That is the total. That probably accounts for the slight discrep- ancy by the right hon. Gentleman on this figure. Anyway, it may contribute to it. To balance our accounts, therefore, we should have to cut imports to about 25 per cent. below the level now contemplated. This is the gap that must be filled. But the problem is that it cannot be filled by cutting imports. If we cut imports too far, great adjustments become necessary in our production and in our whole standard of living. But we cannot indefinitely go on importing what we cannot pay for, and I must tell the House, quite frankly, that it may come to this—and a tragically bad day it would be for us, for Europe, and for the world's hopes of prosperity.
It is most important that we and the whole world should get the perspective of our problem right, because it is also the perspective of the whole world's problem. There are, in fact, many different problems mixed up with one another. Two are fundamental. The first of these is, recovery in production of all kinds all over the world. Until that is complete, shortages and famine will persist, productivity will be reduced, prices will be inflated, and all sorts of undesirable expedients will be forced on all but the economically strongest countries. The second is the establishment of world monetary and credit conditions which enable full employment, high production, and expanding and balance of trade to flourish. Until that happens, there can be no security on earth, economic, political or military, and even those who may temporarily be living in plenty will all the time be living on the edge of a volcano.
The importance of the problem of getting more commodities produced and distributed quickly cannot be over-rated. It is all very well for us to set up long-term organisations to assure the future security and welfare of. mankind, but if the producers of the world do not expand their production more quickly in the next three or four years, the whole opportunity of building a tolerable civilization may be lost. Time is all-important. Not only Britain, but the world, must produce or perish.
We, as the nation most inextricably bound up in world trade, suffer particularly from world shortages. I will take just one example—cereals. The Coalition Government planned, even before D Day, to start restoring the production of British livestock products by modest import? of animal feedingstuffs. We were defeated first by shipping difficulties, and then, after the end of the war, by the threat of world famine which forced diversion even of coarse grains to human consumption. Widespread droughts and other natural disasters were added to war devastation of the great wheat and rice growing areas of the old world, and we were forced to find dollars not only for the whole of our own great imports of wheat, but for those of India, the British zone of Germany and even our normally rice-eating Colonies. We were, therefore, hit in three ways by the cereals shortage, which set back our own plans for agricultural reconversion, added millions to the quantities of food imports for which we had to pay and the price we had to pay for them, and compelled us to buy in dollars what could otherwise have been bought for sterling. The Government responded actively to this situation.
Just over a year ago I crossed the Atlantic to concert with the United States and Canadian Governments measures for bridging the gap between world cereal requirements and supply. I was very strongly criticised from the benches opposite. I hope that some of those who made this criticism will note what has happened since. We have had bread rationing in this country, but, contrary to the prophets, we are still alive in spite of it. Famine in India has been averted by narrow margins, and the economic conditions for political settlement have just been maintained. In Europe also, famine has been held in check, although in some of the ex-enemy countries, owing to difficulties which the House has often discussed, the situation has been very bad. But the big thing is that world cereal production has expanded.
In the United States alone, under the leadership of the Secretary for Agriculture, Mr. Clinton Anderson, whom we look forward to welcoming here at the end of this week, they have planted four million more acres and they are bringing in now the biggest harvest in history—1,400 million bushels of wheat. In Canada also, on whose never-failing efforts we rely for most of our daily bread, the farmers have done great things and are reaping enough this year to secure us the promised supplies under the Anglo-Canadian Wheat Agreement. The world supply of wheat has been expanded and its use economised sufficiently to avert world famine, but the cost in foreign exchange has been enormous and it has left all the wheat importing countries impoverished. Our very success in combating the famine in food has contributed to the famine of foreign exchange in the consuming countries; for, one of the worst things about these shortages is that they are so unevenly spread. In the United States and in the Western Hemisphere generally, production as a whole is more than 50 per cent. higher than before the war. In war ravaged Europe and in Asia, on the other hand, production on the average is still well below the prewar level. This disparity in the rate of economic recovery and expansion is the fundamental reason for the balance of payments crisis which now threatens the world.
The only remedy, pending the restoration of European agriculture and industry, lies in devising some means whereby billions of dollars worth of North and South American production can be transferred across the Atlantic without the necessity for immediate payment in the form of an equal and opposite flow of European goods. Up to now it has been found possible to finance an enormous flow of excess exports from America by a variety of means, for example, by U.N.R.R.A. supplies, by special loans such as those to the United Kingdom from Canada and the United States, and by countries dipping into their remaining reserves of gold and dollars. By these means a breathing space has been won during which the countries of Europe— and let no one underestimate this—have made substantial, if gradual, progress towards the restoration of their production. But now U.N.R.R.A. is dead. The reserves are becoming exhausted, and still the process of recovery is far from complete. Some new way has to be found of maintaining supplies until the Old World can stand on its own feet. The institutions set up at Bretton Woods, the International Bank and Monetary Fund, while they may have a valuable contribution to make even in our present difficulties, cannot by themselves meet the emergency needs of the period of reconstruction.
For this, therefore, something different is required, to which our wartime experience may provide a clue. In war, after the United Kingdom had faced the enemy alone through its second winter, a new system was devised to ensure that those who could contribute to the war against the Axis should not be prevented by book-keeping considerations. The essence of this system of mutual aid was the maintenance of maximum war effort by each country contributing its full available resources whether of manpower, materials, or credits. As we all know, this system proved an important element in victory, but it also proved to be the key to a tremendous domestic prosperity, such as the countries concerned had vainly tried to attain by orthodox methods in time of peace. It is a paradox, most conspicuous in the case of the United States, that enormous apparent economic sacrifices and burdens were shouldered while standards of civil consumption were, in many cases, little reduced and often actually increased.
The world has learnt from this that the test of a modern economic policy is whether or not it keeps the economy running at somewhere near full capacity or not. The price of letting an economy be throttled down right below capacity is so vast, and the sacrifices it imposes so heavy, that anything which keeps the wheels turning pays for itself. War demanded, and brought about, a rational system of international finance. Under this system, the apparent great sacrifice through aid to other countries was much more than made good by the enormous stimulation of demand resulting in more economic production, stability of employment, and a high and steady national income.
Whether the analogy of mutual aid is applicable to the present situation, or whether some more appropriate method can be found of maintaining the life-giving flow of goods and services, I do not know. One point has, in any case, to be borne in mind. Mutual aid was accompanied by something resembling overall planning of allied military and economic resources, and would have been impossible if the countries which gave more than they received had not been confident that the others were pulling their full weight. Now, once more. it is essential that the countries of Europe should prove their will and ability to win through. They must agree on methods to help themselves and each other, in accordance with a co- ordinated economic programme designed to free them from abnormal dependence on imports and make them economically healthy. Only on this basis is it reasonable to expect the full co-operation of the United States and other countries from whom the bulk of the assistance required to restore the economy of Europe must be drawn.
From a strictly business standpoint our recent conduct as a nation may seem extremely foolish. We were foolish enough to go to war for a principle without being attacked, and to spend our accumulated wealth in holding the line against Fascism until other countries, whose values and vital interests were equally threatened, were brought in. We then mobilised more completely than any other country, and refused to compromise our effort by attending to such details as whether we were going to have enough electricity after the war, or how soon we could get back our lost markets. Having emerged victorious we then gave away vast sums to others, while we had to borrow money at interest to carry over the period until our own production and exports could be restored. A good deal of this borrowed money we proceeded to pass on to our starving ex-enemies in Germany, to our enemy Japan for cotton cloth for our Colonies, and to our suppliers in the Argentine and such sterling area countries as India and Egypt to meet their dollar needs. We behaved, in fact, as a one-man international monetary fund, helping the world to carry on until the balance of payments problem could be solved. And we did all this as an act of faith. Had we failed to do the first part of it, we would have lost the war; and had we failed to keep up the effort more recently, the peace would already be past saving.
Trade is an exchange of goods and services, and it must be two-way. We have a record as the world's best customer, and its biggest lender for development in every continent. Unfortunately, we have over-strained ourselves, and we cannot do more than we are doing. We can, however, still contribute a great deal. We can provide important manufactures which are required in every country to restore production. We can also provide vital raw materials such as rubber and wool. Although we are in no position to make an immediate contribution of coal to other countries— apart from what we send them embodied in exports of manufactures—we will redouble our efforts to resume coal exports to the Continent at the earliest possible moment. There are other ways in which we can help. Appalling as our shortage of dollars is, measured against the prospective gap in our balance of payments during the next two years, we have many valuable assets for the common pool and we will make them available in the most practicable and acceptable manner, provided—I emphasise, provided —others are willing to put in their resources according to their ability also.
Time is very short. In these matters the best is the enemy of the good. We cannot hope for a fully comprehensive agreement before the twelfth hour strikes. Therefore, we must go for the best agreement we can get before the clock strikes, as it will, this autumn. Fortunately, the crisis can be dealt with in two complementary parts. First, there is the worldwide problem of raising production: that can be tackled through the United Nations, and by direct talks. Our representatives have made great progress, even in Eastern Europe, in reaching practical arrangements for the development of exchange of commodities and manufactures, and nothing seen in the headlines about diplomatic deadlocks must be allowed to hold up this healing process. It is when we come to the balance of payments that we must, following the regrettable breakdown in the Paris talks with Russia, be content for the time being with a more limited objective.
While production is a vital interest for all countries, and world trade is a general world-wide interest, the bulk of world trade is carried on by a relatively small number of countries. It is these countries. naturally, whose economies are vitally affected by the present shortages of dollars and of other currencies, including sterling —for sterling is a hard currency to some countries, just as dollars are to us. The countries whose economies are of this pattern are the ones which have the greatest understanding of world trade and the greatest interest in putting it on a sound basis. If such countries can agree on methods of maintaining and expanding trade through the present strains and difficulties, they will, in the process, show the way to others and demonstrate the groundlessness of fears that measures, whose sole object is the expansion of production and trade, may have some sinister implications. They will thus provide a magnet of commercial attraction to which other countries will be drawn.
Do not, therefore, let us be held back from seizing quickly and surely what can be grasped now by the fear that we may be perpetuating divisions in the future. The truth is really just the opposite. If we do not create the nucleus of a sane world economy now, the lack of it will force even many who would be disposed to co-operate into hostile or suspicious groups and compel them to take crude and damaging measures in the hope of self-preservation. We, therefore, as a great commercial nation, are staking our whole future on the creation of a sane economic system. We cannot, and will not, believe, after all the sacrifices made by all the peoples for a better world, that anyone who hopes to build democracy in peace will again let loose on the world the demons of trade restriction, unemployment, and famine.
Our progress, since what was called victory, takes us from one crisis to another —[HON. MEMBERS: "Hear, hear."] yes—as the bills which we were forced to sign as the price of victory come in for payment. Perhaps we may feel, and perhaps history may judge, that the people of this country deserved something better after their single-handed stand for freedom in 1940. Certainly, for the individual citizen, and particularly for the housewife, this continuing succession of crises is a bitter and severe test. Very often there is a temptation to vent on His Majesty's Government the irritation and frustration which we all feel, and to speak as if these things were due to some extraordinary wrong-headedness or incompetence. But I think the House will recognise that any Government which had the terrible responsibility of guiding the country through these postwar days would have been up against much the same immense problems, with much the same inadequate resources. Unfortunately, the breathing space has been further curtailed, and the emergence of worldwide order has been further postponed, by events outside the control of anyone in this country. Our production and exports have lagged far behind our needs, and we must increase them vastly and rapidly if disaster is to be avoided.
Nevertheless, we need not be ashamed of what we have achieved in the last 18 months even, though it has riot been nearly enough. We have regained our prewar volume of exports, we have beaten many prewar production records, we have set up a standard of orderly industrial relations which is the envy of the world, and we have contributed a vast effort, despite great difficulties, towards the relief and reconstruction of Europe and of Asia. All of us in this country are entitled to face the, future, whatever it holds, with confidence. We are standing, as in 1940, for what we know is right and sane against prospects which to any other people would look madly discouraging. We do not know how many trials and hardships these next months will bring, but whatever they may be, we will weather them successfully, provided we do not deviate from the only track which leads in the direction of a sane and prosperous world.