COMMONWEALTH COUNTRIES (FINANCIAL AND ECONOMIC CO-OPERATION)

HC Deb 28 April 1958 vol 587 cc28-133

3.31 p.m.

Mr. Brian Harrison (Maldon)

I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof: this House, noting with approval the recommendations made by Commonwealth Finance Ministers at their meeting at Mont Tremblant, Canada, in October, 1957, that arrangements for continuing Commonwealth consultation on economic matters should be included in the Agenda for a Commonwealth Trade and Economic Conference, to be held at Montreal in September, is of the opinion that the development of suitable institutions and the expansion of the existing machinery of Commonwealth economic consultations are essential for the future of Commonwealth development, production and trade. Since the war, we have been all too familiar with the economic and financial problems that have brought about crises in sterling as a currency, and to this country as a banker for the sterling area. These crises have occurred largely because our reserves have been so small, so small, in fact, that they were not reserves at all in that they were not able to tide us over periods of shortage and fluctuations in economic conditions. This has led to a lack of confidence that during that period we, as the banker of the sterling area, would be unable to meet our commitments and that, in any case, in view of the inflation that we have had with us since the war, we would be settling our debts in an inflated currency.

In the early 'thirties, international payments were largely carried out by the mechanism of the gold standard. At that time, the Bank of England was prepared to settle payments through the exchange of gold on demand at fixed prices. For various reasons, Britain then came off the gold standard, but the United Kingdom still remained the banker for many countries who found it convenient to keep their trading balances here. The effectiveness of that rôle became increasingly dependent on institutions in this country for manipulating and preserving the sterling area's reserve. This has made sterling more and more dependent on the influence of additional factors, some of them internal and others external and outside our immediate control.

In the pre-war period, the strength of sterling depended almost entirely on the United Kingdom's trading position and, to use the analogy of a bank, the United Kingdom held sufficient reserves for all calls that might be made on her. During and since the war, the amount of deposits from other countries has greatly increased. At the same time, the United Kingdom reserves have fallen, and, again to use the analogy of a bank, it appears as though the liquidity ratio has become inadequate. It has only been through various forms of restraint, some voluntary, some compulsory, on ourselves and on our customers that a breakdown has been avoided.

Reduced to its simplest, sterling is subject to three main influences. First, there is the effect of the profit and loss of our trading; whether we can export more goods and services than we import. At certain periods since the war, as a result of the tremendous leeway that we had to make up, we have been in deficit, but at present and over recent years the trend has been in the other direction, though we have only just got back to the position that we were in immediately after the war.

The second influence under which the sterling area falls—and this will be increasingly important with the next few years—is the reserves that other people keep in this country, either as part of their banking system or as a convenient method of settling their trading debts. With falling commodity prices, however—and it is largely on primary commodities that the Commonwealth depends—we must expect an additional drain on the amounts we hold for Commonwealth countries, because they will need the funds they have here in order to continue their development and maintain their standard of life.

Were they all to demand their reserves at a particular moment, I do not think that they could be met but, of course, that is not likely to happen because, for a number of reasons, they are statutorily obliged to retain money here. In addition, not all of their reserves are held in available forms that could be realised, even to help carry them over a period when their own payments needed balancing. Nevertheless, the actual threat that they could do that does exist. We must realise that, and take action to show that we have recognised that it is there, and that those countries, consequently, need to have an increased say in the manipulation of these reserves.

The fact that Commonwealth countries have to be moderate in their demands upon these reserves has been recognised at many of the conferences that have been held since the war. The Finance Ministers' Conference held in London in January, 1952, made a particular point of that, and in the communiqué that was issued it was made quite clear that the only real way in which the reserves could remain stable was for each country to balance its own trading and, in the words of the communiqué, "live within its means". But it seems wrong, or unduly optimistic, to expect these Governments to continue to exercise this restraint, to moderate their demands on the central funds and, at the same time, to have no control over them and to have no permanent consultative machinery here to look after them.

Enlightened self-interest demands restraint in the use of these reserves. That self-interest could, I feel, be exploited to make it possible for these other Governments to realise just how important it is that the reserves should be maintained at the highest practical level, to support the soundness of sterling as an international currency.

The third influence that plays on the reserves is that of the overseas investor who wishes to keep his money here, in a safe area. These people are often disparaged as speculators or as the owners of hot money, but nobody can seriously blame people for wanting to hold their assets where they will not depreciate, or blame them far wanting to improve the value of those assets. Of course, to maintain the Commonwealth sterling area we can use the money that these people wish to invest in the Commonwealth, to the advantage of all its member-countries. When the other two influences are at work, frequently these speculators lose confidence in the safety of their money. That was the cause of the crisis last September.

The changed position of sterling which I have outlined can be put briefly in this way. The reserves were built up before the war largely with the earnings of this country. After the war, the proportion of the earnings of this country in the reserves decreased, and, at the same time, the amount of the reserves held or earmarked for other countries in the Commonwealth considerably increased. Therefore, the health of the reserves depended on the efforts not only of this country but of the whole Commonwealth. To quote once again the Commonwealth Finance Ministers' Conference of January, 1952: It is quite clear that the only way to prevent recurrent drains on the central gold reserve is for every country in the area strenuously to endeavour to live within the means which are, or can be, made available to it. At another stage, the communiqué said: It was agreed that, where any country in the sterling area was likely to be in overall deficit, corrective measures should be taken as soon as possible in order to relieve the current pressure on the resources of the area. In other words, it was recognised there that each individual member had responsibilities for the health and stability of the area as a whole. Since this has been recognised for a number of years, it would be appropriate for us to look at the possibility of closer co-operation between the customers, as it were, and the central bank. The present arrangements, with a very typical British informality, seem to be based on the Commonwealth Liaison Committee which meets in London, but this Committee is only a forum for the exchange of information on economic affairs. There are, from time to time, of course, Commonwealth conferences, but their timing is erratic, and very often they are widely spaced. I suggest that the Commonwealth Liaison Committee would be a suitable organisation to develop as a piece of machinery for consultation and policy making to help in the control of the sterling balances.

Any scheme which we may put forward at this time should not be a blueprint, no matter how perfect, for a full-scale organisation. Where we have an organisation in existence now, we ought to see how it can be improved and developed to fit into the general framework, rather than set up something completely fresh and, as yet, untried. If we can use the methods which are so familiar to us in this country of adapting present institutions, modifying, enlarging and improving them, we shall get further practically along the road towards developing consultation and co-operation between the countries that are part of the Commonwealth and the sterling area.

It has been suggested that the Commonwealth Liaison Committee should meet under the chairmanship of the Governor of the Bank of England and, perhaps, at least annually, if not more frequently, the chairmen of the reserve banks or Government central banks in the various Commonwealth countries should attend. While London, to begin with, would be a convenient central meeting point, it could, in time, move round to the other capitals. Having some organisation or some established committee, not just a casual one, which met regularly under the Governor of the Bank of England would, I suggest, bring co-operation within the Commonwealth much closer in this particular respect.

Another organisation well worth considering and developing is the Commonwealth Economic Committee which, in the last few days, has produced a very valuable report. It is an extraordinary thing, however, that whereas we have, as a Commonwealth, probably the greatest share of the world's raw materials, we have, as yet, no catalogue or index to show where they are or, indeed, what will be the future demands of the United Kingdom and the rest of the Commonwealth for raw materials over the next one, two or three decades. I suggest that the Government might well consider using or developing the Commonwealth Economic Committee to produce the equivalent of a Paley Report dealing with the Commonwealth, which would give a good indication as to the direction in which development might go. One might, possibly, model the expansion of that Committee on some of the organisations which have been set up by the O.E.E.C.

I very much regret that my hon. Friend the Member for Eastleigh (Mr. D. Price) is out of the country because, as he said in the debate on the Budget and the economic situation, he was particularly anxious to speak today and give the House some of his views on the institutions adaptable to the Commonwealth which he has been studying. However, he had the chance to put forward some of those ideas in the economic debate, and I feel that they should be considered in the context of our debate this afternoon.

One of the most interesting suggestions I have seen has been put forward in the last few days and attributed, in various ways, to my right hon. Friend the Prime Minister. This is that we should run a Commonwealth bank on the same lines as the World Bank. It is extremely difficult at this stage to see exactly how this would operate, and there would be many practical difficulties if we were to collect sufficient funds, because these must be created from real assets. One cannot, without accelerating inflation, produce funds for development just by setting up another institution. But there are certain ideas relevant to this suggestion which my hon. Friend the Member for Essex, South-East (Mr. Braine) will develop when he seconds the Amendment.

There is an idea from another part of the Commonwealth which might well be applicable here at the financial centre of the Commonwealth. This is the Loan Council system which has been developed between the States in Australia. I hope that any hon. Member who is familiar with the workings of the Loan Council over the last two or three years will not take that as a paragon of how the organisation should be run, but certainly before, during and after the war the operation of a Loan Council which co-ordinated the raising of public issues between various States within Australia worked most effectively.

I feel that this could be done in London in order to get co-operation in the allocation and timing of loans to be raised on the London market. The advantage would be that various countries would be able to put their plans before the Council well in advance and thus they could be co-ordinated, rather than members of the Commonwealth coming in, as they do at present, on a catch-as-catch-can basis to raise their money in the City. It would be also used for allocating some of the funds that this country has available for development in Commonwealth countries and for evolving a series of priorities to be used, in particular, for the smaller countries which are looking for funds.

In the autumn, or in the fall as it will be in Canada, there is to be a conference of Commonwealth Finance Ministers at Montreal. This conference can be at least as good as the Ottawa Conference in the 'thirties. At that time, the Commonwealth and, in fact, the world was facing a set of economic problems which were no less baffling than the ones that we are facing at the present time. They were, of course, very different from the problems which we are facing today. One of the difficulties of many economic experts is to try to find out exactly what problems we are facing today; we get a different theory from each weekly paper that we pick up.

It is important to remember that the some thing happened in the 'thirties. There was a tremendous diversity of opinion as to how we could deal with the problems that we were then facing and about what was the cause of the problems. The fact that out of that fog, as it were, something as useful as the Ottawa Conference and the Ottawa Agreements emerged should encourage us to think that out of the economical fog that we are in today something equally helpful might emerge to relieve the Commonwealth and, in turn, the sterling area of their current malaise. I say that for the important reason that the recovery of the Commonwealth after the Ottawa Conference without doubt contributed to the recovery of the whole world from the economic depression.

I feel that the theme of this conference should be the strength of sterling and that it should consider very carefully the setting up of such institutions as may be desirable and useful to help in studying and operating against the problems facing the sterling area at present. I think that the theme of this conference was best given by my right hon. Friend the President of the Board of Trade, when he spoke in the debate on the Budget proposals and the economic situation. In column 195, he said: … we see that the very growth and increasing variety of the economies of the Commonwealth have created a common interest so urgent as to be almost new, and that is their joint responsibility for the strength of sterling. Before the war, what the United Kingdom did was enough, in normal circumstances, to keep sterling strong. But it is not today. Forty per cent, of the world's trade is done in sterling, but we hold only 4 per cent. or 5 per cent. of the world's reserves."—[OFFICIAL REPORT, 16th April, 1958; Vol. 586, c. 195.] It is because of this common interest in maintaining sterling and the sterling area that I feel that at this stage, between the Mont Tremblant and the Montreal Conference, a discussion such as this would be valuable. It is because of the widening responsibility for the sound use of the limited reserves that we have, and on which depends the future of Commonwealth development, production and trade, that I move the Amendment.

3.57 p.m.

Mr. Bernard Braine (Essex, South-East)

I beg to second the Amendment.

I am sure that the whole House will join with me in congratulating my hon. Friend the Member for Maldon (Mr. B. Harrison) upon his good luck in the Ballot, upon his wisdom in securing this subject for debate and on the skill and lucidity with which he has addressed the House.

We are indebted to my hon. Friend in the sense that this is probably the most important subject with which the House could concern itself at the present time, for two reasons. The first is that our very existence depends upon our trade, almost half of which is done with the Commonwealth. How vulnerable we are in that respect we in this House may know, because our attention is constantly directed to the subject, but I doubt whether the outside world knows.

It is an interesting and little-known fact, for example, that since the turn of the century the foreign trade of the United States and the Soviet Union has represented a small and declining percentage of their national incomes, although in both instances foreign trade has increased in absolute terms. The reverse is true of the United Kingdom and the countries of Western Europe. Our foreign trade has grown faster than our national income. Although we may consider that we enjoy greater prosperity than, say, twenty or thirty years ago, to enjoy that prosperity we have to export a continually higher proportion of what we produce.

I emphasise this because trade must be the theme which runs through not only our debate today, but, as my hon. Friend said, through the Commonwealth Economic Conference when it assembles in the autumn. To export or die is not a slogan or a windy phrase; it is a fact.

The second reason why it is important that we should discuss this subject today is that our place, our position and our influence in the modern world stem directly from the fact that we are still the centre, the heart and the hub of a great worldwide financial and trading system. But it is a system over which we no longer exercise any kind of political control. It can be kept in being only to the extent that we here in the United Kingdom are prepared to continue our traditional réle as trader, banker and provider of technical expertese. If the Commonwealth is to be held together in the future, it is not tradition, it is not sentiment and it is not even the habit of association that will do the trick. It will be by the maintenance of mutual ties of economic self-interest; in particular, trade preferences, capital investment and technical assistance.

It is not an exaggeration, therefore, to say that the survival of the Commonwealth depends on the one hand upon the importance that the overseas members attach to their membership of the sterling area, to the enjoyment of favoured access to the markets, finance and technical services which this country can provide. On the other, survival depends upon the readiness of the United Kingdom to meet these requirements to the best of her capacity.

Having said all that, it should be a matter of the gravest possible concern to every Member of the House and to every person in the United Kingdom that the economic ties between ourselves and the Commonwealth countries have been steadily weakening in recent years. The proportion of trade both between ourselves and the outer Commonwealth, and between the outer Commonwealth and ourselves, has been declining at a time when world trade has been expanding.

One of the great advantages of the system, we are told, is that it is an informal, voluntary association; people can come and go as they please and literally behave as they please in the economic field. This is, of course, also one of the glaring weaknesses of the system. There is no Commonwealth machinery for ensuring continuous, effective co-operation all the time—machinery which would impose restraint or suggest restraint when needed, or which would give encouragement when required. There is no vision of the whole.

It is true that attention is focused on the subject whenever we have a Commonwealth Prime Ministers' conference, or when the Prime Minister, as he did recently, makes a great tour of the Commonwealth. Such a journey made a great impact upon the Commonwealth and upon my right hon. Friend himself, judging by the speeches he has made since his return. There is, however, no continuous, effective machinery for economic co-operation.

We often complain that the United States has no Commonwealth policy and does not understand the Commonwealth, its nature and its purpose. I am not surprised. There is a perfectly simple explanation: there is no Commonwealth policy. The United States, as an American diplomat pointed out the other day, is obliged to adjust its policies and its attitudes to individual Commonwealth countries.

Even here, in the United Kingdom, where at least we could set an example, there is little co-ordination. Four Government Departments have responsibilities in this matter. There are the Commonwealth Relations Office, the Colonial Office, the Board of Trade and the Treasury. The first two seem to suggest that there is some sort of arbitrary division in the Commonwealth. That may be justified on political or constitutional grounds, but it is certainly not justified on economic grounds.

There is such a mixing up of Commonwealth relations today that it is difficult to decide where the responsibilities of the Commonwealth Relations Officer begin and end and where the responsibilities of the Colonial Office begin and end. The Board of Trade—it does the job very well—is interested in promoting British trade overseas, but it is not in the least concerned about the directions in which the trade flows.

As for the Treasury, all three of the other Departments are subordinate to it I make no complaint. I have said some hard things about the Treasury in this connection in the past and, no doubt, I shall say them again. The Treasury is concerned with adding up the pence and seeing how the accounts work out in terms of the United Kingdom, not in terms of the Commonwealth.

It seems to me also that there is a grave weakness in that there is no machinery for giving specific advice on development policy. My hon. Friend the Member for Maldon mentioned that excellent body, the Commonwealth Economic Committee. Hon. Members may have had the opportunity to study that Committee's recent publication on the raw materials of the Commonwealth. Within its terms of reference that Committee has done splendid work. I have argued for many years that we should have a Commonwealth Paley Report—that is to say, we should have a comprehensive, continuous study of the economic resources and development potential of the Commonwealth.

My hon. Friend the Member for Harrow, West (Sir A. Braithwaite) and I pressed this matter in the debate of 30th November, 1956. That was eighteen months ago, and I made two suggestions. I suggested that there was the strongest possible case for extending and improving the existing Commonwealth machinery for the collection and dissemination of economic information and I made two specific suggestions: First, Her Majesty's Government should widen the scope and extend the functions of the existing Commonwealth Economic Committee and discuss with other Commonwealth Governments how its services can be utilised more fully for the benefit of all. Then, I asked that the Government should examine with other Commonwealth Governments the possibility of making jointly or severally a continuous appraisal of Commonwealth resources and development potential."—[OFFICIAL REPORT, 30th November, 1956; Vol. 561. c. 760–1.] The Government acted on the first suggestion, but I understand that as yet, eighteen months later, no answer has been received as to whether this is thought to be a good thing. I hope that when my hon. Friend the Under-Secretary of State for Commonwealth Relations replies to the debate, he will be able to give us some information on this subject.

This is no idle suggestion. The Paley Report had a massive effect upon the United States economy. I do not think that there is any doubt or division on that score. It led to changes in tariff policy, to a change of attitude on the subject of loans for domestic producers, to new thought on the subject of conservating domestic sources of raw materials and the use of substitute materials. It made a powerful impact. I should have thought that what was appropriate to the Americans, with their vast resources, would be even more appropriate to us, dependent as we are upon drawing our supplies of raw materials from all over the world.

My right hon. Friend the Prime Minister made a notable speech on the subject of the Commonwealth at the Central Hall, Westminster, on 2nd April, when he said: The Commonwealth is not a thing that will thrive just by being left alone. It has to be tended and guided. One must go further than that. If it is to thrive the Commonwealth needs to resolve some of its inner contradictions, particularly in the economic field.

Here I should like to return to the vital question of trade. The terms of trade are now running very strongly in favour of this country. At the end of last year, they were running at about 10 per cent. better than they were three years before. In terms of hard cash, that meant that the United Kingdom was benefiting to the tune of £300 to £400 million a year, principally at the expense of Commonwealth producers. I make no complaint about that, but it meant that Commonwealth producers were suffering a corresponding loss.

The danger is this. It is not a question of what we gain on the swings, somebody else loses. The danger is that once this kind of development gets under way, the system as a whole will begin to slow down. I fear that the trend is continuing. Thus, the provisional trade figures for the first quarter of 1958 showed that our imports were 12 per cent. lower in value than in the first quarter of 1957. The trend is going up in our favour and going down for Commonwealth primary producers.

For my sins I am Chairman of the British Commonwealth Producers' Organisation. Representations are constantly being made to that organisation by commodity producers in every part of the Commonwealth that it is all right for prices to fall to a certain point but that when they start falling beyond that the matter is one of very grave concern and must end in adversely affecting the capacity of Commonwealth countries, particularly the more rapidly developing countries, to import their requirements, especially capital equipment from the United Kingdom.

Development programmes, particularly in the Colonies, geared to a level of export earnings, based on higher commodity prices than obtain today, are being slashed. As a consequence, orders for capital goods are being curtailed, our export trade will suffer and the process of slowing down will gather momentum. We see this happening in New Zealand. We see it happening in the Federation of Rhodesia and Nyasaland, which had about the highest rate of economic development in the world up to a year or two ago. We see it to a lesser extent in Australia and Canada. I have just returned from East Africa, where Governmental aid has been slashed by half and where development programmes are seriously affected.

It is not just the economic consequences of this which should concern the House, but also the political repercussions which follow. If I may use Adlai Stevenson's phrase, We are in the presence of a revolution of rising expectations. So many people have been led to expect better education, better provision for health and housing, and so on, and are now disappointed.

It may well be, of course, that commodity prices have been too high, that they ought to come down, and that these fluctuations ought to be evened out, but it cannot be an advantage to the free world that these violent swings take place. The great question which it should be our purpose in this debate to consider is, whether anything can be done about this situation.

The President of the Board of Trade, in the debate on the Budget, said that the Government had examined the question of controlling or evening out these fluctuations in commodities, but a study of each commodity had revealed surprising differences in conditions of supply and demand. One conclusion which was reached was that it was well-nigh impossible to have a system which would effectively stabilise commodity prices, and which did not bring in the United States, or even, for that matter, Western Europe. Moreover, negotiations over some commodities were hard and difficult to conduct, particularly when conducted on a world wide basis. The President of the Board of Trade reminded us that the Tin Agreement took five years to bring to a successful conclusion.

The trouble with the Commonwealth is that it is prepared to conduct salvage operations only after the damage has been done, after a crisis has occurred. I suggest that it is time somebody said that this is the wrong approach. What is needed is a technique for ensuring that the demand for goods and services should be sustained as evenly as possible all the time. Can a method be devised for keeping the wheels of Commonwealth economic co-operation moving smoothly? I believe that it can.

The second proposal which my hon. Friend the Member for Harrow, West and I made in the debate on 30th November, 1956, and which has been echoed again today by my hon. Friend the Member for Maldon, was the setting up of a Commonwealth bank. Many hon. Members will remember how enthusiastically that proposal was received by the House and how lukewarmly it was received by the Government, but at least we did have the satisfaction of getting out of the Government an assurance that they would consult Commonwealth countries about it. And they did. I think that it was seven or eight months later that we got a reply to the effect that this was not really a practical proposition because, after all, what was needed was not a new agency for development but additional capital.

Frankly, I was not surprised at this answer. At that time the British economy was running at full stretch, there was precious little slack and an acute shortage of capital. But today, the situation has completely changed. The economic climate is quite different from what it was then when the Commonwealth countries last considered this matter. On the one hand, we in the United Kingdom have more room for manœuvre than we had then. There is slack in the British economy. Our productive capacity is not fully employed. There is a natural anxiety among hon. Members on both sides of this House representing certain areas in the country about employment. On the other hand, we have a situation where the primary producing countries in the Commonwealth need capital goods for development but are increasingly unable to find the money to pay for them.

I see that the Prime Minister favours the idea now of a Commonwealth bank. According to a report in the Financial Times one day last week, he referred to the proposal saying that it should be discussed at the coming Commonwealth Conference. This is good news, although there are no details available as to what form this organisation would take. Let me throw some ideas into the pool.

I think there is a strong case for setting up here in the United Kingdom an import-export bank on the same lines as that of the United States from which Commonwealth countries could get short-term and medium-term credit for their essential requirements in capital goods from the United Kingdom. The condition is, of course, that the credit is tied to purchases from the United Kingdom. The capital for the bank could be found in one of two ways. Either the United Kingdom would provide the funds out of the growing surpluses which the improved terms of trade are providing—at the expense, incidentally, of Commonwealth primary producers; or, alternatively, Commonwealth countries with sterling balances here in the United Kingdom might be asked to subscribe, perhaps on an equity basis, an agreed part of those sterling balances, the United Kingdom contributing, say, £ for £.

There is nothing very revolutionary in the idea. It has been mooted by distinguished people elsewhere in the Commonwealth. In any event, the production of cash crops such as tea, coffee, sisal and tobacco in the greater part of the overseas Commonwealth is done Against bank advances. Such production is wholly dependent upon bank advances. At any given moment of time millions of pounds of sterling are out on loans secured by growing crops. I see no reason at all why the same principle should not obtain for other commodities and other economic activities in the Commonwealth. If individual banks can take this risk—and they have done so through the years, and are doing it still—then surely the Governments of the Commonwealth can do the same thing.

The advantages of such a scheme are, to my mind, threefold. First, it would enable the United Kingdom Government to help primary producing countries at a time when the terms of trade are moving against them. This in itself would help to knit the Commonwealth together at a time when many people overseas are worried about the connection. When the terms of trade are running in the opposite direction, and the United Kingdom is having to pay more for her imports from the Commonwealth countries, our contribution to the bank might well be reduced in relation to the amount by which the sterling balances increase. I do not wish to be too precise, but I think that this is a matter which ought to be seriously discussed.

I am positive that a device of this kind would enable Commonwealth primary producers to face the future with far more confidence than they do at present. It would certainly have the effect of reversing the present tendency towards the slowing down of essential development programmes, particularly in agricultural development, in the Colonial Territories.

The second advantage, as I see it, is this. By providing reasonable credit facilities, which are not now available, it would have the effect of giving additional encouragement to our exporters, not merely of goods but of services, and a fairer chance against their competitors. I should like to give the House an illustration of what I mean. The British constructional engineering industry has been earning overseas at the rate of about £90 million to £100 million a year over the last three or four years, no small contribution to the welfare, advancement and progress of the overseas Commonwealth. Nearly all of their activities are in the Commonwealth, a substantial part of them in Canada.

Here we have a situation in which a British industry is competitive with nearly every engineering country in the world. On price it is more competitive than its American counterpart, it is about on a par with the Germans, but the Italians, where large quantities of labour are involved, can sometimes beat us. In general, however, we are competitive anywhere in the world. Yet, in fact, in the last few years, contract after contract has been lost, not because the British constructional engineering industry could not do the job, but because it could not offer the attractive credit terms which the Americans and the Germans can.

Take, for example, the Export Credits Guarantee Department, which is doing an excellent job within its limitations. I think that its advances in bankers' guarantee policies last year were less than £30 million. What is £30 million to an industry engaged in mighty projects like the Kariba Dam and the Snowy Mountains scheme, in Australia? I therefore suggest that any scheme which would give extended credit on a selective or priority basis, determined by people looking at the Commonwealth as a whole, would be a tremendous advantage not only to us but to the developing countries overseas.

Thirdly, such a scheme would stimulate inter-Commonwealth trade at a time when it is manifestly clear that a new impetus, a new direction and a new purpose are desperately needed. That should be the aim and object of us all. It is for that reason that I am happy to second the Amendment which has been moved so admirably by my hon. Friend.

4.25 p.m.

Mr. A. G. Bottomley (Rochester and Chatham)

We on this side of the Committee would like to express our thanks to the hon. Member for Maldon (Mr. B. Harrison) for bringing forward this subject for debate today. The creation of machinery for economic and financial co-operation in the Commonwealth is, indeed, a very important matter, and I think that the hon. Gentleman has also afforded the Committee an opportunity of putting forward views before the Economic Conference which is to be held in Canada in September. The hon.

Member for Essex, South-East (Mr. Braine) quite rightly said that we are not discussing in this sense economic and financial matters alone. We are, in fact, discussing the value of the Commonwealth itself.

The expansion of Commonwealth trade is not simply a matter of short-term economics. We recognise the need for economic and financial co-operation to strengthen the Commonwealth as a political and social force in the world. I think it can be truly said that the Commonwealth is an example of interracial and international co-operation. It is an example, too, in a world otherwise divided by mutual suspicions and hostilities. The existence of the Commonwealth will not inevitably continue in the changing world circumstances, and we do well to remember this. It must he deliberately strengthened and constantly adapted to the changing world environment.

These factors must always be borne in mind when economic links between Commonwealth countries are being considered. In other words, there are political and social factors which may sometimes outweigh short-term economic advantages. For example, it would be of small benefit to this country if the fall in the prices of primary products continued. This could lead to such economic stresses that Ghana, New Zealand, Ceylon or Pakistan could go through political changes which would weaken the links of the Commonwealth.

The existence of the Commonwealth should also lead to the furthering of greater long-term development which strengthens the economies of all the member countries. The fact that the economies of Great Britain and other Commonwealth countries are more complementary than competitive gives great scope for mutual development and benefit. This does not mean that the economy of any one member should remain in its existing pattern. Nor does it entail cutting ourselves off from Europe or other highly industrialised areas. It does mean concentrating on building up the links of trade which bind the countries of the Commonwealth together and those which are at present Colonies, but which one day will be independent.

Before elaborating further on this subject, it is important to stress that the other Commonwealth countries are independent and equal members with ourselves, or will become so, and that any plans for expansion or co-ordination must be made and carried out together on terms of complete equality. It is not necessary, for example, that the headquarters of any institution which is established should necessarily be in London. The Commonwealth, as we know it today, was launched on its new phase by Canada taking away power from Whitehall. I would prefer to see it in London, but if we have a new institution, or institutions, centred on London we must give the lead. It is for this reason that the Amendment calls upon the Government to do something in this respect.

The situation is not encouraging today because, as the hon. Member for Essex, South-East has said, trade is moving away from the Commonwealth. The mover of the Amendment said that there are many organs of inter-Commonwealth co-operation and consultation. Those which come immediately to mind are the Executive Council of the Commonwealth Agriculture Bureau, the Commonwealth Shipping Committee, the Commonwealth Telecommunications Board and, most important of all, the Commonwealth Economic Committee. We have been told that the main job of the last named is the preparation of surveys and the making of inquiries. What happens to the studies afterwards we do not yet know, and perhaps the Under-Secretary of State will be in a position to tell us more today.

Let us look at the hard facts of our overseas trade. As I have said, trade is moving away from the Commonwealth. The volume of our imports from the dollar area has increased by 42 per cent. since 1954, while imports from the sterling area have stagnated in volume. The reverse happened during the period of the Labour Government. During the period 1948–52 there was an increase of 25 per cent. in Commonwealth trade and a cut of 6 per cent. in dollar trade.

The stagnation in Commonwealth trade is still continuing. The Board of Trade Journal of 24th January reports a continuation of the trend for imports from non-sterling countries to rise more rapidly than imports from the sterling area. There was a 6½ per cent. rise during 1957. The apparent 2 per cent. rise in sterling imports is almost entirely accounted for by a carry-over from 1956 due to the delays resulting from the Government's disastrous Suez policy. There can be no denying that the laissez-faire attitude of the Government has resulted in a diversion of our sources of supply from Commonwealth countries, in many cases towards hard currency areas. I will give some other illustrations.

Imports of wheat from Australia and Canada have decreased by 21 per cent. since 1952: from £98 million in 1952 to £77 million in 1957. From the non-Commonwealth countries they have increased by 74 per cent., from £27 million to £47 million. The tobacco imports position is even worse. Imports from the Commonwealth have increased by 13 per cent. in the same period; from £31 million to £35 million. From non-Commonwealth countries imports have increased by 150 per cent., from £20 million to £50 million.

Finally, I wish to refer to the question which is now before the Government, that of butter. Imports from non-Commonwealth countries increased by 39 per cent. between 1952 and 1957, from £31 million to £43 million. From Commonwealth countries they increased by 10 per cent., from £51 million to £56 million. It must be remembered that these figures cover a fall in the price of butter, so that the volume was much larger.

I would remind the Government that New Zealand earns one-third of its foreign exchange by selling butter abroad and' that 90 per cent. of the exchange comes to the British market. If that money is not available, the New Zealand buyers will not be able to purchase our manufactured goods, and that could add to an already growing unemployment situation in this country.

It appears to us on this side of the House that the Government have been very dilatory in their reactions to the complaints of dumping which have been made by the New Zealand Government. It is essential that we speed up our reactions to such complaints from Commonwealth countries. In the post-war period we depended to a very great extent on New Zealand. I suggest we are using a very peculiar way of showing our gratitude for the fact that they did not take great advantage of our pressing need at that time by the way we are treating them at present. New Zealand recognises the Commonwealth link by actions.

We seem to be failing to do so, and we would do well to recall that two years ago the Australians were equally upset. In effect, they denounced the Ottawa Agreements and concluded a trade agreement with Japan. Do not let us send New Zealand away equally infuriated with our action.

Three years ago, on 28th July, 1955, I initiated a debate on Anglo-Canadian trade. I asked the Government to accept the policy which the Opposition were putting forward. I suggested that they might use one of their friends to lead a trade mission, Lord Beaverbrook. The Government turned down the suggestion, but last year a trade mission came to this country from Canada, led by Mr. Gordon Churchill, and we know what great success it had. It is true that we are now sending a trade mission there, led by Sir William Rootes—and we send the mission every good wish for success—but, unfortunately, the President of the Board of Trade will be there at the same time, and in view of his well-known capacity for saying the wrong things it would be better if he had stayed in this country.

We on this side of the House urge, as we have done consistently, that there ought to be long-term agreements with the Commonwealth countries. It is necessary to remember that the ability of the primary producers to buy manufactured goods depends on the prices they receive for their products, and on the stability of those prices. Great fluctuations, during both the post-war and interwar periods, made their development and the stability of their economy exceedingly difficult to maintain. Neither are such fluctuations of any real value to us. It is true that when the terms of trade between primary and manufactured goods move in our favour, we get a temporary benefit, but the converse is equally true. Many of our post-war difficulties have been due to these short-term changes in trade. The fall in primary prices over the past year or so is not unconnected with the relative decline in our trade which has taken place over the past months.

In 1957, the volume of our exports increased by a little over 2 per cent. as against between 5 and 6 per cent. in the three previous years. We in this country cannot by ourselves stabilise the prices of primary products. We need the co-operation of other countries, such as the United States of America and, perhaps, Western Europe. Yet it is not impossible to minimise the effects of such fluctuations if we are willing to negotiate long-term agreements with the Commonwealth countries. Indeed, as I have said before, the economies are supplementary.

We on this side of the House are well aware of the Government's doctrinaire opposition to bulk purchase and to Government-negotiated trade agreements, but we ask them again in this debate to look at this matter again, in the hope that we can by these means secure greater Commonwealth co-operation. We can hardly expect New Zealand or Ghana or any other member of the Commonwealth to value the Commonwealth link if they find, in practice, that we are willing to abandon it whenever it suits our short-term economic interests.

If, on the other hand, we would discuss with Commonwealth countries the needs of the British market and their ability and willingness to meet those needs, we might well find a real basis for strengthening the links between us. We cannot expect that discussion and pious words will be enough on their own. There must be willingness to negotiate agreements on these matters from both sides, from the United Kingdom and the Commonwealth countries, for some measure of security. This sort of negotiation, once agreed in principle, can be carried on by a Commonwealth secretariat such as that which has been suggested.

We need to co-ordinate development. Everyone recognises the great need to expand the economies of the territories of the Commonwealth, particularly the under-developed parts of this great association. As we know, the peoples of countries like India or Pakistan, or territories in Africa, are living in poverty and trying to eke out an existence for a few years before they succumb to the manifold diseases of malnutrition. To make our own concepts of human dignity and equality mean anything, those conditions have to be attacked, and that requires great economic expansion.

We have to face the fact that there is a shortage of capital and certain other basic requirements—technicians and teachers, and so on—but it may be that the paramount needs of these areas could be met by all the members of the Commonwealth working together. I recall being sent on a mission in 1949 by one who, we all agree, was a great Foreign Secretary, the late Mr. Ernest Bevin. Burma was then in difficulties and I was sent to Delhi to arrange a Commonwealth conference so that we could see how we could help Burma to overcome her economic problems. Ernest Bevin told me that if that could be done, he could see a great plan for helping Asia as devastated Europe was helped—and the Colombo Plan was formed. The Colombo Plan has not gone ahead at the speed required. The seed was sown, but the plant has not come to fruition. More must be done.

The way in which we can do that is to do something now about priorities for capital investment and the other forms of investment required. We have to avoid great conflicts in demands for scarce resources or unnecessary waste of those resources in the short run. Such agreement would be difficult to work out, but at the moment the Government do not even try. Meetings of Commonwealth Ministers are valuable, but they are neither continuous nor able to go into sufficient detail. Again, we come up against the need for a Commonwealth secretariat.

If we are deliberately to expand Commonwealth economic and financial links, some planning will be required, not only between the member countries, but also within our own economy. It will never be possible to direct our resources to the Commonwealth, or even to guide them in that direction, if the only weapons in the economic armoury of the Government are the Bank Rate and the Budget. Trade certainly must be linked with capital—the two are interlinked—and it must be possible at the very least to have some control over investment policy, both internally and externally.

Only if we have such control can we hope to translate pious platitudes about Commonwealth development into reality. As it is, our reliance on the Bank Rate as an instrument of economic and financial control damages even the existing links between Commonwealth countries. The high cost of borrowing when the Bank Rate is 6 or 7 per cent. is intended as an instrument to ration short supplies. It is the worst possible instrument, certainly when considered in relation to Commonwealth development.

Malaya, Ghana and India have all cut back their development programmes, although those are essential to the existence and well-being of their peoples. At this moment, the Pakistani Finance Minister is over here making a similar plea to the Government, because Pakistan, like those other countries, is having to cut back, partly because she cannot get the money from the capital market, and partly because the rate of interest is so high that it pushes up credit costs and makes the cost of development more or less prohibitive. Those countries would also have to continue to pay for the use of money borrowed for more years than they want to do, because the Government refuse to control the distribution of our resources, but allow them to be frittered away on non-essentials, both internally and externally.

The high interest rates in this country have meant that many members of the sterling area have been forced to impose restrictions on the movement of capital, even within the sterling area, to prevent the transfer of capital from their country to London. When we consider the relative economic and industrial strength of ourselves and other members of the Commonwealth, and the abundance of raw materials and foods, we are forced to realise that such a system of allocating capital resources is the very system calculated most quickly to destroy the links about which we have been talking today.

Finally, on this, it is necessary to point out that many member countries are now having to hunt round the world for capital which is less expensive to them, even to go to those countries of whom we express great fear and who are using this hunt to cause greater discord within our family of nations; yet the whole economic history of the world shows that economic relationships and political links follow the pattern of capital investment.

It is true that we are not now a nation which finds it easy to produce capital for overseas investment, but that makes it all the more important that we should strengthen our economy long-term and in the meantime use such resources as we have to the best possible advantage. Our economy, like that of other Commonwealth members, will be strengthened most surely by mutual trade and a greater degree of co-operation. The proper allocation of our resources and the co-operation which is necessary can both be assisted through the strengthening of the machinery of Commonwealth co-operation.

A suggestion has been made about the machinery which might do, and I, too, want to make a suggestion. First, we need a secretariat, and I should establish a permanent secretariat, perhaps on the lines of that adopted in Europe for the Organisation for European Economic Co-operation. The secretariat could be controlled by a permanent executive of the nominees of the various Governments concerned. Such a secretariat would take over the functions of the Commonwealth Economic Committee in so far as it would collect and make available economic information. The secretariat, however, could go further. It should attempt to increase trade and investment by co-operative measures and endeavour to co-ordinate the investment and import policies of the member countries.

There are obvious advantages with such a secretariat. It would strengthen the Commonwealth as an association of equals, thus avoiding the tendency for all communications from Commonwealth countries to come to Britain and then be disseminated. Through such an organisation it might be possible to have mutual links between all the Commonwealth countries. That would be important as British leadership became less pronounced, as it may do, except in the sense in which we earned it by our own efforts or because of our history. The secretariat would also provide a basis for expanding Commonwealth trade complementary with the expansion of European trade, about which talks are now taking place.

The secretariat would obviously start with few powers because of the jealously guarded sovereignty of the members of the association. It would, however, be a vehicle for continuous consultation and co-operation not only between ourselves and other members, but among all of us and between any two, or more, other members. Such machinery would make it easier to avoid the sort of independent economic actions adverse to the interests of other members which seem to have occurred in Commonwealth countries during the last eighteen months.

A valuable adjunct of a secretariat would be the Commonwealth bank, designed not only to facilitate investment, but also to facilitate financial co-operation. I believe that discussions about a Commonwealth bank have been going on for some time. The Under-Secretary may be able to tell us more about them. The United Kingdom Government put forward the idea of establishing a development bank, with initial subscriptions of about £30 million. Reports in the Press seem to indicate that this matter will be discussed at the Economic Conference in Canada, later. It is on record that the Prime Minister has made such a comment. Other Commonwealth countries are reported as not being too encouraging as at present. I urge the Government to support the Prime Minister in this respect and look again at the proposal for a Commonwealth bank.

Such a bank would have a dual function; it would not be just a Commonwealth equivalent of the International Bank but would also have some of the functions of the International Monetary Fund. By this means countries experiencing a short-term run on their sterling balances could draw upon them without having to fear complete bankruptcy while their economies are basically healthy.

Such an institution would need to accept the independence of member nations. There need be no more question about this than about the independence of the members of the International Monetary Fund or, in Europe, the European Payments Union. I ask the Government not only to examine the suggestion of a Commonwealth bank, but also the possibility of its having this extra function. Such an insurance for the currencies of Commonwealth member countries might make this proposal more attractive. The investment functions could also be very important. If this aspect were to develop it would become essential for the government of this bank to be vested firmly in the hands of the Commonwealth Governments, its operations not being controlled by any single member.

This debate has been extremely valuable. We all value the Commonwealth. We earnestly desire the strengthening of our ties, the deepening of our mutual sympathies and the achievement of our common ideals. The raising of the standards and improved conditions of any member is a matter of interest to all the other members of the Commonwealth. It is a strong union of free peoples, achieved without an ironclad constitution or written rules. The great need, however, is for a closer liaison to be brought about between the members. The proposals that have been made from this side of the House are designed to achieve this, and we earnestly hope that the Government will consider them sympathetically.

4.54 p.m.

Mr. R. H. Turton (Thirsk and Malton)

I join in congratulating my hon. Friend the Member for Maldon (Mr. B. Harrison) on his choice for this debate, and I also congratulate him and my hon. Friend the Member for Essex, South-East (Mr. Braine) on the content of their speeches.

My hon. Friend the Member for Essex, South-East said that this was the most important subject in the world today, and I agree with him, but looking round this Chamber one sees that not all Members appear to take that view. The difficulty is that visitors to this Chamber may sometimes misunderstand the position. It arises from the fact that, on this subject, there is a wide measure of agreement between us; there is not likely to be a Division tonight and, since it is also Monday, there are few Members present.

The right hon. Member for Rochester and Chatham (Mr. Bottomley), with most of whose speech I thoroughly agree, did his best to inject a little opposition spirit. I suppose that he thought that there would otherwise be no liveliness in the debate. Broadly speaking, however, we are all in agreement.

Let us try to estimate the measure of the problem with which we have to deal. I do not want to give many figures, or to repeat those which have already been given but, as I see it, in the last five years the Commonwealth position as an exporter has declined from 30 per cent. of the world's export markets to 27 per cent., and its position as an importer from 31 per cent. to 30 per cent. That has nothing to do with any policy or lack of policy of Her Majesty's Government; it arises from the present world situation. In the period after the war the volume of trade in manufactured goods has risen by 60 per cent. while that in respect of raw materials has risen by 30 per cent. and in respect of food by 10 per cent. Therefore, our Commonwealth partnership, which depends primarily upon the production of raw materials and food, has suffered.

What we have to recognise is that at a time when commodity prices are falling the position of the Commonwealth partnership will be very serious if that fall causes the decline of trade to gather momentum. That is why it is of great importance that, thanks to the initiative of Mr. Diefenbaker, we shall have this Commonwealth Finance Conference in the autumn, and the experts will meet next month.

Let us consider how this country can help the Commonwealth at the experts' conference in June, and again in the autumn. My hon. Friend the Member for Maldon took pride in the fact that our machinery is very flexible. I feel that whereas, in the past, the flexibility of the Commonwealth machinery has brought advantage to all its members, the time has now come when that machinery should be better modelled to meet this very grave problem. I agree with my hon. Friend and the right hon. Member for Rochester and Chatham that probably the most important matter that has to be worked out at Montreal is the suggestion of a Commonwealth economic secretariat.

The Commonwealth Economic Committee performs very useful work; those of us who read through the report on raw materials will realise the value of the research work it has done. But it has no power to initiate policy, and I should like to see the Commonwealth secretariat, in the same way as the Cabinet secretariat, initiating policy, presenting papers and aiding the Ministers of the several Commonwealth countries. We have seen how O.E.E.C. has increased the trade and economy of Europe. Why cannot we have a parallel body, such as my hon. Friend the Member for Maldon suggested, increasing the trade of the Commonwealth?

I should like to say something about the proposal for a bank. Two separate suggestions seem to be involved—one which my hon. Friend the Member for Maldon put forward, of a Commonwealth bank on the lines of the World Bank, and the one put forward by my hon.

Friend the Member for Essex, South-East, of something on the lines of the Import-Export Bank. I would stress two matters in our consideration of the problem of the formation of a Commonwealth bank. First, it must be a Commonwealth bank and not the Bank of England. It must be run by the Commonwealth. Secondly, it must be run upon commercial lines.

The World Bank operates very successfully, and I see no reason why a Commonwealth bank, formed upon the same lines, could not operate with equal success. I realise that there are difficulties, but so long as we regard it as a commercial operation and not a political instrument a Commonwealth bank will succeed.

I should like to take up a point made by the right hon. Gentleman in one of his more argumentative moments, when he was saying how little we had done in the matter of investment. On looking at the figures of the investment in the sterling area of the Commonwealth since the war, I found that 70 per cent. had come from Great Britain, despite all our difficulties during that time. If I remember rightly, 10 per cent. came from the World Bank and only 15 per cent. from the United States. Those facts are not sufficiently well known in the Commonwealth and in the world. We have played a great part, both through Government action and private investment, but I am quite sure that we have to play a far greater part in the future, if the Commonwealth is to maintain its pace in the race between the Commonwealth, European and other continents.

That brings me to the problem of commodities. Again, when the right hon. Member for Rochester and Chatham gave figures of the decline in wheat imports, he omitted the fact that the decline is due to the price of wheat falling from the time of the Korean War, to the present day. That is why our imports of wheat from the Commonwealth have declined. We are faced with these large surpluses of agricultural commodities in the world. I disagree with some of the speeches made today and with that part of what was otherwise the excellent speech of my right hon. Friend the President of the Board of Trade on 16th April. With the Commonwealth so dependent on commodity prices, I do not think that we can sit down and wait for a general international agreement on these commodity surpluses. We have to take action with the Commonwealth and work out a solution for ourselves to deal with these agricultural surpluses.

My right hon. Friend the President of the Board of Trade said: … commodity stabilisation schemes are generally impracticable—I think it would be almost true to say, always—without the participation of the United States. They are usually impracticable without the participation of Western Europe and, perhaps, sometimes without the participation of Soviet Russia."—OFFICIAL REPORT, 16th April 1958; Vol. 586, c. 196.] But what is happening is that the United States is pursuing her own policy of dealing with these commodity surpluses and, in so doing, is damaging the Commonwealth position. The present estimated surplus production of wheat is running at about 49 million tons, or the world's exports for 1¾ years. When we have that huge surplus of wheat, clearly both Australia and Canada will be in considerable difficulty unless we have some plan presented at Montreal to help them.

I read recently a book on price stabilisation schemes written by Mr. St. Clare Grondona. I hope that the Under-Secretary of State can say that the Government have studied the suggestions of Mr. St. Clare Grondona and are working out a price stabilisation scheme for such commodities as wheat. Just as the Tin Agreement helped to stabilise the price of tin—even though it took a long time to negotiate—it may well be that, by a similar method, worked out at the Montreal Conference dealing in the first stage merely with Commonwealth products, we might help to stabilise the price of wheat in the Commonwealth.

Let us see how the United States is dealing with this problem of surplus wheat. Less than eighteen months ago she negotiated the United States-Brazil trade agreement, in which America undertook to sell to Brazil 1,800,000 tons of United States surplus wheat. The conditions attached to this were that the purchase price should be immediately re-lent to Brazil provided that Brazil spent 85 per cent. of it in buying American capital goods and 15 per cent. in buying American consumer goods.

It seems an extraordinary thing that these agreements over surplus commodities can be negotiated by the United States without infringing the General Agreement on Tariffs and Trade. We must look into this matter at the Montreal Conference. If the United States can deal with surplus products in that way, surely we can do so in the Commonwealth. We have plenty of hungry mouths in the Commonwealth; and by a method of working out agreements on the lines of the agreement between the United States and Brazil I think we could increase the wheat consuming power of the Commonwealth countries and, at the same time, help them to develop.

On the subject of butter, I say to the right hon. Member for Rochester and Chatham that this Government have not neglected long-term agreements. After all, we have a Commonwealth Sugar Agreement which is working very well. Do not let us try to find disagreements between parties where disagreements do not lie. I agree that we owe a great debt to New Zealand. Those who fought alongside the New Zealanders during the war know the wonderful contribution which New Zealand made to the war effort. We also know that all through the war years New Zealand never put up the price of butter against this country. We owe them a great debt. What can we do about it now?

I do not wish to score points about what one Government have done and another Government have not, but this Government have taken action. Let us remember that we have the anti-dumping legislation designed to deal with such a problem as that presented by butter imports. As I said at Question Time on Thursday, here is a position in which Sweden, with a higher internal price for butter than is provided for the imported butter, is under-cutting New Zealand, whereas the price of butter in New Zealand in the consumer market is higher than the price at which they send it to us. So New Zealand is free from any charge of dumping.

Sweden, Finland, the Argentine and Holland are all guilty of dumping butter into this country. If the Government will agree, I am ready to negotiate a long-term agreement regarding butter with New Zealand, and I am sure that many hon. Members on all sides of the House would welcome such an agreement to help our Commonwealth partner. Apart from that, I think that we should deal with the dumping of butter now that we can take action under the anti-dumping legislation.

I welcomed especially the reference to the Ottawa Conference by my right hon. Friend the President of the Board of Trade in his speech on 16th April. He said: The Ottawa Conference had a single constructive theme—Imperial Preference. The preferential system has served us all well, and it would be very unwise for the Commonwealth to give it up—as I understand the Liberal Party wants us to do—or to bargain it away, as has been suggested by some in Europe. We intend to keep it. In the changed circumstances of 1958, the problem is to find new forms of co-operation which can be added to the tariff preferences."—[OFFICIAL REPORT, 16th April, 1958; Vol. 586, c. 195.] That is a strong expression of the determination to keep Imperial Preference, but we want a little more than that. When the right hon. Member for Rochester and Chatham was reviewing the course of Commonwealth trade from 1945 onwards, he omitted to mention the very great harm done to Commonwealth trade by the General Agreement on Tariffs and Trade and the "no-new-preference" rule.

We have to revise or renegotiate the General Agreement on Tariffs and Trade. Why should it be a crime to bring up to date a specific preference that has become meaningless? We must go to the General Agreement Committee as a Government and say that we must have these preferences revised. We owe that to our Commonwealth partners. I always believed that the Ottawa Agreements had a tremendous effect in the Commonwealth and upon the employment position in this country; that is why, at the Montreal Conference, the Government should tackle this question of the General Agreement on Tariffs and Trade, and the "no-new-preference" rule.

I noticed in the Observer yesterday that Commander Kenneth Cohen wrote an article on the European Free Trade Area and introduced these words into it: With the erosion of Commonwealth preferences and the loosening of the Commonwealth political structure, Great Britain, on the other hand, has with remarkable resilience abandoned much of its earlier insularism. I was very worried to read that in the Observer. We have undoubtedly had the preferences eroded, but we have not in any way changed our view that if we are to survive as a great Power we need close friendships and links with our Commonwealth.

The Commonwealth and its influence is the greatest hope towards peace. Our aim must be to expand its influence and to deepen its channels of trade. I appreciate that there are great difficulties, but we can surmount them if we go to the Montreal Conference determined so to do, and to make the conference succeed.

5.13 p.m.

Mr. E. Shinwell (Easington)

At the beginning of his speech, the right hon. Member for Thirsk and Malton (Mr. Turton) sought to inject a dose of whitewash into the debate. He begged those outside the Chamber not to misunderstand our position because when there was a wide measure of agreement we usually absented ourselves from a debate.

Speaking with almost brutal frankness, I say this debate is a very feeble overture to the Montreal Conference. I wonder, as many other hon. Members may, what a Commonwealth observer will think of a debate which the hon. Member for Essex, South-East (Mr. Braine) said he regarded as the most important debate we had had for some time. How will they regard the attendance? It is all very well to use fine words but, to use an old adage, they "butter no parsnips". We have to face the facts.

Of course, we all agree about cementing the Commonwealth, about retaining and strengthening the links in the Commonwealth chain, about developing trade with the Commonwealth, and about improving our relations with the Commonwealth. That is the usual language associated with Commonwealth affairs. But how are we to develop our ideas and provide for them a real and substantial application? That is the issue before us, and indeed we hope it will be the issue before the Commonwealth Conference, when it comes.

I agree with the hon. Member for Maldon (Mr. B. Harrison), who made an admirable speech in opening the debate, about the purpose of the Ottawa Agreements, which were concluded before the last war. Strange as it may seem, I was Chairman of the Labour Party Committee on the Ottawa Agreements. Even more interesting is the fact that the present Leader of the Opposition was a member of my committee. I was not its chairman because of a profound knowledge of economics. I had to rely upon the comrades who were associated with me in that venture. I agree profoundly with what the hon. Member said about the Ottawa Agreements, which strengthened Commonwealth trade when it was approaching a crisis. The world has now changed, and Commonwealth trade has dwindled.

The theme running through the debate is precisely the reverse of the theme which was used by the present Chancellor of the Exchequer in his Budget speech. For example, the hon. Members for Essex, South-East, and Maldon, and the right hon. Member for Thirsk and Malton are all arguing in favour of further expansion of trade with the Commonwealth, the provision of further credit facilities and the like. That is very satisfactory, but what impact is that likely to have on the Treasury Bench at this time or for some time ahead?

Mr. James Johnson (Rugby)

There is no one here from the Treasury.

Mr. Shinwell

No. They leave this important debate to the Under-Secretary of State for Commonwealth Relations, for him to handle the critics, as well as those who are not critical of Commonwealth affairs but only wish to make their observations. If we are to reach a satisfactory conclusion from this debate and to provide some guidance to those who will be assembled at the Commonwealth Conference, let us seek a real analysis of the problem.

How does one begin? If Commonwealth trade has dwindled, it is because our trade with other countries has comparably increased. That may be a commonplace thing to say, but that is the position. It is easy enough to say. "Let us not trade with Finland, the Netherlands or Scandinavian or dollar countries. Let us put all our eggs into the Commonwealth basket". If we attempted to do that, there would be great anxiety in many parts of the country by those associated with industrial undertakings, particularly on the workers' side. Many industries would be affected. That is the dilemma that confronts us and which has emerged because of the changing pattern of world trade.

The solution is not to arrest our trade with sterling or dollar countries or with the Commonwealth, but to develop a vast expansion of world trade. That would benefit us, the Commonwealth, and other countries, and would give an impetus to our shipping trade, which is now approaching a crisis. The more international trade we have the more likely shall we have a flourishing shipping industry, which will enable us to produce what are called "invisible exports".

The hon. Member for Essex, South-East argued—I noted his words because I thought them important—that a demand for goods and services, presumably within the Commonwealth countries, should be steadily maintained. Of course, I agree. Stability of trade is desirable, but what does that mean? The right hon. Member for Thirsk and Malton argued along the same lines. He suggested that we might enter into a long-term contract for New Zealand butter. That is precisely the policy of the Labour Party, which has been rejected over and over again by the Government. I do not say it is the whole solution; it is just an approach to a solution of this Commonwealth problem.

We have to enter into long-term contracts, and bulk purchasing if we like to call it that. I know that is heresy in Government circles; it is quite contrary to free enterprise and unlimited, unfettered competition, but we have to face facts. We live in a changing world. I have used the expression in another context and got into a lot of trouble about it—there is really no political partisanship about this Commonwealth matter. We all agree that we want to develop and expand the Commonwealth. We want to respond to its capacity for absorbing and consuming more goods, but if we have to do that we must do it on an organised basis.

The hon. Member for Maldon argued very fluently and learnedly. I had some difficulty in following him, because I am not a financial and economic expert. He argued substantially in support of the creation of financial machinery. I recall that some time ago, in an unofficial committee of which I was the unofficial chairman, but which is now a fully fledged committee of the Commonwealth Association, United Kingdom Branch—we have been elevated to that status—we asked the Secretary of State and the Under-Secretary about the creation of new machinery. Some of us thought that an essential prerequisite of expansion and development in the Commonwealth countries. We sought to create the right kind of machinery with a Cabinet secretariat and economic council in London and the like.

We were told that there was far too much machinery already; there was a glut of machinery. I cannot recall all the items which were retailed, but I am sure the Under-Secretary will be able to say that there is far too much machinery already. Of course we want machinery, we want centralised machinery to co-ordinate the bits and pieces. I say this with great respect to the hon. Member for Maldon, however, that if anyone supposes that machinery will solve the problem he is making a great mistake.

The important thing is the objective. We have good will and affection. I notice, for example, in this afternoon's Press a very pregnant statement by Mr. Walter Nash, Prime Minister of New Zealand. He said that in spite of the fact that Czechoslovakia and other countries had offered trade to New Zealand on barter terms, New Zealand said, "No; we want Great Britain." That is good will, devotion and affection, the kind of sentiment which endears itself to us. Those of us who have been there and know Mr. Walter Nash know that what is said is meant and is based on sincerity.

That is all very well, but only the other day the New Zealand Government floated a loan on the London market, and I believe the bulk of the loan was left with the underwriters. It is all very well to indulge in sentiment, but when one is trying to establish a financial position in the City of London and is rejected in that fashion, the Commonwealth links do not appear so strong as some people pretend. It is not merely the question of butter that is concerned. I say to the right hon. Member for Thirsk and Malton that finance is also needed. Finance is the crux of the whole problem.

What are we to do about it? Before coming to that, I want to say a word or two about another aspect of this problem. There have got to be far more consultations among the Commonwealth countries than there have been in the past. I do not want to revert to old sores, particularly in view of the attitude I adopted in the matter, but the Suez fiasco would not have occurred if there had been effective consultation between ourselves and Commonwealth countries. We recall the attitude of Mr. Lester Pearson, then Canadian Foreign Secretary and the Canadian Government. We also recall the attitude of other members of Commonwealth countries perhaps more sympathetic than Mr. Lester Pearson was. It amounted to a crisis and might have developed into a more serious one and have destroyed the Commonwealth.

There must be more consultation, and it must not be confined to London or to economic matters or the question of expansion and development. It must apply also to defence. On every matter which concerns the peoples of the Commonwealth, there ought to be full and effective consultation—I am prepared to use the term, but not in a literal sense—continuous consultation. If some kind of machinery can be established towards that end, all the better.

I come to what is, after all, the real trouble—the question of how we can provide the finance. I beg hon. Members to understand that the position of the Commonwealth is very serious at this moment. I agree that there is affection——

Sir Godfrey Nicholson (Farnham)

Before the right hon. Member leaves the question of machinery, can he go a little more into detail on the sort of machinery he thinks possible? We would value his opinion, which would be of great interest to the House.

Mr.Shinwell

Instead of having bits and pieces of machinery, liaison committees in London, the Secretary of State having regular consultations with the High Commissioners, and, I believe, other bits and pieces of machinery in London and elsewhere, I would set up a centralised Commonwealth economic council. It need not necessarily meet in London all the time, but in Sydney, Canberra, Montreal, Ottawa, or even in Ghana. There is no reason why it should not meet in India—India is part of the Commonwealth, let it not be forgotten. That is the way to attract people to this conception.

Sir G. Nicholson

Not only on economic matters?

Mr. Shinwell

Not only on economic matters, but on all matters that concern us. Are we concerned only with economic matters and not cultural matters, spiritual matters——

Mr. A. E. Hunter

And the social services?

Mr. Shinwell

—and the social services, all leading up to a higher standard? I am grateful to the hon. Member for Farnham (Sir G. Nicholson) for interjecting, because that leads me to another point. Do we realise what enormous potential consuming capacity there is in the Commonwealth countries? Australia, one of the older members of the Commonwealth, and New Zealand, another of the older members, from my experience and, I have no doubt, the knowledge of other hon. Members, have much that is still primitive. There is a need for further development in a variety of ways. I hope they will not regard that as disrespectful or discourteous. There is also a great deal that is primitive in this country, and it ought to be put right. We shall put that right in due course.

In India there are nearly 400 million people, 75 per cent. of them illiterate and 90 per cent. impoverished, the great mass of them living in squalor, abject poverty and distress. This is a potential market for us if we care to use it. Why are we worrying ourselves about European trade? Not that I reject the idea of European trade; I agree that in concert with other countries in Europe we ought to develop European trade. But India is also a market for us and, India being one of the Commonwealth countries, it is our duty to go to her aid. We have a responsibility to India. We divorced this country from India except for the slender ties of the Commonwealth, but we still have responsibilities to the people of India and we ought not to neglect them. The same applies to Ghana. We create these new Commonwealth countries and immediately we have done that, it is the end of the story.

Sir G. Nicholson

No.

Mr. Shinwell

It is practically the end of the story. The fact that Ghana and India have independence and that South Africa is threatening to become a republic is no reason why that independence should interfere with the ties which bind the Commonwealth countries together. Even when there are political differences of opinion, I see no reason for any separation.

The fact that many of us on both sides of the Committee and probably the majority of people in this country do not agree with colour discrimination is no reason why we should refuse to accept South Africa as a partner in the Commonwealth. They will have to work out their own salvation, just as we have to work out our own salvation. It is all very well to object in principle to colour discrimination, as we all do, but when it comes to practice it does not always work out that way. I do not wish to raise that issue this afternoon, however, but no matter how these countries care to govern themselves once they have independence, whether as a republic or any other kind of independence, we must work with them in building up a balanced and viable Commonwealth. That is our purpose.

Having said that, the question is, how is it to be done? The hon. Member for Essex, South-East suggested credit facilities, but there already are extensive credit facilities. The right hon. Member for Thirsk and Malton said that United Kingdom investment in Commonwealth countries was 70 per cent. of the whole, and that is perfectly true, but he went on, quite rightly, to say that we need a great deal more.

What is happening in some of the older Commonwealth countries? Anybody who has been to Sydney realises how Americanised that city is becoming. The same comment applies to some extent to Melbourne, although fortunately not to Western Australia, South Australia or Tasmania and certainly not to New Zealand. But it is threatening all the time and we cannot blame the Commonwealth countries for seeking the financial, economic and industrial aid of the United States. In the same way there is a danger that India and even Ghana may seek the aid of Soviet Russia, if credit facilities, investment and technical aid are not available from the United Kingdom.

I do not suggest that giving aid must be confined to us. There is a great deal of assistance which Australia and New Zealand can render to other Commonwealth countries. It should not be left to the United Kingdom. It is a matter which must be carefully argued out and analysed before we come to definite conclusions on how to create the proper plan in order to reach the right objective.

How shall we find the money? It has been suggested that we should have a Commonwealth bank. We could have a Commonwealth bank and not have the money. The money must be provided by somebody, and if we provide it in the form of further investment and credit facilities, it means expansion and even inflation. I should like to know what the Government think about that. The fact is that, whether we like it or not, there must be inflation because there must be world development in trade. We cannot avoid it and we have to take the risks associated with it if the Commonwealth is to survive.

I want to see the Commonwealth survive. I say that with the utmost sincerity and I believe that I speak the mind of everybody on both sides of the House and of the majority of people in this country when I say it. We are sincere in our desire to develop the Commonwealth, to expand it and to make it a worthwhile consortium of nations. The question is how we are to inject into that sentiment the realism which will make it effective.

There is a very great danger in our present attitude. I do not go as far as the right hon. Member for Thirsk and Malton, who indicated that it was not a bad thing that we had a poor attendance and that it did not matter very much. The fact is that it is a poor prelude, or overture, to the Montreal Conference. I am bound to say that I came to the House today with great expectancy hoping to find the House full with everybody agitated about the important question of the Commonwealth.

However, let us assume that they are all in agreement with us. All I hope is that before the end of the debate, even if I do not hear it—I ought not to have been here at all. because I have been in bed for the last few days—the hon. Member who will respond to the impact of what is said in the course of the debate will reply favourably and sympathetically and will indicate that when the Government go to the Montreal Conference they will have an organised, well-thought-out and well-prepared plan which can be accepted by the conference not as a complete solution to the dilemma which now confronts the Commonwealth of Nations but at any rate as a partial approach to a solution.

5.37 p.m.

Mr. John Tilney (Liverpool, Wavertree)

The right hon. Gentleman the Member for Easington (Mr. Shinwell) always commands the attention and interest of the House. I agree with him in deploring the small attendance this afternoon, although it is only fair to say that there are more on the Government benches than on the Opposition benches.

Mr. A. Fenner Brockway (Eton and Slough)

There are now, but there were not before.

Mr. Tilney

I have taken a rather careful count. I do not want to make any party point of this, for I find myself largely in agreement with what the right hon. Member for Easington said. There are three points with which I find myself in disagreement. When he was talking about New Zealand, although I did not quite follow him, he suggested that the fact that such a large amount of the New Zealand loan had been left with the underwriters implied that the City of London had not done its job in helping the people of New Zealand. But who are the underwriters? They are the City of London. That ought to be made quite clear to the House.

Nor did I follow him when he urged much further expansion to the extent of inflation. Who are the owners of the sterling balances? They are largely the members of the Commonwealth. If they are to draw on those sterling balances and if we are to honour our debt to those countries, we must pay them in good money, and if we have too much of an inflation and too big an expansion we shall merely pay them in bad coin.

I also fail to follow the right hon. Gentleman in his wish for more and more bulk contracts. I know that it is an idea of his party for many commodities, but there seems to be a great danger in this for a trading nation such as ours. If we obtain all our raw materials and food at an unduly high price, we shall find it very difficult to compete in the markets of the world.

Mr. J. Johnson

Perhaps the hon. Gentleman can explain why the Conservative Party, now in power, has persisted with the Commonwealth Sugar Agreement, but not an agreement in respect of other foodstuffs and metals and fibres. Why that commodity, and no other?

Mr. Tilney

There are certain commodities—and I will come to that point later—on which action can be taken on a long-term basis, but I think that there is great danger in a bulk agreement, anyhow, at a fixed price.

Mr. Johnson

But why only one?

Mr. Tilney

I think that there is more to be done in that direction, and I hope that it will be done in the years ahead, provided that one is careful not to commit oneself to buying too much at too high prices.

As other hon. Members have done, I should like to congratulate my hon. Friend the Member for Maldon (Mr. B. Harrison) upon initiating this debate. I am surprised that, so far, little has been said about what private enterprise has done, and is doing, in developing the Commonwealth. I am surprised, too, that no reference has as yet been made to what my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) did in the Finance Act last year in establishing the overseas trade corporations, enabling companies to plough back profits made overseas and in the Commonwealth so that they can develop their businesses there, to the mutual benefit of the companies and the overseas territories.

I am also surprised that no one has mentioned the importance of taxation in the under-developed countries, and I should like to commend the action taken by the Finance Minister of Nigeria in reducing the rate of Income Tax there from 9s. to 8s. in the £, though that was, to some extent, slightly vitiated by an alteration, retrospectively, in initial allowances and depreciation allowances.

I hope that my hon. Friend the Under-Secretary of State will find out from the Institute of Chartered Accountants, now married with the Society of Incorporated Accountants, what action is being taken by it to help young accountants from overseas—especially those in Africa—to be articled to firms in this country.

Before the amalgamation, members of the old incorporated society were prepared to take articled clerks into their branches overseas, but I understand that the new amalgamated body will not do so. Although this is a small point, it helps immensely in general trade and the expansion of what has become a much more complicated world.

All these, however, are really minor points compared with the problem of the Commonwealth and, particularly, the problem of the sterling area and its development. We all hope that the Free Trade Area discussions will succeed and be of mutual benefit, not only to ourselves and to Europe but also to the Commonwealth, but, should they fail, it seems to me to be absolutely vital that we have a plan for Commonwealth expansion. I find it difficult to discover how we can really bring Canada into some sterling area agreement. Unless the £ can be made fully convertible—and it may take some years yet—I believe that we may have to come to some bilateral agreement with Canada.

I hope that my hon. Friend will consider three main points in the preliminary discussions for the forthcoming Commonwealth Finance Conference. I agree with my hon. Friend the Member for Essex, South-East (Mr. Braine) and others in saying that where we can expand existing agencies it is very much better than creating some new body unknown to this country and other Commonwealth countries. I hope that my hon. Friend will consider a Commonwealth development bank, whether it be an expansion of the Commonwealth Development and Finance Company or a new organisation. Secondly, I hope that he will consider a raw material stabilisation pool; and, thirdly—and taking a long view—that he will think out what should be done in the development of the Bank of England itself.

Over-riding all these things, of course, is the importance of a stable £, because we are the world's greatest debtor although we do nearly half of the world's trade, and by our membership of the European Payments Union, we have brought the whole of Western Europe into our sterling area trade. To that end, savings in this country are absolutely vital. No institutions, of themselves, produce new savings.

I turn, first, to my last suggestion, namely, the development of the Bank of England. For some years now I have been worried as to whether the dollar-producing emergent States, such as Ghana, Malaya and Nigeria, will not, one day, wonder whether they would not do better by having their own gold reserves, as South Africa has, and by hiving themselves away from the sterling area. I think that they may do that, unless they are brought more into the general consideration of the financial policy of the sterling area.

It is only fair to add that in the past we have not invested their own funds particularly well. Those Commonwealth countries find themselves with depreciated, medium-term Government stock which can now be paid back only at a discount and in depreciated pounds. I have some sympathy with their fear of what may happen in the years to come, but if we can get a bank of the sterling area let us have it. If it is not feasible, at least let the heads of the central banks of the Commonwealth meet regularly, in London, say, first of all, and then in the various Commonwealth capitals. Let them operate as O.E.E.C. has operated. Let them be given a job constantly to consider what should be done to strengthen the sterling area as a whole, which is responsible for so much world trade.

If we could get a bank of the sterling area, I believe that we should go to the creditor countries and borrow even further—get a big stabilisation loan so that the world as a whole would no longer fear that we should have some financial crisis every other autumn. If we did as I suggest, we might have to say that the loan would be paid back either in gold or at some agreed figure based on a retail price index. I have no fear of doing so, and something like that may have to be done if we are to prevent some financial crisis every other year or so.

I am proud of sterling's position and what we have done for world trade, but sterling must be a store of value as well as a medium of exchange. It is interesting to note that, in millions of dollars, the value of world trade has gone up from 27,000 in 1937 to 98,000 in 1956, but that world gold reserves have gone up only from 25,000 to 37,000. The balance of the increase has really been carried by the foreign exchange reserves, which have risen from 2,000 million to 23,000 million dollars. It is the growth of the sterling balances, most of them held here, which has helped in that world trade expansion after the war.

I come now to the suggestion for a Commonwealth development bank. The right hon. Member for Easington asked what we wanted. There is much to be said for having a Commonwealth Paley or Gordon Commission Report comparable with what the United States of America and Canada have had. If we do plan, let us plan away from the purely political field, basing ourselves on economic considerations. I have often been worried that Colonial Development and Welfare Fund money has not really been accepted fully as coming from this country. I believe that the World Bank is largely, and wrongly, thought of as an American organisation.

Therefore, even though there are no extra savings, there is much to be said for a Commonwealth development bank which can borrow marks from Germany or dollars from the United States and channel the money into the various territories of the Commonwealth which so need development and cannot themselves go to the World Bank without an independent guarantee from the metropolitan Powers.

I am glad that the World Bank has recently lent large sums of money to Nigeria. The United Kingdom has guaranteed the Nigerian credit, but that, no doubt, will be forgotten, if it is ever known. I believe that if we can go, as a Commonwealth, to the creditor countries and put the credit of the Commonwealth behind the loan, the money so badly needed in many places will be forthcoming. We could do it on a Commonwealth co-operative basis. What struck me so forcibly in my visit to West Africa last autumn was that the politicians and businessmen and even those with plantations wanted the "know-how" of Britain or, at any rate, of the Commonwealth. They did not really want to go to the United States. Yet, for lack of money, they may be forced to do so.

My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) has already touched on the suggestion that there should be a raw materials semi-stabilisation pool. Confidence in the £ is vital, but trade between the raw material producing territories and the food producing areas of the Commonwealth is vital to this country too. We have seen violent fluctuations, especially during the Korean war period. Our export trade in the near future may well suffer. I believe that a third of our imports consists of durable or convertible commodities, and there is much to be said for the Grondona plan. At first, I was rather sceptical. I thought that it would cost very much to store the commodities and that it was merely another device to keep prices unduly high for the producers. I am not at all sure that that is so. An able economist like Mr. Harrod supports it.

Provided that one could have wide commodity price points somewhat similar to the very narrow gold points on which finance was based for many decades, and provided that one did not reserve too many blocks of commodities at a high price and keep them for too long, the scheme has much to commend it, especially if it be organised by a corporation as independent from politics as the judiciary is in this country. The free play of the ordinary market could still go on between the two commodity points. Anyhow, I hope that my hon. Friend the Under-Secretary of State will look at the scheme again and bear in mind the comments which have been made on it. The Federation of British Industries Review is in favour and so is the Manager, which says that, when these ideas are looked at, they will mark the beginning of an era as surely as did the introduction of the gold standard. To my great surprise, I find Tribune and the Director in agreement. Tribune says: This devastatingly simple scheme … is so attractive, and the benefits from it could be so great, that it ought to be taken off the drawing-board and referred to the workshop—in this case the House of Commons. The Director said: Here is the bold outline of a programme for tackling one of the root causes of booms and slumps—the problem of unpredictable costs of standard raw materials, which frustrates intelligent budgeting and imparts a destabilizing palsy to the flow of trade and international payments. This is no crackpot scheme. It is a brave attempt to heal one of the most glaring maladies of the free world economy. I hope that my hon. Friend will ensure that his Department considers very carefully the pros and cons of the scheme.

When all is said and done, even if we borrow from abroad, we must save a great deal of money ourselves, and the probability is that the £200 million on which we base some of our plans is not nearly enough if we are to develop the Commonwealth as it should be. The sum may well have to be much nearer £400 million. But what a goal at which to aim, and what a prize at the end!

5.58 p.m.

Mrs. Eirene White (Flint, East)

There have been comments on the relatively small attendance at a debate on such a very important subject. There is one explanation which has not yet been advanced, a very simple one. This is the fourth debate we have had in eighteen months on the subject of Commonwealth development, though, admittedly, one was very brief at the end of a Friday afternoon. On each occasion, we have had proposals put forward from the back benches opposite and from both Front Bench and back benches on this side of the House. On every occasion, there have been such douches of cold water from the Government Front Bench that it is not really surprising that hon. Members interested in these matters have become a little discouraged.

Eighteen months ago, the hon. Member for Harrow, West (Sir A. Braithwaite), who takes a keen interest in these matters, initiated a debate and made various suggestions, including that for a Commonwealth Development Corporation. This Commonwealth Development Corporation that he envisaged should have £300 million per annum for investment in basic services alone. He was not thinking then of commercial investment or manufacturing investment.

That, perhaps, was being a little over optimistic, but a large number of proposals have been put forward, virtually none of which has found favour with the official spokesmen for the Government. Several of them have been mentioned again this afternoon—for instance, the question of a Parliamentary Report, which the Under-Secretary told us on a previous occasion was not necessary. We have had suggestions from the hon. Member for Maldon (Mr. B. Harrison) for a Commonwealth loans council to settle priorities in a more elaborate way than the Capital Issues Committee and the Treasury do at present. We have had suggestions for a Commonwealth bank. The Prime Minister has made a gesture in that direction.

Perhaps it is significant that the right hon. Member for Flint, West (Mr. Birch) is no longer in the Treasury, because he demolished that idea from the Government Front Bench not so long ago, pointing out that we were the only net exporters of capital in the Commonwealth and, therefore, it would be pointless for us to have a Commonwealth bank. I have abbreviated his argument, but that was the crux of it. Although the Prime Minister may have given a friendly wave of the hand in the direction of this idea, I doubt whether the Treasury officials—who probably have the last word, anyway—have changed their minds considerably.

We have had references to the problem of commodity control. The party opposite reject bulk buying entirely, but desire to have semi-stabilisation. A semi-stabilised commodity seems to me an odd conception. The party opposite now recognises, as we on this side have long recognised, that this is one of the crucial matters not merely for the Commonwealth, but for primary producers everywhere. Yet, apart from sugar and tin, the Government have so far failed to produce any positive policy of their own, or even, as the right hon. Member for Thirsk and Malton (Mr. Turton) pointed out, to have reached a proper understanding with the United States on this extremely important matter.

These are just some of the suggestions that have been made in previous debates which the Government have simply thrown aside as quite impracticable. I shall be surprised if the Under-Secretary produces a more positive policy than he or his colleagues have done on previous occasions.

There are further difficulties in this matter. The Amendment notes with approval one of the matters referred to at the Commonwealth Finance Ministers' Conference last year, namely, arrangements for continuing Commonwealth consultation. As my right hon. Friend the Member for Easington (Mr. Shinwell) rightly remarked, no amount of machinery will be very effective unless we know what we wish the machinery to do. In other words, we must have a much clearer idea about the policy that we want to pursue before we turn our attention to matters of machinery.

This is where I find the position of the Government extraordinarily difficult to understand, because in the points put forward at the Finance Ministers' Conference, at Mont Tremblant, two statements were made which are to a certain degree mutually contradictory. They wish to adopt measures—presumably special and exclusive measures—for the expansion of Commonwealth trade, but also to progress towards the common objective of freer trade and payments.

This dilemma is very obvious among hon. Members opposite. They are trying to pursue to some extent two mutually contradictory aims. One is to have a planned economy. As far as the Commonwealth is concerned, hon. Members opposite seem to be prepared to swallow a certain amount of planning which they are unprepared to swallow in our domestic economy. But, at the same time, the policy of the Government is to be as non-discriminatory as possible and to go with the tide of freer trade all round. That includes not merely trade, but free movement of capital.

These two things are, after all, to some extent mutually contradictory. I think that it is partly for this reason that the back benches opposite find themselves in such an uncomfortable position in these debates. Further than that, of course, the economic and financial policy of the Government has, in general, made our relations with the Commonwealth peculiarly difficult. In the last few years, under Tory economic policy we have seen a dissipation of our national assets on conspicuous consumption, as the economists call it. We have exported our high-interest rate and the credit squeeze, and anyone who has followed, for example, the comments of the gentleman who was recently the Finance Minister of Kenya will realise how people in the Commonwealth have been up against great difficulties owing to the failure of the Government's economic policy at home.

As the hon. Member for Wavertree (Mr. Tilney) pointed out, one further consequence of the Government's economic failures has been the depreciation in the assets of the Commonwealth countries who keep their sterling balances in this country. It may well be that when the dated stocks mature the countries that are free to do so will decide to transfer those assets to other places where they feel they may do better. All these factors militate against the kind of positive economic organisation for the Commonwealth which some hon. Members opposite would like to support.

But we have other dilemmas. It is no use, as my right hon. Friend the Member for Easington emphasised, setting up machinery unless we know what we wish to do. I should like to draw attention to one matter which my right hon. Friend also touched upon, and that is the question not merely of trade but investment in the Commonwealth. Certain types of investment are not necessarily immediately beneficial to this country. One of the difficulties over recent investment in the Commonwealth during the last few years is that some of the £200 million that we hear so much about has been invested by private investors in this country in ways which are questionable if we consider the advantage to the United Kingdom.

First, as we have pointed out again and again, that £150 million or £200 million, whatever the figure is, has largely been invested not in the under-developed parts of the Commonwealth, but in the relatively developed parts—for instance, Australia, New Zealand, Canada, and Southern Rhodesia, which is, at least, more developed than other parts of Africa. This investment has not all been going towards raising the standards of living of those whose standard of living is lowest. The proportion which has gone towards that purpose is very small. Further, some of this investment has been going into secondary industries in these countries, which, I do not deny, is of benefit to those countries.

However, we must be honest with our own workers at home and make sure, if this kind of investment is encouraged by the party opposite, that we know what we are doing. While the Overseas Development Corporation taxation reliefs, which have been welcomed so heartily by hon.

Gentlemen opposite, may be beneficial to the type of investment that I have been discussing, particularly in secondary overseas industries, it may not necessarily be directed to our advantage in the narrower sense.

I have been reading, as I dare say other hon. Members have, a useful Penguin publication written by Mr. Andrew Shonfield. It is an admirable book to read on one's long train journeys at weekends. He graphically points out: If, each time we lose an export market because of local competition our answer is to devote more British capital to investment in the up and coming industry abroad, we shall end up with a lot of very rich individual British investors and our productive capacity enfeebled to the point where we are incapable of selling anything of our own anywhere in the world against foreign competition. No doubt the investors will then decide to emigrate, because this country has no future. That may be putting it in a rather exaggerated way, but there is this substantial argument about asking ourselves whether the kind of investment in the Commonwealth which has been much the largest proportion of our investment in recent years is really what we in this country consider desirable. Mr. Shonfield is right at least in this degree, that it no doubt benefits individuals in this country but that it is questionable whether it benefits us as a whole.

It does not do us any good merely to talk in a sentimental way about the bonds of the Commonwealth without being quite certain what we are trying to do. Our economies in the Commonwealth are not entirely complementary—it would be all so much simpler if they were; but there is no doubt that there are some things which would benefit us in this country which are not necessarily of benefit to other countries in the Commonwealth, and vice versa. That applies also between other Commonwealth countries in their own relationships.

Therefore, we must decide, for one thing, just how far we want the Commonwealth to be regarded as a self-supporting entity. The philosophy behind the Ottawa Agreements was that it was worth while trying to have a fairly tightly-organised system of Commonwealth trade. As I said earlier, the policy of the present Government, in spite of the fair words of the President of the Board of Trade the other day, goes completely contrary to that conception.

I do not think that the Government are in harmony with their own back benchers—or, at least, a certain number of them—on this issue. There are a number of back benchers opposite who would like to revert, as the right hon. Member for Thirsk and Malton said openly, to a much more closely-knit system of Commonwealth trade, presumably because they regard relative self-sufficiency in the Commonwealth as a desirable aim. There is, I believe, considerable confusion in the country on this question of how far it is either desirable or possible for us to establish ourselves as a self-sufficient entity.

There is not only the question of the dollar countries—the United States and Canada—but we are now working on schemes of integrated trade with Europe. They do not at present seem to be making much progress, but the fact that we are so doing has led to much confusion of thought, both here and among other members of the Commonwealth. They want to know exactly what Her Majesty's Government are aiming at and whether we have abandoned the idea of a relatively self-sufficient Commonwealth.

If we still wish to pursue that idea, have we weighed up the cost and do we think that it is worth it? If we regard it as worth while, what is our reason? In several ways, looking at it from a purely economic viewpoint, it is not worth it. We might do much better on the Government's plan for having freer trade all round.

Are there certain imponderable factors in the Commonwealth which make it worth our while going against some of the laws of supply and demand in a free trade world? If so, exactly what are they? Our strategic position has changed considerably and it is at least doubtful what would be the political results of following this kind of exclusive economic system. Therefore, we are having several voices in debates of this kind and we are not all clear about where we are going.

On this side, too—I will be quite frank—we have differences of emphasis in our policy, although they are not quite the same as those among the party opposite. For one thing, because we are a party which believes in economic planning and in priorities and in some kind of mastery of our resources, we would, naturally, favour as part of our general philosophy an attempt to direct investment, for example, not into the direction in which it is necessarily the most profitable for individuals in the purely financial sense, but in which, as far as we can judge, it would do the most good to the largest number of people. That is all part of our general outlook.

Also, as a party, however, as Socialists, we are internationally minded. For us, the dilemma is much more between trying to use international agencies as against Commonwealth agencies than the sort of dilemma which is so apparent in the party opposite. Our natural instinct, as Socialists, would be to say that we would support first and foremost international agencies, particularly, of course, United Nations agencies, and a number of my hon. Friends would, I think, like us to put a good deal more emphasis on S.U.N.F.E.D. and various other agencies of the United Nations than has been done hitherto; but if that is our view, we have to ask ourselves whether we believe that that method of using our relatively scarce resources, especially for investment, is likely to lead to the most desirable results.

One of the difficulties about the United Nations organisations is the diffusion in responsibility, both in democratic answerability and also for anyone in this House, for instance, to question the line of control. It is not at all easy to surrender one's initiative and control to such a large and, in some ways, amorphous body as the United Nations. That is something which we find rather difficult.

Then, there are other international organisations, including, for example, the International Bank. This is not in theory an American institution, but the hon. Member for Wavertree was quite right in suggesting that it often gives the appearance of being so. As the United States is the major shareholder, it is natural that in the international organisations which have grown up since the war, the United States has had perhaps an undue influence. If, therefore, one is putting one's eggs in the international basket, one has to recognise that certain difficulties exist.

I myself have found, speaking in my constituency and elsewhere, that, if it is put clearly and fairly, people will except the fact that we can make a good case for further investment in the underdeveloped areas of the Commonwealth because that will benefit us, but also because it is our social duty, our Christian duty, if hon. Members would like so to call it, to do so. I think that we ought to do it to a far higher degree than we have done it already, but that if we are to do that we must accept the implications and we must will the means.

I do not think that we have been particularly successful in our economic organisations. We have done one or two good things. Colonial development and welfare, for what it is worth is, of course, excellent, but it does not go all that far. Then there is the Colonial Development Corporation, but the Government have clipped its wings. In the Commonwealth, in general, there is some disappointment that relatively small results flow from our debates here, after the high-flown phrases that we are apt to use in this House.

I should like to think that that will not be true of this debate. I hope that the Under-Secretary of State has a really sterling speech to deliver to us, with a large number of positive proposals. I hope that I shall not be disappointed, because I was very much interested to read the comment which was made by a statesman from one of our smaller Commonwealth territories the other day, in which he said: Great Britain, sad to relate, has never succeeded in laying economic foundations that are as sound and secure as the political foundations which she has substantially help to evolve in her overseas possessions. I maintain that in spite of our bias towards internationalism, nevertheless there are some very practical advantages, which we on this side of the House for the most part recognise, in developing our Commonwealth institutions and our Commonwealth economic planning in particular. If we do that, however, it is essential that we should have not only the adequate machinery, but also adequate funds, and an adequate public understanding of why we need those funds and the purposes for which we are using them.

I believe that a very fair criticism, and we should like today to have from the Government a statement which marks a real step forward, and not merely a succession of platitudes or of reasons why the Government are unable to adopt any of the suggestions which have been made in this debate.

6.23 p.m.

Mr. Charles Fletcher-Cooke (Darwen)

The hon. Lady the Member for Flint, East (Mrs. White) has put her finger on one or two of the dilemmas which underlie the thick fog of sentiment and high-flown phrases which inevitably obscure a good deal of a debate of this sort, and I shall, in a short speech, seek to probe one of those dilemmas a little further.

I suppose that what we are doing today is suggesting a sort of agenda, or shopping list, for the Montreal Conference. Certainly, it seems to be already a more promising conference, with a better agenda, than the other great international conference, which is not getting on so well. Already, it has been suggested in the shorthand that experts who take part in these debates know so well that the works of the gentlemen called Paley and Grondona should be on that agenda. I have another, perhaps more abject suggestion, but one which I certainly intend to put.

The right hon. Gentleman the Member for Rochester and Chatham (Mr. Bottomley) said, and said rightly, in his speech that members of the Commonwealth at Montreal must be treated on terms of complete equality. Those were his words. That is absolutely right, but that, of course, works both ways, and terms of complete equality should work in the modern world of 1958 with these great self-governing Dominions, sometimes to our advantage in the United Kingdom and to their disadvantage.

Of course, what I have in mind is the complete lack of mutuality in tariff and quota arrangements between, for example, India and this country, and many other members of the Commonwealth. It is absolutely wrong that we should cling to a shibboleth—for so a doctrine which has been outdated by events becomes—that although other members of the Commonwealth may put tariffs and quotas against our goods, we may not put up ours against theirs.

I speak with feeling on this matter, coming from a constituency in Lancashire. It does no good to the idea of Empire if, as in my area, the words "Empire made" become dirty words. Yet it is true. Anything marked "Empire made" is rejected by millions of people in Lancashire as something which no right thinking person should buy. It is a terrible state of affairs, and it is simply because, in my view, we have not done in the past what the right hon. Gentleman the Member for Rochester and Chatham adjures us to do, that is to say, treat members of the Commonwealth on terms of complete equality.

The right hon. Gentleman says, rightly, that we cannot expect Ghana and New Zealand to value the Commonwealth link if present arrangements work to their economic detriment. I say the same about Lancashire. We cannot expect Lancashire to value the Commonwealth link in present economic circumstances. All that Lancashire asks is for mutuality in this manner in relation to India and Pakistan.

I should be very wrong if I were to say anything to prejudice the negotiations which are at present going on in this matter. But, as the hon. Lady the Member for Flint, East, so rightly said, with these secondary industries in countries as they develop, and rightly develop, this problem not only affects Lancashire but is also affecting a great many other constituencies all over the country, and it will grow.

I remember going over a boot factory in Rhodesia last year. There, they were making pairs of shoes with labour which was so cheap that they were considering breaking into the British market. They could beat the freight, and, of course, there was no question of any tariff, because that is forbidden by our strange rule that although they may tariff and quota us, we cannot do the same to them.

That has not yet happened, but it will soon. It is ridiculous to think that these people can never make objects requiring skilled labour. They can, and they are doing it very fast, and they are very agile at doing so, and rightly so. I therefore beg hon. Members on both sides of the House to take this problem seriously, and not to think that it is somehow a purely sectional or local affair. It is not. The growth of secondary industries in the Commonwealth will not, in my view, permit for long the preservation of unilateral discrimination against the United Kingdom.

Mr. Raymond Gower (Barry)

Has there not always been the danger for great imperial countries, Spain, for instance, that if they are intolerant of the growth of secondary industries, or any other industries in their territories overseas, they ultimately either crush those territories or tempt them to break away?

Mr. Fletcher-Cooke

I think that that is so, but nothing I have said, I hope, conveys the idea that I am intolerant of the growth of these industries. What I am saying is that these industries, like industries in other parts of the world, should enter trade on a fair basis, and not a privileged basis, as is now happening. It is undoubtedly true, that, although our textiles in India have to surmount a tariff, Indian textiles surmount no tariff here. That is the point which I wish to see raised at Montreal, and I hope that it will be high up on the agenda.

Major H. Legge-Bourke (Isle of Ely)

I am obliged to my hon. Friend for giving way. Is he not overlooking, in what he is saying, the enormous difficulty there is for us to alter any of the local arrangements we have, so long as we are bound as we are by the General Agreement on Tariffs and Trade? While I am entirely in sympathy with the argument he is putting, I would ask him to face up to the consequences of doing that. Once we alter the Ottawa Agreements, we must alter G.A.T.T.; and once we alter G.A.T.T. we must alter Ottawa.

Mr. Fletcher-Cooke

That may be true, but I am not at all sure that either G.A.T.T. or Ottawa forbid us to do to Indian cloth what the Indians do to our cloth. I do not think that they do. It is because of the Government's rigid rule. At least, they say it is rigid, but if we quote it at them, they often have to admit that there are exceptions. All goods produced in the Empire and Commonwealth shall be duty and quota free. The strange part is that, for reasons which have never been made perfectly clear, although that applies to cotton, an exception is made in the case of man-made fibres. These man-made fibres are coming in at present under some sort of quota or restriction, but not tariff, and, since the sacred rule has been broken now, without, apparently, any serious result to the Commonwealth, why cannot it be rescinded entirely?

I hope that my hon. Friend will not think that this is merely a sectional and constituency point. It is, of course, a constituency point, as he knows, but it affects a great many constituencies and it is affecting more and more and will continue to do so as time goes on. It must be thrashed out at Montreal, and I therefore beg the Government not to think that it will be somehow unkind or disagreeable to raise this rather discordant note at Montreal.

My hon. Friend the Member for Essex, South-East (Mr. Braine) put his finger on the right approach when he said that we are in favour of Imperial Preference not because of tradition or sentiment, but because we know that this great consortium of nations can only keep together and be kept together by mutual ties of self interest. That is absolutely right. Although sentiment and tradition carry one on a little bit, and, certainly, in the case of New Zealand, tradition has carried us a good way, as we have heard from my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) this afternoon, nevertheless we find these words "Empire made", which should be proud words, being regarded in other parts of the country, and not merely in Lancashire, as words to be condemned. That would be the most terrible result of an attempt, no doubt well-intentioned, by the Government to do the wrong thing for fear of offending the new self-governing members of the Commonwealth—India and Pakistan.

So far as we can discover, it is not at present so much a case of the persons concerned in India and Pakistan who are causing the trouble, as those concerned in Hong Kong, and there rather different considerations apply. It is said that we are trustees and that we can do nothing to prevent the immense growth of the Hong Kong textile industry, because a trustee must look after its beneficiaries even at the expense of itself. That is the doctrine. There is a good deal in that, but my answer is this. It is a bad trustee who over-encourages its beneficiary into so developing itself in one direction at the expense of a more balanced economy that, in the end, that beneficiary becomes so dependent on a state of affairs which, in fact, grows to be intolerable.

Whatever the rights and wrongs are, sooner or later it will become intolerable for the geometrical progression of increase for Hong Kong imports into this country, which have been doubling or trebling every year. It would be much kinder to Hong Kong to set a limit now, when we know that we have to set a limit some time, and for them to do it now, because it will mean that the gentlemen who escaped from China who are doing very good work now in Hong Kong, will realise that there is some limit to this matter.

If it is not done now, it will be unkind to them and to the people of Hong Kong, because it will have to be done at some time, and the later it is done the harder it will be for them, because they will have erected more spindles and more looms and will have invested more capital and will have a grievance that they were not told sooner.

It is no good the Government saying that they hope to do this by voluntary agreement. We do not get agreement, particularly with able businessmen like the Chinese—and these people in Hong Kong are very largely refugees from the mainland—unless we have some cards to play. If we embarrass ourselves by saying that in no circumstances will we take Government action, we shall not get voluntary agreement. I beg of my hon. Friend the Joint Under-Secretary to help the negotiations which are going on now by saying, if he can, that we do not rule out some sort of Government action in this matter.

We must have that card to play if these negotiations are to proceed, and, in any event, this is only one-seventh of the iceberg that shows above the water. This raises acute questions of principle, and it seems to me it must be discussed with our friends at the great Commonwealth Conference in September, along with all those broad matters dealing with raw materials and primary products, which so far have dominated the debate. These are all bigger matters, and different considerations apply, but, in the enthusiasm for the plans that have been adumbrated this afternoon, do not let us forget the secondary industries and the problem which the emerging Commonwealth faces—that it must no longer be regarded as the providers of food and metals for the United Kingdom. Do not let us forget that the problem of the secondary industries is one which, sooner or later, will affect every hon. Member of this House.

6.39 p.m.

Mr. James Johnson (Rugby)

We have just listened to a sombre speech from the hon. and learned Member for Darwen (Mr. Fletcher-Cooke), to which we listened intently, because it was practically full of solid meat—in fact, harsh medicine—but it will find an echo in Yeovil and Leicester, besides the County Palatine. indeed, one could mention many more items, such as Pakistani sports gear, if one cared to have a catalogue of the articles involved, but this is something that should be discussed in the future, and will have to be discussed at the Commonwealth Economic Conference in the coming autumn.

I want to turn to the more cheerful speech of the hon. Member for Maldon (Mr. B. Harrison). The hon. Gentleman is a happy example of what we all wish to see. What could be better than to have an Australian moving this Motion? A Canadian is also sitting on the benches opposite, and we might have had five other Canadians here. One of the things that I should like to see also discussed at Montreal is not only the movement of capital and goods, but the movement of bodies, to which I shall return in a moment. I wish there could be a much freer exchange of human bodies, as well as car bodies. I want to see other people, besides Canadians and Australians, sitting in this House. How much better we should be able to discuss Imperial affairs if we were an international body, with some intimate knowledge of what happens overseas, instead of flitting lightly, as some of us do, to Kenya and Somaliland, and returning here and posing as experts on the subject. So I hope a wide variety of subjects will be discussed at the important conference in the autumn.

If the Government's attitude is any indication of what they will do there, it is not very helpful, is it? We have only one junior Minister sitting on the Government Front Bench. We have had dusty answers time and time again, and I hope that, as my hon. Friend the Member for Flint, East (Mrs. White) has said, we shall get something with a little more meat in it when the Minister winds up the debate.

The hon. Gentleman for Maldon was not hopeful. He did not say so, but his attitude gave me the impression that the Government were "slap-happy." The words he used were characteristic of a good natured Australian. He spoke of "typical British informality" characterising the whole of our dealings over the vitally important matter of Commonwealth affairs. That is not good enough. I speak as a Commonwealth man; if I may use the term. I speak as an "Expanding Commonwealth" man. I want to see more and more expansion and less and less of what has been happening during the last four or five years, as shown by the devastating statistics given by my right hon. Friend the Member for Rochester and Chatham (Mr. Bottomley).

It is no use saying that this trend is coincidental in happening during the period when the Conservative Party has been in office. There has been a diminishing amount of commerce and trade with our Dominions, and the Government had better try to explain that at the end of the day. No back benchers of either side like it, and this is the fourth debate during the last eighteen months in which we have talked in this vein. We hope the Government will think hard about this and about getting a hardworking, deep-thinking committee in action. I am thinking of an organisation for Commonwealth economic co-operation like the O.E.E.C. which was started in 1946 and has done a wonderful job on the mainland of Europe. Why should not the same examination of the problems and the same kind of first aid in stages be given to parts of the Commonwealth?

It is important to export not only cars and textiles but human beings, who provide invisible bonds. I am in no way an Anglo-Saxon snob, but I think we have given other parts of the world something which no other empire has given. We have given justice and incorruptibility through our district commissioners and officers. We have given impeccable standards of scholarship in our university examinations. Those who attend our universities and pass our examinations return overseas with diplomas and certificates which show that they have some idea of engineering or medicine. Although these things are intangibles, they are immensely important.

We are evolving politically very fast. As Lord Chandos has said, it is no use giving people their political liberty if we do not give them the economic foundations on which to expand their future political development, and we have not done that in many cases. I need not refer to the shabby tale of C.D.C. and other agencies which lapse as soon as a Colony becomes self-governing. We must do much more in this respect if we wish those concerned to cleave as close to us as they have done in the past, because there is no doubt that if we do not do it, somebody else will. There will be economic chaos, and Nasser may come along with his particular type of mischief. There may be other Powers concerned. Although I love the Americans individually, I do not particularly love "Coca-Colaisation" either of the Aden Protectorate or of any other part of the Commonwealth. I like to work with Americans but I hope that we shall not have too much Americanisation or any other "isation" of the Commonwealth.

A lot has been said about the agenda of the Commonwealth Conference and what we should do there. As I have said, we must export other things than capital, although that is difficult enough. The Under-Secretary of State, like myself, is a member of the Overseas Migration Board, and I hope that the export of people will be discussed at the Conference, or perhaps I should say the overseas movement of people to the wide Dominions. They need the Scots, the Irish and the Welsh. Scandinavian and Dutch people can go, but there are difficulties of language in the case of the latter. I want our people to go to the Dominions.

I ask the Under-Secretary to assure me that if anyone talks on this point at the Conference, he or his colleagues will say that, while we want Anglo-Saxons and Europeans to go to the white Dominions, we are not too happy about them as settler farmers in the African States. I urge the hon. Gentleman to realise the delicate situation which arises when white men or Europeans go to mixed or plural societies and settle down upon the land. The hon. Gentleman knows where I stand on the subject of the future of the Commonwealth, but this is a ticklish situation and the fewer Europeans who go in as new settlers on the land, the happier things will be in two, five or ten years' time when political constitutions have to be settled.

Where are we to got closer co-operation? We have heard the inspiring speeches of Mr. Diefenbaker. The Canadians would say "yes" all along the line, but it is sad that he, and not we, had to begin the two-way economic interchange of getting together, of collaboration, of swopping ideas and getting down to the job. Mr. Diefenbaker sent his own mission, under Mr. Gordon Churchill, to the United Kingdom, and now we are sending a high-powered team back. I am glad to know that the chairman is one of my constituents—Sir William Rootes, head of the Humber-Hillman works. Sir Vincent Tewson, head of the T.U.C., is also one of this first-class team. Why have we not sent one before, and why cannot we have more? It is rather late in the day, and the Canadians have had to tell us how to set about this kind of thing. However, we wish them luck, and what Mr. Diefenbaker has said about the economic position will be echoed by other leaders, particularly West Indian leaders.

For far too long the Canadians have been too dependent upon the Americans. They do not wish to have investment of American capital to the preponderant extent of 85 per cent. There are 15 million Canadians, they have at least 5 per cent., if not 6 or 7 per cent., of the entire commerce and trade of the world, and they would like to trade more with us. At the moment about 6 per cent. of their trade is with the United Kingdom, and they would like 15 per cent., if they could get it.

What I have said applies also to places such as Liberia. There is no State today which wishes to be too wholly dependent upon one giant economy such as that of the U.S.A. Nor does anyone want to be dependent on the U.S.S.R., the other great giant. These nations would like to have more commerce with Western Europe, particularly with ourselves, and to be more independent of the two colossi who are dominating the world between them.

What Mr. Diefenbaker has said is being said by dozens of colonial and other overseas leaders. Africa needs, and, I hope, will get, what South-East Asia has got, and I beg the Government to pay some attention to developing a "Colombo Plan" for Africa. Why cannot Africa have a scheme similar to that for South-East Asia? The United Nations have begun to move for an economic commission for Africa. Africa is the Cinderella of the Commonwealth with 200 million people, 95 per cent. of whom, if we take out the Europeans, have empty bellies. We have all heard about the malnutrition in different parts of the globe, but what these people need is capital pumped into their society to give them an economic foundation on which to build their social services. They will not have their schools, hospitals and housing unless we help them to provide this development.

It is no coincidence that Kwame Nkrumah, feeling thwarted and frustrated about the Volta Dam project, has called his own independent African conference which will be attended by the Ethiopians, the Algerians as observers, the Liberians, Egyptians and Sudanese and other independent African peoples. Development is their crying need, whether they are in or outside the Commonwealth. If we let them down, they will move of their own volition and attempt to get the capital help themselves.

Reference has been made to a Commonwealth Economic Committee, and the hon. Member for Essex, South-East (Mr. Braine) supported that view. We have had no economic survey of the Commonwealth to link up with the findings of the Paley Commission in the U.S.A. Some of the Paley Commission's figures are startling. They would have startled me if I had been an American, but they invigorate me as one who wants to develop the Commonwealth as it should be developed, because they show that the United States vitally needs the Commonwealth's assistance.

In 1975, demand for tin in the United States will have increased by 20 per cent.—America is already tin deficient and imports most of its needs—demand for zinc will be up by 40 per cent.; copper, 45 per cent.; lead, 55 per cent.; sulphur, 110 per cent.; phosphates, 150 per cent.; bauxite, 290 per cent.; titanium, 300 per cent.; cobalt, 345 per cent.; and magnesium, almost 2,000 per cent.

That is the extent of the deficiency facing the United States. We can meet that deficiency if we get together and develop the Commonwealth, particularly Africa, where so many of these metals are to be found. The U.S.A. will be not a surplus but a deficit nation in less than twenty years. It will be for the mutual benefit of the English-speaking world if the Commonwealth and the United States team up to develop the Commonwealth, and it will also be of immense benefit to under-developed territories. It is imperative for the Western world that we should have this much closer collaboration between the United States and the Commonwealth.

I said earlier that I wanted an organisation like O.E.E.C. If half-a-dozen hard-working and intelligent men could get together in Paris ten years ago and build up what they have built in O.E.E.C., then, when there is much more good will, it should not be too difficult to build up a similar organisation for the Commonwealth. At the High Commissioners' offices in London we should have qualified and devoted assistants or officers attached, economists like those who went to Paris ten years ago, whose job it would be to plan and to suggest what policy should be undertaken by the Dominions inside the Commonwealth. Those officers would form a sort of "thinking box" which the Government need so badly.

Over all that, of course, is the need to put the sterling area into balance with the rest of the world. If we were honest with each other, we should admit that we were "living on tick" and that we had been "living on tick" since the war—I excuse neither party. We have been living on the sterling balances earned for us, mainly by Malaya and West Africa, from tin, rubber and cocoa. Those countries now need much more as Dominions than they did as Colonies, because when they attained independence they lost C.D.C. and C.D. and W. help. Now is the time when they need some of the benefits of those balances which they handed over to us so willingly to help us in our difficult economic situation after the war. I should have thought that it was axiomatic that we should help them after they have helped us.

I want to quote a letter which I had this morning from a well-informed and very thoughtful Pakistani. He said: The falls in raw material prices have badly hit the three Asian members of the Commonwealth and also such members like New Zealand and Rhodesia.… Unless rest of the Commonwealth, and particularly Britain, now comes to their aid their difficulties will he enhanced. He went on to say: High bank rate and similar restrictive policies have been responsible for retarding production over here and also limiting purchases by British firms of raw materials and minerals from the Commonwealth. These restrictive policies have also tended to prevent the export of British capital to the Commonwealth. The wisdom of asking countries like India and Pakistan as much as eight per cent, interest on the sterling loans they are seeking for development is questionable indeed. There are other examples of the difficulties which loyal members of the Commonwealth have experienced because the internal policies of this country and the domestic difficulties which have developed from the dear money policy of the Government.

The hon. Member for Essex, South-East referred to a loan council. It is a good idea, and it should be possible to obtain money for this work. I can see no objection to setting up a Commonwealth bank which did not confine itself simply to raising money on the City of London market. Why could not such a bank in London use West German money to finance development plans in an expanding Commonwealth?

All the speeches from hon. Members opposite have been in favour of expansion and not in favour of the Government policies which are "constriction" and "restriction" and "running down." Speeches from the Government side of the House have had the tones and accents of speeches from the Opposition. The Under-Secretary is smiling, but he knows that has been so. He has been able to hear them as well as I have. Hon. Members opposite have used the terms of the Labour Party's Annual Conference resolution and have said that loans must be made available as cheaply and as conveniently as possible to our sister Dominions overseas.

Conservative back benchers do not want a dear money policy when they talk of helping Pakistan and Central Africa. They want to help those countries as easily and cheaply as possible. It is in our mutual interest to get our Dominions going ahead. The Minister will have to face the fact that he is not merely answering hon. Members on this side of the House, because, in what I hope is a bipartisan atmosphere, hon. Members oppo- site want to help the Commonwealth to develop.

I wish to end with an extract from another letter which may make the Minister aware of the political danger. I said earlier that other people will come into the vacuum which will be created if we do not do our job, particularly in Africa. This is what I am told about the situation in Asia where we are not giving financial and economic help. My friend writes: Russians are alive to this situation and are doing their best to exploit it. Although until now they restricted their assistance to neutral nations like India and Egypt, the Russian and other Communist nations are even now making offers of economic aid (on very favourable terms) to pro-Western nations like Pakistan. The West must react to this in a bold and imaginative manner. I only hope that the Minister will react to our debate tonight in a "bold and imaginative manner."

7.1 p.m.

Mr. W. T. Aitken (Bury St. Edmunds)

I am glad of the opportunity to follow the hon. Member for Rugby (Mr. J. Johnson), because I wish to point out to him that, according to my reckoning, there are six hon. Members in the House who were born in Her Majesty's Realm of Canada. There are also two Australians, two or three South Africans, and various other Members from the Commonwealth. I can assure the hon. Member that most of these hon. Members regard themselves in this place as speaking for Britain, in the same way as the rather larger number of people who were born in this country, and are now members of the Canadian Parliament—particularly the new Parliament—regard themselves as speaking for Canada rather than for this country.

One thing which has always struck me about these debates on the Commonwealth is that when the speeches are analysed most of them revolve round the problem of the viability of this country. So far as the Commonwealth is concerned, it comes to the fact that most of the money and expertise and machinery for handling these things must come from this country. Even when we discuss the prospects of a large measure of assistance from America or elsewhere the machinery for handling such loans is nearly always operated through the financial machinery available in this country. I agree with that great Empire crusader, the right hon. Member for Easington (Mr. Shinwell) that we have to sort out the objects first, and then consider how best to use our limited resources to achieve them. Whatever the Government in power, they must face the fact that there are certain limitations on the amount we can invest abroad. Whether it is now or later that the expansionist view prevails, our main consideration right now should be to sort out the priorities.

Only a few days ago I was at Ottawa and I got an advance copy of the Report of the Royal Commission on the Economic Prospects of Canada, otherwise known as the Gordon Report. Hon. Members have referred to that Report already. In a previous debate I rather enthusiastically proposed that we should have a similar investigation in this country. Having read the final Report, I am confirmed in my enthusiasm for such an investigation in Britain. The Report is a truly remarkable Government Document. It sparkles with wit and is couched in delightfully clear and precise English. There is no question that the Report has produced a number of new and fascinating facts and estimates on the future of Canada which no Government in that country—indeed, no outside Government or firm or individual that hopes to do business with Canada—can fail to take into consideration.

The view which I formed when I first learned about the possibilities of this method of assessing the long-term problems of a country and its economic prospects was reinforced by the remarkable effect on the United States of the ideas of the Paley Report, otherwise known as the President's Raw Material Commission's Report. The effect of this Report on American economic policy, and, indeed, on much of their foreign policy, was almost revolutionary. Clearly, if a nation discovers that in twenty years it will be short of oil, and it is at present a net exporter of oil; that in fifteen years time the great Mesabi iron ore ranges will run out of high-grade ore, such facts become a matter of supreme significance to those responsible. I feel that we should consider very carefully and try to establish in our minds—and, what is more important, in the minds of the whole of the nation—what Britain's future economic prospects really are. Is it really to our disadvantage to encourage secondary industries overseas?

What are we to do about population? We have had the Report of the Royal Commission on Population and Migration, but as hon. Members know, all the facts in that Report must be related to many other matters we are to plan for the future. The Royal Commission procedure is one tried and established method of getting at the facts. A Royal Commission has immense prestige and specific statutory powers. I hope that my hon. Friend considers whether or not we in this country should set up a Royal Commission to investigate the economic prospects of Great Britain over the next twenty years, our food and raw material requirements and how they can best be met in the mutual interests of Great Britain and the Commonwealth, and the rest of the world as well.

We have heard some interesting comments during this debate about what we ought and ought not to do, and another matter which has been mentioned and which struck me with some force was the commodity problem. The wild fluctuations in commodities in the last few years is just about the biggest contribution to inflation that we can imagine. It has adversely affected industry. It has produced endles headaches for those who run businesses. It is one of the major problems of our age. When I speak of commodities, I am referirng to the twelve or fifteen commodities which we use in vast quantities to maintain the industrial life of this country.

The slightest fluctuation, a 5 per cent. difference in the supply of copper in one month, will send the price see-sawing up and down by 15 per cent., 20 per cent., or 50 per cent. in a few weeks' time. The vaguest report of a hailstorm in Alberta, or somewhere in Queensland, will send the price of wheat up or down by 10 per cent. or 15 per cent. This business—it has been referred to three times in this debate—of the stabilisation of commodity prices seems to be the main thing which the Government need to consider. Obviously, if we are to attempt to stabilise commodity prices, in the interests of this country as well as of people overseas, now is not a bad time to start thinking about it, because now commodity prices are really low. If we wish to alter the balance of the see-saw, now would not be a bad time to start thinking about it.

The difficulty of overcoming the apparent helplessness of the economic machine in this country today with this programme is something which I find very interesting. It is something which affects the whole sterling area. As the sterling area is the greatest commodity producer in the world, that must mean the Commonwealth, and so we have an identical interest. We wish to see commodities stabilised for the sake of industry in Britain. We would much rather see the tilt of the see-saw altered, because the ordinary trader cannot foresee these fluctuations and deal with them effectively. He has not the financial resources. At the same time the people overseas who produce these commodities may sell to us cheap for a time, but if they do so for too long, they will not be able to continue buying things from us.

My hon. Friend the Member for Waver-tree (Mr. Tilney) referred to the Grondona scheme. We ought to elaborate a little bit upon it, and I would ask the Minister to explain its proposals. The scheme is a price stabilisation system for commodities, and it was put forward by the very distinguished Australian economist, Mr. St. Clare Grondona. It is supported by some hon. Members on this side of the House of Commons and elsewhere, and I believe that some hon. Members opposite also take an interest in it.

The idea of stabilising commodity prices is particularly suitable for Great Britain. I remember, as a child, trying, with a brother, to make a see-saw go as quickly as it could and hit the ground as hard as it could. A small sister, by standing in the middle was able to stabilise the see-saw, although she was of very light weight, and she could get a considerable effect with very little effort. That small sister, by the way, is now a Member of Parliament in Canada. She is slightly larger, but she is still doing her best to stabilise the position there. The stabilisation idea is particularly suitable and practicable for Great Britain, because we are the biggest importers of commodities. This is the great commodity market of the world.

The weightage required to stabilise this economic see-saw is not nearly as great as some people might imagine. The mere fact that there is a known buyer buying a small amount of wheat at a known price can exercise a very restraining effect on the slide of prices. In the same way, the existence of a known seller at a known price can have a very restraining effect upon the rise in prices. Commodities are of the greatest importance to Great Britain. If it takes so little to stabilise and stop the see-saw going to extremes, we ought to consider such a plan.

What is involved for Great Britain? As far as I have been able to find out, the main difficulty about schemes like the international tin, copper and other schemes, which have been started to stabilise the commodity situation, is that they bog down just because they are international. There is nothing quite so difficult and complicated to operate as an international scheme. Britain being the biggest importer of commodities, the amount of weightage and of purchases required to produce an effective degree of stabilisation is so little that we could go it alone. That is the best argument I can think of for attempting to introduce in this country a workable scheme of commodity stabilisation.

Let me examine for one moment what has happened since the end of the war, or since 1938, in the commodity markets which are most important to this country. One of the most inconvenient characteristics of a commodity market is its wide fluctuation. Rubber fluctuated as much as 373 per cent. in 1950. Since 1938, wheat has fluctuated 273 per cent. and lead 643 per cent. These rises are far out of proportion and in excess of the general inflation that has gone on, and even devaluation had not very much to do with it, because these commodities were bought in the sterling area.

The total fluctuation in wool since 1938 is 405 per cent., that of sugar has been 435 per cent. and of copper 612 per cent. When we think of all the things that happen in this country, and particularly of what happens in Australia, when the wool cheque is reduced, we know that import restrictions are clapped on our goods. All the world can see the effect of these wild fluctuations in commodities. The possibilities that suggest themselves when we look into this scheme are enough to capture the imagination but we really do not know the whole story. It is up to the Government, and the people who are experts in these things, to investigate the possibilities.

I am informed that a price stabilisation scheme would take remarkable little money, and one thing I know is that if it succeeded the consequences would be incalculable for Great Britain. Imagine the effect of accumulating very large stocks of raw materials here as part of a price stabilisation operation quite independent of the Government and by means of a piece of economic machinery. It would step in and buy at a known price and sell at a known price and up to a known quantity. Then the see-saw fluctuations would be small ones. I am afraid I have to use my hands to demonstrate the difference in fluctuation.

Mr. J. Johnson

Do I understand the hon. Member to suggest that there would be a public price-stabilisation board with nominees appointed by the Government and using public money to buy up millions of pounds worth of commodities?

Mr. Aitken

It would be an independent corporation. It would be a piece of economic machinery quite outside politics and as mechanical as the law. It would not be unlike the gold standard or exchange equalisation fund, which are attempts to stabilise, the one gold and the other money. I shall not attempt to argue through the details, because then we should be here for a long time indeed. I will try to illustrate some of the benefits to this country of accumulating large stocks of commodities by the payment of sterling.

This plan was considered very carefully in 1938 by the late Lord Baldwin as a possible wartime precaution. The ideal arrangement is that we should accumulate large stocks which can be sold at a known price and which we buy at a known price. The mere effect of the existence of stocks, which are the equivalent of money, would undoubtedly introduce a stabilising effect into international monetary exchanges. Obviously, if Great Britain accumulates large stocks of wheat, copper or lead, or of any other commodity which is necessary for her own survival, they are assets held in the country and, like gold, would be part of the assets protecting the currency. All I ask hon. Members is that these ideas be investigated to clarify the position of this country in relation to Commonwealth development.

I would like to see a Royal Commission investigating the possibilities of this kind of commodity stabilisation as well, as the population situation in relation to our future economic and strategic needs. Big industry has to make long-term plans. Some hon. Members may have read an article in the Financial Times the other day when the chairmen of various oil companies were looking twenty years ahead. There is nothing new in that, but if business can do it why cannot Governments do the same? I commend these ideas to hon. Members. I believe they already find a measure of agreement among Government supporters as well as among hon. Members on the other side. I hope that the Under-Secretary of State for Commonwealth Relations will indicate the attitude of the Government to some of these new ideas.

7.20 p.m.

Mr. Christopher Boyd (Bristol, North-West)

I am glad to follow another Canadian-born Member, the hon. Member for Bury St. Edmunds (Mr. Aitken). I confess that I do not feel qualified to comment upon his see-saw, except to say that I found his speech extremely interesting and I hope he will press his ideas further on the House. I, at least, shall be very glad to have a further opportunity of listening to him elaborating these matters. It looks as if he has some ideas which may find favour on this side of the House, if not among his own party.

This is a good time to be having a debate about the Commonwealth, not only because of the pending conference, but also especially because of the negotiations which are proceeding to link this country closer economically with Europe. There has been a feeling that there was a conflict between association with the economic community in Europe and economic co-operation with the Commonwealth. The more we have gone into this matter the more the House, on both sides, has come to the conclusion that there is no necessary conflict, but it is important to show our interest and concern for the Commonwealth and all it stands for at the same time as we proceed with negotiations with Europe.

I was sorry to detect a slightly anti-European note in one speech today, although I do not think it was intended. Just as it would be a mistake to damage the Commonwealth for the sake of the European community, it would also be a mistake to damage the European community out of a mistaken over-enthusiasm to take up a particular Commonwealth cause. It is quite right that the anti-dumping Act should be available for use in appropriate cases, but, as I argued at the time when the Measure was being considered, we should be careful not to use the powers under it in an unnecessarily quarrelsome fashion. When taking up a case of dumping with Holland, Sweden or any other country, we should proceed by way of discussion before we take retaliatory action. I am sure those countries would be very ready to discuss the matter with the Government and to seek a way of avoiding any necessity to use powers for imposing additional barriers to their trade. Obviously, we are all concerned to reduce barriers and to increase the flow of trade rather than the other way round.

Mr. Turton

Will the hon. Member explain what he means by that? Does he mean that he wants to restrict the amount of New Zealand butter coming here to the advantage of those countries I mentioned?

Mr. Boyd

Certainly not. We have to seek to reconcile the reasonable interests of New Zealand and European supplies of butter. That certainly will not be easy. What I am emphasising is that we should not rush into action to stop supplies from Sweden, Holland or anywhere else without discussing it with the Governments of those countries. We have our obligations to New Zealand certainly. The right hon. Member for Thirsk and Malton (Mr. Turton) was right to emphasise the debt we owe New Zealand for its consideration during the war, but that is still no reason why we should not conduct in a civilised fashion the necessary negotiations with Sweden, Finland, Holland and other countries.

As the standard of living rises, we are no doubt able to consume increasing quantities of butter and it ought to be possible to import more both from the Commonwealth and from Europe. The primary interest of this country is to increase the total volume of world trade so as to facilitate our getting the necessary trade to raise the standard of living in this country. I must submit that in this respect my approach differs from that of the right hon. Member. At one point in his speech he emphasised that this debate was on the most important of all possible topics the House could discuss at the present time. I felt then that I disagreed with him. There are plenty of more important things, such as strengthening the United Nations and securing an orderly controlled disarmament. There are even a number of things concerned with the economic interests of this country which are more important; for instance, increasing the total amount of trade in all directions so as to facilitate our earning our living in the world and to enable us to get supplies and raise our living standards. Commonwealth trade is part of that purpose and worth fostering in support of it, and even more for a political purpose, but it is not the be all and end all on which this House should be working.

I think it would be a mistake to exaggerate too greatly the importance of trying to make the Commonwealth self-sufficient. The Commonwealth today is not strong enough to stand on its own in world affairs. It would be a mistake to press forward with its arrangements to the exclusion of associations with other parts of the world. I think it would be a mistake to use the Commonwealth as an excuse for staying out of European economic schemes. It would be a mistake, also, to think of the Commonwealth as an anti-American project. Probably many far-sighted Americans would agree. A number of Canadians, Australians and New Zealanders, and perhaps also ourselves, look to Commonwealth associations as a protection against American domination.

It is proper that there should be a balance restored to our international relationships. But I would not wish a united Europe or a closed Commonwealth to be an instrument for waging trade war against America. That would be wrong economically, politically and militarily. We depend for our strength on our alliance in N.A.T.O., but I regard N.A.T.O. as a very proper supplement to the Commonwealth. In the present stage of history, if we are to continue to play the greatest rôle that we can in world affairs, we have to belong to groups and work as loyal members of teams of nations which, together, are strong enough to play a decisive rôle and strong enough to give themselves a fair amount of safety by that co-operation. For that we need to work with America and not against America. That is no reason why we should not gather together in other groupings which do not include America.

We should be a little careful about over-emphasising the economic basis of the Commonwealth. I do not think economics is the main link between the Commonwealth countries. Common history, common language to a great extent, shared ideas and institutions, are an important part of the links that hold the Commonwealth together. It would be a pity if this debate or the conference on Commonwealth economic links led to the impression that we think of trade as the only cement that is of use or value in holding the different countries of the Commonwealth together. That would be a great mistake and would bring the whole thing down to a purely materialistic level which would undermine the Commonwealth in future. Nevertheless, we are concerned today with discussing the economic aspects of the Commonwealth.

One snag about the kind of institutions which have been proposed will surely be that the Commonwealth is not wholly in the sterling area. If we have a sterling area institution and are in danger of excluding Canada, that would be rather an odd result to emerge from a conference initiated by Canada. Canada is one of the most important of the Commonwealth countries, and that would, therefore, be a very peculiar objective to pursue.

On the other hand, the sterling area would be a proper subject for a conference of Commonwealth Ministers to discuss, although it would hardly be possible for a Commonwealth permanent institution to control it. Canada can help us, and Canadian efforts to increase its trade with this country can play a large part in helping to strengthen sterling and to strengthen the Commonwealth, and, obviously, the Canadians will be glad to do that. But the matter is not quite as simple as it might appear at first sight. It may well be that traditional methods of Commonwealth conferences will continue to be better than attempts to establish institutions.

Another danger, although a diminishing danger, of this emphasis on Common- wealth institutions and the emphasis on economics is that some Commonwealth countries still nurse a fear, from past history, that this country might try to re-assert some form of subtle, hidden domination over them. It is sometimes thought that through economic arrangements this country might somehow manage to establish some kind of economic control behind the scenes of the political façade of independence and so re-establish its imperial authority over other Commonwealth countries.

I do not think that that is the intention of any hon. Member. Certainly I hope it is not. Nevertheless, the fear can exist, and my impression is that it has existed until quite recently even in such countries as Canada, Australia and New Zealand. Most of us were a little puzzled by the Canadian reaction to the proposal by the former Chancellor of the Exchequer of a free trade area between this country and Canada, and I cannot help feeling that the only explanation of this lies in some phobia rooted in the history of Canada as a new country, once a colony of this country. We need to find ways of exploring ideas like that without causing them such setbacks as they get through over-hasty publication.

There are plenty of topics which the Commonwealth could well discuss together. The growth of unemployment is not confined to this country; it has grown in Canada, as well as in the United States, to rather serious proportions, and it might well be that an attempt to find ways in which the Commonwealth can work together to make the sterling area a greater success could also bring with them a way of helping us to sustain sterling with less danger of unemployment in the various Commonwealth countries. I hope that that possibility will be explored.

In conclusion, I come back to the importance of not supposing that the Commonwealth can live by economics alone. May I comment on the remarks of the hon. and learned Member for Darwen (Mr. Fletcher-Cooke), who was so worried about trade with India and who emphasised that equality must be recciprocal. I am sure that India does not regard this country as an equal. I am not sure that we should all wish the other Commonwealth countries straight away to cease to regard this country as in any way the senior or centre member of the Commonwealth. It would not be entirely true; there is still a great body of experience and wealth and productive capacity in this country, which in some respects is unequalled anywhere in the world. I do not think we want the respect of the Commonwealth to be undermined to such an extent as might occur if we were to claim exact reciprocity in all these matters.

Some countries in the Commonwealth may feel linked to this country considerably more by the special treatment they get. The West Indies is an example, although the immigration to this country from the West Indies is falling away rapidly at present and no one need be alarmed about the numbers coming here. The unequal treatment which this country offers in the case of Ireland—Ireland is not inside the Commonwealth and yet is treated as if it is—is another example. I do not think it would be wise to sweep away all those anomalies straight away, nor would it be wise, even though to do so might be regarded as in our best economic interests, for us to be guided by economic considerations alone.

7.37 p.m.

Sir John Barlow (Middleton and Prestwich)

I do not propose to follow the hon. Member for Bristol, North-West (Mr. Boyd) very far in his remarks except to say that, having listened to him carefully, it seems to me that he is approaching this question of the Commonwealth in too timid and too nervous a way. The Commonwealth is a great institution which can be built into a far greater world power for good and not for evil. That is the way I look at it, and I hope that, on reflection, the hon. Member will agree with me, because he seems to have treated it in too nervous and too timid a manner.

Mr. Boyd

I agree with the hon. Member, even without further reflection.

Sir J. Barlow

My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) referred to the discussions which are likely to take place in the near future between representatives of India and Pakistan, Lancashire representatives and others concerning the textile industry. These are of the greatest importance to Lancashire, and Lancashire is still a very important industrial area in this country—make no mistake about that. These discussions will set the fashion for the form of other negotiations in time to come.

I deplore that these negotiations have been delayed so long and that there have been efforts which have ended in stalemate. These negotiations are due to begin next month and I hope that they will be successful, because this may be an indication of a first solution to a very great problem between this country, the Dominions and the Colonies. Such problems will have to be faced sooner or later, and the sooner we reach a mutually satisfactory solution the better for all of us. I do not wish those representatives from the East to come here thinking that they can take the whole of the textile market from us at home, let alone all the export markets.

I should like to follow my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken) in his comments on commodity values and commodity prices. He had some most interesting ideas on stabilising commodity prices. I think that the Committee knows that I have been in the commodity world for many years, producing agricultural products in various forms. My hon. Friend mentioned the great fluctuations in rubber prices a few years ago as an example. Since I have been producing plantation rubber myself I have sold it as low as 1¾d. a lb and as high as about 6s. a lb.

Everyone will realise the impossibility of running an industry decently and properly with those violent fluctuations. It is impossible from the point of view of the workers and of the organisation itself, and from that of our tyre manufacturers who require the rubber. If we could only stabilise rubber prices—and this is typical of many other raw commodities—it would be of tremendous importance both to ourselves and to the countries of origin. One thinks of Australia and her wool, Canada and her wheat, Malaya and her rubber, and of the trials and tribulations that their inhabitants have experienced in the past because of these violent fluctuations which, incidentally, have been reflected here, also.

I do not necessarily say that my hon. Friend's suggestions are right. They may not be, but it is of the utmost importance for the Government to try to find some way of stabilising values. Various schemes have been tried in the past and many have ended in failure, but that should be no deterrent to the Government to seek something more suitable. It would be a blessing to mankind if they could——

Mr. Arthur Moyle (Oldbury and Halesowen)

As it is his party that is opposed to bulk purchase on long-term contracts, how does the hon. Gentleman propose to get that stability for commodities that he seeks?

Sir J. Barlow

That is a very long matter. Various methods of stabilising have been tried, and some have been more successful than others——

Mr. Aitken

Perhaps my hon. Friend will allow me to intervene to say that the proposed schemes for stabilisation really have nothing whatever to do with bulk buying. Bulk buying is an adventure on the part of the Government buyer. He buys at what he thinks a suitable price, and sells when it suits him. The scheme that we were discussing was simply an automatic piece of machinery which buys a certain quantity at a known beforehand price, and then sells. It is quite different from bulk buying. There are no political or strategic considerations. The only consideration is that the sellers must accept sterling.

Sir J. Barlow

That was one suggestion. There may be better ones, but we do want to stabilise commodity prices somehow. If I may, I shall deal with barter a little later in my remarks.

It has been my good fortune during the past few months to make two visits to the Far East—to Malaya, Singapore and Ceylon—and to have many talks with the statesmen of those countries, some of which have very recently assumed great responsibilities. When one meets the Ministers who have recently taken over the reins of office, one realises that we still have a responsibility to those countries. Until recently, they were looked after by the Colonial Office, but they are now Dominions and have passed from the Colonial Office to the Commonwealth Office. That, however, does not mean that we have lost all our responsibility. Indeed, in some ways, our responsibility to guide them tactfully when they require help, and to leave them alone when they do not, is far greater.

We have heard a great deal this evening about the need for funds to develop both the older and the younger Commonwealth countries. I have been in this development business all my life. The hon. Member for Flint, East (Mrs. White) quoted Mr. Shonfield as saying that it was all too easy for money to be sent from here to develop young industries overseas, but that it merely made rich men here by bringing profits home. The hon. Lady is not here at the moment, but I can assure her and Mr. Shonfield that that is very far from being the case.

For example, millions have been sunk for ever in South American railways. I agree that that is not one of our Dominions, but I can think of many millions that have been sunk in the Dominions and Colonies which we will never see again, or on which there has been little or no profit. It was a hazard of ordinary business. Sometimes it was successful, sometimes it was not. We hear far more of the successful cases, when money is made and, perhaps brought home, than of the unsuccessful ones when money is lost for ever. To think that it is, or has been easy, to put money in the Commonwealth or in some of the Colonies and expect sure profits is very wrong indeed. With great skill, great care and great experience it may happen. Without those, the venture almost always fails.

Referring again to the small industries that many countries are trying to establish, and, more especially, those that have fairly recently received their independence, one finds it is usual for them to seek to establish a textile industry first. Probably that is because it is the oldest great industry in this country. In some few cases it is successful, but there is great danger of new territories trying to develop industries that are entirely uneconomic.

There is a great deal of talk at present about European free trade, and the necessity for a market of 250 million in order to manufacture goods really efficiently and economically. If we think it necessary to have a market of that size, what is the chance of these comparatively small territories, with markets of 10 million, 20 million or 30 million successfully establishing a new industry like textiles? We wish, and it is proper, to establish new industries where we think that they are economically sound, and we should encourage the new countries to do so. At the same time, we should try to discourage them just wasting our valuable capital. Britain's capital is a very rare commodity, and we wish to see it well and carefully used.

We have heard a good deal today about the advisability of establishing a Commonwealth bank. That seems to be a very good idea, but when an hon. Member opposite—I think it was the hon. Member for Rugby (Mr. J. Johnson)—suggested that we should borrow money from Germany and other places, presumably short-term money, and lend it to the Commonwealth for development purposes, he was surely suggesting rather dangerous methods. I was always told that the quickest way for a banker to become bankrupt was to borrow short and to lend long. The hon. Member's suggestion would mean that we would be doing that, and I am surprised that anyone of his experience should suggest such a thing.

Quite apart from that, while I think that such a bank would be a most excellent thing, £30 million is neither here nor there. Unless the bank could borrow long-term it could not lend long-term, and the probability is that if such a bank were to be established it would be handling funds of great institutions in this country, and possibly in such other Commonwealth countries as Canada and Australia.

For that reason, the bank could probably lend only its capital and what was actually lent to it on long-term. It would be quite different from what is done by British joint stock banks, which borrow and lend on short-term. It is really impossible and quite unsound economically to borrow hundreds of millions, probably on short-term, and lend on long-term, as hon. Members opposite have suggested that a bank having £30 million or £40 million could do.

Mr. Tilney

My hon. Friend will, however, agree that the World Bank borrows medium and long-term.

Sir J. Barlow

I quite agree about that, but I am not talking about the World Bank. I am speaking about the proposed Commonwealth bank. The suggestion of hon. Members, on both sides, I think—I do not want to be unfair—that such a bank should take up some of these West German loans and others which are essentially short-term is dangerously wrong.

Turning to another subject, we all know of the possible embarrassments occasionally caused by newspapers in this country. One has to be very careful in talking about the subject, but I have come across occasions when facts about events in certain countries of the East have been distorted rather deplorably. I have often found that, when anything unusual or, perhaps, Communistic or very "Left" occurs in one of the new Dominions upon which the eyes of the world are directed, the facts are reported immediately in the British Press to scare us and British investors. This is most unfortunate, because it gives British investors and the British people generally quite the wrong impression of those countries. If I may, I will give two examples.

The first example was a very comic one. When I was in Singapore, last January, the municipal council, which was rather to the Left politically, had decided to do without its mace and had put it in the strong-room. I took advantage of this and suggested that, if the council had no further use for it, I should like to buy it. This was reported home immediately in all the British Press. It was a small local incident, but the way it was reported directed on to what was nothing but a silly local incident the spotlight of public interest, giving quite the wrong impression of Singapore to the British people. I was very sorry that it had happened.

When I was in Ceylon shortly afterwards, there were various irresponsible suggestions from very Left-wing politicians that the tea estates would be nationalised. This was reported home immediately, and I am quite sure that a large proportion of British people and British investors in Ceylon tea estates are firmly convinced that those estates are shortly to be nationalised. They may be, but I think it unlikely; I do not think that they will be nationalised for a very long time, if at all. It is most unfortunate when the Press gives a wrong impression here, and dangerous in its effect 8,000 miles away.

One hon. Member asked about barter agreements with a view to stabilising prices. There were various barter agreements during and shortly after the war. Generally speaking, they are not nearly so good as ordinary free enterprise, but there may be cases where they are advisable and almost necessary. We have in wartime seen circumstances in which they are necessary. The Ceylon Government, two years ago, had a barter agreement with China for a large quantity of rubber. China was to buy this rubber at 6d. a lb. above the market price. It was to be shipped to China, whence it was likely to be sent to Russia. China, in turn, was to ship rice to Ceylon. After all the rubber shipments from Ceylon had been sent, the Ceylon Government woke up to the fact that they had received very little rice.

To cut a long story short, the Ceylon Government were about £20 million short. The Chinese Government paid a small amount of that in cash and then said that they would not pay anything further in currency and tried to pay in goods and produce of various kinds. I saw the lists of goods and produce. Most of it the Singhalese certainly could not use themselves, and they have been trying for a long time recently, with great difficulty, to sell some of those goods on the world markets.

Another example of barter is the agreement arranged between Russia and Ceylon during the last two months. Russia is to take a large amount of Ceylon rubber. As hon. Members know, all rubber can be measured exactly for quality; there is a yardstick of quality and price. One knows to a ¼d. per lb. what it is worth every day. Russia is taking a large amount of rubber which has a world value. In exchange, she promises to send to Ceylon, at some future date not exactly arranged, quantities of machinery.

This machinery may be quite unsuitable for Ceylon. Russia, on the other hand, will have a large quantity of this valuable commodity and will ship, at some time in the future, some machinery which has no world value at all. I should be willing to bet that the Russians will have by far the best of that bargain. If some countries desire strongly to deal on a barter basis, we may be wise to consider it. I should deplore it, but, if they insist, we might be doing the right thing to fall in with their requirements.

We have a great responsibility, especially to the newer Commonwealth countries, to help them with their produce. If they cannot sell their produce at reasonable prices on the world markets, it is absolutely certain that they will not be able to take our manufactured goods. In helping them, we are helping ourselves. We have been through two serious slumps in our lifetime, both of which could in large measure be attributed to the fall in commodity prices and the failure of the rest of industry to adjust itself to that state of affairs sufficiently quickly.

I have great hopes that the Commonwealth Conference, in Canada, this autumn, will consider these great problems. If it can solve them, a great step forward in the life and development of our Commonwealth will have been taken.

8.0 p.m.

Mr. Norman Pannell (Liverpool, Kirkdale)

I hope I may be excused if I do not follow the hon. Member for Middleton and Prestwich (Sir J. Barlow) too closely, because I wish to enlarge on a point made by my hon. Friend the Member for Maldon (Mr. B. Harrison). He devoted a great deal of his speech to the sterling balances and the gold and dollar reserves. That is a most important point that must always be brought before us, and the significance of it is apparent. But my hon. Friend did not mention any figures. I do not wish to weary the House with a list of statistics, but I think it is necessary that one or two figures should be given to appreciate this problem.

In December, 1957, sterling balances amounted to £3,912 million, a fall of £178 million compared with the previous year. Of that amount, £882 million was deposited here by the Colonies and £1,817 million by the others, which, I presume, are the independent members of the Commonwealth. It is significant to observe that those figures materially differ from those of the previous year in that the Colony balances are down by £399 million and the independent countries' balances are up by £258 million. The change is obvious, because in the intervening period a number of Colonies achieved independent status and were, therefore, transferred to the other figure.

However, it is significant from this point of view, also. Although we obviously have some control over the balances held by the Colonies, which are still mainly directed from Whitehall, especially in the financial sense, we have no control whatever over the financial actions of the independent members of the Commonwealth. The fact that the balances have been run down by £157 million during the year perhaps indicates that the independent countries have been drawing heavily on their reserves. So far as I know, there is nothing to prevent them drawing at will. The money is on short call, and although much of it is allocated for special purposes, such as currency backing and stabilisation of prices, I do not think we have any right to withold the money if these countries insist on having it.

I understand that the new independent State of Ghana has recently set up a commission to examine how its balances shall be invested. The suggestion has been made that part of the money shall be invested in American and German securities. I think it would be very unfortunate if that tendency were to continue. But it is all a question of confidence. So long as these countries have confidence in sterling, I think they will keep their money here. On the other hand, they have great demands on their money. These newly independent territories are undeveloped, they have ambitious development schemes, and there is a great temptation to draw on their funds to further those schemes. They are also suffering a fall in commodity prices, as has been mentioned, which will cause them even to call on funds which are ear-marked for the stabilisation of commodity prices.

We are very fortunate in that many of the commodity prices in, for example, West Africa, have not fallen substantially. They have not fallen to the same extent as copper, but they could fall much more. I do not want to be a Jeremiah, but perhaps I may give a few figures. The price of cocoa in Ghana today is over £300 a ton. I bought cocoa in the Gold Coast, as it was in 1940, at £12 a ton. The price of groundnuts paid to the farmer in North Rhodesia is, I believe, about £30 a ton. I bought groundnuts in Karno in 1938 at £2 2s. 6d. a ton. There was a time when I could not buy palm oil at all at port because the rail freight exceeded the price of the product when it reached the port.

I do not believe that these conditions will be reproduced, but we must remember that the prices of these primary products have been very high since the war. That is the reason why large balances have been accumulated. Very wisely, these countries have put these balances by for future development, for currency backing and for stabilisation should prices fall. But, although the sterling balances have fallen by about £178 million during 1957, it would be extremely disconcerting if there were any large calls on these funds, and it is essential that steps should be taken to prevent that.

Much has been made of the Grondona scheme for the stabilisation of produce prices. I think I am right in saying that that scheme does not apply to perishable goods. It does not apply to groundnuts, cocoa, palm oil or, I believe, rubber. It could be applied to cocoa, because during the war, when shipment was difficult, cocoa was stored in West Africa for up to two years and remained in perfect condition.

There is a danger that, should there be a serious fall in prices, the funds deposited in this country will be heavily drawn upon. This is common sense. All Commonwealth countries have a common interest in maintaining the stability of sterling. No doubt there are informal consultations between the members of the Commonwealth from time to time, but so far as I know there is no machinery for the regulation of withdrawals.

Much has been made of the advisability of establishing a Commonwealth bank. I have heard the pros and cons of that proposition, but I suggest that we have some of the elements of a Commonwealth bank already in the sterling area organisation, the function of which is to receive deposits from members and to pay out on demand. Perhaps the only weak feature of that "bank" is that its reserves are inadequate, that its assets amount to only £1,000 million against its total liabilities to all countries, including the non-Commonwealth countries, of £4,000 million. In bank phraseology, the liquidity ratio is too low, and that, of course, makes the situation all the more dangerous. I suggest that the sterling area organisation should be expanded and a sterling area board set up and that its membership should consist of representatives from the Commonwealth who have deposits. It could then dicuss the common problem of maintaining the stability of sterling, of co-ordinating, perhaps, expenditure plans and of restraining withdrawals from the common fund. It might go even further and allocate to countries with inadequate deposits in this country funds beyond their deposits in order to develop those countries in common agreement with them all.

I do not know whether that is a feasible suggestion, but it seems better than leaving everything to the hazards of any decision taken by individual Finance Ministers of the Commonwealth. But in the long run we have to recognise that these funds have been accumulated since the war in conditions which have been favourable to these Commonwealth countries and there is a tendency for them to be run down. We must recognise that these debts will have to be repaid some day.

If we are to play our part as the centre of the Commonwealth, it is essential that we should be in a position not only to repay those debts but also go further and invest something beyond that within the Commonwealth. We can do that only by increasing our balance of payments. That has been running at the rate of about £200 million a year in recent years. It is clearly quite inadequate to service our debts and to invest in the Commonwealth.

Fortunately, the tendency has greatly improved in recent months. The figure which I should put as the absolute minimum if we are to face our obligations is a balance of payments of £400 million a year. From my reading of the recent figures, I think that we have in recent months been maintaining a balance at that annual rate. I very much hope that that tendency may continue. We should all recognise our obligation to do what we can to ensure that it does continue, so that we may resume our place as the centre of a great and growing Commonwealth.

8.10 p.m.

The Under-Secretary of State for Commonwealth Relations (Mr. C. J. M. Alport)

Anyone listening to this debate would see no reason why the House should be ashamed of it. It is true that the numbers of our colleagues who are here are not as many as in the case of a major Parliamentary occasion, but, at the same time, the variety of the views and ideas which have been put forward has more than made up for the fact that the debate has been confined largely to those who over a long period of time have taken a close interest in Commonwealth affairs.

Now that it falls to me to reply to this debate, I find myself invited to cover the ground that would normally be covered by my right hon. Friends the President of the Board of Trade, the Chancellor of the Exchequer, the Secretary of State for the Colonies and various others of my colleagues. I intend to take a cheerful and generous view of the scope and responsibilities of my Department, which, I am sure, is right and proper in the case of the Commonwealth Relations Office. If, however, in some cases, I have to leave the points raised for consideration tomorrow and thereafter by my colleagues through the columns of HANSARD, I am sure that some of my hon. Friends will understand.

In some respects, our debate today is certainly a curtain raiser for the discussions which, we hope, will be brought to a successful conclusion in Montreal in September. This Conference, to be held in Montreal, arises from the practical idealism of the Prime Minister of Canada, Mr. Diefenbaker. Her Majesty's Government approach the Montreal Conference in precisely that spirit. We seek, among other things, ways of improving existing methods of consultation and co-operation within the Commonwealth. If the creation of some new institution can achieve this, we shall be in favour of it, but we have no wish to duplicate machinery which is already working efficiently or to create a Commonwealth bureaucracy merely because other international organisations apparently cannot do without an elaborate and costly apparatus of committees, civil servants, public relations officers and central statistical departments.

It is just as possible to argue that the success of the Commonwealth is due to the lack of this formalism as it is to argue that it has succeeded despite its absence. My hon. Friend the Member for Maldon (Mr. B. Harrison) referred during his speech to our methods as being typically British. The truth of the matter is that we have over a period of time evolved certain methods in carrying on international relations—that, after all, is the real essence of the Commonwealth—which have been immensely successful. We have been able to avoid the damaging and dramatic episodes which occur from time to time in many international organisations when the stresses, as is always possible, reach the breaking point.

One hon. Member who spoke today referred to the necessity for some central organisation to impose restraint upon the policies of Commonwealth Governments. The right hon. Member for Rochester and Chatham (Mr. Bottomley) referred, I believe, to the necessity for avoiding independent action. I know the context in which both those phrases were used, but they are the sort of phrases which send a certain chill of alarm through the minds of those who are deeply anxious in all matters of co-operation within the Commonwealth to ensure that the independence of action which is part of the working spirit of the Commonwealth is maintained.

If I may turn to the speech of my hon. Friend the Member for Maldon, and if I may join, as a neighbour of his, in the other very complimentary remarks that were made about the opening address in this debate, I would remind him, as I am sure he is well aware, that my right hon. Friend the Chancellor of the Exchequer made a particular reference in his Budget speech to the problems that surround the present position of sterling. This is relevant, too, to the speech that we have just heard from my hon. Friend the Member for Liverpool, Kirkdale (Mr. N. Pannell).

My right hon. Friend the Chancellor said: I hope, therefore, that we shall neither exaggerate the difficulties that come from our position as the banker of the sterling area, nor underestimate its value to us.… We do not intend to tamper with this system, which is working well.… It requires, too, that we must maintain close and continuous consultation with our sterling area partners. This will be especially reinforced this year by the Commonwealth Economic Conference, in September, and through the preparations for it which are already in hand."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 52.] In addition to that, there is constant consultation along the number of different channels within the sterling area concerning the problems of the sterling area.

There is, in the first place, contact between the central banks, between the Bank of England and other Commonwealth central banks, which are both close and continuous. This takes the form of visits by governors, directors and senior officials in both directions. It is fortified by the fact that the Bank of England receives a steady stream of more junior officials from the Commonwealth central banks who come to it for purposes of training and study.

Secondly, there is the passage of information between the Finance Ministries of all the Commonwealth territories. This is routine and regular. Thirdly, there is the annual statistical exercise, if I may use that phrase, which is carried out by statistical experts from the Commonwealth on the sterling area position and prospects. Then there is, as my right hon. Friend the Chancellor mentioned, the meeting of Finance Ministers, which has become an annual feature since 1954. Although it may well be, as my hon. Friend said, that there would be advantage in supplementing this machinery, I hope that the House will not get the impression that that machinery does not at present exist.

It is clear, as both my hon. Friend the Member for Kirkdale and my hon. Friend the Member for Maldon said, that the problem is, largely, the size of the reserves and the potential calls upon them. There is no machinery in the world which can solve that problem, although it certainly may in some cases be possible to assist in the proper and effective management of the resources at our disposal.

The right hon. Member for Rochester and Chatham criticised the Government. I do not blame him for trying to strike a spark on the flint of controversy in this debate, but he criticised the Government and contrasted our policies with those of the Socialist Government of which he was a member. He gave what seemed to me to be a rather grand conception of what would be the policies of a Socialist Government towards investment in the Commonwealth if his party came back to power. His remarks struck me as being interesting in relation to the remarks made by the right hon. Gentleman the Member for Easington (Mr. Shinwell), when he said that he thought inflation was inevitable at the present time. I understood him to say that.

The greatest danger which could occur to the unity of the Commonwealth, the prosperity of its peoples and the future of the sterling area would, however, be if, as a result of the policies of the United Kingdom were we to accept the inevitability of inflation, we all found ourselves in a new devaluation crisis. It is extremely doubtful whether the sterling area, and with it the network of economic and trading relationships which has grown up within the Commonwealth, would survive a crisis of that sort. Surely it is in the interests not only of the United Kingdom but of the Commonwealth as a whole—practical idealism in its true sense—that we should all follow policies which are designed as far as possible to prevent such strains from being exercised against the resources which are available, so that we do not run into further crises such as we had last year or into a major crisis such as occurred when the last Socialist Government were in power and devaluation became necessary.

Relations within the Commonwealth are conducted through a vast network of official and unofficial contacts between individual people. Its structure today depends primarily upon the speed of communications and transport, the unique facility provided by the English language, and the corpus of ideas of law and politics and society which we possess in common. What is unique about the Commonwealth is that it has never relied on those formal institutions which, as I have suggested, seem to be so essential to other international bodies. Such permanent Commonwealth bodies as exist are highly practical and, indeed, utilitarian in character. They deal with matters like shipping and transport, telecommunications and statistics. For the rest, we depend on what I may best describe as the principle of the ad hoc—conferences of Prime Ministers, consultations on defence and finance at all levels, which are arranged to meet the needs and circumstances of the day. The system is in practice not only flexible but effective. It allows each of the member Governments the widest measure of independence while ensuring that co-operation is continuous.

I do not suggest for one moment that specialised Commonwealth institutions should not be evolved to fortify our present system, but I think we should recognise, and I hope that the House will recognise, that they can never replace it. They must come into being for the express purpose of meeting a definite and widely-felt need, and not as the consequence of any doctrinaire ideas, or from a mere desire to emulate other methods of international co-operation elsewhere. This cautious view is not held only by Her Majesty's Government in the United Kingdom; it is the view which, I am quite certain, will be held in equal force by all the Governments in the Commonwealth everywhere.

I suggest that the House should accept certain criteria for any institution which may be suggested; first, that it must not limit the freedom of action and independence of the members of the Commonwealth; secondly, that it must be strictly practical, with the object of providing recognisable advantages for the general welfare and progress of the peoples of all the Commonwealth countries participating; and, thirdly, that it must be something in which each member of the Commonwealth can play a constructive part despite the fact that there are wide differences of resources and needs between them.

It is against this sort of background that Her Majesty's Government in the United Kingdom are approaching the preparatory work for the Commonwealth Economic Conference in Montreal. There is every advantage in undertaking at this stage a widespread and vigorous debate on the many ideas for the improvement of the existing methods of Commonwealth economic co-operation in addition to the official discussions which will be resumed in June, but I suggest respectfully to the House that these are certain principles which should be borne in mind as the test for the efficacy and probable lasting worth and value of the ideas which are being discussed at the present time.

There have, for instance, during this debate been a number of references by hon. Members to a report of an interview which the Prime Minister gave to the publisher of the Toronto Telegraph. It is widely recognised that one of the major needs of the Commonwealth today is an increase in capital investment. It is equally clear that the resources for this which are available within the Commonwealth are insufficient. Any machinery which can help to ensure that such resources as are available are used most effectively and, what is more, can assist in making available additional resources from elsewhere, must be of value to the Commonwealth as a whole. I cannot think that either in this House or, indeed, in any part of the Commonwealth that view would not receive immediate agreement, but what we are concerned with, as the Prime Minister said in the interview, is the question of ways and means.

When we put the problem to Commonwealth Governments some months ago, all showed themselves in sympathy with the objectives we had in mind, as indeed I made clear in a reply I gave to my hon. Friend the Member for Essex, South-East (Mr. Braine) last June, but, like us, they saw no point in any scheme which merely duplicated existing and long-established machinery. Any plan for a Commonwealth bank or similar institution must have as its main purpose the mobilisation of resources additional to those which are forthcoming at the present time. But with this object in view we hope that something may be worked out between now and the conclusion of the Montreal Conference which will be acceptable to our friends in all parts of the Commonwealth and will strengthen the existing structure of Commonwealth economic co-operation.

I turn to another aspect of this which was referred to by I think, both my hon. Friend the Member for Maldon and my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney), and that is the question of export credits. My hon. Friend the Member for Essex, South-East also referred to it. I had the impression, on studying the debate that we had in this House eighteen months ago, that insufficient importance is attached to the part which the Export Credits Guarantee Department plays and can play in facilitating trade between the United Kingdom and the Commonwealth.

My hon. Friend introduced a figure of £30 million in respect of last year. All I can say is that, during the last three years, the Export Credits Guarantee Department has given guarantees in respect of goods shipped from the United Kingdom to Commonwealth countries to a total of nearly £400 million. This, I think the House will agree, is an extremely substantial sum, and I think hon. Members will realise that, without the facilities for trade which the E.C.G.D. provides, a high proportion of the volume of exchange of goods and services which that £400 million represents would not take place at all.

During their speeches in the debate on the Budget, my right hon. Friends the Chancellor of the Exchequer and the President of the Board of Trade both dealt in some detail with the Government's export credit guarantee policy, and I cannot add to what they said except to remind the House that my right hon. Friend the President of the Board of Trade announced the reduction of the limits of the sum on which guarantees can be given and an increase in the amount covered from 85 to 90 per cent. He said, and I am sure that he was right, that these additional facilities will be of great assistance to trade both within the Commonwealth and outside.

Mr. Braine

I am grateful to my hon. Friend for giving way. While I agree with what he has just said, it is the scale upon which these credit facilities are given about which I am complaining. Is he aware, for example, that the overseas earnings of the British constructional engineering industry have been running at about £100 million a year and could be trebled if the same facilities that are available to its American or German counterparts were made available to it?

Mr. Alport

I realise that point and how tempting it is, but all I can say to my hon. Friend is that the Chancellor in his speech on the Budget pointed out the danger which necessarily arises when entering into a credit race, so to speak, with other countries with which we are in competition. Indeed, I think that that fact would be very obvious to everyone. At the same time, it cannot but be right that any facility that it is possible to give on any reasonable basis to British exporters, British effort and enterprise overseas should be given, and I fully understand the point which my hon. Friend raised.

My hon. Friend the Member for Essex, South-East also referred in particular detail to the problem of commodity price stabilisation. He reminded us that he was Chairman of the British Commonwealth Producers' Organisation, and he said that this was on account of his sins. All I can hope is that he will continue sinning, because there is no doubt, as I know from my own information, he has been a most successful chairman.

The problem is a major problem, to which reference was made by my right hon. Friend the President of the Board of Trade in his speech during the Budget debate. I should merely like to say that it was agreed by the Finance Ministers when they were thinking out the main problems which should be discussed at Montreal that economic and trade problems in regard to agriculture and other primary production should be a main feature of the agenda. There is no doubt at all that all those ideas which were put forward, whether they be ideas sponsored by hon. Gentlemen in this House today, or whether they were ideas such as those referred to in Mr. St. Clare Grondona's book or otherwise, will have particular consideration in relation to this aspect of the discussions. That is the whole purpose of the very careful preparations which have been made at official level for this conference, which have already comprised a meeting of officials, a process which will be continued, as the House knows, in June.

Mr. J. Johnson

Will the discussions include the problem of migration, as well as the cultural and economic questions which the hon. Gentleman has mentioned?

Mr. Alport

I cannot give an undertaking on that. I cannot define whether it comes precisely within the terms of reference at the present moment, but I cannot think that that important subject would not have its proper place in any deliberations of this sort.

My hon. Friend the Member for Essex, South-East also referred to an import-export bank. He knows very well that a great deal of thought has been given to this suggestion in many quarters. I think I am right in saying that it is a very different project from a Commonwealth bank, insofar as an import-export bank would be primarily a United Kingdom organisation, intended to facilitate trade and the exchange of goods between the United Kingdom and the Commonwealth territories concerned.

Mr. Braine

Yes, indeed.

Mr. Alport

I now turn to another rather specialised point raised by my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke) and referred to by my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow); that is, the problem created through the imports of grey cloth into Lancashire. My right hon. Friend the President of the Board of Trade has emphasised that the Government attach the greatest importance to, and intend to preserve, the principle of Commonwealth free entry. However, over the last few months the Government have encouraged the cotton industry to initiate discussions with the Indian and Pakistan manufacturers with a view to the possibility of some scheme of voluntary limitation.

As both my hon. Friends know, the conversations between representatives of the three countries concerned are due to start in London shortly, and I join with the hon. Baronet the Member for Middleton and Prestwich in hoping that these discussions will be successful. I am convinced that those concerned with the problem from the point of view of Pakistan and India are fully aware of the difficulties which this subject creates for the Lancashire cotton industry.

Now I will deal with some of the other organs which exist at present for Commonwealth consultation and which, in accordance with the points made in a number of speeches, offer us opportunity for expansion in the future. As my hon. Friend the Member for Maldon stated, there is a great deal to be said for building on existing organisations and in trying to ensure that they are used to meet the needs.

The Commonwealth Economic Committee has recently published an authoritative survey on raw materials. I do not know whether hon. Members have read it in detail, but if they have seen it they will realise that it represents a very great undertaking indeed. It is the first of two volumes, and although I fully realise that the scope of this first one does not cover the field of economic expansion in the same way as do the Gordon and Paley Reports, I think it will be generally agreed to be an extremely valuable work. I should like to pay tribute to the Chairman of the Committee, Sir Gilbert Rennie, who is High Commissioner for the Federation of Rhodesia and Nyasaland. and to the United Kingdom representative on the Committee, Sir Horace Hamilton, and to their colleagues, for the contributions they have made.

Again, I know the view held by my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken) about the importance of applying the principles followed by the Paley and Gordon Reports to the future prospects of expansion of the United Kingdom. I say without prejudice that since the proposal has now become a survey in respect of the United Kingdom, and, therefore, of a single economic unit, it has a more immediate practical application than when, as earlier, the idea was to be applied to the Commonwealth generally, where there are wide differences of economic progress and problems, which would make a survey similar to the Paley or Gordon Reports difficult to produce. I know, however, that the proposal he has put forward will be carefully considered.

At the last Prime Ministers' Conference, it was agreed that the Commonwealth Economic Committee should be asked to examine what expansion in the scope and nature of its work should be undertaken. The publication of the Raw Materials Survey will necessitate continuing work to keep that survey up to date, otherwise the value of the work already done will be largely nullified. In addition, the Committee has suggested that certain additional work should be undertaken. It has been our view that it should, perhaps, include collecting information about the development possibilities in the Commonwealth, which might be a subject of interest to potential investors, and surveying existing channels for the supply of capital available for such Commonwealth development.

The Committee has recommended that it should be authorised to undertake a survey of existing sources and channels of investment and that, parallel with that, it should publish up-to-date information on the development possibilities and progress, including the development plans, of all parts of the Commonwealth. In addition, it suggests that it should undertake the assembling and publishing of information about legislation and regulations affecting the treatment of external capital through taxation, facilities for the remittance of dividends, repatriation of capital, and special concessions to attract external investment which exist in various Commonwealth countries. It also proposes to provide information about all schemes of mutual technical assistance within the Commonwealth similar to the arrangement which was agreed last year between Her Majesty's Government in the United Kingdom and Her Majesty's Government in Ghana.

I emphasise that these proposals are provisional. The Governments of the Commonwealth have not yet given full consideration to them, but I hope that the House will agree that they present the prospect of making a striking expansion of the valuable work which the Committee has undertaken during the last thirty years. The Commonwealth Economic Committee, let me emphasise, is concerned with facts and information. It is not, and, in our view, should not be, concerned with matters of policy. In some degree, it provides the raw material upon which policy can freely and independently be made by the governments concerned.

I turn now to another of the organs of importance in Commonwealth consultation, the Commonwealth Liaison Committee. It was established, as the House will recollect, in 1948, and at that time its object was to keep the Commonwealth in touch with the European recovery programme. It has now become a continuing organ of Commonwealth consultation, and it has been of particular value recently in ensuring that all Commonwealth Governments are kept in close touch with the progress of negotiations about the European Free Trade Area.

I remind the House that the Committee consists entirely of officials and that it meets roughly once a fortnight, but I should emphasise once again that it is concerned exclusively with facts and with information. It is not concerned in any way with the making of policy, and, if I may claim it, it conforms exactly with the criteria which I suggested earlier were appropriate in evaluating the use of any institution which we might wish to establish. Although I should like to think over at greater leisure the points made by my hon. Friend the Member for Maldon, I doubt whether it could be or should be used for the sort of functions which he had in mind.

My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) and the right hon. Member for Rochester and Chatham referred to a Commonwealth economic secretariat and I should like to refer to that subject. There are certain considerations which I should like to put before the House for the consideration of hon. Members. If a Commonwealth economic secretariat were to be similar to O.E.E.C., were it to be concerned with the working out of policies and the examination of the economic situations and policies of individual countries, I have no doubt that, in the nature of the Commonwealth institution, difficulties would arise. Broadly speaking, O.E.E.C. countries are all at the same phase of economic development and they all have long-established and developed administrative machinery. Broadly speaking, O.E.E.C. countries face the same kind of economic problems. They are contiguous and they trade between themselves. For these reasons, they have accepted the commitments which O.E.E.C. involves.

The same situation does not obtain in the Commonwealth. Commonwealth countries are at widely different stages of economic development. Their problems are different and require a wide variety of economic remedies; some are primary producing, some industrial. The least developed Commonwealth countries would not, at the present stage of the evolution of their economies, be prepared to accept the same policy obligations as the more developed countries. For these reasons, Commonwealth countries would be less likely to accept the implication which such an organisation would have for their freedom of action.

I hope that the House will consider those views on the possibility of producing for the Commonwealth something on similar lines to the secretariat of O.E.E.C. I am sure that we should be making a lasting mistake—this is not a question of undue caution in any way—if we gave or tried to give the impression that it was our conception of the view of Commonwealth economic relations that individual and independent members of the Commonwealth should be tied, so to speak, to some rigid and inflexible economic organisation such as O.E.E.C. might, rightly or wrongly, appear to them to be.

We wish to give an opportunity for hon. Members to speak in the debate which is to follow, and so this is not the time to go into details about other organs of Commonwealth consultation. I would merely say that, on the whole, those that have been most successful are those which have had a fairly limited purpose, at any rate to start with, and which have been specially applied to particular fields of mutual interest. I would remind the House that, for instance, this autumn we are to have in the United Kingdom an informal conference on atomic energy for peaceful uses. We hope that it will be attended by representatives from every Commonwealth country. Surely it is impossible to exaggerate the importance of the contribution which atomic energy can make to the development of the Commonwealth.

Co-operation between our Atomic Energy Authority and fellow agencies in other countries is close, despite the fact that the resources of the Authority are already stretched to the limit; and I am sure the House will welcome the fact that this forthcoming conference will give an opportunity for even closer co-operation on a Commonwealth basis in this vital sphere than has taken place hitherto.

I was challenged by a number of hon. Members, particularly by hon. Members opposite, regarding statistics and the rise or the decline in trade over these last years. I have here two lots of statistics, one, based on percentages, which shows a decline, and the other, based upon value, which shows an increase. I dare say that we can prove what we feel we should like to prove. I do not want to go into that matter tonight. It is true that it helps both sides of the House.

Although this debate may in some degree appear to be going over ground which we have covered in the past, I have no doubt that there are new opportunities as the result of recent changes arising from increased co-operation for mutual advantage in the economic field within the Commonwealth. Nothing could be more opportune and fortunate than the fact that we are to have this vitally important Conference in the autumn of this year at a key moment, as I believe it in the development of the Commonwealth.

The House can be assured that the United Kingdom Government intend to go to the Conference to make a constructive contribution, together with our colleagues there. We believe that this is an opportunity which must not be lost, and we do not intend to lose it. At the same time we must always bear in mind that, if the Commonwealth is to continue to be an attraction to the millions of the new Commonwealth as well as to the old Commonwealth, it must not only provide increasing material standards of living but must show that what we have said with regard to freedom and independence of action is a reality and that the spirit within the Commonwealth is a spirit of voluntary co-operation, unlike other international structures which exist in the world today.

Mr. Bottomley

What about a policy?

8.53 p.m.

Mr. George Wigg (Dudley)

I waited until the end of the debate and until it was too late for the Under-Secretary of State for Commonwealth Relations to reply to me, for I did not want to embarrass him by asking him to deal with the point which I want to raise. I want to deal with the subject of Commonwealth defence. I remember the first defence debate——

Mr. Deputy-Speaker (Sir Gordon Touche)

I will call the hon. Member's attention to the fact that this is a debate on the Civil Estimates.

Mr. Wigg

I could easily have brought myself in order, Mr. Deputy-Speaker, by putting an Amendment on the Order Paper to insert the words "military affairs" in the Amendment which is being discussed. In my submission, political and military stability link up with capital development in the Commonwealth and I am, therefore, in order. Moreover, the Minister has been talking about agencies for dealing with the peaceful use of atomic energy, and I submit, therefore, that if it is in order to discuss atomic energy it must be in order to raise the vital issues of defence.

Mr. Deputy-Speaker

It is altogether outside the terms of this Amendment.

Mr. Wigg

If it is in order for the Under-Secretary to talk about the institutions of co-operation inside the Commonwealth it should surely be in order for me to talk about a similar institution which does not seem to function very easily. It may well be that the subject I want to raise is a matter for discussion at the fortnightly meetings of the Liaison Committee. I do not want unduly to complicate what I have to say, but I am referring to economic matters such as the economic stability of Malaya, which is maintained by the existence of Commonwealth troops not only from this country but by the New Zealand regiment and five battalions of Gurkhas.

It is a matter of very great regret that this field of co-operation receives little or no attention. I want to refer the House to Colonial No. 304, which appeared about four years ago, in which the fruitful idea was put forward that, it being beyond the capacity of this country to train officers from within the Commonwealth, there should be set up a Commonwealth Sandhurst.

That was a first-class idea, but nothing has been done. What was true when that White Paper was published is even more true today. If we want economic and financial stability in Malaya at some time young Malayans must have an opportunity of getting the training, and higher forms of training which will qualify them for the higher military posts.

Mr. Deputy-Speaker

The hon. Member is going very far from the Amendment. This is a debate on the Civil Estimates and we are dealing with a particular Amendment.

Mr. Wigg

I entirely agree that we are dealing with Civil Estimates, but there is no other opportunity for me to raise this matter. I waited until the end of the debate so that I should not impede any other hon. Member and I submit that I am in order because I am speaking within the terms of the Amendment on the Order Paper.

I am pleading to the hon. Gentleman to examine—re-examine is perhaps the right word—the tentative steps which have been taken in this matter over the last ten years, which it has now become the fashion to neglect and the fashion to ignore, with the result that we go on living in a dream world. If, at any time, the situation in Malaya, which is only stabilised by the presence of Commonwealth troops, got out of hand, the demand would have to be met from—where? If no thought has been given to this problem, if it is being ignored by the Secretary of State for Commonwealth Relations, we might be faced with an economic collapse which would have a serious effect throughout the Commonwealth. That is why I contend that what I am saying is within the terms of this Amendment. It would have a profound effect not only on the economy of this country, but on Malaya and many other countries of the Commonwealth.

When this House first began to face the post-war problems of Commonwealth relations, I remember speeches made by Sir Anthony Eden and the present Leader of the House. I would commend hon. Members who have more recently become interested in Commonwealth affairs to read those speeches. A picture was painted of the most intimate relations inside the Commonwealth in dealing with this problem of defence on the ground that it was beyond the capacity of this country to discharge those obligations. If that were true in 1945, how much more true is it in 1958. So frightened are we of speaking the truth to our Commonwealth partners that anything which appears a little awkward is never laid before them. The problem is buried until perhaps one day it re-emerges. Then what is to happen?

I should have thought that at Montreal, or even in the Liaison Committee, at its fortnightly meetings, we might explore the possibilitiy that one day Malaya may have to be reinforced. Who is to do the reinforcing? One of the most fruitful things that has happened since the war has been the establishment of the Commonwealth Division.

Mr. Deputy-Speaker

The hon. Member cannot pursue that topic.

Mr. Wigg

I quite agree that it would be wrong for me to pursue it, but I should have thought, with respect, Mr. Deputy Speaker, that it was in order to mention it, because this is a sphere of Commonwealth relations which both sides of the House have found it convenient to forget. I, like an old dog, have dug in the garden and brought a bone here.

Mr. Deputy-Speaker

The hon. Member should have brought the bone into the debate on the Defence Estimates.

Mr. Wigg

With great respect, Mr. Deputy-Speaker, it would have been quite out of order for me to have raised Commonwealth defence matters on the Defence Estimates. They are not borne on those Estimates, nor are they borne on any of the Service Estimates. I can raise them only at this time. I always defer to the Ruling of the Chair and I say that with great respect.

I want to put some ideas into the Minister's head. Indeed, they are probably there already, for I believe that he shares my views. I want him to attend a meeting of the Liaison Committee or to take an early opportunity of raising this difficult problem with our partners in the Commonwealth. I should have thought that the most fruitful idea would have been to suggest raising Commonwealth battalions to take their place in Her Majesty's Brigade of Guards in discharging public duties in London. What a fruitful and interesting contribution that would be.

Mr. Deputy-Speaker

It is not in order on the Amendment.

Mr. Wigg

I mention it only by way of illustration and as another example of Commonwealth co-operation which would catch public imagination not only in this country, but in every country throughout the Commonwealth. We want living institutions to evolve, to strengthen every method of co-operation and to make the Commonwealth not merely a drab word and a subject which we mention only on such days as that which used to be called Empire Day. We want to make it something which lives and grows. I greatly regret that the ideas which were fostered by Sir Anthony Eden and the present Leader of the House have been forgotten on the Government side of the House. At least, nobody seems to do very much about them. Yet it was the motif which ran through our early defence debates—that there would be very great contributions in this field. When the challenge came, in Korea in 1950, the ideal sprang to life.

I see again that I am trespassing on your good nature, Mr. Deputy-Speaker. I will keep the House for only one minute more, if you will allow me. The Minister will now understand why I waited until he had finished his speech. I am asking him not to forget this question, because if he forgets it the time may not be far distant when he or his successor may wish that they had taken notice of what I am saying now. I believe that the good will is there, and that it could become a practical and living reality, but it needs imagination.

Although the hon. Member occupies a junior position in the present Administration, he may remember that Britain still stands and should stand for primus inter pares. We should not be content to take a back seat and merely wait on the march of events. We should take the lead and initiate the ideas. If not all our Commonwealth partners will try them, at least some might. I should have thought that our experience of the last thirteen years points to the fact that co-operation in defence matters could become a reality if there is sufficient imagination and courage to face the problems.

Mr. B. Harrison

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Main Question again proposed:—