Sterling Balances (Hansard, 20 March 1951)

§ 59. Colonel Crosthwaite-Eyre
asked the Chancellor of the Exchequer if, in view of the fact that His Majesty's Government have no intention of attempting unilaterally to scale down sterling balances held by the Egyptian Government, he will state the policy of His Majesty's Government in this connection in respect of each of the countries holding sterling balances, the total estimated volume and value of unrequited exports that will be needed to carry out this policy.

§ Mr. Gaitskell
His Majesty's Government have no intention of scaling down any of our obligations without the agreement of the other parties concerned. As regards the latter part of the Question, it is not our practice to divulge details of the sterling balances of individual countries and it is really quite impossible to attempt to estimate the volume and value of unrequited exports which would be saved if we embarked on a policy of unilateral repudiation.

§ Colonel Crosthwaite-Eyre
May I ask the Chancellor how he squares this announcement with his obligations under Article X of the Anglo-American Financial Agreement and also if he remembers what was said by the present Minister of Local Government and Planning on 6th May, 1947, when he referred to these sterling balances as "unreal, unjust and unsupportable and must be scaled down"?

§ Mr. Gaitskell
As far as the first part of the Question is concerned, the 1945 Agreement proposed that we should seek by agreement to scale down these balances. That we have done. As far as the second part of the supplementary question is concerned, I do not think that anything my right hon. Friend said on that occasion was in the least inconsistent with the decision unilaterally to scale down these allowances.

§ Colonel Crosthwaite-Eyre
If the right hon. Gentleman says there is nothing incompatible about it, how does he accept the words "unreal, unjust and unsupportable and must be scaled down"?

§ Mr. Gaitskell
It is our view that, of course, morally there is a very strong case for scaling down the balances, but that does not lead us to the conclusion that we have any legal right, or moral right. to repudiate them.

§ Mr. Churchill
Does it not weaken our moral position very much that in order to give these advantages in unrequited exports to Egypt, we have first to beg or borrow the money from the United States?

§ Mr. Gaitskell
I could think of few things which would be more damaging to the future credit of sterling than dishonouring a debt.