§ The Organisation for European Economic Co-operation has, I think, made quite remarkable progress over the last year, and in that we have played our full part. It is no simple task to lay the foundation in statistical and economic services and organisation for a close and friendly co-operation between 17 countries, with the most widely varying political and economic outlook, many of whom have been at political or economic enmity over long periods in the past. It requires a great fund of goodwill and understanding as well as the appropriate machinery,
§ Yet I can say with complete conviction that the very distinguished and devoted body of international and national 47 civil servants who have been working at Paris for the last two years, and amongst whom this country is very well represented, have succeeded in bringing about a degree of co-operation and understanding which I regard as little short of miraculous. It is only necessary to study the Second Report of O.E.E.C. to appreciate that fact.
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But there are other very real accomplishments besides this. The Second Report of the Organisation points out that the growth of production last year has been higher than was ever expected at 25 per cent. above that of 1947, and indeed it is now above pre-war level. This is a great step forward towards that viability by 1952 which is the goal of all European countries. It is, too, a great tribute to the efficacy of Marshall Aid, for which all the democratic world must be grateful. As the Report says:
Four to five billion dollars a year of aid has permitted an expansion of annual output of about 30 billion dollars.
That is a pretty successful pump-priming operation. We were very glad to be able to record our gratitude and admiration of those responsible for the initiation and carrying out of that great scheme at the time of the celebration of the second anniversary of its coming into operation.
§ We have gone a long way during the past year to remove restrictions upon imports into this country in accordance with the suggestion we made at O.E.E.C. and which was there adopted. We believe that for a great trading community like our own, with markets in every country of the world, the fullest possible removal of trade restrictions is beneficial, provided we can maintain the controls necessary to safeguard our balance of payments and our reserves, and to carry out that degree of planning which is essential for the maintenance of full employment in our own country.
§ Within the framework of O.E.E.C. we have been able to agree with certain other countries, notably the Scandinavian countries whose economies are somewhat similar to our own, to go further and get rid of certain controls on invisible payments. We hope to be able to continue that general line of policy.
§ We are now, as the Committee knows, engaged in an attempt to extend still further the transferability of sterling and 48 other European currencies under a European payments scheme which will be better adapted for continuance after Marshall Aid is completed than the schemes which have hitherto operated. I cannot now go into the details of this matter, which is under discussion between O.E.E.C. countries, but I should like to make clear that we are determined, if it is by any means possible, to play our full part in such a scheme, though we must, of course, see to it that the position of sterling, as an international currency which facilitates a great deal of multilateral trade today, is not jeopardised.
§ Whatever comes out of our discussions —and we hope it will be a successful scheme—we must ourselves, as responsible for sterling in the world, move steadily forward towards the goal of the maximum multilateral use of our currency. We have over the past two years been gradually extending the transferability of sterling, until today probably half of the world's international trade and commerce is carried by sterling. This is a fine achievement in the face of all the post-war difficulties, and it has been of great service to the world; but it has only been accomplished at considerable cost to ourselves.
§ There is one other aspect of this problem to which I must refer. A balance of payments between the sterling and dollar areas depends not only upon dollars being more plentiful but also upon sterling itself not being too plentiful. I have dealt with the means by which we hope to make dollars more plentiful in relation to demand, but we must not neglect the other aspect of the problem—the possible over-supply of sterling. Some such over-supply has been almost unavoidable since the war in view of our desire to maintain the full multilateral nature of sterling and our obligations to our fellow members of the sterling area. Political considerations, too, have played a considerable part in our attempt to encourage a more stable situation in various parts of the world which were behind-hand with their economic development and where, in consequence. the pressure of the cold war was very heavy. As I have already stated in the House, we are now being more careful its regard to the supply of sterling, especially in view of the rapid decrease and ultimate elimination of dollar aid.