HC Deb 17 December 1968 vol 775 cc1165-8
Q1. Mr. Dalyell

asked the Prime Minister if he will discuss the calling of a World Monetary Conference, similar to that at Bretton Woods, with the President-Elect of the United States of America.

The Prime Minister

I look forward to early discussions with Mr. Nixon on a wide range of topics, but a world monetary conference without really adequate preparation through existing channels would not be appropriate or helpful at present.

Mr. Dalyell

Is not there an advantage in having a conference at which the central banker and finance Ministers of primary-producing and developing countries are present?

The Prime Minister

Work has been going on continuously through the appropriate United Nations machinery and the International Monetary Fund for this, since the days in office of the right hon. Member for Barnet (Mr. Maudling). Some progress has been made, but most of us are rather disappointed at the limited extent of the progress and the long delay. I have taken a big interest in these matters in the past, so I appreciate the point my hon. Friend raises. But it has not been possible so far to work out a scheme for increased world liquidity which gives a special premium to the requirements of the developing countries without putting them or the countries supplying what they need into balance of payments difficulties.

Mr. Thorpe

Does not the Prime Minister agree that the instability of the world monetary system is such that the crisis of last month could easily recur early in the New Year? Although Bretton Woods may have been appropriate at the time, should not the Government make one of their highest priorities devising new methods to sustain a world currency on a permanent basis?

The Prime Minister

My right hon. Friend the Chancellor of the Exchequer referred to the Bretton Woods agreement in the debate on 25th November, when he said that it had served the world reasonably well over the past generation but that the further we got from it the greater the need for change. Since this will require the agreement of other countries, and since we have not only through the I.M.F. but the Group of 10, the Committee of Three of the O.E.C.D. and in other ways, the means of adequate consultation, I am not certain that to rush straight into a conference bearing slogans saying, "Bretton Woods must go" would be the most constructive way of dealing with the problem, which not just Britain but the whole world faces.

Mr. Sheldon

Since unanimity may be very difficult to achieve at present, would not a more limited means of co-operation perhaps be the answer, particularly such co-operation with the United States, like-minded continental countries and others? Does my right hon. Friend consider that such a conference might be useful in obtaining the kind of order in international finance that is required?

The Prime Minister

I am not sure that the last few words of what my hon. Friend said follow from what he said at the beginning, with which I agree. The unanimity provision was one of the reasons for the frustration of our hopes and those of many other countries, including the United States. But the Stockholm meeting of the Group of 10 last spring and further progress made not only in the I.M.F. but in, for example, the Basle Agreement and other developments since that time suggest that it has been possible, at a cost and with a delay, to meet even the attempt on the part of one or two countries to veto progress.

Mr. Turton

Does the Prime Minister's first reply mean that he will seek an early opportunity to discuss with the Presidentelect the problems of world finance and world trade?

The Prime Minister

Yes, Sir, exactly as I have done with the present President of the United States. Obviously, at this stage I cannot say exactly what the coverage will be, but I think it inconceivable that it would be possible for two Heads of Government to meet without looking at the question raised by the right hon. Gentleman.

Mr. Barnett

In view of what was clearly a disastrous conference at Bonn recently, does my right hon. Friend agree that there is a need to do something fairly soon? Will he, perhaps, consider the possibility of having less rigidity in the whole procedure regarding exchange rates, and would he care to give the House, briefly perhaps, his views on the crawling peg?

The Prime Minister

Again, I find some difficulty in following the implied logic of the question. My hon. Friend must bear responsibility for calling the Bonn conference disastrous. I am not sure that it follows, if a conference of 10 was in his view disastrous, that a conference of 100 would necessarily present an easier opportunity to make substantial and rapid progress. We must work through the Group of 10 and in other ways to solve the problems facing the world. A great deal arises from an international problem of confidence, not a national problem. It arises also from the fact that over a period of time world liquidity has not increased pari passu with the increase in the volume in world trade. This is one reason why we have had these repeated upsets and flurries in the world currency market.

Mr. Ian Lloyd

Does not the right hon. Gentleman agree that the existing channels to which he referred earlier have had at least 25 years' warning of constant crises, and is it not time that they injected a much stronger and higher sense of urgency into their deliberations?

The Prime Minister

Yes, Sir That was attempted by the right hon. Member for Barnet (Mr. Maudling), it was attempted by my right hon. Friend the Home Secretary, and by my right hon. Friend the Chancellor of the Exchequer. But for this sense of urgency, which both sides of the House have never failed to proclaim, to become productive there is required a similar sense of urgency and some agreement as to method among a large number of other countries. We have improved the facilities for international co-operation. For example, the speed with which the Washington conference was mounted last March at the time of the serious upset in the world gold market, the Basle Agreement and even the Bonn conference show a possibility of rapid action. I agree that more fundamental measures may be required, though I do not consider that they will be attained simply by injecting a sense of urgency. The whole world knows the urgency.

Several Hon. Members


Mr. Speaker

Order. We must move on.