§ 37. Mr. Gaitskell
asked the Chancellor of the Exchequer whether he will make a statement on the decision of the South African Government no longer to guarantee the sale of a minimum quantity of gold to the United Kingdom for sterling.
§ The Chancellor of the Exchequer (Mr. R. A. Butler)
As the South African Minister of Finance announced on 4th February, our two Governments agreed 1058 in October last that the special arrangements on gold should come to an end at the end of 1954. Under those arrangements, South Africa undertook to sell to the United Kingdom a minimum guaranteed quantity of 4 million ounces of gold (approximately £50 million) each year; further gold could be earned to the extent that it was not required to defray South Africa's hard currency expenditure, or to maintain her own reserves.
In practice the level of trade between South Africa and the non-dollar area has been such that more than the minimum amount guaranteed has been earned, and the central reserves benefited directly or indirectly to the extent of nearly £100 million from sales of South African gold in London in 1954. In these circumstances we readily agreed with the Union Government that the guarantee had fulfilled its purpose and should be discontinued. I should like to record our appreciation of the assistance which the Union Government have afforded to the central reserves over a crucial period.
§ Mr. Gaitskell
In view of the fact that the South African Government have now withdrawn both the concessions which they made to us in the Agreement of 1950 and 1951, relating to trade on the one hand and gold payments on the other, does the Chancellor still regard South Africa as being within the sterling area?
§ Mr. Butler
I think that that is an unnecessarily unfriendly question. South Africa remains a main feature of the sterling area. Her generosity in respect of gold has been quite unrivalled. She has not withdrawn her concession in regard to gold. It was negotiated by myself with Mr. Havenga, the predecessor of the present Minister of Finance, whose friendship with this country is, I think, unrivalled among any statesmen in the world. I would therefore say that the right hon. Gentleman's question is quite unjustified, and that South Africa remains a prominent member of the sterling area.
§ Mr. Gaitskell
Is the Chancellor aware that it is no reflection on a country to suggest that it may not be a member of the sterling area? Is he aware that Canada is not a member of the sterling area? Will he indicate in what way our trade and currency arrangements with South Africa differ from those with Canada?
§ Mr. Butler
The right hon. Gentleman will be aware that South Africa shares with us in the general meetings which take place of the sterling area Ministers, and that Canada also attends as a dollar member but not a sterling member of the group. As far as I am concerned, our relations with South Africa, in which we are now earning the gold that we need so much, reflect not only upon the great recovery to which Mr. Louw, the new Minister of Finance, has made reference in this country, but also to the great friendship with South Africa in our trade relations one with another.