So long as those reserves are low then the slightest deterioration in the current position, or some change in capital movements, can very easily create an Exchange Crisis.
It means that the Chancellor of the Exchequer is apt to have to be exceptionally cautious in his budgetary policy lest, by going slightly beyond the level at which the right balance of payments surplus would be achieved, he runs into Another Exchange Crisis.
If the world thinks that the German mark is strong and that the £ sterling is weak, and might get weaker, then they will buy marks and sell pounds, and that was what was happening in the Recent Exchange Crisis.
This debate was arranged because of the Exchange Crisis of last month and the measures announced by the Chancellor on 19th September.
I suppose the answer will be, "It is all very well for you to talk, but look at the Exchange Crisis which happened in September.
Will this prevent Another Exchange Crisis if the sterling area is in deficit to the dollar area?
I can only say this from my own experience, that any Chancellor of the Exchequer dealing with an Exchange Crisis, whether it be of the type that I dealt with in 1951–52 - which was of a different type, because that was a case of a bad balance of trade, and we had to cut imports - or a crisis such as this, where wages and salaries are frankly outrunning production and where profits are not up to the wages and salaries, can only deal with it by limiting the circulation of money, as my right hon. Friend has done.
Thanks largely to the measures which we took under the initiative of the late Chancellor of the Exchequer, we faced the Exchange Crisis of last year firmly and resolutely.
If we cannot avoid an Exchange Crisis in these favourable circumstances, what will be the position if these trends, as they very well may be, are reversed?
Yet, by September, 1957, we were in the Worst Exchange Crisis since the war and the full employment policy was virtually abandoned by the Government.
If we so manage our affairs that our export prices look likely to become uncompetitive, we cannot stop the rest of the world drawing the conclusion that Britain is heading for an Exchange Crisis.
The thinly veiled hostility of the Chancellor's predecessor and assistants at the Treasury make me alarmed that, should he bump into trouble with an Exchange Crisis, a price rise or anything of that kind, he will be pressed with the policies of restrictionism.
In 1957, against a background of a favourable and an improving balance of payments, a Grave Exchange Crisis broke out on speculative grounds because many people wanted to get into deutschmarks and dollars.
Since both regulators are subject to Parliamentary approval, what will happen if the gentlemen in Zurich bring about an Exchange Crisis in September?
Secondly, it is no use doing that by expanding internal demand which will provoke an Exchange Crisis.
One of those difficulties - I say no more than this - is the threat of an Exchange Crisis this autumn.
What is emerging is the picture, in fact, of a Major Exchange Crisis quite different from the 'Gnomes of Zurich' view.
De Gaulle has set his highly nationalistic stamp on the Community, and the frailty of the new concept of European unity was revealed in the Exchange Crisis of 1969 when, as we all know, the Six did not react as a whole.
Does he agree that many thousands of holidaymakers are seriously disadvantaged and are in considerable difficulty as a result of the Exchange Crisis, but that there are also less immediate problems, such as the premature cancellation of holidays?