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Title: British speeches of the day
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Title: British speeches of the day
Physical Description: 5 v. : ; 23 cm.
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Subject: World War, 1939-1945 -- Periodicals   ( lcsh )
Politics and government -- Periodicals -- Great Britain -- 1945-   ( lcsh )
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Dates or Sequential Designation: Began with Mar. 1943.
Dates or Sequential Designation: -v. 5, no. 5 (June 1947).
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General Note: Description based on: Vol. 4, no. 1 (Feb. 1946); title from cover.
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Full Text



BRITISH INFORMATION SERVICES
AN AGENCY OF THE BRITISH GOVERNMENT


1 ,'


BRITISH SPEECH Er

OF THE DAY

Page

ANGLO-AMERICAN FINANCIAL ARRANGEMENTS
Hugh Dalton; Sir John Anderson; Sir Stafford Cripps;
Winston Churchill; Ernest Bevin.
December 12 and 13, 1945 .................................. 755

ANGLO-AMERICAN FINANCIAL ARRANGEMENTS
Lord Keynes. December 18, 1945 ............................ 790

MOTION OF CENSURE
Winston Churchill; Clement Attlee.
December 5 and 6, 1945 ............................ ..... 799

INDIA
Lord Pethick-Lawrence. December 4, 1945.... .0

INDONESIA /
Thomas Driberg; J. Platts-Mills; P. Noel-B G D I
December 11, 1945 ..................... V .
/y .- (5
QUESTION TIME IN THE HOUSE OF COMMONS ................ 834


Vol. III, No. 13 January, 1946
NEW YORK 20. . 30 ROCKEFELLER PLAZA . . Circle 6-5100
WASHINGTON 5, D. C. . 907 FIFTEENTH STREET N.W. . . Executive 8525
CHICAGO I . . 360 NORTH MICHIGAN AVENUE . Andover 1733
SAN FRANCISCO 8 . 391 SUTTER STREET . . . Sutter 6634










ANGLO-AMERICAN FINANCIAL ARRANGEMENTS
House of Commons, December 12 and 13, 1945
[EXTRACTS]

THE CHANCELLOR OF THE EXCHEQUER (Mr. Dalton): I beg to
move,
"That this House approves the financial arrangements between His
Majesty's Government and the Government of the United States, including
the final settlement of Lend-Lease and other claims arising out of the war,
as set out in Cmd. 6708; welcomes the initiative of the Government of the
United States in making Proposals for an International Trade Organization,
Cmd. 6709, and approves the participation of His Majesty's Government in
the discussions proposed with a view to arriving at an international agree-
ment upon the basis of the suggestions put forward; and approves the pro-
posals for setting up an International Monetary Fund and an International
Bank for Reconstruction and Development as set out in Cmd. 6546 of 19'44."


Why a Dollar Loan Is Needed
I will begin with the Loan Agreement; and it may be convenient and logical if
we first ask ourselves why we need a dollar loan at all. The answer is, because,
during the war, our national economy has been distorted and violently twisted out of
shape for the sake of the common war effort. And this distortion was deliber-
ately worsened by Lend-Lease itself. We deliberately forced down our exports to
the bare minimum. Why? To make munitions; to make supplies of all kinds con-
nected with the war, for ourselves and for our Allies; and to man the Navy, the
Army and the Air Force.
With the conclusion of the war against Japan and with the sudden ending of
Lend-Lease, we found ourselves in a most abnormal situation. We were faced with
not only one problem but two serious problems. The first was a question mark
for the future, and the second a heavy legacy from the past. The first problem
was the simple question-how were we to pay, from VJ-Day onwards, for all
the food and raw materials and other necessities which we must import in order
to live and to employ our people? Lend-Lease and Mutual Aid have ceased; but
our urgent need of supplies from the dollar countries continued and will' continue.
Some of these supplies cannot be got, except from the dollar countries; and ulti-
mately of course we can pay for them only from the proceeds of our exports,
visible and invisible. I do not need to stress to this House that it will take time-
though I do stress that we must make sure that it takes the least possible time-not
merely to regain the pre-war level of our exports but to reach that higher level
which is required if we are effectively and securely to balance our external trade in
the post-war days.
During the interval, while we are re-establishing this balance, we shall need
to import supplies from all parts of the world, and to pay, somehow or other, for
what we import. Inevitably, therefore, we shall be running, for some time, an
overdraft on our current trading account. The thing is inescapable. If any hon.
Member has doubts as to the magnitude of that overdraft, I would ask him to study
the facts and figures given in the White Paper on the statistical material presented
by our representatives during the Washington negotiations. That is one of our
[ 755







British Speeches of the Day


problems-what I have called the question mark for the future, the problem of how
soon we can re-establish our export trade in sufficient volume to pay for our im-
ports, and, how meanwhile we are to meet the critical situation which confronts us.
But there is also the second problem of the legacy from the war years. This
legacy, a wholly disagreeable one, consists essentially of the debt which we find
ourselves owing to our Allies and associates in the war, not to speak of certain
neutrals. These debts we have accumulated during the war entirely for war pur-
poses. This great load of debt which we are bringing out of the war, is, indeed,
a strange reward for all we, in this land, did and suffered for the common cause,
to which all parties and sections of this community were totally devoted. It is a
strange and ironical reward, on which historians will make their comment.
During the past six years we have had to spend a vast sum in sterling to main-
tain our effort in every part of the world. We spent it in buying local currencies to
pay for our own vital imports of food and raw materials, and to maintain our troops
on many different fronts all over the world, often to the great profit of the local
inhabitants. Yet there is no new physical asset, there is no new real wealth, which
we can now set against this expenditure. We can set against it only the fact of
victory and the liberation of many who fought by our side. It is literally true
to say that all this money has been lost, in a purely financial sense, in winning
the war, but that we still owe it. The sterling which we paid for all these goods
and services, which we needed then so desperately, is still held by the countries
who supplied us; and since we have not been able to write it off by exports to
any great extent, it still stands on the debit side of our account. A large part of
this debt, though not all of it, is owed to the sterling area.

The Sterling Area and the Dollar Pool
I would like, here, to say a word about the sterling area. This is a term which
is, I think, sometimes misunderstood. The sterling area is no new thing. It is
no creation of the war. It is not even a creation of the immediate pre-war years.
The sterling area has existed for over a century as a banking and currency
arrangement. Right up to 1939, when the war broke out, holders of sterling
were free to spend it anywhere for any purpose, but when war came, we and
the rest of the sterling area enforced for the first time a complete system of ex-
change control. It was necessary for the effective conduct of the war, but it was
a new thing, born of war conditions. All members of the sterling area were free to
spend sterling anywhere within the area or outside it for any purpose approved
by their own control; but-and this is important to an understanding of the
present position-we asked the other members of the sterling area to cut to
a minimum their demands on our reserves of gold and dollars, since these were the
central reserves for the whole area. That was the origin of what is now called the
sterling area dollar pool. As hon. Members will see from the Financial Agree-
ment, it is proposed that this arrangement, in the form in which it has existed dur-
ing the war,. shall shortly come to an end, and that we shall revert to the pre-war
convertibility of sterling for current transactions. Later I shall indicate how
shortly it is to come to an end; but here I wish to emphasize that what we are
doing is reverting, in this respect, to the pre-war situation. We are not doing some-
thing which is fresh and new.

Britain's Gold and Dollar Reserves
May I say a word about our own reserves in this country? We began the
war with a little over 600,000,000 of gold and dollars, as against external liabili-
ties of 496,000,000. But in April, 1941, immediately before Lend-Lease began,
our reserves had almost disappeared, as a result of the need to use them up, in







Anglo-American Financial Arrangements


pre-Lend-Lease conditions, for the purchase, on whatever terms we could, of
essential supplies from the United States and elsewhere. In April, 1941, our re-
serves had practically vanished. They had fallen to the dangerously low figure
of only 3,000,000 net. From that point, however, following upon the introduction
of Lend-Lease, our reserves began, fortunately and not unnaturally, to recover.
This recovery was due partly to proceeds of sterling area exports and partly to the
fact that American troops in the sterling area were paid in sterling and other local
currencies, which the American Government bought with dollars, and these dol-
lars came back into our reserves. By October 31st of this year, our net gold
and dollar reserves had risen to about 450,000,000 net-not an excessive figure
in all the conditions that confront us! For meanwhile our external debts had
risen, as a result of the circumstances I have been describing, to 3,500,000,000.
This, then, is the essence of the situation which I am seeking to lay before the
House. On the one hand, we have a vast wartime debt which we have no hope of
paying off from our own unaided resources in the near future. On the other
hand, we have a prospective overdraft on our current trading account for the first
few years of the future, until our exports enable us once more to pay our way.
That was the twofold problem which our negotiators took with them to Washing-
ton. That was the reason why we needed an American loan.

The Lend-Lease Settlement
Before I consider the rest of the Loan Agreement, I would like to turn to
the details of the Lend-Lease settlement included within that Agreement. This
settlement stands rather apart from the rest of the text, and it is, in many re-
spects, one of the most satisfactory features of the Agreement. What does it
provide? First, we receive all American goods for which we had placed, or were
just about to place orders on VJ-Day. These were mostly foodstuffs and some
raw materials. In the second place, we acquire large stocks of American goods of
all kinds which were held in the United Kingdom and in the Colonies on VJ-
Day. These stocks consist partly of war material, a miscellaneous category of items
-iron and steel scrap, medical stores and so forth, and partly of foodstuffs, raw
materials and oil. The settlement covers also certain capital assets constructed by
the Americans in this country and the Colonies, such as pipelines, oil storage
facilities, harbor installations, and the like. Thirdly, we have a complete and
final clearance, recognized by both Governments, of all the miscellaneous out-
standing claims between our two Governments arising out of the administrative
arrangements of the war.
I value this settlement very highly. It does, I think, remove from the future all
fear of ill-will and misunderstanding arising from this most important element
in Anglo-American co-operation in the war. Lend-Lease, a great scheme, greatly
begun by the late President Roosevelt-that most unsordid act in history, as the
right hon. Gentleman the Member for Woodford (Mr. Churchill) aptly called it
-has had a fine, clean end, which we should welcome.

A Grant-in-Aid or an Interest-Free Loan
I now turn to the main provisions of the Loan Agreement. This Agreement-,
let us admit it-is the result of three months of very intricate discussions and
of some very hard bargaining; and I frankly tell the House that more than
once we have been very near to breaking point in these discussions. .. .
I will frankly tell the House that this Agreement is by no means what we at
first proposed. In view of the nature and extent of the British contribution to the
common cause, and of the fact that we had held the pass alone for more than
a year, when all our European Allies had been overrun, and the United States of







British Speeches of the Day


America and the Union of Socialist Soviet Republics were still neutral-in view of
these historical events, our representatives first proposed at Washington that, to
enable us to restore the gravely disturbed balance of our economy, gravely dis-
turbed, as I have emphasized, in the common cause of us all, we should receive
some form of grant-in-aid or, failing that, an interest-free loan. This was the pro-
posal made by our representatives in the first stages of the talks, and the reasons
in its support were deployed with great wealth of detail and great skill by our
spokesmen. But we were told, quite definitely, that this was not practical politics,
and that the Congress of the United States would never consent to any such
arrangement. Nor did we willingly or easily accept some of the other provisions
of this Agreement. Nor are all the forms of words used in it those which vwe
ourselves should have preferred.

The Conditions Arrived At
None the less, in spite of all this, I ask the House to approve this Agree-
ment, as giving us, on balance, substantial and indispensable advantages. In
addition to the 650,000,000 dollars which I have already mentioned for the final
settlement of Lend-Lease, we obtain a further credit for 3,750,000,000 dollars,
making a total of 4,400,000,000 dollars in all. This credit is open to be drawn
upon; up to this amount, until the end of 1951. It bears interest at 2 per cent.
No payment is due, either of interest or principal, until December 31, 1951, six
years hence. Thereafter the loan is due to be repaid in equal annual instalments
of 140,000,000 dollars-about 35,000,000--over 50 years.
I would draw the attention of the House to the fact that the Agreement con-
tains a novel and important provision, not previously included in an arrangement
of this sort, for a waiver of interest. The annual interest is to be completely can-
celled in any year in which our exports, visible and invisible, are insufficient to
pay for our pre-war level of imports, adjustments being made for price-changes
-on the understanding, naturally, that our reserves also are insufficient to make
good the payment. On this last point we are the sole judges. But I would
add that, welcome as this provision is, and helpful as it ought to be in certain
circumstances not altogether easy to forecast in this changing world, we should
not think of invoking this waiver unless all the circumstances of the time justified it.
There is no waiver of the principal. But if we feel that any part of the Agree-
ment needs hereafter to be modified in the light of events, it is recognized in the
text that the United States Government and His Majesty's Government shall con-
sult together. I would add one small point, an obvious point. Since the debt is
being repaid by a series of equal annual instalments, in the early years the interest
will be the predominant element in the annual payments, as against the principal.
As the years go on, this situation will be reversed. But in the earlier years this
waiver will be of greater interest than at a later date.
So much for the waiver clause. I will now say a word about those sections in
the Agreement dealing with the sterling area arrangements, which I should like
to touch upon in the light of what I have said about the sterling area as a
whole and its character. It is at first surprising that, according to Section 6
(I) of the Agreement, no part of this credit is to be used to reduce our debt
to the sterling area. At an earlier stage of the negotiations we thought it was par-
ticularly desirable that part of the loan should be set aside for this purpose; but
as the discussions proceeded, the American representatives took the view that
Congress would not look kindly upon proposals to apply any part of this dollar
credit to reducing our debt to the sterling area. Hence Section 6 (I). But the
Agreement does help us to take the first step towards the much desired restoration
of the convertibility of sterling. And there is considerable desire for. this within







Anglo-American Financial Arrangements


the sterling area-let not the House be mistaken on this point. The restrictions
on convertibility are not popular with our friends in the sterling area. They desire
to see them loosened up. Their relaxation is not something demanded by the
Americans only, it is also much desired by our friends in the sterling area. It is
important, therefore, that we are enabled, under this Agreement, to take the first
steps in that direction through being helped to balance our current trading account
at an earlier stage than would otherwise be possible.
The problem of the sterling area does not only consist of the debt which we
accumulated during the war. For that debt, unfortunately, is not static. It is
continually increasing, from week to week and month to month, because we still
need to acquire, from/within the sterling area, more goods than we can at present
pay for by our exports. The Agreement covers both aspects of this question. First
it contemplates that, within one year of the opening of the credit, the whole of the
current earnings of the sterling area, except those arising from our overseas
military expenditure during the next three years, will be made available to be
spent on current trade in any part of the world without any discrimination.
Broadly, that is liked and welcomed in the sterling area.
In the second place, the Agreement records our intention to agree, with each
of the sterling area countries concerned, a plan for dealing with the accumulated
sterling balances. We propose to ask each of the Governments concerned to discuss
and settle with us, on the broad basis-which will, of course, vary with the cir-
cumstances of each case-that part of the accumulated balances shall be set free
forthwith, for current expenditure anywhere in the world; part shall be gradually
set free, according to a program, over a term of years; and the balance shall
be adjusted, perhaps, in some cases, adjusted downwards, as a contribution by
the sterling area countries to a reasonable settlement of this war debt problem. It
is on those lines that we intend to proceed; and it is on those lines that we hope,
within a measurable time, to restore the pre-war convertibility of sterling. But I
must emphasize that we could not begin to do any of these things if we had, at
the same time, to deal with our own immediate difficulties and the problem of
paying our own way in the next two or three years, without any aid from the
United States. It is only because the American loan contributes to the solution
of this problem that we can afford, literally afford, to take these further steps.
That is why the loan is an indispensable preliminary.

Bretton Woods
I will turn now to the Bretton Woods Agreements, our acceptance of which is
a condition of the Loan Agreement. And I submit to the House that the acceptance
of the Bretton Woods Agreements, subject to one proviso which I will make in a
moment, is definitely to the advantage of this country. Subject to one proviso,
His Majesty's Government will be prepared to defend our acceptance of the
Bretton Woods Agreements quite independently of this Loan Agreement with the
United States. But the proviso is that we have the financial strength to under-
take the obligations of the Bretton Woods Agreements and thus to acquire the
benefits which Bretton Woods offers. In this sense, the Loan Agreement is, for
us, a condition of Bretton Woods. ..
There is a considerable amount of misunderstanding regarding Bretton Woods,
and I will endeavor to explain, as simply as I can, the purposes and the obliga-
tions of the Agreements. Those Agreements establish two new international in-
stitutions, one the International Monetary Fund, and the other the International
Bank for Reconstruction and Development. The purpose of the Fund is very
simple. It is to assist in stabilizing rates of foreign exchange. And, surely, it is
most desirable that we should have, on the whole, stable rates of foreign ex-







British Speeches of the Day


change, provided-an important proviso-that we have learned the lesson of the
inter-war years and obtain, along with measures for promoting stability, a rea-
sonable freedom of adjustment to prevent any repetition of those deflationary
pressures which created so much needless poverty, unemployment and misery in
the inter-war years in this and many other lands. There is no doubt that our
monetary affairs were not well managed in those years. Everybody admits it, and
the problem is to see whether we cannot lay the foundations for a better and
more effective management in the future. It is dearly laid down in the first
Article of the Agreement on the Fund that one of the principal purposes of the
Fund is:
"to facilitate the expansion and balanced growth of international trade, and
to contribute thereby to the promotion and maintenance of high levels of
employment and real income."
I would venture to suggest that there can be no effective international economic
plan, that will work in practice, unless there is some reasonable element of sta-
bility such as Bretton Woods seeks to provide in the field of foreign exchange.
British industry, and British export trades in particular,, suffered grievous damage
in the pre-war years from unregulated, anarchical, competitive depreciation of for-
eign currencies. One day we woke up and found the franc had been marked down.
Nobody had been given notice. Another day some other currency was depressed and
no reason was given for it. I will not multiply examples. It is well known, particu-
larly to those who specialize in knowledge of the export trades, and represent con-
stituencies where those trades play an important part in the life of the community,
that we were constantly being knocked right and left, without warning and with-
out good reason, by foreigners depreciating their currencies. It would be of
great value to the British export trade if we could be reasonably sure that that
kind of treatment would not be repeated.
It is a British interest, therefore, that other countries should not be free to
depreciate their currencies in this way, at least without proper procedure for con-
sultation and discussion; and it is worth our while to enter into an international
arrangement designed to promote more stable exchange rates. But this is not a
return to the gold standard. This proposition, I understand, is debatable, and
will be debated; and there will be many hon. Members who will make contribu-
tions to the subject. I will endeavor merely to state, in a simple way, the rea-
sons why I maintain the view that this is not a return to the gold standard, or
anything like it, but is quite a different order of things altogether. We shall go
into Bretton Woods with the existing rate of 4.03 dollars to the pound. There
has to be an initial rate, and my advisers in the Treasury and the Bank of England
are satisfied that 4.03 dollars is as good a rate as you can fix now. There is no
reason to suppose it is too high or too low in relation to the probable course
of events.

If we are wrong we are not bound forever-and that is the whcle of my
argument-for we can retrieve mistakes in this new and more flexible world of
Bretton' Woods. When we went back to parity on the old basis . the value
of sterling was held thereafter most narrowly. It could only fluctuate-and it
was a very narrow fluctuation-between the limits determined by the cost of
sending gold in one direction or another. We go into Bretton Woods at 4.03
dollars to the , but, if any variation should be necessary . the Agree-
ments provide for successive possibilities of variation, successive avenues which
are open to us to enable us to alter the value of our currency. In the first
place, we, or ariy other Member of the Fund, may change the par va ue of its
currency by 10 per cent, merely by notifying the Fund. ..







Anglo-American Financial Arrangements


In the second place there is the possibility, provided the governing body of
the Fund agrees, of a further 10 per cent variation in either direction, which is per-
missible if a request for agreement to such further variation is made by a member
of the Fund. There must be no delay; there must be a reply from the Fund
within 72 hours. ..
In the third place, further changes, over and above this 20 per cent, may be
made, again with the consent of the Fund, although, here, there is no time limit of
72 hours for the Fund's answer. Such an application would need more time for
consideration; but if good reasons were adduced and the Fund agreed, the vari-
ation could be made.
In the fourth place, and finally-and I desire to underline this most emphatically
-under Article 15 of the Bretton Woods Agreements, any member is free to resign
from the Fund, immediately on giving notice, and without penalty-and can
even get back its own subscription. On resignation from the Fund, the resigning
country recovers full liberty to vary the value of its currency without any limita-
tion at all and without any need for consultation. ..
Having emphasized this point for the sake of clarity, and in order to rebut the
arguments put from both sides of the House that Bretton Woods takes us back
to the gold standard, I hasten to say that it is most desirable that no country should
depreciate its own currency without good cause; otherwise, the whole scheme for
stabilizing currencies is defeated. There occurs in Article 4, Section 5, the phrase,
"fundamental disequilibrium." This phrase relates to a very important prin-
ciple, and I commend it particularly to those who have a recollection of what
occurred in 1931-which I do not discuss now--of pressure being brought to bear
on the Government of this country to make it change certain of its domestic
policies. I also draw particular attention to these words in Article 4:
"The Fund shall not object to a proposed change"-
that is, in the par value of the currency of a member at any particular moment-
"because of the domestic, social or political policies of the member pro-
posing the change."
That, too, is a fundamental provision, which means that every free people or
Government remains master in its own house, so far as its own domestic policy
is concerned. This is a matter to which the Government attaches very great im-
portance, and, to place our view quite dearly on record, beyond any doubt or
peradventure, we intend to follow the example already set up by the United
States Government, who, in acceding to Bretton Woods, gave notice that, when
the Fund is set up, they will seek from its management interpretative declara-
tions as to the meaning of certain parts of it. It is not material to my argument
to discuss on what points they seek these declarations. We intend to follow this
example in procedure, and to seek an interpretative declaration in these terms:
"That, having regard to the intention of the Government of the United
Kingdom to maintain full employment and to the terms of Article I (ii)
and (v) of the Articles of Agreement, the Fund shall agree, under Article IV,
Section 5 (f) that steps necessary to protect a member from unemployment
of a chronic or persistent character, arising from pressure on its balance of
payments, shall be measures necessary to correct a fundamental disequilibrium."
I have read that out to get it on the record. Its purpose is to get agreement
that, if we find ourselves suffering from chronic or persistent unemployment, due
to our balance of payments being disturbed by the trade or currency policies
of other countries, we should be entitled to modify our own rates of exchange. We
must retain the freedom to protect ourselves against the contagion of deflation.







British Speeches of the Day


We do not intend to import unemployment from anywhere abroad. And it is
with a view to making this abundantly dear that this interpretative declaration
will be sought.
The "Scarce Currency" Clause
I must now refer to a very important Article in the Financial Agreement-
Article VII-commonly called the "scarce currency" Clause. Here again, I ask
hon. Members in all parts of the House who have doubts. whether Bretton Woods
is really in our interests to read carefully this Clause and ponder on its-importance
and meaning. Before the war, one of our difficulties was that certain countries were
very anxious to export but very unwilling to import, and very often refused to take
payment for goods sent abroad in the form of imports into their own country. They
used to combine high tariffs with an export drive, which is not, as a rule, a good
combination. The "scarce currency" clause is designed to meet that situation
and to prevent its continuance or repetition. Under Article VII, a currency be-
comes scarce when a country is exporting much more than it is importing, and when
it expects its imports to be paid for, not in goods and services, which is the natural
way, but in gold or foreign currency. In such conditions, the whole process of in-
ternational trade is frustrated. We must seek to prevent any recurrence of chose con-
ditions. Article VII, therefore, provides that, if the Fund pronounces any particular
currency to be scarce, any member of the Fund may take action against that currency
and against exports from that country, on a discriminatory basis. This is of first im-
portance. It means that if some country is pursuing the line of policy which I have
indicated, and is combining an export drive with high tariffs, the Fund may declare
the currency scarce; and, thereafter, all other countries can discriminate against that
country and its trade by special measures of exchange control. These are the safe-
guards against the repetition of some of those very unfortunate events between the
wars. The Loan Agreement states specifically that our freedom to impose exchange
control on current transactions, in the circumstances envisaged in Article VII, re-
mains intact.
Exchange Control
Let me add a word about exchange control here. In the Washington Agree-
ments, references to exchange control are, generally, to exchange control of cur-
rent transactions. In the Bretton Woods Agreements, exchange control of capital
movements, as distinct from current transactions, is not only permitted but posi-
tively enjoined on all members-which is a very remarkable and interesting
fact. In the view of His Majesty's Government this is an admirable provision,
and we intend to live up to it. We are not going to relax our exchange -con-
trol over capital movements. We cannot have any more of the troubles that we had
before the war, resulting from the movement of "hot" money, as it was called,
from one country to another. All such movements must be held firmly in check.
I have lately been reviewing our present exchange control arrangements, and I
hope to introduce a Bill, in this Session, to make these arrangements even more
effective within the terms of the agreements which I am seeking to explain to the
House. The control of capital movements is regarded in the Bretton Woods
Agreements as an essential weapon in the hands of every signatory Government.
I pass now to the next, and very difficult, problem of the Bretton Woods
Agreements transitional period. Our delegation at Bretton Woods-I am not
now speaking of the latest Washington talks-insisted, rightly, that we in this
country should be free to maintain exchange controls on current transactions
for a period of five years. That freedom is recognized in Article 14 of the Bretton
Woods Agreements. At the time this was undoubtedly a very wise and necessary
provision.







Anglo-American Financial Arrangements


But I tell the House quite frankly that, to my regret, and after hard bargaining
and under heavy pressure in the Washington talks, we had to agree to a certain
modification of this arrangement. As part of the Loan Agreement with the
United States, we have now agreed to restore, within a year from the effective
date of entry into operation of that agreement, the free convertibility of sterling
for current trade.
This question of the transitional period was one of the most difficult points in
the whole course of the Washington negotiations. We were most anxious to keep
a somewhat longer period, and it looked at one stage as though, on this point,
negotiations might break down. But the Americans argued strongly that the five-
year period had been introduced into the Bretton Woods Agreements at the time
when there was no thought of any large dollar loan from the United States to this
country such as we are now discussing. This, they argued, completely changed the
situation. For the first few years of the transitional period, they said, we should
be sure of dollars, and this, they argued, would surely remove the heed for a long
period of transition. Finally, though with very great reluctance and after very great
prolongation of discussion, we felt that we must meet them on this point sooner
than break the whole negotiation. It was a point on which they were most firm,
and, I would add, I think that their argument has cogency. The transitional period
is going to be easier, and our difficulties in that period are undoubtedly going to be
less severe, because we shall have the dollar credit available for what would other-
wise be the most difficult years of trade.

The International Bank
May I say a word on the second part of the Bretton Woods Agreements, re-
garding the International Bank? This Bank might be, properly described as an
International Investment Board, to quote the term employed by the Macmillan
Committee-to assist in the development of economic resources in the territories
of its members, including the restoration, in particular, of countries ravaged by the
war, and the development of backward areas where it is particularly necessary to
raise standards of life, purchasing power and productivity. Membership of the
Bank is confined to countries which are members of the Fund. Its capital, con-
tributed by the members, is to be rather more than 2,250,000,000, of which our
contribution will be 325,000,000. One-fifth, in our case some 65,000,000, can be
called up to enable the Bank to begin operations; and of this 65,000,000,
6,500,000 is payable in gold or dollars, and the remainder in sterling. The Bank
will conduct its operations only through the agency of the central monetary au-
thority of each member.
It can operate in any of three ways. It can provide a loan directly out of its
own subscribed funds; it can sell its own securities in a member country, or it can
arrange loans raised in a member country.
The Bank has attracted less attention than the Fund; but, at least for the imme-
diate future, it may be more important. The mechanism of the Fund is more
appropriate to reasonably settled conditions; the Bank, on the other hand, may
be a most powerful instrument to help to repair the damage and ravages of war in
many countries, to set trade moving again, and to foster development in the back-
ward areas of the world. If so, it will be a powerful agency for the international
planning of investment. It will be able to ensure that a program of investment
is worked out well in advance, paying regard to trade conditions in different
countries, and that projects are put in due order of priority and importance.
I believe that this institution can play a most important part not only in pro-
viding funds for the new investment, which the post-war world needs so much,







British Speeches of the Day


but in securing that international investment is wider, more farsighted, more
honest and more humane than in past years.

The Alternative to the Loan
I have tried to explain, as briefly and simply as I can, the main provisions of
these complex agreements, the Loan Agreement and the Bretton Woods Agree-
ments, and to show how they are related to each other. I do not claim that they
are perfect, from the British point of view. Still less, as I have already indicated
to the House on several points, do they embody just what His Majesty's Govern-
ment first asked for in these negotiations or first proposed. They fall short of
what we should have desired, and of what we strove for through the long nego-
tiations. But to those who are critical of these arrangements I venture, in con-
clusion, to put one blunt question: What is your alternative? Every critic should
be prepared to answer that question-What is your alternative?
Let us look at the alternative-an alternative not selected according to the
fancy of an ingenious hon. Member, but dictated by the 'inevitable and ineluctable
facts. Our stock of gold and dollars is running low. Every Monday, in the
Treasury, they place before me a statement showing how much gold and dollars
we still have. The curve goes so-and-so; but it tends downwards. Without new
dollar resources, we could not much longer afford to purchase any supplies which
have to be paid for in dollars. The dollars would not be there. It will take
us several years to re-establish the balance of our external trade, and this on the
assumption that industry is active, that the Government play their part in stimu-
lating and assisting it and that industry itself, that private enterprise also does
its best . .
If we rejected the Motion I am moving, and the group of Agreements I
am recommending to the House, grave shortages would very soon set in, due to
our lack of dollars with which to purchase essential supplies. Our people would be
driven down, once more, deeper into the dark valley of austerity from which we
thought we were beginning to struggle out. We should have to endure greater
hardships, not in facing danger or from V-bombs, but in the trials of our economic
life; we should have to undergo greater hardships and privations than even during
the war, and all those hopes of better times, to follow in the wake of victory,
would be dissipated in despair and disillusion. ...
Moreover-if I may complete this picture of the alternative which would face
us if these Agreements were rejected-the whole of our reconversion of industry
would be slowed up, not only because we should be faced with heavy and pro-
longed unemployment in a number of areas, such as the Lancashire cotton area,
and in a number of our essential industries which would be starved of their raw
materials, but also because we could no longer afford to buy machinery and capital
goods from the United States, many of which are essential to a quick conversion
of our industry from old to new ways and from pre-war to post-war conditions.
It is indispensable that some considerable part of this dollar credit should be
spent on the purchase, not only of food and raw materials, but of capital goods
which are essential to re-equipping our industry. If these Agreements were not
endorsed, all this would be impossible.
I add this future consideration. If the Motion which I am moving were to be
rejected, this would mean a grave embarrassment to our friends in Canada, who
look to their earnings from the sterling area to cover their deficit from their trade
with the United States. And Canada has been particularly generous in her help
to this country during the war. We should ponder, once and again, before we take
any action which would cause distress and disappointment in that great Dominion.







Anglo-American Financial Arrangements


Finally, and perhaps most serious of all, the rejection of these Agreements
would mean the dissipation of all hopes of Anglo-American co-operation in this
dangerous new world into which we have moved. We and the Americans, if peace
is to be assured, must learn to live and work together. The rejection of these
Agreements would not only be an economic and financial disaster for this country
of ours, but it would be not less a disaster for the whole future of international
co-operation.
On the other hand, I desire to emphasize that acceptance of these Agreements
does not mean a life of ease and plenty for all; it does not mean that. This
.dollar credit only gives us a breathing space in which to brace ourselves for new
and greater efforts, designed to restore our industrial and commercial strength,
and to enable us to play our full part, within a world-wide order, in a steadily
increasing production and exchange of wealth. I beg to move the Motion.
RT. HON. SIR JOHN ANDERSON (National): I am sure the House is
greatly indebted to the right hon. Gentleman for the clarity and the frankness with
which he has spoken, and I am equally sure that in the light of what he has said,
there will be no disposition in any quarter to minimize the gravity of the issues we
are debating. The decision that we shall be asked to take at the conclusion of this
Debate may, indeed, be a dominant influence in our financial and economic affairs
for a generation. . I speak on this occasion for myself, and for my right hon.
Friends on this bench, and I speak also, I assure the House, with a sense of the
grave responsibility which, on such an occasion, must weigh on anyone who oc-
cupied as I did the position of Chancellor of the Exchequer until four and a half
months ago.
Now I say frankly that my first impression, when I was able to study the
plan that has been evolved and agreed upon between the two Governments, was
one of acute disappointment. That does not imply the slightest reflection upon our
representatives who have been negotiating these matters on the other side ....
I know too--and I think it right to say this-that the negotiators on the Ameri-
can side have approached these matters with good will, with sympathy, with under-
standing and that, when the tedious weeks, even months, of negotiation came to
an end, they all parted with the best of good feeling.
Though there is much to be said in criticism of these arrangements, I, for my
part, do not doubt that His Majesty's Government have secured the best terms
that were open to them in existing circumstances. In such matters one has to
take account of atmosphere. The war is over. That fact is realized more nearly
perhaps on the other side of the Atlantic; it may be because' that is more remote
from the chaos which war has left in its wake here in Europe. Whether the
atmosphere would have been more favorable, if the Government had been differ-
ently constituted, I am not prepared to say; there is, I think, room there for some
difference of opinion. ....
Our position is the direct result of the efforts we put into the war, when we
sacrificed everything in the common interest to ensure complete, and the earliest
possible, victory. ...
I, myself, have indulged the hope-and until recently the confident hope-that
means would be found of providing what I might call an adjusting payment, in
conformity with the principles of equal sacrifice and the clean slate; principles for
which, until very recently, there was powerful backing on both sides of the
Atlantic. Our difficulties are indeed nothing other than the prolongation of our
war effort. The cutting of Lend-Lease was a great shock but it was inevitable-
I accept that-for technical reasons. The early termination of the Japanese war,
very welcome in itself, paradoxically greatly worsened our position by making it







'British Speeches of the Day


impossible for us to take the first step towards a readjustment of our economy
while we were still receiving the benefits of the Lend-Lease regime.

The Terms of the Loan
Now I come to the terms of the loan, for loan it had to be, when the possibility
of what I have called an adjusting or a balancing payment was ruled out. Why
could it not have been a loan free of interest? Well, I take it that that, too,
was tried and found impossible. In the result we have to pay a rate of interest
which I gather, taking account of the five years initial moratorium, works out at
about 1.62 per cent. ... That, on the face of it, is perhaps not a very unreason-
able rate, but let us remember this-and I think the point should be made-that
what is reasonable in regard to a loan of this kind between Governments, cannot
be judged on the criterion of an ordinary loan which a Government may raise
within its own territory. The net cost to a Government of raising a loan from its
own citizens must be calculated after taking into account the effect of Income Tax
on the interest-Income Tax which has to be paid back to the Government. I am
bound to say that I think-as indeed the right hon. Gentleman very frankly stated
-we have had to accept a very hard bargain. There is no support here for the
,theory, which is in fact entirely baseless but is widely held on the other side, that
when American and British-to use a well-known trans-Atlantic idiom-get to-
gether in a deal, America is always out-smarted.
With regard to the waiver clause, in that, I think, we must recognize a
generous purpose operating in the minds of our friends on the other side. But
without examining a gift horse too closely in the mouth, and without pausing to
consider too closely whether this, indeed, is a gift horse, I do not feel quite sure
that the limit to Article 5 (b)-that is to say, the point after which we cease to be
eligible to claim the benefit of the waiver clause-has been put high enough. It
is for me a little difficult to understand what exactly would be the effect in prac-
tice of these provisions. I can see.that the object has been to ensure that we
have, before we lose the opportunity of recourse to the waiver clause, a sufficient
volume of exports to pay for our pre-war imports and to meet other claims, in-
visible items in the international balances involving a payment of interest, including
an assumed payment in respect of accumulated sterling balances, on which I will
say a word hereafter. It seems to me in that approach that no provision, or at any
rate no adequate provision, is made for such items as increase of population, im-
provement of the standard of living-and we all recognize that our standard of
living was much too low before the war in respect of a considerable section of the
population-or for the raw materials and the equipment required by our industries,
which will have to be producing on a greater scale than before the war because
of the loss of our overseas assets. ...
I pass from the question of the waiver clause to the question of our accumu-
lated sterling debt-sterling balances which have been accumulated by various
countries mainly in the sterling area. It is indeed strange, as the right hon. Gentle-
man said, that the position in which we find ourselves in that respect should be
our reward for the efforts we have made in the common interest during the war.
It is also true, as he said, that, at any rate for the most 'part, the sterling bal-
ances are not represented by actual assets. I think that he was a little too
emphatic on that point because the goods between one country and another differ
widely. There is, for example, Australia, where the accumulated sterling balance
is almost entirely represented in marketing assets in the form of wool clips of sev-
eral years, which have accumulated in our hands. In other cases, a certain portion
of the sterling balances is represented by actual assets which we have or have had.
For the most part, these sterling balances represent sterile military expenditure for







Anglo-American Financial Arrangements


which there is no corresponding asset. They represent the result of our having
been compelled to purchase currency in the various countries concerned, in order
to finance war operations for which we were responsible for carrying on in the
common interest and in the defense of these countries.
About a year ago, I made a speech on this subject at the Mansion House,
in the course of which I said, as I have just reminded the House, that the differ-
ent cases would have to be dealt with individually in the light of their different
circumstances. But I went on to say that if the Governments concerned were
prepared to recognize special features of these accumulations-to recognize that
they are not ordinary commercial debts to be dealt with in the ordinary ways
applicable to such debts-and if they were prepared, therefore, to recognize our
problems, there seemed to me to be no reason why a satisfactory arrangement
could not be made. I find in paragraph 10 of the Loan Agreement a very wel-
come pointer to the lines on which, it had always seemed to me, such an
arrangement would have to be framed. The plan recorded in paragraph 10-
I think it is merely recorded and does not represent an agreement-rests on the
principle that, if we have to accept burdens, as it is proposed we should now do,
they were a result of the efforts we made during the war in the common interest,
and if other Governments, the Governments in question, are to have the benefit
of unblocking and convertibility on agreed terms, and not entirely at our discretion,
they may well be expected to be accommodating. I think it is very useful to
have the moral support of our friends on the other side of the Atlantic in ap-
proaching the problem on that footing.
The main difficulty which, it seems to me, arises in that-connection, is in respect
of the short time within which it is obviously contemplated all these arrange-
ments should, be .negotiated and concluded. I think that will confront His
Majesty's Treasury and other Departments, such as the Board of Trade, with
an extremely difficult problem. I entirely endorse what the right hon. Gentle-
man said about the terms of the Lend-Lease settlement. So far as I can judge
the terms are very reasonable in themselves, and it is a great thing to have a
settlement which does not involve bargaining, item by item, and a complicated
system of accounting. That patt of the Agreement can certainly, in my view,
receive a whole-hearted welcome.

The Bretton Woods Plan
Now I come to the Bretton Woods plan. I should like first to refer to the Inter-
national Bank or Reconstruction and Development, because I believe, so far as
our affairs in the immediate future are concerned, that is by far the most im-
portant part of the whole Bretton Woods Agreement. I think that it would be diffi-
cult to exaggerate the importance of the arrangement made under that scheme
for loans, as the right hon. Gentleman explained, of various types, but loans
which, so far as I understand the position, would be entirely untied as regards
the country in which the money obtained in that way should be dispersed. That is
a very important feature to which I think the right hon: Gentleman did not refer.
Actually, if I may make an observation on that, it seems to me that the Inter-
national Bank for Reconstruction and Development is really a Fund, and the-
Monetary Fund under the Bretton Woods scheme has many of the characteristics of
a bank. That is by the way. The bank-I suppose we must stick to the estab-
lished terminology-is very important on the present occasion for this reason: it is
of the utmost importance that the United States of America should keep dollars
flowing freely through the arteries of international trade. Unless they are deter-
mined to do that, there is, in my view, no hope whatever for the success of this
arrangement. Incidentally, in that connection I support what the right hon.







British Speeches of the Day


Gentleman said about the scarce currency Clause in the main Bretton Woods docu-
ment. I think that is all I need say about the Bank.
With regard to the Monetary Fund, the House knows, I am sure, that I have
always been a supporter of that scheme. I think it a good scheme in itself. I
think that its main purposes are entirely advantageous to provide money for the
avoidance of short-term fluctuations in exchanges; to legislate, as the scheme
does, against the competitive manipulation of exchanges from which, as the right
hon. Gentleman reminded us, we have suffered more than once in the past and
at the hands of more than one country. -I attach particular importance to provid-
ing machinery for the continuous discussion and exchange of views on economic
and monetary trends. I think that all these purposes are entirely beneficent.
This is a matter on which I know some of my hon. Friends on this side and some
hon. Gentlemen on the other side hold very strong views in contradiction to
mine. I here agree with the right hon. Gentleman. I take the view that this
scheme does not involve any return to the gold standard. In fact it does not involve
any return to anything, it is an entirely novel conception, and an entirely novel
mechanism. I also think that it holds no threat to the sterling area. I have always
said that the sterling area can continue in the future as in the past. By "the
past" I mean normal times. No one would suppose we would continue indefi-
Snitely into the post-war period the wholly exceptional arrangements that have
operated during the war. But there is no reason why it should not continue in
the future.
I am glad that the right hon. Gentleman paused to explain once again the
characteristic features of the sterling area. It is not a formula or a formally
constituted organism depending on carefully drafted instruments. It is a prac-
tical working arrangement for banking and currency. There is no reason why
that should not continue. But in everything I have said in the past about Bretton
Woods, I have always made two points clear. One is that the provisions of the
clause dealing with the transitional period were absolutely vital, and the other
is that the Bretton Woods plan, again as the right hon. Gentleman reminded us,
is really a plan for dealing with a state of things -when exchanges have settled
down, not a plan at all for dealing with the kind of situation we shall have in
the first year or two after the war. We ought not to be rushed into it. I have
always thought that the first thing of importance in time was the establishment
of the International Bank, that as regards the Fund it was important to get the
machinery set up to provide a mechanism for dealing with the problem of making
the necessary contacts with central banks everywhere.
I am, I confess, shocked by the suggestion that we are to have this Fund
in full working order in a very short space of time, and the transitional arrange-
ments should not have been adjusted-to use a very mild word-in the manner
contemplated by this Agreement. Let us see what all that involves. At involves
convertibility, not merely in practice, but as a right, at a very early stage. Con-
vertibility, in my view, is a thoroughly good'thing; it was always a goal to be
aimed at, to strive for; but left to ourselves we would have proposed to approach
convertibility by degrees, to approach it tentatively, and not until we had found
in practice that we could undertake the obligation of convertibility and continue
under that obligation, should we accept the de jure liability which this Agree-
ment puts upon us.
I do not know exactly how things will work out. It would be very easy to
imagine a state of things under which, if a number of unfavorable factors were to
come into play simultaneously, the whole thing would at once break down. On the
other hand, it is not necessary to make such a drastic assumption, and indeed on
that sort of assumption I suppose there is no banking institution here or anywhere







Anglo-American Financial Arrangements


in the world, which could be regarded as absolutely safe. But to give de jure
convertibility within a year, or, as the right hon. Gentleman said, 15 months,
might mean virtually paying in dollars for everything we purchase anywhere in the
world. That is an extreme way of putting it, but it represents the extreme possi-
bility and the extreme danger. I feel sure that every effort will be made by
everyone concerned to avoid creating that situation. I am encouraged by the fact
that other countries in the sterling area' have been able already to make consider-
able progress towards re-establishing their trade. If every effort is made on the
other side of the Atlantic to avoid any risk of dollars becoming a scarce currency,
we may be able to pull through. As the right hon. Gentleman said, convertibility
will be very welcome indeed to other countries, primarily in respect of their cur-
rent transactions, and ultimately in respect of such part of the accumulated sterling,
balances as it may be possible to unblock. That is all I need say about the Bretton
Woods plan, because the right hon. Gentleman himself spoke so frankly and
fully on the whole matter.

Commercial Policy; Agriculture
I pass to the declaration on commercial policy which forms part of these
arrangements. I confess at once that I have found the document very compli-
cated and very obscure, full of qualifications, reservations, and inter-locking
provisions. I think it is very desirable that further light should be thrown, as
no doubt it will be, by the right hon. Gentleman opposite, on this part of the
subject. In this matter I do not speak with much expert knowledge, but I have
always taken a very simple view, which is, that we are bound in fact and in
honor by the provisions of Article 7 of the Mutual Aid Agreement. Article 7,
read in the light of the exchanges between my right hon. Friend the Member
for Woodford (Mr. Churchill) and the late Mr. Roosevelt, came to this, that while
we were prepared to discuss the whole field, we were no more under an obli-
gation to get rid of Imperial Preference than the Americans were to get rid of
their protective tariffs. I know that the Government have issued an explanatory
statement which gives their view of the effect of this part of the agreed plan.
I want to ask whether, in the view of H.M. Government, this declaration carries
us any further in the direction of the abandonment of Imperial Preference? I say
that because I find in the document a very unpleasant and' challenging reiteration
of the new word "elimination." That has not appeared in any document of the
kind before in this relation.
MR. DALTON: Article 7.
SIR J. ANDERSON: I do not think elimination of preferences comes in there.
THE PRESIDENT OF THE BOARD OF TRADE (Sir Stafford Cripps):
The elimination of discriminatory practices.
SIR J. ANDERSON: Yes, the elimination of discriminatory practices, but it
was left rather at large how far Imperial Preference between a group of nations,
bound together by special ties, could in this connection be so treated.
Another thing that troubles me in regard to this Agreement-and every one
must know that this is a matter which has engaged very serious consideration for
some time past-is the position of agriculture. I have seen statements to the effect
that our position in that respect is fully protected. It may be right to say that
the declaration goes further in the direction of recognizing the special problems
of agriculture, which it may be remembered we discussed to some extent a Johig
time ago in connection with the wheat agreement, than any previous declaration
or document issued with the authority of the United States Government. But
when it comes to details I suppose that we shall not be bound by every detail that is






British Speeches of the Day


set out in the declaration. It looks to me as if the right of the participating Gov-
ernments to impose restrictions for the purpose of protecting home agriculture had
been very considerably restricted. Perhaps we can have an explanation on that
subject.
Belief That Britain Can Fulfill the Terms
I have come almost to the end of what I have to say. I declared at an
Independence Day luncheon, which I attended shortly before the General Elec-
tion, that so far as I had any influence on the course of events, we would not be
found, when the time came for discussing all these matters, in the position of sup-
pliants. I said also, in emphatic terms, that we would not accept any obligations
which we did not see our way clear to fulfill. That is still my position. If I
thought it impossible, as a practical matter, to carry out the provisions of this
Agreement, I would oppose it. I would give the reasons, I hope, in a way that
would be found convincing to large sections of opinion, at any rate, in America
and elsewhere in the world, and I would ask for an entirely fresh approach.
I do not in fact take that view of the plan, but I utter the warning that subject
to other countries playing their part, the matter seems to me to lie very largely in
the hands of His Majesty's Government. They have the responsibility. The plan
will certainly break down unless all help and encouragement is given to those
industries on which we have to depend for the development of our export trade,
unless everything possible is done to maintain the prestige of sterling, and create
conditions of confidence throughout the world. Unless all that is done. I think
that a breakdown is inevitable.
Before concluding I say that there can be no question of repudiating any of the
provisions of this plan if it is accepted by Parliament, or of our doing as a nation
anything other than bend all our energies to the task of making it a success. If we
do that, and if despite our best efforts it becomes clear that the plan is breaking
down-and the tendencies will become apparent before the event-the result will
not, in my view, necessarily be disastrous. We shall then have to bring Clause 12
into play and ask for a modification, and I believe confidently that if the occasion
does arise, and if the circumstances can be shown to have been as I have described,
Such a request will be received with good will. Certainly, the consequences of a
breakdown some time hence, under the conditions I have envisaged, are not to be
compared with the effecs, inevitable and almost immediate, of rejecting the
plan now.
The Alternatives
I would like to put, in my own way, the alternative of immediate rejection as
I see it. We would inevitably for some time to come have to buy largely in the
United States of America, or at any rate in North America, because the supplies
we absolutely must have are not, at present, available in other parts of the world,
or, where they are available, shipping is not in position to bring them to us.
We should then find ourselves running through our meager reserves at a most
alarming rate. That would compel us to impose on our people at home a de-
gree of austerity never before imagined, and to give a priority to essential food-
stuffs over raw materials and equipment, which would be disastrous from the
standpoint of the establishment of our exports. We might even, after a time,
conceivably, build a new economy on the basis of the Empire, or of some group of
States, but only if the countries concerned were willing to share our fortunes and
our sacrifices, and, in my view, before that opportunity arose, they would in all
probability have broken away.
Let me, in that connection, say this, relevant to an interruption made while
the right hon. Gentleman the Chancellor of the Exchequer was speaking. We are







Anglo-American Financial Arrangements


almost alone in having been stripped of our gold and dollars. The other countries,
that were occupied by the enemy, suffered terrible hardships and privations, but
their gold and dollar reserves were put into cold storage, and they are in a good
position to carry on trade with the United States of America. So are the Dominions,
and the temptation not to support us, but to go their own way, and make the
best of their own resources and possibilities, would be very strong indeed. There-
fore, as I think I have made clear, if I have dealt adequately with the main
features of this point-there are many details which it seemed unnecessary that
I should deal with at this stage because it is the main features of the plan that
matter-my hon. Friends and I have concluded that we should not oppose the
Motion which is before the House, if it is.carried to a Division. On the other hand
we will not vote for it, and we advise our supporters similarly to abstain. We take
that middle course, not merely because the measures necessary to the success of
the plan, as I have said, are so completely under the control of the-Government, but
also, and mainly, because there are words in the Resolhtion as drafted which make
it extremely difficult for us to give it support. I refer to the word "welcomes,"
which seems to import, at any rate in my view, a note of enthusiasm that goes far
beyond anything we really feel.

THE PRESIDENT OF THE BOARD OF TRADE (Sir Stafford Cripps):
It is my function to introduce to the House the commercial side of these agree-
ments, and therefore I propose, as far as possible, to keep away from any con-
troversy and to try rather to put before the House this-as the right hon. Member
for the Scottish Universities (Sir J. Anderson) stated-rather complex and diffi-
cult document, Command Paper 6709. ...
These Washington Agreements are the carrying out of that obligation which
we formally took upon ourselves as a result of the receipt of Lend-Lease assistance
in February, 1942. Whatever our view may now be as to the wisdom of having
entered into that Agreement of Mutual Aid, there was no one, I think, who did
not at that time when it was made consider it was an absolute necessity. Starting,
then, upon the basis of our obligations under Article 7, we have attempted by
these fresh arrangements to carry out both the letter and the spirit of those obli-
gations.

Many of us have in the past stressed the fact that the future peace of the world
does not depend so much upon purely political considerations or co-operation as
upon the elimination of financial, commercial and industrial practices and
methods which have in the past proved themselves so fertile a seedbed for war.
Now, as we face the future, we must make up our minds as to whether we are to
attempt to deal with these economic problems as isolationists or as internation-
alists. We have in the past heard a great deal of criticism of political isola-
tionism in other countries, especially when it was urgently necessary for our own
safety that those other countries should be prepared to co-operate in the inter-
national sphere, and if we are to adopt sterling isolationism in this country, we
must, I think, expect to meet a similar volume of criticism from other countries
who wish us to co-operate. The fact is that we must make up our minds on this
very fundamental question of policy, and having made up our minds, we must carry
our decisions into the sphere of action. It is of no use professing a desire for inter-
national agreement if we are not prepared.to take our part in arriving at that agree-
ment. Those who today say they are prepared to come to agreements with other
countries, but only upon the basis that we get our own way on every topic, or
that their own particular theoretical convictions are completely safeguarded, are,
I venture to say, in effect saying that they are not prepared to enter into international
agreements at all. That is the point upon which we have to make up our minds.







British Speeches of the Day


The Necessity for Compromise
We have, of course, in the course of arriving at the terms of this document,
done our utmost to see that our particular interests as a country are not jeopardized
unduly, that our special relationships within the Commonwealth and Empire are
not affected seriously, and that our own domestic decisions as regards national
planning of our agriculture and industry are not made too difficult; but we have
had also to meet the quite different views and requirements of the United States
of America arising out of their own political theories and their own industrial
necessities. The real question which, therefore, arises is not whether we have
compromised or not-it is indeed of the essence of any international agreement
that we should compronmise-but whether we have arrived at a fair and practicable
compromise which offers hope for the future because it will, in fact, be of as-
sistance in a positive way to those who are participating in it. We must look not
only upon the things we shall be prevented from doing, and which we might do
in a world of complete international anarchy, but also, and even more .keenly,
upon any advantages that we should derive, as far as other countries are con-
cerned, by their having to submit to those same regulations or prohibitions that
we express ourselves as ready to accept. Unless we take that double-sided view
of the advantages and disadvantages of the arrangements suggested, we cannot
possibly weigh up whether on balance they are worth while or not.
This, I think, is certain, that we must either arrive at the best international un-
derstanding that we can, and that we can persuade others to accept, or else we must
abandon all idea of international agreement on economic and commercial matters,
and so revert to the dangerous anarchy which has been so well and truly pictured
in the speech of the hon. Member for South Nottingham (Mr. Norman Smith),
and from which we suffered so acutely in the past. If we are to prevent that
anarchy and substitute for it the rule of law, the rule of law for which no
statesman worked harder in the United States of America than Mr. Cordell Hull
-and I should like to take this opportunity of paying a tribute to him for
his persistence in the field of international agreement-we must certainly be pre-
pared and able to arrive at some arrangement, on matters such as we are discussing
tonight, with the United States of America at least. If we are able to do that I
believe we shall have made some step forward as regards the future of world
commercial organization:
Multilateral Proposals
In the light of those general observations I ask the House to look at the
definite proposals with which we have associated ourselves, proposals put for-
ward by the Government of the United States. I should make it clear that these
do not, of course, constitute in any sense an international agreement. What we
have said, and I should like -to repeat it, is that we as a Government are ini
full agreement on all important points in these proposals, and that we accept
them as a basis for international discussions. We shall, in the light of views
expressed by other countries when these discussions take place, use our best en-
deavors to bring the discussions based upon these proposals to a successful con-
clusion. In other words, we and the United States will together urge the adop-
tion of these proposals upon other countries, but, of course, their implementa-
tion must finally depend upon their adoption by those other countries as well as
by ourselves and the United States. These are not, in other words, put forward
as bilateral proposals between ourselves and the United States. They are pro-
posals by the two of us for multilateral arrangements amongst various countries.
The proposals fall into three parts, under the headings A, B and C, of which
much the longest and most detailed is C, which deals with the International Trade







Anglo-American Financial Arrangements


Organization, but A and B are also important, particularly B, which deals with
the proposals on full employment. It is important to bear in mind that these
three Sections form one single whole, and all three Sections are proposals for
international discussion at this conference which it is suggested should take place
next year.
I can dismiss section A, not because it is unimportant but because I am sure
everybody would be in agreement with the great majority of it. The sentiment
there expressed as regards co-operation in the economic field would, I am sure,
meet with general approval. Of course, the question is, as I said earlier, not
whether we have the sentiment but whether we are prepared to do anything to
carry that sentiment into action.

The Attainment of Full Employment
Section B makes clear that a high and stable level of employment in all indi-
vidual countries is vital to the success of any scheme of international commercial
co-operation. It is, therefore, a part of any co-operative method of dealing with
world trade and commerce, that we must insist upon the need for each individual
country which comes into such a scheme to foster full employment within its own
territory-and that applies, of course, to the United States of America as much as
any other country-and that becomes a matter not merely of national but of inter-
national interest and concern as well. Nor must the full employment be cre-
ated by exporting unemployment from one country to another to the detriment of
the other country. That is fundamental. So it is laid down that the attainment
of approximately full employment by the major industrial and trading nations, and
its maintenance on a reasonably assured basis, are essential to the expansion of
international trade on which the full prosperity of nations depends. The mere
acceptance of such a declaration and principle by all the nations of the world
would certainly be a step in advance.of anything that gained currency during the
period between the two wars. After setting out these general principles as regards
full employment, there follow a series of undertakings by the signatory nations to
the effect that they will take action within their own countries to maintain full
employment within their own jurisdiction, and that they will regularly consult
internationally upon the problems which arise from full employment.
This new approach on an international basis to the problem of full employ-
ment-and of course, should it arise, unemployment too-is, we believe, of very
great value to the future. It is a beginning, a recognition of the interdependence
of nations on the question of world employment, which is naturally so intimately
linked with matters of trade and commerce. Indeed, one has only to follow
the steps taken between the two wars to hamper and hinder world trade, whether
financial or commercial, steps which very often arose directly out of unemploy-
ment, to realize how closely the two problems are related. We now have the
suggestion that it should be formally recognized that every country is responsible
to all other countries to see that it does not create international difficulties by
permitting in its own territories large scale unemployment or by merely exporting
that unemployment to the detriment of other countries. Of course these proposals
in section B will require, at the international conference, a good deal of working
out and elaboration, and it is proposed that that should take place.
The International Trade Organization
I now pass to the much more detailed proposals concerning the International
Trade Organization appearing under head C. The premise is that if we are to
prevent unemployment and its attendant evils we must not hamper the possibility
of widespread exchanges of trade between countries upon an expanding scale.







British Speeches of the Day


In other words, we must adopt an expansionist doctrine. For this purpose it is
proposed there should be set up an International Trade Organization of the United
Nations, which would be based upon certain general principles, and would pro-
vide the means for continuous discussion of matters of commercial policy and the
gradual formulation of an agreed series of procedures by which the major inter-
national problems could be dealt with.

The International Trade Organization is proposed to be set up, and it is dear,
perhaps, that difficulties in setting up such an organization and in laying down
multilateral principles to be incorporated in a multilateral commercial agreement
arise from a very great diversity of economic financial and commercial practices in
the different countries of the world that one desires to get within this international
organization. Some believe in completely free-I think the hon. Member for
East Aberdeen (Mr. Boothby) called it "knockabout individualism"-and free-
dom of competition in every way, while others believe in a measure of control and
planning, both nationally and internationally, and yet others believe in complete
control, internally and externally, by the Government, of all financial and com-
mercial operations in the country.
We must, therefore, either devise, if we can, some loosely-fitting framework
within which we can contain all these diverse methods of national economy, or
else we have to abandon the effort to get an international agreement at all, because
one thing is quite certain . that it is awfully easy to say what one would like
to do, but not quite so easy to persuade 58 other nations to do it, and one has
either to say, as the anarchist does, that one will not accept anything except what
one believes and will agree to nothing else, or one has to get the widest agree-
ment possible in one's own direction with the other countries. There is no
alternative between these courses, and this document is a very definite attempt
to achieve the latter object and get a measure of international agreement into
which any national plan can fit without undue embarrassment to the national
plan itself. . .
The framework of these suggestions includes, therefore, first of all, certain
general provisions as to commercial policy of the kind that are usually inserted in
all bilateral commercial treaties . .

Tariffs and Preferences
Following that, Section A is the important Section dealing with tariffs and
preferences. Paragraph (1) of that Section repeats the words by which we are
bound under Article VII of the Mutual Aid Agreement, and cites them as being
taken from that Agreement-that is, as to the substantial reduction of tariffs and
elimination of tariff preferences.

The words in Article VII are:
"The elimination of discriminatory methods."
There has always been a question of whether preferences are or are not dis-
criminatory methods.- The phrase has now been crystallized in the sense in which
it appears in Section (1). The proposal is that members of this organization
should enter into arrangements in order, ultimately, to achieve, if they can, this
end, that is, the reduction of tariffs and the elimination of preferences. That is to
say, the process of bargaining is to be initiated as between members whereby
they should arrive at mutually satisfactory arrangenjmnts, Nothing can happen
at all under paragraph (b) unless members are prepared willingly to agree with
one another either to reduce tariffs or to reduce preferences. Nobody can compel







Anglo-American Financial Arrangements


anybody to reduce a preference; nobody can compel anybody to reduce a tariff.
If any one party is invited by another to reduce a preference, he is at liberty
to say, "I cannot do it unless you reduce your tariffs by 100 per cent." The bar-
gain is entirely in his hands, and if he is not satisfied with the bargain, there
is no reason whatever why he should enter into it. He has complete and absolute
liberty as to the settlement to which he comes and, moreover, it is clear that he
is bargaining a preference from which another person gets the benefit.
That is the curious thing about preferences: although we impose them, we
do not get the benefit from them. We have to put in the provision that we can-
not deal with a reduction in our preference, unless we get the person who benefits
from it to agree as well as ourselves, and that the quid pro quo we both get is worth
while for the reduction it is proposed to make. The House will remember the tri-
partite bargain of this sort entered into between ourselves, Canada and the United
States of America, whereby some of this bargain was carried out. Certain prefer-
ences and tariffs were reduced by agreement between the three. This contem-
plated a similar sort of bargain but on a much wider scale. It is clear that we
do not necessarily say that we should give up a preference because one country
is prepared to give us tariff advantages. The peculiarity about our trade, as the
House knows, is that it is a very widespread and diversified trade. We do not
sell large quantities of goods of particular lines to particular countries; we sell goods
all over the world in what might be considered comparatively small lines.
Therefore, it is not enough for us to get, as against a preference, the reduction
of merely one person's tariff; we might want 26 countries to reduce their tariff
before we were prepared to drop a preference. Therefore, the whole matter is
completely at large and no one is bound at all. All we say is that we are pre-
pared to enter upon this process; we are prepared to consider that bargaining of
preferences against tariffs. If we can get an advantage which appears to us to
make it worth while and another country can get an advantage which appears to
make it worth while, then we can come to an agreement. It is an attempt to try and
bring down tariff barriers on all sides to a great extent, and it is clear that it must
be to a great extent. A mere nominal reduction of a few percentages is not going
to make anyone enter into a bargain and that, of course, our American friends
understand perfectly well. . .
Quantitative Trade Restrictions
Perhaps I may pass from that to quantitative trade restrictions which are
the next paragraph. This section starts with a general condemnation of this
method of regulating trade; a method, I may say, from which we as a country
suffered more acutely in the period between the two wars than any other
country. The disastrous effect of these kinds of restrictions upon our trade is
illustrated by the fact that our exports to eleven selected countries fell in value
between the years 1929 and 1937-the latter, incidentally, being a good year-
by nearly 40 per cent, and this happened in spite of the fact that by 1937 we had
concluded agreements, which mitigated the severity of restrictions, with nine out
of 11 countries. That gives some measure of the effect upon our export trade of
this type of restriction. The section details a number of exceptional cases in which,
nevertheless, such restrictions would be permitted. They are-I do not think I
need go through them all-dealing with the transitional period, the necessity to
preserve internal supplies in cases of distress; the necessity to achieve suitable
standards for international trade and commerce preventing the importation or
exportation of bad quality goods; quotas for export or import to carry out ap-
proved commodity agreements under the chapter which follows; and then, which
is by far the most important so far as we are concerned, paragraph (e) on page 6,
which deals with the agricultural situation. ...







British Speeches of the Day


Agriculture
The position as regards agriculture may be summarized in this way. We shall
still continue to be able to utilize, for the purpose of encouraging our agriculture
if we desire to do so, the following devices: we can continue tariff protection
provided, in the bargaifiing which goes on, we do not give it away. We can
continue in our State trading, through the Ministry of Food when we are bulk
purchasing, to have margins on prices we pay which are the same as would be
permitted for tariffs; that is to say, we can use State trading just as we could use
tariffs for regulating between imported and home goods. Import quotas can
continue to be imposed to enforce government measures to restrict the quantities
of like domestic products; that is to say, if we want to limit the quantities of
pig meat, or whatever it may be, we can employ a quota for export as well as
for home. That gives one a very great power, because it is always possible to
put a quota on the home market for almost anything. Fourthly, domestic subsidies
are not touched in any way by this document, except where they are on such a
large scale that they are affecting international trade. Obviously, as we are not an
exporting country in agricultural goods, subsidies that we impose on our own
internal production will not affect international trade. ...

Co-operation for Trade Expansion
Quite apart from any question of financial assistance from the U.S.A., I am
convinced that these proposals are an imaginative and practical attempt to arrive at
some measure of economic co-ordination in the world upon an expansionist basis,
and I am profoundly convinced that quite apart from a specific obligation under
Article 7 of the Mutual Aid Agreement, we should make the greatest effort we can
to accomplish international agreement and co-operation in this economic field.
Without that co-operation our attempts at common action in the political field
will be gravely embarrassed, and I believe completely frustrated.
I believe everyone in this House is convinced of one thing at least, that we
must aim at an expansionist rather than a restrictionist policy. Full employment
will depend to a great extent upon our capacity to achieve such an expansionist
policy. This too must be clear, that such a policy depends in no small degree
upon the action of other countries. It can only be achieved by international action.
The sum on balance of the independent national action of countries is bound to
be, in the future, as it always has been in the past, restrictionist in its result. The
whole possibility, therefore, of attaining a real expansion of world trade depends
essentially upon our being able to get a considerable-field of agreement and com-
mon action amongst the nations of the world, and it is for that reason primarily
that I commend this Motion and this Agreement to the House.



THE LEADER OF THE OPPOSITION (Rt. Hon. Winston Churchill):
Everyone is aware of the many objections to the Agreement which is now be-
fore us. The Government have in no way concealed their disappointment. They
tell us that they have not been able to procure easier terms, and I think I may say
that we wholeheartedly share their disappointment. Not only is there disappoint-
ment, there is deep misgiving as to what the consequences will be and also of our
ability, however hard we try, to discharge successfully the obligations now to be
imposed upon us.
I shall not attempt to repeat in detail the complicated technical arguments with
which those who are particularly versed in this matter have enriched the Debate.
I will only repeat the salient objections which we all feel. The first affects the







Anglo-American Financial Arrangements


loan. I was astonished that the United States should think it worth while to exact
the equivalent of 1.62 per cent interest from their debtor in the special circum-
stances in which we find ourselves. This interest charge can play a very small part
in the economy of the United States. In so far as it operates at all, it must be a
deterrent upon their exporting power. They will be taking British imports direct,
or roundabout, in payment of the interest on the debt, instead of repayment for
United States exports, which they desire and which it is in their interest to have
continually increased. We are told that this is a commercial transaction and that
the loan can only be viewed as a commercial transaction. I rather agree with what
the hon. Member for Ipswich (Mr. Stokes) said. It is a great pity that a commercial
transaction should be mixed up with other non-commercial transactions, such as the
agreement at Bretton Woods, upon which we have to pass a Bill, or the Commercial
Policy Declaration on which there is to be agreement between the two countries to
approach together along concerted lines. All the arguments for treating the loan as
a commercial transaction tell against linking with it acceptance of other, extraneous,
and altogether separate, agreements. It is a pity that we should have allowed a
commercial loan agreement to be mixed up-and linked up with other transactions.
I do not like the mixture.
If we have misgivings in respect of the gold standard about Bretton Woods,
or in respect of Imperial Preference about the Conimercial Policy Declaration,-we
are told, "You are getting the loan." When it comes to discussing the loan,
we are told, "This is a commercial matter and cannot be presented to Congress
on any other basis." If the United States had seen fit to say, "We will give a
grant-in-aid," or even "a loan without interest equal to these disbursements in
America paid by the British before Lend-Lease was in action," then it would have
been to their interest to associate with so benevolent an act, agreements and under-
standings on other matters. As it is, we seem to have the worst of it both ways.
Everyone has drawn attention to the proposal to make sterling convertible into
dollars within so short a time as 15 months, whereas at Bretton Woods, it was
contemplated there should be a delay of as much as five years before we accept
convertibility as a definite legal obligation, however much we might try, in the
meanwhile, to accelerate the process in fact. From what I have heard stated in
this Debate without challenge on either side of the House, and especially by my
right hon. Friend the Member for Aldershot (Mr. Lyttelton), this convertibility
proposal within 15 months appears to be a proposition so doubtful and perilous that
the best hope is that in practice it will defeat itself, and that it is in fact too
bad to be true. There is a lot in this. The trees do not grow up to the sky,
indeed, I have not found that to be so in a long life. That is the second obvious
and salient point.
Thirdly, there are most objectionable provisions of the Commercial Policy
Declaration which, for instance, require us, if we are incapable of finding dollars
to pay for American imports of tobacco, cotton, or other commodities, to reduce
also, in equal proportions, our imports from any alternative source. This is really
a proposal upon which I earnestly trust the steady gaze of the just-minded people
of the United States will be attentively fixed.

"Indecent Haste"
Finally, I resent, with every other hon. Member, the indecent haste with which
these most serious complex matters are thrust before us, and have to be settled.
There have been months of secret negotiation-each day there have been rumors
about them, which have been contradicted by the rumors of the day after. Now,
suddenly, we are confronted with this set of complicated, grave, far-reaching
White Papers, and we are told that we must accept them within a few days-







778 British Speeches of the Day

indeed, within a limited number of Parliamentary hours. I make it a cause of
complaint against the Government that they have let themselves be browbeaten
in this matter of time. The date of December 31st for the ratification of the
Bretton Woods Agreement has no special sanctity. It has no more sanctity than
March 31st for the ending of our financial year. I well remember being brought
up to believe that March 31st was a day of particular sanctity and that the world
would come to an end unless things.were done by March 31st. One year it hap-
pened that we could do nothing by March 31st, but the world went on quite
happily. I say that the date of December 31st was fixed for convenience, and it
could be altered for good reasons.
The United States have a strong attachment to the Bretton Woods Agreement,
and even if Congress had to amend their Act or pass it again-I am not aware of
what the procedure would be-just for the sake of altering the date for a month
or two, it would not be asking very much in respect of an international instrument
of such great consequence where 65 other nations are concerned. But v whatever
weight there may be in this difficulty, it is nothing comparable beside the question
why the whole matter should not have been disclosed both to the American and
British peoples now, and be given a couple of months in which to make up our
minds and allow public opinion on both sides of the Atlantic to form itself on this
subject. It might well be that some of the crude objections which exist, and which
are obvious in thee White Papers, might, by good will and mutual concession, have
been smoothed away in the face of the public, and, at any rate, mature judgment
could be formed by what aie, after all, the representatives of the nation assembled
here in the House of Commons.
I have never heard any valid or solid reason why the Bretton Woods date could
not have been revised or extended, or why we should not have said, "These
matters mifst be laid before Parliament, and Parliament will require, at any rate,
a considerable time in which to consider them in the light of maturing public
'opinion." Such a request from a cherished friend and faithful ally could never,
for any reason, have been used or made the ground for breaking off negotiations
on this matter so indispensable to the two countries. Some risk would have been
run in saying "No" when the proper moment comes, in regard to time at any rate.

The Question of Voting
For these reasons, upon which it would be easy to expatiate, we on this side of
the House refuse altogether to accept any responsibility for this set of transactions.
We recognize that it is the duty of the Government to decide. In international
matters it is always our desire to associate ourselves, so far as possible, with them.
I very much regret that we cannot do so on this occasion. The task falls to me, as
Leader of the Conservative Party, to give advice to my hon. Friends as to what our
conduct should be in this present bleak and difficult situation. It would be a
great pity and would weaken us for our future tasks, which are heavy, if we all
voted in different Lobbies on a question of this kind.

We thought it better and wiser to abstain as a body, and that is the course we
intend to pursue.
THE SECRETARY. OF STATE FOR FOREIGN AFFAIRS (Mr. Bevin):
How can you pursue it when you are sitting still?
MR. CHURCHILL: We are discussing the movements of the mind, and not
the much more bulky shifting of the human body. This course is thoroughly
justifiable in an Opposition whose vote cannot, in any case, decide the issue. There
is no reason at all why we should share the responsibility of the Government. The







Anglo-American Financial Arrangements


responsibility lies wholly upon them, and they have the power to discharge it.
Whatever we did with our votes in this House, we could not affect the position.
[Interruption.] I am not asking for any advice from below the Gangway on the
opposite side of the House as to what I should say by way of guidance to my own
supporters. How do I know it would not be prejudiced advice? How would I
know that those smiling gentlemen would not be anxious to lure me into some
trap? They should take their advice on party leadership to the eminent statesmen
arrayed there in an uncomfortable line. We could not stop this arrangement if we
were all united in wishing to do so. We are certainly not all united in wishing to
stop it-that is a fact-any more than the party opposite are all united in wish-
ing it to go through.
On the other hand, I cannot understand why we-the Opposition, the minority
-should be expected to come forward to approve and welcome a proposal which
fills every party in the House with great anxiety, and which is only commended
to us by the fear of an even darker alternative. It is for the Government and their
great majority to bear the burden. . I said the other day out of doors that the
vote at the General Election would turn out to be a disaster to the country. Un-
doubtedly, the hard terms of this loan arrangement are one aspect and one in-
stalment of that disaster. Whatever may be said to the contrary, our relations with
the United States have definitely become more distant and more difficult since the
establishment-[HoN. MEMBERS: "No."] Hon. Members surely want to hear the
case deployed, otherwise the great gifts of the Foreign Secretary will not have
full scope in answering them.

The United States Executive
MR. GALLACHER (Communist): You cannot blame me. I am sitting quiet.
MR. CHURCHILL: I am very glad there are no diversionary or distortionary
tendencies evident in that quarter. Whatever may be said to the contrary, our
relations have deteriorated. Both the great parties in the United States are wedded
to the principle of free enterprise, and are opposed to the collectivist and
totalitarian conceptions which underlie and animate Socialist policy. The fact
that the United States is depicted as the last remaining haunt of capitalism, in a
world which appears to them at the present time to be sinking and degenerating
into Socialism or worse, consciously or unconsciously affects public opinion over
there, and it affects also the movement of political thought in the American Con-
gress. This makes the United States Executive authorities more than ever careful of
the form in which their proposals are brought before Congress. If they reached an
agreement with us and were not able to carry it through Congress, not only their
prestige but the'competence of the United States Executive as a negotiating power
would be affected, and whatever their good will-and it is still very great-the
Executive is inclined above all to protect itself from being stultified by a vote of the
Legislature on a matter of grave international policy. Therefore, they safeguard
themselves by taking every precaution, and in some cases double precaution, in the
text of the documents which are made public.
It is this feeling which has told against us," and not any harsh sentiment or
unworthy desire for material gain on the part of our-American friends. [HoN.
MEMBERS: "Oh."] We claim for our country that we fought from beginning to
end, sacrificing everything for the common cause, allowing no thought for the
morrow to conflict with the attainment of speedy victory. The United States may
also claim, in spite of that expression of sentiment from below the Gangway, to
have poured out their blood and treasure as a great fountain of Allied resistance to
tyranny, and, long before they were themselves attacked by Japan, they ren-
dered us invaluable aid through the great measure of Lend-Lease, that most un-






British Speeches of the Day


sordid act in the history of nations, under which they paid over 5,000 million
in aiding and expanding our war effort in the common cause. Whatever com-
plaints we make about these present proposals, whatever misgivings-and they
are very serious-are aroused in our breasts, both their generosity and the cham-
pionship by the United States of the cause of freedom will ever stand forth as a
monument of human virtue and of future world hope.
I am very glad that no one of the slightest responsibility, speaking in this De-
bate, has used any language likely to reflect upon the noble deeds of the people
and Government of America, to make ill-will between our two countries, or mar
the splendor of the story of the past. . .

The American Point of View
Neither must we underrate or fail to comprehend the point of view of the
Congress and people of the United States. They see themselves confronted with a
burden of internal debt amounting, I am told, to 262 thousand million dollars.
That is about 65 thousand millions. Only their own gigantic exertions working
unfettered and in free enterprise, can enable them to sustain and conquer.
MISS LEE (Labour): If there is that internal debt, does it not mean that
some Americans have done what most Americans detest-some Americans have
made a fat profit out of the war?
MR. CHURCHILL: I am not here to deal with the details of American ad-
ministration, but very heavy excess profits duties were imposed there, as here,
and even if individuals in a foreign country make profits in the course of the war,
that is no reason for saying that we have not benefited greatly from the help
received from that country, nor for denying our tribute of gratitude and respect.
They see themselves confronted with this enormous burden of debt, they see
across the Atlantic political conceptions and ideologies which they regard as widely
divergent from the whole of their vast wealth-getting processes. It remains for the
ineffable Mr. Laski to emphasize this aspect to them on various inopportune
occasions.- They have no doubt read of the dazzling expectations held out to the
people of this country by those who have since been victorious at the polls, ex-
pectations which are not only of a far higher standard of life, but of a far easier
life, than any that has existed in Britain before. They have, perhaps, heard talk
of the 40-hour week from the Trades Union Congress. Meanwhile, they them-
selves, although far better circumstanced than we are, have a host of difficulties
upon them, which the most strenuous exertions of the whole vast impulse of the
life-thrust of their production will be needed to overcome. While we feel
acutely our position, we must not lose the faculty of understanding that of other
people. It is this flow of mutual comprehension which I regard as the most
hopeful element in the future.
Many speak of the privations we should suffer if we did not receive this 1,000
million loan. That, in my view, is the least part. What I should regard as
utterly fatal would be a prolonged rough and tumble struggle in the economic and
financial sphere between the United States and the British Commonwealth of
Nations and the sterling area. I am sure we should get the worst of it, and at the
end would be found only another layer of economic wreckage and ashes scattered
over the tortured face of Europe and of Asia.
Moreover, the United States have an immense interest in the prosperity of
Great Britain and of the British Empire, and their own prosperity could not sur-
vive for many years in the midst of a ruined world or in the presence of a rined
and broken Britain. It is in the working of these practical forces that we must
put our trust for the future, and I am sure that it is along such paths and through







Anglo-American Financial Arrangements


such influences that a happy outcome will eventually be reached. United, these
two countries can, without the slightest injury to other nations or to themselves,
almost double each other's prosperity, and united they can surely double each
other's power and safety. These matters must be carefully borne in mind by
.everybody who has to take a decision tonight.

Britain's Other Creditors
Here I must digress for a moment upon .a matter which I have not heard
mentioned, but which should certainly be taken into consideration. Many hon.
Members have said the American terms are severe; they are even harsh upon a
debtor who has reduced himself to his unfortunate plight by his faithful, un-
stinted exertions in the common cause. But these considerations apply to other
creditors as well as the United States. We are told we owe 1,200 million sterling
to the Government of India and 400 million sterling to the Government of
Egypt. No proposal has come from either of those countries similar to the
great measure of Lend-Lease. Everything has been charged against us, with-
out the slightest recognition of the common cause. In the case of Egypt,
she would have been ravaged and pillaged by the Italian and German
armies, and would have suffered all the horrors and indignities of invasion and
subjugation had it not been that we had defended her with our life's blood and
our strong right arm. We are now told that we owe her 400 million sterling. Is
there to be no reconsideration of that? Are we not entitled to say, "Here is our
counter-charge which we set forth for having defended 'you from the worst of
horrors"? My colleagues in the late Coalition know quite well that this is no
new idea of mine. The same arguments apply to the Government of India. I
specially reserved this matter in the Cabinet in 1942, when I saw with disquietude
these immense debts mounting against us night after night.
I sympathize with the United States line of argument in connection with the
loan. They did not wish to be the only creditor of Britain who had to scale down
his wartime credit and balances. I welcome the perfectly clear implications of
these agreements that it would be right and proper for Great Britain to insist upon
a proper scaling down of these war charges, and that it is unreasonable for the
Americans to be expected to pay large sums of money across the exchange, not
with the object of getting Britain on her feet again as a going concern, which is
a prime United States interest, but of enabling Britain to pay off other creditors
against whom Britain has a far higher moral claim for easy treatment than she
has against the United States. This, however, is all a matter which lies in our
own hands and I do not pursue it further in this Debate.

Advice to Conservatives
For all these reasons I should deprecate most strongly any considerable number
of the Members of the party I have the honor to lead casting their votes against
the proposals which are now before the House. If individual Members have pas-
sionately strong conscientious views, no one can blame them for expressing those
views in Debate or going into the Lobby, where they will find themselves with
some odd companions, but any heavy vote by Conservative Members against the
proposals would be specially injurious to our interests in America. It would be
a gratuitous assumption of responsibilities which we have no need to seek and no
power to bear. It would also be utterly futile and even wanton proceeding, and
a weak yielding to emotions which the long interest of the State requires should
be stoically restrained. I would ask any of my supporters who may be inclined
to cast their votes against these Measures to consider the possible reactions which
a heavy Conservative vote against the proposals might produce across the Ocean


' 781






British Speeches of the Day


and the altogether needless personal responsibilities which they will go out of
their way deliberately to incur. .. ;
I ask, therefore, for general abstention on the part of my friends which will
leave us unburdened with any responsibility for these proposals and at the same
time keep our party free from any attitude of antagonism to the other great branch
of the English-speaking world. The agreement among ourselves has been to
abstain, but I must make it quite clear, as did my right hon. Friend the Member
for the Scottish Universities (Sir J. Anderson), that by thus freeing ourselves
from responsibility for the passing of these measures, in which we have never
been consulted in the slightest degree-they were only flung at our heads last
week-we do not in any way weaken public faith in the word of Britain.
The financial obligations once entered into by His Majesty's Government are
binding upon all parties, even upon those who have not taken any part in affirming
them. We shall have to do our very best, our very utmost, in future years to bear
the heavy load. If we fail, it must not be from any lack of sincerity or exertion,
but simply because the weight that is being placed upon us may be far more than
our exporting power can sustain. Although in 1931 we had to default upon our
American debt incurred in the First World War, nevertheless the character and con-
duct of our people, and the whole conduct of our State, is such that our name and
honor still stand high in the world. Whatever criticism we may bring to bear
on our own Government, it must be quite clearly understood that our refusal to
share their responsibilities in no way relieves us from facing the consequences of
their decisions in a spirit of good faith and to the utmost limit of our strength.

Imperial Preference and American Tariffs
Finally, there is one point I must put on record about the Commercial Policy
Declaration. At my first meeting with President Roosevelt at Argentia in 1941,
I was -ery careful that the terms of the Atlantic Charter in no way prejudiced
our rights to maintain the system of Imperial Preference. Those were not easy
days. The United States were neutral. It was very hard to see'how the war could
be won, but even then I insisted upon that. Similarly when it came to the
Mutual Aid Agreement, I received from President Roosevelt the explicit assur-
ances which have since been published that we were no more committed by
Article 7 to abandoning Imperial Preference than was the United States to abol-
ish her tariffs. What we are committed to, and have been long committed to, in
good faith and in good will, is to discuss both these matters. At the same time we
are bound to take into consideration the views and wishes of the other Dominions
of the Crown, and all has to be discussed at the forthcoming Conference in the light
not only of the actions and agreements of the English-speaking world, but also with
regard to the general attitude of all other countries towards the removal of trade
barriers and trade restrictions of all kinds.
Therefore, we have unquestionable latitude and discretion of judgment. Some
have said that the United States might make what looks like a substantial diminu-
tion of tariffs already so high as to be prohibitive, and that then, although those
tariffs still remain an effective barrier against our exports to America, we should
be obliged to abandon or reduce our present preference. I could not agree with
that view. On this side of the House we reserve the unlimited right of free judg-
ment upon the issue as it appears, when definite, concrete proposals are before
us. It is therefore, in my view, quite untrue to say that we are at this time being
committed by the Government to any abandonment of Imperial Preference
and still less its elimination. Of course, if we find ourselves in the presence of
proposals to effect a vast, sweeping reduction of tariffs and trade barriers and re-
strictions all over the world of a character to give a great exporting power to






Anglo-American Financial Arrangements


this island and to British shipping, which is a vital element in the services we
render to other countries and a vital feature in our means of earning our daily
bread, if we are faced with that, then, undoubtedly, we should be confronted
with a new situation to which we should have to do justice. It would be a situa-
tion about which our Dominions would have strong views as well as ourselves,
and, at that moment alone, and only at that moment, the decision about Imperial
Preference would come before us.
Such is my view and interpretation of all that has occurred with the United
States and also-the Government will correct me if I am wrong-what is now
to be agreed with them by His Majesty's Government. I make no concealment
of my personal view that if all this came to pass the vision before mankind to
be would be brighter than we imagine. I do not see any .probability of such a
point being reached. It is more likely, on the other hand, that tariffs and trade
restrictions of all kinds, even though reduced, will still be maintained at levels
which severely hamper progress towards the ideal of the free interchange for
mutual advantage of goods and services throughout the world. In that case, no
one could in good faith demand of us to forgo the immense moral and material
advantages which have flowed to us by the special development and fostering of
inter-Imperial trade. The Commercial Agreement-I shall only be a very few
minutes more because I want to divide the time with other right hon. Gentlemen
-is not before us today. It has not been made and, therefore, how can we be
committed? It is, of course, the Commercial Policy Declaration which, it appears,
is to be interpreted as coming within the provisions of Article VII of the Mutual
Aid Agreement by which we are bound. But beyond this, the Government ob-
viously cannot at this stage be held committed to any details of some arrangement
to be arrived at tntil after prolonged discussion at some future time. I agree that
the Government should proceed to try and make a good commercial agreement
for improving the future trade of the world, but Parliament must reserve to
itself the fullest right and freedom to judge on broad and high grounds any
definite proposals which are laid before them.
Having regard to all these facts, some of which are common ground between
the Government and the Opposition and which constitute the British position,
now made clear and manifest to the United States, I cannot see there is the
slightest justification for suggesting that we are compromised and fettered in
any way in respect of Imperial Preference. This applies not only to His Majesty's
Government, but in a still more particular sense to the Conservative Party and to
the Opposition who stand aside from the actual decisions tonight. On all these
grounds, therefore, I counsel and urge my friends on this side of the House to
follow unitedly the course we have agreed upon together, namely, of disclaiming
all responsibility for the proposals of His Majesty's Government by abstaining
from voting, but not, on any account, to incur responsibility about them by voting
against them, and, finally, while respecting all solemn financial obligations of the
State, to preserve the fullest freedom of action about all other matters that may
be brought before us in the future.
THE SECRETARY OF STATE FOR FOREIGN AFFAIRS (Rt. Hon.
Ernest Bevin): I never thought that I should meet my right hon. Friend in the
capacity of an abstainer. I have never heard a more pleading speech for every
drunkard to be sober than I have heard from my right hon. Friend tonight-at
least until the Division is over. In view of what he said about our relations with
America, the enthusiasm in Moscow for the Socialists must be immense. I rec-
ognize that the House is debating what may be regarded as a very grave issue, and
I will try in my reply to be as logical as I can and not to resort to mixed metaphors,
and, if I may say so to my old -friend, to a little muddled thinking such as he has






British Speeches of the Day


exhibited in his speech tonight. I know the task of facing this loan lea\ es a good
many people with a sense of discomfort. I do not know anybody who ever came
away from a moneylender's office, and calculated the repayment, who ever felt
comfortable. I imagine that you might call in at the corner and have one and
then, when you begin to see what the weekly repayment is, you begin to wonder,
and it does not seem such a joyous event after all. But this discomfort is added
to when the catastrophe falls upon you after you have been a moneylender your-
self for so long and then have to borrow.
Great Britain has been a moneylender for a long time and most people have
come to the City of London as supplicants. Having been in that position and then
to find yourself going to Washington as a supplicant rather changes the situation.
I can imagine it calls forth all the resistance and every possible feeling inherent
in our breasts. I have not had the chance, owing to other duties, of following the
Debate in the House, but I have tried to read, just to fill up my spare time, the
report in HANSARD as far as I can. Somehow, I rather feel there must have been
a kind of re-echo of our feelings in the minds of New. Zealand and Australia
when they first elected a Labour Government. My right hon. Friend the Member
for Aldershot (Mr. Lyttelton) was, I think, in the swim as well when all the
city magnates looked upon this horrible little Government and then ended up in
the most perfect and suave manner offering 5 or 6 per cent. We have got into
this difficulty not through our own fault, as the right hon. Gentleman said. But
when you do get into difficulties you have got to get out of them.
It must be remembered that we have lived on foreign investments in which
others have toiled to produce interest on the money we have lent, and so con-
tributed to the wealth of this country. No one more than my right hon. Friend,
as an ex-Chancellor of the Exchequer, knows better what it is to stand at this Box
and to feel elated at the amount that has come in to help the Budget from the
people all over the world who have had to pay interest on loans to Great Britain
hitherto.
A Loan for Productive Enterprises
MR. LYTTELTON: Those were loans for productive enterprises.
MR. BEVIN: That is just what this is. This is not a loan to pay a war debt;
this is a loan for food and machinery. That is the difference, and nobody more
than my right hon. Friend the Member for Aldershot laid emphasis, in the Debate
on the Gracious Speech, on the fact that we must borrow money from America, at
interest or without interest, or else get a gift. Well, we have not got it without
interest, and we have not got it as a gift. But we have adopted the third method
and borrowed the money. . But I have done exactly what the hon. Member
for Aldershot suggested. What is he complaining about? Does he say that if
he and his friends had been in office they would have got better terms?
HON. MEMBERS: Yes.
MR. BEVIN: Is that your claim? I demand an answer.
.MR. CHURCHILL: I certainly am of the opinion that we should have got
better terms.
MR. BEVIN: Then that is a libel on the Administration of the United
States. We have not been dealing with New York bankers, we have been dealing
with the actual elected representatives of America, and I will not believe, nor will
I have it said about them without challenge, that the American Government con-
duct their foreign policy in the light of a change of Government brought about
by the free vote of the people of Great Britain.- Why has the difficulty arisen






Anglo-American Financial Arrangements


with the Balkans? Why has it arisen between other countries of Europe and the
United States? Not because of the character of the Governments those countries
have elected but because of the question as to whether there have been free elec-
tions to elect those Governments. If that is so, what a thing has been said of
another friendly Government. The egoism of it, the actual boastfulness of my
right hon. Friend, the horrible assumption that the American Government would
get down on its knees to him because there was a Labour Government in power
here. It is utter nonsense.

The Weight of International Circumstances
But I can understand the shock to many right hon. Gentlemen in this House,
and of those hon. Gentlemen, particularly those who have been lenders hitherto.
Yes, lenders. I know the feeling when you cannot feel that you are top dog any
longer. I know the reaction; I have gone through it more than once. It is a great
experience and you are feeling it. For 20 years you were on top, and the blow
which you received must have been terrific. But I feel myself tonight more in the
position that I have been in so many times in my career when facing the members
of my own organization, the trade unionists of this country, with agreements that
I did not entirely like. That has happened on thousands of occasions in the last
30 years. To one of them the right hon. Member for Woodford (Mr. Churchill)
contributed in no small degree. I had to face thousands of members in this coun-
try with cuts in wages, and I had to do it because of the action of the right hon.
Gentleman and his friends. Circumstances were too much for me. I say that in-
ternational circumstances are too great for the Government now to avoid facing
this issue. And I say to my own party: "Let them abstain. But do not let us have
any cowards on this side." There must be no failure to take a decision. The de-
cision is the thing. My right hon. Friend will agree that it was decision that car-
ried us from 1940 to the end of the war. And it is decision that will carry us
through now. We have got to take the decision. The fact is that we have got to
borrow and we are not in a position to dictate terms. Therefore we have had
to negotiate. Hon. Members have spoken as if they had only to go to the United
States and say, "Stand and deliver on our terms," and they would then get the
agreement they wanted. There is not one single Member who has put forward
a proposal or a claim that they could have got better terms.
I am not going to give way. Then I noticed that my right hon. Friend, for
whom I have the most profound and'long-standing respect-I do not see him in
his place-the right hon. Member for the Scottish Universities (Sir J. Anderson)
said that he and his friends are really going to abstain because the word "wel-
come" was in the Resolution. And let me quote his actual words:
"My right hon. Friends and I have concluded that we should not oppose
the Motion which is before the House, if it is carried to a Division. On the
other hand, we will not vote for it, and we advise our supporters similarly to
abstain. We take that middle course, not merely because the measures neces-
sary to the success of the plan, as I have said, are so completely under the con-
trol of the Government, but also, and mainly, because there are words in the
Resolution as drafted which make it extremely difficult for us to give it sup-
port. I refer to the word 'welcomes' which seems to import, at any rate in my
view, a note of enthusiasm that goes far beyond anything we really feel."-
[OFFICIAL REPORT, 12th December, 1945; Vol. 417, c. 455.]

The International Trade Organization
Where does the word "welcome" come in in the Motion? The Motion wel-
comes the initiative of the Government of the United States in making proposals







British Speeches of the Day


for an international trade organization. [HON. MEMBERS: "Read on."] All
right, I am reading on. Must I understand, at this late hour, after all the efforts
of the ex-Chancellor himself, that to enter this international trade organization is
a bad thing and that the initiative of the United States was wrong? Do the Con-
servatives think it was wrong? Everybody in the House, for months past, has
been urging international co-operation. Now that the United States has taken the
initial step of promoting an international trade organization, are they wrong? I
think the United States is entitled to an answer from a person who held such
responsible office for so long a period of those very negotiations.
When did the negotiations begin which led to these proposals? In 1941, with
the right hon. Gentleman, the Member for Woodford (Mr. Churchill). That is
where it began, and I do not complain. The right hon. Gentleman was up against
it. I was with him in it. I shared every decision he took, and I do not go back
on one. We were fighting for our lives. That great meeting which the right
hon. Gentleman held at Newfoundland at that time, I regard, if I may say so,
as the great turning-point of a most desperate situation. How glad we were to
welcome the right hon. Gentleman back and to see what had been accomplished.
Neither the right hon. Gentleman nor myself was under any delusion as to the
price that ultimately had to be paid-perhaps for our lives. The price that ulti-
mately had to be paid was Article VII, and we knew it, and, believe me, at that
time, we would have paid the price of Article VII in a much more drastic form
than it is now. I would have paid it for the liberty of the world rather than
be defeated.
Imperial Preference
MR. CHURCHILL: The position of Imperial Preference was absolutely safe-
guarded by me under Article VII and by the insertion of the words in the Atlantic
Charter "without prejudice to existing obligations."
MR. BEVIN: I am talking to the right hon. Gentleman about trade agree-
ments. I will deal with Imperial Preference in a moment. I am not criticizing
him, believe me. I say that, at that moment, I would have done what he did. I
will go further tonight and, from this Box, will say that, even if we had been
pressed to sacrifice Imperial Preference, rather than be defeated by Hitler, I would
have paid that price then in 1941. I know the issue that was at stake, but we did
not have to pay the price, and, may I remind the House, we have not paid it
now and it is not in these proposals. In his book, The Dawn of Liberation, the
right hon. Gentleman said:
"Again, in February, 1942, when the United States was our closest ally, I
did not agree to Article VII of the Mutual Aid Agreement without having
previously obtained from the President the definite assurance that we were no
more committed to the abolition of Imperial Preference than the American
Government were committed to the abolition of their high protective tariffs.
The discussions on how great a volume and more harmonious flow of trade
could be created in the postwar years under the Agreement leaves us ir every
respect, so far as action is concerned, perfectly free."
MR. CHURCHILL: Is not that so now?
MR. BEVIN: Exactly. That is the basis of this agreement on Imperial
Preference-not whether the tariff goes down 40 or 50 per cent but on trade
for trade on the merits of trade. That is how I understand it. It is, indeed, on
exactly the same basis as the right hon. Gentleman the Member for West Bristol
(Mr. Stanley) negotiated the 1938 Agreement, by which he reduced preferences
as against tariffs at that time. Therefore it is to be discussed. I think that, when
we are in a difficulty of this kind, it is a good method to put oneself in the place


786






Anglo-American Financial Arrangements


of the other person with whom one has been negotiating. I do not think it is
wise merely to bolster up one's own mind and one's own case without looking
at it exactly as the other person looks at it, and I think it is only fair to the
United States to try to look at it from their point of view. All the discussion I
have read, of yesterday's Debate particularly, forgets that there are two sides to
this story. The right hon. Gentleman referred briefly to them just now, but that
was the first time I had heard of them.
Lend-Lease
A representative of the Americans would say: "The total of Lend-Lease from
U.S.A. to the United Kingdom, including services, was 20 billion dollars. These
dollars were hard goods. Return Lend-Lease from the United Kingdom tb the
United States was equal to about five billion dollars. Some of this covered in-
tangible things-as well as sites, hospitals and things of that sort. All this leaves
a balance of 15 billion dollars to put into the pool with which we carried on the
war, or about three times the amount borrowed from the United States in the
1914-1918 war. Under the Lend-Lease agreement, certain things were written
off, and the present Agreement constitutes a cancellation of a substantial part of
this 15 billion dollars." That is how the Agreement is looked at from the Amer-
ican angle. Now, what were the terms of the Lend-Lease Act, as passed by
Congress?
"The terms and conditions upon which any such foreign Government
receives any aid authorized in subsection (a) shall be those which the Presi-
dent deems satisfactory and a benefit to the United States, made in payment
or repayment in kind or property or any other direct or indirect benefit which
the President deems satisfactory."
As against this, it has been the basis of the argument that we have tried to
get Lend-Lease written off retrospectively. The whole struggle in these negotia-
tions has been an endeavor to get it made retrospective.
The Americans well know our point of view. We stood alone in 1940. It
was then we really got into this trouble-to almost the exact amount which we
are now seeking to borrow. But we failed to achieve that, and there are many
arguments on the American side which I do not propose to go into tonight which
have to be taken into account. I ask the right hon. Gentleman who held my posi-
tion before me whether it is not a great gain to us internationally to clear up Lend-
Lease, war. debts, all the arguments-to have finished with that at the price of
650 million dollars? I say, looking back over the history of my predecessors and
the predecessors in the office of hon. Members opposite, if we could have cleared
off the whole of a great debt of this character at the cost of 650 million dollars the
effect on our subsequent dealings in foreign policy would have been of tremendous
benefit between the two wars.
It has been said that this is a "Baldwin Settlement"; but how can it be com-
pared with the Baldwin position? The basis of the financing of the 1914 war was
entirely different. We borrowed, we lent to others, we made an agreement to pay
back, but the others did not pay us. That was the difficulty. I am not criticizing
Lord Baldwin; he had to face the fact then of which I know little. He had to face
it as a debt. Last time it was a war debt with nothing behind it-no goods, no
machines-and if we had had to face anything like that this time we would have
been sunk. We could not have done it. To compare two sets of circumstances
where the analogy is so different does not really lead us anywhere at all.
The Sterling Area
It is true that Lend-Lease has altered our economy, but I have to look at the
matter as Foreign Secretary and I say to myself, "How can the world get started?"






British Speeches of the Day


That is the great anxiety. What part has Britain got to play? It is said that we
ought to anchor ourselves completely to the sterling area, but what is the differ-
ence in the convertibility under this Agreement and the convertibility in 1939?
They are precisely the same. The alteration of the convertibility was a wartime
measure, and you would have great difficulty in standing up to another country
and saying, "You all agreed to this sterling pool during the war, to win the war,
and now, when you want free trade, you stand to the sterling pool still."
MR. BOOTHBY (Conservative): I must point out that there is a great
difference between 1939 and today. In 1939 the sterling area moved all their
exchanges together. Under the present proposals we shall all be compelled to
move our exchanges separately.
MR. BEVIN: That is quite untrue, and if the hon. Member would study the
thing he would not be so dogmatic. There is another problem affecting the sterling
area. If my right hon. Friends the Chancellor of the Exchequer and the Presi-
dent of the Board of Trade, or any Government, whether us or the Opposition,
could say to everybody in the sterling area, "Don't buy for two and a half years,
keep your orders down," it would be a very simple matter. But they have been
waiting for six years for goods.
The Government considered this very carefully and lengthily, we did not
come to the decision without very great care, and I became convinced in the end
of the rightness of the ex-Chancellor's point of view, which he impressed upon
me so often when he was in office, that the sterling area under these conditions
would not hold. If the sterling area did not hold, and the dollar position was not
settled, that was economic war. And if you add to the troubles that we have to
settle in this world arising out of a world war, an economic war under those
conditions, then I dread the consequences. In the end, I accepted, with my col-
leagues, this agreement because I believed I was doing the right thing for the
world, taking all the factors into account. Whether this obligation to turn sterling
into another currency breaks us soon or not, depends on whether we are able to
satisfy our creditors with sterling goods. If they are satisfied with those, they
will not buy dollar goods. I know we are handicapped. We are handicapped by
the neglect of a great many industries, the loss of skill, and the neglect by this
House of our people for 25 years. I know we have to catch up, and hon. Mem-
bers who abstain tonight have a great deal of responsibility.

The Gold Standard
The hon. Member for East Aberdeen (Mr. Boothby) quoted my Blackpool
speech, when I said that I would not be tied to gold and that no one would
persuade me on this issue. Well, if I had a ship in narrow waters, even in Aber-
deen, and there was a 10 per cent play from the anchor and then another 10
per cent, and then free play, I would not feel my ship was very safe. I should
not think the anchor was a real anchor. I am satisfied, as a member of the Mac-
millan Committee, that if we could have had this free play in 1931, we need never
have got into this trouble. I feel that this is not the gold standard. I have the
authority of the right hon. Gentleman the Member for the Scottish Universities,
who tells me it is not the gold standard; I have the authority of the hon. Member
for Aberdeen that it is the gold standard. I suggest they settle it on their way to
Scotland.
Now if I may return for a moment to Imperial Preference. Why did we have
the Ottawa Agreement? Will any Member of this House suggest that, if there
had been no Ottawa Agreement, the Dominions would not have flown to the
Mother Country's side? Not at all. The reason for the Ottawa Agreement was
perfectly simple; it was the last desperate step to counter the terrible effect of






Anglo-American Financial Arrangements


the report of the Cunliffe Committee in 1918 and 1919, in which Mr. Austen
Chamberlain deflated 40 per cent in one day-and I had to accept 2 a week
reduction in wages for my people at that time. Then the right hon. Gentleman
came along with another 121/2 per cent immediately I had settled that and we had
a general strike.
MR. CHURCHILL: That was an increase.
MR. BEVIN: No, that was in the war. In 1925 and 1926 you came along
and altered the exchange rate by 121/2 per cent by returning to the fixed gold
standard. You upset all the country-and you and I became firm friends forever
after. Really it was this terrible struggle against a bankers' paradise. What did it
mean? It meant that we were working in terms of fixed gold. It did not matter
how you increased production or what you did, that ruthless, relentless, automatic
action of the gold standard stepped in, the cruelest system that ever man invented.
MR. BOOTHBY: And now you are going back to it.
MR. BEVIN: No, not even half way. If this thing is used as the gold
standard was used, then both America and ourselves will land ourselves into a
revolutionary position, inevitably. Therefore I am satisfied that under the rules
which have been laid down and under the scheme which has been devised, pro-
viding those rules are played up to in a correct manner, the situation in which we
found ourselves never need recur. It has been said that, inevitably, this will lead
to another repudiation. That is in the hands of the United States, and nobody
else. The United States say that they want freer trade, but freer trade does not
only mean the lowering of a tariff barrier, it depends on the actual fact as to
whether they bhy goods. The trouble of the Baldwin settlement, as it is called,
and the trouble that would arise under this settlement, will arise if we are not
allowed to work off our debts. If the debts are allowed to be worked off, both
with the United States and internationally, then this few billion dollar loan will
not matter very much. It is the exchange, unfettered, with people purchasing these
things and not putting barriers up, that will ultimately solve the problem.
I recognize that this is a difficult decision to take. All I would say is we are
nationalizing certain industries. They ought to have been nationalized long ago.
The industries are incompetent. I speak as one who knows a good deal about it.
[HON. MEMBER: "Cables."] The cables were the biggest scandal ever carried
out. That Cable settlement was a disgrace, and when the time comes I think the
country will be astonished at what happened. It wants new capital, new blood,
new methods in a number of these basic industries, and I would say to this House:
Carry the Bills as soon as you can. The country has decided. Let us give effect
to it, because that will have a tremendous effect on the amount of money we
have to borrow. Let private enterprise, now the issue has been declared and the
line of demarcation has been drawn, get on with the rest. And I say to my trade
union friends, managers, everybody-with the country up against an economic
position very much like it was militarily in 1940, that now is the time for us to
put our shoulders to the wheel and help this old country through as we did on that e
occasion.
Therefore, finally, I would urge that Members should reconsider whether they
should abstain. Members should take their responsibility, especially now that
peace has to be worked out. We have to stand-to and try to carry great burdens.
Anyway, my final word is this: we stood together in L940 and fought it through
and Britain survived, and Britain shall still survive.
[House of Commons Debates)






British Speeches of the Day


ANGLO-AMERICAN FINANCIAL ARRANGEMENTS
House of Lords, December 18, 1945

LORD KEYNES: My Lords, two, days in Westminster are enough to teach
one what a vast distance separates us here from the climate of Washington. Much
more than the winter waste of the North Atlantic and that somewhat overrated
affair, the Gulf Stream, though that is quite enough in itself to fog and dampen
everything in transit from one hemisphere to the other. Yet I can well see that
no one would easily accept the result of these negotiations with sympathy and
understanding unless he could, to some 'extent at least, bring himself to appreciate
the motives and purposes of the other side. I think it would be worth while that
I should devote some part of what I have to say to that aspect. How difficult it is
for nations to understand one another, even when they have the advantage of a
common language. How differently things appear in Washington than in London,
and how easy it is to misunderstand one another's difficulties and the real pur-
pose which lies behind each one's way of solving them! As the Foreign Secretary
has pointed out, everyone talks about international co-operation, but how little
of pride, of temper or of habit anyone is willing to contribute to it when it comes
down to brass tacks.

The Three Heads of the Proposals
When I last had the opportunity of discussing the Bretton Woods plan in your
Lordships' House, the plan stood by itself, and its relationship to post-war policy
as a whole was not clear. This was responsible for the least easily answered criti-
cisms. All one could say in reply was that the plan was not intended to stand
by itself, but one must begin somewhere. The other aspects were not yet ready
for proposals, though details would be taken in hand as soon as possible. Today
&he situation is different. A more or less complete outline for the reordering of
commercial and currency policies in their international aspects and their recon-
version to peacetime practices now available. Each part is complementary to the
rest. Whether it be well or ill-conceived, in the rounded whole which your
Lordships have before you, the proposals fall into three parts: a blueprint called
long-term organization of world commerce and foreign exchanges on a multilateral
and non-discriminatory basis; short-term proposals for the early reconversion of
the sterling area in the same direction; and an offer of financial aid from the
United States to enable this country to overcome the immediate difficulties of
transition which would otherwise make the short-term proposals impracticable
and delay our participation and collaboration with the United States in getting
the rest of the world along the lines of the long-term policy indicated.

The Criticisms
Each of these parts has been subjected to reasonable criticism. The long-term
blueprint invites us to commit ourselves against the future organization of world
trade on the principle of tying the opportunity of export to import by means of
bilateral and discriminatory arrangements and unstable exchanges such as are
likely to involve in practice the creation of separate economic blocs. It is argued
that this is premature and unreasonable until we have found means to overcome
the temporary difficulties of transition and have more experience of the actual con-
ditions of the post-war world, in particular of how a full employment policy works
out in practice in its international aspects. The short-term proposals have been
criticized on the grounds that they do not allow us enough time to liquidate the
very complex wartime arrangements, or to arrange the onerous fnancial obliga-
tions which they heaped on us. Finally, a complaint is made of the terms of the






Anglo-American Financial Arrangements


financial aid from the United States, that the amount is insufficient and the bur-
den of the interest too heavy.
It is not for one who has striven every day for three months to improve these
proposals so as to lay them less open to these criticisms, and who perhaps knows
better than most people how imperfectly he has succeeded, to take these criticisms
lightly; nor on the day after my return to this country am I yet in a position to
judge, with much accuracy, the mood which underlies the criticisms which are
being made, and which is probably more significant than the particular complaints
in which it has been finding its outlet. Nevertheless I wonder if this first great
attempt at organizing international order out of the chaos of the war, in a way
which will not interfere with the diversity of national policy, yet which will
minimize the causes of friction and ill will between nations, is being viewed in
its right perspective. I feel sure that serious injustice is being done to the liberal
purposes and intense good will towards this country of the American people as
represented by their Administration and their urgent desire to see this country a
strong and effective partner in guiding a distressed and confused world into the
ways of peace and economic order.

The Loan and Short-Term Policy
Let me plunge at once into the terms of the loan and the understandings about
short-term policy which are associated with it. Since our transitory financial diffi-
culties are largely due to the role we played in the war and to the costs we in-
curred before the United States entered the war, we here in London feel-it is a
feeling which I shared and still share to the full-that it might not be asking too
much of our American friends that they should agree to see us through the transi-
tion by financial.aid which approximated to a grant. We felt it might be proper
for us to indicate the general direction of the policies which that aid would enable
us to pursue and to undertake to move along those lines, particularly in terminat-
ing the discriminatory features of the exchange arrangements of the sterling area
as quickly as circumstances permit and that, subject to those general understand-
ings, we should be left as free as possible to work things out in our own way.
Released from immediate pressing anxieties on terms which would not embarrass
the future, we could then proceed cautiously in the light of experience of the
post-war world as it gradually disclosed its lessons.
Clearly that would have given us the best of both worlds. How reasonable
such a program sounds in London and how natural the disappointment when the
actual proposals fall seriously short of it. But what a gulf separates us from the
climate of Washington; and what a depth of misunderstanding there will be as
to what governs relations between even the friendliest and most like-minded na-
tions if we imagine that so free and easy an arrangement could commend itself
to the complex politics of Congress or to the immeasurably remote public opinion
of the United States! Nevertheless, it was on these lines that we opened our
case. For three days the heads of the American delegation heard mne expound
the material contained in the White Paper to which the noble and learned
Viscount, Lord Simon, referred. He would have done it more eloquently, but I
can fairly say that I was heard not only with obvious and expressed good will and
plain sympathy, but also with a keen desire on their part to understand the mag-
nitude and the intricacies of our problem.
I must, at this point, digress for a moment to explain the American response
to our claim that for good reasons arising out of the past they owe us something
more than they have yet paid, something in the nature of deferred Lend-Lease for
the time when we held the fort alone, for it was here that in expounding our case
we had an early and severe disappointment. It would be quite wrong to suppose






British Speeches of the Day


that such considerations have played no part in the final results. They have played
a vital part; we could never have obtained what we did obtain except against
this background. Nevertheless, it was not very long before the British delegation
discovered that a primary emphasis on past services and past sacrifice would not
be fruitful. The American Congress and the American people have nex er accepted
any literal principle of equal sacrifice, financial or otherwise, between all the
allied participants. Indeed, have we ourselves?
It is a complete illusion to suppose that in Washington you have only to
mention the principle of equal sacrifice to get all you want. The Americans-and
are they wrong?-find a post-mortem on relative services and sacrifices amongst
the leading Allies extremely distasteful and dissatisfying. Many different coun-
tries are involved and most of them are now in Washington to plead their urgent
needs and high deserts. Some have rendered more service than others to the
common cause; some have experienced more anguish of mind and destruction of
organized life; some have suffered, voluntarily or involuntarily, a greater sacri-
fice of lives and of material wealth; and some of them have escaped from a nearer,
more imminent or deadlier peril than others. Not all of them have had out of
Uncle Sam the same relative measure of assistance up to date.

Thinking in Terms of the Future
How is all this to be added, subtracted and assessed in terms of a line of
credit? It is better not to try; it is better not to think that way. I give the Amer-
ican point of view. Is not it more practical and more realistic-to use two
favorite American expressions-to think in terms of the future and to work out
what credits, of what amount and upon what terms, will do most service in re-
constructing the post-war world and guiding post-war economy along those lines
which, in the American view, will best conduce to the general prosperity of all
and to-the friendship of nations? This does not mean that the past is forgotten,
even though it may be beginning to fade, but in no phase of human experience
does the past operate so directly and arithmetically as we were trying to con-
tend. Men's sympathies and less calculated impulses. are drawn from their mem-
ories of comradeship, but their contemporary acts are generally directed towards
influencing the future and not towards pensioning the past. At any rate I can
safely assure you that that is how the American Administration and the American
people think. Nor, I venture to say, would it be becoming in us to respond by
showing our medals, all of them, and pleading that the old veteran deserves bet-
ter than that, especially if we speak in the same breath of his Yorthcoming retire-
ment from open commerce and the draughts of free competition, which most
probably in his present condition would give him sore throat and drive him still
further indoors.
If the noble Lord, Lord Woolton, had led the Mission to Washington-as I
indeed wish that he had-I would lay a hundred to one that he would not have
continued in the vein in which he spoke yesterday for more than a few days.
Neither pride of country nor sense of what is fitting would have allowed him, after
he had sensed from every sort of information open to him how Americans re-
sponded to it, to make an open attempt to make what every American well appre-
ciated was well enough known in men's hearts the main basis for asking for a
gigantic gift. We soon discovered, therefore, that it was not our past performance
or our present weakness but ou'r future prospects of recovery and our intention
to face the world boldly that we had to demonstrate. Our American friends were
interested not in our wounds, though incurred in the common cause, but in our
convalescence. They wanted to understand the size of our immediate financial
difficulties, to be convinced that they were temporary and manageable and to be






Anglo-American Financial Arrangements


told that we intended to walk without bandages as soon as possible. In every circle
in which I moved during my stay in Washington, it was when I was able to enl
large on the strength of our future competitive position, if only we were allowed
a breather, that I won most sympathy. What the United States needs and desires
is a strong Britain, endowed with renewed strength and facing the world on the
equal or more than equal terms that we were wont to do. To help that forward
interests them much more than to comfort a war victim.
But there was another aspect of the American emphasis on the future bene-
fits which were expected as a result of financial aid to Britain. Those on the
American side wanted to be able to speak definitely and in plain language to their
own business world about the nature of the future arrangements in regard to com-
merce between the United States and the sterling area. It was the importance
attached on the American side to their being able to speak definitely about future
arrangements that made our task so difficult in securing a reasonable time and
reasonable elasticity of action. As the Chancellor of the Exchequer has explained
in another place, we ran here into difficulties in the negotiations; and we accepted
in the end more cut-and-dried arrangements in some respects than we ourselves
believed to be wise or beneficial, as we explained in no uncertain terms and with
all the force at our command. We warned them that precisely those criticisms
which have been raised would be raised, and justly raised, in Parliament. They
on their side, however, were not less emphatic that we should render their task
impossibly difficult in commending their proposals to their own public unless we
could find ways of meeting their desire for definiteness, at least to a certain extent.

Compromise on Both Sides
Yet I must ask Your Lordships to believe that the financial outcome, though
it is imperfectly satisfactory to us, does represent a compromise and is very con-
siderably removed from what the Americans began by thinking reasonable; for at
the outset the peculiar complexities of our existing arrangements were not at all
understood. I am hopeful that the various qualifications which have been intro-
duced, the full significance of which cannot be obvious except to experts, may
allow in practice a workable compromise between the certainty they wanted and
the measure of elasticity we wanted. Negotiations of this character, in which
technical requirements and political appeal must both be satisfied, are immensely
difficult, and could not have been brought to any conclusion except in an atmosphere
of technical collaboration between the two sides, rather than of technical contro-
versy.
The Amount of the Credit
I must now turn to the financial terms of the Agreement, and first of all to its
amount. In my own judgment, it is cut somewhat too fine, and does not allow
a margin for unforeseen contingencies. Nevertheless the sum is substantial. No
comparable credit in time of peace has ever been negotiated before. It should
make a great and indispensable contribution to the strength of this country, abroad
as well as at home, and to the well-being of our tired and jaded people. After
making some allowance for a credit from Canada, and for some minor miscel-
laneous resources, it represents about as large a cumulative adverse balance as we
ought to allow ourselves in the interval before we can get straight. Moreover, it
may not prove altogether a bad thing that there should be no sufficient margin
to tempt us to relax; for if we were to relax, we should never reach equilibrium
and become fully self-supporting within a reasonable period of time. As it is, the
plain fact is that we cannot afford to abate the full energy of our export drive
or the strictness of our economy in any activity which involves oversea expendi-
ture. Our task remains as difficult as it is stimulating, and as stimulating as it is






794 British Speeches of the Day

difficult. On a balance of considerations, therefore, I think that under this head-
ing we should rest reasonably content.
That the Americans should be anxious not to allow too hot a pace to be set in
this, their first major post-war operation of this kind, is readily understandable.
The total demands for overseas financial assistance crowding in on the United
States Treasury from all quarters whilst I was in Washington were estimated to
amount to between four and five times our own maximum proposals. We
naturally have only our own requirements in view, but the United States Treasury
cannot overlook the possible reaction of what they do for us on the expectations
of others. Many members of Congress were seriously concerned about the cumu-
lative consequences of being too easy-going towards a world unanimously clamor-
ing for American aid, and often only with too good reason. I mention such con-
siderations because they are a great deal more obvious when one is in Washington
than when one returns here.

The Question of Interest
On the matter of interest, I shall never so long as I live cease to regret that this
is not an interest-free loan. The charging of interest is out of tune with the under-
lying realities. It is based on a false analogy. The other conditions of the loan
indicate clearly that our case has been recognized as being, with all. its attend-
ant circumstances, a special one. The Americans might have felt it an' advan-
tage, one would have thought, in relation to, other transactions, to emphasize this
special character still further by foregoing interest. The amount of money at stake
cannot be important to the United States, and what a difference it would have made
to our feelings and to our response! But there it is. On no possible ground can we
claim as of right a gesture so unprecedented. A point comes when in a matter
of this kind one has to take No for an answer. Nor, I am utterly convinced, was
it any lack of generosity of mind or purpose on the part of the American negoti-
ators which led to their final decision. And it is not for a foreigner to weigh up
the cross-currents, political forces and general sentiments which determine what
is possible and what is impossible in the complex and highly charged atmosphere
of that great democracy, of which the daily thoughts and urgent individual pre-
occupations are so far removed from ours. No one who has breathed that atmos-
phere for many troubled weeks will under-estimate the difficulties of the American
statesmen, who are striving to do their practical best for their own country and
for the whole world, or the fatal consequences if the Administration were to offer
us what Congress would reject.
The Moratorium; the Waiver
During the whole time that I was in Washington, there was not n single
Administration measure of the first importance that Congress did not either
reject, remodel, or put on one side. Assuming, however, that the principle of
charging interest had to be observed, then, in my judgment, almost everything
possible has been done to mitigate the burden and to limit the risk of a future
dangerous embarrassment. We pay no interest for six years. After that we pay
no interest in any year in which our exports have not been restored to a level
which may be estimated at about 60 per cent in excess of pre-war. I repeat
that. We pay no interest in any year in which our exports have not been restored
to a level which may be estimated at about 60 per cent in excess of what they were
pre-war.
LORD BARNBY: In volume oFvalue?
LORD KEYNES: Volume. That is very important; I should have said so.
The maximum payment in any year is 35,000,000, and that does not become







Anglo-American Financial Arrangements


payable until our external income, in terms of present prices, is fifty times that
amount. Again I repeat, the maximum payment in any year is 35,000,000, and
that does not become payable until our external income-that is from exports and
shipping and the like-is, in terms of present prices, fifty times that amount. In
any year in which our income falls short of this standard, interest is fully and
finally waived. Moreover, the installments of capital repayments are so arranged
that we obtain the maximum benefit from this provision in the early years. For at
the start the minimum payment to which we have committed ourselves is no more
than 13,000,000 a year; that is to say, less than one per cent of the external
income which we must attain if we are to break even, quite apart from the cost of
the American loan.
It is relevant, I think, to remind your Lordships that the maximum charge to
us in respect of the early years is not much more than half of what is being
charged in respect of loans which the United States is making currently to her
other Allies, through the Import and Export Bank or otherwise; while the mini-
mum charge per cent to which we have been asked to commit ourselves in the
early years is only one-fifth of the annual service charge which is being asked from
the other Allies. None of those loans is subject to a five-year moratorium. All
the other loans which are being made are tied loans limited to payments for specific
purchases from the United States. Our loan, on the other hand, is a loan of
money without strings, free to be expended in any part of the world. That is an
arrangement, I may add, which is entirely consistent with the desire of the United
States to enable us to return as fully as possible to the conditions of multilateral
trade settlements.
The Settlement of Lend-Lease
Your negotiators can, therefore, in my judgment, fairly claim that the case of
last time's war debts has not been repeated. Moreover, this is new money we
are dealing with, to pay for post-war supplies for civilian purposes, and is not-
as was mainly the case on the previous occasion-a consolidation of a war debt.
On the contrary, this new loan has been associated with a complete wiping off the
slate of any residual obligations from the operation of Lend-Lease. Under the
original Lend-Lease agreement, the President of the United States has been free to
ask for future "consideration" of an undetermined character. This uncomfortable
and uncertain obligation has been finally removed from us. The satisfactory char-
acter of the Lend-Lease settlement has not, I think, received as much emphasis as
it deserves. The Secretary of State for India emphasized it in his opening speech
yesterday, but it was not, so far as I noticed, taken up in any of the speeches which
were made by other noble Lords.
VISCOUNT SIMON: I made express reference to it.
LORD STRABOLGI: I mentioned it, too.
LORD KEYNES: I am indeed glad that there is some part of the settlement
which has commended itself to those on the-Benches on this side of the House.
No part of the loan which is applied to this settlement relates to the cost of Lend-
Lease supplies consumed during the war, but is entirely devoted to supplies received
by us through the Lend-Lease machinery, but available for our consumption or use
after the end of the war. It also covers the American military surplus and is in
final discharge of the variety of financial claims, both ways, arising out of the war
which fell outside the field of Lend-Lease and reciprocal aid. Is it not putting our
claim and legitimate expectations a little too high to regard these proposals, on
top of Lend-Lease, as anything but an act of unprecedented liberality? Has any
country ever treated another country like this, in time of peace, for the purpose of
rebuilding the other's strength and restoring its competitive position? If the






British Speeches of the Day


Americans have tried to meet criticism at home by making the terms look a little
less liberal than they really are, so as to preserve the principle of interest, is it
necessary for us to be mistaken? The balm and sweet simplicity of no per cent is
not admitted, but we are not asked to pay interest except in conditions where we
can reasonably well afford to do so, and the capital installments are so spread that
our minimum obligation in the early years is actually less than it would be with
a loan free of interest repayable by equal installments.
The Idea of a Commercial Loan
I began by saying that the American negotiators had laid stress on future
mutual advantage rather than on past history. But let no one suppose that such a
settlement could have been conceivably made except by those who had measured
and valued what this country has endured and accomplished. I have heard the
suggestion made that we should have recourse to a commercial loan without strings.
I wonder if those who put this forward have any knowledge of the facts. The
body which makes such loans on the most favorable terms is the Export-Import
Bank. Most of the European Allies are, in fact borrowing, or trying to borrow,
from this institution. The most favorable terms sometimes allowed, as for instance
in the case of France, for the purpose of clearing up what she obtained through
the Lend-Lease machinery, are 2/8 per cent with repayment ovel thirty years,
beginning next year; that is to say, an ,annual debt of 55/8 per cent so that an,
amount equal to 34 per cent of the loan will have been paid by France during, the
six years before we have begun to phy anything at all. The normal commercial
terms in the Export-Import Bank are, however, 3 per cent repayable over twenty
years commencing at once, so that payments equal to 48 per cent of the loan
would have been paid during the first six years in which we pay nothing. More-
over, the resources of this institution are limited and our reasonable share of them
could not have exceeded one-quarter or one-fifth of what we are actually getting.
Nor are they without strings. They are tied to specific American purchases and
not, like ours, available for use in any part of the world.
What about the conditions associated with the loans? The noble and learned
Viscount, Lord Simon, as have also several other critics, laid stress on our having
agreed to release the current earnings of the sterling area after the spring of 1947.
I wonder how much we are giving away there. It does not relate to the balances
accumulated before the spring of 1947. We are left quite free to settle this to the
best of our ability. What we undertake to do is not to restrict the use of balances
we have not yet got and have not yet been entrusted to us. It will be very satis-
factory if we can maintain the voluntary wartime system into 1947. But what
hope is there of the countries concerned continuing such an arrangement much
longer than that? Indeed, the danger is that these countries which have a dollar
or gold surplus, such as India, and South Africa, would prefer to make their own
arrangements, leaving us with a dollar pool which is a deficit pool, responsible
for the dollar expenditure not only of ourselves but of the other members of the
area having a dollar deficit.
The Sterling Area
This arrangement is only of secondary use to us, save in the exceptional war-
time conditions when those countries were, very abnormally, in a position to lend
to us. We cannot force these countries to buy only from us, especially when we
are physically unable to supply a large quantity of what they require. It seems
to me a crazy idea that we can go on living after 1947 by borrowing on com-
pletely vague terms from India and the Crown Colonies. They will be wanting
us to repay them. Two-thirds of what we owe to the sterling area is owed to
India, Palestine, Egypt and Eire. Is it really wise to base our financial policy on







Anglo-American Financial Arrangements


the loyalty and goodwill of those countries to lend us money and leave out
of our arrangements Canada and the United States? And Canada, let me add,
is not less insistent than the United States-if anything she is more insistent- on
our liberating the current earnings of the sterling area. e
I hope I shall convince the noble and learned Viscount, for I have not yet
finished. This was, anyhow, a condition very difficult to resist, for the main pur-
pose of a loan of this magnitude was for the precise object of liberating the future
earnings of the sterling area, not for repaying their past accumulations. Some
have been misled by the fact that that has been expressly emphasized. Our direct
adverse balance with the United States is not likely to exceed during the period
more than about half the loan. The rest of our adverse balance is with the rest
of the world -
VISCOUNT SIMON: The noble Lord speaks of a proposal difficult to
resist. May we be informed if the experts did their best to resist it?
LORD KEYNES: They did their best to resist so early a date, but I am
giving the reasons why, in being forced to surrender, the magnitude of our sur-
render was not so very great. I have explained so far that it would be very difficult
in any circumstances to carry on the arrangements beyond that for the reasons I
have explained, and I am now passing to what was, I feel, a vulnerable part of our
case. That was, that the precise object of having so large a loan was to make these
very arrangements practicable. About half of it would be a direct adverse balance
with the United States. 'The rest of the adverse balance is with the rest of the
world, mainly the sterling area. Canada will be dealt with separately. The very
object of the other half of the loan is, therefore, to provide us with dollars mainly
for the sterling area. We are given not only the condition but also the means to
satisfy it. I am afraid it would take more than my forensic powers to maintain
that position in its most absolute form against an argument so powerful as that,
if the Americans could say: "You are going to borrow all this money by impound-
ing the earnings of the sterling area. What is the necessity for so large a loan?
The calculations have been based on the contention that we have to meet the major
part of your adverse balance." But that is not the end. I do not think we need
repine too much.
The way to remain an international banker is to allow checks to be drawn
upon you; the way to destroy the sterling area is to prey on it and to try to live
on it. The way to retain it is to restore its privileges and opportunities as soon
as possible to what they were before the war. It would have been more comfort-
able to know that we could have a little more than fifteen months to handle the
situation, but, nevertheless, the underlying situation is as I have described. I do
not regard this particular condition as a serious blot on the loan, although I agree
with the noble and learned Viscount that I would have preferred it less precise,
as I would have preferred many other points to be less precise. Such a view can
only be based on a complete misapprehension of the realities of the position, for
apart from the question of debt, do the critics really grasp the nature of the
alternative? The alternative is to build up a separate economic bloc which ex-
cludes Canada and consists of countries to which we already owe more than we
can pay, on the basis of their agreeing to lend us money they have not got and
buy only from us and one another goods we are unable to supply. Frankly this
is not such a caricature of these proposals as it may sound at first.
The Attempt to Restrict Laissez-Faire
In conclusion, I must turn briefly to what is, in the long run, of major impor-
tance-namely, the blueprints for long-term commercial and currency policy,
although I fear I must not enlarge on that. In working out the Commercial







798 British Speeches of the Day

Policy Paper, to which, of course, this country is not committed, unless a con-
siderable part of the world is prepared to come into it and not merely the United
States, and in the Final Act of Bretton Woods, I believe that your representatives
have been successful in maintaining the principles and objects which are best
suited to the predicaments of this country. The plans do not wander from the
international terrain and they are consistent with widely different conceptions of
domestic policy. Proposals which the authors hope to see accepted both by the
United States of America and by Soviet Russia must clearly conform to this con-
dition. It is not true, for example, to say that State trading and bulk purchasing
are interfered with. Nor is it true to say that the planning of the volume of our
exports and imports, so as to preserve equilibrium in the international balance of
payments, is prejudiced. Exactly the contrary is the case. Both the currency
and the commercial proposals are devised to favor the maintenance of equilibrium
by expressly permitting various protective devices when they are required to main-
tain equilibrium and by forbidding them when they are not so required.- They are
of the utmost importance in our relationship with the United States and, indeed,
the outstanding characteristic of the plans is that they represent the first elaborate
and comprehensive attempt to combine the advantages of freedom of commerce
with safeguards against the disastrous consequences of a laissez-faire system which
pays no direct regard to the preservation of equilibrium and merely relies on the
eventual working out of blind forces.
Here is an attempt to use what we have learnt from modern experience and
modern analysis, not to defeat, but to implement the wisdom of Adam Smith. It
is a unique accomplishment, I venture to say, in the field of international dis-
cussion to have proceeded so far by common agreement along a newly trod path,
not yet pioneered, I agree, to a definite final destination, but a newly trod path, which
points the right way. We are attempting a great step forward towards the goal
of international economic order amidst national diversities of policies. It is not
easy to have patience with those who pretend that some of us, who were very early
in the field to attack and denounce the false premises and false conclusions of
unrestricted laissez-faire and its particular manifestations in -the former gold,
standard and other currency and commercial doctrines which mistake private license
for public liberty, are now spending their later years in the service of the State
to walk backwards and resurrect and re-erect the idols which they had played
some part in throwing out of the market place. Not so. Fresh tasks now invite.
Opinions have been successfully changed. The work of destruction has been
accomplished, and the site has been cleared for a new structure.

The Multilateral System
Questions have been raised-and rightly and reasonably raised-about the will-
ingness of the United States to receive repayment hereafter. This is a large subject
to which I have given a great deal of thought, but I shall not have time to develop
it fully today. I am not, as a result, quite so worried as most people. Indeed, if
in the next five or ten years the dollar turns out to be a scarce currency, seldom
will so many people have been right. It is a very technical matter, very emphati-
cally within their past experience, but not so easily the subject of future prediction.
I am afraid I must content myself with a few headlines. First, it is not a question
of our having to pay the United States by direct exports; we could never o that.
Our exports are not, and are not likely to be, as large as our direct imports from
the United States. The object of the multilateral system is to enable us to pay
the United States by exporting to any part of the world, and it is partly for that
very reason that the Americans have felt the multilateral system was the only sound
basis for any arrangement of this kind. Secondly, all the most responsible people in
the United States, and particularly in the State Department and in the Treasury,







Motion of Censure


have entirely departed from the high tariff, export subsidy conception of things, and
will do their utmost with, they believe, the support of public opinion in the opposite
direction. That is why this international trade convention presents us with such
a tremendous opportunity. For the first time in modern history the United States
is going to exert its full, powerful influence in the direction of reduction of tariffs,
not only of itself but by all others.
Thirdly, this is a problem of which today every economist and publicist in the
United States is acutely conscious. Books on economics are scarcely written about
anything else. They would regard it as their fault and not ours if they fail to
solve it. They would acquit us of blame--quite different from the atmosphere of
10 or 20 years ago. They will consider it their business to find a way out. Fourthly,
if the problem does arise, it will be a.problem, for reasons I have just mentioned,
of the United States vis-a-vis the rest of the world and not us in particular. It
will be the problem of the United States and the whole commercial and financial
arrangement of every other country. Fifthly-and perhaps this is the considera-
tion which is least prominent in people's minds-the United States is rapidly be-
coming a high-living and a high-cost country. Their wages are two and a half
times ours. These are the historic, classical methods by which in the long run
international equilibrium will be restored.
Therefore, much of these policies seem to me to be in the prime interest of our
country, little though we may like some parts of them. They are calculated to help
us regain a full measure of prosperity and prestige in the world's commerce. They
aim, above all, at the restoration of multilateral trade which is a system upon which
British commerce essentially depends. You can draw your supplies from any
source that suits you and sell your goods in any market where they can be sold to
advantage. The bias of the policies before you is against bilateral barter and every
kind of discriminatory practice. The separate economic blocs and all the fric-
tion and loss of friendship they must bring with them are expedients to which
one may be driven in a hostile world, where trade has ceased over wide areas to
be co-operative and peaceful and where are forgotten the healthy rules of mutual
advantage and equal treatment. But it is surely crazy to prefer that. Above all,
this determination to make trade truly international and to avoid the establish-
ment of economic blocs which limit and restrict commercial intercourse outside
them, is plainly an essential condition of the world's best hope, an Anglo-American
understanding, which brings us and others together in international institutions
which may be in the long run the first step towards something more compre-
hensive. Some of us, in the tasks of war and more lately in those of peace, have
learnt by experience that our two countries can work together. Yet it would be
only too easy for us to walk apart. I beg those who look askance at these plans to
ponder deeply and responsibly where it is they think they want to go.
[House o'f Lords Debates)




MOTION OF CENSURE
House of Commons, December 5 and 6, 1945
[EXTACTS]
"That this House regrets that His Majesty's Government are neglecting
their first duty, namely, to concentrate with full energy upon the most urgent
and essential tasks of the reconversion of our industries from wartime pro-







British Speeches of the Day


duction to that of peace, the provision of houses, the speedy release of men
and women from the Forces to industry, and the drastic curtailment of our
swollen national expenditure, and deplores the preoccupation of His Majesty's
Ministers, impelled by-Socialist theory, with the formulation of long-term
schemes for nationalization creating uncertainty over the whole field of indus-
trial and economic activity, in direct opposition to the best interest of the
nation, which demands food, work and homes."

THE LEADER OF THE OPPOSITION (Rt. Hon. Winston Churchill):
We are here today on a Motion of Censure, but it is not the Opposition who have
introduced acrimony into our proceedings. When we met for the first time four
months ago, we refrained from conflict. I pointed out that there never had been a
Parliament in which there was so great a body of work to be done in which all
had an equal interest, or of legislation to be passed to which all parties were com-
mitted. Ideological differences may be deep and wide, but I certainly hoped that
there would have been a very broad and continuing measure of co-operation upon
practical tasks, "and that these would have priority. We therefore did not divide
upon the Address in reply to the Gracious Speech, and the Leader of the House
taunted us the other day for not having done so. I went out of my way, perhaps
further than I should have gone, to mitigate any shock to our credit abroad which
might have been caused by the Government's announcement of the nationalization
of the Bank of England, only to be derided by the Leader of the House for speak-
ing in less alarmist terms than I had done in the heat of the Election.
Throughout we have done our best, even when we did not entirely agree, to
make easy and nationally united, the course of foreign politics. The Prime Min-'
ister found it convenient to refer appreciatively to this in his speech to the Ameri-
can Congress. But when the Government insisted upon keeping on for five years
by legislation all the extraordinary controls, which even in the heat of war we
only renewed from year to year, and when they rejected our friendly proposal for
a two-year period, they showed that they were imbued with the spirit of faction.
They showed a desire to humiliate their defeated opponents, and a desire to have
every economic detail of the social life of our country held in a wartime grip in-
definitely, and obviously for purposes far beyond those of the transition from war
to peace. The Leader of the House actually complained, as no man charged with
the duty of leading the House of Commons has ever done in my recollection,
that we were not having enough first-class rows. The whole attitude of the Leader
of the House, seconded by the Minister of Health-I hope he will be allowed out
of his dug-out before I finish-is to offend, wound, injure and provoke those over
whom they have got so great a Parliamentary majority, but who nevertheless
represent half the nation, and will shortly represent a large majority out of doors.
The Prime Minister may not be aware of all this, though he has had a long
and intimate experience of the personalities and methods of both the Ministers to
whom I have referred. The Prime Minister has not sought in any way to embitter
or inflame our proceedings. Perhaps he will have to hurry up and toe the line this
afternoon, but he has no interest in doing so. The Prime Minister's prevailing
interest must be the success of his Administration. He does not need to grind his
personal axe, and will probably be content if he can keep hold of it. We are,
therefore, glad he is here and safely back. It is my first submission to the House
and the country that the Government, through their leading mouthpieces in the
House of Commons, and through their aggressive policy, have deliberately sought
to aggravate the division which unhappily exists in our country, and that not only
their policy but their methods and their manners are intended to provoke and
exacerbate. That is my first submission.







Motion of Censure


There is another theory which may be put forward to explain the Govern-
ment's behavior, or the behavior of the Ministers who have acted in this way.
They are under heavy pressure, behind the scenes, from their extremists to do
more and go faster even than they themselves think possible. Unless they can show
they are hurting, injuring, provoking their political opponents, they will not be
able to placate their wild men, or control some odd elements that nestle under
their wing. If that be so, they may at this moment be congratulating themselves on.
this Motion of Censure, and rejoicing that they have' lured us into their trap.
Whatever the explanation may be, it leaves the Government convicted of the of-
fense of faction for faction's sake, at a time when they have an immense duty to
perform, and when they need the help of all parties for their large spheres of
activity at home and abroad. ....
What I am deeply distressed about is the state of our affairs and the prospects
ahead. Our economic plight is not only grave, but extremely perplexing. We have
the enormous administrative task to fulfill of repatriating and demobilizing the
Armies, and changing over to peacetime industry. The housing shortage for the
returning troops gapes upon us. Conditions are hard, the authority of the re-
sponsible trade union leaders is challenged in many disqueting ways. Abroad, our
relations with the United States have become more distant, and those with Russia
more obscure. We are told the Big Three are never to meet again, which I heard
with great grief. As for the five Foreign Secretaries who were to prepare so many
things, all that seems to have fallen through. The condition of Europe is a night-
mare. Fateful and difficult decisions await us in India.

A Charge That the Government Promotes Schism
I am not blaming the present Govenment for all this. The greater part was
inherited in the consequence of the war and in our faithful, unstinted and pro-
longed exertions for the common cause. But I wonder what would have been said
if a Conservative or even a National Coalition Government had been in office and
had no better showing to offer than what we see at present. Why should the Gov-
ernment choose this moment of all others in our history, or their life, to proclaim
great new departures in political theory, and why should they try to stir far-reach-
ing changes in every mode of thought and every walk in life? Why should they
raise this great schism of militant Socialism in the land, and divide us with what
must involve increasing bitterness and lack of mutual comprehension with every
further step they take? Can we afford an internal struggle of such a character, at
such a time? Could there be a worse occasion for deep-seated organic changes in
the life of Britain, now when she is exhausted and overburdened in a fearful
degree? Certainly it is a moment peculiarly difficult. One would have thought we
might at least have been allowed to recover normal mentality, that we might let
people regain their ordinary homes after these strenuous years, and that at any
rate there would have been reasonable restoration of our national life, before we
were weakened and torn by the bitter political and social strife into which the
Government or some Members of the Government seek to plunge us.
Certainly it was a very difficult and harassing inheritance for the new Ministry,
but it was also a noble opportunity. Especially was this so after the swift defeat of
Japan had cleared the way for the great steps of release and liberation and of
transition from war to peace. If the Labour Party could have done this well,
*the country, realizing all the difficulties of the task, would indeed have awarded
them the meed of lasting praise. Why can they not, even now, set aside every
impediment, and concentrate upon the splendid though formidable task which
they have demanded and obtained from the nation the right to discharge? Alas,
it is primarily a partisan and doctrinal triumph which they seek, and not that







British Speeches of the Day


fame and honor which would come to them from a great national tasl rapidly,
efficiently and brilliantly executed. It is upon them that the responsibility must lie
for the growing division and consequent weakening of the nation. It is they who
are the innovators, they who are the disturbers.
I should have thought that the first endeavor of responsible Ministers would
be to secure the greatest measure of co-operation between all parties and :il forms
-of national activity. I do not mean a coalition, but a concerted effort. It would
take all our united strength to make our way out of the dangers and eimbarrass-
ments by which we are surrounded and to give the masses of the people, who have
done so well and endured so long, a fair chance of renewing their lives after the
harsh sunderings of war. If I had obtained a substantial majority at the list Elec-
tion my first thought would have been to seek the co-operation of the lainority,
and gather together the widest and strongest measure of agreement over the largest
possible area. Very different is the treatment which has been meted out to us, and
which has already produced party antagonism, bitter as anything I have seen in my
long life of political conflict. I charge the Government with deliberately trying to
exalt their partisan and faction interests at the cost not only of the national unity
but of our recovery and of our vital interest. There is the foundation md the
gravamen of this Motion of Censure.

Alleged Consequences of Socialism
For my part, I believe profoundly that the attempt to turn Great Britain into a
Socialist State will, as it develops, produce widespread political strife, misery and
ruin at home and that, if this attempt involves nationalization of all the means of
production, distribution and exchange-to quote the orthodox phrase which I
understand was reaffirmed at the Labour Party meeting in May-then this island
will not be able to support above three-quarters of the population which row in-
habits it. Not only is this the worst time for such experiments, but this country is
the least fitted of all large communities to endure such a convulsion. I was point-
ing out the other day how intricate, delicate, complex and precarious Ire our
methods of gaining a living in a hard competitive world. We are not like Russia
with its vast oceans of land to develop. We are an old, and, since the population
expanded so largely, highly artificial country, more like Venice which built in em-
pire on piles driven into the lagoons, or like Holland whose dykes keep cut the
sea, or like Egypt whose life is the Nile and irrigation. Here we have 48,000,000
of people and more than half of them must be fed from afar. Surely a measure of
common prudence should regulate the actions of the British Governmernt and
restrain their triumph over their fellow countrymen.
I wish now to speak of the effect of these political party and ideology al an-
tagonisms, which the Government have caused, which I fear they feel it neces-
sary to their internal vigor to foment, upon all the vast processes of trade and
manufacture by which alone we live. Let me make it clear that it is the duty of
every man in this country, wage-earner or employer, to do his best for the C welfare
and survival of the nation from day to day, irrespective of his political views or
dislike or fear of the administration. If the bitterness which Socialist politicians
are injecting into party and party life were to find its counterpart or its ally in the
whole relations of capital and labor throughout the land, our misfortunes would
accumulate with a hideous momentum. Every effort must be made by capitalist
employers, in every form of private enterprise, to do the best possible for their
businesses and for the country under the conditions which prevail. They mu;t not
allow themselves to be deflected by the hostility shown to them and their clasi and
their functions by Socialist Ministers. They must seek for the utmost possible pro-
duction of which they are capable and which is permitted to them.







Motion of Censure


The Government for their part also have to face realities. If industry and enter-
prise are weighted down by colossal confiscatory wartime taxation it will not be
able to revive. If industry and enterprise are fettered, hampered and hobbled at
every step by an ever-spreading network of controls and regulations, and if every
act of commerce is first to take taxation into account, and secondly, to obtain the
innumerable permits required, there will be a vast loss or even arrest of energy
at a time when we can least spare it. We have had all kinds of governments in
Britain, but never in this commercial trading island a Government which set itself
out to stigmatize and, so far as they dare, to eliminate, as if it were an abuse' or
even a crime, the profit motive by which the commercial affairs of the vast ma-
jority of human beings in almost every land have been regulated since the dawn of
civilization. There has never been a government which set out to revive our pros-
perity on such a confidence-killing, impulse-sapping theory as that. Undoubtedly,
if the warfare which the Government are carrying out against their opponents in
Parliament is extended to the class and interest they dislike in industry, they will,
at this most critical juncture in our national existence, enforce an enormous handi-
cap upon the whole productive, inventive and resilient element inherent in our
race and culture.
Demobilization
I will now deal with the affairs of the four Ministers who are directly respon-
sible -for the key departments at home-the Minister responsible for demobiliza-
tion, the Minister responsible for housing, the Minister responsible for trade and
the Minister responsible for our national solvency. Here my complaint touches not
only failure through political prejudice, but failure through a lack of confidence
and lack of management which has already slowed down the whole movement of
the Government machine, except where partisan and doctrinal stimuli are at work.
Surely the tap-root of everything is demobilization. Have the Government justified
themselves upon this great task or not? We know well that they have changed
their minds. Their original scheme, put forward with all their authority, has
proved by their own admission and corrective action to be utterly out of relation to
the problem. Very considerable concessions have been wrung from them by pres-
sure which they resent, and by criticism which the Minister of Labour-who ought
to be grateful-described as mischievous and irresponsible.
What are the facts today? What is the first fact which stares us in the face?
There are still upwards of 4,000,000 persons detained by compulsion in the
Armed Forces of the Crown. At what rate is this enormous total being reduced?
We have been told that a rate of 12,000 a day has now been developed and will
be maintained till the end of the year. That is certainly an improvement, but why,
then, are we to prepare ourselves for a contraction of this rate to less than 9,000
in the New Year? Why in the New Year, when transport ought to be more abun-
dant and there has been a long time to make arrangements for using transport
efficiency? I ask specifically that this drop from 12,000 to 9,000 at the turn of the
year should be prevented. I ask specifically that that step should be taken. What
are the Americans doing? My right hon. Friend the Member for Aldershot (Mr.
Lyttelton) in a massive and weighty opening speech yesterday, mentioned that in
the three months after the end of the Japanese war the Americans demobilized
at the rate of 35,000 a day. They are now demobilizing at the rate of 50,000 per
day as compared with 9,000 a day to which, we are told, unless something is done
about it, we are to conform in the New Year. There is no excuse for our not de-
mobilizing at the same proportionate rate as the United States. They are two and
three-quarter times as numerous as we are, but their demobilization is five and one-


803,






British Speeches of the Day


half times as fast, in fact double the British rate. As my right hon. Friend said,
there is really no excuse for this. The distances over which the Americans have to
repatriate large masses across the Atlantic and Pacific oceans are undoubtedly far
greater in man-miles than those with which we are concerned, having regard to
the immense body of troops in this country, and other great bodies separated from
us only by the distances from Italy and Germany to this island.
No one would object, at the present time, to any man or woman being kept
in the Forces who wishes to stay on, or for whom there is a job to do. But in the
circumstances with which we are confronted, is it not absolute madness to keep
very large numbers of people against their wish, on full pay and at great expense,
doing nothing, or toiling at artificially invented work? How will it help com-
paratively small bodies of men in the Far East, who have to some extent to lag
behind in demobilization through failures in the Ministry of War Transport, to
know that for each one of them, eight, nine or ten men in England, Italy or Ger-
many are kept needlessly crunching the gravel of the barrack squares or gathering
seaweed by the salt sea waves? What advantage can it be to us a year hence, to
have kept many hundreds of thousands of men and women on the treadmill of
compulsory idleness for one, two, three, four, five or even six months extra?
Anyhow, a year or 18 months hence, even on the Government's program, they will
have been released. What will it have availed us to feel they have stood about all
this time, making up at our expense a senseless accumulation of man-days of
uniformed unemployment?
On the other hand, how great is the need for these men and women. On
every side, the cry for more labor arises, not only for key men but for the great
body of soldiers, airmen and sailors who are longed for in their homes and needed
in their jobs, which are often waiting for them. I am well aware there is a counter
case to this. I say, let the two cases be considered one against the other, and it
will be only too plain where the balance of national advantage lies. We must do
what I called the other day the greatest good to the greatest number. The Govern-
ment have already departed, in important respects, from the Bevin scheme. Let
preference in obtaining employment-I use the word preference deliberately,, be-
cause my hon. and gallant Friend the Member for the Lonsdale Division (Sir I.
Fraser) who is so much in touch with the British Legion and other bodies, says
this is what they -really care about-let preference in obtaining employment and
other compensations be awarded to men retained, not deliberately but because of
transport shortage or transport mismanagement beyond their proper order of re-
lease. But set the great mass free, and above all set the women free as soon as they
can be spared. I have never admitted for a moment that the principles of the
Bevin scheme have an application in regard to women. If a woman is needed to
allow a man of higher category to be released, it is another matter, but, to keep
women needlessly, just because of tidiness, is, at this juncture, the quintessence of
super-idiocy. I rest, in this matter, on the decisive figures that in January the
Americans will be demobilizing 50,000 men a day and we 9,000. That figure has
a vital bearing on world recovery, and on our position in world markets at this
peculiarly difficult moment.
Reconversion
I turn to home industry. President Truman told us last week that within 60
days of the end of the war with Japan, 93 per cent of the munitions industry of
the United-States had already been converted from war to peace conditions. That
is a prodigious fact; not only because of its static but even more because of its
dynamic significance. What proportion of our munitions industry has been recon-
verted? It must be remembered that the end of the Japanese war meant much less






Motion of Censure


to us and the end of the German war meant much more-to us proportionately than
to the United States. At the end of September, when America was 93 per cent con-
verted, we were only 43 per cent. Much vital time was evidently lost, to judge by
the number of men and women still employed on supplies and equipment for the
Forces, and by the end of this year the Government hope to achieve 72 per cent
reconversion. I recognize the improvement, and I understand the difficulties, but
it certainly is an astounding fact that, even at the end of this year, we shall be
employing 670,000 more workers on making obsolete weapons of war, or adding
obsolete weapons of war to the enormous piles, the mountainous piles, which exist
more than six months after the German war is over-that we should be employing
670,000 more people than in the summer of 1939, when all these horrors were
about to break out upon us.
Apart from the waste of labor, look at the waste of materials and' fuel, light
and power. I would rather give the people leave, than that they should be made
to waste materials as well as insult their own souls and the honor and dignity of
labor, by doing absolutely useless treadmill work. At any rate, whether in the de-
mobilization of the Armed Forces or in the reconversion of the munitions indus-
try, there is an undoubted need for far greater effort, exertion and efficiency than
we are receiving now, and every spur like this Motion of Censure should be ap-
plied to the Government who, after having held out enormous expectations, have
produced results, so meager and disappointing results, as to lead us, day by day,
nearer to disaster.
N Housing
I come next to housing. I am glad to see the right hon. Gentleman the Min-
ister of Health has emerged from the recess and taken his place on the fire-step.
Contrary to the advice of the great Lord Bacon in his "Essay on Public Offices,"
the Minister of Health is consistently reflecting on his predecessor, and dilating on
the legacy of muddle and incompetency he has inherited from Mr. Sandys and
Lord Portal. No doubt it is an attempt to excuse himself in advance, from the im-
pending failure of his own administration. I do not deny that the right hon.
Gentleman inherited a legacy from the past. It is a rich legacy of achievement and
preparation. This legacy he has squandered with a jaunty profligacy which has
rarely been equalled by a Minister who has still to make a reputation. Taking all
the difficulties of the years between the wars, the British house-building industry
grew in strength and efficiency until its output, in relation to the size of the
population, was greater than that of any other country in the world. This highly
developed house-building machine, and the network of well-equipped manufactur-
ing industries which support it and are almost inextricably interwoven with it, are
part of the right hon. Gentleman's legacy.
The policy of the Coalition Government-not a Conservative Government-
was to enlist the help of all house-building agencies of every kind. In addition to
the emergency factory-made temporary houses, and to the normal houses built by
local authorities, we intended, as soon as we were free from the day-to-day burden
of the war at its peak-as soon as we got the men-to mobilize the full experi-
ence, initiative and organization of the independent free enterprise housebuilders,
including the small builder, and to produce lower priced houses both to sell and
to let. The present Government, however, have decided to deny all financial as-
sistance to this very important section of the building industry, and to restrict
their scope in all directions. Everything, in fact, is being done to make it more
difficult for the independent builder to produce any large number of houses, and
to place him at a disadvantage in relation to the heavily subsidized local authority.


805






British Speeches of the Day


Moreover, when it comes to the allocation of labor and materials, the independent
house-builder is evidently to be kept at the back of the queue. Government sup-
porters, new-comers and experienced Parliamentarians alike, had better face this
blunt fact. Without liberating, using, and encouraging the private, capitalist,
profit-seeking, house-building industry to the full, as well as all other agencies, the
housing problem will not be solved, and the people will suffer.

Strictures on the Minister of Health
The Minister of Health, having decided to stake all on the local authorities,
would surely do well to give them more practical evidence of his confidence in
them. At present, they are, so I am told, hamstrung and restricted at every turn
by the involved procedure of licenses and approvals which have to be obtained
from Government Departments, before the first brick can be laid. If free enter-
prise house building is to be chilled and checked to the utmost, cannot the local
authorities be given the freedom to get on with the overwhelming task which has
been piled upon them? Housing,was put in the very forefront of the Labour
Party's election campaign. Socialist speakers up and down the country told the
electors that their party would know how to build houses at a rate undreamt of
under Conservative administrations.
"If the Labour Party is returned to power, housing can be dealt with in a
fortnight."
According to the Western Daily Press of June 23rd, this was uttered by the Presi-
dent of the Board of Trade. [Interruption.) Well he must have said something,
you know.
THE PRESIDENT OF THE BOARD OF TRADE (Sir Staford Cripps):
The right hon. Gentleman is perfectly right. I said something, but not that.
MR. CHURCHILL: The right hon. Gentleman is very prudent in not en-
deavoring to inform us of the actual words, which he undoubtedly did use, and
which were of so sanguine a nature as to give the impression that he was jump-
ing at office like a dog at a bone. "Five million houses in quick time," was the
promise of the Foreign Secretary. Let us see what progress there is to report.
Until the German war was over and the builders were released, no Government
could have produced any substantial number of completed permanent houses. We
should, however, have expected to see by now signs of permanent house building
starting up on an appreciable scale throughout the country, whereas, as every one
knows, it is still a very rare event to see a permanent house in course of construc-
tion.
The Minister of Health has allowed four months of excellent building weather
to slip away. Instead of helping the house-building industry to start up again, he
has been what is called "shadow boxing," against his own pet bugbear. All his
opponents are racketeers, profiteers, monopolists, ring makers, and no doubt it
may be that in a short time, we shall be called also Fascist beasts. We have not
come to that yet. Instead of tackling this essentially practical task in a responsible
and objective manner, he has been swayed at the start by partisan spite and preju-
dice and by the hope of exploiting these vices to his own personal political ambi-
tions. Both the industry and the local authorities have been waiting for a precise
statement of the Government's policy and program. Instead, the right hon. Gen-
tleman's repeated evasions and vague, threats have created a haze of uncertainty
and suspicion, destroying confidence and paralysing initiative. Not only has he
deprived himself of the most experienced sections of the house-building industry
but he has insulted and discouraged the great building societies, who before the
war did so much to help people with small means to buy their own homes. All


- 806






Motion of Censure


their historic work at a time when thought was not at all advanced on social sub-
jects is dismissed as mere money lending.
While the right hon. Gentleman delivers lectures about the need for low hous-
ing costs, he has allowed the Cripps temporary bungalow to creep up to a price
beyond the maximum which he allows for a full-size permanent brick house. He
has callously discarded the Rural Housing Act, which provided financial assistance
for the reconditioning of cottages for agricultural workers. Instead, he promises
at some unspecified date to build prefabricated skyscrapers over the countryside.
The right hon. Gentleman threatened us the other night with the disclosure of
certain scandals if we asked questions about figures--"putrefying corpses," he
called them-for which his predecessors, presumably Mr. Sandys and Lord Poital,
were responsible. It is his duty to produce these facts. We cannot have a Minister
of Health living among a lot of putrefying corpses. Anything would be better for
these ex-Ministers, I am sure, than receiving a favor from the right hon. Gentle-
man. I am sure they would say with the great Duke of Wellington, when he was
blackmailed by a harlot, "Publish and be damned." No doubt inspired by their
colleague's example, the Minister of Works and the Minister of Supply have been
busily spreading doubt and dismay throughout the whole of the building materials
industry. They have announced in an airy fashion that they intend to go in for
the manufacture and distribution of building materials in a big way, a ruthless
State competition with the existing industry of the country. When this important
announcement was made the building materials manufacturers over a very wide
area of production had still not been informed of the articles they were to be ex-
pected to produce, or what materials the Government themselves intended to manu-
facture. In these circumstances it will not be surprising if materials and compo-
nents of the right kind are not ready when they come to be needed.
The Government have reaffirmed the policy which I declared in my day of
tackling house building with the vigor of a military operation. I stand by that.
The first essential of a military operation is to decide upon your objective. The
Government have never made up their mind on the number of houses they hope
to build by given dates, or, if they have, they are ashamed to publish the figure.
.The Minister of Health said, indeed, in one of his expansive and informative
moments, that in the first 15 months after the war he would build very many more
houses than were built by the Coalition Government after the last war. He did
not mention, I notice, that the Minister of Health during most of that period was
his colleague in the present Government, Lord Addison, who was sacked for his
performance; nor did he mention that in the 15 months following the 1918
Armistice only about 1,000 houses were built throughout the land. Of course, if
that is the yardstick by which the Government are going to measure their achieve-
ments, they certainly will not be accused of aiming too high.
The main difference between the situation now and the situation in 1918 is
that the late Coalition Government, profiting by the experiences of the last war,
made many of the necessary preparations for restarting house building long before
hostilities ceased. Does the Prime Minister wish to pass a Vote of Censure on
himself? I am speaking of the Coalition Government, of which he was a most
important Member, and I think it is true to say that many of the necessary prepara-
tions were made long before hostilities ceased. The result was that when the war
came to an end last summer most of the essential legislation was already passed,
and great numbers of actual building sites had already been cleared or approved,
and in many cases were already in course of development. The objective of the
Coalition Government was to provide 300,000 permanent houses, built or build-
ing, within two years of the end of the German war. This program was ridiculed
by the Lord Privy Seal before the Election. He called it "chicken food." However,
now that the election is over a new name is required, and the Minister of Health






British Speeches of the Day


presents us with the term "crystal gazing." From chicken food to crystal gazing.
All these tactics will be exposed by events at no distant date, and I say today that
unless the right hon. Gentleman changes his policy arid methods and moves with-
out the slightest delay, he will be as great a curse to this country in time of peace
as he was a squalid nuisance in time of war.

On the President of the Board of Trade
The course of my remarks now reaches the President of the Board of Trade.
Everyone knows the distinguished talents which the right hon. Gentleman brings
unstintedly to the services of his fellow-countrymen. No one had made more sus-
tained exertions to contribute to the common pot and few take less out of it than
he does. I have got my vegetarian too, my honored friend Lord Cherwell. These
ethereal beings certainly do produce a very high level and a very great olume of
intellectual output, with the minimum of working costs in fuel. When I learned
that the right hon. Gentleman opposite had been sent to the Board of Trade I
thought to myself, "If he will only deal with this mighty business in a matter-of-
fact, practical spirit, to produce definite results in a comparatively short space of
time, he may render an enormous service to us all and even get us round the
corner." I have not yet abandoned my hopes, though certainly up to the present
moment his career at the Board of Trade has not only been" disappointing to his
friends, but disastrous to us all.
The right hon. Gentleman must dismiss from his mind the idea that it is within
the power or thought of any human being at the present time, in thc present
organization of society and with the present nature of man, to regulate in detail
the entire movement and process by which our 48,000,000 people can earn their
daily bread. He must clear his conscience of the awful question he has to ask
himself so many times a day, "In giving this or that decision, am I betraying Social-
ism or not?" If he would only rid himself of these obsessions and inhibitions he
could still be of great value to the fortunes of Britain. Human beings, happily for
them, do not have to direct all their bodily functions themselves. They do not
have to plan in advance how many heart-beats they are to have in the next 24 hours
or what relation their temperature or blood pressure would bear to those heart-*
beats. They do not have to decide, as a part of the daily routine, what secretions
are to be made by the liver or kidneys. No official quota is set for lymph or bile.
Otherwise I fear the President of the Board of Trade would find he had over-
drawn his account very much. Providence has relegated these problems to the
subconscious mind and left the commanding sphere to human reason.
Let the President of the Board of Trade reassure himself. We can breathe
without him, if he will permit us. The country will never be without its volitions
and impulses if only the Government will let it start. I assert that the revival of
this country is at this moment being stopped, stifled, even strangled, by the resolve
of the Board of Trade, followed by other cognate Departments of the Govern-
ment, to regulate everything. Why can they not realize that the impulse and vol-
ume of national productive ingenuity and progress is overwhelmingly greater and
far more fertile than anything that can be produced by Government officials or
party planners? If the right hon. Gentleman would only realize the limitations
of beneficial Government functions, if he would not harden his heart, like Pharaoh,
and would set the people free, half his problems would at least end themselves.
From every side we hear the complaint that the hands of initiative and enterprise
are tied, and that permits have to be obtained for everything even in the smallest
details.
The President of the Board of Trade is trying to teach all the trades in the
country how they should get back their business. He is rapidly gaining half- knowl-






Motion of Censure


edge over a vast field. He wishes to hold everything gripped and frozen until- he
can form a general view and reconcile that view with the orthodox tenets of his
socialist religion. Meanwhile, the days, weeks and months are slipping away. It
was with a chill that I read that, in the second quarter after the end of the Gertnan
war, our exports had not leapt up as enormously as one had hoped, but had
actually fallen below the level of the previous quarter. I hope there is an explana-
tion for that. With the highest ideals, with the finest intelligence and the best
intentions, the right hon. Gentleman may inflict upon this country injuries which
will long last and will, as they bite deeper, bring ever greater hardship to the mass
of the weekly wage earners whom he sincerely desires to help.
The right hon. Gentleman has greatly disheartened, and still more severely
hampered, the productive commercial energies of our people, and his socialistic
tenets have exercised an undue bias upon him in all his work. After all, so far as
we know, in the next two, three, four or five years the Government must rely upon
private enterprise for between 80 and 90 per cent of their entire production, from
which the Chancellor of the Exchequer draws his revenue, and an even higher pro-
portion rules in the export field. Why, then, harry and maltreat these thousand
and one delicate and complicated productive processes? What is the use of ad-
hering to a system of 80 per cent private enterprise for the next five years, and
then. declaring that the profit motive is a form of moral delinquency? Fancy a
Government in a position of such economic peril and stress relying for 80 per cent
of the national production upon private enterprise, and then setting themselves to
denounce and, if possible, destroy the mainspring of private enterprise and-one
of the main tests of its efficiency generally-private profit and general consequen-
tial benefit. ..
I referred a little while ago to Mr. Truman's statement. There is another point
which should not be overlooked. President Truman said that by the middle of 1946
the metal working trades of the United States would be producing by June next
year two and a half times their 1939 rate-by "rate" I presume is meant "volume"
-of output of consumer goods. There is not a single peacetime manufactory in
Britain which will be producing 100 per cent, and many will be far short of 60
and 70 per cent at that date. All this has its bearing on our power to reoccupy or
retain the markets we have long held, and by which we have paid for our vital im-
ports. The matter is very urgent indeed. We can see what the competition is- go-
ing to be from this mighty community across the ocean, in all the neutral markets
and markets on which we depend for our very daily bread.

Where the Government Should Plan
Coming to this business of planning, the President of the Board of Trade, sup-
ported by his colleagues, demands a nationalized, planned, economic, social and
financial policy. No one will deny that the Government have a great part to play
in modern life and international trade. . Are there not some very large ques-
tions which require State plans and Cabinet decisions, of which we have not heard
much? Instead of devoting their energies to questions of ownership and of day-
to-day fiddling with the multitudinous activities of this island, I would invite the
Ministers to pay some attention to the real economic problems facing this country
and to try to formulate some plan for their solution. What, for instance, is their
wages policy? There are economic arguments for keeping wages down and there
are social arguments for letting them rise, although one thing is certainly wrong,
and that is to allow decisions to be reached haphazardly and disconnectedly, as is
apparently taking place now. If the Government believe in planning, let them plan
here.
Then there is the export problem. Instead of upbraiding the motoring industry,







British Speeches of the Day


why does not the President of the Board of Trade take the responsibility for evolv-
ing an export policy of his own and relating it to the internal trade of the industry,
an internal trade sufficient to sustain it, and put his plans forward for everyone
to see? The only plan that I have heard put forward was received with howls of
"Tripe" from his assembled hosts-a form of hospitality which I cannot recom-
mend and cannot commend, and which, in any case, would be of no use to him.
What do the Government plan in capital policy? From where are the resources
coming for all the projects of industrial development and much else that is in the
air and that is being spoken of? A government can usually raise money and can
always print it, but the labor and materials represented by the money come in a
different category. Labor and the savings of the community are the key. The pre-
war unemployed have been absorbed, and possibly some of the women who have
been drawn into industry will probably stay. We shall be very lucky if we have
as much as a million more at work than we had in 1938.
Finance and Taxation
How, then, do the projects which are afoot relate to our resources? How can
our resources and saving power be expanded and be made more fertile in order to
meet our resources? The comments of the planners upon this situation would cer-
tainly be of interest and possibly of value. We have had no information, nor even
sensible statement, from Ministers on any of these matters. The beginning of our
story is the release of manpower. The end of our tale is finance. When we come to
the discussions on the Budget next year, it will be necessary to unfold in a search-
ing manner what other countries undoubtedly already know, namely, our most
difficult financial position. Ours is the only country which was for almost six years
in the war and which fought with its utmost strength in the workshops and in the
field through all that awful peril. Very early in the days of the National Govern-
ment the Chancellor of the Exchequer, Sir Kingsley Wood, raised direct taxation
as a wartime Measure to levels never attempted by any other modern society and
to levels which cannot be surpassed, because on the higher ranges of income the
amount is a complete confiscation. Every other form of taxation was also raised,
and the financial conduct of the war stood at a level of strictness and sex erity un-
equalled in any other country or at any time. It is quite impossible that such scales
of taxation should be maintained after the dire compulsions of war have passed
away.
The Chancellor of the Exchequer has certainly done nothing to give confidence
to the taxpayer or the investor, and, if he will allow me to say so, he has shown
an altogether undue and unpleasant propensity to win party cheers by grinning
and gloating over harsh financial measures. He speaks as if he had an income
of 5,500,000,000 a year from which he has been graciously pleased to make an
independent gift to the nation in his interim Budget of a net 90,000,000, and
next year, no doubt, there will be a further benefit to come. But in the main,
he plans to maintain the wartime taxes as a permanent feature of our economic
life. It will be vain to look for trade revival or for the return of a general measure
of easement or well-being in the nation as a whole. First of all, the right hon.
Gentleman who holds the proud position of Chancellor of the Exchequer should
insist upon the return of the manpower to civil life, and strike these millions of
men and women off the useless charge account of the State. Next he should aim
at giving to the taxpayer large-scale and massive relief, both direct and indirect,
both small and large. He should force the President of the Board of Trade to
stimulate internal production as well as export trade,' and thus secure at all costs
some output in goods and desirable commodities to absorb the hard-won savings
and purchasing power of the people. Perhaps he would not get so many cheers
for this as he-does in his policy of soaking the rich, so far as they exist, but a year






Motion of Censure


or two hence he may win a reward in the respect of those who are acquainted
with his problems and in the obvious relief in the life of the broad masses of the
people. No reduction of taxation can be secured apart from a great reduction of
expenditure.
Is it not a shocking thing-and this is one of the elements which led us to our
Motion-that out of 5,500,000,000 provided by Parliament for the purposes of
full-scale war against Germany and Japan in the present financial year, only
200,000,000 should be saved when the war will have lasted for the equivalent of
three or four months only out of the 12. Of course, if you keep one and a half
million men drumming their heels when they should be re-creating our vanished
wealth it is easy to cast away the public treasure. However-this is a very small
divagation-there is one economy which has been effected, and which might well
have been dispensed with, and that is the 500 which the Government have secured
by selling Hitler's bust to a parcel of malignant crackpots. I think that with
all the millions flowing out, we might have denied ourselves that small appropria-
tion in aid. Of course, if trade and industry are so hampered, disturbed and
alarmed that their life thrust is diminished or arrested, it does not matter how high
the taxes are pitched, the revenue will gain no advantage, or gain an advantage in
an inflated currency alone.

The American Loan
We shall hear tonight what the Government have settled about the American
loan. I trust, indeed, that agreement has been reached, but this above all other
things I would say: Such a loan would give us, at the best, a couple of years
easement in our vital and primary import needs. We should be buying two years
of grace, but for what? To set our house in order and to get our life energies on
the move. If the Government are to borrow from the United States, and if
strict terms are imposed by the United States, all the more is there an obligation
upon Ministers to deal with our affairs upon their merits and on the dead level,
and to cleai away all this party and doctrinal trash and rubbish in these perilous
days. Otherwise we shall come to the end of these two years with uncommon
swiftness, and find ourselves in' a position most hateful, namely, of being depen-
dent upon the kindness, which may or may not be forthcoming, of a foreign
power.
As leader of the Opposition, I have a very difficult task to discharge. I cannot
bear to see so much squandered that has been so hard won, without making an
effort to reverse the process. The Government reproach us with making their task
more difficult, but what do they expect? Can we, with our convictions, as honor-
able men, as a great party in the State, afford, for the sake of appearances of unity,
to acquiesce in a destructive downward trend in all our affairs at home and
abroad? Are we not bound in honor to give our warnings in good time about the
future, and to record our censure on the present? Would we not be blame-
worthy before history if we sat supine and silent, while one folly and neglect is
piled on top of another, and much that we fought for together is lost or frittered
away? The only excuse for silence and inaction would be despair, and despair is
not to be tolerated among Britons. Moreover, I am as firmly convinced as I was
in 1940, that we have our future in our hands, that we are still "masters of our
fate and captains of our soul." But reflecting on all we have overcome, and, by the
mercy of Providence, survived, I cannot believe that we shall find ourselves de-
stroyed by incompetence or partisanship. In order that Great Britain may enjoy
the glory she has won, and deserved, I call upon all who value her name and
fame to drive home, before it is too late, by a Vote of Censure, the hard truths
of the time upon a quite well-meaning but misguided and inactive Government.







British Speeches of the Day


THE PRIME MINISTER (Mr. Attlee): The right hon. Gentleman the
Leader of the Opposition opened today on a quiet note of injured innocence. We
were the people, according to him, who had driven this public-spirited Opposition
into putting down a Motion of Censure, we were the people who had driven a
wedge between the parties in the State. I have not forgotten the right hon. Gentle-
man's broadcast at the beginning of the Election, nor have the people of this
country. That was when any partisan tone was introduced, and I have also had
the pleasure of reading the right hon. Gentleman's speech the other day to his
party. It was a very different style of speech from that which we have had this
afternoon. The burden of the right hon. Gentleman's speech is this. He said:
Why, when you were elected tg carry out a Socialist program did you not carry
out a Conservative program? To the right hon. Gentleman everything that is
Conservative is normal to him, anything that sees the changing world and wishes
to change it must be wrong. We are always asked to rally round, to bc patriotic
and keep things as they are. We were not returned for that purpose.
The right hon. Gentleman earned, rightly, the respect of this country as a
great man who inspired our fighting forces. Today, quite rightly, on a Vote of
Censure, he is coming forward as a partisan, and his speech, although studiously
couched in terms to suggest that he was only considering the good of the country,
was, in fact, an entirely partisan speech. Anybody who differed from him was
following some fetish, but whenever he spoke and whenever he suggested we
should carry on the good old Conservative policies, he was speaking for tie nation.
We do not accept that.

Conservative Strategy
I have seen a number of Motions of Censure in this House and I haN e moved
a good number myself, but this is a very peculiar one, when one looks at its
origin. . .
The first idea was to follow up the line of the right hon. Gentleman the Mem-
ber for Aldershot and have ah attack on nationalization, but it vwas thought
better to deck this rather academic sentiment with a few references to general dis-
content which would give all Members of the Opposition some talking points.
Meantime, the right hon. Gentleman had, at the Conservative Party meeting, given
the keynote. We all agree that it is a good thing to have an active and well-knit
Opposition, and therefore I am not the least surprised that this opportunity has
been taken, and no one will grudge the Opposition a couple of days to get together.
The main attack has been delivered against the Socialist policy on which we
stood at the Election, but, before dealing with that issue, I would like to say a
word or two about some of the trimmings. The right hon. Gentleman gave us a
great survey. He dealt with a number of subjects. My only regret is that he was
not there dealing with those subjects at the proper time. He dealt with finance.
We have just had a Finance Bill. We have had a Budget, and all those points
could have been made most effectively there. There have been many Debates on
housing. Why could not these points have been made then? There have been
Debates on trade and industry, and plenty of Debates on demobilization. It would
be better if these were made on the regular Debates which come along in the
House, and the followers could have done their cheering not just once a fortnight
but every day in the fight in the House, and the appropriate Minister would then
have got up and answered it. But we have had this kind of omnibus Motion. I
do not intend to deal at .any length with the Board of Trade questions. I think-
and I think most people think-that my right hon. Friend the President of the
Board of Trade dealt very effectively with them.







Motion of Censure


Demobilization
I would like to turn, therefore, first of all, to a matter which the right hon.
Gentleman has made the basis of his whole position, and that is, demobiliza-
tion-a very difficult and dangerous question, and no one knows more of its
dangers and difficulties than the right hon. Gentleman opposite. I heard him
half a dozen times describe the scenes which todk place at the end of the First
World War. What he told me then made a deep impression on me. I and my col-
leagues in the General Election campaign took every opportunity to stress the need
for sticking closely to an agreed scheme. Take any speech I made and hon. Mem-
bers will find that I said that. In his book, The Aftermath, the right hon. Gentle-
man described graphically how fatal was the cost of yielding to the clamor of in-
terested persons to release particular categories of men. The House of Commons
was then full of representatives of big business interests and they clamored for
the men they wanted but, unfortunately, the scheme was based mainly on what?
On just what the right hon. Gentleman has been putting up: do not worry about
the feelings of the men, you must get on with trade and industry. The right hon.
Gentleman said that the prime object was, naturally, the restarting of industry,
and questions of the feelings and discipline of the troops themselves were not
accorded proper weight. What was the result? Chaos, mutiny, dangerous scenes
everywhere. The right hon. Gentleman had to face them, and he did face them,
and he did meet them. Let us just see how he met them. He adopted certain
proposals. He sets them out in his book. First of all:
"Soldiers as a general rule should only be released from the Front in
accordance with age and length of service. Everyone must take their turn
in accordance with this order."
That is precisely what we are doing; that is precisely the plan that was adopted,
with the strong support of the right hon. Gentleman opposite, by the Coalition
Government. I have not heard-I have listened to a number of speeches-any
experienced ex-Serviceman in this House, from either side of the House, suggest
that it is wise to depart from it. And yet the complaint against it is that you must
not stick to that plan. If you have people idle in any way, then rush them out, no
matter what the feelings of the men. The second point of the right hon. Gentle-
man was that the pay of the Army must be increased. Fortunately, the Govern-
ment of which we were both Members took steps to increase pay, without waiting
for a mutiny. Thirdly,
"Young lads must be retained compulsorily and sent abroad, to release
the men who have fought."

Sticking to the Plan
Again, precisely the policy we are following. The right hon. Gentleman
claims, with justice, that those measures restored the situation.. We pledged our
word to the troops. Now we are urged to depart from it. I say that if the right
hon. Gentleman were in office and if he had the responsibilities of troops overseas
in many parts of the world-in pretty critical and unpleasant situations many of
them-he would be quite certain that he would do nothing to suggest that the
Government were breaking their word. He would be the very first to insist upon
sticking to the plan. I know, from abundant letters from men overseas and
from others, that they demand not just immediate return; they demand a just and
equitable scheme of demobilization. The right hon. Gentleman was responsible.
He laid down that scheme. Let us see what he accomplished. He took, I think, a
justifiable pride in his achievements. He says that, for a period of nearly six
months we managed an average of 10,000 a day discharged to civil life. A very
good record. Seventy thousand men a week. Yet this depised Government that







British Speeches of the Day


is said to lag so fat behind, well, we are doing 12,000 a day, 100,000 a week, and
that is going to continue, I tell the right hon. Gentleman. It is not ending at the
end of the year. It is being carried on. On his own showing-
MR. CHURCHILL: We are glad to hear that quite nearly. We do not drop
from 12,000 to 9,000 at the end of the year?
THE PRIME MINISTER: We are carrying on, on the rate.
MR. CHURCHILL: The 12,000?
THE PRIME MINISTER: Yes. I am pointing out to the House that at the
present we are doing better, very much better, 12,000 against 10,000, than what
he said he did. What was the position at the end of the last war?
MR. CHURCHILL: I think I was responsible for the Army alone.
THE PRIME MINISTER: I do not think so. The men there were much
more easily brought across. They were only just across on the Continent. The
difficulties of shipping were nothing like what they are today. I claim, therefore,
that this is very largely a stunt. In the same way, Class B releases were difficult.
The right hon. Gentleman found at the end of the last war how difficult it is to
have special releases for special men without upsetting- the rest. We have been
working on that principle, which has been improved. The right hon. Gentleman
rather sneered that we had managed to alter things. After all, we have to watch
events and see how they move, shipping changes and the like.. There has been a
constant acceleration of the demobilization program; it has been stepped up, and
it is being stepped up again today. In the same way, Class B releases were largely
held back through the unwillingness of the men to accept it, but conditions have
now been made better, and the releases are actually today between 10 per cent
and 15 per cent of the Class A.
I claim that just here is one of the points where I should like to have more
of the spirit of which the right hon. Gentleman talked, that is of all trying to
help in this difficult situation. In a matter of this kind there are thousands of
people with their family feelings, thousands of troops longing to get home. It does
not rest with anybody to make vague statements about "incredible slowness" and
all the rest of it. It is not merely a matter of home policy, either. The right hon.
Gentleman knows perfectly well that one of the things that hampered the Govern-
ment immediately after the last war was that they iad not any troops to send any-
where. The whole thing was in a state of flux. We have to be very careful in
dealing with these things, and look at the foreign situation as well as the home
situation. These releases are being done on a carefully thought-out plan, I must
say a much better plan than at the end of the First World War, and a great deal
more consideration is being shown to the men who fought. At the end of the last
war they were thrown out with a fortnight's pay and the kiey of the street, and
endless bitterness arose from the way in which they were dismissed after the last
war. We have our record; 1,500,000 will be discharged by the end of the year.
I ask the right hon. Gentleman, Does he want us to scrap this plan? Does he want
us to keep this plan on nominally, but sap it away so that it becomes nugatory by
allowing all kinds of exceptions ?-[HoN. MEMBERS: "Answer."]-Does the right
hon. Gentleman want us to scrap the basis of the Bevin plan of age and length
of service?
MR. CHURCHILL: It is difficult to answer in a few words. There is great
difference in the situation now and one which we had after the last war. After the
last war we had no people east of Suez, but we had great problems too in gon
sphere. What has come to be a great difficulty in the present situation is that we
have a comparatively small number of men far off beyond Suez in the East, and







Motion of Censure


that is holding up an otherwise perfectly normal rate of discharge which would be
possible in all the other theaters. [HON. MEMBERS: "Answer."] The new ques-
tion is, how far is it possible to release those from the nearer theaters-[HoN.
MEMBERS: "Answer"]-and how long must great numbers be kept waiting about,
because of the great difficulty of releasing a very few from the distance.
THE PRIME MINISTER: The right hon. Gentleman has pointed out that
conditions have changed, because the Japanese war has come to an end, but this
position, which was adopted by the late Government, was under the general idea
that the Japanese war would continue and that you would have people there and
you would have people at home; yet that position was strongly put by the right
hon. Gentleman about the morale of the men, and that we must maintain it.
Believe me, the need for keeping up the morale of men who are scattered all over
Asia and elsewhere is just as strong.
MR. CHURCHILL: It is all a question of proportion.
THE PRIME MINISTER: And then the question is as to shipping. It is
easy to say there are ships. We have scoured the place for ships. We have man-
aged to speed it up. The right hon. Gentleman knows that demobilization is not
just a question of pulling out men here and there. You have to thirk of the
efficiency of the units when rapidly taking away all the older men and all the rest
of it. I do not need to tell the right hon. Gentleman that it is not an easy process,
and therefore people should not talk lightly about it.

Purchasing Power and Inflation
The next point I would like to take up with the right hon. Gentleman is one
which-I hope I have the quotation correct, I only depended on The Times-
occurs in part of his speech when he was speaking among friends. He said:
"Every effort is being made by the Socialist Government to restrain and
diminish the purchasing or consuming power of the public; spending must
be damped down or there might be the danger of inflation."
The right hon. Gentleman seemed to think this was very wrong of us. I would
like to stress the words of the right hon. Member for the Scottish Universities
(Sir J. Anderson) on the Budget:
"I entirely agree that it is right, prudent and proper to hold back purchas-
ing power as far as possible until supplies of goods are more freely available."
-[OFFICIAL REPORT, 24th October, 1945; Vol. 414, c. 2017.]
A Paper was issued by the late Government. I am sure that it is familiar to the
right hon. Gentleman. It was called "Employment Policy." It said:
"The danger will come when people relax from the discipline and strain
of war and look round for opportunities to spend the money they have saved.
If there were then a scramble to buy while there was still a shortage of goods,
prices would rise. This would mean an inflation boom bringing with it social
injustices and economic disturbances."
The right hon. Gentleman suggested that all of this was due to a fad of the Social-
ists for austerity. He said
"It is not the speedy.recovery of our country's trade and industry. Accord-
ing to the Government, when we have got all this austerity, we do not get a
revival, we only get to the half-baked nationalization plans of the Socialist
doctrinaires."
Well, it was not "according to the Government." There is not a word of truth
in the statement. The right hon. Gentleman says, quite rightly, that the remedy
is increased production. It is all very well to throw that out at a party meeting







British Speeches of the Day


or in this House on a Motion of Censure, but let us see the more considered
language of the right hon. Gentleman's colleagues in the White Paper:
"Peacetime production like war production will necessarily take some time
to get into its stride. . .Civilian production when it is resumed may
concentrate on the wrong things, from the point of view of national needs."
The right hon. Gentleman says, in that breezy way of his, "Look at the United
States of America, a
"mighty evolution taking place in a violent, convulsive, passionate manner,
which causes great commotion and disturbance, but which has already led to
an enormous increase in output of necessary things for the home market with
an immense,- ever-growing overspill for foreign exports."
But has it? This is what a woman reporter of the Sunday Times says- and this
is from New York-
"Purchasers are pushing notes across the counters for luxury items ranging
from ruby-tipped hat-pins costing 150 to Piper Cub aeroplanes. . Women
run their hands lovingly over the sensuous smoothness of mink-lined mink
coats-reversible fur-with the equally fanciful price-tag of 3,000. At a
nearby salon a tiny perfume ampule, set with sapphires, was selling for
75. . Despite the 'get it at any price' psychology"-
and despite the right hon. Gentleman's confidence, I might add-
"of the first peacetime Christmas since 1940, real shortages exist in many
fields. Would-be buyers of men's clothing, children's toys and household
appliances are met by harassed store-owners' vague talk of slowed reconversion,
and bare shelves."

An Increase of Labor and Output
In every industry in this country catering for the ordinary simple people's
wants, there has been a steady increase of labor and of output. I freely admit that
we have not done anything about mink coats or sapphire ampules. It is so easy to
suggest that nothing is being done. The furniture industry: a rise in the labor
force of 4,000 in two months; production of utility units today is over 50 per cent
above the monthly average in the first half of the year. In the carpet industry
the labor increase was more than 50 per cent between May and October, and pro-
duction for the present quarter is 40 per cent up on the last quarter. What is
the picture we get from the other side? And let me say that that kind of thing
does not do us any good abroad and I should suggest that right hon. Gentlemen
who believe in and want to support the foreign policy of this country should not
cry "stinking fish" all the time. In the linoleum industry, the labor force is 25
per cent higher. So I might go on the whole way-clothing, hosiery, cotton, all
those things which are just the simple things that people want.
I give another fact not quite realized by the right hon. Gentleman the Member
for Aldershot. He complained that the labor force in the heavy electrical industry
had fallen since the end of the Japanese war. I know he has only recently taken
over, but he must realize that this fall is the measure of the cut the Government
has made in munitions production. It completely contradicts the complaint he
made of the slowness in cutting munitions production. The hard fact is that the
labor force in the munitions industries is going rapidly and steadily down, and the
labor force in civilian industries is going rapidly and steadily up. The right hon.
Gentleman spoke about factory building. My right hon. Friend the President of
the Board of Trade dealt with all those hampering restrictions invented by the
right hon. Gentleman opposite. [HoN. MEMBERS: "No."] Oh, yes. I am quite
aware that in the war we were not erecting factories, but this was provision for the






Motion of Censure 817

post-war period. He appears to be unaware that 80 new factories are being built
at this moment in the development areas.
Finance
Let me turn for a moment to finance, a subject on which I move with some deli-
cacy-I am not even as much at ease perhaps as right hon. Gentleman opposite.
He said that at least 800,000,000 could have been saved this year by sensible,
vigorous administration of our finances.
MR. CHURCHILL: This financial year, up to March 31st.
THE PRIME MINISTER: Yes-by setting free at an early date millions
of men and women now kept in unemployment. I should like to know whether
there is any basis for that figure. Any one can say 800,000,000, or even
1,600,000,000, but where does it come from, was it given to him by the dis-
tinguished physicist who supplies him with economic information? I would ask
whether, in rendering that figure, he has taken into account all the additional
expenditure which arises on the termination of a war? Let us look at the facts.
Demobilization charges do not stop directly men are demobilized. There is leave
of eight weeks, plus foreign service leave, during which they draw pay and
allowances. They are paid their war gratuities. Does he want to cut that off,
out of the 800,000,000? This is actually an increase in expenditure, and for the
Army alone this amounts to 100,000,000 in the current year. You cannot escape
that. As regards munitions, despite substantial progress payments, when a con-
tract is terminated, arrears of payment fall due, and that is a very large item. Then
we have the cost of a very large haul of prisoners-he has forgotten that. There
is requisitioned property, which when vacated involves heavy compensation.
There is Lend-Lease, which ceased at the end of the war. For food alone there
is'an additional charge of 150,000,000, as the direct consequence of the termina-
tion of hostilities. This is not all, as the right hon. Gentleman said, paying people
for doing nothing. They are putting up houses and factories in the development
areas for returning Servicemen. All those things are of the nature of capital
investment by the community. I dare say these were not noticed.
Estimates will be presented next year in the House and we shall be able to
take them in detail. But, as a matter of fact, reductions in expenditure are being
tackled vigorously. Let me say here that I do not believe anybody would imagine
that directly a war stops you can stop all munition making. Certain supplies have
to go on; you cannot close the whole thing straight away, and it is not always
worth while closing it straight away. In spite of that, Ministry of Supply expendi-
ture in August, September and October was 40 per cent lower than for the corre-
sponding months in 1944. Eleven thousand five hundred Ministry of Supply
contracts were immediately terminated and 16,000 were allowed to run out.
From the picture that is painted, one would think everything was going on as
before. On our naval construction, mainly owing to cancellation since VJ-Day, a
saving of over 70,000,000 will be achieved. At the end of the war the Treasury
immediately issued instructions for a strict review of expenditure. Why should
the right hon. Gentleman imagine that because my right hon. Friend the Chancel-
lor of the Exchequer prudently took a Vote of Credit to cover the whole period,
that necessarily means that it will be spent?

Housing
Having dealt with that, I do not think I need say very much about the housing
position, which has been very fully expounded in Debates in this House. My
right hon. Friend the Minister of Health has replied to these points over and over
again, and it is not true that when we came in everything was fit for a start.






818 British Speeches of the Day

There were grave difficulties, in particular there were key men who were not out
of the Forces, and you have to have some key men, architects and the rest. Also
let me say that it is not easy to start getting a vast number of houses up when
you are coming on into the winter season. You cannot expect to see them all fin-
ished. But this point has been dealt with so often in so many housing Debates
that I do not want to keep the House on it.

Nationalization
I must turn now to the right hon. Gentleman's main indictment:
"these gloomy vultures of nationalization hovering over our basic industries."
I have no doubt the right hon. Gentleman knows all about vultures. The vul-
tures never fed on him because he kept alive, fortunately for us all; vultures feed
on rotten carrion. Is it his view that our basic industries are so rotten that they
attract the vultures? Is that his view of private enterprise? He talks about grow-
ing uncertainty. There is no growing uncertainty whatever. [HoN. MEMBERS:
"Oh."] Well, really, if hon. Members are uncertain, they have been asleep for
a long time. Our party has stood for nationalization programs for 40 years or
more, and even an hon. Member opposite might have realized that when we got
a majority we should naturally go in for nationalization. At the same time, we
put it quite clearly in the King's Speech that we intended to nationalize certain
industries. Reassurances were given to others by Ministers, and particularly by
my right hon. Friend the Lord President of the Council, and really there is no
growing uncertainty. [HON. MEMBERS: "No, no."] If hon. Members, instead of
shouting "no, no," would read the speeches of intelligent industrialists like the
President of the Federation of British Industries, and many others, they would
find that they know a great deal more about their business than he does. I noticed
with interest the difference between the wild and whirling words of the right hon.
Gentleman opposite at the Friends Meeting House and the speech of the right hon.
Gentlemen whom we are so glad to welcome back to the House, the Member for
Bromley (Mr. H. Macmillan). Characteristically, he continues to Lread the
middle way, while the right hon. Gentleman right back in the Conservative Party
goes down the primrose path, which everybody remembers, leads to the eternal
bonfire.
The right hon. Gentleman, says that our proposals on nationalization divert the
Government from the immediate task. That is an example of a static mind. The
idea is that private enterprise is the only way in which our economic affairs can
be managed. The right hon. Gentleman has grown up with that idea and he can-
not get it out of his head. I am quite sure, had he been born in one of those
countries where the railways had, from the start, belonged to the State, he would
have thought it a perfectly natural thing. [An HON. MEMBER: "Which coun-
tries?"] A great many countries. Any handbook will show which they are.
The right hon. Gentleman's general proposition seems to be that things should be
left as they are. Is he satisfied with the coal industry? Has he been satisfied at
any time in the last 25 years with the organization of the coal industry? What-
ever happens, something has to be done with the coal industry, on the admission
of the people who run it. It is a question as to which is the best way to deal with
that particular piece of economic machinery, our way or their way. We have had
20 years and more of fiddling about with their way, and in consonance with the
view of every authoritative commission, we now intend to take our way. I think
we hardly need mention the Bank of England, because it has gone through so
quietly. Electricity-that was half done by a Conservative Government. I very
well remember that Bill going through;, there were no cries about this "wicked
Socialist measure."







Motion of Censure


MR. CHURCHILL: I was Chancellor.
THE PRIME MINISTER: I know. It was introduced by the chairman of the
Anti-Socialist Union. I may say that he got it through with the help of a Socialist
who was leading the Labour side of the Committee upstairs, and myself. And
now gas; here we have the report of the Hayworth Committee on gas. The people
who were on that committee, I may say, were not Socialist nominees. The Minis-
ter was not a Socialist. ere you have a report not based on any theories or
ideologies but on the plain facts as they presented themselves to commonsense men.

A Motion of Censure on the Electors
As a matter of fact, although this Motion of Censure is nominally directed
against the Government, it seems really to be more a Motion of Censure on the
electors for returning Socialists. It seems to be a terrible shock-quite naturally
perhaps for people who remember 1935-that a Government should come in
prepared to carry out its policy. We all remember 1935, the great victory for
collective security and sanctions-followed by Hoare-Laval. Now we have a
wonderful cry which the party opposite are putting forward-"the people versus
the Socialists." This is right in line with the right hon. Gentleman's propaganda
at the time of the General Election. Then the Tory Party was the nation-"truly,
ye are the people." They are now the people. I am quite sure that the right
hon. Gentleman's mind, when he was thinking of "the people versus the Social-
ists," must have gone back to an earlier epoch, to the epoch of the people's Budget,
when he and Mr. Lloyd George were standing for the people, against the Tory
Party.
Only a few years back the right hon. Gentleman was telling us that the Con-
servative Party was ruining the country. He was himself called to the Premiership,
not by the Tory Party, by whom he was despised and rejected, but by the action
and with the support of the doctrinaire Socialists, the vultures, the people who
are not really allowed to belong to the nation now. As a matter of fact, no one
who does not believe in the right hon. Gentleman is any part of the people. No
one who does not belong to the party which, for the time being, he has selected
really belongs to the people. We were all of the people for five years, but I
am afraid we are out of it now. The right hon. Gentleman said that the vote
at the General Election was
"one of the greatest disasters that has smitten us in our long and chequered
history."
Here I am not quite sure that I have the correct report. The Times said,
"our long and chequered history."
That might have meant either the Conservative Party or even, in a regal mood, the
right hon. Gentleman himself. I checked it up with something that was nearer
and dearer, the Daily Express, and it reported that it was
"one of the greatest disasters which have smitten this country."
That was because the electors did not accept the right hon. Gentleman, because
the alternative to Labour and a Socialist program was the right hon. Gentleman.
Throughout the Election he had the spotlight. All those able and experienced
Front Benchers, and those who have fallen by the wayside, were, after all, mere
chorus girls; the prima donna held the stage. The very candidates, hon. Gentle-
men opposite, were commended to the electors not on their individual merits, but
as the chosen supporters of the right hon. Gentleman. The whole thing was
epitomized by a witty man in the City of Oxford who wrote of one of them "Love
me, love my Hogg." I am sure the right hon. Gentleman knows by now that that







British Speeches of the Day


was not good tactics at the General Election, that this country does not like one-
man shows, and therefore, will not accept this Motion of Censure as anything
more than a party move of a politician in difficulties, and will not accept the cry
of "the people against the Socialists." We shall go forward with our policy, the
policy on which we were returned to power by the votes of the electors. We
intend to carry out both our short-term program, dealing with immediate prob-
lems, and our long-term program of reconstruction, and I believe in doing that
we shall have the steady support of the vast majority of the people of this country,
workers and employers alike.
[House of Commons Debatesf



INDIA
House of Lords, December 4, 1945

THE SECRETARY OF STATE FOR INDIA AND BURMA (Lord
Pethick-Lawrence): The statement made by the Viceroy after his return to India
contemplates the steps which His Majesty's Governmeit propose should be taken
to promote the early realization of full self-government in India. The full signifi-
cance of these proposals does not seem to have been properly appreciated in India.
Since it is the firm conviction of His Majesty's Government that it is by and in
consultation with the directly elected representatives of the Indian people that
decisions as to the future governance of British India should be taken, it was a
necessary preliminary that elections should be held to the Provincial Legislatures
and the Central Assembly in India. It was announced that after the elections in
India preparatory discussions would be held with the elected representatives of
British India and with the Indian States' in order to secure the widest measure of
agreement as to the method of framing a Constitution. Unjustified suggestions
have gained wide currency in India that these discussions would be a fruitful
source of delay. I desire to make it plain that His Majesty's Government regard
the setting up of a Constitution-making body, by which Indians will decide their
own future, and also other proposals embodied in the announcement, as a matter
of greatest urgency.
This misunderstanding has led His Majesty's Government to consider whether
opportunities of personal contact between this country and India, which have been
greatly interrupted during recent years, cannot now be increased. They regard
it as a matter of importance that members of our own Parliament should have an
opportunity to meet leading political Indian personalities to -learn their own
views at firsthand. They would also be able to convey in person the general wish
and desire of the people of this, country that India should speedily attain her full
and rightful position as an independent partner State in the British Commonwealth
arid the desire of Parliament to do everything within our power to promote the
speedy attainment of that objective. His Majesty's Government are therefore
arranging for a Parliamentary Delegation to go to India under the auspices of the
Empire Parliamentary Association. The intention is that this party should leave
this country as soon as possible. In view of the difficulties of transport, it will be
limited in size. The Delegation will be selected by the Association in consultation
with Parliamentary representatives of the chief political Parties in this country.
During the transition towards complete self-government India will be passing
through difficult times. No greater disservice could be done to a future Indian
Government and to the cause of democracy than to perchit the foundations of the







Indonesia


State to be weakened and the loyalty of its servants to those who are in authority
to be undefrined before that new government comes into being. Therefore the
Government of India cannot divest itself of the responsibility which rests upon it
and upon all Provincial Governments of preserving law and order and of resisting
any attempt to resolve the constitutional issue by force. The realization of full
self-government can only come by the orderly and peaceful transfer of control of
the machinery of State to purely Indian authority.
His Majesty's Government could not permit any attempt to be made to break
down the loyalty of the administrative services or of the Indian Armed Forces,
and they will give full support to the Government of India in securing that their
servants are protected in the performance of their doty and that the future Consti-
tution of India shall not be called into being by force or threat of force.
In addition, the great need of India, whatever Government are in power, is to
raise the standard of life, of education, and of health of the masses of the people.
Boldly conceived plans to meet this are already in being and His Majesty's Gov-
ernment are giving every encouragement to proceed with them so that improving
social conditions may go forward simultaneously with the institution of self-
government.
[House of Lords Debates]



INDONESIA
House of Commons, December 11, 1945
[EXTRACTS]

MR. THOMAS DRIBERG (Labour): The British people have learnt with
dismay and concern that, four months after the end of the war in the Far East,
British and Indian troops are engaged, and are suffering heavy casualties, in a
war in Indonesia and in French Indo-China-a war whose object appears to be
the restoration of the status quo in the Dutch and French Empires in that part of
the world. Their dismay is not lessened when they learn that we are also employ-
ing Japanese troops in the action there. Indeed, it was only yesterday, I think,
that one of the military spokesmen was reported in the Press to have said that the
action in Indonesia is about to develop into a major military operation, and, as
we all know from the reports, heavily censored as they are, Indonesian villages
have been burned and attacked with rockets-and only those who have been near
the receiving end of a Typhoon rocket know what a terrifying weapon it is-and
there is every indication that this is not a mere trifling or guerrilla campaign, but
something quite important.
I have referred to Dutch Indonesia and French Indo-China. The circumstances
in these two territories are not precisely parallel, of course, but there are certain
resemblances between them. The situation in Indonesia is much more acute, and
the disturbances there more widespread, and I shall, therefore, confine my remarks
mainly to that country, but one should, perhaps, remark in passing that, if any-
thing, French Imperialism in Indo-China was more oppressive and backward than
Dutch Imperialism in Indonesia.
When the Foreign Secretary dealt with this subject in his great speech, if I may
so describe it, in the Foreign Affairs Debate, one point that I noted with pleasure
was the tribute that he paid to all ranks in the British Forces serving in that part
of the world; I should like to echo that tribute, and to pay, in particular-though







British Speeches of the Day


this perhaps, may seem, -to some hon. Members opposite, to come strangely from
these Benches-a special tribute to the British commanders on the sp6t, because I
know that the troubles that have arisen there are no fault of theirs. They have
done their utmost in the way of conciliation, but they have been handicapped
throughout by intransigent and unwise political directives emanating originally
from Paris and from the Hague. If it had been left to the judgment and the dis-
cretion of the "commanders on the spot to settle this matter, I believe that an
amicable solution could have been reached without bloodshed, and both Indonesia
and Indo-China might now have been well on their way towards obtaining self-
government by peaceful means.-

First Intentions Were Laudable
The evidence of that is manifold. General Aung San, the Burmese Natiohalist
resistance leader, has paid repeated tribute to the wisdom and liberality of the
policy pursued by Admiral Mountbatten. Again, in Indonesia some weeks ago,
when the Dutch were at their most difficult, General Christison was meeting and
having dinner with Dr. Soekarno, the Indonesian Nationalist leader. Again, in
French Indo-China I know from my own first-hand observation that General
Gracie did his utmost to get agreement on the spot before the trouble actually
flared up, and the trouble only flared up in Saigon late in September because, in
effect, General Gracie was double-crossed by the French commander on the spot.
Moreover, it should also be said that most of the objectives for which British
troops entered these territories were harmless and even laudable- the recovery of
prisoners of war, the disarming of the Japanese forces, the taking over of Japanese
headquarters, and so on-and when the British troops first went in to carry out
those tasks, they met with no opposition or resistance at all from the National-
ists, but, on the contrary, offers of co-operation. I believe that in some cases
those offers were made use of. I hope sincerely that that can be done again,
and that we can invite the Nationalists, so far as possible, to assist us in those
primary tasks-the recovery of prisoners of war and the disarming of the Japanese.
I believe that many hundreds of lives of prisoners of war and of internees, as well
as of troops, could be saved if we could get and use the full co-operation of the
organized Nationalists in doing that. It was only when the final part of the assign-
ment began to become evident, and when the Nationalists realized that one of the
objectives was the maintenance of law and order until the Dutch and French
civil Governments could be restored, that they began to get restive. So one of, the
questions I would ask my right hon. Friend this evening is this: What exactly
are our commitments to the Dutch and to the French, and from when do they
date? Are they a legacy from the Coalition Government? Were they commit-
ments entered into during the war, when, of course, the Dutch were our Allies-
as they still are-and fought very gallantly on our side? Or are they new com-
mitments? I ask this because some of the more responsible American newspapers
have published a fairly detailed account of the alleged signing of a pact on this
matter between the Foreign Secretary and M. Massigli, the French Ambassador,
within fairly recent months; so I hope that my right hon. Friend can shed a
little light on that.
The Question of Independence
It may be said-it probably has been said-by some of the Dutch and French
spokesmen that we have no right to interfere in the domestic colonial policy of
Allied Powers, and to tell them what to do, and to say to them, "You must give
these territories their freedom straight away." I suggest that we have established
such a right for two reasons. In the first place it is our troops who have the dis-
tasteful, unenviable task of doing this job and sacrificing their lives; in the second







Indonesia


place, we have shown, in our handling of a somewhat analogous problem in
Burma, that we, at any rate, know how to handle such problems in that part of
the world. I do not say that I am altogether satisfied with every aspect of the
situation in Burma at present because I am not, but at least there has been no blood-
shed there, and at least it can now be said that Burma is clearly on the way to
self-Government and independence within a clearly defined number of years.
That is the very least we are entitled to demand on behalf of the Indonesians and
the Annamese from the Dutch and the French Governments respectively. There
was one passage in the speech of the Foreign Secretary which I particularly liked,
and that was his very understanding reference to so-called rebels. He said that the
sensible thing to do with so-called rebels was to talk to them in a friendly and
man-to-man way, and he reminded the right hon. Gentleman the Member for
Woodford (Mr. Churchill) of, at least, one erstwhile rebel known to him who
had now become a great Empire statesman.

The Dutch Offer to Indonesia
Now I come to what is really one of the crucial points in this argument, and
that is the terms of the Dutch offer to the people of Indonesia. My right hon.
Friend the Minister of State said a week or two ago at Question time that that offer
went very far and was extremely liberal. I know he was only answering a
supplementary question at the time, and I hope he will be able to tell us tonight
that he has now analyzed the offer rather more scrupulously and has discovered
that it really does nothing of the kind. The terms of this offer became known on
or about November 6th-a month ago-and, in very broad outline, here are a few
of the main points of the Dutch offer as transmitted to the Nationalists by Doctor
Van Mook-whose position throughout this matter has been one of extreme diffi-
culty, because he himself takes a liberal and humane point of view about it, but he
is constantly being called to order and rebuked, even publicly, by some of the more
intransigent upholders of the status quo in the home Dutch Government.
Some of the main points of the offer are these: that Indonesia in future is to
be "a partner in a kingdom." Now that, I suggest, does not correspond in any way
to our Dominion status. Another main point is that there is to be a representa-
tive body, with a majority of Indonesians on it, and a Council of Ministers, under
the Governor-General as representing the Dutch Crown. Further, so far as one can
gather from the rather obscure language in which this offer has been reported, this
representative body and the Council of Ministers are to deal almost exclusively
with the internal affairs of these territories. That suggests an arrangement analo-
gous to the present situation in Ceylon, which again obviously falls far short of
anything comparable with Dominion status. The question of the suffrage even
is not cleared up in this remarkable offer; the offer merely says that the question
of the suffrage "will receive further consideration." Finally, it is made absolutely
clear that all final decisions on matters of major policy are to be taken at The
Hague.
I really do not think that can be described as an extremely liberal offer which
goes a very long way. I would refer my right hon. Friend to the dispatch from the
special correspondent of The Times which appeared in that newspaper on Novem-
ber 7th. If he has any difficulty about looking that up, it should be said that
there were apparently two editions of The Times on that day-as there are of most
newspapers on most days-and the dispatch appears in an abridged form in some
editions. I think, incidentally, that we can assume that the special correspondent
of The Times who sent that report is Mr. Ian Morrison-a highly responsible
journalist and authority on the Far East, whose admirable and well-balanced book,
Malayan Postscript, will be known to many hon. Members. The Times special







British Speeches of the Day


correspondent's commerit on this Dutch offer was that two months ago it might
have done some good.
"Today, with tension rising all over Java, with shots ringing out in
Batavia each night, and with nearly everyone-especially the Dutch-think-
ing in terms of war, such a statement signifies little."
He then goes on to comment-
THE MINISTER OF STATE (Mr. Philip Noel-Baker): What was the date
of that dispatch?
MR. DRIBERG: The 7th November. He then goes on to analyze the Dutch
statement in general terms and he says, with quiet irony:
"It is more full of loopholes than most official declarations of policy. Nearly
all its provisions, when put into plain language, represent either pious hopes,
.obvious statements of fact . or evasion of the issue. Even the pro-
posed round table conference is to have only advisory powers. No dates are
given, and nothing specific is said about elections."
That is the offer described in this House by the Government spokesman as
being extremely liberal and going a very long way. I am afraid that I cannot agree
with that description. The very least the Dutch could offer now is something com-
parable with Dominion status, and I am not sure that it is not too late even for
that-the situation is so tragic and so tense.

A Dutch Letter from Indonesia
The latest information which I have, apart from the newspaper reports, is in
a letter dated November 17th written in Indonesia by a well-known Dutch Socialist
there, Mr. de Kadt. This man was interned during the Japanese occupation and
is a friend and associate of Mr. Sjahrir, the Prime Minister of the new Indonesian
Provincial Government. I will not quote the letter in full, because it is very long,
but there are one or two sentences in it of special interest and significance. He
says:
"People in Holland have apparently no idea of the way in which the
Nationalist Government, in spite of its weaknesses, now holds power."
He goes on to say:
"I have gone to Batavia because it is the political center. Bandoeng is
practically isolated, for posts, cables, telephones do not operate for Europeans
any longer; neither do railways or motor traffic. Thus you can see the position
of Europeans in Java."
He is writing, by the way, to a friend and comrade in the Socialist movement
in Holland. He says:
"Probably it is already too late for complete Dominion status (with the
right of separation). There is only one solution, the recognition of inde-
pendence and an effort to make an agreement for future co-operation between
Indonesia and Holland on that basis. There is still a chance for a far-reaching
alliance of equal and independent States, but every day of hesitation loses one
more chance for this favorable solution. I have been in touch again with Mr.
Sjahrir [the Prime Minister of the Provincial Governmentj, whom I respect
very much. He has mentally matured during the years of exile and occupation,
and in my. opinion he is the one man who can bring about a satisfactory
solution."
Extremists and Terrorists
Then he goes on to make a perfectly frank admission which could well be
taken by opponents of the Nationalists and used against them, but it is better to







Indonesia


have all the facts of this difficult and tragIc situation out frankly in this House. He
says:
"Sjahrir will have a difficult time with the terrorists, Fascists and rascals
around him who want to use the nationalist movement for their own ends, and
are working among the masses of the people, intriguing and causing trouble.
Of course, there are none of these elements in the Cabinet, which is not only
respectable but very capable. Sjahrir's struggle against corrupt Fascist and
terrorist elements is necessary."
The point is sometimes made by official Dutch spokesmen that these so-called
Nationalist leaders cannot control their own extremists and terrorists. We all
share in the condemnation which the Foreign Secretary expressed of the acts of
terrorism committed by extremists in Indonesia. But the way to enable the
responsible Nationalist leaders to control their extremists is to recognize them as
such. While they have no status and are not recognized by the Allies, how can
they exercise control? That is the way to enable them to do so.
One more point from this Dutch Socialist in Indonesia. He says:
"The problem is to make an agreement which will give economic and cul-
tural chances to the Netherlands in the future. But this can only be done if
people in Holland are reasonable enough to understand that the period of their
political power is ended."

Another Dutch View
One other Dutchman in Indonesia recently came out publicly with a statement
on behalf of the Indonesian cause, a man well known in circles in this country
interested in serious documentary films-Mr. Joris Ivens, who was one of the pro-
ducers of that great film, "Spanish Earth." He was employed by the Netherlands
East Indies Government as film adviser, or in some such capacity, and he has just
resigned that post, saying publicly that his reason for doing so was that he could
not continue to associate himself with an administration which was plainly trying
to reimpose a mere status quo on an advanced and intelligent people with strong
National aspirations.

Mr. Driberg's Two Suggestions: 1
I want to end with two constructive suggestions. First, that there should be
a conference held, away from the inflamed atmosphere of the Netherlands East.
Indies. There has just been a conference in Singapore, but I am sorry to see-so far
as one can judge from the reports-that no representatives of the Nationalist
leaders, either of Indonesia or Indo-China, were present. It was reported as a con-
ference between ourselves, the Dutch, and the French. I hope that the right hon.
Gentleman can tell us a little more about that conference and its results, and what
the possibilities are of holding another conference-perhaps even in London-at
which the Nationalist leaders would be treated as equal parties with representatives
of the French and Dutch, and at which the whole thing can be thrashed out in as
calm a way as possible.

Some Talk About "Quislings"
If the Dutch-I hope they are not-but if they are still making that foolish
remark that "We cannot do business with Quislings," perhaps I might just dispose
of that allegation in passing. I am glad to see that the responsible newspapers no
longer refer to these Nationalists as Quislings, because, of course, although it is
true that in some cases and at some times during the war, some of the Nationalist
elements co-operated with the Japanese, they never did so for the reasons for which







British Speeches of the Day


the Quislings in Europe collaborated with the enemy, and, above all, they never
betrayed their own people. The definition of a Quisling is surely somebody who
betrays his own people. The Indonesians and the Annamese Nationalists were
only concerned in getting independence and freedom for their own people, and
they thought, mistakenly, that they could use the Japanese as a means of getting
freedom from the Dutch and the French. Furthermore, in the new provisional
Cabinet of Dr. Sjahrir, there is nobody who could, even by a twist of language
or imagination, be described as a collaborator or a Quisling. On the contrary,
every member of this new Cabinet has a most admirable record of resistance against
the Japanese during the period of occupation.

Suggestion 2
My second suggestion is that whether or not such a conference as I have sug-
gested can be arranged, this whole situation might be handled under the transitional
security arrangements provided for in Article 106 -of the United Nations Charter.
It will be remembered that the great Powers have power in such a case :o co-opt
other Powers to join in the discussions. No doubt, if that were done in this case,
such Powers as Australia and China would be brought in. I hope that that will be
seriously considered. It does not in any way offset or contradict my prev ous sug-
gestion of a conference. The conference is obviously the short-term, urent way
of dealing with the situation. The other would take longer. If it is said that this
is not a suitable subject for reference to the U.N.O. under these arrangements, one
might ask what is-because if this is excluded, any of the many dangerous situa-
tions which are boiling up, in the Far East in particular, could be excluded.
One might perhaps adapt, very slightly, an old rhyme, and say:
"In matters, of Empire, the fault of the Dutch
Is yielding too little and grabbing too much."
The Dutch have gained vast wealth from the peoples of Indonesia, and they
have done remarkably little to allow or to encourage their aspirations towards
independence. The whole of South-East Asia is now astir. The'whole Far East, as
my right hon. Friend knows well, is the real danger area in the world today. I
hope that the British Government will deal with this whole situation with the
highest wisdom and statesmanship, and with a realistic recognition of the strength
of the new forces that have arisen. The only alternatives before them in Indonesia
are either to recognize the Provisional Government of Dr. Sjahrir, with everything
that that implies, or to conduct a full-scale war for the repression of Indonesian
independence. I do not believe that the British Government, or its supporters
in the country, can regard the latter alternative with equanimity.
*

The Indonesian Nationalist Cabinet
MR. PLATTS-MILLS (Labour): I would like briefly to add to the contribu-
tions already made to the Debate. My hon. Friend the Member for .Maldon (Mr.
Driberg) gave the Indonesian National Government and its cabinet a good repu-
tation. May I introduce them in a little further detail? The members of this cab-
inet are men who are known as established figures throughout Indonesia and in
Holland. I will not introduce them all, but typical is the Home Secretary, or the
Minister for the Home Office, Wiranata Kusuma. This man was a regent; that
is to say, he was the governor of a province in this island with a vast population
of 40,000,000, appointed by the Dutch. For many years he had been such a regent.
More, he was chairman of the Council of Regents; that is to say, he was the out-







Indonesia


standing, best known and most important of the regents appointed by the Dutch
themselves to administer such local autonomy as the Dutch allowed to these people.
When a man like this goes on to the National Indonesian Cabinet, it must mean
that the whole body of the regents are supporting him. He could not do other-
wise. At the Foreign Office there is Ahmad Subardjo, who is a lawyer trained at
Leyden, where all the famous Dutch lawyers are trained. He is known throughout
the world by those races who have struggled for independence against foreign sub-
jection. He was the representative of Indonesia at the Brussels Conference against
imperialism in 1927, and at a similar meeting in 1929 at Frankfurt in Germany.
The Minister of Justice is Dr. Supomo, another product of Leyden. This man
held the minor position of chairman of the Indonesian high court. He resigned
that position-he is not a young man-and became principal or the head of the
Faculty of law at Batavia. This man, if you like, cannot be dismissed as no one
at all. He is a leading lawyer who held the highest judicial position in the country
under the Dutch. Who is more suitable as the Minister of Justice under the new
national regime ? May I turn to finance? We have Dr. Samsi. Where do we go to
get our best advice on finance for our new Government?-to the Governor of the
Bank of England. We take him gladly into our collaboration to deal with our most
vexing problems. Dr. Samsi was the director of the National Bank of Indonesia.
It is not a national bank that these raw natives have set up, but the National Bank
of Indonesia established by the Dutch to administer their great imperial oil
interests. That is the man they have taken on. He has given his service and will
continue to give it when that Government is accepted by us. He was a close friend
of Van Kleiffens, although many of us on this side of the House will probably
doubt if that is much of a testimonial. Mr. Ki-Hadjar, the Minister of Education,
has set up under his own authority, as the chief Indonesian educational officer under
the Dutch, 17,000 schools for the Indonesian people. Do they respect this man, is
he.of any standing in that island? Is he a fit person to fill the position of Minister
of Education? I do not put it against this man, but he was exiled for ten years
after his great successes, because he wrote a satirical book called, When I Was a
Dutchman.
A Request for Information
Having introduced this Cabinet, and the men we shall have to deal with when
this Indonesia is finally established as 'an independent nation, may I say one word
by way of a humble request for information about the obvious confusion both in
our actions and in our information as it is disclosed to us in this House? We are
there, so my right hon. Friend informed us during the great Foreign Affairs Debate,
for three purposes-to disarm the Japanese, to free our prisoners of war and to
release those who were interned. That was, apparently, the situation a week ago.
But was it so? It is on this point that I would like information. Two months ago
every British prisoner of war was released. Six weeks ago we were informed that
the same position still held. My right hon. Friend the Minister of State said that.
The Prime Minister told us the same. I think the Secretary of State for War told
us that, and again on October 31st the position was confirmed by my right hon.
Friend the Foreign Secretary, who said that 2,497 Commonwealth prisoners of
war had been evacuated, that every one was released and that 256 had remained
behind in the country of their own will, because their assistance was being used
to identify war criminals amongst the Japanese. We are obviously not staying
there to release prisoners of war.

Confusion Charged
Are we staying there to disarm the Japanese? We were told by my right hon.
Friend the Prime Minister on October 17th that, in the first instance, we were using







British Speeches of the Day


the Japanese to preserve law and order in the emergency created by the sudden
collapse of the Japanese resistance. There has not been an official word about the
use of the Japanese forces by us against the Indonesian people until today when
the Supreme Commander in the area reports, as a result of the disclosure by Mr.
Edward Murrow, the Columbia broadcasting reporter, that, in fact, we were still
using the Japanese in active offensive warfare. We had this admission-and I invite
the attention of hon. Members to its precise terms-that we were using the Japa-
nese, but only for static defense and also for defense when the lives of Allied in-
ternees and prisoners of war are in danger from Indonesian extremists. I want the
House to appreciate the position-static defense of internees who are in danger. I
want hon. Members to picture the static defense area, placed where you will, and,
beyond that, Indonesian extremists with internees still in their grip-the Japanese
forces statically defending as they move forward to assail the area, where, it is
suggested, the extremists are imperilling the lives of internees. The Supreme Com-
mander in that area added that these Japanese were being used for the static de-
fense of prisoners of war, but we know they are not in captivity. They are all
released and have left the country, except those who have remained behind for
quite express professional purposes. Is it not perfectly apparent, when we say that
we are there to disarm the Japanese, that we are speaking like the unhappy French
children who murdered their parents and who, on their trial for murder, pleaded
for mercy and said: "Have pity on us for, unhappily, we are orphans"? Here we
are deliberately keeping the Japanese under arms for some purpose that is confused,
on the information that we have been given, and then saying that we must stay
there until we have disarmed the Japanese.
We can say that forever. Let us take the island and set up a governor and, if
anyone wants the job, let us have some offers. The island is ours, so long as we
keep the Japanese fully armed, as we appear to be doing. The course to be taken is
that we should say to the Indonesian Cabinet, "We want the release of the in-
ternees." Has any approach been made of that kind? When it was a question of
releasing our own prisoners of war, their positions were identified by the Japanese.
The Prime Minister said in the House on that day that the identity of their posi-
tions had been established, and they had been released. It is clear that the Indo-
nesians do not want to keep the internees against us, but we keep them to defend
them against the Japanese, who are still in arms, and not unnaturally.
I would tell the House of another point of confusion. The right hon. Gentle-
man said in this House, on one dramatic day when a famous and distinguished
officer had been shot, that this was a dastardly crime, and he associated it with
Indonesian extremists. Was it not the fact that this distinguished officer was shot
by a stray bullet when he was being driven in a motor car, to a meeting indeed,
and in that very area where there are so many armed Japanese, our bitterest
enemies? Can we not at this stage have an understanding as to how that officer
died, and whether it is really suggested that it was other than our Japanese enemies,
kept armed by us, who killed him?

An Agreement With the Dutch Government?
That was the tragedy of the whole thing. There is one further point I would
like to make, supplementing what was said by my hon. Friend the Member for
Gateshead (Mr. Zilliacus). It is suggested that there is some agreement with the
Dutch that requires us to be there. The agreement has never been published. My
right hon. Friend the Foreign Secretary a week or two ago said, "It is clear that
there must be an agreement between us and the Dutch." That is not fair to this
House. If there is any such agreement it cannot override the Atlantic Charter or
the Charter of the United Nations.







Indonesia


An International Problem
I ask whether it is suggested that there is some agreement, kept secret so far,
which requires us to be there and to intervene in what is becoming a bloody war
on behalf of the Dutch Empire? It is not a case where the peace of the world
is threatened. The peace is broken, destroyed already. The war is on. In early
October there had been three British casualties. Two days ago there had been 46.
The total now is over 1,000, of which 200 are dead. I am giving the roughest
figures which are in the possession of this House already. It is urged that this
matter must come before the United Nations Organization. The only conceivable
grounds on which it could be withheld from the jurisdiction of the United Nations
Organization, I mean the transitional body that it has set up for the express pur-
pose of dealing with precisely this situation, is set out in the discussions we had
in Moscow. It was there said that a situation might arise for maintaining inter-
national peace and security pending the re-establishment of law and order and the
inauguration of a system of general security. That is the very situation which is
there today, and which was legislated for in Moscow in 1943, and in Article 106
of the Charter. The only reason that could be advanced, surely, for withholding
this matter from that organization, that interim security procedure is this: it could
not be said that this is an international matter. It is solely a matter between the
Dutch and their subject people.
Be it so; what follows? Our lads are there on behalf of the Dutch. They are
carrying out Dutch policy. If this is not a matter of international concern, our
lads . are there as hirelings and mercenaries of the Dutch. They are mercenaries
of the kind that the German princelings used to hire out in Europe. They used
to charge the same price per head for them, when they crossed their territory, as
they charged for the transport of cattle. Our lads are treated in that way and the
only pay they get . is the pay which every mercenary expects, and that is death.
It has been reported officially in the Press that 46 two days ago had paid that
price. That is not a matter between the Dutch and the Indonesian people, it is an
international matter.
As my hon. Friend the Member for Gateshead said, those people were liberated
as a result of international action. The Secretary of State said, on December 3rd,
that we were going there because of a duty which had been allotted to us expressly
by the Supreme Commander of that area. What is more, when those people have
established their freedom they will come into the international field and we shall
have to accept them. It is an international problem from every point of view.
What will be the result if we persist in this armed intervention, when no case
for it can be shown? We shall not only discredit our own moral .standing as a
nation but we shall be leading to this great world organization, to which all the
peoples are looking with hope, being stillborn, for this is the very eve of its birth.
S Are we, on this great day, to advance legalistic arguments to prove that we cannot
bring into action this magnificent machinery that has been set up already for this
very purpose? I assert that we should be given an answer why a truce should not
be called at once and a conference opened.

THE MINISTER OF STATE (Rt. Hon. P. Noel-Baker): I know the House
will be kind to me tonight, for I have to deal with a matter of great difficulty,
which has been raised in a spirit of moderation and international friendship by
the hon. Member for Maldon (Mr. Driberg), and I must carefully choose the
words I use. I want both to reply to the Debate and to make some statements
which, I hope, will be regarded as of importance. Owing to the many other duties
which are falling on my shoulders at the present time, it has not been possible for
me to give as many hours to the preparation of what I have to say as I should
have liked.







British Speeches of the Day


I will begin, if I may, with my hon. Friend the Member for Doncaster (Mr.
Walkderi). He told us that the Dutch Government have not solved all the prob-
lems of the post-war epoch yet. I would repudiate, with some emphasis, what he
said about their participation in the war. When they were attacked by Hitler they
resisted with all the means in their power. I was in The Hague a fortnight before
they were attacked, and had an opportunity of examining their defenses and seeing
what they had done. I venture to say that, with the resources at their command,
they defended their land with the utmost gallantry.
The present Dutch Government is drawn, not entirely but almost entirely,
from the ranks of the resistance movement. Whatever else they may have done,
no one can deny that, after their long martyrdom under the Nazis, they have, so
far, done a wonderful job of reconstruction. But I would like to endorse one phrase
used by my hon. Friend the Member for Doncaster: "The more of the get-together
spirit we can have, the better for all concerned."
I should like to assure the hon. Member for West Fife (Mr. Gallacher) that
some of my ancestors fought against King George 150 years ago, and, therefore,
so far as that is concerned, I enter the Debate with no prejudice against those who
rebel against established authority ....

Why British Troops Went to Java
The hon. Member for West Fife and my hon. Friend the Member for Fins-
bury (Mr. Platts-Mills), if I understood them, cane very near to suggesting that
we ought never to have gone to Java at all, but ought to have left the Japanese,
and the Japanese-trained Indonesian bands, in charge. If that is their suggestion,
I do not think it will receive the approval of the House. Why did we go to Java?
I do not need to repeat it again, I hope, to a House which has heard it repeatedly
from the Prime Minister and from the Secretary of State, but I can summarize
the main purposes. The purposes which it was necessary for us to carry out, and
which I do not think a single hon. Member would repudiate, were to disarm and
concentrate the Japanese forces, to rescue and bring home our prisoners of war,
and-let us not forget it-to rescue the thousands of people whom the Japanese
had placed in internment camps under appalling conditions and subject to cruelty
of many kinds. The only agreements made with the Dutch Government, and with
the French Government about Indo-China, which my hon. Friend the Member for
Maldon also mentioned, were the ordinary civil affairs agreements made with all
the Allied Governments for the taking over by them of the administration when
the Allied Armies had finished their job.
So far as Indo-China is concerned, I understand that the tasks for which the
British and Indian troops went in are now nearly completed. Practically all the
Japanese have been disarmed, a relatively small number remain to be dealt with,
and it is hoped that they will all be dealt with by the end of the year. I for my
part hope that our troops may be able to come away in the early future ....

The Use of Japanese Troops
I want to come to what he said about Indonesia and Java, which is more im-
portant. He said that we were employing Japanese troops, that Indonesian villages
had been burnt, and so on. Let me deal first with the use of Japanese troops. It
is true that they have been used, in the official phrase, "defensively." What does
that mean? It means that if internees, women and children-Dutch, Eurasian or
other-are being attacked and subjected to murder or cruelty, as they very often
have been by the Indonesian bands, then the Japanese are called on to repel those
attacks. According to my information they have been used offensively only once,
and I will give the House the exact details of what occurred.







Indonesia


On December 6th one of our battalions was ordered to reach and evacuate 500
starving internees, '140 of whom had already been carried off. They were met by
heavily fortified strong points. Our infantry could only have got to the rescue of
those people with heavy loss of life unless we had been able to call on some
artillery. There was no artillery to reduce the strong points, except Japanese. It
was used in order to save our soldiers' lives and to rescue those people.

The Use of Rocket-Planes
Some of my hon. Friends, in particular the hon. Member for Finsbury, seemed
to imply that no atrocities of any kind have been committed by the Indonesian
bands. I wish I could agree with him. I am not going to take the time of the
House in describing atrocities, but I could do so at very considerable length. It
was said that we had destroyed Indonesian villages by Typhoon rocket-planes. I
have not heard of that. I have heard of the destruction of two radio stations by
rocket, a very different matter. The targets were very well isolated, with no centers
of population near them, and were very easy to destroy; in point of fact, the per-
centage of direct hits was very high. They were attacked because day by day and
night by night they were pouring out the most inflammatory propaganda, inciting
the Indonesian bands to acts of cruelty of many kinds.

A Burnt Village
It is said that villages were burned. I know of one case in which a village was
burned, and again I will give the House the facts. An R.A.F. aircraft made a
forced landing near a village. The crew were taken and murdered by brutal tor-
ture. Nothing was done against the population. They were cleared out of their
village and the village was burned. I am not defending indiscriminate reprisals,
but in these circumstances I find it hard to blame the commander on the spot.

Indonesian Terrorist Groups
Despite the obstructions and difficulties with which we have met, we have,
in fact, made great progress towards our aims. We have disarmed and concen-
trated under our control a very large proportion of the Japanese forces in the
island. We have set free and evacuated tens of thousands of the internees. There
are still very many to be rescued-up to 200,000, mostly women and children. They
are enduring starvation and all the familiar horrors of Japanese.custody. To get
them out, of course, we had to take military measures. We had to occupy Soura-
baya for evacuation and for supply. Those who are resisting us are sometimes
referred to in a facile phrase as "The Indonesian Army," and it is implied that
they are obeying the orders of the Indonesian "Cabinet" and "Government." The
resistance to the Allied Forces engaged on this relief, and the acts of terrorism
which are going on, are the work, not of an army, but of so-called Indonesian youth
movements, gangs of fanatical youths who were armed, and very largely trained,
ideologically as well as militarily, by the Japanese. This so-called Indonesian
"Army" does not seek approval for its policy from any responsible Indonesian
leader. It has shown itself capable of every outrage all over the Island, against
the Allied prisoners of war and the internees. Moreover, all those who are known
to sympathize with the Dutch and the British were at the mercy of these blood-
thirsty youths, and in some areas in immediate danger of massacre, following on
the starvation they had previously endured.

The British Obligation
I venture to say that no one would urge that we should turn our backs on those
people and say their fate is no concern of ours. If we do not help them no one
else can, certainly not the Dutch, who have placed their troops and their ships at







British Speeches of the Day


the Allies' disposal, and who have been extremely loyal in that regard. We must
do everything we can to complete this work of rescue and relief. The first neces-
sity is to remove them from the remaining camps and then, if we can, to get them
away. That work is very difficult so long as disorder is going on, and once you
start on it, you are compelled to do what the Secretary of State and the Prime Min-
ister described as "restoring order." I know that the phrase "restoring order" has
a sinister connotation in Colonial history. I know that any use of it justifiably
arouses suspicion. I know it has been too often used as an excuse for the sup-
pression of political aspirations by force. But what are the facts in this case? The
suppression of the Indonesian terrorist groups will not in any way weaken the
presentation of the Nationalist case by the Indonesian leaders in their negotiations
with the Dutch. It will strengthen their case; and I have strong reason to believe
-I ask the House to note this-that Dr. Sjahrir and his colleagues would welcome
the suppression of the extremist elements whose outrages only prejudice their case,
and who in fact accept no orders from anybody. How can Dr. Sjahrir present
the Indonesian case effectively under conditions in which the armed forces and the
most important means of propaganda are in the hands of extremists who reject
negotiations and call for further bloodshed? Anyone who has compared the decla-
rations of Dr. Sjahrir and his colleagues with the wild and foolish outpourings
from the radio stations of the so-called Indonesian "Army" will appreciate the
extent of this disastrous division of the Indonesian people. The savagery in word
and action of the irreconcilables can only play into the hands of the more exacer-
bated and less conciliatory elements on the Dutch side.

The Case for the Dutch
Here I must say one word about the case for the Dutch. My hon. Friends
spoke about the Indonesian people as being advanced, educated, capable, and so
on. If that is so, some of the credit goes to the Dutch. The Dutch found these
islands, when they first went there, in very primitive conditions. No one can deny
that the reputation of the Dutch as a Colonial Power stood high in 1939. I ven-
ture to think that we must remember not only that record, not only what they have
done in the study of anthropology, which is so vital to colonial progress, and which
was so admirably advanced by the Dutch colonial administration and by the Uni-
versities of Holland, but that we must remember also the magnitude of the sacri-
fice that they made in the war. We must remember both the help which they
gave us in Holland, when those four days mattered, for they had an effect on the
ultimate outcome of Dunkirk, and their effort in the Far East, when they declared
war on the Japanese without waiting for the Japanese to attack them, and when
their submarines and their armed forces made a mighty contribution in holding up
the pace of the Japanese advance.
I am confident that the well-known phenomenon, the colonial diehard, who
will not admit that the old days of easy and unchallenged ascendancy have gone
and cannot return, will not prevail against men like the present Prime Minister of
Holland, Professor Schermerhorn, and the Minister of Overseas Territories, Dr.
Logemann, both of whom have been personally involved for several years in the
promotion of-movements for the more democratic and progressive administration
of the Netherlands East Indies. The program of the Indonesian Committee, of
which the Prime Minister was chairman, was approved by all its Indonesian mem-
bers and by the Communists. Dr. Schermerhorn's colleagues in the Dutch Cabinet
know from first-hand experience in the Dutch Resistance Movement how intoler-
able repression and the denial of political rights can be, and I do not believe that
that is their purpose in the East.







Indonesia


The Dutch Offer to Indonesia
I ventured to describe the offer of November 6th as generous and far-reaching.
My hon. Friend, in his well-reasoned statement tonight, thought that I was too
optimistic. Had I the time I would gladly analyze it further, but I think that the
difference between us lies largely in what the Dutch propose about the Govern-
ment of the whole Kingdom. They want now to implement the policy which was
broadcast by the Queen of Holland in 1942. They aim at the realization of those
aspirations for a more liberal system by a process of evolution, by co-operation, and
not by violence. They propose a partnership inside a Commonwealth or Kingdom
of the Netherlands, which would include the Empire as a whole. They provide
in Indonesia for a representative body with a substantial majority of Indonesian
members, and, as my hon. Friend said, that body would be dealing primarily with
internal matters.
MR. DRIBERG: Under a Governor-General.
MR. NOEL-BAKER: Yes, but where are the powers to lie? That is to be
negotiated. This is a basis of discussion which the Dutch have put forward and
which they ask the Indonesians to talk about. But the Dutch not only propose
that; they propose a round-table conference to decide on the methods whereby
the Netherlands Indies, like other overseas Netherland territories, will participate
in the Government of the whole Kingdom. I think that is where I differ from
my hon. Friend, and that, I think, is where The Times correspondent, like my
hon. Friend, got it wrong. What does the statement actually say?
"Indonesia will become a full partner in the Kingdom organized as a
Commonwealth of the participating territories. A round-table conference
will propose how this will be done. Decisions, however, will be taken by the
constitutional authorities of the Kingdom."
That means the authorities of the whole Kingdom. Unless I am mistaken, what is
proposed is not at all Dominion status, but it is instead an advance towards a co-
operative, federated Commonwealth of Holland and her territories overseas.
MR. DRIBERG: But without the right of contracting out.
MR. NOEL-BAKER: But surely that is all a matter for the negotiations,
and for future historical development which' we cannot now foresee. Canada,
Australia and New Zealand had no right of contracting out when self-government
was first established by Acts of this Parliament. Let us not forget that until the
war of 1914, Canada, Australia, New Zealand and South Africa had nothing to
do with Foreign Affairs; they dealt with internal matters only.
This is a very far-reaching and liberal proposal for negotiations between those
Indonesian Leaders who are fit to negotiate and the Dutch Government. It is
easy to talk of independence. The leaders who claim to represent the country have
still to prove that they can do so, and that they can exercise effective control;
they have not done it up to now. They have still to prove that they can bring
economic welfare to a country in danger of starvation, in a world where, in far too
many places, starvation exists or is coming very soon. The right plan now is to
proceed on the road of co-operation and orderly evolution, and I beg hon. Mem-
bers to consider how little reason we have yet to think that these Indonesian
leaders could solidify the whole of the people for whom they claim to speak.
Even in Java there is a tremendous mixture of rices-Javanese, Sundanese, Muda-
nese, Chinese, Dutch, Eurasians, Arabs. This has to be taken into account. I am
not saying that that is an argument against self-government, but it is one of the
things that must be dealt with, not by violence or by leaving the country to the
bands trained by the Japanese, but by negotiations between responsible leaders
and a responsible Dutch Government at home.







British Speeches of the Day


Meetings Between Parties Concerned; UNO
I was asked if I would encourage a meeting outside Java, perhaps in London.
I was asked why it was that the Indonesians were not invited to meet at Singa-
pore. To that the answer is simple. The meeting in Singapore was a military con-
ference of the Allies to deal with questions concerned with the liquidation of
the war with Japan, and there was no reason for Indonesian representatives to
participate, and none of the items on the agenda could be said strictly to concern
them. I venture to suggest to my hon. Friends that, before we think of confer-
ences outside, and of referring the matter to the United Nations Organization-
and no one is likely to accuse me of wanting to keep important questions away
from the United Nations Organization-we had.better see whether the negotia-
tions which are now going on, which, on Dutch initiative and with our support,
have actually been begun, should not now be carried further.
It is not true that the Dutch have refused, to have meetings with the Indo-
nesian leaders. Meetings have taken place. The difficulty has been the unwilling-
ness of the Indonesian leaders to commit themselves to formal meetings. They do
not seem confident of their powers to lead and to negotiate as authorized delegates.
Therefore, however reasonable they may be in informal talks, they will not pub-
licly, and as responsible delegates, declare what they would regard as a satis-
factory basis of negotiations. The Dutch, as I said, took the initiative. I think
it is up to the Indonesians now publicly to meet that initiative with counter pro-
posals, if they want to make them, in a spirit of reasonable compromise. Dr.
Van Mook is now on his way to the Netherlands to consult the Dutch Govern-
ment, and His Majesty's Government hope he will be given full authority by the
Government at home, when he goes back to Indonesia, to use his unequalled ex-
perience of conditions and sentiments in the Dutch East Indies to meet the
Indonesian case in most concrete and conciliatory terms. I think we must await
S the outcome of these consultations before we express any further opinion. In the
meantime, we have the right to insist that there shall be the minimum possible
delay in elaborating the statement of November 6th in more concrete terms and as
a basis of negotiation. May I end with these words, which I commend to the
attention of the House?
We now expect, and we demand, that the Dutch and Indonesians should sit
down together to adjust their differences on a basis of concrete proposals from both
sides without any further delay. The first essential is that both sides should
appoint representatives with full powers, who are in no danger of being repudiated.
In the meantime, His Majesty's Forces must continue to do what is necessary to
ensure the safety of Allied prisoners of war and of the helpless internees.
[House of Commons Debates]


QUESTION TIME IN THE HOUSE OF COMMONS
The first hour of every sitting day in the House of Commons is devoted to
answering questions which Members of Parliament put to Ministers. A
selection from some of the questions asked during December, 1945, is
included below, together with the Ministers' answers.

INDIAN NATIONAL ARMY
Mr. Bernard Taylor (Labour) asked the Under-Secretary of State for
India, whether he will now make a statement on the policy which is being adopted
towards those Indian Army personnel who joined the I.N.A.







Question Time in the House of Commons


Mr. A. Henderson: The total number of persons enrolled in or involved
in the activities of the I.N.A. was approximately 43,000. Of these, only 20,000
were members of the Indian Army. Of these 20,000 there are first a substantial
number who took up arms in the cause of the enemy either under compulsion
despite their real inclination, or of intention with the purpose of taking the
earliest opportunity to escape to our side. All these men who concealed and only
technically broke their allegiance are being treated as any other recovered prisoners
of war, and can resume their career in the Indian Army if they wish to do so.
Secondly, there is a large category of men who joined the I.N.A. either through
being deceived by the enemy propaganda or through forcible persuasion or threats.
This category are being released after interrogation and are being given 42 days'
paid leave and will thereafter be discharged from the Indian Army. Some 6,000
cases have been placed in this category.
Those whose collaboration with the enemy is considered to have been of a
more deliberate kind, are being interrogated as rapidly as possible and thereafter
will either be dismissed from the Indian Army or brought to trial by Court
Martial. The policy of the Government of India is, however, that only those
cases will be brought to trial where there are serious charges apart from that of
waging war against the King or desertion from duty. Some of the offenses in-
volved are of the most grave character, such as murder and abetment of murder,
and causing the death or brutal treatment of Indian or Allied personnel. It is not
possible at the moment to estimate accurately in how many cases trials may be
necessary, but the number will bear only a very small proportion to the total figure,
and is estimated as between 20 and 50. It will be seen, therefore, that it is not
the policy of the Government of India to prosecute the men whose sole offense
was that they joined the I.N.A. in the mistaken belief that they were 'helping to
liberate their country.
[December 3, 1945]

GREEK INTERNEES (AFRICA)
Captain Francis Noel-Baker (Labour) asked the Secretary of State for
Foreign Affairs whether he will state the respective numbers of Greek civilian and
military internees held in British-controlled camps in Africa six months ago; how
many of these still remain in Africa; and under what conditions they are now living.
Mr. Bevin: Six months ago there were 38 Greek civilian internees and about
4,000 military and naval internees in North Africa. The numbers are now 2
civilian and 1,683 military respectively. As regards the last part of the Question, I
am informed that conditions in the internment camps in Eritrea and the Sudan
are satisfactory, that accommodation is considerably better than the average for
troops in the Middle East, and that rations, amenities and medical treatment
are all on a normal scale. Moreover, the camps have recently been visited by a
representative of the International Red Cross.
Captain Noel-Baker: Can my right hon. Friend say who is responsible for
holding these men in Africa at the present time, and can.he give an assurance
that, in so far as the responsibility rests with His Majesty's Government, instruc-
tions will be given to the responsible authorities to do everything they can to get
these political prisoners back to Greece at the earliest possible moment?
Mr. Bevin: Yes, we are doing that; they are being transported as fast as
possible, and as far as shipping is available through the Mediterranean. As soon
as we can we will send them back to Greece.
[December 5, 1945]







British Speeches of the Day


UNITED STATES (EXCHANGE OF TEACHERS)
Mr. Osborne (Conservative) asked the Minister of Education (1) how far
the arrangements have progressed with the United States authorities for the ex-
change of schoolteachers for September, 1946; and whether she will assume re-
sponsibility for some portion of the traveling expenses in order to encourage
more men teachers to volunteer for this work; (2) how many schoolteachers it is
proposed to exchange with the U.S.A. under the auspices of the English-Speaking
Union; how far the preparations have gone; and what are the financial arrange-
ments.
Miss Wilkinson: I understand that on the initiative of the United States
Government a committee has been set up there which will correspond with the
committee at work in this country under the auspices of the English-Speaking
Union. Preparations on this side are well advanced and more than 200 applica-
tions have been received for exchanges next autumn. I am considering a request
from the English-Speaking Union for a grant towards the cost of administering
the scheme. The financial arrangements, so far as they concern the teachers, are
indicated in the leaflet, a copy of which I am sending to the hon. Member. As
regards the traveling expenses of teachers who apply for exchanges, it has not been
the practice of my Department to assume any responsibility, but I am examining
this question.
[December 6, 1945]

UNRRA (MOTOR VEHICLES)
Mrs. Middleton (Labour) asked the Minister &f Supply and Aircraft Pro-
duction what is the present rate of delivery to UNRRA of the lorries so badly
needed for relief in the liberated countries.
Mr. Wilmot: UNRRA has placed requirements for the supply from this
country of 14,248 motor vehicles, of which 10,230 fall to be supplied by me from
surplus Service stocks. Of these 10,230, 6,622 have already been supplied and
deliveries to the docks are continuing at a steady rate of about 100 a day, which
is as fast as UNRRA is able to ship them.
[December '0, 1945]

NEWFOUNDLAND (ELECTED NATIONAL CONVENTION)
Mr. Maxton (Independent Labour Party) asked the Prime Minister whether
he is now in a position to make a statement about the restoration of self-govern-
ment to Newfoundland.
Sir Alan Herbert (Independent) asked the Prime Minister what is the
policy of His Majesty's Government concerning the future of Newfoundland.
The Prime Minister (Mr. Attlee): In pursuance of the statement of policy
made on behalf of the Coalition Government in December, 1943, which they fully
endorse, His Majesty's Government have decided to set up in Newfoundland
next year, as early as climatic conditions permit, an elected National Convention of
Newfoundlanders. Elections to the Convention will be held broadly on the basis
of the former Parliamenrary constituencies. All adults will be entitled to vote, and
candidates for election will be required to be bona fide residents in the districts
they seek to represent. The Convention will be presided over by a judge of the
Supreme Court of Newfoundland, and its terms of reference will be as follows:
"To consider and discuss amongst themselves, as elected representatives
of the Newfoundland people, the changes that have taken place in the finan-
cial and economic situation of the Island since 1934, and bearing in mind







Question Time in the House of Commons


the extent to which the high revenues of recent years have been due to war-
time conditions, to examine the position of the country and to make recom-
mendations to His Majesty's Government as to possible forms of future
government to be put before the people at a national referendum."
In order to assist the Convention, His Majesty's Government will make avail-
able to it when it meets the services of an expert adviser who could give guid-
ance on constitutional forms and procedure; and they will also prepare for use
of the Convention a factual and objective statement of the Island's financial and
economic situation. This statement will be made available to Parliament at the
same time.
In the meantime it is, of course, most important that the series of reconstruction
measures which the Commission of Government already have in hand or are plan-
ning to introduce should proceed without interruption, and these will be pushed
forward as rapidly as possible. The Commission have a full program designed to
meet the more pressing requirements of the Island over the next two or three years.
Our relations with Newfoundland have been so special and Newfoundlanders
have played such a gallant part in the war that it would, I know, be the wish of
us all to assure to any new Government which may take over in the Island the
fairest possible start. But we must above all be careful not to promise what we may
not be able to perform, and the special difficulties of our financial position over the
next few years may well preclude us from undertaking fresh commitments.
The object of the procedure which His Majesty's Government propose is to
enable the people of the Island to come to a free and informed decision as to their
future form of government. I know the House, which has always been solicitous
for their welfare, will wish them well in the exercise of their choice.
[December 11, 1945]

GOVERNMENT INFORMATION SERVICE
(NEW ORGANIZATION)
Mr. Maurice'Webb (Labour) asked the Prime Minister whether he has any
statement to make on the future of the Government Information Service.
The Prime Minister: Yes, Sir. The Government have had under consid-
eration the information services which should be maintained at home and overseas
in peace. They are satisfied that, while these services should be on a substantially
reduced scale as compared with wartime, they have an important and permanent
part in the machinery of government under modern conditions. It is essential to
good administration under a democratic system that the public shall be adequately
informed about the many matters in which Government action directly impinges
on their daily lives, and it is in particular important that a true and adequate
picture of British policy, British institutions and the British way of life should be
presented overseas.
In the view of the Government, the responsibility for the information policy
of a Department must rest with its Minister, but there are various technical func-
tions, notably on the production side, which it would be uneconomical to organize
departmentally, and which can best be performed centrally as a common service.
For this purpose we propose that departmental information services shall be supple-
mented by a central office performing certain common technical and production
functions and making specialist services available to Departments for both home
and overseas purposes. To be effective, this office, like the Government informa-
tion services generally, will need a highly qualified rather than a large staff.







British Speeches of the Day


There must also be effective machinery for co-ordination, especially as far as
overseas publicity is concerned. Neither of these purposes, however, requires a
separate Minister exclusively concerned with information matters, and the Govern-
ment have, therefore, decided to bring the Ministry of Information to an end. The
Ministry of Information will, however, continue until the new organization has
been set up, and opportunities of transfer to the new services will be offered to
members of the Ministry's staff with the requisite qualifications. Detailed arrange-
ments are now being worked out and will be made public in due course.
In conclusion, I think that, whatever opinions may be held about the future,
the House generally would like me to take the present opportunity of placing on
record appreciation of the services which the Ministry of Information has rendered
since it was formed in 1939, and of the conspicuous success with which, after it
emerged from its original teething troubles, it performed its important and diffi-
cult task during the war.
[December 17, 1945]

DISPLACED PERSONS (TREATMENT)
Miss Rathbone (Independent) asked the Chancellor of the Duchy of
Lancaster whether he can now make a statement concerning the treatment of
Jewish displaced persons in the British Zone in Germany.
Mr. J. Hynd: Yes, Sir. I am aware of the criticisms to which the hon. Mem-
ber refers. They are without foundation. The information is necessarily rather
long, and I hope that the House will bear with me while I give it.
On the collapse of Germany in May, 1945, the military authorities were faced
with a stupendous task in dealing with the many millions of displaced persons
who were then at large in ex-enemy territories. By the end of October, the vast
majority of those who could be repatriated had either been returned to their coun-
tries of origin, or were on their way, leaving in the British zone in Germany
approximately 550,000 who were not immediately repatriable. Of this number
only a relatively small proportion were Jews. Jewish persons receive the same
treatment and facilities as other displaced persons.
Displaced persons iave an absolute priority over the German population in
regard to food, and special efforts are made to provide: a balanced diet. A mini-
mum ration scale of 2,000 calories per day is prescribed, with additions for workers
and other special categories. This is much in excess of what is being received
by the Germans. Frequent levies of clothing for the benefit of displaced persons
have been made on the German population to augment such imported clothing as
has been available. The biggest levy has just been completed and as a result
winter clothing is now being issued to displaced persons. Every effort is made
to provide adequate protection against the cold. Deficiencies still exist, particularly
in blankets and men's overcoats, but steps are being taken to make good the
shortages.
Displaced persons are accommodated in areas known as assembly centers, which
often consist of blocks of houses requisitioned from the German people. Other
assembly centers consist of large well-fitted barracks or camps. Inevitably, given
the general shortage of accommodation in the heavily bombed German cities, some
assembly centers are overcrowded, but the standard of living space laid down as
the minimum for displaced persons is higher than that allowed for the German
population. The movement of displaced persons to specially selected winter
accommodation started in October last and is now practically complete.
Prominence has been given to conditions which exist in what has been called
"the notorious Belsen Camp." This camp was in fact destroyed by order shortly







Question Time in the House of Commons 839

after the British troops arrived. The only assembly center near the site is that at
Hoehne where a large number of displaced persons, among them 9,500 Jews, are
accommodated. Hoehne assembly center consists of large brick barracks formerly
occupied by S.S. troops who, under the Hitler regime, received special treatment
and accommodation. Many displaced persons who have been transferred from
Hoehne to other assembly centers have asked to return.
The center is run by the British Red Cross Society under the direction of a
relief detachment of the military authorities. The Jewish displaced persons
maintain their own guards, workshops, recreation rooms, and sick-bay, and organ-
ize their own working parties and administration. The hospital is administered by
UNRRA. There is an adequate supply of medicine and the hospital is well fitted
and well run. Included in the staff are some German doctors and nurses who
work under the direction of UNRRA doctors. Each displaced person has at least
two blankets, as have all displaced persons in assembly centers, and all have
received a fresh outfit of clothing since leaving the Belsen concentration camp.
There is no censorship of newspapers within the center and complete freedom
of movement in and out of the camp is permitted. No restriction is placed on
Zionist activities. Contrary to statements which have been circulating in the Press
overseas there was no disturbance at this center on November 15th. Nor has there
been a disturbance at any other time. The facts are that recently a procession of
Jewish displaced persons from the center marched to the office of the military
government detachment to present a resolution to be passed to the British authori-
ties. The commanding officer of the detachment accepted the resolution for
onward transmission. There were no incidents and no arrests and the acting
president of the Jewish committee at the center reports that he has had no com-
plaints about the procedure.
The following food scale is in force:
2913 calories per day for nursing and expectant mothers.
2849 calories per day for workers.
2161 calories per day for non-workers and children.
Ex-enemy nationals, including many Jews, who have been persecuted because
of their race, religion or activities in favor of the United Nations, provided
that their loyalty to the Allies has been established, are treated similarly to United
Nations displaced persons. Those who were at one time at assembly centers and
have left voluntarily have been given ration books, enabling them to draw the
higher scale of rations appropriate to medium heavy workers. The large number
who are scattered as individuals throughout the British zone and live voluntarily
as part of the indigenous population cannot readily be traced, and the administra-
tive difficulties are such that it is not yet possible to provide them with the material
benefits that are available at the centers. The local British authorities have this
matter under consideration and are endeavoring to overcome the difficulties.
Miss Rathbone: While thanking the hon. Gentleman for his in many ways
reassuring report, though there are still admitted deficiencies, may I ask him
whether he will consider whether it would not help to forestall criticisms, whether
justified or unjustified, if he would follow the example of the President of the
United States by appointing a Jewish adviser to the Military Government in our
Zohe similar to the appointment of Judge Rifkind who has been appointed Jewish
adviser in the American Zone?
Mr. Hynd: I am afraid it would be impossible to take any measures which
would forestall criticisms which are unjustified, and which are in this case delib-
erately fabricated. I am already considering the appointment of Jewish advisers.
,So far as the second part of the hon. Lady's supplementary question is concerned,







British Speeches of the Day


in regard to Jewish welfare workers in the camps there are already Jewish welfare
workers on the staff of UNRRA who are now taking over control of these
camps. I have had no complaint of a shortage of Jewish personnel with UNRRA.
If there are such complaints I shall be glad to consider them.
[December 20, 1945]


THE JOURNAL OF THE
PARLIAMENTS OF THE EMPIRE
The Journal of the Parliaments of the Empire is a quarterly publica-
tion issued by the Empire Parliamentary Association, giving a summary
of the proceedings of general interest in the various legislatures of the
British Commonwealth. It provides not only an account of the views of
representatives of various parties in the different Parliaments on inter-
national affairs and other important subjects, but also an account of
legislative enactments of general interest. It thus provides information,
in a condensed form, on legislation and the points of view of leading
men in various parts of the British Commonwealth upon many matters
which are of common interest to those in the United States of America
who are concerned with parliamentary and international affairs.

The Journal is obtainable in North America from the Oxford Uni-
versity Press, 480 University Avenue, Toronto 2, Ontario, Canada. Price:
$1.25 per copy, plus postage, $5 per annum post free.














"HANSARD"

OFFICIAL REPORT
OF
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150
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Obtainable from
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NEW YORK 20, N. Y.

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OTHER MATERIAL AVAILABLE FROM
BRITISH INFORMATION SERVICES INCLUDES:

Labor and Industry in Britain. Monthly. Free on applica-
tion.

Information papers on British affairs covering rehabilitation,
education, farming, industry, government in the British
Colonies, etc., may be obtained free on application.

Also, free on request:
Britain and Tomorrow (Official Statements).
Post-War Planning (Unofficial Statements).
Wartime Planning for Physical Reconstruction.
British Health Services Today.
The British Constitution.
Britain Against Germany, 1939-1945: A Record in
Pictures.
Britain's Future in the Making (illustrated).
50 Facts About India (illustrated).
African Challenge (illustrated).

For catalogue of Films available, terms of hire, etc., apply
to any office of British Information Services.

Material published by British Information Services will be
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