Lords Sitting of 18 December 1945

Preamble
The House met at half past eleven of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers.
Several Lords—Took the Oath.
The Lord Norton—Sat first in Parliament after the death of his father.

ANGLO-AMERICAN FINANCIAL ARRANGEMENTS.
Debate resumed (according to Order) on the Motion moved yesterday by Lord Pethick-Lawrence—namely, 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 KEYNES: My Lords, two days the Westminster are enough to teach one what a vast distance separates us here from the climate of Washington. Much more than the winter waste of the North Atlantic and that somewhat overrated affair, the Gulf Stream, though that is quite enough in itself to fog and dampen everything in transit from one hemisphere to the other. Yet I can well see that no one would easily accept the result of these negotiations with sympathy and understanding unless he could, to
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some extent at least, bring himself to appreciate the motives and purposes of the other side. I think it would be worth while that I should devote some part of what I have to say to that aspect. How difficult it is for nations to understand one another, even when they have the advantage of a common language. How differently things appear in Washington than in London, and how easy it is to misunderstand one another's difficulties and the real purpose which lies behind each one's way of solving them. As the Foreign Secretary has pointed out, everyone talks about international co-operation, but how little of pride, of temper or of habit anyone is willing to contribute to it when it comes down to brass tacks.
When I last had the opportunity of discussing the Bretton Woods plan in your Lordships' House, the plan stood by itself, and its relationship to post-war policy as a whole was not clear. This was responsible for the least easily answered criticisms. All one could say in reply was that the plan was not intended to stand by itself, but one must begin somewhere. The other aspects were not yet ready for proposals, though details would be taken in hand as soon as possible. Today the situation is different. A more or less complete outline for the re-ordering of commercial and currency policies in their international aspects and their re-conversion to peace-time practice is now available. Each part is complementary to the rest. Whether it be well or ill-conceived, in the rounded whole which your Lordships have before you, the proposals fall into three parts: a blue-print called long-term organization of world commerce and foreign exchanges on a multilateral and non-discriminatory basis; short-term proposals for the early re-conversion of the sterling area in the same direction; and an offer of financial aid from the United States to enable this country to overcome the immediate difficulties of transition which would otherwise make the short-term proposals impracticable and delay our participation and collaboration with the United States in getting the rest of the world along the lines of the long-term policy indicated.
Each of these parts has been subjected to reasonable criticism. The long-term blue-print invites us to commit ourselves against the future organization of world trade on the principle of tying the

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opportunity of export to import by means of bilateral and discriminatory arrangements and unstable exchanges such as are likely to involve in practice the creation of separate economic blocs. It is argued that this is premature and unreasonable until we have found means to overcome the temporary difficulties of transition and have more experience of the actual conditions of the post-war world, in particular of how a full employment policy works cut in practice in its international aspects. The short-term proposals have been criticized on the grounds that they do not allow us enough time to liquidate the very complex war-time arrangements, or to arrange the onerous financial obligations which they heaped on us. Finally, a complaint is made of the terms of the financial aid from the United States, that the amount is insufficient and the burden of the interest too heavy.
It is not for one who has striven every day for three months to improve these proposals so as to lay them less open to these criticism, and who perhaps knows better than most people how imperfectly he has succeeded, to take these criticisms lightly; nor on the day after my return to this country am I yet in a position to judge, with much accuracy, the mood which underlies the criticisms which are being made, and which is probably more significant than the particular complaints in which it has been finding its outlet. Nevertheless I wonder if this first great attempt at organizing international order out of the chaos of the war in a way which will not interfere with the diversity of national policy yet which will minimize the causes of friction and ill will between nations, is being viewed in its right perspective. I feel sure that serious injustice is being done to the liberal purposes and intense good will towards this country of the American people as represented by their Administration and their urgent desire to see this country a strong and effective partner in guiding a distressed and confused world into the ways of peace and economic order.
Let me plunge at once into the terms of the loan and the understandings about short-term policy which are associated with it. Since our transitory financial difficulties are largely due to the role we played in the war and to the costs we incurred before the United States entered the war, we here in London feel—it is a
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feeling which I shared and still share to the full—that it might not be asking too much of our American friends that they should agree to see us through the transition by financial aid which approximated to a grant. We felt it might be proper for us to indicate the general direction of the policies which that aid would enable us to pursue and to undertake to move along those lines, particularly in terminating the discriminatory features of the exchange arrangements of the sterling area as quickly as circumstances permit, and that, subject to those general understandings, we should be left as free as possible to work things out in our own way. Released from immediate pressing anxieties on terms which would not embarrass the future, we could then proceed cautiously in the light of experience of the post-war world as it gradually disclosed its lessons.
Clearly that would have given us the best of both worlds. How reasonable such a programme sounds in London and how natural the disappointment when the actual proposals fall seriously short of it. But what a gulf separates us from the climate of Washington; and what a depth of misunderstanding there will be as to what governs relations between even the friendliest and most like-minded nations if we imagine that so free and easy an arrangement could commend itself to the complex politics of Congress or to the immeasurably remote public opinion of the United States. Nevertheless, it was on these lines that we opened our case. For three days the heads of the American delegation heard me expound the material contained in the White Paper to which the noble and learned Viscount, Lord Simon, referred. He would have done it more eloquently, but I can fairly say that I was heard not only with obvious and expressed good will and plain sympathy, but also with a keen desire on their part to understand the magnitude and the intricacies of our problem.
I must, at this point, digress for a moment to explain the American response to our claim that for good reasons arising cut of the past they owe us something more than they have yet paid, something in the nature of deferred Lend-Lease for the time when we held the fort alone, for it was here that in expounding our case we had an early and severe disappointment. It would be quite wrong to suppose that such considerations have

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played no part in the final results. They have played a vital part; we could never have obtained what we did obtain except against this background. Nevertheless, it was not very long before the British delegation discovered that a primary emphasis on past services and past sacrifice would not be fruitful. The American Congress and the American people have never accepted any literal principle of equal sacrifice, financial or otherwise, between all the allied participants. Indeed, have we ourselves?
It is a complete illusion to suppose that in Washington you have only to mention the principle of equal sacrifice to get all you want. The Americans—and are they wrong?—find a post-mortem on relative services and sacrifices amongst the leading allies extremely disasteful and dissatisfying. Many different countries are involved and most of them are now in Washington to plead their urgent needs and high deserts. Some have rendered more service than others to the common cause; some have experienced more anguish of mind and destruction of organized life; some have suffered, voluntarily or involuntarily, a greater sacrifice of lives and of material wealth; and some of them have escaped from a nearer, more imminent or deadlier peril than others. Not all of them have had out of Uncle Sam the same relative measure of assistance up to date.
How is all this to be added, subtracted and assessed in terms of a line of credit? It is better not to try. it is better not to think that way. I give the American point of view. Is not it more practical and more realistic—to use two favourite American expressions—to think in terms of the future and to work out what credits, of what amount and upon what terms, will do most service in reconstructing the post-war world and guiding post-war economy along those lines which, in the American view, will best conduce to the general prosperity of all and to the friendship of nations? This does not mean that the past is forgotten, even though it may be beginning to fade, but in no phase of human experience does the past operate so directly and arithmetically as we were trying to contend. Men's sympathies and less calculated impulses are drawn from their memories of comradeship, but their contemporary acts are generally directed towards influencing the future and not to-
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wards pensioning the past. At any rate I can safely assure you that that is how the American Administration and the American people think. Nor, I venture to say, would it be becoming in us to respond by showing our medals, all of them, and pleading that the old veteran deserves better than that, especially if we speak in the same breath of his forthcoming retirement from open commerce and the draughts of free competition, which most probably in his present condition would give him sore throat and drive him still further indoors.
If the noble Lord, Lord Woolton, had led the Mission to Washington—as I indeed wish that he had!—I would lay a hundred to one that he would not have continued in the vein in which he spoke yesterday for more than a few days. Neither pride of country nor sense of what is fitting would have allowed him, after he had sensed from every sort of information open to him how Americans responded to it, to make an open attempt to make what every American well appreciated was well enough known in men's hearts the main basis for asking for a gigantic gift. We- soon discovered, therefore, that it was not our past performance or our present weakness but our future prospects of recovery and our intention to face the world boldly that we had to demonstrate. Our American friends were interested not in our wounds, though incurred in the common cause, but -in our convalescence. They wanted to understand the size of our immediate financial difficulties, to be convinced that they were temporary and manageable and to be told that we intended to walk without bandages as soon as possible. In every circle in which I moved during my stay in Washington, it was when I was able to enlarge on the strength of our future competitive position, if only we were allowed a breather, that I won most sympathy. What the United States needs and desires is a strong Britain, endowed with renewed strength and facing the world on the equal or more than equal terms that we were wont to do. To help that forward interests them much more than to comfort a war victim.
But there was another aspect of the American emphasis on the future benefits which were expected as a result of financial aid to Britain. Those on the American side wanted to be able to speak

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definitely and in plain language to their own business world about the nature of the future arrangements in regard to commerce between the United States and the sterling area. It was the importance attached on the American side to their being able to speak definitely about future arrangements that made our task so difficult in securing a reasonable time and reasonable elasticity of action. As the Chancellor of the Exchequer has explained in another place, we ran here into difficulties in the negotiations; and we accepted in the end more cut-and-dried arrangements in some respects than we ourselves believed to be wise or beneficial, as we explained in no uncertain terms and with all the force at our command. We warned them that precisely those criticisms which have been raised would be raised, and justly raised, in Parliament. They on their side, however, were not less emphatic that we should render their task impossibly difficult in commending their proposals to their own public unless we could find ways of meeting their desire for definiteness, at least to a certain extent.
Yet I must ask your Lordships to believe that the financial outcome, though it is imperfectly satisfactory to us, does represent a compromise and is very considerably removed from what the Americans began by thinking reasonable; for at the outset the peculiar complexities of our existing arrangements were not at all understood. I am hopeful that the various qualifications which have been introduced, the full significance of which cannot be obvious except to experts, may allow in practice a workable compromise between the certainty they wanted and the measure of elasticity we wanted. Negotiations of this character, in which technical requirements and political appeal must both be satisfied, are immensely difficult, and could not have been brought to any conclusion except in an atmosphere of technical collaboration between the two sides, rather than of technical controversy.
I must now turn to the financial terms of the Agreement, and first of all to its amount. In my own judgment, it is cut somewhat too fine, and does not allow a margin for unforeseen contingencies. Nevertheless the sum is substantial. No comparable credit in time of peace has ever been negotiated before. It should
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make a great and indispensable contribution to the strength of this country, abroad as well as at home, and to the well-being of our tired and jaded people. After making some allowance for a credit from Canada, and for some minor miscellaneous resources, it represents about as large a cumulative adverse balance as we ought to allow ourselves in the interval before we can get straight. Moreover, it may not prove altogether a bad thing that there should be no sufficient margin to tempt us to relax; for, if we were to relax, we should never reach equilibrium and become fully self-supporting within a reasonable period of time. As it is, the plain fact is that we cannot afford to abate the full energy of our export drive or the strictness of our economy in any activity which involves oversea expenditure. Our task remains as difficult as it is stimulating, and as stimulating as it is difficult. On a balance of considerations, therefore, I think that under this heading we should rest reasonably content.
That the Americans should be anxious not to allow too hot a pace to be set in this, their first major post-war operation of this kind, is readily understandable. The total demands for overseas financial assistance crowding in on the United States Treasury from all quarters whilst I was in Washington were estimated to amount to between four and five times our own maximum proposals. We naturally have only our own requirements in view, but the United States Treasury cannot overlook the possible reaction of what they do for us on the expectations of others. Many members of Congress were seriously concerned about the cumulative consequences of being too easygoing towards a world unanimously clamouring for American aid, and often only with too good reason. I mention such considerations because they are a great deal more obvious when one is in Washington than when one returns here.
On the matter of interest, I shall never so long as I live cease to regret that this is not an interest-free loan. The charging of interest is out of tune with the underlying realities. It is based on a false analogy. The other conditions of the loan indicate clearly that our case has been recognized as being, with all its attendant circumstances, a special one. The Americans might have felt it an advan-

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tage, one would have thought, in relation to other transactions to emphasize this special character still further by forgoing interest. The amount of money at stake cannot be important to the United States, and what a difference it would have made to our feelings and to our response! But there it On no possible ground can we claim as of right a gesture so unprecedented. A point comes when in a matter of this kind one has to take No for an answer. Nor, I am utterly convinced, was it any lack of generosity of mind or purpose on the part of the American negotiators which led to their final decision. And it is not for a foreigner to weigh up the cross-currents, political forces and general sentiments which determine what is possible and what is impossible in the complex and highly charged atmosphere of that great democracy of which the daily thoughts and urgent individual preoccupations are so far removed from ours. No one who has breathed that atmosphere for many troubled weeks will underestimate the difficulties of the American statesmen, who are striving to do their practical best for their own country and for the whole world, or the fatal consequences if the Administration were to offer us what Congress would reject.
During the whole time that I was in Washington, there was not a single Administration measure of the first importance that Congress did not either reject, remodel, or put on one side. Assuming, however, that the principle of charging interest had to be observed, then, in my judgment, almost everything possible has been done to mitigate the burden and to limit the risk of a future dangerous embarrassment. We pay no interest for six years. After that we pay no interest in any year in which our exports have not been restored to a level which may be estimated at about sixty per cent. in excess of pre-war. I repeat that.. We pay no interest in any year in which our exports have not been restored to a level which may be estimated at about sixty per cent. in excess of what they were pre-war.
LORD BARNBY: In volume or value?
LORD KEYNES: Volume. That: is very important; I should have said so. The maximum payment in any year is £35,000,000, and that does not become
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payable until our external income, in terms of present prices, is fifty times that amount. Again I repeat, the maximum payment in any year is £35,000,000, and that does not become payable until our external income—that is from exports and shipping and the like—is, in terms of present prices, fifty times that amount. In any year in which our income falls short of this standard, interest is fully and finally waived. Moreover, the instalments of capital repayments are so arranged that we obtain the maximum benefit from this provision in the early years. For at the start the minimum payment to which we have committed ourselves is no more than £13,000,000 a year; that is to say, less than one per cent. of the external income which we must attain if we are to break even quite apart from the cost of the American loan.
It is relevant, I think, to remind your Lordships that the maximum charge to us in respect of the early years is not much more than half of what is being charged in respect of loans which the United States is making currently to her other allies, through the Import and Export Bank or otherwise; whilst the minimum charge per cent. to which we have, been asked to commit ourselves in the early years is only one-fifth of the annual service charge which is being asked from the other allies. None of those loans is subject to a five-year moratorium. All the other loans which are being made are tied loans limited to payments for specific purchases from the United States. Our loan, on the other hand, is a loan of money without strings, free to be expended in any part of the world. That is an arrangement, I may add, which is entirely consistent with the desire of the United States to enable us to return as fully as possible to the conditions of multilateral trade settlements.
Your negotiators can, therefore, in my judgment, fairly claim that the case of last time's war debts has not been repeated. Moreover, this is new money we are dealing with, to pay for post-war supplies for civilian purposes and is not—as was mainly the case on the previous occasion—a consolidation of a war debt. On the contrary, this new loan has been associated with a complete wiping off the slate of any residual obligations from the operation of Lend-Lease. Under the original Lend-Lease Agreement, the

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President of the United States has been free to ask for future "consideration" of an undetermined character. This uncomfortable and uncertain obligation has been finally removed from us. The satisfactory character of the Lend-Lease settlement has not, I think, received as much emphasis as it deserves. The Secretary of State for India emphasized it in his opening speech yesterday, but it was not, so far as I noticed, taken up in any of the speeches which were made by other noble Lords.
VISCOUNT SIMON: I reference to it made express
LORD STRABOLGI: I mentioned it, too.
LORD KEYNES: I am indeed glad that there is some part of the settlement which has commended itself to those on the Benches on this side of the House. No part of the loan which is applied to this settlement relates to the cost of Lend-Lease supplies consumed during the war, but is entirely devoted to supplies received by us through the Lend-Lease machinery, but available for our consumption or use after the end of the war. It also covers the American military surplus and is in final discharge of a variety of financial claims, both ways, arising out of the war which fell outside the field of Lend-Lease and reciprocal aid. Is it not putting our claim and legitimate expectations a little too high to regard these proposals, on top of Lend-Lease, as anything but an act of unprecedented liberality? Has any country ever treated another country like this, in time of peace, for the purpose of rebuilding the other's strength and restoring its competitive position? If the Americans have tried to meet criticism at home by making the terms look a little less liberal than they really are, so as to preserve the principle of interest, is it necessary for us to be mistaken? The balm and sweet simplicity of no percent is not admitted, but we are not asked to pay interest except in conditions where we can reasonably well afford to do so, and the capital instalments are so spread that our minimum obligation in the early years is actually less than it would be with a loan free of interest repayable by equal instalments.
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I began by saying that the American negotiators had laid stress on future mutual advantage rather than on past history. But let no one suppose that such a settlement could have been conceivably made except by those who had measured and valued what this country has endured and accomplished. I have heard the suggestion made that we should have recourse to a commercial loan without strings. I wonder if those who put this forward have any knowledge of the facts. The body which makes such loans on the most favourable terms is the Export-Import Bank. Most of the European Allies are, in fact borrowing, or trying to borrow, from this institution. The most favourable terms sometimes allowed, as, for instance, in the case of France, for the purpose of clearing up what she obtained through the Lend-Lease machinery, are 2⅜per cent. with repayment over thirty years, beginning next year; that is to say, an annual debt of 5⅜ per cent. so that an amount equal to 34 per cent. of the loan will have been paid by France during the six years before we have begun to pay anything at all. The normal commercial terms in the Export-Import Bank are, however, 3 per cent. repayable over twenty years commencing at once, so that payments equal to 48 per cent. of the loan would have been paid during the first six years in which we pay nothing. Moreover, the resources of this institution are limited and our reasonable share of them could not have exceeded one-quarter or one-fifth of what we are actually getting. Nor are they without strings. They are tied to specific American purchases and not, like ours, available for use in any part of the world.
What about the conditions associated with the loans? The noble and learned Viscount, Lord Simon, as have also several other critics, laid stress on our having agreed to release the current earnings of the sterling area after the spring of 1947. I wonder how much we are giving away there. It does not relate to the balances accumulated before the spring of 1947. We are left quite free to settle this to the best of our ability. What we undertake to do is not to restrict the use of balances we have not yet got and which have not yet been entrusted to us. It will be very satisfactory if we can maintain the voluntary war-time system into 1947. But what hope is there of the countries concerned continuing such an

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arrangement much longer than that? Indeed, the danger is that these countries which have a dollar or gold surplus, such as India and South Africa, would prefer to make their own arrangements, leaving us with a dollar pool which is a deficit pool, responsible for the dollar expenditure not only of ourselves but of the other members of the area having a dollar deficit.
This arrangements is only of secondary use to us, save in the exceptional wartime conditions when those countries were, very abnormally, in a position to lend to us. We cannot force these countries to buy only from us, especially when we are physically unable to supply a large quantity of what they require. It seems to me a crazy idea that we can go on living after 1947 by borrowing on completely vague terms from India and the Crown Colonies. They will be wanting us to repay them. Two-thirds of what we owe to the sterling area is owed to India, Palestine, Egypt and Eire. Is it really wise to base our financial policy on the loyalty and good will of those countries to lend us money and leave out of our arrangements Canada and the United States? And Canada, let me add, is not less insistent than the United States—if anything she is, more insistent—on our liberating the current earnings of the sterling area.
I hope I shall convince the noble and learned Viscount, for I have not yet finished. This was, anyhow, a condition very difficult to resist, for the main purpose of a loan of this magnitude was for the precise object of liberating the future earnings of the sterling area, not for repaying their past accumulations. Some have been misled by the fact that that has been expressly emphasized. Our direct adverse balance with the United States is not likely to exceed during the period more than about half the loan. The rest of our adverse balance is with the rest of the world—
VISCOUNT SIMON: The noble Lord speaks of a proposal difficult to resist. May we be informed if the experts did their best to resist it?
LORD KEYNES: They did their best to resist so early a date, but lam giving the reasons why, in being forced to surrender, the magnitude of our surrender was not so very great. I have explained so
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far that it would-be very difficult in any circumstances to carry on the arrangements beyond that for the reasons I have explained and I am now passing to what was, I feel, a vulnerable part of our case. That was, that the precise object of having so large a loan was to make these very arrangements practicable. About half of it would be a direct adverse balance with the United States. The rest of the adverse balance is with the rest of the world, mainly the sterling area. Canada will be dealt with separately. The very object of the other half of the loan is, therefore, to provide us with dollars mainly for the sterling area. We are given not only the condition but also the means to satisfy it. I am afraid it would take more than my forensic powers to maintain that position in its most absolute form against an argument so powerful as that, if the Americans could say: "You are going to borrow all this money by impounding the earnings of the sterling area. What is the necessity for so large a loan? The calculations have been based on the contention that we have to meet the major part of your adverse balance." But that is not the end. I do not think we need repine too much.
The way to remain an international banker is to allow cheques to be drawn upon you; the way to destroy the sterling area is to prey on it and to try to live on it. The way to retain it is to restore its privileges and opportunities as soon as possible to what they were before the war. It would have been more comfortable to know that we could have a little more than fifteen months to handle the situation, but, nevertheless, the underlying situation is as I have described. I do not regard this particular condition as a serious blot on the loan, although I agree with the noble and learned Viscount that I would have preferred it less precise, as I would have preferred many other points to be less precise. Such a view can only be based on a complete misapprehension of the realities of the position, for apart from the question of debt, do the critics really grasp the nature of the alternative? The alternative is to build up a separate economic bloc which excludes Canada and consists of countries to which. we already owe more than we can pay, on the basis of their agreeing to lend us money they have not got and buy only from us and one another goods we are unable to supply. Frankly this is not

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such a caricature of these proposals as it may sound at first.
In conclusion, I must turn briefly to what is, in the long run, of major importance—namely, the blue-prints for long-term commercial and currency policy, although I fear I must riot enlarge on that. In working out the Commercial Policy Paper, to which, of course, this country is not committed, unless a considerable part of the world is prepared to come into it and not merely the United States, and in the Final Act of Bretton Woods, I believe that your representatives have been successful in maintaining the principles and objects which are best suited to the predicaments of this country. The plans do not wander from the international terrain and they are consistent with widely different conceptions of domestic policy. Proposals which the authors hope to see accepted both by the United States of America and by Soviet Russia must clearly conform to this condition. It is not true, for example, to say that State trading and bulk purchasing are interfered with. Nor is it true to say that the planning of the volume of our exports and imports, so as to preserve equilibrium in the international balance of payments, is prejudiced. Exactly the contrary is the case. Both the currency and the commercial proposals are devised to favour the maintenance of equilibrium by expressly permitting various protective devices when they are required to maintain equilibrium and by forbidding them when they are not so required. They are of the utmost importance in our relationship with the United States and, indeed, the outstanding characteristic of the plans is that they represent the first elaborate and comprehensive attempt to combine the advantages of freedom of commerce with safeguards against the disastrous consequences of a laissez-faire system which pays no direct regard to the preservation of equilibrium and merely relies on the eventual working out of blind forces.
Here is an attempt to use what we have learnt from modern experience and modern analysis, not to defeat, but to implement the wisdom of Adam Smith. It is a unique accomplishment, I venture to say, in the field of international discussion to have proceeded so far by common agreement along a newly-trod path, not yet pioneered, I agree, to a
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definite final destination, but a newly-trod path which points the right way. We are attempting a great step forward towards the goal of international economic order amidst national diversities of policies. It is not easy to have patience with those who pretend that some of us, who were very early in the field to attack and denounce the false premises and false conclusions of unrestricted laissez-faire arid its particular manifestations in the former gold standard and other currency and commercial doctrines which mistake private licence for public liberty, are now spending their later years in the service of the State to walk backwards and resurrect and re-erect the idols which they had played some part in throwing out of the market place. Not so. Fresh tasks now invite. Opinions have been successfully changed. The work of destruction has been accomplished, and the site has been cleared for a new structure.
Questions have been raised—and rightly and reasonably raised—about the willingness of the United States to receive repayment hereafter. This is a large subject to which I have given a great deal of thought, but I shall not have time to develop it fully today. I am not, as a result, quite so worried as most people. Indeed, if in the next five or ten years the dollar turns out to be a scarce currency, seldom will so many people have been right. It is a very technical matter, very emphatically within their past experience, but not so easily the subject of future prediction. I am afraid I must content myself with a few headlines. First, it is not a question of our having to pay the United States by direct exports; we could never do that. Our exports are not, and are not likely to be as large as our direct imports from the United States. The object of the multilateral system is to enable us to pay the United States by exporting to any part of the world and it is partly for that very reason that the Americans have felt the multilateral system was the only sound basis for any arrangement of this kind. Secondly, all the most responsible people in the United States, and particularly in the State Department and in the Treasury, have entirely departed from the high tariff, export subsidy conception of things, and will do their utmost with, they- believe, the support of public opinion in the opposite direction. That is why this

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international trade convention presents us with such a tremendous opportunity. For the first time in modern history the United States is going to exert its full, powerful influence in the direction of reduction of tariffs, not only by itself but by all others.
Thirdly, this is a problem of which today every economist and publicist in the United States is acutely conscious. Books on economics are scarcely written about anything else. They would regard it as their fault and not ours it they fail to solve it. They would acquit us of blame —quite different from the atmosphere of ten or twenty years ago. They will consider it their business to find a way out. Fourthly, if the problem does arise, it will be a problem, for reasons I have just mentioned, of the United States vis-à-vis the rest of the world and not us in particular. It will be the problem of the United States and the whole commercial and financial arrangement of every other country. Fifthly—and perhaps this is the consideration which is least prominent in people's minds—the United States is rapidly becoming a high-living and a. high-cost country. Their wages are two and a half times ours. These are the historic, classical methods by which in the long run international equilibrium will be restored.
Therefore, much of these policies seem to me to be in the prime interest of our country, little though we may like some parts of them. They are calculated to help us regain a full measure of prosperity and prestige in the world's commerce. They aim, above all, at the restoration of multilateral trade which is a system upon which British commerce essentially depends. You can draw your supplies from any source that suits you and sell your goods in any market where they can be sold to advantage. The bias of the policies before you is against bilateral barter and every kind of discriminatory practice. The separate economic blocs and all the friction and loss of friendship they must bring with them are expedients to which one may be driven in a hostile world, where trade has ceased over wide areas to be co-operative and peaceful and where are forgotten the healthy rules of mutual advantage and equal treatment. But it is surely crazy to prefer that. Above all, this determination to make trade truly international and to avoid the establishment of economic blocs which limit and
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restrict commercial intercourse outside them, is plainly an essential condition of the world's best hope, an Angle-American understanding, which brings us and others together in international institutions which may be in the long run the first step towards something more comprehensive. Some of us, in the tasks of war and more lately in those of peace, have learnt by experience that our two countries can work together. Yet it would be only too easy for us to walk apart. I beg those who look askance at these plans to ponder deeply and responsibly where it is they think they want to go.
12.31 p.m.
VISCOUNT SWINTON: My Lords, whatever opinion may be held about these proposals—and very different opinions are held in different quarters of the House—we shall all be one in welcoming back Lord Keynes, in expressing our appreciation of his tenacity and his skill in negotiation (with the result of which he admits he is not satisfied), and in thanking him also for the brilliant and clear exposition which he has just given to the House. In many matters he has made the position a good deal clearer to us than it was before. I am sure he will riot mind if I say that his dialectic was most brilliant where he was skating over the thinnest ice.
But, in the conflicting views which have been expressed about these proposals in the debate here and in another place, there comes all the time—and even- in the speech of the noble Lord who has just sat down it peeped out every now and again—a common denominator of agreement that these terms are harsh. I do not believe that they are terms which are in the best interests of the United States or ourselves. They may have been the best that Lord Keynes and his colleagues could get, but I do not believe he himself, with all the pride of parentage, would argue, if I may paraphrase or indeed I think quote his own words, that they are the best designed to help us and the United States forward. I certainly, and I am sure I speak for many in this House, cannot welcome this Agreement, and I should find great difficulty in expressing approval. I believe that the real feeling of a great number of members in both Houses and of people in the country, probably the majority, would be that they regret that force of

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circumstances compelled us to accept these proposals.
It is difficult, perhaps impossible, for anyone without all the information at the disposal of the Government, to assess the importance and the urgency of these credits. I hope very much that the Government, when their spokesmen speak later in this debate, will be a little more explicit than they have been hitherto on the urgent need for these credits, particularly in order that we may pay for our raw materials and for the equipment which is necessary to re-establish our industries. The Secretary of State for India said that he was leaving it to Lord Pakenham. Lord Pakenham, with charming delicacy, I understood to say that it was rather too delicate a matter for a Lord-in-Waiting. I hope it will not be too delicate either for the noble and learned Lord Chancellor or for the Leader of the House when they come to reply.
LORD PAKENHAM: May I interrupt? I am not aware that I used that expression with reference to the particular matter to which the noble Viscount is now referring.
VISCOUNT SWINTON: I apologize if I have misinterpreted the noble Lord's delicacy, but at any rate he will agree that he did not deal with the point and we do Very much want the point to be dealt with.
LORD PAKENHAM: Excuse me, but I am afraid the point to which the noble Lord has referred was not my topic.
VISCOUNT SWINTON: I am very sorry, but when we asked the Secretary of State 'for India to deal with this subject he said that it was a trade matter, and that Lord Pakenham was going to deal with it. I 'do not really mind who deals with it, but I do ask, on behalf of the whole House, 'that some Government spokesman will deal with it very specifically before the close of the debate.
THE SECRETARY OF STATE FOR INDIA AND BURMA (LORD PETHICKLAWRENCE): If what I said is called in question, may I say that I have not my words with me, but I think that if the noble Lord refers to them he will find that I never promised that Lord Pakenham would reply. I said a reply
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would be given. And that promise will be kept.
SEVERAL NOBLE LORDS: When?
VISCOUNT SWINTON: During the debate, by one of the Government spokesmen, I trust, this afternoon?
LORD PETHICK-LAWRENCE: Certainly.
VISCOUNT SWINTON: It must be given to us in this debate. We have to rely, and rightly so, upon the Chancellor of the Exchequer in another place. He painted a very gloomy picture. I think he went so far as to say that the only food which would not be in short supply would be bread and potatoes. But it was not merely our need of food and tobacco. He emphasized the shortage of raw material and of machinery, and that our cotton textile industry could not rely sufficiently on cotton from Brazil (though we import a great deal from there) and from the Empire and Egypt, and that we could not recover our cotton exports unless we had large imports of cotton from the. United States. In the same way, we must have industrial equipment, in spite of all the developments that have taken place here in machinery making and the manufacture of machine tools during the war. His argument was, in fact, this: that we are in a vicious circle. We cannot pay our way or live without exports, and therefore to live we must have this credit. We, in this country, know very well what our export trade means to us; it does indeed mean our very life. I do hope that that is equally appreciated in the United States and that it is equally understood that we can only pay in goods and services.
I am bound to say that if we are asked to make great changes when we enter into the Commercial Agreement—about which I shall have a word to say in a minute—and if we were to discard a great system of Imperial trade partnership which has stood the test of good times and of bad times, it would be but little consolation to be told at the end of twenty years that the Americans had not, after all, appreciated the duties of a creditor nation, and had not given that wide and indispensable opening which must be the effective part of any multilateral agreement. It would be scant consolation if, as Lord Keynes has told us,

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a number of American economists said: "It is not your fault, it is our fault that we have not done it." It is not whose fault it is; it is whose fate is it?
LORD KEYNES: They would consider it their duty to find a way out.
LORD SWINTON: Let us be very sure that we make no commitment of any kind except in return for solid advantages which we know will be lasting and enduring. The Government take the view that unless we can import this raw material and equipment on credit from the United States we cannot enable our industry to recover in time to regain our export trade. We have had no share in these negotiations and we have no inside knowledge of what the position is. The responsibility must be that of the Government. I sec nothing at all unreasonable, much less cowardly, in the line: "This is a responsibility the Government must take. Nor do I feel in any need of advice from the leader of a section of the Liberal Party that we should follow Liberal precedents or Liberal practice. I note, incidentally—I think I am right—that on this occasion in another place his ten followers divided themselves into three parties.
VISCOUNT SAMUEL: That is a falsification of the facts.
VISCOUNT SWINTON: At any rate it was certainly two. Ten divides more easily by two than by three. They certainly did not all vote together.
VISCOUNT SAMUEL: One may have been absent.
VISCOUNT SWINTON: One or two becomes a considerable proportion when the total is ten. I remember a great claim being made on a certain occasion that the production of guns had gone up by 100 per cent. That claim was perfectly true; the number had risen from one to two. Least of all would my noble friends or I take the advice of the noble Viscount on the matter of Imperial preference. He has spent a large part of his political life in doing his best to destroy Imperial preference. Fortunately for the Commonwealth and Empire he has been singularly unsuccessful. He has entirely failed to destroy or even to mutilate it, though he has, by his efforts, contributed somewhat to the disruption of his own Party.
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Before, I turn to the Commercial Agreement—the commercial blue-print—with which I want particularly to deal, I think it is fair to say that I cannot see that a commercial loan would be in the least an alternative, if a credit or loan there has to be. The arguments of Lord Keynes on that seem to me to be quite unanswerable. A commercial credit would have to carry interest from the start, there could be no moratorium, no waiver clause, and no Article 12 as there are in the Agreement here—all of which will certainly have to be used to the full. However, in entering into this Agreement it does seem to me to be of enormous importance that there should be no misunderstanding or dual interpretation which could hereafter give rise to a charge of breach of faith. I shall be agreeably surprised if the waiver clause and Article 12 of the Agreement do not have to be used, not merely as of right but as a matter of necessity. I would have preferred that the Agreement should state clearly and positively what is implicit in it and the inescapable fact—namely, that instalments can only be paid with any regularity if we have a large favourable balance of trade.
That is the more obvious and the more inevitable now that the period of convertibility of sterling is reduced to fifteen months. That, I think, is one of the most dangerous elements in these proposals. It had always been intended that there should be a period of something like four or five years during which we should be free to put on whatever controls might be necessary. The transitional period was always assessed at something like four or five years, but now it is fifteen months. It seems to me to be a most strange paradox that when transitional measures which we had contemplated would endure for two years come before this House, the Government say: "Two years will not be enough; we must have five years because the transitional period is sure to last for as long as that," but that with regard to this, which is perhaps the most vital of all things to be done during the transitional period, they say the five years should be reduced to fifteen months or little more.
I want to turn to the commercial proposals, the blue-print, and to say a word or two about Imperial preference. I was responsible for negotiating most, if not

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all, of the Colonial preferences, not only with this country but with the Dominions and India. which have proved of such enormous value to the Colonial Empire, to the Dominions and to ourselves. They have been of inestimable value to many of the Colonies and the preferences granted by the Colonial Empire in return have been of real value to this country and to the Dominions. The economic and social life of the sugar Colonies is absolutely bound up with the sugar preference. The recovery of this country after the slump was certainly linked with, and indeed produced by, the mutual trade which was based on Imperial preference. Nor did this Imperial preference reduce the volume of our international trade, which advanced concurrently. I do not wish to give figures again, but Lord Croft gave figures yesterday which showed perfectly clearly the undeniable fact that not only did the trade of ourselves and the Dominions steadily and progressively advance, but our trade and their trade with foreign countries advanced at the same time. Nor was that at all unexpected; it is a matter of common sense.
When both the Commonwealth and the Empire and ourselves became more prosperous, we were able to buy more all round. I believe it to be a complete illusion that, if large areas associate in mutual trade, that in any way militates against a larger volume of trade with the world at large. If indeed that were so, the great Customs Union of the United States itself would be the greatest obstacle to trade, and it would be quite impossible for that great multilateral mutual expansion to take place in the future of which Lord Keynes has painted such a glowing picture. I hope that in any negotiations no one will be taken in by that greatest of all old snares, the most-favoured-nation clause. It used to be a fetish, and probably with some people still is. One of two things happened. It was sometimes evaded, and almost fraudulently evaded. Your Lordships may remember the special concession given to tinned milk, the product of cows pastured above an altitude of four thousand feet. On the other hand, where that sort of juggling did not take place, and what is perhaps a more honourable interpretation was given to the clause, countries refrained from entering into agreements with others which would have
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been to their mutual advantage and which, by improving the condition of each of them, would have added materially to the general trade of the world. After all, there is nothing mysterious about international trade; international trade is built up out of the maximum number of trade transactions between the peoples of different countries.
No one objects to our going into trade discussions, but it would indeed be fatal if we were committed in advance to eliminate or whittle away Imperial preference. In the Atlantic Charter and in the Mutual Aid Agreement, Mr. Churchill specifically reserved that position. As he said in the House of Commons on 13th December last, after speaking of the Atlantic Charter:
"Similarly when it came to the Mutual Aid Agreement, I received from President Roosevelt the explicit assurances which have since been published that we were no more committed by Article 7 to abandoning Imperial preference than was the United States to abolish her tariffs. What we are committed to, and have been long committed to, in good faith and in good will, is to discuss both these matters."
Indeed, if a Customs Union—that is, the free entry by beneficiaries as against all others—is not a discriminatory treatment under a tariff, why should more modest provisions between members of the same Commonwealth be treated and stigmatized as discriminatory?
If Cmd. Paper 6709 had stood alone, I should be gravely disquieted. I appreciate that this is a blue-print, and that these are proposals for consideration and are what Lord Simon called an argumentative agenda. What alarmed many of us was the joint statement made on page 18 on behalf of the two Governments. A very different light has been thrown on this by the statement made by the Prime Minister in actually presenting these White Papers to Parliament, which we now know had been previously communicated to the Dominions, and by the subsequent confirmations given by the President of the Board of Trade, by the noble Viscount, the Leader of the House, and indeed by Lord Keynes himself. It is vital that there should be no misunderstanding about this either here or in the United States. Not only are we absolutely free, but we shall act with our partners, to whom we are bound in honour and in mutual interest.

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The Government have in fact given three undertakings with regard to preference which are of great importance. The first is that we are absolutely free to accept or to reject any proposals on their merits. The second is that this is not a matter just between the United Kingdom and the United States, or between the United Kingdom and the Empire and the United States, it is a matter of getting a satisfactory agreement with all nations, because our trade is universal. Thirdly, this is an Empire partnership, and both we and our partners in preference must be satisfied that the quid pro quo that we both get is worth while. All those propositions, I think, ire perfectly char and established upon the statement; made in the House of Commons and the confirmation given yesterday by the Leader of this House. Lord Keynes said that not only was this so but that he was sure that there was no misunderstanding in the State Department. It is equally important that the Whole of the American people should be perfectly clear as to what our position I need not quote again the statements made in Parliament which have been referred but I think that they do fully establish those three propositions which I have made, and I do not think that the noble Lord, Lord Pakenham, who is particularly well acquainted with this matter, would dissent from those propositions.
LORD PAKENHAM; Hear, hear.
VISCOUNT SWINTON: Thank you. That is a Very great and important assurance to us, and a relief in this respect. It is clear that we enter the Conference absolutely free. We shall only reduce or eliminate a preference if we get an agreement which is better for us and for our partners. In making any agreement the Government must have regard to the long view, and not to a short-term accommodation. The mutual benefits of preference grow and fructify. We must be completely sure that any alternative which we adopt is equally enduring and fruitful. The Dominions and India will safeguard their own interests, and they and the United Kingdom will safeguard the partnership interest between them; but the Crown Colonies are entirely in the bards of His Majesty's Government, who will be negotiating as trustees, with the duties and the obligations of trustees. Not only the
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wealth but the health of the Colonial peoples and their social advance rest on an economic basis; they can rest on nothing else. It is a great responsibility. But the Government enter this Conference free; and Parliament will be equally free to consider and decide on any agreements which may result.
Let me add one last word. I do not think there is any doubt that the terms are hard. The Government insist that they are vital to restore our export trade. That is our life blood; it is the only way we have of life, and it is certainly the only way we have of discharging our obligations. Lord Keynes said that what weighed with the United States was not so much what we had done—and we did A. good deal in the common cause—as whether we should face the world boldly and walk without bandages. I would say this to the Government. Lord Keynes has said that he was doubtful whether the credit was big enough, but he thought it was enough for a short time. We have only a short time, even with this credit, in which to build up our industry, to get our export trade going, and to restore it to that much greater level by which, alone, we can live, much less maintain a high standard of life. There we are on common ground. But I would beg the Government to give to industry that confidence and encouragement which will evoke the best in all of us, which will stimulate that spirit of unity which brought us through the darkest days, and which can alone save us in the days of peace.
1.2 p.m.
LORD AMMON: My Lords, I beg to move that the House do now adjourn during pleasure. I suggest that we return at half-past two o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[House adjourned at two minutes past one o'clock and resumed at half-past two o'clock.]
2.30 p.m.
LORD PIERCY: My Lords, as I listened this morning to the speech of the noble Lord who opened the debate, which was so informative, so authoritative and so persuasive, I felt that there was very little more that could be said or this subject and for my part I would have been very glad indeed to have let

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the subject stand where he left it. But the debate must take its course; we must still, I feel, after that great speech, do something more in the way of groping our way through the veils of prepossession and prejudice and through the doubts which arise over concrete particulars to try to find where the truth of this great matter lies.
I was glad that Lord Keynes spoke of the question of mood, because undoubtedly through all the discussions in this House, and in other places too, there has run the constant feeling that this loan should have been a gift. That was the view which was held by the great commercial newspaper the Economist. It arises out of a feeling very vividly expressed in that paper that
"the British economy is crippled and bleeding and condemned to a task of reorganization which would tax the energies and ingenuity of any people."
But there is the American point of view and one of the most valuable contributions made by 'Lord Keynes was that he not only brought out with great clearness what that view was but also went far, I consider, to rationalize it and make us see the substantial foundation. However that may be, whether it is possible or conceivable that we can embrace the American point of view—and, after all. it is a question that history will decide—once it is admitted that there is that American point of view the matter assumes a different complexion. I will again quote from the Economist which says:
"Once the preliminary hurdle is taken—"
meaning the acceptance of the fact that there is an American point of view—
" … it is … possible to admire the generosity of the Americans. The amount is large and the rate of interest low, if the comparison is with inter-governmental covenants of the past, and the insertion of the waiver clause is quite unprecedented. Moreover, to accept 650,000,000 dollars in full and final settlement of all Lend-Lease obligations, which stand in the books at a figure forty times larger, is a courageous thing for any American negotiators to put forward."
I think the question of the gift might very well be left at what Lord Keynes said this morning and on that quotation from the Economist.
I was not myself surprised or deterred to find that this Loan Agreement was
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linked up with that other complex of Agreements which we have had before us. They sprang, of course, from Article VII, but irrespective of that it seems to me a perfectly natural thing. When, for instance, I myself lend, I may not be able to cast a horoscope of the lender for the ten to fifteen years over which repayment is to be made; but at least I want to know what the lines of his policy are going to be and something of his plans for the future. Seeing that their own commercial future is wrapped up in it, I can say that it was perfectly understandable and proper that the Americans should desire to see this Loan Agreement in the context of agreement on the undertakings we mutually took on under Article VII. But here again in these blue-prints, as Lord Keynes calls them, these two Agreements and these "Proposals for Consideration by an International Conference on Trade and Employment" there is a question of mood and of approach. These blueprints have a multilateral tendency, if one can use the present-day jargon; and we have there to reckon with an old prejudice, the protectionist prejudice, which is so much in the bones of so many people in this country and with the new ideology of the bilateralists. As an academic person at one time, I can understand this ideology of bilateralism as a very interesting, historical-economic subject. The real driving force, I feel, of the repugnance to these Agreements lies in that protectionist animus of which we are by no means free. But we have to remember that in Article VII we undertake to assist the United States to find the way to a world of freer trade. That was a definite move away from our protectionist traditions of the past.
I think that if we look at the arguments against these Agreements on practical grounds, we find that they turn on two opinions. They turn, first of all, on the fear that looking ahead we shall be outclassed in efficiency, in production and in salesmanship by the Americans, that we cannot hold our place in a world of equal competition. They turn, secondly, upon a belief—as I think a very misguided belief—that we can, by superior bargaining offset this drawback that we can no longer compete, and for that process of bargaining we have in our hands a very useful weapon in that we are a large consuming market.

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Personally I can accept neither those arguments. I think it is hopeless, if you are commercially outclassed, to expect to redress the balance by bargaining, and in any case that points to a world of restricted bargains and away from a world of expanded prosperity and trade.
I think it is equally false to suppose that we are in fact outclassed)y the Americans in efficiency of production, in fertility of design, in inventiveness and salesmanship. I believe that when we get over the initial difficulties of reconstruction—and the object of this;owl is precisely that—we shall find oursleves able to hold our own with the Americans and I think we shall find ourselves operating then in the conditions which really suit our genius. The conditions of a world of healthy competition and equal treatment for 'all have suited us the past and will suit us in the future; and if we hope for a world of greater prosperity we must look for a world of greater commercial interchange, and that lies along that path.
I turn now to say a word on the blueprint, first of all, of the International Monetary Fund. I do not know whether it has occurred to any of those who have taken part criticism of the International Monetary Find why it was, in tie second half of the nineteenth century and the first half of the twentieth, that great trading nations were anxious to range themselves on the gold standard or on that latest Ingenious variation of h, the gold exchange standard. The object was a perfectly simple and practical ore, to obtain stability of exchange rates for the purpose of international trade. Any noble Lord who has been engaged, as I have, in trade on a large scale with countries with fluctuating currencies, knows very well the risks and disadvantages of that kind of trade. Anyone who has been engaged in that sort of trade will have looked with much relief at other trades where they were dealing with stable exchange rates. When I was a young man, I had the responsibility, among other things, of a trading business rather widely extended in China, and we were very much exercised by the variations in the Shanghai tael. I remember, ore morning, going to see my chairman who was very glum, indeed, about the latest drop in the tael, and I remember remarking, because I suppose it was rather an im-
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pertinent remark to make, that if you trade in China you must have strong nerves. In any case, if you can get exchange stability, obviously it simplifies the whole process of trade.
The gold standard developed defects in the circumstances of the kind with which we are all familiar, but the fact that there is a case against the continuance of the gold standard—in fact, the impossibility for practical purposes of continuing the gold standard—does not in the least do away with the need and desire for stability. What we would really like would be stability of exchanges in as extended an area of trade as possible, and for periods as long as possible; and, when it became impossible to continue the stable rates in any direction, to hope for a process of orderly change under which it would be possible for a particular rate —that is to say, a rate between two particular countries—to be adjusted to fit the internal policy or the necessities of the case, without provoking a trade war or competitive exchange depreciation. That is precisely what you have in the International Monetary Fund. You have arrangements to bring about those results, backed by very substantial financial resources. Moreover, you have arrangements which will assist in correcting the kind of strain on the exchanges which comes when one country is for long periods a country with a surplus credit balance.
It has been said more than once that the International Monetary Fund is a very good fair-weather piece of mechanism. I think that does it less than justice. The machinery of the International Monetary Fund is tough enough to stand a great deal of international economic rough weather. It will riot, of course, stand indefinite strains and stresses, but it will carry us over a great many of the contingencies of international trade, over many of the temporary disequilibria, and give us a large measure of stability in many directions for a long time. But there is one particular kind of strain upon which we all have our eyes fixed—partly arising from recent experience—and that is the case of a country which is continually in credit, has large exports and small imports, and is, therefore, over long periods, owed large sums by the rest of the world. Here these Bretton Woods arrangements come to our assistance. The International Monetary Fund has a

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brother—a sort of Siamese twin—the United Nations Bank, and it seems very odd to me that in these discussions far too little attention seems to have been paid to the United Nations Bank. I am not going to try and expound it in detail; I am only going to suggest to your Lordships' House that the scheme for the United Nations Bank is very well worth serious consideration and will, if these arrangements are approved and come into existence, possibly form the basis of an immensely valuable piece of international machinery.
I am one of those—and I know I am not alone—who regard the future of international lending, apart from some such arrangement as this, with considerable pessimism. So far as the private investor who lends on international account is concerned, I think the time is past when you can persuade the investor to do it. I think, except in pursuance of deliberate commercial policies, such as America has been pursuing in South America, it is very likely that the era of international foreign lending has come to an end except in connexion with the United Nations Bank. What this does is to make it possible to lend under international guarantee, to make loans possible for productive purposes in countries where the Government can sponsor a loan and where the International Bank can give an international guarantee based on its resources. Under that system, loans to countries would be practical and all the members of the International Bank will participate in some degree in the loans. It will be possible, under that system, to raise the funds in the countries where there are funds available for foreign lending, and those will be the surplus countries who have the large credit balances on international account.
There is one feature about these arrangements which is highly important and which illustrates the fact that in these blue-prints presented to us there are a great many features which, from the point of view of purely American interests, may appear to he altruistic. One of them, the feature in the United Nations Bank that expenditure met out of loans should not be tied to any particular currency, means, of course, that the American money market under this scheme would lend its dollars, but that the dollars could be spent
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by the borrowing country in the United Kingdom, Sweden, Czechoslovakia, or anywhere it liked. In that kind of way we get a powerful support to multilateral trade; we get a means whereby the surplus of creditor countries is drained off and whereby any pressure which might lead to a breaking point on the International Fund is relieved. We get, moreover, a species of world co-operation in which, while the money might be found by country A, the work of designing, development and carrying it out in undeveloped countries might easily fall to some other country because the loans have not to be spent in the country where they originate.
I need not enlarge on the immense benefits that can accrue from a restoration of the practice of international lending. From the private 'money market point of view there is a great deal to be said nowadays in the light of history against foreign loans, but on general terms there is everything to be said for international lending, because that is the only way in which you will get a rapid reconstruction of devastated countries and a rapid reconstruction of their industries, imports and exports and, above all, development within measurable time of vast undeveloped spaces of countries like China, of poor countries like India, and of the Dominions. That is the straight road to world prosperity and to expanded trade. Of that part of the blue-prints I will say no more, and will apologize for having gone into the matter at such length.
VISCOUNT ELIBANK: Would the noble Lord mind speaking up a little? We cannot hear him at this end.
LORD PIERCY: In these two twin institutions—the International Monetary Fund and the United Nations Bank—we have two of the most hopeful pieces. of international machinery that have been invented in our time, or for a very long time indeed.
I come now, at last, to a short word on the commercial policy, the Proposals for Consideration by an International Conference. The noble and learned Viscount, Lord Simon, yesterday characterized these considerations as an argumentative agenda. That, he says, is all it is. That brings very clearly to light the difference between this document and the Final Act

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of Bretton Woods. In the Final Act we have a highly articulated piece of machinery on lines on which it could be started up. We have here, in a sense, what is nothing more than an agenda for the consideration of the nations when they meet. Of course, it is very important to take part in the drawing up of an agenda. That, I think, is part of the so-called "Hankey drill" which I was taught. It is very important to be able to write the minutes and to be able to draw the agenda. But there is, of course, more in this than an agenda. We must not conceal the fact that the agenda outlines principles which we are pledged to support and advocate at the international conference. The point I want to make is a repetition of the point Lord Keynes made this morning, that in drawing this agenda an immense amount of work has been done by our representatives and by our civil servants. I have followed, at a distance, this work on commercial policy for something like two years. The difference between the mutual understanding and highly articulated view of the problem which is enshrined in this agenda, and the earlier ideas that were put forward from the other side, is indeed immense. I want to suggest to the House that that is a very valuable basis for this proposed discussion, at any rate if you will concede that a path towards multi ateral trade is the right path for us to take. I thought it was worth while making those observations.
I make one last observation, which is this. The head of the Swiss Bank-verein, Felix Somary, very early n the thirties at Chatham House made what struck me then as a remarkable prediction and seems to me still more remarkable as I recollect it. He pointed out that the accumulated. economic strains and stresses in Europe were very likely, if they could not be relieved, to give birth to a monstrous political progeny which might disrupt Europe. He had no foresight, I am sure, of Nazi power, bit his prediction nevertheless in a remarkable way has come true. One has to bear in mind what was very eloquently urged in another place, that economic policy is one half of your political policy, and if you are punning a policy of peace and understanding on the political side it is essential that your economic policy should match it. I believe myself, old-fashioned as it may seem, that it is the
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path of healthy competition and equal access, of multilateral trade in short, which is the avenue to peace. I believe to-day we are extraordinarily fortunate in being able to pursue that avenue, armed with new mechanisms for producing a combination of order and freedom such as we have never had before.
There is one other thought which has lately flitted in and out of our minds, and flitted even into this debate for a moment: that is the new world situation brought about by the atomic bomb. It may b3 that the solution of that problem will lead to a much greater getting-together internationally in the political sphere, and a much greater reality of working together. It may be that those happenings on the political plane will not only make everything we are discussing to-day on the economic plane more appropriate, but also make it easier for us.
2.55 p.m.
VISCOUNT BENNETT: My Lords, I believe it has been the custom in this House for the speaker following one who has spoken for the first time to congratulate him upon his address, and I do so with great sincerity, for I think the noble Lord who has just sat down has made a noteworthy contribution to this debate.
I confess that, as I read the relevant documents connected with this matter, I was first surprised that our great American Allies would ever offer such a document to the British people, and I was next amazed that the British people should sign it. When it became apparent that it was impossible to deal with the matter on the basis of a grant, I would agree with Lord Wootton that our emissaries might then well have withdrawn and left the matter for further consideration, without pursuing it on the lines that have been followed.
It must not be forgotten that during all these years we have been hearing talk of equality of sacrifice in every quarter, but no one who has crossed the Atlantic Ocean during the last five years will have any doubt as to the inequality of sacrifice. What is more, it must not be forgotten in that regard that there is a great difference between the position of the United States of America and this country. We made a declaration of war. The United States was treacherously attacked and a declaration of war was made against that country, both by Ger-

811
many and Japan. We, during the long year that enabled the Americans to prepare more readily for the war, were defending civilization. I think that is admitted by every one. That being so, does it not follow that consideration of that fact might well have been in the minds of those who had to deal with the position of the United States when it was considering its treatment of its greatest ally?
However, negotiations did continue after it was apparent that a gift or grant-in-aid could not be given—in other words, that an adjustment of costs for a common purpose to attain a common end could not be carried on. That being so, there was an alternative, and it is an alternative that the people of this island have not turned very much to in days gone by, but which they will be compelled to turn more to if we are to survive; and that is to consider the great estate that constitutes the British Empire. We produce practically everything that might be required to enable us to maintain our existence, and we had the opportunity then, some months ago, to see what might be done with respect to that matter.
I need hardly point out that the late Sir Wilfrid Laurier, as long ago as 1911, at the last Imperial Conference that he attended, sought to obtain an inventory of the resources of the Dominions so that we might be able to deal with this problem adequately. It was not until 1917 that a report was made, a report so full, so comprehensive, that it is included in nine volumes, and the final volume contains recommendations that, had they been followed in any way, even partly, would, have made it impossible for the situation that has now arisen, to arise. But that was not done. We have negotiated, not a loan, but a line of credit, amounting to 4400,000,000 dollars, and the settlement of -Lend-Lease differences and balances. I do heartily congratulate Lord Keynes on having settled and determined that issue. I think it is highly desirable that matters of that kind should he settled as soon as possible at the end of the war. We had great difficulty in Canada in adjusting financial problems at the end of the last war. Finally the matter was submitted to the arbitration of the late Lord Asquith, and we felt we had not been too well dealt with. So it is a dis-
812
tinct gain that that has been disposed of and settled, and settled, I think, on a basis that will be regarded by everyone as extremely reasonable.
Now we come to the grant of credit. I cannot but digress for a moment and ask why we did not ask the United States Congress to ratify this Agreement first. Why did we take the initiative? Why did we not ask the Congress of the United States to pass judgment upon this Agreement before we did? That is what prudence would have dictated. Had they done so, we would have eliminated one difficulty. In the United States it has been the practice from time immemorial, when dealing with problems of this kind, to consider new restrictions or new conditions to be added to the existing conditions in the document. For all I know, when this document is finally ratified by the United States Congress it may contain terms and conditions which are riot now in it. That would be in accordance with their settled constitutional practice in dealing with matters of this kind, as I dare say your Lordships will remember was the case in connexion with the ratification of the League of Nations in the Senate of the United States.
We have a grant of credit of 4,400,000,000 dollars and 650,000,000 dollars in connexion with Lend-Lease. It is pertinent for any borrower who has to have his action ratified to determine as a matter of business the value of what is being done. We were told, and told very clearly, that no part of this loan is available for our postwar debts and that is written in the document itself. It is clear that no part of this money is to be available for the purpose of settling the post-war debts of this country to any other country. Clause 6 of the Financial Agreement says:
"It is understood that any amount required to discharge obligations of the United Kingdom to third countries outstanding on the effective date of this Agreement will be found from resources other than this line of credit."
Therefore, so far as we are concerned, this credit does not assist us even remotely in the discharge of our obligations to the various countries in the world to whom we are debtors; and in the statistical information which has been provided it will be seen that those obligations amount to a tremendous sum, a sum three times the size of this credit. Therefore that prob-

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lem which faces the people of the United Kingdom is not in any sense lessened, except indirectly, by the adoption of this Agreement. I think that is fairly clear from the statements made in the documents themselves.
That being so, let us inquire as to the terms on which this money is to be lent to us. If we inquire first of all as to the length of the credit, we are told fifty years. That, I think, is an exceptionally generous attitude of mind by a lender towards a borrower. Fifty years is a long period for a loan of this character. Then we find that the rate of interest is 2 per cent, which is equivalent to 4 per cent domestic borrowing in this country, or has been until recently. The average rate of interest over the years, 1.62 per cent., is much higher than our domestic rate because our Income Tax makes the rate of interest payable on our loans sometimes only seven-eighths of one per cent., sometimes 1¼per cent., the largest being 1½per cent. I was glad to hear from the noble Lord, Lord Keynes, this morning that he sought very strongly to obtain a lesser rate of interest than 2 per cent. Two per cent. sounds a low rate of interest, but 2 per cent. free of Income Tax constitutes a larger return to the Government of the United States than it would on domestic borrowing in this country. I think that is fairly clear.
It has been the custom from time immemorial for the lender to impose conditions upon the borrower. It is therefore important that we should make some investigation into the terms and conditions under which this loan has been granted or this line of credit established. It will be found, first of all, that we must use it for debts which are to be incurred, for obligations which are to be created. I have already referred to that. The purposes of the loan are set out in paragraph 3 and I will not take up the time of your Lordships by reading them. The question of the payment of interest is dealt with in paragraph 4. In my judgment, the noble Lord, Lord Keynes, did not this morning refer to the important and governing factors with regard to waiver of interest payments. It is not a waiver by merely asking for it, as has been suggested. If you will turn to paragraph 5, which deals with this point, you will see this passage:
"In any year in which the Government of the United Kingdom requests the Government
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of the United States to waive the amount of interest due in the instalment of that year, the Government of the United States will grant the waiver if—
and it is the "if" that governs—

"(a) merit of the United Kingdom finds that a waiver is necessary in view of the present and prospective conditions of international exchange and the level of its gold and foreign exchange reserves, and

(b) the International Monetary Fund certifies that the income of the United Kingdom from home-produced exports plus its net income from invisible current transactions in its balance of payments was on the average over the five preceding calendar years less than the average annual amount of United Kingdom imports during 1936–8 fixed at £886,000,000. …"

Therefore that waiver depends upon two things: firstly, on our certificate that the present and prospective external situation is such that we are warranted in making the statement that the waiver is necessary; and secondly, on the Monetary Fund being prepared to give a certificate along the lines I have just indicated. I think that is vastly different from the statement made by the noble Lord, Lord Keynes, this morning, because no reference was then made to the "if," and it is the "if" which is the governing factor in that paragraph. There is no doubt at all about that.
The second condition to which I direct attention is that contained in paragraph 6—namely, that the money shall not be used "to discharge obligations of the United Kingdom to third countries cut-standing on the effective date of this Agreement." The third condition is that
"The Government of the United Kingdom will not arrange any long-term loans from Governments within the British Commonwealth after the 6th December, 19.15, and before the end of 1951 on terms more favourable to the lender than the terms of this line of credit."
Anyone who knows the population of the Dominions as compared with that of the United States—the combined population of Australia, New Zealand, South Africa arid Canada is only that of a few States of the American Union—cannot expect that the terms under which they could lend money would be the same as those on which a great, rich and powerful Republic like the United States could lend it. Yet it is provided in this Agreement that money lent or credits advanced by overseas Dominions cannot be on terms more favourable to them than the terms granted by 'the

815
United States. It is, true that a first mortgagor usually has imposed upon him terms with respect to second mortgages and matters of that kind, but having regard to the respective weights of population I think it is manifestly unfair to impose that restriction upon Dominions in their desire to make loans or extend credits to this country.
The next condition which is of importance deals with the matter I have just mentioned, the waiver of interest. It is provided in this paragraph, as distinct from the paragraph preceding it, that
"Waiver of interest will not be requested or allowed under Section 5 in any year unless the aggregate of the releases or payments in that year of sterling balances accumulated to the credit of overseas Governments, monetary authorities and banks (except in the case of Colonial dependencies) before the effective date of this Agreement, is reduced proportionately…"
It is common ground, as Lord Keynes explained this morning, that so far as the sterling area is concerned we can wipe that from our books and consider it no more when that Agreement becomes operative. That sterling area became very important to this country when we went off gold. Whether or not this country can at this moment permit that area to be destroyed, so far as we are concerned, is not for me to say, because I have not such an intimate knowledge of the matter as my noble friend who has just spoken. All I will say is that I cannot see how within a limited time that can be brought about without doing injury to the business of this country. That is as far as I care to go with respect to that.
Then there comes the next condition, and that is a very strange one. It is:
"that any discrimination arising from the so-called sterling area dollar pool will be entirely removed and that each member of the sterling area will have its current sterling and dollar receipts at its free disposition for current transactions anywhere."
Part of that is acceptable to everybody, but part, of course, is not. Whether or not on balance that was the best arrangement which could be made, I am not in a position to say; all I do say is that I do not think that it is adequate. We then come to the fifth condition imposed with respect to exchange, which provides that
"payments or transfers in respect of products of the United States permitted to be imported into the United Kingdom or other current transactions between the two countries"
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Shall not be restricted, nor shall
"the use of sterling balances to the credit of residents of the United States arising out of current transactions."
That is not an unreasonable condition from one standpoint, but it may work a hardship, as my noble friend who has just spoken, and who is more familiar with such transactions than I am, will, I am sure, admit.
Next we have a reference to
" … restrictions imposed in conformity with the Articles of Agreement of the International Monetary Fund."
I am wholly in accord with those who support the creation of an International Monetary Fund and an International Bank. There, again, the terms and conditions with respect to the establishment of that Fund and that Bank are the all-important elements. There are terms in those Agreements to which I should object, but I am not an expert in these matters, and I content myself with saying that the best possible arrangements, according to the views of those who are supposed to be experts, have prevailed. That is as far as I can go with respect to that, but it might be well to point out one thing. It has been said that this puts us back on the gold standard. I disagree with that view; I rather agree with the language of Sir Warren Fisher in his letter in The Times. It really amounts to this, that the standard, the measuring yard, is to be gold.
Gold, you will find, figures in all the paragraphs dealing with matters of this kind, because the measurement is to be determined in terms of gold and not something else. It is important to keep that in mind. It is stated in terms that the measuring yardstick shall be gold because it has a universal value, because it is still the only metal of universal value. But the odd thing about it—and I have always thought this a very strange thing indeed—is that one country was able to change the value of gold. The President of the United States issued a proclamation and changed the value of gold by 70 per cent. That was done by one country without reference to any others, so changing the entire outlook of financial men upon the world, because it changed the value of gold as a medium of universal value and exchange. That is a matter which cannot be dealt with now. But let us assume

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for a moment that the same authority came to the conclusion that gold should be devalued. What then? If ever there was any question which should be the subject-matter of international discussion in questions of trade and commerce it is that, because it should not be possible that such a condition should prevail in a world where, as has been said, we want to have order rather than chaos. With regard to the other clauses, dealing with imports and exports, I shall not do more than say that they may work satisfactorily, but there is no assurance that they will do so.
I come next to the question of accumulated sterling balances, about which a discussion took place yesterday at which regret I was not present. The time within which we are to deal with the complex problem of these sterling balances is now fixed at one year, plus the period of time between now and when this Agreement becomes effective—say fifteen months altogether. We said originally that the transition period should be as long as five years, Do your Lordships think that to shorten that period to a year gives to this country that opportunity to adjust the matters which it should adjust during the transitional period? That is the real problem there. It is a simple problem. It seems to me that a year is too short a time. I believe that Lord Keynes struggled for a longer period, but that this period was fixed by the Americans and we have accepted it. I think it will be found that it is too short a time; that aye years was not too long a time in which to make the adjustments necessary during the transitional period.
There are several other items to which I should have liked to refer, but in view of the time that the debate has already taken I shall refrain from doing so, realizing that they have been fully and better covered by others. There is an escape clause which provides that either Government shall be entitled to approach the other for a reconsideration 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."
That at least affords us some opportunity to present our views in the event of the situation becoming very acute, and some
818
rearrangements perhaps becoming necessary. I notice from the Agreement itself that it must be taken that the Americans contemplate the possibility of its breaking clown, because it is provided that if a waiver is required before 1955—and remember, interest does not become payable until 1951—and if during the four years between 1951 and 1955 we are compelled to ask for a waiver, there are special conditions to deal with that. It may be taken, therefore, that our friends the lenders have contemplated the possibility of there being a crisis in the administration of this Agreement as early as 1955.
The balance of what I have to say will be more concerned with the fact that no reference is made in the document to preferences. It will be observed that in the accompanying document, however, there is a very full statement, in which there are frequent references to the elimination of tariff preferences. The words are:
"for the elimination of tariff preferences if taken in conjunction with adequate measures for the substantial reduction of barriers to world trade."
I had the privilege of calling together the Conference which dealt with preferences in 1932, and I well remember how difficult the discussions were. Some of you in this country believe that the bargains made were too harsh, but I must point out that that was the most difficult time in the history of Canada, because we lived upon exports, and, when our export trade was almost destroyed, as was the export trade of the world, by being reduced by two thirds of its former volume, it became clear that we had in some way to provide a market for our products. That preference saved our country. With respect to many items we had here a fixed and sheltered market, which enabled us to weather the storm.
Those preferences were attacked shortly afterwards by our friends in the United States, but let me give you in a few short sentences the history of preferences. Preferences in the British Empire were created by the American Government and by no one else. Five times between Confederations and 1898 Canada sought an agreement, a trade agreement, with the United States of America. In fact, at times, as your Lordships will remember, we had agreements signed that the Senate of the United States declined to ratify. Some of them were extremely fair plans and they

819
were put on our Statute books and continued to remain there year after year, but ultimately they were always rejected. Finally, in 1911, President Taft made a suggestion to Canada—it was not a suggestion by Canada to the United States—in which he asked us to enter into a reciprocity agreement. But, during the intervening years from 1899 to that time, Canada had been developing very, very rapidly, and had established preferences to this country—getting nothing in return. Sir Wilfrid Laurier, in 1897–1898 brought in his famous preference legislation by which 33⅓ per cent., subsequently 25 per cent., reduction of the general tariff was accorded to this country. For that nothing was received, though it was believed by the nation, at that time, that some action of a similar nature would be taken by this country. The same principle was adopted by Australia, New Zealand and South Africa. They all gave tariff preferences to this country without receiving anything in return—except your good will, which was always there.
The United States, when we first adopted preferences, in 1898, had a Committee of Ways and Means, in which the tariffs originated, of which Mr. Payne was the Chairman, and he said: "These preferences are family matters, and do not concern us." I think you will find that the first use of the word "family" with respect to preferences came from Mr. Payne. And we have always so regarded them as family matters. We have treated our preferences as being family matters, and we have stuck to that course. They have not been subject to the most-favoured-nation clause. Your Lordships will recall that when Sir Wilfrid Laurier enacted the legislation dealing with preferences to this country, the question was raised as to whether or not that did not contravene the provisions of treaties with Germany, Austria and Italy, where they were covered by the favoured-nations provisions. So important was the matter regarded as being, so great was the attention given to it, that Lord Salisbury denounced the treaty with Germany in order that preference should be given to your goods in Canadian markets. That was a very, very important act.
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If you will trouble to read Lord Lansdowne's speech, in this House, you will be able to appreciate how seriously the matter was regarded. But most countries accepted our preferences. The United States did so without any protest. So did Sweden and several other European countries, and so did South American countries. But Germany persisted in fighting them, and finally she applied in retaliation against Canada her maximum tariff. And Canada responded. Mr. Fielding was Minister of Finance then, and it was some time before he did it. In the end Germany backed down in 1910.
Now I would like to say- how I deprecate talk to the effect that if you do not agree with a country there is danger of war. When I hear talk about the United States of America being offended because we do not do so and so, I am moved to a strong feeling of disagreement. I do not recollect seeing any sign of the Americans being greatly offended when they destroyed in the Senate every tariff arrangement we made with them. There has been no manifestation of any feeling of offence being taken along the border between Canada and the United States—and be it remembered we have something like 3,000 miles of undefended territory there. I know something of the Washington atmosphere, and I know what log-rolling means in connexion with tariffs. On one occasion the President of the United States endeavoured by every means in his power to secure a reduction of the duty on timber brought into the United States from Canada. But the Senator from the State principally concerned was so successful in his log-rolling efforts that the President of the United States was defeated. So I am not without knowledge of the attitude of mind that prevails in the atmosphere and mood of Washington.
But, as I have said, that preference was accepted by the United States. In 1932 at Ottawa Imperial preference was negotiated and your Legislature passed a Tariff Act—a slight protective tariff which not a protective tariff in the sense usually understood, but you merely enacted a tariff to secure equality of opportunity to those who were concerned in manufacturing goods in this country with their competitors abroad. They gave Canada a preference. That preference saved Canada from bankruptcy, and in every part of the British Empire it was of the utmost

821
value. The noble Viscount, Lord Swinton, was present on behalf of the Colonies, and the work which he did, I think, has endured until this day. My noble friend Lord Hailsham, whom I see sitting before me, was of the greatest possible assistance in getting matters disposed of. I may tell you that conditions were difficult, but the Agreements were ratified in the end by your Parliament; Canada ratified them and so did the other Dominions.
But in 1938, you will find that these preferences were greatly reduced. In that year this country entered into a treaty wit-3 the United States of America, as a result of which, that to which Sir Wilfrid Laurier attached the greatest possible value—namely, the preference on wheat—was abandoned. I hold in my hand a book which contains a statement of the concessions which were made by us to the United States of America, with the consent of Australia and Canada, together with the concessions made in every one of the Kings's great Dominions and Colonies —they are named one after another. And. the extent to which preference was diminished is indicated here. Then there were letters exchanged with respect to rather special duties between the United States and the United Kingdom in connexion with trade and so on. All this was; done in 1938, and now, notwithstanding the fact that in that Agreement preferences were greatly whittled down and the preference on wheat destroyed, it still remains that our friends are seeking to destroy the preferences entirely.
I am not disclosing any great secret by saying that the United States has consistently endeavoured since 1933–1934 to destroy the preferences. I submit that to have these family preferences settled by other countries than those within the family is wrong. It is essentially wrong, and it is because of that that I find it so difficult to agree to these proposals. It will be recalled that this document that is circulated with the Agreement contains a provision that we will discuss certain matters at a conference which is to be held hereafter. And it is important to recall that those discussions arc not limited in any sense, but every country in the world that attends—Greece, and the Balkans generally, and the South American countries—will all take a hack at our family preferences. I submit that that
822
is not right or proper, and that we should not by any possible chance have submitted those matters to such a gathering.
I would just point out these words, and then I shall conclude:
"joint statement by the United States and the United Kingdom regarding the understanding reached on commercial policy."
The Leader of this House has stated with regard to that Conference that we enter into it freely, bound by no arrangements that have been made, or by any undertakings that have been given. But let us look at this document. I am thinking what the United States will say when they read this which has been before us as part and parcel of this discussion:
"The two Governments have also agreed upon the procedures for the international negotiations and implementation of these proposals."
That is an Agreement that had been entered into for the implementation of these proposals, and these proposals contemplate the elimination of preference. What are the people of the United States to think if our good faith is involved, as it is? Listen further:
"To this end they have undertaken to begin preliminary negotiations at an early date between themselves and with other countries for the purpose of developing concrete arrangements to carry out these proposals, including definitive measures for the relaxation of trade barriers of all kinds.
"These negotiations will relate to tariffs and preferences, quantitative restrictions, subsidies, State trading, cartels, and other types of trade barriers treated in the document published by the United States and referred to above. The negotiations will proceed in accordance with the principles laid down in that document."
The principles laid down in the document are that preference is to be discussed and eliminated if possible, and we know that in the original proposals made in dealing with the United States one of the matters set up as a condition was the elimination or reduction of preferences, although in 1938 these preferences were whittled down as I have indicated. If you compare our tariffs with the rates of duties which prevail in the United States you may ask yourself this question: What does a substantial reduction mean? Does 45 per cent. with specified duty added mean that a reduction of 10 to is per cent. or 25 per cent. is a substantial reduction? On 45 per cent. a reduction of 50 per cent. would mean 22½ per

823
cent. Is that a substantial reduction from the standpoint of our endeavouring to secure trade in that country? That is the point we have to think of—"substantial reduction." I may be told that 10 to 15 per cent. or 25 per cent. is a substantial reduction, but if the rate is prohibitive it amounts to practically 100 per cent. I contend that this little document is one that in good faith compels this country to deal with the preferences in an international conference. And ultimately the preference perishes.
This family arrangement—the term used by Mr. Payne describing the relations between these great overseas Dominions, as they now are, with this country—which has been so successful is now to be subject to criticism and attack and, if possible, elimination from the Statute Books of the country. If that document means anything, notwithstanding what has been said by the Leader of the House and by the Prime Minister that we are free, the American people will take it that this matter is to be discussed. Why should we put this document at the end of this Agreement? What is it there for? I cannot arrive at any other conclusion than that it is intended that there shall be a discussion on our family preferences in an international conference at least. That is why I find it impossible to become a party to the acceptance of this Agreement.
I agree with many parts of it, but it has its limitations, because no part of the money received will be able to be used against our debts to other countries. How are we going to deal with them? That £3,000,000,000 obligation rests upon us. This Empire can provide all the tobacco required if it gets a chance. Take the question of our foodstuffs; or of cotton. We know perfectly well that the desire to seek a market by the people of the United States is even greater than our interest. The same may be said about wool. We have complete control of the woollen situation to-day. Take other matters. If you look at other matters in the Dominions during the war you will. be surprised at the magnificent develop-merit which took place in those countries and there never was a time when we could have better consolidated our strength than now. On the one hand there is the community which has something to sell:
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on the other side there is the community which requires that very thing. Let us work out a plan which will enable the resources of one part of the Empire to be available to those who do not possess them. It is not difficult.
I have had some experience with an international conference myself. I was asked to call a conference of the wheat-consuming and producing nations in this country in 1932 and I think we had fifty-five delegates there altogether. We were unanimously agreed upon our conclusions, but did they last? They certainly did not. I always like to keep in mind the ideal, but on the other hand does anyone think it is possible to create the world conditions mentioned in the Agreement? Do any of your Lordships think it is possible? It may be a movement towards a desired end. But if they think it is, I would not like them to go through the experience we had in the wheat conference in which we all agreed on a certain line of action and the result was failure.
It is very painful for me to disagree with those responsible for this Agreement but I cannot, I cannot agree. In the words of a distinguished statesman I am a fanatic in relation to the question of preferences for the British Empire. I find here instead of the family being once more regarded as the unit, we are now to submit as a family to the views of our stepsons and stepdaughters and step something else with all their criticisms against us. I cannot vote for that. Therefore with much reluctance, knowing this sum is too small, knowing that we cannot but face a crisis sooner or later—I am no prophet but a crisis is inevitable —I must vote against it. We cannot listen to Lord Keynes without knowing that before the end of fifty years there must be a crisis. When I think of this document which deals with preferences in the British Empire, I venture to think that when that crisis comes there will be men and women who will look back upon this time and say, as they contemplate it and our hurry, our undue anxiety and lack of courage with respect to the British Empire, "This was our darkest hour."
3.40 p.m.
THE LORD CHANCELLOR (LORD JOWITT): My Lords, I rise to take part in this debate with a strange trepidation. I have no sort of knowledge of finance

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other than that which comes to all of us from seeing the bank manager about an overdraft I have no knowledge of economics, but I have, perhaps, the supreme qualification to speak to your Lordships for a short time as the ordinary man in the street and not the specialist After all, it is the man in the street who has to make up his mind about what we are to do in this difficult situation. I suppose I represent all your Lordships in this House when I say I would not hive lent my support to or supported the signature of these documents had I believed that by so doing I should have done an injury to my country. All your Lordships are in the same position. A few weeks ago —and it was, quite frankly, with considerable misgiving—I had to make up my mind what I thought was the right course to take. I want to-day to tell your Lordships the process by which I decided, because it may be the process by which many of you may also decide.
Before I come to that may I first refer to two other topics with one of which I was asked to deal. It is common knowledge to all your Lordships that, in matters of treaties, the Prerogative prevails. The Government of the day advising the Crown can, of course, sign treaties. But, in so far as the signature of those treaties impinges upon the ordinary citizen, so far as they call on the ordinary citizen for a certain form of consent, and so far as they create privileges, then we have to have the law. For that reason w e have to have the Bretton Woods Agreements Bill., but, rather than ask your Lordships to authorize us simply to pass that Bill, we think it much better to ask you to support us in carrying. through these Agreements so that if they are carried through the Bill will follow.
The second observation I want to make is in regard to the speech of my noble friend Lord Altrincham with whom I was associated in another place for very many years. Though I think we have almost always differed in our political views, I, at any rate, have for him a very great regard as a man who always says what he thinks to le true regardless of the consequence. In his speech yesterday he said something about the Prime Minister which, I confess, I thought most unfortunate. He said that when the Prime Minister goes to any foreign country he goes, not as a Party
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leader, but as the Prime Minister of this country to speak on its behalf. It would be entirely wrong if, when Mr. Churchill went, he was to speak on the mere doctrine of Conservatism and equally wrong if Mr. Attlee were to speak merely for the Socialist Party. Any Prime Minister must speak for the nation: He criticized the present Prime Minister and said that when he went to America he confined himself to explaining not the national but the Party case. A lamentable thing. I think that criticism, if I may say so, was most unjust. Your Lordships all know the situation that was prevailing at the time, and if you have read your Daily Telegraph to-day you will have seen that there is a movement in America, in certain quarters, that this loan should be refused to this country because we have a Socialist Government. Therefore, it was important that the Prime Minister in going out there should show that we Socialists are not a violent set of gangsters, as we are sometimes described, and that there was no reason why America should not extend to this country favourable consideration.
I much prefer the observation which Sir John Anderson made when he spoke to the American Chamber of Commerce and which was reported in The Times of Friday last. He said he did not think any Government negotiating from this side would have got better terms. He saw no lack of cordiality anywhere during Mr. Attlee's visit to America and, when he addressed the two Houses, he spoke with disarming frankness. He did not make the mistake of trying to model himself on that incomparable, inimitable personality, Winston Churchill. Any stiffness which might have been apparent in the negotiations or in their result was attributable to economic and not political considerations. From my own point of view, from what I have read and heard—and I think I have seen everything—there is no man against whom the accusation should less readily he made than the present Prime Minister, that when he goes out, to represent this country abroad he represents a mere Party and not a national point of view. I thought it right to say that because this is something which I feel very deeply.
There are three Agreements here in question, and all the three documents are inter-related. Let me, first of all, say a word or two about Cmd. Paper 6709,

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Proposals for consideration by an International Conference on Trade and Employment, with regard to which we are committed to this extent. The Government of the United Kingdom is in full agreement on all important points in these proposals and accepts them as a basis of international discussion. What are these proposals? In the broadest outline, the proposals for consideration stress the need for economic co-operation between nations. Is there anybody who doubts that? Then they stress the need for raising the level of economic well-being among all peoples. They deal with trade barriers and discriminations which stand in the way of an expansion of multilateral trade. Each of the signatory nations will take action designed to achieve and maintain full employment, and no nation will seek to maintain employment through measures likely to create unemployment in other countries, that is to say, you must not export your unemployment. The noble Duke, the Duke of Bedford, said it was always necessary to have unemployment except in a state of war. Very well then; if he is right, let us have war, only let it he war against poverty, disease and ignorance, and in that way, I believe, we can avoid unemployment.
Is there anything in these proposals to which anyone could take exception, when we realize that all the Dominions, who, I hope, will come to this conference, will come there free and unfettered—absolutely free to take what decision they like? When I read this document and I had to make up my mind about it, I confess I asked about tariffs and preferences, and I was told what Mr. Winston Churchill said, I think, in another place: that so far as he could see on that matter we were completely free. Of course, it is a fact, as Lord Bennett said, that you may have a reduction of a tariff which is merely notional. You may fix a figure in your tariff which completely and effectively keeps out any competition; you may then double it, and if you subsequently reduce the resultant figure by 25 per cent. it is not really effective at all. Of course that is so. On the other hand, however, if you are at liberty to bargain about a real, substantial reduction in tariffs in return for a corresponding reduction in preferences, it seems to me you have got everything you can desire.
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The second question I asked when I had read this document was: What about agriculture? Will this interfere with the carrying out of our agricultural policy which was set out in a White Paper recently? I am sure it will not, and I do not think in this debate anybody has challenged that. The third question I asked was about State trading, and when I found that State trading may be carried on on commercial considerations, there again I was quite satisfied. I apprehend, although I am not versed in commerce, that one of the elementary rules of commerce is that you enter into negotiations with somebody and fix a long-term agreement with him, and even although in some particular year you might be able to get a commodity cheaper from somebody else, the long-term consideration is the one that prevails. We should be perfectly entitled, as I understand it here, to buy sugar, for instance, for our own Dominions. With regard to that Agreement, I confess I had, after the explanations had been given, no difficulty.
Now the second Agreement, No. 6546, was the Bretton Woods Final Act. It establishes two things: it establishes the International Monetary Fund and it establishes the International Bank for Reconstruction and Development, about which in this debate I think far too little has been heard. So far as the International Monetary Fund is concerned, we have been assured—and if I understand the meaning of English we have been assured rightly—that this does not involve our going back to a rigid gold standard again. On the other hand, it does give us some prospect of stability of exchanges. Now if, in the future, we are really to increase our exports to the extent to which we hope, do we not desire some reasonable stability of exchanges? True, if we will, we can depreciate our currency if we are not tied in this way. But so can anybody else. I suggest to your Lordships that almost the first condition, the first prerequisite, of our increasing our export trade is that there should be stability of exchange and multilateral trading. One other thing. We have always had some apprehension—let us be quite candid about it—that the United States might not play the part of a creditor nation; she might be only too willing to go on exporting and unwilling to allow imports. In this document, with its provisions which

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allow discrimination when the currency becomes scarce, you obtain, to my mind, the best safeguard you can get against that.
Finally, we come to the Financial Agreement. I had not had the opportunity of seeing Lord Keynes. When I am in doubt or difficulty about these matters I always make a habit of going and seeing Lord Keynes if I can but I had to make up my mind without seeing him, and I confess there were paints in the Agreement that worried me. I felt strongly that the amount of money was not enough; I felt that the interest payment should not have been there at all; I hoped for a grant and, quite frankly, I was concerned about the convertibility of sterling in such a short time a; some fifteen months. I therefore had considerable doubt in my mind as to what course I should take. If I had heard the speech of Lord Keynes, I confess I should have had no doubt at all. But I had to make up my mind before I heard that speech. I asked three questions, and I think they are the questions that any of your Lordships who are in difficulty about this matter would ask. I said, first of all, suppose we refuse this, what will be the effect on foreign affairs generally; secondly, what will be the effect on the Commonwealth and Empire if we accept; and thirdly, what will be the effect on ourselves it we reject? I suppose those are the three questions which anybody wants to have answered to his own satisfaction before he makes up his mind on the subject.
With regard to foreign affairs, I have talked this matter over with many people who know very much more about foreign affairs than I could ever hope to know, and I found an absolutely unanimous opinion that the effect of rejecting this proposal would be disastrous to the idea of collaboration between ourselves and the United States of America. If we cannot collaborate with the United States of America who, after all, speak our language, if we cannot get on with them, then surely we shall not be able to get on with any foreign nation. I believe it to be absolutely a fundamental matter for this country and the United States that we should keep in step in the years to come. It was because we got out of step in the years between the wars that all these things happened. Let us see that this
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does not happen again. There is nothing in our friendship, in our collaboration, which is in any sense exclusive; it does not prevent other people coming in with us; but the fact that we are there together is a powerful magnet which may attract other people to operate in what we believe to be the right way. Therefore I ask if any of your Lordships doubt that that answer was the right one.
Then I was deeply concerned about the possible effect as between ourselves and our Dominions, because, after all, we in our British Commonwealth have made the most practical contribution to a world organization which anybody has yet made, combining working together with complete freedom. What would be the effect there? I leave my noble friend the Leader of the House and Secretary of State for the Dominions to deal with that matter in a much more authoritative way than I can. But once we have established that if they come into this discussion they come in completely free and unfettered to do what they think right, I will ask you to consider with me what was said by the Chancellor of the Exchequer in another place (which again has not been contradicted) about that great Dominion of Canada which has meant so much to us and whose assistance has been so valuable to us in this war. He was moving the same Motion as I am now speaking to. He said:
"If the Motion which I am moving were to he rejected, this would mean a grave embarrassment to our friends in Canada, who look to their earnings from the sterling area to cover their deficit from their trade with the United states. And Canada has been particularly generous in her help to this country during the war. We should ponder, once and again, before we take any action which would cause distress and disappointment in that Dominion."
I am sure that your Lordships in all quarters of the House would indeed ponder again and again before you took any action which was likely to distress Canada.
The third question to which I wanted an answer was, what would be the effect on this country if we refused the loan? I say quite frankly that I am quite willing to go through a few years of austerity —super-austerity if you will—rather than mortgage the future altogether. Let me recall to the mind of the noble Lord, Lord Woolton, the words of one whose opinion we have both learnt to value. I

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refer to Sir John Anderson. In all the discussions we had about this sort of topic—and we did have them in the old Coalition days; we did not fail to foresee that this sort of difficulty might arise—I am sure the noble Lord will agree with me when I say that Sir John Anderson seemed to have a very considerable grip of the whole subject. What did he say on this topic in his speech in another place a few days ago? He said, referring to what would happen if we refused this loan:
"… we should then find ourselves running through our meagre resources at a most alarming rate. That would compel us to impose on our people at home a degree of austerity never before imagined, and to give a priority to essential foodstuffs over raw materials and equipment"—
I stress those words, "to give a priority to essential foodstuffs over raw materials and equipment"—
"which would be disastrous from the standpoint of the establishment of our exports. We might even, after a time, conceivably build a new economy on the basis of the Empire, or on some group of States, but only if the countries concerned were willing to share our fortunes and our sacrifices, and, in my view before that opportunity arose, they would, in all probability, have broken away."
That is the statement of a man who is accustomed to weigh his words.
I asked for some further information. I do not regard austerity in foodstuffs as being primarily the most important thing. We should be, however, unable to maintain anything like the existing level of food consumption. In the case of sugar, we depend upon large supplies from Cuba and the ration would have to be heavily reduced. The distribution of tinned milk, milk powder and dried eggs would have gradually to come to an end as stocks became exhausted. We should have great difficulty in importing sufficient maize to build up again our production of meat and dairy produce in the United Kingdom. We depend upon the United States for 80 per cent. of our tobacco supplies. Cotton from the United States forms the basis of a considerable part of the Lancashire industries, and complete substitution of other types would be impossible; even for that part of the field where substitution is possible adaptation of machinery is necessary and this process would inevitably slow down the recovery of an industry which, of all other industries, it is most urgent rapidly to expand.
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I will not trouble your Lordship with a list of other commodities, such as timber, plywood, steel and a large number of chemicals. Failure to supply some of those commodities would have delayed the building programme. There would have been a difficulty, at least a temporary difficulty, with regard to petrol. But far more important than that, to my mind, would have been the necessity to concentrate on foodstuffs and to let go the equipment which alone is going to regenerate and revitalize our industries and get us started again.
I go further. If we are concerned—desperately concerned as we must be—to make ends meet, how can we hope to play the part of a great Power in the world? How can we hope to look the United States and Russia in the face? We have considerable expenditure in the Middle East, in Palestine and in Egypt; we have to support Armies there. If we are in desperate straits to make ends meet we will have to content ourselves with sinking into the role of a second-class Power.
I do not say those points are of primary importance; there are other matters which may be of greater importance, and I think there are. Quite frankly, what affects me even more than those considerations is the fact that we should bang the door on the first attempt at international cooperation. I have told your Lordships what I heard and the answers to the questions which I asked. I submit that the questions I asked were the right questions and when I heard the answers I came to the conclusion that, although, quite frankly, I would have liked to have seen different conditions in this Agreement, I should not be doing my duty if I failed to support it.
My noble friend Lord Woolton, in the course of his speech yesterday used what he described as strong words. He did. He said that there is no harm in using strong words—and there is not. He said that the Americans like strong words—perhaps they do. But I prefer strong words if they are followed by strong actions. I do not like strong words and weak actions. If the noble Lord really thinks that this transaction is a degradation, if he really thinks that this is a cringing policy of appeasement, surely his course is clear. He describes himself as a financial Puritan. My Lords, Puritans went to the

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stake for their beliefs. If the noble Lord is really such a Puritan, and really believes these things, then, if this is such a degradation as he thinks, I expect that we shall find him in the Lobby voting against these proposals. But, as I do not believe that this is a degradation, as I believe that it offers us a real chance of international cc operation, and gives us not an easy task, I agree, but a task which will call for the very best in every one of us, and which does give us a chance, I ask your Lordships to support the Government by voting for this Motion.
4.11 p.m.
VISCOUNT HAILSHAM: My Lords, I do not intervene in this debate in order to advise any of your Lordships to vote against this Motion, but I hope you will forgive roe if I take the opportunity to state my personal position. I have been a supporter of the late Joseph Chamberlain's policy of Imperial preference throughout my political life, and I was one of the delegates to the Ottawa Conference, which established Imperial preference as a key-note of our Commonwealth policy. My noble friend Lord Bennett was one of the main architects of the success of that Conference. I do not want to depart in any degree from that standpoint. On the other hard, I do not wish in any way to criticize or to attack the United States for driving a hard bargain. We were the suppliants for a loan, and it was for their free and unfettered choice to lay down the terms on which they were willing to grant it to us. I know that they have shown themselves capable of unexampled generosity iii Lend-Lease, and I do not suppose that they feel themselves called upon to support a Government whose Party Chairman criticizes violently in America their form of social structure and their Government, or to lend money which they believe will be thrown away in a Socialistic experiment.
I am not going to discuss the pros and cons of the Bretton Woods Agreement, which others are much more competent than I am to determine. I am, however, concerned about the possibility of repaying the stipulated amounts of the loan. I remember the arrangements made by Earl (then Mr.) Baldwin in 1923. At that time we found ourselves unable to keep up the stipulated payments, and we were far richer then than we are now. I feel
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very doubtful whether we can comply with the stipulations in this Agreement, although I am reassured by the opinion of my noble friend Lord Keynes, whose brilliant speech was most interesting on that point.
There is one item in the Agreement which gives me very many qualms. Your Lordships will remember that it is part of the bargain that we declare ourselves in full agreement on all important points in the commercial proposals, one of which is the elimination of Imperial preference, accept them as a basis for international discussion, and pledge ourselves to use our best endeavours to bring such discussion to a successful conclusion, in the light of the views expressed by other countries. We expressly declare that these negotiations will relate to tariff preferences and so on, and that they will proced in accordance with the principles laid down in the American document. I confess that I do not share the view of the Lord Chancellor that that Agreement leaves us completely free in the negotiations. I am more inclined to feel the same qualms as my noble friend Lord Bennett felt about that.
As I see it, there are at present three outstanding Powers in the world—the United States, the Union of Socialist Soviet Republics, and the British Commonwealth and Empire. The United States have absolutely free trade among themselves, and so have the Republics in the Soviet Union. They are at liberty to impose such restrictions as they think fit, without limit, on other countries, while granting to their own members what is in fact unlimited preference. On the other hand, we in the British Commonwealth express ourselves by this document as in full accord with the ultimate elimination of tariff preferences. We seem to agree in the meantime not to increase any margin of preference on any product, and not to introduce any new preference whatever. We agree to facilitate access by all the nations of the world on equal terms to the trade and to the raw materials of the world which are needed for their economic prosperity, and we agree that these provisions shall apply to everybody's Customs territories, and that if any member has more than one Customs territory under its jurisdiction, each such territory shall be considered a separate member for the purpose of applying these proposals.

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It seems to me that this ingeniously excludes from these provisions trade between the different members of the Soviet Union, and also trade between the different States of the United States and between the United States and its Dependencies, but includes trade between us and our Dominions, and I think also trade between ourselves and our Colonies, so that, as was pointed out yesterday, the United States is at perfect liberty to grant absolute freedom of access to its market to Porto Rico and probably to Cuba and the Philippines, whereas we are precluded from giving any preference to the West Indian islands in our markets.
Since the Ottawa Agreements, and up to the beginning of the war, trade between this country and the Dominions has very largely increased—I think by about 75 per cent. in volume—and in the present conditions of the world the Colonies are very largely dependent on their preference in our markets for their very existence. I realize that the Americans have largely increased their factories during the war, and that they are very anxious to secure British markets so as to ensure full employment for their people, but I do not think it is reasonable for us to agree that such employment should be secured at the expense of our trade, or by enabling the United States to supplant our products in the various markets of the Empire, and by preventing us granting our Colonies preferential terms in our own market. I am all in favour of the policy of full employment in the United States, but I do not want to see it realized by exporting unemployment to our people. Sir Stafford Cripps, on a recent occasion, exhorted us to attain strength through misery. I am afraid that this Government, by these Agreements, is establishing a reign of weakness through misery.
LORD PAKENHAM: Can the noble Viscount give us the reference to that? That point of view was attributed to the President of the Board of Trade, but I have no recollection of his having used that expression.
VISCOUNT HAILSHAM: I am afraid that I had not prepared myself with any quotation.
LORD PAKENHAM: If I may correct the noble Viscount, I believe I am right in saying that it was Mr. Winston
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Churchill who, quite erroneously, attributed that point of view to Sir Stafford Cripps.
VISCOUNT HAILSHAM: I do not accept the words "quite erroneously." I think that probably Mr. Churchill was well justified. On my understanding of the matter I do not think that strength through misery is what is going to be achieved. I think that "weakness through misery" is likely to be the ultimate result. I realize that this country is very tired, and that if we do not accept this loan on the terms on which it is offered to us, we shall have to face a prolonged period of austerity; but I, personally, believe that that is a price which is well worth paying in order to preserve our rights in the markets of the Commonwealth and Empire, and our rights to give other nations of the Commonwealth and Empire a preferential treatment in our own markets.
Mr. Winston Churchill, when he negotiated the Lend-Lease Agreement with the United States, was very careful to stipulate that the Agreement did not affect our Imperial preference, and he announced that he was not proposing to preside over the liquidation of the British Empire. I am profoundly relieved by the statement made yesterday by the Leader of the House, endorsed as it was by Lord Keynes, who said not only that he accepted that point of view but that the Americans had been told of it before these Agreements were published. Therefore, I do not think that I am entitled to vote against this Motion, for three reasons. The first is based on national grounds. I do not think that it is fair to the Government, who have been charged by the electorate with the responsibility for the conduct of our affairs, to deny them a loan which they regard as essential for their recovery. Secondly, on grounds affecting this House—I think that the rejection of this loan after it has received the endorsement of the House of Commons by a majority of more than three to one would be to challenge a conflict between the two Houses, with the Peers charged with insisting on the infliction on the people of a period of unexampled austerity. Thirdly, on Party grounds, which have been very much emphasized by the Lord Chancellor in the remarks which he has just made.

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I believe that this Government have given a display of mismanagement and muddle which, ultimately, the electorate will realize—in housing, in aviation, in demobilization, in bureaucracy, in interference with trade, in neglect of their plain duty of trying to rebuild our;battered economy, in the pursuit of the will-o'-the-wisp of Socialism. In all thee things they have earned—and I hope that they will ultimately receive—the condemnation of the country. I do not think that we ought to give the Government the opportunity, of which I am quite sure they would take full advantage, of escaping the consequences of their own mismanagement by throwing the responsibility upon the action of the Peers, who, they would say, had prevented them from carrying out their policy and from obtaining the loan which would have enabled them to cure all our troubles. I am confirmed in this decision not only by the Lord Chancellor's anxious provocation c f Lord Woolton, but also by the knowledge that this decision has the emphatic approval of all out Leaders in both Houses.
4.25 p.m.
LORD LINDSAY OF BIRKEIR: My Lords, may I begin by asking they indulgence which I know is always accorded to a new speaker in this House. It is difficult, in any case, to intervene and speak for the first time in a debate of this far-reaching scope and importance; all the more because I fear that I and other noble Lords, who are going to speak later, have had a lot of our eloquence made unnecessary by the able speech which was delivered by Lord Keynes at the beginning of this sitting.
I rise only because I have two concerns which I wish to express. I hope to put them very briefly. The first concern is about the effect which the decision we take to-day, the way we make it, and, perhaps, more the way we express our feelings about it, is going to have on our relations with the United States. I do not mean for a moment that we should not be perfectly frank with the United States and say what we think, if we do think that they have driven an uncommonly hard bargain with us. In some ways, I think that they have And I think it is all to the good that this debate has taken place, and that it should be made dear to Congress—when this comes before Congress—that if we accept
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this scheme it is just as much as we can possibly do. If I may follow up a remark which was made by Lord Bennett, I would emphasize that if they charge up the terms, well, we on our side have made our bargain, and if our bargain is not respected, the situation is changed.
I think that Lord Woolton was right, feeling as he did, to use the language which he did use. I always found in the States that people there prefer you to talk as you think. Americans are most suspicious of some British speakers—not humble and ill-mannered Scots like myself, but those gentlemen from the South of England who are apt to be—I cannot quote the exact American phrase, but this is what it means—so infernally polite that the Americans never know what they are thinking. I am sure, in view of my limited but still fairly wide acquaintance with the United States, that if we adopt the habit of speaking about the United States with something remotely resembling the frankness which they always use when speaking about us, our relations would be very much better. I do not intend to criticize, for a moment, the way in which my noble friend Lord Woolton talked yesterday. It is not for me, a new boy, to say what I think about his conduct. But I can think—and I do think.
In my view, we ought not to be concerned too much with the view of this being a hard bargain. I think it would be a very great pity if we accepted this with resentment and rather sullen bitterness in our hearts. The first reaction of a lot of us I believe was the same as mine when I first read these terms. But, even before I heard the speech of Lord Keynes, I came to see—and I am sure that "see" is the right word, not "think"—that that reaction was unjust. I know what it was that did most to put me off; and it is clear that it did most to put off a large number of other noble Lords, especially a large number on the other side of the House. I am not a friend or an adherent of Colonial preference. That no doubt is a dreadful thing to confess, but it is true that I am not. But it perhaps makes it all the more emphatic when I say that when I heard Americans making snooty remarks about that poor little preference of ours, I thought it was about the limit, and I still think so.
I think that one of the difficulties about the relations between these two great

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countries which we both inherited from our common spiritual ancestors, the Puritans —already mentioned in this debate—is the habit of looking down with ineffable superiority on other people. When we do that to each other it is really more than we can bear and when the Americans do it to us it riles us very much indeed. The kind of impression we have got of these negotiations, of the Americans looking on us as people who did all kinds of wicked tricks and using their powers to make us very good children, was very hard to bear, considering the facts. But I suggest that that is not the point. The point is that we are being asked to co-operate with America in a task of enormous importance and hopefulness, and we ought to say to them: "We are prepared to come in on this. We welcome your initiative." We are, I am sure, rejoiced to hear to-day from Lord Keynes that that is the view of the Americans, that they want us to be able to cooperate in the world market. I think it is important to say "We welcome that, we are prepared to co-operate and we will do our very best, but you are making it a bit hard. Because you are making it a bit hard we now insist that where these terms can be interpreted in our way"—and there are many places where they can —"we propose so to interpret them."
I do not think any useful purpose is served by mutual recriminations on both sides of this House as to whether other people could have made a better bargain. The Middle West distrusts Socialists and it also distrusts the feudal aristocracy by which it believes this country is governed when a conservative party is in power. Colonel McCormick thinks we are the right people with the wrong opinions, but the noble Lords on the other side the wrong people with the right opinions. It is really about six of one and half a dozen of the other. Let us face it, and face what is more important. The difficulties arise from something which is quite fundamental in the American constitution and way of thinking. We must face it. The fact that the Government of this country decides on a policy is a strong reason for both Houses of Parliament in following the Government's lead. The fact that the American Administration decides on a policy is a reason why Congress should not do it. Therefore all negotiations have got to go on with the
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Administration—and the American Administration seems to me to be an enlightened Administration—with the bogy of what Congress may do in the background. You cannot exaggerate that difficulty. I think the gratitude we owe to Lord Keynes for what he has done in facing that difficulty is very great indeed. In so far as we look forward, it seems that we must face the facts of co-operation with America in the future. We shall have the same trouble again and we must try to he patient and understanding about it.
The only thing I wish we had done was to make up our minds last year about Bretton Woods; that we had been perfectly definite and had said: "We can do Bretton Woods on these terms and no others." That might have helped Lord Keynes when he was confronted with the American negotiators, when he was confronted with their particular Jorkins, to say that we had a Jorkins of our own. But that cannot be helped and the milk is already spilled. Why I think that we must support these arrangements at almost any price is that this world is going to be ruined unless America can learn elementary sense in international economics. So long as the United States can go on thinking that they can have a large export surplus and refuse to be paid in anything but gold, disaster is inevitable sooner or later. That will be like an economic atomic bomb and I really believe that all our differences in face of that are neither here nor there. We should consider that and ask ourselves what reasonable chance there is of converting the United States to seeing that their old policy of a high tariff and trying to export a surplus is a ruinous one.
I rejoiced to hear this morning from Lord Keynes that he thought that quite considerable way has been made with that, that the American Administration is converted. I do not suppose for a moment that the great mass of the American people have been converted. You do not change a religion that dictates common sense as quickly as all that. A high tariff has for many years been regarded like a religion by many people in the United States. "If you had asked Hilary Vane," it says in that charming novel by the American Winston Churchill, Mr. Carew's Career, "what he believed in, he would have said that he believed in a high tariff." When I heard Lord

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Croft speak about Imperial preference, I felt his emotions were a faint shadow if what the Americans felt about their high tariff. Therefore things are hound to take time, but we have really got the beginning of an organization to deal with them. We have got an organization under which dollars may become a scarce currency and we have got a whole process by which there is for the first time a really good chance—and I do riot put it higher than that—that America may learn this elementary lesson in t me.
Noble Lords opposite have said "Are you sure?" I think nobody can be sure but it seems to me that everything that could be done towards it is being clone. It you refuse these proposals then everything goes and you push America back into isolationism and economic isolationism. We did not like it last time and it now going to be infinitely worse. For that reason, if these proposals about the financial arrangements were worse than they are, I should think that almost anything was worth doing which presented a chance of converting the United States and seeing that we are not going to have that frightful catastrophe again. Therefore, I repeat that what we want to say to the United States is "Yes, we are ready to co-operate." We also want to insist that these proposals do allow of various interpretations, and that we have our own interpretation. That, I hope, has come out in this debate and in the assurances given about Imperial preference by various Government aid other speakers. Therefore, do no: let us take this White Paper about proposals for financial reconstruction and proposals for consideration by an international conference on trade and employment as if it were a Bible or, still less, as if it were a legal document. It is not that; it is a programme.
The other thing you have to remember is that it is written in Americaneze. A nice, witty remark of Oscar Wilde was that the English and the Americans have everything in common except their language. That is not quite true, but there is something in it. May I make that point specific by taking a particular instance of the ambiguity—I am prepared to say the blessed ambiguity—on page 8 of this document:
"Members engaging in State trading in any form should accord equality of treatment to all other members. To this end, members
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should undertake that the foreign purchases and sales of their State-trading enterprises shall he influenced solely by commercial considerations, such as price, quality, marketability, transportation and terms of purchase or sale."
The terms of your purchase and sale are only to be influenced by the terms of your purchase and sale. What a blessed document!
But the point is simple. Is this going to allow a Kenya tobacco planter to get a stable price from an agricultural point of view? If to be subject to commercial considerations you mean the world price or the world market at that time, the unfortunate Kenya tobacco planter could. perhaps, afford to grow tobacco if dollars were a scarce currency, but when they stopped being scarce he would be ruined. If that is what it means it can be no good. But it can, just as well, be interpreted the other way. Even the hardest-hearted commercial business man would think it commercial policy to keep your customer alive. It is even commercial policy to say, "If you are going to go on trading with me, I will give you slightly better terms than if you came into the shop." Even I—we all have to do these things to-day—if I go to the grocer that my wife used to go to in peace-time, some times find something under the counter. That is not un-commercial; it is commerce. What I want to impress upon the noble Lords is that there are quite clearly different constructions to be put on this document. It would be a very bad thing if there were not. It would be quite impossible for the British with their way and the Americans with theirs to have all this put in the same language. What we have got to do, and what I am sure the Government are going to do, is to have our own interpretation.
May I say one last word about Russia? It was mentioned by the noble Lord, Lord Keynes, and is had a charming but slight bouquet from the noble Lord, Lord Croft, yesterday. Surely, the trouble about the world at present is that of the three great Powers most concerned in this co-operation, two of them are just emerging from isolation and isolationism. Both America and Russia distrust one another profoundly, and both of them distrust us a little bit because we have been playing this game so long that they think we arc so clever that we shall deceive them. Therefore, the situation is not easy. I

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profoundly believe that the British way of life and what it stands for is not, and never will be, that of Russia or the United States, but something far greater. Unless we have and retain a view of our own, and unless we have an interpretation of our own, we shall not be fulfilling our great task. But, inside these great documents, there is room for us so to behave, and I cannot believe that, ultimately, your Lordships, on whatever side of the House you sit, will refuse what seems to me to contribute to the manifest world destiny of this country.
4.45 p.m.
LORD BALFOUR OF INCHRYE: My Lords, I count myself fortunate to-day in being privileged to extend to the noble Lord, Lord Lindsay, congratulations on behalf of all your Lordships who heard his speech. I would congratulate him on its subject matter and add how glad I am sure your Lordships arc that in future we shall have the wisdom, the knowledge, and the learning which he brings from his university city. We all look forward to future contributions from the noble Lord.
For two days now we have had a debate in this House and there has been a debate in another place for, approximately, three days on the three-fold proposals contained in the Resolution on the Order Paper to-day. It is indeed strange that there have only been found two noble Lords able to accept wholeheartedly the proposals contained therein. Indeed, all noble Lords, not excepting the noble Lord, Lord Keynes, have been frank in their criticism, which has been continuous and widespread. We have had criticism of the harshness of the terms and criticism of the pity that the global sacrifices of this country have not been accepted in the way we had hoped as compared with what we think have been the sacrifices of other nations fighting the common war. There has been regret at the necessity for these proposals, and there has been fear of the consequence if we do not accept them. Also, there has been fear of the consequence if we do accept them. These, and many other points, have been the targets for criticism except for the two speeches which were full of praise.
I must say I was intrigued at the role of the noble and learned Lord on the
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Woolsack. He called himself the "happy mind of the man in the street" which was easily satisfied when he had read the document and had asked himself three simple questions and given the answers to himself. The other speech, which was full of satisfaction, was that of the noble Viscount, Lord Samuel, who, unfortunately, is not now in his place. I believe there is in existence an early phonograph record of the voice of Mr. Gladstone and that you can still turn on that record and hear the voice boom forth. I must say when I listened to the noble Viscount, Lord Samuel, it seemed to me that he had just come fresh from such an audition and had paused at the statue of Mr. Cobden on the way. But when all criticism has been made and debate is stilled, I gather that the Opposition side of the House is to be advised by my noble friend Lord Cranborne to abstain from voting. I understand that that will be on two grounds: first, because there is a lack of alternative to the acceptance of the loan together with the gloomy picture that has been painted in many directions as to what will happen if we do not accept it. I hope a little later in the few remarks I shall make to your Lordships to show that there is another side to the austerity that the Lord Chancellor painted in that word picture. The second ground is that of political expediency, because the Opposition in the Lords must not be accused of the responsibility for more austerity for the nation and we must not be allowed to provoke a constitutional crisis. It is because I am unable to accept to-day either of those two contentions that I speak for myself and from these Benches this afternoon.
To-day we have in front of us two proposals, amongst others, on the Order Paper: the first is the Resolution in the name of Lord Pethick-Lawrence, and the second is that for the Second Reading of the Bretton Woods Agreements Bill, which I understand we are going to take. I want to ask what happens if we pass the Bretton Woods Agreements Bill but are not prepared to approve this Resolution. Let us look, for a moment, at what are the issues in the situation. What are we discussing? We are being asked to pass a vote of approval of the loan and of welcome to the agenda for a commercial conference, because that is broadly what the document is, and also we are being asked to approve the

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Bretton Woods proposals. I think we are entitled to ask the Government for some fu7ther light upon this further. The Lord Chancellor touched very briefly upon the point, but was careful not to make nay positive declaration.
As I understand it, provided that we do not object to the Bretton Woods Agreements Bill, this House would not be blocking any legislation, nor would it be holding up any action should the Government wish to take such action. We should, in fact, be denying that vote of thanks to the Government which they have cone to this House to ask for in respect of an instrument which the Executive have already signed, within their rights, and with which they can proceed without approval of either House of Parliament, should they so wish. The Government have asked for the approval of both Houses of Parliament, and it is obvious that the approval of the elected Assembly is necessary; but if this House likes not to give approval, the Government would proceed, within their own rights, without taking any notice at all. I would ask the Government if they take the view that we are debating to-night two issues: a welcome to the proposal, and thee. the Bretton Woods Agreements Bill. If we do not object to the Bretton Woods Agreements Bill—there i no proposal, so far as I know, to divide against that Bill—would the Government consider that a lack of approval by this House, with no force behind it to make the Executive do anything at all about the opinion of this House, would provoke a political crisis? I think we are well entitled in this House to know. There are many noble Lords who do not wish to provoke a political crisis but, on the other hand, are very determined not to give this welcome which the Government ask for in regard to proposals that they feel will be to the detriment of this country and the British Empire.
I hope that we may have from the noble Lord who replies a clear statement. I am sure the noble Lord who replies will not take refuge in the defence of saying: "Vote at your peril, and we will then WI you what are the consequences of your vote, should your Motion be carried." That would be most unfair. What we ask is how the Government would take a Motion refusing approval, which I repeat has no executive force behind it. Your
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Lordships' House has been described as many things, but it was described by one of the Socialist candidates at the Election as "an impotent adjunct to their political heritage." Would an expression by a body described in those terms be considered as provoking a political crisis? I submit that we are entitled to ask whether that is so, in order that those noble Lords who do not wish to provoke a crisis can go into the Lobby and register their approval or otherwise.
We are conducting to-day our debate at a disadvantage. All noble Lords, whether they be in favour of or against these proposals, must admit that we are dealing in very general terms with many imponderables, on which sincerely different views are held-and varying interpretations are given to vital sentences in documents affecting the economic welfare of this country. But in one quarter there is no hesitation, there is no doubt as to what is meant. In the United States there is no uncertainty of purpose, there is no confusion of issues, there is no ambiguity in their determination as to what they are going for. The noble Lord, Lord Keynes, speaking this morning, said that we might be doing a serious injustice to the liberal hopes of members of the Administration. But the Administration is responsible to Congress, and Congress is sensitive to United States public opinion, and, as the noble Lord, Lord Keynes, said in his following words, the Administration found themselves unable to put forward proposals for a free gift because they knew Congress would not look at any such proposition by the Administration. You have only to read the American Press and the declarations of American business men. They show two things: first, that they declare that the pound will be linked to the dollar, which in turn is linked to gold; and secondly, that they make no secret of their wish and determination to burst right open, once and for all time, those Empire markets which have been our main preserve, and upon which—
LORD KEYNES: It is exactly the opposite. They complain that it is not a return to the gold standard, and not linking sterling to dollars. That is their complaint.
LORD BALFOUR OF INCHRYE: If the noble Lord would read the varying opinions in the American Press which I have been reading, he would find there

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are many who are saying it is linking the pound to the dollar. I shall have pleasure in sending the noble Lord some. I have a cutting here from the Daily Telegraph which says that the Secretary of Agriculture of the American Administration says that the British purchases of American agricultural products might in fact prove an important factor in preventing farm surpluses. There is no doubt at all that the American agriculturist has, quite rightly and naturally from his point of view, got his eyes upon those markets that have been our chief preserve in the years past, and in which lie, I believe, our chief hopes for the future. I believe, as Lord Keynes said this morning, that there are speaking to-day two voices, 3,000 miles apart, on matters which brook no misunderstanding, which permit of no vague but convenient political generalities. I could not agree with the noble Lord, Lord Lindsay, when he said he was glad there was ambiguity in these documents. In order to avert misunderstanding in the future I think the one thing we want to avoid is two interpretations by two nations 3,000 miles apart.
I would like to put to your Lordships that we are to-day at the parting of the ways. We have got to decide in this House whether we are going forward with an Empire policy, in partnership and friendliness with the rest of the world, or whether we are going forward with an internationalist policy. This country, with its 48,000,000 people, is, as the centre of the Empire, a great Power, but as a unit alone it is nothing but a small country in Europe. Our greatness lies in the fact that this country is the centre of the Empire. I believe that before we take the step to which this Motion will lead us we should most certainly look to see whether there is some alternative. I should like, for a moment, to deal with the argument of greater austerity which, until the noble and learned Lord, the Lord Chancellor, spoke this afternoon, had always been expressed in very general terms. The advocates of the acceptance of these proposals, who based their arguments on the fact that otherwise much greater austerity would have to be imposed upon the country, have all been careful, until the noble and learned Lord Chancellor was good enough this afternoon to give us some particulars, not to get down to specific items.
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I would submit that there is another side to the argument. The Lord Chancellor picked out certain items, but Empire statesmen have declared their willingness to make a great and combined effort with this country in order to make up the deficiencies which would occur should we not accept this loan. Before the war Australia sent approximately 75 per cent. of her produce to this country, and New Zealand sent 95 per cent. India sent 30 per cent. of her cotton and jute to Lancashire, with but very little to the United States. I wonder whether those countries will find an equal acceptance in the United States or elsewhere of those primary products should they not have this market as free to them in the future as it has been in the past.
From the United States we get 8 per cent. of our total imports of grain and flour, 8 per cent. of our total imports of fresh fruit, 20 per cent. of our total imports of other food, including sugar, dried fruit, lard and canned fish, and 55 per cent. of our total imports of cotton. The Lord Chancellor mentioned cotton, but surely we have, as is known by several noble Lords who were in the last administration, large cotton stocks which would tide us over for some considerable time while we were increasing the production of Empire cotton. The tobacco position is admittedly grim, but as the noble Viscount, Lord Bennett, said, the Empire can grow all the tobacco which is required. I will not weary your Lordships with further figures or multiply the examples I have given. All I would say is that an examination of the imports from the Empire before the war shows that the position is not so hopeless as those who bring forward the greater austerity argument would have you believe.
The point of Imperial preference is, I believe, a moral as well as a business issue. I cannot accept the view that cash alone motivates reciprocal trade between the Mother Country. the Dominions and the Colonies. Empire ties are close and deep; they are not always expressed in columns of figures, as will be known to those of your Lordships who have travelled the Empire, particularly if they have not travelled as Government V.I.Ps. Imperial preference is the corner-stone of our economic structure. The intentions of the United States are clear, definite

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and justifiable from their angle. It is all very well for the noble Lord, Lord Keynes, to say that the American State Department has a low tariff viewpoint, but as he has himself admitted, using the point in another connexion, whatever the liberal-minded members of the Administration of the United States may think, Congress and public opinion are the final masters there, and they have not shown any indication yet that on the long-term view America will ever be a. great importing country. If through the proposals American industry can get the all-clear, an Imperial preference, it will march into what has been tour best field of endeavour and wherein, I believe, lies our best hope for the future.
How far are we committed to a policy of elimination? Whether we go to the commercial conference with our hands free or committed in principle to the elimination of Imperial preference has been debated at length. I do not propose to refer to any of the quotations, which have been oft repeated, of the Prime Minister, Sir Stafford Cripps, and of Lord Pethick-Lawrence in this House yesterday. I would like to read one passage from the speech. in the debate in another place, of Colonel Stanley, who came fresh from the Colonial Office. This is what he said:
"Imperial preference is now classed with the other forms of discrimination which are regarded as economically anti-social and which have got to be eliminated."
The written word is what counts, and the written word shows we are committed to consideration of the elimination of Imperial preference.
It is the attitude of mind to the written word which is the second most important point, ant. there does exist the attitude of mind that in an international world there is no place for the British Empire and for Imperial preference, and that eventually, in the long run, they should be eliminated. The noble Lord, Lord Pakenham, speaking yesterday, said:
"I think even our bitterest critic. 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."
"Might count," "would be extremely unlikely! Surely, in considering a
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policy which might mean the extinction of one of our Colonies from an economic point of view, one ought to use far more definite language than "might count" or "it is unlikely." It is that of which I complain in the attitude of mind with which we are going to approach the commercial conference.
Whatever we may say, in the United States they see clearly what they want. Can anybody foresee that in the future we are going to be in any stronger and better bargaining position than we are to-day? No, my Lords; we shall have to accept this loan and we shall in all probability be in difficulties over the rapid convertibility if Britain at this hour and in her present position, with her skilled, expert and determined negotiators, has been, as it were, pushed around, how can any of us say she will fare better in the months to come? That is why I feel it is a dangerous thing to debate this issue here ignoring the fact of what is going on in America, ignoring what is the clear and determined purpose of those on the other side of the Atlantic.
I conclude with this remark. To-day I believe we are at the parting of the ways on Empire matters. If we do not make a stand now we shall retreat from position to position until there is nothing left in the years ahead. The question for each of us is: Are you for the Empire at all and every cost politically and economically, or are you not? I believe the issue is nothing more nor less than that. For myself, if there is a vote, I am prepared to answer, not by promoting a political crisis which I do not think need occur, or should occur, but by registering in a clear and positive manner my total inability to support, much less to welcome, the proposals in this Resolution which I feel will be, if accepted, the start of the downhill road for the British Empire.
5.10 p.m.
LORD RENNELL: My Lords, I should like to add to what the noble Lord, Lord Balfour of Inchrye, has said about Lord Lindsay. It gives me particular pleasure to be able to congratulate him myself, having sat at his feet in the days when he was my tutor, before the last war. I learnt much from him at that time, and so much do I feel the force of what he said that he has in fact taken away from me one of the points that I wished to make.

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I believe that the feeling which has been engendered by the White Papers and the Loan Agreement, presented as they were, is due more to mood and more to particular points, such as Imperial preference, than to the whole context of the documents when they are examined together. I find this mood a little difficult to explain. I do not wish to go into any of the criticisms which I feel, and I believe that the noble Viscount, Lord Samuel, when he spoke only in praise of the Loan and other Agreements, did not do so because he did not also feel that there were points of criticism and matters of difficulty. They have, however, been made so much of in another place and here, and dealt with in such detail, that I shall not weary your Lordships by referring to any of them. I will only say that I feel that some of the criticisms which have been made have been made from a mood which perhaps ought to have been dissipated, and would have been dissipated if a little longer time had been left for both Houses to consider the documents, before a debate took place upon them.
Speakers in your Lordships' House, and also in another place, have said that if our relations with America were founded on so tenuous a ground that they could not withstand the criticisms which have been made, then our relations must indeed be in a poor way; but I think that that is not perhaps the whole truth. There is a changer to our relations with America in speaking of these proposals as they have been spoken of. You have heard from Lord Keynes of the feeling which the Americans themselves have regarding the generosity that they have displayed in Lease-Lend and in other directions, and of the progress that the Administration itself has made away from what we might call the bad days of the World Economic Conference of 1933, and the economic isolationism which led to the breakdown of that Conference. If a nation or a body of people sincerely believe that they have done something which in their view is generous and enlightened, and is going to lead the nations of the world into a better state than that of which we had experience between the wars, then if all they get in return is to be told that they have treated us, their best and oldest ally, hardly, and that they have extorted terms
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from us which are unjust and unfair, that is something which may endanger our relations with America. In order to dissipate that feeling, I hope that the speakers who will conclude this debate will say that, at any rate so far as His Majesty's Government are concerned, there is no feeling of that sort, and that that mood, which was so prevalent in the country at the beginning of this series of debates, has been dissipated in great measure by what was said by the noble Lord, Lord Keynes, this morning.
There is one other point which I should like to make in the short time for which I propose to detain your Lordships. It has been said in many places, and it may indeed be said in the American Press, that another Government than this Government might have obtained better terms. To say that is to say that the American negotiators who were the opposite numbers of Lord Halifax and Lord Keynes have taken a partisan view of the negotiations which they have conducted, which is a most improper accusation to make against any foreign Government, let alone that of the United States. If there is anywhere a lurking feeling that that is so, our answer to that must now be, as it has always been, that His Majesty's Government and their policy are our business and no one else's. The way to show that is to support His Majesty's Government now over these proposals, and show that we at any rate feel that so far as third parties are concerned, His Majesty's Government are always His Majesty's Government.
This Loan Agreement and the Agreements connected with it are, as Lord Keynes and others have said, a whole. They are interdependent, though elements in the Agreements may be changed when we come, for instance, to discuss the International Trade Organization, which is at present only an agenda or a series of proposals. I would ask you to cast your minds back to the Bretton Woods debate in this House and in another place, when, apart from those who mistakenly assumed that the Bretton Woods Agreement was a return to the gold standard, the gravamen of the criticism was that it was putting, as Lord Keynes said, the cart before the horse to discuss a financial arrangement of that sort before discussing the trade agreement upon which it was

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dependent. It may be a pity that the Loan Agreement has been tied with Bretton Woods and with the International Trade Organization, but, had it not been tied up with those two proposals, would not that same criticism have been made of the Loan Agreement? Would it not have been said that, by itself, it was impossible to discuss it without knowing what was going to be done about trade? Alternatively, if the proposals for the International Trade Organization had been put forward without the Loan Agreement, would it not inevitably have been said, "These may be very nice proposals, and it is very interesting to see that the Americans have moved away from economic isolation towards multilateral world trade, but how can we participate in that without that financial assistance which is necessary?" And speakers of every Parry have agreed that that financial assistance is necessary.
When, however, those Agreements are all tied up together, the criticism is made that the Loan Agreement, instead of being a straightforward commercial agreement, is tied up with strings to two other Agreements which we may or may not and. which have come in, I think, for a great deal of unfair criticism on account of that mood to which Lord Lindsay referred, which has led us to criticize them all, irrespective of their individual merits. Leaving individual and particular points out of these Agreements—the Loan Agreement, Bretton Woods and the International Trade Organization—is it not possible to consider the whole of these Agreements as one, and to see whether on balance the whole is not so satisfactory that there cannot be any question of doubt about our accepting it? We have been offered by the protagonists of isolation and high tariffs, for the first time in history, a series of proposals which will make world trade and world Finance flow freely between the nations once again. The stream may not be clear and may not flow freely for many years to come, but at any rate these proposals have been made by America, hitherto the protagonist of the opposite view, to see whether it is not possible to achieve what we in this country have always wanted to achieve, and have been preaching to the nations of the world irrespective of Party for generation after generation yet now, because this has been offered to us by the United States in con-
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nexion with a loan, we turn and rend it with criticism and faint praise.
I, myself, feel not the slightest hesitation in this. It is not a question of facing a future of greater austerity if we do not accept these proposals; it is a question of facing a future of austerity in any event. But I have no doubt at all that with the good will which has been shown, and the mood which Lord Keynes has found in America, there is greater hope out of this complexity of Agreements and arrangements than I have seen since before the last war. And, in these circumstances, if, on balance, I feel like that, I must, unhesitatingly, also vote that way —if a vote is called for. In a matter of importance of this sort, is it necessary for me to remind your Lordships of the injunction on which we were all brought up, that on questions of this kind: "He who is not for me is against me." There are not three courses possible. I submit that there are only two.
5.22 p.m.
THE EARL OF PORTSMOUTH: My Lords, I would not rise to intervene after there has been so many speeches, and so much eloquence in these last two days, but for my intense personal conviction, as a Cross-Bencher, that this whole proposal for the loan is fraught with intense dangers for the future. My convictions are as strong as those of my noble friend Lord Balfour, who has spoken so recently. I should like to say also that, after listening to what struck me as being—except in a few cases—the mournful masochism of those who have supported the Bill and those who are going to abstain, I feel the same fell clutch at my heart which I had when I first read the proposals. I think it is a great pity that we did not remember the sententious advice of Polonius before embarking on this particular adventure, for one of the very deepest feelings that I have is that nothing is more likely —if this loan goes through with its attendant conditions, and is acted upon—than that we shall get on very much worse terms in our relations with the United States. I myself have always been, first and foremost, an intense believer in the unity of our own Commonwealth, in the necessity for our working together with our Colonies as a whole, and in the need for working with the United States, to the, utmost, for world

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peace and prosperity. But I believe that it is with our own people that we should start.
I am convinced, knowing—as Lord Keynes also knows—the feeling that prevails in America, and the ignorance that exists in the Middle West with regard to the actual conditions on our side of the world, that the Americans very rightly feel that they have made generous proposals. I am not quarrelling either with the rate of interest or the time of repayment, but it is the general conditions of the loan that, in my view, are fraught with perils and may lead to disaster. When I was in America two months ago, the embers of isolationism were being fanned by talk of the loan proposals. In one particular Isolationist newspaper, which has great influence in the Middle West, I saw Lord Keynes described as a "titled moocher," with whom Americans, it was said, would be very well advised to have as little to do as possible, because he might "outsmart" them.
It is not in the immediate future that I fear we are going to be confronted with the greatest danger as a result of relaxation of that generosity and good will which has hitherto governed the relations between America and this country. The time of greatest danger, I feel, is going to come anywhere from five to fifteen years from now, because "isolationism" and "disillusion" have almost the same meaning. Some time, in five or fifteen years from now, we are almost bound to have to call the waiver clause into operation. The men in the Middle West, and even from West of the Alleghenies, who have such a controlling influence on Congress and the Senate, are not going to be able to regard that waiver clause in the way that we see it. They will look at it in the same way that they looked at our defalcation under the Baldwin Agreement. And then, I am afraid, will be the time of danger when America may retire from co-operation for the benefit of the world. The danger will be all the greater by reason of the fact that she will do so at a time when it will be most important for us to stick together. That, indeed, will be the time of our great danger.
I could not help feeling that Lord Bennett had not had any valid answer
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to his very fine exposition of the dangers to Imperial preference in our own family of nations. You cannot get away from the fact that either we shall have to have Americans feeling that we have acted in bad faith if we stick to Imperial preference, or, on the other hand, what is far more dangerous, we shall find—because we are tied up with the loan, because we have already committed ourselves to discuss these things—that there are bound to be substantial reductions in Imperial preference which may be fatal to our future.
Surely—and in this I agree with Lord Bennett—one of the great troubles with which we are faced is due to the fact that it appears never to have been even in the last Government's minds, to have explored finally and fully—as we should have done from 1943 onwards, when the dangerous position into which we were likely to find ourselves at the end of the war, had become apparent—every chance of Imperial development and every opportunity for development of our own resources. I cannot believe, after fifteen years of study of the resources of the Commonwealth and Empire, and of our own home powers of production, that we have not the men, materials and the skill with which to build up a great stable foundation; because stability means beginning at the bottom. It does not mean putting a world edifice on the top and trying to build your foundations afterwards. I think it is necessary to begin with our Empire first and to continue afterwards with the other like-minded nations, and especially with the United States, which has already afforded us such relief in the war. Surely that would have been the honourable alternative, to have sought by every other means in our power to find a way of building up. If this Bill is passed, if we can use the utmost austerity in drawing upon credits while at the same time developing our own resources, I believe that we shall keep our self-respect with the United States, and that we shall be able to go as equal partners with them in the future. But if we draw to the utmost on that credit I feel that the danger to come will be such that it will be a dark day indeed for us in this country and the British Empire. If a vote is challenged, on my personal conviction I must go into the Lobby against it.
5.31 p.m.
LORD BEAVERBROOK: My Lords, I say to the noble Lord that there will be a vote. We will challenge the Government. They will perhaps defeat us because you will observe that they have got all the bankers on their side. This is a new phase in the development of the Socialist Party. They are united, the Socialists and the bankers, in their opposition to us! First let roe say that I do not criticize the Americans, at all for the terms they have exacted in making us the offer of this loan. Not a tit. I do not criticize the strings they have tied to it. It is my view that these terms arc quite reasonable. The interest charge of 1.62 per cent. is a new experience for this country. For my part I point no finger of blame at the Americans whatsoever either for the terms of the loan or for the strings they have tied to it, for when loans are generously offered, if you examine them deeply, the bankers will usually tell you that strings are tied to them.
Nor do I wish to criticize the Americans for wishing to impose on us the gold standard, They have got nearly all the gold in the world and naturally they want us to come in and help make good that gold in the world. Naturally they want us to introduce the gold standard to the Empire countries and to such countries as they may have when they have Britain joining in making their gold standard proposals. So I make no complaint about America advancing the gold standard as a condition of the loan so generously offered at 1.62 per cent. Nor do I deny their altruistic method of presentation of Bretton Woods. I am sure of the altruistic motive on the part of America. But the loan and Bretton Woods just do not happen to suit the economy of Great Britain and it is on that account that I develop my opposition. That is the reason for my criticism.
I deny that the terms are harsh. I do not think the conditions are stiff, and I hold to the opinion that the loan is reasonably offered and should be gratefully rejected! That raises the question with me, a question which was put to the House in the very excellent speech, with which I do not agree. of Lord Rennell, "Do members of this House think loans are unnecessary?" Yes, I think loans are unnecessary and I want to be allowed to state my case why I think this loan is
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entirely unnecessary at the present time. I do not think there is the slightest justification for it unless the justification is Bretton Woods. First of all, in order to make my case, I must ask you to be patient while I deal with some trade returns and in order to discuss them I must take those before the war. I have seen the statement of the present Chancellor of the Exchequer and also of the previous Chancellor of the Exchequer, Sir John Anderson, to the effect that we must have this loan, we must subscribe to Bretton Woods, because we need raw materials and foodstuffs that the Americans can supply. Well, there is a long-term loan and there must be, in consequence, a long-term arrangement.
The trade returns before the war have to he taken into account in part because we have imported in the past a considerable quantity of our foodstuffs from Holland, from Denmark and from Belgium. All these countries are coming into production again and once more they will bring quantities of foodstuffs to our Shores. Therefore, I must examine the American trade returns on the basis of 1938 and on that basis I will point out to you that we imported from the United States more than 5 per cent. and less than re-per cent, in grain, flour, wheat of all kinds and other foods. As to raw materials, we are told there were imports of raw materials from the United States. We are told that if we do not import cotton we shall go short. It is true that before the war we imported one-third of our cotton requirements from the United States and one-halt from the Empire, but we have now in stock a large quantity of American cotton, far more than we can use in a considerable length of time. It is estimated by those who are competent in the cotton market that there is a sufficient store of cotton on hand to supply our requirements for several years. If that statement does not conform to the views and opinions of His Majesty's Government I should like to hear a declaration on the subject, but I feel quite confident that the statement I have made, based on information given to me by authorities in the cotton trade, will prove to be justified by an examination of the figures.
Another raw material is tobacco. Here, without American imports, we should face a shortage without doubt and possibly we

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have to bring some American imports of tobacco to our shores for some little time. Great new tobacco growing areas are opening up. Canada is increasing tobacco production at an immense rate. In a few short years Canada will have doubled the present production of tobacco and without doubt Canadian tobacco is equal in quality to the very finest Virginian tobacco. I have that statement from one of the principal tobacco manufacturers in Great Britain. He says that Canadian tobacco is showing an excellence which is equal to the Virginian tobacco. There is also Rhodesian tobacco and the tobacco from the Balkan States which will furnish us with all the supplies we need.
There is another raw material, oil. These are all raw materials which we import from America and which Sir John Anderson says we must purchase by means of the loan. Abadan can supply all our requirements and even after she has supplied all we require there is a surplus in other quarters of the Empire. Abadan can supply us—Abadan is in Persia and there is no need to draw upon American supplies of oil and petrol whatsoever. There is no necessity at all. Everything can be got from Abadan and ether resources in the Empire. Then there is the Royal Dutch production. It is certainly not an American production and we cannot claim it as a British production. The Royal Dutch production needs a very big market in Britain and there is no reason at all why Royal Dutch oil should not come to this market in exchange for payment in sterling. It does not come from a dollar area, and there is no objection whatsoever if we insist upon paying Royal Dutch in sterling.
It is true that more than one-third of the oil distribution systems in Great Britain belong to the Americans, and it is true that they want to use their own raw materials from America although they tell us that America is running short of supplies of oil. None the less, they will want to bring in their own raw materials and they will want us to pay in dollars for those materials. It would be right for us to say to the American companies, "By all means retain and make use of your distribution systems; by all means take over one-third of the oil and petrol market in Great Britain, but supply us with the oil which passes
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through your distribution system in exchange for payment in sterling or else go and buy your raw materials in sterling areas. There is plenty there."
These are the problems that confront us: to find new sources of food supplies amounting to five per cent. of our prewar imports or more as soon as the size of the provision of food from America drops. Surely, we can deal with that small quantity by promoting production in our own agricultural industry? It is more than five but less than ten per cent. of the foodstuffs we import from America. Surely, we can produce beef, eggs, butter and other types of foodstuffs from our own agricultural industry to make up that amount? We can, if the need confronts us, set up centres in the sterling bloc for the production of a portion of our requirements of those raw materials. Cotton, tobacco and oil are three great raw materials. We faced that problem in 1940 when our sources of raw materials in Belgium, Holland, Norway and Denmark were cut off, and when we were cut off from France and North Africa. At that time we were wanting supplies of raw materials forthwith in our aircraft industry. We diverted our lines of communication to the Empire and, in a short time, we were able to recover our efficiency and to secure supplies sufficient to continue aircraft production in Britain. At that time we turned to our Colonies and the production of bauxite, the raw material of aluminium, was increased four times. I see a noble friend of mine at the back who was partly responsible for that increase. Northern Rhodesian copper was increased, cotton was increased, and the Output of rubber was doubled during the crisis. When we called upon the Colonies for raw materials for the purposes of munitions of war and to build aeroplanes we got a double output. The same applies to every other commodity. Cannot we do likewise in peacetime if we are confronted with a financial crisis? Of course we can; it only requires the spirit to do it and the energy and the drive—nothing more. It may be, we can make a success of it.
Next we are told our burden to date to countries in the sterling area makes acceptance of the loan essential. I know the noble Lord, Lord Keynes, said something of the same sort this morning. But is our financial position so desperate that we have to go abroad for assistance? I

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must give you some figures. At the present time our balances, according to the statement of June 30 this year, amount £3,000,000,000 from the sterling areas. These sterling areas before the war held in Great Britain £500,000,000, but since the war a great change has come over the value of money and what was a normal balance of £500,000,000 must now become at least £1,000,000,000. But then, again, Bank of England notes are held here and there throughout the sterling areas as security for local note issues. These old issues have expanded enormously and there has been the greatest development in the use of notes in various puts of the sterling area. In all probability that has added another £500,000,000; £1,000,000,000 being the working balances in Britain and an increase of £500,000,000 on account of the extension of note circulations all over the sterling area means £1,500,000,000. If you take that £1,500,000,000 from the figure of £3,000,000,000 you gel a vast reduction in the debt.
But even that is not the whole picture. The sterling balances due to Australia and New Zealand can be set off against the wool we bought from those Dominions, and not only set off against the wool because there is a surplus besides. We actually bought from those Dominions up to June 30, 1945, according to information received from the City to-day, wool to the value of £470,000,000. We bought the wool from three Dominions, the Commonwealth of Australia, New Zealand and South Africa. We have paid for that wool, but we have not been able to use it; it is in store here. Those Dominions have only got £284,000,000 on deposit here so that there is another credit of almost £200,000,000. It may be said by the noble Lord, Lord Keynes, that that is in sterling. But it is in sterling backed by wool to the value of £470,000,000. And here, let me say the most astonishing thing. I do not believe the Government can know it, although I am quite certain it is known by the noble Lord, Lord Keynes.
LORD KEYNES: As the noble Lord appeals to me, I will say that, in a long and rugged life spent in the statistical jungle, I have never heard statistics so funny.
LORD BEAVERBROOK: There is the answer. His Lordship never heard statis-
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tics so funny. I never heard of his Lordship failing so lamentably if he did not know that. He has been derelict in duty if he did not know this was the position. We had £470,000,000 of wool here, and those Dominions had only £284,000,000 on deposit with us. And here are some more "funny statistics," which you can cast up to-morrow or tonight. The Dominions, taken altogether, are actually in debt to Great Britain. There is a balance of debt in favour of Great Britain after making allowance for the sterling balances held here in London. Will Lord Keynes deny that? No, he will not deny it. This is not generally known, and you did not hear it in his Lordship's speech this morning. In fact, the Dominions, on balance, owe money to Britain.
LORD BALFOUR OF BURLEIGH: Does that include India?
LORD BEAVERBROOK: No, it does not include India. India is not a Dominion. I thought the bankers knew that. It is said that the adverse balance of trade drives us into borrowing in Washington. I think I am making out a pretty good case against this borrowing expedition of my noble friend. I make use of the trade returns, because of course the adverse balance is a current balance. This adverse balance has been estimated at £750,000,000, and this deficit is put forward as another reason for this loan. But of this amount only £300,000,000 is represented by trade with the United States. We spent in the last nine months in the United States at the rate of £240,000,000 a year, on American tobacco, films, cotton and oil. On those four items we spent £240,000,000, and you must remember that the trade deficit is £300,000,000. By diverting some of those tobacco purchases to the Empire, by relying upon Empire oil, by requiring Royal Dutch to take sterling, by seeking from the American distribution systems settlement in sterling for the oil they pump through their centres of distribution, we could reduce that balance by a great deal. I suggest to your Lordships that it would not be unreasonable to say that we could reduce that balance by £100,000,000. Remember the four items that make up that £240,000,000—oil, the cinema, tobacco and cotton. I would ask you to believe that by economy in cotton, using up our stocks, by diverting some of the

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tobacco purchases to the Empire, by persuading the American vendors here to take sterling for their oil, by bringing Royal Dutch into the situation, and by talking to Mr. Rank, we can save perhaps £100,000,000.
Now let us remember the assets we hold. We have £450,000,000 in gold and in dollars. We have more than £200,000,000 surplus in British investments in North America, and we have forty-seven British insurance companies out in America earning money for us. We have larger stocks of raw material in Britain than ever before in the history of the country. We have more imported machine tools than we can use. You hear the story that we require machine tools; well, we have more imported machine tools than we require. Our stocks of scrap of every description will last us for a long time. I hope I have dealt with the suggestions of some of your Lordships that we have to have the money in order to meet immediate requirements in food and raw materials.
It has been said that unless we accept the loan, the United States will not be in a position to sell their goods in this market. But, as Mr. Seymour Cocks remarked, what in that case would happen to the American exporters, and what would happen to the great American distribution centres in Britain? What would happen to the assembly plants here? Would they all be abandoned? No, not at all. We arc the greatest single market for American exports in the world. Where else can the Americans find their market save only with us? Lord Keynes says that the U.S.A. buys elsewhere, and by purchasing elsewhere Britain is able to sell in centres where American purchases prevail. It is true they purchase elsewhere, but what they purchase is not goods, but gold, and that is why they have such an immense stock.
Next we are told that the Dominions will abandon the sterling bloc and join the dollar group. Why? We are the great export market for the Dominions. My noble friend Lord Balfour of Inchrye gave you the figures to-night. He said that 100 per cent, of New Zealand's exports, nearly all of Australia's primary exports, and two-thirds of Canada's agricultural exports, come here. You are told that
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Canada is waiting for us. Of course she is waiting for us. But where is the alternative market for Canada if we do not take two-thirds of her agricultural exports? Not, certainly, the United States, where meat, eggs and bacon are all in surplus production already, and giving the American Government very considerable trouble on that account. Yet it is suggested that Canada will secede from her relations with the sterling bloc if we do not go on with these projects in Washington. Imperial sentiment apart, the Dominions must continue to rely upon the British market. But of course sentiment does prevail. Canada has announced her intention of helping us in a very big way. She has said, at one time or another, that she is willing to sell to Britain for a period of ten years on deferred terms without interest. She has made similar statements of a most generous nature. Nevertheless, however, Canada has no alternative.
Lord Keynes to-day, speaking in this House, got quite as big a whoop for saying this as for saying my figures were silly. He said that the alternative is to build up a separate economic bloc which excludes Canada, and consists of countries to which we already owe more than we can pay, on the basis of their lending money they have not got and buying from us and one another goods we are unable to supply. The last time you heard that you laughed; this time there is no laugh. Let us examine that extraordinarily witty comment of Lord Keynes. In the first place Canada has no alternative market and cannot separate herself from the Empire. In the second place, we do not ask the sterling bloc to lend us more money. All we say is: "Deal with the old firm and continue to deal with the old firm." In the third place, we are able and willing to supply the goods. But there comes the pinch. There is the whole story. Under Lord Keynes's plan the United States of America would supply the goods. That is the difficulty and the trouble. Australia and New Zealand are satisfied with the present position. Nobody contradicts that, although I expected contradiction. South Africa is satisfied. There is no comment from Lord Balfour of Burleigh. South Africa is satisfied with the present position.
Certainly the position is difficult; there is no doubt about that. It calls for the utmost efforts to rebuild both our export

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trade and domestic production, but it is not nearly so dark as the Government would have us believe. We cannot meet this dark situation by contracting to pay £35,000,000 yearly in American dollars for the loan and another £100,000,000 in dollars which represents the recurring yearly difference between purchases from the United States and sales thereto. Further, if we pay 2 per cent. interest to the United States, naturally we shall be asked to pay 2 per cent. interest on these frozen sterling balances—they will be frozen under this plan—which will amount to £1,500,000,000: that portion which is not involved in ordinary transactions of business and security for accommodation. Two per cent. on £1,500,000,oco means £30,000,000. Of course, after Bretton Woods these payments are convertible into dollars, so under these arrangements we are being asked to undertake obligations in dollars amounting in all to £165,000,000. You have only to contemplate it lo sec the absurdity of it. It is embarking on a plan that we cannot possibly contemplate.
I have tried to put forward arguments against the loan and to show that it is neither necessary nor desirable at the present time. I do not deny that one day the loan may be needed. I do tot deny that if things go badly with us the loan may be called for. But if things, go well with us we shall not have to apply to Washington at all. But I say there is something much worse than the loan. I do not deny that the terms of the loan are good, but I do insist that the tying of Bretton Woods and the Commercial Agreement to it is far more serious. In the first place, there is the gold standard. Bretton Woods means the gold standard. This is the gold standard. No argument can alter the wording of the Final Act of Bretton Woods; you all know what is laid down in Article 4.
Lord Samuel told us that it was all right because Mr. Dalton said it was not the gold standard, and Lord Sort-pill told us it was all wrong because Mr. Morgenthau, formerly of the American Treasury, said it was the gold standard. We had those two quotations, one from Mr. Dalton and the other from Mr. Morgenthau. Mr. Morgenthau was longer in office than Mr. Dalton, so I suggest you take the opinion of Mr. Morgenthau. Then we had that very distinguished
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banker, Lord Balfour of Burleigh, the Chairman of that great institution, Lloyds Bank, telling us "This is not the gold standard." He did not tell us that Yesterday; he told us that in 1944. We should be influenced by the opinion of such a great banker. But we had Lord Sempill telling us that Mr. Nelson Aldrich, the President or Chairman of the Chase National Bank, had said that it was the gold standard. Mr. Aldrich has been much longer Chairman of a bank than Lord Balfour of Burleigh, so I suggest we accept his opinion. I do not want to take up too much time; I feel I am going on too long. I was going to congratulate Lord Keynes again. You may think I am talking too much about Lord Keynes, but I have the greatest admiration for him; I admire him as the finest living propagandist. Perhaps he is going to put over something big this time. However, as to the speech he made here to-clay, I heard the same speech made in support of Mr. Baldwin's debt negotiations in 1923. All the same reasons were trotted out in 1923. At that time Lord Keynes was against the gold standard, and Lord Samuel (who, to his credit, was also against it), rather indicated that Lord Keynes's advice should be adopted because at that time he was against the gold standard. May I say that my advice may be taken too, because at that time I was also against the gold standard? But it is certain that Bretton Woods had been represented as the gold standard to the people and the Congress of the United States, and if when the Agreement comes into operation we maintain that it is nothing of the sort we shall be denounced and condemned. It has been definitely represented to the' people and the Congress of the United States as the gold standard.
Even more serious is the attack on Imperial preference. Here let me say how deeply I was moved by the speech to-day of my noble friend Lord Bennett. It was a most moving speech in defence of the principles which brought into being our great Empire, for it was in 1932 at the Ottawa Conference that the foundations of the Empire were laid. The Government say there will be elimination of Imperial preference in exchange for the reduction of traiffs. That is the attack we say they make on Imperial preference. For my part, I do not deny their definition of their policy; I think

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that is the meaning of the document. My complaint is that they have put Imperial preference on the counter, they have offered it for sale and have named their price. Their price is not the elimination of tariffs but the reduction of tariffs.
What are we going to get from the United States of America? I heard my noble friend say to-day that the President has power to reduce tariffs in the United States by 5o per cent, and 5o per cent. it will be. What will be the result of a 50 per cent. reduction of tariffs in the United States? Whisky, which represents one-quarter of everything we send to that country—and we obviously send far too much—will be 25 cents a bottle cheaper because of that reduction in tariffs. How much more whisky are we likely to sell because of a reduction in price of 25 cents, or one shilling, a bottle? Next, some very high-priced suiting material goes out for the gentlemen. I am sure the Labour Party is not expecting to make a great deal out of increased sales of suiting for rich people in America. Besides those two items, we sold before the war—I am giving you the pre-war figures because it would not be fair to give you the war figures—£1,700,000 or £1,800,000 worth of various cotton piece goods. Outside that, there is not another item on the list which amounts to as much as these that I have mentioned. A 50 per cent. reduction in the tariff may give you a little increase in the export of Scotch whisky, a trifling increase in suits for gentlemen, and some increase in the higher grades of piece-goods. There will be no other increase in sales in the United States.
And in return for this, what do we give the United States? We give them our Empire market. We give them freedom to take from us the trade that we had before the war, on which we rebuilt our position from 1932 until the outbreak of war. Some people pretend that Imperial preference will not be damaged, but we know what will happen. The noble Viscount, Lord Samuel, whose speeches I admire very much—he is a magnificent speaker; I wish he could think as well as he speaks—told you that the purpose and desire is world free trade, and that the only reason for our tariffs is that other countries have them as well. I have heard that proposition getting a considerable measure of assent in this House.
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But not from me. I am a protectionist. I believe in protection. I believe in protection for Britain. I am convinced that if you do not sustain a system of protection in the immediate future, your walls will fall to the underpaid labour of Europe, and you will scatter unemployment up and down all over this land. Even the Socialist Party dare not deal with that situation.
My friends and I have always held the view that tariffs are in any case necessary to our economic Empire. It is a mistake to suppose that there is universal acceptance of the proposition laid down by Lord Samuel and Lord Pakenham. Lord Keynes said that he worked for three months in Washington. He has worked hard, I know. He has brought back a good Loan Agreement, I know. He worked for three months. Some of us in this House—Lord Croft and others—worked for forty years. We worked hard and we laboured long to try to build up Imperial preference. I have been at it for thirty-five years all told. At last the Ottawa Conference was called by my noble friend Lord Bennett, and out of that Conference emerged something which we thought at last was the economic Empire. It was not enough; it was only one pillar. The sterling bloc came from the disasters of the gold standard and of the American debt settlement, but none the less that was another pillar of the Empire. Then came to us through the war the chance of a third pillar, the dollar pool.
Here at last was a united Empire, bound together by Imperial preference, the sterling bloc and the dollar pool. The sterling bloc supplied us with our resources during the war. Little has been said on the subject. Much has been said in praise of Lease-Lend and Mutual Aid, and in praise of President Roosevelt's vision, with which I agree heartily, and in praise of the generosity of America, which I acknowledge. But let it be said and repeated with emphasis over and over again that the sterling bloc contributed more—a greater measure of financial help—to Britain than did the United States, including Lease-Lend and Mutual Aid. Contemplate that with wonder and admiration! To the resources with which we fought the war the United States of America contributed £4,000,000,000, but the sterling bloc contributed over £4,000,000,000. You owe your gratitude to the sterling bloc as well

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as to the United States of America. The sterling bloc carried you in the dark days of adversity as well as the United States of America.
Destroy the sterling bloc, disperse that dollar pool, eliminate Imperial preference, and we throw away this Empire. I canoe here35 years ago with this vision of the Empire as an economic unit. That vision came very close to realization. The Empire structure grew in strength and purpose. Now it is being needlessly and wantonly and wickedly thrown away. One last stand is possible to preserve the opportunity for the future that Empire unity gives. One last lonely hope remains. The verdict of this House of Lords has yet to be given; after that must come the fateful and final decision.
6.16 p.m.
VISCOUNT CRANBORNE: My Lords, it might well be thought, and perhaps is thought, by some of your Lordships that it is unnecessary for me, who am not a trained economist, to intervene in this debate at all. There is clearly little that I can add on these rather intricate economic points to what has already been said in two full days of debate on the issues before the House. The subject of this Anglo-American Agreement which you are being asked to-day to approve has already been exhaustively examined during the discussion from every aspect by many who can speak with far more authority than I can. However, it seemed to me right, that I, who have for the moment at any rate the privilege of leading the official Opposition in your Lord- ships' House, should try to give some guidance to those who sit on these Benches as to the vote which we might properly give on these extremely difficult and thorny questions. I take it very kindly that in his speech yesterday the noble Viscount, Lord Samuel, let us into the secret of how the Liberal Party seek to secure a united front—which is, I understand, that they pair against each other in private, and do not come into the House at all. I am afraid that I am not entirely convinced that this method is one hundred per cent. effective in producing a united front, because during the short time that I have been in your Lordships' House this House has been littered with. Peers of Liberal antecedents who agree only on one thing, and that is
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on total disagreement with all the other Liberals.
VISCOUNT SAMUEL: I think that the noble Viscount might show a little more kindness to us, because in -his heart he must be praying that there arc enough Liberal Peers here to-day to vote for the Government and defeat his own supporters!
VISCOUNT CRANBORNE: I can assure the noble Viscount that I am not in the least worried about it—and I hope that I am right! In any case, I do not think it in the least scandalous to give advice in public to one's supporters, whether that advice is taken or not; and I intend to go ahead with my advice for what it is worth. First, I would like to say a few very brief words about the Agreement itself. I do not think that there is any doubt at all about what your Lordships feel concerning the terms of this Agreement. Nobody—with the possible exception of the noble Viscount, Lord Samuel—really likes it very much. We all feel that it represents a hard bargain, and we deplore the fact that the country has been put into the position in which it has been put. It has been, I believe, a cause of discouragement to all those of us who believe in close, Anglo-American collaboration and in close Anglo-American sympathy and understanding as the most important thing for the future of the world. And I say this in no spirit of ingratitude to the United States or, I hope, from, any lack of understanding of their own difficulties, which Lord Keynes has explained for us so clearly this afternoon. Certainly, what the noble Lord said made a great impression on me, and I think it did on all your Lordships.
I do not want the noble Lord to think us unperceptive in this matter. We shall never forget the generosity of the American people, official and unofficial, in the dark days of 1940 and 1941 and we shall never forget their vast contribution of men and material which was such a main factor in securing victory for the Allied cause. Nor, if I may go further, do we any of us underestimate the further contribution which is represented by the wiping out of Lend-Lease, and the loan of £1,100,000,000 which forms part of this Agreement. We are not ungrateful for all these things. It is, of course, the terms that have been attached to that

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loan—and it is no good ignoring the fact —that have given a serious shock to the British people. Why are we in our present difficulties—economic difficulties, financial difficulties? Surely, it is because of the entire dedication of our national resources for six long years to the cause of freedom, which was, after all, the joint cause of this country and of the United States of America.
As we all know, as a result of that conflict which has just ended, we in this country have been more heavily hit economically and financially than any other country. We have been longer in the struggle than any other country, and our concentration on the war effort; taking into account our size, has been more intense. I do not wish to labour this point. It has been fully dealt with in many speeches—in speeches which have been made by my noble friend Viscount Simon and others. But I cannot ignore it, because it is the main cause of our disappointment at the terms of the present Agreement. The way a good many people in this country look at the position is this. It was open to the United States to regard us in one of three ways during the negotiations. They could have regarded us as partners: they could have regarded us as customers: or they could have regarded us as competitors.
We had hoped that they would take the first view. For what is happening now flows directly, of course, from what happened at the time when we were fighting and working together during the days of the war. If we were regarded by the people of the United States as true comrades in arms during that period of dark days, then, naturally, a good many people in this country now find it difficult to understand why that spirit should not still inspire them over the period of reconstruction. Even if that was too much to hope, I think it was widely felt in many quarters that we might at least have been regarded as a good and old-established customer of the United States. In the past, I think we have been the best customer of the United States. They have sold more to this country than to any other country. And, of course, we wish to occupy the same position again. We all want to buy American goods: but to that end we do temporarily need all the assistance that can be given to re-establish
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our export trade, not only, of course, with the United States, but with all other countries. That, we believe, from our long-established experience as a trading nation, is in the best interests of both countries.
But from this Agreement there are many people—and I think it better to state this frankly—who have gained the impression that we are regarded by certain sections of opinion in the United States not only as a customer—indeed, not so much as a customer—but as a competitor, a competitor to be downed and ousted from the markets of the world while the opportunity is favourable. That is the conclusion at which many people in this country have arrived, from such things as the phrasing of the references to the Imperial preferences in the proposals for consideration by an international conference on trade and employment, the insistence of the United States Government on bringing forward the date of convertibility of sterling from five years to one, and certain other provisions in the Agreement. That conclusion may well be unjustifiable. I hope very much that it is. If it were true, the outlook would be extremely dark for the world. But, nevertheless, the impression to which I have referred is widely held both inside and outside this House, and it accounts for that deep feeling of disappointment and disillusionment with which the Agreement has been received in many quarters.
I fully appreciate, I think we all do—and we appreciate it much more after hearing Lord Keynes' speech to-day than we did before—how the Americans look at the subject. I thought that his speech was an immense contribution to our understanding of the matter. He presented to us a view which we could not otherwise have appreciated at all. We all, I think—I certainly do—recognize how their eyes are concentrated not so much on the past as on the future, and how they feel sincerely that in entering into the Agreement they are entitled to be regarded as being generous and helpful to us. It may also well be that this is as far as they could get their own Congress to go. I am quite certain that we are all very ready to take this into account when the time comes either to vote or to abstain, as the case may be.

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It is not my purpose, however, to go in great detail into this Agreement. As I have said, it has already been discussed ad nauseam in the course of the last two days. My noble friend Lord Beaver-brook gave us just now a most admirable and extremely entertaining knock-about turn. I think we all enjoyed it, though I notice that he postponed his speech until all the really trained economists—I hope that I am not insulting my noble friend Viscount Addison by saying this—had already spoken. But all the same, in my view, and I think in the view of most of your Lordships, a great many of the arguments used by Lord Beaverbrook, were still-born. They had been killed before birth by the earlier speeches.
My object in rising to address your Lordships, as I say, is not to go into the details of the Agreement, but to examine what 'we ought to do about it in the light of the facts and of its reception throughout the whole of this long debate. As I see the position, there are three courses open to us. I think the noble Lord, Lord Pethick-Lawrence, said that there were only two, hut I would add a third. We can support the Resolution which has been moved on behalf of the Government, we can reject the Resolution, or we can abstain from voting. I wish to explore with your Lordships—and especially with those sitting upon this side of the House—these three alternative lines of action. Personally, even after listening to the brilliant and persuasive speech which was delivered by Lord Keynes, I should find it very difficult to support this Resolution. That is my feeling. It asks us to approve of things of which we do not approve, and to welcome things which we do not welcome.
Noble Lords opposite may very fairly ask: Could you have done any better? It is not my desire to introduce any heat into this discussion or to say anything which is controversial or offensive—and I hope that I shall not do so. Nor frankly do know whether it would be justifiable to claim that the Conservative Party as a Party would have been more successful. I do not propose to make that claim, but I certainly believe that if the assistance of Mr. Churchill himself had been called in earlier it might have made a considerable difference to the terms of this Agreement. Thè Foreign
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Secretary, in the speech with which he wound up the debate in another place, taunted my right honourable friend Mr. Churchill in this connexion with egoism and boastfulness. I have, as your Lordships know, a very high respect for the Foreign Secretary, but I cannot help thinking that on reflection, and in the light of events in the last five years, he will regret those words, which he used, no doubt, in the heat of debate. Nor do his remarks show that knowledge of the United States which one might expect from a Foreign Secretary. Anyone who has been in the States, even for a few hours, must surely realize the unparalleled position which is occupied by Mr. Churchill in that country, a position almost unequalled by any Englishman since the United States became a nation. He is not merely regarded as the architect of Britain but as the embodiment of Anglo-American friendship, and whatever he says is listened to with the closest attention.
Why was not Mr. Churchill asked to take part in these negotiations? If I am told we are back on the Party system in this country, I would reply that so are the United States on the Party system, but that did not prevent President Roosevelt from appointing an all-Party delegation for the San Francisco Conference, where some of the members representing the Opposition Party played a most important part. The Washington correspondent of the Daily Telegraph reported on Thursday last:
"Mr. Churchill's speech was widely quoted in broadcast reports to-night. It was especially disturbing to listeners who are aware of his admiration and respect for the United States."
Clearly his speech came as a surprise to the American people. What a difference it might have made if he had been able to express those views earlier, if he had had an opportunity of making American public opinion aware of the full force of the British case. Yet he never could do that because he was never given the chance.
This question of a loan, we all agree, is not a Party question; it is a question which affects all Parties. I would make no reflection of any kind on the band of brilliant and devoted civil servants who carried on our negotiations. I think we owe them a very deep debt of gratitude. But I still think that what was needed '.or this purpose was an all-Party delega-

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tion of Ministers and ex-Ministers, including Mr. Churchill. The Government ought to have made use of his prestige and the confidence he inspires in the United States. Yet they preferred to handle the matter on a strict Party basis. So far as I know, the Opposition were never even consulted as to the developments as they occurred, and when the Prime Minister did go to the United States he made a purely Party speech. I understand that the Lord Chancellor said, when I was unfortunately absent from the House, that his object was to persuade Congress that the Labour Party was a respectable body—what used to be called "Socialist in a nice way." But surely it would have been very much more valuable, from that point of view, if the delegation had been representative of all Parties. That would have been direct evidence that we are able—
LORD STRABOLGI: The Prime Minister had Sir John Anderson with him on that occasion.
VISCOUNT CRANBORNE: I am talking about the negotiations on this loan. In any case, Sir John Anderson was not there to express views on that; he went as an expert on the atomic bomb. The Government, of course, had a perfect right to do what they did. But as they have thought it better not to associate us with these negotiations I really do not see why they should expect us to associate ourselves with the decisions resulting from them. Nor can I see, especially in view of their unwillingness to consult us at an earlier stage, why it was necessary to have all this bustle in a few days, or even in a few hours. I am told that Congress is going to be given four months to make up their minds. Why are we expected to make up our minds in a few days—I think Mr. Churchill said a few hours—of Parliamentary time? I am told that, under the American Constitution, or for some other reason, unless the Bretton Woods Agreement has passed through Parliament before the end of this year the Bretton Woods Agreement would have to go before Congress again. I am told that that was the insuperable difficulty. But we have got a Constitution too, and I should have thought that our Constitution required, in the spirit if not in the letter, that a measure of this importance should be given full consideration both by Parliament and the British people.
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Parliament has done its very best in the few days allowed it to master the intricate difficulties, though even so the House of Commons had to come to a decision without even hearing the views of Lord Keynes.
But the British people have only the haziest idea of what these Agreements are all about. That is not the fault of the British people. These are difficult subjects, technical questions. They cannot be mastered by the layman in a few days. Yet this Loan Agreement is going to bind this country for fifty years. It seems to me quite intolerable that we should have been hurried in this way. On that point I think the Government should have stood absolutely firm and should have given an opportunity for opinion in this country to mature and crystallize. These are some of the reasons which make it difficult, if not impossible, for those who sit on this side of the House to vote for the Resolution.
Now I come to the second alternative before us—the rejection of the Agreement, for which the noble Lord, Lord Beaverbrook, has just asked. I am bound to say that I find myself here in a position of equal difficulty, but for different reasons. This difficulty, in which I find myself and in which other noble Lords as well find themselves, arises not from the merits of the Agreement but from the grim character of the prospects before the country if the loan is not forthcoming. We have it on the authority of late Conservative Ministers that these results might well be catastrophic. It might mean lowering the whole standard of living of the British people, which in all conscience is quite low enough. It might mean a reduction in the sugar ration, in the fat ration and the petrol nation; it might mean that cigarettes might become almost extinct. It is not for me to make the Government's case to-night. No doubt the noble Viscount the leader of the House will do so. But I simply cannot believe the picture which was given to your Lordships by the noble Lord, Lord Beaverbrook, just now of a world flowing with milk and honey.
LORD BEAVERBROOK: That was not the picture.
VISCOUNT CRANBORNE: That was the picture I and many other noble Lords got.
LORD BEAVERBROOK: It was your description of the picture.
VISCOUNT CRANBORNE: As I said, T cannot believe that picture because, if there were really all this amount of stuff to come from the sterling area, we should have got it already. But on the contrary, many of the countries mentioned by the noble Lord, Lord Beaverbrook, countries like France, Belgium and Holland, are countries to which we are at present having to send foodstuffs. I know the noble Lord did not wish to misrepresent the position.
LORD BEAVERBROOK: I said they would recover.
VISCOUNT CRANBORNE: At any late, it would in the meantime present increased hardships for the people of this country. Moreover, as I understand it, our refusal to accept this loan might mean very much more than a reduction of our rations. It might mean that when our present dollar reserves are exhausted we should be unable to purchase materials and machinery which can only come from the United States and which are essential to the revival of our export trade, and that might well mean, in its turn, increased unemployment and increased suffering. We in this House, contrary to what is sometimes thought outside, never—at least in my experience—have taken a very extreme Party view, and I believe all of us think most of the essential needs of our country. However imperfectly we may think the Government have handled this business of the negotiations, it is not our job to make their task impossible. At any rate, that is my view. No doubt the noble Lord, Lord Beaverbrook, who has urged the House to reject the Agreement, would he ready, as we all should he, to tighten his own belt. There are, however, many people in this country who cannot command even the resources available to the noble Lord and their lot might very well be lamentable.
LORD BEAVERBROOK: Is not the House of Salisbury very rich?
VISCOUNT CRANBORNE: I hope we should all be willing to pull in our belts. But the very fact tilt the noble Lord and I have more than other people should make us more careful about the advice we give. If we were to think, as the noble Lord, Lord Beaverbrook, and the noble Lord, Lord Balfour of Inchrye, apparently do, that Imperial preference is dealt a fatal blow by this Agreement and
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that the unity of the Empire is being destroyed, if that were so, it would raise issues of the gravest possible nature. But I do not think it is possible to hold that view in the light of the very specific assurances given in another place both by the Prime Minister and by the President of the Board of Trade, which were repeated yesterday by the noble Viscount who leads this House. As I understand it, our representatives are to have a completely free hand in this Commercial Conference. It is to be noted that the Prime Minister's statement, as I understood the n able Viscount the Leader of the House to say, was actually submitted to the Dominion Governments and approved by all of them. I understand, further, from the noble Lord, Lord Keynes that the State Department are also aware of the character of statement. The noble Lord, Lord Balfour, remains, if I nay so describe him, a doubting Thomas. He says it is only the written word that counts. But all these words are written or printed now, and they are definite undertakings by the Government. I think we must accept them. Indeed, if I may say it without rudeness, the Government would find it quite impossible to get out of them.
We all know the very old story of an Irish mother whose son had joined the Army and who went to see him marching in the ranks, and said, "All of them were out of step except our Pat." I was reminded of that story as I listened to the noble Lord, Lord Beaverbrook. We have here the views of the late Prime Minister, of the present Prime Minister, of the late Chancellor of the Exchequer, of the present Chancellor of the Exchequer: of the Leader of the House and Dominions Secretary, of the Dominion Governments and of the State Department, and now we are told they are all out of step except our Max. I just cannot believe that.
LORD BEAVERBROOK: And severity of your followers in the House of Commons.
VISCOUNT BENNETT: If I may, I would like to say that the point is not such as the noble Viscount is now making. The point I should like to make is that we are submitting Imperial preference to an international conference and not to the family.
VISCOUNT CRANBORNE: I was just coming to that point. I am sorry I was not here during the speech of the noble Viscount, Lord Bennett. What he has just said, that the elimination of Imperial preference is open to discussion by an international gathering, is perfectly true, but I should have thought that that pass was sold—if indeed it has been sold—when the Mutual Aid Agreement was signed. At that time the noble Lord, Lord Beaverbrook, was a member of the Government, though I do not think he liked it very much.
LORD BEAVERBROOK: I opposed it. If you jibe me with any responsibility, I will make it perfectly clear that I opposed it.
VISCOUNT CRANBORNE: At any rate, the position, as I understand it, is that our hands are not tied about a reduction of Imperial preference unless we are to get adequate compensation, not only from the United States, but from the other nations taking part in these negotiations who are bound to give us an adequate quid pro quo for our export trade. That I understand to be the position. That is the position which has been stated a great many times during these discussions; and I am bound to say it has given me and, I expect, a good many other noble Lords, a considerable measure of relief. I do not wish, any more than other noble Lords, to see the destruction of the Empire or the economic structure of the Empire. I would say to the noble Lords, Lord Bennett and Lord Beaverbrook, and others who have given us an alternative—which was, as I understand it, that we should as it were tighten up the sterling bloc, the Empire countries and the other sterling countries—that I do not believe that in present circumstances a bloc of that kind, unless there was convertibility of sterling, would bear the strain.
From my own experience at the Dominions Office—and it is fairly recent experience—I have always found that the Dominions nowadays, whatever may have been their view in the old days, to-clay regard Imperial preference, not as an essential principle, but as a practical convenience. It may be a pity, but it is a fact, and we must have a realistic view about it. If we were unable to supply things of which they were in need, it is my belief they would be obliged to buy where
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they could, under separate agreements. And that applies with equal force, and perhaps with an even greater force, to the other sterling nations. It is my belief, from such experience as I have had, that to reject this loan would not be necessarily to preserve the sterling bloc. On the contrary, it might very easily hasten its collapse.
Moreover, there is another aspect of the position of this House in connexion with our decisions this evening which I think we ought to consider. No one would imagine—I certainly should not myself —that the noble Lord, Lord Beaver-brook, has moved the rejection of this Agreement in any lighthearted or irresponsible spirit, because I know very well how deeply he feels on this matter and has felt for a great many years. But there are wider issues yet in the decision this evening to which I do not think he has attached sufficient importance. The noble Lord, Lord Balfour of Inchrye, mentioned them, but I do not think the noble Lord, Lord Beaverbrook, referred to them at all. Yet, to my mind, they are fundamental. The noble Lord, Lord Beaver-brook, has not attended the House at all since the Election, except on Thursday last, when he took the oath to enable him to speak to-day, but most of us who have been here day after day during the last few months will know how very difficult and delicate is the position of your Lordships' House in the new political situation. Up to now, I do riot think we have done so badly. We have maintained our independence and yet avoided a clash with another place. But we have only achieved this result by the exercise of constant restraint and patience.
I noticed that the Sunday Express last Sunday suggested that a vote against the Resolution—I am not giving the exact words though I think it is an accurate interpretation of them—would not have constitutional importance. It would simply be a gesture of disapproval. That, I think, was the point made by the noble Lord, Lord Balfour of Inchrye, in your Lordships' House this afternoon. I would answer that in that case it really is not worth while your Lordships voting against the Agreement if that is all that you are going to achieve. Moreover, I have been reading my Sunday papers and it is clear from the paper named Reynolds News, which I understand represents the Labour

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Party, that the Government takes a very different view from Lord Balfour on this question.
LORD BALFOUR OF INCHRYE: I asked what the Government view was.
VISCOUNT CRANBORNE: Well, I will just be able to tell you. I hope to have it confirmed—I cannot be regarded as the only exponent of the Government view. In an article which I thought tried gratuitously and rather offensively, to raise the issue of "Peers versus People," the political correspondent of this paper, in a passage evidently inspired, stated this quite definitely—I will read his words:
"The suggestion was being made by Lord Beaverbrook's supporters that since the Government has power to accept the loan without a vote of Parliament, the Lords can pass his Resolution merely as a demonstration of protest and can, if it likes, allow the Bill ratifying Bretton Woods to go through. I have authority for saying that if the Tory Peers decide to follow Lord Beaverbrook. thereby provoking a crisis, the Cabinet will accept the challenge."
This House, as your Lordships already know, is not to be bullied by Reynolds News, or, indeed, by anybody else. We shall always, I hope, try to do our duty in the light of all the considerations that have to be taken into account, whatever the consequences may be. I do not rule out, and never have ruled out, the possibility that some issue may arise sooner or later on which a difference of opinion between your Lordships' House and the House of Commons may become unavoidable. It seems to be implicitly urged by Lord Balfour that we had better have this row now. "Better have a constitutional crisis immediately than lose the Empire"—that was the balance of his argument. In the light of the Government's explanations I do not personally, think the situation of the Empire is quite so desperate as does the noble Lord, Lord Balfour, nor clearly do the Dominion Governments themselves, and anyway, I do not think that the alternatives which have been put before your Lordships to-night are quite the way 'to save the Empire.
Moreover—and this I would emphasize to your Lordships—I cannot conceive of so bad a battleground for a fight between the Lords and the Commons as this particular issue, when the considerations are so evenly matched between the two sides, when we should be acting against the
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advice of the Conservative leaders in another place, and when the Conservatives even in your Lordships' House are not united. I cannot imagine a worse ground to pick for your battle, if a battle is to take place. I would point out to any supporters of Lord Beaverbrook on this question who may be present, that if quite a small proportion of your Lord ships voted against this Resolution and the Agreement was rejected, this House would have to assume responsibility for any evil results that might follow and, quite likely, for a great many evil results which did not in fact follow from the refusal of the loan. I cannot imagine an act of greater folly than to provoke a crisis of that kind on this particular issue, nor one more likely to be resented in the country.
While, therefore, I cannot advise your Lordships, feeling as I do, to do such violence to your consciences as may be involved in a vote for the Resolution, do urge you most strongly not to vote against it. If the Government think this Agreement is necessary in the national interest, we must acquiesce. In my view there is no' other course open to us. That means, in plain words, that we must abstain—a course not of weakness, but of common sense, taking into account the manifold considerations involved. I therefore recommend that course to your Lordships who sit upon these Benches, as the only wise, honest, and statesmanlike thing to do.
6.56 p.m.
THE SECRETARY OF STATE FOR DOMINION AFFAIRS (VISCOUNT ADDISON): My Lords, I will reply at the beginning to the implied question in one of the last sentences of the noble 'Viscount's speech. He asked if the Government think this loan is necessary in the public interest, or words to that effect, and my answer is that we do. I shall refer later on to the extraordinarily interesting and entertaining display with which Lord Beaverbrook furnished us. I am sorry that his speech did not take place, as originally arranged, earlier, because I had understood that it had been suggested that he would speak before Lord Keynes. Then we should have had the advantage of Lord Keynes's criticism of Lord Beaverbrook's speech, and I am thinking, indeed, I am quite sure, we have missed something that would have been both instructive and

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entertaining. Also I regret it for another reason: that being made so late in the debate, it has not given me the opportunity of checking the noble Lord's figures as they really deserve to be checked. I may say, however, that I have received information from the Department, as he readily foresaw, with respect to two figures, and I find them quite inaccurate. But I will come to that later.
I do not know that I should refer to what the noble Viscount, Lord Cranborne, said as to the way the Government had handled this business. It was, of course, as he foresaw, a highly technical matter, and the experts we sent out to Washington to deal with it were experts who had been working for a long time for the previous Government. As a matter of fact, the expedition more or less set out about a fortnight after this Government came into office, and it is not, I think, to be supposed that the instructions to these gentlemen, their preliminary considerations and all the rest of it, were invented during that fortnight. They were, of course, the result of long study under the direction of the previous Coalition Government, and we are greatly indebted to them for that study. I only want to say that these gentlemen were sent out on a mission which clearly had been contemplated for a long time.
The noble Viscount expressed disappointment that the Government did not, at that time or afterwards, send a joint delegation to Washington, and particularly he deplored the fact that Mr. Churchill was not invited to be a member. I do not propose to go into that, but I would like to make a few observations on it. First, I would say that those matters are not material to the issue before the House to-night, which is whether or not we should approve of these arrangements; and secondly, I am afraid it must be said—and nobody says it with more sincere regret than I do—that the kind of co-operation the noble Viscount desired was made exceedingly difficult by the broadcasts of Mr. Churchill at the General Election.
Now I come to the point of the discussion. I will deal first, quite briefly, with matters which I think have effectively been cleared up in the debate. Lord Beaverbrook asserted with repeated emphasis that the Bretton Woods Agreement
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was the gold standard. It is a pity that he did not advance any reasons for his conclusion. I well remember a teacher of mine, in the old days, chiding a student about a conclusion at which he arrived or some statement which he had made, and saying: "Will you not get it into your head that what matters is not a man's conclusions but his reasons?" Reasons were conspicuously absent from Lord Beaverbrook's statement and they were conspicuously present in the argument addressed to us by Lord Keynes. Except for the noble Lord, it has not seriously been contended in the whole course of these discussions that the Bretton Woods Agreement means a return to the gold standard, and I therefore do not propose to follow that up.
I do, however, want to direct your Lordships' attention to one of the governing purposes of this undertaking, and I also want to remind you that the Paper on the United Nations Monetary and Financial Conference was published with the authority of the Coalition Government, not of this Government only. If you will turn to page 16 of this Memorandum, you will see that the purposes of the Conference as described by the representatives of the Coalition Government—and we fully adhere to them—were:
"To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.
"To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and Maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy."
Could there be a more splendid objective for a conference than that? I think everyone of us here must have painful recollections of what happened during the thirties, when we had no discipline in economic exchanges. We had 3,000,000 people out of work in this country. Everybody who has studied these things, even in the most superficial way, must recognize that one of the great needs of the world is to have an organization which can bring more order into these matters. That is one of the first essentials of prosperity. I will not say any more about that because I think the case has been argued completely, and the noble Lord who has just spoken did not even refer to it.

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The next suggestion which was made, and which I think was equally effectively dealt with by other speakers, notably by Lord Keynes, was that these proposals would mean the break up of the sterling area. I would suggest that those who make statements of that kind are living in a world of fancy. Most of the members of the sterling group have large credits and they arc very anxious to buy what their people need and to acquire a certain measure of liberty. I am quite sure that nothing we in this country could do would prevent them making some use, sooner or later, of these great resources. As a matter of fact—this is not conjecture on my part —I know it is actually proposed to be done by at least one of them. If you want to break up the sterling area, then refuse this credit. That would be the way to break up the sterling area, to make it impossible for us to deal with these difficulties. However, except in one or two speeches that has not been seriously controverted.
Now I come to the Commercial Agreement and I shall refer, perhaps at a rather greater length, to what the noble Viscount, Lord Bennett, and the noble Lord, Lord Beaverbrook, said with respect to the British Empire. May I first remind your Lordships once more, in specific terms, of the objects of the conference? This is a conference called, at the initiative of the United States—note that, for I shall come to it again—and with our concurrence, to discuss certain matters. What is the chief objective? Just look at it. The Paper says on page I:
"Collective measures to safeguard the peoples of the world against threats to peace and to reach just settlement of disputes among nations must be based not only on international machinery to deal directly with disputes and to prevent aggression, but also on economic co-operation among nations with the object of preventing and removing economic and social maladjustment, of achieving fairness and equity in economic relations between states, and of raising the level of economic well-being amongst all peoples."
Further down it is said:
"It is recognized that:

(a) In all countries high and stable employment is a main condition for the attainment of satisfactory levels of living."

This is the first time in history that anything of that kind has been undertaken, and you are going to turn it down—or at least the noble Lord, Lord Beaverbrook, is.
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This is the first time in history that more than forty nations have agreed to come together to see what they can do to enable poor people to be better off. That is the first purpose of this conference. Pray God that it will succeed ! What does it mean? It means the recognition by this conference that unemployment and wholesale misery in the world have been due to the poverty of millions of primary producers, and it means recognition that the prevention of unemployment requires a lifting up of the standard of living of the bulk of the people everywhere. That is the purpose, the governing purpose, of this conference. I want your Lordships to bear in mind, too, that it is called at the initiation of the greatest industrial nation in the world. I think that whatever may be said about how the Government approached these negotiations, and whatever experts we may have sent or not sent to Washington, all these things are trifles compared with what is really the issue before us.
I come now to another aspect of it. The noble Lord has stated, and I am sure he believes, that this, somehow or other, means the break-up of the British Empire. Quite frankly, I do not recognize that he has any monopoly of zeal for the British Empire. We are just as zealous for the British Empire as he is. If we thought that this meant danger to the British Empire we should not touch it—of course we should not. But it does not quite the contrary. In, the first place, with regard to freedom to bargain when the meeting takes place, this Paper is, so to speak, an agenda for the conference. It was made abundantly clear to the Dominions, as we insisted that it should be to ourselves, that when we went to the conference we should be free to consider individual proposals on their merits, and if we did not think it was worth our while to accept them we should be free to reject them.
The case was, of course, put before the Dominions. The noble Lord seems to ignore the fact that the Dominions lad representatives in Washington the whole time. We ourselves, through my own office, were sending long telegrams to them almost every day, telling them everything. The Dominions are quite capable of judging these matters for themselves, and indeed they insist upon judging these matters for themselves. If

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the noble Lord were in my place and sought to judge these matters for them, he would soon find that out. They insist on judging these matters for themselves, and we have not had a single protest from them. They recognize that they are free, and they will deal with the matter in their own way. If they do not think that a bargain is worth while they will not enter into it; but they recognize that what is right for them is right for us. They recognise our necessities. So far as that is concerned, it was made abundantly clear that each country is free to judge, in the light of its own requirements, the merits or demerits of any proposal which is brought before it.
The noble Lord used some strange expression about the British family being put on the counter, or words to that effect. Frankly, I do not know what he means. It is a strange illusion if the noble Lord thinks that he or anybody else can put the British Empire on the counter.
LORD BEAVERBROOK: I did not say that. I said that Imperial preference was being put on the counter
VISCOUNT ADDISON: It is just the same.
LORD BEAVERBROOK: That is what I said.
VISCOUNT ADDISON: The Dominions insist on judging these matters, and quite rightly, for themselves. They will discuss whatever is put before them in the light of the particular proposal which is made. If they like it they will agree to it. If they do not, they will not. They have never objected to this scheme; they have never objected to the proposal that they should enter into this conference to discuss the removal or mitigation of barriers to world trade.
I should like to remind the noble Lord of what happened when he was a member of the Government—at least, I think he was; he has been in and out so many times that I cannot be certain. I believe that he was a member of the Government on February 23, 1942. Am I right? Apparently his recollection is not certain, but that does not matter. On February 23, an agreement was concluded by the government of that day which contained an article to which I should like to refer,
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Article VII. The noble Lord was a party to it. I should like to point out that an invitation was issued to all the Dominions, and they were, so far as Article VII is concerned; brought into consultation, and were parties to the general objective of Article VII, just as we were. If preference could be put on the counter, Article VII put it there.
LORD BEAVERBROOK: We do not agree with that. Persons who hold my view do not agree with that.
VISCOUNT ADDISON: You were a member of the Government, anyhow.
LORD BEAVERBROOK: Persons who hold my views do not agree that Article VII compromised Imperial preference.
VISCOUNT ADDISON: It is designed to that end; it refers to the "elimination of all forms of discriminatory treatment in international commerce." I am not saying anything against discriminatory treatment. What I do say is that preference is discrimination. If it is not, what is it?
LORD CROFT: There was no discrimination whatever against any foreign country under Imperial preference.
VISCOUNT ADDISON: Preference means—and I am glad that it does—that you prefer one thing to another. It means a preference in favour of the Empire. That is what it is. That is discrimination, and it is no good pretending that it is not. I do not object in the least all I say is that the noble Lord is not entitled to object now. That has been accepted for years now, so that there is nothing new in this matter. At any rate we must make it our business, and quite rightly, to keep the Dominions fully informed on all these matters. They are, I am glad to be able to say, fully conscious of our difficulties, and they are helping us very greatly so far as they are able to do so, and I am sure that they will continue to do so.
I must correct one statement made by the noble Viscount, Lord Cranborne. What I said was that the statement of the conditions which we attached to attendance at the conference and the discussion of these issues, which was drawn up with great care, and which in fact, as Lord Keynes confirmed this morning, was the subject of most careful preparation, was communicated to the

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Dominions. We did not seek or obtain their acquiescence or approval. I do not want to be misunderstood.
VISCOUNT CRANBORNE: They made no hostile comment?
VISCOUNT ADDISON: None whatever. They recognize our difficulties and so far as the assurance of freedom of discussion and complete independence are concerned of course they all welcome it.
Let me refer to two other points which I regard as of great importance. The noble Earl, Lord De La Warr, was good enough of send me notice of one of his questions, which related to the application of this scheme to our agricultural policy. That was a matter which we raised specifically. We asked whether there was anything in this which would prevent us buying, say, New Zealand butter in butter take that as a simple example, and we were assured after a most careful examination both here and elsewhere that there was not. We should not have accepted it if there had been. Let us be quite clear about that. There is nothing in this Agreement which prevents us giving effect to the agricultural policy which this Government have put before the country with, I think, fairly common agreement.
Lord Beaverbrook took the line that there was no necessity to have a loan at all. I think that is a fair description of his case. To my thinking it was rather a strange mixture. It seemed to me that the noble Lord blessed the loan more or less. At all events he gave it his approval. He seemed to think that the terms of interest were fairly generous, and he raised no objection to them. Then, towards the end of his speech, he seemed to be of opinion that we should be in sore straits to ray the interest. Somehow I do not seem able quite to make that fit. But it does not matter.
I want now, if I may, to take two of the sets of figures that the noble Lord gave us. I think his general contention 'was that by some—shall I say conjuring trick? we could sustain ourselves more or less in the future, and be independent even of United States purchases. That was his case. He talked about the production of food from, Europe. Those of us who have been engaged in the anxious discussions which have taken place on this matter, well know that our problem has been to find cut where we can scrape
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up enough wheat to keep the poor people in many European countries alive. That is our problem. It is not a case of getting any food from them. It is not a case of Europe feeding us. It will be a long time before there is any hope of our getting food from countries on the Continent. The prospect we have to face is that of tightening our belts and feeding Europe. And it will be so for a long time. But in view of the fairy picture which the noble Lord has painted—
LORD BEAVERBROOK: Would it be too painful if I interrupted again? I said that this was a long-term loan, and that a long-term loan required a long-term policy. You must consider food imports before the war. There is no use making calculations based on food imports during the war. Furthermore, we must take account of the fact that Denmark, Holland and Belgium will eventually come into the market with food supplies.
VISCOUNT ADDISON: But the unfortunate fact is that we are confronted with troubles with which we have got to deal before there is any hope of those food supplies, of which the noble Lord speaks, arriving.
LORD BEAVERBROOK: I am discussing long-term policy.
VISCOUNT ADDISON: What we are discussing is what we have to do to meet our present necessities—what we have to do in order to get this poor old country started again in a commercial and industrial way. It is no use telling me to wait till food from Denmark comes over here a few years hence. That is cold comfort to the poor people who have only got a very few ounces of butter. The whole world is very short of food, and it will continue to be so for some years to come, at the best. As the noble Lord knows well—as a matter of fact it has been proved rip to the hilt—the majority of people in the world did not get enough to eat. I hope that one of the results of this conference will be to give them a better standard of living, so that they will be able to buy more food. What the noble Lord has been saying really amounts to an invitation to us to enter a land of dreams. It really seems as though he expects us to overcome our prospective troubles by waiting until all these things, to which he has alluded, have developed.

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Now let me come to one or two figures which I think I snatched correctly from the speech of the noble Lord. He said that we have in store £470,000,000 worth of wool, to help us tide over our present difficulties. I am afraid that, having regard to the statement that has been supplied to me, I can only say that he is very wide of the mark. The facts are these. On the 1st of July, the amount of wool in store was 3,250,000,000 pounds weight, and the value was £170,000,000. That is the whole lot of wool in store. So the noble Lord is only £300,000,000 out on that particular figure. But even this wool did not belong to us alone. It was jointly owned by the United Kingdom and Dominion Governments. So, it seems to me, that what the noble Lord's proposal really amounts to is that we should, in effect, ask the Dominions to buy back from us wool that does not belong to us, and then give it back to us for our use. I hope his other statistics are more reliable than his wool statistics. But at all events, as I have said, so far as I can make out, he is £300,000,000 out in his figure. Also, the wool is owned by four different parties and not by us singly.
Then another point which was dealt with by the noble Lord was our ability to carry on without the help of the United States. I think he said that we have some years' stock of American cotton.
LORD BEAVERBROOK: Would you like to know what I said?
VISCOUNT ADDISON: Yes.
LORD BEAVERBROOK: I said that cotton stocks in Manchester, in this country generally, were very considerable, and that those cotton stocks at the present rate of consumption would supply us with necessities for several years.
VISCOUNT ADDISON: American cotton—
LORD BEAVERBROOK: Cotton supplies, I said.
VISCOUNT ADDISON: Well, in the first place, the present rate of consumption is not what we want to maintain. We want a much higher rate. One of the great purposes of the Government is to keep the mills of Lancashire better supplied with cotton so that they can supply our
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own people and other people all over the world with cotton goods. It is not the maintenance of our present rate of production that we are aiming at. We want to get something better than the present starvation level. That is point number one. Point number two is this. The noble Lord has spoken of several years' stocks. The statement supplied by the Department concerned to me is that if we continue to practise the strictest economy, the present stocks of American cotton in this country may be made to last for twelve months. That is a bit different from the noble Lord's fairy picture.
LORD BEAVERBROOK: But you have got to take into account Empire cotton.
VISCOUNT ADDISON: The noble Lord really must make some approach to accuracy. He was talking about American cotton. I am talking about American cotton. We want much greater production, and the fact is that instead of there being several years' supply there is only one year's supply if we practise the strictest economy.
LORD BEAVERBROOK: On what basis of production?
VISCOUNT ADDISON: It is on the basis of our practising the strictest possible economy in the use of this supply. That is not what we want to do at all. I am afraid that the noble Lord's figures are quite inaccurate.
LORD BEAVERBROOK: On, no, they are not.
VISCOUNT ADDISON: These are the only two figures which I have been able to check.
LORD BEAVERBROOK: You have been over the lot of them.
SEVERAL NOBLE LORDS: Order, order.
VISCOUNT ADDISON: As I have said, these are the only two sets of figures which I have been able to check, and they are both grotesquely inaccurate.
Might I just turn for a few minutes to try to deal with some of the realities of what actually would happen if we did not accept this loan? It certainly has no relation to realities whatever that we should supply ourselves by getting a sort of ringed fence round the British Empire. In the first place the British Empire would not be willing to put a ringed fence

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around itself. The result of these attempts to try isolation would be ruin to everybody. It is asking us to consider a dream. There would be certain results. The noble Lord, the Lord Chancellor, has mentioned some of the results which would follow in the way of deprivation at home. I quite agree with him. As I think the noble Lord, Lord Croft, said, he exhorted us to tighten our belts. The people this country would be perfectly willing to tighten their belts if need be. I do not say they would not, and these things were most anxiously and carefully scrutinized. They are of vast importance. It is no good pretending that they are not importance. The people of this country lave been undergoing austerity for six Tars, and we are not entitled to continue their hardships if we can possibly avoid it. It is a serious responsibility if we are going to improve their conditions.
The noble Lord said that milk powder and dried eggs would disappear quite soon from the market, but they are very vital foods to a very large number of women and children. I do not know by how much the sugar ration would have to be reduced, but it might have to be reduced by 40 per cent. at all events a very large reduction indeed. The Government are not disposed to ask our people to halve, or very much reduce, their present very meagre ration if they can avoid it. At all events, it is a matter which should he taken into very serious consideration. Of course we should shut out a lot of maize and that would mean it would be more difficult to feed our cattle and in consequence it would probably reduce our milk output.
Someone has said something about tobacco; that about 80 per cent. of the total tobacco supplies would disappear. The noble Lord said he would get it from Rhodesia and the Empire. Well, we can get a crop in Southern Rhodesia and production there has been greatly expanded, but the position put to me by Southern Rhodesian representatives not long since was that, although they had increased their output of tobacco very largely, before they undertook more extensive cultivation they wished to know for how long the tobacco was going to be bought. It was a natural solicitude on their part and at any rate it would take a considerable time before you could produce any large quantity as compared with what
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this would mean. And there are a large number of people who do not like Egyptian tobacco. There is no doubt at all about it that it would be a question of a great many years, with the most efficient production, before anything like what the noble Lord conjured up could possibly become available.
I have dealt with the cotton figures. We should have shortages in many other things—plywood, timber, petrol and many others, in addition, of course, to a greatly increased frugality in things like meat and many fats and so on. It is true with regard to some of them that you could supplement your supplies from elsewhere, but we have got to remember that the food production of the world is very much below what it was. It would mean, in fact, that if we were to turn this down and go without we should inflict upon our people serious hardships in their everyday life, both with regard to things they can buy and with regard to the food they can eat. We hold that that matter should be very seriously considered in looking at the considerations which should guide us with regard to this loan. Not only that, if we were to turn this down it would practically paralyse our chance of recovery for a considerable time by the lack of raw materials, machinery and so on. I do not know what the noble Lord was thinking about but he talked of millions of tons of scrap. There are millions of tons of scrap, but what our manufacturers want is not scrap but excellent machines to enable them to get on with the job. Scrap is scrap. Some of these machines are exceedingly complicated, elaborate structures which require months to build, but our manufacturers, in order to get going again, require the machinery and not mountains of scrap. It is no comfort to them that the noble Lord comes along here and offers our textile manufacturers a mountain of scrap instead of a new machine.
As a matter of fact, if we were to refuse this loan we should jeopardize our chances. That is what we should do and that is the plain English of it. We should practically wipe off the slate any opportunity of stabilization of currencies in the world through the Bretton Woods undertaking. We should put into eclipse all those efforts which are proposed to be made and which will be made by the Trade Conference to enable the standard

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of living of people all over the world to improve and for trade barriers to be diminished. As the noble Lord indicated, and as others indicated, although I will not enlarge on that, we should render an ill service to the world, a terribly ill service to the world, by the spoliation of our relations with the United States. We all know that none of us are any the worse for speaking frankly, as we do across these Benches, but it is the fact, and we cannot escape from it, that if this loan, this conference and the whole lot go by the board, you are prejudicing relations with the United States all over the world. It is no good pretending you are not. Any man in a responsible position to-clay, looking over the Pacific, looking anywhere you like, will know that it is vital to the world that we should work together with good will and that if we can possibly avoid it nothing should come between us to interfere with our cooperation.
Any noble Lord who votes for the destruction of this is undertaking a terrible responsibility—and it is not a matter for laughter. I have described how I look at it. It is a truthful description; I have not exaggerated it one bit. And I say in conclusion that here, in this, we have an opportunity of making a beginning without delay for our people to be supplied with the raw materials and machinery which are necessary for the restoration of our industry, so that our people can get settled to work producing goods for which the world is hungry and of which they themselves stand in need. At the same time, here to-night in these proposals we have the means of assuring the people
that the period of hard work in restoration that lies before them will not be accompanied by personal deprivations more grievous in some respects than some of those they suffered during the war.
We have presented to us, also, the opportunity for entering into arrangements with the chief nations of the world whereby the violent and ruinous fluctuations of the exchanges of the past may be guarded against. Moreover, we are invited, along with a great assembly of nations at the invitation of the greatest industrial nation in the world, to participate in a conference whose definite purpose is to raise the standard of living of all peoples so as to enable them, with greater purchasing power, to supply themselves with the things they require. In my view, my Lords, it is an unexampled opportunity that lies before us. Preparation for it has engaged the energies of many men, both here and in America, for more than two years, and I want to accord with one sentence of the noble Viscount in this respect, that it is not a Party matter. It is not, and we do not want to make it a Party matter. It is a national matter; it is an international matter. We feel conscious of all the difficulties, but we put it before your Lordships as urgently necessary if the world is to advance on the road to recovery. I entreat you, my Lords, with sincere respect to accord to these proposals your good will and your active support.
7.42 p.m.
On Question, Whether the said Resolution shall be agreed to?
Their Lordships divided: Contents, 90; Not-Contents, 8.

CONTENTS

Jowitt, L. (L. Chancellor.)

Addison, V.

Ammon, L. [Teller.]

Allendale, V.

Amulree, L.

Linlithgow, M.

Buckmaster, V.

Ashton of Hyde, L.

Reading, M.

Cecil of Chelwood, V.

Balfour of Burleigh, L.

Willingdon, M.

Cowdray, V.

Boyle, L. (E. Cork and Orrery)

Hampden, V.

Bradbury, L.

Amherst, E.

Harcourt, V.

Chatfield, L.

Beauchamp, E.

Knollys, V.

Chorley, L.

Cavan, E.

Leverhulme, V.

Daryngton, L.

Drogheda, E.

Mersey, V.

Denman, L.

Huntingdon, E.

St. Davids, V.

Dowding, L.

Jellicoe, E.

Samuel, V.

Dunmore, L. (E. Dunmore.)

Lucan, E.

Stansgate, V.

Elphinstone, L.

Perth, E.

Trenchard, V.

Foxford, L. (E. Limerick.)

Radnor, E.

Wimborne, V.

Gage, L. (V. Gage.)

Russell, E.

Gorell, L.

Shaftesbury, E.

Sheffield, L. Bp.

Hare, L. (E. Listowel.)

Stafford, E.

Harmsworth, L.

Waldegrave, E.

Aberconway, L.

Hatherton, L.

Henderson, L.

Noel-Buxton, L.

Rushcliffe, L.

Holden, L.

Nunburnholme, L.

Rusholme, L.

Keynes, L.

Pakenham, L.

St. Just, L.

Killanin, L.

Pethick-Lawrence, L.

Sherwood, L.

Latham, L.

Piercy, L.

Southwood, L.

Lindsay of Birker, L.

Quibell, L.

Strabolgi, L.

Marley, L.

Ramsden, L.

Swaythling, L.

Monkswell, L.

Reith, L.

Terrington, L.

Monson, L.

Rennell, L.

Trent, L.

Morrison, L.

Rochester, L.

Walkden, L. [Teller.]

Mountevans, L.

Romilly, L.

Westwood, L.

Moynihan, L.

Rothschild, L.

Winster, L.

Nathan, L.

NOT-CONTENTS

Bedford, D.

Bennett, V.

Redesdale, L.

Sempill, L. [Teller.]

Portsmouth, E.

Balfour of Inchrye, L. [Teller.]

Stanley of Alderley, L. (L. Sheffield.)

Beaverbrook, L.

On Question, Motion agreed to.

Motion agreed to accordingly.

BRETTON WOODS AGREEMENTS BILL.
Read 21 (according to Order): Committee negatived.
Then, Standing Order No. XXXIX having been suspended (in pursuance of the Resolution of December it), Bill read 3a, and passed.

GOVERNMENT OF ORISSA.
7.55 p.m.
LORD PETHICK-LAWRENCE: My Lords, I beg to move the Motion standing in my name.
Moved to resolve, That this House approves the continuance in force of the Proclamation issued under Section 93 of the Government of India Act, 1935, by the Governor of Orissa on the 30th June, 1944, and of his Proclamation varying the same issued on the 7th September, 1945, copies of which were presented to this House on the 25th July, 1944, and the 9th October, 1945, respectively.—(Lord Pethick-Lawrence.)

WOOL STOCKS.
LORD DENHAM: My Lords, I beg to ask the question standing in the name of my noble friend Lord Barnby.
[The question was as follows:
To ask His Majesty's Government, the total weight and value of wool
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owned outright or in conjunction with the Dominions in all theatres. Also the assumed value of future commitments to purchase.]
LORD PAKENHAM: My Lords, the total weight of stocks on July 1, 1945, was about 3,250,000,000 pounds, the cost of which, where lying, was about £170,000,000. Under the recent Agreement, this is owned jointly by the United Kingdom Government and the Dominion Governments. The 1945–46 Dominion clips are being taken up by the United Kingdom Government by the previous methods of appraisement and bulk purchase, at an estimated cost of about £75,000,000, on account of the joint Organization which is being set up by the United Kingdom and Dominion Governments. Thereafter, it is proposed that new clips shall be offered for sale through normal channels, the Joint Organization taking over any such wool not purchased at the auction reserve price.

PLYMPTON ST. MARY RURAL DISTRICT COUNCIL BILL [H.L.]
Returned from the Commons, agreed to, with Amendments: the said Amendments considered and agreed to.

EAST GRINSTEAD GAS AND WATER BILL.
Returned from the Commons, with the Amendments agreed to.
House adjourned at three minutes before eight o'clock.