HC Deb 07 May 1925 vol 183 cc1187-235

3. "That the new import duties which were imposed by Part I of the Finance (No. 2) Act. 1915 shall be revived and shall be charged on and after she first day of July, nineteen hundred and twenty-five, and for the purpose of the charge of duty on cinematograph films the expressions 'positives' and 'negatives' in Section twelve of the said Act shall be deemed respectively to include undeveloped positives and undeveloped negatives."

Which Amendment was: In line 1, after the word "duties," to insert the words. other than the duty on motor cars, in-chiding motor bicycles and motor tricycles. "—[Mr Pethick-Lawrence].

Question again proposed, "That those words be there inserted. ".




The hon. Member spoke yesterday. He is not allowed to speak again to-day.


I was speaking when I was interrupted by the Chancellor of the Exchequer moving the Adjournment, and I gave way.


The hon. Member sat down, and then the Adjournment was moved.

Commander BELLAIRS

Nearly all the speeches which were addressed to us yesterday from the Liberal Benches were in the nature of a warning to the Chancellor of the Exchequer to beware of the company he keeps on this side of the House. I do not wonder at it, because hon. Members opposite have every reason to be beware, considering that the Leader of the Liberal party has been tarred with the brush of Protection when a Member of the Coalition Government, and the right hon. Baronet the Member for Carmarthen (Sir A. Mond), who was, I believe, Treasurer of the Free Trade League, has given us a most clear lead in regard to Protection. He has told us that Protection is justified for key industries, and is justified against dumping and against depressed exchanges. He also told us that the foreign trade depends entirely on more or less of a monopoly of the home market. On all these accounts I say that these McKenna Duties are justified. Take the motor trade. It proved itself to be a key industry in the War. It is certainly a victim of dumping on occasions. If we take the one part of the motor trade which was exempt, and which I consider ought to be subjected to the McKenna Duties—commercial cars—they were the complete victim of dumping in 1920, when no fewer than 16, 250 commercial cars were dumped into the country.

Lieu.-Commander KENWORTHY

I think it is very necessary to get this matter clear. What exactly does the hon. and gallant Gentleman mean by these commercial vehicles being dumped? Were they sold under cost of manufacture, or what does he mean?

Commander BELLAIRS

I mean simply and solely this, that in 1920 an abnormal number of commercial cars were dumped from America and from Germany. Those 16, 250 cars that came into the country were over 11, 000 more than the whole British product, whereas in all normal years the British product exceeded the imported product. When Liberals contend that the year of greatest employment corresponds with the year of great foreign import they are stating what is absolutely true. That is because in the final year -of the boom, rather than spoil their own market, places like United States and Germany dump their goods into the one Free Trade market. So in the year 1920 we had this abnormal number of commercial cars, and the result was that in 1922 we had three-quarters of the men employed in the output of commercial cars sent into unemployment. It was simply and solely through this great dumping of commercial cars from the United States and Germany, in particular, that this arose. We have depressed exchanges now more than ever was the case when the right hon. Baronet the Member for Carmarthen made his speeches and issued that pamphlet, "The Popular View," in which he used all these Protectionist arguments. Take his final test, the home trade amounts to three-fourths of the total trade. If we lose that, we lose the foreign trade. It is by virtue of his grip on his home trade that American exports are going up by leaps and hounds. The American exports in 1923 were twice the exports in 1913, four times the exports in 1903, and 10 times the exports in 1893. With our Free Trade system, without the assistance. Of duties such as this our export trade is not going up except by means of Empire trade., We have a case where the home trade is comparatively small, the lace trade of Nottingham, where the fact that three-quarters of the trade is foreign trade, and there we find that a Committee has reported in favour of a duty of 33⅓ per cent. [Interruption.] It has. I have read the Report to-day

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We know that we got £7, 500, 000 in three years from these McKenna Duties. Thatwent in relief of taxation and brought prosperity to these trades, because they were in full employment and were expanding, and the Government in addition got increased Income Tax and Super tax. All these things went in relief oftaxation on other trades. If you had this taxation on the other trades, you would have had increased prices, because there is nothing more certain than that whereas duties on foreign imports do not always lead to increased prices—in the case of the motor taxes and gramophones they led to decreased prices—direct taxes invariably lead to increased prices, because a manufacturer must put his overhead charges into the price of his goods. The McKenna Duties were taken off in 1924 and an increase in imports took place immediately. The imports under the McKenna. Duties in September, 1923, amounted to £320, 268. In September, 1924, there had been an increase of £489, 854, so that the amount had gone up 2½ times. The result, of course, must have meant employment abroad and unemployment at home. I know that the Liberal argument is that these goods are paid for by other goods, but they never tell us what is the nature of the other goods which pay for them. If they were to address them selves to that question, they would find that the foreign countries send us those goods upon which the maximum of skilled labour is expended, whereas we are sending more and more of those goods on which there is not the maximum of skilled labour required. I only hope that in the process of discusing this Budget we shall, if possible, extend the duties, and it is because they will be of use to us when we come to fight the 1929 Election that I am delighted that the Chancellor of the Exchequer has put them into his 1925 Budget.


The hon. and gallant Member for Maidstone (Commander Bellaire), who has just addressed the House, has been deploring the number of imported commercial bodies, and has asked why they were dumped here. Surely they were not dumped here as a gift, but were sent because there was a demand for these vehicles by our transport contractors in order that they might get them at a cheap price and be able to carry the goods of other trades on a more favourable basis. It is rather significant, if we turn up the figures for the last 20 years, that we find that whenever there has been a decline in the imports of manufactured goods it has been accompanied by an increase in the number of unemployed in this country, showing conclusively that imports of manufactured goods are paid for by exports of other manufactured goods. The hon. and gallant Member suggested that there was a fallacy in the Free Trade argument, in that while we brought in manufactured goods on which considerable labour was expended we exported raw materials or manufactured goods on which less labour had been expended. Surely, that is contrary to the knowledge and experience of anyone in trade. In the iron and steel trade, for instance, we know that we import semi-manufactured material at a comparatively low figure, spend a large amount of labour on them, and then export the same material at an enhanced price, having found employment for a large number of our people here. I submit, therefore, that the hon. and gallant Member's contention that the import of goods means more unemployment is not borne out either by the practice of the trade or by the figures which are supplied to us each year.

The question we have to consider is whether these protective duties are to be imposed without a protest. This is the first time for 100 years that we have had a protective Budget such as the right hon. Gentleman has introduced. If these new import duties which he is imposing were merely for revenue purposes, why does he not put on a corresponding excise duty? Surely, other trades, like the silk trade, for instance, have a right to inquire why they should be subject to an excise duty set against an import duty when the other new import duties do not carry corresponding excise duties. The real question is not the respective interest of this or that particular trade, but the interest of the consumers and the public generally. Whatever may be the immediate effect on any individual trade, there is no question that these import duties mean increased prices for the purchasers in this country. If not, what is the object of putting on these duties? It is surely a protective purpose, in order to raise the cost of these goods in this country. Take, for instance, the motor car. I suppose the number of licences taken out for cars is considerably greater than at any previous time. That means that since the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) repealed the duties last year, and the fall in price consequently took place, large numbers of people have been encouraged to buy and to run cars which they never had before. Small people of moderate means have made these purchases under the expectation that the duties would be kept off. Now, having involved themselves in the expense of running one of these cheaper cars, they find that the duties are put on again. That means that all the accessories and all the renewals which they will require during the running of these cars will he at an enhanced price. They will therefore find themselves very seriously mulcted in extra running costs and in increased costs for repairs. I submit that it is contrary to the interest of the great body of consumers and users of cars that these higher prices should be put on.

What is the justification? There is no unemployment in the particular trades concerned. Figures have already been given to show how the manufacture of motor cars has increased since the right hon. Gentleman the Member for Colne Valley removed the duties. The export figures show most encouraging returns. Whereas in the first quarter of 1923 the export of cars and parts amounted to £804, 000, last year it was £1, 248, 000, and this year it is £2, 280, 000, showing a very considerable increase since the time that the duties were taken off, and bearing out entirely the Free Trade contention that if you only reduce the price of goods you will increase the sales and, consequently, the production and employment. What is true of motor cars is also true of motor cycles. Our export trade in motor cycles has increased very considerably. The British production in 1924 was 134, 000 as against 95, 000 in 1923. In the same way, the export of parts has increased from £421, 000 to £738, 000 last year. So you can go on to show in all these cases how an increase of trade and a corresponding increase of employment have been the result of the removal of these duties. We, therefore, say that it is the heighth of folly, where trade is booming, that we should take this reactionary measure of putting on duties which will restrict and hinder instead of help trade. The Birmingham Post, which is an authority which will be treated with respect on the benches opposite, in an article of the 5th March, said:

Activity(in the motor industry is still maintained. The buoyancy which, marked the Coventry motor and industry since the early days of the opening season continues. The demand so far is most satisfactory; machinery is running day and night, while unemployment is substantially less than at the corresponding period last year. Could there. possibly be a more striking demonstration of the sanity and soundness of the Free Trade policy than that quotation which I have given from the Birmingham Post? If you turn to musical instruments, or to any of the other articles which are covered by these duties. you find exactly the same tale. The exports of musical instruments have increased from £1, 180, 000 in 1923, to £1, 659, 000 in 1924. Therefore, there is complete justification for the Free Trade argument as to the statutory effect of the freeing of commerce from these restrictive duties, and I hope that a protest will be made in this House against going back to the old days of Protection. If you begin with one trade, you cannot refuse to others that which you give to a special industry. Why should one particular section of the community be advantaged at the expense of the rest? I would like in conclusion, to repeat the protest that was made from these benches yesterday as to how far the Prime Minister is maintaining the promise which he made to the House in December last year. In the Debate which arose then on the Amendment moved from these benches on the fiscal question, he said: We have no mandate for Protection, and we have never asked for it Later on, he goes on to say: So far as the protection of any industry goes in tint. Parliament, the only avenue open to them is the avenue through the new Safeguarding of Industries Act. "—OFFICIAL REPORT, 17th December, 1924; cols. 1063-1. Vol. 179.] Why, in face of that definite pledge and that most explicit statement, are these new protective duties put on in the Budget, and why are they not taken through the machinery of the Safeguarding of Industries Act? We submit that the Prime Minister ought to be called upon to show reason why he has not kept faith with the statement which he made to the House as late as December last. Is the answer to be found in the fact that the machinery of the Safeguarding of Industries Act would not enable these duties to be put on? They would have to prove that the industry is suffering from unfair competition. It cannot be shown from the figures that I have just quoted that any of these industries are suffering from unfair competition. It is rather the reverse. They have been stimulated by competition from abroad to greater activity, and consequently they are enjoying a prosperity which they had not under the protective duties. I submit therefore that it is unfair for the Prime Minister to have overlooked, shall I say, the definite pledge which he made to the House in December last that, so far as the protection of any industry goes in this Parliament, the only avenue open to them was the avenue of the new Safeguarding of Industries Act. This Budget, with its protective duties, is a breach of that understanding, and I think Re have the right to call upon the Prime Minister for an explanation why he has varied his judgment and action in this matter.


I am not a wholehearted supporter of the Chancellor of the Exchequer in respect of all the items in his Budget, and therefore I rise with all the more pleasure to tell him how entirely I am in favour of the re-imposition of the so-called "McKenna Duties. "There has been a suggestion—almost an accusation—of a breach of faith in our party in bringing in these duties. We back benchers can only speak for ourselves, but I can tell the House that I never had a meeting in my constituency at which I did not attack in unmeasured terms the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) for having removed these duties. I hope the right hon. Gentleman will not be hurt if I say that I referred to him many times as a doctrinaire Free Trader. I was asked why he had removed these duties if their removal was so harmful as I suggested, and I replied that it was because he was a "doctrinaire Free Trader. "The question of the title of these duties has been raised, and an objection has been made to calling them the "McKenna Duties. "One hon. Member has suggested that they might be called the Churchill Duties. I am sure that all the Members of the House are aware of the extremely retiring and modest disposition of the Chancellor of the Exchequer, but I think he might make a concession to the wishes of hon. Members opposite, and allow his name to be coupled with that of Mr. McKenna in the title of these duties. I am only sorry that the name of the right lion. Gentleman the Member for Colne Valley cannot be inserted between them, so that these duties might be carried down to posterity as being of a non-party nature.

The opposition to these duties comes from both parties opposite, but the right hon. Member for Colne Valley is undoubtedly the high priest and leader of the Opposition. He towers above the other hon. Members who oppose the duties, as the mountain which is honored by bearing his name in North Wales towers above the surrounding hills. The question has been asked why were these Duties ever removed by the right hon. Gentleman. I think I can, with due modesty, give an answer. Certain hon. Members who are present to day were not privileged to attend the momentous meeting of the Ancient Society of Pedantic Free Traders, which was held to consider the special report issued in regard to the McKenna Duties, and how they were working. The opening of the proceedings was hardly harmonious, because although, in a most unselfish spirit, a Socialist Member moved that a certain Liberal take the chair, another hon. and gallant Liberal objected to that particular Liberal being the chairman

The report of the Special Committee was submitted, and the chairman, in submitting it, apologised for calling the meeting at such short notice, but said that the matter was of imperative importance, and required immediate action. The report stated that since the McKenna Duties were imposed, employment in the motor and other trades affected had been greatly enhanced, that no price rings had been formed by the manufacturers, that the retail price of the articles concerned had gone down to the consumer, that outputs were going up, and that the country was very well satisfied with the result of the duties. In addition to these terrible conditions, the Revenue had benefited to the extent of something like £3, 000, 000 per annum. In view of these lamentable facts, it was absolutely essential that the McKenna Duties should be removed at the earliest possible moment, or the sacred cause of Free Trade would have received its death blow. Accordingly, the right hon. Member for Colne Valley at the earliest opportunity removed the duties

For a gentleman of his magnificent mental attainment to have taken such an action would have been inexplicable but for the fact of the harm that. the duties were doing to the cause so dear to the heart of the Free Trader. In removing the duties, he allowed his heart to rule his head. I think it was Queen Mary who said that when she was dead they would find the word "Calais" engraved on her heart. If the right hon. Member for Colne Valley carried his heart on his sleeve, we should see the words Free Imports imprinted thereon. He must have acted against his better judgment in removing the duties. In the springtime, it is permissible for the heart to rule the head, but judging, from what I heard him say in December, when these duties were being discussed, "he hates them in December as he does in May"

I cannot understand why hon. and right hon. Members opposite take such an objection to these duties. In addition to raising revenue, they afford a certain amount of Protection to our manufac- turers and employment to our work-people. The opponents of the duties seem to think that to impose them for the purpose of raising revenue is justifiable, but if at the same time, without increasing the price to the consumer in this country, there is the additional advantage of employment, they oppose the duties.


The hon. Member who has just sat down, and who has such a high opinion of the right hon. Member for Colne Valley (Mr. Snowden), surprises me. The simple reason why the right hon. Gentleman removed the duties has not occurred to him. For anyone standing on such a pinnacle, surely it is natural for him to follow out the principles he professes; but that does not seem to have occurred to the hon. Member. Seeing that the right hon. Gentleman is a pronounced Free Trader, what is there more natural than that, when he was Chancellor of the Exchequer, he should adhere to that policy and fulfil the pledges he had made to his constituents? Surely that is a very simple explanation

If we were going to have Protection introduced, the arguments of the hon. and gallant Member for Maidstone (Commander Bellairs) would have been appropriate, and we should have recognised that he was presenting the case for Protection; but I do not understand that the Chancellor of the Exchequer is professing to introduce Protection with the McKenna Duties. We are given to understand that Protection for the time being is on the shelf, a point which the hon. Member who last spoke seems to have forgotten. The Conservative party, although they profess to be supporters of Protection, have agreed, I understand. that for the time being that it shall not be put into force, with certain exceptions. That is why we have heard no argument why, If Protection was to be introduced, the Chancellor of the Exchequer selected the McKenna Duties. No one would accuse the Chancellor of the Exchequer of being inclined to follow the lead of any man, or being tied by any party or by anything that has been done by his predecessor in office. Therefore, I do not understand why the Chancellor of the Exchequer simply adopted the McKenna Duties, except for the very simple explanation that hon. Members opposite were so committed to the McKenna Duties, and welcomed their reimposition so heartily that he did not take the trouble of inquiring whether these were the best Duties that could be imposed.

When Mr. McKenna originally made these proposals, the idea was to prevent the entry into this country of certain articles which were largely looked upon as articles of luxury, and which in time of war it was not the desire of the Government that the people should buy. If it was the idea of the Chancellor of the Exchequer to tax luxuries, why did he not tax other things? He might have adopted the suggestion made by the hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) yesterday, who pointed out certain articles of luxury that were being imported. Why did the Chancellor of the Exchequer adhere so closely to the McKenna Duties? Take the question of watches. The hon. and gallant Member for Maidstone seems to suggest that all will be well in this respect if the McKenna Duties are imposed. The entry of cheap watches into this country has meant a considerable re-export trade. In 1913 these cheap watches which come into this country were being re-exported to the extent of 700, 000. That provided a certain amount of work for those connected with the trade. Ten years afterwards, when the MeKenna, Duties had been in operation, that re-export trade in cheap watches had almost, been wiped out by the duties

In introducing duties of this kind, we want to remember that they will have an influence on other sections of trade. If you take one trade and simply protect it, and you look at it only from the point of view of the results in that particular trade, the effect is almost certain to be beneficial. Take the case of the motor industry. It is proposed to give Protection to the motor industry, but at the same time you are not protecting the necessities of life, and you are going to allow employers, inevitably, to insist on lower wages, because they will say that in regard to food, clothing, and so forth the men in the trade are getting the benefit of Free Trade. On the other hand, the employers are to have the benefit for their manufactures of the protective duties. You pick out a few trades, and you impose these duties for the benefit of those particular trades, while on the other hand the men employed in those trades have the benefits arising from Free Trade in connection with food and so on. That is neither Protection nor Free Trade. It is neither one thing nor the other

The hon. and gallant Member spoke of the wonderful prosperity of the motor industry under the McKenna Duties, but he did not tell us of the prosperity of the motor trade since the McKenna Duties were removed. I find from figures published in an imparital journal, the "Economist, "that the production of motor cars in Great Britain in 1922, when the McKenna Duties were in existence, was 40, 000. In 1923, the number was 67, 000, and last year, in spite of the removal of these duties, the number had increased from 40, 000 to 107, 000.


Can the hon. Member give the comparative figures for the United States?


I am afraid I have not those figures. The value of these motor cars rose from £20, 000, 000 in 1922 to £35, 000, 000 in 1924. Meanwhile, the average cost to those who were going to buy them fell from £500 to £341. The Economist said that the net profit of motor companies, according to their reports for the first quarter of this year. were over 40 per cent. higher than those of a year ago. I suggest that these figures quoted in the Economist should he considered. We know perfectly well that many of the difficulties of the motor companies, which were pointed out a year ago, are not so much connected with trade but with the finance of the companies. A large number of the companies are suffering from watered capital to a great extent. Much of the financial difficulties of these motor companies was due not to the McKenna Duties, but to the finance of the companies. These instances show that the abolition of the McKenna Duties has not had the disastrous effect that was suggested. Hon. Members opposite have to concede the point that the abolition of these duties a year ago has not had a disastrous effect upon the motor industry. This industry is going on excellently at the present time

If the Chancellor of the Exchequer wished to impose duties on luxuries, why did he not impose them on such articles of luxury as furs or jewellery? I can only imagine that it is in strict adherence to some pledge given, perhaps at some secret political meeting. The hon. Member for South Salford (Mr. Radford), who told us of a secret Free Trade meeting, must remember that secret political gatherings where pledges are given and promises made are held in connection with other parties. Possibly the explanation of the re-imposition of the McKenna Duties is to be found in some secret gathering of the Tory party in some part of London, and that is the simple explanation why the Chancellor of the Exchequer, who is usually so original, has not favoured us with any originality in re-imposing the McKenna Duties.

One of the items affected by the McKenna Duties is the manufacture of pianos. It seems a little strange that just after the Chancellor of the Exchequer had announced the imposition of the McKenna Duties, the manufacturers of pianos were so unimpressed by the prosperity that the Chancellor of the Exchequer was going to bring to them that they suggested to the workpeople that it was time they should have a reduction in wages. If there is going to be a new era of prosperity for these trades which are subject to the McKenna Duties this seems hardly the right time for the employers to be suggesting a reduction in wages. It seems to me that you can have Protection and you can have Free Trade. You may put on taxes to prevent articles of luxury coming into the country, but to put them on certain selected trades, selected by accident, and to propose for them special protection for no reason except that Mr. McKenna suggested that they should be protected about eight or nine years ago, seems to me to be absurd and impracticable and for that reason I shall oppose these duties.


The Chancellor in his Budget statement gave the reasons which guided the House in 1915 in the imposition of the McKenna Duties, and stated that those reasons still exist. Though the reasons which guided the House during the War in imposing these duties are, perhaps, still unchanged, it certainly can be said that circumstances have changed materially, and in respect of commercial motor vehicles they have changed entirely. I venture to bring to the notice of the House the very unfair effect which the application of the McKenna Duties only to what may be termed pleasure motor vehicles will have as regards commercial motor vehicles. When the duties were imposed originally by Mr. McKenna, commercial motor vehicles were specially exempt, because the manufacturers were exclusively diverting their factories and plants to the production of munitions, and when the necessity for those munitions passed away the manufacturers had to re-establish what already was a perhaps tender and uncertain industry in the face not only of vigorous foreign competition, but also of an enormous accumulated stock of motor vehicles reconditioned which had been employed during the War. In their efforts they had not the shelter of the McKenna. Duties.

The Chancellor has told us that, from whatever point of view the McKenna Duties may he regarded, from his point of view he regards them solely as a means of producing revenue. In the collection of that revenue it is incidental that there is a certain measure of Protection, and it does seem to me extremely unfair that one class of motor vehicles should enjoy the shelter of Protection, and another class of motor vehicle, which has suffered nothing but adverse conditions since the War, should continue to he penalised by foreign competition. I would appeal to the Chancellor to include commercial motor vehicles within the scope of the McKenna Duties, on the ground not of shelter or protection —though we are quite willing to accept that incidentally —but purely on the ground of revenue. I understand from authoritative figures which have been supplied to me that the duty which it can reasonably be estimated will be paid upon imports of motor vehicles would represent, if commercial vehicles were within the scope of the McKenna Duties, an increase of between 40 and 50 per cent. upon the estimated yield from pleasure vehicles. Both manufacturers and users of luxurious limousines have always regarded the commercial vehicle as the ugly duckling of the industry, and because perhaps of its lack of beauty it has certainly met with very unfair treatment. I would ask the House to support me in my request to the Chancellor to reconsider his attitude and do something to include commercial motor vehicles within the scope of these duties.

The inclusion of commercial motor vehicles will have the tendency to make the gross yield which he anticipates from pleasure vehicles a net yield, for this reason. In the application of the McKenna Duties there has had to be for Customs purposes a complicated system of supervision and inspection to ensure that exempted vehicles shall not escape through transformation, or owing to various technical reasons, the operation of the duty. The occasion for that arises because of the fact that commercial vehicles and pleasure vehicles are now constructed from the same component parts. Consequently, when an importation of motor parts takes place—and 1 believe that in a modern car the parts number about 2, 000—those have to be most carefully traced by the Customs. The result is that in the works or stores of companies which construct both commercial and pleasure vehicles you have two sets of identical parts lying side by side, one of which is duty free, for the construction of commercial vehicles, while the other is duty paid for pleasure vehicles.

I am told that manufacturers were compelled when the duties were still in operation to maintain a special staff in connection with supervision and equally the Customs had their own whole-time staff in some of the larger works. But that is not all. When the vehicles had been constructed periodical inspection is necessary, for the purpose of ensuring that a vehicle which has been constructed as a duty. free vehicle for commercial purposes is not transformed into a pleasure vehicle, thereby becoming liable for the payment of the McKenna Duties On those grounds I think that the House will be disposed to agree with me that not only by the inclusion of commercial vehicles within the scope of the McKenna Duties will the revenue be greater but also that the net yield from the ordinary pleasure vehicles will be considerably increased. I make an tamest appeal to the Chancellor to include commercial vehicles within the scope of the McKenna Duties.


I listened, not, indeed, in full agreement but with a great deal of sympathy, to the appeal by the hon. Member who has just sat down. I cannot help feeling that the Chancellor of the Exchequer will find it very difficult to steel his heart against it, because on what ground can he justify a discrimination between a commercial vehicle and a pleasure vehicle? But I must protest against the implication, which persisted throughout the speech of the hon. Member, that these duties are identical with the McKenna Duties. These are not the McKenna Duties. Neither in character, duration, intention or circumstance do they resemble the duties which Mr. McKenna introduced in different circumstances at the end of 1915. I feel sure that if that distinguished economist and financier were here to adorn our Debates to-day, he would be the first to repudiate the parentage of these new Import Duties which we are now discussing.

The Chancellor of the Exchequer interrupted my hon. and gallant Friend the Member for West Walthamstow (Major Crawfurd) yesterday when he was talking about these duties as being duties on luxuries, and he said that Mr. McKenna said that they were luxuries at that time. My hon. and gallant Friend gave a complete answer when he pointed out that what were luxuries in 1916, and were then unnecessary, are no longer luxuries, and that these motor cars, particularly the small light cars so much used in country districts by farmers, which are an essential part of the modern farmer's equipment, can no longer, except by a gross abuse of language, be described at luxuries. The right hon. Gentleman says that he is introducing these duties as new import duties for the purpose of revenue, whereas. Mr. McKenna, when introducing these duties, introduced them not for the purposes of revenue but for the purpose of restricting imports and restraining trade, which's a purpose contrary to that of the right hon. Gentleman.

The, principal characteristics of the McKenna, Duties were, first, that they were imposed with the primary definite and deliberate object of restraining trade, and I submit that that will be the inevitable consequence of the duties now proposed. To use Mr. McKenna's own words, they were proposed to restrict imports and reduce consumption, and it is now proposed to impose duties which will have the effect of reducing consumption and reducing employment in the industries concerned. In the second place, they were imposed during the War when the economic circumstances were in every Fay abnormal. One great object that was aimed at was to save shipping space. Mr. McKenna said:

We cannot increase out exports. The reduction of imports is an object in itself. But the professed object of the Chancellor of the Exchequer in introducing these duties is to obtain revenue, and nobody has pointed out more forcibly than the right hon. Gentleman himself that you cannot pursue by the same methods the totally different objects of restricting imports and obtaining revenue. Mr. Bonar Law said that the duties would never be continued in any circumstances when the War was over. And this brings me to my third point, that these duties were always intended to be temporary. Mr. McKenna said that we had to deal with objects which were purely temporary, and again in 1921 he declared that he deeply regretted that the Government had, tot given effect to his promise that the duties on imported luxuries should be imposed for the period of War only. Why was this promise not fulfilled? Because in the Parliament from 1918 to 1922, and in tie Parliament which followed until the end of 1923, there was a majority of members who in their hearts and from honest conviction believed in the doctrines of Protection, and believed that these duties were necessary, and doubly so when the slump came in 1920, when they honestly believed that the renewal of the duties would greatly add to the evil of unemployment in the industries affected.

The right hon. Member for Hillhead (Sir R. Horne) said yesterday that he felt that the Labour Chancellor of the Exchequer was running an unwarranted risk in removing the duties. I confess frankly that I was not unmoved by such considerations myself when this subject was discussed last year. I felt quite certain and convinced that in the long run the effect of removing these duties must be to increase consumption, increase employment and do good to industry, but I felt that, perhaps, at the moment, when there was so much unemployment, it would not be not wise to break the window of the hothouse. On the whole, however, I was convinced that it was wise. I felt also that the late Chancellor of the Exchequer had access to information on these questions, and was able to judge the situation at the moment better than I was. And I felt that even from the purely party point of view, he would not lead his party on to the ice by removing the McKenna Duties unless he was quite certain that it would bear. However, that may be, the fact remains that, since the duties have been removed, the results have proved, not merely a vindication of the right hon. Gentleman, but a far more ample vindication than the right hon. Gentleman himself could possibly have anticipated.

Now the argument for Protection is shattered. But the Chancellor of the Exchequer must throw a sop to his Protectionist supporters. On account of the pledges given by the Prime Minister they are forbidden to attack the citadel of Free Trade, but they attach a kind of sentimental importance to the capture of this little outwork. Yet they cannot attack it under the guise of Protection They are forbidden by the Prime Minister's pledge. So the Chancellor of the Exchequer, characteristically fertile in dialectical expedients, has devised a new argument and exclaims with well simulated indignation that it was a wanton act on the part of his predecessor to deprive the Treasury of this Revenue. Nobody minded the duties. They were being paid quite easily. People hardly knew they were paying them and no one expected relief. As a matter of fact these arguments would have been unsound had they been applied to the Budget of the Labour Government. They were not applied in the Debates of that time. The argument then was on the protection of the motor industry, and arguments as to depriving the Treasury of a certain amount of revenue were not raised. But everyone had a right to expect relief. It had been promised. There was certainly a very strong feeling in the last House of Commons that the duties ought to be removed at the earliest possible moment.

These arguments do apply to one of the taxes in the present Budget; they apply to the Super-tax. There you have a tax which everybody has paid and on which nobody expected relief. I challenge the Chancellor of the Exchequer to find one Super-tax payer who expected to get any relief. Whether or not that argument applied to the McKenna Duties last year, it certainly would apply to the Super-tax in this Budget. I am not questioning the Chancellor's need of addi- tional revenue, although I can sympathise with the disappointment of those who thought, I suppose, that by some magic he could propose bold schemes of social reform without reducing expenditure and without increasing taxation. Still the taxpayers as a whole, whether rich men with large family estates, with the prospect of having to pay Death Duties, or whether they were users of silk, or whether they were consumers of motor cars and clocks and watches, hoped that as a result of this Budget we should get lower taxes. Now they find that the Chancellor of the Exchequer is bearing down upon them with a Budget with the strange device "Excelsior" on.

Yet you cannot make omeletes without breaking eggs. The Chancellor of the Exchequer has introduced courage ms, constructive and imaginative proposals. His Budget is full of flaws, and, with all respect to my right hon. and gallant Friend the Member for North Bristol (Captain F. Guest), it is the duty of the Opposition vigilantly and relentlessly to criticise the Budget. Still, it is the nest Budget ever introduced by a Conservative Chancellor of the Exchequer.

Most Chancellors of the Exchequer, if you try to criticise some part of their proposals, and especially the taxation proposals, say: "Ah, but you are spoiling the whole construction of the Budget. You cannot pull out a brick without the whole thing collapsing. "But here we are on velvet, because we can urge the right hon. Gentleman not to reimpose these duties, and, instead, to leave the Super-tax at the level at which it is now. By the reduction of the Super-tax the Chancellor of the Exchequer is losing nearly three times the amount of revenue that he gains by reimposing the McKenna Duties. If he wants revenue, why is there no countervailing Excise? In that way he would get far more revenue. If these industries want Protection—as a matter of fact we know they do not need it—let them justify themselves under the machinery of the Safeguarding of Industries Act. I, therefore, ask the Chancellor, if he admits that these duties are of a protective character, how is that to be reconciled with the Prime Minister's pledges? Why are these particular industries singled out for these protective duties? If they are imposed for revenue purposes, why is there no countervailing Excise?

I do not expect any answer to these questions. We are all far too familiar with the Chancellor's methods of controversy. If he cannot answer he coruscates; and when he rises to speak to-night I have no doubt that he will dazzle the House with the scintillations of his wit, and bemuse his supporters with the richness of his rhetoric, and as they stream out into the Lobby they will say, "What a triumph for the Chancellor again ! and the answer will be, "Yes, was not the right hon. Gentleman in fine form to-night?" But when they wake up in the morning, or in two or three days' time, they will have recovered from the spell which the Chancellor of the Exchequer has cast over them. They will find that their supporters in their constituencies are still asking the two humble little questions which I have ventured to address to the right hon. Gentleman, and are still resentfully demanding a satisfactory answer, still demanding to have these irritating duties removed from articles of consumption which are of such great importance to farmers and men engaged in industry in many parts of the country.


Having listened to the witty and able speech of my hon. and gallant Friend who has just sat down, I cannot help but regret that he has come down on the wrong side of the fence after all. I remember that when I had the privilege of sitting with him on those benches, I was hopeful that he would see the light in the near future. But, unfortunately, he has succumbed to the charms of the Wee Free section, and has entirely forsaken the National Liberal influence, which certainly held sway at that time. If I correctly understood the arguments of the hon. Member for West Middlesbrough (Mr. T. Thomson), he said this: The Chancellor of the Exchequer was not justified in reimposing these duties because it was not in the interests of the consumer, and he went on to illustrate the fact that the consumer did benefit when these duties were taken off. He forgot to say that if when these taxes were taken of in the early Spring it was not possible to sell a motor ear, it would not be possible to sell one at all. The Association of American Motor Car Importers in this country thought, "This is not an opportune moment and there is no necessity to sacrifice an additional profit of 333 per cent. We will not pass this on to the consumer. We will wait until the autumn, when it is most difficult to dispose of cars. That is the time to take off this duty and pass it on to the consumer. "But in the autumn the political situation was very unsettled, and it was obvious that a General Election would take place. It did take place, and the Conservative party was returned. That section of the motor industry which is actively engaged in importing foreign cars came to the conclusion that in view of the past pledges and utterances of the Conservative party these duties stood a very good chance of being reintroduced in the first Budget of a Conservative Chancellor of the Exchequer. So, therefore, in fact, this reduction in price was not passed on to the consumer at all.

5. 0 P. M

With the permission of the House, I will give some instances. I have studied this question and have taken six leading makes of American cars. In nine out of ten cases there is a difference in price in this country, over that of the retail price f. o. b. Detroit, of some £200. For instance, there is a car known as the Paige. After examining the price of that car f. o. b. Detroit, and after adding a reasonable sum for freight and insurance to this side of the Atlantic, there still remains the extraordinary profit of £165 over and above the retail profit which is allowed to the agent in the United States of America. Therefore, it is not right for hon. Gentlemen opposite to say that the consumer directly benefited by this reduction. As a fact he did not benefit at all. What was the real effect of these duties when they were first introduced? We saw an announcement in the Press the other day that '250, 000 Ford cars had been manufactured in this country by skilled English mechanics, with a minimum wage of £3 a week. It was after the duties were instituted that. the Ford companies set up and built a factory at Manchester, of English materials, with English builders and architects. They introduced English machinery, and they employ to-day a staff 97 per cent. of which is of British origin. They have manufactured in this country and sold in this country a quarter of a million Ford cars. They have paid in revenue to my right hon. Friend the Chancellor of the Exchequer a vast amount of money which would otherwise have been lost. Surely the late Chancellor of the Exchequer does not mean to tell us that the party which professes more than any other party to protect the interest of the working-class man, considers it is not in the interest of that class that they shall he employed in such vast numbers at a minimum wage of £3 a week. Not only did the company do that, but they also proposed to set up another big factory in the vicinity of Essex, on the banks of the Thames. When this proposal had been carefully considered, they saw with surprise that the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) proposed to take off these duties in the near future. They therefore did not expend an amount of money, I think, running into millions of pounds, on the big factory which they were going to set up, but they extended their option in order to see what action the Conservative Chancellor of the Exchequer would take, and I shall be very surprised indeed if we do not see, after the 1st July, this order proceeded with the utmost. expedition

My hon and gallant Friend, in his most entertaining speech, said that because these duties were originally introduced for the purpose of restricting imports, therefore, although after having been in operation for a considerable number of years, and are bringing in 3, 000, 000 a year revenue, here no justification for the Chancellor of the Exchequer to benefit the taxpayers of this country to that extent. Only yesterday we listened to interesting speeches for a reduction in the Tea Duty. Does the hon. and gallant Baronet say we must sacrifice £3, 000, 000, and also make a reduction in the taxation on tea? I do not think my hon. and gallant Friend, with all his ability, would carry his argument as far as that.


I have just suggested adding Excise and increasing revenue.

Captain EVANS

Even so. I doubt whether that would meet the hon. and gallant Gentleman's point. After all, what is the ultimate effect of the reintroduction of these duties? I think most of those who read our papers saw that the Vauxhall Motor Company, one of the leading manufacturing motor companies of this country, are in a position immediately to reduce their price, and that would not have been possible if they had realised that in the fall, when it is most difficult to dispose of cars of any nature, the American importers in this country would have reduced their price by 33⅔ per cent. I can give the case of another motor company. At Detroit, free on board, the price is 1, 965 dollars. After adding 200 dollars for freight and insurance to this country, and after allowing for the profit of the retailers in Detroit and other parts of the country, there is still a profit of over £200 on that car. I would like to ask my hon. and gallant Friend where he thinks that £200 goes to? Surely it does not go to the consumers, as many sub-sections of his party tell us.

I do hope most sincerely that my right hon. Friend will not be persuaded by the hon. and gallant Gentleman, but I do hope he will give serious consideration to the suggestion that this tax should be extended to commercial vehicles. After all, personally, as one who is interested in the transport trade of this country, I see no reason why commercial vehicles should be excluded from this duty, if you are going to tax motor cars at all. I must say, that as a user of an American car for a long time—[An HON. MEMBER: "Shame "!]—on which 33⅔ per cent. has been paid, and on which the Chancellor of the Exchequer has benefited accordingly, I think the English manufacturer has got all his work cut out to compete with the fine American products we get from the United States to-day, and, in my modest judgment, that is all the more reason why he should be protected. It is obvious that unless you manufacture on a large scale, as in the United States of America, unless you instal mass production plant which enables you to turn out motor cars at the rate of thousands a day, it is impossible to compete with those conditions of manufacture. [An HON. MEMBER: "Why"?] Unless you have the same plant in this country as they have in the United States, and the trouble is that the users of the motor car in the United States are far more numerous than in this country. I think I am correctly stating the fact when I say there are more cars in the State of New York than there are in the whole of Great Britain. So it is obvious that it is very easy for the American manufacturer to send his surplus supply of motor cars over to this country, and dispose of them at a figure very little over cost price, if he so choose; and my argument is that if the Chancellor of the Exchequer had not brought in these duties, the price of American cars in this country would have been reduced in October or November by something like 40 per cent. —a price at which the manufacturers of this country would have been totally unable to compete.


When the speech of my hon. and gallant Friend is stripped of all fiscal and economic fallacies, nothing remains but the old Protectionist argument, and his speech, and, indeed, other speeches from those benches, are indicative of the policy which the right hon. Gentleman the Chancellor of the Exchequer will have to follow particularly if he remains in his present office. He will have to violate, I have no doubt, every pledge he has made during his political career. He will have to swallow all kinds of theories that he has put forward in opposition to all forms of tariff and Protectionist duties, and we shall see him shortly as a full- blown Protectionist. I have, throughout my public career, consistently opposed all forms of tariff and Protectionist duties. I have not adopted that attitude because I believe that the application of Free Trade principles would, in itself, solve or eliminate the gross evils that arise and exist within our industrial system. I have regarded it as essential to the maintenance and promotion of our industrial prosperity, such as it is, and I have always considered that the encouragement and the imposition of tariff walls or protective duties would, in themselves, destroy the possibility of international good will, and create those conditions from which war, strife and discord unfortunately arise, and, of course, make the admirable policy of the League of Nations an impossibility.

I am fortified in my opinion, and in the policy that T have adopted, because of the attitude of the country when the question, in a direct and general sense, was placed before it, when the people emphatically repudiated anything in the nature of tariffs or protection, and, in my own case, when I had an opponent in 1922, and the same opponent in 1923, who was heralded in the Press as an authority upon this subject, I found that my majority went up by over 10 times—I mean the hon. Member who now sits for Reading, no other, and no less. Therefore, I think we have full justification for challenging, in a most thorough manner, the policy of His Majesty's Government in this particular. It has been suggested that the motor industry is something in the nature of a new industry. There is some measure of truth in that argument, and it was suggested by the hon. Baronet the Member for West Wolverhampton (Sir R. Bird) that the industry had diverted its activities during the period of the War, and, in consequence of that diversion, had not been afforded the opportunity of developing its resources, and making that fascinating appeal which the industry does make to the fancy and tastes of the people. In consequence, it is suggested that it was entitled to some measure of State assistance. It is not the only industry that turned its attention to the support of the War in the sense of the production of munitions, not the only industry that, on the cessation of hostilities, was compelled to re-organise its resources for the purpose of facing and supplying the needs of peace.

I recall that, in this connection, a committee sitting under the auspices of the then existing Ministry of Reconstruction, did make some recommendation that the industry should receive some assistance for some short period of time, on the conclusion of peace. I think the period was in the neighbourhood of three years. Well, these duties were imposed in 1915. They were continued for a period of five and a-half years after the conclusion of hostilities, and, in my judgment, ample opportunities and facilities existed for the trade to re-organise its resources, and to place itself upon an efficient basis. Their troubles have been largely financial, and not industrial, and many of their difficulties have been brought about by their own folly, and their own struggles for supremacy, to cut one another out of the market. By lack of efficiency, or ineptitude, if that word be preferred. This industry, in my judgment, was never an infant industry as such which warranted the imposition of duties of this character. The industry had not to procure, develop and train skilled labour. It was in a highly developed industrial country. It had not to train and develop a technical staff. The staff was already here, trained in what is possibly the most highly developed industrial country in the world, and while those arguments might be applicable to a less industrialised community than ours, there is no justification for assuming in this case that the industry was in the infant stage.

In fact, at the moment of the abolition of these duties, the industry, from a commercial point of view, was firmly established and capable of meeting all forms of competitions. Though I am not unmindful of the difficulty associated with the finance of the companies, the conditions, in my judgment, when the late Chancellor of the Exchequer repealed these duties were most favourable in every respect so far as the industry was concerned. We know that any industry which once receives State support will constantly renew its claims for State support in one form or another, and will always contend that it has never passed out of the infant stage. The attitude of the great captains of industry in so many quarters to-day, and the constant demands which they make for State assistance in the form either of protective duties or of subsidies, is but one more sign of the failure of the industrial and economic system under which we live to-day. The system should be able to stand on its own legs and develop its own business if it is to justify itself in the opinion of the country.

I call attention to one feature of these duties. One of the most impressive features in connection with the repeal of the duties was the raging, rampant campaign of foul abuse, lies and misrepresentation in connection with this particular industry. I should think no man in public life ever suffered more from abuse than the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) did in connection with the policy enunciated in his Budget. All kinds of stories were circulated as to what was to happen, and one eminent producer of motor cars—who seems to have been so successful that he has been able to purchase a great company and factory in France—foreshadowed one million unemployed. A director of Wolseys Motors said the number of unemployed would be increased by five figures, and disaster in every quarter was foreshadowed. What has been the history of the matter? Since the repeal of these duties, instead of an increase of unemployment in the industry, there has been an increase of employment. I recall a speech made by the Mayor of Coventry—I think it was in November, 1924, after the repeal of the duties—in which he indicated that the employment exchanges of Coventry were unable to supply the labour which was called for, and they were sending abroad to their neighbours for labour and working night shifts. I also recall that that eminent newspaper the "Daily Express" sent an industrial commissioner about the country to interview captains of industry, and one of the interviews was with a director of a company responsible for the production of tools, who said orders were never more numerous and the call upon the resources of the industry was never so great, largely because of the increased supply to the motor industry.

In every direction since my right hon. Friend took off the duties, the motor trade has improved and increased in prosperity. The price of cars, it is true, has gone down, but that is to the advantage of the community, as it enables people of small means to purchase their own cars. If any justification were needed for the repeal of these duties, we should find it in the increasing prosperity of the industry, but what is the justification for their reimposition? I think from the revenue point of view they bring in a little over £3, 000, 000, and, as has been pointed out, we have sacrificed three times that amount of revenue by giving reductions in Super-tax to people who never required and never desired those reductions, though they will be only too happy to take them with open hands from the Chancellor of the Exchequer. I can only see one justification for the reimposition of the duties, and it is that it enables the right hon. Gentleman the Chancellor of the Exchequer to justify what little faith the members of the Tory party have in him. They have not a great deal; there is much doubt and suspicion in their minds as to what he means to do not merely to-day but to-morrow.


How do you know?


Of course I know very well and I think the hon. Member for St. George's (Mr. Erskine) should be the last to talk about what is in the mind of the Conservative party. The doubt which exists in the Tory party exists likewise among the people of the country. We have many examples in justification of our lack of faith in the right hon. Gentleman's political capers and political policies. It seems to me the right hon. Gentleman felt that if he wanted to maintain his position in that party and upon the Treasury Bench, he must introduce something in the nature of protective duties or the reimposition of duties, as an acknowledgment for the time being at any rate—I will say no more—of his loyalty to the Tory party. I am satisfied in my own mind. [Laughter.] I am entitled to be satisfied in my own mind. I am entitled to satisfy my personal judgment in these matters because I have to defend my views to my constituents possibly more frequently than many hon. Members opposite, who only visit their constituencies once in 12 months. I do so with greater frequency. I am satisfied, having regard to all the facts, and bearing in mind the attitude of the country towards this question, that when the opportunity arrives there will be an overwhelming manifestation of opposition to the re-imposition of these duties or to anything like their extension.


The hon. Member who has just sat down seems to be very sure that he knows his own mind. He also seems very sure that he knows the minds of others, but I would remind him of a little couplet:— He prays best, who leaves unguessed, The secrets in another's breast. I think the Chancellor of the Exchequer will be able to give sound reasons for the proposals he is making. When the hon. and gallant Member for Caithness (Major Sir A. Sinclair) referred to the Chancellor's replies as consisting not of logic but rather of wit and rhetoric, he reminded me of our Lancashire saying: Kettle co'in th'pon brunt, which being translated means: The kettle calling the pan black. I think after his brilliant speech there is some truth in that remark. Hon. Members above the Gangway and behind me ask why the McKenna Duties are being re-imposed. We might very fairly ask, why were they taken off? To those who say we have no mandate for reimposing them, I reply that the Labour party had no mandate for taking them off. The last General Election but one was not fought on the question of whether or not we should do away with the amount of Protection which then existed. It was fought on the question of whether or not that Protection should be extended, because in the view of the then Prime Minister the extension of that principle was the only solution for the unemployment problem. He is perfectly logical now in putting us back in exactly the same place as we were in before. I would ask the Chancellor to consider sympathetically the appeal made by the hon. Member for West Wolverhampton (Sir R. Bird) with regard to extending this duty to commercial cars. It is no good arguing that this will decrease employment. With regard to commercial vehicles there is no doubt that even if we lose the possibility of buying these cars abroad, the workshops of this country could produce all that are required. In addition I should like the Chancellor to give attention to the question of tyres. Here I touch on a subject which is very familiar to the House, but the fact that it is familiar is no reason why it should not be brought forward. An injustice created in 1920 or 1921 does not become any less because it is allowed to continue until 1925 or 1926. Hon. Members on the Liberal benches talk a great deal about lobbying by Protectionists and infer that it would be easy for people to influence the Chancellor of the Exchequer. This great industry has been trying to influence the Chancellor of the Exchequer but all to no purpose. if the same amount of pressure, or log-rolling, or lobbying had been, carried on as was carried on by the Free. Traders in regard to fabric gloves, no doubt a deputation would have been received. Free Traders talk about lobbying as though the Protectionists were the only people who did it. There is more lobbying done by the great Manchester school, headed by the hon. and gallant Member for Leith (Captain Benn), in a week than there is by Protectionists in five years.

Captain BENN

Free Traders do not ask for anything out of the pockets of others, but out of their own pockets.


The most that Free Traders ask for is always that they can buy in the cheapest possible market, irrespective of whether or not the people, who otherwise would have made those goods, are unemployed. If you wish to see the character of the Free Trade influence that is going on at present, look at the great outcry going on about artificial silk—with a certain amount of reason, perhaps, but not a great deal—led by their stalwart. They will make their pressure felt, and he would be a wonderful Chancellor who could resist anybody coming from that quarter. If you want to know the type of the resistance to the proposals of the Chancellor of the Exchequer, take a few railway journeys backwards and forwards to Manchester, and see the character of a great many of the people who are travelling backwards and forwards at the present time. I am not like hon. Members above the Gangway on this side—and I do not want to be—who are so fond of saying that they do not believe in the Free Trade doctrine, but who are always afraid of voting in any way against it. I am a Protectionist, and frankly so. I was a Free Trader, and I said I should be a Free Trader until it could be proved to me that there would be more dislocation of employment by continuing the policy of Free Trade than by establishing the policy of Protection, and it was because I felt that change in my views that I became a Protectionist instead of a Free Trader. [An HON. MEMBER: "In cotton? "] Yes, in cotton, too.

The most important point, to my mind, is the regularity of work for the work-people, and when you talk about a duty making the price greater, you must remember that prophecies do not always come true, especially after that very memorable case that the hon. and gallant Member knows so much about, when it was said the price of these particular commodities would increase. After the duty was put on, it did not increase at all. It was also said, with a great degree of certainty, that if a duty were put on fabric gloves, the fine spinning cotton industry of Lancashire would be ruined, but there has never been a single spindle stopped because of it, and it is the only section of the cotton trade that has been successful during the last five years. I would ask the Chancellor of the Exchequer not to take the slightest notice of all these protests from those who are simply doctrinaire Free Traders, and I ask him—and I think it is a reasonable request—to do what the four Chancellors of the Exchequer who have preceded him have refused to do, and that is to say why motor-car tyres—[HON. MEMBERS: "Hear, hear!"] You would not cheer if you had lost your money in it. It is very singular how hon. Members are so anxious to see the downfall of those engaged in industry in this country, so that they can say, "I told you so." That is the top and bottom of it. They do not care if 90 per cent. of the industrialists of this country are in the Bankruptcy Court if only their theories are proved to be correct.

I will now come back to the question I want to ask. I have asked it for five years. I have asked four previous Chancellors of the Exchequer to say why motor car tyres should be the only component part of a motor car that is exempt from taxation now, and I ask the present Chancellor of the Exchequer to give a reason if he cannot see his way to tax them now.

Captain BENN

This Debate, of a general Protection versus Free Trade character, is the more interesting because many of us who have been in the House since the War have seen in practice the application of these principles, and, instead of merely debating in vacuo, they can cite the actual experience from the imposition of the duty, the taking off of the duty, and the proposed re-imposition of the duty. We have seen the experiment present before our eyes, and I hope that hon. Members in all parts of the House will agree with me when I say that two things have been shown. The first is that the predictions of those who were most qualified to express an opinion, namely, those in the trade, were not realised by the event. It is really useless for the hon. and learned Member for Swindon (Mr. Banks) to say, as he did yesterday, that the good effect of the Churchill Import Duties on motor cars and other things has not yet been exhausted, and that the period of Free Trade which we had since the late Chancellor of the Exchequer removed them has not washed out the good effect of the original duties. We have had experience.

We were told many things when the duties were taken off. I will not mention Mr. Morris particularly. He made some very wild statements, but I do not think anybody took him very seriously. He said that a million people would be put out of employment. However, I will take the case of Sir Edward Manville, who was a most respected Member of this House, and whose opinion was quite as entitled as that of Mr. Morris to serious examination. He put the number who would be unemployed at 100, 000—that was his estimate—with a loss of £7, 000, 000 one way and another, in unemployment insurance benefit and so on, in consequence. Mr. Morris went on to say that he would be forced to reduce his production by 50 per cent., and, there being a bye-election at that time in Oxford, he actually discharged 1, 300 out of 5, 000 men. What happened at the end? As soon as it was observed that the political attempt to secure the advantage of the tariff had failed, and that the right hon. Member for Colne Valley (Mr. Snowden), even though he were only a doctrinaire Free Trader—and I should not respect him the less—who was doing a great stroke for British industry and employment and the prosperity of the people of this country when he removed those duties, did not intend to reimpose them, Mr. Morris changed his tune and announced that, owing to a decrease in overhead charges, he had been able to reduce the price of his cars. In fact, he followed suit with all the other makers of motor cars and importers of motor cars, and made very considerable reductions in the price of his cars. It is not denied. I hope I am not merely engaging in controversy. I am stating what is known. The newspapers were full of advertisements.


Does the hon. and gallant Member know that Mr. Morris discharged those men because there was a bye-election at Oxford?

Captain BENN

What I said was—[An HON. MEMBER: "Is the hon. and gallant Member aware that the Morris works are not in the Oxford constituency at all? "] —I certainly should not attempt to take advantage of any immunity that one enjoys in this House to make a charge which was improper. I will say no more than this, that Mr. Morris was prominently identified with the fierce agitation to retain these duties, that Mr. Morris announced that their withdrawal would result in discharges, that there was a bye-election in Oxford, that discharges did take place, and that, when there was no hope of the reimposition of the duties, the men were taken back and prices were reduced. Hon. Members can make what they iike from those facts, none of which is open to challenge. What has been the general result of the removal of the duties? The general result has not been unprofitable to the motor car trade, taken as a whole. The "Times, "in explaining why the shares had not risen unduly after the announcement made by the Chancellor of the Exchequer in his Budget speech, said the financial results of the companies had shown expansion since the temporary removal of the duties. So it is a strange thing that all these prophecies of disaster were falsified, and I think the true explanation is this, that there is a very large unsatisfied demand for motor traction of one kind and another in this country.

I quoted some figures in the Debate on this subject last year, showing that, whereas in the United States of America there is a motor car for every 11 persons, in this country there is, or there was then, a motor car for every 110 persons, or only a tenth of the consumption of motor cars. Since that time, if hon. Members will look at the figures of the licences issued for motor vehicles, they will see that there has been a steady increase in the use of motor vehicles, when the duty was on, from 800 to 900 to 1, 000, and when the duty was off, to 1, 200 licensed motor vehicles. The truth is really this, that while some limited interests may make a profit out of a tax, the general motoring public, the people engaged in the motor car trade, as repairers and mechanics, and in all the ancillary trades that are concerned, have profited by the increased use of motor cars, to say nothing of the great addition to the comfort, convenience and pleasure of the people. These duties have stood in the way of us enjoying in this country the same measure of motor transport that they enjoy in other countries, or in some of them.

I leave that purely commercial aspect of the question in order to deal with the political aspect. Those of us who remember the imposition of these duties in the first place have a real cause to feel that we have been betrayed in the matter. The right hon. Gentleman will remember that in 1915, when the duties were imposed, there was a large Free Trade majority in this House, but there was something else, even more important than Free Trade, which was going on at the time, namely, a war, and it was proposed that certain duties should be imposed for the purpose, of course, as we know, of reducing consumption and getting on with the prosecution of the War. Some Free Traders, including my right hon. Friend the Member for Carmarthen (Sir A. Mond), protested against those duties and said: If we let you put your foot in the door, you will try to force it in the interests of Protection, and we do not think you should take advantage of the War need to make the first step in the direction of Protection in this country. That was a very proper thing to say. The House of Commons, if it had cared to devote itself to this fiscal issue, would have prevented any Government from introducing protective duties, but it said: No, if Mr. McKenna says there is a war necessity involved, we are prepared to waive the fiscal question altogether, but we do not want this to be made an excuse in the future for launching on the slippery slope of Protection

Mr. Bonar Law's speech must be read in the light of that knowledge, and his pledge that they would not be kept on after the War was really intended to allay the justifiable anxiety of a Free Trade House of Commons. He said: Do not be afraid of this: it has no fiscal import whatever, and I will undertake to say that these duties will not be used as an excuse for turning this country from a Free Trade country into a Protectionist country. What has happened? We know very well that, as soon as the War was over, all these pledges were forgotten, and these duties were made the stock argument for altering the fiscal system under which our taxation is raised. The Prime Minister used it in his speeches, and the Home Secretary used it in his speeches. They said: Look at these duties on motor cars; what a wonderful example they are; let us, therefore, impose a general tariff. I am speaking of the Election before last. We have always felt that it was a mistake to trust during the War those people who took advantage of the pre-occupation of the War in order to make this first step towards a policy which we distrust, and we have been justified. Everything that was said by my right hon. Friend and by other Free Traders in 1915 in the midst of the War has turned out to be true. When the Chancellor of the Exchequer gave his word that these things would not be used in this way, his word was accepted, and the word of the Protectionists in the Cabinet was accepted. The door has been forced, and because of that we now find ourselves launched upon a change. What are the arguments given for this? Once you include gramophones, motor cars, musical instruments, and the other things, where are you going to stop? What answer can the Chancellor of the Exchequer possibly make when he is asked to extend these things; to this or that right hon. 'Gentleman or to this or that hon. Member? He can make no reply at all. What does he think now? What does he say to this:

I say that every Englishman should bare the right to buy whatever he wants, wherever lie chooses, without restriction or discouragement from the State.


Made under any conditions whatever.

Captain BENN

I did not observe that any cheers greeted the quotation that I have just read, and I am wondering if there is going to be any response from the Chancellor of the Exchequer. Perhaps the right hon. Gentleman himself recognises the turn of phrase and the happy rhetoric in which he himself described the Free Trade position? May I ask him this simple question: These McKenna Duties were in operation in 1923. They have been in operation since 1915. What is the right hon. Gentleman's view? Is he prepared to make any reply —perhaps an immediate reply? What was his view in November, 1923, about the McKenna Duties? Was he in favour of them or opposed to them in November, 1923?


He was not bigoted about it.

Captain BENN

The right hon. Gentleman cannot say—

The CHANCELLOR of the EXCHEQUER (Mr. Churchill)

I do not want repeatedly to interrupt the speeches of hon. Members, because it is always difficult to distinguish between a real and a rhetorical question; but my own view in 1923 was that, if we were asked to decide whether this country should adopt a general protective tariff in everything, then the various questions in connection with these matters must be examined with the utmost severity. But that is not the issue that arises to-day, because of the pledge of the Prime Minister that no general tariff shall be introduced into this present Parliament.

Captain BENN

The House will be a little bit grateful to me for having provoked that answer from the right hon. Gentleman. There is one other thing, and that is the reference of the right hon. Gentleman to the pledge of the Prime Minister; and because the Prime Minister is now here, I would like to ask him a question. The Prime Minister said in December last in this Parliament that there was only one avenue for any industry seeking protec- tion. and that was by means of the Safe- guarding of Industries Act. What did he mean by that? Did he mean that was one of the avenues left open, and that the Chancellor of the Exchequer was free to bring in his little heterogeneous collection of duties on motor cars, gramophones, and so on, when he receives the powerful demand of hon. Gentlemen below me, or the demand of the hon. Member for Cardiff (Captain A. Evans) for a tax on commercial motor vehicles, or the demand of the hon. Member for Wolverhampton (Sir H. Bird) for a tax on commercial motor vehicles? How can he, resist these taxes if you keep on this absurd collection of duties? There is no half-way house. We have to admit the principle or not admit it. The right hon. Gentleman once said that he believed in Free Trade as he believed in the multiplication table. I wonder what he thinks now of the multiplication table? We are not opposing these duties on doctrinaire grounds. We are opposing them because they are the first step in an evil direction, and because once you allow these duties you cannot resist other demands. When these demands come, they mostly fall upon the commodities of the poor. The taxes of the right hon. Gentleman mean making the rich richer and the poor poorer. [HON. MEMBERS: Oh!] Hon. Members opposite have one conception as to why they Are Free Traders. What they appear to say is that they are Free Traders because tariffs are merely instruments in the hands of those above in order to exploit the poor

What is the real policy of the party opposite? I do not. know. The Chancellor of the Exchequer is the best or the most authoritative exponent of it. I cannot say what it is. There seems to be a diversity of opinion. If it be true that these things may form a danger, and are the first step, and lead to what. the majority of hon. Members opposite have in view, the definite objective to which they are marching with these stealthy strides, if so, then we are right in saying we will not take the first step, because we know where it is going to lead. The Chancellor of the Exchequer has said that protective taxes have been taken from the programme of the party. Is that true? That is not. the view of the Colonial Secretary. There was a controversy taking place in the Press not very long ago as to what really was the policy of the Prime Minister, and a very well known publicist wrote and said: That the policy of Protection had been erased from the programme of the Conservative party. To that the Colonial Secretary replied to the effect that the writer was completely misinformed, and that this policy had not been erased, and all that had happened was that a more direct and effective method of tariffs all round had been substituted for the somewhat slower method of legislation. In view of the. honest belief of the party opposite, in view of the obvious danger of these duties, in view of the convictions I have put forward, we oppose these duties to-day.

The PRIME MINISTER (Mr. Baldwin)

With the permission of the House, I should like to make a statement about business which I promised earlier in the sitting, and with a view to meeting the general wish of the House. The discussion on the Silk Duties has been postponed until Monday, while the remainder of the Resolutions are to be brought to a conclusion by about 11. 30 this evening

On Monday, the consideration of the Silk Duties Resolution will be taken till 10 o'clock in the evening, and after that the Second Reading of the Criminal Justice Bill. I propose to suspend the Eleven o'clock Rule, merely to secure the passage of that Second Reading

On Tuesday, we will take the Church of Scotland (Property and Endowments) Bill, Report and Third Reading, until 8. 15; and then the Teacher's (Superannuation) Bill, Second Reading, until 11 o'clock. I do not propose to move the suspension of the Eleven o'clock Rule on that day, as I understand it is for the convenience of all parties that this arrangement should be come to

On Wednesday, there will be the Second Reading of the Rating and Valuation Bill, and at 8. 15, Private Members' Motions

On Thursday, we will take the Ministry of Labour Vote.


I am sure we are very grateful to the Prime Minister for doing so much to meet the request we made earlier in the day. understand that there has been complete agreement. That being so, we on this side will do what we can to carry out the arrangement.


May I say that my Friends and I in this quarter of the House entirely agree with what has been said, and are much obliged to the Prime Minister for meeting what was very widely felt would be a desirable arrangement, so that we might have the Silk Duties discussion at an early hour.


On the question of the arrangement in regard to the Scottish Bill. I should like to ask the Prime Minister why the discussion on this Bill is to finish when he proposes? The Liberal party has deserted the matter. Although it is quite true that the Liberal party have worked in it, yet we can quite understand the arrangement, because the Liberal party have deserted the whole question of the Church of Scotland entirely, and particularly the hon. Member for Motherwell (Mr. Barr), who in particular has very great knowledge of this question. Certainly in my judgment there ought to be an extension of time beyond a quarter-past eight o'clock. Scotland is not receiving its due recognition. [HoN. MEMBERS: "Oh!"] Yes, say that, and I say that this is a matter which in times gone by occupied the public mind and the national mind of Scotland for many years. It has been somewhat relegated to the background in later days, but I think it is not at all creditable that the Labour party should let down some of their own representatives who have carried on this work to such a degree that they are entitled in far more consideration than has been given to them at the present time. I make my protest as a Scottish representative.

6.0 P.M.


I am very glad, as the Minister in charge, that these arrangements have been come to, because I think it is in the interests of the House of Commons and the country that the real issues in an important controversy should be decided at the best hours of our Parliamentary sitting. I certainly should have greatly regretted if the Silk Tax, in view of all the interest that has been excited by it, had had to be debated at 11 o'clock, 12 o'clock or one o'clock in the morning, when the large number of interests affected by this Measure would not have been able to acquire any intelligible account from the newspapers of our Debate, and when, generally speaking, full Parliamentary justice could not have been done to the controversial issues involved. I hope that, apart from all the fighting which takes place on a Budget, we may manage, as far as possible by common arrangement, to bring the most important issues, where there are the sharpest divisions of opinion, to the test at times when the whole discussion and protest can be fully followed all over the country. That, at any rate, is the spirit in which the Government intend to conduct these matters.

On the subject of the so-called McKenna Duties, I have a preliminary observation to make. I think a great deal too much fuss is being made about these McKenna Duties. It is a great mistake to try to raise the question of Free Trade and Protection, to make out that the whole of those immense issues are jeopardised or involved in either direction by any- thing that happens in regard to the McKenna Duties. The McKenna Duties cannot be judged apart from their history. We must look back over the last 10 years and see exactly how these duties have been treated before anyone can say what general fiscal issues they involve. Let me take, first of all, the issue raised about the pledge of the Prime Minister. The Prime Minister said—I have not the exact words in my mind, but the House can correct me—that there would be no general tariff, that we would not introduce Protection by a back door, and so forth. He also said that the means by which industries seeking protection under our safeguarding of industries powers—the means by which they could attain protection would be through the machinery set up in the Board of Trade and under rules which were published later.

Captain BENN



I hope the hon. and gallant Member, whom we have listened to with the greatest pleasure and interest, will relax for a moment his incessant and insistent vigilance. It was never intended by such a declaration, the last declaration I have referred to, to limit in any way the full freedom of the Chancellor of the Exchequer to propose in any year duties which had for their bona fide object the necessary service of the revenue of the country— never. No such limitation has ever been imposed upon me, nor was it intended in any way to impose such a limitation. If we are to say that because of these pledges the Chancellor of the Exchequer of the day is inhibited from introducing taxes of this kind for revenue purposes, what is the position of Lord Oxford and all his Liberal colleagues, who, returned as they bad been upon an absolutely Free Trade basis, in the most strict and vehemently controversial aspect of the Free Trade issue before the War, thought it right to introduce these very duties without going back to their constituencies, without paying the slightest attention? [Interruption.] It is because they were not considered to be duties which affected the issue between Protection and Free Trade. They did it because these were duties which, for various purposes, they thought good, and which those of us who are now here and who were here then thought good, and they did it in order, amongst other things, to sustain the revenue of the country

I base myself in these matters upon the declaration of Mr. McKenna:, a Free Trade Chancellor of the Exchequer, who introduced these duties. I will read the quotation:

The particular articles which were chosen have been chosen primarily upon the ground that their consumption is not required in this country; secondly, on the ground of improving our fallen exchanges, and, thirdly, upon the ground that in satisfying these two objects we shall also obtain a certain degree of revenue. Those are the reasons which he adduced, those are the reasons which existed then, and those are the reasons which, no doubt modified by the difference in circumstances between peace and war, exist to-day; and those are the reasons, and those are the only reasons, upon which I base myself in proposing the reimposition of these taxes. Of course, it is true that the duties were introduced by Mr. McKenna in time of war. I was a member of the Government in 1915 which first proposed these duties. I was rather startled when I saw these proposals being made and heard them put forward. I thought to myself, "Well, of course, we are at war." And then we had the orthodoxy of the right hon. Gentleman the Member for Spen Valley (Sir J. Simon)—otherwise, almost impeccable, it is the only stain on his orthodox escutcheon—to rely upon. We had Lord Oxford (then Mr. Asquith), and we had, of course, my right hon. Friend the Member for West Swansea (Mr. Runciman), then President of the Board of Trade and intimately connected with all this branch of the subject, and, of course, we had all the members of the Liberal party, ex-Ministers, who were members of the Coalition Government. That was in the time of war. But these duties were not only imposed with the authority and sanction of the Liberal Free Trade Members in time of war, they were imposed year after year in time of peace.

We have had several interesting and effective interventions in our Debate by the right hon. Baronet the Member for Carmarthen Boroughs (Sir A. Mond), who, I am sorry to see, is not in his place to-day, who has a very varigated record on this subject. He was the principal Liberal opponent of these duties' when they were first imposed. When Mr. Asquith came' forward and proposed the duties, when Mr. McKenna was his Chancellor of the Exchequer, when every one of the Liberal Ministers was rallied to their support, when the War was going on, when the need of acquiring and economising shipping space was so important, the right hon. Member for Carmarthen Boroughs—he was not the Member for Carmarthen Boroughs then—stood up and boldly opposed the duty. Then came another phase, when the right hon. Gentleman was in office, in an important position, after the War. Then, although his leaders had changed their positions and were now opponents of the duties, he became one of the strongest supporters of the duties. He vindicated them year after year; year after year he voted for them; year after year they were challenged in the House and he sustained the case for them. The right hon. Gentleman led us rather to suppose that it was rather against his will, and that he acquiesced for the sake of larger ends, that in his heart he did not like them. But he acquiesced in what was done. He bowed the knee in the Temple of Rimmon. He did much more than that; he led the chants, and when it came to that Safeguarding of Industries Act he very nearly conducted the service. Now, released from the cares and responsibilities of office, and placed in a position of extreme freedom, freedom which almost trenches upon mental anarchy, the right hon. Gentleman comes before us denouncing the vices of Socialism and posing as one of its strongest opponents, while at the same time perfectly ready to adopt any sloppy fallacy that is likely to be popular at the moment. Finally, he invites us to vindicate the infallibility of the Free Trade system by adopting some principle of a general subsidy towards wages in the less successful industries.

I am quite ready to contrast my record in this matter with his. I was one of the original Ministers who proposed these McKenna Duties 10 long years ago. When I was out of office during the War I never opposed them. When I resumed office during the War I continued to support them; year after year, for six or seven long years I supported them. When I was out of office last year, and these duties were repealed, I denounced their repeal, and now I stand here at this box to reverse the decision of the right hon. Gentleman opposite. It is perfectly true that in the election of 1923, when the whole main, fundamental issue of Free Trade or Protection was definitely raised, I naturally adopted an entirely combative, fighting position over the whole field. Certainly I did so. If we are going to be told that these duties are the thin end of the wedge to re-establish a general system of Protection in this country, carrying with it, as it would do, protective duties upon food, certainly we must examine thorn and resist them and criticise—certainly; but that decision does not arise to-day, and I stand here as a Minister in this Government relying, as I do, with the utmost confidence on the pledges that were given in the electoral programme and platform on which this party obtained its great majority.

Once that has been said, we are perfectly entitled to examine these matters in their proper relations, not as raising the great controversies which have disturbed and greatly darkened counsel in this country in fiscal matters for so many years, but as practical measures for the reinforcement of the revenue without. injury to the industries of the land.

Now I come to the right hon. Gentleman the Member for Colne Valley (Mr. Snowden). He said the other day that he deplored the raising of this problem, but who raised it? These duties were incorporated in the general fiscal system of the country over what was quite a long period in these rapidly changing days, a period of nearly 10 years. Here were these duties r reducing revenue, industries being built, up upon them, and manufacturers taking advantage of them. [An Hox. MEMBER: "That is Protection. "] Certainly it is a measure of Protection. There they were, slumbering, not only innocuously, but with fruitful and advantageous results to the revenue. Who was it took up these duties, took them by the ears, and brought the whole thing into the forefront of British politics, and made these duties a great challenge and a great issue, and the cause of bitterness and misunderstanding amongst those who ought to have agreed in order to make sham bonds of union between those who are irrevocably sundered? It was a party manœuvre.


The, bond did not last very long.


The right hon Gentleman used these duties as a partisan measure to obtain Liberal support—Liberals were more numerous then than they are now—and to divide the Liberals from the Conservatives with whom they had so many bonds is common and so many differences in common against the Socialist party, in order that the right hon. Gentleman and his party, having isolated them, might destroy them at leisure. Moltke, Ludendorff—none of the great strategists planned so artfully and so successfully. I say that was a partisan act and it aroused great resentment. It caused a great disturbance amongst those who were used as pawns in the party game. It caused a great deal of disturbance to the industries of the country, and aroused great political resentment.

Then came an election at which hundreds of Members condemned the repeal of those duties. It was a subject put forward on every platform before the electors in every constituency. lion. Members stood on the platform at the election and condemned the repeal of these duties, and they were supported in an enormous majority of constituencies by a large majority of the extended electorate. In view of the challenge being given and taken up, the matter having been made a part of the fight in the election, we are bound—after all majorities have some rights—to restore the status quo in this matter, and that is all we are doing.

One of my hon. Friends said: "Why did you not put the ditty on commercial vehicles?" Another referred to a duty on tyres. There is a lot to be said for that. If you were really approaching duties of this kind in a scientific spirit and just endeavouring to deal with luxury articles from the point of view of raising revenue, and at the same time giving a certain stimulus to those trades at the expense of the general community, if you were doing that, then these McKenna. Duties would not constitute the schedule of your proposals. As a matter of fact, we are now simply undoing what was done last year by the right hon. Gentleman the Member for Colne Valley (Mr. Snowden). It is a case of "as you were. "That is all we are, doing, but that is what we are determined to do.

I have, said this much on what I will call the historic reasons for the reintroduction of these duties, and I think in the ordinary fair play of politics these reasons will be understood in every part of the country. I also claim that, purely on the merits, there is a good case far obtaining £3, 000, 000 of revenue by the reimposition of these duties. I have already explained that the Budget this year consists of a series of balances nicely adjusted. You have the Death Duties and the Super-tax marching hand in hand. If you had not the one you would not have the other. Then we have the Silk Tax paying for the remission of the Income Tax on earned incomes. We have war pensions declining, and the new pensions extending.

Then there is the execution of our pledges in regard to Imperial Preference, which will cost between £1, 400, 000 and £1, 500, 000 this year. This is only the execution of pledges given to the representatives of the Dominions who came here at our call and received these pledges in fulfilment of the Resolutions of the Imperial Conference of 1917. These McKenna Duties just pay for this, and next year they will just pay for the fulfilment of these imperial and Colonial Preferences and the additional £1, 000, 000 set aside in order to develop Imperial trade in this country. I think that is a very good balance and a very good way of dealing with this problem.

I have said that this does not in my judgment raise the controversy between Free Trade and Protection, and I think it is a great mistake for Free Traders to try to raise the enormous issues connected with the general fiscal policy of this great country upon such a small and flimsy pretext. Having regard to the historic origin of this proposal, I think it is a grave mistake to try and pretend that the whole fiscal policy of the country is to be changed because, forsooth, we reimpose duties which are well known and have been in existence for the last 10 years, and which it is perfectly well known are imposed not in the sense of raising that issue at all. if you are going to raise that issue, you are going to bring your cause into action on the worst possible ground.

if you look at the facts disclosed in the interval between the repeal of these duties and the present time, and compare the condition of things before they were repealed with the condition of things afterwards, certain very broad conclusions undoubtedly emerge. In, the first place, it is perfectly clear that the repeal checked employment. I am not in the least dissuaded by the fact that there has been more employment in the motor trade. We have been told that 90, 000 more motor cars are on the road this year. Of course, when anybody is adopting a new transport system it is perfectly natural that there should be a great increase of employment. But I am perfectly certain that within the general forward movement of the trade, there were distinct eddying and disturbances of trade. The other trades concerned were certainly affected. With regard to musical instruments and watches and clocks there is not the slightest doubt that an adverse effect has been produced upon employment.

The next fact that emerges is the enormous increase in importations. We had no idea of increasing foreign importations. Again, take the case of clocks and watches. The monthly average of the importation of complete clocks for January to July, 1924—that is a period of six months before the duties were repealed—was 177, 000, and the monthly average in the six months afterwards was 520, 944. In the case of gold watches, for six months before the duties were repealed the average was 10, 476, and the average for the six months after that period was 41, 270. In the case of silver watches, before the duties were repealed the average was 17, 000 and afterwards 72, 450. Taking other watches for the six months before the duties were repealed, the total was 174, 075, and for the six months afterwards 460, 957.

Look at this. Taking gold watch cases the average for the six months before the repeal of the duties was 29, 461, and after the repeal of the duties, 14, 776. In the case of silver watch cases for the six months before the duties were repealed the total was 49, 807, and after 33, 124. Observe what has happened. You must look at facts, because they look at you. Here you have an enormous increase in the importation of finished articles and a decrease in the importation of the parts, showing that a large amount of work had been done outside this country which might have been done inside the, country. This is borne out by the evidence of the Board of Trade, and my information is that factories which were working at full time are now working at greatly reduced time, and we have seen the setting up of a whole. new factory in Switzerland for fitting the parts of the watches into their cases.

I know perfectly well if the State, with all its power and wealth chooses to give an advantage to particular industries they will derive a very great measure of prosperity. but I say as a free trader that right hon. Gentlemen opposite are making an enormous mistake by raising on this the general issue as to whether this country should revert to Protection or remain on the whole on the broad basis of Free Trade. They are doing this on the sole ground of the reimposition of duties under which we have lived for the last 10 years, upon which men of every party are committed, or at least compromised, and which we now reimpose with an ample majority, and with a full mandate from the country for purposes which are essential for the ordinary revenue of the year.


The Chancellor of the Exchequer has entertained and amused the House with a very admirable example of the Attorney's method of abusing his opponents when he has no case of his own. The only justification that the right hon. Gentleman could claim for the inconsistency of his record upon this question was that there were some who had been not more consistent than himself. The right hon. Gentleman has refused to defend these duties on the ground that they are Protectionist in character or in intent, and he cannot, therefore, be very grateful to the Members of his own party who have taken part in the Debate during the last two days, for every speech which has been delivered from the Tory benches has been a speech welcoming these proposals on the ground that they were Protectionist in their character and steps towards a general scheme of Protection.

The right hon. Gentleman went at some length into the history of this question, and I do not think that the House of Commons has ever been treated to a more grotesque perversion of the historical facts of a case than that which has been given by the right hon. Gentleman in the speech which he has just made to the House. The right hon. Gentleman repeated—for a great part of his speech was simply a repetition of what he said in his Budget speech last week—he repeated almost in identical words what he described as the historical justification for the reimposition of the McKenna Duties. The simple fact of the matter is that these duties were imposed in war time, under war conditions, and for war purposes, and there was a definite and distinct understanding that they would be repealed when the War was over. I have no responsibility for the fact that these duties were retained for three or four years after the War.

It is quite true that the Committee on Reconstruction recommended that these duties might be kept on for two or three years, in order that the motor trade might recover from War conditions, but why were these particular trades suggested in 1915 for the application of these ditties? The Chancellor of the Exchequer did not inform the House upon that very important matter. The motor industry, clocks, watches and the other manufactures included under these ditties, were selected because these things were not being produced in this country at that time. Motor factories and these other factories had been turned into rminftion works. The right hon. Gentleman said that he was a member of the Government at that time, and, if that were so, he knows quite well that it was an understanding between the Free Trade and the Protectionist Members of the Government that these particular articles should be selected, because at that time, owing to the fact that there was no home production of those articles, no question of Free Trade or Protection could possibly arise by the imposition of these duties. The right hon. Gentleman wants to know why there is so much fuss about this question, and he was very severe in his references to the motives which prompted me in repealing these duties 12 months ago. I am afraid the Chancellor of the Exchequer is quite incapable of understanding that any person can be moved or prompted by honest political convictions. [Interruption.] At any rate, I can tell the right hon. Gentleman this, that my action last year in repealing these duties was not the price that I had to pay for political apostasy.


Is that to show the weakness of your case?


No, it shows the in- ability of the hon. Member opposite to hear the truth. The right hon. Gentle- man says that his party had a mandate for the action he proposes to take. That I absolutely deny. We had a mandate for what we did last year. We had a majority of Members in this House who were pledged, not merely by their political principles, but by pledges under which they had been returned to this House, to take the earliest possible opportunity of repealing these duties; but it is necessary to keep on reminding hon. Members opposite that they represent a minority of the electors of this country, and that it is only by the eccentricity of our electoral system that they happen to have a majority in this House. The Government have no mandate for the re-imposition of these duties. The majority of the electors in this country, notwithstanding Red letter scares, not- withstanding the fact that many hon. Members opposite have been returned to this House by the votes, as I have said before, of hundreds of thousands of old women who were dragged out of theirhomes—[Interruption.] The Government have no mandate, and the Chancellor of the Exchequer, in dealing with the Prime Minister's pledge, made, surely, one of the most extraordinary admissions ever made by a Minister of the Crown. I tell the Prime Minister that he cannot long remain silent under the charge that his Government, through the action of the Chancellor of the Exchequer, had violated the pledge that the Prime Minister gave in this House some months ago.

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