Sitting of 15 May 1957

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  ROYAL NAVY

    Maralinga Range
    Mr. Brockwayasked the Parliamentary Secretary to the Admiralty for what purpose the naval contingent which has arrived in Adelaide from Great Britain will be used at Maralinga weapons testing ground.
    The Parliamentary and Financial Secretary to the Admiralty (Mr. Christopher Soames): The Maralinga range is manned jointly by the United Kingdom and Commonwealth of Australia on an inter-Service basis. The share of responsibility allocated to the Royal Navy and the Royal Australian Navy is the operation and maintenance of the power station, water supply and other plant.
    Mr. Brockway: While thanking the hon. Gentleman for that reply, may I ask whether his attention has been drawn to the Report of a Select Committee of the West Australian Parliament in which it says that, owing to this training ground, the normal way of life of the natives has been interfered with and that a large number of them have been denied their tribal grounds? In view of the service which this training ground gives to the hon. Gentleman's Department, are the Government prepared to make some contribution to the aid of those natives, who are in dire distress?
    Mr. Soames: All that has been done so far has, of course, been done with the full knowledge and co-operation of the Australian Government.

    H.M.S. "Birmingham" (Visit to Cannes)
    Mr.Liptonasked the Parliamentary Secretary to the Admiralty why the Mediterranean Fleet's flagship, H.M.S. "Birmingham", was recently diverted from Middle East manoeuvres to Cannes.
    Mr. Soames: After completing her part in the North Atlantic Treaty Organisation exercise "Medflex Epic", Her Majesty's Ship "Birmingham" visited Cannes from 9th— 14th May in order' to "show the flag" during the International Film Festival. The visit was particularly appropriate since the British film "The Yangtse Incident" was being exhibited.
    Mr. Lipton: Is it true, therefore, that a royal command to send a warship to Cannes was issued by Miss Anna Neagle?
    Mr. G. R. Howard: Would my hon. Friend say whether these manoeuvres were taking place in the Eastern Mediterranean, as the Question would seem to imply, or not?
    Mr. Soames: No, Sir, they were not. They were taking place west of Malta.

    U.S. Naval Review (Dollar Allowance
    Mr. Liptonasked the Parliamentary Secretary to the Admiralty what dollar allowance is being made to officers and men of the Royal Navy attending the United States naval review in June at Norfolk, Virginia.
    Mr. Soames: Officers and men of Her Majesty's ships visiting dollar area countries may convert into dollars up to two-thirds of the pay drawn by them on the fortnightly pay day before their visit and on any pay day that falls during the visit; in addition they may draw the whole of their seagoing local overseas allowance in dollars.
    Mr. Lipton: What does all that boil down to? How much is an ordinary naval rating to be allowed to spend if he goes ashore during this review?
    Mr. Soames: I am grateful to the hon. Gentleman for asking this Question, which enables me to deny a report that was given currency and, I fear, credence of the other side of the Atlantic, to the effect that ratings were to be allowed only one dollar a day. In fact, what I have said in the Answer to the Question means

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    that for a visit which is to last ten days a chief petty officer will be able to draw 67 dollars; and an ordinary seaman 42 dollars, which, if I may translate that into pounds for the hon. Gentleman, means £15 for a ten-day visit.

    Courts-Martial
    Dame Irene Wardasked the Parliamentary Secretary to the Admiralty in how many instances since the start of the last war requests for courts-martial have been refused in the Royal Navy.
    Mr. Soames: An officer in the Navy cannot demand a trial by court-martial as of right, so there is no record of cases in which individual officers may have asked for one and been refused.

  POST OFFICE

    Premises, Aberdeen (Extension)
    Mr. Hector Hughesasked the Postmaster-General if he is aware that the General Post Office buildings in Crown Street, Aberdeen, are over fifty years old and are too small for the postal purposes and facilities required by the city; and if he will state his plans for extension to the premises or for the acquisition of new and larger premises for those purposes.
    The Postmaster-General (Mr. Ernest Marples): Yes, Sir. We plan in two or three years to start an extension to the Crown Street building on the north. The land has been bought.
    Mr. Hughes: While thanking the Postmaster-General for that Answer, may I ask him whether he realises that this is a matter of the greatest importance to the business life of Aberdeen? Will he, therefore, shorten the period of three or four years and expedite the work that is to be undertaken?
    Mr. Marples: I realise the importance of the matter, but I must say that the planning of this extension was held up for a long time by the local planning authority and not by us.

    Inland Letter Rate
    Mr. Liptonasked the Postmaster-General how much estimated additional revenue would accrue from increasing the inland letter rate to 3d.
    Mr. Marples: Making certain reasonable assumptions, about £7½ million.
    Mr. Lipton: Although this increase would, to some extent, cover the present deficit of £11 million, can we have an assurance from the right hon. Gentleman that he will not make this increase?
    Mr. Marples: No increase has been announced.
    Mr. Lipton: Can we have an assurance that the Post Office will not impose the increase?
    Mr. Marples: That is a hypothetical question.

    Deliveries
    Mr. Allaunasked the Postmaster-General why it is proposed to cut the postal deliveries in the Manchester and Salford postal area to one delivery on Saturdays whilst still retaining two deliveries for the London postal area.
    Mr. Winterbottomasked the Postmaster-General why it is proposed to give two deliveries to the London postal area on Saturdays and only one in the provinces.
    Mr. Marples: At the present time, on Saturdays, London has three deliveries, and most other places have two deliveries. The suspension of one Saturday delivery everywhere has the effect which the hon. Members describe.
    Mr. Allaun: As people in the provinces pay the same postal rates as do Londoners, why should they have a poorer service?
    Mr. Marples: I do not think that the hon. Gentleman will find that they do have a poorer service, because when they post their letters in Manchester for London, and put a 2½d. stamp on them, they will have the advantage of the delivery in London.
    Mr. Winterbottom: Will the Minister agree that there is inequality in the service as between London and the provinces? Why should he exercise, or continue to exercise, this preferential treatment in favour of London?
    Mr. Marples: It is not really preferential treatment, and it was agreed to by the party opposite when they were in power—[Interruption.] For five years the

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    party opposite could have altered this had they wished. London has always had an extra delivery, for two reasons. First, it is the capital and the volume of letters flowing into London is greater, and, secondly, the rate of flow is higher because London is a railway terminus. For that reason it has particular difficulties.
    Sir R. Cary: Can my right hon. Friend say what difference this will make to postmen's duties in Manchester? Secondly, will post offices remain open on Saturday afternoons?
    Mr. Marples: The changes will make quite worth-while improvements in the postman's life. Most postmen will still not enjoy a five-day week, but under these proposals about half the postmen will be on five or five-and-a-half day duties, as compared with only 10 per cent. at present, so postmen in Manchester will have an appreciable improvement. Manchester post offices which are at present open on Saturday afternoons will continue to be open on Saturday afternoons.
    Mr. C. R. Hobson: Is the Postmaster-General aware that during our period of office, the service was related to volume of traffic and not to economy?
    Mr. Marples: That is precisely what I said in my Answer.

    Charges
    Mr. Ness Edwardsasked the Postmaster-General whether he is yet in a position to formulate in detail the manner in which he proposes to meet the increased charge of £11 million per year which he recently announced.
    Mr. Marples: No, Sir. Further pay settlements may be made shortly. I will inform the House of the consequences when the whole effect on the Post Office budget is clearer.
    Mr. Ness Edwards: Will the Postmaster-General give an assurance to the House that when these changes are to be announced he will announce them orally, and in the House, and not on a Thursday, in a written reply to a "stooge" Question?
    Mr. Marples: The right hon. Gentle man is, again, mistaken. The Written Answer on the Thursday about the
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    alteration in Post Office services followed the precedent set by the party opposite, when the noble Lord, Lord Listowel, was Postmaster-General. So far as increases of charges are concerned, I will, again, follow the precedent, which is to announce them orally in the House.
    Mr. Ness Edwards: Is not the right hon. Gentleman aware that the change was announced in this House orally and was the subject of debate, and that it was not done behind the back of the House by means of a Question for written reply?
    Mr. Marples: I am quite certain that the right hon. Gentleman is wrong, because I made a particular point of looking up the precedent of what the noble Lord, Lord Listowel, did when he was Postmaster-General. I am afraid that the right hon. Gentleman is wrong.
    Mr. C. R. Hobson: Is the Postmaster-General aware that when the increased cable and wireless charges were made public by his predecessor, they were disclosed in reply to a "stooge" Question for Written Answer on the last day before the House adjourned for the summer Recess?
    Mr. Marples: Increased charges will be announced orally in this House. The alteration of postal services was announced in reply to a Question for Written Answer, which is precisely what the party opposite did.
    Mr. Winterbottomasked the Postmaster-General what has been the total amount of additional reserves gained as a result of increased charges for Post Office services since 1951.
    Mr. C. R. Hobsonasked the Postmaster-General (1) what has been the increase in revenue due to increase in Post Office charges for the years 1952, 1953, 1954, 1955, and 1956;
    (2) what has been the total increase in the Post Office wages bill for each of the years 1952, 1953, 1954, 1955, and 1956.
    Mr. Marples: I would refer the hon. Members to the Ansper my predecessor gave to the hon. Members for Brightside (Mr. Winterbottom) and for Caernarvon (Mr. G. Roberts) on 18th April, 1956.
    Mr. Winterbottom: Has the Minister not had time to waken since then? Does

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    he not understand that this information is being sought in order that we shall know the position in the Post Office? Surely, we can have these matters revealed to us quite clearly by means of Question and Answer in this House?
    Mr. Marples: The hon. Gentleman has only to go to the Library. All the information will be found there.
    Mr. Winterbottomasked the Postmaster-General if he will list the individual increases in charges for Post Office services made since October, 1951.
    Mr. Marples: I would refer the hon. Member to the Answer my predecessor gave him on 18th April, 1956.

    Postal Services
    Mr. C. R. Hobsonasked the Postmaster-General when he will be able to post notices in the post offices setting out the details and times of the reductions in services, delivery and collection of mail, parcels and letters for London and the main provincial towns.
    Mr. Marples: The changes announced on 2nd May are subject to final ratification at the Annual Conference of the Union of Post Office Workers. Their detailed application to individual areas will then be considered and local announcements will be made as and when arrangements are completed in each case.
    Mr. Hobson: In view of the nature of that reply, can the right hon. Gentleman say whether he will make a statement to the House?
    Mr. Marples: I will consider that suggestion, but it may be difficult to make a statement to the House because conditions vary locally over the country as a whole.
    Mr. Hobson: Would the Minister put such a statement in the Library?
    Mr. Marples: I should like to consider that suggestion.

    Mail from Jordan (Deliveries)
    Mrs. McLaughlinasked the Postmaster-General what deliveries he has received of mail which originated in the Hashemite Kingdom of Jordan from the middle of September, 1956, up to the time of the British intervention in Egypt;
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    and what inquiries he has received regarding non-delivery of mail posted in Jordan.
    Mr. Marples: As the information about deliveries is rather detailed, I am, with permission, circulating it with the OFFICIAL REPORT. With very few exceptions, services from Jordan worked normally, and I am not aware of any complaint. But I shall be glad to make inquiry if my hon. Friend will let me have details.
    Mrs. McLaughlin: Is my right hon. Friend aware that a number of people have not received mail which was posted in Jordan during the period referred to in the Question, and, to the best of my knowledge, most of these people are under the impression that it is the British Post Office which is at fault?
    Mr. Marples: I shall be grateful for any details, if my hon. Friend will let me have them.
    Following is the information:
    Surface letter mails from Jordan followed the regular pattern of one or two arrivals a week, taking on average about fifteen days in transit. There is no direct surface parcel post service.
    Daily air letter mails were received regularly, taking the normal two or three days in transit, except that those sent on 27th and 29th October, 1956, took 48 and 27 days, respectively, the service afterwards resumed its regularity with a slightly longer transit time. Air parcel mails are dispatched irregularly, but there was an abnormally long interval between two dispatches, on 19th October and 5th December, respectively.

    Overseas Press Telegrams
    Mr. Rossasked the Postmaster-General why he proposes to extend the type of agencies and persons permitted to use the Press telegram service; and if he will state the loss in the service for each of the last five years.
    Mr. Marples: In extending to broadcasting authorities the right to receive overseas Press telegrams, the new regulations which I laid before Parliament on 7th May regularise arrangements which have obtained since before the war. I regret that these regulations have not been presented earlier. The restriction as to the person who may send overseas Press telegrams has been found to be unnecessary. On the second part of the Question, my inquiries are not complete and I will write to the hon. Member as soon as they are.
    Mr. Ross: Surely, any extension of the use of a non-profit-making branch of the service is a matter for concern. Can the right hon. Gentleman tell us who asked for this extension? From whom did the approach come that this service should be extended?
    Mr. Marples: This service has been continued for years under successive Governments since before the war, and it has not been taken away because it was thought at the time that it was right that the Press should have a cheap form of communication so that they could get the news to the Commonwealth and round the world.
    Mr. Ross: But that is not the question that I asked. We are all aware of the facts concerning the Press, but now this service has been extended to broadcasting agencies. Who asked for this extension?
    Mr. Marples: They have enjoyed it since before the war. It is not an extension.

    Stamp-Selling Machines (Post Offices)
    Mr. Russellasked the Postmaster-General approximately how many stamps, are contained, when they are full, in stamp machines provided outside post offices; and if he will instruct postmasters to see that machines are full before post offices close on Saturdays.
    Mr. Marples: Stamp-selling machines are charged with rolls of 240, 480, 960, or 1,920 stamps, according to the use made of them.
    A machine should contain enough stamps to keep it working when the post office is closed. Postmasters have clear instructions about this; and if the hon. Member will let we know of any difficulties he has had I will gladly have inquiries made.

  WIRELESS AND TELEVISION

    B.B.C. Wavelengths (Utilisation)
    Mr. M. Stewartasked the Postmaster-General whether the present wavelengths of the Home and Light programmes of the British Broadcasting Corporation will both be fully utilised when the proposed programme changes are put into operation.
    Mr. Marples: Yes, Sir. All the wavelengths will continue to be fully utilised when the new programme arrangements go into operation.
    Mr. Stewart: Can the Postmaster-General explain why, if the wavelengths are being fully utilised, the B.B.C. is now discussing draft programmes for October which involve the deletion from the Home programme of nearly all serious music? Is he aware that this may mean serious under-employment of the B.B.C. Symphony Orchestra, the disbandment of some regional orchestras, and a severe blocking of opportunity for young British composers?
    Mr. Marples: The Home and Light programmes will be joined to form a single programme at certain times, but both programmes will be used, and the programmes will be sent out on both wavelengths.
    Mr. C. R. Hobson: Can the right hon. Gentleman say on which wavelengths these programmes are to be transmitted?
    Mr. Marples: Not without notice.

    Institute of Directors (Proposed Programmes)
    Mr. Allaunasked the Postmaster-General whether he is aware that the proposed showing on commercial television of 16 political propaganda films by the Institute of Directors contravenes the provisions of Section 3 (1) (g>) of the Television Act, 1954; and if he will use his powers under Section 9 (2) of that Act to prevent the showing of these films.
    Mr. Marples: I am aware that the project was regarded by I.T.A. and the two programme contractors concerned as likely to contravene in certain respects paragraph 6 of the Second Schedule of the Television Act, and as such was not accepted. I understand that the Institute has now made certain amended proposals which are being considered by the Authority and the companies. The second part of the Question does not, therefore, arise.
    Mr. Allaun: Is the Postmaster-General aware that the Institute is still pressing the I.T.A. to give way? Does not the whole affair illustrate the danger of placing television. the most powerful.

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    medium that the world has even known for influencing men's ideas, in commercial hands?
    Mr. Marples: The Institute has presented amended proposals, and as I do not know what the amended proposals are I cannot say anything about them. But if they are amended suitably, I suppose that the I.T.A. will do its duty under the Schedule to the Act.
    Mr. Braine: Can my right hon. Friend say in what way these documentary programmes, designed to illustrate the achievements of British business and industry, contravene the regulations?
    Mr. Marples: At the present moment I do not think that anyone can say that, because the films have not been produced. Until I, as Postmaster-General, have seen the evidence, I do not think that I can be expected to pass judgment.
    Mr. Ness Edwards: Is not the right hon. Gentleman aware that these films were withdrawn after this Question was put down for answer in the House? Will he assure himself that the amended films will not contravene the provisions of the Act, especially bearing in mind that he has power to act in this way?
    Mr. Marples: The right hon. Gentleman is misinformed. The films have not yet been made; therefore, they cannot be amended.

    B.B.C. Charter
    Mr. Ness Edwardsasked the Postmaster-General if he will make a statement relating to the duration of the British Broadcasting Corporation charter.
    Mr. Marples: The Government will certainly wish to consider, at the appropriate time, the extension of the B.B.C. charter, which runs to 30th June, 1962, to make its currency coincide with the period provided in the Television Act for the I.T.A. services, but it is too early to make a definite statement.
    Mr. Ness Edwards: Is that why the right hon. Gentleman made his statement, in a speech outside this House, that the Government intended to allow the charter to run for another two years?
    Mr. Marples: There was nothing new in the statement that I made outside the House. I merely restated what was said
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    in the House of Lords by the then Postmaster-General, my noble Friend, Lord De La Warr. He said that, first, everybody was agreed that there should be a comprehensive review, and secondly, that the life of the Authority and the B.B.C. charters should end together. That was said on 12th July, 1954, in the House of Lords.

    Sound Broadcasting
    Mr. Ness Edwardsasked the Postmaster-General if he will make a statement on Government policy relating to the introduction of commercial sound broadcasting.
    Mr. G. Darlingasked the Postmaster-General his policy with regard to the licensing of commercial radio stations to compete with the British Broadcasting Corporation in the field of sound broadcasting.
    Mr. Marples: The introduction of commercial sound broadcasting would be a major change in policy. The Government have no such proposal in mind.
    Mr. Ness Edwards: If that is so, why did the right hon. Gentleman, in the speech which he made outside the House, say that the question of breaking the monopoly in sound was obviously one which would have to be considered by a committee which the Government would set up. Will the right hon. Gentleman tell us whether or not he is flying kites?
    Mr. Marples: If we should have a comprehensive review, as was forecast in 1954 in the debate on the I.T.A., clearly everything should be included in that review, including commercial sound broadcasting. The committee may say that it is not worth while or the committee may want it, but it will clearly be included in that review. The Question on the Order Paper asks what the Government have in mind at the moment.
    Sir R. Grimston: In view of the success and popularity which have attended the breaking of the B.B.C. monopoly in television—
    Mr. Ellis Smith: Success?
    Sir R. Grimston: —would it not be as well to consider breaking the monopoly in sound?
    Mr. Marples: That may be desirable, but I think it would be part of a comprehensive review and could not be effected on its own by the Government.
    Mr. Ness Edwards: Is there no limit at all to the opportunities which the Government are going to give to their friends to make profits from public services?
    Mr. Darling: In view of the fact that the Minister has power now to license any radio station or television station without seeking approval from the House, will he give an assurance that there will be a full discussion, not only of the possibilities of the sound broadcasting monopoly being broken, but of the terms of reference of any such committee which may be set up to inquire into it, before we go any further?
    Mr. Marples: On a question like that I should not like without notice to give any assurance, because we must consider these matters very calmly. If there is to be a comprehensive review, I cannot see why any Member should wish to exclude sound broadcasting from it.

    Broadcasting (Future Developments)
    Mr. G. Darlingasked the Postmaster-General what proposals he has for the appointment of a committee to inquire into the present organisation of sound and television broadcasting and to make recommendations for future developments.
    Mr. Marples: None, Sir, at present.
    Mr. Darling: If, as was stated in reply to a previous Question, the Government are considering setting up a committee to inquire into this matter, could we have a discussion in the House to cover the terms of reference which I mentioned before and generally to consider broadcasting policy, as a result of which a committee could be set up to deal with the technical questions and so on?
    Mr. Marples: The question of discussion in the House is not a matter for me but for the Leader of the House.

    Television Licence Fee
    Mr. G. Darlingasked the Postmaster-General if he will reduce the television licence fee to viewers living in areas of poor reception until reception of programmes is improved to a reasonably satisfactory standard.
    Mr. Marples: No, Sir.
    Mr. Darling: Is the right hon. Gentleman aware that in Sheffield, and I suppose in other pants of the country, there are thousands of television viewers who cannot get good reception because of the siting of the transmitters in relation to the surrounding countryside? In Sheffield it is due to the hills. In those circumstances, is it not rather fraudulent to take a full licence fee from people if the Post Office cannot give them a complete service? If the Postmaster-General cannot do anything about reducing the fee, can he improve the service?
    Mr. Marples: I will certainly try to improve the reception if the hon. Gentleman will give me details of where he does not think it is adequate—
    Mr. Darling: In the North-East.
    Mr. Marples: —but it would not be practicable to attempt to adjust television licence fees to reception conditions, since reception differs not only from place to place but from time to time.
    Mr. Darling: The Postmaster-General has had hundreds of letters from Sheffield about this matter; and in view of the unsatisfactory nature of the reply, I wish to give notice that I shall try to raise the matter on the Adjournment.

  TELEPHONE SERVICE

    Blackburn
    Mrs. Castleasked the Postmaster-General whether, in view of the large number of applicants on the waiting list for business telephones in the Blackburn telephone area, he will expedite the laying of a new cable in this area.
    Mr. Marples: New cables are at present being laid in Blackburn, districts being tackled in turn. The work is being pressed forward as quickly as our resources will permit, but I cannot yet say when the work will be finished.
    Mrs. Castle: While thanking the Postmaster-General for that encouraging reply, might I ask him to realise that there have been very long delays for business people in Blackburn, and will he, therefore, see that this work gets priority, as this is an important industrial area?
    Mr. Marples: I could not give it priority, because the proportion of applications outstanding in Blackburn is slightly less than in the rest of the country.

    Exchanges (Dialling Facilities)
    Mr. Russellasked the Postmaster-General when further telephone exchanges in the central London area will be obtainable by dialling from toll exchanges in south-west Hertfordshire; and if he will issue an up-to-date list of those which can now be dialled.
    Mr. Marples: Calls to all exchanges within five miles of Oxford Circus can already be dialled. A list of these exchanges is given in the prefaces to the local telephone directories. I am sending to my hon. Friend a full statement of the exchanges in south-west Hertfordshire which have this dialling facility.
    Mr. Russell: I am obliged to my right hon. Friend.

  ROYAL AIR FORCE

    Unidentified Flying Objects
    Major Wallasked the Secretary of State for Air how many unidentified flying objects have been detected over Great Britain this year as compared with previous years; and whether the object picked up by radar over the Dover Straits on 29th April has yet been identified.
    Mr. Beswickasked the Secretary of State for Air what was the nature of the aircraft or other object sighted on the radar air defence screens on Monday night and which occasioned the dispatch of aircraft of Fighter Command.
    The Secretary of State for Air (Mr. George Ward): Five flying objects reported this year are as yet unidentified compared with six last year, none in 1955. and six in 1954.
    The object sighted in the Channel on 29th April turned out to be two of a large number of Hunters of Fighter Command engaged on a training exercise. Their movements as observed by radar were somewhat unusual and aroused the suspicions of the radar defences.
    Major Wall: I thank my right hon. Friend for that reply. May I ask
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    whether the report that the planes were travelling at 1,000 miles an hour is true? Is my right hon. Friend aware that unofficial reports of sightings have increased greatly this year, and that there is a feeling that the Air Ministry is sometimes rather reticent in making statements on these matters?
    Mr. Ward: In reply to the first point, I can say that the speeds of the objects as tracked on the radar screen were nothing like so fast as reported in the Press. In reply to the second point, hon. Members will bear in mind that reports relating to this year are still under investigation, and some of the objects may well be identified later.
    Mr. Beswick: Is the right hon. Gentleman aware that there is a certain amount of apprehension about these false alarms? Has he speculated upon what may happen in the days when nuclear deterrents are in use and when we shall not have a few months to find out whether missiles are actually coming our way or not? Can the right hon. Gentleman give an assurance to the public that there is some method of identifying objects other than the radar screens on the South Coast?
    Mr. Ward: It was precisely because the radar control and reporting system was not absolutely certain whether these objects were friendly that it directed them to be investigated.

    Air Trooping (Britannia Aircraft)
    Mr. Beswickasked the Secretary of State for Air what discussions he has had with representatives of independent air operators about the use for trooping purposes of the three Britannia aircraft now on order by the Government.
    Mr. Ward: I would refer the hon. Member to the statement I made on this subject in introducing the Air Estimates last Thursday.
    Mr. Beswick: Are we to understand from what was said last Thursday that it is now the intention of the Government to supply the private commercial companies with aircraft with which to conduct these trooping operations? If it be now the position that the nation supplies the passengers, in the form of troops, the nation is also going to supply aircraft, and the nation has its own Transport Command and its own Air

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    Corporations, what possible justification remains now for putting out these contracts to private companies?
    Mr. Ward: I think that I made it quite clear in my speech last Thursday that we wanted a strategic reserve of airlift in the civil companies.
    Mr. de Freitas: But is it not a scandal if public money is to be used to underwrite the private operators, when these very same publicly-owned aircraft could be used for trooping by the Royal Air Force or by the well-experienced publicly-owned Corporations?
    Mr. Ward: We hope that perhaps one of the independent corporations may wish to buy these planes.
    Mr. Beswick: Would the Secretary of State explain what he means by his last statement, that one of the air corporation would perhaps buy—
    Mr. Ward: The independent companies.
    Mr. Beswick: But if it be the case that the independent companies cannot buy these aircraft, and if the whole case for the previous policy, that by giving trooping contracts we were building up a strategic reserve, has gone by the board, and the Government are now to supply the aircraft, why cannot we allow the Corporations or Transport Command to operate these services?
    Mr. Ward: We want the civil air charter companies to do trooping for us.
    Mr. Beswick: Why?
    Mr. Ward: We are making available to them aircraft in which they can do trooping to the Far East, because they have the proper range. That is the policy by which we shall build up our strategic reserve of airlift.
    Mr. de Freitas: Will the right hon. Gentleman look at this matter again, because this backhanded way of subsidising the private operators is profoundly unsatisfactory?
    Mr. J. Griffiths: Are we to take it that it is now Government policy, particularly in this case, to subsidise private enterprise out of public funds?
    Mr. Ward: There is no question of subsidy.
    Mr. Griffiths: Jobs for the boys. Money for the boys.
    Mr. Beswick: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment of the House at the earliest opportunity.

    R.A.A.F. (Disbandment)
    Mr. Beswickasked the Secretary of State for Air what further consideration he has given to the proposal that some decoration or other acknowledgement should be made to those who served in the Royal Auxiliary Air Force.
    Mr. Ward: Medals and decorations are traditionally awarded for specific actions or for meritorious service rather than to mark an event such as the disbandment of Royal Auxiliary Air Force units. Long-service auxiliaries are, of course, eligible for the Air Efficiency Award.
    Mr. Beswick: Is the right hon. Gentleman aware that I am not suggesting that a medal should be struck to honour the disbandment of this Force but to honour the services which the men have previously given in it? Are we to understand that, since we had a discussion on this matter, the Secretary of State has not given any thought at all to what permanent recognition he can give for the most valuable services that these men rendered voluntarily through the Royal Auxiliary Air Force?
    Mr. Ward: I have already said that those who rendered ten years' service are eligible for the Air Efficiency Award.

  RAILWAYS

    Empty First-Class Seats
    Mr. Allaunasked the Minister of Transport and Civil Aviation if he will give a general direction to the British Transport Commission that on long-distance trains second-class passengers who are forced to stand should be permitted to occupy empty first-class seats.
    The Minister of Transport and Civil Aviation (Mr. Harold Watkinson): No. Sir.
    Mr. Allaun: Does the Minister think it right that every day, on non-stop, long-distance trains such as "The Mancunian ", men, women and young

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    children are having to stand for nearly four hours in corridors and guard vans, when there are empty first-class seats; and could not this situation be dealt with quite simply by the ticket collectors?
    Mr. Watkinson: I think that the answer is two-fold. First, this is a proper matter for the Commission to deal with; it is part of the commercial management of the railways. What is, I think, more important is that on those long-distance trains—this is not well enough known and, perhaps, it should be made better known by the Commission—seats are bookable and people can obtain a seat by taking the trouble to book beforehand.
    Mr. Allaun: But the Minister must know that regularly on these trains there are not enough seats for the second-class passengers, whether they book or not. Surely, it is a matter of principle and something for which the Minister is responsible?
    Mr. Watkinson: No. If the guard or official on the train finds that the train is grossly overcrowded, for reasons which cannot be avoided, he has certain latitude of action.
    Mr. Popplewell: Would the Minister approach the British Transport Commission in order to make more publicly known that particular regulation, that when a train is crowded a second-class passenger may approach the local station master or inspector and ask him to provide a seat in a first-class compartment, and that that person has authority to do that? Will the right hon. Gentleman see that that is made more widely known?

    Euston—Glasgow Line (Electrification)
    Mr. K. Robinsonasked the Minister of Transport and Civil Aviation when the electrification of the Euston—Glasgow main line will commence; which section will be undertaken first; and when it is expected that the Euston—Rugby section will be completed.
    Mr. Watkinson: The pilot section in Lancashire and Cheshire should be in operation by the middle of 1958, but it is not possible at this stage to say when the section of the line from Euston to Rugby will be ready. It is hoped that the whole line from Euston to Manchester and Liverpool will be completed by 1967.
    Mr. Robinson: Is the Minister aware that that is a long time to wait, particularly for my constituents who still suffer from a serious smoke nuisance, especially in the Chalk Farm area? That is one of the many reasons why the plan is urgent. Will the Minister do his best to speed up matters?
    Mr. Watkinson: I know that the hon. Member is in touch with the Transport Commission, which, I know, is doing all that it can, but the problem is a difficult one. The Euston—Rugby section will, however, be ready a long time before the whole line is completed. The Commission will do the best it can.
    Mr. Popplewell: Will the Minister confirm that the progress being made with the modernisation plan is well up to expectations? I believe that it is, but I should like the right hon. Gentleman's confirmation. It is a tremendous task.
    Mr. Watkinson: It is a tremendous task, and it is actually ahead of schedule.

  ROADS

    Trentham—Trent Vale Road
    Mr. Ellis Smithasked the Minister of Transport and Civil Aviation what action he proposes to take to minimise as soon as possible the dangers on the main road between Trentham and Trent Vale, Stoke-on-Trent; and if he will make an order to establish a maximum speed of 15 m.p.h. between the hours of 8 a.m. and 8 p.m. within the limits of the road where the greatest number of accidents have happened.
    The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. G. R. H. Nugent): A speed limit of 15 m.p.h. on this busy trunk road would be impracticable and unenforceable. Our plans to widen more than a mile and a half of the road are, however, well advanced.
    Mr. Ellis Smith: In the meantime, people are risking their lives and children have daily to cross these roads. Is the Minister aware that several housing estates have been built on one side of the road, which means that children, in order to go to school, have now to cross this main road? In view of all these facts, will the hon. Gentleman reconsider

    397
    his reply, with a view to taking action to minimise the danger until the new road is constructed?
    Mr. Nugent: I accept that this road is a dangerous stretch of road; that is the reason why we are making these improvements which will reduce the element of danger there. But, in the meantime, I must tell the hon. Gentleman that a 15 m.p.h. speed limit is unlikely to be observed or to improve the road safety conditions.
    Mr. Ellis Smith: If I accept that reply, what constructive proposals has the Minister to make, if he is not prepared to accept mine, in order to minimise the dangers'?
    Mr. Nugent: The constructive proposals are that we arc widening one stretch of the road this year, and, as regards the other stretch of the road, the land has been acquired and the work is likely to be going on in the course of the next eighteen months or so.
    Mrs. Slater: But what does the Minister propose to do in the meantime—that is the whole point—while the road is being constructed? How long a time does he think will elapse before the road is finished?
    Mr. Nugent: One section of the road will be in course of construction this year, and the benefit of that will, therefore, accrue during the course of the next twelve months or so. I am afraid that there is nothing further we can do in the meantime on this stretch of road. We have already done all that we can.

    Birmingham—Preston Motorway
    Mr. Ellis Smithasked the Minister of Transport and Civil Aviation when it is intended to start and finish the new main road which will by-pass Trent Vale, Stoke-on-Trent.
    Mr. Watkinson: I assume that the hon. Member is referring to the proposed Birmingham—Preston motorway. The draft scheme for this road was published last month, and the statutory period in which objections may be lodged expires on 20th July. It is not possible to judge how long the making of the scheme and the other necessary preliminaries will take before construction can start. I shall authorise this proposal,
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    to which I attach high priority, as soon as I can.
    Mr. Ellis Smith: I appreciate and welcome that reply, but the Minister will be aware that large-scale firms of civil engineers are very efficient people and they can make calculations as to how long it will take to construct the road. Can the Minister give a rough idea?
    Mr. Watkinson: No. The hon. Gentleman misunderstands the position, as, I am afraid, many other people do. It is not the civil engineering work which causes delay in respect of these new motor roads; it is the refusal—the correct refusal—of my Ministry to over-ride the rights of individuals in getting the land.
    Mr. Ellis Smith: It is the landlords, then.
    Mr. E. Johnsonasked the Minister of Transport and Civil Aviation why over two years elapsed between the announcement by his predecessor that it was intended to build a motor road from Preston to Birmingham and the publication of the proposed route; and what action he is taking to shorten the time taken in preparing future schemes of a similar nature.
    Mr. Watkinson: The announcement of 2nd February, 1955, clearly indicated that the Preston—Birmingham motorway would not be ready for commitment until about 1958–59. The intervening period has been taken up by the necessary consultations with all the interests concerned, and if they are to have full opportunity to state their case it is not possible to shorten the procedure.
    Mr. Johnson: Will my right hon. Friend give an assurance that he is considering all the ways and means of shortening these delays in the hearing of appeals? While one respects the rights of the owners of property, it seems to take an intolerably long time for appeals to be heard.
    Mr. Watkinson: I have had a special inquiry conducted in my Ministry into the procedures necessary for buying the land that is necessary for motor roads and I am afraid that it is not possible further to shorten the procedure. We have shortened it considerably. The procedure involves not only the buying of

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    land from the private owner, but dealing with local authorities and all the interests involved.
    Mr. E. Johnsonasked the Minister of Transport and Civil Aviation how many appeals have been made up to the present time against the proposed route for the Birmingham-Preston motorway; how long he anticipates that it will take to hear the appeals; and when he expects work on this motorway will begin.
    Mr. Watkinson: Nine objections have so far been received. The statutory period in which objections may be lodged does not expire until 20th July, and until I know the number and weight of the objections and have considered them I cannot say how long the remaining statutory processes will take. I shall authorise this scheme, to which I attach high priority, as soon as I can.

    Programme
    Mr. Jannerasked the Minister of Transport and Civil Aviation the total of authorisations under the road programme for each of the years 1954–55 to 1957–58, inclusive.
    Mr. Watkinson: The figures asked for are shown in the published Estimates for the years in question. They have increased from £14¼ million in 1954–55 to £62 million in 1957–58.

    Hook Road Fly-Under, Kingston By-Pass
    Sir H. Linsteadasked the Minister of Transport and Civil Aviation whether work has yet started on the Hook Road fly-under on the Kingston by-pass; and when it is estimated that the work will be completed.
    Mr. Watkinson: I am considering the objections to this scheme put forward at the inquiry held into the compulsory purchase of the land required.
    Sir H. Linstead: Can my right hon. Friend indicate when he is likely to be able to announce a decision?
    Mr. Watkinson: I hope very soon.

    Markyate By-Pass
    Mr. E. Johnsonasked the Minister of Transport and Civil Aviation when work on the Markyate by-pass on road A.5 commenced; what has been the rate
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    of construction in yards per month up to the present time; and when he expects the by-pass will be open for traffic.
    Mr. Watkinson: The work started in December, 1955, and I expect that the by-pass will be fully open to traffic early next month. It is already in partial use. The rate of construction in yards of carriageway per month would be misleading as it would take no account of the other necessary work.
    Mr. Johnson: Why is the rate of construction of roads so very much slower in this country than on the Continent? Is my right hon. Friend fully satisfied that the best and latest road-building machinery is in use?
    Mr. Watkinson: I do not agree with my right hon. Friend. The civil engineering rate of road construction in this country is very fast indeed. Perhaps when my hon. Friend next motors on the German autobahnen, he will notice that their levels are sinking because they were not provided with adequate foundations.

  TRANSPORT

    Departmental Officers (Enforcement Duties)
    Mr. Ernest Daviesasked the Minister of Transport and Civil Aviation how many officers of his Department normally engaged on enforcement of the provisions of the Road Traffic Acts are now engaged on other duties, including petrol rationing; and when it is proposed they shall return to their normal duties.
    Mr. Nugent: Ninety-four officers who would otherwise have been employed on enforcement of the Road Traffic Acts have been engaged hitherto on work arising from fuel rationing. They are now being released as quickly as possible to return to enforcement work.
    Mr. Davies: Is the Minister aware that, during the period of petrol rationing, it has not been possible for the enforcement officers even to inquire into a large number of alleged contraventions, particularly of Section 19 of the 1930 Act regarding the keeping of records and continuous working? Will he ascertain whether there are sufficient officers now engaged in this important work, as breaches of the law are, unfortunately, increasing at the present time?
    Mr. Nugent: It is, of course, true that they have not been able to give their normal attention to that work, but they will be doing so now at full strength, and I can assure the hon. Gentleman that their numbers are adequate for the responsibilities that they have.

    Parking Scheme, Westminster (Public Inquiry)
    Mr. Ernest Daviesasked the Minister of Transport and Civil Aviation what action he proposed to take on the parking scheme submitted to him by the Westminster City Council.
    Mr. Watkinson: I have consulted the London and Home Counties Traffic Advisory Committee, and on its advice I am proposing to appoint an independent inspector to hold a public inquiry into this scheme as soon as possible.
    Mr. Davies: Will the Minister make that "as soon as possible" "very speedily", because the need to have schemes in force is very urgent, particularly following the ending of petrol rationing? Is he in a position to say whom he proposes to appoint as the independent inspector?
    Mr. Watkinson: No, I am not at the moment in a position to say. I should, in fairness, say that the Westminster City Council has lost no time in bringing such a scheme forward, and I am grateful.

    Road Accidents (Dogs)
    Mr. Jannerasked the Minister of Transport and Civil Aviation how many road accidents through dogs on roads have occurred in each of the last six months; how many people have been fined for permitting a dog to stray on roads designated under the Road Traffic Act; and whether he will consider inserting prominent notices on such designated roads instructing people that dogs must be kept on a lead.
    Mr. Nugent: The number of road accidents involving personal injury, attributed by the police to dogs, in each month beginning October last, was 245, 222, 200, 179, 163 and 215, respectively.
    No order has yet been made naming a road on which dogs must be kept on a lead, but a number of orders have now been submitted to my right hon. Friend for confirmation. In considering them
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    we shall wish to know what plans local authorities have for providing suitable notices.
    Mr. Janner: As there have been as many as 2,600 accidents due to dogs being on the roadways and about 70,000 dogs have been killed on the roads, will the Minister see that something is done in this matter fairly speedily, and that instead of areas being designated without people knowing, he will ensure that the proper signs are put up?
    Mr. Nugent: As I have said, that is one of the aspects that we are examining whilst we have these orders under consideration. We hope to complete our consideration Shortly, and my right hon. Friend will then announce his intention with regard to these orders.
    Mr. Ede: During the months when there was a substantial fall in the number of these accidents, was the reduction due to the decreased number of dogs or to the decreased number of motors on the roads?
    Mr. Nugent: I am not able to speculate.
    Mr. J. Hynd: As most of these accidents are caused not merely by dogs not being on leads but by dogs having nobody accompanying them, does not the Minister agree that it is a matter not merely of ensuring that dogs are on leads, but of ensuring that stray dogs do not wander about without someone in charge of them?
    Mr. Nugent: That is one of the many difficulties in making orders of this kind.

    Upper Berkeley Street, W/
    Mr. Russellasked the Minister of Transport and Civil Aviation if he will introduce one-way working, temporarily at least, in Upper Berkeley Street, W.1, while it is obstructed by road works.
    Mr. Nugent: No, Sir. We have consulted the Commissioner of Police for the Metropolis and the St. Marylebone Borough Council and we agree that one-way working here is unnecessary. In any case, the works are now almost complete.
    Mr. Russell: While I am glad to hear that the works are almost complete, may I ask whether my hon. Friend would not

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    agree that in a street in which there is roam for only one line of traffic, it is rather silly to have traffic in the opposite direction trying to get past at the same time?
    Mr. Nugent: There was just room for two lanes of traffic, and we felt that it was in the general interest of traffic flow to keep the street as a two-way traffic street.

  MINISTRY OF DEFENCE

    Officers and Other Ranks (Retirement Compensation)
    Dr. Kingasked the Minister of Defence if he will take steps to enable officers who are due for compulsory retirement during the next two years under the Government's new defence programme, to obtain other posts during this period without forfeiting benefits which would be theirs if they waited until they were compulsorily retired.
    The Minister of Defence (Mr. Duncan Sandys): The terms of compensation for the officers and other ranks concerned are not yet fully settled; but I can assure the hon. Member that the problem referred to in this Question has not been overlooked.
    Dr. King: While thanking the Minister for his sympathetic approach, may I ask him to bear in mind that a number of middle-aged officers face compulsory retirement in the next two years, that it is difficult at that age to get a job, and that if in the intervening time they have a suitable opportunity of getting a post, it seems hard that, because they are being compulsorily retired, they should lose benefits to which they have entitled themselves by their military service?
    Mr. Sandys: I entirely recognise that point, and I assure the hon. Member that in settling the terms of compensation it will be taken into account.
    Major Legge-Bourke: In welcoming what my right hon. Friend has said, may I ask him to bear in mind that as long ago as the end of the First World War, certain officers were given an assurance that if they retired a little earlier for the convenience of the Service, they would not forfeit any pension rights, but that the Treasury let them down very badly?
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    Will my right hon. Friend ensure that that does not happen again?
    Mr. Sandys: I am sure that my right hon. Friend the Chancellor of the Exchequer fully recognises the honourable obligation—[Interruption.] I am anxious that my hon. Friend who asked the question should be able to hear what I say. I had, perhaps, forgotten, in turning in his direction, that we are living in the electronic age. What I was saying was that I am quite sure that my right hon. Friend the Chancellor of the Exchequer is fully aware of the honourable obligations which we have towards those men.
    Mr. Paget: Is the right hon. Gentleman aware that those honourable obligations will not be fulfilled unless he makes the compensation high enough to get the necessary number of voluntary retirements, and that if he does not do that he will have broken faith with those men who are obliged to retire, and thus he will not get new volunteers?
    Mr. Sandys: My belief is that we shall get a very substantial number of voluntary retirements for that reason.
    Mr. Paget: There are no voluntary retirements.

  BRITISH GUIANA

    Incident, Skeldon Sugar Estate
    Mr. D. Jonesasked the Secretary of State for the Colonies (1) what action has been taken against the police officer who fired on the strikers at the Skeldon Sugar Estate, British Guiana, in February last;
    (2) whether he is aware that an official Commission of Inquiry found that the police officer responsible for firing on the strikers at Skeldon Sugar Estate, British Guiana, had made an error of judgment; and whether he proposes to authorise disciplinary action.
    The Under-Secretary of State for the Colonies (Mr. John Profumo): It is not proposed to take any disciplinary action against the police officer concerned.
    Mr. Jones: Having regard to the circumstances and to the result of the court of inquiry, will the hon. Gentleman take care to see that people who are not psychologically fitted, in the circumstances of such cases as this, to be in

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    possession of loaded rifles, are deprived of the opportunity of making errors of judgment again?
    Mr. Profumo: After careful consideration of the Commission's report the Governor decided that there were no grounds for taking disciplinary action, and my right hon. Friend does not see any reason to disagree with that decision.
    Mr. Jones: What I am asking is that an assurance be given that efforts will be made to prevent people who are psychologically unfitted for handling loaded rifles in circumstances of this kind from being in possession of those weapons on these occasions.
    Mr. Profumo: I think that that is a rather wider question.

    Demerara Bauxite Company
    Miss Leeasked the Secretary of State for the Colonies the price paid for the products of the Demerara Bauxite Company, British Guiana, by its parent body in Canada; and what price is paid by other consumers.
    Mr. Profumo: As the reply contains a number of figures in tabular form I will, with permission, arrange for it to be printed in the OFFICIAL REPORT.
    Following is the table:

    PRICES OBTAINED BY THE DEMERARA BAUXITE CO., LTD., FOR ITS PRODUCTS

    Product

    Average Prices per ton obtained during first quarter of 1957

    From parent body

    From other consumers

    $

    $

    Dried bauxite

    (a)Metal grades

    12·15

    —

    (b)Other grades

    —

    12·10

    Calcined bauxite

    —

    35·56

    Prices are f.o.b. Mackenzie, British Guiana. $4s. 2d.
    Miss Leeasked the Secretary of State for the Colonies what information he has concerning plans, made by the Demerara Bauxite Company, to smelt aluminium in British Guiana on a scale that will provide a substantial increase in employment and industrial development within the Colony.
    Mr. Profumo: None, Sir, but the Company has recently announced a 60 million West Indian dollar programme for installing plant to process bauxite to alumina. The construction of this plant will give employment to about 1,500 people. When the plant is fully operating, permanent employment will be available for about 700 people.
    Miss Lee: Is the Under-Secretary of State aware that while capital going into British Guiana is appreciated, there is a fear that a scarce and valuable raw material is being used up in British Guiana without enough manufacturing going on in British Guiana to justify that?
    Mr. Profumo: I think that the fear will prove to be unfounded.

  MALAYA

    British Subjects, Malacca (Memorandum)
    Mr. Peytonasked the Secretary of State for the Colonies if he will make a statement on the memorandum submitted to him in June, 1956, by British subjects of all races in Malacca; and what reply he has made to that memorandum.
    Mr. Profumo: This memorandum was in fact submitted not to my right hon. Friend but to the Constitutional Commission which was then at work in Malaya. I am sure that the Commission gave full consideration to the contents of the memorandum when drafting its Report.
    Mr. Peyton: Is my hon. Friend aware that some of the people who were responsible for that memorandum are now in this country? I very much hope that my right hon. Friend will give consideration to any representations which they may make.
    Mr. Profumo: I am sure that my right hon. Friend will give consideration to such representations.

  NORTHERN RHODESIA
  Mr. Andrew Mutemba and Mr. Emmanuel Chalabesah
  Mr. J. Johnsonasked the Secretary of State for the Colonies if he is aware that no specific charges have been preferred against Andrew Mutemba, Western

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  Provincial President of the Northern Rhodesia African National Congress, and Emmanuel Chalabesah, Provincial Deputy General Secretary of Congress, who were banished to Kasama, Northern Province, and that to date no compensation has been paid; and whether he will reconsider their cases.
  Mr. Profumo: These men were originally detained under Emergency Powers Regulations, and before restricting them the Governor had received and considered the recommendations of the Advisory Committee set up under those Regulations. They are at present restricted to the Kasama district under the Emergency (Transitional Provisions) Ordinance. They have had the opportunity to state their case before the Commission, consisting of a High Court judge, established under that Ordinance. The Governor will further consider their case, together with that of other restricted persons, when he has received and studied the Commissioner's report.
  Mr. Johnson: Will the hon. Gentleman be good enough to confirm that of the 70 African leaders banished last September only one so far has had a charge made against him in open court— Matthew Nkolomo, Secretary to the Mine Workers' Union? Does not that offend against all the canons of English justice? Why are not charges preferred against these men, and why are they not brought to open court, and sentenced if guilty? Their dependants are still living in the Copper Belt without means of subsistence, and these men have no means of subsistence, and are banished to the hinterland and the bush.
  Mr. Profumo: This was done under the Emergency Regulations, as the hon. Gentleman knows. I think that we had perhaps better await the Commissioner's report.

POLIOMYELITIS (VACCINE)
The Minister of Health (Mr. Dennis Vosper): With your permission, Mr. Speaker, and that of the House, I will make a short statement on the progress of vaccination against poliomyelitis. With the agreement of my right hon. Friend the Secretary of State for Scotland, my statement will cover Scotland as well as England and Wales.
The production of this vaccine, which, with the stringent safety measures, involves some of the most complicated processes ever undertaken in this field, has had its difficulties. Nevertheless, 213,000 children had been vaccinated by the end of 1956, and vaccine for well over another 500,000 has been issued this year. This covers about 750,000 of the 1,910,000 children registered for vaccination by their parents. The vaccine is now coming forward well and we look forward to completing the vaccination of the children already registered.
At the same time, we have come to the conclusion that registration can be extended. It was orginally limited to children born in the years 1947 to 1954. We are now proposing that parents of children born in 1955 and 1956 should be given an opportunity to register them, and that a second opportunity should then be given to the parents of children born in 1947 to 1954 who decided not to register them last year. The arrangements for registration will be handled by the local health authorities and will be announced locally in due course.
Last year, vaccination was suspended at the end of June. This was done because there was not at that time evidence that the use of the vaccine during the months when the disease might be expected to be most prevalent would be free from risk of provoking paralysis. My right hon. Friend and I have now been advised by the Joint Committee on Poliomyelitis Vaccine, appointed by the Central and Scottish Health Services Councils, that vaccination need not in general be suspended on that ground. Local authorities have been informed of this advice in a circular which they are due to receive today.
Further production difficulties cannot be ruled out, and I do not feel justified

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in trying to forecast the dates by which it is hoped to make complete further stages in the programme. Nevertheless, we believe that the programme I have outlined is realistic and, barring unforeseen accidents, that it is capable of fulfilment within a reasonable time.
The number of notifications of poliomyelitis so far this year has been relatively high. This must be a cause for concern. I am, however, advised that on the basis of past experience it is not possible at this stage to draw any conclusions as to the probable incidence of the disease later in the year.
I have seen suggestions that arrangements should be made to import vaccine from America. When drawing up our scheme we decided, on expert advice, that the vaccine to be used in this country should have a composition different in certain respects from that of American vaccine which is made from strains of virus including the virulent Mahoney strain. That advice still stands, and, while the situation will continue to be kept under close review in all its aspects, my right hon. Friend and I do not consider that any departure from this policy is warranted in existing circumstances.
Dr. Summerskill: In view of the high number of cases of poliomyelitis already registered in the first four months of the year, that is, before the start of those months which we consider of serious import, could the Minister say approximately when there will be enough vaccine available to vaccinate the 1 million children who were already registered before the extra number now mentioned?
Mr. Vosper: As the right hon. Lady will have noticed, I am most anxious not to make forecasts which might prove inaccurate because of production difficulties, but if all goes well it should be possible to complete vaccination of those already registered by the end of this summer.
Mr. Wade: To clarify a point which has caused some misunderstanding in the public mind, may I ask whether it is
410
correct that the disease which is most common in this country differs somewhat from the disease in America and, therefore, it is desirable to use the vaccine that is most appropriate to this country?
Mr. Vosper: I think that that is correct. The composition of the vaccine in this country is different from that in America, and the opposition to using the American vaccine is not so much that it may be unsuitable but that the vaccine used in this country today is more suitable for the disease in this country.
Mr. Blenkinsop: Is the right hon. Gentleman in touch with developments in the United States in the use of the vaccine there, and will he ensure closer contact with general practitioners in this country in view of his comments?
Mr. Vosper: The present advice will be brought to the notice of all general practitioners this week. There is very close contact with the United States, particularly through the Medical Research Council.

BALLOT FOR NOTICES OF MOTIONS
  East African Commission
  Mr. J. Johnson: I beg to give notice that on Friday, 31st May, I shall call attention to the Report of the East African Commission, and move a Resolution.
  Elderly People (Care)
  Mr. Allaun: I beg to give notice that on Friday, 31st May, I shall call attention to the need for greater care for elderly people, and move a Resolution.
  Defence Services (Finance and Administrative Control)
  Mr. Sharples: I beg to give notice that on Friday, 31st May, I shall call attention to the need for inquiry into the methods of financing and administrative control of the Defence Services, and move a Resolution.

SUEZ CANAL
3.34 p.m.
Mr. Hugh Gaitskell: I beg to move,
That this House expresses its concern at the outcome of the Government's Suez Canal policy, and deplores the damage to British prestige and economic interests resulting there-from.
In our opinion, given the circumstances in which we find ourselves, there was no real alternative to the decision announced by the Prime Minister last Monday that British shipping could go through the Canal. To have gone on by ourselves, or, indeed, with the French, boycotting the Canal would have done us serious economic harm. It would have penalised our exporters, it would have involved a continuing dollar expenditure which we can ill afford, and all this without any or with very little chance that we would have achieved any better terms for the settlement of the Canal as a result.
The fact is that only with unity among the users of the Canal could such a boycott have succeeded, and it is perfectly plain that no such unity existed. Therefore, in all the circumstances, we had to be realistic and recognise that all ideas of "going it alone" were nonsense and that we must cut our losses and swallow our pride.
The financial measures which the Prime Minister announced are obvious enough. It was clear, of course, that we did not wish at this stage, and while we still had so many financial issues outstanding between ourselves and the Egyptian Government, to release their sterling balances, but there is one question which I should like to put to the Prime Minister, about which I am rather puzzled. Why was it not possible to confine the new No. 1 (Special) Account to the Canal dues only? One can see very readily that to avoid realising the balances as a whole it was necessary to provide that any sterling paid for the use of the Canal could, in turn, be paid by the Egyptian Government to a special account which they could then proceed to use, but why was it not possible to limit that account simply to the Canal dues?
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Why was it inevitable, as the Prime Minister's statement implies, that nonresident holders of sterling must be able to use this account? The implication of the right hon. Gentleman's words, that non-resident holders must be able to use the account, therefore, was that we could not really resist the claims of resident holders and the whole machinery of current transactions would be re-established. This may or may not be a good thing, but it is a further concession towards Egypt at a time when I should have thought it wiser to have made only the minimum concession essential for the use of the Canal.
There is another point in connection with the financial proposals. The Prime Minister suggested that perhaps even the blocked account might be released, so far as payments made into it were concerned, in respect of transactions before the end of July. Thereby, as I followed his argument, it was intended that British traders here who were owed money by Egypt could obtain that money from the blocked account. But this, of course, gives such traders a decided advantage against many other British subjects who have suffered severe losses as a result of Government policy.
It means, for instance, that a firm which has had stocks and equipment belonging to it seized in Egypt is unable to get compensation, whereas a firm which happens to have money owed to it by Egypt is able to get compensation. I am not clear why it was considered wise to make this discrimination in favour of some types of creditors against other types. Perhaps we can have some enlightenment on these two points.
I have said that we must cut our losses and we should certainly have no illusions about what they are. First, there is the financial account vis-àvis Egypt. While we have blocked their sterling balances they have seized all our stores at Tel-el. Kebir and have also seized private investment on a very substantial scale. Furthermore, they have announced their intention of claiming damages against us for the action we took last November. No doubt, in due course, there will be discussions with the Egyptian Government on these issues. Frankly, what worries me is that, while I believe that the Egyptian assets here amount to just over £100 million, my impression is that the

413
British assets which they seized in Egypt are worth substantially more than that.
If that is the case, our bargaining position in discussions with Egypt is a very weak one. The outcome will, no doubt, turn in that case on whether we are prepared to consider any claim for damages which the Egyptian Government may put in. I would ask the Prime Minister: what is the attitude of Her Majesty's Government to the Egyptian claim for damages suffered by Egypt as a result of bombardment and action by our Armed Forces in November? Are they rejecting this claim out of hand, or are they prepared to go to arbitration on it? I think that the country is entitled to know what attitude the Government will adopt on this question.
Can we also have an assurance that the British Government now accept full responsibility to indemnify all those British subjects who have suffered severe losses in Egypt personally and in relation to their property? It really is quite unreasonable that the Government who placed them in this position should not be prepared to accept the responsibility to pay them back. Of course, the Government are entitled to claim what they can from Egypt. But we cannot be sure, for the reasons that I have given, that such claims will, in fact, be substantiated, and if they are not substantiated then we on this side of the House say that the Government opposite must accept full responsibility for this matter.
I turn to the terms for the use of the Canal. I will not call it any more than the Prime Minister called it, a settlement. It is, of course, a unilateral declaration by Egypt. Most of the points made in this unilateral declaration are the same as promises made many months ago, undertakings given last summer by President Nasser well before 30th October. For example, in this declaration covered by the letter of the Egyptian Foreign Minister of 24th April to the Secretary-General of the United Nations, the Egyptian Government once again pledge themselves to observe the 1888 Convention.
They had always said that they would do so. Once again, they say that they are prepared, in the event of disputes about tolls, to accept arbitration. The
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Egyptian Government had said that before. Once again they say that in the event of disputes about discrimination in the use of the Canal they are prepared to accept arbitration. They had said that before. And, once again, they say that they are prepared, if negotiations do not succeed, to go to arbitration on the question of compensation for the shareholders of the old Canal Company.
There is, therefore, little that is new in the declaration, little that was not well known to all of us last September and October.
Our attitude to the document and to the terms on which we now proceed to use the Canal naturally turns very much on what alternatives we have in mind. To the British Government of the day, who were so concerned to emphasise that the Suez Canal was our lifeline, that if it were cut there would be very grave unemployment here, who insisted that the Canal could not be allowed to come under the control of a single Power, who insisted that the 18-Power proposals formulated after the conference in London last August were the proposals by which we must stand—to a British Government that does all this, obviously the latest terms from Egypt can fairly be described as involving capitulation.
But, even apart from the demands which were made and the arguments adduced in their support last summer, we can fairly say that the terms upon which we now use the Canal are somewhat worse even than the other terms which were in process of being negotiated during the course of October. By these other terms, I mean those set out in Mr. Hammarskjöld's letter of 27th October to the Egyptian Foreign Minister. In fact, a comparison of these two documents shows that they are—the Egyptian proposals now and the Hammarskjöld-Fawzi proposals—similar in many ways, but the present proposals are worse in two respects.
First, there is no question here of any agreement. This is a unilateral declaration by Egypt. It is not the result of negotiation, and, although the Egyptian Government have deposited it with the United Nations and say that they regard it as an international instrument, it remains obscure in international law as to how far it is to be treated as the equivalent of a pact or settlement. But,

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secondly, in the new proposals there is nothing whatever except one single, vague sentence about co-operation between the users of the Canal and the Egyptian Canal Board.
In the Hammarskjöld-Fawzi correspondence there was a very elaborate structure of co-operation. There was to be a committee or commission of Canal users which was to hold joint meetings with the Egyptian management board. There was provision for arbitration on disputes between them, and, indeed, the whole letter shows quite clearly that the solution thus envisaged was one of real cooperation between the users and Egypt. We can fairly say that it was not as satisfactory to us as the international board which we were demanding in the 18-Power proposals, but it did involve, and this was set out in great detail in black and white, a clear structure of co-operation which simply does not exist in the new proposals at all.
Indeed, Mr. Cabot Lodge, commenting on these new proposals, picked out this very point. He said that
" The United States believes that the Egyptian declaration does not fully meet the six requirements laid down by the Security Council."
He went on to say:
" In view of the lack of provision for organised and systematic co-operation between Egypt and the users there is no assurance that the six requirements will, in fact, be implemented."
Mr. Cabot Lodge is right. That is precisely the difference not only between the new proposals and the Security Council Resolution, but also between the new proposals and the Hammarskjöld letter which set out far more favourable terms.
There is, I know, an argument which the Prime Minister hinted at during Question Time the other day, that the proposals set out in the letter of Mr. Hammarskjöld are not really proposals which the Egyptian Government were going to contemplate seriously. It is true that the Egyptian reply was only that they were regarded, with one exception—I do not need to trouble the House with that—as a fair basis for negotiation. But really, to pretend that at that stage in the whole story, at the end of October, it was the Egyptian Government who were unlikely to negotiate fairly on these
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proposals while the British Government were willing to do so, is a clear travesty of the facts of the situation.
The fact is that the Egyptians themselves had proposed a meeting at Geneva on 29th October. President Nasser, in fact, said that if necessary he was prepared to go to that meeting himself. There was every sign at that stage that the Egyptian Government were anxious for a settlement, but this was rejected by the British Government on the flimsy excuse that, first, before any kind of meeting with the Egyptians could do any good they must put forward alternative proposals. This does not make sense because, in fact, there had been negotiations under the United Nations, following the Security Council meeting, between the French, the British and the Egyptians, as a result of which Dr. Hammarskjöld wrote that letter to Mr. Fawzi.
The truth is that we are now forced to accept terms far worse than those which were demanded earlier, and somewhat worse than those that we could have had. The reason for this is quite simply that our bargaining position today has been gravely weakened as a result of the events of 30th October. I ask the House to contrast the situation which obtained in October with that which obtains today. At that time, our ships were going freely through the Canal. At that time, the users of the Canal were united. They had come together in the London Conference, they had agreed on proposals, they were prepared later, though the British Government were very reluctant to do so, to negotiate on those proposals. At that time, our influence in the United Nations was still considerable. At that time, time was on our side. It was not on the side of President Nasser. At that time, the dues were being paid only partially to the Egyptian Government. As far as we were concerned, they were still being paid to the account in London of the old company.
Today, the ships are diverted. They were not, until the Prime Minister's announcement, going through the Canal. Today the Canal users are not united, but divided. Today, our influence in the United Nations is gravely undermined. Today, we are obliged to act in a hurry because we cannot afford to lag behind other Canal users in using the Canal.
It is ironical to constrast what has actually happened with those frequent

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statements by the Foreign Secretary last autumn that the great weakness of the United Nations was that it could not do things in a hurry and that, therefore, we must use other action to get things done more quickly. How much better it would have been if we had exercised a little patience when time was on our side and we were in sight of a reasonable settlement.
I turn to the question of what next can be done, for I am far from wishing this debate or my own speech to be purely critical. [Laughter.] There will be some criticism later. Obviously, we have to try to negotiate an improvement on the Egyptian declaration. That was implied by the Prime Minister when he said. "This is not the end of the story." I want to ask him what was the exact significance of that phrase? Of course, if he just meant that all sorts of things are happening in the Middle East, as they always are, and that there are to he some further discussions with the Egyptians, it has no greater significance. But if he meant that he had some wonderful new cards up his sleeve which be was going to play, I think the House is entitled to know a little more about it, for it is a dangerous thing, if you have not got the cards up your sleeve, to pretend that you have.
Some things in this situation are fairly straightforward. I do not believe that it will be very difficult to negotiate with the Egyptians some further elaboration of their declaration about co-operation between the users of the Canal and the Egyptian management board. It should not be particularly difficult—at least from a technical angle—to get going negotiations on compensation for the shareholders of the Canal Company, with a provision for arbitration as well. I imagine that we shall be taking up our own financial negotiations with Egypt, and on that I have already said that, though I think our bargaining position is a weak one, nevertheless we must do what we can.
The second and much more difficult issue, which I know concerns hon. Members on all sides of the House, is that of the Israeli shipping. Our view on this matter has never wavered. It is that freedom for users of the Canal, including the Israelis, is implicit in the six points of the United Nations Security Council Resolution. Secondly, we believe that
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this question of the Israeli shipping should have been dealt with by the Assembly at the time that they were debating the withdrawal of Israeli forces.
I am not saying that it was possible or reasonable for the Israelis to insist on laying down conditions before they withdrew. The argument of the Secretary-General and others that this was, in some form, an act of aggression I think we can accept, but there was also an obligation upon the United Nations Assembly to recognise that Israel had some wrongs which had to be put right as well. We believe that at that time the Assembly should have combined in a single resolution—as was. I think, proposed by Mr. Lester Pearson of Canada—that, first, the Israelis should withdraw, secondly, that Egypt should give up the state of belligerency under which she had always claimed, to stop the Israeli ships, and, thirdly, that the United Nations Force should be accepted by both countries, Israel and Egypt, and accepted by them as staying there until a permanent settlement had been reached.
I regret very much that the Assembly did not reach that conclusion, and I think one reason why it was not possible to get them to accept it was the appalling loss of British influence in the United Nations. But the obligation of the Assembly remains, and, indeed, is increased by the fact that the Secretary-General repeatedly assured Israel—and so, we believe, did the United States— that if they were to withdraw then this other matter of the state of belligerency would be dealt with. Therefore, it is up to the United Nations to deal with it.
As we all know, the United Nations Security Council, as long ago as 1951, called upon Egypt to allow the Israeli ships to go through the Canal and, indeed, condemned the whole idea that she could claim not to do so because she was still in a state of war with Israel. We believe that is the starting point at which any new negotiations should take place. I would have said myself that that Resolution coming from the Security Council might be said to overrule any decision of the International Court, but I would not wish to take any very strong line on that. However, I will say this, I think that the onus lies upon Egypt either to accept the Security Council

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Resolution of 1951 or, if she is not prepared to do that, then it is for Egypt to take the matter to the International Court.
The third point that arises is the question of the Gulf of Aqaba. There our position—which I think is the same as that of everybody else in the House—is that Israeli shipping must be free to use the Gulf of Aqaba and to go through to Elath. In this part of the world, the situation is a little better because the United Nations Force is there, and, in any event, it is not possible for Egypt, even if she were in possession, to stop those ships except by an act of war.
Having said all these things, one must recognise that, unfortunately, we have very limited bargaining power in dealing with Egypt, that on our own there is very little we can do. With others, and particularly with the United States of America, there is a certain amount that can be done. We can make provision for alternative routes, we can build the larger tankers, we can develop the new pipelines running from Iraq to Turkey.
Then there is the possibility that the United States of America might use the economic aid which she once gave to Egypt, and the prospect of further aid, as a bargaining counter. There is the possibility also that the money for the development of the Canal, which will be badly needed, could be given only on conditions which seemed satisfactory to Canal users.
I emphasise again, however, that all these bargaining weapons or points are things which we can not use on our own. They are essentially weapons which can only be used by the Canal users as a whole, and particularly in collaboration with the United States.
I turn briefly to two or three other wider consequences in the Middle East. We are in really a ridiculous position about the Tripartite Declaration. I ask the Prime Minister to try to clear this up: are we bound by the Tripartite Declaration of 1950 or not? If we are bound by it, are we bound by it in relation only to Israel, Syria, Lebanon and Jordan, or to Egypt as well? What, indeed, is our exact relationship to Jordan now that the Treaty has come to an end? And does the Tripartite Declaration apply today not only to frontier guarantees, but also to the
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balance of arms going to that part of the world? We are in complete confusion about this, yet it is a matter of obviously the highest importance that we should know exactly what are our commitments.
The second matter is quite different and is also very urgent. I am informed that the United Nations Relief Work Agency will run out of funds altogether at the end of June. This Agency is, of course, the body that provides for the very large number of Arab refugees in Jordan, Egypt and other territories. I am told that the reason why it will run out of money at the end of June is that the American and British Governments cannot make up their minds how much they are to pay.
I do not blame the British Government for this—it is certainly a responsibility shared by the American Government— but I need not emphasise the appalling consequences that will follow if the Agency has no more funds, if it is unable to buy the food that is necessary to feed the refugees, and if it cannot, indeed, carry on at all. I ask the Government to take this up as a matter of urgency. If there is one way in which we can recover a little of our lost prestige in the Middle East, it would, I think, in this case be by an action which ran even in advance of what the Americans do, so as to enable the Agency to continue its work.
I finally pass to some conclusions on the wider problems of the Middle East and the events of the last nine months. First, the background. Our interest in the Middle East is overwhelmingly that we wish peacefully to buy oil from that part of the world. We want to buy it, and we are prepared to help develop it.
Our second interest is an obligation, in view of past history, to see to it that Israel and the neighbouring Arab States both survive. I think there remains, whatever the exact position about the Tripartite Declaration is, a moral obligation on us here from which we cannot escape.
These two aims can be achieved only if there is stability in the Middle East, but the problems of stability are these. Stability is threatened by three forces— by Arab nationalism, by poverty and social revolution, and by the influence, I believe, of the Soviet Union. All these three things are bound up together.

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The United States, of course, has largely supplanted us in the Middle East. I am not one of those who grumble about that. We gave it to the United States on a plate. We invited them virtually to come in. We had so far lost our influence that, indeed, there was no option. I do not believe that the United States engineered this or was, indeed, particularly anxious to get itself so heavily involved politically and militarily, but it is so involved today.
It is clear that at the moment the United States is conducting what might be described as a holding operation. It is continuing one of the policies which the British Government in the past used to follow, and that is the policy of trying to separate the other Arab States from Egypt. I would not deny that, for a short period at any rate, this policy may have some success.
It is true that as regards both Saudi Arabia and Jordan the trend seems to be moving in that direction. But I must say this. I do not believe that, whatever the short-term gains may be, the basic problems of the Middle East can be tackled unless we are prepared eventually to talk with the Russians about them. I cannot see that we can ignore the fact that the Russians are now firmly in the Middle East, and sooner or later we are bound to have discussions with them.
That is the background against which we have to judge the events of the last nine months. The dispute between us and the Government has never been on the merits of Colonel Nasser's action in nationalising the Canal. We condemned this as they did and as did many other countries, and we condemned it not because of the act of nationalisation but because of the way it was done and because of our very natural doubts about the future of the Canal. Our dispute with the Government has throughout been simply on the question of how this problem should be dealt with. From the start we have urged two things; first, that we should not act alone in this matter, and, secondly, that we should not use force contrary to the Charter of United Nations. Both these points were perfectly clearly stated in the very first speech that I made on behalf of my party on 2nd August, and they were repeated again and again in the innumerable debates that took place in the summer and autumn.
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We accepted the 18-Power proposals. We did not think them unreasonable. We urged that the Government should not regard them as an ultimatum to be accepted or not, but should be ready within the United Nations to negotiate with Egypt about them. We believe that by the end of October we were in sight of a settlement which, though not ideal, was reasonable.
It was at that point that the Government chose, using the excuse of the Israeli attack, to invade Egypt; and it is clear that they planned to do so when they learned of the possibility of the Israeli attack. What the consequences were is clear to all and cannot be denied —the blocking of the Canal, the cutting of the pipelines, the strain on the £, the introduction of petrol rationing here, the check to industrial expansion, a tremendous blow to our reputation in the world and particularly in the Middle East and in Asia and, at the very least, a very serious breach between ourselves and America and grave misunderstanding in and a threat to the unity of the Commonwealth. Let me say one further thing about this. One of the worst features of this whole episode, I think, is that it was a really serious blow to that better relationship between the peoples of the East and the West which we had so carefully fostered during the previous ten years.
Some of those consequences are now past, but others still remain. I know there are those who would say—there are no doubt many of them on the Government benches—" If only we had been allowed to go through with it, if only the United States had behaved differently, if only the United Nations had behaved differently, and if only Russia had behaved differently." [HON. MEMBERS: "If only the Opposition had behaved differently."] Yes, and if only the Opposition had behaved differently.
Let us take these points that the United States might have behaved differently. Is it really suggested that after we had deceived our closest ally we should expect it to come to our aid in doing something of which we knew from the start it would disapprove? The French Prime Minister admitted that the reason why we never consulted the Americans was that we knew that they would disapprove. Was it really to be supposed that the United

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Nations would take lying down this flagrant violation of the Charter, that it would be prepared to back us up? Did the Government really believe that there would be no two-thirds majority against us?
As to Russia, is it really suggested that the Russians were not going to react at all? Certainly, in the correspondence now published between Mr. Bulganin and Sir Anthony Eden it is made perfectly plain by the Russians what was going to happen. It really is absurd to suggest that these reactions are something which need not have happened, that they are not part of the whole facts of the world situation which should have been taken into account.
Now, what of the Opposition? There are those, I know, who talk nowadays about us—I repeat, us—searching our consciences and standing in white sheets. If those who talk this way are serious, they utterly fail to understand the point of view of the Labour Party. We could not possibly support a policy which was, in our view, utterly wrong and utterly damaging to our national interests. We could not support a policy which violated all the principles on which our foreign policy had been based for the past ten years.
We wished to see, and still wish to see, our country not putting itself above international morality but giving moral leadership to the world. Nor can we accept, as Her Majesty's Opposition, that we have to adopt as our slogan, "My Government, right or wrong." We claim, too, that in refusing to support the Government's action in going to war, and in opposing it, we did something at least to preserve a bit of our reputation in the Middle East and in Asia. And let hon. Members be quite clear about this. Whatever attitude the Opposition had adopted in this matter would not have made the slightest difference to the reaction of the United States, or the reaction of the United Nations or the reaction of Russia.
I appreciate that, of course, there may be a certain inner logic among those who have recently left the party opposite, by which they say, "We will go it alone, never mind what happens." But, while there is an inner logic there, it is utterly out of relation with the realities of the external situation.
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This notion that we can "go it alone" and that we have the power to do so, regardless of the attitude of our allies and the rest of the Commonwealth, in the world as it is today, is nothing short of lunacy. The mystery is how the Government themselves for a time followed this policy, for, leaving morality out of it altogether, if hon. Members wish, they will not deny that an appalling error of judgment was made.
It is not right that the responsibility for this should be laid to the door of one man. It is not the former Prime Minister, but the whole Government who are responsible—those who backed it throughout, those who opposed it but had not the courage to resign, and those who backed it first and then withdrew their support. The present Prime Minister's rôle in these weeks remains somewhat obscure. Yet he is a man who could, perhaps more than any other member of the Government, have given sound advice in this matter. He had been Foreign Secretary, he had been Minister of Defence and he was Chancellor of the Exchequer.
I wonder whether he warned the Cabinet of the time that there might perhaps be certain defence difficulties, which have since emerged. Did he tell them that he thought the Americans would welcome all this with open arms? In the light of his experience as Foreign Secretary, did he imagine and tell the Cabinet that the United Nations would give it their blessing? Did he, as Chancellor of the Exchequer, consider for a moment that perhaps, if this were to be done, there might be a little trouble with the £, or was it only at the last that he came to realise this? Is it true that in the early stages he was the most flamboyant and romantic supporter of the whole plan? Perhaps we shall hear a little more about his point of view this afternoon.
So much for the past. As for the future, the lesson is clear enough. We must reaffirm our principles in the three essentials of our foreign policy—a united Commonwealth, support for the Charter of the United Nations, and the Anglo-American Alliance. We must not only reaffirm these, but we must base our foreign policy upon them too, for only in that way and by abandoning the path down which the Government strode last

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autumn can we hope to regain some of our lost influence and prestige in the world. Only in this way can we recreate confidence between ourselves and our allies and unity in the Commonwealth; and both these things are essential if we are to achieve the lasting world settlement for which the sorely distracted peoples of the world are longing today.
4.15 p.m.
The Prime Minister (Mr. Harold Macmillan): We cannot complain of the decision of the Opposition to put a Motion of censure on the Order Paper, or even at their attempt to exploit a political situation from which they may hope to draw some dividends, but I am bound to say that I am slightly surprised at the terms of the Motion.
I try to judge these matters as objectively as possible, but, with the best will in the world. I cannot agree that over the past seven or eight months the Leader of the Opposition has chosen as his single directing purpose the maintenance of British prestige. The incidents of last November have been debated over and over again, and the pros and cons of the Government's action have been exhaustively discussed. No doubt, there will be some Members in this long two-day debate who will wish to go over it once more, but I must say that I would not have thought that the Leader of the Opposition would be very anxious to recall some of the incidents of these discussions.
The broad opinion of the great majority of our fellow-countrymen can, I believe, be stated quite simply. They have a full understanding of the crucial problem and the crucial challenge which confronted the Prime Minister and the Government of the day. They do not think that the Opposition did very much to help. They know that Sir Anthony Eden was actuated by the highest patriotic motives, based upon a longer experience and fuller understanding of world affairs than almost any man in this country. They have the deepest sympathy for him in the cruel illness which struck him down at the critical moment. They believe that if the decisions that he took, with the full, complete and unanimous support of his Government—[An HON. MEMBER: "Why did he resign?"]—with the full, complete and unanimous support of the Government—[HON. MEMBERS: "No."] —they believe that, if those decisions were
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misrepresented at home and misunderstood abroad, yet there is a growing body of opinion in every part of the world which is beginning to appreciate and understand the reasons for the Government's policy. They therefore believe that his actions and those of his colleagues will be fully justified by history.
Nevertheless, since British opinion is, and always has been throughout our long history, both practical and objective, they believe that Governments must face facts as they are, and I propose, therefore, first to deal with the question of the use of the Canal. As I made quite clear on Monday, and here I think that the Leader of the Opposition agreed with me, I do not pretend that the position is satisfactory. This is not a satisfactory settlement, and the reason is that it is not a settlement at all. It is not a satisfactory agreement, just because it is not an agreement. It is a unilaterally drawn prospectus of the terms on which the Egyptian Government are prepared to offer the use of the Canal to potential customers.
To be fair, there are features and elements in it which, as the right hon. Gentleman opposite said, are not unreasonable. Nevertheless, it is a statement of conditions, made by one party only, and with no such guarantees as would adhere to an internationally negotiated settlement. It is quite true that the Egyptians have offered to register this document at the United Nations, but I doubt very much whether international law prevents them from withdrawing or amending it at their will.
Of course, it can be argued, as the right hon. Gentleman argued today, that we could have obtained by negotiation a multilateral international agreement of the kind we sought, but I do not think that there are any grounds for saying that. At no point during the long negotiations between the seizure of the Canal and the other events in that area which precipitated military action was there any real willingness on the part of the Egyptian Government to be tied down to any definite proposals.
The right hon. Gentleman said that we could have got better conditions if the events of November had not taken place. Let us see what was the situation at the meeting of the Security Council when the Resolution embodying the famous six principles was debated. The

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second part of the double Resolution—and it was the second part which was the teeth of the Resolution—stated that the London proposals corresponded to the six principles and invited Egypt to make a counter proposal which would provide equally effective guarantees for the users. This Resolution also called for co-operation between Egypt and S.C.U.A.
What happened to this? Of course, first, it was, naturally, vetoed by the Russians. Nevertheless, the Secretary-General did his best and wrote a letter, to which the right hon. Gentleman referred, on 24th October to the Egyptian Government setting out his ideas of what might be the basis for negotiations. He was restricted, of course, in what he could put forward by the vetoing of the second part of the Resolution. Nevertheless, he sent this letter, to which the Egyptian Government made a reply. I quoted on Monday the words of that reply and I will read them again:
"… we share with you the view that the framework you have outlined in your letter is sufficiently wide to make a further exploration for a possible basis for negotiations along the lines indicated in it worth trying."
Those phrases cannot be construed as an acceptance of the six principles. It was a tentative approach to a conditional consideration of a hypothetical proposition for an exploratory exercise.
Mr. Gaitskell: The right hon. Gentleman failed to point out that at the beginning of this letter the Secretary-General was setting out, not ideas of his own, but impressions of points which had already been established in the course of the discussions which had taken place in New York.
The Prime Minister: Certainly, and anybody who would think that that was anything approaching an acceptance has had no experience of any negotiations, or must have a very naive view of what was likely to happen.
The Egyptians were obviously relying on two things: on the Russians being able to veto any effective resolution, and, of course, on the feeling, to which Mr. Menzies called our attention at the time, that they would be quite safe to elude and evade the real issue, because they believed that no effective action would be taken against them. Having said all this about the Egyptian attitude both
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before and after the events of last November, I think that it is fair—and here the right hon. Gentleman was scrupulously fair himself—to remind the House of the actual terms of Egypt's latest proposal and to compare what I have called the prospectus, the unilateral proposal, with the six principles.
The first principle dealt with the freedom of passage through the Canal. On that, the Egyptian Government have reaffirmed their intention to respect the 1888 Convention. There is, of course, the problem of Israel about which I will say something a little later. The second principle related to a regard for Egyptian sovereignty. There is no dispute about that. The third principle dealt with the insulation of the operation of the Canal from the politics of one country. I will deal with that in a moment.
The fourth principle dealt with the fixing of the level of the tolls. On that, the Egyptians have now said that they will undertake not to increase tolls by more than 1 per cent. a year and that if they seek an increase greater than that and cannot obtain agreement by negotiation they will put the proposal to independent arbitration. So far as tolls are concerned, this undertaking, if honoured, is no more onerous for the users than was the position under the régime of the old company.
The fifth principle dealt with the earmarking of a proportion of the revenues of the Canal for development. The Egyptians have now indicated that they are ready to set aside 25 per cent. for this purpose in a special account of the Suez Canal Authority. This figure is a reasonable percentage and, provided it really is an independent fund and the undertaking is kept, that would meet the fifth principle.
The sixth principle dealt with the question of compensation to the Suez Canal Company and recommended arbitration if there was failure to agree. The Egyptians have agreed to arbitration on the question of compensation, but have not yet followed the sixth principle in proposing suitable provision for the payment of the sums found to be due.
On the face of it, therefore, if—and, of course, this is the big "if"—these conditions are kept, then the Egyptian proposals in these respects are not so very far from what the six principles envisaged.

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If they are honestly fulfilled, the Egyptians will have accepted a considerable measure of restriction. But there remain two vital points. The first of these is that this is a unilateral declaration which the Egyptian Government can amend or withdraw at will and it is, therefore, unacceptable as it stands. Secondly, since such a decision would be a political decision—a decision to amend it or withdraw it unilaterally—it does not meet the third of the principles because it does not insulate the Canal from the politics of one country.
Therefore, this memorandum is not a settlement, it is not an agreement, it is merely a declaration of the terms which the Egyptians say they will follow. In those circumstances, what were we to do? I believe that the House as a whole will agree that we have made the right decision. It would not be a tolerable position for our country if the great bulk of the international traffic were to pass through the Canal and we were to be excluded from it by our own will.
Strikes or lock-outs may be useful instruments in certain types of conflict, but neither of them is much good unless it reaches a high degree of universality. Any boycott must be very expensive and it would fall particularly heavily on Britain; but a partial boycott by one or two countries would be valueless. We could not tolerate, either from the point of view of the balance of payments, or that of the future of the British shipping industry on which so much depends, or, indeed, on any practical consideration, a situation in which we received so much injury without developing a sufficient and corresponding degree of pressure to achieve our end.
We have, therefore, thought it right to advise our British ship-owners accordingly. It would, however, not be right to pass from this without paying a tribute to the solidarity and patriotism shown throughout by the shipping industry. In reaching this decision, naturally throughout we have been in close touch with the Commonwealth Governments concerned. We have had the advice of some of them throughout the whole deliberations of S.C.U.A. and the House will perhaps have observed the statement of support for the steps we have taken by the Australian Deputy Prime Minister.
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Now I come to the financial arrangements. I think that the House will agree that it is essential, if we are to pass through the Canal, that any payments and outgoings necessary should be paid in sterling. There was a good deal of doubt about this problem, but that is essential. Therefore, discussions were held at a technical level between the Bank of England and the National Bank of Egypt when their officials met in the normal way at the Bank for International Settlements, at Basle. An agreement was reached on the basis that has already been announced and consequential banking arrangements have been made with the approval of the Governments concerned.
I do not know how far it is realised— I know that it is not realised by everybody—that to obtain foreign currencies we must transfer sterling to the person from whom we wish to obtain such currencies and, furthermore, that that sterling must be in a form which he can use. Therefore, this particular account must be free, but once the transferable account is opened any foreign owner of transferable sterling can place it to the credit of this account.
The right hon. Gentleman asked me why this is so. There are two points to consider. One is a point of fact and the other a more technical matter of management. In the first place, there would be no object in preventing him doing so, because any non-resident holder of transferable sterling could sell it in the market and obtain dollars or any other currency with which to pay the Egyptians. Therefore, there is no particular object in preventing them using currency through the account.
Secondly, it would be quite impossible, for technical reasons, to check any precise reason for which an Australian or somebody else paid sterling into this account. Therefore, it is necessary. But it is worth while considering making the special account open to British residents for current trade transactions, and that matter we are prepared to consider and decide according to what is our own interest.
There is another point which the right hon. Gentleman raised about certain pre-July trading debts. It may be of advantage for arrangements to be come to regarding these, that is to say, transactions entered into in good faith before the July decision to block the No. 1

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Account. As regards the wider issues involved, regarding the No. 1 Account, that remains blocked. I think I made the position clear in my statement on Monday. There are large sums in this blocked account and we have large claims. Up to now we have thought it prudent to deal with the difficulties of individual British citizens by the machinery of the Resettlement Board. This, however, only deals with immediate hardship. It will be one of the advantages of these discussions which we are about to begin that we can put forward formally the claims which we are entitled to make and which we are determined to press.
We fully realise our responsibilities and the urgency of the matter for all those concerned, but, beyond this, it would really not help our negotiations or assist our bargaining position if I were to say more—and I think that anyone who knows anything about these matters would agree with me about that.
So much for the present position, but what shall we do to work for a multilateral agreement, which can be the only basis for a satisfactory permanent settlement? Quite apart from the Convention of 1888, we believe that no country has the right to regard an international waterway like this Canal from a purely national point of view. We have, therefore, always declared that there can be no real settlement which leaves the uncontrolled authority in the hands of a single Power, or, at least, does not conform to the six principles.
We shall, therefore, continue to do everything we can in the coming months to secure a final settlement on those lines. That is also the view of the great user countries, and since it is the great user countries that, broadly speaking, can alone contribute to the capital resources of the Canal and contribute to the strengthening and modernising of the Canal, this aspect of the matter is of considerable importance, for it is an aspect to which, in their own interest, the Egyptian Government must give some attention. For the maintenance of the Canal as an Egyptian asset depends ultimately upon the good will and confidence of the users. Meanwhile, we shall continue to use every method we can to secure our purpose.
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We have made it clear—and I must now repeat it—that the use of the Canal by British shipping will not prejudice the existing legal rights or the terms of the final settlement. [Laughter.] That is the position that has been taken—in spite of the merriment of hon. Members opposite—by the Governments of every maritime nation in the world.
The United Nations remains seized of this matter, and it is also seized of another matter. I have been asked what is our view of Israel's right to sail her ships through the Canal. We maintain that her rights under the 1888 Convention must be assured. We shall do all we can, through the United Nations and with our friends, to see that this happens. In the Egyptian declaration they have stated their willingness that disputes or disagreements arising in respect of that Convention should be settled in accordance with the Charter of the United Nations, which no doubt means in accordance with Chapter 6 of the Charter. As the right hon. Gentleman suggested— indeed, it was the only proposal that we could make, I quite agree—we shall join with others to try to see that effective action is taken within the terms of the Charter.
The right hon. Gentleman mentioned the possibility of the International Court, and that is one method of proceeding, but I would earnestly hope that this matter could be settled by the United Nations more quickly, and thus avoid the long delay of International Court procedure. I agree with the right hon. Gentleman that this throws a great responsibility upon the United Nations. It may be said that the United Nations has failed up to now, but I cannot help thinking that the dangers involved in letting these matters drag on are now more clear than ever before to all the nations of the world.
Similarly, with regard to the Gulf of Aqaba, we have made our position clear. I am glad to say that the American Government have done the same, and we shall certainly do nothing to advise our ship-owners not to exercise what we, believe to be their undoubted right. Meanwhile, there are other ways in which we must look ahead.
Mr. Wedgwood Benn: Before the right hon. Gentleman leaves that point, will he answer the question that has been put to the Government

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over recent weeks: whether he is prepared to sponsor the admission of Israel as a member of the Canal Users' Association, to strengthen her legal position in this matter?
The Prime Minister: That would be a matter for the Canal Users' Association, but I should not have thought that the important thing was for her to join this Association; I should have thought the important thing was to get the United Nations, one way or another, to support what Israel believes to be her right.
There are some wider aspects that I would like to mention about the problem of oil. As the House knows, oil traffic represents about two-thirds of the total business going through the Canal. Those hon. Members who listened to the debate on power which we had the other day must have ben impressed by the picture presented by my right hon. Friend the Paymaster-General. It is clear that even with all the encouragement that we can give to the expansion of nuclear energy there will be an increasing world-wide demand for oil in the years to come.
This means that whatever settlement may be reached over the Suez Canal the facilities for bringing oil from the Middle East must be enlarged. The international Suez Canal Company had large plans for increasing the capacity of the Canal. What will happen now, we cannot tell. We must, for the present, look mainly to the provision of additional pipelines and the expansion of the tanker fleets. The international oil companies, which have been meeting together recently, have set up a number of committees to make detailed studies of the possibility of constructing additional pipelines. As soon as practical plans have been worked out, they will be put before the Governments concerned, including those of the countries of the Middle East.
So far as tankers are concerned, there is no doubt that the existing fleets will soon be insufficient to cater for all the world requirements. At the end of 1956, the world tanker tonnage totalled about 44½ million dead weight tons, of which tankers under the United Kingdom flag accounted for nearly 8 million. Since November last there has been a tremendous flow of orders for new tankers. There are now about 30 million dead weight tons under construction and on
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order. About 10 million tons of this should go into service in the next two years, to be followed, on present plans, by a further 28 million tons by 1965.
Moreover, where there are today only about a dozen "super tankers" of over 40,000 dead weight tons in service, the number of these vessels will have increased by 1965 to probably 300, perhaps a quarter of the whole world's tanker tonnage. These will be fast, modem tankers designed for economic operation, not only through the Mediterranean but also round the Cape. Almost 5 million dead weight tons of tankers are under construction or on order in the United Kingdom shipyards. I hope to see this figure still further increased over the next few years.
Then there is the question of where these large tankers can discharge their oil. We must plan adequate facilities for ships of up to 80,000 or even 100,000 tons. The British oil companies, I am glad to say, are preparing to handle the increasing number of super tankers which are likely to come in the next few years. Milford Haven, for which the Government are setting up a conservancy authority, looks like becoming a major European oil port. But all these plans, both for pipelines and more and bigger tankers require large supplies of steel plate and the steel industry also has to be expanded. These plans are well under way and by 1962 the output will represent an increase of by no less than 60 per cent.
But if all these measures for facilitating the supplies of oil and increasing them are to be pressed forward with a real sense of urgency, they require the close co-operation not only of a large number of Government Departments, but of private companies. I have, therefore, decided to appoint a special adviser on the transport of Middle East oil, who will assist me to concert and direct the activities of the various Government agencies and help me to ensure that there is no avoidable delay in carrying these measures to fruition. I have selected for this duty Sir Matthew Slattery, who has been such a conspicuous success as Chairman and Managing Director of Short Brothers and Harland Limited. I am grateful to the companies associated with the Government in the ownership of this firm for agreeing to this arrangement. Sir Matthew will take up his

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duties at once. He will be free to find the necessary assistants to help him. and I am sure that this is the right way to set about this rather complicated task.
I should like to turn now to a wider field before I finish. I am very conscious of the sense of frustration and disappointment which many hon. Members feel, but I do not think that it is in the interests of this country to represent the present situation as an unequivocal success for Colonel Nasser. Quite a lot has happened in the Middle East in recent weeks, and quite a lot is happening. I would never try to represent to my hon. Friends in this House a situation as good when I do not believe it to be good. I have already said that I think that this is an unsatisfactory arrangement, and it certainly does not satisfy us. But I would not support the view that it is the end of the story or quite so completely a one-sided outcome as some people appear to believe.
Before the Canal issue arose, the situation in the Middle East for the last two or three years had been growing steadily more dangerous. The immense efforts of Communist subversion propaganda and infiltration has produced a great effect. The Soviets, foiled in Europe by the organisation of N.A.T.O., sought out the weak spot, where extreme nationalism and xenophobia were easy to exploit. For my part, I am not sorry that this situation was revealed by the events of last year. I think that if this ulcer had gone on growing without lancing, it might have reached a stage when the poison could never be got out.
All through the last six months the Opposition, like Ansaldo, have cried "Woe, woe". They have told us that what we did would lead to the break-up of the Bagdad Pact—"total disruption" was, I think, the phrase of the right hon. Member for Derby, South (Mr. P. Noel-Baker). The Bagdad Pact is stronger today than before. The adhesion to both the Military and Economic Committees of the United States Government is a source of additional strength to the Pact. They told us that we would unite in a single movement against us all the force of Arab nationalism. Of course, there is a great struggle going on, but I think that in recent weeks there have been substantial gains, and in many ways the position
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of the Egyptian Government is weaker. Egypt is becoming isolated from many of those whom she claimed to be her friends, and who are now taking every opportunity to free themselves from Egyptian domination and the dangers of Egyptian expansion.
The Arab world has not been united against us. On the contrary, the groupings are changing in their character and there is good hope for thinking that these tendencies will continue. Thirdly, in the debate in this House on 6th December, some hon. Members claimed that the Anglo-American alliance had been broken beyond repair. I did not take that view. I said:
"It is now possible that the United States… have begun to realise what the Middle East problem really means and the dangers involved not only to our own country but to the whole world."—[OFFICIAL REPORT, 6th December, 1956; Vol. 561, c. 1470.]
Since then there has been a revolution in American thinking on this matter which has led to great developments of policy and a closer association of the United States with the Bagdad Pact; and what I hope will be a fruitful and sensible co-operation between the great oil companies of the Western World. And so what has happened has led to greater and not less Anglo-American co-operation in the Middle East.
Then hon. Members said what we had done had irrevocably split the Commonwealth. All I can say is that the meeting of the Commonwealth Prime Ministers will take place here in a few weeks' time. I beg hon. Members on both sides of the House not to be misled by this cascade of defeatism. Do not let them allow their natural disappointment at the turn of events in some directions to divert them from a recognition of great improvements in others. We have a great and powerful interest in the Middle East and we do not intend to abandon it. We are a great world Power and we intend to remain so.
We are not foolish enough to think that we can live in this modern world without partners. That is why we stand by our alliance with N.A.T.O., S.E.A.T.O., and the Bagdad Pact; and that is why I have laboured to try to get our American friends to understand the hard facts and to co-operate with us in facing them. I believe that if they had understood the situation sooner and

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better we would have been spared many of these troubles.
But I am not one of those who interpret co-operation on either side as subservience. We must be partners with respect for one another. There must be occasional differences of opinion or emphasis, but we in Britain must not be afraid of making our position clear and defending our own interests. That is why, in spite of all the pressure and agitation against me, I am determined that this country should be and remain a nuclear Power.
Finally, let me make this appeal to hon. Members on both sides of the House. Do not let us minimise our difficulties, but do not let us exaggerate them. We must not be defeated by an episode, or cast down by a difficult stage in a long journey. The history of a nation, like the life of a man, is not a series of stills. It is a moving picture. We must sec it as a whole. We must be quick to exploit every phase or turn of events that can be turned to our advantage. Therefore, we need patience, as well as courage; resilience as well as resolution. We have often had in our long history tactical setbacks or partial failures, but it has been our pride that we have been able to move on from them to ultimate success.
4.52 p.m.
Mr. J. McGovern: I have listened to the speeches made by the Leader of the Opposition and by the Prime Minister and I must confess that the speech made by the Leader of the Opposition was clear, concise and to the point. I really am disappointed with the speech made by the Prime Minister. I think that he evaded most of the real issues in connection with the Suez Canal and the disastrous consequences that have ensued since then.
I remember hearing, in Australia, a tremendous condemnation of the events that took place at that time. A number of papers had from day to day headlines, "Eden's War". There was tremendous consternation among a large number of people at the action that had been taken at that time.
I do not start my speech or my criticism of the Government at this stage. I think that over a long period of time tremendous errors were made in dealing
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with the Arab world. First and foremost, from the time of the war there was a great opportunity in the world for welding the Arab nations into one great bloc by understanding and sympathy with their aims and aspirations, but we proceeded along the lines of attempting to divide the Arab world and the policy pursued along these lines was completely out of date.
It may have suited the purpose thirty or forty years ago. But by the war itself there was thrown up throughout the whole of the Middle East, Far East and Africa a tremendous desire for national expression. We failed to satisfy the demands of the people throughout the whole of the Middle East, Far East and Africa, and great disasters have befallen us in consequence of that attitude.
There was a famous statesman in America who said some time ago that there could be a method of developing friendship and association if we were prepared to show a proper attitude. We in this country have never learned the simple art of confessing when we make an error, expressing regret and saying that we are sorry for the action that we have undertaken when that action was wrong.
May the day come when the Prime Minister and the Foreign Secretary are able to go into a difficult area and meet the people concerned, have a heart to heart talk and say, "Well, we are sorry for the past, where we have been wrong, and we will begin again."
My claim against all Governments since the end of the war is that they have failed to realise that we are living in an age when there is, what we might call, a state of permanent revolution. I think that the position was set out very carefully at the beginning of the 1914 war, by Leon Trotsky, when he said that it was the end of fireside politics, that we were moving into the sphere of permanent revolution and that national struggles, struggles for expansion, class struggles and unemployment would go on throughout the world incessantly until one side or the other was vanquished.
The politicians of my generation have failed to see and recognise that aim and the methods which ought to be taken in the Middle East in order to prevent the success of the action that has been initiated from outside. It should have been evident to almost all politicians that

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Russia was striving to get into the Middle East, and that by getting in under cover of that struggle their expansionism throughout Asia could then be put into operation. In the struggle that is taking place our aim should have been the very proper aim to prevent Russia from moving into the Middle East and being able to create trouble in that area. The action by force that we took to prevent it was successful in bringing about the thing that we wanted to avoid. Therefore, in my estimation, we failed to meet the needs of the people in that area in a proper manner.
I remember hearing, at the time that the attack was made on Colonel Nasser by Sir Anthony Eden, that Colonel Nasser had expressed a desire to go to London during the discussions that were taking place and to Geneva. When he had made up his mind along those lines the wireless was used to make a vicious attack on him. One does not make an attack on a man of the kind that was made over the wireless and then invite him to have a cup of tea immediately afterwards. The result was that Colonel Nasser decided to call off his intention to go. He had also said that he was waiting, at that stage, to get one kind word from London, and that kind word never came.
Mrs. Jean Mann: Did Colonel Nasser understand that most of us do not want him to have a cup of tea with us?
Mr. McGovern: There are even hon. Members who might not want a cup of tea with other hon. Members. That proves nothing.
We talk of the use of force and of the hydrogen bomb and fail to realise that that is not the real danger in the Middle East or the Far East. The grave danger at present is the buying of the military high commands by Russia to get internal control of each country, to obviate the attacks that have been made upon her about subversion.
I remember being in Persia when we had the trouble about the oil wells. One evening a man walked up to the commander-in-chief of the forces there, "I was given this revolver to kill you this afternoon". The commander-in-chief thought that the man was making an attempt to get publicity, so he laughed the incident off. Then the man said,
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"Well, I see you don't believe me. At the post office tonight in this town I am to meet a man who will pay me a certain amount of money if I am successful in killing you." They sent a security officer to the post office and there they saw a man who turned out to be the leader of the Communist underground movement in the area.
They seized him, and from information gained they seized a second man. Ultimately, they got control of an office, where they found a book in code. At first, they could not decipher the book and were preparing to send out copies of the code to every prominent country in the world to ask for assistance, but suddenly, they broke the code. They discovered the names of about 230 officers who were in the pay of Russia, according to the book, and who had been receiving vast sums of money.
When they discovered this they could not believe it, but after a time they got the officers there, and many of them admitted that they had been in the pay of Moscow during the period when the oil wells were being seized. Immediately, on the confession of many of these men, the authorities shot a large number of the high command. They were so staggered with the number of people who were in the pay of Moscow that they then took action to discover secret printing presses. They discovered, after three visits to one country house, that there was a disconnected basin in the bathroom. Underneath they discovered a stair, and, finally, they found an elaborate press that had been used for these purposes.
Let me give another example. I remember the Shah of Persia saying, in the grounds of his own house, "We have to see either a violent revolution from outside or a sacrificial revolution from inside."
The Secretary of State for Foreign Affairs (Mr. Selwyn Lloyd): I am interested in what the hon. Gentleman is saying. In which year did these events take place?
Mr. McGovern: In 1954. The details are published with pictures in an American book. Then the authorities took action, after getting the printing press, to discover a large number of people who were connected with it.

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Let me give a further example of something that happened to a man who had charge of the oil wells, so as to drive home my story. A man called Mobigar, a Parliamentarian, was in the arena as a great supporter of the Shah. I saw him in Bangkok and he said, "I would like to tell you my story about the oil wells of Persia. I think it would interest you." I said, "All right." We sat down and he told me a fascinating story.
He had been arrested by the British during the First World War. Because of that he developed a tremendous hatred and bitterness towards the British. He would have gone any distance to hurt the British. He said that at the time when Mossadeq took charge of the oil wells he was given the task of stopping the oil wells and driving the British out. He said, "This was a splendid job for me and I went to it with heart and will. I stopped the oil wells and I was driving the British out. In the process of driving them out I saw that I was hurting our own economy more than I was hurting the British economy. After that, during the national struggle behind Mossadeq I saw that people were appearing in the streets, squares and fields with rifles, machine guns, bombs and ammunition and I began to wonder where they were coming from. We discovered that they were coming from across the Caspian Sea, from Russia."
He said that Mossadeq was at that time at the height of his power. He went on, "Just then I saw that other people were preparing to move in, take charge and push Mossadeq aside. Control in that area was, therefore, passing out of the hands of the Shah and of the Arab world and into the hands of leaders who were subservient to Moscow ". Just at that time, this man met some people in the area who said to him, "The trouble with you is that you are animated with bitterness and hatred about the British. You will never be of any use in the world until you get rid of it." He said that he got angry with them and went home, but he thought more and more about it. He came back to those people, and realised that hatred of the British was destroying him and that he had been used in an attempt to transform that area into power for another country for another reason.
One of the great troubles today is that we do not realise exactly the methods
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that are being pursued and the aims of those who are struggling for power all over the world. I would boil it down to saying that we are looking for solutions and want to use force or are brandishing these weapons, but that that is not the method that should be employed to get the good will of the people of the world, and especially in those areas.
I remember seeing Chiang Kai-shek and Nehru. One of the most dangerous men in international politics is a man in India named Krishna Menon. He was at one time Labour candidate for Dundee, but he was asked to stand down because of his association with the Communists and their ideas. He is a man with a brilliant mind and is much more capable than Nehru. He is a trained Marxist, and he is helping to draw the world along the road that the Marxists want the world to go. He has been moving about between London, Moscow, Rome, Paris, Berlin, New York and Cairo. He is able to collect all the information and he is then able to say to the Kremlin, "Here is the length to which they are prepared to go."
This is crucial. The deterioration in the world towards Communism is not a nightmare of mine, but a realistic view I have gained. The deterioration is tremendous. How many hon. Members realise that in India gradually every single position is being held by people who are favourable to the Soviet Union? They are prepared to move in and then Russia will be able to say, "This is not the result of our conduct; it is an internal matter and none of us had anything to do with it". Mr. Nehru went to Moscow and in Delhi I saw a marvellous film of his visit there. The film took nearly two hours to show. It was sent to nearly every cinema in India, to be put on the screen at a very nominal figure. It showed Nehru as a man who was out to advocate world peace and to sell it to an unwilling West.
The propaganda was subtle and complete. At one time I saw Nehru and his daughter receiving as many as a hundred bouquets of flowers. The film did tremendous propaganda for the Comintern and tremendous damage to the West. The result is that throughout the Far East today expansion of Communism is going on. Nehru believes that he can be the Tito of the Far East. In those areas in country after country they are having

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success. If one goes out there and seeks knowledge one finds tremendous evidence of success on their part and tremendous evidence of failure on our part to realise what is really wrong in the world.
Mr. Benn: Before the hon. Member finishes this part of his speech, I hope he will not leave the subject of India without making some reference to the fact that the greatest free elections in the world have recently taken place there and that many of us in the West look to the Indian example of democratic Government as the best hope against totalitarianism in India.
Mr. McGovern: I should have thought that the hon. Member would have realised that Communists pay very little attention to the parliamentary arena. They pay attention to the workshop, because those who control the means to govern control the nation. Therefore, if they leave the parliamentary arena to politicians and get complete control in the workshops they are destined to take over power in the end. I am glad the hon. Member has raised that point about India, because in Kareli there was the first Communist majority which defeated the Congress Party and the father-in-law of the man leading the party in Kareli is the Indian Ambassador in Paris. That shows how deeply the development towards Communism has gone among intellectuals in that country.
If we are to save the world, the time is opportune for a different approach entirely. In the ordinary hurly-burly of political struggle, with the denunciation of one another and division all round, the country is going down steadily. That has to be changed for a more realistic approach if we are not to go the same way as Germany, Italy and other parts of the world and, ultimately, all become poor as a result. I want to build a new world and want that new world to be built by men who can justify to the people of the country when appealing for leadership that they should be entrusted with leadership. For that a new approach is needed.
I remember meeting a considerable number of people from our Foreign Office in different parts of the world. I never met a more self-satisfied group in the whole of my life. They seemed to have cocktail parties and to be running around with the éliteȔ
Sir Beverley Baxter: On a point of order, Mr. Deputy Speaker. May I ask for your guidance? I understood that we were supposed to be discussing Suez Canal policy. I wonder whether the hon. Member has not gone slightly astray from that subject.
Mr. Deputy-Speaker (Sir Charles MacAndrew): I was under the impression that the hon. Member for Shettleston (Mr. McGovern) was showing the dangers of Communism in connection with Suez.
Mr. McGovern: I am trying to show that another approach must be made to the problems of our day and that all the weapons and all the ideas we have at present have failed. A new approach is essential. I come to the point by stating something which does not endear itself to a large number of people, even in this House—a moral rearmament approach. I believe that if we are to build a new world we should go to a mirror and look at ourselves. There, we shall see where to begin to build a new world. That is the approach which must be made. I realise that there are large numbers of people that that does not suit.
At one time I would have relegated that idea to the scrap heap because I was so confident that I had all the answers and that the answers were all political and economic, but I have lived to see that man has failed entirely because he has not got the proper moral approach by which, on a friendly basis, he can discuss the problems one sees throughout the world. The dangers in Africa, the dangers in Asia, the dangers in the Middle East and right throughout the whole of the Arab world could, I think, be settled by a different approach altogether. If we could stop considering who is right and consider what is right we should be well on the road to solving these difficulties.
The action we took in the Middle East, when we dropped bombs there, astounded me, because I never believed that this country would again go into warfare of that kind and the assertion of imperialistic power. In the Far East I was asked what an imperialist was and I gave this answer. An imperialist is a man who becomes an enthusiastic nationalist in another man's country. We have to accept that whether they be in Cairo, India, Malaya, Africa, or any other

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part of the world, these people all have similar rights to ours.
Therefore, if there are difficulties, we ought, as the Leader of the Opposition so clearly said, to discuss the whole matter in a reasonable frame of mind. I see a growing desire all over the world for friendship. A man in the Far East said to me, "If your businessmen could learn to live according to the moral standards of moral rearmament in the Far East and the Middle East, then Britain would regain her supremacy and leadership in those areas." There is a tremendous feeling of sympathy and support for Britain in those areas. Those people really like the British people and British institutions, arts and literature, but the British business classes have been regarded as the bloodsuckers of the East. If that is true, then one can well understand the antagonism which is shown.
Some hon. Members condemn the Government for their present proposals. Without going back to the past, I see no alternative to what the Government are doing today. They should accept the proposals which have been made. Let there he no eyewash about it; Egypt is entitled to control the Canal subject to agreement with the rest of the world about the safeguarding of shipping in that area. The Egyptians should not be regarded as our enemies because of the attitude which they adopt. We can imagine how we should feel in Scotland or England if someone tried to dictate who should control our waterways, or took control out of our hands. Only when we consider the matter deeply and place ourselves in the position of the other man shall we appreciate the reason for our failure in that part of the world.
I see no alternative to what the Government are doing, but I wish we could go even further. I wish that the Prime Minister and the Foreign Secretary would ask for a meeting with Colonel Nasser in order to reach an understanding with him on that basis. I believe we could establish such a friendship. If we attempt to divide the Arab world, we are preventing the Arab world's nationalistic expression and preventing the Arab countries obtaining the bloc which they are entitled to seek, If the Arab countries had such a bloc, and we encouraged them in it, I am satisfied that the Middle East would be a great bastion of strength against the expansionist policy of the Kremlin. By
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the action which we took last autumn, we threw away that friendship for the time being. We ought frankly to admit that we were wrong, and, on that basis, attempt to build up greater friendship in the area.
When I was in America Admiral Radford spoke to me about the American soldiers who were prisoners-of-war in Korea and had defected to the enemy. I crossed swords with him when he described them as traitors and evil men. I told him that he must realise that every soldier from China, Russia, Poland and Czechoslovakia who went into the field had been trained in the Communist ideology, and that when our soldiers met Communist soldiers they had no real reply to the Communists.
It is meaningless to talk to people in the Middle East or the Far East about freedom and democracy when they have never experienced such things. We ought to be able to say to them that we are prepared to meet them on the basis of friendship and the creation of a new world, and suggest to them that we should jointly attempt to build that new world and thus get rid of the antagonisms and difficulties facing us at present. A soldier should be given a gun to deal with emergencies, but he ought also to be given an ideology with which he can answer the Communists. This is a world of ideological struggle, and if the soldier is given an ideology with which he can answer the Communists, he will be prepared to make sacrifices in the interests of the building up of the new idea.
There are many people living loose, easy lives who do not like this idea. There are many who are so embittered by past struggles that they fail to realise that we are today living in a different world while they arc talking in terms of thirty or forty years ago. I appreciate the difficulty. I have seen many men in different parts of the world who are becoming imbued with the idea of putting humanity's struggle on a moral basis. Decay is present, and the threatened eruptions arc bound to take place. If we do not adopt new tactics we shall all go down in that struggle because of the crises, poverty and decay resulting from the old ideas and the old order.
I am making a plea to the House. It is not easy to do so. It is easier to join a political party than to show a moral

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attitude and to accept moral standards in one's approach to the world. Politicians are nearer to God at election time than at any other period in their lives. I appeal to politicians to realise that this moral struggle is an essential one. I give moral rearmament very high priority. I have changed from many rough-and-tumble and bitter ideas and hatreds of the past. Only if we get rid of bitterness and hate and hold to these moral standards in dealing with difficult and dangerous situations in the Middle East and the Far East shall we get the right response. If that is our attitude, I believe that we in this country can build a real new world with all those throughout the world who are animated by similar desires. To me, that is the lesson of the struggle in the Middle East. If the Government go along that road they will meet with continuous success in their approach to world problems.
5.28 p.m.
Captain Charles Waterhouse: Nobody will deny the complete sincerity with which the hon. Member for Shettleston (Mr. McGovern) speaks on the subjects which interest him so greatly. I cast my mind back a long time, to the year when he and I came into the House after the same General Election. Perhaps I might say in parenthesis that I do not take quite the view of General Elections that he has expressed. I remember very well that in those days the hon. Member took a very different attitude to life from that which he takes now, and I would say, with admiration, that he has come a long way along the path which he himself points out to others.
The hon. Member made a remarkable statement about the attitude of the Soviet Government in India. I drew the immediate parallel of the attitude of the Soviet Government in the Middle East. It was, surely, because Her Majesty's Government knew of the dangers of Russian infiltration in the Middle East, just as the hon. Member knows of the dangers of Russian infiltration in India, that we took the drastic action that we did at the end of October and the beginning of November.
If ever there were an instance of Satan rebuking sin, we have it in the Opposition's amazing Motion. In my view, the
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Socialist Party have been responsible for our present difficulties at every point. They were responsible for the first crashing error—Abadan. They were responsible for the other crashing error of not coming out firmly in support of the Convention of 1888 on the question of Israeli shipping. They weakly handed the whole of that matter over to the United Nations, and United Nations, of course, shelved it after passing a pious resolution.
They supported right hon. Members of our party in what I thought was the wrong policy in the Sudan and the wrong policy over the Canal Zone. They gave it support by their voices and by their votes in this House of Commons. I submit that one cannot sensibly denounce a result when one has applauded every step which leads to that result.
The House and the country will not readily forget the speeches made by the right hon. Gentleman the Leader of the Opposition in this connection, any more than they will readily forget the visit of the right hon. Lady the Member for Warrington (Dr. Summerskill) to console Nasser immediately after that incident. I have heard her referred to in Lancashire as "Nasser's nasty nanny". That may be something of which she is proud, but it is not anything on which anyone on this side of the House can look with anything but scorn.
Under our constitution, the Leader of the Opposition in this Parliament of ours has a very great position. No other nation in the world has the two-party system developed just as we have. Therefore, in no other nation does the weight of the voice, quite apart from the personal character, of the Leader of the Opposition carry such weight; and the Leader of the Opposition today cannot be exonerated from much of the blame for his early attitude. It was not his personal influence but the influence of his office which had an effect on the United States and the United Nations, and, therefore, a thoroughly evil and bad effect on the attitude that the world adopted to our particular difficulties.
Do not let hon. Members opposite blame us to the exclusion of themselves. That we on this side of the House deserve some blame I am the last to deny, but that they on their side share it with us to the full I am the first to assert. I

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believe that we have come to the bottom of this hill. I do not believe that at the moment there is any further humiliation which either our American friends or the United Nations or anybody else can force upon us.
In three years we have certainly come a very long way. It has been said in the last few days that the present situation is "unpalatable", "hardly endurable", and "a capitulation". I agree with all those remarks, but if that is so, what ought to he said of what happened in 1954? What was the position then? In those days to many of us it was absolutely unendurable, and it put into our minds a bitterness and a sadness which we cannot easily dismiss.
This is the third occasion in three years on which some members of the Conservative Party have felt it their duty to protest, by vote or by abstention from voting, against the actions of three consecutive Conservative Governments. I am not among them on this occasion, not because I disagree in the least with their attitude—on the contrary, I am in the most complete sympathy with it—but I do not consider that the Government led by my right hon. Friend, or even any of the leading members of it, had a major responsibility for those errors in policy and failures in action from which, in my opinion, the present lamentable position has arisen.
My line was decided by the terms as well as the manner of the Prime Minister's announcement on Monday, and it has been reinforced by his speech this afternoon. He wisely presented the Government's decision as making the best of a very bad job until such time as we can make, and take, an opportunity to repair the damage. No senior member of the Government has taken any other line, and I hope none will; but I do complain— and I have given the right hon. Gentleman notice that I intended to make this humble complaint—of the remarks of the Minister of Transport when he said last Monday that
" Britain has secured its main practical objectives in what I might call phase one."
I do not really understand to what the reference was, but I feel that were that line to be taken by the Government there would be danger of a major split in the party in which I personally have such tremendous pride.
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There are three points I want to develop, all of them of importance. First I want to refer to the position of British nationals in Egypt and to the four men who are arraigned before the Egyptian courts today. I believe that the charges against them are trumped up and without foundation. Two of them face death. I hope that my right hon. Friend the Prime Minister views the position with extreme seriousness. I hope, too, that the Government will take all—and by that I mean all—means in their power to secure the safety of these men.
Months are dragging on. There are many thousands of British subjects expelled from Egypt whose property has been confiscated. There are several hundred employees of contractors on the Base who have lost their personal and household effects. I know that some steps have been taken to remedy the position, bur. they have been rather in the form of giving aid to those most in need. There is no question of an appeal to charity or of dealing with hard cases. Justice demands complete and speedy settlement of these issues.
I ask the Prime Minister to look into the matter himself and to get early and effective action taken. We must remember, to our discredit, that Britain has not always in the past dealt generously with her own people who have been in difficulties of this sort. I beg the Prime Minister to take no risk of exposing himself to a charge of that sort when history comes to be written.
What should be Britain's attitude to Egypt today? I distinguish quite definitely between Egypt and Colonel Nasser. With Egypt we have had long ties and associations, generally friendly and generally helpful. We have done a very great deal for Egypt, and there are many Egyptians who realise that just as much as anybody does in this House.
We have an inveterate foe in Colonel Nasser. We ought to chase him like a pest officer would chase a rat. [HON MEMBERS: "Oh."] We should chivvy him. We should harry him wherever he goes and whatever he does. [HON. MEMBERS: "Oh."] Hon. Members opposite may protest. I know that their feelings are very often more strong for enemies than for friends of this country. I equally know that there are very many hon. Members opposite who are just

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as jealous of the honour and credit of Britain as are those on this side.
We should refuse Nasser all financial aid. We should not give him access to any blocked funds until all liabilities have been settled in full. We have to remember that Nasser has nothing with which to pay except the blocked sterling credits which we hold on his account. If we let those go, we let something go which will never be replaced, for the very good reason that Egypt has nothing to replace it with. Her only major asset, which is cotton, is mortgaged to Russia for years to come.
We should make it clear to the United States that the grant of aid by her to Egypt would not be regarded as a friendly act to us; that we would not regard such a grant of aid as the act of a friend. We should show Nasser up to the Arabs as a dethroner of kings. We should show him up as a man who betrayed and ousted his own leader. We should show his up as a Communist adventurer. And to his own people, the Egyptians, we should show him up as a man who has led their country into distress and poverty, and as a man who is most probably facing his country with complete bankruptcy. In a word, as you will gather from what I have said, Mr. Deputy-Speaker, I want to see intense propaganda in favour of our view and against the Nasser régime—against Nasser's personal régime in particular.
There are two other points to which I want to refer. Sinai has been mentioned several times in the House, and I refer to it only in passing. I am not yet satisfied that something ought not to be done about the position and the ownership of the Sinai Peninsula. I do not believe that it could be proved that it is Egypt's by right and by law. I think that if some international régime could be evolved for taking over that tract of land it would be of lasting benefit in the Middle East.
I want to remind the House of another thing—the Canal is not the only waterway in Egypt. There are the waters of the Nile. Nasser has denounced all treaties governing the Suez Canal. I suggest that we should take a similar step about all treaties governing the control of the waters of the White Nile itself. We should approach the Sudanese Government and
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make it clear to them that in the past our policy has been one of a balance between Sudanese, Uganda and Egyptian interests, and that in the future we are to cut out the Egyptian interest from that altogether —at least for the time being—and are to control the flow of the White Nile for the benefit of Uganda and of the Sudan and not of Egypt.
That can be done. Many of us have seen the Owen Falls. All of us know that at the Owen Falls, Egypt today has a representative, and that that representative actually has the control—not the physical but the actual control—of the flow of the White Nile. I believe that it would be a very useful gesture, if no more. throughout the whole of the Middle East and throughout the whole of that part of Africa if that representative of Colonel Nasser were sent about his business.
I will ask my right hon. and learned Friend the Foreign Secretary, when he looks into the whole matter, not to be too much influenced by the detailed approach of his Department. The Foreign Office is, rightly, a very meticulous Department. It can be over-meticulous, and there are times when politics have to be considered as a very important factor in deciding national and international action.
Finally, I want to repeat a question that I put three years ago. Is there intended to be any finality at the point of retreat we have now reached, or is it just a brief halt on a long and miserable road? Britain and other European Powers have been to a large extent talked and pushed out of the Far East by the United States during the last decade. Mr. Dulles and his colleagues are in no small measure responsible for undermining our position in the Middle East, not only in the last few crucial months when they aligned themselves with their avowed Communist foes, but in the conduct of their diplomatic affairs over a period of three or four years.
I remind you, Mr. Deputy-Speaker, that Egypt is a Middle Eastern country, but it is also one of the gateways to Africa—
Mr. Cyril Osborne: If my right hon. and gallant Friend is to destroy Anglo-American unity and is also to fight Communism, how does he think this country is to start?
Captain Waterhouse: The last thing I want to do is to destroy Anglo-American unity, but the first thing I want to do is to assert British rights and British interests. I would not be half so good a friend as I am of my hon. Friend the Member for Louth (Mr. Osborne) if I did not frequently tell him precisely what I thought of him. Plain speaking hurts no man and hurts no nation, provided that it is done honestly and with sincerity. That is how I am speaking of our American neighbours today—I should like to call them friends again. I am not attacking them out of spleen, but I am pointing out what are, I believe, their very real shortcomings and my belief that they have done real disservice to this country.
As I was saying, Egypt is not only a Middle Eastern country, but is a gateway to Africa. This is not Nasser's last move. Like other dictators, he cannot afford to stand still and allow the Egyptian people fully to realise their own plight. He will turn his attention soon—and I venture to make this prophecy—either to Libya or to the Sudan. I saw in the papers only this week that Saleh Salem—the dancing major—has just applied to the Sudanese Government for permission to reside permanently in the Sudan. It may be that he wants to carry out some normal and healthy avocation, but I very much doubt it. That man was responsible for the troubles of two years ago in the southern part of the Sudan. He will be responsible for other troubles again. I hope that my right hon. Friends in the Foreign Office will keep their eye on him.
What is to be our attitude if, or rather when, fresh trouble is started in the Sudan; when a party or section asks for Egyptian protection or Egyptian help and Egyptian troops, with Russian arms and Russian experts, move south up the Nile to assist their friends? Do we intend under our new defence set-up—and I hope this will be dealt with by the Foreign Secretary or the Prime Minister—to retain sufficient strength to deal with such a situation; and will we be prepared when it comes to act quickly and effectively whatever the United States or the United Nations may say about it?
I hope that when he comes to reply the Prime Minister will say something or
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these vital possibilities, because I am convinced that if we are not prepared in such circumstances to take the strongest possible action, we will see in the lifetime of Members of this present House of Commons the end of the British Empire and the dissolution of the Commonwealth.
5.50 p.m.
Mr. John Hynd: We have just listened to a most interesting and, in some ways, pathetic speech from the right hon. and gallant Member for Leicester, South-East (Captain Waterhouse), because he is clearly speaking in a world that has long since gone. It was remarkable to hear him suggest that all our troubles are due not to the present Government, which up till now he has been so busily engaged in attacking, but to the Opposition.
I should like to recite the main points of his attack on the Opposition. He seems to have forgotten that it is not the Labour Party which has been the Government throughout this period but his own friends on the Front Bench opposite. He referred to our first crashing error, Abadan. What was that crashing error of Abadan? There we were faced with a somewhat similar position to that which we faced when the Suez Canal was nationalised by Nasser. The Persian Government had nationalised the oil company. Had we acted in Abadan as the present Government acted in Suez, I should like to know where we would have been today.
As it was, there was a Labour Government in power at the time and we faced that crisis with common sense, patience and reasonableness, recognising that whatever our grievances might be at the action that had been taken and the way in which it had been take, nevertheless the oil was on Persian soil and the only way in which we could continue to benefit from the production and use of that oil was by negotiation with the Persian authority. That is the policy that we followed. The result is that we are back in Abadan using the oil, there were no destroyed homes of families in Persia, and British prestige stood higher than ever.
If one compares that with what happened at Suez and what has come out of the adventure in Suez, I think the Labour Party has everything to be proud of.
Sir Robert Grimston: I would remind the hon. Gentleman that what was a 100 per cent. British interest in Abadan has now as a result of this business become a 40 per cent. British interest and a 60 per cent. American interest.
Mr. Hynd: At least there is no further conflict between British and American interests there, and the Persian Government are getting a much better deal than they had before. Probably, if Egypt had had a better deal from the Suez Canal takings, we would have had less trouble over that.
The right hon. and gallant Gentleman referred to the matter of Israeli ships and the United Nations Resolution about freedom of passage for those ships through the Canal. He seems to have forgotten that there were six years of Tory Government when nothing was done about that. It was not the question of the passage of Israeli ships through the Canal which persuaded the Government to intervene at Port Said. They were not interested in that. It was only when British commercial interests were threatened that they took action. Six years of Tory Government followed the decision of the United Nations and nothing was done about it.
Reference was made by the right hon. and gallant Gentleman to the withdrawal from Suez. Was not the withdrawal from Suez conducted under the ægis of a Tory Government? When he came to cast aspersions on the action of the United States of America in this story, I began to wonder whether he was going to blame the Labour Opposition at the time of George III for being responsible for the Boston tea party. As it happens, there was no Labour Opposition at the time of George III.
Captain Waterhouse: The hon. Gentleman should quote me correctly. I never said that hon. Members opposite were responsible for our withdrawal from the Canal Zone. What I said was that they supported that policy, which was suggested from this side of the House, with their votes and their voices.
Mr. Hynd: We certainly did not oppose the policy that was put forward at that time. But I understood that a great part of the Prime Minister's indictment today was that the Opposition was not
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sufficiently loyal to the Government. Listening to the right hon. and gallant Gentleman, one would have imagined that the Government could not have known what the Labour Party's attitude would be to the invasion of Port Said. What was the difficulty? The whole world knows what the Labour Party's attitude is to matters of that kind. [Laughter.] The right hon. and gallant Gentleman may laugh, but surely he would not suggest that the Labour Party, in opposition and in government, has not consistently preached the necessity for constant loyalty to our allies, to our international commitments and to the principles of the United Nations.
We have declared that policy over and over again, and ever since we were a party we have declared our constant opposition to any idea of the use of armed force by this country in the furtherance of its commercial interests. The Prime Minister and the Government knew that. For the same reason that they did not consult the United States of America, because they knew what the reaction would be, they did not consult the Opposition before taking action in this case.
I should like to remind the right hon. and gallant Genleman of what the Evening Standard said last night about the responsibility for this matter. It said:
" Mr. Macmillan's unhappy statement in the Commons yesterday marks the humiliating end of a most painful chapter in British history."
It refers to the
" stupidity and folly of those who surrounded Sir Anthony Eden but failed to back him up."—
They are on the Government Front Bench now—and adds:
" Responsibility for the consequences is theirs".
The Evening Standard did not go so far as to try to blame the Labour Party.
With regard to the Prime Minister's speech, I am sure that so far as the earlier part of the speech was concerned—I say nothing about the latter part which contained a great many irrelevances—most hon. Members on this side of the House and many on the other side listened with a sense of shame and humiliation. The Prime Minister was showing very clearly why the Conservative Party has had nothing since Suez but a series of electoral defeats at by-election after by-election

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throughout the country. When he claims that people by and large were supporting the Conservative Party, he knows that that is not the case, and, if he did not know, he has the evidence now.
People know that the Conservative Party, by and large, is a party more of bluster than anything else. All that the Prime Minister was saying today was sheer bluster. After telling us about this humiliating surrender to Colonel Nasser, and what the Government's attitude has been, he tried to impress the House with his determination to insist upon this and that, when he knows very well that he cannot insist upon anything. The only thing that he can insist upon is that his colleagues should support the Government if the Government are prepared to go to the United Nations as an ordinary member of the United Nations and ask for nothing more than their fair share of justice.
What is the indictment against the Government? I do not want to go into the history and the reasons why Colonel Nasser decided to nationalise the Canal —the business of the Aswan Dam, the importation of Russian arms because Egypt could not get them from the West, and so on; but because of that, the British Government engaged in a completely unjustified armed aggression against a country which was obviously unable to defend itself against the combined forces of Britain, France and Israel. This country was responsible for the slaughter of hundreds of innocent people in Port Said who had nothing whatever to do with it, and, having done that, the Government got cold feet and tried to crawl out of the whole business.
Those on the Government Front Bench who, as the Evening Standard pointed out, supported our mad Prime Minister at that time, then deserted him and threw him to the wolves. Those who howled "Treachery" and made all kinds of threats—where are they now? We have heard the right hon. and gallant Gentleman say that he was prepared to stand in the second last ditch. He is not prepared to stand in the last one; it is getting a little too risky.
Where is the hon. Gentleman, the Member for Preston, North (Mr. J. Amery)? He is standing behind the Prime Minister, with a glass of water, supporting the Prime Minister in his
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inglorious, humiliating surrender. Where is the hon. Member for Stafford and Stone (Mr. H. Fraser)? He has been breathing threats. Where is the hon. Member for Lanark (Mr. Patrick Maitland)? The Evening Standard had a good picture of these gentlemen, having a good laugh—"We have proved to be a fistful"—and it says that the photograph is of four of the Tory rebels enjoying a joke. What is the joke? The joke is that they have got all the publicity they were looking for, and, like the "Rent Bill rebels", they are now consulting the Whips as to whether it is safe to have a little revolt. Above all, what is in the minds of the rebels, those who have given up the Whip, is that this Government, which they denounced as having misled the country and brought us to this humiliating position, must be upheld at all costs. That is one of the reasons they have refused the Whip.
One of the rebels, the hon. Member for Lanark, the other day compared this situation, the revolt and our debate, with the debate on Munich. At least one thing can be said about Munich which makes it clear that the Munich affair is not comparable with this. Neville Chamberlain, for all his faults, however much he may have been misled or have misjudged the situation, was, at least, inspired with the idea of preventing the slaughter of innocent people and trying to prevent a war. Rightly or wrongly as he went about it, that was his purpose. This Government are in the dock for launching an unnecessary war, causing the death of people unnecessarily, and then running away from the consequences.
The Prime Minister tried to ridicule the charge made by my right hon. Friend the Leader of the Opposition about some of the consequences of Suez, about the effect upon the Commonwealth, about the effect upon our Allies and the confidence of the United States. He claimed that, as a result of Suez, America is becoming more and more convinced of the necessity for clear-cut, better understanding and common action than it was before. The Prime Minister claims that the Commonwealth is more united than ever. It seems to me that we shall soon be hearing that we have to thank the late Adolf Hitler for having made it possible to create the United Nations. It was a similar type of action, with the

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same kind of incentive behind it, which caused the great calamity in the world, from the ashes of which arose the United Nations, upon which we all pin our hopes today. But is that any justification?
What of the other consequences which my right hon. Friend did not mention— the imponderables of East-West relations, for instance, and relations between Russia and the free world? What has happened to them as the result of Suez? The story has been recited before from these benches of what happened on 30th October, when the Russian troops, already withdrawn from Poland, were withdrawing from Hungary. On 30th October there came the return of Russian troops to Hungary with the full force of invasion. It is something which must be proved by history yet, but there is sufficient evidence on the record now to indicate that Russia and Yugoslavia were, at that time, under the impression that it was not merely an attack upon Egypt that was taking place, not merely an action by Britain, France and Israel, but something bigger, inspired by America.
One has merely to discuss this subject with representatives of these countries to discover what was in their minds. How far that was responsible for the reversal of Russian action in regard to Hungary would be very interesting to know. At least, it is something not to be ruled out. We know that, after the ultimatum to Egypt and the attack on Port Said, there was a complete reversal of what appeared to be happening in Central Europe under the new Russian policy towards her neighbours. These things must be examined, and the evidence about them will gradually accumulate and develop.
My right hon. Friend said that all has not been lost. Thanks not to what we did in Port Said, but thanks to the pressure of British and international opinion, our Government were prevented from going on with the adventure. All is not lost. British prestige still stands high in a great part of the world, specifically because of the attitude taken by Her Majesty's Opposition and by the people of this country. [Interruption.] The Prime Minister ridiculed that suggestion, and hon. Gentlemen opposite are trying to ridicule it now. Do not they read the newspapers? Have not they read what
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Prime Ministers in Commonwealth countries have said? Have not they read what has been said in the Arab countries, in America and the other parts of the world, about recognition of the fact that this crime in Port Said was not a crime committed by the British people but by the British Government, against which the British people were in opposition? Because of that widespread recognition, the leaders of Commonwealth countries have said that they have not yet lost faith in this country. All is not lost.
We did not lose all our Arab friends, though we did our best to lose them. Here again, because of the capitulation, very valuable Arab friendships were saved after a while. Nuri es-Said, without doubt the greatest statesman in the Middle East, was in London just before these events happened; in fact, he was here on the night when the nationalisation of the Canal was announced. His attitude was anti-Nasser, as it has always been; but when Nuri es-Said returned to Bagdad he was told by his Cabinet that, in order to keep the support of the people of Iraq, they had to support Nasser. Thus, even the greatest friend that Britain has ever had in the Middle East was obliged, because of conditions in the Arab world created by this business at the time, to send a telegram to Colonel Nasser supporting him. Every Arab and every Arab country had to take the same attitude, not because they wanted to support Colonel Nasser but because they knew that the feeling of the people of the Middle East had been stirred to such a pitch by the British action that they could not possibly stand against it.
King Hussein in Jordan was put in great difficulties also. Most people who know the attitude of King Hussein, towards the East and the West and towards Colonel Nasser know very well where his support lay, but they know very well also that, like Nuri es-Said, King Hussein was quite helpless. Because we have got out of the Suez adventure, he has, to some extent, been able to face the dangers confronting him in his country. Although I shall not be supported by many of my hon. Friends when I say this, I believe that whatever King Hussein has done in Jordan he has done in the interests of preventing an Army coup and the setting up of a military dictatorship in Jordan

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similar to, and affiliated with, the military dictatorship in Egypt.
It is true that King Hussein has abolished the first democratically elected Parliament Jordan has had. He has abolished, for the time being, the trade unions of Jordan. But what are these trade unions? They are not trade unions as hon. Members on either side of this House understand them. There are no trades in Jordan. These unions are political organisations, as everyone familiar with the country knows. There was a democratic Parliament, but who were the parties behind it? They were largely led by, or composed of, Palestinians, not Jordanians. The principal influence among them is that of the rich Palestinian refugees, whose main purpose in life is to maintain in being the refugee camps as a pressure point in trying to get back their orange groves in Tel Aviv. Of such are the political parties in Jordan made.
It was quite clear to anyone who saw what happened when General Glubb was expelled that this kind of situation would arise, because of the feeling in the Army that they had to turn out King Hussein and tie up with Colonel Nasser. Obviously, that sort of thing cannot go on. It may be that these political parties are not the genuine political parties of the Jordanian people. It may be that the trade unions are not proper trade unions. But, obviously, King Hussein cannot maintain his position indefinitely; he must eventually recognise the pressure of public opinion. That public opinion as it exists at the moment is in favour of closer affiliation with the other Arab countries, including Egypt, because Jordan is not an economically viable country and must depend upon a wider extension of the economic basis of the Arab territories.
Why should we, as has been suggested in this debate and many times before, base our policy in the Middle East upon maintaining the division between the Arab countries? If it is the feeling of the people in the Arab countries that they should keep together, then, since the Arab countries in particular are so unbalanced economically—with such curious little corners like Kuwait and Bahrain, with their tremendous revenues from oil, with that great uncivilised Saudi Arabia with almost a corner in
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oil in large quantities—apart from Iraq —and countries like Jordan and Egypt without a drop of oil—obviously, in common sense and in logic, there is everything to be said for a closer federation of these countries in which the oil can be organised and the benefits of the oil revenue spread throughout Egypt, Jordan and the rest of them so that there can be a common effort towards developing the resources of these countries. We should not discourage, but encourage, developments of this kind.
There is a possibility now—one can see it already—of a new start in Anglo-Egyptian relations. The same kind of tone is now coming out of Egypt as we saw immediately prior to the nationalisation of the Suez Canal. The situation was developing to the advantage of Anglo-Egyptian relations at that time. They are beginning to show signs of developing again along the right road.
We do not need the kind of threats that we had from the right hon. and gallant Member for Leicester, South-East, about cutting off the Nile waters and hounding Colonel Nasser or whoever else happens to be a leader in any of these countries, whether he happens to be a democratically-elected leader or a king. Surely, our whole attitude now should be to try to establish the most friendly possible relations and to offer such assistance as we can, in common with other United Nations countries who can afford it, so that we can help to build up these countries and possibly bring about an entirely new situation in the relationship between them and the West. Unless we do this, they, like Colonel Nasser, when we refused arms to Egypt from this country and when we refused Egypt support for the Aswan Dam and other things, will have no alternative but to turn elsewhere. That cannot possibly be to the advantage of this country, of the West, of the Arab countries or of the world.
The opportunity, I believe, now exists. I think that Colonel Nasser is prepared to recognise that the Canal is his best economic asset at the moment, that it means nothing to him at all unless the other countries are prepared to use it, that the other countries are in a position to develop alternative methods of getting their oil out of the Middle East and that, therefore, it is in his interest to

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see that the Canal is developed and that equitable terms are arranged with the other countries. If that is the feeling of Colonel Nasser— and he has no alternative— there is an opportunity for us to talk on level terms.
I do not believe that that opportunity can be taken by a Government whose hands are red with the blood of the women and children who were murdered in Port Said I am convinced—and I have the support of the voice of the British people in all the by-elections which have taken place since the Suez affair—that the only way by which we can open this new road towards new relationships with the Middle East is for the Government to resign and to let the people of this country have a change.
6.14 p.m.
Sir Robert Grimston: The only part of the speech of the hon. Member for Attercliffe (Mr. J. Hynd) which appeared to me to make a great deal of sense was that part of it with which he said his party would not agree. The hon. Member began with a reference to Abadan as being a triumph for Socialist police—
Mr. J. Hynd: Common sense.
Sir R. Grimston: —Socialist common sense. That seems to me the most astonishing statement. If I remember aright, the Socialist Government at that time sent a cruiser to Abadan. They did not use it. All British property was then seized and in the end a Conservative Prime Minister was forced to come to an arrangement whereby the property which had been 100 per cent. British had to be shared between ourselves and the United States of America.
Mr. Hynd: The hon. Member will recall that one of his own colleagues, the hon. Member for Heeley (Sir P. Roberts) suggested the alternative policy of dropping an atom bomb on Abadan.
Sir R. Grimston: If that is the sort of interjection that the hon. Member wishes to make, I will not give way to him again.
I should be very surprised if many members of the Socialist Party up and down the country, and particularly those members of the Socialist Party who supported Sir Anthony Eden's Government in their action on Suez—and I have
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indications of that in my own constituency—would agree with the hon. Member that Abadan was a triumph of Socialist common sense. Heaven preserve us from Socialist common sense.
As my right hon. Friend the Prime Minister has remarked, we are not at the end of the story, and I wish to address my few remarks to what, I believe, should be the shaping of the end of the story. It is not a bad thing to remind the House of what Sir Anthony Eden said on 30th July, on the morrow of Nasser's seizure of the Canal. The words he used were these:
"No arrangements for the future of this great international waterway could be acceptable to Her Majesty's Government which would leave it in the unfettered control of a single Power which could, as recent events have shown, exploit it purely for purposes of national policy."—[OFFICIAL REPORT, 30th July, 1956; Vol. 557, c. 919.]
I believe that that statement, at that time, commanded the general agreement of both sides of the House, but there is no doubt that the present arrangement, as the Prime Minister has said, comes nowhere near the requirements of that declaration. It is not a settlement at all.
Colonel Nasser has laid down terms for the use of the Canal and it remains at present under his unfettered physical control. Whether he keeps to the terms that he has laid down for a week or a month, for six months or a year, is anybody's guess. That is where our economic situation to some extent rests at the moment so far as the Canal is concerned.
Egyptian good faith under Colonel Nasser is a thoroughly debased coinage, even amongst his Arab brethren, as the revelations of his subversive activities in Saudi Arabia, Jordan and Iraq have disclosed. I believe that my right hon. and gallant Friend the Member for Leicester, South-East (Captain Waterhouse), with whom I have associated over the years in this matter, is right when he says that the present unhappy state of affairs is the outcome of a misguided policy of attempting the appeasement of Nasser. All that, however, is now a subject for the historians and in present circumstances I do not see how the Government could deny the use of the Canal to British shipping in the absence of a complete boycott, which, obviously, is unattainable without the use of force.

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While, therefore, I completely sympathise with the attitude of my hon. Friends, I cannot bring myself to refrain from voting against a Motion in the terms of that brought forward by the Leader of the Opposition, with his record in this matter, which, certainly to the whole of the Conservative Party and, I believe, to a good many of his own supporters, is utterly contemptible. [Laughter.] The right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan), who has been in this House, as I have, a very long time, laughs, but I watched his sayings and doings at the same period, and I noticed that he was very careful to ensure that that remark could not be made of him.
The Egyptians may learn in time that in ordinary commercial life customers have to be satisfied if their custom is to be kept, and under international control of the Canal great benefits could be brought to Egypt in the future. Perhaps, eventually, Egypt will find that out.
However, our present policy should now be directed to ridding ourselves of dependence on the Canal by every possible means. In the movement of oil, this can be done by vigorous pursuit of other means, such as pipelines, to all of which the Prime Minister referred. I was particularly glad to hear of the appointment, which he announced in his speech, of an adviser to go into this question, and to hear that the appointment has been made and that the adviser is to get to work straight away.
In addition to this, every pressure should continue to be exerted on the Egyptian Government to bring home to them that the flagrant, unilateral tearing up of international treaties simply does not pay. There should be no question of any easing of the economic pressures at present being put upon Egypt by ourselves and particularly by the United States of America. I want to come to that later. I think, also like my right hon. and gallant Friend, that we should declare our intention of reconsidering the agreement about the Nile waters. That has been suggested in other quarters as well.
The misgiving which I have is that these matters may not be pursued with sufficient vigour, and that as ships begin to go through the Canal a complacent feeling will arise that all is well, until we are all brought up again to another rude awakening. I certainly hope that will not
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happen, and I was encouraged by the Prime Minister's announcement in his speech that he does not intend that to happen, but it is a misgiving of many of us.
In all this, the matter of economic pressures, and so on, the question arises in one's mind: is this sort of pressure to be frustrated by a lingering pro-Nasser attitude on the part of the United States of America? I have met Americans who have said, "You would do much better to treat with Nasser, because if he falls you may get something worse." I believe that that is an utterly wrong attitude, and I hope that the Americans are beginning to realise it.
The House may recollect that, with a number of my hon. Friends. I sponsored a Motion, which we put upon the Order Paper, and which came to be known as, "The Anti-American Motion." It attracted what, I think, was a record number of signatures amongst members of the Tory Party, and it had some effect, I think, on public opinion at the time. It certainly reflected public opinion at that time, which overwhelmingly held the view that the Americans had not stabbed us in the back, but very nearly had done that. It certainly commanded very general support in the country. After the Bermuda Conference, and in view of the fact that the United States of America seemed to be taking a more realistic view of the situation, that Motion was removed from the Order Paper, but I think it needs to be said that the damage done to Anglo-American friendship has not yet been retrieved.
I do not want it to be thought that my remarks are based entirely on what only I myself feel, and I agree with my right hon. Friend that among friends plain speaking is the best thing. I turned up an article, which I have here, which appeared in the Sunday Times on 6th January, and which was written by Mr. Dean Acheson, who was the United States Secretary of State from 1949 until 1953. I should like to read one extract to the House. It says this:
"The British and French entered secretly upon a venture the worst criticism of which is that it failed by reason, in the first instance of our own action against them."
These are Dean Acheson's words:
"But of deeper concern that this costly misjudgment is the division and distrust which it reveals. It was not Machiavellian depravity

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on the part of the British and French which made them fearful to trust us with their plan of desperation, but a belief that we had not only been disregardful of their vital interests but had deviously led them to frustration."
I say quite frankly—I think, perhaps, it would be better said from the back benches—that that feeling has not yet been entirely removed. The other day we opened our newspapers to read of the movement of the Sixth Fleet, and we observed, with what, perhaps, I may call rueful satisfaction, that the Americans were apparently prepared to do just what we did last year, and for which they roundly condemned us.
While public opinion in this country is only too ready and anxious to resume with full cordiality Anglo-American relations—I believe that to be necessary in the interests of the free world—I think it must be said that it will require more than polite visits to bring that about. We in this country, in the words of Dean Acheson, feel that our temporary failure now is largely due to the American action against us, and we shall be looking in the future for that situation to be redeemed.
I have made the few remarks upon that subject which I wished to make. I have indicated that I shall vote against the Motion, but I myself believe that, provided we can pursue a policy which does not treat this as a settlement or as the end of the story, we shall yet come out of this business in a better position in the Middle East and with better relations with the United States of America.
6.27 p.m.
Mr. Wedgwood Benn: I have listened with very great care to the speeches of both the right hon. and gallant Gentleman the Member for Leicester, South-East (Captain Waterhouse) and the hon. Gentleman the Member for Westbury (Sir R. Grimston), and I beg the House not to allow this debate to degenerate into a consideration of a dream world. Whatever view we may take of the actions taken by the then Prime Minister or by the Leader of the Opposition, let us at any rate, consider the facts.
If we consider the facts, one thing stands out a mile, and it is that there is no comparison between Abadan and the Suez Canal Base agreement, and the
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action taken last October. Why is there a difference? Because on those previous occasions the British Government rightly came to terms with what was happening; but last October force was used.
What we are considering tonight in this post mortem is not the so called scuttle, if I may use that term, of the Socialist and Conservative Governments. We are conducting a post-mortem on the action which the right hon. and gallant Gentleman the Member for Leicester, South-East and the hon. Gentleman the Member for Westbury have persistently advocated in the past. What we face is, of course, the far more total failure of a military attempt to stem the tide than ever there was of our attempts to come to terms with change in the Middle East.
I found the Prime Minister's speech a pathetic one because he persisted in telling the House that this was not a settlement. Why? Because, he said, it was a unilateral declaration. That may have gladdened the ears of the international lawyers, but in the history of the British Empire there have been many settlements of that kind. The only difference between those and this is that they were unilateral declarations by British Governments; and now we are faced with a position in which, because of our folly and stupidity, Colonel Nasser has been able to impose a unilateral settlement upon this country. Hon. Gentlemen opposite may think that they can change it by more propaganda or by stopping the Nile before it passes the Sudanese frontier so that none of it shall reach Egypt, but they are living in a dream world.
I want to direct the attention of the House primarily to the facts of the situation as they must present themselves to us. But I should like to deal, first, with the question of prestige. The question of prestige and honour has arisen both in the statement made by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) in refusing the Whip and in the Motion on the Order Paper in the name of my right hon. Friend the Leader of the Opposition. I say quite frankly that I know where the noble Lord stands. He believes in banditry of the old type. If it is a British interest, we have it. If the Canal is vital to us we take it. This is the morality of Nina Ponomareva—" I like

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your hat, I will have it." But we are not dealing with the fact that the Government attacked Egypt, which we thought wrong, but with the fact that throughout this business there was hypocrisy and dishonesty by leading members of Her Majesty's Government.
We say that that affects the prestige of Britain. We say that it affects the prestige of Britain's Cabinet and Foreign Secretary that a Prime Minister should say that our measures were only precautionary measures when we now know that he was preparing for war. We say that it affects the prestige of the United Kingdom when a Prime Minister says that force is the last resort, as he said at the special sitting, when we know that at that time he was planning an attack on Egypt in co-operation with the French.
We say that it affects our prestige that a Prime Minister should have pretended to deliver an ultimatum to Egypt and Israel while our colleague in the delivery of that ultimatum was, throughout, supplying arms to one of the countries to whom we were supposed to have addressed that ultimatum. We say that, too, of the whole story of consultation and of the fact that a Prime Minister said that we had no time to consult the United States when we know that the reason why she was not consulted was because we were frightened that she would stop up in our enterprise.
One reason it is right that the word "prestige" has been put in the Opposition Motion is that the behaviour and dishonesty of the Government in dealing not only with allies, but with the House and with members of their own party, make them unworthy any longer to carry the name of Britain into international conferences. I am sorry that the Labour Motion did not pay greater attention, or, at any rate make greater mention of the moral failure of the Government in launching this attack. I very well understand the intention behind the Motion. It is to show to the country at large that no only was this action wrong, as we said in October, but it was ill-conceived, badly planned and in every way undesirable, and that, in the end, it has failed.
It is the object of the Motion to point out to the House that it failed, but I wish, also, that we had put down afresh,—even though the public understands it
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very well—that our objection to the policy would have been just as great today if we were at present in occupation of the whole of the Canal and British shipping were passing up and down it on our own terms. I have no doubt that my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) will make that clear when he winds up the debate for the Opposition tomorrow, just as my right hon. Friend the Leader of the Opposition made it clear throughout his brilliant speeches last autumn.
Many criticisms have been made against my right hon. Friend for his leadership last autumn. I can only say, as far as I am concerned, that his lead is the thing which. above all other things, will give this country reason to be proud when it considers this whole business in the years that lie ahead.
We have had from the right hon. and gallant Member for Leicester, South-East the reason why he will not vote with the rebels tomorrow night. It is because he does not hold the present Cabinet responsible. He blames the Americans, the Russians, the Opposition and everybody else, but not his right hon. Friend the Prime Minister. But his right hon. Friend is rather more forthcoming. He said that the policy of the Government last autumn was unanimous.
Are we to understand that it was the unanimous policy of the Conservative Government last autumn that this enterprise should be planned? If it was a unanimous policy it changed very rapidly. It was presumably, the Government's unanimous policy to go in. It was the unanimous policy to stop. Then it was the unanimous policy to come out. Presumably, now it is the unanimous policy to say that we got the best of a very bad job. It was the unanimous policy to say that we went in to act quickly because the United Nations could not have acted. And I suppose it was the unanimous policy to veto the United Nations when it did act. It was presumably the unanimous policy to say that we went in to stop the war, and, at the same time, to say, in leaflets and broadcasts, that we were going in to seize the Canal.
It was the unanimous policy to reveal the extent of Soviet penetration and then unanimously to admit, on questioning, that all the figures given had been

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available in June. It was the unanimous policy to put teeth in the United Nations, and unanimous policy to vote against a resolution to set up a special Assembly to consider the problem of the Middle East.
The Government were also unanimous in saying that all this proved that the Canal was not vital, as the Minister of Transport has said. Finally, it was unanimous policy to say that what we did was to lance an ulcer, which is the latest explanation. Presumably, it is unanimous policy now to say that we did all this last summer because we always knew that there was an ulcer and we wanted to lance it. Presumably, if we are to give the Government credit for exercising their doctor's mandate, we should vote against the Opposition Motion.
I do not for a moment believe that the rebellion led by the noble Lord the Member for Dorset, South, will come to anything. I am sure that he will not misunderstand me when I say that proof of that is that he should have been chosen to lead it. I say that without any discourtesy—I admire him—but he is a figure from a past century. I have listened attentively to every debate on this subject. I heard the Tory Party cheer the tough line originally announced as a precautionary measure. I heard hon. Members opposite cheer the Prime Minister when he said that we did not intend to use force. I heard them cheer when he said that we were going to the United Nations, and when he said that there was no possibility of further negotiation.
When the Prime Minister said that we were going into Egypt and going to attack, they all cheered. They cheered when there was a cease-fire. They cheered when they found that there was a mistake and there was no cease-fire. They cheered when the fighting began again. They cheered when it was announced that we were half-way down the Canal. They cheered a great military triumph, and, finally, they cheered when we got out altogether. Therefore, if I am a little sceptical of a Tory rebellion in the House, I hope that the noble Lord will understand that it is nothing personal.
This has been a practical failure because the Government miscalculated.
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They miscalculated absolutely everything. The Prime Minister said in his speech today that no one knew more about world affairs than Sir Anthony Eden. I would have said that twelve months ago. But the then Prime Minister and his Cabinet, and we must include the right hon. Gentleman who was Minister of Defence and the present Foreign Secretary, who is a disgrace to his office, not only sullied the honour of Britain but were wrong in their belief about what was going to happen.
They honestly thought that the Americans would support them. They believed that, despite what Eisenhower and Dulles had told them privately and publicly from the end of last July. They thought that the Russians were going to sit back. They must have been naïve if they knew that the Russians were stirring up trouble and supplying arms and they thought, at the same time, that the Russians would sit back and let us reoccupy our old colonial territory.
They absolutely misunderstood the situation in Egypt. Egypt had never been independent since the days of the Pharaohs till July, 1956, when the last British troops left and, for the first time, an Egyptian controlled the country. As I have said before, we, who controlled the destiny of Egypt from Whitehall for eighty years, are not in a position to criticise Colonel Nasser for failing to get a popular mandate within six weeks of British troops leaving the country. We misunderstood the passion in Egypt. Indeed, the extraordinary thing is that when we used force—the sacred remedy of the Tory right wing—we found that it strengthened rather than weakened Nasser.
But the tragedy is, of course, that the position is just as it was before the crisis. I do not blame the Tory Government—I never have, and I do not believe that any of my hon. Friends have blamed them—for the crisis in the Middle East. It is a very complex crisis. It is a crisis with which we as a Government had to contend in our six years of office. It is a crisis more acute than it was when this drastic action was taken last autumn. L is a crisis made up of the Israel-Arab conflict, and the Government have no solution to offer for it.
The Prime Minister, at the Guildhall, gave that first feeling of insecurity to

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Israel, which led Ben Gurion into the Sinai campaign. By denying arms to Israel throughout last year, it gave Israel the feeling that only her own arms and the courage of her soldiers lay between her and obliteration. The responsibility lies on the Government for the failure to provide a solution to that question.
Then there is a revolution going on in every Arab country. It is a great mistake to think that when one is pouring dollars into feudal Arab countries one can expect not to upset the feudal system. Just as the Industrial Revolution precipitated great political and industrial changes in Britain, so, in the Middle East, the wealth which is pouring into it in return for oil will produce great changes. Towards that change, Her Majesty's Government made no sort of contribution.
Towards the battle of the Arab countries against Western imperialism, Her Majesty's Government made no contribution. It is no good getting Sir Gladwyn Jebb, in Paris, to talk about France's sacred mission in Algeria when the Algerian people believe that they are at one with the American colonists and all those others right up to the Indian nationalists at the end of the last war, in fighting for their independence against foreign rule. If we do not offer a constructive alternative to this military struggle for their own rights against foreign control, then the prestige, good name and honour of this country count for nothing, and rightly so.
My criticism of the Government is that they see in the Middle East, in the struggle between king and colonel, emperor and dictator, in the oil conflict and in all the difficulty and crisis there, opportunity for gain for themselves. They have approached the Middle East as an area in which one can buy oneself into a position of strength. That is the game which the French played and the game which the Russians played. They learned it from the Foreign Office. The theory is, sell them some MiGs and submarines and the people will be willing to do what one wants. That is the tragedy of it.
We are now in the position where all these crises are reasserting themselves. We are back where we started, with the difference that American arms instead of British arms are going into the Middle
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East. Over all this hangs the hydrogen bomb. I will not convict myself of being a Communist by mentioning health. We all know that anyone who mentions strontium 90 is put on a secret list in the Home Office. I am talking about the situation, which I beg the Government to consider, which was proved up to the hilt in the limited Suez campaign that we witnessed last year. It is simply that one cannot have a little war any more.
Why did we pull out of Suez after five days. One reason is that Mr. Bulganin, having warned us in advance when we were there, said, "What about rockets on London?" I have mentioned this before. Whether hon. Members take it seriously or not, Eisenhower did, and he found it necessary to issue a statement. The truth is that we live in such a dangerous world that if these limited wars develop it is almost certain that they will become major wars.
I want to consider, therefore, the alternative of the United Nations. What is it really in these circumstances? The Suez crisis made the United Nations a controversial issue. It made me sick for years to hear the United Nations spoken of as one speaks about the Women's Voluntary Service or the English-Speaking Union, which all men of good will could support. Because the United Nations is bound to be controversial. It is a new and revolutionary approach to the settlement of world problems.
I want, if I can, to try to say why I think that, even with its limitations, the United Nations has a part of play. I will take, first, the Security Council. Ministers have said, and have been cheered for saying it, that the Security Council is no good because of the veto. But the veto is a reflection of the true power situation. The veto reminds us that one cannot get a solution in the Middle East unless one has Russian support and approval, and talks to the Russians. It is no good thinking that it is the rules and regulations and standing orders of the Security Council which frustrate the Middle East settlement.
The truth is that in a world of big Powers, big Power agreement has to be reached if there is to be a settlement. That is the only thing I want to say about the Security Council. I am more interested in the General Assembly because that body talks, and we who earn

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our living by talking ought to remember and be proud of the value of talking. There is value in talking as our parliamentary institution found when we were as weak and powerless as the General Assembly.
The noble Lord the hon. Member for Dorset, South will remember the seventeenth century as a time—I am making a serious point here—when this House of Commons suffered from two very great weaknesses compared with our position today. First, it did not control the king, and, secondly, it was not responsible to the electorate. In fact, it was rather like the United Nations today, which does not control the national Governments and which is not elected by popular vote in the countries of the world.
But who, on consideration, would deny the value of the seventeenth century House of Commons? It was a place where public opinion was brought to play at just the point where it was wanted and in such a way as to influence the Government and provide a canalisation of general national feeling on great issues. It did not matter that one could buy one's seat, as many hon. Members did in those days. Some of our greatest Members of Parliament put down a deposit of a rather different kind, and, in return, came to Westminster. That did not matter. What mattered was that there was talk about the issues of the day.
Mr. Osborne: The hon. Gentleman will remember that it also produced a civil war for the only time in the history of this country.
Mr. Benn: I think that the hon. Gentleman is doing me less credit than is my due because, of course, these weaknesses to which I have been alluding continued up to the eighteenth and nineteenth centuries. There were some great politicians in those days, when the value of talk was recognised and before the battle for responsibility of Parliament to the people was fought out. If anyone doubts me, let him look at the first thing that a dictator does when he comes to power. The first thing he does is to stop free talk, because he knows, and we know, that free talk is dangerous. Once people start talking and thinking it is very dangerous.
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Free talk is the most revolutionary thing in the world, and I know that hon. Members opposite agree about that. Therefore, I urge the House to remember that the General Assembly of the United Nations is a place in which world public opinion is brought to bear. Some may say that world public opinion is meaningless—just talk. But it is important for the reason that all the big Powers of the world are anxious, for their own security, to be approved of and supported by the other countries.
When Marshal Bulganin and Mr. Khrushchev spent all that money going to India, they did not do so for the fun of it. It was because they cared whether India was, and would remain, favourable to them. When we spend a lot of money financing the right hon. Member for Luton (Dr. Hill) to put Britain's case abroad, it is because we care about what other people think of us. We want them to think well of us, although one can hardly imagine that from the character of that particular appointment.
I finish with this point. The more I have listened to this debate, the more I have felt that the argument is not between the parties but between the generations. There are members of my party—many of them, I think, are older members —who took the view, which I do not deny was taken by some people who vote Labour, that the course the Government took was a right course of action—
Mr. Patrick Maitland: Oh.
Mr. Benn: The hon. Gentleman the Member for Lanark (Mr. Patrick Maitland) has delivered himself into my hands, because if he believes that most Labour voters agree with Sir Anthony Eden, what political credit could my right hon. Friend have got from opposing him, which is the charge constantly made against him, that he did it simply for popularity?
Mr. Patrick Maitland: That is a most interesting point, and no doubt in the course of time we shall see whose credit stands most high.
Mr. Benn: All I can say is that it is the tragedy of the man who opposed Munich at the time that he should have committed an even greater folly at the end of his political career. After all, the late Neville Chamberlain condoned aggression

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in the interests, he said, of peace. Sir Anthony committed aggression in the so-called interests of peace, and I myself have no doubt which view the historian will take of the two right hon. Members who opposed each other in the autumn of last year.
I am anxious to make this final point. It is that there were hon. Members on the other side of the House—and I think I can say truthfully that they were the young Members—who took the view that in the world in which we now live the old idea of force is out of date. They did not search round frantically for a scapegoat of the Russians, or the Americans, or the Opposition, or anybody else.
As far as I am concerned, I believe that Britain can be great even if she cannot send a submarine or an aircraft carrier or a battleship to impose her will in any corner of the world. The reason why the noble Lord is defeatist is that he does not believe that Britain can be great unless she can impose her will by military force on other countries in the world. That is what really divides us.
I think I can speak for many of my hon. Friends when I say that we are genuinely not frightened of the world which is emerging, We believe that in the Afro-Asian countries, inside the Commonwealth and outside, we are getting the greatest possible support for the idea for which we have always stood. That idea is a simple one. It is the idea of the assumption of popular control over the power in the community. We live in an age where the power is so great and so dangerous that the assumption of that popular control in a responsible democratic way is the most important thing that can happen.
It is because we believe that this new emerging world has the right to claim for itself the rights and privileges that we boast of in Britain, and should have the best chance of making use of them in peace and justice for its own people, with the help of this country rather than in the face of the opposition of this country, that we see in the Suez crisis a turning point. We see a moment in our history when the old-fashioned way of force was shown not only to be wrong but to fail, We invite this country, and everyone who lives in it, to look to the future with a greater confidence in our contribution.
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We believe that our mission at its best is a mission of making ourselves a great Parliamentary Power rather than merely a nuclear Power, as the Prime Minister said in his speech.
6.54 p.m.
Mr. Angus Maude: I must not allow myself to be deflected into talking too long about the views which have been expressed by the hon. Gentleman the Member for Bristol, South-East (Mr. Benn) and by the hon. Gentleman the Member for Sheffield, Attercliffe (Mr. J. Hynd), tempting though it is, because I have much in addition that I should like to say in as short a time as possible.
I noticed that both hon. Gentlemen began their remarks at almost every point where they referred to my right hon. and gallant Friend the Member for Leicester, South-East (Captain Waterhouse), to my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) and, indeed, to all those on this side of the House who had supported Sir Anthony Eden's original action, by saying that they are figures from a past century, that they are living in a different world, that they are living in the ages of the past.
There may be something in that, but the trouble with the hon. Member for Bristol, South-East and his friends is that they live in a world which has not started yet, which may never start. For all this talk about facing the practical realities of Arab nationalism, of facing the realities of honour and prestige, they have not, in fact, the faintest practical solution to offer for any of the problems which this country has been facing in the Middle East and in its foreign relations during the past year and more—not the beginnings nor the glimmerings of a solution.
The hon. Gentleman talked about the United Nations. He dismissed the Security Council pretty briskly, and I thought with perfect correctness, saying that the deadlock there represented a deadlock between the great Powers who form its permanent members, and that it merely reflected a situation of complete frustration. That is true.
The hon. Gentleman then talked about the General Assembly in a part of his speech about the seventeenth and

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eighteenth century House of Commons, the relevance of which was not always apparent. In the end he said that the value of the General Assembly was that world public opinion was brought to bear there, that people started to talk and then began to think— though, as one of my hon. Friends said, it might sometimes be better, even on the benches opposite, if the reverse were the case.
It is nonsense to suggest that the General Assembly decides anything or does anything effectively as a result of bringing world public opinion to bear through the General Assembly. Nothing can be further from the truth. Is it really believed that what Mr. Krishna Menon says in the General Assembly represents the public opinion of the people of India, and that when the Egyptian Ambassador speaks the public opinion of the Afro-Asian peoples is expressed through the General Assembly of the United Nations? Is it really believed that this represents an effective channel for world public opinion which will issue as effective action? If that is what the hon. Gentleman believes, it little behoves him to taunt us with living in a different world—
Sir Lynn Ungoed-Thomas: Why not come to Suez?
Mr. Maude: I am coming to that, as the hon. and learned Gentleman will not be surprised to find, because that is what this debate is about. We are talking about practical and effective measures. What did the hon. Member for Attercliffe or the hon. Member for Bristol, South-East suggest as practical measures which could have been taken by the Government in this country last winter, or earlier, and which could be taken now? Not one single suggestion. In fact, the hon. Member for Bristol, South-East differs very little from the hon. Member for Glasgow, Shettleston (Mr. McGovern), except that the latter believes that the future of the world can be adjusted by bringing everybody to believe in the tenets of the Oxford Group, and the hon. Member for Bristol, South-East believes that the Government of this country should follow the tenets of the Oxford Group but that the Governments of Middle Eastern countries may be as immoral as they like.
We have heard it before, this suggestion that Nasser was perfectly right to nationalise the Suez Canal—that it was
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his Canal and that he could do what he liked. The hon. Member for Attercliffe made his view on that quite clear. Yet, after all his talk about the unfortunate history of the last six months or so, he was referring to the statement of the Prime Minister today as a humiliating surrender. I simply cannot understand the extraordinary schizophrenia which gets into hon. Gentlemen opposite on this subject; though, if they can imagine that they reflect the views of this country during the Suez crisis, they can imagine anything. It is beyond my comprehension how they can believe that anything which they suggested could have brought a practical solution to the problem with which the British Government were faced last winter. It is inconceivable. They were relying on the United Nations machinery, which by their own admission has built into it frustrations which make it impossible for it to act effectively.
They continue to complain because the British Government used force at that time. It was not, of course, merely the use of force which made the policy fail. It was the ineffective use of force. That has always been obvious. The hon. Member for Bristol, South-East said that, if it showed anything, it showed that one could no longer have little wars. If one believes that it is impossible ever to have little wars, what it means is that the world is certain to rush headlong into a general third nuclear war. The only hope on which civilised countries can base their defence or their foreign policy is that it is still possible to restrict the scope of incidents which may break out locally in one area of the world or another, because the alternataive is too frightful to contemplate.
Mr. Aneurin Bevan: Is the hon. Gentleman seriously suggesting that an armed attack undertaken by two great world Powers like France and Britain in co-operation with Israel is a local incident in a local war? Surely it is local only because the other chap was too weak to fight back much.
Mr. Maude: The word "local" as used by the right hon. Gentleman, as used by the hon. Member for Bristol, South-East and as I use it is used to contrast that type of war with a third world war in which all the major Powers would be engaged with nuclear weapons.
Mr. Bevan: Is the hon. Member, therefore, suggesting that we can avoid a third world war only by allowing three Powers to humiliate and subjugate one small Power?
Mr. Maude: If that is the right hon. Gentleman's solution to foreign policy problems, and if that represents the limits of his comprehension, I can only say that the future of this country when he becomes Foreign Secretary is a dim one.
There are only three methods by which one can deal with local conflicts. One method is to get an agreement without the use of force. If the use of force becomes inevitable in default of an agreement, the second method is to try to limit the area of conflict. The third method is to let the conflict spread until it becomes a nuclear third world war. The right hon. Gentleman believes that there is no alternative and that one has to have the third world war. If he believes that, then the absolute lack of comprehension of right hon. and hon. Members opposite as to what was involved last winter in the Middle East almost baffles belief.
I must not allow myself to be deflected too long into discussing the extraordinary views of hon. Members opposite. As the House knows, I have the somewhat painful and unpleasant task today of explaining why I have found it impossible to continue to support and to associate myself with the leaders and the Government I have supported and followed for seven years in the House.
I listened, if I may say so, I hope without impertinence, with considerable sympathy to the Prime Minister's speech today. I am sorry to say that I was unable to find it wholly reassuring. When the Prime Minister made his statement in the House the other day I had expected that it would be accompanied by some practical suggestions as to how the situation was to be improved for the future. Indeed, I had hoped that during the first five months of this year, during the time that has elapsed since the withdrawal from Port Said, some practical steps would have been taken to improve the situation for the future. If they have—it seems incredible that they should not have been taken—I really feel that, for the reassurance of the people of this country, it would have been better if we had been told what they were. I hope
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that the Foreign Secretary or the Prime Minister, when dealing with these points, will tell us a great deal more about this.
The Prime Minister said in his statement—he said it again today—that this is not the end of the story. Frankly, I found this difficult to grasp. I could have understood the argument so much better if the right hon. Gentleman had said that this is the end of the story. If he had said that we have had four difficult years and a number of failures and humiliations but this was the last hurdle and once we got over it we should be on the flat and could gallop home, I could have understood that argument. However, it is precisely because this is, as I see it, not the end of the story that I feel so desparately worried about the situation.
This is not the end of a three-year process which started in 1954. This is, I fear very much, the middle of a six-year process. If the process is to be projected into the future in the same way as it has gone on, then the outlook is bleak indeed. This process started in a sense with the crisis of Abadan, and it followed under Conservative Governments with retreats in the Sudan, with the agreement with General Neguib and Colonel Nasser, and with the Suez fiasco last year. Is it really conceivable that the story will not be continued in exactly the same way unless some practical steps are taken to prevent it?
What are the lessons of the history of every dictator who has ever held power in any country in the world? What do they show? They show that he must always keep up the momentum of his actions, the dynamic of his policy, that he can never afford to accept an agreement and to say "I am satisfied," because, by nature and by definition, a dictator can never be satisfied or he will lose the support of his own people. If he is insecure at home, a dictator must always have a scapegoat and an enemy whom he can defy and humiliate.
Who is the enemy to be in this case? If Jordan is now as it may be; I do not— know; I wish I understood what the foreign policy of America was—to be under the protection of America, presumably the enemies against whom Nasser will fulminate and against whom he will act will remain Britain and Israel. I do not know to what extent he still hopes that he can fight another round

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with Israel and win, but I do know that on past form he must believe that the easiest enemy to triumph over is Britain. That must seem to him to be the most obvious fact, above all others, when he comes to consider his future possibilities.
Nasser has played this hand most brilliantly to date. He has got away with everything. Why should not he think that he can get away with it again, either on his own initiative or with the advice that he may receive from Russian or other advisers? Having lulled this country into a position in which it reorganises its overseas trade on the basis of transit through the Suez Canal, what is there then to stop Nasser raising his sights and discriminating against British shipping as well as Israeli shipping and again raising the dues? What defence have we at that point? As far as I can gather, we have no more defence than we have now. If we have to accept, as the Prime Minister—
Mr. Benn: I am following the hon. Gentleman's argument with very great care, but there is one point that I do not understand. For six years the present Government were in power with British troops on the Canal, but we never made Nasser allow Israeli shipping through the Canal. Why should it be different if the hon. Gentleman's troops go back now?
Mr. Maude: The hon. Member has overlooked two things. First, I did not approve of the fact that under a Conservative Government Israeli ships were denied transit through the Suez Canal. I personally believe that the United Nations showed deplorable weakness, and that every Government which sent representatives to the United Nations showed deplorable weakness. The second thing which the hon. Gentleman has overlooked is that I am not recommending that British troops should go back to Egypt. The irrelevance of his remarks seems to be complete, for they had nothing whatever to do with what I was talking about.
I cannot see what is to prevent subsequent discrimination against British shipping. There may be a policy for dealing with this matter, but why cannot we be told what it is? Surely, this is not too much to ask? It must be obvious—when
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the right hon. Gentleman opposite talks about a humiliating surrender, and when the Prime Minister says that this is not satisfactory, that this is a unilateral declaration by Egypt which we have no alternative but to accept—that this must be considered in the Middle East, in Egypt and elsewhere, as a triumph for Nasser. It must be considered as something which will raise his prestige.
It is not only the fact of what the Government are doing now, but the timing of it, which seems to me to be so deplorable. Just at the point when Nasser's prestige has suffered, as it must have suffered, from his failure to bring down King Hussein in Jordan, just at the time when Saudi Arabia is beginning to turn away from its alliance with him —whether at the bidding of America or because it has seen the way things may go in the end, I do not know—just when Nasser's prestige in the Middle East has been tottering, this is the time which we choose to bolster up that prestige with a surrender of this kind.
The argument is that there is no alternative, or that the alternatives are all unpleasant. It is the greatest possible mistake, in politics as in anything else, morality or whatever it may be, to believe that because all the alternatives to something are unpleasant, one has to do that thing. It does not follow at all. It may be better and wiser in the long run to adopt a more unpleasant alternative than to do this thing, and I think there are alternatives.
It is difficult to marshal the arguments for and against them, because, quite frankly, we have not received from the Government at any time enough facts to make it possible for us to judge which possible alternatives are practicable and which are not. We have never had the material on which to discuss these things in practical terms. I have never understood why it was not possible for us to be given alternative plans for the construction of pipelines before now. I am prepared to believe that it will take a very long time to construct a fleet of super-tankers. I am sure it will. But is not it just a little late now, five months after our withdrawal from Egypt, to be setting up an advisory committee to coordinate action? It is the lack of some practical action and promise of this kind that has disturbed my hon. Friends and

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myself so much during the past few months.
Therefore, even now, when hon. and right hon. Gentlemen opposite seem strangely diffident about suggesting that we should take the matter back to the United Nations—I can only assume it is because they genuinely believe that Nasser's case is a strong one and that it is right, which I do not—I still believe that we should never lose an opportunity of taking the case back to the United Nations. The Prime Minister says that the United Nations is seized of the situation. I do not know quite what that means. What are they going to do about it? Even if hon. Gentlemen think that we have forfeited our moral rights, we still have rights as members of the United Nations to have our just claims considered. Instead of using our sterling balances to subsidise Nasser, is not it possible to use them to subsidise our ships which have to suffer this competitive disadvantage in going round the Cape? That is a suggestion which we might at least have discussed and have heard the reasons against it.
All through this long process, against which I and some of my hon. and right hon. Friends have been continuously protesting, I do not think we can be thought guilty of being inconsistent. The only thing of which I think we could legitimately be accused is that we did not take the final step of leaving the Parliamentary party before, and I, for one, regret that I did not do so last December. I still could not honestly believe that the same dismal process, which had gone on so long, was not at last to be arrested. I could not believe that still the Government were not going to produce any practical proposals for improving the situation and safeguarding British interests in this area, and yet, after five months, not the first sign of a proposal has come before us that can inspire any confidence whatever.
In these circumstances, I do not feel that it is possible that I can support Her Majesty's Government on this matter, and, with the utmost regret, because this is a sad moment for me and for my hon. Friends, I have to say that I cannot support them, nor do I feel that I can belong any longer to the party to which I have belonged all my life.
This is a matter of great sadness to me. I would hope that the divorce might
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be only temporary, but so far nothing has happened which makes me optimistic on that score. I implore the Prime Minister and the Foreign Secretary to try to reassure my hon. Friends and myself in slightly more concrete terms than has been the case up to now. It is not only a case of eight of us here in this House; it is millions and tens of millions of people in this country who are utterly bewildered by the turn which events have taken, who cannot believe that a Conservative Government could behave with such apparent ineptitude and weakness, and who pray to have their confidence in the Government and the party restored.
7.18 p.m.
Mr. M. Philips Price: It is right that we on this side of the House should move a Motion of censure on the Government, for it must be stated that the record of the Government over the Suez Canal issue is one of the most disastrous in our history. It was the same sort of policy and misunderstanding which brought about the situation in the eighteenth century which lost us the American Colonies. It was the same sort of mistake made by the Lloyd-George Coalition between 1920 and 1922, when they so completely misjudged, also in the Middle East, the importance of the rise of Nationalist Turkey, that led us to the most humiliating withdrawal from Chanak and finally from Istanbul.
But, critical as we were of the Government over its Suez failure, I think it is also true to say—at least, it is true for me, and I think for many of my hon. Friends here—that we have no sympathy for Colonel Nasser and his regime of dictatorship in Egypt. He is a phenomenon which is to us of much less importance than the rise of Nationalist Turkey under Mustapha Kemal. Nasser's Arab nationalism is not a true nationalism. It has been warped and twisted by xenophobia and aggressive militarism which will not settle down with its neighbours. It is a petty Napoleonism which must be fought, but not by the methods used by the Government last October.
That is why we have moved this Motion. The revolutionary regime in Egypt started well with many reforms and the beginnings of big agrarian changes in the country which were on the right

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lines, and many of us were sympathetic. I went to Egypt in 1954 and had very much sympathy with what Colonel Nasser was then trying to do. Unfortunately, the régime in Egypt came up against internal difficulties. There was a rapid rise in population at the rate of 500,000 a year in the narrow Nile Valley with an inability to raise the food production of the country in proportion to the rise in population.
It is very much easier to beat the anti-foreign big drum and to carry on xenophobia to try to make it appear that the foreigner is responsible for the state of Egypt. That is the reason for the petty Napoleonism of the revolutionary régime which began so well. That ought to have been understood by the Government and their supporters. Unfortunately, there is a streak of the old imperialism among hon. Members opposite. They tried to force my right hon. Friend the Member for Lewisham, South (Mr. H. Morrison) to take in Abadan the same action which they took in Egypt last December. They thought that if we occupied Abadan the régime of Mossadeq in Persia would fall, very much as they thought that the regime of Nasser in Egypt would fall. Very wisely, my right hon. Friend resisted that temptation.
I was in Abadan not very long before the crisis arose. I took the view very strongly that if we had gone in there we should have had the whole of Persia against us and it would have been impossible to bring about the fall of Mossadeq, as we ultimately did. My right hon. Friend very wisely did nothing more than send a cruiser to the Shatt-el-Arab to get out Britishers whose lives were in danger in Abadan. He relied upon the blockade of Persia preventing her from selling oil on the world markets, and within three years that had brought about the fall of Mossadeq.
I was among the first Englishmen who went into Persia after the fall of Mossadeq. There were two others, two journalists, but they went in without visas. I think that I am the first who went in with a visa, in the autumn of 1953. One of the first impressions I gained—and I saw people from the humblest up to His Majesty the Shah himself, although, of course, I cannot say what he said—was that because we had held our hand,
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gradually, through our blockade and the inability to sell Persian oil and the economic effects of that, Mossadeq's support became weaker and weaker.
That ought to have been the policy in dealing with the petty director Nasser, but the Government did not adopt it. They tried the old Tory imperialism which still runs much stronger on that side of the House than I thought. When they pressed my right hon. Friend for Lewisham, South to go into Abadan, I did not think that they were really serious, but they adopted that policy over the Suez Canal with the result which we have seen.
Mr. John Harvey: Surely the parallel the hon. Member seeks to draw between Persia and Egypt is not very valid, because in Persia there was no question of an enormous build up of Communist influence and Russian arms being piled up by the Mossadeq régime, which has been the trouble in Egypt.
Mr. Price: Certainly, there was the Tudeh Party in Persia which was notoriously a Communist organisation. I will concede to the hon. Member that there is some difference in that the world could do without Persian oil but could not so easily do without the Suez Canal. There is that difference, but even so that does not invalidate the main line of my argument. In consequence, in some ways Nasser is more difficult to deal with than Mossadeq, but even so I believe that a wise policy of mobilising world opinion against Nasser and seeking to develop alternative routes would do something to deal with him. I am one of those who believe that Colonel Nasser presents a very dangerous factor in the Middle East. But I want bygones to be bygones in this matter. I do not want to hark back too much to what happened last October.
I wholeheartedly support this Motion, but I hope that we shall not pursue the argument beyond today, because we have to consider the future, although it is right that we should register our protest at the Government's mishandling of the situation last autumn. The Minister of Transport was right when he said not so long ago that the Canal has been shown to be not quite so important as we had thought. Of course it is important in a sense, particularly for our export trade

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to southern Asia and the Far East, because that way we can get cheaper transit to those areas.
However, we can afford to look to alternative routes for heavier goods, particularly oil, more than half of which traffic which now passes through the Canal. Anyway, it is doubtful whether the Canal can carry very much more of the tremendous amount of oil which will have to come from the Middle East to Western Europe to keep its industries running and developing. It is not possible for the Canal to carry that extra traffic. Very considerable sums must be spent on widening and deepening the Canal, and from where will Egypt get the money to do that work? It should be possible for us to get this extra oil by other means.
One way, as I suggested as far back as December of last year, is by large tankers, 50,000-ton tankers, going round the Cape. I understand that if enough of them are built the overhead costs will be such as to make it possible for them to compete in the long distance haul round the Cape with the shorter haul of smaller tankers going through the Canal. This is a matter with which the ship owners have to deal. But the Government cannot divorce themselves from interest in this matter. They must also take action. Only the Government can do anything about the provision of dock facilities to handle these large tankers. I should like to know what the Government are doing. Only a few ports can be expanded to handle this sort of situation.
Then there is the question of an alternative pipeline passing through friendly Arab countries—and there are friendly Arab countries. That is a strong point upon which we can very well rely in formulating our policy. There are friendly countries, like Iraq, and also Turkey, across whose country we could build, with Turkish agreement, a pipeline to come out in the Mediterranean at Istanbul.
Meanwhile, it may still be tactically desirable to use the pipeline through Syria. But I have been there a few times in recent years, and Syria is a country in whose politics I have not very much confidence, whereas I have a good deal of confidence about the political set-up in Iraq and the friendly republic of Turkey. Last autumn I was in south-east Turkey and travelled along portions of the territory which has been surveyed by
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engineers, and I understand that it is quite possible for a pipeline to be built to run from the Northern Iraq oilfields to the east coast of Turkey, which it will be completely impossible for any Communist-influenced republic like Syria or Egypt to blow up, as happened last autumn.
Mr. Barnett Janner: Does not my hon. Friend think it is about time we considered the possibility of encouraging a pipeline of this description through Israel, which is a friendly country?
Mr. Price: I quite understand that. My hon. Friend can be quite sure that I have not left that out of my considerations.
Mr. Janner: My hon. Friend never mentioned it.
Mr. Price: I am afraid that Israel is too near the danger zone to make it advisable to use that route as the main line, although a pipeline is now being constructed there by the French, on a small scale. I agree that for Israel it is certainly desirable, but I am afraid that it is not one upon which we can rely as a fundamental alternative route, such as the one that I am suggesting, which would be much further back, and in territory which is in every way reliable from our point of view.
Mr. Janner: Israel is a very friendly country.
Mr. Price: Iraq and Turkey are also friendly countries. I do not want to pour cold water upon my hon. Friend's suggestion, but I do not think that a route through Israel could be our main line.
Here again, the Government must take a hand. I know that the oil companies are sitting here in London considering plans for financing a scheme of this kind, but the Government cannot say that this is merely a commercial and technical matter which is no concern of theirs; it is very much their concern. Moreover, there are certain political issues which they may have to tackle. Another idea is to have a pipeline running from the Persian oilfields across Iraq to Turkey. I do not think that Iraq is altogether keen about that. There is a certain amount of jealousy, and it would require tactful handling. That is where the Government and the Foreign Office can get busy

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smoothing over any difficulties which may exist between Iran and Iraq in order to settle a matter of this kind.
All these are cards which we can play in dealing with Colonel Nasser. He may sit on his Canal, but the Canal might become a dry ditch, as Mr. Dulles said the other day. I do not think he will get sufficient money out of the Canal to finance the building of the Aswan Dam—the refusal to finance which by the World Bank was the cause of the original trouble. Egypt needs water for her teeming and increasing millions, but she must behave like a civilised country if she is to get the financial support of Western Europe and America to develop along those lines.
If she goes on like she has been doing and refuses to allow Israeli shipping to pass through the Canal there are still other cards we can play, as I pointed out to the Prime Minister in a Question recently. One does not want to be too crude in these matters, but if one is dealing with dictators of this kind there is no use being mealy-mouthed about it. Egypt's lifeline is the Nile, and she cannot live without water—and increased water.
The point which must be borne in mind is that the republic of the Sudan, which is very friendly to us she has not taken the line which Egypt has generally taken in relation to our position in the Middle East—is very worried about the Aswan Dam because the building of a great dam there would create an enormous internal lake which would lose 10,000 million tons of water a year in evaporation, whereas if the water were impounded further up the Nile by a number of smaller schemes the loss through evaporation would be much less. It would also provide the Sudan with considerable reserves of water for her own development, which Egypt is much too inclined to ignore.
Colonel Nasser has an Achilles heel. After the way that he has behaved it is our business to see to it that we press him wherever we can. I do not believe there is any other way that we can get him to see reason. I am not one of those who thinks that by being nice and kind to Colonel Nasser we shall get anything out of him. We withdrew from the Sudan, and Egypt continued to be
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unfriendly; we withdrew from the Canal Zone, and Egypt continued to be unfriendly, and we rightly withdrew our financial support for the Aswan Dam when the World Bank withdrew its support—and I think that was right. because Colonel Nasser had not come to an agreement with the Sudan as he had said he would do—and he occupied the Canal.
That is the type of man with whom we cannot deal except in his own way. Let us always bear in mind that in the Arab world we have friends. The ancient hostility and competition between the populations of the Nile and the Tigris and Euphrates valleys, which were recounted in the chapters of the Old Testament, have been going on ever since, and are there now. The atmosphere in Bagdad is friendly—quite different from that in Cairo or Damascus. The Iraqis are Arabs with a very large Khurdish population. They are very intelligent people, and they have been brought in with the Arabs very sensibly and liberally. That has had much to do with the build-up of the much more friendly situation in Iraq.
It has been most interesting to see that in the last three weeks the three kings of Jordan, Iraq and Saudi Arabia, have been consulting together in Bagdad. They are not democrats as we understand them, but after travelling in those countries for many years I have come to the conclusion that the democracy that we have built up over centuries does not go down very easily in these countries. The only result is that corrupt people and party manipulators of the worst kind gain control. We have had our troubles and it has taken us several hundreds of years to get over them. They are only Just beginning, and a strong Government is necessary.
It is not for us to be squeamish and give lectures on democracy to this Government or that. The point to consider is whether a dictator is friendly to the other countries of the world. Does he agree to work with them? Is his sovereignty to be limited, or is it to be completely unlimited, which would mean that he would say, "I shall do what I like with my own"? Out of this situation I believe can come good, but it needs a Government with a long-term policy. It was once said by Lord Salisbury that

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in foreign affairs we must use large maps and have great patience. We need an abundance of patience now.
7.41 p.m.
Mr. Gilbert Longden: It is always extremely refreshing to hear what the hon. Member for Gloucestershire, West (Mr. Philips Price) has to say to the House. But I must take exception to his references to Tory imperialism. That was a piece of partisanship which was quite unjustified. If it means anything, "imperialism" means that a country goes into a foreign place and seizes part of that foreign territory for itself and stays there. There was nothing of that kind advocated by us in Abadan. What we advocated there was that the Government should take effective steps to protect British interests. That was all. If that is what we are accused of, I do not complain.
Mr. Philips Price: We got that security another way.
Mr. Longden: Not wholly.
I wish to show why I oppose the Motion before the House. We are asked by Her Majesty's Opposition to express concern at the outcome of the Suez Canal policy and to deplore the damage to British prestige and economic interests. Were I to support that Motion, if sufficient hon. Members supported it, it would mean that the Government would have to resign, and that the people of this country would be given the glorious opportunity of transferring the future conduct of our foreign policy into the hands of the party opposite. That is the first thing which must be grasped by hon. Members who propose either to vote for this Motion, or to abstain from voting against it.
Mr. R. J. Mellish: Does the hon. Gentleman then freely admit that, were there to be a General Election, we should be the party returned to office?
Mr. Longden: I am sorry, my hon. Friend was talking so loudly that I could not hear that intervention.
Mr. Mellish: Then may I repeat it? I know that the hon. Gentleman's hon. Friend talks much too loudly. Does the hon. Gentleman freely admit that were there to be a General Election now, the Labour Party would be returned to office?
Mr. Longden: I do not admit any such thing. I said that there would be the risk of such an event, and I am not prepared to take it.
To review the outcome, I must go back to last July. Ever since Nasser took control of Egypt he has made no secret of his intention to unite the Arab world, from the Atlantic to the Persian Gulf, under his leadership with the primary object of kicking the Israelis into the sea. Memories are very short. People forget these things and what the situation was like last July. Then, a million refugees were rotting—they still are, I regret to say. Arab-Israeli relations were as bad as possible, short of war and people were being killed every month on the borders of Israel. Then, on 26th July, Nasser seized the Canal at pistol point.
Without entering into the ideological merits of nationalisation, may I say that I do not think that anyone can possibly deny that that was a flagrant denunciation of an international engagement which he had himself ratified only two years before and which still has twelve years to run? Nevertheless, the British Government recalled that one of the objects of the United Nations Charter is
" to establish conditions under which justice, and respect for the obligations arising from Treaties … can be maintained."
Mr. K. Zilliacus: Including the Charter?
Mr. Longden: I said that that is one of the objects set out in the Preamble to the Charter.
We scrupulously observed the terms of the Charter. We acted under Article 33 and then under Article 37. The outcome of that policy so far has been the six principles of 13th October last, and that is not, I think, an outcome which should cause us undue concern. Meanwhile, the Israelis, goaded into action by the inflammatory and murderous threats daily poured out from Cairo radio—I have in my possession some hundreds of sheets of extracts from Cairo Radio broadcasts at that time—decided to strike before Nasser's plans could fructify further, and who shall blame them?
To suggest that this action was taken in collusion with Her Majesty's Government is to carry naiveté to the extreme limit and I believe that that ridiculous canard is now dead. The very last thing

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the Israelis wanted was to be stopped just as they were on the point of wiping the Egyptian Army off the face of the map—four Israeli prisoners, 8,000 Egyptian prisoners! Yet we did stop them, and by armed force. Why?
Mr. Janner: May I interrupt the hon. Gentleman and ask why the party opposite did not allow the Israelis to carry on? They had right on their side.
Mr. Longden: The hon. Gentleman is preventing me getting through my speech and the next thing I was going on to was to tell him why. We prevented them by armed force. Why? I said I was going to answer the question. To find the answer, I prefer not to go either to the leaders of Her Majesty's Opposition or to the editor of the Manchester Guardian, the Observer or the New Statesman, or any other editorial opinion. I prefer to go to the source. This is the reason, as given by Sir Anthony Eden to this House at the time:
" Her Majesty's Government and the French Government have accordingly agreed that everything possible should be done to bring hostilities to an end as soon as possible. Their representatives in New York have, therefore, been instructed to join the United States representative in seeking an immediate meeting of the Security Council. This began at 4 p.m." —[OFFICIAL REPORT, 30th October, 1956; Vol. 558, c. 1275]
Sir Anthony also said:
" We certainly should not wish to keep any British forces there … for one moment longer that is absolutely necessary to deal with this immediate situation."—[OFFICIAL REPORT, 30th October, 1956; Vol. 558, c. 1275–7.]
He also said that of course, British and other troops would be withdrawn once the hostilities ceased. Then, two days later, on 1st November, Sir Anthony Eden said:
" We do not seek to impose by force a solution on the Israeli-Egypt dispute, or the Suez Canal dispute, or any other dispute in the area… The first and urgent task is to separate these combatants…. That is our purpose. If the United Nations were then willing to take over the physical task of maintaining peace in that area, no one would be better pleased than we."—[OFFICIAL REPORT, 1st November, 1956; Vol. 558, c. 1649.]
I do not think that even his political opponents have ever accused, or will ever accuse, Sir Anthony Eden of deceit. That is what he said and that I believe is what he meant.
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Those two purposes were fulfilled. That is part of the outcome of the policy which, today, we are asked to deplore. There was a very real danger, as near a certainty as anything could be, that the whole of the Middle East, aided and abetted by Soviet material and moral aid, would have been at war. I think it strange that lovers of peace should feel concerned that that danger, at any rate, was avoided by the action which we took. I find it strange that anybody on the benches opposite should feel concerned that the United Nations has been goaded into doing something instead of having to indulge in futile palavers during two hundred sessions of the Security Council while the situation they were supposed to be curing got steadily worse. I find it strange that anyone in this House should feel concerned that, at long last, the United States of America has had its eyes opened to the realities of life in the Middle East and is prepared to share part of the burden.
When those two objectives had been obtained we withdrew our forces. Why? The hon. Member who asked me "why" before is now going out of the Chamber, so he will not do it again. We withdrew our forces because, as Lord Salisbury said in another place, on 11th December:
"…in my view, for what it is worth, we could not with any shred of honesty have gone on after the objects for which we had landed had been achieved."— [OFFICIAL REPORT. House of Lords. 11th December, 1957; c. 849]
I would commend that judgment to my dissenting hon. Friends. They may legitimately wish that the Government had had other intentions, but surely they cannot blame the Government for not doing what they never intended to do.
After the cease-fire, and without the smallest justification, Nasser deliberately sabotaged the Suez Canal, and so caused the failure of our third objective, which was the wholly laudable one of maintaining this international waterway open to world trade. Unless one judges solely by results, it seems a little hard to blame the British Government for that. The Canal would certainly have been blockaded if the Israel-Egypt war has been allowed to continue. Now that, thanks to the United Nations, the Canal is open again—
Mr. Janner: I do not want the hon. Member to think that there is any discourtesy, but I have to be at a meeting

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in a few minutes' time and must leave. Do I understand from him that he agrees that Israel was not the aggressor—as I think—but, nevertheless, ought to have been stopped from settling the difference between herself and Egypt in a legitimate manner, in view of the fact that she had been attacked?
Mr. Longden: I agree with the hon. Gentleman, for what my opinion is worth, that Israel was not the aggressor in the true sense of that word. I think that the Powers who had forces on the spot were right to stop the war, because it would have spread and endless human suffering would have been caused.
Now, thanks to the United Nations, the Canal is open again; and since it is clear that 90 per cent. of the other users have not the power, even if they had the will, to boycott it, I imagine that no one in this House suggests that we should deliberately damage our own trade by the self-inflicted wound of a unilateral boycott. I agree with the description by The Times this morning of the general feeling on these benches that
"The Government's decision is one to which there is no sensible alternative at this stage."
As to our prestige, which, also, is mentioned in the Opposition Motion, I can only say that at Strasbourg I detected no sign that it had suffered damage in Europe. We heard from the hon. Member for Attercliffe (Mr. J. Hynd) about the wise things that the Commonwealth Prime Ministers had said, but he did not actually quote them. With the permission of the House, I will quote three brief statements by Commonwealth Prime Ministers at the time:
"There never was any danger that the association of the older members of the Commonwealth would have broken up"
That was said by Mr. Lester Pearson, in Ottawa, on 3rd December.
"British action in Egypt has not been directed towards a return of Colonialism in the Middle East but was a sincere …effort to ensure free passage for all nations through the Suez Canal."
That was by Mr. Suhrawady, in Karachi, on 2nd December.
"I do not think that India and Ceylon should withdraw from the Commonwealth as a protest against British action in Egypt."
That was by Mr. Bandaranaike, in New Delhi, on 11th November.
As for America, all reports reaching me agree that the ordinary American
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citizen is much more sympathetic to us than he is to his own Administration. But I cannot find it in my heart to blame the State Department, greatly though its policy has damaged us, because I sincerely believe—and this is not uttered in a spirit of party rancour—that history will show that far greater damage to our cause was done, and far greater comfort and succour was given to Nasser, by the words and actions of Her Majesty's Opposition.
As to our economic interests, I shall content myself by saying that if we are to shoulder the duties and responsibilities of a great Power, we must be prepared to pay something for doing so.
In conclusion, I turn to my hon. Friends who have resigned the Whip, and I would say to my hon. Friend the Member for Ealing, South (Mr. Maude) that it is not only sad for him but sad for all his old friends on these benches, too. But I listened in vain—and I listened very carefully—to hear what he would have us do, not what he would have us do if we were living before the First World War, but what would he have us do now. All that I could understand from his speech was that he would take the matter to the United Nations. But it is there. I am quite sure that, while there should be no force without justice, there can be no justice without the sanction of force. I also believe that even when the cause is just, that force should normally be used not unilaterally but collectively.
So we have handed over the vexed and dangerous problems of the Middle East to the United Nations, and there is no reason at all why those problems should not be solved without war. The first of those problems is Nasser himself—and let no one here imagine that he has got away with it. I regretted to hear my hon. Friend the Member for Ealing talking about Nasser's triumph. It will be all in the Cairo newspapers tomorrow. But it will be quite untrue. I would leave Nasser to stew in his witches' brew. I fear that the people of Egypt will have to suffer severely for Nasser's crimes.
The recognition of Israel, within negotiated and permanent boundaries; the refugees; and the future of the Canal, remain to be solved. The United Nations should be able to solve the latter of those problems, which includes Israel's

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right to use the Canal like any other nation. I agree with the Sunday Times that
" A touchstone of the United Nations integrity and effectiveness is its response to Egypt's treatment of Israeli ships."
Never in its brief history has the United Nations had a bigger or better chance. If its members—and they include ourselves—fail to take it we may have to contemplate withdrawal, and a relapse to the age-old, but, I had hoped, discredited, principle that might is right.
I shall have no hesitation whatever in going into the Lobby to support my right hon. Friends tomorrow night.
8.0 p.m.
Mr. Desmond Donnelly: The rather naïve defence of the Government's intervention in Suez which has just been made by the hon. Member for Hertfordshire, South-West (Mr. G. Longden) will deceive nobody but himself.
His thesis was that Sir Anthony Eden announced the ultimatum and in the same sentence said that the United Nations were being informed of the ultimatum. That was a most extraordinary way of saying that that put Sir Anthony Eden completely in the right. In my view it amounts to saying that when the burglary has taken place the burglar telephones the police. In most crime annals that would be described as a bad burglary. It is a burglary and nothing else. It is no justification for the crime. The hon. Gentleman said he believed that American public opinion was more sympathetic to us than was the point of view of the State Department. Doubtless that would explain why President Eisenhower won the Presidential Election in the middle of the crisis.
The hon. Gentleman also referred to the question of collusion and said there could have been no collusion because the Israelis did not like what happened. It is true that the Israelis did not like what happened, but that does not mean that there was no fore-knowledge on the part of the British Government. In the statements that we have had from the Government Front Bench there has been no specific and categorical denial that Her Majesty's Government had any foreknowledge of whether or not an attack
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was going to take place. A reference was made to the Bromberger disclosures. These were most interesting in themselves, but I urge the hon. Gentleman to look at those disclosures.
Mr. Beresford Craddock: The hon. Member for Pembroke (Mr. Donnelly) has said there was no denial in this House of collusion with Israel. I heard the last speech made in this House by Sir Anthony Eden, and in it he gave a categorical denial to the accusation of collusion.
Mr. Donnelly: I also heard the speech of Sir Anthony Eden, the last he made. He did not say that he had no specific fore-knowledge. That is quite a different matter from collusion. I was saying "fore-knowledge". If the hon. Gentleman had listened to what I said he would know that was the word I used.
Mr. Longden: How can there be foreknowledge without collusion?
Mr. Donnelly: They are quite separate things. The British Government undoubtedly made their dispositions from it and a whole chain of events flowed from it.
Mr. Longden: How can there be collusion if there was no fore-knowledge?
Mr. Donnelly: There might not have been direct contact between the British and Israeli Governments. The contact may have come by the French Government. That is a way in which to have fore-knowledge without collusion, and that is the point I am seeking to make.
The essence of what the hon. Member for Hertfordshire, South-West was saying exposes his dilemma in this debate and the dilemma of the Government all along. He said that on 26th July Nasser seized the Suez Canal at pistol point. That gives it away, because the mistake that has been made all along, and which has bedevilled the situation, is that the Government have confused ownership of the Canal with freedom of passage through the Canal. That is what has made our British position so difficult. Had the Government confined themselves to securing freedom of passage it would have been an entirely different matter. That is the difference in this issue which has led to all the subsequent mistakes and misunderstandings.

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Interesting references were made this afternoon by the Prime Minister to practical proposals which might be taken now. My right hon. Friend the Leader of the Opposition referred to the financial arrangements and negotiations which should be entered into with the Egyptian Government from now on. There is nothing I would add to what my right hon. Friend said about the financial implications of these arrangements, except that nothing that the Prime Minister said gives one any confidence that these negotiations will be any better conducted in future than negotiations have been conducted in the past.
One ray of hope I found very interesting in the Prime Minister's speech concerns the practical proposals which he proposes to set in motion; too late, maybe, for some people. They should have been done long ago; but nevertheless everybody will agree that it is better that they should come now than not at all. The practical proposals concern the conveyance of the oil and securing against the vicissitudes of the administration of the Canal. This problem comes under three main heads. The first is the actual need. Last year about 115 million tons of oil came from the Middle East; 75 million through the Canal and 40 million through the various pipelines. The estimated demand is that by 1965, which is about as far as one can estimate at the moment, from 175 million tons to 225 million tons will be needed for Western Europe.
How is that gap to be bridged? First, there is the problem of getting the oil from the Middle East, either in pipelines, through the Canal, or via the Cape. It has been reckoned that unless the Suez Canal can be extended and substantially altered 75 million tons a year is very nearly the optimum amount of oil that it can carry. Therefore, there will have to be alternative sources of supply in the form of pipelines or via the Cape. There has been a suggestion, to which my hon. Friend the Member for Gloucestershire, West (Mr. Philips Price) referred, of a pipeline running right across the northern tier of the Arab countries, from Kuwait, through Persia to the Turkish coast. That has been estimated to be able to carry about 70 million tons a year.
There has been nothing from the Government about Government policy to
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stimulate these new pipelines or about the security of the pipelines. Although the proposed pipe does not run through Syria or Jordan, security problems are involved. There are other alternative possibilities, such as the extension of Tapline by about 10 million tons. Other ideas have been mooted. I would like a statement of policy from the Government to show what they are doing so that we are not dependent on the Suez Canal in 1965, and that action has been taken along these lines.
The next thing is the question of tankers and super-tankers to which the Prime Minister referred. He did not make it clear whether the tanker capacity would be adequate by 1965 if we had to take a substantial proportion of the oil via the Cape. To carry 100 million tons of oil from the Persian Gulf to Europe by Suez requires about 14 million deadweight tons of tankers, and to carry the same quantity by the Cape would require another 7½ million tanker-tons. Is attention being paid to this increase in tanker capacity? Is it enough? What is to happen about the capital investment, which is estimated at £500 million? Are the Government satisfied with the arrangements for building the new tankers and for dockyards to accommodate these tankers, and whether the dockyards are adequate to the demand which is foreseen in the next fifteen or twenty years?
The important third question which I would ask the Government is a constituency matter. Milford Haven is the oil port to which the Prime Minister referred this afternoon when he announced that a conservancy authority was being set up. What other arrangements and what physical stimulation is being given by the Government to see that not only Milford but other possible oil ports are being refurbished to take these large supertankers? What arrangements are being made to take the oil away from these ports? Where is it to be taken? What are the oil refinery arrangements? We should like a statement of policy on these matters as soon as possible. My impression of the Milford Conservancy Authority, which is only one example of the problem, is that while arrangements are being made for the disposal of the oil, very little is being done about practical stimulation of further development. It is still in the embryonic stage. We want

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physical action to be taken. We want to know what is to happen about this Conservancy Authority and the other authorities. I would far rather have them called "development authorities" than "conservancy authorities", because we are really interested in development.
Thus, the first real, comprehensive question is, is it the Government's intention, and is it within the terms of reference of the appointment that was announced this afternoon, that the Prime Minister's new oil adviser will take into consideration all these arrangements such as the physical transportation of the oil, arrangements for the tankers' disposal of the oil when it comes here?
The next question is this. It is all very well talking about the physical arrangements for the transportation of this oil, but what about the political arrangements for seeing that the Middle East is in a state in which we can actually get the oil? It is no good having tankers, pipelines and refineries if the political turbulence in the Middle East is such that the extraction and sale of the oil to Western Europe is impossible. My right hon. Friend the Leader of the Opposition mentioned the question of the Jordanian refugees and I would stress that point. Unless action is taken now—by the end of June—to see that adequate money is available, the whole of Jordan could easily be in flames in a very short space of time and the damage caused would be infinitely greater than could be met by the amount of money required by U.N.R.E.F. at the moment. I understand that the British and American Governments are waiting to see what other countries are to contribute so that they can arrange their contributions proportionately. That is not enough, because time is running out. I urge the Government to give an answer in this debate on this vital matter.
The next question which arises in this political discussion is on the problems which have been created by the American aid given to the Middle East. I agree that when a Power vacuum is created it may be temporarily essential for another Western country to seek to fill it, but the difficulty about the present arrangement of American aid is the way in which it has been given and the long-term effects it is
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likely to have in the Middle East. It may mean simply that one unpopularity is substituted for another unpopularity. The great danger is that while President Eisenhower might be buying the sheikhs and the harems Mr. Khrushchev is winning the men in the bazaars. That is constantly the danger of the whole of the Middle Eastern position.
It also is the problem which arises out of any aid canalised through the United Nations. If aid goes through the United Nations—quite normally and properly because it is a public international body—there are always strings. I do not mean political strings, but administrative strings. It says that it is better to do this or that and, as a result, the Arabs, feeling sensitive, become disgruntled about the aid granted to them in that form. So United Nations aid has some limitation.
What are the possible alternatives? Even if we have substitute routing of the oil through the Middle East, that will also create problems in the Middle East. If we ignore Jordan and Syria and route it through other territories, there may be pressures in the Western countries to cease giving economic aid to some of these countries which are no longer directly on the line of the oil. Political problems would result which ultimately would be damaging when they spread from those other countries which had been temporarily ignored. What we must be careful about is not so to safeguard our oil supplies as to create for ourselves new political problems in the Middle Eastern countries. I want to know the policy of the Government on that.
My solution is to create a position in which there is a direct relationship between the money paid from the West to the Middle Eastern countries and the actual standard of life of those countries. That is the only long-term, practical solution which would preserve the pride of the Asian and Arab nationalists and the only way in which they would not feel that they were being given either Danegeld or mere dollops of grants which continue to make them dependent on the West. This is a very subtle, a very difficult, and a long-term problem. It is not a matter which can be settled entirely by the Western Powers from the outside; it has to grow from the inside.

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One of the most satisfactory forms of development has been the Iraq Development Board. That kind of authority has done more than anything else to preserve the régime of Nuri in Bagdad. Without the Iraq Development Board the political turbulence in the Middle East might well have engulfed the whole area. We want more such development boards. We should not impose that on those countries, but that is the way in which our policy should be directed.
As to the oil companies themselves, I should like to see a much more active policy on the part of the oil companies with which this country is associated, not towards payment of royalties to those Arab countries but towards more joint ventures with those Arab countries. That would give them the feeling that they had a stake in the development and they would be more likely to preserve what is being created. In the slowly growing democracies—they are very slow-growing and cannot be judged by Western standards because the number of people who actually have political consciousness or ideas of how to make democracy work in those areas is very small—that kind of joint venture is one of the things which can play a most positive part.
Our real charge against the Government is that we set out on this road of understanding and co-operating with ancient nationalisms that were growing up and the venture of Suez expended the political capital we had created by the new concept of Commonwealth. That is really the fundamental difference between the two sides of the House. At no stage have we ever condoned Colonel Nasser's behaviour or his political aggrandisement policy. It is quite untrue for any hon. Member opposite to say that we did. It is equally untrue for the right hon. and gallant Member for Leicester, South-East (Captain Waterhouse) to say that it was the action of the Leader of the Opposition which had left the British Government in an impossible position and compelled them to follow a policy which ultimately led to this situation. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) said quite clearly on 2nd August I will read it again from the record, as it cannot be said too often—
" I must, however, remind the House that we are members of the United Nations, that we are signatories to the United Nations Charter,
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and that for many years in British policy we have steadfastly avoided any international action which would be in breach of international law or, indeed, contrary to the public opinion of the world. We must not, therefore, allow ourselves to get into a position where we might be denounced in the Security Council as aggressors, or where the majority of the Assembly were against us."—[OFFICIAL REPORT, 2nd August, 1956; Vol. 557. c. 1616–7.]
There could be no more clear warning for the Government. [Interruption.] That has been the position of the Opposition all along. The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) might not like it but, unfortunately, he has referred to only one part of the speech and paid no attention to the safeguarding clauses. Many hon. Members opposite did the same, but this has been the consistant view of the Opposition. There would never have been this situation if the Government had taken into account the external political feeling, defence requirements and also the internal feelings of the British nation, but the Government flew in the face of the existing facts.
The last part of my remarks tonight are directed to hon. Members on the Government benches. As the right hon. Member for Woodford (Sir W. Churchill) once said, the use of recrimination about the past it to ensure effective action in the present. I do not want to refer to Sir Anthony Eden; there are special circumstances about him. He is not here to answer for himself. We all feel sorry about his ill-health, but that does not mean in any way that we condone the action which he took, nor does it mean that we in any way withdraw from the criticisms which we uttered. Nor does it prevent us from criticising the right hon. Gentlemen who are in Government today who sustained Sir Anthony Eden during his period of office, spurred him on and condoned his action.
First of all, there is the Foreign Secretary. I am sorry that he is not now in his place. The Foreign Secretary has the most extraordinary capacity for winning friends and influencing people throughout the world. When he went to Khartoum there were riots. At Bahrain he was stoned. When he went to America the President refused to see him. Without any question, in the current vernacular, he has earned the title of the worst Foreign Secretary we have.

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I should like to ask the Minister of State, who is here representing the Foreign Secretary, to bring to the Foreign Secretary's notice this specific question. British troops did not leave Egypt until the middle of June. The period in which Shepilov and the Chairman of the British Transport Commission went to Cairo for the final handing over ceremony was not until the 16th— 17th June, if I recollect correctly. But well before that a very clear warning appeared in the British Press as to the course of events which was likely to follow the moment that British troops left the Middle East. Here is a statement published in The Times on 5th June and sent from their Cario correspondent on 4th June:
"The Egyptian Government's representative on the Suez Canal Company Board, Burhan Said, declared today that Egypt will not extend the Company's 99-year concession which expires in l968. 'The concession will not he extended a single second, and the Government already has plans to take over the Company management at midnight on 16th November. 1968', he said."
If they already had plans before the British troops left, what action did the Foreign Secretary take, in view of the subsequent chain of events, to warn his colleagues in the Cabinet of the dangers involved? It would not have required very much perspicacity to have realised the implications of a statement by Egypt that they already had plans to take over the Suez Canal. "Already" means "already", as subsequently transpired to be the case. Will the Minister of State ask his right hon. and learned Friend how he explains his dereliction of duty to the British nation in failing to take proper measures in this respect?
Secondly, we have the Prime Minister. On his own admission today, the Prime Minister accepted his collective responsibility with all his colleagues in all the actions which took place. It is no good the Prime Minister imagining that he can escape all culpability simply because he floats into the House of Commons on a sea of ration-free petrol eating the Eden hat. The right hon. Gentleman's apologia this afternoon is not enough for condoning his own responsibility.
The fact is that he said he was for the action in the first place, but the moment the economic implications of it were laid before him on his desk in the Treasury he turned against the decision for which
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he had personal responsibility. The right hon. Gentleman has never explained himself on this. He will have to explain himself to the British electorate ultimately for his personal responsibility in the Suez venture, for the political miscalculations, the military blunders, the economic catastrophe and the moral crime. I do not say that Suez was a folly; I say that it was a crime and that the Prime Minister is among those who are personally responsible.
I do not want to go into the question of those who urged him on—the Suez group. The right hon. and gallant Member for Leicester, South-East has made his speech this afternoon. It was not very relevant to the situation. He referred to the "dancing major." I think that all it amounts to is that we have had the "talking captain" in the House, and I hope the "talking captain" feels satisfied with the damage which he has done, not only to his party but to his country, as a result of the irresponsible talk by himself and his hon. Friends in the House over the last few months. Nothing condones their responsibility either.
But the worst responsibility of all rests upon hon. Members opposite who knew that this Suez policy was wrong, realised its damage to our country and what it would do to the future position of the country in the world, and failed to take action. Speaking in the House on 17th November, 1938, the right hon. Member for Woodford (Sir W. Churchill) said:
"…hon. Members above the Gangway—pledged, loyal, faithful supporters on all occasions of His Majesty's Government—must not imagine that they can throw their burden wholly on the Ministers of the Crown. Much power has rested with them. One healthy growl from those benches …"—[OFFICIAL REPORT, 17th November, 1938: Vol. 341, c. 1129.]
Similarly, one healthy growl from the benches opposite would have changed the course of British history.
In the event, what happened'? The political cowardice of hon. Members overcame their principles and their patriotism. If they had taken action then they could have saved this country from irreparable damage. It will take a whole generation to overcome that damage. That is why we on this side of the House are quite unbending in our opposition to the actions which have taken place and

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why we have every intention to have recriminations about what has happened so that we can have effective action in the future.
This Suez story is not over. Some people say that it will not be an issue in the future. They are quite wrong. Suez will be an issue for a generation, just as Munich has been an issue. It will be argued about and discussed, and the consequences of the Suez venture will be a perpetual challenge to future British Governments. The practical point is that as soon as there is a General Election there will be a Government which is likely to meet this challenge in a very different spirit and with a very different conception of what is right in the world and how to attune ourselves to the legitimate aspirations of the uncommitted areas of the world.
I appreciate that the noble Lord, the Member for Dorset, South does not like this, but it is no good him taking his politics from some romantic novel of John Buchan. It is far more important for him to attune himself to the realities to which the Government Front Bench have had to attune themselves this week. Does he think they like to come in here to admit their blunders? They had to do it. They had no alternative. We accept that, but we have no intention of allowing this issue to drop until the men who were responsible for it are driven from the Government Benches.
8.26 p.m.
Mr. Richard Sharples: I am sorry that the hon. Member for Pembroke (Mr. Donnelly) finished his speech on such a bitter note. I listened with interest to what he said earlier, when I thought he made some constructive suggestions, but to introduce a note of such bitterness into this debate was, I think, most regrettable.
My right hon. Friend the Prime Minister came to the House this afternoon and had the courage to paint a picture which was, let us face it, fairly black. He made no bones about it whatever. He did not attempt to paint a picture to show that the operation had been an unqualified success. I am glad that he made it quite clear that he stood firmly behind the decision which was taken, and that he did not in any way attempt to wriggle out of it or to put the blame for anything upon his predecessor.
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The picture is far from satisfactory, and we must admit it. We arc today no nearer a solution of either the Arab-Israel dispute or of the Suez Canal question than we were at the beginning of the operation. Sir Anthony Eden, when he was passing through Panama on his way to New Zealand, said that. It is a fact and it must be admitted. Moreover, we still have not solved the problem of the refugees, a problem which must be solved if we are ever to have a solution of our other problems in that area.
The question of the Israeli shipping has bedevilled the Suez Canal problem for far too long. Both the Labour Government and the Conservative Government are to blame for not having taken a firmer stand over this matter, and not only are the British Government to blame, but the United States Government as well, who, throughout this period, have never taken a firm line upon the question.
Mr. J. Hynd: The hon. Gentleman has referred to the responsibility of the Labour Government for not carrying out the U.N. decision on Israeli shipping, but was not that decision taken only about three weeks before the Labour Party left office?
Mr. Sharples: The problem originally arose in 1948.
Mr. Hynd: Not the U.N. decision.
Mr. Sharples: The problem had been known ever since 1948.
Mr. Hynd: Labour left office in 1951 and it is now 1957.
Mr. Sharples: No firm line was taken upon the matter whatsoever. The time to enforce it was immediately the U.N. decision was made, and that was the time when the Opposition were in office.
Mr. Kenneth Pickthorn: Would my hon. Friend also remind the House of those Resolutions of the United Nations which have not been obeyed by the Israeli State and about which nothing has been done by any British or American Government?
Mr. Sharples: I will not be drawn by my hon. Friend into an argument about that.
I see on the tape tonight that the proposal has been raised again of the sending by Israel of a test ship through the

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Suez Canal. I hope very much that Israel will do this, and that we shall make it quite clear that if there is any question of its being stopped, we shall support Israel in the United Nations, and that if other nations are not prepared to raise the question we shall ourselves assist Israel to have the matter raised in the United Nations.
Reference has been made in this debate to the Nile waters, and I think that at this stage we have to make quite clear our attitude on that matter. We cannot afford to get into a long legal wrangle about the Nile waters, and we should make it quite clear now that we intend, if we have to, to use those waters as a bargaining point in getting international disputes in that part of the world settled, if other nations are not prepared to come to reasonable terms.
One matter I would particularly draw to the attention of my right hon. Friend is that of the compensation for British citizens who have been displaced from Egypt, and the question of their property. It is not good enough to say that we shall deal with cases of hardship. It is not a question of hardship with which we are concerned. These people are a definite responsibility of Her Majesty's Government. It is for the Government to ensure that their rights are upheld.
I turn for a moment to the longer-term problems. My right hon. Friend the Prime Minister has spoken of the need to find alternative means of getting the oil from the Middle East without having to go through the Suez Canal. I hope that we shall press on hard with the effort to solve that problem and that we shall give priority to the building of larger tankers and give full support to the building of the alternative pipeline. We must also consider the problem of providing suitable docks for the reception in this country of the oil carried by these large tankers.
At the same time, we should look at the long-term prospects for the oil-producing areas. In some way or another we must try to bring Arab friends in the area into some sort of partnership in oil production, not only from the point of view of providing revenue for the Arab countries but in order to give them a share in the responsibility for that oil production. I believe that that
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can be done, in the end, only by some form of partnership.
Many lessons are to be learned from what has happened during this period. One of them, certainly, is the military lesson that we must never again find ourselves in a position in which the only strategic Reserve we have is dependent upon the call-up of reservists. That simply is not good enough. We must also look into the question of why it was thought necessary to use the enormous sledge-hammer of the operation which was mounted to crack so small a nut. Some of the fault lies with our top-heavy military organisation. I hope that we shall never again find ourselves in that position.
I believe that what we have learned from what has happened during recent months gives us an opportunity to work out now a real long-term policy again for the Middle Eastern areas. We have also learned from Suez and from Hungary that there is today no rule of law for the settlement of major political disputes between nations. One of the main points of our policy in the future should be to try to find means of establishing a real international rule of law for the settlement of disputes of this kind.
8.40 p.m.
Mr. K. Zilliacus: I agree very heartily with the closing sentiments of the hon. Member for Sutton and Cheam (Mr. Sharples), and also with the beginning of his speech, in which he enumerated the problems that remain and the failure to solve them. But I believe that if we are to face honestly the problem of establishing a rule of law in these matters we must dig a good deal deeper to find the causes of this failure and to decide, on the basis of an accurate estimate of those causes, what we ought to do.
This is not just a failure in the Suez Canal; it is the end of a traditional policy in the Middle East, a policy that rested on two main points. The first was that the Middle East was treated as a kind of preserve after the war for this country and the United States jointly, and we were concerned to keep the Soviet Union out of the Middle East and bottled up in the Black Sea. That is a policy which goes back to the Crimean War, or even earlier.

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The second part of the policy, and the immediately important one from our point of view, is to secure access to the oil resources of the Middle East. That we have identified up to the present with retaining possession of those oil resources in the hands of Anglo-American oil companies, with a tendency for the American to supplant the Anglo side of that arrangement, and to support such rulers of those countries as are prepared to leave their oil resources in the hands of oil concessionaires in exchange for support, if necessary, against the inclinations of their own people for more social justice, for less poverty, and for freedom from foreign rule.
The two great forces in the Middle East, indeed throughout the world, and particularly the Asian and African nations, are the forces of nationalism and the desire of those who are desperately poor, ignorant and backward to try to catch up with the modern world. The tragedy of Western policy is that we seem more and more to be literally putting our money on those who are treating those forces as enemies and trying to repress them.
As my hon. Friend the Member for Pembroke (Mr. Donnelly) said, we are supporting the sheiks in their harems whilst the Soviet Union is supporting the man in the bazaar. There is no reason why we should identify ourselves in the Middle East with the very people and the very forces that have no future, that are bound to go down. We need not really be afraid that if the more modern-minded Arabs and others in the Middle East who have a desire for social change and for modernisation of their countries, and have a desire to run their own countries, get their heads, and get into control of their countries, that they will fall under Soviet domination.
They will not. Their one desire is not to be run by other people, either the Russians or the West, and our weakness is that we keep on trying to gather them into the Western fold and retain some form of control over their countries; whereas the Russians say, "You can have arms, you can have economic and technical aid, provided you stand on your own feet. We do not want you to join our camp." This is a much subtler way of going about it than our way. At one time it looked as if we were beginning to learn that
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lesson until we knocked ourselves out in Suez. Now the Americans have taken over in a much cruder and much more extreme form under the Eisenhower Doctrine.
This criticism I am making is a criticism of the foundations of our Middle Eastern policy. The situation was bad enough before, but the Government made it worse by going in for the northern tier of alliances, the Bagdad Pact, which meant that we were trying to establish air bases within twenty minutes' flying time of Soviet territory and Soviet oilfields and coalfields. Of course they were not amused by that, Of course they felt they must do something about it. What they did was to back Nasser, as a disconcerting and successful counter-stroke.
The next thing that happened was that Mr. Dulles made his offer to help Nasser to build the Aswan Dam and then suddenly withdrew the offer. Some people say this was done because of the pressure of the cotton interests, which did not want the cotton-growing area of Egypt to be developed. But I understand that a recent biographer and admirer of Mr. Dulles said he did it on purpose, that he deliberately wanted to humiliate and slap down Nasser in order, I believe the phrase was, "to cut him down to size."
If that was so, it is not the first time that Mr. Dulles has proved a major disaster. What one might expect happened. A regime like Nasser's, a military dictatorship, which lives on prestige and gets slapped down and humiliated, has to do something melodramatic and violent to recover the ground lost and regain its prestige in the eyes of its people. As my hon. Friend the Member for Pembroke pointed out, there had already been warnings from the Egyptians that they intended to take over the Suez Canal Company the moment the concession came to an end. They already had plans: for the purpose. The line of least resistance in the situation created by Mr. Dulles was to advance that nationalisation by twelve years and do it in a one-sided, provocative and flamboyant way.
Even so, as Nasser promised full compensation to the shareholders, and promised to keep the Canal open according to the 1888 Convention, it is doubtful whether in international law he had committed any breach. At any rate, if he had, it was obviously a matter to try

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to settle by reference to the International Court.
On top of that, the Government have now somewhat belatedly discovered that, after all, the Suez Canal was not quite as important as all that. But their actual reaction to the situation was at least as violent and at least as misguided as the original provocative action by President Nasser.
Here the parallel is so close in reverse to the past that I will permit myself to state it in analysing the situation. Right from the outset the Government had what I call a private real policy and a public make-believe policy, exactly as they had in 1935 over Abyssinia. The difference is that then they were trying to appease the aggressor but this time they themselevs were bent on committing aggression. In both cases they had to fool public opinion and manoeuvre other countries by pretending loyalty to the collective system.
The first stage was the idea that they should just crash into Suez and attack it. The French were particularly insistent of that. We were not ready, and held back. That corresponds with the first stage of the Abyssinia episode. The next stage was complications and camouflage. Then the Labour Opposition became active. The United Nations came into the picture. The United States gave warnings, the Russians gave warnings, and so on.
From then on, the Government were concerned to manoeuvre in such a way as to get a free hand for attacking Egypt. The one thing they wanted to avoid was getting into negotiations. They were constrained by the Americans to have the Suez Conference in London. They thought it would be all over in three days and would give them a clear mandate to deliver a sort of ultimatum to Nasser, which he would turn down, after which we could cut loose. It did not work out that way.
There was even the danger of Nasser accepting the invitation to attend the Conference, in which case it would have been difficult to avoid negotiations. But Sir Anthony Eden's broadcast insulting him took care of that, because Colonel Nasser could not come over after that. Then some newspapers reported the fear of the Foreign Office that when the
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Menzies' Mission went to Cairo it might start negotiations. So it was made very clear that Mr. Menzies was only a glorified messenger boy and had no right to indulge in negotiations. Then came the reference to the United Nations under great pressure from the Opposition and from public opinion. We remember the scene in the House and how great that pressure was.
But the Government maintained their private policy all the way through. They had no intention at the United Nations of engaging in any negotiations for a compromise solution. They maintained their position with complete intransigeance. They would not yield an inch of their position. They were definitely looking forward to a breakdown in the. Security Council and claiming that that would give them a right to resort to force, Lord Kilmuir made the claim in Wythenshawe, near my constituency, on 23rd September. Two days later Mr. Menzies in Australia dotted the "i's" and crossed the "t's" and made the claim again.
It is very much like a parallel in reverse with what happened over Abyssinia. I mention this because it shows the kind of methods to which Governments resort in crises of this sort. On 11th September, 1935, Sir Samuel Hoare made a tremendous speech to the League of Nations Assembly, promising steady and collective resistance to every act of aggression in upholding the Covenant. But the day before he had privately assured M. Laval that the Government would not apply any form of economic sanctions that would involve them in the risk of war with Italy. The instruction given to the unhappy Mr. Eden, as he then was, in the Sanctions Committee was never to take the lead and to oppose any measure that involved any risk of war with Mussolini, who was informed of this by Laval, and who thereupon became the invisible but all-powerful chairman of the Sanctions Committee.
An even more interesting thing is the parallel between the Suez Group today and what I would call the "all-in appeaser group" of those days. It was the Suez Group which pushed the Prime Minister into this squalid Suez adventure, and the papers at the time were full of it. It was said that, if he showed any

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weakness or did not go ahead, it was as much as his job was worth, because he would be for the high jump.
Mr. Patrick Maitland: What newspaper said that?
Mr. Zilliacus: The Daily Mail, the Daily Sketch and the Daily Express in September last— [Interruption.] If the memory of the hon. Member opposite is so short, I shall be quite happy to introduce him to the cuttings in question in the Library.
Mr. Patrick Maitland: When the hon. Member says that all the Press at a particular time reported these things about what the Suez Group were telling the Prime Minister, namely, to get on or get out, can he tell us when this happened? I do not remember a single instance.
Mr. Zilliacus: I did not say that all the Press did so. I said that a number of articles appeared over quite a long period containing the threats to the Prime Minister as to what would happen to him if he did not act accordingly in this matter. It is no use hon. Gentlemen opposite trying to wriggle out of it, because it is on the record.
Mr. Patrick Maitland: I am merely asking the hon. Gentleman to substantiate his statement.
Mr. Zilliacus: I am generally accused of giving too many quotations, and I did not bring that one with me, but I can show it to the hon. Gentleman.
The odd thing was that the inverse happened over this business of Abyssinia. When the show-down came on 19th December, 1935, Lord Winterton first accused the Labour Party of being warmongers because we insisted that economic sanctions must be honestly and effectively applied even if that meant running the risk of war. For that we were called warmongers by the party opposite. Having made that charge Lord Winterton said this:
" Hon. Members opposite may laugh at us, the real Conservative party, for our views, but if we thought that that was the real meaning of the Government's policy, which we do not, we would break up the National Government tomorrow."—[OFFICIAL. REPORT, 19th December, 1935; Vol. 307, c. 2061.]
He explained—what was in fact the Government's policy that they only wanted
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to apply sanctions that would not involve them in the danger of war with Italy, and, for that reason, explicitly ruled out oil sanctions.
Then came the showdown in December, rather similar to the showdown here, and Sir Samuel Hoare was sacked to save the rest of the gang, much as Sir Anthony Eden had to go to save the rest of the present gang. In his resignation speech Sir Samuel Hoare had the audacity to make the claim that, by the sanctions swindle and the Hoare-Laval deal for the partition of Abyssinia, the Government had saved the League of Nations and world peace. That is a pretty close parallel to the kind of claim made by this Government, which started by violating the Charter of the United Nations by aggression, and ended up by dragging this country's name in the mud, reducing it to the status of a third-rate Power, and having to swallow the humiliation of accepting worse terms than they could have got without resort to war. They claim that they have saved the United Nations by doing this and have performed a great deed in saving world peace and all the rest of it. The only thing they did not do was to emulate the famous remark of Mr. Baldwin, on 19th December, 1935, when he said.
" I was not expecting that deeper feeling which was manifested by many of my hon. Friends and friends in many parts of the country on what I may call the ground of conscience and of honour. The moment I am confronted with that I know that something has happened that has appealed to the deepest feelings of our countrymen, that some note has been struck that brings back from them a response from the depths."—[OFFICIAL REPORT, 19th December, 1935; Vol. 307, c. 2034–5.]
He claimed that he and his right hon. Friends had never departed from a policy of loyalty to the League of Nations. That is exactly the same mentality as we have in the Government today. Having committed an international crime and blundered into failure, they still maintain the moral attitude or immoral fortitude of the impenitent thief on the Cross. They are quite sincerely indignant that the Opposition failed to support them in their international crime.
This is so important that I will spend a few moments dealing with it, because the implication behind that attitude, and I know that it is a perfectly sincere attitude, is that there is an unlimited duty on the part of the citizens of this country

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to support the Government in any war for any cause in any circumstances. That, of course, is a totalitarian claim. It runs counter to democracy in foreign affairs, and it also runs counter to a new development in international law which goes under the name of the collective peace system.
During the debates on Suez in another place on 12th September, Lord McNair, ex-President of the International Court, put that point very clearly. He said that fifty years ago international law still gave Governments an unlimited right to resort to force in support of their views, but in those fifty years, particularly through the Covenant and, later, through the Charter, there has been a transformation of international law. Now there are definite legal restrictions on the right to resort to force, which means, of course, that now a new international offence has been created, the international crime of aggression, resort to force, contrary to the Charter. So what the claim of hon. and right hon. Gentlemen opposite amounts to is that the Labour Party should become accessories after the fact to the crime of aggression committed by them.
Mr. Richard Fort: Can the hon. Member tell us what definition of aggression is given in the Charter or in any other authoritative statement from the United Nations?
Mr. Zilliacus: The Charter says that there shall not be resort to force except with the authorisation of the Security Council or in self-defence against an armed attack, and any other form of resorting to force is a violation of the Charter and constitutes the crime of aggression. I thought that that was plain enough and well known enough—[HON. MEMBERS: "Korea."] Even a collection of impenitent aggressors should understand that. But I fear that it is too much for them and they cannot get it.
Mr. Patrick Maitland: Who aggressed in Korea?
Mr. Zilliacus: I have always regarded Korea as a Korean civil war—[HON. MEMBERS: "Oh."]—with one side backed by the Soviet Union and the other, side by the United States.
Mr, Bernard Braine: Was that before the hon. Member was re-admitted to the membership of the party opposite?
Mr. Zilliacus: I have never changed my views, and the reason I am back is, thank God, that the Labour Party has stopped following hon. and right hon. Gentlemen in foreign affairs. We have at last realised, as I have realised for a long time—because I saw hon. Members opposite at work at Geneva—that the basis of their foreign policy is a class basis, just as much as the basis of—[Interruption.]They are defending the old order and, in the Middle East, it has come out very clearly that that is the root defect of their policy.
Perhaps I may finish my argument about the collective peace system. This is a fundamental thing. Hon. and right hon. Gentlemen opposite must learn once and for all to accept the fact that no Government of this country any longer has totalitarian powers when it comes to going to war. They must pay attention to the obligations of the collective peace system or they will be met by the most determined resistance on the part of a large body of people, notably those represented by the party on this side of the House.
We are pledged to a world peace loyalty. As long ago as at the annual conference of 1934 and at the Trades Union Congress of the same year we pledged ourselves to put loyalty to the collective peace system above the duty to support the Government in war, and to refuse to support a Government that resorts to war in disregard of its obligations under the collective peace system. It is that attitude that has created a fundamental change, with which hon. Members opposite had better learn to come to terms, because it is part of the realities of 1957. I know that it is very difficult for them to catch up with this century, but it is about time they did so.
The horrifying thing is that they have not learned a thing from what has happened before. They are still committed to obligations which, if they attempted to act on them, would set the world alight in the Middle East. They are committed under the Bagdad Pact, as interpreted by the Government, to do what they call defend the territories of the Bagdad

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Pact signatories against Communist subversion even when masquerading as nationalism. That is from the 1956 White Paper. In practice, that amounts to armed intervention in the internal affairs of those countries if any of these reactionary rulers cannot cope with a rising of his own people.
If they attempt to do that, particularly with tactical atomic weapons—as they threaten to do—they can very easily touch off a world war. In any case, they would be committing again a policy of aggression in violation of the Charter, because that sort of policy is contrary to international law.
Mr. Osborne: The hon. Member says that the policy of the party on this side of the House is based upon a class concept. Does he think that the policy pursued by Ernest Bevin, when he was Foreign Secretary, was based upon the policy that the hon. Member alleges is the basis of our policy, or upon the policy that the hon. Member is now enunciating himself?
Mr. Zilliacus: The House knows very well that I did not agree with Mr. Bevin on foreign policy. I disagreed with him because I thought that we had no foreign policy of our own and were following in the footsteps of hon. Members opposite. I was against it then as I am against the same policy today. I do not say that in any party political spirit. I am looking at the matter from the point of view of fighting for peace and the question of what is right and what is wrong.
As the hon. Member for Sutton and Cheam (Mr Sharpies) said, we should try to deal with this matter through the United Nations—but to deal with it through the United Nations means that we have to deal with the Soviet Union as well as the United States. We cannot deal with this matter on the basis of a Western policy, trying to revive the assumptions and methods of the Crimean War. We have to put forward proposals, for instance, for canalising economic aid through some kind of economic committee for the Middle East of the United Nations. We should try to get agreement between the great Powers jointly to keep the peace through the Security Council, and to control the traffic in arms to the Middle East.
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The Soviet Government have put forward proposals near enough to this kind of thing to make it reasonable to assume that if we put forward proposals of this kind we could in fact work out a basis for negotiation which would be acceptable all round. It is only when the great Powers pull together in the Middle East, on the basis of the Charter of the United Nations, that we establish peace between Israel and the Arab States and work out economic development schemes which will provide an inducement to the Egyptians to behave themselves in connection with the Canal, Israel and their relations with the Sudan. Then we will have some real bargaining power. We have no bargaining power now, and we can achieve only tension and deadlock so long as we persist in this ruinous policy of trying of build up anti-Soviet positions of strength and treat all the forces of change, social justice and nationalism in the Middle East as enemies. We must get rid of these nineteenth century ideas and postulates and come to terms with the new world forces and with the new system of international relationships which is summed up in the United Nations Charter.
9.5. p.m.
Mr. Bernard Braine: I will make only this reference to the extraordinary speech to which the House has just listened from the hon. Member for Gorton (Mr. Zilliacus). Having listened to the implied attack on the policies of the late Mr. Ernest Bevin, and the tissue of misrepresentations of what has happened not only in recent years, but over the last two or three decades, I can well understand why the hon. Gentleman was drummed out of his party in 1948. I cannot understand why he has been accepted back again.
Naturally, in debates of this kind there are sharp divisions of opinion and this debate has proved no exception. I listened with great interest to what the hon. Member for Pembroke (Mr. Donnelly) had to say. His speech was, as usual, witty and provocative. I liked some parts of it; they were constructive and helpful. But there was one thing he said which I think, cancelled out almost everything else. He described the Suez intervention as a crime and said that, of course, by inference we on these benches

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who supported it—I make no apology for our action—are criminals.
I ask the House to look at this from our point of view. Was it a crime to attempt to stop a war that was already raging? Was it a crime to attempt to limit a conflict which, had it spread, might have engulfed the whole world? Was it a crime to goad into action the United Nations which, for eight years, had done nothing except pass resolutions which the various parties concerned in the Middle East defied? Looking back, has it been so very unsatisfactory that the United States, who consistently refused to share responsibility for development and peace in that vital region, has now decided to do what we wanted it to do all along? Is that a crime, or is it an achievement?
As I understood the speech of the Leader of the Opposition, his argument ran something like this: these latest terms from Egypt, which we are now obliged to accept, involve capitulation. They are far worse than any terms we could have expected from the Egyptians as late as October of last year. The right hon. Gentleman said that at that time our ships were passing through the Canal. We were not paying full dues to the Egyptians. Nasser's position was uncertain.
The argument advanced this afternoon by the right hon. Gentleman is, I submit, wholly false for two reasons. As the Prime Minister reminded us this afternoon, the Egyptians at that time were confident that they could rely not only upon Russian support—and, in fact, their confidence was not misplaced in that respect—but also on divisions of opinion in the West.
Was it not the fact that on the very eve of our referring the Suez Canal dispute to the Security Council—an action which, I take it. whatever our other differences, all hon. Members are agreed was right—the unfortunate Mr. Dulles had to tell the world that there were serious differences between the United States and their principal allies over the question of colonialism. What had that got to do with the issue? President Nasser was given every possible encouragement to avoid coming to any reasonable settlement. A reasonable settlement
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was out of court; it never was possible at that time.
Indeed, as the Leader of the Opposition said in a notable speech in this House on 2nd August, it was not any good sitting down round a table with Nasser. He was not in any mood to talk. His aim was to establish an Arab empire, stretching from the Atlantic to the Persian Gulf. It was all very familiar, the right hon. Gentleman told us. We had experienced all this before. It was like Hitler and Mussolini on other occasions. Moreover, the Government had been right to take the precautionary measures they had taken. That was the mood in which the right hon. Gentleman approached the problem following Nasser's seizure of the Suez Canal.
The Times, on the following day, had an account of the debate under the headline:
"Impressive unity in the Commons."
The hon. Member for Gorton was out on a limb in those days, because apparently, according to The Times,
"It would be just to accord that overworked appellation a Council of State' to Parliament's grave and responsible debate on the Suez's issue this evening."
That is how the report started. There follows an account of what the Prime Minister said and how the Leader of the Opposition replied.
The "ratting" started the following day. On 3rd August, I find that the News Chronicle reported that
" Mr. Gaitskell's leadership of the Labour Party over the Canal crisis is sharply attacked in the latest issue of the Bevanite Weekly, Tribune. Under headline ' Stop This Suez Madness.' the main front-page article declares: Mr. Gaitskell's reactions to the crisis were those of the most orthodox Tory.'
The article says Labour ' must fight the Tory plan to bully Egypt, and defend her where her demands arc justified. It must protect Britain from being hustled into the use of force, which would mean acute danger of war '."
This is 3rd August, the day after the Leader of the Opposition had taken a patriotic and responsible stand in declaring that the Egyptian dictator was an aggressor and that his action in closing the Canal was not merely an act of nationalisation, but was a foretaste of aggression to come. Rightly, the Leader of the Opposition had in mind what the Israelis had had in mind for a long time past, that this was one more step in the

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struggle to establish Nasser's ascendancy in the Middle East; one more move in the direction of crushing Israel and driving her people into the sea.
There was no question of the party opposite rising in its wrath some time in September, when it was clear to hon. Members of the party opposite that the party on these benches was bent on bullying Egypt. This happened the day after the right hon. Gentleman's bold stand. I congratulate the right hon. Gentleman. We can all understand his position. "I am the Leader", he said, "I must follow my colleagues". That was the position then—not just on the eve of the military intervention or after it. There was a complete absence of unity from the very first week in August.
Whether the Government were right or wrong in the handling of the negotiations prior to the intervention during August, September and October, at no time after 2nd August did they have the support of the party opposite. I was present in the gallery at the Labour Party Conference, in early October, and I heard the hon. Member for Gorton address the Conference, almost with tears in his eyes, and say, "Comrades, the day I was expelled from the Labour Party, in 1949, was the saddest day of my life". He then went on to say, "Comrades, today is the happiest day of my life, because the bipartisan foreign policy is dead."
Mr. Zilliacus: I said that it was drowned in the Suez Canal.
Mr. Braine: Agreed, I remember the very words. No doubt the hon. Gentleman enjoyed his moment of glory.
If the Suez intervention which followed was such a failure, it is legitimate to ask ourselves why the right hon. Gentleman the Leader of the Opposition taunted us this afternoon? He said that we on these benches blame the Americans, blame the Opposition, and are seeking excuses for our failure. I think that the real explanation was given by the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) on 19th December. I admire the right hon. Gentleman the Member for Ebbw Vale for the simple reason that one knows where one stands with him. He does not run away from the issue. He at least is consistent. He said:
" Hon. Members opposite will now be able to realise that they did not come out of Egypt
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because of the United Nations, or because there was a United Nations Emergency Force, or for any of the other recondite reasons which have emerged from time to time from harassed hon. Members opposite, but because the Opposition would not agree to their staying,"
Later, he went on:
"It is, therefore, true, and I make no more of it, that it was the Opposition, the sharp division of opinion ', which made Her Majesty's Government sensitive to the resolution of the United Nations, and which, eventually led to our having to pull out of Egypt."—[OFFICIAL REPORT, 19th December, 1956; Vol. 562, c.
1400.]
I listened very carefully to the speeches made by the critics of the Government on both sides of the House and I have not heard a single positive suggestion as to what we might have done, or might do in the future. I do not like the decision that the Government have had to take, and I do not think anybody in the country likes it. I would much prefer to have boycotted the Suez Canal. If the users of the Canal had agreed to work together I believe that a boycott would have been effective. At least, it would have been effective in present circumstances.
It would he completely disastrous to "go it alone". [HON. MEMBERS: "Hear, hear."] I do not understand the cheers of the Opposition. My hon. Friends feel in their consciences that they have to abstain from voting for the Government tomorrow. I ask them to consider this. Our foreign policy can be just about as strong as our economic power. It is the outward expression of the inner underlying economic strength of the nation.
Mr. Paul Williams: Would not my hon. Friend agree that there is a possibility, to put it no higher, of renegotiating the Nile head waters agreement? That suggestion has been made two or three times from both sides of the House.
Mr. Braine: I imagine that there is every possibility. I was coming to that point a little later, but since my hon. Friend raises the matter I would point out that the users of the Nile waters are not only the 20 million Egyptians. There are three British territories in East Africa, as well as the Sudan, to consider.
The policy that this country should pursue in this matter, however, should not be one which is wrong in itself. It is contrary to international law to deny

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existing rights of water to people. There has been no question of our bringing pressure to bear unilaterally by denying the Nile waters to Egypt, even if it were practicable to do so. On the other hand, Egypt must be made to understand that she is not the only user of the Nile waters. One way of making Egypt face her international obligations would be to raise this issue in the interests of all users of the Nile waters. The obvious solution to the problem is the creation of a Nile Valley water fund.
Mr. Williams: That is why I used the word "renegotiating" rather than "abrogating".
Mr. Braine: Certainly. But, returning to my hon. Friend the Member for Ealing, South (Mr. Maude), I had a great deal of sympathy with a large part of his speech, except when he said that it was difficult to frame constructive alternatives because there was a dearth of information. I do not think that there is any dearth of information about the cost of our boycotting the Canal and damning the consequences. The cost at current prices of routeing a 30,000-ton tanker from the Persian Gulf through the Suez Canal to this country, a distance of nearly 7,000 miles, is £83,000. If it is routed round the Cape, a distance of over 11,000 miles, the cost is £120,000.
It does not take a genius to work out what the effect on our economy would be as regards oil fuel alone of greater shipping costs and longer delay in delivery. If we had more and bigger tankers, such as were referred to by the hon. Member for Pembroke, additional oil could be carried, but we have not got those tankers.
Mr. R. R. Stokes: Does the hon. Member know that the additional cost per gallon of fuel is less than ¾d., as admitted by Shell Transport, which has put up the price by 5d., as it had no right whatever to do?
Mr. Braine: I did not know that. That is a refinement of the argument which may well be valid, but I do not think that it alters the sense of what I am saying.
Mr. R. T. Paget: Is the hon. Gentleman aware that the tanker
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would still go through the Suez Canal, but it would be wearing a Liberian flag?
Mr. Braine: Surely, that strongly reinforces the argument I am using. Perhaps the most powerful reason for sending our shipping through the Suez Canal in these new circumstances is that our shipping industry could be completely ruined if our imports and exports went by ships under foreign flags.
Then there is the question of dry cargoes. Continuing to route this traffic round the Cape would mean, I am told, the acceptance of a 10 per cent. surcharge on our exports and imports sent by that route. It would also mean an additional 14 or 21 days on delivery dates. I remember Ernest Bevin saying that if he had 50 million tons more coal to export every year he would feel better able to conduct the foreign policy of this country. The same applies in this case. I do not believe that we have any choice in the matter.
The question is: what do we do now? I agreed entirely with the Prime Minister this afternoon when he said that this is not a settlement. It is merely convenient for us to take this step at this stage. For me, the test of the whole matter is whether or not, in the next few weeks, an Israeli ship passes through the Canal. If an Israeli ship—
Mr. R. H. Crossman: What should we do if Egypt refused to allow it to do so?
Mr. Braine: If the hon. Member was in the House this afternoon, and heard what the Prime Minister said, I am sure he would agree that there is no qualification so far as we are concerned. This is the test. If the Egyptian régime is ready and willing to allow Israeli shipping to pass through the Canal we may take it that there is now a readiness to accept the international obligations which Egypt owes to the maritime nations of the world, including ourselves. To me, then, this is the sticking point. I hope that steps will be taken to send an Israeli ship through the Canal very shortly and I am delighted to hear that we shall support such a move.
Mr. Paget: What are we going to do when the Egyptians refuse to allow the Israeli ships to go through, as they will?

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The hon. Member says that we shall support them. With what shall we support them?
Mr. Braine: I would throw that back to the hon. and learned Member. If he had been listening to the speeches of his hon. Friends since the beginning of last August, he would know the answer. The matter would be referred to the United Nations, where it is now, and since on the benches opposite, there is such great faith in the efficacy of the United Nations, I do not see why there should be a smirk on the hon. and learned Member's face when I tell him.
Dr. J. Dickson Mabon: Does the hon. Member share that faith?
Mr. Braine: I am not quite as pessimistic and as lacking in faith as the critics on both sides of the House seem to be.
I would advise my hon. Friends who do not find it in their consciences to accompany us into the Division Lobby tomorrow night, to re-read the history of the reign of Elizabeth I. Then, this country was relatively poor and weak compared with the great military powers, France and Spain, yet as a result of subtlety in statecraft— [Laughter.] The right hon. Member for Ebbw Vale (Mr. Bevan), who is laughing, is perhaps one of the most subtle figures in politics; unhappily, he is surrounded by unsubtle, even naï ve, colleagues. As a result of this, it was possible for a relatively poor and weak country to steer its way through great difficulties and to emerge as a Power respected in the world.
I believe that we have tremendous reserves of strength. I am not prepared to agree to take steps now which would jeopardise the economic health and wellbeing of the country, the employment of our people and the building up of our reserves, upon which, in the last analysis, the strength of our country and our power to influence the modern world depends. It is for that reason, and bearing in mind the speech which I heard from my right hon. Friend this afternoon, that I accept the Government's decision and have complete confidence in the Prime Minister to see us through.
9.29 p.m.
Mr. R. J. Mellish: I tried to follow the speech of the hon. Member for Essex, South-East (Mr. Braine) as keenly as I could. As far as
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I can judge, he has earned a place on the Front Bench, because he tried hard to defend what it is almost impossible to defend. Knowing the calibre of the Government Front Bench, I would say that the hon. Member could not worsen it in any way, and there is no reason why he should not be considered for it in the future.
I have listened all day since 3· 30, but it is very difficult to work out from the speeches of hon. Members opposite who are the rebels, who are the semi-rebels and who are the supporters of the Government. As far as I can judge, the hon. Member for Essex, South-East at least is a genuine supporter of everything that has gone on. He is not quite sure why, but at any rate he intends to support the Government.
I should like to deal first with one of the most important points which we must face on the Suez issue. We do not deny that many of our supporters in the country supported the line taken by Sir Anthony Eden. Equally it is fair to say, as hon. Members opposite will agree, that many thousands of Conservatives were appalled by what Sir Anthony Eden and his Government did at that time when they used force in the Suez venture. We have to face that fact and to make clear at the beginning of the argument exactly what are the essential differences between the two parties on a fundamental question which is asked again and again in the country about the word "patriotism".
We know the line which hon. and right hon. Gentlemen opposite take. We know what they say on public platforms. They say, in effect, that the Labour Party is not a patriotic party, that it is a party which supports the enemy. That has been said again today in this House. It will be said again outside in the country. Indeed, one of the arguments the Conservative Party is now using is that one of the reasons why we are now in the position in which we are, one of the reasons for the capitulation to Nasser, is the Labour Party's opposition to the line of action taken and the attack made by the Government last October. That is what is being said, and it has to be answered.
The answer is that it is because of our patriotism in this party that we have used the arguments which we have upon the

531
issue of Suez. There is a difference between the two sides of the House, but it is not in patriotism. It is a difference of view, and it is shown by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke). I believe and my party believes in a truly great Britain, and that is the sort of Great Britain which will win the affection of peoples throughout the world. The noble Lord the Member for Dorset, South has come in for a lot of criticism during the day, and I can understand that the action which he has decided to take is not one which makes him happy, although he feels he must take it, and one does not want to rub it in too much, but I say to him that the sort of Great Britain in which he believes has been dead a long while and that the vast majority of our people now do not want to see a Great Britain like that again, a Great Britain which gained its prestige throughout the world not because it was respected but because it was feared.
If it is Tory philosophy, as I believe it is, that the one way in which to deal with the sort of problem which arose in Suez is the way of the gunboat policy, if the Tories believe that, as they certainly do, and that becomes our national policy, then I see no future for a really great Britain in this modern day and age. That is one of the reasons why we took the line we did in the previous debates in this House upon this subject.
The hon. Member for Essex, South-East once again quoted the leader of my party, referring to the speech which my right hon. Friend made in August. The one essential passage he forgot to mention, which he so conveniently forgot—indeed, deliberately omitted was that passage which emphasised that although what Nasser did was wrongly done, that was a matter that should be dealt with by the United Nations. My right hon. Friend said so because we of the Labour Party in this House have always believed in collective security. We believe that any problem of this kind can be dealt with only by collaboration with our allies.
Mr. Braine: I know the hon. Gentleman is fair-minded, and so I will put this to him. I agree that at the end of his speech the Leader of the Opposition did say that. However, throughout the whole of August and September the Government
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were seeking to arrive at a solution of the dispute in accordance with Article 33 of the Charter, and at no time during September and October were they outside the provisions of the Charter.
Mr. Mellish: I was explaining to hon. and right hon. Gentlemen opposite the attitude of my party. We saw our leader's speech at that time as being the speech which ought to have been made at that time, and that he was right in saying that what Nasser had done had been done in the wrong way, and that my right hon. Friend was right in trying to make sure the Government themselves did not commit a bigger blunder.
One of the greatest tragedies was that this House was divided. Of course, that did great harm throughout the world. It was a fact which the enemies of our country wanted to seize upon and they seized upon it. There can be no doubt that great harm was done by it, but the responsibility for that lay with the Government, because when they took their Suez Canal action, did Sir Anthony Eden have the courtesy and the decency to inform the Opposition? Did he tell them?
He came to that Front Bench and announced a fait accompli. That is not the sort of way to get unity in a country like ours. It is on the record that that is what he did. He went to that Box and said, "In a few hours' time we shall be at war with Egypt." Of course we opposed; of course we objected. [HON. MEMBERS:" Armed conflict."] Yes, but whatever term was used, that was what Sir Anthony Eden did. It is no good the Foreign Secretary denying that, as he appears to be doing. That was one of the reasons there was so much upset and indignation and the Chair was put in the impossible position of trying to restore order, and I think that it was then that the sitting of the House was suspended.
The Prime Minister announced that we would be in a state of armed conflict in a matter of hours. He had issued an ultimatum without a single word of discussion with the Opposition Front Bench, and now we are being told by hon. Members opposite that we on this side of the House, because of lack of so-called patriotism, brought the country into this position.
Mr. Selwyn Lloyd: I understand that the hon. Member is saying that the first time that the leaders of the Opposition heard about this was when the then Prime Minister announced it in the House of Commons. I am not suggesting for a moment that the then Prime Minister consulted the leaders of the Opposition about the situation, but the Leader of the Opposition was certainly informed before that statement was made.
Mr. James Griffiths: Since this matter has come forward, may I recall to the Foreign Secretary, and inform my hon. Friend the Member for Bermondsey (Mr. Mellish), that on that afternoon, between quarter past and twenty minutes past four, the Leader of the Opposition and I were asked to meet the then Prime Minister who, in the presence of the Foreign Secretary, read out a statement, at 4.20 p.m. He afterwards took it to the House and the statement was read at 4.30 p.m., without any consultation of any kind with us. Does the Foreign Secretary agree that I am telling the House what actually happened?
Mr. Lloyd: I am saying that the Leader of the Opposition was informed before the statement was made in the House and. what is more, there was no question of stating that we were at a state of war.
Mr. Griffiths: I ask the Foreign Secretary whether he accepts or not the statement that I have made about what actually took place that day?
Mr. Lloyd: I certainly accept the fact as to the timings and that the Leader of the Opposition was told then, but I was dealing with what the hon. Member for Bermondsey (Mr. Mellish) was saying—that the first that the Leader of the Opposition heard was the statement in the House, and I was saying that the statement that we were at a state of war was not true. Neither statement made by the hon. Member was true.
Mr. Mellish: We have the position pretty clear now. I am quite wrong in stating that the Leader of the Opposition had not been informed that we were in a state of armed conflict—ten minutes before that statement was made in the House.
Mr. Lloyd: That cannot be allowed to pass. There was no statement that we were in a position of armed conflict that day at all.
Mr. Mellish: Her Majesty's Government had issued an ultimatum to Egypt, and ten minutes before the statement was made in the House the Prime Minister told the Leader of the Opposition and the deputy-Leader of the Opposition, in the presence of the Foreign Secretary. I would say—
Mr. Griffiths: This is important. I gather that the Foreign Secretary accepts my statement as a statement of what actually took place.
Mr. Lloyd: Let us get this quite clear. Within a fairly short time after the decision was taken—[HON. MEMBERS "After."]—certainly, the responsibility is that of the Government of the day. [HON. MEMBERS: "Hear, hear."] Any Government worthy of governing would take that decision, and the Opposition were informed with due courtesy before the statement was made to the House, but I say that the statement was not that we were at a state of war.
Major H. Legge-Bourke rose—
Mr. Mellish: I will give way to the hon. and gallant Gentleman later. We have now this clear—that the position so far as the ultimatum was concerned was that we as a Labour Party, Her Majesty's Opposition representing 13 million of the electorate in this great country, were not informed of this ultimatum, in the sense that it had already become a fait accompli before we were consulted. And the same party that did that is today accusing us of lack of co-operation in this matter. Surely, this must be on record as one of the indictments against the Government.
Major Legge-Bourke: Is the hon. Member seriously suggesting that the whole policy conducted by the Opposition throughout the Suez crisis was entirely due to injured amour-propre?
Mr. Mellish: I am suggesting to the hon. and gallant Gentleman that it comes ill from the mouths of hon. Gentlemen opposite to accuse us of lack of cooperation and of not attempting to help our country, when the Government are

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primarily responsible for having taken the decisions without consulting those of us who represent half the nation.
Mr. James Stuart: May I ask the hon. Gentleman if he does not agree that the Government must always take the responsibility for these decisions?
Mr. Mellish: We have got to this stage then, that if the Government of the day decide to go to war upon any issue, they need not consult Her Majesty's Opposition although the Opposition represents nearly half the nation? If that is to be the policy of the Government of this country in future, I can only say that it is a very sad one. I do not believe that hon. and right hon. Gentlemen opposite feel happy about it.
Having said that, and having allowed most of my speech to be exchanged between the two Front Benches, may I say that we have now "had" Suez? We were told by the Prime Minister that this is not the end of the story, but it is certainly the end of a sad chapter, and it would be wrong for British people to try to rub it in, and to sneer and jeer too much at hon. Gentlemen opposite.
However, of this incompetent Government, amongst all those who are still on the Front Bench today, the one man who shares the responsibility for this is the Foreign Secretary. How he can still retain his position, I do not know. How he has not had the courage and guts to resign today, in view of what has happened as a result of the Prime Minister's statement, I cannot understand.
I will quote two things said in this House by the Foreign Secretary, said to the House and to the country and to impress his own party in particular. First, he said, referring to nationalisation of the Canal:
" We are not prepared to accept the present situation. We are not going to yield on this question of principle—the principle of ensuring right of free passage through the Canal under some international system. We feel that this great international waterway must not be left at the mercy of the caprices or the spleen or the hatreds of one Power or of one man."—[OFFICIAL REPORT, 2nd August, 1956, Vol. 557, c. 1663.]
Then over a month later he said:
" We are not prepared to let unrestricted control of the operation of this Canal pass into the hands of one Government or of one man,
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and upon that issue we are not prepared to compromise."—'[OFFICIAL REPORT, 13th September, 1956; Vol. 558, c. 172.]
This was the Foreign Secretary, the main representative of Her Majesty's Government, who has served under Sir Anthony Eden and the present Prime Minister. This is the man whose own Parliamentary Private Secretary has resigned because he must be ashamed of him as Foreign Secretary today. How can the right hon. and learned Gentleman defend both those statements in the light of the statement made by his own Prime Minister?
At least the Prime Minister can get out of this by saying that he was not such an important person, that he was only one of a great crowd who all backed and supported him. We have to accept that as being so, but the Foreign Secretary, in speech after speech, took the line that Sir Anthony Eden took, and persuaded him to go on and on, and also took the line that the right hon. and gallant Gentleman the Member for Leicester, South-East (Captain Waterhouse) supported.
I am sickened by the thought that this Foreign Secretary of ours has not got the 'courage to resign. The truth is that he is a lawyer, and he regards each item as a brief. It was a brief in August, and he spoke according to the brief as he saw it. Now it is a different brief in May, and so he gives a different answer. I can tell him this, that Britain and the British people feel humiliated today about what the Prime Minister has said. There is no one who is British who does not feel that. After all that has happened in Suez, the right hon. Gentleman now has to say that Nasser is as strong as he has ever been. No one can deny that. The Prime Minister is fooling people when he tries to think he has weakened Nasser over this. Even our national Press is saying that Egypt has gloated over the position Britain is in.
Yet here is the Foreign Secretary still trying to defend his previous position. I tell him now that at any rate in the eyes and opinion of the majority of people in this country there is nothing but contempt for him and the policy he now follows. Anyway, I do not believe that he can last very long in his present position. Looking back on his record, I can say to him that he has no need to feel proud. He has split the party, he has split the

537
country. He has not only done that, he has made it virtually impossible for this House of Commons, so far as foreign policy is concerned, ever to be united on any policy as long as he is Foreign Secretary. There is hardly any policy that the right hon. and learned Gentleman can now represent that could unite this House. All of us in the House—it includes hon. Members on the Government Benches—think that the time has come when he ought to go.
When we look back over Suez, what does it add up to? Of course we have had a humiliating defeat. It is almost impossible to estimate what it has cost this great nation in dollars, sterling and prestige. I believe that prior to Suez—I was in the Middle East for a short time—we were learning from the experiences of the past. Abadan has been mentioned again and again. At least one good thing came out of Abadan. It was that the oil companies in the Middle East, in Iraq, Bahrain, Kuwait and elsewhere, recognised that unless they altered their way of life and co-operated with the nationals of the countries in the Middle East—at Abadan everything centred around the oil companies and the nationals did not come into it at all—shared their profits and brought the people in the deserts into the orbit of the activities of the oil companies, disaster would face them.
I am convinced that the day is coming —it is not far off—when Iraq and the other oil-producing countries of the Middle East will rightly demand the ownership of their own oil supplies. I know what right hon. and hon. Gentlemen opposite will then say. They will say that we found the oil for those countries, produced the machinery and made the wealth possible, and that what those countries propose to do is disgraceful and that British prestige will be affected. My hon. Friends and I say that we have to anticipate this demand. It is natural that those people should ask why any of the oil royalties should be distributed to a foreign Power. We must face the issue and go out there anticipating the demand.
We were doing a good job of work in the Middle East, and we have lost that as a result of the Government's efforts. Whichever way one looks at the Suez episode and Her Majesty's
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Government's policy, one can find hardly any credit, except perhaps that by now it must have sunk into the minds of right hon. and hon. Gentlemen opposite that we can never repeat that action. I would say to the noble Lord the Member for Dorset, South that, however we try to be the sort of great nation that I understand he wants, we shall fail, and fail miserably. Our task in the world today—it is not a make-believe world—is to understand the desires and aspirations of ordinary folk. If we say that patriotism is a fine and great thing, we cannot deny it to others. We must understand the reason those people are proud of their country. Because of the poverty and degradation which they suffer, they will, of course, be exploited by the Nassers. Indeed, our record in the past is not all one of which we can be proud.
I believe that the Suez adventure has been one of which we can all feel thoroughly ashamed. I hope that one consequence of it will be that we get rid of the present Foreign Secretary and everything that he stands for.
9.48 p.m.
Sir Victor Raikes: I think I ought perhaps to be able to claim the indulgence of the House tonight. Although I have been a Member of Parliament for twenty-five years, this is the first time that I have spoken not as an official Conservative Member of the House. Nevertheless, I do not think I shall get any indulgence. Indeed, as in the few words that I want to utter I am bound to be controversial, I pass on to them at once.
It is not a very pleasant thing after a good many years to be bound to take the step which I have honestly felt bound to take on this issue. I should like briefly to tell the House and the Government why I have felt bound to take it. First, I was one of those who voted against the then Government on the Abadan issue. I thought the Abadan surrender was based on weakness, and I still think so. I am bound to say that I consider the end of the adventure at Suez to be at any rate in part the effect of weaknesses about which I will say a word or two in a moment. Holding that view, I could not do much less than what I felt bound to do at the present time.

539
Let us look at the situation. We all knew last autumn that Nasser was being armed by the Soviet Union and was acting as a stooge of the Soviet Union and that he would be used in due course to destroy the State of Israel, and that when the State of Israel was destroyed there would be either a major war or the Soviet Union and Nasser would be the twin heroes of the Middle East. The Canal was seized deliberately in order to test the reactions of the West. If the West had acted, if Britain and France in August of that year had acted straight away, Nasser's bluff would have been called without any major war, and we should, in fact, have seen this Soviet stooge deflated and a more peaceful era would now be found in the Middle East. It was not so.
Instead, we referred it to the Canal Users' Association, and it was made quite plain by last September that nothing was going to come out of it except a mixture of diplomatic exchanges. From the negotiations with Nasser only one clear thing emerged, and that was the six points, which I welcomed at that time, as showing the lines on which the Canal should become an international waterway. They were valuable to us, and will be valuable in future. It was obvious in September that nothing would happen. In October, when the Jews marched—not, in my view, as aggressors, but to forestall their own destruction some time this year—when they marched, France and Britain adopted a certain attitude, which I then supported, and which I make no apology for supporting. It was aimed at two things. One, which succeeded, was to prevent this war spreading into a war which might engulf the whole of the Middle East and, indeed, the whole of the world, and secondly, we had to get on to the Canal. We got on to the Canal, and then the pressure came.
There were three pressures, which entirely overthrew the latter part of our policy— the action of the United States, the action of timidity of the United Nations and, I say without hesitation, the deplorable action of the Socialist Party at that time. I am not arguing about their sincerity, but I say without hesitation that the action of the Socialist Party last autumn created an impression of far greater disunity in this country than actually existed at the
540
time, and that it had an undoubted effect on the State Department of the United States in putting pressure on us. There is not the slightest doubt about it. Nasser won his first battle when the cease-fire took place. He won his second battle when we withdrew from the Canal in December. I bitterly regretted both these moves, but at the same time I still felt that, under pressure, the resignation of Members of Parliament and so on, it might have had a very dangerous effect upon the £, which was very shaky in December, and I was one of those who held his hand, and indeed voted for the Government, rather than abstaining, and for that reason alone.
I still hoped that certain things could yet be done, but my main criticism of the Government is that in these months since December, far from trying to rally the Canal users, far from trying to find methods, diplomatic and otherwise, by which we could in fact have still shown ourselves to be a great Power in dealing with Egypt, we handed over everything to the United States of America and to the United Nations. What has the United Nations produced apart from Mr. HammarskjÖld's famous outburst, "I could not get better terms, because I did not have a pistol in my hand."? What is the use of the United Nations unless it has the power to enforce justice where justice should be enforced?
We should not have handed over negotiations to the United States, which had stabbed us in the back last November. To have done that was asking for a failure of negotiations. We did not rally anybody. We did not rally the Canal users or the shipowners. How could we do so when week after week the Press was suggesting that the Government would surrender in the next week and when there was no authoritative statement from the Government to say that, instead of surrendering, we would not accept unfavourable terms and that by a partial boycott we would hurl this man off his economic perch on which he so precariously stands at present?
This is a surrender. We have been asked what is our alternative. My answer is that today, 15th May, there is probably no alternative, but I believe that in these past months we should have been putting up a show. The sort of show at which I would have aimed, with my noble

541
Friend Lord Saslisbury, would have been a partial, if not complete, boycott and, over a period of time, possibly have used Egyptian assets to subsidise the cost of freight round the Cape. I believe that in an extra month or two we might have brought this man down, a man shaken by his failure over Jordan. Even if we had failed we should not have weakened our relations with France, our one ally, as we have done, and the blame could have been placed on the proper shoulders.
Those are the reasons why I feel that merely to abstain is not enough. A Minister can resign without resigning the Whip. A back bencher, if he feels strongly, has only one alternative, and that is to say that in present circumstances he will withdraw from the party Whip.
542
That, with certain of my hon. Friends, I have done. We believe that our action will do something to strengthen our foreign policy in the future. We believe that with a strong foreign policy ahead Britain can still unite herself. The power is there and the spirit is there, but what we look for is leadership and, without leadership, the nation will perish.
Debate adjourned—[Mr. E. Wakefield.]
Debate to be resumed Tomorrow.

ADJOURNMENT
Resolved, That this House do now adjourn.—[Mr. E. Wakefield.]
Adjourned accordingly at two minutes to Ten o'clock.

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

LORD DENNING
The Right Honourable Sir Alfred Thompson Denning, Knight, a Lord Justice of Appeal, having been appointed a Lord of Appeal in Ordinary, under the provisions of the Appellate Jurisdiction Act, 1876, as amended by subsequent enactments, with the dignity of a Baron for life, by the style and title of Baron Denning, of Whitchurch in the County of Southampton—Was (in the usual manner) introduced.
LONDON COUNTY COUNCIL (GENERAL POWERS) BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

EGYPT: BRITISH SUBJECTS' SAVINGS CERTIFICATES
2.46 p.m.
VISCOUNT COLVILLE OF CULROSS: 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 can elucidate the position of British subjects holding National Savings Certificates bought in Egypt who now want to cash them in Great Britain—

(a) if the certificates are physically in a bank in the United Kingdom;

(b) if the certificates are physically in a bank in Egypt.]

THE MINISTER OF EDUCATION (VISCOUNT HAILSHAM): My Lords, I have personally considered my noble friend's question very carefully. I am sorry to have to tell him that I have formed the opinion that both of the cases be poses in the Question raise serious
782
and difficult questions of law which might become the subject of litigation in the courts. In these circumstances, I do not think that it would be proper for me to express an opinion upon them.
VISCOUNT COLVILLE OF CULROSS: My Lords, I thank the noble Viscount for his Answer, and I think that in consideration of what he has said I can ask no more.
VISCOUNT THURSO: My Lords, may I ask whether there are any other countries where British subjects buying these certificates may find it doubtful whether they are entitled to cash them when they want to do so? If there are such countries, ought it not to be published and made known to everyone that they buy certificates in these countries at their own risk and may not be able to get their money back when they want it?
VISCOUNT HAILSHAM: I did not say that it was doubtful here.

THE ECONOMIC SITUATION
2.48 p.m.
LORD PETHICK-LAWRENCE LORD PETHICK-LAWRENCE rose to call attention to the economic situation; and to move for Papers. The noble Lord said: My Lords, I rise to move the Motion standing in my name on the Order Paper. For many people the Budget which the Chancellor of the Exchequer delivers in another place has as its main interest the question of what taxes he is proposing to put on and what taxes he is proposing to take off. Far be it from me to disclaim my own interest in that proceeding, either personally or vicariously; and I imagine that most noble Lords to-day will take the same view. Nevertheless, it is not on that subject that I rise to address your Lord-ships. I propose to discuss this afternoon the many aspects of economic and financial importance dealt with by the Chancellor of the Exchequer and in other financial statements.
Your Lordships will perhaps remember that when I introduced a Motion in February, I concluded my remarks by asking the Chancellor of the Exchequer to appoint a Committee to consider and report on the best financial means that should be adopted to deal with inflation and other important matters of public

783
finance. I was happy to hear the Chancellor of the Exchequer, in the course of his Budget speech in another place, definitely declare his intention of doing that very thing. Subsequently, we have had the names of the members of that Committee. I feel confident that the gifted chairman, the noble Lord, Lord Radcliffe, and the other illustrious members of his Committee will duly consider the evidence that will be laid before them and will state the facts as they find them, and, moreover, make very useful, happy and desirable recommendations. Your Lordships will no doubt remember that a somewhat similar Committee was appointed nearly thirty years ago. The Macmillan Committee, as it was subsequently called, made many useful suggestions.
I note that on this occasion the terms of reference of the Committee are wide. I will quote to your Lordships what they are:
" To inquire into the working of the monetary and credit system and to make recommendations."
In announcing this, the Chancellor of the Exchequer went on to stress the importance of savings and investments and the observance of international obligations. It is on those aspects of the financial and economic situation that I propose to devote most of my remarks to your Lordships this afternoon.
I am old enough to have lived for thirty years in the reign of Queen Victoria. Towards the turn of the century this country had reached perhaps the zenith of its position of influence in the world. The slogan, "Britain rules the Waves, "and the phrase, Pax Britannica, were no idle words in those days, because, as a matter of fact, Her Majesty's Navy (I use "Her" because it was Queen Victoria's) patrolled the seven seas and kept the peace of the world. It was no exaggeration to say that the British Empire, as it was then, was one on which the "sun never set", because in every continent of the world we had considerable possessions and our rule prevailed in them. But not only had we in the realm of power politics an outstanding position; our financial and economic position was one of great strength, and at that time we were convinced that that position was impregnable.
Let me recall to your Lordships some of the points on which this confidence
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was based. In the first place, though we were in the main a net importer of foodstuffs and raw materials, we still had one valuable material export which brought us in a considerable return. I refer, of course, to our coal trade, which had taken the place of the wool trade and of other articles of commerce which had prevailed in earlier centuries. At one time, the coal trade reached a total of 50 million tons in a year, which made a considerable contribution to our balance of payments. In the second place, we had a vast quantity of overseas investments. The figure was in the neighbourhood of £4,000 million, which was a much larger sum in those days than that figure would represent at the present time. Those £4,000 million of investments abroad brought us in no less than £300 million to £400 million every year, another considerable contribution to our import and export balance. That large mass of foreign investments had been built up over several decades of the reign of Queen Victoria and was the result of the saving and thrift of that section of the population which at that time possessed the greater part of the wealth and income of the country.
In the third place, Britain, as the pioneer of the Industrial Revolution, had gained during the preceding centuries the "know-how" and skill to produce manufactured goods which were greater than those of any other country in the world. From that we derived great advantage, because we were able to purchase cheap raw materials abroad and put our skill, knowledge and craftsmanship into working them up into expensive goods which were eagerly sought for in all parts of the world; and that, in its turn, gave us considerable profit in exchange. Then there was shipping and shipbuilding. Shipping was a service rendered to the world which brought us great advantage, and shipbuilding was a form of export, though I do not think that it is classed in the ordinary exports of the country.
Then there was the work we did in lending money abroad, carried on through the discount houses and carried on so successfully that to some extent they used up the available cash which was needed for home investment. Your Lordships will remember that the contribution of the Macmillan Committee to economic knowledge was what was

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subsequently known as the "Macmillan gap", which was the failure of our monetary institutions—the discount houses and the banks—to enable small industries to Obtain the capital they required to carry on and extend their businesses. There was also the insurance system, largely a British institution. The knowledge and reliability of insurance agents; in this country were respected everywhere throughout the world.
Finally, there was the contribution made by the position of sterling, which was not only the monetary symbol in which the trade and industry of Britain with other countries was carried on, but was also that in which the trade of one foreign country with another was largely carried on. Not only that: in effect, this country was the banker of the greater part of the world. When one country wanted to pay another and when an individual of one foreign country wanted to pay an individual in another foreign country, to a very large extent they paid in sterling through London, as the banking centre of the world. In order to support our position as banker, there were two or three factors of the greatest importance. The first was that we held a very large gold reserve in the Bank of England; secondly, because of our knowledge and experience, and the past history of our banking and financial system, we had attained a high respect in the realm of credit; and thirdly (I am not attempting to make any fiscal point over this), our free trade system at that time enabled goods to be invoiced through to London and out again without any question of Customs duties arising. Those were the assets that we had; they were considerable advantages, and put us in a strong position.
Before I pass on to consider them to-day, may I say that I should be sorry if your Lordships gathered from what I have said that I am wholly a laudator temporis acti and that I look back on those as halcyon days. I recognise that there was an unhappy obverse of the coin, because some, at least, of the strength rested upon the shameless exploitation of the working class, who in those days were synonymous with the poor; and it was, to some extent, due to grinding the face of the poor who lived, in many instances, stunted and sweated
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lives. Certainly I think that not only on this side of the House, but on all sides, there will be a feeling that, so far as that was a part of the strength and wealth of the country, none of us has any wish to go back to those rather sad days.
What is the position to-day? The logic of events, which in my opinion, is one of the great teachers of mankind, has forced the Government to-day, as it must have forced any Government of any Party holding office in this country, to take a realistic position with regard to power politics, notably in the realm of defence. We have had heartburnings in some ranks in Parliament, in both Houses, as to the changes in the defence policy of this country in consequence of the determination to be economically strong—because it is no good being on paper materially defence strong and not having the economic strength in order to back it up. So, because of the economic position, we have had a new realistic approach to the matter of defence by the Government. I venture to suggest to your Lordships that the time has come for us to take a wide sweeping view of our whole financial and economical position and to see how far what was splendid in those days of fifty or sixty years ago about which I am speaking can be carried on at the present time; how far the former glory can be maintained, and how much of it has to be discarded under the category of what I may call lost horizons.
I will go through the list of the things I have enumerated in the earlier part of my speech. The first question is the export of raw materials. Coal as a net export has, of course, "gone west". I do not suppose that we shall ever again export coal, and gain a profit out of it; in fact, the difficulty will be, even if we import a certain net amount of coal and add to it all the oil we can reasonably import, whether we shall have enough fuel material to carry on our industrial organisation until nuclear power has come in sufficient quantities to supply the balance. I am afraid that if coal goes, it means the end of our last raw material export from this country. I am happy to think that in other parts of the Commonwealth considerable export of raw materials is taking place, a fact which plays an important part in keeping the head of sterling above water and enabling it to be not submerged by the tide of change.
I come now to the question of overseas investments. Two great wars have dissipated the greater part of that splendid capital reserve of £4,000 million which we had at the beginning of the century, and only a small part of it now remains. To some extent we have built it up in the last few years, but I am afraid that it will be a long time before we are likely to be able to build it up again to a total of £4,000 million; and even if we did that, that amount to-day represents a much smaller sum, for practical purposes, in purchasing power than it was in the days of which I am speaking. We should probably require £10,000 million to £15,000 million to take the place of the £4,000 million in the days gone by, and I see little chance, at any rate in what is called the foreseeable future, of our finding any such amount.
While that has been happening here, in the United States, not only through its Governmental loans, found in the Budget and all the various lending forms of Government finance, but by private individuals, there has been a large investment in countries all over the world. A figure was quoted to me the other day—and I see no reason to doubt it—of something in the nature of 20,000 million dollars—that is, something approaching about £7,000 million—as the amount of private investment—investment by American citizens in their private capacity—in enterprise all over the world. That is a considerable sum, and it gives the members of the United States an immense control over the enterprise and work of the world as a whole. It is not for us to regret that, but it appears to me, as I imagine it will to most of your Lord-ships, unlikely that we shall ever rival the investment character of the United States. I am afraid that, if we are realists, we must face the fact that in the future our contribution to the investment and enterprise of the world will have to take second place to that of the United States.
While speaking of that subject, let me come to the question of investment by the discount houses. I have already pointed out that in days gone by, when the Macmillan Committee was sitting, there was a failure by the discount houses—they did not come into existence for that purpose—to keep our home investment going. Personally, I hope that in
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the days to come, in the not too distant future (I should not have regretted it had it been done even this year), we shall restore the favourable treatment of investment replacement of assets and extension of capital in this country and recognise that through financial means. At the same time, I should not like to see that done to the extent of again bringing about inflation, which I regard as a most serious evil.
Turning from that to the question of raw materials and our imports, in consequence, the question is a matter of how much difference there is between our export and our import total. A great deal of rubbish is talked about that, because people say, "If our exports increase only by so many hundred millions we shall be out of the difficulty." Most people when they say that, quite fail to realise that if you increase your exports by, say, £100 million, it must inevitably mean increasing your imports, not by so much, but by a considerable amount, because the raw materials out of which our exports are made are largely imported. Therefore, unless the people at home are actually going short, it stands to reason that every £100 million obtained from export—unless it is due to changes of price value—must be diminished for practical exchange purposes by the amount we have to pay for the raw materials out of which those exports are made. So it is only the balance, the profit, that we make which really helps our exchange.
When I come to the question of shipping and shipbuilding I think I see a more rosy picture. I understand that the shipbuilding industry has not only as many orders as it can cope with, but a great many more. I think there is something like £900 million of backlog in the shipbuilding industry. What I will say with regard to that is this. I hope that the employers and workpeople will come to some terms by which they can go on happily. There is no doubt that the shipbuilding industry makes a substantial profit, and the workpeople are entitled to their share of the benefit. It is essential for the financial stability of this country that the shipbuilding industry should get on with the ships which are being built and the orders that have been received. More or less the same argument applies to the shipping industry, because we

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carry materials all over the world, not only from and to these Islands but also from one foreign country to another; and this brings us in a valuable profit which is well worth having.
With regard to insurance, I am a great admirer of the insurance system of this country. In Lloyd's we have an institution which is almost without parallel. I think in some ways it is unique throughout the world. We have also a great number of insurance companies. American insurance companies are doing a large amount of business up to a point, but, at any rate, our insurance system is holding its own. Our credit in insurance is exceedingly high, and this business certainly provides a useful addition to our exchange.
Finally, I come to the tremendously important question of the position of sterling in the world, and the problem of Britain as the banker for a large part of the countries overseas. Bankers must be credit-worthy. By the nature of their trade, they are borrowing short and lending long, and in order to continue to do that without disaster, their credit must be unusually high. Their credit is of two kinds. It is, first, an objective fact. There must be known resources of reserves lying behind the credit of any bank. As I pointed out to your Lordships, in the days gone by we had large gold reserves in the Bank of England. Your Lordships will know that as well as I do. But your Lordships will also know that our physical reserves behind our sterling position at the present time are pitifully low—they are almost what I should call a pocketful. It is only recently that the present Prime Minister, when Chancellor of the Exchequer, went to the International Bank to raise a loan to strengthen our reserves. Of course, up to a point that was a good thing. But at the same time, to have to go to another Bank to underpin your reserves does not greatly improve the feeling of credit-worthiness of your own institution. I am not saying that he was wrong: I am merely saying that the fact that he had to do that shows, I think, how dangerously near the margin we are at the present time.
Further than that, it is of course an unhappy fact that the two World Wars, and their aftermath, have reduced our physical credit to very low proportions.
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But the other prerequisite in credit is equally important, and that is not solely a physical objective fact: it is a question of a moral, I might almost say a spiritual, quality. A banker has to be no respecter of persons. He cannot refuse to honour the cheque of his customer because he does not like his customer's morals, or because he has a personal quarrel with him or his wife. He has to meet his debts and his credit. If they are called upon by the customer, he has to provide them. That being so, that is one of the reasons why the whole Suez incident has dealt such a lasting blow, not only at the honour of this country, as we on this side of the House see it, but also, I think everyone must admit, to the material prosperity of this country. The customers not only must be able to get their money back—they must also be able to get it back in reliable currency. That is why a further devaluation of sterling will go far to put finis on the standing of sterling and the retention of our position as a world bank.
I say all this because, for my own part, I desire greatly that we should be able to weather the storm and to retain our position as bankers of the world. But that will be possible only on three conditions: The first is that we have no more Suez affairs; the second that we resolutely scotch inflation; and the third that we build up our reserves by the thrift of our people, and with their determination to make this country strong again in finance as well as in other ways. We have to remember that the sources of wealth in this country have changed. In the years about which I was speaking earlier, there was only one section of the people who had money which they could invest as a means of saving—what were called the "well-to-do" classes. Even the smaller middle-class man was taught that he ought not to spend his whole income, but that he ought to save with a view to his own old age and the wellbeing of his children. The wealthy people were also able to save very large amounts. But to-day, the centre of gravity of available money has largely changed, and it is essential that all classes of the community, if they have money they do not need for their immediate consumption, should be encouraged to put by an amount which will effectively benefit the country.
I should like to add this. One of the arguments of reply given to-day to that advice is: "What is the good of putting by £I when, ten or twenty years hence, when I want it, it will be worth 10s.?" That is true in a situation of inflation. But the inflation arises because not enough people save. If a very much larger number of people saved, not only would each individual have something put by for the future but there would not be that fall in the value of money that there is to-day. So the question of saving is, to my mind, very great and important. In the last resort, however, the future of our country depends on the character, resource and initiative of our own people. I have a tremendous faith in the people of this country, and I believe that if they are properly led, and properly encouraged, they will pursue a noble path in the history of the world. I believe profoundly in education and in the Welfare State because, if we are to hold our own in the world to-day, it must not be only a few here and a few there, scientists and other great people, who are able to carry on the industry of the country: it must be the whole population. We must not waste a single boy or girl who has brains by letting their education stop and their teaching come to an end.
Greatness is not a matter of material, finance and economy alone: it is also a moral quality; and I believe in teaching the youth of this time the greatness that has been in our country in days gone by. If we educate them along those lines, and if we make them feel that it rests with them to keep the greatness of our country to-day, under the new conditions and new forms, I believe that we shall win out and have a people as great in the future as they ever were in the past. My Lords, I beg to move for Papers.
3.23 p.m.
LORD GRANTCHESTER: My Lords, I cannot attempt, and I could not do so, a survey on the scale achieved by the noble Lord, Lord Pethick-Lawrence, who always speaks with great authority on economic matters. If I might venture one word of comment upon what he has said, I would say, with very great respect, that he appears to me to be a little guilty of reading history backwards. His strictures on the past are made in the light
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of the present. In an expanding economy, it takes time for the benefits to become spread over the whole population, but this process has been steadily going on over the years. I should therefore like to start my remarks with one or two rather general comments. First, I would congratulate the Government on the start they have made in reducing the excessive burdens on the people of this country, and in cutting expenditure so as to be able to do that. I am not convinced yet that their aim is sufficiently high. I should like to hear from them a recognition that no Government can go on, year after year, taking more than one-third of the national income and spending it; that they are therefore determined to keep their expenditure within a very strict limit. It is always possible to find good reasons for expenditure, but the Government must do the same as the individual has to do. How often we have to say, "We cannot afford it"!
Secondly, I want to challenge the principle of budgeting for a surplus. The Budget is an instrument by which the Government raise the money necessary to meet their authorised expenditure. This practice which has grown up of budgeting for a surplus is a comparatively recent innovation, and I think that it needs to be challenged. The Budget has become an instrument not only for raising money to meet Government expenditure but of compulsory saving. If a Government wishes to compel saving, then it should do so openly, under a separate Bill, and should not introduce forced saving by the back door as part of a Budget.
If money is not required to meet expenditure, it should be left in the hands of the taxpayer. As I have said, there is a welcome indication that there is a realisation that less must be taken from the taxpayer, but, if this principle of not budgeting for a surplus had been accepted, it would have been possible for greater relief to be given immediately. Not only are the people of this country taxed at a higher rate than other countries with whom we are in competition, but, as I have said before, they are assessed on a much stricter basis. It is upon a much stricter assessment that the rate of tax is levied. In comparing taxation in one country with that in another, I think we should look at the basis on

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which assessments are arrived at. For example, if insufficient allowance is made for depreciation, which is the case today in many businesses here, the tax levied is not truly a tax on profits at all but is a tax on capital.
Thirdly, I should like to refer to the discussions which have taken place between the Chancellor of the Exchequer and the Governor of the Bank of England, and to comment on the directives which have resulted from the representations of the Chancellor of the Exchequer, Frankly, I find the wording of the directives a little unfortunate. No banker who has been trained in sound banking principles needs to be warned against long-term lending or to be told that his operations should be confined to "bridging operations" where capital development is contemplated. The trouble is that a Government of one complexion, when it intervenes, intervenes in one way and a Government of a different complexion intervenes in another. I am old-fashioned enough to believe that the business of this country is best conducted and can best flourish if it is run on sound business lines, without pressure, threats or interference from the Government, and that there is really little excuse for interference of this kind to-day.
There is a large public sector in the nationalised industries, and if the Government are anxious to try out directives, let them try them out in the public sector. If, as a result, they achieve more satisfactory results, their example might well be followed in the private sector without any directives at all. In the meantime, I should like to ask whether the banks and other financial institutions in the City are to apply the directives given them to the nationalised industries. Will the projects envisaged by the nationalised industries be submitted to the Capital Issues Committee? If not, could not the Capital Issues Committee very well be dispensed with? I would much rather trust the financial institutions, who have long experience in the conduct of their business, than any artificial or arbitrary system of control as exercised through the Capital Issues Committee.
Or, my Lords, is the position really more serious than we think? Is it the truth that perhaps the Government no longer firmly believe in the application of the test of profitability? Have they, under
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Socialist tuition and teaching, come to believe that authoritarian direction is better than the economic democracy of the free market, which by the sum total of its choices determines profitability and thus points the only safe road to expansion? Or have the Government come to the conclusion that the market cannot operate satisfactorily while the exchange rate remains fixed, and therefore that they must continue to direct, or, shall I say, attempt to direct or influence the economy in what I call an authoritarian manner? If so, would it not be better to consider whether the exchange rate should not be freed. These are two matters to which perhaps the Radcliffe Committee will direct their study.
I have been very much impressed recently by the almost universal clamour in the world in favour of wealth. Mr. Bevan has been touring the world and has come back full of what can be done with wealth for good, for directing nations into the right policies. Many Governments are showing that they have little or no interest in dealing with countries where the people are not wealthy. I think Mr. Bevan has an exaggerated idea of the power of wealth for good. All the same, it should be the pride of any Government to create conditions under which its people can increase their wealth. For this to be possible the Government must not take an excessive amount of their earnings. It should confine its levies to meet specific purposes clearly stated, and, I suggest, abstain from including a surplus which may tempt it to increase expenditure.
As the noble Lord, Lord Pethick-Lawrence, has emphasised so well, individual wealth can be increased only by saving, and I suggest that the campaign in favour of saving must be intensified by every means. In order that this campaign may cover the widest possible range, I suggest that the Government should take a look at what is happening in the United States; how more and more saving there is going into shares secured upon industrial enterprises. Will the Government consider whether some modifications of the law might not be made here to make possible investment on similar lines—not necessarily in quite the same way, but along the same lines—in a simple and inexpensive form? I think that would be well worth looking into. When you

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are emphasising the importance of saving, it is a poor means to emphasise saving if you make a distinction between earned and unearned income. You earn it one year and save it. That is good. You invest it and the next year you draw a dividend. That is bad and must be penalised. This sort of contradiction destroys the ordinary individual's belief in the sincerity of the Government's purpose in advocating saving.
My Lords, there is another matter to which I would refer—I mention this particularly in view of the talk which is going on about the introduction in Europe of a common market. I should like to see more attention given to opportunities for development overseas in co-operation with Continental firms. In the oil industry the Government is very much involved, in its large shareholding and in its right to appoint directors to the boards of some of the oil companies; therefore the Government has a special responsibility, because of its direct interest in these oil companies. Is the possibility of co-operation with Italian and German interests, for instance, being given sufficient thought or encouragement?
I should like to conclude my remarks by stressing, as the noble Lord, Lord Pethick-Lawrence, did, the overriding importance of the problem of stopping inflation. Inflation is the disturbing factor to the thrifty: it undermines every campaign for saving; it threatens the security of the home and the family; it brings in its train moral deterioration, and destroys all that is best in human character. Certainly overspending by the Government and, I suggest, a too steeply graded system of taxation, as well as artificial controls on the exchange—all these are, I suggest, inflationary factors with which the Government should deal. It is not too much to say that this Government will be judged primarily on its success or failure to stop inflation.
3.37 p.m.
LORD BRAND: My Lords, I should like first to congratulate the noble mover of the Motion on his speech. I listened to it with a certain amount of nostalgia. I am a Victorian also, not the vintage of thirty years but I think twenty-two years, so I am not too far behind. I was also interested in his remarks about the Macmillan Committee, of which I happened
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to be a member, and where I had the honour, for about eighteen months of meetings, of sitting next to Mr. Ernest Bevin, so that I learned to appreciate his great qualities. We all had the pleasure, also, of listening to Lord Keynes cross-examine the Governor of the Bank of England and other eminent witnesses.
I have only two things on which I desire to comment further on Lord Pethick-Lawrence's statements. When he mentioned discount houses, I think he really meant the merchant banking houses, banks of issue, because it is not the discount houses who do the investment, particularly the foreign investment; they are in the short-term market; it is the private banking houses who do the foreign investment. I myself was not aware that I was "fleecing" the poverty-stricken when I was working in the City. I think that when we made money it was more out of the foreigner—perhaps equally unmeritorious, some might think—than out of our own country.
I would add that I think it is a mistake to condemn the last part, or even the first part, of the Victorian age for being so wicked in oppressing the poor. I think the poverty was much more due to the difficulty of producing wealth in those days than is the case in these days. Now, a single workman, with the help of machines, can produce three or four times as much as he was able to in those days, and that adds to the wealth of the whole population. Possibly one or two of your Lordships read in the Listener that I had a little controversy with another gentleman the other day, when I pointed out to him that Sir John Clapham, the eminent Cambridge economic historian, stated that by the year 1900 the standard of life was 75 per cent. higher than it was in the year 1850. Well, 75 per cent. is quite a lot, and in those days the standard of life was increasing rapidly, though nothing like so rapidly as it is now, of course.
I should like to detain your Lordships for a certain time (I hope not too long) by giving some sort of analysis of the present position of this country. I shall not say much on the Budget. Everything goes to show that we still need, first of all, restraint in the way of personal consumption in this country, and secondly, an increase in the total production, particularly of exports—of course with the

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noble Lord's proviso that we get only the net results of the exports less the imports brought, in to make them. But these are both commonplaces. I should like to congratulate the Government in one direction—on the success of their monetary policy during the year 1956: bank rate, credit restriction, and so on. The commercial balance which was minus £79 million on our balance of payments in 1955, became a surplus of £233 million in 1956. That is a considerable difference of £312 million in twelve months.
LORD PETHICK-LAWRENCE: May I interrupt the noble Lord? Am I not right in thinking that a large part of that difference was clue to pulling down of stocks, and therefore does not really represent the real advance—it is only the changing of stocks into money? Is that not so?
LORD BRAND: To a certain extent, it was—I could not state the figure—but anyhow, there was that addition, due to; the fact that capital investments were reduced. The long-term balance, after various deductions, but without taking into account withdrawals of sterling, was a surplus of £42 million, instead of a minus figure of £242 million. But that big surplus all vanished when one considers changes in what the White Paper calls the net monetary position. There were large withdrawals of sterling, largely owing to Suez; and we not only lost that surplus but had to borrow £200 million from the International Monetary Fund. At the end of that time, the total surplus to be added to our Reserves was only £5 million.
In view of all these circumstances, the Chancellor of the Exchequer had to be cautious in his Budget; and in my opinion he was cautious. It is true that he made certain total reductions in tax, equal in a full year to about £130 million, but the Budget also provided that the total deficiency above and below the line should be less by £200 million than the year before. So that, generally, I think it was a cautious Budget. I personally particularly welcome the relief on company profits earned abroad, because I think that will help our exports and encourage enterprise abroad.
I come now to our general economic problem. The immediate problem is how to avoid a crisis in two or three years. The more fundamental problem, as both
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speakers have said, is how to stop inflation. It seems to me that in the main the solution of both these problems is the responsibility of the Government. You cannot persuade people in general, not even employers, by reasoning with them to act so as to produce a surplus, and not a deficit, on our balance of payments. The Government must produce conditions under which everyone will so act that there is a surplus. Nevertheless, the Government ought to be able to look for assistance both to employers and to trade union leaders, as well as to bankers. I assume, of course, that trade union leaders regard continuing inflation as evil; that they regard continuing balance of payments crises as evil; rapid depreciation of currency as evil and rapidly rising prices as evil. I should have thought they must think so, yet sometimes they seem to wash their hands of such things and disclaim all interest. Perhaps I am denigrating them.
Nevertheless, it must be recognised that inflation is an almost world-wide phenomenon since the beginning of the last war. Take particularly stable European countries. Switzerland has had practically no inflation since the early 1950s. Sweden, Holland and the United Kingdom all show large rises in prices and wages since 1950. All three show relatively larger rises in prices and wages than the United States. There is much less rise in price there, and considerably less rise in wages. Germany has had a striking rise in the last two years, but she started later and from lower down.
If I am right, the main causes of inflation since 1945 are somewhat as follows. In the first place, undoubtedly Governments to-day understand more than they did in 1918 the importance of avoiding deflation—indeed, they have all been determined to avoid it. But beyond that influence are, I think, much powerful causes. The first, and the most powerful, is that we are now in what one might call a New Railway Age—something is happening now such as happened in the railway age. Science, technology, invention, new industries, new materials, and new chemicals are all making immensely rapid advances. Nearly all countries, and not only Western Europe and North America—though chiefly they—are taking advantage of this new knowledge—countries like Russia, China, South America

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and India. The population of the world is increasing by 25 million every year. In most cases, owing in the main to these causes, there is something like full employment. If we take the case of India, perhaps an example of a country going ahead too fast, we find that she is trying vast new five-year plans but has not the money to finance them. India believes, however, that by spreading a plan over some years she may be able to get through.
These are general instances of what I may call the New Railway Age. They are accentuated by the Welfare State idea and the doctrine of absolute, brimful, full employment. In consequence there is a tendency in nearly all countries, and certainly in this country, to press for conditions which accentuate inflation; and demands for more and more social welfare expenditure, together with urgent demands for new capital formation arising from the rapid material progress of the world, are very great. Added to this, over-full employment must inevitably lead to continuous pressure for higher wages, and that, again, to higher personal consumption.
All this, together with (in our case) huge defence expenditure, leads to our not having room for everything. We burst our seams at the point of the balance of payments. For instance, if we increase our capital formation to any substantial extent—and it is vital that it should be sufficient—then the consequent increase of imports brings a crisis, as it did in 1955. Crises are easily caused in this country by such circumstances, since—and here I entirely agree with the noble Lord, Lord Pethick-Lawrence—our reserves become insufficient for our liabilities and we are like a bank overtrading with insufficient liquid assets.
Being a Victorian, I should like to add something of the opinion of two other writers. I hope I shall have your Lordships' indulgence in reading one or two extracts from the Lloyds Bank Review, of which bank I am a director. One of the authors I know; the other I do not. Both are highly competent economists, comparatively young and should therefore know the feelings of this generation. Mr. Roberts is a well-known economist at the London School of Economics. This is what he says:
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" The extent to which inflationary pressure has drawn wages upwards in Britain, Holland and Sweden is apparent from the way in which earnings have tended to pull away from wage rates. In all three countries there has been a tremendous growth in special payments by employers to circumvent the nationally negotiated wage rates which have been fairly fixed at levels well below the market price for labour. When profits are running at such a level that it pays an employer to exceed the agreed wage rate in order to obtain the labour he requires, it becomes impossible in a democratic society to hold wages down. In other words, the problem has to be tackled at a more fundamental level. The Swedish trade unions have recognised that stability cannot be secured by wage policy and they have openly stated that it is the responsibility of the government to use monetary and fiscal measures designed to keep the level of purchasing power within non-inflationary bounds. They have also recognised that this will mean, in practice, a level of employment less than brimful. The Swedish T. U. C. thinks that this is a price worth paying because it frees the union from the necessity of exercising unreasonable restraint in their wage demands. Wage restraint, they point out, is not only in the long run impossible if the state of the market compels employers, by bidding against each other, to raise wages; it is also disastrous to the unity and effectiveness of the unions."
Then Mr. Roberts compares that with the attitude of the British T. U. C., and not too favourably. He thinks that they are more stuck in old ways. But I will not read that, unless the noble Viscount, Lord Alexander of Hillsborough, would like me to do so.
VISCOUNT ALEXANDER OF HILLSBOROUGH: I should like to read it afterwards, if the noble Lord will kindly let me have it.
LORD BRAND: Then Mr. Roberts says that there can be little doubt that a higher level of unemployment is one of the principal reasons why prices have not risen as much in America as in the three European countries. Whereas unemployment in those countries has averaged between 1½ per cent. and 2 per cent., in America it has been about 4 per cent. He says:
" It does not follow that unemployment would have to rise to 4 per cent. in Britain before stable prices could be assured; it is, however, almost certain that stable prices cannot be maintained at a level of demand that keeps unemployment much lower than 2 per cent."
The other author, Mr. Little, is a Fellow of Nuffield College. He was a Fellow of All Souls—my College—and was Assistant Director General in the

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Economic Section of the Cabinet Office. He says:
" All Governments now admit themselves responsible for ensuring ' high and stable' levels of employment. This has come to be interpreted in a very strict manner indeed. Unemployment of over half a million…would now be enough to evoke cries of mismanagement. But one cannot go much below this figure without excess demand and inflation resulting. Only a remarkably accurate balancing of economic forces is regarded by politicians and the public as good enough."
I have read those extracts because they are views of highly competent economists who spend their lives investigating this problem; and they both agree on that particular point.
I, like everyone else, am all for the fullest employment which our economy can stand, which means more or less full employment except for a small percentage of workers between jobs. Unless we can devise a plan for bringing about this result, any Government in this country seems destined to walk on a tightrope only just balancing or not balancing at all. Analysing our needs a little further, one finds that our total income arising out of total production goes broadly to meet the personal requirements of the population and also the current requirements of our companies and businesses and the demands of government and local authorities. But it is vital that we should allow room for certain other needs: first of all, sufficient for new capital formation which now seems to put us in a crisis immediately we try to provide it; and, secondly (and, indeed, this almost comes first), the replenishing of our reserves, I should say by at least £100 million a year. Our reserves—excluding the International Monetary Fund £200 million—are lower than they have been for eight years. It is vital that we should increase our reserves, and we should do so at a rate of a great deal more than £100 million a year for the next few years, as we have to pay back the International Monetary Fund in the course of the next three years.
Thirdly, we want the full amount of investment abroad. For the last four years the average has been about £200 million a year. I think that is none too much. I know that the Party of the noble Lords on the other side of the House are greatly in favour of helping undeveloped countries—helping the peoples of undeveloped countries to help them-selves,
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and so on—and I sometimes wonder whether they fully realise that they are asking for a much bigger surplus on the balance of payments, because only out of the surplus on the balance of payments can you lend money abroad. Therefore, I think they do not quite realise it is the people of this country who have to make the sacrifices, either by consuming less, or having lower wages, or saving more, if they want to help other countries. At the present time these vital needs are not met. Either, therefore. Government demands on the productive resources of the country or the demands of all the people in the way of personal consumption must be diminished, or otherwise production must be increased and, probably, at the same time, personal consumption restrained.
This double task is not easy. I only hope that Lord Radcliffe's Royal Commission will be able to show us how to carry it out. But I think it will mean that the terms of reference will need to be very widely interpreted. They seem to me now designed only to deal with the monetary problem, and the monetary problem is only one side of the matter. You cannot solve the problem by monetary means if the whole population is doing something which prevents that from being effective.
I am not going into the wages question as it affects the economy of the country. But I would allow myself to say that surely the picture which the noble Lord, Lord Pethick-Lawrence, has given and the picture which I have given of this country's condition is such as to demand that all restrictive practices on the union side and on the employers' side should be as far as possible removed. There, at any rate, I think particularly on the union side, is the direct way of raising the standard of life and helping to solve our problems. Many people resign themselves to more and more inflation as an inevitable necessity. It is true that we have not done so badly under inflation. I see that according to the London and Cambridge Economic Survey, which gives us the best statistics on this side of the picture, the real earnings of men in industry are shown to have increased by 14 per cent. between 1952 and April, 1956. That is to say, in four years they have increased 14 per cent. The rise in earnings has not simply been level with the increase

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in prices but it has been 14 per cent. more. If one compares long-term figures for. "wages and dividends of ordinary shares—and I am taking these figures from the National Income and Expenditure Blue Book for 1956—wages in 1953 amounted to £6,750 million as against £1,920 million in 1938. Therefore there has been an increase of about three and a half times. On the other hand, dividends on ordinary shares of non-nationalised companies amounted in 1955 to £646 million as compared with £331 million in 1938. Thus dividends on ordinary shares have nearly doubled in nominal value, whereas wages have increased nominally three and a half times.
Salaries will no doubt have risen in somewhat the same proportion as wages, but, of course—and this is the sad part of inflation—all those classes which live on fixed incomes, all pensioners, and all those who have no means of bringing pressure on the community, will have suffered and will go on suffering as long as inflation lasts. All savers of money in National Savings or any kind of Government security or other fixed interest security will go on gradually losing their money. I hold the view that we ought to have a Trustee Act that does not compel trustees to invest in fixed interest securities but forbids them to do so. I think that that is the only way of saving their clients' money.
The noble Lord, Lord Beveridge, is not here at the moment but some of your Lordships may have noticed an article of his on his pension scheme which appeared in the Press the other day. This he said had been put on to the scrap heap by inflation. I daresay that the Labour Party plan on pensions, which comes out, I understand, tomorrow, will in the next fifteen or twenty years suffer the same fate, if we go on as we are going on now. Of course there are some advantages to some of us if we rob our creditors, whether they are the owners of the National Debt or foreigners owning sterling balances. It is very pleasant to get rid of your obligations by gradual inflation. Nevertheless, anything like the present pace of inflation which we are suffering from, if continued indefinitely, will, in my opinion, rot our whole society. There is, to my mind, nothing more ruinous than rapid inflation
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I have seen it in Germany and in other countries and I know what it is.
My Lords, I would add three last observations. The first is that now is the time, when the world is highly prosperous and there is still a great and growing demand for our exports, to put our house in order. If the rest of the world suffers from depression it will be vastly more difficult for us. My second observation is that the fact that all other nations are inflating at nearly the same rate has saved us from serious difficulties. On the other hand, if they begin to hold inflation at bay and we do not, the difficulty of selling our exports will rapidly increase and we shall soon face critical times. Lastly, as to immediate policy, I am not sufficiently immersed in day-to-day financial affairs for my opinion to be of much value. As, however, for reasons I have given, our immediate objectives must be, first, to restrain home consumption which, with wage rises, will tend to increase, and secondly, to encourage exports and encourage also capital expenditure likely to be helpful to our export trade, I should agree that the banks should be requested to maintain restriction of credits where home trade only is concerned, but to encourage export trade; that hire purchase restrictions should be continued, and that the bank rate should not at present be lowered.
4.11 p.m.
THE EARL OF DUNDEE: My Lords, the noble Lord, Lord Pethick-Lawrence, began by saying that he was not so much interested in the tax proposals of this year's Budget as in the Committee which is being set up, under the noble Lord, Lord Radcliffe, to advise us about inflation. I certainly hope that the advice we receive from the Radcliffe Committee will be as valuable to the country as the £100 million of tax remission which the Chancellor of the Exchequer was able to give us last month. The noble Lord gave us some interesting reminiscences about the reign of Queen Victoria, in which we had stable prices which were based on the gold standard, but in which we also had great unemployment and unnecessary poverty. I am sure that the noble Lord will agree that it is better to have our present system of a managed currency, which is primarily directed towards maintaining full employment, even although that should involve, as it does, a grave and continual risk of inflation.

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For twelve or fifteen years now, since the end of the war, we have maintained full employment, but the value of our money has been reduced by more than half. I should like to believe that we may be learning how to reconcile full employment and stable prices by experience, by a process of trial and error, although so far the errors have been a great deal more than the trials. In the time of the Labour Government and for a year or two afterwards, under the Conservative Government, we tried to check rising prices by controlling them, by controlling also the purchase and allocation of industrial materials. That may have been right or it may have been wrong, but it certainly did not stop inflation.
The present Government have not entirely abandoned controls. I do not think that in the present age controls will ever be entirely abandoned. We still have the Capital Issues Committee and many controls over imports; above all, we have this credit squeeze. The Prime Minister told us that it is a squeeze of love, of affection. Nevertheless, it considerably restricts our freedom of movement. Whether these measures will be successful in preventing inflation, I do not yet know. We cannot yet say whether they have stopped it. The declared object of the Government's disinflationary policy eighteeen months ago was to check imports, to put the burden of restraint on consumption rather than on investment, and to increase exports. I think it ought to be said that in these respects the Government's policy has not been unsuccessful. Our imports have been checked; consumption has been checked, but not capital investment; and exports last year increased by £267 million.
When the noble Lord spoke about exports, he pointed out that they were not a pure gain, because we might have to import raw materials to make them. I am sure that he did not mean to imply, however, that a vast improvement in our export drive is not vital to the future of our economy. We need greater exports, not only to live but also to pay our debts, to pay back within the next two years the £590 million we have borrowed from the International Monetary Fund and to carry out our programme of investment abroad—all of which steps are essential to the prosperity and standard
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of living of the British people, to the maintenance of the value of our currency and to the prevention of inflation. Although an increase of £267 million in our exports is not nearly as much as we need, it is a move in the right direction.
I am particularly glad to see from the Economic Survey that our exports to North America increased last year by 23 per cent. On page 30, in the table, a single figure is given for the United States and Canada together—an export figure of £421 million. I should be grateful if my noble friend Lord Hailsham could give us the figure for Canada by itself. In 1955, our exports to Canada were £140 million, and if the increase for 1956 has been pro rata, I suppose the figure might be about £180 million. I should very much like to have the correct figure. There are many reasons why we ought to consider our Canadian trade figures quite separately from the figures of our trade with the United States. One reason is that Canada is pursuing a liberal trade policy. The Canadians are not trying to be self-sufficient. In the United States, only 4 or 5 per cent. of their consumption is imported from abroad, but in Canada it is about 25 per cent.
The Canadians want to encourage reciprocal trade with all parts of the world, including Great Britain, and they do not impose any serious barriers against British trade. Another reason is that the importance of Canada in the world within the last seven or eight years, which is only yesterday in economic history, and the importance of Canada as an export market for British goods, have been entirely revolutionised by the discovery of its mineral wealth. The richness of the ore, mineral and oil deposits and of the natural gas below the soil of Canada cannot be measured at present, but it is quite possible that within another generation the wealth of Canada may be greater than that of the United States. This vast natural wealth is now being exploited efficiently, but not prodigally, by a rapidly increasing population.
It is not much use giving any statistics about Canadian economy or population, because they are both increasing so fast that the statistics are usually out of date by the time they are published. The city of Edmonton, which a few years ago was the sixth in Canada, woke up one morning last November to find that it

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was the fourth city, because its population had just about doubled since the last set of figures was published. But nobody yet knows how much more it has increased since the present set of figures was compiled.
Canada is a young economic giant which wants to trade with Britain, and I do not think British industrialists have yet fully woken up to its importance. They want more capital goods and more consumption goods. British exports to Canada are usually cheaper in price and better in quality than those from the United States, which at present enjoys a major share in the Canadian market. However, we have two great handicaps, both of which can be overcome if we take the trouble to overcome them. One is unpunctual delivery. That, of course, is a matter which can be redressed only by industry itself. It may be that the long duration of the sellers' market after the end of the war has led some industries into the habit of thinking that punctuality does not matter. But the sellers' market has now gone; we have to engage in keen competition with our foreign competitors, and the most progressive of our customers will not wait for goods which are not delivered on time. Our other handicap is ignorance of Canadian needs, which is hardly surprising, because the Canadian economy is changing so fast that it is difficult to keep pace with it at a distance of 3,000 miles.
We have scored some good points lately in the Canadian market, particularly on the side of capital goods. All the material for the great pipelines—the West Coast transmission and the Trans-Canadian pipeline for carrying supplies of natural gas across Canada and the United States—have been supplied by British firms, and a great deal of the best electrical equipment in some new industries has also been supplied by leading British firms. These are all very creditable results, but they represent only a small fraction of what we could be selling to Canada now, and a still smaller fraction of what we ought to be able to sell to Canada in ten years' time.
The potential market for consumption goods is equally great, because the increasing population of Canada is earning such high wages that it is now uncommon for a married Canadian
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worker to live in a rented house. They are all buying or building new houses, and paying for them on the instalment system out of their wages; and if they want to move to another part of the country, they seldom have any difficulty in selling their house at a profit. That creates a huge demand for domestic goods of every kind. Not long ago, a small Scottish firm which exports floor covering found itself unable to sell a single yard of linoleum in Canada; then a representative went there and found that they wanted linoleum of a slightly different colour and pattern. The firm made a slight alteration of its plant, and in one year increased its Canadian exports from nil to £110,000; and it is hoping to double that figure in another year. That is only a trivial example of what could be done if we took more trouble to make proper use of the market which is waiting for us in Canada. The Canadians themselves feel strongly that we are not taking enough trouble to find out what they need and to sell them what they want.
When I was in Canada last winter I had the pleasure of meeting several of our Trade Commissioners in the Canadian Provinces, and I think it is impossible to speak too highly of the excellent work they are doing. The value to us of their services in promoting British trade in Canada is incalculable. But it seemed to me that the scale on which we enable them to operate is far too small. The salaries which we give them are not commensurate with the importance of the work they are doing; and however good a man may be at his job, if you pay him too small a salary that is bound to affect his status among the business community with whom he has to deal. What we want our Trade Commissioners to do is to introduce more British sellers to more Canadian buyers, and they will obviously be able to do that a great deal better if they can move about on terms of rather greater equality with Canadian businessmen. I thought, also, that the staff with which we provide them is not nearly large enough for the areas of territory they are expected to cover. We have only one Trade Commissioner, with a staff which could be counted on the fingers of one hand, for the two great Provinces of Manitoba and Saskatchewan, which are about equal in extent to the whole of the proposed

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European Free Trade area, and which may soon be almost equal to it in economic importance.
The time for British manufacturers and traders to establish a firm foothold in the Canadian market is now. In two years' time the St. Lawrence seaway will be open, and we shall then be able to send British goods by the cheapest method of transport into the heart of Canada. A great export drive of British goods to Canada now might cost us a few more of our precious dollars. What is needed is to spend more on the Board of Trade and the Commonwealth Relations Services there, and to give better dollar allowances to British visitors who go there. It is impossible to earn money without spending it. When the Province of Ontario was settled by the United Empire Loyalists after the American War of Independence, the British Parliament, on the advice of the Younger Pitt, who was then Prime Minister, gave them a grant of £4 million, which was a great deal of money in 1784, when our whole national revenue was only £15 million. That was a gift without interest, and I think it was the best overseas investment which Britain has ever made.
I am all in favour of expanding our trade in every possible direction—indeed, we must do so—and I am sure that it is possible to reconcile British participation in a European Free Trade area with our obligations to Commonwealth countries. But I think it will be very much in our own interests if we keep our eye fixed on the right target; if we give priority of attention to a country which is going to provide the greatest export market in the world—a country which does not impose any barriers at all to British trade; a country which can pay us in the dollar currency, which we need most, and a country which is a loyal member of the British Commonwealth.
4.30 p.m.
LORD DOUGLAS OF BARLOCH: My Lords, before I pass to the main topics with which I wish to deal, I should like, as a Canadian myself, to thank the noble Earl, Lord Dundee, for what he has said in his speech about the Dominion of Canada, its expanding and virile economy, and the opportunity which it so willingly offers for British trade.
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There seem to me at the present time to be three essentials for the economic progress and well-being of this country. The first is a reduction and a redistribution of the burden of taxation; the second is stabilisation of the purchasing power of currency, and the third is the removal of obstacles to international trade. All those are important and vital to our economy. The Budget, which has just been introduced, goes some little way in affording relief from the extraordinarily heavy taxation with which we have been burdened for so many years. The adjustments for the most part are in direct taxation. I hope that the time is coming when further relief will be given to indirect taxation, whether of purchase tax or of custom duties, because there is quite a large section of our population who cannot obtain relief from taxation in any other form than that.
It is very important to reduce taxation which is reflected in the price of commodities, because that, at any rate, does something towards stabilising the cost of living, and a steady rise of prices is undoubtedly a cause of extreme discontent to the working population. And, of course, it is one of the strongest reasons for ever-increasing demands for higher wages. I am not objecting to higher wages; I am all in favour of them. Those who contribute by the work of their hands and brains towards creating the wealth of this country deserve to be paid for it. There is need, therefore, for a readjustment of the burden of taxation so as to relieve the price of commodities.
And there is a need for readjustment in other ways than that. One of the most conspicuous examples, to my mind, is in the rates which are levied for raising revenue for local authorities. They constitute to a large extent a tax upon housing accommodation, and as rents become decontrolled and the level of rent rises, it is inevitable that when a fresh revaluation is made for purposes of local taxation the rateable value of houses will rise very much indeed, if it is to be brought into accord with the true economic facts. It seems to me impossible to continue for ever to rate other properties upon their present-day values, and to try to rate dwelling-houses upon the values which they would have had in the year 1939. This, again, is a tax upon a commodity of general consumption—the accommodation which everybody must have for

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himself and his family. I think the time is now long overdue when we should do what has been done in many other countries, and make a distinction between the value of the building and the value of the site upon which it is placed, and diminish the taxation upon dwellings and other improvements, and impose a rate upon site values in place of it. I do not wish to pursue that point any further.
I want to turn now to the question of inflation, and I am glad that in every quarter of the House to-day there has been a plea that this problem should be dealt with. There was a time, until comparatively recently, when debasing the currency was regarded as entirely immoral, as a species of theft upon a gigantic scale. It was left to this age to pretend that there was something virtuous in this process, and that out of it advantages could come to some or other class of the community. I do not believe that. I think it has been upon every occasion an unmitigated evil. I know that it has been defended by ingenious arguments.
Our late colleague Lord Keynes certainly expounded a thesis which was intended to prove that inflation was beneficial. Among other virtues of it, in his view, was that it would produce the euthanasia of the rentier. Indeed, that has been taking place in recent years. But who are the rentiers who have gradually been squeezed out of existence? They are the old age pensioners, the people who have saved a small amount of money intended to sustain them in their old age, the people who have invested in savings certificates and other Government securities, and who have been advised to do so by successive Chancellors of the Exchequer. Those are the people who have been gradually squeezed and, indeed, rapidly squeezed, by the process of inflation. Others, who possess greater resources and more knowledge and experience, have been able to evade the consequences; and so, at the same time as we have had the euthanasia of the rentier, we have also had the paradise of the speculator, because a period of inflation affords far more opportunities for his enterprise than does a period of stable money and steady prices.
This process of inflation has not only produced those results but has interfered with rational economic calculation and
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the proper conduct of business. In order that the economy shall expand, it is necessary that there should be not merely the maintenance of its existing capital equipment but a progressive increase in the amount of capital invested per worker. It is only upon that basis that the economy can continue to expand and that production per head of population can increase. The result of inflation is that, in order to replace its capital, a business has to calculate depreciation not in relation to the original cost of its equipment, but in relation to the ultimate cost of replacement when that is necessary. In the arrangements between the taxpayer and the Inland Revenue, no account whatsoever is paid to that factor. Therefore, the whole cost of replacement cannot be charged as an expense of running and maintaining the business but has to be met out of accumulated profits, and the accumulation of profits during a period of extremely high taxation is, of course, very difficult to achieve. Thus the high rate of taxation, combined with the steady inflation and increase of prices, has made the conduct of business and the expansion of our economy extremely difficult.
Now it is said—and I think I even detected an echo of it to-day—that inflation arises because people are so naughty as to wish to spend the money which they earn. I disagree with that view entirely. The whole object of economic life is to obtain goods for consumption, and to imagine that it has any other purpose is to turn the whole process upside down. The noble Lord, Lord Brand, quoted a very interesting article which appeared in Lloyds Bank Review by Mr. Roberts, and I think one of the most remarkable things in it is that he pointed out that, in general, wages were below, rather than above, the value of labour; therefore it paid employers to pay some, at least, of their workpeople more than the rates of wages which had been negotiated for the trade.
If that is true—and I believe it is—it is a conclusive answer to the argument that inflation has been caused by the pressure of the trade unions to increase wages. That argument is simply not true. Inflation is caused by Government policy and by nothing else. It is caused by the increase in the circulation of money. It is caused by the expansion of the issue of Treasury Bills and short-term securities

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by the Government which can be readily turned into money if the holder so wishes. So long as the Government continue to pursue a policy of that kind, so long will inflation continue, no matter what happens to rates of wages and to other circumstances in the economy.
Lastly, I want to say a word about the third topic which I mentioned—the need for the removal of barriers to international trade. It would, I think, be a very considerable step forward if a free trade area was created in Europe, so long, of course, as it was upon the basis that it was not a Customs Union and that the participants in it were not debarred from lowering their tariffs to other countries if they wished to do so. That condition is absolutely essential, because, although it is desirable that we should expand our trade with European countries, it is also essential that we should expand our trade with other countries, notably with North America, both Canada and the United States; and as those countries are pursuing on the whole a liberal policy with regard to trade, the opportunity possibly exists for extending that process further and reducing the barriers to trade between us and them. I sincerely hope that something of that kind will be possible, because international trade, while valuable to most countries, is of paramount importance to us, and has been for many generations.
We are dependent upon other countries for the procurement of both food and raw materials, and will continue to be so. After all, trade is an integral part of production. Goods are not of value until they have been brought to the consumer, and the process of bringing them there is as much productive as the fabrication of them. I hope, therefore, that further progress will be made in reducing and readjusting the burden of taxation, in stabilising the currency and in opening the channels for trade between this country and other countries.
4.48 p.m.
LORD MELCHETT: My Lords, I knew that I was inadequately qualified to take part in a debate in your Lordships' House on this very important subject, and I was all the more conscious of the inadequacy of my knowledge when I listened to the noble Lords, Lord Pethick-Lawrence and Lord Brand, reviewing our economic problems right
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back into the Victorian era. I became very much more aware of the fact that my own active interest in our national affairs goes back only to the end of the last war. When he came to the latter part of his speech, the noble Lord, Lord Brand, called on two young economists to support and sustain his argument that it was essential that we should have a slightly higher percentage of unemployment in order to stop inflation. I imagine that both those young economists belong more or less to my own generation, and I cannot allow this occasion to pass without saying that, even if we belong to the same generation, I could not possibly disagree more strongly with that proposition.
I consider it an absolutely fundamental responsibility of civilised and well-managed society that it should provide full employment for all people who are fit and able to work. To advocate in this day and age that it is necessary to hold the threat of unemployment, and all the human misery that goes with it and is synonymous with it, over the heads of working people, in order to control our wages policy and inflation, I believe to be both dangerous and entirely unnecessary. I must admit that my experience is very limited. I have had a little experience of industry and of managing people, and I am firmly convinced that it is possible to arrange a balance between the various calls on labour, the remuneration of labour and their terms of employment, in conditions where there is no surplus, or, at least, only the surplus required for people moving from job to job and the basically unemployable.
It requires, of course, a great deal more effort and a great deal more imagination on the part of management, as well as on the part of the organised labour unions. You do not, in my opinion, hold people in jobs and attract people to jobs only by paying higher wages than are paid by the alternative employer up the road. You keep them for a large number of reasons: more intelligent management; better facilities; profit-sharing, incentive schemes; explaining to people what their jobs are about; interesting them in their jobs, making them feel part of something more than a routine job where they do their work and leave at the end of the week with their pay packets. All this implies a much greater sense of responsibility, and requires far

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greater effort on the part of management; and I believe it is in that sphere, and not by returning to conditions of unemployment, that we shall find the solution to our wages problems. I did not intend to say anything on that subject when I came here this afternoon, but in view of the point which I think the noble Lord, Lord Brand, was trying to establish, I felt bound to express those views to your Lordships.
As I said, I have been conscious of these complicated matters for only a short period of time, during the post-war years; and throughout that period we have been faced with what has been referred to this afternoon as a series of recurring crises. I would rather view those years as a continuous crisis with periods of improvement, moments when things looked as though they were getting a little better; but the basic balance of payments difficulties and the main cause of the periodic acute crises have been with us the whole time.
At each moment of acute crisis various reasons have been produced for our difficulties. First, we were suffering from having fought the war and from all the devastation that it had caused and the amount it had cost us. Later, we established an enormous welfare system and brought about many social reforms, all of which, of course, had to be paid for. Then, after Korea, we started rearming. More recently, we seem to blame Suez as being very largely at the root of our immediate difficulties. As noble Lords will have seen, in the Economic Survey Suez is referred to liberally as being a factor which has accentuated our difficulties. No doubt that is true, but the difficulties were there; and I do not believe that Suez is anything very exceptional.
We are going to have recurring "Suez-es" of one sort or another. We have had all sorts of similar difficulties at varying periods since the war. We had the Korean war; we had troubles in Malaya; we had Abadan. I simply do not believe that we can look forward any time in the next twenty-five years to a period where we shall not have that sort of difficulty. It may not be "limited" wars, but even if it is not, we may have basic economic problems. It does not require much imagination to visualise the difficulties that would face us if we were
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to lose, say, the dollar earnings from Malayan rubber and tin; if we have difficulties in getting all the oil we require from the Middle East—not an impossible proposition; if we experience a change in the terms of trade that we now enjoy with West Africa, which are very preferential and on which a large part of our diet is based. Difficulties of this sort arise continuously, and I am convinced that we shall have them in the future.
Another difficulty which is likely to become accentuated in the next few years is the terms of trade, the difference between the prices at which we are able to import materials into this country and the prices at which we can sell our manufactured goods. The tempo of industrial development and production all over the world is increasing. The call on the available supplies of raw materials is putting them up in value the whole time, and we shall have greater difficulty, as the years go by, in getting the materials we need at attractive prices. Technical developments in automation and in other directions may enable us to become more efficient, but that is a two-edged weapon, because in so far as manufactured products fall in value as compared with raw materials, we shall be in a much more difficult position vis-à-vis our competitors overseas who are better endowed in raw materials. After all, we have to import practically all the materials we need.
The point I wish to establish is that we ought to consider our economic policy against the background of the facts of the world as it has turned out to exist in the post-war years, rather than as we should wish it to be; not trying to excuse our difficulties by various international crises but facing up to the fact that there will inevitably be difficulties and crises, and that we must have a plan which gives us a more stable basic balance of economy on which we can plan for the future. The Economic Survey, dealing with the prospects for the United Kingdom tells us in paragraph 90:
" The outlook will continue to be dominated by the necessities of the balance of payments."
Further down the same page, paragraph 92 says:
" We can look forward to further progress in industrial investment and with it further improvements in the living standards of the whole community only when the balance of payments has been placed on a really secure footing."

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I have no doubt that few people would disagree with that proposition.
If I may refer your Lordships to the section dealing with the general assessment—paragraph 79—I would point out that there is a statement which says:
" Restoration of the current balance of payments surplus without checking production could have been achieved only by an even better export performance."
Of course, that is referring to last year. But is that really the last word? Why just a "better export performance"? How about saving imports? After all, this is a balancing problem; there is just as much to be gained by saving imports as there is by increasing exports. I really cannot understand the extent to which the Government, as one sees here in this White Paper, is so set on this one-sided approach of striving for increased exports.
Since he took office as Minister of Power, the noble Lord, Lord Mills, has advocated the necessity of our investing more in our coal industry; of developing coal to the utmost extent, and of making use of coal in as many ways as possible—even deriving oil from coal, and gasification, and all the other various openings. That argument has, to a great extent, been based on the fact that coal is a natural resource of this country: it is part of our own wealth; we do not have to import it. Why, then, cannot we pay more attention to our other great natural resource, which is our land, and to our ability to grow things—food and timber? Can we afford to go on ignoring this natural resource which is right on our very doorsteps?
The products of the soil—that is, almost exclusively food and timber—amount to half of our total imports bill. I know that that has been said often before, and often in your Lordships' House, but I make no apology for repeating it. We imported £3,900 million worth of various commodities last year. Amongst those were included half of our food, which cost £1,250 million, and 85 per cent. of all the timber and wood products that we require, which amounted to £430 million. We do this as a matter of policy; it is certainly not necessary. It has been established technically for many years that we could reduce these imports and substitute home-produced products. Those of your Lordships who are interested in the technical aspects,
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which are obviously not suitable to be raised in a debate of this character, will no doubt study the Report of the Natural Resources Technical Committee on forestry, agriculture and marginal land, which adequately demonstrates what are the possibilities for increasing these products.
I will not enter into a detailed economic argument as to whether or not this is desirable purely from the point of view of economics: that is, whether it is desirable to grow more here in the way of food and timber as opposed to importing it. But I ask Her Majesty's Government this question: is it not well worth while again exploring this alternative? It is very much out of fashion at the moment, both with the Treasury and, one gathers from the White Paper, with the Government. But there is a large body of extremely well-informed opinion, economic, scientific, and industrial, which is convinced that a great deal more could be done to help—obviously, it is not a sinecure—the balance of payments problem by investing more and paying more attention to developing the natural resources of these Islands.
Is it not possibly also time to consider whether one or two of the other basic assumptions which lie behind our economic policy are really sound and working in practice? Several noble Lords who have spoken this afternoon have pointed out the difficulty of our investing abroad while we are bedevilled with a lack of surplus resources. Indeed, we are short of savings and real resources to invest in this country. Is it possible for us to go on playing a leading part in investing in under-developed areas? If you are going to take real resources from this country and build a steel mill in an underdeveloped area or put up a hydro-power scheme in Central Africa, or any other major project of that type, it can only be done at the expense of building something similar in this country. If we had a real surplus of money, of savings, so that we could pay other people to carry out those works abroad for us, that would be one way of doing it; but we have not a real surplus. If we had an actual surplus of labour and productive capacity, so that instead of increasing our steel plant in this country we could put the spare people to work to build a steel plant in some other part of the world, of course that would be possible. But

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as things are at the moment, we are fully committed, fully stretched, and, indeed, as most people seem to be agreed, we are, if anything, lagging behind in the rate of our industrial development and capital formation in this country.
My Lords, is it possible that we are suffering from what has been described as "delusions of grandeur" in this question of investing in under-developed areas? What are the real advantages to us? Looked at purely from the point of view of either reciprocal business or as an investment yielding long-term profits or earnings to this country, many of these investments are, to say the least of them, unattractive. It is, of course, difficult to face up to the fact that in regard to this great part that we played in investing overseas in territories where we are particularly committed, we can perhaps no longer sustain the effort. But if it is a matter of fact, is it not better to face up to it now and look for some alternative?
For instance, we could be more active in taking a lead in creating investment and lending institutions of an international or regional character, where either the savings and surplus funds of the European community or surplus investment funds which are available in other parts of the world—a great amount has accumulated in Switzerland nowadays, but of course there are surpluses available also in the North American continent—could be channelled into some of the territories where we ourselves are trying to carry the whole, or a large part, of the burden. That may not sound very attractive to some people, but if it is a matter of fact that we cannot afford to do it ourselves and are doing it at the expense of the economy of this country and our future stability, I feel it is time that people were at least faced with that choice: that either we make this investment overseas and go without something here, or we make the investment here and try to take part in some more general scheme for financing under-developed areas.
In the realms of defence, which we have had to face in the last few weeks, we have been told that it is impossible to defend this country by ourselves and that it can be done only as part of the collective security of the free world. It is equally true in the realms of economic
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development that there must be a collective effort by the Western world—the highly developed world—to invest in and support the under-developed areas; and I would submit that it is quite impossible for this country to take an unreasonable share of that burden on its own shoulders. In passing, I should like to make one reference to defence. We have had an enormous burden to carry in respect of overseas garrisons and bases for the defence of our interests all over the world. Would it not be possible to find a means of bringing bases such as Cyprus into N. A. T. O. rather than sustaining them as purely British bases? Can we foresee circumstances in which we shall again use these bases for a purely British operation outside the collective defence system of our Allies? If that is the case, surely we can also spread some of the costs and expenses of our overseas bases over the N. A. T. O. countries and our other Allies.
Lastly (and I apologise for detaining your Lordships so long) there is the question of sterling and its position as an international currency. The noble Lords, Lord Brand and Lord Pethick-Lawrence, and others, have this afternoon once again pointed out the total inadequacy of the reserves of the sterling area to stand up to use as an international currency, and the imperative need to build up those reserves if we are to continue to have sterling used on an international basis. I am unconvinced as to whether it is either possible or desirable to try to continue to have sterling used as an international currency. What are the advantages to this country? We are told that there are earnings from foreign exchange transactions; that we get a certain amount of business transacted through London and that the wide use of sterling is of great national importance from many points of view. But if it is as important as all this, it is extraordinary that there is such a complete lack of statistics to show that, in fact, we make any profit on our foreign exchange earnings, or to what extent.
LORD BRAND: My Lords, may I say a word in reply to the noble Lord's point? I do not think I referred to what one might call the "City earnings" at all. I want a stable currency. With a stable currency and strong reserves we may leave sterling to be either a national or an international currency—it does not matter which. It probably will be used

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all over the world because we have certain institutions. I am not interested in the earnings of foreign exchange dealers but in having a stable currency for the people of this country.
LORD MELCHETT: My Lords, I entirely subscribe to the view of the noble Lord, Lord Brand, that we must have adequate reserves in order to have a stable currency, and that if we have a stable currency it may be used over a wide area. What I am not convinced about is that it is possible to get it used or to keep it in being as an international currency, as we are so extremely vulnerable. We have now made sterling transferable to non-residents and, as we have seen in recent months, when there is a very small upset in the world, which can be quite outside our control, an intolerable strain is put on sterling and in turn on this country, and we have to take drastic steps to hold the situation—steps which have real repercussions on our whole economy. If we are doing this in order to maintain sterling as an international currency—
LORD BRAND: A stable currency.
LORD MELCHETT: My Lords, I am in favour of maintaining a stable currency, but I am putting the proposition that if we are doing it partly to maintain it as an international currency, ought we not to question whether that is really desirable? So far as I can see, it would be desirable only if there were real advantages, either because of trade through London, or earnings, or perhaps for many other reasons of which I would not know. I simply put forward the view that it should be carefully examined as to whether it is possible or desirable to continue to press to get sterling back to the kind of status quo ante where it was a strong international currency, carrying such a large part of the world's trade.
I make no apology for putting forward views which I fear some of your Lordships may find slightly unconventional, and even heretical. I have suggested that we should reconsider certain aspects of our present policy, particularly in regard to imports, investments abroad, especially in under-developed areas, and also the position of sterling as an international currency. I have done so only because I believe that the present policy,
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if it is continued unmodified, will be getting to the point where it is really unworkable. Indeed, I think in some respects it has already proved itself unworkable.
I am not qualified in any way to know whether alternatives exist or if alternatives are necessarily desirable, but I do ask, in all humility, that some of these points should be given very careful re-examination (I have no doubt they have been examined) as we seem to be making slow progress towards greater stability. We live in an age of Comet aircraft, nuclear power stations, managed economies and managed currencies all over the world. We must adjust our economic thinking and planning to keep pace with events, or we shall be in a very difficult position in years to come.
5.20 p. m
VISCOUNT MASSEREENE AND FERRARD: My Lords, I feel that I should offer some excuse for speaking in this debate, in that I can claim no degree in economics. Since, however, the wealth of this nation has not been created by economists, and since Mr. George Bernard Shaw has told us that if all economists were laid end to end they would not reach a conclusion, I feel emboldened to speak. For I, at any rate, have reached a conclusion. It is surely highly satisfactory to have an economic debate in your Lordships' House where Party rancour is non-existent. In our great nation, clustered as we are on this overcrowded island, we cannot afford to let the basic principles of economics be submerged in the welter of human frustrations and passion. If there is one sphere in which we dare not make mistakes to-day, it is in our economy, balancing as we are on a tight-rope of export-import stretched across an increasingly competitive world. Unlike the position in the past, as the noble Lord, Lord Pethick-Lawrence has said, we have no ample safety net of gold and foreign investments to tumble into. To-day, one wrong move and our standard of living crashes.
I saw it reported that Her Majesty's Minister for Publicity, Dr. Hill, stated at a Press conference that the economic position of this country was strong and healthy. All I can say is that I am only

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thankful that I have never been one of the doctor's less robust patients. I doubt very much whether the economic position of this country has been basically strong and healthy at any period during my lifetime—certainly it has not during the last twenty years. This does not mean that Her Majesty's Government have not every reason to congratulate themselves that the measures taken last year to relieve the inflationary strain on our economy have had success. Our debit trade gap with the world was reduced from £859 million to £571 million. Whether a £571 million trading debit can be called a "strong and healthy position" is surely open to doubt. I think that "improvement" would be a better description.
In spite, however, of this trading debit, we have, as the noble Lord, Lord Brand, pointed out, a surplus on balance of payments. But when we look into this it appears that it is chiefly owing to defence aid and to the fact that the annual interest on the North American loans last year was paid into special accounts and not entered in current debits. We have also, as the noble Lord, Lord Brand, pointed out, borrowed 561 million dollars from the International Monetary Fund which have to be repaid by 1959. We further obtained stand-by credits from the International Monetary Fund and the U.S.A. Import-Export Bank to the amount of £440 million to bolster up sterling. When we take these figures into consideration it will be seen that the surplus on our balance of payments is really due to defence aid and borrowed money. I do not want to appear a Jonah, but the point I am endeavouring to make is that although the figures for 1956 make happier reading than those for 1955, they give no undue grounds for optimism. As the Economic Survey points out, we were one of the few countries outside the dollar area which did not increase their gold and dollar reserves. Is it not also a sobering thought to realise that last year wages and salaries increased by 9 per cent., while output per man fell by 2 per cent.? In fact, industrial production did not expand at all. That output per man should decline is most disheartening when we take into consideration the increasing amount of capital invested yearly in plant and machinery.
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The one bright spot has been agriculture, where, in spite of the appalling harvest weather, net output increased by 3 per cent. and output per man by 1 per cent., notwithstanding that during this period the volume of capital investment in agriculture declined. That is a fine performance, for which every credit is due to the agricultural policy of Her Majesty's Government and to the farmers and the workers generally in the agricultural industry. But agriculture does not suffer from strikes and restrictive practices. Is this not where we hit the nail on the head? If production per man per annum would increase in terms of wages paid, our economic insecurity would vanish, and we could build up substantial overseas investments from our trading surplus. The question is how to get increased production for increased wages, for the latter without the former is economic suicide. You can bring a horse to water but you cannot make it drink. I think it was the noble Lord, Lord Brand, who said that in a democracy you cannot control the ever-rising wages. How can it be brought home in our democracy to the British working man that in his own interests he must make the best use of the tools given him, and that he must not perpetually come out on unofficial strikes for incidents so trivial that they belong to the nursery?
It is said, perhaps callously, that only two things make men work—fear or ambition. The Welfare State has removed fear, while not all men are ambitious. What is the solution? In fact is there a solution within the framework of democracy, or will labour eventually forfeit its freedom to an all-powerful State? I do not think so. In my small way, as an employer in light industry and agriculture, I consider that the British working man is second to none in the world, but he is suffering from a mental sickness, a hangover from past grievances, some real, others imaginary, an attitude of mind which was not helped between the wars by a flood of mischievous propaganda "agin the bosses". Some of the spokesmen can hardly complain now if the workers in the nationalised industries took them at their word—chickens always come home to roost. Without doubt there are forces agitating in industry to-day whose object is to bring economic chaos and ruin to our

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country, thereby preparing a fertile seedbed for Communism. I believe that these subversive elements would have no success at all if the British working man were taken more into the confidence of managements and could gain the simplest knowledge of economics.
Your Lordships have probably heard of a B. B. C programme called "The Archers" which explains to our vast urban population, in a very human family story, the facts of rural life. Could not Her Majesty's Government sponsor, in conjunction with Her Majesty's Opposition perhaps, an "Archers" programme on the radio or television to bring home to the industrial population that if you take more out of the pot than you put in, the end is an empty pot? I understand that in America all schools teach simple economics. Could not all British schools do the same? I have been to America two or three times, and during these periods I have been struck by the quite different attitude of the American worker towards management and capital, compared to that of his British counterpart. There is none of the suspicion or envy so often evident over here. I am convinced that this is largely because he understands the basic principles of economics.
I hope that your Lordships do not think that I am over-emphasising the importance of labour-management relations in our economy. I feel very strongly on this point: it appears to me to be the whole crux of the matter. Management must take a fair share of the blame. In very large factories, of course, it is not easy for management to retain the personal touch with the man at the bench, but every effort must be made to do this. It is useless talking about joining the free market, common market or any other market in Europe unless restrictive practices and strikes stop. Let us put first things first, the horse before the cart and not the cart before the horse.
If only we can clear away from our labour relations the smog of past grievances and ignorance, the future would appear to be extremely rosy. We hold all the other trump cards. Our nation has the finest scientists, inventors, engineers, executives and craftsmen generally to be found anywhere. To use slang, we have the "know-how". We
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appear to be ahead of the world in atomic energy for industrial purposes, a fact which offers exciting prospects in the production field. We have vast resources in the Commonwealth and Colonies still waiting to be tapped. The noble Lord, Lord Melchett, does not think there is much object in tapping them, but I beg to disagree with him. The standard of living throughout most of the world is rising, offering unlimited scope, for a great trading nation such as ourselves. The luxuries of yesterday are becoming the necessities of to-day. Full employment for the nation should be assured into the foreseeable future, provided, of course, it is understood that the object of production is, first and foremost, to produce goods.
What is the alternative to happy relations in industry? It is ever-increasing inflation, while we stagger from financial crisis to financial crisis and price ourselves out of world markets. No matter how brilliantly Treasury officials juggle with the figures, or how able our Chancellor of the Exchequer—and if I may say so, we have a most able one—it is only the people themselves, united as a whole, who can produce the wealth to maintain the Welfare State and increase their standard of living. As the Economic Survey points out, and as several noble Lords have said this afternoon, our prospects will depend mainly on the expansion of exports, but we shall need drive and determination if we are to take full advantage of the expanding markets. If we as a nation refuse to see the red light, and are led astray by agitators who care not one iota for the welfare of the people they profess to support, then indeed we shall get the Government we deserve. Before I conclude, I should like to remind your Lordships and the nation that those who would create a loafers' paradise will, as sure as night follows day, end up in a dictator's hell.
5.42 p.m.
LORD CLITHEROE: My Lords, when one speaks rather late in a debate it is always tempting to speak at some length, because one wants to comment on a good many of the speeches made by other speakers. I will not spend long discussing the last two interesting speeches to which we have listened. I certainly will not argue the merits of the Chancellor of the Duchy of Lancaster as an economic diagnostician, and

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I will not attempt to deal at length with the interesting speech made by the noble Lord, Lord Melchett, although I should like to deal with it at some time if I could. I think I understand what the noble Lord was driving at when he was discussing the question of sterling as an international currency, although at first I was not quite clear. I quite understand that if sterling does not remain a sound currency, then the price that we may pay for trying to use it as an international counter may become a heavy one; and I think that that is a point which merits a great deal of thought.
The noble Lord, Lord Pethick-Lawrence, introduced the debate, as he always does, with a fascinating speech. I am going to devote the few remarks I shall make to the House to the topic which has been raised by so many noble Lords—namely, the question of the depreciation of our currency. I am quite certain that the ordinary people of this country of all sections are unaware of the importance of this matter, although they all feel severely what they naturally describe as the rising cost of living. Before doing that, I should like to say a word or two with regard to the Budget, and to congraulate the Chancellor of the Exchequer on two changes that he made. The first is the new system of taxation of overseas companies, which I think will be of great importance to this country; and the other is the reduction of taxes on certain incomes. I must say I was encouraged to hear the Chancellor refute the suggestion that the Government are giving money to those taxpayers when, in fact, they are only slightly reducing the most excessive burden of taxation which these people have been bearing for many years.
I now want to come to my main theme, and I shall not make a controversial speech, at least from the point of view of Party politics. Like other noble Lords, I welcome wholeheartedly the appointment of Lord Radcliffe and his Committee which is to inquire into our monetary system and the working of it. Many of your Lordships have stressed this serious fall in the value of our money. I am not going back beyond the year 1946 for the moment, although your Lordships are no doubt all aware that the value of our pound now, so far as purchasing power is concerned, is only about
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one-third of what it was before the Second World War. I want only to go back to 1946, because the war was primarily responsible for the depreciation of the currency that took place up to that time. The depreciation which has taken place since 1946 has taken place under Governments of both Parties, and the purchasing power of the pound has steadily depreciated. Just to bring it home to your Lordships, I am going to read out the value of the pound, in terms of purchasing power, as it has been in this country since 1946. In 1946 we start at 20s. Then for the ensuing years, in their order, it was 18s. 9d., 17s. 5d., 17s. 0d., 16s. 5d., 15s. 2d., 14s. 5d., 14s. 1d., 13s. 10d., 13s. 4d., 12s. 10d., and now last March, the latest figure I have, 12s. 7d.: and it is still going down.
Apart from the duty of defending the country against foreign foes, there is no duty on any Government of more importance than providing and maintaining a sound currency. I do not apologise for again stressing to your Lordships the vast and enormous difficulties caused to the trading community by a fluctuating currency, or the suffering that it inflicts on so many members of the community. Currency which depreciates causes hardship to all holders of fixed incomes and creditors, and it gives an unjustified and undeserved reward to all debtors. This is grossly unjust and places a heavy burden on those who have saved: on those who have secured pensions for themselves by their hard work, or fixed incomes for themselves, as the result of savings either of their own or perhaps of their father, their husband or whoever it may be.
The social consequences of this fall in the value of currency are enormous, and history shows us that wars and revolutions are most apt to follow from them. I would suggest to noble Lords on both sides of the House that it would be quite futile to inaugurate a great new pensions scheme as a means of saving for old age, which in itself is highly desirable, unless we maintained a sound currency. Otherwise, we are just cheating people by taking their hard-earned money and eventually paying them back in money that is worth less. Without a sound currency that would be a first-class swindle on the public, and I hope that neither Party in the State will dream of initiating it.

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It is easy to say these things, and it is generally thought to be hard to propose remedies, though in his most interesting speech the noble Lord, Lord Brand, did propose certain remedies. But unless the remedies are found, we shall have continual industrial unrest, because the constant rise in prices naturally forces workpeople to ask for higher wages, and we shall have all sorts of serious consequences following from it. The most serious and obvious consequence will be the further devaluation of our currency in relation to currencies which have been better maintained. The noble Lord, Lord Pethick-Lawrence, said that a further devaluation would put finis to the value of sterling, to the British pound, and the noble Lord, Lord Brand, said that it would rot our whole society. I agree absolutely with them both.
Such a devaluation means a vastly increased cost of all our imports, without which we cannot live, and a reduced price for our exports; that is to say, we have to send more goods overseas every year for each quarter of wheat or each ton of raw materials we import. Those of us who can remember the early 'twenties remember what happened in the catastrophic devaluations which took place in Germany and Austria, when people were wheeling barrow-loads of notes about the place as a means of paying their bills. It is all very well to say that we in this country never go to extremes, but I can assure your Lordships that when you start down a hill you get to such a pace that nobody can pull you up. For goodness sake! let us pull up before we reach that point.
LORD GREENHILL: May I interrupt the noble Lord? It is not because I want to contradict what he has been saying about the value of the pound, but rather because the alarmist note which the noble Lord is striking is perhaps exaggerating the danger. My reason for saying that is that one hears similar complaints about the fall in the internal value of the dollar in America, where, over the last few years, the purchasing power of the dollar has been falling so greatly—though not perhaps to the extent the value of the pound has fallen here—as to cause alarm among the people of America.
LORD CLITHEROE: I fully appreciate the noble Lord's point, and I entirely sympathise with him. It is difficult to get the balance right. One does not want to be alarmist, but one does somehow want to arouse people to the dangers which are before them.
So far as the value of the pound in other countries is concerned, although it may affect our balance of payments difficulties, it does not make the slightest difference to the other serious consequences that I have been pointing out—namely, the immense impact which the fall in the value of money has on the people who have pensions here, even if similar things are happening in other countries. Of course, the noble Lord will agree that the fall in the value of the purchasing power of the dollar has been nothing like as great in the United States as the fall in the value of the pound here; and there are certain other countries who have managed their currency even better than that country.
We have been told by many noble Lords why this has happened. Broadly speaking, it is because the Government and the country are spending more than we can afford. Again, broadly speaking, I think that is the truth. Since 1951, the fiduciary issue has increased by 40 per cent. I am not going back many years. In January, 1952, the figure was £1,400 million, and in April, 1957, £1,975 million. Noble Lords are aware that since the end of the war we have placed the power to increase the fiduciary issue in the hands of the Government of the day without the necessity for them to obtain the prior consent of the House of Commons or of Parliament as a whole. That is a thing which I have not heard referred to by anybody. It was slipped through without anybody knowing about it. Now, all the Chancellor of the Exchequer has to do is to sign a chit, and it is done. I do beg the Radcliffe Committee to give due weight to the fact that all forms of credit: have some ultimate dependence on the stock of legal tender in existence. All forms of credit are related to that in some degree. I suggest that that fact has been largely ignored in recent years, and ignoring it had led us into trouble. There are eminent economists (I am not an economist) who share my view on this matter, and I hope the Radcliffe Committee will give attention to it.

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We have ahead of us at the present time an enormous programme of capital development. Those nationalised industries over which the noble Lord, Lord Mills, has some oversight, rely upon the Government under the new arrangements for their new capital. They go to the bankers now for working capital, day-today capital, but they rely on the Government for permanent new capital. This programme, which is for much-needed developments that have the support of all intelligent people in this country, amounts to enormous figures. I do not know whether noble Lords opposite have noticed the size of these figures, but adding up atomic power, electricity, coal and gas they amount to £4,700 million. In addition to that, the steel industry has a programme running into many hundreds of millions—a figure which has not yet been announced, but which I have every reason to suppose is a large number of hundreds of millions.
Many other great developments are on foot at the same time. The noble Lord, Lord Brand, referred to the "railway age". What was done in that period is the greatest miracle, I think, in our industrial history, but what we are attempting to do now is something even more. I assure your Lordships that if these great sums of capital are to be made available they can come only from two possible sources. One is savings, either within industry or outside it; and the other would be the investment of foreign funds in this country. I know of no other way. If the capital investment made in the coming years exceeds the supply of savings or foreign investment, and if the Government continue to issue more paper to fill the gap, that will inevitably, without the slightest doubt, cause a farther depreciation of our currency. Nobody can deny that.
It is clear that the programme of development and the savings that are required must be brought into line, and that the Government must cease the policy of printing paper to provide for capital development. Paper does not provide either labour or raw materials or brains, which are required in going in for these great developments. Printing paper may not be quite the literal truth, but if your Lordships look at the figures of the note circulation you will see that that is what it means in practice. The note circulation
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in 1950 was £1,287 million, and the average note circulation for this year is £1,949 million. That is a staggering increase since 1950.
May I be so bold as to make two suggestions to the Committee over which the noble and learned Lord, Lord Radcliffe, will preside? One is that they should study the history and the cure of previous depreciations of currency from the days when it was done by the clipping of coins, up to to-day, when it is done by the increase of the fiduciary issue. Secondly, they should take evidence, not only from the citizens of this country but also from distinguished observers from overseas—because outsiders often see a bit more of the game. I have not the slightest doubt that interesting evidence will be given by the Treasury, the Bank of England, the trade unions, the employers' associations, and by the bankers and economists in large numbers. It is right that they should all give evidence, and it is right that the representations of workers and employers should carry the greatest possible weight. But all those witnesses will have some difficulty in looking at the matter objectively. They are all deeply interested in it, and however objective you wish to be, when you are deeply interested, it is difficult to be objective. That is why I suggest most earnestly that much attention should be given to the evidence of history and, secondly, that we should get some evidence from distinguished observers from countries overseas, especially those countries, not excluding some of the Commonwealth countries like Canada, which have succeeded in maintaining a much sounder currency than we have. Take a country like Switzerland, which I think the noble Lord, Lord Brand, told us has maintained a stable currency for several years now. We could learn a lot from them.
We are living beyond our means and, unless we cease to do so, our currency will decline. That is another way of saying what the noble Lord, Lord Brand, said, that there must be some restraint of personal consumption. How to bring that about is the key to all these problems. We have either to increase our wealth by our work and our wits or we have to reduce our standard of living—one or the other. I suggest that any

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further creation of credit must be more closely related to output, and that effective control of the note issue is essential if a managed currency is to work honestly.
I remember in Bernard Shaw's The Intelligent Woman's Guide to Socialism that, after he discussed this currency problem for a long time he came to the conclusion that he would prefer even the gold standard to any standard managed by a Government. We have passed from those days and we must have a managed currency to-day.
I do not think that the noble Lord, Lord Melchett, quite did justice to the noble Lord, Lord Brand, in what he said about employment. I know that the noble Lord, Lord Brand, has no more desire than the noble Lord, Lord Melchett, or I have to see unemployment, but I do not think it is unfair to suggest that over-full employment is just as dangerous as under-employment. Of course, they are both undesirable things. The objective must be that everybody is fully employed: we must try to find the means of getting full employment. The dangers of over-full employment are as serious and menacing as are the dangers of under-employment. There is a great task before the Radcliffe Committee, and I know that the noble Lord, with the aid of his colleagues, will do his best to present the country with a Report which will give us something to work upon. I, for one, hope that it will not be too long before we receive it.
6.3 p.m.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I am quite sure that in all parts of the House we feel that this debate to-day has been well worth holding. We have been feeling that right the way through, especially after the opening speech of my noble friend, Lord Pethick-Lawrence. If the noble Lord looks me straight in the eye, I think he will agree with me that we have never really discussed religion together, but I should like to remember that the good is oft interred with men's bones instead of being brought out during their life. When I felt like this I went back to my room and picked up a little cutting. It is a cutting from Hafiz, who said:
" Fear God, and where you go, men shall think they walk in hallowed cathedrals."
When the noble Lord, Lord Pethick-Lawrence, talks to me or to anybody else
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about human things and economics, I feel I am listening to the good man who creates the atmosphere for me of the "hallowed cathedral".
I wondered to-night, when I was listening to him, whether he was really going to come down to the kind of problems about which I have been thinking. Towards the end, however, he put the historical approach to the subject and the debate which has taken place since has been on absolutely right lines. The noble Lord seems to have incited the kind of comment that I expected would be made. We are all very much obliged to him. It is a great tribute to his speeches on previous occasions that, however the Chancellor of the Exchequer may have arrived at his decision, he has nevertheless decided to appoint the Radcliffe Committee. That appointment cheers us on this side very much, because it is quite in accord with what the noble Lord, Lord Pethick-Lawrence, recommended.
I join with the noble Lord, Lord Clitheroe, in saying that I hope that that Committee will produce really substantial ideas for dealing with the very grave situation with which we are faced at the present time. I, of course, agree with the noble Lord, Lord Pethick-Lawrence, about the things that we have to avoid if we are to succeed. There must be no more such affairs as the Suez adventure—I will not comment upon it. We must work regularly to "scotch" inflation. We certainly have not given too much time in this debate, although we have given a great deal, to the question of inflation. The third point was that we must at all points build up the thrift of the people. I quite agree with the noble Lord that it is a fact, as was brought out in one or two other speeches, that the centre of gravity, as it were, of the money and resources of the population has shifted since the days about which he was speaking. The noble Lord is a Victorian, and the noble Lord, Lord Brand, is a Victorian.
LORD BRAND: Partly.
VISCOUNT ALEXANDER OF HILLSBOROUGH: I understand. They were talking about the fact that we have changed very much since then. I have been thinking while listening to all the speeches—and I have listened to all of them except one: that of my noble friend

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Lord Douglas of Barloch, who happened to be speaking while I was out of the Chamber—that the overriding difficulty which your Lordships' House is trying to face to-day is the problem of inflation. I do not often agree with the noble Lord, Lord Grantchester, but in his indictment of certain aspects of inflation I felt myself agreeing with him very much indeed. I should like a little more intimate knowledge of some of those bankers' directives than he seemed willing to give us to-day. I like the argument, but I should like to see some of those directives to bankers.
When he asked: "Do the Government no longer believe in profitability?", I felt very sorry that we could not get the noble Earl, Lord St. Aldwyn, on his feet to answer that question, because the noble Earl produced a White Paper in the House the other day in which he said that the aim of the Government's agricultural policy was to take the profitability out of several very easily and well-produced agricultural commodities. So it may well be that the Government are bound to answer "Guilty" to the noble Lord's charge and that they are giving up their belief in profitability. I would say to the noble Lord, Lord Grantchester, from my own experience of his previous speeches in the House and his great affection for the complete freedom of the individual to do almost just what he likes in the community with regard to the maintenance of profitability, that what he has suggested was not far off that.
LORD GRANTCHESTER: I suggested that profitability was a guide to what the people wanted, and that therefore profitability is the means of interpreting an economic democracy, as I understand it. You cannot make a profit unless you serve the public.
VISCOUNT ALEXANDER OF HILLSBOROUGH: That is certainly a definition. I will look at it on paper. I should not have thought it was the kind of special panacea to be applied to the great problems of inflation at the present time.
I was most interested in the speech of the noble Lord, Lord Brand. He and I look at a number of these economic problems from very different angles, but there is no reason why we should complain about each other on that count. In regard to the noble Lord's references
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to labour problems, especially those that were not his own but where he was quoting to the House from two economists, I felt very much at variance with those opinions. I wonder what the influence of those economists' opinions for dealing with inflation, if they were put into operation, would be so far as the organised workers of the country are concerned. My conviction is that if the economist, Mr. Roberts, who said we could hardly do with very much less than 2 per cent. of unemployment if we were to have something like a stable currency and a cure for inflation—
LORD BRAND: Is it not the case—perhaps the noble Viscount knows the exact figure better than I do—that we have 1½ per cent. unemployment now? I think so; I do not know.
VISCOUNT ALEXANDER OF HILLSBOROUGH: We have had an even smaller percentage than 1½ per cent., and it would not be as much as 1½ per cent. now if there had not been such a comparative stagnation in production in the last twelve to eighteen months. Because although certain export figures have improved, the rate of general increase of production we had in the country up to that time has gone down until it is actually reaching stagnation point. The 1½ per cent. includes some people who cannot find employment at present, and a good many who are working short time.
The other quotation—I think it was from Mr. Liddell—was in a similar vein. I would say at once that I have been working in the working-class organisation for almost all my life, and I have seen a great deal of progress made, both in the education and in the thinking of workers in those organisations, and especially those leading them. But if you try to go to-day to the educated worker and say, "You can have full employment only provided you can agree "—as it seems to me the economist he was quoting was suggesting that the Swedish T. U. C. were going to agree—
LORD BRAND: I dislike interrupting the noble Viscount. I promise to send him the two articles to which I referred, which will give him a pretty adequate account of the authors' views. I should like to put the problem like this. I know that if the word "unemployment" is mentioned

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one is bound to be criticised in every conceivable quarter. I should like to ask, how can you produce a state of affairs where the employer does not of necessity produce over-employment and inflation?
VISCOUNT ALEXANDER OF HILLSBOROUGH: I will look at that again in Hansard to-morrow and think it out, because it wants a little adjustment, having regard to what we heard earlier to-day.
From my experience, I do not think that if you go either to the trade union movement as an organisation, or to educated individual members, and say that you must have an economy in which about half a million unemployed must always be contemplated, you will get them to depart from what is still their fear, in view of what happened after the First World War—namely, the belief that "If we produce 100 per cent. we shall be gradually working ourselves out of a job ". That is the condition of mind among the workers that you must dispel, and we in the Labour Party believe that it is not impossible to organise full employment and yet not have a certain constant figure of unemployment. That can be done best by actual physical controls of the type that are sometimes rather frowned upon by members of the Party opposite.
I turn to the speech of the noble Earl, Lord Dundee. I am not going to criticise him at all, because I agree with most of what he said. The reference to Canada interested me very much. I think that what the noble Lord, Lord Melchett, said about investment overseas and the like wants examination; I think he put some very important points to us. I should like to feel that we had a much bigger British share in the investment which is now taking place and is still required in Canada. To do that we mast have a steady growth—and it is important to say that in this House, because the noble Earl the Leader of the House has under his special wing the development of the Dominions and must therefore have a special interest in the rest of the Commonwealth. We must develop every possible bit of good feeling in these Dominions and in the developing parts of our Commonwealth.
I think we had rather a set back in this regard, which I hope will not last
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and which I hope we shall recover from, arising out of the Suez affair. Sometimes we on this side of the House are charged with being the wicked people who help to produce difficulties for the Government over their Suez policy, but it is not so; there has been general criticism all the way round. I went just now to look at the Economist of February 9, in which there was an article on liberty, equality, and a word I confess I was a little puzzled over until I looked it up, sorority, which is something to do with sisterhood; I have no doubt the Minister of Education will tell me if that is correct. I was very struck with this passage, which I have remembered:
" Britain's historical rôle as mother country is not in dispute. But a conventional mother-daughter relationship ends when the daughters are mature enough to handle their own affairs. A certain time-lag may occur before the daughters see their emancipation clearly, especially if the old lady preserves a reputation as a shrewd adviser. But if Mum is caught pinching hats in Oxford Street, the relationship changes abruptly. She is now in need of advice herself."
If I had been the author of that comment upon the condition of the Suez affair, I have no doubt I should have got a very good slating in this House or anywhere else, and I think the illustration used by the author of that was a little hard. We could not describe the Suez affair as "pinching" anything. But if he had said that you have to be careful of a mother who engages in front of her children in the dangerous practice of picking chestnuts out of the fire, I think the illustration would be perfect. We need to recover all our good feeling and good will in the whole of the Dominions and Commonwealth.
THE EARL OF HOME: I think it is a common experience of all mothers and fathers that they are continually picking chestnuts out of the fire.
VISCOUNT ALEXANDER OF HILLSBOROUGH: I obviously ought not to have attempted to soften down the illustration, because the Government does not like it. I was trying to help the Government in the matter. If they prefer the other one, I will leave it.
I am, therefore, anxious to see investment go along in such a way that the returns from it can be profitable in our general balance of trade. I was impressed, most of all, among all the

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speeches from the other side, by the speech of the noble Lord, Lord Melchett. I think that he was facing up to modern conditions. He was trying to collect the facts in our minds and then trying to face them with realism. I hope that some of the things he said, especially with regard to sterling—I am not sufficiently expert to make a detailed comment upon his speech—will be brought to the notice of the Radcliffe Committee. It is certainly a matter for argument. The question of the use of sterling in a wide area, such as we have been using it now, even in conditions in which we cannot keep it stable, is a great question to have to answer. I should certainly like to see that question referred to the Radcliffe Committee. I should think it would be within the terms of reference which we have had brought to our notice to-day.
The other thing which struck me forcefully (I am glad to see that the noble Earl, Lord St. Aldwyn, is now on the Front Bench) was the reference to the means of helping our balance of trade by recognising that it is just as important not to have too large a proportion of imports as it is to have a steady increase, whenever we can gat it, in exports. I hope the noble Earl, Lord St. Aldwyn, will look at Lord Melchett's speech in tomorrow's Official Report, because it is worth bringing to the notice of the Ministry of Agriculture. They have done a great deal for agriculture, but I feel that in modern conditions, such as we have to face to-day, we can do a great deal to balance our trade position if we accept the task of producing more food in peace time, and make general provision, even for the difficult days of a future war, for the expansion of our growing of timber and also food products. I believe that a proper development of the ideas in the Agriculture Act, 1947, could secure that. It certainly will not be secured on the basis of asking farmers every now and again to take the profitability out of their particular commodity. I do not think that is the way to build it up.
I greatly appreciated the speech of the noble Viscount, Lord Massereene and Ferrard. I thought that he was thoroughly honest in picking out the points that ought to be observed by all impartial thinkers in dealing with the real assessment of which is the balance
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of payments situation at the present time. He gave adequate reasons why we should not be too "cocky", as it were, about the achievements last year, having regard to the balance of payments, because he gave the true facts. I was most struck with the common illustration used about the possible results of co-operation with the workers. I have been a co-operative propagandist for something like forty-five years, and we in our Co-operative Movement have always had one simple phrase to follow—namely, "If you put more in, you will get more out". The noble Viscount rather put it the other way round; that if you take it out and do not put any in, you get an empty pot. I think that is absolutely true. If you put more in, you will get more out.
But let the noble Viscount go away without looking at the latter part of his speech—that there are so many wicked agitators in the country that they are going to lead us into the disastrous result which he put into such vivid language in the last few words of his speech. They are not as bad as that. We in the workers' movement have difficulties to contend with, and the wrong agitators have got to be dealt with. But if he will continue to talk as he did in the other part of his speech, about giving new confidence to the workers, and about a proper share of that confidence being given to them in the ideas of management and the special problems of production, then, I believe that we can make real progress.
Now I come to the speech of the noble Lord, Lord Clitheroe, who concentrated on the one theme of depreciation in the value of our money. As to its possible effects, no one could quarrel with his assessment. But I still feel that we have not yet fully assessed the mistakes that have been made in both the main periods since the war. We in the Labour Party made mistakes when we were in office between 1945 and 1951. We know that we made certain mistakes—we cannot be perfect. But we found a very difficult situation in 1945. If we take the mistakes made since 1951, it falls to the lot of the present Opposition to try to point out what those mistakes are. No doubt noble Lords opposite will always find opportunity to point out our mistakes before 1951. At two successive Elections the

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country was promised a sort of "free-for-all"—reductions in food prices, all prices to be down, and that kind of thing. To find then that the value of the pound has depreciated on the rising of prices to the extent so graphically described by the noble Lord, Lord Clitheroe, suggests that the methods employed in managing our currency cannot have been completely right, or effective, or acceptable to the people themselves.
I believe that we cannot possibly get a cure, or even a substantial remedy, for inflation unless, in the circumstances in which we have found ourselves post-war and in face of the modern developments throughout the world, to which Lord Melchett referred, we have a planned economy for the country, and unless we have not merely a bankers' squeeze, under the direction of the Treasury, but also a planned control as to what is to be produced for export and what is to be produced for the home market, thereby keeping a general central control as to how the monetary resources arising from industry are deployed into the proper sphere of investments.
That is our policy. It is a policy of which we are not ashamed, and by which, in the years from 1945 to 1951, we saw substantial achievements. When one counts up the mistakes, whichever period one looks at, I do not think that any of them matters so much as the achievement in 1945 of pulling this country back from its bankrupt position, without any real reserves of production in the country, and the achievements of production and distribution such as we got up to 1951. There have been certain improvements since, but we have been having these recurring crises; and the anxiety, I gather, not merely in labour circles but in other circles, is whether the Government are sufficiently seized of the problem. I should rather doubt whether that can be so. I should surely think that they would be regarding it, like most people, as one of the most urgent problems to be dealt with.
If the noble Viscount, Lord Hailsham, who is to reply, would cast his mind back for a moment, he may remember an article in The Times on April 30, which referred to "The Lost Plateau". That article was printed only a few days before the Chancellor of the Exchequer
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announced that he thought now was the time for expansion in certain directions, financial and economic. If the noble Viscount recalls the article, he will see that whoever writes in, and advises, The Times on that subject fears inflation like the plague. And many other people also fear it, for the reasons given this afternoon by the noble Lord, Lord Clitheroe, in regard to the depreciation of the pound.
I daresay there are many in your Lordships' House who, like myself, experience it every day. I subscribed to a superannuation fund for nearly thirty years, and I should have been comparatively comfortable, in my very humble sphere: of living and spending, had we had a stable pound corresponding to the value it had when I was making my contributions; but to-day the return is not worth one-third of what I might have hoped to receive from that superannuation. It is that which, when we think of the Budget, makes us feel that surtax payers might have been able to wait a little longer than old-age pensioners. Though we have not made very striking criticisms of the Budget in this debate—and have not desired to do so—it seems a little difficult to understand why so many things that Her Majesty's Government do are necessarily inflationary. It is because they are inflationary that there are the organised applications from the workers for constant increases of wages and salaries to meet the situation, applications which are putting up costs, reducing the value of the pound and making things altogether much more difficult.
I hope that one result of our debate may be that Her Majesty's Government will look at this again. For although, as my noble friend Lord Pethick-Lawrence has said on many occasions in these economic debates, we have no biased political view against the handling of credit by Government direction through the banks, so that in that way there may be a check, and although we are not afraid of such a control, if it is not overdone, I am quite satisfied that Her Majesty's Government will not get where they want to get on this matter unless, instead of mere direction, they take more direct, more widespread and more operative controls than can be effected through a mere credit squeeze.
6.33 p.m.
THE MINISTER OF EDUCATION (VISCOUNT HAILSHAM): My Lords, on the last occasion when we had an economic debate I had to confess that I had too little to say for the reason that my right honourable friend was then preparing his Budget. On that occasion I was being pressed by a number of noble Lords, from more sides of the House than one, for the appointment of a Committee on monetary matters to correspond with that of some years ago. To-day, at any rate, I am in the happy position of receiving garlands of flowers because such a Committee has been appointed. I draw attention to this happy circumstance not in order to derive any satisfaction for myself—because, of course, I had nothing whatever to do with it—but to show that public opinion, reasonably expressed, through both the economic newspapers and the two Houses of Parliament, does have effect on Government policy; and to emphasise the value which debates of this kind necessarily have, even though at the time the Government spokesman may not immediately respond to the request which is made. I hope that those who question the value of discussion in Parliament will note this small circumstance, and others as they happen, to show how valuable our debates are and can be.
The thing which has struck me most about this afternoon's debate is how well we come out of it. Your Lordships have been talking about our underlying difficuties, and no one, I think, has sought to underestimate them. Certainly I shall not seek to do so. But we are talking mainly about the progress of the year 1956, for it is a little too early to talk about 1957 and a little too late to talk about 1955. During the year 1956, exports had a remarkable upsurge, and the balance of payments showed a definite improvement. We have had one or two sly "digs" about Suez but we shall be discussing that subject next Thursday, so I shall not respond to this fly cast over my nose. I will only say that whatever noble Lords may think of the circumstances, and whatever we may be saying about it, in one way or another, next Thursday, the fact that this episode took place during the year under review underlines the importance and value of the improvement which took place in the balance of payments and in the export
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position during that year. Because I think one can say without any exaggeration whatever that had it not been for the international situation—which certainly was not entirely of our making—those figures would have been very much more satisfactory even than they were. During the same period our reserves have improved.
I thought that the noble Viscount who has just spoken attempted a mild and not illegitimate Party passage in his speech just before he sat down. We believe that the policy which was adopted at the end of 1955 to counteract the position of that year, and indeed the policy which we have consistently pursued since 1951, has been more markedly successful in dealing with our underlying difficulties, including even the rise in prices, than that pursued in the period before. We believe that that can quite plainly be shown statistically; and though we have had special difficulties to deal with (and we realise that the Labour Party had a special difficulty, both at the beginning of their term of office and during the Korean war) it can be demonstrated that, on the whole, a situation which in 1955 looked menacing was handled during 1956 with almost complete success. That gives us a good deal of confidence for the future.
In fact, there has been remarkably little criticism. Again, we are dealing in 1956 with a year in which investment increased very rapidly. That is very encouraging because, after all, investment is the basis of an expanding economy in the future. In 1956, the amount of fixed capital expenditure by manufacturing industry was 20 per cent. higher than in 1955, compared with an increase of 27 per cent. between 1954 and 1955. The estimate previously given of capital expenditure during the last quarter has been substantially revised upward. Having been previously estimated at 16 per cent. higher than the year before, it was 17 per cent. higher than the year before. So that, in addition to a marked improvement in our overall position as regards exports, balance of payments and reserves, we are dealing with a situation in which investment was very much up.
I do not think that the noble Viscount, Lord Alexander of Hillsborough, and to a lesser extent my noble friend behind me, were quite fair in referring to a period of stagnation in production. In fact,

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stagnation is the exact opposite of what has been taking place. It is true that the total value of production was not up, but that was because industry was engaged in a very desirable form of "General Post." Production was veering away from consumer goods, which were causing the inflation, to export goods and to investment goods. In fact, if one looks at the figures for investment and export goods, it is clear that production was rising substantially. Therefore to describe the situation as one of stagnation in that important sphere of activity is, I think, a mere misunderstanding of the situation, a misunderstanding which I am sure has led to a lot of needless anxiety. We are dealing with a year in which there was an exceptionally large increase in personal savings, partly, though not of course entirely, the result of the Government's credit restrictions. That is another point which I think we are entitled to look upon not in a spirit of self-congratulation but in a spirit of sober satisfaction.
Taxes have gone down. The noble Lord, Lord Grantchester, said we had made a beginning. I think, with all respect, that he was doing us less than justice in that connection. I have in front of me a table showing the percentage of the gross national product accounted for by different types of taxes over the years 1946 to 1956. It has to be stated as a percentage, otherwise arguments would ensue as to the different values of money in each of the several years. In 1946, we were expending no less than 38·8 per cent. of our gross national product through taxation, including local taxes. The Labour Government had brought it down by 1950 to 34·8 per cent. But it has come down since then to 29·6 per cent. And that is true both of taxes on income and capital and of taxes on expenditure. In 1951, the former represented 16·4 per cent. of the gross national product. They are now down to 13·9 per cent. The same is true also of taxes on expenditure. Answering the point raised by the noble Lord, Lord Douglas of Barloch, they are down from 14·9 per cent. in 1951 to 12·6 per cent. in 1956. In fact, if one translates these percentages into terms of pounds it is literally true that hundreds of millions of pounds have been saved by reductions in taxation.
The picture which has been painted of taxation as high is a thoroughly just one.
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We are all conscious of it. Fortunately, even Ministers have to pay their share. At the same time, one must not underestimate the direction in which we are going, viewed as a percentage of the gross national product, which is, after all, the important factor to consider in judging the burden of taxation. So we are dealing with a year in which taxes were reduced.
I cannot accept the view, no doubt included for electoral reasons in the last part of the speech of the noble Viscount who leads the Opposition, that the surtax payers should always wait every time before getting a share of reductions of taxation. My own view of society is, and always has been, that one should try to make every section of society feel that they are part of a family and have some share in the affection of their fellow-countrymen. I do not share the view that surtax payers should have to wait, always and for ever, until it is considered electorally convenient to woo their votes. On the contrary, they come at the end of the queue—it may be right that they should; but it is also right that at the end of the queue there should be a little left for them when things are beginning to go better, so that they may feel that they also are playing a worthy part in society. I am not impressed with the contrast made between them and the old-age pensioners, who have received constant attention both from this and from other Governments, and no doubt will receive more from my right honourable friend as the years go on.
The first impression I got—I think a legitimate one—from the course of the debate, is that what we are discussing is a year of steady improvement in the face of very considerable special difficulties, some of which were international and temporary. And may I say, in passing, that, whatever view is taken—as I say, I do not want to anticipate next Thursday's debate so I shall express none—about operations in connection with the Suez Canal, I personally feel strongly that only a very exceptional concatenation of circumstances brought these events about, and it is quite unlikely that anything of the kind, whatever the view you take to-day, is likely to occur in the future. So from the economic point of view we are looking at a year of very considerable recovery and expansion, following

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a position which looked quite threatening at the end of 1955 and in the face of considerable difficulties.
The Government cannot accept the view that the present position is anything but an encouragement to them and an indication that the policies that they have been pursuing in relation to finance, monetary matters and credit, have been the right ones. For instance, I do not think we should accept Lord Grantchester's criticism that we should not have budgeted for a surplus. We did, of course, budget for a very large surplus. We have just done so. Lord Granchester was not behind anyone else in his attack on the evil of inflation. But budgeting for a surplus is a means of attacking inflation, and it is the means chosen to counteract inflation on the scale with which we are threatened. In the modern world drastic steps of that kind have to be taken. It was largely to counteract inflation and to meet dangers to the balance of payments that money was not left, as the noble Lord would perhaps put it, in a classic phrase, "to fructify in the pockets of the people."
LORD GRANTCHESTER: It all depends, does it not, upon the use to which the surplus is put? It is dangling a temptation before any Government Department to spend more money. That is the point which I was making.
VISCOUNT HAILSHAM: I think, with respect, that the noble Lord's argument is based on a confusion of thought. You only budget for a surplus if you have already decided not to spend part of the surplus. The temptation to spend more money comes before you have decided to budget for a surplus.
LORD GRANTCHESTER: There are such things as Supplementary Estimates.
VISCOUNT HAILSHAM: Supplementary Estimates come from wicked spending Departments like those over which I preside, and they bear no relation to the Chancellor of the Exchequer's decision to budget for a surplus. If I may divulge what is a well-known fact of English politics, I can assure the noble Lord that my right honourable friend is every bit as responsible for curbing the spending Departments after having budgeted for a surplus as before—much to the distress of some of us. So I do not
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think that the noble Lord's criticism was sound or reasonable. On the contrary, to fail to budget for a surplus is to encourage evils which we all want to face and face honestly.
Underlying the debate is the fact of the depreciation of the value in money and the rise in prices, or inflation—whatever you choose to call it. I think it was generally recognised on both sides of the House that in a system of full employment (the latest figures of unemployment, I believe, are about 300,000, and I think most of us will agree that that is full employment) wage demands not accompanied by an increase in productivity, if acceded to, must necessarily result in a depreciation in the value of money. I do not accede to the view, which seemed to be that put forward by the noble Viscount, Lord Alexander of Hills-borough, that because prices rise one per cent., or whatever it may be, wage demands for a much larger amount are thereby justified. On the contrary, I believe that in the long run both unions and Government would be well advised to calculate quite calmly what increase in wages is really justified by the increase in productivity, if any.
It was for precisely that reason that my right honourable friend, in dealing with the recent report arising out of a strike, was attracted to the proposal for an advisory committee to consider these things. I cannot remember off-hand how far the Committee's discussions have gone, but I hope that they will be received in a friendly spirit in all quarters. I do not believe that it is to the disadvantage of anyone to find out what are the facts and to discuss what the inferences to be drawn from them would be. Speaking for the moment personally, I would regard discussions of this kind as a contribution to the solution of the problem of inflation which we are all seeking.
I think that all Members of your Lordships' House were seized with the importance of defending the value of our currency, a plea for which was made in an eloquent speech by my noble friend below the gangway. Of course, the pound is difficult to defend in a period of full employment and rising costs and prices. It has been emphasised that other countries are suffering from precisely the same maladies in precisely the same context. But I think that it should be remembered, not to our discredit, that a

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large number of the countries we have helped with a certain sense of pride on the way to independence have acquired large balances of sterling currency which we have a natural commercial obligation in honour to turn into goods or capital goods at some time; that these countries naturally desire to turn their balances, which are expressed in currency, into solid concrete investments to develop and benefit their countries; and that we are honourably discharging that obligation. It is a burden to our people that we should do so. It is a burden which will be felt by our people but one which I am sure our people would wish the Government to bear. Of course, it adds to the pressure upon our currency, but I cannot see that an honourable commercial nation can do otherwise than honour them.
I would say, with respect, to the noble Lord, Lord Melchett, in whose interesting speech I was much absorbed, that when he asked what the advantage to us was of being the banker to a large part of the world, I would answer him by analysing a little more exactly what is meant by being the banker to the rest of the world. We are not in the ordinary sense bankers; we are bankers by analogy. There is in London a mechanism for international trade which exists nowhere else, except perhaps in New York. No one grudges the New York bankers their position in international trade, but is so happens that our mechanism is more used because it is more useful to other people on a larger scale. Many countries are short of dollars, and it so happens that sterling is the currency of which they have a greater quantity than any other; and therefore it is inevitable that a great number of international trading transactions should take place in the City of London in terms of sterling. It is an advantage to us to do so, even though it is in terms of small receipts, but I agree with the noble Lord, Lord Brand, that these small receipts can possibly be of immeasurable, impalpable advantage to the prestige of this country, to its standing in the world and its influence, perhaps even in an indirect way to the actual trading position that it should continue to possess. Certainly it is of direct advantage to this country that the total volume of world trade should be increased, and it is probably a factor that increases the total volume of world trade that our currency is available and our financial mechanism used.
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A large number of countries have acquired sterling, either as a result of direct export or import into or out of this country, or as payments from others who have so acquired it. These balances, when they are acquired lawfully in the course of commerce, constitute an honourable obligation for us to fulfil. I conceive that all these are the things which are meant when we say that Britain is the banker of the world. There is no bank and there is no account. What is meant is the position which I have endeavoured to describe. We cannot honourably vacate that position as a matter of deliberate policy, because it would involve the repudiation of current bargains which we have honourably undertaken. Therefore we must defend the stability of our currency, both in the interests of our own community and of those for whom we have to account for sums in terms of sterling. That is all that is meant by our being the banker of the world.
We also require a surplus on trade, or a balance of payments surplus, in order to invest abroad. I agree with my noble friend who contended that investments abroad are in themselves valuable assets which can be realised in an emergency, which broaden the basis of our economy and enable us to have a more flexible and mobile economic system. Though I do not wish to say anything in criticism of the noble Lord, Lord Melchett, who rightly stressed the importance of investment abroad, I would point out that during recent years we have invested abroad to the extent of about £200 million, which becomes about £160 million net, when the countervailing-figure is taken into account, and we have been investing at home. To my mind, all that shows a position in which the British nation, under its Government, is seeking manfully and realistically to cope with its economic difficulties.
I was deeply moved by the passage with which the noble Lord, Lord Pethick-Lawrence, began this debate, by the contrast between the spendour of Victorian England and the bewildered, distracted and convulsive twentieth century. But let us make no mistake. It may be that in relation to the rest of the world Victorian England stood on a pinnacle where we do not stand now. But Elizabethan England is much richer than Victorian England. The only differences

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which have taken place are, first, that during that period the rest of world has become much richer much faster than we have, and, secondly, that since the 1914–18 war in which, let it be remembered, we played an honourable part, the world itself has become a precarious and dangerous place to live in. It is precarious and dangerous for us to live in because Britain is not only one of the greatest world communities, it is also one of the most sensitive world communities. Nothing can happen anywhere which does not affect us.
There is no one place upon which we can rely in order to secure absolute prosperity—not even our home market or our agriculture. Although I agree that timber is a good thing, it takes a long time to mature after it is planted. Britain is thus one of the most sensitive of the world's communities. A disaster in America, Africa, Asia or Australia affects the bread and butter of people living in England, because there is nothing that can happen anywhere with which we are not intimately concerned. That, surely, is precisely what gives us a peculiar moral stature in the world.
There is no fight in the twentieth century in which British people have not been killed, in the long run, because it took place; there is no economic disaster in the twentieth century which has not brought British people poverty because it has taken place, even if it has taken place on the other side of the planet. There is no form of misfortune or good fortune which can afflict the world which is not reflected here, not simply as a matter of statistics but as a matter of human happiness. When we say that we want universal peace, it is not an expression of good will but an intimation of the condition of our existence and of our prosperity; we have to wish it, or we die. If we say we want universal prosperity, or greater trade, it is because we know that our life depends upon it, and not simply out of sympathy for our fellow-men. So we face an economic position in which, as it were, the whole planet is reflected in this island, and that is why what we say and do here is a matter of peculiar responsibility, and a matter from which we and our fellow human beings cannot easily dissociate ourselves.
7.2 p.m.
LORD PETHICK-LAWRENCE: My Lords, I think everyone present will agree
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that we have had a most interesting and good-tempered debate; not one of the speeches has been delivered in a spirit of acrimony. We are all faced, as I think the noble Viscount who has just sat down said, with great difficulties, and we are all striving, to the best of our ability, to find a way out. I have no intention, at the close of the debate, of dealing at any length with the speeches that have been made, but I should like to mention three in which I have been interested for certain reasons. The noble Lord, Lord Grantchester, talked about "this surplus". The real fact is that there is no surplus. It is only because we have put an arbitrary line down the middle of the expenses that it is called a surplus. We are still in deficit on the expenditure which the Government authorise, and it is not a surplus. That is why what the noble Viscount said in his reply is so essentially true.
Then I was much interested in the speech of the noble Lord, Lord Melchett. He may be interested to know that it is a good many years since I had a protracted debate with his grandfather on the question of the nationalisation of industry. I say that because I was particularly interested in some of the points made by the noble Lord to-day. With a good deal of what the noble Lord, Lord Clitheroe, said I found myself in agreement. I did not altogether agree with his view that it was the amount of money in being that created inflation. I agree with him that there is a correlation between the amount of money and the degree of inflation, but the real question is: which causes which? My own view is that it is the inflation that causes the excess of currency, and not the other way about. At any rate, I cannot entirely agree with his view on the matter.
Finally, may I say that I very much appreciate the speech of the noble Viscount who replied for the Government. He has said a great many things which many of us on this side fully support, but if on some points we disagree with him, that is only natural, sitting as we do on opposite sides of the House. I thank all noble Lords who have taken part in the debate, and beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.
House adjourned at five minutes past seven o'clock.