The hon. Member may think that there was a bigger flight to the dollar. As far as anybody knows what happens in these days—and it is all clouded in mystery—the big flight was to the Deutschmark. There may have been some flight to the dollar. The hon. Member says so. I do not think that he is right, but he may be. Even if he were right it would not affect my fundamental point, which is that there was nothing defective in the British economy which drove us to this high Bank Rate.
It is bad enough to have an economic crisis, but when we have to listen to sober lectures on economics, which are as devoid of logic as they are of humour, how can we have any honest prospect or confidence that the Government's measures will benefit the people?
The crisis was brought about either by a flight to the Deutschmark or, as the hon. Member says, by a flight to the dollar, and not because of anything that we were doing wrong. It was purely because the holders of sterling were taking up a speculative position.
The question is: what shall we do about it? Are we, because of the operations of speculators to the tune of a few hundred million pounds, to take a pessimistic view? Are we to be asked to mutilate permanently our own economy, which turns out thousands of millions of pounds each year in goods and services? Are we to call a halt to this expansion and reduce fundamental investment policies when economically, even under the present Government, we are doing extremely well?
There was some cause for pride. A Labour Government would have done much better, but the present Government were not doing too badly at all. We were going along fine and paying our way. We were not naughty boys importing too much and exporting very little, and expecting the world to keep us. As a matter of fact, this speculative exchange crisis came at a time when our figures were very good and we were doing extremely well, when we were showing the world that we were really stalwart chaps doing our jobs and not intending to live on anybody's backs, and it was not due to the shortcomings of the people of this country at all. It relates to a chronic uncertainty of the world in which we live.
Secondly, the real persons to be blamed are not the working class of this country, not the trade union movement of this country, but the Treasury and the highest direction of the Bank of England. First of all, in fairness it must be said that they are operating in very difficult circumstances, but what has happened is this. Before the war, the British Navy and British military power was enough to protect us in the world, and the £ sterling was matchless on its own in the world. But we all have to recognise that there have been a few changes. A political readjustment has taken place in this country, and we have to recognise that our political and military policies must be changed to fit our changed military and political position in the world.
That is why groups like the extreme wing of the "Suez group" are discredited now, not only in the Labour Party, but in the Conservative Party opposite. Their policies constantly collide with reality. What has not been adjusted to the same extent are our financial and economic policies in the modern world in relation to Britain's power in the world. This has not been done financially and economically to the same extent as it has been done politically. Though the "Suez group", politically, remain on the other side of the House—a rather sincere and nice minority—they have been utterly discredited politically and nobody will now allow them to collide with reality to the ruin of this country by pretending that we are still the power that we were before the war.
In the Treasury, where financial "Suez groupers" still hold the fort, when they collide with reality, because they will not grow up and realise that the £ in 1957 is not as strong as it was when they were boys, and is never likely to be, when the financial and economic "Suez group" at the Treasury and the Bank of England collide with reality, it is not so obvious to the ordinary people of this country that the damage is caused by the "Suez group" in the Bank of England and the Treasury, because the average man in this country does not understand economics. In fact, he knows practically as little about it as the Bank of England and the Treasury, though he is not so articulate as they. They get in first and say, "You are always asking for more wages, when you have got these social services and all these other things; you are responsible for all these difficulties", ignoring quite cheerfully the fact that this country, despite the social services, full employment and a rising standard of life, has managed to pay its way in the world after the most devastating war and the loss of all its overseas investments.
The "Suez group" at the Treasury are getting away on the ignorance of the ordinary people of this country, who are beginning to believe that these international crises affecting our £ are brought about by their own behaviour. I say that that is absolutely untrue. They are brought about because the international set-up is such as to encourage temporary waves of speculative selling of the £.
One cannot gear one's whole style of life and economy to the fact that at some time somebody will make a "bear" raid on the currency. If I were trying to gear my standard of life to the fact that somebody might panic my creditors, I would have to change in and out of flats every week because when my creditors panicked, I should not be able to afford my flat, my car and some of the friends I have. A temporary emotional crisis on the part of my creditors would induce in me catastrophic general changes in my permanent way of life. My friends, my car, my flat and my whole standard of life would go. That is what the Government are doing. They are saying that because momentary waves of international speculation may affect the sterling position, this crisis has come about.
I am not suggesting that it is not important and should not cause them great concern. I do not doubt that this is a ground for real anxiety but the Government must not allow their anxiety to drive them to make permanent changes in the economy of the country when it is basically sound, and send it backwards instead of forwards, which is where it was going, because in the long run we would be worse off even in relation to our international position.
Now we must return to the "Suez groupism" at the Bank of England. They believe basically that though things have changed a little since they were boys, they have not changed very much and that, with a little ingenuity on their part and a little discipline and loyalty on ours, sterling will be again w hat it was when they were boys. Every time that our reserves get stronger, they have their fling and they begin to disappear again. The first time that actually happened was the time of the American Loan of £1,000 million.
I know that the Americans insisted that we should agree to convertibility, but by the time it was due, and the right hon. Gentleman the Member for Battersea, North (Mr. Jay) will remember that I said this to him, not after but before the event, and many hon. Members of this House can claim the same—that this £1,000 million would go down the drain if we had convertibility. The reason why we did have convertibility was not that it was dishonourable to break the agreement with the Americans, because we could just as well have gone to our creditors and got out of the terms of the contract before bankruptcy as after bankrupting ourselves to prove our sincerity. The Treasury say "We could not help ourselves. We did not want convertibility; indeed, we fought against it." It is true that was what the American Government wanted, but if we had tried to show at the crucial time to the Americans that to insist on convertibility would be to send the money down the drain we would have been released. The Government were saying at the time that we were doing it because the Americans insisted, when what was happening was that we were throwing money out of the window because the Treasury believed we could succeed with convertibility.
Let me now deal with one thing that reflects great discredit on the Chancellor and his advisers—though he may know nothing about it, as I think he does. Indeed, it will reflect even more discredit on him if he really understands the situation. This is the question. The "Suez group" in the Treasury and the Bank of England have been talking about Britain's position as a nation which exports capital. They say we should go back to the time when they were boys when this country was exporting capital. They still believe that things are really the same or should be brought back to be the same as they were then, when we were exporting capital on a large scale.
Though I am not against certain particular specialised exports of capital, it is the most destructive nonsense to the British economy to say that we are a country which should be exporting capital today. This is megalomania. This is "Suez groupism" in a financial sphere. This country cannot afford the additional capital it needs for vital things such as internal communications like roads and railways upon which our whole economy will depend. We have quite insufficient capital for all the development we ought to make at home, but we have capital to spare for investment in Canadian oilfields. This is doing what the "Suez group" appeared to suggest—that we should export capital because we always have done and because it is a good thing to do in any case. We cannot afford to allow the speculator in this country to buy Canadian dollar stocks and invest money in all sorts of Canadian oil propositions, not only because they are highly speculative and the money is likely to go down the drain but because we have urgent need of the capital at home.
The £ sterling in the international market has lost more strength by the loss of those dollars, which could have been used to counter the short selling, than it has lost by any of the trade union demands made in recent times. If the Chancellor will continue to dissipate our reserves at the behest of the out-dated "Suez group" at the Treasury and the Bank of England then, of course, he will find himself beset from time to time by a selling crisis of sterling for which he has not the reserves.
The Chancellor of the Exchequer and the Prime Minister, and the Minister of Labour who has spoken in the debate today, are not regarded, I believe, by many people in this House as reactionary blimps. In different parts of their political careers both the Chancellor of the Exchequer and the Prime Minister have been responsible for many things of which they are entitled to be justly proud in moments of lively-mindedness and independence of thought. What dismays me more than anything at the present time is that in the middle of the panic brought about by the Treasury because of the situation of sterling in the international market it looks as if both right hon. Gentlemen have sold out on every decent, lively-minded and creative thought they ever had. It looks to me as if they have sold out to the kind of economic and financial fiction which resulted in consequences against which they were in violent protest before the war.
I cannot help thinking that for the Chancellor and the Prime Minister, who, after all, are regarded by many of us as bright, forward-looking individuals, although of a different political philosophy, to come to the point where they deliberately sabotage British industry, deliberately slash investment and where they exalt usury to the chief instrument of economic and financial planning—and it is not even good planning at that—is something to be deeply regretted.
I never hoped to see the day when the newspapers of this country would be so full of invitations to usury and where so much of the economy of the country revolved around it as at the present time. I do not know whether the Prime Minister is going to be proud that, having achieved by a number of accidental circumstances extreme power, he is now going to use it to support all that was stupid and all that was antedeluvian in financial and Tory thinking and against which he himself in his best moments before the war was in protest.
I beg right hon. Gentlemen opposite not to do this and not to throw away the good will of the trade union movement which, far from being justly accused and sneered about and propagandised against by every subtle hint which is intended to wound and damage it in the eyes of the people of this country, particularly by those who are the sore victims of the present financial process, is the most loyal, decent and patriotic trade union movement in the world and to which the people of the country owe a debt of gratitude. I beg the Prime Minister not to disown his own ideals and not to take us into a period of restrictive and backward policies, into the bad old days against which all his own best thinking was directed before the war.