IMPERIAL PREFERENCE.

HC Deb 25 March 1919 vol 114 cc323-66

Major NEWMAN

I beg to move, That, in the opinion of this House, the delay on the part of the Government to declare its policy for the protection of key industries, for the prevention of dumping, and for Imperial preference, is prejudicial to the reconstruction of trade and industry, to the production of revenue, and to the employment of labour. The luck of the ballot has given me one of the few opportunities the Back Benches enjoy of pressing the Government, not so much as a private Member but as a citizen, on its policy on a vital point. Members who were returned last December to support the present Government were returned by a vote which altogether cut across old party ties.

An HON. MEMBER

Not all of them!

Major NEWMAN

I said, "Members who supported this Government." They were therefore returned to carry out a definitely clearly laid down policy. Without a doubt there were hundreds of thousands of electors who voted for what are called, "Coupon candidates," for one reason only. In the words of the Prime Minister they were told, and they believed, that "we must face questions of policy with new eyes, without regard to pre-war views or pre-war speeches." As regards the economic future of the country and the Empire, the Coalition leaders in November last were absolutely frank, clear, and courageous. The Prime Minister, in a letter to the Lord Privy Seal, gave to the economic policy of himself and of his Government, if returned to power, pride of place. I will quote what he said: I have already accepted the policy of Imperial Preference as defined in the resolutions of the Imperial Conference to the effect that a preference will be given on existing duties and on any duties which may subsequently be imposed. As regards other aspects of this problem, I am prepared to say that the key industries on which the life of the nation depends must be preserved. I am prepared to say also that in order to keep up the present standard of production and develop it to the utmost extent possible it is necessary that security should be given against the unfair competition to which our industries have been in the past subjected by the dumping of goods below the actual cost of production. Beyond this I should say we must face all these questions with new eyes, without regard to pre-war views or pre-war speeches. The object which we have in view is to increase to the greatest possible extent production in this country, so that no man or woman may want and that all who do an honest day's work may have comfort for themselves and for their children. Subsequently, the Prime Minister and the Lord Privy Seal, in their manifestoes to the electors just prior to the General Election, wrote as follows: One of the lessons which had been most clearly taught us by the War is the danger to the nation of being dependent upon other countries for vital supplies on which the life of the nation may depend. It is the intention, therefore, of the Government to preserve and sustain where necessary these key industries in the way which experience and examination may prove to be best adapted for the purpose. If production is to be maintained at the highest limit at home, security must be given against the unfair competition to which our industries may be subjected by the dumping of goods produced abroad and sold on our market below the actual cost of production. So much for the Coalition policy, on which many hundreds of thousands of electors voted a few months ago. The Leader of the official Liberal party again on this particular plank was precise at any rate. Mr. Asquith declared that he was an unrepentant Free Trader. I am using "Free Trader," of course, in the conventional sense of being in favour of free imports. Only a few days ago there was a new programme put out at Manchester—a new Manchester programme—upon which, as I understand, the official Liberal party is to concentrate, and in that new programme the first plank is Free Trade, and consequently no tariffs. The Labour party, at the General Election, were equally clear and precise. In their manifesto they told the country, "Labour is firm against tariffs and for Free Trade." Again, of course, I am using "Free Trade" in the conventional acceptance of the term. That manifesto was signed by all the eminent Labour leaders, including such men as Mr. Sidney Webb. Now, at any rate, here in this welter of coupon confusion, we have a clear-cut national issue, and we have absolutely clear-cut differences of party. We have had the election, and the Coalition won it, and if ever there was a Government that was given an absolutely clear mandate by the electorate, this Government was given a mandate to carry on fiscal policy in the way which was put before the country by the Prime Minister and the Lord Privy Seal. I realise that the Government has established something like a transition period between war and peace—a moratorium—until 1st September, and that in that position they have done themselves in, but the average man in the street wants to know what the Government is going to do after 1st September. Are they going over the top, come what may? If they are going over the top, have they got their objective clearly defined and their plan of campaign clearly thought out? Not only the United Kingdom, but the Empire wants to know that. No doubt hon. Members read, a few days ago, a speech made by one of the prominent Ministers of New Zealand (Mr. Fisher), in which he pointed out how anxiously they were awaiting the decision of the Imperial Government on the question of Imperial Preference, and he said that if the decision was not given soon it would greatly interfere with the trade of New Zealand, which would be diverted to and captured by such countries as Japan and America.

Leaving Imperial Preference aside for the moment, what about our home industries, our key industries—the dye trade, the glass trade and others? I imagine that it is absolutely unthinkable to any man, whether he be a Free Trader or a Tariff Reformer, that we should allow these key industries to be destroyed by foreign competition, whether it is the competition of an enemy country or of an Allied country. We have established these industries with great difficulty and they have been so vital to us during the War, and we cannot allow them to be lost by any sort of unfair competition. Of course, key industries are only comparatively few. What about the new industries which have been established since the War began? What about the competition which they will have to meet if they get no protection? I will quote what happened to a very small and comparatively unimportant industry. This instance may seem almost trivial, but it is an example of what may be happening to small Britishers to-day who have had the pluck and initiative to dare to do certain things during the War, and who now, apparently, are reaping a very unfair reward. I received a letter the other day. My correspondent says: The company was formed in 1916 by two other friends and myself to undertake the manufacture of millboards, and leather boards, for which we were assured there was a great demand in England consequent on the cessation of the importation of Dutch straw boards. We purchased on old derelict mill, which in bygone years had been utilised for paper-making. We fitted the mill with new machinery and started operations in 1917. Owing to the restrictions imposed by Government and the difficulty in obtaining raw material the results of the first year's trading showed a heavy loss. As the result of good prices and the help the company received from the Controller of Paper and Raw Materials, the company made up a good proportion of this loss in 1918 and hoped to have a successful future. After the signing of the Armistice, the Government permitted the importation of cheap Dutch straw boards, and on the arrival of the consignment of these the demand for our manufactured goods came absolutely at an end, the result being we have recently been forced to close the works. That may be a small example, but it is an example of what has happened, and is bound to happen up and down the country if certain protection is not given to these small infant industries. The case I have quoted is an instance of unfair competition, because the Dutch workman is paid a far lower wage than the English workman. What about the question of dumping? There, again, the Government have been perfectly explicit. They were explicit in their manifesto before the Election, and they have been explicit since the election. They spoke about dumping in the King's Speech— Measures will be devised for the prevention of the unfair competition of imported goods below their price in the country of their origin. What the man in the street wants to know is this: "Does the Government mean here and now to take the necessary measures to prevent the dumping of Japanese and other cheaply-made goods?" Of course I realise, and the House will realise, that Japan is one of our Allies, but we cannot allow our trade to be ruined by the cheap labour of Japan. Take the case of Japanese hosiery, which is produced by Japanese operatives who work twelve hours a day for 1s. 6¾d. The Japanese manufacturer and mill owner runs his mill for a hundred and forty-four hours a week. How are our people to compete with that? How are our hosiery manufac- turers, who run their mills forty-four hours a week and pay the operatives perhaps an average of 60s. a week, to compete with that? I leave aside for the moment the foreign market, and I ask, How is the hosiery manufacturer in this country going to compete at home against competition of that sort?

I will give another instance of Japanese competition. Take the Irish hand-embroidery trade. That, in the North of Ireland, is a very important cottager's industry. How on earth can the Irish cottager, the Irish man or woman— especially in Ulster, where the circumstances of life are maintained, and rightly maintained, on a good standard—possibly compete in their cottage industry against the industry of the Japanese, where a man or woman is content to work for an average wage of Is. 6¾d.? Of course, it is perfectly impossible. The thing cannot be done. Other hon. Members could give instances similar to these. The average Britisher wants to know what the Government are going to do. He knows and we know that we have to have production, and we have to have increased production, and we have to keep our market. He knows and we know that at the moment our export trade is stagnant and at the same time the whole of the great industrial plants of America are working at full blast. If he did not know that, President Wilson has told us so. Apart from America, Japan, and other competitors, what is happening in Germany behind the camouflage of Spartacists, starvation, and so on? Do any of us know what the German manufacturer and the German workman are doing, what they are producing now, and what they are getting ready to dump upon us and upon other parts of the world once the blockade is raised? We do not know; we cannot tell. I imagine that the Government will tell me and my Friends that there is no need of particular hurry in announcing their fiscal policy, that the thing is all right until the 1st September. That only means, for Parliamentary purposes, three or four months. We shall be rising, I suppose, some time in August. Before September the decision has got to be taken on this question. Three or four months is a very short time in the history of a nation, and it is a very short time for the Government to let the country know what it means to do in a great question like this. This is the last chance which we private Members may have of pressing this subject, and I would beg the Government to tell us exactly what their fiscal policy is going to be. I have been returned to support the Government, and I will support the Government, but it is my duty to carry out the pledge which I gave to my Constituents to press forward the fiscal policy which I promised to support when I asked them to give me their votes, and to see that it is carried out by the Government with the least possible delay.

Mr. MACKINDER

I rise to second the Resolution moved by my hon. Friend. I do so in the hope of drawing from the Government a statement of a more definite character than any which we have yet had. We had a promise in the King's Speech. We had an interim statement from the Minister for Reconstruction in regard to the policy of the Government up to the 1st September. We who stand behind this Motion feel that that statement was wholly inadequate. I heard that statement and read it afterwards with great care, and it gave more satisfaction, it seemed to mean more, when I heard it than when I came to read it afterwards. At the present moment we have in the country a necessity which maybe indicated by the three words, production, enterprise, confidence. Everyone admits that the solution of our difficulties is only going to be obtained by great and increased production, but in order to obtain that production we must have enterprise, and the first condition of enterprise is confidence—confidence that you may calculate with reasonable probability, with businesslike probability, what the future is likely to bring. The A and Z of the position at present to my mind is the breeding of confidence. The Chancellor of the Exchequer, I think it was, said to us a week or two ago, when he was told Americans were taking forward orders in large quantities in various countries, among them even in enemy countries, that there was nothing to prevent our people doing the same thing. There is. There is lack of confidence. Our manufacturers are encouraged to step forward, to look forward, to make preparations for a distant date, to be ready when opportunity comes, and they are denied the elements upon which to make their calculations. Meantime you have in the United States hot industry, not only preparing but ready, held back, as Americans think, simply because of the restraint exercised by the Government of this country.

Take the labour position. There are many causes making for labour unrest, but admittedly one of those causes is the fact that labour fears unemployment on a great scale. The evidence of the statistics of the payments that are being made by the Government on account of unemployment at the present time is not encouraging. One of the facts that enterprise has to face at this moment is labour unrest, and labour unrest is connected with the probability of unemployment. You are in a vicious circle. Labour fears unemployment; enterprise fears labour difficulties. No one but the Government can break that vicious circle. The only way in which the Government can break it is by taking action likely to give confidence. In my belief if enterprise could become confident, if that confidence spread itself as it would do from the captains of industry down through all the grades of industry you would have solved not only many of the difficulties of our finance but also the difficulties connected with the general state of labour. We say that this declaration of policy will brook no such delay as is involved in a postponement until the 1st September, and I cannot help feeling that the course of recent events must be educating the Government in some degree to the fact that it is undesirable to continue this policy of procrastination. Take the story of the New Issues Regulations. I do not blame the Chancellor of the Exchequer. He came newly into office. A certain amount of time was essential to him to examine the position. He found a certain policy in force. At first he yielded to the arguments that were put before him and he issued regulations even more stringent in character than those we had before. Then he yielded somewhat from that, and now he has given way wholly, and given us almost complete liberty so far as the internal industry of this country is concerned. Is that not clear evidence that the Government themselves are realising what is the penalty of delay at the present time? If that be true in regard to one aspect of this problem is it not likely to be true also in regard to other aspects of what is the essential peace problem, the problem of giving confidence, and so engendering enterprise.

I am not going to repeat in this House the old well-worn argument of Tariff Reform. I make the appeal to Members of all parties, Liberal and Labour, as well as Unionist, Free Trade Unionist as well as old Tariff Reform Unionist, to recognise the fact that we stand in a new position. In bringing the Resolution before the House we speak not only to the Government but to the Front Opposition Bench, or a portion of it at any rate, for we realise that we are between two fronts. I want not to repeat old shibboleths, but I am not ashamed of having been a Tariff Reformer. I was a Liberal in the 1900 election. I went over to Mr. Chamberlain in 1903 because I felt the situation of the Empire was a new situation. Hon. Members will remember that there were certain facts in view in those years, 1902–3–4, which may well be grouped together. Let me remind them of them. Not only did Mr. Chamberlain ask you to prepare measures for the defence of the trade of the Empire, but Lord Rosebery asked you to be more efficient, and Lord Roberts asked you to prepare your Army. At that time all those were looked upon as different movements. But was it not the case in fact that three wise men among us had read the signs of the times, had read the meaning of the Kaiser's letter to the President of the Transvaal Republic, had realised the meaning of the German navy laws, and had realised that we were steering straight to a world war. Some of us, feeling and knowing that in these modern days you could not say that this industry or that industry is preparing the material of war, but knowing that all industry would be involved in war, and knowing that food, and knowing that steel, and knowing that coal, and knowing that wool, and knowing that chemicals were practically all alike in the equipment of modern war, realised that there was no possible preparation for the great war that was coming but general defensiveness in regard to the whole of our trade. That was the reason why some of us who had been brought up in the pure faith of Adam Smith realised that the time had come when defence was more important than opulence. I know that my Friends on the Opposition Benches will say, "Yes, but you were accumulating those foreign investments which enabled you to tide over the great crisis of this War and enabled you to finance your Allies." That may be true, I admit, but may it not also be true if you had accumulated, even granting that would have been the effect, rather less in foreign invested wealth, and had here been prepared with the industrial mechanism that was necessary for equipping your Army, that you might either have not had to fight the War, or if you had, it might have lasted for a shorter time, in. that you would have been equipped earlier. In the long run, it mattered from the wealth point of view, little whether you had great wealth to squander in war accumulated beforehand, or less wealth and more equipment to fight the war so shortly. That was the position in regard to wealth. But the difference in regard to lives would have been immense, and the young lives of this country are the future wealth of this country. Therefore those who look only to wealth take a short view in our opinion.

But that is past. We believe we were right, but we recognise that the conditions that we were then preparing for are gone and past. For good or for ill this nation took the policy which it took in 1906, and this nation has come through, at whatever cost. But there is a vast change now, and if those old arguments tending to the defence of this Empire no longer hold with quite the same force, and if you say that it is improbable that during the next generation or two you will have to fight such a war as we were then preparing for, none the less I say if our old Tariff Reform arguments have no longer the same strength, neither have your old free import arguments. Those arguments were fitted to a position that held perhaps in the middle of last century. We will not discuss whether they held if you took a long view as well as a short view. But surely there can be no question now, having fought this War and having squandered your wealth, and having spent so large a proportion of your young vigorous life, that this nation now stands in a very different position from that in which it stood during the prosperous sunny years of the middle of last century! I ask my Friends the Tariff Reformers to put their old arguments on one side, and I also venture to ask Free Traders to put their arguments on one side. Let us face this question anew in the circumstances that hold to-day. We are no longer a creditor nation. The fall in the American exchange, now that control has been removed, indicates our real position. We stand in relation to America, financially, much as Germany stood in relation to us before the War. It is quite true that the French ex-change has risen, and it is quite true that if you could imagine there were an effective Russian exchange, that it would stand vastly nominally in our favour. But our debtors before the War were, on the whole, capable of paying. Our debtors to-day may, and we hope in the long run will, be able to pay; but for the time being we owe money and we shall have to honour our debts, and we are owed money and we shall have to be generous. We are no longer a creditor nation. What is the meaning of that? The meaning of that is that we have parted with, a natural protection. My Friends the Free Traders use the word "Protection" in a very narrow sense. They recognise only one form of Protection, whereas there are many forma of Protection. How did the fact that we were a creditor nation give Protection to our industry? It gave it in this way: We had investments abroad. The City of London, broadly speaking, administered those investments. We had investments, let us say, in railways in various countries. The companies controlling those railways, not only sent their profits to London, but had in London the offices which gave orders for the materials required for renewals and repairs upon those foreign railways, and in nine cases out of ten those orders were placed in this country. The fact that the City of London owned great investments abroad gave the power to the City of London of patronising the industries in the North of England.

You may say that we have not parted with all those investments at the present time. No; not yet. But the Stock Exchange is not freed from control yet, although the exchanges have been freed. When you come to a free Stock Exchange, free to sell abroad as well as in this country, will you not probably be faced with the position that money will be wanted in this country for a thousand purposes? We owe America money, and will you not settle many of your accounts by a series of transactions ending in the transferring to America of not a few of your South American investments? Given a free market I cannot help feeling that, this is bound to take place. The net effect will be that this industrial' country will lose one form of Protection which, under the former régime we claim it has had in a very powerful manner. The truth is, as Prince Bismarck once said: Free Trade is the policy of the strong. To him that hath shall be given. The fact we have to realise now is that, having stood forward and saved the world, we have spent our own substance, and we have to set out as a nation to make our fortune again. What is the result of that? It is that we stand in the position in which Germany stood before the War—the position which she has sacrificed. This country owned investments abroad. The interest, the dividends were paid through the City of London, and were reinvested from the City of London. But we shall find that source of profit bare, and we shall have to do what the Germans did—makes wares suitable for the market which we wish to woo, and we shall have to travel with our wares. Whereas we formerly sat in the City of London at the seat of custom, with the whole world coming to us, and giving orders to industry, in the future our captains of industry, taking counsel together, will have to organise their exhibitions, will have to organise their travellers, will have to see that they have far more intelligent travellers than ever before, and will have to travel the world in order to peddle out their wares. We shall have to build up again the fund which formerly we administered, precisely as Germany built up her fund and as the United States built up her fund. When the War came those two nations, by hard work in the way of manufacture, had put together funds and were rivalling us in the world's markets. Germany has sacrificed hers by her folly. This country has sacrificed hers, may I say by her heroism and her altruism, and the United States stands with double wealth at the present moment.

9.0 P.M.

Two courses are open to this country. You may return to your old policy. You may imagine still that your City is in command of the world. You may continue to lend and continue to order on the basis of what remains to you. If you do you will become an Amsterdam. The richest people, man for man, in the world are still the Dutch. But Holland is a country of traders, a country of ship-owners, a country doing trade before the War between Germany and the rest of the world, the owner of properties, in Java —but not a land for workmen on a great scale. That is your one possibility. You may become a rich, small bourgeois nation, or, on the other hand, you may determine to face the conditions of the future and you may determine that this nation will make its fortune afresh, that the strength of this nation shall lie, not in these fat bourgeoisie, living on the fortunes of the past, but in a great, vigorous, magnificent nation of workmen. If you are to do that, if you are to take the second course, then you must recognise the conditions of modern industry. What is the essence of success in modern industry? Manufacturing on a great scale. Article for article you cheapen, and you render more efficient the production if you produce on a great scale. You meet the conditions of the market because you can produce a greater number of varieties, you have a greater shop front. From every point of view—cheapness, efficiency, marketing, the necessity of the organisation of industry is that you should manufacture on a great scale. But what is the result of that? That you can no longer trust to that old condition of petty competition on which the laws of Adam Smith were based. If your vast organisations include under each separate administration production from the raw material to the finished article, if you count your capital by the hundred millions, your position is that you have left far behind that old petty chaffering of the market.

Our modern industrial organisations are recognising the fact, and every great industrial organisation is seeking to make its own steel, to own its own collieries, and to own its own pig-iron furnaces and rolling mills. If it be shipbuilding it makes its own engines and turbines, and does not act merely as the old-fashioned shipbuilder who merely put together the assembled parts in the shape of the ship. The reason for these vast organisations from the raw material to the finished product is that since industry must be on a great scale, and you no longer have free markets in which to buy your raw materials, you are subject to the whims of individuals whether those individuals own the raw materials or whether they are owned nationally. The world has to be refitted; it will take us many years to refit it after the destruction of this War. This country can grow rich again by bearing its share in that refitting, and we can make the great engines and great mechanisms which are required to equip the world once more in machinery. We can do it if you are going, as a nation, to behave as these great trade organisations behave, to equip yourselves completely from end to end with the necessaries of production. But then you must recognise the fact that you have got to face the Empire ownership of raw material, the protection of your key industries, and the prohibition of dumping.

As to your raw materials I have already said that half a dozen of the great ship-building companies in this country at the present moment have found it necessary to equip themselves step by step until they have got the ownership of collieries and iron mines. When we come to the key in dustries let me just remind the House of a fact—and especially would I venture to remind the Members of the Labour party. Last autumn it fell to me, in the absence of the present Chancellor of the Exchequer, who had undertaken the duty of opening an exhibition of key in dustries that was held 200 yards from this House—it fell to my lot to open it, and I ventured then to mention in my speech certain facts in regard to two key industries—tungsten and magnetos. I pointed out how 'tungsten was an essential, small it might be, in the making of hard steel, for cutting edges in machine tools and for many other purposes known to Sheffield. I pointed out too how the supply of tungsten in this country was sufficient only for a few weeks at the beginning of the War, while Germany had supplies sufficient for several years. I pointed out further the case of magnetos required for internal combustion engines, essential for motor cars, aeroplanes, and submarines, and how the magneto was almost entirely obtained from a single German firm, and that it took us two years in which to make the industry capable of equipping our aeroplanes, our motor-cars, and our submarines in competition with the Germans at the beginning of this War. I stated these facts. They were reported in the newspapers, and a gentleman wrote to me from a well-known club in London, and asked me, almost with threats, how I dared to put such nonsense before the public. He was a merchant in herrings. He had exported much weight and value in herrings to Germany before the War. "Surely," he said to me, "if it paid us to catch and cure herrings, and if it paid Germany to make tungsten and magnetos, then we are both the richer for it! Are you going to prohibit the Britisher from doing the most profitable thing?" I felt the case was hopeless, so I wrote back to the gentleman and told him I was afraid that he and I were worlds apart, and it would be hopeless for me to argue with him.

But surely in that extreme, in that grotesque case, you have the essence of those old money economics—if we had caught a few less herrings and exported a few less to Germany, and if we had made a little more tungsten, we would have had a more balanced trade, and although we we might have made a trifle less profit we would have had the weapons—the hard steel and the internal combustion engines during the first year or two of the War, and the result would have been that thousands and tens of thousands of good British lives would have been saved for this country. In those economics, which look only at exchange, values, a thousand pounds worth of pig iron is deemed a fair exchange for a motor car worth a thousand pounds. But you have only to imagine the non-producing pig-iron nation producing motor cars to realise the difference in human life—the rough, splendid vigour, no doubt, of labour, producing coal and pig iron, the skilled, refined artisanship, and infinite variety of skilled labour needed to produce that magnificent product of modern industry, the motor. It is bad for any nation to consist entirely of rough labour or entirely of skilled artisans.

There only remains the case of dumping. I venture to put to the Government this special reason why it is necessary to hurry with their declaration of future policy. Labour rightly asks for better conditions in the future. But the terms of Mr. Justice Sankey's Report show the conditions upon which you are going to attain those better terms. Next summer Labour will get shorter hours, and not now immediately, and two years hence it will get still shorter hours. Why these delays of three months and two years and three months? It is in order that you may prepare the new organisation of industry that is necessary. If you are to give better conditions to Labour those better conditions are an investment, and all investments take time in which to produce their results. In America probably you have better conditions of labour, partly owing to the fact that there they have virgin soil and partly owing to the fact they are producing in a differently organised manner. But organisation takes time, and if you are to give these better conditions for which Labour has applied, and which it rightly deserves after this War, then you must recognise that if you are to obtain the great production which is necessary to save this nation and to save all civilisation, you will obtain it only by recognising the fact that shorter hours, more efficient work, and better pay can only give you the return after the lapse of a certain time after you have got the better paid men, after you have got the better home conditions, aye, and the full result will be when the children have grown up in the better homes.

All these better conditions of labour which you are going to obtain from higher wages and shorter hours are to be obtained only as investments for the future. Therefore, I ask the Government to announce, without a day's delay, what the future conditions are going to be, because if those captains of industry are to be able to organise labour and give employment to labour, are to be able to get to work to prepare the labour saving appliances, to prepare the better organisation, to prepare to seize the psychological moment when it comes, they want every day, every hour, now to put into thought and preparation. They have to brace themselves up to the courage which is necessary in the conditions of the future which will govern the world. You tell me—I may even hear it from these benches in the course of the Debate—that in some of your key industries you have adopted the method of prohibition with licences. There seems to be salvation in the minds of some of those hon. Gentlemen in regard to the method of prohibition with licences. It saves them from that terrible word "tariff." But what are they afraid of in the tariff? One thing they are afraid of is corruption, they tell us—undue pressure on Government Departments—lobbying in this House. Well, I do not know what the experience of any of them who are employers, any of them who are organisers of industry, has been during the War; but my impression is that the obtaining of licences to do this and that, and almost everything you do, involves delay, bad temper, endless irritation, loss of opportunities, and, I am not so sure in the long run, even some corruption. If you are to have arbitrary granting of licences which no man can calculate beforehand, with some dangers—let us grant it—of corruption, or a rule that each man can look to, and perhaps some dangers of corruption in the settling of the rule—recognise the fact that you have danger of corruption in either case. Neither will give you immunity. You have got to face that fact. But what is the difference? You ask for enterprise. You ask for an employer to put down £100,000, let us say, to put up a new plant to make some new industry in this country. That man has to calculate all manner of conditions—labour, foreign tariffs, cost of raw material, possibly new arrangements under the Ministry of Ways and Communications—an infinity of conditions. I would infinitely rather know the tariff or the prohibition that I was going to deal with than have to chance the influence that I might be able to bring to bear in order to obtain a licence to import or export. My friends tell me, "But surely if you do put on a low tariff it means a regular rule." I do not want to argue the whole question of tariffs, but I do say to the Government, "If you get prohibitions and if you get duties here and there for certain industries, you will end by finding it far simpler to have some general rule."

But I do finally put the point that if, as the result of duties, your industries make some profits and accumulate them, if the community does not get the whole advantage of the duty put on, that is not a very great disadvantage. It is not a very great disadvantage for this reason, that if you are starting a new industry you will not get the money from the City of London. They do not understand industries there. If you want to start a new industry, you will go to someone already engaged in industry, a rich man who knows the conditions of industry, and who, out of the profits he has saved, will finance your new industry. That is the practical way in which industries are started. There are two separate funds—the City fund and the industrial fund. You may do something in the future—I hope you may— from the savings of the populace. There are many hopeful, and, I am sorry to say, many disappointing facts with regard to War Savings Certificates. But do not let us hide the fact that the fund out of which industry is developed is the fund saved from the profits, and the thing you have to try to prevent is the distribution of undue dividends. Money saved and invested in the business will develop the industry. I am not afraid of the profits that have both got behind the tariff barrier. We are asking the Government to give us— because it is owing—some distinct indication of the policy they mean to follow after the 1st September, in order that enterprise may lay its plans now, while there is still time, and if those statements made this evening are such that those of us who stand behind this Resolution feel that we must make some protest in the Lobbies, then I would venture to put the position very shortly thus: In 1872 Mr. Disraeli from that bench used a famous geographical simile. Looking at the Government opposite to him, and pointing his hand from end to end of that bench at all the row of hoary heads, he compared them to the great range of the Andes Mountains, seen from the deck of a ship in the Pacific, with the great row of snow-clad caps to the extinct volcanoes. But my geographical simile will hit both that bench and the bench opposite. In the Mediterranean there is a certain Strait which was much feared by the mariners of antiquity. On the one side is the rock of Scylla; on the other side is the whirlpool of Charybdis. The whirlpool is there [pointing to the Treasury Bench]. The rock is there [pointing to the Front Opposition Bench]. The Government, urged by the necessities of the moment, have, I am afraid, no time to think, and they go round and round. We beg them to summon up courage to break their vicious circle, to stop their hesitancy, to give firm foundation for courage and for enterprise on the part of the country. And in certain parts, at any rate, of the Opposition Bench, there is, I fear, a rock of dogma and doctrine which even this War has not been explosive enough to blow up. They will tell me that it stands for economic truth. Grant it is economic truth, all truth is relative in its significance. That rock of Scylla, which was a danger to the mariners of antiquity, is now laughed at by the captains of modern steamers. Some of these hon. Gentlemen who stand upon that unexploded rock, who stand crowded on that little rock, forget that what was a truth of great importance in the 'twenties and the' forties of the last century has been dwarfed by the organisation of modern industry. I beg to second.

Sir DONALD MACLEAN

We have listened to two speeches which have interested the House very much, and notably that of my hon. Friend who has just sat down. His economic arguments were listened to with an affected interest, but I do not know that some of the metaphors with which he finished his very eloquent speech were not of equal interest to all the Members present. I do not know to which side he really allocates the snow-capped Andes or the extinct volcanoes. Apparently we can make our choice with regard to that. At any rate, he referred to us as being on a rock. All I say about that is that if hon. Members have to make a choice between a rock and a whirlpool, I should advise them to stick to the rock. But I want just to take the House back for a very few minutes to the Resolution which is before us. While my hon. Friend made detailed reference to the question of the key industries and also to the question of dumping, I noticed that he said nothing about the question of Imperial Preference, to which the now historical letter which was written by the Prime Minister to my right hon. Frend the Leader of the House, on 2nd November, gave dominating interest. Let me read the relevant sentence— I have already accepted the policy, said the Prime Minister, of Imperial Preference as defined in the resolutions of the Imperial Conference to the effect that Preference would be given on existing duties and on any duties which may subsequently be imposed. I should like to confine what I have to say to that. Of course, we can only deal with the existing duties. We do not know what the future has before us in the matter of duties which may hereafter be imposed. But let us see what it really amounts to, this question of Imperial Preference on some of the existing duties. Take the question of tea. How does Imperial Preference work out on that point? The imports—I am taking the year 1913, the last year that I can get at—the imports for the Empire in that year were roughly 340,000,000 lbs., and from foreign countries 50,000,000 lbs. It will be seen that as far as the figures are concerned, the Empire holds a practical monopoly of the tea trade of this country. How is Imperial Preference really going to help us there? Our foreign tea comes mainly from China and from the Dutch East Indian possessions. Suppose we are going to have Preference on tea differentiated as against China? What is the position there? China in that year took nearly £15,000,000 worth of British manufactures. How is China going to be affected in regard to British merchants going to that country to sell British manufactures, if one of the very first things we do after this War is concluded—and China is, if not quite one of our Allies, certainly more than a friendly nation—is to put on a duty as against China? What is the position with regard to the Dutch East Indian Possessions? Holland gives no Preference to anybody; she has practically Free Trade, and our manufacturers have the same access to the overseas dominions of Holland as her own traders enjoy. Have the Government considered what would be the effect on those trading facilities at present granted by the Dutch Government to our traders if we started out by penalising Dutch tea? These are facts we have to deal with. After all, this is a business matter, and has to be dealt with on strictly business lines. What about the question' of sugar? Take refined sugar. From the Empire, in 1913, we imported 6,000 cwts., and from foreign countries we imported 18,450,000 cwts. Of unrefined sugar, from the Empire we imported 1,500,000 cwts., and 19,500,000 cwts. from foreign countries.

Brigadier-General CROFT

Will the right hon. Gentleman state which foreign countries?

Sir D. MACLEAN

It was outside the Empire, anyhow. We took an immense figure from Russia.

An HON. MEMBER

No, not from Russia—moderate.

Sir D. MACLEAN

The great bulk of our sugar coming from foreign countries, what is the Government policy? Are we to reduce the duty on sugar from the Empire and to increase the duty on what we can get from foreign countries?

Brigadier - General CROFT

Enemy countries.

Sir D. MACLEAN

I say foreign countries. It might be enemy countries, but if sugar comes from an enemy it is just as much sugar. You want sugar, and you want to get payment from our enemies. Will anyone tell me how you are going to get indemnities from our enemies other than by two ways, goods or services. It cannot be done. Gold, such gold as we can scramble for, amount to mere dust in the balance. There is only the one way of getting payment from an enemy or a friend outside these shores—goods or services. We all want cheap sugar, at any rate very ranch cheaper sugar than we have got. If you are; going to increase your duty on that, on the basis which the Prime Minister has promised to the Leader of the House, what will be the results Then again, I do not need to labour the question o£ wine. We shall be at once in trouble with our friends and Allies in France if we propose to give a preference to Australian, wine. The whole, resolves itself into this. Do my hon. Friends really wish to surround the British Empire with a ring fence of preferential duties, and set up a close system of tariffs here?

If you are going to have a ring fence of duties around the Empire, what about, those friendly countries who have been fighting and losing with us? The whole; situation, my hon. Friend below the Gangway knows very well, has in many respects fundamentally been changed in this War. That is common ground between us. That is a matter which we shall have very gravely to bear in mind. We have to deal with trading Allies, America, France, and. Belgium, so far as the latter can trade, Italy, and also others. I do not know how the League of Nations question comes in here. What does President Wilson say? "We are going to have a League of Nations. Each nation will set up its own system of tariffs, but as between all the nations then embodying the League, you must treat all alike." That is laid down there definitely. I would ask my hon. Friends to bring the matter down to a close business calculation of how we are to carry on our trade. I agree entirely with my hon. Friend in one thing: if we are driven into a system other than that which we had before the War, our system, of free imports, I most certainly prefer tariffs to licensing. That I have not the slightest doubt about. Such log-rolling as, goes on, and must go on—and the Government Departments cannot help it— makes it that the thing is festering with corruption, with secrecy, and with every thing that is undesirable. Tariffs would have to be dealt with by a House of Commons Committee, and that matter possibly fought out on the floor of this House. However undesirable that would be from my point of view, it is certainly preferable to any system of licensing. I do not wish to detain the Committee longer, but desire to put two or three points in connection with this interesting Debate for the initiation of which we are very much indebted to the hon. Gentleman below the Gangway.

Mr. T. SHAW

I rise with a certain amount of trepidation after the very eloquent speech of the hon. Gentleman the Member for Camlachie, who was so eloquent that he almost convinced me, although he turned the Front Opposition. Bench into a rock, and then made them stand upon themselves. He told us that before the War the City of London was the toll gatherer, that we had the riches of the earth, that we dominated the situation, but that in order to fill that position again we must change the system which we had before the War. I think the hon. Gentleman proved too much. When you prove too much, the result, I am afraid, will not bear calm investigation. I hope the Motion will not be passed. At the present time in Paris peace is being negotiated. We are hoping on these benches that either as an integral part of the peace settlement itself or by negotiations continued afterwards that an international arrangement will be made in regard to a minimum standard of comfort for the workers and a fiscal arrangement covering all the countries now negotiating. I suggest to the House that the peace terms themselves will have a very important bearing upon the fiscal policy of this country in future, and that it is extremely inadvisable for the Government at the present time to make a declaration that may influence the peace terms in a way not to the advantage of this country, its industry, and its commerce. I suggest, too, that there is a great danger of discontent among our Allies. I dare say it is quite natural that if the French are told that Australian burgundy must have preference over their burgundy they will not be pleased—to say the least of it, and the reaction may tend to do us more harm in the commercial world than any good we shall get from the preference we give.

On the general question, Protection, I am not at all carried away by the eloquence of the hon. Gentleman. There has been an artificial Protection during the War, and those of us who sit on these benches, and know what use was made of that artificial Protection by those who had goods to sell are not likely to be carried away by floods of eloquence. The facts are there. We have the experience of them, and "an ounce of fact is worth a ton of theory." We are told of the necessity for safeguarding our key industries. Yes, I do not think there is a voice on these benches that will be raised against that. But we say: "Safeguard your key industries in the proper way."

Brigadier-General CROFT

How?

Mr. SHAW

How? I will tell the hon. and gallant Member! Determine what it is absolutely necessary you should produce, and produce it as a nation. Do not give a vested interest to any body of producers by tariffs. Produce the things you absolutely need for yourself and take the benefit for the nation. I want to say that no sensible man will doubt that an increase of production is necessary if we are going to pay off our debts and become wealthier in future. But are we going to increase our production by setting up a method of taxation which helps the incompetent, the lazy, and those without initiative to exist? Or are we going to develop our resources by making people work and do their best? Note the contradiction. We are told that we need tariffs, because we cannot compete with Japan, which only pays Is. 6½d. per day. How are you going to compete against charges like that, we are asked. We need these tariffs, we are told, because of competition with America, which pays bigger wages than we do. What does it all mean? I ask myself as a plain man, do we need tariffs because of low wages or because of high wages? Evidently one or the other must be wrong, or the country is wrong from beginning to end. [HON. MEMBERS: "No, no!"] Let me now say a word about dumping. I am glad to have the definition of what dumping is. Dumping is selling goods in a country at a lower price than the cost of production in the country of their origin. That is not the definition of dumping given by the newspapers which generally represent the views of the hon. Gentlemen who seconded the Motion. We are told that it is dumping because Holland sends us baskets for fruit at a cheaper rate than we could get the raw material in this country, although no one alleges that these baskets are being sent here at a less price than Holland can produce them. I do not think, however, we shall quarrel, if this is the definition of dumping, about the solution. If goods are deliberately unloaded into this country at less than their cost of production in order to hamper our markets, then I for one will say keep them out absolutely, lock, stock, and barrel. Let us have no duties.

We were told that a certain very distinguished politician was an unrepentant Free Trader, and there are quite a lot of those on these benches. We are still unrepentant, because we feel that Tariff Reform, so-called, is the best method ever adopted for squeezing the consumer, and above all, the poorest people in the country. The Government are asked whether they are going over the top. If we have to go over the top, I suppose we may be shot, but we shall not run away on this issue. There has been an insinuation that we are in danger of losing our New Zealand trade to Japan, if we do not give her a Preference. I believe that to be an insult to the people of New Zealand, and I believe it is untrue. We have been told of the difficulties certain firms have had in making mill boards and leather boards. I do not know exactly where this kind of thing is going to end. The Resolution asks the Government to make a plain declaration on certain matters, but the speeches we have heard refer to quite other things. If we have to protect an industry like millboards and leather-boards, other industries will claim the same protection, and we shall have every industry being carried on in this way, with the result, which was not a very pleasant one, from which the system of Free Trade saved us many years ago.

I want to say a word or two about Japanese competition, and I want accurate data as to what these wages that are quoted mean. I have heard in my time a great number of statements about the textile industry, and personally I have conducted investigations on the Continent of Europe in order to find what prices were being paid, because of the statements made to me that we were being undersold by cheap German, Belgian, and Dutch labour. My finding was that in Belgium the workers were actually getting higher piece-rates than we were, that in Holland their piece-rates were also higher, and I also found that Germany's success was not due to her methods of manufacture, but to the methods of her merchants and her Consular system, and to the fact that by a careful study of foreign languages her merchants were able to enter markets that we might have entered with better articles; and she beat us, not because of our lack of manufacturing capacity, but on account of the German capacity for getting into the markets of the world and commercially beating us out of existence.

I know that some of the German methods were not above suspicion. I know how Germany went into Italy and how, through the Banco Commerciale, were actually able to use Italian money to finance German companies who were competing with Italian companies. It is for us to smarten our own methods and wake up to what has been going on. We want to develop our own Intelligence Department and train, our own men properly, so that they may enter foreign markets and sell our goods on the best possible terms to those who want to buy them. I have already referred to the inconsistencies of the argument with regard to low and high wages. In my opinion, the greatest danger to this country in competition with foreign countries is not the low-paid country, but the country in which wages are high, hours are low, standardisation has taken place, and organisation is absolutely of the most, perfect character.

One thing that could be done which would be of far greater service than any system of tariffs is for the employers to say frankly to the workpeople, "We do not mind what you earn if you will give us the maximum of production, and if you do we will guarantee that your wages shall not be reduced because of your efforts." I am speaking of what I know. I have in my own personal experience met case after case in which the increased production of a new article has meant the reduction of the rate of pay for the worker, and the worker has said, "What does it matter? If I produce more, it simply means that my rate of pay is reduced, and I will produce exactly the amount of my money and no more." The employer has proceeded on similar lines, and the worker in return has acted in the same way, and has given the employer as small an amount of labour for as big a wage as he could get. That kind of thing needs sweeping away, and it is of far more importance that that thing should go than any question of tariffs.

You can have what tariffs you like, but if you have inefficient production, neither protective tariff or anything else will carry you to the front as a progressive nation; but with the best feelings between employers and employed, with the best efforts of the operative, and with good wages, no amount of foreign tariffs can prevent you getting to the top of the scale. Therefore I suggest that our attention should be devoted to that side of the problem and to the commercial side, and then there is not a nation on the face of God's earth, America included, that can beat us. I know something of some of the trades in Germany. I have been in dozens of German commercial establishments, and German workshops, and I say unhesitatingly that my experience was that when it came to the actual production of the goods our men could beat the Germans, and at any time and place were able to hold their own.

I am aware that Germany had some specialities. I know the works at Stuttgart, and I know in the case of certain manufactures Germany came to the front, but this was the exception rather than the rule. The reason for this is not to be found in her superior methods of production but in her merchants, who were ahead of our own merchants and our methods, and which in some respects we ought to copy. If we have Tariff Reform, I believe we shall have set up in this country a number of vested interests that it will be exceedingly difficult to kill, once given life. I believe that Tariff Reform leads to incompetence, bolsters up in-efficiency, and bleeds the consumer. I only need to repeat what our experience has been in this respect during the War, when we have had a system of artificial Protection. We have seen the result of that, and we do not want any more of it. In conclusion, let me appeal to the House, whatever the opinion of hon. Members may be on the subject of Protection or Free Trade or with regard to dumping, not to pass this Motion at this time. Give the Peace Conference a chance. Let the delegates there see whether it be possible to build up a system of international arrangements as to hours of labour and conditions of work. Let them see if it be possible by mutual arrangements to agree so far as tariffs are concerned. Do not by a declaration to-night probably defeat the very object that we are seeking, namely, to live in peace and comfort with our neighbours, doing the best for ourselves and not injuring them in any way.

Major TRYON

I have been very much struck in this Debate by the very different feeling that prevails in the House compared with the old Debates that we used to have before the War when it was simply one party against another. We have had a very interesting speech from the hon. Member who has just addressed the House, and I need hardly say how much many of us on this side agree with all that he has said about the importance of increasing production and of encouraging the workmen to increase their production by giving them fair rewards for it and not cutting down payment for that production when it is increased. But he made other points. He told us that the success of Germany was due to her merchants, and then he told us that what he would do in this country would be to sweep away all the merchants and substitute State officials and Socialism. I never heard a more remarkable statement than that the whole of the success of Germany was due to German merchants coming from a Member of a party which proposes to sweep away the wonderful enterprise which has done so much to build up our trade. He told us that this German enterprise was the thing which made Germany, and he went on to say that under tariffs you got no enterprise. I wonder whether he is aware that Germany is a protected country and has been for many years! If tariffs mean, no enterprise, how is it that he finds enterprise in Germany? He says, also, that there is no invention under tariffs. Has he ever heard of the United States? Was there ever a country where there was more invention than in the United States?

Mr. JOHN JONES

And high wages!

10.0 P.M.

Major TRYON

I agree. The right hon. Gentleman the Member for Peebles (Sir D. Maclean) asked what President Wilson had to say. President Wilson said, "No sane democrat advocates Free Trade for the United States." I must apologise for replying to these debating points, but time is short, and we have had such an interesting Debate that I thought it better to reply to the points that have arisen than to make a general statement. Other points were suggested. We were told that we should get into trouble with our Ally France if we had tariffs. I wonder whether hon. Members who say that are aware that France is a country which has had a tariff against our goods which has in no way interfered with our friendship with her? Do they say that France will not tolerate our having a tariff, although we gladly agree that it is perfectly right for the French people to impose one? Are they aware that our relations with France were greatly improved when Cobden went back upon his earlier doctrine and arranged a commercial treaty with France not on the basis of Free Trade in this country and tariffs abroad, but on the basis of mutual concessions between us and France? That is what we work for. One of the vital questions that we must consider—and no man can tell the answer —is what is going to be the general policy of the world with regard to tariffs, Protection, and Free Trade? We here are not bound simply to work on party lines for anything. We are simply trying to see what is best, and it is very difficult to see any chance in the world of the future for Free Trade for this reason. We must remember that as self-government has been granted to our Colonies it has always been followed in the long run by the imposition of tariffs. We must remember that all great republics and all Labour parties who are trusted by the people to govern their country impose tariffs. Therefore, there does not seem very much chance of a Free Trade world. I frankly admit that there are great advantages in a Free Trade world. I do not deny it, but there are also great disadvantages of the smaller countries trying to set up new industries. All that we have to do is to consider what is right for us and our country. The right hon. Gentleman the Member for Peebles could see no difference between sugar made here and sugar made in our Dominions or sugar made in Germany. He said, in the colloquial expression, "It is just as much sugar wherever it is made." It is not just as much sugar when war breaks out, and you find that you are dependent for an essential food upon a production in Germany, not because it belongs to Germany but because it has been artificially created in that country. We have had a Debate which has been a great happiness to me, because of the friendly feeling with which we have approached the question. We have had an admission from the right hon. Gentleman the Member for Peebles to which I would respectfully call attention as of the greatest importance. It is that tariffs are far better than any system of licences. That is a great and very important admission. We cannot, in the world as it stands to-day, with fighting still going on in many countries in Europe, and with peace anything but in sight in the world, place the safety and liberty and absolute freedom of our country at the mercy of any other nation. We must be in a position to get all our essential supplies, our food or any production that is necessary, either for our maintenance or our defence. Therefore, in the interest of our liberty, apart from all economic questions, we must be self-supporting.

There is a proposal that a League of Nations should use the economic weapon to coerce some other nation. We have travelled a long way from the days when we were told that those who use the tariff only injure themselves. The weapon which we were told many years ago was so feeble that we ought not to use it lest we hurt ourselves is now admitted to be so powerful that we can coerce other nations with it. There are nations against which this power would have no weight. But let us free ourselves from being at the mercy of any country. Let us be independent commercially in our food, in our raw materials, and in our essential supplies, in case, which we pray may never happen, there may be another war. I have only intervened as one who has taken part in these Debates every year. I see new hope in this Debate, because we have had from the Labour party, from hon. Members opposite, and from all the House, an entirely different method of approaching this great and vital question. I would only say two things in conclusion. First, we must approach this question on the basis of the Empire, and not on the basis of these small Islands. Secondly—and I do urge this respectfully upon the Government— though there may be people who dislike Free Trade, and there are, and though there may be people who dislike tariffs, and there are, they all must unite in condemning any prolongation of a state of things under which we do not know whether we are going to have Free Trade or tariffs. We must settle the policy that we are going to have, and either policy will be better than this prolonged state of uncertainty.

Mr. BONAR LAW (Leader of the House)

Listening to a Debate of this kind carries our memories back to a very different state of things from that which has prevailed during the last few years, and it is a Debate to which personally I have listened not only with great interest but with great pleasure. It is a subject which has always interested me, and I think I may say that before the War, I do not say as regards quality, but as regards quantity, I do not think there was any Member of the House who made so many speeches as I did in regard to it. I am therefore tempted to go into the subject on something of the old lines, but I shall entirely resist that temptation, or not entirely, but what I shall endeavour to do, with, perhaps, some references to the remarks which have been made, is to state as clearly as I can what the policy of the Government is and what our intentions are in regard to it. I listened with special interest to the speech of my right hon. Friend the Member for Peebles (Sir D. Maclean). Following the remarks of my hon. Friend below the Gangway, he came instantly to the conclusion that if he had to choose between them, a rock was better than a whirlpool. I am not quite sure. In the case of a whirlpool you either go through it or you go down. In the case of a rock, as the speech of my right hon. Friend shows, once you are sitting on it nothing on earth can move you from that position. But my right hon. Friend did really make a new departure. I understand that he represents the party of which for so long Mr. Asquith was the distinguished leader in this House. The speech he has made to-night is in the most absolute contradiction to the definite view which was taken, not only by Mr. Asquith, but by all his colleagues, at the time of the Paris Conference on economic subjects. My right hon. Friend, like another famous family, has learned nothing and forgotten nothing, but that was not true of those who preceded him on that bench. They had at least learned this, as the proceedings of the Paris Conference showed, that in a world where war is possible no nation can safely depend upon other nations for those things which are essential for the life of that nation. That is something to have learned. Then my hon. Friend who spoke last on that side (Mr. T. Shaw), in a speech, with much of which I agree, made two remarks which are worth noting. The first of these was that the whole future prosperity of this country depends upon the extent to which we can increase our production. With that I entirely agree, and it is from that basis that the whole efforts of the Government will be directed in framing a policy in the new conditions. He said also that one of the reasons which made him object to a tariff was that it would create vested interests. Perhaps that is true but the most vital of those vested interests is high wages, and I would ask my hon. Friends who sit on that bench—I am not now describing in the least what our policy is to be—to put to themselves this question: How is it possible to preserve a high scale of wages in this country if such conditions as were described by my hon. Friend who moved this motion prevail, and if, as I know is the case to-day, some cotton goods, the very goods for which he specially pleads, in small quantities, I admit, are coming in from Japan which are on sale in our market at a lower price than our manufacturers must pay for the cotton out of which these goods are to be manufactured? I put to them that question.

Now I will deal with the Resolution. It begins with a reference to Imperial Preference, and on that point, at least, there is no doubt, and has long been no doubt, as to what the policy of the Government is. In 1918, I think, it was definitely declared by His Majesty's present Government that we had adopted and would carry into effect the policy of Imperial Preference. That was known not only before the last election, but it was known more than a year earlier. There is no doubt, therefore, in anyone's mind that, so far as that particular question is concerned, the policy of His Majesty's Government is not in any doubt, and that it will be carried into effect at the earliest possible moment. With regard to that policy, I really was not only interested, but surprised to hear the kind of criticism directed against it by my right hon. Friend the Member for Peebles. It is an exact repetition of the arguments which were used at the Imperial Conference of 1907 by Mr. Asquith. He endeavoured to convince the Colonial Prime Ministers that Preference would be of no earthly use to them, and he made a very elaborate argument to that effect. I have not looked this up, but I think it was Mr. Deakin who said, in reply to Mr. Asquith, "That is surely a question for us." It is still a question for them. Shakespeare says: There is nothing either good or bad But thinking makes it so. If it were really of no use and our Dominions thought it was of use, it is worth giving for that reason alone. But it goes far beyond that. The assumption in all these arguments is that the conditions of trade are going to continue under a new system precisely as they are, as regards statistics, under the old system. Nothing can surely be more ridiculous than that. A Preference on these goods, on sugar, for instance, within the Empire is bound to have an enormous effect on the production of sugar through out the whole of the Empire, and it will entirely upset all your statistics. I think after the lessons of the War it is really ridiculous to say that it makes no difference to us whether we get the sugar from our own Empire or from abroad, or whether the trade which results from it is within our own Empire or abroad. Is there anyone who would maintain that now? Why, look at the history of this War. I think this country has throughout been very magnanimous in the way it has spoken of the exploits of our Colonial soldiers. I think we have spoken of them even more highly than we have praised the doings of our own men, and it is right for they were far away. They were not under the same compulsion which rested upon us to take part in this War. But making all allowances, when we realise how close, how doubtful the result was is it too much to say that we have no guarantee that we should have won the victory but for the help of our Dominion fellow-subjects? In view of that fact is there anyone who will be prepared to say that to whatever extent we can increase the productive power and manpower of the Dominions by our trading with them—by our Preference with them—that is not a good thing for Great Britain as well as for the Empire?

But it goes much further than that. My hon. Friend (Mr. Mackinder) pointed out that while in our old fights about the tariff we spoke of Protection as if it only applied to the imposition or some imposition of tariffs, it really does nothing of the kind. I am myself inclined to think that in the old controversy both sides were rather inclined to exaggerate the importance of the subject which they were advocating. It might operate in many other directions. Just think, for instance, what an addition—I am speaking now of the past—we could have made to the fighting forces of the Empire if there had been, not control, but some direction of the emigration which took place on such a tremendous scale before the War. Or take another aspect in which we might have given that preference before the War. Capital it a new country is vital. How easy it would have been for us, when London was the centre of the money market of the world, to give some slight preference in the borrowing of money in London to help to develop the Empire in some such way. All that kind of thing is involved in the effort to treat the Empire as one unit and we have done it in another way. In this system of licences which is now going on we have removed all restrictions within the Empire. That in itself is a preference of almost inestimable value to our Dominions, and we get value for it. I read to-night in an evening paper a short account of a debate in the Canadian Parliament. They were passing there a subject which interests Canada as well as the House of Commons, that Canada should get her full share of the indemnity and that it should cover the cost of the War. The acting Prime Minister of Canada, in dealing with that subject, said they could rely on the future, as in the past, upon Great Britain treating Canada not only justly but generously. That spirit, and the fostering of that spirit, is worth more than any fiscal policy.

As regards Preference, the position is quite plain. The policy of the Government has been and will be carried out. My right hon. Friend the Chancellor of the Exchequer is already considering in what way he will give effect to it in the forthcoming Budget. I noticed that the right hon. Gentleman (Sir D. Maclean)—I thought it very unfair to President Wilson—dragged him in, as if he had something to say about this policy of Imperial Preference. That is very unfair. The Republican party in the United States tried to make political capital out of what President Wilson had said about the League of Nations. The first thing he did was to tell them that nothing that he had said or meant implied in any way interference with the United States in its own fiscal policy. That fiscal policy includes Preference, and a very big preference given by the United States to some countries outside the Dominions of the United States.

Now we come to the general question. My hon. Friends would like very much that we should declare, quite distinctly and now, exactly what our policy is going to be. I can assure them, and I can assure the House, that there will be no hedging of any kind, and no hesitation in declaring that policy as soon as it is possible for us to decide in what form it will be carried out. The letter to which my right hon. Friend (Sir D. Maclean) referred, addressed by the Prime Minister to myself, made it quite plain what the general line of our policy is. That declaration will be carried out by the Government to the full, in the letter and in the spirit. But can anyone really suggest that it is possible to-day to say exactly in what form it will be carried out? Let me point out what is actually being done. As was explained by my right hon. Friend (Sir A. Geddes) the other day, the present policy of the Government is by a system of licences to restrict the imports of these goods into this country. I do not think—and I say this in all sincerity—that it raises in any way the fiscal controversy in its old form. The conditions to-day are absolutely abnormal, and you cannot at this moment deal with them by any definite system which will apply to normal conditions. I do not suppose there is any Member of this House—I am sure the Labour party would not—who would say that at this moment, when all our industries have been occupied in producing material for war, and are being gradually changed to a peace basis, we should allow unrestricted imports of the very things which these factories are being started to make, and allow them to be sent in by countries which have not had our suffering during the War, and are in a position to send them in to-day. I do not think any man in the House would think that reasonable. I submit that it is a very bad system and the sooner it can come to an end the better. We cannot deal with that to-day by a tariff, even supposing a tariff were a desirable thing. You cannot deal with these conditions by a tariff. There are certain classes of goods, mainly luxury goods, which would be bought at any price with any tariff, and these are the very classes of goods which our factories are being prepared to make, and for which the market would be taken away if the imports were allowed at the present time. In these conditions, I think it is a very desirable thing, when we have time to look around, to go fully into this problem and to decide, not in a hurry, not in excitement, but after careful and complete examination, which is the best permanent system for this country. That does not mean that we are neglecting the subject now. As a matter of fact, one definite part of the undertaking given at the time of the election is being fulfilled. We definitely promised that there would be anti-dumping legislation. A Bill on that subject has been carefully considered, and a Bill is already in trim, though we have not had time to consider it, and I myself have not had time to examine it. So far as that subject goes it is being dealt with. But, of course, there is far more than that involved.

My right hon. Friend spoke of two things—of key industries and of keeping up production in this country. That is what we have got to do. That is the aim which we have set before us. We have not decided what is the best way to do it, and I say to my hon. Friends who agree with me on this question, as I say to the others, we have got to deal with this question quite apart from our old prejudices. We have not got to go into it, and I am not going into it, with the idea of saying to my right hon. Friend that a tariff is the only way. We have got to treat it as we have treated every war problem—that is, to see what is the object at which we are aiming and then to try to discover what is the best means of carrying out that object. That is our policy. It cannot wait for ever, and already the Department has been engaged in trying to formulate a scheme which will be the best way of carrying out the policy which the Prime Minister put before the country. But it is all very well to talk about our not dealing with the thing right away. We cannot do it. I do not know whether the House fully understands what the pressure on the Government is at this moment. From the nature of things that pressure must be great, because through no fault of ours the Government is in effect divided. One half is in Paris and one half is in London. Nor am I complaining, but it is an indication of what the position is when I say that though for the last three months I have been free from the responsibility of a great Department, yet at no time during the War has the pressure upon me, and I am sure upon all my colleagues, been so great as in these three months. It is not too much to say that in the circumstances we have a right to ask that the House, whatever its views, should recognise the facts and realise that there is no unnecessary delay, and that we are doing our best.

But, in addition to that, I confess that I am not at all sure that the delay is all to the bad. Perhaps we all need a little education still. I learned to-day from my right hon. Friend the President of the Board of Trade that he had a deputation from a particular industry, that the deputation consisted both of employers and workers, and that the deputation came to complain of the limited imports which we were allowing into this country. The Labour side of the deputation spoke very frankly to my right hon. Friend. They said, "If the Government do not deal with it we will deal with it ourselves, and find a method of seeing that these goods are not transported direct and dealt with in this country, if you insist on letting them in." One thing I am certain of is that owing to the War, and the conditions of the War, there is an absence of expansion of trade. There is, I am sorry to say, growing unemployment. As long as that takes place I, personally, am absolutely convinced that more and more the feeling will grow up among the working classes in this country that, if we are to maintain and, perhaps, improve the present level of wages, we must have more security than we have had in the past in our own home markets.

That is my position, but I quite admit that everything that was said by my hon. Friends about the need of a definite policy is true. It is quite true that our manufacturers are in a position of great uncertainty. That is not altogether due to the question of what the fiscal policy is, perhaps it is comparatively little so. Everyone knows what the other conditions are, the uncertainty as to the prices of raw materials, the uncertainty as to the level of prices, everything of that kind. I was going to say I was glad to mention—but that would not be the right way to put it—I can tell the House that those conditions are affecting other countries, including the United States, to a very large extent at present. But, undoubtedly, if people could know exactly what our fiscal system is going to be it would be of great value to everyone, and it is clearly the duty of the Government to come to a decision and announce it at the earliest possible moment. We do not in the least intend to wait until September before we announce that policy, but we do intend to make as certain as we can that it is the best policy, that it has been thoroughly thought out, and that it is something on which the Government as a whole is prepared to come to this House and ask for the support of the policy we lay down. That is all I have got to say on the subject to-night. I hope I have not spoken too much in the line of my old speeches, at all events I did not mean it. I recognise—I have not in the least changed my views—but I recognise that the War has altered everything, and that the Government which has now secured the confidence of the country is a Government which represents very different views on these questions, and what I mean to do is to try to get, without trying to force my views or the views of my Friends on those who do not agree with us, the best policy we can in the existing conditions which prevail.

Mr. ACLAND

This has been an interesting Debate up to now with a high level of speeches which I shall do my best to maintain. But I think it has been a little disappointing in one way, because the supporters of the Motion have not really dealt with the Motion itself. The right hon. Gentleman who has just replied for the Government, in a most interesting and able manner, refrained from adding anything to what he had said before. I think the most interesting thing about his speech, if I may say so, was the almost total silence in which it was received by those who had moved and supported the Motion. When my right hon. Friend (Sir D. Maclean) was discussing the question as to there being a tariff or prohibition, he made it quite clear that he was prepared, if he had to choose between the two, to suffer from a tariff; but the point he was making, and those who work with him intend to go on making, is this, that we for our part do not intend, if we can help it, to have either a system of prohibition or a system of tariffs. We regard them both as being evil, and we do not intend to let ourselves be put in the position of having to choose between two things which we regard as almost equally bad. I would like to devote the few words, I have to say to commenting on the Motion as it is on the Order Paper, from one point of view expressed by the right hon. Gentleman, and with which I am sure we all agree, that what is supremely necessary to this country now, and for the next few years, is the greatest possible increase in production. Until we can revive our producing capacity, we are very greatly in danger of drifting into national bankruptcy, and I entirely agree with him that that is the thing we must have in our minds first, foremost, and all the time.

There are three subjects dealt with in the Motion—key industries, dumping, and Imperial Preference. With regard to key industries, I do not intend to say much, because that is a matter which, more or less, we have been discussing two or three times lately. Only one quite interesting thing has happened since our last Debate, and that is the resignation by Lord Emmott of his chairmanship of that Committee which was dealing with certain matters of imports and exports and their restriction. That has, I am bound to say, justified altogether the fears which I and some of my Friends ventured to put before the House when we were dealing with this matter before, namely, that the question in its working out by the Subcommittees in charge of the different groups of subjects would, as Lord Emmott said, be dealt with too predomi- nantly by an element directly interested in the trades concerned in a way which he, as an honest and impartial man wanting to keep apart from all that sort of atmosphere of pulls, in favour of this industry or in favour of that set of manufacturers, could not stand, and therefore he has resigned his position. That is the sort of thing, hinted at two or three times in this Debate, you are bound to get into if you are going to proceed on the basis of selecting certain industries for more or less limited prohibition. The only way—I for one certainly am not and I do not think any of those with whom I work on this Bench are against it—is for the Government to bring down to the House as soon as possible a list of those industries which they really regard as essential key industries. When they do that, I do not think there will be any absolute refusal to consider anything as a result of the War. The War, of course, has changed a great many things, and if certain industries are selected as those which the Government thinks must receive, for the future, special treatment, I believe they will find everybody in the House prepared to consider their list. The only thing we shall fear is that however careful any set of persons may be in trying to say what our key industries are at present, it is only too likely, when the next emergency arises—if ever an emergency does arise—that we shall find it is quite a different set of industries from those we have carefully tended and conserved at the present time, and therefore what we can do in advance will not, in all probability, be very much good. That does not acquit us from having to apply our minds to it when the Government can bring down a definite set of industries and declare that all other industries are absolutely free from restrictions. There is this second condition, which has also been pointed out from these benches, that when that list of key industries is brought before us by the Government for discussion, it is absolutely essential that some machinery should be suggested for keeping those industries under the very strictest national control, and securing that the profits for carrying them on should come to the nation, and not go to any sets of private and interested individuals. We have said that kind of thing before. We shall go on saying it again. [HON. MEMBERS: "Hear, hear!"] At any rate, I am devoting my speech to the Motion, and that is what some hon. Members who have taken part in the Debate did not do. Being invited by the Motion to go into the question of key industries, I have ventured to go into that question, and to set, even at this late hour, a precedent in that respect.

Then there is the question of dumping. I noticed that when my right hon. Friend talked about the possibility that we in this country might be willing in future to take sugar even from Germany there were loud derisive cheers in a certain quarter of the House, and when he proceeded to ask how else Germany could possibly be expected to pay the indemnity there was, if I may say so, a loud silence in the same quarter. Absolutely no reply has ever been suggested to that question. At the last Election when I was asked if I were in favour of making Germany pay I said, "Yes," but I also proceeded myself to ask another question—"How?" There is no answer to that except that it can only be by letting Germany send us her goods or allowing her to render us certain services such as shipping and insurance. I shall be perfectly prepared to look forward—and I shall do so with some pleasure—to see how in fact we actually do get paid the expenses of the War which the vast majority of people of this country were led by the Government to expect would be paid if we exclude taking German goods or letting Germany do service for our benefit. I am quite content to wait and see how that works out.

Then I come to the question of Preference. I think my right hon. Friend opposite was quite fair when he said he was going to keep away from the old controversy. I think he did, but still his speech in many ways reminded me of old times. It reminded me of the days when the Foreign Secretary used to deal with fiscal questions and get up and make speeches quite as clever and quite as interesting as that which the right hon. Gentleman made to-night, but which, like his, did not carry his own supporters any further towards Preference, which was after all what they were in pursuit of. It was rather like that to-night, because when my right hon. Friend spoke so eloquently of all we could do in the direction of Preference for our Dominions by directing capital in ways which would assist them in doing certain other things I am quite certain that what was in their minds was, "Thank you for nothing. We knew all that before, but we want something vastly different from that." That is so, of course. When they are talking about Preference they want a regular system of tariffs right through to be set up. As long as the Government maintain just the same attitude as they have hitherto adopted I do not know that we have much to complain of. We shall judge when the matter is definitely before this House. They have said precious little so far. They have said that they intend to give a Preference on Duties already imposed or that may be imposed, and they also state that nothing whatever will be done which can possibly increase the price of food; therefore sugar is not entirely ruled out.

Mr. BONAR LAW

We definitely stated that our undertaking on duties now imposed applied to sugar. A preference will be given.

Mr. ACLAND

Sugar is surely a food. I remember a very definite statement which entirely precludes the Government from doing anything which either directly or indirectly will increase the price of the food of the people.

Mr. BONAR LAW

My right hon. Friend is surely forgetting that the party of which he is a member always taxed the very commodity to which he is referring.

Mr. ACLAND

It has been frequently pointed out that an all-round duty for revenue purposes is one thing, while a preferential duty, which is supposed to give particular persons a particular advantage in prices is a perfectly different thing. I feel sure if you are going to say, "We will put on sugar or on tea an all-round duty for revenue purposes, of which the whole yield goes into the Exchequer," that is one of the ways in which this country has always consented to pay its taxes, but if in connection with the fiscal question you have made the statement that you are not going to touch food in the sense of preferential or Protectionist duties, it seems to me it is very difficult to carry that out in the direction of putting preferential duties on sugar or tea or things like that. However, we shall see. The point I want to make is that the right hon. Gentleman, to my relief, did not go an inch beyond what the Government had frequently said before, and, I am afraid, very much disappointed those who brought forward this Motion. I do not wonder the Government hesitates. There is a great deal about which to hesitate. It is a dreadful thing to contemplate what hon. Members who move this Motion do contemplate with the utmost cheerfulness, namely, beginning our new relations with our new Allies by putting on duties against the goods they send out. [An HON. MEMBER: "They do to ours."] That is all very well, but we have settled down to a system with them which to our considerable advantage in the past, has not admitted of duties being put on against their goods, and we shall see when it comes. I think it will be a considerable gain to the group with which I work that when we really do begin for the first time to put on duties against Belgian exports, and French exports, and Italian exports, there will be considerable difficulty and considerable friction, and I do not wonder at all that the Government hesitates before announcing a policy of that kind.

With regard to the Dominions, of course there is this fact you cannot get away from, namely, that there is no really effective demand that we should set up that system of tariffs, beginning with Preference, which the Movers of this Motion have in mind. The Dominions before the War were perfectly content that we should do what was best suited to our own system, and that has always been admitted by their great leaders. My right hon. Friend quoted one of them in his speech to-night in backing up what he said about Preference, and the best quotation he could find was this, that the Prime Minister of Canada had said that he could rely on Great Britain ever doing in the future, as in the past, what was best for the industries and so on of Canada. There was no complaint that we had not in the past pursued a policy which was perfectly consonant with, the best interests of Canada's industries. Surely, if this War has proved anything, it is this, that the best foundation for Imperial solidarity is sentiment, and is not tariff bonds or trade arrangements or bargains. At once when you start that you get difficulties. You get South Africa wondering whether they are not being worse treated than New Zealand, or Canada wondering whether they have not been unfairly treated compared with Australia. So long as you go on the basis that, for good reasons connected with our industries and our people, it is necessary for us to avoid an enormous system of tariffs, that is understood by every man in the Dominions who knows our conditions here at all, and there is no heart-burning, no jealousy, no squabbles, as to who shall get most. The effect of such a system as is advocated here—though they will never come to close grips—a system of Preference as the basis of your tariffs, going up in steps—a moderate duty against the Dominions, a heavier duty against our Allies, a heavier duty against neutrals, and a still heavier duty against other countries. It is a four-decker tariff they are really advocating.

I want to touch on the effect of that on the export trade, on the restoration of which the prosperity of this country depends more than anything else. We have had, owing to natural conditions, owing to the industry of our people, owing to our geographical situation, without any tariffs at all, because we had no tariffs at all, the most unexampled position of favour with regard both to our imports and our exports in the pre-war period. There has never been a country in which at the same time so large a proportion of what we imported consisted of food and raw material, and so large a proportion of what we exported consisted of manufactured goods. That has been the concomitant—I do not say that that was necessarily the result, but it was the concomitant—of our system of free imports. That has a bearing on the question of exports. If you embark on this question of a tariff based on Imperial Preference it is a thing that will take years to work out. It might very well take three Sessions before it was finally accomplished, even if you had no crowd of great questions bearing upon you as now, owing to its vast complications and tremendous difficulties. For, during all that time, there would be doubt when there should be certainty. There would be a want of confidence, when there ought to be confidence, as to what would be the future of the country, at the very time when those engaged in building up our export trade again ought to be as certain as possible as to what the future has in store. If you are going to be committed, as this Resolution, if carried, would commit you to building up an enormous tariff machine, it must affect every export business in thousands of ways. Hon. Members who lightly contemplate the setting up of a great tariff as a thing to be done in an odd fortnight of the Session, or something of that kind, do not realise in the least how that must affect every great exporting industry in this country. We obtain the greatest portion of what we import in the form of raw materials or semi-manufactured articles needed for this great export trade. The only way to build up the confidence which our industries need more than anything else is by freeing them from the prospect of the great edifice of a tariff put on all sorts of things which affect their trade. Remember that half our trade is export trade, and we cannot maintain a population half as great as that which we now maintain unless that export trade is restored. Finally, I say once again that the only way to restore confidence in that great export trade on which we must depend if we are to be saved from the bankruptcy to which we seem to be rapidly tending owing to the heinously inflated Estimates that the Government have this year put before the country—we shall not have a Budget, but a Loan. It will simply be a proposal for raising hundreds of millions more pounds in Loan in this country, with practically nothing, compared to the expenditure, forthcoming on the side of taxation. That way lies bankruptcy—the only way to avoid it is by restoring our export trade to the fullest possible degree. So long as our export trade is threatened by the regulation tariff which the proposers of this Motion have in mind, the confidence which is essential cannot possibly be restored.

Brigadier-General CROFT

I cannot think it is necessary to reply at length to the right hon. Gentleman. Mr. Joseph Chamberlain and Mr. Disraeli answered his speech a very long time ago, and he appears to have learned very little from the experience of the War. I am sorry, almost, that not one of his colleagues who was associated with the Paris Resolutions is in the House at the present time to have pulled his coat-tails and reminded him of the pledges of the Liberal Leaders outside. I would like to say one word on the speech of the Leader of the House. He pleased everybody in the House when he told us that the Government were going forward with their policy of Imperial Preference, although some of us regard it is a very small measure within that limited scope. Everyone who has been keen on this question in the past will realise that if it is a small thing as a financial gain to the Dominions, it is a great thing to show the Dominions and the Colonies that so far the spirit is willing for a greater development of our inter-Imperial trade in view of the common sacrifices of the peoples of the British Empire. In regard to the main tariff policy of the Government many business men will think that it is deplorable that the right hon. Gentleman had to tell us that the Government had not made up their mind as to their policy. The Tariff Resolutions were introduced, I think, in the summer of 1916. Mr. Asquith and his colleagues were very emphatic, not only as to the wisdom of that policy, but as to the extreme urgency of carrying it into effect forthwith. Yet while His Majesty's Government have promised from time to time that we were going to have a definite statement of the policy of the Government, we find even once more to-day they are unable to give this House any very definite lines on which to go. The right hon. Gentleman himself, one would have thought, must have made up his mind, because, in the days gone by, there has been no more profound student of the questions involved than himself. But the real trouble, I think, is that the Govern-itself has not really made up its mind as to what are its main principles of policy. One heard of a letter written to the Unionist party, thoroughly converted, that the Government were to have a real economic policy. We have to remember, too, that the Secretary for War went down to his constituents with a clear conscience because he was joining a Free Trade Government! The same difficulty is puzzling the minds of business men of this country. No single business man, no single agriculturist, knows for a moment where he is. We quite understand the pressure of work on His Majesty's Government in regard to all these questions. But surely the whole of the Government are not responsible: surely some of its members might, during these four long years, have been in a position to get a policy ready for which the sanction of the Prime Minister could have been obtained!

One word in regard to the right hon. Gentleman the Member for Peebles. We have had all the big guns of the Opposition Bench here to-day, and their most powerful arguments have been brought to bear. What the House will note with extreme interest was that the right hon Gentleman, the leader of the official Liberal party told us that we must have cheap sugar! The indication was very clear that so far as he was concerned, he was determined that that sugar should come from Germany or Austria-Hungary if it was cheaper than in this country. It is well that the country should know that this miserable remnant throws stones at another party in the State owing to its smallness, oblivious apparently of the fact that 100 per cent. of those that went to the poll under its ægis were returned, whilst the party to which the stone-throwers belong came back differently to what they went out! Thousands of people in this country demand that the Government shall, at the very earliest possible moment, tell them where they stand; otherwise they can make no plans, and you will not get real confidence in the industry of this country.

Mr. FRANCE

The Leader of the House did not deny, but rather, I think, defended with some difficulty, what I should have thought was the giddy occupation of not trying to go down in a whirlpool! Although he said that everything had changed during the War with regard to the attitude on this subject, he also denied that his own views have changed. We shall be grateful to him, having pointed out that it will be unwise to proceed at once, and in a hurried fashion, to try and decide our whole future policy of this country, that he told us that the Departments were at present considering how best to carry out a temporary policy. We heard the other day that that policy was to be reviewed in September. We were told to-night that the decision would be given before December—

It being Eleven of the Clock, the Debate stood adjourned.