Orders of the Day — Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 22nd November 1967.

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Photo of Mr Harold Wilson Mr Harold Wilson , Huyton 12:00 am, 22nd November 1967

Yes, Sir, the position is, of course, that, when we devalued on Saturday it was the international monetary community itself which came forward with facilities to see the operation through. This is a very fair question. My right hon. Friend made it clear on Monday that we were not borrowing for the purpose of living on the sum borrowed, but that it was what might be called a deterrent, to make it absolutely crystal clear, if it was not clear already, that speculation at the new parity was not worth the gain—and with no strings. The loans from the central banks have no strings whatever, as was stated clearly on British television by Dr. Emminger on Monday night, in the same programme in which the right hon. Gentleman took part.

I have given the estimates of the unemployment trend on the basis of no devaluation and I have said what the dangers would have been of having conditions imposed when we might have had to halt this process of industrial expansion in its tracks. The events of the past three months—I am not seeking here to lay the blame on the Middle East or on docks strikes or on speculation, a great deal of it emanating from this country, as the right hon. Gentleman knows very well.—[Interruption.]

A good deal of this, it has been made clear in the public Press for a very long time, was being spread from this country, from the City, to a great number of foreign exchange dealers who thought it would be wrong to devalue, that there would be no question of devaluation, when all the time there was this insidious spread of political gossip from people in this country, persuading them that it was not so.

The right hon. Gentleman never used his authority to condemn it. In last week's Evening Standard, for example, there is an interview with a very distinguished Swiss banker who made an interesting comment—this is from a senior member of one of the biggest of the Swiss banks: Once again, the most persistent doubts about the future of the £ have been originating from London rather than any foreign centre. This confirms what other city editors said in July, 1966, that the gnomes of Zurich could not understand why our people in the City persistently tried to sell sterling short.

Whatever the effect of these past three months—there may be two interpretations, or more, about them in this House —the fact that these things happened means that it was right to make a fundamental reappraisal, not only of the country's economic strategy over these past years but more deeply, over the economic position of the country as we have known it for about 15 years. It just was not enough, as my right hon. Friend the President of the Board of Trade made clear yesterday, that we had succeeded in reducing our current balance of trade and payments, excluding capital payments, from a deficit of £400 million in 1964 to £18 million in 1966.

What we had to face this autumn, as right hon. Gentlemen have to face time after time when they were in office, was whether we could maintain, not for a few months only, but year in and year out, an expansion in production, and full employment, without again running into a balance of payments crisis. My right hon. Friend yesterday set out clearly the fundamental clash between industrial expansion and national solvency—how, for 15 years every boom had led to external crisis, each crisis worse than the last, every period of deflation led to a temporary easement, each easement more insecure than the last.

My right hon. Friend made clear, too, how more than once, and understandably, right hon. Gentlemen opposite were considering breaking loose from this dilemma by devaluation, how they rejected this devaluation, and how we supported them from the Opposition Front Bench in rejecting it. The right hon. Member for Enfield, West fairly quoted yesterday some of our statements in Opposition about devaluation. Even when our national solvency was imperilled by Suez, with which we profoundly disagreed, even then, we pledged our support from that Box to the strength of sterling.

When the right hon. Gentleman and again the right hon. Gentleman the Leader of the Opposition this afternoon talked about morality I am surprised that the word did not choke them. The right hon. Member for Enfield, West hated Suez, knew it was wrong and immoral, and had not got the guts to resign—that is his morality. His Leader cajoled and bullied the back benchers into supporting not only an action which was immoral, but which was sold by the right hon. Gentleman to the House on a basis which we now know to be totally removed from the truth.

What we do not know is whether the right hon. Gentleman was himself deceived or was a party to the deception. [HON. MEMBERS: "Answer."] Some day he will tell us. [Interruption.] He must have been the best Chief Whip ever to be able to sell anything as immoral as that to a large Parliamentary party, not all of whom had forsaken their principles—they have a very good Chief Whip now.

As I have said that it is a 15—