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Orders of the Day — American Aid and European Payments (Financial Pro Visions) Bill

Part of the debate – in the House of Commons at 12:00 am on 27th January 1949.

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Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby 12:00 am, 27th January 1949

I think that the hon. Member for Cannock (Miss Lee) will be glad to know that while I do not often agree with what she has to say, tonight is an exception. I entirely agree with her that the vast majority of the workers in the United States are entirely behind the Marshall plan. I am quite convinced that people of all ranges of income in the United States are prepared to make sacrifices, and let us remember that to send Europe goods in the way that they are doing means denying themselves on a very considerable scale, and I believe that classes are willing to do that in their effort to preserve those countries in Europe from which so many of them have originated and which created the civilisation which they value so highly.

We have had an Amendment to this Bill. As I listened to what was said by the proposer and seconder, I thought of the speech that General Smuts made last year in which he said: There is very great opposition to the United States Marshall Plan from a country which prefers to see poverty, misery and confusion because it is only in such conditions that Communism will prevail. It would be quite improper for me to suggest that the mover and seconder were more concerned with the interests of Russia than this country, but I think that I can say that those who are more interested in the success of Communism than in the maintenance of democracy are the people who will attack this plan.

The Chancellor of the Exchequer, in that balanced survey which he gave us, made considerable claims for the achievements of this country during the last year. He did that with the personal modesty which we always expect from him, but perhaps without all that caution to which we are usually accustomed. But I do not think that he would himself disagree with the hon. Member for Chesterfield (Mr. Benson) who made it clear that if there is not economic recovery in Europe our position in this country will be desperately precarious. I think that the Report makes it very clear that the economic position of Europe at the present time is not only due to the last war or to the last two wars but to deterioration over many decades. In fact, what civilised Europe has to do today is to change a trend which has been going on for over half a century, and to do it after the destruction caused by the war and without the physical assets that it used to have. This is a most momentous challenge, and we can only hope to meet it if we can put aside those petty differences which divided us in the past. I would agree with the hon. and learned Member for Carmarthen (Mr. Hopkin Morris), who is the only Liberal who has attended this Debate, when he urged that we must try to get rid of these impoverishing trade barriers which have divided us in the past.

The United States, with their great generosity—and as the receiver of it I would rather not compare their generosity with ours, as the hon. Member for Cannock did—have made it possible to formulate a plan. Therefore, there is hope, and it would be entirely wrong to be alarmist or defeatist, but I think we should be anxious and apprehensive. The consequences of failure are so awful. Failure now, as the Report says, will have disastrous consequences. Unless there is a change of policy we shall only get three-quarters of the imports planned, which would create an intolerable situation. The right hon. Member for Saffron Walden (Mr. Butler) told us how the official Board of Trade Journal described what would have happened without Marshall Aid—an enormous cut in rations and an enormous rise in unemployment. The last Economic Survey said that without external aid there would be wholesale unemployment, distress and dislocation of our production which will delay for years the prospect of a decent standard of living for our people. I think that in spite of the measured optimism of the Chancellor there can be no doubt of the great gravity of the situation. It is very disturbing how little this is realised. Indeed, the Government's own White Paper says: The difficulties of the present economic position do not present themselvs in an obvious form to the British public; a real and grave crisis in economic affairs seems remote and unreal. We are indeed infinitely poorer than is generally realised. We on this side of the House do not blame the Government for the situation in which they found themselves, but I think that we might rightly criticise them for their apparent blindness to it. I cannot understand how people responsible for the welfare of this country can possibly be expanding Government expenditure to four times what it was in 1938. I see from the Interim Report that in this country the proportion of national income spent by the Government and local government departments has increased since 1938 by 50 per cent. In France the proportion is the same, and in the United States of America the proportion of the national income spent by the Government is actually materially less than it was before the war.

While I accept the optimism of the Chancellor of the Exchequer, I look with considerable apprehension to the targets of the United Kingdom. For example, what is expected from oil? It is anticipated that we will earn in 1953 950 million dollars from oil, in spite of the fact that last year we actually spent 800 million dollars. To turn a deficit of 800 million into a favourable balance of 950 million in four years seems a tremendous task. We are told that the total invisible earnings, which last year amounted to 140 million dollars, will rise by 1953 to 1,050 million dollars. That may happen, but it is a little reminiscent of the mistaken calculations from which we have so often suffered in the past. For example, in the Survey of 1947 we were told what the deficit in the following year was likely to be, and in the following Economic Survey was a paragraph stating that the deficit on current account was £325 million greater, that is 93 per cent. greater, than was anticipated. With that sort of record, I do not think that we can have complete confidence in the estimates put forward in this way.

Let us at once realise that our position is certainly much better than anywhere else on the Continent. I think that a considerable degree of credit goes to the Chancellor of the Exchequer for reversing the catastrophic deflationary policy of his predecessor. He very soon made it clear that expenditure at home does, in fact, affect the balance of payments abroad, whereas before he became Chancellor the Government, apparently, took the view that what they spent at home had no effect whatever upon our balance of payments.

Credit is due, even more than to the Chancellor, as he will be the first to admit, to the British people, who have consented to be taxed and rationed on a scale as never before, and infinitely above that of any other country. I must point out to him, however, that we have reached a stage of taxation which is a serious disincentive and that even here there comes a breaking point, a stage when people will try to evade taxes and rationing to an extent not known in this country but which has been witnessed on the Continent. I warn him not to go much further.

The Chancellor, in that part of his survey which was optimistic, compared production in 1948 with that of 1947. But that is rather misleading, for 1947 was an exceptionally unfavourable year because of the fuel crisis. We are not justified in being quite as satisfied as the Government apparently are, with the rate of production in this country. The chairman of Lloyds Bank, for example, said last week that in the year ended September last our production of goods was per cent. above pre-war average with a labour force in manufactures and construction which was 6 per cent. higher. In view of the great technological inventions which have taken place during that time, and the fact that we can expect an improvement in production year by year of only, say, 2 per cent., these results are very disappointing.