Orders of the Day — Sterling Exchange Rate

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

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Photo of Mr Frank Fairhurst Mr Frank Fairhurst , Oldham 12:00 am, 28th September 1949

I do not profess to be able to express myself in the eloquent language used by the hon. Member for Oxford (Mr. Hogg), but I claim to apply true sincerity and honesty in what I have to say. What I have to say may not be to the liking of all hon. Members, but I feel that I must say it because I believe it to be a contribution to the Debate.

Before coming to what I chiefly have to say, I would make a passing observation. The ordinary people today have social services which they never want to lose. It is true that they pay for them, but I believe that they appreciate them as bringing about better conditions and tending towards a higher standard of life in the future than they ever had before. That is an all-important fact. If I had to choose between a 5 per cent. increase in the weekly cost of living and loss of the social services, I should choose to retain the social services. I am not suggesting that that alternative will have to come before us.

Devaluation of the pound can only be a temporary expedient. The struggle between Shylock the dollar and the sterling golden calf has yet to be resolved. I am not optimistic about a solution being found without fundamental social changes in the United States and elsewhere. It has been patent to me for many years that the foundation of our social edifice built upon capitalist economy is unstable and cracking, and capitalist economy is completely breaking down. In July, the hon. Member for East Aberdeen (Mr. Boothby) said: No amount of cost-cutting and price-slashing will enable us to export manufactured goods in very large quantities to the United States ever again. I believe that he was right. He went on: We cannot have a so-called planned Socialist economy at home and international competitive anarchy abroad."—[OFFICIAL REPORT, 14th July, 1949; Vol. 467, c. 733 and 737.] Again I think he was right. He went on to explain that he was not against the welfare state in principle but only in favour of it when the time was oppor tune. The right hon. Member for Aldershot (Mr. Lyttelton), speaking in the same Debate, made reference to loss of confidence and declared that nationalisation and bilateral agreements were solely responsible for it. He said that we ought to try to increase our dollar exports. He made the striking suggestion that the United States were the home of manufactured goods. At the time I thought that was an illogical statement.

This is how the dollar crisis suggests itself to me. All soft currency areas are now involved in the crisis and repercussions are bound to involve the U.S.A. In 1948, we thought that we were beginning to come to grips with the problem and that there was a possibility of the gap between imports and exports being closed, but that hope proved to be unfounded. If our internal economy is dependent upon physical supplies from the United States and if the respective currencies are in conflict one with another because the standards of productivity vary, I cannot see how the difficulties can be avoided. In the past, the methods we have adopted to avoid them have manifested themselves in mass unemployment, reduced living conditions and economic misery. There is something fundamentally wrong with a social system in which people are unemployed by the million, other millions are suffering poverty, and overproduction brings silent industries and no work. Surely that is the economy of the madhouse.

During 40 years we have suffered two major wars, which have enabled Governments to stave off the crisis which we are now experiencing, but those wars made the world crisis more certain. The war of 1914–1918 gave us 10 million dead and 20 million wounded, a colossal burden of debt and a crisis which shook the world. The recent war saw each country busily engaged in smashing the economies of other countries, farm lands laid waste, industries, cities, towns and communications knocked to pieces, and victors and vanquished emerged from it almost bleeding to death. War, with all its brutality and misery, physical and spiritual, cannot be the forerunner of progress, but it is proving to be the red light against self-destruction. If the people of the world do not take heed now, what will happen may solve our problems in a way that no civilised person could wish. In a world where capitalist methods of production obtain, it would be suicidal on the part of His Majesty's Government to attempt to revert to the unbridled conditions of the past. If we can make arrangements and agreements with other countries, bilateral and multilateral agreements might bring a feeling of security. On the other hand, if the world is to continue to attempt to live by competitive struggle alone, it is doomed. World economy will continue to break down and economic wars must end in military struggle.

Is it not time that we realised that the world has grown out of the need for competition and that the conflict between competition and co-operation must soon resolve itself one way or the other? I say in all sincerity that as long as the profit motive prevails and is paramount, no nation can survive unless it is the most efficient, the least wasteful and the most highly mechanised, and its people the most industrious. That is not all. We might yet have the fantastic spectacle of people in all countries working for no wages and existing upon a starvation diet, in their efforts to beat each other in competition. Surely, again, that is economic madness.

It is remarkable that countries which were almost destroyed in the recent war are now beginning to rehabilitate themselves and American aid has been one of the means of doing this. Another £1,000 million has been granted. I venture the prophecy that in five years' time the general standard of living for millions of people will be much higher, provided that capitalism is halted, controlled or eliminated, or that the U.S.A. can continue to give away huge dollar aids, or to sell her surplus at extremely cut prices, or that she can build up to fantastic heights the social standards of her own people. If industrial countries are able to build up their capital resources one can visualise in the not distant future that the potential output of the world will be staggering. Yet we are faced with a great economic crisis because the sellers' market has now become a buyers' market. Does that mean that there is now a glut of commodities where once there was a scarcity? Has everybody, in all the countries concerned, all the food, clothes, houses, furniture and luxuries which they want and, because of this, are not now prepared to buy? The answer is, No; but we are told our prices are too high and are not competitive. Is not the acme of policy for all capitalist-controlled countries to sell their surplus and to buy nothing, especially countries which are practically self-contained, as is the United States of America?

On the other hand, I cannot see that if we cut our prices too hard or devalue our currency that will present a solution. If America wants none, or only very few, of the goods we produce, no good result is likely to be achieved by devaluation or the cutting down of our prices, or even by giving our exports away if America does not want them. All capitalist controlled countries want to sell the surplus which they produce.

I remember the time—I do not think I am wrong—when a certain well-informed person in the textile industry reminded the country of the days when goods were mass-produced by that industry. This country was the home of inventions which modernised the textile industry and enabled us to sell our goods in every corner of the world. India felt the full blast of that competition, because all her products had to be made on handlooms. In those days, the markets of the world were at our feet. We amassed huge fortunes. We were in the forefront of technical efficiency and had machines which no other country possessed.

The question which I am now about to ask applies not only to textiles, but to every other industry also. If we were in the forefront then, why are we not in the forefront today? Whose is the fault? It is not that of the workers, because, as is well known, in those days the cost of production in the direction of wages was almost infinitesimal. The answer is that the textile industry is today confronted with what has happened in America, and that in the past the owners and controllers of that industry cared not one jot about what was likely to happen in the future. They amassed huge profits but never sufficiently modernised their industry, yet our machine makers in nearby areas—I refer now to Lancashire—exported far better machines than were being used here. Those owners and controllers of the industry cannot evade the responsibility for the position which has arisen. Had their industry been modernised, as it ought to have been, we should now be exporting goods competitively to America and other places and thereby obtaining assistance which would be invaluable to us in our present situation.

It might be said that had we increased the price of gold by 50 per cent. from the rate of £8 15s. 3d., that might have helped to solve the problem, that it would have been a palliative or, perhaps, would have eased the situation. I do not know whether such a step would have had that result, for such a course has not been adopted, but I repeat that, sooner or later, America will discover that she cannot eat all the gold stored in her vaults. If we are faced with a difficult situation, it cannot end here. If America cannot sell her surplus cotton and other commodities which she has for disposal in Europe, the reaction is bound to resolve itself in unemployment. Even today, we are told, America has an unemployment problem. America is a highly mechanised country, capable of producing a far greater mass of commodities than her own people can consume. If she cannot dispose of her surplus, the problem which will be created in America will become acute and may well bring about repercussions which will be by no means happy and healthy for her economy.

My concluding words are these. I should not like to think that any possibility existed of this country or its people returning to what we have had to experience over the last 40 years. I am referring now to what was said by both the right hon. Gentleman the Member for Woodford (Mr. Churchill) and the right hon. and learned Member for Montgomery (Mr. C. Davies). Less than 40 years ago, the average life of people in this country was 40 years. Something, therefore, was radically wrong. It may be unpalatable to hon. Members opposite if I remind them of the days when queues began to form on a Monday morning.

In my childhood I have seen people slinking to the pawn shop on a Monday morning with bundles under their arms. They were taking their husbands' suits to pawn to enable them to exist for the rest of the week. Those same queues would return on a Friday to redeem their possessions. I have seen queues going to the market place on a Saturday night, scrapping for bones when the shops were fully stocked with meat. I shall never forget standing myself in a queue 100 yards long waiting to sign on because I could not get work. Nobody can accuse me of not wanting to do my job. I always wanted to render service, and always took pride in doing it to the best of my ability. We dare not, and cannot, go back to those shocking conditions. Whichever Government is in power has a responsibility to see that we make progress and do not go back.

The acid test of devaluation is whether it will help or will do otherwise, and whether it will play its part in maintaining full employment. Hon. Members opposite do not understand what the thought of possible unemployment tomorrow means to ordinary, decent, civilised men; neither do they understand the awful nightmare which it may be to that 95 per cent. of our people who want to work honestly and decently, nor the ravages which it can cause in the home. Whether we like it or not, we must take note of all these factors. We must plan our economy in such a way that progressively we develop a social life. We dare not lose the social services we now possess; the ordinary people will fight to the death to maintain them.

Let everybody, in every party, take note of these things. I say this with all sincerity, because I have a great pride in my country. There is no other country in the world like it. I do not even want to spend my holidays in other countries. There are so many places to be seen in this country and its people are such, that I have not the time to do otherwise than to get the benefits which this country can give me. I want to see the greatness of the past continued; I do not want to see a policy which would again create mass unemployment or bring about conditions such as I and countless others have suffered. There is no more degrading feeling for a man than to find himself slinking along and signing on for unemployment pay. If a man is doing a good job of work and is able to buy commodities and helping to build a planned social economy, it is far better than doing nothing at all.

The acid test of devaluation is whether it is going to build up the social life of the people. If I thought it would interfere with or reduce the social standing of our people in the long run, I would go into the Lobby and vote against this Motion. But I feel that on balance it is in our favour. The thing has been done and we have to make the best of it. As individuals we must try to make the best of the situation. This situation is not of our creating. There are thousands in the country, wealthy people, who do not care a jot how we go on and there are plenty of people who have sprung from the ranks from whom I come who are taking the same attitude. I would like to see this stopped, and I would not care what action the Government took if they could wipe these things out. We should tackle this matter and be frank. This problem is urgent and serious.

I say that the Government have tried to do a good job. They have had many difficulties, but they have given our people something they have never had before, social security. If they will plan the future in order to build that up, they will do something for which the workers will always hold them in respect.