PRIME MINISTER'S STATEMENT.

HC Deb 02 August 1923 vol 167 cc1769-822

Motion made, and Question proposed, "That this House do now adjourn."—[Commander Eyres-Monsell.]

The PRIME MINISTER (Mr. Baldwin)

I propose, with the permission of the House, to open the Debate by reading a statement identical with one to be read in another place. Upon that the Debate will proceed, and if I be fortunate enough to secure the permission of the House, as I shall have exhausted my right of speaking, I propose to intervene later.

On 7th June last the German Government, having considered the replies of the Allied Governments to their first Note of 2nd May, communicated to the latter a further Memorandum containing revised proposals for dealing with the questions of Reparations and the Ruhr. The German Memorandum appeared in the Press of 8th June.

Communications then passed between the Allied Governments with the object of ascertaining and elucidating their respective points of view, and the French and Belgian Governments in particular exchanged opinions with His Majesty's Government on the subject.

A month later—on 12th July—a statement was made in both Houses of Parliament as to the position assumed by His Majesty's Government, and the necessity of action was strongly emphasised, in order to terminate a situation that was fraught with peril both to the peace of Europe, and to the interests of all the parties concerned. Certain propositions were submitted by His Majesty's Government as the bases of any such action, and the statement ended by recommending definite steps to the Allies. His Majesty's Government held that the proposals contained in the German Note of 7th June deserved to be examined and replied to, and that such reply should, if possible, be an Allied reply. Further, inasmuch as the French and Belgian Governments were indisposed to take the initiative in formulating an answer, His Majesty's Government said that they would themselves assume the responsi- bility of framing a draft reply, which they would forward for the consideration of their Allies.

In pursuance of this intention, His Majesty's Government drew up a draft identic reply which they forwarded on 20th July, with a covering Note, to the Allied Governments of France, Belgium, Italy and Japan. In this draft reply, they dealt with the various proposals contained in the German Memorandum of 7th June. They expressed their opinion that, while nothing should be done that was inconsistent with the stipulations of the Treaty of Versailles, advantage would be derived from an examination by impartial experts, in co-operation with the Reparation Commission, into Germany's capacity for payment. As to the question of the guarantees offered by the German Government, His Majesty's Government went on to point out in the draft reply that the economic value of any such guarantees must largely depend upon factors of which the German Memorandum had made no mention, such as the stabilisation of the mark and the balancing of the German Budget; and that no guarantees could be effective unless provision were made for some form of international control of German financial administration. The draft reply ended by advising the German Government, if it desired a resumption of inquiry, to withdraw without further delay the ordinances and decrees which had organised and fomented the policy of passive resistance, and unequivocally to disavow the acts of violence and sabotage which had in some cases accompanied it; and it expressed the belief that such an action on the part of Germany would involve a reconsideration by the occupying Powers of the conditions of their occupation, and a gradual return to the normal features of industrial life in the Ruhr.

In the covering Notes with which the draft reply was sent to the Allied Governments, His Majesty's Government gave fuller explanations of the views which they held on all these points, and they urged upon their Allies that inter-Allied discussions should be opened with as little delay as possible, whether by Conference or otherwise, for the purpose of elaborating a comprehensive plan of a general and final financial settlement.

The replies of the Allied Governments have now been received. The Italian Government have not so far returned a written answer, but have expressed themselves as in general agreement with the views and proposals of His Majesty's Government. The French and Belgian Governments have returned independent replies.

His Majesty's Government have devoted the most careful and anxious consideration to these replies, and, while fully conscious of the friendly language in which they are couched, and of the cordial spirit by which they are inspired, they regret not to find in them the material for sending the Allied answer to the German Note to the despatch of which they attach so much importance—indeed, the draft reply submitted by His Majesty's Government is not mentioned in the French and Belgian replies. Nor do these Notes appear to hold out any definite prospect either of an early alteration of the situation in the Ruhr, or of the commencement of the discussions about Reparations, to both of which His Majesty's Government had eagerly looked forward. It is apparent that many weeks, if not more, might easily be consumed in the preliminary interchange of opinions between the Allies on the lines that are now foreshadowed by the latter before any effective step could be taken for terminating the present situation.

His Majesty's Government cannot too often repeat that, while regarding the interests of their Allies as bound up with their own, and while shrinking, as they have done throughout, from any action that might be thought indicative of Allied disunion, they yet hold firmly the view that the problem now before all of them cannot be evaded; and that, while the Allies may be occupied in exchanging views in a spirit of unabated friendliness on this or that detail of this or that proposal, the European situation, carrying with it all prospect of the Reparation payments to which the Allies are equally entitled, may sink into irretrievable ruin.

In these circumstances, His Majesty's Government have decided to lay before Parliament with the least possible delay the papers which record their own views and endeavours, and they are inviting their Allies to agree to the publication of the Notes or statements on their part to which reference has been made and which are required to explain the situation as a whole. His Majesty's Government entertain the hope that the publication of these papers may assist in determining the real dimension of the problem with which the Allies are confronted, and may convince the world of the imperative necessity of prompt and united action to deal with it.

12 N.

Mr. J. RAMSAY MacDONALD

I am sure that the House has listened with profound interest, and in some respects with profound disappointment, to the statement that has just been made. The profound disappointment relates to the replies that have been received by the Government from our Allies. I venture to hope that the omission of all reference to our suggested Note in the reply to the German Government's Note by the French and Belgian Governments is not more than an oversight. That a Note of that character, raising matters which no Government can afford to overlook now, and which lie at the very foundations of the problem which is now facing all the Governments of Europe, should not receive even a sentence of reply, is a matter of profound disappointment, I am sure, to this House.

We are discussing this subject under most inconvenient conditions. I do not blame the Government exactly, but yet this is the last chance that we shall have of considering our relations with our Allies, and, if we do not discuss that matter now, we shall have no opportunity apparently of discussing it before the autumn. The House ought not to adjourn without expressing its views, at any rate in a general way, upon the situation with which we are now faced. But how can we do it without papers? The right hon. Gentleman may have gone as far as he possibly could. He has given us a certain amount of information, but not nearly enough to enable us to explore this delicate and difficult subject in the way that the House of Commons ought to be able to do before it separates for its holiday.

There is one general point of satisfaction, and I express it with the greatest pleasure. Our Government at last has determined to devise a policy of its own and to pursue it. As I understand it, in general terms that policy expresses this: That this country has and must have views and interests which it must express and protect. Otherwise, we have no foreign policy at all. Further, that our conception of an alliance is a co-operation in which common aims and policy are defined by discussion and are pursued by concurrence, and not a combination which any one of the partners can claim to control by its own will and in its own interest. I think that that is both reasonable and proper, and, in so far as the action which has been inaugurated by my right hon. Friend since he became Prime Minister, carries out that general conception of British policy, I think he can depart on his holiday—[Laughter]—I hope that my description will prove a little more accurate than seems likely—but in any case he can depart with the assurance that the vast body of the House of Commons, the great mass of opinion in the House of Commons, is behind him in carrying out that policy. There is one question I would like to ask. I noticed, in listening to the statement, that the period of time between 8th June and 12th July was hardly referred to at all. Within that period, I understand, we addressed questions to the Governments of France and Belgium. I wonder if the Prime Minister will be in a position, when he replies, to fill some of the details into that very short paragraph at the opening of his statement.

The position in which we find ourselves is this—and I hope that we shall not lose the opportunity which this new position gives us of reconsidering the whole of our position. We have been pursuing a certain policy, to my mind, and to the minds of my hon. Friends, a negative policy. That is perfectly clear from the Debates which have taken place on this subject since the House began this Session. We are now going in for a positive policy. We have tried negation, we have remained quiescent, we have been tranquil, we have, in fact, looked on, and the result is the conditions with which we are faced to-day. Now the Government have made up their minds to pursue a policy in a positive way. Before I pass to one or two questions about this policy and to find out exactly what it is going to be, I should like to say this, and I hope we shall get a pledge from the Prime Minister on the matter. It is a long time between the

beginning of August and the middle of November, and during that time affairs may get a little more difficult and critical than they are even now. I think we ought to have a very definite assurance that, should circumstances arise, the Government would call this House together, so that no great step could be taken and no large commitment made without the full consent of this House, which otherwise could not carry with it the national strength that it should. On Monday, I indicated that request in the form of a question which I put to the Prime Minister. On Tuesday, the right hon. Gentleman the Member for Paisley (Mr. Asquith) put it more categorically. To-day, I repeat it. We hope to receive a definite pledge that, with full information before us and in the event arising, this House will be summoned to discuss the situation if the Government considers it requires to take some new step.

The first point in the new departure must be this. We must end all trust in secrecy. That phase of diplomacy ought to have been finished with the War; that volume ought to have been closed with a bang. No Government conducting the foreign affairs of this country ought now to trust to secrecy, because the ways of secrecy are the ways of evil. We know the gentleman whose deeds do not belong to the light, and, although the preliminaries of the agreement must be carefully explored, quietly explored, between those responsible for Foreign Offices and Governments, nevertheless the limitations of secrecy ought to be very strictly defined, and they certainly ought not to go to the length of determining what is to be the great policy of the country, as under present circumstances that policy may determine whether this country is to exist as a large European Power and a successful economic Power, or not. For instance, we have already seen in the French Press how evil secrecy is in the tittle tattle that is being published and the bad rumours that are getting circulated. The way in which the French public are being misinformed in what we are doing and what we propose to do is only possible when no clear official statement is made as to where we stand, what we want, and what is our policy. The security of the nations depends upon publicity and not upon secrecy.

I do not know whether the Prime Minister is in a position to answer this question, which may seem to be an aside, but which is not. One or two French papers just now are beginning to give currency to a rumour that we are engaged in secret conversations with Spain against the interests of France in North Africa. Is that true, or is it not? If we are engaging in conversations with Spain, as I can very well imagine that we are (if it is necessary, why not?) if our interests are involved, why not discuss them? But there is no harm—there would be no harm—in conversations, the subject of which and the scope of which are made clear to everybody who cares to read and who can read. But there is infinite harm, more harm to-day than at any time in our lifetime, in conducting conversations, the subject and scope of which are religiously and carefully kept out of the public Press. We have nothing to hide, nothing to conceal, and nothing to be ashamed of. We are not, I hope, conspirators in Europe. I hope we are a nation looking after its own interests in such a way as to offer no menace to any other nation that happens to exist alongside of us.

The first task of the Government is to make the outlook clear. However bad it may be, let us know what it is, let us understand what the problems are and where the difficulties are. That has been done to a very considerable extent by the statement to which we have just listened. For instance, it is perfectly clear that France is in the Ruhr not for the purpose of getting reparations. No sane man can hold to that view now. There was a very significant remark in one of the rather melancholy sentences of the statement to which we have just listened, which said that in the Note we have informed France and Belgium that, if they would agree with us upon a common reply to the German Note, we were prepared to make a representation to Germany that, as far as the Government could do it, passive resistance ought to be condemned or stopped or whatever is the proper word to express the responsibility of the German Government for what is taking place in the Ruhr. No reply. No notice taken of it. Therefore, we are forbidden—if that is the last word—from assuming that if France could get a guarantee from the German Gov- ernment that passive resistance would be condemned, she is prepared to reconsider the conditions of her occupation of the Ruhr. That is also wiped off the possibilities of the situation.

Are we not compelled to come to the conclusion that the French policy in the Ruhr is a policy that is prompted rather by war-like feelings, feelings that have been handed over from the War, feelings that were unsatisfied as a result of the War, and that, in a sentence, it is an attempt to continue war after formal peace has been declared? That is being carried on under conditions that are peculiarly favourable. The military situation of France is unchallengable—she is absolutely master. There is not a State and there is not a combination of States that can successfully challenge the present military position of France. Moreover, as far as we are concerned, the French economic position is extraordinarily powerful. It was stated by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) the other day when he read that interesting and illuminating extract from an official publication, that France was building herself up economically. The idea that France is a devastated country to-day is an idea that belongs to the nursery and not to the House of Commons. This country to-day is far more devastated than France herself is. France is economically self-contained on account of the economic roots of its life being dug into its own soil. Its industry and work have been made the subject of great trusts and organised monopolies, the capital expenditure upon which has been enormous. Every other picture is a misleading picture. To-day, its unemployed can be counted almost by a few repetitions of the fingers of your hand. Its economic position is stronger than it was before the War except in one respect and that is in regard to its Budget.

That is very important. I do not intend to pursue inquiry as to the reason, but there is no doubt that if a country like France is anxious to balance its Budget it would not have very much difficulty in balancing it. Certainly, if our Government had the same economic advantage that the French Government now have for the purpose of raising national revenue, I venture to say that the Chancellor of the Exchequer who is to present our Budget next year would be a very much happier man than he is likely to be. It is enough to leave it there, I think, for the purpose of laying down as clearly as possible in a short statement, what is the exact position of France in relation to carrying on the policy that I have just indicated. She is in an extraordinary advantageous position, because the key points in carrying out that policy are, first, military strength, and, secondly, economic strength. And France holds them both. Consequently, it is in a very favourable and fortunate position for once again raising the problem—can one nation crush out another? Whilst that is being answered by events, we are suffering. Why should we suffer? Why should an Ally like France ask us to suffer? What is wrong, what is unfriendly in our Government going to France, in connection with the occupation of the Ruhr-, explaining our position to France, and asking France to consider us as well as herself, in carrying out a common policy? I hope that even now this question of whether a nation can crush out another, and whether one people can crush out another people, will be answered in the 20th century, as it has been answered in all the centuries preceding it, with a strong and a mighty "nay." That being so, I hope that France even now, and Belgium, are going to meet us in an accommodating way to devise with us a policy which will lead to the reconstruction of Europe. When we begin, quite clearly, the policy of reconstruction, when the British Government begins the policy of European reconstruction, what is the start?

Lieut.-Colonel J. WARD

Is the hon. Member really entitled to assume from the Prime Minister's statement that the Government are going any further with their policy?

Mr. MacDONALD

If I am going wrong, the Prime Minister, I am sure, will correct me. I am certain that the Prime Minister will not allow me to assume things which are not in the statement. I am trying to say what is the meaning I attach to the statement. When the Prime Minister replies I am certain that if I am putting more emphasis upon certain things in the statement, perhaps after my own liking and after my own desires, he will correct me and put the perspective a little bit more accurately than I am doing it now. I am giving my view of the statement, and I am giving my view of the real meaning of the new policy and the departure made by the Government within the last few weeks. The first thing we have to do in the policy of reconstruction is to come to a settlement with Germany. Along with that we must come to an agreement with France and the other Allies regarding inter-Allied debts. The two cannot be separated. It is impossible to separate one from the other, and my conviction is that, whatever Government is going successfully to pursue the policy, the beginning of which is indicated in the Note which has been read to us, must keep these two things in the forefront and pursue them both simultaneously.

We have to settle with Germany and come to an agreement with France and Belgium and our other Allies regarding War debts. In doing that, might I beg the Government to re-explore the whole question of reparations. We have been talking about reparations, I think, in a somewhat unfortunate way, and even now the expression that is so commonly used is this, "What can Germany pay?" That is only a very small part of the problem. [HON. MEMBERS: "Oh!"] Certainly, a very small part of the problem. Will hon. Members refuse to accept this as another part of the problem—how best can it pay in the interests of the nations receiving the payment? Germany could pay in made ships, and we asked it to pay in made ships, we compelled it to pay in made ships. Supposing you could undo that. Supposing you had had an example given you by another nation of what yourself did regarding the shipping reparations policy, and supposing to-day, instead of discussing in a general way our European policy, this House was asked by the Government to consider whether we would accept made ships in reparations payment, would we accept them?

Mr. A. M. SAMUEL

They would run them against us.

Mr. MacDONALD

You can have it either one way or the other. If your general policy is such as to put Germany in a superior economic position against yourselves, then accept the result of your errors without complaint. I am afraid the hon. Member is rather dragging me off the main issue, and I do not want to be dragged to one side. Surely it is perfectly plain that, if since the peace we have been pursuing a policy which, week after week, and month after month, has been increasing our economic and industrial difficulties, then it is time to revise the whole policy, not only in respect to one point, and to bring it back to what we would call a sound economic basis, leaving out hot feelings and putting in calm heads to take their place.

Sir F. BANBURY

The question is, "If we have been."

Mr. MacDONALD

The point I want to bring out is the point of reparations, and to appeal to the Government not to regard the question of reparations as having been settled by merely asking what can Germany pay. There is this to be taken into account. We had a speech from the right hon. Member for Hillhead (Sir E. Home) yesterday, who said, quite truly, that in certain circumstances if we are not very careful we are going to begin the industrial peace with Germany punished, broken, smashed, apparently, and yet, oddly enough, in a superior position to compete with us in neutral markets. I am very glad to hear that, because that is what we have been saying for some years. It is perfectly plain, it is perfectly simple, that if you crush a country which has got economic facilities and industrial capacity, and if that country, with great factories, well-equipped factories and good industrial brains, has been so crushed that its currency is debased, as the mark now is, and, secondly, if its working people are broken, if they are made subservient and have lost their sense of individual dignity, then, given those circumstances, the more you crush that country the more effective does it become as a competitor as against foreign countries. Apparently some hon. Members do not agree. When a settlement does come—as it must come sooner or later, for it cannot be postponed for ever—when we have agreed to our reparations, when we have agreed to the conditions in which Germany is going to enjoy industrial peace, then it is my most profound hope that this country will not then discover that it has got to go through a second economic crisis entailing a new and vast amount of unemployment.

What I would suggest is a complete revision of what I might call our programme of reparations, of our conception of what reparations should be made, so that the reparation payments should be related, not merely to the capacity of Germany to pay, but to our needs and our conditions, and the conditions of France, Belgium, Italy and all the others, in the markets of the world. The moment that the impedimenta of the present circumstances of the world are taken off, it may be possible, if this policy is not carefully considered, that the very fact that we impose reparation burdens on Germany will be a benefit to Germany when she comes into the open markets of the world, unless the obligations are imposed on sound, economic lines, not by feelings but by very careful considerations of what the best policy ought to be.

I would ask the Government whether they could tell us what policy they propose now to pursue? What do they propose as a next step? Do they intend to go on with an attempt to appoint this expert Commission, either as a Commission independent of the Separation Commission or as an adjunct and a sort of assistant to the Reparation Commission? Moreover, what are they going to do to counteract this vital lapse of time? We know that the Ruhr was occupied on the 11th January, and this is the beginning of August. During all this time, as the late Prime Minister said more than once in this House, Germany's jugular vein has been cut, and the blood has been pouring out of her, with the result that exhaustion is very near at hand. If we desire to keep that country in existence, for economic and political reasons, have the Government any plan by which, while that blood is still flowing, a complete agreement can be come to with our Allies? Have the Government any proposal to make, any plan to put into operation to keep things going in the meantime, so that wreck and ruin may not come? We are frightfully handicapped now.

Two great critical events have happened since peace came. One was the 1918 election, which resulted in a most fatal way for this country. Policies were pursued, seeds were sown, and we are reaping the harvest to-day. One of the sheaves of that harvest was presented to us by the Prime Minister half an hour ago—a dead- lock between this country and its late Ally. The next critical event was the occupation of the Ruhr, when we refrained from taking action and allowed things to drift. Now, for the third time, we have an opportunity of making our position clear, and the great enemy which we now have is the enemy of time. Unless the Government can devise something to keep things going in the meantime, then the pourings out from Germany's cut jugular vein will mean that we may be defeated in the end, however good our intentions may be.

The next thing required at present more than anything else is the stabilisation of the mark and the balancing of the German Budget. I am told that credits to the extent of £1,000,000—only that and nothing more—would reflect marvellously on the economic conditions of Germany to-day. Two things are required—credits for coal and credits for imported food. The Government would be very wise to keep things going, to bolster them up in that way—if the information which I have received on quite good authority is found to be correct—because the economic condition of Germany is of the utmost importance to us both on political and civil grounds. There may be hostile industrial combinations centering round the furnaces, iron and coal deposits of Germany and France in the engineering and iron industries, and we may have to face a vast combination of internationalists who regard us first of all as fair prey on the European market. The next thing which this country cannot allow to happen, while standing by indifferently, is that the politics of Central Europe should go to wreck and ruin. Let us look at our own interests. Surely we have an interest in keeping the government of Central Europe from the Junker to the right on the one hand, and the Communist to the left on the other. In whichever direction the pendulum swings they are both reactions—the extreme right and the extreme left—which mean the destruction of order and constitutional government. That is a problem to which we ought not to be indifferent.

Looking at Europe, as we must look at Europe—because we share very largely the responsibility for the condition of Europe to-day—and trying to do our best to put the nations and the peoples of Europe once again upon the broad highroad of peaceful perambulation, we cannot overlook the fact that, if things go on as they are going on, the pendulum has got to swing violently either in the one direction or the other, and to whichever side it does swing it is all to the bad for this country and will lead to the complete prostration of Europe. Therefore, whatever memories and feelings the word "Germany" may bring, we had better be reasonable and objective in mind now, and realise that a broken Germany is going to pull Europe behind it for many years down the road of impending ruin. I am only putting these questions. If the Prime Minister finds that he cannot answer them we will trust ourselves to him—[HON. MEMBERS: "Hear, hear!"]—in answering questions, certainly. I think there is no doubt about that. If the Prime Minister gets up and says "I cannot in the public interest answer these questions," then that is an end of it for the moment so far as I am concerned.

The further question which I want to put is this. Do the Government propose to take any steps to get Germany included now in the League of Nations? It is of the greatest importance that the German State, if the conditions can be arranged, shall now take its place among the other States of the world federated in the League of Nations. I believe that there are difficulties in the way. Little delicacies have to be faced and overcome, but, nevertheless, I hope that our Government is going to make its position clear, that if Germany does apply for full honourable membership, membership of equality of the League of Nations, our Government are not going to boggle about anything but are going to support it with all the power that they can command. It is sometimes said that France will object. I hope that France will not object. But suppose that France does object; it is only another of those unfortunate differences, some of which, even more serious than this, have been referred to in the Memorandum read to us half an hour ago. We have to take up our stand, not in opposition to France, not in antagonism to France. We have to take up our stand and our attitude, with France and all the other nations, on the understanding that we believe sincerely that it is our duty to do so, and if France objects that certain things can- not happen, because they can happen only by unanimous agreement, then it is better that we should make our position clear.

These are all the observations which I desire to make to-day. I welcome the new departure. Like others, I have not had time to study the details of what has been placed before us, but taking the general lines which the Government are going to follow positive policy, I welcome it. There are difficulties. We have been too long making mistakes, and we must come out of mistakes to wisdom through difficulties. That is always the way. We recover ourselves through difficulties. But I feel certain that, if the Government go straight on, steering the ship carefully and skilfully but with courage, they will in time get through the difficult position in which they find themselves, and they will be more respected, rather than less respected, because they are making their position clear, and if the storms blow about them for a short time the best way to get into the calm deep waters of peace is to go straight on until they have passed through those storms.

Mr. AUSTEN CHAMBERLAIN

The Leader of the Opposition has made an interesting and a grave speech, as befits a very grave occasion: but the speech itself invites almost as many questions, if it were permissible to put them to him, as he has put to His Majesty's Government. What, I should like to know, are we to understand from the observations of the hon. Gentleman is the attitude of himself and his party to our demand for reparations from Germany? The hon. Gentleman used an illustration which, if it had any meaning at all, could bear this meaning only, that it would be better for us at once to make up our minds not merely not to ask for reparations, but to refuse them if they were offered.

Mr. MacDONALD indicated dissent.

Mr. CHAMBERLAIN:

I will give way in a moment to the hon. Member. I do not want to misrepresent him; I want to get light.

Mr. MacDONALD

The right hon. Gentleman must not misrepresent me, because I did not say that. I simply said that if you put the question to yourself, "What can Germany pay?" that is not the solution of the whole problem of reparations—[HON. MEMBERS: "Ships!"]—I said you must choose your forms, and one of the forms you would not choose now was payment by completely made ships—[HON. MEMBERS: "Oh!"] Of course, I do not want to interrupt the right hon. Gentleman, but he must take it from me that the remarks I made did not mean that no form of reparations was possible, but that we had not yet sufficiently considered what the best form was, and it was that for which I put in a plea.

Mr. CHAMBERLAIN

Now we nave the hon. Gentleman's explanation, which I am very glad to have heard, I think the House will agree with me that his observation meant very little. I thought he seriously put forward his argument about the Ships as a contribution to the solution of the reparations question. He said that if we had to decide the question again to-day, would we not refuse to take those ships. Why should we? If you say, "If you could have sunk all the enemy's marine, and prevented them from building any more, that would have been better than taking ships," perhaps it would. But were those ships going out of existence merely because we could not take them? They were going into competition with ourselves, and it seems to me that the hon. Gentleman assumed that Germany will trade only with foreign countries if she has reparations to pay. She will do all the trade she can in any circumstances. If it be large and profitable, and just in proportion as it is large and profitable, the Allies, who suffered at her hands, are entitled to exact reparations' from that source.

Lieut.-Commander KENWORTHY

In what form are we to take reparations? I should like to ask that question.

Mr. CHAMBERLAIN

I hope the hon. and gallant Gentleman will permit me—I have never interrupted him—to continue my observations.

Mr. PRINGLE

May I ask the right hon. Gentleman a fair question? [HON. MEMBERS: "Oh!"]

Mr. CHAMBERLAIN

I hope the hon. Gentleman will allow me to make my observations. I am not answering either of the hon. Gentlemen, who have not yet spoken. They will have an opportunity of making their own speeches. Perhaps I might conduct my conversation through you, Mr. Speaker, with the hon. Gentleman the Leader of the Opposition, without turning aside to answer all the questions which other and inquisitive hon. Members may put. I really want the Leader of the Opposition to consider where his argument logically leads him. Is it a good thing for us that we have got to pay £30,000,000 or £40,000,000 a year to America? No. Then why is it a good thing for Germany that she has got to pay reparations to us? To listen to the arguments against exacting reparations, one would really suppose that the most fortunate country in the world is the one which has the largest external debt, because it follows as a logical and inevitable consequence that it will do the largest and the most flourishing international trade.

I come to another observation of the hon. Gentleman, from which I wish, if I may, to disassociate myself. The hon. Gentleman, if I rightly understood him—and this time the matter is so grave that I would beg his attention—suggested to the Government that this country should advance credits to Germany to sustain her at the present moment. I trust and I know, that the Government will do nothing of the kind. I hope that the day of loans from the Government is ended, and that other Governments will get the loans they need in the money markets of the world, and from private investors. But, in any circumstances to propound that policy in the conditions of to-day is surely the most amazing—

Mr. MacDONALD

I only meant it from private investors.

Mr. CHAMBERLAIN

I am greatly relieved to hear that. I need say no more about it, because the hon. Gentleman did not make the suggestion which I thought he had made.

Mr. MacDONALD

I meant by exactly the same means as money has been advanced through the League of Nations to restore Austria.

Mr. CHAMBERLAIN

That is surely quite a different thing. That is an international loan, guaranteed by the respective Governments, in certain proportions. To make that proposal to-day would lead us, where? I observed a speech of the hon. Gentleman, not made in this House, but reported in the papers a few days ago, in which he said that the only hope of the maintenance of European peace rested with himself and his friends, and, with the help of God, they would secure it. I trust that the hon. Gentleman will have all the help that can be given, because his unaided suggestions did not contribute to this very laudable purpose. Just consider. He invites the Government to guarantee a loan to Germany. For what purpose? To keep her going. That is, to encourage her; to lend our assistance directly to frustrate French policy; to range ourselves, openly and actively, on the side of Germany in the attempt to defeat it. That would be indeed a grave decision to take. The situation as it is is grave enough, and I think none of us will go for our holidays with any very happy reflections on the statement which the Prime Minister has made to us to-day.

Before I come to that, may I make a request to the Prime Minister? The Leader of the Opposition denounced secrecy in diplomacy. I think that the denunciation of secrecy in diplomacy is claptrap. I have never heard of Labour Members, when they had a little diplomacy to do in their own party, or in trade unions, inviting the Press to come and listen to their confidential discussions in order that no tittle-tattle should get about as to their respective actions. If you want to do business, you must be able to explore the ground privately, to put forward suggestions without prejudice, and, failing agreement, to resume your old position without having it injured by public discussion throughout. It is only in that way you will come to terms. The Prime Minister has said that he proposes, in any case, to lay Papers defining the attitude of the British Government in these negotiations, and that he hopes to receive the assent of our Allies to the publication of further Papers emanating from them. Is there any longer any reason why the proposals which were made by the then British Government, in the summer of last year, should not be laid before the House and the world? In our part of the history of this question, a very long history, we have had two sets of negotiations, one in January and one in the last month. The Papers of the January one have been laid, and the Papers of this last month are to be laid; yet the Government insist on wrapping in obscurity the Papers of long ago—

Mr. LLOYD GEORGE

And the November Papers.

Mr. PRINGLE

Why were they not published at the time?

Mr. CHAMBERLAIN

They were not published, for a very good reason. The Conference was not at an end, and the Government had by no means abandoned hope that out of those proposals there might yet be found a method of agreement with the other Allied Governments. In any case, they are now history, but they are an important part of the history, and I submit to my right hon. Friend that it would really be in the national interest that those Papers should be given to the House of Commons and the country.

1.0 P.M.

I said that the statement which the Prime Minister made was a very grave one. We listened to it, I suppose, without surprise, but not without, at any rate, so far as I am concerned, very considerable anxiety. Will the House consider for a few moments what a vast change has passed over Europe, and over the relations between ourselves and our Allies in the course of the present year. It is an open secret that the French Government wished to go into the Ruhr long before they went there. It was the opinion of the then Government—as it was the opinion of the right hon. Member for Central Glasgow (Mr. Bonar Law) and his Government, as it is the opinion of the Prime Minister and his colleagues to-day—that the Ruhr enterprise was one which every British Government should do its utmost to prevent. At any rate, as long as the Coalition Government—which is not popular, and which has to carry the weight of many accusations—was in power, the Ruhr was not entered. Then came the January Conference. Our Government made proposals. They were rejected. We left the conference room. We left the other three Allies without our counsel or help, and we forfeited any method of influencing their subsequent decision. I think it was most unfortunate. Hitherto, there had been a very close association of ideas between the Government of Italy and ourselves. There had been a very close association of ideas between the Government of Belgium and ourselves, and I think it was a great misfortune that this Conference continued among those three Powers with Great Britain unrepresented, unable to make any observations as the Conference went on, and unable in any way to influence their decision. The late Prime Minister adopted a policy of warning the French against the results of their enterprise but, when it appeared to him they were determined to carry it through, of promising them a benevolent but passive attitude on the part of this Government. There has been a new development. The passive attitude has given way to an active one. Has it made our relations better? Has it carried us nearer to a solution? I wish I could think so. We on both sides of the Channel have paid homage to the Entente. But what is the Entente to-day? In what sphere of politics does the cordial Entente of a few years ago direct a common policy and secure a common action? It is a profound, a most regrettable and a most dangerous change in the European situation and one which affects our interests, not merely in Europe but in other places far beyond European bounds.

I am afraid that since January the French Government and our own have drifted steadily further apart. Is my right hon. Friend quite sure that he took the best method of dealing with an extraordinarily difficult situation? It is obvious what is the objection to the policy which the British Government is pursuing. It is not to condemn the policy that I state it, but to an understanding of the situation, I think it is necessary it should be stated. It is quite clear that this policy, while it fails to restrain France, irritates France, and while it fails to secure relief for Germany, encourages Germany. That is a very dangerous policy to pursue, and I read with some anxiety a passage in a communication from the Paris correspondent of the "Times" yesterday. He describes French policy as it exists to-day— However things fall out it is thought"— that is, it is thought in Paris— they will turn out to the advantage of the French. Either Germany gives way, in which case the French consider payment may yet he assured and will have been assured by the operations in the Ruhr, or Germany breaks up and in that case France is not only secure, but can obtain compensation for herself. A little later the same correspondent says: There should be no illusion on this score. A bargain might have been possible had it not been too conspicuous some time ago, but now the die is cast and if Germany will not give way neither will France. That comes from a source which the Government cannot say has been unfriendly to them in their conduct of foreign affairs. The hon. Gentleman opposite asked for more publicity. I regret that there was as much. I regret that the first stage in the new negotiations should have been a public statement of the defniteness and solemnity of that which the Prime Minister made to the House on 12th July. If you want these negotiations to succeed, if people have got into a position from which it is very difficult for them to recede with credit to themselves or their country, it is not well to begin by a public statement of what you require of them as a first step to private conversation with them to see how far you can agree. I assume, however, that the statement, which was one of great gravity, had been carefully considered. The Prime Minister in that statement said the Government are convinced that an indefinite continuation of this state of affairs is fraught with grave peril. Germany herself appears to be moving fast towards economic chaos which may itself he succeeded by social and industrial ruin. Again he said: It is not too much to say that the recovery of the world is in danger and that the peace for which so many sacrifices were borne is at stake."—[OFFICIAL REPORT, 12th July, 1923; cols. 1586–87, Vol. 166.] Those are very grave statements to make, and they are not in my opinion exaggerated. What I should like the Prime Minister to do this afternoon is to assure us that, before the statement was made—before he entered on the new development of his policy, of which that statement was the first indication—he had carefully considered, not only what was to be done in the event of his securing an agreement with France, Belgium and our other Alles, but what the course of the British Government should be if we failed to secure that agreement? It is now evident we have failed to secure the agreement. I do not know whether the Prime Minister will feel in a position to answer at once the question of the hon. Gentleman opposite, "What are you now going to do?" If he considers it would be contrary to the public interest to make such a statement at this moment, I shall accept that, as I am sure will every Member of this House. We all know that the right hon. Gentleman speaks with a heavier responsibility than lies upon any one of the rest of us, but, if he cannot tell us what the policy of the Government is, at least I would beg him to reassure us so far as to tell us that the Government, before they embarked upon this policy, had carefully considered and clearly determined what they would do in the event of such an answer as they have now received. Then we can go away for three months' holiday, and we shall at any rate feel that the Government are not drifting rudderless on the ocean, but are pursuing a clear and definite policy amid all the perils of the time.

Mr. ASQUITH

This Debate has assumed a somewhat discursive character and it has been adorned already by two nautical perorations. I do not propose to follow the right hon. Gentleman who has just spoken or my hon. Friend the Member for Aberavon (Mr. J. R. MacDonald) into many of the considerations, interesting as they were and important as they were, which appear to me, with all deference to them, to have little relevance to the particular circumstances of the case. I am going to submit one or two questions to the Government, as I presume we are all entitled to frame separate interrogatories. The first shall be this: Can my right hon. Friend the Prime Minister give us the assurance for which I asked a couple of days ago, that, if and as soon as there is anything in the nature of a grave new development in what is at present an inchoate and most nebulous situation, the Government will exercise the power which the law gives them of summoning Parliament and placing the situation before us, and will not take a grave and it may be irrevocable decision without the advantage of Parliamentary discussion? I make that appeal, not only in view of the obvious gravity of the situation, but because of the extremely embarrassing conditions in which we are embarking on this discussion to-day. I have never known a similar case. The real question, as far as there is a real question, is, What course ought to have been adopted, or should now be adopted, by way of reply, to the only public document we have got, namely, the German Note of the 7th of June? That is the only document which as yet we have before us. I understand, and we all understand, from the statement made by the Prime Minister, that he is prepared next week, or in the near future at any rate, to publish some parts of the correspondence which has taken place between our Allies and ourselves. He referred to the consent of France and Belgium being necessary to the publication of some of those documents.

The PRIME MINISTER

Their own replies.

Mr. ASQUITH

I do not know why. These things are not love letters, intended only for the eyes of two persons, the writer and the person to whom they are addressed. These things are part of a continuous negotiation between statesmen on matters vitally affecting the interests of Europe and the world. I know, as a matter of courtesy, it is the custom to ask foreign Governments for their consent as to the publication of correspondence or particular documents. Yet I cannot for a moment admit that there is a right of veto on the part of any Power to prevent the publication of documents which are integral links in a chain of negotiations, I hope, therefore, when the documents are published it will be in a complete form. I agree with one remark of the right hon. Member for West Birmingham (Mr. A. Chamberlain) that a great deal of nonsense is talked about secret diplomacy. The old-world diplomacy, which is now in such disrepute, in its most secretive moods, never, I think, abstained from the publication of documents of this kind, and the result is—I will not blame the Government for a delay which was probably inevitable so long as we get the documents in due course—the House of Commons now about to separate for a long time is debating this question to-day, without any authentic knowledge whatever of what has been going on. The Prime Minister made a summary, and I need hardly say I am perfectly certain it is an accurate summary, though necessarily not an exhaustive one, of what has taken place, and this brings me to what I think is the only other question I wish to put to the Prime Minister. I feel quite incapable of going into these large ques- tions, any one of which has been debated time after time on the floor of this House, as to the character of reparations, the mode of payment, the relation between reparations and Allied indebtedness and so on—I feel quite incapable of adding anything to what has been said on these subjects—but what we want to know is, what does the change of policy which the right hon. Gentleman adumbrated in his statement really mean?

That is the question which I put to my right hon. Friend, and I am not putting it in any critical or hostile spirit. But I think, in the absence of all documents, to leave each man for himself and the House as a whole to draw inferences as to what had actually taken place, is not right. I do not see why any reluctance should be shown to satisfy our perfectly legitimate curiosity for some more definite and explicit statement of what the Government really propose to do, in the event of this Allied disagreement, which, if it has not already taken place, appears to be within measurable distance—what steps they propose to take, and what, with a little more detail, is the real character of the independent communication, if they have one in their mind, which it may become their duty to make to the German Government. We shall be greatly reassured, before going away, if the Prime Minister will give us some information on those lines. For my part, I deliberately suspend my judgment, as I think we are entitled to do, as to the wisdom of the course which is being taken, not because I am suspicious, or unduly suspicious; still less because I agree with those who think it is the duty of the Government to look on with folded arms, in an attitude of absolute passivity, while Europe is going to rack and ruin; but because I am satisfied that if we are to get, as I hope we may get, in this matter in the future, as we have had to some considerable extent in the days gone by, a general unanimity of view among the people of this country, it can only be by the Government taking this House completely and at once into their confidence.

Colonel GRETTON

Everyone who has heard the Debate so far must agree with the right hon. Member for Paisley (Mr. Asquith) in deploring that a subject so grave and critical should have to be dis- cussed, under the circumstanced of to-day, without full and complete information at our disposal, but beside the right hon. Gentleman is sitting another Member, the Leader of the Opposition, who has no doubt as to where the policy of the Government is leading us, and the hon. Member for Aberavon (Mr. J. R. MacDonald) expressed his almost complete approval of all the steps which have yet been taken, and pointed out some of the steps, at any rate, which he would desire to be taken, to complete the process which he desires to see carried out. No one will complain that the hon. Member for Aberavon takes the line to-day which he has done. He has never been the friend or supporter of a French Alliance, or even of an Entente. In the period during the War he always advocated a cessation of hostilities, and the building up of an understanding with Germany at the expense of France at the earliest possible moment, and it is significant also that the hon. Member has made suggestions to-day which, if they are carried out, would undoubtedly provoke and widen the breach, which has already perhaps gone too far, and which would intensify the deadlock and promote a real breach of understanding with the Government of France. What can be more insidious than the proposal that an international loan should be made for the benefit of Germany? It could only result in strengthening her opposition to the French policy and action in the Ruhr, and the hon. Member must have known when he made it that the French Government at present is absolutely opposed to the admission of Germany into the League of Nations under present conditions, and that to bring forward such a proposal could only be to create friction.

Mr. MOREL

Why should France be the dictator? What is the basis of the argument?

Colonel GRETTON

I am not concerned to argue it. That fact exists, and when you are conducting diplomatic negotiations, it is surely most unwise, reckless, and leading to a breach of understanding if proposals are deliberately brought forward to which, it is known beforehand, objection will be taken. The position undoubtedly is becoming very grave, and I must express the opinion, for what it is worth, that the position of the British Government in dealing with European questions has been made considerably worse owing to the episodes during, and final ending of, the negotiations at Lausanne. There the British representatives abandoned one position after another, and it was only with the greatest difficulty, and by accepting almost everything that the Turkish Government brought forward, that the peace was concluded. Undoubtedly, what happened there has shaken the firmness, the determination, and the foresight of the representatives of the British Government in negotiating with foreign nations. I am quite sure that the Prime Minister, when he replies, will say, as he has said before, that his strongest desire in foreign policy is to have a firm understanding with France and full co-operation with Italy. That is just what is not being accomplished now, and it is because that is not being accomplished that we all feel such great anxiety.

What is the alternative? Serious steps have been taken, and we cannot stand still without danger. It is quite clear that the Government now are drifting into a breach with France. That is not the desire of the people of this country, for wherever one goes among the general public, in the country or in this City, one finds almost universally expressed surprise and failure to understand how this Government should hesitate to support France in extracting the full reparations from Germany that she has engaged to pay. No one can understand how any British Government should desire to let Germany off those payments which are certainly due in justice, and which she has agreed to make. There are certain influences at work to make things easy for Germany, and those influences are very largely financial. To some extent they are also political. No doubt there are hon. Members accustomed to sit on the benches opposite who Could give a very full explanation, from their own knowledge and experience, of what those political influences are, but I would deal only with one or two of the financial considerations. There has been in London and elsewhere, as in every country in the world, a large speculation in German marks, investments in German securities represented by marks, and there is no doubt that if the mark, as it inevitably must do, disappears as a unit of value—it has practically gone now, and it can never recover—there will be great financial strain and perhaps failures in certain places.

Moreover, the result of this sale of German marks in foreign countries is the acquirement by German financiers of large credits in those countries, in exchange for worthless paper marks, and I am told on the most excellent authority that this process has gone so far in the United States of America that the German financiers now hold to their credit a Very considerable proportion of the War profits in the United States. The lowest amount at which the German credits in foreign currency are placed is equal to £400,000,000 of our standard.

Mr. MOSLEY

Mr. McKenna says £200,000,000.

Colonel GRETTON

No; £600,000,000 is the statement given by Mr. McKenna in a recent speech, and even higher estimates have been made, but I do not believe even those figures are sufficiently high; and in these circumstances, when Germany admittedly holds enormous credits abroad, having transferred her realisable securities and a large part of her currency to foreign countries, what folly, what madness, to talk of making a loan to Germany, in order to enable her to pay her way! There is no doubt that a large amount of sterling stands to the credit of German financiers in the City of London, difficult to trace, not always put forward in the names of tho3e responsible for the handling of these very large sums, but the money is there, English money, or the money of other countries, billed in London, with whom the Germans desire to trade. It is difficult to trace, but when I make inquiries, people well acquainted with the City of London all agree that the sum standing to the credit of German financiers in the City of London is a very large sum.

Mr. J. JONES

The same in Berlin, with English financiers.

Colonel GRETTON

No. That is worthless That has all been lost. Let us examine for one moment what is Germany's capacity to pay. We are told that Germany can pay nothing, that there must be a long moratorium, and that then she can pay very little. What is Germany's capacity to pay? Her capacity to produce, and what can be levied in the form of taxation and in duties on imports and experts. The German powers of production have enormously increased, and that is confirmed by all the information I can get. I was talking recently to a very competent person, a man with great knowledge of Germany, who had travelled the length of Germany on business, and everywhere he found new factories erected. All these factories were fitted with the most modern, the most-economical and efficient machinery—all money spent since the end of the War. He found all the workpeople—there is very little unemployment there, 7 per cent. is the latest figure—engaged working in industries, putting forth their energy to produce, and getting good value from the efficiency of machines in the factories. He was told—and this confirms a great deal of other information—that the German manufacturers, producers, and financiers have entered into a federation to control prices and markets. They are not competing, but are merely quoting prices, which are world prices, or very little below world prices. They are accumulating stocks. When the reparation question is settled, they are prepared to enter into a stern and devastating competition with this country, particularly, and all the countries of the world. In five, years, one of their prominent men told my friend, they will make England the poorhouse of the world.

Travelling through the engineering and industrial areas of this country, he found no development. Furnaces were not at work, vast quantities of machinery were standing idle, new factories constructed during the War were unoccupied or derelict, and in those works which he entered he found a great deal of slackness and idleness among the workmen, and no such industrious intensity which characterised every place where he saw work going on in Germany. What can we do in such conditions as these. Germany, at any rate, has enormous foreign credit. She has absurdly low taxation at home, and business is very largely relieved of its debenture and mortgage interest. The one thing requisite to Germany's full prosperity and Germany's industries is the operation of the transport system, and that is State-managed and very largely State-owned. If managed on principles of private enterprise, Germany would be well equipped to sweep the world of trade and commerce, and be far richer, more prosperous and more powerful than before the War.

Pursuing this question of the industrial and economic conditions of Germany, they have deliberately, by their policy of inflation, crushed out and ruined, probably beyond repair, the bourgeoise and the middle-class people with small incomes and pensions. On the other hand, the working people are getting enough to live upon and clothe themselves, and, owing to their housing policy, enough to pay their rent—

Mr. J. JONES

It is not true.

Colonel GRETTON

—and the industrial magnates, federated with the manufacturers and financiers, are making enormous profits, a large part of which they are putting into their industries, equipping themselves for the coming economic struggle. They know full well that this reparation question has to be settled, and that reparations have to be paid, and they want to know and be sure what their obligations are. The German Government cannot pay reparations; the only people who can pay reparations are the people who can control the German industries. Why do not we act at once on these facts, and support France in exacting the fullest payment that Germany can pay, and which we know well they can pay and they expect to pay when they are forced to it. The policy of this Government has been to leave France to pull the chestnuts out of the fire, and to exact reparations, and now France is disheartened by new proposals for setting up a Commission of Experts. What can these experts do? What are their estimates really worth? They are guesses, and you cannot expect them to come up against the real questions, and make the hardest bargain, and that is the way to ascertain what Germany can pay. By our present policy of leaving France in isolation, we are prolonging the occupation in the Ruhr, and encouraging the resistance of Germany. If it be the policy of this country, as has been advocated this afternoon, that time is of great importance in this matter, the way to apply time to this problem is to bring all the pressure we can upon Germany to settle this question of reparations quickly, have no more moratorium and delay, but apply that pressure at once, and so put an end to the crisis and all questions of doubt and hesitation.

I go further. Germany has always endeavoured to escape her obligations. In the first place, a capital sum was mentioned and accepted, and the annual payments were laid down. Germany said, "We cannot pay; we must have a moratorium; we must pay less." Experts agreed, and a lesser sum was fixed, and then she tried to escape again. Germany will never keep one of her engagements, and her proposals at the present moment are worth no more than those made before, unless there are substantial guarantees, on which you may lay your hands to enforce the payments, which can be made by the German magnates, because the German Government has no money at all. Why should we not go to the ports of Germany and superintend the collection of the Customs and Excise? There are not many of them. If the amounts collected were put into the coffers of the Reparation Commission, it would soon bring the German people and the German Government to settle this question. I think those who make complaints about the occupation of the Ruhr have very little knowledge of what was in the Treaty of Versailles. It was laid down that that occupation was permitted, and the only question was whether the default made by Germany was sufficiently grave to justify that part of the Treaty of Versailles being put into operation.

It was held by France and Belgium that the defaults were sufficiently grave. Our Prime Minister at that time, the right hon. Gentleman the Member for Central Glasgow (Mr. Bonar Law), stated that though he did not assist in that Occupation he hoped it would succeed. I must confess that I view with the very gravest alarm the course which is being pursued by His Majesty's Government. The method of negotiation is by a kind of Press controversy, and the exchange of Notes of a highly controversial character. That is not the way the old diplomacy was conducted, or indeed any method of diplomacy can be successfully carried on. Diplomacy is not a matter of controversy, and the writing of one dispatch to score off another, with criticism of the arguments put forward. The old methods of diplomacy were by way of conversation and the exploration of ways to see what ground of agreement and disagreement might exist, and when something was agreed upon as common ground, when, I say, that was found, or nearly found, then was the time to commit something to paper. I trust there may be some reversion to the old methods, and that a very serious attempt will be made to ascertain what ground of agreement can be found; and that the difference which exists between the British and French Governments, which is viewed with alarm by the British people, will be bridged over. What hope is there for the peace of the world? What hope is there for the peace of this country except by a complete understanding with France on which may be based economic and financial agreement? Reparation from Germany is not the main question. If we have a breach with France what are we going to do? Are we going to ally ourselves with Germany? God forbid. I think the British people will have something to say very definite and very decisive to any Government which appeared to establish an alliance or an agreement with Germany at the expense of our old friends and Ally France!

Lieut.-Colonel MOORE-BRABAZON

This is a subject upon which there are considerable differences of opinion, as is sometimes the case with members of one family, and it seems to be developing into something in the nature of the Irish problem which is ever with us, and which appears to be insoluble. I differ very much from the view put forward by the hon. and gallant Member for Burton (Colonel Gretton). He takes up to my mind what I call the "Morning Post" view. Frankly, I disagree every day with the "Morning Post" in every single particular except the date! But I like the "Morning Post" in this respect, that it does put forward its view with the idea of trying to help the country. In that respect I have a sneaking regard for it, although, as I say, I think it is always wrong. But there is another thing in respect to the point of view of the French which I think should be made clear to the people of this country, and that is the influence of the "Daily Mail." As is known to many people the "Daily Mail" is published in three places, Paris, London and Manchester, and there is an agreement that the leading article shall be the same in all three publications. Those who are familiar with France know that any paper in which there is published anything against the French Government brings on itself enormous trouble and the conduct and distribution of the paper over there becomes practically impossible. The "Daily Mail," after all, is a commercial proposition, so that we have this result; that one of our most influential English papers has its policy directed from Paris. I consider that that is a very grave disadvantage, and a thing which never should be allowed to happen in respect to a country like ours.

What is it that this paper advances every day with a sickening monotony accompanied by letters from its readers? It is the theory that France is in favour of reparations whereas we are not. Could anything be more fallacious than that? The whole point of French policy is to keep a weak Germany—nothing else! Our desire is to get reparations if we can, but at all costs to get trade restored. The sooner that is made clear to the people of this country the better it will be. I agree with some of those who take the view that the operation of Germany from the point of view of the mark has been one of the most colossal swindles we have ever witnessed on a big financial scale. It is absolutely amazing. The advantage that has accrued from a commercial point of view in the reduction of their debentures, and their loans throughout the whole country is enormous. One of the most extraordinary things is the disappearance of capital from Germany across the border, and I think that is a lesson to some hon. Members here who favour socialistic ideas with respect to capital to see how liquid capital really is. If we are desirous of getting reparations they will not be got in Germany so much as from other countries outside Germany. The suggestion has been put forward in this respect that we should tax the German peasant, but the German peasant has an extremely poor standard of living. One can only judge the wealth of a country by the standard of living of its inhabitants, and meat once a week and no milk does not make a rich country. Because the industrialists have swept all the available wealth out of Germany to put forward a proposition that you should tax the pence of the workpeople seems to me to be the height of absurdity.

The whole policy of the late Coalition Government on the Ruhr might be likened to the Mad Tea-party in "Alice in Wonderland" where you had the Mad Hatter in control. But the country at the last election said very clearly that they did not want the Mad Hatter in control. They chose the Dormouse. What has been the result of the Dormouse policy? The Mad Hatter, anyhow, kept France out of the Ruhr; when the Dormouse arrived the French went in. The consequence we see in the crisis today. We do not know what is the policy of the present Prime Minister, but I maintain that in respect of these very difficult questions that those in charge of this country are in the position of Alice still in Wonderland. I am one of those who would welcome a very much more vigorous policy by this country over this question. It is a very urgent question. One cannot frame policies on this question or take steps years ahead. It is a matter of weeks. Take the question of food in the Ruhr to-day. The German Government sent food into the Ruhr and it is being paid for in marks. But there will come a time, as the exchange gets worse and worse, when the farmers will cease taking paper marks in exchange for the produce which they are sending into the Ruhr. If the time ever comes when the farmers will not take German notes, and no produce goes into the Ruhr, then passive resistance there must collapse. I should like to know what is our policy relative to the position of passive resistance? We do not approve of the Ruhr adventure, but are we in favour of the passive resistance policy adopted by the Germans? If we are, then they can keep up passive resistance. If we are in favour of crushing passive resistance, then for no more than three weeks could it possibly remain, because of the impossibility of the German people being able to buy goods to feed their people in the Ruhr. I want to ask the Prime Minister under what terms does he think France can ever withdraw from the Ruhr? Although I take up on this matter firstly a pro-English point of view, I do think that we should see the German side of this matter. To start with, as a solution, I am prepared to grant to France complete security against aggression she may possibly ask for, and I think that is all we should be asked to give to France.

Lieut.-Colonel CROFT

What do you mean by complete security?

Lieut.-Colonel MOORE-BRABAZON

That is for them to decide. The French nation have done themselves no good by their adventure in the Ruhr. After the War we found Germany splitting up into pieces, but the French occupation of the Ruhr has knit that nation together in a way that we thought was practically impossible two years ago. This building up and coming together of the German nation has taken place under the guise of getting protection against Germany. What I say is that there must be a breaking point which must come if you are going to pursue this policy of weakening Germany still more, and the time must come when the country will go bankrupt, with revolution and every form of civil war breaking out. Is that going to be an advantage to France or to this country? Personally I fail to see how it can be any advantage. When we see at last our Government tentatively taking a line of its own in the solution of this great European problem, I ask hon. Members, and especially everybody sitting on this side of the House, not to take any view but that of giving the strongest support to the Prime Minister, leading this country to come again into European politics, because what is going on now cannot continue without inflicting great injustice and misery upon all the peoples of Europe.

Mr. MOREL

The speech to which we have just listened is a refreshing experience after the one that preceded it, which to me seemed to be a very perfect compendium of the "Morning Post" view, with a little of the "Daily Express" thrown in. The Leader of the Opposition expressed the view of all of us when he said that we were prepared to support the policy of the Prime Minister as we understand it, although we are acting, of course, under the difficulty we have pointed out of having no papers. Nevertheless we are prepared to support the policy of the Prime Minister as we understand it, and we believe in the sincerity of his promise to make a great effort to bring the intolerable state of affairs in Europe to an end. It remains true, nevertheless, that the whole of this controversy and the Debate to-day accentuates the fact that the whole of this controversy is being carried on in a perfect fog of unrealities which is inimical to the success of the Prime Minister's policy.

We are living in an atmosphere of mystification and equivocation in regard to the whole of this discussion. Just as an example I would mention that we seem to be looking upon the devastated areas of France as if they were a howling wilderness, whereas two-thirds of them have been rebuilt, and at the present time life in them is pursuing its normal course. Again, we talk as though France was groaning under an intolerable burden produced by the necessity of restoring the desolated areas, whereas, as a matter of fact, France was never more prosperous. Vast sums of money have been made by French industrials out of the rebuilding of those devastated areas. Many French industries and French agriculture are really booming to-day, and the French citizen is taxed more lightly than the citizens of any other country in Europe. In proof of this I need only mention that France at the present time is able to issue loans to foreign countries and she has just issued a large loan to Poland.

Again we talk as if Germany had paid no reparations at all, but that is quite a fantastic statement, because Germany has been making reparations for the last four years, and ever since the Treaty was made which mulcted Germany in payments unparalleled in modern times, besides imposing upon her a great mutilation of her territory and a huge war indemnity. What is the danger? It is not reparations. The issue which is facing Europe to-day is not reparations, because the time has long gone by when it was a question of being able to wring hundreds of millions more or less out of Germany What we are faced with to-day is the problem whether the whole economic edifice of Europe is going to crumble before our very eyes and ruin us in the dust which it will make. And yet we go on talking about reparations. Surely it must be patent to every man of common sense in this House and out of it that for every penny we have got for reparations up to the present time we have had to pay 1s. out of our own pockets in doles to the unemployed.

2.0 P.M.

It must be patent to every man of common sense that in pursuing this will-o'-the-wisp of Reparations as at present conceived it means the industrial ruin of Germany. We have been pursuing it at the expense of British trade, British industry, the British producer and consumer, and the British working men. The real crux of the impolicy of the past four years and the real crux of the situation to-day is that we have shut our eyes and closed our hearts to the human issue in this matter. The puzzle which confronted statesmanship when the last guns ceased to growl was not to mulct our late enemies in enormous sums, but to cooperate with them in rebuilding and reconstructing Europe, and because we did not do that we are faced with a great human tragedy much bigger, more profound and more dangerous than the economic and financial dislocation which that tragedy involves. I know that in some quarters, in this House and outside, it is still extremely unpopular to deal with the human issue in this great controversy, and it is still regarded as unpatriotic to cease to hate the ex-foe with whom you have made peace. Is it still regarded by some section's in this House as disgraceful to speak decently of former foes. These sentiments are not going to deter us on this side of the House from touching the human issue, because it is a cardinal article of our faith that between branches of the great human family there is no real inherent hatred, but rather an association not only economic in all those matters which are common to humanity.

What is the spectacle with which we are faced to-day? That is the tragedy of the situation. We have a people to whom only men of little minds will deny the epithet great, a people great in intellect, great in its achievements, great in its virtues as in its defects, lying agonised at our feet. For centuries our sons and their sons have competed in honourable emulation in scientific research, in arts and crafts, in exploration and in commerce. For centuries we have drunk deep at the wells of learning of these people. It is only two decades ago that we began to drift apart owing to an accumulation of errors and miscalculations on each side, exacerbated by news- paper poison on both sides, and further complicated by an unhappy incompatibility of temper between our respective rulers. It was only then that we began to drift apart and ceased a friendly intercourse which has spanned a thousand years. This people to-day is humbled in the dust. It is mutilated in its territories. Deprived of three-fourths of the raw material of life, its life is destroyed, its middle classes are broken and despairing, its working classes are going along the same road, and for these people stricken to the very heart we have not one generous word!

Is this worthy of our greatness? The time was when we prided ourselves upon our capacity, after we had fought a man and beaten him to shake hands with him. The time was when clemency of victory was the rightful boast of our statesmen, and our leaders were in that cause prepared to confront the buffets of temporary unpopularity. Is our attitude to-day compatible with our repeated pledges? How many times during the War, and especially during its later stages, were we urging the German people in the words of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) to adopt a real democratic constitution which would make it much easier for us to conclude a broad democratic peace with them? How often did we repeat over and over again that we were not fighting the German people, that the destruction and disruption of Germany had never been a war aim of ours from the beginning, and that what we wanted was that the German people should throw aside their military caste and despotic Government and become a democracy with which we could work? Such utterances are not to be wiped off our national record. They are indelible. Is such an attitude compatible with our national interests? Is there any Member of this House, wherever he may sit, who can contemplate with equanimity the establishment on the Continent of Europe of a great military hegemony coupled for the first time in the history of the world with a great economic domination of iron, steel, and coal and raw material? Can anyone contemplate with equanimity such a military-economic hegemony in Europe. If so, not only is he utterly blind to all the teachings of history, but he must be suffering from temporary aberration. If we continue to close our eyes and shut our hearts to this great human tragedy, may not that tragedy be the forerunner of another tragedy?

Mr. BECKER

Did I understand the hon. Member to say earlier in his speech that if Germany were let off her war debts, and if the Ruhr question were settled, trade would revive in England?

Mr. MOREL

The exact words I think I used were that for every penny piece we had got from Germany in reparations we had paid out a shilling in unemployment doles and loss of trade. We are sincerely disposed on these benches to support the Prime Minister in his general purpose and in his policy as far as we understand it, but may I indicate that in my belief the chief danger from which the Prime Minister's policy is suffering as at present disclosed is this, that so far—and I say so far advisedly—this controversy is being narrowed down to a difference of national interests as between France and ourselves. So long as it is narrowed down to that point of difference of national interests the success of the Prime Minister's policy is very unlikely, and I say that for two reasons, first because confined within those limits the case the present British Government is putting forward, while it is thoroughly legitimate and sound, suffers from weakness produced by precedent action of the Coalition Government. Several Members have accentuated that statement to-day. Secondly, the invasion of the Ruhr has been spoken of as though it first took place in January of this year. It was nothing of the kind. M. Poincaré put the keys of the Ruhr in his pocket when, with the blessing of the right hon. Gentleman the Member for Carnarvon Boroughs, he sent French troops to occupy the ports of the Ruhr—Düusseldorf, Ruhrort, and Duieburg—not in January, 1923, but in March, 1921. That was the beginning of the invasion of the Ruhr, and that invasion was carried out, as I have said, with the blessing of the right hon. Gentleman the Member for Carnarvon Boroughs. Further, that occupation of the ports of the Ruhr was the outcome of the London Ultimatum of March, but in May there was another London Ultimatum, also with the blessing of the right hon. Gentleman, pitched at Germany's head, and what did that ultimatum convey? It conveyed that, if the German Government did not, without reserve or condition, undertake to fulfil their obligations as to final reparations, which included the payment of a fantastic sum of £6,600,000,000, the Valley of the Ruhr would be occupied until those obligations were fulfilled.

Lieut.-Colonel CROFT

Hear, hear!

Mr. MOREL

I am delighted to fed that that statement is being cheered by the hon. and gallant Member.

Mr. PRINGLE

It was only bluff.

Mr. MOREL

What I want to point out is that the principle that it was legally and morally right to occupy the Ruhr militarily in the event of Germany's default was implicitly admitted by the Coalition Government, and that is the real reason why this Government has found it impossible to challenge the legality of the French action. That is the Achilles' heel. If we confine this controversy merely to the narrow issue of an Anglo-French difference on the matter of policy, I am afraid the Prime Minister's object will not be fulfilled. I am dealing with the realities, upon which few speakers in this Debate on the other side of the House, with the exception of the hon. Member who spoke before I did, have touched. I am dealing with the realities, and I am facing the facts as they are, as I think this House and this country should do, because nothing is more dangerous, and nothing may well prove to be more disastrous, than that this country should abruptly and suddenly be brought face to face with one realities of the situation. Such conditions lead to the sweeping of the public off its feet, to panic, to rash decisions, and, as we know from experience in the past, to war. The facts are these: We have opened a momentous debate with France, and I use the word "debate" in the widest sense of the term. We all want that debate to have a peaceful conclusion, but we shall be driven, and we are driven now, to go on with that debate. We cannot drop the debate, we cannot leave it suspended in the air; it has to be gone on with, and, if we are going to pursue it as we are pursuing it now, on the narrow basis of an Anglo-French conflict of opinion, then there is very grave risk of the debate not having a peaceful termination. Both sides are taking into account that great possibility, and both sides are preparing for such a dread possibility.

It would be criminal to hide that truth from the country, and it is our duty to proclaim it. I am unalterably convinced that the Prime Minister will not succeed in his policy, and that this debate will not have a peaceful termination, unless the rest of the world, and especially the United States of America, can be led to participate in our Debate with France. The rest of the world, and especially the United States of America, will not participate effectively in our Debate with France so long as that Debate presents itself as an Anglo-French controversy as to the best method of wringing further sums from Germany. If we desire the effective participation of the world, and again I say especially of the United States of America, in this great Debate of ours with France—which is tantamount to saying that we desire, as we do desire, that that Debate shall have a peaceful termination—then, somehow or other, the Prime Minister must raise the whole of this controversy out of the rut of a mere national interest on the one hand, and out of the rut of so-called reparations on the other, must place it on that higher and bigger plane to which it properly belongs, and must treat it as a great human issue, which not only involves the economic destinies of Europe, but which involves the fundamental moralities of international relationships.

I should now like to touch upon one or two specific points which arise from the Prime Minister's statement to-day. I think my hon. Friend the Member for Aberavon (Mr. J. R. MacDonald) has already touched upon the question of Germany joining the League of Nations and being on the Council of the League. There are two vacancies in September, and one of those ought, in my opinion, to be filled by Germany, because it is obvious now to any man who studies the subject that, until Germany is in the League of Nations, you will never have an effective instrument for the reconstruction of Europe. I suggest that the British Government should make it quite clear that if Germany applies—and you can hardly expect any German Government to risk the affront of applying and being refused—that if Germany applies to be admitted to the Council of the League she will have the support of the British Government.

Then I should like to accentuate another point upon which my hon. Friend touched—the point of time. How near Germany is to complete collapse it would be impossible to dogmatise about, but all those who are best informed realise that that collapse is imminent, and may come at any moment. The whole population is underfed, and, undoubtedly, unless Germany can, from some quarter or other, get short credits for food supplies, we may have the whole of Central Europe in an uproar within the next few weeks. Why our Government should not participate in providing such short credits I really fail to sec. If we set the example, it would be one which would be followed. The world is not yet dead to all sentiments of pity and justice, and a gesture from us would galvanise those sentiments into life. Above all I, for my part, much regret—and here I speak on my own responsibility, and do not commit my friends around me, although I have no doubt the majority will agree with my view—I much regret that, as I understood the Prime Minister's statement—if I have misunderstood him I stand open to correction—a portion of the Prime Minister's proposed reply to Germany consists in demanding that the German Government should rescind its decrees, its ordinances, concerning passive resistance.

Lieut.-Colonel J. WARD

You do not agree with the resistance, do you?

Mr. MOREL

If the hon. and gallant Member will contain his impatience for a moment, he will see exactly where I stand in the matter. Neither this German Government, nor any German Government which could conceivably follow it, could stop passive resistance in the Ruhr. That passive resistance comes from the breasts of the population, which has been traditionally anti-militarist from the beginning. The Westphalian miner has been so much opposed to militarism that, in the days of the old German régime, it was realised that it was a much better policy not to station troops in the Ruhr. The ordinances of the German Government are not the causation of passive resistance, but the consequence of determination of the working-class population of the Ruhr to resist dictation at the point of the bayonet. If the German Government had taken any other action than the action it actually did take there would have been chaos on the Ruhr and not passive resistance, but active resistance, and assuming the German Government withdrew the ordinances now chaos and active resistance would supervene in the Ruhr. I hope the Prime Minister will think twice and three times before he urges upon the German Government a course which would drive any German Government to suicide and which would let loose riot and bloodshed on a large scale in the Ruhr.

I believe it should be said here in this House—and it can be more fittingly said by a back bencher than a front bencher—and I wish to place on record my belief in this respect in this House, as I have done outside its walls, that the stand made by the working class population of the Ruhr is the greatest demonstration of moral force as against military violence which history records. In the face of the most extreme provocation, despite petty insults and humiliations and vexations on every day, despite daily tyrannies, the closing of the schools, the commandeering of the hospitals, the holding up of traffic, telephones and telegraphs, the plunder of private property, the pillaging of pedestrians in the streets, cruel whippings in prison, the complete dislocation of civic life; without counting these wholesale, cruel expulsions carried out with a revolting cynicism shameful to those who ordered it—despite all this, the working class population of the Ruhr has kept its head and has maintained its resolve, and I say for my part that I am proud to think that any population in Europe, whatever its nationality, whatever its circumstances, should have proved the power of the human will over the sword. I am persuaded that the example of the working class population of the Ruhr will ring down the ages, as I am persuaded that at this moment the attitude of the population and its persistence in that attitude is the only thing that stands between the world and the establishment of a military and economic domination by a single power in Europe with the aftermath of war and of destruction which such a domination would infallibly entail.

Lord COLUM CRICHTON-STUART

I am rising to address the House for the first time and I therefore crave that indulgence which I have often known given to other young Members. In my official life I have spent a good deal of my time in correspondence with the hon. Member who has just spoken, and I was always then, as I am now, deeply impressed with his sincerity, but I put forward the view that he does not correctly express the view of the great mass of the people of this country. The Leader of the Opposition said, as I think truly, that the great mass of the Members of this House are behind the Prime Minister; but another frame of mind also exists in this House. There is a distinct cleavage of opinion between those who more or less constantly are the supporters and the friends of French policy and those who are equally consistently the critics of France. I believe that the mass of public opinion outside this House will not accord with the two frames of mind of which I have spoken. Rather, the public incline to commend France for the amount of success which can be laid to the credit of the Ruhr policy, but on the other hand they feel a growing anxiety when they realise the general economic losses which have already been suffered as the result of that policy, and will be suffered, so long as that policy continues, in a growing degree. Public opinion was fairly convinced that the desire of the German Government and of the German people, before the occupation of the Ruhr, was to evade the payment of reparations, and they have been impressed very deeply by the change of tone which has been shown in Germany since the occupation of the Ruhr took place. Before the occupation there was a series of offers by Germany of payment of reparations. In none of those offers was the word guarantee ever mentioned. There was a second series of offers, and there, in two places, guarantees were offered in addition to certain sums which were mentioned and which differed from each other. First the magnates of the Ruhr offered to guarantee a certain part of the money which was said to be forthcoming, and then, secondly, the German Government themselves put forward an offer, which is now under discussion. That, I think, profoundly impressed the public.

The action of France in the Ruhr has produced a very marked change in the attitude of Germany towards the payment of reparations. There is now in Germany a realisation of the absolute necessity that they shall be paid. Public opinion in this country also realises that it is of paramount importance that now that a certain degree of success has attended the policy of occupation in the Ruhr, that occupation should come to an end as soon as possible. A modification of the Ruhr policy, even in the minds of the best friends of France, appears now to be possible. It must be clear to the German people that though the occupation was to end to-morrow it would always be possible for the occupation to be renewed. Germany may be considered now to have learned a lesson.

In the announcement made by the Prime Minister, the most unsatisfactory part appeared to me to be that in which reference was made to the omission by France of any mention of the suggestion put forward, that we should use our influence with the German Government to induce them to desist from supporting passive resistance in the Ruhr. In spite of that, it appears to me that no real change in the policy of His Majesty's Government would produce any better results than to continue in the line the Prime Minister has indicated. The further we move from the side of France the less chance there is that the occupation of the Ruhr will come to an end. If His Majesty's Government use their influence, in a series of separate negotiations with Germany, to induce the German Government to withdraw their official recognition and support of passive resistance, the position of His Majesty's Government will, if they succeed with Germany, be materially strengthened in approaching France in another and separate series of negotiations to induce France to begin to modify to some extent the policy of the Ruhr occupation.

The attitude of Germany to passive resistance in the Ruhr seems to be the first obstacle to be removed. It is a point of honour with the French. His Majesty's Government will surely rather take the side of France in that respect than urge upon France the other alternative, which is for France to accept the proposition of Germany that passive resistance has been a success and that French policy has been defeated by that means. If His Majesty's Government is able to put before France the satisfaction of the withdrawal of German official support for passive resistance, together with other offers in the form of more definite guarantees, of bigger guarantees than have so far been offered, His Majesty's Government will be in a position to test the sincerity of France, because, if these offers are on the whole generally reasonable, if they are reasonable in the estimation of His Majesty's Government, it is probable that the whole of the nations of the world will also agree that they are reasonable. If France then refuses to consider the offers and makes no further sign than she has made hitherto, then it will be clear to our own people, and I am sure it is not clear yet, that there is a sinister and selfish motive behind the policy of France in the Ruhr. As a result of that, what is most important will be achieved by the Government, namely, that there will be behind the Government a unanimous public opinion besides the almost unanimous opinion of this House.

The PRIME MINISTER

I should like to congratulate my Noble Friend the Member for Northwich (Lord C. Crichton-Stuart) on having got through so happily what is the most trying ordeal in the life of a young Member of this House, and on having made so interesting and important a contribution to the Debate. I hope that it will not be long before we may hear him taking part in Debate again.

I fully appreciate the remarks which fell from the right hon. Gentleman the Member for Paisley (Mr. Asquith) when he said how difficult it was to conduct a Debate in the absence of the documentary evidence which is essential to a full under standing of so much that we are discussing to-day. But I can assure the House, and I hope they will agree with me, that it is only the circumstances of time itself that has defeated my desire to place everything I could before them to-day and the fact that the House is rising rather earlier than it has done in recent years, and that the latest part of this important correspondence was only received two or three nights ago. I have done my best in the statement which was prepared, and which I read, to give as much as was possible to show the course of the negotiations during the last couple of months, and I am afraid that with that to-day we must be content.

I think it would be of some use to the House if I began by filling up the gap to which the hon. Gentleman the Leader of the Opposition (Mr. Ramsay MacDonald) called our attention during his speech. He said he was curious to know what had occurred between the 7th June and the 12th July. Let me say this here. Some criticism has been passed to-day in the course of the Debate, on the late Prime Minister on the ground that in January last he took up a passive rather than an active line on the occasion of the proposed entrance into the Ruhr. It is always, perhaps, more easy after the event to say what a man should do. He was in an extremely difficult position, and think, having regard to the facts of the time, he took the right course and the course that I think would have been taken by many of his old and his present colleagues For, after all, what was it he did? He might easily have precipitated a breach in the Entente. He stated in the most explicit and precise terms what his objection was, and he gave his reasons for that objection, but, at the same time, he strained to the uttermost his well-known affection for France and his loyalty to the Allies and prepared to wait for a time a spectator of events, knowing quite well that such an action must have exposed himself to the criticisms to which he was subject and to which naturally he is subject to-day. It was quite obvious that that passivity could only be temporary, and had he remained in office he must have brought that period of passivity to a close. So it was that when I succeeded him I felt at once that the time had come to make an attempt to move forward and to bring, if possible, to a termination, a state of things which appears to everyone in this House to hold within it the seeds of unhappy and possibly terrible events in the future. Therefore, we lost no time, and immediately after receiving the German Note of the 7th June we issued, within six days, a questionnaire to our Allies to elucidate certain points upon which it was necessary that we should have information before we could see clearly on what lines we could proceed with the greatest hopes of success in replying, or suggesting a reply to the German Note. It was on the 13th June that we issued that questionnaire. It was not until the 3rd July that we received a reply from Belgium and until the 6th July that we received a reply from the French. Without delay, we prepared a covering Note to our Allies, a Note which covered a draft reply to Germany which we had hoped might, at any rate, have been taken as the basis of a reply from the United Allies. We had the two Notes ready to be despatched by the 20th July. On the evening of the 30th July we received the French and Belgian replies, which were translated and circulated to the Cabinet on the 31st July, which was only the day before yesterday. Therefore, I think the House will agree that, whether our procedure was right or not, no time has been lost by this Government in the last two months in taking, at any rate, preliminary steps which seemed good to us to find a way out of the impasse into which we had drifted.

There was one good thing about our actual passivity. I think it showed with utmost clearness how ardent our desire was to maintain the old relationship with our Allies. We sacrificed something to prove that. We also allowed time to elapse to prove whether our contention or the contention of our Allies as to the efficacy of the method of attaining the common end which we have in view, was justifiable or not. While that has been to the good, there has been one bad thing about this delay. The silence of Great Britain has led many people, not only in the world at large but in Great Britain, to overlook the interests of our country. We must remember that we are allies, that our interests are no less and no more than those of France and Belgium, and that as Allies we have an equal right to declare our views; but it cannot be expected amongst allies any more than amongst friends that we should always regard a thing from the same point of view. When a difference arises between allies, as between friends, it is far better and far more honest to state frankly where the differences arise and what the reasons are for them, knowing that by that method you are more likely to come to an ultimate agreement than if you try to hide them and gloss them over.

I must say, although I sympathise with a great deal of what was said by my hon. and gallant Friend the Member for Burton (Colonel Gretton) that it is a little surprising to find an hon. Member holding the views which I know he does, and a Member of what I may perhaps term the extreme right falling into the same mistake that hon Members who sit on the extreme left have always fallen into, and that is in assuming that when a difference of opinion arises between this country and another it must necessarily be this country that is wrong, and the other country that is right. I deprecate from the bottom of my heart in a discussion of this kind such phrases as pro-French and pro-German. They only confuse the issue and they cause irritation. If we are to be pro- anything, let us be pro-British.

On this point I think I ought to make a few observations, not in detail, but speaking generally and broadly—regarding rather the wood than the trees—on the Ruhr position, and what it means, so that both our own people and our Allies may understand where the real difference of opinion comes. We regard the Ruhr policy as not well calculated to achieve the common end which we have in view. Our Allies regard it as a good method to achieve that end. That is a perfectly honest and genuine difference of opinion as to methods, whereas we both agree that what we want is to secure the payment of adequate reparations, and that as soon as may be. The reason that I doubt the wisdom, or am certain of the unwisdom, of the Ruhr occupation is, that in my view it postpones, by its very length, the payment of reparations, and it is hurting, directly and cumulatively, through the progress of time, the trade of this country and the trade of the world. There has been a good deal of nonsense talked on this subject by people who imperfectly comprehend it, but I think that no one will controvert the few statements that I propose to make.

It would be untrue to say to-day that the cause of the unemployment that we have in this country is due primarily to the Ruhr occupation. That is an exaggeration on the one side. The Ruhr occupation is an unhappy symptom of the diseases which are inherent to-day in so many nations of the world. The direct cause of the unemployment is due to the impoverishment of the world, which has made it so difficult for countries and individuals to afford to make the payment for goods whch they want, or to find means of making those payments. But it is true to say that the occupation of the Ruhr is now beginning to be felt in the trade of the world, and that the longer it lasts the more heavily and grievously will it be felt, and for this reason, that there is no isolated unit in the industrial life of the world. To take the old threadbare analogy of the machine, the trade machine of the world, you stop a part of it from functioning and the whole suffers. You have a contraction of trade in the Ruhr going on, as we know, to-day, and the result of that contraction is felt on the wires between Liverpool and Calcutta and between Liverpool and Valparaiso. India, supporting one of the largest populations of any country in the world, with a good monsoon and every prospect of enjoying favourable terms of exportation, finds that neither with her jute, her hides, her seeds or her rice has she her accustomed markets in Central Europe. The reaction of that is two-fold and means the cessation of progress and prosperity in India. It means that India will be poorer than otherwise she would be, and it means that Lancashire suffers. In the same way, the inability of Germany now to take nitrates from Chile is bringing the Chilian national trade to a deadlock, and we find that, as the situation gets worse, the difficulty of providing credits for the payment of imports into Germany is beginning, or soon will begin, to tell on our own coal trade, because at this moment the Germans are seeking to find means of financing the import trade into Hamburg for coal. Similarly, the reaction will go right across the world to Australia. You will find the same thing happening with the importation of Australian wool into Germany.

That is what is happening, and we are told by some superficial observers, "Oh, yes, but it is a very good thing for British trade." But it is not a good thing for British trade. The few orders here and there that we may be getting are no compensation for the orders that we are losing in international trade. And what else is going on? The liquid capital of Germany is being reduced—her gold—and her industrial shares are passing into the hands of foreigners. All of which will make it more difficult to get reparations when the time comes, and meantime Belgium has to watch the docks at Antwerp becoming less and less occupied. Where is this leading to? The circumstances are unprecedented, and there is no one who can foretell what the result will be of a collapse or a surrender, which some of our friends tell us is a necessary preliminary to the recovery of reparations. It has been said in this House to-day that our action is strengthening German resistance. We want to do nothing to strengthen German resistance, because we know well that the longer Germany resists the more hopeless will be the position afterwards. We want a settlement and quickly, but what is going to happen if and when the collapse of Germany comes, a collapse the nature of which no one can foresee?

We know one thing, that whatever it means it will mean less reparations. We know another thing, that it will mean a longer time before Germany's financial system can be restored. And I fear very much another thing, that if it be a collapse or a surrender that is caused by a feeling that anything is better than a continuance of what is going on now, then what will happen will be that Germany will sign an agreement, and she will default again, and we must look forward to an endless chain of events similar to those of the last few years. It is because we feel that so strongly that the Government are using every endeavour, and have not yet given up hope of success to secure such unity among the Allies as may lead to a quick and a final settlement. If, however, a settlement were made—and I only want to say a word or two about this because it has been alluded to to-day and is often on the lips of men—you may he faced in the future with a very strong industrial Germany. You cannot have it both ways. You must either have a broken country that will pay no reparations, which will leave the trade of the world in such a state that it will become the work of a generation to make good and find new fields of industry, or you must have a Germany that will be powerful industrially and that will pay adequate reparations.

3.0 P.M.

There is no choice between those, but let us remember this, that just as Germany may prosper and just as she may be charged with reparations so in proportion to those reparations will she have to have an export trade, and one of two things will happen. Either we shall have again some of the most serious competition which we have ever had to face or else such an increase in the trade of the world throughout the world that the amount of exports which will arise to meet reparations can be absorbed nationally, and that is what we must hope to see. But where do we hope to see room and scope for such absorption? The largest potential market in Europe is Russia, and sooner or later that market will be opened, sooner or later the German exports will go largely into Russia, because in the past Germany has been the country most familiar with trading in Russia and most competent to conduct it. I see, in the future, that Russia may act as a shock absorber, to take from the world production of increased trade so much of the exports of Germany as will allow the German portion to be absorbed in the whole without causing us the apprehension to which I have just given expression. But, when the time comes—and I believe, as I said, that it will come, that Russia slowly begins to move in the domain of trade again—I do not believe myself that she can make much real progress until that stretch of Europe lying to the west of her is financially sound and whole. Therefore, with this settlement which we are seeking so earnestly and with a whole heart is not only wrapped up the financial stability of Central Europe but, in my view, financial stability, and all that goes with it and lies behind it, of all Europe from the centre eastwards.

There is only one more thing I want to say before I sit down. I am sure the House will understand that at this moment, when the Government have to take into consideration the form of reply to the last Notes which they have only just received, it will be quite impossible for me to attempt to canvas the various lines upon which it might be possible for us to answer. I will only say this, and I will ask the House to believe me, that I realise to the full that the Government of the day, in dealing with these matters, is not merely the Government of one party, but is a Government which, for the time being, is speaking in the name of the whole nation, and that we shall not leave a stone unturned to do, what we have tried to do in our first Notes, and that is to bring together and to keep together the whole Allied forces; to secure from Germany what is due to us in justice; and to secure a settlement fully and finally at the earliest day possible. That will be our endeavour, and I may add that should at any time there arise any crisis in our relations—which, indeed, I pray God may not arise—I should not hesitate to call Parliament together at whatever time that might be.

There is one more thing which I think I must say, because I think it is only fair to our own people and to our Allies, and because it is no mark of true friendship to refrain from pointing out where you can see that the real danger may lie. I have always acted on the assumption that the object of our Allies in pursuing their Ruhr policy is to secure reparations, as is our object. It has often been stated that there are ulterior motives. I do not desire to believe that, but if that be so, I would say just this. Deep down in every British heart, irrespective of party, lies a profound sense of what they believe to be right. It is a thing upon which they do not argue, but they feel it, and it is one of the most potent forces in our lives. It was the force that took this nation into the War, and the force that kept them there till the end. If the British people should feel, after a lapse of time, that the wounds of Europe were being kept open instead of being healed, there might then easily ensue the last thing in the world that I would like to see, and that would be an estrangement of heart between our people and those who take the opposite view. I hope, and I believe, that nothing of the kind will ever happen; but, as one who is and always has been a warm friend of France, who desires to and who means to work with her to the utmost limit of my power, I think it is only a mark of friendship to say what I have just said; and it is because I want that friendship to last that I want a rapid settlement of these troubles that are tormenting Europe to-day.

Mr. MOSLEY

In the course of this Debate we have listened to two long statements from the Prime Minister of this country, but in the course of both those statements he has declined to answer the great question of this Debate, which has been put to him in several speeches from this side of the House, and which is, "What are you going to do next?" The Prime Minister indulged in a very interesting analysis of the economic situation, with which very few people on this side of the House, I imagine, would be found to disagree; although, from the speeches to which we have listened from the other side, there would probably be found a good many people to disagree with him among his own supporters. On this side, however, there are few people who will disagree with the economic analysis which was the entire feature of the right hon. Gentleman's speech. That analysis, and the unhappy spectacle of the little family quarrel, comprised the statement of the Prime Minister at this grave hour. I was happy, at any rate, that he did repudiate the doctrines of the hon. and gallant Member for Burton (Colonel Gretton). He accused him, in a taunt with which we are all familiar, of voicing the opinions of another country, and I was almost in hopes that the Prime Minister would say to his supporters, "You are the friends of every country but your own." That taunt would have had such a familiar ring. It would have been rather a solace to some of us who have suffered much from gibes of that nature. Apart from his analysis, and from the quarrel, which I welcome, with that die-hard element which I am afraid has too long impeded the progress of this country—apart from that stand on the part of the Prime Minister, which we all so gladly welcome, what has he told us of the next stage in the policy of this country? He said, in effect, that he had only just received these Notes, and this refusal of France to consider even the proposals of Great Britain, and that, consequently, he had not been able to formulate a policy. But did the Prime Minister go into this matter only seeing one move ahead? Did he not think out his policy in advance? Did he never envisage the prospect of the Prime Minister of France refusing to consider the proposal of the British Government to establish an inquiry into Germany's capacity and to revise the reparations schemes? Is this the first time that the dawn of such knowledge has appeared to the Prime Minister?? Did he think that France would immediately accede to his request, and did he seriously come down to this House to say that he had not thought out any other policy of any kind—to make this statement to us before the long Autumn Adjournment?

In what a situation does it place this House? We are asked to adjourn until 13th November, and in the interval we may find the whole of the great economic system of Europe crashing and dissolving in a welter of blood, and we leave the Prime Minister of this country sitting on that Bench saying that he has not as yet formulated any plan or policy whatsoever to deal with the situation. So far, he has been pursuing a policy of trying to persuade France to adopt a more reasonable frame of mind. That is not a new policy. It is one which was adopted by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) and others, during the last four years. They have all tried to persuade France to take a reasonable view of the situation. The publication of the Papers and letters which have passed, and which the Prime Minister thinks is going to have such a great effect on world opinion, will merely inform the world of a point upon which we imagined it had already been informed, namely, that there is a disagreement of opinion upon the reparations problem between this country and France. That is the only concrete contribution to a solution of this question which the Prime Minister has announced in the course of this Debate. Clearly that is a situation which may be viewed with grave apprehension and with the greatest disappointment throughout the length and breadth of the land. If I may vary a familiar phrase, for some months past the mountains have been in labour, and even the ridiculous mouse, which bitter experience led us to anticipate, is stillborn.

Lieut.-Colonel J. WARD

Still being born!

Mr. PRINGLE

It looks as if it were very protracted labour.

Mr. MOSLEY

Perhaps the right hon. Gentleman will say if we are to have any inkling of any sort—