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Keepleftbyagroupofmembersof HOW THIS BOOK CAME ABOUT One evening in January, whcffthe House ofC6mmons was sitting late, a dozen Members began talking about the crisis. We found that we all agreed about the need for a more drastic Socialist policy if we were not to drift into disaster. During the Spring those talks continued,and this book is the result. In its final form it has been written by only three of us-Dick Crossman, Michael Foot and Ian Mikardo - and they take responsibility for the detail and form of its arguments. But, nevertheless, this book is a joint pro- duction of all of us. We offer this book to the Labour Movement in the hope that it will provide some ideas for the Margate Con- ference and after. We don't pretend to have covered every single aspect of Britain's problems and their solution. We know that many of the suggestions we put forward will be unpopular in some quarters. But we are convinced that the Movement is in the mood for plain speaking. Our" Red Paper" tries to Carryon where the Government White Papers left off. LONDON. April, 1947. KEEP LEFT By a Group of Members of Parliament GEOFFREY BING (Hornchurch) DONALD BRUCE (Portsmouth North) ,R. H. S. CROSSMAN (East Coventry) HAROLD DAVIES (Leek, Stafford) MICHAEL FOOT (Devonport) LESLIE HALE (Oldham) FRED LEE (Hulme) BENN W. LEVY (Eton and Slough) R. W. G.MACKAY (N.W. Hull) J. P. W. MA.LLALIEU (Huddersfield) . .. ... IAN MIKARDO (Reading) ERNEST R. MILLINGTON (Chelmsford) STEPHEN SWINGLER (Stafford) GEORGE WIGG (Dudley) WOODROW WYATT (Aston) , May, 1947 NEW STATESMAN AND 10 Great Turnstile, London, W.e.1 - j CONTENTS WHAT WE ARE UP AGAINST II THE JOB AT HOME 14 III DEMOB. 26 IV THE JOB ABROAD ... 30 V TWENTY THINGS TO DO NOW 45 CHAPTER I WHAT WE ARE UP . AGAINST 1. The Problem IMAGINE the Labour Conference meeting two years hence, in 1949. Imagine, too, that the following headlines appeared in the newspapers: STILL ABOVE 3,000;000 -I "NO EARLY HOPE FOR ENDING SHORT TIME," SAYS MINISTER RATION SCALE NOW DOWN TO 2,000 O\.LORIES AMERICAN CONGRESS DECIDES LOAN ISSUE TO-DAY These examples may sound like scare-mongering. Perhaps they are. But if some things happen and some other things do not happen, then those headlines may be no more than a faithful description of the trouble we shall face two years hence. We are living to-day in the midst of a coal crisis, a food crisis, a raw materials crisis, a manpower crisis, a trade crisis, a dollar crisis and more besides. All these different crises or problems interact on one 'another. But perhaps the simplest way to sum them all up and reveal the precise nature 'of the peril which confronts us is to take the dollar crisis. For several years past, this country has not paid its way in the world. That is to say, we have not paid for the essential 'food and raw materials which arrive at our ports every week with goods and services produced in this country. It was impossible to produce those goods and fight the war at the same time. Workers were called up for the Services, industries had to be turned over to war production. How, then, did we obtain the goods we needed from abroad? We did it by borrowing from other countries. Britain has been living on borrowed money or borrowed goods, whichever you like to call it. First of all, we sold our foreign investments-or a great part of them. That was money which we had stored in foreign countries over the previous hundred years by the process of sending them goods for which we received no immediate payment . We built railways and harbours in foreign lands , sent them locomotives, machines and other products, and instead of receiving goods in exchange we piled up nest-eggs abroad. Before 1939 we received the interest on these foreign investments in the form of goods; they accounted for a good part of the essential commodities we Imported. In 1939, 1940 and 1941 we could not afford to go on merely drawing the interest. We wanted imports so badly, imports for which we could no longer pay with equivalent exports owing to the change-over to war production, that we had to use the capital as well. We raided the nest-eggs. But the sale of foreign investments only kept us going for a short while. It became clear that if no-one would pay for the imports we wanted and could not pay for ourselves, we should lose the war. It was then that President Roosevelt introduced Lease-Lend; in effect, America gave us imports and left the reckoning till the end of the war, on the understanding that much of the payment would be wiped out altogether. But ,even that was not enough. We had to borrow from one country after another ' 4 KEEP LEFT Canada, India, Egypt and dozens of other countries besides. They provided goods and chalked it up on the slate. The sums they lent are called sterling balances. Finally, at the end of the war, we were still unable to pay our way. Our export industries had been cut down drastically and it would take some time to build them up again. The Government calculated that it would still need to borrow for four or fiveyears more. Therefore we got the loans from America and Canada. We are partly living on those loans to-day. In 1946, for example, the country had to pay £1,400 millions for goods purchased from or used abroad. .The sum which we earned by our exports or other means was £950 millions. This left us with a debit balance of £450 millions. Most of the debit was made up by drawing on the American and Canadian loans. About a third of all the imports brought to our shores in 1946 came on borrowed money. How long are- these loans going to last? That is obviously the fact which must govern the thought of those in' charge of the nation's affairs. No definite answer to the question is possible. The economists differ, and the answer will partly depend on the actions we take at Margate and the Government takes in the next few months. But it is vital to give some sort . of answer to the question. Only then shall be know the measure of the tasks ahead of us. At the beginning of the 'year there were £950 millions of the American and Canadian loans left. The Government estimates that £350 millions is the right amount of the loans which we should spend this year. That would leave us with £600 millions at the beginning of 1948. Assuming that the tendency was to spend less of the loans each year owing to the recovery of our 'own industry, they ought to last us on this calculation until the end of 1949. Unhappily, there are some features of the situation which make the prospect less hopeful. First : there are difficulties concerned with what the economists call trade with hard currency countries and the convertibility of sterling. We need not discuss these technical terms now. They are important, however, and there are many who believe that on account of them we shall . have to spend up to £150 millions more of the loan this year. -Even more important is the assumption underlying the calculation that we shall need to spend only £350 millions of the loan this year. We shall keep it down to that figure if, and only if, we are able to make a huge increase in our exports. Ever since the end of the war, the Government has been striving with might and main to build them up. Tens of thousands of workers have returned to the export trades. Rigid control has been maintained over the goods produced so that they could be sent abroad instead of being used at home. A big start was made as a result of all those efforts. By the end of 1946 exports had been built up to a point 10 or 15 per cent. above the pre-war level. But if we are to keep the drain on the loan down to £350 millions or thereabouts we must push the level of exports up to 40 per cent. above pre-war this year. That is the assumption underlying the Govern- . ment's estimate. It is a tremendous task. It becomes all the bigger when we remember that before the war we were exporting coal in large quantities. No hope of doing that exists this year, which means that a heavier burden still must fall on other trades. To reach the target, exports of manufactured goods must exceed the pre-war level by 65 per cent. WHAT WE ARE UP AGAINST - Is it really possible to achieve these increases? Early this year there were signs that the spurt in the export drive was' slackening. Then came the fuel crisis. That is estimated to have lost us some £100 millions' worth of exports. If we are to make good that loss and to reach the target laid down by the Government, then exports in the second half of 1947 must be produced and sold at a level one-third above the peak level attained at the end of 1946. However well we'do, we are hardly likely to achieve that aim. Suppose that exports for the whole year were kept up at the rate of 10-15 per cent. above pre-war (which would still mean making up in the second half what we have lost owing to the fuel crisis in the first half).
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