G. Walkden, E. Woodburn, Rt. Hon. A.
Summerskill, Dr. Edith Walker-Smith, D. Wyatt, W.
Sutcliffe, H. Watkins, T. E. Yates, V. F.
Swingler, S. Watson, W. M. Young, Sir A. S. L. (Partick)
Sylvester, G. O. Watt, Sir G. S. Harvie Young, Sir R. (Newton)
Symonds, A. L. Weitzman, D. Younger, Hon. Kenneth
Taylor, R. J. (Morpeth) Wells, W. T. (Walsall)
Taylor, Dr. S. (Barnet) West, D. G. TELLERS FOR THE AYES:
Mr. Snow and Mr. G. Wallace.
Aitken, Hon. Max Hutchinson, H. L. (Rusholme) Pritt, D. N.
Baxter, A. B. Marlowe, A. A. H. Solley, L. J.
Darting, Sir W. Y. Marsden, Capt. A.
Dower, E. L. G. (Caithness) Piratin, P. TELLERS FOR THE NOES:
Gallacher, W. Platts-Mills, J. F. F. Sir Stanley Holmes and
Sir Thomas Moore.

Resolved: That this House re-affirms its report of the objectives of the Convention for European Economic Co-operation signed in Paris on 16th April, 1948, and having regard to the need for the achievement and maintenance of a satisfactory level of economic activity without extraordinary outside assistance, approves the Economic Co-operation Agreement between the Governments of the United Kingdom and the United States of America initialled ad referendum in Washington on 26th June, 1948, and the draft exchange of notes between the Governments of the United Kingdom and the United States of America on most favoured nation treatment for Western Germany and Trieste.

  1. ADJOURNMENT 16 words
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