If in the affairs of a man or a nation a time comes when all possible choices appear distasteful or fraught with grave danger, it is useful, indeed essential, to reflect on how one got into the embarrassment. Past choices, past mistakes, may well illuminate the problem more clearly than arguments about the present, for they will show the often unstated premises which brought the situation where it is. In the history of this country the choice, which is now after much prevarication more and more openly admitted, between entry into the Common Market and maintaining even a semblance of a cohesive Commonwealth (beyond Royal visits), is as grave as any. It seems the catastrophic end of disastrous policies. If not remedied, I feel confident that the choice, however it may fall, will lead to further discomfiture and decline.

I.

While most of this failure is the direct result of the laissez-faire attitude of new Toryism, the early mistakes were due to the failure of Labour ministers to evolve an adequate philosophy of economics fitted to implement their aims. They were (especially Dalton, Bevin and Stafford Cripps) dominated by their official advisers who had no policy beyond the desire to return to “normalcy”, to have done with war-time controls irrespective of whether they were needed or not.

Britain after the war found itself in a position of unchallengeable pre-eminence in Western Europe. She alone had stood up to the Nazi threat. While her contribution to the actual liberation of the Continent had been less than that of her giant partners, she had earned and was granted equal station. No doubt her capital equipment was run down; she had suffered severe damage and her population was exhausted. But in her war-time controls she possessed an instrument which would enable a supply-conscious allocation of her resources. And the war period created a strong Sterling Area in which Britain had undoubted preference such as the Ottawa Empire preferences could never supply. The bulk-purchase agreements provided stable markets for the overseas areas while the metropolis benefited from relatively low prices. Insistent American pressure, starting with the Lend Lease negotiations and the Bretton Woods Conference, and reinforced by the predilections of the British bureaucracy, led to policies of liberalisation and currency convertibility which ushered in the first of the eight exchange crises in British postwar history in 1947. Bankruptcy and unemployment seemed inevitable in Europe.

At that point the Americans recoiled from their own dogmas and inaugurated the Marshall Plan. They voluntarily permitted a sharp discrimination against American exports and the establishment of a double preferential system which united the Sterling Area and Western Europe. With the establishment by Gaitskell, against the resolute opposition of the Treasury and the Bank of England, of the European Payments Union, this new economic unit had become a working system which was to lay the foundation of Europe’s recovery.