COLONIAL LOANS BILL

HC Deb 19 November 1948 vol 458 cc749-93

Order for Second Reading read.

12.1 p.m.

The Under-Secretary of State for the Colonies (Mr. Rees-Williams)

I beg to move, "That the Bill be now read a Second time."

The object of this Bill will, I am sure, commend itself to hon. Members and right hon. Members on both sides of the House. It is to give the Treasury authority to guarantee loans made to Colonial Governments by the International Bank for Reconstruction and Development. Owing to the Charter of the Bank it is only possible for this to be done on a guarantee of His Majesty's Government. This is because His Majesty's Government is a member of the Bank and because no Colonial Government is such a member. Article III, Section 4, of the Bank's Statute, reads as follows: Conditions on which the Bank may guarantee or make loans. (1) When the member in whose territories the project is located is not itself the borrower, the member or the central bank or some comparable agency of the member which is acceptable to the Bank, fully guarantees the repayment of the principal and the payment of interest and other charges of the loan. It is because of that requirement that this Bill has been introduced.

This is an enabling Bill in the sense that it does not impose any obligations upon Colonial Governments, but enables them to obtain the advantages of a loan from the International Bank if they so desire. Southern Rhodesia, which is not within the responsibilites of my right hon. Friend the Secretary of State for the Colonies, is, as the House will see, included in this Bill, in Clause 1 (7), at the request of the Southern Rhodesian Government.

The House will, perhaps, bear with me while I postulate some of the background of this Measure or at least show the setting in which it is placed. It is the object of the Government to encourage in every way possible the economic development of the Colonial territories. It may be said that there are four objectives in the economic policy in relation to the Colonies. The first is to restore and improve the capital equipment of the territories so as to provide a firm basis for future development. The second is to promote those types of economic activity, whether primary or industrial production, in which the territories are best fitted to engage, having regard to the balance of their economies, and the advantages of their external trade. The third objective is to raise the living standards of the Colonial peoples as rapidly as the level of their productivity permits. The fourth is to secure the mutual advantage of the United Kingdom and the Colonial territories, having regard to the finance, equipment and skill which the former may be able to provide.

Among the benefits to Colonial territories which this policy provides is, of course, that we are able to provide them with new and important potential sources of finance. I shall deal in more detail with that at a later stage but this is definitely one of those new and important potential sources of finance, helping to clear away obstacles placed in the way of achieving sound economic objectives. It will remove some economic obstacles which have so often, in the past, stood in the way of political advancement. In our view, there can be no sound political advancement which is not accompanied—and in my view Preceded—by economic, educational, social and health advancement.

The obstacles to progress which I have suggested are not merely financial obstacles; they are also material obstacles. As the House well knows, we are making every effort to overcome these obstacles by allocating a much greater quantity of steel than we have done in the past. In the current quarter it will be about double the previous level of the steel allocation. After 1st January there will be an even greater improvement than that doubled allocation which the Colonies are now getting in this present quarter. There have also been considerable improvements recently in the supply of cement and particularly in the supply of textiles.

Mr. Ivor Thomas (Keighley)

In regard to steel, have the Government accepted the recommendation of the Select Committee on Estimates that there should be a specific allocation of steel for the Colonies?

Mr. Rees-Williams

We had been pressing for that for a considerable time before the Select Commitee's Report was issued, but it was a very useful confirmation of our point of view.

The Colonial Empire is at the moment a net dollar earner at the rate of about 200 million dollars a year, so that we can see that already the policy of His Majesty's Government is having a considerable effect. We shall no doubt be able to increase that net dollar earning in the future to a greater figure than it is at present.

Mr. Gammans (Hornsey)

The hon. Gentleman speaks about the Government's policy. Surely, the Government are not taking credit for having planted all the rubber trees?

Mr. Rees-Williams

Rubber is by no means the only product. I would also say that His Majesty's Government can to some extent take some credit for the conditions under which that industry was able to get on to its feet so rapidly at the end of the Japanese occupation.

Our financial objective, arising out of the general economic objective to which I have referred, is to ensure that sufficient finance is available from within the Colonial territories and from external sources. There has in the past been great difficulty, not only in Colonial territories but also in metropolitan countries in which primary production is the main source of wealth, in obtaining a better standard of living and in achieving any sort of industrialisation.

There have in the main been only two ways in which a country such as that could obtain finance. The first was by exploiting the primary producers, namely, the peasants; or, secondly, by obtaining foreign loans which inevitably—I am not saying improperly—meant that there had to be attached those conditions which are commonly known as "strings." During the last few years we have tried to provide funds for colonial territories without either exploiting the primary producer or by obtaining foreign loans on onerous conditions. We have tried to do it in several ways; first, owing to the price of primary commodities, which has been high since the war, by obtaining finance from surplus revenues, that is, by taxation by means of export duties and the like. Secondly, by making available to Colonial territories sums under the Colonial Development and Welfare Act which aggregate £120 million over the ten-year period up to 1956.

We have also, as the House knows, established the Colonial Development Corporation which we hope will provide a considerable amount of finance and skilled assistance to the Colonial territories. Lastly, we have made available the London market. The House will perhaps have seen that on 11th November the Trinidad £3 million loan was offered on the London market. It closed after one minute, and £80 million was offered for the £3 million that was required. Whilst the Colonies are asked to keep off the market as long as possible, under the present conditions we feel that they must be allowed access for financing development and other essential work for which other resources are not available. The hon. Member for Hornsey (Mr. Gammans) is, as usual, amused. I hope his amusement comes from the feeling that the Government's policy in relation to the Colonies is of such an outstanding character as to persuade investors to offer money at that rate to the Colonies on such a large scale.

In addition to the financial projects which I have mentioned there is also the possibility that European Co-operation Administration loans may be available. At the present time we have not negotiated any loan under this particular administration, but it may be possible that they will be negotiated at a later stage. As a matter of fact, we have asked for scientists and technicians under the European Co-operation Administration. Altogether we have asked for about 50 trained men, 25 geologists and about 25 ground surveyors under this project. Various other projects also are being suggested to the European Co-operation Administration in relation to the Colonies.

We do not anticipate that there will be any immediate request under this Bill, but we have introduced it now, not because there is any pressing need for it at the moment, but so that we shall be in a position to act promptly if it is required. The House knows that the Government always like to have the facilities which they desire to offer in good time, and not to be lagging behind. There is one main difficulty and one subsidiary difficulty at the moment under the Bank policy—not under the rules but under the policy—which might dissuade the Colonial Governments from applying for these loans. The first is the high rate of interest, which has recently been at 4½ per cent., including 1 per cent. commission which the bank takes on all loans. The second is that the dollar loans are only available for the purchase of equipment from dollar sources.

As the Colonies normally have a wide spread number of projects, with very few dollar requirements in respect of each project, it means that they would have to lump together a number of projects in order to make it worth while going to the bank for a dollar loan. We think that the borrowing could most conveniently be done through the Colonial Development Corporation. They can consolidate their requirements more easily than the Colonial Governments and preliminary contacts have been made between the directors of the Colonial Development Corporation and the Bank.

It is not necessary to include the Corporation in this Bill, because the Treasury have the power to guarantee loans made to the Corporation under the provisions of the Overseas Development Act. We feel that the object of the Bank, the purposes for which it was set up, are estimable. They intend to do all they can to restore world prosperity and trade, and I must pay tribute to the imaginative quality of those who set up the Bank to assist in this work. I hope it will be of real assistance to the Colonial territories over a number of years.

Clause 1 Subsection (1) of the Bill provides that the Treasury may, subject to certain conditions, guarantee the payment of the principle and of the interest on any loan paid to the Government of a colonial territory by the International Bank. The amount of principle, as hon. Members will see, is limited to £50 million. This is, in fact, an estimate of the maximum aggregate sum required in the foreseeable future.

Clause 1 Subsection (2) states that the colonial government must satisfy the Secretary of State, with the concurrence of the Treasury, that the purpose of the loan is likely to promote development of the resources of the territory. So we have there the three parties, as it were, to be satisfied before any application is made—the Colonial Government, the Secretary of State for the Colonies and the Treasury.

Under Subsection (3) a guarantee shall not be given unless the Treasury and the Secretary of State are satisfied with regard to the financial provisions relating to the appropriation of the loan, sinking fund, charging of assets, and receiving of money to meet the charges.

Under Subsection (5) hon. Members will notice that after any guarantee is given the Treasury must lay a statement before each House. Subsection (6) states that the Treasury must at certain stated intervals lay before the House a statement relating to the sum or sums guaranteed. Subsection (7) defines the term, "colonial territory". It is defined as including colonies, protectorates, protected states and trusteeship territories. I must apologise for an error which many hon. Members have no doubt noticed in the Explanatory and Financial Memorandum. In the second line of the second paragraph the Subsection there indicated should read "(7)" instead of "(5)".

I ask the House to give a Second Reading to this Bill, which has the admirable purposes that I have already indicated.

12.18 p.m.

Earl Winterton (Horsham)

This Bill raises very large issues indeed. In fact, I venture to think it would be in Order on it to discuss the whole question of Colonial development, but the House will be glad to know that I do not propose to do that this afternoon. I have one or two observations to make on what we may call the main principle behind the Bill. Before doing so, in accordance with custom, I must disclose an interest. I happen to be a large landowner in one of the Colonies which may be affected by this Bill

I was very glad that my hon. Friend the Member for Hornsey (Mr. Gammans) made the interruption which he did during the speech of the Under-Secretary of State for the Colonies. To judge from some people, it is only in the last two or three years, since this Government came into office, that there has been any development in the Colonies or any loans at all to the Colonies to carry out their development. That is complete and absolute nonsense. There have been development loans to the Colonies for at least the last 25 years.

Anyone who has visited practically every Colony in Africa, as I have, would testify to the fact that from 1920 onwards there was enormous development in the African Colonies alone, and this Bill is intended to continue that development. Further to that point, I would say that there is a fantastic delusion which really demands the attention of the next psychiatrist conference; in fact it might form the principle subject for discussion by that conference. It is a delusion which is confined to my noble Friend in another place Lord Beaverbrook, and the present Government, that until they came into office nobody ever heard of the Colonies, nobody ever did anything for the Colonies, and nothing had ever been produced from the Colonies. I must not get on the subject of psychiatry, but I am very interested in it. I would make an appeal for a distinguished psychiatrist to go into this matter to find out how to eradicate the roots of this delusion from both the Government and the noble Lord. In carrying out that task he would be doing a most valuable thing for science. I am sure that the Under-Secretary would lend himself to examination very readily. Whether Lord Beaver-brook would is another Matter.

There was one delicious observation made by the hon. Gentleman in reply to the interruption of my hon. Friend the Member for Hornsey. When a reference was made to the question of rubber—I think I have got his words right—he said that the Government could take credit to themselves that the rubber industry had so rapidly got on to its feet. Do the Government also take credit to themselves for a totally unnecessary rebellion in Malaya which was due to the incapacity of the Government? Does the hon. Gentleman, who commends himself always to us on this side of the House by his smiling affability and his complete belief in his own powers and those of the Government, also take credit to himself for that rebellion?

Mr. Rees-Williams

The trouble in Malaya is due to world-wide Communism. The Government do not take credit for that. Since the war ended the Government, in most difficult circumstances, have done a large amount of good in Malaya.

Earl Winterton

We must not argue that or else both the hon. Gentleman and myself will get into trouble. That is not the view on this side of the House. The view we hold is that the worst Government to deal with Communism is a Socialist Government. We need only look at what has happened in Europe for confirmation of that fact.

No one who made an extended tour of the Colonies before the war as I did, could deny the immense amount of development taking place. We welcome this Bill because it is one of the means of continuing and indeed of extending that development. Of course, in effect, as the hon. Gentleman truly said, the purpose of this Bill is to enable us to obtain dollars. That is one of the principal effects of the Bill, and I think that is perfectly right and proper.

Having dealt with the more controversial part of my speech, I come to the points where I think I agree with the hon. Gentleman. I believe the hon. Gentleman will agree that we as a nation welcome American participation in the development of British Colonies. This Bill is one means of obtaining it. I hope that it will not have the defect of deterring British manufacturers from producing and supplying in large quantities certain machinery which is required for development in Colonial countries. Though the matter does not immediately arise, both sides of the House would be glad if the hon. Gentleman would give an assurance that everything possible will be done to enter into long-term contracts with manufacturers of British machinery which is required in the Colonies.

Sir Arthur Salter (Oxford University)

Of course, the noble Lord will realise that one of the great advantages of American money—and it is very largely American money in this Bank—being used for this purpose is that, under the statute of the Bank, money lent by it is in no way tied to the provision of goods from a particular country, so that it is available for expenditure on goods imported into the Colonies from this country.

Earl Winterton

Yes. I am grateful for that interruption. I was aware of that fact and I should have made it clear. What I was suggesting—and I would say that my right hon. Friend the Member for Oxford University (Sir A. Salter) would be in entire agreement with me—is that it is an excellent thing for us to give the impression that we welcome American participation in these development schemes but that, in that participation, so far as the provision of machinery is concerned, we must have fair shares. Very properly, Clause 1 sets a limit to the amount of money which can be borrowed. I am sure that the Under-Secretary will agree that it is necessary that his Department should keep a careful eye on the requirements submitted by the Colonies in order to see that a proper balance is kept. Unless that is done, it might be found that some Colonies got too much and others got too little. For instance, it might easily happen that one Colonial Government might get off the mark rather quickly, thinking that if they got in their application first they would be more likely to get the money, and other Colonial Governments might want to consult local opinion and to prepare their case more thoroughly.

Clause 1 (2) refers to the purpose of the loan. It states: No loan shall be guaranteed under this Act unless the purpose of the loan is approved by the Secretary of State … as likely to promote the development of the resources of the colonial territory concerned. I hope here that I shall not be in conflict with hon. Gentlemen opposite. There is no reason why I should be, because no party question arises. I suggest that these loans should be used primarily to develop the economic resources of Colonial territories. It is admitted by all of us that many Colonies have very backward social systems. Obviously they require improvement, but it would be a case of putting the cart before the horse to spend money on social improvements before there is established an economic background which will make those social improvements possible. This should be a Bill to develop the economic resources of the Colonies for the benefit of the Colonies, including the poorest paid inhabitants.

I wish to make one point with regard to Subsection (3), where the conditions are laid down. One of those conditions is that the Treasury should satisfy itself as to the general financial position of a Colony which wishes to borrow. The hope we express on this side of the House is that the Treasury will be content with a general survey of a Colony's finances and that this Clause will not impose too much of what is known as Treasury control in the accepted sense of the term. Any hon. Members who have visited the Colonies will know how—in the past at any rate and for all I know at present—terrible difficulties have been caused for Colonial treasurers who often find annoying conditions laid down in respect of money loaned to them. I have known instances where things ought to have been done and could not be done because of conditions laid down. I hope, therefore, that this will not mean Treasury control in the accepted sense of the term.

We accept this Bill in principle. We are glad that it has been brought forward. We hope that it will prove beneficial to the Colonies and that it will be another step in the long, carefully constructed road—a road which has existed far longer than hon. Gentlemen opposite would care to admit—in the development of the Colonial possessions of the British Empire.

12.29 p.m.

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

I hope that in the interests of His Majesty's Opposition the clearly stated division of opinion between the noble Lord the Member for Horsham (Earl Winterton) and the noble Lord in another place will be resolved at an early date. We on this side of the House are well aware of Lord Beaverbrook's well known prejudices in favour of this Government which naturally discount any tribute that he cares to pay in the columns of the "Daily Express" to our Colonial policy.

Earl Winterton

If the hon. Gentleman thinks that Lord Beaverbrook is a supporter of the Conservative Party he had better think again. If he thinks that Lord Beaverbrook is a supporter of the Conservative Party he also needs to see a psychiatrist.

Mr. Hughes

Whatever views Lord Beaverbrook may hold about the Opposition, I think it is quite clear that he has considerable reservations on His Majesty's Government, and, therefore, when he does pay a tribute to the Government, that tribute carries all the more weight coming from that particular source. While admitting that, obviously, there has been Colonial development in the past, any unprejudiced observer will admit that the scale of Colonial development in these territories in the last three years, while the present Government have been in office, has been far greater and more progressive and imaginative than in the period between the wars.

We on this side of the House welcome this Bill. We recognise that, in addition to the great efforts already made by the present Government, there is still much room for further development and expansion, and I particularly welcome the very encouraging news which the Under-Secretary has given us about steel expansion. I hope that the Report of the Select Committee has had some part in stimulating and expediting the Government's action in raising the steel allocation to the Colonies. The position in the Colonies today is that the limitation on development is not primarily one of finance. It is at this stage primarily one of materials, and skilled and technical man-power, and that is the reason why this Bill will remain for the time being an enabling Bill.

Having said that, I will add that it is also quite clear that the present limitations on dollar expenditure have been seriously affecting some Colonial territories. I quote the answer given by the Financial Secretary to the Government of Nigeria to the Select Committee, when he was asked, on this specific point, whether steps have been taken by the Nigerian Government to make application to the International Bank for Reconstruction. The answer he gave was: We have been informed that a dollar ceiling has been imposed for the whole of the Colonial Empire and that the ceiling for Nigeria is x dollars. We have fought and are still fighting for that to be increased, because we have a lot of leeway to make up, and with orders placed and import licences having been approved the stuff has not yet come forward, and we regard it as absolutely imperative that we should have a higher allocation of dollars. It is quite clear that though the chief limitation on Colonial development at present is not financial, that the dollar limitation is quite serious. As the Undersecretary said, the Colonial territories are net dollar importers, and I therefore hope that they are going to get a fair share of the dollars available from the general sterling area pool to help them to overcome their difficulties. Their financial requirements are enormous. To take the case of Nigeria at the present time, under the ten-year plan outlined in the Colonial Development and Welfare scheme, the amount of capital expenditure provided for is only 5s. per head of the population per year. Obviously, that amount of capital expenditure does not go very far to meet the great needs of an undeveloped territory of that kind.

Colonial development is precisely the kind of purpose for which the International Bank was set up, and, looking at its third annual Report, it is clear that there are considerable sums of money available now that could be used, but the only development loan which has so far been made is a loan to Chile. Ninety per cent, of the money available is from American sources, but I think we ought to be clear that money from the Bank offered in this way does not mean, as the noble Lord seems to think, that we are asking for direct American participation. It is true that the Bank is primarily financed from American sources, but it is an international institution under international control, and I am sure that the American representatives on the Bank would be the first to recognise that.

The Under-Secretary pointed to a very real difficulty about using the Bank as a source of finance, and that is the question of the rate of interest. The rate of interest on E.C.A. loans is 2½ per cent, whereas loans coming from the Bank, if we allow for commission, are at the rate of 4½ per cent. I do not know what is the rate of interest on the Trinidad Loan—

Sir William Darling (Edinburgh, South)

Three per cent.

Mr. Hughes

Until the Bank can cut down the rate of interest on money advanced to these undeveloped territories, this available source of finance is not going to be used to anything like the extent that it should be.

I should like to ask the Under-Secretary what are the detailed arrangements for repayment of these loans. There are various clauses in the Statute setting up the International Bank providing for different types of loan, which provide for direct loans to members, for making or participating in loans raised in the markets of members, or guaranteeing in whole or in part loans made by private investors through the usual investment channels. I am not clear if this Bill enables us to ask for financial assistance under all those three Subsections. Then there are various escape Clauses in Article IV, which provide that, in certain circumstances, territories may receive dollar loans which they can repay in other currencies.

Is it the view of the Colonial Office or the Treasury that we may, in this way, be able to get for the Colonial territories dollar loans which we shall have to repay, not in dollars, but possibly in sterling? Can we have any help on that point? Another question was raised by the Under-Secretary when he said that dollar loans would only be available for use in dollar areas.

Mr. Rees-Williams

They will only be used for dollar requirements—for dollar purposes in any of the areas.

Mr. Hughes

I want to draw attention to the terms of the Statute——

Mr. Rees-Williams

Let us get this quite clear. The loans will be used in the sterling area because all these territories are in the sterling area, but the form of the loan must be in dollars. It is not part of the statute of the Bank, but part of the policy of the Bank.

Mr. Hughes

Article III (5) provides that the Bank shall impose no conditions that the proceeds of a loan shall be spent in the territories of any particular member or members. That, I think, meets the point raised by the noble Lord.

What type of loan is the Bank likely to give? In the third annual report, a most interesting and instructive document, they say that this kind of finance will be least necessary for the production and processing of primary materials and for the development of light manufacturing industries. In other words, this kind of finance will be less readily available where there is hope of private investment, but it is precisely for the development of primary and processing industries, that many of the Colonial territories must urgently need financial assistance. The Colonial Development and Welfare money is going to be used in the provision of social services and the basic economic developments that are required. What is really needed in addition is finance which will be available for building up secondary industries, and so on. I hope that the Bank, in considering any application that may come forward from the Colonial territories, will not rule out finance for this kind of project, which is extremely important.

As I understand my hon. Friend, this is but a preliminary Measure. I had intended to ask whether any applications had been put to the Colonial Office by Colonial Governments for this sort of finance, and what stage such applications had got to—whether any applications had been approved by the Colonial Office, and if there had been preliminary consultations with the Bank. There is a fairly long and detailed procedure set out whereby the Bank itself goes in for pretty elaborate investigations in the territories for which loans are required. A considerable time would elapse, it seems to me, before money was actually made available, after the time at which a Colonial Government first put forward a suggestion. So even if finance is not needed immediately, it may be a good idea to get a project started right now.

The Bank also is able to provide technical assistance and independent experts at the request of members for development schemes. The Under-Secretary mentioned getting technical assistance and independent experts through the European Co-operation Agreement. I should like to know whether an approach has been made, or is contemplated to be made, to the Bank, to assist Colonial territories in their desperate shortage at the present time of technical assistance and independent experts. One difficulty we may come up against is that shortages of equipment and materials which are needed in the Colonial territories are as serious in the dollar area as they are in the sterling area. Therefore, while the finance may be forthcoming it may not assist very much the type of development we have in mind.

Finally, I should like to draw attention to a very significant sentence in the third annual report of the International Bank. It says: Any development programme, if it is to have the necessary popular and governmental support, must emerge from the thinking of the responsible leaders of the country itself. I want to underline that. In our development projects we are increasingly trying to bring in local Colonial opinion at an early stage in discussing development projects, and I am sure that that is absolutely vital to the success of all kinds of development projects. We have to get the assistance, and co-operation of the responsible leaders of the Colonial peoples themselves, even where they have not yet reached a high stage of political self government. I hope, therefore, that in the consideration of any projects under this Bill, that will be borne very much in mind.

12.44 p.m.

Mr. Ivor Thomas (Keighley)

This is a short Bill, but it raises most important questions which ought to receive a searching examination from the House before it is given, as I think it will be given with general approval, a Second Reading. As the noble Lord the Member for Horsham (Earl Winterton) has already recognised, some of the most important questions in Colonial development are raised by this Bill; and I agree very much with almost the whole of the most thoughtful speech of the hon. Member for West Wolverhampton (Mr. H. D. Hughes). Anybody who has anything to do with the Colonies will admit, I think, that the most urgent need at the present time is the capital development of the Colonies, and I so much agree with the Under-Secretary that this capital development is the prerequisite, or, at any rate, ought to be the accompaniment, of constitutional, social, and educational advance. At the present time constitutional advance has outstripped economical development, and we need a very great economic development to restore the balance.

In the past that economic development was undertaken by private enterprise on a very large scale, to which due recognition has not been given. I shall leave it to the hon. Member for Maldon (Mr. Driberg) who, I think, is trying to catch your eye, Mr. Speaker, to tell us the degree of Lord Beaverbrook's support for the Government. But I should myself like to say that private investment in the past has done a most remarkable work in the Colonial territories. It has done that work without asking for a guarantee, such as the International Bank is securing under this Bill. It has done so without asking for 4½ per cent. interest on its investment, and has often gone without any return for many years on end. However, it has become more and more difficult for private enterprise to undertake that work. The reason is quite simple. It is the high taxation which is being pursued in this country, and which is having serious consequences both here and in the economic development of the Colonies.

There is only one source at the present time from which that capital investment in the Colonies can come. If we face the facts we know that that source must be the United States of America. The question of whether American participation in the development of the Colonies ought to be welcomed is one that has exercised a good many people; and for this reason, that the United States has tended to embrace principles which would, in fact, hamper development of our Colonial territories. We all know, I think, that our recovery here is based on three things, the development of home agriculture, of our invisible exports, and of our Colonial resources; and the Government appear to many of us to have gone rather a long way in the Geneva and Havana agreements towards accepting principles, originating in America, which would tend to hamper Colonial development.

If the United States is to participate in Colonial development the best way in which it can be done is the way in which it is being done under this Bill; that is, through the International Bank. As the hon. Member for West Wolverhampton has just stated, the greater part of the Bank's resources, do, in fact, come from American funds. The third report which, like him, I have been studying, says: The different funds available to the Bank for lending have come very largely from United States sources. In fact, of the 992,500,000 dollars available for lending not less than 635 million dollars comes from the 20 per cent. paid-in portion of the subscription of the United States.

The next question that arises is the attitude of the International Bank towards Colonial development. How will it use the £50 million for which we are seeking a guarantee under this Bill? I think we have very satisfactory answers to that question in the third report of the Bank. The hon. Member for West Wolverhampton has read one quotation from it, and I should like to make another, which is, I think, relevant. The third report says: In formulating its policies with respect to furnishing advice to its member governments, the Bank has borne in mind that it must avoid any gratuitous interference in the internal affairs of any country, or the assumption of financial or other commitments it cannot fulfil, or too deep an involvement in the details of a particular program. That seems to me a very wise approach for such an international organisation to make, and, incidentally, an approach which I should expect from a body which has as the chairman of its advisory council my right hon. Friend the Senior Burgess for Oxford University (Sir A. Salter).

I think the third report also enables us to see the uses to which this £50 million may be put. The bank in its very thoughtful report outlines two types of investment in the Colonies. One, as the hon. Member for West Wolverhampton has just said, is the production and processing of primary materials, and the other is the development of light manufacturing industries. The report goes on to say, and I should like to make this quotation as I believe it answers the question of the noble Lord the Member for Horsham as to how this money will be used: Some other fields of investment which are equally essential to well-balanced development may frequently be less attractive to private capital, either because of the size of the investment required, or the smallness or uncertainty of the returns, or the prospect of Government intervention or control. Large irrigation and reclamation projects, public utilities, health and training programs and migration schemes are likely to be subject to these difficulties. While many investments made by private capital in the past have been in transportation, communications and power facilities and additional investments may be anticipated, the trends of recent years suggest that this is the type of development that is most apt to require assistance from the Bank, either in the form of direct loans or through guarantees. A very interesting point to me, as I am sure it will be to the Under-Secretary, who has so much to do with the Colonial Development and Welfare Fund, is that this report, and particularly that part which I have just quoted, bears out strongly the wisdom of the administration of our own Colonial and Development Fund. It is precisely on this type of project that the £120 million which we are making available out of United Kingdom resources for Colonial development is being spent.

There are certain other lines of policy laid down by the Bank which I think ought also to be brought to the notice of the House. They seem to me to be very wise. The third report says that the Bank should favour the application of the limited supplies of capital to projects which will result in the greatest increase in production and trade in relation to the size of the investment, and it also says this—which I am sure will have the support of the noble Lord: The extensive capital required for all of these purposes emphasises the need for application of the remaining capital to immediately productive uses rather than to premature or disproportionate development of heavy industries. Thanks to the Treasury guarantee, this Bill adds another £50 million to the sums which have been made available for Colonial development. We have had £120 million from the Colonial Development Welfare Fund which, when supplemented by local resources, will amount to £350 million. We have £150 million made available under the Overseas Resources Bill, most of it for Colonial territories, and we now have this additional £50 million. This is very welcome and, as I hope I have shown, it is not tied up with what the Under-Secretary called strings. However, do not let any of us think that this will solve all the problems of the Colonial territories. The needs of the Colonial territories are to be measured in thousands of millions of pounds. Nevertheless, within its limits, this is a most useful Bill, and I hope the House will give it a unanimous Second Reading.

12.54 p.m.

Mr. Gammans (Hornsey)

I have a great personal regard for the Under-Secretary, as he knows, and I refuse to believe that he is as simple as he pretends to be when he talks about the success of the Trinidad loan. Has he not thought that possibly one of the reasons why it was over-subscribed was not so much people's faith in the stability of the Government as their desire to get their money out of the country? If he doubts the assertion, he might contrast people's anxiety to invest money in' Trinidad with their reluctance to invest money in the National Savings Movement in this country.

Mr. Rees-Williams

I am grateful to the hon. Gentleman for giving way. I would simply say that when the tree falls so do the branches.

Mr. Gammans

Maybe, but still the money would, in fact, be in Trinidad.

Hon. Members opposite must forgive me if I support this Bill with a certain amount of cynical amusement, because all my life I have listened to Socialists beating their breasts unctuously about what they call Colonial exploitation. Colonial exploitation is only another way of saying investing outside capital in a particular Colony. Here we have it in full measure—not merely British money but money which is largely American, capital which has been gained by private enterprise, and also the profit motive. So the wheel has turned a full circle. The hon. Gentleman is rather like the secretary of a Band of Hope who has been offered a substantial donation by the Licensed Victuallers' Association and wonders whther he should accept it. However, he has wrestled with his conscience and has gone round to the nearest pub and pocketed the cheque. Well, we live and learn; some of us have to live a very long time before we learn.

The truth is that the Colonies need capital. They need all they can get, and the interesting thing is that those Colonial territories which have succeeded in attracting the largest amount of outside capital enjoy the highest standard of living, and those which have the least outside capital have the lowest standard of living. We are short of capital ourselves, and so we very much welcome this opportunity of getting capital from another source.

I hope the hon. Gentleman can give us real assurances that there are no strings whatever tied to these loans. I hope he can assure us that any money we may borrow from this Bank has no connection whatever with, say, stock piling in the United States or rearmament or anything of that sort, and that any Colony which needs outside capital can come along to this Bank, through the Colonial Office, and make a claim for the capital. There is, of course, the danger to which the hon. Member for Keighley (Mr. Ivor Thomas) referred, of mixing up the functions of State loans, whether they come from this country or from the International Bank, and private investments. I hope the House will keep the difference very clearly in mind. To my mind, the function of these State loans is primarily for capital development, including roads, railways, aerodromes, things like mineral surveys and so on.

I hope, too, that the hon. Gentleman will tell us if at this stage he has any ideas in his mind as to which Colonies may ask for loans from the International Bank. Is he thinking of British Guiana or British Honduras, or the growing of rice in Borneo and the Far Eastern territories, or is it that today he is merely thinking of providing facilities without having any definite schemes in mind? There is the danger which we ought to face, that these State loans may discourage private enterprise from investing their money as well. I know the hon. Gentleman feels that the only true development started about three and a half years ago, and unless he is going to freeze off all private enterprise and say "I do not want you at all," he should be a little more careful in his reading of history and a little more gracious in the invitation which he extends to private enterprise in future. Otherwise, he will not get it.

What we want is the greatest amount of capital in the Colonial Empire, whether it comes from this country or from private sources or locally, provided it fits in with one or two principles. The first principle is that the sort of development that private enterprise wants to undertake should be in accordance with the general economic plans of the particular Colony; that it should pay its fair share of taxes, including in the case of mining, reinstatement of land; the realisation that mining is a wasting asset; and, in the case of loans from non-sterling areas, investors must realise that there may be limitations on the transfer of their dividends into hard currencies, and lastly that private enterprise shows itself an ideal employer.

We on this side of the House gave our support to the Groundnut Scheme in East Africa, but we recognise that there are dangers which are shown in this Bill, including the danger which I have mentioned of freezing out private enterprise. There is also the political danger which I do not think the Under-Secretary has fully appreciated; here for the first time are His Majesty's Government exploiting a Colonial territory direct. He will have to be extremely eloquent in due course if he can persuade the people of East Africa that this is not being done primarily for the benefit of the people of this country who will want the food which that scheme is going to produce. Up to now, the Colonial Office has always been, as it were, the judge standing in an intermediary position between capital and the people of the country. Now they have become the exploiters themselves. I warn the hon. Gentleman that political agitators in a Colony would put a very different interpretation on that form of enterprise from that which the hon. Gentleman would wish.

Mr. Rees-Williams

Is the hon. Gentleman referring to the Groundnut Scheme? He will remember that in the Overseas Resources Bill, when we used something of the argument which he is now using, the hon. Gentleman was one of those who wanted the Overseas Food Corporation to come directly under the Colonial Office and not under the Ministry of Food.

Mr. Gammans

That was because I thought the Colonial Office would be in a better position to deal with the sort of criticism which I have raised than would be the Ministry of Food. I want to say a final word about Subsection (3). This deals with the financial standing of a Colony. I hope that the House will agree that it is impossible to divorce the financial standing of a Colony from its political stability. After what has hap- pened in Malaya, the International Bank and the American taxpayer will need a lot of assurance that His Majesty's Government are capable of maintaining order; the hon. Gentleman may see that the same thing is likely to happen in Cyprus. I warn the hon. Gentleman that if there is a Communist uprising or Communist trouble in Cyprus, it will be no use just sending out some well-meaning simpleton from the T.U.C. to try to argue with the local people on how to run a trade union.

After all, Lord Trefgarne has warned us and the Government of the danger of sinking money in a Colony which makes known its intention of clearing out of the Empire at the earliest possible moment. After what has happened in Burma, I quite see the point of his warning, because Burma has certainly done very well out of its disloyalty to the Crown. It has got out of paying its war damage liabilities; it has expropriated the assets of British companies and, if I may put it this way, it has out-Daltoned the ex-Chancellor of the Exchequer in the terms which it has paid to companies which have been taken over. We have given them £30 million, and now we have loaned them another £2 million of our dollar resources. If the Colonies feel that they can do as well out of being disloyal as they can out of being loyal, we do not get the conditions under which this money can safely be loaned.

In welcoming this Bill, I think that we ought to pay tribute not only to the Bank, but to its largest shareholder, the United States, for their great farsightedness in helping us at this time. Hon. Members opposite may say that that help arises out of a mixture of idealism and also of enlightened self-interest. That may be so. If all human affairs were governed by enlightened self-interest the world would be a much better place in which to live than it is today. I think that perhaps history may show that the fact that the United States did not go isolationist after the second world war, either politically or economically, may turn out to be the greatest single event of this century. Here we see one other example of it in their attitude towards us and our own Colonies, and it is for that reason that, with the reservation which I have made, I entirely support the Bill.

1.5 p.m.

Mr. Harold Davies (Leek)

I am sure that, despite the cynicism of the hon. Member for Hornsey (Mr. Gammans), in the main, he agrees with this Bill. What are we setting out to do? In reality the great British public are guaranteeing directly and indirectly another loan of £50 million which will come through the International Bank. While, as the right hon. Member for Horsham (Earl Winterton) said, it would be quite in order to spread that over the Colonial areas, it would be wrong of me to extend my talk on that subject for more than a few minutes today, but I hope that in the near future we shall have the opportunity for a full Debate on the position of the Colonies, because there are certain aspects of trade in the Pacific of which I think this House should take note.

I should like to know what will be the kind of development envisaged in the Pacific area, especially after the Japanese trade agreement in connection with which we have acknowledged that there will be a 3½ times expansion of Japanese trade. None of us desires to keep the Japanese people below the subsistence level, but unless we have some coherent and parallel development of economic and trade policies in the Pacific Basin, then whatever policies we may build up for our Colonial territories in South East Asia they are likely to be destroyed because of lack of co-operation.

I deprecate the fact that many Members in this House are becoming hypnotised by United States commercial power. I hope that it will be realised—and the hon. Member for Hornsey (Mr. Gammans) was, I believe, present at the Empire Parliamentary Conference during the Recess when we had delegates from overseas—that it was demonstrated by representatives of the Colonies that it was quite possible, despite the shortage of raw materials and of machinery, to make new purchases and to achieve new output targets. One of the things that would help towards this would be for the Labour Government to kill this horrible job snobbery which exists in the Colonies.

I do not want to enter into the cut and thrust of Debate, and I do not desire to take up the remarks of the right hon. Member for Horsham about Communism in Malaya; but it is not Communism in the main which is the cause of the trouble in Malaya and South East Asia; it is shortage of rice and other food, and political groups have taken the opportunity of exploiting this shortage. The repeated assertion that it is Communism all the time which is the cause of the trouble is now growing nauseating, and is not in strict accordance with the real economic facts of that country.

What we should try to do with these loans—and I was glad to hear the hon. Member for West Wolverhampton (Mr. H. D. Hughes) mentioned it indirectly—is to kill some of this job snobbery in the Colonies. Cannot it be used to send out British workers—men who have not degrees but ordinary decent bricklayers and men of that kind—men who can lay a road without knowing about road instruments—who would be of tremendous value. I do not want to accuse anyone of saying that in the past the Colonies existed for the public school man, but the Colonies hitherto seem, to have existed for the type of man with higher academic or technical education. Cannot we now push into the Colonies people possessed of our own British skill, who can help the people around them, and cannot these loans be used for this type of development?

Mr. Gammans

Does the hon. Gentleman suggest that people should be pushed into the Colonies without any qualifications? Is he saying that an engineer should not have degrees and that we should push in a bricklayer because he is a bricklayer?

Mr. Davies

No, let us be reasonable about this. We want to encourage these people. What is the good of the engineer if we have not the men of skilled labour below the level of the engineer? I suggest that as well as sending doctors to the Colonies, which is almost an impossibility in view of the great shortage of doctors in the world today, we should seek to develop the health services by maternity and welfare work. If we have to find university graduates, engineers and doctors to develop the Colonies, then we shall have to wait for at least 60 years. I am suggesting that we should break down this job snobbery and get on with development on these lines. We have filled the Colonies with babu types. There is nothing worse in the Colonies than the de-classed native, the native who when he is taught to pen-push is wanted neither by his own people nor by the white people. What we want to see is a manly type of labour to develop the Colonies on both the economic and social sides.

Under the agreement signed last November, the Colonies reduced their preference margin on imported goods from non-Empire countries by £4.2 million, measured in terms of 1938 trade. This country must stand up to the pressure of the United States in our trade agreements. The tragedies and troubles in Malaya have been largely caused by the low price of rubber. While our development plans are bound to be affected by the dollar crisis, we might as well see, while being fully prepared to co-operate with any country that wants to develop the Colonies, that we get the maximum possible prices during this transitional stage in the economic life of the Colonies.

For the first time some of the Colonial people are meeting a new money problem. The circulation of money in Jamaica has increased by more than 2,000 per cent., and in West Africa it has increased by 165 per cent. In these circumstances, it is essential that there should be consumer goods available to mop up any inflationary pressure which must ultimately lead to a lower standard of living for the people. I agree with the hon. Member for Hornsey (Mr. Gammans) that we should not read too much into this Bill. It is for us to watch the development of the Colonies, and in this connection I hope that in the near future the House will have the opportunity of a three-day Debate to discuss the economic, social and political development in relation to the Marshall Plan and the plans of this country.

1.15 p.m.

Sir William Darling (Edinburgh, South)

The hon. Member for Leek (Mr. Harold Davies) has given us a very interesting impression of his Colonial experiences. I would remind him, however, that for the past 20, 40 and 100 years European manual workers have been going to the Colonies. How, for instance, does he think a rubber plantation is set up? Is it done by coolie labour? Does the planter have nothing to do with the arrangement of his plantation? Then what about irrigation?

Mr. Harold Davies

The hon. Member is completely misinterpreting what I said. I did not say that British skilled labour had not gone out to the Colonies in the past, but that we needed to break down the job snobbery which existed in the past.

Sir W. Darling

I lived in the Colonies for a number of years, and I was not conscious of this job snobbery which has caught the fleeting glance of the hon. Member; but perhaps, like many others, I lived in a world without it, and the occasional visitor sees more of it. The tea plantations and the great irrigation works of India and Ceylon were not constructed or built up by the class of person he has in mind. The hon. Member has a picture of an English public school boy going out to do this work, living a life unassociated and detached from the people.

The Government are extremely good at producing Bills of this character. Last week we had a Scottish Water Bill which envisaged water development in Scotland for the next 50 years at a cost of £20 million; and today we have a Bill which envisages development in the Colonies over the next 20 years at a cost of £50 million. Not only do the Government nobble the past and seize the present, but they face the future by drawing an increasing number of blank cheques which they will not be expected to redeem. I am surprised that the financial experts who support the Government are not here this morning. We find that the Government are now borrowing money at 4½ per cent. It shows that when the Government's cheap money policy comes up against the hard facts of reality it disappears into nothingness. I voted against the American Loan for the very reason that it inevitably leads us to this kind of finance. I am not in any way opposed to America advancing capital, but it is for the Socialist Government to be reminded that in order to secure Colonial development, their cheap money policy is defeated and they have to go overseas and pay 4½ per cent., with 1 per cent. banker's commission.

Sir A. Salter

The 4½ per cent. includes the banker's commission.

Sir W. Darling

There is an addition to the 4½ per cent. in one of the Clauses.

Mr. Rees-Williams

The banker's commission is 1 per cent. and the interest 3½ per cent., making a total of 4½ per cent.

Sir. W. Darling

I accept the correction, but 4½ per cent. is very different from 2½ per cent. I suggest that inevitably as a result of the Government's policy there will be an immense amount of dis-investment. The private enterprises which are being taken over will free a great amount of capital on the home market, and the weight of investment will be very considerable. Indeed, that has already been proved by the weight of investment in the Trinidad loan. Is the main prop of our Colonial development to be loans from the International Bank of Reconstruction rather than use of the machinery of the finance market in the United Kingdom? Has the finance market in the United Kingdom proved insufficient, and are the Government satisfied that they cannot raise the finance over the period when they are likely to require it? Is Trinidad a single exception, or is it to be tripled or quadrupled over the whole field?

I suggest that before we commit ourselves to a £50 million loan, of which 35 per cent. will be supplied by the United States, and 15 per cent. by our subscription, and the rest by others as the sheet anchor of Colonial development, we should look to our own resources. They are probably freer than they have ever been, and we must remember that ultimately, finance controls industry whatever the qualifications. Ultimately the placing of this loan largely on American finance, will inevitably condition for many reasons but for the main reason that it is American finance, the market for which these goods and services are purchased. It may be a good thing, but it is not a good thing for a Socialist Government, which is preaching a cheap money policy and is now prating about Colonial development, to tie their policy to such potentialities. So while sharing all the hopes of His Majesty's Government that this loan will bring about all the conditions they properly anticipate, I would ask them to think again, and I would offer a dissenting note about the wisdom of offering themselves to the extent of £50 million in an international loan.

1.21 p.m.

Mr. Driberg (Maldon)

These semiprivate Friday Debates are always most interesting when the noble Lord the Member for Horsham (Earl Winterton) is in one of his more provocative moods, and he certainly entertained us admirably this afternoon. I am sorry that he has had to leave us, because I propose to respond to the invitation of the hon. Member for Keighley (Mr. Ivor Thomas) and clear up so far as I can the noble Lord's anxieties about the position of his noble Friend, Lord Beaverbrook, vis-à-vis His Majesty's Government. It can be done in one sentence. The position is perfectly simple. Lord Beaverbrook has two main objects in life: first, to harass the Labour Government; and secondly, to embarrass the Conservative Party. He enjoys himself enormously doing both.

It was evident from some of the noble Lord's remarks and some of those of the hon. Member for Hornsey (Mr. Gammans) that the Conservatives are now becoming extremely sensitive to reminders of the inadequacy of their record in Colonial development in the past, as compared with the record and the projects of the present Government. The noble Lord was, of course, perfectly correct in saying that there have been many development loans in the past. But, if the figures be examined, surely it will be found that the scale of such assistance in the past was really puny in comparison with what is being done by the present Government. Again, the noble Lord—I am glad to see that he has come back—was perfectly correct in emphasising that Colonial development, development loans, and so on, are in themselves no new thing; none the less, although my experience of the Colonies is no doubt less extensive than his, when I visit a colony I am often shocked to find how ineffective those efforts, which are alleged to have been made over so long a period, have been in assisting such territories to improve their conditions and in helping to combat the appalling squalor and hunger in which so many millions of the inhabitants have to live.

Earl Winterton

I do not think the hon. Member would hold that view if he had seen as I have seen over the past 17 years such things as Takoradi Harbour, the amazing improvement in conditions in Nigeria and other social improvements in West Africa, for example, the complete eradication of the malaria mosquito from Sierra Leone. Anyone who has seen all these things could not honestly say that there have been no development in the Colonies between the wars.

Mr. Driberg

I did not say that there had been no development and, of course, I pay tribute to such work as has been done in combating tropical diseases. My point is quantitative rather than qualitative. I insist that the amount, the scale, of such work in the past—and still today, for that matter—has been infinitesimal in relation to the size of the problems and the populations to be dealt with. That is all I say, and from that point of view it is just to claim that the present Government have tackled this problem in an infinitely bigger way than any previous administration has done.

We are sometimes accused, in a word of which the Leader of the Opposition is very fond, of liquidating or wanting to liquidate the British Empire. I should have thought that it might be more just to say that the present Government are sublimating the British Empire—to borrow a word from the psychiatrists whom the noble Lord admires so much. We are beginning to create a decent Commonwealth out of the largely slum Empire that was bequeathed to us by our predecessors.

Having said that, and having been controversial in the first part of my remarks, as was the noble Lord, I should like to say that I found one of his points extremely important and interesting and that was his emphasis on the prior importance of economic development as compared with social and constitutional development, which was also referred to by the hon. Member for Keighley. This is, of course, of fundamental and primary importance, but I would suggest that, rather than give an absolute priority in time to economic development, we should try to encourage the two simultaneously: economic development in itself is not enough unless there is social advancement, which includes, presumably, educational advancement, enabling the people to make full and intelligent use of the economic development that is provided. This is true whether it be in agriculture, for instance in the study of techniques of soil-conservation—a subject of tremendous importance in so many parts of the world—or in any other respect. We should try to get a parallel development, socially, politically, and constitutionally, as well as economically. I quite agree that it is unfortunate when one too far outstrips the other.

There are two questions I want to ask my hon. Friend before I sit down, if he proposes to speak again by leave of the House. The first is this: in Clause 1 (7) of the Bill, does Subsection (a), which defines the territories covered by the Bill, include such territories as Jamaica, which have achieved what is usually described as partial self-government? It reads: a colony not possessing responsible government. If that includes such Colonies as Jamaica, which possess some degree of self-government, I suggest that this wording is not quite correct. It might be altered on the Committee stage if suitable wording can be found, because it is not true to say, whatever view one takes of the character of the present administration there, that Jamaica has not got responsible government. It has got responsible government up to a point, and I suggest, therefore, that on the Committee stage my hon. Friend might consider substituting some such words as: a territory not possessing full self-government. My other question is what exactly is covered by the words— … development of the resources of the colonial territory concerned. Are those to be interpreted narrowly—possibly it is necessary that they should be—and as referring only to material resources, agriculture, minerals, and so on? Or will they be interpreted rather more widely, to include, for instance, educational development, either general or technical? After all, there is nothing that could contribute more to the development and maintenance of the resources of many of these Colonial territories than, for instance, precisely that study which I have just mentioned, the study of modern methods of soil-conservation.

1.30 p.m.

Sir Arthur Salter (Oxford University)

I want to make one passing remark upon the comparison which the hon. Member for Maldon (Mr. Driberg) made between the extent of Colonial development in the past and what is now being undertaken by the Government. He said that past Colonial development had been infinitesimal in relation to the need. That is a rather strong word anyhow, but the comparison, of course, is not between what has been done in the past and the need, but between what has been done and what is being and will be done now and in the near future. And what will be done will depend not upon the good intentions of the Government, nor even upon the statutory facilities which they have obtained under Acts of Parliament; it will depend upon the resources that can be allotted for that purpose, and those resources are restricted in our present and prospective economic conditions.

It is for that reason I rise not only to welcome and support this Bill, but to express the hope that the Government will do all they can to encourage loans of the kind which are contemplated in this Bill. It is a great advantage that foreign money, and in particular American money, should come in to assist in the development of Colonies, our own and others, and in such a form as it does when it comes as loans from this Bank, a Bank of which while the great bulk of the financial resources are American, is under international control and has an international outlook and policy. This is shown, for instance, by the fact to which reference has been made that as distinct from the Export-Import Bank, the loans so made are not tied to expenditure in any particular country, and the borrowing country can use the resources it so obtains for buying what it needs wherever it finds it most advantageous and economic.

There are several reasons which make it advantageous to develop loans of this character. In the first place it will be a great advantage to the inhabitants of the Colonies because it is clear that, with the addition of external resources of this kind, both the extent and pace of Colonial development can be greater than would otherwise be possible. In the second place, it will also be to some extent a relief upon the hard-pressed economies of the metropolitan countries, our own included, which will find it extremely difficult—if, indeed, it will be possible at all—to export capital from this country on the scale contemplated in the relative Act that this Parliament has passed.

I think, too, that there is a further advantage. In the evolution—constitutional, political and the economic status generally of the Colonies—it is extremely important that what is done should be based upon world opinion, not only in the Colonies and in the metropolitan countries, but in external countries and, in particular, in the greatest of the non-Imperialist powers, America. It is important, however, that this should be informed and responsible opinion, and it seems to me that the association of America with the Colonies in the form now contemplated is a good basis for the development of responsible, informed opinion of that kind.

There is one further advantage. The time must come when Governmental loans of this nature are supplemented by the resumption of private lending and private enterprise. It would be of great advantage if at that time—it may be soon after the period during which the disequilibrium of the world balance of payments is being temporarily bridged by such measures as Marshall Aid—American private investors should find the Colonies an attractive field for the investment of their money. For to the extent to which they lend money in his way there will be a reduction in the necessity for the closing of the gap by the violent reduction of American exports, which might be disadvantageous both to their economy and to the economy of the countries that will still desire to import American goods for which they would otherwise not have sufficient dollars to pay.

I think, therefore, it is advantageous that American private investment should find an attractive field in the Colonies, but there is a great obstacle in the way of that development taking place. The Imperial Powers, our own and others, naturally attach conditions for the entry of investment—for example, for the sake of protecting the inhabitants against the dangers of exploitation, and sometimes for other purposes. It is difficult if successive private investors, or people concerned with the development of private enterprise, have to negotiate one after the other quite separately with the metropolitan Powers as to the conditions under which their money might enter. I think that the Bank—an inter-governmental institution of this kind—can, while immediately doing something immediately beneficial, also provide the further benefit that it will have cleared the way for the entry of capital under private conditions later.

For all those reasons I not only support this Bill but couple with it an expression of hope that the Government will do their utmost to make these loans really mature.

1.37 p.m.

Mr. Follick (Loughborough)

I rise to support this Bill, and I shall not find fault with Colonial development in the past, although in the past it was not co-ordinated—it was too much located in parts of the Empire that could be more easily exploited. We have to aim at a total overall development so that the whole Colonial system can develop at the same rate throughout the world. We have Colonies which have received no attention at all, and even now are not receiving the slightest attention, but which may in the course of time be of the utmost importance in our Imperial development. I have been fortunate enough to visit many of our Colonies. In fact I have been in some Colonies the names of which are hardly known in this House. I have been in Tristan da Cunha, St. Helena, and Colonies of that nature which, seem to ordinary persons of no value, but which may with proper development be not only of great economic but also of great strategic value.

Will the Protectorates be included in this development loan? They are important parts of our Empire. Will the Mandated Territories be included? We cannot develop a Colony alongside a mandated territory without viewing the region as a whole. We have a few small European Colonies like Malta and Gibraltar. How much of the development loan will be given to our smaller possessions? Will they be given any attention other than military? That alone will not be proper Colonial Development.

In the field of education we have one outstanding Colonial development which is not in a Colony at all but in a Protectorate. I am speaking of Makerere College. I was there recently. They are extremely short of books and apparatus for educational purposes. Are we to give sufficient attention to the educational developments of these territories, in contrast to economic development? After all, economic development depends largely upon educational development. Are we going to give the right sort of education to these people? I went to a secondary school in Uganda. The pupils were being taught about the Punic wars. I asked whether that served a useful purpose and whether the pupils understood about those wars. The answer I received was that those were the only books they possessed. When I was in South Africa I spoke to Dr. Jantsen about native education. He impressed upon me that, "We have got to give the natives an education that will be useful to them and to the Union. We must not give them an education which will be useful neither to themselves nor to the Union."

We must be very careful not to upset the economies of any territories as a result of our loan. Let us consider the -case of Southern Rhodesia, in which Colony we have upset the growth and production of food. The land there could be much more advantageously employed for food and agriculture. Native labour has drifted into the tobacco farms at the expense of food farms, because the pay is higher and the work easier. As a result the price of food has risen tremendously, and, consequently, the cost of labour is much greater than formerly.

How much of this loan is to be applied towards the extinction of diseases? We are all aware of the tsetse fly problem in Lake Victoria district. I went to their experimental institute for tropical, agricultural diseases and found that there again, money is required. Are we to regard this matter as part of the educational or of the economic development? All these questions have to be studied very carefully.

In answer to my hon. Friend the Member for Leek (Mr. Harold Davies), I found right through Africa, in the Colonies, Protectorates and Mandated Territories, that the officials are of the very highest standing, broad-minded and sympathetic to the natives, in great contrast to the settlers. The present officials in our Colonial Empire are the finest set of people we could possibly send there. I say this because they ought to have some recognition in this House for the great work they are doing and their sympathy towards native questions.

Mr. Harold Davies

What I said had nothing to do with the officials. I was not accusing them of job snobbery, either as a class or in groups. What I am saying is that it does exist generally and even amongst some officials.

Mr. Follick

I found no evidence of it amongst any of the officials. They are very broad-minded and very much taken up with their work. Of the settlers, however, I can only say that up to 15 years ago the English language was not allowed to be spoken by the natives of Kenya. Sir Kenneth Anderson put a stop to that when he was there during the war.

I support the loan. I hope it will develop the Empire and bind the Colonies more than ever to the Mother Country. It will be a sign to the world of the new ideas which are coming to the front in this country, and we shall stand out as a shining example to other nations with Colonies of their own. When the loan is in full operation I hope that some form of co-ordination will be arranged between the Colonies of all the nations throughout Central Africa. They all have the same problems to face and will have to find the solutions together. They cannot find the solutions in an isolated fashion. It is possible that a loan will be required not only for our own Colonies but in conjunction with the French, the Belgians and the Portuguese, to bring the whole of Central Africa up to a very high standard of development, for the ultimate benefit of the whole world.

1.46 p.m.

Mr. Rees-Williams

I shall be glad to reply to the various points raised during the Debate. First, however, I must apologise for the absence of my right hon. Friend the Secretary of State. He intended to be here with me today but, in fact, was delayed by one of those aircraft defects which remind us that in spite of all our notable achievements we have not yet been able to conquer what the hon. Member for South Edinburgh (Sir W. Darling) might call the "empyrean problem."

We have had a very interesting Debate and I think it is most important that we should consider all these Colonial matters with very great care. Every word which is uttered in this House goes out to 40 different territories and is most carefully examined by their peoples, who look to this House to serve their interests and take careful note of what is proposed. It is most satisfactory, therefore, that so many hon. Members today have joined in the discussion.

The noble Lord the Member for Horsham (Earl Winterton) asked several questions which were most apposite. His first was for an assurance about British machinery, that our manufacturers would not be prejudiced by the passing of the Bill. I give him that assurance fully. In fact, we are in negotiation continually with manufacturers in this country about different types of equipment for Colonial territories. We enjoy the most amicable relations with the manufacturers, who are doing everything possible to help us in this matter. The second point raised by the noble Lord was his hope that we would not deal with applications on the principle of first come, first served. This is a very important point and one which we are watching. Every application will be considered on its merits and in relation to other possible projects. As the noble Lord will understand, we cannot wait indefinitely for projects to come forward but we shall bear his suggestion very closely in mind.

The colonial territories have been notified of the Bill and are aware of its objects. Its purpose is primarily to develop economic resources. The interpretation of the word "resources", however, which was referred to by my hon. Friend the Member for Maldon (Mr. Driberg), is not in any way intended to be a limited one. By "resources" we mean not merely the obvious resources in the shape of minerals or agricultural products; there are, of course, other resources also. I should certainly have thought that technical education, for instance, might well be one and transfer of population might possibly be another.

Sir W. Darling

Is it possible to borrow from the International Bank for the purposes of education and the transfer of populations?

Mr. Rees-Williams

I do not know; that is a question for the Bank to decide. In the developing of resources, technical education must play a great part. I do not see how we can develop resources without technical education. We are bound to have technicians, fitters, mechanics and so on, and all that forms part of development. One of the features of our policy is to encourage technical education wherever we can. But, as I say, it is primarily a point for the Bank to decide. We do not intend to define the word "resources" in any limited sense.

Sir A. Salter

In any case I take it that the money coming from this country under existing Acts, and the money which comes from the Bank are complementary. If we cannot get money from the Bank for a particular purpose we consider desirable that can be adjusted in the allocation of money from our own resources.

Mr. Rees-Williams

The right hon. Member for Oxford University (Sir A. Salter) is quite correct. I hope that it was not from his experience of the Treasury, that the noble Lord the Member for Horsham suggested that they may be too rigid in their examination of these schemes. I can assure him that that is not our expectation but that Treasury examination will be in the spirit of the Act, if it is passed. The applications will be considered on general grounds and will not have to go through rigid, detailed and perhaps pettifogging examination, which would defeat the object we have in mind.

In an interjection by the right hon. Member for Oxford University to the noble Lord it was stated that the dollar loans might be used for non-dollar purchases. That is quite correct as far as the statute of the Bank is concerned and under the Bill there is nothing to stop it. Unfortunately, it is the policy of the Bank at the moment that dollar loans shall only be used for dollar purposes, but that may change at any time—I do not see why that should give so much pleasure to the hon. Member for South Edinburgh, who is chortling and chuckling, but it does not give pleasure to us.

Sir W. Darling

Nor here.

Mr. Rees-Williams

We hope it may be remedied in time.

Sir A. Salter

"Dollar areas" does not, of course, mean American countries, but purchasing in any country where dollars are required in order to buy goods.

Mr. Rees-Williams

That is so; within what we call the dollar area. I quite agree with my hon. Friend the Member for West Wolverhampton (Mr. H. D. Hughes) that steel is the bedrock of our requirements. As I pointed out, the steel allocation in the current quarter is running at about double the allocation in the previous quarter and, from 1st January, there will be even greater improvements. We are doing all we can in regard to steel.

The question of repayment is very important. At present borrowing would have to be in dollars for dollar goods, or in Belgian francs if dollars were not required. The U.S. and Belgium are the only countries which have given permission for a share of their contributions to be used in borrowing.

Earl Winterton

I am sorry to interrupt, but I am standing in a white sheet because I was so instructed as to be in agreement with the right hon. Gentleman and then I was shaken by what the right hon. Member for Oxford University (Sir A. Salter) said. To put it in a nutshell, is it not true to say that this provision enables us to make use, through the Bank, of loans from dollar countries? That is the effect, I believe.

Mr. Rees-Williams

That is the position at the moment, until the Bank alters its rule. The statute of the Bank does not preclude us, but that is the rule of the Bank and the agreement between it and its members contributors. Dollar loans would normally have to be serviced and repaid in dollars.

Mr. H. D. Hughes

Surely there is an escape clause?

Mr. Rees-Williams

There is an escape clause under, I think, Article IV, Section 4 (c) but no honest borrower would put in for a loan thinking he was going to get out under an escape Clause. We certainly would not do that. We assume that dollar loans would have to be serviced and repaid in dollars.

Mr. Hughes

When I say an escape clause, I do not quite mean what my hon. Friend the Under-Secretary of State indicated in his reply. I understand that by agreement with the country supplying the dollars—in this case, the United States of America—it is permissible for the Bank to arrange for the loan to be repaid in sterling.

Mr. Rees-Williams

Yes, I believe it is. The Bank could do so, certainly, but the present condition is that if we want to borrow we would in all probability be met with the rule that we must repay in dollars. I am not saying it is a harsh rule, but it is a fact.

Sir W. Darling

A hard fact.

Mr. Rees-Williams

It is a fact. I do not know whether facts can be hard, or soft——

Sir W. Darling

Oh, yes.

Mr. Rees-Williams

It is a fact. In answer to my hon. Friend the Member for West Wolverhampton, we have no definite projects in mind at the moment. This is in the nature of an enabling Bill, although, of course, in the strictest technical sense, it is not an enabling Bill. It is to give power to Colonial territories to borrow, if they so desire. We shall carefully consider speeches made today, I am sure that the Colonial territories will do so too, and we shall consider the type of project which will come under the terms of this Bill. I am sure the right hon. Member for Oxford University will agree that it is desirable to have various sources to which one could go for various types of project. This is, as it were, another arrow in our quiver, although normally it would be used rather by the Colonial Development Corporation, than the governments of the territories, for reasons I have explained.

I was asked by the hon. Member for Hornsey (Mr. Gammans) for an assurance that there would be no strings attached to this and that assurance I give, apart from the conditions I have mentioned. Certainly there are no strings in regard to re-armament or stockpiling. He also asked for a word of encouragement to private enterprise. Our policy in regard to private enterprise in the Colonies is clearly laid down and does not differ very widely from the conditions he gave this morning. If it goes in in no monopolitistic spirit, under conditions of being a good employer, and if it goes in in accordance with the economic policy of the territory and so on—all of which the hon. Member mentioned—we agree, and there is no real dispute between us. What we do not agree to—and it is not only what we do not agree to but also what is not agreed to by the people in the territories who are coming more and more to object to monopoly interests——

Mr. Gammans

Like British Overseas Airways——

Mr. Rees-Williams

I was talking of private monopolies—[HON. MEMBERS: "Oh."] There is a very great difference indeed.

Mr. Ivor Thomas

I cannot let this pass, because, on the instructions of His Majesty's Government, I had to go to the United Nations and make a great fight in the debate on the trusteeship agreements, to enable His Majesty's Government to grant monopolies in cases where it was advantageous to the Colonial territories.

Mr. Rees-Williams

It is rather odd that the hon. Member for Keighley (Mr. Ivor Thomas) should come forward and, among his other confessions, confess something he had to do on an official occasion, but what he said does not depart from what I am saying, and does not affect the point. I agree that if private enterprise is acting in accordance with the requirements of the territory and the economic policy of the territory, we welcome it. But we do not welcome these monopolies. Surely hon. Members opposite do not either, and we are not in disagreement. Or do they disagree? Do hon. Members wish to support private monopolies which are acting to the detriment of the people of the territory, and which are strongly objected to by the people of the territory? If not what are they arguing about?

Mr. Gammans

What we are objecting to is that the hon. Gentleman can never make a speech without denigrating and abusing the efforts of private enterprise in the past. We see no sign whatever that he gives them any sign of encouragement for the future.

Mr. Rees-Williams

The hon. Member is difficult to please. I never said a word about private enterprise in my speech. I said that I agree with the hon. Member's definition as to how private enterprise should go into the territories. He now accuses me of never saying a word in recognition or support of private enterprise. In other words, he himself must be attacking or denigrating it, because I am supporting him. He cannot have it both ways.

As to the difficulties of development in the past, we often get, not only in this House but in the Colonies and in the United Nations Trusteeship Council, this sort of argument being bandied about. The fact is that in the past private enterprise could not, and in the present cannot, undertake large scale projects when the possibility of a return is either nonexistent or is related to the remote future I will give the House an example.

Earl Winterton

If the hon. Gentleman intends to deal with this vast subject may I ask him whether he has considered the case of the chartered companies and similar companies, which for years did not pay a dividend, and which today, as a result of the splendid spirit of adventure they showed, are among the most renowned companies in the world? I have never heard such a statement as that of the hon. Gentleman.

Mr. Rees-Williams

I was not referring to chartered companies, but they were not always successful. I am thinking, for example, of North Borneo.

Earl Winterton

I was thinking of South Africa.

Mr. Rees-Williams

The instance of South Africa also proves what I said. It was not profitable. It is difficult for private enterprise to undertake that sort of project. I am not attacking private enterprise; by its nature it was difficult for it to undertake such projects. If I may give an example of what I mean, 40 years ago, when the right hon. Member for Woodford (Mr. Churchill) held the office which I now hold, he went to Uganda and made certain suggestions there which would have altered the whole face of that part of Africa. But in those days there were no facilities to undertake the development which he suggested, and it is only now that such development is taking place.

I am not complaining about the fact that private enterprise did not do these things. It was not intended to do them. I am saying that the State did not do them. My criticism is not so much against private enterprise in the past as against the State in the past because it did not undertake those things which it should have done, and which private enterprise in the past could not undertake.

Earl Winterton

What about Rhodesian copper?

Mr. Rees-Williams

Was that the State?

Earl Winterton

No, private enterprise.

Mr. Rees-Williams

That is what I am saying. In the case of copper, manganese, lead and tin there is the possibility of a fairly immediate return. In the case of other schemes of a far-reaching nature, particularly in African developments, in connection with which there is no possibility of a return within any appreciable period, and perhaps not a direct return at all, the State should have come to the assistance of that country's development.

The Colonies themselves could not afford this development, and the only ways in which they could have developed them in those days were the two I have mentioned, which have so often been adopted by metropolitan countries rather than by Colonial Powers. That is, either by exploiting the peasants or by obtaining large foreign loans with "strings" to them. I should have though that everything which I have said today was so much common form and so well known that it could not be questioned. I am not attacking private enterprise. I am explaining why private enterprise did not do these things.

Sir W. Darling

May I put to the hon. Gentleman as an example the British India Company, which was taken over by the State. Does the hon. Gentleman think that that was a successful pattern?

Mr. Rees-Williams

In its early days the East India Company was purely a trading chartered company, with its little stations at Fort William, Fort George, Calcutta and Madras. That is how things had to be done in those days, and such an instrument had to be used. But we have gone ahead since then. The hon. Member is still in the 17th century while we are living 300 years later. We are trying to remedy the mistakes of the past and to provide agencies other than those which were then available.

I must correct one reference which has nothing to do with the Colonies. It was made by the hon. Member for Hornsey (Mr. Gammans)—he has made it twice this morning on two different Bills, which must be a record—to our "lending" Burma £2 million. Burma is a member of the sterling area and has drawn the £2 million as a member of the sterling area. His Majesty's Government and the Governments of the territories concerned are responsible for law and order, and they fully intend to see that their responsibilities are carried out, even under the most difficult circumstances. We hope that we shall have the support of the hon. Member in discharging that duty.

My hon. Friend the Member for Leek (Mr. Harold Davies) asked about the trading agreement with Japan. We hope that it will be helpful to the Colonies. It will provide them with Japanese prints and cotton goods. They will supply in return some of the raw products which the Colonies produce. We hope that the agreement will be helpful, and we think it will be. With regard to these Japanese prints, I recently made a tour of West Africa and I took particular note in the markets as to the prints there. There were many Japanese cotton goods which had been reprinted in Lancashire. I gathered from the market women and the women who were buying that they still like Lancashire goods, and when Lancashire cotton goods come back on the market in ever increasing numbers, as we hope they will, they will find ready customers. The people in the Colonies have a great admiration for British goods. The British bicycle in particular stands on a plane which is all its own. It is essential that the British manufacturers should maintain standards. They have a great name in the Colonies because in the past their goods have always stood the test of time and the test of hard wear. It is essential that they should maintain those standards.

My hon. Friend the Member for Leek finally asked about "job snobbery." I think that he was misunderstood by hon. Members opposite on this point, and that what he meant was that there is in the Colonies a field for people who perhaps have not university or even professional qualifications. We have recognised that and created opportunities for a type of person called a development officer, who is proving himself most useful. He is invariably an ex-Serviceman, who has not got qualifications or a degree. He goes as assistant to the engineer or the agricultural officer or the district officer, and takes from those well trained and valuable people an immense amount of routine work, such as checking up, investigation, etc., which is most valuable. So to some extent we have met the point of my hon. Friend.

The hon. Member for South Edinburgh (Sir W. Darling) had obviously not read the Bill. I make no complaint about that. We are often interested by speeches made by the hon. Member which show a very limited acquaintance with the Bill that is before the House. But he and I always listen when we can to each other's speeches, and I was hurt that he had not listened to my speech on this occasion. Had he done so many of his difficulties would have been dissipated. There is no question of the amount of interest on the loan being mentioned in the Bill which he suggested. Nor does the question of a difference between the reason for the Trinidad loan and the loan from the Bank arise in this Bill, but I did explain it in my speech. The Trinidad loan is a sterling loan. I saw some expression of pain on the face of the right hon. Member for Oxford University (Sir A. Salter) when the hon. Member for South Edinburgh made his statement. It is obvious that the right hon. Member for Oxford University had read and understood the Bill.

Sir W. Darling

On what theory does the Under-Secretary come to the conclution that I have not read the Bill? It is a very simple Bill and even my limited intelligence can appreciate it.

Mr. Rees-Williams

I had such respect for the intelligence of the hon. Member that I thought that if he had read a short and simple Bill he would understand it. He had not understood it and I naturally assumed—perhaps wrongly—that he had not read the Bill.

Sir W. Darling

It is a simple and not very satisfactory explanation. I was following the hon. Gentleman when he made his remarks. I did not need to read the Bill. I had only to follow the simple statement of the hon. Gentleman.

Mr. Rees-Williams

In that case my respect for the hon. Member's intelligence must go down.

Sir W. Darling

Such humiliations are common.

Mr. Rees-Williams

The hon. Member for Maldon (Mr. Driberg) drew attention to the necessity for economy and social progress to go hand in hand. He asked me two questions, one of which I have answered, about resources. The other one was whether Jamaica was within the scope of the Bill. It is included under Clause 1 (7, a), but I will look into the point he has raised before the Committee stage. I am obliged to hon. Members for the very great consideration they have given to this Bill.

Question put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House for Monday next.—[Mr. Joseph Henderson.]