HC Deb 19 July 1955 vol 544 cc190-2
21. Mr. Roy Jenkins

asked the Chancellor of the Exchequer when he now expects to make sterling fully convertible.

Mr. R. A. Butler

When the necessary conditions are satisfied.

Mr. Jenkins

Is the Chancellor not aware that at the present time the monetary markets of this country and of Europe are full of speculation about the extent to which the right hon. Gentleman is committing himself to a £ floating between more widely separated points than is at present the case, and that there is general agreement that this is doing harm to the position of sterling? Can the right hon. Gentleman make no statement before we adjourn to give information about his attitude and policy here, which can improve the position?

Mr. Butler

To do me justice, it should be said that I have never departed from the line of the statement which I have given to the hon. Member and to the House. It may be that it will help hon. Members to assess the position—whether it is of assistance outside I do not know—to suggest that some of these stories may have emanated from the discussions going on in Paris about the possibility of altering the European Payments Union and introducing, at some date when any European currency may go free under conditions laid down, a system under which free currencies and fixed currencies can operate together in Europe. In order to do that we have had discussions in Paris involving the setting up a new system of clearing and a new system of a European Fund. That was a wise precaution because it may well be that circumstances may alter in Europe. It may be that out of those discussions certain rumours have sprung.

Mr. Jenkins

To what extent has the right hon. Gentleman been advocating in Paris that the £ should be allowed to fluctuate more widely at some date in the near future?

Mr. Butler

I have never altered my attitude or my statement of the conditions that must be fulfilled before convertibility can be introduced.

Mr. Gaitskell

May we take it that the right hon. Gentleman has no intention of making any change in the matter before the House reassembles in the autumn?

Mr. Butler

It is not reasonable to tie the hands of any Government with regard to the currency of the country. There is also no reason for me to depart from the statement I have made about the conditions for convertibility, namely, credit, a sound internal policy, and a widening of the boundaries of trade.

Mr. Gaitskell

As there will no doubt be discussions on this matter at the meeting of the International Monetary Fund, to which I believe the right hon. Gentleman is going, will he give us the assurance that, at least for the next three months, no change will be made; that he does not intend, for instance, to put forward any proposals in this direction at the meeting of the International Monetary Fund?

Mr. Butler

I do not think that any Chancellor of the Exchequer or Finance Minister of any country would tie his hands in relation to the currency. I cannot go further than the statement I have made on the subject of converti- bility. The right hon. Gentleman is quite right; there will no doubt be discussions with the Commonwealth and with European Ministers and so forth at the Bank and Fund meetings in the autumn. It would be wrong to build more than is right upon any statements that have been made or to go any degree further than I have done in my own statement.

Mr. Jenkins

Do the Chancellor's three conditions for convertibility include a larger gold reserve than at present exists?

Mr. Butler

All these matters are relevant. There is the pattern of trade, the state of one's reserves—the pattern of trade is most important—the availability of credit and the internal economy. It must be clear to the House that the state of the internal economy at the present time wants a certain degree of tightening up. These are matters to which we all ought to pay attention. These being the conditions, I should have thought there was no reason for further rumours or stories.