STERLING AREA (CLOSER CO-OPERATION)

HC Deb 22 February 1952 vol 496 cc567-665

11.5 a.m.

Mr. Richard Adams (Wandsworth, Central)

I beg to move, That this House, being of the opinion that the future prosperity and well-being of this country lies in the closer co-operation and coordinated development of the Commonwealth and sterling area, calls upon Her Majesty's Government forthwith to pursue this policy with a fresh and vigorous determination; in particular, to resist any attempt to make permanent any commitments which are designed to weaken Imperial Preference or other Commonwealth ties and, realising that such development cannot be left to private enterprise, calls upon Her Majesty's Government to initiate State action, wherever necessary, for the full use of the resources of this revitalised association in the promotion of peace and understanding in the world, and the economic advancement of all peoples. The House will be well aware that three crises have hit this country in the years since the end of the Second World War, and they have tended to be repeated in cycles of roughly two years. Each time those crises have hit this country, measures have been taken which have had the effect of reducing the living standards of our people. I have no confidence at all in the present proposals of the Chancellor to meet this third crisis. I have no confidence at all that there will not be repeated, perhaps in a year or two, a crisis comparable with the others, and I think that, if we continue each time to take the same measures, which are to cut imports and attempt to expand exports, our standard of living in this island will steadily decline.

At the end of the Finance Minister's Conference last month, the Chancellor said, "We have given the sterling area a new lease of life." But for how long? There is no guarantee that that new lease of life is going to extend indefinitely. The statements that have been made upon convertibility in recent weeks really frighten me. It is as if a family were trying to move into a new house before the foundations were complete. Convertibility must be a long-term objective, and there are many other and more urgent problems to be settled before we strain every sinew and nerve to achieve something which is obviously beyond us for some time to come.

I should like to refer to a statement made in "The Times" on Wednesday, I think, which said that two committees had been set up, one presided over by the Under-Secretary of State for Commonwealth Relations and the other one presided over by the Minister of State for Economic Affairs, who is to reply to this debate. I think it would have been far better if the right hon. Gentleman had deferred the setting up of that committee for a long while in order to devote his attention, with his colleagues from other parts of the Commnowealth, to more urgent problems.

I have no confidence whatever in the proposals which have been made in recent weeks for dealing with the situation that confronts this country. There are some deep, fundamental problems to be solved. With regard to the general situation, the 20th century, which is supposed to be the age of the common man, has seen two devastating world wars. I have not the time to go into the causes or to deal with the effects of them, but they have certainly set back any prospects the world may have of reaching a higher standard of living.

We live today in the danger of yet a third world war, which may wreck the civilisation that we know and, in my view, the motives at work for that third world war are the same as promoted the other two, namely, the inequalities which exist in different parts of the world and the natural aspirations of all peoples to have a fair share in the wealth of the world.

If we manage to avoid that third world war, I think that history will show that the effect of these two world catastrophes has been to cause nations to move into supra-national groups and communities. They realise that there is no future in the 20th century for 50 or 60 small nations, each competing one with the other, both in the realms of national security and of economic and financial independence.

I want to digress here for a moment to pay a tribute to those idealists who are working for world government. There is not the slightest doubt that wars and the dangers of war will be removed only when, ultimately, the world is treated as a single political and economic unit, but I think that at present that is the dream of idealists and that we must turn our mind to more practical matters.

That movement towards bigger groups, bigger trading areas, bigger areas of common politics and security, is going on at the present time whether we like it or not. Behind the Iron Curtain that grouping has been imposed by force, and whatever the political changes may be in the coming years, I can never foresee political and economic independence being won again for such small countries as Albania or Rumania.

I am supported in that belief by the fact that what has gone on behind the Iron Curtain by force has been the subject of a voluntary movement in Western Europe. In the case of huge areas like the United States of America or Russia, there exists this large trading area, this large mass of population, these large productive resources which alone enable us to take full advantage of the productive methods of the 20th century.

Against that background, this country has still to choose its future. This country has still to make up its mind what part it will play in world affairs against that inevitable movement, which nobody can hold back. To my mind there are four possibilities facing us today.

The first is to rivet ourselves to Western Union. That idea has already been discarded and I need not say much more about it. When he was free from the cares of office, the Prime Minister was advocating that we should join with those nations across the Channel, but since he has resumed the responsibility of office he realises that it is not a practical proposition.

The second possibility is to throw in our lot with the United States of America, and many people have advocated that. I have no time to examine it today, because there are many other matters about which I must speak, but this suggestion has been crudely expressed by saying that we ought to become the 49th State of the Union.

Sir Herbert Williams (Croydon, East)

rose—

Mr. Adams

I will give way later. I have a lot to say.

That suggestion holds out no prospects for men of courage and determination, because inevitably, in the course of years, it would mean that most of us would become guides to our ancient historic buildings and monuments or glorified hotel keepers for those who wish to pass a holiday in this country. Apart from that, this country would be little more than some agricultural community.

I wish I had more time to examine that suggestion, but I must pass to the third choice which is a policy of drift. We need do nothing to grapple with the world situation. We can allow events to control us. Then we should inevitably follow the example of the Roman and the Spanish and other Empires whose glories have passed away.

The fourth possibility is that to which I call the attention of the House today—a new policy for the Commonwealth and sterling area, a new approach in order to give the Commonwealth a platform on which it can operate in world affairs with some authority once again. Today, the sterling area is like some shipwrecked people on a raft at the mercy of the wind and the stormy seas. We have no control over our own destinies. If the United States of America care to increase their purchases of rubber and tin, the sterling area can be put back on its feet again. But for how long? For three months? For six months? Perhaps a little longer. If individual members of the sterling area run into a considerable dollar surplus and wish to exercise their right of spending it in the dollar area, then we are thrown back into deficit again.

In other words, there is no co-ordinated plan to ensure stability in the Commonwealth and sterling area. I admit that there are difficulties in the proposition which I shall outline—there are difficulties associated with Canada's position in the dollar area, there are perhaps political difficulties in South Africa; but they are no greater than the difficulties confronted in the conception of Western Union, no greater than trying to work out a common plan for iron and steel, such as the Schuman Plan, no greater than grappling with the problem of reaching a lasting settlement between France and Western Germany.

On the other hand, we have the immense advantages of a ready-made association which has stood the test of a long time; and of a tradition, sentiment and experience in handling affairs together which, if brought to a logical conclusion, would mean that we have much to offer to the world in helping to guide it to lasting peace and prosperity. There have, of course, been some developments. In the six-and-a-half years since the war the Labour Ministers have done much to develop Imperial trade.

Sir H. Williams

Oh!

Mr. Adams

There have been the groundnuts scheme and the Gambia egg scheme which, much as they have been derided by hon. Members opposite, are the beginnings of a new imaginative approach to the problems of the Commonwealth and the sterling area. The Colonial Development Corporation has done fine work in the Colonies. When they are scorning the groundnuts scheme, few people bother to refer to the very successful scheme which has been developed in Australia. The Colombo Plan, too, is a grand conception and is the beginning of the sort of thing I have in mind.

There was, of course, the meeting of Prime Ministers in January, 1951, and in a moment I shall quote from the communiqué which was then issued. But there is need for some greater and more imaginative approach if we are to solve the problems which confront us today. The Prime Ministers' Conference was a gleam of hope, and I want to quote two extracts from the communiqué which was issued at the end of the Conference. They said, first of all: Our historic Commonwealth, which comprises one-fourth of the world's population and extends over all the continents and oceans of the world, is singularly well-constituted to enable it to study and in some measures to comprehend the vexed questions which beset the world. Earlier, they said: The Prime Ministers examined the economic problems arising from current shortages of raw materials. They agreed that, apart from any comprehensive international organisation for handling raw material problems, there was need for closer and more regular consultation between the Commonwealth countries on all questions of supply and production. They agreed to recommend that existing Commonwealth machinery for consultation on economic questions should be strengthened. I should like to ask the Minister of State for Economic Affairs how far that machinery has been strengthened since 1951; how far it is the intention of the Government to develop that closer cooperation which is envisaged in the communiqué. I should also like to know from him what developments there have been in the liaison committee set up in London in 1948. The communiqué referred to the fact that the Prime Ministers had called for increased use of that Committee.

But we must proceed more rapidly There must be much closer co-operation than any that has taken place up to now, if we are to succeed in maintaining the Commonwealth and the sterling area. There are many matters to be considered in connection with the new plan, and I have time only to touch on them in a sentence or two before I get to the main matter on which I want to speak, which is the economic and financial implications.

The first thing I want to say is that there must be a new focus on the Commonwealth. This country, a tiny island with a population of over 50 millions, must no longer regard itself as the centre about which revolve dominions and colonies. There must be an end to this conception of a mother with a series of daughters and dependencies. The whole Commonwealth must have an equal status. It must be a sisterhood of nations, and there must be continual hope held out to the dependent Colonies which are at present administered from this country that they will achieve independence as soon as they are ready.

Again, the Prime Minister's Conference said: The great antidote for war is hope. We must hold out hope to our own Colonies. The present troubles in Malaya are largely associated with unfortunate developments of the past, and if we are to hold this Commonwealth together it must develop as quickly as possible into a sisterhood of equal nations.

Much could be said about the problem of defence. That, again, must be decided by the Commonwealth as a whole, and our contributions to N.A.T.O., our contributions to the South-East Pacific, must all be decided by the Commonwealth as a single unit; and, too, an equal burden must be shared by all parts of the Commonwealth. We must contribute to our defence resources according to our ability. This country has carried a heavier share of the burden. We must face up to the reality. It must now be worked on a single common plan for the whole Commonwealth.

There is, too, the question of emigration. I have had occasion to speak on that before in the House. We must, as a Commonwealth, see where 1,000 or 10,000 pair of hands can best be used. If it is in the development of mineral resources in Canada, then the Commonwealth must undertake a plan to get the workers there. If in the best interests of the Commonwealth as a whole it lies in the development of agricultural regions in Australia, then, again, a common plan must be formulated to get the work done there. The decisions that are taken must be taken in the best interests of the Commonwealth as a whole, and not from the selfish interest of a single nation or a single section.

Let me illustrate that point. Wheat is urgently needed today in India, and the Commonwealth must make plans to see that the millions in India receive the food that is needed to enable them to make their contribution to the Commonwealth. If that involves a lowering of the standard of living in other parts we must be prepared to make that temporary sacrifice in the interests of the whole.

The time is passing rapidly, and I must leave points like that to other hon. Members, or, perhaps, to some other occasion, because I now want to turn to the essential factors in a common economic and financial plan for the Commonwealth. There must be this common policy. There must be the controls necessary to ensure the stability of the area as a whole. There must be a survey of production and needs. I have no need to tell the House of the resources of the Commonwealth. The "Daily Express," with which I seldom agree, has certainly done that job for the people of this country. Nobody will dispute the immense resources available in the Commonwealth.

Having worked out our surpluses and deficits, having planned the resources of the Commonwealth to meet our needs, we must make contracts with the rest of the world, to ensure that our deficits are supplied and that our surpluses are made available to the other countries of the world. There must be a planned development of the whole area. In that connection, there have been excellent letters in "The Times" in recent days. I do not disagree—speaking from memory—with a single word of the letter contributed to that newspaper by the hon. Member for Aberdeenshire, East (Mr. Boothby). There have been other equally important letters, all emphasising this fact, that we must make a fresh survey of the Commonwealth and sterling area.

We must endeavour as far as possible to develop our resources to make us self-supporting and to bring about an improving standard of living for the backward areas in Africa, India, and elsewhere. Having made our plans we must fit that into our approach to the rest of the world. All that involves planning, bulk purchase, long-term agreements, for stability. I do not know whether hon. Members opposite will accept many of those things, but I do assure them that, whether they like them or not, they are necessary if the Commonwealth is to survive. This Commonwealth plan will not be restricted as, perhaps, the old Imperial Preference conception has been in the past. It can, as the hon. Member for Aberdeenshire, East, has said, be complementary to Western Union.

Having examined our resources and our needs there is no reason why we should not draw up long-term contracts which will help us and help Western Union. The day may even come, perhaps, 20, 30, 50 years or more from now, when other big trading areas such as Russia or America herself may agree to join with the Union, and if that day ever came I for one should be perfectly prepared to strike the word "British" out of British Common- wealth, and enter into a larger commonwealth which might one day embrace the whole world.

I want to know what is the Government's attitude to this new conception. I want to know whether the Government are prepared to come out of G.A.T.T. as quickly as possible. I want to know what their attitude is to the various loan agreements, the most-favoured-nation clause, the policy of non-discrimination; because all these matters are wrapped up in this new conception of the Commonwealth, and I want to know whether the Government will accept the implications of my Motion.

I could have said much more on these important matters, but I must now turn to the Amendment, in the name of the hon. Member for Wembley, South (Mr. Russell), to my Motion, in line 8, to leave out from "ties," to the end, and to add: and urges Her Majesty's Government to create the conditions in which private enterprise, assisted by State action where necessary and appropriate, can bring into full use the existing and potential resources of the Commonwealth and sterling area in order to promote peace and prosperity. I believe that the world is moving towards a planned economy with greater social justice, and that whatever people individually may do about it, whatever nations may do about it, that movement is inevitable in the twentieth century. As a Socialist I believe that we must move into that new order as rapidly as possible. I know that the Conservative Party in this country, and those who think like them in other parts of the world, will tend to move more hesitatingly and more slowly into that inevitable new order, but schemes such as the Colombo Plan, and great schemes for hydro-development in Africa, for new agricultural development in Australia, and for developing the immense mineral resources of the Commonwealth, can, in my view, be developed only by State enterprise. That is why I say in my Motion that we cannot leave these new developments entirely to private enterprise.

According to whether that side of the House or this side is in control of our affairs, according to whether, in the Commonwealth, and, indeed, in the world, as a whole, Conservatism is moving slowly or Socialism is moving rapidly, inevitably the State must take a greater part in these developments. I ask the hon. Member who has put down an Amendment to my Motion not to boggle over what is, after all, a petty point compared with the big issues we are discussing today.

I hope that this debate will not degenerate into a discussion of the merits or demerits of private enterprise or State enterprise, because the issue of the future of this country and of the whole sterling area is far bigger and far more important than that. I ask those who support the Amendment, having expressed their views and emphasised the importance from their point of view of private enterprise, to accept the importance from my point of view of State enterprise and State planning, and not to press their Amendment. If it is pressed I, as a Socialist, must ask my hon. Friends to oppose it.

Wing Commander Eric Bullus (Wembley, North)

rose—

Mr. Adams

I am sorry, but I still have a lot to say and I must soon resume my seat, as there are many who wish to take part in the debate.

Assuming that the broad proposition which I have enunciated is acceptable to the House, I turn now to ask what is the significance of the sterling deficit. I should like to expand the conception developed the other day by my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) in connection with our own internal affairs. Why should the balances of the sterling area be totted up year by year and month by month? What magic is there in bringing the sterling area into an exact and precise balance with the rest of the world year by year? Let us look for a moment at private bank overdrafts. I hope I shall make the analogy clear to hon. Gentlemen opposite, who appear to be a little sceptical.

If "a West End type," a "spiv" or a drone, manages to secure a bank overdraft and lives on that without contributing to society, then, of course, it is right and proper that that should be cut off quickly. But do we take the same attitude towards those millions of pounds overdrafts run by the Imperial Tobacco Company, I.C.I. and Unilever? There is no effort made in private trading to balance the accounts of large companies year by year. It is almost a sign of strength that they receive overdraft facilities from the banks.

The Commonwealth certainly has assets and resources which should justify confidence in the future of the Commonwealth. There is no short-term solution to this problem of the sterling area deficit, and what we have to do is to find the capital to finance that deficit, provided we can assure those who are providing the overdraft that it will be wiped out in a reasonable period, and that there are assets in the Commonwealth which should justify confidence in lending the money.

Mr. Beresford Craddock (Spelthorne)

This is very interesting. Will the hon. Gentleman say what would happen if these people do not accept that long-term assurance?

Mr. Adams

That is what I propose to turn to next, namely, to consider the position of the United States. That is the colossus which dominates the world today; it has doubled its productive capacity in the last decade: it has an annual income some ten times that of this country; and, as I said earlier, the rest of the world is at the mercy of decisions taken by the United States. That colossus is a tremendous productive machine which is anxious to sell its products all over the world, but does not wish to buy anything except a small selection of raw materials, such as rubber and tin, and luxury items, such as British whisky and Irish linen.

The United States realises—I am sure its Administration does, although I have much graver doubts about some of the Republicans—that if the world is to continue, if the world is to avoid wars, if the world is to achieve peace and prosperity, with a rising standard of living throughout the backward areas in particular, the United States must be prepared to spread its dollars all over the world, because unless it is prepared to do that we shall get into economic chaos and confusion. The sterling area itself is rocked by decisions taken individually by businesses in America.

Contrast that with the position of this country at the time of the great Victorian era of prosperity. Building upon our early advance in the Industrial Revolu- tion, this country built up a tremendous productive machine which sold finished products all over the world in return for food and raw materials. It was natural that this country should develop as the banking centre and the insurance centre for those transactions, and with the surplus we invested in the Commonwealth, the Colonies and other parts of the world. That conception worked for a great number of years because it was self-balancing. But the Americans must realise their responsibility, as the biggest producing unit in the world which finds it unnecessary, or is unwilling, if you like, to import from abroad, in the finding of a solution to this dollar problem, which has confronted us ever since the Second World War.

The big question is how that dollar finance is to be arranged. It can be left to American private enterprise, and they will seek out those projects in the rest of the world which produce the greatest profit; it will be done at rates of interest of 8, 12, 20 per cent. and more; and in my view that would be a very unwise decision. The alternative is for America to make her surplus available through international financial control at a half of 1 per cent. or 1 per cent., and I should like to describe how it can operate.

We have already the beginnings of the machinery in the International Monetary Fund. Looking at the various trading areas of the world which are developing, I think that in a very few years there might be only half-a-dozen or so—Russia, Western Europe, the British Commonwealth sterling area, America, perhaps some South American confederation, and so on. The International Monetary Fund, acting as an international bank under international supervision and by agreement, must conduct normal banking operations.

There will be, on the one side, tremendous credits, and because America is the outstanding creditor country in the world those credits will, to begin with, come almost entirely from that country. With those credit deposits on the one side, the International Monetary Fund, working under the authority of an international planning board, will make credits available to those areas which are running a debit account. It is only in that way, by, if one likes, a system of approved overdrafts that we can get the world back to prosperity again.

America must realise that India, for example, needs considerable help at the present time, and that if the world is to achieve a higher standard of living there are vast projects which need financing in Africa, Australia and elsewhere. It is the responsibility of the United States to decide whether they are going to finance these privately, as they have done up to now. Only yesterday there was an announcement that they were to finance a project in the West Indies, and they may decide tomorrow that they will finance a project in Africa, but it will be very shortsighted, as I said, of the United States to claim the right, because of their overwhelming dollar superiority, of building up their own economic empire. It must be done by international planning and control.

They have nothing to fear from a strong Commonwealth and sterling area. If, by accident or design, they permit the Commonwealth to disintegrate, then a dangerous vacuum is created which will lead to still greater difficulties and troubles in the world today. But a strong Commonwealth, backed by the necessary finance required to develop capital long-term projects, which alone can raise the standard of living and which alone can prevent future wars must depend upon help from the United States of America.

I am conscious that I have spoken for a long time, but this is a wide subject which needs considerable examination, and it is one, I suggest, upon which a decision must be taken quickly. A halting, indeterminate attitude will mean the end of the Commonwealth and sterling area in a few short years. But a new vigour, a new determination, a planned order of economic development within the Commonwealth and sterling area, which can help and guide the rest of the world into peace and prosperity is, I suggest, a conception which we should grasp today. If we do so, we can enter another Elizabethan age far surpassing that of the 16th century, and with this difference: this time we can help to lead the Commonwealth and the world into a golden age for the common man.

11.42 a.m.

Mr. F. Beswick (Uxbridge)

I beg to second the Motion so well moved by my hon. Friend the Member for Wandsworth, Central (Mr. Adams).

In doing so, I do not propose to go into long economic arguments. With reasonable brevity, I want rather to make a declaration of faith. I doubt whether there is any man or woman who could have walked the streets of this country last week without feeling that in this nation we have developed a sense of human and social values and a conception of political tolerance which must remain an essential element in this world if we are eventually to win through to that world federation of free peoples of which my hon. Friend spoke, and which I, like him, would wish to achieve.

As I see it, the question which we now have to answer, and the answer to which this Motion attempts to point, is what material arrangements can we now make which would enable that spirit to flourish. I look this morning to the possibilities rather than to the difficulties, and I do not apologise for doing it. I think that too many people recently have spoken about the difficulties without being inspired sufficiently by the possibilities.

The first thing on which I think we all agree is that this country cannot afford to drift into more financial crises. The second thing about which, I hope, most of us will agree is that so far the approach of Her Majesty's Government is not adequate to the situation. They really have not met the challenge in the spirit that is required. We shall not ride off this crisis simply by putting the sick and the maimed in the front line. We shall not solve our financial difficulties by making the sick pay for prescriptions or by making the maimed buy their surgical appliances. I hope that on that we all agree, even hon. Members opposite.

We would all agree, too, I think, that in this modern world, as my hon. Friend said, the United Kingdom cannot build up sufficient material resources unless she enters into some association with other groups of nations. An American correspondent said a year or two ago that no country had done more since the war than the United Kingdom to pull itself up by its own boot straps. But, let us face it, boot straps are not a good enough basis on which to build our economic security. I look, therefore, for the reasons which my hon. Friend outlined, to the sterling area and the British Commonwealth as a framework in which we can develop and achieve prosperity and make our contribution to the peace of the world.

I hope that I shall not be patiently lectured by any economist about the sterling area. I know which nations are in it, which are nearly in it, and those that are almost out of it. I know also the Commonwealth nation not in it. What we seek is to get the maximum area of the world with a common currency, and with common associations, to take part in this venture. May I, in passing, say this about European Union or Federation: There has been a lot of energy used and a lot of coming and going about Western European union. It has been the fashion to say that there was nothing inconsistent in the idea of European union and our membership of the British Commonwealth. I think that the emphasis has been the wrong way round.

I think that we should put our energy and research into closer integration of the British Commonwealth and state that there is nothing inconsistent with that conception and the idea of having Western European nations come in and join us. I hope that in future the focus will have shifted from Western Europe onto this idea of a sterling area union. I hope also that in these modern times there will be no talk about the geographical difficulties of these scattered territories. I believe that Burke said in the 18th century, talking about the difficulties of integration, that we could not set aside the eternal barriers of creation; but, of course, we have set these barriers aside.

If I may be allowed a personal reminiscence, in the early months of the 1945 Parliament I used to slip out from here as a pilot of B.O.A.C. and get to various parts of the Commonwealth much quicker than I have since crossed from Washington to San Francisco in an express train. We are shortly to have a scheduled service to Johannesburg in 22 hours, and when the improved Comet comes along it will be possible to go to Australia in 36 hours. The whole of the difficulties and problems which Burke looked at have completely disappeared in these days of radio, radar and modern aeroplanes.

If we are to achieve this unity, what are the steps which should be taken? I will indicate the steps which should be taken in this order. First of all, we should ask for a complete, unequivocal customs union. This is not a new idea. I remember Ernest Bevin, with his customary courage, making this proposal at a Labour Conference.

Mr. Cyril Osborne (Louth)

Joe Chamberlain made the proposal, too.

Mr. Beswiek

He may well have done. I favour the idea of union in order to extract the maximum psychological stimulus as well as the utmost economic benefit. Some people may tell me that it cannot be done, but if a thing is the right thing to do we ought to redouble our efforts to achieve it. I wish we would put a tenth of the energy into proposals of this kind that Gandhi and Nehru had to put into the campaign for the independence of India. If we worked for integration in the way that they did for independence, there is nothing that we could not achieve.

If, for various reasons a customs union is not possible in the immediate future, we ought at least to sweep away the impediments to a genuine system of Imperial Preference. I should like to know from the right hon. Gentleman who is to reply the attitude of the present Government to Imperial Preference. What advantage will the Government take of the saving clause which my right hon. Friend the Member for Huyton (Mr. H. Wilson) inserted in the Geneva Agreement on Tariffs and Trade when he was President of the Board of Trade?

I want to make it quite clear that when I endeavour to put over the idea of this trading area, I wish no injury to any other State or area. I certainly do not wish to offend or injure the United States of America. However, I cannot understand why, on the one hand, the Americans should endeavour to push us into closer association with European countries and, on the other, get so agitated when we want to have a closer association with those who speak our own language. I just cannot follow it.

I should regard it as just as impertinent for anyone outside to complain of our endeavouring to get a freer movement of trade and individuals between one part of the Commonwealth and another as it would be if I complained about the freedom of movement between Montana and Minnesota. The analogy seems to be complete. We need exactly the same freedom of movement between units of our Sterling area as they now enjoy within the North American Union.

May I also say this about American trade? I do not see any future for us in trying to secure dollars by selling penny packets of stuff over the Western States and the Middle West of America as we are endeavouring to do at present. I know firms that are spending a dollar or two dollars in order to sell one dollar's worth of stuff over there and the Americans will stop it as easy as turning a tap off, when it pleases them.

I was once derided for asking for a bilateral trading treaty with the United States. I never thought I should live to see the day when the right hon. Gentleman the Member for Woodford (Mr. Churchill) would go to the United States and do a bulk purchase deal in very much the same tradition as that in which my right hon. Friend the Member for Huyton went to Moscow and concluded a bulk purchase agreement there. There is much more likelihood of doing significant business with the United States on those lines than in having all these commercial travellers with large expenses sheets bumping into each other in the Middle West. And there is still more chance of doing this business as a Unified Commonwealth.

When I talk along these lines it is not because I have any desire to cut us off from the United States. I am not trying to build up a power bloc. I do not want to go draping more iron curtains round the world. I want eventually a complete free trading area throughout the whole world.

If the first point is that of a customs union, the second must be some permanent committee for the Commonwealth as a whole, with an adequate secretariat to do the research and make the recommendations for the economic development of the area as a whole. I visualise some form of Economic Survey for the Commonwealth; perhaps not every year —yearly surveys and annual accounts seem to be out of fashion just now—but at any rate we should have them fairly regularly, and they ought to follow the pattern of those we have in the United Kingdom.

The known resources of the British Commonwealth are tremendous. The unknown resources must be stupendous. And every month the chemists and the scientists bring forward new ideas and proposals which will enable us to develop the productivity of our area. What about krilium, the new American discovery? We could use that in some of the arid areas of the Commonwealth. By means of D.D.T., we completely cleared a Colony of malaria. What more is being done along those lines? What has happened to the Colombo Plan? What progress is being made? Is the present economic crisis being used as an excuse for slowing down the Plan? The present economic crisis should be a signal for us to redouble our efforts along those lines.

It is no good pretending, as some hon. Members opposite do in adding their names to the Amendment, that we can get all the capital we want for these schemes from private sources. This job is too big for the private capital which will be forthcoming. We have not yet really tried to raise within the Commonwealth capital for development of this kind. If our people were asked to make sacrifices and provide capital for a project of this kind, as we ask them to make sacrifices for the re-armament programme, the response would be tremendous.

There would be no talk in South Wales about cutting out short time, nor would there be in New South Wales either. All over the Commonwealth we could get a response from ordinary men and women which we do not yet imagine. We have had "Wings for Victory" weeks. Why should we not have "Commonwealth Development for Peace and Progress" weeks throughout the Commonwealth?

My hon. Friend spoke about the necessity for closer integration and a fairer sharing of the financial burden of military defences. I agree with him. I should like also to see common propaganda and publicity carried on throughout the British Commonwealth. The finest publicity we ever had was that of the old Empire Marketing Board. Cannot we now have something of the same kind taking place throughout the Commonwealth? What a great part the Crown Film Unit could also play.

The Minister of State may tell me, out of his great knowledge and experience, that all these things are not possible yet, and he may instance all manner of diffi- culties, but I feel that today we do not want simply a recital of difficulties. Hon. Members may have seen a remarkable tribute paid recently to this country by the "Washington Post." That American paper said that the reign of George VI was greater even than that of Queen Victoria. In the one reign we had built up an Empire, and in the other we had granted the Empire freedom and independence.

It will be up to the economists and others to give me the necessary answers to fulfil the sort of programme on which I believe we all wish to embark. But if independence was the keynote of the last reign, then integration and unity should be the hall-marks of the present. The United Kingdom has much to offer its partners in a venture of this kind. Our political skill and experience and our technical knowledge and "know-how" are not to be laughed at; we have great experience in these matters.

The advantages that would flow from this would not be a one-way affair. We are not simply asking to hang on to the coat tails of others; we are asking them to come in with us on a basis which is appropriate to modern requirements. Although there can be none of the old-time imperial domination by us, the leadership towards this new conception must come from us. If we can achieve that leadership, I believe that the reign of Queen Elizabeth will yet be greater even than that of George VI.

12 noon.

Mr. Ronald Russell (Wembley, South)

Before I move the Amendment which stands on the Order Paper in the name of myself and several of my hon. Friends, I should like to say that I heartily welcome, in general, the Motion which has been moved by the hon. Member for Wandsworth, Central (Mr. Adams), and particularly the spirit in which both he and his hon. Friend the Member for Uxbridge (Mr. Beswick) have dealt with this subject. As a matter of fact, I have been entering my name in the Ballot since the beginning of the Session in the hope that I might be lucky and be able to move a Motion of this nature. I am glad that it has fallen to the lot of the hon. Member for Wandsworth, Central, and that he has chosen this subject.

Nobody on this side of the House could possibly disagree with anything in the first sentence of the Motion. We all strongly believe, and have believed for a long time, that the future prosperity and well-being of this country lies in closer co-operation and co-ordination of the Commonwealth and sterling area. We are very glad, indeed, to know that so many hon. Members opposite, judging by the cheers with which the speeches of the hon. Member for Wandsworth, Central, and the hon. Member for Uxbridge were greeted, are following suit, and that there may be more hope of greater unity on this subject in the House in the future than was the case in the past.

I notice that the hon. Member for Wandsworth, Central, called for a fresh survey. I take it that he is not very satisfied with what has happened during the past six years while the late Government was in power. If that is so, he is in agreement with me on that point.

Mr. Adams

Although I had much ground to cover I did draw attention to the fact that for the last six and a half years Labour Ministers had made great contributions to this problem. The conference called in January, 1951, by the then Prime Minister was a significant move.

Mr. Russell

I will not cavil at that, but I am glad to see a greater sense of unity now in the House on this matter than has been the case in the past.

As to the sentence: …in particular, to resist any attempt to make permanent any commitments which are designed to weaken Imperial preference or other Commonwealth ties… we should have liked it a little stronger. I did not put down an Amendment to that, because I know that Her Majesty's Government are now considering the whole question of our future commitments under the General Agreement on Tariffs and Trade.

As my right hon. Friend the President of the Board of Trade indicated in an answer to a Question I put on 31st January, this is a difficult problem. I know that it requires a good deal of consideration and consultation with various Commonwealth Governments as well, but I hope we shall not have to wait long until we have some information on this point. We want to rid ourselves of the shackles imposed by the General Agreement on Tariffs and Trade, and regain the freedom, which we enjoyed in the inter-war years, to regulate our Imperial trade in whatever way we think fit between ourselves and the other members of the Commonwealth.

It was, of course, the late Government which committed this country to this General Agreement on Tariffs and Trade, when Sir Stafford Cripps was President of the Board of Trade. I am glad we are to have the support of his successor, the right hon. Member for Huyton (Mr. H. Wilson). The right hon. and learned Member for St. Helens (Sir H. Shaw-cross) attended a recent Geneva conference, and I am glad to see that now we have not only got the report of that conference, but also his support in taking the view that we must not make any of these commitments permanent. It is worth drawing the attention of the House to the speech made by the right hon. and learned Gentleman at Geneva last September, which I do not think has ever been quoted in this House, because there was a General Election and a change of Government before we had any further sittings at which it could have been used.

The right hon. and learned Gentleman, at that meeting of the contracting parties to the General Agreement on Tariffs and Trade at Geneva, and said: So far, the United Kingdom Government, like other Governments, has not felt able to commit itself finally to the General Agreement, and we shall need to consider how far its present provisions, with the undoubted restrictions which they impose on us in such matters, for example, as preference between Commonwealth countries, and with their unsatisfactory bearing on the relations between the contracting parties and the International Monetary Fund, are counterbalanced by tangible advantages in the promotion of world trade. We certainly do not disagree with a statement like that. I understand it caused a certain amount of consternation among the other delegates to the conference of contracting parties. I hope that my right hon. Friend the Minister of State for Economic Affairs and his friends will take courage from the support which has been given by the right hon. and learned Gentleman, at any rate to the extent of not making permanent any of these commitments.

There is also support for a policy, I do not say of Imperial Preference but of tariff arrangements from the Council of Europe, because at the meeting of the Assembly of the Council of Europe last December the Assembly passed two rather important resolutions. They both deal with the same point. One of them directed the Organisation for European Economic Co-operation to study methods to achieve closer co-ordination between the economies of the member States of the Council and their overseas territories. I am paraphrasing the resolution, but that is, in substance, what it means. It was passed by the Assembly on 8th December last.

Three days later the Assembly passed another very similar resolution, instructing the Secretary-General of the Council of Europe to prepare a study of these methods. In other words, O.E.E.C. has been asked to study this problem and so has the Council of Europe. I know from my own knowledge that there are officials of the Council of Europe engaged on that study now. So the whole of the Council of Europe is obviously coming to the conclusion that this preferential system is worth studying. At any rate, they are asking for a study of closer methods to establish better coordination between member States and their overseas territories. I hope that Her Majesty's Government will take note of that, and that it will re-inforce our plea for ending our commitments under the General Agreement on Tariffs and Trade.

I want to give one example of the damage already caused by our committing ourselves to the General Agreement on Tariffs and Trade. That was revealed by a trade agreement which this country entered into with Pakistan last year. When the partition of India took place four years ago it meant the partitioning of all trade arrangements as well, and it was found by the Pakistan Government, after they had gone into the matter, that there was a great unbalance between the preferences granted by Pakistan and the preferences granted by this country to Pakistan. Pakistan was giving tariff preferences to this country on goods to the value of about £16 million a year. We, on the other hand, were only granting preferences to Pakistan goods to the value of about £4 million a year.

Naturally, Pakistan felt that this was a little unfair and they tried to arrive at a better balance. If it had not been for the General Agreement we could have extended our preferences on some of the Pakistan goods and achieved a balance that way, but we could not do so because we had pledged ourselves under the General Agreement. We were forbidden to increase our preferences or introduce any new ones.

The only way that the balance could be rectified was for the Pakistan Government to wipe out or reduce some of their preferences on our goods, and that is what happened. Agreement on those lines was reached between the late Government and the Pakistan Government. The Pakistan Government were satisfied with the results, under which they gave preferences on our goods to the value of about £9 million a year and we gave preference on Pakistan goods to about £4 million a year. The unbalance was reduced from about 4 to 1 to about 2 to 1.

Mr. Norman Smith (Nottingham, South)

Dollar dictation.

Mr. Russell

We want to be free from any dictation or force majeure from the other side of the Atlantic, and free to increase our Commonwealth and Empire trade.

I do not regard the Amendment as raising a petty point at all. If the hon. Gentleman had not inserted the sentence: realising that such development cannot be left to private enterprise. I do not suppose that anybody on this side of the House would have had any objection to the Motion as it stood. It is only because the hon. Gentleman emphasises State action rather than private enterprise that we have felt obliged to put down the Amendment.

Mr. Adams

Surely the hon. Gentleman agrees that the development of the Commonwealth and the sterling area is a State matter and cannot be left to private enterprise. I see nothing to quarrel with in that phrase.

Mr. Russell

There is a very great deal in the emphasis which perhaps is not intended by the hon. Gentleman.

The Motion rather suggests that State action must be the main thing, and that is where we differ from him. We think that private enterprise must be the main force, with State action helping. Let me point out what has been achieved by private enterprise in the past. There is the tin industry in countries like Malaya and Nigeria. There is the vast rubber industry of Malaya and other parts of South-East Asia. Look at the colossal copper industry of Northern Rhodesia, the cocoa industry of the Gold Coast and other East African Colonies, and the oil seed industry of British West Africa. All those industries were developed by private enterprise.

If the late Government had spent more time and thought on developing railways in British East Africa or seen that the railways were supplied with locomotives we might have had more groundnuts than we had in the four or five years which were occupied with the fantastic scheme in East Africa. My right hon. and gallant Friend the Member for Kelvingrove (Lieut.-Colonel Elliot) has estimated that those five industries—tin, cocoa, rubber, copper and groundnuts—have been responsible for the investment of about £400 million of private enterprise capital in the Colonial Empire in years gone by. Those are examples of what private enterprise has done in the past.

Passing from the Colonial Empire to the Commonwealth, one can point to the vast tea industries in India, Pakistan, Ceylon, Nyasaland, and other parts of the Commonwealth. At the present time we import 99 per cent. of our tea from the Empire and Commonwealth. Where would we be but for that development during the past 50 or 60 years? There is enormous mineral development in copper, nickel, lead, zinc and aluminium in countries like Canada and Australia. We have enormous supplies of metals from those countries, and from British Guiana. A very great deal of our food comes from other parts of the Empire and Commonwealth because private enterprise has developed them in the past. A very great deal of the raw material for our re-armament programme and for our exporting industries also comes from the Empire and Commonwealth because private enterprise has developed them in the past. We believe that State action should create the conditions for private enterprise to establish industries.

I would point out one slight difficulty about the Motion. This country cannot suggest State action to bring about the Motion. This country cannot suggest State action to bring about Commonwealth development. I know that the hon. Gentleman did not mean to suggest it, but the Motion does call upon the Government to initiate State action to make full use of the resources of the Commonwealth. We cannot possibly do that. We cannot tell Dominion Governments that they have to start something by State action.

Mr. Julian Snow (Lichfield and Tamworth)

Surely the hon. Gentleman is not quite right. Does not recent history show that some parts of the Commonwealth, such as Australia, have been only too glad for State initiative to take place?

Mr. Russell

The hon. Gentleman will no doubt agree that we cannot take action in the Dominions. We have no power to enforce anything to be done in regard to the internal affairs of Commonwealth countries. The time has long passed when we could dictate what the Commonwealth countries should or should not do within their own territories.

What I mean by creating conditions for private enterprise is providing communications, for instance. This was the view taken very long ago by the late Mr. Joseph Chamberlain. If the State is to take any part in these developments it should be in seeing that there are railways, roads, airfields, harbours, cables and electric power for private enterprise to carry on its industries. There is a vast field for the State, particularly in regard to electric power, as suggested in the Colombo Plan.

Mr. Gordon Walker (Smethwick)

Why should not that be done by private enterprise, too?

Mr. Russell

I am not suggesting that private enterprise should not do it, but that the State's responsibility is to see that there are communications much more than to see that there are industries.

Mr. Beswick

When the hon. Member mentions the constitutional impossibility of the State initiating action in various parts of the Dominions is he not accepting the assumption that there should be a joint and central initiation of this planning?

Mr. Russell

I entirely agree that we should consult the Dominions, because we cannot develop the Commonwealth at all except with the agreement of all the countries concerned. I share the view of my hon. Friends that at the earliest moment we should have a Commonwealth economic conference to go into all these matters of planning. We cannot dictate to sovereign countries, to our sister nations, as the hon. Member for Wandsworth, Central, called them, what they shall do inside their own countries.

We can persuade Colonial Governments, but that is another story. I agree with the right hon. Member for Smeth-wick (Mr. Gordon Walker) that there is no reason why private enterprise should not play its part in ensuring Commonwealth development, but private enterprise should deal only with the industrial side while the State should confine itself to communications.

Mention has been made of the Colombo Plan, that vast scheme which will involve an expenditure of £1,834 million over a period of about six years and will improve conditions in India, Pakistan, Ceylon, Malaya and other countries in South-East Asia. Of that sum £839 million is expected to come from private investment as well as from Empire and foreign Governments and the International Bank. This scheme was agreed to by the late Government. Here there is a field in which private enterprise can play its part with State action.

Incidentally, there is a good example of how private industry and State action can combine over Empire development in a scheme which is being put forward by the New Zealand Government to establish a saw mill, a pulp mill and a newsprint mill in the North Island in an effort to solve the paper problem. In that scheme, which was put forward last year, the New Zealand Government has made an estimate of the capital needs, of which it will not find more than 15 per cent., the rest being left to private investment.

The board of management will have only one Government director on it; the rest will be private industrialists. The Government is proposing to supply the power, a new port, a railway, land for houses and also some of the houses. Private enterprise will establish the mills and do the rest. That is a good example of how State action and private enterprise can go hand in hand.

Mr. A. J. Irvine (Liverpool, Edge Hill)

Are we to take it that the hon. Member welcomes that degree of State intervention?

Mr. Russell

Yes, I have said already that we welcome State intervention which creates the necessary conditions, and that is exactly what this scheme is doing.

Now I come to the question of private investment, upon which the hon. Member for Wandsworth, Central, also touched. He particularly mentioned American investment in this country. I do not see why we should not have Canadian investment in the Empire. If, however, we are to have private investment we must make the conditions attractive. It is no good expecting American industrialists, individualists or capitalists—or what hon. Members opposite call them—to invest money in schemes if they fear that their capital may be nationalised or the income from that capital frozen by a future Government.

However we might like to dictate to investors, no matter from what country they come, we cannot expect them to invest their money with that fear in the background. Unfortunately, the previous Government set an example to other countries of how to nationalise private capital, which is not an encouragement to American investors to do what we want.

My right hon. Friend the Secretary of State for the Colonies said recently how much we would welcome American and Canadian investment in some of the colonial development schemes now being planned. We shall not succeed in this unless we come to an understanding with the Governments of the Dominions and those Colonies which have a much greater degree of self-government than some of the others—countries like the Gold Coast. Unless we come to an understanding with those Governments that there will not be an expropriation or nationalisation of capital at some future date, investors will be discouraged.

Mr. Norman Smith

I thank the hon. Member for giving way and I do not want to follow him on nationalisation, but he mentioned two things which might prevent American investors from getting their dividends. Is he advocating either some form of international gold standard or convertibility?

Mr. Russell

I do not want to get drawn on to the question of the gold standard or convertibility at the moment. All I am advocating is that we must not attract capital from the United States or anywhere else and then find a Government—perhaps the Government of one of the Colonies—saying, in future, "You cannot have any dividend or income from that money for some time to come."

I think I am right in saying that the one condition of the present Government welcoming American investment in the Colonial Empire is that it must not result in a net loss of dollars to the Commonwealth in the process. That takes care of the convertibility point which the hon. Gentleman raised. Subject to that condition, we must also make it clear that the industries concerned will not be nationalised or the income of the investors cut off in any way.

Lastly, I want to emphasise again the point I made at the beginning of my speech. If we are to succeed in the development of the Commonwealth and sterling area—and I mean by that the development of the Dominions as well as the Colonies—we must be free to regulate our trade to suit our own needs. Therefore, the first step which must be taken in this matter is for Her Majesty's Government in this country, as well as those in the Commonwealth countries, to come to an agreement that we shall free ourselves from the general Agreement on Tariffs and Trade and all other restrictions on Imperial Preference so that we can regulate our own economic conditions to suit our own policy.

I beg to move, to leave out from "ties" to the end of the Question, and to add instead thereof: and urges Her Majesty's Government to create the conditions in which private enterprise, assisted by State action where necessary and appropriate, can bring into full use the existing and potential resources of the Commonwealth and sterling area in order to promote peace and prosperity.

12.30 p.m.

Mr. Bernard Braine (Billericay)

I beg to second the Amendment, which has been so well moved by my hon. Friend the Member for Wembley, South (Mr. Russell).

I welcome the Motion, which has been moved by the hon. Member for Wandsworth, Central (Mr. Adams) and supported by the hon. Member for Uxbridge (Mr. Beswick), and particularly some of the things they have said. My rejoicing is all the greater since those two hon. Members, and particularly the hon. Member for Uxbridge, demonstrated how far some of the party opposite have travelled since the days when their principal mentor in political thinking, Sir Stafford Cripps, said that it was fundamental to Socialism to liquidate the British Empire.

Mr. Harold Wilson (Huyton)

The hon. Member will be aware that in 1947 Sir Stafford Cripps, in addition to the late Mr. Ernest Bevin and other members of the party, advocated an Empire Customs union, and made that proposal publicly and to the Commonwealth, but that for reasons which we all regret other Commonwealth countries were not able to associate themselves with the idea.

Mr. Braine

It is one of the encouraging things about human kind that most of us can learn by experience. The grim realities of recent years have brought home to all of us that, however loosely knit our association of States and Dependencies may be, in time of very deep crisis and difficulty there is a sense of unity which brings us together, and which affords to the world an inspiring example of how nations can live harmoniously together. Secondly, it is—

Mr. Beswick

rose—

Mr. Braine

May I finish the point? Secondly, it is now usually accepted that the economic well-being of the people of these islands depends on our remaining the centre of a great trading and economic system.

Mr. Beswick

We ought to get this clear. Just as Sir Stafford Cripps—and by implication, it was stated, we shared the views implied in his phrase—referred to the liquidation of the Empire, I should say that if we were to move to this new conception of a Commonwealth, about which, apparently, we have agreed today, the old Empire would have been liquidated.

Mr. Braine

May I develop my argument a little further? It is a good thing that hon. Members opposite should be calling for greater co-ordination of Empire economic activity, and so on, and that they should be calling for a resistance to further attempts to weaken Imperial Preference and other Commonwealth ties.

The hon. Member for Uxbridge said this morning that he was going to make a declaration of faith. With us on this side, this sort of thing has been a faith all our political lives. In the summer of 1949, the Conservative Party published its Declaration of Imperial Policy, in which occurred the following words: The Conservative Party has never supported any decision taken at Geneva, Havana or elsewhere, inimical to the general system of Imperial Preference, and we shall take all steps in our power to ensure that in the future our liberty in this direction is not impaired. Why is it necessary today that the Minister of State should be asked to give these assurances? Who entered into these commitments? Who was it who sold Imperial Preference down the river? Have hon. Members opposite forgotten how, in 1945, they paid a heavy price for American aid, which was supposed to last for five years, but which, put in the irresponsible hands of the right hon. Member for Bishop Auckland (Mr. Dalton), disappeared in just about a third of that time?

Since that transaction is relevant to what we are discussing today and to the present difficulties which confront our people, I say that to have asked, as we did then, for American aid on the basis of our common war-time sacrifices, without first consulting Commonwealth countries upon a common plan for action and facing together with them the problems of the post-war world, was hardly an act of statesmanship; but to surrender, in return for such aid, our sovereign right to determine our own pattern of trade and development, was an act of madness. Many of our present troubles stem from what I describe as the criminal innocence of those days.

The transaction that was then entered into was much more onesided than that. For that brief 20 months of aid we are to spend the next 50 years repaying to the United States a sum roughly equivalent to one-half of the income currently derived from our exports to the U.S.A. The transaction is even more one-sided, because under Article 9 of the Agreement we agreed to deny ourselves the right to switch our purchases of commodities from dollar sources to sterling area sources.

It is all very well for hon. Members opposite to ask the Government energetically to pursue the development of sterling area resources when they themselves entered into commitments which effectively fettered our capacity to do that very thing. In the last five or six years we have been free only to reduce our dollar imports, to tighten our belts, and have grown increasingly powerless to do anything about it.

I agree with what has been said about our efforts to enter the dollar market. I agree with the hon. Member for Uxbridge that we shall never be allowed to get a firm foothold in the United States market. The American policy of non-discrimination is designed for every country except the Americans. Yet the conditions imposed upon us by the United States Government forced us to make a dollar drive.

It is interesting to note that trade figures reveal that this country enjoys a bigger export market in Australia, whose population is only one-eighteenth that of the United States, than in the U.S.A. We enjoy a greater market in the Union of South Africa, with a population only one-fourteenth that of the U.S.A., and in Canada—a dollar country, it is true—with its population only one-twelfth that of the United States; and we enjoy a greater market in the Indian sub-Continent than in the United States. Yet all of us in the Commonwealth have grown perilously dependent upon the United States.

The American policies of intermittent purchase of raw materials, which has had disastrous effects upon prices; of high tariffs, designed to exclude foreign goods, which alone can enable the dollar gap to be bridged, and of subsidising exports when American goods cannot stand up to Commonwealth competition, are all a threat to the stability of the sterling area and of the Commonwealth.

I therefore agree with my hon. Friend the Member for Wembley, South, that if the Commonwealth is to survive, it must be free to determine its own pattern of trade and development. It must be free to cut down its dollar imports if it wants to do so, and to switch its sources of supply to the sterling area. It must be free in this way to balance its accounts. This, of course, entails the restoration of our sovereign right to impose such tariffs as we think fit, in order to protect the level of wages and employment at home, and the restoration of preferences to stimulate trade in a way beneficial to the Commonwealth as a whole.

I welcome the idea put forward by the hon. Member for Uxbridge of an Empire Customs union. It is not a new idea, but it should find a place in our discussion today. Nor do I believe we should be exclusive about preferential systems. I think we should be ready to invite Western European countries to join in our system of Imperial Preferences. But the whole point is that we are not free to do these things. It is true that Article 9 has gone as a result of the repayment of the first instalment of the American Loan, but the general agreement on tariffs and trade still remains.

I know that a preferential system, indeed, the Empire Customs union, which has been advocated, is frankly discriminatory against some parts of the world. It also implies that the economy cannot be left to the mercy of blind economic forces. I think it was the right hon. Member for one of the Lewisham divisions—he was Lord President in the late Government—who said, in 1946: We are determined that we are not going to be caught unawares by blind economic forces under this Administration. But that is what constantly happened, precisely because they let our defences down.

Mr. H. A. Price (Lewisham, West)

To save one of his colleagues embarrassment, will my hon. Friend make clear that the remark was made by the right hon. Member for Lewisham, South (Mr. H. Morrison)?

Mr. Braine

I thought I made that clear.

Now, there appears to be some doubt and confusion on this subject among hon. Members opposite. As a Tory I repudiate laissez faire. I believe that the State has a great part to play in the shaping of the economy and I believe that there is a case for State in vestment. But let us get this into perspective. It is only a short time ago that hon. Members opposite believed that State enterprise could supplant private enterprise; that it was not only politically wise for State capital to be invested in overseas projects, but that it was economically profitable to do so.

Four years ago, when the Overseas Resources Development Act became law and two great State Corporations were set up, the belief existed on the benches opposite that by this means they would tackle development in a way that private enterprise had never been able to tackle it in the past. There were all kinds of glaring references at the time. The "Daily Herald," for example, described the setting up of the Overseas Food Corporation as the most comprehensive plan in Britain's history. The "Daily Mirror" said, "Big dividends are certain."

That was the kind of ecstatic view of State investment taken in those days. Today, I do not think that a single hon. Member opposite shares the view of the hon. Member for Wandsworth, Central, who described the Gambia egg fiasco as an imaginative beginning. It was the most frightful flop and everyone knows it was. Today, I think we should be prepared to learn from experience. Quite apart from any other consideration, I believe these massive State corporations are too big. Experience shows, particularly in relation to the Overseas Food Corporation, that they are too big, impersonal and remote. [An HON. MEMBER: "What about Unilever?"] Yes, but that runs its business profitably and the test of any organisation is its efficiency and profitability. I think, however, that there is a case for smaller Colonial development companies.

It will be in the recollection of some older hon. Members that this idea was first mooted by the late lamented Mr. Oliver Stanley, when moving the Colonial Development and Welfare Bill towards the end of the war. The idea was put forward by the Evans Commission which went out to investigate the possibilities of development and resettlement of population in the West Indies although no attempt was ever made by hon. Members opposite to implement that part of the Commission's Report.

I believe there is a case for marrying State investment with local experience and local enterprise. The sooner we draw a veil over the operations of the Overseas Food Corporation the better. When I was in the West Indies last summer, I asked a number of questions about the operations of the Colonial Development Corporation, which has certainly a little better record than the Overseas Food Corporation. I was told by a prominent West Indian that it was "rich in words, but poor in deeds."

The result of what happened in Gambia has caused the Colonial Development Corporation to be overcautious and now it will not touch the kind of undertaking for which it was originally designed. Where should the line be drawn between State and private enterprise? We on this side of the House —my hon. Friend and I, certainly—believe that, primarily, State action should be concerned with the long view, with the creation of conditions under which commercial enterprise can flourish. It should concern itself with the building of roads, the provision of railways, or harbours, of water supplies, and so on.

There is a case, for example, in British Guiana for the building of roads and the carrying out of drainage and irrigation works. There is a case for the provision of a deep water harbour in Barbados and for building new railways in East Africa. Let me give the House just one example of what I have in mind. There is no more important single foodstuff in the world than rice. Millions of people, particularly in the Commonwealth, depend upon it for dear life. The whole economy of our territories in South-East Asia depends on a plentiful and sure supply of rice. The production of tin, rubber and copra in South-East Asia, which is vital to our economic survival, depends, on the supply of rice. I understand that there has been a great increase in the rice production of Malaya. But, the four Commonwealth territories in South-East Asia still require the importation of 700,000 tons a year. They get it from three countries wracked with civil war and still suffering from the effects of the Japanese war and all of which are menaced by Communism. Overnight the supply of rice could be cut off from our Commonwealth territories in that region and there are no alternative supplies in the world except, possibly, in the United States—

Mr. Snow

There could be.

Mr. Braine

There could be, indeed. In the Commonwealth there is one place where rice could be grown on a comparatively large scale in a short time. British Guiana is producing 60,000 tons of rice a year but I have it on the authority of those who are knowledgeable on the matter that something like 300,000 tons could be produced within five to 10 years, if the necessary capital were found for drainage and irrigation works. That is the kind of project in which the State should take a lead.

But private enterprise would grow the rice. And what kind of private enterprise? Hon. Members opposite do not understand the realities. The person who would grow the rice in British Guiana is the peasant. It is in the interest of everyone concerned, not only our country but the rice consuming countries of the world and the people of British Guiana themselves, that more rice should be grown. Already as a result of the Government-sponsored rice scheme in that country, more rice is being grown by the peasant, but the State can help to create conditions in which still more can be produced. I am sorry to detain the House so long in giving these details, but I am sure that that is the kind of thing to which we must bend our energies in the future.

Mr. Irvine

Are we to take it that the hon. Gentleman shares the hope that in British Guiana there will not be the waste of soil and soil fertility to the extent which has been permitted by private enterprise in the United States?

Mr. Braine

I am devoting my remarks entirely to the Commonwealth. I have no particular desire to emulate what has been done anywhere else in the world. I think that that interruption was quite irrelevant. We have our own problems, and I trust that we shall deal with them in our own way. Investment in non-self-liquidating projects—

Mr. Charles Royle (Salford, West)

rose—

Mr. Braine

I have not got a lot of time, and I do not wish to give way because there are one or two other important points to which I should like to draw attention.

My hon. Friend the Member for Wembley, South, has referred to other ways in which the State can help to create the necessary conditions for economic expansion. There must, of course, be a reasonable assurance that what is produced can be sold. That in itself is one of the reasons why we must at the very earliest opportunity regain our freedom to introduce such preferences as we can arrange with the Commonwealth.

Secondly, there must be an assurance that private investors do not have added to the normal commercial risks and hazards which they are ready to accept, the possibility of confiscation, and that there will be freedom to enjoy reasonable profits. I say that because it is very important if overseas investment is to be attracted into the Commonwealth as seemed to be envisaged at the Commonwealth Finance Ministers' Conference. Lastly, there must be an inducement to invest.

That brings me to my final point. It is beyond all dispute that the level of taxation in this country has reached a point where it is very difficult indeed to find money to finance new development. I hope that the Chancellor will pay some attention to that matter when he introduces his Budget. In another way current Income Tax practice is discouraging overseas investment of a useful character. I trust that the Under-Secretary is taking a note of these points, and in particular this one, because I should like an answer to it.

In the West Indies a number of Colonies offer very powerful inducements indeed to private enterprise to set up new industries. For example, they extend a five years' tax free holiday to firms coming in and establishing new industries. In addition to that, they give very generous depreciation allowances. As a result of this policy, which certainly received the blessing of the late Government and, I should imagine, will commend itself to the whole House, a great deal of North American capital has been flowing in to Trinidad, Jamaica and Barbados.

New factories are being set up. That is all to the good. But the disturbing thing is that very few British companies have taken advantage of these concessions, and the reason for that, as the House will be aware, is that under the double taxation agreements, all profits remitted home are subject to local Colonial Income Tax which is then offset against British Income Tax.

That is fair enough—nobody will quarrel with that—but in the case of United Kingdom companies whose boards of directors are located in this country and whose operations are controlled here in the United Kingdom, British Income Tax is levied on all their profits, including undistributed profits. If such a company is scheduled as a new enterprise in the West Indies, no offsetting allowance is permitted by the British Treasury. The result is that the British Treasury is profiting at the expense of those colonial territories which have been offering special inducements in order to attract risk capital. That is wrong, and it should be investigated by the Government as quickly as possible.

Indeed, it poses a paradox. Here is Britain, on the one hand, urging the Colonies to broaden and diversify their economies, while, on the other hand, she is nullifying concessions designed to attract risk capital into those Colonies, without which no proper economic development can be undertaken. I hope the Government will consider that matter sympathetically and will sweep away restrictions on overseas development of that kind.

The hon. Member for Uxbridge said that we should not allow difficulties to stand in our way, and I agree with him. The possibilities of development in this Commonwealth of ours are stupendous. Science is now our handmaiden. I was greatly impressed when visiting Trinidad, with the wonderful work which has been done by the Imperial College of Tropical Agriculture.

I have no wish to detain the House further, but it occurs to me that there is one point which is relevant to what we are discussing. The average yield per acre on the best cocoa estates in Trinidad is roughly 400 lbs. Over the island as a whole it is about 100 lbs. an acre. As a result of the work of scientists and plant breeders it is now possible to grow cocoa yielding 1,500 lbs. an acre. That is an example of the possibilities. The opportunity is undoubtedly there. The challenge is tremendous, and I am sure that given the appropriate encouragement the British people will respond.

12.59 p.m.

Mr. Harold Wilson (Huyton)

I will not follow the hon. Member for Billericay (Mr. Braine) in the criminal innocence, to use his own phrase, in which he has approached one or two of the problems, but there are one or two matters to which I wish to refer. Let me begin with a warning to the hon. Member. In the early part of his speech, he made several references to the United States of America. I hope he will not go in that tone for too long. If I were to make a speech like that, I should be accused by all the Tory Press of violent anti-Americanism, and I have never made such attacks on the United States as the hon. Gentleman made this morning.

Mr. Braine

The right hon. Gentleman was a member of an Administration which accepted these onerous conditions. He has no right to make disparaging remarks of that kind.

Mr. Wilson

The hon. Gentleman criticised the United States not merely for the onerous conditions, but on all the other questions about American sales and American markets.

Mr. Braine

I am very grateful to the right hon. Gentleman for giving me the opportunity to clarify the point. I was not criticising the United States; I was, in fact, criticising the late Government, of which the right hon. Gentleman was a member, for accepting these types of conditions.

Mr. Wilson

When the hon. Gentleman looks at his speech tomorrow, he will see that he was talking not only about the late Government but about the United States. With regard to those conditions, the hon. Gentleman, a few moments ago, referred to the rice problem in words with which we all agree, and he commented on the fact that one of the main difficulties was that, of the three principal rice-producing areas, two are still prevented from making any major contribution because of the devastation arising from the war. Does not the hon. Gentleman realise that in 1945 the devastation arising from the war was a good deal greater than it is today and that we and the whole Commonwealth were driven into the dollar areas to get the food to live? India was facing starvation and had to go to the United States to get grain. That grain had to be paid for.

The Commonwealth development that went on in 1946 and 1947 required a good deal of American assistance, and we all regret that that was so; but we and the other countries would not, without that loan, have done the amount of development that was achieved. I agree with the hon. Gentleman that the conditions attached to that loan were onerous. I think that they entirely ignored the fact that we and the Commonwealth as a whole had come out of the war a great deal poorer because of the sacrifices made in the war, and America had come out a great deal richer.

Although we voted for the loan because it was essential in the interests of the Commonwealth, I think the conditions attached to it were unfair and unduly onerous; but the alternative—to refuse the conditions and refuse the loan —would have held back Commonwealth development and caused famine and starvation in the Commonwealth. That was something we could not accept, and therefore we had to accept those conditions.

A number of hon. Members on both sides of the House have said that the economic crisis we are now facing is a 20-year crisis; it goes back deeply into the past and it is going to last for a very long time in the future. In an article published in a Sunday newspaper two or three weeks ago I indicated a seven-point programme for dealing with the crisis. I said that it would take 20 years to solve and I put very great emphasis on the need not only to intensify intra-Commonwealth trade but to develop a Commonwealth source of supply of materials and foodstuffs.

Great things have been done in the last six years. When the hon. Gentleman says that the Imperial thesis is a declaration of Conservative faith, I agree; but in the matter of Commonwealth development one judges not by faith but by works, and that is how the party opposite will be judged and how we, also, should be judged. On that test Commonwealth trade in the last six years reached the highest figure in its history, not only in terms of quantity—the amount of trade passing—but in proportion of our total trade. We reached a figure of 50 per cent. of our total imports from Commonwealth sources and a figure very close to that for exports going to the Commonwealth.

Mr. Osborne

Was not that largely because we had no reserves with which we could buy outside the Commonwealth? We had no option.

Mr. Wilson

The hon. Gentleman ignores the fact that during this time our trade was increasing, and our export trade reached the highest figure—measured by value—in the history of the country, and a higher proportion of that went to the Empire and Commonwealth than ever before.

In the matter of Commonwealth development, great progress was made. I am certain that hon. Gentleman opposite —particularly the hon. Member for Croydon, East (Sir H. Williams), a pathetic specimen who can say nothing in a debate like this except grumble about Gambia eggs—could not tell us about even five or six other projects that have succeeded. They know all about Gambia eggs and groundnuts from the speeches of Lord Woolton, but I doubt whether they have given the same kind of attention to the reports of the Colonial Development Corporation in regard to the 60 or 70 other schemes in all parts of the world, on which the whole House, I am sure, wishes the Corporation every success and gives it full backing.

With regard to the important question of preference, I should like to express my warm agreement with the speech of the hon. Member for Uxbridge (Mr. Beswick), who referred to a Customs Union. In Geneva in 1947, I made that suggestion to all the Commonwealth delegates present. It was made the subject of a great speech to the T.U.C. by Mr. Ernest Bevin: it was pushed by Sir Stafford Cripps. We have to face the fact, as the hon. Member for Wembley, South (Mr. Russell), said, that we cannot dictate to the rest of the Commonwealth. None of us wants to do that.

We have to face the fact that some Commonwealth countries do not want a Customs Union. We all regret that; we think it is wrong. There is a great element of protectionism in Australia. That is no reflection on the present Australian Government; there was also a great deal of protectionism in the minds of the previous Government. That protectionism affects not only goods from foreign countries but goods from the United Kingdom. Because of that, there is not the will, in Australia, Canada and certain other countries, for the Commonwealth-wide Customs Union which I am sure hon. Members on both sides of the House would like to see and do all in their power to promote.

On the question of Imperial Preference, I agree with the hon. Member for Billericay. I think that the conditions connected with the American loan were irrelevant, very doctrinaire and most regrettable. I have said this scores of times to leaders of American delegations. I believe that they were designed to impede the progress of world recovery and not to promote it. I said that publicly in Geneva on 23rd August, 1947, when I took the crisis of 1947 as a text to show that we needed more Commonwealth development, more Imperial Preference, and not less.

Last year, at Torquay, at a time when we had failed to reach agreement with the United States because they were demanding what we considered to be unacceptable proposals for whittling away Imperial Preference, I explained to them, at three o'clock in the morning, that as far as His Majesty's Government at that time were concerned, we would never be a party to making permanent an agreement on tariffs and trade unless those unacceptable conditions about Imperial Preference were removed. In saying that, I said that I was speaking for all parties in the House, because I knew that the Conservatives would take the same view. That was reiterated by the right hon. and learned Member for St. Helens (Sir H. Shawcross), and I trust that it will shortly be reiterated from the Front Bench by Her Majesty's present Government.

I do not agree with the hon. Gentleman that the General Agreement on Tariffs and Trade is wrong. I think that to a great trading nation such as ourselves there are very many elements in that agreement which are of great value and which will prevent other countries from putting on various kinds of protectionism and barriers against the exports which are necessary to us. The hon. Gentleman on two occasions said that we must be free to regulate our own trade. What did he mean by that? Did he mean quotas? Did he mean the Australian beef policy followed by the party opposite before the war? I do not think he meant that; I think he meant that we must be free to put on tariffs, and so on.

I should like to remind the hon. Gentleman that we are free, as long as we are in balance of payment difficulties, to put on something far more effective than a tariff, and that is a quota on American goods. The Chancellor of the Exchequer and the President of the Board of Trade, are doing it every day because of the present economic crisis. They have no alternative. That is a much more effective instrument than tariff protection, which carries behind it far more vested interests than are concerned in the balance of payments.

I suggest to the hon. Member that he should look at the problem from the point of view of the interests of the country as a whole—of all our trade, and not merely that vitally important part, Commonwealth trade. His desire to regulate our own trade might be emulated by a lot of other protectionist-minded people in other Parliaments and Governments. They want to be free to regulate their trade. They want to be free to put a tariff, possibly an insurmountable tariff, on British goods, and if we set them free to do so because we want to be free ourselves, that may mean death to many important British export industries—and I am glad to notice that I have the support here of hon. Members opposite.

I would say one other thing to the hon. Member. Preference is not the only means of developing trade within the Commonwealth. Even if we had agreed on it, I do not think Preference would have been anything like so important in the last six years as such things as long-term contracts and bulk purchase. These are the things which give confidence to the producers in Commonwealth countries —confidence that when they have expanded production they will not find themselves without a market. It was the party opposite who had quotas on Australian beef, which killed trade in beef from Australia to this country.

Although long-term contracts take many years to become effective, they are much more important in the development of certain kinds of foodstuffs than any Preference. I am not saying, however, that these are the only methods. All the methods suggested are important and we should follow all of them if we mean to have the success for which we hope.

Turning to Commonwealth development, we all welcome that there was yet another meeting of the Commonwealth Finance Ministers. We welcome the appointment of two sub-committees, one under the right hon. Gentleman the Minister of State and one under the Under-Secretary of State for Commonwealth Relations. But the Under-Secretary will have discovered by now, if he did not know them before, one or two things about the development of Commonwealth trade. Commonwealth development is not achieved by speeches in the House of Commons. It is not achieved by committees. It is not even achieved by leading articles in the "Daily Express."

Commonwealth development requires a number of things, and most of all it requires technical assistance which, as my hon. Friend said, this country is well equipped to give; it requires finance, which we are not so well equipped to give; even more important, it requires steel and capital equipment. Unless the Under-Secretary is able to allocate steel for Commonwealth development from our very scarce resources—and we did when steel was scarce in 1948—unless he does something to release capital equipment for Commonwealth development, his committee and, more important even than his committee, the whole future of Colonial development will be faced with disaster.

What we should be discussing today—although we are to have a debate on it next week, so perhaps I will not do so—is the White Paper issued yesterday, which says we are to spend £300 million more on re-armament. Before the White Paper was issued, did the Under-Secretary state what effect it would have on the possibility of Colonial development? As I have said before, we cannot develop these great Commonwealth areas with exports of asprin tablets, and non-utility clothing. What we have to send is capital equipment, and we are being prevented from sending it at present by rearmament; and it looks as though the situation will become a good deal worse rather than better.

We must not be smug or complacent about what has been achieved or is being achieved in development. Anything the Under-Secretary is able to do this year will not yield great quantities of food and raw materials for the Western nations. He will do extremely well if he can develop at a rate sufficiently fast to meet the needs of the rising populations of the areas with which he is dealing. For many years there will not be a surplus or dividend of food and raw materials for the Western Powers. We have seen that even in Australia, where the development of meat production will cover only the increased requirements of our Australian friends and will not provide great surpluses for this country.

I think it is vital that we should not be smug or complacent about the Colombo Plan. The Colombo Plan was a great conception—one of the greatest conceptions in Commonwealth development or, indeed, in the development of underdeveloped areas—for it covers non Commonwealth areas as well—in the history of the world. I think credit should be given to all those concerned, from every Commonwealth Government, who took their part in it. It involves a good deal of development, costing, at 1949 prices, £1,868 million in six years, designed to increase the area of land under cultivation by 13 million acres—3½ per cent.; the area of irrigated land by 13 million acres—17 per cent.; the production of food grains by 6 million tons —10 per cent.; and the production of electricity generating capacity by 1,100,000 kilowatts—67 per cent.—in those areas.

Yet, great as these increases are, they will not be enough, as the Report makes clear, to raise the living standards in the areas covered by the Colombo Plan. All they can hope to do in the light of increasing populations is to maintain the present standards of living in those areas, even if the Colombo Plan is put into effect fully. I hope we shall soon have a whole day's debate on the progress of the Colombo Plan. It is of vital importance. Perhaps I may offer one or two thoughts about it; I have been putting some rather longer thoughts on paper, which I hope hon. Members will read when they are published, but these are a few short thoughts.

First of all, although this is a great scheme, it is on far too small a scale to do what is required. The £1,860 million in six years is spread over an area with a population of 570 million people—one quarter of the earth's population. That represents an expenditure of about 11s. per head per annum on capital development. It is a pathetically small figure.

The Report of the United Nations experts on the development of underdeveloped areas, published last year—and I think the finest thing put out by the United Nations on this question—calculates that for that area, or broadly that area, if we are to develop at a rate sufficient to raise the national income per head by 2 per cent. per annum, it will require something like 87s. per head on development in the area and not the 11s. proposed under the Colombo Plan. The Colombo Plan, therefore, great as it is, provides only one eighth of the rate required to achieve a very modest 2 per cent. increase in the national income per head per annum in these areas.

The second point is this. The Colombo Plan remains an aspiration as far as finance is concerned. It said that a sum of over £1,000 million was required for the six years, but it did not reach any conclusions about where the finance would come from. Some was to come from running down the sterling balances—and we must not take too much satisfaction about that; we must not think that we are making a major contribution to Commonwealth development by it, because it involves a rate of running down the sterling balances which is only one-half the rate at which they were run down from 1946 to 1949.

There was, therefore, a great and yawning financial gap, and the Report made a hopeful nod of the head in the direction of the United States and left the matter there. Of course, from that time the United States were caught up with re-armament on a prodigious scale, and there is no prospect of getting from the United States anything like the financial assistance required, nor, indeed, is there prospect of it from this country.

From the financial point of view, therefore, we must conclude that the Colombo Plan is in very great danger—the more so because the calculations were based on certain assumptions about the earning power of those areas in regard to their raw material exports which were made in a very good year. In present conditions, and in probable future conditions, therefore, the financial problems of the Colombo Plan will be even greater than those set out, which themselves were not solved in the Report.

Mr. Osborne

I agree with most of what the right hon. Gentleman has just been saying. He said that we are not going to develop these great plans by exports of aspirins, and that we must he prepared to sell machine tools and steel and things which are required here at home. His next point was that many of these things will not bring any dividends back to this country for many years. Those are two things he said on which we both agree. Does not the right hon. Gentleman think that he ought to emphasise his second point a great deal more to the people of this country—that we have got to make sacrifices that may reduce our standard of living and that we are not going to get a return for them for perhaps 10 or 20 years?

Mr. Wilson

I wish the hon. Gentleman would come to some of my public meetings. I do not think that I have addressed a meeting in the last six months without making that point. When the hon. Gentleman sees the Report to which I have referred and which will be published shortly, he will find that that point has been very fully made. Certainly, my hon. Friend the Member for Gravesend (Sir R. Acland) has not failed to make it clear in the speeches that he has made.

The point that I would make about the Colombo Plan is the very serious position which has developed about the supply of capital equipment. On this I offer the House not my own judgment but that of a very eminent Indian economist, Dr. Rao, who will be well known to hon. Gentlemen opposite, and who wrote in Lloyds Bank Monthly Review last July: During the last 12 months on the side of actual imports of capital goods and essential consumer goods the position has grown significantly worse. These countries find it very difficult to get the imports they require for their development. Unless some positive steps are taken by the Governments of the industrialised countries concerned to take into account the development requirements of the under-developed countries in the planned utilisation of their industrial potential and of the raw material supplies and sources controlled by them, the supplementation of the Colombo Plan is going to be extremely difficult, if not actually impossible. That was said before re-armament really began to interfere with the supply of capital goods.

I do not want to enter too much into this arid discussion about public enterprise versus private enterprise. We recognise that both are required. [HON. MEMBERS: "Hear, hear."] Yes, we recognise that both are required, and I am afraid that public enterprise is going to be required on a scale far transcending anything thought of by hon. Gentlemen opposite. Private enterprise has its part to play, and in a small way and in certain areas it is playing its part today, but that part is limited, compared with the great task of Commonwealth development in Africa, Asia, and in under-developed areas elsewhere.

It is public enterprise that is opening up in those areas roads, railways, and so on, that are needed, and I am sure that when my right hon. Friend the Member for Smethwick (Mr. Gordon Walker) got up and asked about railways provided by private enterprise, he was making the point satirically to hon. Gentlemen opposite, who were suggesting that a great deal of this development can be done by private enterprise.

Mr. Gordon Walker

I was merely trying to point out that the speeches do not carry us very far.

Mr. Wilson

Yes, I quite understood what my right hon. Friend said.

Mr. Braine

The right hon. Gentleman will forgive me interrupting, since he is referring to a point which I was making. Will he tell the House what was the total capital at the disposal of the Corporations set up by the late Government? How did that compare with the total capital invested in, say, a single industry such as the rubber plantation industry? The right hon. Gentleman knows as well as I do that there is in the rubber plantation industry alone £100 million more capital invested above the money voted by Parliament during his period of office.

Mr. Wilson

Yes, but it took a rather longer period of time to do it. I think we are all agreed in this House that what has to be done now has to be done as a matter of urgency if we are not to face a world crisis by starvation before the end of this century. Of course, one knows the record of private enterprise in rubber and tin, but the private industry's record has necessarily been selective. It has skimmed the cream off in many directions.

There are other forms of development which are necessary and which are not going to yield that degree of profit. There is much to be done in the building of roads, laying of railways, provision of docks and harbours, irrigation schemes, hydro-electric schemes and great multipurpose development schemes of the kind included for India and also for Pakistan and Ceydon under the Colombo Plan. There has to be a tremendous expenditure on social development. It is not a thing that private enterprise could do at all. There are such things as anti-malarial measures and health measures of many kinds to prevent diseases in human beings and in cattle. There is education. Perhaps the most important of all forms of development is agricultural extension. They all require a vast amount of capital investment.

What is required is capital investment in human beings which may not show any profit, but which will in fact be more profitable than any investment in ordinary private enterprise projects. The hon. Gentleman got near to the point when talking about peasant production. I agree with him that there is a tremendous development and expenditure required on such things—more than on the more glamorous Tennessee Valley Authority type of schemes—to help the peasant producer in Africa, in Asia and elsewhere. This will all require millions of money, and technical assistance in every way, and it is going to require public enterprise, for no private industry could do the job.

The hon. Gentleman mentioned United States experience. In Puerto Rico there is a great amount of industry which in other countries is conducted by private enterprise that has to be done by public enterprise, or else has to be subsidised on a tremendous scale. Some of such undertakings do not yield even a 4 per cent. dividend, which is not usually regarded as a satisfactory reward for a risky venture. Many are not going to yield more than 1 per cent. But they will yield progress in raising the standard of life of the people.

There has been a lot of investigation of this question of private enterprise in the United States, where they have available for overseas investment far more than we have. It is generally recognised that private industry cannot do the trick. Of the 800 million dollars invested on private account in the years 1947 to 1949, 92 per cent. has been in the form of direct investment in companies' subsidiaries or overseas operations, and 74 per cent. of that direct investment has been in oil. Over that whole period 128 million dollars was invested in developments in Latin America and only 28 million dollars in other under-developed areas of the world.

Mr. Gordon Gray, in a report to the President of the United States—a very fine document—on foreign economic policies concludes: Only a few hundred million dollars, at most, is likely to be invested in underdeveloped countries outside the Western Hemisphere in properties not related to oil. Taking into account the known obstacles and the uncertain effectiveness of the limited measures that can be taken to overcome them, it must be frankly recognised that private investment cannot be expected to solve the problem of financing development alone. That, I am sure, is an argument the House will accept, coming from so important an authority in the United States.

But I must emphasise once again how vital it is particularly to get on with the Colombo Plan. Heaven knows, that plan is far too small, but it is in greatest danger of dying out and of not being implemented. I would quote once again, in conclusion, what Dr. Rao said: The psychological effect of a big plan that fails to be implemented is far worse than that of a modest plan that is actually realised; and nowhere in the world is this more true than in the Asia of today, where people are sick of paper plans and promises and are clamouring for results. I must confess to a feeling of uneasiness about the meager character of the progress achieved so far in regard to the implementation of the plan. The Colombo Plan required for its success two things: national effort and Commonwealth effort. The former is in operation; national plans of development are already under way, and determined efforts are being made to secure larger volumes of domestic finance. But as regards Commonwealth effort, progress is slow. Commonwealth effort lay in three directions; technical skill, finance and supplies. He says something is being done for technical skill but nothing appears to be done about the remaining two… Unless the machinery is completed, and unless it functions actively in all the three fields, viz., technical skill, finance and supplies, there is but little chance for the plan as such to succeed. And the grand conception of a multi-lingual and multiracial Commonwealth working in co-operation to raise living standards within the less developed parts of its area which underlay the Colombo Plan would really have been in vain. I am sure it will be the desire of the whole House, apart from any party arguments we have on individual questions within the Motion, that this must not be allowed to happen, and that the Colombo Plan must go forward at the earliest possible moment to complete success in order to raise the standard of life of the 570 million people covered by its operation.

1.31 p.m.

Mr. Christopher Hollis (Devizes)

I am sure that we can all congratulate the hon. Member for Wandsworth, Central (Mr. Adams) on his good fortune in the ballot, and on the subject he has chosen to raise.

With a very large proportion of the observations made by both him and other hon. and right hon. Members opposite I am happy to find myself in complete agreement. But there are, I think, just one or two little friendly tiffs that we might be entitled to have. First, if the hon. Member for Wandsworth, Central, thought it necessary to condemn the policy of the Chancellor of the Exchequer, surely when debating such a subject as this it is a little bit unfair that he should speak as if the policy of restricting trade were the total policy of the Chancellor, and that on such a subject as this he should not even mention the meeting of the Commonwealth Finance Ministers.

As for being frightened of language about convertibility and the elimination of preference, we must remember that the Socialist Party did cast its vote in favour of the British Government of the day accepting the principle of turning very rapidly to convertibility and of eliminating preference. The right hon. Member for Huyton (Mr. H. Wilson) said that he cast his vote for that measure, but that he gave it his vote with dislike for the measure, and thinking that the terms were extremely onerous.

But the right hon. Gentleman was not Chancellor of the Exchequer at that time. The Chancellor of the Exchequer of that day, the right hon. Member for Bishop Auckland (Mr. Dalton), said that there was no item in this agreement which he would not be prepared to defend on its own merits. However, that is past history, and we are all most ready at all times to welcome prodigal sons. Nevertheless, I think it would have been better had they not spent too much of their time complaining that the calf is not sufficiently fatted.

Let me now turn from combat to the general principles of the hon. Gentleman's argument with which I am very much in agreement. We all agree with the general outline of the situation, that the great problem of the 20th century is the enormous predominance of the United States and its vast surplus of exports over imports. We all agree with his analysis of the difference between the situation in the 19th century, when this country was the predominant country—a small country, poor in raw materials and importing raw materials every time it won a new export market—and the situation now, with the United States, rich in raw materials, finding its export market but very often bringing in no imports to meet it.

If it is not impertinent for me to say so, I thought the hon. Gentleman brought out that point very well. We all agree that is a great problem. The great problem, therefore, of the rest of the free world is how to set itself free from this continued dependence upon the United States.

I quite agree that the time has past when it is possible for any one country, such as this country, or any other, to do that simply by acting alone. This is a time when we must act in large units, and incomparably the largest unit in the free world outside the United States is the sterling area. Therefore, nothing could be more proper than that we should give our first attention to the methods by which we can solve the problems of the sterling area. The importance of the sterling area in the relationship of trade with the United States has grown enormously over the last dozen years.

It so happens—and doubtless hon. Members already know the figures—that the proportion of imports into the United States which come from the sterling area is almost exactly the same today as it was before the war, in 1938, and that is about 20 per cent. But, if we analyse this figure, we find that in 1938 one-third of those imports came from the United Kingdom, whereas now only about one-sixth come from the United Kingdom. It is thus obvious that if we are to act to free ourselves from this American predominance, we are not likely to be successful unless we act in co-operation with the whole sterling area.

Therefore, our policy must be frankly to discriminate—and I use the word, naturally enough, in the strict economic sense and not in any sense of unfriendliness—to discriminate against the United States; to take as few goods as we possibly can from the United States. That is not an anti-American policy, a policy unfriendly to America. Indeed, no one has shown more clearly than Mr. Walter Lippman that it is as much in the interests of the United States itself as in our interests that a condition of what he calls "mutuality" should be established, if it can be established; a condition of equal exchange of goods between the rest of the free world and the United States.

Friction is inevitable in this or that case as long as half the world is living on this give-and-take relationship with the other half of the world. We ought to be grateful indeed for the generosity of the United States over the past years, but though it would be improper to criticise their generosity, we are entitled on some occasions, I will not say to criticise, but at any rate to question their intelligence, because American policy since the war is a little puzzling, at least in one respect.

Immediately after the war we were told that we could have assistance from the Americans on condition that we did everything we possibly could to eliminate preference; that is to say, the wickedest thing in the world was for us to have special economic relations with any other country. But now along comes the Mutual Security Act, by which we are told that we can have assistance if we work for federalism, and only if we work for federalism; so now, apparently, the wickedest thing in the world is not to have any special relations with any other country. We are, therefore, entitled to say to our American friends that it is a little puzzling, and that we cannot even find out very clearly which it is they expect us to do.

However, our task is, as has been agreed by all the speakers today, to build up the strength of the sterling area as much as we possibly can by a policy of economic development, and by, to a very large extent over the years, a policy of migration so that the white population of the sterling area can be spread out more evenly than it is spread out at present. There seems to be no dispute whatever about that, so I need not delay the House with it. But there does come the great question, with which every hon. Member has dealt from one point of view or another, naturally enough: Where is the capital for this development to come from?

It does not come, as the right hon. Gentleman said, or more or less said, merely by making speeches. It is a very serious problem, which we must clearly settle. I quite agree that this is not the occasion for which we can argue about the re-armament programme, for whatever we think about the arguments we are all agreed about the problem. Obviously, the re-armament programme in itself makes the solution of this problem enormously more difficult. Nobody doubts that. It is a matter of opinion as to whether the re-armament programme is necessary or is not necessary, but there is no difference of opinion about whether it is inconvenient or convenient.

It makes a problem which, difficult in any event, may become incomparably more difficult. All I can say about what the right hon. Gentleman said about that and the Colombo Plan is that I cannot agree that the re-armament programme is, as it were, irrelevant to the Colombo Plan. To carry through the Colombo Plan it is necessary, among other things, that not only should we be prepared to provide capital for the development of those countries but that there should be some sort of guarantee that there will be law and order in those countries.

Nothing would be more foolish than to invest money in a country and to build factories and bridges just to be blown up by the enemy. We can argue whether the re-armament programme is of assistance to the preservation of world peace and of law and order, but if it is of assistance, which those who support it think it is, then it is not irrelevant.

Mr. H. Wilson

I do not want to magnify the differences that exist between us on this or any other point. I believe re-armament to be necessary, but we cannot debate that today. But surely he will agree that if the efforts made are excessive, we shall not only get less rearmament—and I know that he wants re-armament—but we shall be faced with the situation that there will be less for Commonwealth development, which can make its own contribution to peace.

Mr. Hollis

I am reminded of an incident of my schooldays when, in the school debating society, we discussed a motion that too much novel reading was a bad thing. We rejected it, of course, by a substantial majority. I agree that if we go at too great a pace that is a bad thing. The whole question is: What is too great a pace? I appreciate that we cannot argue that today, but perhaps there will be an opportunity to state our opinions about it when it is a topic for debate on some other occasion.

To come back to the general point about capital. There is this difficulty about capital. It will be much more difficult to have a rapid development of the sterling area unless we can get some assistance from American capital. I think that everyone agrees about that. I think that it is a rather sterile argument to debate what proportion should be private and what proportion public, because circumstances will largely dictate that.

I call the right hon. Gentleman's attention to the United States Department of Commerce's study of world economy and the fate of American money which went abroad between the wars, when they showed in some detail how the money that went in private investment was on the whole much less frequently lost than the money that went in Government loans, and that of those private investments by far the most profitable were investments in countries which were protected against American consumer goods by high tariffs, the great example being American investment in the automobile industry in Ontario. I think that there is hope that if conditions become more stable we shall be able to get substantial American co-operation in spite of the fact that we are discriminating against American consumer goods, as, in my opinion, we must do.

The second point, which does not seem to have aroused much issue, is the fact that there is no incompatibility between friendship with the sterling area and development of economic relations between Europe and the sterling area. Far from it being a choice between those two things I would say that we cannot have an Empire policy which is not a European policy and that we cannot have a European policy which is not an Empire policy; and when I have argued this matter on a number of occasions before Continental audiences, I have insisted that Western Europe standing alone is simply not a viable economy.

Arguing the problem from the point of view of the sterling area, I would say, first, that a point of considerable importance is the political advantage to the whole sterling area of preventing Western Europe from collapse. The Dominions are only too well aware that twice in a lifetime it has been proved that when there is a war in Europe they have to fight in it, so from that point of view they have the greatest political interest in what happens in Europe; and, from the economic point of view, the fact is that since they have their balances in this country, which is a member of E.P.U., they are tied in with the European economy, whether they like it or not.

The third point I want to make on that is one of very strong agreement with what my right hon. Friend the President of the Board of Trade said the other day. He said that it was very desirable to keep as free and open a market for sterling purchases as possible in a non-sterling part of the world. The sterling and Commonwealth countries have built up their balances in this country. We can- not in all circumstances, when our own supplies are scarce, supply them with the goods which they would like, nor can we expect them to allow us to hold those balances and get nothing for them in- definitely.

If there is any source which we can open to them whereby they can purchase under conditions of necessity other than from America, other than by transferring sterling balances into dollars, that is a very great advantage. Roughly, I would say that in the strategy of this policy there are three stages—and that brings me to the original point made by the hon. Member for Wandsworth, Central. There is the first stage in which, doubtless, we should welcome American help in one form or another, so long as conditions are not incompatible with honour in order to save ourselves from the immediate crisis.

Then will come the second stage—and, I hope, tolerably soon—when our policy must be one of discrimination against the Americans and the establishing—fairly soon, I hope—of a full sterling area European convertibility, coming as near as we can to a Customs union with a free exchange of goods as possible between the countries of that sterling area European unit, and of re-establishing, too, so far as we can, the entrepôt markets which we have unfortunately lost in this country at least for those parts of the world.

If, as a result of that—and it will be a long time before this happens—we have built up a position which Mr. Lippman called "mutuality" in which we can exchange goods for goods against the United States, then will come the time to move towards general convertibility. I would not hope to move towards general convertibility until something like that happens. We have not heard anything from the Chancellor of the Exchequer which has entitled us to believe that it is in his mind that general convertibility is to be established in anything like the near future.

Incidentally, when hon. Members speak about the importance of Canada, when we do get to that final stage then Canada will certainly have an all-important role to play, just as we have today. We are the one country that belongs both to the sterling area and to Europe, so in the event of such a bridge being established Canada will have an important role to play being the one country that belongs to the Commonwealth and also to the North American area. This seems to me to be the strategic outline of the situation.

We have also to face the fact that at the moment we are living in a condition of extreme crisis. In those circumstances we have to take certain short-term measures, and it is often very difficult not to take short-term measures which may make it impossible to carry through the necessary long-term policy. We must be very careful to avoid that situation. We need not waste the time of the House in going through the figures and con- jecturing the date when the reserves are expected to run out if our measures are not effective; the date will depend on whether we take our average for the whole of last year or the last six months of last year. However that may be, everyone agrees that the situation is serious.

The late Chancellor of the Exchequer said that the two problems were the United Kingdom balance of payments and the general sterling area balance of payments. Everyone agrees that both those problems are very serious at the moment. I agree with the hon. Member for Wandsworth, Central, in that I do not like policies of mere restriction of trade. In an extreme crisis such restrictions are necessary, but they are no solution and may, indeed, all too easily bring us to anything but a solution.

Restriction breeds counter-restriction, and in the end we may balance our books, but in accomplishing it we may have destroyed trade altogether, as zero equals zero. The result may be no good to anybody. I agree with the hon. Member in wishing for as little mere restriction as possible, and I am sure that my right hon. and hon. Friends on the Front Bench agree with that, too.

The second point is one which the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), had in mind when he said that the crisis was more one of the sterling area than one merely of this country, it would he thought be a mistake if we carried out economy measures which were too drastic, and that what is desirable is that other countries in the sterling area should do more. That may or may not be all right as an academic proposition, but I do not see what good it does us in practice.

The other countries of the sterling area have at one time or another, and particularly in the last few months, shown themselves willing to make very great sacrifices. We are grateful for those sacrifices, and if they can see their way to make further sacrifices, we shall be more grateful still; but there is nothing very much that we can do about it.

References have been made to India's situation. It is a vital interest to the world that the experiment of self-government in India should be successful so that India's productivity shall increase and she will be much less dependent upon outside sources of food. That is eminently desirable, but we can do a very limited amount about it.

It is enormously important that all the countries of the sterling area should be prosperous, and the consequences of any country going bankrupt would be tremendous. Nevertheless, our position is enormously more important than that of any other country in the sterling area, and we should make a fatal mistake if we merely sat around waiting for somebody else to do something about it. First, we are an importer of food to a vastly greater extent than the other countries of the sterling area—importers of the most fundamental necessity of life—and, second, we are the bankers of the sterling area; and while it is a very bad thing for anybody to go bankrupt it is doubly bad if the banker goes bankrupt. The hon. Member for Nottingham, South (Mr. Norman Smith), and I may have some theories about how the banking system should be run, but that is how it is run at the moment, and if it is run that way it should be run well.

There is another school of thought. The hon. Member for Gloucestershire, South (Mr. Crosland), made an interesting speech the other day in which he said that, instead of moving towards greater convertibility, it might be necessary for us to restrict convertibility. Two or three days ago Mr. Balogh had a letter in "The Times" to the same sort of effect. The hon. Member for Gloucestershire, South, did not have time to develop in detail precisely what he was suggesting, but if I understand his point aright I would say that restriction of the convertibility that we have already established would be a very serious and dangerous measure. I do not know whether the sterling area could survive it.

I believe that the overseas members of the sterling area might be inclined to argue that the difficulties of the United Kingdom were not temporary ones, but were ones which would never be overcome and that, that being so, their best plan was to cut their losses in respect of the sterling balances if they could not get the money out and to make arrangements elsewhere. Nevertheless, in this position of extreme crisis, we may have to adopt extreme measures.

I should not like to commit myself as to what measures, if they prove necessary, I should not think it necessary to accept over the next few very serious months, but if there is to be any further measure of freezing sterling balances, it is incomparably important that the measures should be carried through by agreement between us and the holders of the balances rather than by unilateral action. If they are carried through by unilateral action the whole situation is bound to be disastrous.

That brings me to a point which is a matter of great curiosity to me. I am making the seventh speech in this debate and yet what I regard as the most fundamental point of all has not yet been raised. If we want to strengthen and develop the sterling area, surely the first thing is to ask what is the major weakness in its present structure. I should have said that the major weakness is that it is operating with grossly insufficient reserves. There can be no more important point in our minds than that.

The hon. Member for Wandsworth, Central, asked why the balances of the sterling area have to be settled up from year to year, as if whether we settled up from year to year or over a longer term was simply a matter of our choice. That has nothing to do with our choice. We have to run the system on short-term calculations because our reserves are intolerably insufficient. The most important question to which we can direct our minds is how we can remedy the very dangerous reserves situation.

In 1939, 41 per cent. of British trade was backed by reserves; today 10 per cent. of British trade and only 5 per cent. of sterling area trade is backed by reserves. I wonder what can be done about that. I hope I may stimulate my right hon. Friend the Minister of State for Economic Affairs to tell us something more definite of what is in his mind about that. It would help us if the Americans could be persuaded to raise the price of gold. So long as they go on buying gold they might as well pay more for it. I do not think there is much that we can do to make them, but the Americans could do something about it.

A review of the fundamental financial machinery of the sterling area is the most important matter within the area's constitution to which attention should be given. Whether we chose to demote the Bank of England to a purely English hank and set up a new larger sterling area institution, or whether we agree to the Bank of England being more closely associated with other countries of the sterling area is, to me, a matter of words which is of secondary importance. But there must be some means of establishing this monetary management of the sterling area on a much more definite basis than at present exists.

There is the Sterling Area Statistical Committee and the Commonwealth Liaison Committee, but no one can find out what they do and the whole thing is wrapped in an intolerable degree of secrecy. If the British Government should ever have to carry through again a policy of devaluation, I do not think that the sterling area would tolerate that we should carry it through by mere unilateral action, as it had to be carried through the last time because of the lack of that central sterling area financial machinery of which I have spoken.

I should be very glad if my right hon. Friend could tell us what possibilities he thinks there are of in some way funding the sterling balances, so that they should at any rate be long term obligations on the British Government rather than that they should exist as short-term obligations pushed off by a series of ad hoc agreements of a few months and a few months, so that nobody knows when the demand will come on the British Government and whether they will be able to resist such a demand without fatal damage to their own credit.

Sterling balances, like so many other things in this country, have grown up accidentally to these fantastic figures, and if they go on floating about in the present way an intolerable situation will arise and there can be no recovery of the sterling area in a stable sense until that problem is tackled. I hope my right hon. Friend will feel in a position to tell us something of what is in the Government's mind on this point.

I am grateful to the House for having borne with me, and I am very glad to have had the opportunity of intervening in this debate. I entirely agree with every speaker who has spoken about the enormous importance of increasing the strength and prosperity of the sterling area as rapidly as possible. The three particular points I should like to leave with the House as my contribution are these: it is not possible to do that unless, among other things, a final solution is found to this problem of insufficient reserves; it is not possible to have prosperity for the sterling area without integrating its economy with that of Western Europe; and we can go very much too far in talking about economic and political policies as two different things.

We must, indeed, build up the prosperity of the under-developed countries of South-East Asia, but to do that we must pursue a vigorous economic policy. We cannot do it until law and order and peace are guaranteed to those territories; and whether under a native Government or a European Government is irrelevant for this particular argument.

2.4 p.m.

Mr. A. J. Irvine (Liverpool, Edge Hill)

I agree with a good deal that the hon. Member for Devizes (Mr. Hollis) has said, and, indeed, I think the most striking feature of this debate is the degree of agreement which prevails in the House on the necessity of strengthening and maintaining the sterling area.

The question to which we want to apply our minds is, how can that best be done. I bring to that question neither the training nor the outlook of an economist. There are five or six hon. Members in the House who appear to be regarded as economists in the recognised sense of the term. It would he impolite to describe their forms of speech as jargon, but flattery to describe them as the Queen's English. None the less, in all modesty I want to put before the House—and I do not want to be too long, because other Members will want to speak—the considerations which appear to me to be of fundamental importance in the tremendous problem of strengthening the sterling area.

The first consideration, which I think would be universally accepted, is that it is vitally important that we should solve our own balance of payments problem. That must be the first part of our task. However difficult it may be to define the sterling area, it is quite clear that the prospect of the survival of a currency area, about the stability of whose central banker there is any doubt, must be very poor indeed.

So the first task is to solve our own balance of payments problem. It is agreed between the parties in this House that that is an objective. There may be some difference of opinion as to the methods. We on this side may think it is possible to carry out the necessary disinflationary measures without impinging upon the standard of life of the masses of the people to the extent that hon. Members opposite think necessary. Be that as it may, the objective is agreed.

The second factor which I think should be borne in mind, if we want to maintain a strengthened sterling area, is that the objective must continue to be eventual convertibility of sterling. My hon. Friend the Member for Wandsworth, Central (Mr. Adams) referred to a letter written recently to "The Times" by the hon. Member for Aberdeenshire, East (Mr. Boothby). While agreeing with most of the letter, I do not agree with it to the extent that the hon. Member for Aberdeenshire, East, appeared to write off as impossible the re-establishment of convertibility even as a long-term objective of sterling area policy.

I agree rather with the observations made today by the hon. Member for Devizes, that if it becomes widely believed within the sterling area by the units that comprise it that there is an intention to abandon, as a long-term objective, renewed convertibility, the sequel may well be the disintegration of the whole sterling area.

The third factor which I would suggest as being of prime importance in this matter, and which I concede has been universally agreed on in this debate because controversy has not been evident today, is that there must be an immense increase in production in the sterling area. If it is to become a stronger economic unit, it must have more productivity. It must export more, and there must be more movement of trade within its own borders.

I entirely agree with what was said by my hon. Friend the Member for Uxbridge (Mr. Beswick), in what I thought was a very striking speech, about the importance of stimulating by every honourable measure of propaganda capital investment by our own country and other countries in the sterling area for greater production, and for exploiting the hidden resources in that area. I am all in favour of that, but we also—I do not know how the House will re-act to this—want to encourage large-scale American investment. I should entirely welcome, and I imagine the whole sterling area would welcome, large-scale American investment in enterprises throughout the sterling area.

I agree with the Motion about the desirability of Imperial Preference but none the less it is important to bear in mind that the development of Imperial trade policy and Preferences should not be allowed to limit or discourage American investment in the sterling area. The two objectives are consistent. We want Imperial Preference and British and Commonwealth capital investment in the sterling area, but also American investment. The three factors should be encouraged by our policy.

The Amendment suggests that, for the purpose of this large-scale investment, there is a better prospect from private enterprise than from public and State investment. It may well be that there is a substantial and important difference between us on that point. We have economic and social objectives in the expansion and development of the sterling area for which investment by Government Agencies may be far better suited than investment by private companies.

Sir H. Williams

Is the hon. Gentleman proposing to apply that principle in encouraging American investment?

Mr. Irvine

I desire American investment in the sterling area and for my part I would welcome it most in the form of a development of President Truman's Point Four, and of investment by Government Agency. The type of investment we want in the sterling area for the agreed social and economic objectives is not by any means the type of investment which will bring the quickest return to the private investor.

It is futile to suggest that in the development of unexplored and undeveloped territories the record of private enterprise is without flaw. We can point to examples of catastrophic failures by private enterprise, even in the United States of America where capitalist enterprise has achieved such remarkable things. Consider the appallingly uneconomic treatment of American land which deprived the soil of fertility in a wasteful degree that has hardly ever been paralleled in history. There are many respects in which it will be better to have investment by Government agency.

The fourth consideration that we have to remember is the importance of international planning in the allocation of raw materials. In that respect my right hon. Friend the Leader of the Opposition made a very valuable contribution when he was Prime Minister, in his discussions at Washington. Production in the United States is rising at a far more rapid rate than its capacity or desire to import the products of other parts of the world. It will be disastrous if raw materials go indiscriminately into the maw of the great United States economy. The corollary of that is that the percentage of exports from sterling area and Commonwealth countries into the United Kingdom is tending to decline steadily. We want to arrest and reverse that process. In both respects we require planning, at an international level, of the allocation of raw materials.

The final and fifth point I wish to put before the House is the desirability of closer administrative integration in the sterling area. We want more regular meetings of the Finance Ministers. We want to know what is done by the Commonwealth Liaison Committee and what prospects there are of expanding its activities. We feel the desirability, not merely of the collection of information which is carried on by the Statistical Committee, but of policy formation by the Liaison Committee.

I would like to see more extensive Commonwealth representation upon the staff of the Bank of England. One name of a distinguished Commonwealth figure has already appeared in the Bank's Court of Directors. It is desirable that the Bank of England should have Commonwealth representation among its personnel.

I would be interested to hear what the Minister has to say about the desirability of investigating the question of creating a central sterling area bank apart from the Bank of England. It could provide for the coming-together of opinions and information from all quarters of the sterling area. It has always seemed to me that the sterling area has benefited in the past from the functioning of the great commodity markets in this country. I am prepared to concede that the sterling area today is a survival from the time when the whole world was the sterling area and when London was the central bank of the world. We do not deny that the sterling area is a survival of the days of our great commercial and trading supremacy, but we insist rather more strongly than do hon. Members opposite that those great days of commercial and trading supremacy were days of intolerable social inequality and injustice within our borders.

That is an aspect of the matter upon which we think it right to insist. It does not follow, however, that we are unable to recognise that the sterling area is the survivor of that period when the whole world was a sterling area and when the commodity markets in London, Liverpool and the provinces were fulfilling their functions with a skill and distinction which made them attractive to the entire world and when London was the central banker. I should be in favour of any Government action which would revive the functioning of commodity marketing in this country, provided—and this is an important proviso—it could be done without tampering with what has now come to be a fundamental part of our social services, namely, food subsidies.

I can conceive it possible that the existing scale of food subsidies may have a somewhat inhibiting effect upon the operation of the commodity markets. I do not claim to be an economist, and that may be so or not. It is possible, however, that the old-time functioning of the commodity markets might not be regarded as entirely compatible with our existing system of the large-scale extensive subsidising of food. Subject to that important proviso, we on this side of the House would welcome any possible revival of the operation of the commodity markets as part of a process of stimulating activity throughout the sterling area. These are the matters which seem to me to be most relevant to the problem of maintaining and developing the sterling area.

In conclusion, I repeat that I am grateful to my hon. Friends who moved and seconded this Motion. In discussing the future of the sterling area we are discussing the economic aspect of the great problem of developing in greater strength and quality our great Commonwealth. This is the economic aspect of Commonwealth and Imperial policy and it is appropriate that early in the new reign our attention should be focused on a matter of such great significance to us all, all.

2.22 p.m.

Mr. Charles Fletcher-Cooke (Darwen)

I intervene for a few moments rather in a vien of sadness in this love-feast of both sides of the House. It is amazing that we have not had today the benefit of any intervention from, indeed any presence of, the Liberal Party as it exists at present, for we are driving a final nail into the old ideal of world free trade. It is no good beating about the bush and pretending that that is not a very sad event.

Men are we, and must grieve when even the shade Of that which once was great is passed away. And yet even the leaders of the Liberal Party have not seen fit to come here today.

I rise to support this Motion as amended, which I hope it will be. It is not our fault that there is unanimity in this House that we can no longer struggle towards that ideal except through the reverse process of building up against America an economic unit of equal size, for that is what it comes to. That is what must be done and that is really the nub of this Motion today. I say that in no spirit of enmity towards the United States of America because I am sure it is ultimately for their good as well as ours that we should take this step. Because it is right that this should go on record, I want to ask my right hon. Friend whose fault this is. I seem to remember that at the time of devaluation some not very specific paper promise, but some consideration in the legal sense of the word, was given by the Americans to Sir Stafford Cripps that if we devalued they would try to lower their tariffs. That was some years ago and I wonder to what extent that has been done.

If, as I suspect, little has been achieved in that respect, does it not show that we have been extremely forbearing, that we have gone to the limit and beyond the edge of risk in ourselves attempting to free world trade by means of the General Agreement on Trade and Tariffs and other measures and have received little response from the most important quarter to which we might have looked for it? In those circumstances it is only right to put the blame where it lies. No party in this House, however much it may grieve at this, cans do anything but support the spirit behind this Motion, and, as I said, I am sorry that the Liberal Party has not seen fit to add its voice thereto.

My last point is directed towards an attitude to the Empire prevalent amongst continental Powers, particularly big ones. They seem to regard the fact that their territories are connected by land as entitling them to do things within their territories which they deny to us because our people are linked together not by land but by sea. That is a fundamental misconception on their part which we should do our best at all times to quash. After all, we regard the sea not as a barrier but as a highway. It is still the cheapest method of communication, if not the quickest. It is still cheaper to send goods by sea than by land, and, far from regarding it as some awful obstacle to be surmounted, we regard it as a direct link, as a strengthening bond and not a weakening one, with our kith and kin overseas.

I am most grateful for the attention of the House. I hope my right hon. Friend will deal with the question of the extent to which the United States of America has found it possible to honour, not its bond, but the undertaking it gave quite definitely 24 months ago to see whether it could not lower its tariffs in return for our undertaking to devalue.

2.29 p.m.

Mr. Gordon Walker (Smethwick)

I want to add the expression of my gratitude to my hon. Friend the Member for Wandsworth, Central (Mr. Adams) for bringing this matter before us. It raises urgent and important long-term problems. The truth is, and we all know it, that the sterling area is today in danger. It can be saved only if important and radical adjustments are made in its working, in our general attitude to it, and in the attitude of the other members of the sterling area to it. I want to say a word or two about several ways in which the sterling area must be adjusted to the completely new world situation which exists compared with the situation in which it flourished in the last century.

First, we must get out of our heads the idea that the sterling area is to any large extent still a bank, of which London is the banker, with a lot of customers. It is today very much more a co-operative bank, and it is important that the other members of the sterling area besides ourselves should regard themselves not as customers of a banker, but as shareholders and directors in a common cooperative bank.

That change seems to me to have occurred in 1947, when agreements were made all round that the sterling balances would not be freely convertible. Once that is done, once we have got agreement that our deposits are not convertible, we are ceasing to be a banker with customers. Those who used to be customers are now all undertaking responsibilities for the running and direction of a co-operative bank.

From that it follows that it is not now so much as a bank that we should look at this thing, but as a great and important instrument for economic policy, which we should deliberately use for achieving certain economic objectives; and further that all of the other members of the sterling area must accept the fact that they are directly responsible, with us, for the running of this area.

It is proper that a word of gratitude and recognition should be said to the South African Government and to Mr. Havenga for the policy, announced by him when he went home after the Commonwealth Finance Ministers meeting, that his Government would give a new and greater support to the gold reserves of the sterling area. That is in line with the communiqué that was issued by the Commonwealth Ministers, and is in line with this new approach, in which all of us must take an active part if the thing is to work and survive.

I should like in this connection to refer to the sentence in the Motion about "closer co-operation and co-ordinated development" in the sterling area, and to deal with it in a certain specific and urgent application. The hon. Member for Devizes (Mr. Hollis) drew attention to the very low level of gold and dollar reserves in the sterling area and the problems that result from this. I think that it is even worse than he said.

We have to recognise that for a very long time indeed the gold and dollar reserves of the sterling area will not be adequate for the running of it in the old sort of comfortable way in which it used to run. We have got to put that out of our minds, and we must find and build up a substitute for running the sterling area without adequate reserves for a long time ahead. The alternative to a big gold reserve is a new arrangement for arriving at quick decisions in the sterling area by which those in it can adapt themselves to all the shifts and changes which one would normally expect to be absorbed by a gold reserve, but which cannot be so absorbed when there is no longer a gold reserve.

I quite agree with those who have spoken of the importance of more quick and frequent meetings of the Finance Ministers. New Comets and all the rest will make this easier, but, as hon. Members know, it is extremely difficult in the Commonwealth to find convenient dates, when the various Parliaments have different sessions, recesses, and so on, for Ministers to meet very often in the year or at very short notice.

We have, therefore, to turn our minds much more to the creating of an official body—of civil servants, as distinct from Ministers—who can be in much closer touch than ever before in building up a body of common facts, ideas and doctrine, and in keeping Ministers of all the Governments continually informed, so that they can much more rapidly reach decisions and will not, as now, have to spend time in agreeing upon a common picture of the problem every time. In this way, the picture could all the time be kept up to date.

I should like to add my question, which has already been put by other hon. Members, to the right hon. Gentleman about the Commonwealth Liaison Committee, which is, perhaps, the best arrangement. It is usually best in the Commonwealth to take something that exists and to adapt it than to start something new. Although the C.L.C. is not perfectly adapted to this purpose, I hope it will be brought along so that we get this common meeting of minds at the official level, which nowadays is so important in all fields in the Commonwealth, and not only in this sphere.

My hon. Friend the Member for Edge Hill (Mr. Irvine) and others have asked how far we can solve our problems by increasing production. More production is, of course, necessary, but it is important to realise that we must get the production in the right things and, in particular, must concentrate upon the greater production of dollar earners and, above all, of dollar savers. By this I mean things like Australian wheat. If there is more of it, we spend less dollars on wheat; and if there are more United Kingdom capital goods going to the Commonwealth, those countries pay less dollars to buy capital goods.

The question at issue is one where the short-run problems run into the long-term problems, because the greatest problem of all that is facing us is the problem of absolute shortage; there just will not be enough of certain things in the next 10 years for us to live on. Therefore, by increasing production in the right directions, we help not only to solve the immediate dollar problem, but to solve the even greater problem of absolute shortages that we will run into. All of us—the United Kingdom and all other members of the sterling area—must change our policies in many important ways if we are to increase production in the right direction so as to help to solve both the short-run and the long-term problems of the sterling area.

The hon. Member for Devizes asked: "Where is the capital to come from"? Of course, we all want United States investment in the sterling area. That was made very clear in the admirable communiqué of the Commonwealth Finance Ministers, but I thought that that communiqué was much too hopeful. It would be a great mistake if we relied upon any large quantities of American capital coming in. It is one thing to be ready to welcome it and to do everything possible to that end, but it is quite another thing to base plans on very large amounts coming in. We have in this to rely a very great deal on our own resources.

One direction from which the capital can come is by re-arranging the uses that we make of our capital in the sterling area. There has been a very wrong, unbalanced investment in the whole of the sterling area—in other words, a waste. We have not been using the capital which we have between us in the best and most effective way. That has been due partly to other members—other Governments and countries—of the sterling area, partly to ourselves.

There has been far too great an investment in unimportant secondary industries all over the Commonwealth, which produce at high cost and which waste a lot of capital, investment and labour that could be used much more profitably for them and for us if it were put into other directions and activities. Equally, there has been too much investment by the United Kingdom, and we have not, therefore, got enough capital goods to send to the Commonwealth—capital goods that are vitally important for saving dollars and absolutely essential if we are to overcome the problem of the absolute shortage of things like food and certain raw materials which we must have.

We must, therefore, have a policy, and we must discuss it with our partners in the sterling area, of concentrating on essentials and of making quite considerable changes in our general attitude to what is a good capital investment in the sterling area. We ourselves, I am quite sure, must be prepared to reconcile ourselves to paying higher prices over the long run now ahead for many of the things we need from the sterling area. Otherwise, we shall get nothing. If we are not prepared to pay higher prices, these things will not be there in 10 years time. It is a choice of paying higher prices or not getting them at all and we must reconcile ourselves to paying higher prices.

We must have a policy under which we treat farmers in the Commonwealth in the same way as we treat our own farmers. We give them long-term guarantee arrangements of prices and have to pay quite high. We have to pay our own farmers high because otherwise we cannot get the food. We have the same problem in the whole sterling area and we shall not otherwise get the food in 10 years, or less.

I think we have also to reconcile ourselves—and I should like to hear what the right hon. Gentleman thinks of this—to paying higher prices for things which are good dollar earners. Tin is an example. It is a thing we must buy and pay more for, although it causes us some difficulty, because it is a good dollar earner for the sterling area. That should carry the corollary that as far as possible we should get other countries in the Commonwealth to keep down prices of things which are the raw material for good exports and not in themselves dollar earners. We should also concentrate on the manufacture of capital goods for the Commonwealth markets to a much greater extent.

Commonwealth countries in the sterling area must also put first things first. They must also have a priority in their capital investment. I am sure we shall get into grave difficulties if there is not an increasing realisation by them that it is wrong and uneconomic to put so much into secondary industries. They should remember that migration—upon which they are rightly keen, as we are—is itself a great capital investment and if they are to have a whole line of secondary industries eating up the available capital, they will have less for migration. For every migrant they have to provide schools, roads, factories and houses, and migration itself is therefore one of the greatest capital expenditures. They must also concentrate on the basic products both industrially and agriculturally. Just as we have to reconcile ourselves to paying more for their basic products, they must reconcile themselves to paying more for our capital goods. We cannot have the terms of trade against us permanently; there must be a reasonable balance.

Other countries in the sterling area have to realise that they cannot have it both ways; they cannot ask both for steel and for capital goods, but have to decide which they want, and there is no doubt that capital goods are essential. That is another reason why secondary industries must be reduced, because there will not be the steel for secondary industries. If there is agreement on the general rearrangement of our capital investment and priorities, it will mean a great deal of public and State industries and State agreements in the Commonwealth about these policies.

It certainly also means—something on which we are all agreed in this debate—the maintenance of Imperial Preference. I do not want to make a party speech, but I must say that the late Government did their part in maintaining Imperial Preference through all the G.A.T.T. talks. But there is a great deal of difference between maintaining Imperial Preference and hankering after a Customs union. That is an echo from the old ideal of Imperial Federation. Even if one wanted it, it is a non-starter and we all know there are a lot of countries in the Commonwealth which will not look at it. In any case, it is an old-fashioned idea. Tariffs are not nearly as big an interference with trade as quantitative restrictions and so forth. Therefore, when we are talking about discrimination —and I am one who thinks we must discriminate, in the economic sense of the word—let us think more of long-term arrangements and less of tariffs.

We must certainly discriminate for absolutely essential economic reasons. I shall be very interested to hear what the right hon. Gentleman has to say about the more enthusiastic things which have been said against G.A.T.T. I would not want to commit us to a permanent acceptance of the provisions of that arrangement, but, on the other hand, we must realise that G.A.T.T. has advantages for us. We are not only a Commonwealth Power, but are also a world. Power and it is important to have that in mind when people are discriminating against us.

I hope the right hon. Gentleman will cast his weight against the Amendment. It seems to be out of place. It has out-of-date ideas, and rather doctrinaire ideas at that. There is certainly nothing in the Motion to stop private enterprise, or to hint that private enterprise should not play its proper part. It has certainly a role to play, although it seemed to me that the hon. Member for Wembley, South (Mr. Russell), was rather arguing that the State should undertake all the difficult and unremunerative expenditure. I hope he was not.

Mr. Russell

indicated dissent.

Mr. Gordon Walker

The hon. Member was not. We are in agreement and I will not go on with that sentence. The Amendment would do harm in two ways. It would imply that the very important things which my right hon. Friend the Member for Huyton (Mr. H. Wilson) emphasised are not necessary—the really great specific State undertakings which must be carried out. Secondly, and even more important, it would give an impression, because it says: assisted by that action where necessary and appropriate, that the State would he reduced to assistance. It is necessary for government today to intervene and give general and broad direction. Above all, the Amendment would imply a dislike of bulk purchase arrangements—great bulk purchase arrangements which are vital to us. It throws doubt on our generally agreed view in this country that bulk purchase agreements in the Commonwealth and the sterling area are of vital importance, and anything that throws such doubt would do great harm.

In Australia we have concluded a sugar and meat agreement, and in other countries with which we have been negotiating bulk purchase agreements any hint that we do not like them and are thinking of pulling out from that sort of policy would do very great harm. As it seems that this is the real purpose behind the Amendment, to throw doubt on these things, I hope the right hon. Gentleman will throw his weight against it with all the greater strength.

Sir H. Williams

Is not the right hon. Gentleman confusing two things? What the Government does is first to observe existing agreements, and then to avoid such new agreements.

Mr. Gordon Walker

Commonwealth countries will want to know what the attitude will be when the present agreements run out. It makes a great deal of difference if we are for these things or against them. I hope the right hon. Gentleman was listening to that intervention. It becomes all the more necessary that the Government should not support the ideas which lurk behind this Amendment.

My last point concerns Canada, which has been mentioned, in passing, on a number of occasions, but which it seems to me has a central position in this matter. It has been quite clear in this debate, and in general conversation and writing about this matter, that there is a natural tendency to identify the Commonwealth and the sterling area. People put in a saving clause about Canada being outside, but in practice they identify the two. Of course, Canada is not in the sterling area and the difficulties before the sterling area place a very grave Commonwealth problem before us. To put it in blunt terms all the rest of the Commonwealth has to discriminate against Canada because we are trying to save and to earn dollars. When we speak of discrimination we always think of the United States, but, of course, it also applies in economic terms against Canada.

The difficulties of the sterling area have a very grave effect on Canada. There is, first, our inability to make sterling convertible and this disrupts the triangular trade on which Canada's prosperity rests between the dollar and sterling areas and ourselves. There is also great danger of a rift between ourselves and the sterling area and Canada. Canada—and we should recognise this on every occasion—has shown great wisdom, patience and foresight in helping the sterling area to solve its problems, although it has been against its immediate short-run interests to do so. It has readily and almost willingly forgone important traditional markets in the sterling area. It has helped United Kingdom exports in Canada against a certain amount of vested interest opposition that always arises.

It seems to me that there are two things which are essential if we are not to find the problems of the sterling area gravely endangering the Commonwealth because Canada is not in the sterling area.

Mr. Beverley Baxter (Southgate)

This, of course, is a subject which appeals very much to me. I know this is a difficult problem, but I should like to know whether the right hon. Gentleman has ever considered the question of Canada being on a dual currency. I think there are historic reasons for it, and on my last trip to Canada I talked to some of the financiers there who did not rule it out altogether, although they saw certain difficulties.

Mr. Gordon Walker

It would need to be discussed. It would, of course, be a matter absolutely for the Canadian Government; but I have a feeling that one does not avoid the real difficulties of this world by fiddling about with currencies. In any case, we could not earn enough Canadian currency, whatever it was, to buy the things we need from Canada. That is my feeling about it.

I should like to ask the right hon. Gentleman whether he agrees that these two things must be done in the interests of the sterling area, and even more in the interests of the Commonwealth: first of all, that we ought to have a much more strongly expressed policy of putting the Canadian dollar first in our export drive. We ought to say that we need Canadian dollars even more than American dollars. We should do that as a deliberate policy, asserted with all the means which are at the Government's disposal for encouraging and directing exports, and it should be proclaimed. I know there are difficulties, because there is the United States angle to it, but it would make a great deal of difference to the attitude of Canadian purchasers of our goods and people with whom we would be competing with our goods if they knew that this was our deliberate policy which we were going to sustain.

Secondly, in the light of that, we should make renewed efforts to get the support of the Canadian Government for increasing our exports in their markets at this time. I refer to the sort of help which they have given us so generously in the past. It seems to me that the solution of the problem of earning enough Canadian dollars is a vital part of the problem of the sterling area, because any real disruption of the Commonwealth as a whole would have very great effects upon the sterling area and would tend to pull it apart.

To summarise, we must realise that the sterling area has got to be radically adjusted to the new economic realities of the world. If we do this and keep in mind the Canadian end of this problem, we can look forward to releasing the vast resources of the Commonwealth which are almost unimaginable, and make it all the more certain that the Commonwealth as a whole will play the vital rôle in the world which it must play politically and in every other way, but which it can only play politically if it has got a good sound economic basis for itself in the world.

2.54 p.m.

The Minister of State for Economic Affairs (Sir Arthur Salter)

Perhaps it will be convenient if I intervene now to make a few comments on the Government's attitude to the questions raised in the Motion which is before us and in the speeches which have been made.

I say at once that I am sure the House as a whole feels grateful to the hon.

Member for Wandsworth, Central (Mr. Adams) for having used his luck in the Ballot to provide us with an opportunity for such a wide-ranging and interesting debate as we have had on questions of such urgency and of such importance. Although there are certain matters on which we differ, I think I should start by emphasising the very large measure of agreement on the questions which have been discussed today.

My intervention will be, as an intervention should be in relation to a discussion on a Private Member's Motion, restricted and restrained. Indeed, in a debate that has covered such wide ground—economic ideologies and such questions as migration and defence, quite apart from the questions of collaboration in economic and financial measures in the sterling area—I must obviously be to some extent selective, short and, it may be also, superficial in some of the answers that I give. Subject to that, I shall do my best to deal with what seems to me to have emerged in the course of today's debate.

Before I proceed to discuss these questions I should also like to say that I am sure that we on this side of the House are grateful to the hon. Member for Wandsworth, Central, and to those who supported him, for the firm and unqualified support that they have given to the need for the development of closer cooperation with the Commonwealth, for their endorsement of Imperial Preference and, indeed, for the spirit in which they have said what they have said on the problems which now confront us. Neither the Motion nor the hon. Members who have supported it have breathed any kind of party or partisan spirit, at least as regards their main theme.

I was also struck with the very large part of the speech of the right hon. Member for Smethwick (Mr. Gordon Walker), with which I was in agreement. That does not cover every point he made, and I must say at once that it does not carry me so far as to refrain from supporting the Amendment, which I shall support for reasons which I will give in a few minutes. I very much agree with a great deal of what the right hon. Gentleman said, and in particular, with his endorsement of Imperial Preference and the comments he made on the impracticability at this time of thinking of setting up a Customs union in the full sense in the Commonwealth.

As I have already said, I must be selective as well as, in some cases, rather superficial. There are, however, one or two general questions which were raised, and which form the framework within which we must consider particular questions, on which I should like to make a few comments. I was asked, for example, how I conceive our special relationship with the Commonwealth and our relations with Europe, on the one hand, and our connection with still wider movements on the other hand. Personally, I should conceive our relationships in the form of expanding circles, to some extent overlapping. Our closest relationship will be, of course, with the Commonwealth. Then there are expanding relationships outside the Commonwealth and in Europe, less close than inside the Commonwealth, but still more close in many respects than with other countries; and outside that, of course, we must have appropriate relations with the rest of the free world.

I agree with what several hon. Members have said, that that special relationship in the Commonwealth—including Imperial Preference—is not incompatible with a special relationship also with Europe, close, although not so close, as that which we have in the Commonwealth. That, I believe, is recognised by European countries. While this is rather a technical matter, any Members who are interested in it will see from articles of mine and speeches I have made that I have attempted to develop ideas as to the way in which some kind of preference and a special relationship within Europe would be compatible with a closer and stronger preference inside the Commonwealth itself.

I come now to a question on which I must make a few adverse comments. The hon. Member who introduced the debate made an excursion into what I thought was a rather unreal realm of finance and economics. He spoke as if it were merely unreal magic to tot up our sterling deficit from time to time, as if we could live happily ever after on constantly renewed and approved overdrafts. It would, indeed, be magic if perpetually renewed and approved overdrafts enabled us to live happily without paying our way as we go.

Mr. Adams

Can the right hon. Gentleman say how, without that assistance for the time being from American sources, we shall be able to undertake the vast capital projects in the Commonwealth which are essential to any success?

Sir A. Salter

I must turn the hon. Member's question round and ask him how, if we are unable to get sufficient assistance to finance projects of development which we may think highly desirable, we can insist upon getting that assistance; and whether we shall not, so far as we are unable to supplement our own resources from sources outside the Commonwealth, have to adjust what we can do to match our resources? Here we are caught in the inescapable facts of arithmetic and the inexorable logic of the balance of payments, and when the hon. Member gives us his fanciful picture of living for ever with perpetual deficits and overdrafts—

Mr. Adams

I did not say that.

Mr. Cyril Bence (Dunbartonshire, East)

The right hon. Gentleman has referred to the statement of my hon. Friend about the existence of a perpetual overdraft. Would it not be true to say that both in a national and an international monetary economy there always exists a perpetual overdraft, in the names of different people, perhaps, but all the time. Is not a bank credit a perpetual overdraft?

Sir A. Salter

The hon. Gentleman will know—unless he is particularly fortunate with his Bank—that he cannot go on indefinitely, or even for a very long time, spending more than he is earning. That situation would mean not only a continuing overdraft, but a perpetually increasing overdraft. We must regard ourselves, like anybody else, as subject to these inescapable limitations of arithmetic.

If the hon. Member doubts the reality of what I am now saying I should like him to look closely at the reflection of the adverse balance of payments which we have been suffering which appears in the movement of the reserves. If he studies the course of the figures over recent months and reads the very illuminating debate which has taken place in the last few days in another place he will appreciate my point.

With regard to one of the more particular questions that have been asked—the question about the Colombo Plan—I agree with what was said by the right hon. Member for Huyton (Mr. H. Wilson) about the limitations of that scheme. It is an important scheme; it is a valuable scheme; but, of course, it is a scheme that does not purport to cover all the needs of the countries comprised in it, in the sense in which the right hon. Gentleman spoke.

There again, I am afraid that we are inescapably compelled to relate what is done in the way of capital export for the purpose of development, not only to human needs, but to the actual resources at our disposal. Subject to that, it is true that we welcome the Colombo Plan and we are continuing the work upon it Our interest in it is shown by the visit of Lord Reading to Karachi that wilt take place next month. At that meeting, the whole of the progress and prospects of the Colombo Plan will be reviewed, and it will be after that review that the House will best be able to form a general picture of what is happening and what is likely to happen.

Meantime, we are proceeding with it, and we are making our contribution to the technical operations, in fact, we are continuing in this respect what was initiated by the late Government. Incidentally, although this touches on a question with which I shall deal in a moment, the Colombo Plan itself contemplates a very considerable machinery of recurrent or continuous consultation between Commonwealth countries. It is one part of the machinery about which I will say a little more in a moment.

One or two other questions were raised. The first was about migration. Our position about emigration is that we welcome a steady flow of United Kingdom citizens to the Commonwealth, provided that such migrants comprise a cross-section of the population by age and employment. I think it is important to emphasise those last words, because, of course, it is true that, in an ageing population like ours, a selective emigration of people after the period when the cost of their education and training has been borne in this country, and just at the moment when they are becoming of most value as producers in excess of what they consume, is a considerable burden.

Subject to that, of course, we welcome a flow of migrants to the Commonwealth, and it is interesting to note that the flow has been very considerable in the years since the war. Up to the middle of 1951 the average number of migrants to the Commonwealth was something like 120,000 a year, which is not very much less than the average in that great period of migration before the first World War, when, I think, the average reached 148,000.

That, I think, is all I can say on a question which is, after all, on the fringe of our main subject today. Equally, I must say only a word or two about defence. As the House knows, there was a Commonwealth Defence Minister's Conference last autumn. We shall be debating defence matters next week. Anyone who is interested in my personal views can see them from a number of interventions which I have made in the House over the last 13 years on Commonwealth and defence matters, and he will find that I have very considerable sympathy with what was said today by the hon. Member.

I come to the Amendment itself. I think that the Motion as amended would be preferable to the Motion as it stands. As has been pointed out, to a large extent it is not an absolute difference of principle but a difference of emphasis. We recognise, of course, that private enterprise and State action should go on together. We on this side of the House, could not agree with the Motion in the extent to which it tends to depreciate the role of private enterprise.

In addition to that, my hon. Friend the Member for Wembley, South (Mr. Russell) made the point that the wording of the Motion is constitutionally incorrect and undesirable. It is, of course, the case that while there is a good deal of State action in the different parts of the Commonwealth, in the bulk of the countries concerned it is action which must be taken by the Government of the country concerned and not by Her Majesty's Government. As I read the Motion, it implies that it is to be taken by Her Majesty's Government in this country.

Mr. Adams

But surely it follows from the terms of the Motion that if we institute closer co-operation and coordination in the Commonwealth, that co-ordinating body, whether it be a committee or a meeting of Ministers, could initiate such action where necessary, by agreement, in the different parts of the Commonwealth.

Sir A. Salter

Perhaps, but I am dealing with the actual terms of the Motion, which …calls upon Her Majesty's Government"— by which I take it the hon. Member means this Government— …to initiate State action… I am quite sure that those words would be resented if they were passed in that form, and I think that the wording of the Amendment is greatly preferable, pointing out, as I would, that in the Amendment itself it is not proposed that private enterprise should be entrusted with the complete task. It says: assisted by State action where necessary and appropriate. That, surely, is a much better emphasis, though I should like to say, incidentally, having regard to a few words spoken by my hon. Friend who seconded the Amendment, that I must make reservations from the point of view of the Treasury as to suggestions about tax remission, for in that matter I cannot anticipate or prejudice what my right hon. Friend may or may not say a little later.

Mr. Gordon Walker

May I interrupt on that point, as the right hon. Gentleman is resting his case on a matter of constitutional propriety—with which I quite agree? It seems to me that the Amendment offends just as much, and for this reason. If the right hon. Gentleman objects to the Motion, he must object to the Amendment, too, because it says: …assisted by State action.… State action must refer to action by Her Majesty's Government for the same reason as he said the Motion does. The right hon. Gentleman talks about our implying that the Government here can assist by State action in other Commonwealth countries; which shows, I think, that the whole of that part of his argument is really just something thought out to justify his slipping this bit in about private enterprise. I hope that he will with draw his implication that this Motion is constitutionally improper, because it would be just as improper to have the Amendment.

Sir A. Salter

I do not agree. I read the Amendment to mean that "Her Majesty's Government can create conditions." We can create certain conditions —by the raising of loans, and so on—in which private enterprise can operate assisted by State action. But the State action would be State action in the country in which the development is taking place.

Mr. Gordon Walker

That applies to the Motion, too.

Mr. Adams

If at a Commonwealth Conference this Government were to take the lead in persuading some other State to initiate State action, I should see nothing constitutionally wrong in that. As my right hon. Friend rightly said, there is no difference, from the constitutional point of view, between saying "initiating State action" and saying "assisted by State action."

Sir A. Salter

I do not want to elaborate this point too far, but it seems to me perfectly clear that in the Motion as it stands Her Majesty's Government are called upon to initiate action—action which would, in fact, properly have to be initiated by the Government of a Dominion or other part of the Commonwealth; whereas in the Amendment Her Majesty's Government are asked to create certain conditions, which then may be assisted by State action; which appears to me to mean State action by the Government responsible for the particular action.

Mr. Gordon Walker

The conditions created are in other Commonwealth countries. Therefore, according to the right hon. Gentleman, we shall be interfering in that action. The right hon. Gentleman cannot have it both ways.

Sir A. Salter

Not necessarily, because I give at once an instance. Suppose Her Majesty's Government here arranged certain conditions as to the raising of a loan in London. The action as to the management and use of the produce of that loan would be action dependent upon State action by the Commonwealth countries concerned. At least, that is the way in which I read the Motion and the Amendment, and with that in mind I, personally, shall support the Amendment.

Mr. Beresford Craddock

Surely the teal difference is State action: …where necessary and appropriate…. "appropriate" being the operative word.

Mr. Adams

Do we gather from that intervention that the right hon. Gentleman is not being at all helpful in dealing with the Amendment proposed from his own side?

Sir A. Salter

I have given the reasons why I shall myself vote for the Amendment if it goes to a Division, though looking at the whole of this debate, and at the whole of the question before us, I wonder whether this is not one of those occasions when, seeing that there is no single clearcut issue which divides either party, or indeed groups within the parties, this House would not more usefully serve the function of being a forum of debate rather than an organ of decision, an occasion where this Chamber is more important than the adjacent Lobbies.

Mr. Gordon Walker

By withdrawing the Amendment, does the right hon. Gentleman mean?

Sir A. Salter

No.

Mr. Gordon Walker

Why not?

Sir A. Salter

For the reasons I have mentioned the Amendment is essential in order to relieve the Motion of what would otherwise be an undesirable element.

Mr. Beswick

Before the right hon. Gentleman sits down, will he not go into a little more detail about the duties of the Commonwealth Liaison Committee?

Sir A. Salter

I was not sitting down. I only gave way to the hon. Gentleman. I am afraid I have not finished at present. I have only finished with this particular point.

I now come to the question which I think has perhaps attracted more interest than any other in the House this afternoon, and that is Imperial Preference in relation to the General Agreement on Trade and Tariff. There are one or two things I should like to say about G.A.T.T. First of all, let us remember what is the formal position. The Agreement was intended to be a preliminary step towards the creation of an international Trade Organisation—a project which has not been proceeded with.

Secondly, G.A.T.T. as it stands has not, in fact, been ratified by any country which has signed it at present. It is operative at present under a protocol which is subject to termination to 60 days' notice. That is the formal position. But it is equally important, I think, to remember the origins—

Sir H. Williams

Is my right hon. Friend not confusing the Havana Agreement with G.A.T.T., with regard to ratification?

Sir A. Salter

I do not think so, no. I think that what I have said is correct.

This treaty was negotiated and the arrangements started on the assumption, which was common to quite a number of agreements that were fashioned either in the last years of the war or in the years immediately succeeding the war, that within a few years, or a relatively short time, we could return to what we regarded as more or less normal conditions of trade, balances of payments, and so on, in which, while there would, of course, be fluctuations, they would be fluctuations over an underlying equilibrium.

We know only too well how far we are from attaining that happy position at the moment, and it would be a very remarkable thing if a treaty, worked out in detail upon an assumption so far from corresponding with the facts were suitable in every way to constitute a code for the commercial policy of the world.

We are fully sensible of the disadvantages of some of the provisions of this treaty, including the provision as to "no new preference." We have the whole matter under the closest consideration. I will tell hon. Members in a moment why I cannot be more specific. But I should like to say in regard to Imperial Preference, which is in our minds at this moment, that, speaking now of opinion within the Commonwealth generally, it is never regarded as preventing reductions of particular preferential margins where, as part of an arrangements proposed, it is thought by the Commonwealth countries concerned that the advantages secured are greater than any disadvantages suffered by such a modification. Subject to that, of course, we believe in Imperial Preference, and I agree with the right hon. Gentleman that in this respect we are following the lines of out predecessors.

We realise the difficulties presented by some of the provisions of G.A.T.T. as it now stands. At the same time, we must remember that the action that is appropriate is not just a scrapping of the whole of this Agreement. There are good things in the Agreement, and it is important to us as a great trading community, and perhaps particularly important when we are in a weaker position now than we were in the past, that there should be some code which can save us and all the other trading countries from the chaos caused by competitive, spasmodic changes in restrictions, quotas, exchange rates, and so on.

We need a code of commercial practice, although it may not be, and I think will not be, in the precise form in which it stands now. That being so, how do we proceed? Certainly not by the scrapping of the whole of the Agreement as it stands, least of all by unilateral action. First, we must consider carefully what changes we want in the Commonwealth, and then we must proceed with the other appropriate negotiations. Obviously, the wise way of getting the best chance of success in these negotiations cannot be premature publication of a unilateral decision by one of the countries concerned or by this country. I have said enough, I think, to indicate the kind of purpose that is in our minds and the way in which we shall propose to proceed.

I now come to the group of questions —development, co-operation and consultation. I think that I ought to say at once on this that it is important to bear in mind the restriction on our available resources in regard to capital exports from this country. I think that it is important to read out to the House the very deliberate statement made unanimously by the recent Commonwealth Finance Ministers' Conference. They said: By the development of their productive power members of the sterling area will not only strengthen their economies, but will also help to meet the inevitably growing demand for food, raw materials and other essential goods. Such development will require the investment of substantial financial resources, and it is clear that, after taking account of whatever they themselves can provide"— that includes us— it will be necessary for many member countries to obtain those resources from overseas. For some time to come the Commonwealth will not be able to meet its growing needs entirely from its own resources, and developing countries will therefore need to rely in varying degrees on investment from outside the sterling area. We are agreed that such investment is to he welcomed, and that all necessary steps should be taken to encourage it.

Mr. Adams

Will the right hon. Gentleman say in what way that statement in more deliberate language differs from saying that the Commonwealth needs a bank overdraft?

Sir A. Salter

There is a great deal of difference between bank overdrafts in the sense in which the hon. Gentleman has used that term and the encouragement and development of investment of the kind contemplated in the passage which I have just read. I will not argue that further at this moment. The passage I have read is important as a perspective to many of the plans, and very attractive plans, that are being and have been discussed by Members on both sides of the House. We cannot export capital from this country on the scale and in the way that we did when we had a large surplus in our balance of payments, now that we are, and so long as we remain, in deficit.

One cannot go on indefinitely lending from a deficit. One can do it for a time by borrowing short and lending long, but in time, and no very long time, that leads to the brink of disaster, as we are witnessing today. Subject to that inevitable limitation, we agree with what has been said about the immense importance of helping the development of the full resources of the Commonwealth as fast and as far as our means permit.

The House will be aware that following the conclusion of the Commonwealth Finance Ministers' Conference a working party was set up, under the chairmanship of my hon. and learned Friend the Under-Secretary of State for Commonwealth Relations, to work on the problem of development. In fact, two working parties were set up, the one to which I have just referred and another, of which I was chairman, on convertibility. I mention both working parties at this moment because, apart from being relevant to the development problem, they are an instance of the way in which we are not only continuing, but also extending the machinery and methods of Commonwealth consultation and co-operation.

Both working parties have produced interim reports which have been sent to the Governments concerned, and the intention and expectation is that after a few months there will be another meeting of the two bodies to continue their work with the advantage at the second stage of the views of the Governments on the interim reports.

Mr. Follick (Loughborough)

The right hon. Gentleman persists in saying "Commonwealth." Does he mean "Commonwealth and Empire" or just "Commonwealth"?

Sir A. Salter

I am using "Commonwealth" in the sense in which it covers dependent territories as well as self-governing territories.

The whole machinery of consultation, to which a good deal of reference has been made, is not only being continued but is also being made to function actively and to function at a greater pace under the impulse of the greater needs and the greater urgency of the crisis which now confronts us. It is being extended in the way in which I have just described, but the machinery and methods previously in existence are also being used.

I was particularly asked about the Liaison Committee. That Committee meets once a week in London. It exchanges facts and statements of policy of the different member countries. It has not been found a very suitable instrument for the formation of policy, and for that I believe we shall probably have to rely upon other methods and other instruments, at the best meetings of the Finance Ministers themselves—although they are subject to the difficulties which the right hon. Gentleman mentioned—and also such intermediate systems and methods as are illustrated by the two working parties.

Mr. Beswick

With regard to the other instrument which is to formulate policy, does the right hon. Gentleman envisage, within the policy, actual programmes of development within the Commonwealth area?

Sir A. Salter

The machinery as a whole comprises many parts. At the top, policy will be made, as it has been made, at past meetings of the Finance Ministers and at the recent meeting in January. But between the Finance Ministers' conferences on the one hand and a permanent official body such as the Liaison Committee on the other there are such intermediate organs of consultation and co-ordination as I have just mentioned.

Mr. Gordon Walker

It is clear that there cannot be anything for settling policy except the Finance Ministers' Conference. Can the right hon. Gentleman tell us if there is yet any official committee for the exchange of the sort of information which will enable Ministers in the Commonwealth countries to keep in almost daily or weekly touch with developments of the sterling area of the kind about which we are talking? That would be something new and something which we wanted to get, but could not get, when we were in office. I wonder if it is yet in existence.

Sir A. Salter

I cannot say there is any regular and permanent new organ, but there are such developments as I mentioned when speaking of the working party reports. In other respects there are measures which are rather too detailed for me to elaborate at this moment, but we are attempting to supplement the machinery at our disposal.

Anyone who participated in the recent Commonwealth Finance Ministers' Conference and in the still more intimate, personal discussions during them, as I did, could not but be immensely impressed. Much in the Commonwealth has changed, but much, possibly the best part, still remains. I was impressed at the Conference by the fund of good will that there is on all sides, as well as the determination which is common to the different parts of the Commonwealth to overcome the very grave difficulties which now present themselves to us. One could not go through that experience without being conscious of the fact that so many responsible Ministers from the different parts of the Commonwealth, when the association is in danger, felt a renewed and more vivid sense of the value of that association.

In other instances we have seen when great and historic institutions have been tottering and falling, that men everywhere throughout the world turn to those which still remain with renewed feelings of respect and admiration, with a more vivid sense of !heir value. We have seen such a reaction in relation to the British monarchy in recent days, and those of us who attended the recent Finance Ministers' Conference saw it there in relation to the Commonwealth. Here in this House today, despite all our differences on other matters, we have again seen a salutary reaction to danger, a reaction which may still carry us through all our troubles and initiate another great era in our history.

Mr. Hollis

Would my right hon. Friend, before he concludes, tell us something about the problem of reserves?

Sir A. Salter

I have taken careful note of what my hon. Friend said. I know what he has in mind but I think it would prejudice rather than assist his case if I made an attempt to answer his questions specifically.

3.35 p.m.

Mr. Henry Usborne (Birmingham, Yardley)

I am sure that no one would wish to speak in this debate without expressing gratitude to my hon. Friend the Member for Wandsworth, Central (Mr. Adams) for initiating a most interesting and important debate on a subject on which, broadly speaking, we are all agreed. I would add how extremely interesting I found the speech of my hon. Friend the Member for Uxbridge (Mr. Beswick) in seconding the Motion.

In so far as I wish to make one or two points that are partially critical, I would assure both my hon. Friends that the criticisms which I offer are not in any way intended to despise the laudable aims which they and all of us share, but just at this moment in our history when not only this country but half the world faces an extremely critical situation it is important that we should not try to do the right thing in the wrong way.

An hon. Member on the other side of the House has drawn attention to the Gambia egg scheme and the groundnut scheme and said that both were complete flops, and that we all knew it. He tried to draw the conclusion that because those schemes both failed—I admit that they did—that type of scheme ought never to be attempted. I believe that both those schemes were the right sort of thing to be attempted, but we must not make the mistake of doing them in the wrong way. It is in that spirit and in an attempt to be constructive that I want to make a few points.

We are all agreed that large-scale economic development in the area with which we are most closely associated ought now to be initiated. The difficulty appears to be: How do we find the capital to do the things that we want done? I believe that the trouble today is that even in the sterling area there is not the capital available to spend on these schemes.

Where do we get this capital? My hon. Friend the Member for Wandsworth, Central, in an interjection, seemed clearly to indicate that we could get it on a kind of overdraft. In a second interjection, he made it clear that we would be borrowing the money in some way. It has to be admitted that the only country in the world that seems to have the capital available is America. We have to get it from there because we cannot get it anywhere else. If I may extend the analogy of the overdraft, I fear that it is true that we may borrow money and live for a time on an overdraft, but it is unfortunately true that the bank manager generally takes something as collateral. Eventually he practically owns all our property because he takes a charge on our physical assets.

Are we prepared to initiate large economic schemes either in our own country or in Commonwealth countries—or advise them to initiate schemes, which is about all we can do—on the understanding that we borrow in the only possible place, and that that country shall take some kind of charge on the venture? In other words, the real difficulty is not economic at all, but political, in the sense that we have to get the capital from America.

America will lend the use of its capital and will be concerned directly or in- directly in the political mechanisms by which it can be sure that the capital is properly used. On the other side of the fence, the State or community that is borrowing the capital is nervously concerned as to what strings may be attached to the lending of the capital, and the more difficult it is to discover what strings are attached the more sinister it appears and the more certain it is that the strings are extremely powerful. It is a political difficulty. We have to come to some understanding in the sterling area with the dollar world, because it is only from the Americans that it is possible to get capital now.

I am convinced that there is need in a great many parts of the world, and not least in parts of the Commonwealth, for large-scale economic development. I am convinced that these things cannot be initiated unless in the first instance the required capital is in the form of State capital. The initial sum is far too big to be left entirely to private enterprise, but the two can go hand in hand; that is to say, when large-scale State-controlled capital initiates these schemes, it will be feasible, possible and attractive for penny packets of private capital to follow, and that we should welcome. So, broadly speaking, the last two or three lines of both the Motion and of the Amendment are redundant, for both are red herrings.

Mention of the T.V.A. draws my attention to another point which ought to be made. If we start large-scale economic development schemes, it is probable that the capital which will be required will be beyond the means of any one single State. Assuming that we do not want to get it all from America but need only have some underwritten and the rest drawn jointly and severally from the States of the Commonwealth, it would be a supra-national venture. In all probability also, the economic enterprises started would be on such a vast scale that they would spill over the boundaries of any of the nation States involved.

Looking back over the development of the T.V.A., it is clear that the T.V.A. would never have arisen had it not been that the States involved in its development plan were all parts of the United States. It is not without significance that on three occasions Wendell Wilkie took a case to the Supreme Court of the United States against a ruling that the action of T.V.A. in its early days was unconstitutional, and had there not been a common law operated by the United States of America and the Supreme Court of the United States—in other words the political institutions—the T.V.A. would have died stillborn.

Therefore, it needed the political institutions in order to make that economic venture possible. I have a shrewd suspicion that because of the scale of the schemes we are considering considerable constitutional disputes are likely to occur, and that unless we find the supranational machinery we shall not be able to solve those disputes. Therefore, we shall merely start a scheme which will be sound on paper but which will be killed stone dead in its early stages. And for every failure we make today, it will be harder to succeed to morrow.

We often hear it said that the real danger confronting the sterling area today arises not through any fault of the sterling nations, but simply because the United States will not buy as much as she is anxious to sell, and simply because of that fact she will take in all the gold in the world, no matter how often it has been distributed. It is said that the danger to the rest of the world is simply that America is anxious to sell and refuses to buy. We contrast that with how the world was run when sterling was the world currency in the 19th Century. We say that then the British were ready to invest their money all over the world and how wonderful it was then and how bad it is today because America will not do likewise.

What was the difference in the world then? We were able to invest our money all over the world because, broadly, we controlled the politics of the world at the same time. We could invest our money knowing that in the long run dividends came back to us and would remain convertible. I am merely arguing again that the problem is not economic: it is broadly political. The Americans today do not invest abroad, not because they do not want to invest abroad, but because they do not think it is safe to do so, simply because they do not control the politics of the nations abroad, who could readily, as someone has said, nationalise the industries which they had started. Once again, therefore, the problem is political and not economic. Secondly, it involves the United States of America more than, or as much as, it involves any part of the Commonwealth. Thirdly, any of the enterprises that we are advocating will be too large to be initiated by the finance which is available to any single State.

We are advocating, therefore, that there should be some kind of supra-State fund out of which developments can be operated, albeit that the actual organisation or the particular economic venture may be inside one nation. The funds cannot come out of the Exchequer of any one nation; they must come from a common exchequer, to which all the nations in the sterling area, or beyond, must in some way contribute.

It is for that reason, perhaps, opportune that the Amendment has been moved. The last three lines of the Motion invited the taunt which the Amendment provides. Apart from those last three lines, the Motion and Amendment are so important that I wish it were possible for the mover of the Motion to delete the last three lines on condition that the mover of the Amendment should withdraw it. If that were possible, how glad we all would be.

I hope that hon. Members will forgive me for having been critical. I know how appallingly irritating it is in a difficult world when people who want something done proceed to say that the proposals which have been made are unsatisfactory. There are enough difficulties, and the difficulties can be left to argue for themselves. But nothing is more dangerous in a difficult situation than to try to do the right thing in the wrong way and to fail. We simply cannot afford to fail any more. We have so little time. The country is in a tight spot, and the Government have no more clue than anybody else.

3.48 p.m.

Mr. H. A. Price (Lewisham, West)

Although today is Friday and this is a Private Member's Motion, this debate is one of the most important in the so far short life of this Parliament, and both the mover and the seconder of the Motion are to be congratulated on providing the opportunity for this debate.

I was a little disappointed in the speech of the hon. Member for Wandsworth, Central (Mr. Adams), because it seemed that although he had glimpsed the truth, somebody had breathed on his spectacles at the psychological moment, with the result that his vision had become blurred. I liked very much better the speech of the hon. Member for Uxbridge (Mr. Beswick), who seconded the Motion, and I join issue with him on one point only. On his point with regard to a Customs union, I preferred the speech which came from his Front Bench.

In the few minutes at my disposal, I want to say, first, how extremely important I consider this subject to be. I agree with the hon. Member for Yardley (Mr. Usborne). I believe that the future of this country and of the Empire and the sterling area is at stake. If we are to find a solution to our problems, we must do so quickly. In my view, it lies in the development of the resources of the Commonwealth and Empire, and nowhere else. Unless we can solve the problems in that way, I believe that we are witnessing the disintegration of the Empire and the sterling area.

The debate has ranged very wide. Reference has been made to Australia, New Zealand and Canada, but we have heard these places mentioned before; the development possibilities there have been referred to frequently, and I should like to confine the searchlight to Africa. I believe that in Africa we stand the best chance of getting quick returns and I believe quick returns are essential. The time at our disposal is very limited, so I will summarise the matter. The right hon. Member for Ebbw Vale (Mr. Bevan) said in a speech a little time ago that he would like to have a survey of the resources of this island. A survey of the territories available to us for development in Africa would, I believe, show wealth so far unimagined, awaiting the coming of the minds, the men and the machines which could reap the harvest. There is almost every known grain, almost every known fibre, immense quantities of timber and almost every known mineral available there awaiting men with spirit, foresight and energy.

I regard this matter as so important that we ought to forget the small differences that divide us on it. My sympathy is with the Amendment, but I do not regard it as very important. I should like this House to send out a message to the country, and indeed to the world, this afternoon, not that we are quarrelling over the precise way in which this problem should be tackled, but that we are united in saying that it should and must be tackled. I should like to find some way of avoiding dividing the House either on the Amendment or on the Motion.

I return to the question of Africa and wish to mention two examples. Most of us, I am sure, have heard of the Wankie coalfields. It is estimated that there are four billion tons of coal in the Wankie coalfields in Southern Rhodesia which could be produced for 14s. a ton at the pithead. What a boon it would be if we could get 20 million to 25 million tons of that coal for export to the Argentine for meat or to Scandinavia for wood pulp or timber. But there is an obstacle —400 miles of territory between Wankie and the coast. This means that a 400 mile railway would have to be built and loading facilities provided at Walvis Bay. That is the difficulty, but difficulties like that will have to be overcome; they exist in every part of Africa and every part of the Empire and must be met if we are to reap the harvest which lies there.

An hon. Friend told me that he was in Nyasa a month or two ago and he came back ecstatic about the possibilities of that territory. It is roughly the size of England and is practically virgin. Half a million people from these islands could produce enough food there, plus what we produce ourselves, to make ourselves self-sufficient in food. That may be slightly over-painting the picture, but let us over-paint it a little rather than under-paint it, because what the people of these islands need today more than anything else is hope for the future. For the last 12 or 13 years we have been accustomed to austerity and restrictions and we tend to resign ourselves to them. That is the wrong spirit; we need hope for the future and a Government which embarks on a programme along the lines indicated today could give the British people the hope they need and stimulate them to the effort required to overcome the difficulties to which I have referred.

The hon. Member who moved the Motion spoke towards the end of his speech of an Elizabethan era, but he seemed to want an Elizabethan era in a Socialist State. If he will forgive me for saying so, I regard the two as completely incompatible. I prefer the picture of the Elizabethan era, but surely we can agree that in a scheme of this size there is ample scope for both State activity and private enterprise.

The way in which I see the problem is as presented by the hon. Member for Yardley. I visualise the formation of an African Development Corporation, let us call it, with a capital of, let us say, £5,000 million—a lot of money, but I do not think too much—which could be provided by private enterprise and by the State. I do not see any reason why we should be reluctant to anticipate the participation of America in this project. After all, what else is America to do? She simply cannot go on ladling out millions of dollars in charity year after year. The long-term consequences of that to her own economy are too obvious to need emphasising. Here is an opportunity for her to invest the money instead.

Here is a legitimate sphere for State participation. Let the State devote its attention to ensuring the necessary priorities. This African Development Corporation which I have envisaged would need the highest priorities for capital equipment. Roads, hospitals, schools, wharfs and railways would have to be built, but at the same time men in small or large units would have to be there tilling the soil, making the borings for the wells and the mines, rearing the chickens and pigs. After all, that is what we are going there for.

This is not a function for State enterprise but for private enterprise. We want the maximum possible flexibility and adaptability if we are to get the best results. It is easy to pour scorn upon projects such as the groundnut scheme and the Gambia egg scheme. I have done it in my time, but I do not think we should do that today. We ought to draw the lessons from them, and one of the biggest lessons that we can learn from those projects is that they were too big and too inflexible.

We cannot build a new empire in Africa by using the methods of the nationalised industries. We did not build up the greatest empire the world ever saw by State enterprise. It was built up by private enterprise of the best kind. It is easy for hon. Members opposite to pour scorn on those sectors of private enterprise which made mistakes. Let us not do that today. Let us learn the lessons from those mistakes. If we were to co-operate in this way we would be making the most healthy approach to this important problem. It is my conviction that unless we approach this problem in this way, and unless we solve it, the consequences will be far more severe than any of us have perhaps envisaged.

Mr. Adams

rose in his place and claimed to move, "That the Question be now put."

Question put accordingly, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 66; Noes, 113.

Division No. 30.]	AYES	[4.00 p.m.
Attlee, Rt. Hon. C. R.	Healey, Denis (Leeds, S.E.)	Pannell, Charles
Bing, G. H. C.	Henderson, Rt. Hon. A. (Rowley Regis)	Parker, J.
Bowden, H. W.	Herbison, Miss M.	Peart, T. F.
Bowles, F. G.	Hewitson, Capt. M.	Pursey, Cmdr. H.
Brookway, A. F.	Hobson, C. R.	Robens, Rt. Hon. A.
Castle, Mrs. B. A.	Holman, P.	Robinson, Kenneth (St. Pancras, N.)
Crosland, C. A. R.	Hudson, James (Ealing, N.)	Ross, William
Dalton, Rt. Hon. H.	Hughes, Emrys (S. Ayrshire)	Royle, C.
Davies, Harold (Leek)	Irvine, A. J. (Edge Hill)	Smith, Norman (Nottingham, S.)
de Freitas, Geoffrey	Isaacs, Rt. Hon. G. A.	Sparks, J. A.
Deer, G.	Jay, Rt. Hon. D P. T.	Stewart, Michael (Fulham, E.)
Edelman, M.	Jenkins, R. H. (Stechford)	Strachey, Rt. Hon. J.
Evans, Albert (Islington, S.W.)	King, Dr. H. M.	Tomlinson, Rt. Hon. G.
Evans, Edward (Lowestoft)	Lee, Frederick (Newton)	Tomney, F.
Ewart, R.	Lever, Harold (Cheetham)	Usborne, H. C.
Fienburgh, W.	Lipton, Lt.-Col. M.	Viant, S. P.
Fletcher, Eric (Islington, E.)	Marquand, Rt. Hon. H. A.	Wells, Percy (Faversham)
Freeman, John (Watford)	Mellish, R. J.	White, Mrs. Eirene (E. Flint)
Gaitskell, Rt. Hon. H. T. N.	Mitchison, G. R.	Williams, W. T. (Hammersmith, S.)
Gordon-Walker, Rt. Hon. P. C.	Morgan, Dr. H. B. W.	Wilson, Rt. Hon. Harold (Huyton)
Hall, Rt. Hon. Glenvil (Colne Valley)	Morley, R.
Hamilton, W. W.	Mulley, F. W.	TELLERS FOR THE AYES
Hastings, S.	Noel-Baker, Rt. Hon. P. J.	Mr. Richard Adams and Mr. F. Beswick.
NOES
Allan, R. A. (Paddington, S.)	George, Rt. Hon. Maj. G. Lloyd	Marshall, Sidney (Sutton)
Alport, C. J. M.	Gough, C. F. H.	Mott-Radclyffe, C. E.
Amory, Heathcoat (Tiverton)	Gower, H. R.	Nicolson, Nigel (Bournemouth, E.)
Ashton, H. (Chelmsford)	Harris, Frederic (Croydon, N.)	Noble, Cmdr. A. H. P.
Baldock, Lt.-Cmdr. J. M.	Hay, John	Nugent, G. R. H.
Baldwin, A. E.	Head, Rt. Hon. A. H.	Nutting, Anthony
Baxter, A. B.	Heald, Sir Lionel	Oakshott, H. D.
Bell, Ronald (Bucks, S.)	Heath, Edward	Peake, Rt. Hon. O.
Bennett, Sir Peter (Edgbaston)	Hicks-Beach, Maj. W. W.	Peto, Brig. C. H. M.
Bishop, F. P.	Holland-Martin, C. J.	Pitman, I. J.
Bossom, A. C.	Hollis, M. C.	Price, Henry (Lewisham, W.)
Boyd-Carpenter, J. A.	Holmes, Sir Stanley (Harwich)	Raikes, H. V.
Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)	Hopkinson, Henry	Redmayne, M.
Brooke, Henry (Hampstead)	Hornsby-Smith, Miss M. P.	Remnant, Hon. P.
Buchan-Hepburn, Rt. Hon. P. G. T.	Hudson, Sir Austin (Lewisham, N.)	Roberts, Maj. Peter (Heeley)
Bullus, Wing Commander E. E.	Hutchinson, Sir Geoffrey (Ilford, N.)	Robinson, Roland (Blackpool, S.)
Butcher, H. W.	Hutchison, James (Scotstoun)	Salter, Rt. Hon. Sir Arthur
Cary, Sir Robert	Hyde, Lt.-Col. H. M.	Smithers, Peter (Winchester)
Conant, Maj. R. J. E.	Jenkins, R. C. D. (Dulwich)	Snadden, W. McN.
Cooper, Sqn. Ldr. Albert	Johnson, Eric (Blackley)	Spearman, A. C. M.
Craddock, Beresford (Spelthorne)	Jones, A. (Hall Green)	Spens, Sir Patrick (Kensington, S.)
Crookshank, Capt. Rt. Hon. H. F. C.	Joynson-Hicks, Hon. L. W.	Steward, W. A. (Woolwich, W.)
Crosthwaite-Eyre, Col. O. E.	Kaberry, D.	Strauss Henry (Norwich, S.)
Crowder, John E. (Finchley)	Law, Rt. Hon. R. K.	Stuart, Rt. Hon. James (Moray)
Do la Bère, R	Legge-Bourke, Maj. E. A. H.	Sutcliffe, H.
Deedes, W. F.	Lennox-Boyd, Rt. Hon. A. T.	Taylor, Charles (Eastbourne)
Digby, S. Wingfield	Lloyd, Rt. Hon. G. (King's Norton)	Thomas, P. J. M. (Conway)
Doughty, C. J. A.	Lloyd, Rt. Hon. Selwyn (Wirral>	Thorneycroft, Rt. Hn. Peter (Monmouth)
Drewe, C.	Low, A. R. W.	Vane, W. M. F.
Eccles, Rt. Hon. D. M	Lucas-Tooth, Sir Hugh	Vaughan-Morgan, J. K.
Elliot, Rt. Hon. W. E.	McAdden, S. J.	Vosper, D. F.
Fisher, Nigel	McCorquodale, Rt. Hon. M. S.	Wakefield, Sir Wavell (Marylebone)
Fleetwood-Hesketh, R. F.	Macdonald, Sir Peter (I. of Wight)	Ward, Miss I. (Tynemouth)
Fletcher-Cooke, C.	Mackeson, Brig. H. R.	Webbe, Sir H. (London & Westminster)
Fort, R.	MacLeod, Iain (Enfield, W.)	Williams, Sir Herbert (Croydon, E.)
Foster, John	Macmillan, Rt. Hon. Harold (Bromley)
Fyfe, Rt. Hon. Sir David Maxwell	Manningham-Buller, Sir R. E.	TELLERS FOR THE NOES:
Gammans, L. D.	Markham, Major S. F.	Mr. Ronald Russell and Mr. Bernard Braine.
Garner-Evans, E. H.	Marlowe, A. A. H.

Main Question, as amended, put, and agreed to.

Proposed words there added.

Resolved, That this House, being of the opinion that the future prosperity and well-being of this country lies in the closer co-operation and co-ordinated development of the Commonwealth and sterling area, calls upon Her Majesty's Government forthwith to pursue this policy wth a fresh and vigorous determination; in particular, to resist any attempt to make permanent any commitments which are designed to weaken Imperial Preference or other Commonwealth ties; and urges Her Majesty's Government to create the conditions in which private enterprise, assisted by State action where necessary and appropriate, can bring into full use the existing and potential resources of the Commonwealth and sterling area in order to promote peace and prosperity.