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rHIS
DOCUMENT
IS
T H E
P R O P E R T Y
Printed
O P
H I S
B R I T A N N I C
for the Cabinet.
August
M A J E S T Y ' S
G O V E R N M E N T
1947
Copy No.
SECRET
CM. ( 4 7 )
69th Conclusions
C A B I N E T 69 ( 4 7 )
COMCI USIONS
of a Meeting
on Tuesday,
of the Cabinet held at 1 0 Downing
5th August, 1 9 4 7 , at 1 0 - 3 0 am.
Street,
S.W. 1 ,
Present: The E i P i i t H o n . C . R . A T T L E E , M . P . , P r i m e M i n i s t e r (in the Chair). The R i g h t Hon. ERNEST BEVIN, M.P.,
i h e Ri^V H o n . H E R B E R T M O R R I S O N ,
S e c r e t a r y of S t a t e for F o r e i g n
M . P . L o r d P r e s i d e n t of t h e Council.
Affairs.
The R i g h t H o n . A R T H U R G R E E N W O O D , T h e R i g h t H o n . H U G H D A L T O N , M . P . ,
C h a n c e l l o r of t h e E x c h e q u e r .
V.P.."Minister w i t h o u t P o r t f o l i o . The R i s h t Hon. Sir STAFFORD C R I P P S , T h e R i g h t H o n . A . V . ALEXANDER,
M . P . , M i n i s t e r of Defence.
K . G . r M . P . , P r e s i d e n t of t h e B o a r d
JOWITT,
The R i g h t Hon. J . CHUTER E D E , M.P.,
S e c r e t a r y of S t a t e f o r t h e H o m e
Department.
The R i g h t H o n . V I S C O U N T A D D I S O N ,
Seer.-&,ry of S t a t e f o r C o m m o n w e a l t h
Relations.
The Right H o n . A . CREECH JONES,
M P . . Secretary of S t a t e for t h e
The Right Hon. J . WESTWOOD, M.P.,
The Right Hon. G . A . ISAACS, M . P . ,
Mimsifer of L a b o u r a n d N a t i o n a l
The Right
ht
Hon.
VISCOUNT
hancellor.
Lo:
S e c r e t a r y of S t a t e for S c o t l a n d .
The
Right
Hon.
T H E EARL
OF
L I S T O W E L , S e c r e t a r y of S t a t e for
I n d i a a n d S e c r e t a r y of S t a t e f o r
Burma.
Hon. E. SHINWELL, M.P.,
M i n i s t e r of F u e l a n d P o w e r .
The R i g h t H o n . A N E U R I N B E V A N , M . P . , T h e R i g h t H o n . T . W I L L I A M S , M . P . ,
Minister of H e a l t h .
M i n i s t e r of A g r i c u l t u r e a n d F i s h e r i e s .
The R i g h t Hon. GEORGE TOMLINSON,
M . P . , M i n i s t e r of E d u c a t i o n .
T h e following w e r e also p r e s e n t :
The R i g h t H o n . V I S C O U N T H A L L , F i r s t T h e R i g h t H o n . F . J . B E L L E N G E R , M . P . ,
Lord of t h e A d m i r a l t y (Items 1 - 2 ) .
S e c r e t a r y of S t a t e f o r W a r (Items
The R i g h t H o n . P . J . N O E L - B A K E R ,
MJP. Secretary of S t a t e for A i r .
The R i g h t H o n . A L F R E D
BARNES,
M.P.. M i n i s t e r of T r a n s p o r t .
1-2).
The R i g h t Hon. JOHN W I L M O T ,
LORD
PAEENHAM,
Chancellor
of
the
Duchy of L a n c a s t e r (Items 1 - 2 ) .
The R i g h t H o n . W I L L I A M
M.P..
Parliamentary
T r e a s u r y (Item 1 ) .
WHITELEY,
T h e R i g h t H o n . J O H N STRACHEY, M . P . ,
M i n i s t e r of Food.
The R i g h t Hon. Sir HARTLEY SHAWCROSS, K . C . , M . P . , A t t o r n e y - G e n e r a l
(Item 1 ) .
S i r E D W A R D B R I D G E S , P e r m a n e n t Secre­
Secretary,
Secretariat
tary, Treasury.
:
M r . W . S. M U R R I E . M r . S. E . V . L U K E . [34134-2]
M.P.,
M i n i s t e r of S u p p l y (Items 1 - 2 ) .
r
B
CABINET
69
(47)
CONTENTS
Minute
Subject
No.
Page
1
S u p p l i e s a n d Services ( T r a n s i t i o n a l P o w e r s ) Bill
201
2
B a l a n c e of P a y m e n t s ....
Food Production.
Coal.
Film Eemittanees.
Petrol.
Foreign Travel.
Pie-deployment of Labour.
Capital I n v e s t m e n t .
Overseas Military Expenditure and Size of the Armed Forces.
Balance of P a y m e n t s Situation.
201
3
Coal
208
Extension of Five-Day Week t o Ancillary Workers in the
Coalmining Industry.
Supplies and
Services
(Transitional
Powers) Bill.
(Previous Eef erence: C M . (47) 6 8 t h Conclusions.) 1. T h e C a b i n e t h a d before t h e m a m e m o r a n d u m by t h e
Chancellor of t h e E x c h e q u e r ( C P . (47) 223) covering a d r a f t
S u p p l i e s a n d Services ( T r a n s i t i o n a l P o w e r s ) Bill.
T h e C a b i n e t were i n f o r m e d t h a t the effect of t h e Bill w a s t o
enable the p o w e r s conferred by Defence R e g u l a t i o n s c o n t i n u e d i n
force by the S u p p l i e s a n d Services ( T r a n s i t i o n a l P o w e r s ) A c t , 1945,
Lo be used for t h e a d d i t i o n a l p u r p o s e s defined i n Clause 1 (1). I t
t h u s removed a n y r i s k t h a t t h e G o v e r n m e n t m i g h t be challenged i n
the courts for u s i n g , i n o r d e r to deal w i t h t h e p r e s e n t s i t u a t i o n ,
p o w e r s conferred by R e g u l a t i o n s c o n t i n u e d i n force p r i m a r i l y t o
deal w i t h conditions in t h e t r a n s i t i o n from w a r to peace.
T h e Bill d i d n o t confer power t o m a k e n e w Defence R e g u l a t i o n s
or to revive Defence R e g u l a t i o n s w h i c h h a d been revoked, a n d i t
would not m a i n t a i n in force Defence R e g u l a t i o n s w h i c h would l a p s e
w i t h t h e e x p i r y of the E m e r g e n c y L a w s ( T r a n s i t i o n a l P r o v i s i o n s )
A c t , 1946. N o r would the Bill p r o v i d e s t a t u t o r y a u t h o r i t y for t h e
p a y m e n t of subsidies such as acreage p a y m e n t s to f a r m e r s or g r a n t s
for t h e r e c o n d i t i o n i n g of r u r a l houses. T h e q u e s t i o n w h e t h e r t h e
Bill should include power to m a k e n e w R e g u l a t i o n s h a d been care­
fully considered, b u t it h a d been felt t h a t i t w o u l d be unwise t o ask
P a r l i a m e n t to g r a n t p o w e r s w h i c h could n o t be shown to be n e e d e d ;
a n d , so far as could be seen, all t h a t t h e G o v e r n m e n t m i g h t w i s h to
do in order to deal w i t h the economic s i t u a t i o n could be done u n d e r
t h e R e g u l a t i o n s c o n t i n u e d in force by t h e A c t of 1945. A s r e g a r d s
the question of s t a t u t o r y a u t h o r i t y for the p a y m e n t of subsidies, i t
h a d not been t h e p r a c t i c e to use Defence R e g u l a t i o n s for t h i s p u r ­
pose d u r i n g t h e w a r a n d t h e r e seemed t o be n o justification for doing
so in peace.
T h e C a b i n e t w e r e also i n f o r m e d t h a t t h e consultations w h i c h
h a d t a k e n place w i t h the O p p o s i t i o n s u g g e s t e d t h a t they would press
for a full d a y for t h e Second R e a d i n g D e b a t e on t h e Bill a n d m i g h t
wish t o move a m e n d m e n t s in Committee. I n these c i r c u m s t a n c e s it
m i g h t be necessary to p o s t p o n e t h e a d j o u r n m e n t of P a r l i a m e n t u n t i l
the following week.
The C a b i n e t ­
(1) A p p r o v e d the d r a f t S u p p l i e s a n d Services ( T r a n s i t i o n a l
P o w e r s ) Bill a n n e x e d to C P . (47) 2 2 3 ;
Took note t h a t notice of p r e s e n t a t i o n of the Bill h a d a l r e a d y
been given a n d a g r e e d t h a t the B i l l should be p u b l i s h e d
forthwith;
(3) A g r e e d t h a t , in o r d e r to enable t h e B i l l to be passed before
t h e S u m m e r Recess, t h e a d j o u r n m e n t of P a r l i a m e n t for
the S u m m e r Recess should, if necessary, be postponed.
Balance
of
Payments.
2.
T h e C a b i n e t h a d before t h e m —
(i) a m e m o r a n d u m by the Chancellor of t h e E x c h e q u e r ( C P .
(47) 223) covering a note r e p o r t i n g the r e s u l t s of f u r t h e r
Reference:
e x a m i n a t i o n of t h e p r o p o s a l s w i t h r e g a r d to food p r o ­
CM.(47)68th
duction, economies in petrol, a n d foreign travel aliow­
Conclusions.)
ances w h i c h h a d been considered by the C a b i n e t a t t h e i r
m e e t i n g on 1st A u g u s t ( C M . (47) Q7th Conclusions,
Minute 2);
(ii) a m e m o r a n d u m by t h e P r i m e M i n i s t e r ( C P . (47) 226)
r e p o r t i n g t h e conclusions reached by t h e Defence Com­
m i t t e e on t h e proposals m a d e in C P . (47) 221 w i t h
r e g a r d to overseas m i l i t a r y e x p e n d i t u r e a n d the size of
the Armed Forces; and
(iii) a m e m o r a n d u m by t h e M i n i s t e r of Food ( C P . (47) 224) sug­
g e s t i n g t h e lines of the s t a t e m e n t t o be m a d e by the
P r i m e M i n i s t e r on the subject of food i m p o r t s in t h e
debate on 6th A u g u s t .
[34134-2] B 2
(Previous
Food
Production.
The Minister of A griculture said t h a t he h a d circulated to the
L o r d P r e s i d e n t s Committee a m e m o r a n d u m ( L . P . (47) 137) setting
o u t the r e q u i r e m e n t s of the a g r i c u l t u r a l i n d u s t r y for the purpose
of s e c u r i n g an increase of £ 1 0 0 millions in net production by the
y e a r 1951-52. T h i s expansion w a s technically possible, but it could
be achieved only if all the necessary resources, incentives and stimuli
w e r e m a d e available a n d applied. E x c e p t i o n a l action would have
to be t a k e n by t h e G o v e r n m e n t to p r o v i d e a d d i t i o n a l labour, houses,
hostels, m a c h i n e r y , feeding-stuffs a n d o t h e r requisites, together with
s u b s t a n t i a l financial aid.
T h u s it would be necessary to recruit
140,000 a d d i t i o n a l B r i t i s h a g r i c u l t u r a l workers, of whom 60,000
w o u l d be r e q u i r e d by mid-1948, and 30,000 foreign workers would
be needed i n a d d i t i o n . H e proposed t h a t this increase in the labour
force should be achieved by a v a r i e t y of measures, such as the defer­
m e n t of call-up of a g r i c u l t u r a l workers, the continuance of the Con­
trol of E n g a g e m e n t Q r d e r , a n d other means which were set out in
d e t a i l i n L . P . (47) 137.
I n discussion some doubts were expressed whether the Govern­
m e n t w o u l d be wise to commit themselves to such an extensive and
l o n g - t e r m p r o g r a m m e as was proposed, since it m i g h t absorb more
of t h e n a t i o n a l resources t h a n we could afford to devote to agricul­
t u r e , a n d w o u l d , in a n y event, be d e p e n d e n t on our being able to
secure t h e necessary supplies of i m p o r t e d feeding-stuffs.
A s a g a i n s t t h i s , i t w a s p o i n t e d o u t t h a t an expansion of home
food p r o d u c t i o n would be one of the most effective means of con­
serving foreign exchange. T h e r e w a s n o reason to suppose that the
t a r g e t p r o p o s e d would involve an excessive allocation of our national
resources t o a g r i c u l t u r e ; a n d there would be no possibility of
s e c u r i n g t h e necessary co-operation from the farmers for a pro­
g r a m m e covering a lesser period.
The C a b i n e t ­
(1) Eeaffirmed t h e i r decision t h a t steps should be taken to
enable an increase of £ 1 0 0 millions a year in net agricul­
t u r a l p r o d u c t i o n t o be achieved by 1951-52.
Coal.
The Lord
President
recalled t h a t a t their meeting on
1st A u g u s t ( C M . (47) 67th Conclusions, M i n u t e 2), the Cabinet had
agreed t h a t the t a r g e t for coal p r o d u c t i o n d u r i n g the period from
September 1947 t o M a y 1948, should be 4-i- million tons a week for
both d e e p - m i n e d a n d opencast o u t p u t . I n his view, i t would not be
possible to achieve t h i s t a r g e t ; and, if it were made public, we might
be involved in e x p o r t commitments w h i c h we should have to honour
a t t h e expense of our own needs. H e t h o u g h t t h a t the maximum
t a r g e t for the p e r i o d i n question should be 4^ million tons a week
for both d e e p - m i n e d a n d opencast p r o d u c t i o n .
The Minister
of Fuel and Power said t h a t u n d e r present con­
d i t i o n s we could n o t look for p r o d u c t i o n of deep-mined coal in excess
of 3,800,000 tons a week. On the a s s u m p t i o n t h a t agreement would
be r e a c h e d on longer hours, p r o d u c t i o n m i g h t be increased to
4 million tons, b u t t h e i n d u s t r y would only be discouraged if a
h i g h e r target w e r e set. I n a d d i t i o n , he t h o u g h t it conceivable that
250,000 tons a week of opencast coal m i g h t be obtained.
The Foreign Secretary a n d the President of the Board of Trade
suggested t h a t a n average weekly o u t p u t of 4,200,000 tons of deep­
m i n e d coal m i g h t reasonably be a d o p t e d as the t a r g e t ; but the
general view of t h e Cabinet w a s t h a t the t a r g e t should be 4 million
tons for d e e p - m i n e d coal a n d 250,000 tons for opencast coal.
The C a b i n e t ­
(2) A g r e e d t h a t the t a r g e t for coal production during the
p e r i o d from September 1947 to M a y 1948 should be
4 million tons a week of deep-mined coal and 250,000 tons
a week of opencast coal.
es.
The President
of the Board of Trade recalled t h a t a t t h e i r
m e e t i n g on 1st A u g u s t ( C M . (47) 67th Conclusions, M i n u t e 2), the
C a b i n e t h a d been inclined to favour a scheme u n d e r w h i c h all
r e m i t t a n c e s in respect of foreign films, i n c l u d i n g films a l r e a d y
i m p o r t e d into t h e U n i t e d K i n g d o m , should be stopped. A n y such
scheme w o u l d m e a n p r o h i b i t i n g t h e e x h i b i t i o n of all foreign films
in t h i s c o u n t r y ; a n d the effect of t h i s would be t o reduce by 80 per
cent, t h e n u m b e r of n e w films available for exhibition to the public.
T h e r e s u l t w o u l d be t h a t m a n y cinemas would have to close down
completely, a n d t h a t i n d e p e n d e n t e x h i b i t o r s w o u l d be forced out of
business. I n these c i r c u m s t a n c e s h e suggested t h a t it m i g h t be wiser
t o impose a 300 per cent, d u t y on all new i m p o r t s , w h i c h would
enable us to r e t a i n 75 per cent, of the e a r n i n g s of these films. T h e
necessary powers h a d a l r e a d y been secured in the F i n a n c e A c t .
The Cabinet—
(3) A g r e e d t h a t s t e p s should be t a k e n to limit r e m i t t a n c e s in
respect of foreign films to not more t h a n 25 p e r cent, of
the e a r n i n g s of such films.
A t t h e i r m e e t i n g on 24th J u l y ( C M . (47) 64th Conclusions,
M i n u t e 3), the Cabinet h a d decided t h a t a saving of 500,000 tons of
p e t r o l should be achieved by cuts in t h e basic r a t i o n a n d in t h e
a m o u n t of petrol consumed by commercial vehicles a n d by t h e
Services; a n d a t t h e i r m e e t i n g o n 1st A u g u s t ( C M . (47) 67th Con­
clusions, M i n u t e 2 ) they h a d suggested t h a t the possibility of m a k i n g
a g r e a t e r s a v i n g t h a n 500,000 tons should be considered.
The Minister of Fuel and Power said t h a t a n a d d i t i o n a l saving
could not be secured e x c e p t by a f u r t h e r cut in t h e basic r a t i o n , or a
f u r t h e r reduction in s u p p l e m e n t a r y allowances, or by a c u t in the
issues of petrol to c h a r a b a n c s . T h e decision a l r e a d y t a k e n would
involve a s u b s t a n t i a l r e d u c t i o n in t h e basic r a t i o n a n d supple­
m e n t a r y allowances, a n d he w a s a f r a i d that, if f u r t h e r r e d u c t i o n s
were made, p r i v a t e owners w o u l d increasingly resort to the black
m a r k e t for a d d i t i o n a l supplies.
The Minister
of Transport
said t h a t the G o v e r n m e n t s p r o ­
posals for s t i m u l a t i n g p r o d u c t i o n would t h r o w a heavy b u r d e n on
r o a d t r a n s p o r t . H e t h e r e f o r e suggested that the cut in issues of
p e t r o l to commercial vehicles should be 5 per cent, i n s t e a d of 10 per
cent., as proposed by the M i n i s t e r of F u e l a n d P o w e r .
The Cabinet—
(4) A g r e e d t h a t the a i m should be to secure savings of petrol
a m o u n t i n g to 500,000 tons in 1947-48 by t h e methods
proposed in p a r a g r a p h 10 of A n n e x I I to C P . (47) 223.
Travel.
The Chancellor of the Exchequer recalled t h a t he h a d proposed
t h a t from 1st October foreign t r a v e l allowances should be reduced
from £ 7 5 for 12 m o n t h s to £ 3 5 for 14 months. H e also proposed
to l i m i t the allowance of a child to £ 2 0 and to m a k e r e d u c t i o n s in
business allowances. If t h e C a b i n e t t h o u g h t i t r i g h t , he would be
r e a d y to reduce the foreign t r a v e l allowance f u r t h e r to £ 2 5 . H e
would g r e a t l y p r e f e r not to have to revert to the w a r - t i m e system
u n d e r w h i c h foreign travel w a s only rjermitted for special reasons,
since t h i s would impose a n excessive s t r a i n on t h e a d m i n i s t r a t i o n .
The Cabinet—
(5) A g r e e d t h a t foreign travel allowances should be reduced
from £ 7 5 for twelve m o n t h s to £ 3 5 for f o u r t e e n months,
a n d t h a t the p r o p o r t i o n a t e allowance for a child should
be £ 2 0 .
jyment
our.
The Lord President
e x p l a i n e d t h a t , t h o u g h the r e p r e s e n t a t i v e s
of the T r a d e s U n i o n Congress w i t h whom the M i n i s t e r of L a b o u r
a n d he h a d discussed t h e G o v e r n m e n t s t e n t a t i v e p r o p o s a l s for the
re-deployment of labour h a d been unable to commit themselves
finally, they h a d been generally favourable to t h e proposals and had
a g r e e d t h a t , in a d d i t i o n to the negative direction of labour througj
t h e g e n e r a l a p p l i c a t i o n of t h e Control of E n g a g e m e n t Order, ther
w a s a case for some m e a s u r e of positive direction. There would hi
f u r t h e r consultations w i t h t h e N a t i o n a l J o i n t Advisory Council or
t h e following day.
The Minister of Labour e x p l a i n e d t h a t he contemplated the ual
of positive powers of direction only i n exceptional cases when
w o r k e r s refused to accept employment offered to them by the employ,
m e n t exchange.
The President
of the Board of Trade recalled t h a t at the I
C a b i n e t s m e e t i n g o n 1st A u g u s t ( C M . (47) 68th Conclusions)
d o u b t s h a d been expressed about t h e wisdom of a t t e m p t i n g to uss:
p o w e r s of positive direction u n d e r peace-time conditions. In
v i e w i t would be u n w i s e to t r y to use powers of positive direction
t o deal w i t h i n d i v i d u a l r e c a l c i t r a n t w o r k e r s a n d , unless the Govern­
m e n t w e r e p r e p a r e d to e m b a r k on t h e wholesale positive direction of
labour, it would be b e t t e r for them to confine themselves to the use o:
n e g a t i v e powers.
4
The Minister of Health urged t h a t p e n a l t i e s for t h e contraven-1
t i o n of t h e Control of E n g a g e m e n t O r d e r should be primarily
H e s u p p o r t e d the view of the I
d i r e c t e d a g a i n s t the employer.
P r e s i d e n t of t h e B o a r d of T r a d e t h a t it would be unwise to attempt j
to use powers of positive direction in i n d i v i d u a l cases and pointed
o u t t h a t w h e r e a m a n w a s u n w i l l i n g to accept a reasonable offer of
employment he could be penalised by refusal of unemployment
benefit. T h e G o v e r n m e n t would find themselves in g r e a t difficulties
if t h e y a t t e m p t e d to u s e powers of positive direction to force workers
i n t o employment in w h i c h the conditions were unsatisfactory.
of State for War pointed out t h a t many men
The Secretary
released from t h e A r m e d Forces in Class " A " h a d reinstatement
r i g h t s , a n d it h a d been the practice to allow all men released in
Class " A " to enter a n y employment they chose d u r i n g their 58
d a y s of demobilisation leave. H e hoped the new proposals would
not involve any c h a n g e i n t h e position of such men.
The Prime Minister said t h a t he h a d assumed t h a t in his state­
m e n t in t h e P a r l i a m e n t a r y debate he w o u l d i n d i c a t e t h a t powers of
positive d i r e c t i o n would be used to a limited extent.
The C a b i n e t ­
(6) I n v i t e d t h e M i n i s t e r of L a b o u r to review i n the light of the
discussion t h e d r a f t s t a t e m e n t which h a d been prepared
for t h e use of t h e P r i m e M i n i s t e r in the Parliamentary
debate.
(7) A g r e e d t h a t a n y powers of negative or positive direction
w h i c h it m i g h t be decided to exercise should not be used
in such a w a y as to affect t h e r e i n s t a t e m e n t rights of men
released f r o m the A r m e d Forces, a n d invited the Minis­
ter of L a b o u r to consider w i t h the M i n i s t e r of Defence
the effect of t h e exercise of a n y such powers on the free­
dom of choice of occupation which men released in
Class " A " enjoyed in t h e p e r i o d of 56 d a y s ' demobilisa­
tion leave.
Capital
investment.
The Prime Minister said t h a t he proposed to state in the debate
on 6 t h A u g u s t t h a t in t h e immediate f u t u r e i t would be necessary
t o concentrate on investment projects which would give quiet
r e t u r n s i n a d d i t i o n a l e x p o r t s or i n t h e s t r e n g t h e n i n g of the
i n d u s t r i a l s t r u c t u r e w h i c h produced exports or essential goods
H e would indicate that neff'
w h i c h m u s t otherwise be imported.
b u i l d i n g of all k i n d s w o u l d have to be strictly limited a n d that there
would be some c u r t a i l m e n t of the h o u s i n g p r o g r a m m e and greater
c o n c e n t r a t i o n on the b u i l d i n g of houses for miners and agricultural
workers.
The Minister
of Health suggested t h a t it would be better to
avoid a n y specific reference to h o u s i n g for m i n e r s a n d a g r i c u l t u r a l
w o r k e r s , since t h i s m i g h t be held t o imply t h a t h o u s i n g projects in
a r e a s such as P l y m o u t h , Coventry a n d London, w h e r e t h e r e w a s a
very u r g e n t need for a d d i t i o n a l houses, would be s t o p p e d . H e did
not dissent from t h e view t h a t t h e r e should be some redirection of
the h o u s i n g effort, b u t h e u r g e d t h a t t h e r e should be n o suggestion
t h a t t h e total p r o g r a m m e was being cut. A n y such suggestion would
j e o p a r d i s e t h e success of t h e scheme for p a y m e n t by results in the
building industry.
The President of the Board of Trade s a i d t h a t control of c a p i t a l
investment w a s meaningless w i t h o u t some r e d u c t i o n in t h e building­
p r o g r a m m e . T h e r e would be no difficulty i n finding m a r k e t s a b r o a d
for a n y s u r p l u s of b u i l d i n g m a t e r i a l s w h i c h m i g h t arise as a result
of t h e slowing down in our b u i l d i n g p r o g r a m m e .
The Cabinet—
(8) Reaffirmed t h e i r decision t h a t there should be a c u r t a i l ­
m e n t of c a p i t a l investment p r o j e c t s other t h a n those
c o n t r i b u t i n g to e x p o r t or to i m p o r t saving.
The Prime Minister said t h a t i t w o u l d be seen from C P . (47)
226 t h a t t h e Defence C o m m i t t e e h a d recommended t h a t by
31st December, 1947, t h e r e should be a r e d u c t i o n of 133,000 in the
n u m b e r of B r i t i s h t r o o p s s t a t i o n e d overseas. A f u r t h e r reduction
of 77,000 would be m a d e between 1st J a n u a r y , 1948, a n d 31st M a r c h ,
1 9 4 8 ; a n d t h e r e would also be by 31st December, 1947, a reduction
of 34,000 in t h e n u m b e r of n o n - B r i t i s h troops employed in t h e
M i d d l e E a s t a n d S o u t h - E a s t A s i a , which w a s e q u i v a l e n t in terms
of cost to a r e d u c t i o n of a p p r o x i m a t e l y 21,000 B r i t i s h troops. T h e
proposed reductions would p u t a heavy s t r a i n on s h i p p i n g a n d
would affect t h e a r r a n g e m e n t s for g r a n t i n g special leave to men w i t h
long service overseas as well a s slowing down t h e r a t e of w i t h d r a w a l
of G e r m a n p r i s o n e r s of w a r from t h e M i d d l e E a s t . I n a n n o u n c i n g
t h e r e d u c t i o n s to P a r l i a m e n t no details would be given of the
p a r t i c u l a r t h e a t r e s from w h i c h t r o o p s w e r e being w i t h d r a w n . W i t h
regard, to the size of the A r m e d Forces, t h e M i n i s t e r of Defence
h a d been able t o recommend a r e d u c t i o n of t h e e s t i m a t e d s t r e n g t h
a t 31st M a r c h , 1948, from 1,087,000 to 1,007,000. T h e Defence
C o m m i t t e e h a d come to t h e conclusion t h a t to a t t e m p t to b r i n g t h e
n u m b e r below 1,007,000 at 31st M a r c h , 1948, by accelerating releases
would a c c e n t u a t e t h e difficulties w h i c h t h e Services w e r e experien­
c i n g t h r o u g h t h e s h o r t a g e of t r a i n e d men to such a n e x t e n t a s to
m a k e it impossible for them t o m a i n t a i n fighting u n i t s or to provide
for t h e t r a i n i n g of new r e c r u i t s . On t h e o t h e r b a n d , t h e Committee
h a d felt t h a t it m i g h t be possible to m a k e a t e m p o r a r y reduction in
t h e n u m b e r of men called u p u n d e r t h e N a t i o n a l Service Acts, a n d
t h e possibility of t h i s w a s n o w b e i n g explored. I t would be impos­
sible to i n d i c a t e in t h e d e b a t e w h a t reduction in t h e size of the
Forces m i g h t be achieved in t h i s w a y , a n d he proposed to confine
himself to s t a t i n g i n g e n e r a l t e r m s t h a t t h i s p o i n t w a s being looked
into together w i t h t h e whole question of t h e size a n d shape of the
u l t i m a t e peace-time A r m e d Forces.
The Minister
of Labour s a i d that, since t h e m e e t i n g of the
Defence Committee, t h e officials of the D e p a r t m e n t s concerned h a d
been c o n s i d e r i n g how a r e d u c t i o n in t h e size of t h e A r m e d Forces
at 31st M a r c h , 1948, could be achieved by a t e m p o r a r y slowing
down of t h e call-up. Before f u r t h e r progress could be m a d e in this
m a t t e r , however, i t would be necessary t o decide w h e t h e r the aim
w a s t o secure only a small reduction, say, of 10,000, or s o m e t h i n g of
t h e order of 100,000. A small r e d u c t i o n could be achieved by the
slowing down of t h e c a l l - u p by a d m i n i s t r a t i v e action, b u t a n y large
r e d u c t i o n would r e q u i r e to be c a r r i e d o u t by r e s t o r i n g the Schedule
of Reserved Occupations.
The Minister of Defence pointed o u t t h a t a n y wholesale defer­
m e n t of men due for call-up in 1947 a n d 1948 would be r e g a r d e d a s
a breach of t h e pledges given by t h e Government to men already P
i n the A r m e d Forces. H e hoped t h a t no decision would be reached I
u n t i l t h e r e s u l t s of t h e enquiries which he w a s m a k i n g into the size
a n d s h a p e of t h e u l t i m a t e peace-time A r m e d Forces were available
The Foreign Secretary
said t h a t he would be opposed to am
scheme of complete e x e m p t i o n of p a r t i c u l a r classes from national
service. H e also p o i n t e d out t h a t H i s M a j e s t y s Government were*
pledged t o r e t u r n all G e r m a n prisoners of w a r by the end of 1948'
H e a s s u m e d t h a t t h e slowing down of t h e w i t h d r a w a l of German
p r i s o n e r s of w a r from the M i d d l e E a s t would not result in failure
t o c a r r y out t h i s pledge.
The Cabinet—
(10) A p p r o v e d the recommendations of the Defence Committee
w i t h r e g a r d to overseas m i l i t a r y commitments and the
size of t h e A r m e d Forces as set o u t in C P . (47) 226, and
a g r e e d t h a t in t h e d e b a t e on 6th A u g u s t it would be
impossible to give a n y e s t i m a t e of the extent to which
t h e size of the A r m e d Forces m i g h t be reduced by slowino
down the call-up of men u n d e r the N a t i o n a l Service Act
(11) A g r e e d t h a t a r r a n g e m e n t s should be m a d e to ensure that
t h e t e m p o r a r y slowing down of the withdrawal of
G e r m a n prisoners of w a r from the Middle E a s t should
n o t involve a n y breach of the pledge t h a t all German
p r i s o n e r s of w a r would be r e p a t r i a t e d by the end of
1948.
B a l a n c e of
Payments
Situation.
The Foreign Secretary said t h a t he h a d received a communiea­
tion from t h e U n i t e d States Secretary of State, in reply to his
t e l e g r a m of 2 n d A u g u s t , accepting the suggestion t h a t discussions
should t a k e p l a c e f o r t h w i t h on a h i g h official level concerning the
p r e s e n t p o s i t i o n of t h e U n i t e d K i n g d o m a n d its immediate implica­
tions. M r . M a r s h a l l h a d said t h a t h e w a s in entire agreement with
t h e view t h a t such discussions should not be regarded, as affecting
t h e m a t t e r s u n d e r consideration a t t h e P a r i s Conference; and, in
o r d e r to avoid a n y m i s u n d e r s t a n d i n g on this point, the United
S t a t e s G o v e r n m e n t felt t h a t a n y reference to, or a n y announcement
of, such discussions should, m a k e it clear t h a t they were to deal with
problems a r i s i n g out of the A n g l o - A m e r i c a n F i n a n c i a l Agreement.
M r . M a r s h a l l h a d a d d e d t h a t the decision w h e t h e r or not to invoke
A r t i c l e 12 of t h e A g r e e m e n t w a s one w h i c h a t this juncture would
a p p e a r t o rest w i t h the B r i t i s h G o v e r n m e n t ; but t h a t it should be
u n d e r s t o o d t h a t the U n i t e d S t a t e s G o v e r n m e n t could agree to no
a c t i o n u n d e r t h i s a r t i c l e w i t h o u t p r i o r a u t h o r i s a t i o n by the
Congress.
The F o r e i g n Secretary said t h a t , in view of Mr. Marshall^
reference to t h i s point, it would be a tactical mistake to invoke
A r t i c l e 12 of t h e A g r e e m e n t a t this s t a g e .
The Chancellor
of the Exchequer
agreed w i t h the Foreign
S e c r e t a r y . I t w o u l d be advantageous if a t a n y r a t e the preliminary
discussions could t a k e place i n L o n d o n r a t h e r t h a n in Washington,
as h a d been suggested by M r . M a r s h a l l .
If necessary, further j
discussions could t a k e place in W a s h i n g t o n a t a l a t e r stage.
T h e C a b i n e t then discussed w h a t should be said in the Parlia­
m e n t a r y debate on 6 t h A u g u s t about the present d r a i n on United
K i n g d o m dollar resources a n d the measures which m i g h t be taken
to remedy the s i t u a t i o n .
The Chancellor of the Exchequer
said t h a t he was circulating
to t h e C a b i n e t a m e m o r a n d u m showing t h e effect of the various!
factors w h i c h h a d led to t h e p r e s e n t situation. A s the Cabinet
knew, t h e r e h a d been no m a r k e d increase in the d r a i n on our dollar
resources since 15th J u l y , w h e n the convertibility obligation under
t h e U n i t e d S t a t e s L o a n A g r e e m e n t h a d come into force. I n fact,
for some t i m e before 15th J u l y we h a d been obliged t o allow certain
countries, such as C a n a d a a n d t h e A r g e n t i n e , to convert into d o l l a r s
their s t e r l i n g receipts for s u p p l i e s sold t o us. Moreover, there h a d
been a tendency for holders of s t e r l i n g balances to d r a w on t h e m
for dollar t r a n s a c t i o n s , t h o u g h h e h a d done h i s best to l i m i t the
extent of this. I n h i s view, i t would be a serious m i s t a k e to a t t e m p t
to deal w i t h t h e s i t u a t i o n by some such d r a m a t i c move as the
blocking of sterling, since such action would merely a c c e n t u a t e our
difficulties. I t h a d t o be remembered t h a t we were d e p e n d e n t on t h e
A r g e n t i n e for such essential commodities as meat, a n d t h a t , if we
refused to p a y for it in convertible sterling, t h e only result would
be t h a t s u p p l i e s from t h a t c o u n t r y would be invoiced in dollars.
The Minister of Health said t h a t , in his view, t h e r i g h t course
w a s to block s t e r l i n g f o r t h w i t h . W h a t e v e r t h e P r i m e M i n i s t e r said
in t h e d e b a t e on t h e subject of convertibility w a s likely t o lead t o
a r u n on our dollar resources w h i c h would d r i v e us to m a k e s t e r l i n g
inconvertible. Our a i m should be to d i s e n t a n g l e ourselves from the
U n i t e d S t a t e s economy since i t w a s obvious t h a t t h e U n i t e d S t a t e s
were n o t p r e p a r e d to comply w i t h the conditions w h i c h would m a k e
a m u l t i l a t e r a l t r a d e system work. O u r p r e s e n t negative policy of
c u t t i n g i m p o r t s w o u l d merely lead to a f u r t h e r r e s t r i c t i o n of w o r l d
t r a d e a n d so a g g r a v a t e our problem.
The Minister of Food s u p p o r t e d t h e M i n i s t e r of H e a l t h . E v e n
t h o u g h t h e blocking of s t e r l i n g w e r e to lead t h e A r g e n t i n e to d e m a n d
p a y m e n t in dollars, should we be in a n y worse case t h a n a t p r e s e n t
when we h a d to p a y in s t e r l i n g w h i c h w a s s t r a i g h t a w a y converted
i n t o dollars 1 A n d m i g h t w e n o t be able to r e d u c e t h e calls on our
dollar resources from other countries by blocking s t e r l i n g 1
The President
of the Board of Trade s a i d t h a t it would be
a d v i s a b l e to a w a i t t h e outcome of the debate before t a k i n g a n y
steps to block s t e r l i n g .
The Foreign Secretary
suggested t h a t , in the P a r l i a m e n t a r y
Debate on 6 t h A u g u s t , t h e P r i m e M i n i s t e r should m a k e it clear t h a t
t h e d r a i n on our dollar resources did n o t arise by a n y means exclu­
sively from our obligations u n d e r the L o a n A g r e e m e n t , a n d t h a t
much of it w a s d u e to a w o r l d s h o r t a g e of dollars w h i c h h a d not
been contemplated or p r o v i d e d for w h e n the L o a n A g r e e m e n t w a s
m a d e . T h e a i m of the L o a n A g r e e m e n t , a n d of o t h e r a g r e e m e n t s
such a s B r e t t o n W o o d s , h a d been to p r o v i d e the conditions u n d e r
wdiich a system of m u l t i l a t e r a l t r a d i n g w ould o p e r a t e satisfactorily,
b u t t h e o p e r a t i o n of a n y such system pre-supposed a f e r t i l i s i n g flow
of dollars o u t w a r d s from t h e U n i t e d States, w h e r e a s in fact d u r i n g
t h e p a s t year or so, o w i n g p a r t l y to b a d h a r v e s t s a n d p a r t l y to t h e
cessation of U . N . R . B . A . , dollars h a d t e n d e d to flow t o w a r d s t h e
United States.
T h u s t h e conditions under which m u l t i l a t e r a l
t r a d i n g could o p e r a t e h a d not been created. I f t h e system could not
be m a d e to work, t h e n w e m u s t look for salvation in some other way.
T h e s t a t e m e n t could go on to a n n o u n c e t h a t t h e U n i t e d S t a t e s
G o v e r n m e n t h a d a g r e e d to enter i n t o discussions w i t h us r e g a r d i n g
our p o s i t i o n a n d its i m p l i c a t i o n s .
T
The Secretary of State for Air said t h a t the s t a t e m e n t proposed
by t h e F o r e i g n S e c r e t a r y m i g h t be s t r e n g t h e n e d by some reference
to the severe d r o u g h t s i n E u r o p e a n d elsewhere, as a result of w h i c h
a g r i c u l t u r a l p r o d u c t i o n h a d n o t begun t o r e a c h a s a t i s f a c t o r y level
i n these a r e a s u n t i l the p r e s e n t year. T h i s h a d obliged E u r o p e a n
countries to look t o t h e W e s t e r n H e m i s p h e r e for a very l a r g e
p r o p o r t i o n of their food. T h e solution of o u r difficulties m u s t be
found, first, in h i g h e r a g r i c u l t u r a l p r o d u c t i o n in E u r o p e a n d other
c o u n t r i e s outside t h e W e s t e r n H e m i s p h e r e ; secondly, in h i g h e r
p r o d u c t i v i t y in t h e U n i t e d K i n g d o m so t h a t we m i g h t exchange
goods for food instead of h a v i n g to p a y for o u r i m p o r t s in s t e r l i n g ;
a n d t h i r d l y , in a n outflow of dollars from t h e U n i t e d States t o c a r r y
the world over i t p r e s e n t t e m p o r a r y difficulties.
[34134-2]
c
The C a b i n e t ­
(12) I n v i t e d t h e F o r e i g n Secretary a n d the Chancellor of the
E x c h e q u e r to p r e p a r e for the use of the P r i m e Minister
in t h e P a r l i a m e n t a r y debate a s t a t e m e n t dealing with
t h e d r a i n on U n i t e d K i n g d o m dollar resources and the
measures w h i c h m i g h t be t a k e n to remedy the situation.
T h i s s t a t e m e n t should be on t h e general lines indicated
by the F o r e i g n Secretary i n t h e discussion.
(13) Took note of C P . (47) 224.
Coal.
Extension of
Five-Day
Week to
Ancillary
Workers in the
Coalmining
Industry.
(Previous
Eef erence:
C.M.(47)32nd
Conclusions,
Minute 8.)
3. T h e C a b i n e t considered a m e m o r a n d u m by the Minister of
F u e l a n d P o w e r ( C P . (47) 225) a b o u t t h e claim of the National
Union of M i n e w o r k e r s t h a t the five-day week should be extended
to workers in a n c i l l a r y u n d e r t a k i n g s of t h e N a t i o n a l Coal Board.
The Minister
of Fuel and Power e x p l a i n e d t h a t on 5th June
t h e N a t i o n a l Coal B o a r d a n d the N a t i o n a l U n i o n of Mineworkers
h a d a g r e e d t h a t t h e five-day week should not a p p l y to workers in
a n c i l l a r y u n d e r t a k i n g s . Subsequently t h e U n i o n h a d pressed the
B o a r d to a g r e e to its a p p l i c a t i o n to such workers, a n d on 3rd July
t h e B o a r d , a f t e r b e i n g informed by the M i n i s t r y of Fuel a n d Power
t h a t a n y proposal for a n extension of the agreement of 5th June
w a s a m a t t e r on w h i c h the B o a r d should seek guidance from the
Government, h a d a g r e e d w i t h t h e U n i o n on a formula which, by
e x t e n d i n g t h e five-day week only to colliery craftsmen and by
specifically e x c l u d i n g w o r k e r s whose activities h a d clearly nothing
to do w i t h coal-mining, i n effect confirmed the agreement of
5 t h J u n e . L a t e r i n J u l y , however, the Union h a d claimed t h a t this
formula h a d been only provisionally a g r e e d a n d b a d discussed with
t h e B o a r d a n e w f o r m u l a w h i c h did n o t exclude ancillary workers.
A t t h i s p o i n t t h e B o a r d h a d i n d i c a t e d t h a t they could not settle on
a revised formula w i t h o u t g u i d a n c e from t h e Government, a n d he
h a d t h e n t h o u g h t i t r i g h t to b r i n g the m a t t e r before the Lord Presi­
d e n f s Committee, who h a d a g r e e d (L.P. (47) 23rd Meeting,
M i n u t e 3) t h a t the M i n i s t e r of L a b o u r a n d be should maintain the
a t t i t u d e t h a t the five-day week w a s i n t e n d e d to apply to mine­
w o r k e r s a s s u c h a n d n o t to w o r k e r s i n a n c i l l a r y undertakings. In
accordance w i t h t h i s decision he had w r i t t e n to the Chairman of
t h e N a t i o n a l Coal B o a r d on 28th J u l y s t a t i n g t h a t it would not be
p r o p e r for t h e B o a r d to agree to t h e extension proposed by the
U n i o n , while c o n c u r r e n t l y the M i n i s t e r of L a b o u r bad informed
r e p r e s e n t a t i v e s of t h e U n i o n t h a t t h e U n i o n should deal with the
B o a r d in the n o r m a l way, a n d t h a t , if a g r e e m e n t could not be
reached, t h e u s u a l a r b i t r a t i o n m a c h i n e r y should be invoked. Unfor­
t u n a t e l y t h e C h a i r m a n of t h e N a t i o n a l Coal B o a r d h a d sent a copy
of the letter of 28th J u l y t o the S e c r e t a r y of t h e Union who, at
t h e m e e t i n g w h i c h t h e P r i m e M i n i s t e r h a d held w i t h t h e Board and
t h e U n i o n on 30th J u l y , h a d suggested t h a t , if t h e Government were
i n t e r v e n i n g in the m a t t e r , t h e U n i o n should have the r i g h t to submit
t h e i r case directly to t h e Government. T h e Secretary of the Union
suggested t h a t , unless the U n i o n ' s claim w a s g r a n t e d , there would
be stoppages of work. On t h e other h a n d , to g r a n t the claim would
m e a n a g r e e i n g i m m e d i a t e l y to a five-day week for some 7,000
w o r k e r s employed in a n c i l l a r y u n d e r t a k i n g s , such as brick works,
c e n t r a l w o r k s h o p s a n d oven works, a n d there w a s no guarantee that
i t would be possible t o a v o i d f u r t h e r extension to all workers of this
k i n d employed by t h e B o a r d , which i n t u r n m i g h t lead to a claim
for a five-day week for all w o r k e r s in t h e t r a n s p o r t , engineering and
building materials industries.
T h e following p o i n t s w e r e m a d e in discussion :—
(a) T h e repercussions of g r a n t i n g the claim of the Union were
so serious t h a t the G o v e r n m e n t could n o t give the National Coal
B o a r d a free h a n d to n e g o t i a t e a new formula.
(b) I t would be p a r t i c u l a r l y u n d e s i r a b l e t o concede a five-day
week to w o r k e r s in colliery r a i l w a y s in view of t h e repercussions of
such a concession on o t h e r r a i l w a y w o r k e r s .
(c) T h e r e seemed to be no g r o u n d for g r a n t i n g to the w o r k e r s
covered by t h e claim a n y t h i n g beyond a 44-hour week.
(d) I f t h e N a t i o n a l Coal B o a r d w e r e n o t p r e p a r e d to reject the
claim, t h e n o r m a l a r b i t r a t i o n m a c h i n e r y could n o t be b r o u g h t into
o p e r a t i o n . I t would, however, be possible to i n s t i t u t e a fact-finding
e n q u i r y w h i c h w o u l d t a k e account of t h e repercussions on other
industries.
The C a b i n e t ­
(1) I n v i t e d the M i n i s t e r of L a b o u r , i n c o n s u l t a t i o n w i t h the
M i n i s t e r of F u e l a n d P o w e r , to a r r a n g e for a fact­
finding e n q u i r y into the claim m a d e by t h e N a t i o n a l
U n i o n of M i n e w o r k e r s ;
(2) Agreed t h a t it should be m a d e clear t o t h e N a t i o n a l Coal
B o a r d t h a t , p e n d i n g t h e h o l d i n g of t h i s enquiry, they
should n o t g r a n t t h e claim m a d e by t h e U n i o n .
Cabinet Office, S.W. 1, 5th August, 1947.