Clause 2.—(FINANCIAL PROVISIONS.) (Hansard, 7 July 1955)

§ Mr. Douglas Jay (Battersea, North)
We have no wish to spend the rest of the day discussing what appear to be verbal matters and questions of definition. We are anxious to raise substantial matters, affecting this Agreement and the whole vital question of investment in the undeveloped areas. It is not our fault, or perhaps anybody's fault, that we have been sidetracked into these apparently verbal questions. We ought now to see exactly where we stand.
The Economic Secretary has now admitted that there is not in existence at this moment any Agreement whatever. All that is in existence and that is before us is Articles of Agreement, which have been laid before the House and the Committee in the White Paper. In that case, speaking as a layman and not as a Parliamentary draftsman, it appears to me that there are grave errors of drafting in the Clause, in which we have constant references not to the Articles of Agreement but to "the Agreement." It is confusing to consider a Clause referring to an agreement when we have established that no Agreement is in existence.
I do not know whether the Government, having badly misdrafted the Bill, and earlier in the day having attempted to force through the Report stage of a Bill and having had to withdraw it, would 1441 now prefer to withdraw either this Clause or the Bill altogether and to continue the discussions another time. We may be forced to move that this Bill be treated in that way if we find that we are unable to discuss seriously an ill-drafted and confusing Bill. Until that happens, I want to put forward some suggestions.
Now that we are on Clause 2, we are certainly not on a question of definition but mainly on a matter of substance. The Clause says: There shall he paid out of the Consolidated Fund of the United Kingdom all sums required for the purpose of making payments on behalf of Her Majesty's said Government under paragraph (a) of section 3 of Article II of the Agreement. We have now established that it is not an Agreement. It is "Articles of Agreement"; but leaving that point aside, I take it that we may discuss, since we are asked to issue these moneys out of the Consolidated Fund, the merits of these Articles of Agreement which we have before us in the White Paper. So far, I hope that the matter is clear. I want to direct attention only to one particular point.

§ The Deputy-Chairman (Sir Rhys Hopkin Morris)
There is only one Article referred to in the Clause. It is Section 3 of Article II, and not the articles in general.

§ Mr. Jay
It is at least clear that the Clause refers to Section 3 of Article II of the Agreement. On the other hand, is it not the case that these moneys are issued for the purpose of the operation of the whole of this Agreement? They are issued admittedly under this particular section of the Agreement. Surely it must be possible at this stage—and if it is not it is not possible at any stage—to consider the merits of the proposal under which this money is to be issued.

§ The Deputy-Chairman
That is a matter for Second Reading debate. We cannot do that at this stage. On the Second Reading that could have been done.

§ Mr. Jay
I wish to direct attention to the conditions in Section 3 of Article III of the Agreement, which refers to the point which was discussed on Second Reading and about which the Economic Secretary has since written to me, the power of this Corporation to sell its 1442 investments in order to revolve its funds after the enterprise has got into operation.

§ The Deputy-Chairman
That is not a matter which arises under the Clause which refers to Section 3 of Article II. There is nothing in the Clause about Article III.

§ Mr. Jay
In that case, I think that my hon. Friends would feel inclined to ask you to accept a Motion to report Progress and ask leave to sit again. Perhaps I might advance my reasons for that. We seem to have reached a point at which we are discussing a Bill which has been so ill-drafted that I cannot believe it could have any legal force even were the Committee to approve it. It refers to an agreement which does not exist. It fails to differentiate between an agreement which does not exist and an agreement which might exist. It does not refer to Articles of Agreement which do exist and which were signed on 11th April and are now before us.
It all rather suggests that we are now in a position in which we are not able to discuss any of the merits of a Measure by which the Committee is being asked to approve the expenditure of £5 million of public money. In the interests of discussion both of the control of these moneys and of the whole merits of the scheme we have before us—which deals, after all, with how these moneys should be invested in these undeveloped areas —it would really be better to put before us a proper Bill which is comprehensively and correctly drafted, to which we could direct our attention, and which would seem to have some hope of a reasonable——

§ The Deputy-Chairman
I am sorry, but I could not accept such a Motion. These are all matters which should have been raised on Second Reading.

§ Mr. Hale
On a point of order. The Explanatory and Financial Memorandum to the Bill refers to the Section and explains it. I am referring to paragraph 2, which reads: Of these obligations two require legislative authority, namely the payment of a subscription of $14.4 million … and the extension to the Corporation … That is what the Clause provides—that we are to pay 14.4 million dollars. May 1443 I very respectfully remind the Chair that dollars are not part of the normal currency of this country, nor normally part of the currency of any of Her Majesty's Colonial Territories. Surely we are entitled to discuss whether we should pay——

§ The Deputy-Chairman
That, I think, comes under Section 3 of Article II, which is in order.

§ Mr. Hale
No, Sir Rhys. May I venture to say that it is possibly the paragraph which has misled. The actual payment which we are now discussing is in Section 2.

§ The Deputy-Chairman
The Agreement is in order—Section 3 of Article II of the Agreement.

§ Mr. Warbey
With great respect to your Ruling on my hon. Friend's proposed Motion, Sir Rhys, may I suggest that what we are concerned about in putting it forward——

§ The Deputy-Chairman
That, I am afraid, cannot be argued. I have given my decision.

§ Mr. Jay
Well, Sir Rhys, you have ruled that it is impossible to discuss anything of substance on this Clause. You have also ruled that you will not accept a Motion to report Progress. That leaves the Committee in a position in which it is very difficult to carry on at all.

§ The Deputy-Chairman
The Question is, "That the Clause stand part of the Bill."

§ Mr. Hale
On that point, may I deal specifically with what we now have under discussion, which is Section 3 of Article II of the Agreement? That, I understand, we can now discuss because that involves us in a financial obligation of 14.4 million dollars. I shall restrict my remarks quite narrowly to whether we should be spending money in dollars, entering into an agreement in dollars, and whether it will be to the advantage of Her Majesty or of the territories for which Her Majesty has responsibility. Section 3 says: Each original member shall subscribe to the number of shares of stock set forth opposite its name in Schedule A. I take it that that brings in, by incorporation, Schedule A which, of course, 1444 provides for the relevant amount of subscriptions, the number of shares to be allocated to each member country, and the amount in United States dollars. It would be impossible to discuss it in vacuo, and that is clearly part of Section 3 of Article II, which states: The number of shares of stock to be subscribed by other members shall be determined by the Corporation. (b) Shares of stock initially subscribed by original members shall be issued at par. (c) The initial subscription of each original member shall be payable in full within 30 days after either the date on which the Corporation shall begin operations pursuant to Article IX, Section 3 (b), or the date on which such original member becomes a member, whichever shall be later, or at such date thereafter as the Corporation shall determine. Payment shall be made in gold or United States dollars in response to a call by the Corporation which shall specify the place or places of payment. (d) The price and other terms of subscription of shares of stock to be subscribed, otherwise than on initial subscription by original members, shall be determined by the Corporation. Those are the provisions of the limited Article to which reference is made in the Bill, which I understand under your Ruling, Sir Rhys, we are entitled to discuss. That raises a point which is exercising my mind and which is a very remarkable proposition, that we should agree to pay in dollars. We are paying 14.4 million dollars as a contribution to this Fund. It is unfortunate that the discussion is limited, because in a limited discussion one is unable to balance the arguments for and against a proposition and we are anxious to elicit some information.
The question of dollars arises in this way. We have been face to face with very great financial difficulties over a large number of years purely by the absence of dollars. As I said on Second Reading, this is an extraordinary provision under which we are to pay this money for the United Kingdom and the whole of Her Majesty's dependent territories. The position as explained by the Economic Secretary on Second Reading makes this quite clear. I do not think he will dispute at all that if any of Her Majesty's Colonial Territories have any private enterprise for which they require grants from this Fund, if the Bill goes through and the Corporation is established, that can only be done with the 1445 consent and on the guarantee of the United Kingdom. So, although the 14.4 million dollars ostensibly covers the United Kingdom, one has in mind mostly the consideration of dependent territories.
This is a very real problem, because if our dependent territories have to repay loans in dollars and spend money in dollars the whole of that trade is in terms of money which has to be spent in Washington. The Clause as drafted provides for the establishment of the Corporation, and the Corporation is a branch of the International Bank whose headquarters are in Washington. I do not propose to discuss the rest of the Agreement, but I must point out that it is on the same location and the narrow compass in which we are talking is of the payment from London to Washington for the purpose of establishing this financial Corporation.
If we take this little problem as a microcosm of the great problem which confronts the world, there are overwhelming reasons why we should consider it before we go further and say to Her Majesty's Government, in considering Clause 2 of the Bill, that they should look a little further and think a little before accepting this in toto and accepting the obligation without qualification, as it would appear by Article 9 they have undertaken to accept it.
I said that I would quote one dependent territory as an example of how the moneys are to be spent. It is a fair quotation, because it is the only one in which we have legislative responsibility in respect of which loans have been made by the International Bank. On the notes I have, the United States Economic Co-operation Administration approved a loan of £5 million in Rhodesia to be repaid in cobalt, copper, tungsten and chrome. There is a further loan of £3 million announced a month later also from the Administration. This was made to the Chibiluma Mines, and the loan was to be repaid in copper and cobalt. Then we come to the really relevant transaction: the two loans made by the International Bank had to be made in the specific limitations of the Bank because until this Bill is passed that organisation cannot lend to private enterprise. It lent 28 million dollars for the expansion of electric power production at an interest of 4¾ per cent. and commission repayable 1446 in 25 years and 14 million dollars in March for building a new railway from Rhodesia to Mozambique. Later it was stated that the United States Foreign Operations Administration had agreed to make a loan of 10 million dollars for the purchase of rolling stock.
When we consider the effects of the loan, we find that we are in a position in which the Rhodesias are already committed to the payment of about 10 million dollars a year to the various American controlling agencies, including the International Bank, out of their revenue. That will add even more to the unbalance of trade.
If we take these things in bulk and examine the results of what is taking place, it gives us pause. The United States announcement of their dollar investments abroad, issued on 25th December, 1952, showing the position at the end of 1950, gave a grand total of 11,800 million dollars. That was the total of United States foreign investments, interest on which had to be paid in dollars. Of that, 3,564 million dollars was in Canada. The United Kingdom had 840 million dollars. Those are the last full figures published by the authorities, but further figures two years later showed that they had increased to 14,000 million dollars. Those are direct investments abroad, which of course is a matter of the gravest concern to us. If hon. Members will not accept these figures of direct investment, the corresponding figure as supplied to me by the research department shows United States investments abroad at the end of 1953 as 39,454 million dollars.
That is why I venture to say that any further agreement by Her Majesty's Government to arrange for the financing of colonial development in terms of dollars is of very grave consideration to the House. We are reaching a position in which the United States, possibly for the very best of motives—and I make no imputation—is becoming the mortgagee of the whole civilised world. The situation is very grave.
I say no more than this in conclusion: I personally have always believed in the British Commonwealth of Nations. I have always believed that our duty, instead of entering into agreements of this kind, is to use our utmost resources to develop the British Commonwealth of 1447 Nations. I was one of those in 1945 who suggested a consultative Commonwealth Parliament. I agree with the noble Lord the proprietor of a very well-known newspaper who advocates this. Indeed, I can understand the crusader being in chains, and if the noble Lord looks at the figure of United States investment in Canadian oil he will find that he will soon be unable to oil the chains locally, unless steps are taken.
I urge the Committee to consider the whole question of investments. It affects the cotton workers in Oldham, and it affects the whole question of our having a viable productive area in the sterling area. This is too big a question to be dismissed lightly and that is why I wanted briefly to indicate the points which I had in mind without elaborating them in detail.

§ Sir E. Boyle
I cannot add much to what I said on Second Reading, but the hon. Member for Oldham, West (Mr. Hale) will recall that I said specifically on Second Reading that we in the United Kingdom would have liked the Corporation not to operate only in terms of dollars. I said that that was one of the least satisfactory aspects of the Articles of the Agreement.
Dealing with the last point which the hon. Member made, I should like to quote from what I said on Second Reading: I am glad to be able to tell the House that there is still a possibility of the Corporation operating in sterling in those parts of the world where sterling is the traditional currency and in due course we intend to seek to negotiate arrangements to this end."—[OFFICIAL REPORT, 1st July 1955; Vol. 543, c. 692.] When I was replying, by leave of the House, at the end of the debate on Friday, I pointed out that dollars provided by the Bank were not tied to expenditure in the United States. Dollar loans from the Bank have financed purchases from many countries and substantial sums in the dollars provided in those countries have been earned by our exporters. I attempted to meet the points which the hon. Member made.
I think the hon. Member has misunderstood the position about guarantees. One of the main differences between the Bank 1448 and the Corporation is precisely that the Bank must secure the guarantee of a member country for any loan made to a borrower not itself a member Government, whereas the Corporation will not seek Government guarantees in these circumstances.

§ Mr. Hale
The Corporation did so in Rhodesia.

§ Sir E. Boyle
I am talking about the new Corporation. This is one of the main differences, as I explained on Friday, between the International Bank and the new Corporation.

§ Mr. Jay
Before we part with the Clause can we be told by the Economic Secretary whether the Government are proposing to amend in Committee or on Report subsection (1), which refers to Article II of the Agreement? The Economic Secretary has already agreed that there is no Agreement in existence, and that, therefore, this wording is incorrect. If it is not incorrect, it is meaningless. Surely the Committee must not accept the Clause with that phrase in it, which, in the circumstances, has no significance whatever. What does the hon. Gentleman propose to do about it?

§ Sir E. Boyle
When I spoke on the Question, "That Clause I stand part of the Bill" I devoted two or three minutes to explaining that this Clause was accurate in referring, as it does, to the Agreement, and I cannot add any more now to what I said then.