INTERNATIONAL FINANCE CORPORATION BILL (Hansard, 14 July 1955)

LORD HAWKE

My Lords, the Members of the International Bank, of which Her Majesty's Government is one, have decided that there is need and scope for a new International Finance Corporation. This is a Bill to enable Her Majesty's Government to take its share in this institution. The Bretton Woods Convention set up two international financial institutions, the Monetary Fund and the International Bank. The Fund exists to provide foreign exchange for members who are short of it, and the Bank is to lend money to Governments or to enterprises with a guarantee of Governments This new institution has rather different aims and objectives from the Bank. In the first place, it is something of an appendage to the Bank, in that the governors, the directors, the office and quite possibly the staff will be the same. Its aim is to provide funds for the less developed parts of the world by lending to productive enterprise without Government guarantee. It can lend money in any way except by taking up capital stock. It is hoped that it will revolve its funds by selling its investments after nursing them, and it is hoped that the 100 million dollars capital, of which our share is 14.4 million dollars, will go rather further than one would think otherwise, if that were not the case.

There are three main points which may be asked. Why is it necessary that the capital of the Corporation should be subscribed in gold or dollars? We must admit that gold or dollars is still the only entirely free international currency, and if the Corporation is to function all over the world it must function in a currency which is truly interchangeable; but we have hopes that, when operating in the sterling area, it will make loans in sterling.

Then what do we get out of this? In the wider field, any Provision for the development of the under-developed parts of the world is to our advantage. We have a scope for exporting goods corresponding to the capital which is put into those countries, and of course any raising of their standard of living is naturally to 798 our advantage, too, in the long run. No one can deny that there is a great shortage of savings throughout the world, and particularly savings likely to take risk in these under-developed parts of the world. We hope that the setting up of this Corporation will be instrumental in attracting private investment into those channels, in that the participation of the Corporations should be considered to be a sort of hall mark which may stamp the quality of the investments.

The other question is the immunities and privileges about which we have spoken at some length. I would say here, however, that as the Corporation is not expected to have an office in this country the privileges and immunities given by the British citizen in this country will be of very little account; furthermore, that as the staff is expected to be largely the same as that of the International Bank who already have these privileges, no fresh ground is really being opened up. If 75 per cent. by capital of the sub-scribers are prepared to pay their subscriptions—and we believe they are—there is no reason why this institution should not start to function next year. The clauses with the aid of the Long Title are self-explanatory. I beg to move that this Bill be read a second time.

§ LORD PETHICK-LAWRENCE

My Lords, my noble friends on these Benches authorise me to say that they are in support of the principle underlying the articles of agreement in this Bill. I do not think that the noble Lord opposite who introduced this measure, or anyone else, can claim that it is a very heroic Bill. A hundred million dollars may sound a large sum to people not acquainted with big international affairs, but it is a very small sum. It may be true that it is a rotating fund, but still, for what it is worth, it is worth proceeding on those lines. The matter of the exclusion of sterling is, I think, a little more important. I thought the noble Lord who introduced the measure here was a little less emphatic than was his right honourable friend in the other place, who said that the British Government were themselves disquieted about this matter, and still pressed for sterling to be recognised on partial equality, if not full 799 equality, with the dollar in this matter. In view of those points, in spite of what I may call the minor blemishes of the proposals, we on these Benches do not intend in any way to impede the passage of the Bill through this House.