I apologise for raising this matter so late in the evening, but I do so with some confidence because of the urgency of the problem and because it is so topical. I wish to raise the question of the economic consequences of a possible peace in Korea, and I wish to ask what plans the Government have in mind to meet the problems which will arise.
Despite the incredible folly of the President of the South Korean Republic, most people hope that we shall very soon see an end of the cold war and that we shall reach a period when the East and West have learned to live together. I think we can say with confidence that not only in this country but in the United States of America, where the burden of the Korean war has been so heavy, the ordinary people want to see an end of the strain, both in blood and materials, that Korea has imposed on them.
The question I want to put is this: if peace comes, can a slump be far behind? And if so, what are the Government doing about it? Already, Mr. Deputy-Speaker, the possible peace is casting its shadows across the industry, the markets and the trades of the whole world. I should like to give my hon. Friend three examples. In the American journal "Time" only last week, under the heading "Economy," it said this:
When the first Korean truce rumours spread through Wall Street last week Stock prices suffered the worst break in two months.
It goes on to ask this question:
What will peace do to the United States business? Where does the U.S. economy stand? Banker Marriner Eccles, onetime chairman of the Federal Reserve Board, had one answer: 'We're at the top of our boom now, and there are heavy deflationary pressures. Shortages are giving way to surpluses. More consumer goods will be produced than are sold. The home building peak has passed…. Exports are falling off rapidly'
I want to ask: what is peace going to do to British industry? What may it do to the policy of full employment? What is it going to do to the size of the wage packets of the people in our own industry?
I give another example. The "Evening Standard" of last Tuesday, under their City heading, said this—or the City Editor said:
I hear that more than 1,000,000 tons of tanker shipping is now laid-up in the world's backwaters as a result of the prolonged slump in tanker freight rates. A truce in Korea could result in a further score or so being put on a care-and-maintenance basis.
Here is the last quotation that I should like to give as showing the shadows that are falling not only in our own country but in the countries in the Far East, for which we in this Parliament have considerable responsibility. At the international labour conference in Geneva
last week, "The Times" of last Wednesday reports:
Representatives of the Governments of Pakistan, Ceylon and Japan today appealed at the international labour conference for more consideration of their mounting difficulties by the western countries. Mr. Malik, Pakistan Minister of Labour, said that stability in the advanced countries was achieved at the cost of the raw material producing countries, 'which have gone deeper in the abyss of poverty, from which mass discontent and the terrible forces that threaten the peace of the world are raising their heads'.
I ask my hon. Friend, therefore, what, if peace comes, as we all hope, and as we all want it to, are to be the economic effects in this country, and what plans have the Government to meet the problems that will arise?
There are men in our country and in America who believe that each country should "go it alone," and face problems on their own. I do not believe that that is possible. I believe that this country is tied irrevocably, as it were, to the American apron strings. In this country we have what I should like to call "the Beaverbrook—Bevanite axis "—a strange combination, but I believe that that axis, which is always talking about a third world force, of a Britain that could be, as it were, a balancing force between the Russians and the Americans, provides no solution for us.
My hon. Friend knows quite well the American economy consumes such a large proportion of the world's raw materials, and produces so much of the world's goods, that if there is a boom in America the whole world prospers; but if there is a slump in America the whole world will suffer. And it is because I fear that peace in Korea will, for a period, bring a slump in the American economy that will reflect itself in this country, that I am asking him for a statement that will reassure not only the business men of this country but the trade union leaders and those engaged in industry as a whole.
The "Economist" on 28th March published a remarkable article with a headline "If America Slumps." In that article, which I am sure my hon. Friend has read, it is stated:
… a recession of demand in America, even of the very low order of 2 or 3 per cent... would usher in an economic crisis that would reverberate round the world.
For example, the last time before the war when there was a slump in the American economy was in 1938—
In that year, the real value of America's gross national product fell by 4 per cent... and its money value fell by 6 per cent. The result was that the total value of American imports fell by 36 per cent., the value of its imports from Britain fell by 41 per cent. and from the overseas sterling area by 50 per cent.
That was the result of a 2–4 per cent. fall in American productivity. What would be the effect if there were anything like the slump that America had in 1929, when her output fell by about 40 per cent.? I put it to my hon. Friend that we have no hope of solving the problems that may arise as the result of a Korean peace unless, first and foremost, there is the closest of understanding, cooperation and working between the American economy and our own. We cannot hope to solve the problem by ourselves.
I want to give my hon. Friend four examples of where I think trouble could easily arise. Before the war American cotton was priced at 5d. a pound. In the Korean boom it shot up to 45d. a pound. Today it is back to 30d. Wool tops, in which Australia is so closely interested, were 25d. prewar and in the Korean boom period shot up to 348d. and are now back to 170d. Contrast this with the two commodities upon which our Colonial Empire so largely depends. Rubber, before the war, was 8d. a pound. It shot up to 73d. and it is now down to only 20d.
If there were any slackening in the demand for rubber, to what price would rubber sink? I am told that the rock-bottom average economic price for rubber is about 2s. a pound. It is selling today at only Is. 8d. So that if there is a falling off in the demand for rubber as the result of peace in Korea, and if no joint steps are taken by an Anglo-American board to support that price, there will be even lower wages paid in the Far East, more estates may have to close down, there will be more unemployment, and we are likely to lose in peace what we fought a war to avoid.
In the case of tin, before the war the price was £229 a ton. It shot up to £1,470. It is now back to £675. In the case of these two commodities the price of one is 2½ times the pre-war price and the other is three times the pre-war price. And if we remember that the value of sterling has fallen to one-third of its pre-war value, rubber is already lower than it should be, and tin is wobbling on the bottom price.
If, as the result of peace in Korea, the demand for these basic commodities for armament purposes slackens, then I can see such ruin in our overseas dependencies and in the economies of our friends in the Far East as would create tremendous political problems. Last year there was about 1,815,000 tons of rubber produced, and America consumed about 454,000 tons. But during the same year America consumed 807,000 tons of synthetic rubber. If America considered it economically necessary to consume more synthetic and less natural rubber the effect on the price of natural rubber would be considerable, and the effect on the rubber-producing areas for which we are responsible would be great.
I wish to know whether any agreements have been arrived at with America on these problems. Is discussion taking place now? Tin and rubber are our greatest dollar earners. The very solvency of sterling depends on the prices we obtain for those two commodities. It would be tragic if we waited until peace came and then started to discuss these problems. We have to face them now. A statement by this Government and by America that the problems which may arise are being faced now would give assurance to those who might be affected and help to minimise the slump which might come.
What agreement has been arrived at regarding stockpiling? Shall we continue to buy these strategic stockpiling materials when peace comes to Korea? Has any limit been set to the amount of stockpiling? I hope there will not be a kind of Korea demand in reverse, a competitive desire to sell on the part of America and ourselves. If that happens there will be the world's greatest economic and commercial slump.
Is there continuous discussions between the American Government and ourselves on these problems? When I was in the United States and Canada last year I asked these questions of leaders of Administrations in both countries, and was told that they were bridges which would be crossed when we arrived at them. I think we have arrived at them now, and I should like to have some assurance that we know how to cross them. What plans have been made for men in the engineering industry who will be temporarily unemployed when we switch from making guns to making prambulators and other things? It may take from six to 12 months to re-jig and re-tool the engineering works. Shall we find ourselves competing with America in the sale of peace-time commodities for neutral markets?
At the same time, when commodity markets will be so uncertain and when the engineering industry, upon which the prosperity of both countries depends so largely, will be in a state of flux, we shall be expecting the men who are serving in the Forces to be slowly released. What plans are being made to see that these men will have jobs to come back to? To leave it until the last moment would be a tragedy for them and the country.
I realise that these are great, overriding and difficult problems. I realise, too, that we can not solve the problems by ourselves. I realise fully that the best hope for us is to have as great as possible agreement with the American Government. I ask my hon. Friend if he can, at least, to make a statement that could go to the men whose jobs may be involved, to the men whose industries may be upset, and to the whole country, that when peace does come, as we all hope it will, that the problems it will bring have been studied beforehand and that the Government have measures to meet them. I hope that my hon. Friend will be able to give me some reassurance on this point.