3
༣..
Page 182
done in good times. The slightest recession in the United States would make it out of the question. Indeed, a recession would increase the pressure of American. exports in neutral markets.
Our aims, therefore, should be:
IV. Aims
(1) To increase home production; particularly of food, coal, other minerals and any machine tools or consumer goods now imported from the dollar
area.
(2) To reduce still further, as a systematic and continuing policy, our imports from the dollar area and other areas with which we are in deficit, and, where necessary, to substitute for them imports from the sterling area. (3) To develop in the sterling area alternative supplies of the food and raw
materials we need and now obtain from non-sterling sources.
(4) To make the best, from the point of view of our capital and consumer goods.
industries, of the new markets created by (1), (2) and (3) above.
(5) To continue to promote the maximum exports to non-sterling areas con-
sistent with the above.
In a word; we should not delude ourselves with the vain hope that we can main- tain our living standards by pushing exports in increasingly unfavourable conditions.. On the contrary, we should try, even at the cost of severe sacrifices in the short-term, to produce inside the sterling area the goods we need. If a policy of this kind can be put into practice, it would in due course re-establish the sterling area on a firm economic basis and open for its peoples the renewed prospect of an expanding economy. It would be good economics and goods politics. Can it be done?
(1) To Increase Home Production
V. Methods
Agricultural production must be increased, by every possible method. Capital. investment in agriculture last year was only 4 per cent. of the whole. More- vigorous steps must be taken to replace incompetent farmers and give a chance to younger men. We must return to the war-time methods and revive the siege psychology which sustained them.
:
Some inducements must be found to increase coal production and mineral production generally, Scrap and other salvage must be collected again as in the war. The whole problem should be studied afresh, as a matter of urgency. We should not rule out subsidies to production in growing industries.
(2) To Replace Dollar by Sterling Imports:
The whole list of dollar imports must be re-examined and considerable hard- ships accepted in the short term. American films are not necessary. American tobacco must be replaced as far and as rapidly as possible by sterling tobacco (and as our arrangements with Europe proceed by Greek and Turkish tobacco). In so far as this is not possible, the loss of home revenue must be accepted or raised by other methods.
We ought to be able to get all our sugar very quickly from the Commonwealth. The same is true of copper, and perhaps some other metals.
(3) To Develop New Supplies of Food and Raw Materials
To encourage investment in the sterling area it is necessary that the investor should have confidence that there will be a steady market for the goods produced by his investment. The first step, therefore, is to provide the necessary pattern of a high level of sterling trade. In so far as trade has to be regulated, the most liberal form of interference is a preference upon a tariff. But in our present critical cir- cumstances, we shall also have to resort to more drastic forms of control by dis- criminatory quota and licence. Nor can we overlook the strong attachment of many raw material producers in the Commonwealth to long-term contracts. The precise methods will vary from case to case. What matters is that priority should be given to sterling produce as a declared permanent policy. This, of course, involves exercis- ing our right to free ourselves from the limitations imposed by G.A.T.T. The fear of unfavourable American reaction has, in my view, been exaggerated. The non- discrimination and free-trade tradition of the State Department does not represent American opinion. Nor does it conform with American protectionist practice.
Page2482 of 200
Page 182
204
1
205
о