§ Nevertheless, it became clear by February that we needed to take action to moderate the growth of imports and to encourage exports. And from the result, all I can say is, thank goodness that we took action in time. To take such action the Government of the day has, broadly speaking, one of two choices. The first is to limit and control the supply of goods which the consumer at home can buy. But there is an alternative, namely, to check spending at home by more flexible methods. The former course would involve a return to curtailment of trade, both at home and abroad, a return to controls on consumer choice, even perhaps a return to rationing. We do not believe in a policy of this kind.
§ It is only by looking forward and outward, by expansion, by liberating the human spirit to give and do of its best, that our island people can survive. This is the road we prefer—an adjustment of fiscal and monetary policy which, without cramping or distorting the natural vigour 40 of the economy, maintains the disciplines which are essential to an expanding community. It was in this faith that in February credit control was applied; the Bank Rate was raised, hire-purchase transactions were restricted and finance for such business was limited. At the same time, I authorised the Exchange Equalisation Account to operate with wider discretion in overseas exchange markets. This was certainly a case of putting in the troops to save sterling from being sold at too great a discount, thus losing business for Britain as well as dollars for our reserves.
§ I see that it has been suggested that we have departed from our policy of a collective approach with the Commonwealth, Europe and the U.S.A. to the solution of the world's trade and currency problems. This is not so. We still seek to find with our partners the best method of freeing our payments to match the widening of our trade and the opening of markets.
§ I am glad to say that already, in the field of the exchanges our action has produced distinct results, which have taken the shape which I had hoped for.
§ For example, the Committee may be glad to hear—and I hope hon. Members will smile—that the sterling dollar rate has risen from about 2. 78½ dollars in the third week of February to just over 2. 79⅝ dollars, and the rate for transferable sterling from under 2. 72 dollars to just over 2. 77⅛ dollars. That is a very considerable rise. This shows that the action which we have taken to meet the needs of our balance of payments has strengthened international confidence in our policies and our determination to carry them out. We have thereby fortified sterling.
§ It will, naturally, take some time for the effects of the Bank Rate and of the tightening of credit to make themselves fully felt on our balance of payments. Our import bill, as the March import figures show, will inevitably continue for a time to be affected by decisions taken and orders placed before the measures of 24th February—at any rate for a time.
§ But the situation has been brought under control, as, for example, is shown by the movement of the reserves since then and the latest rates for sterling. Of course, we cannot be satisfied yet, and we shall remain ever watchful.