Orders of the Day — Exchange Control Bill

Part of the debate – in the House of Commons at 12:00 am on 26th November 1946.

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Photo of Sir Isaac Pitman Sir Isaac Pitman , Bath 12:00 am, 26th November 1946

I have quite a clear conscience. I did not attempt to do anything illegal.

I come now to the question of the harm which this Bill will do. The result of what the Government are now trying to do in normal rather than emergency situations will undermine respect for the law. This is grave moral harm. Again it is hypocritical of His Majesty's Government to say, as they do in that Memorandum, that with this Bill they are aiming not at current account, but only capital account, transactions. What will be the view of the American, or of any foreigner, who sees that the Bill provides that he may not go and buy his wife a hat, and that no-one can export a penny whistle, without the consent of the Treasury? Is that not stopping current account? Of course it is. His Majesty's Government have got to do so. They know it, and that is why they are doing it. This may be so but to my mind it is a harmful thing for His Majesty's Government to pretend that they are not doing what on the face of the Bill they are doing and that pretence will undermine public confidence. It will furthermore undermine the view that is held of us in other countries. I am sure that sooner or later there will be a scream about it, from the other side of the Atlantic.

As well as the moral harm there is the physical harm that it will do to our standard of living. London has been the financial centre of the world. As well as the invisible exports which pay for bread, housing and other matters, and are an important contribution to our standard of living in this country, there arise from London being a financial centre further advantages in the form of undeclared dividends. The information which comes to London is of great value in peace, in the building up of trade. Money comes from overseas from one lender, and is lent by the City of London to a borrower for some commercial transactions, and the information of that transaction is available in London. If the history of the Ministry of Economic Warfare were gone into, I think the enormous value to us in war, as well as in peace, of the City of London remaining if not the centre at any rate an important financial centre of the world, would be apparent. The harm to the aim of maintenance and raising of our standard of living will be very great. The Chancellor of the Exchequer will be forced, in the long run, to choose between the two horns of a dilemma. He will either have to abandon his big stick against the foreign lender and have to let money come in freely and go out freely, and so encourage invisible exports, or he will have to give up the benefit of using other people s money because he wishes to control the process completely. Let us not "kid" ourselves. The foreigner will not use London so long as the Chancellor has these powers and a blank cheque to use them without notice. There is no such thing as hot money. There are only hot situations. Hot money does not exist of itself. The only two cases in my knowledge where allegedly hot money occurred were in two situations which were hot. The two hot situations were first the product of the 1931 Labour Government, and the second the effect of a big major war of the size of the one that we have just had. Those were the two examples of the hot situations which undermine the expectation of stability for the future, and which lead to money going out.

Remember that it is money coming in —or rather not coming in, as much as going out—which is an important factor, as important as that of the money going out. Whatever exchange Regulations we have in this country we just cannot cover that other part of the so-called hot money situation, the revolvingness of money, the money coming to London at the end of the transaction for re-employment by London. Nothing will force foreigners, if they do not believe in our currency, to lend us their money, and they will certainly take it out and they will not lend it to us again. No, there is to my mind no alternative other than to stabilise the exchanges of the world and make the United Nations organisation and the Monetary Fund work properly. This is the responsibility of His Majesty's Government, to work it properly, and to create such a situation at home and abroad that the £ sterling has a permanent and fore-seeably stable long-term value.

The Bill is therefore, to my mind, trebly wrong. First of all, it will undermine morals. Secondly, it will destroy the power and strength of the City of London in the world money situation, and finally, it will deflect attention from the real duty of His Majesty's Government, which is to conduct the affairs of this country so that the £ shall be stable and so that there shall not be any hot situation of any kind.

I come to my final point, that the Bill is not necessary. Surely, we should all hope that at some time the £ will stand fairly and squarely on its own feet, and have a real rather than a fictitious value. If we do not take that view, that is to say, if the Bill is not unnecessary, then clearly it is a despairing view. I reject despair. This country is climbing magnificently out of its difficulties. I think my 10-year hope is not impossible. I think 20 years ought to be a certainty. We ought then to be on our feet, so that the £ sterling may stand on its own. So, either the Bill is unnecessary or there is some hidden motive behind it. Either His Majesty's Government are despairingly incompetent to introduce an unnecessary law—or incompetently despairing. The only other possibility is that the Chancellor of the Exchequer is playing politics.

I believe that the right hon. Gentleman is playing up to the ignorant and the extremists of the party who support him. [Laughter.] I ask hon. Members to wait a moment. May I make my point in this respect? He is looking for a scapegoat for 1931. The Bank of England was his Bogy No. 1. Now, finance and the City are his Bogy No. 2. He is arguing that for him to seem not to make a change of what was existent between the wars is clearly to show that it was not the financiers but, in point of fact, the Labour Government of 1931 which caused the great financial crisis. After all, the general public is not financially-minded and this Bill is most difficult to grasp—