I intended to come to that, but if the hon. Member wants to know what I should propose for 75 per cent., I would say 50 per cent. or preferably 25 per cent. and a bigger credit swing. I feel that the right hon. Gentleman must insist not only that the gold proportion must be reduced, but also that the amount of the swing, the amount of credit advanced by E.P.U., should be considerably larger than it is at the present time. I think the greater freedom of goods to move and the danger that there might be a temporary deficit for this country as a result of a sudden movement of particular commodities ought not to put this country in a more vulnerable position in respect of the payment of gold.
Indeed, the suggestion has been made, and I hope the Chancellor will keep an open mind on it, that there might be a central bank for the area, not only to extend credit and to carry out the extended credit duties of E.P.U., but perhaps to take positive investment action in depressed sectors of the free trade area. All are afraid that depressed areas within the free trade area might possibly drag the rest of the area down, and there is a lot to be said for the creation of a central bank or a central investment board to help some of these debtor areas, these depressed areas, by positive investment projects.
I emphasise that this is absolutely vital, otherwise—and I suspect that some people, not the Chancellor, may have this motive—any period of adverse balance might lead to pressures for policies of deflation involving unemployment in the United Kingdom or in other areas. If there is no system of credits and if there is a serious attack on our balance of payments position, I think the pressures for internal deflationary policies may become almost impossible to withstand. The Chancellor has on more than one occasion said what he thinks about pressing those deflationary policies too far. We have become only too familiar over the last year or two with the fact that once we start a policy of pushing interest rates up as a means of controlling the situation, what we have is not a flexible instrument but a ratchet which will go only one way. The effect of the increase is lost and then we have to impose a further increase with a further twist of the credit screwdriver. It would be extremely dangerous if we got into a position in which we had to rely even more than the Chancellor relies at present on deflationary means of preventing a balance of payments crisis.
Indeed, I will go further. I hope the Chancellor will tell us that policies of international full employment will underly the whole conception, that they will be written into the treaty and that specific agreements on the lines of those worked out by international agreement in 1949–50 will be part of the final arrangements that he hopes to see.
I come to another necessary safeguard. The Chancellor must preserve full freedom for all the policies necessary for the maintenance of full employment and full production in this country. If the right hon. Gentleman is just thinking of this scheme as a means of generalising over Western Europe the policies of Tory freedom under which this country is languishing, then he should go no further with it. He must reserve the right to introduce all the measures of economic planning which are needed for full employment and for expanding investment and expanding production. In particular I would emphasise the need for a Development Area policy.
There is no doubt that certain areas may be badly hit over a period of years as a result of what we are debating today. Therefore, it will be more necessary and not less necessary that the Government should have an effective policy for bringing employment, bringing factories, bringing industrial prosperity to areas that may suffer. I think the Government may go a little further in this. They may need special policies to help particular industries. I do not mean by subsidies. I mean by giving aid to help them get on to their feet again. The whole Development Area policy has been one of helping a sick area to become a development area. We may need a policy, I think, to help a sick industry to recover, especially one which is suffering from the draught of European competition. I hear an hon. Member mention carpets. I do not know whether that is an industry that the Chancellor would have in mind or not.
I gather, to come to my fourth condition, that the Chancellor is not proposing that there should be a free movement of labour within this area, but there is in many industries—and there is in the mind of the hon. Member for Kidderminster (Mr. Nabarro), I think—some apprehension about under-cutting by cheaper industries abroad. Therefore, parallel with the twelve to fifteen years' tariff process there should be positive action to improve labour standards, and especially to improve social security standards. I hope the Government will tell us they are going to use the full powers and the full facilities of the International Labour Office for this purpose during the twelve to fifteen years. I hope they are going to begin by making a reality of Article 2 of the Brussels Treaty, which is very relevant in this connection, but there should be included specifically in the agreement or treaty a provision relating to labour standards on the lines of Article 7 of the Draft Charter for the International Trade Organisation.
Fifth, since the purpose of this whole operation is a freer flow of goods, we have to recognise that the purpose would be utterly frustrated if we saw the emergence within Europe of international cartels or market-sharing arrangements. Therefore, I ask the Chancellor to tell us that he will press for a specific clause to be written into the treaty to prevent cartel action of this kind.
There are certain queries in the minds of many industries and one very difficult and knotty point about re-exports. As we know, some countries have liberalised their dollar raw material imports more than we have. If those countries are able to get cheaper dollar raw materials than we can, this country must be protected against their re-exporting those materials either in the form in which they are bought or in only a slightly processed form.