§ I will now, if the Committee will allow me, come to the question of the gold standard and the cost of living. Everyone knows, or pretends to know, the arguments for and against the gold standard. No one has ever denied that it carried with it privations as well as rewards. My hope and faith is that the privations are minor and temporary and that the rewards will be major and permanent. Everyone knows, for instance, that the gold standard renders inflation impossible and that its introduction deprives the exporting power of a country of the hectic stimulus of a collapsed exchange. Everyone knows that a fall in prices, although it may bring you into truer relation with the outside world and although it is in the long run an advantage of the highest kind, is, while it is taking place, disheartening to the producer at home. Everyone knows that our present policy of paying our debts and maintaining a sound currency implies inevitably high taxation, national sacrifices, and some suffering.
§ Mr. CHURCHILL
There is among us—I do not know whether the hon. Lady is a member of it or not—a small but highly intellectual school of thought which reaches its fullest expression in Russia, but also flourishes among some of our nearest neighbours, and which proclaims openly that it is much better for a nation to go through the bankruptcy court and start business again— 35 as most of the great Continental belligerents have done in one form or another—and either to repudiate its debts and start again or pay as much in the £ as it finds convenient by writing its currency down to the necessary figure. Happily, we are not called upon to argue about the ethics of such a course because, in any case, it would not be in the interests of Great Britain, which is still the greatest of all creditor countries. The population of this island is maintained by international trade, and anything that makes the purchase of the raw materials and the foodstuffs which we need more costly or more difficult is a direct menace to our livelihood. From this point of view, the producing industries, as well as the entrepot trade, have derived a lasting benefit from the resumption of the gold standard. But this is not all. Nearly one-quarter of our population depends on world-wide operations of credit and commerce for which the stability of sterling is absolutely essential.
The income which we derive each year from commissions and services rendered to foreign countries is over £65,000,000, and, in addition, we have a steady revenue from foreign investments of close on £300,000,000 a year, 90 per cent. of which is expressed in sterling. Upon this great influx there is levied, as a rule, the highest rates of taxation. In this way we are helped to maintain our social services at a level incomparably higher than that of any European country, or indeed of any country. These resources from overseas constitute the keystone, in time of peace, of our economic position, but they depend upon the stability and integrity with which our experienced democracy has hitherto been prepared, under every stress and strain, to maintain the strictest principles of public finance and public faith. Everyone is tempted from time to time by seductive dodges, and everyone from time to time concedes something from the purity of orthodox opinion, but no British Government has yet dared to undermine the hard rock of British financial integrity; and with the mighty economic structure of the United States towering up on our western flank, if ever there was a time when such a step would be disastrous it would be 36 now. Better hard times and a continuing nation than lush, lavish indulgence and irrevocable decline.
We may console ourselves among present discontents by observing that London, in spite of the immense sacrifices made by Great Britain in the War, has regained effectually its solid international pre-eminence in the world, by observing that we are still the greatest international market, that we are able to maintain money rates which are lower than those prevailing in New York, and that the bill of exchange on London, which after the War was seriously menaced, has, in the last few years, regained its time-honoured position as the favourite international instrument and token of commerce.
But I will own that an equally great attraction for me, in the pursuance of this policy, has been that decline in the cost of living which was definitely promised as the result of our allegiance to sound money. I spoke earlier about the increased consumption of tea and sugar. Everyone knows the argument in favour of a free breakfast table, but what is the burden of these remaining taxes on tea and sugar compared to the relief afforded to the consuming public by a decline of 18 points in the cost of living? The identifiable increase in the purchasing power of the wages of insured wage and salary earners alone is equivalent to a remission of indirect taxation of £160,000,000 a year. This takes no account of the proportionate advantages reaped by the enormous number of persons, including the poorest in our midst, unorganised and uncatalogued, from the improvement in the purchasing power of the humble incomes upon which they depend.