International Monetary System (Hansard, 5 July 1982)

§ Lord Boothby
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne)
My Lords, no.

§ Lord Boothby
My Lords, arising out of that very unsatisfactory Answer, may I ask the noble Lord whether Her Majesty's Government realise that the present world economic recession stems from the decision of the United States Government, when the Bretton Woods Agreement collapsed—as I predicted it would and the rejection of which I moved in another place—to demonetize the dollar which halved the French gold reserves, wiped out 4,200 million dollars of our own reserves and reduced the stock of international reserves from 600,000 million dollars to 300,000 million dollars? May I further ask whether they are aware that the only world statesman who foresaw this, and who consistently advocated a viable international monetary policy based on a gold exchange standard, was President De Gaulle? Finally, for how long do Her Majesty's Government mean to tag along, as their predecessors have done for the last 10 years—both Labour and Tory—in the wake of the economic policies of the United States Treasury and the Federal Reserve Board which border on insanity, and which have already brought deep recession and unemployment to the United States and which are now doing the same to Western Europe?

§ Lord Trefgarne
My Lords, I think that one needs to distinguish in one's mind between what may have been the merits or demerits of going off the gold standard many years ago and going back on it again now. Whatever may have been the position in former times, I think that the difficulties of going back to a fixed price for gold, for example, now are very formidable indeed and not to be lightly dismissed. There have recently been a number of inquiries into the possibility, not least one by the United States Gold Commission, which the noble Lord may have seen, and clearly the arguments are still very sharply against going back onto the gold standard.

§ Lord Harmar-Nicholls
My Lords, will my noble friend read the book that the noble Lord, Lord Boothby, wrote about 25 years ago? There may be some enlightening point in it which would be worth reviving.

§ Lord Trefgarne
My Lords, the noble Lord, Lord Boothby, is, of course, a great expert in these matters, and has consistently advanced the view which is reflected in his Question today. But I must say that circumstances in regard to the international monetary system are now very different indeed from those of 50 or even 25 years ago. I think that the new approach towards a multi-currency international reserves system is better.

§ Lord Cledwyn of Penrhos
My Lords, would the noble Lord agree that, in fact, the Bretton Woods conference succeeded in giving the Western world relative economic stability for a quarter of a century? Whatever the merits or demerits of the arguments advanced by the noble Lord, Lord Boothby—and I agree with many of his arguments—does the Minister not agree that it is now advisable, indeed imperative, for Her Majesty's Government to make the initiative in stimulating a similar international conference with a view to giving the Western world some element of stability, which it has certainly not enjoyed for the last few years and which it does not seem likely to enjoy over the next few?

§ Lord Trefgarne
My Lords, it is true that the Bretton Woods system served quite well, perhaps rather than very well, from 1944, when I think it was first established, to 1971 or thereabouts, when it was discontinued. The matter, of course, arises at conferences of every kind from time to time, as it did not least at the Versailles Summit quite recently, when the heads of state addressed their minds to this matter and made some reference to it in the communiqué. But the fact remains that circumstances have changed very much since 1944 and we need to move forward. I think that the approach of the IMF and the development of the special drawing rights—in other words, a general approach towards a multi-currency system of international reserves—is much better suited to the second half of the 20th century.

§ Lord Boothby
My Lords, perhaps the Minister will allow me to ask him one final, very brief question. It is simply this. The world can never get out of the recession in which it now is without a viable international monetary system of some kind. How 554 does the noble Lord propose to get out of it in the absence of any international monetary system? We have none today.

§ Lord Trefgarne
My Lords, I do not think that it is in the gift of any single nation—even the United States—to take one single step that will lift us all out of the international recession. We need a steady and steadfast—if that is the right word—economic policy by all the major trading nations of the world, including the United States, the United Kingdom, France, Federal Germany and the rest, so that together we can improve the trading situation of the world. As regards the United Kingdom, that is what we are seeking to do.

§ Lord Boothby
My Lords, with what we have not got.