Sterling Area (Closer Co-Operation)

Part of the debate – in the House of Commons at 12:00 am on 22 February 1952.

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Photo of Mr Henry Usborne Mr Henry Usborne , Birmingham, Yardley 12:00, 22 February 1952

I am sure that no one would wish to speak in this debate without expressing gratitude to my hon. Friend the Member for Wandsworth, Central (Mr. Adams) for initiating a most interesting and important debate on a subject on which, broadly speaking, we are all agreed. I would add how extremely interesting I found the speech of my hon. Friend the Member for Uxbridge (Mr. Beswick) in seconding the Motion.

In so far as I wish to make one or two points that are partially critical, I would assure both my hon. Friends that the criticisms which I offer are not in any way intended to despise the laudable aims which they and all of us share, but just at this moment in our history when not only this country but half the world faces an extremely critical situation it is important that we should not try to do the right thing in the wrong way.

An hon. Member on the other side of the House has drawn attention to the Gambia egg scheme and the groundnut scheme and said that both were complete flops, and that we all knew it. He tried to draw the conclusion that because those schemes both failed—I admit that they did—that type of scheme ought never to be attempted. I believe that both those schemes were the right sort of thing to be attempted, but we must not make the mistake of doing them in the wrong way. It is in that spirit and in an attempt to be constructive that I want to make a few points.

We are all agreed that large-scale economic development in the area with which we are most closely associated ought now to be initiated. The difficulty appears to be: How do we find the capital to do the things that we want done? I believe that the trouble today is that even in the sterling area there is not the capital available to spend on these schemes.

Where do we get this capital? My hon. Friend the Member for Wandsworth, Central, in an interjection, seemed clearly to indicate that we could get it on a kind of overdraft. In a second interjection, he made it clear that we would be borrowing the money in some way. It has to be admitted that the only country in the world that seems to have the capital available is America. We have to get it from there because we cannot get it anywhere else. If I may extend the analogy of the overdraft, I fear that it is true that we may borrow money and live for a time on an overdraft, but it is unfortunately true that the bank manager generally takes something as collateral. Eventually he practically owns all our property because he takes a charge on our physical assets.

Are we prepared to initiate large economic schemes either in our own country or in Commonwealth countries—or advise them to initiate schemes, which is about all we can do—on the understanding that we borrow in the only possible place, and that that country shall take some kind of charge on the venture? In other words, the real difficulty is not economic at all, but political, in the sense that we have to get the capital from America.

America will lend the use of its capital and will be concerned directly or in- directly in the political mechanisms by which it can be sure that the capital is properly used. On the other side of the fence, the State or community that is borrowing the capital is nervously concerned as to what strings may be attached to the lending of the capital, and the more difficult it is to discover what strings are attached the more sinister it appears and the more certain it is that the strings are extremely powerful. It is a political difficulty. We have to come to some understanding in the sterling area with the dollar world, because it is only from the Americans that it is possible to get capital now.

I am convinced that there is need in a great many parts of the world, and not least in parts of the Commonwealth, for large-scale economic development. I am convinced that these things cannot be initiated unless in the first instance the required capital is in the form of State capital. The initial sum is far too big to be left entirely to private enterprise, but the two can go hand in hand; that is to say, when large-scale State-controlled capital initiates these schemes, it will be feasible, possible and attractive for penny packets of private capital to follow, and that we should welcome. So, broadly speaking, the last two or three lines of both the Motion and of the Amendment are redundant, for both are red herrings.

Mention of the T.V.A. draws my attention to another point which ought to be made. If we start large-scale economic development schemes, it is probable that the capital which will be required will be beyond the means of any one single State. Assuming that we do not want to get it all from America but need only have some underwritten and the rest drawn jointly and severally from the States of the Commonwealth, it would be a supra-national venture. In all probability also, the economic enterprises started would be on such a vast scale that they would spill over the boundaries of any of the nation States involved.

Looking back over the development of the T.V.A., it is clear that the T.V.A. would never have arisen had it not been that the States involved in its development plan were all parts of the United States. It is not without significance that on three occasions Wendell Wilkie took a case to the Supreme Court of the United States against a ruling that the action of T.V.A. in its early days was unconstitutional, and had there not been a common law operated by the United States of America and the Supreme Court of the United States—in other words the political institutions—the T.V.A. would have died stillborn.

Therefore, it needed the political institutions in order to make that economic venture possible. I have a shrewd suspicion that because of the scale of the schemes we are considering considerable constitutional disputes are likely to occur, and that unless we find the supranational machinery we shall not be able to solve those disputes. Therefore, we shall merely start a scheme which will be sound on paper but which will be killed stone dead in its early stages. And for every failure we make today, it will be harder to succeed to morrow.

We often hear it said that the real danger confronting the sterling area today arises not through any fault of the sterling nations, but simply because the United States will not buy as much as she is anxious to sell, and simply because of that fact she will take in all the gold in the world, no matter how often it has been distributed. It is said that the danger to the rest of the world is simply that America is anxious to sell and refuses to buy. We contrast that with how the world was run when sterling was the world currency in the 19th Century. We say that then the British were ready to invest their money all over the world and how wonderful it was then and how bad it is today because America will not do likewise.

What was the difference in the world then? We were able to invest our money all over the world because, broadly, we controlled the politics of the world at the same time. We could invest our money knowing that in the long run dividends came back to us and would remain convertible. I am merely arguing again that the problem is not economic: it is broadly political. The Americans today do not invest abroad, not because they do not want to invest abroad, but because they do not think it is safe to do so, simply because they do not control the politics of the nations abroad, who could readily, as someone has said, nationalise the industries which they had started. Once again, therefore, the problem is political and not economic. Secondly, it involves the United States of America more than, or as much as, it involves any part of the Commonwealth. Thirdly, any of the enterprises that we are advocating will be too large to be initiated by the finance which is available to any single State.

We are advocating, therefore, that there should be some kind of supra-State fund out of which developments can be operated, albeit that the actual organisation or the particular economic venture may be inside one nation. The funds cannot come out of the Exchequer of any one nation; they must come from a common exchequer, to which all the nations in the sterling area, or beyond, must in some way contribute.

It is for that reason, perhaps, opportune that the Amendment has been moved. The last three lines of the Motion invited the taunt which the Amendment provides. Apart from those last three lines, the Motion and Amendment are so important that I wish it were possible for the mover of the Motion to delete the last three lines on condition that the mover of the Amendment should withdraw it. If that were possible, how glad we all would be.

I hope that hon. Members will forgive me for having been critical. I know how appallingly irritating it is in a difficult world when people who want something done proceed to say that the proposals which have been made are unsatisfactory. There are enough difficulties, and the difficulties can be left to argue for themselves. But nothing is more dangerous in a difficult situation than to try to do the right thing in the wrong way and to fail. We simply cannot afford to fail any more. We have so little time. The country is in a tight spot, and the Government have no more clue than anybody else.