§ 10. Viscount Hinchingbrooke
asked the Secretary of State for the Colonies what steps are being taken to authorise East African Governments to initiate policies of deficit financing at low interest rates and to establish centralised banking facilities and exchange equalisation funds on modern lines in order to promote a high level of business activity and employment at stable prices.
§ Mr. Iain Macleod
There has been careful study of the important matters raised by my noble Friend. For example, the I.B.R.D. mission to Tanganyika reported that it would be wiser not to take action to establish central banking facilities in East Africa until political developments in the area were clearer. It is doubtful whether, in present circumstances, deficit financing on a substantial scale could be practised without destroying confidence in the currency. The East African Currency Board is empowered to invest locally up to £20 million of its reserves, and, of course, Her Majesty's Government are giving substantial financial aid to these Governments to stimulate economic activity and employment.
§ Viscount Hinchingbrooke
I am grateful to my right hon. Friend for that reply, but can he confirm that in Kenya, for example, just at a time when the economy is somewhat placid, to say the the least, taxation is being increased, thus reducing the impact of the private sector on public financing? Is it not time that some high-powered Treasury officials were sent out to inquire into the possibility of reflationary activities, always guaranteeng a stable price level at the end of them?
§ Mr. Macleod
I am very conscious of the importance of these subjects. The head of my Finance Department in the Colonial Office has visited Kenya twice in very recent weeks and among other matters has discussed these very points. In reply to my noble Friend's suggestion for a high-level inquiry, perhaps I may send him the report of the I.B.R.D. mission to Tanganyika which, with certain reservations, will apply equally to Kenya and Uganda. I think that he will find an answer to most of the points he raises there.
§ Mr. G. M. Thomson
Can the Secretary of State persuade his noble Friend to apply his progressive Keynesian economics to this country as well as to Kenya?