Financial and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 30th January 1952.

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Photo of Mr Harold Wilson Mr Harold Wilson , Huyton 12:00 am, 30th January 1952

The point raised by my hon. Friends is, unfortunately, one of the least of the sins of His Majesty's present Administration. I should like to draw the debate back to where it was when it was left by the President of the Board of Trade.

I found the right hon. Gentleman's speech a great disappointment. Any one in his position could have been expected to give some lead to industry about the export drive, saying what commodities we might succeed in selling abroad and the steps necessary to achieve that result. All that he has told us, apart from some very ominous references to the utility scheme, to which I will come in a few minutes, was that he thought our problems could only be solved in the long-term by some capital adjustment involving American investment in the sterling area in the hope of gaining a profit.

The right hon. Gentleman will not be in his position for very long before he discovers that that does not hold out any hope whatever of solving the problem which we are facing, and that if we are to get the right development in the sterling area and other undeveloped areas we cannot do it on a private enterprise profit basis, because most of the work that has to be done will involve investments, which for many years can, by their very nature, give no immediate return in terms of profit.

I should like to come to the picture painted by the Chancellor and by the President of the Board of Trade, and to express my feeling that they have not in any sense attempted to give us an economic programme for facing our present position. What they said yesterday and today is not an economic programme. It is simply and solely a betrayal—a betrayal of those who were misled into voting this administration into power on the basis of a false prospectus without precedent in British political history.

Now, the policy which they put forward is seen to be totally irrelevant and doctrinaire. They are using the crisis—we do not deny that there is a crisis—as an excuse for breaking all promises that they made and for launching a direct attack on the standard of living of the British people. The extraordinary thing is that neither the Chancellor nor the President made any attempt to analyse the causes of our present economic difficulties. They described some of the symptoms; they never attempted to describe the causes.

One significant remark was made by the Chancellor when he said that our position has been deteriorating for half a century. Of course, he is right. That must have been gall and wormwood to the Prime Minister to hear yesterday. In his 50 years in public life, there have been two kinds of administration so far as he has been able to tell us about them: those of which he was a Member, in which the country was prosperous and successful, and those of all parties of which he was not a Member and in which the country was bankrupt and facing disaster.

The right hon. Gentleman is quite right in saying that this crisis goes back a long way before the war. In fact, had we attempted a policy of full employment before the war, if the 2 million who were unemployed had been free to import the food that they needed and if we had had to import the raw materials for full employment, we should have had a major overseas payments crisis every year in the 1920's and 1930's. We know how much the war has worsened the position, chiefly because this country assumed far heavier burdens during the war than any other ally. We came out of the war a good deal poorer, and some countries, particularly the United States, came out a good deal richer. That position has persisted into the post-war world.

Since neither of the right hon. Gentlemen have tried to do it, let me say what, I think, are the basic factors underlying the present economic crisis. First, there are the very big changes in the consuming power of the United States. There was criticism of my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) when he referred some time ago to the lurchings of the United States economy. The Chancellor expressed exactly the same thought last week in a public speech somewhere in London, when he referred to the United States as a giant which, whenever it stirs in its sleep, affects every one of us.

Unfortunately, the lurchings are not only the lurchings of the United States economy. There are also violent changes of policy on the part of the United States Administration. A year ago, when there was a chronic shortage of raw materials, the United States Administration was stockpiling—at the wrong time—creating further shortages, and pushing up prices. In the summer and autumn of 1951, when it would have been reasonable to have gone in for a policy of strategic stockpiling on the part of the United States, when some abnormal purchases were necessary to maintain the price of sterling area raw materials, such as rubber, tin, and so on, the United States Administration had in force almost a boycott on the importation and stockpiling of those goods.

The second basic fact, to which the right hon. Gentleman made virtually no reference, is, of course, the scale, extent and pace of world re-armament. The United States at present are sucking in materials on a prodigious scale and denying them to the rest of the world. We are finding not only steel scrap, but pig iron and iron ore, that would normally be coming to the steel industries of Europe, being shipped across the Atlantic to the United States because of her almost insatiable demand for these raw materials.

And yet we are finding that the prices of the goods we have to buy from the United States are being maintained partly by artificial methods and by artificial scarcities, while at the same time it has been the policy of the United States Administration to depress the prices of the goods sold from the sterling area to the United States, thus creating, or adding to, the basic dollar problem which is the common lot of the whole non-dollar world.

The third factor in this situation, to which the right hon. Gentleman did not refer as a cause of our problem, is our own re-armament. Yesterday, the Chancellor said that he would put the emphasis more on exports than on cuts in imports, and the President of the Board of Trade said today that that was where the emphasis lay. But where are these exports to come from? From what industries are we to get them? The President of the Board of Trade has very little hope of expanding our exports of textiles and clothing. He knows that the market overseas does not exist for them at present, particularly with the growth of Japanese competition, which is becoming stronger every month.

What the world wants today, and what the world insists on having if it is going to buy our products, is engineering goods. It is no good the President of the Board of Trade telling them that they must take textiles, clothing, aspirin tablets and all the rest of it. They want engineering goods. This is true not only of certain parts of the dollar area and South America, for instance; the sterling area requires engineering goods from this country.

The Colombo Plan, which is an essential part of the programme for developing the Commonwealth and for providing stability and peace in South-East Asia, is dead—unless the right hon. Gentleman can do something to release capital goods exports from this country to the Commonwealth. The Chancellor did not mention this yesterday, but I can well imagine that one of his biggest problems in the Sterling Area Conference was the clamour and requirement of other stering area countries for capital equipment from Britain—not merely the under-developed areas, but Australia and New Zealand, for example. The Chancellor knows perfectly well that if we cannot meet these requirements, those countries will go to the dollar area for purchases, and in time this failing to meet the requirements of the sterling area for capital equipment may well lead to the disruption of the sterling area, with all that that means.

Why do not the Chancellor and the President address themselves to this problem, because this is basic to our economic troubles? They approach the situation with a monumental degree of irrelevance. They think they are going to solve the export problem by charging a poor widow woman for her deaf aid. Does the President of the Board of Trade think, does the Chancellor really believe, that charging a man for surgical boots will send more switchgear to Canada? Do they really think that that sort of thing—charging for abdominal belts and other things—will send more tractors to Pakistan?