GOLD AND DOLLAR RESERVES (Hansard, 15 March 1961)

§ Mr. Harold Lever (Manchester, Cheetham)
I am sorry to see that the right hon. and learned Gentleman the Chancellor of the Exchequer is not in his place.

§ Mr. Deputy-Speaker (Major Sir William Anstruther-Gray)
Order. The hon. Member is perfectly in order, if he so desires, in raising a point on which he requires the presence of the Chancellor of the Exchequer, but unless hon. Members have warned a Government Department that they intend to raise a matter on the Adjournment affecting that Department it is not fair to expect that Department to be represented to reply. Therefore, it has been the practice for the Chair to deprecate the raising on the Adjournment, without warning, of subjects to which an adequate answer cannot be given.

§ Mr. Lever
I am very loath to speak under a cloud of deprecation, as it were, but the Chief Patronage Secretary, who is here, is a responsible Minister of the Treasury and is paid a considerable salary as an official of the Treasury. The matter which I wish to raise is of some public importance and as I am speaking on the spur of the moment, without preparation, I do not see why the right hon. Gentleman, who is paid to spend his time at the Treasury, should not also speak a little more extempore than is his wont.
After all, the right hon. Gentleman must be getting a little tired of his sole contribution to the oratory of the House being, "I beg to move, That the Question be now put", so gagging his fellow hon. Members from expressing their opinions, and the phrase "Tomorrow", from which one gets an impression of continuous procrastination.
Much as I would like to defer to the concept of giving the Minister warning, I cannot do so. It is right that some form of protest should be made against the way in which the Government take it for granted that the privileges of hon. Members, especially back benchers, can be taken for granted or ignored. We have had this process over and over again, and that is why I am speaking on the Adjournment.
Having kept the House up until this ludicrous hour in this ruthless way, even then with totally inadequate time to debate the very grave issues which we have been discussing throughout the night, the Government think that Ministers are now entitled to go home and the Chief Patronage Secretary thinks that back benchers will give up their right to the Adjournment.
Two extraordinary things have already happened during the course of the day. My hon. Friend the Member for the Western Isles (Mr. Malcolm MacMillan), perhaps a little too exhausted to protect his own parliamentary rights after speaking so splendidly and with such clarity on the Bill we discussed during the night, asked my hon. Friend the Member for Leek (Mr. Harold Davies) to give way so that a question could be put. I am sorry to say that an attempt was made to prevent my hon. Friend the Member for the Western Isles from 1708 exercising his rights as a Member. That was astonishing.
I hate to tread on sore toes, as it were, but I have to say this candidly. It was with the greatest reluctance that I followed my party in the complaint against Mr. Deputy-Speaker. Tonight, he attempted to prevent my hon. Friend from exercising one of the most preciously regarded rights of a back bencher. Having myself given way earlier—and I am not urging that this was done with intent, but the fact is that my rights as a back bencher—

§ Mr. Deputy-Speaker
Order. The hon. Member is making me a little anxious lest he should find himself in the position of criticising the Chair, which leads to difficulties. I do not believe that on the Adjournment it is right to go back to a previous proceeding dealt with by the House in Committee.

§ Mr. Lever
If I have given anybody the impression that I am criticising you or any occupant of the Chair, nothing would grieve me more. I should like to say, in unmistakable terms, that that was never my intention. I thought that I had made it plain that it was inadvertence, but the fact is that I lost my right to speak.
I want to raise the question of the presentation of the gold reserves. It seems to me that the gold and currency reserves are of vital importance to the country. It is all right saying, "You should have given notice to the Chancellor of the Exchequer". There were plenty of Ministers here who could have dealt with this question had they chosen to face the music and accept the rights of hon. Members to raise these subjects on the Adjournment. It is only a matter of convention that we give notice. There is no rule to that effect. I see that there are present hon. Gentlemen with conspicuous intelligence and experience who will perhaps repair the omission of the Minister.
This is a simple point. I will go this far to meet the hint which I have received from the Chair. I will try to make my argument within a short compass, and very simple.
We are a trading nation, running with inadequate reserves and constantly terrified by the position which will arise if foreigners become anxious about our 1709 balance of payments and the state of our currency and reserves. It follows that one of the reasons why we publish the state of our gold and dollar reserves is that foreigners shall know that we have adequate reserves to meet any likely commitment. It equally follows that we should see that our reserves should present as good a picture as we honestly can of the state of those reserves, but because of quaint doctrinaire decisions by the Bank of England the reverse is the practice, and the Bank of England constantly states the currency reserves of the country on a wholly inadequate basis, purely out of old-fashioned obstinate habit.
I am not without justification, even without warning, in using on behalf of back benchers our traditional right to raise matters such as this on the Adjournment and asking the Minister, or the Lord Commissioner of the Treasury, whom I see present, or any of his supporters, to deal with the point. I am raising.
Why do we constantly reveal our reserves in the worst possible light by leaving out of account the immense foreign investment which we possess; the immense dollar bond holdings which we possess; and the immense variety of other investments which are being made annually at some cost to our reserves? The least we should do if we are investing abroad is to see that the reserves bought by the labour of the people of this country are placed publicly to the credit of our people who have made the efforts by way of exporting capital—perhaps not altogether wisely. We ought at least to record the amount of this export of capital in the credit of the reserves.
Another great advantage would be that everybody would know how much we had invested abroad in dollar security and the like. Everybody would know that if the need arose in the interests of our trade, in the interests of expanding our industries and there was a run on our currency, the currency would not be defended only by the last busman's wage increase but that it would be defended by the dollar holdings held by private individuals.

§ Mr. John Rankin (Glasgow, Govan)
As my hon. Friend is deploring the con- 1710 cealment of these other reserves, can he enlighten us by disclosing them, even if he can do it only approximately?

§ Mr. Lever
Nobody knows how big the reserves are. One of the reasons why I plead that we should register with the Bank of England all these dollar holdings and dollar securities and publish the figure with the gold and dollar reserves is that they are a large part of the reserves. I press for this because the public are largely in the dark about the extent of these holdings.
I asked a Question about this some years ago and got the most extraordinary reply from the Chancellor of the Exchequer. He said that from the Canadian figures he had worked out our dollar holdings to be X million dollars. The point was that we had no statistics at the time, and the Chancellor did not know; he had to go to a Canadian source, which made a rough approximation of the size of our dollar holdings. This will not do. We need better information about the extent of these dollar holdings, and we should take them into consideration and announce them with the rest of the gold and dollar reserves.
This is a desirable thing, but it is being obstructed, for some reason, by the Bank of England, and, presumably, by the Treasury. I take it that the Minister is waiting to reply, although he looks intensely bored by the debate. This is a serious matter, and I hope that when I leave him time to reply he will address himself to these serious and fundamental matters.
Even the psychological disadvantages to this country are considerable in their economic consequences. It is not only the hard-faced men of Zurich who are responsible for this run on sterling; it is the ordinary people who are holding sterling in the course of their trading operations who are becoming apprehensive and are feeling nervous, because they think that our reserves are inadequate to sustain the existing volume of trade. One reason why our reserves have not increased in spite of our great efforts over the past fifteen years—

§ Mr. Malcolm MacMillan (Western Isles)
The Minister has paid very little attention to my hon. Friend. He has not taken a single note in order to give any answers on points of detail.

§ Mr. Lever
I can only hope that HANSARD will record the nature of the questions asked and such answers as are vouchsafed by the Government.

§ Mr. Rankin
The Minister may have a very powerful memory.

§ Mr. Lever
I plead earnestly with the Government to reconsider the whole question, when we have people rendered nervous about the state of sterling and we are moving into a period when this is causing a great deal of anxiety. There is no reason why the anxiety of the holders of sterling outside the country should not be allayed by letting them know the reserves that we have accumulated as a result of the thrift of our people. It is not generally recognised that since the war enormous sums of money have gone abroad by way of investment, because no proportion of the figure is included in the announced reserves, which are restricted solely to the gold and dollar holdings at the Bank of England.
This is very important at present, because voices are being heard urging this country to take a stand in supporting the idea of doubling or even trebling the price of gold. I am sorry that this artificial juggling, which alters nothing, should have been substituted for the kind of measure I am advocating, which has solid reality behind it, namely, to increase the amount of our announced reserves by disclosing the actual reserves held by the Government. Nothing would be added to our reserves by joining in the movement to increase the price of gold.
It is said that the Government ate thinking of supporting that move, but I cannot believe it is true, because the Government have a creditable record of co-operation with the United States Treasury which, in turn, has a creditable record in rejecting these desires to monkey with the price of gold—

§ Mr. Harold Davies (Leek)
This is a vital point. This debate will concern the Common Market and the Free Trade Area. Statistics such as these are essential for an assessment of the real strength of Britain vis-à-vis the Common Market, E.F.T.A. and the Commonwealth.

§ Mr. Lever
That is a little removed from the point I am making. It is more 1712 relevant to the strength of our currency until we have reached any kind of agreement which will protect all the currencies of the major trading nations, which is the ultimate goal of the President of the United States, and I think it is the goal of the Prime Minister when he discusses these matters, but in the meantime this move would be facilitated if we disclosed the true reserves held by the people of this country in gold and dollars, and dollar securities.

§ Mr. Rankin
While a great deal of money has been invested abroad, is it not true, nevertheless, that much of that investment today is now, perhaps, not realisable? How could we then count it as added to our wealth?

§ Mr. Lever
That would be a matter of assessment by foreign observers, but if, for instance, our total holdings of dollar bonds amounted, on current valuation, to 5,000 million dollars or more, even discounting some of that and even assuming that the outside world said that we could not realise all of it if we wanted to, it would represent an addition of a very substantial sum to our reserves, probably, even with a discount, greatly exceeding the total amount of our present gold and dollar holdings.
In other words, we are concealing the greater part of our reserves. We desperately need the confidence of the world, and we are in fact behaving in a way which is less likely to attract it, with really painful results, because, in our situation, it is vital that we should command world confidence for our currency. I am sure that hon. Members on both sides of the House will realise that this is a vital matter to a great trading nation like ours. We must preserve in the world a feeling of confidence in the stability of our currency.
Recently, we had rumours of devaluation after the revaluation of the Deutsch-mark, and the Chancellor of the Exchequer made earnest denials of any such intention on the part of the Government. I hope that he means it. There is no reason at all why we should devalue the £. If we had a better Government, there would be even less reason, but in fairness to this Government, I must say that there is not the slightest reason to devalue the £. The £ is not an overvalued currency. The trouble is that these denials, 1713 quite understandably, are taken by the outside world to be a mere matter of form.
The Chancellor of the Exchequer, of course, is almost bound to deny any pending devaluation until it actually occurs. What the world is watching is not words and assurances from the Chancellor of the Exchequer, which count for nothing, but for facts. I mean no reflection whatever on the right hon. and learned Gentlemen. It is simply that the most honourable Chancellor is obliged to deny a devaluation even if he thinks it is coming, in the vain hope that he will be able to stave it off or prevent its premature disclosure. No Chancellor is bound to be absolutely candid with the world on these matters, and that is generally understood. I think it was Dr. Johnson who said that a man is not upon his oath when composing lapidary inscriptions, and the Chancellor of the Exchequer is never upon oath when stating the Government's intentions with regard to devaluation or revaluation of the currency.
On the other hand, if assurances will not defend the £, actions will, and one action which could be taken, which is relatively simple to take, is to see that our reserves are properly proclaimed to the world so that the congealed industry and sacrifice of the people of this country—that is really what the investments are—are plainly shown in the balance sheet which we present of our foreign currency resources.
Exports of capital from this country since the war took place at no small sacrifice. In my view, they have taken place on too large a scale for health. They have played a very great part in compelling Governments, just as soon as industry has started to get into its stride, to take deflationary measures. We have been over-exporting capital and, as a result, so soon as industry gets under way, we find that we have a balance of payments crisis.

§ Mr. Harold Davies
It ought to have been kept at home to use in underdeveloped areas like the crofting Highlands.

§ Mr. Lever
I cannot quite perceive the connection between crofting and the export of capital. My hon. Friend is raising that tender question again. I agree that capital should have been kept here and 1714 used for industrial developments at home—

§ Mr. Rankin
Some of it.

§ Mr. Lever
A lot of it; but whether it should have been used to provide minibuses in the Outer Hebrides or light industry to supplement the part-time earnings of crofters is quite another matter. Without in any way reneging on our international responsibilities, much of the investment which has gone abroad should have been used at home, but if it has gone abroad let us at least have the credit for it in the balance sheet of the country's reserves which the Bank of England shows.
I gather from a certain taciturnity of expression on the Government Front Bench that it is unlikely that I shall receive a detailed reply this morning. I apologise, Mr. Deputy-Speaker, for not accepting as readily as I normally would your gentle hint as to conduct, but I hope that you realise that that was not out of any disrespect for you or for the Chair. In the light of recent happenings in the House I felt it vital that all hon. Members should be jealous of all the rights of Members and the procedures of the House which, however little they are understood outside, we know all too well are part of the safeguards which have been developed for protecting democracy and the rights and liberties of the people.
The House has the most out-of-date procedure and rules of any Legislature in the world and yet it is the most durable legislative machine in the world and the most fitted to protect the democratic liberties and rights and traditions of our people.

§ Sir Douglas Glover (Ormskirk)
The hon. Member for Manchester, Cheetham (Mr. H. Lever) said that he would give an equal time to hon. Members on this side of the House to reply to him as he himself took, but I have been waiting here for nearly half-an-hour and he has left only about four minutes. It is typical of his way of being fair that he has taken nearly all the time available for the Adjournment and has left no time for a reply to his argument.

§ Mr. H. Lever
The hon. Member knows that one gesture of his hand would have brought me to resume my seat and to have left him ample time. He is not being fair.

§ Sir D. Glover
When the hon. Member speaks in the House he nearly always says many things with which many of us agree, and there is much to be said for the suggestion that we should disclose our hidden reserves. I am sure that hon. Members on both sides of the House will take great satisfaction in the fact that today this great country is once more a creditor nation and that our investments overseas have so strengthened our position that we are no longer suppliants but are a great trading nation with overseas investments probably as strong as they were before the war.
The hon. Member is not very wise, however, in trying to have these mobilised purely as a defence to the day-to-day currency exchanges across the counter. We have moved a long way in the last three or four years in increased liquidity through the International Monetary Fund and the World Bank, and I believe that without disclosing these hidden reserves our position is strong enough for all the trade which we require to do.
I reinforce what he said about the £ not being undervalued and about there being no question of devaluation being necessary. We are capable of defending our currency in the world market without disclosing these hidden reserves. There are difficulties in carrying out a survey because the figures change from month to month and year to year as one bond is bought in New York and another is sold in South America. The investments are not necessarily static. But if we could find out to a more precise 1716 extent what the hidden reserves are, and use our publicity to let the rest of the world know that the money was there, I am sure that it would strengthen confidence in this country and help others to realise what a great part this country has played in the development of the world since the end of the war.
That has nothing to do with this disclosure or the strengthening of our own currency, but it would show that, for our resources, we have done more for the development of underdeveloped and developed countries in the last fifteen years than almost any other country. Our record is probably just as good as, if not better than, that of the United States of America. That will come as much of a shock to a great many nations. If they realise what we have done in the way of investment I think that it might be of some encouragement to the great German nation and, indeed, to every nation, much to the benefit of all mankind.
Therefore, although I think that the hon. Member for Cheetham rose in a rather facetious mood at the beginning of this Adjournment debate, I think that, as is so often the case, he has raised a matter of interest and importance, and I do not think that even at this hour of the morning we have done other than used the time of the House in a most valuable manner.