§ 2.52 p.m.
§ THE EARL OF DUNDEEMy Lords, I beg leave 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 the French Government's plan for a return to the gold standard in the settlement of international payments is being put into practice in French monetary dealings with other countries; whether Her Majesty's Government consider that this will have an adverse effect upon international liquidity; and whether Her Majesty's Government will consult with other Governments, and with the directors of the International Monetary Fund, on measures to protect world commerce against the possible deflationary consequences of French policy.]
§ LORD SHEPHERDMy Lords, the French authorities have presented dollars to the United States authorities for conversion into gold at a greatly increased rate in recent months. It seems that the French have now converted what they regard as the surplus part of their existing dollar holdings, and would plan now to convert only net dollar accruals as they arise. The United States authorities have been able to meet these conversions without difficulty, since the gold reserves behind the dollar are great. The French action is bound to decrease the total of international reserves and hence of liquidity. In itself this action should not damage world trade significantly.
We naturally await further clarificacation of how the French authorities 75 expect to operate the whole system which they have advocated. International discussions are continuing in the Group of Ten, in consultation with the International Monetary Fund. No doubt the French Government will seek discussion in the forum of any new proposals they may wish to make. At the same time, as announced in the communiqué following the Prime Minister's recent visit to President de Gaulle, the Chancellor of the Exchequer and the French Minister of Finance will be meeting to discuss the problems that arise in relation to international payments and the expansion of world trade.
§ THE EARL OF DUNDEEMy Lords, I thank the noble Lord for his very full Answer. Would he agree that if there were to be a sudden and heavy contraction of international liquidity, British export trade would probably suffer more heavily proportionately than American or French trade? Can the noble Lord assure us that the Government do not think it is necessary to take any protective measures, in consultation with the International Monetary Fund and other countries, against temporary ill-effects from this French action?
§ LORD SHEPHERDMy Lords, as I am quite sure the noble Earl, Lord Dundee, will recognise, expansion of world trade depends on increasing general international liquidity for the trading nations. As the noble Earl is aware, previous Administrations have sought to increase liquidity, particularly by increasing the quotas of the International Monetary Fund; and I think this is a very important step.In regard to taking action in the present circumstances, I said in my original reply that we do not believe that the action so far taken will have any significant result in affecting world trade. I draw the noble Earl's attention to the discussions that are now taking place between the Ten and the International Monetary Fund, and I think it would be far wiser for us to wait and see the results of these deliberations. This is a matter of considerable interest. I see that the noble Lord, Lord Booth by, has a Motion down on the Order Paper on this subject, and it might be the wish of the House to have an early debate on it.
§ THE EARL OF DUNDEE: I thank the noble Lord.
76§ LORD GRANTCHESTERMy Lords, could we be informed whether the International Monetary Fund has secured payment of the 25 per cent. increase in quotas which were agreed in Tokyo in September last?
§ LORD SHEPHERDMy Lords, I think that question is rather wide of the Question on the Order Paper, and if the noble Lord would put it down I would endeavour to answer it.