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

– in the House of Commons at 12:00 am on 28th January 1949.

Alert me about debates like this

Order read for resuming Adjourned Debate on Amendment to Question [27th January], "That the Bill be now read a Second time."—[Sir S. Cripps.]

Which Amendment was, to leave out "now," and at the end of the Question to add, "Upon this day six months."—[Mr. Pritt.]

Question again proposed, "That 'now' stand part of the Question."

11.10 a.m.

Photo of Mr David Eccles Mr David Eccles , Chippenham

The ceremonial which we have just witnessed reminds me that in rural areas when we want to induce the public to listen to dull political speeches we often interlard the proceedings with a competition or a raffle. I am fortunate, therefore, that the Government have allowed this whiff of private enterprise to ease the passage of a two days' Debate on Socialist planning. The weather yesterday must have influenced the speeches of the Chancellor of the Exchequer and of the Economic Secretary. It was a heavenly day, the sun shone, and Whitehall was ravishing in the misty light, and master and boy must have sung as they came to the House, Oh, what a beautiful morning; Everything's going our way. But is it going their way? I shall have something to say about that in a minute. I like to think that it was the sunshine that blinded the Economic Secretary to the many powerful and unanswerable arguments contained in the great speech of my right hon. Friend the Member for Saffron Waldron (Mr. R. A. Butler).

Of course, we agree on both sides of the House about the great objective of returning to solvency and liberating British economy, but we differ very much about the methods by which we should return to that fortunate position. I shall speak largely in relation to Europe. Before I begin to criticise the Bill and to say sharp things about British planning, I want to make it quite plain that personally I have an unshakable belief that Western European co-operation is worth pursuing and, if properly handled, can lead to enduring success—but the margin between success and failure is small. The material, political and moral reserves of Europe are very low. Indeed, they have only just stopped falling and whatever anyone may think about the far distant future, in the next few years no Marshall Aid country can afford bad planning, or the luxury of trying to put plans into practice by methods which alienate large numbers of creative men and women.

It is because Europe has come so near the lips of the whirlpool and requires all her united strength to get back to safety that I welcome this clumsy, cryptic Bill with some misgivings. Of course, if the hon. and learned Member for North Hammersmith (Mr. Pritt) divides the House, I shall be in the Government Lobby. As the Chancellor of the Exchequer explained, this Bill does something to make European currencies convertible between each other. We all want the Marshall Aid countries to export more to each other but the volume of this intra-European trade depends largely on the ability of the debtors to pay their creditors, and it has long been obvious that some special machinery was required to settle the balances which, at the end of the day, were outstanding between the net creditors to the whole of the group and the net debtors. When designing the financial machinery for this purpose, the vital thing to preserve was the incentive to balance European trade at the highest possible level.

Every member of the Marshall group should have been stimulated to export the maximum possible of essential goods to the other members of the group. Europe needs every ton of Belgian steel and every ounce of Turkish tobacco and every standard of Scandinavian timber, and so on, so that the first thing one asks about a payments agreement is: Does it provide the machinery for moving the greatest possible volume of these badly wanted goods? The same sort of payment problem arose in connection with Canadian trade with Europe. Canada was in the position to sell us more than we could pay for. Fortunately, the Americans quickly found a way round that problem by making off-shore purchases of Canadian products and shipping these goods unconditionally to Europe, leaving Canada free to spend the dollars as she pleased. These dollars were a straightforward incentive to make the goods available for export, and hon. Members will see that the system set up under this Bill is quite different from that of off-shore purchases.

E.C.A., instead of making off-shore purchases in Europe, makes part of the grant of Marshall dollars to a participating country conditional upon giving drawing rights in its own currency to other debtors in the group. The result of that is that every creditor-country has an incentive to keep down the volume of its exportable surpluses in order to qualify for the largest amount of unconditional dollars, and every debtor-country has an incentive to pitch its import requirements as high as possible in order to qualify for as much additional aid as it can squeeze out of the others. Thus the system of conditional grants destroys the incentive to balance European trade at the highest possible level. It takes the heart out of the exporters and puts bad ideas into the heads of the importers.

I hope that in the next period of aid the Americans will, with adequate safeguards, provide a cleverer carrot to encourage Europe to balance its trade at the highest level. Speaking on this point, the Chancellor of the Exchequer referred to the Belgian position, and I wish to take him up because I do not think he was accurate. Under the system set up by this Bill, when the Belgians have earned all their unconditional dollars, there is not only no inducement but there is a positive danger of inflation if they continue to export to their impecunious neighbours. They have to choose between unemployment and inflation, a choice which has not been and which is perhaps now not very far from us. If the Belgians could earn dollars by exporting more than their planned targets that obviously would be of substantial benefit to the rest of the Marshall group.

I think that I can show the House that this system of unconditional grants has disadvantages also for the United Kingdom. In the first period of Marshall Aid, we were granted 1,263 million dollars, of which 282 million were made conditional; therefore, our net aid was 981 million.

As the Chancellor said yesterday, we are also making available the equivalent of over 200 million dollars in drawing rights, so that roughly—and I think the figure ought to be repeated again and again—40 per cent. of our aid is being passed on. Most of our conditional drawings are in favour of France whose final position is the reverse of ours. France was allocated 989 million of Marshall Aid and received 323 million conditional aid, making her net aid 1,312 million dollars. That is a provocative example of how in a frightened world it can pay not to face up to your difficulties. The French Government ought not to have had such big sterling drawing rights as they have been given. They could have earned more sterling by sending us the goods we want, even including the frivolous cheeses and the stuffs our women would like to have, and still more by entertaining our tourists on the generous scale they were prepared to do.

If later today the President of the Board of Trade reports to us the new French agreement, it is as well to remember that his Majesty's Government was pushed into this agreement by E.C.A. because the Foreign Secretary had signed Annex C to the Intra-European Payments Agreement under which a net creditor is bound to take all it can from a net debtor. We should have done this months ago instead of hanging out for some obscure principle of austerity.

What are the French going to do with all these millions of pounds we are going to give them? Are they going to buy United Kingdom manufactures? Certainly not. They and the other countries to whom we give drawing rights from the sterling balances are, as we all know, going to spend by far larger part of that money buying raw materials in the sterling area. There is nothing wrong in expenditure of that kind. Holders of pounds must be allowed to transfer them from one part of the sterling area to another or the system ceases to function. Having these drawing rights, there is no complaint against France for buying, let us say, wool in Australia, but there is also no escape from the consequences here in London. The sterling balances of the selling country are bound to increase, and the United Kingdom to be saddled with additional claims upon our goods and services.

Here again the incentive set up under this system is topsy-turvy, because the narrow interest of the United Kingdom is to keep these drawings as low as possible and get the most unconditional dollars that we can. The interest of the French is to ask for too much and—this I consider to be very important—no intimate bond is forged between the raw material countries and the Marshall plan. It was clearly in recognition of the clumsy way in which this payment system works that the Australian Government made their very generous gift to His Majesty's Government the other day, about which the Chancellor of the Exchequer and my right hon. Friend spoke. This gift, immensely welcome though it is, is none the less the result of faulty planning. The Australians have made a fine gesture to meet the situation brought about by lack of foresight and skill on the part of His Majesty's Ministers.

It is easy to see where the British and American policy went wrong. The Commonwealth ought to have been brought into this picture much earlier and much more intimately, as I have said in this House on many occasions. The flaw in the policy is that the Marshall Plan does not reflect the fact that the whole project of European recovery, breaks down without the raw materials of the sterling area. What should we have done about this? As I said, so far the Americans are unwilling to make off-shore purchases in Europe or in a sterling area. For reasons which we all know but do not understand, the Americans approve of the Commonwealth when talking about defence but disapprove of it when talking about trade and finance.

When His Majesty's Government saw the consequences of this American attitude they ought not to have eaten humble pie and kept quiet. They should have gone over to the offensive and said to the United States that, because of their policy about off-shore purchases, it was only as an organised Commonwealth that we could play our full part in the Marshall Plan. They ought to have said to the Commonwealth that if they considered the sterling area was something worth preserving—and we all know that they do—they should join with us at once in working out under the wing of E.C.A. a junior Marshall Plan.

The prosperity of Western Europe and the defeat of Communism are of as much interest to the Commonwealth Nations as to the U.S.A. Therefore, there was every bit as much reason to organise Commonwealth aid as there was to organise United States aid. The Americans should have seen that they could not get the best out of the United Kingdom or out of the Commonwealth Nations if they insisted that we did not act in a public partnership with the Dominions, and if they tried to treat us as the sole providers of pounds to be spent anywhere in the sterling area.

There is another weighty reason why a Commonwealth Marshall Plan should have been worked out earlier. If the Continental Marshall countries are to receive the equivalent of 500 million dollars in sterling goods then the providers of those goods must, like the Americans, have some assurance that sooner or later the recipients will be able to pay their way. How are we to secure that this new equilibrium comes about? Paragraph 393 in the Interim Report lays down that: The counterpart in local currencies of our sterling drawings must be used with prudence and in the best interests of all. In plain words, that means that we should like the countries to whom we give drawing rights to use these three years to expand production of the goods we want to import, and for my part I support the Chancellor when he says that Britain cannot indefinitely subsidise a pattern of European production which is out of date. Great changes have to be made.

On the other hand, is it reasonable to expect Europe to make these adjustments against the clock unless they are given a guarantee of a stable market? When the United Kingdom gives these long-term contracts for European foodstuffs, which are foreshadowed in the Interim Report, will it not be of vital importance that the Commonwealth Nations shall be in on these negotiations? His Majesty's Government have a duty to reassure our friends in the Commonwealth that what we are seeking to do is not to substitute European supplies for Empire supplies, but to substitute European supplies for dollar supplies.

This can best be done, and, in fact, can only be done, if we draw the Commonwealth into a public partnership in the Marshall Plan. These are delicate matters, and cannot be satisfactorily arranged if the United Kingdom continues to act in the grand nineteenth century manner, dealing in a superior way with the Commonwealth on the one hand, and with Western Europe, on the other. The time has come to reorganise the old firm. The elderly directors should now put their children on the Board and ask them to share in the responsibility of management and finance.

Turning to another aspect of this system of intra-European payments I mentioned earlier the need to see that the counterpart of the drawings is widely used. E.C.A. is the head prefect, charged with restoring order among the down-at-heel and undisciplined boys in Europe. But this Bill—and this is something new—establishes His Majesty's Government's claim to be second prefect and I understand from the French and Belgians that the right hon. and learned Gentleman fancies himself as a monitor. That is a rôle difficult even for an Old Wykehamist to fill with grace. It would be easier for the Government to give advice if they were in more obvious partnership with Commonwealth countries from whom come the raw materials Europe cannot do without. Over the centuries the recognised equipment for an international schoolmaster has been a cane in one hand and plenty of sugar in the other.

What should we ask Europe to do? There is no answer to this question unless we reckon with the political beliefs and dominant personalities on the Continent. As my right hon. Friend the Member for Saffron Walden said yesterday, nothing but trouble would come from pushing ahead with economic planning without considering whether the plans are to be implemented by a Socialist, or a free enterprise, economy. The Interim Report faces this difficult situation and says frankly that some of the Marshall countries believe in a free market and others in control. According to our own political views we in this House are likely to say that one or other of these rival systems is the slower ship in the European convoy which will establish the pace of the whole. We are not now arguing the merits of the two systems, but, whatever theoretical opinions any hon. Member may hold, the hard fact remains, to which several references were made yesterday, that the Civil Service in many of the Marshall countries is incapable of implementing a planned economy.

Whether we like it or not, we have to accept the position that the American and British advisers will waste their time if they ask for the imposition of physical controls that are beyond the administrative competence of the country concerned. Yet, I am afraid that is exactly what our Socialist representatives are doing. I constantly meet Europeans who tell me that the Chancellor of the Exchequer is under the delusion that he can export the restraint of the British people and the skill of the British Civil Service. I hope that is not the view of the right hon. and learned Gentleman, because it is manifestly absurd to expect some of our neighbours to behave as we behave after a thousand years of insular development.

The Interim Report puts its finger right on the place where our advice can be both practical and of immense value. I refer to monetary policy and measures to check the over-spending of national incomes. Here I am in complete agreement with my hon. Friend the Member for Bury (Mr. W. Fletcher) who said that stability of prices and currencies was the fundamental reform that we could urge on a group of nations widely different in their political beliefs and in their administrative competence. Where inflation is present, free imports are like water poured on sand. We had experience of this at home when the previous Chancellor was galloping through the American Loan.

All those imports were just like water poured on sand and, with that experience in mind, we must ask how European recovery can succeed if the French are incapable of balancing their Budget and most of the Marshall countries are consuming too much and saving too little? Of the many aspects of financial misbehaviour to which I would like to have referred I will only mention the ruinous conflict between taxation and savings which threatens to exhaust all the Marshall countries. This conflict must be resolved in favour of savings, or the European standard of life will wilt and then collapse.

My right hon. Friend said yesterday that this is a problem vital for our own recovery in Britain, and indeed, it is. The plain duty of the Chancellor is to practice at home what he preaches in Europe—strict economy in private consumption and in Government expenditure. The British people, the common people, are giving a wonderful example of restraint in their daily lives—[HON. MEMBERS: "Hear, Hear."] Yes, but what about the Government? Are they giving an equal example of restraint? Can they claim that their policy has brought British prices into a satisfactory relationship with each other, and with wages, and are now firmly held? Are they in a position to tell the other Marshall countries what they ought to do about savings, costs and prices? Many of us have grave doubts. It cannot be repeated too often that the volume of exports to America, on which we so largely depend, is going to fluctuate with the price and quality of British goods and that Britain, as the senior Marshall country, must give a lead in holding her own costs and prices in check. One of the greatest factors in the cost of everything is Government expenditure, and in future Debates we shall have much to say on this side of the House about the waste and extravagance in spending Departments.

I want today to say a word about American commercial lending. At present the Americans are discouraged from investing in Europe by three things, the inconvertibility of currencies, the fear of inflation and the threat of nationalisation. The first two obstacles—inflation and inconvertibility—could be cleared away by sound fiscal policy. If Europe chooses to live within her national incomes plus Marshall Aid, she can soon lay the bogy of inflation and move towards convertibility, but she cannot do this so long as Governments are the chief sinners in over-spending and by their profligacy submit their economies to the fever of inflation or the frustration of controls.

A nation determined to nationalise one industry after another cannot attract private capital. It may be that hon. Members opposite do not want any private American capital investments in this country, or in the colonies. I challenge them and ask the President of the Board of Trade, to tell us during the Debate what are their views about American private capital. Of course, if they look to any private investments in this country they will have to take care about the inducements offered. They can be sure that many of the other Marshall countries will want American private lending and, therefore, they will have to set, and be very ready to set, a limit to the area of State ownership.

I want to go further and suggest that a general understanding in Western Europe about the area of State ownership is essential to the success of the Marshall Plan as a whole. In the first place, a failure to define clearly where Government property ends and private property begins will be taken as an admission that the Government concerned aims at a totalitarian economy. Such an admission robs democracies of any convincing answer to Communism. Who believes, that without such an answer, there can be any moral or spiritual cohesion behind the Marshall Plan or, indeed, any hope of winning the cold war?

Secondly, the House will have considered the economic implications of the American proposal that Europe should specialise more, producing what each country is most fitted to make or to grow. On paper, such a suggestion appears to lead straight to more Socialism and controls, but in practice if the method of State control and monopoly is used it will fail, if only for the reason which I have already given, that Europe is not capable of administering that kind of productive organisation. It is not only not capable of administering the plans but is not capable of making the plans. I am told that the British Delegation to the O.E.C. re-wrote all the 18 Continental plans. I see the Chancellor of the Exchequer shakes his halo. He will find that on the Continent a good many people say so who know something about it. It is difficult otherwise to account for the similarity among all the plans excepting the French one—and the French is markedly unrealistic for the reason that the French did not have the advice of the Chancellor's delegation.

The truth is that the only planners and managers of experience in the Marshall countries are to be found in private business. There is no getting away from it, and their co-operation is essential. Either the European Recovery Programme is worked through these people or it will not be worked at all. I try to look at Europe objectively and I have come to the conclusion, I hope without prejudice, that Socialism simply is not an instrument that can be used to get the Marshall Plan into operation within any time that one can foresee, and that leads to an interesting conclusion. Should the British Government go on kicking against the pricks and try to force Socialism on those Marshall countries? That aparently was the advice of the hon. Lady the Member for Cannock (Miss Lee). On the other hand, should they accept the position and try to improve, invigorate and make prosperous the system of private enterprise? That appeared to be the advice of the hon. Member for Chesterfield (Mr. Benson).

I see that it is a very hard choice for hon. Members opposite. If the capitalist system were the unregenerate enemy of the workers I could understand the decision to have nothing to do with it, but in the last 25 years enormous changes have taken place. As my hon. Friend the Member for Tiverton (Mr. Amory) showed yesterday, in a very sincere and moving speech, owners and managers today display a sense of social responsibility that makes quite out-of-date the old division between capital and labour, which is fostered mainly for political purposes. If this were not so, the Chancellor could not have reported to the House the economic revival that has taken place in this country in the last 12 months.

Apart from the changes that have taken place in Britain I ask the House to look abroad. Take the inaugural speech of President Truman which warmed every Christian heart. He pledged the United States to bring their technical knowledge to the service of backward countries. Is that the sort of behaviour that classical Socialism expects of classical Capitalism? Last evening we were enchanted by the somersaults of the hon. Member for Cannock, who tried to explain that capitalists in America were no longer a factor. She knew—and this was the interesting thing —that American business is going to respond to the President's appeal. European business men will do the same if similar appeals are made to them, provided, of course, that they are not treated as crooks who are to be nationalised as soon as their Government can get round to them.

Neither European Socialists nor Conservatives have a monopoly of intelligence and virtue. They need each other, and if they do not work together there is no hope for the Marshall Plan. That is why we on these benches have taken this Debate very seriously. We realise that the margin is small between success and failure and that success means a united effort in all the Marshall countries.

I will not detain the House further, except to sum up my proposals for action. The duty of His Majesty's Government, neglected at present, is to work out a Commonwealth Marshall Plan, to give a convincing lead to Europe on how to consume less and save more, and to abandon the disruptive and debilitating experiments in nationalisation. If they were to do this they might get a good place in the history books.

11.47 a.m.

Photo of Major Donald Bruce Major Donald Bruce , Portsmouth North

A large number of hon. Members on this side of the House would agree with the remarks made by the hon. Member for Chippenham (Mr. Eccles) who is urging that we should administer our part of Marshall Aid wisely. It is important to realise that we are giving large-scale aid to Europe in addition to receiving aid ourselves. I think that the hon. Member would agree that it would be wrong for us to ask European countries to surrender their independence to any greater extent than we are now prepared to surrender ours; that we should be careful of the way in which we administer our counterpart of Marshall Aid which is implicit in the intra-European payments arrangement; and that we should not endeavour to intervene in the economies of other countries.

The most remarkable part of the speech of the hon. Gentleman and indeed of the speech of the right hon. Member for Saffron Walden (Mr. R. A. Butler) was the changed atmosphere on the Opposition Benches after the last nine or ten months. Last March the Chancellor of the Exchequer brought out his Economic Survey for 1948. Immediately, the headlines of some evening newspapers said that it was a "Black Paper" and also, in this House, the right hon. Member for Woodford (Mr. Churchill) stigmatised that document as a "Black Paper." The right hon. Member for Aldershot (Mr. Lyttelton) said that the export targets set out in the paper were quite unattainable. Two months later he said that our position at that time was worse than at the end of the war. There was an atmosphere of gloom and despondency on the Opposition Benches in those days. What did we find yesterday in the speech of the right hon. Gentleman and today in the speech of the hon. Member? We find the Opposition are now cooing like sucking doves. We find that they accept the Four Year Plan prepared by the same Government as that which prepared the Economic Survey for 1948. It is a very interesting thing indeed that the Opposition should support such a plan prepared by a Government which, up and down the country for the last three years, they have stigmatised as entirely incapable of preparing any coherent plan at all.

I was most interested in the remarks of the right hon. Member for Saffron Walden and in several points of substance which he made, particularly in his praises of private enterprise. In a Debate of this kind the Opposition always follow a procedure similar to that which obtains in the law of slander and libel. They always say, "We did not say it, or if we did say it, it was not slanderous." They view the achievements of the country since the war and during last year as put forward by the Chancellor of the Exchequer yesterday in exactly the same way. First, they say that there has been no success under this Government. They then say that if there has been success, although they do not admit it, it is due to private enterprise or American aid.

On behalf of a large number of my hon. Friends, I want to pay a tribute to private enterprise, but the private enterprise to which we pay tribute is not the private enterprise to which the Opposition pay tribute. We ought to pay tribute to the private enterprise of the miner whose skill and enterprise has given us increased production of coal, the private enterprise of the nimble fingers in the textile industry which have given us more textiles, the private enterprise of individuals in the transport industry who have operated with conspicuous success, and the private enterprise of the ordinary individual.

As to the Opposition's point that any success this country has achieved is due to American Aid, no one on this side of the House would wish for a moment to minimise the consequences for this country of the very generous treatment we have received at the hands of the United States, but implicit in that argument is an excuse for the pre-war unemployment under the administration of the party opposite.

Photo of Sir Douglas Dodds-Parker Sir Douglas Dodds-Parker , Banbury

And of the Socialists in 1931.

Photo of Major Donald Bruce Major Donald Bruce , Portsmouth North

It is therefore interesting to note the extent of the aid which the Marshall Plan and the American Loan have provided for us. It has contributed very considerably towards the solution of our balance of payment problem. If that problem were not solved, there would be a shortage of raw materials and large scale unemployment. However, in the years 1937 and 1938 there was no balance of payments problem. Our deficit then was about £40 million or £50 million a year on an average, which could easily have been covered by the ample investment resources and gold reserves which we then had. Yet the Conservative Party maintained nearly 2,000,000 unemployed. That was at a time when capital works were crying out to be done. The Opposition cannot talk about their record in the matter.

Photo of Sir Douglas Dodds-Parker Sir Douglas Dodds-Parker , Banbury

Nor can the Socialists.

Photo of Major Donald Bruce Major Donald Bruce , Portsmouth North

Every hon. Member must remember that the plan put forward by the Chancellor of the Exchequer means that everybody in the country must make sacrifices for some little time to come. Owing to the adverse terms of trade against this country and as a result of factors over which we have no control, we must send more and more of our produce overseas in return for less and less. In fact a large part of our austerity is due to the terrific height of our export targets, and we must keep them high in order to carry out our plan and solve our balance of payments problem, with the help of Marshall Aid, so that we can obtain viability in four years time.

The Opposition's propaganda has done nothing to encourage those sacrifices. The Opposition have not represented to the people that much of the shortage of household goods which they require is due to the fact that we must send everything abroad. It certainly does not lie in the mouth of the hon. Member for Scarborough and Whitby (Mr. Spearman) to say that members of the Labour Party have derided the Chancellor of the Exchequer over austerity. From the benches opposite and their propaganda organs in the country have come these denunciations of the Chancellor of the Exchequer for carrying out the policy of maintaining his high export targets. I hope that there will be a change of heart in the Opposition so that our people will be sustained in their endeavours while they see ever more of their produce going abroad in our attempt to achieve our high export targets, and we shall have no more of the kind of thing which has been uttered by the right hon. Gentleman the Member for Woodford (Mr. Churchill). In a broadcast on 14th February last year the right hon. Gentleman said: Why then can we not earn our living, pay our way and stand on our own feet? We are assured that our total output is greater than before the war. Why then is there a shortage in the shops and why do people have to queue for every kind of household equipment and often for necessities? It is because our whole life is being handled the wrong way round.

Photo of Viscount  Hinchingbrooke Viscount Hinchingbrooke , Dorset Southern

How right my right hon. Friend was.

Photo of Major Donald Bruce Major Donald Bruce , Portsmouth North

There was not a spark of intellectual honesty in that statement because the right hon. Gentleman knew, and the Opposition know it, that a large part of the sacrifices are due to the fact that we must maintain high export targets. However, this is not the only pressure upon our people. Other pressure arises from the necessity to maintain a very high capital programme. It has been said many times that we suffered loss, damage and obsolescence during the war amounting to £3,000 million, and we must replace that. Added to that is the obsolescence in our industries before the war, to which eloquent testimony has been paid by the Conservative hon. Member for East Aberdeen (Mr. Boothby).

The necessity to rebuild and increase our capital equipment and to improve its efficiency means that while that process is taking place—while effort is being made in the industrial field to build new factories and plant, in the housing field to build new houses and in social service to provide new hospitals, and to modernise our railways and our mines—and while sacrifices are required of us for our export drive, no substantial rise in the standard of life of our people can be expected save that which may come from even further increased production.

It would be nice to feel, after the speech of the right hon. Gentleman the Member for, Saffron Walden yesterday, that the Opposition will do their share of explaining to the people that a large part of their sacrifices are due to the capital investment programme. I want to ask the right hon. Gentleman a few questions about his own publication, "The Industrial Charter," the proofs of which, I understand, were on some occasions corrected by him in his bath. The right hon. Gentleman brought this document out on 12th May, 1947. In those days the Conservative Party were in a far bolder humour than they are now. The right hon. Gentleman wrote: The estimate of £1,700 millions for capital goods given in the Economic Survey for 1947 is inadequate as a total and gives no indication of how this sum is to be divided among the immensely greater volume of pressing claims. The right hon. Gentleman was not modest in those days. He was prepared to give a figure of what he thought the capital expenditure of the country should be. Do the Opposition say that the capital investment programme, with the diversion of 20 per cent. of our resources to capital purposes, is too large or too small?

From what I understood yesterday the right hon. Gentleman does not wish to cut it down. This is somewhat peculiar, because it was only about a year ago that the Chairman of the Conservative Party, Lord Woolton, said that in those days of over-full employment there should be drastic reductions in capital expenditure of all kinds whether private or public. Days of "over-full employment" ! But the unemployment figure today is exactly the same as when Lord Woolton demanded capital cuts a year ago. Does the right hon. Gentleman agree with that statement of Lord Woolton, because the conditions of employment remain the same? Is he going to say that there should be cuts in capital expenditure? If so, where should they be applied?

The right hon. Gentleman yesterday did, however, give a hint. He said he thought that more of our capital resources should be diverted to industry. I interrupted him to ask, if there was to be no increase in the ceiling of capital investment, from which other item of our expenditure the right hon. Gentleman would subtract it. The right hon. Gentleman, however, was most modest; he was not forthcoming, as he was in his Industrial Charter. He said that this, of course, is a question the Government must answer. But the Four-Year Plan we are now debating has been known to everybody for six weeks or a month. Have not the intelligentsia of the Conservative Political Centre had time to study it and advise the right hon. Gentleman? I think we ought to be informed about these matters.

Only four days ago the right hon. and gallant Gentleman the Member for the Scottish Universities (Lieut.-Colonel Elliot) was demanding an increase in the expenditure on housing. If the capital expenditure of the country as a whole is to remain at 20 per cent. of the national income, and if we are also to increase it in the industrial field as, I think, the right hon. Member for Saffron Walden would desire, from whence are these cuts coming? It would be very interesting to hear the answers from the Opposition. Is the reduction to come from social services? Oh, no. The Opposition would eschew any attempt to cut down capital expenditure on schools and various other things of that kind. Indeed, in the country they are demanding more schools. Are they going to ask that capital expenditure in fuel and power should be cut down? In the country they are demanding exactly the reverse. Or do they demand a cut in housing? We have a right to be answered on these questions.

It does not lie in the mouths of the Opposition to say, "Yes, we agree with your overall capital investment target" and then in the next breath to denounce the Government for all the sacrifices that the adherence to that capital programme will entail. They will, indeed, be heavy. In the country the Opposition are playing a dual role but in this House, when they have to debate things on the floor of the Chamber, they speak in very dulcet tones. When their representatives go out into the Constituencies—I expect we shall have it in Batley and Morley, and in South Hammersmith, too—the whisperings around the canvas will be like this: "Of course, the shortage of food and of everything else is all due to the Government. You vote for the Tories and we will get you all you want." We had the same thing in Portsmouth recently and we shall have it all over again. It is the most shocking form of political dishonesty—

Photo of Sir Douglas Dodds-Parker Sir Douglas Dodds-Parker , Banbury

I am glad the hon. and gallant Member admits it.

Photo of Major Donald Bruce Major Donald Bruce , Portsmouth North

—that the party opposite should on the one hand, pay lip service to a capital programme—and, indeed, on many and appropriate occasions ask for its increase—yet at the same time have the audacity to ask for an increase of consumer goods, and also to blame the consumer goods shortage upon the Government.

The production figures of this country as envisaged in the Four Year Plan may well be exceeded. Indeed, with the record of the last two years behind us it seems very likely that the production targets will be not only achieved but passed, for those figures record only a 2½ per cent. increase per annum. I should like to go on the record, as would, I think, many of my hon. Friends on this, side, as saying that if this increase in production does, in fact, take place, then, although we must of necessity and in justice and in equity ease the burden of the ordinary little man whose efforts have made it possible, as much of that new increased production as we can afford must go to augment the capital programme. Unless we do so, unless we increase this country's industrial potential, not only to balance our overall balance of payments immediately but to meet the increasing competition from the Western Hemisphere and elsewhere, our last stage may well be worse than the first.

The production increases of our people have been very considerable indeed. One can understand the party opposite wanting to make political party capital out of these things, for they have no plan of their own. But when the production achievements of this country have been so magnificent our people are entitled to be encouraged by all sides of the House and to be spurred on to further effort. I hope that that encouragement will be given to them. Our people are not only a people working economically in their various jobs, who go to work, earn their money and need their evening leisure; they are people in a democracy, interested in politics, and entitled to know, in a democracy which depends upon a two-party system, what the alternative policy of the Opposition really is.

I have spent some time in reading through the proceedings of successive Conservative conferences, at which are put forward large numbers of niggling, niggling resolutions which have no constructive purpose whatsoever. Strangely enough, these resolutions are practically always carried unanimously. Occasionally, when the hon. Member for Orpington (Sir W. Smithers) is present, there may be a dissentient voice. This is in very great contrast to our own party conferences where matters are debated on the basis of reasoning and often have extremely narrow majorities. For the last three years I have been trying to find out what are the policy, principles and programme of the Conservative Party. All I can get is this string of resolutions, passed either unanimously or nearly unanimously. Never in the recorded history of man has there been so great a unanimity in favour of so great a vacuum.

The people of this country are entitled to know what are the alternatives of the Opposition. Meanwhile, they may know that the policy put forward by my right hon. Friend has not only the tepid, half-timid support of the right hon. Gentleman, but has the admiration of the entire civilised world. That is something which our people should be told. I have spoken somewhat controversially this morning because occasionally, I think, no harm is done by the raising of controversies in this House. The right hon. Gentleman and his friends, the right hon. Member for Woodford, the right hon. Gentleman the Member for Bournemouth (Mr. Bracken), and the right hon. Gentleman the Member for Aldershot, reserve their controversy for outside, so that they cannot be answered in the House of Commons on these matters. I do not think that a little word of controversy inside this Chamber does any harm.

However, we have to sustain our people in their efforts in the years that lie ahead, and each one of us, whatever his politics may be must realise that he should do what he can to keep alight the spark of greatness that is in each one of us, a share of the greatness of our country as a whole, and to help to see that the spark is not quenched by the unhappiness and injustices which are still suffered by thousands of our people. But on this occasion we should fortify ourselves with pride in what we have done, and with a proud challenge to the difficulties that lie ahead.

12.11 p.m.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Because, Mr. Speaker, of the advice you gave us yesterday not to speak too long I shall refrain from answering the party diatribe to which we have just listened from the hon. and gallant Member for North Portsmouth (Major Bruce). I should have liked to give the House some report of my recent two months' trip to America, where I was trying to sell textiles, and to have told the President of the Board of Trade about some of the difficulties with which we as traders are faced, and which will affect him when he comes to his planning. However, as you, Sir, have asked us to be brief I shall cut out all that part of what I want to say. Instead, I shall concentrate on our position at home.

Yesterday the Chancellor of the Exchequer congratulated the nation on the good results achieved in 1948, and he was loudly cheered by his supporters. That sounded to me like a danger signal. Last September, when we had a similar Debate on economic affairs, the Chancellor was given the greatest ovation I think any right hon. Gentleman has had in this Parliament. He received it because of the report he gave of the magnificent achievements of the British workers. When I reached one of my factories afterwards one of my workers said something to me which seemed to me to be a danger signal, and I should like to draw the Government's attention to it. That man said to me, "If Cripps says things are better they must be very good indeed." It seems to me that what this nation requires is not a cheerful man-about-town Cripps, but a stern, hard, relentless, remorseless Chancellor who will keep the nation faced with its difficulties and keep us on the right track.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

Will the hon. Gentleman allow me? I am not quite sure I heard him aright, and it is so important I should like to be clear about it. Did I hear him describe the present Chancellor as a "cheerful man-about-town?"

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

If the hon. Member had listened he might have heard me say that I thought that what the nation did not require was the Chancellor trying to be a cheerful man-about-town.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

Is that what he is trying to be?

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

I want him to be stern, and to say to the people of this country that, well though we have done, we have infinitely greater problems ahead to solve.

Photo of Mr Percy Daines Mr Percy Daines , East Ham North

He said that yesterday.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

But he was not cheered when he said it.

Now I come to the White Paper. The Chancellor yesterday described it as a long-term programme. It is partly that. However, what the country ought to be told is that it is a begging letter that we are sending to the American workers and the American taxpayers, and we should tell our people that we are requiring from the American workers and taxpayers 940 million dollars, and that unless they send us those 940 million dollars this year, this country under this Government, owing to some factors over which they have no control but also owing to some factors over which they do have control, will be faced with mass unemployment and starvation. That is what is said in the Report.

I think that the Chancellor yesterday failed in his duty in not issuing a very urgent warning to this country that, great as may be the Americans' desire to help us, generous as they may be—and there is no country in the world that has proved itself more generous—there is danger in Our sitting back and saying, "We shall get this aid for another four years." For seven years the American people have had wonderful harvests. The prosperity of America depends largely upon its farm belt. If the law of Joseph that he enunciated in Egypt were to come true in the West, and if there were to be seven bad harvests in North America—it would be disastrous, not only for this country but for the whole of Europe. We ought to face the possibility that nature may turn on the Americans, so that, good and laudable as their intentions are, they may find themselves unable to be as generous to us in the coming years as they have been and as they aim to be.

In addition, I say that the House ought to realise that the Americans are today spending 15 billion dollars on defence. The hon. Member for Gateshead (Mr. Zilliacus) will like that. They are spending 15 billion dollars on defence, and their war chiefs say they would like 20 billion dollars'. They say, "Remember Pearl Harbour. We do not intend to be caught twice with our pants down." Therefore, if there were to be any setback in the American economy it would not be defence that would suffer first: it would be overseas payments. We ought to face that. If we are to be realistic, and fair to our workpeople, we ought to tell them so. Therefore, it is all the more urgent—and here is the only thing in the speech of the hon. and gallant Member for North Portsmouth with which I agree —that we all, on both sides of the House, should go to our constituencies and our workers and say to them, "We have done very well so far, but the difficulties ahead are still terrific, and unless we all pull together nothing else but starvation faces us."

So I come to the central point I wish to make. In paragraph 30 on page 6 of the Report, the Government make to the American people this confession: The difficulties of the present economic position do not present themselves in an obvious form to the British public. … A real and grave crisis in economic affairs seems remote and unreal. The task before us is not to talk party politics, as the hon. and gallant Member for North Portsmouth did, but to get our people to face that problem, which affects the heart and guts of the country's position. I hope the British public will face the realities. The Chancellor made it clear that unless by 1952 we achieve 13 per cent. greater production than we had last year we shall not achieve our targets. That will take some achieving. Why is it that the British public will not or cannot face the realities? I believe it is because this Government are trying to do the impossible. They are trying to pay for one war, to prepare for another, to give everybody social security, to see that everybody lives well seven days a week but works half-heartedly only five days a week. [HON. MEMBERS: "No."] In the paper almost every morning we read reports that working hours are being reduced in some place or other. We cannot produce unless we work. If the party of the hon. Member for Gateshead (Mr. Zilliacus), the Communists, were to come into power, they would see that everybody worked.

Photo of Mr Konni Zilliacus Mr Konni Zilliacus , Gateshead

On a point of Order. I am not a Communist; I am a member of the Labour Party and I deeply resent that kind of statement.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

I humbly beg the hon. Member's pardon. That was a slip which was not intended. If the extreme Left were to come into power they would have to insist on greater discipline to get greater production, because wherever they have come into power throughout Europe that is the first thing they have done.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

I cannot give way. I have to keep to my timetable. The poor working-class housewives of this country are being made to suffer because too many men would rather eat less than work more. That is the heart of our problem and that is why the Government have to confess that too many people in this country will not and do not realise our economic difficulties.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

I believe our problem at heart is a moral problem. In every class and in every walk of life there are far too many people who are trying to take a great deal more out of life than they are prepared to put into it. I believe we could find some on the other side of the House. It is so in every walk of life and it is seeping from what in the olden days hon. Members opposite would have called the few, privileged idle rich down to the idle poor, and this country can no more afford idle poor today than it could previously afford idle rich.

As I see it, the problem is that Socialism has somehow lost its soul. It is unable and unwilling to inflict punishment and it is unable to inspire men to do things. If I may give the House an example, when I was in Vienna in 1946 with a Parliamentary Delegation we went at night to see the great cathedral and at 9.30 p.m. we heard men working hard behind the boards to rebuild that lovely cathedral. I am not a Catholic, but I take off my hat to the men who were doing that work. I said to the interpreter, "What are these men doing here working so late?" He said. "These men are working for the love of their cause." They were doing a job, rebuilding that cathedral, because they loved the things for which it stood.

The tragedy today is that Socialism is unable to get any group of working men to do any work for the good of Socialism. I ask hon. Members to face this fact. The slum dwellers of London, the bombed out people, wanted houses and wanted them quickly. Is there any hon. Member opposite who could go to the building operatives and say, "Work on Saturdays one day a month for nothing in order to produce houses not for the rich but for the poor"?

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

They work on Saturdays now.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

But they will only do it if they are paid overtime and double time. As I say, it seems to me that the problem here is a moral problem and it is a problem which Socialism seems unable to tackle.

Although my time is up, perhaps I may give a final example. The Chancellor of the Exchequer wrote a book—a remarkable book which I wish all hon. Members opposite would read. It was called "Towards Christian Democracy" and he might have well have written it for this Debate for this is what he said: Courage and fearlessness of consequences are taught as outstanding Christian virtues… Leadership does not consist in seeking to interpret and then to follow the wishes of the majority, but rather in the attempt to lead and direct popular thought. … He goes on to say: Indeed, leadership and popularity often appear to be almost opposites.… It is that leadership which we lack at the present time. Despite the fine achievements of the last nine months we still have much greater problems to overcome and I beg the President of the Board of Trade, when he comes to reply, not to minimise the difficulties but to make an appeal to his own supporters as well as to the employers to face the problem which arises from the poverty which two wars have brought upon this country and which can only be overcome by increased production and much harder work.

12.26 p.m.

Photo of Mr Maurice Edelman Mr Maurice Edelman , Coventry West

I am quite sure that throughout the country, both among people who voted Conservative and those who voted Labour, there will be deep resentment at the sanctimonious lack of generosity which the hon. Member for Louth (Mr. Osborne) has displayed towards so many of his working fellow countrymen. Undoubtedly, throughout the world people have been filled with admiration for the self-denial, the determination and the dignity which the Government's Four Year Plan represents. When the hon. Member for Louth describes as "a begging letter" a plan which is based on renunciation, on austerity and willingness to work hard, I am quite sure that in all parties throughout the country there will be the most profound feeling against the hon. Member.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

On page 64 and in paragraph 47 of the Report there appear the two lines which really matter: …the amount of financial assistance from the United States that will be needed by the United Kingdom in 1949–50 is 940 million dollars. If that is not a begging letter I would like to know what is.

Photo of Mr Maurice Edelman Mr Maurice Edelman , Coventry West

If as a result of an exhausting war in which this country made a contribution which has won the admiration of the whole world, she now requires certain additional assistance in order to repair the ravages of that war, surely that is not an act of mendicancy but rather a claim to assistance to which this country is entitled.

I do not wish to follow party controversy in dealing with this plan this morning but rather to point out some of the difficulties, and to make one or two suggestions as to what might be done in order to make the plan effective in its general purpose of achieving economic independence for Britain. It is now quite clear that the great flaw not only in the British plan but in all the 19 plans is that they were prepared in isolation. As a result of the fact that these plans were prepared by civil servants sitting in their offices, dealing merely with statistics and not with the actual physical resources which have to be dealt with by the plan, we have an incongruity between many of them which we are only now trying to resolve.

Only yesterday the noble Lord the Member for South Dorset (Viscount Hinchingbrooke) referred to the collective plans as a mosaic. If, in fact, that were the case I would have applauded the result, but in point of fact the plans do not add up to a mosaic. Each of the constituent parts has a volition of its own; and in the total we have a general pattern which resembles a jig-saw in which the pieces do not fit into each other and cannot fit into each other because they have not been made in such a way as to be capable of being assembled together.

To illustrate my theme, I would refer to the incompatibility between the British plan, as it stands today, and the plan which the French have put forward. The most obvious example of incompatibility is that the French, traditionally, produce luxury and high quality goods, which have in the past formed quite an important part of their exports, while we in this country, pursuing a programme of austerity, very naturally do not want to import luxury articles at a time when we have to tighten our belts and limit our imports to the bare necessities. And so, while on the one side we have the French anxious to develop their traditional exports, and eager not to discard the skill which they have developed over so many centuries, we are reluctant to accept exports that the French wish to send. Yet, in order to make the French plan effective, it is absolutely essential that they, like us, should balance their payments by exporting more than they import.

The question remains, therefore, should not consultations have taken place between manufacturers, trade unionists and all concerned with production in the two countries in order to try to harmonise the exports and imports of both countries so that they blend into each other? It is clear that so long as planning is carried out by a central body trying to impose a blue-print plan on two conflicting interests, so long will there be disparity between the two plans. Sometimes people say the reason for this conflict is that in both countries there are vested interests, anxious to maintain their special advantages.

When we come to the question of planning industries of two or more countries, the words "special interests" have rather pejorative implications. In point of fact, there are "vested interests" which are perfectly legitimate. A worker in Coventry making motor cars does not want to have his factory closed down by a remote central planning authority in the interest of a worker in Paris. And vice versa the same applies to a British or French industrialist. They are right in their national plan to want to maintain and serve those interests. This fundamental conflict of interests between the industries of both countries can only be resolved by what I would suggest this morning should be joint consultations between all concerned, and finally the establishment of international trade associations under the joint direction of O.E.E.C., established in the same way as national trade associations, with the difference that in these new organisations there should be participation by the trade unions and the Governments concerned, in order to relate their activities to the public interest.

As an example of the conflict that has arisen between Britain and France in creating their Four Year Plans, there is the question of wheat and meat. The French intend increasing their output of both wheat and meat, but they feel an anxiety that Britain, when it comes to a question of buying wheat, will tend, very naturally, to turn towards the Commonwealth for purchases of wheat, rather than to France. As the hon. Member for Chippenham (Mr. Eccles) has said, it is right and desirable that this country should turn towards the Commonwealth to try to obtain as many of their requirements as possible. But, quite obviously, it is only possible to reconcile the legitimate desire of the French to increase their wheat production and the desire of the Commonwealth to sell wheat to Great Britain if the Commonwealth and France and the British interests concerned are brought into a collective consultation.

Another example of a potential clash between the plans is the case of meat. The Australians are anxious to develop the meat resources of their Northern Territories. The French, under their Four Year Plan, as part of their total increase of 25 per cent. in agricultural produce, are trying very hard to develop their livestock resources. But in Britain, among those who import meat from abroad, there is considerable resistance to the idea that the French should increase their production of meat. Indeed, the story has been put out, whether rightly or wrongly, that in France foot-and-mouth disease is prevalent. Consequently the people who import meat into this country say that they are only prepared to import an increased quantity of French meat if that meat comes in tins. Clearly, it is absolute nonsense, if the French should want to increase their production of meat, that we should concentrate on importing from France their meat in a tinned form. It is wholly uneconomic to buy canned meat from a country that lies only twenty miles away.

Among other items which the French wish to export is wine. There again there is a general uncertainty as to what extent we regard the importation of French wine as being a luxury or a semi-luxury. Only recently the Bordeaux wine growers instructed a British firm of advertising agents to engage in a very wide publicity campaign to promote the sale of Bordeaux wine in this country. If it is our intention to reduce the importation of French wine, let it be said immediately. Let it be announced now, so that there will not be this wasteful effort of the Bordeaux wine shippers trying to promote their exports, while we, in rather a stubborn silence, give no sign of what we intend to do, leaving it apparently to the development of chance.

There are other contradictions between the two economies. The French, who intend to increase their agricultural output, are eager to develop their, at present, under-mechanised agriculture. In order to do that they have increased very considerably their imports of tractors from America, which are paid for, of course, in dollars. At the same time they are trying to raise their own output of tractors to a total of 50,000 a year. We at home, as hon. Members know, have made, before the war and during the war, very substantial advances in the production of tractors. Now our present production is running at the rate of something like 100,000 a year. In order to reach the objective of the Four Year Plan we hope to increase that output by a further 10 per cent. The fact is however, that our present output of tractors is sufficient to supply the domestic market, as it exists today, and also to provide the necessary replacements. We are eager to export.

Here then we have the paradox that while the French are paying dollars for their tractors, and making desperate efforts to build up a tractor industry in order to produce 50,000 tractors a year, we ourselves having developed a tractor industry which is probably the best in the world, and saturated our own market, are in the position of looking for markets in which to sell them. We look to Europe. But the French instead of buying their tractors from us, as they so naturally could, and sending us in return those agricultural products which we need, are now buying tractors from America.

I could go on multiplying examples of this kind, but there is one more serious matter of incompatibility between the economies which I wish to emphasise this morning. The hon. Member for Chippenham (Mr. Eccles) drew attention to the difficulties of payment clearings between the countries concerned. I wish to draw attention to one fundamental difference between the Marshall countries, and in particular between Britain and France, which must be a cause of concern to everybody and which, if not corrected, is likely to destroy the plan. It is that by 1952 we propose to increase our industrial exports to a figure of £400 million. The French, for their part, not very attracted by the idea of being the Argentine of Great Britain, anxious themselves to increase their industry and to enlarge their own industrial exports, which is a necessity for them if they are to have a favourable balance of payments—the French are concentrating in many respects on exactly the same lines of industrial production as we ourselves today.

The matter is further complicated by the fact that Western Germany is also producing identical lines for export and is meeting with very considerable success. Here we have plans prepared in isolation and being applied in isolation, in which the objects of the countries concerned are similar and the instruments by which they hope to attain their objects are contradictory. For that reason, we come to the point where it is absolutely necessary that we should have between the countries and the industrial interests concerned the consultations at an industrial level which I referred to in my opening remarks.

There is also the question of tourism. Here again, there seems to be a certain collision between the tourist interests of Britain and France. The French hope to raise their tourist income to something like 330 million dollars, which is an extraordinarily high figure when one considers that in 1947 the figure was much nearer 100 million dollars. We, for our part, propose in the White Paper to raise our tourist income to 260 million dollars. All that shows the absolute necessity for the trade interests concerned to come together to discuss the matter.

To summarise the argument which I have sought to advance, I believe that it is possible in Western Europe for Socialist countries—the countries with planned economies and nationalised industries—to work together with countries which have private industries, provided that the interests concerned enter into consultation in order to harmonise their purposes and provided that there is some kind of enduring organisation related to O.E.E.C. by means of which there may be a constant supervision of these cartel arrangements to bring them into line with public policy. I know that my hon. Friends shrink rather from the word "cartel," and quite rightly, because before the war the cartel was used in order to restrict output and keep up prices.

Fundamentally, if we want an integrated European economy, we should not be unduly afraid of the word "cartel." the "cartelisation" of the industries of Western Europe which I favour is one in which industries with similar objects and functions get together to integrate their purposes and activities by specialisation, standardisation and the division of labour so that there should not be undesirable competition. That seems to be a purpose which Europe can well follow. If my right hon. Friend does promote these consultations as soon as possible between the various industries of Europe, not only will our own Four Year Plan be more sure of success but it will be the best guarantee that the 19 plans of the Marshall countries will jointly succeed.

12.45 p.m.

Photo of Sir Douglas Dodds-Parker Sir Douglas Dodds-Parker , Banbury

I always have pleasure in following the hon. Member for West Coventry (Mr. Edelman) because I think that we on this side of the House have got used to hearing a characteristically moderate and constructive speech from him. Although I cannot agree with the half-truths that he put about cartels without taking time to put the full case, I think that I agree with much that he has said. I remember at the end of the war discussing with the French the whole question of the mechanisation of agriculture. They said that they thought that the British had the best mechanised medium and small farms in the world and that they could get from us mechanical equipment which would enable them to increase their output which they could then send in return to the British. These plans have been going on for some time.

If I had followed the hon. and gallant Member for North Portsmouth (Major Bruce), possibly I would have been tempted into controversy with him, but as the hon. and gallant Member is no longer in the Chamber I cannot put to him some of the real facts on unemployment, how, for instance, after two years of a previous Socialist administration in 1929–1931 it went up from 1,100,000, to over 2,500,000. I will not be drawn into further controversy beyond this: that we do feel that the recovery of this country, which is very considerable, is due to private enterprise and American aid. It has taken place, not because of this Government but despite this Government.

The question I wish now to put to the President of the Board of Trade, following what was said by my hon. Friend the Member for Chippenham (Mr. Eccles) is: Do this Government want North American private enterprise capital in the Commonwealth and Empire? Many people throughout the world welcomed very much Mr. Truman's fourth point in his inaugural address when he spoke about the development of underdeveloped areas. The point made by the Chancellor of the Exchequer yesterday about the Commonwealth and Empire being gravely neglected was dealt with most firmly by my hon. Friend the Member for Bury (Mr. W. Fletcher). What escapes the attention of the Chancellor very often is the psychological, as apart from the practical, side of overseas development. Only those who have worked among these primitive people realise the tremendous progress which has been made in the last 50 years, and the work which has been put into achieving it. It is not merely a question of offering people wages. This progress involves a whole change in a way of life before a practical plan can be put into action.

I ask the right hon. Gentleman what he intends to do about North American capital coming into the undeveloped areas of the Commonwealth and Empire. One sees quite a lot of criticism in newspapers of all political parties that not enough has been done by private enterprise since the end of the war in these territories, and particularly that North American private enterprise capital has not come in during the past three years. I will put to the Government by way of criticism some of the reasons why this development has not taken place. In the first place, as my hon. Friend the Member for Chippenham pointed out, there is a fear of nationalisation, especially of minerals. People who go to these territories and spend vast sums of money exploring and searching for minerals may find that under this Socialist Government nationalisation may take place with unfair terms of compensation to industry such as those which have been given in this country. Beyond that, there is the Capital Levy. I do not believe that the Chancellor of the Exchequer yet appreciates the damage which has been done to sterling as a currency throughout the world. To the economic pressure on sterling it has added a political pressure. Until the whole system of capital levy is disowned by the Socialists, there will be that political pressure on sterling.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Southwark Central

Can the hon. Gentleman reconcile that statement with the fact that the introduction of the Capital Levy—or the Special Contribution—has coincided with an enormous strengthening in the position of sterling in the world?

Photo of Sir Douglas Dodds-Parker Sir Douglas Dodds-Parker , Banbury

The strengthening of sterling which has taken place has been due to the great assistance of the Marshall Plan. The Capital Levy has still a tremendous adverse pressure on sterling.

My next point which has already been stressed from this side of the House concerns the question of over-heavy taxation. The paper of the Federation of British Industries puts that in a far better way than I could. This is a most serious situation not only for industry in this country, but for producers overseas. A primary producer company in which I have an interest in Southern Africa last year made a profit of £70,000 and paid £50,000 in taxes. How can any company which has to buy new material and re-equip their mechanisation, build reserves and so on, do so with that rate of taxation? The whole of Southern Africa is now affected by drought, and, apart from the question of profit, such companies may easily find themselves running into heavy deficits.

Another point concerning producers and North American capital is the inability to repatriate profits. There is nothing definite laid down about this, but I cannot see how the Government can expect individuals responsible for other people's money to invest it overseas if there is no security that they will get repayment. Another matter which is adversely affecting overseas development is that the Bank of England will not allow blocked sterling to be used for exploration. When people have this money, they are not permitted to go looking for the minerals which are so important to future development.

How then is it proposed that the fourth point of Mr. Truman's address shall be implemented so far as the overseas territories are concerned? Are we to expect the United States authorities to agree to public funds being used and restricted in the same way as private funds have been so far, or are the Government going to ease the conditions under which private enterprise can operate? In either case, will there be discrimination in favour of North American capital against British capital? It is not within the power of the great band of Marshall Aid administrators in this country—to whom I would add my tribute to what the Chancellor said yesterday—to allow Marshall Aid Funds to be used to perpetuate Government-to-Government subsidies and State trading under E.R.P. The purpose of the original Act was to get private enterprise going, and it was not the intention that it should be used in the way in which it is being used from time to time for the above Socialist purposes.

Finally, on this point, I ask are supplies obtained from North America to be diverted to Government schemes for political purposes instead of being distributed for economic reasons? The heavy tractors which are being used on the groundnut scheme are a case in point. I would like to put it to the Chancellor and the President of the Board of Trade that all the heavy tractors obtained in 1947 and 1948 were used under a Government monopoly, when many private companies would have been interested in obtaining some of those tractors for their own development plans. I asked a question in the Debate in July about this but I got no reply; I suggest that the American authorities intended to ensure that private enterprise, as was required by Congress, should get a fair allocation of this capital equipment. How is this being ensured? Is there, in fact, any American representation on the allocation committee?

Now I come to my own suggestions for the future. The first action I would take would be to remove the obstacles to which I have referred affecting all producers, not only our producers, but those from the North American continent, in which I include Canada. Secondly, we have something to learn from American experience. The right hon. Gentleman who was the last Minister of Supply has been on a visit to the Tennessee Valley authority, and I believe that there is much valuable experience to be gained from that body in our future development schemes for the under-developed areas in the matter of soil conservation, hydroelectric development and so on. The British are not behind in this kind of development and there are in Africa several successful examples of such developments—the Nile Projects Commission and the Gezira Scheme in the Sudan.

Another point to which I would draw the attention of the President of the Board of Trade is that, on the day when the Chancellor of the Exchequer arrived in Washington, there was a leader in the "Washington Post" about "chemurgy." Having looked up the word "chemurgy" in a dictionary, I got into touch with those who were concerned with this matter. The leader was aimed at the Chancellor of the Exchequer. I found that "chemurgy" is, roughly, the industrial use of the by-products of plant life. I think we can say in this country that we have excellent research departments in Unilever's, Imperial Chemical Industries and other private enterprise organisations, but there is no centralisation such as the Americans have through their National Chemurgic Council. I think they are only too willing and anxious to make available to this country the experience which they have gained in this field in the last 15 or 20 years, and I urge the Government to pay more attention to this research and find out from the Americans whether this information cannot be made available to us for our future developments. I think that, in this connection we have to concentrate on the long-term aspects and on raw materials that can be reproduced and renewed by nature, like plants and water, for instance, rather than on some other materials like oil and coal, which, as far as I know, are not being replaced at the present moment.

Thirdly, I urge on the Government, particularly in the development areas, to concentrate on some sort of scheme for improving incentives to workers. At present, in Southern Tanganyika, where the Government is engaged in large development, the development of the new harbour is held up, because, instead of workers coming from Portuguese East Africa they are going the other way, owing to the shortage of consumer goods. There are more of these goods in Portuguese East Africa today than there are in Southern Tanganyika, and I would urge the Government to provide an incentive by means of increased consumer goods to attract these people. I believe that one of these incentives which might be used with advantage and which might help very considerably is ice-cream. That may be thought to be strange, but it is a very useful food for Africans. It contains sugar and fat, and, as a food for the peoples of the under-developed territories, I think it would provide a further inducement and would be a very useful addition to their diet.

Finally, I would urge the Government to put first things first. Much has been done, as is shown in this Report which is before the House on European Co-operation, but what we have to do in the under-developed areas is to concentrate on transport. We must see not only that we get the production we need, but also that we have got the railways, roads, and transport services to carry the goods. I listened to the statement made on Monday during the Adjournment Debate by the Under-Secretary of State for the Colonies, about the transport developments in Africa, and the calling of a Western Union conference in Southern Africa as we have urged so often from this side of the House. I hope that when we get to that stage we shall have reached agreement among ourselves. I think that closer co-operation to the point of federation, of all British territories comes first.

I also hope that the Government are looking very hard at the revision of the Congo Basin Treaties. In these territories before the war, I think we may claim that the British were the only people who played fair with these Treaties, but now with the return of goods from Germany and Japan there are considerable difficulties ahead for us if the industries of those countries are to resume as indicated in this Debate. One of the main hopes of getting the Africans to work will be the provision of the sort of cheap goods, such as formerly came from Germany and Japan, and if we cannot do better in that direction than we did before 1939, we shall find these markets again taken by these foreign competitors.

May I make one appeal for the Italians? As I have said before, I believe that the Italians know quite a lot about road construction, and that in Italy we could find a number of men skilled in technical road work, for which British are not available and in which the Africans are not yet skilled enough, to help in the development of these backward areas.

My right hon. Friend the Member for Woodford (Mr. Churchill) spoke about the first American Loan and said that it should be a springboard and not a sofa. But, apart from the Chancellor of the Exchequer—to do him justice—and, I think, one or two other hon. Members opposite, the average Government supporter has not been using it just as a sofa, but as an anaesthetic. They have not faced up to the extent to which this country is dependent on American aid. From some of the Chancellor's recent speeches, in which he stated some of the economic maxims which we accept as being axiomatic, and which the hon. and learned Member for North Hammersmith (Mr. Pritt) said yesterday were good Tory sentiments, it is clear that he realises the action he has got to take for the future restoration of prosperity in this country: such action will be a further admission that Socialism as preached by this Government is not only politically and morally bankrupt, but economically impracticable.

1.2 p.m.

Mr. Scott-Elliot:

I want to say a word about that portion of the speech delivered yesterday by the right hon. Member for Saffron Walden (Mr. R. A. Butler) which dealt with the Government's policy in regard to agriculture. He began by saying something with which, I think, we can all readily agree. He drew attention to the need for more meat production. In particular he considered it desirable that we should have more store cattle. I could not agree with him more. I am a hill farmer, and I recognise that the hill country is the country which is going to provide the supplies of store cattle which can be fattened on our low ground farms, and which will be of infinite value to us.

Thereafter, it seemed to me that the right hon. Gentleman got on to rather more controversial ground. He criticised the cropping programme, and stated that in his opinion it might lead to a decline in soil fertility. He went on to press for a very substantial import of feeding-stuffs from overseas, and drew attention to what some of our Continental neighbours are doing in that matter. Let me make it perfectly plain that, of course, I welcome increased imports of feedingstuffs from overseas, subject to two qualifications. In the first place, they should be bought at a reasonable price—some of our imports of feedingstuffs have not been so bought in recent times—and, in the second place, these feedingstuffs should not come from the dollar area.

Clearly, it would be a very shortsighted policy on our part were we to begin asking for feedingstuffs from the dollar area under E.R.P. if we could not be sure that we could continue these imports, and it is perfectly obvious that there is no guarantee that we could. It must also be remembered that, at the present time, the cost of imported feedingstuffs is very high in relation to the price of meat. That is a point to which I want to draw attention because, from the national point of view, to import large quantities of feedingstuffs from overseas, and to convert them into meat in this country, is not going to be particularly profitable for ourselves.

It seems to me that, by advocating this large import of feedingstuffs, the right hon. Gentleman was carrying on the policy originally advocated in the White Paper produced by the right hon. Member for Southport (Mr. R. S. Hudson) when he was Minister of Agriculture in the Coalition Government. Hon. Members who have read that White Paper will realise that it is suggested that we should greatly increase our meat supplies, and that these supplies should be conditioned all the time by the amount of feedingstuffs we could import. Personally, I look on that as rather a defeatist argument. I believe in this country, and I am convinced that we can produce a great deal more ourselves. We know that in industry we are capable of producing more. Take the case of the cotton industry. It is generally accepted that if all the undertakings in the spinning section of that industry came up to the standard of the best 20 per cent., we should be able to produce 20 to 25 per cent. more cotton yarn a year.

That is a very considerable amount, but I believe that we could do even more than that in agriculture. When one walks over a well-managed farm in good farming country and compares that farm with another being farmed by someone who is just jogging along in the old way, one realises the enormous difference between the two. I believe that I am understating the case if I say that the one produces more than twice as much as the other. I am convinced that we can produce a great deal more in this country.

I want to turn to the point made by the right hon. Gentleman in respect of fertility. He said he thought there might be a decline in the fertility of our land if we went in for such a large cropping programme. I do not want to lay down the law about this, because I realise that conditions differ in different parts of the country. I believe that most of the experts would tell us that ley farming gives the best results so far as fertility is concerned. They tell us to plough up, grow crops, lay down the grass again, use that grass for silage or hay, then for pasture, and, finally, go through the rotation again.

In this matter, I should like to quote the first two or three sentences of paragraph 73 of the White Paper we are now discussing. It says: The expansion of livestock production necessitates larger acreages under coarse grains and other fodder crops if dependence on imported feedingstuffs is to be reduced. Substantial improvements are being planned in grass production and grass drying. Special emphasis is being laid on ley farming as a means of maintaining the arable acreage and at the same time improving the yield of grass for feeding purposes. I feel that the right hon. Member for Saffron Walden, if he is going to criticise the Government, as he did yesterday, should have drawn particular attention to paragraph 73 and should have said that he considered it to be fundamentally unsound.

In conclusion, may I give what I believe to be the reason for this question being raised, because it is very important indeed. I believe that in certain parts of the country, owing to the increased amount of labour required for it, ley farming is not quite so profitable for farmers as grazing livestock may be. I am not sure about that matter, but I believe that is what a good many farmers would say. We have got to face up to this question. I am one who believes that we should try to avoid giving directions in respect of cropping, and that we shall then get the best results.

I understand that my right hon. Friend's officials, when going round the farms, make a point of being quite frank to the farmers as to what is likely to pay them best. The agricultural advisory service tells the farmer quite frankly, "We want you to do this, but we think it might be a little more profitable for you to do something else." I want to make that point abundantly clear. In view of the advantages that the Government have already given to farmers through guaranteed prices, I think they have a perfect right to ask the farmer, in the national interest, to carry out this programme of ley farming. I believe that if that is done we shall succeed in securing the large increases which are postulated in the White Paper, and in that I wish my right hon. Friend the Minister of Agriculture all success.

1.10 p.m.

Photo of Hon. John Maclay Hon. John Maclay , Montrose District of Burghs

Inevitably, a back bencher contemplating a Debate of this kind must prepare his speech rather on the accordion principle, hoping he can stretch it out to produce a beautiful harmonious whole. If, owing to the shortage of time, all I produce is a thin, distorted squeak, at least, there is not an excessive number of ears to be offended by it. We have had in this Debate, and certainly from the Economic Secretary last night, much comment on the degree of unanimity that there has been throughout it. The hon. and gallant Member for North Portsmouth (Major Bruce) did his best to put something else into it. I understand that it is a good idea to leave that alone. I shall try to do so, but cannot completely.

Of course, there is much unanimity about what we are discussing. It would be most irresponsible were we not to seek the highest degree of unanimity, because we are discussing the whole fate of Western civilisation. If economic recovery does not come to Europe, the Western civilisation we know must go. The part of Great Britain in that recovery and in that civilisation is absolutely vital. We are unanimous, too, in expressing appreciation to the United States for their great generosity. I share the feeling; but I sometimes think we say too much about generosity, because I think that the greater compliment is to understand that they are willingly and at great cost to themselves accepting their share of responsibility in the world with a full understanding of what the saving of Western Europe means to the world and to the United States themselves. I think that is the highest form of compliment one can make.

But unanimity does not go much farther, although there is another important point on which there is a high degree of unanimity. Last night the Economic Secretary talked about the fact that with anything like laisser faire conditions in the last three years and without essential controls on imports exchange and the allocation of materials, disaster could not have been avoided. He spoke as though that view were the prerogative of the Government and of hon. Members opposite. That is, of course, absolute nonsense. There is no responsible politician in this country who does not agree that those controls have been absolutely essential in this period. Where we begin—or, at least, I begin—to quarrel with the Government in their efforts towards European recovery is, that they do not stop at those controls, but try to carry them far down into the economic life of the country.

What I should like to know is whether responsible Ministers, the President of the Board of Trade and the Chancellor of the Exchequer, are recognising now that they must reduce their ideas of the limits to which Government planning should go. Unless they do, they will undo a great deal of the work they are attempting. I know that many of the things the Chancellor of the Exchequer has done have been right. I never have been one to criticise the campaign of austerity. I do not think that conditions need have been so hard as they have been and are, if certain policies arising out of the Socialist theories of the Government had not been applied, but I think the Chancellor was right to put the emphasis on imports, because any responsible person has known all along that we should have to pass through a desperately difficult period after the war.

However, I suggest that the Government's actions are in conflict with their objectives as set out in the Report we are considering today, and in the speech that the Chancellor made last night. If we had only the Chancellor's speech of yesterday and these reports to go on, I think we should find a quite remarkable degree of combined support for what we have to do in this country, but, unfortunately, there are other actions of the Government which are not consistent with the declared objectives. The worst charge I have to make against the Government in relation to European recovery is that in home affairs we are left in a desperately uncertain state, and that is felt on the Continent. It so happens that from time to time I have to go to Paris for international meetings of international business men. I am repeatedly asked, "What really is happening in Britain? Are we to believe the British Government when they say that British industry is to be State-owned as to 20 per cent. and free as to 80 per cent.?" I do not know the answer to that, unless I turn back to former pronouncements of Labour Ministers. I am not going to pursue that subject, because one cannot in the time available, but I do say that there is complete uncertainty.

If Britain would really give a lead, I myself should go some length with the Government. I hate State ownership. I think it is wrong fundamentally. However, I also think we should all accept the fact that certain things have been done, and look to see if we can make them work, and distinguish between State ownership and State management. Hon. Members opposite have talked about the desirability of both for 50 years and have converted many to their view. We must accept the fact that certain things have been done, but State management will break down the whole thing and break the country down, too, if the implications of State management are tolerated.

I cannot go further into that subject now, but I come to the question of multilateral trade, to which the Chancellor gave lip service yesterday, and to which all these documents would seem to commit the Government. I wonder if the Government can possibly reconcile some of their policies and acts with a real desire for multilateral trade. I wonder how many hon. Members opposite would have liked to vote against the Geneva Tariff Agreements not because the related commitments were not sufficiently multilateral but because they thought they were committing themselves to certain things which would prevent the Government tying up as much of the world as possible in a tight bilateral bulk purchasing Socialist planned economy.

I come now to one single detail—the policy of bulk purchase. In paragraph 136 of the Report there are these words: It is, however, a basic condition of the full attainment of these shipping objectives that the United Kingdom, like the other participating countries, should be able to offer shipping services throughout the world in free and fair competition and that there should be no governmental obstruction by discrimination and other measures to their acceptance. That is an admirable sentence. I hope the Government have been fighting for that, but suggest that their hands are hopelessly tied. I turn to the Argentine, for example. I am not going to talk about meat. Enough has been said in this House recently on that subject. When we began bulk purchasing during the war the Argentine did not go in for bulk selling. We know the rest of the story. Where it was found that this country intended to pursue a bulk purchase policy in time of peace inevitably we found ourselves faced in that country with bulk selling.

Let me take one of the subsidiary results. Spurred on by this feeling on the part of the Argentine Government that they are now running their own planned economy, they turned to ships. What have they done? First, they gave absolute priority in berthing for a considerable period to the Argentine ships, which would in two days get into berth, be discharged, and then turned round again. Foreign ships were held back, and English ships were delayed five, six, 10 weeks and more. Then the Argentine Government started making their agreements with other countries, and into those agreements inevitably crept a clause that half of the shipments should be in the tonnage of the Argentine and the other half in the tonnage of the country with which the Argentine were having negotiations.

One could go on and on with examples. They have even gone to the extent of putting insurance restrictions on trade, compelling the trader who is dealing with the Argentine to insure with an Argentine firm. Those are subsidiary results. When the British Government say, "You must put a stop to these nefarious practices," the Argentine Government can well turn round and ask, "What are you doing? Didn't you start it, and are you not looking round to see where you can make bilateral bulk purchase agreements?" How can we get multilateralism out of a bulk purchase policy? Can it produce ordinary negotiations in which credits or cash are involved. The other nation is almost bound to look for what goods it can demand before agreeing to any transaction at all. Barter must result.

How the Government can reconcile that kind of world trading with an ultimate free flow between nations simply beats me altogether. I would have loved to expand my views on that subject because it is a key problem, but I cannot now. It is easy to fight about bulk purchase purely on a political platform, but what we must do is to feel that the Government are looking at their acts of the last three years. I agree that after the war inevitably some bulk purchase was necessary, but what is causing such uncertainty abroad is whether it is the permanent policy of the British Government. Until we know that—the Government fortunately is not permanent—and where a Government is going, there is bound to be continued uncertainty abroad.

One would have thought that it was worth anything to the present Government, in order to keep confidence in Europe going, to make their views clear on some of these points. I wish that I could expand them. It would be very interesting to see whether the Government recognise that State management must stop the individual trader from being given a chance to function. Western Europe can only become a free trading area if Governments confine themselves to the proper functions of Governments, seek to do their best to remove the major obstacles to trade, to deal with tariffs, quota restrictions and the fundamental problem of convertibility with the help of Marshall Aid. Having done those things, the Government must get out of the way and let the trader go out and do his business normally, not cluttered up with endless forms and restriction.

I cannot sit down without telling one story which illustrates the difficulty of getting trade going. It did not actually concern Europe, but Canada. A trader whom I know wanted to open up an export trade with Canada which he was fairly certain would be successful. He hoped to start exporting goods manufactured in Scotland and possibly, later, to develop his own factory in Canada, his reason being that he thought it was worth doing. He had sounded the market and thought it a good venture. He had to go to the Board of Trade about the materials, and to the Bank of England with regard to the financial problems. They were sympathetic and sounded interested, but in a few weeks he found himself with a string of questions: Was he sure of his availability of materials; was he sure of his market; was he sure there was not an excess of competition; was he sure of this and that. How could he answer these questions? He could not and the venture is dead. He could only rely on his "best guess" that this job was worth doing.

That is how the whole of British influence in the world has been built up over the last 100 years, by the maximum number of individuals seeing possibilities and taking them, some going down in the process. Unless the Government can leave the individual to get on with detailed enterprises, and take the dangerous risk of business, there is very little hope for this country and none at all for Europe.

1.24 p.m.

Photo of Mr Konni Zilliacus Mr Konni Zilliacus , Gateshead

The hon. Member for Montrose Burghs (Mr. Maclay), like many hon. Gentlemen on that side of the House, seemed to be trying to prove that if only we would go back to capitalism in this country—to free enterprise—we should do much better in reconstruction under the Economic Recovery Programme. If there is one fact that leaps to the eye, it is that, of all the countries concerned, this country has done far better than our Western European neighbours, precisely because we have carried out a domestic policy of Socialist Measures of public ownership, planning, and the mobilisation of production. The nearest approach to realism in that respect was from the noble Lord the Member for South Dorset (Viscount Hinchingbrooke), who gave a despairing cry yesterday at being let down by the Americans.

The appeal of the Tory Party to the Americans is, "Won't you please say that the Labour Government is doing very badly and should go back to capitalism?" and the Americans are being very awkward about it, because as previous speakers have mentioned, Thomas K. Finletter, Averell Harriman, Paul G. Hoffmann and the United States Department of Labour have all spoken in the warmest terms of the successful and manful effort of the British Government in reconstruction and in playing its part in the European Recovery Programme. I should like to rub a little salt into the wounds of hon. Gentlemen opposite by quoting one more American opinion on that subject. Walter Lippmann, in a review of the present state of the European Recovery Programme, which he calls "E.R.P. and Permanent Crisis." points out that the essential purpose of American aid was to enable Western Europe to buy time. He said, surveying the various European countries We might conclude broadly that the United Kingdom is at one end of the scale, Greece at the other, and the rest at various points in between. The United Kingdom is a shining example of a country which is using the time gained by the subsidy for a prodigious, almost ruthless, effort to adjust itself to the fact that it is much poorer than it was, and must learn to live accordingly. The British may not succeed in making themselves independent of American subsidies by 1952. But if they do not wholly succeed, it will not be because they are not trying. There is no evidence in Britain of the disposition to use the time gained to postpone, rather than to deal with the grave problems of post-war readjustment. I think that is a striking tribute, but a tribute which this country deserves, and the lion's share of the credit goes to the Government. I think that the Opposition find themselves in a curious position in trying to belittle our achievements and record, when those who should be our sternest critics take a far more favourable view.

The main point I wish to make this afternoon is that unless this European Recovery Programme is considerably modified in its political purpose, in its international context, and in its social foundations we are heading straight for another failure. A lot of speakers on this subject have been optimistic to the point of sheer unreality. The interim report of O.E.E.C. pointed out that, as we are going now, the countries of Western Europe will have a population one-tenth higher in 1952 than at present, will be able to afford only three-quarters of their pre-war imports, and will be faced with heavy deficits in their trade balances. The report points out that this would mean misery for some countries. I understand that an earlier draft actually spoke of the danger of mass unemployment and of widespread volutionary unrest in that situation.

These rather gloomy forecasts are based, in their turn, on the estimates of available resources and possible developments that are themselves extremely optimistic. They assume, for instance, that output per man-hour in Western Europe, despite the scarcity of capital, will increase by 15 per cent. between now and 1952; they assume that we shall be able to increase trade with South America by about 1,000 million dollars, capturing about half the American trade with South America. The underlying assumption is that the American export industries will allow themselves to be discriminated against and have some of the markets taken away without protest. But there has already been an outcry by the American export industry at the possibility of losing a little of the American export trade.

In view of some of the remarks of the Chancellor about how, under the present dispensation, it is necessary to submit to the invasion of our economic privacy and to sweep away the distinction between internal and foreign affairs, it is legitimate to have a look at what is the set-up in France and Italy. These two countries have substantially gone back to the capitalist economic system. In fact, at one time voices in the American Press were raised, by Walter Lippmann amongst others, accusing the Labour Government of dragging its feet and being reluctant to go into an economic union with Western Europe, because we believed our semi-Socialist economy could not be readily dovetailed in with the capitalist economies of France and Italy. The conclusion was drawn that perhaps Labour rule here was an obstacle to carrying out the plans for Western Union. I am glad that the Americans appear to have changed their opinions in that respect.

What has happened to the capitalist economies in France and Italy? In France it is notorious that almost the entire amount of American aid has gone to cover current needs and very little has been done to put France into better shape for facing the future. There is great social tension. The working class and the trade unions have been excluded by American intervention, through the threat that aid will be withdrawn, from any share in the Government, because the French workers have persisted for the most part in voting for Communists, both in the trade unions and in the constituencies. The penalty for that is exclusion by the U.S.A. from any participation in the Government, whatever the other French parties may think.

In Italy the same situation has arisen, but there it has gone a little bit further. A few days ago Mr. James P. Zellerbach, the head of the American Advisory Mission under E.R.P., published a report opposing a land reform scheme that is supported not only by the Democratic Front parties, the Socialists and the Communists, but also by a large section of the Christian Democratic Party. The scheme proposes to divide all estates above 250 acres. Mr. Zellerbach opposed the scheme on the grounds that it might lead to a lowering of production. In short, American policy in both France and Italy has produced the restoration of capitalism, but at the cost of creating glaring social injustice, pauperising the workers, and causing a grave land problem in Italy, which leads to social instability and is one of the worst obstacles to the economic recovery of the country.

In Western Germany the situation is even worse. A great deal has been said about the growing danger of German competition. That competition is dangerous for two reasons—first, because the wages of the German workers are only about half what they are in this country. My hon. Friend the Member for Bexley (Mr. Bramall), in the Debate on 28th October, gave a vivid picture of the poverty, distress and appallingly low standards of life of the German worker, largely as the result of the American policy of reviving capitalism in Western Germany. The second reason why German competition is dangerous is because Western Germany has been split off from Eastern Germany. Highly industrialised Western Germany must seek markets in direct competition with us and Western Europe, instead of finding its natural outlet in Eastern Germany and in agricultural Eastern Europe. That is not a problem confined to Germany, but it is greatly aggravated by bringing Western Germany into the picture.

General Clay, the American Commander-in-Chief in Germany, recently issued a report expressing alarm at the growth of German reaction and Fascism. In this connection he mentioned the Black Front and the League of German National Revival, started by. Otto Strasser, one of Hitler's earliest henchmen, who has popped up again, and whose programme includes the return of Alsace and Lorraine as well as the territories in the East which Germany has lost. In a recent interview he said that a new world war would be to the advantage of Germany, because it would kill off a lot more Americans, British and Russians than it would Germans.

The American Press has been talking about preparation by the American military authorities of military forces in Western Germany and the creation of German forces, but I shall not go into that now, although I have the necessary quotations here. All I will say is it is a most disquieting development. It is part and parcel of the policy of militarising Western Europe through the Atlantic Pact and the Brussels Treaty as well as carrying out a large rearmament programme with the help of American Lend-Lease. If that is done we can say goodbye to all prospects of economic recovery. Like everybody else, we must choose between guns and butter. We cannot have both, nor can we afford guns, even with the help of American Lease Lend. We cannot pay our way if we prepare for war.

Those are the disturbing facts about the Western Union economic aid programme on present lines. There are two ways of dealing with it. The first is to go on as we have gone before, ignoring the disturbing facts. To do that will invite defeat when realities overtake us, as they have already done in the Middle East; as realities have overtaken the Americans in the Far East; as realities have produced a painful and increasingly dangerous deadlock in Greece and over Berlin; and as reality has indicated that Western Union, if it goes on trying to couple economic recovery with preparations for a third world war and anti-Communist intervention, will run on the rocks.

What is the alternative solution to awaiting defeat piecemeal rather than look facts in the face and choose our policy accordingly? The alternative is to take certain decisions and to use our full weight and influence in the councils of Western Union and in our relations with the United States to insist upon these decisions being given due consideration. First, we must not, in any circumstances, re-arm beyond our capacity for economic recovery. We must not rely upon American Lease Lend for re-armament, because that means surrendering our national independence on the vital subject of defence. We must insist on taking our stand on the Charter of the United Nations and refusing to commit ourselves to a new balance of power and a new arms race. We must also point out to the United States and to France and Italy that we cannot cast in our economic lot with the latter countries so long as the working classes are pauperised and treated as second class citizens, without the right to vote for the political parties they want to, or to take part in the reconstruction of their countries and in the government of their countries because of the interposition of an American veto.

I agree with the hon. Member for Chippenham (Mr. Eccles) that there must be a general understanding in Western Europe about the area of State ownership. But I mean that in a somewhat different sense to him. There must be a certain minimum of public ownership, planning and control in the economies of Western European countries before they can effectively co-operate to create an economic union.

I congratulate the Government on what they have done hitherto in the way of trade treaties with Eastern Europe. The Polish Treaty in particular is a very welcome and important development. Other Western European States have also concluded treaties with Eastern Europe. Italy recently completed a big one with Russia and the Swedes have very important treaties with both the Soviet Union and Poland. Belgium, Holland and Switzerland have already concluded a number of trade treaties with Czechoslovakia, Yugoslavia, Poland and the Soviet Union.

I suggest the time has come to attempt a big expansion of these economic relations between East and West, because they are the one missing factor in the situation that could make the difference between economic failure and success for the European recovery programme. A new organisation has been formed for Eastern Europe, called the Council for Economic Mutual Aid. Its founders complain of the difficulties of trade with Western Europe. Why do we not call that bluff, if it be bluff. I do not think it is. I think that we may get somewhere through asking the European Economic Commission of the United Nations to attempt to prepare for and arrange a conference between the U.E.E.C. in the West and this new body in Eastern Europe. They should survey the whole ground of the existing network of East-West Treaties and see what the possibilities are of developing the economic interchanges between East and West.

I hope that President Truman's reference to the development of backward areas will be taken up by this country through the Social and Economic Council of the United Nations, possibly with the help of the Trusteeship Council. The danger is of developing a kind of enlarged Anglo-American imperialism. We should try instead the new technique with which the League of Nations experimented in some of the schemes it worked out and applied for co-operation between the League Technical Organisations and for instance the Chinese National Commission of Reconstruction and similar bodies in other countries in the Far East and the Middle East, as well as in Europe and in Africa, where a number of experiments were carried out in those days with this new technique of organised internationalism on the basis of equality of status. I believe that we could do some thing and the same thing on a much larger scale through the social and economic council of the United Nations. That is the channel into which we should try to direct this very interesting idea put forward by President Truman and endorsed in this country.

Finally, I would plead that the Government should try the experiment, through this House, of inviting the Parliaments of Western Europe to elect by proportional representation delegations say of 40 each, from Italy, France, this country, Benelux and Scandinavia, to have a meeting here in London, with the British Parliament acting as a host, in order to survey the whole field of these developments, and review the political purposes, international context, social foundations, and economic progress, and problems of Western Union. That experiment would show whether or not it is possible to incorporate in the constitution of the Western Union some provisions for a permanent, consultative, international Parliament.

The experiment is worth making, because I believe we are up against something much bigger than adjusting the views of Government. It is a matter of harmonising the relations of peoples, of making us understand each other better, of airing new ideas, of meeting responsible criticisms and opposition. In that kind of meeting you would get the Communists of Western Europe, the Socialists who believe in neutrality of Sweden and Switzerland, the Socialist Left Wing which is extremely critical of fundamental features of Western Union. You would get the benefit of the cooperation of the oppositions, as well as of Governments. Nobody can suspect that I have unduly "matey" views about Opposition views upon foreign policy. My quarrel about the Government's foreign policy is that it is too much like that of the Opposition. But in matters like this it would be valuable to have a broadly based discussion, from many different points of view, including the contributions that the Opposition would make to the discussion, in an interparliamentary meeting of this sort.

Let us try that experiment, let us allow these fresh winds of criticism and comment to blow. Let us above all, not be afraid of looking at facts that are nasty, disagreeable and dangerous, or of reviewing the assumptions on which our policy is based. If anybody is going to make this policy succeed it must be the Government of this country, in the light of the success it has already achieved in its national reconstruction at home, through the application of the Socialist measures for which it received a mandate from the people.

1.46 p.m.

Photo of Sir Waldron Smithers Sir Waldron Smithers , Orpington

The hon. Member for Gateshead (Mr. Zilliacus) made two points to which I should like to refer briefly. He spoke of the economic recovery of this country, which we all applaud and with which we all agree. That recovery could have been far greater if it had not been hampered by the endless restrictions and controls of this Government. He also referred to conditions in France and Italy, but those countries have not been allowed to recover because of the Communist propaganda which has got into their people. In one of our Lobbies there is a picture of Sir Thomas More defying Cardinal Wolsey and refusing to grant a subsidy to King Henry VIII, without due debate. I wish someone would remind the Government and country of that because they are pushing through these great measures, fraught with enormous consequences, without due debate.

The "Daily Mail" sums up in a heading this morning the speech of the Chancellor of the Exchequer yesterday: "A hard way, but free by 1952." I believe that we cannot be free by 1952 under the policy of this Government. I hope the Chancellor will correct me if I am wrong but I understand that in spite of all we are doing, the dollar gap in 1952 will be 300 million dollars.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

The hon. Member has asked me to correct him. He is dealing with two completely different things. The figure he has given is what the O.E.E.C. say is for all the European countries if they cannot obtain the imports and the exports which they estimate.

Photo of Sir Waldron Smithers Sir Waldron Smithers , Orpington

We are talking about European recovery and that is a figure which has to be faced and overcome somehow or other.

The Bill before us is based upon two documents. One is Command Paper 7572—and that document is to a great extent an attempted vindication of the Socialist policy over the last three years. It is prepared by theorists and planners and it cannot command British, American or European confidence. Unless we have a different policy and a return to a policy of the breakdown of all barriers and to free enterprise, it simply means that more dollars are being poured down the Socialist drain.

I should like to make a comment now upon one matter which has not been mentioned but which is a great danger to European recovery, and that is in relation to the power and evil influence of the right hon. Member for Bishop Auckland (Mr. Dalton). He is a Member of the Cabinet and he is representing us at the Brussels Pact Conference. We have got out of the Dalton frying pan into the Crippsian fire. We are partners with 18 other nations. I have tried to study these papers. It seems to me that we are the senior partner in this firm. It is of vital importance that Britain should pull her full weight in European recovery. The success or failure of European recovery depends upon the men who organise it and carry it out. I say that the directors of the board of Britain, so to speak, are not fit and are proved by their previous actions not to it be to lead Europe to recovery.

I have seen the summary of the Swiss proposals in the paper published in Paris. It says: The Swiss memorandum explains 'that Switzerland cannot draw up a long-term programme properly so-called because the motive force of its economy lies in private enterprise,' the State confining itself to promoting private initiative by creating the conditions in which it can prosper. Brave little Switzerland. I wish the British Government had been able to make their contribution to the 18 nations on those lines. Command Paper 7572 is not a very honest document. It allows too much praise to what the Government have tried to do. The Paper published in Paris is a much more honest document. In all this we are really proposing a four-year budget for Britain and Western European recovery. There is an old saying: Man proposes but God disposes. The prophets of old spoke with authority. They began many of their sayings with "Thus saith the Lord," by which I mean they based their advice to the people on fundamental principles. Today it is, "Thus saith Cripps, Attlee, Strachey or Stalin or somebody else," and it just will not work.

Many of the speeches I have heard have dealt with mere details, but the question is much more fundamental and I want to dig very deep. My hon. Friend the Member for Louth (Mr. Osborne) made some references to the moral and spiritual aspect of the problem. When I was preparing my speech I came by chance on this quotation: Dead flies caused the ointment of the apothecary to send forth a stinking savour. The Government are the dead flies in the healing American ointment of European recovery. This pull between Right wing and Left wing policy is nothing new, because nearly 3,000 years ago this was said: A wise man's heart is at his right hand but a fool's heart is on his left. Here is another quotation: Folly is set in great dignity. A fool also is full of words: A man cannot tell what shall be. So we have this tremendous and most serious attempt to achieve European recovery with Marshall Aid and yet the plan will be administered by men who are not, I believe, fit for the job for which O.E.E.C. stands. It will be an expensive education—O.E.E.C. means the "Organisation for the Economic Education of Cripps."

I want to deal with the kind of people who are to run this plan. The Chancellor of the Exchequer got into power by making revolutionary speeches, and now he is determined to stay in power even if he has to conform to basic principles. Nothing will stop him from trying to remain in power. Look at his Workington speech the other day. Command Paper 7572 is full of "ifs" and "assumptions." One of the big "ifs" is whether we shall have to devote more to the defence services at the expense of economic recovery. Speaking at Leeds on 1st October, 1946, the Chancellor of the Exchequer is reported to have said: If we are plunged into war I devoutly hope that the workers of this country will use it for the purpose of a revolution. Will the Chancellor of the Exchequer tell me "Yes" or "No," whether he still cherishes that devout hope, for I have found that it is very difficult for a leopard to change its spots.

Photo of Sir Waldron Smithers Sir Waldron Smithers , Orpington

I am trying to show the kind of people who are running this. The Prime Minister is having a purge of Communism in the Civil Service and at Edinburgh on 7th February, 1948, and Bristol on 28th February, 1948, the Chancellor of the Exchequer threatened us that unless we conform to what he calls his principles the alternative is likely to be "some form of totalitarian Government" or we shall find ourselves "driven into totalitarian expedients." There is really no difference in principle between the policies of Hitler, Stalin and this Government. The Government are out for more and more power and to extend Socialism and State control to Western Europe. The Government are being asked to go into partnership with 18 nations and are asking to borrow money from America. As an ordinary business man I would not go into partnership with one of the Members of the Government and I would not lend any one of them any money as a banker.

As we are so dependent on American aid I want to quote one or two "Voices from America." Mr. Henry Hazlitt has written a remarkable book called, "Will "Dollars save the World?" In it he says: It would be ungenerous and shortsighted to minimise the appalling physical destruction and the enormous economic and political problems that the last World War brought upon Europe. We can never forget that in the war against Nazism England stood for a whole year alone. Thousands of her houses and factories were destroyed by blitz. Her peace-time equipment ran down. Her export trade was reduced to less than a third. Most of her foreign investments had to be sold. However, after paying this generous tribute, he goes on: Yet when all this has been admitted, we must go on to ask ourselves in all candour whether it is the destruction and dislocations of the War or the Governmental policies followed since that War which are primarily responsible for the present European crisis. Mr. Hazlitt says in another chapter: As a contribution to revival, the economic policies followed by a country are much more important than any foreign loan. He also says: If it were possible successfully to impose sound policies as a condition for our loans, the conditions would be more important than the loans themselves. According to Section III of the Explanatory and Financial Memorandum to the Bill conditions are imposed. I think it would be for the good of Britain and would not interfere with British sovereignty if America were to say, "Unless you stop this policy of State Control and Socialism, you will not get another dollar." The Government should not forget that American aid is renewable every year. One more quotation, because it is important to see what American opinion is at these times: One is sometimes disposed to wonder, indeed, what can be done to save people who are determined to have dictated economies and Socialism; what can be done to save nations that are bent on destroying themselves? The policy of this Government can bring no good at all to anyone.

The hon. Member for West Coventry (Mr. Edelman) spoke of the contributions made by the 19 nations as having been written by civil servants. He put his finger on the weak spot. Those contributions may have been written by civil servants but what we require, in order to achieve recovery in Western Europe, is hard-headed business men who will break down the barriers and enable trade to flow freely. I recommend hon. Members to read the New Year speeches of the chairmen of the "Big Five" banks. They are reported in the "Statist" of 22nd January, with splendid editorials on pages 74 and 79. The main points there borne out are "the appalling rate and enormous volume of Government expenditure, the crippling and crushing taxation and unnecessary controls." I appeal to the Chancellor, while there is yet time, to stop all this Socialist folly. I believe that recently he received a deputation from the National Union of Manufacturers. He should call together a Committee comprising that organisation and the chairmen of the "Big Five" banks and let them administer Marshall Aid for the recovery of Europe.

Of the administration of Marshall Aid Mr. Hazlitt says this: Those who oppose heavy loans and grants from our own government to European governments are sometimes accused of being 'isolationists.' But those believe that, in place of government loans, the barriers should be removed to private loans, and that our private lending markets should be freely opened up to foreign borrowers, are in fact the true internationalists. They see economic internationalism as the freedom of individuals in all lands to deal freely with each other, to buy from and sell to each other, and to do all this without having to run to some nationalistic-minded government bureaucrat for a special licence for every transaction. The difficulty of governmental loans and transactions is that they come out of the economic sphere and have political reactions. I understand that, although the people of Canada are not saying much, they are today very upset about the way they have been treated. The last thing we want is any difference between us and the other countries of the Empire. All that could be avoided if loans were made through private individuals instead of through Governments. Also very much in my mind is the question of bulk purchase, and I think that the Minister of Food is one of this country's major menaces. This question, however, was adequately dealt with by the hon. Member for Montrose Burghs.

To sum up I say this: God in his wisdom gave Moses on the Mount Ten Commandments for the guidance of the human race. But these men of the Government, obsessed with vanity and drunk with power, are trying to run the country with 25,417 commandments and, as a consequence, administration breaks down. Ask in the Library. Ask civil servants. They simply cannot cope with the work. I can name the remedy very briefly in the slogan of the right hon. Gentleman the Member for Woodford (Mr. Churchill): "Set the people free."

I ask the Government seriously to consider these points. We require a drastic reduction in the Civil Service. I have some figures which have been prepared by the research department of the Library, to whom I pay tribute for their work. From 1939 to 1948 the total numbers of people employed in national and local government service at the end of each year rose from 1,385,000 to 2,146,000, an increase of 761,000. If we are to carry out the advice of the chairmen of the big banks and to reduce expenditure, I put this proposition to the Government. I have estimated these figures; they can be worked out accurately if necessary. Assuming the wages we are paying these 761,000 extra civil servants for being drones in the hive, and assuming what would be their earnings as workers in productive industry, it has been estimated by a responsible statistician that each of them costs us £1,500 a year. By getting rid of them the country will save £1,140 million a year.

If we are to help Europe there must be a drastic reduction in Government expenditure and taxation. The Government must stand up to the T.U.C. On 4th February last year the Prime Minister appealed to the nation to restrict dividends, profits and wages. The Chancellor of the Exchequer—who, I see, does not like my speeches and has left the Chamber—at Workington paid a tribute to the loyal way the restriction on dividends and profits had been adhered to. I am, of course, open to correction, but I calculate that on an annual basis wages have risen since 4th February, 1948, by about £90 million a year. And there is a further demand in the Press this morning for even more wages. What is the good of a £100 or even a £1,000 a week if the money is worthless because there is nothing to buy in the shops? The Government are prisoners of the T.U.C. and not masters in their own house.

We must remove all controls and tariff barriers as soon as possible and do away with restrictive practices in industry. One hon. Member has talked about bringing pressure to bear upon the workers. No pressure, however, is necessary. Unless the workers of this country as a whole, whatever the sacrifice, increase their output by from 10 to 12 per cent. economic forces will come to bear and bring the most ghastly retribution to this country; the laws of supply and demand will come along like a steamroller and leave us on the hard high road of reality.

I had the honour to know a wonderful man, Mr. G. Murray Brumwell a former assistant editor of "The Times," who has since passed away. A few days ago I discovered a letter he wrote some years ago. His words, true at that time, are equally true today. This is what he said: These are grave days. Democracy in our country is being put to the grand test. Will it show itself worthy of its inheritance or will it allow itself to be led captive by dictators and planners (planning involves compulsion) and schemers who promise it everything but freedom? In all these tremendous issues we are discussing today, God is our hope and strength, A very present help in trouble. —not a lot of theorists and planners who sit on the Front Bench opposite in this House.

2.8 p.m.

Photo of Mr Louis Tolley Mr Louis Tolley , Kidderminster

I do not propose to devote any of the time at my disposal to answering the vulgar, insulting criticisms which have been the main topic of the speech of the hon. Member for Orpington (Sir W. Smithers). I will leave others to judge the nature and context of his remarks.

The Bill which we have been discussing for two days is both historic and significant. It is historic in the sense that for the first time in history it has been possible to get 19 nations to agree to a common policy which seeks, by the application of principles laid down, to bring each one out of its present disastrous position; yet in that process it neither harms nor hurts any other individual or nation associated with the Plan. Some months ago when America decided that Marshall Aid should be given to these 19 nations, including our own, it was specifically laid down and emphasised that before any aid could be granted or received each nation must prove its worth. It would have to prove conclusively that it was making all possible efforts, without aid or assistance, to bring about its own recovery.

I wish to pay my meed of praise to all those in this country, the Government, workers, managements and technicians, for the great part they have played so far, especially during 1948, towards securing our economic and financial stability. I think it only right we should pay them that compliment. Much criticism has been levelled against the Government, but I rather felt when listening to some speeches from hon. Members opposite that there was not much enthusiasm in what they had to say in criticism. If we are conscious of and sincere in the application of our designs and desires to make a contribution in the present situation we should pay a very great tribute to the plans of the Government, which have yielded such remarkable results.

I well remember that at the commencement of last year when the Chancellor of the Exchequer introduced to the House industrial targets set by the Government, the right hon. Member for Woodford (Mr. Churchill) not only criticised those targets, but went so far as to say that they were ridiculous and unobtainable. Those who have taken the trouble to understand and study the situation during 1948 cannot but be impressed by the remarkable progress made during the year. In only two industries, coal and textiles, did we not succeed in reaching the targets set. Without making any excuses I would point out that in coal there was a remarkable increase in production in 1948 as against 1947. It left no fear in my mind that at last, through Government policy, the coalmining industries of Britain have been brought back to a position in which they will be able to play a great part in our final economic and financial recovery. The target in the textile industry was not reached, but that was only by reason of shortage of labour.

Under the Marshall Plan we find ourselves making our own individual efforts towards recovery and indeed they are great. We are now in the position of having some aid given us which will enable us, by 1952, once again to be self-supporting. I have paid some slight tribute, I think justly, to the effort made by all concerned during the past year towards recovery. The time has arrived when the Chancellor in his Budget statement in April might consider whether or not he could give some incentive to our people. Yesterday he emphasised and re- emphasised that, despite all we have done, he must call for still greater effort on the part of the people. They have responded in the past to any national appeal that has been made and they will respond in the future.

I wish to turn attention to one or two things which might be of assistance in producing that added effort and showing the people that the Government pays due regard to what they have done and wishes to help them. I say to the Chancellor most sincerely that beer and tobacco play a most important part in the life of our country, whether we like it or not. I mix with the ordinary people and take great pride in doing so. In that way I can get their feelings about the present position. I found that on the last occasion when the Chancellor put an additional tax on beer and tobacco there was greater resentment than I had ever previously found since the Government took office. Men and women rightly felt that here again, as always, they were being asked to pay the total bill and to meet the full burden of additional taxation. It should be remembered that during 1948 the volume of wages somewhat decreased and there is something to be said for an alleviation of taxation in every respect, especially as it affects Purchase Tax on clothes and articles essential for the home, things which it is not merely expedient, but necessary to buy. In this field, also, the Chancellor might give very serious consideration to some partial reductions wherever possible.

One of the greatest incentives to our people to go on maintaining their spirit of good will towards the Government and the country, which they have shown in the past year, would be by tackling the question of Income Tax with a sense of reality, especially as regards the lower wage groups. Many hundreds of thousands are receiving no more than £4 10s. to £5 a week as wages, and many of them have wives and families and responsibilities. If we are to maintain that support we have enjoyed and which has meant so much to the recovery of national prosperity, the time has come when the Chancellor should tackle the question of Income Tax and give some relief.

That applies especially in regard to overtime payment. Many men who conscientiously respond to appeals to work overtime feel resentment at the fact that when they receive their wage packets a very considerable amount has been taken in respect of Income Tax from the overtime payments. I hope what I have said will not fall on deaf ears because I believe it is essential, if we are to maintain the spirit which exists despite the austerity under which our people have suffered for so long, that they should receive, as they are justly entitled to receive, some rebate and some sort of incentive to help them maintain their spirits and enthusiasm.

I appeal to the Government on the subject of agriculture. The right hon. Member for Saffron Walden (Mr. R. A. Butler) dealt briefly with the subject yesterday and he saw fit to twit the Government about the lack of houses, of water supplies, of electricity and of amenities generally in the countryside. I agree that we, as a Government, have to sit up and take notice of these shortages because the agricultural policy is the one policy which, in the main, we have to expand long before 1952. I would, however, remind the right hon. Member for Saffron Walden and his right hon. and hon. Friends—and I speak from a very long experience of the countryside and association with it—that they ought not to blame the lack of houses, of water supplies and electricity on this Government. All those problems should have been solved years ago, but no attempt was ever made to do so. Turning to the Government, I want to tell them that I realise the great and important part British agriculture can and will play in the immediate future in the restoration of our prosperity. Let us see that no stone is left unturned in bringing that prosperity about.

I welcome this Bill because I believe it is of such significance that not only shall we and, I trust, the whole of the nations who are taking part in this great plan, achieve financial and economic restoration to prosperity by 1952, but it may well mean, because of the design and character of it, that even when that has been achieved we shall meet together as great united nations in other spheres and other activities. I believe that can give the greatest protection to humanity against future wars.

2.24 p.m.

Photo of Mr Sidney Shephard Mr Sidney Shephard , Newark

Like the hon. Member for Kidderminster (Mr. Tolley) we on this side of the House will pay our tribute to all those engaged in industry for the recovery which we have made up to the present time. On the other hand, of course, there is no room for complacency, for we have still a long way to go. My hon. Friend the Member for Louth (Mr. Osborne) got into trouble with the Opposition for a few remarks which he made about the five-day week and the need for increased effort. I think he was misunderstood. He was not suggesting that the only way to increase the productivity of industry was by working longer hours. We all know very well that in the United States, productivity per man-year with a 40-hour week is considerably higher than ours with an average of a 45-hour week. I hope my hon. Friend will not be misunderstood in this respect. The Chancellor pointed out yesterday that we were to devote something like £2,000 million a year to increasing and modernising our industrial equipment, and on this side of the House we agree that that is the best method, not that of working longer hours.

I thought the Chancellor gave us one of his usual, very informative surveys, a survey which, of course, will be understood by Communists and financial experts and by many business men. I think it is very doubtful indeed whether these surveys are understood by the man and woman in the street and extremely doubtful whether they are understood by the workers in the factories. In the past two or three years the Government have been trying to bring home the economic position of the country to the people by means of posters on our hoardings, by advertisements in the Press, and by magazines and journals such as "Time," but quite frankly I think it is very doubtful whether that type of publicity has had any substantial effect.

I should like to see the Government make an entirely different approach to the problem. I want to see them make a personal approach to the individual and in that connection I will make a suggestion to them which I hope they will consider. The Board of Trade has its regional organisations which are responsible for dealing with all engaged in industry in their particular regions. I suggest that from those regional organisations a paper is sent out, call it what you will, to every firm, headed "National Recovery Pledge." The wording should be as follows: We, the management and the employees of X Y Z Company, recognising the vital need for higher productivity as a means of maintaining and ultimately improving our standard of life, pledge ourselves to do our utmost to increase our own individual efforts. I believe that would be worth trying. Those pledges could be signed by every person working in every industrial unit in the country. They would then feel they had a personal interest in this matter. I am sure it would have a far greater effect than posters on the hoardings.

Yesterday the Chancellor spoke of the need for better methods as a means of increasing our productivity and he referred to the Anglo-American Advisory Council. He rightly stresses the need to bring the least efficient firms up to the standard of the best. I understand that under the guidance of that council, delegations from the principal industries of this country are to visit America, to exchange knowledge, and, later, to learn what our American friends call the "know how." As Members of Parliament we have the opportunity of visiting industrial works in this country and I cannot remember a single occasion on which I have been in a factory when I have not seen some idea, perhaps of method or lay-out or process, which could be copied with advantage by others.

I know that in the past there has always been the suspicion that if a competitor is allowed into one's factory he at once becomes a dangerous rival. We cannot afford that attitude of mind today. It is in the interest of the national recovery that we should exchange knowledge within each industry. I should like to see members of trade organisations exchanging visits to each other's plant and exchanging knowledge. I hope a scheme of this nature will be formulated. The Chancellor indicated production targets for many of our key industries, but he made no mention of what the Government intended to do regarding recruitment of labour for the undermanned industries. Those were the industries for which the very large targets were set. I do not think that this is the occasion when we should go into that. Presumably we shall hear how those industries are to be manned when we have the economic survey Debate.

The Chancellor emphasised again, as he does so repeatedly, that there could be no significant increase in the size of the labour force. We on these Benches do not agree. We consider that there is a great deal of wasted labour in this country. As one hon. Member said yesterday, it is not a very reassuring position to know that over 10 per cent. of the working population are employed in national and local government service. Quite apart from that, there are those employed in industry, who are put down in the official Digest as productive workers, but who are actually engaged, not in productive work, but in dealing with the burdens imposed upon industry by the Government.

Whether on this side of the House or on the other side, we all want to see this country recover. We agree with the position of joint consultation and that there should be harmony in industry. We want to put aside the bitterness that has existed in the past. The hon. and gallant Member for North Portsmouth (Major Bruce) in his speech did his best to perpetuate that bitterness when he paid a compliment to the physical workers. He paid no compliment to the management——

Photo of Major Donald Bruce Major Donald Bruce , Portsmouth North

The hon. Member is misrepresenting me. I feel quite sure that I paid a compliment to private enterprise in whatever form it took place. If I did not specifically include the managements I most certainly do so now, and also the technicians and the individual operators.

Photo of Mr Sidney Shephard Mr Sidney Shephard , Newark

I accept the explanation of the hon. and gallant Member, but I made a note at the time, and this is what he did say: I should like to pay a tribute to the coal miners and the textile workers. The people to whom I should pay tribute in private enterprise are those. He ignored the management altogether, and I am glad to have his assurance that the management should have been included, because otherwise he would not have been keeping in step with his right hon. and learned Friend the Chancellor of the Exchequer. It is useless to expect this country to recover unless there is a concerted effort both by management and workers.

2.35 p.m.

Photo of Mr John Kinley Mr John Kinley , Bootle

It is very heartening to find so much general agreement on the work Britain has done and the work which Britain proposes to do. Those matters have been covered so effectively that my only excuse for intervening in this Debate is to interject what I think is a new idea, or at least one that has not so far been proposed, and one which I am afraid will not meet with general approval.

I speak as a townsman, born and reared in the town, and knowing nothing at all about agriculture, yet realising that agriculture is our most important industry. The most important man in the nation is the man who, by what he produces enables the rest of us to live. Without him the rest of us would either have to produce our own food or die. Because this is our most important industry I suggest that we should endeavour to increase that industry to its maximum so far as the whole of our country is concerned. It has never been done before. It has never been attempted before, and we are not attempting it now. We are increasing it, but the increase is not nearly sufficiently rapid or extensive, and I think it could be very much improved.

At the present time we import a very large proportion of our essential food. If we could produce that food at home we could keep export goods at home and thus improve the general standard of living of our own people. I suggest that while we are talking about the problem of agriculture, and the production of food by orthodox methods we must begin to consider the unorthodox. The suggestion I wish to make, which I cannot expand, but which I hope to put in a nutshell, may not meet with general approval, but I put it forward for what it is worth.

This year we are taking from production 170,000 young men for the Services. We shall dump most of them in centres in which they will receive some training, but after their first few weeks the greater part of their time will be wasted, as was the greater part of my time in my service during the 1914–18 war. We could waste the time of our soldiers then, while there was a war on, but we shall waste that time now while we are at peace. I would therefore suggest that the whole of the Service depots and barracks should be imposed upon those parts of the country which have not yet been cultivated, and which, under ordinary agricultural rules, are incapable of cultivation. We should make one of the basic rules for the whole of the Services, "First of all train your men, and, having trained them, make the whole of your unit self-supporting so far as food is concerned." Then, instead of having 170,000 men withdrawn this year from production—while remaining food consumers—that would enable the arable areas of this country to be increased to the advantage both of those men and the rest of the nation.

2.40 p.m.

Photo of Mr Harold Macmillan Mr Harold Macmillan , Bromley

This Debate has covered a very wide range and the hon. Member for Bootle (Mr. Kinley) has perhaps added a little to it. Almost the whole field of economic problems at home and abroad has been under discussion. The difficulty which has confronted Members has been which points to seize upon and which features to underline in so large a canvas. In discharging the onerous task of trying to sum up this afternoon I shall try to deal with some of the conclusions that may be drawn from the Debate rather than dwell upon the details of the Bill or of the discussion. Nevertheless, the details of the Bill are very important.

The House listened with special interest this morning to the brilliant speech of my hon. Friend the Member for Chippenham (Mr. Eccles). He showed how serious may be the effects of the plan foreshadowed by this Bill upon the whole economy of Europe, if it is not wisely used. Indeed, the necessity for this precise machinery has been something of a disappointment, for had the United States been pre pared to accept and make, on a sufficient scale, arrangements for off-shore purchases in Europe similar to those elsewhere, then the problems of transfer could have been much reduced. However this may be, undoubtedly this country has suffered by the failure to operate the system through the Commonwealth as a whole. For, as he pointed out, the United Kingdom is treated as a separate economic entity, equally detached from the sterling and the Imperial area.

Thus, so far as the technique of currency and exchange is concerned, we have neither united Europe nor united the Empire. We talk a great deal about both, but we have achieved so far very little towards either one or the other. Moreover, as I understand it, the actual machinery adopted tends to discourage the more scrupulous and encourage the less internationally minded of the nations of Europe. It puts a premium upon every European country having a deficit with another country. By a curious chance, therefore, it does internationally just what we have lately been doing at home. Honesty has become the worst policy. Everybody lives on capital who can; and, in this case, upon someone else's capital.

However, apart from these technical but rather alarming considerations, the main scope of the Debate has covered a different and a more diversified field. What are its main conclusions? In drawing them we are actuated not by partisan feeling upon one side or the other. We should not wish merely to score debating points against each other; and I think that in the course of this Debate, with some notable exceptions, that has been the spirit which has been shown. At the same time, we must not refrain from drawing the lessons as we see them, and enforcing them.

The first lesson to be drawn, it seems to me, is how great was the illusion under which the whole country suffered in the period immediately after the war. That sense of enchantment and illusion must not be repeated. Perhaps we are all, to some extent, responsible for it; for in the later stages of the last war, as of the first, men and women, satiated with misery and destruction, naturally seized avidly upon the hope of a better time to come in the future, in order to fortify themselves against their present ills. In that sense, perhaps these great and ambitious schemes and plans may have been justified. But they involved the dangerous risk of later disillusionment. For how could it seriously be supposed that, after the vast destruction of war, we could suddenly emerge to wide prosperity by the mere effort of supporting at the polls either the Socialist, the Liberal or even the Conservative Party? The tasks were far too great to be attacked by these crude methods. You cannot vote yourself into prosperity. You can only work your passage home.

The second conclusion which I think we must draw is that, alas, these problems cannot even be solved by optimism, faith and hope. The previous Chancellor of the Exchequer, tried that method, I am sure in all sincerity, and I had no doubt that he still believes in it. Those were the happy days of the Stock Exchange boom. Everybody was making money. Spivs and drones alike were flourishing. Money was poured out without thought. The American Loan was wasted to a degree that is incredible to look back on, and men and women were sustained through these times by the intoxicating fumes of a vast inflation. Then the bubble burst, and we are now finding out in all conscience how unhappy the next morning may be.

The third conclusion which I would draw is that a great deal of the argument that has filled the minds and excited the passions of people for the last generation has been quite remote from the realities approaching this island. For, quite apart from the war, as the Chancellor of the Exchequer has often observed, the balance of payments and the change in the equilibrium between the Old world and the New were bringing nearer and nearer a situation which would demand the greatest skill and enterprise to overcome. Of course, the second war, coming upon us hardly recovered from the first, immensely intensified and accentuated this movement, but still, even so, it was in swing.

Thus, we have learned that a great deal of the propaganda and political battles which were fought, and are still being fought, on the basis of trying to enrich one section of the community at the expense of another, are false. We have learned that the reward of enterprise and skill is only a tiny portion of the total national wealth and, whereas all parties in the State have welcomed and even assisted in its redistribution by measures of social reform, we on this side have resisted the view that this could in itself provide an economic benefit as opposed to a social one.

Indeed, we have always felt that, if pressed to far, it would be a great economic disadvantage to the community as a whole. It is mainly perhaps upon this question of incentive to the most energetic people of the nation in every class that we find ourselves at variance with the internal policies of the Government. At any rate, let us abandon, as many Members have appealed to us to do, this ancient malice and hatred, and concentrate upon the advice which comes from the Chancellor of the Exchequer in his latest role. He has in the past since I have known him in this House, with bewildering versatility gone through almost every phase of political thought. He at one time seemed to adopt the mantle of Robespierre; now he seems to be a sort of reincarnation of the late Mr. Samuel Smiles. In this mood, the right hon. and learned Gentleman has recently told us a number of very sensible things. Sometimes I think he is becoming almost too Victorian in his outlook. May a quote a few of these aphorisms which I have culled out of a truly prodigious output. He has said: In 1952— why 1952 I do not know— In 1952 we shall have to pay for any thing we get or else go without.There is only a certain size of cake to be divided up on the present basis of production, and if a lot of people want a larger slice they can only take it from others who in terms of real incomes will have a smaller one.There is no alternative. We must either export and earn enough to pay for our food and raw materials or do without. Ministry of Health and War Office journals, please copy. On the whole, I think we are all better off if we do not eat too much.Many people feel the pinch of difficulty in making ends meet.If our people or any sections of them were now to try to grab larger money incomes it would lead to our inevitable failure. All these are very admirable, if not very novel, sentiments, indeed, the novelty lies not so much in the words themselves, as in the speaker. No wonder the hon. and learned Member for North Hammersmith (Mr. Pritt) was pained and shocked.

My fourth conclusion is that, although these estimates and prophecies to which we have now become accustomed in these White, Grey and Green Papers, are sustained by figures and tables upon an impressive scale, their accuracy and reliability are really very doubtful. I should be happy indeed if I could plan the future intakes and outgoings of my own business for the next five years with anything like such certainty that is here claimed in these papers. The fact is that this kind of planning, by its apparatus, gives the illusion of precision, much as the elaborate technique and formulae of the medieval astrologists and alchemists gave to their clients the assurance of scientific certainty. But, in any case, whether they are right or wrong, I think there has been one very noticeable thing in this Debate. Nobody, in any part of the House, has suggested that these estimates are too optimistic.

After all, they depend upon a great number of assumptions. They depend upon an increase of industrial productivity in this country of 25 per cent, and an increase in agricultural productivity of 15 per cent. for the period. It is quite true that these calculations bear comparison with pre-war rates of growth, but these broad percentages and averages are very dangerous. Are we really sure that, in three or four years' time, there will be another 40 million tons of coal to sell? That is a most important part of the calculation. Are we sure that there will be a market abroad at present prices if the coal is there to sell?

Do we believe that the general export situation will remain as favourable as it is now? Some markets may shrink and some may collapse altogether. Can we assume that the terms of trade will remain the same, because the Chancellor said that we were only assuming that for the purposes of planning. But that is a basic assumption of the plan, and it is very important whether it remains true or not. Can we assume that there will be no increase in expenditure on armaments? I should be very doubtful of that. What allowances have we made for the revival of German competition, which, if Germany is ever to become solvent, must be correspondingly greater than it was before the war because of the loss of the Eastern territories of Germany? What allowances have we made for the even more dangerous Japanese competition?

I do not wish to be a pessimist, still less do I wish to denigrate the remarkable performances of the people of this country, especially in the last year. I will even deny myself the pleasure of arguing whether their success was because of or in spite of the activities of the Government of the day, but I say it is our duty to face the reality that by the general consensus of opinion expressed in almost every quarter of the House, these figures and estimates are certainly too optimistic, and make, if anything, insufficient allowance for the many dangers that may develop during the period.

I have not mentioned what is, perhaps, the most vital assumption of all, because it is one in which, in a way, I have the most faith. It is, of course, that American Aid will continue at the rate which we all want to see during the whole period. I believe it will. Well, then, if all our hopes are realised, what is the picture which confronts the people? Four more years of continuing effort, austerity and sacrifice in the hope that, in the end, food consumption may approach the level of 1938, which, if I remember aright, came at the end of a prolonged period of Tory misrule. Let us get therefore one thing quite clear in our minds. Any party or group of men which tries to tempt the electorate by bribes, or by holding out some agreeable picture of an automatically realisable Utopia, will incur more than ordinary guilt. [HON. MEMBERS: "Hear, hear."] Hon. Members opposite have done it once; they must not do it again.

Photo of Mr Denis Pritt Mr Denis Pritt , Hammersmith North

The right hon. Gentleman and his friends have done it a hundred times, and lied every time.

Photo of Mr Harold Macmillan Mr Harold Macmillan , Bromley

The hon. and learned Gentleman says that we have done it a hundred times and lied every time. I do not think his language is worthy of himself, and his historical background must be even weaker than the arguments from him usually are.

Photo of Mr Denis Pritt Mr Denis Pritt , Hammersmith North

I can remember occasions in this House when I gave details of instances of the Tory Party, in fact, going to the country on false pretences, and when not one Member of the party got up to deny it.

Photo of Mr Harold Macmillan Mr Harold Macmillan , Bromley

Even the insults of the hon. and learned Gentleman will not induce me to vote in his Lobby this afternoon.

Photo of Mr Harold Macmillan Mr Harold Macmillan , Bromley

Any one who paints a rosy picture will carry a very heavy responsibility. We conclude from this examination, then, that, if all goes well, if everything goes according to plan and all these hardships are undergone, then, at the end of the period, the United Kingdom balance of payment will still be unfavourable, but not to a very large degree, while the balance of payments of Europe as a whole will still be unfavourable to the degree of £750 million. If anything goes wrong with any part of these calculations, or if any of these unfavourable features becomes accentuated, the position of the United Kingdom and of Europe in 1952 will be something approaching collapse.

Those are the facts. What more can we do, then? We can do much internally, in my view, by a change of approach and method, but I do not propose to pursue in detail a line of argument which might emphasise the wide divergence between hon. Members on this side and those who are supporting the Government. I must say that, in my view, we could restore confidence and success to industry, and, more than by anything else, can help it now, by at least pausing in the development of nationalisation, by at least giving a time for the consolidation and working-out of existing schemes, and, above all, by the withdrawal of this insane measure, with the vast uncertainties of a vesting date not even known between a period of 18 months or two years, affecting the most successful of all our industries—iron and steel.

We could do much to revivify our people by reduced taxation, as two or three hon. Members below the Gangway have suggested—reduced taxation based upon good national housekeeping and wise retrenchment. By redirection of both theory and practice we could restore individual pride and success and give a real inducement and incentive to achieve it. If I do not pursue these points in great detail today it is for this reason. I must say frankly that even if we were to do everything here at home which I and my hon. Friends think prudent and avoided all that we feel to be foolish, I do not believe that this country could save itself by its own efforts alone, if those were confined to internal policy.

What, after all, is the real fact that faces us today? It is so tremendous that it is hard to grasp. It is a world development, more serious and more menacing than that which we have recently repelled after six years of war. We have to go back hundreds, nay thousands, of years to find a parallel. It is the challenge to the whole future, moral and material, of that civilisation founded in the Mediterranean which, for more than 2,000 years, has held the dominant place in Europe. During the second half of the 20th century this issue will be decided; it will fill the lives and thoughts of all of us, of our children, and, maybe, of our grandchildren. It is the unceasing struggle, sometimes concealed and sometimes overt, between Communist Imperialism based upon a materialist, sadistic philosophy and the tradition of the West, based upon the twin foundations of humanism and Christianity.

Scarcely four years have passed since we won our great effort over Hitlerism. I do not believe that there is a single hon. Member in this House who, in May, 1945, could have imagined that within four years of victory there would be such a terrible deterioration. We are now familiar with the march of barbarism to the West, as country after country in Central and Eastern Europe has fallen to the Communist aggression. That story need not be retold, but it should not be forgotten that, even now, we only cling to the capital of Berlin by the fine thread of the airlift. But the progress, or rather regress, in the East has been almost more spectacular. Of all these great economic plans, historians may well decide that the fall of China into Communist control is the most important event of the century.

When I was a boy, it was one of the compensating charms of the geography lesson, which had not many other attractions, to pore over a map of the world, a great part of which was then coloured red. I know that the fashionable requirements of what was, and still is, called "progressive thought" made it incumbent upon many people to deride and deplore this regrettable extension of British influence. I can only say that twice in my lifetime men and women have given freely of their lives and fortunes to defend this system, and never have volunteers come forward more enthusiastically than from some of those outlying portions of the world, including races not of white or of British descent. At any rate it may be a satisfaction to some, though a sense of great sorrow to more, that such a system is now in partial liquidation, a system which, with all its faults, has probably brought with it to more people a greater degree of peace and happiness than any system has ever brought in the history of the world.

Take the map of the world today. It is red enough now, and getting redder every day, but it is the wrong kind of red. Do not let us shut our eyes to the lessons which the new map has to teach us. I say frankly that if Europe and European civilisation stood by itself, I should have very little hope. Even if United Europe—or what is left of free Europe—can be brought into effective operation right away—and we have made only a very small beginning—even if Germany can be finally and wholeheartedly integrated into the Western European system, I do not believe that Europe alone can overcome the dual menace of her own economic sickness and the perpetual, ceaseless moral disintegration to which Communist agitation and infiltration subject her.

That is not to say that we must not use all our endeavours to effect European unity. I was very glad to see the Foreign Secretary's words at the Foreign Press Association a few days ago on this subject. By the way, I wish he would talk to us in the same spirit as he talks outside. He never seems to speak here so freely of his mind. He might cause a little agitation at the official Box, but we would really learn a little more of his own views. But, at any rate, the expression of faith in a United Europe that he gave was very stimulating and encouraging. Let him act in this spirit and we shall try to forget the petty jealousies and vanities which have done so much to impede and harass this movement since the Leader of the Opposition launched it at Zurich two years ago.

But the European countries— fortunately—do not stand alone. In almost every case they have their extensions and projections into other continents. First and foremost there is the British Commonwealth and Empire. I note it is the new fashion of the Socialist Party to claim a sudden interest in the Colonial Empire.

Photo of Mr Harold Macmillan Mr Harold Macmillan , Bromley

I welcome that, but the Socialists should keep a sense of proportion.

Photo of Mr Harold Macmillan Mr Harold Macmillan , Bromley

The Chancellor of the Exchequer indulged in a rather unworthy sneer in his speech about the past neglect of the Colonial Empire. He was admirably answered by my hon. Friend the Member for Bury (Mr. W. Fletcher). Let the Socialists be careful both in their denigration of the past and in their claim for the present. We have only to think of the vast investments in the Colonial Empire to see what has been accomplished in the past. In tin and rubber alone that investment amounts to over £300 million. Add cotton, copper, cocoa, sugar and all the rest. Against this, what have they so far to show? A few thousand acres of groundnuts and of sunflower seeds which have not yet been reaped.

Photo of Mrs Leah Manning Mrs Leah Manning , Epping

Can the right hon. Gentleman imagine that there would have been this Empire if it had not been for our people who went out there and populated it? Are people as nothing, in comparison with the material things of which he is speaking?

Photo of Mr Harold Macmillan Mr Harold Macmillan , Bromley

I am very grateful to the hon. Lady. She has made my point exactly. It was the individual people, with their own initiative and enterprise, who laid all these foundations. I say that before the Socialists pass all that away with a cheap sneer, when making what are supposed to be national speeches—and I heard the Chancellor's speech; we all heard it—they should look to their own record—a few thousand acres of groundnuts not even reaped yet, and a few thousand acres of sunflower seeds. I hope they will come to fruition. The Colonial Secretary is a very agreeable figure, but he really must not imagine himself to be another Rhodes.

Photo of Mr Harold Davies Mr Harold Davies , Leek

The right hon. Gentleman asks us not to denigrate the past. Would he not agree that owing to Labour policy we have a better friendship with India than ever before and an opportunity in the near future to treble or more than treble the trade we have with her people?

Photo of Mr Harold Macmillan Mr Harold Macmillan , Bromley

I will answer the hon. Gentleman frankly. I hope that he is right and I pray that he is right. I was only talking now of the steps that we can take. Where our resources are insufficient, are we making the best possible effort to use other resources which may be available? First of all, let us think of the vast Colonial possessions of Britain and the other European nations in Africa alone. I believe that there is a more immediate and more fruitful possibility of co-operation in Africa between the nations of Europe than perhaps in any other sphere. It may be easier to get plans for the common development of that Continent, without too much regard to the old frontiers and old demarcations, than perhaps in Europe itself.

Moreover, as has been said by other hon. Members, cannot American resources be used to expedite and fructify these schemes? All this requires a great sense of urgency, a powerful and imaginative leadership. Just to jog along at this ambling pace is not enough. This is a race, and time is not on our side; it is a race and not an afternoon stroll. Indeed, in many instances we are losing ground—[Interruption.] The right hon. and learned Gentleman talks a very great deal himself when he is talking, and when other Members of the House are speaking, he never makes an interruption that can be heard on this side.

I say that, in some ways, we are losing ground. Many of us are much perturbed at the effect on Canada's economic position and ultimately perhaps on her political future of the frightful trade and currency tangle in which we all seem to be increasingly enmeshed. In the first years after the war, we used to talk about and sign treaties to promote a multilateral trading system, at least among the free nations. Perhaps we tried to go too fast; but since then, we have made much progress backwards. While we preach expansion, we have been driven to practise restriction. Bilateral agreements, made between Governments, seem increasingly to take the place of genuine trading contracts between individuals. The Chancellor of the Exchequer claimed for this new plan that it would tend to revive a system for which he coined a new and horrible word—multilateralisation. I hope that it will, but so far the process has been the other way.

I say that we have much to be thankful for. The peoples of the United States who are, after all, the people who have carried the torch of civilisation from the Old World into the New have certainly responded with a far-sighted and generous alacrity to our need. I do not agree with those who say that we had not a right to make that call. I think that we earned that right in the efforts we made to defend the freedom of the world when we stood alone, from the days of the Stalin-Ribbentrop pact to the end. If we have a right, we have also a duty, and we cannot honestly say that in the first two years, at any rate, of this Parliament we have performed that duty. Marshall dollars of themselves do not dissipate the conditions which have led to permanent dollar shortage; they merely serve to avoid a complete collapse. Marshall Aid of itself does not solve these underlying problems, but merely gives a short breathing space within which a plan for their solution can be devised and at least partially executed.

But one thing is certain, in the immense conflict which now embraces the whole world—I agree with some of the hon. Gentlemen below the Gangway that from their point of view the military, strategic and political part of this programme is intimately bound up with the economic and there is no good disguising it—the Old World and the New springing from the same origins and bounded by the same ideals, must stand or fall together. It is because the peoples of Europe and America are beginning to grasp this truth that we dare to hope even amid all perplexities and difficulties.

May I be allowed to make, in all sincerity, one final observation. This Debate has quite properly dealt with material and economic problems which arise out of the Measure before us. I do not believe that by material and economic measures alone that our salvation can be won. Communism and materialism can only be repelled by an active faith and it must be a fierce and fighting faith. Scepticism and agnosticism may appeal to a few sophisticated minds; these are luxuries which can perhaps be afforded in some periods of a nation's history when men can live upon the moral and spiritual capital accumulated by their predecessors. They cannot inspire the whole of the nation to effort and to action. The Roman civilisation was only saved and prolonged by the triumph of Christianity, at once the instrument of resistance and conversion, by which it overcame barbarian aggression. Without a revival of faith, the civilisation of the West, which is its heir, will fall, and it will deserve its fate.

3.17 p.m.

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

The right hon. Gentleman the Member for Bromley (Mr. H. Macmillan) ended on a note which will, I am sure, find an echo in the minds of very many on this side of the House. Until his concluding words it is true to say that he had approached the subject of this Debate with a very apt brush. He has taken us some thousands of years back into the past and some thousands of miles across the world. Most of his speech dealt with the political rather than with the economic implications of the Measure which is before this House and of the White Papers and other documents, which have been the subject of Debate in the last two years.

Everyone will agree that this has been a constructive and helpful Debate. Apart from one or two episodes we have had general agreement from all sides of the House, first, that the basic principles of O.E.E.C. are right planning, and, secondly, that while there is admittedly a need for the reconciliation and integration of the various national four-year plan and while this need is being tackled, our own plans for 1949–50 and the four-year plan are realistic and designed to give us viability by the end of the programme. As my right hon. and learned Friend said yesterday, the foundation of joint recovery is firm and decisive action by each of the individual members of the organisation. Economic co-operation, if it is to be a reality, must be based upon sound and stable economic, financial and fiscal policies within each nation itself. What he said yesterday has been approved by practically every hon. Member who has spoken. It has been recognised rather more freely than in the past perhaps, that the achievements of 1948—production, exports and the contributions towards the balance of payments problem—have shown that we are on the right road. Equally, these figures show we have a long way to travel before we reach the end of that road, before we can say that we have not only reached but consolidated the position where our overseas payments are balanced, and where we can say we stand on our own feet and pay our way in the markets of the world.

The events of 1948 have shown that our policy has been right. The party opposite, while always fairly promising support to national objectives has, equally, always said that the methods that we have been following could never bring success. The right hon. Member for Woodford (Mr. Churchill), in a long and forceful speech in October, 1947, made it plain then that in his view the export policy announced by my right hon. and learned Friend on 12th September of that year was doomed to failure. He said that there was no likelihood of our reaching the targets and that until the people were set free and restrictions were removed, private enterprise could not function.

The production figures of the last year have shown how wrong was that view. In the closing months of 1948, national production was 6 per cent. above 1947 and approximately 25 per cent. above 1938. If we are to take a more normal pre-war year as our standard of reference and not a year affected by rearmament, our production in the past few months has been 40 per cent. above that of 1935. The figures in many, and indeed in a growing number of, industries have shown how this national revival has been taking place. Shipbuilding is increasing year by year in gross tonnage per month. Commercial vehicles are more than 50 per cent. above pre-war, tractors are 10 or 11 times above it, ploughs are a dozen times above pre-war, and mowers are four times. Combined harvesters are being produced at the rate of 1,100 in the first three quarters. Not a single one was produced in this country before the war, in spite of the need for these products in this country and in the world generally.

Let the House next turn to the export drive, which was doomed to failure along the lines on which we were doing it. It has reached a figure of 50 per cent. by volume above 1938. As my right hon. and learned Friend said yesterday, the total earnings from exports in 1948 exceeded those of 1947 by more than £450 million. In spite of shortages of materials, difficulties with plant and with buildings, and the inability to catch up with the long years of war, many industries in the past year have succeeded in exporting a far greater volume of goods abroad than ever before in their history. It is, indeed, only those manufacturing industries whose selling drive was frustrated by import restrictions abroad, who failed to achieve great gains over 1947. We have seen cotton piece goods increasing their exports by 43 per cent. over the previous year, wool by 38 per cent., rayon by 40 per cent., engineering by something like 44 per cent., motorcars by 56 per cent., and coal, in which hon. Gentlemen opposite are always so interested, by 855 per cent.

A number of speakers said that this job has been done by private enterprise. I notice that the right hon. Member for Bromley, who always expects us to listen while he is speaking, does not always act by it himself. One or two hon. Members have said that it was not because of, but in spite of, this Government, but the right hon. Gentleman, in his fairness, said that he would not argue the point whether it was in spite of or because of the Government. However, as I have previously said, hon. Gentlemen opposite are changing their ground on this subject now. A year ago they said that private enterprise could not function because of our controls and restrictions. Now that private enterprise is making new records in many fields every month, we are told that the tribute must be to private enterprise which is functioning not because of but in spite of the Government.

Turning from exports to the balance of payments, as the statement of my right hon. and learned Friend showed and as the figures available to the House make quite clear, we have seen the dollar gap, which in 1947 was £1,024 million, reduced in the first half of 1948 to £254 million and in the second half of 1948 to £169 million. The overall balance of payments has been reduced from £630 million to an annual rate in the first half of 1948 of £280 million. The figures for the second half of 1948 are not yet available, but my right hon. and learned Friend pointed out the steady improvement on visible trade account which was taking place because of the successful achievements of the export drive, and he said: We may expect that our total balance of payments will show better results than that derived from our visible trade alone."—[OFFICIAL REPORT, 27th January. 1949, Vol. 460; c. 1124.] There can be no doubt that, so far as balance of payments is concerned, we are quite clearly on the right road, but even with the great improvement which has been marked in the past year we can still see standing out clearly the problem for this country and for Western Europe of the dollar balance of payments. As my right hon. and learned Friend said, it will not be long before we reach a position of overall balance—we may have touched it already—but to consolidate that in the difficult months and years that lie ahead will be no easy task. However, difficult though that may be, the task of securing a balance on dollar account will be very much more difficult still. Speeches from all parts of the House have shown that none of us is under any illusion about the difficulties of achieving this in the next four years. While every effort is being made to economise in dollar imports, we shall need the maximum effort in exports to dollar areas both from this country and from other parts of the sterling area, if we are to succeed.

I have been asked by a number of hon. Gentlemen in all parts of the House what the Government think are the prospects of increasing exports to the dollar areas. It is certainly true that one of the biggest contributions we can make is in relation to—it is one of the main problems which arises out of the Bill—the problem of increasing dollar earnings through increased exports to the Western Hemisphere. The House is familiar with what is being done to reduce imports from the Western Hemisphere. It knows that imports from the Western Hemisphere, which were about 32 per cent. of our total imports in 1938, rose to 47 per cent. in 1947, because the Western Hemisphere was the only source of supply for many foodstuffs and raw materials, but, as a result of our intense efforts to develop new sources of supply and as a result of our sacrifices, it has now been reduced once again to a figure slightly over the prewar percentage, it now being 33½ per cent. Meanwhile, exports to the Western Hemisphere have painfully, though steadily, increased from the figure of 15 per cent. in 1947 to 16½ per cent. last year.

To maintain and slightly increase this percentage of our total exports going to the Western Hemisphere has, of course, really been a remarkable achievement when we remember that our total exports have been going up at a very steady and satisfactory rate. That means that the dollar exports have been going up at a slightly faster rate. If we take 1938 as 100, in 1947 the volume of exports to the Western Hemisphere was 94 and in the first half of last year it had recovered to 125 and in the second half to 133. However, the measure of the job lying ahead of us is shown by the fact that we are hoping to increase this figure to 147 during the currency of the 1949–50 programme and to 171 in 1952–3.

No one is in any doubt about the difficulties involved, or the size of the challenge this presents to our exporting industries and to our salesmen and sales organisations overseas. Parts of the Western Hemisphere are still blocked with import restrictions but in our bilateral trade discussions we are doing what we can to get these restrictions removed. I hope the right hon. Gentleman will accept the use of the word "bilateral" in these discussions, for we cannot really describe these trade agreements as "unilateral."

At least two markets—Canada and the United States—are in the main free and open to our exports; free and open, that is, except in so far as they are limited by tariffs, which cause difficulties for certain of our exporters. But in these markets there has been a great achievement in the past year. Our exports to the United States last year were at the rate of £66 million against £48 million in the previous year. In this advance our traditional exporting industries played their part. Textiles, including linen, and pottery made great and growing contributions. Worsted piece goods, for instance, last year not only more than doubled the 1947 figure, but trebled the pre-war figure. These figures refer, of course, to volume and not to value. Cotton piece goods increased from a pre-war figure of 8.6 million yards to 11.1 million yards: carpets from 45,000 square yards to 650,000 square yards. Exports of China increased sixfold.

But, of course, the most remarkable development in our export trade to the United States last year was passenger motor cars: from a total of only 45 cars in the whole of 1938, and 1,124 in 1947 to 24,475 in 1948. Another equally striking development has been agricultural tractors: 341 in 1938, three in 1947 and 12,305 in 1948. Taking engineering products as a whole our exports to the United States, which were less than £1 million in 1938, were £4.1 million in 1947 and £14.2 million in 1948, an increase between 1947 and 1948 of nearly 250 per cent.

These results have been achieved in the face not only of United States home production but also of intense competition from other dollar-hungry countries. Of all United States imports in 1948 this country accounted for the whole of bicycles, between 90 and 100 per cent. of cars, woollen hosiery and blankets, 80 to 90 per cent. of silverware, 70 to 80 per cent. of worsted cloth, and 60 to 70 per cent. of whisky, knitted outerwear, linen towels and so on. We are the major exporters into the United States market over a very wide range of manufactures.

Industry, exporters and the Government are urgently considering what more can be done to increase our sales to the United States. My right hon. and learned Friend and others of us have continually impressed upon industry the need—as the hon. Gentleman for Scarborough and Whitby (Mr. Spearman) said last night—to get out West, to get away from the belief that the only way to sell to either the United States or Canada is through the Eastern ports. There must be further penetration to the West, the mid-West and the deep South.

The Government have made clear what they are prepared to do to help in the provision of dollars for advertising a very necessary service in developing certain American markets. I think exporters have found that, if there is anything within their power to help increase exports to this new market, the Government are standing by, both here and through our representatives in the United States, to help in any way possible. But the real challenge is made to our export industries, not only to those who have already established themselves there, but also to the many others who have not yet sought their fortune in that market. We have heard a lot about adventure, risk and enterprise in the last few days. The right hon. Member for Saffron Walden (Mr. R. A. Butler) was pressing this on us. Here is a challenge for the adventurous spirit.

The attack on the North American market means great enterprise in production and salesmanship and a closer study of the consumer needs and tastes in the American market, with special attention to matters like packaging, display and so on. No one pretends this is easy for any manufacturer. There are many unaccustomed difficulties in this market. Let us be frank about it, the market is a little erratic. There are many manufacturers in this country who during the last few years have made a struggle to establish themselves in new markets in the United States and have found themselves faced with sudden and, to them, unexplained and unwarranted cancellation of orders in one or two lines where the United States market has reached the balance between home production and demand. This has, perhaps, caused a little discouragement and a little frustration, but I am certain that when the whole of our exporting industries realise how much the national interest is wrapped up in their further efforts to increase sales to the United States, Canada and other hard currency and priority markets, they will redouble the efforts they are already making.

The right hon. Member for Bromley referred just now to Canada. Of course, the achievement of a much higher rate of exports to Canada is in no way less important than success in our export drive to the United States. The right hon. Gentleman expressed concern, and the House generally and the Government have rightly expressed concern, at not being able to take the many varieties of foodstuffs, timber and raw materials which Canada would be able and willing to send us at this time. As the right hon. Gentleman said, we shall never forget the great generosity of the Canadians in assisting us in every way open to them. We are particularly conscious of the fact that they have in many cases deliberately adjusted their methods and economy to our special needs. But today, with all the effort we are making, we are still paying with our exports for only one-third of our total Canadian imports—imports which represent a staple part of some of our most essential foodstuffs, timber and other raw materials.

Perhaps the House will forgive me, although I have given a lot of figures, if I give one or two striking figures of what has been achieved in the Canadian market. Engineering exports, for instance, have doubled, from £7.4 million to well over £14 million, between 1947 and 1948. Exports of china have increased from 8,700 cwts. before the war to 25,000 cwts. last year and carpets have increased more than tenfold. The rayon industry increased four or five fold between 1938 and 1948. It is a matter of great regret to us all, and especially to Lancashire, that the cotton target export for Canada was not reached. The target was 80 million square yards for the year and the achievement no more than 36,500,000 square yards. But, even that represented an increase over the previous year of some four or five times and the failure to reach the target, I wish to make clear, was due to no shortcomings on the part of Lancashire to offer the goods on an adequate scale, often at the cost of shortage of particular items of material on the home market.

I have spent a considerable time dealing with the question of exports to North America, because, in my view, it is fundamental to the whole subject we have been debating, but there are a number of questions which have been put. One particularly important question put by a number of my hon. Friends and hon. Members opposite was about trade with Commonwealth countries. Our dependence on the Commonwealth and the need further to develop our imports from the Commonwealth have been rightly stressed. Perhaps too many of the discussions on this subject refer to developments in the Colonies and there are the usual discussions which we have had this afternoon about the record of previous administrations, or rather of private business interests, in developing the colonial market and the record of the present Government.

One very important thing which is often missed out in this connection is the importance of developing new sources of supply within the self-governing Dominions of the Commonwealth and it is a plain matter of history that before the war supplies from many of these Dominions were too often spurned because of the competition with farmers in this country for an all too small market. I am not blaming the Party opposite for taking the side of the British farmer against the New Zealand farmer or the Australian farmer, although at certain times this struggle came very near to breaking the economic links of the Commonwealth. What was at fault was the total volume of demand for food in this country, which was kept down to such a low figure by unemployment and poverty and which ought to have been increased to a far greater extent so as to have made possible increased imports from the Commonwealth countries and increased supplies from the farmer in this country.

It has been suggested in certain quarters that we are not exporting enough to Commonwealth countries today, that they are being given second place or third place in comparison with the countries of Western Europe or of the Western Hemisphere, and indeed, that they are having to be subordinated to the interests of certain bilateral trade agreements. I think the recent figures of exports to the Commonwealth will suffice to put that matter in its true perspective. Taking the sterling area as a whole, exports in 1947 were 117 per cent. of the pre-war volume. In the first half of last year they were 141 per cent. and in the second half of last year 153 per cent.—a quite remarkable development of trade with the sterling area. The four-year programme envisages an increase by 1952–53 to 163 per cent.

Again, it has been suggested that the Colonies are being neglected in this export scheme. In 1947 exports to the Colonies were already 30 per cent. above the 1938 volume and in the first half of last year they were 80 per cent. above the pre-war volume. They are planned to rise to at least 226 per cent. of prewar by 1952–53. We have heard hon. Members stress, and rightly stress, the need for exports of capital goods to the Commonwealth. Taking the Commonwealth countries as a whole, exports of capital goods in 1948 were 86 per cent. above 1938 by volume. Taking exports of capital goods to the Colonies, they were 247 per cent. of the pre-war volume, and this at a time when resources have been extremely limited and when it has only been shortages of resources of steel and of capacity which have prevented us from doing far more.

This Debate has shown a fairly general agreement that the Four Year Plan is realistic. We are not quite so clear about the position of His Majesty's Opposition as we are about the position of our own side in relation to this Four Year Plan. We have not had a clear answer to the question which I think in all fairness we ought to put: do they or do they not support the Four Year Plan?

Photo of Mr Harold Macmillan Mr Harold Macmillan , Bromley

We are not going to divide on the Bill.

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

I am sure that the right hon. Gentleman and his supporters will be with us in the matter of this Bill, but of course this Debate has taken place to quite an extent on the subject of the Four Year Plan, which has been debated very fully by most right hon. Members and hon. Members opposite though not to any great extent by the right hon. Member for Bromley. We have still had no clear statement from the Opposition whether they accept or do not accept this Four Year Plan as a way of achieving viability by 1952. We have been given no clear lead. It has been rather like a statement I saw recently in a Surrey newspaper, when a non-political organisation there asked the Labour and Conservative Party speakers to discuss their relative policies. The Conservative agent is reported as saying that it was quite out of the question. He said "If we revealed our policy now it would play right into Labour's hands." He was further quoted as saying, "Our policy remains a secret until 1950." If that is their line, all well and good. This Debate has certainly shown that they are carrying out that attitude as far as their economic policy is concerned.

We have had a number of individual suggestions, not, I think affecting the broad plan, from hon. and right hon. Gentlemen opposite, and to some of them I would like to refer for a moment. The hon. Gentleman the Member for Chippenham (Mr. Eccles) asked one or two questions, and the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler) is not able to be with us this afternoon for reasons which we all understand and about which we sympathise with him. Therefore I will not go fully into one or two suggestions which he made, but there was one suggestion which has been taken up by other speakers and it would be right for me to deal with it. He rightly stressed the importance of exports to the Western Hemisphere and made a suggestion, not a very novel one, that exporters to that market should be allowed to retain perhaps 10 per cent. of their dollar earnings for their own use; whether for their own private use or for the use of their firms was not made clear.

Photo of Mr David Eccles Mr David Eccles , Chippenham

May I interrupt the right hon. Gentleman? I understood my right hon. Friend to say that they should be given a bonus release of goods on the home market which would be in step with what they would be able to sell in North America. I do not think he suggested dollars for their own use.

Photo of Mr Harold Wilson Mr Harold Wilson , Ormskirk

A bonus of goods for the home market is one of the principal incentives which is used in a whole host of exporting industries at the present time as a means of encouraging exports generally to all markets. If I understood the right hon. Gentleman wrongly on the question of dollars, I apologise to him in his absence. But it is a suggestion which has been made to us officially by a number of trade organisations, so that even if I am misrepresenting him it would be worth while my dealing with the matter now.

Obviously the Government could not look at that proposal. It would be quite unfair to those who are doing what we all want to see many exporters doing, and that is, concentrating on the Commonwealth markets and particularly on Commonwealth development schemes. Those who are being asked and are themselves exporting capital goods, cotton to Africa, for instance, or transport equipment for some big colonial development scheme, or essential maintenance, should not be treated worse than the whisky manufacturer who happens to be sending a large proportion of his output to the United States. That suggestion has been put forward and I am glad to have the support of hon. Members opposite as well as from my own side in saying that it is not a scheme which we could seriously consider for one moment.

The hon. Gentleman the Member for Chippenham began the Debate this morning by referring to the song which he thought my right hon. and learned Friend must have been carolling when he came along to the House yesterday. The hon. Member suggested that the Chancellor was singing, O, what a beautiful morning, Everything's going my way. If my right hon. and learned Friend was affected by yesterday's weather, as he may have been, the hon. Gentleman was equally affected by this morning's weather. My right hon. and learned Friend was at least supposed to be singing a fairly recent song, but the hon. Member was obviously singing a prewar song very largely forgotten, I lost my way in a thick fog, In a thick, thick fog in London. Although I tried to follow his speech which was entertaining and contained a number of points and detailed suggestions, I did not get out of it very many suggestions that have any bearing on the present situation. He, of course, again failed to say quite clearly whether he supported the Four Year Plan or not. He did not say whether he thought the methods we were proposing for its fulfilment were the right ones or the wrong ones. We are still in his thick, thick fog as to what Tory policy is in all these matters. But he did say that he thought it was desirable that we should have the fullest consultation with the Commonwealth both on our own Four Year Plan and on all the questions affecting the European Recovery Programme. I can tell the hon. Gentleman that there has been the very fullest discussion. Indeed, the Four Year Plan itself was discussed with representatives of all Commonwealth Governments before it was finally tabled in Paris, but naturally we did not want to commit any of the other Commonwealth countries to all the details in it.

I think that the principal points he made were, first, that we would have done better if instead of proceeding as we have in Paris—and, of course, there were 18 other nations to consider in this matter—we had put the whole of our intra-European trade, or the essentials of it at least, on a dollar invoice basis. He said, quite rightly, that that would have provided some incentive to increase exports. Of course, this scheme has a certain prima facie attractiveness, but, in the first place, it would have needed a very much larger packet of dollars from the United States. Clearly, the United States never considered dealing with the problem in that way.

Second, I should have liked to ask him how he would have drawn the line between the essential exports he wants to encourage and the inessential exports. There are many marginal cases where it is difficult to see whether they should be dealt with in dollars or in native currency. European trade would, on the whole, have been reduced, because we should all, more or less, have been engaged in competition for one another's dollars; we should all tend to refuse to sell for European currency. It was to avoid this that the intra-European payments scheme excluded off-shore use of dollars in Europe.

Then the hon. Gentleman and a number of those who followed him, asked about American capital in this country and in the Commonwealth. My right hon. and learned Friend has answered this question on a number of occasions. We are prepared to consider and to welcome any scheme on its merits dependent on the contribution it makes to what is, after all, the main objective of our policy—viability by 1952. We have to see what contribution it will make, what are the financial arrangements and also what arrangements are to be made for remittances and returns on the investment. Certainly, I think that the facts answer perhaps better than any general comment. We have received a number of applications, some for quite substantial sums, and we are prepared to approve investments on the terms I have stated. I am dealing with the hon. Gentleman's speech particularly, because it has been the leading speech of the day on economic affairs.

Another matter was the oft repeated suggestion that the Government must cut down expenditure. Of course, the Opposition have been asked often enough what items of expenditure they want us to cut—social services, Defence, food subsidies. Do they want us to cut those or not? As for the questions which I have often put to them about which controls we should take off, we get a hollow silence. They are always advocating that we should cut down expenditure, but we are never given any lead or any suggestions about which items should be cut.

Finally, the hon. Gentleman said—and we are at one on this matter—that we must stop prices rising further. Of course, he knows perfectly well that the main consumer items, whether clothing or foodstuffs, are high in price because of costs and prices overseas. One of the highest increases affecting certainly the clothing market, has been in the case of wool. There is no question of bulk purchase here. Wool is dealt with on a free market and it has gone up because of the world demand and supply position. If the hon. Gentleman accepts that as the fact, what is his suggestion for dealing with prices? Does he want us to increase the food subsidies? Other Members of the Opposition have been very cool on the subject of food subsidies. Does he call on us to reintroduce the clothing subsidy, because it conflicts not a little with the idea of cutting. down expenditure. Or do they want us to tighten up price control and slash still further the distributors' margins. It may be that these things may still be Tory Party policy, but there we are lost in the fog and we shall have to wait until 1950 before the secret is out.

The general contents of his speech and of that of the right hon. Gentleman, dealing with economic affairs, was really this, and I am compressing his remarks a little. The Government ought to prepare a plan, and, having done that, what we then want is Cobdenite laissez-faire and Gladstonian finance, combined with retrenchment at home. The answer to that is that we have prepared a plan, but that we need positive action, not laissez-faire to see it through.

A number of hon. Gentlemen on the other side asked me, in replying, not to minimise the difficulty of the situation. I do not think many of us in any part of the House was guilty of doing that. It was suggested by the hon. Member for Louth (Mr. Osborne) that now is the time once again to appeal to all sections of the community to remind them of the work that lies ahead, and of the fact that, impoverished as we are by two world wars, denuded of our foreign exchange and injured by the blitz at home, we are trying to carry on with a maximum effort so as to provide our own salvation which this Four Year Plan is to help. I agree with him, and I appeal for this Four Year Plan to be adopted by all parties. Now,. if at any time in our economic history, is the time for the national unity we hear so much about, but national unity, after this Debate, must mean national unity behind this Four Year Plan, which no one in the Opposition has found means of attacking, and which, until someone finds an alternative to the plan, means national unity behind the policies necessary to carry it out.

In making this appeal, as I do, for dealing with these enormous difficulties, I ask that each one of us should now appeal to all sections and all political parties for real national unity on the lines of this Four Year Plan. Now is the time to drop the approach of which we have seen too much in recent times of treating these shortages and difficulties as something out of which to make political capital. The right hon. Gentleman opposite, especially, faced up to the real reason for the difficulties we are in, and I call upon him and his Party, in common with all other parties, to get behind this Four Year Plan and see that the job is carried through.

Question, "That 'now' stand part of the Question," put, and agreed to.

Bill read a Second time, and committed to a Committee of the whole House for Monday next.—[Mr. Joseph Henderson.]