Full text of Marriner S. Eccles Papers : British Government's White Paper on Employment Policy, Box 34, Folder 12, Item 7

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UNRESTRICTED
Report No. 29^

American
London, England
June 17, 1944

TH1 BRITI3H GOTj2R!i)«IT f S WIOT3 PAPiSR

POLICY

The Volte Paper raprssants a revolution In
official thinking about the trade cycle. The important proposals in this docu&ant have long bean
advanced by progressive economists and it la not the
originality of the approach that la significant but
the fact that for the first time the Government have
broken with the "orthodox* conception of the i&ethods
of dealing with the trade cycle.
Ta& very conservative DAILY TiSL23GRA?Ii i*£ay 2?) begins a discussion of
the mite Paper with the remark:
ithln the framework of deaacr&ey XLO Government had ever put forward ao comprehensive a
set of proposals for promoting full employment
as were enunciated in the White Paper.
The economist, J.P,.Hicks, in the MANCHESTER GUARDIAN
(May 30) comments:
It Is Indeed the dawning of a new day when an
all party Government is eoiamitted to shaping
Its policy In accordance with new ideas*
These two remarks are typical of the general reaction
of the press and weekly journals.
Most of them have
some criticisms of detail but only the left-wing and




/irresponsible

-2Irresponsible TRIBUNE and the professionally dissatisfied HiSW STATESMAN AN1 • TIOW carry their
criticisms so far as to receive the Paper with
hostility or with grudging doubt.
The White Paper is put out by a Coalition
Government and consequently ita proposals do not
go much beyond tha miniaurii measures required to
implement effectively an active employment policy.
They probably represent tha xaaxiraum area of agreement which could be achieved in the Coalition,
ljven so, a clear cut and consistent state&ent haa
obtained.
Probably tha moat ^revolutionary** statement in
the Paper is ita opening sentence:
The Governnant accept t* one of their primary
aims and responsibilities the maintenance of
a high and atable level of employment after
the war.
After a lon^ period of gestation a new official
conception of Government responsibility in social and
economic affairs haa been born.
It ia significant
that no one has yet challenged this principle.
TH3
KMHKWT3T points out that the acceptance of necessary
authority automatically follows from the acceptance
of responsibility and consequently the British Government are committed to take what irieaaurea may be necessary to secure their aim.




TI,

(May 30) remarks:

The Unite Paper itaelf ana the way it has been
received are significant of the remarkable
change in economic and financial thinking which
has ocourred since the end of the last war,
particularly during the last ten or twelve years.
The heterodoxy of 1931 has become the orthodoxy
of 1944.
It is taken almost as a matter of
course that the Government should accept as one
of their priaary aims and responsibilities the
maintenance of a high and stable levei of employment after the war; that they should propose during the transition period to exercise
a firm control over the location of industry
and the flow of private industrial investment
in order to make sure that the national interest
is not subordinated to individual and sectional
interest; and tnat M a long-term policy they
should propose to offset fluctuations in the
volume of private invaat&ent by control over the
investment expenditure of local authorities and
other public bodies, &a well aa by more direct
Means affecting both investment and consumption
expenditure.
Taken together these generally
accepted ideas constitute a revolutionary en&nge
in the approach to jocial and economic problems.
/The

-3-

second important goners! nota atruefc by
the waits* 'saper i s the c a l l on tha cooparatioa of
"th© coia&unity &a a who!**" ana especially employers
•iiii • i i l i l i in Industry to ensure the auocesii of the
p o l i c i e s outlined.
Voluntary cooperation and res*
traint &TQ particul&rly important because the Government policy outlined augends to a vary small extent
on central power** of direction but rather i s limited
to bringing about conditions favorable to the maintenance of t htAh laval of er^loyaent.
Clearly,

fcfet nnmmilltl will be a&ls to l l a l t i t s control if

people w i l l voluntarily do what they &ra asked to
do.

ffet roilnnco ou voluiit&ry cooperation, particularly frofa private Industry, has disturbed
aoiae of
the j o o i a i i s t s and advocates of a l*plMnn#d't t*cono»y.
Th&y complain that;
in ©ff»ct t
start to fInlah on the aasjucLption of a
piete return to pro-war capita\ltm 9 without
3Vf3ii %hm wtLSiVx&ut iiifusian of ^ooiallaa at
i l l point.
It &;i3ucu*n that, i f the :t&ta
tak^u :itepa to ausure an ^xpunaionlot financ i a l policy, acoociuaAied by an &nimv&®& public
worka program of tha traditional &1JKL, «uid
ruinforced in e&s«# or need ^y revijiona of
contributions &nd tctxus MA other
for choctcing tne pull of
in bad t i £ » s y prlvuto enterpris©,
under the tftimuiua of the profit motive y w i l l
do HM r e s t ,
[Uffl $TAT£m&M AW) NATION9
June 3 ) .
On the other iumd, the l i b e r a l s accept the basic principles of the -ftilttf Paper, ulthoufe,;ii they &re ekoptical
whetaer the measures proposed will b& adequate to maintain oaployi&ent (aae below pp«/>f-/b ); their cx^ltlclsau!
are different trim tho»e of the Social1sta in thfet they
do not assort tlMli the only \my ot e f f e c t i v e l y preventing unemployment i9 to vutebiiuh • .^ociall^t
and Inauatrial aacground
This first chapter of thu »vhite Paper warna that
the level of eraploysiont *m& the standard of living i&
Britain do not depond on internal policy ftlOSM but
on It* ability to uoll gOtAl abroad;
It is therefore an esaential part of the Government's &mgloym&t policy to cooperate actively
wita other nations, in the first ^lace fur tlM
ro-establishicdnt of general ©conojkic stability
aftor the ahock^ of ths w^rt «fti next for the
of trade.

^hit© Paper then cutllaa^ ta<* »%•#• wiilch IJUI Governhas taken to achieve international cooperation in
f i e l d : ?he ^tloxaie Cnarter, the mutual *dd /»|jr««ssent, the recoaaendationa of the Hot ..>pringa Gonferenoe
and oonsultatloiiD v«ith the Ooveraiaenttt of other United



/nations

Nations on tha aethods of carrying out these and
other general
t
On© of the iisynotes of tn« tthlte :";ap**rf no ve ever,
is that industry must tsJos tr*# responsibility for
improving i t s efficiency and must exercise i n i t i a tive 1* taking advantage ox* %&$ favor*ble
created by the Qoveru^ent.
a export
are if!1 oil Sill high priority in obtaining r»w
labor aed factory spavn &ft«r th© w&r, but tae
pousibility rests on there to make the moat of their
art unities.
elftl i!i3S4isur^8 May o« tatcen from
tis» to tim* for particular industries but tae
Paper priRnrily deals witl the general m««i»ure
necessary to secure a high leva! at employment
oxkt !rKiustri«s mi a whole.
of
liite !"*«|)erf» attitude toward the export truue
problem,
W^ T
8?) tafcea ©xo^ption to
^cautious" B0t« struck oy the fti%9 NMV in
lSiag Itet tne possibilities of aai&teinin«; interuul
employment ware conditional on tne expension of
trade*
fKK THtiS hau fre^utiiitly urged tiiat Britain
u?»0 ti#r iari*^ internal mr&et aa a
g
to sacur« export rsarJcets.
I t agraea tnat
uadoubtediy depends on a flourishing foreign tVttdsj tor

its prosperity tat s

|]
erse cm",ulona i t ShomH be
to find custor^rs far tne exports
sjsjs>toi to pttj for asaenti^l Imparts.
\e
bargaining ^ower of tae SrltjUo siarKet i s
in I»sj»Hi i f otcer mwna f a l l to
iut^rnatlousl ooopemtlon in
proraotiat: UM UDSlMU^a of gooda and services.
In this context wsuM certainly be

of a proper ordering 9t the country's oversea* trading
relsitionships cunnot puusibly be gainsaid," but doubts
tJtiat la the present intsrnationsl discussions upon
whloh tM v?nlte Pap*? put 3 M nuch rellanee sufficient
itJOiat is takon of the problott facing « country trying
to carry out e full cssployxsent policy:
present "ihlte Puper does notnin^ either to
or to mmov® these doubts*...It iu now
g a , as a deliberate act of policy,
that depressions in Horn® trfide Obnnot he avoided
or cured hy r«soviisi; e i l ]?urpoaive diroctioa
froa ©corionic affairs.
.a s«i*a truth appl
-vlth aqual stznanth to depre^slOAs in foreign
trad®.
It sjty ike that %hm ^OY«rn»i»nt ha.T« pl
for the or^anisad piaintenencti of zhv voium© of
oviiraeaa trade; if so, nothing lias yet been
about
9B3 H^
, on tii« ouier
along with, other .socialist (MPfsmSi Baa always




/that

that Britain could Maintain full
prosperity tttl#fM4e)a&ijP of the vmi of t&e world.
ffea "Yhite Paper's "if," therefore, iiaa up&et I t ;
But we had uncLerstooa tefeftt one of the
•laiMI of til© advantages of full ejaploysent
policy was thrtt I t oouid be UB&d to j
prosperity bM* ®ven in face of
ahead j Mti i t is a l i t t l e dawplng to be mmt
nt the outaet ttlth &•«••« coaeitlonal aoutefid®,... wiitit w«* Husl to know..,, i s wkufciia
i t oan b© yffifialii if %h» oo&dition la not
®atiafi»4;
oa th^t point th% c
ohoaen to
?he ^iiite Papur ^oea a l l out for
cooperation ami -does not suggest the use of ^instru- •
m^ats ia res^rvc^** but t^»rt le ao doubt that in taking
th# wiaponaioility for aftltttnlfttltg amploywrnut the
Ooveraatnt reco^ia&ttts tlimt I t also mu&% taiie reaponsib i l i t y for cioing everything ^onsible to NUnm that
ext«roal tradia in aittintsii&dd.
I t vlalMMI to do this
through iateriiatioiuil oollaboratiou «nd by onoouragisg
i n i t i i t t i v e , effiei^aey aai f l e x i b i l i t y in til® #xport
industrieu*
Other irietiLocis are tiot nieiitioned bat the
Ifliiti Pap^r cl®ariy r<»oo^nlxe« that doasstic
mtnt policy will not to* tintirtilyfe*uecessful If
trade la depressed.
The...Tranaitloft from Jar to
Tim WkXtm ?apcr reeoc:nisr*osi th*».fc the period of transltiosi ; #ill require apiioial HNUH0NMI not oaly to f a c i l i t a t e ti'je tranaition but «ilao to prevent an inflation
and e disruption of the M
M
M
M
M
W wiiloh would, leasen the
ohanoeft of preYentii^ aerlcma ct»fl«ttion end poat«wcir
unaiaploys»iit •
T&r## dang®ra must be guarded against
in t h i s period:

!• DM fletel oxmiHil of *p>telfi of

l

2. laflation.
3« tt» failure of production to m®&% tlM stoat
ea»antial Matlonal miede f i r a t .
To avoid tlWM afMigerg thm Oovariuaent will u^© the
following s©tliods to
* . . . secure, so far as poaaibl^, t M t labor
oapaoity no longer y<Ul4 for auaition^
tlon shall be \ima for prodaciu*; c i v i l i a n good®
af iiigli p r i o r i t y ;
knd %lm% ral@asaa of prefiiaea
labor and material ani coordinated la advance so
as to r@duo© local o'r tuaporai^y una&jploys&eiit to
t-ii© mlnisura.

(a) taf anialstiu^ flm# to pr^para to nwitoa
ttialr ca^aaity to ^s&oe lint praaiiction
quickly M
l




/

(b) by

-o-

(b) toy finding out In advance where til© •Irllliti
labor which will gradually iMflBi available
for civilian work will be £so»t urgently
r®quired;
|e) by arranging, 80 for fta war conditions permit, that lufeor aaft raw materials will fee
forthcoming for urgent civilian work and
ensuring that the &achlitf»ry of allocation
dsviaed in war-tine will bo adaptable to
the *jpeeial conditions likely to obtain
after tiie oncl of %I.IQ war In :-;\iro|>@;
(d) fcy arranging, »o far M possible,
tailM«tita of i&utiltlons praduction
place in areas whore the capacity
can be used for civilian products
priority;

that ourshall takeand labor
of high

(•) hj arranging that the diapoaal af
CJovernaent atocICi ahall not prejudice tli@
re-eatablishutent and aevelopiaent of the
trade fhetmtlff for producing
aiiiilar goods;
(f) tef regulating the &lip—»X of Goveruiaent
In ouch a way as to help towurdu
^erly restoration of employment.
coatrol, rationing t .subsldiea to maintain a
general level of- co3toff4 ©nooura^easnt of
savings, control of aocaas to t&a c&pit&I Mtftot ao
that HM flow and airectlon oi* inwsttmnt, ow b» regulated, control of labor and industrial staffs*
and raw material allocation to etiforce priorities for
the export tracits, ©S0©iiti©l civilian ooimumptloA
tli@ g>"#<mi|—ttt of iaauatry will be continued
the transition period.
^hs ,*aite Paper beiiwvea that
tills period nomi not be
. . . . the r«cup#rati¥# powera of isodorii productive
technique are v#rjr strong.
Umler favorable
external condition a, i t xaay not b# vary 10x145
before production becomes adequate to seat the
various oalla upon i t .
M
N
B th&t liappeau, UNI
f i r s t aim of eaploysient policy - Uw laalntfuuisoe
of an adequate level of' expeucliture on goods and
ssrvleea - will no longer te® realised automatically, &a « by-product of the war effort or of
reconatruotlon, but will call for the appileatlan
of a policy deliberately dlreotoG to that end.
•&• frankftftBMMMMMtof the oontinuance of lilglit
control over fltind, pwt**m$ caatB, raw materials*,
capital and labor wua *m%mly received by txia presu.
It i s recognized that t&eae controla will b«
in tho gpnoral inter^at and althou&n i t ia not
to pradiet how long thm public will put up with them,
there i s reason for thiin;ln£ that l a m will not be
great difficulty la saintalning th@a at lisast ao long
as til® n w i is glaringly




XOH0&I.3? approves? "Beyond question, tfcla
policy I s on the right lineu, and' i t la rea&auring
to ss©@ the n&ed for maintaining control throughout
t*ie period of shortage go
traoonproaiaiagly s t a t e d . "
T
m * TH.TT
-5 RF
H r'.*?»», with "unusual grace,
states neurly a l l t h i s section of the White Pag#T i s
unexoeptionttble , . . . ' *
of Influotry and Labor
r'art of tha problto in tiia tra&*itio& period will
b© to CM ok wthe development of localised unenployraent
but the MHIUlftl adopted idLli bo continued in thfl
longer period to handle localised uaanpioy?A©nt.n r?n@
•iiite '\iper, ti^irofora, "turns aside fron trio liiln
argusiaat" to liacusa the distribution of labor and
industry.
fte pre-war !?aepro^s^a AJTMUi" wsiro primarily ureas
that wars lur&tly dependant upon n single ii&u»try or
group 1 of related in£uatriii««
Hut "flrat iino of
attack * onttMBplOfMftfti a these ar^ae, the !;hita
pjropOS«lta i s t o ^roaote U&« efficiGiio^ of the
imluntriea.
Th# general maiiitenanca of
|>owar will alao b^Bofit tlieae &r«*0.
In audition t o
til© general measures, however, the Hovernment proposes
to attack tiia problttai of LooeJJL*«4 uimm^lo/imnf by t*4«*
aivdraifio&tion of incioiitry, by ^reMorin^ obstacles to
the transfer Of vorkera," txixa by "proridl&g tr«iinli'i^
f a c i l i t i e s to f i t workers from
deeliaiiig
iBdu^triea for
1
!
joba in expanding
iB&ustriets.
*
Tile
itite
Paper tftated
f l « t l y : 9J% will be aa object of ^OYernment policy to
3@eure 0 baltiiiced induatrial devtslopLi^at in
in, t&o pHiit been unduly aeptinaent
on industries
l l y vuinorabl© to mxeiaployr;.ent.ff
I t then outa series of meaaurw to b© uatsa ia
i
ttui oatmbliahaant or n«w aiit#rpriiA#ii in thase
areas.
ZH addition, the O-overanent will underto develop baaic fterricea such ao clock torbora,
transport, power, e t c . , in tae laTaiiijpiiHl areas «nd
will "organiztj reseorofe vdtii n fi«n to d i M B
te
types of industry would f i t BOat liatur^lly into the
l*ag~tern ©conoay of e&ch of ttiese ajN
fr

'he l i a t of "iaTalftjmant areaa" i s axpaota^l to
aa economic conctitiona change and the policy w i l l ba to
revive sconossic a c t i v i t y in tne aroaa.
Only in special
eases will aa attao.pt be Hade to transfer population out
of an area.
p
y
for atainisteriu^ tha p
relating to tna distribution of industry will rttl oxt
several different iuinistriaa, but tba Board of frada
will be uaod os tim channel throu>;li wnioii Uui
will daal with thtf
The OoTarima&t iviUl •aaoupage tiie daveiopsieut of
training and re-training facilities* for workers, and
employers providing «tt>proved courses will raeaive ^of
grants.
;'ralna#a will be granted allowances




/entirely

entirely separata fro» th# unemployment benefit;
» worker *will not bm expected to wait until lie lias
been unemployed fop a long tin© before beeoMing
eligible for re-training.*1
Resettlement allowances
willtoogiven to workers tre&aferred u M e r approved
TSS :JSC0H0ai3T call® this chapter of the White
The ®ost satisfactory chapter.. • . In n&iiy wmyn
Several Important principles have betin
The f i r s t 1$ that the OovenM^at has
p©»alblllty in thm tmtt&r at ©11.
This lii
It#@lf Is fttitu a victory.
Tli« s«t©
of poliey i« iMUNUy 1#SE ti&fortaiit •
I t is
accepted, us « gentral priaeipl©, tlxat I t ia
better t wh#r#v#r l i l t l w i i to t&k® tii® work to
thm lit^or rath#r %h&u tli^ lafeor to tlM work.
So far aa whol© regions ar# concerned, i t la
the Government f i jiolley to t&ifc® 41ir@rsifidd
industries iato th® sp«elai itr#m# rather than
to drain the® of tfaeir popuietioa.
th« WMts Paptr proposes taat
m®n% will assume c@rtaia v@to power® over the location
of Industry, posltliNi aetloa is Had tod to
kinds of #ncoura^©JS0at. TJior* lias t>@@n
QriticlfiM of th# fallur© of the aoverntwriX to
gr@at«r f©w©r of direction of industry.
TSB j£0KGUX8?
suggests thet oompulaion or direct financial asslatano©
will b# ro^uirod.
air William B©veridg«f writing in

nu ommrm

(M^r t t j g M U I tiM wait© Pupor state©®at

tittttt the moasures proponed "will enable the GoTormaent
to ex©r<jlse a substantial Influenee over tli® location
of now indujtrial dovolopnont, as contemplated by tno
Bar low R#f>ortt*» a ^'woloom® feroaeh In tho sllenco wnieh
lias shrouded %im attltudo of tfe# QOTornoiont on tna no at
tliorny
©f ioi^stio reconatruetion probl@aa.^
But
ff
wfeat i s wanted," he say®, *•!« not influonoo ovar tn®
lo@atlon of Industry but ©oittrol.

llonotholosa9 the Oovornnent do poss&ss important
instrusaonta of ©outre*! t on® of too most ©ffaetiTa ©f
lflkioH i s tn« building porsit i»stt#d by tho Ministry of
Works on tho advlcso of tho Board of Trad#. Mr. Oalton,
Froaidaat of th® Board of Trado, haa aallad t h i s HM
moot powerful l@"v@r for influanoitig tho location of
Whlto Pap©r la conearnad with tho location of
lnduatry only Insofar an i t la eommetad with ^^ployss»nt policy.
I t i s not concerned with a gonaml
policy of industrial dlvorsifiuatioii.
Tho "oalaaeed
industrial d©v«iopm«nt** disousa#d in tho Ihita
applies only to ap©ciaiiy vuin©r&ble t m i i
prablmmm of th# loo tit ion of industry and **laad
fto Bmk aro too nubjaot of separate da^atoa and
oussiona and the White Paper deliberately avoided
controversies exeept insofar ass ®©ploym&nt poliay
opeclfioally conc©rn©d.




-9GTieral Conditions of a High and Stable
Level of iaploymeftt
This chapter, which is concerned with an analysis
of the problem of maintaining aaploynent in Britain,
and tha nart one dealing with methods of maintaining
total expenditure, are the ha&rt ot the White Paper
and have aroueed the moat comment.
The questions
discussed in these two chapters have been the subject
of much public controversy and coiaiaent in the past
two ye&ra.
The imbasey reported the British discussions on the maintenance of full employment after
the war in Beport Ho. 663 transmitted with Despatch
Hd. 11697 of October 27, 1943la that report the
aaxlmum area of agreement ou the problem was outlined
and It li clear that the : hito Paper adheres fairly
closely to this maximum.
Its proposals, of course,
fall far short of those of aoat of the more progressIre opinion in the country, including the opinion of
people like sir William Beverldge and of journals like
THiS SC0K0XZ3T.
The MAIICHiaf^R OUARDLiiH (May 27) has
undoubtedly put Its finger on the reason for this;
In the an&lyuisj of the causes of unemployment
and of the waya in which the Government can
help to prevent it, the White Paper shows a
de3lre not to alarm those in industry, labor
and finance who will have to revise their
notions and cuatoms If the schess is to be
effective*
The three condition** of & high and stable level of
employment outlined by the White Paper are:
(1) Maintenance of total expenditure on goods
and services above the level at which
general unemployment
(2) Keeaonable stability of the level of wages
and prices;
(3) Mobility of workers between occupations and
localities.
(1) llaintalnlng Total
To maintain total expenditure the
Govern&ent are prepared to accept in future the
responsibility for taking action at the earliest
possible stage to arrest a threatened slump.
This Involves a new approach and a new responsibility for the
The analysis of the White Paper Is briefly as follows:
The key to the maintenance of employment la the
prevention of a minor decline In expenditure, for If a
fall In desiand and consequent uneraploynsnt occur in one
Industry a cumulative process may be set in motion which
will develop into a major depression.
Consequently,



-10if the Government step in quickly to offset the
decline in one sector of toe econtmy by appropriate
Government Investment, the depression can be avoided.
Thus quick action and a moderate aiaount of Govurasant
expenditure will suffice to maintain employment.
total expenditure is made of five components;
private consumption axpenditure, public expenditure
on current services, private inv^atiaent expenditure,
public investment expenditure and the foreign balance
(the difference between exports (visible and Invisible)
and imports (visible and invisible)}*
Of these,
private investment expenditure "is the most usual and
most patent cause of Instability
in total expenditure,
and consequently in employment•rt
Instability of
foreign trade is another serious cause of fluctuations
in employment.
These two items not only have the
most Influence on fluctuations in employment but are
the most difficult to control.
The guiding principles, therefore, of the Government's policy in maintaining total expenditure are set forth an follows:
(a) To avoid an unfavorable foreign balance,
we must export much sore than we did before
the war.
(b)

Everything possible
dangerous swings in
investment - though
may be particularly

must be done to limit
expenditure on private
success in this field
difficult to achieve.

(c) Public investment, both in timing and in
voluBie, must be carefully planned to offset
unavoidable fluctuations in private invest(d)

e muB% be ready to check
decline In expenditure on
which normally follows as
reaction to a falling off
investment.

and reverse tiie
consumers' goods
a secondary
in private

The analysis of this section has been widely welcomed as a clarification of the ideas regarding kind of
weapons needed to combat the trade cycle and an indication of the extent to which the British Government has
accepted modern economic thought.
The uhthY TKLEGi.
(Hay 3 D expresses the general opinion as follows:
.... the sudden overwhelming onset of depression
in 1929 not only found us with no weapon in our
armoury to defeat it but with the ©oat confused
ideas as to what weapons were needed.
The INSaults of recent analysis are crystallized by the
White Paper when it specifies fluctuations in
private capital expenditure and in foreign trade
as the prime sources of the trade cycle.
The clear recognition of the nature of the problem
expressed in this section is one of the chief reasons
for the enthusiastic response of the press to the pub-




lication

-11I lost Ion of tm* Tfhite Paper.
The methods to be
used in translating principles Into action ere
discussed in the subsequent chapter.
(2) mestability of Prices and wages
If wages and prices are not kept reasonably
stable:
Government action to asaint&in expenditure
will be fruitless...•This does not mean
that every wage rate must remain fixed...•
(it) does m a n , however, that increases in
the general level of wage rates must bo
related to Increased productivity due to
increased efficiency and effort.
To achieve this end the white Paper calls for
the cooperation of employers and workers: workers
"must examine their trade practices and cuatoiaa to
ensure that they do not constitute a serious impedittent to an expansionist economy &xi& so defeat the
object of a full employment program.w
Employers
must not raise prices to increase profit margins and
thus absorb Government expenditure and ^frustrate**
Government action to maintain employment.
In this section cornea the Government statement
promised in January on carteld and monopoly.
It Is
meagre and disappointed those who hoped that the
Government position would be made tentm in this white
F&per as Lord foolton had implied It would.
The
statement reads a« follows;
There has in recent years been & growing tendency towards combines and towards agreements,
both national and international, by which
manufacturers have sought to control prices
and output, to divide markets and to fix conditions of sale.
men agreements or combines
do not necessarily operate against the public
interest; but the power to 4o so is there.
The Government will therefore &®&k power to
Inform themaelves of the extent and effect of
restrictive agreements, &n& of the activities
of combines; and to take appropriate action
to check practices which may brln& advantages
to sectional producing Interests but worJc to
the detriment of the country as a whole.
Although the last sentence announces a definite Govern*
m&t policy, many coaiaentators, including Mr,'frf,the
Financial Editor of the HWCfD&TjBl dUMlDim (June 1)
asks: "How much does all this amount to?" Mr* Fry
points out that a report published in 1931 by the
Board of Trade on "restraint of trade** discussed the
undesirablllty of certain monopolistic practices and
also stated that the question might be examined at a
later date.




The question raised by the present White
Paper is whether the tiae has now arrived
for such an inquiry or whether the
merely wants to w»e«k power" to look into the
natter et some future date.
similarly 11112 iCGMGIfia? speculates on the meaning of
these sentences:
Few sentences in the whole White I'mpa? are
jaore enticing or more ambiguous than the one
that promises a Government inquiry Into the
extent and effect of restrictive practices
and the taking of "appropriate measures" to
check then.
It say aean a great deal or
It may mean almost nothing at all.
In default of further information, and in the
absence of any sign of willingness on the
Government*3 part to take the Initiative in
its general industrial policy, it seems the
more probable Interpretation that the sentence seans v®ry little.
embassy Despatch Mo. 16301 of June 15, 1944»
gives a aaore complete discussion of cartel &ud monopoly
questions in relation to the Whlt*» Paper.
(3) Ability of Labor
The third condition for maintaining employment
is a reasonable mobility of labor*
Oovermaent policy
in this field was outlined in the section dealing with
the transition period.
But if short-tana unemployment
Is to be reduced to a minimum:
.... every individual auat exercise to the full
his own initiative iu adapting himself to
changing circumstances..,.It would be a disaster
if the intention of the Government to saaintain
total expenditure was interpreted as exonerating
the citizen from the duty of fending for himself
and resulted in a weakening of personal enterprise •
llethoda for Maintaining Total Expenditure
the following la a nummary of the methods the
Government plan to use to maintain total expenditure:




1. Capital expenditure
(a) Manipulation of the rate of Interest.
(b)

Encouragesasnt of privately owned enterprises *to plan their own capital expenditure in conformity with a general stabilisation policy/* including methods of
"influencing" private investment such as
deferred credits.

(c) Planning of public expenditure.
/a. Consumption

2«. Consumption expenditure
(&) Variation iu social insurance contributions •
(a) The Government are also considering a
system of deferred tax credits; the
possibilities of timing the purch&ae of
its own needs of eonsuaer goods; the
possibility of Government purchase and
sale of consumer goods; nn4 the regulation of hire~purehase (lnstalsiant
stale) transaction**.
3« Central
(f}

ahort-tena unbalancing of tiie Budget

Hate of Interest
Tlie Wkite ?&$*? announoes taat a cneap money
policy will \m maintained wfor amm tiae after tne
end of tne war."
After that:
tne possibility of influencing capital expenditure by the variation of interest rates will
be kept in view.
Ifce experience gained since
1931 of cooperation in this field between the
treasury and the Banlc of ingland and the Joint
>toek Banka will nnke it possible to operate
«t concerted and effective monetary policy
designed to promote stable employment.
These sentences have caused considerable perturbation In the financial press but most writers have
carefully explained that they do not necessarily Bean
v^ry much.
The FBUHCIAL nsm (May 273 coaforta itaelf:




Presumably, the Govarasumt has not yet thought
out the question in detail; otherwise it
would hardly have disposed of a matter of such
grave Importance in a single paragraph.
That
interest rates should have aom elasticity in
the varying phases of th« ©eonoaic cycle is
reasonable enough in the abstract*
The difficulty, however, i& that, as a result of the
aucoe^s of cheap jaoney policy before and during
this war, we shall be starting, in all probability, from a point at which it will be
decidedly easier to raise interest rates to
check any incipient future boom, than to lower
them still further as a stimulant in depression.
ucceaaive Chancellors* of the i^xene%uer nave
emphatically reaffirmed the Oovernasnt's intention of isalntainlng vhsmp sioney*
If ^elasticity"
is to be reintroduced, it la highly important to
know within what limits it will be exercised,
and where the mean point will lie.
Th& text
of the white ?&pmr needs auppleaentlng, if only
because of ita suggestion that Its authors have
/not

-uaot a particularly high opinion of the nfficaey
of low interest rates in encouraging investduring depression.
In n later editorial the ririflffTTTfll UMB (June $)
wad feeling more efteerful a ad thar# expresses fc&«$
general position taken by the financial journalist!*:
Undoubtedly a aecond, or & tentix, reading tends
to soften the apparent asperity of the first
itapreaalon... .un close examination, therefore,
the monetary policy announced in the White
Pft$«r •••ad to com to this: that when the
traa«itioa period is M i r , the authorities will
still regard *fch©ap moimy" as a normal state of
affairs$ t&outfb they will reserve liberty to
brinn about a temporary rise, ia cooperation
with the market, whenever the ecouoaic system
seems in danger of being over*stimulated. Thia,
after alif la not really intimidating for Oiltedged holders - it i3 probably as much as they
oould aak for, anyhow«
The Financial editor of the IteSGH33?£R
(May 27), points out that there will be no question of
using a higher interest rate to assist in the general
antl-cyele policy untils
the pressure for ®&pltal subsidies, •••lores then
it will only be -kept in •!•«.*
All this
means, of course, that direct control of new
isaues will last much longer than moat City
people expect.
The next question is whether
an export of private capital to other countries
with higher rates of Interest could be prevented for long by the sort of light-handed exchange
control proposed in the new currency plan. The
answer is probably that no one Knows.

InTlusnca on Private
The Governs©nt proposals regarding the control of
private investment, "one of the elements (of total
expenditure) likely to fluctuate saost" are limited to
"encouragement* in the hope that the larger private
enterprises ssay be willing to follow, in their own
interests, the example set by the Government in the
timing of public investment and to adjust their activities accordingly."
It is pointed out that business
itself has an interest in evening out fluctuations in
capital investment but if this together with Governsent encouragement 1st not enough;




• ••• a further inducement would be provided if
it were found practicable to adopt a device
similar to that of the deferred tax credits
mentioned In paragraph 72 below and calculated
to stimulate capital expenditure at the onset
of a depression.
This and other possible
methods of Influencing the volume of private
investment will continue to be studied as
knowledge and experience of the new technique
for maintaining total expenditure are accumulated.

/The

TH-S i»COJIOMIST considers that the policy outlined by the White Paper, **if it is to be regarded
as a final stateii&ni, caruiot be called anything but
weak.** It oalls for:
a really thoroughgoing policy of influencing
private capital expenditure *hich la prepared
to use ©vary weapon, including those of taxation and control, to whatever extent 1neoessary to achieve the result.
Many of tn« critics of the unite Paper canter
theirf criticism on the mild nature of the Govern*
isent s proposal for the control of private investment.
%v*n the FINANCIAL UMm (May 27)» although
pleased that there1 is to be less "central direction
and •interference than was generally expected,«
atatea that perhapg there la not enough of It "to
realise the pl&n*t§ objectives." ?fcs» M X L f HttUJ)
(May 29) considers that the "diluting influences of
the Coalition art plainly apparent in this respect
of the plan,,..
9

encouragef and 9£kay* are not iapresaivc words
;• aurer course Is indicated in the Labour
executive*3 proposals:
•Increase the range of public enterprises9 to
include in particular fuel and power in all
ltd forms f Iron and ateelf and transport.
:v®ry extension of 3ooialit»m a&k&a it easier
to plan employment aa a whole•'
But the present Govenuatut la not a
Government.
It remlnis for us to press upon
public opinion these further measures which w@
consider neoessary to the full affective
operation of the iaployaent Policy.
Despite this shortcoming - an-Jl others which we
shall iiave to point out as discussion of the
plan proceeds - mm are entitled to welcome the
plan, as a whole, aa a gr&at &ain for a principle
which our llov^aant has long ana tirelessly
urged.
There tmu bittii considerable support in the press
(see i^abassy'a Report $o.663 of October 27, 1943) ^ O P
the creation of a national Investment Boardt &a& aooe
dlaappolntment is oxpressed that this haa aot been
done.
lir f1111am Beverldga in ais forthcoming report
on ej^ploy&ant policy will racoassnd auch a Board to
control private investment.
of Public expenditure
The Qovctrnaeut propose to uja their influence on
the expenditure fof local authorities and public utility
undertakings,
£he limit a of this policy are recognised
but within those limits tho Gov^rns&iint believe that




/they

-16they ©an influence public capital expenditure to
an extent which will be or material value for the
purpose of salRtalnli^ employment.*
The local author it Ida will fee ati&ed to submit
annually a five-year program of capital expenditure
to the appropriate Department, and these pisn® will
be coordinated and adjusted "in the light of the
latest information on the prospective anploy&ent
situation."
The Government will use their powers
of granting or withholding loan sanctions to influence the timing of th® investment programs.
The -mite Pap&r asserts that the timing of public
Is crucial for...
if a decline In da&and can b© caught quickly
enough and corrected, a comparatively siodeat
amount of compensating expenditure will be
sufficient to restore the balance
The
Government believe that in the past the power
of public expenditure9 skilfully applied, to
cheek the onset of a depression has been under*
estimated.
These proposals of the white fapar have also been
criticised for not going far enough and some economista
are doubtful that the "pump priming" technique will
restore the balance with a Mcomparatively sodeat*
amount of expenditure.
Thin last point, however, la
a question to be decided by experience and the tfhlte
Paper stresses the extent to which the methods and
policies in practice adopted will depend on the
experience obtsln^d nh®n the task of si&int&ining employment In actually attempted.

® 3hlte Paper recognises that awings in capital
expenditure nay occur infipltoof the Government's
efforts to prevent them.
In order to prevent these
awing© froa leading to "progressive degeneration of
the atate of trade" the Government proposes to take
ae&surea to maintain consumption expenditure.
Here a&aln, spe^d will be enaentlai.
The
Ideal to be alssed at la &oim corrective Influence which would cot* into play autocatically - on th© analog of & thermoatatlc
control - in accordance with ruloa determined
in advance and wall understood by th© public.**
m e method proposed In the White Paper is a variation of the weekly contributions paid by employera and
employed under the proposed new aysteia of social




The standard rate of contribution would be
assessed on the basis of a forecast of the
average level of unemployment, in such a
/way

-17way as to keep the i*oei*l iasuranee fund
in balance over a lumber of jwm*
But
the rate; of contribution actually levied
would exceed the standard rate at times
when u&eaployment f e l l below the satlasted
average l e v e l &u& would be leaa than uie
standard rats at tiiae^ whan unemployment
exceeded this average.
In order to avoia oonfunion during Uie introduction of the new ^oolnl insurance ay.*ten and because
the acheme la not suitable for the transition period,
i t w i l l aot b® put into operation until the abnormal
condition of the post-war jreara has
l a addition, "If experieaoe should dhow that
the variation of 3oelal l&ttura&oe oofitributioiie
of Talue In keeping eaiployjaent uteaay at fc high
l e v e l , but that another inetruiaeat tor operating
upon the volume of uonsuaption wae alao 4eeirable t M
the Goveru^ent maj coasldar "whether in i>roa^erou«
tinea rather more taxatioa should be raieed than
wa» neoeaaary for the Budget requirementa of the
year and that excesa treated a** a credit repayable
to the taxpayers la bad
Thtiae zaeaaurea would help to au&tain eoasurtera
demaad; the Qover&s&ettt j&i^ht alao tli&e i t s own orders
for coaausiar feoode Siad w i l l ntudy the p o a s l b i i i t l e a
of dirstct Ciovernaeut ^urohaae of coueuiaers* goods for
to the public ana of the r ^ u l a t i o n of hiare*

Centr&i

fklM aoction of the White reaper i s peculiarly
It point© out that:

Hone of the iwilit ^ropoaula aoftWioed in tal**
Paper involves deliboratt) plaoulug for a
d e f i c i t in the Batioxml iiodlget In years of
sub-aariaal trado a c t i v i t y . , • .ru© deeigiied
variations in tha capital ^o&ition of the
in^urmiee fund w i l l not affect tae
Budget.
Finaaoial in^ueemeiits to
public authorities to expand capital expeiidi
tare w i l l mxhxlj take the form of an annual
grant towards ^atlu*, recurrent ohar^es on
the loan^ raided ana t h e i r burden #111 oonbe spread ov&v a lon^
OUARDI/JI (*iay 30):

h writing in the

:

'tiiis> Is a quibble.
8»w eiae would the
interest burdaa be a|»read i f the (ioveriment
borrowed directly?
I t i a high t i a e that
our rulers began to reialiae th*»t any future
coiasitmajat, tix&& in j&uney I M I , in flnanc i a l l y «^uiYalant to • debt
The White Paj^er appears to be concerned that as
l i t t l e as possible of the cost of maintaining employ*



/sent

-laahall fall on the central budget.
It iapliea
that local authorities can boar moat cf the burden:
much of th© public capital sxpendltur© by local
authorities ia remunerative in the oocaeeroiai sense;
if, In addition, the finance of noa-re&unerative
kinda of expenditure in Hprudently administered"
and if -*a Jtropt* relation in kupt between tft& growth
of capital expenditure and the buoyancy of rate
lncasse,** tina growth of the indebtedness of local
authorities should not involve an "intolerable burdtm
on local rates."
Th» OoY&rnnent would, uosmver,
n^ finance the* capital expenditure of local
authorities undertaken tor reasons of employment
policy if auoh expenditure would involve an nintolerable burden on local
~h$ :*oT©rnio»nt appear to take the position that
local f Inane a should carry i^ost of thd burden bscaus
of the iisadvanta^s of a continuous growth in the
debt of ths central Govormaent,
This debt 19 alr#a.4y v«ry largu and will b^ooae larger and rauoh of
it is a ''dead weight" debt.
probittma tmj arise fro& the growth of
productive or aemi-produotive debt, they will
h® siltlgatsd if w© ean m.ov$ us soon as possible
into a dtato of affairs in */hich an affesctivo
reduction can fci zuado froia y»ar to year in that
part of the public debt which la a dead-wight
war debt.
On the one hand:
policy of steadily docraasing the deadweight debt, ?rhil« oth^r forma of debt are
increasing, doa3 not mean a rigid policy of
balancing the Budget «aoh year regardl^so of
the state of tr&da.
:uch a policy In not
required by jtatuta nor la it part of our
tradition.
There is nothing to prevent the
Chancellor of the Exchequer in future, aa in
the past, froxi taklxi^ Ittto account tlie req,ui
a^nts of trad^ and efo^loymont in framing hia
annual Budget*
On Ui& ;>lher iiand, "no departure from the
that th« budget must be balanced over a longer period"




;vhit0 Pap^r points out that:
Hot only the national deadweight debt In the
narrow sens©, but other public in&ebtedness
which laTolv-38 directly or indirectly a charge
on the j&chG^uer or on tiie ratos, reacts on
the financial aystam.
Interest and other
charges thus falling on the ^xchaquer are
often regarded aj in lite nature of a transfer
Inco.r3& in tha h&ada of the recipieata and aa
Impoalng 00 real burden on the community aa a
whole*
But the matter does not present Itself In that light to tht» taxpayer, on whoa©
/individual

•19individuai effort and enterprise high taxation acts as a drug*
nonetheless, It proposes nt the same tliae variations
in the social Insurance contribution. Hicks coiameats:
e authors of the White Paper/ ^°
he reduction of taxaa in time of depression,
but they are prepared to countenance a reduction in social insurance contributions, because the debt would full on the social insurance fund*
(Yet what ia the social insurance*
fund but another of the Central Governmentf a
banking accounts?}. Hie deficit on the aoolal
insurance fund might be very useful, but it
could only be used to even out good and bad
years, so that its potency would be distinctly
limited.
It see&s clear, however, that the Government re
cognises the necessity of being free to adapt budgetary policies to the requirementa of an employment
program but at the same tire it wishes to placate aa
much aa possible the protagonists of "sound* budgetary
polioy:
undue growth of national indebtedness will
have a quick result on confidence. But no
less serious would be a budgetary deficit
arising frost a fall of revenue due to depressed
Industrial and eonunsrolai conditions• 'merefore, in controlling the situation, especially
in the difficult years after the war, the
Government will have equally in mind the need
to maintain the national income, and the need
for a policy of budgetary equilibrium such as
will maintain the confidence in the future which
is necessary for a healthy and enterprising
industry.
Like J.R.Hicks, TOB BC0MOMX8? accuses this aeotion
of the m i t e ^aper of "quibbling."




The section of the White m&*r devoted to the
financial implications bears ail the jaarka of
a compromise. It starts with the statement
that "none of the main proposals contained In
this Paper involves deliberate planning for a
deficit in the national Budget
in years of
aub-naraai trade activity.n
But this, unless
the word "deliberate" cloaks a verbal quibble,
Is equivalent to saying that ncone of the Bain
proposals in this Paper is conceived on a large
enough seal®.*
It is impossible to Imagine a
successful e&ployaent policy that did not involve a deficit In so%e years - as indeed a
later paragraph seems to imply*
ffor is It
even quite certain that a successful policy Is
compatible with the balancing of the Budget
over a longer period. In economic policy, as
in war, it would be aloe to combine victory
/with

-2Gwith a balanced budget, but a deficit Is
better than defeat. In the Tory longest
run, the teat Is whether the net interest
burden of the national Debt Is a rising
proportion of the national Income • as Is
also pointed out by the White Paper, which,
in this section, la nothing If not catholic.
But there are surely more ways of bringing
Mahomet and the mountain together than by
imposing any financial rigidities.
and even the TOUHDXAL KI0S (June 2} writes;
•. • • economic opinion would by no means
unanimously accept the proposition that full
employment can be achieved without some rise
In debt in the long run*
If the Intention
of the Oovernssent were to rule out "deficit
spending* of any kind over a periodt then
considerable doubts would be felt about the
prospective success* of their policies.
On the other hand, the City Editor of the
CHHOHICLE (Hay 30) la "than&ful* that "there la to
be no 'deliberate planning for a deficit in the
national Budget in years of aub-nonsal trade.ftf
The Policy in Practice
This final chapter of the White Paper gives a
general statement of the Govermasmtf s attitude toward
the problem of putting their policies into practice
and proposes a central statistical and economic con*
trol unit.
... .the Ooveraesent recognize that they are
entering a field where theory can be applied
to practical Issues with confidence and certainty only as experience accumulates and
experiment extends over untried ground
the whole of the measures here proposed have
never yet been systematically applied aa part
of the official economic policy of any Government. In these natters we shall be pioneers.
We must determine, therefore, to learn from
experience; to invent and laprov© the lnatruirmnts of our new policy as we move forward to
Its goal. And It would be no less foolish to
Ignore, than to be dlamyed by, the certainty
that unsuspected obstacles will emerge in
practice.»
The other important point Is the proposal to
establish "on a permanent basis a SIFJIII central ataff
qualified to measure and analyze economic trends and
submit appreciations of them to the Ministers concerned . *
During the war this function to&n been fulfilled
by & group of economists in the War Cabinet secretariat
The mxy conception of & central review of the national
economic position as a basis for national economic
policy is a war-tlsoe development, but it was soon
realised that the instrument developed for the purposes of controlling a war economy could be used
/equally




equally- effectively in peacetime.
'She white
Paper outlines the kinds of s t a t i s t i c s naeaeci to
enable the cent nil staff to operat© effectively.
It proposes to;
Develop the annual Willta ¥&$&$ on ffatlon&l
Xneoa* and .Expenditure by providing a much
mm complete ana lysis than Ms hitherto
#bee8 possible of the constituent parts of
the country1© total expenditure.
In pwrticular, direct estimates will lie nacle of
the various types of capital expenditure
and the various sources of savings. This
will be, in
effect, til* Capital Budget of
f
the nation « we&ith*
studies undertaken by the Ministry of Labour
and national Service of the manpower position will
also bo nmiliy<
The correlation of these
p
y
- for total expenditure and for
• will thua play a vital part In
tae formulation of Ooirera^&nt policy for
the maiaten&ne© of employment.
Tun policy of using the presentation of the
Budget to ?«rilament as an opportunity for reviewing
and denting the "financial and economic health of
the ©ountry as a whole
and to ©onsider the ^rospeets
for %hm nosing year1* will alao be retained after the

tfe.e White Tmp®? ®\Mtmri%®& above la a
iag and balanced dooument.
I t does not make the
mistake that nan/ of the popular discussions on full
employment have wide of placing aa mmsti emphasis on
employment itself
that %&0 purpose of employment is
m
overlooked.
A rising standard of living^ i s consistently linked with emplor^nt policy &®& the White
Pmpmr stresses th« iaport^ioe of improving the prodttctlvity und efflolenoy of Industry.
3oan» of tiM oritles of the White NUMMP
regretted that i t did not oover wider, though collateral, issues; others have rt»®ogniised that the proposals
f
of this Paper for® only a part of th@ aovernment
s
w
r^ooiistruetion program.
" H i i | work and hoi^s i s
the Churehllllan aummr? of what Britain hopes to
achieve in the post-war world.
1*h© £mpioyaent Paper
deal® only with work, social seourity, isediaal
servle#s9 housing, atepatloa and the location of
industry are being dealt with separately.




TOS M T A f ^ (June 2) points out that:
The nm white Paper, therefore, mmt b# regarded
as embodying the l a t e s t , though not of necessity
the l a s t , of a series of far-reaching and closely
related aoaaurea whose aole purpose la to advance
the physical, material and neatal welfare of tit©

•

1

-22M M of Individual citizens who m k e up
the population of tills country.. ..The White
Paper....must not be considered In isolation...
a &over**iae&t which within twelve months can
approve in principle a far-raaching social
security prograa, carry through the House
of Cojas&ons & measure re shaping the whole
educational system of the countryt frame a
plan for 4 comprehensive national Health
©rvice, und now produce an employment
policy designed to ensure More or leas congenial work for everyone prepared to work
Industriously &n& honestly, m y deserve BQWM
of the hard things said about it, but certainly does not deserve them
The ?*'hite P&^&r is remarkably undoetriitaire;
the term "personal enterprisen and initiative11 la used
but not "private enterprise; political Ideology is
not part of its function. It is a technical document, the proposals of which are designed to achieve
high and stable employment within the existing system.
It takes a long view - &&ny of thu measures would
not be put Into operation for several years after
the war - but considers as well the Immediate problem arising at the end of the war*
the coaservative DAILY n L M M P S (May 31)
can approve, for:
It e&bodlas a revolutionary change in the outlook of the 3tate towards its role in the
economic system without a revolution in the
system itself.
yt
H U M (May 30) approves the conservative nature of the Unite Paper:




....if the country is engaged, as it is, In
feakin& revolutionary changes, It is important
that they ahould be effected In the traditional
British way, step by step n& necessity dictates, with all B&&&&& of opinion taken into
account and «^ry endeavour made to secure
the widest possible support at every stage,
even at the cost of soxae apparent weakness or
inconsistency. It say be that, eventually,
@ore direct measures will be neeess&ry for
stabilizing the flow of private investment
and directing it into Urn right channels than
are contemplated In the Government's long-term
policy. That time and the experience of the
transition period can be left to decide* In
the meantime regulation not in every reapeet
effective but secured with the cooperation and
support of industrialists themselves nay prove
of greater benefit than a sore complete aysteia
imposed upon thorn against their will.
/This

-23quotation undoubtedly sums up the general
attitude that the authors of the White Paper hoped
to create in the country.
critics there are and
will be, but the criticism is for the most part
constructive and progressive - Britain has offidaily inaugurated, with this Paper, a new conception of the function of Government,
iiven Sir
£1111*19 Beverldge, wlio a&a lilsiseif a ©ore farreaching proposal on employment polio/ to mice,
writes|
The $fcite Paper la the beginning of a voyage
to a better world.
It remains for the
people of Britain to m & a certain that the
is completed.
It is too soon to say how the ithite Paper will
be viewed by the country.
The Home Intelligence
service, which surveys public opinion, reported almost no reaction to the ifklte Paper.
This Is understandable, however, since the White Paper had to
compete for public attention with the Italian victories and the European Invasion.
On the other
hand, the sectional Interests, such as the banking
fraternity, the imnufacturera, the exporters, the
trade unions, the farmer*, the local Government
authorities, have not had time to digest the proposals
and *xpr*9* their opinions.
The only coioaants so
f&r have coia© from the preaii arid a few professional
economists.
views of the political parties will be
expressed in a three-day debate which is scheduled to
begin on «fune 21st. flu Jolm iiAdersan (Ciiancelior
of the exchequer), Mr* Oliver Lyttelton (Minister of
Production), and Mr» format Beven (Illniater of Labour)
w H i defend the White Paper, and while they ©uy
Illuminate &om> or tJo.% m>T® obaciirn parts of the
^apar, it is unlikely Ui&t they will add or detract
anything of real
The debate will consist or a preliminary canter
over the whole field, and it is already &aown that the
parti#a will officially tfiw* tue prgposala a
weloo&s.
In contrast» Uie aoadl'ul of extresae
Conservative baa*;-benchers will alra>st
certainly attack the proposals &£ little short of
totalitarianism or socialism, and toe $xtr<ts*& leftwing of tile iAbour Party, supported by Goiaiaonwealtn
an4 the Independent Labour Party, will attack on the
quite oppoi*lte grounds that the proposals iierely perpetuate oapit^liiia and therefore cannot possibly solve
the problem of ampioyia* at.
The bulk of tiie Conservative, liberal and Labour K»?4 will, hownvar, find much
common ground In the White i*&p*rfM proposals.
It will b# &QU® limi b^i'ore un$ foJLl evaluation
can be aade of the political future of the White Paper,
This will depend in part on whether the present Coalition Government is replaced by a w* Coalition or a
party Govern^gAt.
It in nuta %Q ^ay t&ftt whatever
form the new Government takes - Coalition, Conservator
or Labour - the basic conceptions as well as mat of
the proposals in the /iiitu l>a$mr will be adopted as




/Govem&snt

-24-

f

GteTernaent policy. It hm b#ocm@ almost universally accepted in Britain that the State has a primary and permanent responsibility for a© ordering and steering t&e
#0OB«»la affairs of tiie country tiiat & MgM and fairly
stable level of amploya«at COM )m isflinttilnod. It Is aiao
alisost axioiafttie tliat no Governa^jat aim surviv# unl@sa It
la pmp&rm& to aocept this responaifeility.
Report prepared by
Mltk li^nhardt In
eollaboratioa with
3. I). B«rger

}
)
)
}
Uonlmrdt
Assistant to the
Ambassador

f i l e 8^0.4
Hectograph to the department of State
mtSXMimt

Department of
Depart»ent of Labor
1'reasury Department