Lords Sitting of 31 March 1954

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR On the Woolsack.
Prayers

TATE GALLERY FUNDS
2.35 p.m.
LORD AMULREE: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will request the Trustees of the Tate Gallery, since they raised no objection in principle to the publication of the state of their funds, to complete their report of February 17 to the Lords Commissioners of the Treasury by publishing such a statement of their purchasing fund as at that date.]
THE PAYMASTER GENERAL (THE EARL OF SELKIRK): My Lords, in their report of February 17 the Trustees of the Tate Gallery signified their intention of reviving the pre-war custom of issuing an Annual Report in which information would be given of their purchasing policy and a statement of the funds they administer. I am informed that their first Report will deal with the year ending March 31, 1954, and I would ask the noble Lord to await its publication.
LORD AMULREE: My Lords, I should like to thank the noble Earl for his reply, and perhaps I may put a supplementary question. Can the noble Earl say whether the Report which he has mentioned will contain a summary of the Gallery's financial affairs before the year ending March 31, 1954, as well as the figures for that year?
THE EARL OF SELKIRK: I am afraid that I am not in a position to say what the Report will contain, but if I may make a personal guess it is that it will probably give some account of what they were doing before the year ending March 31, 1954. I am sorry that I cannot give
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any assurance to that effect, but that is my general impression.
LORD AMULREE: I thank the noble Earl.

GERMANS IN EGYPTIAN WAR MINISTRY
LORD VANSITTART: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government, (1) whether any statement can be made on the formidable number of German Nazis and Communists employed in various branches of the Egyptian Army: and (2) whether the West German Government possesses any means of diminishing the number of Germans engaged in seconding the Egyptian policy of assassination.]
THE MINISTER OF STATE, FOREIGN OFFICE (THE MARQUESS OF READING): My Lords, I believe that about eighty Germans are at present employed by the Egyptian Ministry of War and Marine. Their main duty is to advise on the training and establishment of the Egyptian armed forces, but a small number of them are concerned with arms manufacture and research, and some are known to be assisting in the development and production of sabotage weapons and to have instructed in sabotage and guerilla techniques. The majority of the advisers are not political extremists, but I understand that some of them are ex-Nazis and former S.S. officers. I have no evidence of any Communist influence amongst them.
As regards the second part of the noble Lord's Question, I must point out that all these Germans are private individuals, and the Federal Government has no formal control over their activities. The Federal Government has been willing to do what it can in this respect, but the difficulty is that the more extreme of the advisers are the least susceptible to the Federal Government's moderating influence. I assure the noble Lord that Her Majesty's Government will continue to watch the situation carefully.
LORD VANSITTART: My Lords, I thank the noble Marquess for his reply. I confess that I am greatly relieved by

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it, especially by the figure of eighty, because my figure was considerably more alarming. I should like also to express my gratitude for what he said about the attitude of the West German Government in this matter, which is evidently quite satisfactory.

SYNTHETIC RUBBER SCHEMES
LORD OGMORE: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether their attention has been called to the proposal by Imperial Chemical Industries, Limited, and other big British chemical or commercial organisations to embark on the large-scale production of artificial rubber; and what steps they are taking to safeguard the welfare of the people of Malaya who rely so greatly upon the production of natural rubber.]
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR THE COLONIES (THE EARL OF MUNSTER): My Lords, I understand that the projects are for the manufacture of certain types of synthetic rubber with highly specialised industrial application. These new products will not compete with natural rubber in its normal uses. The tonnage produced would be insignificant in comparison with Malaya's output. As regards the second part of the Question, the Government of the Federation of Malaya are endeavouring to improve the efficiency of the natural rubber industry by encouraging replanting with high-yielding trees. They have instituted control over grading and packing to improve the quality of rubber exported; and extensive research and development work is being carried out in this country and in Malaya to improve the technical qualities of natural rubber and to develop new uses for it. A comprehensive inquiry into the Malayan rubber industry covering
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costs of production and taxation has begun.
LORD OGMORE: My Lords, I am grateful to the noble Earl for his Answer, and I sincerely trust that his forecast of the effect of these schemes on the Malayan industry is correct. In this connection, has the noble Earl's attention been drawn to a statement made by the Secretary of State for the Colonies at a public dinner in London only a few nights ago when the Secretary of State described this product as a "bastard synthetic rubber" and compared it to the hydrogen bomb?
THE EARL OF MUNSTER: I have read the report of the speech made by my right honourable friend, but I found nothing about the hydrogen bomb in The Times report.
LORD OGMORE: I have here the cutting of The Times report in which the Secretary of State deplores the penetration of the wide fields of the use of natural rubber by this new product. He considers it an evil and likens it to the internal combustion engine, the radio and the hydrogen bomb—a somewhat comprehensive group, f agree, but the hydrogen bomb was mentioned.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, in view of the noble Earl's statement: that he thinks this highly specialised product will not compete with Malayan rubber, may I say that I have never heard before that synthetic rubber was being produced for a non-competitive purpose with natural rubber. Can he enlarge on that?
THE EARL OF MUNSTER: Yes, I think I can. The projects which we're announced last week are for the production of special types of synthetic rubber, including heat and oil-resisting rubbers and resins for shoe soling, which would not compete with natural rubber. In point of fact, the production anticipated at the moment is something like 16,000 tons, which is less than 3 per cent. of the total Malayan output.

THE SYDNEY CONFERENCE
2.42 p.m.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE rose to draw attention to the results of the Sydney Conference; and to move for Papers. The noble Lord said: My Lords, I hope your Lordships will consider it is both appropriate and right that we should debate great issues such as the Sydney Conference which affect the destiny of our country. I trust that your Lordships will find this debate welcome, and the more so as it is to be graced by the maiden speech which we shall hear from my noble friend Lord Baillieu. Noble Lords who follow him will have the opportunity of congratulating him after his speech, but I cannot refrain from expressing my good wishes in the certainty that his maiden speech w ill appeal to your Lordships.
The Sydney Conference was not an emergency meeting to discuss emergency matters but one of a series of conferences between partners of this loosely-knit, undefined combination of nations which are of proven unity in ideals and effort, both in peace and in two world wars. The Commonwealth machinery of consultation remains informal. There have been at various times, in this country and elsewhere, proposals that this machinery should be made more permanent and that some fixed inter-Dominion consultative organisation should be formed. That idea has never found favour in authoritative quarters, either here or elsewhere within the Commonwealth, and I do not think that it is likely to find favour in the future. Nor does it seem to me necessary, so long as meetings such as this Sydney Conference are held at which subjects considered appropriate between partners in the Commonwealth are discussed amongst those partners.
It seems to me that the encouraging feature of the Sydney Conference, and the feature which is different from previous Commonwealth Conferences, is that at last we have reached the stage when the Commonwealth declares that it will act as a unit and not, as so often in previous conferences, agree that the several component parts shall each follow out some particular line of policy. At the Conference the Commonwealth endorsed as a unit the principle of Com
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monwealth Preference—I do not mean preference in the narrow tariff sense but preference for development and investment. I trust your Lordships will agree that, when we talk of the ability of this country to participate in Commonwealth development, it is good to remember that this investment is possible only because of the policy of the Chancellor of the Exchequer and Her Majesty's Government over the last few years, which has resulted in the growth of the strength of the sterling area.
The story of our recovery is told in the Economic Survey which is issued to your Lordships to-day—a message of reasoned and cautious optimism. The major part that Britain is expected to play in this policy of investment has been made possible—and it cannot be too widely known —only because of the policy of Her Majesty's Government which turned a threatened sterling area deficit of £1,000 million in 1951–52 into a surplus of over £400 million by mid-1952–53, with reserves in the sterling area by January, 1954, of more than £900 million. Those are achievements of which I think the Government have every reason to be proud and which give every reason for congratulation to the Chancellor of the Exchequer.
Nevertheless, he must feel some disappointment that the world, and particularly the dollar world, has not accepted our exports to the extent that he himself declared necessary in December, 1952. At that time, he told representatives of industry, commerce and organised labour that we must increase our exports by 20 per cent. over 1951 in order to achieve a surplus of some £300 million to £350 million in our balance of payments required to build up reserves and provide for investment overseas. In fact, the exports have shown no great rise which will enable them to play their part to the extent the Chancellor of the Exchequer had hoped. The Economic Survey shows that the volume of exports is running at approximately 5 per cent. above last year's average level, but when we take into consideration possible falls in price level I feel that there is no great reason for optimism that the world will accept British exports to the extent that the Chancellor of the Exchequer hoped. Indeed, at the Sydney Conference my right honourable friend spoke of £120 million being sanctioned for Common

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wealth investment. I should like to ask the Government how they reconcile the figure of £120 million with the expectations declared by the Chancellor of the Exchequer in 1952, that from £300 million to £350 million would be the necessary figure.
The ultimate purpose of investment and development is production, but I would submit to your Lordships that there can be no incentive to the British investor to invest in production overseas, for the Dominions to borrow funds, or for emigrants to leave this or other countries and go to work and settle in the Dominions, unless there is a reasonable chance of the resulting production finding a market. In fact, Commonwealth development hinges upon the certainty of stable markets, and stable markets, in turn, hinge upon some form of preferential treatment in one form or another. For these reasons, systems of tariff preferences which give continuous mutually agreeable incentives are essential for the sound expansion of Commonwealth production. That truth, if you will accept it as a truth, brings us straight up against what I believe is by far the most important issue, and the widest issue, of the Sydney Conference: the decision of Her Majesty's Government to have one more try for a free trade world, based on the hope a! a change of economic heart and policy by the United States. It is the Government's decision to accept for Britain the continuance of the principle of non-discrimination in international trade and the extension of the most-favoured-nation treatment to all who conform to these rules.
In sustaining their faith in the possibility of a free trade world, the Government are following along the lines which have been followed since 1946, and which I believe, if we look to past history, will show a series of declared expectations unfulfilled and economic forecasts confounded. The Government still declare their belief in this aim and policy of the multilateral free trade world, and they are apparently not discouraged by setbacks. At the same time, it seems to me, they do not express any very great enthusiasm about the possibility of the horse they backed running rather faster than it has hitherto. The Government
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have expressed no great enthusiasm for the Randall Commission Report. It seems to me that the Randall Commission Report gives little encouragement of any drastic liberalising of tariffs and trade in the United States economic policy. If your Lordships will look at to-day's Manchester Guardian, which contains an interview with Mr. Randall, you will observe that he does not seem very optimistic that even his modest proposals will find favour with the Republican Congress, in spite of the fact that the President of the United States has sent a message to his Administration asking that the Legislature shall assent to the Randall proposals. Those proposals are modest proposals, but their reception is only lukewarm.
The conviction of Her Majesty's Government, it seems to me, is that in spite of a nationalistic world, where there is no international equilibrium, they think this attempt at a free trade world is still worth while, and they accept the risk and the cost. At the Sydney Conference, this belief was translated into a willingness not to press for the Amendment of G.A.T.T. This belief in the free trade world took the form of declaring that, though we believed in tariff preference as a method of canalising mutually advantageous trade channels, Britain was willing to defer to the wishes of those who were unwilling to make any advance beyond the present position. The issue of discrimination or non-discrimination in our international trade is often befogged by critics who can describe reasonable discrimination only in terms of exclusion. The truth is that we all want an expanding economy and the highest possible level of international trade. The question is, how are we going to get it; and if, later, we have to alter our economic course, how much shall we have to pay for the time that we have spent in following a policy that has subsequently to be abandoned.
While we pursue this aim of multilateral international trade, we are losing good will and faith in Britain by parts of the Colonial Empire; and that is a sad thing. We should all realise the price we are paying for this attempt. The tobacco, sugar, banana and citrus fruits industries of the West Indies are unable to gain any increased preferences in our markets for which they are crying out

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and to which they feel entitled, morally as well as economically. Because of the shackles of G.A.T.T., we can do no more than we are doing now to help them. That is part of the cost we are having to pay for the pursuit of the multilateral free trade world. It is tragic to read in Jamaica of bitter resentment, of talk of breaks in trade ties with the United Kingdom in favour of reciprocal arrangements with Canada because we cannot do more for the West Indies than we do. It is tragic, also, to know that Trinidad's Government have considered it necessary to call a protest meeting of citrus-producing West Indian Colonies to protest against the purchase by the United Kingdom of nearly £l million of citrus from the United States. That is part of Her Majesty's Government's policy, but let us not hide from ourselves the cost, in good will and in faith in Britain, which this policy has meant to us at the present time.
Again, while we pursue this aim of the multilateral free trade world, we do so at a cost of our ability to protect our home markets of agriculture and industry. Since 1945, we have in fact enjoyed protection in this country, not so much by tariff but from transitory factors which are now disappearing—the protection through balance of payments restrictions and the destruction of enemy industrial property and plant. That has given us a degree of protection, apart from tariffs, which is sliding away, and now we are about to face the full blast of competition, in Europe and Asia, from those who were our enemies before. We have not yet met that full blast either in our overseas or in our home markets. We are beginning to feel, as in shipbuilding, the effect of indirectly subsidised work carried out in the yards of our foreign competitors. This competition, particularly if there is a severe United States recession, which would have a magnified effect in this country, may require suddenly some rapid and positive action by the Government of the day in order to protect our home markets. Noble Lords on that side and this side of the House will remember the 1931 crisis: the Abnormal Importations Act had to be passed rapidly through Parliament to save our industry from the blast of unexpected, sudden and, as we termed it, unfair competition.
We agreed at the Sydney Conference to continue a condition in which, if such a situation arises, we are powerless to protect our home markets, short of using the very methods of quantitative licence and quotas which we are all trying to discard. This curious position has arisen because, under G.A.T.T., we cannot use a tariff as a means of home protection. If we wish to raise any unbound tariff or create a new tariff, we cannot do so, because we are pledged by G.A.T.T. to raise correspondingly the duties against Commonwealth imports. But by the Ottawa Agreements we are pledged to allow into the United Kingdom, duty-free, virtually all the Commonwealth production of agriculture and industry. So we are in a cleft stick, because, so long as G.A.T.T. exists in its present form, we must discard one or the other; and, if a situation arose such as that, we should be driven to the worst form of discrimination and protection—again, licences, quotas and quantitative restrictions, which I repeat we are all trying to discard.
I have tried only to show on the debit side something of the costs and dangers of clinging, perhaps too persistently, to the present policy of hoping for an economic sunrise in the West. I have not dealt—and I will not delay your Lordships by attempting to do so—with the pros and cons of whether we could or could not have taken some unilateral action in Sydney in the way of modifying the General Agreement on Tariffs and Trade—whether or not, had we taken that unilateral action, the risks for this country would have been too great in relation to the possible benefits—or whether it was better to follow the policy which Her Majesty's Government did, of saying, "We cannot go further than our partners agree to go." Her Majesty's Government who have the responsibility for the affairs of this nation took the latter view.
But without arguing the point as to whether we could or could not have done something more at Sydney, let me say this. The future of the principle of the right of discrimination in our trade comes up for settlement at Geneva this autumn, when the General Agreement on Tariffs and Trade is to be reviewed. It is necessary that decisions of immense importance shall be reached before, and not during, the Geneva session, if Britain

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is not to be tied up for a further period of years with the chains that now bind our economic freedom. Before the autumn, we shall see the reaction of the Republican Congress to the message of the Administration on the Randall Commission. We shall see whether there are any indications that the Republican Congress will allow a drastic change in the way of the liberalising of American economic policy. My own view is that those who believe in that are going to be disappointed—I may be right, I may be wrong, but we shall see.
Whatever alternative exposes itself, I would conclude by asking that Her Majesty's Government should arrive at decisions in the light of actual facts and practical needs, rather than beliefs and hopes which have not yet been fulfilled and which, it seems to me, are not likely to be fulfilled in the reasonable future. My Lords, my plea is this. All credit to the Government for all that they have achieved. But do not let us hope for too long and at too great a cost for something in the way of an international free trade world when it is not going to be attained. Rather let us look alter ourselves and our partners by restoring to ourselves a reasonable degree of discrimination; and let us be ready to do it before the Geneva Conference in the autumn. My Lords, I beg to move for Papers.
3.4 p.m.
THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (VISCOUNT SWINTON): My Lords, the Whole House is indebted to my noble friend Lord Balfour of Inchrye for introducing to us to-day the topic of the Sydney Conference and all its problems, which, indeed, range very wide over almost the whole economic field. I think it is important, as indeed he reminded us, to bear in mind that this was not a special Conference called to deal with an emergency or with some new situation. It was one of the regular meetings of the Finance Ministers to review the action which the sterling area countries have been taking in concert ever since the beginning of 1952. It has been said (it is easy to criticise a communique—I have done it myself sometimes) that there was nothing very novel in the outcome of this Conference. That is quite true, but I do not see why that should be a
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source of adverse criticism. As my noble friend pointed out, it shows that the action we have been taking, individually and collectively, over the past two years has been singularly successful.
In the life of nations, as of individuals, discord often attracts more attention than harmony—I think that is also true of modern music. But two years' harmonious co-operation in the Commonwealth has certainly yielded remarkable results. We were running hopelessly into debt. In the last quarter of 1951 the sterling area was running a balance on the wrong side at the annual rate of over £1,400 million. I agree that it is also fair to take what was the annual figure over the whole year. The convenient way of dealing with Commonwealth accounts is to take them from June to June—that is the common practice of us all. The deficit of the Commonwealth sterling area, in balance of payments in the year ended June 30, 1952, was £1,000 million. That deficit was turned into a surplus of over £430 million in the year ended June, 1953.
At the Conference, Minister after Minister testified to the importance of sound internal policies and the effect which these have had. in producing this satisfactory change. The Governments all testified to their conviction that we are following the right road in our domestic policies and in our general economic policy, and that we are confirmed in our determination to go on following that road together. In fact, I think the theme of the Conference arid the attitude of all the Commonwealth countries can be summed up in the words "confidence", "resolution" and "preparedness". The noble Lord, Lord Balfour of Inchrye, has spoken a great deal of Her Majesty's Government in this country, but nearly all that he was saying concerned, of course, the collective judgment and decision of all the Commonwealth countries. It is rather important that we bear that in mind, because we could no more dictate to seven other wholly sovereign members of the Commonwealth than they could dictate to us—and none of us would wish to. If we are to act together, we must act in concert.
The Conference reaffirmed its support of the policy which is generally referred to as the collective approach.

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It was to this aspect that my noble friend devoted a good deal of his speech. I think he was perhaps unduly pessimistic on the prospects for the liberalisation of the United States trade policy. I think someone once said that pessimists were people who had lived with optimists. The noble Lord may have been in hopeful company lately, but I would, at any rate, ask him to wait and see. We have all seen this morning the message which the President of the United States has addressed to Congress. That message contains a number of specific proposals, founded largely on the Randall Report, many of which are directed to the reduction of the American tariff and to the simplification of American customs procedure. I think that any trader would agree that the simplification of procedure is at least as important as, and perhaps more important than, the reduction of the tariff. Your Lordships may have observed that the President himself characterises these customs procedures as an "unwarranted" burden on trade. I think, too, that we ought to look not only at the specific proposals, but at the language which the President uses in this very carefully framed message, and at the spirit which inspires it. The scene now shifts to Congress, and we shall not, of course, be able to form a fair judgment—or indeed any judgment at all—until we see how Congress reacts. Some time must elapse before final decisions are taken.
I find myself in agreement with the noble Lord on this at any rate—that all this emphasises the importance, in other Commonwealth countries and here, of doing everything we can in three directions: first, in the development of Commonwealth resources; secondly, in the expansion of exports based on efficient production (and they will not be based on anything else); and, thirdly, in doing the maximum of trade we can within the Commonwealth. We are, in fact, carrying out this threefold policy. Where I differ from the noble Lord is in this. That policy which we are carrying out is not an alternative to the collective approach. That threefold policy is very necessary whether the collective approach succeeds or fails; it is not in the least inconsistent with the collective approach. Indeed, I would say that the threefold
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policy is really complementary to it. If I may take an example with which I am very familiar, I would refer to the Ottawa Conference and the work which we did there (I think I am the sole survivor of that shocking episode; but I am not at all ashamed of what we did). If noble Lords will look at the trend of trade following Ottawa they will see, it is true, that trade within the Empire increased enormously; but—and this is the interesting and significant thing—they will see that trade between countries of the Empire and the rest of the world increased in even greater volume than trade within the Commonwealth. Therefore, I would say—indeed I must treat this as axiomatic—that the stronger we in the Commonwealth are in our resources and in our mutual trade, the better shall we all be able to play our part in a wider and freer system of world trade, if that can be brought about.
It follows from what I have said that I cannot accept Lord Balfour of Inchrye's thesis—if I have followed him aright— that we have to choose between the collective approach and Commonwealth development. And surely he is wrong in saying that we shall have to pay for the time we have spent in following a policy that may have to be abandoned assuming that the collective approach gets us nowhere. But there is nothing to abandon. We have not removed restrictions on dollar imports, and we certainly shall not remove such restrictions unless we are satisfied that all the conditions are present in which it would be safe and beneficial for us to do so. And, as I have said, and shall show further in a few minutes, we are doing all we can to develop Commonwealth resources. It has been our practice, and it will certainly remain our policy, to keep an open door for imports from the Commonwealth sterling area. My noble friend characterised the collective approach as "one more try for a Free Trade world." That awakes echoes of the Election of 1906; but it surely is a considerable exaggeration, even if the conditions were the most favourable anyone can imagine. It really would not be a Free Trade world. It would be more accurate to say that it would be a world in which there was more and freer trade. Of course, there is no question of eliminating tariffs.

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That leads me to say something following on what the noble Lord has said, and to speak very frankly about G.A.T.T. and Imperial Preference. My own personal views are known, and I think I express the views of my Party and of the Government in this. We were always opposed to and disliked the "no new preference" rule. But it is riot something that happened at Sydney. It was clear at the Conference in December, 1952, that the countries of the Commonwealth held differing views about Imperial Preference and about G.A.T T. We, in the United Kingdom, argued strongly that the whole Commonwealth should join in getting G.A.T.T. amended to allow new preferences; in fact, that Imperial Preference should be treated on similar terms to closer and more exclusive customs unions. I argued vehemently—and I thought logically and convincingly: I certainly convinced myself—that it was neither logical, nor sensible, nor fair, to say that a customs union which enabled a group of countries to encircle themselves with an all-embracing prohibitive twill ring was a blessed thing but that the looser and far less prohibitive system of Imperial Preference was something wicked—a sort of poliomyelitis infection. I put that very forcibly. But I am bound to say that I could not get the majority of the Commonwealth countries to agree. The largest measure of agreement 'we could get as between Commonwealth countries at the Conference was this: first of all, a general desire to maintain existing preferences, founded on a belief in their value. I was glad to see that the able Finance Minister in India, Sir Chintaman Deshmukh, during the Budget debate in the last day or two staled emphatically in the House of the People in India that he stood by the existing preferences because he regarded them as of real value both to India and to this country.
But while the Commonwealth countries as a whole would not go further than maintenance of existing preferences, they agreed after a great deal of discussion —and this is the second point—that there should be a united effort in which they would all be prepared to join, to get the G.A.T.T. countries to agree that the "no new preference" rule should be amended to allow the United Kingdom to raise duties where there is free entry for Commonwealth countries to-day, and to raise
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those duties without imposing corresponding duties on Commonwealth products. We all tried to do that, but were only partly successful. I admit there was a gap. The Government regret that we could not persuade a number of Commonwealth countries to go further. It is much better to talk about this position quite frankly. We could riot, and that is a fact we have to face and accept.
Your Lordships may have noticed that when people talk about G.A.T.T., they are apt to dilate on the features they like or dislike. My noble friend was no exception. But we have to look at all four quarters of the animal. I admit that it is rather a mixture. I must not say it is a mongrel; that would be rude to it; but it is a rather odd amalgam. It combines moral aphorisms, codes of conduce admonitions and prohibitions, many of them no doubt very sound, of what we shall do and what we shall not do; but bound up with all the codes and platitudes are a number of special tariff bargains. The Government in this country and the Governments of other Commonwealth countries made those bargains with a number of foreign Governments because they thought they were good business. It all hangs together. One country cannot get rid of the bits they do not like and keep the bits they do like, unless they get the agreement of all the other countries. It is like any other contract or treaty. There was one thing on which all the Commonwealth countries agreed, both last year and this—that was, that it is in the interests of all of us to keep the tariff rates which are bound by Agreements embodies in G.A.T.T., bound for a further period.
Personally I regret that the "no new preference" rule was ever introduced into the General Agreement. I doubt whether it was really necessary to abandon freedom in preference in order to get the tariff concessions. I think that when these Agreements were being negotiated it would have been wise to have taken perhaps a little less in tariff concession and for the Commonwealth to have kept its freedom. But there it is; we have the Agreement. We have the attitude of the Commonwealth Governments. Imperial Preference and Empire trade are reciprocal processes, and it is important that we should act in concert. Then the noble Lord. Lord Balfour of Inchrye came to what, after all, is the crux of the

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matter— that is, accepting that the Commonwealth are not all at one over this business, should we be wise to take unilateral action? —I thought he was very fair in saying that he was not going to commit himself to that. I am sure he is right. I am sure that we should do more harm than good by isolated independent action by merely denouncing G.A.T.T. ourselves, which would deprive us of every benefit without getting the Commonwealth to move along with us. G.A.T.T. comes up for review at the end of this year or early next year, and the Commonwealth Governments have agreed that we will consult together. It will have to be a very full consultation, and we must all do a lot of work on it before that review takes place. That we have undertaken to do, and we certainly shall do it. We shall not leave it till some Geneva meeting and have a consultation in the corridor. That is not the way we propose to work it.
This situation makes it all the more important that we should concentrate on the development of Commonwealth resources. That development not only increases the strength and wealth of the country in which the development takes place, but is an immediate encouragement to exports from this country. It leads to more sterling imports and saving of dollars and to more mutual trade in the future. All this strengthens the whole Commonwealth and fortifies the trade balance and reserves of the Commonwealth sterling area. I take a very good example, which your Lordships will have noticed recently in the Press—that is, the Sui gas development in Pakistan. That is a tremendous find. It is a great bit of luck to find this vast area of natural gas which is already proved and which is estimated to be sufficient to relieve them for seventy to eighty years of all need to import coal. That is going forward, and going forward, as I see it, in exactly the right kind of partnership.
The Pakistan Government have a share —Pakistan shareholders have had an issue, which was over- subscribed six or seven times—the Burmah Oil Company have an interest, and there could not be a more efficient undertaking for them to be in partnership with. And I am glad to say the Commonwealth Development Finance Company, which your Lordships will know to be the new
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institution founded in the City by a number of trading firms after the 1952 Commonwealth Conference, have taken up £1 million of equity capital. I do not think I am revealing any secret when I say that already, as a result of this new partnership undertaking, large orders have come to this country. That seems to me a typically good example. We are practising what we preach. Last year, over £120 million was approved for investment in the Commonwealth Sterling Area. This is all new money; it is not transfers of existing capital. In addition to that, £ 38 million worth of capital was approved for transfer to Canada.
If I do not weary the House, I want to deal with one other matter; not that my noble friend raised it—I should not have expected him to do that—but it has been canvassed a great deal outside. It has been said that we can develop intra-Commonwealth trade only if we are ready to stick to Government bulk purchase, of which the noble Viscount, Lord Alexander of Hillsborough, is such a strenuous advocate. It would indeed be a most unhappy dilemma if it were true that we had to choose between freedom and Empire; if the old motto Imperium et libertas were Imperium aut libertas. Fortunately there is no such dilemma. It is quite untrue to suggest that we must have bulk purchase if we are to have intra- Commonwealth trade. That was developing well before the war, when hulk purchase played no part. It went very well after Ottawa and there was no suggestion to me at Ottawa, or afterwards, that we could develop trade within the Empire only if we had bulk purchase.
Laying aside dogma, there really are grave dangers and disadvantages in bulk purchase. It may be costly to the taxpayer. It depends, after all, on the single judgment in one commodity, or in a series of commodities, of a Minister or Ministers, and their officials, few of them trained to the job, and none of them universal experts. Nothing is harder than to gauge the future of a market. I should like to give your Lordships an instance in my own experience in this Government, while I was still responsible for a great commodity which I am now glad to say has been restored to a free market and exchange. I got hold of the two biggest consumers in this country of this article, and I got the two leading men in each

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firm to come and advise me. I said: "What view do you take of the market to- day in this commodity and of future prospects?" Sitting there together with me, they gave me diametrically opposed views. One of them said,"Well, if I could, I should buy three months forward." The other one said, "I do not agree in the least; I should not buy forward at all." Is that not a good example of how much wiser it is, in the interests of trade, and certainly of the taxpayers, that these things should be in free markets, where individuals can exercise trading judgment? Moreover, this freedom enables us to reopen the commodity markets. Those markets are not there just for speculation. They came into being, grew and prospered because of their value to producers and to buyers. They are of great value to us and to the Commonwealth. They earn currency, directly and indirectly, and thereby they enhance the value of sterling and confidence in the pound, which is a common interest of the whole Commonwealth.
That leads me to this comment. There is one aspect of the present situation which has not attracted much attention, because it is not at all sensational; but it is very satisfactory. The sterling area has now weathered six or eight months of a gradual downturn of United States activity —"downturn," I believe, is the fashionable phrase to use now as the polite equivalent for a modest recession. Anyway, that has been going on. Yet we have met that with confidence frilly maintained in this country, with the pound stronger than it ever was, and with a steady accretion to our reserves, in spite of the fact that we had heavy debt and interest payments at the end of last year. That is an immeasurably better performance than we have ever put up, in similar circumstances, since the war. I think that is proof of the confidence of foreign countries in our policy, and in sterling, and it shows how important it is to continue with this policy.
I have spoken of the present. If I am asked about the future, without claiming to be at all infallible I should say that the sterling area ought to enjoy a substantial balance with the rest of the world this year; but I do not think we can expect that to be as high as we achieved in the latter part of 1952 or in 1953. It must be remembered that we and other
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sterling area countries have liberalised our policy by the removal of restrictions. Also — and this is a most satisfactory feature — production has risen considerably, which in its turn involves a considerable increase in the volume of our imports of raw materials. We are not doing too badly over exports at the present time. My noble friend Lord Balfour of Inchrye mentioned dollar exports. In 1953 our exports to dollar countries were £47 million higher than in 1952 —the noble Lord will find that in paragraph 19 of the Economic Survey which has just been published. Our total exports in recent months have been running at about 5 per cent. above last year's average.
LORD BALFOUR OF INCHRYE: In volume.
VISCOUNT SWINTON: Yes, in volume. We can draw encouragement from these facts, but certainly we must not become complacent. The law fundamental is always there: that we have got to be competitive producers. Whatever we like to do to our own tariff, we have got to export competitively, and we have got to pay for our imports of raw materials and food by competitive exports. We have been doing better in recent months. But it is not enough to hold that position. We must do better still if we are to improve our reserves and to have the substantial balance we should like to see for investment, particularly in the Commonwealth.
The facts of our economic position are so important that we must do all we can to make these facts and their implications known to all our people. The Government, of course, must do everything they can in this way: I am sure we are all agreed about that. Successive Governments have given —and they have been right to do so —a wealth of information on the general industrial and economic position, and, indeed, on the broad facts of particular industries. We shall continue to do that, and we should welcome any practical suggestions on how that information can be made more graphic and more effective. But, at best, the information which the Government can give, authoritative and important as it is, must be somewhat general. That is true, too, in a lesser degree, of the admirable work done by organisations like the British Productivity

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Council. But when the Government and organisations have done all they can, it is only the individual firm which can apply the general knowledge to the particular circumstances of a trade. It surely is of the highest importance that this application, in terms of production, price and competition, should be known and appreciated on every shop floor. I know that many firms are doing this, but the aggregate of our exports and our trade balance depends on the efforts of each and all. We are all in it together, and we ought all to share the same knowledge. If I may !use an old military saying, every man should have sufficient knowledge of the general idea to carry out his particular operation.
I should like to close on another encouraging note. Last year I was lucky enough to visit six Commonwealth countries—or, rather five countries and a continent, because it included every State in Australia. Anyone who visits the Commonwealth to-day cannot fail to be impressed by the deep interest which every country takes in the progress in the economic condition of all the other countries. The diversity of the Commonwealth, and the sovereign independence of its constituent countries, has, thank heaven ! in no way diminished, but rather has enhanced the realisation of our interdependence, and the fact that we are all members one of another. In that unity lies our strength.

EAST-WEST TRADE
3.40 p.m.
THE MARQUESS OF READING: My Lords, with the permission of the House, I should like to make a statement on the discussions which have taken place this week with Mr. Stassen, representing the United States Government, and M. Maurice Schuman, representing the French Government, on the subject of East- West Trade. We discussed questions affecting both the scope and the enforcement of the controls over the export of strategic goods to the countries of the Soviet bloc We found ourselves in full agreement that, while controls must be maintained on exports of goods which would add directly and significantly to the Soviet bloc's military capabilities, especially of course in
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unconventional weapons, we should seek a substantial relaxation of the controls in other goods and an expansion of civilian trade. I emphasise that such a relaxation is fully compatible with security requirements.
On this agreed basis, we shall now proceed to discuss with other friendly Governments the detailed application of this policy. Our proposal to them will be that we should examine the scope and effect of the controls category by category, the whole operation taking two or three months. But it is our hope to introduce agreed changes by stages, and the House may be assured that we shall avoid needless delay. At the same time, the House will appreciate that there can be no question of relaxing any controls except after full discussion with other friendly Governments who are equally concerned.
EARL JOWITT: My Lords, we are grateful to the noble Marquess for making that statement, which seems eminently satisfactory, so far as it goes, and plainly indicates that measure of good will which we all hope to receive from two such valued Allies. I say "so far as it goes." The difficulty arises when you come down to details, and I should very much like to be assured that the House will have an opportunity of being informed from time to time as and when detailed application of these provisions have been agreed upon. Perhaps the noble Marquess will consider what steps he can take to inform the House when details are worked out. The second question I would ask is this. Assuming that at Geneva a satisfactory result is come to and that the state of war in Korea is declared at an end, should I be right in thinking that the same principle would then apply to China as is now being applied to the Soviet bloc countries?
THE MARQUESS OF READING: My Lords, as regards the noble and learned Earl's first question, I will consider whether we can meet him in any way, and if so how, on the points which he has put. As regards the question on China, Geneva has not yet begun, and I think we shall have to see whether real progress is made there. I certainly cannot commit myself to any decision or any statement of policy at this stage.
LORD HENDERSON: My Lords, I would emphasise this point. We on these Benches are anxious that relaxation of controls should be extended to East-West trade in the Far East as soon as possible. I can understand the noble Marquess saying that the Geneva Conference has not yet begun, and that there is no result as yet as a guide but should I be right in assuming that the Government have considered in advance what they would do in the event of agreement? Surely it is not going to be left until after the Conference to decide whether, in principle, there should be an extension of the relaxation of controls to East-West trade with China.
THE MARQUESS OF READING: The noble Lord has been a Minister in the Foreign Office and I really cannot believe that he would expect me to say now that the Government have come to a decision as to what steps they would take at some future time in a situation which has not yet begun to develop.
VISCOUNT ELIBANK: My Lords, may I from these Benches heartily welcome these discussions, which I hope will lead to an improvement in East-West trade and, in its turn, to an improvement in the tension in the political sphere. I was going to ask the noble Marquess the question which was asked by the noble and learned Earl, Lord Jowitt—that was, whether he could keep the House informed from time to time both as to any changes in the scope of these controls and also, particularly and just as important, with regard to their enforcement. As the noble Marquess knows, there is an international body known as COCOM sitting in Paris and which reports to the Government from time to time. Parliament and the British public as a whole have no cognisance whatever of what goes on behind its closed doors. Therefore it seems to me all the more important that Parliament, as suggested by the noble and learned Earl, should be kept informed, and it may be that questions may from time to time be addressed to the noble Marquess in that respect, As regards China, is the noble Marquess aware of what I have said in this House frequently on the subject of China? I only mention it to- day and hope that I may perhaps be permitted to reinforce everything that has come from the Front Opposition Bench on this particular subject.
THE MARQUESS OF READING: My Lords, I find myself in some difficulty in disentangling the questions from what the noble Viscount has put. On the point he has made with regard to giving the House as much information as possible, as I have told the noble and learned Earl, Lord Jowitt, I will consider with the others concerned in these matters whether we can give any, and if so what, information from time to time. The noble Viscount is quite right in thinking that I am already aware of his views on the subject of China trade.

THE SYDNEY CONFERENCE
3.47 p.m.
Debate resumed.
LORD OGMORE: My Lords, I agree with the noble Viscount, Lord Swinton, that we are indebted to the noble Lord, Lord Balfour of Inch rye, for raising this subject to-day. It would have been a pity if we had not had an opportunity of discussing this important Conference, and perhaps it is as well that we did not have a debate immediately after the Conference, because we have now been able to see some of the developments in the speech made by President Eisenhower which was referred to by the noble Viscount. In fact, in the papers to-day we see that the President of the United States has specifically referred to the Sydney Conference. In some way he links his points up with the decisions arrived at and commends the Commonwealth for the proposals they made at Sydney. We have listened to the two speeches with great interest. To a large extent I felt as if I were a bather sitting on the shore, because it was a discussion between two very capable exponents of Tory Party policy as to what Tory Party policy should be. I must say that had to come down (though this business of Tory Party policy is no business of mine) on the side of the noble Viscount. I think he was quite right in saying, as he did, that the collective approach is no real enemy to Commonwealth development. I quite agree with him; and while I sympathise with Lord Balfour of Inchrye, who has always the Colonies' point of view at heart, I think he need not be afraid that the collective approach will affect the Colonies to their disadvantage.
This is an interesting point and shows how the Tory Party is schizophrenic—

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which I believe is the popular word now adays— on this issue. The point is that the last part, or a large part of the last part, of the noble Viscount's speech was not, or was not intended to be, an answer to Lord Balfour of Inchrye; it was an answer to something that the noble Viscount, Lord Alexander of Hills borough, said on the Cotton Bill. The noble Viscount, Lord Swinton, said, in effect, that there is no need nowadays for bulk purchase or long- term contracts and marketing boards. That shows the schizophrenia of the Conservative Party, because this, of course, is an outstanding example of the collective approach. Once you jettison Lord Balfour of Inchrye you cannot have a halfway house; you must come all the way to our Benches. I believe that the position of the noble Lord, Lord Balfour of Inchrye, is perfectly logical; but once you get away from his position you cannot stop with the noble Viscount, Lord Swinton, three-quarters of whose speech attacked Lord Balfour of Inchrye and one- quarter my noble friend Lord Alexander of Hillsborough. You have to come all the way to us, because, whatever may be said about the bulk purchase of materials from foreign countries —and there are strong believers in that system, including my noble friend Lord Alexander of Hillsborough, who has had vast experience in this field in the Co-operative movement—I am sure that no one who has had experience, as several of us have, of this system of bulk purchase, long-term contracts and marketing boards, in the Colonies and in undeveloped areas, will in any way dispute their great value.
The debate on the Cotton Bill was largely concerned with that particular aspect: how can we protect these Colonial peoples? I do not want to go into that debate again. I imagine that it is a debate which will carry on for a considerable period of time, if what the noble Viscount, Lord Swinton, has said is now accepted Tory policy. If he is going to jettison the Colonies, or at least the long- term contracts, the bulk purchase and the marketing boards as regards the Colonies, then he, the Conservative Party and the Government will run into a great deal of trouble, not only from us on this side—and we shall conduct a guerrilla campaign so far as
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we can, with our somewhat meagre forces—but also from the Colonies themselves. The noble Lord, Lord Balfour of Inchrye, has already mentioned one of the first fruits of the Government policy when he quoted the objections in the West Indies to the citrus proposals of the Government. As these long-term contracts are broken, one after another, I am quite certain that the Government will have a howl of protest from the Colonies concerned. I believe we can say that we are firm believers in helping the Colonies— and the firm believers are not all on this side; there are many on the other side as well, and on the Cross Benches. I should wish in this respect that we could in some way take the subject out of the Party arena, because it will be a rather desperate business if these poor people in the Colonies, often on the borderline of want, are to be handicapped and to have their future so seriously jeopardised by what is, to a large extent, nothing but ideological prejudice on the part of the Government Front Bench.
This debate, although it has not had a great deal to do with Sydney, has, I think, brought out one interesting fact. That is that we must, in order to safeguard the collective approach, take it to its logical conclusion and continue these various methods which we have found so efficient, so far as the producer is concerned since the war—because we who are interested in the Colonies look upon this first as a question of the producer, rather than of the consumer. The United States President's proposals have been referred to by the noble Viscount, and I will not go into them any further except to say that we sincerely hope that Congress will accept them and that they augur a new ray of light into the economic world of our time. So far as the sterling area is concerned, I thought the noble Lord, Lord Balfour of Inchrye, rather over- emphasised the work of the Government in this field, because, according to paragraph 12 of the Economic Survey, 1954, which was in the Printed Paper Office yesterday:
"The United Kingdom's terms of trade improved further between 1952 and 1953, import prices being about 12 per cent. lower over the year as a whole, while export prices fell only by about 3 per cent."
So, in fact, the welcome improvement in the terms of trade was not due entirely to the wisdom of the Government—which

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we all acknowledge, of course ! — but also had something to do with the fact that export prices stayed up while import prices fell, or at least fell to a greater extent than the export prices.
We are all glad to see that the sterling area is strong, and I agree with those speakers who have said that it is a splendid mark of Commonwealth solidarity that all the members of the Commonwealth are in the sterling area except, for special reasons, Canada. Actually, I agree here with the noble Viscount, Lord Swinton. I do not agree with those who said that nothing came out of the Sydney Conference. I should have thought that the fact that they did agree on so much was in itself a welcome sign. When one realises that at the Conference representatives of Canada, India, Pakistan, South Africa and so on were all sitting around a table and coming to agreement on a fairly wide range of subjects—or, at least, a. fairly wide range in the particular subject they discussed—I should have thought that that in itself was an achievement. The Commonwealth is a curious institution, and we cannot push the boat out, so to speak, further than we have the strength to do at any one time; and we have to remember that there are great differences of opinion among Commonwealth members on most proposals that are put before them.
I should like to raise one point on this aspect, and that concerns United States investment in Canada. In my opinion, for what that is worth, Canada is going to be one of the most powerful and important countries in the world in a few years' time. I see that in the oil business, which is a new industry in Canada, in 1951 the United States invested 636 million dollars—nearly 52 per cent. of the investments in this field. I also notice that a new factor is the increasing interest taken in the Canadian market by the Germans, who are also pushing many of their products. I would ask the Minister who is to reply what our industries are doing. I know that they have been handicapped by the fact that Canada is a hard-dollar area, but I feel that we should make every effort to get into the Canadian market and to supply them with all goods, both capital and consumer, that we can. I think that behind the minds of all of us who have
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considered these matters must always be the possibility of a United States recession, because much of this interesting Report which we have now had laid before us, and, indeed, to some extent the decisions at Sydney, will be of little value if there is a strong United States recession. It would be interesting to know if the Government can give us any indication of their feeling about the possibility of a recession in the United States in the near future.
I am glad to say that I understand the Government have made some commodity agreements in spite of the views strongly expressed by the noble Viscount:, Lord Swinton. I believe that they have made commodity agreements in sugar and tin. We should like to hear from the noble Earl who is to reply what the Government have done in that field.
VISCOUNT SWINTON: The noble Lord must not go away with the idea that I am opposed to commodity agreements —indeed, before the war I was the author of commodity agreements—but the commodity tin, rubber, or sugar agreements that we had before the war have nothing whatever to do with hulk purchase.
LORD OGMORE: I agree, of course, with that, but neither have they anything whatever to do with free trade. There is not a very great distinction. They are the same genus, in the same field. Commodity agreements, bulk purchase and long-term contracts are all, so to speak, invasions of the area of free trade. I willingly accept what the noble Viscount said. It is another proof how muddled the Government Front Bench is on this particular problem. Here we have the noble Viscount exclaiming in no measured language, with all the eloquence at his disposal, against bulk purchase and these other methods, and supporting commodity agreements, which, as I say, are in a way second cousins, if not first cousins, to the other methods. At all events, we shall be glad to hear from the noble Earl who is to reply what the Government are doing in that field.
Incidentally, I see from a statement made by a Minister in another place that they have thrown overboard the noble Viscount. Lord Woolton, who gave us an undertaking, as we thought, about the Raw Cotton Commission: they have now

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decided to close the Royal Cotton Commission definitely at a certain date. I have the date here: they are going to wind up the Commission as soon as possible after August 31 next. This is a serious matter, because we understood that the Raw Cotton Commission was to be kept in being for some considerable time, in fact as long as there was a necessity for it in respect of Colonial cotton products. We understand that it is difficult to deal with Colonial cotton on the futures market. Perhaps the noble Earl will tell us why, and why, when it was decided to keep the Cotton Commission going for some considerable time. there is now within a week, this difference. The noble Viscount, Lord Woolton, says one thing in this House and Mr. Heathcoat-Amory says another thing in another place. We are entitled to know who, if either of them, speaks for the Government.
We have had an interesting statement to-day on East-West trade, and we welcome it. We hope that, in due course, we shall have an extension to other countries with whom we are not now trading, because, it has been clearly stated from time to time, and there is no doubt about it, that the Commonwealth in itself is not self-sufficing. Mr. Butler made a statement to that effect, and gave chapter and verse for it, when he discussed the results of the Sydney Conference in another place. We cannot in the Commonwealth be self-sufficing, either as producers or as consumers. It is absolutely essential to us to get markets behind the Iron Curtain and in the Far East. I am certain that, subject to all the necessary safeguards with regard to materials, for war and the like, the sooner we can get that trade flowing again, the better it will be for us and for the Commonwealth as a whole.
Finally, I should like to ask the Government one question—I do not necessarily expect an answer to-day. When dealing with the Commonwealth we are dealing with something which is a living and growing entity. It has not by any means reached its final form. Very soon, within the next few years, there will be knocking at the door, applying for entry, the Gold Coast, the Federations of Malaya, Nigeria and the West Indies, and the Central African Federation. That will happen within a very few years, and at a later
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stage, no doubt, there will be others, although I think it will be some considerable time before any others are in that particular position. But, as I say, with regard to those five, the situation will be facing us in the comparatively near future. I would ask the Government to give some thought to the constitutional and economic repercussions of the application for admission of these various Territories: they will be very great indeed. Probably the repercussions on the constitutional side will be greater than those on the economic side, but certainly there is no doubt that we must do much thinking before these particular Territories apply for admission. That is obvious if only for the one reason that the Commonwealth is getting rather large in numbers.
It may be that we shall have to think out some process or method of consultation quite different from the present—that is to say, possibly a system of Commonwealth circles, the circles interlinking but not coinciding. I should like to know that the Government are doing some thinking on these matters and are not just allowing the situation to drift, as they are, unfortunately, with regard to those thirty or so Colonies which can never be self-supporting because of their isolated geographical position or because of the paucity of their economic resources. I hope that they will not do in the former case what they are unfortunately doing in the latter. I think I have given the noble Earl who is to reply quite enough to reply to in the time which he probably wants to take. Once more, I should like to express, on behalf of noble Lords on this side, our gratitude to the noble Lord, Lord Balfour of Inchrye, for inaugurating this Commonwealth debate.
4.8 p.m.
LORD BAILLIEU: My Lords, I have just returned from a four months' visit to Malaya, Colombo, Ceylon, New Zealand and my native land, Australia. In Australia I was privileged to see the heart-warming, welcome given to Her Majesty the Queen. It is something which will live long in the memories of Australians, and it is something of which I think we can all be proud. I believe that this great Odyssey is the greatest single act of constructive statesmanship in our history as a Commonwealth and Empire. It happened that the Sydney

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Conference was held while I was in Australia. I sensed something of the reactions and comments arising there, so that I thought it might be appropriate to your Lordships if I ventured to give some general comments and reflections which have occurred to me. In doing so, I need not say that I enter a formal plea of confession and avoidance at this stage for any breaches of form or otherwise of which I may be guilty. I am sure that your Lordships always extend your full indulgence and generosity to anyone making his maiden speech in this House.
I feel that, if we are to assess properly the results of the Sydney Conference, we must bear in mind certain background facts, as well as certain more general considerations which arise in our approach to the issues before the Conference. Your Lordships have been told that the Sydney Conference was one of a series—in fact, it was the third in two years—on matters of very great import to this country and the Commonwealth. It was also, I think I am right in stating, the first Conference of Finance Ministers to be held outside the United Kingdom. It was certainly, I am assured, the most important Conference of its kind to be held in Australia. It was not, as your Lordships have been reminded, a crisis meeting. It was not to deal with an overwhelming emergency. The principals met there to pool their experiences since the last Conference and to exchange views on such matters as world trade and balance of payments, to discuss Commonwealth questions such as the freeing of trade, Imperial Preference and, probably the most vital of all, the development of our Commonwealth resources. I think it is important that we should bear these background facts in mind.
I believe that at this stage it is difficut to overstate the importance of holding a Conference of such importance in a great capital city of one of Her Majesty's realms abroad. I feel that the Conference can be judged to have been timely. The Australian Prime Minister, on the very eve of the Conference, said this:
"I am looking forward eagerly to the Conference. I do not suppose for one moment that it is going to produce new and dramatic decisions; the subject is not one which lends itself to drama, unless it be the drama of careful thought and patient action. But I
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do know from my experience in London that each of our distinguished visitors brings with him an invaluable contribution of character, ability and experience, and that we shall benefit in consequence."
I believe that to be a fair assessment, and that the Conference in itself served an essential purpose. In any case, I can assure your Lordships that it was a great personal success for the Chancellor of the Exchequer. He was just the type of Englishman they like to welcome in the Overseas Commonwealth—modest, frank and courageous, and. talking a gospel of faith and hope in the future of this country and the Commonwealth which they wished to hear.
I mentioned earlier certain general considerations which I felt we should bear in mind in discussing the Sydney Conference. I do not think we can, or should, ever forget in this island kingdom how marginal our position really is, and how much we depend on the moral strength and character of our people, as well as the vagaries of trade itself. We are told that we are a trading nation. We are. We must buy—that is, we must import our food and raw materials, to feed our people and sustain our industry. We must sell; that is, export goods and services in order to acquire these very essentials of existence. As has been emphasised earlier in this debate, we must do this on terms which are essentially competitive in regard to price, delivery and quality. If we fail to do so, then we shall be faced with a growing contraction in our trade and commerce, with increasing unemployment, and with mounting economic and social problems. So we see that our way of life—our standard of living, a high and. a profitable level of employment, the maintenance of these social and cultural amenities which we all cherish, and, indeed, our position as a world power—depends upon the efficiency of British industry, in which, of course, I include the greatest of all, British agriculture. That is why, since the war, and irrespective of the Party in power, British industry has pressed forward to increase production and lower unit costs. I suggest that these considerations in themselves, and irrespective of Party matters, govern, as in my view they should limit, the policies and decisions of Her Majesty's Government in the United Kingdom.
This leads me naturally to my next general observation, which has been

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referred to by noble Lords who have previously spoken. We have seen, in the course of this century, the development of a process by which questions of foreign policy and defence have been dealt with throughout the Commonwealth on the broadest possible basis. Purely Party and national points of view have, with the years, been increasingly reconciled with that wider concept which seeks, by constant discussion between sovereign nations, the formulation of policies and plans for their common welfare and safety. The Commonwealth approach was reflected, if I may say so, in the very high level of the discussions which recently took place in your Lordships' House on these two subjects. I feel, therefore, that we should welcome the evidence of recent years that the same processes are afoot in the field of finance and economics. The Sydney Conference and its two immediate predecessors are evidence, in my view, that the nations of the Commonwealth see a special virtue in these Conferences. We may hope that they will continue, and that we shall gradually achieve in the financial and economic sphere a similar measure of understanding, a similar sense of restraint and responsibility, as we have done in the fields of Defence and Foreign Affairs. I suggest that, whatever comes out of such Conferences, we cannot afford to forget that it is the work of a representative Commonwealth gathering, and not simply that of a Party Government of the United Kingdom.
I need not remind your Lordships that since the war we have been plagued with a series of biennial balance of payments crises. In 1947, 1949 and 1951 our trade and payments picture deteriorated abruptly. The London Conference of 1952 met under the shadow of the crisis of 1951; but that Conference laid down a pattern of policy which has since been confirmed and extended by the subsequent Conferences held in December, 1952, and in January, 1954. We may note, I think with relief, that 1953 was free from any trade or payments crisis, and I think we may hope that the two-yearly crises have come to an end. This will represent a vital step towards the restoration of sterling as an international currency and of this country as the banker for the sterling area. I need not
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catalogue, even if time permitted, the progress which we feel has been made in this country in recent years, in its public finance, in the restoration of a growing freedom of trade, and in the gradual removal of the wartime paraphernalia of controls and restrictions. All these factors have contributed to our resources and growing strength, and to our power to implement the policies agreed at the Sydney Conference.
I propose, in order not to weary your Lordships, to limit myself simply to two matters—the one providing revealing evidence of the growing strength of sterling, the other providing a challenge to us all, in this country and abroad, to concentrate our available resources on Commonwealth development. On the 22nd of this month new exchange regulations were issued which relaxed considerably the existing restrictions in the use of sterling by residents of countries outside the sterling area. The effect of these regulations has been greatly to reduce the varieties of sterling which were almost a byword in the foreign exchange markets of the world, and to increase the area in which the trade transactions can be settled in sterling. At the same time, freedom has been restored to the gold market in London, and operations have already started. I think both these relaxations are important, and both may he said to have derived from policies formulated and agreed at the conferences which preceded that at Sydney. In my view, they are a real step forward, and will be as welcome to the world in general as they are to traders in this country.
The Conference Report dealt at great length with the problem of Commonwealth development. In this connection, the importance of sound internal policies, involving the checking of inflation and the lessening of competition for available resources, was emphasised. Whilst supplies were easier, finance remained the major limiting factor, and the channels through which the finance was funnelled from the United Kingdom were stated. Now, one of these agencies which I think may well be destined to play an increasingly important role is the International Bank for Reconstruction and Development, commonly known as the World Bank. I am led to this conclusion after studying a report made by a small, well-qualified group which went from the

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Federation of British Industries to the United States, by invitation, to study the organisation and the methods of the Bank at Washington. The report is short and factual, and, I think, of considerable general interest. It is certainly of interest to all those in the contracting and engineering industries concerned in operations overseas.
There are only three points to which I would refer. The first is this. Of the development loans already made by the Bank, approximately one-third arc to Commonwealth countries. Secondly the view expressed in this report is that the scale of direct foreign aid to be provided in future from official American sources is likely to taper off. They are not optimistic that the undeveloped world can look to that source for any substantial part of its capital needs. Their view is that the World Bank will become an increasingly significant channel for the movement of capital from the United States into the capital-hungry countries of the world. The third point is that in the opinion of the group the exercise by members of their right to control the loan of their subscription to the Bank has reduced the Bank's ability to lend for acceptable projects. They appreciate that the Chancellor of the Exchequer must keep under constant review the limits given to the Bank from time to time to lend from its sterling resources. In this connection, there is always the problem of unrequited exports. They plead, however, for as open a policy as possible, for the simple reason that this country is dependent upon a growing volume of world trade, and only if we get it can we hope to earn growing surpluses for investments overseas. They agree that in theory the earned surplus should precede and justify the investment but they emphasise—I think quite rightly—that sound investment will enable a surplus to be earned, though there may be a time lag. The Sydney Conference, itself, emphasised that finance was a major and limiting factor. So, I venture to commend to Her Majesty's Government the contents and recommendations of this very admirable report.
Nevertheless, despite the valuable contribution made by such international organisations as the World Bank, it is generally accepted, I think, that for the harmonious development of the productive resources of all areas of the world,
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more particularly those which are underdeveloped, there must be a substantial growth of private international investment. I do not think that public funds will be adequate for the purpose, nor, in some cases, wholly suitable. The vital role which can be played by private investment in stimulating economic development has already been referred to by my noble friend, Lord Swinton, when he mentioned the loans recently made by the Commonwealth Development Finance Corporation. I think, however, that, in looking at this problem as a whole, we must stress the fact that the impediments to further Commonwealth development—especially for private enterprise—are by no means all on the lenders' side. There are problems of taxation, of transfer of funds, of the risks of expropriation which concern the overseas investor, to which borrowing countries should pay constant attention. They will only succeed in attracting and not repelling the foreign investor if he is satisfied that he will get the security he needs. So I venture to suggest that these and cognate questions should be frankly examined and a solution sought for them if the Commonwealth countries now faced with the responsibility of promoting and co-ordinating Commonwealth trade and development are to carry out their task.
I think we can summarise by saying that in recent years we have seen that economic and financial conditions throughout the Commonwealth have greatly improved, and I believe we can say that this improvement may well have derived from policies formulated and applied by the principal Commonwealth Governments. I suggest that we do not weary of well-doing, but press forward with policies which have been tested and proved by experience. I feel that this country, as the heart and core of this great Commonwealth and as the central banker of the sterling area, must achieve results which will enable it not only to discharge its debts to the United States, to Canada and to Europe, but also to build up the surpluses necessary for the development of the Commonwealth, and to augment steadily our reserves of international purchasing power. Our success in these very formidable tasks will consolidate our own strength, raise the standards of living of the peoples throughout the Commonwealth and, I believe, assure the peaceful progress of mankind

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throughout the world. It is my profound conviction that, with wisdom and courage, this achievement lies well within our grasp.
4.27 p.m.
LORD ROCHDALE: My Lords, I have always been unusually fortunate on the occasions when it has been my privilege to speak after a noble Lord who has made his maiden speech. Certainly this afternoon has proved no exception. The noble Lord, Lord Baillieu, started off by telling us that he had just completed a tour over the wide open spaces of the Commonwealth. He told us of the exceptional opportunity he had had of sensing the feeling of the Conference as he was in Sydney at the time it was being held. But it is for much more than that that we welcome him here. Having regard to the background of experience that his remarkable industrial career has given him, the great industrial organisation over which he presides with such distinction, and its world-wide ramifications, and, if I may add also, the very distinguished term of service which he gave as President of the Federation of British Industries, we all looked forward to his maiden speech with great hopes. We have not been disappointed. It is common form to say after a maiden speech that we all hope we shall hear on many future occasions the noble Lord who has spoken, but to-day I could not possibly say that without the utmost conviction and the utmost sincerity. I do indeed hope that we shall hear Lord Baillieu on many future occasions. I congratulate him most warmly on this speech, but I feel that, in doing so, we ought also to congratulate ourselves on having him come to join us in our counsels.
When I had studied carefully the communiqué of the Sydney Conference it came to my mind that there were certain points that stood out particularly clearly. I believe that every noble Lord who has spoken to-day has referred to the same points, but, none the less, without taking too much of your Lordships' time, I should like to repeat one or two of them. First there is the fact that the Conference took place in an atmosphere that could in no sense be regarded as one of crisis. Then there was the fact that the problems under discussion could be
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regarded as long-term problems, and not as problems requiring immediate first aid. As noble Lords have said, this was the third of a series of such Conferences. If one reads between the lines, the indications are that it is likely to be followed by other Conferences at regular intervals. Following on what my noble friend Lord Baillieu said, may I express the hope that these future Conferences mill be held in the various capitals of the Commonwealth around the world. It was obvious that, more than ever, the Commonwealth countries were acting as a voluntary team. Renewed emphasis was placed on the prior requisite that individual countries should continue to keep their own house in order and should strengthen their own economy. Whereas previously all emphasis had been placed —and rightly so—on the importance of dollar earnings, that emphasis was now somewhat widened to spread over non-sterling area countries, an acknowledgment of the real progress that has been made over the last twelve months in the increase of dollar earnings, to which my noble friend Lord Swinton referred. Lastly, member countries again appear to have come to a general agreement that, as things are to-day, as the communiqué said,
" the creation of a close system of discriminatory arrangements would not offer a solution to our problems."
I could pick out a number of other points that particularly stand out, but those are enough, I think, when taken with the frequent references in the communiqué to world affairs—" world prosperity," "the best interests of all in the world as a whole,"the outlook of world trade"—to lead me to ask my noble friend this general question. Would it be a fair assessment of the policy of Her Majesty's Government to suggest that what was sought was an increase in United Kingdom trade, not by trying to expand, against all the growing competition there is, our share of world trade as we know it now or within a restricted preferential area, but rather by trying to maintain the proportion of world trade we have in an increasing world trade, so that our total trade goes up even though our share remains the same?
If I am right in that assessment of the Government's policy, it seems to me that the first alternative is essentially a restrictive arrangement the other is an

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expansionist policy. The one carries with it just a suspicion of defeatism; the other a commendable degree of optimism. The one seems to overlook the immensely increased and increasing industrial potential which exists, not only in the United States and in this country but also in Europe and in the other countries of the world, far outstripping the production potential that existed when Imperial Preference was first conceived or when it was so vastly expanded in the early 'thirties to such good effect. The other seems essentially the realistic attitude to take to-day. I know that the question has been asked (I am not sure whether I read it into the remarks of my noble friend Lord Balfour of Inchrye): what will happen if the United States do not play their part in helping to open up world trade—if, for instance, they do not implement the limited, though useful, recommendations of the Randall Report? Ought we to have some alternative policy to work on? I take the view of my noble friend Lord Swinton, that here it is not a question of alternatives.
Apart from that, admittedly, the Randall Report does not go so far as many of us would have liked, or, indeed, so far as many citizens in the United States would have liked. Some of your Lordships may have read a report, in the international edition of the New York Times of the 23rd of this month, referring to a conference on the Randall Report held at Princeton University by a number of eminent American economists. Whilst the economists agreed with the Report, so far as it went, it seems to me that they went out of their way to show how inadequate it was if America was to play the part in the leadership of world trade they would have liked. Is it not generally agreed that. important as it may be for the world and for the United Kingdom in particular, for the United States to liberalise her trade—and, like other noble Lords, I am glad to see that in to-day's papers the President has broadly welcomed all the recommendations of the Randall Report—yet even if the United States swept away every barrier to trade within the United States, that could not he relied upon to provide the complete answer to the world dollar problem
What seems to me to be of equal, perhaps greater, significance is the statement in an earlier Report, which your Lordships will no doubt remember, the Paley
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Report, in which the certainty was expressed that if present trends meant anything at all, the United States would be increasingly compelled to purchase her raw materials from outside her own boundaries, in doing which, irrespective of her internal political views on tariffs, important as they are, she might go a long way towards redressing the world dollar position. It seems to me that here is something we ought to be able to hold on to. Obviously, it will be a long-term matter, but any Commonwealth trade policy should also be a long-term matter; and if, as is clearly stated in the communiqué, it is the policy of the Conference "to press on with developments to the limit of available resources," surely there must come a time when the results of such a policy, on the one hand, and the tread of the United States demand, on the other, will meet; and the greater and quicker the development now in the Commonwealth, the sooner that will be. Therefore, I am sure that we should hold on to any existing preferences, so long as all the parties to them are anxious that they should be maintained and taken advantage of: but we should not, attempt to make any ma: or extension of these when those intended to benefit are clearly not wholeheartedly in favour of them. In the long run, we do not know where existing preferences will go. If there is a major trade recession, there may be a strong temptation to make some dram extension of existing preferences. But in that event, and in the long run, I feel that they might well prove to be a disruptive source of weakness to the Commonwealth, rather than a source of strength, and not in line with the wider world approach that we are inclined to take nowadays on other matters such as, for instance, defence.
I therefore come back to my main point and what I understand Her Majesty's policy to be: the expansion of United Kingdom trade by way of increasing world trade, even if we retain for ourselves only the same percentage that we now have. Following on that I should like to ask my noble friend a further question. Are Her Majesty's Government satisfied that, as regards Commonwealth and Colonial development, on which the success of that policy must finally depend, and on which so much was said in the communiqué,

919
there are reasonable hopes that the rate of development, with all the help that the United Kingdom can give and that can be obtained from elsewhere, will be able to measure up to the rate at which world production and world consumption and therefore world competition, has been and is being expanded? I should like to join with other noble Lords who have expressed appreciation to my noble friend Lord Balfour of Inchrye for having introduced this important matter, because it is one on which we cannot reach a firm conclusion in one debate. It must be constantly before us, and must exercise the minds of everyone who has anything to do with production to-day.
4.41 p.m.
LORD FAIRFAX OF CAMERON: My Lords, I should like to express my gratitude to the noble Lord, Lord Balfour of Inchrye, for introducing this Motion. The Sydney Conference was valuable, first of all for the fact that it took place at all. All personal contact between members of the Commonwealth is of great value, whether it be through conferences, Ministerial visits, or Parliamentary delegations. Telegrams and letters between Governments are no substitute for that personal contact. In fact, there is no substitute for it at all. I believe that the visit of the noble Viscount, Lord Swinton, last autumn to the Antipodes was of inestimable value. I remember that when I was in New Zealand in 1949 I heard a number of complaints—I could have heard them in Australia, too, because the situation was the same there, but I heard them only in New Zealand—that in the previous four or five years only one Cabinet Minister and one junior Minister from the United Kingdom had visited that country. I think the noble Viscount set an example which I hope will be followed by others.
The Commonwealth is a loose association and I believe that with the development and increase of self-government, independence and equality of its members, it will become even looser still, and it will be more than ever essential to keep in touch by visits amongst the various countries. It is only on the spot that one can keep in touch with the current and changing views and sentiments of the various peoples who make it up. I think the best example of that
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at the Sydney Conference was the news, which came as something of a surprise to some people, about the changed attitude of some Commonwealth countries towards preferential tariffs. I hope there will be annual Commonwealth Conferences like this, and I also hope particularly—and I especially say this—that it will always be held in an overseas Commonwealth country. Too often these Conferences, like the Prime Ministers' Conferences, are held in this country. It is worth the effort for our representatives to go overseas to the Commonwealth countries, and it will be enormously appreciated by the people over there. We might 20 round them in turn.
I come for a brief moment to the passages in the communiqué about investments in the Commonwealth. Investment was emphasised, and quite rightly so, because I believe Commonwealth trade and economic development has come to a hurdle, and it will not be able to get over the hurdle and increase without large-scale investment in the resources of the Commonwealth. In connection with this, the communiqué mentions that development will be an aid to improve the balance of payments of the sterling area. I believe we all would agree with that, but I think we should have no delusion but that the development of these resources is going to be a long and heavy haul. We have heard about the long-haul in defence, and there is certainly an equally long-haul in Commonwealth development.
It is easy to talk about the vast undeveloped resources of the Commonwealth—we so often hear about them—but you cannot just go and pick these resources off a tree. Development is an expensive business and it is a long business. One particular instance occurs to me. When I was in Queensland I was being told the whole time about the enormous mineral resources of that State, which are very varied and generous, too. Some people spoke as though great wealth was waiting just around the corner to be developed. These resources are very great. But it will take a long time and many millions of money, not only for mine-workings, houses and so on, hut to develop the ports and roads that are necessary. It is no small thing. It is very worth while, but we should, none the less, not forget what we are undertaking.
LORD BURDEN: Is the noble Lord referring specifically to coal?
LORD FAIRFAX OF CAMERON: Coal was amongst them but there are a great many other minerals whose diversity of names I cannot remember this afternoon. Coal workings, large opencast workings, are already being extensively developed. As to where the finance is to come from and how easily it can be obtained is another matter. The borrowing countries of the Commonwealth are to supplement the loans of the United Kingdom for development. But, even so, the resources are not adequate. Last year this country made available £120 million for development in the Commonwealth. That is a large sum for us, but when you spread it over the whole size of the Commonwealth it does not amount to very much. I wonder whether we should not consider pursuing with greater vigour than we have up to now the procuring of funds from outside this island and from outside the Commonwealth. This matter has already been touched upon by the noble Lord, Lord Baillieu, in an excellent maiden speech, but I should once again like to refer to it. Investment from the United States of America has been small. That may partly be due to lack of confidence or to the non-convertibility of sterling, difficulties which inevitably must discourage any dollar investor. In spite of that, I believe that we should do all we can to encourage United States investment and particularly private investment, because that, I feel, could be of far greater use in many ways to Commonwealth development than investment of a more official kind.
There is also the question—but I have not heard it mentioned—of European investment in the Commonwealth. One knows that Europe is not in a very much better way in regard to funds than we ourselves are, but at least she could make some contribution; and as her destiny and ours in defence are so inextricably linked together, I do not see why we should not approach Europe with that particular end in view. It could be done either direct or through the World Bank, about which the noble Lord, Lord Baillieu, spoke—which is the best and right way, I am not in a position to say. Outside aid in the way of funds for the Commonwealth may be repugnant to
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some people in this country, and within the Commonwealth overseas, who perhaps feel that we should keep it all within the family circle, but I cannot help feeling that the Commonwealth is rather like a private company which has expanded to a certain extent and then has to go outside into the market for other funds to carry out further expansion. That is rather like the situation of the Commonwealth, and. I cannot see any objection to our doing something similar.
I come now to the question of trade and preference. The communiqué made a brief reference to the need for endeavours to ease restrictions on inter-Commonwealth trade. However, the Chancellor of the Exchequer, in a speech which he made recently, enlarged on this. part of the communiqué and also mentioned a most significant fact, and that is, the changed attitude of Commonwealth countries to tariff preferences. Those who did support tariff preferences in the past appear now to be more lukewarm about them. I do not think that that matter should surprise us so much, because, as we know, Australia, amongst other countries, is building up secondary manufacturing industries. When I was; there I often heard people speak of the need felt in Australia for what they called a balanced economy. There was a considerable aversion to being always a primary producer only, and the feeling for the development of secondary industries was 'very strong. However, I do not believe that, just because of this, we should be misled about the intentions of Commonwealth countries. Because Commonwealth countries may be lukewarm in their attitude towards tariff preferences, it does not mean that they are indifferent to Commonwealth trade. In the first place, those two things are not the same: one is the substance, and the other the means or the catalyst by which you bring about what you want. Tariff preferences have in many cases worked admirably, but there are a number of other means which have worked equally well in other instances—quotas, long-terms agreements on price and quantity and so on, and investment, which in itself is a form of preference.
Finally, the biggest preference of all in the Commonwealth, and one which is so large that one sometimes does not see it at all, is the non-convertibility of sterling, which has created an automatic

923
preferential trading area for the sterling area. If sterling were to become convertible, I imagine it would open up all Commonwealth producers to a great deal more foreign competition, particularly from the dollar area. To my mind, that would be a serious situation and one which should receive serious contemplation and consideration by Her Majesty's Government before it takes place, if ever it does take place. The fact is that there is nothing sacrosanct about any one particular method that may be applied to increase Commonwealth trade. I can think of three instances which show how different methods apply in different circumstances. Recently Her Majesty's Government obtained permission from G.A.T.T. to put up a protective tariff against European horticulture. That is the obvious instrument to use in that particular case.
On the other hand, I believe that the Jamaican sugar growers are not interested in a preferential arrangement for selling their sugar in this country. What they are much more interested in is a long-term price and quantity agreement. The same applies to New Zealand dairy producers, some of whom I met when I was out there. They said that they were not so keen on preferential tariffs. What they wanted was a good long-term agreement under which they would know how much they would be able to sell, and roughly at what price. Finally, I believe that the Sydney Conference was most valuable, particularly from our point of view, in bringing us in this country abreast of outlook in the Commonwealth. I believe that we can never impose any line of action or theory on Commonwealth members who are unwilling to receive it. That way most certainly would lead to the dissolution of the Commonwealth. We can lead the Commonwealth, but only if we remember that the Commonwealth is a live and changing thing, and that we, like other members, must keep pace with its evolution and changing mood.
4.58 p.m.
THE EARL OF SELKIRK: My Lords, it is my pleasure this afternoon to offer my warm congratulations to the noble Lord, Lord Baillieu, on what I may describe as a most powerful, informed and 'balanced maiden speech, which we have
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all greatly enjoyed. From the opening of this debate the noble Lord, Lord Balfour of Inchrye, has made it clear that the Sydney Conference was a routine meeting of Finance Ministers. It is perhaps worth recalling that the Conference was really continuing policies which were substantially outlined just over twelve months before. It is probably not unfair to say that in the autumn of 1951 the sterling area was within measurable distance of breaking up. The short-term measures taken then enabled a broader view to be taken when the second Conference met in December, 1952. The noble Lord, Lord Rochdale, in an interesting and thoughtful speech, raised some big questions, and he asked what was the long-term view of world trade. I suggest to the noble Lord that if he looks at the communiqué of December, 1952, he will see it stated there. It is to promote the expansion of world production and trade. I think his second definition was a perfectly fair one. We wish to see that expansion, and to retain our share of it. I thought the noble Lord was a trifle pessimistic in some of his utterances. I do not think that, on this very day when the new statement of the American President has been made to Congress, it is necessary to anticipate so definitely what would happen if they had taken no notice of it. I feel that that is going rather fast on that account.
LORD ROCHDALE: Perhaps I may interrupt the noble Earl. I hope that I made it clear that it was not I who was anticipating but some other people; and I asked what would happen then.
THE EARL OF SELKIRK: At the moment, I am happy to maintain an optimistic view of the discussion. Perhaps I may be excluded from considering what might happen in the reverse case. May give a small example of what I mean by the expansion of world trade? The noble Lord, Lord Rochdale, may have noticed two small points. The first is the expansion of the area in which sterling accounts may be transferred: it is only a technical matter, but it is a movement in the right direction. Your Lordships will also have noticed the reopening of the gold market in London. That also is not in itself a big thing, but it is a step in that direction, which I think is of some consequence.

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We agree, of course, on a wide measure in principle on the objectives, but we disagree as to the manner in which they should be carried out. It is fair to recognise on these occasions that one-third of the commodities entering the world market are produced within the British Commonwealth, and over 50 per cent. of world trade to-day is conducted in sterling. As a small boy, I used to be taught that every fourth baby was Chinese. I do not know why that illustration was not applied to the British Commonwealth, because it could have been applied with the same accuracy. Many of us hold strong views of almost emotional character in regard to certain aspects of our policy. There are those, for instance, who have a hatred of nondiscrimination; those who have a limitless confidence in convertibility or a passionate faith in the effectiveness of preference; or, shall I say, an unbounded belief in bulk purchase. I suggest, with great respect, that what Sir Dennis Robertson has recently said about convertibility might be made to apply to all. He said:
" Interconvertibility of currencies is not an end in itself but a means to the promotion of a steady and abundant flow of international trade and investment."
I suggest that those remarks could be applied with equal effect to all the other ideologies which may be put forward I think the noble Lord, Lord Ogmore, got a little confused in the farrago of somewhat conflicting ideologies which he suggested to your Lordships. I suggest that we should on no account sacrifice the measure of Commonwealth agreement which we have on the altar of any theory at all.
The noble Lord, Lord Ogmore, suggested that there was no resting place between my noble friend Lord Balfour of Inchrye and myself. I do not know that I am so far removed from my noble friend Lord Balfour of Inchrye, but if the noble Lord thinks that I am sitting in an uncomfortable position, may I suggest that he takes home the Economic Survey for 1954, and reads it carefully to himself, and then sees whether it is he or I who is sitting in the more comfortable position. The noble Lord asked about commodity agreements. It is the present Government's policy, and I think it is the policy of any Government, to try to set
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up commodity agreements so far as possible. But, of course, every commodity scheme raises real difficulties. It is not easy to find producers who agree on questions of price with those who use the commodity—there is a constant disagreement on that. Commodities are of a different type. There are, for instance, those in which the consumption is elastic and the production is static—which, to some extent I think, is the case with rubber—and those like wheat, in which the reverse conditions apply. None the less, we have at the present time a Sugar Agreement, to which the noble Lord, Lord Fairfax of Cameron, referred, into which is fitted our eight-year agreement to buy two-thirds of the sugar exports from the Colonies, Australia and South Africa, at prices which are "reasonably remunerative." That Agreement is now awaiting ratification. and we hope that it will be ratified in due course.
The noble Lord also asked about tin. The Tin Agreement has been drawn up and is awaiting ratification as from March 1, 1951, and it is hoped that agreement will be reached by June 30. We attach considerable importance to that Agreement, and if it is ratified it should provide a wide measure of stability within the tin-producing countries. The United States has indicated that she does not intend to sign but will maintain what may be described as a "benevolent neutrality." Her signature is riot necessary for the ratification of the Treaty. There are only one or two other countries left over, particularly Indonesia, and if they agree the Treaty will come into effect; and we have high hopes that that may well be the case.
LORD OGMORE: Before the noble Earl leaves that subject, I am sure that we all thank the Government for the excellent work they have done in regard to this Tin Agreement, representing as they do both producers and consumers. But the noble Earl will no doubt agree with me that it will be difficult to work this international Agreement when the United States is a "benevolent neutral," whatever that may be considering that the United States is the largest consumer of tin. Does the noble Earl really think that it is practical politics, and that the Tin Agreement can be maintained without the United States?
THE EARL OF SELKIRK: I think the noble Lord will agree that a commodity agreement is difficult to work, and that it is even more difficult to reach a measure of agreement. I would agree with the noble Lord that it would be better if the United States were in, but we think it will remain a workable scheme, even in the limited way in which it applies now. I hope the noble Lord will not press me to say anything more than that—except, perhaps, this: in the limited time that I have had, I have looked at what my noble friend Lord Woolton said in this House, and at what was said in another place, and I am satisfied that it is consistent.
The noble Lord mentioned the subject of the American recession. I have not much more to say on that, except that the opening signs are that there is no acute dollar shortage. This is probably due, in the first place, to America's overseas expenditure on military aid, and, secondly, to the much greater economic health of many countries outside the U.S.A., including, of course, the United Kingdom. Industrial production has fallen by about the same amount as it fell in 1949. Commodity prices have remained fairly steady. Apart from a steady decline in the rate of inventory accumulation, which I believe is the same thing as I should call stocks and works in progress, there has been no great reduction in the aggregate United States internal spending. Moreover, the Stock Exchange has remained steady and even buoyant. It is for that reason that we hope we shall be able to weather this storm without having to impose any restrictions which will interrupt our progress towards a freer world.
There is one aspect behind our association with the Commonwealth which is vital to us, and that is the health of the sterling area—it is a difficult matter to speak of, because all members of the Commonwealth are not members of the sterling area, and all members of the sterling area are not members of the Commonwealth. It is desirable, however, to remember one or two of the really important advantages which it contributes, because sometimes we take it a little for granted. In the first place, it is a form of insurance. The noble Lord, Lord Ogmore, said that the Government were fortunate in having the terms of trade moving in their favour. Well, of course, it is part of the structure
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of the sterling area that when the terms of trade move in one direction for the United Kingdom, for a large part of the sterling area it moves in the opposite direction. So, in that sense, it forms a sort of insurance for the structure as a whole. In the second place, it is a banking system, which is the most convenient form of exchange for the greater part of world trade; and that means a considerable advantage. The sterling area resolves problems of payment by being able to draw freely on a common banking system in an area in which the values of currencies are stable. The sterling area countries constitute the largest group of countries within which there is a very large measure of freedom in the matter of exchange transactions. In fact, there is no area as large with such a high measure of freedom.
The third point that I would make is the stability which it gives. A most interesting speech was made recently by the distinguished and able Finance Minister of India, Shri C. Deshmukh, explaining his views on the sterling area from the point of view of India, and particularly emphasising the importance of stability. Finally, I should like to make this point, which was emphasised by the noble Lord, Lord Fairfax of Cameron, on the question of capital. The sterling area has access to the London market, which is the biggest source of capital in the whole of the sterling area. That is of real importance. It is for that reason, of course, that the strength of the economy of this country is of such importance to the sterling area, because it is only through our savings and exports that we here are able to invest overseas in the sterling area. I do not want to overlook the fact that the greater part of all capital in the Commonwealth area is, in fact, found locally, and that the contribution from the London market is, in a sense, only marginal. I do not mean that it is not important, but, none the less, it is only marginal.
LORD PETHICK-LAWRENCE: What did the noble Earl say?
THE EARL OF SELKIRK: It is marginal in relation to the total amount. I may mention here the loan to Ceylon which was recently floated successfully in London. All this development is, to some extent, directed towards restoring the even balance between industry and

929
agriculture which is a common problem throughout all the world.
The noble Lord, Lord Ogmore, asked about Canada. The noble Viscount, Lord Swinton, said that last year we had authorised investment of £38 million in Canada, which is already something, considering our difficulties. We arc not aware that any important proposal is held up for lack of dollars. I would refer the noble Lord to the Economic Survey which also refers to that point. The noble Lord, Lord Baillieu, referred to the International Bank. We, too, attach great importance to that. As I think the noble Lord is aware, we have authorised the release of up to £60 million of our 18 per cent, subscription to the International Bank. That will be used for investment extending over six years within the Commonwealth. The Bank is also, of course—these are points which were made by other noble Lords—a channel through which private money can flow, to some extent, from the United States of America. As such, it is a useful channel for us to employ. I regret that more money does not collie front there. We can only hope that it will.
I have tried to answer the questions which have been put. I will end by a short quotation from the Queen's speech at the opening of the Commonwealth Parliament on February 15, because I think it fits into the context of this debate. This is what Her Majesty said about the Sydney Conference:
" This was one of a long and continuing series of such conferences. Their immediate objective is to strengthen the British Commonwealth; but their ultimate benefit will flow to other nations and to the great world community of people everywhere."
5.15 p.m.
LORD BALFOUR OF INCHRYE: My Lords, I should like to thank noble Lords who have taken part in this debate, and particularly the Ministers of Her Majesty's Government, the Secretary of State for Commonwealth Relations and the Paymaster General, for the contributions which they have made. This has been an interesting and valuable debate, fortified and embellished by a most remarkable maiden speech from my noble friend Lord Baillieu. He asked for the usual indulgence to be extended to him
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but there was little reed of it in the way he delivered his remarks.
Much of the debate has hinged upon what is going to be the outcome of the United States economic policy. The noble Lord, Lord Ogmore, said that the President's message—I quote the noble Lord—" was a new ray of light on United States economic policy." We have to see whether it is a headlight guiding animated movement down the road of liberalisation or whether it turns out to be the parking light of a stationary vehicle. I was not quite clear as to the purport of some of the remarks made by my noble friend Lord Rochdale. Unlike my noble friend Lord Fairfax of Cameron. who wits not dogmatic as to the methods by which Commonwealth trade should be expanded, be it by tariffs or be it some other form of economic development, I understood the noble Lord, Lord Rochdale, to make the point that in no circumstances would any extension of tariff discrimination in favour of ourselves or our partners be a good thing. Was that how he put it? I should net like it to go en record if I have it wrong.
LORD ROCHDALE: No, I think the noble Lord has overstated my case.
LORD BALFOUR OF INCHRYE: I am delighted, because I should not like to feel that the noble Lord had thrown over Britain's strong and free Imperial Charter quite so readily. With those remarks, again thanking those noble Lords who have taken part in this debate, I beg leave to withdraw my Motion.
Motion, by leave, withdrawn.

TEES CONSERVANCY BILL [H.L.]
Reported from the Select Committee, without amendment.
TEES CONSERVANCY (DEPOSIT OF DREDGED MATERIALS) BILL [H.L.]
The CHAIR MAN OF COMMITTEES informed the House that the opposition to the Bill was withdrawn: The Orders made on the 9th of February and the 16th of March last discharged, and Bill committed.
House adjourned at seventeen minutes past five o'clock.