"If we could first know where we are, and whither we are tending, we could then better judge what to do, and how to do it."

Abraham Lincoln

The Princeton University Conference, a program for the exchange of ideas, is designed to provide wider opportunities for members of the Princeton Faculty to meet with representatives of member organizations to consider questions in areas of mutual interest. Princeton's primary objective is to improve access to basic ideas, whatever their source, and to stimulate communication between the interdependent elements of society.

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TABLE OF CONTENTS

INTRODUCTION

Harold Sprout
Henry G. Bryant Professor of Geography and International Relations
Department of Politics, Princeton University

THE IMAGE OF BRITAIN IN AMERICA

John H. Peck, C.M.G.
Director General, British Information Services, New York

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SOME AMERICAN IMPRESSIONS OF BRITAIN

Carlos H. Baker
Woodrow Wilson Professor of Literature
Department of English, Princeton University

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BRITAIN'S ECONOMY TODAY

Geoffrey M. Wilson
Deputy Head, The United Kingdom Treasury Delegation to the United States
Alternate Executive Director for the United Kingdom, International Bank,
Washington

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BRITAIN'S FOREIGN COMMITMENTS (I)

Geoffrey L. Goodwin
Reader in International Relations, London School of Economics
and Political Science
Rockefeller Visiting Fellow to the Institute for Advanced Study, 1959

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BRITAIN'S FOREIGN COMMITMENTS (II)

Michael D. Donelan
Sir John Dill Fellow, Princeton University
Former Member, Research Department, British Conservative Party

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BRITAIN'S DEFENSE PROGRAM

Harold Sprout

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# INTRODUCTION

## Harold Sprout

The focus of the Conference is indicated by its title. The main theme, around which the program was built, is the link between economic and political strength. This link is asserted in two statements quoted in the preamble of the program: one from a report on "Britain and Europe", prepared by *The Economist*; the other from the British Government's Statement on Defense, issued in April 1957.

*The Economist's* report says: "The connection between economic and political strength is very close; they are two faces of the same coin." *The Defense Statement* says: "Britain's influence in the world depends first and foremost on the health of her internal economy and on the success of her export trade.

The British Defense Minister, Mr. Duncan Sandys, principal author of the Defense Statement, was speaking with specific reference to military policy. He was justifying reduction of British military expenditures and other changes in Britain's defense program. *The Economist* was speaking in the broader context of statecraft in general, in a report that dealt specifically with the effects on British industry of establishing a "free-trade" area in Western Europe.

The link between economic and military strength is well recognized. A state's military power manifestly cannot rise very much above the capacity of its economy to feed goods and services to its military forces. There is also evidence that success in diplomacy depends, in some degree, on adverse parties recognizing a state's capacity to back up its demands by resort to violence if necessary.

But is that all one can say about the link between economic and political strength? Is one to judge the power and capabilities of a state wholly, or even predominantly, on its capacity to employ violence?

As I read the historical record, especially the record of recent history, a nation's influence in the world, its role in the world community, depends on a great deal besides military hardware and men under arms. The United States and the Soviet Union surpass all others in capacity for violence. Yet it seems to me clear that their respective ability to influence the behavior of nations is not in proportion to their admitted capacity to turn the earth into a radioactive desert.

Indeed, one might go so far as to contend that the sheer destructiveness of the super weapons, stockpiled in Russia and America, prevents their effective use as active instruments of statecraft. The functions which these super weapons have come to perform--and which they are publicly admitted to perform--is to "hold the ring" while less violent and less dangerous instruments and techniques are brought into action.

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These less violent, and hence more fruitful, techniques are well-known. They include diplomacy, public relations activities of many kinds, technical assistance and economic aid to needy nations, economic and psychological warfare, and very limited use of military force.

The link between economic and political strength can be easily traced with respect to some of these less violent techniques of statecraft. A government cannot wage economic warfare--by embargoes, boycotts, and other means--unless it controls markets, goods and services needed by its adversaries. A nation cannot export technical assistance, productive capital, or food to starving peoples, unless it has these commodities to export.

But mere statistics of economic production and numbers and kinds of technical experts potentially available manifestly do not tell the whole story. One needs to know how the Government in question views technical assistance, economic aid, and military outlays. One needs to know what ideas prevail as to what is economically feasible to undertake. One needs to know further what limitations the politicians recognize in the attitudes and expectations of the public whom they serve. We shall clearly want to explore these aspects of the political economy of Britain today.

Is there ground for believing that economic factors may affect a state's policies in still more subtle ways? For example, its ability to carry on effective diplomacy and to project its image to other peoples? Its ability to win and hold allies? Its ability to restrain the follies of its allies? Its ability to negotiate effectively with uncommitted nations and with potential enemies?

These questions suggest still others. How may a nation's dependence on foreign countries for food and raw materials affect the attitudes and decisions of its responsible policy-makers? What limitations are imposed by the nation's financial position, its international balance of payments? How may economic conditions--especially a sense of prosperity or, conversely, a sense of adversity at the grass-roots of public opinion--affect the mood and political attitudes of a people? How, if at all, may such public mood and attitudes limit the politicians' freedom of choice and action? Are there, in short, subtle but significant links between conditions and trends in a nation's economy, on the one hand, and the tone and spirit, the energy or passivity, of its policies and statecraft?

One is reminded, in this connection, of some thoughts voiced by Viscount Chandos in The Sunday Times (of London), a little over two years ago. He asked: "Can our political knowledge and maturity be brought into play, and can military force necessary to sustain an independent foreign policy be built on the foundations of our present economy?

"That economy (Chandos continued) is artificial. The population of Great Britain at the time of the Battle of Blenheim was a little over six millions. Today it is more than fifty millions. This increase has not been built up by the discovery and exploitation of indigenous resources other than coal and some iron and the intensive

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cultivation of our fields. It is broadly true to say that the difference between the two figures of six millions and fifty millions is an index, though not, of course, an accurate measure, of the extent to which we have to live on our brains. A few million tons of seven per cent copper ore, a sizable oil field, some waterfalls with a head of two of three thousand feet in these islands would be some insurance against the dangers of making mistakes; but we have not got them."

Chandos went on to cite some of Britain's recent achievements-- pioneering in radar, nuclear physics, jet enginry, and constructive applications of nuclear power. He was inclined to believe "that business can probably be transacted more quickly in London than in any other center, not excluding New York." Britain still has "the largest merchant fleet." "Services such as banking and insurance and terminal markets are more highly developed here than elsewhere."

In the political sphere, Chandos continued, "We have to rely more on our brains than when by our might we imposed the *Pax Britannica* for a hundred years." But he had not the slightest doubt that "in the political," as "in the economic and financial field," Britain has still the "role of a leading Power to play."

The speakers, whose talks are reproduced in this brochure, dealt with important aspects of the role which Britain is playing and may continue to play during the second half of the twentieth century. These papers were given at the Conference in slightly different order than here presented.

The brochure opens with two discussions of American impressions and images of Britain today. The scene then shifts to a description and analysis of conditions and trends in the British economy, chiefly as these are related to foreign policy and military defense. Two papers deal with various aspects of Britain's foreign commitments. The final paper presents an analysis of Britain's defense program in the context of economic, political and military conditions.

All of the papers relate in various ways to the main theme of the Conference. That theme, to repeat, is the link between economic strength and political strength and influence. The papers pose such questions as: What is the present condition and trend of British economy? What is Britain's external position, commercial and financial? How do American policies affect the economic strength and prosperity of Britain? To what extent may changes in economic conditions affect the role that Britain plays in the world community in general, and in the defense of the West in particular? How do Britons view their foreign relations and commitments today? How is Britain's international role viewed in the United States today? These are the kinds of questions that this Conference was intended to evoke, questions that were explored in the plenary sessions and debated in the seminar-size discussion groups of the Conference.

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AMERICAN IMAGES OF BRITAIN

John H. Peck

One result of working with the British Information Services in the United
States is that you make a number of discoveries, some of them rather remarkable,
about your own country. Looking back one evening on three years work, mostly in
Manhattan but including excursions into 32 States of the Union, I knew that my medit-
ations reminded me strongly of another experience which I could not pinpoint. Then,
in one of those flashes of revelation which sometimes come in the night watches, I
realized what it was. Should you ever have occasion to accompany the young to a
fun-fair or amusement park, you may be lured into a mysterious edifice where, after
negotiating a dark and confusing labyrinth, you suddenly find yourself in a spacious
hall lined with many mirrors. And there your image confronts you many times repeated,
very fat and prosperous, very lean and hungry; elongated and arrogant, squat and self-
satisfied; with head erect, or veering headlong to the left, or reaching sideways to
the right. Somewhere there may even be a plain mirror reflecting an undistorted view.

To travel around the United States, listening and learning about the images of Britain projected by, shall we say, a southern branch of the English-Speaking Union, Rotary or The Elks in the mid-West, or a Chamber of Commerce in California, produces a very similar set of reflected images of Great Britain and the British Commonwealth of Nations. Moreover, in observing this diversity of images it is necessary to maintain some measure of official and intellectual integrity, and recognize that flattery of one's country is as much a distortion as unfair criticism, and also that one's own idea of an undistorted image is not necessarily the same as one's neighbors'.

Nevertheless, it is perhaps a better use of the taxpayers' money to con-
centrate on what we think is mistaken or unfair criticism of Britain than to worry about
correcting impressions which even we have to admit err on the side of idealism. So if
I discuss today what seem to me to be misplaced criticisms of my country and its poli-
cies, this is not to say that I have not met many Americans whose affection for Britain
is boundless, or that I think that the press, radio, and television coverage of British
affairs in the United States is inadequate or inaccurate. It is just that the selection
sometimes seems a little odd.

A few weeks ago, I thought I detected a ripple of concern when The
New York Times conducted a survey which indicated, I believe, that more than 30
per cent of the American people did not know that Berlin was in the eastern segment
of Germany. I must confess that I do not know what figure a comparable survey would
produce in the British Isles, but it might well be not so very different from the Ameri-
can. I think the main point it establishes is that more than 90 per cent of the people
devote more than 90 per cent of their time, energy, and mental faculties on preoccu-
pations with their own domestic affairs, personal, family, local and parochial. We

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all of us, whatever our age, income, or educational grouping, have vast areas of
ignorance. This fact ought to have a direct bearing on information work. It means
that there are two problems: one is to do what we can to lessen the extent of ignorance
about Britain and British affairs, the other is to remove misconceptions and substitute
correct information. Obviously, the United States is so vast and our resources are so
slender that in practice it is hard to keep the two apart. But since we are talking
today about the images of Britain and not about blank mirrors reflecting absolutely
nothing, I am forced to concentrate more on the misapprehensions.

I would like to read you an editorial which came our way from a journal
published in a small city way out west. It is entitled "Poor Old English Lion" and this
is what it says:

"Under the impact of socialism and its verminous advocates, poor old England, which might have lasted a thousand years and outshone the empire of Rome, has gone a bit further down the drain. Cutting its defense armament to microscopic proportions, renouncing its navy and letting the world know that it is going out of business as a first-rate nation have been the price of pensions, and socialized medicine, and free false teeth for everybody and a five-day week in manufactories that could well be working overtime. Americans may ponder this street accident on a national scale and wonder if it was worth it.

"The British Empire was in part a victim of world tides over which, ultimately, it had no control, but the greater part of its dissolution has been from sabotage within its own national economy. The political formula of everything for the shiftless and confiscatory taxation for the thrifty and hard-working has run its course with the inevitable result that nobody wants to work, nobody will work and the national incentive to ambition has disappeared from the English consciousness all through the social fabric from navvy to nabob.

"England will not disappear altogether from the map of the world until the first week of the next war. The momentum the name and character of England evolved in Tudor times is too formidable to dissolve overnight and will never, of course, disappear from the stream of history. But the softening of the brain which is the fatal characteristic of socialism has no cure. The British lion simply hasn't been able to get enough nourishment through the agency of free false teeth."

May I now read you some excerpts from a radio commentator widely
broadcast in the United States a few weeks ago:

"As a result of two World Wars and a heavy dose of socialism at home, England's possessions, with their markets, have all but disappeared, so the possibility of trade with Communist Russia looks very good to British leaders. After all, what is a little appeasement among traders.... We can hardly blame British leaders for continuing to think of Britain as a first class power instead of the second class power she has actually become, but the amazing thing from the standpoint of the United States is that the British lion, which is really just a pussy-cat these days, is still able to clip the wings of the American eagle.... England, riddled by its socialist welfare

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state economy, in spite of a so-called Conservative Government, does not seem able to compete for new markets. This is especially true now that her once captive customers--former British colonies--are no longer under her rule...."

The commentator then suggests that Britain is now trying to play Russia against Western Germany, the latter being a trade rival to Britain. He goes on:

"Of course, she is playing with fire but that is beside the point. She has done it before and when the fire got too hot, there was always good old Uncle Sam to come along and put it out...." And so on, and so on...

Finally, I'll quote a delicately modulated voice from Boston--a letter in the *Boston Herald* early this year from which the following are excerpts:

"When I was going to school I learned from our history books that although the Americans retreated from Bunker Hill, it was for the purpose of coming up behind the sleeping Redcoats to give them a shellacking, and to send them running into their holes like the rats which they were, and still are.... In World War I, the British fought to the last American soldier. I do not recall exactly how many billions of dollars the British still owe us from World War I and World War II. It is bad enough that they won't pay us this money, but they won't pay us even the interest on this money, and they are still asking for more...." Those are only excerpts, but you get the general idea.

Now I have been grinding remorselessly through these three exhibits for two main reasons. Let me say straight away that I am assuming that in an audience of this caliber nobody feels the slightest twinge of embarrassment at hearing an Englishman reading out remarks about his country that appear rather less than enthusiastic. If so, I assure you that is quite unnecessary; I have quoted them partly because I consider that the problem they pose is not a British one but an Anglo-American one since I do not think it is an American interest that such ideas should be widely entertained, and secondly, because they do in fact touch on most of the most widely held misapprehensions and prejudices about Britain. I would also like to say that I may be hypersensitive and blindly optimistic, but I detect in all three effusions a slightly tongue-in-cheek atmosphere, as if the authors were adopting the attitudes traditionally expected of them, and if you dug down deeply enough you would strike not dislike or mistrust, but something approaching affection.

You will notice that certain themes run through these three examples I have given you. The first is that Britain is finished as a great power, largely due to the insidious influence of socialism and the welfare state. We are falling down on our defense obligations and we cannot compete for new markets, partly because of our welfare state and partly because we have lost our colonies. We borrow enormous sums of money from the United States which we do not repay, and we do not even pay interest on them.

Even so, our three critics quoted above have left out a few things and I feel it incumbent upon me to mention certain other beliefs which strike us as mistaken.

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By far the most widely held and deeply rooted conviction about Britain that I have encountered in the United States is the belief that you have only got to scratch a Briton to find a reactionary and probably brutal colonial type strenuously resisting the trend towards independence of our colonies and still living in a colonial past. The emotional basis for this belief is of course to be found in American history--perhaps a little illogically, seeing that the Revolutionary War was revolt not of the natives but of the white settlers. But it is fortified by a number of more concrete beliefs widely held but fortunately untrue. In a gathering of this sort I think I can violate the cardinal principle of publicity work that you do not give wider circulation to an error by calling attention to it yourself. I will give you eleven propositions about British colonial policy which we have encountered many times in the United States, not one of which is true today. Here they are:

(a) The colonies pay taxes to Britain. They don't.

(b) Britain has a monopoly of trade with the colonies; we close their markets to other countries, and will not allow other countries to purchase the raw materials they produce. Untrue.

(c) We do not want to give them independence because, without control of their resources to bolster the British economy, the economy would collapse. Rubbish.

(d) We deliberately keep down the prices of colonial raw materials, and the wages of colonial labor, so that we can buy colonial products cheaply and sell them at great profits on the world market. We don't.

(e) The result of this, and particularly of (d) is that firms operating in colonial territories pay dividends at a very high rate. This was once true in some cases, e.g. the copper companies in the Rhodesias in their early days, but it isn't now.

(f) We prevent industrialization because it would compete with our own industries. Not true.

(g) We employ forced labor, or labor too poorly paid that it amounts to the same thing, on development projects, e.g. railways, roads, harbors, for which we take all the credit. No.

(h) Colonial peoples are not allowed to invest in enterprises in their own countries. Of course they are.

(i) We do not educate colonial peoples, so that they will never be in a position to better themselves. Palpably false.

(j) Our plans for self-government are window dressing (now discredited by Ghana, Malaya, etc.); that we only give increased self-government reluctantly, when we are forced into it. Rubbish.

(k) The colonies could develop their economies themselves and achieve self-government if we ploughed back all the money we take out. But we put in an immense amount of money, and are training them to self-government as fast as we can.

To this I might add the widely held belief that Britain exercises some form of control over the policy, domestic and foreign, of the independent sovereign states which compose the Commonwealth. The best example of this belief in our

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records is the Superintendent of a school district within fifty miles of the Canadian border who asked in all sincerity why Canada still paid taxes to Britain. You can realize how, cumulatively, these misapprehensions can create a pretty dismal picture of our colonial policies.

Leaving out of account the genuine divergencies of policy on such matters as the recognition of Red China, there are a number of misapprehensions or prejudices about the internal structure of Britain, which are perhaps worth mentioning. Americans are far too courteous to thrust on an Englishman any unfavorable views they may have about matters which are our own domestic concern, such as our Monarchy, our Church, and our House of Lords and for the purpose of encouraging American visitors to go touring in the British Isles we make our own contribution to the image of Britain as a sort of museum piece full of ruined castles where the hereditary peer of the realm in his robes is attended by beef-eaters and country bumpkins in their smocks. We too have our figures-of-fun--Colonel Blimp and our colonial administrator changing into his tuxedo in the jungle every night, and usually for some unexplained reason called Carruthers.

Now a lot of this is good clean fun and it would be the height of folly for anyone in either country either officially or personally to take it seriously. The only danger as I see it is lest misapprehensions and prejudices on points of detail may add up to an image of Britain as a nation in which the United States, looking around on the world at her friends and allies, may lose confidence. Moreover, if Americans, as I hope they do, are going to have views about Britain, discuss her, have close ties with her, then I think you will agree that you may as well have the facts right.

Many of the unfriendly images of Britain originate in this tiresome word "socialism." As a servant of The Queen I am not called upon to pronounce judgment between the Conservative and Labor Parties. "Socialist" or "socialistic" are wide terms covering a multitude of sins--or virtues. In general I suppose it all boils down to the fact that you think that in Britain the Government interferes too much in our private lives and our private enterprise, with the result that we are becoming decadent and inefficient. Last year, for example, some study was produced which was circulated as a pamphlet, in a major New York bank review, and in U.S. News and World Report. It contrasted the "heavily controlled paternalistic and subsidized socialism of Britain" with the free enterprise of West Germany.

Well, we do not want to launch forth into a string of comparisons between Britain, the United States, and Germany, but one or two points are irresistible:

(a) The number of British civil servants is being steadily reduced, and we run our system with fewer civil servants per head of the working population than you do.

(b) No nation can go through what we did in the last war and after it and still survive and preserve the world sterling system without a pretty drastic system of controls. Some people do not seem to realize that today this entire system of controls has been virtually swept away.

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(c) Britain spends less on social welfare than West Germany.

(d) It is not Britain that subsidizes its merchant marine. While on agricultural subsidies Britain is a tyro compared with both the United States and Germany.

(e) Over the last seven or eight years industrial production in the United States and Britain has increased at about the same pace.

But of all the charges about socialism the feature of British life which attracts the most attention in the United States is what here, though not in Britain, is called "socialized medicine." I think much of the hostility towards it in the United States is based on the mistaken belief that we are pressing you to adopt a similar system. Of course we would not dream of doing any such thing. Partly it is due to the belief that the Government can somehow tell the private citizen what doctor he is to go to. In fact, of course, everyone has complete freedom to choose his doctor, and if he prefers to be treated as a private patient he is free to do that too. Certainly the overwhelming majority of the British people would not wish to see the National Health Service abolished. While there are bound to be individual expressions of discontent, over 90 per cent of our doctors and dentists are participating in it. Of course it is expensive, but the results have been spectacular. In the last fifteen years, for example, maternal mortality rates have dropped by 75 per cent and infant mortality by 50 per cent. Now this is partly, of course, the result of improved techniques and scientific advances, but the point is that the Service is really comprehensive and covers the most complicated treatment, the supply of appliances, and full hospital services for everyone. We believe it is giving a new outlook to many people who in the past feared incapacity, neglected their own health, and, for economic reasons, ignored the possibilities of preventive medicine. Despite the cost, we think the investment is paying off.

As to Britain having an effete economy, as a matter of fact we have heard much less in recent months about the industrial and commercial decline of Britain. This is perhaps due to the success of British firms bidding for U.S. power contracts; to the fact that we are again in the lead as the country that sells most motor cars in the United States; to our success in securing the first commercial contracts for nuclear power stations in Italy and Japan; and to the estimate last summer that 75 per cent of the world's turbine powered aircraft have British engines. In general we see no reason for losing confidence in our ability to compete for world markets. Our only fear is that our very success should lead to protectionism elsewhere. One aim of the western world should, in our view, be to establish coherent trading policies in order to expand the total volume of world trade as far and as fast as possible.

Another large body of criticism centers upon the image of Britain as the skillful professional beggar who borrows large sums from the trusting Americans which she has no intention of paying back. I do not know to what extent it is desirable or profitable to delve back into history. Certainly many people still remember the debts of the First World War. You will recall that we went on repaying these well into the 1930's, long after the other allies and ex-enemies, who owed far more to us than we did to you, had stopped their payments. We paid back about half what we borrowed from you, and suspended the rest only when the whole of the financial system of the world and the national economies of most of the states composing it collapsed. Therewith, the only known means of paying debts--by selling goods--also collapsed. The

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problems of the Second World War are more relevant and more interesting. Judging by the comments and enquiries we receive, I think that certain facts may not be fully realized. The British aim in world trade is simple enough. We want to pay our way. That is to say we want to earn enough from exports and other business, such as banking, shipping, and insurance, to cover our essential imports, to service our debts, and to meet our obligations to provide reserves for the sterling system and capital for the Commonwealth and our dependencies. We do not want a large favorable balance just for the sake of having one. Today we are meeting all these commitments. At the end of the Second World War it seemed totally impossible. The problem, of course, was to get re-started after the destruction and dislocation of the war. Here the United States came to the rescue with Marshall Aid, which Sir Winston Churchill described as the most unsordid act of history. This aid was a gift, and the British will always remember it with gratitude. It is difficult to remove some of the resulting misapprehensions about our role without appearing to be ungrateful. Perhaps the best thing is to give the facts and figures about aid to Britain, what we have been doing to help others, and the effect upon the ultimate victim, the taxpayer.

From mid-1945 to the end of 1957, when Britain received the last installment of earlier postwar aid allocations, Britain had received some $8,900 millions in loans and grants--$3.4 billions in grants and $5.5 billions in loans. Marshall Aid, included in this total, was suspended on Britain's own suggestion in 1950-1951.

This aid underpinned our own efforts at recovery. It looked to the day when we could "pay our way" again. It looks as though that day has arrived.

So it is not to belittle the program of aid to Britain if I make these points:

First, it certainly was not "money down the drain." These loans and gifts have made possible the maintenance of U.S. exports, for, throughout the postwar period, other countries could not earn enough to buy all they would have liked to have bought from dollar markets. U.S. aid has reasonably enough bridged the dollar gap, and thus enabled your exports to be maintained and increased. The loans--the biggest item in your aid to us--were not a bad investment either. We are fully paid up to the minute, on both interest and capital, and we intend to go on until every penny piece of the debt is discharged with interest. I do not see how one can condemn such a transaction without criticizing the whole foundation of the American economy!

Secondly, Britain is not, as some people had come to suppose, a major charge on the U.S. taxpayer. Although all taxes are a grievous burden, the size of the burden caused by Britain often gets our of perspective. It has been estimated that the cost of helping your strongest ally back on to here feet--between 1945 and 1955--was six-tenths of one per cent of the U.S. tax dollar--six cents in every ten dollars. I know too well how these little fractions of a cent can accumulate into an unpleasant burden; but I think it fair to give you this sample of the sort of unreasonable worry about Britain that continues to nag away in the minds of often friendly people.

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The same people are often surprised to know that over the years Britain has paid heavier taxes (measured as a part of the national income) than has America and that a part of these taxes has gone to helping other countries in turn. The sterling equivalent of $5.5 billions in government grants and loans have been made by Britain since 1945--rather more than half to foreign countries, the rest to Commonwealth countries and the dependent territories. So we have been giving, as well as receiving; and know the problems--economic, political and emotional--that arise at both the giving and the receiving end. I don't see what more we can do to correct the belief that we are in any way a defaulter; and we must rely on a large extent on our American friends to help us nail this lie. One statistical thought, however, I would like to leave with you. The cost of the service of our debts to America and Canada last year was almost exactly met by our sales to the United States of British cars. If you bought none of our cars and we paid no debts, neither side would be worse off where the balance of payments is concerned. On the whole, however, I expect that you, like we, would prefer us to go on sending you both cars and cash.

So you will see that the answers are there, if we can get them across. I am not sure to what extent this point is relevant to the theme of your Seminar, but I ought briefly to say that we consider the task of informing the American public about British affairs and about the rest of the world to be an American responsibility--the American correspondents in London, the editors, commentators, and newscasters in the United States, specialists, teachers, and those who individually and collectively make the study of British affairs their business. There is no direct link in any medium between the British Information Services and the American public as a whole, nor do we hurl out masses of paper into the blue in the hope that some of it may be read on its journey to the wastepaper basket. We do try to assist in building up the American image of Britain by providing background comment, factual material, official interpretations, for anyone who asks to receive it and is seriously concerned with portraying to the American public Britain as she really is. Any assistance you can give us in this task will be gratefully accepted.

If you add together the three main subjects with which I have tried to deal this morning--misapprehensions about Britain, the British correction of these misapprehensions, and the very brief sketch of our general information policy--you may well be left with an impression of defensive, disconnected, and shortsighted activity. May I hasten to say, therefore, that we regard this whole question of removing specific misunderstandings as simply the negative side of our work, and a minor part at that. We are not a negative or defensive people. Many of us have a pretty clear idea about Britain and her place in the world. In presenting that picture to the United States, we obviously have to take into account what it is that thoughtful Americans want to think about us. So greatly daring, I shall turn the mirrors round and try to give one personal British image of America. It seems to me that you look with respect and affection on many of our traditions, particularly where they are part of your history. Although nothing in this world would induce you to adopt them for yourselves, you appreciate the way they work in our country. Looking round at the world to see who are your friends and allies, Great Britain, both in its own right and as the Head of the Commonwealth, holds a special position, and can fairly claim to be vital both to American military and economic strength and to the

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waging of the cold war. It is, therefore, much more than a sentiment which makes you want to be reassured that our domestic institutions and our economic policies are sound and stable, that we are pulling our weight as allies in all respects, and that our domestic and foreign policies conform to your own high standards of morality. How fortunate it is that this coincides so closely with the picture of ourselves that we want to convey, not in order to please you but because we happen to think it is accurate.

Great Britain, as we see her, has at least seven facets which, we hope, are clearly visible in the United States.

First, we are indeed steeped in tradition, but it is the tradition of Magna Carta, of the rule of law, of freedom under the law, of democratic institutions that not only look fine on paper, but actually work.

Secondly, the British Isles are the heart, the center of the Commonwealth. The history of the evolution of the British Commonwealth, which today, with the British dependent territories, occupies one quarter of the land surface of the earth, and houses one quarter of the world's total population--the evolution of this remarkable organism is the history of the spread of the political ideas which were born and nurtured in the British Isles until they have, to a greater or lesser degree, become operative, become the driving spirit of the democratic institutions of the British Commonwealth. But, more than this, it is the same ideas, the same practical methods of applying them, which also animate the United States of America today. I think myself that it is both a great pity and a great mistake to regard the history of the United States as beginning in 1776. In our view, the history of the United States begins in 1607, and it was the growth and the spread of essentially British institutions among the British settlers in the United States during those 170 years between the founding of Jamestown and the Declaration of Independence that furnish the wellspring and the driving force of much of what the United States stands for in the world today, and we think that that in itself provides of all the links between Britain and the United States perhaps the strongest, and it is therefore not out of place to mention it in the course of a talk about the immediate practical problems of the mid-twentieth century.

Thirdly, we consider that Britain, from the defense point of view, is one of the major forces in the free world. After all, we are the only other power in the free world that makes and stores its own nuclear bombs, not only the atomic bomb, but the hydrogen bomb. We are the only other power in the free world which is successfully developing ballistic missiles for delivering these atomic devices, if necessary. But more than that, where conventional weapons are concerned, it has to be borne in mind that the British defense effort in the period of the cold war--during the period since the end of the Second World War--the British defense effort has been as great as that of all the European mainland members of NATO added together.

Not only do we have commitments--defense commitments--spread all over the earth's surface, but we have very important resources in the way of bases, and stockpiles, which might, if the worst came to the worst, come in extremely handy. I personally do not agree with those people who say that, because it would need only

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one hydrogen bomb to obliterate, shall we say, Cyprus, that, therefore, a defense base on Cyprus is unnecessary. I think that the answer is that it would only take six such bombs to obliterate the British Isles; and surely, the lesson to be drawn is that under nuclear conditions there is great merit in means of dispersal, and such bases as Cyprus, or Aden, or Singapore, might, under certain circumstances, come in very handy. Moreover, it has to be remembered that, under modern conditions, weapons are only half the story. The other half--and a very important half in strengthening, and encouraging, and unifying the free world--is positive, firm commitments to come to each other's aid. In time of trouble. Britain was a foundation member, not only of NATO, but of the Brussels Pact, drawn up a year earlier, out of which the North Atlantic Treaty grew. We are a member of the Middle East defense organization, still called the Baghdad Pact. We are a member of the Southeast Asia Treaty Organization. Nobody can say we are not committed, and nobody, I think, would dare to say that we are unlikely to honor our commitments. I think that this adds up to saying that we consider ourselves a formidable element in the defense dispositions of the free world.

Fourthly, as Mr. Wilson will explain later, we are a major factor in the world's economy, because of the vital importance of sterling as a world currency and as a means of transacting world trade. Far more is at stake than the economic prosperity of the British Isles in the defense of the pound sterling, which called for such strenuous and, mercifully, so successful efforts during the past years in Britain.

Fifthly, we regard ourselves as an ingenious, industrious, inventive, forward-looking industrial power. In this respect, we are, of course, to some degree a trade rival of the United States, just as we are of the other great industrial powers. We do feel, however, a certain lack of logic in our being told in one breath that, because we are so riddled with Socialism, so idle, so reactionary in our outlook, that we are no longer a competitive element in world markets and, at the same time, to be told that we are such a serious and such a successful competitor of American industry (in such matters as turbines or motorcars, for example) that there is every justification for protectionist devices in the United States in order, apparently, to compete with the commercial threat from Britain. It is difficult to have it both ways. We do not feel ourselves that this commercial rivalry need be anything but healthy. The world, surely, is large enough for us both. It does seem to offer a golden opportunity for developing mutual trade and improving our capabilities for trading with the rest of the world.

Next, getting back again to political theory, we regard British democracy as a lively, reasonably efficient, and highly adaptable system of government and structure of the state. I don't mean by that simply that our parliamentary institutions were able to function unmodified throughout the war and, in particular, throughout the Battle of Britain. I mean more, that our parliamentary institutions have successfully introduced, put through, what amounts to a social revolution in Britain during and after the war. You must remember that, while you, we, and others, may say a lot about Britain being a Socialist welfare state, you've got to remember that a great deal of this is not an issue of party politics at all. The National Health Service, for example, was worked out not by a Labor Government, but by Winston Churchill's wartime coalition government; and while, of course, it is not perfect and

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it has its critics, as I have said, by far the greater part of the British people today would not wish to see it abolished or drastically modified. Certainly our society, basically a capitalist society, has evolved and continues to evolve in response to changing demands and changing social patterns. It is not hidebound. In particular there has been a great widening of the frontiers of opportunity for the young people in England. And that is all as it should be. This in turn has brought certain frustrations with it, which is inevitable and not necessarily unhealthy. But we reckon that this widening of opportunity, and breaking down of many of the old class barriers has been achieved without, apparently, destroying British inventiveness or adventurousness. At any rate, we sincerely hope not.

And finally, we regard ourselves as a country which sees its future inextricably tied up with that of the United States. By this I don't mean only that our material or defense interests happen to coincide at the moment. I mean that we feel--and we hope you do--that our future security and prosperity lies through developing the closest ties in an Atlantic community, and particularly between Britain and the United States. Now, I know that there exists a certain, very well and thoroughly publicized, trend of anti-American sentiment in Britain at the present time. Indeed, I am being constantly asked about this. I would say, however, that I do hope nobody takes this tragically or even particularly seriously. What is important, is to realize that the Prime Minister, who, after all, is a pretty experienced politician, has staked the political future of the Conservative Party on the doctrine of interdependence, and that the leader of the opposition has always made clear the vital importance he attaches to the U.S. connection. I cannot imagine that they would have done that without the backing--possibly the tacit, and not particularly vocal backing--of the majority of the British people. But I personally, having considered the defense, economic, political, cold war aspects of the interplay of British and American interests, keep on coming back, in the end to what I might call the basic ideology, the underlying philosophy which animates your history and ours. I think there are many lessons from history to show just how deep this goes and how fundamental it is. It may, therefore, be appropriate if I conclude with a small historical quotation from a somewhat improbable source. I found this in the *Arkansas Gazette*, Volume 1, Number 1, dated November 20, 1819. I think that it fairly sums up the British attitude towards the United States today: a relationship of two powerful partners, neither of whom wants to trample on the other, but tied, among other bonds, by that of mutual respect. Apparently, in 1819, there was a motion in the House of Commons to confer some honor or decoration upon an American citizen for unspecified services rendered in India. The great Mr. Wilberforce spoke on this motion, and, according to the *Arkansas Gazette*, this is what the report said:

"Mr. Wilberforce, who brought forward the resolution, stated that it was very desirable to show the United States by the proceedings of the British House of Commons that they do not consider them with any unfriendly feeling, or entertain towards them any prejudices incompatible with the full performance of justice."

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# SOME AMERICAN IMPRESSIONS OF ENGLAND

Carlos H. Baker

Since it is my happy lot to be a teacher of English literature in the United States, I should like to begin with an allusion to two of England's best-known writers: Geoffrey Chaucer and Matthew Arnold. And in particular to Arnold's judgment on the works of Chaucer that they lacked high seriousness. I have always disagreed with Arnold on this score because it is my opinion that Chaucer indeed had high seriousness—he merely sought to convey what he had to say to his readers in pleasant and palatable form. I should like to take the spirit of Chaucer as a kind of text under which to say what I have to say—which is ultimately serious, if not always highly so.

Perhaps the following remarks represent a kind of serious-comic interlude in the weighty program on which we are now engaged. If they are pertinent at all, it is not under the rubric of economics or defense, but rather under that of foreign policy, or more especially, certain cultural aspects of English foreign policy towards the United States. My concern will be to put forward a few observations about the English view of America, gathered during a professional lifetime of teaching English literature, and during a year lately spent in England.

My theme is simple, and falls into two parts. The first part is that the English people are among the finest in the world—very likely the finest. They display qualities of courage, indomitability, endurance, firmness in the defense of human rights, a stoic sense of duty, continuance of respect for quality in the face of worldwide cheapening influences, and the maintenance of a standard of living well summed up in the old phrase about "plain living and high thinking." This last seems to me to be partly a matter of economics, partly a matter of ethics. It is as if the prevailing opinion among Englishmen were, as I have no doubt it is, that the cultural standards of Athens can best be maintained by a rather stubborn adherence to the domestic economy of Sparta. BUT, and I come now to the second part of my theme, most English people neither know nor care much more about the United States than Job's turkey knew or cared about the intricacies of Hebrew participial construction.

Anglophilia, though by no means universal among the people of my country, is far stronger in the United States than love of America in England. I suspect that, educated person for educated person, Americans know more about England than person for person the English know about America. One meets a quite astonishing number of Englishmen who are not entirely certain whether or not Chicago is an eastern coastal city, whether or not the Mississippi River empties into Puget Sound, and whether Mexico is or is not part of the Union. The recent accession of Alaska and Hawaii to statehood status will no doubt be troublesome to Englishmen for some generations to come.

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The late Hugh Gibson, American Foreign Service officer, and onetime United States Ambassador to Belgium and Switzerland, used to tell a story about an Englishman and an American who fell into conversation in a British Railways first-class compartment. After a time the Englishman asked--and this is a most unlikely aspect of the story--why it was that Americans so disliked the English. "We don't," said the American, "but if we did, it would be because your boys burned Washington." The Englishman looked amazed. "Burned Washington?" said he. "Burned Washington? No, no. I'll give you Joan of Arc, but not George Washington."

No doubt this story could be matched from the British side of the Atlantic four or five times over. The ineffable politeness of the English keeps them from telling such stories to visiting Americans like me. But one is sure that they circulate in senior common rooms, or indeed wherever two or three Englishmen are gathered together.

In this context, I was struck by a remark of C. P. Snow's--the eminent and admirable British novelist whose works have had a deservedly wide circulation in the United States. "After all the debating points have been made on both sides," said Sir Charles, "I doubt whether the two cultures are YET anything like completely separable." I call your attention to the considerable caution of Sir Charles' sentence, which I personally find quite amusing. And you in turn may be amused if now I turn for a few minutes to some of the "debating points" on both sides.

Although the British attitude towards the United States has been held to be more favorable than to any other nation outside the Commonwealth, only about one in every two native-born Englishmen has ever met an American. The chances, moreover, are very good that he thought the one he met was brash, boastful, cold, proud, or wasteful. To many an Englishman, it seems to me, wastefulness is the most striking, and strikingly immoral, fact about America. I recall an occasion in an Oxford stationer's shop when an Englishman and his wife came in to buy for the wife a new fountain-pen. The husband was extraordinarily pertinacious in wishing to see every item in the way of pens that the stationer had to offer. He examined each with care, tested it, wrote with it, inquired about the internal mechanism, and so on. This required some ten minutes. At last the stationer said, "Perhaps you would like one of these--they're extremely popular in America, and of course they're made there." "That's a bad start," said the customer, loudly. What I did not recognize until some time later was the reason for the Englishman's remark. It was not meant gratuitously. It was meant as a protest against American wastefulness--specifically the American economic doctrine of planned obsolescence in which a mechanism is designed to break down at or near the end of the period for which it is guaranteed. This doctrine had struck this Englishman, as indeed it strikes many Americans, as a highly immoral one. Being myself the owner of a whole drawerful of obsolescent ball-point pens, I could not have agreed more.

The economic motif underlies the fountain-pen story. The same motif is visible in another factor of cultural interchange. In the period 1945-1957, only about 470,000 British visitors came to these shores, less than one per cent of the total population. In the same period roughly 350,000 Americans visited England every year, nearly as many annually as the entire British total in twelve years' time. One great

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hope for the promotion of better intercultural understanding would be more extended visits by English people to the United States, and of course in far greater numbers than heretofore. There might indeed be a good deal of wisdom in modifying the Fulbright fellowships and visiting professorships into reverse Fulbrights, which would bring the English to America rather than bringing Americans to England. I shall return to this point presently.

Meantime I should like to resume the "debating points" discussion. A frequent English complaint has to do with the "promiscuous gregariousness" of Americans. Along with this goes a certain horror about what the English call our "lack of constituted privacy." While I was in England, an English don paid a first visit to the United States and was horror-stricken to learn that we actually erect houses side by side without walls or fences between them. He even took a snapshot to prove the truth of this astonishing discovery, and it was published along with his article in *The Listen-er*. When one looked at the photograph, there was indeed neither wall nor fence, but simply two houses with rather scrubby--and slightly overlapping--lawns. To the Amer-ican, on the other hand, the fences and walls of England seem designed to exclude, as indeed they often are. They are high, they are often topped with broken glass or sharp iron spikes, and not infrequently the gates that perforate them are locked from within. "But of course," says the Englishman in astonishment, "a man's home is his castle, isn't it?" To which the American reply is that some are more like castles than others, and that the degree of exclusiveness sometimes practiced in England is rather more than the occasion would strictly warrant. During a year in Oxford I reread Thomas Hardy's *Jude the Obscure*, which not unjustly lodges some complaints against this English attitude. I found the rereading an illuminating experience in a city-full of walls.

This leads to the matter of snobbery, another set of debating-points. Mr. W. H. Auden distinguishes what he calls democratic snobbery from aristocratic snobbery. He has held that democratic snobbery is the uglier of the two because the "included are relatively so many and the excluded relatively so few." He cites the case of the Baron de Charlus, whose exclusiveness he finds not only forgivable but even charming. For if the Baron will speak to only half a dozen people, it cannot be supposed that the millions suffer severely from being unable to speak to the Baron. On the other hand, says Auden, the exclusiveness of the American Country Club, since it purports to be democratic, is actually inexcusable. If it excludes Jews, for instance, it immediately involves itself in a contradiction for which dishonest ration-alizations must be invented.

Auden's point is well-taken. Yet the average American is likely to be rather unpleasantly shocked the first time he hears an English servant at table address-ing a member of the British aristocracy as "milord." (This, by the way, used to bother our great philosopher-poet Ralph Waldo Emerson as long ago as 1833.) The continuing British fostering of a servant class appears to be yielding somewhat. At any rate the English think so. But among many people in England what may be called "servant mentality" still prevails, and the American finds this as hard to take as he finds "demo-cratic snobbery" hard to explain to his English brethren in any class.

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Even the weather constitutes a debating point. There is a widespread belief among the English that all the bad weather comes straight across the Atlantic from the United States. But of course all "fine" days are thought to be strictly a native product, like British ale. The British visitor complains that our weather in America runs to extremes: it is always too hot, too cold, too wet, or too dry--to say nothing of the insects, the snakes, and the poison ivy. The American visitor to England soon tires of hearing about the much-touted evenness of the British climate. It reminds him of the man who boasted that his wife was a very even-tempered worman--mad all the time.

Then, as we play here with debating points, there is the joke about size. It is one of those continuing intercultural jokes, dating back at least a hundred years. Since we have bred Niagara Falls, Walt Whitman, and skyscrapers, the joke is not without some justice. I recall a page in the *Sunday Times* while I was in England which displayed side by side two pictures of motor cars. One was a neat little British car, all shipshape, small, economical, and clean of line; the other was a gigantic American four-door sedan, painted like a circus wagon, and flourishing fins not unlike the flukes of a whale. The two pictures were identified by nationalities, but without other capions. Many an Englishman chuckled that Sunday at this good old joke in steel clothing.

Another instance is personal, and arose in a queue in a butcher shop. The butcher had known many Yanks during the Second World War, and we got on very well. Since the queue was short, we had a little conversation about the differences of nomenclature for the parts of beef-cattle as between our two countries. Seeing that I was holding up the line, I ended the discussion by saying something like "no matter what the names of the cuts may be, it's still the same animal." The man behind me immediately said with a grin, in which there was ever so slight a mixture of a leer, "Yes, but of course your cattle are bigger." Loud laughter in the butcher shop.

But let us leave these debating points, which are most of them not very serious, and return to what I think is the central problem: the astonishing ignorance on the part of most Englishmen of what America is really like. This was a matter into which I looked with some care during my stay in England. For I was lecturing to Oxford students on American poetry and prose, and I discovered that in general they lacked incentive, they lacked many necessary books despite the riches of Bodley, and of course supremely they lacked interest in a subject in which they were not going to be examined. They neither knew nor cared much about American literature, an opinion which I discovered reflected the opinion of many of the dons. Oxford, if I may say so, showed a remarkable degree of provincialism in this respect. In fact, the so-called "provincial universities" like Notts, Leeds, and especially Manchester, were in fact far less provincial in this way than Oxford and Cambridge.

Oxford is better off for books than the other places, for they automatically receive copies of American books which happen to be published in English editions. But to say that they are owned is not to say that they are used. The fledgling American Studies programs at the red-brick universities must function in many instances with minimal holdings in American books, and in some few cases I was given to understand

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that almost their entire holdings in American books were those presented to them by the United States Information Service in London.

The visitor to England for cultural purposes is struck by the lack of a spirit of reciprocity in cultural exchange on the intellectual plane. Any American university library is far better equipped with English literature than any English university library with American literature. This is true even after one has made allowance for the much shorter time--say 150 years as over against 1500 years--in which American national literature has been produced. And the lack is evident not only in literature, but also in American history, art, music, sculpture, architecture, and even (though perhaps to a lesser degree) in economics and government. One example will serve. The Harmsworth Professor of History at Oxford, an annual importee, teaches a course in the American Civil War, an event in American history which, out of all other events, has received the official Oxford imprimatur as something of continuing interest. The visiting professor also gives an optional course of his own choice. But the examinations permit only discussion of the Civil War. The professor's other choice tends to go begging.

I have no intention of brandishing statistics like Excalibur. But out of many examples, one might choose the arrangements that prevail in the General Certificate Examinations for the northern tier of red-brick universities, where American studies are demonstrably most active: Manchester, Leeds, Liverpool, Sheffield, Nottingham, and Birmingham. Under their Joint Matriculation Board in the last year for which I have figures, only ten candidates out of 3500 took American History at the Advanced Level, while at the ordinary level only 130 out of 26,000 took American history. As for the secondary schools, a recent estimate by a professor at the University of London concluded that only 14 per cent of the whole secondary school population makes any significant study of American history while at school, and this is very likely an over-estimate rather than the reverse.

As one might guess on the basis of these figures, I found very little evidence of a profound and searching interest in American history in England. In this connection I should like to examine briefly a remark lately made by Professor H. C. Allen of the University of London. "It is no longer true," said he, "as it once was, that for a young university teacher in this country to embrace the study of American history is a kind of academic kiss of death." And he added: "There are some genuine difficulties in the way of research on the subject by young British historians, but they have on occasion been exaggerated and they are yielding before such things as microfilm and above all the spread of facilities for travel-study in the United States."

The obvious comment on Professor Allen's observation is that it is odd indeed that the pursuit of American studies by young dons should ever have been a kiss of death operation. It is certainly true that any young don who must depend on microfilms to do serious study of American culture will shortly wish that death had kissed him before he began. The answer to the problem to me is very clear indeed. It is nothing less than the considerable extension of travel-study arrangements by which English scholars can come over to the United States for lengthy visits. The only qualification I know of is the fear, among a few of the younger men, that if they

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left home for this sort of thing for very long, their academic preferment there might be usurped by other more domesticated people.

The picture, in short, is relatively dark, though it may be the classic case of darkness before some kind of dawn. The prevailing ignorance of American culture in England can be overcome only by bottom-to-top instruction at the age levels where it counts most--and in the schoolrooms, lecture-halls, tutorial conferences, and libraries both public and institutional of the United Kingdom.

The present-day visitor to England can see two rays of hope. The first of these is the British Association for American Studies, founded in 1955, with the aim of encouraging study and research in American history, institutions, literature, and (I am happy to say) geography. The current membership is something like 125, lately increased by 40 new men at a conference held in Oxford this past winter. Under its general aegis, and with the assistance of the United States Information Service in London, a professorial chair has been endowed for Leeds, and there is a possibility of another at Kings College, London. The second ray emanates from the Council of the Hansard Society for Parliamentary Government, which in 1956 wisely established an American section, charged with promoting knowledge of the American system of government in the secondary schools of the United Kingdom.

By way of conclusion to these remarks, it may be guessed that the acquisition of knowledge of American culture by the English is likely to be a long, slow, conservative process. In the past few years, a certain mild infection seems to have been introduced into the British bloodstream. But one is reasonably sure that British culture is assiduously developing antibodies to fight the invader.

The American novelist William Faulkner offers a humorous account of the British attitude towards invasion with which I will close. He supposes that an enemy force has invaded England and that the natives turn out to repulse it. The officers, says Faulkner, get out in front, armed with walking-sticks, and say to their followers: "Come along, lads. That seems to be the enemy yonder and there appear to be a goodish number of them but I daresay not too many." And then walk on to engage the invaders.

The American who wonders, not how he could conquer England, for he is no more interested in conquering England than the English are in being conquered--but the American who wonders how he could possible help the English to pay a little more attention to American culture of the better sort--he, I say, may sometimes feel that he is facing that indomitable island nation who come out with walking-sticks and say, in effect: "Come along, lads. That seems to American culture yonder and it looks fairly sizeable and complex, but I daresay not too large and complex for us to resist successfully, as we have been doing now for a goodish number of years."

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BRITAIN'S ECONOMY TODAY

Geoffrey M. Wilson

I am glad to be able to report that the British economy is in good shape. As evidence of this, I can cite three main developments--first, our decision at the end of last year in conjunction with several of our European partners, to make sterling fully convertible on external account and the strength of sterling in the exchange markets since then. Second, the rising trend in the gold and dollar reserves of the Sterling Area; apart from two months in which we made substantial debt repayments, they have risen in every month since September 1957, and now stand at $3,250 millions. And third, the fact that in last month's Budget the Chancellor was able to reduce taxation by $825 millions.

Of these three developments, two are primarily in the external field. That reflects a very fundamental fact about our economy: the extent to which our domestic policies and fortunes are bound up with the health of sterling and the operations of the Sterling Area. There is a tremendous literature on this subject, not least on this side of the Atlantic, but the essential elements can be stated in a few simple propositions.

First it is estimated that rather more than 40 per cent of all international trade in the world today is financed in sterling. This means that all countries hold sizable trading balances in London. Second, sterling holdings in London constitute the main foreign exchange reserves for some 700 million people--indeed, sterling is a reserve currency second only in importance to the dollar.

Third, we are investing abroad at a rate of 500-600 million dollars a year--perhaps a slightly higher rate compared to our national income than is represented by U.S. investment abroad.

It follows that Britain's domestic economy and the strength and stability of sterling cannot be considered in isolation from each other.

In what follows I shall try to elaborate on these propositions. But first it may be useful to give you a thumb-nail sketch of the sterling system.

Perhaps the main point to stress is the organic and voluntary character of the Sterling Area. There is no legal definition of it; no one has ever been coerced into joining or prevented from leaving it--nor could they ever be. The payments restrictions which have been associated with the Sterling Area during and since the war are accidental to its nature and have already proved in large measure to be temporary. The sterling system grew up imperceptibly and almost accidentally during the nineteenth and twentieth centuries as an informal association of countries--in particular,

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many under-developed countries of the British Empire as it then was--who found it con-
venient to trade in sterling and therefore to hold their reserves in London, who looked
to London for investment capital, and some of whom took the British pound as a statutory
base in order to overcome the difficulties in establishing a sound currency of their own.
In those days, of course, sterling was always freely convertible into gold, and up to
1939 there was no element of restriction or discrimination in the system at all.

In 1931, the United Kingdom abandoned the gold standard. This event
helped to crystallize the idea of the Sterling Area because immediately, or soon after-
wards, a wide group of countries, including all the Commonwealth countries except
Canada, pegged their own currencies on sterling, though some continued to maintain
substantial reserves in gold, and all were entirely free to acquire it against sterling.

When the Second World War came in 1939, by mutual consent the gold
reserves of the independent members of the Sterling Area were pooled, and members
agreed to limit their drawings to the minimum necessary for the prosecution of the war.
Exchange controls were instituted in the United Kingdom and by other Sterling Area
countries. I should like to emphasize that each country set up its own exchange con-
trol system and administered it itself. At no time was there any restriction imposed by
the United Kingdom on transactions between the United Kingdom and the rest of the
Sterling Area.

Similarly, the war had an enormous effect on the position of sterling.
In spite of the vast and generous assistance of the United States, the United Kingdom,
in order to prosecute the war effectively, had not only to sell about half her overseas
investments but also was forced to obtain very large amounts of goods and material on
credit from all over the world. The effect of this was, in plain terms, that we got
very heavily into debt. Before the war our liquid assets just about covered our liabil-
ities; in 1945 after we had run up war debts with most countries in the world, our
liabilities were between five and six times as large as our liquid assets--the gold and
dollar reserves of the Sterling Area. The existence of these heavy liabilities, the
sterling balances as they are called, has been a crucial factor in our postwar econ-
omic history, and one of the main limitations on our freedom of action in our purely
domestic economic affairs. There was too much sterling in the world and not enough
demand for it, just as there were too few dollars and too much demand for them.

Our first task after the war was to remedy this extremely unpromising
situation, and after 14 years we have achieved a considerable measure of success.
Thanks in great measure to the very generous aid and overseas investment from the
United States, we were enabled to weather the very difficult years immediately after
the war. Our economic expansion and our export drive have meant first that a good
part of the sterling could be paid off; and second, because of the increase in trade
many countries are now glad to hold sterling balances which in the immediate post-
war years might have seemed larger than they would ever need. As a result our
liabilities are now only three to four times our assets--a ratio which is still high, of
course, but one which we can live with so long as, taking the world as a whole,
there is no great desire for our creditors to liquidate them.

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I should like here to emphasize an important point about these balances. It is sometimes thought that they are tied to purchases in Britain or the Sterling Area. This is not so and never has been. They can be, and are, used for purchases in any part of the world at the sole discretion of the country making the purchase. Thus, India, for instance, has run down her balances by no less than $1150 millions over the last three years, and this sterling has been used to make purchases in Germany, Japan and this country, as well as in Britain. Indeed, the availability and use of these balances has played a large part in the last two years in maintaining the flow of international trade.

The fact that so many countries are dependent on sterling and hold most of their reserves in our currency makes it clear that we in the United Kingdom have a particular responsibility to maintain its stability. This responsibility is fully and publicly recognized by the leaders of both the major political parties in the United Kingdom.

My object in recapitulating these essential features of sterling and the Sterling Area is to bring out a fact which is not always fully understood in this country. In addition to our own domestic affairs, Britain is also an investor on a large scale, the banker for a large part of the world, and the custodian of the currency which finances nearly half the world's international trade. The interaction, and sometimes the competing claims, of our domestic needs and our obligations as banker and investor has been the main economic preoccupation of all British governments since the war. But it is agreed policy among all parties that our ability to make a positive contribution to world economic affairs depends in particular upon the maintenance of the internal and external value of sterling.

Much of this is, of course, also true of the dollar which is even more widely held as a reserve currency than sterling. But there is a tremendous difference in degree. Two sets of figures will illustrate this point. Foreign imports are equal to 15 per cent of our gross national product. They are only three per cent of yours. The sterling area reserves cover 3.5 months imports. Your reserves cover 19 months imports. Finally, the narrow margin on which we have been operating is also shown by the fact that sterling, which finances 40 per cent of world trade, is backed by no more than 5 per cent of the world's gold reserves.

The events of the autumn of 1957 illustrate the risks to which we can be exposed by the widespread holding and use of sterling, and the policies to which we are now committed. Our prices were not out of line and our balance of payments was healthy--indeed we had a surplus of $750 millions for the year as a whole. But confidence is a tender plant, and misgivings at home and abroad about our domestic policies, coupled with a wave of speculation first against the French franc and in favor of the German mark, and then against sterling, resulted in our carefully built-up reserves falling by $530 millions in three months. Devaluation would have been disastrous to us as well as to world trade. However, not only did we not devalue, but we imposed no import or exchange controls. By raising our bank rate to seven per cent, and taking strict measures internally to control expenditure and credit, we put the world on notice that we had no intention of taking any easy way out of our difficulties and that we were determined to strengthen, not weaken, the value of

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sterling. The results have been gratifying. We have literally gone from strength to strength. The reserves have risen in almost every month since then; we have achieved (partly, it is true, as a result of lower prices for food and raw materials) a very substantial surplus on our balance of payments; we were able to announce at Montreal last autumn some further removal of discriminations against dollar goods; we have, with our European allies moved a step closer to complete convertibility.

These events drove home two morals which I do not think we are likely to forget in a hurry: first, the need to pursue domestic policies which warrant confidence at home and abroad; and second, the need to build up, or at least have access to, reserves adequate to ride out the crises of confidence which are bound to occur from time to time.

At the cost of some over-simplification, I should say that we have been dealing with three major problems during recent years. The first has been to fit the British economy to stand in the modern world without artificial supports and constraints. These were necessary under the war-time regime, but subsequently became increasingly irksome, distorting, and most important, ineffective.

The second has been to promote a great increase in the proportion of our national resources saved and devoted to investment, so that we should be able to hold our own in the world and achieve the economic growth which is our objective.

The third has been to reconcile the maintenance of high and stable levels of employment with a sound balance of payments and price stability. All these things--a high rate of investment, a sound balance of payments and price stability--are essential conditions for full employment in the long run.

How have we got on? The process of freeing the economy from war-time controls and constraints is now virtually complete. Price control and all the general consumer subsidies have gone. Particular demands are no longer swollen by charging people less for things than they really cost. The market is free to do the job which it alone can do quickly and efficiently of making the finer adjustments between supply and demand. People can spend their money at home as they wish without bureaucratic supervision or direction.

Externally, the pound is standing firm on its feet, after the removal of most of the controls which had been necessary since the end of the war. Sterling is again in a position to play to the full its immensely important role as a reserve currency for the world. By the progressive removal of trade restrictions we have shown that we in the United Kingdom are ready to pursue the policies which all countries need to follow if we are to have expanding world trade. It is a matter of common agreement among all parties in Britain that expanding world trade is the indispensable condition both for our own economic growth and for that of the free world as a whole.

The share of fixed investment in our national production has been rising steadily ever since 1952. In the year just ended, investment of all kinds took just 20 per cent of our gross national product compared with 16 per cent eight years ago.

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It is interesting to recall that the share taken on average between 1900 and the outbreak of the last war was probably not more than about 12 per cent. This shows how great is the change which has been brought about in the proportion of our resources devoted to investment. Another good thing is that this increased investment has included a massive effort of overseas investment, nearly the whole of which has been in the Commonwealth. This is nothing new for us, of course. We have been an international investor for just about as long as we have been an international trader and international banker. But in the early years of postwar reconstruction, we naturally could not spare much capital for overseas. However, in recent years, our long-term investment has been averaging some $500 millions a year; and last year it reached nearly $700 millions, or over one per cent of our national product.

The problem of reconciling price stability with expansion still persists, as indeed it does with virtually every other democratic country. I suppose that this is one of the most important and intractable economic problems with which the modern world is faced. There is no simple and single solution which can be introduced overnight by a decision of Government. Nevertheless, a greater degree of price stability exists in the United Kingdom today than at any time since 1945. Wage rates rose less in 1958 than in either 1957 or 1956. It remains to be seen how we shall fare on this in 1959. But internal prices rose by only two per cent--less than half the average for 1948 to 1956. This rise was due almost entirely to higher food prices which were effected by the weather, and higher rents which were a foreseen consequence of an important measure of rent decontrol. It did not reflect any general inflationary pressure.

This relative price stability is of course in part due to the fall in the price of primary products which has also been largely responsible for our exceptionally favorable balance of payments in 1958. But it is not wholly accidental. From mid-1955 to mid-1958, the growth of home demand was deliberately restrained by a variety of measures in order to check the rise in prices, to cut down imports and encourage exports and so safeguard the country's external financial position.

We paid a heavy price for this. Industrial production as a whole was virtually stagnant for three years, though there were significant changes within the total. And unemployment rose. But investment was maintained, with the result that there is now a substantial reservoir of unused capacity and labor.

So much for what we have tried to do during recent years and the position which we have now reached. But you will no doubt expect me to look into the crystal ball and say something about what we expect to happen during the coming year. I am less diffident about doing this than I should otherwise be since I can draw on what the Chancellor of the Exchequer said a month ago when he introduced the budget.

First on the domestic side. Here the outlook is dominated by the fact that we have at present some unemployed manpower and a good deal of under-employed capital equipment, both of which could now be employed productively if the demand were there. We have not yet reaped the full benefit which we should, and shall, derive from the massive industrial investment of the last four years. The

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physical possibilities therefore now exist for an appreciable increase in production above
its present level.

Various measures have in fact been taken during the last six months to stimulate consumption and, through this, production. They have had some effect, but the Chancellor decided, with a remarkably wide measure of public support that the time was ripe for some further stimulus. This is the purpose of the tax reductions which seem to have aroused a good deal of comment in this country. They will provide a substantial stimulus to consumption just at the time when the effects of earlier measures, such as the removal of restrictions on consumer credit, will be wearing off. However, a fair proportion of the income tax reduction is likely to be saved and used for investment in the private sector, which has shown signs of sagging. Special incentives for investment were also included in the Budget.

But there is no question of our simply going on a grand spree. As I said earlier, in our determination to eradicate the virus of inflation we prescribed for ourselves three years of, if not bed-rest, at least strict convalescence. Now with prices stable and substantial excess capacity, the time has come to get up and walk.

But is this expansion likely to endanger either our balance of payments or our hard-won price stability?

Well, of course, a recovery in demand and production at home is bound to mean more imports. And since a lot of our major markets, especially in the overseas Sterling Area, are still in difficulties as a result of the decline in the prices of their products, we cannot expect any immediate expansion in our exports. As a result we expect our balance of payments surplus this year will be a good deal smaller than it was last year. But there should still be a respectable surplus, sufficient to cover our investments abroad. There is also likely to be a larger outflow of Government capital than in recent years, partly as a result of decisions we took last September to help still further the less developed countries of the Commonwealth.

The main point is that we believe that we in Britain have our own contribution to make to the re-expansion of the world economy. If each nation were to pursue too cautious a policy in regard to its balance of payments, international trade would stagnate. On the other hand, if as we expect there is renewed growth in production and trade throughout the world, we can hope to benefit from it fairly soon in a stronger demand for our exports.

Of course, the danger of a resurgence of the wage-price spiral cannot be ruled out. We cannot claim yet that we fully understand inflation or how to cure it. I doubt if anybody does. But there seem to be grounds for hoping that we may now be able to keep it under control. We have now had, as I have said, a substantial period of near price stability, so that one justification of wage increases in recent years--that they are necessary to restore to their recipients their previous real income--no longer exists. Moreover, the present under-employment of both equipment and manpower should mean that we are able to achieve increases in labor productivity which could more than offset moderate wage increases. Thus the position looks promising

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and though there are risks--there always are, in one direction or the other--they seem worth taking, for the risks in further stagnation seem greater. But if things should go wrong, and inflation should develop at home or our payments position should deteriorate abroad, we shall without hesitation take immediate and strict measures to cope with the situation. I think our recent record justifies confidence in our determination and ability to succeed in this.

So much for the immediate outlook. Before concluding, however, I should like to look for a moment rather further ahead, though only to raise questions rather than give any predictions. At home our long-term economic aims are simply enough stated, and are shared I imagine by every country in the world: they are to promote the maximum steady growth of prosperity and high employment for all our people compatible with stable prices and our obligations abroad. It is these overseas obligations, as we conceive them to be, which make our external economic policy more complicated, and more challenging too, particularly as it seems likely that the situation will be increasingly dominated by the political, moral and economic problem of developing the vast under-developed areas in the world. This is likely to mean in practice that now we are at last on our feet again. We shall be working increasingly closely as a partner with the United States in trying to bring about similar results for others elsewhere in the world.

One might sketch our possible lines of development in terms of our three traditional roles--international investor, international banker, and international trader--and one relatively new role: provider of foreign aid.

Since the war we have disbursed some $5.5 billions in grants and loans to other countries. This is small, of course, in relation to your aid programs, but our economy is only about one-seventh the size of yours, and for much of the postwar period we were in bad shape ourselves. We are stepping up our bilateral aid abroad, and are keenly interested in the ideas that have been put forward for a multilateral International Development Association.

As an international investor our role is growing as our wealth and savings grow. For many reasons our own private investment has been concentrated in the Sterling Area where we have provided 70 per cent of the foreign capital since the war, and it will probably continue to be concentrated there.

As an international banker we have, as I outlined, been very concerned to build up sterling once more to a valued and widespread trading and reserve currency. This we shall continue to do. We also welcomed the U.S. suggestion that the reserves of the International Monetary Fund should be increased by 50 per cent, and have strongly supported this move, despite the fact that it will probably cost us some $200 millions this year and probably mean a fall in our reserves despite a surplus on our balance of payments. But our own gold and dollars are only our first-line reserves. The increased quotas of the I.M.F. will mean a much greater increase in the second-line reserves of ourselves and of most other countries in the world.

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Finally, I come to our position as an international trader. This is the job we have done longest and the one which will prove the most crucial--to ourselves and the rest of the world--in the long run. In the days when we were receiving massive aid from you after the war, our ambitions were summed up in the slogan "Trade not Aid." Others are now in this position. It seems to me that however generous and far-sighted the aid and investment programs of the free world become, they must still fall far short of the possibilities of expanding trade. Perhaps it is already time to consider our next objective--what kind of commercial policy you and we and the rest of the free world will have to pursue so that those countries at present in need of aid may increasingly be able to earn a decent livelihood by trade. This seems to me to be one of our major tasks for at least a generation ahead, and we are in better shape than we have been for a long time to play our full part in it.

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BRITAIN'S FOREIGN COMMITMENTS

Geoffrey L. Goodwin

"If all secrets were known," Sir Edward Grey wrote, "it would probably be found that British Foreign Ministers have been guided by what seemed to them to be the immediate interest of this country without making elaborate calculations for the future." This suspicion of 'large conceptions or great schemes', to use Grey's phrase, or of general a priori principles as a guide to foreign policy decisions is one constantly reiterated by British statesmen. In this vein is Sir Austen Chamberlain's much quoted conviction that "the true line of progress is to proceed from the particular to the general"; or Mr. Churchill's and Mr. Bevin's preoccupation with the immediate and concrete problems of European recovery and security rather than with the United Nations blueprint for the future. So empirical an approach may have its weaknesses by encouraging facile opportunism or a tendency merely to wait upon events. "English policy," said Lord Salibury in a moment of exasperation, "is to float lazily downstream, occasionally putting our a boat-hook to avoid collision." And, of course, the ability to play a relatively 'free hand' upon which this empiricism was predicated has by now greatly diminished. But the tradition is still not without its influence, as is witnessed in, for instance, Mr. Macmillan's advocacy of the 'step by step' approach to European problems, in his view that an ultimate settlement is most likely to be reached through a succession of comparatively minor agreements hammered out during a continuing series of negotiations. Generalizations about the ends of British diplomacy need to be treated with special caution therefore. This is particularly the case as we approach the present. Not only are very recent events usually too close to be seen in their historical perspective, but we may the more easily fall into the trap of allowing hindsight to read a logic and coherence--a 'grand design'--into policies which in reality may have been little more than tentative gropings to meet bewilderingly complex situations.

Nevertheless, having once uttered these warnings--and stressed the highly impressionistic and greatly over-simplified nature of what I have to say--a brief prospectus of what seem to me to be some of the major features of British diplomacy in the last decade or so may contribute to our discussions later this afternoon, if only by provoking dissent; and it may also help to place in context that more rigorous analysis of problems of economic aid, of the Middle East, and of Britain's relations with Europe, with which Mr. Donelan is to follow.

Four preliminary remarks may be in order. First, a word about the present temper of public discussion in Britain on foreign policy. This is not easy to gauge, yet one fact is striking, that is the near uniformity of outlook amongst what might be called the articulate policy-influencing segment of public opinion. Instead of the deep and persistent cleavage of the inter-war period between the so-called 'realists' and 'idealists' on such issues as disarmament and collective security, most

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people in Britain today have very much the same mental picture of the world and of Britain's place in it. The very intractability of the cold war and the narrowing of Britain's own range of choice and freedom of maneuver must be accounted mainly responsible for this new-found accord. And the heated debates over the Suez debacle and the fairly sharp differences of approach to proposals for disengagement are a warning that there are still issues which can divide the nation. Yet the experiences of the past as well as the pressures of the present have led the Left (apart from some habitual 'Dissenters') to shed much of its susceptibility to political panaceas on the international level and to embrace in large measure the traditional realism of the Right. One result is that both Right and Left now share a common predilection, in an atomic age, for those maxims which, as Herbert Butterfield once put it, "accept the fact of human conflict but seek to prevent conflict from overturning the whole civilized order of things."

The vivid awareness that a full-scale nuclear conflict would do precisely this for victor and vanquished alike, is an effective brake on that crusading zeal which, in the pre-Sputnik era, was occasionally found in this country. Another reason for its absence is, I think,--though this is more controversial--the inclination to attribute the present international deadlock more to the conflict of power than to the clash of ideologies, to fasten on the conflict of interests rather than on the peculiar wickedness--or obscurantism--of the other side. Is it in fact altogether irresponsible to suggest that the present stalemate over Germany might well not be very different, given the existing configuration of power relationships in Europe and in the world at large, even if the West did not have to deal with the Soviet oligarchy, but with, say, a democratized Tsardom--or a modern Alexander I? Possibly this is to underestimate the expansionist logic of totalitarian despotism, a common delusion in the 1930's; possibly it also reflects a certain blindness both to the potency of the ideological weapon in an era of popular diplomacy and to the strength of the messianic urge to fashion the world in the image of the proletariat. Yet an obsession with the ideological divide may foster the even more costly delusion that Soviet policy is motivated exclusively by ambitions in which anxiety about Western intentions plays no part; 'a situation of Hobbesian fear cannot...but be aggravated by the heat of moral indignation.'

The second comment is connected. When hopes of preserving world peace through a harmonious concert of Great Powers had to be abandoned and Britain turned again to a balance of power policy, there was virtually no question of her reverting to her traditional role of the 'balancer', 'throwing her weight now in this scale, now in that'--an idea which, incidentally, still has its adherents among the proponents of European unity. But Britain's firm commitment to the Western scales of the new world balance in no way detracts, in the British view, from the urgent need to attain a *modus vivendi* between the Western and the Communist worlds not based solely--or almost solely--on a 'Balance of Terror.' 'Brinkmanship' has a part, and an important part, in a policy of 'negotiation from strength'; but it is still only a part, not the whole. The inherently competitive nature of a two-sided balance (as each side seeks to diminish its sense of insecurity and to strengthen its hand in negotiation by achieving a slight preponderance of power), as well as the real possibility of the world toppling into a full-scale nuclear war without any one nation positively willing it, calls for *parallel* policies of the maintenance of an effective deterrent and the

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exploitation of every genuine opportunity of reducing international tension. Firmness, yes, but firmness with flexibility as the current saying goes. There is, of course, something here of the belief that the British can still provide the negotiating ability, though only the Americans now have the power to back it. But it is not a matter of 'trusting the Russians' or of 'appeasement'; if to that much-abused word is given some such meaning as 'surrender by installments.' It is one of common prudence--and indeed, of morality.

The third and rather distinct point is by way of a brief reminder of the special problems posed for Britain, and other colonial powers, by the growth of national self-consciousness and self-assertiveness among Asian and African peoples at a time when Western Europe's power and influence are on the wane. These problems do not dominate the British political scene to the extent that the Algerian tragedy does in France; but they are an ever-present preoccupation. The Afro-Asian powers' desire to put an end to the last vestiges of European tutelage is natural enough. And for a country like Britain, which in the last decade has demonstrated in unmistakable fashion her desire to lead her dependent peoples to full nationhood, there need be little quarrel with most of their long-term objectives. We learnt our lesson not so far from here nearly two hundred years ago. But in territories, the Central African Federation and Kenya for example, where a minority European settler population have, and for the most part wish to retain, a dominant voice in their 'partnership' with the African majority, the racial tensions are already serious; and they may well become more acute.

Even *The Times* of London was moved to ask only a few weeks ago whether in 1960 a disagreement might not arise between London and Salisbury, the capital of the Central African Federation, so fundamental as to precipitate another 'Boston Tea Party'. Little less disturbing is the capital the Communist world can make out of such racial tensions, wherever they exist.

Another aspect of the general problem of anti-colonialism was pointed up by the Anglo-Iranian oil dispute (1951-1952) and the Suez crisis, namely, the dilemma with which the United Nations Charter confronts those states with important overseas interests threatened by enforced expropriation. They are enjoined to abjure the unilateral use of force, yet not only is no collective means of protection or redress provided as an alternative, but, as the United Nations' handling of the disputes over Guatemala, Hungary, Kashmir and Suez have shown, this prohibition is apt to discourage against the colonial powers. I myself very much doubt whether Anglo-French action over Suez was warranted; but what if a not dissimilar situation should arise in Iraq or Kuwait?

Finally, in these rather extended preliminary remarks, there is the vexed question of Britain's present determination to remain a member of the 'Nuclear Club,' on which Professor Sprout will no doubt comment. Critics of this decision argue that it overstrains Britain's resources or that the resources devoted to nuclear weapons could better be spent on conventional armaments; that it brings no real gain in prestige; and that only by Britain's renunciation of her nuclear status can other claimants be persuaded to forego their own nuclear ambitions. This last argument is,

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to my mind, a particularly powerful one. But what certainty is there that Britain's renunciation would in fact have the result intended? The only material consequence might be to weaken the West's nuclear capability, to diminish Britain's own diplomatic standing and, above all, to make Britain and Western Europe more heavily dependent, in years to come, upon American willingness to court destruction to come to their aid. For reasons such as these, and despite occasional rumbles of dissent from various quarters, both major political parties have so far firmly rejected any abdication of H-bomb status, as has, somewhat less decisively, the electorate. Both parties assume that Britain needs the H-bomb if she is to play a leading part in the great issues of peace and war, and if she is to continue to serve as the lynch-pin for what, for convenience' sake, might be described as the three intersecting--a more comforting adjective this than tangential--three intersecting circles of her life and power, that is, her ties with the United States, within the Commonwealth, and with the nations of Western Europe. Let me turn first to Britain's ties with the United States.

One need hardly remind a gathering such as this that the whole course of political and economic events since 1945 both in Europe and the world at large, has re-emphasized the wartime lesson of the vital importance of Anglo-American cooperation. Yet it is as well to remember that in 1945 British fears of renewed American isolationism were very much alive. Through the United Nations, American power had been harnessed to the cause of world security; but the Charter obligations were 'general' and not 'particular,' and an early American withdrawal from active participation in European affairs was a real possibility well into 1946. When in 1947 Soviet pressures started to bring about a common Anglo-American front, Mr. Bevin's prime aim was to draw North America, Britain and Western Europe more closely together. This was, and is, the crowning achievement of NATO (aided and abetted, one might add, by the European Recovery Program and OEEC). Today, NATO--and to a lesser extent its appendages, the so-called Baghdad Pact and SEATO--forms the hub of British foreign policy.

The stresses and strains within NATO are evident enough, as are the weaknesses of its appendages, though they are frequently exaggerated. It would indeed be surprising if they did not exist. Alliance implies political disunity. It also implies a limited objective. The members of NATO are clearly not yet ripe for political union in whatever form; and even the one objective upon which they are all agreed, the military defense of Europe, is bedevilled by the tussle between the obvious need for 'balanced collective forces' (now somewhat belatedly acknowledged by the British Government) and the determination of most members to continue to plan along national lines. Outside the military sphere, on problems such as the political future of Germany, the planning of a global strategy, or the measures required to meet the Soviet economic offensive, the most the members can at present be expected to do is to consult regularly in an attempt to reconcile divergent views; and this on the whole they do in fact do, with a very fair measure of success. They can, of course, consult at great length without composing their differences. "These are," as The Economist pointed out, "the frustrations of alliance. They could be ended only if the alliance were transformed into a political union." This must surely be the long-term objective; and there is perhaps a special responsibility upon the North American and British peoples to work toward this end. But effective political unity is, at best, a very, very

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long way off. Meanwhile those frustrations of coalition diplomacy that stem from the refusal to get drawn into each other's problems (whether Suez, Algeria, or the 'off-shore' islands) may sometimes turn out to be blessings in disguise.

In the British view, whatever its present difficulties, NATO does still provide the essential framework for maintaining an effective counterpoise to Soviet power and for anchoring American power firmly in Western Europe. The Soviet lead in intercontinental ballistic missiles and the consequent American need for intermediate range missile bases both in Britain and on the Continent have for the moment strengthened the American stake in Europe. But when this need becomes less pressing, as it may well do in the next five years or so, many in Britain and on the Continent fear (though with what justification it is difficult to say) that, as in 1945 and as in 1919, there may be renewed pressure in the United States for the withdrawal of American troops from Western Europe and for a return to the concept of 'fortress America.' The probability that such pressure would become almost irresistible if some form of disengagement had been agreed upon for the two Germanies and Central Europe is one of the most powerful, though not necessarily decisive, arguments for the latter's rejection. Even the Labor Party, the most persistent advocates of disengagement, might have second thoughts if this were shown to be its inevitable outcome.

Mr. Macmillan's proposal for an inspection zone on both sides of the present dividing line within which a ceiling might be set on armed forces and armaments harks back to Sir Anthony Eden's 1955 proposal and is, of course, quite different from disengagement--or the lesser nuclear disengagement of the Rapacki plans--to both of which the present Government is opposed. Its main aim, as I understand it, is to guard against surprise attack or the spread of a frontier incident, and thereby to lead to a reduction of tension in this highly charged area. It could also serve as a 'curtain raiser' for a wider disarmament scheme.

The other two main areas of Anglo-American diplomatic activity are the Middle East and Asia and the Far East. In the Middle East, an area still of vital strategic importance to Britain as a source of oil, as a focal point of air and sea communications, and as the gateway to the rapidly emerging continent of Africa, Anglo-American relations have only too often been at cross-purposes--and this even before 'Suez.' The rivalries over oil rights may at times have been a contributory factor, but they were of far less importance than early differences over the reality of Soviet ambitions in the area; over the creation of the State of Israel; and over the posture to be adopted in the face of the militant Arab nationalism symbolized by President Nasser. The diminution of British, and French, power and influence in the area, hastened in the early postwar years by the dire need to curb overseas military expenditure and by Britain's inability to draw on the resources of the Indian sub-continent as in pre-independence days, has to some extent been offset by the extension of American power into the Eastern Mediterranean (the Truman Doctrine of March 1947) and then into the Middle East (the Eisenhower Doctrine of January 1957). The traumatic impact of Suez and the Soviet threat in Iraq and Iran have also brought Anglo-American policies into closer alignment; and American economic support and the promise of bilateral military assistance now serve to buttress the 'northern tier' remnant of the British-inspired Baghdad Pact. In other respects the scene in this vital but highly vulnerable area seem to me so depressing that I will leave Mr. Donelan to comment upon it.

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Far Eastern--and to a lesser extent Asian--desiderata have, on the whole, had to take second place to European and Middle Eastern interests which are more vital to Britain's security and the welfare of her people. The preponderant position of the United States in the Far East and Pacific has also made Britain disposed to wait upon American initiatives, while the exclusion of Britain from the ANZUS Pact demonstrated in striking fashion Australia's and New Zealand's reliance on the United States rather than on Britain for their security needs, a reliance which had been presaged by Mr. Curtin's broadcast of December 27, 1941: "I make it clear that Australia looks to America free from any pangs about our traditional links of kinship to Britain." On the other hand, Britain's Commonwealth ties and responsibilities as well as her commercial and economic interests still give her a considerable stake in Asian and Far Eastern affairs. Britain has borne the main burden of the costly and prolonged struggle against Communist terrorism in Malaya and has recently successfully steered Malaya to sovereign status. She played a respectable part in the Korean War; she is a substantial contributor to SEATO and, as the 1958-Defense White Paper disclosed, she still maintains armed forces of over 100,000 men in the Far East and the Middle East. The Colombo Plan owed a lot to British as well as Australian initiative and to Britain's willingness to make the wartime sterling balances available for her Asian partners' development. This is hardly the picture of a power that has turned her back on Asian affairs. As is well-known, over the recognition of Communist China, the armistice negotiations in Korea, and the Geneva conference on Indo-China, Britain has at various times expressed her strong dissent from American policies. And this irrespective of which political party has been in power, for in Britain--no doubt partly because British interests have not been so closely engaged--there has been no equivalent to the "Great Debate" on China policy which was conducted with so much vehemence in the United States. But, as on other issues, she has differed as a friend, seeking to influence and modify American attitudes and not in order to strike off on an independent--and what for that reason would probably be an ineffectual-line of her own.

The close and intimate Anglo-American cooperation achieved during and immediately after the Second World War and the predominant position of the United States in the Western alliance system has encouraged the British people to regard their relations with the United States as being on a very different footing from their relations with other countries. From the British viewpoint this may indeed be so; but it is rather ingenuous to expect the American people to see their relations with Britain in quite the same light. As the joint Council on Foreign Relations/ Chatham House Report of 1952 on "Britain and America" pointed out: "In American eyes to advocate closer links with Britain may look like advocating looser links with France and other countries with whom the maintenance of close and friendly relations is also essential." Both President de Gaulle and Chancellor Adenauer have in fact made it abundantly clear that "any attempt by the United States and Great Britain to pre-concert their policies over a wide field on a 'combined' basis would...provoke resentment and suspicion." To read into Anglo-American relations a special intimacy is one thing--and I dare claim, a good thing--but to expect that this intimacy would accord a privileged position to Britain in the councils of the Western alliance is quite another. This is not always sufficiently appreciated in Britain. Indeed, I sometimes sense a tendency to claim at one and the same time, not only a privileged position but also some exemption from the obligations of such a position on the grounds that in normal times Britain's

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closest ties must always be within the Commonwealth. It is to these ties that I shall now
turn.

In terms of traditional sympathies Anglo-American relations do in fact
tend to take second place to Commonwealth connections. Some have not, of course,
adjusted their mental picture of the Commonwealth to new facts and still harbor the
comforting image of Britain as *pater familias*, this in turn fostering illusions about the
Commonwealth as a 'Third Force' of comparable stature to both the United States and
the Soviet Union. But few of that famous bard, Lord Milner's Kindergarten are with us
still, and the voice of their mouthpiece, the Round Table, is so muted as to be barely
recognizable. On the whole there is general recognition both of the profound changes
in the nature of Commonwealth ties that have come about in the last ten years and of
the fact that Britain is no longer the shield and magnet she once was. It is granted,
albeit at times rather reluctantly, that the tug of the United States for Australia and
New Zealand as well as Canada is bound to affect their relations with Britain (while
at the same time making close Anglo-American cooperation all the more important),
and that since 1947 the Commonwealth has, in a sense, become bi-focal, with New
Delhi little less important than London as a center of diplomatic activity. Yet real
pride is taken in the successful evolution of what was a predominantly British and Im-
perial grouping into a multi-racial society of sovereign states; even to the extent, I
suspect, of partly reconciling those imbued with the Imperial spirit to the loss of Em-
pire. The Commonwealth is frequently held up as a happier model of international
cooperation than the United Nations on the grounds that it has worked and is working,
even though how and why it works is admitted to be something of a puzzle. Sceptics
about European Union are apt to cite the Commonwealth experience to rebut pleas for
more supra-nationalism. As distinguished a writer as Christopher Dawson went so far
as to claim in 1952 in his book *Understanding Europe* that:

> "The experience of the British Commonwealth has disproved the Hobbes-
> ian doctrine that if political power is not concentrated, society returns to the jungle.
> It has shown that it is possible to divide sovereignty and yet preserve the bond of peace
> and the order of civilized community."

Nor is this a party matter. For Conservatives, the ties with the older
members figure most prominently and there is considerable criticism of Asian 'neutral-
ism', whereas the Labor Party is more ready to listen attentively to the views of the
Asian members and to regard relations with India as by way of being a symbol of the
new Commonwealth. Yet it was Mr. Macmillan who said on returning from his Com-
monwealth tour last year: "We are really only at the beginning of this new Common-
wealth relationship that has sprung up over the last ten years."

This is, of course, rather an idealized picture of the new Commonwealth.
Probably few in Britain would share the ultra-realist position of one of the most read--
and deservedly so--textbooks on politics among nations in which, as a colleague reminded
me, the Commonwealth does not appear in the index at all. Yet it is the case that
interest generally in Commonwealth affairs is distinctly cooler than thirty years ago
and that some students of international relations in Britain might be inclined to view
the Commonwealth as but the vestigial remnant of Empire, able like the Holy Roman

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Empire to evoke loyalty long after the power to command it had vanished, but incapable of materially influencing the course of diplomatic events. "It is noticeable," Mr. Martin Wight writes, "that United Kingdom Governments habitually made the Commonwealth unity argument a reason for evading their duty; but when they have been preparing something disgraceful, as the Hoare-Laval Plan or the attack on Suez, they have acted without consultation. If today, however, there is no danger of a repetition of these errors, one reason surely is that the Commonwealth has become more disunited, its mystique is past its zenith, and it no longer commands a priesthood powerful enough to deflect the British Governments from the primacy of European security." The centrifugal pressures within the Commonwealth, of neutralism, racism, Kashmir, are indeed obvious enough, as is the steady assimilation of its internal relationships to the condition of international politics. Yet even if the bonds of sympathy have become increasingly tenuous, there still remains the closely-knit network of reciprocal interests in diplomatic as well as in commercial and financial matters, the rapid disintegration of which would be certain to have painful results for all concerned. It is this 'concert of convenience' rather than bonds of sentiment which is likely to prove the most enduring cement of the new multi-racial Commonwealth. And it is still an open question whether the challenges to this Commonwealth concert will prove too great for its survival or whether they may not evoke a response from amongst its members which will give renewed vitality to the Commonwealth 'complex' for many years to come. The belief that the Commonwealth can bring a 'touch of healing', to use Mr. Nehru's happy phrase, not only to this patch-work of peoples of nearly every race, creed and tradition, but also to the world at large, is at least not an ignoble one. No wonder then if further 'entanglement' in Europe is apt to be looked at rather askance lest it weaken Britain's bonds within the Commonwealth. It is upon the vexed question of Britain's attitude towards her European neighbors that I must finally briefly touch.

Even today Britain's attitude towards Europe reflects something of the ambivalence of the past, that Professor Seton-Watson described: "The desire for isolation, the knowledge that it is impossible...." There are senses in which Britain does feel herself a part of Europe--in contradistinction to the Soviet Union, to Asia and Africa, and even to the United States; yet the balance of sentiment and thinking still tends to run the other way, stressing Britain's separateness from, rather than her identity with, continental Europe.

Yet Britain, through first the Brussels Pact (1948) and then the London and Paris Agreements (1954) which set up Western European Union, is committed to the defense of Western Europe more closely than ever before. In 1934 Mr. Baldwin could startle the House of Commons by declaring: "When you think of the defense of England, you no longer think of the chalk cliffs of Dover; you think of the Rhine. That is where our frontier lies." Today it lies along the Elbe and Britain is committed to keeping her forces there so long as her partners require. Continental critics point out, with some reason, that this commitment is not without qualification and that it is predicated upon the retention of American ground forces on the Continent. Nevertheless, from the very logic of events, Britain is now bound to her continental partners by ties so close as virtually to rule out the possibility of a sudden rupture; and she is likely to remain thus bound for so long as it is profitable to contemplate.

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In contrast, as is well-known, no British Government has been willing to contemplate the eventual abdication of ultimate control of Britain's foreign and defense policy in favor of some European body. Close association on an inter-governmental basis is one thing; full membership of a federated Western Europe--or of schemes (the European Coal and Steel Community, or the European Common Market) which point in that direction--is quite another. Towards such schemes the British attitude is similar to that evinced by M. Briand's proposals for European Union in 1930; it is one of "caution, though cordial caution." To charges that Britain is out of sympathy with the efforts of the Six (France, Western Germany, Italy, Belgium, Netherlands, Luxembourg) to work towards some form of political integration, the reply might be made that Britain must of necessity give primacy not only to her Commonwealth connections but also to the Atlantic Alliance, and to ensuring that the "Europe of the Six" takes shape as part of a steadily developing Atlantic system and not as a "Third Force," or as an economic bloc which might divide rather than unite Western Europe as a whole.

In practice, of course, the reasons commonly given for Britain's refusal to merge her identity into that of a new Europe are frequently but rationalizations of a deeper psychological gulf still separating Britain from her continental neighbors. Partly this is traditional; as recently as September 1954, Mr. Eden could say: "We are still an island people in thought and tradition, whatever the modern facts of weapons and strategy may compel." Partly it is Britain's image of herself as a 'world power,' without quite that sense of insufficiency engendered by defeat or occupation, in which, among Continentals, national loyalties can the more easily be transmuted into a new European loyalty. To the informed 'man in the street' on the Continent (with possible reservations in the case of France) the idea of European unity is by now a familiar one, however imperfectly or diversely it is understood; in Britain it is still apt to be regarded--though less so than five or six years ago--as unreal and even slightly eccentric.

The stresses and strains injected into British foreign policy by the effort to balance and contain the three sets of relationships I have described are obvious enough. Is the effort worth making? Might not Britain be better advised to throw her lot in--cost what it may in terms of her Commonwealth and American ties--with the Europe of the Six--if they would have her? Or would so drastic a surgical operation merely threaten the economic well-being of her people and deprive her of those outer reaches of her diplomatic influence which lend chief substance to her claim to be still regarded as a 'world power,' and a world power with that very rare commodity, a truly world view?

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# BRITAIN'S FOREIGN COMMITMENTS

## Michael D. Donelan

You will not, I hope, suspect me of nostalgia for Britain's imperial past if I ask you to imagine for a moment that I were speaking fifty years ago. Then I could have listed the aims and methods of Britain's foreign policy--the pursuit of trade, the command of the seas, the protection of the Empire, the prevention of a continental hegemony--with little risk of fundamental disagreement from my countrymen. Today, such a consensus is no less essential to a confident foreign policy; yet it does not exist. This fact was explosively revealed in the Suez crisis. A disheartening and now well-remembered aspect of the first week of November 1956 was the manner in which the Government produced first one, then another, then still another justification of its action, and at the same time neither affirmed nor denied what most people believed was its main motive. The Government did this because the population had no common standard by which to judge the Suez action, and accordingly there was no one consistent, steadfast justification which could hope to unite the population in support. This same disunity on national aims is still detectable in private discussions in Britain, and deducible from the heavy reliance of the peroration passage in public speeches on that lowest of common denominators, the meaningless platitude.

This uncertainty of direction is due in part to the strangeness and turbulence of the postwar world. But confusion from this source is compounded by the bewildering multiplicity of interpretations of the world. Some will have it that the essence of events is an 'East-West cold war'; others, the struggle of Communism and Democracy; still others, the liberation of Asia from exploitation by the white world; and perhaps others, with equal justice, the exploitation of the divisions of the white world by Asia. Such simple global patterns are not only the enemy of shrewd policy; their inadequacy, their variety and their rivalry gravely confuse public opinion and judgment.

The aims of Britain's policy have been still further befogged by the elevation of methods into aims. The lines of Britain's policy were laid down in the frightening years from 1945 to 1950, still in the shadow of one war, darkened further by the danger of another. Inevitably the prevention of war became the first interest of British opinion and the foremost aim of British policy. This emphasis was plainly right; but one unfortunate effect was that the methods for the achievement of this aim, then selected and popularized, became after a time aims in their own right. Institutions such as the United Nations Organization and NATO became not mere methods against war but talismans against war. Any irreverence for the United Nations, any change in NATO, to pursue but these two instances, must necessarily be wrong.

So, at the time of the Suez crisis, many in Britain insisted not merely that the Government's policy was foolish, in which respect they may or may not have

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been right; but also that to act through the United Nations must be a priority of British policy. This it was said was the 'fundamental' or 'long-term' interest of Britain, regardless of whether the Organization would or could defend any particular British interest on this or apparently any other occasion.

A similar attitude plays a part in the current debate on Western policy on Germany and on European security. All the proposals for change in this policy may on practical grounds be thoroughly bad; yet many in Britain, as apparently the majority in the United States, fear these proposals not so much on practical grounds as on principle. For years'the strengthening of our alliances' has been the first slogan of any speech on Britain's foreign policy. In consequence NATO has become a symbol of resistance, a talisman of security at a level lower than argument. If NATO is changed in any way the spell will be broken, the virtue will depart, it will no longer be NATO; therefore there must be no change.

So far as NATO's position in Europe is concerned, this taboo has notoriously begun to weaken in Britain during the past year; but we may leave a discussion of that until later. The object of these opening remarks is to suggest that in recent years in a variety of ways the true aims of British policy have been thoroughly obscured, and to note the danger of this state of affairs. It is dangerous because under normal circumstances, policy will be confident only in standing still; again, because policy will be subject to erratic decisions in a sudden crisis; and most of all dangerous because there is likely eventually to be a public revulsion against immobilism, uncertainty and platitude, and this revulsion might set policy on a definite but perilous course. Public opinion is frequently right in its rebellions; but rarely right in judging what to do instead.

As to the proper aims of Britain's foreign policy, certainly the prevention of war must be foremost; yet it is in fact only half an aim. For the object of maintaining peace in the world is, of course, to be able to do something in the world of peace. It is this second, positive half of the total aim which, I believe, the British public is these days in a mood to hear about, and which, for stability's sake, the public must hear about and British policy set itself to pursue.

The nature of this conference, the papers which have gone before make it scarcely necessary for me to mention what this positive aim must be. Let me simply state baldly that it is the promotion of the foreign trade on which the prosperity, indeed the very life of Britain depends. The true aim of Britain's foreign policy is then the prevention of war, the promotion of trade. All the organizations, alliances, partnerships of which Britain is a member should be but methods to be used, modified and, in the event of incompatibility, preferred one to another in the service of that aim. If today you read an official speech containing a list of Britain's aims, you will find them to be: disarmament, the creation of a world organization, the strengthening of the free world alliances, the maintenance of the Commonwealth. You will not find, first and foremost or quite likely anywhere, the promotion of trade. I do not say that if this formula of Britain's aims--the prevention of war, the promotion of trade--were adopted, there would be a sudden great change in Britain's policy; but I do suggest that there would be a firm standard for balanced judgment, more shrewd for policy, more persuasive to the public than the slogans of ideologies and organizations.

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It is the custom today to talk in global ideological terms. Perhaps therefore Britain's position in the world demands that British statesmen conceal the centuries-old, humble, nationalist-sounding aim of trade, and state Britain's aims only in more visionary terms. I do not know; but I doubt it. For it seems clear that in a revolutionary world such visions as the rule of law and a just and lasting peace are not to be brought about by exhortations or by planning. Nor are such bodies as the Atlantic Community to be given positive influence for peace by the mere negative effort of preventing war. Such visions and such influence are to be sought by the pursuit of positive, practical objectives, good in themselves. I need not remind you that the onetime *Pax Britannica* was founded not on a plan or an exhortation but on the pursuit of trade. Nor that in today's conditions, though that aim may sound narrow and nationalistic, it will in fact require the greatest possible practical cooperation with the largest possible number of nations. Such cooperation is, it seems, the highest goal that Britain can set herself in the service of the ultimate visions of humanity without losing her direction in the clouds. This may be the faith of a nation of shopkeepers; I do not believe we should be ashamed of it for that.

* * *

So far as Britain's policy in Asia is concerned, it may at first sight seem that emphasis has in fact shifted to the promotion of trade. Last November 8, in the annual Guildhall speech, Mr. Macmillan gave this interpretation of events in the Asian world: "A hungry man after all is not inclined to put the ballot box before his next meal. If our way of life is to survive and spread and vitalize we must offer prosperity as well as freedom. In the face of the Communist challenge, we cannot hope to hold our own even in our own countries, and certainly among the uncommitted nations except on the basis of a continued growth in world prosperity and world trade."

The objective here, the expansion of prosperity and trade in Asia, is obviously excellent; the terms in which it is posed seem, however, more questionable. Asia is not Asia but part of the 'uncommitted world'; the enterprise is conceived as the answer to a 'Communist challenge'. Mr. Macmillan is in fact sharing the thoughts of M. Spaak and of certain American statesmen who nowadays emphasize that having been checked militarily, the Communist Powers are mounting an economic cold war against the West.

Why the British Government has chosen these terms to recommend trade and aid to Asia is not clear. It may be that they believe, just as the American administration is said to believe, that they can only win the support of the public for these policies if they represent them as part of the struggle against Communism. Whatever the reason, it seems risky to campaign for economic aid on the promise that the Asians will set up the ballot box where prosperity flourishes. They may well not wish to do so, or at least not for a long time; public opinion at home might then become impatient of the whole enterprise. The Asian countries are likely to resent the idea that Britain's object in aiding them is to secure her own position against the Soviet Union and China. The so-called uncommitted world showed as long ago as the Bandung Conference that it was in fact a committed world, committed to its own problems. It wanted nothing to do with the cold war.

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No doubt there is a sense in which Asia is an East-West battlefield. But there are sometimes more tactful ways of fighting a war than to say you are fighting it, as the Marshall Plan showed when Europe was in a somewhat parallel mood of neutralism to that prevalent in Asia today. Furthermore, a justifiable criticism of Western policy in recent years has been that it has seemed never to do anything but always to be trying to stop the Communists doing something. It is certainly unnecessary in the case of economic aid that the West should adopt this negative approach, so depressing to its morale. Britain at least needs the prosperity of Asia on its own account, would need it whether the Soviet Union, China and Communism existed or not. As a trading nation, Britain's economic advance would be greatly accelerated by the economic advance of Asia. There is a positive interdependence here, and I suggest Britain should lay her emphasis on this both at home and in Asia. Less talk about the Communists would deny them the spiritual advantage of seeming the positive, progressive force in the world. More confidence in, more talk about, our own plans for their own sake might capture that advantage for us.

Two themes have underlain my comments so far: Asian opinion and the enrollment of Asia in the East-West cold war. I should like to pursue them further since different attitudes on them are the crux of the Anglo-American differences on Asian policy.

Britain has always been gravely concerned at the spread of Communism and Chinese influence in Asia; but she has understood that the West must as a priority keep the support of Asian opinion if these threats are to be successfully countered. It is to be hoped that despite the recent economic cold war talk, she will maintain this attitude with regard to the Soviet Union now appearing on the Asian scene. The United States has adopted different priorities, the contrast being most evident in policy on China and on Asian security.

In the case of China, I will not repeat all the well-known arguments back and forth on the status of Formosa, but concentrate on the other issue which could probably be solved separately if there were the will to do so: the recognition of China and her admission to the United Nations. The argument between Britain and the United States has not changed since the origin of the problem. In the Washington talks of December 1950, Prime Minister Attlee stressed the importance of keeping the support of Asian opinion. President Truman and Secretary Acheson stressed the importance of the support of American opinion. American opinion would not understand a policy of strength towards Communism in Europe and weakness towards it in Asia.

The nine years which have since elapsed might most profitably have been spent in teaching American public opinion that diplomatic contact and negotiation are not weakness. Instead the United States has passed them in talking the language of the cold war in Asia, the most heinous crime in the Asian international code; in giving the impression of unjustifiably ostracizing China; in sacrificing any chance of political leadership in Asia; and all--this is the pity of it--without the slightest discernible advantage to herself or the cause of the West or to anything save perhaps Sino-Soviet solidarity.

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There were at one time similar Anglo-American differences on security in Asia, though Britain eventually allowed her opinion to be overborne by American pressure and by special considerations arising from the war in Indo-China. When SEATO was under discussion in the spring of 1954, Foreign Secretary Eden told the House of Commons (Hansard, June 23, 1954) that in his opinion no permanent Southeast Asia defense organization could be "fully effective without the understanding and support of the Colombo Powers," that is, Burma, Ceylon, India, Indonesia and Pakistan. In the event SEATO was established with the support only of Pakistan, and against the strong opposition of the other four Powers. The United States protocol to the Manila Treaty, according to which her undertaking against aggression meant Communist aggression, confirmed beyond doubt that SEATO was a cold war instrument, and this the four Powers resented as an unjustified importation of foreign quarrels into Asia. If SEATO had any military value to compensate for this political drawback, its creation might still have been worthwhile; but, or so I shall argue, in a moment, it has not.

It would be understandable if American opinion thought that the Quemoy crisis and recent events in Tibet should at last awaken Asia to the realities of the cold war. It therefore seems essential that Britain should now exert all her influence against the development of a cold war in Asia. Nothing it seems could be more dangerous to world peace than the development of a mounting feud between the Asian countries and China. In the first place the southeast Asian countries at least are exceedingly vulnerable; their present comparative neutrality is an important defense. In the second place, while the quarrels of Europe do not appear to be world war quarrels, those of Asia might be. I can say most briefly what I mean here by suggesting that Asia today seems a little like the Balkans on the eve of the First World War, the place of Germany, Austria-Hungary, and Russia being taken by Russia, China, and the United States. With China apparently in a mood of growing irritation and irresponsibility, it is to be hoped that Britain will now abandon her reticence towards American policy, will do all in her power to prevent the formation of blocs and rigid alignments, will, as one measure, press urgently for the ending of the Chinese-American quarrel on China's admission to the United Nations and for diplomatic contact between them.

In this connection there is a further question to be raised on SEATO. I will not go into the merits of military assistance and special great Power guarantees to Asian countries because even if these are desirable, they do not necessitate a collective security organization. The point I wish to raise is one which might become important if Chinese policy eventually provokes serious suggestions within Asia for a new and wider defensive alliance.

The advantage of collective security is that it provides a stronger deterrent to aggression than any individual nation could provide. The disadvantage is first that it tends to make every issue which arises seem part of a total quarrel, in today's case the East-West cold war or Democracy against Communism. This raises the heat of the issue and is not helpful to a solution. The second disadvantage is that if aggression does in fact occur, it is not easy to limit the conflict in area and intensity. In Europe these disadvantages can be discounted because the past suggests that the European nations will be involved in each others' quarrels whether they have a

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collective security agreement or not. The same is not true in Asia, or at least not to the same extent.

It is therefore open to question whether the value of collective deterrence in Asia outweighs the drawback of a possible increase in the scale of any quarrel or conflict. I doubt seriously whether it does. Collective deterrence in Asia is extremely weak. The Asian countries would not be able to make much collective effort against aggression. Deterrence is achieved by the ANZUS Powers and by Britain. Now their main interest is to fight any Asian war on as limited a front as possible. In consequence it seems that both in order to avoid cold war in Asia and in order to retain the option of limiting any hot war, Anglo-American policy for Asian security should proceed on the principle of bi-lateralism and not of multi-lateralism. SEATO, it seems, was an unjustified application of the European example to Asia.

I have suggested throughout that the unique service of Britain to Western interests in Asia is her sensitivity to Asian opinion in matters of politics. This sensitivity is due primarily to the Commonwealth connection, and here I would select one point for your notice. There is talk within NATO these days of the need to develop a common NATO policy towards the world outside Europe. I suggest that Britain would do well to treat this idea with the greatest caution. There is already some fear in Africa and Asia that European unity represents the formation of a white bloc against the Afro-Asian world. It seems that what is needed is not organizations which crystallize the opinions of Europe and Afro-Asia on each other but which join them together in a common activity. The economic activities of the Commonwealth and the Colombo Plan are the most successful examples of this to date. Furthermore, by means of common activities giving substance to political ties, these organizations do something to stem the progressive fractioning or balkanization of Africa and Asia, one of the great challenges of our time. The world is still waiting for the United States to make her answer to that challenge by leading some such collective enterprise in Asia as these.

* * *

While Britain's position in Asia has changed little since 1955, in the Middle East it has changed markedly both in relation to the European powers and the United States.

The turning-point was the Suez crisis. Britain was sternly told in the European press and in sections of her own that, whatever the historic tradition, her interest in the Middle East was today little greater than that of the other Western European nations. Looking around, we have begun to see with some sense of shock that this is so. Britain's interests are oil, markets and the sea and air routes; but these are shared by all the OEEC countries. Britain has the largest stake in the oil, is by far the greatest user of the Canal, is the most commercially active European power in the area. Several of the Middle East states are members of the Sterling Area. But the decline of Britain's political influence and the return of Germany and Italy from their postwar exile from the region are nevertheless tending to make Britain only first among European equals so far as interests are concerned. True, it is often pointed out

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that the Middle East is the land bridge between Eurasia and Africa where Britain's interest is, with that of France, predominant. But I doubt whether this land bridge notion is truly significant today. I find Marshal Sokolovsky's Sudan campaign a little hard to imagine. As for Soviet subversion in Africa, I suppose that like everyone else subversive agents travel direct by air these days.

If Britain's interests now only entitle her to be first among European equals in the region, in practice she far outdistances them. She scarcely consults them; they scarcely challenge her charge of the collective European interest. The reason is partly tradition, but partly the attitude of the United States. The United States has become since Suez the leading Western power in the Middle East; but she needs Britain as a partner. The existence of this partnership is well attested by the coordination of British and American policies over the past two years. It is at least for the moment the only basis on which Britain's traditional status in the Middle East can be maintained.

The partnership does not of course mean equal responsibility for Western interests. Since Suez the United States has taken over from Britain in that respect. Britain has lost the Canal and has lost most of her influence in Iraq, the country on which her Arab policy was based. The United States is now the foremost Power in the Baghdad Pact; or perhaps I should say the Pact has now been replaced by the bi-lateral treaties between the United States and Iran, Turkey and Pakistan. Even in Jordan economic assistance is now as elsewhere largely in American hands. All that remains to Britain is the Aden Colony and the Gulf protectorates, the friendship of Jordan and a quantity of goodwill and respect among the commercial classes and statesmen of the region. Declining responsibility may in the end enhance Britain's political influence in the region because the odium of imperialism may decline with it. This in the long run may well be the more important point; but not for the moment.

Corresponding to the transfer of responsibility, Britain must now get American permission for major action. If last July you read Mr. Macmillan's announcement of the landing of British paratroopers in Jordan, you may have been struck by the sentence: "Her Majesty's Government's decision was taken after full consultation with the United States' Government and our action has the full support and approval of the United States' Government." The contrast here was with Suez; the lesson learned that of Suez. I anticipate that even in the case of a crisis in Kuwait, major decision would be dependent on American approval.

It seems then that Britain's role in the Middle East must consist at least for the moment of giving good advice to the United States, with a strong chance that it will be accepted. The question is whether Britain has good advice to give.

A few years ago I should no doubt have spoken at this point of Britain's long experience and understanding of the Middle East. But events, particularly in Egypt between 1954 and 1956, revealed that in many in Britain experience had not been kept up to date, that understanding had stood still, had hardened into reaction and resentment. However, I believe it would be wrong to stress this and to suspect Britain's advice in consequence. Britain has a talent for learning swiftly from

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misfortune. Though it is perhaps too soon to judge, I believe that the Suez episode is working a radical readjustment of mood and attitude on the Middle East. As for the two greatest errors of the past few years, the prime mistake at Suez was to suppose that the action could succeed without the approval of the United States, and this as we noted with the example of Jordan has already been corrected. The second great error was the Baghdad Pact. I do not think it would be repeated even if the opportunity arose.

The Baghdad Pact was represented at its signature in 1955 and thereafter primarily as a barrier against Soviet expansion. But had this been the main motive, the Pact would not have been extended beyond the non-Arab countries on Russia's border, beyond Mr. Dulles' "northern tier", Turkey, Iran and Pakistan. It might admittedly be said that the Pact was extended southwards into the Arab area because of the danger of Soviet subversion there. But it is not necessary to sign a pact in order to exchange information about police methods. Nor was it necessary for an Arab state to be a member of the Pact in order that the Western Powers might intervene against subversion. Neither Jordan nor the Lebanon where such action was taken in 1958 were members.

The main content of the Pact was political and its politics were bad. It was for this reason that the United States wisely avoided formal membership. Until the summer of 1954 it was hoped that Egypt and the majority of the Arab states would join in a security organization for the Middle East. The organization would build up a spirit of responsibility and cooperation in the region, and this alone would do much to safeguard British interests. When this hope proved vain, instead of seeking some other form of collective cooperation, Britain chose to associate as many states of the region as she could. This choice strangely disregarded pan-Arabic and anti-imperialist sentiment, evidenced if in nothing else in the fate of the Treaty of Portsmouth in Iraq. The Middle East organization was now certain to be seen by the Middle East critics as a British bloc, dividing the Arab world, designed to strengthen British influence and protect British interests. As Anglo-Iraqi tension with Egypt, as pressure on Jordan to join grew in the winter of 1955-1956, the Baghdad Pact became more and more what these critics said it was.

Looking back after the debacle it is almost incredible that Britain should have hoped to secure her interests in Iraq by overtly allying it with the two states most suspect to Arab and in particular Iraqi opinion, herself and Turkey. However, to criticize the Pact today is a little like kicking a man when he is down, one's aim directed by hindsight. The power of Arab opinion, or rather of revolutionaries using it, to change the policies of Arab governments was perhaps bound to be underestimated in 1955. It is not likely to be underestimated in the future.

As to the future, though this may seem small comfort for current events in Iraq, the secession of Iraq from the Pact has definite advantages. The Pact has been removed from the Arab area; pactomania will cease to poison Anglo-Arab relations. As regards security against Soviet aggression, the present position is probably the best possible: bi-lateral American commitments to the three states on the Soviet border, supplemented by the promise to the whole Middle East in the Eisenhower Doctrine. The only final answer is awareness of Soviet pressure by the states of the region themselves; this happily seems to be growing.

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There remains however the question to which neither Britain nor the United States seems yet to have found an answer. To what extent do they recognize a legitimate interest of the Soviet Union in the Middle East? It may be that every form of Soviet influence is subversive and dangerous and must be checked. Or it may be that it is ultimately more dangerous to attempt the complete exclusion of a great Power from an area in which it has a traditional and understandable interest. On various occasions in the past two years the British Labor Party has suggested negotiations with the Soviet Union for a Great Power guarantee of Middle East frontiers, for a joint economic development scheme under United Nations auspices, and for an end to the armaments race in the region now reaching threatening proportions. It is not easy to see how the Arab states could be associated with such negotiations; nor is it possible to be optimistic about their outcome. But the attitude from which such suggestions spring seems to me a wise one, and the Government right to be receptive if cautious towards them.

Meanwhile there is the possibility that Communist regimes or trade and aid agreements with the Soviet Union might close Middle Eastern countries to Britain. It seems, however, that nervousness of this possibility may be as dangerous as that possibility itself.

The Soviet Union has had until lately few interests in the Middle East. She has therefore enjoyed the maximum freedom of maneuver in harrassing Western interests. Gradually, however, her activities are placing her in many of the dilemmas with which the West has long been familiar. I will not labor the parallel, though perhaps Soviet difficulties in steering a way through the Egypt-Iraq quarrel deserve special mention. The crux of the matter seems to be that the Arab world is determined to preserve its independence of the Great Powers and that it is in a fair position to do this since it can appeal from one bloc to the other. Accordingly the Soviet Union may be very wary of a puppet or seeming-puppet regime in the Middle East. Even something so mild as a Communist Nuri es-Said might do grave damage to Soviet prospects in the area as a whole. Of course, if we deny the Arab countries the option of appealing to us by giving grounds for fear that an appeal would lead to political interference, then the Soviet Union will be able to proceed as ruthlessly as she wishes. But the conduct of the Lebanon and Jordan actions suggest that Britain and the United States are fully aware of this danger.

As to what the Arab countries might themselves do, it seems that in the natural pattern of events even a Communist government would be nationalist, Titoist, would for instance base its oil sales on economic and not on political considerations. On the other hand, there is the danger that a harsh attitude by the West to a Communist regime might drive that regime into subservience to the Soviet Union, perilous though that might be to itself. If newspaper reports are to be believed, Britain is currently urging the United States to avoid precipitate support of Egypt for fear of just such a result in Iraq.

Next, Britain's attitude to the various problems presented by the Arab world itself. The first of these, the Arab-Israel quarrel, is rightly being handled through the United Nations. Britain and the United States have already a sufficiently

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bad reputation in this question with Arab opinion. Any overt attempt on their part to arrange a settlement would certainly be attacked as aid to Israel. Certainly progress through the United Nations is painfully slow; but that is because the problem is probably at present insoluble. There are signs that the Arab leaders are becoming privately more realistic in their attitude to Israel; but such are the rivalries within the Arab world that it is improbable that any of them would dare at present to advocate a settlement.

For this reason and for many others, it is clear that Britain and the United States must still give priority to encouraging Arab cooperation. The trouble is that the Arab states themselves have nothing to cooperate about. Common hatred of Israel is sterile; oil divides into the "haves" and the "have nots"; pan-Arabism, when more than a slogan, produces national jealousies. Common fear of the Soviet Union may bring some solidarity, though the fate of the Baghdad Pact raises some doubts of cooperative schemes based on security. The likelihood is in fact that nothing less than a Marshall Plan for the Middle East will do. It will be objected that a Marshall Plan presupposes a spirit of cooperation; but while not denying some truth to this objection, I suggest that it is defeatist. A spirit of cooperation will never exist until something to cooperate about is patiently offered. Just as in Asia, so in the balkanized Middle East, the greatest need today is for some form of collective enterprise. To meet this need is also the hardest problem; but that is normal.

Beyond cooperation lie the aspirations to Arab unity. Here Britain is unlikely to advise a positive Anglo-American policy. Her encouragement of the Arab Federation of Iraq and Jordan to save Jordan from the United Arab Republic proves in retrospect to have been a case of out of the frying pan and nearly into the fire. To judge from the Government's statements of the past year, the principle is henceforth to be the protection of the independence of states. This principle at one stroke fore-stalls any of the possible dangers latent in unity imposed from Cairo, Baghdad, Moscow or anywhere else, adequately protects Britain's interests, reassures our friends of con- tinued support, can claim the sanction of the Charter, and can be used even in the confused case of subversion.

As to peaceful union among the Arab states, no doubt Britain would be made uneasy by a federation, say between the United Arab Republic and Jordan. In the House of Commons debates on the Middle East crisis last July, Mr. Macmillan declared, probably with full justice: "I do not believe that honorable Members on either side of the House really wish to see a dictatorship established in the name of Arab nationalism and stretching all across the broad lands of the Middle East" (Hansard, July 17, 1958). However, possibly the emphasis here is on "dictatorship" and this in practical international terms means an aggressive Power. Accordingly, if Arab unity proceeds without aggression, Britain may well think intervention or even political interference likely to do more harm than good.

I should add that there is apparently a further Middle East problem con- nected with this one. It was raised by the British Labor Party at the time of the Jordan intervention and is called the problem of the colonels against the kings, or Britain's support for the reactionary regimes in the Middle East. Unfortunately I do not under- stand the point being made here, and so can only call it without comment to your notice.

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There remains the question of Britain's most vital stake in the Middle East. I do not think that there is much doubt, particularly in the light of opinions expressed at the recent Arab Oil Congress, that sooner or later in the next two decades the Middle East states will demand the management of Middle East oil. There is, on the other hand, considerable doubt whether the British government and British oil companies are facing this likelihood. They seem only to be wondering whether they can defend their oil with troops or by offering the oil states more profits. They do not seem to be considering the alternative of gradually transforming the companies into Anglo-Arab and Anglo-Persian partnerships.

Britain's interest in Middle East oil is threefold: the oil itself; the revenues from marketing it, together with the sterling accounts of the oil states; and the oil industry as a potential instrument for training the new Middle East elite in a sense of equality, self-confidence and responsibility. The lack of these sentiments in this elite is the main root of the social and political instability of the region which it is in Britain's general interest to remove. None of these three British interests, oil, revenues and stability, can be safeguarded or furthered over the next decade except by the transformation of the oil companies into partnerships.

For the past century, Britain's activities in the Middle East have relied on the support of British power. That period is now over. These activities must henceforth seek their support within the Middle East itself. Unless the British oil industry involves the new powers in the Middle East in its future, it has no future. From a still wider viewpoint, the principle of partnership with the Middle East states is essential to the world political interests of the West. The future of the oil industry is one of the most important problems facing Anglo-American policy in the Middle East both on its own merits and because it may be the determining factor in the relations between the Soviet Union, the Middle East states, and the West.

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The most interesting focus for a discussion of Britain's interests in Europe these days is her attitude to negotiation with the Soviet Union. However this focus entails a certain danger. It will bring into relief differences of interest between Britain on the one hand, and France and Germany on the other. Yet I do not wish to exaggerate the importance of these differences. They are subordinate to a fundamental community of interest which will endure at least until some genuine relaxation of tension with the Soviet Union is achieved.

Since Britain seems to be in need of defense these days, let me first say plainly that European differences on negotiation with the Soviet Union arise not from the attitude of Britain but from the attitude of France and Germany. It is not the desire of Britain but the reluctance of France and Germany to negotiate which is abnormal. Never in the whole history of Europe has the art of diplomacy needed excuse, whatever may be the case on this side of the Atlantic. What truly requires explanation is why France, long the proponent of negotiation with the Soviet Union, has changed her mind; why General de Gaulle, who began his Presidency with an initiative towards the Soviet Union in the shape of a letter to Mr. Khrushchev, should now show such reluctance to

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meet him; why Dr. Adenauer, the West German Chancellor, should show less interest in German reunification than the Prime Minister of Britain.

The main divergence of British and Franco-German interests in Europe and correspondingly the main difference in their attitudes to negotiation with the Soviet Union stem from the Treaty of Rome signed on March 25, 1957. After ECSC had prepared the way, after the disaster of EDC, on this date the Little Europe of the Six was finally born. Because Little Europe is such a momentous achievement, because it is young and fragile, the attention of the Six is focused intensely upon it. They are averse to any new project for fear that its chance may be injured by the distraction. It is this mood which was fundamentally responsible for the rejection of the Free Trade Area, and which is now responsible for Franco-German reluctance to undertake negotiations with the Soviet Union. To put it bluntly, adding domestic preoccupations in the case of France, they have enough on their hands already without negotiations with the Soviet Union.

However, if you will excuse a little more digression into Franco-German politics, Little Europe raises more precise obstacles to East-West negotiation than this. Little Europe is not merely an economic community but a means towards solving the oldest problem of Europe. Dr. Adenauer has long believed, and convinced General de Gaulle at Colombey and Bad Kreuznach, that the solution of the German problem is the integration of West Germany into the life of Western Europe, economic, military and political. Any change in the existing situation in Germany might endanger this integration; therefore there must be no change; therefore there is nothing to negotiate with the Soviet Union about.

Britain might make two comments on the mood and attitudes of the Little Europeans. The first, that Little Europe is not Europe; that the most profound disunity of Europe lies along the Iron Curtain; that for those who believe in European unity, the goal must surely be to mix, not the West Germans into Western Europe, but the Germans into Europe. This will require a settlement with the Soviet Union. Second, even if it be objected that European unity is visionary, even if emphasis must at present be on Western European unity, Britain's attitude in the present negotiations with the Soviet Union does not in fact jeopardize that aim. It cannot be denied that in Britain's desire for a European settlement and in the Franco-German emphasis on Little Europe, there are the makings of a strong clash of interests. But, for the moment, Britain seems less interested in this or that plan for a European settlement than in the prior task of reducing the East-West tension created by the Soviet ultimatum on Berlin by showing willingness to negotiate. So much at least cannot harm Western European unity.

So far we have sought the principal cause of Britain's famous "flexibility" with regard to the Soviet Union. It is, I have suggested, simply that she is not bound to inflexibility by the preoccupations of Little Europe as are France and Germany. But there are also positive factors at work.

There is, first of all, a sharper awareness in Britain than in any other NATO country of the perilous basis of Western security. The West has refused--to my

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mind, shamefully refused--to provide conventional forces capable of withstanding those of the Soviet Union. Western Europe is therefore bound to rely for its security on nuclear threats which it would be madness to carry out and on the probability that the Soviet Union does not wish, despite the nuclear stalemate, to attack with its conventional forces. Yet this dependence on a probability has a definite corollary. It means that if a crisis occurs, if the Soviet Union issues threats, if in fact the probability that she will not attack weakens, then the West cannot refuse to negotiate. This may be a lamentable state of affairs, but, given the present strategy for Western defense, it is an inevitable state of affairs. The best that the West can do is to use all its diplomatic skill in the negotiations to avoid dangerous concessions. In such a case as that of West Berlin, refusal to negotiate might be practicable because the risk to the Soviet Union that the West might make nuclear war over it is out of all proportion to the worth of the city to her. But this is offset by the fact that British opinion equally does not think West Berlin worth a nuclear war, and will not accept the risk involved in refusing negotiations.

There is another strategic factor which may be important. One of the standard objections to any of the plans for Germany from disengagement to a zone of arms limitation is that NATO forces would be left with only the territory of France in which to maneuver in the event of war. This is a specious argument. If the Red Army launched an all-out attack on continental Europe, either the nuclear apocalypse would begin or the continental countries would surrender. In neither case would anyone be worrying about whether NATO's twenty divisions had room to maneuver.

This fact has obvious implications for Britain's policy. Britain is as interested as ever in the security of the Continent. But if that security rests primarily on nuclear weapons which are or could be sited outside the Continent, then there is little reason for considering the Continent--and specifically, West Germany--in military terms, that is, for allowing military considerations to impede political settlements. I do not suggest that British policy is in fact based on such extreme reasoning. Official British policy argues that NATO forces in Germany are essential to deal with any limited attack, though why this responsibility could not be left to West German troops is obscure. On the other hand, both France and Germany were quick to suspect at least a tendency towards the thoughts I have outlined at the time of Britain's revolutionary Defense White Paper of 1957, and simultaneous reduction of the British Army of the Rhine. Their suspicions had no justification at the time; these changes were due to economy and not to strategy. But economy can lead to new strategy, and such suspicions might have some justification now.

It is said in the newspapers that one of the pressures on the British Government to negotiate with the Soviet Union is cold war weariness in the British population. I believe this is only half true. The real point seems to me to be one already touched on in connection with Britain's Far Eastern and Middle Eastern policy. By tradition and by temperament and by reason of their trading interest, Britons are pre-disposed to diplomacy, negotiation, compromise. This spring is not after all the first time that Britain has urged reluctant partners to attempt a settlement with the Soviet Union. As early as 1951, Churchill suggested a summit conference, and repeated his suggestion in 1953 after the death of Stalin. I will not weary you by recalling

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the many occasions on which Britain has cajoled the United States to the conference table on this or that issue or conflict of the cold war. The general point seems to be that Britain has never wholeheartedly accepted the American concept of the "cold war" nor the American strategy for fighting it: "containment." According to these concepts, the task of the free world is to build barricades round the Soviet Union and to wait patiently behind them until one day Soviet society mellows and the Soviet leaders agree to arrange a just and lasting peace. I do not think I need comment on the millennialist theory of history involved here. The practical point is that Britain, on the contrary, believes both strength and diplomacy to be continuously necessary in a world of endless disharmony, in a world in which the best possible solution is the best possible bargain.

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I have offered you several generalizations about the British spirit, be-
lieving them to be as true as such generalizations ever can be. Let me now return to
practical issues. I have stressed throughout the significance of the existence of Little
Europe in Western relations with the Soviet Union. It is equally significant in Western
European relations with the United States, that is, in the Atlantic Alliance. For many
years, Britain has been America's main partner; for some years, France has striven for
equality and is now increasing the pressure; recently Italy made certain tentatives in
the same direction. If Little Europe coheres, then it may, as a bloc, replace Britain
as America's main partner. So far as European affairs are concerned, this would be
to a great extent appropriate. So far as the wider world is concerned, the effects of
such a development would be momentous, but too ramified for me to enter into here.
I would simply point out how important it is for Britain that no division should grow
between herself on the one hand and the Six on the other. This leads me to make some
comment on the immediate practical issue, Britain's relations with the Common Market
of the Six.

If the Soviet Union would agree to its own suggestion made in 1957 of
a free trade area embracing the whole of Europe, then I believe Little Europe would
be bound to accept a free trade area, and the dilemma of Britain's relations with the
Common Market would be solved. However, though it would be in line with her
policy of preventing a strongly cohesive Western Europe, there seems on other grounds
little likelihood that the Soviet Union would agree. In consequence, any such pro-
posal might do nothing but arouse the resentment of the Six.

The next possibility is that the Six might after all be presuaded to
accept a Western European Free Trade Area. So strong is the opposition of French
industry, so prevalent are the fears that a Free Trade Area would dissolve Little
Europe politically and economically, that there seems little grounds for optimism in
this direction at least for the moment. To judge from General de Gaulle's nationalist
emphasis and from Premier Debre's past insistence on an associated Europe rather than
a unified Little Europe, France might in the end shrink from the federalism inherent
in the Common Market and turn to a free trade area as a way out. The ever-increasing
power of Germany might produce a reaction in France in favor of her old desire to
bring Britain into Europe, and this too might cause some modification of her stand on
the Common Market. But these future possibilities are even more speculative than
my pessimism on the prospects of a free trade area in present circumstances.

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In this uncertain situation Britain has two possible courses. Either she can wait and see how policy develops on the Continent, meanwhile working for the best possible interim accommodation of her Commonwealth and continental interests; or she can offer to join the Common Market. Britain is at present following the first course. Only the Liberal Party advocates the other. If Britain were to join the Common Market, this would mean under present circumstances that her commercial policies towards the Commonwealth and towards the whole world would be determined by a bloc, the Six, with which she does but an eighth of her trade. If it later became certain that Britain was gaining less commercially from standing apart than she would from joining the Common Market, then she would do well to revise her attitude. But this is far from certain at the moment.

I will conclude with a comment in the spirit of the remarks with which I began. One of the factors in the issue, Commonwealth or Common Market, most strongly felt in Britain is political. I question whether this should be so. I suggest that the issue should be judged now and in the future in commercial terms. It is said that the Commonwealth is the main basis of Britain's status as a world Power and accordingly that the Commonwealth connection must not be weakened. But this raises the question, what is the object for Britain of being a world Power? The answer is, for the prosperity of her people, for her commerce. I think some of my countrymen are sometimes a little confused as to why Britain ever came to have a Commonwealth. It was in truth mostly an accidental acquisition in the interests of trade. Trade was the substance; the accident was Empire.

I share the belief of my countrymen that the maintenance of Britain's world influence is important for the peace of the world. But she can only exert that influence successfully if she has economic strength. As to the framework for the exercise of that influence, the Commonwealth or the Commonwealth alone might in time not be the best. I have already mentioned the momentous effects that a united Western Europe would have on Britain's world position. At the same time, the Dominions of Australia, Canada and New Zealand are being pulled by the facts of geography into America's orbit; India is demanding more and more economic aid which Britain alone cannot give; the African colonies are being helped to self-government and may federate by no means necessarily within the Commonwealth. If, but only if, the interests of economic strength so demand, Britain must turn to a new chapter of her history, seeking a new political framework for the exercise of her influence in the world.

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