March 1957

on the World today

THE life of Prime Minister Harold Macmillan’s new Tory Government depends above all on two things: the development of an Anglo-American policy in the Middle East and a massive expansion of exports. The Socialist leaders, Hugh Gaitskell and Aneurin Bevan, will do all in their power to bring the Government down, for they are convinced they would win a general election by a mile. But history is against them. The Tories have a Parliamentary majority of 60. Only the votes of their own party can turn them unwillingly out of office before 1960. The last time a Government with a clear majority was brought down in peacetime by a vote in the Commons was in 1895.

As London sees it, there are only two alternatives to consolidating a joint Anglo-American policy: 1) acceptance of a straight Pax Americana in an area where British interests are more direct and vital than American; 2) the filling of the power vacuum in the Middle East by the most effective local power — probably President Nasser’s Egypt, backed by Soviet Russia. Neither development, would be acceptable to the “Suez group” in Parliament (whose full strength is put at 60 members). Nor would either be palatable to the nation.

It is already widely feared in unofficial Britain that the United States seeks deliberately to oust British influence from the Middle East oil fields and substitute its own. The first alternative outlined above would seem to many Britons to prove this suspicion. As for the second, the need for Middle East oil is so imperative that if any individual gained political control of the area he could well fancy himself master of Europe. The West, including the United States, would have suffered an appalling reverse.

The economic threat to the Tory Government is, of course, intensified by the blocking of the Suez Canal and the shortage of oil. Until the Middle East comes out of crisis the Government cannot really come to grips with its central problem. That problem can be summed up in a few sentences.

For twenty months British production has stood still. But British productive capacity has not stood still. A massive investment program has increased it rapidly, and is even now increasing it still further. Opportunity for great expansion is at hand. But without expansion the gap between capacity and production could translate itself into serious unemployment. Yet British trade is balanced. The pound sterling has recovered from its winter weakness. The position remains, in Mr. Macmillan’s words, “brilliant but precarious.”

A similar dualism runs through the whole Brilish situation and through British thought. The British are suspicious of American initiative where it exists, and anxious for it where it does not. They sense that a completely new era has begun, but they welcome signs that Britain does not intend to enter it without a struggle. They acknowledge that Sir Anthony Eden’s policy was disastrous, but hold that it was right.

Mr. Macmillan’s immediate task was to break with the past and yet to preserve continuity. He was the only politician who could fulfill both requirements. His cabinet appointments testified how sincerely he had tried to do so.

The Queen’s choice

Mr. Macmillan was not elected. He emerged. It is undoubtedly the absolute prerogative of the British sovereign to decide on whom to call to form a new administration. Constitutionally Queen Elizabeth II did not even have to take ministerial advice. She did, however, ask such advice. She was advised first by Sir Anthony. Then she called in Lord Salisbury, Lord President of the Council, and later Sir Winston Churchill, the old lion, who drove to the palace wrapped in a rug designed and colored like the Union Jack.

Lord Salisbury, Sir Winston, Sir Anthony, and Mr. Macmillan have one striking thing in common. They all refused to vote for the Munich agreement in 1938. But R. A. Butler, Macmillan’s rival for the post, had voted for Munich as Foreign Undersecretary. The issue of appeasement perhaps had come up once again. The views of Tory members of Parliament were also brought to the Queen. The feeling against Butler, in spite of his pre-eminence as the Tory tactician and philosopher, was stronger among right-wingers than the feeling against Macmillan was among moderates.

Out of all this, two particular developments are likely. The first is a stronger demand for the future election of Tory leaders—Churchill has favored this proposal in the past —and the second a demand for further social “democratization” of the party.

The new Prime Minister

Macmillan is proud of his descent from plain Scottish crofters. But his personal background is impeccably U — Eton, Oxford, and the Brigade of Guards. He is connected by family ties with a dozen of the great noble families in Britain.

Yet, while Macmillan pleases high Tories most because he has not broken with the past, he also pleases others most because he has. It is possibly significant that Macmillan’s first obvious action on becoming Prime Minister was the simple one of firmly trimming his mustache. It used to droop. This, combined with an almost Edwardian style of dress and a sharp wit hidden behind a muffled voice and a very straight face, possibly did more than anything else to give him what Malcolm Muggeridge, editor of Punch, described on television as “a tiny, tiny, tiny flavor of mothballs.” Macmillan has now changed his style.

The Prime Minister’s second action, even before he had formed his Government, was to meet informally the chief American correspondents in London. This accorded with the public’s hope that his accession to power would be good for AngloAmerican relations — a hope supported by the fact that his mother was American and by Macmillan’s happy friendship with General Eisenhower in North Africa during World War II. Sir Anthony’s sad going opened the way for a new deal.

Macmillan’s Government represents a new deal in another way. He has brought in Sir Percy Mills, an industrialist with much occasional experience of administration, to boss power and steel. This obviously presaged an increase in the nuclear power program. Nuclear power cannot make Britain independent of imported oil. But it can make Britain independent of an increase in oil imports.

The Prime Minister also promoted Peter Thorneycroft, Duncan Sandys, and Sir David Eccles. Mr. Thorneycroft was one of the founders of the Tory Reform Committee. Mr. Sandys, son-in-law of Sir Winston Churchill, is clearly a man with a future. Sir David Eccles did well as Minister of Education. All three have been prominent in the movement for closer integration with Europe.

These appointments reflect a public acknowledgment of an awareness that times have changed. Just what they have changed to is not easily defined, even where it is understood. But the evidences of the change, besides the established fact that Britain’s military power is now limited, include the realization that it is not German arms that worry Britain in 1957 but Germany’s lack of arms; that Britain is no longer scared of U-boats but is, rightly, scared by Volkswagens.

As a military power in its own right Britain may have no future. On the other hand, as possessor of both fission and fusion bombs, as banker to half the world, as the greatest buyer and a tremendous trader, Britain clearly has a brilliant future, provided its economic resources can be devoted first of all to economic growth.

The cost of defense

A constantly recurring theme of the new Prime Minister — spoken to foreign correspondents in the spring of 1956 and repeated at a NATO meeting in Paris in the winter — has been: “If only we could make a big reduction in defense expenditure we could resolve one of the Treasury’s main dilemmas: we could completely transform our foreign balance.” Britain has been spending twice as much on defense as have its NATO allies in Europe (8.2 per cent of its national product), more than Canada, and only a little less than the United States. If it cuts its spending it will have to give up more imperial “commitments.” But a reconsideration of Britain’s commitments, bringing its defense spending more nearly into line with the rest of Western Europe, is almost certainly imperative to the success of Macmillan’s second personal project, the association of Great Britain with the proposed European common market.

Macmillan appreciates the need for competition, but he appreciates even more strongly the need to increase exports. As things are today, a large increase in exports is possibly the only thing, other than an American subsidy, that can save Britain from serious industrial trouble.

The crisis of the pound in December was a crisis of confidence. It had no relation to the realities of Britain’s external trade balance. The trade balance was good. But Britain’s production (in total) has been stagnating while its capacity to produce has been growing. Some trades, notably the car industry, already buck a slump.

Chancellor of the Exchequer Thorneycroft’s dilemma, as he prepared his April budget, is that if he lets home demand increase he may unbalance Britain’s trade. That could start another, and more realistic, run on the pound. But if he does not let home demand rise, the gap between actual and potential production will widen. That could spell unemployment.

An increase in unemployment (now at 2.2 per cent) would also strengthen the power of the charge made by Gaitskell and Bevan that “Tory freedom" cannot possibly reconcile full employment with stability. In this case the Tories might rue the astonishing Suez transposition which has made the rebellious Bevan now their favorite and the donnish Gaitskell their anathema. Showdown time is about to arrive for political economic theory. Because of this it is probable that Butler is far from finished. His leftist type of conservatism could be brought into play in order to redress the balance if the going should get tough.

Tantalizingly just over the horizon is this possibility of a vast increase of production—$3 billion higher than it is today. That is the conservative estimate of the difference in 1957 between potential and performance.

The pressure of taxes

In the circumstances, Thorneycrofl will be much exercised as to how he can provide incentives, as early as April, both to industrialists to invest and to individuals to work and save. The rate of income tax is 42.5 per cent. After a gross income of $5600 is reached, surtax starts its additional grab, soon reaching 95 per cent.

It is not the height of taxation so much as its exceedingly low starting point that disenchants the middle classes; that and a constant 5 percent inflation. This disenchantment is reflected in the correspondence columns of the Times, and also in the long, patient, hopeful queues outside the London immigration offices of Canada, Australia, and New Zealand. If they could, 300,000 people would leave for Canada alone this year. These are not runaways, but skilled artisans, engineers, scientists, doctors.

Another sign of middle-class revolt that the Government faces is the incipient rebellion against the National Health Scheme by the nation’s doctors. A strike of doctors, in which they would treat patients but not with “socialized" medicine, has been a constant possibility since Sir Anthony Eden’s administration refused to implement the recommendations of an official report for a pay increase of 25 percent for nationalized doctors.

In the popular press even more space was given to the dire possibility that the Oxford-Cam bridge boat race might have to be canceled. The reason was lack of gas for the Oxford coach’s launch. At the last moment it was discovered that ration coupons had been sent, but official anxiety had caused them to be rushed erroneously to the stroke of the previous year’s boat, Mr. Christopher Davidge.

There were other signs that there will always be an England. On the evening Macmillan was nominated, the commercial television service hurriedly sent a camera to pace Downing Street. It encountered a serious young man in a deerstalker hat. He proved to be unaware that there had been a change of Prime Minister. When informed he shook his head. “Oh, dear!” he said. “Bristol University won’t like that at all.”