Tories and the Pound

By HUGH FRASER, MP

A s Parliament goes into recess and the crisis deepens it is impossible to feel much optimism either for the country or for any politi-

cal party. Least of all can one relax in the thought that the failure of Mr Wilson's policies will auto- matically redound to Conservative advantage.

Any autumn day-dreams of a coalition will founder on Mr Wilson's absolute belief in power and his outstanding ability to exploit politically his own economic disasters. Did he not win the last election largely on the collapse of his own incomes policy? The weeks ahead look like giving large, if not catastrophic. scope to this talent.

The development of the crisis is, of course, outside the control of any Opposition, but the Opposition must adapt a stance which will be effective in a post-crisis and pre-election phase. Whichever way it goes, whether Wilson suc- ceeds or fails to hold the pound at its present fixed parity, his determination is not for less but for more centralism and Socialism, more plan- ning and control, with all the blame—whether the Conservative party speaks out or remains silent during the next few months—placed on the shoulders of the liberal economy and Con- servative politicians.

As Mr Heath has rightly said, this crisis has produced a watershed in British politics. It is now important that the Conservative party should signpost an escape to a better land, and offer a radical and liberal solution to the people. This is no easy challenge to a party in opposition at a time of national crisis, especially when as a tactician Mr Wilson has unrivalled power. and unsurpassed ability for smear and vituperation.

His tactic is a very simple one. It is to defend the fixed parity of the pound—not his handling of the economy. 'When all seems lost,' said a Chinese sage, 'put out more flags.' Now Mr Wilson has not just a flag to hand, but a positive oriflamme --the pound. Every sacrifice can and

will be made in its name. There is no better 'cry' for his loyalist Tadpoles and Tapers. The Prime

Minister has already, in a furiously patriotic chat, asked the national editors to suppress dis- cussion of this fundamental part of the economic crisis. Abroad this silence impresses nobody—in fact the reverse. If the Government fears public debate so much, has it perhaps no case to argue? At home the case is very different. There is a real chance that Mr Wilson will frighten his political opponents into a conspiracy of silence.

That silence would mean' a tacit acceptance that anything is preferable to a change in the pound's parity. To accept this principle is not just manifest economic nonsense : if it is pushed to its logical conclusion it gives Mr Wilson all the moral power of a national government without the incubus and brotherly affection of non-Labour colleagues.

To avoid this trap—and trap it is—the Con- servative party must first elevate the argument

to that of the economy as a whole, and then state quite forcibly the basic problems as they see them, and their solution.

The truth is, of course, that sterling at $2.80 is not the key to Mr Wilson's plan at all. If it

had been„ then quite clearly he could have deferred for the next twelve months some of the more Socialist elements in his programme. Mr Wilson is far too clever a doctor to be fighting Hugh Fraser was Air Minister in the last Conservative government. to the death for the thermometer: he is fighting for total control of the patient. The true battle is not for the pound but for the economy, and whether it should be captive or free.

If there be fact in the paradox that the only person wildly speculating in sterling is the mer- chant who leaves his pound uncovered, there is much in the belief that the one person most exploiting the pound for the greatest political advantage is the Prime Minister himself. There is no dramatic need for a rapier of truth. to puncture the swelling bladder of economic vapour and mysticism. All that is required is a statement that the parity of sterling is only one factor in the economic situation, and must be discussed; and the recollection that its parity has changed the times in fifty years.

The long-term danger to the British economy is not so much that, for all his political brilliance, Mr Wilson is no longer in full control; his original blackmailing threat of devaluation has swung back on him and made this country a prisoner, and sort of economic Vietnam, of the dollar; at home, having talked of another Dun- kirk; he proposes an economic Passchendaele.

Bad though that be, the real danger with Mr Wilson is that whichever way the crisis breaks he will use the occasion not just for calling in overseas investment, but for establishing even more rigid controls, the first taste of which we have had in the Prices and Incomes Bill.

Mr. Wilson's policies, far from strengthening the pound. have merely exposed it to two forces over which he has insufficient or no control. The first is the political and economic whim of the American government, and the second is the fact, if his domestic measures are pushed to effective lengths, that Mr Wilson cannot have the support of his own party, and does not deserve the backing of the nation.

An uncontrolled and unplanned devaluation therefore probably lies ahead, with the world's bankers demanding some fixed and dangerous new parity for sterling. This, however, will not put the Conservatives back into power. There will naturally be a change of policies, a reflation, a new fixed rate and more rigidity. That is why it is vital that the Conservatives should state the case for the free economy. The centre of that case must rest on a free and floating pound.

The true strength of sterling can only reflect the strength of our economy, and the pound must be made the measure of our success or failure. A pound at whatever fixed rate of exchange, uneasily propped up by foreign bankers, can earn no man a living nor protect a single liveli- hood. Any expansion must fall on the reserves instead of the rate: any elbow room for reorgan- isation must be denied by such policy.

The present over-use and over-valuation of sterling is not disproven by elegant letters in The Times newspaper, or by Mr Wilson's tame bank- ing pundits, but brutally shown by a world unprepared to hold it.

In 1931, at the height of another economic crisis, we had the faith and courage to set the pound free and let it float. As one Socialist expedient after another is exhausted, as each new complex economic contradiction proves use- less, we must aim at setting the pound free once mare. Until that is done we have no power of political or economic manoeuvre at home or abroad. Nor can there be any flexibility in our economy, no incentives, no rewards, no step to the wider groupings in Europe, and no chance of healthy competition or major tariff adjustment. There is no light at the end of the policy being pursued and planned by Mr Wilson. No, not a glimmer.

The Tory need is to state the case for breaking from this iron and ever-tightening ring. Now is the time not for consensus in crisis, but for courage in reconstruction.