HL Deb 10 March 1981 vol 418 cc103-5

2.43 p.m.

Lord Boothby

My 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 they realise that, so long as money, as such, remains valueless throughout the world, and consists of nothing but paper, in one form or another, there can be no hope of stopping world inflation; and whether they will now consider consulting the Government of the United States about the possibility and desirability of remonetising gold by the reestablishment of an international gold exchange standard, with gold at a realistic price, and flexible exchange rates.

The Minister of State, Treasury (Lord Cockfield)

No, my Lords.

Lord Boothby

My Lords, arising out of that splendid reply, may I ask the noble Lord whether he realises that I am not now concerned with the economic policies of the Government, but with the absence of money, without which one cannot conduct international trade, and that when the United States of America demonetised gold and tried to substitute the paper dollar as an international currency it failed hopelessly? Is he aware that we can do very little about it, but that—and this is the remaining point—unless and until some international action is taken rapidly to establish a viable international monetary system, the supply of money will remain out of control and the world recession will deepen? I cannot see any other alternative.

Lord Cockfield

My Lords, I am grateful to the noble Lord for the assurance that he gives. He has, of course, campaigned tirelessly on this subject for 50 years and I am sure that he must, understandably, be disappointed at how little progress he has made. The tide of both opinion and policy has continued to flow against him throughout this period. So far as international trade is concerned, one of the problems of the old gold standard was that it did not provide sufficient liquidity. Steps have been taken in recent years to expand international liquidity, for example, by the creation of SDRs. This is a matter of great importance and I appreciate the point that he makes.

Lord Hale

My Lords, is the noble Lord aware that this is not only a matter of great importance but also a matter which, on this day of all days, raises the most fundamental question that can be raised? As the noble Lord has said that the Government have no policy in this direction, will they say whether they have any policy for establishing within the Common Market a currency system which offers hope of being viable, which will not produce a reduction of Britain within the Common Market to a second-class monetary nation by definition and which will give a real hope of establishing a monetary system which is not subject to world fluctuations, but which has the support of all the members of the Common Market on terms mutually and generously agreed?

Lord Cockfield

My Lords, Her Majesty's Government have policies to deal with all the problems with which we are faced.

Noble Lords

Oh!

Lord Cockfield

My Lords, so far as Europe is concerned, the noble Lord will be fully aware, of course, of the European monetary system, and this is a matter that Her Majesty's Government keep under constant review.

Lord Paget of Northampton

My Lords, will the noble Lord accept this unique occasion of my agreement with him without embarrassment, and will he further impress upon his colleagues in the Government that, while on occasion inflation may be inconvenient, deflation—that is the writing up of debts instead of writing them down—has been uniformally disastrous in economic history?

Lord Cockfield

My Lords, I am glad to hear that the noble Lord agrees with the policies of Her Majesty's Government. So far as the second part of the noble Lord's supplementary question is concerned, of course it ranges over a very wide field. It is important to maintain the value of money and to ensure that money does remain honest money, and neither inflation nor deflation represent acceptable policies.

Lord Boothby

My Lords, I should like to ask one final question of the noble Lord, which is simply this: Does he realise that the whole world has never yet been able to get on without some kind of international monetary system until today, when it is not getting on at all?

Lord Cockfield

My Lords, I understand the point that the noble Lord has made. Of course it opens up a very wide field of discourse. The breakdown of the Bretton Woods system was in many ways the cause of many of the problems that we face. There are great difficulties in re-establishing an acceptable and workable international monetary system, but it is an objective which we all have in mind.