UNEMPLOYMENT.

HC Deb 03 February 1930 vol 234 cc1527-84

Sir ARTHUR STEEL-MAITLAND

This is the first chance that the House has had since the Recess of giving the Lord Privy Seal an opportunity of giving an account of his stewardship, and we hope to-day that the light hon. Gentleman will give us a specific account of what he has done. Last autumn he was very sanguine about the situation. Speaking at a date when he already had knowledge of the disturbance in the City due to the Hatry ease, and when he must have been already aware of the troubles in America, he gave us his own opinion of the immediate situation. It was this: Speaking from a close examination of all the facts I have no hesitation in saying there is a trade improvement. I have no hesitation in saying prospects are brighter than they were."—[OFFICIAL REPORT, 4th November, 1929; col 678, Vol. 231.] That was in the late autumn. To-day, the latest figure for unemployment winch-has been given to us, unless the Lord Privy Seal or anyone on his behalf can give us later figures in anticipation, is 1,473,000. It is quite true that comparison of figures for unemployment may he fallacious. As we have been told by the Lord Privy Seal, you cannot compare June and December, nor can you compare the present situation with that of months immediately following. There is a rising figure of unemployment in the Autumn, generally, but a fall and improvement in the Spring. But we can compare the last figures that we have with the same figures for the corresponding periods of previous years. We have a far higher figure for unemployment to-day than in any year for seven years past at this time of the year. That is not the only disquieting feature of the situation or indeed the most disquieting. All that we know about the, situation otherwise ought to have tended to an improvement. The prolonged strike had effects which resulted ill unemployment long after the strike finished. The influence of these results has been wearing off and things ought to be better now than the year before, instead of worse.

When the present Government came into office, the figures were 60,000 better than for the corresponding week in the year before. The figures are now very nearly 50,000 worse than for the corresponding week of the year before. Not only have we to deal with that situation, but we have to deal with the fact that wherever we go, with whomsoever we talk among those who are engaged in the productive industries of the country, there is a depression and a lack of confidence that has not been experienced for years past. We make-no personal attack on the Lord Privy Seal. We do not do him any disparagement when we say that we care infinitely more about the problem of employment itself than we do whether the Lord Privy Seal gets his salary. In addition, the Lord Privy Seal has an engaging personality. He makes us the partners in his joys and his sorrows, so that we can sympathise with him. But if our sympathy is to continue, he must make a clear statement to the House. I must confess that we are surprised not to see him here this afternoon.

The CHANCELLOR of the DUCHY of LANCASTER (Sir Oswald Mosley)

My right hon. Friend has been called to a very urgent conference. He will, I hope, be in the House very shortly. Meanwhile, I will take notes of the observations of the right hon. Gentleman and convey them to my right hon. Friend.

Sir A. STEEL-MAITLAND

We are glad that the Lord Privy Seal will be here later. We shall lock for an account of his stewardship from his own mouth. The Chancellor of the Duchy will remember that when he spoke on behalf of the Lord Privy Seal on a previous occasion, he gave, us a promise that the Lord Privy Seal would be glad to give that account as soon as he was able. If the Lord Privy Seal is to retain our sympathy, everyone will agree that he must give us this afternoon an account which will be clear, ample and precise. I propose to make the task easier for him. He is rather an elusive character. I do not say that he wishes to mislead the House, but I think that sometimes in the answers that he has given to questions and in the references that he has made to past statements of his own, he has given an account which has not been fully satisfying to those who have heard them. It may be that he has not formulated the points quite precisely to himself; at any rate, I put that forward as an explanation. For that reason, if the Chancellor of the Duchy is taking notes, I will put certain specific questions, to which I hope that we shall obtain quite specific answers. As the questions affect employment and are interesting to all quarters of the House, I will ask hon. Members to note whether the Lord Privy Seal in his reply does or does not give us the direct and specific answers to which the House is entitled.

The first subject that naturally arises to the mind is the famous visit to Canada in the Autumn. When the Lord Privy Seal returned home he made speeches about his visit and gave interviews, all of which received great publicity. They raised high hopes and aroused expectations as to the positive results of his visit. Up to the present time Members in all quarters of the House, from the Clydeside, who are interested in shipping, just as much as from this side, have tried to ascertain exactly what has been the result of the visit, but without success. The first question that arises is in relation to the ships that we were told would be needed for the coal trade of Canada as a result of the Lord Privy Seal's visit. I will not overstate any expectation that the Lord Privy Seal has aroused. The Chancellor of the Duchy is conversant with the different utterances of the Lord Privy Seal in regard to this matter and perhaps he will correct me if, by a hair's breadth, I overstate what the Lord Privy Seal has given us to understand. He led us to understand that a contract for five ships, of 7,000 tons each, would be placed in order to deal with the increased coal trade with Canada from Great Britain during the present year, 1930. That was his specific undertaking. It is three full months since that statement was made to the House, and I would now put these specific questions: What has happened? Has any contract for ships been placed? If so, for how many ships, of what tonnage and to what firms? The House is entitled to know. The House must have a precise answer if it is to retain any confidence in the expectations which the right hon. Gentleman has placed before the House.

4.0 p.m.

The next point in regard to the Canadian visit is in regard to coal. Coal, the Lord Privy Seal informed us, was together with steel the one item of trade with Canada to which he had devoted his greatest efforts, in order to increase British exports to take the place of exports to Canada which had previously gone from foreign countries. As we all know, there has been an export of hard coal to Canada during a number of years past. For the past four years it has exceeded 500,000 tons a year. What the Lord Privy Seal gave us to understand was that, as a result of his visit, that export would largely be increased this year. He said to this House: I say without fear of contradiction that, whatever may be said to the contrary, the difficulty about hard coal next year will not, so far as Canada is concerned, be to get customers, but will be to supply the demand."—[OFFICIAL REPORT, 4th November, 1929; col. 674. Vol. 231.] Of course, it is patent to everybody at all familiar with Canada, that shipments of a substance like coal in the early months of the year to Canada are restricted for various reasons connected, of course, with the navigation of the St. Lawrence. On the other hand, shipments even of coal do occur in the early months of the year. What is most important is that, orders for future delivery in the coal trade are placed well beforehand, so that by now there should be ample opportunity of knowing whether, in fact, British exports not only for last month, but also during the whole of the early part of the year are to fulfil the quite confident expectations and statements which we have heard from the Lord Privy Seal. Therefore, may I put my next quite specific question: What actual orders have been placed for the export of British coal to Canada during both January that has passed and the spring months; how do they compare with the export of previous years; and how far precisely do they satisfy the expectation held out? The visit of the Lord Privy Seal to Canada was going to result in a large increase in the export trade of British coal to that country.

The last point with regard to the Canadian visit has reference to steel. The Lord Privy Seal said: When I come to steel I am even more optimistic."—[OFFICIAL REPORT, 4th November, 1929; col. 675, Vol. 231.] Again, we are entitled to know now whether his optimism has been justified. The Lord Privy Seal realises that the trade in coal and the trade in steel are of great importance. Clearly, there-lore, it is his duty not only to take notice of optimistic indications of the future, but also to keep track of the orders that pass so as to see how they are likely to be fulfilled. It is the more easy for him to do so, because, as he himself has explained to us, there is a centralised British office for dealing with steel for Canada. Though we may be told that the actual placing and fulfilling of these orders is a commercial matter, that is not an answer to us. He is easily able to keep track of how the trade is going, and we are entitled to know exactly what the prospects are compared with previous years. That is the precise question I put.

There is another point with regard to trade generally about which I would not wish to put any question so specific or to demand an answer, but about which, I think, we ought to have the Lord Privy Seal's view. He has declared himself, and I think quite rightly, an apostle of the rationalisation of industry. He has told us how he has been in touch with the City and with banks for that purpose, and how they are ready to help in facilitating that rationalisation. I have no doubt that all that is true, but it is not new. Great finance houses in the City had been helping with the rationalisation of industry long before the Lord Privy Seal came into office. The Vickers-Armstrong amalgamation was one step in rationalisation accomplished long before the General Election. [An HON. MEMBER: "Not because of rationalization !"] It was because of rationalisation, and what was true, there was true also of the union of such great steel works as Bolckow-Vaughan and Dorman Long. Negotiations were in progress long before the Lord Privy Seal had anything to do with the conduct of industry as far as the Government were concerned. What is true of the iron and steel trade was true also of the cotton trade. Negotiations with firms for cotton amalgamation were in existence long before the conversion of the Lord Privy Seal to the doctrine of actively helping the progress of rationalisation. That being so, while, I think, none of us on this side would wish to hinder, but always to help in such progress as far as lies in our power, we would like to know rather more precisely the exact part which the Lord Privy Seal has played in a process which was already going on and in fairly full swing before he took up his present office.

With the permission of the House, I would like to turn to another part of the Lord Privy Seal's activities and those of his coadjutors on the Front Bench opposite, namely, the question of public works. We were promised a White Paper last December. We were told that we would get it very soon. Later on, we were told that it would not come yet, but we might expect it in the middle of February. It seems a strange thing, after so much delay, suddenly to come to such precision on the point of raid-February. I think we are entitled to ask ourselves why the right hon. Gentleman should have chosen that precise dale. Why the middle of February? Was it because they could get the information just by that date and by no other? Or did it happen to have any connection with the speech of the Lord Privy Seal early last Autumn, when he said that when February came he would be ready to make comparisons with the previous year? He himself deprecated making misleading comparisons as regards figures. Yet he must have known that it was precisely in raid-February of last year that there was a sudden jump of over 100,000 in unemployment, not from any general and abiding reason, but because for the moment there was very severe weather and a very sharp frost. Consequently, if this year there is a continuance of open weather, this, obviously, would be a peculiarly unfair date of all dates for comparison. It is a strange coincidence that that is the precise date for which the White Paper is promised, and the date at which, naturally, we would be expected to get up a debate on the subject in this House.

Until we get the White Paper, it is impossible to debate the subject, because we have not got it before us Like the agenda of a business. If a person who is in the chair conducting the business reads over a large number of new and unaccustomed figures, however accustomed people may be to deal with statistics, it is impossible to take them all in for the purpose of immediate criticism. Therefore, clearly, this House ought to have the White Paper before it, and be able to go into it before it has a real chance of pronouncing any verdict upon it. A speech in reply, which is simply a long list of figures, which none of us has seen beforehand, can, obviously, be no account of the right hon. Gentleman's stewardship at all. I would like to ask the Chancellor of the Duchy whether when we have the White Paper, it can give, together with the actual figures of schemes, some estimates which will enable us to see how far those schemes are of value or the opposite with regard to unemployment. How much work, for example, can each scheme be expected to provide? How much each scheme is in anticipation, is it work that ought to be undertaken at once or is it work that is anticipated three, four or five years hence? lastly, what is the estimated total of the Government expenditure on each of those schemes? That is what we would like when the White Paper comes. But I think to-day a list of details with which we are not familiar would not be treating the House fairly. The House prefer to-day to have a statement of the Lord Privy Seal's policy with regard to these schemes, and the reasons which led him to press them forward. It is not so long ago since he criticised us on this side of the House for being backward in pressing forward relief works. He said:— The right hon. Gentleman opposite put on the brake; I am putting on the accelerator."—[OFFICIAL REPORT, 20th December, 1929; col. 1866, Vol. 233.]

An HON. MEMBER

Hear, hear.

Sir A. STEEL-MAITLAND

I hear a cheer from the opposite side. One cheer, does not make a scheme, any more than one swallow makes a summer. What we want is to know what is the basis of the right hon. Gentleman's belief and his reasons for his policy. It is very important; it goes to the root question whether these public works be, as they are in fact to a large extent, relief works; whether they are really justified; whether they will help employment, or whether, ultimately, they will make unemployment worse. It is a subject on which there is a great difference of opinion in this House. One view is held by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) and, perhaps, also by the right. hon. Member for Darwen (Sir H. Samuel); at any rate, the right hon. Member for Carnarvon Boroughs holds it strongly that what is needed in this country to deal with unemployment is a vast scheme of relief works. [An HON. MEMBER: "Public works."] In my opinion in many cases these public works have an element of relief work in them. The right hon. Gentleman fortified his opinion with the beliefs which are stated by some economists of very high authority. There is another view. There is the view which I myself hold that while there is a certain elasticity in the supply of credit, I do not believe that there is the mass of frozen credit which would justify a huge extension of public works. Therefore, while a very limited amount of public works containing an element of relief work is justifiable and may help unemployment, it is only within very narrow limits indeed. When you pass those limits you may be doing more harm than good. If you pass those limits, you may see a number of men dotted about on some road which you are making and to whom employment is given on that stretch of road. That is what you may see. But it is more than likely, according to the view of many of us, when you have passed the narrow limit, that what you will not see are the men who have lost employment in some productive industry at their own trade through the curtailment of the credit which has gone towards putting the other men on roads. That is a fundamental difference in view. It affects the whole question of the extent to which public works should be undertaken.

If anyone corrects me because, hastily, I said relief works, may I put this reflection before the House? If some public work is not actually needed on business grounds, then to the extent to which it is not actually needed it is relief and not public work. The greater part of these public works—I do not say all of them—probably would not be undertaken at the time by the public authority unless there was a State subvention to make them undertake the work. In other words, in a great many of them there is an element of relief. Again, if you anticipate by, say, five years some great public works which may be fully justified at the end of five years, the very fact of so much anticipation means that over 30 per cent. of it is relief, because of the premature expenditure of capital. We wish to hear from the Lord Privy Seal, What is the foundation of his own beliefs? What are his views about credit and relief works, from that point of view, which make him justify the procedure upon which he is going at this moment? The Lord Privy Seal has told us at any rate that he is anxious in each case to get 20s. of value out of the pound. [HON. MEMBERS: "Hear, hear !"] I am glad to hear those cheers, because I hope that the hon. Members who gave them will keep him up to it. He has not achieved it yet. If he has not achieved it, at any rate he has come very much nearer achieving it than his colleagues have done.

I will turn for a moment or two to the question of foreign trade. We are all now agreed about the importance of it, and the Lord Privy Seal, now that he is seized with the importance of it, wishes to do everything to enable us to maintain the whole of the foreign trade which we still possess and to regain some of the trade which we have lost. One of his reasons for helping forward rationalisation is in order to reduce the cost of manufacture so as to enable us to compete with foreign countries more efficiently. We rejoice over his conversion to this view, but, if there is to be joy over the one sinner that repenteth, we would ask whether he can control the other 99 of the gang who show no sign of repentance of any sort or kind? [An HON. MEMBER: "What do you mean by 'gang'?"] I withdraw the word "gang" and substitute the word "flock."

When it comes down to business, we have to look into the question of cost. The Lord Privy Seal lays this stress upon rationalisation because it will reduce the cost of management so that we can compete more successfully than before in oversea trade. He is a member of the Government, and I would ask, What are the rest of the Government doing There are other costs than those dependent on organisation. The burden of taxes upon industry is as important an item in deciding whether we are able to compete effectively or not. [Interruption.] It is so with regard to steel, cotton, and woollens. If we are to grant all that the hon. Member says, it does not for one moment detract from the truth that the burden of taxation on all these industries is diminishing their power of competition in foreign markets. Here is the Lord Privy Seal talking to us about the regaining of our foreign trade, and yet during the whole of the time his colleagues are engaged in making it infinitely more difficult for us to retain the trade which we possess, apart from regaining that which we have lost.

The Chancellor of the Exchequer is supposed to be the guardian of the purse of the public, and, when he was speaking here on the Third Heading of the Unemployment Bill, ho save us a complete modern edition of the Pharisee's Prayer. He was so proud of himself; so contemptuous of others. He said: "Lord I thank thee that I am not as other men are, extortioners, bad financiers, or even as this Conservative. I fast twice a week; I give tithes of all that others possess." That is the Chancellor of the Exchequer's version. At the same time, here he is, always giving way, always allowing fresh burdens to be placed upon the taxpayer in general and directly upon industry as well. [An HON MEMBER: "Where are they?"] Four million pounds in that one Clause of the Insurance Bill, of which £2,000,000 comes directly as a burden upon industry. That is one instance alone. There is the Coal Bill to which he has assented, and as a result of which there will be an increase in price which may be anything from 1s. 6d. to 4s. a ton weighing directly upon one of the raw materials which enter in varying degrees into the manufacture of every single article which forms our foreign trade. While these are direct burdens upon industry, there is the great increase in general taxation which indirectly burdens industry in precisely the same way. How can the Lord Privy Seal justify the action of his own Government—when he himself asserts that the recovery of our foreign trade is so vital—in continuing to add to these industries costs at least as great as those which can possibly be taken off through any process of rationalisation?

There is one other point which has arisen in this connection and which is also of great importance at this moment. It is the effect on unemployment of the Safeguarding Duties. In the first White Paper, the Lord Privy Seal indicated that he was going to carry out schemes costing about £42,000,000. He calculated that these would produce work—if we accept the view that they will produce work without damaging industry in other respects—equivalent to the employment of 40,000 men a year for four years. Then it comes to an end. But the burden of the schemes is still left upon the country and the taxpayer. I ask the House to compare that with what happens in those industries which have been safeguarded up-to-date. There has been an immense increase in employment, but, if anyone says to me that it would have increased in any case, duty or no duty, then my answer is, that at any rate the additional rate of increase due to the Safeguarding Duties is, without question, more than equivalent to the whole of those 40,000 men a year; and not for a period of four years only, but in perpetuity and on a lasting basis. If there ever was a case before the War for Safeguarding Duties, it is a much stronger case now.

Sir HERBERT SAMUEL

Does the right hon. Gentleman know what the increase has been?

Sir A. STEEL-MAITLAND

By comparing it as far as I can with the increase and the decrease in those industries in comparable countries on the Continent. Perhaps the House will allow me to give an instance. I take the question of lace. Lace is an article in which the general trade of the world has decreased. There has been a change of feminine fashions. Lace is not worn for trimmings, and in other ways as it used to be. The result has been, that in every one of the producing countries in the world during the last four years there has been a decrease in the number of people employed in the lace industry. On the other hand, in Great Britain alone of all countries, while there has been a decrease in the people attached to the industry, there has been an increase in the number of persons actually employed. It is by that process of comparison that one is enabled to say, I think with confidence, that, just as that has been the effect in the lace industry, if one compares in amount, the growth in the industries, such as the motor car industry for example, in France, Germany and in this country, the additional employment on a lasting basis through the Safeguarding Duties is greater than the whole of the unemployment for four years only which is given by the schemes which the right hon. Gentleman has already brought before us.

Mr. MAXTON

The right hon. Gentleman may have made himself plain to the right hon. Gentleman the Member for Darwen (Sir H. Samuel) on the matter of the lace industry, but his explanation has left me in a greater fog. He made this statement, that, although the number of people attached to the industry had decreased the number employed has increased. As the right hon. Gentleman has been so specific about its success, one or two figures would be helpful.

Sir A. STEEL-MAITLAND

I have not the figures here, but I shall be delighted to give them to the hon. Member. As regards what I said, may I give this explanation, if I was not clear? The total number of people attached to an industry includes those who are actually employed and those who are out of work, though belonging to the industry. Therefore, the number of people attached to the lace industry had slightly declined, but the amount of unemployment was so much less that the total of those who actually found employment in the industry was greater. I hope that I have now made the matter clear. I will send the hon. Member the figures.

Mr. MAXTON

This is the main basis of the Opposition's case against the Government, and we should like to have it quite clear. I take it that the effect of safeguarding on lace has not been sufficient to bring it back to the position which it held before it was safeguarded?

Brigadier - General Sir HENRY CROFT

May I ask my right hon. Friend if it is not a fact that the production of the lace industry has gone up by 50 per cent. in the last four years?

Sir A. STEEL-MAITLAND

I am giving the hon. Member an instance in which the actual figures of those employed have increased, and that in a trade which was otherwise decreasing the whole world over. The general point that has been put to us who are strongly in favour of a policy of Safeguarding is this: Opponents say to us, "You point to the increased number of people in the motor trade, or in the silk trade. Those trades would have increased in any case, and therefore you are not entitled to take the whole of the increase as due to the Safeguarding Duties, because in any case it was an expanding trade. I have taken on purpose, when challenged, the case of what was not an expanding trade but one that was diminishing throughout the world, particularly in the other great producing countries, like Switzerland and France, and, although it has been diminishing throughout the world, the decrease in employment in this country which would undoubtedly otherwise have taken place has been staved off through the Safeguarding Duties which were imposed.

Mr. MAXTON

Safeguarding changes the fashions !

Sir A. STEEL-MAITLAND

I am not sure whether the hon. Member is married or not, but, if he will question any feminine Member as to how far there has been a change in fashions and a decrease, he will be enlightened without any need of figures. We want to hear from the Lord Privy Seal what is going to be the policy of the Government with regard to these Safeguarding and McKenna Duties. We are entitled to know. Here is a time when unemployment is worse, as shown by the figures and by the general experience, than at any time during the last seven years. It is going to be increased—the reason may be good; I am not questioning that—by the stoppage of the building of cruisers. Suppose that is justified, which I am not concerned in debating, surely, when you are going to have in any case additional unemployment for that reason, it seems to be the worst possible time for going forward with a policy of repealing those duties which are the support and help of some of those trades that are already in existence. I trust the Lord Privy Seal will give us some clear answer upon these points. It is no answer to give us a list of some new works which may be in prospect which we have not had time to examine and about which, as yet, we have none of the further details for which we ask.

We have a particular right to get it for this further reason, that we are faced with this situation, having been led to expect that by now things would be a great deal better and not worse. We were told by hon. members opposite last year that they had an actual programme. Since then, the Lord Privy Seal and his helpers have been running about like rabbits, scratching for a scheme that they can put before the House. The Chancellor of the Exchequer, when in Opposition, told us he had innumerable schemes that he could produce. Why were they not produced? Why could they not have been put before us? We were told by the Prime Minister that they were not schemes of public works but were schemes which would directly make industry active. Why, therefore, were we not told? We were told that they could produce the schemes at once, and could carry them into effect, because they had men who had the ideas and the courage to do so. We have seen no ideas, we have seen no courage, and the least we can ask for is a clear and precise statement of what has been done after all the expectations that have been raised.

Mr. STRAUSS

The right hon. Gentleman has attacked the Lord Privy Seal on his record in dealing with the unemployment problem. I do not apologise for that record, because I believe it needs no apology, but I desire to point out the unfairness of the attack that has been made. Hon. members opposite always lay considerable emphasis on the importance of our foreign trade when dealing with unemployment in the opinion of many too great an emphasis, to the exclusion of our home trade. But when an event occurs, as it did last year, of international importance which depresses the trade of the whole world, one would think it would only be fair of the right hon. Gentleman to mention it.

Sir A. STEEL-MAITLAND

If I remember rightly, I said, the Lord Privy Seal must have had knowledge of what was going on in America at the time that he made his speech on 4th November when he said that the outlook was so bright.

Mr. STRAUSS

The full effects of the slump in New York could not have been foreseen by anyone. They were certainly not foreseen by any of the great economic experts, and it is, therefore, not unreasonable to suppose that the experts even in this country did not foresee its full effects. But it is generally known, first of all, that the boom on the Stock Exchange in New York, which caused a rise in money rates in all European countries by attracting for investment purposes, money across the Atlantic, had the effect of depressing trade in this country by narrowing and restricting credit and it is also known that the aftereffect of the boom, the slump, by causing tremendous losses to numbers of people, had the effect of restricting purchasing demand and again damping production. I should like to quote an authority which no one by any stretch of the imagination could suggest is tainted by Socialist influences. In the January edition of the "Federation of British Industries" review of last year, they state: Unfortunately, adverse international monetary influences made themselves increasingly felt as the year proceeded, and we find both home and foreign trade showing signs of reaction in the closing months of the year. …. The responsibility for this disappointing end to what promised to be one of the best post-War trading years is, as is now generally appreciated, to be attributed almost entirely to the abnormal condition of the international money market and the high level of money rates which was one of its principal features. Hon. Members opposite are apt to put the blame on the Lord Privy Seal for every adverse factor affecting employment. Do they seriously suggest that he was responsible for that, or that any Government could have had any influence in preventing it? The right hon. Gentleman also said that the process of rationalisation had started before the Labour Government came into office, and that it was not right for the Lord Privy Seal to take credit for it. The unemployment problem to-day is so acute because the industrialists have not even yet made any attempt to rationalise their industries in comparison with those of our great competitive countries on the Continent and in America. My own belief is that there are two alternatives in front of the country. Either we must refuse to rationalise, on the ground that we shall increase unemployment, or possibly because the industrialists themselves are too lethargic and shortsighted to do so, in which case our industries will gradually decay and the number of the unemployed will continue to grow; or we must now rationalise drastically and thoroughly. It will undoubtedly for the time being cause the displacement of labour, but in time we shall be an efficient economic unit, again able to compete with our competitors abroad.

The unemployment that we have to-day is due, I believe very largely to the individualist and old-fashioned notions of our industrial leaders. The rationalisation that has taken place has meant, at the worst, merely amalgamations of various industries by which the promoters have made considerable profits for themselves, and have not increased the efficiency of the industry itself one iota. At the best, it has meant the replacement of old plant by new. But scientific rationalisation and reorganisation, as it has taken place in competitive markets abroad, has not yet started in this country. On the Continent they look upon it as a highly developed and most important science, and there are organisations of scientific experts who are continually being employed in reorganising works and making them more efficient. I came in contact the other day with the case of a factory making Pullman railway care in Poland. The managers decided to call in one of these expert organisations. After the experts had been at work for some time, they were able to curtail the length of time it took to produce their wagons. They produce them in series of five, which used to take 180 days. After a few months they were able to reduce that period, purely by scientifically replanning, and using exactly the same amount of labour, from 180 to 95 days, which has since been further reduced. Reorganisations of that kind, and rationalisation of that kind, are still completely absent in this country, as far as I am aware. It is true that certain managers committees discuss the special problems of certain industries and a certain amount has been done in what may be called scientific welfare work, in reducing industrial fatigue, but large scale scientific replanning of industry is still absent in this country. This is not only due to the lack of foresight on the part of industrial leaders but also to a lack of initiative on the part of the last Government in urging industrialists to carry out a policy of rationalisation.

Only in two directions can this, or any other, Government tackle the problem of bringing the industries of the country up to a more efficient point than they are to-day. It is difficult for this Government owing to the Parliamentary situation in which they find themselves. One of the best methods is the control of credit, or more particularly the direction of the credit, of the country away from useless foreign investments and purely speculative Stock Exchange business into those industries which can benefit most by rationalisation. Such a control would go a long way to get over the difficulty. But only in two directions can any Government tackle the unemployment problem. One, in urging, if they cannot use compulsion, the industrialists of the country to bring their plant up to a level of efficiency equal to that of our competitors and, in the second place, in launching out on public works, mostly from the point of view of relief works which would carry a number of the unemployed who would be out of work during the process of reorganisation. Those are the only two directions in which the Government can reasonably work. International trade is not under the control of any Government, but judged on these two principles, the reorganisation of industry and the launching out on relief works, which latter has been done to a much greater extent by the present Government than by the last, the supporters of the present Government in the House and in the country can well be proud of the work that has been done.

Sir HUGH O'NEILL

The right hon. Member for Tamworth (Sir A. Steel-Maitland), who initiated this Debate, made a number of very pertinent observations and asked the Government a number of very definite questions. I agree with my right hon. Friend that this is not the occasion for harrying the Lord Privy Seal too much. We ought rather to sympathise with him. He is engaged in a task of extraordinary difficulty and complexity, and if he has failed to redeem the promises and pledges which he made it is not so much his fault as the fault of the general policy of the Government. We are faced with this bold plain and open fact, that during the last five months of the Conservative administration the unemployment figures fell by more than 350,000 and that during the first six months of the Socialist administration they have increased by considerably more than that number. These are plain figures, and they are the kind of things which the country understands. The Lord Privy Seal, so far, has adopted a policy much of which is quite acceptable. We all agree with the main lines of his policy in so far as it has shown itself; trying to increase our export trade by an extension of trade facilities, State aid of industry, and also necessary public works. All these are the kind of things which any administration was bound to attempt to carry out in the difficult circumstances with which we are faced.

We have lately been told that a great deal is to be expected from the Lord Privy Seal's conversations with what he calls the City. I have only seen one definite public effect, which may or may not have been the result of his initiative, but I saw that the Bank of England was affording facilities to the United Dominions Trust, which is a company engaged in financing the hire-purchase system. That at any rate is all to the good.

Sir A. STEEL-MAITLAND

May I intervene for one moment as the right hon. Member might wish to know. I happen to be a director of the United Dominions Trust, and the negotiations began with the Bank of England weeks before the Lord Privy Seal made his speech at Manchester and were entirely independent of anything he has done.

Sir H. O'NEILL

Whether it was independent of the Lord Privy Seal or not does not affect my argument, which was that this kind of credit has been given for years past and has always been afforded by the great banks and financial houses of this country towards industrial projects which are likely to help in the improvement of industry. No; the real cause of the increase in unemployment to-day is the general policy of His Majesty's Government. Let me refer to the increase in expenditure. The Chancellor of the Exchequer, two days ago, made a speech in which he naturally tried to put the best light he could upon expenditure increase. As far as I read it, he said that we were committed to an extra expenditure of £8,000,000 this year and, at the very best from his own point of view, of £14,000,000 next year. What industry cannot understand is this; how is this extra expenditure going to be met unless we are in for some form of extra taxation? [An HON. MEMBER: "Fewer ships !"] It may be possible, as a result of the Naval Conference, to reduce the expenditure on the Navy, and if that is possible, and we are able at the same time to make our security as good as it is now, then I think that kind of reduction of expenditure will be welcomed in all quarters of the House. But you are not going to save the amount of the recent increases by building fewer ships next year. Surely no hon. Member expects that? And if we are faced with increased taxation that in itself has the effect of depressing industry and creating and increasing unemployment.

The right hon. Member for Tamworth also referred to the uncertainty about Safeguarding and the McKenna Duties. I will not say anything about that except this, that whether those duties have or have not succeeded in increasing employment—I personally have no doubt that they have—we know that those who are engaged in those industries which are safeguarded one and all desire the retention of these duties. Surely that is a pretty strong argument that they are beneficial to the industries and are increasing employment. The Chancellor of the Exchequer says that he cannot disclose Budget secrets, that he cannot make an announcement about this until Budget day comes. Surely, in the present period of great depression and unemployment it would be the best thing to discard a small matter of practice like that and if the right hon. Gentleman has come to any decision to let us know what the decision is so that industries may be relieved, or at any rate, may know the worst if the duties are to be taken off. Another thing which tends to shatter confidence is, for example, the determination of the Government to repeal the Trade Disputes Act. That will mean that the general strike as a method of coercion of the Government will again be legalised, and that mass intimidation in some form or other will again be brought within the law. That is not the kind of thing which creates confidence in industry.

There is another aspect of the Government's policy with regard to unemployment which has not yet been touched upon, but upon which we have had a good many promises and statements. The Lord Privy Seal himself, just before polling day at the last election, made this statement: Labour was going to solve the unemployment problem by spending money, and by giving bigger pensions to old people, inducing them to retire and find jobs for younger people. 5.0 p.m.

That, we understand, is part of the Government's policy for curing unemployment. A day or two ago in this House the Chancellor of the Exchequer answered a question as to what it would cost to give a pension of 25s. a week to everyone on attaining the age of 60.

Mr. COVE

On a point of Order. Is the right hon. Member not now referring to what would require legislation?

Mr. SPEAKER

The subject of Debate to-day is a very wide one, including, as it does, the salary of the Lord Privy Seal. I do not think that the right hon. Gentleman is entitled directly to suggest something that would require legislation. Strictly speaking that would not be in order.

Mr. COVE

The right hon. Gentleman was talking about the General Strike before this, and devoted a large part of his speech to it.

Mr. SPEAKER

I cannot rule everything out of order.

Sir H. O'NEILL

I quite appreciate that one ought not to touch upon legislation in a Debate on the Consolidated Fund Bill; but, nevertheless, the whole matter is so large and intricate that one cannot discuss the salary of the Lord Privy Seal without at any rate referring to the main aspect of the unemployment policy of the Government. One of the aspects of that policy is, apparently, the granting of pensions to those in industry who reach the age of 60. In answer to a question in the House the other day, the Chancellor of the Exchequer stated that to give a pension of 25s. per week to all people at the age of 60 would cost £285,000,000 a year this year, that is 1930, and would cost £480,000,000 by—

Mr. COVE

On a point of Order. Is the right hon. Member not out of order in discussing all this, which would require legislation?

Mr. DEPUTY-SPEAKER (Mr. Robert Young)

The granting of pensions at 60 would require legislation.

Sir H. O'NEILL

When in the Chair a minute ago, Mr. Speaker ruled that it was competent to discuss the general unemployment policy of the Government.

Mr. DEPUTY-SPEAKER

But he also said that it would not be in order to discuss matters that would require legislation.

Sir H. O'NEILL

I appreciate and understand that, and if you rule definitely that any reference to that part of the unemployment policy of the Government is out of order, of course I leave it at that.

Mr. DEPUTY-SPEAKER

I was present and I heard Mr. Speaker state that questions requiring legislation were out of order.

Mr. MacLAREN

The right hon. Gentleman has made reference to certain specific Acts of Parliament. I quite appreciate the co-relating of some Act of Parliament to the question of unemployment, but I have listened to the right hon. Gentleman very carefully, and he has begun to discuss the merits of these various Act" entirely apart from the question of unemployment.

Sir H. O'NEILL

I am very sorry that hon. Members opposite desire that I should not refer to this matter. In view of what Mr. Deputy-Speaker has ruled, I have no alternative but to leave it at that. I think that the figures which I have been able to quote have at any rate shown the immense difficulties, to put it no higher, which any policy of that kind would cause to the Government. Another fact that is tending to create want of confidence is the situation in India. India is one of our greatest markets and a country in which order and peaceful progress are of inestimable and vital advantage to the industry of this country. In all these matters, the policy of the Government is tending to create want of confidence, and the one thing that is more likely than anything else to damage industry in this country is want of confidence. In addition, there are one or two definite and concrete facts which are bound to lead in the immediate future, so far as I can see, to an increase in the unemployment figures.

My right hon. Friend the Member for Tamworth referred to naval disarmament. If naval disarmament comes about and if our building programme is decreased, that in itself, of course, for good or ill, will lead to more unemployment. Then we have Clause 4 of the Unemployment Insurance Bill. The Government White Paper, which explained that Clause, pointed out that the Clause as it left the House of Commons would lead to an increase of from 80,000 to 90,000 in the number of those on the unemployment register. So that you are going to get an increase in the figures from that cause. Another matter which will lead, and, indeed, is leading, to an immediate increase in unemployment is the rationalisation which was referred to a few moments ago. What is rationalisation? I will tell hon. Members what I take rationalisation to be. I take it to mean this; Bringing about amalgamation in industry, installing all the most modern plant, machinery and equipment, with the object of reducing the cost of manufacture; bringing businesses together so as to spread your overhead charges over a wider field and installing more modern machinery so as to bring your processes more up to date. But surely it means also that you are going to modernise your plant in order that you may maintain your wages at the old scale, but employ at those wages a smaller number of men. That is what rationalisation must mean.

What is the object of it? The object of it surely is this: After you have so modernised your plant yon will, by reducing your cost of production, capture new markets, increase your trade in existing markets, and so gradually increase the volume of trade in that business, so that in the end more men may be employed in it than were employed formerly. That is what I understand by rationalisation. It is a process which is going on with, I am glad to know, the approval of the Lord Privy Seal, all over the country to-day and in many of the great basic industries upon which we depend for our prosperity. I have indicated some of the difficulties of our trade at the present time. I am sorry to see that the Chancellor of the Exchequer is very cross with industrialists and bankers who are bold enough to mention those difficulties. He says that their criticism is unintelligible. To suggest remedies for this unfortunate unemployment is far less easy than to mention the causes of it. I suppose that in the long run the remedy of hon. Gentlemen opposite would be the nationalisation of industries, for, after all, that is the basic creed of Socialism.

Mr. DEPUTY-SPEAKER

That also would require legislation.

Sir H. O'NEILL

I fully appreciate that, and to that extent I suppose that even in mentioning it I was technically out of order. I was using an illustration, and I do not think I have gone beyond that. However, I will assume that that is the Socialist remedy for unemployment. What is the sensible remedy? The sensible remedy is summed up in two words—restore confidence. How are you going to do that? First of all it is vitally necessary for the Government to carry out a policy of economy. Of course, it is too much to suppose that the Government will sacrifice expenditure which they have already initiated, but for heaven's sake let us devoutly hope that they are going to sanction no more expenditure. Then let them encourage, as far as they can, better relations between employers and employed. They talk about a Trades Disputes Repeal Bill. It seems to me that the Government, representing as it does what I suppose we may call the majority of the organised trade unionists of the country, has an advantage with regard to the question of relations between capital and labour. Labour has been very suspicious in recent years. If this Government which represents Labour, throws itself heart and soul into the attempt to bring about peace in industry and to diminish trade disputes rather than increase them, nothing will tend, in the long run, to restore confidence more effectively. I hope that the Government will not fail to pursue that line of policy.

This is an extraordinarily difficult problem, but, when we survey the industrial history of this country during the last four or five years, it is impossible not to feel that some kind of crisis such as we are passing through now was almost inevitable. It is only four years ago, or less, since we had the General Strike, and, quite recently, we have had for the first time in our history, apart from the short period in 1924 a Socialist Government in office. Industry in this country is—naturally I maintain—suspicious of a Socialist Government and will be so until this Government, as a result of having to face up to the facts of economics, realise, as I believe they will very soon, the delicacy and intricacy of our industrial and economic structure. When they see how easily that structure can be damaged, then I think it is possible that they will stick to their saner views, discard their more extreme pronouncements and become a responsible party in the State, a responsible Government putting forward responsible Measures. If they do so it is possible that, before long, some of that confidence the want of which has been so marked in industry recently, will return and that we may get back to times not only of better employment but of greater advance in industry than those which we have experienced in recent years.

Major NATHAN

The Lord Privy Seal, speaking on unemployment immediately before the Christmas Recess, suggested that it would not be fair to compare the unemployment figures at the end of the year with the figures at the time when he entered on his present office. Figures are like hydrangeas. They have a habit of taking on different colours according to the light in which one looks at them. But in whatever light one regards the figures of unemployment as they stand, the stark fact emerges that there has been no improvement. I will not take the comparison that there has been an increase of 400,000 or 500,000 since the present Government took office, but I direct the attention of the House to the average weekly number of persons unemployed at the present time as compared with the last year or two. It will be found that the figure for January of the present year shows no improvement, compared with the figure of 1928 and is appreciably greater than the figure for 1927. These are relative figures as to averages. When I take the actual figures given by the Minister of Labour the other day in reply to a question, I find that on 20th January of the present year there were 1,290,000 persons unemployed in England and Wales as compared with 1,249,000 on approximately the same date last year and 1,044,000 on approximately the same date in 1928. A simple calculation shows that the figure at present is some 43,000 worse than it was on the corresponding date last year and 250,000 worse than it was in January, 1928.

The House expects some explanation from the Lord Privy Seal as to the reasons which he thinks have occasioned this increase. The hon. Member for North Lambeth (Mr. Strauss) suggested that the increase was due to the slump in Wall Street. The slump in Wall Street had many unexpected repercussions, but one thing which it has not affected is the rate of unemployment in this country. Since that slump credit has become easier here, and the reduction of orders which possibly may be expected as a result of the situation in the United States has not yet, in any real sense, materialised. The hon. Baronet the Chancellor of the Duchy of Lancaster, speaking on 21st January, said with great frankness: I do not think anyone would suggest that any measures taken by the present Government are affecting the unemployment situation materially, one way or the other, either beneficially or adversely."—[OFFICIAL REPORT, 21st January, 1930; col. 95, Vol. 234.] I ask the Lord Privy Seal, since it is contended that no action of the Government has affected these figures so adversely, what has done so?

I should like to track down some of the elusive ideas which have from time to time flitted across the Floor of this Chamber with regard to dealing with unemployment—ideas which have been mentioned once, and of which one never seems to hear again, but which are simply lost in oblivion. I am not referring to those matters which are the subject of the White Paper published a few weeks ago. Nor have I in mind the measures which I understand are to be included in the White Paper to be published during the present month. I wish to take a number of items to which apparently the Lord Privy Seal himself attached importance some time ago but of which we have heard little or nothing since.

I ask, in the first place, what is the position with regard to the Channel Tunnel. In November the right hon. Gentleman informed the House that he expected the report by Christmas. Again, on 17th December, he said he expected the report before Parliament reassembled after the Recess. Has he yet received that report? If so what action do the Government propose to take upon it? Then, as long ago as 4th November, the Lord Privy Seal referred to the scheme known as the Lower Thames Tunnel scheme. He told the House that it was a £3,000,000 scheme; that the Government were desirous of proceeding with it, and that he hoped to be able to make an announcement within a few weeks. Is the right hon. Gentleman in a position to make that announcement now? The right hon. Gentleman both during the General Election campaign and since expressed the view that the 20 ton waggon ought to be introduced. What action is he taking on the report of Sir Arthur Duckham's Committee both as regards the simplification and cheapening of transport and the provision of work? There is also the matter of steel sleepers. On the last occasion when the Lord Privy Seal gave any information on this subject it was to the effect that 13,000 tons—which he himself admitted was infinitesimal in relation to the possibilities—had been ordered by the railway companies. What is the position to-day?

During the Debate on the Address, the right hon. Gentleman referred, as I understood him with approval, to the project of an outer London goods railway. He said the Government were setting up a committee to consider that matter. Can he now state the composition of the committee, the stage which it has reached and whether it is yet in a position to make a definite recommendation. The right hon. Gentleman the Member for Tamworth (Sir A. Steel-Maitland) has already referred to the five 7,000 ton ships, regarding which the right hon. Gentleman on his return from Canada in November said orders were in negotiation. Only a few days ago the right hon. Gentleman told us that he had received a letter from a firm of shipbuilders in connection with these ships. Can he give us some more definite information? Is the letter from the shipbuilders with regard to one ship or two ships or all five ships? The House is entitled to information upon that subject in view of the very definite statement made by the right hon. Gentleman on 4th November.

I come now to a matter which is in rather a different category. The right hon. Gentleman, preluded by all the publicity to which he, in his high office, is entitled, went to Manchester and made a speech which was blazoned forth under headlines such as "Banks to help Industry." I wish to put some questions to the right hon. Gentleman on that matter. As far as I understand his statement on that occasion, stripped of verbiage it comes to this—that where businesses or groups of businesses put forward proposals for amalgamation or rationalisation which seem sound to those advising the City, then the City will give its co-operation in working out the details of the scheme and in finding the necessary finance.

I paraphrase the words, but I do not think I have done him any injustice in what I have said. I wish to ask the right hon. Gentleman, How does the procedure which he has indicated here differ from the attitude that the City is now and has at all times been prepared to adopt towards sound businesses—"industry on a broad and sound basis," which is the condition which the right hon. Gentleman lays down—and since when has it-been that money could not be found in the City of London for enterprises which comply with those conditions? Is there anything new in the announcement which he made, in the conditions attached to any application, in the persons or the concerns to whom application is to be made, in the manner in which or the persons by whom the finance is to be found? I ask him, in a word, What does he intend to be understood by the use of the term "the City"? I put that specific question.

It is well understood that the Bank of England is comprised within that definition, but whether it comprises the whole of that definition is a matter upon which perhaps the right hon. Gentleman will enlighten the House. It certainly does not include the joint stock banks, or perhaps I ought to qualify that statement to the extent that Mr. McKenna, in making his annual speech as Chairman of the Midland Bank, has been silent upon this matter—not unnaturally, in view of the fact that he is a member of the Committee which was appointed by the Prime Minister to inquire into banking, finance and credit. …. and to make recommendations calculated to enable these agencies to promote the development of trade and commerce and the employment of labour. I quote the terms of reference, because I should rather have expected the right hon. Gentleman to await the Report of the Committee before making any definite pronouncement as to what the banks were or were not prepared to do, or what they ought to do. I take Lloyds Bank, the annual meeting of which took place on Friday. Mr. Beaumont Pease, the chairman of that bank, referred to this matter, saying: There seems to be a certain amount of blame levelled at the banks, that they are not using their influence and power to enforce amalgamations and reconstructions, and generally to assume functions Which at present they only exercise to a limited extent. He goes on to say: We can ask ourselves how far can the banks assist; how far do their functions extend; and what is the form of influence they can usefully exert where any steps should appear to them to he desirable? He goes on further to say: My own answer to these somewhat difficult questions is definitely that it is not the function of individual banks, or even of banks as a whole, if that were a practical possibility, to initiate the reorganisation of industry, or to try to dictate the steps which should be taken in this direction. … These points should be left to the industry itself or to technical experts. He goes on to use words which I think are very material in this connection. He says: No doubt banks have an important and useful role to play in providing the necessary temporary finance"— I emphasise that word "temporary"— for the reconstituted industry, if they are satisfied that the position has been sufficiently investigated and that the reforms instituted have reasonable hopes of success. I do not think the right hon. Gentleman will obtain any further satisfaction from a speech made by Mr. Goodenough, chairman of Barclays Bank, on the 21st January. Mr. Goodenough was unambiguous in his opinion. He stated that, in his view: It lies with industry itself to reorganise itself, that not being within the province of the banks, and provision of capital is of little value unless a business is efficiently organised and controlled. He says a little later: If the difficulty is due to some relative inefficiency, it may be possible to overcome it through reorganisation. It is then that the banks can assist by helping to find the liquid capital"— I draw the attention of the House to that term "liquid capital"— that is necessary to such reorganisation when a scheme has been carefully worked out by experts. I turn to the speech made by Sir Harry Goschen, chairman of the National Provincial Bank, who said: No one, I take it, would suggest that the banks should permanently find the money required for capital expenditure, and lock up their resources in machinery and bricks and mortar. It never has been the policy of the English joint stock banks to immobilise their funds in such investments, and I trust it never will be. It does not look as if the National Provincial Bank would be included in the term "the City" referred to by the right hon. Gentleman at Manchester. Lastly, I would ask the House to bear with me while I refer to the speech made by Mr. Hugh Tennant, chairman of the Westminster Bank, at its general meeting held on the 29th January. He made an interesting suggestion in his speech, to which I would direct the attention of the right hon. Gentleman. He referred to the suggestion that: British banks should extend their activities to providing home industry with fixed as well as working capital, and should interest themselves financially in company formations, after the manner of certain Continental banking systems. He went on to say: There is one definite obstacle which prevents British banks, as at present constituted, from pursuing this line of development. Unlike Continental banks, they are mainly deposit institutions, and are not in a position to lock up in long-term industrial investments funds which are, for the most part, liable to be withdrawn practically on demand. I draw the attention of the right hon. Gentleman to these authoritative pronouncements by the chairmen of the various joint stock banks, because those pronouncements rightly carry considerable weight in the financial world. If, as is obvious, the various joint stock banks are not to foe included in the term "the City" for the purposes of the right hon. Gentleman's scheme, does it extend beyond the Bank of England, and, if so, does he include the various finance houses and issuing houses? I ask him that question because I have made certain inquiries as to how far the approaches of the right hon. Gentleman have been to the finance and issuing houses. I am not in the position in which the right hon. Gentleman apparently thought my hon. Friend the Member for North Paddington (Mr. Bracken) was the other day, when, in response to a question as to the meaning of the term "the City," he declined to give him an answer on the footing that my hon. Friend knew the answer to the question he was asking. I tell the right hon. Gentleman frankly that I do not know the answer to the question I am asking. All that I would say is that, from inquiries that I have made, it is not the answer that I should have expected it to be.

I said just now that the speech made by Mr. Tennant had introduced a useful suggestion, or the germ of a useful idea. The joint stock banks have in the past been too apt to make advances on what they call temporary loans on fixed assets, but almost before the banks have realised it in many instances these temporary loans, this temporary capital has in fact become fixed capital, because the Banks have been unable to obtain repayment. I want to ask the right hon. Gentleman whether, in the course of his investigations and negotiations, it has been suggested to the joint stock banks that, to use the phrase which the right hon. Member for Bewdley (Mr. S. Baldwin) used, they should cut away the dead wood. Unless and until the joint stock banks are prepared to cut away the dead wood, it will be extraordinarily difficult, and I believe impossible, to obtain a healthy financing of reorganised industry.

There are one or two further questions in this connection which I wish to put to the right hon. Gentleman. Previous speakers have referred to investments made by the Bank of England in the United Dominions Trust. Is that part of the scheme for financing British industry which the right hon. Gentleman has in mind, and, if so, does he not think it necessary to give any explanation to the House of what looks very much like a reversal of policy? Whether credit inflation be right or wrong—and there are, of course, differences of opinion on that matter—it is clear that the investments in the United Dominions Trust look like a. reversal of policy, for hire-purchase business involves credit inflation.

In his negotiations in the City, has it been suggested to the right hon. Gentleman that it will be impossible to obtain any assistance from the City beyond that which the City ordinarily and upon its own initiative will give to sound concerns requiring the provision of capital; has it been suggested to the right hon. Gentleman that those facilities might be increased if the Government were prepared to take, by means of the Trade Facilities Act or in some other way, the ultimate risk; and what answer has the right bon. Gentleman given to any such suggestion? I should like to know also whether, in connection with these various negotiations and investigations, the right hon. Gentleman brought to bear upon the Bank of England or any other financial institution in the City of London political pressure, or, shall I say, pressure to induce such institutions for political reasons, in reference to his schemes for reducing unemployment, to undertake financial obligations which upon their merits they would not undertake?

Finally, does the right hon. Gentleman really think that the machinery of the Rank of England, either with or without the joint stock banks, is appropriate for finding for British industry that fixed and permanent capital which is essential, or even for finding on reorganisation temporary capital, temporary in the sense that it is not fixed, although it may be for pretty long periods? Does he not rather think the time has come when we should reconsider our methods of financing, and consider the adoption of the system which has been so long and so successfully in vogue on the Continent, and in particular in Germany, and create—and this is the idea which I take from Mr. Hugh Tennant's speech—something in the nature of an industrial bank, let us say an industrial credit institution along the lines of the agricultural credit institution for which Parliament has already made itself responsible, at all events, something which will correspond in this country and fulfil here the functions which have been for generations past so admirably fulfilled by the great banks in Germany. It involves taking a new and different view of banking, and for that reason it is not suitable to be undertaken by the Bank of England or the joint stock banks. It also involves a special technique, of which our banks have little or no experience, but there are those who have the experience, and who will be available for the management of such institutions. My mood to-day is one of inquiry rather than of criticism and, therefore, I would end with this interrogation to the right hon. Gentleman: Will he take into consideration and consult with the joint stock banks, and the finance and issuing houses of the City of London, as to the creation, on a scale commensurate with the importance of its task and of its opportunities, of an industrial bank along the lines which have been so successful for so long on the continent of Europe?

The LORD PRIVY SEAL (Mr. J. H. Thomas)

I apologise to the House, and to the right hon. Gentleman who opened the Debate, for my inability to be present at the outset, but I will endeavour to answer the various questions which have been put. I will proceed at once to a series of questions put by the hon. and gallant Member for North-East Bethnal Green (Major Nathan). He drew attention in all his questions to certain statements specifically made by me at different times. He pointed out that at the latter end of last year I intimated that I hoped to receive the Report on the Channel Tunnel by Christmas. I have since stated that I did not think the Report would be out for a few weeks. The Government are in no way responsible for that Report. A Committee was appointed because of the importance of the question, and the first thing that happened when I came into office was that the Chairman of the Committee came to see me, and said that his Report would be very considerably delayed unless I was in a position to sanction expenditure that would enable the Committee to have the benefit of certain expert technical advisers. The Government agreed, sanctioned the expenditure, the technical advice was called in, and I was informed by the chairman, as I told the House in answer to a question, that he hoped his Report would be presented in the course of next month. In any case, the House must clearly understand that it would not only be improper, but would seriously prejudice the value of such an important Report, if the Government merely said to the Committee that they must have the Report by a given time, regardless of consequences. Therefore, all I have done is to say to the Committee, "Speed up; let me have the Report as soon as you can"; and immediately the Report is presented, and the Government arrive at their decision, the House will be informed.

The second point raised by the hon. and gallant Gentleman was that I referred in a speech on the problem of unemployment to the building of what I called the Lower Thames Tunnel. It is true that. I referred to the importance of it; in fact, I said that, in my judgment, there was no scheme which offered more immediate benefits to the problem of unemployment and simultaneously made a practical contribution to the solution of the traffic problem of London. We attached considerable importance to it, so much so, that we instructed Sir Henry Maybury to go to the various authorities and endeavour to get contributions from them towards the scheme, and also, if he could, get agreement to try to induce them to introduce the necessary Bill so that the matter could be facilitated. He did that, and he succeeded in getting cooperation among the authorities. The Government agreed to a very big sum of money, the whole scheme was fixed up, the Bill was introduced into the House of Commons, and on four days last week it was blocked in various parts of the House. That is the answer to that part of the question.

Sir BASIL PETO

Is the right hon. Gentleman aware that the Bill was blocked because the Port of London Authority were never consulted, and are not satisfied that it would not obstruct the access to the docks?

Mr. THOMAS

I never attempted to give any reason. I was asked a simple question as to what has become of the scheme to which I attach so much im- portance. I told the House exactly what had been done, and merely said that Parliament blocked the Bill. There may be a good or a bad reason; I do not know, and it is not for me at this stage to ascertain.

Mr. BOOTHBY

It makes a good deal of difference.

Mr. THOMAS

It is for me to answer the specific questions put by the hon. and gallant Gentleman. Be wanted an answer, and I have given it.

Mr. WARDLAW-MILNE

Is it fair for the right hon. Gentleman to make out that the House of Commons is stopping his scheme, whereas, as a matter of fact, it is a question of difference of authoritative opinion on the merits of the scheme?

Mr. THOMAS

If that be the position, no one knows better than the hon. Gentleman that the place for these differences to be hammered out is provided by this House in a Committee upstairs, and he knows perfectly well that the merits of the dispute between the Port of London Authority and the other authorities is not a subject which I can argue across the Floor. The merits of the dispute, whatever they may be, cannot be ascertained and argued until a Second Reading is given and the Bill goes upstairs.

I come to the third question, which was: What has become of the Report with regard to 20-ton wagons which was submitted by the Duckham Committee? That Report was made after an investigation into the general question of privately-owned wagons and the use of small wagons. The hon. and gallant Member will remember that the investigations show that there was considerable delay, inconvenience and loss of revenue by the present method of not pooling wagons; that there was inconvenience and loss owing to the large number of small wagons in existence; and that there would be advantages to transport, and especially to the coal industry, if the pooling of these wagons could take place. That, in essence, was the Report. It was presented to the present Government, although the Committee was formed by the late Government. We agreed to the Report in principle, and instructed Sir Arthur Duckham to consider the question how immediate application of it could be made. It is only fair for me to point out the difficulties. I believe that there are tremendous advantages in a 20-ton wagon, and anyone who knows anything about the coal trade would admit it, but 51 per cent. of the terminals in connection with the docks and railways would have to be altered before you could universally adopt the 20-ton wagon. In addition, privately-owned wagons are in so many hands, that you must adopt some scheme that will not automatically wipe out these private people, merely for the benefit of the railway companies.

Major SALMON

What is the estimated cost in this connection?

Mr. THOMAS

I think that it is within the vicinity of £20,000,000; it is some very big sum of money.

Mr. REMER

Does that include the works at the collieries?

Mr. THOMAS

There are two or three factors to be taken into consideration. There are screens so situated at the pits that they would have to be removed before a 20-ton wagon could be got into them. Then there is the difficulty about the terminals. The question of expenditure was not alone connected with the terminals, but with the shifting of the screens in order to take the wagons. It is open to public utility companies to avail themselves of the Development Act, for which Parliament gave me authority, in order to speed up the work that would be necessary, and the answer to the hon. and gallant Gentleman is that no delay is being occasioned by the Government.

6.0 p.m.

The next question was, what was my view on steel sleepers? When I first approached the problem of the railway situation and unemployment, knowing that practically the whole of the sleepers were imported, and believing, as I then believed, in spite of opinions against me, that there was no justification for using wood sleepers, and that steel sleepers could be made cheaply with some benefit to the country, I drew the attention of the railway companies to that point. I emphasised the point that not only would it be of importance to industry here, but that India, Australia, and a number of our colonies had for some years used steel sleepers. I cannot conceive of criticism coming from any quarter of the House if I can influence anybody to get something made in this country instead of importing it from abroad. My intervention was justified. The first railway to give them a real trial was the Great Western, followed by the London, Midland and Scottish Railway, then the London and North Eastern Railway and the Southern Railway. Not only are they now satisfied that steel sleepers are a practical proposition, but every one of the railway companies has budgeted this year for an extension of the mileage of track on which steel sleepers are used. Then I have been asked: "Is it true that the Government put some political pressure upon the Bank of England to compel them to change their policy?"

Major NATHAN

The question which I put to the right hon. Gentleman was this: "Have the Government, for political reasons, brought pressure to bear, in connection with their unemployment policy, to secure the financing of proposals which, apart from that pressure and upon their merits, would not have been financed?"

Mr. THOMAS

There is not very much difference. The hon. and gallant Member has only elaborated what I said very shortly. The answer I give is "No." Anyone who knows the history of this country can hardly conceive of a Labour Government bringing political pressure to bear upon the Governor of the Bank of England. What was done, as I shall endeavour to show later on, was to endeavour to get the banks and finance houses and other people to consult with the Government as to the best means by which they could render assistance in dealing with the problem.

Another question which was put had reference to the coal situation, the steel situation, and the ships that were contemplated for the Canadian trade. The position with regard to coal is as follows: In 1928 we purchased from Canada direct 51 per cent. of her raw material—wheat—including a very large proportion indirectly, which came via Boston, New York and other places for mixing purposes. Examining the figures, and looking at what Canada spent with us in return, I found that for every £1 Canada spent with us she spent £5 with the United States of America. I know there is considerable talk about patriotism and sentiment and waving the flag; but I came to the conclusion that from a purely business point of view that was not a good commercial transaction for us. I looked into the position to ascertain what particular commodities there were which we could justifiably ask Canada to take from us in return; apart from sentiment, apart from our connections, apart from all those things, what particular commodities were there as to which, regarding the transaction on a commercial basis, we could say to Canada, "Give us a fair chance."

First I examined the coal position. I found that Canada imported approximately 14,000,000 tons of coal. Of that total 12,000,000 tons could be excluded from our consideration, as being coal with which we could not hope to compete, because we could only hope to compete with coal within the Quebec and Montreal regions. I ascertained prices, and came to the conclusion that we could supply coal to Canada—better coal—at a commercial price; but this was conditional upon certain transactions to which Canada must be a party. First, we had to be sure of a return cargo, because if we had to pay the charge of carrying any commodity to Canada, and the ship was coming back in ballast, we could not hope to compete. I set myself to see whether I could ensure regular return cargoes. My simple proposition was, could I ensure a return cargo of wheat for the coal that we supplied? The Canadian National Railway and the Canadian Pacific Railway each stated that it was prepared to give a trial order for 100,000 tons, provided the price could be agreed on. Others were also giving orders.

I immediately met the Wheat Pool and said, "Let us discuss right away the possibility of a return cargo." I will come to steel in a moment. The negotiations did not make much progress in Canada, for reasons which the House will understand—because of the abnormal situation last year in regard to the wheat harvest, which confirmed the Wheat Pool in taking certain action. I am not going into the merits of the case; I am merely stating the facts. It was agreed that the conversations should be renewed. The Wheat Pool are in London now, and I have already met them, and it would not be fair for me to make any other comment than to tell the House what is the nature of the negotiations. That can be stated in a sentence. I want to ensure a return cargo so as to enable our manufacturers who are supplying steel and those who are supplying coal to have a fair chance of competing; because if there is a return cargo it will halve the cost of carrying the cargo they are sending there. That is the basis of the negotiations. So far as those on the coal side are concerned, they were so satisfied with the progress made that they informed me by letter officially that they were prepared themselves to order, and take the risk of, five ships. A firm of Sunderland shipbuilders have been asked to prepare the plans of the ships, though the order for them has not been placed. That is an indication of the confidence they have, notwithstanding the abnormal difficulties to which I have referred.

This is not a subject for banter across the Floor of the House. I put this serious point to the House, that for every 300 tons of coal we can sell to new customers employment is given to a miner, and we have provided for him and his wife and family, as well as assisting all the other people who are involved in the trade. If I can in any way increase by 500,000 tons the output of coal from this country to a new market in exchange for a commodity that we are compelled to buy, I shall be making a much better contribution towards solving the unemployment problem than by merely talking about doles or any other expenditure of that kind.

Now I will apply myself to the question of steel. I found that Canada was importing 300,000 tons of steel, much of which the steel people in Canada assured me they could buy from this country. I went carefully into the question with the steel trade, and the House will have read the statement, of their very able representative, Mr. Piggott, who gave an interview to the Press quite recently. The position is that instead of all the firms here competing with each other and getting no business. Great Britain has got one representative in Canada for the steel trade. He negotiates and does business for the country as a whole and not for any particular firm. That is the answer to the series of questions that were put. I hope I have answered all of them fairly.

I will proceed now to deal with the broad general situation. Quite frankly, if we are to be judged merely upon the figures of unemployment the figures are worse than they were 12 months ago. [HON. MEMBERS: "Hear, hear !"] It is hardly a question for "Hear, hear"; it is far too important. I will not be influenced a snap of the fingers by any speeches anybody has made from the party point of view—myself included. I am endeavouring to keep in mind that this is the most dangerous as well as the most human of all our problems, and there is no delight in mere party scoring over it. I say right away and quite frankly that whatever advantage may have been taken either by this side or anyone else, whatever it may be, "Yes, judge if you like by that standard." If you do that I have no right to complain, and I am not complaining; but I am entitled to say to the House, not so much for the benefit of those inside the House as to those outside the House, and also to those who understand our economic position, that a profound mistake is made in always magnifying a thing; and business men tell me daily that an immense amount of harm is done by conveying an impression which, after all, is a false one.

I am not at all concerned in giving a figure to illustrate what I have said. When these figures show that 1,400,000 persons are unemployed to-day, the outsider will get the impression that 1,400,000 people are perpetually looking for a job. The actual facts are that 750,000 of those persons were in work less than a month ago. Whatever may be said on this point, I repeat that I am much concerned that those people outside should understand that fact. One hon. Member has asked me, "What have you done towards reducing the number of the unemployed; what contribution have you made and how is it that the figures are going up?" I want to draw the attention of the House to the fact that all parties are responsible in this matter, and there are no exceptions to what I am going to say. Questions are put to me every week asking, "What are you doing; what is the result of your plan; when are they going to materialise?" All these questions convey the impression that unemployment is the one dominant thing about which they are thinking. Last Monday, under the altered Standing Order which I obtained from the House, I certified a large number of Bills. I came down to the House every day at 2.45 p.m., in accordance with the Standing Order, with these Bills all certified that they would deal with unemployment, the passing of which was vital before anything could be done. Even to-day, after six consecutive days of my sitting here, seven of those Bills were objected to involving an expenditure of £20,000,000, not a copper of which can be spent, and under which no benefit to employment can be given until the House of Commons has passed those Measures. That is my answer to those who ask, "What are you doing?" We are told that the Government are responsible, but I ask, is it fair either to condemn the Government or myself after the reasons which I have given? One hon. Gentleman said that the objection of the Port of London was far more important.

Sir B. PETO

It was necessary that ships with a much larger draught should have access to our docks.

Mr. THOMAS

There may be some good reasons for the objections which were taken, but what I wish to emphasise is that all these Bills deal with the question of unemployment. Some hon. Members of this House apparently believe that there is a more important reason than finding employment. One hon. Member has asked, "Why have a House of Commons at all?" I think such a question is quite unworthy. I was careful to say that there might be quite legitimate reasons, and I also stated that the objections were as numerous from this side of the House as from the other side. The only point I was making was that at least I could not be held responsible for schemes for relieving unemployment not materialising if the House of Commons took that course.

Mr. WARDLAW-MILNE

Is it quite fair to say that? If the objections, from whatever part of the House they come, are reasonable, the Government are in a position to get their Bill carried at any time by making it clear that those objections will be met.

Mr. THOMAS

The hon. Member evidently forgets that the Government have no jurisdiction in this matter, and he knows that it is the duty of the Chairman of Ways and Means to name the next day. Every day last week the Chairman named the next day, and to-day the Chairman has announced that on Wednesday night certain Bills will be taken. Even then the objections raised quite legitimately by hon. Members opposite are matters which, in the end, can only be determined upstairs.

Captain BOURNE

Is it not the case that none of these Bills can go upstairs until 12th February because petitioners, up to that date, are still able to present objections; and if the objections are dealt with now, the Bill will be quite ready to go forward in Committee at the earliest moment that the Committee can deal with them?

Mr. THOMAS

That is not so. On the contrary, a number of these Bills, as far as petitioners are concerned, are not opposed, and, as far as I know, the objections raised by the hon. Member for Barnstaple (Sir B. Peto) are objections on extraneous points, and have nothing to do with the merits of the Bills.

Captain BOURNE

Is it not a fact that the petitioners have until 12th February to present objections, and therefore it is impossible for the Lord Privy Seal to say with absolute certainty whether any of these Bills will be passed or not?

Mr. THOMAS

That seems to me to be a technicality. I am stating to the House the broad general practice, and the difficulties which present themselves to me. I have been asked why it is that as compared with 12 months ago the unemployment figures are worse. I have already said that I admit that they are worse. I will go as far as to inform the House that when the figures which will be announced either to-morrow or on Wednesday are published, it will be found that they are the worst of all the figures, because there will be an increase of 18,000 in the figures to be published. I wish to be quite frank about this matter, and I have no hesitation in saying that before the end of this month, there will probably be another 100,000 added to those figures.

Sir A. STEEL-MAITLAND

I trust that that is really due to some temporary reason, such as a trade dispute or some other reason of that kind.

Mr. THOMAS

That is what I am endeavouring to explain. The figures which will be announced to-morrow will show an increase of 18,000, and from the information at my disposal the result of the passing of the Bill which is now being considered in another place may easily put another 100,000 on the register of the unemployed. It will be 100,000 at least, and the total may be more. That does not mean that there will be more unemployed, but it means that a large number of people will be able to say, "Look at this great increase in the figures," either not knowing or forgetting the fact that the increase is due to the cause which I have already mentioned. But that is not the full answer to the hon. Gentleman's question. There is a number of causes. The figures during the past month are mainly influenced by cotton and wool. Two-thirds of the increase this week is due directly to cotton and wool. Unrest in China, difficulties in India, the fact that Japan is a more serious competitor—all of these are factors which are contributing to the position.

Although so many of those schemes that I have already sanctioned for railways, docks, harbours, roads, municipalities, totalling at this moment somewhere in the vicinity of £50,000,000 odd, cannot become operative until Parliamentary sanction is given, I do not attach importance to these schemes as being the real, effective solution for the problem of unemployment. I emphasise that for this reason. If I were dealing merely with a temporary problem, if it were for me to find some temporary work, no matter what the expenditure might be it would then be justified; but if afterwards, when the money had been spent, when the temporary work had been provided, the problem was even worse, it would have been far better not to have spent the money. I am faced with the cold hard fact that the country does not realise at this moment the serious situation of some of our industries. Surely, it is not going to be argued that we on this side are responsible for that. Surely, it is not going to be argued that all the difficulties that I have to face at the moment are due to the advent of a Labour Government seven months ago. [Interruption.] If the hon. Member—

Mr. HANNON

I apologise to the right hon. Gentleman for interrupting him, but what I wanted to say is very applicable to the point. It is that the present policy of His Majesty's Government is making the situation worse for industry every day.

Mr. THOMAS

I will endeavour to face that criticism. I presume that the hon. Gentleman admits what I have stated, namely, that this Government cannot be held responsible for the abnormal situation. I will examine a few industries which are the main cause of the unemployment problem, to see if he is right. Does anyone suggest that the cotton situation in Lancashire at this moment is something for which the Government are responsible? There you have an increase every week of 4,000, 5,000 and 6,000 on the unemployment register, and that must go on unless there is a real change in the export trade, which will never be brought about by the methods at present existing in the cotton trade, where there is over-capitalisation, where spindles are on a basis of two or two-and-a-half times more than ought to be the case, all requiring to be brought down to an economic basis, with hundreds of units all competing one against another and cutting one another's throats, with no organised selling agency and no organised buying agency, with no regard—[Interruption.] Someone says, "And no Safeguarding." It will not do for the hon. Member to go down to the cotton trade, who are dependent for their export trade on free cotton, and talk to them about Safeguarding—

Sir NAIRNE SANDEMAN

Surely, the right hon. Gentleman does not know that for the last six years I have stood on Protection and Safeguarding in the cotton trade every time, and have won each time?

Mr. THOMAS

The hon. Member may have stood on it, but are we not entitled, in view of the importance of the facts of the case, to say that at this stage we should keep away from questions of that kind? I will deal with the question of Safeguarding later, but, so far as the cotton trade is concerned, anyone who went into Lancashire and talked about Safeguarding as a protection for the cotton trade would be laughed out of court. I have indicated the situation with regard to cotton. What is happening now? There is a reluctance to face the facts. There has been a decrease in our export trade in cotton, since 1913, of over 40 per cent., and in the woollen trades of 24 per cent.; yet it is true to say that there are large numbers of people engaged in the cotton industry who still refuse to face the facts.

The object of my visit to Manchester was to try to deal with the factor that has been mentioned, namely, lack of confidence. Whatever debating points may be made in the House, it would be foolish to deny that, if there be abroad in trade and industry and commerce a lack of confidence, a feeling of pessimism spreading from one to another, it must have repercussions on trade. No one can deny that it aggravates the unemployment problem and that it adds to my difficulties every day, and I should be foolish to deny it, or to ignore the fact that I have abundant evidence of it. It would be idle to deny that, before going to Manchester, I felt that there was a lack of confidence, which if allowed to continue, would be followed by a worse unemployment situation. I deliberately went to Manchester to face that side of the question, in the first place, and, in the second place, to give to the Lancashire people at least an indication that the Governor of the Bank of England and those for whom he spoke did not take the pessimistic view that some people took. I indicated on his behalf, in the statement that I read, that the City was prepared to give assistance on certain terms. The object of that statement was, in the first place, to answer a lot of ill-informed people who were going about assuming and stating that the banks were mainly responsible for the industrial situation because they would not help.

I said at Manchester, and I repeat in the House now, that in many cases the banks had given help in the wrong direction. I stated in Manchester, and I state now, that it would have been far better for me at this moment, and for the country, if some of that assistance had never been given, because it was bolster- ing up inefficiency, because it was merely putting off the evil day, because it was preventing these people from being forced right up against the facts. The same criticism that I made under that head also applied to the question of trade facilities, and that is my answer to the hon. Gentleman. I have not introduced the trade facilities scheme because the trade facilities scheme in the past has contributed very largely to inefficiency, because it has been used to bolster up inefficient concerns, and because to-day we are suffering from a number of undertakings that were kept going, quite honestly, as it was thought at the time, by the provisions of the trade facilities scheme. Having felt that and said it, I also indicated to the Lancashire people what I indicate here and now, namely, that it did not mean that the banks would not give assistance, but it did mean that assistance would be given on certain clearly defined terms.

The question is put to me: Did I speak for the Governor alone? Were the joint stock banks consulted? Were any of the issuing houses consulted, and did the issuing houses know anything about it? According to the hon. Gentleman, from his inquiries they knew nothing about it. I will answer those questions right away. It is very difficult merely to state across the Floor of the House the names of concerns that are called upon to advance money. It is yet more undesirable to answer in this House, and I shall not do it, as to any particular concern that avails itself of that opportunity, because you cannot expect, and you will not get, business men merely to advertise their difficulties. My answer, shortly, is this: The only one that I did not see was Mr. McKenna, but the other four gentlemen quoted by the hon. Gentleman I saw personally, and I have no reason to say other than that they agreed with my policy. So far as the issuing houses are concerned, there is no issuing house in the City of London that is not associated with the statement that I make. All of them, so far as my knowledge goes, I have met collectively.

I daresay the hon. Member for the City of London will have a word to say later in this Debate, but I ask to be excused from going into details on this matter, and for this reason. There is not a day, and there has not been for the last month, on which I have not been engaged in discussing, not only what works or schemes for employment I would sanction, but what works may be closed down, in the case of what works receivers have been put in, or what works are in such difficulties that financial arrangements must be made. I ask the House to believe that, as those who have been in close touch with the matter know, this has been the most difficult and delicate part of my problem in dealing with unemployment during the past few months. Before passing from the cotton industry, I should like to pay them this tribute, that, whatever may have been the differences in the cotton trade in the past, the representatives of the trade unions as well as of the employers met me jointly, and discussed frankly and fully the question of rationalisation and all that it involved, and the trade unions were as frank and as ready to meet the situation as were the employers. That, to me, was the most hopeful sign of my visit to Lancashire.

Turning for a moment to the steel trade, the same problem in another form, the House will have heard the answer to a question to-day as to the closing down of Penistone, where 1,300 people are involved. They have seen in the Press the closing down of the Ebbw Vale Works, and there are many more in the same position. Again it is the same story. There are plants that can hold their own, but there are a large number of plants that cannot hope to compete, and they realise it. Rationalisation and amalgamations are taking place, but it is no good assuming that amalgamating two concerns, or even four, is really solving the problem. Therefore, I am up against the fact that in coal, in steel, in cotton, there will inevitably be more people dismissed before we can hope even to put the trade on a sound basis.

It is hard for me to have to admit those facts, but it is far better for the country to know them, because whatever the temporary situation may be, ultimately it will be to the good of the country as a whole. It all demonstrates that merely shouting for tariffs will not cure inefficiency. Mere shouting for Protection will not put these concerns in a position to compete with their rivals as they ought. [HON. MEMBERS: "It will help!"] At all events, there ought to be common agreement that if there is inefficiency, if there is lack of organisation, if there is something lacking, it is our duty to face the consequences of it. If there is not, let us apply any other remedy that is a good one, but do not let us look for a wrong remedy before we ascertain the cause. I am facing the facts and I am not pessimistic, because I believe this reorganisation in the end will be good. The chemical industry is the best illustration I know of rationalisation. I am informed that 9,000 people were dismissed as the first result of that rationalising scheme. The whole of them were absorbed, and within 15 months twice that number were engaged in the industry. [HON. MEMBERS: "Protected !"] Unprotected. [HON. MEMBERS: "What about dyes?"] Is it not as well that hon. Members should at least face one side of the problem? If they believe the only solution is tariffs, surely it is not for them to quarrel with a policy which says, First let us be efficient. You have no right to look for a remedy unless you are satisfied that you cannot do without the remedy. I am only pointing out that, from the standpoint of my own position as Minister, it is unpleasant to have to face these facts, but I am facing them because I believe ultimately it will succeed.

My concluding illustration is the motor industry. Here, I believe, there is a greater field for employment than in any other industry that I know. Here again it is no good merely shouting for tariffs. Out of 6,500,000 cars produced in 1928 this country, with 27 different concerns, produced 211,000. Our own Dominions, including Canada, took three times our output, and 85 per cent. of it from the United States. This industry gives real scope for finding employment, and surely it is my duty to say to it, "You have too many units competing one against the other. Get together like the other people did and then you can hope to capture the trade."

I have endeavoured to answer the questions that have been put. I knew, when I undertook it, that my task was not an easy or a pleasant one. I knew I should be subject to all manner of criticism. I do not complain. The House has been very fair. I have disregarded, and will disregard, the mere spending of money because it is spending money as a solution. I turned it down. I will not hesitate to spend money if it will add in the end to the efficiency of the country. All the time I base myself and the Government upon a long-term policy of efficiency, of placing our industries in a better position, of recognition of the fact that we have not got to be handicapped and we have to give what encouragement we can to our industry and keep clearly in mind that a nation that is compelled every year to buy £800,000,000 of raw material and foodstuffs can only meet the situation by its export trade being in a strong, sound, and healthy position.

Sir H. SAMUEL

When I last had the privilege of addressing the House, I was able to express to the Government a very cordial measure of agreement and support. I only wish I were able to do the same to-day. We should all most earnestly desire to be able to speak in words of congratulation to the right hon. Gentleman, and it is with regret that we find that the results that have so far attended his efforts do not justify expressions of that character. We should be glad if we could congratulate him on a successful issue of his efforts, not only on account of their great national importance, but also because there is in every quarter of the House an exceptional measure of good will towards him personally. We should not only welcome his success for the country's sake, but we should also applaud it for his own. The Motion before the House has relation to his own salary. No one here would suggest that there should be a reduction. Indeed, if it were in order for a private Member to do so, we might suggest a form of increase, and it would be advantageous to the State if we could hand over to him a modest commission per head on all the unemployed for whom he would be able to find occupation. I am afraid at present that would be a minus quantity, and as the scheme would necessarily have to work both ways, the right hon. Gentleman would find himself heavily indebted to the State.

The unemployment figures at present are at the highest point they have been at any date during the last seven years, and the right hon. Gentleman has been in the unhappy position of being obliged to tell the House that this week they were being increased by another 18,000. Even yet the House and the country are not, I think, fully seized of the immensity of the burden that lies like an incubus upon the country. I put down a question a few days ago, asking the Minister of Labour what was the total population now dependent upon the community at large for its maintenance, and it appeared that the number of dependants of those who are unemployed is more than equal to the number of those who are in direct receipt themselves of assistance. There is at present a population of more than 3,000,000 who are now, owing to unemployment, dependent upon the community at large and are being maintained upon the Insurance Fund, or from State subventions to that fund, or from the Poor Law. It is true that they are not the same people continuously unemployed, and, from the human point of view, that is a source of satisfaction. But the economic burden upon the nation is the same—a population of 3,000,000 month after month and year after year. It is as though all the people of Birmingham, Liverpool, Manchester, Leeds, and Bradford were stopped from working and had to be maintained by the rest of the country. It is a terrible handicap upon any nation in the world-wide competition for trade, and in the international rivalry for industrial prosperity.

7.0 p.m.

That is the economic burden; but that is not the worst feature of the case, because the human aspect of it is even more tragic—all these hundreds of thousands of homes in distress, and often in despair, owing to the unwilling idleness of their breadwinners. It is a matter of very great disappointment that when, after eight months of effort, the right hon. Gentleman comes to report to the House, he is compelled by the facts to confess that he has been able to make no impression whatever upon the magnitude of this evil. At first, the Government were fully entitled to say that they must be given time before we could see the results which had been achieved, and in the first few months the whole country was willing to wait. Even after some months of office, when the right hon. Gentleman was speaking to the annual conference of the Labour party on 1st October, the country in general was still willing to be patient. He then said: I cannot make any promise of figures at this moment but I am confident that, when February comes, the figures will be better than those of the late Government. February has come, and the figures are worse. Various schemes that have been put forward have faded completely from view. In his first speech he told the House—and we heard it with great interest—that he had in view schemes to induce the prosperous industries to open establishments in the distressed districts. We pressed the Government to say what those inducements were to be. The Chancellor of the Duchy, in one of the Debates, said that his right hon. Friend had in mind some scheme for assisting industries more or less on the lines of the rating relief of the last Government. We waited. The Lord Privy Seal was again pressed to say what these inducements were. Then he said that he had been endeavouring to induce particular industries, and one especially, to open establishments in South Wales, but had been prevented from success owing to difficulties with the local water supply. Any large scheme of statesmanship, any general inducement, seemed to have disappeared entirely from his consideration. We were told again at the outset that there were vast plans for the electrification of Liverpool Street station with connected schemes which would involve orders for the iron and steel industry—I quote again the Chancellor of the Duchy—of between £75,000,000 and £100,000,000. Where are those schemes now? We hear nothing of these proposals or of the orders for the steel industry of from £75,000,000 to £100,000,000.

We had from the Chancellor of the Duchy in the last Debate on this subject on 21st January, a remarkable statement, very candid and very honest—all honour to the hon. Gentleman—but one, to which the House and, indeed, the country must give the most close attention. It has already been quoted by my hon. Friend the Member for North-East Bethnal Green (Major Nathan) when the House was not so well attended, and I make no apology for repeating it. The hon. Gentleman said: I do not think anyone would suggest that any measures taken by the present Government are affecting the unemployment situation materially one way or the other, either beneficially or adversely."—[OFFICIAL REPORT, 21st January, 1930; col. 95, Vol. 234.] That is after eight months of office. Is that what the Labour party anticipated? Is that what their supporters looked forward to? When hon. Members opposite made election speeches to those who were going to be their constituents at the time of the last election, when the whole country was keenly interested in this question of unemployment, when they all of them, and all of us, spoke to our electors and told them what they would wish the new Parliament to do, would any of them, when they addressed great meetings in market places or town halls on the eve of the election, have ended with this peroration: "And I can assure the electors of this district that, within eight months of a Labour Government taking office, the representative of the Ministry will be able to tell the House of Commons that the measures taken by that Government are not affecting the unemployment situation materially one way or the other?"

Sir O. MOSLEY

I invite the right hon. Gentleman to quote any statement made by any Labour candidate which promised that our measures within eight months would effect much?

Sir H. SAMUEL

I am quite sure that the country was given to understand that any Labour Government would tackle this question with vigour and with efficiency, that they had plans ready to be put into operation. Certainly, we did so, and we should have been discredited if, after eight months, we had come to Parliament and said that we had made no impression upon the problem one way or the other. Certainly, the statement of the Chancellor of the Duchy is an indication of a very complete failure within this period to fulfil expectations which were undoubtedly definitely held out. What is the duty of the House of Commons in the present circumstances? Must we remain merely watching and waiting, criticising and complaining? The right hon. Gentleman who opened this Debate had very few suggestions to make. He did not then repeat the threefold policy of the late Government of which the country heard so much year after year: First, as we were told continually, that trade was just on the point of improving and that there was no need to be perturbed about the unemployment problem at all; secondly, that the late Government were carrying out vast public works and were ready to give, and did give, the figures of great public expenditure; and, thirdly, that public works were no use and that expenditure on that account would do more harm than good. We were not given to-day those contradictory statements.

Sir A. STEEL-MAITLAND

Will the right hon. Gentleman quote those statements which he says that we have made?

Sir H. SAMUEL

I have not got them now, and I do not propose to detain the House. Again and again, I have quoted them in the country during the time the right hon. Gentleman was in office. They were never disputed. The speeches of the late Prime Minister and Chancellor of the Exchequer were continually of an optimistic tone, saying that, if there were no more labour disputes, trade would undoubtedly improve, and unemployment would go down. They put it in the remarkable White Paper published immediately before the election on the authority of various Government departments that great works had been undertaken for the benefit of the unemployed and ended in the same White Paper with a declaration made on behalf of the. Treasury—a most improper proceeding in my opinion—that for reasons of finance, expenditure on public works of a large character was likely to be most mischevious. Those were the three statements made again and again, but which, in face of the House of Commons, were not made to-day. The other suggestion he made was about the policy of Safeguarding, which, of course, we cannot discuss now, but which we shall have an opportunity of discussing once more on a private Members' day this week when we shall be willing to meet the hon. Members on that question.

There is more than one aspect of the unemployment question to which the House of Commons ought to give even more attention than it has yet done. The first is this. Is there not a danger that the very measures which the country has taken to relieve the effects of unemployment, most necessary measures as they are, might not be in some degree perpetuating the causes of it? I mean our insurance schemes, which I believe to be right in principle and right in the main in their operation. Is it the case that our insurance schemes are tending to immobilise labour, to stop its fluidity, to prevent it adapting itself to the changed conditions of industry? Is it the case that workmen who would wish to find temporary employment in occupations other than their own are afraid of doing so for fear of being penalised by losing their rights to unemployment benefit in their own trade? I do not know whether it is so; I make the inquiry. Is it the case that employers, when trade is not at its best, are tempted and almost invited by our system of unemployment insurance to stop their works for a few days at a time and to throw upon the whole community the burden of maintaining their workmen meanwhile? These things appear to me to need examination. I do not assert that these are matters of great importance, or that they are of large effect upon the problem, but, for my own part as one Member of the House, and there may be others who may take the same view, I should like to be assured that we are not in some directions making a mistake in our system of dealing with unemployment and may not be to some degree aggravating the evil which we seek to cure.

Secondly, I do not feel for my own part at all convinced that the measures taken by the right hon. Gentleman for works of various character are in any degree adequate. Many of us think that we ought to be grappling with this problem on an entirely different scale, not on a scale twice as great but a scale perhaps 10 times as great. We have made our own contribution to these questions, and I should be very grateful to know whether the Lord Privy Seal and his Department have consulted experts such as Sir Henry Maybury, for example, with regard to road development. Many of us think that our road system, in spite of great improvements, is quite inadequate to the present needs of the country and in 20 years' time may be utterly inadequate to cope with the needs of the country for communications. In a score of directions with regard to our whole national equipment for industry and commerce, we are by no means convinced that the works undertaken are commensurate with the needs of the country. I do not mean relief works. I entirely disagree with the right hon. Member for Tamworth (Sir A. Steel-Maitland). We have not in view any expenditure on relief works. The works which we contemplate are all works which would be wholly justified on their own merits, economically sound, and justified for the needs of the country.

Lastly, there is the most important aspect of the question: By what means can we aid and stimulate the great staple trades of the country to expand their production and to re-absorb the workers? I agree with the right hon. Gentleman fully that there is great need for organisation and for a higher level of efficiency. I would like hint and his colleagues to proceed by whatever way is possible, both by information and by stimulus of various kinds, to encourage industry in this direction. How far has he yet proceeded with his plans of Empire development? It is largely by the development of the resources of the Empire and its markets and population that we shall get that great outlet for our exports which is the final element of the whole situation.

In all these three departments of this great problem, could not the Government enlist to a greater degree than is now the case not only the goodwill but the co-operation of Members of this House? We were told by the Prime Minister in a famous phrase on the opening day of this Parliament, that he would like to see the House of Commons become more a Council of State and regard itself less as consisting of arrayed regiments facing one another in battle. There are, I believe, in this House, now, as always, very large reserves of administrative experience, ability, and energy. There are, it is true, critics who are accustomed to depreciate "politicians." I have heard it said that the only man who ever came to the House of Commons with the right, idea was Guy Fawkes. But those who know the House more intimately take a very different view of its capacities. A few days ago General Smuts, when leaving this country, as a kind of epilogue to the wise and stimulating messages which he had been giving, used these words: I feel convinced that you are up against a hard struggle in this country, and I am of opinion that there should be far more national co-operation than is apparent at present. I saw what the people of Britain could do in 1917. The time is rapidly coming when there will have to be another great effort of co-operation, for the problems which your country has to face are greater than any single party can solve, and the interests of the nation will have to come first. Those are very wise words, and I venture very humbly to suggest to the Government that they might make a real effort to secure the co-operation, in examining all those various problems and in securing suggestions for action, of all sections of this House. Responsibility is in proportion to power, and it is for the larger parties in this House to take the initiative rather than the small group who sit upon these benches. I feel certain that, if the Government do desire a larger measure of co-operation from the House in seeking a solution of these problems, it will most readily be given, for all of us are eager to aid the Lord Privy Seal. We recognise the difficulties of his position, we appreciate the zeal which he shows, and we are only anxious to support his efforts.

Mr. E. C. GRENFELL

I venture to address the House because the Lord Privy Seal has referred to the City and to me in particular. I understand that the House for some time has been wondering what the Lord Privy Seal meant when he referred to the City, as he did at Manchester. Let me say that, as far as I understand the matter, and as far as I understand the City, he meant the City, an amorphous body, which is not political in any sense. The City sends two Members who sit on these benches, but we have always maintained when we come into this House that we are freer than any other Member to express our opinions on any subject and in favour of either side. To-day, there ought to be no sides on this question. The right hon. Gentleman the Member for Darwen (Sir H. Samuel) twitted the Lord Privy Seal and his party with not having done more for unemployment, and in my opinion it comes ill from him and his party. We do not make that accusation, because we never believed that the promises could be fulfilled in either of these cases. Having said that, let us get to work and put our house in order. I would like to refer to the speech of the Chancellor of the Exchequer, on Saturday I think it was. He said: This is still the most wonderful country in the world. There is plenty of life in the old dog yet. The only thing it lacks is more pluck. We are without those great resources of wealth which most countries have. Part of that is true and part of it is quite untrue. It is wrong to say that this country is wanting in pluck, and it is wrong to say that we are without those great resources which most countries have. Why! we are blessed far in advance of most countries, and we profited by that in the last century. I have said that I want to avoid politics, and I will do so. I want to say—and I hope that it will not offend anybody—that I apportion the blame for the present state of trade here in many directions, and that none of the causes to which I refer are responsible singly. It is not the want of pluck from which we are suffering; it is the want of confidence in ourselves, and hence a want of confidence in us on the part of other people. To a certain degree we deserve it. If you were an industrialist employing much labour you would to a certain extent be nervous of what is called the tyranny of trade unions. If you were a member of a trade union, you would perhaps be distrustful of the ability of your employers. I do not say this in any critical spirit of cither party. I think there is justification in regard to both criticisms. I would point out that in the majority of enterprises in this country, especially in the smaller ones, there are not many strikes, and there are not many lock-outs. You hear of those that exist. On the whole, there is a great spirit of amity between masters and men in this country, but there is no news published about those cases. The reason we are still keeping our end up is because of these inconspicuous trades wherein there are no differences to speak of and where no strikes or lock-outs occur. That is one feature to be remembered.

There are two other points, or at any rate one other point, making for difficulty and loss of confidence to-day. The main one is the great increase of taxation. This Government is largely responsible for promises. I do not say that the last Government were guiltless either. Until we can stop this increase of taxation, there will not be a return of confidence in this country. Light-hearted statements are sometimes made in this House, perhaps for amusement, which do infinite harm. There are sometimes, if I may say so, wild speeches made from the heights over there which do harm and which are not meant to be taken at their 100 per cent. value even by the speakers, and the same thing occurs here.

I said I was going to speak as representing the City, especially as regards what the Lord Privy Seal had said. The City consists of the representatives of many big houses, occupied with trade all over the world, and trading with their own money. I presume that what the Lord Privy Seal meant was the so-called moneyed people, the banks, the issuing houses, and essentially the big investor or small investor. The only way that those bodies can relieve trade is for the richer people, or the issuing houses, or the banks, to be so convinced that they have the cure for some particular industry which is at present in trouble, that they can temporarily help to restore it to prosperity and then make the public—and this is really what the City means—relieve the banks and the issuing houses of the burden which they have undertaken; and for that you must persuade the public that the people offering these securities have, so to speak, bettered the concern and know that it is in good order.

There have been in the past, especially in the last few years, many enterprises in sore trouble. We will not say whose fault it is. In the cotton industry, it is probably largely due to circumstances over which no one here has any control. But there are other enterprises in which I believe the prosperity of the last century made the employers careless of new inventions, made them think that we had the monopoly of prosperity, and that they did not keep pace with the times. When I say that the employers were to blame, everyone on the other side of the House will agree with me, as also, I think, will many people on this side of the House. It is extremely difficult to get rid of these employers. Very often they have vested interests which are difficult to give up. They are right on their beam ends, have ruined the business and thrown their people out of employment. It is the man to whom they owe money, the banker, who may sometimes put pressure upon them, and sometimes he is loth to do so.

The one body of financial people to whom the Lord Privy Seal referred, were, I presume, the so-called issuing houses, and he said that he had seen all of them. Those people—a small body—have no great funds of their own which they can use to advance to the many industries which at present require reorganisation. If they can advance funds, they do not propose to have their credit ruined by having their funds locked up in those industries for ever. These issuing houses and the banks have no real body of experts who can look into industries of all sorts. If they can create such a body they may do so, and, I think they will. On their behalf, all that I suggest is, that, if they do establish such a body, no one in this House must expect that when they have got a cure and a man to administer the cure, the medicine they are going to give is going to cure the body in any short time.

It is perfectly useless to twit this Government or any other Government for not restoring the heavy trades, some of the intricate trades, to their old prosperity in one year or two years, and it is quite useless for them to criticise the Lord Privy Seal and his people if they cannot do it. What we require is confidence in our own country. Many of these financial houses have financed industries in other countries, because, in their opinion, conditions were more stable, or because they saw a bigger reward. We want to disabuse these people of the idea that the quarrels between master and man or fresh taxation make the English industry an unprofitable one in which to invest their money or ask their customers to do so. I hope that we may get rid of that fear. England has not lost its pluck, but England requires some security of peace at home—I hope we are securing peace abroad—and, if we did not believe what has been said on three sides to-day, that we are going to work together for the common good, and if we were not aware of the great danger, I should not he so confident about the return of this country to happier days.

It being half-past Seven of the Clock, and there being Private Business set down by direction of the Chairman of Ways and Means, under Standing Order No. 8, further Proceeding was postponed without Question put.