HL Deb 17 December 1945 vol 138 cc677-776

2.40 p.m.

THE SECRETARY OF STATE FOR INDIA AND BURMA (LORD PETHICKLAWRENCE) rose to move to resolve, That this House approves the financial arrangements between His Majesty's Government and the Government of the United States, including the final settlement of Lend-Lease and other claims arising out of the war, as set out in Cmd. 6708; welcomes the initiative of the Government of the United States in making "Proposals for an International Trade Organization," Cmd. 6709, and approves the participation of His Majesty's Government in the discussions proposed with a view to arriving at an international agreement upon the basis of the suggestions put forward; and approves the proposals for setting up an international Monetary Fund and an International Bank for Reconstruction and Development as set out in Cmd. 6546 of 1944.

The noble Lord said: My Lords, in moving the Resolution which stands in my name on the Order Paper, I am conscious of a deep sense of responsibility. I have in fact a Herculean task to perform. First of all, I have in brief to expound and justify to your Lordships three complicated Agreements, one of which is the Loan Agreement, another the Bretton Woods Agreement, and the third the Trade Treaty, which I propose to touch upon only briefly, and to leave to my noble friend Lord Pakenham later in the debate to handle at greater length. But that is not all. I conceive it to be my duty, so far as I can, also to help to build a bridge between the Old World and the New, which are separated geographically by three thousand miles of ocean, and which might, if we were not careful, become grievously divided by commercial and economic antagonism.

It would be idle to pretend that the settlement I am asking you to accept today is in full accord with the desires of the British people and of His Majesty's Government. We had hoped to secure acceptance by the Government of the United States and later by Congress, of our claim that, as we had thrown into the common struggle all our resources, and had stripped ourselves bare in the process, the generous help known as Lend-Lease would be extended for the whole period, right up to the restoration of the peace economy of our country, and not merely for the period of the "shooting war" alone. We failed, and further, we had to make many and various concessions which we should have preferred not to make.

But, having said this, I feel that it is only right to put before your Lordships how the matter appears to our neighbours on the other side of the Atlantic. They regard the settlement as an exceedingly generous one from their point of view. -First and foremost, they note that they have written off the main body of Lend-Lease, amounting to something of the order of £4,000,000,000 to £5,000,000,000 net, and further, that the objects of Lend-Lease which have accrued since the end of hostilities have been treated on the same basis as the fresh credit which they are according to us in this Agreement. Secondly, they are making to us a loan on terms which in their view are far more liberal than would be justified merely on a commercial basis. In this respect they point in particular to the waiver clause, about which I shall have something to say before I sit down. In the third place, they have made at our request many important concessions, and the final terms of the document at the end are in many respects very different from, and much more in our favour than those which they put forward at the beginning, and to which they pinned their faith. It is true that they have attached certain conditions—so-called strings—to the Agreement, but in their view these are mutual engagements designed to promote the widest measure of general international commercial prosperity. That view may be right or it may be wrong, but at least we ought to understand their point of view on this matter.

This Agreement, therefore, is a compromise; and, like all compromises, it falls far short of what either party set out to obtain. It has been reached by hard bargaining, and personally I am convinced that at the end there was no margin on either side for further concessions. Nevertheless, your Lordships will have heard with approval that our able, devoted and patient negotiators parted from their opposite numbers who represented the United States in a spirit of personal friendship and complete good will.

After that brief introduction, I will turn to the Agreements themselves, and begin with Bretton Woods. The so-called Final Act of Bretton Woods proposes the setting up of two pieces of machinery; the first is the International Monetary Fund and the second is the International Bank. The main purpose of the Fund is to promote exchange stability. The Fund must be set up before December 31 of the present year, and our signature is necessary for this end. Members of the Fund have to contribute their quotas and will be entitled, under certain specified conditions, to borrow currency from the Fund. Each currency has at the start a parity exchange value which is expressed in terms of gold or of United States dollars. It is this provision, of course, which arouses the greatest controversy on this part of the Agreements. There are those who violently oppose this proposal, and there are those who support it. Many of those who oppose it say that this is a return to the gold standard. Some even go so far as to say that by this Agreement, if we accept it, the pound is anchored to gold. I venture to suggest that both those statements are entirely inaccurate, and I should like to make this personal reference with regard to the matter. In the middle 'twenties, when the gold standard was being restored by the then Chancellor of the Exchequer, Mr. Winston Churchill, I was one of a very small band of members of the other House who opposed that return. I have never changed my point of view; and if in fact this was a return to the gold standard as we understood it in days gone by, I for my part would not be standing here to defend it. What is true of myself is, of course, equally true of that great economist who has been one of the negotiators, Lord Keynes, who, understand, is likely to be here to-morrow and to take part in this debate.

What is true, of course, is that by this Agreement sterling is related to gold. I should like your Lordships to face this fact. If there is to be any stability in exchanges, if, in fact, there is to be any relation between our currency and other currencies, and if at the same time one or more of those currencies is in fact related to gold we cannot escape from relating our currency to gold. And that is precisely what this Agreement does. Inevitably, at any time, under the circumstances, there must be a relation between our currency and gold. The only question is the degree of flexibility which attaches to that parity. I venture to suggest that under the Bretton Woods Agreement there is considerable flexibility. I am not going to read to you the terms of the Article which refers to this, for I feel sure that nearly everyone here has those terms in his mind. Broadly speaking, they are these. We have an absolute right, at any time, to change our parity up or down by not less than ten percent. We have a right, subject to concurrence by those who are in charge of the Fund, to make a further alteration of ten per cent. and, over and above that, there is the possibility that we may secure approval for a further change in the parity value. It is expressly laid down that the Fund shall not prevent these additional changes in parity value if the equilibrium and the position of the finances of the country that is seeking this alternation are at stake.

I cannot, myself, see how, short of throwing over the whole basis of exchange stability, you could have much greater flexibility than that. I would like to remind your Lordships of how the trouble, in the inter-war years, arose. It arose from two causes. First of all, there was the competitive depreciation of many of the currencies of the world, and this Agreement, this Monetary Fund, in its terms, will do a very great deal, when it comes into effect, to prevent a recurrence of what happened in that respect in the inter-war years. The other cause of trouble was deflation. I should like to remind your Lordships of this. I do not think we can escape responsibility in this country. The country which first set out to deflate was not the United States, not the countries on the Continent of Europe, but this country of ours, which, at the, dictation of the Bank of England, deflated its currency and returned to an old parity of gold, at a time when it was most injurious to do so for our own interests, and thereby brought us into great trouble. It was not until after that that the United States started a spiral of deflation which, first of all, drove us off the gold standard, and, later, drove the United States also off the gold standard. Or rather, it forced the United States to change its parity; it did not, exactly, drive the United States off the gold standard, because the United States preferred to take that alternative course.

Looking at these facts, with regard to the future, and considering the possibility of deflation, I say that I should think there is reason to believe that the nations concerned have learnt their lesson; that a nation which sees a deflatory process threatening to take place, will take steps to prevent it occurring. I have never departed from my view that, though our currency may be related to gold, goods are the real measure on the question of value. As I have expressed it in times gone by, the value of money has got, ultimately, to be construed in terms of baskets full of goods.

I say there is nothing in this Agreement to prevent that ultimate conclusion being reached. Supposing it does not happen, suppose the worst takes place—I do not believe it will, I believe that humanity will be wise enough, having gone into error in years gone by, not to repeat that mistake—but suppose this whole system fails. Well then, there is an escape clause. Any member is entitled to break away entirely from the Fund, and, though I should certainly hope that that would not occur, and I should not advocate our entering this Fund lightly with that escape clause in mind, if the worst comes to the worst, and human beings show themselves so incapable that they cannot make use satisfactorily of that Agreement, that course is open to us to take. So the issue seems to me to be this. Do we want order and stability in the exchanges or do we want chaos and individual scrambling? With constantly fluctuating exchanges, international trade is bound to be exceedingly difficult and dangerous. I suggest to your Lordships that this country, this great maritime nation, depending, as it does, so largely upon foreign trade, not only for its prosperity but for its very existence, is bound to take any chance that offers itself of getting stability and order.

I ought, perhaps, to make allusion to one or two other matters in regard to the Monetary Fund. In Article XIV of the original document we are provided with a period during which we are free to deal with currency questions. It is quite true that in the Agreement with the United States this period is cut down to a shorter period. I regret this, but I am bound to point out that one of the reasons for this long period was the fact that our nation, in common with others, would not have means of purchasing foreign currency so essential to carry on during the interval. The fact that America is providing us with this credit does enable us to carry through without the discriminatory practice which it was contemplated might have to last for a longer period. On the other hand, in Article VII of the Fund Agreement, there is a provision which places difficulties in the way of any nation whose currency is in short supply, and it may well be that the difficulties we experienced in exporting to the United States in the inter-war period will be rendered very much less in the days to come owing to the operation of the Fund in bringing to book a country whose currency is in short supply. So much for the Monetary Fund.

The other instrument is the International Bank, which has for its purposes—and I had perhaps better read from those which are mentioned in the document itself—the following: To assist in the reconstruction and development of territories of members. … and to promote the long-range balanced growth of international trade.. In other words, the International Bank is for long-term credit, whereas the Monetary Fund is mainly for dealing with short-term difficulties in exchange.I need not go over in detail the provisions set out in the Articles relating to the Bank. They are those which are requisite for the purposes for which it exists. So far as I know, no exception has been taken to this very important instrument, which will, I hope, prove of very great value. It is not possible to predict the precise, direct use that this country will make of the International Bank, but it would seem to me that anything which restores the economic prosperity of the nations of the world cannot fail to be of great value, of essential value, to us.

I turn from these monetary agreements, concluded at Bretton Woods, to the trade proposals. I am not going to deal with them at any length because my noble friend Lord Pakenham will give you details. But I should like to draw your Lordships' attention to this. The title of this White Paper is "Proposals for Consideration by an International Conference …" I wish to draw your attention to the first three words. It is, of course, quite true that His Majesty's Government expressed their general agreement with the ideas lying at the back of this document, and I know that there are certain members of your Lordships' House who do not view with favour all the proposals in this White Paper. I will therefore content myself with saying this: none of these proposals binds us to any final decisions. The final decisions await the negotiations. Still less do they bind any other member of the Commonwealth. Quite clearly we could not do that. We could not hind them, nor any of the other self-governing members of the Commonwealth, and it is only if we get a consideration which seems to us adequate that we are obliged to take any steps at all to do what is requisite on our side.

I turn from that to the Loan or Credit Agreement itself. The main lines of it are very well known—the amount, the rate of interest, the delay for five or even six years before the first repayment has got to he made and the unique waiver clause. I should like to draw your Lordships' attention to the fact that that is not merely a postponement of interest, but a cancellation of interest for those years for which the waiver clause exists. Further, with regard to the waiver, I should like your Lordships to appreciate that the criterion on which the waiver depends is such that it will not involve an inquest into our economic position in this country by an outside agency.

I have already mentioned the fact that by the Agreement we wipe out the whole of the Lend-Lease engagements during the war, and that the amount borrowed since the ending of hostilities is put on the same terms as the new money credit which is the main object of the document. Of course, there are strings attached to this proposal, and some of them we would very much rather have been without. One is the limited amount of time permitted for us before the current dollar receipts in the sterling area 'are freed for purchase of other currencies. With regard to that I can only say that noble Lords must remember that this sterling area is a voluntary matter, and quite apart from this Agreement I very much doubt whether we could impose on holders of sterling balances in other parts of the world an indefinite arrangement by which all the current dollars that they earn are paid into our pool and never allowed to be used for the purposes for which they would like to use them. In the second place, there is the point of the abrogation after some fifteen months of the latitude for discrimination in Article XIV. I have already given a partial answer to that. In the third place, there is the obligation to negotiate with our sterling creditors for some adjustment of our sterling debts. Of this I will only say that we have not committed them in any way; they are not bound and it is for us to see how far they will go, in return for the greater flexibility which this instrument gives to currency, to make some adjustment of the sterling credit.

That is the picture, the picture of these Agreements and the question that we have to ask ourselves is: What are we going to do about them? We can accept. them or we can reject them. The Chancellor of the Exchequer in another place pointed out quite truly and cogently that if anybody proposes to reject, it is up to him to say what is the alternative which he suggests should be adopted. So far as I am aware, there were only two positive alternatives—if you can call them so—suggested in the other place or which I have seen suggested anywhere. The first one seemed to be a very lighthearted one. It was that we should have none of these Agreements and that we should earn our own way by taking off all controls and freeing industry to do exactly what it liked. I can only say that if anyone imagines that by allowing all sorts of luxuries to be imported, involving foreign, currency, and all sorts of practices to be adopted which would not help us towards an export balance, that is going to relieve cur present anxieties, it is flying in the face of all economic and reasoned commercial understanding. The other proposal which was made needs more careful consideration. It was that in place of these Agreements, with all the strings attached, with all the Bretton Woods and the other things, we should have gone for a purely commercial loan. If anybody takes that view, I would like him to realize that that possibility was not overlooked by those negotiating this settlement with the United States, and I do not think anyone who knows the facts will attempt to deny that it was quite impossible to obtain a commercial loan of sufficient magnitude to meet our essential requirements.

The whole amount of the French loan, I need hardly remind your Lordships, was a comparatively insignificant sum, and though we might have obtained a loan a little larger than that, there is an immense gap between the figures of that loan and the figures which would have been required to meet our contingent liabilities for the next few years. But, even had we been able to secure a commercial loan of the magnitude required on anything like the French terms, it would have involved an annual burden on this country which we should be quite unable to meet. Therefore, though at the first flush there may be something plausible about that proposal, I can assure your Lordships that it was investigated and the investigation yielded no positive result.

If we lay aside those two positive proposals, there remains the negative one, that we should leave matters alone ha the hope and belief that after a limited period of time, a different settlement would have been reached. I do not shut out: the possibility that had we done nothing now the logic of circumstances might have forced both nations into agreement; but if your Lordships think that after that interval we should have got a proposal far more favourable to us then, I think, you are in a dream world. Remember the comparative bargaining powers of the two countries, and remember that at the present time, at any rate, the demand for American goods by all countries will be enormous. I do not think there is the prospect of our reaching a settlement in a reasonable amount of time more favourable than that which we have secured in these proposals, or that we should be in the least likely to secure it.

To put that out of account, what would be our position in the meantime? What about the interval? I am not going to lay the principal stress upon the austerity it would have imposed on this country. That would have been grievous. Anyone who knows the facts, which I am not going to enumerate now, cannot doubt that the austerity would have been such as very few people in this country realize—far more grievous than (luring the war.


Could the noble Lord give any details? That is the one question about which the House is most anxious to know.


I will certainly see that an answer is given to that question, and if it were the principal point of my speech I would have prepared myself on it, but, as it is not, I am laying it aside. The austerity which would have been imposed is not the main burden of my objection, nor do I base even the main burden upon the fact that unless our industrial pump is primed, our industry will not be able to recover in a reasonable amount of time. The loan is essential to us in order that our industries may be started up again. I want to place it on somewhat less material considerations than that. I base it on the same consideration as Lord Halifax who, in a speech a few days ago to the English Speaking Union in the United States, used the following words: Were these Agreements to fail, could we hope that the relations between our two countries would escape continuing and dangerous strain which you and I should view with great anxiety? On this decision the pattern of world economy during the coming years will be largely shaped. For good or ill, we are now all members one of another. No single country or group of countries can expect to enjoy peace, prosperity or security alone. The world has grown top small. Therefore, my Lords, we are confronted today with two alternatives. One is to come into agreement with the United States to build up a new world order of finance and trade. The scheme admittedly an experiment which without good will will fail. So, in fact, will any scheme, however good on paper, fail if good will is not present, but with patience and with mutual understanding there is a real chance that it can be made to work, and, where it falls short, it can be amended and improved. The other alternative is to stand outside and fight a financial and economic battle with America, the outcome of which, for ourselves, no one can foresee. But the issue, I suggest, goes further even than that. I would beg any of your Lordships who contemplate voting against this Agreement to weigh very carefully before doing so what will be the consequence of its rejection. It would mean not merely a quarrel with America, but the end of all co-operation. We should destroy all immediate hope of building up a world order and we should be putting ourselves into a position of isolation. On the military field there were many people in the United States, before that country came into the war, who thought the prosperity of that great country and its vast internal resources could be built up on isolation. They learnt that that was impossible. I say to your Lordships, isolation is an impossible creed for any nation in the middle of this twentieth century. We dare not fail the future generation in this our country and the future generation throughout the world by embarking on so ruinous a course. I beg to move.

Moved to resolve, That this House approves the financial arrangements between His Majesty's Government and the Government of the United States, including the final settlement of Lend-Lease and other claims arising out of the war, as set out in Cmd. 6708; welcomes the initiative of the Government of the United States in making "Proposals for an International Trade Organization," Cmd. 6709, and approves the participation of His Majesty's Government in the discussions proposed with a view to arriving at an international agreement upon the basis of the suggestions put forward; and approves the proposals for setting up an International Monetary Fund and an International Bank for Reconstruction and Development as set out in Cmd. 6546 of 1944.—(Lord Pethick-Lawrence.)

3.21 p.m.


My Lords, the noble Lord who has just sat down began by saying that he felt he had a difficult and a very responsible task, and I am sure that all your Lordships will be grateful to him for the exposition which he has placed before us of these very complicated documents which were presented to Parliament only five days before they had to be discussed. I think we shall agree with the noble Lord on the advantage which is gained by having a settlement of accounts for Lend-Lease and Reciprocal Aid, a settlement, I think, which in the document which has been signed is declared to be complete and final. I was a little taken aback that the noble Lord did not dwell more upon the consequences to this country, its life and prospects, if this large amount of dollar credit is not now made available, and I think before this long debate closes we may be glad to have some information about that.

Studying the thing as impartially as I can, I do myself very clearly sec that there is an imperative demand for a large dollar credit, not merely to save this country from very severe austerities but for the purpose of enabling us to get going with our export trade. But whatever may be said as to the urgency of dollar provision, and however persuasively the noble Lord puts these documents before us, here is the plain fact: that I do not suppose there ever has been a very important international Agreement put before Parliament for acceptance in which it was found that the conditions which attached to the Agreement aroused in this country such deep anxiety and such widespread mistrust. I should doubt whether it has ever happened before. You may say of it, as Wordsworth said about the lonely village maiden, that it is a case where … there are none to praise, And very few to love. Now we are told that some of our American friends are surprised at our disappointment. The noble Lord has just told us that from their point of view this is a very good thing for us. Well, we must all choose our words carefully, but between friends—and I refuse to agree that the friendship between the United States and this country is in quite so fragile a condition as the noble Lord opposite seemed to imply—it is better to speak candidly as long as we do it in moderate terms. In these two days' debate, though many of your Lordships will take part and express, no doubt, many anxieties and criticisms, there is one thing on which we shall all be agreed and which I think the noble Lord conceded: that this is a very different Agreement from the sort of Agreement which Lord Keynes and his companions went across the Atlantic to try to get. Nevertheless, I want to say at once that I associate myself with the advice which I know the Leader of the Opposition will give, that the House of Lords should abstain from rejecting this Motion and from bringing about the consequences that would then ensue.

The Financial Agreement itself is, of course, already signed. If the Lord Chancellor takes part later on he will tell us how far such an Agreement—a Treaty really—operates without Parliamentary sanction. In principle that is certainly true in the Constitution of our country, though of course it is not true in the Constitution of the United States. But partly because of the undertaking which the Government made to bring these matters 'before Parliament, and partly because the passing of the Bretton Woods Bill is necessary to implement the arrangement, here the whole matter is before us, and, as the noble Lord said just now, we have to decide what to do about it.

As I have said, this is not at all the sort of Agreement for which we had hoped, and in this great bundle of White Papers, which it is very difficult completely to master, there is one—Command Paper 6707, Statistical Material Presented During the Washington Negotiations—which shows what our case was when our negotiators went to Washington. They sought an agreement which would give fuller effect to the contrast—for it is a surprising contrast—between our situation and that of America at the end of a war in which we were allies and joint victors. I do not think there is any ground for saying that in making reflections on this subject we are doing any injury to Anglo-American relations. No one fails to realize the immense contribution that America made in securing victory. We gratefully acknowledge, every one of us, that it was the stalwart help of America in every field—men, munitions, Lease-Lend, and all the rest of it—that made possible the final overthrow of Nazi domination. Every one of us counts Anglo-American co-operation now, and in the future, as an outcome of the war, as something which is more precious than anything else except the rescue of liberty for the world and except the new proof of the close-knit unity of the British Commonwealth and Empire. There is no harm in saying to America that we Britons, who are conscious of what Britain has done, yet readily acknowledge that American effort was like to our own.

But—and this is the point— likeness of effort is not the same thing as equal sacrifice. We think history will not forget that we, with our British friends across the seas, stood alone for a year; that we scraped together every dollar we could find; that we requisitioned and sold every foreign security which could produce more dollars; that we diverted all our factories to work on munitions; that we sacrificed the prospects of a quickly recovering export trade, and endured the destruction of our homes. As a result, at the end of the war (this, I am sure, is the case that Lord Keynes went to America to make) we have lost dollars, gold, readiness to export, and almost everything a victor might hope for except our own liberty and determination to hold fast. That is the case, I apprehend from this official document, which our negotiators went to America to present. It is no reproach to the United States to say that, splendid as their contribution has been, they have not met with the same fate. America loaded herself with heavy burdens indeed, but she came out of the war with increased power to produce and with unlimited resources, whilst our effort has left us enfeebled by sacrifice. The reason why the ultimate burden is so unequal is not only that we were engaged in the war for its whole duration; it is that this was a small country engaged in a war extending all over the world and compelled to incur frightful liabilities if it was going to make good its unalterable resolve to fight on even when alone.

Therefore we utter no reproaches. The Americans are a free and proud people who can never be induced to go beyond what they are prepared to give. We value their friendship as a buttress, a support, and a solace in a world which is rather dark for us, but it is, I think no disservice to Anglo-American friendship to state, with the candour that is expected between friends, how it comes about, to the surprise of many Americans, that we regard this Agreement, which is the best our negotiations can secure—and I am sure they did their very best—as a disappointing adjustment and, as some would say, a hard bargain. I am very conscious that anyone who speaks first after the opener is tempted to occupy a great deal of time, and certainly if he went over the whole ground that would be inevitable. I do not desire to do so, because many speakers will have, I hope, an opportunity to make their contributions. I should like to take, merely as an example of our disappointment or anxiety, two features which give many of us special concern. The first, to which the noble Lord has made a reference, though I think a rather slight one, is this prompt convertibility of sterling for current transactions. The second is the phraseology employed in a most impor- tant matter, in the relations between tariffs and preference.

Clause 7 of the Financial Agreement, as the noble Lord said, imposes a condition attached to the loan. I do not think this, at least, could be described as a mutual condition. That was the expression the noble Lord used in describing the American view. There is nothing mutual about this, which is that the Government of the United Kingdom will complete arrangements as early as practicable, and in any case not later than one year after the effective date of the Agreement, after which sterling balances from the sterling area held here in London are to be convertible into other exchange and not, as they are at the moment, regarded as largely inconvertible.


May I interrupt?


I know what the noble Lord wants to say. I mean in respect of current transactions. It is the sterling which will arise in current transactions between members of the sterling area who bank in London and who up to the present, though only as a war arrangement, have been prepared to treat that sterling as, for the time being, unconvertible. I did not for a moment suppose it applied to past balances. That is a very serious provision, as the noble Lord, I thing, recognizes. The, solidity of the sterling group before the war did not depend on any such provision. I think I am right when I say that before the war the sterling group, a group of countries consisting not only of members of the British Empire but of others too, banked its credits in London on terms that were freely convertible. The solidarity of the group largely depended upon that, because the members felt they were free to leave by taking other currency, and just because they were free to do so, they did not do so. It is not altogether unlike the way in which the British Empire is held together; its members remain closely knit exactly because of that freedom which they enjoy.

When the war came recourse to convertibility was dropped, not so much, I believe, by definite bargain, as by what may be called a consensus of practice based on the recognition of the extreme need, as the head of resist- ance, of this country. I quite understand—and I think the point was well made—that we cannot expect that inconvertibility to go on indefinitely; indeed, if we attempted to exact it, members of the sterling area might be disposed to break away. That is true enough, but limiting this idea entirely to current transactions does make the great difference that we are bound to restore convertibility in current transactions in a very short time. You cannot pass to the practices of normal health instantly when you are recovering from a severe strain.

Let me take a simple illustration. Let us suppose that in two years' time we buy tea from India. That is a current transaction. The payment for it would be a sterling credit here in London. Let us also assume that a Maharaja in the next year or two wants to buy a motor car. Although it might be difficult to find one for him in this country, none the less so long as sterling remains inconvertible there is a definite trend towards the British market, which is very seriously modified if it is said that this new money, arising from transactions in the sterling area, must be declared to be convertible into dollars within twelve or fifteen months. I feel sure that this was one of the conditions inserted in this Agreement very unwillingly indeed on the side of the British negotiators. It seems to me that that clause gives ground for saying that the conditions are hard; and, as far as it goes, I cannot but think that the effect of it is to give a further encouragement to American export, and to put a further difficulty in the way of British competition.

The other matter on which I want to say a word is that of tariffs and preferences. Here it is very important to follow the documents. I think that the documents before us leave the issue in a confused state; and I think, therefore, that they call for an interpretation by which our Government will stand. Let us take the two or three documents in turn, to see just how we trace them through. If you take Cmd. 6709 and turn to page 5, you find in it a sentence which refers to entering into arrangements "for the substantial reduction of tariffs and for the elimination of tariff preferences." Now, it is perfectly obvious that a high tariff might be substantially reduced and yet leave a barrier to imports from the British Empire which could not fairly be equated with the abolition of preferences: That is perfectly clear.

I venture to give a very simple example. Jamaica produces sugar, and so does Porto Rico. Porto Rico for this purpose counts as part of the United States; it is inside the tariff wall, and therefore sells its sugar in the American market without any tariff to surmount. Jamaica, on the other hand, is kept out by a high tariff. She disposes of her sugar—she could not dispose of it other-wise—with the assistance of a preference given by Britain and other parts of the British Commonwealth. Suppose that as a result of negotiations a number of rows of bricks at the top of the American tariff wall are taken down, what will happen? Will that be a quid pro quo for abolishing the preference to Jamaican sugar? It would not, indeed; for the result would be that, while the Porto Rico sugar would now have equal entry into our market with sugar from Jamaica, on the other hand Jamaican. sugar would not have equal entry into the American market with sugar from Porto Rico. It is therefore a matter of the greatest importance to know what is meant by this particular juxtaposition of words. The poet Clough wrote a line (which happens to be a very good English hexameter) on the subject of propinquity between the sexes leading to affection. The line is this: Juxtaposition in short, and what is juxtaposition? I have to put the same question; what is this juxtaposition between the elimination of preference on the one hand and the substantial reduction of tariffs on the other?

I am bound to say that there is something to be said which may relieve our anxieties to some extent. In the first place, as the Secretary of State pointed out, this document in which that phrase occurs is not really an agreement: it consists of proposals for consideration put forward by the Secretary of State of the United States, Mr. Byrnes. It is what I may call an argumentative agenda. On the other hand, on page 18 of this document there is an endorsement, which I shall not pause to read, by the Government of the United Kingdom which seems to express full agreement on important points in the agenda and to accept them "as a basis for international discussion." I regard that language as ambiguous, and I want it to be cleared up. I have not overlooked either the fact that this juxtaposition may be said to have an earlier origin, because in the Mutual Aid Agreement of 1942, which was negotiated between Mr. Churchill and President Roosevelt, there is an article, Article 7, which uses the word "discrimination," although Mr. Churchill very wisely at the same time secured with President Roosevelt.— I do not know whether by letter or otherwise—an agreement that it was to remain perfectly clear that the result of all that was not to mean either that we were bound to drop any of our preferences or that America was bound to drop any of her tariffs. The whole matter was left to the future.

But the matter has now gone further than that, and this is a point on which I want a little help from ay: Front Bench opposite. Ten days ago, when this great bundle of White Papers was first presented to Parliament, the Prime Minister made a statement which is to be found in the House of Commons Hansard of Friday, December 7, column 2718. What he said with reference to this matter was this, and it is very important: It is recognized that reduction or elimination of preferences can only he considered in relation to and in return for reductions of tariffs and other barriers to world trade in general which would make for mutually advantageous arrangements for the expansion of trade. There is thus no question of any unilateral surrender of preferences. There must be adequate compensation for all parties affected. He went on to point out that some preferences are of particular importance to the economy of certain areas, and he said: The elimination of all preferences would be such a step as would require a most substantial and widespread reduction of tariffs and other trade harriers by a large number of countries. By that I suppose. he meant more than America—for instance, the French Empire.

I think that this House is entitled to have that assurance given here and now. We ought not to be required to hunt out a copy of Hansard giving the proceedings of the House of Commons to get comfort, as I do get comfort, front that assurance. I venture to ask my noble friend opposite, the Leader of the House, whether he will, in this House, here and now, give us the full confirmation of the Government by saying that that declaration is the declaration by which they will stand.


My Lords, I am obliged to the noble and learned Viscount for giving me notice that he would ask me this question. I must, in making this statement, read a later sentence to the one which he read: All negotiated reductions in most-favoured-nation tariffs will operate automatically to reduce or eliminate margins of preference. That is the sentence. I have to say, with regard to this statement that the Prime Minister made, as to the interpretation which His Majesty's Government place on it, that that statement was most carefully made; it was communicated to all the Dominions, and we stand by it absolutely.


My Lords, may I as one who has been present at the discussions, be allowed to give further confirmation of that? Not only is this known to the Dominions, but there is not, in my judgment, the smallest misapprehension on the part of the States. As you may suppose, something a little more drastic may have been in their minds at one time, but the exact position, which the noble Leader has outlined, was before their minds emphatically on many occasions. There is not the smallest room for doubt about it.


My Lords, I am very glad to have confirmation from both in front of me and from behind. I should think that the two, taken together, will give a great deal of satisfaction to many people in this House who were sincerely anxious on the subject—and not without reason.

I am going to resist the temptation of making several criticisms, because I wish not to make any unfair claim on the time of the House. There is, however, one matter upon which I should like to make an observation. It is said that this Agreement is unacceptable because some people feel great doubts as to whether it can be literally performed. The noble Lord who opened the debate called attention to provision. designed, no doubt, to meet any case of extreme need that might possibly arise, but I want to make a different observation. As it seems to me, with regard to these obligations—the obligations to repay by instalments with interest stretching over a long period— that while, of course, there is a British undertaking on the subject, and it is only entered into in good faith, still it is not the borrower alone, but it is the lender also who has a part to play in connexion with repayment. To put it in its simplest terms—and I hope that I am not putting it too inaccurately, speaking as I do in the presence of great economic authorities—this repayment, which we bind ourselves to make, must be made either in gold or in goods. Gold could only be available if and when we recover a substantial balance of payments in our favour. In the ultimate analysis, our power to repay depends on our ability to export.

It seems to me—brought up as I was in an old school on this subject—that it is a fallacy to assume that any State, however wealthy and powerful, can go on everlastingly lending abroad and exporting abroad without making provision for an intake in exchange. It is useful to recollect the position in which this country found itself at the end of the last century, when we were a great creditor nation. We then lent money abroad on terms which required repayment and interest. But we lived under a system which permitted the entry into this country of the debtor's produce in exchange. I do not know if there is a new economic theory which gets away from these simple propositions. I am not sufficiently instructed to know. But it seems to me that they are propositions which lie very much at the basis of this question as to whether we have an adequate power to repay.

I am not going to detain your Lordships on the subject of Bretton Woods. It so happened that on May 23, 1944—even in the presence of so great an authority as Lord Keynes—I had the duty, which I discharged as well as I could, of explaining the scheme of Bretton Woods. Much can be said about it, no doubt, but I leave it now to others. It is perhaps only right, though, that I should say—for what it may be worth—that I share the view that the scheme of Bretton Woods is not, properly speaking, a return to a rigid gold standard. It is not. I appreciate that the object, the broad object, of it is to discourage unilateral depreciation of currency merely at the will of a Power that feels embarrassed—of which we had many examples in the case of France not so many years ago—and to substitute for it, if possible, an orderly adjustment by international discussion and negotiation. I will say no more on this, because I am sure that we shall hear a great deal more about it later. The House, in the debate of May, 1944, resolved that the statement of principles in Cmd. 6519 provides a suitable foundation for further International consultation with a view to improving monetary co-operation after the war". In our decision to-morrow we shall carry that matter a step further. I confess that, in my studies on the subject, I am rather led to regret that the essential provision of dollars should have been thus tied up with all these other proposals. I cannot help thinking that it might have led to greater clearness had it been possible to keep the two things separate. But, no doubt, there are very important answers to be given to that.

I conclude by facing the practical questions that are before us. I suppose there are two. The first, I take it, is: Should noble Lords so vote as to reject this whole scheme with the consequence that we deprive ourselves of immediate dollar resources imperatively needed to buy essential supplies—food, raw material and machinery—untilwe can once more export enough to pay our way? It is the revival of our export trade, in every sense, which is an issue in this debate. I hold that we should not vote for rejection. If these essential dollars can only be obtained on these severe terms, then, to use a phrase which I saw in one of our great newspapers, that is a reason for regret and disappointment but it is not a reason for rejection. With these dollars, and with the further loan which Canada has promised to add to her generous war contributions—and to which Canada attaches no such conditions—we must struggle to get through. I, therefore, conclude by saying that, for my part, I think the loan is essential though the conditions fill me with anxiety.

And here comes the second and last question. It is a very delicate one. Should the general body of your Lordships actively support the Resolution? Some of your Lordships may be prepared to do so. I should not be surprised if my noble friend Viscount Samuel, who follows me, tells us that he intends to do so. There is a view that by promoting this subject you are making a movement towards free trade. Originally it was thought that if this country went free trade the rest of the world was bound to follow. That did not turn out to be true, and I mast say that I hold the view that for Britain herself to return to free trade without corresponding action on the part of the rest of the world, is an impossible course. It will be said: "Well, if you think that the loan must be accepted even on these terms, you ought to vote with the Government." Really, those who say that are trying some of us a little too hard. After all, it is the Government that has taken the whole responsibility for negotiating and for making this Agreement. The Cabinet has been in close touch during these months, but the rest of us, and the most important leaders of the Opposition, have had this series of White Papers thrown at us live days before the discussion began. wonder how many of us can lay our hands on our hearts even now and say that we have read every word of them, and., what is more, understood them?

This is not a case in which the Government, in view of the vast importance of what they were going to do, something which would affect the future, have sought to take into confidence, and secure the counsel of, the leaders of the Opposition. That has been done; it was done before the war. For good or for evil, the result here is entirely brought about by the Government through their experts. I must add an observation which is relevant but which is not intended as a severe rebuke, that there has never been, about this all-important matter, so far as I can ascertain, any personal contact at the highest level, nothing at all corresponding to the meetings which took place, let us say, before the Atlantic Charter or Mutual Aid. I do not think that any member of. the Cabinet has gone over in order to meet the heads of the American Executive on this particular subject. The result is achieved by the unwearied patience and skill of experts whose services we gladly acknowledge, and I must say that it would go very much against the grain that some of us should appear to take the direct responsibility for results which are so disappointing and so provocative of anxiety. On the other hand, let me make it equally clear that if this Financial Agreement, which is in the nature of a treaty, already signed by the Government of the day, becomes effectively operative, it binds not merely this Government but this country, and binds all who come after. Any abstentions should never he regarded as indicating any claim to disavow this bargain hereafter.

What will acceptance of this loan really involve? This is my last reflection. It seems to me that the acceptance of the loan under these conditions must evoke a greater resolve than ever before to develop and use British powers of production. Let no one suppose that because there is no alternative available, because we escape some more drastic austerities, acceptance of this loan is going to justify "going slow," stoppage of work, and easier conditions in the life of the nation. It is going to do nothing of the kind. We are, as I conceive it, endeavouring to climb along an uphill road, which is very rough and stony. This essential provision of dollars, which the Financial Agreement would give, will remove an immediate obstacle which blocks our advance, which might throw us into the ditch, but the uphill road is there all the same. Long and unremitting toil will have to be continued before the burden which is cast upon us by war, in spite of victory, can be lifted from the shoulders of our indomitable people.

4.7 P.m.


My Lords, I had wished at this stage of the debate that the House would have had the opportunity of listening to my noble friend Lord Keynes. It is he whom the House would wish to hear, and he can speak with an authority unrivalled by any of us, but at his own desire he has postponed his contribution till to-morrow. We are, all of us, however, exceedingly glad to see him back in his place for this discussion, and we would testify to him our gratitude for the invaluable and untiring services which he and his colleagues have rendered to the country in these strenuous negotiations at Washington.

Speaking on behalf of noble Lords on these Benches, I would say that we regard this complex of Agreements and proposals as promoting primarily three purposes. First, to secure the fullest, closest and friendliest co-operation in world affairs, political and economic, with the United States of America; secondly, to ensure the speedy stabilization of the currencies and international exchanges; and thirdly, the lessening of restrictions that obstruct the channels of international trade. We regard these three purposes as of dominant importance, and all other matters as subordinate. We think that these Agreements are on the whole well calculated to promote these purposes and therefore we shall give them our firm support. I must say that there seem no grounds whatsoever for the course which is being taken by noble Lords on the other side of this gangway, and the defence for their proposed action presented by the noble and learned Viscount who has just spoken appears to me strangely unconvincing. After all, abstention is itself an act and these noble Lords cannot evade responsibility for any consequences that might ensue from their abstention.

I speak as one who for a number of years was leader of a Party which has suffered from time to time from internal dissension and has been the object occasionally of derision and even of contumely! So I confess a certain sardonic satisfaction in watching what is happening in a neighbouring quarter of this House. The public observe that a few days ago in another place one half of the Conservative Party followed the advice of their illustrious leader, but another half followed the promptings of their own froward hearts. I rather suspect it may be that the action proposed to be taken here to-morrow by noble Lords who are my neighbours, is dictated not solely by dissatisfaction with minor clauses in this Agreement, but possibly, perhaps, in some slight degree, by knowledge of the fact that if they went into the Lobbies, a large number of their members would vote one way and a large number the other. But that could easily be avoided if they were to retire to one of the larger Committee rooms and were to arrange to pair with one another, when the result would be the same without the public scandal.

I was glad that the noble Lord who introduced this Motion had the courage, at the outset of his observations, to remind the House of what has been the American point of view. We shall not arrive at a sound and sober judgment unless we bear that in mind. I hope that in the debates in the Capitol at Washington there will be found some who will express to the American Representatives and Senators what has been the British point of view in this discussion. Let us remember that there might well have been no Lend-Lease at all in the early stages of the war unless the American people had been willing to follow the wise and strong lead of President Roosevelt. There might have been no pooling of ideas and resources before Pearl Harbour. Let us remember, after all, that we have received in Lend-Lease the value of a sum of the order of £5,000,000,000 and that America ends the war with an internal debt of the order of £65,000,000,000—not dollars. At the present time we need a loan from America. The sum of £1,000,000,000 could easily have been raised in this country; there would have been no difficulty about that. But that would not have served our purpose because we need dollars for the purpose of buying food, machinery and materials. I know of nothing in the order of the universe which makes it obligatory on the United States to lend us £1,000,000,000, or £100,000,000, or even £1,000,000; or anything that makes it compulsory on them to lend free of interest, or even at the interest of 1.62 per cent. which is the effective rate charged under this Agreement. Nor do know of any reason in the nature of things why they should consent to suspend the receipt of any interest for the period of five years and, after that, to allow the waiver of any interest at all in any particular year in which it would cause grave inconvenience and disturbance for this country to pay the sum across the exchanges.

The reasons why they are taking the course of giving us the facilities that they are—which are far short, it is true, of those we would have desired—are partly altruistic and partly egoistic. In the first place, the Americans recognize that we made a tremendous and exhausting effort in what proved to be the common cause. They remember that for two years, from 1939 to 1941, while we were struggling with our backs to the wall against terrible odds, with all our European Allies overthrown, they were still enjoying peace and prosperity and the benefits of non-participation. They recognize, therefore, out of good will, that they do owe us some further assistance, but they have interests of their own which would lead them to the same conclusion. They recognize that economic isolation has been disastrous to themselves. Any historian describing the events of this century would certainly find and declare that of the great depression that overspread the world in the years from 1929 onwards, the main cause—the principal cause that would have to be picked out from among all the rest—was the American policy of the Hawley-Smoot tariff. The Americans said to Europe: "You must pay our debts to us and we will not accept your goods." The consequence was they sucked up most of the gold of the world and then suffered themselves from the gravest depression; like Midas, the King of Phrygia, who obtained his request from the gods that everything he touched should turn to gold, who would himself have died of starvation for lack of edible food unless the gods had relieved him from what had proved to be a curse.

So, now, the Americans realize that they should not again fall into that error of policy and, just as the American economic collapse of 1929 was a disaster not only to them but to Great Britain and Europe, so, in 1946 or 1947, an economic or financial collapse of Great Britain and Europe would be a disaster not only to us, but to the United States as well. Consequently, they have been forthcoming and ready to give this assistance. They have attached to this loan what appears to us mistrustful conditions of a very elaborate character. Let us realize, looking at it from the point of view of the American taxpayer, producer and merchant, that they wish to be assured if they lend us £1,000,000,000 of their money, that it will not be used, either directly or indirectly, to subsidize or assist in any way the British export trade in competition with the American. One can well understand that a body like the Congress of the United States—the two Houses of the American Legislature—and their constituents should wish to be assured that after two or three years the situation would not arise when they would be saying to one another: "We lent them £1,000,000,000 and now they are using it to undercut our own trade in the markets of the world." So these particular restrictions can safeguard us against a grave misunderstanding and mutual ill-will.

I want to deal briefly with two grounds of attack upon this Agreement. In the first place, it has been represented in the popular Press—in the Daily Express in particular, and we are to-morrow to have the noble Lord, Lord Beaverbrook, on the rampage—that this means the restoration of the gold standard. I do not wish to go into technicalities, but only to quote four authorities which, I believe, will be accepted by your Lordships. The first is Lord Keynes himself—no doubt he will say something to this effect tomorrow—who, speaking in your Lordships' House when the proposals for the Bretton Woods Conference were under consideration, described himself, as we all know he was, as a strong opponent of the restoration of the gold standard of 1925, declaring that these proposals were the exact opposite of the old gold standard.

It is true, of course, that gold has a place in this scheme; gold is not altogether devalued. But, if you want to have a scheme which is to have the assent of the United States and Russia, how would it he possible to devise any plan which would leave gold without any international value at all? The Americans have a vast accumulation of gold in their stores, gold which they have obtained mainly from us in payment for value received. Are we now to go and tell them: "We have paid you our gold and now it should be devalued altogether, universally; let it be of no future use except for gilding picture frames or making wrist watches or artificial dentures"? Similarly with regard to Russia. Russia depends upon her great gold output and her vast export of gold to enable her to purchase machinery and all kinds of commodities in all parts of the world. How can she put her signature to an agreement which would say that in future gold is to be treated merely as dross and to have no place at all in the currencies of the world?

The other authorities which I intended to quote are one Chancellor of the Exchequer and one ex-Chancellor of the Exchequer. Mr. Dalton, in another place, said: This is not a return to the gold standard or anything like it, but is quite a different order of things altogether. The ex-Chancellor of the Exchequer is Sir John Anderson, who said: I take the view that this scheme does not involve any return to the gold standard. Now we have had a further ex-Chancellor of the Exchequer, the noble Viscount who has just spoken, who again declares that this is not a restoration of the old gold standard or anything at all of a similar character.


I said so last year.


And said so last year: that is a double affirmation. Consequently, I hope your Lordships will not accept at its face value any declaration, however emphatic, that this is the gold standard and that we are returning to the old evils which beset our steps in 1925 to 1932.

The other main line of attack is that this is the destruction of the sterling area which we have built up with so much pains and the maintenance of which is essential to our prosperity and well-being. Neither the sterling area nor the dollar area can fully prosper if they are isolated from one another and from the world. Again I quote my noble friend Lord Keynes who, in the speech to which I have referred, said: With our own resources so greatly impaired and encumbered, it is only if sterling is firmly placed in an international setting that the necessary confidence in it can be sustained. "Firmly placed in an international setting"—that is what is to happen to sterling under the scheme.

When we survey generally the whole world situation we are all agreed—and it has been repeated again and again from all quarters—that the hope of mankind depends upon the close co-operation in political and economic matters of the three great Powers, the British Commonwealth, the United States of America and Russia. We can all see that there are two great and formidable dangers which threaten that trinity. One is political and the other is economic. The political danger is that Europe should be divided into two blocs—the Eastern and the Western—one under the leadership of Russia, and the other under the leadership, perhaps, of Great Britain. The other danger is that in economics the world again should be divided into two blocs, one the sterling bloc under the leadership of Great Britain and the other the dollar bloc under the leadership of the United States. If that were to come about and if those two were placed in sheer opposition to one another or competition with one another, inevitably there would be a chronic rivalry which would engage in manœuvres in order to get the support of the rest of the world, the third parties. There would be alienation, there would be antagonism, and when some crisis arose, as crises always have done and will do in the history of the world, then man- kind might find itself powerless, through the United Nations Organization or in any other way, to bring about pacification, because already the nations would have aligned themselves in hostile array.

The first question—that of the political groups, the Eastern and Western blocs—is not a subject for our consideration to-clay. I say nothing upon it. But the second, the danger of dividing the world into dollar and sterling areas, is a matter which is being settled at our meeting at this very moment. And let me add this with regard to the relation of the dollar bloc to the sterling bloc: that if they are not reconciled to one another, the Dominion of Canada would be placed in an utterly impossible position economically, and a position that might lead to the very structure, the very cohesion, of the Commonwealth itself being put under a serious strain.

As to the three purposes in view, I have spoken on the first one, the relations between Britain and the United States. On the second, the stabilization of the currencies and exchanges, I need say nothing, because everyone, I think, is agreed as to the vital importance and urgency of it. What other prospect is there of ensuring that stabilization which is absolutely essential to success, with which our merchants cannot dispense, unless along the lines of the Monetary Fund and the international Bank? We all know that the hest hope of promoting employment in the highly industrialized countries of the world is to promote the prosperity and welfare of the backward half of mankind, the peoples of countries such as India, China, and other countries of the world. How can that be done unless by some conscious, deliberate, international effort, those of them who are credit worthy being provided with credits? And how can that be done except through the Monetary Fund and the International Bank?

The third and last of these three purposes is the removal of hindrances to trade. For thirty years that has been one of the main controversies in this country, from the early years of this century to the middle of the thirties, and how often have I heard it said, since I had some part in that controversy almost from first to last: "Well, of course, we all agree that freedom of international trade is an ideal if only it could be obtained, but you Free Traders are living in an unreal world; you cannot get it nowadays." How many of your Lordships who have taken part in that discussion have said, "We would readily agree to universial free trade, but not to one-sided free trade. France is protectionist, Germany is protectionist, the United States, above all, is protectionist. We must retaliate. We must: protect our own markets and preserve them to ourselves since other countries are doing the like." I always suspected that to many that was a plausible facade for sheer crude Protection, the desire to get rich by reserving certain markets, establishing monopolies and quasi-monopolies and fixing prices at will. However, that was the argument. But what is the position we are discussing here to-day, in this House, in December, 1945? The position now is almost inverted. We have the United States coming forward with the most comprehensible proposals for clearing the channels of trade.


For complete free trade?


Not complete, but towards clearing the channels of trade, to a great extent. Their tendency is that way. And we have noble Lords, like Lord Beaverbrook and others who think with him, who now are holding back, forgetting all that they said about their desire for freeing the conditions of trade if only other countries would do the same. Nowhere has that crude protectionism been more rib than in the United States and nowhere has it engendered more completely trusts, cartels, combines, high costs of living for the people, and great fortunes for the semi-monopolists, the multi-millionaires. This change of view in the United States is clue to long and bitter experience. They find that protectionism does not succeed, that they are losing more than they are gaining. Consequently they come forward with the proposals now before your Lordships' House in the White Paper, putting forward a complete change of view, urging that we should all agree to a rapid reduction of all these hindrances and signifying their readiness to begin negotiations at once with a view to an international conference on trade and employment next year to carry out that purpose.

I agree with my noble friend Lord Croft that all depends upon the extent to which the United States proceed in these negotiations and in action. They certainly will have great difficulty with their own interests. To declare general principles is easy, but to translate them into practice is often very hard, particularly if there are individual groups which combine together to bring pressure on Congress when they consider themselves to be damnified, even in a small degree. They can bring very strong pressure to bear. It has been made perfectly plain in these negotiations that this Government is not committed in any way to modifying any of our arrangements unless the proposals made by the United States, viewed on the whole, are to the general benefit not only of ourselves but of our Dominions and Colonies as well as to the United States.

To those of us who sit on these Benches the case appears to be not one for continuing ' the crude and ineffective eighteenth century method of tariffs; nor, on. the other hand, do we consider it possible in the present conditions of the world to go back to the old system of laissez-faire, to the automatic self-regulating exchanges, to the Ricardian economics of one hundred years ago. The right policy in general terms, apart from details and particular applications, seems to be just the kind of policy which is embodied in these Papers now before your Lordships—a rational well-considered plan of world action, not going back to the crude, imperfect, inefficient and unsuccessful methods such as protectionist tariffs, but rather working out point by point a solution of particular problems one by one.

With regard to one matter in which your Lordships' House is particularly interested, as has been shown by many recent debates—namely, the effect of this measure upon British agriculture—we have had certain very emphatic assurances. British agriculture is an industry which has to be upheld, not purely for economic reasons, but for broader national reasons. The policy which should be adopted in the case of an industry such as that is not ineffective and crude tariffs, but rather the kind of policy which has been laid before this House and the other House by the present Government and by the Coalition Government, and which commands a general measure of assent in all Parties. In another place the President of the Board of Trade, Sir Stafford Cripps, said with regard to the position of British agriculture under this scheme now before you that "the position had been examined with extreme care and the Government were perfectly satisfied that these proposals would allow them to carry out to the full the agricultural policy which had been announced by the Minister of Agriculture."

To sum up, this is a case of a bargain between two parties who have certain interests in common which they wish to promote and who, at the same time, have certain interests which are mutually competitive. They want. both of them, to secure those they have in common and they are obliged, if they wish to come to an agreement, to compromise on the others. So there comes about a state of bargaining in which the parties endeavour to give away as little as possible of their own interests in order to secure general agreement. Then there comes a moment when that bargaining must cease and when the negotiators must, viewing the matter as a whole, say Yes or No. The consequence has been the Papers which are now before you. If at that stage either party says: "We have done very well out of this," the other party will at once say: "We must, therefore, have been deceived." If either party says "We are heavy losers in -this deal," then its supporters in the country will say, whether here or in America, "If you confess you are heavy losers, you must be very bad negotiators and we will not ratify this agreement." But if both parties say: "We have been lured into giving too much and getting too little, but better this than nothing at all"—and that I think is the situation at this moment in Westminster and Washington—it may be hoped that the deal will go through in both places. I am hopeful of that.

Having regard to the extreme complexity and difficulty of all these problems, it would be, I think, a great achievement if a single Government had come to an agreement within itself over a vast scheme such as this which secured the unanimity of all its members. How much greater an achievement has it been when not one but two great Governments have had to come to an understanding; and how much more remarkable is it when those two Governments have had to go to forty or fifty others and secure the assent of all of them. No wonder that the negotiations have been strenuous; no wonder the debates here and elsewhere have been difficult, but at the end there is no doubt what is the right course to take.

As other speakers have said, and as we all agree, there arc risks in this scheme, but those risks may not be realized. To accept this scheme is to accept the possibility of grave future troubles; to refuse it is to bring the certainty of immediate disaster. If this scheme were rejected to-day, what would be the effect on the World Economic Conference which is to meet next summer to achieve a wider measure of international co-operation? That Conference would be impossible; it could never meet. If these preliminaries were abortive, the Conference itself could not sit. Within the next few weeks the United Nations Organization is to hold its first meeting here in London. Suppose your Lordships were to reject this measure; in what an atmosphere of gloom and hopelessness the United Nations Organization would meet if this first attempt at wide international co-operation had failed. In the stabilization of world affairs after this prolonged and widespread upheaval: all depends on the steadiness and the firmness of the legislative bodies in all countries. I feel convinced that this Parliament, that this House will not fail in its duty.

4.40 p.m.


My Lords, I always enjoy, as I am sure your Lordships do, listening to the oratory of the noble Viscount who has just sat down. I generally find him persuasive; I generally find arguments carrying me along with him. But to-day, somehow or other, I thought that he got off on the wrong foot.


It was on your toes!


He looked across with, I thought, a certain pleasure in his eves at the prospect of some disunion on these Benches, and he then advised us how we should proceed. I will accept advice from the noble Viscount on many things, but he is not competent to advise us on how to keep a Party together! As I have listened to this debate, one of the things which has impressed me has been how the noble Lord, Lord Pethick-Lawrence, and subsequently the noble Viscount who has just sat down, have been most anxious to explain to us what the position of the United States was. They have told us a great deal about American opinion. In fact, the noble Viscount began to talk in almost, I thought, lyrical terms about altruism and about the abolition of restrictions and conditions. I wondered whether he was talking about this loan, because I had not observed in it anything that is likely to do away with restrictions.


I do not remember using those words.


I hope that I am not misinterpreting the noble Viscount; I took down what he said. We have heard this Agreement recommended to us this afternoon with much idealism, with many remarks about a new world in which it was important: that all of us should cooperate together. We had an almost pathetic scene painted of a coming conference meeting in a condition of gloom. My Lords, we are talking about a commercial Agreement. I want to say at once that I think it is a bad Agreement. It is a bad Agreement into which the Government have entered. Since the question of these Benches has been raised, let me say that I am not speaking on behalf of any Party to-day, and nobody else is in the least involved in the things that I say. But I do say this, that I could not have stood at that box and recommended this loan to the public of this country; I should, had I been in office, have been compelled to leave office rather than recommend this loan.

I feel this very deeply. I feel that this really is the hour of disillusion and of degradation. The Times the other day wrote about our arriving at our financial Dunkirk. No, my Lords; we fought at Dunkirk, but to-day we are surrendering what I conceive to be our just rights. We are surrendering them to the power of the dollar, because those responsible for the affairs of this country do not dare to retreat on the economic fastnesses of the Empire. They fear that the British Empire might not support them. What right have they to come to that conclusion? I wish that the present Government, before they committed us to this loan, had withdrawn their emissaries. I should like to join with others in speaking in terms of the highest praise of those emissaries, but it is policy which is involved here, and that is a subject for His Majesty's Ministers. I wish they had asked the emissaries to come back when they could not get reasonable conditions, and I wish that they had then quite frankly consulted the Parliament of this country and the Governments of the Empire; and then, fortified with that knowledge, they would have been able at least to speak for a united country.

They have not made that democratic approach. A transaction of this kind, spreading as it does over a matter of half a century, is not one for a Party, a Party that represents but a moiety of the country; it is one in which I should have liked to sec the Government speaking for the nation. To-day they arc not entitled to do that; they have had no consultation that would enable them to speak for the nation. That consultation would very willingly have been forthcoming. This unseemly haste with which they pressed these measures on our judgment results from fear, fear on both sides of the Atlantic, fear of the force of public opinion. Why do they do it? Fear is a bad guide to wise conduct. The noble Lord, Lord Mottistone, who is not here to-day, placed many of us and our children in his debt some years ago, when he produced a book with the stimulating title Fear and Be Slain. It ought to be in every schoolroom in the country, and it ought to be before the eyes of those who are responsible for the government of the country.

We are entering on this undertaking because we are fearful of the immediate consequences of rejecting the American offer. I have tried in vain to find out what those consequences arc. It is no use painting a gloomy picture and saying: "Ah, you will have austerity; you will not be able to do this or that." The noble Lord, Lord Pethick-Lawrence, was, if I may say so, the first person that I have heard speak on this subject who put austerity properly in the background and did not make it a major issue. I am sure that he was right. Let us know what the facts are before we enter into this Agreement. What is it that we are not going to be able to get? When we know the facts, Parliament will be in a position to judge what to do. My Lords, I am fearful of accepting this bond, and I am fearful of it because I admit that I am a financial puritan. I was brought up in the school which regarded financial probity as a matter of the greatest import- ance. For generations it has been one of the characteristics and the glories of the City of London. I am very fearful of the name of my country being placed on a bond which we may not be able to honour. I am more fearful of that than I am of the consequences of refusing to sign such a document. I could not sign a bond unless I knew that I could redeem the pledge. The Government have signed this bond without knowledge that they will be able to redeem it. The very conditions involved in the transactions deny such knowledge to them. They rely upon some nebulous scarce-currency clause in Article 12.

I shall not occupy your Lordships' time to-day with any political argument. Issues involving tariff policy and the British Commonwealth and its freedom to conduct its own affairs in its own interests are undoubtedly involved in these transactions, but my noble friend Lord Swinton can speak on these issues with more authority than I possess. Noble Lords who have spoken so far have tried to explain what the views of the Americans are on this subject. I am trying, if I may, to explain what the views of the British are on this subject and therefore I shall confine myself to the stark realism of the facts of this credit.

Let me say at once that, to my mind, there is no doubt as to the immediate importance of such a dollar credit to us. We need it; but let us remember, too. that America in her own interests ought to make it. Indeed they would be compelled, by economic circumstances, to make credit available to us sooner or later. They will find that the making of credits is an obligation of the trading necessities of a creditor country. We can say these things—as the noble Viscount, Lord Simon, has already mentioned—because for generations we, in this country, have fulfilled these obligations. And it has been to our great advantage to do it. But it has contributed to the prosperity of the world and it has contributed considerably to the development of the American continent. Now, we have become a debtor nation, seeking credit so that we can trade. The roles are reversed but the rules remain the same. America will have to grant credits in the interests of her own economy.

I think it is a fair question—if one is looking at this problem from the point of view of the British people and not from that of the American people—to ask this: Why do we need this credit from America so urgently at the present time? The answer is clear; and whatever rights we have given up, we have the right, at any rate to state this, and we can state with pride. It is because, in 1940 and 1941, we paid to the United States of America every dollar that we could collect from our accumulated resources. We paid those dollars for ammunition, for the building of factories—which still exist in America—to make munitions of war so that we could fight for the freedom of the world. We reduced ourselves to the miserable, poverty-stricken position of having only £3,000,0oo in gold and in dollars in this country. The American Government still holds those securities in pawn. We fought, we paid on the barrel "for the means to wage that fight. At the same time, and in agreement with America, and as a condition, we deliberately abandoned and sacrificed our own export trade—which was then earning for us much-needed dollars—in order that we might release men from that trade to undertake the obligations of war. The nation, and the men and women in it, abandoned markets and lucrative employment in order that they might go to fight the enemy. Those are the causes—and let us record them with pride—that have put us into this poverty-,stricken condition so that we have to seek dollar credits from, America. Those are the causes of our discontent. and the stories of our bereaved homes, the sight of our shattered towns bear witness to our sacrifices and our sufferings in those years.

I think that these things should be said. I do not wish any words of mine to embitter the relationship with a country which I, personally, esteem through knowledge; but America can have, in retrospect, no pride in her years of hesitation. Later, she varied her policy. When we had no more dollars left she embarked on that great and magnificent act of statesmanship the Lend-Lease Act, which will live in history to her credit. And let this be said also; the conditions in these Papers for the wiping out of all war debts, for the final act of settlement of Lend-Lease, are greatly to the credit of the United States of America.

Then we come to the post-Pearl Harbour period. When America had been disastrously attacked, there came the great brotherhood between the two nations, and we in this country—and rightly—have never been backward in praising the valour of her fighting men Or the prodigal generosity with which she threw her life and her wealth into the conflict to achieve victory. But America came into the war not to save Britain, but so that we might together—and do not forget this—and with the aid of our Empire, defeat the nations that assailed us. Together, in alliance and friendship, we triumphed, but the war has left us poor. It has left us the largest debtor nation in history. America, on the other hand, has been left by the war with no external debt, and rich beyond her dreams. I ask the American people whether, in justice and in honour, they ought not to return to us, and without conditions, those securities that we were compelled to deposit with them in 1940. I do not ask for a loan. That is why I oppose this loan. I do not ask for a gift. I ask for rightful restitution of the dollars we paid in advance of what became a common cause. The noble Lord, Lord Pethick-Lawrence, talked about "we are one of another." It cannot be a case of "one of another" when they keep possession of something that we sent at a period of such trial and then come and talk about letting us have a loan on terms such as those which are now before your Lordships' House.

There is another aspect of this problem which I should like to bring to public notice. It is so elementary that I believe it has almost escaped notice in the United States of America. The problem is this. We are not borrowing "dollars"; we are borrowing credit that will be expended on goods. If repayment is to be made, it must be made, either directly or indirectly, in goods. I ask the Government what provision had they made before they entered into this Agreement, before putting the name of Britain to it, to ensure that those goods will enter the United States of America? They have taken the money; have they, at the same time, made the means available so that we are going to be able to pay it back? During the years between the wars I was in America and wherever I went I heard the story of our default on the Baldwin loan. It was a subject of much bitter comment. It was greatly to the detriment of British commercial interest and prestige, and an Englishman hearing it constantly, began to hate it and to feel somehow that we were being depreciated. I venture the opinion that our failure to repay our contractual debts had much to do with American insistence that we should pay on the nail for the munitions we got in 1940. In entering into that loan, I am prepared to admit that Mr. Baldwin and his Government in 1923 sinned in ignorance, but if we repeat the process, then indeed we shall be sinning against the light.

How can any competent body of people on either side of the Atlantic enter into a loan agreement without at the same time having satisfied themselves that with good will on both sides, repayment can be made? Instead, the Americans have said this: "We want your endorsement of Bretton Woods. We must have it." America has said to this country: "We must have that endorsement of Bretton Woods before the 31st December of this year. Otherwise there will be no loan." That is not the way that I like to think of this country being treated. They say it because if it is not endorsed before December 31 they must consult their own country again. That is as may be. That is their point. I do not like this tacking of a loan on to Bretton Woods. It is not a respectable way in which to treat a great country. They say: "Of course, we will give you credit. We will insert generous waiver clauses with regard to the payment of interest, but the capital must be repaid and subsequently, in the summer, we will enter into discussions as to our mutual tariff policies and we will pay particular regard to the elimination of Empire preferences."

The noble Lord, Lord Pethick-Lawrence, with what is surely extraordinary optimism, talks in his speech about our bringing America to book if we have difficulties on the scarce-currency clause. In view of the way they have talked to us it does not look as though you would ever have much influence when you tried to bring them to book. And meanwhile Britain's name has gone on to that bond. We have signed it knowing full well that unless America lowers her tariffs we cannot meet the obligations of the bond. That is not my idea of a good commercial agreement. I wonder how many members of this House would pledge their own credit on such a basis? I believe that our financial reputation is being put in Chancery. For fifty years we are faced with this prospect of labouring to pay toll to America for her financial transactions in munitions. For fifty years we are going to face the prospect of possible default because our credits may not allow us to pay our debts with our labour. That is the position in which His Majesty's Government have placed us, and I venture with great respect to them to say that they have served us ill.

Let me say this to America: a wise creditor has regard to his customer's interests. We are the largest and the best market for American goods. America has much to gain or to lose in this market. At the moment she is on the top of the world, a position of very great peril. I have spent the last few days in my anxiety about this loan collecting commercial opinion. I have been mixing with the business men accustomed to trade with America, the business men in the Midlands and in the North. I find some surprise expressed at the American commercial short-sightedness in regard to this credit. That is what I find among business men. As to the general public, I find them angry. I find them in a mood to say: "Cannot we do without America?" That is a loose statement, and it is a foolish remark, but I am telling you what they have said. They go on: "Cannot we get our cotton from the Empire? Cannot we use the cotton we have got stored away and that we bought during the war?" Then they say: "Cannot we make our own films in this country? Do we want American motorcars? "

I tell America that a loan of this nature will create a sales resistance here which will, in my opinion, be a bad thing. I do not want a trade war, but I know the value of the British Empire to America. I know the value of the Lancashire cotton market to America, and America is not in a position in which we need to be so frightened. I deplore the fearful attitude of the Government. American traders need us as much as we need them, and there is neither need nor justification for this cringing policy of appeasement to her immediate power. I think it is time there was some plain speaking. We lost the habit between the wars; unless we are prepared to surrender our place in the world, we had better get that habit back. The Government are afraid of America, afraid of the decision of Congress, so afraid that they have entered into obligations on our behalf which, in My opinion, show no proper estimate of their consequences. They have pledged our inheritance in order to relieve them from the pressing needs of the time.

Of the details, many of which I believe spell disaster to the quick recovery of the trade of Britain, I will not speak, because I know them to be in the minds of others. I have dealt only with the broad commercial aspects of the problem. I believe I am speaking for the trading community of this country when I say that I believe this Agreement to be harsh, unjust, and commercially unwise. I know that I speak for a wider public when I say that they resent this dollar dictation, and as long as this loan lasts it will carry the memory that in the days of our need America seemed to forget the sacrifices we have made and to forget her own obligations. That is a state I regret. I regret it because, like many others, I had looked for an era when the two countries would work together for the expansion of the trade of the world. This is an Agreement whereby we are going to jeopardize our own trade expansion, even within the space of a year, in order that we may purchase an immediate relief. I want to go on record in your Lordships' House in condemnation of these proposals. I declare this bargain to be unworthy of either nation. It will ease the task of this Government while it lasts, and they will hand on to their successors and to the country a very heavy burden.


What is the alternative?


It is my belief that it is made without conscience and with a disregard of commercial consequences and of the high prestige of the country. I have spoken very briefly. I feel very strongly about this loan, but I realize there are other issues involved. In spite of many weaknesses, I think the Bretton Woods proposals are for the general benefit of the world, and I shall vote for them. We ought to support them. Then there is, of course, this very embarrassing domestic issue which faces those of us who sit on this side of the House. This loan is not, to my mind, an issue on which battles should be fought. The people have elected their combatants. The Government of this country have accepted this loan and, with it, all the responsibilities it involves. For my part, I can support them on Bretton Woods, but I cannot support them on the loan. I shall follow the advice which the noble Viscount, who leads the Opposition, with vast knowledge and great political experience, may give to us at the close of the debate. I believe wise statesmanship lies in declaring our views frankly and then abstaining from further responsibility in the matter.

5.12 p.m.


My Lords, I want to say a word first about the Financial Agreement. The war which has just concluded was, in the fullest sense of the words, a joint war by the United States and ourselves. Our aims were joint aims and our comradeship in arms was such, I believe, as has never before been achieved between two Allies in the field. The spirit of partnership inspired everything we did jointly with the Americans in the war. I can only say the Financial Agreement does not reflect that spirit of partnership; it reflects the absolute diversity of our points of view. Let me tell your Lordships my point of view about this financial transaction.

Lend-Lease was passed by Congress in March, 1941, nine months before the United States came into the war. Surely, it would not have been an excess of generosity if its effects had continued for no shorter period after VJ Day? As the noble Lord on the other side of the House has already said, it would not have been a great stretch of magnanimity if there could be included the dollars which were spent by us between September, 1939, and the passing of Lend-Lease. I have observed with interest in the reports of the Nuremberg trial that the American prosecutor has been at pains to trace the sources of Nazi aggression for many years before 1939 and, indeed, for many years before 1933. If we carry that thought to a logical conclusion, we have to go back to the last war. One of the things I regret most about this settlement is that there is no reference to the old war debt. That is passed in silence, as one passes in silence a social solecism which may be committed by a friend; one thinks it kinder to say nothing about it.

It is a matter for profound regret that the truth about that old debt was not placed on record in these transactions because, as history has proved and as the efforts of the United States to bring about better conditions are now proving every day, the fault was not with us but with the failure on the part of the United States to receive the goods with which alone we could pay the debt. Yet we let it be passed over in silence so that if, again, difficulties occur the Amercians— or millions of them—will say, "There you are, they arc at it again." From my point of view it would have been but justice had the Americans said: "We recognize our share in your failure to implement the old debt obligations. We hand you back, as an act of grace, the dollars you paid in a vain attempt to fulfil those obligations."Then the matter would have been plain and on record for posterity to see. But is such a suggestion as that practical politics? Obviously not. If the war had been fought in the Middle West it might have been a different thing, but, unfortunately, the war was fought a long way from the Middle West—in the East and on the West.

I would like to spend a moment in comparing the terms of the financial arrangements this time with those made after the last war. I do so because a Member of Parliament in another place—one of the prominent supporters of the Amendment which I believe is to be moved by the noble Lord to-morrow in your Lordships' House—ventured the opinion that the 1923 terms were princely compared with these. Just think! Last time, no Lend-Lease—the "most un-sordid act in history," as it has been called. And do not forget we are always glad to speak in terms of relative contributions. We talk of sacrifice according to our resources. We must not be surprised, therefore, if the Americans prefer to look at the absolute financial contribution they have made which, necessarily, compared with ours, is greater. Last time, the rate of interest was 4 per cent. and was in respect of a fixed loan of dollars which had been blown away into the air and which were represented by no assets. There was no new money, no five years' pause, no provision of waiver and no recognition of exchange difficulties. I hope the noble Lord opposite, when he moves his Amendment, will produce some better argument. than that.


It is not my intention to move an Amendment tomorrow. I mean to speak and vote on the Resolution.


Would the noble Lord say which way he will vote and thus put us out of our agony?


I am glad the noble Lord is not going to move his Amendment, but, at the same time, I hope that does not mean, as it is on the Order Paper, that I shall be precluded from referring to it, because I look forward with pleasure to referring to it a little later on. Another difference from last time is the fact that we have before us the International Monetary Fund and all that that implies. I welcome that for its own sake because I am certain it is a genuine attempt to return to freer trade. I must admit I was astonished to hear the noble and learned Viscount, Lord Simon, say, in reference to that, it would be a mistake for Britain to return to free trade without a corresponding action by others. In fact he said that was impossible. But who is suggesting it? The whole point of Bretton Woods is that we are all to go back to freer trade together. If the noble and learned Viscount will forgive me, I fail to see the point of that remark.

In addition to the International Monetary Fund, there are the proposals regarding trade and employment which we have heard a good deal about. I wish to read your Lordships just the headings because they encourage me very much. Heading A, "Need for International Economic Co-operation"; B, "Proposals concerning Employment"—and that refers to high and stable levels of employment—and C, "Proposals concerning an International Trade Organization." It may well be that that paper has an American flavour. I think it has, but then it is an American paper. It is only an agenda, but what would we not have given for an American agenda of that character at the Economic Conference of 1933?

My Lords, we have had misgivings, a great many misgivings about the juxtaposition of the phrases "elimination of preference" and "reduction of tariffs." Like the noble Viscount, I have devoted a good deal of attention to the documents, and I was going to take your Lordships through them, but in view of the happy intervention of the noble Lord, Lord Keynes, I hope we may regard that subject as disposed of. We take it that we enter into the negotiations on these proposals with a completely free hand. Our hands are free. We take the loan and we enter the discussion without any implied or absolute obligation unilaterally to destroy Imperial preference. Now we have got that clear and I think it is a great relief to a good many of your Lordships.

I want to say a word on why, we must accept this credit. The first point, of course, is the immediate driving need of dollars. What do we want dollars for? We want the dollars for immediate needs because we have been told on good authority—Government authority—that our food will be cut, our clothing will be cut and, above all, our power of industrial reconstruction will be crippled. That is the real difficulty. One noble Lord asked, why cannot we use Empire cotton in Lancashire? I am told half the Lancashire mills cannot run on Empire cotton, and if they have to be converted the process may take two years. We cannot wait two years to get our textile industry going and our exports re-established. May I, in passing, just interject this remark. We have spent £15,000,000 a day on the war, and there were those enthusiasts who said: "There is the proof, that if you want to spend £15,000,000 a day on social reform you can do it." Was the hollowness of any claim ever more clearly illustrated than by the straits in which we are at the present time? I trust we shall never more hear any absurd claims of that sort.

The other reason why we have got to take these dollars and these arrangements is that there is no constructive alternative. Or is there, my Lords? I am just a little disappointed that the noble Lord is not going to move his Amendment, because I thought that behind that Amendment he was going to offer us a constructive alternative. I do not think it is an' use destroying this Resolution unless you can put something in its place. The noble Lord's Amendment offers three objections: (1) That it is a return to gold; (2) that it abolishes the sterling area; and (3) that it is a destruction of Imperial preference. The return to gold has been adequately dealt with and I would only ask the noble Lord to answer this question before he proposes the rejection of the Motion: Are stable international exchanges desirable in the interests of world trade in general and Empire trade in particular? It stable exchanges are desirable for international trade, what alternative is there except something of the nature which is now proposed?

What would, in fact, happen so far as the Empire is concerned, if we turned down this arrangement? Would your Lordships just think first of the position of South Africa. South Africa has a huge idle purchasing power in the form of bank balances. South Africa has no external debt to speak of. She has repatriated practically all her debt to the United Kingdom. She owes no dollars. She has her gold to sell. She has no experience of austerity so far as her civilian population is concerned. South Africa has no need to borrow; she has her gold to sell. All she has to do to get the American goods and dollars of which she has tremendous need is to give first offer of her gold to New York instead of to London, and who could blame her if she did it? Why should she, at this time of the day, when the war is over, embark upon what would be serious austerity, simply for the benefit of the people of these islands?

Then India. India has supplied during the war substantial quantities of dollars to the dollar pool. Our indebtedness to her is very considerable. She has urgent need of goods—capital goods and consumer goods. We can supply only a small fraction of the capital goods which India needs and none of the consumer goods in the immediate future. How can we expect India, in those circumstances, not to conclude commercial credits with America? And what about Canada? Canada, if we do not conclude this arrangement, will be torn between the interests of the United Kingdom, her mother, and the United States, her brother with whom she has such close ties of friendship and of commerce.

I do not believe there is a practical alternative. Is it possible the noble Lord is going to offer us, as an alternative, Empire free trade? Of course, Empire free trade is a most effective title. We all respond with loyalty and enthusiasm to the mention of the Empire, and I confess that I am unrepentant enough to say that the words "free trade" have something of a similar association for myself, and I am not ashamed to admit it. Consequently I think it is a most ingenious title. "Empire multilateral trade" would not have sounded nearly as good, though we have to call free trade "multilateral trade" in these days. I think the title is one which does great credit to the ingenuity of the noble Lord opposite. But unfortunately the resonance of the title corresponds exactly to its pretensions. Empire free trade is the quintessence of the suggestio falsi; it is the apotheosis of the false prospectus. Perhaps the noble Lord is going to offer us a closed sterling area. The point has (already been made that that is isolationism, and isolationism is restrictive. If we are going to have a world based on an expansive economy we cannot have isolation; we have got to have some international arrangement such as has been proposed.

Now a word about the question of convertibility. Industrial competition has got to be faced sooner or later. The greatest strength of sterling has always been its convertibility, and, in fact, one of the great benefits we get out of the dollar loan and one of the great objects we have in the long run is the restoration of that convertibility. I think those people who look on non-convertibility as a, protection have got the whole conception of this matter of international trade all wrong. But the early date of convertibility is the hardest part of the bargain which we are asked to accept; compared to that, the £35,000,000 on the exchanges is, in my opinion, a flea-bite. I am bound to say that I think in this matter the export-mindedness of the United States negotiators has got the better of their magnanimity.

Can it be done? We do not like to assume obligations which we are not sure we can fulfil. We are like a good borrower at the end of his resources, but whose credit is still perfectly good. Your Lordships remember perhaps what Omar said on the subject. He said: "Take the cash and let the credit go; nor heed the rumble of the distant drum." That is not the spirit in which we should undertake this bargain. I want to refer to what the noble Lord, Lord Woolton, said with regard to the financial probity of the City of London. I share with him the view that it would be damaging to our financial reputation if we were to undertake any bargain we did not think we could carry out. The only thing which enables me to support this Agreement is Article 12 of the Financial Agreement. With great respect to the noble Lord, Lord Woolton, I do not think he got it quite right. He said there was in Article 12 some nebulous statement with regard to scarce currency. I am sorry the noble Lord is not in his place, but I think what he was thinking of was Section vii of Bretton Woods, which is entirely concerned with "scarce currencies" and is a very valuable section. Article 12 of the Financial Agreement, which is what gets us out if the conditions become intolerable, reads: Either Government shall be entitled to approach the other for a reconsideration of any of the provisions of this Agreement, if in its opinion the prevailing conditions of international exchange justify such reconsideration with a view to agreeing upon modifications for presentation to their respective Legislatures.… I hope it is perfectly clearly understood that that is not only an integral part of the Agreement but a thing which is meant to be worked. What I am trying to guard against is this. If and when difficulties arise America must not be in a position to say: "There they are; they are trying to dodge the bargain which they undertook."

There are immense difficulties to be overcome. The greatest of them is the tremendous excess of exports which America enjoys. I see no real sign that she is prepared to undertake the long-term obligations of a creditor. We must not forget America's difficulties. Her productivity is enormous. Do not forget that the United States has superimposed the whole of her war production on practically 100 per cent. of her peace production. Our peace production, of course, was severely cut owing to the exigencies of the war, and that, as the noble Lord opposite said, is one of the additional reasons why early convertibility is so cruel. But American production is colossal; they have their whole war production superimposed on their whole peace production. Consequently they are bound to have a colossal surplus of goods to dispose of. Can your Lordships wonder that they are export-minded?

This loan is made, as the noble Lord opposite said, in the interests of the United States, and it has been made on commercial terms; but never forget there are millions of people in the United States who wish it could have been made with greater magnanimity. Consequently. I feel that this has got to be accepted and, what is much harder, accepted gratefully. We have got to rely on the friendship, the magnanimity and, above all, the continued education of the United States to see us through the difficulties which lie ahead. The education of the United States has proceeded a long way since, 1918, as a recital of Bretton Woods and all the rest proves; yet, complete as is their underwriting of the full conditions of world trade, I still cannot help doubting whether the full implications of her creditor position are understood in America.

Two things are necessary if these arrangements are not to break down. The United States must take full responsibility as a creditor nation, and that involves not only lending abroad but importing. That is the critical point; she has got to learn to import far more than she does at present. That is a responsibility which she has voluntarily taken upon her shoulders, and which she must never be allowed to forget. The other condition necessary is that our own industry shall become efficient enough to share in a competitive way the common task of supplying the immense amount of goods which will be necessary to raise the standard of living in the whole of the world. Above all, these arrangements must be accepted in the interest of Anglo-American co-operation. It was Anglo-American co-operation which saved civilization in the world of yesterday, and it is Anglo-American co-operation alone which offers a hope of peace, plenty, and happiness in the world of to-morrow.

5.39 p.m


My Lords, in view of the very interesting and the powerful speech that has been made by the noble Lord, Lord Balfour, I hope we shall see him in the Division Lobby with us to-morrow. So far we have only had one indication from a Conservative Peer as to what he is going to do, and that is from the noble Lord, Lord Beaverhrook. I ventured to interrupt the noble Lord, Lord Balfour of Burleigh, and ask him how he was going to vote, but he did not reply. I see the noble Lord, Lord Altrincham, is very anxious to intervene. I shall not detain the House for long, but there are one or two things which I think ought to be said, The first thing which I think ought to be said is this. We have had a most extraordinary speech, if I may say so, from Lord Woolton. I am sorry the noble Lord is not in his place, but I believe when he comes to read that speech he will himself regret it. If I had made that speech, it would have been described as mischievous.


It would have been, if you had made it.


The noble Lord says it would have been if I had made it. ''O, Jew, I thank you for that word." Apparently Lord Woolton is not taken very seriously, and I am. At the end of all this the noble Lord, Lord Woolton, is not, apparently, going to cast a vote one way or the other. I hope for more boldness from Lord Balfour, and I do not despair. As for the noble and learned Viscount, Lord Simon, I admired his references to the long, hard and uphill road which we have to tread and along which we have to battle our way forward. Apparently his contribution to this great struggle ahead of us is to sit on the fence.

We are to have neither the advantage of his support nor the encouragement of his opposition. I do not congratulate the Party opposite on their leadership or on their political courage. The truth of the matter is that the Conservative Party are eager to wound but afraid to strike. They want to have the opportunity later on, when there are economic difficulties in this country and when people are suffering privations and austerities—as they will undoubtedly have to do, whether this loan goes through Congress or not—to cash in on that position and make political capital out of it by saying "We were not responsible." The Conservatives, therefore, will riot vote for us; and they will not vote against us, because they are afraid of a political crisis between the two Houses. If that is the state that the Conservative Party have come to, they may well resign themselves to a sojourn in the political wilderness for the next generation, or even longer.

I should like very respectfully to congratulate my noble friend Lord Pethick- Lawrence on the way in which he introduced this Motion. It was, if he will allow me to say so, the most positive recommendation that has yet been made by any member of the Government, and was all the more acceptable for that reason. I myself had intended to use some of the arguments which he employed. This is a difficult and complicated matter, but thought that my noble friend made it very clear. The noble and learned Viscount, Lord Simon, complained of the difficulty of understanding all the documents in five days. I can sympathize with that, but he is not alone; there are forty million people in this country, and I am afraid that the great majority of them do not as yet understand these issues. Lord Balfour of Burleigh spoke of the education needed in America for the enlightenment of the American public. There is a great deal of information and education required for the enlightenment of our own public. Perhaps it will comfort the noble and learned Viscount, Lord Simon, if I tell him that two young ladies waiting in a bus queue were heard discussing the matters now before your Lordships, and one said to the other, "What puzzles me is, who is this Sir Bretton Woods?" I think that that is typical of many.

My noble friend Lord Pethick-Lawrence did not make a great deal of possible austerities, and apparently on that account disappointed some noble Lords on the Front Bench opposite. I agree with him. I think there is a much better recommendation for these Agreements than the avoidance of further austerities. After all, we are spending in dollars the equivalent of £18,000,000 a year to pay for American films, which are not necessities, however entertaining they may be. It may be said that it is necessary to keep up morale and provide some mental escape for our people, but these films are not necessities. I do not know what is the present bill for Virginian tobacco, but it is very heavy. That is not a necessity. People get very irritated if they cannot get Virginian tobacco nowadays, but before the last war, when Lord Croft and I were dashing young officers, we did not smoke Virginian tobacco; our tobacco came from Turkey and Egypt. We could do without Virginian tobacco.


I agree with the noble Lord that the British Empire could produce all the tobacco that we require.


That is what I am saying; not for the first time, the noble Lord and I are in complete agreement. To say to our people that the rejection of this loan would mean a tightening of belts and a giving up of luxuries is not a very strong argument. Our people, if properly appealed to, will face any hardship for what they believe to be right and just. I prefer the way in which the matter has been put by my noble friend Lord Pethick-Lawrence.

I should like, if I may, to try to put before your Lordships the case as I see it from this side of the House. I ask you to imagine the effect of the rejection of this series of Agreements in the House of Commons last week, or this week in your Lordships' House, on the present meeting which is taking place in Moscow, where Mr. Byrnes and Mr. Bevin and Mr. Molotov have a very difficult and complicated task. It would not help Mr. Bevin and it certainly would not help Mr. Byrnes, if these Agreements were rejected, and I think that that is a consideration which must be borne in mind. I think that one of the great functions which your Lordships' House can perform at the present time is to explain these Agreements to our people. Your Lordships will be listened to by the masses of the people. I think that we should emphasize that there are, after all, certain very favourable items in these Agreements. A great deal can be made of the final settlement of Lend-Lease, which is a great advantage, on terms on which I think we can congratulate our negotiators and their American colleagues. To wind up Lend-Lease cleanly and for a not extravagant payment is, I think, a tremendous gain for the future.

I understand that one line that the Opposition have taken is that they could have got better terms. In fact, Mr. Churchill said in another place that if he or his colleagues had been doing the negotiations they would have got better terms. I venture to suggest to your Lordships that that is a complete fallacy. I have been reading the American newspapers for the last three months, ever since these negotiations began, and I have carefully read the epitome of the whole of the American comment both in the Press and on the wirelesss on these financial conversations; I am very doubtful indeed whether better terms could have been secured in the present temper of the American Congress and the American people.

I do suggest, however—and this is no sort of reflection on the noble Viscount, Lord Halifax, our Ambassador in Washington, and no sort of reflection on Lord Keynes and the team of experts that accompanied him—that they might have been in a rather stronger position on certain aspects of the negotiations if their delegation had been headed by one or two Cabinet Ministers from this country. Although Lord Halifax has held very high offices in the State, he is regarded in the United. States as a diplomat. Lord Keynes, although he has held very high positions in the City and as adviser to the Government, is not of Ministerial rank. On the other hand, the two principal negotiators on the other side were members of the United States Administration or Cabinet. I am inclined to think that the more political side of the matter could have been better emphasized by Cabinet Ministers from this side. Those who heard Lord Pethick-Lawrence speak this afternoon will, I am certain, agree with me that it is a pity he was not there.

There is one point which has not been mentioned in the very interesting speeches this afternoon. This again is, I think, a partial explanation of the American point of view, which we cannot ignore. It is no use scolding the noble Viscount, Lord Samuel, because he put the American point of view. We have to consider it when we are weighing the rights and wrongs of these transactions. The loan over all attracts an interest of 1.62 per cent. but at the present moment the American Treasury borrows from Ls own public at 1.92 per cent. It is perfectly true that it gets part of that back in Income Tax and so on, but as the case can be presented to the American Congress by our ill-wishers—and we have illwishers—they can say: "You are charging these wealthy and clever British less than you are paying our own citizens who lend to the Government.

There are other arguments which have been put forward this afternoon which tend to show that these Agreements will not necessarily have an easy passage through Congress, and here I want to put a question to my noble friend Lord Pakenham, or whoever is going to reply at the end of the debate. I have given notice of this question, and it is this: Are we going to be caught unprepared again? Let me put it in another way. Are we making the necessary preparations in case this loan is rejected by Congress? Congress has accepted Bretton Woods and, presumably, the American Government can carry through the proposals that are going to be brought forward at this great economic international conference. But the loan might be rejected by Congress. Are we prepared for that eventuality? It is not only physical preparation that will be required—though that is most important—hut spiritual preparation as well. Are we spiritually preparing our people

The end of Lend-Lease obviously caught us unprepared. For that I blame the Caretaker Government, of which I see several ornaments on the Benches opposite, and the Coalition Government which preceded it. They should have known that Lend-Lease was coming to an end, and yet its cessation was received with dismay and apparently without any adequate preparation. We cannot afford to be caught in that way again. I would beg that some answer to this question may be given in the course of this debate. It is not just a matter of my curiosity. I assure your Lordships that it is not that which has led me to put this question. But I think that the British public are entitled to an answer; they are entitled to know not exactly what is being clone but that preparations are in hand

I venture to say that those of your Lordships—and I hope that everyone who is listening to me now will be included—who are alive in twenty or thirty years' time will probably look back on all our great trepidation and our doubts about this loan with calm amusement. Then it will not appear as such a tremendous lot of money— £,1,100,000,000 or 4,400,000,000 dollars—as it does to us now. That would have been the cost of fifteen days of full warfare by the United States. If the war had gone on for another fifteen days, the United States would have spent on their war effort the amount of this loan. And the amount expressed in terms of our war effort would be about sixty days' expenditure. Now it is quite obvious that, if this country had not been in the war from the beginning, to achieve victory would have taken the United States longer than fifteen days. Perhaps it might have taken fifteen months, or even fifteen years. Therefore, looking at this with a sense of proportion, I think that these matters fall into their proper place

There is another consideration. For the last five hundred years or so there has been in the world a tendency towards an inflation of prices. There has been a steady rise in price levels all over the world. What may seem a very heavy burden at the present time, this matter of £36,000,000 a year may, in consequence of the inevitable rise in prices, a general expansion of productive power, the utilization, possibly, twenty years hence of atomic energy for commercial and industrial purposes, appear very much lighter to our grandchildren

I notice that State trading is recognized. I think there is a very clear answer to that question relating to sugar from Jamaica which has been raised in this debate, and which, indeed, I have heard many many times over a number of years. I think it concerns Jamaica, San Domingo and Porto Rico. The answer to the question, of course, will not have occurred to the noble Viscount, Lord Simon, who put it. It is simply that State trading is permitted under this Agreement, so that the Government can buy Jamaican sugar in bulk, and they will not. be accused of discrimination. I may say that I have raised this matter with the Government and these are the answers which I have been given. The same will apply with regard to bulk purchases made in New Zealand and Australia—to bulk purchases of foodstuffs. That is not discrimination at all.


If the noble Lord will allow me to intervene, may I say that we shall be very greatly interested to have that confirmed by the noble Lord, Lord Pakenham?


There is no need to wait for confirmation from Lord Pakenham. You will find it set out in the Commons edition of Hansard for last Wednesday in the report of a statement by the President of the Board of Trade. I can assure the noble Lord that I am not speaking without the book. I have read Hansard. The truth is that the whole of this, as my noble friend Lord Pethick-Lawrence has suggested, should be taken together. The loan, itself, is not in isolation. The Bretton Woods proposals are not in isolation. They are all part of a whole. There is the loan itself, the proposed International Bank under the Bretton Woods arrangements, the International Monetary Fund, the forthcoming international conference on economics, trade and commerce, and the United Nations Organization, itself, which meets next month and which has an economic section. All these, I suggest, should be taken together. They all point in the same direction, and that is to a coming together of the nations of the world; not only of the so-called "Big Three," but of the fifty-two members whose representatives will assemble in three or four weeks' time in this City of Westminster. It is a tendency towards a working together, a co-operation. The alternative to such a policy, which alternative, I hope, is going to be discredited, is cutthroat competition and international anarchy in commerce and industry, which has so often led to strained relations and even to wars in the past.

I suggest that the key to the whole situation lies chiefly in one thing. I refer now only to the question of the service of the loan, which is, naturally, exercising the minds of so many of your Lordships. If the United States of America are prepared, as Lord Balfour has suggested, to behave as a creditor nation should behave, and must behave, then there should be no difficulty in maintaining the service of the loan, and no question of repudiation or default—which seems so to worry Lord Woolton—can arise. A creditor nation, as we have learnt in the past from our experience and the French nation when it was a creditor, has to accept an import surplus, otherwise its debtors cannot pay it. What does that mean? It means, among other things, a higher standard of living; and in the present case, this will apply particularly to the great working masses of the United States, especially those in the Southern States of America who are, in many cases, miserably poor and underpaid. It is not very encouraging to see that there have been attempts on the part of some American employers deliberately to bring down the high wage rates which their work-people earned in war time. I notice that the Administration is resisting this. If it is persisted in, however, if the lesson of how a creditor nation must behave in the present world has not been learnt, the results cannot fail to be most regret- table. As I have said, there must be an import surplus. I hope that the people of the United States as a whole will benefit from this culturally as well as materially. I hope that a second generation, the children of rich men, will show a desire to go into the professions instead of all trying to get into business or commerce and do better at making fortunes than their fathers. I hope that we can rely upon America to behave as we did when we were a creditor nation, and as the French and every other creditor nation has had to do in the past.

If the lobbying by vested interests in Washington can be curbed, checked and discouraged by the better-instructed -sections of the American public, this debt can be repaid. I am sure the general result will be to confer great benefit on humanity. And in saying that, I am not only thinking of this country, for I feel that this transaction will tend to encourage closer co-operation between the Governments of all right-minded people and will help towards the establishment of that world government which is inevitable and which must come.

6.0 p.m.


My Lords, the noble Lord who has just addressed your Lordships, spoke, I think, in one part of his speech of the great importance of American public opinion. I entirely share his view as to the importance of American public opinion, and I will come to that at a later stage in my speech. I think, if I may say so, that he showed less sense of realism when he suggested that we should accept obligations which will last to the year 2001, in order to make certain that they do not interfere in any way with the Moscow Conference which may last two or three weeks. I do not think that that is a contribution in favour of the argument which would carry very much weight in your Lordships' House. I am also a little doubtful whether he did justice to the fact that our unpreparedness in the face of the end of Lend-Lease was really due to the sudden and unexpected end of the Japanese war. The noble Lord, almost alone in the world, I believe, must hive forgotten the atomic bomb. I hope he may long continue in that state; it is a nightmare day and night to most of us.

Many members of your Lordships' House are better qualified than I am to deal with the matter of these Agreements, and it is not about that subject that I am going to venture to occupy a short time in the debate in your Lordships' House. I would only say two things about the matter. The first is to reinforce what my noble friend Lord Woolton said, about the way in which these Agreements deal with what the Chancellor of the Exchequer in another place called "the legacy from the past." I think it is perfectly true that the settlement of Lend-Lease, to quote the language of the Agreement, "the complete and final settlement "of Lend-Lease, is, I would not say the most satisfactory, but the least unsatisfactory feature of these Agreements. It is perfectly true that we received a great deal from the United States, but we gave even more, and that is why I cannot regard even that part of the Agreement as an adequate and generous arrangement between two great nations who have been Allies in a great war. I have the text of the Lend-Lease Act here. It was not an Act which was passed for our benefit. Its very title recites: Be it enacted by the Senate and House of Representatives of 'the United States of America in Congress assembled that this Act may be cited as an Act to promote the defence of the United States. Much of our contribution to the defence of the United States was made before the United States was our actual ally in this war, and I feel very strongly, as my noble friend Lord Woolton said, that that ought to have been taken into consideration in the arrangement which has been made. I am not in the least afraid of speaking frankly on this matter to anybody who may hear my words on the other side of the Atlantic. I have spent a great deal of time in the United States, and have always found they appreciate frank speech. They do not like diplomatizing or seeking to disguise what is the real point. I think, therefore, we should speak with absolute frankness, and that we should be much better friends if we did.

As to the matter of the Agreements, there is only one other comment I wish to make. That deals with the future, what the Chancellor of the Exchequer very properly called "the question marks for the future" which distinguish these Agreements. The questions are many and complex, and they certainly cause me the liveliest apprehension, but I welcome the statement which was made by the noble Viscount, the Secretary of State for Dominion Affairs and the Leader of His Majesty's Government in this House, which was evoked by my noble friend Lord Simon on the question of Imperial preference, and which was supported to our great satisfaction by Lord Keynes, who has actually been engaged in these negotiations. That goes a long way to my being reconciled to the fact that our Government have accepted this Agreement, although in my opinion they should never have accepted it. To speak of the reduction of Customs and the elimination of preferences—


You must remember that that was from Article VII which was drafted long before this Government came into existence.


I am sorry to differ from the noble Viscount. There is nothing about elimination of preferences in Article VII. It speaks of the elimination of discriminatory practices, and we have never in the British Empire or in this country allowed it to be said that preferences given to members of our family within the Empire are discriminatory practices as against those outside. I do not think that that should ever have been accepted by a British Government. In spite of the reassurance which has been given us, and which, as I say, I welcome, I must say I am desperately afraid as to whether the qualifications, the explanations, and the clarifications given to us in Parliament arc appreciated on the other side of the Atlantic. There is danger, I think, of deep misunderstanding, because the way in which we interpret these things is not reaching the public ear in America. I, too, study the American Press and I am bound to say that our point of view aril the kind of interpretation which we are determined to put on the obligations we are undertaking, is not at all well understood over there.

It may be understood in official circles. Lord Keynes assures us that it was, but it is certainly not understood by the general public. I fear, therefore, that these obligations may be the cause of grave misunderstanding in the future, and that the people of the United States should understand this, which is absolutely fundamental to these Agreements. They do not understand that the conditions attaching to our acceptance of this line of credit—the only conditions on which we can pay for this credit if we take it up—involves a complete transformation and indeed a transfiguration of the American economic system if they arc not to compel default. The Foreign Secretary in another place said very truly that what this is going to depend upon is not an argument as to whether or not the Customs have been sufficiently reduced. It is going to be answered by the practical, the concrete, unavoidable test of whether our goods are actually going into the United States. The whole thing turns on that. I honestly wish I could feel that the American public understood that.

I pass from the matter of the Agreements to the manner in which they were negotiated and presented to Parliament, and here, like the noble Lord who preceded me in this debate, I should like to emphasize the importance of American public opinion. The outstanding fact, the lamentable fact, about American public opinion is at the moment its surprise and its astonishment at the fact that these Agreements are not being well received in the British Parliament. There is no question about that. They are genuinely astonished. How can that astonishment have come about? It is surely a reflection on those who were responsible for conducting those negotiations and seeing that our case was put across.

I know of the difficulties. Anybody who is familiar with American public opinion knows there are perpetually articles about Uncle Sam not being a Santa Claus and about being played for a sucker by wily diplomatists from the other side of the Atlantic, and so on. The anxiety they express is very widespread and, therefore, the importance of dealing with the American public and its opinion should, I think, have been recognized from the very first. I cannot absolve His Majesty's Government from a very grave responsibility owing to the manner in which these negotiations were conducted and these Agreements reached.

When Lend-Lease was first established the British case was stated to the American public with matchless eloquence and persuasiveness. I quite agree that events were then helping us and that the situation was so grave that it was difficult to mistake it. I agree that the Empire was standing alone against the world and that the peril to civilization was manifest, but events would not have spoken so effectively for us if they had not been adequately interpreted by a great man and understood by a great man on the other side of the Atlantic. At that time our most representative figures; our weightiest men, our guns of the longest range and heaviest calibre, were sent across the Atlantic to conduct the arguments on our behalf. Compare the procedure in this case. In the first place, the negotiations were entrusted entirely to officials and experts reporting, of course, to the Cabinet in London, but, all the same, entrusted on the spot entirely to officials and experts.

Heaven knows I am not in any way disparaging the magnificent work which those experts did. Your Lordships are all looking forward to hearing one of them to-morrow in your Lordships' House, but officials and experts cannot carry the weight that Ministers carry. I entirely agree with what the noble Lord said about that. It is an outstanding point. It is true that they issued a statement. The statement they issued is very like one of the White Papers published now, but everybody who knows how difficult it is to deal with public opinion knows that hand-outs are useless, especially hand-outs full of statistics arid tables. A national case must be put across in a different way; it must be done by personal presentation by men who are known and who carry weight. That is what counts in critical negotiations and issues of this kind between great peoples.

For months, the veil of secrecy has hung over these negotiations at Washington. We heard they were breaking down, that they were going on, but we have never known exactly where they stood nor what the difficulties were, and neither has the American public. Now we are being told something about them. The only American argument I have heard used is not an argument on the merits of a single point; it is simply the argument that they cannot do it, although it may be right, because Congress will not accept it. That is the only argument so far advanced and that, in itself, is a damning commentary on the way 'in which these negotiations were carried on. The Prime Minister went to Washington at the invitation of the Government of the United States while these negotiations were in progress. He addressed Congress. When a Prime Minister goes abroad, it does not matter to us to what Party he belongs; he represents the nation, and we want him to state the national case. Did he do so? So far as I know, he never referred to this, the greatest issue between the American and British peoples at the present moment. He confined himself to explaining and defining, not the national, but the Party case. That was a lamentable thing. If the common man or the average elector—of whom we have been hearing so much recently—is going to be able to do what he wants to do, to ensure good will and peace among nations, his interest must be enlisted in negotiations of this sort, and he must he given a chance of understanding and making his influence felt. In this case, I do not believe he has ever been given that chance on the other side of the Atlantic. In consequence, this is a sorry business. Parliament is deeply divided, and more deeply divided in another place than even the Division lists indicate. The nation is profoundly disturbed. It is impossible to go anywhere, as my noble friend Lord Woolton said, without realizing that. But even that is not all. After this hole-and-corner method of negotiation, the Agreements are being rushed through Parliament. The Papers were only presented ten clays ago. They are immensely complicated Papers, and we have had no time for careful consideration, and there has been even less time in another place. We have had no time for adequate debate and, again, that is especially true in another place.

The way in which the Bretton Woods Bill has been rushed—it is not one to which I object, but for which I am prepared to vote—is, as a matter of fact, a direct breach of a promise given to Parliament. That was perfectly clear when it was introduced and discussed at a much earlier date. Never has an Executive used its power with such disregard for public opinion and such undemocratic contempt for Parliament. J. say that advisedly, and I challenge noble Lords opposite to contest the truth of what I have said. Compare the regard which is being shown for Congress. Congress is to have all the time it requires. It is not to begin this discussion until after the Christmas recess and, we are told, it may continue discussing this matter until the end of March. There may, perhaps, not be a decision until even a later date still. That is in striking contrast with the treatment accorded in this country to the Mother of Parliaments.

What, then, are your Lordships to do? The noble Lord opposite seems anxious for information on that point. I shall answer him direct. He may not like the answer, but it is what he is going to get. Your Lordships' responsibility is great. The virtue of a Second Chamber resides not in any power to thwart the people's will, but in the power, if need be, to bring about delay for reconsideration and to give time for deliberate thought. That, I believe, is the right and main function of the Second Chamber. Can your Lordships exercise that virtue in this case? In present conditions, I submit, with great humility, your Lordships cannot. I believe if your Lordships attempted to do so you would make the situation, bad as it is at the present moment, much worse. I believe the Government would divide the nation still further at a moment when national unity is of the utmost importance.

I pause to observe that this is indeed a strange situation. Half the nation—a little more than half, I believe—is gravely under-represented in the lower House and that House itself is divided on this issue, and not divided on Party lines. In one important matter the Executive at this moment is breaking faith with Parliament. If ever there was an occasion when the role of a Second Chamber was important, it is this. But owing to historical causes on which I do not propose to dilate, this Second Chamber is not able to play its proper constitutional part at this time—this very critical time in the history of the nation and the Empire. I fear that is the fact. Clearly, sheer conservatism is not always the best way of conserving the stately fabric of constitutional principle upon which our democratic system rests. In my opinion, attention will have to be given to that aspect of our Parliamentary situation before too long is past. But we must face facts. A challenge to the majority in another place by this House at the present moment would greatly stimulate Party feeling, no doubt to the noble Lord's delight. It would plunge the nation into greater disunity, when common effort towards recovery is the most essential thing.


Will the noble Lord be good enough to permit me to intervene? He is referring to me. I think it was his Party which started Party strife, and not myself. Why does he pick me out?


Because the noble Lord particularly asked for information on this point. He said he did not understand exactly where noble Lords stood.


I do not understand now.


I am telling him, and am endeavouring to answer the question which he asked. I am quite prepared to ignore him if he prefers that.

I am convinced, then, that a vote against this Motion would not advance, and might indeed gravely prejudice, the Imperial interests which we all have at heart. I shall therefore abstain from voting. I cannot vote for this Motion, for indeed, like Lord Woolton, if I had been a member of a Government which had undertaken these obligations, I would have resigned my place in that Government. I feel as strongly about it as that. I therefore cannot vote for this Agreement but I will abstain from voting, because that seems to me, in present conditions, the wisest course from the point of view of national interests. I am convinced that both His Majesty's Government and the Government of the United States will, before long, find reconsideration of these Agreements imperative as the situation develops. Fortunately, as the noble Lord, Lord Balfour of Burleigh, and others have pointed out, there is full provision for that in Clause 12 of the Financial Agreement which Lord Balfour of Burleigh read out.

While we should never sabotage these Agreements, while we should do our utmost to carry out our undertakings, whether we like them or not, we must make it plain that our power to carry them out depends on the United States and not on ourselves. That is the point that has to be hammered in all the time. I do not believe, as a matter of fact, that the United States will learn that lesson in time. There is no sign of that change in public opinion, in the Press, in Congress, or in the whole framework of that great economic system at the present moment. I trust—and this is my last word—that when the time comes under Clause 12 to seek a reconsideration of what may not be working in these Agreements, a full national delegation and, indeed, better still, an Empire delegation, will be entrusted with that important national and Imperial task.

6.26 p.m.


My Lords, I rise to introduce to the House the commercial side of these proposals. I do so in no apologetic spirit and not at all in the attitude of a man who recommends a friend a drink on the grounds that it has not got much poison in it and that at any rate a stomach pump is close at hand. That is not at all the spirit in which 1 bring before you these very complicated proposals. I have, however, one word of apology for your Lordships. I desire to be very brief as so many other noble Lords are anxious to speak, and it may be that 1 shall proceed somewhat too rapidly. If so, I hope noble Lords will not hesitate to intervene and inform me that I am not making myself altogether clear.

I would like to ask and try to answer three questions that are certainly agitating the mind of the ordinary man, and I hope I may include your Lordships in that category. The ordinary man is asking, first of all, where do these commercial proposals—the ones set out in Cmd. Paper 67o9—come from; to what do they commit us; and what do they offer us? I shall try to deal, therefore, with their origins, their obligations and their benefits. The question of origins need not detain us long. These commercial proposals, this declaration of commercial policy as it was happily called by Mr. Churchill, flow directly from Article 7 of the P4Utual Aid Agreement of 1942. They simply carry a stage further the declared commercial policy to which this country has been committed for nearly four years under three separate Governments. I do not think I need say more about that, because although there was a certain amount of discussion about it in another place, at the end Mr. Churchill declared himself, as I understand it, completely satisfied with regard to that point.

And now for the question of commitments. In an absolute sense we are committed to one thing only: to consultation with a view to trying to find agreement along certain definite lines. The Dominions are not even committed to that. To quote the statement attached to the three documents on behalf of the Prime Minister: The recent talks in Washington were of course conducted on of the United Kingdom alone and I am not in a position to speak for our partners in the Commonwealth, none of whom an in any way committed. I would only say now that, while we have kept closely in touch with them during the conversations, it is quite understood that each of the Governments concerned will be able to approach the inter-nation, international discussions with full freedom of action. So there is no obligation whatever on the Governments of the Dominions. The United Kingdom, on the other hand, is committed to a search for an agreement, but, of course, we cannot be committed to finding an agreement. We are the absolute judges, when the time arrives, of whether an agreement is available that suits our interests and complies with our ideals. But we do not intend this conference to fail. We are riot putting this document before you as though to say: "My dear fellow, it does not really amount to very much in the end; it does not signify anything." That is not our attitude; we mean this conference to succeed, and we are determined that it shall. We mean these commercial proposals to amount to something solid and substantial in the form of benefits for the people of the world.

Let us first look at what commitments are involved if this conference does succeed. Of course, they are hypothetical, contingent and inevitably very imprecise, but their general character is foreshadowed in the Command Paper before us. Let us look at that Command Paper. I will not say anything about two very important aspects of it—namely, the provisions for economic co-operation and full employment—but I venture to say in passing that a future generation may well consider that the most significant sentences in all these documents not only in this one but in all these documents—are contained on page 2 of Command Paper No. 6709, where it is said that each of the signatory nations will take action designed to achieve and maintain full employment within its own jurisdiction. That is now common ground between us in this country, as is the idea of economic cot-operation, so I pass to the international trade organization which occupies the great bulk of the Paper.

Perhaps the House will allow me to read Clause 4 of the purposes set out in Chapter I. The clause in question announces that the intention is to promote national and international action for the expansion of the exchange and consumption of goods, for the reduction of terms and other trade barriers, and for the elimination of all forms of discriminatory treatment in international commerce…. That is the pith and kernel of the whole thing, and, as you will see, it follows very closely Article 7 of the Mutual Aid Agreement. For the present purpose, perhaps the most crucial sections are B, C, D and E of Chapter III, the chapter on General Commercial Policy. These sections deal respectively with (1) tariffs and preferences, (2) quantitative trade restrictions (including, of course, quotas and embargoes), (3) subsidies and (4) State trading. I will have to say a word about each of those in a moment, but putting it very broadly—and, I am afraid, rather loosely—one can say that the document aims at the reduction of tariffs and preferences by a process of mutual bargaining. It prohibits quantitative import restrictions, with certain very important exceptions; it permits subsidies with certain, only less important, exceptions, which on balance should tell heavily. in our favour; and it affords the widest possible range of State trading provided certain rules are observed.

With regard to tariffs and preferences, I will not say quite as much as I had intended to say, because the matter has been cleared up so carefully by the noble Viscount, Lord Simon, and the Leader of the House. Therefore I need not worry your Lordships with a very detailed exposition of that matter. The noble Viscount, Lord Simon, has quoted relevant words of the Prime Minister, and I need not quote him again. I think however that one observation of my right honourable friend the President of the Board of Trade, in another place, may be added. He pointed out that the trade of this country is so exceptionally diversified and widespread that it would not be enough for us to secure, as against the discarding of a preference, the reduction of merely one country's tariff; we might want twenty-six countries to reduce their tariffs before we were prepared to discard a preference.

As regards the very important question which was raised relating to Jamaica and other countries placed in her position, I think that even our bitterest critics on the other side must take it that we should not be mad enough or so lacking in regard for the Empire as to overlook the fact that the removal of a certain preference might ruin an entire community. In this process of mutual bargaining that might count for a great deal. It is extremely unlikely that any arrangement would be reached which would be such as to bring an entire community to destitution. I do not know whether I am in order in saying this, but I seem to remember an illustration which my right honourable friend the President of the Board of Trade used on another occasion, though not, I think, in another place. He said at the Bar one could never refuse a brief, but one could mark it with an impossible fee. I suggest that in the kind of case which the noble Lord, Lord Altrincham, has in mind, though it is not for me to speak with authority here, an almost prohibitive fee might be imposed.

I should add, as the President of the Board of Trade pointed out in another place, that we arc in no danger of forgetting the fact that the benefits from the preferences we impose flow not to us directly, but to others. There can be no question, where we have a preference agreement with a Dominion, of sweeping away that preference without consultation or agreement with the Dominion concerned; there can be no question of unilateral action even if it appears to suit the book of this country regarded in isolation. I feel it was those and similar assurances which were given in another place which enabled Mr. Churchill to say, near the end of the debate, "I cannot see that there is the slightest justification for suggesting that we are compromised and fettered in any way in respect of Imperial preference." Those were the words of Mr. Churchill in another place, and they were accepted by implication by the Foreign Secretary, who replied to him. I hope that in this House also the matter has now been thoroughly cleared up.

I must pass over more rapidly than they deserve the elaborate provisions regarding quantitative trade restrictions. These restrictions, quotas, and so forth, are to be abolished in principle, but this principle is subject to a number of very important exceptions. The ones I have selected as most important are these. Import quotas on agricultural products under prescribed conditions of glut will be still permitted; quantitative trade restrictions in face of an adverse trade balance will be still permitted, as long as they do not discriminate against one foreign producer more than another. There may be some slight misunderstanding there, As I understand the matter, if it were a question of quantitative restrictions imposed under those conditions, we should not be bound to say to each country, "We are going to cut your total expert to us by the same amount as the imports of every other country." One country might be sending us luxuries—I mention American films simply for the purposes of illustration—and another country might be sending us necessities. We should not be forced to go on taking a considerable portion of luxuries and at the same time cutting necessities. Clearly, what would have to be borne in mind would be that we should not discriminate between sources of supply for the same commodity.


if a quantitative restriction were put on, and if we were going to buy only 100,000 tons and there were five sources of supply, does that mean we should have to distribute our purchases equally between the five sources? That is quite inconsistent with the statement—I am not suggesting that Lord Strabolgi speaks with any authority—that by combined purchase we should be able to place orders where we wish, in which case we could do it where less damage was done to the exchanges. What is the position? Do I make myself clear?


Perfectly clear. I would hasten to say that I am not aware, having listened to the noble Lord, Lord Strabolgi, of his having said anything with which I feel His Majesty's Government wishes to disagree.


Would the noble Lord forgive me? Lord Strabolgi said he had the authority of His Majesty's Government to say that if the Government went in for State trading, it would riot be subject to limitations or restrictions of any kind under these Agreements. Is that the fact?


I am afraid that until I have seen Hansard I would not like to become involved in an argument as to the precise words used by my noble friend Lord Strabolgi. May I deal with the point raised by the noble Lord, repeating that in my recollection Lord Strabolgi said nothing which was in any way inconsistent with Government policy? The question of State trading. is the question which the noble Lord, Lord Altrincham, has most in mind, but the noble Viscount, Lord Swinton, asked whether we were bound to distribute our purchases equally. It would have to he by reference to a standard year. If we had previously taken 80 per cent. from one and 20 per cent. from another, we should not, if we had to cut them down, be forced to adopt a measure of equality.


I think that it is clear. If you put on a restriction it has to be applied pro rata on some agreed basis over your sources of supply. Whether the purchases are made by a hundred-and-one different buyers in the country or by one single buyer, the State trading agency, makes no difference; the State trading agency would be just as much bound to place its orders pro rata as individuals would be. Is that right? I am sorry, but this is most important.


I agree that it is most important, but I should like to finish dealing with this matter under my four headings, and then, perhaps, the noble Viscount will tell me whether his question has or has not been answered. State trading is a specific heading in the documents, and that is the way in which I am handling it here, because in Cmd. 6709 the discussion of quantitative restrictions is separate from that of State trading. I am going later on to deal with State trading in seine detail. Still under the heading of quantitative import restrictions, I would point cut that discrimination is permitted in one case at least, and that is where a particular country—which might, of course, be the United States—was certified as having a scarce currency. In that case discrimination is permitted. Subsidies are in general permitted, pro- vided that they do not do serious damage to international trade, but export subsidies are restricted by certain rules, which should benefit us considerably, bearing in mind the unfortunate experience which we had before the war at the hands of other countries who adopted these export subsidies. The provisions about subsidies should on balance permit us to Have such subsidies as we desire in this country, while at the same time discouraging certain foreign subsidies from which we might suffer damage.

Coming to State trading, it may be said, in the first place, that State trading is given the broadest possible scope, remembering that the degree of protection given in this way is subject to negotiation in the same fashion as tariffs and preferences. Noble Lords have the documents before them, and, since we seem to be getting down to what I might almost call the Committee stage of the matter, I would refer you to Cmd. 6709, pages 8 and 9, Section E, State Trading, paragraphs 1 and 2. It is worth informing your Lordships that in the course of the discussions in Washington it was made quite clear that the United Kingdom would wish to be free to continue its experiments with State trading in food products, and it was pointed out that other countries might also engage in State trading. The proposals in Section E were framed accordingly. They were framed in the light of our known and declared agricultural policy. They will require members of the International Trade Organization engaged in State trading to accord equality of treatment to all other members, and it is provided that Government transactions should be influenced solely by commercial considerations. That is a matter, no doubt, of definition.


World price.


Not necessarily, no. It says nothing about world price. I am sticking to the documents, and I cannot seek to make an improvement in them.


What do you think "commercial considerations" means?


I do not think that it is for a Lord in Waiting to improve on the language of this document!


I thought that you were here to give us advice.


No, my humble function is only to provide entertainment. There is nothing here which would rule cut bulk purchases or long-term contracts, and it is very important that that should be emphasized. What this does is to say that all such bulk purchases and long-term contracts shall be made on a commercial basis, and that political considerations shall not be taken into account in making such purchases and contracts. State trading has to be on a commercial basis, and not on political considerations. If you require a more authoritative interpretation, it may be necessary to ask for one from the Lord Chancellor.


It is quite clear.


I hope the House will realize that the Government's agricultural policy is specifically safeguarded. The essential methods are negotiated tariffs, quotas in certain cases, subsidies, and State trading. Those are the four ways in which agriculture is, or may be, protected under this scheme. I must go on somewhat rapidly. There is one real weapon which we do discard. I want to be quite frank about this, and not to try to prove too much. If we decide that an agreement is forthcoming which we can accept, we do discard the weapon associated with Dr. Schacht, the weapon of going to the sources of supply and saying: "We will buy from you only if you buy from us," and bullying each country in turn. That is one weapon which we do discard, but surely it is not a weapon which could be very easily employed without becoming involved in something like a trade war with America, and surely we are not going to suggest that that is the spirit in which we should enter the new era.

I come finally to the benefits, which, of course, are very substantial. We all know, if we have studied the statistical abstract accompanying these documents, that this country requires to increase its exports by between 50 and 75 per cent. Does any noble Lord seriously believe that it would be possible to increase our exports by something between 50 and 75 per cent. compared with pre-war and effect a huge advance of that kind by snatching some advantage from under the nose of America out of a diminishing total of world trade? More than other countries it is essential for us, whose markets are so far-flung and diversified, that world trade should expand if we are ever going to attain that level of exports which we are all agreed is essential if we are going to return to, much less improve, our pre-war standard of living.

We believe in the ideal behind this document. We believe that trade barriers on anything like the scale which would otherwise confront the world are a thoroughly evil thing, and we believe that here is a unique chance of getting rid of them to a large extent. This is not the old controversy between free trade and protection, in which so many noble Lords have played such a distinguished part on both sides. If you go back to the famous pamphlet on this question written at the beginning of this century by the Conservative Prime Minister of the day—Mr. Balfour, as he was then—or if you look at the brilliant article in today's Daily Telegraph written by Richard Law, the son of another Conservative Prime Minister, you will find it stated that the protectionist case in this country has always been based solely on the idea that it is necessary to impose tariffs in this country in order to force other tariffs clown. This country has often been faced with a choice between free trade and protection for this country, as against a background of world protection but that is not the choice which is before us this time. The choice which is before us this time is between world trade expansion under these proposals and world trade restriction if they fail. An eminent orator in another place described some of these proposals as representing an "economic Munich." The Times newspaper has improved their state to "an economic Dunkirk." May we not see in them rather an economic El Alamein—the first chance which we have had this century to break through from the waste lands of fear arid restriction into the fields of opportunity and hope?

6.51 p.m.


My Lords, in following the very interesting speech which has been made by the noble Lord who has just sat down, I make no apology, even at this hour, for offering a few remarks. We have a clay and a half, practically, to decide—after only ten days' notice that it would be raised—a question which may vitally affect the whole future of this country and the Commonwealth and Empire. I think it so happens that alone of all those who have addressed your Lordships' House this afternoon I have been for forty years associated with those who, sincerely believing that the British Commonwealth and Empire is the greatest force for world good, desire to see the closest promotion of trade through Imperial preferences.

Now these great issues which we have to decide here, it appears to me, find favour with very few. Certainly no one greets the proposals with enthusiasm. I can I find no one of any Party who is really keen on this thing. "Rarely has the nation entered with more misgiving into any international agreement," said the News Chronicle of last Thursday. That newspaper, I believe, speaks very largely—or it used to do so—for the Liberal Party, with which it had very close and intimate associations. The Chancellor of the Exchequer himself, in another place, appeared to me to be delivering something more like a funeral dirge than a trumpet blast heralding a new and hopeful dawn, whilst millions of those who have associated themselves over a long period of time with movements to build up comradely fraternity between the countries of the Commonwealth and Empire view these proposals—if they are as stated in the White Paper—with abhorrence.

The only answer I can get from any one of my friends when I put it to them whether they accept the plan under duress, is to have the question asked of me: "What is the alternative?" The short reply to that seems to me to be, even after hearing all the eloquent speeches which have been made in defence of the. Government, that if we were compelled to seek a loan, why did not we face up to it fearlessly and honestly like men seeking relief from a temporary embarrassment, incurred in the common cause, by a loan which we were determined to honour, in the honouring of which we would make all reasonable sacrifices, and the terms of which we knew we could carry out? What is detestable to the British people, I believe, is that, whilst we believe the British Commonwealth and Empire when fighting alone in their solitary glory, in 1940, saved the world, we should be granted a loan to which conditions are attached which make the full honouring of our obligations most dubious, unless, indeed, we find ourselves in a truly miraculous industrial and financial recovery; conditions which also definitely propose to surrender the principle of Empire economic unity which is, after all, so far as we know, the accepted policy of our people, and for the destruction of which there was certainly no mandate at the time of the General Election.


My Lords, the noble Lord must forgive my interrupting him, and I am sure he will understand that I am very sorry to do so. But really there is nothing of the kind which he is now suggesting in this proposal. There is nothing resembling it in the most remote degree.


I wish I could really believe that. But I am basing what I say on the terms of the White Paper itself. I will come to that Paper in a moment—that I promise the noble Lord. But I do not want to be deflected at the moment. What then was the alternative? I admit that I am not a financial pundit; I ask this question as an ordinary common-or-garden business man. Why on earth should we not have sought a loan somewhat on the same terms as the loan that the United States has granted to France? I know that France is paying 2⅜ per cent., but believe a thousand times that we should and could pay an additional ⅜ths per cent. rather than accept for the rest of our lives economic thraldom in the loss of our fiscal liberty in dealing with the sister countries of the British Empire. Do not tell me that we could not pay an additional⅜ths per cent. or 1 per cent. to preserve this great freedom. All know that, in the prosecution of ideological politics our present Government are already pledged to social luxuries far exceeding such additional cost of the loan interest as I have suggested. I must ask, Was the war contribution of France, of whom I am a well-wisher, so much greater than ours that she gets a loan free of conditions whilst we are placed in "strings"? I think "strings" was the word used by the noble Lord who opened this debate, but I would prefer to say "whilst we are placed in chains."

When we are told that we could not carry on without this aid, I answer, as my noble friend Lord Woolton has already clone, that we have no evidence to prove that assertion. Some people forget that this is, after all, the greatest import market in the whole world, and the greatest bargaining factor for mutual trade relations that has ever been known. They also forget that the British Colonial Empire has vast potentialities for development which—if we set to work to tighten our belts and win through—can bring us a tremendous return. Many thought that we were down and out in 1931, but we refused to be beaten. We rallied all our friends, and in six short years, from 1932 to 1938, we were striding to prosperity. Yes—striding to prosperity. In that short time, in the first effort at reciprocal Imperial preference, we increased our exports to the countries concerned in the Ottawa Agreements alone by 70 per cent or £69,000,000. In that short time we reached the highest degree of employment ever known in our history in this country.

Nor did any foreign country suffer from the fact that we had set up a healthy economic condition within the British Commonwealth and Empire; in fact, the foreign world sold more to the countries which enjoyed our preference after the duties were lowered than ever they had before. No one of any Party will deny—and I am sure of this after to-day's debate—that unless me can bridge the adverse balance of trade, we can never completely recover, and our whole standard of life will degenerate. In other words, we must restrict all but vital imports and we must vastly increase our export trade. The whole basis of this Agreement. however, is in the direction not of increasing our exports, but of doing the reverse—namely, to increase our imports from the United States. As I read it, the United States is not only to get the interest but with the very loan on which she charges interest to secure increased imports into our market and all the markets of the British Empire.

Now it is evident that in very many branches of our industry, the very goods which the United States would seek increasingly to export to this country, to the Colonial Empire, the Dominions, and India, are those goods which we are most fitted to produce. I do not refer, of course, to cotton and tobacco, which have been mentioned. These we are ready to buy. I submit that these it is vital for the United States to sell. If we cannot buy, and they will not sell these commodities, we must greatly stimulate our production within the Commonwealth and Empire, which is by no means impossible. Twenty-six different countries in the British Commonwealth and Empire can produce tobacco. Let the word go out, and in four years' time you would have a great increase of production. If we so stimulate American imports within the Commonwealth area as the United States intends, in five years' time we shall see the United States dug firmly into all those markets which were so precious to us, where we have enjoyed a preferential good will for fifty years, and which were buying from us over 50 per cent. of our manufactures up to the outbreak of war. He is an optimist who thinks that starting so late in the race we shall ever recover that vast trade which this Agreement is to throw open to the highly geared American production before we have got our wheels turning at all.

I submit, therefore, that it is bad business. It is bad for the traders, bad for the workers, bad for shipping, bad financially, bad for the Dominions, and perhaps fatal to great areas of the vast Colonial Empire where it is our fixed purpose as trustees to endeavour to uplift the standard of living of the natives. Worse things follow. One condition is not only that there shall be a reduction of tariffs. No one will quarrel with that if the reduction is mutual and complete, and the United States and all other countries will adopt free trade. That is an argument I agree that you cannot resist. It is something worthy of an entirely new outlook on world trade, but there is not the slightest evidence of that anywhere. The noble Lord who, in his optimism, suggested we had something entirely new where we were not against foreign tariffs, but we were up against the suggestion that there would be free trade from every country in the world, but that is not likely to be the position, believe me. Everyone in those countries of an industrial nature—


Would the noble Lord be in favour of a general reduction in tariffs if it were possible?


I have always said so, all my life. Cobden told us that as surely as the sun rose in the heavens to-morrow all the other countries would follow. But not one country followed. That is the kind of platitude we often hear from those Benches, but it is something of which there is not the remotest chance. Supposing Australia was lured along this. path of universal free trade, how long could she live under the extraordinarily efficient export of United States industry? I venture to think you would find it very difficult for her to go along that path with you, and you would find the same with every other industrial country in the world. I want to suggest that apart from the question of the reduction of tariffs, we have something like a dictate in this White Paper, that there is to be an elimination of all forms of discriminatory treatment. I beg your Lordships to consider for one moment whether it is not a fact that Imperial preference never was discriminatory, because under it we treated every foreign country equally. What we did was to lower our tariff rate against our own kith and kin and our other fellow-subjects, and that alone is the extent of our crime.

We have reduced the duties and I resent the lecture to my noble friend Lord Beaverbrook, when it was suggested by the dismal Micawber who supported the loan from the I3enches opposite, Lord Balfour of Burleigh, that it was dishonest to speak of Empire free trade as a worthy ideal. Of course it is a worthy ideal. Is not the economic union of the U.S.A. inside its tariff wall regarded as a worthy ideal? I think you will find that Soviet Russia has also free trade within her own boundaries. That to secure this onerous loan we should surrender the right to do as the original Colonies of America slid—namely, to prefer the products of our own people within an economic union, is an interference with sovereign rights and internal fiscal affairs hitherto unheard of in any country or group of countries in the world.

What is the heavy lasting grudge of the United States against this old country in spite of the reasons for great, real and. lasting friendship? It is that we, who at least at that time—the War of Independence—were the sovereign power, interfered with the fiscal liberty of British colonists in America. But this to-clay is the Boston Tea Party in reverse, and an interference with the freedom of our country to manage its own affairs, an inter- ference that I regard as unparalleled in the history of the world. We have just emerged from a mortal struggle in which we must almost have suffered defeat but for the stupendous contribution in life and treasure of all parts of this Commonwealth and Empire when no other ally remained in the field. Yet the demand goes forth, when their blood is hardly dry, that we are to tell those who fought so brilliantly and died so gloriously by our side, that an ally will not lend us money unless we forego permanently all hope of Empire economic unity.

I sought consolation from what was said by Government spokesmen in another place, but I confess to confusion. Sir Stafford Cripps said: Nothing could happen at all unless members were prepared willingly to agree with one another to reduce tariffs or preferences. I admit the importance of that statement—and this is of moment—if the United States understand it. It means we go into conference absolutely free and unfettered to continue to grant preference to all our sister countries in the Commonwealth and the Empire if we and our partners so desire. I must, however, point out that the document which we have been discussing to-day—the White Paper jointly agreed to—speaks of the "proposals." I underline the word "proposals." If the proposals for consideration included, let us say, the elimination of the British Fleet, that, surely, could only mean that we were going into conference prepared to contemplate the end of British sea power? But the same must be true of the elimination of preference if you agree to go in on that proposal. If the Government were not prepared to eliminate, why was this fateful document ever signed? It goes further, and on page 4 in Chapter I I find the heading "Purposes." Purposes include all forms of discriminatory treatment. Later on, in Section B of Chapter 3 it specifies: Import tariffs and preferences." His Majesty's Government, seeing the "atmosphere of gnawing doubt," if I might again quote the Bible of the Liberal Party, the News Chronicle, now says through Sir Stafford Cripps: Therefore, it was not enough for us to get, as against the preference, the reduction of merely one person's tariff; we might want twenty-six countries to reduce their tariffs before we were prepared to drop a preference.'' I was partly consoled by that, but it does not square with the White Paper. Therefore, I solemnly invite the Government, with the White Paper before us, to reiterate what Mr. Ernest Bevin declared, when seeking a mandate at the election, when he said that "we would not abandon preference so long as other countries continued to use tariffs against us." Is that really the meaning? I should like to know. Sir Stafford Cripps said: "We are absolute masters." Mr. Churchill has declared that preference was definitely reserved by himself with President Roosevelt. That sentences with a contrary meaning were ever included in the White Paper was, I submit, a grave and tragic blunder. Let the Government, on whom the whole responsibility rests, state now explicitly before our decision is reached that, whilst we will seek—as we all desire—the closest co-operation and explore any proposals for mutual trade agreements between our two great countries, Imperial preference is a purely domestic concern and the economic unity of the Empire is not regarded by Great Britain as a condition in acceptance of the loan. The proposals and conditions in the White Paper can do nothing to promote what we all desire—permanent friendship with our great ally so that as co-operators we can become joint architects in a lasting world peace. As the White Paper stands to-day the loan is such as is described in Polonius's advice—it "oft loses both itself and friend." I ask the Government to make it explicitly clear and then my conscience will at least be clear. I would say to them I believe that most noble Lords who agree with me, if they could have an assurance of that description, would find they were able to adopt a very different course.

7.14 p.m.


My Lords, I should like to ask your Lordships for the indulgence usually shown in this House to maiden speakers. After listening to all the many eloquent and well-informed speeches on this highly complicated subject this afternoon, it seems to me that the ground has been very fully covered. Therefore if my speech is unlikely to be very brilliant, I can assure your Lordships it will have the advantage of brevity. As regards the necessity for this loan, I feel I am hardly in a position to speak. We are assured by His Majesty's Government that failure by this country to obtain this loan on the present occasion must inevitably plunge the British people into even greater austerity than they are at present called upon to endure. Without full access to the facts and figures relating to our stocks of foodstuffs and raw materials, our shipping position and all the other innumerable factors that must affect a decision of this magnitude, I do not see that we can do otherwise than accept His Majesty's Government's assurance that every alternative was fully considered before the nation was asked to accept a loan on what seemed to me such melancholy terms.

I must confess I should have expected we could have obtained better terms than these. Even if we discount all sentiment regarding our war efforts, it still remains a fact that in 1937 Great Britain alone was buying no less than 20 per cent. of the world's total exports. It seems me that if we do not buy those exports who else is likely to buy from the United States on a comparable scale? Surely, the maintenance and indeed the expansion of this country's power as a consumer must always be one of the main planks of. any American economic policy. The fact that the United States have not seer fit to put us on our feet free of charge, seems to me to imply not so much any lack of gratitude or any lack of generosity on the part of our American friends, but a very great misunderstanding of this country's economic position and, if I may say so, of their own best interests. As it is, from 1950 onwards we' shall have to shoulder an annual financial burden at least as great as that which we had to shoulder after the last war, and I must confess I can see no factor in the present situation to encourage us in the belief that our task in the future is likely to be any easier than it was then. It is true that we have the waiver clause, but constant recourse to this concession is hardly calculated to improve Anglo-American relations. As before, we shall do our best to fulfil our obligations, but I do not think it would be right to deceive either ourselves or our American friends as to the very real magnitude of our task.

Nor can I welcome our enforced adherence to the Bretton Woods Agreement compelling us, as it does, to return to a dollar standard, and, worse still, to a free convertibility of sterling in such a very short time. This seems to me to expose our export trade to all the hazards of another American slump and, surely, the lessons of 1925 to 1931 should not so soon be forgotten—that only the constant flow of dollars from the United States to the rest of the world can ensure the success of such a scheme. We must hope this flow will, in fact, take place, but it is not without misgiving that I accept our adherence to the Bretton Woods Agreement, for only by expansion of our export trade can we ever hope to repay this loan.

For all these reasons I cannot do otherwise than consider this Agreement unfortunate and one which is likely to impair rather than improve our relations with the United States. In view of the importance of a continuance of this friendship forged in the years of war, I cannot possibly support this Agreement. On the other hand I find it difficult to vote against it for want of a real workable alternative, an alternative which is not merely a possibility within six months' time or a year's time but which is here ready now. For this reason I feel myself compelled to abstain.

At the same time, I would like to say one brief word on a matter which is particularly dear to my heart, and that is the question of Imperial preference. It was indeed a family interest for very many years. I am. glad to say that we have received very substantial reassurances in this House to-night from the noble Lord, Lord Pakenham, and other members of His Majesty's Government regarding this international conference on which we are shortly to embark. All the same, I am still not entirely happy about the situation, for It seems to me that His Majesty's Government are committed not only to the conference itself but, according to the joint statement issued by His Majesty's Government and the Government of the United States, to accept the agenda of this conference as a basis for international discussion and, what is more, to use their best endeavour to bring these discussions to a successful conclusion—a point which I think the noble Lord, Lord Pakenham, reiterated in your Lordships' House a few moments ago.

Now if we are ever to repay this loan, we have got to have exports and we have got to have markets, and where are we going to find those markets? On the one hand, we have the markets of the British Empire and the markets of those foreign countries who were our best customers before the war and with whom, in many cases, we had bilateral commercial agreements. From the year 1932 onwards, when we first started Imperial preference on a large scale, as my noble friend Lord Croft has already said, we did show remarkably rapid recovery in cur export and import trade. And, what is more, this was no mere selfish scheme, for it did give very substantial benefits to many foreign countries as well, whose trade increased commensurately with ours. So, on the one hand, we have a system which has proved its worth, not only to ourselves but also to foreign countries. This is not a selfish system; It is a workable system and it is a system which works for other people besides ourselves.

As against this, we have the alternative of multilateral free trade which, in the past, has equally proved itself a failure. This alternative system seems to me to rest entirely on one thing and on one thing only, and that is whether the world's greatest producer (that is to say, the United States of America) is prepared at the same time to become the world's greatest importer—and is not only prepared but is able to become the world's greatest importer. If she does, then it is possible that the new era to which the noble Lord, Lord Pakenham, referred in such glowing terms, may indeed come to pass, but I am sure he will forgive me if I express my misgivings and do not share his confidence in this event. For, after all, as I think the noble Lord, Lord Balfour of Burleigh, pointed out, America's war production had been physically superimposed on her peace production, and I am extremely doubtful as to her capacity to import, if she is to avoid widespread unemployment. For all these reasons I do feel most strongly that the successful outcome of this conference can only lead to the failure of our economic recovery and dangerously impair the future prosperity not only of this country but also of the whole British Empire.

7.28 p.m.


My Lords, it is a high privilege, on your behalf, to endea- vour to express congratulations to the noble Lord who has just sat down. We were privileged to know his father well and to hear him often speaking in your Lordships' House. He was certainly one of the greatest Empire figures of our day. I am sure your Lordships would wish me, on your behalf, to congratulate his son, the noble Lord who has just sat down, and to hope that he will very often come here and that we shall hear speeches from him.

I have listened with very great care to the speeches which have been made during the course of this debate, and I wish particularly to express agreement with the speech made by my noble friend Lord Wootton, which was followed by a powerful speech by the noble Lord, Lord Altrincham. Those two speakers appealed to me as touching the realities of the situation as I see them, and had I been in any doubt in my own thoughts in regard to this Resolution, on which. personally, if your Lordships' House is to vote, I shall vote against, I should have come to that conclusion, I think, after listening to the speeches of the noble Lords to whom I have referred. It has been made very clear in the interesting speech we heard in the earlier part of this debate from the noble Lord, Lord Pethick-Lawrence, and others speaking for His Majesty's Government in your Lordships' House and in another place, that the high ideals of service in a common cause that animated international affairs as between the United Nations during the period of hostilities, have given way now to ideas of commerce. We must clearly face up to this altered situation, realizing at the same time, as has been well stressed by other noble Lords, chat together with the four great Dominions and the Colonial Empire we stood alone in the world against the aggressors for a year; and more.

Now the main points advanced in your Lordships' House and in another place in regard to this affair seem to be, first, that it does not mean a return to the gold standard—and I say specifically the gold standard as referring to the standard in use between the wars. Also that there is no alternative, and furthermore that there is an escape clause. We have heard to-day, and have read in the report of the debate in another place, of the interpretation of His Majesty's Government and others on this issue with regard to gold, but surely the important thing is to know the interpretation and intentions of the senior partner in this affair, the United States of America. Your Lordships will remember that Mr. Morgenthau, who retired a short time ago from the position of Secretary of the United States Treasury, in presenting his report on international finance to Congress, said: "The Bretton Woods plan marks the fruition of the American Treasury's gold policy." In addition, Mr. Aldrich, the President of the Chase National Bank, the largest bank in the world, said: "In the United States the proposal is termed a further application of the gold standard." So whatever our ideas may be, those quite clearly are the ideas of the United States, and, as they are the senior partner in this" affair, it is all important that we should realize that fact.

Reference has been made to whether there is an alternative. May I submit that there is one, which, in a debate in your Lordships' House in November, 1941, I was privileged to advance. It is called A Twentieth Century Economic System. I submit that those ideas then advanced in your Lordships' House stand as good for application to-day as they did then. Perhaps it might be convenient at some later stage to-morrow for the noble Lord who will reply for His Majesty's Govern-mint to tell your Lordships what are the Government's views on this matter, seeing that the Coalition Government went into the question in some detail, and no doubt a report is available. I will give an example of the interest taken in these matters. Copies of that Hansard went, as all other Hansards do, to various parts of the Empire. Just two hours ago a telegram was handed to me which, with your Lordships' permission I will read, a; it is addressed to your Lordships' House, my own name being merely tagged on as an appropriate person to submit it to your Lordships: Australian Women's Part believe that American Loan to Britain and Bretton Woods Agreement if accepted would result in economic slavery and disintegration of British Empire. Pauline Budge, President. That shows how people Down Under are thinking on these matters.

In order to alleviate the anxiety of the Dominions and the sterling area, so that they will not be held up for urgent equipment by the present inability of the United Kingdom to supply it, I think they might be encouraged to negotiate their own commercial loans with the United States for such equipment as they may desire. In so doing there would be no question of their sterling balances in London being converted into dollars, but the United Kingdom market for the products of those countries would be safeguarded for the years to come, by which time the United Kingdom would be able to liquidate the sterling balances.

In the debate in another place on Wednesday, December 12, the Chancellor of the Exchequer referred to the fact that before the war certain countries were very anxious to export but very unwilling to import, and very often refused to take payment for goods sent abroad in the form of imports into their own country. They used to combine high tariffs with an export drive, winch is not, as a rule, a good combination. The Chancellor said: "In such conditions the whole process of international trade is frustrated. We must seek to prevent any recurrence of those conditions." He then stated that the scarce-currency clause—Article VII of the White Paper—was designed to meet that situation and to prevent its continuance or repetition. He went on to say that Article VII provided that, if the Fund pronounced any particular currency to he scarce, any member of the Fund might take action against that currency and against exports from that country, on a discriminatory basis.

That is quite true, hut what the Chancellor of the Exchequer omitted to mention was that the currency of a creditor nation which had a persistent excess of exports over imports would not become scarce so long as the country was prepared to use the proceeds of its sales abroad to buy up the existing fixed assets of other nations. It could sell motor-cars, refrigerators, and vacuum cleaners abroad, and use the proceeds of those sales to buy up land, industries, hotels, cinemas, theatres, and other fixed assets of that country. There is nothing in Bretton Woods to compel it to use the proceeds of its own exports to pay for return imports. Only when such a country got tired of buying up the fixed assets of other nations would its currency become scarce, and only then could the Fund authorize the victims to use discriminatory tariffs against the goods of that exporter. In fact, the scarce currency clause will en- able a nation to lock the stable door, but only after the horse has been stolen.

I should like to make it clear that I have no objection to a country putting new fixed assets, which did not exist before, into another country, but I do suggest there is every objection to their selling current consumer goods, refusing to accept imports of current consumer goods in return, and, instead, acquiring the fixed assets of the country to which they sell. To exchange the wealth-producing assets of your country for refrigerators, vacuum cleaners and the like is not a good bargain; it is literally selling your birthright for a mess of pottage. If you will turn to Article 6, Section 1. (b) (ii) and Section 2, you will find that this very undesirable form of capital in-vestment is open to the surplus, but not the deficit, countries. I submit to your Lordships that a country which exports the products of its estate is entitled in return to claim the products from the estates of other nations, but it is not entitled in equity, although it is entitled under Bretton Woods, to refuse to take these products and then foreclose on the estate itself. As my noble friend Lord Woolton and others have emphasized, goods and services must be paid for by goods and services and not by the remitting of gold or by creating debt. The situation that we are facing is indeed a serious one.

My final remark is that what might be called the Bretton Woods final act, the Financial Agreement and the Proposals for an International Conference on Trade and Employment, are all designed to strengthen the power of the United States, which is, as I said before, the senior partner in this arrangement, and the world's biggest seller, lender and creditor, and to undermine the very strong position, which we had and which they fear we might have again, as the world's largest buyer. I think the situation is an extremely serious one, and perhaps I may quote a few lines which fix this matter in my mind, and which I hope may fix it in your Lordships' too: Now when our land to ruin's brink is verging, In God's name, let us speak while there is time ! Now, when the padlocks for our lips are forging, Silence is crime.

7.40 p.m.


My Lords, I find myself to-day in the rather unusual position, for me, of being on the side of the majority, if not in this House anyhow, I believe, in the country, because find that opposition to the Bretton Woods scheme, which is one of the conditions of this loan, is almost universal among people of widely different political and economic outlook. I think that the Government are making the very gravest mistake in involving us in this loan in. such conditions. Their motto, indeed, seems to me to be "After us, the deluge." As long as the goods are coming in from America, everything in the garden will be more or less lovely; but when the long and difficult time of repayment begins it will be a very different story indeed. We shall find that under more unfavourable conditions than existed after the last war we have saddled ourselves with a burden which last time we found it impossible to carry.

I am sure that a good many Labour Members who voted in favour of this proposal did so against their own better judgment, because they had promised to accept the orders of the Party Whips; and that, to my political inexperience, seems to be a very inadequate reason indeed. We have been told that if we reject Bretton Woods it will imperil good relations between this country and America, but I find that the really fine and enlightened people in America are as much against Bretton Woods and all that it stands for as I am. With regard to the very large number of America citizens who, like our own citizens, are not well versed in these matters, I think that a great deal could be done by informing them of the true position. America, fortunately, is not one of those countries in which it is a penal offence to, listen to a British broadcast.

If a loan had to be obtained from America at all—which personally I doubt—I am not convinced that there was not a case for trying to negotiate a commercial loan for those goods, and those goods. only, which we could not possibly obtain from anywhere else and yet which were-vital to our country's needs. If the proposal was turned down, I think that it should still have been left on offer, and I believe that, for reasons with which I shall deal a little later, in time, perhaps with a certain amount of grumbling, the. American Government would have come to accept our proposal. I am convinced that if as much time and energy had been devoted to trying to mobilize the resources of the Empire and of other countries not under Wall Street domination as has been devoted to trying to negotiate the American loan, we should have ended up in a far more satisfactory position. The British Empire, armed with a thoroughly sound financial and economic system, could, I believe, produce sufficient to meet its own needs.

That is not the only point. It is almost certain that, even if we turned down the proposal for the loan and did not receive an official continuation of Lend-Lease, the American Government would soon have found itself compelled to make large gifts of goods to other countries, and especially to ourselves The reasons for this are slightly technical, but they are so important and are so universally overlooked, both by statesmen and by economists, that I should like very briefly to explain them. In America, as in any other great civil zed country, there are two very important factors in the country's economic life, and they are increasing mechanization and investment. Whenever a country's industries arc being increasingly mechanized, then during any given period more money is being put into depreciation funds for future renewals of the increasing amount of machinery than is being paid out of such funds for current renewals, and the difference between the smaller amount being paid out and the larger amount being put in constitutes a shortage of consumer money, leading to bad trade and unemployment.

The other important cause of shortage is investment. Whenever you take money distributed in the form of wages, salaries, interest or profits by existing industries, and use either to set up a new industry, or to extend an old one, then as soon as the new industry or the extension gets going and puts new goods on the market there will he a shortage of consumer money, for the simple reason that you cannot buy the increased amount of goods with a fixed amount of money. Some years ago I put this point to one of our leading economists—if my memory has not failed me, it was the noble Lord, Lord Keynes—and, when he discovered that it was not the usual Social Credit ninepin which he was in the habit of diverting himself by knocking over, he fled incon- tinently from the field of economic discussion.

Short of a reform of the financial system which the American Government and American financiers are not likely to attempt, one of the favourite devices for overcoming this shortage is a bank loan of new money to finance an export trade which brings in no equivalent value of imports. I hope your Lordships will believe me when I say that a bank loan is a. creation of new money; if you are doubtful about that, you will find it substantiated in the Encyclopædia Britannica, and in the chapter on banking in the Report of the Macmillan Committee. To give a simple example, and take very small imaginary figures for the sake of convenience, suppose the amount of goods on the American home market to be 1,000 dollars' worth, and suppose that, owing to increasing mechanization and investment, only 800 dollars are distributed in a form free to buy the goods. If a bank loan of 200 dollars is made for an export trade which. brings back no equivalent value of imports, that will fill up the gap. If, however, the export trade brought back 200 dollars' worth of imports the problem would still remain, because, although there would he 1,000 dollars in money, there would be 1,200 dollars' worth of goods on the American market.

Actually, of course, in real life the position is not quite as simple as in my example, since the American banks would require interest on their loan of, say, 10 dollars, which would have to be provided in the form of British exports; but 10 dollars' worth of British exports would be a very modest price to pay for 100 dollars worth of gift goods from America. There would also, of course, be a slight disproportion between money and goods on the American market—1,000 dollars in money and 1,000 dollars in goods; but a 10 dollar shortage would be a far less serious business than a shortage of 200 dollars.

The Bretton Woods Agreement is objectionable because it runs counter to the very practical recommendations for enlightened foreign trade which were laid down some time ago by the experts of the London Chamber of Commerce. The experts of the London Chamber of Commerce are perfectly well aware of the need to maintain stability between the exchanges, and they recommend that no private individual should be allowed to buy, sell or own foreign currencies, and also that currency rates of exchange should be fixed permanently by countries desiring to trade with one another without any reference to gold. That can perfectly easily be done, either by taking a number of articles in common use in the two countries and working out an average, or by taking the amount of money which is needed in the two countries to give a citizen in each of those countries approximately the same standard of living. They also recommended that if one country exported goods to another it should he paid by receiving a credit on that other country's goods or services to the value of the exports; and, if within a certain period that credit was not used, the debt should be regarded as cancelled. That is a perfectly business-like arrangement, but it is one which Bretton Woods would not allow.

There is also what I may term the "moral objection" to the American Loan which is very keenly felt in this country. If, in the future, we had to make tremendous sacrifices in order to help some nation much poorer than ourselves, there might be something to be said for it. But we are to make those sacrifices to help a nation which is, potentially, the richest nation in the world. It is, therefore, a very different matter indeed. Another objectionable feature in the Bretton Woods scheme is that not only will it involve us breaking our backs, in the future, sending away goods which our own citizens badly need, but, as an alternative, it offers payment in gold. In order to obtain that gold, again, our citizens would have to break their backs, sending goods to a gold-producing country—for example, Russia. When we got the gold and sent it over to America it would be of no use or value to American citizens, and in all probability it would merely be sterilized. Incidentally, to get the gold we might well be involved in cut-throat, wage-lowering competition with other debtor countries also striving to pay off their debts to America.

The Bretton Woods scheme would also tend to perpetuate a very unhealthy state of affairs with regard to British exports. Far too much importance is being attached, at the present time, to the question of exports. A country does not grow prosperous on the goods which it sends away, but on the goods which it produces for home consumption and on the goods which it imports. The point may perhaps be raised that exports are necessary to obtain imports, but that is only a part truth, because it overlook the "gift" goods situation, which I have just outlined, as a feature of the present economic system. Ideally, a nation would only export goods surplus to the requirements of its own citizens, and the Government should be careful, and more than careful, before they involve themselves in any undertaking which will force the people of this country to send away choice goods which they have made, and which, again, they themselves sadly need. Then we were told that one of the aims of the Bretton Woods scheme is to secure full employment. Full employment is impossible in an age of labour-destroying inventions. You can only get full employment during a war. If the Bretton Woods experts said they were out -to get maximum production and maximum satisfaction of human needs they would be showing more intelligence.

Then there is the very grave objection indeed that we are proposing to hand over the control of our economic life, in a very large measure, to a gang of representatives of Wall Street finance who are responsible to no one and are above every Government. America will have more votes on the Bretton Woods board of management, as it were, even than all the component parts of the British Empire put together and, either by economic bribery or by economic intimidation, it is obvious that her representatives will always be able to sway that body in whichever direction they desire.

Two rather contradictory points of view have been put forward in this House this afternoon. Sometimes we have been told that the American financial representatives are keen to do away with all trade barriers and to establish prosperity in every corner of the world. At other times, we are assured that they have driven a very hard bargain with us. Is it really reasonable to assume that the same men who drive a very hard bargain with us will not drive an equally hard bargain with all other countries of the world when they have got their heads into the Bretton Woods noose? The addiction of the Bretton Woods Fund to gold gives the lie to their claims to be world philanthropists. Even if you admit that Bretton Woods is not a return to the ordinary gold standard, in that we are not obliged to restrict our domestic money supplies by gold, the use of gold in regard to foreign trade is highly objectionable if a country exports goods and receives payment in gold it means that its citizens will have worked hard to produce useful goods for export and that all they will have got back in exchange is some useless yellow metal which they never see or own. Even if gold is used to purchase goods from another country, the citizens of that other country will have to hold the baby.

A very undesirable situation can also arise if a country imports goods, pays with gold and then exports other goods to that same country. Those exports give her a right to a claim on the other country's money, and she can use that claim to buy up the other country's industries or its newspapers, or to finance propaganda, possibly of a singularly poisonous kind. In other words, it gives a country the power to interfere in a wholly reprehensible way in the political and economic life of another nation. I greatly hope, therefore, that your Lordships will reject this plan. It has been suggested that if this House should do so it would provoke a constitutional crisis of the first magnitude. Possibly; I do not know. The Labour Government might feel tempted to punish us by political extermination, but even in that dire event, I would say that we at any rate will have gone down fighting for the deliverance of our country from economic servitude, and indeed for the protection of the whole world from the most impudent attempt history has ever known to establish an economic and financial dictatorship.

May I make one other point in conclusion? A good many members of this House apparently feel that while they cannot support Bretton Woods, yet for reasons' of national unity they ought not to oppose it here. There are occasions, and this is one of them, when the economic life of this country and the economic prosperity of this 'country are at stake for many years to come, and also, I fully believe, the economic freedom of the world, when even considerations of unity ought not to be held to be too important. We should do the right thing—take sides. If the scheme is a sound one, it should be supported. If it is an unsound one, it should be opposed.

8.0 p.m.


My Lords, I rise to speak as one who has been engaged for many years in business. Examining these documents, and particularly the Agreement, it seems to me that they are the products of economists and financial experts lacking the touch of practicability which would have been given to them had business men of the capacity of the noble Lord, Lord Woolton. and others like him, been occupied in their preparation. In saving this, I appreciate, of course, the difficulties under which our representatives have had to work, and particularly the great services rendered by the British Ambassador, Lord Halifax, and Lord Keynes. But I feel that they were tackling an extremely difficult job.

The people with whom they were negotiating are the sort of people who, in the early difficult days, took over the Courtauld interest in America for a sum of money which was so ridiculous in comparison with the value of the business that it cost the British taxpayer nearly £30,000,000 to compensate Courtauld's for their property—nearly a year's payment of this new loan. It is also true that they are the same people who took over all our best securities in Canada and America, as has been mentioned by the noble Lord, Lord Woolton, and who gave us practically half their value. On reading through the Agreement, the word "loan" is always used in connexion with it, but it seems to me to be perfectly clear that they are opening a line of credit. As I understand it, you use it up as you go on, and therefore to say that we are only going to pay 1.62 per cent. interest, is, I can only imagine, based on the assumption that we get the whole sum of money immediately, and because we do not pay interest for five years, the real rate of interest comes to less than two per cent.

Turning to the terms of the Agreement, Clause 3 sets out the purpose of the Agreement, "to facilitate purchases by the United Kingdom of goods and services in the United States." This is the main condition. To my mind this entirely overlooks the fact that while we wish to buy the goods from the United States, the Americans also have to sell their goods, and for a great part of their export trade we are their best customers. In fact, where could they sell these goods unless they sell them to us—that is a great point which we want to bear in mind—or perhaps to some other country much less credit-worthy? Business is a many-sided affair. Manufacture and production is difficult and requires great enterprise and skill, but selling is also very difficult and troublesome. I find that in the years 1936 to 1938—and this bears on a question asked. this afternoon and upon which the Government has promised some information— the imports from the United States ran in this way: grain and flour, £6,700,000; fresh fruit £3,000,000; tobacco, £15,000,000; and cotton, £16,000,000. The way I look at it is this. We might have had to put up with difficulties at first, but in the course of time our own Colonies and Dominions could have produced the cotton and tobacco which we require. That has been emphasized in the debate this afternoon. Of course, we have taken a good quantity of goods from Canada, and in that respect the grain and flour figure is £23,000,000. From other British countries the figure for grain and flour is £18,000,000, for fresh fruit £16,000,000, and for cotton—here is one good point—£8,700,000. I ask, where could the United States sell these goods except to us? Again, large quantities of agricultural products have been brought into the country. We are turning ourselves into a first-class agricultural country again, and I think we ought to continue in that course. We created a wonderful industry in the rubber field in Malaya. Why cannot we create these other industries which to-day tie us hand and foot to the United States?

Mention has been made of machinery. As I see it, we have imported vast quantities of machinery, and our own machine tool trade has grown extremely strong. I think that the necessity for importing machinery will not exist in the future as it has done in the past. Mention has been made of the backward state of the cotton trade, and that it ought to be using new machinery. If it requires new machinery it could be produced here, because our industry makes the very best machinery which can be obtained. The same is true of coal-mining machinery. We are told that some of the best that can be produced is produced in this country, and that it is better suited to our conditions. I do not take a very bleak view of these matters.


Let us cheer up a bit !


That is what I am trying to suggest is the proper way—to produce everything we can and reduce our imports. On this point I think a challenge should be definitely issued to the distributor trades. The distributing industry in this country has grown to an enormous extent, and I think we should insist on it selling British goods and not importing so much from abroad. That would certainly help. As I have tried to say, we should take our courage in our hands, and bear in mind the wonderful developments which are taking place in this country. Imperial Chemical Industries are spending £10,000,000, Dorman Long are spending over £8,000,000, and we know that Courtaulds are building works in various parts of the country. I feel quite certain that with a good effort, whereas the situation to-day looks bleak and difficult we can overcome it and not be slaves of the United States of America in perpetuity.

So far as the Bretton Woods Agreement is concerned, I should like to ask the Government and their experts if they can avoid the sort of thing which happened after the last war. I can remember going to America and being given three and a half dollars for one pound sterling. The teller in the bank who gave it to me said it was a rotten shame that I should be given that much money for a pound. Again, you went to Canada and were given a very little more. If the Bretton Woods Agreement will forbid that kind of thing in the future it is particularly welcome. I hope the Bretton Woods Agreement will scotch the international speculators in exchange. They are a dreadful lot of people; they take a currency and say, "We will put it down." They do so until they think it is at the right price, then they buy again and sell. That has been one of the features of the inter-war period. Take the differences that took place in the franc. It was not due to trade circumstances in the main, but to what I call international speculators in exchange. Therefore, if I can get a satisfactory answer in regard to the Bretton Woods scheme, I should be prepared to vote for it and to say it is one of the best things we could do in the circumstances.

8.11 p.m.


My Lords, I have listened to a great number of long speeches, but I can assure your Lordships that I will be very brief and I hope to touch on one or two points not already raised. I cannot help thinking that the whole question of financial aid to this country must have been in the minds of the late Government some time before the end of the war. We have never heard what their proposals might have been, but it is inconceivable that some financial arrangement had not been considered a long time ago to tide the country over the difficult period after the cessation of Lend-Lease and the reduction in our export trade. I cannot see why the sudden cessation of Lend-Lease was considered by some people as a great shock and an unexpected happening. The position has always been quite clear, and I do not think its sudden cessation should have been considered as a contributory factor towards the financial difficulties in which we find ourselves at present.

I should like to know whether any approach was made by the late Government or by this Government to our partners in the Empire for financial assistance and arrangements. No doubt it was considered that we should receive very generous treatment from the United States, but, surely, it was considered necessary to have an alternative plan in case a good arrangement with the United States was not possible. It might have been possible to have devised a means by which the raw materials of the Empire might have been traded against a commercial loan. I do not know, but the! noble Lord, Lord Pethick-Lawrence, tells us that a straight loan was, in fact, requested.


I did not say that; I said the matter was explored.


It is true, of course, that without this proposed credit which we are now asked to vote for, the conversion of the bloc sterling of many members of the Empire would be delayed. But rather than face the possibility of the loss of Imperial preference—and I am not at all convinced, in spite of all the assurances we have had, that we shall not lose Imperial preference—the Empire would have rallied round us if an approach had been made to them many months. ago. In fact, Canada has offered her willing help. Owing to the lack of an alternative plan, we have now been forced into a tight corner, and I do not see we can do otherwise that accept this Financial Agreement. The only way in which this credit can be repaid is by America taking goods in exchange, but I see nothing in the Agreement to warrant that assumption. The only bright spot in it is the final settlement of the Lend-Lease account on terms which are very favourable to us. It is only fair to say that I believe the United States consider that in this settlement they have generously discharged their obligations to us, and that this Financial Agreement is a new factor which will stand on its own basis and must show substantial benefits to themselves apart from any assistance it may give to us.

Let us be frank about these matters. Consciously or unconsciously, there is a tendency in the United States to prefer to deal with the constituent members of the Empire rather than with the Empire as a whole, and to feel, perhaps, through this method, that there is a better outlet for their resources. Although friendly towards us and fully appreciative of our great efforts, I cannot help feeling that the people of the United States now have a tendency to consider this country of very small account. Their minds have turned towards the great problems in Asia and the rise of the new great Power in Eastern Europe. I cannot help feeling that this Financial Agreement, together with the Bretton Woods Commercial and Monetary Plan, is bound to cause a weakening of the bonds of Empire: If we are thrown into the vortex of free trade in our present condition, our standard of living in these islands may be depressed far more than if we had decided to weather the storm in our own family circle. The Liberals will no doubt hasten to cast their votes in favour of this Financial Agreement which brings to them the vision of world free trade. There is no doubt that these credit arrangements are a hard bargain for us, but the sands have run out and there is now no time left to consider an alternative plan. But I suggest it should not be lost sight of that an alternative plan may yet be necessary because we have no certainty that Congress is going to agree.

I do not propose to vote against the Motion because I feel that without an alternative plan this country might now be led into a catastrophe from which it might be difficult, or even impossible, to recover. Neither do I feel justified in voting for an Agremeent which I dislike and consider a bad bargain. Also, I wish to retain the right to criticize and endeavour to amend the various commercial and trade agreements which are bound to arise from this Agreement. To vote for this Motion would be to accept fully the monetary policy set forth. Mighty Empires of the past have been swept away through weaknesses which have developed after great wars, and hope we are not on the threshold of a similar catastrophe which might still be hastened by the financial and commercial agreements causing a strain on the financial link that binds our Empire together. Without the Empire we are certainly of very small account. I hope the people will realize the danger that exists before it is too late.


My Lords, on behalf of my noble friend Lord Keynes, I beg to move that this debate be now adjourned.

Moved, That the debate be now adjourned.—(Viscount Mersey.)

On Question, Motion agreed to, and debate adjourned accordingly.