HC Deb 22 November 1949 vol 470 cc287-317

7.35 p.m.

Mr. Harold Davies (Leek)

I am glad that I have this opportunity of raising on a broad basis the issue of war debts and, in the time available, am able to look at a specific section of them, namely, the sterling balances. I hope thereby to elicit a little more information from the Minister than was given to the hon. and gallant Member for New Forest and Christ-church (Colonel Crosthwaite-Eyre) when he raised this issue on 15th November. Whether the hon. and gallant Member agrees with my point of view or not is another matter, but the entire House is agreed that here is a basic problem in British economy and one towards which we should now be looking and organising our forces in order to try to find an answer.

By way of general introduction, I would point out that no civilisation can bear for ever such a burden of debt per head as is represented by war debt or National Debt. From figures which I have gathered from the Library, I find that the deadweight of National Debt per head of population in March, 1914, was about £14 2s. By March, 1946, the deadweight per head of the National Debt was £500 4s. Thus we have found a method of passing the burdens of wars past, present and future on to the as yet unborn. If every war were paid for on the nail, wars would never be fought. We live in a world of realities and those of us who are practical politicians know that the art of politics is not what you want but what you can get. In the last two wars, had the legislators of this country had the courage, we should have imposed a rough equalisation of income on every citizen when we had to meet the forces of aggression from outside. Had that principle been applied we should not have found profiteers in war or so many people anxious for war to last a little longer. However, those are general points which in this short Debate I shall not be able to develop.

I believe that one section of the war debts we must try to deal with is represented by the sterling balances, and this question has been raised many times by the hon. and gallant Member for New Forest and Christchurch. As far as I am concerned, the issue is not one of repudiation but of the equalisation of the burden. I believe also that the sterling balances could be made an asset if we tackled the problem properly. If, for instance, there were a firm agreement of goods for goods, then the "bears" now in the market would be defeated. At the time of the Bretton Woods agreement, what did the authorities say when they talked of scaling down? We find that the Government of the United Kingdom, according to the Financial Secretary at that time, intends to make an agreement with the countries concerned for an early settlement. The principle of joint contributory responsibility applies to the current defence of Western Union. The principle of joint contributory responsibility should have applied to the last war. In fact, the Second World War was in a way a world-wide enterprise against Fascism, and paying for that war is not merely a British problem but a world problem.

I regretted very much, in a recent Debate in the House, hearing an hon. Member opposite referring to this country as a nation of spongers. That is entirely wrong, because if we analyse what Britain has had coming in and what we have given out since 1st January, 1946, we arrive at a completely different conclusion. Since the war Britain has received in total, by means of the American and Canadian Loans and Marshall Aid, a gross sum of £1,500 million in dollars. Since that date also Britain has spent £1,013 in dollars on overseas expenditure, including U.N.R.R.A., all other relief and rehabilitation, and the cost of administering Germany, as well as our heavy overseas military commitments. Since January, 1946, there has been also a legal export—or there was until a month ago —of capital from this country to the sterling area of £450 million. We have also released £430 million worth of sterling balances, making, therefore, a total of £880 million. This means that this amount of capital and exports has been transferred from this country without any return. We see, therefore, that in total Britain has provided to other countries aid in excess of her dollar aid by £400 million.

If we take a different set of figures and analyse them, comparing the British balance of imports and exports to and from the United States with the same balance of the sterling area excluding Britain, we arrive at approximately the same conclusion. That is a state of affairs which cannot possibly continue. I reiterate, therefore, that paying for the last World War is a problem not merely for the British people, but for the entire world. If revolutionary situations are to be prevented from arising in the world, it is of paramount importance that all nations regard this problem as a world problem.

In 1945 Lord Keynes, with skill and patience, tried to negotiate in Washington on this issue of war debts, and the Foreign Secretary, on 13th December, 1945, indicated to the House that the whole struggle then was to get Lend-Lease written off retrospectively. I contend that the Marshall Plan and the "little" Marshall Plan have shown already that the entire approach to the problem has altered. That is indicated also, I believe, by Mr. Truman's Fourth Point.

I believe that in Washington this month there will be a discussion in which this problem of British war debts, sterling balances or whatever they are called, will be considered. We know that no satisfactory solution has been found to this problem, and we already have a first-class economic argument which puts forward the point of view which I am now trying to expound. If hon. Members will read the book by Professor Hancock and Miss Gowing, which was published by His Majesty's Stationery Office and is to be found in our Library, they will see on page 369 a chart showing war expenditure as a percentage of national income. The interesting thing about that chart in this excellent book is that it is not an English, but an American, chart. It was presented to Congress by President Truman as part of his 20th Report on Lend-Lease in August, 1945. Page 369 of this book contains also this quotation: To the extent that the cost of each nation's contribution to the war can be measured in financial terms, probably the best measurement is the proportion of its national income which each of the United Nations is devoting to the war. Here Mr. Truman merely represented the recommendation of his famous predecessor, President Roosevelt, who in June, 1942, in his 5th Lend-Lease Report, said: All the United Nations are seeking maximum conversion to war production in the light of their special resources. If each country devotes roughly the same fraction of its national production to the war, then the financial burden of the war is distributed equally among the United Nations in accordance with their ability to pay. That is a wise democratic policy in so far as the last World War was a world public enterprise against the spread of Fascism. It would mean that each citizen of the Allies would pay in accordance with his ability to pay—that is, in reality with income—which is a democratic principle.

The Truman-Roosevelt doctrine leaves out for Britain the effect of bombing and of shipping losses. If we take the Truman chart on page 369 of Professor Hancock's book and apply these percentages to actual national income and war expenditure, there is an over-payment by Britain of £6,000 million and a short-fall in the case of the United States by £7,500 million. That is not to say that America is not a great and generous nation or that the American citizen did not pull his weight in the last war. I do not want to cast any aspersions on any nation. I merely want to try to look at this question from the point of view of sterling balances in relation to the economic crisis in the world—it is not only a British crisis, but a world crisis—realising that no other country has faced the storm of the economic crisis so squarely, or has managed to steer so steady a course through those seas, as this country. One point we ought to notice is that on 28th February, 1948, the "Statist" dealt with these problems and showed that the figures I have mentioned could be approximately doubled if all the details were included.

I admit that there are many causes besides war finance and war debt which add to Britain's dollar and other diffi- culties and I believe I would be in Order in introducing an example of one or two. We have the decline in dollar earnings and the typical example of what I call "hot" money. Only a few days ago I asked a Question of the Colonial Secretary about the movement of coffee from Kenya to Italy. There is a lot of commodity-shunting going on in the world at the moment, which is undermining the £, undermining the sterling area and placing Britain in a difficult economic position. It was interesting to see that in December, 1948, the amount of coffee moving from Kenya to Italy was only 100 cwt. In June, 1949, it was nil, but in July it was 261 cwt. and in October—last month—it reached the peak point of 923 cwt.

The "Financial Times" has taken the trouble to explain to financiers how they can dodge the exchanges. It had two excellent articles, one on 16th November and the other on 17th November, 1949, dealing with this problem of markets for cheap sterling. Referring to Italy in the second article, it said: The opening reference to 'commodity shunting' is in connection with the marrying-off of different descriptions of sterling, involving usually a hard currency transaction at some stage. Multiple currency practices"— They can be many, because there are more than 100 quotations of the £ in the world at present— … facilitate these deals by creating divergent cross-rates. Here is the bit in which I am interested: But, in the case of Italy, which was allowed to return to the transferable account area on condition that she established the official dollar-sterling cross-rate, Italian assurances of the strict observance of Bank of England regulations have not availed very much. I need not go on quoting. That was the reason why I put down the Question about Kenyan coffee, because all over the world this movement of "hot" money is undermining the position of the £. If it is thought out by any group of industrialists or merchants, it is one of the most unpatriotic acts in which any section of the City, or elsewhere, could participate at present.

Colonel Crosthwaite-Eyre (New Forest nd Christchurch)

Has the hon. Member any evidence that any "hot" money is used by anyone in the City for the purposes to which he has referred?

Mr. Davies

I qualified it; I said "If." Later on I will come a bit nearer the bone. There is something else we must realise about these unrequited exports. I have not the time to work out the involved economic analysis, but does not the issue of unrequited exports increase the inflationary tendency in the country? I think it does. We are continually sending them to discharge sterling war debts. "The Times" of 21st August, 1945, put the matter in a nutshell: The possible need for transitional financial assistance from the United States will arise in large measure from the arbitrary and accidental way in which the financial burdens of the common war effort came to be distributed and the case is strong for some readjustment recognising the principle of ' equality of sacrifice ' laid down by Mr. Roosevelt and permitting the change-over from war to peace to be accompanied with the fewest restrictive practices and the highest commercial freedom and productive efficiency. This naturally brings me to point 13 of the recent Washington communiqué dealing with sterling balances. The most encouraging passage in the entire communiqué was—or was it?—I put that qualification in, that the balances were frankly described as the result of payments made by Great Britain "in the common war effort." There is a frank and generous recognition of that on the part of the United States of America. Congressman Christian Herter came to Europe and made the famous Marshall Report, which he drew up after his Committee's tour of Europe, on 1st February, 1948. Congressman Herter's report confirmed this general thesis of mine. In his report dealing with England's trouble, Congressman Herter called for a war debt conference and paid a remarkable tribute to Britain, a much greater tribute than we have had paid by hon. Members opposite. Four brief passages of the Herter Committee's report are very relevant. The report says: For well over a century and until the recent war, the pound sterling was the monetary unit for carrying on a substantial part of the world's multilateral commerce. This activity has languished since the war because of the inconvertibility of the pound sterling and attempts to revive it by use of the dollar, however flattering, have been unsuccessful. The dollar can probably never take the place of the pound sterling in world trade because the United States may never be an importer to the same relative extent and on as world-wide a basis as the United Kingdom. He then pointed out that the sterling balances hung like a millstone round the neck of the British economy and he called right away for a distribution of the burden and suggested that the United States must assist in calling a conference and participating in the solution, perhaps by providing the means for converting some of the sterling balances into dollars as an inducement to Britain's creditors to make substantial reductions. Even the Herter Committee recognised that the dollar could never quite take the place of the £ sterling because of the unique position of the sterling area, and of Britain in particular, in world economy.

Have we used our bargaining power enough when discussing these sterling balances? The very fact that we import four-fifths of the world's butter, half the world's egg production, half the world's cheese and half the world's tea—I could give other examples—show that we are in a strong position. Have we used that position as a buyer in world affairs to force the world to face the public enterprise of the Second World War against Fascism and to try to get equalisation of the burden amongst the ex-belligerent countries of the world? I think not.

There may be some danger in Herter's suggestion about the dollar credits, because I believe that if we allowed our sterling balances to move over completely into the dollar area and be credited by dollars, there would be a demoralisation of the pound and we should also lose future markets. I do not think we should do that. I believe that another approach to this problem can be made, and I believe that our Government, whatever may be said elsewhere, have a strong bargaining power which they have not yet been prepared to use at the international conference tables of the world.

I have two other points to make and then I will leave the matter to other hon. Members to take up. Walter Lippman, in a famous article on "Liquidating the British Crisis," suggested that the United States should directly discharge these war debts to countries such as India. In my view a war debt settlement is needed between America, the Commonwealth and Britain to reach an agreement to enable sterling to be freely convertible for current transactions. There may be a danger in the Lippman suggestion. I ask the Economic Secretary whether he considers that this solution would be a selling out of the future of our heavy capital industries in those areas? Does he believe that if we did this it would mean that we should lose markets in areas which hitherto naturally linked up with the sterling area?

Finally, I believe that a co-ordination of economic policy within the Commonwealth is needed. On this issue of sterling balances, I do not think that up to now we have had that co-ordination. I wonder whether the Government and the country as a whole fully realise the absolute or paramount importance of this problem to the economy of Britain? I should therefore like the Economic Secretary to tell the House, if he can, in what kind of mood the Government hope to go into the Washington conference to discuss this problem of the sterling balances, and whether he realises that we have come to the end of continuous appeals to the mass of the people in Britain. We have been moving in a circle; we have been saying to the people of Britain of all classes, "Work harder, consume less, produce more, and we shall solve the problem." Then to our amazement we find that there are forces outside this House of Commons and outside this Government that cannot be controlled—I have given examples of some of them—and once again we are confronted with a crisis which is not really internal but external.

I believe that the great success which the Government have had has probably been due as much as anything to the profound common sense, innate stability and fundamental decency of the mass of British people, irrespective of creed or politics; but if the public are met all the time with some exterior crisis to which, no matter how hard they work or how little they consume there is no answer, I believe that we shall undermine the social welfare State which we have set up.

I regret to be forthright here, but I believe that in some cases there is an attempt in parts of the City—the hon. and gallant Member can challenge me on this matter if he wishes—to use this weapon of "hot" money, this weapon of cross-rates, this weapon of movements of goods, to undermine not so much the stability of the country but the stability of the Government, which have been in power for four years only and which in those four years have done more for the mass of the people than any other Government in history.

Colonel Crosthwaite-Eyre

The hon. Member has returned to the same charge as before. Surely he is aware that anyone in the City, whatever his feelings may be, can only obtain the proper exchange rate for any transaction in any currency, and that it is quite impossible for anyone in the City to use money in the way in which the hon. Member has described? If he has any evidence will he please, as I asked him about 10 minutes ago, produce it or withdraw the charge?

Mr. Davies

I qualified my observations by saying "I believe." The attack on the Government economy can take place in two or three different ways. The attack can be on gilt-edged securities; there can be rumours of the devaluation of the dollar. Are there or are there not? There can be attacks on the pound. I believe that up to the devaluation of the pound we had co-operation from the City. The publication of these two articles in the "Financial Times," which are two of the most excellent articles I have ever read on how to dodge the exchanges—I know they are not written with that title—expose—call it exposure if you wish—the method by means of which "hot" money, cross-rates and other kinds of manipulation can undermine the pound. The hon. and gallant Member will have an opportunity to reply and can take me up on that point if he wishes. I do not think that these two articles have done a service to the Government or to the pound sterling. I think that they try to undermine confidence in the pound sterling and in this Government.

8.8 p.m.

Mr. Parkin (Stroud)

The House will be grateful to my hon. Friend the Member for Leek (Mr. Harold Davies) for seizing this opportunity to re-introduce this subject in such a broad and well documented way. I hope that the Government will be grateful also for an opportunity perhaps to add a little more to what they have been able to say in the past about this problem of war debts and sterling balances which has been with us for far too long. We begin of course with the fact that the sterling balances are owed to people who undertook to render certain services to us or to supply us with certain commodities in exchange for value.

That was a bargain which was entered into during the stress of war by the predecessors of the present Government, but which the other people have every right to expect shall be honoured. It is no use people lecturing the Government and telling them that they ought to take advantage of Bretton Woods to have these balances scaled down when in fact discussions on that subject must be between ourselves and those who hold the sterling balances, and not with the broad comity of nations which backed Bretton Woods.

I suggest that this problem would perforce have been solved a long time ago—we could never have carried the problem for as long as we have done—but for the fact that by accident it happens that the existence of these sterling balances helps along that broad policy of aid in rehabilitation after the war and assistance to younger nations in their own development plan, a broad policy behind which this Government and the party to which I belong stand and will continue to be in broad support. It is indeed a complete and world approach to the problem of world rehabilitation at the end of the war. It is a mere accident that the debts which were incurred happen to coincide with the need for capital development in some of those countries.

I think we have gone far enough in this matter. My hon. Friend the Member for Leek has given the figures of the extent to which Britain has carried a burden of help to other nations since the end of the war. We are fond of telling the Americans that they must grow up. We exhort the Americans to remember that they are now a great creditor nation and must behave like one. I think we sometimes forget that, as the Leader of the Opposition so mournfully pointed out, we ourselves are a debtor nation, and it is about time we behaved like a debtor nation. We should say to the rest of the Allies, to those who are able to share in this burden, that, although we are prepared to bear our own share of this burden, we canot much longer continue to pay at the rate at which we have been paying in the past.

The problem divides itself roughly into two, because it is a matter of goods so far as we are concerned, and not merely of cash. It is a question of whether we can supply either capital sterling or consumer goods to the holders of the balances. I think we are entitled to say at Washington, and to the world at large, that although we will accept liability to pay our own reasonable proportion of these balances in sterling, and only in sterling, yet the whole total of them should be regarded as part of the general war effort of the Allies; and what happens to the remainder depends upon the attitude which others of the Allies feel able to take.

Frankly, what that means is that it is desirable that the United States of America should say that they are able to guarantee to some such organisation as the International Monetary Fund the dollar backing necessary if it were possible to come to an arrangement by which the remainder of the burden could be shifted on to such a fund. So far as our obligation is concerned, our own share ought to be paid in sterling, and only in sterling.

I wish to ask the Economic Secretary whether any consideration has been given to the possibility of approaching the holders of these sterling balances and making the sort of trade agreement that has recently been negotiated with other countries where outstanding indebtedness has been brought into the picture; whether it would be possible to make arrangements to draw up lists of essential, desirable and non-essential goods and agree with the holders of the balances that if a percentage is available each year so much shall be spent on consumer goods, provided an equivalent amount is spent from the free sterling which they hold?

In other words out of the purchases of certain types of goods from this country by the countries who are our creditors a certain percentage shall be allowed from the sterling balances each year. We may then contrive to get a reasonable balance between the sort of goods which we can conveniently spare from year to year, because it is most important that we should retain in those countries a market for our consumer goods.

We cannot have it both ways. We cannot shift this responsibility on to the shoulders of the dollar area and still expect our own commercial interests in this country to be unimpaired. We want to preserve a market for our own consumer goods, and for capital goods if possible where we are very much over burdened at the present time. If we could first of all get agreement of support from our allies, and then an agreement from the holders of the balances to spend a proportion of them in different categories of goods which may be drawn up I think we could come to an agreement on this matter which would be a great relief, not only to the Treasury, but to the people of this country who have a feeling that there is no end to the number of demands which might be put upon them as a result of this long outstanding problem.

8.15 p.m.

Mr. Swingler (Stafford)

We are indebted to the hon. Member for Leek (Mr. Harold Davies) for raising once again this question of war debts. As he said, it has been discussed on a number of occasions in this House since 1945, but we are entitled to go on raising this question, because it is one that has not yet been dealt with properly. We are entitled to underline the extent to which we are suffering today from the costs of war, and from the fact that Britain bore a disproportionate part of the cost of the 1939–45 war. The hon. Member for Leek recalled the famous declaration of President Roosevelt in 1942, when presenting his Lend-Lease Report, in favour of applying the principle of equality of sacrifice to the United Nations; that the burden of the war should be equally and fairly spread by the same sort of fraction of the national incomes of the United Nations being spent on war.

In fact, it has turned out, taking into account Lend-Lease and reverse Lend-Lease, that Great Britain bore a disproportionate burden. If, in fact, that principle of equal sacrifice had been applied, there is due to this country the sum of £6,000 million for what in fact was over-spent if exactly the same fraction of the national income were applied to the Powers that fought against Fascism. That is not my figure, but the figure given by Congressman Herter in his report. There is nothing I wish to add to the analysis so ably outlined by my hon. Friend the Member for Leek, but I want to make a completely different point which, I think, is relevant.

It is not only true that Britain paid a disproportionate amount of the cost of the Second World War, and has suffered as a consequence of that a piling up of debts and sterling balances—as my hon. Friend the Member for Stroud (Mr. Parkin) has been discussing—but it is also true that we are already paying a disproportionate amount of the cost of the next war. It should be emphasised that today under the heading of defence, and the meeting of world-wide commitments, and by contributing to arrangements under various Acts and treaties, this country is bearing a disproportionate burden. This country is a heavy d6btor nation as a result of suffering the whole course of two world wars and the enormous losses sustained in the Second World War including over £6,000 million of British overseas investments, as well as the actual physical destruction and the piling up of these debts and so on. It is an amazing situation, therefore, that this country should today be paying a higher proportion of its national income for defence—in the opinion of some people in preparation for the next war—than any other nation in the world except the Dominion of Australia.

According to figures recently published in Report No. 1265 of the United States House of Representatives Committee on Foreign Affairs, which is available to hon. Members, Britain is spending 7.6 per cent. of her national income on defence, compared with an expenditure of 6.4 per cent. by the United States, between 4 per cent. and 5 per cent. by France, 3.2 per cent. by Belgium and 2.0 per cent. by Canada. I quote those figures from memory, but I think that I have quoted them correctly. It is, I think, true that the Australians are spending some 11 per cent. of their national income on defence. It is also true that the Netherlands have a very heavy defence budget this year which I think is roughly the same percentage of national expenditure as the figure for Britain.

What is true—and again this is on the authority of the House of Representatives Committee on Foreign Affairs—is that if an average percentage were struck of expenditure on the defence preparations of all the Atlantic Pact countries, this country could reduce its budget by £147 million. We are spending £147 million more for defence than we would have to spend if President Roosevelt's principle of equality of sacrifice, worked out in terms of the national income of each country and the amount being spent on defence—that being regarded as a common effort—were applied. We find that the United Kingdom, having suffered the consequences of two world wars, having paid out a higher proportion than the other United Nations for the Second World War and, four years after that war, now bears a heavier burden in its defence budget in relation to its national income than the other countries in the common effort, including countries which are far wealthier and which have far greater resources.

When that situation is appreciated, very little more need be said to account for the British crisis of 1949. We need to go into little more than these results of past wars and the problems arising out of defence in the past, the present and the future, in order to appreciate the position. The problem is aggravated by the fact that the trend is for the cost of war to become heavier. The cost of the last war per day per man equipped was far heavier than the first war, and in the next war it will be a hundred times greater. Anyone who has studied the defence budgets of different nations—and particularly that of this country with its global commitments—knows that the enormous cost that we have to pay is not merely due to our world-wide commitments, because Britain had these Imperial commitments during the inter-war years, but is due to the fact that modern equipment is vastly expensive and rapidly becomes obsolescent. The cost of equipment—of wireless, tanks guns and planes—increases rapidly.

This burden of defence hangs like a millstone round our neck while we struggle to reconstruct after the world upheaval caused by the last war. On this question we must implore the Economic Secretary and his colleagues to become more tough-minded. We cannot continue to bear these burdens. If nothing can be done quickly to apply the principle of equality of sacrifice to the past, something can be done about the present. Something can be done about piling up debts in the present. In view of the criticisms made about the causes of our economic crisis, we are tntitled to demand that in any arrangements, in commonly agreed foreign policies and commonly signed treaties and so on, we should not have to bear a disproportionate part of the cost.

To my mind, we are entitled to demand more than that. We are entitled to demand that we should have to pay less than what is strictly our fair share, because we have borne a disproportionate amount of the cost in the past. We are entitled to say that we should be allowed to pay a smaller fraction of our national income for military preparations than other countries which are better situated or which suffered less from the economic point of view. In any case, we are entitled to demand that this Government should stand up for some kind of fair shares. We are entitled to say that it is wrong in every way that this country in its present situation, in receipt of Marshall Aid, and "carrying the can" as it does in various parts of the world, should have to spend 7.6 per cent. of its national income on defence when the United States spends only 6.4 per cent., Canada only 2.0 per cent. and France only 4.6 per cent.

There are people who say that we should spend more, that we should provide more men for the forces and commit ourselves even further in Western Europe. We are entitled to demand that there should be some form of equal sacrifice in regard to manpower, costs and so on, in connection with that policy, just as we strive to get the application of the principle which was enunciated by the President of the United States of America. That is no reflection on or criticism of American policy. It was, after all, the great American war leader whom we all salute, President Roosevelt, who generously enunciated that principle of equality of sacrifice in the national income in trying to pay for the war—in a way in which wars have not been paid for in the past—as a common war effort. I think we ace entitled to consider this picture as a whole—not merely the sterling balances and how they should be dealt with as a separate problem, or merely the war debts that have piled up, as well as the prospective war debts that may pile up in future—together with the general strain on the economy of the country of payments for past, present and future wars.

8.30 p.m.

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

My hon. Friend the Member for Leek (Mr. Harold Davies) has raised this subject in a very broad fashion, and I have noted what he said and what was said by his hon. Friends; I am sure that others, both in this country and outside, will also note their views.

It is, of course, wholly salutary for it to be constantly pointed out that this country is suffering an enormous burden as the result of the war, indeed as the result of two wars, and that that is in fact one of the main causes, if not the main cause, of our present difficulties. My hon. Friend the Member for Leek spoke of the total of the war debts both internal and external, which we have incurred, and he quoted figures of the entire National Debt as far back as 1914, compared with today. It is true that there has been an enormous increase in the total debt; from a figure in March, 1939, of about £8,280 million, to a figure at this moment of about £26,125 million. The total debt, was actually reduced by approximately £450 million in the last Budget year, as a result of the Budget surplus which we in this country, almost alone in the world, have enjoyed in the last two years. Owing to devaluation, that drop in the nominal total of the debt in sterling has been wiped out at the moment; but, of course, the figure is still less than it would have been if we had not had the Budget surplus.

At the same time, as a result of the policy of this Government in keeping low the interest rates on Government debt, the burden on the present Budget is very much lower than it would otherwise have been. In 1938–39, the annual interest bill falling on the Budget was £216 million, and that has risen in the present year to an estimate of £466 million. If the average rate of interest on the National Debt today was the same as in 1938–39, the annual bill today would be £665 million. Therefore, we have saved the very substantial sum of £200 million in that fashion, and if there are any who advocate higher interest rates for Government debt, they should pause to think what that would mean in added Government expenditure.

My hon. Friend devoted most of his time, quite naturally, to the external debt incurred in the last war, or the sterling balances, as they have come to be called. He argued that, if the burden of paying for the last war had been apportioned on the principle of each country paying in proportion to its national income, this country would have paid much less than in fact it did pay. He inferred that this country had over-paid in the final settlement that resulted from the war. I think that is a view which is very widely shared in this country. It is not, perhaps, for me to say how widely it is shared outside this country; but it is fair to point out, first of all, that in the Washington communiqué these debts were spoken of as arising out of the common war effort.

It is also true, I think, that the United States Government, in the original Loan of 1945 and the Lend-Lease settlement, and, of course, in the Marshall Aid agreement, to some extent recognised that fact as arising out of the way in which the war had been financed. It is also fair to recall that the Australian and New Zealand Governments have also recognised it by the free gifts which they have made to this country, and which, of course, have had the direct effect of reducing these debts. The Australian Government have made gifts of that kind totalling £36 million and the New Zealand Government has made a gift of £10 million.

I agree with my hon. Friend that the discharge of this debt obligation—the release of sums from these sterling balances—is, of course, a call on the productive resources of this country. I do not quite accept all his figures as I understood them, but it is approximately true that if we reckon up all the gifts and loans which this country has received from the North American continent since the war, and all the aid we have given to other countries, by way of U.N.R.R.A. by way of the European Payments Agreement and in many other forms, the two totals are not so far different from one another. That in itself is an answer to the argument we sometimes hear from the Opposition that this country has been living on foreign aid since the war.

When I listen to some of the speeches made by the Opposition on this subject, and in particular to the speeches of the hon. and gallant Member for the New Forest and Christchurch (Colonel Crosthwaite-Eyre)—who is so sedulous in bringing it to our attention—I often wonder what it is that the Opposition are asking us to do. Some of the speeches of hon. Members opposite create the impression that the Opposition are in favour of the unilateral repudiation of these obligations.

Colonel Crosthwaite-Eyre

I think that the hon. Gentleman is referring to me at the moment. Can he give a quotation from any of my speeches to substantiate what he says?

Mr. Jay

Yes, I certainly can. In the course of a question addressed to my hon. Friend the Member for Wednesbury (Mr. S. N. Evans) last week, the hon. and gallant Gentleman said: If the hon. Member will look at the Bretton Woods Agreement he will see that it was not a question of whether we would attempt to do this or that, but that we would undertake a just scaling down."—[OFFICIAL REPORT, 15th November, 1949; Vol. 468, c. 1980.]

Colonel Crosthwaite-Eyre

Scaling down, not repudiation.

Mr. Jay

I am very glad to have for the first time a clear statement from the hon. and gallant Member that he is not proposing the unilateral repudiation of these debts.

Colonel Crosthwaite-Eyre

Before I interrupted the hon. Gentleman for the first time he accused me of using the word "repudiation." He has now quoted a phrase of mine in which I said "scaling down." He must agree that the two things are entirely different, and I hope that he will now withdraw the imputation that I used the word "repudiation" in that connection.

Mr. Jay

I am asking the hon. and gallant Gentleman if he will assure me that he has not advocated, and is not advocating, repudiation of these debts; I shall be very happy to have the matter cleared up.

Mr. Emrys Hughes (South Ayrshire)

Is not the debt repudiated by the amount it is scaled down?

Mr. Jay

I think that could be argued, but I believe we are now in agreement that the hon. and gallant Member is not in favour of the repudiation of these debts.

Colonel Crosthwaite-Eyre

The hon. Gentleman can clear up the matter now by withdrawing what he said, that I had suggested that these debts should be repudiated.

Mr. Jay

What I said was that some of the speeches made by the hon. and gallant Gentleman might have created that impression. I am very glad to have his assurance that that is not what he is proposing. But if he and the Opposition are not proposing the repudiation of these obligations, then just what exactly is it that they are recommending? If they are recommending that we should get together with the holders of these balances and that we should seek by agreement to achieve a mutually agreed settlement, that, of course, is precisely what we have done. If that is what the hon. and gallant Member is arguing, however, I think he deceives himself in failing to face this basic hard fact in the situation: namely, that those who hold these balances have not, in fact, hitherto been willing to agree to any scaling down of that kind, apart from the gifts by Australia and New Zealand. The fact is that there is a very deep difference of opinion on this subject between many people in this country on the one hand and the public in the countries which hold the balances on the other hand, in the way in which we look at these obligations. It is no good ignoring that fact. It is one of the basic facts in the situation.

The other night the hon. and gallant Member tried to argue that there was some obligation, as he said, in the Bretton Woods agreement that we had not carried out. In that he was inaccurate in several respects. First—and here I think I am also correcting my hon. Friend the Member for Leek (Mr. Harold Davies)—the Bretton Woods Agreement makes no reference to the sterling balances at all. The only reference to the sterling balances is contained in the Anglo-American Financial Agreement of December, 1945; and I think it is perhaps the coincidence of the dates which misled the hon. and gallant Gentleman. It is Article 10 of the Financial Agreement with the United States. Secondly, that Article does not place any obligation on this country to scale down the balances. What it says is: The Government of the United Kingdom intends to make agreements with the countries concerned …. The United Kingdom will make every endeavour to secure the early completion of these arrangements. It should be quite clear that the obligation on this country is not forthwith to scale down these debts, but to seek agree- ment on the subject. Thirdly, I should like to point out that the expression "scale down" which the hon. and gallant Gentleman used does not appear in the Anglo-American Loan Agreement either.

Mr. William Shepherd (Bucklow)

Will the hon. Gentleman read the whole of it?

Mr. Jay

The actual word used is "adjusted." It divides the balances into three parts, and the third part is: balances to be adjusted as a contribution to the settlement of the war debts. I think we ought to get this clear since it was quoted the other night.

Colonel Crosthwaite-Eyre

I should like to know what is the actual technical difference which the hon. Gentleman puts between "adjusting" and "scaling down."

Mr. Jay

The hon. and gallant Gentleman understands the English language just as well as I do, and I should have thought that "scaling down" and "adjustment" do not mean the same thing.

Mr. Shepherd

Would the hon. Gentleman read the whole of Article 10 so that we can see exactly what His Majesty's Government undertook to do?

Mr. Jay

It would take a very long time if I read the whole Article, but broadly speaking it starts by saying: The Government of the United Kingdom intends to make agreements with the countries concerned … covering the sterling balances and later on it says that these settlements will be on the basis of dividing these accumulated balances into three categories. The first is to be released at once, the second is to be similarly released by instalments, and the third is to be adjusted. It finally says—and these are the crucial words: The Government of the United Kingdom will make every endeavour to secure the early completion of these arrangements. It follows, I think, that if we accept the two facts, which I gather the hon. and gallant Gentleman does accept, first that none of us—

Mr. Parkin

May I interrupt my hon. Friend? It may be true that the hon. and gallant Member for New Forest and Christchurch (Colonel Crosthwaite-Eyre) gives the impression, wherever he is, that he is advocating the repudiation of sterling debts, but in fact he has not spoken tonight. Could my hon. Friend flatter him a little less, by not answering a speech he has not made, and pay some attention to the statesmanlike proposals of my hon. Friend the Member for Leek (Mr. Harold Davies)?

Mr. Jay

I was just coming to that. To give credit where it is due, however, the hon. and gallant Member has made more speeches on this subject, taken by and large, than have my hon. Friends.

If it is agreed that none of us is in favour of the repudiation of these agreements, and if it is also accepted that the countries concerned have not hitherto agreed to the scaling down of the debts, there are, I think, only two practical courses open to us. The first of these courses has been to leave the question of principle for the moment unsettled, and to make temporary arrangements for the release of certain amounts of the balances year by year.

If this is agreed, the immediate question becomes, in effect, how large the release should be in each case, and how rapidly it should be made. When we come to consider that, in relation to one country or another, I think we have to take into account the factors put forward by my hon. Friend the Member for Leek and, indeed, certain other factors. First, we have to remember that a large proportion of these balances represents the monetary reserves of the countries concerned. Secondly, I think we have to take into account the point mentioned by my hon. Friend the Member for Stroud (Mr. Parkin)—the immediate and important needs of some of the countries holding the balances, both for food supplies and for the supply of raw materials; in the case of India, these have been very vital. We have also to remember their need for capital development, which is essential if some of the less-developed countries of the Commonwealth are to build up their productive capacity and are, in the end, to render us less dependent on dollar supplies.

Another important fact which we have to take into account is how far, by release of balances from this country and release of British exports at the same time, we can save dollars by enabling these Commonwealth countries to buy fewer American goods. At the moment that is a particularly important factor because the whole Commonwealth is making an effort to economise dollars and to take British goods instead. The next factor mentioned by my hon. Friend the Member for Stroud is also important, when he said that to some extent a steady release of these balances helps to build up, in the long term, an export trade from this country to other Commonwealth countries.

Mr. Harold Davies

The "Economic Bulletin" for Europe emphasises the point which the hon. Gentleman has made and from which he is now passing. I should like to know if, at any time, we have discussed this matter with the Commonwealth or the sterling area, because the "Economic Bulletin" said: If the sterling area countries, other than the United Kingdom, had kept the volume of their imports from North America at the 1938 level they would have had a surplus of over 300 million dollars instead of a deficit of 450 million dollars. I do not accept it as possible to keep at the 1938 level, but has there been any tendency to encourage them to keep at a reasonable level of purchases?

Mr. Jay

Of course there has been a continuous tendency. As my hon. Friend knows, the main purpose of the Commonwealth Conference in July of this year was to agree jointly between all the sterling area Commonwealth countries that their imports of dollar goods should be reduced by 25 per cent.; and, of course, in order to enable some of them to do that it is necessary to supply British goods instead; that is precisely the point I was making. If all those factors are taken into account, and considered in relation to each separate negotiation, it becomes possible to reach some agreement as to how large a release should be made. The Chancellor stated clearly in the recent Debate that it is the intention of the Government to aim at curtailing these releases from now onwards, as each of the agreements is made from time to time, in order to attempt to reduce the strain on the productive resources of this country.

The other main practical course open to us is to study this problem in general with the two dollar countries, the United States of America and Canada; and that we have undertaken to do in conjunction with those two countries in the recent Washington communique. Those discussions will start very soon. Finally, I will answer my hon. Friend's question. In what spirit shall we approach those discussions? I would say that we shall approach those discussions with an entirely open mind, in the hope of reaching a solution which is in the best interests of all the countries concerned.

8.51 p.m.

Colonel Crosthwaite-Eyre (New Forest and Christchurch)

I feel that I must apologise to the hon. Member for Leek (Mr. Harold Davies) and the hon. Member for Stroud (Mr. Parkin) for the fact that the speech that I would have made has been answered already. I can only say that the answer has proved as unsatisfactory as I thought it would. This occasion is like many other occasions in that the Financial Secretary to the Treasury and the Economic Secretary will never face the issue at all. They start by misquoting, as the hon. Gentleman did who tried to attribute to me the word "repudiate," although I have never used it in this matter; they then utter a certain number of pleasant platitudes, and sit down.

I hope that this being the second Debate of this nature within eight days, we may at least impress the Government with one thing. It is that, whereas in the past it may often have been only hon. Members on this side of the House who have raised this question, now hon. Members opposite do so; and tonight three hon. Members opposite have spoken one after another on this subject. I hope that all the old taunts that have been thrown at this side of the House—and the Financial Secretary taunted us last week—to the effect that we would strive to drive a wedge between this country and the Commonwealth, that this was a Tory plot against the stability of the £, and all the rest of it, will now be forgotten, and that at last the Treasury will realise that this is a subject which commands respect in all quarters of the House, and that it has nothing to do with the machinations of the party machines.

Let us go to the roots of the problem. The hon. Gentleman has made much play with all those negotiations which, he says, may or may not have to go on, and all the rest of it, in order to achieve a settlement. He said that the Anglo-American Loan Agreement did not commit us to anything. But let us, for once, try to face the situation realistically. How did these debts arise? We are agreed, I think, that they arose because, during the war, we, as the principal partner in the sterling area, were determined that no financial consideration should stand in our way in bringing troops and material to bear at the crucial point at the right moment. That was the only thing we thought of. But at that time we did make it clear in the Coalition Government—and the hon. Gentleman knows it as well as I do—that there was to be no question, when the bill came to be settled after the war, that just because we brought those troops and that material to bear we should be the sole payers of it. If the hon. Gentleman is honest, the next time he speaks from that Box he will say that under the Coalition Government the express reservation was made that, at the end of the war, it should be up to us, whichever country might be the holder of these balances, to arrive, without any further palaver or discussion, at a just settlement of who provided what to whose benefit.

Mr. Jay

By agreement.

Colonel Crosthwaite-Eyre

If the hon. Gentleman agrees, all I can say is that half his speech tonight—

Mr. Jay

By agreement, I said.

Colonel Crosthwaite-Eyre

By agreement, certainly. Now let us go a stage further. The hon. Gentleman says that it was by agreement, but again, if he looks at the records in the Treasury, he will see that it was our undoubted right to submit counter-claims for what we had done. I have asked a great many Questions on this, and as far as I am aware the Government have never yet submitted a counter-claim, and have certainly never pressed for one to be accepted. Every time they have ridden off, as the hon. Gentleman has ridden off tonight, on this phrase "By agreement."

If the hon. Gentleman looks back at what I have said, even tonight, he will see that it was the duty of His Majesty's Government—leaving aside the Anglo-American Financial Agreement and all other considerations—whoever might be in power at the end of the war, immediately to submit counter-claims so that a just balancing of these debts might be effected. The fact is that His Majesty's Government have never done it. They have always ridden off it; they have always striven to make it appear as though, before we could do anything to settle these debts, we had to secure the agreement of the other countries concerned. I suggest that that is absolute nonsense; that we were the people who had the right to submit counter-claims; that we were the people who had the right to say what we thought was a just balance; and that, far from the other country having to be consulted and cozened in some way into an agreement, it was up to us to make the settlement, and up to us to see that a just decision was reached.

Mr. Jay

I am not quite clear what the hon. and gallant Gentleman is arguing. Is he arguing that the agreement of the other country was not necessary to the settlement, or is he not?

Colonel Crosthwaite-Eyre

That, I think, is to beg the argument.

Mr. Jay

It is not.

Colonel Crosthwaite-Eyre

It is. What I am saying is that as I understand it from what the hon. Gentleman has said tonight—just as he has often said before—we cannot enter into any settlement unless the other country will permit us to broach the subject.

Mr. Jay

indicated dissent.

Colonel Crosthwaite-Eyre

But that is what he has said tonight.

Mr. Jay

I do not know how to make it clearer. I am merely saying that one cannot reach agreement between two parties unless both sides agree to the settlement.

Colonel Crosthwaite-Eyre

Well, that at least is an advance for which I am very grateful. Up to now the hon. Gentleman has always said, "How can we settle these debts until the other country agrees to communicate with us and discuss a settlement?" I have asked, not only the Economic Secretary but his right hon. and learned Friend the Chancellor of the Exchequer, what counter-claims have been submitted, and as far as I know I am still safe in saying that the Government have never been able to say that they have submitted one counter-claim.

Mr. Jay

I do not want to interrupt too much, but the hon. and gallant Gentleman must know that there was a very large counter-claim against India on account of various defence matters which was settled and duly paid, with agreement on both sides.

Colonel Crosthwaite-Eyre

Again, if I may say so, the hon. Gentleman is riding off the one question that really matters. That particular claim had nothing to do with sterling balances, but was entirely concerned with static barracks in India, which were not necessary to us and which—as in the case of those in Egypt which were in exactly the same position—were paid for by the Government concerned. But that has nothing to do with this overriding question of sterling balances and their diminution, or adjustment, or scaling down, whichever term the hon. Gentleman chooses, in effecting a just settlement.

Mr. Jay

I must make this clear. The balance was, in fact, written down as a result of acceptance of that claim, and therefore, clearly, it has been settled.

Colonel Crosthwaite-Eyre

No. They took over the physical assets. There was no writing down at all. They merely got physical assets for a certain sum of money. There was no acknowledgement that a sum of money should be written down because we had defended Egypt with the Eighth Army or India with the Fourteenth Army. All that happened was that His Majesty's Government sold barracks and other installations for sterling; but there was no acknowledgement in either case, either by the Indians or by the Egyptians, that they had in fact received services from His Majesty's Forces which they should recognise by acknowledging that they owed us money, resulting in a scaling down of the debts.

Mr. Orbach (Willesden, East)

Because the Egyptians did not want to be saved.

Colonel Crosthwaite-Eyre

That may be so, but we certainly saved them. I was there at the time. The hon. Member may know certain Egyptians who did not want to be saved, but I knew quite a number who did. I think that he would find it hard to prove that that was the official view of the Egyptian Government.

Let me get back to the point that we were discussing. His Majesty's Government, from the very start, whether under the Anglo-American Loan Agreement or under what was said at the time of the Coalition Government during the war, were committed to the scaling down of these debts to a just balance. His Majesty's Government have not done a thing to try to implement either what they had the right to do under the agreements of the Coalition Government or the obligation to do under the Anglo-American Loan Agreement. They have not done a thing. The have merely released these balances.

I think it is right that we should try tonight to go one stage further and see why they have done that. I am quite certain why they have done it. The hon. Member for Leek and the hon. Member for Stroud hinted at it when they said that there was in fact a certain amount of our exports which we could afford to allow to go without getting anything in return. The truth is much deeper. His Majesty's Government did not really care what they gave away or what they sold, provided they could maintain a facade of full employment. They were perfectly prepared to make releases, which would in fact mean that whatever it might cost the country in the future, there would be no unemployment in this country. That is all they have done.

I think we have to allow, particularly in regard to India and other such countries, that the Government ' have enabled this full productivity to be maintained purely by releasing money in order to enable those countries to buy from us. They know that we get no return. If the Government are sincere in what they say about this crisis, why do they allow these unrequited exports to go abroad? They must know that it is far better to face the fact that we can only sell goods if we get something in return, rather than allow this to go on.

I saw only yesterday a leaflet produced by Transport House dealing with productivity, and saying how much better off we are than we were after the First World War or, alternatively, in relation to Europe; but there is no other country in Europe that has the quantity of un- requited exports that we have. There is no other country that bolsters up its production figures by shoving stuff abroad irrespective of whether it brings anything in return or not. I suggest to the hon. Gentleman that at long last, when he gets three hon. Members on his side of the House rising to speak on this matter——

Mr. Harold Davies

I do not want to be drawn into this argument as though I were putting forward this rather peculiar suggestion that I felt that we were doing this to maintain full employment at any cost. There is an important point here. This country has always been well-known for honouring its obligations, and I am not saying that we should blindly repudiate them. I am after a balanced and dispassionate discussion of the situation, and I do not want to be accused from the other side of being one of the people who would help to shatter both the sterling area and the British Empire and Commonwealth by doing what the hon. and gallant Member opposite is suggesting.

Colonel Crosthwaite-Eyre: I was quoting the hon. Member for Stroud on this question of unrequited exports. So far as the question of honouring our obligations is concerned, I have dealt with that already, and no one is less anxious than I am that we should repudiate a debt. I have made it quite clear what we should do. We have not only the right but the obligation to make a just settlement.

Mr. Julius Silverman (Birmingham. Erdington)

Does that mean repudiating a part?

Colonel Crosthwaite-Eyre

I hope the hon. Member will look at what I have said, because it would be foolish for me again to go over the ground. I will conclude in the hope that the next time we have a Debate on this subject the Government will try to give an answer to this simple question: why have they done nothing concrete about these debts, and why are they allowing unrequited exports, which are such a drag on our economy at the present time and can produce nothing in return?

9.6 p.m.

Mr. Maurice Webb (Bradford, Central)

I should have preferred to catch Mr. Speaker's eye before the Economic Secretary spoke, because I wanted to put one or two points to him, but I am glad to have this opportunity to take up one or two matters referred to by the hon. and gallant Member for the New Forest and Christchurch (Colonel Crosthwaite-Eyre). I tried to understand why the hon. and gallant Member was almost simmering with indignation, but I could not find out why until his last few sentences. Apparently, this is an opportunity to accuse the Government again of deliberately doing this wicked thing of maintaining full employment. I do not accept the hon. and gallant Member's explanations at all, but even if it is right, surely it is not a bad thing for a Government to try to bring about full employment? Surely that is a desirable thing to do. For myself, I would not necessarily exclude all those things the hon. and gallant Member mentioned if, in fact, they were necessary to maintain the full working of our economy.

The hon. and gallant Member's recollections of what the Coalition Government did may be better than mine. I was not a Member at that time, but I do not remember at all vividly the Government of that day entering into the kind of arrangements he has suggested. My recollection is that the House of Commons at that time wanted everything possible to be done to win the war. It is not at all clear that we entered into certain commitments, and I should like to hear something in support of the statement that we did, in fact, undertake to put in counter claims. In any case, the trouble about such arrangements is that subsequent Governments have to apply them in the circumstances of today.

One of the troubles of this Government has been that it has had to fulfil far too many unfulfillable obligations and pledges, far too many pledges that have been inherently insoluble—I could give a whole range of things, of which this is undoubtedly one. I think that the whole arrangement about sterling balances was far too loose and careless, and that a complaint which could legitimately be made against the previous Government is that they did not enter into the specific arrangements mentioned by the hon. and gallant Member, which would have been a reasonable thing to do. They could well have said, "We are helping you win the war, and in return you will have to pay us for all the assistance we are giving you."

That was not done, and this Government, therefore, had to face the situation in an atmosphere of reality, conscious of the political realities of the situation. It would be hopeless for us to make any impossible demands in negotiations of this kind, and it is to our credit that, in spite of our overwhelming burdens and difficulties, we have tried to reach an understanding that is workable. We must, in the end, come back to the fact that there must be agreement on the proposals put up; otherwise, what sanction should we have? What possible sanction does the hon. and gallant Member suggest is at our disposal to compel an unwilling partner? In the end, even the Conservative Party must face reality and the reality is the stark facts of the situation.

I want to make one or two points for my hon. Friend the Economic Secretary to think about and he may answer them at some other time. I think it is wrong to attempt to look at this problem of sterling balances by itself. It has to be considered against the whole background of our post-war obligations. I am glad to think that in previous speeches we related this problem to the graver problem of Defence expenditure. That is a very important element in the picture. We never hear any suggestions from the other side of the House that it would be reasonable to expect someone to come in and help us to carry some of this heavy Defence expenditure.

That is a point we must have in mind and I believe the time is rapidly coming when this Government, or its successor, will have to come forward on an appropriate occasion and say that the problem is quite intolerable and cannot be sustained; that it is imposing on us a burden which we are not capable of sustaining. It should be related to the whole question of sterling balances.

Mr, Geoffrey Cooper (Middlesbrough, West)

Would my hon. Friend put in the same category the £3,000 million of these debts which are outstanding and are equally intolerable?

Mr. Webb

I can see the point made by my hon. Friend. I say that the whole picture should be considered together. I think it wrong to pick out a piece and to try to solve that part of the problem, because in that way we do not solve anything. I was in America during the Recess and I found the most appalling ignorance of the realities of our situation. I do not know why that is so. It may be that many have gone over there and forgotten their duty to their own country.

There is an almost complete lack of understanding of the kind of sacrifices we are bearing today. Today I recorded talks to America in a radio station and had to stop in order that I could explain what unrequited exports are. The commentator said they have not the slightest idea of what unrequited exports are. They know what unrequited affection is but they do not know unrequited exports. In some way we have failed to show to them that so far from indulging ourselves with Marshall Aid, we have sacrificed much on the other side of the balance sheet and are making an enormous balancing contribution. In order to strengthen our effort I press the Economic Secretary to give to all sections in the United States some indication of the other side of the balance sheet—to tell them about unrequited exports and all the other things we are giving.

I listened to the Economic Secretary on sterling balances. One point which he did not touch on was the type of goods we are now exporting in the form of unrequited exports. I have reason to believe that it is possible for us within the global amounts involved in this arrangement to help ourselves economically by sending other types of goods, or goods different from those which we are now sending in some cases. I think we are much too careless in considering that side of the question. If greater discrimination could be shown in the type of goods at our disposal it would be to our advantage.

In general, I say that it really is not reasonable for Members on the other side of the House to suggest that this desperately difficult and delicate situation is somehow the responsibility of this Government. It is inherent in the situation that arose out of the war, and for my part I am satisfied that on the whole the approach of the Government towards a solution has been a good one and to the best advantage of this nation.

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