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Title: British speeches of the day
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2o8--5













INDIA: THE TRANSITION TO
SELF-GOVERNMENT

HOUSE OF COMMONS, March 5, 1947

The President of the Board of Trade (Sir Stafford Cripps): I beg to
move,
"That this House takes note of the Statement on India made on 20th February
by the Prime Minister and approves the policy set out therein."
The recent statement of His Majesty's Government on India has, rightly,
been received as one of the greatest importance, not only to this country
and to India but to the whole future of orderly and peaceful government
of the world. It is not necessary, I think, for me to recapitulate in detail
the various stages in our long history of association with the Indian people,
throughout which we have traveled constantly-though with varying speed-
towards the final and inevitable stage of Indian self-government. The
British people have, by precept and example, done much to inspire the
Indians to go forward to achieve their own self-governing democracy.
Strange though it may now seem, an Englishman, Mr. Hume, who has been
called the "father of the Indian Congress," largely inspired that body in
its origins in 1885, when it was first established.
Our own constant reiteration of the advantages of the free methods of
democratic Government have certainly encouraged the Indians in the de-
velopment of their own national ideal. Even before the war in the years
preceding the Act of 1935, the tempo of advance towards' self-government
had accelerated and a very marked forward step was taken with the setting
up of democratic self-government in the Provinces under the provisions of
that Act of 1935. Not unexpectedly, and indeed according to the rule in
these matters, the very fact of granting extended powers of self-government
in itself brought about a demand for further acceleration. As the French
say, l'appdtit vient en mangeant-appetite grows with eating. That appe-
tite was developing rapidly before the war and led, unfortunately, to many
sharp differences between the British Government and the peoples of India.
When the war came, the stability of our continued control of India was
obviously threatened. In the circumstances of the war, the keen Indian
nationalist saw an opportunity to expedite the process which seemed to
him--
Mr. Boothby (Conservative): On a point of Order. I am sorry to
interrupt the right hon. and learned Gentleman, but I would ask you, Mr.
Speaker, whether it is in Order for an hon. Member to peel and eat an
orange during the Debate?
Mr. Speaker: In this Chamber, one does not smoke, one does not chew
gum, one does not eat chocolates and sweets-and one should not peel and
eat an orange in this Chamber, either.
Sir S. Cripps: I was saying that, in the circumstances of the war, the
keen Indian nationalist saw an opportunity to expedite the process which








House of Commons, March 5, 1947

seemed to him to be unduly slow. As in so many other countries in this
war, and, in that feature, following the same lines as in the case of the
First World War, the appeal to fight for democracy and freedom awakened
a strong echo of the desire for their own freedom amongst the ranks of
the nationalists in India; and, at the same time as these ideological argu-
ments were favoring the rise of nationalism, the actual circumstances of
the situation made it more and more difficult, even if we desired to do so,
to continue those measures of control and restraint which formerly had
been available to us.

THE 1942 CRIPPS MISSION
Indeed, it seemed hardly logical or sensible that, where freedom had
been promised, steps should be taken to restrain the advance towards that
very freedom. So it was that, with the consent of all parties in this country,
a policy for the transfer of power in India to the Indians developed under
the wartime Government. Both the statement of 1940 and the offer of
1942 quickened this process for the transfer of power. The substance of
the offer of 1940 was, as the House will remember, recapitulated by the
then Prime Minister in his statement in this House on llth March, 1942,
at the time when he announced the going of a Mission to India on this
matter. If I might quote the Prime Minister of that time, this is what
he said:
"This amounted, in short, to a promise that, as soon as possible after the war,
India should attain full Dominion status, in full freedom and equality with this
country and the other Dominions, under a Constitution to be framed by Indians,
by agreement among themselves and acceptable to the main elements in Indian
national life. This was, of course, subject to the fulfillment of our obligations
for the protection of minorities, including the Depressed Classes, and of our treaty
obligations to the Indian States, and to the settlement of certain lesser matters
arising out of our long associations with the fortunes of the Indian sub-continent."
-[OFFICIAL REPORT, 11 March 1942; Vol. 878, c. 1069.]
Though, in 1940, it was still assumed that self-government would be granted
within the British Commonwealth of Nations, in 1942, with the full ac-
quiescence of the then Cabinet, it was specifically and publicly stated that
the Indian people were entitled freely to elect to go out of the Common-
wealth if they so desired. The offer of 1942 was on the basis of the setting
up of a Constituent Assembly immediately after the war, and, subject to
agreement between the major parties, it, in effect, promised that Indian
independence should be realized as soon as the Assembly had completed
its deliberations. There was thus set a term upon our continued control
of India, so far as we were concerned, though what should be the length
of that term was left in the hands of the Indians themselves to decide.
This offer contemplated that, if the two major communities could not
reach agreement, then it might become necessary to divide India between
them. The possibility of the division of India, failing agreement between
the two major communities, was thus put forward publicly by the British
Government. The proper protection of minorities was made a condition
of the transfer of power, as, indeed, was the negotiation of the Treaty as
to the conditions of transfer. I will read some of the actual words of this







India: The Transition to Self-Government [SIR STAFFORD CRIPPS]

offer, so that the House might keep them in mind, because they are a very
material part of the present situation:
"His Majesty's Government undertake to accept and to implement forthwith the
Constitution so framed,"-
that was, by the Constituent Assembly-
"subject only to:
(1) the right of any Province of British India that is not prepared to accept the
new Constitution to retain its present constitutional position, provision being made
for its subsequent accession, if it so decides.
With, such non-acceding Provinces, should they so desire, His Majesty's Govern-
ment will be prepared to agree upon a new Constitution, giving them the same full
status as the Indian Union and arrived at by a procedure analogous to that here
laid down."
The second reservation was with regard to the signing of a treaty which
would be negotiated between His Majesty's Government and the Constitu-
tion making body:
"This Treaty will cover all necessary matters arising out of the complete trans-
fer of responsibility from British to Indian hands. It will make provisions in
accordance with the undertakings given by His Majesty's Government for the pro-
tection of racial and religious minorities; but will not impose any restriction on
the power of the Indian Union to decide in the future its relationship to other
Member States of the British Commonwealth."
Although this statement and offer was not effective in bringing about agree-
ment with, or, indeed, between, the Indian communities, it did, nevertheless,
have the effect of encouraging all parties in India to look for an early realiza-
tion of their freedom, either by the path of unitary central government or
the other path which envisaged a possible division ....
The majority community did express impatience at what they regarded,
in these circumstances, as the continued veto by the minority, and they
blamed, of course, this reservation upon the British Government. This
impatience led to the widespread civil disobedience movement that occurred
in the autumn of 1942, and to the drastic action which was taken to suppress
that movement.

FACTORS AT WORK SINCE 1942
There were other factors at work. The exigencies of the war situation
were such that it was not possible for the British Government to continue
with the recruitment of Europeans for the Secretary of State's Services,
while, at the same time, there was, of course, a great increase in the Indian
Forces, accompanied by a rapid Indianization of their officer cadre. This
meant that, side by side with the growing demand for an acceleration of the
transfer of power on the part of all parties in India, there was an obvious
and inevitable weakening of the machinery of British control through the
Secretary of State's Services. It was, of course, through these Services that
British control had been exercised in the administration of Indian affairs.
They had been supported in extreme cases by the Indian Army under
British command and with a large percentage of British officers, and by
British troops stationed in India. In the last resort, British responsibility
was exercised by Parliament through the Governor-General and the Gov-
ernors, who could dismiss the Indian Government if it failed to carry out
its functions under the Act of 1935 and then take over control under

171







House of Commons, March 5, 1947

Section 93, using, of course, for that purpose, as the main support of the
administration, the Secretary of State's Services who look to the British
rather than to Indians for their future advancement, livelihood and
pensions.
After the offer of 1942 had been rejected by the Indian parties, it was
repeatedly stated by the Coalition Government that it still remained open
for acceptance. There was, therefore, the continuing prospect of a Con-
stituent Assembly meeting immediately after the war, with the almost in-
evitable sequel that, if the Assembly could agree upon a new Constitution,
it would be adopted, and so India would have her freedom. In the face of
this developing situation, and the knowledge that the Secretary of State's
Services were diminishing in strength, it was not possible, even if it had
been thought desirable, to take steps to reinforce those services, because of
the war situation which then existed.
It must be remembered that those Services were manned both by Eu-
ropean and Indian officers in the proportion, roughly, of one to one. At
the end of the war, a very considerable number of time-expired officers
were being kept on, who, at best, had only a short time in which they could
be called upon to serve, and who were being held at their stations by war
emergency regulations. So far as the Indian officers were concerned, who,
presumably, looked forward to a continuing career in the administration,
despite any transfer of power, they, naturally, began to look more and more
to those Indian parties which would, in the future, hold power, rather than
to the British, who had announced their willingness to hand over power.
All those officers, European and Indian alike, were most loyal in their
service, but they were, obviously, placed in a very difficult position when
the Indian majority leaders had a clash with the Central Government, as
they did in the early part of 1942, or when the views and methods of Indian
Ministers ran counter to those of the British elements of the administration.
In June, 1945, the British Government, realizing the strain that had been
brought upon the Secretary of State's Services during the war, launched a
scheme under which recruitment could take place, of both Indians and
Europeans, to fill the gaps that had occurred, or were anticipated. After
the change of Government in July, 1945, it became abundantly clear that
Indian public opinion was against any such fresh recruitment, and, later,
that there was a very strong opinion in favor of winding up the Secretary
of State's Services altogether. Accordingly, in June, 1946, it was finally de-
cided to abandon any such further recruitment, in circumstances to which
I will refer when I come to that period of time. When the present Govern-
ment, therefore, came into office, they found themselves already committed
by these accumulated influences and facts, to which I have referred, to a
course of action which was entirely consistent with the avowed policy of
the party they represent, that is, to give freedom to India as soon as the
Indians should be able to decide upon a new Constitution.
Immediately, therefore, the processes necessary to arrive at that decision
upon the Consitution were put into operation. Provincial elections were
arranged, and, as soon as they had been held, new democratic Provincial
Governments came into being, and, for the first time since the beginning
172







India: The Transition to Self-Government [Sm STAFFORD CRIPPS)

of the war, the full strength of the rival communities was made dear, and
it became apparent that Indians had ranged themselves substantially upon
a communal basis behind the Congress, on the one hand, and the Muslim
League on the other. Even before those elections were concluded, the
Cabinet Mission had left for India. By this time, however, there had been
a serious deterioration in Indian-British relations, so that the first job of
the Mission was to convince the Indians of the sincerity of the intention of
the British people, and nothing contributed more to the improvement in
relations that subsequently took place than the Prime Minister's statement
in this House on 15th March last.
THE MINORITY QUESTION
The resolution of the Indian problem was not then possible, in view
of the extreme tension which existed between the communities, and, so
long as the minority could thwart the majority at every turn, by exercising
a veto which we were prepared to accept as absolute, there did not seem to
be any solution. In his statement, the Prime Minister used these words:
"We are very mindful of the rights of minorities, and minorities should be able
to live free from fear. On the other hand, we cannot allow a minority to place
a veto on the advance of the majority."
That made it clear, I think for the first time, that the majority could not
be indefinitely held up by the minority, but, on the other hand, that the
majority would have to take fully into account the position of the minority.
Speaking further on that occasion on the minority question, my right hon.
Friend added these words:
"I am very well aware, as we all are, of the minority problems in India, and I
think that Indian leaders are more and more realizing the need for settling
them if India is to have a smooth passage in future years. I believe that due
provision will be made for that in the Constitution, and my right hon. Friends"-
referring to the Cabinet Mission-
"in their conversations, will certainly not neglect the point. We must, however,
recognize that we cannot make Indians responsible for governing themselves and,
at the same time, retain over here responsibility for the treatment of minorities
and the power to intervene on their behalf."-[OFFICIAL REPORT, 15th March, 1946;
Vol. 420, c. 1422-1423.]
I quoted that passage to make clear that it was definitely stated that the
protection for minorities must fall within the Indian Constitution, and
could not come from outside. That statement by the Prime Minister met,
I think, with almost unanimous approval, both in Parliament and in the
country.
THE 1946 CABINET MISSION
The story of the Mission's efforts in India has already been fully re-
counted to the House. I will only remind the House that, when they left
India, the idea that this country was not sincere in its desires to see Indian
self-government speedily realized had, very largely, disappeared. During
this period, between July, 1945, when the present Government took office,
and July, 1946, when the Cabinet Mission returned from India, it would
have been most undesirable, and, indeed, wrong, to have restarted Euro-
pean recruitment to the Secretary of State's Services. I can imagine no
action which would more certainly have convinced the Indians of our lack
173







House of Commons, March 5, 1947
of sincerity if, with one hand, we had offered them self-government, and,
with the other, recruited Europeans to carry on the British Raj.
It certainly would have rendered impossible the task of the Cabinet
Mission, which met with a considerable measure of success. At least some-
thing very near agreement was reached on the scheme for a Constituent
Assembly-something far nearer agreement than had ever been reached be-
fore. We had, as -disinterested friends, succeeded in bringing the two major
Indian parties much nearer together. It is true that we had not succeeded
so far as an Interim Government at the Center was concerned, but the
attempt was not for that reason abandoned, and within a few months such
a Government was at last formed-a thing which many people had con-
sidered to be quite impossible in the circumstances.
Almost immediately after the Mission had left, some very unhelpful
speeches were made by Indian leaders, which whipped up the excitement
already engendered by the complicated and long drawn out negotiations
and by the ever nearing prospect of power passing into Indian hands, and
this brought about a sharpening of the communal conflict in the country
which, most unfortunately, and, indeed, disastrously, led to the breaking
out of mass violence in Bengal, Bihar and Bombay, as the House knows.
At this time there were Indian party governments in the Provinces respon-
sible to their Legislative Assemblies, and a Coalition Indian Government
at the Center, and one of the first questions taken up by those governments
last autumn was the discontinuance of the Secretary of State's Services, as
I have mentioned. They felt that if they were to be responsible for the
future administration of India within some reasonable period of time, the
sooner the dual loyalty to the Secretary of State and the Indian Govern-
ments was brought to an end the sooner they would be able to settle down
to a stable form of administration which would accord with the future
state of India.
When the Cabinet Mission was in India we had, naturally, discussed this
problem of the Services and their automatic running down with those
responsible for their maintenance, and we had then explored the possibility
of their temporary reinforcement, as I mentioned earlier. It was made clear
to us-and we accepted and took responsibility for the decision-that no
short-term scheme could yield effective or valuable results, because the
crucial period was immediately ahead, and that for that period new or
emergency entrants could not contribute anything, especially in the very
difficult and tangled political atmosphere that then existed. So this com-
mitted us to a continuation with the existing Services under conditions, so
far as the Indian personnel were concerned, such as I have already described
to the House. We were, of course, at the same time demobilizing British
Armed Forces as rapidly as was possible, and, I may say, under heavy pres-
sure from all sides of the House of Commons, and that meant that the num-
ber of British troops which could be left in India and the East was being
rapidly diminished from the wartime level.
At the same time, the Indianization of the Indian Army was proceeding
more rapidly than ever, latterly under the directions of an Indian Defense
Member of the Interim Government. It was in these circumstances after
174







India: The Transition to Self-Government [SIR STAFFORD CBRPPS]

the decision of the Muslim League not to join in the Constituent Assembly,
and their failure to reverse their decision on entering the Interim Govern-
ment, that we invited their representatives and those of Congress to come
to this country with the Viceroy at the beginning of last December.
Though the conversations which then ensued produced no decisive result,
we hoped that they might result in a lessening of the differences between
the two communities and make it easier for the Muslim League, which was
the only British Indian element then standing out, to join the Constituent
Assembly. As a result of this meeting, we put out our statement of 6th
December, and there can be no doubt that as the result of that statement
there has been a narrowing of the gap between the two parties. The Con-
gress accepted that statement, but included within their resolution of ac-
ceptance words which the Muslim League considered still to contain some
reservations. It is, no doubt, unfortunate, and certainly unpremeditated,
that just at the moment when the Muslim League was about to reconsider
the situation with a view, possibly, to coming into the Constituent Assembly
at Karachi, events in the Punjab boiled up, leading to a clash between the
non-Muslim League Punjab Government and the Muslim League. We can
only hope that tolerance and good sense will bring about some settlement
of a very difficult and complicated matter. This is just another one of those
factors which make it so difficult to predict the course of events in a complex
situation such as exists politically in India today.
However difficult prediction may be, the facts have to be faced and dealt
with when they arise. At the end of January, almost contemporaneously
with the refusal of the Muslim League to reconsider their position in rela-
tion to the Constituent Assembly, following upon the result of the Congress
resolution upon the British Government's statement of 6th December, came
the demand by the non-Muslim League members of the Interim Govern-
ment that the Muslim League members should withdraw. That demand
was based upon the proposition that the Muslim League representatives had
been invited to join the Interim Government on the basis of the Muslim
League taking its place in the Constituent Assembly. That proposition
accorded with the facts of the case, and had at the time of the invitation
been communicated by the Viceroy to the leader of Congress. It is true that
in their acceptance of office in the Interim Government, the Muslim League
did not expressly accept this condition, but it was assumed by those con-
cerned that as they had not repudiated it they would consider themselves to
be bound by it. Whatever may be the rights or wrongs of that situation,
it does not seem to His Majesty's Government to be wise to precipitate a
decision upon it so long as there is any hope of all parties meeting in the
Constituent Assembly and working side by side in the Interim Government.

TRANSFER OF POWER
It was in these circumstances which I have detailed, I am afraid, at some
length-I think it is necessary for the House to have them in mind-that His
Majesty's Government had to consider what action they should take to try
to smooth out the difficulties of the transfer of power in India, and that
was a very difficult decision to take. It seemed essential that we should not
175







House of Commons, March 5, 1947


lose the initiative and that we should not hesitate or adopt a policy of inde-
cision. There is, I believe, nothing worse in such a situation than tempo-
rizing or delaying for the sake of delay. What, then, were the alternatives
which faced us? Those alternatives were fundamentally two, though both,
of course, might be subject to minor variations: first, we could attempt
to strengthen British control in India on the basis of an expanded personnel
in the Secretary of State's Services, and a considerable reinforcement of
British troops, both of which would have been required, so that we should
be in a position to maintain for as long as might be necessary our adminis-
trative responsibility while awaiting an agreement amongst the Indian com-
munities. Such a policy would entail a definite decision that we should
remain in India for at least 15 to 20 years, because for any substantially
shorter period we should not be able to reorganize the Services on a stable
and sound basis.
The length of period necessary would be determined by the considera-
tion that the Indian members of the Secretary of State's and other adminis-
trative services should look to us for their future career and prospects rather
than to the Indian leaders, to whom we should undoubtedly, under those
circumstances, find ourselves in opposition if we were to declare our inten-
tion to stay for such a period of time. The second alternative was, we could
accept the fact that the first alternative was not possible, and make a further
attempt to persuade the Indians to come together, while at the same time
warning them that there was a limit of time during which we were prepared
to maintain our responsibility while awaiting their agreement. One thing
that was, I think, quite obviously impossible was to decide to continue our
responsibility indefinitely-and, indeed, against our own wishes-into a
period when we had not the power to carry it out. Those were the alterna-
tives, and the only alternatives, that were open to us.
In pointing out these two alternatives, I must refer to the opinions ex-
pressed by two noble lords, who have both had long experience as Viceroys
of India. Both of them-one speaking recently in another place and the
other speaking a few months ago-have stressed the reality of these two
alternatives, and have stated that in their view there is no third alternative.
Though neither of them professes to like either alternative, they are both
driven to the conclusion that we must choose between them; and the very
remarkable speech of the noble Lord, Lord Halifax, in another place made
it clear why he could not oppose the decision arrived at by His Majesty's
Government. The first alternative we had no hesitation in putting aside.
It would be contrary to all we have said, and to the policy of this country,
to prolong our stay in India for more than a decade against the wishes of
the Indians-and there can be no shadow of doubt that it would be against
their wishes. It would be politically impracticable, from both a national
and an international point of view, and would arouse the most bitter ani-
mosity of all parties in India against us.
Even if we had been prepared to make available the extra troops that
would be required to deal with opposition by the Indian people over that
period of years, it is certain that the people of this country-short as we are
of manpower, as we all know-would not have consented to the prolonged







India: The Transition to Self-Government [SIR STAFFORD CRIPPS]

stationing of large bodies of British troops in India, for a purpose which
was not consistent with our expressed desire that India should achieve self-
government at as early a date as possible. Such a decision would, as I have
said, have met with the hostility of all Indian communities, as indeed has
been shown by the reaction to the statement the other day. We should,
therefore, have had to rule India through the Governor-General and the
Governors without any representative Indian Government. We therefore
ruled out the first alternative, as both undesirable and impracticable.
We were left with the other alternative, and we had to consider the form
in which that alternative should be expressed, consistently with our pre-
vious promises, and to consider particularly the time limit we should set
beyond which we could no longer reasonably be asked to accept respon-
sibility for the Government of India, for the reasons that I have already
stated-that we should not have the power to carry it out. It will be remem-
bered that it had already been decided at an earlier date, as I have men-
tioned, that it was impossible to alter the situation by building up again the
Secretary of State's Services for a short temporary period. We were therefore
faced, either with the permanent building up which I have mentioned
under the first alternative, for a considerable term of years, or with specify-
ing some terminal date beyond which we should not be willing to continue
our responsibilities.
So far I have dealt with this problem from the British point of view.
But we were, of course, equally concerned to do our very best for India,
and to enter upon this new phase of our long association with that great
sub-continental area in a way that was worthy of our people and of the
enlightened policy that they had followed. We were therefore determined
to pursue our co-operation with the Indian communities, and to make every
effort to assist them to come to an accommodation between themselves. We
took the view that the fixing of a definite term, during which they must
either come to an agreement to set up a united independent Government
for all India or else break up the country into smaller and weaker units,
should provide the strongest inducement to them to sink their differences
and to act together. It seemed to us that, as it was clearly impossible to
contemplate an indefinite stay in India-under constant pressure to side
with one or the other party in the communal dispute-we must, in fairness,
tell all parties when the time would arrive by which they must have settled
their own differences or risk a clash of forces and communities, in which
we should take no part. It is not right that we should allow ourselves to be
put in the position of imposing the will of one community upon the other
by the exercise of force; whether it is the majority or the minority does not
matter. The facts of the situation are certainly hard and difficult, but they
have to be faced. They flow, as I have tried to show the House, not from any
sudden and hurried decision, but from the whole historical development
of the Indian situation, particularly having regard to the six years of war
which have latterly intervened.
On more than one occasion I have ventured to point out to the House
that we are making a tremendous experiment in the methods of peaceful
progress in attempting to hand over power in a Continent of 400 million
177







House of Commons, March 5, 1947

people, without any use of violence. In the course of that great civilizing
experiment we have had constantly to take risks. I do not think any of us
would claim that we have always been right; we have, nevertheless, done
our best, we have gone a long way in the direction upon which we are all
agreed, and we have now reached the final and most critical stage. We still
have to take risks as to the effect of our actions, both upon ourselves, upon
India and upon the rest of the world. But there are two principles by which
I am convinced we should be guided. We must not let the fear of difficulties
prevent us from doing what we believe to be right; and we must not fail
ourselves or India through lack of decision at a critical moment. In giving
up our control in India, we want to do our utmost to co-operate with the
Indians of all parties and communities through these final stages of the
realization of their freedom.
We, therefore, decided to state frankly and openly to the Indians the
latest date to which we can reasonably be asked to accept responsibility for
the Government of India, in order that they might have the opportunity,
to which they are most fully entitled, to arrange how best they shall prepare
themselves for that time. It is suggested we might have fixed a later date,
as being more convenient, and as giving more ample time to carry through
the Constitution making. But if the Indian communities failed to agree,
could we have been in any way certain that we should have been able to
discharge our responsibilities after that later date? We arrived at the deci-
sion as to the date upon the best advice that we could obtain. The fixing
of the date of June, 1948, constitutes, therefore, an honest and frank accept-
ance of the facts of the situation. We are convinced that, if the Indian
parties at once set themselves to the task, they can arrive at a decision upon
their new Constitution by the date named, or, at least, agree upon an
interim national Government to. which we can hand over power at that
time, even if the whole process is not absolutely completed. The House
will appreciate that there are certain inescapable facts, arising out of the
past circumstances, which must condition our action today, and it is of no
use wishing that they were other than they are.

THE INDIAN STATES
There will be, I have no doubt, a number of questions as to the form
of the statement, and as to its effect upon different sections of the Indian
peoples, and so forth, and I will try before concluding, to deal with one or
two of the more important of those. First, let me deal with the Indian
States. As we have repeatedly stated, there is no intention of handing on
our rights and obligations under paramountcy to anyone else. When we
transfer power in British India, the rights and obligations of paramountcy
will lapse. We are very glad to see that the beginnings of an agreement have
been reached between the representatives of the Princes and the members
of the Constituent Assembly, as to how the former shall join in the delibera-
tions of that Assembly. Such a joint working out of the problems of the
future relationships of the States to what is now British India, is, of course,
the only wise and sound course. We have envisaged in the statement that
some States may wish, in these final stages of paramountcy, to adjust or
178







India: The Transition to Self-Government [SIM STAFFORD CRIPPS]
modify their position vis-a-vis the paramount Power, and we have stated
that we are prepared to agree to such modifications where they are necessary
and reasonable. But such modifications will not, of course, in any way
determine the future relationship of the States to the rest of India. It is
purely a matter of transitional convenience.

THE PROBLEM OF A CENTRAL GOVERNMENT
The next question arises out of paragraph 10 of the statement. It has
been stated by some that this paragraph is unduly vague. To whom, it is
asked, do we hand over power if, by the due date, a new Central Govern-
ment for all British India has not been constituted by a fully representative
Constituent Assembly? We shall certainly, of course, in the first instance,
do all in our power to encourage the formation of such a Government as
put forward by the Cabinet Mission, and in accordance with the procedure
which they suggested. But, if this proves impossible of realization, and
there is no such Central Government in being or in prospect when the time
comes for us to take a decision, then we shall be forced to choose, in the
light of the existing circumstances at the time of our decision, the most
appropriate government or governments to which to hand over power.
We have said in our statement that it might be the then existing Provincial
Governments, as was suggested in the offer of 1942; or it might be some form
of combined government for parts of India, depending upon what seems
best and most helpful for the future of India.
In our statement of 6th December we stressed the fact that, if a large
section of the Indian population had not been represented in the Constitu-
ent Assembly, we could not accept the forcing of unwilling Provinces into
a united Indian Government-if, in the making of the Constitution, they
had not been fully represented. To that principle, which has, we under-
stand, the assent of Congress, we adhere; and if it should eventuate that a
large group of Provinces-but not all-agree upon a form of Constitution,
then it may be necessary to hand over separately, in the areas which have
not been fully represented in the Constituent Assembly. We shall have to
consider in what way this can best be done, so as to meet the best interests
of India. The position is at present sufficiently uncertain to make it impos-
sible now to forecast what will then be the wisest action to take, when the
time comes to make a decision. The only way to remove that uncertainty is
to get the agreement of the Indian Communities as to what it is they wish
us to do. We can hardly be accused of vagueness and uncertainty when the
Indian communities themselves cannot come to any common agreement
upon which we can act.
What I have already said covers, to some degree, the position of minori-
ties and their protection. But, in addition to that, there are the provisions
which the Cabinet Mission laid down in accordance with the promise of the
Prime Minister, which I have quoted, on 15th March last, that this matter
should, so far as we could influence it, be dealt with in the new Constitu-
tion. The Minorities Commission, which has now been set up to advise the
Constituent Assembly as to the proper measures of protection to be incor-
porated into the Constitution will, we hope and expect, make full provision
179







House of Commons, March 5, 1947

for minority protection. It is to be noted that all the minorities are repre-
sented in the Constituent Assembly and the Minorities Commission. The
only gap is that left by the Muslim League, who would not thank anybody
for calling them a minority. We believe that, judging by the way matters
are proceeding, there will be ample protection for minorities in the new
Indian Constitution. That is the only way in which effective protection
can be given, for they must, ultimately, rely upon the tolerance of their own
fellow Indians for their safety and freedom. There will be nothing any out-
side power can do, if there is intolerance or unfair treatment.

FUTURE RELATIONSHIP BETWEEN GREAT BRITAIN AND INDIA
There is one further question which must, I am sure, be in the mind of
every Member of this House, and that is: What of the future relationship
between Great Britain and India? The Government have always stressed
the fact that we in this country would welcome India as a partner in the
British Commonwealth of Nations, but we have equally emphasized the
point that we do not seek unwilling partners. If the Indian people wish it,
we shall be only too glad to see them associated with the British Common-
wealth of Nations, and we believe that from that association they, like our-
selves and the other Dominions, would derive great benefits. But there is
something more important and precious than any such formal association,
and that is the continued friendship between the two countries, which can-
not grow and flower in an atmosphere of restraint. Friendship must be
freely given, and not forced, or held by chains of power. It has always
seemed to me a profound mistake to believe that we could accomplish a
mutually advantageous relationship with India by continuing our control
over that country against the will of the people, in however modified a
form. The only true basis for our future friendship is absolute freedom of
choice on both sides, and I believe that this latest statement of His Majesty's
Government marks the final clearing away of those influences which have
militated against a full and free friendship in the past, and that it is, there-
fore, a great and valuable step to our continued close and friendly relations
with the free India of the future.
The most statesmanlike views which were expressed by Pandit Nehru a
day or two ago, and which have been echoed by many others in India, prove,
I think, the value of His Majesty's Government's decision in strengthening
the ties of good feeling between the Indian and British peoples, and I trust
that that same statesmanship may find ways and means of bringing about
agreements between the Indian communities. It must be obvious, I think,
to anyone who objectively studies the present situation, that there is really
only one way in which all these various difficulties can be overcome, and
that is by the co-operation of the Indian parties. It is their problem, and
for it they alone can find the solution.
We shall continue during the time that we remain in India to do all
that we can to assist, and we believe that this latest statement that we have
made of our intentions will do something to help to bring the Indian com-
munities and their leaders face to face with the realities of the situation, and
the urgent necessity for coming to a decision amongst themselves. Time is







India: The Transition to Self-Government [Sm STAFFORD CIPPS]

short, and the matter brooks no delay. These next few weeks must be
decisive of the future of India, and the happiness of its 400 million inhabi-
tants. Whatever may have been the misunderstandings and the differences
which have divided the Indians and the British Government over the past
few years, and whoever may have been at fault, we have now made it
abundantly and inescapably clear that we intend, by June, 1948, to with-
draw our control of India, in favor of that freedom which Indians of all
communities have persistently demanded.

THE FUTURE FATE OF THE INDIAN PEOPLE
During the next 16 months, we have agreed to remain while they reach
their final decision, which must, as I have said, determine, for better or
worse, the future fate of the Indian people. In this final period, a new
Viceroy is going out, Lord Mountbatten. He has, with great public spirit
and self-sacrifice, accepted a task which no one will envy. I am certain that
everyone in this House, whatever his views may be upon the policy of the
Government, will wish him well, and will hope he may find a ready response
amongst the leaders in India. Our whole policy and action have been based
upon the acceptance of the Indian claim that Indians are worthy and fit for
self-government, and anyone who has the privilege of knowing their leaders,
would not for a moment doubt that claim. They have their own difficulties,
which are, indeed, great; they, too, find themselves enmeshed in the tangled
skein of their own historical development. It is only by acts of real states-
manship on all sides that they can free themselves from their own internal
antagonisms. Their problems cannot, I am convinced, be solved by the
use of force. No stable future can be built on the foundations of civil strife.
I would, therefore, urge upon the Indian leaders, with all the force and
sincerity at my command, that they should seize this, the last and greatest
opportunity for supreme statesmanship, through which they may bring
happiness and prosperity to their own people, and show the world that they
can not only solve their own internal problems, but make a great contribu-
tion to world progress. Over the last year, they have, despite all the diffi-
culties and bitter feelings, come much closer to an agreement upon how the
future Constitution of India shall be worked out. Both sides have moved
forward to meet one another, and each must still make a small advance
in order that they may definitely come together in agreement. Now is the
time when the wider good of all India, throughout which both communities
are widely dispersed, must take precedence over the narrower claims of single
communities or single parts of that great continental area. If only they will
come together in both the Constituent Assembly and the Interim Govern-
ment, with a determination, while respecting one another's rightful claims,
to co-operate in the working out of the new Constitution in a form suitable
to the diversity of their religions and races, then they will be able to lead
India into paths which will avoid the horror and the tragedy of internal
strife, and.allow her to develop her great resources, through peace into pros-
perity, to the unending benefit of all her peoples, whether Hindus or
Mussulmen. [Hoe of Common Debates]
[House of Commons Debates]










BRITAIN'S ECONOMIC SITUATION
HOUSE OF COMMONS, March 10, 1947

The President of the Board of Trade (Sir Stafford Cripps): I beg to
move,
"That this House welcomes the laying before Parliament of a survey of the
nation's requirements and resources for the year 1947, is concerned at the serious-
ness of the situation disclosed, and will support the Government in all practical
measures taken in co-operation with all sections of the people of the country to
overcome the difficulties and to make secure the foundations of our industry so as
to provide a high standard of living for our people."
In laying before the House The Economic Survey for 1947 set out in
the White Paper, Cmd. 7046, it will probably be convenient to Members if
I follow broadly the arrangement of the White Paper itself. This falls into
three parts: First, the principles of and the machinery for economic plan-
ning in this country; second, the achievement of the first 18 months of peace
up to December, 1946; and, third, the situation in 1947. But before coming
to these three parts, I think it is necessary to say a word or two about the
general setting in which we approach our economic problem, and it is, in
particular, essential to bear in mind two antecedent periods-first, of course,
the war years, and, second, the period between the two wars. That is the
latest period during which we experienced what might be termed normal
peacetime economy. I am sure it is not necessary for me to stress in any
detail the effects of the six years of total war upon our peacetime economy.
It has been equally serious upon our internal and external trade.

THE LEGACY OF THE PAST
Internally, many of our civilian industries were heavily concentrated.
Their factories were taken over for wartime use, their labor forces were dis-
persed, and there was no new entry of young persons who could be trained
up to the required degrees of skill. Our transport and communications suf-
fered from lack of maintenance and renewal, piling up a huge backlog
which must be dealt with now. Wartime industry absorbed vast quantities
of labor, and the whole balance of our industries was completely changed
from its peacetime pattern. The great destruction by bombing of houses,
factories, docks, storehouses and other buildings left us acutely short of
every kind of building, and with an enormous volume of repairs to carry
out, apart altogether from the deferred maintenance which was postponed
during all the war years. In our industries we had not only been unable to
provide new and up-to-date machinery and equipment during those years,
except where it was required for war production, but we had been unable to
maintain the old machinery, much of which was worn out by long use.
These and other direct effects of the war-a part of the price we willingly
paid for victory-presented in themselves a very difficult task if we were to
put them to rights in a reasonably short period of time.
In the matter of our external trade, the effect of the war was equally
severe. During the latter part of the war our exports were cut to ribbons.







Britain's Economic Situation [SIR STAFFORD CRIPPS)


We were forced to abandon a great part of our overseas markets so as to
concentrate upon war production, with the result that at the end of the war
when Lend-Lease had to be discontinued we found ourselves with exports
that could hardly pay for one-third of our then reduced standard of imports.
It was in those circumstances that we obtained the lines of credit from the
United States of America and Canada because the commodities we were
bound to have, principally food and raw materials, were not obtainable
from any other part of the world and had to be paid for. Unfortunately,
the position is still most difficult because we are taking 42 per cent of our
imports from hard currency areas, whereas only 14 per cent of our exports
are going to those same countries. In the result, not only are we still ex-
periencing a deficiency of our general balance of payments due to the fact
that we are not yet exporting enough, but there is a special and much
greater deficiency in our dollar balances. That is another direct effect of
our work for victory during the war. It was an inevitable result of the cessa-
tion of Lend-Lease and the devastation of other countries from whom we
had formerly been able to draw our essential supplies.
These internal and external difficulties directly resulting from the six
years of war are, however, only part of the historical background to which
we must look. In the period between the two wars we had not, of course,
fitted ourselves for the great increasing productivity which we now, in
completely changed circumstances, find to be essential to our economic sur-
vival. Nor had we pressed forward with the reorganization of our basic
industries, which were competitively out of date in many respects, especially
in their mechanization. In a condition of continual large-scale unemploy-
ment labor-saving machinery had seemed less necessary; indeed, there was a
tendency to repeat the Luddite cry that machinery created unemployment,
and "rationalization" became a much suspected, and indeed hated word.
The large and continuous volume of unemployment reduced our own
standards of living. Yet we were unable, in accordance with the then
dominant economic theories, to utilize the available labor for the much
needed reconstruction of our industries. It is this industry of ours, with all
its wide diversification in buildings and equipment, that, after a further
six years of war, we are now expecting to be able to expand at an unex-
ampled rate, and in a properly phased manner. There is now a lack of
balance in industry, which has grown out of the war and the inter-war
years. Some industries tend to have more labor than they can fully employ
with the limited supplies of material at their disposal, while others are
short of the labor that is needed to meet their targets when they have ample
supplies of materials. This is partly because during the war we were obliged
to curtail and concentrate many of the industries making particularly con-
sumer goods, in order to put our greatest possible effort into war production.
In the textile and clothing industries, for example, we deliberately cut down
production so as to allow workers to be spared for the production of muni-
tions and for the Armed Forces.
The difficulty of rebuilding the labor force in those industries reflects
the sacrifices that were made during the war. But it also reflects the long
period of depression in the textile industries before the war. We have to
183







House of Commons, March 10, 1947

start rebuilding those industries at a time when manpower is scarce, and
when there are plenty of other opportunities for workers who would nor-
mally enter the textile industries. Even if the textile industries were highly
attractive in their amenities, pay and so forth, they would still have to
contend with a famine in juvenile workers because of the fall in the birth-
rate and the raising of the school-leaving age, and a rather less obvious
shortage which is rapidly approaching in women workers, which can ulti-
mately be traced to the fall in the birthrate in the 'twenties. The same kind
of problem has arisen in coal mining. It is obvious that even if the war had
not come we should have had difficulty in arresting the decline in the num-
ber of coal miners, which everybody took for granted in the years between
the wars. Sooner or later it would have been necessary to call a halt to the
gradual process of wastage, and to increase the share of coal mining in the
number of new entrants into industry.
The reason, I think, why a good many people have been alarmed and
depressed at the facts set out in the White Paper is because they never have
fully realized what effect two world wars within a generation have inevitably
had upon our economy. The First World War struck us a violent economic
blow from which, in fact, we had not fully recovered when we were struck
by the Second World War. We have not been able, in the period between
the two wars, to readjust ourselves to our new economic situation, and the
measure of that failure was the continual mass unemployment from
which we suffered. It is not, therefore, any matter of surprise that we should
emerge from the Second World War-which was both longer in its duration
and more intense in its dislocations than the first-with a more battered and
distorted economy, and one for which the ineffective palliatives that were
tried during the inter-war years would be even less effective.

ECONOMIC PLANNING
Since this Government came into power hon. and right hon. Gentlemen
opposite have often made the suggestion that we on these benches
were unaware of the difficulties that were bound to face the country in this
post-war period, and consequently did not disclose them to the electorate
at the time of the General Election. Now, this is so contrary to the fact
that I should like to dispose of the suggestion by quoting from a broadcast
which I made, during the Election, on 20th June, 1945. I said this:
"While we have been fighting we have been hard put to it, and we shall be after
the war, to get enough produce to support and protect our people. We need the
same determination and self-sacrifice, and the same sense of values that have brought
us through to victory in the war. We know, and we emphasize, the difficulties that
lie ahead. But we know, too, that the ordinary men and women of this country
can overcome them if they will."
We do not depart one iota from those statements, which are as true today
as they were when they were spoken, and were a not inaccurate forecast of
the conditions as we now find them.
Let me turn to the first section of the White Paper, dealing with eco-
nomic planning. The method of that planning must be worked out in
accordance with our own democratic institutions and ideas, and also to fit
the very complex economic structure that has been built up in this country
184







Britain's Economic Situation [SIR STAFFORD CRIPPS]

over the last century. We cannot take a theoretical plan suited perhaps to
some other country and apply it to our own very different circumstances.
We shall work out our own method of planning in the empirical way that
suits our temperament as a people. Hence the somewhat tentative nature
of the machinery that we have so far set up. We must have experience of
planning and its results before we can attempt to finalize the form of the
machinery that we must use. There is one particular drawback from which
we are at present suffering, and that is the lack of accurate statistical
knowledge as to our peactime production and distribution. The last rele-
vant census of production was taken 12 years ago, in very different circum-
stances, and we have never yet had a census of distribution. Though our
wartime statistics were far fuller than any that we had collected before,
they are largely inapplicable to present problems, because they deal with
wartime and not peacetime production. As the House knows, we are trying
to make good these shortages by the Statistics of Trade Bill. But it will be
some years before we can have all those fuller statistics, and in the mean-
time we must do the best we can with what we have got.
Another matter to which I draw the attention of the House is the way
in which the possibilities of planning are determined by the measures avail-
able for enforcing the plan. There is a wide difference between what may
be termed totalitarian planning, and democratic planning. The essence of
the former is that the individual must be completely subordinated to the
needs of the State, even to the extent of depriving the individual of free
choice of occupation. Democratic planning, on the other hand, aims at
preserving maximum freedom of choice for the individual while yet bring-
ing order into the industrial production of the country, so that it may
render the maximum service to the nation as a whole. We are attempting
to make a success of democratic planning, and, save for emergency measures
such as were necessitated by the war, or may be necessitated by some urgent
economic crisis, we have decided, in accordance with what, I am certain, is
the wish of the country, not to employ, as a normal matter, methods of
direction or compulsion of manpower outside the necessities of defense.
We must, therefore, adapt our methods of planning to our means of
control and enforcement. We cannot plan our industries as, for example,
we plan our Armed Forces. In that case, because we positively control the
manpower intake, we can, with accuracy, lay down full details of all the
Services to be available and the exact number of men to be employed in
each. That is a precise and accurate plan, of which an exact estimate of
cost is given in the Service Estimates every year. There is no question of
buyers of the output: there is complete certainty that, one way or another,
it will all be utilized. In planning our industrial production we cannot
have such a strict plan. We must deal in broader classifications, and we
must attempt to guide production into those classifications, not by direct
control of manpower, as with the Services, but with other regulatory con-
trols which are available, such as those of raw materials, capital, investment,
machinery allocation, taxation, and so forth. But, apart from those various
controls, we must also rely upon the individual co-operation of both sides
of industry. It is of the essence of democratic planning that it is, to a very
185







House of Commons, March 10, 1947


considerable extent, dependent for its implementation upon the willingness
of employers and employees to join in working out the plan; and it is to
deal with this sort of democratic planning, as I have defined it, that we have
set up the machinery which is dealt with in the first part of the White
Paper.
THE JOINT PLANNING STAFF
There are two important changes which we are making, on the basis
of our experience up to date, in connection with the reorganization of
economic planning. These are changes since the White Paper. First is the
strengthening of the staff for economic planning, and the second is the
arrangement for ensuring the co-operation of industry in the planning
organization. The foundation of this economic planning work must, of
course, be done in the departments concerned with trade, industry and
economic affairs. In recent months these Departments have been con-
stituting their planning staff. In future, it will be the recognized practice
that each Department will have a whole-time planning staff under a senior
officer, charged with special responsibilities in that field.
The most important development on which His Majesty's Government
have decided is the strengthening of the inter-departmental planning ar-
rangements. They propose, therefore, to appoint a joint planning staff,
somewhat on the lines of the procedure that was so successfully developed
in the war, as, for example, in the joint war production staff. The main
strength of this staff will be departmental planning officers. But it is
essential that the staff should work under effective direction from the
center, and it has been decided to make a new appointment of a full-time
executive head of the inter-departmental planning staff. The man selected
will need to be a man of very special attainments and experience. Each of
the departmental planning officers will have on his staff at least one officer
whose duties are so arranged that, while he does not lose contact with his
own Department, he can devote a considerable part of his time on the
central work of the joint staff. It is contemplated that these assistants will
frequently meet together to work as special groups under the staff. Under
these arrangements, the head of the organization will not himself require to
have any large staff of his own, but he will need a small, picked staff of
persons with programing experience and a small secretariat.
The function of this inter-departmental staff will cover the whole field
of forward planning; but they will also be specially concerned with the
more immediate task of reviewing the program for the rest of 1947 in the
light of developing conditions, so as to weigh up the calls which that pro-
gram makes on productive resources, and to recommend how resources and
requirements can best be brought into balance continually. The inter-
departmental planning staff will, of course, work in the closest relation with
the other central organizations, in particular the Economic Section of the
Cabinet Office and the Central Statistical Office, both of which have im-.
portant contributions to make towards economic planning. The arrange-
ments outlined above are a development or evolution, and will be calcu-
lated to ensure strong direction from the center, where it is needed, without
interference with departmental responsibilities.
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Britain's Economic Situation [SIR STAFFORD CRIPPS)


CONSULTATION WITH INDUSTRY
The second point concerns the arrangements to ensure the co-operation
of industry in the organization for economic planning. There will, of
course, be a very large number of questions on which the Government will
need to consult with the representatives of a particular industry or group
of industries, apart from problems which affect those industries in the plan-
ning of our economic affairs. That will be done, as now, through the
Departments primarily concerned. But, over and above these particular
questions, there are many wider issues on which His Majesty's Government
feel the need of consultation with industry as a whole in regard to economic
planning; and they intend to suggest to the various organizations concerned
on both sides of industry, that there should be a small board representative
of the Government's planning staff and of both sides of industry, which
would meet from time to time throughout the year to follow development of
the plan. The Government recognize that, if they are to get the best out of
our forward economic planning, they must have the help of both sides of
industry in formulating and carrying out the plan. Industry must be
brought into the planning processes at an early stage, and must have before
them the facts which the Government Departments have at their disposal.
They must know the difficulties to be resolved, the gap between demands
and requirements, and the results to our economy as a whole if we fail to
bring the two into line. They must have all this, in order that their help
may be obtained in the formative stage of planning.
As the White Paper states, the planning in the White Paper is based
upon two main sets of facts, first, the actual division of the labor forces of
the country, and second, the allocation to various purposes of the gross
anticipated national income. The total available manpower of the country
is subdivided between the various industries, as far as possible, in accord-
ance with the needs of the nation, and so as to achieve an allocation of the
national income which is to the greatest benefit of the people as a whole.
These so-called budgets are, of course, very different in their nature from
the budgets of the Chancellor of the Exchequer. They are dealing in men
or materials, even though the common denominator can be expressed in
terms of money. They must automatically balance, and if they do not bal-
ance in accordance with some plan, they will, nevertheless, still balance by
deficiencies appearing, perhaps, on the very things of which there is the
most vital need. It is the task of planning to see that those deficiencies,
if they must occur, fall in the least inconvenient places.

RECONVERSION PROGRESS SINCE THE WAR
I now pass to the second part of the White Paper. This records the
achievements of the country during the first 18 months after the end of the
war with Germany, that is, down to 31st December 1946. Looking back to
what was expected and predicted in the spring of 1945, it seems to me that
the technical processes of reconversion have been accomplished more
smoothly and satisfactorily than we then expected. Nearly the whole of that
18 months has been occupied in the reconversion of industry and manpower
from wartime to peacetime tasks. It must be borne in mind, that the dis-
187







House of Commons, March 10, 1947

turbed conditions of the world have been such that it has not been possible
during those 18 months to bring down the Defense Services to peacetime
levels. The occupation of Germany, the troubled conditions in the Far East
and Palestine, and other inescapable demands have meant we could not
reduce the Armed Forces below the level at which they stood at the end of
last year. Despite this factor, we have, during the period, demobilized from
the Forces over 4,250,000 men and women, and from munitions production
upwards of 3,250,000. This process has been carried through with a mini-
mum of industrial disturbance, due to the co-operation of industrialists and
workers, and with only a very small percentage of unemployment over most
of the country, though in the Development Areas the rapid demobilization
of wartime industry has resulted in a higher and, unfortunately, a more
persistent degree of unemployment.
What these 7,500,000 people, returning to peacetime work, have accomp-
lished, after their long absence from production and other jobs they were
doing, can be judged by the levels to which our production has risen over
that period. By the end of 1946 the volume of goods exported had risen to
about 113 per cent of the pre-war figure. Apart from shortages of raw
materials and power, there is no doubt that we should have seen a further
substantial rise in exports in the early months of the present year. So far
as the home market is concerned, we cannot always judge the achievement
in production by the degree of satisfaction of demand, because of the great
increase in demand arising from the higher standards of wages and salaries,
and the accumulated deficiencies of wartime, together with the large war-
time savings. It is quite apparent, too, that the quality standards have risen
generally in the country, which fact is, I think, not unconnected with the
comparatively higher standard which so many people have experienced
during their service in the Armed Forces. This pressure of demand has
meant that even where production has risen well above the 1938 standard,
there is still a shortage of supplies.
Table B on page 34 of the White Paper sets out the comparative produc-
tion of a number of important commodities for the last two quarters of
1946 compared with two pre-war years. Some important articles, particu-
larly in the category of engineering, like motor-cycles, agricultural tractors,
and commercial vehicles, show large increases on pre-war production. The
same can be said of merchant shipbuilding compared with 1938. On the
other hand, textiles, with the exception of rayon yarn, show a large defi-
ciency. The consumption of gas and electricity has greatly increased, as
has the consumption of non-ferrous metal. Those are all signs of generally
increased production, though there is a marked unbalance, with some severe
deficiencies, particularly in the field of consumer goods. The summary in
paragraph 58 shows what, on broad lines, we have accomplished during
these 18 months, and in view of the war damage from which we suffered,
and our total mobilization for war purposes, those are results with which,
I think, the country can be reasonably satisfied. Moreover, we have been
able to obtain some approach towards a balance between our different
requirements, though it has not yet reached more than the first stage, and
much remains to be done.







Britain's Economic Situation [SIR STAFFORD CRIPPS]

We have throughout this period been operating in circumstances of
world shortages and of internal shortages as well, so that our margin of
stocks in most cases has been fluctuating about a very bare minimum. It
was liable to be upset at almost any moment by weather, or shipping diffi-
culties, or labor troubles in other countries, as well as by the position in our
own basic industries. We have had to impose bread rationing for this
reason, and our coal and power situation has been growing increasingly
dangerous as consumption leapt forward ahead of supplies. We have now
over a series of years, as the House knows, been living on a coal overdraft.
We drew on our stocks in 1943 by over 1,000,000 tons, in 1944 by 1,500,000
tons, in 1945 by 3,600,000 tons, and in 1946 by 4,000,000 tons. In addition
we have used up almost all the accumulated stocks of opencast coal which,
at the end of 1944, amounted to over 2,250,000 tons. I will deal with the
whole coal matter in detail later. These shortages of materials and stocks
have not only meant the use of a good deal of manpower in rationing
schemes of various kinds, but have also created an atmosphere of uncer-
tainty which is inimical to high efficiency in production.

THE PLAN FOR 1947: BALANCE OF PAYMENTS
I now pass to the third and most important part of the White Paper.
This is introduced by the sentence:
"The central fact of 1947 is that we have not enough resources to do all that
we want to do."
The Government have constantly emphasized that fact, and indeed, we
have often been criticized for too much austerity, for diverting goods from
the home market for export, for not allowing more home consumption of
goods, and for not doing this or that other extravagant thing that was con-
sidered desirable. I believe that anyone who reads the White Paper will
now agree that the policy pursued was the right one; indeed, judging by
some current press and other criticism, our mistake has been that we have
been too easy-going. One thing, anyway, no one may say, and that is that
they have not been kept acquainted with the facts. The Monthly Statistical
Digest, of which I hope all hon. Members have at least seen the cover, was
published for the first time by this Government, and it gives monthly all the
current information that is available. The fact is-and this must be made
clear to all our people-that we cannot do everything at once, and that we
must, therefore, make up our minds as to what it is upon which we should
concentrate our resources.
The third part of the White Paper sets out to show how we should do
that for the year 1947. It does not purport, of course, to be a long-term
plan. That we shall get out as soon as we can with the staff that is available.
Here let me say that any one who looks upon this realistic picture as por-
traying disaster or forecasting catastrophe must completely misunderstand
the temperament of the British people. It is a challenge to achievement
by the people, and it is not a record of their failure or their impotence. As
matters of first importance are the payment for imports-that is, of course,
principally by our exports-and the basic industries and services without
which the rest of our economy cannot function.
189







House of Commons, March 10, 1947


So far as payment for our imports is concerned, this raises two questions
-the over-all balance of payments, and the balance of hard currency pay-
ments. We can, and indeed, must, operate on both sides of these balances.
Our imports are not a fixed figure, but can be varied to some extent accord-
ing to our ability to pay for them in exports. There is, however, an almost
irreducible minimum below which we cannot allow imports to fall if we are
to have enough food for our people and maintain the flow of raw
materials essential to our industry. The import program for 1947 is set out
in paragraph 69 of the White Paper. This is a little larger than the rock-
bottom minimum in that it envisages a certain variety of foodstuffs, al-
though not much more than at the present time, a small increase of con-
sumer goods made from imported raw materials, and the continuance of the
token imports and the war devastated region imports, which both come
within the 35 million of imported consumer goods.
There are, too, the items tobacco and films as to which a number of
people have made suggestions. It certainly is unfortunate that smoking has
increased as much as it has since the pre-war years. It is now between 130
and 140 per cent of pre-war, which is really much more than we can afford,
and yet I am constantly being asked Questions about supplies, and sugges-
tions are made that more should be manufactured. It is not an article that
is easy to ration. It would take a very large staff indeed to do it because of
the immense numbers of points of distribution. It is, moreover, a com-
modity in which a black market is very easily created and quite impossible
to suppress. We, therefore, concluded that for 1947 at any rate we will not
ration tobacco. We shall, of course, continue the policy of using all the
Empire tobacco we can get. Films are an important factor in providing
people with relaxation in difficult times. We shall have to introduce a new
Cinematograph Bill early next Session because the old Act expires next
year, and we do not feel we should embark upon any hurried policy of
cutting such imports, even if that policy would have any effect. We are try-
ing to counter this tendency to use too many foreign films and spend too
much on them by improving our own output and by stimulating our own
exports of films. In both these directions we are having very considerable
success, so that the net loss on foreign exchange on films is falling. We must
always remember, with regard to imports, that there may be extra emer-
gency items that we shall have to include by way of imports, such, for
instance, as coal for double bunkering at the present time. So much then on
the import side.
How are we to meet that bill for imports? Our total need for foreign
exchange will be 1,450,000,000 for imports and 175,000,000, the balance
on Government overseas expenditure against receipts, making in all 1,625,-
000,000. We cannot of course, cover all that by exports. Our net invisible
income is estimated at 75 million, and if we fix the limit of our borrowing
at 350 million for this year, we shall have to aim at 1,200 million from
receipts from exports and re-exports. The proportion between borrowings
and exports must, of course, be determined in the light of our capacity to
export, but the fact that we have put borrowing in 1947 at so high a figure
as 350 million shows that we have not to the smallest extent exaggerated







Britain's Economic Situation [SIa STAmRTOD CmIPPS]

the need for exports. The 140 per cent increase in volume over 1938 is
not a wildly optimistic hope; it is the irresistible conclusion to be drawn
from the fact about our balance of payments. We conclude, therefore,
that our home consumption must be so adjusted as to enable us to reach
our export target of 140 per cent by the end of 1947.

THE HARD CURRENCY SITUATION
So far, I have dealt with the balance of payments as a whole. I must
now say a word about the hard currency situation. It is an unfortunate
fact, but an inevitable sequel of the war, that, just at the time when we
are critically short of dollars and other hard currency, we are driven by
circumstances over which we have no control to purchase a greater pro-
portion of our import needs from those very countries whose currencies
are the hardest for us to acquire. The position is, therefore, that although
our over-all balance shows a deficit to be met by borrowing of 350 mil-
lion sterling, there is within that over-all figure a larger potential deficit
of hard currency, especially so far as dollars are concerned. It is not our
choice, but the availability of commodities which determines where we
buy. We must buy in the market where the goods are available, or else
go without. In order to try to meet this situation, we have to do two things.
First, we must try to get back to purchases in soft currency or sterling
markets as soon as ever the goods are available, and secondly, we must
send the maximum possible amount of our exports to the hard currency
countries. Both those steps are part of our plan, and are in fact now in
course of being carried out. We are negotiating with many European
countries to get as much as we can, not of luxuries but of necessities, in
return for the goods we send there. At the same time, we try to encourage
as large sales as possible of our goods in the difficult currency countries.
My right hon. Friend the Chancellor of the Exchequer and I have both
urged industry to give their immediate attention to this problem. Detailed
discussions with particular exporters and groups of exporters are now being
started by the Board of Trade and the Ministry of Supply. There can, of
course, be no question of a sudden and fundamental change in destination
of all our exports; nor do we intend to introduce a mass of new controls to
force exporters into hard currency countries. Each type of export must be
considered on its merits, and we shall have no hesitation in relying upon
exporters to appreciate the seriousness of the hard currency problem and on
their readiness to work out, in consultation with the Board of Trade, the
precise steps which can best be taken for its solution.
It would take too long to go through all the reasons against a policy of
indiscriminate redirection of our exports to hard currency markets, but per-
haps I may mention one or two of them. We have a long-term problem of
markets ahead of us, as well as a short-term problem, and it would be foolish
to throw away, perhaps forever, a good long-term market, it may be in a
Dominion, for the sake of a purely temporary market in a hard currency
country. Then there is the question of our responsibility which we cannot
burke, for the supply to our own Colonial Empire of essential goods. Nor
would it serve any useful purpose to divert our exports away from a good







House of Commons, March 10, 1947

sterling market overseas to a dollar market if the vacuum that would thus
be created were to be filled promptly by exports from a dollar country. One
fact which is perhaps not appreciated is that the proportion of our exports
going into hard currency markets has increased by about 1 per cent per
quarter during 1946, so the trend is in the right direction, but we must try
to accelerate that trend. I have every confidence that exporters will treat
this problem as really urgent, important and vital in the national interest.

EXPORT TARGETS
I referred just now to our long-term need for markets. Our 1947 target
for exports is 140 per cent by volume of that of 1938 by the end of the year,
but our long-term target is 175 per cent by volume of 1938. To achieve this
when the sellers' market has gone, as it will have gone before very long,
will be a task demanding all our traditional skill and enterprise as exporters,
and all the competitive strength in price, quality, and design that we can
muster. Even so large an increase in our exports would mean that, unless
world trade expands very appreciably, we should need to win an enormous
proportion of the total world trade in manufactured goods, just about one-
third, and that, of course, is impossible for any one country. That is why
the Government attach so much importance to the plan for an international
trade organization, with its declared objective of providing full employment
and increasing the total volume of world trade.
We also believe that if this project is reasonably successful it will assist
in putting right one of the causes of the world's economic ills which was
noticeable in the 1930's and which can be seen in another form nowadays,
accentuated as a result of the war, in the shape of a quite alarming disparity
between exports from the Western Hemisphere to the rest of the world
and the imports to the Western Hemisphere from the rest of the world.
In saying that, I do not mean that an international trade organization can
put this right by, as it were, a stroke of the pen, but it can provide the
essential framework to enable rectification of this great disparity to be gradu-
ally achieved. Here I should add that this country must have a great interest
in seeing the disparity put right, suffering as we are from our own acute
dollar shortage, which is an acute and special instance of the more general
problem.
I am not suggesting that, in the long-term, if all goes well, there will be
no need for us to pay special attention to our own exports to hard currency
countries. Though the problem may be especially acute just now the need
for dollar exports will, so far as I can see, be with us permanently, anyway
for the next 50 years. The four objectives of policy, so far as the balance
of payments is concerned, are set out in paragraph 79. It is along those lines
that we are now working. I would emphasize once again the point set out
in paragraph 81. This export program must be a prior charge on our re-
sources, and we shall therefore have to content ourselves with what is left
over. There is, of course, flexibility as between industry and industry. Some
will exceed the target greatly, as they are doing now, and others will fall
far short of it; as, for instance, coal. Something like 25 per cent of our
manufactured goods will have to go abroad, if we can get them there, and







Britain's Economic Situation [SIR STAFFORD CRIPPS]

we shall have to content ourselves with living on the other 75 per cent, to-
gether with such imports as our exports can earn for us.
I now pass to the all-important matter of our basic services. The fuel
and power situation has been debated fairly recently in the House, so that
I need not deal with the present situation in detail. Coal, steel, power, and
transport, together with the building industry, capital equipment and agri-
culture, are fundamental to our economic system. Upon their productivity
will depend to a large extent how quickly we can achieve targets we set
ourselves over the rest of the economic field. Our main task in 1947 is to get
these basic industries and services right.

COAL TARGETS
I turn first to coal and power. Ever since 1941, when a large number of
skilled miners were withdrawn from the mines for the fighting Services, we
have been in trouble about coal production. During the war, by measures
of economy and by drawing on our stocks, we managed to make both ends
meet, though each year there was growing anxiety as to whether we could
get through the late winter period. In 1942 a scheme for rationing was
worked out, but it was never applied. We were lucky enough with the
weather in the following years to get through the wood. Weather such as
we have had this year must inevitably have meant breakdown.
So far as electric power and gas are concerned, during the war
periods there was no marked increase in domestic use. Indeed, there
could not be, as very few appliances were being manufactured, and gen-
erally, in order to get a new appliance, an old one had to be handed
in in exchange. In addition to that, there was the economy of the blackout.
When however a time came before the end of the war to plan the new hous-
ing program, emphasis was rightly placed on the need for having up-to-date
labor-saving houses. As part of the housing program a very large manu-
facture of electric and gas appliances was stimulated. I remember when I
was at the Ministry of Aircraft Production being asked to facilitate the
turnover of some of the factories making aircraft accessories to the manu-
facture of those power appliances. That type of manufacture is very easily
started and developed. As a result of those plans, one of the first civilian
industries that greatly increased its production was that of electrical and
gas household appliances, with the result that the domestic consumption
of gas and electricity increased greatly, not only in the new dwellings but
through the purchase of appliances by others.
Mr. Churchill (Conservative): Has not there been a corresponding re-
duction in the domestic consumption of coal?
Sir S. Cripps: No, Sir. The right hon. Gentleman is quite wrong.
There has not been a corresponding reduction at all. Perhaps it would
be easier if I were allowed to continue. There have been very large scale
purchases of those appliances. It will be noticed in the statistical returns,
Table 68, that the really big jump came between the third and fourth
quarters of 1945, which had, of course, been planned much earlier. Electric
fires jumped from 41,000 to 122,000, and electric irons from 79,000 to







House of Commons, March 10, 1947


170,000 in the same three months. At the same time, of course, industry was
being rapidly electrified and every scheme for modernization included an in-
creased degree of electrification. This, no doubt, the House understands, is
inevitable, because we look very largely to the substitution of manpower by
electric power to give us our economy in our production program.
The output of electric generating plant to come into operation this and
next year meant orders being placed three or more years ago, and power
stations being planned and built. That was the job of the electricity gen-
erating undertakings, but, in the circumstances of the war at the time when
the orders should have been given, it was impossible to place more orders.
Under wartime Government control, a balance was struck between manu-
facture for the home market and for export, including I may say a great
deal of much-needed plant for Russia. Contracts were made and planned on
that basis, and they cannot now be gone back upon. Even if it were prac-
ticable to divert exports to home use, which it is not in fact, we would
risk losing forever one of our most valuable and stable markets for export.
That would be the result if we were to cancel contracts. So we find ourselves
today unavoidably short of generating plant and unable to carry a peak
load. We have, in fact, arrived at the point towards which we have been
moving for nearly five years and during which demand for fuel has outrun
supply, and no stocks remain to be drawn on, while at the same time elec-
tricity demand has swamped generating capacity.
The question is: Can we stimulate production so as to overtake the ever-
rising demand? Successive Governments have done their best, but we on
these benches have always believed that it was only through a complete
reorganization of the means and the conditions of work in the coal industry
that we could get the fuel we need. That process has now been set on foot
under the National Coal Board. Although production has improved, it
must be some years yet before the full effect of reorganization can be felt.
The target for coal production which is fixed in the White Paper is 200
million tons in the present calendar year, but in order to achieve that target,
a number of measures will have to be, or are now being taken. I shall deal
with them in a moment-the result of which it is not possible to foretell
with certainty. We must have a new, planned distribution of output, at
least for the next six years, and we must continue planning, not taking a
target figure but a fair estimate. Otherwise we may find a deficit of one
vital need, such as stocking up, through over-consumption for some other
purpose.
The House will be aware that the holiday period falls chiefly in the six
summer months. That is one of the reasons why the average production in
those months is lower than for the winter period, though there are compen-
sating factors, such as greater ease of transport and better health during that
period. We have taken an estimate of 89 million tons as being available
during the six summer months-83 million tons deep-mine coal, and 6 mil-
lion tons opencast. Of this total, the first charge is for stocking up. We
expect to start with 5 million tons of stocks, and we have decided the best
we can do this year is to make that up to 15 million tons by 1st November.
Ideally, it should be more-another 3 million to 5 million tons; but if we







Britain's Economic Situation [SMI STAFFORD CRIPPSJ

were to try and make it all up in this six months, it would mean so little
was left for industry that the position would be made impossible.
I will now give the House the rest of the budget figures. In millions of
tons stocking up, 10; electricity, 11.8; gas, 9.7; coke ovens supplying town
gas, 5.2; water, .2; railways, 7; colliery consumption, 5.3; miners coal, 2.1;
merchants disposal, house coal, 12.8, others, 1.2; larger non-industrial con-
sumers, 1.5; Northern Ireland, 1.2; coastwise bunkers, .5; Service Depart-
ments, .5; miscellaneous, 1.3, leaving 17.6 for iron and steel, coke ovens, not
supplying town gas and other industries, making an inland total of 87.9, to
which 3.1 exports and bunkers are added, making 91 million tons, from
which should be deducted a saving by coal-oil conversion of 2 million, leav-
ing a figure of 89 million tons. These figures are based, so far as gas and
electricity are concerned, on full industrial use, consistent with allocations
of solid fuel to industry, and continued substantial restrictions on domestic
and non-industrial users. We want to save an average of 80,000 tons of coal
a week on domestic and non-industrial gas and electricity consumption dur-
ing the summer. We have not yet finally decided how this shall be done,
because we want to make the inconvenience and worry of that saving as
small as possible. We must do our best to get that saving, and if we do not
get it, it will mean a further industrial cut, as there is nowhere else the coal
can come from.
We shall certainly have to prohibit certain wasteful and unnecessary
usages during the summer, such as domestic space heating. It may be we
shall be driven to the necessity of a domestic fuel rationing scheme.
Transport is to be on the basis of a ten per cent cut on passenger services
as compared with last summer, and the introduction of the summer services
a month later-Ist June, instead of 1st May. As I have mentioned, we in-
tend to save 2 million tons from the coal-oil conversion scheme; we shall
also have to secure some saving from double bunkering and supplies of
bunkers to depots abroad. On that basis, there is left for iron and steel and
coke ovens and for all other industry, 17.6 million tons for current use,
apart from stocking, which is exactly two-thirds of the total estimated re-
quirement if industry were to be running full out.
If the output of coal rises above our estimate, that will mean more for
industry, and if it falls below, there will be less. We are now going to
examine with industry how best we can allocate this quantity to give the
maximum output, while maintaining a proper balance between the indus-
tries. It is unfortunate, but inevitable, that when all the other users have
been cut to a minimum, industry has to get what is left over.
The House will observe that with an extra 8.8 million tons, industry
can get all it needs, so that our immediate production problem is to get
an average increase of about 10 per cent above the present estimate in the
next six months, if we are to maintain full industrial production. We
shall do our utmost in that direction, and shall appeal to the miners to
give up just that extra bit necessary to keep our industries going full out.
Every extra ton will count. It is an attainable target, and I know that the
miners will do all in their power to help in this vital struggle to keep their
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House of Commons, March 10, 1947

fellow workers fully employed throughout the summer, and to get the ex-
ports which are of such supreme importance to us at the present time.
I have not the time to go into all the details as to the various measures
we are taking to increase production. They consist of two parts: To enlarge
the total labor force, and in particular, the total number of face workers-
that is, the ratio of pit workers to other workers-to increase the output per
man-shift, and secure regular attendance. Even with present limited pit-
room, there are vacancies for face workers in some mines. If we are to get
a substantial increase we shall need more face-room, and that will be devel-
oped as quickly as possible, but it takes time. More workers will be trained.
Ex-miners from the Forces will be encouraged to return to the pits and from
other industries by more intensive propaganda, and by putting no hin-
drance in their way whatever work they may be doing. In the long run, we
must depend on British miners to get the coal. We shall certainly fail to
get our own people into the mines if we create the impression that it is
such an unpleasant job that we cannot expect British people to engage in
it, and so we must get foreigners to do it for them. By all means, as a tem-
porary help, let us introduce Poles or any one else with whom our miners
will agree to work, but our main purpose must be to make the industry
attractive enough to recruit our own men into it. That is why we propose
to exempt from call-up to the Forces for the next five years underground
coal miners as well as to make the industry more attractive by the provision
of houses, hurrying forward with pithead baths, the supply of more food
and consumer goods in the mining areas and so forth.

ELECTRICITY
To cope with the electrical situation, we require steps which are not
merely coal saving, but which also deal with the problem of the peak load. We
must, if we are to get sufficiency of production, avoid load shedding at the
peak. To this end, we have decided that a wholesale staggering of industrial
hours is absolutely necessary, and we hope that the arrangement of two
staggered day shifts will avoid the danger of large-scale shedding, without
having to have recourse to night-shift working. This will only be so if we
secure a very considerable economy in the domestic use of electricity, which
is equally important from this point of view, as it is from the point of view
of coal saving. We shall, at the same time, encourage the use of auxiliary
diesel generating sets of about 50 kilowatts, or slightly more, which will
make some contribution to the easing of the peak load. Before passing
from the fuel and power difficulty through which we are passing, I should
like to put it in its true perspective. This country has massive reserves of
coal, and it has a strong, healthy and courageous population, amongst whom
the miners have not always been recognized as men contributing a vital
service to their country; perhaps latterly some of us, hearing stories of how
they have struggled through deep snow to get to the pits to win coal for us,
have gained a deeper appreciation of their contribution to our economy.
Our embarrassments at the moment arise through three causes-the
running down of stocks during the war, the failure hitherto to get back
to pre-war levels of manpower and output and shortage of electrical gener-
196







Britain's Economic Situation [SmI STAFFORD CBIPPS)

ating plant. All these are temporary, and they will be put right because
the British people will put their backs into this job as they always have
done and do when there are difficulties to be overcome. The improvement
required is marginal. A ten per cent increase of output over the estimated
figures would, as I have shown, clear us of all our internal difficulties as to
fuel, provided that we did not indulge in the wasteful manner in which we
used our fuel pre-war.
STEEL
The steel position is not quite so critical since the limiting factor will
be coal and coke and we shall not be able to produce up to full capacity.
Even so, if we balance the use of fuel by the iron and steel industry against
that used by other industries we should be able to get through.
When we come to transport, we find that the railways are in a very diffi-
cult position. During the war their maintenance of permanent way, rolling
stock and locomotives, had to be sacrificed to war necessities, while at the
same time an ever-increasing load of traffic was thrown upon them. The
utmost is being done to build up their wagon stocks, including the use of
Royal Ordnance factories, and to increase the number of locomotives avail-
able, including the repair abroad of the wartime utility locomotives. The
position regarding permanent way is particularly difficult. Here we are met
with the impossibility of obtaining enough timber, although we have
combed the world for it. Unfortunately, the Baltic and Russian supplies
are not available at present, and that used to be our main source. We are
doing what we can to provide substitutes and step up their manufacture,
but the shortage is acute, and may have a serious effect upon traffic this year
if it cannot be made good. Coal and industry will take priority over pas-
senger traffic during this year, especially during next winter.

AGRICULTURE
I now come to agriculture, which is an important priority as a saver of
imports. I will not now repeat what our policy is in this field, but I would
point out that our difficulties are labor and machinery. Hitherto we have
been able to maintain a labor force by the use of the Land Army and large
numbers of prisoners of war. The former is falling off in number, and the
prisoners are being repatriated. This labor must be replaced if we are to
maintain our output. Here we are anxious again to recruit our own people,
but we are planning to get help, as far as possible, from foreign labor,
especially where it can replace prisoners of war. So far as machinery is
concerned, our own output has gone up very greatly since pre-war years, and
at the same time we are importing foreign machines which will improve
our efficiency. We have, in fact, the most highly mechanized agriculture in
the world. The prospects for agriculture are good, now that for the first
time the industry is to have a stable basis, under the terms of the Bill now
before the House.
CAPITAL EQUIPMENT
I now pass to our program for capital equipment. As to this, I think
there has been some misunderstanding. The objective of the White Paper
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House of Commons, March 10, 1947


is stated to be that 20 per cent of the national income, after allowing 7 per
cent for depreciation, should be expended upon capital equipment and
maintenance. How that should be divided up is set out in paragraph 117.
By way of indicating the sort of comparison with pre-war, it is pointed out
that the 1947 program will exceed, by at least 15 per cent, that of a normal
pre-war year. That is the program for capital equipment, and maintenance,
excluding housing and housing maintenance. No one doubts the pressing
need for industrial re-equipment in this country and so far as possible we
want to provide our own machinery and plant. If we cannot and it is
urgently needed for our industries, we must import it from abroad.
I want to make it quite clear that there has never been any question of
withholding scarce currency in such cases. The difficulty has been to get
orders placed, and the very long delivery dates offered overseas. In the past,
of the country's total expenditure on capital equipment and maintenance,
not more than a quarter has normally gone on industrial plant, and a great
deal of that was for the simple replacement of existing machines. The net
addition to the stock of equipment was a relatively modest matter. That is
why we find ourselves today in many ways ill-equipped to carry out exten-
sive industrial re-equipment ourselves with new plant, and why we have
encouraged the expansion of those industries which manufacture such
equipment.
The proportion of the expenditure on capital equipment and main-
tenance that will go to supplying machinery to industry under the plan will
be very much more than 15 per cent over pre-war. That is the figure
assessed for the whole category, and within that category the proportion of
machinery for industry would be much higher than pre-war. It must not
be forgotten that during the war the engineering industry had enormous
access to new equipment, much of which is still available. The fact that the
very large wartime surplus of machine tools has been disposed of so
smoothly, without any interference to the machine tool industry, shows
how eagerly this new equipment has been absorbed in other parts of
industry.
To take another case, the cotton industry, we are trying to give Govern-
ment assistance to stimulate the ordering now of new equipment which is
badly needed. In another case, we have brought in the capacity of the
Royal Ordnance factories to assist with the building of special machinery
such as, for instance, that for fully fashioned silk hose. We should like to see
re-equipment going forward even faster, and our greatly expanded engineer-
ing industry playing the major part in the re-equipment. So far as orders
for goods from overseas are concerned, we, too, are disappointed that not
more have been placed. Within this capital re-equipment scheme there are,
of course, vital priorities, such as coal-mining machinery and electrical gen-
erating plant, to mention two obvious ones, and we are taking steps to see
that these two categories get a more complete and unequivocal priority
than they have in all cases hitherto enjoyed. It is the old wartime difficulty
of chasing through to each sub-contractor and sub-sub-contractor and apply-
ing the same material priorities to his part of the job as to the main con-
tract. On the whole, I believe that if this matter of re-equipment is
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Britain's Economic-Situation [SIR STAFFORD CRIPPS]

examined, industry by industry, and factory by factory, it will be found
that the cases where desired re-equipment has been held up, except by the
length of time to execute the order, are extremely few, whether the
machinery is manufactured at home or abroad. Indeed, we have been
putting pressure on industry to re-equip, but there is a limit to the speed at
which it can be done.
As to building, with special reference to new capital equipment and
maintenance for industry, we have a sufficiency of labor provided the divi-
sion between housing and other forms of building is kept sufficiently
flexible, so that if materials are short in one category the labor can be
switched across to another in which there is not the same shortage of bricks,
timber, or steel, or whatever material it may be. There is, undoubtedly, a
great deal of new factory accommodation which will ultimately be needed
in industry in this country but it is not, at the moment, such an urgent
priority-except in the Development Areas, where special efforts are being
made-as raw materials, fuel, or machinery. In the building industry, per-
haps more than anywhere else, there is an ample opportunity for increased
output per man-hour, and this is one of the cases in which we believe that
a proper incentive system would have a marked effect.

MANPOWER
So far, I have been dealing with those basically important forms of pro-
duction to which we must especially devote ourselves this year. Until these
deficiencies are remedied we shall not become fully conscious of our acute
shortage of manpower, but, as soon as they are, we shall find ourselves up
against a manpower problem. I do not propose to deal with the manpower
employed in the Defense Forces because that topic merits more than a
cursory reference in what I am afraid is already an over-long speech, and
it will be fully dealt with by my right hon. Friends the Minister of Labor
and the Minister of Defense tomorrow when they speak in this Debate.
In the total volume of manpower available, it is calculated that we shall
be able, by the end of this year, to have got 100,000 foreigners to work.
They may be Poles, or other imported labor. That figure has been criticized
as being too small. We could have written in a quarter or half a million
if we had wished, but the figures would not have been realistic. In this
country we are not, like France or other Continental countries, accustomed
to use foreign labor in bulk, and it is essential to go carefully with its intro-
duction, or more harm than good will be done.
It is not only trade unionists who are anxious about the introduction of
foreigners. The same attitude rules in professional bodies, indeed every-
where where competition or unemployment is feared. Nor is it the slight-
est good to force foreign labor upon an unwilling industry. To do so will
not increase, but reduce, production by the unrest and dislocation that it
causes. The language problem is a very difficult one. In the mines, for
instance, from the safety point of view, a foreign miner must be able to
understand English. There is also the accommodation difficulty. We are
most anxious to get in as much foreign labor and employ as many Poles as
we can, but we believe that the realistic figure is 100,000 placed in industry







House of Commons, March 10, 1947


by the end of this year. That, of course, is not a maximum. If the measures
we are taking to get them are more successful than we anticipate then so
much the better for everyone.
This gives us a total estimated manpower of 18,400,000, and a question
arises as to how we want to see it distributed under the main heads. On
page 29 of the White Paper there is set out the approximate distribution
for December, 1946, and December, 1947, the latter being appropriate to
the plan set out for 1947. Substantially, what it comes to is this: we hope
for 278,000 more people to be available in 1947 than was the case in 1946,
and we have expressed how that extra labor is likely to be spread over the
different uses, a small reduction being made in the public services, which
is also added back to the other items. The changes are not large or striking,
and an explanation of them is given in paragraph 129. I do not propose
to go through all these items, with a number of which I have already dealt,
but there are one or two observations I must make on them. This distribu-
tion of our labor force, although it is the best we can achieve, will not by
any means restore our pre-war position in a number of consumer commodi-
ties, particularly the textile group, where there will still remain a very seri-
ous and marked deficiency. We are going to do our best there to help with
foreign labor, and hope for some success. We are also trying very hard to
get the cotton industry moving on a plan of reorganization and re-equip-
ment which will, we hope, with a smaller manpower, give a greater produc-
tion. But it is a very slow job, and as the weeks and months go by, without
any final decision by the industry, the time for getting results is further and
further postponed.
It will be noticed that the distributive and consumer services, other than
transport, take up a very large volume of labor-4,500,000-and that it is
recognized, in the plan, that that may slightly expand this year. The growth
of the tourist industry, which we are trying to foster, will mean a growth of
ihe labor employed in that industry. A large part of this industry is to be
found in the distributive and wholesale and retail business, as to which,
unfortunately, our present knowledge is very limited. In December last,
2,300,000 people were employed in distribution. While this represents an
increase of 15 per cent on the previous year, it is still well below the pre-war
figure of 2,900,000. As against this total, the volume of goods handled by
the distributive trades was probably little less than pre-war, so that there
is already an economy of labor in distribution. More goods are now being
handled per person employed. That, of course, we welcome, but we must
go even further. It is the national duty of those engaged in distribution to
make every possible economy in the employment of man and woman power
which may be used in productive industry. I am sure that they will rec-
ognize that, and shoulder that responsibility. We ask them for their co-
operation. We should all like better distributive services, fewer queues,
quicker service and better delivery, but we just cannot afford to increase
the numbers employed in distribution while important industries, like
textiles, have to go without.
Another item I may mention is public services. The figure of 2,130,000
is made up of: National Government employees, 1,016,000, of whom the







Britain's Economic Situation [SuI STAFFORD CRIPPS]

Post Office and industrials number 615,000; local government, 1,014,000, of
which the fire services and police number 89,000. The first total, 1,016,000,
is under the direct control of the Government. The second is not. The
target reduction for the combined figure is 80,000, but this will be im-
mensely difficult, especially while the present shortages make rationing of
many kinds essential. If fuel rationing is to be done in any form, we shall
need additional manpower to administer it. Some part of this manpower
is, of course, doing what used to be done outside Government service, and,
therefore, is not an addition. Some of the staff of the National Insurance
Department provide an illustration of that. Other staff is still employed in
winding up wartime commitments-demobilization, disposal of services,
many matters connected with the occupation of Germany, and so on. A
large block is employed in rationing food, clothing, furniture, and in the
allocation of raw materials. These categories will, it is hoped, be reduced
as soon as world and domestic shortages start to disappear. A good many
of the minor controls have in fact already been got rid of, and others will
progressively be abolished as the supply situation improves. Having set
out the desirable labor distribution for the end of 1947, this is related to
the expected distribution of resources during the year, which is on page 31,
paragraph 137.
The figures for 1946 are not yet available, but will be published in asso-
ciation with the Budget of the Chancellor of the Exchequer in the usual
way, when the inter-relation of our financial and commercial situation can
be more fully discussed in the light of the survey he will then make on the
past year's financial policy, and any proposals which he has to bring forward
for the coming year. The comparison, therefore, must be with 1945, which
is not of much help owing to the very great change in circumstances-for
instance, Defense falling from 49 per cent to 11 per cent. The comparison
with pre-war is perhaps better. It shows a lower percentage on personal
consumption, with a higher percentage expenditure on Defense, other pub-
lic expenditure, capital equipment and maintenance.

THE IMPLEMENTATION OF THE PLAN
I now come to what is of fundamental importance, and a matter which
has led to a great deal of criticism, that is: How is the plan to be put into
effect? The general line of criticism has been that, while setting out the
facts, the White Paper fails to show how the difficulties are to be overcome.
That is a very understandable criticism, especially from those who find it
difficult to distinguish between totalitarian and democratic planning.
It is an interesting fact that most of this criticism is really inspired by the
same unconscious reaction towards planning: "You need not worry about
me, I will do my bit, so leave me alone, but make the other man do what
he ought to do in the national interest." Employers urge that they should
be freed from controls, but that labor should be disciplined. There is a
demand for a wages policy, but not for a profits policy. Employees tend to
take the view that employers should be strictly controlled in their profits,
prices, and so on, but they, the employees, should be left free to bargain
as best they can in what is now a sellers' market, so far as labor is concerned.







House of Commons, March 10, 1947


The manufacturer would like the wholesaler's and retailer's profits regu-
lated, but not his own profits; the retailer and the wholesaler, curiously
enough, take the opposite view. This perfectly natural reaction of each
wanting to be free from restraint or control himself, but wanting others
to be controlled so as not to affect him adversely, makes the idea of demo-
cratic planning somewhat difficult to implement.
Yet we all recognize that there must be some method of planning in the
post-war world. The plan in the White Paper is very widely accepted but
the crucial and critical question is: How far are we to use compulsion to
enforce the carrying out of the plan? When a complaint is made that the
Government have not shown how the plan is to be realized, it really means
that the Government have not expressed themselves as ready to compel this
or that section of the people to conform in their actions to the national
interest. It is here that we believe that a clear distinction must be drawn
between the lack of control over the individual in the choice of his occu-
pation, on the one hand, and, on the other, the controlled use of those mate-
rial factors which are necessary for production. The material factors are
the social and economic instruments available to the nation, the use of
which must, under modern conditions, be planned, and, therefore, to some
extent, controlled by the community. The great difference between our pres-
ent and our pre-war economy is that labor, which before the war was looked
upon as a comparatively cheap commodity in full supply, of which, in fact,
there was always a surplus, has now become in very short supply-that is to
say there will be an over-all deficiency as soon as the supplies of fuel and
raw materials are readily available. While there was a surplus, no one
pressed for a wages policy, except in the sense of a minimum wage to pro-
tect the worker, because the ever present mass unemployment was in itself
sufficient to moderate the demand for improved wages and conditions. Now,
however, the circumstances have been reversed, and with the prospects of
over-full employment and the pressure of the shortage of labor upon wages
and conditions of employment, a demand is made for what is in effect a
Government policy to restrain the employee from using the shortage to his
own advantage.
In fact, the White Paper contains a wages policy, but not the sort of
policy that some people are demanding. We are proceeding upon the basis
that despite the difficulties created by full employment, employers and em-
ployees should remain free to settle the conditions of work or wages in
industry, where the employers are private or public companies or corpora-
tions. But as is stated in paragraph 28 they must, we believe, take a much
broader view of the national interest in their negotiations than has been
done in the past. They must have regard to national economic tendencies
and dangers, and not merely to those of their own industry. As stated in
paragraph 131, the undermanned industries, the less pleasant and heavier
industries, must have their conditions improved, so that they become less
unattractive. They certainly must not repel the manpower it is sought to
add to them. That process has been going forward with Government help
in the way of granting building licenses and allocating materials.
Any question of increase in wages and profits must be accompanied by a
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Britain's Economic Situation [SIl STAFFORD CRIPPs]

corresponding increase in production. So again, it is emphasized that the na-
tion cannot afford shorter hours of work unless the change can be shown to
increased output. Finally, in paragraph 134, stress is laid upon the need for
having some incentive element throughout the wages structure which will
be an inducement to a higher rate of productivity. The policy, therefore,
is I think quite clear: First, we cannot afford increases in wage levels or
shorter hours unless they increase productivity per man-year. Second, in the
less attractive industries which are undermanned, there should be im-
provement in conditions to overcome the comparative disadvantages from
which they suffer. This must not lead to a competitive race for improve-
ment in all industries, or its purpose will fail. Third, incentive schemes
should be introduced into wage systems wherever possible. Fourth, the
Government will provide both sides of industry with all the information
and assistance possible through the National Joint Advisory Council and
otherwise, but they leave the implementation of the policy to the two sides
of industry.
Mr. Boothby (Conservative): Will the right hon. Gentleman say what
the incentive must be?
Sir S. Cripps: Piece rate work, bonuses and other incentives, which vary
greatly in each industry. The circumstances of today undoubtedly offer a
great opportunity for inflationary tendencies to develop. The tremendous
pressure of demand, with only a limited capacity to supply, means that
there is a tendency to enter a price wages spiral. So far, we have been able
largely to avoid this danger, and this has been to a great extent due to
the restraint and good sense of the workers and their leaders, who have not
pressed unduly their advantageous position in the labor market. It is more
than ever necessary in the circumstances disclosed by this White Paper that
the restraint and good sense should continue, for if we were to experience
a rise in wage levels or a shortening of working hours which seriously re-
duced the volume or increased the cost, of our production, we should un-
doubtedly risk a most serious worsening of our position. The policy, as I
have said, is broadly agreed by everyone. The difference that exists is as
to how it should be put into operation. We believe that the best way to
get such a policy operating is to leave its implementation to the leaders of
both sides of industry, in the light of a full knowledge of the economic
difficulties of the country, and this is the course which we have decided
to adopt in the plan for 1947.

PRODUCTIVITY
So far, I have dealt with this one aspect of implementation of the pol-
icy. There are, of course, special steps which I have mentioned with re-
gard to the various basic industries and services which are being taken to
implement policy, but when it comes to the general question of the pro-
ductivity of our industry, we must, of necessity, fall back upon the volun-
tary efforts of both sides in industry, except where a whole industry can
be taken over and reorganized or can be persuaded with Government as-
sistance to embark on a considered scheme of productive improvement.







House of Commons, March 10, 1947


Broadly speaking, the job of production is divided between the manage-
ment, and the worker; the management providing the tools and the
worker doing the job. By tools, of course, I mean not merely the ma-
chinery, building, finance, and so on, but also the skilled management
whether it be works management, production, or personnel.
The condition of maximum production by the worker is determined
by the environment in which he works, both physical and psychological.
More and more it is coming to be realized that the worker's reaction to
his daily surroundings will determine his morale and so his keenness and
concentration on his work, and thus his volume of production. Without
any mechanical change whatsoever in the present setup of our industries,
we could, undoubtedly, get a considerable increase in production if every
worker were happy in, and keen on, his work. It is along these lines that
there is still much to be done in the science of management, and it is for
that reason that the Government, as part of their plan to increase pro-
ductivity, have financed, in its initial stages, the British Institute of Man-
agement, which will, we hope, help to develop to the highest point pos-
sible the management techniques of this country.
Another way in which much saving could be made is by redeployment
of labor in our factories. In the past, with a plentiful supply of labor,
this matter was not deeply considered by industry as a whole. The trade
unions, anxious to keep their people in employment, looked upon it as
an advantage if extra hands could be kept in employment, even if they
might have been dispensed with by some rearrangement of the work. Now
that there will be a shortage and not a surplus of labor, it is essential that
we should study the deployment of labor in our factories to see what sav-
ings can be made. Such savings would not only conserve our labor reserves,
but also reduce prices as well. In the long run, we should look to the
raising of our standard of living along the line of reduced prices and stable
wages, rather than on the basis of ever increasing wages and prices chasing
one another, and so far as past experience goes, prices always winning.
One of the uncertain factors in the situation about which there has been
much discussion is the change that has taken place in the tempo of pro-
duction or the rate of output per worker. All sorts of statements have
been made as to the fall of production per man-hour compared with either
the wartime or pre-war experience. The fact is that no figures existed
upon which any general judgment can be based. I know of individual
cases where it has gone up and where it has gone down. Even in two fac-
tories working side by side and drawing on the same labor force often wide
differences of performance are to be found, influenced, for example, by
the degree of skill of management in one factory compared to the other.
During the dislocation of reconversion, with the attendant difficulties of
the shortage of many raw materials and retooling, it would be surprising
if there were not some fall in production per man-hour, but it was little
good to try to ascertain the facts until that stage had been passed through.
We are now instituting inquiries to try to find out what these trends are.
In the concluding paragraphs of the White Paper we stressed the need
for getting rid of all those restrictive practices and ideas which may have







Britain's Economic Situation [SIR STAFFORD CRIPPs]


been applicable to a condition of large-scale unemployment, but which
have no place in a time of full employment. We need a great degree of
flexibility of mind on both sides of industry if we are to adapt our indus-
tries to the new economic circumstances. The Government have done
their utmost to help along those lines. The production departments are
in various ways suitable to the particular industries with which they deal,
bringing the workers and employers together to work out ways and means
by which each industry can improve its performance in production. The
working parties and the Industrial Organization Bill exemplify how this
is being done. The Production Efficiency Department of the Board of
Trade and the intensive course of education for foremen and others or-
ganized by the Ministry of Labor are other examples and they could be
greatly multiplied. It is impossible to compel people to produce. We
can persuade them and help them, and that is what the Government are
trying to do, but the result will depend upon the response and co-operation
of industry as a whole, and it is for that co-operation that we ask for in the
White Paper.
THE TASK BEFORE THE BRITISH PEOPLE
I have tried to lay before the House and the country in some detail, and
I fear at great length, the main lines of our economic situation as it has
developed since the war, and as it now presents itself. There are, of course,
many important points upon which I have been unable to touch, but they
will, I am sure, be covered up by my right hon. Friends at a later stage in
the Debate. There is no doubt that this is one of the most important if
not the most important Debate which has ever come before this House.
For the first time in this long democratic history, it passes in review, the
economic condition of the country, and the steps that should be taken, as
is stated in the Motion which I have moved,
"in co-operation with all sections of the people of the country to overcome the diffi-
culties and make secure the foundations of our industry so as to provide a higher
standard of living for our people."
Democratic planning to this end is something towards which we must
feel our way with care and we must not be driven along the path upon
which some would apparently have us travel of compulsion and direction,
or into the jungle of chaotic failure which luxuriated in the aimless and
unplanned laissez-faire atmosphere of the period between the two wars.
Nothing that has so far happened, leads us to believe that there is any
better way than the way which we are now pursuing, and we shall con-
tinue upon it with, I hope, the support of the people and the co-operation
of both sides of industry, whose help we shall need, and whose assistance
we seek.
The picture is undoubtedly a dark one, but it is dark, not because it
is hopeless of solution-let no one make that suggestion for one moment-
but because the way to its solution is hard, and calls upon us all to make
sacrifices of present comfort to the future stability and prosperity of our
country. The defeat of our enemies in six years of total war preserved for
us our freedom and opened the way to a democratic future of prosperity.
But it also left us with the gravest deficiencies and the most tremendous
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House of Commons, March 10, 1947


tasks, if we are to take advantage of the opportunity which we had won
for ourselves and for others. The first easier stages of reconversion are
safely and successfully negotiated, and we have now come face to face with
the real difficulties of the situation-difficulties which are not transitory in
their nature, but which will require all our most determined efforts to
overcome.
This is not the time for a supreme emotional call to service for some
short time of emergency as in the days of Dunkirk, but rather for a steady
drive like that which followed the Dunkirk period of the war, when the
people, never sparing themselves, remorselessly drove forward production on
every front, but particularly upon those which were then critical. Today, fuel,
power, transport and agriculture are critical fronts, not for the destruction
of an enemy but for the preservation of our own future. Never have the
people of this island backed, helped and encouraged by the sister nations
of our great Commonwealth, failed themselves or the world when, with
native intelligence and with high hearts, they have gone out to meet and
break through the difficulties that have confronted them. Today, they
meet a new challenge, a challenge to their capacity. It is one which is
well within their competence but which demands of them renewed efforts
and sacrifice. They will meet that challenge as they have met others in the
past; and history will recall these months through which we are now pass-
ing, as a great opportunity, boldly seized and courageously undertaken by
the whole British people.




Sir Andrew Duncan (National): The primary purpose of the White
Paper is to bring home to the country just how serious the national posi-
tion is, so serious indeed as to constitute a challenge to all. The survey
does not pretend to outline a long-term plan for the rehabilitation of our
position, but I was encouraged, by what the President of the Board of Trade
had to say this afternoon, to hope that the Government have it in mind
still to prepare-speedily, I hope-a long-term plan. However valuable
surveys and short-term plans are they can only be properly appraised against
the background of a long-term plan. We find it extremely difficult to
assess properly, without a background, the part of the White Paper which
seems to constitute the plan for 1947. But there is a further difficulty, and
that is that the present breakdown must have caused some change in the
plan, either immediate or later in the year. So, we do not quite know
yet what qualifications we should apply to this plan in respect either of the
coal or general industrial position.

LESSONS OF THE FUEL CRISIS
Whether the recent weather did, in fact, cause a breakdown, or whether
it merely accelerated and accentuated a crisis which was already on its way
is not a matter that we need have controversy about, but there are two
lessons, as I see it, that we ought to draw from this breakdown. The first







Britain's Economic Situation [SIR ANDREW DUNCAN)

is that stocks were inadequate for such emergencies as may develop in
winter and did, in fact, develop this winter. We should begin now to cal-
culate what stocks should be put in for next winter. The second lesson-
and it is equally important-is that it is quite hopeless to expect to re-
plenish depleted stocks during winter months, except at dreadful cost.
Warned, as we have been, the country will certainly expect the Govern-
ment to make ample provision for next winter.
There is another consideration which we must keep in mind. When
the war came to an end, as the President of the Board of Trade said today,
industrial firms, returning to their peacetime activities, although they had
equipment, manpower, and coal stocks, did not have, in many cases, the
raw materials in stock, or the parts or components which were necessary to
marry to a regular flow of production. But rise in productivity in the last
quarter of 1946 demonstrates, I think, that industry was just beginning to
find its way through all these embarrassments. Progress was being made
in fitting together the different processes of essential industry. That is an
encouraging thing, because it means that in spite of post-war difficulties
we were successfully emerging from our immediate problems. It is also
true, as the right hon. and learned Gentleman said, that there were other
longer-term problems that were still to be solved, but we were emerging,
not unsuccessfully, from our immediate difficulties. Now, this breakdown
in coal, besides causing a widespread breakdown of production in coal
areas, has certainly caused serious dislocation in many of the intricate and
innumerable crossings and channels that go to make up the industrial
stream. If I may vary my metaphor, it may be that bottlenecks will survive
a long time yet before we can get back into the rhythm of major production.

THE PROSPECTS FOR 1947
What is the plan proposed for 1947? We may argue as we choose about
the past or our hopes for the future, but I am sure that what this country
wants most to know is what is the prospect for this year. Therefore, I ask
the House to consider that this plan is based upon the target of 200 million
tons of coal per annum. Coal, as the President of the Board of Trade re-
minded us recently, is not just coal; there are infinite varieties of coal. I
would like to pay tribute to the Mines Department and more recently to
the Ministry of Fuel and Power for the admirable work which they have
done in promoting and furthering coal economies. But I fear that they
have been so busy taking the motes out of the eyes of industry that they
have forgotten the beam in their own eyes.
It would be true to say that for the last few years the economies made
in fuel utilization have been more than neutralized; at any rate, they have
been neutralized to the extent of many million tons. On a calculation
carefully made, they were, I believe, neutralized last year to the extent of
10 million tons. That was by reason of the increased impurities in coal,
mainly dirt and stone, and by the fact that firms had now to draw their
supplies from a great many more sources than in the past. This resulted
in firms being asked to take coal which was not always good in quality, and
which was not always suitable for the purposes required. When tonnage
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House of Commons, March 10, 1947


is the major preoccupation in coal supply there is always a natural tendency
for both quality and uniformity to fall. I suggest that the Minister of
Fuel and Power should devote his full energies to such savings as can be
made this year. I believe it is a matter of great discouragement to indus-
trial establishments to have to spend time, thought, and money on making
fuel economies, and then find that their allocations have been cut down.
That is bad enough, but to find that the allocations which have been made
are of poor quality coal is a very great discouragement. It is an even greater
discouragement to firms who have spent considerable sums of money-for
the purpose of augmenting their fuel supplies-by converting some of their
plant to oil. I do not pretend that disappointment can be avoided so far
as allocation is concerned, but I urge that it should be avoided so far as
quality and uniformity are concerned.
As to the coal budget, I know that the President of the Board of Trade
would not expect us to regard the figures which he gave today as anything
more than provisional. I should say that one can only get a fairly broad
picture of what is proposed in the plan. It seems that in building up
coal, the steel industry has to operate on a reduced level compared with
1946. The capacity for a substantial increase on the 1946 level is there.
By maintaining the 1946 coal supplies, a greatly increased production of
steel could be obtained this year because the steel industry has been con-
verting to oil on a large scale. The Government are planning for the
steel industry to run at anything from three-quarters of a million, to a
million tons less capacity than they are capable of running at even if they
were able to obtain only their 1946 coal supplies. Manpower and capacity
will be used inefficiently at a time when maximum production per man-
hour is of the highest importance. The same restraint follows right
through to the engineering and metal using industries.
Sir S. Cripps (The President of the Board of Trade): The right hon.
Gentleman has not quite accurately understood what I said. If we could
get 200 million tons of coal we did not think it would be necessary to re-
duce the consumption of the steel industry. The reduced figures I gave
were on the basis of what we estimate we shall get, without taking into
account the improvement we hope to get. We were taking the firm esti-
mate which had been given for production in the next six months. We
hope the target will be higher, but that is not a firm enough basis on which
to make an estimate. On that basis, I agree, we should not be able to have
full steel production for industry.
Sir A. Duncan: I quite follow what the right hon. and learned Gentle-
man said, and I do not quarrel with it. But the situation is extraordinarily
difficult, and far be it from me to add to the difficulties of estimation. I
was, however, founding my observations upon the White Paper, which has
postulated 200 million tons of coal, and I was not founding my observa-
tions upon the provisional budget on which the President of the Board of
Trade was, quite rightly, speaking today. The White Paper founds upon
the 200 million tons of coal, and founding upon that, it does say that the
steel available will not be appreciably less in 1947, compared with 1946.
I am saying that if we had only the same coal supplies for steel as in 1946,
208







Britain's Economic Situation [SIR ANDREW DUNCAN)

we should get an output of three-quarters of a million tons more than the
White Paper suggests.
Mr. Jack Jones (Labor): Before the right hon. Gentleman leaves this
question of steel production, will he say whether he has taken into account
the greatly intensified oil conversion in the industry?
Sir A. Duncan: I am sorry if my words did not carry to the hon. Gentle-
man, but I started by saying that it was because we had converted and were
still converting.
Mr. Jones: I got that point clearly. The point I wanted to make was
this. Has the right hon. Gentleman taken into account intensified oil con-
version in the future 12 months?
THE NEED FOR A BOLDER PLAN
Sir A. Duncan: I have not made any calculation beyond 1947 because I
am dealing with the coal budget and the industrial budget for 1947. I
was observing that this restraint upon steel follows through into engineer-
ing and all metal-using trades. The White Paper budgets for a lower rate
of home usage of steel by the metal-using trades than they had achieved
in the last quarter of 1946. It declares its intention, at the same time, of
discouraging further expansion of labor in the major steel-using industries,
in the hope they will thereby get greater productivity per man within these
trades. As in steel, so it was in the steel-using industries; they were gather-
ing momentum in the last quarter of 1946. To envisage a less production
in these trades in 1947 than in the last quarter of 1946 is to check back to
a lower rate than had already been reached in the last quarter of 1946.
I would ask the President of the Board of Trade to have this matter fully
examined. The plan is based upon subnormal operations in the steel and
steel-using industries, and those industries, as well as being of the greatest
importance for export, provide the basis for the re-equipment of British
industry. Even in spite of all our difficulties now, I suggest to the House
that it would be quite wrong for us to be content not only to give up any
idea of further advancement in 1947 as against 1946, but actually to check
back to below the rate we had arrived by the end of 1946. Therefore, the
1947 plan-which I am taking is based on 200 million tons of coal and to
which I shall return shortly-must be bolder I suggest, if it is to set the
pattern for subsequent years. It also must be bolder if it is to use the full
productive effort possible within those industries with their present man-
power. I suggest that that is vital to the country.
If what I have said is true-and I ask that it be investigated-then it
follows that the coal target is too low, and I believe that 200 million tons
today is too low a target figure. I admit that if we were sure of getting
200 million tons of genuine coal of the quality that we want, it might be
a different story. But the target of 200 million tons of coal is too low. I
realize that we might not get 200 million tons produced this year, because
there are such problems as that of recruitment for the mines, being affected
by the raising of the school-leaving age and there is the prospect that the
five-day week will reduce production. [HON. MEMBERS: "No."] Let me
put it another way then. It would be very unsafe to take the risk of tak-







House of Commons, March 10, 1947

ing it for granted that there would be maintained output. I am not saying
anything against the miners in that, but reduced hours might mean re-
duced output, and the Government are right in saying that there should
not be a reduction in hours unless output is not thereby reduced. Third,
and equally important, there are transport difficulties and the possibility
that next winter will be worse than that through which we are passing.
With all these reasons facing us, I wonder if anyone can think it wise to
take chances upon too low a coal target. Obviously that leads to the ques-
tion: Where are we going to get the coal? The White Paper itself says
that failure to produce 200 million tons of coal in 1947:
"will set back the productive efforts of the country generally."
I have tried to show that even the 200 million target will curtail pro-
ductivity in the country, but never mind my argument. Let us take the
Government's own argument, as to what will happen if we do not get the
200 million tons? I do hope that the Government will still consider the
question of imports, because I think that the President of the Board of
Trade will probably agree that 15 million tons is too narrow a margin for
stock. I accept his suggestion of 16 million; others preferred 18 million.
Those are arguments which we have all had in earlier years. I myself,
always plumped for 16. I know that there are authorities in this country
who think that 18 is the right figure. I am not quarreling too much with
15 or 16 million, except to say that this country would never forgive us if
in severe weather conditions next winter, we got into a jam because of
shortage of stock.
It is very important to pay attention to public feeling on this matter.
I think the feeling of all sections of the House is really quite serious that
this question is the responsibility of the Government. We ought not, as a
nation or as individuals, to allow pride to stand in our way. We must
not feel that it is too humiliating, because we have been a great coal-ex-
porting country in the past, to import coal now. There should be only
one test-can we get the coal? If the Government tried hard and then
said that they could not get the coal, I think the country would accept the
situation. The nation is looking to the Government for a lead in this
matter, and they will resent us tying ourselves to a policy of sharing short-
ages. Much less should we want to restrict or restrain-we are against re-
strictive practices in other directions-because we are nervous about im-
porting coal. Above everything else, we must not run the risk of another
breakdown next year, and I ask the House to consider how much happier
the country would have been, if another 10 million tons had been imported
during 1946. There is no hon. Member of this House who would dare
face public opinion next year, if this situation were repeated and if it could
have been avoided by importing coal.
I therefore make the point that it can not be the right policy merely
to make the best use of resources which we know to be inadequate. We
must strive also for adequacy of resources. I was very interested to hear
the President of the Board of Trade say how much further still the Gov-
ernment was proposing to develop the machinery for surveying the whole
field. I take no exception to that. I think that that, perhaps, is one of




- *.*.* S *


Britain's Economic Situation [SIR ANDREW DUNCAN)

the most satisfactory operations of Government machinery in modern times,
but I wish the President of the Board of Trade and the Government
would pay more careful attention to the controls they operate. After all,
what is the use of having objectives propounded unless you have the ma-
chinery for working towards those objectives, and our controls today are
very varied. While considerable variation may be necessary in dealing
with raw materials, we have had an extension of some controls which I
fear may only increase the friction and frustration. All I would ask of the
President of the Board of Trade is that he should consider whether this
is not a subject that might be included amongst those which the Govern-
ment indicate in the White Paper, they will discuss with industry. At the
moment, it is fair to say that the risk to which a firm or an industry may
be subjected because of the inadequate allocation of coal in relation to
other raw materials is very serious, but it is no more serious than the risk
of an insufficient allocation of raw materials in relation to coal. In either
case, the chances are against coal and materials being in balance and in
line with productive capacity. I feel that the President of the Board of
Trade should examine this point, and consider whether it would not be
wise to include it in the proposed discussions with the various industries.
CAPITAL EQUIPMENT
The foreword to the White Paper on Employment Policy in 1944, con-
cluded with these words:
"Without a rising standard of industrial efficiency, we cannot achieve a high level
of employment, combined with a rising standard of living."
And the White Paper makes it perfectly plain that this can only be achieved
by an acceleration of industrial re-equipment and development, on the one
hand, in an effort to make up for the leeway lost through the war, and by
greater productivity on the other. What is the proposal in the White
Paper with regard to capital equipment and maintenance? As the Presi-
dent of the Board of Trade indicated this afternoon, a 15 per cent increase
over pre-war is the figure named in the White Paper. But he proposes to
have a great deal of flexibility and easement as to how the 15 per cent will
be applied in different industries. I suggest that, no matter how shared
out, 15 per cent is a completely inadequate increase for 1947, as compared
with the maintenance rates of pre-war days. The figure should be at least
50 per cent. Working from Tables 117 and 137 if the figure of 50 per cent
were accepted for capital equipment and maintenance, it would only in-
volve allocating something like 23 per cent of our total resources to all
capital expenditure, including houses, as against 20 per cent in the White
Paper. This increase could be obtained without any curtailment at all of
the other things for which expenditure from national income is required.
It could be obtained by the more effective utilization ot manpower, steel,
engineering and building capacity, which are the things, according to the
White Paper, that limit the amount.
This amount of 50 per cent is confirmed, I suggest, from Table C,
where it is recorded that the manpower employed in metals and engineer-
ing for home civilian use were, in June, 1939, 1,200,000. Today, they are
1,822,000, so that we have an increase there of a little over 50 per cent.







House of Commons, March 10, 1947

I further suggest that these two things tie up to make quite possible an
increase allowance of 50 per cent for equipment and maintenance. I em-
phasize this point of more rapid modernization of our industrial equip-
ment because it would contribute so substantially to the more efficient use
of both manpower and fuel, and also because it would greatly increase our
ability to supply better and cheaper products when overseas conditions of
sale become more difficult than they are today. We must not allow our-
selves to be carried away by an easy sellers' market.
I certainly should not wish to minimize in any way the present need for
exports. I would like to pay my tribute to the work of the President of
the Board of Trade in this connection, but I ask him to consider whether
it may not be true that there is a little too much forcing of immediate ex-
ports, without regard to the overriding need to build rapidly an efficient
economy for future credit-worthiness. Our credit-worthiness is what will
count in the future. I feel both on the import and the export sides, there
is an absence of care for this overriding need. For instance, the Chancellor
of the Exchequer told us the other day that in the last six months of 1946
our purchases from the United States were only 5 per cent for machinery,
7 per cent for films and 32 per cent for tobacco. The Chancellor of the
Exchequer quoted these figures tonight. I do not know what view lend-
ing governments take, but I am perfectly certain that if any one of us had
lent a friend money so that he might rehabilitate himself, we would have
thought he was spending it in a very profligate way indeed if he had spent
it in that kind of fashion. We must consider, for the future, what impres-
sion is being formed now as to how we are spending the money?
On the export side, it is probably fair to take the railways, which are
as good an example as any. The railways within the last year have been
second only to coal in imposing limits on our productive effort. The mar-
gins on which they have been working and their inability to handle traffic
without bottlenecks, even in good weather, have caused serious inroads on
production, and we find that two of the main difficulties are a shortage
of locomotives and a shortage of wagons. Locomotives have been switched
in considerable quantities for an expansion of our passenger traffic. That
could be corrected probably without any serious inroad at all on our loco-
motive export. But I believe as much as 40 per cent of the wagon produc-
tion of this country last year was exported at a time when our railways
were calling out the wagons. I call upon the President of the Board of
Trade to take this question into very serious consideration. I do not know
what the Chancellor of the Exchequer has in mind by way of preparing for
the period when the loan comes to an end, but surely there is nothing
more important than to stimulate the rapid growth in capacity and effi-
ciency of industries on which, in the long run, our exporting interests de-
pend.
COMMERCIAL AND FINANCIAL SERVICES
As representing the City of London, I might be permitted to draw the
Chancellor's attention to the contribution that can be made to our export
trade by rebuilding and developing those services which the City of Lon-
don has traditionally rendered. The commercial and financial activities
212







Britain's Economic Situation [SIB ANDREW DUNCAN]

of the City, including its wholesale markets of raw materials, its insurance
and its banking services have combined to make London the most impor-
tant export center in this country and, indeed, in the world. The stability
and maintenance of these services was of great importance in maintaining
the balance of payments pre-war. I suggest to the Chancellor of the Ex-
chequer and the President of the Board of Trade that they should be
quickly restored and encouraged, as they are most important elements in
our essential services and exports. Unless we ultimately pay our way by
industrial and commercial efficiency, it is quite futile for us to talk of rising
standards of living, increased leisure, social security and all the other im-
provements at which we rightly aim, and indeed in which we are proud
to lead the world now. But their continuance, improvement and expansion
depends, in the end, upon our industrial and commercial efficiency. It
will be some time before we can measure the consequences of the present
crisis and breakdown. But there can be little doubt that our economic
position has had a serious setback, and that the recuperative power of the
country has been badly shaken. This has, unhappily, occurred at a time
when, in any case, as the White Paper says, no policy has yet been formu-
lated for building up our longer-term position. The formulation of a
policy cannot be longer delayed.
As I started, so I should like to end, by saying that I was glad to have
encouragement from the speech of the President of the Board of Trade-
that he was of opinion that a longer-term policy was needed. Fortunately,
the White Paper at least reveals how desperately serious that position is.
If ever there was a time, in peace or in war, when the efforts of all were
needed to surmount our difficulties, it is now. No one can escape personal
responsibility for co-operating to the full in the restoration of the founda-
tions of our national recovery. But the Government must accept the re-
sponsibility for creating an atmosphere and an outlook which will permit
a total constructive effort to be possible in what the White Paper so rightly
describes as this critical moment in our affairs. [ e o C
[House of Commons Debates]


PROBLEMS AT HOME AND ABROAD
LORD INVERCHAPEL, British Ambassador to the United States,
to the New York University Law Alumni Association
New York, March 10, 1947. I am conscious of the high honor that you
do me by inviting me to address your one hundred and tenth Annual
Banquet. Normally, you would no doubt expect me to make a learned
speech on some subject connected with your Law School. This evening I
do not propose to do so for two reasons.
In the first place, my connections with the Law have been fugitive and
uninspiring; indeed, as a diplomatist I am supposed to be beyond its reach,
although, I confess, I have never yet put privilege to the test.
Secondly, the news from Britain and the comments on it during recent
weeks have been so depressing, not to say disturbing, that I think you would
be justly surprised if I did not tonight direct myself to them.
213







New York, March 10, 1947


THE BRITISH CRISIS
From what I have read and heard during the last few weeks, I cannot
escape the thought that considerable misconception has arisen here and
there of Britain's problems, both at home and abroad. India, Burma,
Egypt, Greece, Palestine, and Britain's position as stated in the Economic
Survey White Paper, which was presented to the House of Commons by
the Government on February 21, have all been fused together into one
picture, and viewed against the mournful background of the storms and
blizzards which have raged up and down the British Isles in a manner un-
heard of for 75 years. The gloomy thoughts conceived in the midst of
shivers in chilly London offices have reflected themselves in editorials in
this country, which seem to suggest that we are ruined, and that the Com-
monwealth and Empire is falling to pieces.
Let me say at once that Britain's domestic problems have nothing what-
ever to do with the recent announcement of our intention to leave India
in 1948, to negotiate a new treaty with Egypt, or to set up a constituent
assembly in Burma. Perhaps they have had something slight to do with
the need to reduce our very heavy commitments in Greece, but not nearly
as much as has been made out.
I do not propose to deal with any of those questions in detail. I simply
wish to separate them from what is now considered to be a major crisis in
Britain's internal affairs, and the impact of that crisis upon her capacity
to carry out commitments to the rest of the world.
Nobody can deny that the snow storms have inflicted cruel discomfort,
and imposed such a strain on the war-worn industrial system of Britain,
as to cause nearly half of it temporarily to stall. It is impossible at the
moment to calculate the loss in production. That will emerge a little later.
But to quote Leon Trotsky: "It is a great mistake to draw conclusions
about the strength of a country from the temporary condition of its tech-
nical apparatus." The frosts and the snow storms have set us back at a
most inconvenient time, but they have done no more than that.

Is BRITAIN FINISHED?
In spite of the fact that we had suffered a loss through the war of some
25 per cent of our national wealth, by the end of last year we were export-
ing in volume 110-115 per cent of our 1938 exports; we had reached a
building rate of a quarter of a million houses a year; in 1946 we built
nearly a million gross tons of shipping-equal to 1938; and our agricul-
tural industry, oddly enough the most intensively mechanized in the world,
showed an increased output of 35 per cent in value and 70 per cent in food
content.
We had also achieved a normal pre-war year's re-equipment and main-
tenance of industrial plant. All this was achieved in spite of the fact that
two million of our most able-bodied workpeople were either in the armed
forces, or producing equipment for them, and in spite of the fact that our
imports of raw materials have been no more than 70 per cent of the pre-
war volume.
I may perhaps with fairness claim that this is not the achievement of
214







Problems 'at Home and Abroad [LORD INVERCHAPEL]
an old, horse-and-buggy, broken-down country. During 1946 we certainly
bore our full share of expenditure in relief, and in the cost of occupying
enemy countries. Germany alone has cost us nearly $500 million a year.
All this has left us with a serious deficit in our balance of payments,
which amounted last year to $1,800 million. We had expected it to be
$3 billion, but we did better in practice by $1,200 million.
This year, in spite of the snow, we aim at raising our export figure to
140 per cent of 1938, which will still leave us a hard road to travel in order
to attain our target of 175 per cent.

BRITAIN'S DOLLAR PROBLEM
Now if this were simply a straightforward transaction of exporting
British goods and receiving the currencies of other countries in return, it
would be a big enough task in itself. If there still existed in the world the
old-fashioned system of currencies, all of which were exchangeable one for
another, we should probably be able, somehow, to continue to bear our
heavy share of relief until the necessity for it had disappeared.
But our contribution has been made infinitely more difficult by our
having to buy such a high proportion of our imports from the Western
Hemisphere, which has meant paying for them in dollars.
It may interest some people to know that European countries are run-
ning into debt to Britain at the rate of something like forty million dol-
lars a month. The reason for this is simple. Europe, together with such
other parts of the world as were ravaged by war, have not yet been able
to restart their agriculture and other industries, thereby to contribute to
the flow of international trade.
In addition to this, constant rains in Great Britain throughout last
summer, caused us to lose the best part of what had promised to be a
bumper crop, whilst the Southern Hemisphere was smitten by a severe
drought, with the result that it has only been possible to buy food in any
quantity from the West.
SLast year 42 per cent of our imports came from North and South
America, whereas we were only able to persuade yourselves and Latin
America to buy 14 per cent of our exports in return. This has meant that
we are using up your and the Canadian credit faster than we foresaw.
I think I have said enough to show that the world economy at the
present time is grievously distorted, although institutions have already been
set up for the solution of the problems it presents. But in order that those
institutions may be fruitful, they must be used with unusual imagination
and boldness.
EXPANDING WORLD ECONOMY
I am impatient to see the World Bank and the Monetary Fund at work
helping the war-stricken areas of the world to get into production again,
and, with the help of a kindlier Providence rebuilding and expanding
world economy.
All over this country we see evidences of high inspiration-such, for in-
stance, as the Tennessee Valley and Missouri River project. Within the
Empire my Government and the Governments of various colonies are em-
215







New York, March 10, 1947


barking on not dissimilar schemes. For instance, only a few weeks ago we
set on foot an immense plan in East Africa for the production of vegetable
oils, which, in a few years' time, should be raising the standard of literally
millions of the inhabitants of East Africa. This will cost our Exchequer
$100 million.
In addition to this, I hope to see some really substantial results from
the conference on International Trade, which is starting at Geneva in
April; for unless we can re-establish freedom of commerce and exchange
of goods throughout our world, we shall go back to that ugly system which
was strangling us before the war, in which each country was striving for
self-sufficiency. None of us can be self-sufficient today. Indeed, I suggest
that the only self-sufficient community in this world of ours is a cemetery.
I have no fears about the position of my country or yours in an ex-
panding economy.

THE TASKS OF RECONSTRUCTION
We in Britain are going through a difficult phase of reconstruction,
which calls for careful planning. Nevertheless, no man has been required
to surrender his essential liberties. A man is expected to work to pull his
weight, but he may walk out of a job today, just as you may here.
We must bear it in mind that in my country, and in the Common-
wealth of which it forms a part, we have immensely increased our indus-
trial plant during the last six or seven years, as you too have done in this
country. In order that these great industrial systems may flourish and
bring a benison on mankind, mankind must be able to buy the output.
It is a truism that we can only buy if we have something to sell in exchange.
It is only by helping, not only what were conventionally known as the
backward areas of the world, but also the great countries of Western
Europe, which have suffered almost mortal blows in this last war, that we
shall set our society on the path of progress again. I beg you to reflect
on this question, for yours is the greater responsibility at this time.

VISITORS TO BRITAIN WELCOME
I do not want to minimize in any way the problem with which we are
beset in Great Britain. I know that there are many friends of ours who
are seeking, both privately and in public, to help us. I hear some people
saying that they are cancelling their holidays in England for this summer,
because they feel that they will be taking bread out of our mouths. As a
matter of fact-and here I should like to dispel another misconception-we
hope to see as many visitors in Britain this summer as are able to go there.
If they do not mind sharing our slender rations, they are more than wel-
come, for not only would they be making a substantial contribution to our
invisible exports, but they would also see what we are doing to help our-
selves. They would find our spirit is undaunted, that we are taking our
misfortunes in our stride and that we are determined to fulfill each and
every one of our obligations. [Oficial Release]










BRITAIN'S CRISIS
Broadcasts by the RT. HON. CLEMENT ATTLEE, Prime Minister,
and the RT. HON. ANTHONY EDEN, Deputy Leader of the Opposition

London, March 18, 1947.
The Prime Minister (Mr. Attlee): This is the first of a series of broad-
casts in which Government and Opposition speakers will give you their
views on controversial subjects. Tonight, however, I am going to speak
to you rather from the national than the Party political view. The diffi-
culties which face this nation are too serious and the challenge too imme-
diate to allow me to indulge in Party scores.
The Government have just published a survey, which sets out the prog-
ress made in reconstruction since the war, the present position of the nation,
the tasks which face us all, and a plan of action. It deals with the everyday
things of life. The nation's problems are the same as those which you
all have to face in your families. How can we produce or get the food,
clothing, shelter, fuel, education, and all the things needed for a full life
for all members of the family? What work, and how much work should
each member contribute? How much leisure and amusement can we afford?
In a word, how can we gain our living in the conditions of the present
day, and what standard of life can we afford?
Now it takes longer and it is more difficult to solve these problems for
a nation than for a family, especially when that nation has been at war
for six years and has saved itself and others by dedicating everything to
victory. After victory we have to reverse the process of mobilization. The
survey shows how vigorously we have turned over to the ways of peace.
Millions of men and women have returned from the Forces and from muni-
tions to civilian life; industries have been restarted with great energy. As
a result, the number of employed persons is greater than in 1938; the out-
put of goods had, by the end of 1946, almost reached pre-war level and
exports had exceeded that level. A fine start has been made by the workers
and management. It's a record of which you may well be proud.
We could have recovered quicker if we had brought all our men home
from abroad, but then we should have failed in our duty to our friends.
We could have got more food, timber and other things, if there hadn't
been world shortages and if we had been selfish and grabbed all we could
with no thought for others. We should have had a better start if we hadn't
been blitzed, or if we had kept everything up to a perfect standard of main-
tenance, instead of putting all our effort into the war.
As a result, we now have not enough men and women or materials to
do all the jobs which need doing, and those industries which for various
reasons are less attractive than others are short of workers.
It has, therefore, been hard to get the right balance between the various
parts of our industrial machine. The most striking example is coal, the
production of which has not kept pace with the increased needs of industry.
We also require more electricity and the plant takes a long time to make.
But I've seen the makers, who are doing all they can to speed it up.







London, March 18, 1947


THE PRESENT POSITION
Let us now look at our present position. As a nation we have two tasks:
the one is to provide goods and services for our home needs; the other is to
pay for the food and raw materials which we must get from aboard. Before
the war we were rich; we owned money and railways and so forth abroad.
The income from these helped to pay for our imports, but we sold these
in order to help win the war. We have, therefore, borrowed large sums
from Canada and the United States to tide us over while we build up again,
but when this money runs out, we must pay for what we want from our
own resources. To do this we must devote a far larger part than ever before
of the wealth we produce to pay for imports.
The question which now faces Britain is: Can we maintain and increase
our standard of life, or must we reduce it? I believe that we can maintain
it, and in course of time raise it, provided we organize intelligently, make
full use of science and invention, avoid waste, and above all work well.
We want, therefore, a sustained effort by the nation, but to be effective
this effort must be well directed. We are short of workers and of raw
materials. We must, then, use our limited resources in the best way. This
is where the plan comes in.
During the war the Government planned for victory. It took control
of the whole life of the nation, used all its resources, requisitioned property,
and so on. It rationed food and clothing, and directed men and women
where and how to serve. The nation as a whole willingly accepted all this
regulation and interference, because everyone wanted victory and realized
that private interests must give way to the supreme needs of the community.

DEMOCRATIC PLANNING
In peacetime we need the same willingness and public spirit, and we
need a plan. But we cannot compel people. That is the point you must
realize. The plan must be run on lines which accord with our democratic
ways and ideas, and which suit the complicated economic structure of this
country. We want the utmost freedom for the individual compatible with
the general good of the community. We must ration food and goods while
they are scarce to insure fair shares, but we have let up on a great many
wartime controls. Businesses have been returned to their owners, and men
and women are no longer directed where to work. Nevertheless the Gov-
ernment can lay down the general plan, and must take steps to see that the
really vital needs of the community are satisfied.
A democratic plan cannot be put into effect by a Government simply
issuing its commands, but only by the willing co-operation with the Gov-
ernment of citizens who understand the aim in view and the parts which
they are asked to play.
What, then, is the aim of the plan? The aim of the plan is to give
all our citizens-not just a section of them-social security and the oppor-
tunity for living full and fine lives.
What is the part you are asked to play in the plan? Your part as citi-
zens is by your work to provide the goods and services on which the plan
depends.







Britain's Crisis [MR. ATTLEE
The Government's part in the planning is to see to it that those needs
which are most urgent come first, and to plan the future development of
the country on sound lines.

BASIC INDUSTRIES
Let us see together how we are setting about this. First of all, there are
three great industries on which all our lives and jobs depend-coal, power,
and transport. These are the foundations on which the plan is built. The
Government has decided that these shall be nationalized and run in the
interests of the community, because we believe that this is the most efficient
way to deal with them. We have all learnt by bitter experience that unless
we can get the coal and electric power we need, everything comes to a
standstill. I am not going into the melancholy history of the coal industry
this evening, except to say that if the advice of Commissions of Inquiry
had been taken years ago, we should not now have our present critical
position.
Victory in the battle for coal will be a decisive factor in our campaign
for national prosperity. The justifiable demands of the miners for better
conditions have been met. Management and workers today are friends.
They have not always been friends in past years. I saw the miners' repre-
sentatives again this morning, and they told me the miners will go all out
to reach the target. Their record during these recent weeks has been mag-
nificent, but they need reinforcement. I join in the appeal of the miners'
leaders to all skilled men who have left the pits for other occupations to
return to help the country in this hour of need.
And they need the help of the rest of the community. The miners today
are like the fighting men in the Forces during the war in the front line.
Just as the fighting men depended on the workers in the factories, so miners
and workers in gas and electricity are today looking to them for the tools
to do the job. We want all the mining machinery we can get as quickly
as possible. We want the employers and the workers in the engineering
and other industries to help. We want more plant for power stations, and
more engines and trucks to move the coal, and more supplies for the gas
industry. I have myself seen some of the makers of these things, and we
propose to see others. They have promised their help, and the Government
is doing its part by giving priority and every assistance it can.
Next, how do we deal in the plan with two of the great evils of the
past-distressed areas and bad town planning? We must never again have
'distressed areas with rotting pockets of unemployment; so, under the plan,
factories and works are being put up where the workers are available. We
must never have again the haphazard expansion of towns and the ruin of
the countryside; so, under the plan, town planning has been pushed forward
and new towns designed.
These are human matters, not dry, academic planning. What about
housing? There's a great leeway to make up. We had to decide what was
wanted most, and we decided that the provision of houses for those who
need them most and the putting up of factories and works and public
buildings such as schools should come first.
219







London, March 18, 1947


Then we come to agriculture. Like the miners, the men and women
who work on the land and did such a splendid service in the war are still
in the front line. But they badly need reinforcements if we are to get the
food which we so urgently need. We must have more workers on the land.
The recent bad weather-the worst of the century-has been a heavy
blow in many ways. It made the coal shortage even worse. It set back the
housing program seriously, but, above all, it has injured our home agri-
culture. The wet autumn had already held up work on the land and now
snow, frost, and floods have damaged crops already sown, delayed spring
sowing, and killed many thousands of cattle, sheep and lambs. This is a
loss which will take long to make good.
We may well be thankful that this exceptional winter did not occur
during the war, but it has been a great setback, and the agricultural com-
munity deserve all our sympathy and help, and the workers in the great
basic industry of transport-road, rail and sea-have earned the gratitude
of all of us for their devoted work.

THE INDIVIDUAL'S SHARE
Now let me sum up. It is vitally important that these basic industries
of fuel, agriculture, transport, and, I would add, iron and steel, should
have all the workers and equipment they need. Their efficiency is the
foundation of our national plan, although our economic future depends
also on how intelligently and well we work in the vast range of other in-
dustries.
Owing to our concentration on war production, and the increased de-
mand due to better wages, there are great deficiencies to be made up. We
are short of everyday things like china, sheets, towels and household goods
generally. We are also short of machinery, factories, houses and materials.
And then we must increase our exports. -Finally, we are very short of
workers. We just have not enough people to do all we want. We are get-
ting some help from foreign workers, but that is not enough. What is the
moral? The moral is clear. All who can work should work. There should
be no waste of labor. Labor should be effectively used with all the help
that science, invention, and management can provide and should give of its
best. Now you may ask: "How does this affect me individually? What is
my share in the effort that is required?" Let me try to give a few answers.
First, our attitude towards our work. We must all bear in mind that
apart from bringing us our wages, salary, or profit, our work, whether for a
public or a private employer, or in our home, is our individual contribution
to all those goods and services by which we live and on whose increase our
standard of living depends. I believe that the home and home life is essen-
tial to good production and the housewife who always does her share so well
deserves the best we can give. But everyone must contribute their share.
If not, the sum total will be smaller, and all will suffer.
Ask yourself whether you are doing the kind of work which the nation
needs in view of the shortage of labor. Your job may bring you in more
money, but be quite useless to the community. You may, if you are a man,
complain of the shortage of coal or houses due to lack of labor in the mines







Britain's Crisis [Mn. ATTLEE)

or the brickyards; you may, if you are a woman, complain of the shortage
of towels and clothing due to lack of women workers in the textile industry.
But have you any right to complain if you are content to do some better
paid but quite useless work? Then you may ask for shorter hours, but are
you justified in asking for this unless you do a real job while you are at
work? You may be an employer of labor. Are you attracting labor from use-
ful to unimportant work for your own profit? Then we are all consumers.
Are we doing our best not to waste the national resources, for instance, by
carelessly wasting light or fuel?

THE TEST OF BRITISH DEMOCRACY
Some people abroad are suggesting that the day of this country is over.
Some of them thought so in the war, but they discovered their mistake.
The British people are never daunted by difficulties. The greater the
emergency the more readily they respond to the call for service. We shall
win in peace just as we did in war. Let us all work together cheerfully.
We understand teamwork from the games we play. We will continue to
play our games, but we must not let them take precedence over work. Let
us take our work in the spirit in which we take our play, remembering that
belief in victory is half the battle.
Britain showed the world that she could stand up to terrible odds in
defense of the British way of life. We will show the world today that Brit-
ish democracy can, by self-discipline and the team spirit, overcome our
economic troubles and so move on to better times for all.
[Official Release]



London, March 20, 1947.
The Deputy Leader of the Opposition (Mr. Eden): I must apologize
if I sound rather hoarse, but I'm only just recovering from 'flu.
No one will deny the seriousness of the economic crisis that now con-
fronts us. It is not merely the weather that has caused this. The weather
has made things worse, but the origin of our troubles goes much deeper
than that. The immediate cause of the breakdown has been shortage of
coal and shortage of electric generators. The fuel and power crisis, com-
ing just at the time when industry was regaining rhythm in post-war pro-
duction, has been a cruel blow to our prospects. Its effects will long be felt.
But these immediate problems must be set against the wider back-
ground. Before the war our overseas investments, themselves the result
of the thrift and enterprise of our ancestors, played an important part in
our national economy. Today these have been largely spent on the war.
We are heavily pledged overseas, particularly by the existence of the so-
called sterling balances, those vast debts which are one of our principal
rewards for saving the world. Our export task is truly gigantic.
To meet all these commitments we have a labor force which is ill dis-
tributed, and industrial equipment which is suffering from the strain of
six years of war. Finally, in our internal finances, we have a dangerous







London, March 20, 1947


situation. Too much money is chasing too few goods, while Government
expenditure greatly exceeds revenue.
All this is most serious. But these difficulties can be overcome, pro-
vided that we set about them in the right way.

THE FAILURE OF THE GOVERNMENT'S POLICY
Within the limits of the time I have, it is my duty to show you where
I think the Government have made mistakes and to suggest what we think
should now be done. This is not, indeed, an occasion for faction, but it is
most emphatically an occasion for fair and keen but constructive criticism.
The British people, after all the strain of war, are now called upon
to put forth further efforts in order to win the peace. In these circum-
stances they are entitled to the best of leadership, and they are entitled to
make sure that they are getting it. It is not enough that we should be
satisfied that the Government means well. We must also be satisfied that
they have the ability to administer the country in these difficult times, and
the determination and the power of leadership to bring the country through
the dangers that lie before us.
We must have economic planning of a kind and of a quality that will
ensure the fullest possible use of all the resources we possess, both at home
and abroad. I have for some time been saying, both in the House of
Commons and in the country, that in their concern to interfere with the
working and control of individual industries, the Government have been
losing sight of their first task, which is broad, strategic planning. The aim
of planning should be to guide and stimulate the efforts of industries and
individuals, not to restrict and distort them. Let me give you an example
of what I mean. The dislocation of industry from which we have suffered
this winter, the discomfort which the public has had to endure, have been
caused by a shortage of five million tons of coal, or about ten days' output.
That is relatively a very small margin indeed. Moreover, the danger of a
breakdown must have been evident last spring; for it is in the spring that
the coal budget for the next 12 months is prepared. Surely, it would have
been wiser to take precautions then against such a calamity, even if this
meant buying five million tons of coal abroad, or cutting down our ex-
ports, which amounted to nine million tons last year in bunkers and other-
wise? This would have been better than allowing ourselves to stumble un-
prepared into such wholesale dislocation. Even now the coal production
target for this year is too low for the needs of the nation. It is below
what was achieved in 1941 by the same number of men with less machinery.
Stranger still, the Government have, by speeches and by reductions in
the purchase tax, encouraged us to buy electric fires and gadgets at a time
when they must have known that our generating plant was inadequate to
carry a further load. Nor, apparently, was the manufacture of generators
for the home market given any adequate priority at all. And throughout
last year we were actually exporting mining equipment and electric gener-
ators. Again, there is a substantial figure for the export of agricultural
machinery, badly wanted on our own farms. That is what I mean by a
failure to plan.







Britain's Crisis [MR. EDEN)


THE QUESTION OF EXPORTS
Now I turn to the question of our export trade. Here again, nobody
denies the importance of exports, if we are to obtain the necessary equip-
ment and raw materials for our industries and the necessary food for our
families. In the present circumstances the concern of the Government
ought to be with the pattern of our import and export programs; and here
all is far from well.
It is disturbing to note how small a portion of our exports is at present
going to the so-called "hard currency" countries, principally the American
continent, for these are the countries who have the things that we really
want. According to the Government's own White Paper, only 14 per cent
of our exports are going to hard currency countries, while we're taking as
much as 42 per cent of our imports from them. It becomes all the more
urgent to sell goods to these hard currency countries, because the sellers'
market, which is at present available all over the world, is not going to
last forever. When this market begins to dry up, and by the summer I'm
afraid we shall begin to see the first signs of it, we shall be faced with
stern competition. Then our increased costs, which a continuance of pres-
ent conditions will make inevitable, are going to add to the difficulties of
our manufacturers in winning their way to world markets.
Again, I cannot feel happy about the use which we are making of the
American Loan. I had always understood that by far the greater part of this
loan would be used to re-equip our industry, to provide us with essential
raw materials, and perhaps some foodstuffs. But, actually, in the last half
of 1946 we spent only 5 per cent of our dollars on all kinds of machinery
as against 7 per cent on films and still more on tobacco. Surely these figures
do not make sense.
Now let us look at money and taxes. The rate of Government expendi-
ture is still today about three times above the peak pre-war budget. You see
the consequences of this in a crippling level of taxation, which acts as a
definite brake on effort and incentive in all walks of our national life. I
think it is of the utmost importance that there should be tax reliefs of a
kind that will encourage effort and output. I have in mind, for example,
further reliefs on earned income; effort must be rewarded. There should
also be a revision of the methods of operation of Pay As You Earn and the
transference, if possible, of a further proportion of the weight of taxation
from direct to indirect taxation. But none of these reliefs can safely be
given as things are today, unless there is a substantial decrease in the rate
of Government expenditure.

GOVERNMENT INDIFFERENCE TO PUBLIC OPINION
Perhaps the most striking of all the failings of the present Government
is their apparent indifference to public opinion and their inability to make
their policies intelligible to the ordinary men and women, who are most
closely affected by them. Small wonder that many people are bewildered
by what has happened in the past few weeks, so very different from what
they have been led to expect. As a nation we possess all the qualities of
character needed for our tremendous task. Our democratic institutions
223






London, March 20, 1947
are fashioned for change and progress. We are addicted to the best kind of
discipline, which has been described as organized unselfishness. It is surely
the duty of those who govern to make their policies not only clearly under-
stood but true to British character and in accord with tried and valued
British institutions.
Let us consider how our free institutions, which are a vital feature of
our democratic system, are in danger of being weakened by excessive inter-
ference and regimentation. The influence of Parliament is affected if ill-
digested Bills are forced through by methods such as the guillotine, which
will prevent large chunks of them ever being discussed at all. Hasty and
careless legislation impairs the authority of Parliament, and so imperils
the sovereignty of the people which reposes in Parliament.
Again, the British Civil Service is a source of national pride for its effi-
ciency and its integrity. An honest, impartial, efficient Civil Service is an
essential of democracy as we understand it. But as the Government rushes
legislation through at a break-neck speed, our Civil Service is being over-
loaded with work, and its efficiency is in grave danger of being reduced.
Local government is the center of democratic activity in the provinces.
The municipal service, which has so often been the training ground of our
national representatives, is being discouraged and belittled by over-central-
ization of administration in London.
If our industrial system is to tackle the great task before it, there is need
for Government aid and general direction, but not for so many over-
centralized and confusing controls.
Incentives to hard work there must be. In totalitarian States the threat
of force operates. It is well that we should never forget this forbidding fact.
We need to create an incentive based on pride in achievement and a sense
of service to the community, plus reward for effort and a true partnership
between capital and labor. There are many ways in which such a partner-
ship can be formed, differing in detail to suit the varying conditions in
industry. The Conservative Party has for some time been studying this vital
problem and will shortly present its proposals. I believe we will offer the
rank and file worker a position in industry that will cause him to feel that
he is more than a mere cog in the wheel. The question I ask my listeners
to ponder is whether the workers, brought under a vast system of State
monopolies, will be able to achieve a higher sense of personal responsibility
and greater pride of achievement than they can attain under a system of
enlightened free enterprise.

NATIONALIZATION: A PARTY POLICY
I have tried to make an objective analysis of our problems and to pro-
pound some remedies for our ills, but it is an essential condition of the
success of any policy that there should be true leadership.
The Prime Minister appeals for support of the Government on national
grounds, but unfortunately the Government persist in pursuing policies
which divide the nation. The state of the nation today is very different
from that at the time of the General Election. There has been a marked
deterioration in our affairs. We hear of the Dunkirk spirit, but the essence
224







Britain's Crisis [MR. EDEN)

of that spirit was that we all set aside partisan programs and joined in a
national effort.
Mr. Attlee said that he didn't intend to score Party points; but what he
repeatedly called his plan, which appeared to be merely to nationalize
transport, electricity, and, perhaps, other industries too, is the most con-
troversial of Party politics. You cannot unite the nation on that basis, for
even on the figures of the last General Election about half the nation was
against the Government on these issues. Nor, whatever their merits, do
they offer any cure for our immediate ills. They merely cramp and confuse
industrialists and clutter up the desks of Civil Servants who should be
attending to more urgent tasks. Though our hands must be free for the
future, nobody is going to ask this Government to go back now on what is
already law. But I say to the Government: Stop galloping ahead down
nationalization avenue, and pay attention to the things that matter most
now-food and fuel, houses and clothes, the balance of trade, the balance
of the budget, the fate of home agriculture. Make no mistake about it.
Home agriculture is going to be a vital issue in 1947. All who work on
the land will need every assistance we can give them. These are the things
a Government should be troubling its head about, and not whether elec-
tricity should become a state monopoly in 1948 or not. The Government
must put first things first.
For my part I am more than ever convinced that giant State monopolies
offer no cure for our national ills. On the contrary, the success and stability
of a civilized State depend upon the widest possible extension among all its
citizens of the private ownership of property. That is our faith, and I know
it is poles asunder from Socialism.

THE CALL FOR A NATIONAL LEAD
But there is an immediate task, and on this I conclude. The Govern-
ment is faced with issues as complex and as urgent as have ever confronted
our State in time of peace. Let them face these difficulties in a national
spirit. Let them give a true national lead and we can win through. The
British people will always respond to a lead. If they are told the truth,
and if they are given the lead they require, they will never fail you. If
what has to be done is unpleasant and unpopular, they will not flinch if
they know it to be necessary. Let them be given a national lead. Let them
be told in clear language what is required of them. Let them be given a
term and a purpose.
Today, the nation is like a runner who starts, as he thinks, to run his
half a mile. He strains every nerve, he almost drops from exhaustion; he
reaches the winning post, but, alas, the tape is not there, nor can anyone
tell him where it will be.
Instead of an endless vista of growing restrictions and dismal forebod-
ings, let our people be given a clear and definite task, which, though harsh,
holds out at its conclusion the prospect of a freer and fuller life for our-
selves and for our children.
For close on three hundred years the British people have solved their
political differences peacefully by democratic methods and Parliamentary







London, March 20, 1947

processes. Now has come our greatest testing time. It is not only that we
have a democratic duty to ourselves, to solve our political problems by
debate and vote, but we must set an example to Europe of the virtues and
virility of free discussion and the other liberties we cherish, and show that
they lead, under God's guidance, to a healthy way of life and high achieve-
ment.
I ask you to examine these methods; I ask you to examine them without
political prejudice and with characteristic common sense, and I am confi-
dent that your democratic answer will be against State regimentation and
in favor of a system of free enterprise, adapted by modern thought and
brought more closely into line with popular aspiration. I call that the
democratic answer, because democracy stands for the pursuit of individual
happiness, and I believe that without the free development of human per-
sonality and the joy of personal achievement there can be no true happi-
ness for the individual or lasting prosperity for the nation.
[Official Release]


EXPORT AND IMPORT TRADE
HOUSE OF COMMONS, March 24, 1947

Mr. Harold Wilson (Secretary for Overseas Trade): This Debate has
covered a very wide range in the field of overseas trade, and I think, if I may
say so, it has proceeded at a very high and serious level, with the possible
exception of the very charming intervention of the noble Lord the Member
for Southern Dorset (Viscount Hinchingbrooke), who gave us some little
insight into that dream world in which he is still living. With this excep-
tion, I think the importance of our export trade has been fully recognized
and fully expressed, both in the short-term and in the long-term aspects. I
should like to deal with many of the points that have been raised both on
the short-term and on the long-term problems, but in doing so, I am afraid
it will be necessary for me to hop from subject to subject rather than
attempt a connected picture.

THE SHORT-TERM PROBLEM
The short-term problem of export is, of course, fundamentally a problem
of production and a problem of the allocation of supplies between home
consumption and export. The short-term import problem in many fields
is a question of actually getting hold of the materials, machinery, food, or
whatever it is that we need to import into this country. When the noble
Lord suggested that we should not only cut off our export trade for a
short time, but also increase our imports, I do not think he realized that
many of the things he was calling upon us to import are not easily procur-
able. A large number of hon. Members have referred to the necessity for
importing more machinery for the re-equipment of our factories, and have
contrasted the dollars and other currency spent on what they describe as
non-essential imports, with the relatively small amount spent on machinery
for the rehabilitation of industries. The reason is not that machinery has
226







Export and Import Trade [MR. HAIOLD WILSON]

not been getting an adequate proportion, but simply the difficulty of com-
peting with the vast reconversion needs of the American industry. With
regard to increasing importation of food, I do not want to go too much
into that subject to which the noble Lord referred. One of the biggest
difficulties, as he well knows, has been, not only in procuring it but in
getting it moved to the seaboard for shipment to this country. On many
of the points raised on the short-term question I agree with the hon.
Member for Banbury (Mr. Dodds-Parker), particularly that we should try
to encourage new exports and where possible, new suppliers. Of course, he
will realize the difficulty of bringing new suppliers into industries where the
raw materials are already very short and where it is necessary to give fair
supplies to those who are already in the industry.
The question of the direction of exports was raised by a very large
number of hon. Members, and I think that most of what I can say on that
has already been said by the President of the Board of Trade in his speech
a fortnight ago today. What we are doing, without introducing a system
of rigid licensing of exports, which would be necessary to get such a physical
redirection, is to encourage and persuade industrialists in as many industries
as possible to try to send their exports to the hard currency countries, and,
as the hon. Member for Edgbaston (Sir P. Bennett) has just said, particu-
larly in cases where it is possible to increase the total amount of exports.
In those cases we are asking that, so far as possible, the exports should go
to the hard currency areas, but, of course, there are great difficulties about
doing that on a really rigorous scale and on the scale which some members
have suggested, particularly, of course, in view of the necessity for main-
taining contacts with the markets which we shall certainly need when we
come to deal with the long-term aspect, especially some of those Empire
markets the importance of which hon. Members opposite have stressed in
their speeches today.
Then the question has been raised by one or two of my hon. Friends on
this side of the House of trade with Russia. I do want to assure them that
we are anxious to get the fullest possible trading relations with Russia,
and there is no lack of good will or energy on our side in trying to make
that effective. My hon. Friend, now the Paymaster General, who preceded
me as Secretary for Overseas Trade, was very energetic in this respect and
only a few days before he left the Board of Trade he sent a message to
Moscow stating his willingness to go immediately, at short notice, with a
view to having trade talks with the Russian Government. Since I followed
him at the Board of Trade, another message has already been sent repeating
on my behalf, the assurances he has given that we are anxious to have talks
with the Russian Government to see what mutually advantageous arrange-
ment can be made for trading between Russia and Britain.
The question was raised by four or five hon, Members about the impor-
tation of azaleas, tulips, mimosa, and other flowers in recent weeks. There
is a reason for these imports. I think hon. Members who have had experi-
ence of negotiating with some other countries on a bilateral basis know
when asking them to increase their exports to us of the things we want
often you can get the increase required only at the cost of bringing in







House of Commons, March 24, 1947

certain other things which, quite frankly, we are not so keen to have.
It is a fact that the country to which the hon. Member for West Coventry
(Mr. Edelman) referred was willing to increase exports to us of steel which
we need, only on condition that we were able to take imports of certain
flowers and fruits to which exception has been taken in certain parts of the
House.
INCREASING WORLD TRADE
Turning from the short-term to the long-term problem that, of course,
is very much more complicated and in some ways more difficult. The long-
term problem of British exports is partly one of getting production but
much more it is a problem of cost, of efficiency, of being able to compete
with other countries under conditions of a buyers' market. It is partly
that, but fundamentally it is a problem of increasing world trade above the
level of the nineteen-thirties. As my right hon. Friend said earlier this
afternoon, we require a 75 per cent increase above pre-war volume. In our
own interests, and in view of the necessity to maintain the flow of raw
materials for full employment, it is also absolutely vital that we get such
an increase in world trade as to make it possible for us to reach our export
target. That is one reason why we have joined in the elaboration of this
International Trade Organization, and one reason why we are going to
send a delegation to Geneva is to attempt to raise the volume of world
trade.
Mr. William Shepherd (Conservative): As our export trade is almost
confined to manufactured goods, and as the tendency in the world today is
an increase in industrialization, to what direction does the hon. Gentle-
man look for our manufactured goods market?
Mr. Wilson: I am afraid that question would take a long time to answer,
but an increase in industrialization in keeping with the rising standard
of living in those countries, would demand more goods. But one thing
which is going to affect the pattern of trade in the future will be the
demand for capital goods already playing a large part in Britain's export
trade. What we are seeking at Geneva as a means of increasing world trade
is a reduction not only of tariffs, but of other trade barriers, including
quantitative regulation of trade. This reduction in tariff barriers is being
sought, not only in an effort to increase world trade, but also as a means
of solving the problem mentioned in the speech of the hon. Member for
Edgbaston just now. While speaking of that, I should like to thank the
hon. Gentleman for the good wishes he expressed for the delegation which
we are sending to Geneva. The problem to which he referred was that of
increasing the imports into America, in order that there could be some-
thing corresponding with their capacity to export, and the problem of
maintaining the right balance of payments for the creditors, especially
those in the Western Hemisphere, quite apart from the problem of increas-
ing British exports. Anyone who considered the problem of world trade
for one moment, would agree that it is impossible to solve the world mone-
tary problem, unless we can solve this problem of imports into the United
States and similar countries.







Export and Import Trade [MR. HAROLD WILSON]

The right hon. Gentleman the Senior Burgess for Oxford University
(Sir A. Salter) said he could not find in the Charter any proposals for
dealing with this problem in a country which had a consistently favorable
balance of payments. I see that he is not here at the moment, but if he
were I would refer him to Article 7, page 5, Section E, paragraph 3, of the
Charter, which sets out in the fullest terms the kind of proposal which he
was wanting to see.
I.T.O. AND IMPERIAL PREFERENCE
Turning to the question of Imperial Preference, this matter was first
raised-I thought in the least constructive form-by the right hon. and
gallant Gentleman the Member for the Scottish Universities (Lieut.-Colonel
Elliot). He quoted some very impressive sounding figures of trade in the
period following Ottawa and the Import Duties Act, and showed that
during the period between 1932 and 1937, trade with the Dominions
increased quite remarkably-and so did trade outside the Empire. It is
very easy to prove a thing of that kind, if you are going to compare, as the
hon. Member for Mid-Bedford (Mr. Lennox-Boyd) was quick to see, one of
the worst slump years of all time with a year of peak activity for pre-war
days, particularly when using value figures, and comparing the figures of
a low price year of 1932 with the figures of a high price year of 1937. I
suppose that figures of that kind were used before the war by hon. Mem-
bers opposite to persuade themselves that they had solved the problem of
world depression.
Lieut.-Colonel Elliot (Conservative): I do not wish to interfere with
the rather complacent arguments which the hon. Member is addressing to
us. Surely he will see the purpose was to get out of the depression; and we
did get out of the depression. He admits that by his arguments.
Mr. Wilson: I think a lot of other countries without Imperial Preference
got out of the depression, and have equally remarkable figures. I do not
think anyone in 1937, this so-called boom year-the people in my constitu-
ency and in other parts of the country, and for that matter, the millions of
unemployed in the export industries-really felt that the right hon. and
gallant Gentleman and his colleagues had solved the problem.
Lieut-Colonel Elliot: They certainly made a better effort to solve it than
was made in the two free trade years when the hon. Member and his friends
put men out of work at the rate of one per minute.
Mr. Wilson: If we are going back into the question of the depression, it
hit the whole world and began before our party came into office. There
are a lot of other figures which we might quote.
Lieut.-Colonel Elliot: We have all night.
Mr. Wilson: The right hon. and gallant Gentleman apparently wishes
me to quote some figures like for like. For those Empire countries to which
he referred, taking 1929, the exports to Canada were 35 million, and in
1937 they were 271/ million; for Australia they were 54 in 1929, and
37V/ million in 1937; for New Zealand they were 21 million in 1929,







House of Commons, March 24, 1947


and 20 million in 1937. He did not refer to South Africa, where there was
an increase.
Lieut.-Colonel Elliot: The very country I want.
Mr. Wilson: If the right hon. and gallant Gentleman had not compared
1937, but the year of incipient slump, 1938, when the export trade was
falling very fast indeed, and when, if it had not been for the oncoming
of war and rearmament, we should have entered a slump at least as great
as that of 1931-32, the picture would have been very different. I remember
reading in the Manchester Guardian at the time, that in the second quarter
of 1938 cotton exports had reached the lowest figure since 1852. Statistics
can be used to prove either the case for Imperial Preference or the case
against it. I am sure we are happy to leave the statistics which the righ hon.
and gallant Gentleman was quoting.
I now come to the real argument about Imperial Preference, and the
part which it is to play in this conference at Geneva. I think that the right
hon. and gallant Gentleman opposite really over-dramatized the situation
when he used the phrase about "the Empire being abolished." Not only
can this be answered by the assurance given by my right hon. and learned
Friend, but also by the fact that the British Empire was not born in 1932,
and does not derive solely from Ottawa, the Import Duties Act, or the
various other economic bonds to which he referred. I wish the right hon.
and gallant Gentleman had been present at some of the discussions we have
had during the past few weeks between the Commonwealth countries, so
that he could have realized the "ideological" relationship-I hate the word
"ideological"-between certain of the Commonwealth countries and this
Government. We have been having the closest consultations with Common-
wealth countries on the line to be taken at Geneva, and we are consulting
with the representatives of a considerable number of Colonies. Represen-
tatives of the Colonies will be at Geneva, as well as representatives of the
Dominions. In these talks, which began on Ilth March, we hope to have
three and a half weeks' of very intensive work on the problems we have
been debating today. I can certainly say that the talks have been extremely
friendly and co-operative, and that there is a hopeful spirit about the out-
come of the Geneva conference. We are, at present, going through every
item of common interest to ourselves and the Dominions. We are going
through every item that might appear on any tariff or preference list that
might be called into question at Geneva.
I think that my right hon. and learned Friend gave Members opposite
the assurance which they were seeking-and I think they were satisfied
with it-about Imperial Preference. Article 24 provides for negotiations to
begin between foreign nations for reciprocally mutually advantageous nego-
tiations, directed to a substantial reduction of tariffs and other charges on
imports and exports, and to the elimination of import tariff preferences.
It is not a question of trading the whole of the Imperial Preference system
for minor concessions in the tariffs of other countries. We are undertaking
a whole and laborious series of individual negotiations at Geneva. There
is no question of trying to apply an automatic common rule to the Imperial







Export and Import Trade [Ml. HAROLD WILSON
Preference list, or overseas tariff list. We judge every item on its merits.
A given reduction in a foreign tariff would call for an appropriate reduc-
tion in Preference, if it were mutually advantageous. In the phrase, "mutu-
ally advantageous," we have in mind advantageous to the third party to
every Preference negotiation. The elimination of Preference on any item,
or series of items, can only be in return for a substantial reduction in the
tariffs of the country with whom we are negotiating. Article 24 (I) (c)
states that the principle is accepted, in negotiations, that the binding of a
low tariff is recognized as a concession equivalent to a substantial reduction
of a high tariff....
The next point referred to the reduction or elimination of preference.
The point of the Article is that if we were negotiating with, for instance,
the United States, an offer to bind one of our existing low tariffs would be
equivalent to an offer on their part to reduce a high tariff. As far as the
preference is concerned, if, for instance, Canada were negotiating with the
United States, a reduction in the preference would be equivalent to a reduc-
tion in the high tariff, or, alternatively, if a country with low tariff rates
were negotiating with Canada on a particular high tariff item, a binding
of that low tariff would be taken as equivalent to Canada's reduction in
the preference.
Lieut.-Colonel Elliot: The hon. Gentleman does not seem to realize the
difference between the words "reduction" and "elimination." There is a
difference, I assure him.
Mr. Wilson: That has been fully realized in these discussions. These
words have not been put in without the most careful thought.
Lieut.-Colonel Elliot: I am sure of that, but why does the hon. Gentleman
skate round them when it comes to explaining them to the House?
Mr. Wilson: I think it has been explained several times that only a sub-
stantial reduction in a tariff would be exchanged for the elimination of a
preference. As far as we are concerned, there is no question of our offering
to bind one of our tariffs against a preference.
Lieut.-Colonel Elliot: The hon. Gentleman has not grasped the point at
all. A tariff can be reduced and put back again, especially under the escape
clause. It can be done at any moment. A preference takes a long time to
negotiate. Once swept away, it cannot be restored.
Mr. Wilson: I will deal with the right hon. and gallant Gentleman's
question about the escape clause in a moment in its relation to preference
as well as to tariffs, but I would not accept his suggestion that if any other
country makes use of the escape clause it is not possible to reimpose a
preference which has been lost. I want to repeat what is more important,
and that is the fact that we shall not lightly reduce, much less eliminate,
any preference except in return for a really valuable concession from those
with whom we are negotiating. In many ways, the negotiations which we
are having at Geneva, and any subsequent ones which follow, can be
regarded as a continuation of the trade agreement of 1938 with America,







House of Commons, March 24, 1947


carried out under the guidance and direction of the right hon. Gentleman
the Member for West Bristol (Mr. Stanley)-an agreement in which we
reduced tariffs and preferences in return for a reduction in United States'
tariffs. It is owing to the war that we have not felt the real effects of that
agreement.
REPERCUSSIONS ON BRITISH AGRICULTURE
I come briefly to the point raised by a number of hon. Members con-
cerning the effect of these proposals on agriculture. I wish to assure hon.
Members briefly, though I could go into it more fully, that nothing that is
done under these proposals ties our hands or prevents us carrying out the
agricultural policy which has already been announced to the House and
which the House has approved. We can continue the use of tariff protection
in agriculture to the extent that it can be introduced on any item as a
result of the Geneva discussions. To the extent that State trading continues,
we can use State trading in the same way, giving more advantageous prices,
to home agriculture than to overseas buyers, the margin corresponding to
the tariff which would rule if private trading were in operation. We are
perfectly free to assist home agriculture to any extent. The restrictions in
the use of subsidies under the Charter deals with export subsidies and
subsidies for general production. Of course, subsidies can also be followed
equally in private or State trading. I should like to assure hon. Members
on this side of the House that nothing in this Charter in any way affects
the right or ability of this country or any other country to manage or
operate internal economy, whether agricultural or industrial, and cannot
affect the development of the welfare services which this Government in
recent months have been intensifying.
I think the proposals will really help the British farmer. Not only do
they not tie our hands with regard to an internal agricultural policy, but
they assist the farmer in the positive help which is given in protecting him
against the worst effects of international agricultural depression. One of
the worst things which hit the farmers between the wars was the quantita-
tive regulations in other countries and the fact that many exporting coun-
tries found a market in this country, because they had been driven out of
other markets owing to quantitative restrictions overseas. I know the
Government then found it necessary, in defense, to introduce and operate
quotas in this country, which possibly at that time was the only means of
defense against the influx of food from abroad. The proposals in com-
modity planning and stabilization of prices will help to protect the British
farmer, and as well, will balance the international development of a full
employment policy.
I have been asked a number of questions about quantitative restrictions,
the quota restrictions and the banning of such restrictions under this
scheme. As I have said they can be used in agriculture. They can also be
used in dealing with short supplies, in the regulation of war surpluses and,
very important to this country, in times of acute balance of payment diffi-
culties. As long as we are in balance of payment difficulties we can operate
quantitative restrictions on imports. There are careful safeguards so that
no country will abuse that provision. Apart from that, quantitative restric-







Export and Import Trade [MR. HAROLD WILSON]
tions go altogether, and I think that will be of great value to this country.
It was a familiar weapon in use between the wars, but like so many primi-
tive weapons, it often recoiled on the heads of those who used it. Take
the figures of the years between 1929 and 1937, the exports in the case of a
large number of countries which took our goods dropped.

CONSULTATIONS WITH INDUSTRY
Before I conclude I should like to deal with one or two points which
were raised by the hon. Member for Edgbaston. He asked about the consul-
tations with industry. The Lord President of the Council on 15th April,
1946, announced the Government's desire to get into touch with trade
organizations, and on the same day a letter was sent out to the British
Chambers of Commerce, the Federation of British Industries, the Trades
Union Congress and other bodies asking for expressions of view from
industry. We have had those expression of view from industry on the
general question of international trade policy and details of trade organi-
zations and also individual tariff negotiations. We have had a series of
meetings in the Board of Trade with possibly hundreds of individual trade
organizations and also with representatives of the trade unions on many of
these questions. My predecessor, now the Paymaster-General, met the Fed-
eration of British Industries and the National Union of Manufacturers.
I have met the Association of British Chambers of Commerce and a meeting
has been arranged with the T.U.C. which unfortunately had to be post-
poned owing to traveling difficulties. We have also arranged to establish,
while the Geneva talks are going on, a standing consultative committee
representative of the bodies I have mentioned and also of the National
Farmers' Union, and this is to meet constantly and regularly under my
chairmanship to consider progress at Geneva and to discuss any points that
arise. I shall, myself, travel between Geneva and London, and representa-
tives from Geneva will come across as occasion arises to meet this con-
sultative committee. We shall certainly bear in mind what the hon. Gentle-
man said about the desirability of giving as much notice as possible of the
questions on which we want to consult the committee.

THE "ESCAPE" CLAUSE
Another point that was raised concerned the escape clause. I have
already mentioned that this escape clause, which has alarmed a number of
hon. Members, applies equally to ourselves as to the United States. We
have the fullest right to invoke the escape clause if we are adversely affected,
and the mere fact that the American Government have said that this escape
clause will be included in all future American trade agreements is not,
perhaps, quite so serious as it looks at first sight. That clause has been
included in very many American agreements in the past and, so far as I
know, it has been invoked only on one or two occasions. Furthermore, as
I have said, we ourselves can invoke it, and the fact that there is an escape
clause may make some other countries more courageous in the kind of trade
agreement which they are willing to come to at Geneva, and subsequently.
Finally, a question was raised about the Philippines. The point is that







House of Commons, March 24, 1947

the Philippine products used to enjoy a reciprocally free entry with the
United States. There was, in fact, a customs union, which is fully allowed
for in these trade negotiations. When the Philippines became independent
this was changed, but to avoid too rude a shock on the Philippine economy
it was arranged that transition from the customs union to the final state
of things should be spread over a period of about 20 years, at the end of
which time preference would be completely extinguished as between the
two countries.
INTERNATIONAL PLANNING
The last general question with which I should like to deal was raised
by my hon. Friend the Member for Stoke (Mr. Ellis Smith) and my hon.
Friend the Member for Grimsby (Mr. Younger). They were a little afraid
that these proposals would make international planning impossible. I
want to reassure them completely on that point. In the first place, inter-
national commodity planning, which is very vital, is possible only under
this kind of proposal-unless we are going back to the kind of commodity
planning we had between the wars, which was mostly of a restrictive char-
acter imposed by the producers themselves....
Secondly, in so far as international planning means anything, one of the
most important things of all is the development of undeveloped areas, and
we are all grateful to the hon. Member for Mid-Bedford (Mr. Lennox-
Boyd) for his very frank admission that the Colonies, over the very long
period when hon. Members opposite were in the Government, still remained
very severely underdeveloped. This Government has plans, and intends
to go on with the development of the Colonies, on a. very big scale. The
scheme to which the hon. Gentleman the Member for Mid-Bedford referred
for groundnuts production in Africa is only the first of many schemes of
development. The proposals in Chapter 2 of the Charter, as well as the
proposals in the Report of the Food and Agriculture Organization, provide
for a much more rapidly increasing development of the so-called backward
areas, and I fail to see how that could be done except on the basis of an
international organization of the kind which it is proposed to set up under
this Charter.
We have heard certain criticisms of these proposals; we have heard
certain worries expressed as to what might happen; we have heard a certain
amount of cynicism that this might not come off; but what we have not
heard is a constructive alternative to the proposals which are at present
before the world. We have to increase our exports. That is absolutely vital
to this country. The hon. Member for Mid-Bedford pointed out that, as
President Roosevelt said before he died, it is equally vital, if the Americans
are going to provide full employment for themselves, that they must treble
their exports. Except on the basis of an increased world trade, the only
result of that would be an extremely vicious, vigorous, intensive trade war
between that country and ourselves, and probably most other countries
as well, which have just the same ideas. It is not a question of opening up
the Empire markets to American competition. It is a question of opening
up all the world's markets to all the export trade of the world.
234







Export and Import Trade [MR. HAROLD WISON)

BRITAIN'S EXPORT PROBLEMS
I would like to conclude where I began, by saying that these Interna-
tional Trade Organization proposals are not of themselves a solution to
Britain's export problems, either short-term or long-term, but they do
provide the conditions in which a solution can be found. That solution in
the long-term can come only by the development of efficiency in British
industry, and of lower costs of production, and, as the hon. Member for
Banbury said, by new blood and new ideas in British industry and in
British exports. That can be achieved only under this kind of proposal.
If we are to look at the alternative, an alternative based purely on trade
wars with a restricted volume of world trade, of British industry sheltering
behind high tariffs and, therefore, only able to go on from year to year as it
was before the war, without modernizing itself, re-equipping itself, shelter-
ing all the time its inefficiency behind the trade barriers erected-if that is
to be the alternative which some hon. Members opposite are suggesting-
there is truly no hope whatsoever for British export trade in the modern
world. That is not the spirit in which we go to Geneva. We go to Geneva
hopeful that something will come out of this, hopeful that we are going to
establish an organization which will make possible a great increase in
world trade, and while we are quite prepared to discuss with all countries
any item they want to discuss, we certainly shall not give up any item of
Imperial Preference without getting something really worth while in
exchange.
exchange. [House of Commons Debates]



THE NATIONAL SERVICE BILL
HOUSE OF COMMONS, March 31, 1947
The Minister of Labor (Mr. George Isaacs): I beg to move, "That the
Bill be now read a Second time."
In asking the House to give a Second Reading to this Bill, I propose,
briefly, to explain the need for it, and then to go, in a little more detail,
into the methods and conditions set out in the Bill itself.

THE NEED FOR NATIONAL SERVICE
Primarily, the need for the Bill arises from the fact that the regular
components of our Forces have seriously run down, owing to the fact that
there has been no regular recruitment during the war. At the moment
we are faced with the position that the number of men in the Army, serving
under a regular term of enlistment, is something a little over 100,000-prob-
ably 110,000, or somewhere in the region of that figure. In the regular Air
Force the number of regular Servicemen is now down below 70,000. In both
cases, those figures contain a large number of men who will shortly be
coming to the end of their engagement, and unless some steps are taken to
fill up those gaps, we shall find ourselves in a very difficult position. In the
Royal Navy the position is, admittedly, much better; but even so, it is not
235







House of Commons, March 31, 1947


satisfactory. In the Navy there were regular Service intakes during the war,
and voluntary recruiting has been a little more successful.
Some time back the Government realized that there would be this prob-
able shortage, and they embarked upon an extensive recruiting campaign,
by a periodical press campaign, by advertisements in the press, and, in many
cases, by the support of hon. Members of this House in making appeals to
their constituents. Results in recent months have shown an improvement,
but they have been by no means all that we should desire. For example, in
the three months to January of this year the volunteer intake into the Forces
was 22,349, compared with 13,298 which we had in the three months up to
June. But even that improvement, welcome as it is, is insufficient to meet
the need, and to build our Forces up even to their pre-war strength. The
position which confronts the Government is that, unless we can continue
the present arrangements for the call-up of men, the regular element in the
Services is likely to be insufficient to meet even a fraction of our minimum
defense requirements. Therefore, if the defense Forces are to be maintained
in a sufficient state to enable the defense of the country to be undertaken,
should it be necessary, we must have a Bill of this kind. It is the view of
the Government, quite definitely, that that gap can only be met by a scheme
of National Service. The voluntary scheme has not proved sufficiently effec-
tive, despite the attractions of improved conditions, and the prospects of
advancement that are open to the voluntary Serviceman now as compared
with before the war. That is not sufficient to encourage the enlistment of the
number of men that are required.
There is, however, a second reason, and that is the need for the nation
to build up efficient, well-trained reserve and auxiliary Forces. We must
maintain a reasonable state of preparedness in case we should be engaged in
a future war. I am sure it is the very sincere and earnest hope of every one
of our people that we may not be faced with a future war. There is no idea
and no intention in the mind of any of our folk to engage in a fight with
anybody. On the other hand, somebody may want to have a fight with us-
we do not know. For that reason we have to be prepared to stand our
ground, and to defend our country and the principles in which we believe.
If our Armed Forces are to be capable of operating efficiently at the begin-
ning of an emergency they must be backed up with efficient and adequate
reserve Forces; otherwise, all that we shall be doing will be saying to the
volunteer force, which is inadequate to meet the strain: "You go into battle.
We will sacrifice you, and will wait a few more months while we train the
others that are to come on." We think it is absolutely essential that we
should have efficient and well-trained reserves to enable those necessary
requirements to be faced. We do not think it is possible to get that reserve
by purely voluntary service. Now, before the war the Territorial Forces
were staffed with a number of enthusiastic men, who were willing to give
their spare time to train for the defense of the country. But the training
that can be given under those circumstances does not produce a sufficiently
efficient individual to take full part in the defense of his country, and, in all
probability, not sufficiently well trained to look after his own personal
defense.







The National Service Bill [MR. ISAACS]

Air Commodore Harvey (Conservative): Does the right hon. Gentle-
man mean that the Battle of Britain pilots, who trained in the auxiliary Air
Force, did not play their part when the war came?
Mr. Isaacs: It is most unreasonable for the hon. and gallant Member to
try to put into my mind any such thought or suggestion. I think that every
one of our people who so willingly responded in the war when they had the
clarion call from the then Prime Minister, deserves credit for the way they
devoted themselves to the job. To pick out any one as against another, and
to try to draw a distinction between them, is not reasonable or fair. Even
the footsloggerr" did his bit, with the training he had-[HoN. MEMBERS:
" 'Even'?"]-Some hon. Members opposite seem to be anxious to pick up a
word here or there, and to make something out of it. Perhaps I might go
back to what I was trying to say. I was trying to say that every one of those
people who volunteered for any kind of service did his best. But those
people could not do as well as they might have done, because they did not
have facilities for full and complete training, which we hope they will get
under this Bill. This is no time to draw distinctions between one and the
other. We have to bear in mind that the training required for our Forces
today is a much different training from which was required before the out-
break of the war which has just closed: there are new weapons; scientific
weapons of different kinds; technical developments of all sorts, which re-
quire a very complete training to enable a man to be efficient at his particu-
lar job, and we cannot rely upon that kind of training being given after an
emergency has arisen. On that matter, in relation to emergency and the
need for speed in action I will, if I may, quote to the House, if they will be
considerate enough to listen, a passage from the Prime Minister's speech on
the Loyal Address on 12th November last, which I think clearly sets out the
Government's point of view. My right hon. Friend then said:
"First of all, the development of modern warfare has made this country more
vulnerable. We are now part of the Continent. We can be reached by attack from
the Continent. While in the past we always had a long breathing space on which we
could depend, that breathing space is most unlikely to be available should any war
arise in the future. The logic of that is that while we keep our front line Forces
as low as we can consonant with efficiency and the jobs they have to do, we must
have trained reserves who can take their part right away without waiting for six
months' training."-[OFFicIAL REPORT, 12th November, 1946; Vol. 450, c. 40.]
We consider that compulsory National Service is not only necessary to
ensure speed, but is also the most democratic way of providing the Forces
required. In the old days, between the wars and before the wars, recruiting
statistics show that we had a greater intake into the Army in days of serious
unemployment, when men turned to that kind of opportunity of getting
their livelihood, when no other means were open to them. We think today,
that the responsibility, the duty-I think one might almost say the privilege
-of taking part in the defense of our country should be spread over the
whole of our young men, irrespective of their class or their occupation; they
should all come along and play their part in this service. We consider it
is a national duty that everyone, when required, should come to the defense
of their country, and individuals should give sufficient time to making them-
selves competent to undertake that duty.
237







House of Commons, March 31, 1947


COMPULSORY MILITARY SERVICE
This Bill provides a method for carrying out that duty. It amends the
existing National Service laws. It is an amending Bill. It provides for con-
tinuous compulsory military service from 1st January, 1949. I will explain
the detailed changes as between the existing laws and this Bill a little later.
I want to emphasize, first of all, that all the existing safeguards for personal
hardship cases, for conscientious objectors and all the other reasonable
requirements for postponement and deferment, have been maintained, and
in some cases have been slightly extended. These arrangements worked
exceedingly well during the war. There may, of course, have been cases
where somebody did not get a postponement, who thought he should have
got it, but in general their work gave satisfaction as fair and reasonable, and
we consider that the hardship committees and conscientious objectors'
tribunals and other similar bodies for dealing with these cases should con-
tinue to take part in the administration of these provisions, as they have
done in the past.
Until 1st January, 1949, men will be called up under the existing ar-
rangements set out in detail in Command Paper 6831 under the title, Call-
up to the Forces in 1947 and 1948. Under these arrangements, young men
called up during this year will serve for two years, and those called up from
the beginning of next year will serve a gradually shorter period, the period of
service being reduced, so that those called up at the end of the year will serve
18 months, thus bringing them into line with what the Bill provides. This
Bill provides that the National Service Acts shall cease to have effect on 1st
January, 1954, unless a later date is fixed by Order in Council. In other
words, this new Bill means that military service for the nation will continue
to exist for five years definitely, but can be extended by Orders in Council.
Such Orders in Council must have the consent of both Houses of Parlia-
ment. That means that young men who have not reached the age of 18
by 1st January, 1954, or any later date, will not be liable to be called up,
but that at that date, the liability at once disappears. But it must be clear
that there must be some men called up just before that date, who will then
be in the Services, who will have to continue their Service, although the
period of it will not end until after the date on which compulsory enroll-
ment has expired. Parliament itself will have complete control over the
extension or otherwise of this liability to service; it will be for Parliament
to determine it, as it seems necessary in the light of the circumstances exist-
ing at that time.
THE FIELD OF THE CALL-UP
Now as to what we may call the field of the call-up. The Bill gives au-
thority to call up young men between the ages of 18 and 26; but I must
make it clear at once that the usual call-up age will be the age of 18, and
that the extra age limit is put in-for the purpose that I will explain a little
later on-so as to give facilities to the Ministry for making deferments and
postponements. The total period of service is seven years, 18 months' full
time service with the Forces, and five and a half years with the Reserve Ser-
vices. Under the present Acts, men up to the age of 46 are liable; and their
liability to serve, when called up, is until the end of the present emergency;
238







The National Service Bill [Mn. ISAACS]
and that is to be fixed by some date. But under the Bill men will be called
up definitely for the stated period of 18 months. Therefore, they will know,
once they leave their civil employment or student courses, that they are
going in for a fixed and definite period.
Primarily, the reason for the 18 months' full-time service is determined
by two factors. First, there must be an adequate period of initial training.
That is not to say that the full 18 months will be taken up by training.
Many of the Forces, or sections of the Forces, may be able to complete suffi-
cient training by the end of 12 months, and the young men may then do a
bit of soldiering. Men may finish training, and then go to do garrison duty
or some other work to take the place of some of the men coming out at
the end of their normal time of service. Whilst the period of 18 months may
not be required for complete training it is required for service. Secondly,
it is necessary to have a marginal period so that extensive training may be
given and the fullest opportunity taken of the time in which the Services
have the young men at their disposal. But it has to be borne in mind that
this, in itself, will bring about an added demand upon the normal full-time
soldier because it will be regular components of the Forces who will have to
undertake the training of the young men coming in; and, therefore, there
will be less men available in the active lines should any requirements arise
for their services.
I should like to mention here that the Government are not using the
word "conscript" in this Bill. We are referring to these young men as
"national service men." There are many who prefer to think they will be
coming in to do their service willingly, although called up, and who do not
like the connotation of the word "conscript" and its reference, not to cir-
cumstances in this country, but to circumstances in which others have used
it, and which have become associated with the word. I make that point
for what it may be worth.

A SHORTENED PERIOD OF SERVICE?
I want to refer to one or two other factors. We hope that it may be
possible-as I shall explain, there is power in the Bill-to shorten the period
of service. There are two ways in which that may be achieved. First, we
may find that the campaign to attract young men will be more successful
than it has been. Many of the young men called up to do their 18 months'
service may find the Services so attractive to them that they may desire to
continue in them, and to continue for a fixed period longer than their 18
months. Secondly, our overseas defense commitments may be so changed
to make it unnecessary for us to have the Forces which we now think
are going to be necessary; but this is too indefinite for the Government to
assume for the purposes of national planning. Therefore, there is power
in the Bill, in Clause 1 (1, a), for the Government, by Order in Council,
to reduce the initial period of the 18 months' whole-time service; and I
have authority to say, that should this be practicable it will be done. It
must be borne in mind that there may be cases in which a man may find
himself called upon to serve a little more than the 18 months period. It
will be entirely his own fault if he does; if a man deserts, or is absent with-
239







House of Commons, March 31, 1947

out leave any time, he will be called upon to make good that time of
absence by continuing his service after the 18 months have passed.
There is also power in the Bill to reduce the period of 18 months in
certain cases. It will be used for exceptional purposes. For example, we
are informed by the Royal Air Force that a "man being trained as one of
an air-crew may reach a certain part of his training at the end of 12 months,
and that the time left to him is not sufficient for him to go right through the
next stage; and that it might be better to release him, and to carry on with
his part-time training, at the end of 12 months. We have taken power in
the Bill to allow that, should it be necessary; but if a national service man
is released for any of these reasons from full-time service before the 18
months expire, he will be expected to make good that time by a little extra
time in the part-time service training program, and so to make up, to some
extent, the full time lost.
The age for calling up is 18 years, but there is provision to allow young
men who apply to be called up earlier, but not earlier than the age of 17
years and six months. The provision is made quite deliberately, so that
young men going up to a university, or to some other training course, may
choose to be called up a little earlier, enabling them to come out of the
Forces a little earlier in time than if they had waited until they were 18 to be
called up; and in time to start their university or other scholastic careers.
It may be a very hard thing indeed for a young fellow in certain circum-
stances to be called up one year after starting his scholastic work, and find
himself pushed back and he may prefer to do his service first. There is a
similar slight variation with regard to doctors and dentists. In normal cir-
cumstances, doctors and dentists will find themselves called up round about
the age of 25; but there will be many in the field of call-up, who are taking
specialist courses and want to become specialists in one branch of their
profession; and when an individual requests that it should be done, his
call-up may be postponed, and he will be liable to be called up, up to the
age of 29. That has been done to meet the needs of the professions, so that
men will get their additional training. At the same time, it is an advantage
to the Services, because they will have within their ranks men with higher
qualifications to assist in the professional work of the doctors and dentists
in the Forces ....
DEFERMENT
I should like to mention the question of deferment. By having the field
of call-up ranging from the age of 18 to that of 26, with the normal inten-
tion of calling up at 18, we have a long field in which to plan deferments.
But this must be said right at the outset, that it is the intention of the
Government under this Bill that all young men liable and medically fit shall
serve their time in the Forces-all of them, with the exception which I shall
explain and of which the House has already been informed. We are anxious
not to interrupt training, whether for the professions or for the arts or for
industry, or whatever it may be, and, therefore, the option is given to the
young man to defer being called up until his apprenticeship or training
has been completed. Therefore, a student going to the university, or a
young man going to an apprenticeship in industry, can decide whether he







The National Service Bill [Mn. IsAACS]


will do his service, and get it over and done with, or whether he will con-
tinue his training and do his service afterwards.
That will be his option, but this is being tied up with one or two very
stringent provisions. First, a young man will have to satisfy the district
manpower boards or the recruitment committees that there is a genuine
and satisfactory learnership, studentship or apprenticeship in operation.
It must be genuine. It is not going to be allowed, that a firm finding that
their young men are to be called up, suddenly rushes to get indenture forms
for them. The apprenticeship must be in existence at or before the time of
call-up, and must be a satisfactory apprenticeship. I can speak only of ex-
perience in my own industry. I have known of a case of a printer in South
London with six young lads as apprentice compositors. He had drawn a
premium of 25 from each of them, yet after their apprenticeships, they
did not know enough even to print a winkle bag, let alone get a job in
the trade. That is going to stop. The manpower board has to be satisfied
that the apprenticeship is a genuine apprenticeship.
I ask the House to see the great advantage in this, in that it should, in
fact, encourage genuine systems of apprenticeship to be developed through-
out the country, and end the haphazard methods of teaching that have
developed. There must be a genuine and satisfactory studentship, appren-
ticeship, or learnership in existence. With the exception of underground
miners, no deferment will be allowed on industrial grounds-deferments
will be allowed on other grounds, as I have explained-but the Government
have recently announced that underground coalminers will not be called
up to the Forces for the next five years. Young men already engaged as
underground coalminers, when they become due for call-up, will have
their call-up deferred as long as they remain underground coalminers. By
this means we are protecting that very important industry at the moment
from the loss of its manpower. It is not intended that there shall be indus-
trial deferment in any other industry.
There is, then, the question of posponement of liability to serve in the
Forces. Postponement has existed under the Act now coming to an end.
It rested on exceptional hardship, and so on. I think the Hardship Com-
mittees, in the main, have done their work exceedingly well. There is every
reason to believe that they will do just as well under this Bill, when it
becomes an Act. Unless a certificate of postponement is granted by the
Minister, the matter will be referred to a Military Service Hardship Com-
mittee, and there will be a right of appeal allowed from the decision of
that committee. The appeal can be made either by the Minister or by the
applicant against the decision of the committee, and the matter can be
taken to an umpire. I must point out that, where a postponement has been
given in that way, that postponement does not itself automatically exempt
the person from serving, or allow him to pass out of the field of service,
because should he reach the age of 25, when he would normally pass out of
the field of call-up, and the hardship qualification should disappear, as it
might easily do, he would still be liable to do his service. In other words,
opportunities will not be made so easy that some form of postponement







House of Commons, March 31, 1947


can be continued from month to month, enabling complete evasion, unless
there is absolute need for it.
Mr. Stephen (Independent Labor Party): Up to what age?
Mr. Issacs: The age of call-up, 18 to 26.
Mr. Stephen: The right hon. Gentleman said that if a person received a
postponement right up to the age 26, he might be called on after 26 for
service. Up to what age? Might it be 30?
Mr. Isaacs: It is difficult for me to give specific answers on detailed points
at this stage. If, when he reaches the age of 26, and the condition justifying
postponement still exists, it seems to me that further postponement will
be granted, and he will not be called up immediately. From what we have
seen of these cases, they are most likely to be cases of students at universities
who, because of failure to pass an examination, have had to continue on
a little longer and have not come out until they reached the age at which
they would pass out. This is only a safeguard to make sure that nobody will
maneuver the postponement opportunities in such a way as to evade the
service which it is felt should be given.
Mr. Wilson Harris (Independent): I would like to put one question
about universities. Is deferment optional for any undergraduate, or only
for scholarship holders or persons of a certain standard?
Mr. Isaacs: The option will be for any person. Any person going through
any kind of tuition-university, industry, law, and so on, where there is a
genuine contract of training of some sort-has a right to ask for the defer-
ment of his call-up. It is made as wide as possible so as not to interfere with
training.
PART-TIME SERVICE
I would like now to say something about part-time service. At the end
of 18 months, the men who have served will go into a Reserve. In the
Royal Navy they will go into the Royal Naval Special Reserve, which is
being created for this purpose. If they serve in the Army, they will go into
the Territorial Army, or the Army Reserve. If they are in the Royal Air
Force, they will go into the Royal Air Force Reserve. Power has been taken
in the Bill to transfer men from one of those Reserves to another, and there
are four main reasons why that is done. It can be done either by the Forces
themselves or at the man's request. The main reasons are as follow:
First, a man may have obtained during his part-time service knowledge,
capacity and efficiency that would make him more useful in another branch
of the Services. May I give as an example a man who may have served
in the Army and who, on coming out of the service in the Army, has worked
in an aircraft factory and become an expert aircraft fitter; it might be of
advantage, therefore, to transfer him from the Army Reserve to the Royal
Air Force Reserve. It is that sort of thing which makes it desirable for this
power to exist. Secondly, there may reasonably be a change in the balance
of the various Forces. One might find that one Force had far more men
than might be needed, and another Force fewer men. In that case, it would
be desirable to have powers to make transfers. Thirdly, a man may live in







The National Service Bill ([M. IsAAcs]

another area. He may have been living on the sea coast and have been in
the Royal Naval Reserve. He might then go far inland where there were op-
portunities for him to have training in some other branch of the Reserve.
Fourthly, a man might, for personal reasons, wish to change from one Re-
serve to another; it might suit his convenience to do so because of the
location of his residence, his employment, and so forth. We are taking
power to permit that sort of thing.
The period of overall service is seven years-18 months full service, and
five and a half years part-time service. That part-time service also may be
extended in the case of men who have deserted or failed to fulfill their
obligations, and who will be expected to continue in service. Part-time
service has been devised in a form which it is hoped will cause the least
possible interference with industry. In the five and a half years a man will
be required to do 60 days, and he cannot be compelled to do more than
21 days in any one year. It is also intended, although this may not be
specifically mentioned in the Bill, that there will be conversations with
industries with a view to arranging the best periods of the year in which
the training can take place so as to provide the very minimum of inter-
ference with industry. A man will have a call-up notice giving him 30 days'
notice of being called up for his Reserve training. It is possible that, having
come out of the Forces after 18 months, he may not be called upon to
do any part-time service perhaps until a year or so has elapsed, but the
maximum period of 60 days remains absolutely fixed. An attempt is being
made to interfere as little as possible with industry and with the ordinary
domestic conveniences of the Service man by allowing him to commute each
day by a number of hours of evening attendance. Four periods of one hour's
attendance, or two evenings of two hours, will be equal to a full day's train-
ing. In other words, it is the introduction of a four hour day for part-time
trained men. The Services will make arrangements by regulations to
cover that.
It must be pointed out also that if a man wishes to do so, he can vol-
unteer to do his part-time training in the Volunteer Reserve, but it is clear
that if a man volunteers to do his Reserve service in the voluntary section,
he does not escape the liability of being required to do at least the 15 days
in each year up to the maximum of 60 days during the period. If that pro-
vision were not there, it would be possible for a man who volunteered under
contract to give voluntary service for, say, for four years, to put in more
than his 60 days in the first two years, to draw his gratuity, and then to
stay away and avoid further service. The main purpose of the Reserve is
not only to keep the men's training as far as possible up to pitch, but to
have the men available should it be necessary. Therefore, voluntary service
in the Volunteer Reserve does not allow a man to evade whole-time service
as such in the ordinary Reserve .. ..

REINSTATEMENT IN CIVIL EMPLOYMENT
I want now to speak about reinstatement in civilian employment. The
Reinstatement in Civil Employment Act, 1944, when one considers that four
million men and women have come out of the Forces, has worked with
243







House of Commons, March 31, 1947

amazing satisfaction. It is true that there have been a number of difficult
cases, but they have been a ridiculously small percentage of the whole.
Therefore, we propose to continue those arrangements, but with the fol-
lowing slight change. Under the existing Act, however short the employ-
ment was, the employer has to reinstate the man for not less than 26 weeks.
If he has been in employment for more than 52 weeks, the employer has
to guarantee reinstatement for 52 weeks. Owing to the changes in the
period of service, and so on, the following alterations are proposed-that if
the employment was for less than 13 weeks, reinstatement should be guar-
anteed for 13 weeks; if employment was for more than 13 weeks, but less
than 52 weeks, the reinstatement must be guaranteed for 26 weeks, and
then, as before. If employment was for over 52 weeks, the reinstatement
should go on as well for 52 weeks.
Under the Act as at present, the employer has an obligation to reinstate
a man only if such reinstatement is reasonable and procticable. This neces-
sary safeguard will continue. I know that some of my hon. Friends will
wonder how a lawyer might interpret "reasonable and practicable," but it
has given rise to little difficulty, for out of four million people who have
come out of the Forces, the vast majority have been re-employed, and where
the term "reasonable and practicable" has been referred to the various
tribunals, in the main the matter has been settled satisfactorily. We pro-
pose to continue the machinery which has proved satisfactory.
There is one other minor change. Under the existing Act, an employer
is not under an obligation to reinstate a man after six months have elapsed
since the end of the present emergency. Obviously, that condition will have
to be changed. Therefore, the employer will not be under an obligation to
reinstate a man after six months from the end of his whole-time service. In
each particular case, the liability remains on the employer to reinstate the
man for the six months after the man comes out of the Forces. Under the
Reinstatement Act, volunteers who volunteered for the Forces have the
same right of reinstatement as men called up and sent compulsorily into
the Forces. This Bill preserves that right for the volunteers who joined
under the old Act. Under the new Bill, as volunteers who volunteer for
the Forces will probably serve five, seven or even more years, it is not felt
reasonable to compel an employer to take back a man after he has been
away for seven years, and who volunteered to go away, as against a man
who was called up only for a limited period. There is that change in
the Bill.
There is a slight change in the period in which a man must apply for
his reinstatement in civilian employment. Under the old Act, he had to
make his application on the fifth Monday after his discharge and to be
available for employment on the ninth Monday. Under this Bill, he has
to make his application on the second Monday and to be available for
employment on the fourth Monday. It is obvious that there is a reason for
that. Under the old Act men have eight weeks' demobilization leave before
resuming employment. Under the Bill a man will get from 18 to 24 days
according to the length of their service. They will have the option of
enjoying that leave without losing their right of reinstatement.
244







The National Service Bill [MR. IsAAcs]


Another slight change will be necessary for we have to pay attention
to the re-employment of men who have been called up for part-time train-
ing. We do not wish to see growing up an opportunity for employers to
say that they will not take men back because of the operation of the Bill.
There will be sufficient safeguards against that happening. A man will have
the right to go back to his job after his part-time training. If there is any
question about a man not being re-employed, he can go to a reinstatement
committee where the onus of proof will rest upon the employer. If I am
asked about the penalty, it will be in some of the compensations to which
the man will be entitled, according to the period involved.
Mr. Sydney Silverman (Labor): Can we have an example?
Mr. Isaacs: It might be a month's salary.
We are now entering a sphere in which other factors begin to operate.
Tomorrow we shall have raised the school-leaving age, and we are coming
into a field where more extensive educational facilities are open to the
young people of our country. Therefore, it is intended that those who come
into the Forces shall not lose the advantage of the extended education
which they would have had, if they had been following their normal em-
ployment. The Services have made arrangements for such continued edu-
cation and the Bill places a general duty upon them to do so. They will
provide education, and the cost will be met out of the Service Estimates.
Local education authorities will be asked to co-operate with them in
carrying out the duty, but that authority will be relieved of the general
obligation of finding facilities for the large number in the Forces who may
happen to be in their area.

CONSCIENTIOUS OBJECTORS
Finally, I would refer to the conscientious objector Clauses. The arrange-
ments under which conscientious objectors may now be registered are three.
One is unconditional exemption. The second is conditional exemption,
upon the applicant's undertaking to do civilian employment. The third
is non-combatant service. Those three forms of exemption will remain,
with slight changes. As regards conditional exemption, the Minister may
direct the objector to undertake work of the kind specified by the tribunal.
It may be necessary for the objector to submit himself to medical examina-
tion in order that we can ascertain that he is fit for the work.
Professor Gruffydd (Liberal): Can the Minister tell us whether any
provision is made for objectors who refuse to submit themselves to medical
examination?
Mr. Isaacs: If a man is registered unconditionally he will be quite free,
as he is now, and he will be out of the field of employment. There is one
other condition. If a man had gone into the Army he would have served
for 18 months and he would have been liable to serve 60 days in the reserve.
As a conditionally registered objector, he will continue for 60 days beyond
the 18 months, so that he will be called upon to give to the State exactly
the same number of days as if he had gone into the Service.
Mr. Rankin (Labor): The right hon. Gentleman has missed the point







Question Time in the House of Commons

of the question put to him just now by the hon. Member for the University
of Wales (Professor Gruffydd). What is to happen in the case of objectors
who refuse to submit themselves to medical examination?
Mr. Isaacs: Exactly the same as has happened under the Acts which are'
in operation at the moment. The only changes that are being made in the
conscientious objector arrangements are those which I have explained.
It is felt that they worked satisfactorily, generally speaking, during the war
and they will continue now as then.
Mr. S. Silverman (Labor): Is not the right hon. Gentleman aware that
under the Acts now in force, a man who conscientiously felt that it was
wrong to submit himself for medical examination was punished again and
again for what. was, in fact, only one offense? Do I understand that it is
proposed that that shall continue?
Mr. Isaacs: I want to make it clear, as I did try to just now, that if that
is the arrangement that operates now, the Bill does not make any change
in the arrangement. It may be that it is thought it ought to do so, and it
may be that when the Committee stage comes these matters can be discussed
and argued out. I want to make it clear to the House that there is no
change in that arrangement.
I have nothing further to explain to the House. I would finish by saying
that the Government believe the Bill is necessary. Otherwise, they would
not have introduced it. They believe that it is fair to all. They think it
is fair to the State and to industry, and fair to the men who have borne
the heat and burden of the day in the last four or five years, that we should
now try to carry on the work for which they have struggled. We think the
terms of the Bill are reasonable and can be carried out without hardship
upon the community. The Government also believe that the period of
service is fair in existing conditions and that the period for which the Bill
is intended to operate is appropriate in all the circumstances. For those
reasons, and because we believe that the Bill is required and is fair, I ask
the House to give it a Second Reading.
[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 of some of the questions asked during
March, 1947, is included below, together with the Ministers'
answers.
AUSTRALIAN AND NEW ZEALAND GIFTS
The Chancellor of the Exchequer (Mr. Dalton): I have to inform the
House that His Majesty's Governments in Australia and New Zealand have
announced their intention to make gifts to His Majesty's Government in







Question Time in the House of Commons
the United Kingdom for the reduction of the heavy burdens which the
people of the United Kingdom are carrying, as a consequence of financial
arrangements entered into during the war. The Australian Government are
making a gift of 25 million Australian-[HoN. MEMBERS: "Hear, hear."]-
and the New Zealand Government a gift of 121h million New Zealand-
[HON. MEMBERS: "Hear, hear."]
The Australian Prime Minister states that his Cabinet have been consid-
ering various forms of assistance which Australia might be able to render to
Britain at this time, and have decided to make this gift as a contribution
to the war costs incurred by Britain in and around the Pacific.
The New Zealand Prime Minister states that the gift from the Govern-
ment and the people of New Zealand is in recognition of the magnificent
and unprecedented effort of the United Kingdom in maintaining freedom
and making possible its expansion in the years to come, and of the enor-
mous burden that the people of the United Kingdom have carried and are
bearing during the post-war period.
I am sure that this House, and the people of Britain, will most warmly
appreciate these generous gifts and the spirit which has prompted our
kinsmen in the two great Dominions in the South Pacific. This is yet one
more proof, for all the world to see and ponder, that we of the British
Commonwealth are members of one family, no less closely united in peace
than in war. I am sending a message of thanks and deep appreciation to
both Dominion Governments today. [March 5,1947
[March 5, 1947]
DEVELOPMENT SCHEMES: TRINIDAD
Mr. Hector Hughes (Labor) asked the Secretary of State for the Colonies
the estimated total cost of the development schemes for Trinidad; how
much of it is proposed to be spent on expansion of social services; and how
much on economic and industrial development.
The Secretary of State for the Colonies (Mr. Creech Jones): I have as
yet received only outline proposals, as a preliminary to a ten-year develop-
ment plan, and these tentative proposals, in which expenditure of some 13
million is envisaged, have still to be referred to the Legislature of Trinidad.
They have been discussed with the new Governor, who will review them
in order to secure that the maximum provision is made, within the means
available, for works of economic development, including especially the
development of local food production and of secondary industries. Pend-
ing such review I cannot indicate whether a development plan of the
magnitude suggested will be financially possible or the amounts which will
be allocated respectively to social services and to economic and industrial
development. [March 5,1947]

HONG KONG (CONSTITUTIONAL CHANGES)
Mr. T. Reid (Labor) asked the Secretary of State for the Colonies whether
he will make a further statement on constitutional changes in Hong Kong.
The Secretary of State for the Colonies (Mr. Creech Jones): On 1st
May my predecessor announced in this House that His Majesty's Govern-







Question Time in the House of Commons

ment had had under consideration the means by which, in Hong Kong, as
elsewhere in the Colonial Empire, the inhabitants of the territory could be
given a fuller and more responsible share in the management of their
own affairs. He went on to say that it was thought that one possible method
of achieving this end would be by handing over certain functions of internal
administration to a Municipal Council constituted on a fully representa-
tive basis but that the Governor had been asked thoroughly to examine
these important issues in consultation with the representatives of all sections
of the community in Hong Kong.
The Governor and his advisers held these consultations and, after con-
sidering other alternatives, he came to the conclusion, with which I agree,
that
(a) A Municipal Council should be set up in Hong Kong on the
widest representative basis possible. The majority of the members will
be elected, and the Council will gradually assume as many of the present
functions of the Central Government as can appropriately be assigned
to it. The Municipality will include Kowloon, but not that area of the
New Territories outside Kowloon which by reason of its rural character
is not entirely suitable for immediate inclusion in the area to be admin-
istered by the Municipal Council;
(b) The constitution of the Legislative Council should be modified
with the object of securing on that body a more direct and a proportion-
ately increased representation of the unofficial community. Under his
recommendation, which I have accepted, the official members will be
reduced to seven, and of the eight unofficial members two will be directly
nominated by the Municipal Council, and one each by the Hong Kong
General Chamber of Commerce and the unofficial justices of the peace.
The remainder will continue to be nominated by the Governor.
His Majesty's Government are satisfied that these measures constitute
the best means of achieving their genuine desire and intention to give the
people of Hong Kong a practical and effective share in the management of
their own affairs. [March 5,1947
[March 5, 1947]
UNIVERSITIES (NEW GRANTS)
Sir E. Graham Little (Independent) asked the Chancellor of the Ex-
chequer if he will now make a statement regarding the grant to universities
which he proposes to make in the forthcoming Budget.
The Chancellor of the Exchequer (Mr. Dalton): I have received and
considered a report from the University Grants Committee on the financial
needs of the universities for the five years 1947-52. Before the war Ex-
chequer grants to the universities were settled for periods of five years. I
propose to resume this practice in order that universities may plan develop-
ment with knowledge of the resources they may expect. They will need
Exchequer grants on ,n increasing scale for some time to come, both in
order to effect improvements which were due even before the war, and to
increase the number of students.
As their needs will be on a rising scale, I propose that Parliament
248







Question Time in the House of Commons


should be asked to provide recurrent grants rising from 9,000,000 for the
academic year 1947-48 to 9,970,000 for 1948-49 and thence by annual
increments of 650,000 to 11,920,000 for 1951-52. The recurrent grants for
the present academic year will amount to between 6,000,000 and 7,000,-
000. These figures exclude the grants of 500,000 now made to teaching
hospitals, which will continue during the financial year 1947-48 and the
amount of which for future years has not yet been determined. They also
exclude grants for agricultural education, responsibility for which will pass
to the University Grants Committee after the current year.
The University Grants Committee estimate that the universities' pro-
grams of development will necessitate during the quinquennium non-recur-
rent grants amounting to 50,000,000, of which 40,000,000 would be for
new buildings and 10,000,000 for acquiring sites, existing buildings and
new equipment. I accept this estimate of the need and will do my best to
meet it. I am advised, however, by my right hon. Friend the Minister of
Works that, even after allowing for a high degree of priority, the best fore-
cast at present possible does not justify the expectation that Universities
will be able to undertake more than 20,000,000 worth of new building dur-
ing the quinquennium. I appreciate that such a restriction of the building
program must retard to some extent the expansion which the universities
have in view and which, in the public interest, the Government most
earnestly desire to see. I am afraid that for the present it would be only
prudent to plan on the basis that not more than 20,000,000 worth of new
building will be possible during the quinquennium, but I propose to review
the position from year to year.
The sum which Parliament will be asked to vote for the financial year
1947-48 is 11,875,000. This figure includes the grants to the teaching hos-
pitals, provision for agricultural education after the present academic year,
and 3,500,000 for capital grants. [March 10,1947

ANGLO-EGPYTIAN TREATY NEGOTIATIONS
The Deputy Leader of the Opposition (Mr. Eden) asked the Prime
Minister whether he has any announcement to make on the recent state-
ment by the Egyptian Prime Minister on the causes of the breaking off of
negotiations for the revision of the Anglo-Egyptian Treaty.
The Prime Minister (Mr. Attlee): Yes, Sir. The statement issued by
the Egyptian Prime Minister on the Anglo-Egyptian negotiations stated that
the final breaking off of these negotiations might be attributed only to the
inability of Egypt to obtain satisfaction on the following two essential
points: (1) The evacuation of British troops from Egypt. This evacuation
must be immediate, complete and not conditioned by a treaty. (2) The
maintenance of the unity of Egypt and the Sudan, self-government for the
Sudanese and the restoration to Egypt of her rights in the administration
of the Sudan in order to further the preparation of the Sudanese for self-
government.
This declaration can best be judged in the light of the agreements
reached between Sidky Pasha and the Foreign Secretary in London last
249







Question Time in the House of Commons


October. These agreements provided for mutual arrangements for defense,
arrangements for evacuation and for the Sudan. The agreements were
initialled by the two statesmen in London ad referendum to their Gov-
ernments. The Egyptian Government submitted them to the Egyptian
Chamber of Deputies on 26th November, 1946, and received a vote of con-
fidence. Thereupon the Egyptian Government informed His Majesty's
Government on 1st December that they were ready to sign the Treaty and
the two Annexes dealing with evacuation and the Sudan. The Foreign
Secretary in his statement in the House of Commons on 27th January,
made quite clear the sole reason why the signature did not in fact take
place, namely, the endeavor of the Egyptian Government to construe one
phrase of the protocol on the Sudan as meaning that they could rely on the
support of His Majesty's Government to deny to the Sudanese complete
freedom of choice when the time came for them to choose their future
status.
The British Government had already agreed, as part of the above
arrangements, to the complete evacuation of British troops in Egypt by
1949. This is not an excessive period for the winding up of the immense
commitments built up by the British Army in Egypt, which was its main
base for the war in which British arms saved Egypt from being overrun by
the Nazis.
As already indicated by the Foreign Secretary in this House, the British
Government are also in favor of eventual self-government for the Sudanese,
who, when the time comes for them to choose their future status would not
be debarred from choosing complete independence or some form of associ-
ation with Egypt or even complete union if they wished. It is not true,
therefore, to say that "British policy is directed towards inciting the Sudan-
ese to secede from Egypt."
The Egyptian statement also says that the Sudanese are a people of the
same race, language, and religion as the Egyptians. I should point out that
the Sudanese comprise many races and types, Nilotic, Hamitic and Negro
besides Arabs. Furthermore, out of approximately seven million Sudanese,
more than two and a half million are not Muslim nor Arabic speaking.
It is also stated that the Sudanese will only be able to express their views
freely when British troops have evacuated the Sudan. British troops, in
common with Egyptian troops, are in the Sudan at the disposal of the
Governor-General for the defense of that country. It is incorrect to say that
the presence of either the British or the Egyptian troops makes it impossible
for the Sudanese to express their views freely.
[March 11,1947]

DEVELOPMENT PLANS
Mr. Skinnard (Labor) asked the Secretary of State for the Colonies (1)
whether he will give details of the amounts allocated, in the 10-year devel-
opment plans already approved, to development and to welfare and of the
main groups of items classed under each heading; (2) which of the 10-year
development plans submitted by Colonial Governments have now been
finally approved.







Question Time in the House of Commons
The Secretary of State for the Colonies (Mr. Creech Jones): Subject,
in most cases, to certain reservations, I have already approved the 10-year
development programs of the following territories: Nigeria, Sierra Leone,
Kenya, Tanganyika, Zanzibar, Seychelles, Mauritius, St. Helena and Cyprus.
If the improvement of education, medical and health, housing and an-
cillary services and miscellaneous social welfare schemes, are included under
the heading of welfare, and other schemes are classified as development,
though this classification is far from sound, the amount devoted in the above
programs to development is 58/2 million, and, to welfare, 491/ million.
Since the details are rather long, I will, with my hon. Friend's permission
circulate them in the OFFICIAL REPORT.
Mr. Skinnard: Is my right hon. Friend satisfied that, in general, the pro-
portion devoted to development, as compared with welfare, is adequate in
view of the necessity for Africans to provide their own revenue as soon as
possible, in order to solve their own social problems?
Mr. Creech Jones: This is a very difficult problem. In our development
plans it is most important that the economic basis should be laid, so that
the social services can be sustained later.
[March 12,1947]

MACHINERY (PURCHASES FROM U.S.A.)
Mr. Philips Price (Labor) asked the Minister of Agriculture what value
of agricultural machinery is now on order from the U.S.A. and Canada.
The Minister of Agriculture (Mr. T. Williams): Agricultural machin-
ery (including parts) to the value of 514 million has been ordered from
the U.S.A. and Canada for delivery this year. In addition, orders are now
being placed for delivery in 1948.
[March 17,1947]

TRADE UNION ADVISERS IN THE COLONIES
Mr. Gibson (Labor) asked the Secretary of State for the Colonies how
many trade union advisers have been appointed by his Department; for
which Colonies they have so far been appointed; and whether it is intended
to extend the practice of appointing trade union advisers to encourage and
advise on the development of trade union organization among the workers
in the Colonies.
The Secretary of State for the Colonies (Mr. Creech Jones): In 1942,
as an experiment, six experienced trade unionists from this country were
recruited for Labor appointments in certain Colonial territories. This
proved to be most successful, and since 1945 thirteen other appoint-
ments of this type have been made. The territories in which these offi-
cers are serving are Nigeria, the Gold Coast, Sierra Leone, Gambia, Kenya,
Tanganyika Territory, Northern Rhodesia, Ceylon, Mauritius, the Malayan
Union, Singapore, Palestine, British Guiana and the Windward Islands. As
regards the last part of the Question, the further selection of trade unionists
for this type of employment will most certainly be encouraged.
[March 19,1947]







Other Speeches and Debates


OTHER SPEECHES AND DEBATES
IN MARCH, 1947

Texts can be consulted in the Library of British Information
Services: those speeches delivered in the House of Lords or the
House of Commons are published in full in "Hansard," copies of
which may be bought through B.I.S. For prices see inside back cover.

SPEECH TO A MEETING OF THE WORLD FEDERATION OF UNITED NATIONS
ASSOCIATIONS
Mr. Clement Attlee. London, March 1.

DISREGARD OF INTERNATIONAL OBLIGATIONS
House of Lords, March 5. Lord Vansittart.

ECONOMIC SITUATION
House of Commons, March 11. Mr. Winston Churchill.

ARMY ESTIMATES
House of Commons, March 13. Mr. Fred Bellenger; Earl Winterton.

AIR ESTIMATES
House of Commons, March 17. Mr. Philip Noel-Baker.

NAVY ESTIMATES
House of Commons, March 18. Mr. John Dugdale.

ECONOMIC SITUATION
House of Lords, March 20. Lord Beveridge.

NATIONAL SERVICE BILL
House of Commons, March 31. Mr. Winston Churchill.










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