Commonwealth and International Economic Problems

– in the House of Commons at 12:00 am on 2nd December 1958.

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3.5 p.m.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory):

I shall always regard it as a very great privilege to have had the opportunity of attending the Commonwealth Economic Conference at Montreal and I know that that view is shared by all my colleagues and all our advisers in the United Kingdom delegation. We spent two weeks at Montreal. Living and working together in that vast Queen Elizabeth hotel which is itself a striking symbol of modern technical development, we had an impression of what the Commonwealth can mean when practical problems are tackled in a spirit of good will and eagerness to help, a spirit appropriate to our great family of nations.

I should like to apologise to a number of hon. Members who heard me dilate on this matter at a meeting of the Commonwealth Parliamentary Association the other day. If I have to repeat myself, I am sure that they will understand. It is difficult, of course, to describe what one means exactly by this Commonwealth spirit. Hackneyed phrases come to one's lips and one instantly rejects them as inadequate, but hon. Members in all parts of the House have experienced this spirit at the Commonwealth Parliamentary Association conferences and on other occasions and will know very well what I mean.

I will attempt, anyhow, two negatives. There was no obsession whatever with anything like points of procedure or prepared positions. There was no horse-trading and no haggling, but quite the contrary and that, as hon. Members will agree, is in refreshing contrast to what goes on at many international meetings. The whole atmosphere was friendly, informal, intimate but businesslike. If one can respectfully say so of a meeting of one's colleagues, I think that it was generally agreed that it was what might be called a mature gathering. Discussions were held against a background of realism and of a knowledge of the practical limitations with which we are confronted in the world as it is.

Its most notable feature, I think, was that it was forward and outward looking. and hon. Members would agree that these two qualities are very desirable in any plans that we may make for the future. Also, whereas, on previous occasions, the emphasis at such a conference has been on independence, this time, and for the first time, the emphasis was on interdependence. I believe that that again is something which is very important and very encouraging.

The conference, of course, stemmed from the proposals which had been made by the Prime Minister of Canada, Mr. Diefenbaker, in 1957. It was at his initiative and at his invitation that the conference was to be held in Canada. Her Majesty's Government in the United Kingdom welcomed the proposal and cordially supported it. We felt that no more fitting rendezvous for such a conference at such a time could possibly be imagined than Canada, with her astounding record of progress and development.

Needless to say, the Canadian Government threw themselves into the organisation of the conference and the entertainment of the delegations with characteristic thoroughness and generosity. The Prime Minister of Canada addressed us at a Government banquet. The Minister of Finance, Mr. Donald Fleming, a friend of many of us in the House from past Parliamentary conferences and visits, presided over all our discussions with great skill and amiability in a manner which we felt contributed considerably to the results achieved.

Looking back, I think that Ministers from all countries will agree about the great value of the preparatory work done by officials from all the Commonwealth countries, and notably at the two preparatory meetings held in London under the chairmanship of Sir Roger Makins. So, Ministers were well briefed. and when the technical waters rose dangerously high round our necks we remitted the problems to our officials, confident that they would, as they almost invariably did, bring a solution to us with our orange juice and cereals at breakfast the next morning.

Hon. Members will agree, I am sure, that the existence of a band of senior civil servants and other experts, such as national bank governors, who have been meeting and working together over the past ten or twenty years and have got to know one another really well, is something of increasing value to the Commonwealth. I feel that strongly myself. After all, Ministers come and go, alas, but these men continue to hold positions of responsibility. We are well served today by the experience and the "know-how" of these persons, and much will depend for the future upon ensuring that there shall be a continuing supply of men of high calibre and quality.

The theme of the conference was expansion, as the Report made clear. An expanding Commonwealth is a dynamic partnership in an expanding world community, as I ventured to call it in the inaugural session. The work covered two broad, but closely related subjects: trade and payments, on the one hand, and development, on the other. I would like to say something shortly on each of those, though I shall leave most of the trade side to my right hon. Friend the President of the Board of Trade, who will speak later.

First, there was unanimous reaffirmation of the importance of sterling as the currency in which a large part—nearly half—of the trade of the world is done, and the paramount importance of keeping it strong and stable. Canada, as a dollar country herself, firmly subscribed to that view, just as firmly as the rest of us. On convertibility, the conference recalled and confirmed the decision of the Commonwealth Conference in 1952 that our ultimate aim should be to make sterling convertible, and that progress towards this objective should be as fast as economic circumstances permitted. Since 1952 a great deal of progress has been recorded there. Furthermore, it was accepted that the United Kingdom—because sterling is our own currency as well as being used for so much of the trade of the world—must be the judge of when economic circumstances permitted a move forward to be made.

The United Kingdom, as a result of our improved balance of payments position, had found it possible in July to take a further step forward in the relaxation of dollar restrictions, notably on chemicals, and at the conference my right hon. Friend the President of the Board of Trade announced further relaxations on most types of machinery, on newsprint and on canned salmon. Furthermore, he said that if all went well we hoped next year to start relaxations on a range of consumer goods and foodstuffs.

Those relaxations were well received in Canada and, later, outside the Commonwealth by the United States. It happened that our concession on canned salmon came at a very timely moment. I did not know it at the time, but apparently there is the biggest surplus of salmon above sales this season that possibly the Canadians have ever had, so this decision was extremely popular when the news arrived in British Columbia.

The objective of expanding trade brought us very quickly to the question of international liquidity and the size of the reserves on which world trade is being done. Hon. Members will remember that my right hon. Friend the Prime Minister has been active for a considerable time in stressing the importance of an adequate base for expanding world trade. So we strongly welcomed, as, indeed, did the whole of the Commonwealth, the initiative taken by President Eisenhower in August, when he brought this matter to the fore with practical proposals for the expansion of the resources of the International Bank and the International Monetary Fund.

Perhaps I might be allowed to digress there for a moment to consider the actions taken at New Delhi on this subject. The International Monetary Fund and the International Bank play, of course, a very big part in providing the resources on which we believe that world trade may be expanded. The Fund, by its consultations, advice and financial help, seeks to ensure that money shall be a help and not a hindrance to trade, and the International Bank supports the development of a country's resources on which further production and trade can be built.

Expansion, of course, means high levels not only of production and trade, but also inevitably of payments as well. With the best will in the world, and the wisest national policies, there will, nevertheless, be periods of strain and imbalance in the future when substantial and timely financial assistance to countries in temporary balance of payments difficulties will be needed if there are to be no setbacks. So the resources of the Fund must be sufficient to meet these claims and the Bank must be in a position to comply with increasing demands.

For these reasons, at the annual meetings of the Bank and the Fund at New Delhi, my Commonwealth colleagues and I supported an all-round increase in the Fund's quotas and, as we had agreed at Montreal, the United Kingdom suggested an increase of 50 per cent. We also advocated that the capital stock of the Bank should be doubled, although we expressed the hope that the Bank's operations should be managed, if possible, in a way which would enable this additional capital to remain uncalled. There was a considerable measure of agreement that the increases in the resources of these two international institutions were necessary, and the executive boards of both of them are now working on definite proposals. We hope very much that these institutions will find themselves with increased resources by the time of the next annual meeting.

Turning to trade, the background of our discussions on trade was the slight downturn in world trade, after a number of years of steady expansion, and the sharp drop in the export earnings of the commodity and food producing countries. We were all anxious to avoid measures which might adversely react on those countries and so deepen the fall. Although my right hon. Friend the President of the Board of Trade will he saying more on this matter, I would like to mention the main conclusions that we reached under the heading of trade.

First, there was reaffirmation of the importance of the role played by tariff preferences—that is to say, the importance of the rôle they have played, that they are playing and that we believe they will have to play in the future. This was not a mere formality. It was a significant and deliberate conclusion that we reached after considering up-to-date assessments of the way these preferences are working today. From time to time, adjustments reflecting changes in the scope and character of world trade will be needed. The adjustments made between the Australians and ourselves last year, and the recent agreement with New Zealand are examples.

Hon. Members will have seen the Canadian Government's offer to bind the rates of preferential duties on an important list of products of interest to the United Kingdom. This long-term assurance will be of value to our exporters who are making such great efforts to build up an increasing trade in the very important Canadian market, for it will give them confidence. Examples of products coming within that offer are motor cars, aircraft, tractors, and iron and steel goods. We can be assured of the continuance of the valuable preferential arrangements which we all agree to be an essential part of our system of economic relationships in the Commonwealth.

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

If Imperial Preference rates are so good, as the right hon. Gentleman suggests, why are the Government reducing instead of increasing them?

Mr. Amory:

The rates are not unilateral decisions by Her Majesty's Government in the United Kingdom. They are part of an agreement with other countries concerned.

I now turn to deal with stablisation schemes—and my speech is bound to be chopped into bits, since so many subjects were discussed and there is so little time to explain them to hon. Members. We had some useful discussions on the ways in which we might try to even out some of the severe fluctuations in commodity prices. We found ourselves in agreement that the best way of dealing with the problem of ensuring fair prices to producers was by concentrating our efforts on raising and holding high the level of inter-Commonwealth trade. We also agreed that there was no panacea which could be applied to all commodities, unfortunately, and that each had to be considered on its separate merits. It became clear to us that for most commodities, at any rate, price stabilisation agreements covering only the Commonwealth were not good enough, and that to be effective such agreements would have to include the main producers and consumers in other parts of the world. Apart from certain existing schemes where there are arrangements for reconsideration from time to time, the United Kingdom offered to organise studies into any specific commodity which any Commonwealth Government felt it would be useful to study. That is where that matter stands.

I now turn to the rather controversial subjects of agriculture and foodstuffs. We had to consider the effects of agricultural protectionism. These have many forms and involve distinct problems in a number of countries. All of us at once recognised our definite obligations, in one form or another, to our own producers. Those of us from the United Kingdom explained the reason for and the extent of our measures of support for our producers, and I believe that the explanations which we gave were understood by our colleagues. Some countries thought that the present G.A.T.T. rules were more effective for manufactures than for commodities and foodstuffs. It was agreed that the G.A.T.T. rules needed urgent consideration and that the subject should be raised and a study made of how the rules of G.A.T.T. in that respect could be strengthened.

My right hon. Friend the Paymaster-General gave an account of the negotiations on the European Free Trade Area, and our Commonwealth colleagues affirmed that an outward-looking European Free Trade Area would be conducive to an expansion of trade, and, therefore, welcome. On the other hand, they expressed concern about the effects in the opposite direction which might be achieved if only the present Common Market proposals came into being. They asked us to continue to keep them in close touch with the situation, and to consult them about negotiations, as we have been doing.

The important point which cropped up in our discussions on trade was the need of the underdeveloped countries to increase their export earnings. We all appreciated that we must try to avoid placing obstacles in the way of such exports, and there was a recognition that such exports provided difficulties for established industries in the importing countries. We agreed that, in such circumstances whenever possible, solutions between the industries themselves should be sought. This will undoubtedly prove to be a difficult matter in the future.

I want now to deal with development, a subject which was obviously of the very greatest interest to every Commonwealth country. As hon. Members can imagine, we were at once brought up against the sharp differences in the standards of living and stages of development of Commonwealth countries. Mr. Morarji Desai, the Indian Finance Minister—whom, incidentally, we were delighted to welcome in this country on his way to Canada—reminded us that the national income per head of the population in India was about £20 as against £400 in this country. The availability of capital in the quantities needed proved the limiting factor in this matter, as we had all realised it would.

Good will alone cannot create capital. The highly developed countries expressed a strong wish to continue to expand the already substantial help which they were giving to other Commonwealth countries. Britain, which is the only Commonwealth country which is a net overseas investor of capital, over recent years has devoted a large proportion of her resources to loans and investment in the Commonwealth. As was said in the Report, 70 per cent, of the new overseas investment of the Commonwealth has come from this country since the war.

There were two things which we thought it right to emphasise. The first was that any country which wanted to encourage long-term private investment should make sure that its climate was favourable to such long-term investment —and we all agreed that private investment must have or should have an important part in the total investment of most of these countries. The second was that if highly developed countries were to be in a position to help with large-scale investment and by loans, a prior requirement would be to ensure that our own economies were kept strong. There was ready acceptance by the wealthier countries of the Commonwealth that we could not be indifferent to the development of other countries. The Canadians offered a substantial increase in their Colombo Plan aid, and we announced a new policy of Commonwealth assistance loans, as we called them, to other independent countries in the Commonwealth.

Hon. Members will be aware that we recently announced our intention to make a loan of £38½ million to India, £28 million of which will be through the medium of Commonwealth assistance loans, and we expect shortly to sign the agreement for a loan of £10 million to the Pakistan Government. I hope that this type of assistance will be a substantial help to the recipient countries. The amount that we shall be able to lend must depend upon our economic position and on the circumstances of the borrowing country. We do not intend to lay down any rigid or fixed periods; these will depend upon the circumstances of each application. The rate of interest will be based upon the rates at which the United Kingdom Government themselves can borrow, plus a small management charge. These loans will be spent on United Kingdom exports, though not necessarily negotiated in relation to any particular contracts.

We also announced the intention to institute a new system of Exchequer loans to the Colonies, which will be made under an extension of the Colonial Development and Welfare Acts. Together with the Colonial Development Corporation, this increased capital which will be made available, will, I hope, prove of real help to the development of the countries concerned.

I should like to say a word about the work of the Commonwealth Development Finance Company—a company which has already played a useful part in channelling private funds to schemes of fruitful development. We discussed that company and its operation. Consideration is being given to a further expansion of the resources of the company through the participation of Commonwealth central banks and other official sources, and also a further contribution from the Bank of England. Those will be matters primarily for the company concerned, but the Government will be willing to help in any appropriate way that may be found useful.

The question of a possible Commonwealth bank was discussed. The issue was whether there would be a useful rôle for a new financial institution in the Commonwealth—a kind of development bank. The test we applied was the question whether such a new bit of machinery would lead to the availability of increased funds either from outside or inside the Commonwealth, without interference in the present activities or responsibilities either of Commonwealth Governments or existing international institutions. We all realised that creating a new bit of machinery was not quite the same thing as producing the funds. We had to bear in mind, again, that the United Kingdom is at present the only net overseas investing country in the Commonwealth, and we are already fully stretching our resources in overseas investment.

The general conclusion was that in existing circumstances we could not provide, with confidence, an affirmative answer to that question, but we agreed that further studies should be made after the decisions had been reached in the case of the expansion of the existing international institutions, and we are now making suggestions to our Commonwealth colleagues as to how such studies might be made, and seeking their views.

Before leaving the question of development, I would add that since the Montreal Conference Her Majesty's Government have decided on another practical step which will help. At a recent meeting of the Consultative Committee for the Colombo Plan my right hon. and gallant Friend the Minister of State for Foreign Affairs announced that the United Kingdom would make available a further £2 million for the technical assistance scheme. That means that our rate of expenditure will be almost doubled in four years' time.

I want to refer to three other rather imaginative decisions. The first was a decision on telecommunications. We decided unanimously, in principle, that a Commonwealth round-the-world coaxial telephone cable should be constructed. That is a long-term proposal, and many technical and financial problems remain. I hope that right hon. Gentlemen opposite will not ask me too much about the meaning of "coaxial". I understand that people are more and more anxious to ring each other up from all parts of the Commonwealth, and we decided that that was a very good thing, on the whole. Governments are now considering their attitude towards the scheme which has already been submitted to give effect to this proposal, which appealed very much to the mood of the conference.

Secondly, and most interesting, the question of education arose. That is a very valuable section of the Report of the conference, because educational training is of fundamental importance to developing countries. The proposals amounted to the institution of a new scheme of Commonwealth fellowships and scholarships which will eventually cater for 1,000 students. The United Kingdom undertook responsibility for half that number of places. It is encouraging to know that in the United Kingdom today we have more than three times the number of overseas students that we had six or seven years ago—and two-thirds of them come from the Commonwealth.

In fact, we are now allotting between 10 per cent. and 12 per cent. of our total places in universities and technical colleges to these overseas students. That means that, apart from the indirect contribution, through Government grants, towards the maintenance of these colleges and universities, the United Kingdom is also giving direct assistance to many of the students.

The emphasis was on the need to increase the resources and facilities for the teaching of English all over the Commonwealth, and this again fitted in very much with our views. The position is that an early conference will be called to discuss with education authorities and university authorities throughout the world what form this imaginative new plan can take.

Thirdly, we reached agreement on the ways of improving Commonwealth economic consultation. Our colleagues accepted the United Kingdom offer to provide a Commonwealth House in London to assist in reaching that objective. We decided to co-ordinate, under the name of the Commonwealth Economic Consultative Council, the present' economic consultation that takes place. At the highest level that Council will consist of meetings of Finance and Economic Ministers. Nothing higher than that can be envisaged—at any rate by Commonwealth Finance Ministers. Under that Council will be held meetings of senior officials, and we expect that those meetings will be even more frequent than they have been in the past.

We believe that consultation on economic matters must be a continuous process, and must take place at a number of levels. The Report of the conference lists a number of matters which might be placed under the umbrella of this Commonwealth Economic Consultative Council. Apart from the kind of meetings to which I have referred certain other matters arose which needed immediate consultation, such as the consideration of what revision of G.A.T.T. rules might be made, and further studies of the idea of a possible financial institution.

We shall continue to be well served by such bodies as the Commonwealth Liaison Committee, which meets regularly throughout the year to discuss matters of common concern, and by the Commonwealth statisticians, who meet from time to time to consider matters concerning Commonwealth balance of payments. I must also mention the Commonwealth Economic Committee. It was agreed to expand the services of that Committee and that new work, dealing with the progress of economic development and raw materials, should be undertaken. The Council will, as it were, incorporate all these bodies and any other bodies which may be set up.

I sometimes wonder whether people in this country, or in any Commonwealth country, realise how much consultation goes on. I believe that the institution of the Commonwealth Economic Consultative Council will help people to realise what is taking place and encourage them to make that consultation wider, more frequent and even more intimate than has been the case in the past. I ought to add that we did not envisage a permanent secretariat to this Council, as various committees of officials will prepare the work for the Council of Ministers.

As I have mentioned, we made the offer to our colleagues that in the United Kingdom we should provide a Commonwealth House at which all the meetings of these bodies convened in this country could be held. Such a House would also be used for matters other than economic. All the Commonwealth Governments welcomed our offer, and we are now considering how it can most worthily be implemented. I am not sure that the proposal for this co-ordination of our consultative activities would have been likely to receive approval at any previous conference, and I think that its acceptance is a symbol of recognition of the need which exists today for close and more continuous association between us on economic matters.

Photo of Mr James Johnson Mr James Johnson , Rugby

Does the right hon. Gentleman envisage a meeting of Commonwealth Parliamentarians in the same way as, for example, we have meetings of N.A.T.O. Parliamentarians?

Mr. Amory:

We did not get round to the Parliamentarians at this conference, but no doubt the Parliamentarians will get round to us and tell us what they think ought to be done.

I should say that action has been taken to follow up all these proposals, though it will be some time before a number of them will be implemented. I wish to add a tribute to the contributions made by the seven delegates from the Colonies. I am sure that my noble Friend the Minister of State for the Colonies will agree that they made most practical and distinguished contributions to our debates.

Such is the brief picture which I have to give to the House of what I believe were two highly encouraging conferences. Montreal brought to birth no spectacular changes in policy for the good reason, I think, that the representatives of the Commonwealth who assembled there found our existing policies were broadly sound and on the right lines. But what we did find—and we realised the need to direct our attention to this matter—was a need to work together so that those policies may be more fruitfully carried out.

We must never delude ourselves that in a family of nations—however harmonious may be our relations—including countries with such widely differing problems as are represented in our modern Commonwealth, we should ever find ourselves completely in agreement on our domestic economic policies, or even on our priorities. The great strength of these conferences, I think, is that although we recognised and understood the reasons for these differences of emphasis and approach, and accepted them, at the same time we resolved to work together to bring our individual policies into harmony for the strengthening of the whole family.

Every delegate went away convinced that the results had exceeded his expectations. All now turns on the actions of individual Commonwealth Governments in furtherance of the objects agreed on at Montreal. On behalf of Her Majesty's Government and the United Kingdom, I can say that we intend to exert ourselves to see that our actions accord with the spirit and the letter pf the agreements reached. I think we can feel assured that the Montreal Conference, and the still wider New Delhi Conference together substantially improved the prospects of achieving expansion in trade 'and in development, to the benefit of the Commonwealth and of the whole free world.

Photo of Mr Charles Royle Mr Charles Royle , Salford West

I did not wish to stop the flow of the right hon. Gentleman's thoughts, so I refrained from interrupting his speech. But he referred to consultations between this country and the Commonwealth about the Free Trade Area. May I ask whether any consideration was given to the possibility of a wider concept of a Free Trade Area which would embrace the Commonwealth and Western Europe?

Mr. Amory:

No. We talked broadly and generally on this subject, but I do not think that such a proposition was ever discussed; certainly not as an immediately practicable scheme.

4.18 p.m.

Photo of Mr Arthur Bottomley Mr Arthur Bottomley , Rochester and Chatham

Hon. Members on this side of the House wholeheartedly welcome this debate on Commonwealth affairs. Having heard the Chancellor of the Exchequer, we can understand why the Government were not anxious that such a debate should take place. It is a pleasure to follow the right hon. Gentleman, whom I at once acquit of being in any way responsible for taking up a great deal of the time of the House in discussing cars for electioneering and party advantage rather than matters affecting the Commonwealth.

By its very nature the Montreal Conference was bound to be a great conference. It was a conference where there were assembled delegates from 11 countries—representing 660 million people—with their economies in different stages of development. What a wonderful opportunity was afforded to do something striking, but this afternoon the Chancellor has revealed that that was not accomplished.

These regular Commonwealth conferences are something in which the Labour Party fervently believes. It was a Labour Government which started them. Since 1945, there have been 20 Commonwealth conferences. From 1931 until the outbreak of the last war, when there were great economic problems and threats of war which culminated in the Second World War, only four Commonwealth conferences were held. The Government cannot even claim credit for the conference which has just taken place. The Canadian Prime Minister suggested that it should be held. His suggestion followed another imaginative move which he made when he sent a large trade mission to this country to build up trade between the two countries.

With due modesty, I can say that I was ahead of him in that respect, because in a debate in the House in July, 1955, I urged the Government to send a strong delegation to Canada, under the leadership of Lord Beaverbrook, to press for trade with Canada. The Government turned that down. They are always too late and they do too little.

The Chancellor has told us that at the conference development and commodity fluctuations, trade and finance, education and telecommunications were discussed. During the conference the President of the Board of Trade made what was to appear a most spectacular liberalisation of dollar exports. But the right hon. Gentleman made no attempt to link that with the restrictions which the Canadians were putting on the importation of British woollen goods. He might have done something about that. The fear of Canadians who believe in a liberalised trading community is that not only did the President of the Board of Trade let down industrialists in this country, but he let the Canadians down, too. The fear that many people have is that what the Government intend to do is to make a dash towards convertibility. My right hon. Friend the Member for Douglas—

Photo of Mr Charles Royle Mr Charles Royle , Salford West

Is the Isle of Man within the Commonwealth?

Photo of Mr Arthur Bottomley Mr Arthur Bottomley , Rochester and Chatham

Very much so. My right hon. Friend the Member for Battersea, North (Mr. Jay) will deal more fully with this matter later.

Through the courtesy of the Under-Secretary of State for Commonwealth Relations I have had sent to me a very nice pictorial record of the Montreal Conference. In it are quotations from the delegates to the conference and also Press comments. I note that there is not a comment by the Deputy Prime Minister of Australia; I managed to get that for myself. He said: We believe in partnership, not cut-throat competition. I notice that there is no quotation from the Manchester Guardian. On 24th September, 1958, the Manchester Guardian, referring to Commonwealth aid, said: In themselves these are merely improvements in the mechanism of lending, and it does not follow that the scale of British investment in the Commonwealth will rise at all steeply. Those are things which ought to have been put in that book to give a correct impression of what was accomplished at Montreal.

The most important decision taken at the conference was to expand economic aid to Commonwealth countries, especially in Asia and Africa. I had the pleasure of hearing Vice-President Nixon, whom we welcomed to our country. He was talking about Africa and Asia and he said of these two continents: That is where the battle for the world will be won or lost in the economic areas of Asia and Africa. I met Vice-President Nixon myself last year, in the United States. I told some of my friends that on this subject he had the right ideas. So far as development in Asia and Africa is concerned, the main responsibility falls upon Her Majesty's Government and Her Majesty's Government in Canada. These are two of the largest industrialised and trading nations in the world.

Canada, it must be acknowledged, has promised to increase from 35 million dollars a year to 50 million dollars for three years her aid under the Commonwealth plan. She has also promised further aid to the West Indies. This is a practical way to help the underdeveloped countries. What have our own Government done? They promised to make cheap credits available by means of the Export Credits Guarantee Act to industry in the Commonwealth. So far as the Colonies are concerned, they will have to get it under the Colonial Development and Welfare Acts.

The Export Credit Guarantees Department is a vast insurance undertaking, and although it takes risks especially for the Commonwealth it does not take undue risks; it dare not, otherwise it would be in trouble with Parliament. So it is not possible in these developing economic areas of Asia or Africa, where great risks have to be taken, for the Export Credit Guarantees Department to do all that it might like to do.

Then we are told that the London money market is to be opened up more extensively to allow opportunities for Commonwealth development bodies to borrow money. Everything that has been done by the Government has been done to help their friends in the City and this is another move in that direction. The Government are to invite other Governments to help to make contributions, so the Chancellor has told us, to the Commonwealth Development Finance Company. This body was launched with a flourish of trumpets in 1953. It has an authorised capital of £15 million. It had power to borrow twice as much in the open market, but during the first four years of its existence it did not spend its £15 million.

Mr. Amory:

I do not think that the right hon. Gentleman really understands how these Commonwealth assistance loans are to be made. They are, in fact, Government-to-Government loans and they have nothing to do with the normal insurance operations of the Export Credit Guarantees Department. They are made under the Export Credits Guarantee Act, because that Act give the Governments power to make such loans.

Photo of Mr Arthur Bottomley Mr Arthur Bottomley , Rochester and Chatham

To this extent the Government are to be made responsible because of the risk. If there was no risk it would have been left to private enterprise.

The Commonwealth Development Finance Company, as I was saying, has not used in the first four years of its existence all the money that was made available to it. To the extent that it has used the money, it has spent substantially a good deal of it in the Union of South Africa and Southern Rhodesia. Why a Government-sponsored organisation should follow get-rich-quick merchants and tax dodgers I do not understand. Perhaps the President of the Board of Trade would tell us something about it tonight. The Government have given no signs of co-ordinating investment. This is what is really required in the present circumstances. If we are to strengthen the value of sterling that is the way that it should be done.

I should like to ask why more thought has not been given to the work of the Colonial Development Corporation. It is a body which has done very useful work. It can associate with private enterprise, it can work on its own, or it can work in association with colonial Governments in the development of backwood economic areas, but the Government seems to give very little support to it, in spite of the fact that time and time again both sides of the House have urged that the Colonial Development Corporation should be given greater opportunities to carry out schemes to develop the underdeveloped parts of the British Commonwealth.

The Chancellor, this afternoon, and the Colonial Secretary at the Conservative Party conference this year, laid greater stress on the Commonwealth Development Finance Company than on C.D.C. I gather from the Chancellor of the Exchequer that we are to enlarge the resources of the Commonwealth Development Finance Company. If this means an increase in equity capital for C.D.F.C., why do this and not allow the C.D.C. the same facilities?

The Colonial Development Corporation is expected to operate on a commercial basis and I say that it should be treated like a normal business and like the Commonwealth Development Finance Company is to be treated. C.D.C. is doing a remarkable job under difficult circumstances. It is having to finance overseas development at a higher rate of interest than it can carry. Many sponsors of very desirable projects cannot borrow the money because the interest rate is too high. The Government have reduced loan charges in many other spheres. Why do they keep the interest rate at 5¾ per cent. in the case of the Colonial Development Corporation? I would strongly urge the Chancellor to reconsider this matter and see whether more cannot be done in the way of enabling this worthwhile body to do much of this development work.

It is encouraging to find that under the Colonial Development and Welfare Acts opportunities will be provided for further expansion in the Colonies by means of Exchequer loans. I gather that in those cases the loan, if it is to be given—and in this I am in accord; certainly if it is to a subordinate body—is to come through the colonial Government. Once it has been agreed with the colonial Government, the development body in a Colony has to come to the private market and raise the money as best it can.

Those who are associated with local authorities know by bitter experience that that is not the best way to pay for developing public services. The Government are more keen on perpetuating the spirit of competition than of co-operation. Indeed, this was carried through at the conference of the World Bank and International Monetary Fund, held in Delhi. The United States delegation suggested a form of co-operative planning. They proposed the consideration of an International Development Association. The Chancellor himself poured cold water on the scheme. He said: If it emerges in concrete form we shall study it with care and interest. But we should be very careful about the resources and functions of any new bit of international machinery. This is not the way to encourage great enterprise. The Chancellor of the Exchequer must be warmer in giving support to the suggestions of one of the richest countries in the world.

The Commonwealth has tremendous resources. In part, it accounts for the world's greatest primary products. They include wool, jute, cocoa, tea, sisal, gold, nickel, manganese, asbestos, natural rubber, rice, oilseeds, tin, chrome, wheat, sugar, butter, wood pulp, bauxite, copper, lead, zinc, coal and uranium. It harnesses all those primary products to great manufacturing potential. The United Kingdom and Canada are in the first six of the great industrial nations of the world.

What could be done if we directed our attention to using the whole of these facilities for developing the Commonwealth? We were told by the Chancellor that more consideration is to be given to this matter by the establishment of a Commonwealth Economic Consultative Council. I listened to the Chancellor and I have studied the reports carefully, but I cannot see that the proposed council will do anything different from what the Economic Committee has done in the past.

Perhaps the right hon. Gentleman will tell us what kind of staff the proposed Council is to have. I believe that at present the staff numbers 45. Is it the intention that the Council will have an adequate staff to do its job, or will that job be left to the present 45? Perhaps we can have an answer to that question later.

The Government are carrying a tremendous responsibility in building up hopes in Commonwealth countries for aid. My view is that the Commonwealth will be sadly disappointed. We cannot help the Commonwealth unless we have a sound economy. [HON. MEMBERS: "Hear, hear."] I know that the Government will claim that we have a sound economy, but let me tell them that before the war that meant unemployment, limited imports, idle factories which did not require imported material, and unemployed workers and families who were not able to buy imported foodstuffs.

This is happening again. It is typical Tory policy. This will affect the economies of the primary producing nations of the Commonwealth, who are already suffering by falling commodity prices. The Government are misleading the Commonwealth by saying that greater aid can be given. That cannot be done unless we' use to the full all the production power of our country, which the Government are not doing.

Both at Delhi and Montreal, African and Asian countries, and Australia and New Zealand expressed their anxiety about the demand for and the fluctuations in price of food and raw materials generally. Their hopes for prosperity and development had been frustrated by sudden changes in demand and in prices. Mr. McEwan, the Deputy Prime Minister of Australia, said that we ought to have supported him more strongly. He refused to regard such fluctuations in the prices of primary products as inevitable. He said, "It is not good enough. We cannot be content with this."

Her Majesty's Government should be saying this, too, but they are not. When Mr. Diefenbaker, Prime Minister of Canada, was in London recently he said, "The opinion that I gather as I travel is that the Communist drive is designed to undermine the economic strength of the free world by under-trading and undercutting." Mr. Khrushchev has said, "Through trade we can destroy other Powers that are opposed to us."

Must the cold war be followed by trade war? Why should we not have war upon poverty? The ban on trade with Russia and China was kept on long after it was necessary. There was a case to be made out for the embargo at the time of the Korean War, but we kept things on the stop list which Russia and China would have bought and had to buy, but are now manufacturing for themselves. China is developing into an industrial country. There are great opportunities for the powers of East and West to join together and to make war on poverty. They could combine their resources to help the backward parts of the world.

At the moment there is great concern about the fall in prices of primary products. That will not continue when the increasing demand comes from people who are better fed and clothed. We shall then want all the raw materials we can get. The Russians and the Chinese know that as well as we do. I should like to see more being done to build up East-West trade. One way of ensuring stability of prices is by making long-term trade agreements, but the Government have destroyed them all but the Sugar Agreement. Sugar has been about the most stable of all our primary products. The best way of securing our objective is, therefore, by international agreements covering all the main producing and consuming countries. In that way we ensure proper safeguards for producer and consumer.

The conference agreed that at the meetings of the World Bank and of the International Monetary Fund, which were held subsequently in Delhi, they should proceed to expand their resources for reconstruction and development. I was glad to hear that the subscriptions to the World Bank were to be increased by 100 per cent., thus increasing the resources of the World Bank at a time when that is very necessary. It had very nearly reached the end of its borrowing powers. In the case of the International Monetary Fund an increase of 50 per cent. in the quota was necessary because the Fund had been eroded away by inflation.

I would repeat what the Chancellor of the Exchequer himself said in Montreal, when he referred to the expanding Commonwealth as a "dynamic partnership in an expanding world." Some Government supporters think that if we had Imperial Preference it would solve all our difficulties, but it is significant that the Chancellor said nothing about it this afternoon. [An HON. MEMBER: "He did."] He mentioned it, but what I mean by "saying something about it" is developing the subject and not merely mentioning it.

The right hon. Gentleman is true to form, because a past Chancellor of the Exchequer, following an earlier Commonwealth conference, said: I must say, in passing that the words Imperial Preference' are not altogether accepted on every side in the Commonwealth."—[OFFICIAL REPORT, 3rd February, 1953; Vol. 510, c. 1692.] Now—perhaps this is why the question was not developed—two of our older Commonwealth countries are cutting Imperial Preference. New Zealand has done it in the last few weeks in a way which has brought it down from 20 per cent. to less than 10 per cent. in most cases. Imperial Preference is not the answer. The answer is to be found in building up our own trading fully and effectively. The two Commonwealth countries to which I have made reference have found that we do not trade with them to the extent they require and have made agreements with Japan.

To see what is happening to Commonwealth trade we may take the figures for 1947 to 1950, when Commonwealth trade went up from 26 per cent. to 31 per cent. After seven years of Toryism it is now 1 per cent. lower. If we take inter-Commonwealth trade, the proportion of imports coming from inside the Commonwealth reached its highest level during the period of the Labour Government, and was 47 per cent. Last year, under the Conservative Government, it was 40 per cent.

If we take exports we find they follow a similar pattern. The proportion of exports from the Commonwealth going to Commonwealth countries in the period of the Labour Government was 50 per cent. and in 1957 it was 41 per cent. If we take United Kingdom trade with the rest of the Commonwealth we find that in the period of the Labour Government it was 47.4 per cent. and that in 1957 it was 46.5 per cent. Labour's policy has been to expand both inter-Commonwealth trade and trade between the Commonwealth and the rest of the world.

Mr. Amory:

Has the right hon. Member got the figures of actual levels of trade in the period of the Labour Government and the recent periods of the Conservative Government in inter-Commonwealth trade?

Photo of Mr Arthur Bottomley Mr Arthur Bottomley , Rochester and Chatham

My right hon. Friend will deal with that. [HON. MEMBERS: "Oh."] I do not dodge this; I am not like hon. Members opposite.

If we take world trade as a whole Commonwealth trade was increased during the period of the Labour Government. This has not happened under the present Government. It has always been the policy of the Labour Party to boost trade with the Commonwealth and the figures I have quoted have shown that that was being done. The policy of the Labour Party has always been to achieve stability in prices of raw materials upon which the viability and most Commonwealth countries depends. We constantly urge a greater financial commitment by the United Kingdom towards the furthering of plans for the economic development of the underdeveloped countries of the Commonwealth.

The Government give lip-service to these aims, particularly to the expansion of Commonwealth trade. We shall listen with interest to what the President of the Board of Trade has to say later. They profess to be the party of the Commonwealth. Their economic policies have not done a thing to strengthen the Commonwealth. At Montreal, nothing startling happened. In the booklet about the Montreal Conference there is a quotation from The Times leading article on 27th September, 1958, which has the heading, "A real success," but it does not include what The Times also said in its leading article about the accomplishments of the conference. The article said: … they are, broadly speaking, things which the individual Governments could and would have done by themselves without a conference. On previous occasions in the House I have stressed that we should look beyond short-term economic advantages in our dealings with the Commonwealth countries and regard our trade with them in social and political terms. For instance, a fall in the price of primary products might benefit this country for a time, but the consequences to the less-developed countries of the Commonwealth might well have violent and disturbing political results.

The countries of the Commonwealth have largely complementary economies and it is highly desirable to take advan- tage of that fact. I would not, of course, suggest neglecting our trade markets in America or Europe. I am a strong supporter of the European Free Trade Area. By a combination of the industrial might of Europe and the formidable resources of the Commonwealth we could end the destitution and poverty in the striken areas of the world. The Commonwealth will continue to change and develop. The economic pattern of each member will inevitably differ from the others, but we must do our utmost to strengthen our economic ties and to create new economic interests. This will be yet a further means of ensuring that the Commonwealth remains a great example of developing democracy and stable government. If we are to strengthen and expand our economic and financial links with the Commonwealth, that can be done only if we plan our own economy and guide our production towards the Commonwealth countries.

To rely on a Budget and the Bank rate is not enough, particularly if the Budget is produced merely to win votes at an election. That can damage not only our own economy, but the economy of the Commonwealth, also. The clumsy use of the Bank rate, with its unselective alternatives of squeeze and expansion, does not provide sufficient gears in our highly complex economy. As the Chancellor said, we require an expanding Commonwealth in an expanding world. I say to the Government: why do they not have a summit conference to deal with these matters?

A summit conference on the subject of the hydrogen bomb is always being demanded. So long as the bomb is in the hands of the great Powers it is unlikely that it will ever be used, because there is the knowledge that if it were used by one of them all would be destroyed. Yet every day we are allowing hundreds of thousands of people to die and not doing anything about it. Why not a summit conference to deal with the resources of the world, the feeding and sustaining of these people? That is the kind of bold, imaginative leadership which should be given.

We on this side of the House regard the Commonwealth as our natural home, economically as well as politically. It must be obvious to everyone by now that the day in which the 50 million people living in these islands could play an arbitrary, independent rôle in world economics is long since past. The livelihood of our people, the health of our society, and the future influence of Britain depend on our association with some wider, larger community. This must surely be in the Commonwealth. It is here that we find our natural and closest friends, people who have built up their democratic structures on the same lines as ours, people who believe in the same principle of life as we do.

What is more, we have a common interest and common responsibilities. We have within our Commonwealth millions of people living in much poorer circumstances than those known in this country for many years past. They are not only our responsibility; they are also our potential customers. Self-interest and ideology can go hand in hand. We do not for a moment suggest that the Commonwealth should become a self-sufficient, exclusive community. In any case, that is impossible in the present world, but we do say that we can find here in the new expanding, developing Commonwealth a first priority for our economic interests.

It is for these reasons that we regard with grave concern the damage being done to the Commonwealth economy by the policy of Her Majesty's Government. The steep decline in inter-Commonwealth trade is loosening the ties which bind our free and equal nations together. The failure to stabilise commodity prices is impoverishing millions of our fellow Commonwealth citizens and depriving them of the ability to buy our goods. The refusal to allocate loans where they are so gravely needed in Commonwealth countries is now forcing increasing numbers of Commonwealth States to look elsewhere.

We have always said, and we repeat, that the development of this new, multiracial, free and equal community bestriding the five continents of the world can be the vital influence in our search for a peaceful world. If can become so only if we match our pretensions by practice. It is the measure of the failure of the Government that both politically and economically they have endangered the mutual confidence on which the Commonwealth rests. We shall take the first opportunity of revitalising this great community by deeds as well as words.

4.50 p.m.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

I always think it deplorable when an attempt is made to bring party acrimony into Commonwealth affairs, even when the smear of bitterness is spread very thinly over the benevolent exterior of the right hon. Member for Rochester and Chatham (Mr. Bottomley). He must realise that when he criticises the results of the Montreal Conference he is not merely criticising the decisions of a Government which it is his function to oppose, but also the deliberations and decisions of the 11 constituent members of the Montreal Conference. I have great admiration for the right hon. Gentleman. and I wish that he had not made some of the remarks which he made in his speech.

I congratulate the Government on what they have achieved at the Montreal Conference, and I congratulate especially my right hon. Friend the Chancellor of the Exchequer on the friendly family spirit which he managed to create at Montreal, chiefly, I believe, through his rather disarming and unspectacular presentation of difficult problems. I believe that we have made some progress and that we have laid the foundations upon which, if we have the will and the energy, we can build an expanding Commonwealth.

There were, however, difficulties which the Montreal Conference faced. In my view, it was suffering under the handicap of being sandwiched between the Washington talks and the New Delhi conference, and there was a tendency to keep looking over one's shoulder and to see if one were keeping in step with Washington. Unlike the right hon. Member for Rochester and Chatham, I found the theme of the conference—an expanding Commonwealth in an expanding world—rather difficult to understand. If the Communist world is to expand its trade by under-pricing and under-trading how can the Commonwealth expand? Again, if we have a discriminatory organisation like the Common market or the United States Surplus Disposal Board continuing unchecked, and if the Commonwealth adheres to the no new-preference rule in G.A.T.T., how can the Commonwealth expand?

I believe that we have to take serious note of the decline in the Commonwealth share of world trade and also in the United Kingdom share of Commonwealth trade.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

It has been going on for a long time.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

I agree that it has been going on for a long time. Broadly speaking, it has been going on ever since this country subscribed to the General Agreement on Tariffs and Trade under the Labour Government, although there are other factors.

Let me deal first of all with that, and especially with the recent figures published in the Trade Returns. There has been a decline generally in our trade, comparing the October figures with those of last year, but if we analyse that decline we see that the Commonwealth share of our imports declined by 50 per cent, more than the foreign countries' share of our imports. That is a factor which we in this country must tackle.

New Zealand, one of the most loyal members of the Commonwealth, has had to take the very drastic step of reducing our preferences. By and large it is halving the preference on most goods, not, as the right hon. Gentleman said, a reduction below half; it is a reduction below half in some sectors but in most sectors it is a half. This step has been taken because New Zealand has been finding it more and more difficult to get the advantage of Imperial Preferences in their trade with this country.

The Times put it very clearly in its leading article on 26th November, when it said: The import duty preferences given by the United Kingdom to the primary products of Australia and New Zealand, being in specific terms of money related to quantity, have had their true value seriously eroded by universal inflation, and they cannot be increased as long as the General Agreement on Tariffs and Trade stands. This is a fact which this country must now realise. If we are to get closer to the Commonwealth countries in trade, then we must look again at our inability to discriminate further by making the Imperial Preferences up to date instead of having them linked by specific preferences to an unreal standard.

The Times went on to make a statement which I think not worthy of it, be- cause if The Times had taken the trouble to check it the statement would have been seen to be untrue. The leading article said that New Zealand had to take this action because British agricultural policy has restricted British food imports much below the level which might reasonably have been foreseen twenty-five years ago. I think it is important that that statement, which is often bandied about even by Commonwealth Members of Parliament and Commonwealth Ministers, should be checked by the figures. If we consider the imports of the four principal agricultural products which we took from New Zealand last year and compare them with those for 1938, which was the last full pre-war year, we find that we were taking very nearly double the amount of butter which we took in 1938.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

In quantity; it was 1½ million cwt. in 1938 and 2·9 million cwt. in 1957. In mutton and lamb we were taking 30 per cent. more than in 1938, and in apples and cheese we were taking the same quantity. I think this makes it clear that British agricultural policy has not interfered at all with our link with our friends and cousins in New Zealand.

The other factor, apart from the G.A.T.T., is that there has been a serious decline in commodity prices. I believe that to be particularly due to the very large carry-over of stocks built up throughout the world. The figures for wheat show that the carry-over surplus is now five times what it was pre-war. For coarse grain it is twice what it was in 1952, for butter it is twice what it was in 1952 and for cheese it is twenty-eight times what it was in 1952. These large surpluses are making it very difficult for the primary producing countries, such as those of the Commonwealth, to get rid of their annual crops.

Looking at the results of the Montreal Conference, I have been disappointed that earlier action has not been taken to deal with stabilising the price of primary commodities and to do what I mentioned in a speech in the House on 28th April—to move the food into the hungry bellies in the Commonwealth. I believe that that must be our main task, and I was encouraged to see that in a speech last week Mr. Nixon made exactly the same point. These huge surpluses have been built up, and there are other surpluses of which I will talk later, which will have drastic effects. It is therefore important that we should do more than is suggested in paragraph 44 of the White Paper—examine the problems on a commodity by commodity basis. I gather from Mr. Diefenbaker's speech at the Albert Hall that Canada proposed a food bank plan, and I should like my right hon. Friend to tell us as far as he can, without any breach of secrecy, the full nature of that plan and what difficulties there may be in putting it into effect.

The Commonwealth's present and most important task is to demonstrate our ability to shift the surplus commodities to where they are needed; to take off the market surpluses that are not at present required and, generally, to raise the purchasing power of the less developed countries. I believe that to be the major rôle of the Commonwealth. We are a companionship and a partnership of primary-producing countries, and within our territories we have so many millions of people who are hungry and require to be brought up to a good standard of living and nourishment.

There is another factor of which I am very conscious. It is no good the right hon. Gentleman the Member for Rochester and Chatham thinking that either he or this country has the power to prevent the cold war developing into a trade war. I have recently returned from a three-week visit to the Far East. I speak now for myself, but I hope that my other colleagues who accompanied me on that visit will give their own views.

Wherever I went, whether it was to Hong Kong or to Ceylon, I found great evidence of conserted action on the part of the Chinese Communists and the Soviet Government to break the economy of the free world by under-pricing in an economic war. Perhaps I may be permitted to give the House just one or two illustrations of this.

Taking, first, surplus commodities, I see that Richard Hughes, in the Sunday Times states that this year China has a surplus of 15 million tons of rice. According to my calculations that makes the total rice surplus figure about 18 times what it was in 1952. There is every evidence that Communist China will use that rice surplus to break the economy of the rice-producing countries.

Again, when we were in Hong Kong, we saw that the fishermen were unable to put out to sea to catch their fish because of their fear of Chinese gunboats; and it was a fact that the Chinese were under-selling them in their own markets. We saw that the pig farmers in the new territories of Hong Kong were having their livelihood demolished by imports of Chinese pigs which were being sold at well below the cost of production. We found that Hong Kong textile workers were losing their markets to Communist China, especially the Indonesian markets, as a result of under-pricing.

In this House we very often hear of Lancashire's fears of Hong Kong. I can assure Lancashire and the free world that they have and will have much more to fear from Communist China's under-pricing in all the textile markets of Europe and elsewhere.

Those are the facts in Hong Kong, and perhaps I can now give an illustration from Ceylon. There we found that Ceylon was losing her market for tea because Communist China was exporting black tea to Canada and was capturing the Canadian market by under-pricing.

What we have to realise is that price has no meaning at all to the Communists when they are waging an economic war. Therefore, by under-pricing and under-trading they can break any market, unless we have some strategy to defeat their object.

The right hon. Gentleman was perfectly right when he said that, on the evidence of the Paley Report, everything may eventually become all right, but before that the Commonwealth primary-producing countries will decline and go back. That is the quick object of the Communists in their economic war; not to ensure that eventually all prices will be low, but that having broken the prices in the Commonwealth countries, the Communists themselves will later be able to raise the prices.

I feel very strongly on this. We really must get our hands free of the G.A.T.T. so that we can meet the Communist challenge in this economic warfare. I am very grateful to Her Majesty's Government for having, as I believe, taken a step forward by the creation of the Commonwealth Economic Consultative Council. As I read paragraph 84—and I hope that I am right—that Consultative Council is something very different from the Commonwealth Economic Committee, which was mostly concerned with the creation of statistics.

As I see it, this new council is a means by which matters of policy between Commonwealth countries will be considered and exchanged, first, at senior civil servant level, and then at the very high level of Finance Ministers. That is very different from the work done, valuable though it was, but at rather a low level, by the Commonwealth Economic Committee. My only worry arose when my right hon. Friend the Chancellor said that he did not envisage any permanent secretariat for the Consultative Council, and I hope that my right hon. Friend the President of the Board of Trade will expand a little on that when he winds up this debate.

I see this as a method by which we can get the machinery going to find out what is happening in all the Commonwealth territories where living standards are being attacked by imports at low level prices from Soviet Russia and Communist China. All that information has then to be sent to the various Commonwealth countries, and then the Commonwealth Ministers must be gathered together. Surely a secretariat is necessary for that. I, and others, have pressed for many years, both here and outside, for a Commonwealth economic secretariat, but I feel that this other secretariat is, perhaps, better than that which we had advocated in the past.

We also have great need for more consultation between Commonwealth agriculture Ministers; and for a Commonwealth agricultural policy. I have already mentioned the rather misleading allusion to our position vis-à-vis New Zealand that has appeared in The Times. There is far too much misunderstanding on this subject. Further, I believe that the farmers throughout the Commonwealth should be working together in an orderly manner to fulfil the needs of the Commonwealth and to secure that food should go, as I have said, to the hungry bellies. For that reason, I believe that what we should have is a Commonwealth agricultural consultative council, whose function it should be to work out, in due course, a Commonwealth agricultural policy.

I should like to add just a word on the other side of the problem—the need for capital. We all know what Montreal has done by making Commonwealth assistance loans available from Exchequer funds. That is a step forward. I myself feel that it is no good merely thinking that we can finance the Commonwealth through the Colonial Development Council, as the right hon. Gentleman the Member for Rochester and Chatham rather naively suggested, or, indeed, that the good work which is being done by the Commonwealth Development Finance Corporation is sufficient to do all the vital work of providing capital for development.

I have always believed that we should have a new Commonwealth financial institution. It was my right hon. Friend the Prime Minister who made the proposition that there should be a new Commonwealth financial institution. In his speech at the Albert Hall, Mr. Diefenbaker said—I was abroad at the time, but I read his speech later—that, at Montreal, he had supported the Prime Minister's idea of a new financial institution for the Commonwealth and had said that, in his view, he thought that would not conflict with the International Bank or the International Monetary Fund.

If this is so, and we have two of the greatest leaders of the Commonwealth advocating a new financial institution, it is somewhat disappointing to find, in paragraph 69 of the White Paper, that the idea had been put in cold storage until after the New Delhi meeting. It is even more discouraging to hear my right hon. Friend the Chancellor of the Exchequer today say how great were the difficulties in doing anything about establishing this Commonwealth Development Bank.

I appreciate some of the difficulties, and I hope that my right hon. Friend the President of the Board of Trade will expatiate on them in his winding up. Of course, I can readily understand that the International Bank, in so far as it has a monopoly in. international lending, will not welcome any competition. My personal belief, however, is that, if we did have a Commonwealth development bank, there would be many non-Commonwealth countries, such as Western Germany and Switzerland, which would be willing to make contributions to the bank although they would not make contributions to the economies of individual Commonwealth countries. In other words, they would welcome the use of that a venue for their capital, backed by the Commonwealth and, may I add, run by the Commonwealth. I believe also that much personal savings in many Commonwealth countries would be made available to a Commonwealth financial institution. People would choose that channel rather than invest the money in outlets for capital in their own countries. I hope that we shall have more reasons than we have hitherto been given to explain why the very imaginative proposal of my right hon. Friend the Prime Minister, supported as it was by the Prime Minister of Canada, has, so far, had so little success.

In general, I believe that much valuable work has been done at Montreal, but I believe that very much more remains to be done. If the struggle between the free world and the Communist world is to extend further into economics than it has extended already, then we must realise teat the Commonwealth is the most vulnerable sector. We must, with our Commonwealth partners, prepare a strategy and plan against that economic aggression. We can show the world that the Commonwealth partnership is the answer to Communism. Let us, therefore. hon. and right hon. Members on all sides of the House together, do our best, without bickering, to make the partnership an effective one and build upon the foundations laid at Montreal.

5.15 p.m.

Photo of Mr Hervey Rhodes Mr Hervey Rhodes , Ashton-under-Lyne

I am proud to follow the right hon. Gentleman the Member for Thirsk and Malton (Mr. Turton). I followed him round the Far East for many weeks, and my regard for him increased as each day passed. The right hon. Gentleman did a splendid job when he led the all-party delegation and I am glad to have this opportunity of saying that to him publicly in the House and to follow him in this debate.

The right hon. Gentleman made a number of valuable points—he seems to have taken away half my speech—and to two of his points I particularly wish to refer. The first relates to the Commonwealth Bank. There is no doubt that the idea of the Commonwealth Bank was welcomed as an imaginative move. Equally, there is no doubt that it was bogged down because the borrowers might have a lot to do with the lending of the money. Perhaps it would be better to put it on a slightly broader basis and bring in people such as the Germans, who would surely co-operate in such an endeavour, and make a better balance as time goes on. Also, as the right hon. Gentleman suggested, the Swiss might be influenced to take part.

Talking about these things will not do much. We must have some real action on the part of everybody in the free world unless our system is to disintegrate altogether. We are caught at an unfortunate time because, in many cases, our partners in the Commonwealth are inexperienced in taking over their own Government. Not only are they caught in the throes of economic difficulties, but they are caught also in the throes of administrative difficulties. We ought to be very patient with them and very eager to implement, by every means at our disposal—ignoring what we may sometimes regard as shortcomings on the part of some members of the Commonwealth—plans and schemes to help in a really constructive way.

I am disappointed, as is the right hon. Gentleman the Member for Thirsk and Malton, that no secretariat is to be set up to support the Commonwealth Economic Conzultative Council. I am afraid that the idea will go out that we do not attach sufficient importance to the problems facing the Commonwealth. I recommend the Ministers concerned to take note of the speech of the right hon. Member for Thirsk and Malton and think again about what we can do because, when all is said and done, most of the initiative and enterprise in this matter will have to spring from us.

Last time we debated this subject I referred to the changing pattern in Commonwealth trade and world trade, but until I went to the Far East I had no idea of the speed at which it was changing. I have come to the conclusion that anyone who is talking about the Far East and is six months away from the subject, does not know what he is talking about. If my hon. Friend the Member for Farnworth (Mr. Thornton), who has just returned from the Far East, were to catch Mr. Speaker's eye today he would bear out my statement that events are moving at lightning speed.

In the last 12 months we have seen a decline in the price of commodities. It has been estimated that the value of all economic aid during the last 12 months from wealthier members of the free world to those who are poor has been cancelled out by the reduction in commodity prices. Surely, if we have any wit, it is time for us to start to think in terms of a stabilisation programme, having in mind that people want to stabilise not when prices are going up but when they are going down. If we exercised a little native wit at the present time, it might be an opportunity to start the discussions right now so that there will be no question of motives being under suspicion. Manufacturing nations and primary producing nations are equally effected as things stand at the moment.

The hon. Member for Preston, South (Mr. Green) and I made a pre-delegation visit under our own steam to Japan, feeling that by going to Japan first we might be able to get a view about what was happening in Hong Kong and other parts of the Far East in an oblique way. We were right. We were well received in Japan, where we saw the politicians, the industrialists and others. Two or three problems were paramount in the minds of the Japanese. One was the question of trade with China and another was the question of the police Bill, an internal matter. I would warn hon. Members about leading people to believe that there is an enormous future for every sort of industry in this country simply by trading more with China. I utter this warning because it is only by experience that one finds out these things. Only a moment ago I said that if one were speaking six months away from a situation as fluid as that in the Far East at present one was out of date. It is particularly so with this subject.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

I take it that my hon. Friend is not losing sight of the fact that the Asquith Machine Tool Corporation, Ltd. and the Brown Corporation, Ltd. have received a very big order from there.

Photo of Mr Hervey Rhodes Mr Hervey Rhodes , Ashton-under-Lyne

I am not losing sight of that and not belittling it. One cannot make a generalisation which will fit every circumstance. That is what we are often in danger of doing.

The politicians in Japan, just as the politicians here might be, were enthusiastic and said, "Yes, trade with China", as it sounded all right to their constituents; but the industrialists and the others were not so sure. The engineers said to us, "Do you see that machine tool? It is a product of our latest ideas. Do you think we shall sell it to China? If we do, it will come back to us in six months' time at two-thirds of the price at which we can make it." The makers of conventional machines such as ring frames said "Yes, we would supply the machines to China, but they do not want these. Anybody can make them. The Chinese can make them."

The makers of consumer goods said "No, there is not much hope for us. Have you heard what has happened?" We had not heard much about it. I remember the hon. Member for Farnworth sounding a warning months ago about the export trade potential in China, but when one is listening to someone talking in this House one does not always take all that notice of it at the time. But there are times when one has to take notice, especially when someone knows what he is talking about and has perhaps seen things at close quarters.

As I was saying, the makers of consumer goods asked "Have you heard what has happened? We have lost all our orders for cotton goods in Indonesia. The Chinese have taken a contract for 60 million metres payable in ten years at 2½ per cent. interest." Let hon. Members wrap that up and take it home with them. Let the E.C.G.D. have a go at competing with that; it will be very busy.

The difficulty with a lot of these matters is that strategic necessity gets mixed up with what is either good for the Commonwealth or for us. I think that we have to do a bit of clear thinking along with our major ally. If we do not, we shall tread on each other's toes for many years to come.

I should like to give one instance. The amount of trade during the last 18 months between Australia and Japan has increased tremendously. Complaint has been made that trade within the Commonwealth is decreasing, and this is an opportunity to study what one of the principal reasons may be. Wool has gone up as an import into Japan and has gone down as an import here. The reason is not difficult to see. If Japan has to be kept sweet: and has to be kept in the position of a supporter of the free world, it means that she has to be given some trade somewhere if she cannot get it in China.

Photo of Mr Hervey Rhodes Mr Hervey Rhodes , Ashton-under-Lyne

Precisely. Let me make my speech in my own way. The coincidences on this problem are too obvious. When Japan got another consumer goods industry to build up, in wool, the basis upon which the quotas for woollen and worsted goods into the United States were altered at one and the same time. I say definitely, knowing this business, that the incidence of trade with America in woollen and worsted goods is loaded in favour of Japan. If that is done for the purpose of strategic necessity, we are muddling two issues and we have to get down to the problem on the basis of a solution which will keep us strong even if we have to make the sacrifices as we go along. Free world trade should not be carried on on this sort of basis.

Japan is absolutely bewildered at the moment. If Japan's rôle is as an offshore island, the demands that will be made to keep her sweet will be even greater than those which have been made in the past, and conventional exports to America and other places will be even larger. Unless world trade increases in proportion to the size of that difference in pattern, we shall be the losers. The implications of that prospect must be considered.

The Japanese complained about United States support prices. Many people in the free world have complained about United States support prices. It is nothing new. I have heard it for many years from my constituents. But here it was coming from Japan—another little window opening on to a section of international trade of which we should take note. China is emerging as one of the largest producers of raw cotton in the world. That being so, and having a totalitarian régime, it is able to dictate what price it charges for cotton to its manufacturers.

The Japanese say, "Is it not about time that the two-price system of the Americans went, so that we can at least start on the same kind of adequate basis as our neighbours in China? "Japan showed us that the bad situation in the cotton industry is not confined to one part of the world. The problem is worldwide, and everybody is experiencing it, unless it is a place like China, which is prepared to give the stuff away and where there is no real value in wages, or a place like Hong Kong which can take advantage of very cheap labour.

The Japanese Government has put seals on 30 per cent. of her machines in the cotton industry. The hon. Member for Preston, South and myself went through the best cotton factory in Japan. If ever there was a place for automation, that was it. It was a factory that had been designed and built for a particular object—namely, low running costs in terms of personnel. In that factory there were 100 carding machines to one person. Yet that factory, with all its advantages in terms of machines, was running on the basis of only 70 per cent.

We eventually reached Hong Kong. as I have eventually reached Hong Kong in this speech, and it is rather ashes in my mouth because I shall have such a lot to say and I do not want to go on for too long. I thought that the people in Hong Kong were unduly defensive. I thought that they were making a defence of their industrialisation which I do not think was necessary. Industrialisation occurs very often by fortuitous circumstances. In Hong Kong's case it was the result of the falling off of the entrepôt trade, and the amount of capital which was made available. There was cheap labour available in Hong Kong and know-how was available in no uncertain terms through the immigrants from Shanghai. They are the most meticulous, mathematical and brilliant managers that I have had the pleasure to meet. We must not forget that they were the ones who left Shanghai, where many thousands of similar brains are working on the instructions of the Chinese Communist authorities.

I thought that some factories in Hong Kong were dreadful; I thought that some places were first-class. In previous debates in the House, I have expressed myself very strongly about those who run the factories, but I should like to say that with their drive, virility, energy and know-how they have no need whatever to exploit anybody. They can get along very well without exploitation and without the degrading things which have been going on in Hong Kong, which have been so ably dealt with before in this House by my hon. Friend the Member for Farnworth. If those in Hong Kong would only realise that they can do better by raising the standard of their workers, from the point of view of hours and wages, to the standard of the workers in Asia—or even better than that—they will do a tremendous service to labour canditions in Asia generally and will also remove to a great degree the stigma that attaches to them now.

Hong Kong, too, has this Chinese competition complex. The bathroom tiles which have been exported from Hong Kong in the past are now being undercut by the Chinese. Red China is sending bathroom tiles to Germany at 10½ cents and to Canada at as low as 7 cents against the Hong Kong price of 16 cents. The competition applies even to the humble tomato or potato and when it comes to shirts it is more staggering still.

I bought three shirts, one in Japan and two in Hong Kong, for samples. The one from Tokyo was 26s., the one made in Hong Kong was 15s. and the one made in China was 5s. 3d.

Photo of Mr Hervey Rhodes Mr Hervey Rhodes , Ashton-under-Lyne

I was about to add that they were near enough to be comparable. That applies to everything. A few moments ago, we were talking about sugar. The Chinese are undercutting all the sugar that comes into Hong Kong. They are putting it up in packets and selling it freely at low prices in the Far East.

During the anguish that Lancashire is undergoing, we should seriously consider whether the pattern that is emerging will be one which sets a standard for other consumer goods industries which will be similarly placed in another few months' time.

Let the Government think very carefully on this. If the home trade of Lancashire is, say, 2,000 million sq. yds. and Hong Kong is allowed to send in, for the sake of argument, 130 million sq. yds., what will happen when the new mill which is being put up by Communist China in Ceylon comes into production and Ceylon says, "Now, we want to enter the British market, too. You have allowed Hong Kong to come in." Shall we allow the Ceylonese to come in, too? We might agree if they can compete, but in time there will be some heartburning between individual members of the Commonwealth as well as in Lancashire if this problem is not settled as a principle before long.

I ask the Government to get down to this. If the time has gone when we can make a principle in the case of cotton, at least let the Government think it out so that we will be able to say to these people, "All right. So much and no further", which is a fair thing to do. If we take the situation in time, they will know where they are.

I hope that my remarks get back to the people in Hong Kong. I should like them to realise what we are up against here, and I hope that they put into operation a meticulous plan for the certificates of origin and the guaranteeing of the necessary fundamental information for the use they make of Imperial Preference. I say no more of that at the moment. I could, but it would not be opportune or fair to do so at present. I suggest that unless a move is made, I shall have to raise this matter at some other time.

The fact that the commodity prices have gone down distorts the thinking of a lot of our poorer members of the Commonwealth. They are thinking that there is a kind of talisman, a kind of magic, in industrialisation. Listen to this about how it is planning out in Ceylon. China asked Ceylon whether she needed assistance. Ceylon replied, "Yes." "In what field?" said China. "Rubber trees ", replied Ceylon;" they were tapped too much when the British were here." So the Chinese say to the Ceylonese, "All right. We will help and give you a grant for the renovation of your rubber plantations." "Thank you very much", said the Ceylonese, "that is nice. How will you do it?" "Well", said the Chinese, "we will give you a cotton mill to do it with." So the Ceylonese said, "How will a cotton mill do that for us?" The Chinese said, "You will be spending so much on the renovation of your rubber plantations. Spend that amount and we will give you a cotton mill of the value of what you spend."

The Ceylonese thought that was a very good idea until they inquired—some of them did not tell us when we were asking about it—what the snags were. The snags were that they had to pay for this cotton mill in ten years' time in any currency that the Chinese dictated. That is what I mean by the muddled thinking that is going on.

We are not tackling this job as seriously as we might. Too much lip-service is being paid to all this business of the Commonwealth and what it means without much effort on everybody's part. I feel that we shall be called upon to pay up. The other side is likely to bid us up, but in the present state of affairs, if they are exporting the labour of poor people in China to get in a bit of currency, surely we can outbid them today in terms of aid and economic assistance to the poorer folks in the free world. If we cannot do it now, we never shall. Unless it is done now, we shall lose the opportunity.

I ask the President of the Board of Trade and the other Ministers in charge for goodness sake to get going now with a stronger instrument than that which has been forged in Canada, with a secretariat that is able to move to any part of the world.

5.50 p.m.

Photo of Mr John Tilney Mr John Tilney , Liverpool Wavertree

The hon. Member for Ashton-under-Lyne (Mr. Rhodes) paid a most graceful compliment to my right hon. Friend the Member for Thirsk and Malton (Mr. Turton). He said with what pleasure he had followed him more or less round the world. It is with pleasure and a little alarm that I follow the hon. Gentleman who, unlike some at least of his colleagues, speaks with authority and common sense. I find myself largely in agreement with everything he has said. He made a most remarkable contribution to the debate, and I am glad that he dwelt for a time on the commodity prices aspect of the Communist economic danger.

I believe that the Government, certainly in the last few years, have done a fine job in improving the standard of the £ sterling in the international currency markets. Our reserves have risen, but we have done it because the terms of trade have turned largely in our favour, which may well mean that the trouble has merely been deferred. It will be difficult to sell our manufactures in our old markets of New Zealand, Australia, India or West Africa.

Because commodity prices have fluctuated so violently in the past, I am a little surprised that all that we decided to do at Montreal was to examine that problem and no more, because the effect of low commodity prices on our trade is bound to be detrimental in the long run if they continue to go down, whereas if they remain reasonably low and stable enough for our clients in different parts of the world to buy our goods it may be good for everybody. What we want is the expansion of world trade. It is a British interest just as much as it is the interest of Japan. It is essential that world trade should be expanded, and even if there were no Communist economic drive that would still be true.

The United States has endeavoured in the last year or two to spend herself out of her depression, and it looks as if she is going to succeed. That may give us a little time to think and to make preparations for the coming years, but there is still a lot of unemployment in America and a lot in this country in various pockets and pools. Suppose things go wrong with the Free Trade Area and the Common Market. Suppose Australia puts on more import controls, as she is threatening to do. I wonder whether our trade will expand as we all hope it will.

I had the pleasure last Thursday of going with some hon. Members opposite and some of my hon. Friends to look at the new nuclear power station at Brad-well, on the Essex Coast, and there we saw looming up in the fog a number of ships laid up which should have been used in trade. I am told that they are a few fewer than a month or two ago, because there is less loss incurred by the shipowners if they charter them at current rates than if they lay them up, but it is still a substantial loss, whereas one would hope that these ships would be trading at a decent profit for all concerned.

May I stress what I consider to be three fundamentals for our trade policy? The first is that our currency should be acceptable in the international markets, and that it should be broadly based. I agree that that has been helped by the decision to expand the International Monetary Fund and the World Bank which was taken at Delhi. Our currency has a backing of dollars and gold and of other currencies which can be readily interchanged.

The second point we must always remember is that if we ever get out of step, if our raw materials cost more than those of other nations, we will become what the Prime Minister described as an island of inflation in a deflationary world. Immediately, we would get a balance of payments crisis.

The third vital thing for this country, as a great trading community of 50 million people, is that we must still be able to buy in the cheapest markets of the world for our raw materials; otherwise, I do not see how our manufacturers can compete.

How can all these fundamentals be adjusted against this Communist economic attack, especially in Asia and Africa? The Vice-President of the United States spoke to us the other day about the victory of plenty. It is a splendid conception, but it is only the intention, like a paragraph in Army Regulations and what we want is the method paragraph on how to achieve it. We must, somehow or other, help the primary producers, and whereas we, vis-à-vis America, want trade rather than aid, the same thing applies to us much more in regard to the underdeveloped countries of the Commonwealth.

May I get back to the base of our credit policy—currency and gold? The creation of extra currency without real wealth leads to disaster. I was much interested, talking to the atomic scientists last week, to understand, possibly for the first time, that we have virtually found the philosopher's stone. It is now possible to change one element into another —uranium into plutonium and thorium into uranium.

How many years are to elapse before we make synthetic gold, and, then, will gold be the real base for the expansion of our trade? Is it the real, proper standard of value? Only the future can tell, but it has not always been all that good. In the days of Elizabeth I there was too much of it, and not enough wealth. Today, either because of political decisions there is a need, unfulfilled, to put up the price, or because there is not enough of it it is still not the ideal standard.

Hon. Members opposite and myself have our own individual balance of payments problems. So do companies, but when we consider whether we are solvent or not, what does a bank which is asked to lend a little money consider? It considers what investments and cash we may have, or, in the case of companies, what stocks they have, to weigh up what the net assets may be.

I cannot understand why that same argument that is applied to companies big or small cannot also be applied to countries. I do not understand why the central banks, as well as having their currency backed with gold and with dollars, marks and Swiss francs, might not to a certain proportion have currency backed by imperishable commodities as well. I know the old argument that bad money drives out good and that if one had too much of anything at a rigid price all the good backing of the currency would go and the world as a whole would become frightened; and that is one thing which must be avoided at all costs.

What my right hon. Friend the Chancellor of the Exchequer has done par excellence in the last year is to establish a £ which is now almost supreme in international markets. It is so much so that the premium of the dollar, which was at one time up to 15 per cent., is now a negligible fraction of 1 per cent.

I hope, therefore, that my right hon. Friend will look into the scheme of Mr. St. Care Grondona, the economist. This is not an airy-fairy scheme, as many people might think. It is backed to my certain knowledge by directors of many very large companies in this country. It is commended by other economists such as Mr. Roy Harrod. What Mr. St. Clare Grondona wants is some form of price stabilisation corporation for commodities. I must confess that when I first heard his speech and first read his book about it I did not like the scheme. I thought that it would prevent our buying in the cheapest market, that it would cost too much and therefore affect our balance of payments and, above all, interfere with the free market which I believe is also essential.

But it does none of these things. If I may take up the time of the House for a few minutes, I should like to describe very briefly what the scheme is. It is that at a given date that statutory body, the price stabilisation corporation, should announce the price at which it would buy a given amount or block—and only in substantial quantities—of a particular commodity. That amount might be one-eighth of our annual consumption or one-sixteenth, or whatever Parliament were to decide.

I admit that the formula is complicated. The datum price would be calculated on either the price ruling at a given date, the average of the last year, or the average of the last two years, whichever was the lowest. Then the price at which it would be financed, that is, at which the corporation would buy the commodity, would be 21¼ per cent. below that datum. It would be a rather low floor, and once one block of that commodity had been bought another could be purchased only at 5 per cent. lower. Therefore, it would not be a rigid floor, such as we had in the Tin Agreement, or a partially rigid floor as in the Sugar Agreement. It would be more like a series of terrace steps, up or down, as against either a shute or an escalator.

Surely, one of the major jobs before the Western world is to try to let primary producing countries see ahead the prices of their commodities so that they can adjust their economies to what is likely to happen, not suddenly but over the months. If one has this wide commodity point of about 22½ per cent., against the very narrow gold point, that price stabilisation corporation might well make a major profit in the course of years.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

The hon. Member has given a very good summary of the book which can be read by all hon. Members in the Library.

Photo of Mr John Tilney Mr John Tilney , Liverpool Wavertree

I am delighted that I have not been caught out in my homework.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

The hon. Member is not caught out at all. What he says is confirmed in the book.

Photo of Mr John Tilney Mr John Tilney , Liverpool Wavertree

I think that we are all agreed that our object is to prevent these wide fluctuations. If only the prime producers of the Commonwealth could feel reasonably assured, they could plan ahead and be much more confident against Communist attack.

I should like to deal with four or five likely objections to the scheme. The first would be the question of what would be the fair price for that datum. How do we know that what I have suggested is a fair price? As the Ion. Member for Ashton-under-Lyne has suggested, now is the time for action. If we do not do it now, when shall we ever do it? It is a comparatively good time when prices are reasonably low and our own financial reserves are high.

Secondly, how are we to decide in advance on the size of the block? The book suggests one-eighth of the annual consumption. It may be one-sixteenth but, of course, if Parliament decides on one-sixteenth it means that stability is less and that the number of steps in the terrace will be that much more in number. In my opinion, a decision on what the block should be is no more difficult than a decision made by directors on how much to hold in stock or to put in reserve.

Thirdly, why should a body outside Parliament have power to create currency? I personally would prefer to create currency against imperishable raw materials rather than, as the book suggests, finance that purchase against Government bonds, but as far as I know there is no limit to the currencies or, for that matter, to the gold which the Bank of England can buy, at a price. It may be that in future years we might find that the dollar is devalued. That is a risk which bankers must take, and they would have that risk in respect of only a limited quantity if they could back our currency with imperishable commodities.

The fourth objection is that we would maintain prices and prevent commodity producers from adjusting output to meet the true demand. That would be true if the price floor was rigid, but as it is flexible I do not think that that argument applies.

The last argument is that we would be paying a higher price than other countries, but that is manifestly untrue because, within these wide commodity points, free enterprise on the market would be able to buy wherever it liked. Even if the market price fell below the low point of the commodity index at which the Corporation would have bought, people would still be able to buy the commodity at the world price.

Photo of Mr Thomas Price Mr Thomas Price , Westhoughton

This is fascinating, but I am bewildered by the proposition because, apparently, the theory relates only to what this country will do. While we are doing this perhaps desirable thing within its limited context, what is happening to counter-action taken by the Communist world? What would happen to primary commodities like oil, which is in tremendous demand by the free and the Communist world? Would not this be subject to one of the major bargaining counters—something that goes beyond economics and includes political diplomacy?

Photo of Mr John Tilney Mr John Tilney , Liverpool Wavertree

The Communist world can do that now. It has already done so for tin. That is why I believe we ought to create currency against that eventuality, because if the Communists crash the price month after month, all they will have against what is real wealth will be our currency. What will they do with that currency? They will buy our goods. They will want something in the end for the real wealth they are producing.

Photo of Mr Hervey Rhodes Mr Hervey Rhodes , Ashton-under-Lyne

Is the hon. Gentleman aware that this would work in the case of my own commodity, wool, that the stocks held now in strategic reserve by our Government are in the region of 20 per cent. of the gross imports of that commodity, and that it would fit the bill if these were floating stocks?

Photo of Mr John Tilney Mr John Tilney , Liverpool Wavertree

I am grateful to the hon. Gentleman. I believe that this scheme could work for copper, zinc, lead and cotton, which is virtually an imperishable commodity, as is wool.

My plea to my right hon. Friends the Chancellor of the Exchequer and the President of the Board of Trade is that they will at least look at this scheme. We might have a small experiment. I believe we have time to do that. Let us try. I believe that the sterling area, thanks to what my right hon. Friend has done in the last year, is now strong enough to make that experiment. If the Communists attack us, they can attack us now and we are unprepared. If we try this scheme, even in the sterling area alone, we shall be that much better off.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

May I ask two questions, as I have not read the book? Could my hon. Friend say whether any calculation has been made as to how much sterling would have to be locked away in this scheme to stabilise prices? Secondly, what effect would that have on sterling stability if we took that volume from our reserves to do this?

Photo of Mr John Tilney Mr John Tilney , Liverpool Wavertree

As far as I know, a calculation has not been made. Indeed, I do not see how anyone can calculate what the world will produce. But what is the object of currency? It is to facilitate the exchange of wealth—raw materials, food, or whatever that may be. If the real wealth of the world gets that much bigger, we want more currency. What we want is a stable level of prices, if possible. Now we have stabilised the £, but there is a danger of commodity prices going down even further than they have already done, of people being out of work in this country, of trade contracting. The British interest is to expand trade. I cannot see why this should not be done.

Personally, I should like to see this experiment made with our friends the United States of America because I believe that it would help them; but if they cannot convince their own Congress that this is a worthwhile experiment I believe that we should make it in a small way because of our friends the primary producers in the Commonwealth. I believe that the sterling area, and Great Britain, as the Mother Country, is strong enough to try.

6.14 p.m.

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

I am glad to follow the hon. Gentleman the Member for Wavertree (Mr. Tilney) though I do not propose to follow him at length into the theories of St. Clare Grondona. I think, however, that his proposals are worthy of the closest examination by the Government, because they appear to avoid some of the troubles inherent in other schemes for stabilising commodity prices.

Of course, the scheme is primarily designed as a new commodity backing for currencies and it does not, as far as I can see, achieve stability of commodity prices although it might, in theory anyhow, cut out the most extreme fluctuations, and this would be a great advantage. Everybody is agreed on this, but there are many different opinions on whether it could be achieved by one method or another.

Certainly, I would like to hear, at the end of the debate, whether the Government have given serious consideration to those proposals, and if they have, whether they like them or not, and if not, why not?

Photo of Hon. Patrick Maitland Hon. Patrick Maitland , Lanark

Do we not want to realise that some of us have raised this in the House over and over again and have never had a single answer?

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

Yes. The House is united on this and wants a real answer tonight.

May I, for a moment, turn back to the question of the Commonwealth? I find the policy of the Government on the Commonwealth—if one can call it a policy—very frustrating and irritating. I would like to know who it is supposed to please, because it seems to me that the Government appear to be advancing backwards by stealth. I am sure that they do not deceive either the hon. Gentleman the Member for Lanark (Mr. Patrick Maitland) or the hon. Member for Wembley, South (Mr. Russell) and other keen supporters of Imperial Preference, for more and more of it.

It is useless to have the kind of statement we have had from the Chancellor today, saying what a marvellous thing is Imperial Preference, what a great thing it has been in the past and what a wonderful thing it will be in the future, and then saying that we are cutting it down. Why do they not "come clean"? Then at least they would get the wholehearted support of those people who approve of the movement in the direction of a whittling down of Imperial Preference. We know that it is going that way.

Not only is it down, as The Times indicated in perhaps a rather exaggerated form. The right hon. Gentleman the Member for Thirsk and Malton (Mr. Turton) rather overstated his case, I thought, when he complained about the reference in The Times to the influence of our agricultural subsidies on reducing Commonwealth trade. There is no doubt that Commonwealth trade has been decreased by our agricultural subsidies. No one will be convinced that high support prices for our own agricultural produce, and some of it indiscriminate and wasteful, is not affecting Commonwealth trade with this country. Obviously it is, and this is one of the things about which New Zealand and Australia quite reasonably complain.

Of course, geography is bound to assert itself and they are interested in developing their trade with Eastern countries and also with America. So to continue large discriminations against those countries really ceases to be in their interests, and this is why New Zealand and Australia have now demanded a reduction. It is interesting that in paragraph 24 of the White Paper reference is made to this point: The Australian Government have just taken a further step to reduce discrimination, a step which will open a further 10 per cent. of Australia's total imports to the competition of dollar sources of supply. Over half of Australia's imports are now dealt with on a non-discriminatory basis. I suggest to those genuine supporters of Imperial Preference, who are mainly on the back benches of the Tory Party, that we are trying to put the clock back if we suggest that Australia and New Zealand will be in favour of giving us larger preferences in future than they have done. As I have said, the tendency is a whittling away of Imperial Preference. I suggest that this is not only in the interests of New Zealand, Australia and other Commonwealth countries, but that it is also in the interests of the United Kingdom If that is so, why do the Government not "come clean" about it and say clearly where they are going? It is not as if this is the end of Commonwealth co-operation. I agree entirely with most of the remarks made in the latter part of the speech of the right hon. Member for Thirsk and Malton, especially when he asked for improvement of the machinery for Commonwealth co-operation.

Speaking to present arrangements, the White Paper says, in paragraph 83: These arrangements which are already extensive have served us well: there is no need to expand them, nor would we wish to change in any way their consultative character. Then the Government go on to say that they are, in fact, expanding them and are setting up a Commonwealth Economic Consultative Council.

This afternoon, the Chancellor said that although the theme at previous Commonwealth conferences had been independence, at the latest conference it had been interdependence. He went on to say how necessary it was to have meetings of expert civil servants and he spoke of the benefit obtained when the governors of Commonwealth banks were able to meet. He spoke of the increasing importance of such meetings and, referring to consultations, he used the phrase "a continuous process".

The right hon. Gentleman made a case for increasing Commonwealth consultation of a more permanent form, although still flexible and not rigid. If that is the case, why do the Government not clearly say that that is their policy for Commonwealth development and Commonwealth co-operation? It is a policy different from that pursued in the past, when the policy was based on the Ottawa Agreement which dealt solely with discrimination against traders from other parts of the world.

The Government are slowly moving towards the diminution of Imperial Preference, on the one hand, and on the other, closer co-operation with the Commonwealth in the provision of capital and in the co-ordination of domestic economic policies. The right hon. Member for Thirsk and Malton spoke of agricultural policies and urged the setting up of a council specifically to deal with the agricultural policies of Commonwealth countries so that they could be fitted into each other. I entirely agree. This is another matter requiring Commonwealth integration and co-operation. There would be far less trouble with agricultural surpluses and all the difficulties which those entail. We want a curtailment of unjustifiable and uneconomic activities and a much better use of Commonwealth resources.

We must face the fact that this means a diminution of sovereignty. We may not pass an Act of Parliament to say that we are giving up some sovereignty, but the very fact of co-operating and agreeing not to do what one is urged by one's constituents to do indicates giving up some measure of sovereignty so that the Commonwealth as a whole and, in the long run, the United Kingdom, shall benefit. This could be the great theme of the Government's policy, and they should openly say whether that is their intention and not, as I said earlier, try by stealth to advance backwards.

If the Government agree with what I have been saying about Imperial Preference, I cannot understand why they have not used it as a bargaining counter in their negotiations on the European Free Trade Area. Imperial Preference is being whittled away and will diminish still further. It is said to be one of the difficulties in our negotiations that European countries say that we derive benefits from the Commonwealth which we are not prepared to share with continental countries.

Why do the Government not say that we are prepared to give up our special advantage of Imperial Preference, or at least share it with Europe, especially if that would help to arrive at a mutually satisfactory agreement? I have urged this on more than one occasion and the Government have made a great mistake in not making a feature of this point. Whether they think that it is a matter of great moment or not, as a gesture it would have been very important.

Photo of Mr David Eccles Mr David Eccles , Chippenham

I must correct the hon. Member. Imperial Preference is not ours to give away. It is a bargain made with members of the Commonwealth from which they get substantial rights in our market in exchange for which they give us preference in their markets. I assure the hon. Member that if we suggested to Commonwealth countries that we were in any way prepared to give the Imperial Preference system to Europe, we should get a very dusty answer.

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

The right hon. Gentleman does not understand my argument, although I have tried to state it before. I am suggesting giving away only those things which we are able to give away. Those are the preferential rates which we receive when exporting our goods to the Dominions.

Could we not say to European countries that we were quite prepared for our goods to go to Australia or New Zealand on the same basis as German goods, for example? If the Germans negotiated the same preference, well and good. If that is not done, all imports into Australia and New Zealand may have to enter without preference. I am not suggesting that we should increase tariffs against Australian goods entering the United Kingdom to make the tariffs against Australian goods equal to those against German goods.

I want briefly to refer to liquidity in connection with the expansion of world trade. We did not hear much on this subject from the Chancellor. I gathered that he welcomed the suggestion that the International Monetary Fund quota should be increased by 50 per cent. Does he expect that that increase will come entirely from the U.S.A.? If it is to come from all the countries which are members of the Fund, where will we find our share, since I understand that our reserve is too small even for our own requirements at home? If we are to provide only currency that would not be of much help, since the Fund has plenty of foreign currency which is not being used and anyone repaying loans has to do so in gold or dollars.

Recently two other suggestions have been made, which I wish to do no more than air because I am not capable of doing them full justice. I am encouraged to speak about them by the fact that many economists also talk about them without appearing fully to comprehend all their ramifications. One alternative suggestion has been made by Sir Oliver Franks, and is to the effect that members should deposit gold and foreign exchange surnluses—which would still be a rather difficult thing for Great Britain—after which they would settle their international accounts by means of drafts on their balances with the Fund. The point of this process is that it would provide the Fund with means of creating liquidity, like a normal bank, by granting drawing rights or overdraft facilities in excess of its gold and cash holdings.

The other alternative is referred to in a recent article in Lloyds Bank Review, by Mr. Maxwell Stamp. His suggestion is that countries should keep their own reserves as at the moment, but agree to accept certificates of indebtedness from the Fund in settlement of international accounts, and that all member countries of the International Monetary Fund should agree to treat the certificates of indebtedness as if they were gold. By so doing machinery would be provided for creating international credit.

Photo of Mr Alastair Harrison Mr Alastair Harrison , Maldon

This is a most interesting point. Can the hon. Member explain it a little more thoroughly? Would it increase the real funds available, or would it be just printing money, with the possibility of world inflation, as has been experienced in the case of certain countries?

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

The same idea struck me when I read the article, and I do not profess to be capable of arguing that point, since I am not an economist. I am merely putting the point to the Government as an extra thought, like the Grondona plan. I should like to know whether the Government have examined the suggestion, and what their reaction is to it.

As I understand, it would mean that the International Monetary Fund would have to change itself into a central world bank, and would start to operate very much like a bank does in this country, except that it would have supreme power in this field, and although it would undoubtedly be controlled by its members it would be capable of expanding or contracting credit as it thought necessary according to the trading conditions of the time. It would appear that if the Fund pursued erroneous policies it would create inflation by producing too much credit when it was not desirable.

However, that is one of the two schemes which have recently created some interest in financial and economic circles, and which appear to have the advantage over certain other schemes in that they enable the Fund, after a change of its articles, to change itself into a central world bank. This gets over the difficulty mentioned by the hon. Member for Wavertree arising from the limitation which the amount of gold imposes upon available world credit. It does not appear to be entirely limited by gold. because dollars are at present accepted as an alternative, and have allowed world reserves to increase accordingly.

This would enable the basis of world credit to be made much more flexible. It could be expanded or contracted as world trading conditions required. I hope that the President of the Board of Trade will have a word to say on that matter, and that he will also give us a clearer statement of Government intentions about Commonwealth developments than we have yet had.

6.35 p.m.

Photo of Hon. Patrick Maitland Hon. Patrick Maitland , Lanark

The hon. Member for Bolton, West (Mr. Holt) expressed the hope, which many hon. Members on this side of the House share, that we shall at last get from the Government a clear and full statement of their considered views upon the Grondona Plan. The hon. Member talked about "advancing backwards by stealth." I wondered whether he himself was not advancing backwards—and not by stealth —when, after suggesting that the preferential system was discredited and deserved to disappear, he drew attention to the great preferential system existing in the heart of Europe, which confronts this country with a serious problem.

The preferential system is not discredited; it is being pursued in Latin America, by the Communists in the East, and in the European Common Market. The idea, as such, is not discredited, although under the impact of recent events the position of preference in the Commonwealth has been reassessed. Albeit in a curious way in the sense that the Commonwealth has in unison confirmed its value while holding back from any assertion that it deserves to be extended.

In his speech in the corresponding debate in another place, the Secretary of State for Commonwealth Relations concluded with these remarks: This Commonwealth means everything to us in the United Kingdom. We shall do everything we can for its welfare because we dare to believe that, much as it means to us, it means as much to all mankind."—[OFFICIAL REPORT, House of Lords, 4th November, 1958; Vol. 212, c. 178.] We are stirred by that; we were stirred by the Prime Minister's Commonwealth tour nearly a year ago; we were stirred by the conduct of the United Kingdom delegate at the Montreal Conference; we have been stirred by the imagination of the Government in their preparations for the conference; we have been stirred by the United Kingdom project for the scholarships scheme that came out at the conference; we have been stirred by the Commonwealth Economic Consultative Council; we have been stirred by the British project for a Commonwealth House; we have been stirred by the project to increase aid to Commonwealth countries through the work of the Export Credits Guarantee Department, described by Barclays Bank Review in these terms: … there can be no doubt that this latest move will have the effect of raising the status of the E.C.G.D. in international financial circles to a position similar to that occupied by the U.S. Export-Import Bank. We have been stirred by the fact that, for the first time for many years at least, if not for the first time in history, the Commonwealth has been put first in the Gracious Speech. And yet there are those who find cause to suspect that Her Majesty's Government are dragging their feet. It has taken five weeks since the Session was opened for us to arrive at this debate. It has followed some domestic legislation which was trivial in comparison—legislation of which I approve, but which in no sense merited priority over this question. Now that we have the debate it is being held not upon a Motion to take note of the final act of the Montreal Conference but upon a mere Motion for the Adjournment, when we can raise any other question we like. A great act of State of this sort demands and deserves that all the Parliaments of the Commonwealth should formally take note of it and declare themselves upon it. Some of us found that when we raised points on this subject in the debate on the Address they went unanswered. Even though one or two hon. Members were vouchsafed a letter in which some points were answered, others were altogether neglected.

I took note of the words uttered by my right hon. Friend the Chancellor this afternoon when he said that all now turns on the actions of the Commonwealth Governments in carrying out the decisions reached. But how are we to make sure that our ten sovereign Government partners do, in fact, carry out these decisions? How can we get after this, that, or the other Government which have pledged themselves to high-sounding principles but do not carry them out? We have no constitutional provision for chivvying them or chasing them.

So I again ask my right hon. Friends on the Government Front Bench, and, through them, I ask the Commonwealth as well, to bear in mind the possibility that we could, quite simply, devise a forum for pursuing these matters, if only we had a conference of Parliamentarians once a year instead of every other year. This idea was also mentioned this evening on the other side of this House by the hon. Member for Rugby (Mr. J. Johnson), whose contributions on this subject we always listen to with much interest.

What is the good of pronouncing that we recommend or that Commonwealth Governments recognise, that they should make external capital investment welcome if we have no chance to take up the matter of Governments that are false to these principles or neglect or obstruct the repatriation of capital or its earnings? I believe the time has come for our Government to say clearly whether they are sympathetic to the idea of an annual Commonwealth Parliamentary conference to debate these great acts of State and to demand and insist that the Commonwealth Governments carry them out?

We were all pleased to learn of the projected Commonwealth Economic Consultative Council. We realise that it is to be a gradual growth and, at any rate in theory, a kind of post facto recognition of what already exists. But we have been promised a certain number of things in the Montreal communiqué, which was published nearly two months ago. We were promised further studies about the Commonwealth Bank idea after the New Delhi Conference. Yet, the other day, in an Answer to a Parliamentary Question, I learned that those studies have only got this far—that "arrangements" for those general studies are "under consideration". And that is eight weeks after the conference dispersed.

We have been promised that there will be further studies of the commodity position, commodity by commodity. I wish to be told whether they have started, and if so, in relation to which commodities and where; and if they have not, why not. We were promised consultations within the Commonwealth about surplus disposals. Have these consultations started? I want to know? If they have, which commodities have been affected? If they have not, why not? [HON. MEMBERS: "Answer."] I have much to say in a short time. I am sure that my right hon. Friends will do their best to reply later. I have many other questions to put—[HON. MEMBERS: "The Minister is not listening."] I think he heard. In any case, he will hear presently—there is more to come.

We have been told that the Economic Consultative Council will bring together such consultations as are already proceeding. Are we to be told that these specific ad hoc consultations cannot take place because Commonwealth House is not yet built? Are they in operation already, and does the Economic Consultative Council already exist? Or has there been a two months' time-lag without anything happening? We are promised a Commonwealth education conference. May we be told whether the preparations are under way or are they still only being considered? Has a date been fixed? Is there an agenda? May we know these things?

I consider that the Montreal Conference and the communiqué which was issued from it a great step forward in what I would call Commonwealth self-consciousness of itself. And so I congratulate Her Majesty's Government on producing this little pamphlet which I hold in my hand, and which is supposed to he a popular version of it. But I hope that they will not do such a thing again. Because, without being too critical just now—there are other things to be considered of a more positive kind— I say that this is a rather bad précis of the more indigestible proposals contained in the communiqué, written in the worst kind of Civil Service English and dotted about with a few pictures and maps and charts taken from known C.E.C. reports That is not the way to provide an intelligible and popular document which anyone can understand. If such a document were produced it would sell like wild-fire, not only in this country but in the Commonwealth as well. This present pamphlet is inadequate; but it is at any rate an effort to do something, and for that at least I congratulate the Government.

It may be said that to produce a popular version of the Montreal communiqué in terms which everyone who has had a high school education can understand is impossible under the present structure, because it would involve committing the ten or eleven sovereign Governments to particular statements. Is not that an argument for something which was put forward in this House the other day, namely, the need for a Commonwealth information unit, in which all the Commonwealth Governments would be represented and which would act under their direction, like the Commonwealth Economic Consultative Committee? Its job would be to drive home throughout the Commonwealth—and, if necessary, outside of it—what the Commonwealth is, what it is all about and what it means. If we have no machinery for doing such a thing, why not call a Commonwealth information conference to set it up?

On matters of policy we have heard a good deal about commodity prices which were at the heart of the Montreal discussions. So far as I can make out, the general assumption underlying the communiqué and running through the speech of my right hon. Friend this afternoon is summed up in the November issue of Barclays Bank Review, where it is stated: The Conference listened to the complaints, but took no immediate action to set in motion commodity agreements, whether by way of restriction of production or by stabilisation of prices. It goes on: If such action is to be taken it must obviously "— that is the critical word—"obviously"— be done on a truly world-wide basis. Any purely Commonwealth scheme would merely condemn industries within the Commonwealth to bear the handicap of relatively dear raw materials. That seems to spell out much more plainly than we heard this afternoon the assumptions underlying the Montreal communiqué. I believe that those assumptions deserve critical analysis.

It is suggested that a purely Commonwealth scheme is impossible, because it would raise raw material prices to the United Kingdom. As was said by the hon. Member for Ashton-under-Lyne (Mr. Rhodes) the present is a great opportunity for this country—when, in a certain sense, stabilisation may be to our immediate disadvantage—to press this idea forward. We are told that a Commonwealth scheme will not work, and, therefore, we have to include all the main producers and consumers, including Russia and China. Some of the points which I intended to make have been made more vividly and effectively by hon. Members opposite.

The simple fact is that whether we look at Chinese rice, or at aluminium, which is produced both by Russia and China, or whether we look at copper or lead or manganese, we find that the Soviet countries are out to increase production far beyond what appear to be their likely home needs. They are, apparently, ready to intervene in overseas markets and to undercut wherever they can. We were told during the Recess that the Russians had told my right hon. Friend the President of the Board of Trade that Russia would not try to sell more than a certain amount of aluminium in this country in the coming year. It is true that the amount was five or six times more than had been sold in previous years. But there was an offer, and the President of the Board of Trade produced it as a kind of positive step forward.

But are we to suppose that the Russians, who have been undercutting Canadian aluminium for the last 18 months, will not go on doing so? And what they dump here is not the limit of what they may do elsewhere. Suppose we cannot get them and the Chinese into these commodity agreements? The whole idea appears, to me, at any rate, and probably to other hon. Members on both sides of the House, to be simply "pie in the sky".

If such a world scheme depends on Russia and China, and if, as many of us think, Russia and China will not "play" for very long, I ask: what is the alternative? Indeed that is why I ventured to interrupt the hon. Member for Bolton, West to press the Government for a proper statement about their views of Grondona plan. This booklet, "Utilising World Abundance" has been mentioned on this side of the House over and over again, and copies have been sent to Ministers. The Prime Minister and his colleagues have had correspondence about it. We are all agreed that the impression given was that either they could not understand it—that is not surprising because it is very difficult to understand —or else they would not. At any rate, we have not had a proper, lucid and thorough exposition of the Government's view of the Grondona plan and on the face of it this does appear to be one alternative to the "pie in the sky" idea that we can only stabilise prices by agreement with Russia and China.

My hon. Friend the Member for Waver-tree (Mr. Tilney) asked, and I asked in a speech in the House a few months ago, whether we could be told what was the Canadian Prime Minister's project for a food bank and what were the objections to it. Mr. Diefenbaker referred to it in a speech at the Albert Hall and my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) mentioned it when he spoke of the great problem of getting the surpluses we have into the hungry bellies of about half of our fellow Commonwealth citizens. We have not had an answer to that. We have not heard whether Her Majesty's Government approve or disapprove of the Diefenbaker idea for a food bank. We want to know.

As to the Commonwealth Bank it is agreed—indeed, it is underlined in the Montreal final act—that the Commonwealth requires to switch capital to the under-developed countries and, in particular, to the ones which tend to get somewhat neglected by the ordinary free flow of capital, because owing to their still recent independence the stability of their Government is perhaps open to question by outside countries.

We know, at the same time, that the World Bank has done very good work. We know that from 1946 to 1957 it invested just under 1,000 million dollars in the Commonwealth. But the distribution of that investment challenges the very assumptions at Montreal. If we analyse that investment per capita, we find that it works out like this: Australia, 31 dollars per head; South Africa, 10 dollars; Ceylon, 2 dollars 30 cents; Pakistan, 90 cents; and India, 60 cents. That is what the World Bank does for the Commonwealth. No one can say that in so doing the World Bank is following the policies that the Commonwealth agreed at Montreal. This is one reason why I believe that we cannot allow ourselves to be put off by the explanation simply that the Commonwealth Bank was thought to be inappropriate in present circumstances. The Montreal communiqué spells out the circumstances in which, on the contrary it would be most appropriate.

We are told that it would not raise more capital. If that is so, why do the Common Market countries organise a European investment bank for themselves? Do they imagine that it will not raise more money? Why do the Latin Americans—who know how to earn a penny or two—set up their own bank? Do they think that they will not get any money out of it? On the contrary. We have not had a satisfactory answer on this subject yet.

I believe that I speak in harmony with hon. Members on both sides of the House when I suggest again that an investment bank with the prestige of the Commonwealth behind it, with the gigantic resources of the Commonwealth —developed and underdeveloped—behind it, with the enormous growing wealth of the Commonwealth behind it and with the population of every country of the Commonwealth increasing and the gross national product rising per head behind it, could claim a better share of the available capital of the world than the Commonwealth has been securing through the agency of the World Bank.

We are told that the Commonwealth countries are not very sympathetic about putting up the money. That is an extraordinary argument. It conflicts with the private advice that some of us have been at great length to obtain for ourselves. When we talk in private to statesmen of Commonwealth countries they sometimes seem to tell us the opposite to what we are sometimes led to believe by Her Majesty's Government. The stories they tell us are that Canada, Malaya and New Zealand would be wholeheartedly for a Commonwealth Investment Bank, that Australia and the Federation of Central Africa are hesitant but in principle sympathetic, that India, Pakistan, Ceylon and Ghana who stand to profit are watchful and careful, and that South Africa's attitude is unknown. I may be wrong, but that is the impression we get and it is difficult to believe that when we make friendly contact with Commonwealth statesmen whom we meet in private we. should be told something different from the answer they give to Her Majesty's Government.

Mr. Amory:

I can only say, on the assumption that my hon. Friend has given as to the Commonwealth reaction to this suggestion, that I should have thought it justified very fully the decision that this matter should be given further study.

Photo of Hon. Patrick Maitland Hon. Patrick Maitland , Lanark

I apologise. My right hon. Friend was not, I think, in his place when I alluded to these studies earlier. So far as thorough studies are concerned, we have not got further than planning the arrangements to carry them on. But I am very glad to hear from my right hon. Friend that further serious studies of this matter will be pursued, and I am very grateful for my right hon. Friend's interest.

There is one other point about the Montreal final act. We are told that the Commonwealth Government's agree that the G.A.T.T. rules in respect of agriculture require amendment. I wonder whether the President of the Board of Trade, when he winds up the debate, would tell us what, in fact, were the Commonwealth proposals to be put up to their G.A.T.T. colleagues, how far these proposals did get at the G.A.T.T. Conference the other day and when we can expect some results.

In conclusion, I should like to congratulate Her Majesty's Government even though in doing so I may appear simply to be trying to press and goad them along. They know me well enough to know that I sometimes goad when I am really trying to congratulate. I do congratulate them. First, for supporting at once the project to hold this conference, and then for the very imaginative contribution to its preparation and the equally imaginative conduct of the United Kingdom delegation under the leadership of my right hon. Friend the Chancellor of the Exchequer.

But I beg of the Government to beware of the impression which is current that we are, in fact, dragging our feet. The conference took place two months ago and we have had to wait many weeks for this debate. Right hon. Gentlemen opposite and I and others have had to press for this debate. I am sure that the Government are not dragging their feet at all; but it would encourage our friends outside if there was confidence that they were pressing on. I hope that the Government will take up the idea of getting this Economic Consultative Council going now. I hope that the promised consultations and studies will start soon and that we can know when they are happening and where they are happening.

I hope that the Government will also give their mind to the idea of an annual meeting of Commonwealth Parliamentarians. This is a matter that arises directly out of the scale of the Montreal Conference. Everyone is agreed that the project is, in principle, worthy of support, and everyone agrees that some of the principles enunciated at Montreal are, in a sense, unique and could be matched with those of the C.D.C. and the C.D. and W., Acts. Those Acts proclaim and emphasise literally the interdependence of the richer and poorer, the haves and the have nots, in the Commonwealth just as the final act of Montreal goes a big stage further. But we, citizens of the Commonwealth, claim the opportunity to exercise our right to chivvy all our Governments to make sure that these principles are, indeed, carried out.

This Commonwealth is not a stagnant relationship. It requires and deserves vivid and resourceful inspiration. It has not been lacking in great leaders hitherto. Field Marshal Smuts said, as far back as 1935: We are not afraid of equality"— the Montreal Conference was about economic equality— of liberty, of sovereignty. We welcome them as inevitable developments, and on them as a basis and foundation we build our great co-operative group. Montreal was a great, co-operative endeavour, and it is up to us to make sure that that co-operation lives. Smuts added: It has already outlasted the empires of our day, and long may it continue as a bulwark of freedom and progress in the civilisation of the world.

7.2 p.m.

Photo of Mr Albert Oram Mr Albert Oram , East Ham South

The hon. Member for Lanark (Mr. Patrick Maitland) is so earnest in his views about the subject matter of the debate that one can understand his disappointment at the rather lukewarm and hesitant speech that we heard from the Chancellor of the Exchequer. The hon. Gentleman told us that he had been stirred by certain things that were happening. He used the word "stirred" so often that one might expect him to be a little mixed up. Anyhow, he knows where he stands, as a forthright advocate of an expanding Commonwealth.

Hon Members have already pointed to the fact that one of the central themes of the debate is the problem of fluctuating commodity prices. To that aspect of the matter I want to direct my remarks. The fact that it was so much in evidence in the Montreal discussions leads us to hope that it has been something of a corrective to those who, over the past couple of years, have almost tended to take credit in terms of our improved balance of payments, for declining prices in the world scene and who have tended only to recognise the short-term advantages to this country's balance-of-payments position.

While recognising the immediate advantages, we need to recognise two other things as well. The first is that if we gain by declining commodity prices someone else, notably the producers of the primary products, are losers, and the benefits that we see in our balance-of-payments situation is the reverse of the situation in countries like India and Malaya who depend very much upon their production of primary commodities. The second point is that even though we derive some immediate advantage we are liable to get a long-term disadvantage, in that our potential customers are no longer able to import the goods that we wish to send them.

We have been constantly reminded of the great division in the world between the "have" countries and the "have not" countries. What has been happening through the decline in commodity prices over the last two years is that the "have" countries have been becoming the "have-even-more" countries, and the others the "have-even-less" countries. This country and the nations of the world have to tackle this question of fluctuating commodity prices in a much more vigorous and forthright way than we have been doing in the post-war period so far.

One of the important ways in which this problem could be tackled is by the conclusion of the right kind of international commodity agreement. We have seen the international conference which took place this autumn negotiate a new international sugar agreement. That is the sort of thing that can be done, and the way in which it is possible, over a broad front of countries of many different kinds, to reach agreement on a commodity so that we may have reasonable stability in commodity prices. By "reasonable stability" everyone recognises that we should not and do not mean rigidity. We do not want to freeze any particular economic situation, but to avoid harmful, sharp fluctuations in commodity prices and to establish machinery whereby long-term price changes can he made to fir, in with the natural changes in the long-term market and in technical conditions.

The solution of this problem is vital to the countries which we usually refer to as "under-developed." The Secretary-General of the United Nations is constantly reminding us in his annual reports of the great significance of this subject of world commodity prices. He reminded us in one of his reports that an average reduction in world commodity prices of only 5 per cent. could equal the transfer of the entire private and public capital from the Western world to the under-developed countries. That probably means that during this period, when world commodity prices have been declining, all that we have done by grants and loans has been wiped out by the fact that the producers have lost more on the swings than they have gained on the roundabouts.

There is a specific illustration of what I have in mind in comparing the effect of declining or increasing prices with a direct grant. About a year ago there was a marginal increase in the price of sugar which the producing countries received under the Commonwealth Sugar Agreement. I forget the exact figures, but it was a small price increase that was agreed upon. I asked the Minister of Agriculture. Fisheries and Food at the time to tell me the effect of this marginal price increase upon the income of the island of Mauritius. I was given the figure £580,000 by which Mauritius would benefit from that increase. Then I asked what had been the grants under the Colonial Development Act and I learned that Mauritius, over about two years, had received grants amount to £¾ million.

Those figures point the moral that the primary producers prefer the maintenance of a fair and reasonable price for the commodities upon which they depend, particularly in place which, like Mauritius, depend upon a particular commodity. That is often much more important than the most imaginative and generous grant. I put a great deal of my faith in the negotiation of international commodity agreements. I do not underestimate, and I do not think other hon. Members should, the very great difficulty of concluding the right kind of commodity agreement. There are good, bad and indifferent commodity agreements and it is most important that when we put this country's signature to a commodity agreement we should make sure that it is a good and proper one.

We have in the instance of the Sugar Agreement a particularly good example of how a commodity agreement should read, especially if we look at the lists of participating countries. There one finds an encouraging sign of what can be done in this field. We not only have a balance between importing and exporting countries with about an equal balance of votes, but we have small countries like Panama and huge countries like China represented. We have lists of countries which are distinctly developed in the industrial sense and lists of countries which are distinctly underdeveloped.

More important still perhaps, is the fact that we have, in the importing group and the exporting group, countries from both sides of the Iron Curtain. We have countries with sharply different political and social systems. If we look at one list of countries we find in juxtaposition Poland, Portugal, the Union of South Africa and the Union of Soviet Socialist Republics, which is an ecouraging sign that the Iron Curtain need not be a barrier in the negotiating of such agreements as I have in mind.

Although the Sugar Agreement is a good example, I suggest there are others which are less good. One which was referred to this afternoon is the Tin Agreement. That was in the news recently when, overnight, there was a tremendous slump of about £90 per ton, because the manager of the buffer stock withdrew support. I am not expert enough to know the ins and outs of the business, but, looking at it as a layman, I suggest that the agreement itself is structually far weaker than the Sugar Agreement. For example, one finds that three major importing countries, Japan, Germany and the United States are outside the Tin Agreement and that no country from the other side of the Iron Curtain is a member of it.

Consequently, because major consuming countries are outside, there are aspects of the operations of the Tin Agreement which lead one to suspect that it operates sometimes almost like a producers' cartel. I am not entering into the whys and wherefors, the rights and wrongs, but the suggestion has been made that the slump was in a measure caused by the selling of tin by the Soviet Union. That points to the fact that, if we have not got a comprehensive coverage of countries of all political kinds, an agreement is always liable to be the victim of the economic cold war.

Incidentally, a number of speeches from hon. Members opposite—with much of which I have agreed—seemed rather tainted by the suggestion that what we have to do is to go out vigorously in the economic cold war rather than approach the matter, in what I think is a much more constructive way, by trying to get countries together in international commodity agreements, as in the Sugar Agreement, which I believe shows that that sort of thing is possible. If we do not get commodity agreements of a balanced kind, commodity agreements of an unsuitable kind are liable to be made.

Only recently I was reading in the Grocer that fifteen Latin-American countries have got together and unanimously agreed on an agreement for limiting the export of coffee. There is no suggestion of an agreement having been reached under United Nations auspices or of balancing consuming with producing countries. That, I suggest, is just the sort of agreement we want to avoid if we possibly can. I fully admit that to get the right sort of agreement means a hard and long struggle, but that is the road we should endeavour to tread. We should not believe that there are obstacles such as the unwillingness of countries on the other side of the Iron Curtain which make it impossible to pursue that task.

Another point I wish to make in connection with commodity agreements is that we of the Western World must be prepared in our negotiations with the primary producers almost to lean over backwards in settling prices which can be advantageous to them. There should be methods whereby the strong can help the weak. That would apply, for instance, in an agreement negotiated for maintaining the price of cocoa, in which it would be the duty of Western countries to be generous in settling the price which would enable the producers of Ghana to lift up their living standards rather than to suffer reverses. Even within the Western world that principle should operate. In the current wheat negotiations, for instance, one would hope that the Americans will be persuaded that there is a case of the strong helping the weak. They should see that the interests of consumers of wheat—in this case, we are on the consuming side—should be considered equally with the interests of their farming population.

If I put forward the general proposition that it is up to us in the Western world to take a strong new initiative in the negotiating of international commodity agreements which themselves can be instruments for raising the standards of living of people in the under-developed countries, I would also suggest that there is a corollary to that main proposition of which we ought to take note. We should ensure that the advantages in these agreements get home to the people in the under-developed countries who really need helping. If, for instance, we enter into a commodity agreement to maintain the price of tin or copper, it should be the miners of those commodities who get the benefit of any agreement reached.

Therefore, I hope that in all the negotiations the International Labour Office, international trade union movements and the international co-operative movement will be brought in at early stages, both in drawing up the agreements and seeing that they are carried out. I am particularly keen that co-operative organisations in the under-developed countries should be encouraged and that, so far as lies within our power in the councils of commodity agreements, we should ensure that the participating countries encourage the growth of trade unions and co-operative organisations.

I was interested in what the Chancellor said this afternoon about education, which was discussed at the Montreal Conference. I should call his attention particularly to one aspect of inter-Commonwealth education, which makes a great appeal to me as a co-operator. That is the fact that co-operative departments in the Colonies each year send a number of students to the Co-operative College at Loughborough. That seems a particular example of something which needs a great deal of encouragement and a great deal more money to be spent on it. Not only, as in the case of those students, should they be Government-sponsored students but there ought to be the possibility of managers and secretaries of colonial cooperative societies going to Loughborough, to Canada and other places where there are interesting co-operative experiments. Nothing but good could come from that sort of encouragement.

I recognise that in a great deal of what I have said, particularly about international commodity agreements, there are severe limitations upon what one Government can do. Effective action depends in the long run upon getting agreement among a great miscellaneous group of countries. Here I sympathise very much with the tone of the speech by the hon. Member for Lanark—that this does not mean that we have to sit tight and wait for others to take the initiative. It is up to our Government to take every possible initiative in getting these commodity agreements under way.

I listened with particular care to the sentence used by the Chancellor when he dealt with this question, and I thought he was a little over-cautious. He said that we were prepared to set up study groups for any commodity in which any other country thinks that we should take an interest, or words to that effect, but surely it is up to us to take a much more vigorous initiative in setting up these study groups, and I hope that the matter will not only be studied at the academic level but that action will quickly follow.

There are two initiatives which this country can take, irrespective of what other countries do. My right hon. Friend the Member for Rochester and Chatham (Mr. Bottomley) referred to bulk purchase, which is one piece of activity open to this or any other Government to take on their own initiative. I do not propose this evening to enter into the arguments in favour of bulk purchase. The only point I want to make in this connection is that the Emergency Laws (Repeal) Bill, now passing through the House, abolishes the Government's powers in respect of bulk purchase, and it seems to me that in the present situation of commodity prices this policy is directly opposite to that which the Government ought to be pursuing.

The second point I want to make about action which it is open to a Government to take on their own initiative has in a large measure been covered by preceding speakers, but I want nevertheless to refer to it. It is the implementation of the proposals put forward so lucidly by Mr. St. Clare Grondona. I urge the Minister who is to reply to the debate to state what is the Government's view on these interesting proposals. We have had that request voiced from all sides of the House, and it is time that the Government let the House know what are their views on this subject.

This is no crank idea. It comes from an economist of world-wide repute who has put in at least 25 years of his life in an earnest study of this question. His book has received praise from a great variety of critics of considerable authority, and although I do not claim to be able to enter into such a cross-examination as that to which the hon. Member for Wavertree (Mr. Tilney) was subjected about the proposals, I have been impressed by the fact that any review which I have read and any comments which have been made in the House have failed to fault the proposals in any major sense. If that is so, and since the proposals are so revolutionary and yet in essence so simple, and since the outcome of their implementation would be so beneficial both to this country and to the world, it seems to me that the Government are duty bound to have a very close look at them. I suggest that they ought to set up an inter-Departmental committee to examine them and then to let the House and the country know precisely what are the Government's official views about them.

It seems to me that these proposals have the great advantage that although it is possible for one Government to take the initiative in putting them into effect, they are nevertheless international in the sense that they can fit into rather than run counter to any negotiations which are going on for the establishment of international commodity agreements. It therefore seems to me particularly suitable that an experiment should be made along these lines.

On this subject, as on so many others, it is easy for any one of us to have his own belief in a particular theory and a particular point of view, and it is easy to use extravagant language about the importance of what one has to say, but I believe that it is not too much to say that this question of fluctuations in world prices is of major significance in the world's fortunes at the present time. It is one of the most vital things which the Governments of all countries have to face. It seems to me that at a very high level, and with a very great sense of urgency, we should be tackling it in a spirit of international co-operation and should be rejecting any suggestion of national self-interest in the discussion of these matters.

If we do that—and we can do it if we have sufficient imagination and sufficient leadership—I believe that we shall be making a major contribution to the establishment and maintenance of a peaceful world.

7.27 p.m.

Photo of Mr James Ramsden Mr James Ramsden , Harrogate

The hon. Member for East Ham, South (Mr. Oram) made the kind of cogent, reasoned and well-analysed speech which one would expect from a chess player of his distinction. I hope he will forgive me if I do not follow his gambit, but there are certain things which I want to say, and I have promised not to take long.

I think the whole House will share the anxiety which he has expressed that we should find some means of helping commodity producers. I find the approach which the Government have made to these problems so far, as set out in the Report on the Montreal Conference, not at all unsatisfactory and quite realistic. May I refer, briefly, to Section IV of that Report which deals with education and, in particular, with the teaching of the English language, to which my right hon. Friend made some reference in his opening speech.

This may seem a narrow point to introduce into a wide-ranging debate, but I hope that hon. Members will not be impatient with me. The widespread use of the English language is one of the main links which bind the Commonwealth together at present and one of the factors which make the smooth working of its economic system possible. It is an economic asset which could be lost if we did not go about preserving it in the right way.

Incidentally, the whole question of education and the English language was the subject about this time last year of one of the best debates we had in New Delhi at the Commonwealth Parliamentary Association Conference, where the United Kingdom delegation was led by my right hon. Friend the Chancellor, then in his capacity as Minister of Agriculture. It has been a fortunate turn of the political wheel for him, perhaps, which has enabled him to participate in the Commonwealth discussions both at the Ministerial level and also at what I may call the back-bench level in the gathering of the Commonwealth Parliamentary Association in New Delhi last year.

The question of education has been referred to in the Montreal Report, and the fact that this is in the fullest sense an economic problem hardly needs emphasising. The widespread use of the English language, at any rate in certain parts of the Commonwealth, at the moment gives our businessmen and their salesmen a 50 years' start on their competitors. A fitter can go from this country and do a job in any part of the Commonwealth, can be himself and can get along well, whereas a fitter from Russia or China, or even Germany, doing a comparable job, would have to be something of an educated man in order to have the same opportunities. That is the measure of the economic advantage which the widespread use of the English language gives us.

Some people say, "Leave well alone and do not push the question of the preservation and teaching of English too much or you will provoke a reaction." I do not think that is a sound objection, although it is true that in some parts of the Commonwealth questions of language are hot politics at the present time. Because English is a great lingua franca for the spread of the scientific and technological knowledge which every Commonwealth wants, that fact would prevent the spread of the teaching of English from meeting any political reaction in countries where nationalistic feelings are strong. The use of English is much more likely to lapse because some other Power, perhaps, from outside may come along and make a more determined effort to popularise and push its language than we take the trouble to do.

As the White Paper points out, the main thing is to get more teachers of English. On this point there are two questions which I should like to ask the Government. The first concerns a point which I think the right hon. Member for Smethwick (Mr. Gordon Walker) raised and to which I have never heard an answer. Could the definition of "technical aid" under the Colombo Plan be extended a little to include the teaching of English as eligible for aid? Most of the technical aid which is given under he plan is given through the medium of the English language, and it would not seem to be an unreasonable extension to ask for. I wonder whether consideration has been given to this point.

Secondly, is the plan mentioned in the Montreal Report to make more teachers available in Commonwealth countries to operate only at university level? It looks at first reading as if it is, and, if that is so, I think it is rather a pity. I talked to two teachers at a well-known public school in Lahore at this time last year. a man and his wife who had started teaching in State schools in this country and who had gone out and were teaching in Pakistan and subsequently had plans to go on to India. They thought that more teachers would be prepared to go out for a period to Commonwealth countries if it were not for the fact that when they do so they lose their superannuation rights and other benefits which they get here. I do not know if that is true, but if it is, perhaps the Government could find a way of getting over it and thus encourage teachers to go out, not only at university level.

The third thing that I should like to mention is books. This is a hare that the hon. Member for Dundee, East (Mr. G. M. Thomson) has been hunting, with, I think, some success. This is an important matter, and the impression that we both formed in Delhi last year was that Russian books of many kinds and on many subjects are more readily available in the shops than English books. The Government have already announced measures to improve this state of affairs, for which we are grateful. The supply of books is important, particularly the supply of textbooks to libraries. I remember very well that when I was an undergraduate just after the war textbooks were very scarce and one could not buy them. Therefore, one was dependent on the libraries. If the supply of English textbooks to the British Council and university libraries and other places could be increased, it would win us a good deal of good will.

Incidentally, it is of importance to people who use libraries that they should be open at a time which suits their convenience when they have time to read rather than be open at a time exclusively for the convenience of the staff who have to run them, and here a balance of convenience would be helpful.

Going back to the White Paper, the decision about Commonwealth scholarships and fellowships and the meeting which is to be held next year to make arrangements for this matter are very good news. I was glad to see the emphasis which the Government put upon training in what are called the humanities. Because we are short of scientists and because scientific knowledge is such an important thing in the Western world, we tend to over-emphasise the importance of scientific education and are apt to forget that in the less advanced countries the need is still not so much for scientists as for all-round administrators. I therefore welcome the emphasis that has been placed upon this point by that part of the Report.

I also hope that the plan referred to does not only envisage a one-way traffic of scholars and students from the Commonwealth to this country. I hope that they will also go in increasing numbers from this country to the Commonwealth. In this connection, I will mention the work of the British Council in India, some of which I had the opportunity of observing. This is a first-rate example of what can be achieved with very little money available.

India must be one of the few countries in the modern world in which one is as likely to get a full capacity audience to listen to a lecture on Shakespeare as to get an audience which wants to watch an American film. Not only do more intelligent people attend, but more people want to go. Professors with the academic qualifications to give such lectures make a bigger impact than the type of propaganda which is disseminated by films, and the cost, I imagine, is very much less.

I think that it is true that because of 100 years or more of contact with British civilisation there has been implanted in India an appreciation of our standards and values. This also applies to the rest of South-East Asia, and there is a real hunger for close contact with those values at first-hand through the medium of professors and others who may be able to go there. This is a hunger which we would do very well to satisfy if we can.

There are two impressions which I formed from seeing the work of the British Council in India—

Photo of Mr James Jones Mr James Jones , Wrexham

I am following the hon. Gentleman's argument with considerable interest, but I wonder whether too much emphasis is being placed on the teaching of English in our Commonwealth countries. I am wondering whether we could not go further and make more advance along educational lines if we talked to people in their own tongue and showed them that we respect them by paying due respect to their own language?

Photo of Mr James Ramsden Mr James Ramsden , Harrogate

I am obliged to the hon. Gentleman. I think I said before he came into the Chamber that some people objected that we might offend national susceptibilities if we pushed the teaching of English too far. I said that I was not convinced that that was a good argument for not doing it, because English is the medium through which so much of the technical and scientific information which is wanted nowadays is conveyed in textbooks and scientific journals, and so on. The desire for this kind of information is so strong that it should outweigh any tendency to feel that English was being pushed politically.

Photo of Mr Ernest Thornton Mr Ernest Thornton , Farnworth

Would the hon. Member not agree that a profound effect has been caused in India by the countless Russian technicians there, who have gone equipped not only with technical knowledge but with knowledge also of the Indian language?

Photo of Mr James Ramsden Mr James Ramsden , Harrogate

That is perfectly true, but I am not sure that it is a good argument for letting the position of the English language slide. If that happened, all our technicians would have to learn the other language. At the moment they do not need to do so. This is an advantage that we enjoy.

I wanted to make two points about the work of the British Council. It would be a bad thing if the Council's activities tended to be too much concentrated in the rather artificial and hot-house atmosphere of New Delhi, which has an atmosphere, I believe, rather like Washington, although I have never been to Washington and cannot make a fair comparison. It is, in a sense, unlike any other city in India, and it would be a pity if the British Council were too much concentrated there, as perhaps it tends to be.

Secondly, it would be a good thing if suitable men could be made available, through the offices of the British Council, to serve all over the provinces of India as, for example, curators of local museums, professors occupying chairs in local universities, and so on. if this were to happen, each one might well become a kind of nucleus of British ideals and values and in this way they would have an influence out of all proportion to their total numbers or the cost of making them available.

Soon after our delegation returned from India, I was very impressed by reading an article in the Observer by Mr. Pannikar, which exactly hit off this approach to the question which the British Council had put in my mind. He suggested what he called a British school in Delhi, analogous to the British school in Rome or Athens —in other words, a centre, for want of a better term, of British culture from which the influences and the information for which there is a hunger in India could be disseminated.

I hope that the section of the White Paper on education, linked, as it is, with plans for technical development in the Commonwealth, although it has been less noticed, perhaps, than other sections of the White Paper, will be vigorously followed up by the Government. It holds great promise for Commonwealth development and is among the most important sections of the White Paper. I hope that the House will not feel that I have erred in spending so much time in discussing it.

7.44 p.m.

Photo of Mr Malcolm Macpherson Mr Malcolm Macpherson , Stirling and Falkirk Burghs

I am rather reversing the normal convention of the House when I say to the hon. Member for Harrogate (Mr. Ramsden) that I do intend to follow his speech. I, too, intend to speak on the section of the White Paper dealing with education. It has been an attractive experience to listen to the hon. Member speak on the same theme. I do not disagree on any of his major points. Indeed, I do not recall even any minor point in the hon. Member's speech with which I was at odds.

The hon. Member talked about the importance of teaching English from the economic viewpoint and, in general, I certainly agree. In doing this, the hon. Member took a specific instance of the general theme, stressed by the White Paper in introducing the subject of education, that education is an essential to development and thus has its strong economic value. In the old days, one used to think of education as being essentially a cultural matter with, perhaps, certain professional schools tacked on to it. Nowadays, however, there is no doubt that, as the White Paper tells us, education is an essential to development. It has a strong economic value without having lost its strong cultural value. From the purely political point of view it is also important, as the hon. Member stressed from time to time during his remarks.

I shall not do more than touch upon the education section of the White Paper, but I believe that we are in a good deal more danger than is apparent in same places from Communist doctrines because our educational effort or our educational assistance to the territories concerned has not been quite strong enough. The more we do in the matter of education in the Commonwealth, the more we can ward off alien doctrines of that sort.

The general picture of education, particularly in the underdeveloped parts of the Commonwealth, calls for a considerable effort of interest, investigation and planning. One gets the picture of a pupil taking a primary course and then hunting for a secondary course but being unable to get it, of pupils hunting for technical courses but being unable to find one, and of pupils taking secondary courses but being unable to take the next step of going on to professional training, university or higher technical courses because openings were not available. That kind of thing represents a continual search for further opportunities in education at all levels.

When I speak of education, I refer to it in the broad sense in which the White Paper uses the word, education which involves training as well as formal scholastic education. One of the things that happens is that people find all sorts of openings where openings do not exist in the ordinary provision in the Colonies, for example, that the colonial Governments make. They then find other openings provided, perhaps, by the funds of our "friend" Nasser, or from other sources. It is not always possible simply to expect that a youngster at the end of a secondary school course will decide that since he cannot go on to a university or professional course, he will stop his education there. If funds are made available from another source within the Commonwealth, he is likely to be tempted to accept those funds to continue his further education. This seems to me to be one of the major elements in the whole picture of education in the Commonwealth.

We have a strong interest in education. One of the points made by the White Paper, and also by the Chancellor of the Exchequer when opening the debate, was the widespread and deep interest shown in education throughout the Commonwealth and at the Montreal Conference. That interest in education is reflected in youngsters themselves and yet they cannot be satisfied. We are not giving them enough education or sufficient avenues to go ahead.

The White Paper leaves me in doubt about how this problem will be met. We have heard of the conference to be called at the beginning of next year. Judging from the earlier paragraphs in the section dealing with education, one assumes that the conference will have wide terms of reference. The first paragraph speaks of the needs at all stages, from primary education to the training of foremen and technicians and right up through university study to postgraduate level. If the conference is to have that field of reference, well and good, but one has the impression that it has not, and that the conference will be concerned mainly with a narrower field than the field one would want it to tackle.

The first item mentioned for the conference to discuss—the more unofficial word "meeting" is used in the Report—the main point of the meeting seems to be, when one comes down to the later paragraphs of this section on education to discuss the provision of scholarships and fellowships for advanced education. That is always a rather glamorous thing to do, and there is a great deal of interest in people finishing their university courses in, say, West Africa or India, and then going to Canada or coming to this country to do post-graduate work.

There is very great interest in boys coming from the secondary schools in the Colonies to take university courses here, and that might rather tend to attract funds from services which would not be attracted to give funds to more prosaic work at other levels. It does not seem to me that that is the primary need, and I hope that the Government will assure us that when this meeting does take place early next year it will not be concerned only with universities and students at a fairly advanced level.

I hope, also, that the Government will tell us who is to attend. I am not thinking of which particular nations or territories, but rather of which authorities or institutions within the territories that will be represented. Who is to attend from this country? Will they be representatives of the Government or of the universities, or of both, plus extra-academic educational institutions, and so on? One would like to know that, because it would give something of a picture of what the meeting is to tackle.

One of the things with which it seems to me to be necessary that such a meeting should attempt to deal is to provide some sort of general picture of what is going on in the educational field in the Commonwealth. We ought to know where the big gaps are, and where the big successes are, and, beyond that, we ought to know, not just in a haphazard way, that particular members of the Commonwealth can help others. We ought to be told whether any particular gap in a particular country can be helped by, among others, certain of the territories mentioned. It seems to me that that is the kind of thing which it is possible to do, and, while one cannot go into it in great detail, it is both necessary and desirable.

How great, for instance, is the demand for higher education at the university level or professional level? We in this country cannot satisfy our own local demands here. What is the demand that will come from outside? The Chancellor said that 10 or 12 per cent. of university places were to be set aside in this country. On what is that 10 or 12 per cent. based? What is the reality behind the actual figure. And, again, what is the mechanism for getting that 10 or 12 per cent.? We cannot give places to all our own local students inside the United Kingdom who are ready for universities.

What shall we do? How does one assign the priorities? Do we simply leave out some of our own students to bring in this 10 or 12 per cent., or do we apply roughly the same level of attainment? Do we cut out colonial applicants for places in that 10 or 12 per cent., who, at their different level of attainment, would also be cut out if they were students from United Kingdom schools? One would like to know a little more about how the thing works. There are all sorts of areas of factual information on which, it seems to me, we could very well do with some sort of survey being made.

A speaker in another place, when the corresponding debate to this one was taking place, suggested—and I think that the suggestion was taken up, at least for consideration, by the Government—that perhaps we shall need not just a meeting early next year, but a permanent organisation to go into these things. There is probably a good deal of soundness in that suggestion. One of the reasons why I say that is that we are concerned, not with a simple, comparatively uniform system of education, as we have in this country, where even its diversities are expressed in terms of principles with which we are all familiar, but with an extraordinary system of very diversified types of education, of different standards, different methods and different subject-matter, with problems of language, and so on.

Inside all that, we have the sort of problem which arises again in territory after territory, because, in this sort of thing, the problems of the underdeveloped territories are in general very similar. They have a great number of similarities with each other. What, for example, do we say is the priority for education in a particular colony? Do we want to give everything to primary education until all the children have got at least primary education, or do we say that we will cut out some people from school altogether t) give more secondary education?

That is what is happening in Kenya, which is concentrating on building up secondary education, knowingly at the expense of some of the primary children. To what extent should we do that? What is the answer to this whole question of priorities? How do we determine that we should be spending more of our funds on university education, although we are not giving everyone secondary education, or even primary education? That sort of thing involves a lot of general principles which, it seems to me, need working out before we can apply a proper policy for education throughout our Colonies and throughout the underdeveloped countries in the Commonwealth generally

There are other similar general problems, and it seems to me that the proper sort of organisation to investigate these things, to find out enough about them to be able to take decisions definite enough on which to base policy, might need to be a permanent organisation of some sort. It might not need to be full-time, but a permanent organisation, composed possibly of people engaged in other educational activity. It seems to me that we need an organisation which will try to deal with some of the fundamentals on a long-term basis.

I do not want to go into questions not quite so fundamental as that at any great length, but it seemed to me that, when the conference turned to the subject of education, it was turning to a subject which has not merely cultural values, but also economic and political values. I am not going to stress the political values. Like the hon. Member for Harrogate, I would stress the economic values, and say that this is a question which, all through the Commonwealth, we have to settle in terms of policy. I do not myself think that we know enough about what is happening in various parts of the Commonwealth to be sure about questions of policy and what is the wisest policy to follow here and there.

Take, for example, the question of standards. I am a bit of a heretic in this matter. It is considered almost treasonable in this country to say that our standards for university degrees are too high. I think that, in practice, it may be that they are too high for us to export. In fact, in America and in some other countries the standards are lower. Our standards are the products of the nineteenth century and the early twentieth century, periods in which there was some slack in the economy all the time, and people were not attracted by the terrific surge of interest which an expanding economy gives. We had more possibility of building up first-rate schools and universities in the first part than possibly we shall have in the second part of the twentieth century of maintaining them.

That kind of thing needs to be examined, and a great number of the general matters of principle. I hope, therefore, that when the debate is wound up we shall be told in a little more detail what the meeting in the early part of next year will do, how it will be constituted, what will be its terms of reference and whether there is any likelihood of some of these long-term problems being referred to a permanent or semipermanent long-term body.

8.1 p.m.

Photo of Sir Albert Braithwaite Sir Albert Braithwaite , Harrow West

I am very glad to have the opportunity of taking part in the debate, and I hope that the hon. Member for Stirling and Falkirk (Mr. Malcolm MacPherson) will forgive me if I do not follow the theme which he has developed so interestingly on the educational side. I want to apply myself more to the commercial aspects of the Montreal Conference and those which relate to the expansion of world trade and the liquidity of capital for the development of our Commonwealth resources.

First of all, I should like to pay tribute to the Chancellor of the Exchequer and the President of the Board of Trade for the brilliance which they displayed in leading our own delegation to the Montreal Conference. Reading between the lines, it seems to me that what they did there literally saved the conference from being almost a stalemate. They infused some life into it. At the same time I am not satisfied that the Conference Report is by any means a document upon which to rebuild and revitalise the British Commonwealth of Nations. Its implications are narrow. ft is phlegmatic. It is not precise enough in its conclusions, and it gives no real, positive direction on how even those conclusions will be carried out.

I wanted something much more vital to lead our Commonwealth affairs than a lot of pious platitudes. Many people have said a great many things about how we should develop the Commonwealth, but there has been a remarkable absence of action since the Montreal Conference took place. The Canadian Prime Minister came over here and made great speeches on what should be done, but I have seen no real reflection in deeds implementing the words which he uttered.

We are members of a great institution of 600 million people and this Commonwealth of ours is not an exclusive white man's club. Divers races of every kind are involved. There are underdeveloped territories and territories emerging into self-government. There are a variety of conditions which need very careful analysis and need to be under scrutiny by a competent central authority, such as the secretariat which is suggested in one of the concluding paragraphs of the Conference Report. This secretariat has a great job to do. It must weld these different elements together to make them into a homogeneous whole which can work to the advantage of everybody and not a particular section.

I am quite certain that with dynamic leadership in the secretariat we can have a volume of information and statistical data on which to base our future handling of this problem, so that we can lay plans of value and importance to the Commonwealth as a whole. We must have someone to preside as a chancellor of the exchequer of the Commonwealth to start with, because finance is at the root of practically all the problems that we must face. There must be a central authority to deal with finance.

This country cannot carry out that duty, because of many factors which are well-known to the House. The two world wars and the great strain which this country has undergone has limited our resources here. We have to mobilise the resources of the Commonwealth together in some form, but there seems to be a holding back by certain parts of the Commonwealth from taking part in revitalising the finances of the projects which are necessary to ensure Commonwealth expansion and proper economy.

I have made one or two speeches in the House in connection with the Commonwealth Bank. Indeed, I have had many discussions with my right hon. Friend the President of the Board of Trade on this very matter. I believe that it is vital to us to have a Commonwealth Bank conducted exclusively by members of the Commonwealth. If other financial institutions in any part of the world want to come into the development of the Commonwealth they can come in through that avenue. They should not be allowed to come and go ad lib.

They should not be allowed to come in round the corner, getting money from all and sundry, without regard to the general plan of an expanding Commonwealth which is being built to be progressively stable in its economy. If we have one element of the Commonwealth dashing ahead of another and taking out all that is best in world trade to the detriment of other parts, we shall be in difficulty all the time. Therefore, this financial institution, this Commonwealth Bank or whatever it may be, must be a Commonwealth institution directed by the Commonwealth and through which all finance must flow for developments under the advice of a secretariat and the planners of Commonwealth expansion in the future.

I believe that these are sound proposals. I know that my right hon. Friends have had great difficulty with some of the other countries. They all say that they are net importers of capital and not exporters of it. But none of these countries is so poor that it cannot find something to put into the common pool if it is given proper representation on an institution of this character.

I have had some experience of finance in the Commonwealth, because companies with which I am associated have carried out tremendous works all over the world. One of them is building the largest harbour in Africa at Tema. Therefore, I have constant meetings with the leaders of the Government of Ghana, a new emerging territory. I know about their ideas. I know that they would welcome a central focal point inside the Commonwealth where they could go with their plans for development and have them considered.

If it is outside the capacity of the Commonwealth as a whole to finance these great undertakings, by all means let us bring money in from the rest of the world. Money has to find a home somewhere. Given attractive terms, it will go where it is safe, and surely it is safe in the British Commonwealth where there is a massive area of mineral and agricultural wealth, probably the largest in the world, lying under the control of Commonwealth nations.

Therefore, I beg the Chancellor of the Exchequer not to allow the Commonwealth Bank idea to become drowned by the World Bank and other institutions. I am sure that the idea does not require a great deal of money. This scheme could be started with a small initial capital which would provide the security for Paying in Brest on money borrowed for the great projects of development. There are hundreds of plans pigeon-holed today which ought to be implemented.

Photo of Mr Ernest Thornton Mr Ernest Thornton , Farnworth

Is the hon. Gentleman giving enough attention to the political risks involved for private risk capital?

Photo of Sir Albert Braithwaite Sir Albert Braithwaite , Harrow West

Anyone who invests outside his own country has to take an element of risk. I hope these central plans for the future of the Commonwealth will be vetted by the secretariat proposed to be set up. The secretariat would bring those plans into the light of day. It would let the world see what we were trying to do, and then what money we have in the resources of the Commonwealth will flow in. If there is not sufficient, let us invite other people to join us in order to make the projects sound.

It is only by an expansion of world trade that we shall keep secure for the next generation the peace of the world. I am sure the Russians have discovered that their economic manœuvres are far more fruitful than any manœuvres they could exercise in a hot war. Indeed their infiltration into the realm of commodities should be seen by our Commonwealth as a real danger, because if the prices of the goods of the primary producing countries are depressed, the standard of living of those people will fall and we cannot expect the Commonwealth to prosper.

I feel strongly about the development of the British Commonwealth, because it can be a great factor for the good of the world if we can centralise our plans instead of having spasmodic improvements. If they are introduced spasmodically here, there and everywhere, without any concerted plan, we shall not integrate the 600 million people into a unit which can help the world.

I congratulate those who took part in the Montreal Conference on the production of this document. Its language is gracefully chosen, but it does not seem to me to convey the sense of urgency necessary for immediate action. I believe this House of Commons is always at its best when it is discussing a matter of this kind, where there are few party political differences. We all want improvement in every part of the Commonwealth, in which we are proud to be partners. Therefore, I hope that the suggestions which hon. Members have made today will be noted by the Government. I beg them to remember that there are some of us in this House who are getting tired of the dilatory way in which these affairs are being handled. It is high time that definite, positive, precise action should be taken, and therefore we hope to see this plan brought to full fruition.

8.14 p.m.

Photo of Mr Ernest Thornton Mr Ernest Thornton , Farnworth

I followed with great interest the remarks of the hon. Member for Harrow, West (Sir A. Braithwaite), and I was very pleased to find myself in agreement with much of what he said. I would remark, however, that the Montreal Conference has failed lamentably to meet the challenge of the times.

This year I have been privileged to pay two extensive visits to Asia and the Far East, and I have come back somewhat alarmed. I do not speak as an alarmist, because these experiences were not new to me. It was my fifth tour of Asia since the end of the war, and my contacts have been mostly with the trade union organisations. So I have seen the trend of developments in China and the rest of Asia during the last twelve years, and it is out of these experiences that feel some sense of alarm after my recent visit. I arrived back in this country only last Friday. I had not been on a Parliamentary mission, so I have not had Parliamentary contacts.

My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) said that anyone who has not been to Asia for six months is out of date. There is more truth in that remark than seems apparent. There can be no doubt that the impact of China on the rest of Asia at the present time is very great indeed. The impressive nature of her productive achievements is leaving a mark upon the rest of Asia without doubt. China's motives, the lack of human freedom and the suffering involved are comparative irrelevancies compared with the impression created on the rest of Asia by her rapidly growing production.

I call the attention of the House to the report by René Dumont, Professor of Comparative Agriculture at the Agronomic Institute of Paris. In this report he calls attention to the fact that during 1958 the agricultural production of China will be increased by between 60 per cent. and 90 per cent. as compared with 1957. He says that what is happening in China is the most impressive agricultural advance in world history. That is having a tremendous impact upon the rest of Asia. Also it is revealed, and I think can now be accepted as true, that China's development this year in iron and steel is equally impressive. It is estimated that this year she is doubling her iron and steel production from 5 million tons in 1957 to 10 million tons in 1958, and that in 1959 it will be 20 million tons, which is more than the production of France. Now this is being achieved by investment in manpower rather than investment of capital, and her steel production now is proceeding on terms that are expensive in manpower but cheap in capital investment, in small productive units that are turning out 30 or 40 tons per day only.

That brings me to the impact of China on the rest of Asia. When I was in India a few days ago, I was informed that within the next few months a Bill would be put through the Indian Parliament to deal with the land problem and the redistribution of land. It has already been decided that that redistribution of land will be on the basis of collectives, again following broadly the Chinese pattern. Already, 30 or 40 licences have been granted for the erection of small steel plants, again on the Chinese pattern. That is very important and an indication of the trend to which I have called attention.

Hon. Members have spoken of the damage done by the fall in commodity prices. The people of Asia think that booms and slumps in commodity prices are devices of the white men for robbing the coloured men. That may or may not be true, but it is what they think, and their actions and decisions are based on what they think and not on what we think they ought to think.

I returned from the Far East by way of Thailand and Pakistan, spending a short time in each of those countries. I was extremely disturbed to see military dictatorships established in what we have been accustomed to call Free Asia. The message I want to put across is that if in what we considered to be Free Asia we have military dictatorships and those military dictatorships fail to match the productive advance of China, the long-term result in Asia is certain. If there is a lack of freedom in those countries and low production, and in China there is equally a lack of freedom but high production, there is no question of the way Asian countries will eventually go.

I do not think that the Commonwealth alone can meet this challenge. Properly handled and organised and directed with vision and vigour, the Commonwealth can be one of the most effective answers to the challenge of Communism, but we have to realise that we cannot leisurely go on this road and that private risk capital cannot provide the investment needed to meet the challenge.

We are living in a world of competition for higher living standards, and that corn-petition will be keener in Asia than in the West. We are meeting a competitive challenge now, as between Russia and America and ourselves, for who will have the highest living standards. However, in Asia the challenge is sharper and more keenly felt than in the West. Unless the Commonwealth and America, with vision and vigour, can direct a scheme rapidly to lift the living standards of the underdeveloped peoples, we shall assuredly lose the race in Asia, and if Asia goes Communist the Western world will be in a very hazardous position.

America is now appreciating the imminent dangers of this challenge. Under Commonwealth leadership and with American financial assistance, it will be possible to provide capital development projects. However, let us make no mistake about it there must be no strings of any kind. If any strings are attached to such projects, it will be completely fatal and will have the opposite effect to what is intended.

In Asia today we are facing revolution by example. It will probably be said that what is happening in China, with all its inhumanities, is something which the rest will not follow. In my judgment, the result to those poverty-stricken peoples will be far more important than the means towards the results.

8.25 p.m.

Photo of Mr Ronald Russell Mr Ronald Russell , Wembley South

Most of my right hon. and hon. Friends have begun by congratulating Her Majesty's Government on the results of the conference and on the production of the White Paper, although sometimes with reservations. I do exactly the same, and there is one matter especially on which I congratulate our representatives at the conference—the high pressure at which they worked while the conference was in progress.

As you know, Mr. Deputy-Speaker, I had the good fortune to be staying in Montreal during the conference, because I was lucky enough to meet you in the Queen Elizabeth Hotel while you were passing through. As my right hon. Friend said, that is a vast building. I understand that our representatives slept on the fifteenth floor, worked on the third floor and ate at one or the other, so that there were periods of three or four days when they literally never put their feet on the ground. They must have worked with tremendous concentration during the eleven days of the conference, and they deserve our grateful thanks, as do the other delegates, for the hard work they put in.

I want to be brief because there are others who wish to speak. What I have to say is summarised in paragraph 58 of the White Paper, which refers to the help given to under-developed territories. The last sentence of that paragraph says: One important way in which help can be afforded to the under-developed countries is to provide opportunities for them to expand their trade on a stable basis thereby increasing their export earnings and improving their prospects of attracting external capital. That is a sentence with which most of us will agree, but what worries me is how it will be done, and there is nothing in the communiqué to explain that. Indeed, the next paragraph deals with the shortage of capital without trying to solve the problem.

This is where the conference fell down. In an earlier paragraph, the White Paper said that the conference reaffirmed the need for maintaining and not weakening or discarding the Imperial Preference system. I know that that is a proposition with which the hon. Member for Bolton, West (Mr. Holt) does not agree. What I am sorry about it that no steps were taken to enable us to increase and develop the system. I have never yet found anybody except the hon. Member for Bolton, West putting up an economic argument against doing that certainly no argument has come from the Front Bench putting forward any economic basis for not doing it.

We all know the reasons. First, there are the restrictive clauses in G.A.T.T. and, secondly, there is the insistence of the United States economic policy that the Agreement shall be adhered to. Until we take counsel among ourselves with a determination to end that restriction we shall never get inter-Commonwealth trade going on the right basis. That is why I could not refrain from saying "Hear, hear" to the interruption made by the hon. Member for Bolton, West during the Chancellor's speech when the hon. Member asked why, if the world preference system had been so good in the past, we were whittling it away and not increasing it. I am sorry that we are whittling it away and that the Australian and New Zealand trade agreements—one made a year ago and the other only recently —have further, if only slightly, whittled down the margins of preference. This is a step in the wrong direction.

Only this morning I received in the post another document which emphasises what I said, namely, the November issue of the West India Committee Circular. It contains an article headed "Montreal and The West Indies," and says that the conference has provided no answer to the question which, to the West Indies at least, is probably the most important of all. It goes on to ask the question. … how are they in the coming era of free trade to continue to derive the profit they need from resultant products. In other words, although we are promising the development of the West Indies and other parts of the world we are not ensuring that we can find markets for the produce they develop.

Another paragraph in the article expresses anxiety about two commodities which are at present quite secure, namely, citrus and bananas. It says that in the agreements negotiated a few years ago those two industries have been allowed at least to preserve themselves and are on a fairly stable basis, but goes on to say: Unhappily for the West Indies, every pronouncement made by the United Kingdom makes clear its intention to remove the quota protection hitherto given to West Indian citrus as soon as the protection can no longer be justified for balance of payments reasons. Another industry which, under the same umbrella, has expanded and given new hope to the very poorest territories in the West Indies, transforming the outlook of thousands of impoverished peasants, is the banana industry. The threat to this industry is equally ominous. I want to know whether the forebodings of this article are seriously justified, in that there is a danger of these two protected industries being abandoned in the interests of freer trade, or whether they can be allowed to go on under the protection they are now enjoying and possibly expand in future and provide still more employment for the people of the West Indies.

Of all the less developed parts of the Commonwealth the West Indies takes pride of place in its claim for our help. The islands of the West Indies, incidentally, are our oldest possessions and are most deserving of constitutional advance. I hope that we can reassure them on this point.

What makes me unhappy about the result of the Montreal Conference is the complete lack of any determination to end the policy of non-discrimination which has been thrust on us ever since the end of the war, which was enshrined in G.A.T.T., signed by the party opposite —a complete departure from our traditional policy. For about 250 out of the last 300 years this country has followed a policy of protecting our home industries against unfair foreign competition and has given first preference in our markets to Commonwealth produce—or, as it was in the old days, Empire produce. The Empire countries have done the same thing. There was a gap of about fifty years when we had a free trade era, when the party represented by the hon. Member for Bolton, West had their way. It was not really a prosperous era, in that we began losing our position in the world, and our share of world trade began to shrink.

The four older Commonwealth countries of Canada, Australia, New Zealand and South Africa led the way back to imperial preferences, on a unilateral basis, in the early 1900s. We reciprocated in 1919, and developed them to their present level in about 1932. We have gradually come away from that ever since. I think that the Government should now follow the example of Canada, Australia, New Zealand and South Africa. They should rectify the condition of unbalance which has developed as a result of the inflation of post-war years and offer to raise the specific preferences which we grant to Commonwealth countries—and which the hon. Gentleman opposite wishes to abandon altogether—to their pre-war level in order to correct the condition of unbalance which has caused New Zealand, Australia and Pakistan to reduce their preferences to us. We could do that unilaterally. In this case there is no need for reciprocity because we owe them something in order to catch up with the advantages which we enjoy in their markets.

That is the first thing we should seek to do under G.A.T.T. We should then attempt to renegotiate the whole of our imperial preferences in the light of postwar events. Then we shall set Commonwealth trade on the right lines. But until we do that, we shall continue to be at the mercy of world economic forces. The Commonwealth will be at the mercy of American exports and we shall be at the mercy of undercutting by Communist countries which hon. Gentlemen opposite have mentioned. That is the only way in which we can get back to a sound economic state and get the whole of the Commonwealth trade on a sound economic basis.

8.36 p.m.

Photo of Mr James Johnson Mr James Johnson , Rugby

I intend to follow the example set by the last two speakers and to make a short speech, because I notice that the hon. Member for Bury St. Edmunds (Mr. Aitken), who is a Canadian, wishes to speak. What he has to say should be interesting as he will be the only Canadian who will have an opportunity to speak.

I wish to refer to two of the speeches made earlier in the debate, one by the hon. Member for Lanark (Mr. Patrick Maitland) and the other by the right hon. Gentleman the Chancellor of the Exchequer. I have never heard two speeches which were more absolutely opposed to each other. I am not referring to the content of the speeches, but to the manner in which they were made. The hon. Member for Lanark believes in the Commonwealth and he gets up and says so. The Minister spoke as though he were addressing a pleasant Sunday afternoon gathering.

If the speech of the hon. Member for Lanark may be likened to bubbling champagne, that of the Minister was like stagnant Guinness. That sort of thing shakes hon. Members on this side of the House, because in such a debate as this we should all feel the same way about the Commonwealth. After all, we stand or fall by the Commonwealth and we should do our best to act together. This is one debate where we might reveal a certain amount of bi-partisanship. We enjoyed listening to the hon. Member for Lanark nudging and needling his Minister who, in the language of the hon. Gentleman, who is a Scot, might be compared to a "lazy loon" in this matter.

The Chancellor of the Exchequer led our Commonwealth Parliamentary delegation to New Delhi. He gave an account of the Commonwealth Parliamentary Association in just the same easy-come easy-go fashion in which he gave an account of the much more vital and much more important conference at Montreal. The right hon. Gentleman is a member of the party which is alleged to be the party of "Empire and Commonwealth". But it is the backbench Members opposite who show some signs of life while their Ministers sit half-dead on the Front Bench. If the Government mean what they say, let us hope that we shall hear answers to the questions put by the hon. Member for Lanark. I could ask similar questions, but the hon. Member asked them in a much better way than I could.

I hope that we shall hear answers to those questions, particularly regarding the Commonwealth Bank. Who will argue publicly that the Commonwealth could not finance its own bank? The Labour Party is pledged to spend 1 per cent. of the national income on the underdeveloped countries, but places like poor, poverty-stricken Ghana can earmark £10 million to help Guinea, and the Canadians, the Australians and other peoples in the white and coloured Dominions are willing to do something about this matter. Why cannot our Government give a lead? Why do they sit there in that stagnant Guinness fashion?

I want to ask two questions. One is about this widening gap between the wealthier more developed western economies of the United States of America and Western Europe and the underdeveloped poorer economies, particularly in Asia and tropical Africa. I am told by the Manchester Guardian that this gap is widening. Professor Frankel would say that it is not. From what I have learned when overseas I believe that the gap is widening, because although we are lifting slowly the standards of these people of the underdeveloped areas we in the West are going ahead at a much faster pace.

It is like a town. Size begets size. A town tends to become bigger and bigger. It is the same with a country's economy. The more wealth it has the faster its development and the more dynamic it becomes. We must pump in more capital to these underdeveloped territories. The idea of the Commonwealth Bank has been turned down. We were told earlier by my hon. Friend the Member for Farnworth (Mr. Thornton) that our capital investment in the private enterprise sector is shirking its job in doubtful political places like India and elsewhere. If that is so, the Government must do their task. We were given some shattering figures earlier about where the World Bank money is going. It is invested in the "safe" white dominions, like American automobile investments in Melbourne, the South Africa and Central African Federation but not in the places that need it so badly. Mr. Desai, the Indian Finance Minister, who was at the Montreal Conference said that Neither the world nor the Commonwealth can continue to march forward if some countries and their peoples have nothing but poverty and stagnation to look forward to. This sticks out a mile. The Government of the day are doing little in the way of capital investment to lift up the standards of these peoples of the underdeveloped areas. I should like the Chancellor to address himself to this question and to the need for stabilising commodity prices. I cannot understand why the Chancellor, who has continued the Commonwealth Sugar Agreement and given more stability to places like Mauritius, Barbados and Fiji and elsewhere, cannot carry this arrangement on to other commodities and give the same stability to other overpopulated territories which need the backing by a guaranteed market in these wealthy densely peopled islands of the United Kingdom. The Government do this in regard to sugar but they will not support other commodities for these overseas territories. I hope that we shall have an answer to some of these questions later.

At Montreal, India, Pakistan, Ceylon and the older white Dominions had Ministers to speak for them. What about the Colonial Territories? I gather that their representatives were there as observers and indeed made valuable contributions to the debate. East Africa with its millions of people wants money even more than South Africa, Australia and the other Dominions. What are we doing about that? They cannot get money in the New York or London capitalist markets. The right hon. Gentleman will have to turn his attention to getting more Colonial Development and Welfare money for these Colonial Territories, because they cannot go on to the market to get money for their own internal development.

On the question of education, I have asked in the past when we are to have a Commonwealth education conference and I have a Question down on Thursday on that subject. This question of education is critically important. I am glad that the Chancellor of the Duchy of Lancaster has just come into the Chamber. It is not only a matter of having Somalis and Zanzibaris learning English and becoming educated in our way of life and thus countering some of the stuff poured out by Nasser and his friends in the Middle East.

The fight between East and West will be settled not by guns or conflict but, in this technological age, by the nation which has the higher educated people. Our biggest investment need not only be in machines and the like, but in educated people. That will be our biggest capital investment. Joe Stalin said in the Soviet Union, "The nation's capital lies in its young people." We should educate more than we have done the people in our overseas territories.

The standards in our overseas universities are much too high. It is a complete farce that matriculation standards are so high in Nigeria that out of 35 to 40 million people we have only 600 or 700 in the universities. We have come down to a dismal decimal of 1 per cent. of the population who go on to higher education. I hope that the Commonwealth education conference which is to take place next year will be wide and far-reaching, and will discuss all these matters and particularly the subject of teacher supply. We cannot get teachers overseas. I hope that the education conference will be very well worth while. The composition of it must be carefully considered. There must be not only Government representatives and people from the National Union of Teachers, but people from local education administration.

Lastly, I would refer to the meeting of Commonwealth Parliamentarians which was also mentioned by the hon. Member for Lanark. If we back benchers met Members of Parliament from places like Sidney, British Columbia and Ghana, we might collectively be able to needle apathetic Ministers into doing something, Commonwealth Bank or no Commonwealth Bank. If we have all these people talking about expanding the Commonwealth which we all desire so much we might push some of our "lazy loons" on the Government Front Bench into more active efforts.

8.48 p.m.

Photo of Mr William Aitken Mr William Aitken , Bury St Edmunds

I have sat here for a very long time and have had the not unusual experience of hearing a good deal of my speech made for me by my hon. Friends the Members for Liverpool, Wavertree (Mr. Tilney) and Harrogate (Mr. Ramsden). I start off by congratulating the Government on a very remarkable achievement in Montreal. It is remarkable that Britain is at last able to give a real lead because she is in a position to do so again as the result of the policy of Her Majesty's Government over the last few years. It was very interesting to mark that for the first time the country which I know best, Canada, has also become a great leader in the Commonwealth. This is probably one of the most significant things about the whole conference.

I do not share the strictures laid by my hon. Friend the Member for Thirsk and Malton (Mr. R. Turton) upon the right hon. Member for Rochester and Chatham (Mr. Bottomley), who had a most unenviable job. He had to get up and try to beat the Government with a feather. That is what it boiled down to. There is nothing that the Opposition can attack in this achievement of the Government, which is absolutely splendid. My hon. Friend the Member for Lanark came round towards the end of his speech into agreeing. This achievement really has infinite possibilities for Great Britain.

The main reason why I have denied myself considerable sustenance over a considerable time is that there is one important point which must be made in the debate, and it cannot be made with too much emphasis. It is that probably the most important subject discussed at the Commonwealth Conference was commodity prices.

Commodity prices have one very inconvenient characteristic. They fluctuate very widely in the short term and usually rise markedly in the long term. The man who speculates in commodities very often loses his shirt, but the man who invests in the production of commodities usually ends after a few years with a fortune. The question of commodities is particularly important for Great Britain. It is important for the whole world, but for Britain and the Commonwealth our inability to deal with these wild fluctuations is one of the major headaches of our age.

Because of the immense power of a buyer in a buyer's market, which there is at the moment, I believe that we are in a position to give a lead—not just for the Commonwealth but for the whole world —on the question of commodity stabilisation. We have had generations of experience in this country in producing, financing, insuring and shipping commodities all over the world. There is a great reservoir of commodity expertise. I have far too much respect for my right hon. Friend and his advisers to start laying down the law about any particular scheme of commodity stabilisation. Several hon. Members have referred to the Grondona scheme. Like others, I have taken a great deal of interest in it, and I find it absolutely fascinating. It makes a lot of sense to me. I think our duty here today is to insist that it should be properly investigated.

I have had some discussions with right hon. Friends about this, and I am not really satisfied with the replies I have had. I am not at all sure that the people who run the vast machine are the best people to advise on the intricacies and mechanism of that machine. It is not always the man who drives a motor car who is an expert mechanic and can tell one all about the best design of car.

Therefore, I believe it would not be a bad idea to hand this matter over to the Cohen Committee. I have looked at the terms of reference of that Committee. I consider that an examination of any commodity stabilisation would be well within those terms of reference. It is an independent Committee, and I am sure that none of us at present is either qualified or would wish to go off the deep end and start bullying the Government. That is not my intention, nor the intention, I am sure, of my hon. Friends, but we really ought to have an answer and ought to know if the Government have any alternative methods in mind. Clearly, from the conference, they have something in mind; I think we ought to know about that. That is my appeal to the Government on the question of commodity stabilisation.

We must also remember one thing about it. I am not sure that my hon. Friend the Member for Wavertree emphasised this enough. Not only will the commodity stabilisation scheme envisage buying commodities, but also selling them. In the long-term history of commodities, the business of selling them can be a very profitable thing.

There is only one other thing I want to say and my hon. Friend the Member for Harrogate has said most of it for me. That is on the question of the use of the English language. There is no doubt that those of us who have travelled around the world in the last few years have found that one of the most remarkable phenomena is the growth of the use of the English language. It may seem a little paradoxical to say that this is going on and then to tell the Government, "You must do more about it", but the answer is that if something is accelerating, why should we not accelerate it still more? I remember being told in one great city in the Far East that the teaching of English was one of the two major professions there. The other was a much, much older profession.

This growth of the use of English is surely one of the most significant things in the whole of our Commonwealth position today. What an opportunity it provides. I believe that anything which the Government can do—they are doing a lot and I hope they will do much more —to press on with the education of people in the English language will be most valuable. To the whole of Africa and most of Asia, English is their window on the world. All the technical skill, all the approach to modern life, must come to millions of these people through the use of the English language, and I therefore hope that the Government will take this very much to heart and will carry out their intentions with all possible vigour.

I see that I am not supposed to speak for very much longer. I wish I could, because I have much more to say. I think the Government are to be congratulated and that this is the beginning of something very big and very great in our Commonwealth development.

8.57 p.m.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

The Chancellor of the Exchequer today claimed personal parentage of the Montreal slogan of an expanding Commonwealth in an expanding world. This is a very worthy slogan, almost an intention paragraph, as an hon. Member said today. Unfortunately, it is in conflict with the Government's policy at home. What we have at present, in hard fact, is an economically stagnating, if not declining, Britain in a Commonwealth which is held back by stagnation here.

The Chancellor also today described the Montreal Conference as forward-looking and outward-looking. I only wish that his policy at home were also forward-looking and outward-looking; but if we compare what he said today with the last number of his own Treasury Bulletin and look at the production trends in the United Kingdom this year, we see in the latter case a line going steadily downwards throughout the year. Another hard fact is that United Kingdom imports from the Commonwealth in the first ten months of this year have dropped by £175 million. The clear reason is that the Government have cut down demand in this country; and, of course, this cut has diminished the income of the Commonwealth countries and, in turn, their ability either to import or to develop.

Not merely have our imports from the sterling area so far this year been lower than last year, but the proportion of our trade coming from the sterling area—and this is literally the sterling area, not the Commonwealth, although they overlap to a large extent—has been declining for five years. The volume of our imports from the sterling area today is approximately no higher, absolutely, than it was in 1954, although our dollar imports have increased by 25 per cent. since then. Under the laissez faire policy of the present Government there has been a steady switch away from the sterling Commonwealth in our imports and towards the dollar area.

We on this side of the House, of course, welcome many of the decisions taken at the Montreal Conference and the Government's actions there, particularly where they will genuinely aid Commonwealth development and expansion. We should indeed have applauded them even more had they been more generous and taken earlier. The main tenor of the debate has been to try to instil a note of urgency in all these matters into the Government.

In view of the ever-growing proportion of dollar imports, I do ask the President of the Board of Trade whether it was wise of him to make unilateral cuts in our import quotas for a large range of dollar imports, such as machinery, newsprint, canned salmon, and so on, without any concession, so far as I know—and if there was one I wish we could be told what it was—from the United States or Canada. All these extensions of quotas, as I am sure hon. Members realise, affect the United States as well as Canada.

Even in the case of Canada, this unilateral gesture will most probably increase the unbalance of trade between our two countries. The outstanding fact about Anglo-Canadian trade, which nobody has mentioned today, is that the United Kingdom still buys from Canada far more than Canada buys from us. Indeed, in the first ten months of this year, we bought £250 million worth of goods from Canada, but Canada bought from us only £150 million worth. I should be the last person to suggest that every country should try to have exactly balanced trade with another—we all know that that would not work at all—but when the unbalance is as great as that, I should have thought that the concessions by one side might reasonably be balanced by concessions from the other.

Yet what has happened? Only this summer Mr. Diefenbaker's Government actually raised their tariff against British woollen goods, only a month or so before the Montreal Conference. If I am wrong and this increase has not been put into force, I hope that the President of the Board of Trade will tell us. Here is an essential British export to a dollar market, produced by one of our most important industries, which at the moment is acutely depressed, and yet Mr. Diefenbaker, who professes, I am sure sincerely, to have great enthusiasm for Anglo-Canadian trade, raises the tariff against British woollen goods just before the conference. Then the President of the Board of Trade, without securing any concession in return except the promise by Canada to leave preferences where they are and not to make them any less favourable from our point of view, gives away heavy cuts in dollar import quotas largely to meet the Canadian case.

Unless there other facts about which we have not yet been told, I think that we could have expected a mutual agreement that the wool tariff would at least be left where it was, in return for the high quotas for machinery, canned salmon, and so on. After all, it is purely the President of the Board of Trade's job at these conferences, apart from other things, to stand up for British industry.

I know that we were told by the Chancellor that all had a wonderfully happy time locked up in an hotel for ten days or more, almost like the College of Cardinals, almost swimming in good will, or so it sounded. But if one were a Yorkshire woollen worker on short time, one would have felt that this good will might be a little more mutual. I realise that the Chancellor said that there was no horse trading; but I think it is a little rough on our own industry to have tariff barriers erected against it, to have no concession made in return, and then to be told that there was no horse trading and that everybody in British Columbia is most enthusiastic.

The President of the Board of Trade seems a little prone to these acts of unilateral "disarmament" in economic affairs. As an hon. Member opposite said, we have had two new trade agreements—one with New Zealand recently and one with Australia a little earlier—in the last two years. In both cases, I think, the United Kingdom has agreed to curtailments of the preference in our favour without any counter-concession in return. Again, if there was a counter-concession, I should be very glad to hear from the President of the Board of Trade what it was. Would not Commonwealth expansion get along rather better if concessions in future could be mutual and not always one-way gestures by the United Kingdom? At any rate, we on this side are in favour of collective rather than unilateral disarmament in these matters.

I also cannot help thinking that mutually beneficial agreements with the Commonwealth might have been far easier, had not the Government arbitrarily thrown away, for doctrinaire reasons, the ability to make State purchase contracts for Commonwealth produce. Both Australia and New Zealand in the last few years, and probably the West Indies also, would have welcomed, I believe, a willingness on our part to guarantee markets for some of their farm produce. This method might indeed have been just as successful, and far more immediately practical, than some of the ambitious commodity stabilisation schemes that were argued at Montreal. I do not believe that we should launch out into State purchase schemes all over the place for all sorts of commodities; but I seriously suggest to the Government that, where a Commonwealth Government asks us to do so for the sake of Commonwealth development and stability, we ought not to turn it down out of hand for purely doctrinaire reasons.

Both the Montreal and Delhi conferences rightly treated development, particularly of the poorer countries, in the Commonwealth as the paramount task. I am sure that that is wise. Economic development of the sterling Commonwealth is, for one thing, far the best hope of overcoming our own still excessive dependence on dollar sources of supplies for essential materials and foodstuffs.

Politically, such development is even more important still. In the world in which we live today, we see, on the one hand, tremendous efforts being made in India and other Commonwealth countries, by democratic methods, to provide new factory employment fast enough to match the increase in millions in the population. Recent events in Pakistan, as one hon. Member has already said, show that democracy and Parliamentary government are still very much on trial in those countries, and that the battle is as yet by no means finally won.

On the other hand, we see development and industrialisation going ahead at a great rate, not merely in Russia, but in China. All my information confirms what my hon. Friend the Member for Farnworth (Mr. Thornton) said in his extremely interesting speech today, that progress in China is now extremely rapid. My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) also showed that, at least in the production of raw cotton and manufactured cotton, to judge by the trading effort she is making, China is undoubtedly going ahead fast.

We all made the error some years ago of underrating the speed of advance of the Russians in industry. I do not doubt that the Chinese are making at lot of mistakes; but neither in Russia nor China is there any appreciable unemployment. That fact will certainly not be overlooked in the rest of Asia.

The moral of all that is, as my hon. Friend the Member for Ashton-under-Lyne said, that we have to hurry faster with Commonwealth development. I support everything that hon. Members in all parts of the House have said today about the need for more urgency and speed in all this. Yet this is precisely where our own stagnation policy at home in the last year, and to some extent in the last two years, has done so much harm. This policy, together with the American recession—which the Americans have cured, whereas we have not yet cured our own recession—has caused the fall in world raw material prices over the past two years, which has in turn set back progress and development all over the undeveloped countries.

I see that the Paymaster-General is present. A few years ago, he argued that a high British Bank Rate and a deflation here had lowered world prices and thereby turned the terms of trade in our favour. If he really believes that argument, he must, I suppose, think that the British stagnation policy introduced in September, 1957, has been a main cause of the partial impoverishment of the underdeveloped countries in the past year.

It really is no good starting a deflation here, and then talking about helping the rest of the world by commodity price stabilisation schemes and all these other devices. Unless there is expansion of demand in the United Kingdom, the United States and West Europe, then progress in the poorer countries will be slowed down, whatever we do. Indeed, stagnation here does as much harm to India, the West Indies and New Zealand as it does to our own coal or steel industries and many areas of this country. I believe that expansion of world demand everywhere is also the only answer to the problem of which my hon. Friend the Member for Ashton-under-Lyne rightly warned us today—that competition from Asia in all sorts of industrial products will grow steadily more intense over the next ten years.

Certainly, the decisions at the Delhi Conference, which we on this side of the House have long urged and fully support, to raise the International Monetary Fund quotas and to double the subscription to the International Bank, should both help towards expansion. So I should have thought, should the United States plan for an international development association. I hope that the Government will not obstruct that plan, which, at least, is a positive idea. All these seem to us to be in the excellent tradition of the Colombo Plan. But how soon are these schemes to operate?

When one reads, for instance, of thousands of people in India rioting in order to get a number of jobs which were far too few for any but a fraction of them, and of the prospect of the labour force in India increasing by millions faster than there is any hope now of jobs being created, it really is not a compliment to the free world to be told that the administrative process of expanding the Fund and the Bank will apparently take something like a year. Is this really necessary? I believe that it will require legislation in this country to increase these subscriptions. If so, I can pledge my hon. and right hon. Friends to push on quickly with that legislation, assuming that it is in the spirit of expanding Commonwealth development.

Both the Bank and the Fund—and I think this is common consent—have proved their value since the war, though the Fund is still a very long way from realising the hopes originally placed in it. The International Bank has been more successful, and certainly the world would be a poorer place today if we had not had it. I sometimes think that Mr. Black has rather an excessive bias in favour of privately financed, rather than publicly financed, development, because the truth is that we need a great deal of both in all these poorer countries.

A very high proportion of private investment in the underdeveloped countries since 1945 has been in the oil industry. The more investment we have in oil the better, provided that the oil companies do not attempt to interfere in the government of the countries concerned. I cannot help wondering sometimes, when contemplating the oil industry, whether it would not be far better for ourselves if a higher proportion of our oil supplies could come from the Commonwealth. It is a most remarkable reflection that, even after all the new oil discoveries of the last 15 years, British Petroleum, which is after all, preponderantly Government-owned British public enterprise, is still today drawing 98½ per cent. of its supplies from countries in the Middle East, which are not notable for their political stability. If we could have a rather larger proportion of oil coming from India, Ceylon and Australia—and Trinidad, as my right hon. Friend reminds me—I think we should be in a happier position.

Certainly, as the Montreal communiqué admits, a great deal of development must also be public, because we have to start with roads, water supplies and basic services of that kind. The Chancellor spoke today of what the communiqué calls these Commonwealth assistance loans, which I gather are to be made under the second part of the recent Export Guarantees Act, though not actually through the Department.

Mr. Amory:

Under Section 3.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I am not quite clear, however, about the figure of £50 million given in the communiqué, of which we are told offers have already been made. Can the Government say over what period that sum of £50 million applies, and is it really any new decision or just a record of what we knew to be going on already? The hon. Member for Lanark, who is clearly very displeased indeed with the Government—

Photo of Hon. Patrick Maitland Hon. Patrick Maitland , Lanark

I began my speech by hailing what the Government had accomplished and saying that I had been stirred by it, and I then added a certain number of questions. I am looking forward, with others, to the answers.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

When an hon. Member starts his speech in that way, we always know what is coming after the word "but". Whatever the hon. Member intended, he asked what the Government were doing about the Commonwealth Bank which was proposed at the conference but which was then laid aside for study. I presume that the idea did not move more rapidly forward because nobody except the United Kingdom was willing to put any capital to speak of into it. The Chancellor told us that the United Kingdom is still the only net exporter of capital in the Commonwealth.

I agree with the hon. Member for Harrow, West (Sir A. Braithwaite), that we surely have reached a point in time when the United Kingdom should not be the only net investor in the Commonwealth. After all, Canada, Australia and New Zealand have a higher standard of living now than we have here. Canada's population is over one-third of ours, and I believe that her real income per head is nearly three times ours. Her total income must be very nearly equal to that of the United Kingdom, and she is also an importer of capital on a large scale from the United States.

I notice that Canada's subscription to the Colombo Plan is going up, and that she is finding 10 million dollars over five years for the West Indies. Those are certainly steps in the right direction. But 10 million dollars over five years is really a very small amount in relation to the needs of the West Indies. It is about one-thirtieth of the value of one continuous steel stripmill as established in this country; and that, although extremely welcome, does not seem to me a very large contribution.

We on this side of the House have one major quarrel with the activities of the Chancellor of the Exchequer at the two conferences, apart from the general slowness of progress and the stagnation policy pursued at home. It is the threat of convertibility of sterling which the right hon. Gentleman keeps holding over the British economy. He goes round the world chanting his devotion to convertibility and his belief that it is only just over the horizon.

When I hear Chancellors of the Exchequer praise the merits of convertibility I am always reminded of the famous prayer uttered by St. Augustine in his youth, "Lord make me pure, but not yet". If that is what the right hon. Gentleman means, I do not mind, but the Montreal communiqué translates St. Augustine's prayer into rather less terse English as follows: The final decision on the timing of the convertibility of sterling must rest with the United Kingdom, who would, however, take into account the interests of the Commonwealth as a whole. I should like to ask the President of the Board of Trade what this means.

If it means that the Chancellor seriously contemplates full convertibility within a few months, we believe that it would be grossly imprudent. It would deserve the description which I believe somebody has given to second marriages, as a triumph of faith over experience. I would not, of course, accuse the Chancellor of that particular form of faith, but he sometimes sounds to me as if he were falling a victim of another occupational disease of Chancellors. That is the delusion which he and other Chancellors have developed, that because he has been nearly a year in office, the economic problems of the United Kingdom are in a fair way to being finally solved. He really talked at times today as if everything was perfect everywhere and there was no cloud in the sky.

If convertibility is really being seriously thought about, let us look at a few of the real facts seriously and soberly for a moment. I do not believe it would be any safer to move towards full convertibility today than it would have been in 1952 or 1955. The gold reserve today is far too small. We have had three dollar crises in the last four autumns. To our great good fortune, the United States has been exporting gold on a large scale, which is a piece of luck that will not last. There have been widespread but totally unfounded rumours of dollar devaluation, which have also accidentally and indirectly helped us, and our import prices have fallen 10 per cent. further. Yet, despite all this good luck, our gold reserve is still far below the high point of June, 1951. It is true that gold has flowed in over the last 14 months. But some people forget that from September, 1949, to June, 1951, it flowed in for 21 months; and then import prices suddenly rose, as hon. Members well know.

All these facts argue, I believe, for caution. The hon. Member for Liverpool, Wavertree (Mr. Tilney) said rightly that the good fortune of sterling this year has been largely due to the favourable terms of trade. He also said wisely that this might mean that the trouble had only been deferred. I agree, and I also ask the Chancellor to note this: if import prices had risen between 1957 and 1958, or, indeed, between 1958 and 1959, in the same proportion as they did between 1950 arid 1951, we should have not a balance of payments surplus of perhaps £400 million as we have, but a deficit of more like £1,000 million.

The truth is that full convertibility will be premature until we have a far higher gold and dollar reserve; and any premature convertibility in my opinion is the enemy of expansion at home. This would be another act of unilateral disarmament. It would put a big part of the power over British economic policy into the hands of overseas bankers and speculators. More than once in the last year we have had Ministers in this Government telling us that we cannot yet let up on contraction at home because it would remove confidence from the minds of foreign hankers in sterling.

Indeed, only two days before this debate The Times City page said that if convertibility was coming, our domestic policies must be "tailored"—that was the word used—to suit it. That means more stagnation at home to coax the capricious speculators into holding sterling. In our view, full convertibility prematurely introduced at the price of more industrial stagnation and decline, would be not merely a blunder, but a crime—and a crime not just against the unemployed in these islands, but against trade and development, and against all the efforts of millions in the poverty-stricken countries in the Commonwealth to raise their standards by democratic means.

I suggest that the guiding aim of our economic policy should be not any financial fetish of this kind, but the realities of production, employment and human living standards. Financial policies at home and abroad should be tailored—if we must use that word—to sustain the expansion of production, employment and development, on which the rise in those standards must depend.

9.25 p.m.

Photo of Mr David Eccles Mr David Eccles , Chippenham

I am very grateful for the choice of the debate, which has proved once again that we have many right hon. and hon. Gentlemen with great knowledge who take a devoted interest in Commonwealth affairs. I join with those hon. Members who said that we do not talk about these things often enough. I was very grateful to my hon. Friends for the contributions they made, and I will try to answer them and hon. Members opposite as I go along. I was especially grateful to the hon. Member for Harrogate (Mr. Ramsden) and the hon. Member for Stirling and Falkirk Burghs (Mr. Malcolm MacPherson) for raising the subject of education. If I have time, I should like to refer to that.

We understand that some hon. Members who have given a lifelong service to the Commonwealth feel that at the Montreal conference we did not do enough to increase trade between the various members of the Commonwealth. They rightly contrast that with the very positive results of Ottawa in 1932, when we were able to institute the great imperial preference system.

Times have changed, however. Twenty-six years ago the United States had not become the world's greatest creditor, and at that time we did not have to consider the tremendous power of the United States to lend to the Commonwealth. Nor did we have to consider any form of economic threat from Communism, as we do today, with all its political consequences.

Therefore, it was not necessary for the Commonwealth 26 years ago to think very hard about contracting out of the world trading system—which is what we did with the preferential system. It served us extremely well, and it was an action which everyone except the Liberal Party thought right. It was the correct thing to do at that time to try to protect ourselves from the appalling distress which followed an economic slump, such as that of 1929. Of course, that circumstance has not been present now, and we have to deal with an altogether different world trading pattern.

The Montreal Conference was quite right in refusing to consider methods of contracting out of the multilateral world system. As my right hon. Friend said, we went there fully convinced that an expanding Commonwealth was a possibility only in the context of expanding world trade. We felt that it was up to us, representing as we did new and old nations, poor and rich nations, to give an example of modern economic thinking which would prod our Government and other Governments of the free world to join forces and raise living standards. We think that the Montreal Conference gave such an example and that today the follow-up is becoming clear.

Our chief task was to narrow that gap in living standards between the industrialised and well off members of the Commonwealth on the one hand, and the newly developing and poor members on the other.

Hon. Members are familiar with the fact that this gap has been growing wider, partly because the old industrialised countries have such a predominance of resources for their own expansion, and partly because the new countries have such an immense increase in the number of mouths to feed. I think that the House would agree—and my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) put this very well—that, whether or not there is a threat from the Communists, we ought to do all we can to close that gap. We should be ready at all times to share with the newly developing countries the discoveries and techniques of the more advanced economies. It has always been part of the Western tradition that the strong should help the weak.

At the same time, it cannot be denied that the Sino-Soviets are providing the West with a very powerful additional stimulus—and the hon. Member for Ashton-under-Lyne (Mr. Rhodes) told us a great deal about this stimulus—to demonstrate that we can successfully help to raise living standards in Asia and in Africa in a more humane way than would ever be possible under a Communist system. Mr. Diefenbaker and the Canadian people are firmly and generously behind this policy; so are the leading men in the United States.

I give two examples. Mr. Walter Lippmann, in a series of articles in the Manchester Guardian following his visit to Moscow, made it strikingly clear that the Communists had confident ambitions that they would win the struggle in Asia and Africa through men's stomachs. In his last article, Mr. Lippmann wrote: The Communist revolution will, I think, expand in Asia unless we make an heroic effort of statesmanship to demonstrate that there is an alternative to it. Mr. Nixon, whose speeches here last week impressed us all very much, said, when addressing the English Speaking Union: If they "— that is, the newly developing countries— believe they are offered no other choice, they will choose progress even without freedom. He went on What must be made clear and unmistakable for all the world to see is that free people can compete with and surpass totalitarian nations in producing economic progress. We have to ask what exactly is this heroic effort of statesmanship that is to be made, and how are we, as a matter of practical politics, to achieve Mr. Nixon's aim of surpassing totalitarian nations in bringing this economic progress to the underdeveloped countries. No one knows the complete answer, but I think we can claim that the Montreal Conference, the New Delhi meeting of the Bank and the Fund, and the last Ministerial meeting of G.A.T.T. showed the way that the free world now has to go. The heart of the problem is that trade is better than aid.

This becomes very clear when we examine the way in which we can finance the larger programmes of development without either compromising the independence of any of the nations or inducing an inflation. We agreed at Montreal that a steady and continuous expansion in the industrialised countries is the essential condition of sufficient help to the underdeveloped countries. We can succeed only if the rich nations are generating savings in growing volume from year to year; and only if the rich nations are willing to buy more goods from the underdeveloped nations, and to buy steadily, because otherwise we get these fluctuations of commodity prices. For both those conditions to be fulfilled it is essential that continuing expansion should take place in the Western industrialised economies. I wish to answer some of the questions raised regarding commodity prices. The Montreal Conference studied this with great care following a very careful study by our experts before the Commonwealth met together. All that we learned there led us to the conclusion to which I have just referred, that nothing is a substitute for a steady increase in industrial demand for raw materials and food supplies.

Let us take the question of fluctuations in commodity prices. First, no one knows exactly what is a fair price for international commodities. The present level of commodity prices is not so low in relation to profits that can be earned at these prices as is perhaps generally thought. Of course, prices went up after the war because there was a universal scarcity. As new supplies were beginning to come on to the market after the war, there arose the Korean crisis, which gave a new twist to the buying of commodities. That was followed by one of the greatest programmes of buying for stock-piling ever seen in the world, the United States strategic stock-piling programme, and also our own, which was on a much more modest scale.

It happened that at the time when these stock-piling programmes—which were taking enormous quantities of basic commodities off the market—came near to their end and were running down there was a small recession in United States trade. There was also an increased quantity of commodities coming on to the market from the free world because of the development which had been carried out and the investment which had been made, and because new techniques were bringing their reward. There was also a sudden influx of commodities from the Soviet bloc.

All these things put together induced a fall in commodity prices far exceeding the change in volume of commodity exports. If we take the whole range of raw materials and food something like 2 per cent, to 3 per cent. was the reduction this year against the maximum since the war. There is thus very little reduction in the movement of commodities which is mainly due to the eating up of stocks already at the receiving end. There has not been much reduction in the volume of commodities sold. There has been a severe fall, in price due to the factors which I have enumerated.

Against that background, what sort of commodity stabilisation schemes are likely to succeed? In today's debate my right hon. Friend the Member for Thirsk and Malton (Mr. Turton), who is a great authority on this matter, and my hon. Friends the Member for Wavertree and Bury St. Edmunds (Mr. Aitken) and the hon. Members for Bolton, West (Mr. Holt) and East Ham, South (Mr. Oram) have all said that we ought to be able to do something to mitigate this tremendous fluctuation in commodity prices. What sort of schemes might there be? I think they fall into two distinct kinds.

The Sugar Agreement or the Wheat Agreement are typical examples of the first kind of scheme which takes in the whole world situation. This type of scheme is intended to control and regulate the whole supply and demand of a great world commodity. When these schemes make sense we give them our adherence. We are a member of the Sugar Agreement. Sugar is a unique commodity and one of the very few for which there is no substitute. It is easily re-exportable and, in any case, three-fifths of our supplies come from the Commonwealth. It is a unique commodity, and I am glad to say that the Sugar Agreement has not only worked well but has recently been renewed and, we think, made better.

Regarding wheat, if the new wheat scheme to be discussed at Ottawa seems to us a practical proposal, and it looks as if the disposal of stocks is geared to the probable relationship between production and demand so far as we can see it, we shall be willing to join it. The tin scheme has been in trouble. There are very few commodities of which it appears to be possible to make a world scheme of that kind.

Then there is a second class of scheme, which is a scheme designed not to try to control prices throughout the world, but, as I understand it, to mitigate fluctuations and, perhaps, to help certain Commonwealth producers. It is mixed up with Mr. Grondona's proposition that we should have commodity schemes as a backing for currency. We looked at all that kind of thing at Montreal. The real difficulty is that the United Kingdom is the only member of the Commonwealth able to put up any substantial amount of money for backing buffer stocks of this kind, and what we can put up and the power of absorption of this market is not great enough to make any of these schemes, or very few of them, of any practical value.

To the hon. Member for Wavertree and those who think like him of having commodities instead of the gold reserve, I would say that the whole purpose of a reserve is that we can use it on a rainy day, and that means that we must be able to convert it into purchasing power. We know from our experience of holding commodities in strategic stockpiles that at the very time we want to sell those stocks they become completely unliquid. From all over the world telegrams arrive from producers of these commodities saying, "Please do not sell a single ton or bale because the market is weak. Please do not do it because it will not be good for your relations with us." I think that commodities as a currency reserve are not capable of fulfilling the first purpose of a currency reserve which is that it should be liquid in time of difficulty.

I should like to say one or two things about the industrial expansion which we consider is the foundation of providing a better market for primary producers. The first is that, do what we will, we cannot get away from the fact that the United States economy is the key factor for industrial demand in the free world. We in this country, much as we should like to be able to do so, have not really the power to offset the effect on commodities of a recession in the U.S.A. We can maintain the volume of our own imports, and by and large we have done that. We have not imported so much coal as before, but by and large the volume of our imports has been retained during a recession in world trade.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

The total value of our imports has gone down this year, and it is the total value that matters from the point of view of the exporting country.

Photo of Mr David Eccles Mr David Eccles , Chippenham

All we can do is to maintain volume. When the value goes down that is not to be blamed on the United Kingdom, because the value of these international commodities is made by the demand of the whole world. The point that I am seeking to make is that we in this country do not have the power to settle or maintain the price of international commodities. We can maintain the volume of the imports and that we have done.

The hon. Gentleman said, "Would you not have done better by this country if you had had continuing expansion in production here?" Curiously enough, one new member of the Commonwealth raised this at Montreal and said, "Would it not have been a better service to the Commonwealth if the United Kingdom had not proceeded with the 7 per cent. Bank Rate and the credit squeeze, and continued with expansion of production?" That member was slapped down by other members of the Commonwealth who said, "What we want is stability of the £ sterling." Had that policy been pursued, my hon. Friend would not have been able to go to Montreal with a sound £. The underdeveloped countries represented to us that they needed all the loans and aid they could get.

That leads me to say a word about some of the questions which were raised. The hon. Member for Bolton, West asked me about the International Monetary Fund. A quarter of the increased quota will be put up in gold. The United Kingdom's gold subscription will be about £60 million. The rest will be in sterling and will in effect be loaned back to us, but we shall probably have to sell gold to some of the Commonwealth members for their subscriptions. In other words, this is a very big effort that we are making on behalf of the liquidity of the whole world. We are making it because it means that the subscriptions as a whole will be increased and a great many more dollars will be put in, which will be put up for general expansion.

I was asked about the Commonwealth bank proposal. It ran into difficulty. It is not easy to put across a great proposal of that kind. I think that my hon. Friend the Member for Harrow, West (Sir A. Braithwaite) knew well those difficulties. I would say to him, to my right hon. Friend the Member for Thirsk and Malton and to the hon. Member for Ashton-under-Lyne that they should go on discussing this matter, but that Commonwealth countries fear that if we try to mobilise savings in a Commonwealth bank it would interfere with their own borrowing powers in their own countries. Some of them fear that if we tried to use a Commonwealth bank for the purpose of attracting loans from outside on a joint guarantee, which in fact would be a United Kingdom guarantee, they would find their credit not affected in foreign markets such as New York, if borrowing were done in this way. These are well known difficulties, but they need to be discussed, and we shall continue to discuss them.

The right hon. Member for Rochester arid Chatham (Mr. Bottomley) mentioned convertibility. The very fact that the world is talking of one more step towards full convertibility proves the strength of my right hon. Friend's policy. They would not be talking about it if they did not think that the £ had been well looked after. I cannot add to what my right hon. Friend has said, but it is of great interest to the Commonwealth that, sooner or later, the declared aim of both parties, which is to reach convertibility, should be achieved, but the decision rests with the United Kingdom Government since it is our currency. We cannot do it unless the circumstances are right, and the position will be carefully watched.

Certain proposals connected with the International Development Association are being looked at. We are not by any means pouring cold water on them, but they require further study.

On the point about lending money and helping the Commonwealth with its development, the House might like to know that in the last few weeks we have made inquiries from High Commissioners in all Commonwealth countries to find out whether any of their development plans can be speeded up in the sense that they could bring forward their schedules of orders of goods from the United Kingdom. It is rather difficult to discuss development plans that are already phased out, and I do not expect spectacular results. It is giving us a chance to see whether there may be opportunities to use the additional finance which we are prepared to make available on speeding up definite programmes overseas.

If we take a longer view, it is clear that it is not by loans and aid alone that the financing of these development plans can be satisfactorily achieved. There must therefore be a substantial increase in the export earnings of the underdeveloped countries. That is really where the test of statesmanship to which Mr. Lippmann and others referred comes, because economic progress in an independent, self-respecting country implies being able to pay one's way, if not immediately, then over a period. If that is not a reasonable prospect, if the development loans cannot be serviced, if there is not enough foreign exchange to buy the increasing imports always called for when a country is industrialising itself, and, above all, if its creditors are reluctant to buy its goods, how can we expect an underdeveloped country to champion the economic system which provides it with such a melancholy experience?

The Commonwealth Conference fully understood this. We put on record that it was essential for the self-financing of development programmes that the exports of those countries should be increased and obstacles against them should be taken away. Of course, we were including manufactured goads. At the same time, we saw that what we could do in this respect inside the Commonwealth cried out to be supplemented by liberal policies in the United States and Western Europe. Whether Western Europe will be liberal or not—and we very much hope it will be—is still an open question. It is a very grave question and the Government are determined to spare no effort to secure a Free Trade Area which we believe the great majority of the O.E.E.C. countries are anxious to see established.

Photo of Mr Ronald Russell Mr Ronald Russell , Wembley South

Does my right hon. Friend think that what he calls a liberal policy by the United States and a Free Trade Area in Europe will be adequate to absorb the exports of under-developed countries?

Photo of Mr David Eccles Mr David Eccles , Chippenham

I am grateful to my hon. Friend, because I was coming to the question of what are the chances of the United States opening their market wider. That is really the key question. It is easy to be pessimistic about this after the examples of the wool tariff quota and the lead and zinc quotas. May I interject in reply to the right hon. Member that the Canadian Government have undertaken to restore the preferential margin on wool and to do a number of other things which, I am convinced would only have been done because the friendship of Montreal made everyone think what they could do for each other.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Does that mean that they are to put the tariff on British wool back where is was before, or to raise it still further?

Photo of Mr David Eccles Mr David Eccles , Chippenham

They have raised it roughly from 19 per cent. to 21 per cent. in one case, and from 15 to 18 per cent. in the other. The preferential margin is very large indeed, and they are negotiating with other countries, Italy, in particular, to raise the duties on them so that the preferential margin may be restored. I venture to guess that the tide is turning against protectionism in the U.S.A. In saying that, I am not only thinking of the Reciprocal Trade Act. Something useful can be done under that Act, especially if all the industrial countries will play. The President of the United States has power to reduce American tariffs by about 20 per cent. over four years.

I do not think we must expect too much, first, because there are a number of countries which are unlikely to reduce their tariffs on United States manufactures unless the United States will reduce their quotas on foodstuffs. Secondly, it is not easy to see what scope there is under the Act for worthwhile bargains with some of the countries which most need help from the U.S.A. So, looking at the problem of the gap in living standards, if that were all one could say about the chance of a liberal policy in the United States, I do not think one could be more than a qualified optimist. But I cannot believe that the country which launched the Marshall Plan and which has given international aid on a scale never before known in history will not now come forward with some new constructive policies in the field of trade because, as my right hon. Friend the Member for Thirsk and Malton, and the hon. Member for Ashton-under-Lyne said, the writing on the wall is so plain.

The Soviets are using their new economic power in carefully selected areas. They are buying some raw materials which the rest of the world cannot absorb at the moment. They are dumping their goods with extraordinary skill. They are insisting on barter, which puts the weaker economy in the hands of the stronger, and they are making loans at key points, too. What satisfactory reply can there be to that except to expand the exchange of goods in the free world and to pay cash for what we buy? And how can such a policy of multilateral trade and free currencies be effective unless the United States and the other industrialised countries steadily increase their imports?

We took this doctrine from Montreal to the G.A.T.T., and if I had time I could tell the House that we registered some success there, because it was clear at the G.A.T.T. that the Commonwealth were acting together and that they had put their finger on the awkward problem, which was the excessive protection of certain countries against the import of foodstuffs and minerals in order to keep their high-cost producers going. Although we have made only small progress so far, all that is now being studied by the G.A.T.T., and I have hopes that something of value will come out of it.

I must say that our own system of agricultural protection received a very good mark at the hands of the economic experts who wrote the Haberler Report, because our system of protection—deficiency payments—means that the price of food which the housewife buys across the counter is the world price and we make up to our farmers the difference between the world price and the guaranteed price by way of subsidy.

That is not the way in which most of the industrialised countries are acting today. They are adopting a system of protection by quotas on imports, which creates a scarcity inside the country, so that they maintain high prices and in that way they subsidise their farmers. The New Zealanders have been mentioned in this debate. The United States are eating only 9 lbs. of butter a year per head compared with 16 lbs. per head before the war. Why is this? It is because they will not let any butter into the United States and the price of butter in the United States is 70 cents a lb. New Zealand could easily sell butter to the United States at 40 to 45 cents a lb.

It is for reasons of that kind that a new look has to be taken at this excessive protection against the foodstuffs and the raw materials which come from these countries, and I venture to say that it is the United Kingdom's stand for this at Montreal and afterwards at the G.A.T.T. which has placed this subject well on the table in international thinking.

I should like to say a word about education, because it is very close to my heart, and the subject was raised by my hon. Friend the Member for Harrogate and the Inn. Member for Stirling and Falkirk Burghs. The conference will deal not only with the university students' scheme but also with teacher provision, and we have very much in mind the need for the teaching of English.

I agree very much with my hon. Friend the Member for Bury St. Edmunds that English is a window on the world for so many of these people from the Commonwealth. They said to us, "We must have more education if only because we dare not trade with the Communists while we are so illiterate and ignorant, because our people are susceptible to their propaganda. It is all right for you in the educated countries. You will not go Communist. You have learned not to go Communist. But we still have to be educated in order to resist their wiles."

It was a remarkable thing and nothing we did at Montreal might in the long run bear better fruit than this education drive which we start next year.