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C A B I N E T .
TEE
PRESENT
SITUATION
Memo r a r
The P r i s e M i n i s t e r ,
at a r e c e n t meeting of
s u g g e s t e d t h a t we s h o u l d now a d d r e s s o u r s e l v e s
of
the
general
present
course
situation.
we s h o u l d t u r n t o
the
to
It
controversy,
It
was a g r e e d t h a t ,
that.
In order
any o f
1.
after
to a v o i d
The f a i l u r e
is
against
of
sections
the value o f
to
repeal
measures;
the p u b l i c
at
nervousness of
their
factor
of
removed.
the
of
this
of
raised
they
must
this
may be a t t r i b u t e d ,
to
of
its
most
the powerful
without
the d e f e a t
many f o r e i g n d e p o s i t o r s
if
of
it
in
September
conditions
the
at
the
Opposition.
also.
sterling
19th,
being
The
about t h e c o n d i t i o n s
stability
it
important
would p r o b a b l y n o t h a v e b e e n t h e
about t h e
so
that
campaign
of
and
formation
any a s s u r a n c e
a t home and a b r o a d t h a t t h e
anxiety
the
impression
t h e week p r e c e d i n g
election,
credit
Government and w o u l d ,
some a t l e a s t
to
primary
British
I n v e r g o r d o n no doubt c o n t r i b u t e d
own c o u n t r i e s
if
have
the
are concerned,
e l e c t i o n would b e such as to e n s u r e
The I n c i d e n t
defence
sterling,
and, second,
general
fulfil
which h a s g i v e n t h e
the p r e s s , during
an i m m e d i a t e
given
circulate
they have been r a i s e d ,
t h e Government t o
the whole p o l i c y
of
the Cabinet ^
some q u e s t i o n s
my own i n i t i a t i v e ,
was f o r m e d , t h e
Opposition,
came i n t o p o w e r ,
financial
the
interval,
troubling
deal with
as causes w i t h i n t h i s c o u n t r y
a strong
for
of
with which i t
of
question
a short
I
s
frankly.
the maintenance
far
should n o t , o f
these m a t t e r s , but s i n c e
be d i s c u s s e d
object
must n e c e s s a r i l y
I
the
t o be pursu.ed b y t h e Government i n
w i t h a s t a t e m e n t w h i c h m i g h t "be u n d u l y l e n g t h y ,
memorandum.
Cabinet
in
deciding
had b e e n
This
is
supported, by t h e
fact
that
the f o r m a t i o n
N a t i o n a l Government had had an immediate
withdrawals.
They b e g a n a g a i n a s soon as i t
the p o l i t i c a l
doubtful,
position
in spite
i t s parliamentary
is
right
sent
is
of
the
shown b y t h e
itself
steady
it
t o save
a general
telegram of
reply,
h,
sterling^
gram was r e a d ,
I
Ernest Harvey
same t h i n g from a l l
Precisely
it
the
i s no r e a s o n
effect
worst,
that
but
do s o .
it
there
It
the
will
end o f
does n o t
September
19th,
d i d , and t h a t
same f a c t o r s
it
was
r e a s o n he
hold
of
t h e Bank
that
at
tele­
of
view;
bir
t h e y had ""heard t h e
exist.
which l e d t o the
The -Z i s h e a v i l y
in the nature
not
cf
still.
Some may
sink below perhaps
5 0 at
that
it
depend upon u s , but upon w o r l d
financial
The announcement
an i m m e d i a t e g e n e r a l
as b e f o r e ,
conditions
in this
election,
would p r o d u c e
as b e f o r e ;
There i s
the gravest
risk
of
currency,
and we h a v e n o t b e e n i n f o r m e d o f
of
any r e s o u r c e s which,, once i t
the
feel
the
will
'
­
net
opinion
country.
made under
t h e same
a slide
deprecia
results
i n the
value
existence
started,', would be adequate
it.
-2r-
of
disaster
depreciated,
t h i n g s wiry t h e
of
stop
tether.
at which t h i s
confirmed that
as t o t h e s t a b i l i t y
t h e same c o n d i t i o n s
its
a conference
can be no a s s u r a n c e w h a t e v e r
of
Minister,
produced by the b e l i e f
At
s h o u l d n o t became much h e a v i e r
confident
situation
over."
then f o l l o w e d s t i l l
there
the
L a v a l s s i d t h a t he f e a r e d
information
said that
from
the French Prime
asked the .Acting Governor
England whether t h e i r
had become
received
view of
that
a s s i s t a n c e w h i c h was made
e l e c t i o n was imminent.
on S a t u r d a y ,
tion
for
stopping
and t h e o n l y p a r t i c u l a r
disturbing
Lowning S t r e e t
but
That t h i s
Jank o f E n g l a n d was r e a c h i n g
m e n t i o n e d was t h e
that
support
in
the
appeared
t h e Government
the r e q u e s t
In a very f r i e n d l y
too l a t e
of
majority'.
i n answer t o
when t h e
effect
of
to
2. Those s e c t i o n s
idea
of
of
an i m m e d i a t e
the newspapers
tween
the O p p o s i t i o n
on t h e o t h e r ;
it,
would go
with
that
to
election
believe
that
it
Government,
or
an a g r e e d programme i n
which
each s e c t i o n
others,
The C a b i n e t
i s no such p r o p o s i t i o n
the Conservative
immediate
possibility
of
party.
to
ten
obtaining
duties
certain
friends,
corn
and t h e C h a n c e l l o r
will
join
to
as soon
in
carry
as a d o p t e d by
tariff,
figure;
that
to
policy
as an e l e c t i o n
of
T h i s would n o t
the defeat
conduce
to
of
law.
was a n n o u n c e d ,
s h o u l d become t h e s u b j e c t
their
not
it
to
includes
impose
the
to
It
in
that
of
is
the
their
Liberal
elect
these
a vehement p u b l i c
they
else
t h e Exchequer and
the country
into
as
fodd-stuffs
the r e p r e s e n t a t i v e s
an a p p e a l
the
nothing
t o be e x p e c t e d
cf
an
so f a r
country
any o t h e r
i s not
that
beyond
that
a general
programme
contrary,
advocating
from t h e e l e c t o r a t e
It
that
On t h e
and meat and o t h e r
any more than
Parliament
that,
permission
endeavoured
aware
clear,
the
programme
or tc
eventualities-
Prime M i n i s t e r
party,
cent,
Minister,
had
out
well
us.
while
put b e f o r e
protectionist
on f o r e i g n
is
or mi sunder s t a n d i n g ,
will
per
carry
quite
T h a t programme i n c l u d e s
limited
also
h a v e made i t
doubt
concerned they
the f u l l
before
representatives,
election,
resembling
and that".'a mandate would he
the n e x t P a r l i a m e n t .
there
to
the
be­
Government
one c l o s e l y
the p r e s e n t Prime
the wishes of
the
l e d by many
one hand sand a N a t i o n a l
on t h e
Government t o
than
h a v e been
by
would be a c o n t e s t
enable that
are
attracted
under
obtained
the
.who a r e
general
this
the
the public
country
t o meet
in
to
of
2 58
a
inevitable
matters
controversy.
the Opposition
at
polls.
3.
The f o l l o w i n g
month h e n c e , when,
it
conditions
are
i s suggested,
the
likely
to p r e v a i l
election
would be
a
in
progress ­
(a)
in
the
Prices
shops,
of
necessities
and m i g h t
still
be
would have
risen
actively^jvising.
considerably
(b)
The u n e m p l o y e d , nd o t h e r
e c o n o m i e s j would h a v e
three weeks'
(c)
jvrst r e c e i v e d
allowances
thousands
affected
their
on t h e r e d u c e d
The P u b l i c A s s i s t a n c e
w i t h hundreds o f
classes
first
in a l l
Committees would b e
of
(e)
further
with loss
the l a r g e
of
coping
cities
would
certainly
and c l a s h e s
There might
with
even be
life,
A hard b a t t l e
depreciation
or
applicants,.
the p o l i c e would be f r e q n e n t c
rioting
two
scales.
( d ) D e m o n s t r a t i o n s by t h e unemployed
be o r g a n i s e d
"by our
might be p r o c e e d i n g
of
t h e £ and o f
the
t o check
the
rupee,
m
i
n
i
u
m
"
' i,
(f)
A series
of
Ord.ers m i g h t b e i s s u i n g
Government D e p a r t m e n t s , week b y w e e k ,
the r i s e
in prices
designed
c o u l d h a r d l y b e imagined,,
O p p o s i t i o n would be c a r r y i n g
The w h o l e f o r c e
concentrated
reductions
in fact
in wages;
resulted in
and m i g h t r e s u l t
secondly,
food-taxes.-,
of
British
Government
Opposition,
the
the
.credit
s
and t h e d e f e a t
threatened
i n the
r i s e ; and,
a further
e c o n o m i c and f i n a n c i a l
\ finas I t s e l f .
of
living
thirdly,
increase
including
support
of
of
to the
a
It
is
the
saving
successful
a discredited
t h a t w as a n t i c i p a t e d ,
embark w h i l e
had
made a f e w weeks ago on
might be w h o l l y disappointed..
opposite.
cost
a general t a r i f f ,
to the
reduced
saved the
the n a t i o n would be r a l l i e d
precisely..the
to
this
Calculations,
easy v i c t o r y
no r i g h t
general
formid.able
had n o t
i n a much g r e a t e r
of
Orders
t h e Labour P a r t y w o u l d b e
an a c t u a l r i s e
through the i m p o s i t i o n
that
on a most
of
a
ivJeanwhile
and s a l a r i e s a n d
p r o p o s e d now t o add t o a l l
basis
-
i n denouncing a p o l i c y which f i r s t
unemployment a l l o w a n c e s
check
successful.
C o n d i t i o n s more u n p r c p i t i o u s f o r
campaign^
the
to
and t o p r e v e n t p r o f i t e e r i n g
w h i c h m i g h t or m i g h t n o t b e
election
from
and
reckless
Instead
the r e s u l t
of
might
be
a gamble on w h i c h we h a v e
the country i s
difficulties
in the
i n which i t
grave
n^w
-
It
the
is
u r g e ! that
during
or a f t e r
c o n d i t i o n s would be s t i l l
that
an e l e c t i o n
ensure
political
period.
elected.
If t e m p o r a r y
until
stimulus
evidently
if
is
other
i s very
to
become more
in order
to
is
said,
has
cannot
been
speculative.
It
of
give
industry
the £ w i l l
-
as t h e
anticipates;
if
that
is
so,
decline
c o n d i t i o n s would at
t h e Continent,,
that
general
by t h e
to
me add t h a t
party,
Lloyd-George
an e a r l y
on t h e
4.
in
having
all
every
to
our
politicians,
urgently
had p l u n g e d
into a
been f o r c e d t o
continue
its
do so
support,
t h e l e a d i n g members o f
oi
and L o r d G r e y ,
parliamentary
on
thought,
are
party
including
strongly
on t h e l i n e s
is very
the
opposed
proposed;
The Government has s e v e r a l m a t t e r s
dealt
demanding
its
with properly
attention,
if
/
.
to
and t h a t
nearly
unanimous
of
utmost
point).
urgency
we
criticisms.
school
general e l e c t i o n
/-the L i b e r a l
be
of
situation,
refusing
be s p a r i n g
their
on t h e m e a s u r e s
without
legislature
Liberal
we l e a r n t
control the
election,
(Let
Mr.
and i f
concentrating
should not
once
such as t h o s e t h r o u g h w h i c h we a r e
i n seme c o u n t r y
necessary
and
i n European and
now p a s s i n g had been p r e v a i l i n g
of
a
favourable.
conditions
instead
may
Stcck
unemployment may
and p o l i t i c a l
and
considerable
no s e r i o u s w o r s e n i n g
considerably
winter
propitious,
a new P a r l i a m e n t
overseas markets,
If
a
it
the d e p r e c i a t i o n
Exchange
there
for
observers,
This again
be t h a t
essential
stability
Foreign
be r e - a s s u r e d
well
new i s
less
trie
2 6 0
w h i c h can
the
only
a d i s s o l u t i o n of Parliament
all
i s not impending,
ready to continue working
together
and i f
we a r e
as we have done
hitherto.
Not urgent
affecting
of
the p r i c e
domestic p r i c e s ,
aside
or r e l e g a t e d
of T r a d e .
'
of
same degree a s q u e s t i o n s
sterling
and of
the rupee and
but, a matter' which c e r t a i n l y
to
the f u t u r e ,
I t w i l l be i m p o s s i b l e
questions
cannot be put
i s t h e problem of
the
t o prevent, a l a s t i n g
Balance
and
J
d e p r e c i a t i o n of
the v a l u e of
our currency i f
payments to be made abroad b y t h i s
constant
e x c e s s o v e r the t o t a l
country a r e
receipts.
days when t h i s Government, was formed,
first
I have c o n t i n u a l l y
urged
h a r d l y any i n f o r m a t i o n has b e e n c i r c u l a t e d
need e x a m i n a t i o n a r e t h e s e
(a)
What are
r e l a t i o n not
visible
o n l y t o the u s u a l
but
So far,-
however
to the C a b i n e t and
The p o i n t s which
clearly
­
the g e n e r a l
and i n v i s i b l e ,
therefore
and from the
such an e x a m i n a t i o n s h o u l d be u n d e r t a k e n .
no d i s c u s s i o n has taken p l a c e . ­
the
in
The ma+ter
demands t h o r o u g h and immediate examination,
that
directly
' "-"*
increasing
total
i n the
dimensions of
categories
also
the problem,
of e x p o r t s and
to the movements of
in
import
capital
i n and out?
(b)
What, are the p o s s i b l e
the problem?
it
r e s t r i c t i o n of i m p o r t s ; '
e x p a n s i o n of e x p o r t s ;
i n f l u e n c i n g the movements of
devaluation of currency.
With r e g a r d to the r e s t r i c t i o n
serve the purpose £& view?
be f o l l o w e d by r e t a l i a t i o n
exports,
w
&
s
might
before?.'
means of
solving
­
e.-g.
(c)
alternative
of
capital;'
imports - Would
How' far" would
i t be l i k e l y
abroad,- which by l e s s e n i n g
l e a v e the b a l a n c e
of
t r a d e the
same as
our
it
to
( d ) With, r e g a r d " t o
any r e a l
prospect
"
JL.
that
the
expansion
the o f f e r
-
I "by the German C h a n c e l l o r
of
of
exports,
is
there
t a r i f f reductions
***
^
^-
made
and "by t h e B e l g i a n Government
can he
I
a he d r o u g h t
can he
to
a head,
obtained in
(e)
How f a r
devaluation
as l o n g
of
and i f
so,
other countries
is
the £,
suggest
either
that
vrorth c o n s i d e r i n g
system of
in the
is
considering
immediate
of
these
questions,
that
J trade.
Liberal
means o f
Neither
the L i b e r a l
I n answer
an e x p r e s s i o n o f
Government
following
(a)
in view
these
the
themselves
the
our v i e w s
cf
to
a
I
of
C u - o p e r a t i o n as p r e s i d e d
general
on
the
is
correct.
attitude.
invitation
course which
to
over i t s
of
The
suggest
for
the
the
the Cabinet %
the
effect
that,
week and t h e many u r g e n t
that
have
presented
t h e N a t i o n a l Government
those problems
close
solution
our a d v e r s e b a l a n c e
venture
the l a s t
in a
spend t i m e
s h o u l d b e made t o
as a c o n s e q \ i e n c e ,
for
t he er ei r shown
a s s e n tt o t ob e i tt h. e
w
as t o t h e
consideration
events
only
t a k e n up no such
a t home and e l s e w h e r e ,
itself
of
to t h e P r i m e M i n i s t e r ' s
An announcement
of
have
or
and s h o u l d
members o f
assumptions
s h o u l d now a d o p t ,
for
- problems,
address
of
redressing
representatives
5.
the
and t h a t we n e e d n o t
Government
i nc i any
on g r o u n d s w
o fo upl dr i n
p l e , ca
es
ve
e n r ei ff u si et
indispensable
future
should engage
the establishment
t h a t because
by t h e
last?
on t h e g r o u n d s
tariffs,
concessions
also?
the C a b i n e t
and c o n t i n u o u s e x a m i n a t i o n
n o t p u t them a s i d e
similar
the whcle problem a f f e c t e d
as t h e d e v a l u a t i o n may
I
that
i n the
same s p i r i t
formation.
will
of
(b)
Specie!
reference
urgency o f the question o f
feet
that
merits;
The Government
grounds ­
treatment o f the gold
international
the U n i t e d S t a t e s and P r a n c e
\ which have b e e n ,
(d)
will
f o r the e a r l y
not co-operate,
them.
off
immediate
problem.
conference.
o r which may be f o r c e d
together without
given priority
and t o t h e
s h o u l d be" e x a m i n e d on i t s
s h o u l d b e t a k e n i n hand a t once
summoning o f a g e n e r a l
confer
it
of Trade,
s h o u l d make one o f i t s c h i e f
the i n t e r n a t i o n a l
The p r e p a r a t i o n
I jshould
Balance
which m i g h t b e f o u n d t o be n e c e s s a r y , had
b e e n r u l e d o u t on a n r i o r i
objects
the
i t has been agreed t h a t
no r e m e d i e s ^
(c)
s h o u l d b e made t o t h e i m p o r t a n c e am
If
the c o u n t r i e s
the g o l d
This matter
standard
should be
and b e p r e s s e d on from day t o day.
P a r l i a m e n t should be i n v i t e d
to oass a v e r y
short
7
Bill
as
amending
the d e f i n i t i o n
to cover t h e present
(e)
i n t h e Emergency P o w e r s A c t so
situation.
As soon a s t h a t h a s b e e n d e n e , and t h e p r e s e n t
legislation before
Parliament
the
should adjourn,
t o summon i t a t s h o r t
(f)
House o f
conduct o f
passed,
a r r a n g e m e n t s b o i n g made a s b e f o r e
notice­
The Government
address i t s e l f
Commons has b e e n
would t h e n b e f r e e
to the pressing
f o r a few weeks
immediate problems,
the I n d i a n C o n f e r e n c e .
After
to
and t o t h e
t h a t breathing
space,
the questTon"'of '& g e n e r a l e l e c t i o n might again b e considered i n
the l i g h t
of
the
situation that
would then
(Intd. )
Home O f f i c e ,
S. V/. 1. ,
September 24th, 1951.
prevail.
H.S.