§ LORD SEMPILL asked His Majesty's Government whether any agreement has been reached, or is under negotiation, with the United States of America, for the establishment, after the war, of a world bank entrusted with the right to issue and recall the currency and credit of this country.
§ The noble Lord said: My Lords, the question that stands in my name has already been before your Lordships' House on three occasions, and leave was asked to postpone to a more opportune moment on December I and December 15—in both cases due to the lateness of the hour—and again on February 2 at the request of the noble and learned Viscount the Lord Chancellor. Your Lordships will remember that the Lord Chancellor thought that it was not desirable that a similar matter should be discussed in your Lordships' House and in another place at the same moment. The Lord Chancellor suggested that the Chancellor of the Exchequer might elucidate the point I had in mind in asking the question. I am very grateful indeed to the noble and learned Viscount who sits on the Woolsack for his consideration and advice, and I see that he was wise in suggesting that the statement then to be made by the Chancellor of the Exchequer in another place should be awaited.
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The debate in another place on February 2 and February 3 arose, as your Lordships know, from a Motion by my noble friend Lord Winterton, the member for Horsham and Worthing. There were many speeches of moment, which your Lordships will have read, and the debate, through its two-day course, showed the importance that right honourable and
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honourable members attach to this vital question of post-war economic policy. The Chancellor of the Exchequer, who spoke on the first day, gave a most important survey of the pre-war economic system, and some indication of the views of His Majesty's Government as to how it should be remodelled to meet post-war conditions. The right honourable gentleman, at one point in his speech, said:
It is wise and timely to survey the wide and difficult subject of post-war financial and economic policy.
This is a most satisfactory statement, and will be of particular interest to your Lordships as in a debate on a Motion that it was my privilege to move on November 18, 1941, the noble Viscount, the Leader of your Lordships' House, when replying for His Majesty's Government, indicated that the matter was receiving very earnest consideration, and that a declaration of policy would be forthcoming at no distant date. The matter was again urged by my noble friend Lord Addison on June 4, 1942, and so we come to the declaration by His Majesty's Government on February 2, 1943.
§ It was obviously not possible in the course of the recent debate in another place to cover all the ground, and the matter referred to in the question that stands in my name to-day was not directly referred to, and as it is, your Lordships will agree, of the premier order of importance I have to ask the question that stands in my name on the Paper. It appears that there is a movement, both here and in the United States of America, to establish a world bank which would control through its subsidiaries the currency and credit of all nations. There is apprehension that the Bank for International Settlements might be used as a nucleus for such an organization. Whatever controls the currency and credit of a country does, in fact, control its economic and, therefore, its social life. By providing credit, industry can be built up, and if credit is withheld it must starve. Such a power would extend not only over industry, but over the individual. This vital question is not a matter dependent upon expediency. It is not merely a question of technique. It is a question, and a most vital one, of fundamental principle. Are we, while paying lip service to the principle of freedom, 104 not only for individuals but for nations—a principle for which we have fought throughout our long history—about to have imposed a form of financial world dictatorship, which is not only the complete negation of freedom and democracy, but is the twin brother of Nazism?
§ In one country after another we have seen men, if one might so call them, so, opposed to the principles of freedom and democracy, that they have been prepared to sell their country to a foreign tyranny. We must, I suggest, be on our guard against those within the United Nations who may be planning, consciously or unconsciously, to sell their country to a world financial authority. The economic dilemma with which it is suggested the post-war world will be faced is, briefly, as follows. Unless the highly-industrialized nations can assure for themselves, internally, full employment and a rising standard of living at a stable price level, they will have revolution. The Beveridge Report, to which so much attention is very rightly being given in another place, at this moment and on thoroughly progressive lines, and other schemes to the same desirable end, will, of necessity, increase the rigidity of the price structure. Any attempt at deflation with a view to forcing down the general price level would, in fact, bring the whole structure down on our heads.
§ May I now suggest that your Lordships consider the international aspect of this matter? It is clear that any attempt to return to the nineteenth century system of international competition in cheapness, international free trade in money and international money lending, must inevitably make it possible for those countries whose peoples can be persuaded or forced to accept a relatively lower reward for their labour in relation to their efficiency and to the efficiency of their equipment, to undersell and put out of international business those nations whose price structure has been made rigid. That is a problem which must be faced. Herr Hitler's method of dealing with this same problem is to control the currencies of the whole of Europe from Berlin through subservient national banks. As your Lordships know, six new currencies have been created since the invasion of Austria in 1938, and the incorporation of that, the first of many suffering countries, in the Third Reich. The Nazi system enmeshes all within its 105 grip and since, after religion, economic forces are the strongest of all influences the strength of the German financial tyranny must not be under-estimated. By the means described, the German central control can determine the competitive power of all the nations under its heel. It can decide which industries are to flourish, and provide them with credit, and which are to starve. Moreover, such a system, as your Lordships are aware, not only can be, but is being, used to corrupt the venal, blackmail the timid, and ruin the honest and courageous. It is to an extension of this system over the whole world that those who advocate the establishment of a world bank—a world tyranny—are looking.
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How out of phase any such plan must be with the views of His Majesty's Government may be gauged from the Chancellor of the Exchequer's words on the 2nd February, when, referring to the plans to be, he said:
They will be based upon freedom, justice, unity and the continued advancement of mankind. There could be no greater contrast or bigger gulf between this and another projected world order, that of Herr Hitler.
There is, however, another technique for solving this problem, a technique in line with British tradition. Instead of a super-national world authority dictating to each nation what it shall do, this technique leaves each nation free to solve its own problems in its own way. It can export as much as it likes, according to its own needs and circumstances, but unless it wishes to make a present of its exports, it must import to the same value. Dropping the price level, subsidizing, and all other dodges for increasing exports would, under the system, be pointless, unless the nation was prepared to use similar dodges for stimulating imports. Here we have the principle of personal responsibility applied to the nation, with the sound maxim that if a nation misbehaves itself it gets itself into trouble until it can mend its ways.
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On November 18, 1941, I had the honour of bringing these proposals to the notice of your Lordships. They are set out in a small booklet of some sixty pages entitled A Twentieth Century Economic Policy. Since then, the suggestions outlined in that booklet have been widely considered in the Empire, in the United States of America, and by the appropriate authorities in the Governments of the
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freedom-seeking peoples now sitting in London. Millions are facing death in order that they may manage their own affairs in their own countries, and it is vital that any suspicion regarding the establishment of a world financial tyranny should be laid to rest with the most explicit and unequivocal reply to this question. I feel quite sure that this can be given, since the Chancellor of the Exchequer said in another plate on February 2: "There is nothing secret about any of these ideas." He was referring to ideas about economic reconstruction. Your Lordships will also have been further inspired in regard to the way in which the post-war economic situation is being viewed by a recent speech by the Home Secretary. The Times gave high praise to this speech, and described it as "one of a remarkable series of speeches by the Home Secretary." In it the Home Secretary said:
We have learnt much better how to make our money system our servant instead of the cruel task-master which has exacted so many unnecessary sacrifices from us in the past.
I beg to ask the question which stands in my name.
LORD STRABOLGIMy Lords, I was hoping that the noble Viscount, Lord Bennett, would give us of his wisdom on this important question, but perhaps your Lordships will permit me to say a few words before the Lord Chancellor replies to my noble friend Lord Sempill. I should like to congratulate my noble friend on his pertinacity and courage in bringing forward this question. I should like to tell him, though it will not deter him, if he does not know it already—no man from the County of Aberdeen would be deterred by any perils created by man—that he is challenging both in his speech and in his question very powerful, unscrupulous, and dark forces, and no one knows that better than the noble and learned Viscount on the Woolsack. My noble friend Lord Sempill, if I may say so respectfully, did not in the least exaggerate the perils he described in his speech.
I am sorry that another engagement has prevented the most reverend Primate from supporting my noble friend, as I understand he had arranged to do. I am speaking for myself on this matter. I know the views of my noble friends on these Benches, but this is a question which 107 has not yet come before the Labour Party as a whole and we have not found it necessary to lay down any kind of policy, so that no one can speak for the Party on this matter. I am very encouraged, however, by the fact that we have the most reverend Primate on cur side, and I should like to remind your Lordships of what he said because I believe that he has put his finger on the very centre of the problem. In theory, this idea of an international bank with control over currency and credit throughout the world is a very fine idea. People talk about an international currency and its value to commerce. But unless this international bank is responsible to an International Government or a Super-State, it would be a tremendous danger to the liberties and therefore to the lives of all mankind. You cannot have an irresponsible body with these tremendous powers; and if I thought that this was being smuggled through by the people who control Governments in the various countries concerned, I myself would advocate the raising of the first barricade to resist it.
My noble friend referred to the Bank for International Settlements. There is the model—in theory very good; in practice a thoroughly mischievous organization. Let me remind your Lordships of what has happened there—I think my noble friend referred to it. It is still in being; why I do not know. The German representatives are Dr. Schacht, who would be in anything of this kind, and Baron von Schroeder, the German banker, who is one of the guiltiest men in Germany. On his shoulders, I believe, history will lay much of the blame for the tragedy which now afflicts the world. This is the high German financial authority who brought together von Papen and Hitler and caused them to collaborate, so making the formation of the Nazi Government possible, and by that act precipitating the present world war. He remains a director, as does our own Mr. Montagu Norman, Governor of the Bank of England, and another British director.
The President of the Bank is an American banker, Mr. McKittrick, formerly a partner of Higginson & Co. This is not ancient history. This Bank for International Settlements exists and intrigues now, and, as my noble friend Lord Bennett will remember very well, in 1937, against 108 the Standstill Agreement—and this will not be beyond the knowledge of the noble and learned Viscount on the Woolsack—Higginson & Co. made a loan, and a considerable loan, to the I.G. Farbenindustrie. For what purpose? In order to buy arsenic for Germany from Sweden for the manufacture of the poison gas known as Adamsite. Mr. McKittrick was a prominent member of Higginson & Co. and is still the President of the Bank. He was recently over here—I believe this is common knowledge; it has been published in the Press—and taking soundings about the possibility of what was called a negotiated peace with Nazi Germany. His Swiss confrere on the Board of the Bank was very active in this country also in the same direction. We all know the sad story of the way in which this bank betrayed the Government of Czechoslovakia by handing over its funds to the German invader. This bank is still in being; it is still active; it still has Japanese, Vichy French, Italian, German and British directors upon it. If that is to be the model for an international bank, then I think that we should all be most grateful to my noble friend for ventilating this question in your Lordships' House.
I should like, if I may, to add to the question which my noble friend has put to the noble and learned Viscount. My noble friend has referred to the proposal for an Anglo-American arrangement. Is Russia to be in on this? She is our Ally. We have a twenty-year agreement with the Russian Government to collaborate with them in economic matters as well as in political matters. I should like respectfully to ask the noble and learned Lord Chancellor to tell us, when he comes to reply, whether it is proposed to consult Russia before we go further with such proposals. The arguments as put forward by the Chancellor of the Exchequer in another place are very nebulous. On a careful reading of his speech I do not really understand why the Lord Chancellor found it necessary to "ride off" my noble friend on February 2; because the Chancellor of the Exchequer was very guarded and I could draw very little information from what he said.
There is the case as I ventured to put it in support of my noble friend against this proposal. I hope that the Lord Chancellor will be able to give my noble friend some comfort. If he does not, I hope that my noble friend will pursue this 109 matter and that we shall enlighten the public on both sides of the Atlantic as to what is afoot; and, above all, make it clear that no irresponsible body—irresponsible in the sense of not being responsible to a Government—no irresponsible body, as proposed, shall have this immense power over the prosperity, the liberties and the lives of men.
§ THE LORD CHANCELLOR (VISCOUNT SIMON)My Lords, my noble friend Lord Sempill will agree that the question on the Paper, which is the matter to which I propose to reply, deals with a topic that is of a very difficult and technical kind, and I, at any rate, feel it better to answer his question categorically, and not to be tempted to spread observations on this occasion over a larger field. All these banking subjects require for proper treatment not only precise language but very considerable study. I gather that my noble friend put his question in a spirit of anxiety. I am very glad to relieve his anxiety altogether. The answer to his question is this: There are no negotiations proceeding with the United States of America and no agreement has been reached or is contemplated for the establishment of a world bank which would have the right of issue and recall of currency or credit of this country. The right of issue of currency in the United Kingdom is governed by legislation, and Parliament's consent would be required for any change in the position. The credit of this country also is not a matter which can, or would, be put within the control of a world bank.
LORD SEMPILLMy Lords, I thank the noble and learned Viscount on the Woolsack, for his extremely interesting and satisfactory reply.