FINANCIAL SITUATION.

HC Deb 08 September 1931 vol 256 cc13-135

The PRIME MINISTER (Mr. Ramsay MacDonald)

I beg to move, That this House will, upon Thursday, re-solve itself into a. Committee to consider of the Ways and Means for raising the Supply to be granted to His Majesty. Little did we think, when we bade each other good-bye on the 31st July last, that the next meeting of the House of Commons would show this revolutionary change. I propose to tell the story of the last month or two, and thereby ex- plain what has taken place; but may I say, first of all, that this is one of those extraordinary incidents which happen in politics, and which are really a test of democratic government. Every now and again, things happen which require courage to face. [Interruption.] States get into a condition when an immediate remedy is required, even when it is not a complete remedy, which is unpleasant and unpopular, and when leadership is required, not merely to follow what is easy, but to face what is difficult. Against dangers of this kind—sudden crises which may be of a vital nature to the State—democracy has not always been successful in saving itself; but there is nothing that is more heartening, there is nothing that gives one a deeper sense of justification, than the way in which, wherever democracy rules, wherever Parliamentary institutions exist from one end of the country to the other, this country and this House have braced themselves up to meet the serious crisis. The proof that it has been welcomed and heralded with great gladness is one of the best justifications for the action that has been taken.

On Saturday, the 8th August, a statement reached me that the Bank of England—[HON. MEMBERS: "A h!" alarmed at the outflow of deposits and the danger to gold reserves, was considering the possibility of a serious situation having to be met, and on the Monday I returned to London. [Interruption.] I at once got into touch with my then colleagues, with the leaders of other political parties, and with the representatives of the Bank of England. The crisis steadily approached. My view was, and it is still unmoved, that the then existing Government, in co-operation with other parties, should face that crisis. We worked hard at details. We spent days considering the May Report, examining its proposals, and generally putting figures down on the unmade, but steadily being made, scheme. I need not inform the House of the ups and downs of the succeeding days. I could not secure that arrangement, and, therefore, on Sunday, the 23rd August, the late Government resigned; and, being commissioned by His Majesty to try to form another one, I accepted his commission, and my colleagues are with me now.

What was the reason for these trying days? Between 13th July and 30th July, the Bank lost £34,000,000 in gold. Temporary credits were arranged to supplement that loss and in order to save gold. By the third week in August these were practically exhausted. The Bank was down again on gold, and a further loan was required to keep sterling, not from coming off gold but from tumbling off gold. From day to day reports, everyone almost gloomier than the other, and discussions as to how much time was still remaining, and what would be the best steps to take to save the situation went on.

Let this House be in no doubt about the situation. I wish I could afford merely to talk magnificent generalities about it. The position that those of us in responsible positions had to face was that there was something like a typhoon approaching and, unless we could avert it, it would pass over us leaving widely strewn wreckage behind. We had to face reality and act promptly and vigorously, not in relation to the party machine, but in the national interest, not in relation to high policy such as is contained in the Macmillan report, but to the immediate crisis which was impending. There was no time for fiddling while Rome was burning. The specific, and indeed the only problem was to restore waning confidence, to stop the drain, to secure the loan necessary to give us a chance to rebuild our defences.

An attempt is being made, I see, to represent the crisis as no crisis at all. I have said that it did exist. We must not be deceived, moreover, in giving-proper proportion and proper weight to, the imminence of the crisis because of' the fact that it was of long origin. When! it came, it had to he met with courage and decision. Nor must people imagine, or get away with the criticism, that what is being proposed to be done now is of the nature of a permanent cure for the whole system. The position when this is over has to be carefully and thoroughly examined and reviewed so that evils may be remedied and faults removed from it. But that is not for this moment. Criticisms of the banking system—these have to be examined. War debts and reparations—what is said about them is common ground for most people who know anything about international finance and the international situation—that this country has burdened itself by its honesty and its generosity of policy in paying debts and helping other countries. Who said that for the first time? Who is alone thinking of that now in relation to our difficulties? None of these things can be overlooked. None of these things will be overlooked when the lack of confidence recently shown in this country and which has brought us into our recent troubles has been overcome.

Let us come to close quarters with the crisis so far as this country itself is specifically concerned. We have been suffering from that world depression of trade which has meant unemployment, which has temporarily disarranged our economic affairs, and which has produced, and is producing, a Budget deficit. That is the first thing. Then, hitherto the finance of unemployment, met by ever increasing Treasury expenditure and borrowing which seemed limitless, has had to be met by borrowing and increasing indebtedness. Then there is a third issue which must he met, and that very quickly, if we are not to get into a crisis from a different point of view altogether. The figures of our trade balance are not favourable, and we must be careful lest we are put into a position of paying for our imports by capital or by printed paper. This, again, must be dealt with without delay. There is another reason which has had a very serious effect upon our international trade. There has been an unfortunate propaganda intended, no doubt, primarily for home consumption which has had a great influence on the mind of foreign investors. There has been the steady weekly publication of unemployment figures, including people not unemployed in the literal sense of the term, which has also added to the fears. Finally, the May Report, the Committee set up by the House of Commons, meant primarily for domestic guidance and domestic consumption, became a great international document and used in the hands—I should not like to say of opponents, but certainly in the hands of a section who were not friends of this country—was a sort of last straw that broke the camel's back.

These and similar things caused the present crisis, and I emphasise—and the House cannot get away from its responsibilities in this respect—that it was pot something a few months ahead which could be arranged in terms of a large, continuing policy. It was something that was actually at our doors. Then at the same time, or at least in a parallel time, along converging lines, came the collapse of an all-important Austrian bank. Then there was the credit failure of Germany which led to the withdrawal both of foreign banks and individuals on account of the general uncertainty which spread after that failure, and we Being international bankers and the country into whose national bank vaults the deposits from scores of different States flowed, it laid us specially open. There was a general state of international uncertainty such as that. Moreover, there was another contributory cause—a very important contributory cause. Banks, and countries with greater Budget deficits than ours, had become timorous as to the possible immediate demands upon them, and they withdrew into their own vaults deposits that had been placed here for security under these conditions. This great international banking centre found itself undefended from the demands that were being made upon it.

We had no alternative whatever between either taking some steps to prevent the breaking of that cloud or standing by, talking much perhaps but very inactive, and allowing it to break upon us. The currents driving the thunder cloud may have been of far and remote origin, as undoubtedly they were, and they may have come from all quarters of the heavens, but that was not what the Government had to face. What the Government had to face was that the cloud was there and was about to break upon it and it had to accept its responsibilities either to deal with it as a tem- porary and emergency measure or stand aside and allow destruction to fall upon it.

I notice that there is a great attempt made to talk about a bankers' plot in international finance, an attempt to control political policy from the City. This is undoubtedly a serious obstacle to the great mass of the people understanding what was actually the situation. I want to say this. I will join with anybody who says that no outside authority ought to control State policy. I have said it again and again regarding finance, and I shall say it again and again as often as I see that influence in operation. Neither financiers nor any other organised interests should be allowed to control Parliament, step in behind the cloak of Cabinets and try to determine national policy.

What is in this propaganda? I have told the facts of the situation to which the Government, has to bend itself. Money is flowing out of the banks, gold being raided, and loans have to be raised. Who in their senses can say that bankers and financiers, however selfish, devise for political purposes methods to bring themselves assuredly to bankruptcy? Let me tell the process of negotiations. So far as we failed owing to our financial difficulties, it was for two main reasons. I am only dealing with this country. First of all, everybody knew that the Budget was not going to balance. Everybody knew that the gap was not going to be such a very narrow one that you could quite easily step over it. That was the first reason. The second was that the method of raising the unemployed finance was bad—[An HON, MEMBER "Why?"]—Do not go away and misunderstand me. I say that the method adopted for raising it was bad. In the eyes of the world the whole thing aroused suspicion that there was to be no end of it, and that, in face of the prospects of an increasing body of unemployed this autumn and winter, joined with the prospects of a serious deficit in the Budget, national finance would show such gaps that the whole position of this country would be so weakened that no foreign Power and no foreign lenders would feel any security.

That was the case—[Interruption.]—hon. Members can object and say what they like, but they have to face the facts. Those were the two things that had to be met. This country had shown that it was wanting a loan; those who supplied the loan were the public, and not the banks. The loan that was floated in Paris the other day was only partly a bank loan—[An HON. MEMBER "Six-and a-quarter."] That is, quite untrue. That is the sort of information that, I am sorry to say, is blazened abroad in a certain type of newspaper which really for once ought to consider national interests rather than party interests. If this country was to get a loan it had to do two things, and not one only. It had to balance its Budget. [An HON. MEMBER: "And get rid of you."]—That is a little bit of humour. It had to do, not one thing but two things. It had to balance its Budget or take steps to secure a balanced Budget, and to put its unemployment finance on a sound financial basis. When the sub-Committee of the old Cabinet met, very urgently summoned, they at once began to study the May Report in order to effect economies. They began a double process, and used the May Report. as a catalogue. My late colleagues will be familiar with that expression. The Report was used for the purpose of going down it item by item, but not with the object of accepting recommendatiions. They went down the May Report as a catalogue of economies for balancing the Budget and proof, and it was an admirable proof, of their concern for economies was very quickly given by the order issued for the 5 per cent. cut, as an emergency cut, upon the lower grade of the Civil Service.

Mr. W. J. BROWN

Shame upon the lot of you!

The PRIME MINISTER

I say "no." All my colleagues made it perfectly clear that this was rot a permanent thing.

Mr. ARTHUR HENDERSON

And nothing to do with the May Report.

The PRIME MINISTER

Nothing to do with the May Report! I said that it had to do with economies.

Mr. W. J. BROWN

I suppose that is where equality of sacrifice began.

The PRIME MINISTER

I—[Interruption.]—

Mr. SPEAKER

I hope that the Prime Minister will be allowed to make his speech and also that the leader of the Opposition will be equally allowed to make his reply.

The PRIME MINISTER

I was dealing with the 5 per cent. cut. That was not a permanent cut. The cut was due on the first of this month. In the meantime the Tomlin Commission had presented its report, and no one wished to have any more cuts as an ordinary operation in wages, on account of the sliding scale. The desire was that the 5 per cent. cut should be made as an economy cut, and the Government's position was still open to review the report of the Tomlin Commission and to come to any decision it liked upon it. It was a clear, wise, farseeing step not to cut wages, but to ask economies from a body of people which everybody contemplated would come in on the general economy cut later on.

When the schemes were finished—scheme after scheme was considered—by instructions they were communicated to the representative leaders of the other two parties. By then it was quite clear that what had to be done was to get a loan. The financial situation had worked itself out, all things had been considered carefully, out and in, backward and forward, up and down, and analysed; but it was perfectly clear that what had to be secured and what was the first goal that had to be reached, was a loan. When it was put to the representatives of the other political parties, they said to us: "Will this scheme secure the loan? If it does, we will support it. If it does not, we shall not." Again, with full consent, representatives of the Bank of England were consulted as to whether in their opinion the scheme proposed would produce the loan. Remember, we were asking for it. If our terms did not give assurance, we should not get it. [Interruption.] Nor have you ever got it under any other system.

There was nothing different between these consultations and those which precede the floating, say, of a limited liability company. People interested ask questions. They want to find out what provision is made for this, and what provision is made for that. If they feel secure, they subscribe. If they do not feel secure, they do not subscribe. That is exactly the position. It is just as if you have an overdraft. Just as a trade union does its banking business; just as a co-operative society does its banking business. I have to give my securities to the co-operative bank just in the same way that I have to give them to the private bank, and I have to give the same notice of withdrawal if I happen to have a small deposit in a cooperative society as I do if it is in an, ordinary bank. You could have put the loan on one side. You could have said, "We do not want it." Then the crisis would have broken upon you.

Mr. KIRKWOOD

What about the conscription of wealth?

The PRIME MINISTER

That would not have saved you. The crisis would have been upon you before conscription took place. I want to impress upon the House the fact that these transactions as regards the State were precisely of the same nature and conducted in precisely the same way as any loan transactions conducted in private life between companies or between individuals and banking companies. I wish to state, specifically and emphatically, and this has been reported to my colleagues before, that never in the whole process of the negotiations carried on by the Chancellor of the Exchequer and myself, with die approval of the Government, and reported to it immediately after each interview, did the banks interfere with political proposals. They simply confined themselves to giving us expert advice as to the effect of the proposals on the possible yield of the loan. [Interruption.] I hope that hon. Members before they laugh at the matter will ponder over it. Some people may say that these ways of raising money are humiliating, and those who cannot bring their minds to bear upon actual facts and who know very little about the Constitutions, may describe it as unconstitutional, but that is precisely what has happened for generations in every public, private, or State loan that has been raised in the money markets in the whole world.

4.0 p.m.

And, certainly, suppose they were as objectionable as some hon. Members think, suppose every time w e, saw a banker he said, "You must make this political change," we could not have changed the system during the day or two which were left.

In view of the far-reaching negotiations, which must be begun pretty soon as regards reparation settlements and so on, which can only be discussed, which can only be begun to be discussed when the very best of good will has been created between France, America and ourselves, I am sure that those who have experience of the conduct of foreign affairs will see to it that in this campaign against the banks nothing will be repeated like what was said the other day which was quite untrue against the magnificent helpfulness and good will shown by New York and the American bankers from beginning to end of the whole negotiations. We have been so long immune from panics of this financial character, that it is very difficult for our people to realise what they mean. Suppose that we had said that banks are bad, and that what had happened was due to a certain extent to War debts and reparations for the last 10 or 12 years and we had allowed the banking negotiations to fail, the crisis would have come.

We maintain that if instant action had not been taken as regards this specific crisis, it would have meant that sterling, as I have said, would not merely have gone off gold or at least would have been reduced—I am not making any pronouncement. At any rate, that is a reasonable matter for discussion and consideration. But that is not what would have happened the other day—the pound sterling would not have had its content of gold diminished to a certain extent by a careful management and in the course of carrying out a plan; it would have tumbled. One day it would have been 20s. and the next day 10s., and it would have tumbled without control. [Interruption.] I am not scaremongering; I am giving you some history. That happened in Berlin. What, then, would have happened? Hon. Members who are representing Labour but not more adequately than I am and than I shall be doing, have to remember what would have happened if nothing had been done to avert what was maturing over our heads. Sterling, as I say, would have gone off the gold standard without management or control. It would have tumbled. [An HON. MEMBER: "What of it"] The present state of world trade is, in all goodness, small enough and limited enough in its compass, but to that would have been added a chaos of currency, and not only would the streams have been thin and shallow, but they would have been stirred by uncertainty. The British exporter to-day would not know what he had to charge for his goods tomorrow, and the countries sending to us the necessities of our lives would have been in a still more impossible position in doing trade with us. The Government's proposed cuts may be serious, but you know what they are. The cuts that are being proposed by those who are standing by while nothing is being done to save the immediate situation are indefinite.

Mr. KIRKWOOD

Who proposes cuts?

The PRIME. MINISTER

I am going to get, according to the decrees of my late and present colleagues—for nobody will sympathise with the pay of Cabinet Ministers, and they pretend not to do so themselves—a cut of £1,000 a, year. [An HON. MEMBER: "And then you will not go out l"] I would far rather have that than stand by while the currency of the country is tumbling down head over ears, and get a cheque for £5,000 every year in those conditions. I shall be in pocket by the £1,000 cut, instead of being out of pocket by the £5,000 a year. That is what is going to happen to the wages of the working clases who are being told, to stand by nominal wages, without any guarantee that those nominal wages will buy half of what they buy now. I say the Government's proposed cuts may be serious, but cuts in circumstances such as those are far more serious, and what is worse they are uncertain. Those who disregard the immediate situation and refuse definite and tolerable cuts, throw over employed and unemployed, wage earners and rentiers alike, to the wreckage of complete collapse.

That is the alternative which the Opposition has to face. I emphasise the point. If there is a real panic, the value of money may not sink slowly and by small percentages but may wither to nothing. War pensions, old age pensions, health and insurance benefits become worth, as they became in Germany, only the price of a newspaper. In Germany and Vienna people rushed to convert their whole life-savings into some tangible article, or offered everything they had for one square meal. Everybody who knows the facts of the case knows that that is so. Even if wages, after the collapse is over, are gradually raised, it may take years to retrieve what is lost overnight during one crash. We have to import a huge proportion of our food and raw materials. Our position, therefore, is far more delicate than that of countries which at one time or another have witnessed flights from their currency. Our people would have to endure far worse evils if only for a period the complicated position of credit and exchange, on which such importations depend, were to be thrown seriously out of gear.

It is no use sitting complacently talking about considerations which have nothing to do with this crisis, and in spite of the fact that country after country in Europe has undergone it for precisely the same reasons as are beginning to show in our finance. [Interruption.] Overborrowing, over-spending ! The hon. Member knows perfectly well that in different circumstances and down different ways but from precisely the same things, the same methods, the same shortcomings, borrowing to pay debts, expenditure out of proportion to capacity, one piled on top of the other, country after country has suffered a financial collapse, and the people who suffered were not the wealthy people most of all, but the great mass of working people. People may say that this is a scare, but I challenge anyone to say where the deterioration once begun, where the tumbling once started, is to be stopped. The experience of other nations shows that it stops only at. the bottom. That I decline to face, and will continue to decline.

The country must not mistake the nature of the problem. It is not a lack of potential national resources, but a lack of immediate confidence. It is not ability to balance the Budget this year or next by drawing more from capital or by heavier borrowing, by imposing taxes on paper which are ceasing to yield any cash. The problem is that of putting our finances, as they are to-day, on a sound foundation. The system of State finance is the keystone of the fabric of the State. Those who stand by us now are assured that they are engaged in no hopeless task, but that their efforts will restore sterling to its long reputation for reliability. I appeal to the nation—[HON. MEMBERS: "Go to the country now!"] I appeal to all classes and conditions to go cheerfully with the Government over the hard and broken road along which our security, our honour and our well-being have to be found. Far better for all of us to go with tight belts into stability than with loose ones into confusion.

The burdens which we shall ask each one individually to bear will be burdens, but, in relation to the national service required, not inequitable ones. My right hon. Friend the Chancellor of the Exchequer will explain the details on Thursday. Already His Majesty has given a lead to his people by his royal example—quite unsolicited. The widow has offered her mite, the unemployed themselves have written claiming the privilege of sharing with those who are proud to contribute to the establishment of the financial stability of the nation. Our people will be proud to help, and will be jealous to see the fruit of their surrender in a restored national credit. No one can refuse without feeling in his heart the qualm of shame. This is not a selfish attack on incomes, a pernicious cutting down of expenditure, an inroad upon the standards of living; it is a ranging of all in a common contribution to uphold the credit of the nation upon which the lives and income of every citizen depends.

As for ourselves, the Government, whether our life be long or short, it has already been useful. It has been necessary. If this House meets to-day with the £ worth 20s. and unemployment relief paid in good coinage, with wages not tumbling down in value, it is because the formation of this Government gave the country a breathing space. It is a team of men belonging to all parties who believe that until this emergency is over party strife should not appear here, and I ask the House of Commons to uphold our hands in our work. Will it be long, will it be short? I do not know. One definite thing I can say is that it is our duty to remain here, and it is your duty to keep us here, until the crisis has passed; until the world is convinced once again that the sterling is unassailable, until the wages and incomes of our people are freed from the destructive influences which have been threatening them recently. When that is accomplished and you here say that nothing more can be done by such exceptional means, we shall be prepared to hand back our seals of office and begin to fade among the things which have been, but which will never be forgotten, I believe, in the history of our country.

Mr. ARTHUR HENDERSON

I hope the House will accept it from me that never on any previous occasion during the eight and twenty years that T have been a member of this House have I risen to address it with a greater feeling of embarrassment than I do to-day. No one, who knows anything about the history of the party with which I have been so long associated and who knows anything of the almost day to day collaboration between the Prime Minister and myself will expect me to have a feeling other than one of difficulty in finding myself called upon to reply to his speech. He and I have occupied the most, important offices, shall I say, of the Labour movement in the country. It has only had two secretaries in 31 years. The Prime Minister was secretary for the first 11 years, and at his request I became his successor, a position which I have held just upon 20 years. We have been in two Governments, and now I find myself in a position, which I never sought, called upon to reply to his first speech under exceptional conditions. May I say that the personal aspect of the case appeals to me very strongly. By the change that has taken place we have lost three if not four of those who have been in the very forefront of the battle, and who, especially in two cases, have been associated in the building up of the movement. [Interruption.] It is no use hon. Members interrupting me; I shall deliver my speech in my own way. The loss must be felt especially by one situated as I am. I want to say this, that whether the withdrawal of our colleagues be long or short, whether it be temporary or permanent, it is a direct loss to the labour movement.

The next point is the position of the new Government. I notice that it is described as a National Government. I hold that neither by its composition nor the manner of its formation is it entitled to call itself a national Government. We have the largest party on this side of the House, notwithstanding the bakers dozen of defections which have taken place, and how a Government can be described as a national Government which lacks the support of the party representing the largest number of Members of this House I fail to understand. So far as we here are concerned, we have decided, as our presence on these benches show, to be the Opposition so long as this Government, lasts, and, as we have been taught during the whole of the 28 years that I have been here that it is the duty of an Opposition to oppose, we will do our best in that direction. May I say that nothing I have heard to-day, nothing that those behind me have heard to-day, will induce us to change from that position.

The Prime Minister in his speech dealt with the history of the crisis. Some hon. and right hon. Members opposite seemed to get a morsel of comfort earlier on from the fact that I myself had admitted that there was a crisis. I have never denied it, and the Prime Minister himself has brought the most convincing proof that we never denied it nor refused to consider it, as I propose to show. I shall not be expected to accept as verbatim everything the Prime Minister has said in describing the story from the moment when he called the sub-committee together until the termination of the life of the last Government. He will not expect me to place the emphasis just exactly where he placed it, and I hasten to assure the House that there are substantial points of difference in the statement that he has made and the statement that I propose to make.

When we were called together what was the position placed before us? The position placed before us was that we had to bend ourselves, not to one, but to two tasks if I may put it in that way. We had to bend ourselves to find ways and means of balancing the Budget, and let me say that there was absolute agreement both in the sub-committee and in the larger gathering, the Cabinet itself, that we ought to do everything in our power to balance the Budget. But we were told that there was a second task—and this is very important. We were told that we had also to balance the Unemployment Fund on an estimate of 3,000,000 unemployed, a figure happily not yet reached, and I at, once said, speaking for myself, that while I thought it was right that we should try and balance the Budget I did not see how at one step and at the same time we should be called upon to balance the Unemployment Fund.

We set to work and we went through, not the May Report, but a, set of proposals submitted to us as the result, as we were told, of hours of consultation between the Prime Minister and the Chancellor of the Exchequer. When we saw that list, the first exception I took to it—I want this to be clearly understood—was that we were approaching the problem in the wrong way. [Interruption.] I know that hon. Members will not agree, but I am putting my standpoint. I said that we were approaching the problem at the wrong end. Instead of beginning, as we were beginning, with the question of reductions in the rates of benefit paid to the unemployed and similar reductions, I said that we should begin at the other end; and that is my position to-day. For what purpose has this party been created? To begin with those who have least or with those who have most? We are going to balance the Budget. If there is a crisis, as I have already admitted and as the Prime Minister has emphasised, surely the right way to begin is not to go to those who have least under the system of society in which we live, but to go to those who have most. That was the position that I took up, and I never departed from it. I noticed it was said that I was the leader—where the information came from I do not know—from the beginning against cuts in the dole; and I am proud of it.

Mr. ERNEST BROWN

On a point of Order. [Interruption.] Is the House to be entitled to know whether what the right hon. Gentleman says now was said in the Cabinet? If so, are we who sat on Cabinet Committees to be allowed to ask the right hon. Gentleman to agree to produce the evidence of his colleagues before the all-party Unemployment Committee?

Mr. HENDERSON

If the hon. Member had done me the honour of following me, he would have seen that I was dealing with a sub-committee.

Mr. BROWN

I am much obliged to the right hon. Gentleman. I had the honour also of being a member of a Cabinet sub-committee. I would ask him—[Interruption.] The right hon. Gentleman has given way. I would ask him, since he is telling the House now, on this question, what he said in a subcommittee of the Cabinet, will he agree, on behalf of his colleagues who sat on the sub-committee, to produce the whole of the evidence and all the documents concerning what were their views on unemployment insurance in the autumn of last year?

Mr. HENDERSON

The hon. Member for Leith (Mr. E. Brown) must be well aware that the appeal he has addressed to me ought to be addressed to the present Prime Minister. I have no control over Cabinet sub-committees' minutes or papers. Therefore, his interruption was altogether uncalled for. The next point to which I want to refer is a point of very great importance in the history of the proceedings. The Prime Minister did not refer in any way to the fact that on more than one occasion I thought the position, the crisis as we call it, had become so serious that I wanted the members of the party which had made it possible for the Prime Minister to occupy the position to be called together in order that the situation might be reported to them. We have this remarkable position to-day, that we have the Prime Minister at the head of another Government, and that never once did he look into the faces of those who had made it possible for him to be Prime Minister. I venture to say that that is absolutely without precedent in the whole history of Parliament.

The next point to which I want to refer is this: The Prime Minister made a good deal about seeking the co-operation of other parties, and he said that his colleagues were in favour of that course being followed. I must say that we were all agreed that that course should be followed. In fact, I hold the view, and have held the view for some weeks, because I think I could call to the mind of the Prime Minister certain things that occurred even beyond the date of two months that he referred to, that showed that the financial situation was then becoming critical. Therefore, I am not taking exception to the fact that we have to-day what is called a National Government, but what I prefer to call a new Government. What I do take exception to is the manner of its formation, what led immediately to the formation of the Government. I hope I shall be able to show to the House that we have a very strong case indeed on that point.

This situation is not of our making. When I say "our" I mean the old Government. I want to emphasise that point. The financial situation that has been so fully described by the Prime Minister is not of our creation. There has been, during the last two or three weeks, in fact during the last two or three months, not only a propaganda arising out of the May Report, to which the Prime Minister referred, but I believe and hold very strongly that that propaganda, national and international, did more to make the crisis. But that is not the only propaganda we have had during the last two or three weeks or months on the critical financial situation. Oh, no, very far from it. We have had one ex-Minister after another of the Conservative party endeavouring to make it clear to the mind of the public that this situation, which had to be dealt with in this exceptional way, was the result of a spendthrift Socialist Government—[Hon. MEMBERS: "Hear, hear"j I am delighted to have such corroboration of that statement. But I am not going to, content myself with cheers. These statements have been made, and thought I would look up the position and see exactly where we stood, and see whether, after all, we had been the spendthrift Government that some of these Conservative speakers and Conservative newspapers had been throwing about so strongly.

I am sure that the right hon. Gentleman the Member for Epping (Mr. Churchill) will be interested. I am going to bring to the notioe of the House part of his recent history, because I am trying to make the point that we are not solely responsible for the position that we have to-day. Let me read from a newspaper which has given very substantial support to the present Government. I refer to the "Daily Mail" This is what the "Daily Mail" said in its leading article on 28th August, 1929: Mr. Snowden's counter-attack on Tuesday against Mr. Winston Churchill's criticism of his policy as Chancellor of the Exchequer, was not only a brilliant retort to the most formidable debator on the Conservative side, but a detailed and damaging exposure of the reckless extravagance of the last Administration. In the unsuccessful attempt to bribe its way back to office the Conservative Government squandered the scanty reserves of our national exchequer. The treasury that it handed over to its successors was one of bare cupboards, plundered shelves, and empty boxes. Mark you, this is not said on the soapbox; it is said in the "Daily Mail" I will give you a little more of the "Daily Mail.": Half an hour of plain talk by the present Chancellor of the Exchequer was unfortunately enough to reveal such a state of disarray and disorder in our national affairs as completely to justify his claim that much of the financial confusion of the Socialists is inherited from their predecessors. The Conservative Government took everything that it could lay its hands on. It raided the Road Fund for 20 million pounds, it stinted the Sinking Fund of 60 million pounds, and it treated as current revenue 13 million pounds Which by right belonged to the Currency Reserve Fund. Moreover, it sheltered as far as possible from public knowledge the fact that there had been an addition to the Government's expenditure of well over 30 million pounds during its term of office in respect of Unemployment Insurance. The stratagem by which it concealed the increased liability was to treat this entirely irrecoverable amount as a loan to the Insurance Fund. No further argument, I think, is necessary to bring it home to the House that at any rate a substantial contribution to the present financial situation has been made by the previous Conservative Government. May I say, in passing—because in view of the new situation we must be equitable in the distribution of our criticisms—that I am not sure that the right hon. Member for Darwen (Sir H. Samuel) and his colleagues are entirely blameless in this matter, for if my recollection serves me well, during the past two months they have been appealing time after time for the Labour Government to spend more money, provided always that the money was spent in the direction that they dictated. That is so.

The deduction that I make from this position is that if there is a crisis, if two or three months ago there was a crisis beginning, it must have been obvious not only to the Prime Minister and to others; it must have been obvious to leaders of the other parties. If it was not obvious, I am certain that during that period the Prime Minister did his best to bring it home to the right hon. Member for Bewdley (Mr. S. Baldwin), the present Lord President of the Council. But instead of them rising to the occasion, instead of them coming and saying, "We must deal with this situation as its seriousness and its importance demand, "what do I find? I find that in a speech which, as recently as 3rd August, the right hon. Gentleman delivered in his own constituency to his annual meeting, he said: If the Government are determined to make a great effort to restore financial equilibrium at home, they will then have the support of His Majesty's Opposition. But the responsibility is the Government's. We are the Opposition and it has been a curious sign of inferiority complex that the Government are always asking us what we should do. We are not in office and for an Opposition to say what it is going to do, if it comes in, beyond an outline of general policy, is a singularly foolish action. What does that mean? It means that they were prepared sympathetically to consider proposals. It means that they were prepared to co-operate, but to cooperate without accepting any responsibility. I do not object to the Prime Minister telling us that we agreed that he and the Chancellor of the Exchequer should see the Opposition Leaders. Oh no! What we object to is the results of some of the conversations, and one of them I noticed the Prime Minister discreetly passed over, without giving any attention to it whatever. [An HON. MEMBER: "What about the conversations in Paris?"] I hear an interruption about some conversations in Paris. I have left the Foreign Office but the Foreign Office have had the good sense to give a most emphatic contradiction to any such statement, and, what is more, the Prime Minister of France himself definitely contradicted that any such conversation ever took place.[HON.MEMBERS:"Withdraw!"]

During the discussions that we had in trying to reach the position that has been described by the Prime Minister, I must tell you that there were certain serious difficulties presented to us. None of us liked, I think, a single one of the proposed cuts, but there were two that we could not accept on any account. At any rate, I speak for my own position. These were, any interference with the efficiency of the social services and any lowering of the standard of life by cuts in the unemployment benefit, and in order to make my position clear, and in view of a statement which I hear across the Floor that I had run away, I want to say this, that even in the early stages—I notice that the hon. Member for Leith is ready to jump up, and I must be careful—even in the early stages I said this: "I am going to reserve my decision until I see the complete picture." That statement, I think, cannot be challenged. [HoN. MEMBERS: "Sitting on the fence!"] What nonsense! If I may use a phrase which I once heard the Chancellor of the Exchequer use, it is grotesque and ridiculous to say that we ran away or that we sat on the fence. We sat day after day trying to get agreement—I am going to come to the point directly—and what did we find? After sitting for several days, we found this, that provisionally, £56,000,000 of economies had been accepted. £56,000,000! You will notice the words in the quotation which I have given from the right hon. Gentleman the Member for Bewdley: If the Government are determined to make a great effort to restore financial equilibrium £56,000,000 of economies provisionally accepted!

An HON. MEMBER

Did that include the teachers' cut?

Mr. SPEAKER

I previously asked hon. Members to hear the Prime Minister without interruption, and I must now make a similar request in regard to the Leader of the Opposition.

Mr. HENDERSON

£56,000,000 provisionally accepted—

The SECRETARY of STATE for the HOME DEPARTMENT (Sir Herbert Samuel)

By whom?

Mr. HENDERSON

By those who were dealing with the question.

Sir H. SAMUEL

The late Cabinet?

Mr. HENDERSON

There is the difficulty. If I reply to the right hon. Gentleman, the hon. Member for Leith will want to know why I state things about the Cabinet. That is the position, and I am trying to avoid being tripped up in that way. I have already said that my own personal position was this: "Until I see the complete picture I reserve my decision." We had reached the stage when £56,000,000 of proposed economy cuts were provisionally accepted, and we went away on the understanding, at any rate as I understood it, on the Friday night—two days before our resignation—that we would face Parliament, and as far as I was concerned, I was determined, in the meantime, to have put into operation, a statement that was made during the discussions, namely, that it would be no use going on unless we carried our own people with us.

We met next morning and what was the position? [HON. MEMBERS: "The Trades Union Congress!"] The Trades Union Congress was not in it at all. You are days out of it. Next morning we met, and what was the result? We had a report given to us, and that report said that the £56,000,000 of economy cuts were inadequate, and that there must be from £25,000,000 to £30,000,000 more, the bulk of which must come from the unemployed. Here was the position. After struggling on all those days and trying to get a measure of agreement with which we would face Parliament, having the colossal sum of—56,000,000 of economies provisionally accepted, we met next morning and were told that the Prime Minister and the Chancellor of the Exchequer had had another interview with the leaders of the other parties, and they reported to us that the cuts were not enough and that there would have to be £25,000,000 or £30,000,000 more, the bulk of which must come from the unemployed.

The PRIME MINISTER

I do not want to interrupt the right hon. Gentleman, but as he has told us that, will he tell us what was the figure presented with full authority to the leaders of the other two parties before that?

Mr. HENDERSON

I will be quite prepared to stand by the Cabinet Minute, and I think I will be shown to be correct, that prior to the night I am referring to—

Sir H. SAMUEL

I am sorry to interrupt, but I cannot allow that statement to obtain public currency. It is not the case that the leaders of either of the other parties said that there must be £25,000,000 or £30,000,000 more cuts, the bulk of which must come from the unemployed, or anything like that.

Mr. HENDERSON

I do not know how the right hon. Gentleman can say what was stated in the Cabinet. I do know this, and, Mr. Speaker, if it is necessary, I am prepared to be placed on oath. [HON. MEMBERS: "Is it necessary?"] Well, our statements are being challenged, and I am quite prepared to ask each one of my colleagues who sit on this side of the House, and I will venture to say that there is not one of them but will whole-heartedly associate himself with the statement which I have just made. But what was the remark I immediately made after the report was given on that Saturday morning—the day before we resigned, because we practically resigned on the Sunday and not on the Monday. What did I say'? I said, "Mr. Prime Minister, I have had a growing conviction that we are being asked to handle a situation that it will be quite impossible for us to carry through."[HON. MEMBERS: "Hear, hear!"] Yes, I am frank and honest about it. I said, "That conviction is stronger now than it has ever been," and I went on to say, and you can think of it what you like, "The sooner the position is ended, the better so far as I am concerned."

Why did I take up that position? Faced on that Saturday morning with a demand, because that is how it was put to us, that there should be £25,000,000 more, the bulk of which was to come from the unemployed, I visualised myself being in this position. £25,000,000 or £30,000,000, the bulk of which was to come from the unemployed. I do not know what they meant by "the bulk" I do not know where the dividing line was to come in, but I could see six shillings a week being asked from the unemployed worker who had a wife and two children and the man now drawing 30s. being asked to accept 24s. I do not mind saying that that, even in this crisis, was too much for me.

I am going to try to show you why such a demand was too much for me. After all, this is no new question to those of us who have been so long associated with the Labour movement. No one knows this better than the Prime Minister or any of his colleagues, especially the Chancellor of the Ex-chequer. If there is one question that we have made our own, rightly or wrongly, in the whole history of politics—and we have been taunted many times from these benches by the previous Opposition—if there is one subject more than another that we have made our own, it is the question of unemployment. What has been the cry from the old days of Keir Hardie, the first leader we ever had in this House, when he was making the demand for "work or maintenance"? We then took the question up, and we declared that care for the unemployed was a social duty and must be treated as a national responsibility.

That is not all. May I quote from another interesting document I have here? I say that this question was "the" question at the last General Election, as far as Labour was concerned. We have never disguised that.We have never attempted to run away from that position, and in the first sentence I am going to real from this document, which is the manifesto issued at the last General Election—and we are always being reminded that we ought to carry out our pledges—I am going to make a present to the supporters of the new Government. Some of them I know will relish it very much. The first sentence under the heading of "Maintenance" is: The Labour Party's plan for dealing with unemployment is to provide work. Hon. Members opposite did not seem to relish that as much as I thought they would. The Labour Party's plan for dealing with employment is to provide work, but pending the absorption of the unemployed into regular occupations it will take steps to relieve the present distress. It will also amend the Unemployment Insurance Act so as to afford more generous maintenance for the unemployed. 5.0 p.m.

That is not all. I have, I think, made our position clear, that this has been our question. We have stood for it all these years, and, so far as I am concerned, I hope the time will never come when this party, on this side of the House, will do other than look after the human needs of the unemployed to the extent that is possible. But we are not the only politicians who have committed themselves on this question of human consideration for the unemployed. I want to bring that out very clearly by a couple of quotations. Speaking on the 20th June at Tredegar Park, Lord Hailsham, who was dealing with the problem of unemployment, said: We have our own plans, and I believe that they are better than those of the Royal Commission "— that is the Holman-Gregory Royal Commission. Please note this: The last thing we should try to do is to reduce benefits and increase contributions, but "— and I am going to read the whole quo-tation— it is essential, if we are to maintain our financial stability, that the Unemployment Fund should be upon a proper basis. To that we agree too, provided you do it at the right time. The other quotation is interesting, because it came at a by-election, and by-elections are always very important. This was at a by-election during June also, when the official Conservative candidate, at the Gateshead election, made this statement arising out of the report of the Holman-Gregory Royal Commission: The necessity for the inquiry and the report of the Royal Commission were the direct results of the hopeless inefficiency of the Labour Government in all its attempts to cope with the economic situation. The report brought once again into prominence the fact that it was much more important that the Government should devote itself to improvement of trade and the consequent provision of more employment rather than provision for unemployment. They wanted work, not the dole. This is the point that I am coming to— At the same time, he"— that is, the Conservative candidate— had always been against any reduction in the scale of benefit. I think the House ought to realise that this question of reduction in the benefits of the unemployed is really a major issue so far as we are concerned.

The last point that I waist to make in that connection is this: During the negotiations, we invited three national committees to meet us. Two of them met in joint meeting, one of them being the General Council of the Trades Union Congress. I want to make that clear, because I believe that a number of hon. Members opposite are under a misapprehension. It is thought that the Trades Union Congress came to us to dictate to us. Nothing of the kind. We invited the Trades Union Congress and the National Executive of the Labour party to meet ns. [HON. MEMBERS: "Why I"] What took place? A statement was made by the Prime Minister, followed by the Chancellor of the Exchequer. I am only going to deal with this one point, because it bears on the subject with which I am dealing. The Chancellor of the Exchequer informed these two national committees—that was on the Thursday before we resigned—that cuts in the unemployment benefits were not part of our proposals.

Now we pass on again to the time when we were asked for the £25,000,000 or £30,000,000 more, the bulk of which had to come from the unemployed. I kept in mind that we had told these committees that cuts in the rates of unemployment benefit were not part of our proposals. What happened? I said then to my colleagues: "We told these two committees"—and I am the secretary of one, and have a certain measure of responsibility as such—"that we were not making a cut in the unemployment benefit part of our proposals. Should we not recall the committees and inform them of the new position? "—that is, the position that had been taken up on that Saturday morning. No such action was taken. Just as when I asked that the party be called together, no such action was taken. So far as I was concerned, I was quite prepared; as I said a moment ago in my opening remarks, on that Saturday morning I thought we were being expected to carry through a task that was too much for us as a minority Government and that the sooner it was ended the better.

The right hon. Gentleman the Prime Minister has given you the remainder of the story about seeing the bankers. I am not laying down any complaint about the bankers. I would not dream of doing so. I think that the banker as just like anyone else. If he has to find money for me, he ought to be in a position to lay down his conditions. If I go to America or France, there is only this difference between some of us, that I think the problem might have been approached rather differently. I think it was approached too much in a spirit of undiluted and unrelieved pessimism, and I never believed—and I say this quite honestly—

Major COLFOX

The first thing he has said honestly!

HON. MEMBERS

Withdraw!

Mr. HENDERSON

Let me say that my faith in our international relations, my faith in the good relationships, that had been brought about very largely through the action of the Prime Minister on his visit to Washington, between the United States of America and ourselves, my faith in the good relationships between France and ourselves, that I had a little to do in establishing, my belief in the interdependence of international finance, led me to this conclusion, that however threatening the situation might be, in their own interests they never dared to have allowed the things to come to pass that had been brought to our notice.

Mr. DIXEY

You would have done nothing.

Mr. HENDERSON

How can any hon. Member sit there and say that we had done nothing?

Mr. DIXEY

I said you would have done nothing.

Mr. HENDERSON

I will only say this last word in conclusion. All of us were brought to work under very great pressure. All I could do, and all I tried to do, was to bring the best judgment I could to bear upon the situation. I felt that I had a moral responsibility as well as a political responsibility, and I do not believe that what may be morally wrong is always financially right. So. I took my stand. I was quite prepared to come to the House, as I have already said, with the position as it was on the Friday night. I was not prepared, whatever happened, to be guilty, especially without going to the committees to whom we had said, "There is to be no reduction in unemployment benefit" [Interruption.] We are now told that the Chancellor of the Exchequer said nothing of the sort. May I just say that I have had the shorthand notes checked, and if the Chancellor desires it, I will to-morrow send him an extract of his own statement. What is more, there are hon. Members here and there, outside the delegation, who were there and heard the statement, and I had told my own committee, as secretary of that committee, when they were pointing out the danger of cuts in the unemployment benefit, "You remember the statement made by the Chancellor of the Exchequer, and I stand by his statement." What is more, there are hon. Members on this side who attended a committee—that is, the committee of this Parliamentary party—who in the morning had a statement made to them, and the right hon. Gentleman the late Home Secretary made the deliberate statement to them that the Chancellor of the Exchequer had made, that there were no cuts in the unemployment benefit included in our proposals.

Now I say this in conclusion: It has been a very difficult position. I deplore the fact that I have had to reply to the Prime Minister. I have stated my part of the case. I stand by the consequences. There was some suggestion made in the concluding part of the Prime Minister's speech about the sacrifice that he and his colleagues in the present Government were making. [Interruption.] Yes, he made a statement about that. If that was to suggest—I do not suppose it was—that he and those who had remained in were making all the sacrifices, I must challenge that aspect of the case.

The PRIME MINISTER

I only made the statement that I would rather have four thousand good pounds than £5,000 subject to a tumble-down.

Mr. HENDERSON

I do not wish for a moment to misrepresent my right hon. Friend, but I think he did use the phrase "I am going to submit to a cut of £1,000." That is the point to which I am referring. It has been suggested in one newspaper that I, like one of old, was getting the 30 pieces of silver.

The PRIME MINISTER

That was me.

Mr. HENDERSON

I can produce the print. I have it in my pocket, so there need be no dispute about it. [An HON. MEMBER: "The 30 pieces of silver'?"] Not the 30 pieces of silver, but the statement. To pass out of office, such an office as I held, and give up work—and no work has been dearer to my heart than the work in which I have been engaged for 2¼ years—to give that up and to come and be forced into this position, well, if there is no sacrifice there, I do'not understand what the word means; but I would rather do that than have complied with the last demand that was made upon us, and you can take it from me that if there is a new Government to-day, the point that broke the old Government was not that they were not willing to make an attempt to balance the Budget, but that they were unwilling to comply with the demand that was made to us-and we shall have much to say about that in the remaining discussions this week—in the closing hours of the lifetime of the Government, by the leaders of the political parties—at any rate, reported to us as having been made; and I say that rather than comply with that I would have preferred to go out of politics entirely. The Prime Minister appealed to the country. We appeal to that part of the country that we have tried to represent, and I hope that we will appeal on high, strong Socialist grounds. Nothing that is said by any Minister of this Government and no jeers from the other side of the House will prevent us standing true to our ideals, our principles, and our Socialist faith.

Mr. CHURCHILL

It is so many years since I have had To make a speech in this House without the support of that Box, that I feel almost entitled to demand a measure of that indulgence which the House is accustomed to give to new Members. Moreover, I must I frankly admit that I am unused to the dizzy heights of the back bench and altogether uncertain whether I have gone up or down I must also confess that during the last speech I felt at times quite shy; I felt as if I were listening to a family quarrel, to a bitter dispute which was going to break up a happy home, and I am bound to say that I do not think it ended on a very high note with those tearful measurements of the relative pecuniary losses involved in the grave constitutional cataclysm which has just taken place. The speech of the right hon. Gentleman the Leader of the Opposition was mainly formed of his complaints against his late colleagues in the Socialist Administration. They are apparently serious; they are certainly appalling; and I have no doubt that they will one day form the subject of very attentive historical investigation. But we who have crossed the Floor of the House at the call of our leaders have little or no concern with those complaints. Our part has been to come to the rescue of a Socialist Government reduced to loggerheads and impotence and to do what we can to help the country through its difficulties.

We have our own complaints against the right hon. Gentleman and the party opposite which has now adhered to his leadership, and they are very grievous complaints. There has been some historical recital of the past, and we cannot forget that the right hon. Gentleman and those who sit with him obtained Office by treating in the most unfair and merciless manner their predecessors, who were confronted also in their task with grave difficulties. We cannot forget that they made promises of the wildest character and indulged in measureless boastings. Then, as this year began to unfold, the late Government took a series of steps which greatly aggravated the crisis so far as we are concerned, and which tended to diminish public confidence. It was in January that the Chancellor of the Exchequer sent Sir Richard Hopkins to give his evidence before the Royal Commission on Unemployment Insurance in which he declared that our Budget was unbalanced. It was in February that the Chancellor made his most solemn warning statement to the House, but nothing was done. Our credit suffered the injury of the warning but our practice was in no respect amended. Matters drifted on; more expenditure was incurred; further obligations were accepted by the Treasury; and all through June there was no whisper or suggestion for dealing with the situation. The Budget which the right hon. Gentleman produced bore no trace of the alarmist declaration he had made beforehand and made no provision to restore the situation.

Then we got to July. In July the German crisis came, and it was apparent that our trade balance was adverse. Gold began to leave the country at an alarming rate. It was in July that the first rumours of the proposed formation of a National Government became rife. They then got into the newspapers. No doubt we shall hear from my right hon. Friend the Lord President of the Council a somewhat fuller account of all the important conversations which lead up to this surprising though no doubt necessary change. I mention this fact for a particular reason. If the leaders of the late Government were so clear in July that a great financial crisis was approaching that they were already considering the possible political reactions which would follow from it, why did they not take some financial precautions then? Surely there was a good opportunity then. Here was our great London money market, with all its delicacy and great value to the country and the Exchequer—one of the great assets which we possess in the world—here it was obviously in a difficult situation with the world becoming very chaotic all round it, and here were the Government seeing that a crisis was impending and even discussing matters with other parties. Why did they not take some financial precautions?

I am assured that it would have been possible to take financial precautions. Our credit at that time was such that we could easily have obtained an ample trans-Atlantic credit which we would probably never have had to use, but which by its amplitude would have made it quite clear that there would be no challenge to sterling. With our position, with our foreign investments and great industrial aptitude and capacity, what, a shame it is that we have come down to this humiliation! Nothing at all was done on the financial side. The right hon. Gentleman, who was the second or third Member of the Government, bore a great load of responsibility, and the more so because when the crisis came he and nine-tenths of the Government and his party quitted their responsibility. He objected to "ran away," so I choose the word "quitted." He quitted his responsibility and gathered all his forces together; then, declaring themselves a hostile Opposition, they set themselves in speeches and declarations to make the task of their successors as difficult as possible.

In this, the right hon. Gentleman has had an undeniable measure of success. The action which he has taken has blighted to a considerable extent the hopes which were associated with the formation of a national Government. Now that the largest party in the House is in irreconcilable opposition, it is true that the term "national Government" can no longer be properly used, but the hopes formed upon that Government have also been weakened, and I am told that adverse monetary currents are still flowing and even in some respects accentuated. With the whole Socialist party gone into Opposition resisting the policy of the Government, resisting the effort to deal with the situation, of course confidence will not return and judgment is suspended. Everyone feels that the battle is still to be fought. The right hon. Gentleman, who a fortnight ago was treated with so much consideration and honour as our Foreign Secretary, has played a recognisable part in bringing about this public misfortune. In these circumstances, the moderation and restraint which I recognised in his speech are no more than were becoming.

It is of the future rather than of the past that I wish to speak in the short time that I shall trespass upon this exceptional measure of indulgence which I am to receive from the House. The crisis is not over—neither the political nor the financial crisis. On the contrary, it is beginning and will be prolonged. The position which was taken up by the leader of the Conservative party is one of immense consequence, and we cannot at this time measure exactly how far this consequence will carry us. It certainly involves a very great sacrifice of the purely party interest for which he was responsible, but that was made in the hope of rendering an indispensable service to the country at a moment of extreme urgency. Whether that historical action was wise or unwise, only time can prove. Some may think that it would have been better to have given the not, complete assurances of support to the Socialist Administration in respect of all the economies and financial measures that they were willing to take. After all, they were prepared to commit themselves to £56,000,000 of the most unpopular economies, economies which, no doubt, they are going to try to denounce us for carrying into effect. They were committed to that £56,000,000 of economies, and I am not at all sure that if they had received full assurances of support from both the other parties they might not have got through their own difficulties themselves, without bringing this extraordinary political disturbance upon the country. However, the deed is done. It was done from high motives, disinterested motives, and we have got to make the best of it.

I must admit that my first reaction on reading—abroad, on my holidays—of the formation of this new Government was that it should stay in office for a good long time. I hoped to see this Government, a National Government as I then thought it was, including the whole three parties, deal effectually, upon an agreed basis, with the Tariff Question, and to deal with it not as a matter of party scores but as it should be dealt with, as a vital question of business and economics in which the whole country is interested. I hoped to see it deal with the Gold Standard, to see it review and examine that position, taking as its starting point the resolutions of the Genoa Conference of 1922 about the economy and the utilisation of the available stores of gold, and being guided at every stage by the evident hoarding of gold on a gigantic scale which has been proceeding ever since 1925, especially in the two countries which have benefited from reparation payments. I thought also, and hoped, that this Government might achieve the conversion which would be such a great easement to our affairs. And there were other important things. But then, in a few days, or in a day or two, we learnt that it was not a National Government at all. It soon appeared that, through no fault of its own, it could rely only upon two out of the three parties in the House. We saw the whole Socialist party cross the Floor and resolve themselves into opposition, and from that moment it seemed to me—and I would like my friends on this side to consider this with care—that a challenge was open, that a definite challenge was open to the fundamental interests of the State, and that, in the famous phrase of Mr. Gladstone, such a challenge once thrown down must he taken up and events must go forward to an issue.

Everyone can see the dangers and disadvantages of a General Election in the next few months, but the question we have to ask ourselves is whether those dangers and disadvantages will be lessened by putting it off. The late President of the Board of Trade told us very candidly, and even brazenly, how great are the benefits which he expects the Socialist party will reap from delay. They are, indeed, obvious. A fortnight ago the party opposite were held responsible throughout the world for the conduct of events, for acts of omission and commission which had reduced this rich country to its present plight; but with a few honourable exceptions they have shifted the burden, as it is vulgarly called, they have "passed the buck." That burden is now borne by His Majesty's Government, that is to say, by an administration supported by, roughly speaking, 250 Conservatives, 50 Liberals and 10 or a dozen Labour men. I am, sorry to have to recount those figures, but, after all, they constitute one of the underlying facts of the Parliamentary situation. With every day that passes the short, shifting memories of our electorate will fade. A vast, unorganised electorate will have now discontents and new disappointments, and they will assign to the Conservative party, which, after all, is the main and dominant force in this Government, an increasing measure of the weight and burden of affairs.

In six months' time it will not be the Socialist Government that will be in the dock, but the Government of the day; and those whom I shall never cease to declare have very largely brought these misfortunes upon us will once again be the airy and irresponsible critics of the administration, will once again be promising galore, will once again be boasting of all they could do if only they came back into power. I believe that, with truth, a very unpleasant truth, the right hon. Gentleman the Leader of the Opposition might say, in words with which Dr. Coué familiarised us, "Every day and in every way I shall get better and better." I hope that that also will be borne in mind. It may be said that this is only a party argument, but let us look at the national side. One of the great causes, as I have always held, that has weakened and quenched our trade and industrial activity in this recent depression has been the uncertainty which has overhung the whole political field. In the board rooms of a thousand companies men have said to one another, "No one knows when the General Election will come; no one knows how it will end. We would do much better not to embark on new enterprises and on expenditure to replenish plant until we know a, little more as to where we are." No country in the world makes its people and its business live in such a continuous condition of uncertainty as we do. In France, America and other countries the people know there will not be a General Election or a change; but we here have been for two years under the perpetual threat of a General Election, and I say that while this uncertainty continues indefinitely it will be the very greatest handicap upon the revival of our business. Moreover, we have, probably, a modest majority, and inside that majority there are strong currents. The position of the Government must be precarious if their tasks and labours are prolonged. From every point of view the business of this country will be prejudiced until we reach some finality.

Further, there are two very great questions either or both of which might expose His Majesty's Government to the greatest danger. The first is India. This Government, in my judgment—I submit it respectfully to the opinion of the House—is not in a position to make any large departure in Indian policy. It would not be fair to ask the assent of Parliament to some great surrender of its powers at a time when ordinary political activities are suspended. I hope that we shall have an assurance—I ask it amicably, but pointedly, of my right hon. Friend the Lord President, of the Council—that there is no immediate question of any substantial or new departure in Indian policy, that the exploratory work upon which the Conference is engaged will carry us on for some time to come, and that before any serious decision is taken full normal political conditions will have been restored. That is the first point; but there is another and greater question which overhangs our situation. It, is the question of Protection, the establishment of a protective tariff, and other measures connected with the control of dumped imports and with the fostering of British agriculture.

Lieut.-Commander KENWORTHY

Ask the Home Secretary!

Mr. CHURCHILL

I am of opinion that, whatever views may be held in this House, the nation is now ripe to adopt that policy. Three-quarters of the late Labour Cabinet, lifelong Free Traders, or at any rate a very large proportion, were prepared, we are told, in this crisis to adopt or approve a tariff for revenue, which, since it would have had no countervailing excise, would unquestionably be the establishment of a general protective tariff. And in what other way, I ask, can the vast sums of money which are lying idle in the banks—[HON. MEMBERS: "Oh!"]—be made available—[An HON. MEMBER: "Why go to France or America for money?"] The hon. Gentleman is forgetting that our trouble was over the exchange—[Interruption]. You might be more grateful than that when the matter is explained to you. In what other way can these great sums of money be voluntarily attracted to support British industry, and in what better way can industry and employment be increased and the cost of unemployment be reduced, unless we are to confine ourselves simply to these hard cuts in benefits?

No, Sir, it seems to me that the position of Conservative Ministers, who have so often declared in the plainest possible manner their faith and belief that a great mitigation of unemployment can only be achieved by the adoption of a system of Protection and Imperial Preference, will become almost intolerable if they continue month after month, for a very long period, confining their efforts altogether to enforcing unpopular economies, and levying new and burdensome taxes without being permitted to bring forward a constructive and remedial measure. Anyhow, I submit to the judgment of the House, and especially those sitting on this side, that there will be no revival of British industry in the circumstances to which we have come until a tariff is proclaimed. I go further and say that there will be no restoration of confidence at home or abroad until the Socialist party has been again decisively defeated at the poll. If there is a large measure of agreement upon the argument which I have ventured to put forward, then clearly the task before us is to use this precious interval, which may not be very lengthy, to endeavour to frame and formulate a national policy and programme gathering together and marshalling around that policy the greatest and strongest support from men of good will in all parties.

I am anxious that the Conservative party should co-operate in this work. I rejoiced, when I came into the House this afternoon and witnessed this great scene, to notice that indubitably the Floor was broader than the Gangway, and long may it remain so. The main cause of our exceptional misfortunes in these times of world stress has been that there has been a confusion, a paralysis of the Government instrument through the turmoil and intrigue of three parties, and one of the consequences arising out of that has been a minority Government which did not represent the strength or will-power of this powerful country, but an unexpected convulsion has achieved what no Government could have accomplished. Now we are all together. Now we see our common opponents arrayed against us, but I earnestly hope that we are not going back to the dark days which have led us to this pitch of confusion. We need a Government instrument commanding not only the support of a majority in this House, but commanding the support of the majority of people of this country. Such an instrument alone can restore that grip and focus of affairs which has enabled weaker countries than ours to recover and escape continued decline and humiliation.

I will conclude by making an appeal to the Liberal party, and I will address myself particularly to my right hon. and gallant Friend the Secretary of State for Scotland. He is a friend in form now as well as having long been a friend in fact. I do not suppose that there was any appointment to the new Government, so well chosen as many of them have been, which gave more satisfaction in all quarters of the House than the choice of my right hon. and gallant Friend for a position which is suited to his gifts and qualities, and that satisfaction was nowhere stronger than in his native land, over whose administration he now presides. I single him out not because of that fact, but particularly because he does not belong to the old, vicious, bitter, obsolete past of the fiscal controversy, but he belongs to a period in which fair and unprejudiced views may be taken. My right hon. and gallant Friend belongs to a generation which takes a fair and unprejudiced view on these matters and I appeal to him to discard pedantry and to seek a true sense of proportion, having regard to the position in which our country stands to-day. If it were possible for those who have now come together—or the best of them—to reach an agreement upon a truly national programme covering the whole field, we might speedily escape from our present welter and bring our country back to its old strength and prosperity.

I was brought up in my father's house upon such watchwords as "Trust the people" and "Never fear the British democracy," and I do not think we need fear them now. They are a great people, and they are at their best on great occasions. They rise to emergencies when there are real emergencies to face, and they know quite well that there is more freedom here than in many foreign countries. They know quite well that the rich in this country are more heavily taxed than anywhere else, and they also know that poverty and misfortune are more liberally and compassionately dealt with in this country than anywhere else, and better than they are dealt with even in great countries like the United States which were unsmitten by the War. Those people are proud of their country, and they will never forgive the men of any party who took part in allowing this country to fall behind in the march of nations which has reduced us to our present position in the world. I say to the Government and to those who are going to support them in their difficult task that we need not be afraid of the British democracy in the grim struggle which lies ahead of us. Give them a fair chance and a good plan, give them fidelity and courage, and then you may go to them in good heart.

Mr. MAXTON

I would like, in the first place, to congratulate the right hon. Gentleman the Member for Epping (Mr. Churchill) upon what he has described as his maiden effort. The House is always willing to listen to the right hon. Gentleman whenever he has a contribution to make to our Debate. Personally, I must say that I prefer the right hon. Gentleman when he is delivering back bench speeches from the Front Bench than when he is delivering Front Bench speeches from the back bench. The seat in this House which the right hon. Gentleman is now occupying is one with reasonably honourable traditions, and I hope that that bench will never let down the spirit of free speech and independence in this House.

6.0 p.m.

I gather from the speech which the right hon. Gentleman has delivered to-day that he is not throwing himself wholeheartedly behind the new National Government, and I agree with the right hon. Gentleman in his statement that the fundamental issue has still to he fought out, and the sooner it takes place the better. Something has to happen before then. The fundamental issue has still to be defined, and it is certainly not the one which has been referred to in the speech of the right hon. Gentleman the Member for Epping. The fundamental issue is certainly not the question of the gold standard, but something entirely different. The fundamental issue seems to me to be concentrated in the position which has transferred the late Labour Government into opposition, and that issue is the question of how the unemployed in this land are to be treated. That forms a mic crocosm, a nucleus and the crux of the whole question as to whether this nation is going to be run on a plan conceived in the interests of the whole lot of the people, or whether it is to be run on an individualistic basis for the benefit of the few with financial interests, who have said that they can only support Great Britain and recognise Great Britain as their country as long as it affords them a certain and sure investment for their money. The right hon. Gentleman paid a tribute to the patriotism of the British working class. I am glad that he limited his congratulations to the working class, because, if I am correctly informed, one of the precipitating causes of the existing position in Great Britain was not that American financiers did this, or that French financiers did that, or even that the Bank of England laid down certain conditions; but that members of the British wealthy classes, seeing their possessions in danger in this land, started to take steps for their flight to other countries, where they thought they would be more secure. The Noble Lady the Member for the Sutton Division of Plymouth (Viscountess Astor) shakes her head. She has personal family knowledge of these matters, which, of course, I have not, and in her case it was not necessary—

Viscountess ASTOR

I understood that it was the foreigners who were withdrawing their funds.

Mr. MAXTON

I am sorry; I know that there are certain interests that have their risks so widely distributed that they have not the same concern about immediate transferences in times of danger. That constitutes, to me, the real issue that has got to be fought out in this nation—whether this small group of financially powerful people, with no stake in the country that is not movable, with no stake that they are not prepared to move, are going to dominate national policy; whether our whole national economy is to be run in their interest, or whether it is to be run in the interests of the whole body of the people; and among the whole body of the people at this juncture, and in the state that we are now in, the unemployed man is the man who most calls for support, regard and defence.

I am not going to cast any stones at the right hon. Gentlemen who, formerly of this party, have remained in the Government. I cannot, naturally, associate myself with the congratulations that are offered to them. I am going to congratulate them on their courage, but I am going to pass very severe commentary on their intelligence. I am not thinking of it in the party political sense or in the personal sense; I am criticising them because they still believe what the large proportion of the Labour party believed when in office—that it is possible to make the capitalist system of society work. There has come from that Front Bench to-day a great call to the nation to make sacrifices. I am ready to make sacrifices for any good purpose. I am ready, to use phraseology that has been used in the Debate to-day, to tighten my belt—[Interruption.] Yes, the consequences might be disastrous—[Interruption]—but I am ready to tighten my belt with the rest of the nation. But I want to have two things explained to me—two things which I think I am entitled to be told, two things which everybody in this country who is asked to make sacrifices is entitled to be told. In the first place, for how long a period is the sacrifice to be made; and, secondly, are those who are recommending this sacrifice, or imposing this sacrifice, or asking us to make the sacrifice, satisfied in their minds that this sacrifice is going to take the nation as a whole out of its difficulties?

The view that has been expressed steadily in this House for 10 years by the group with which I am associated, and more particularly by my late friend the right hon. John Wheatley, has been that there could be no prosperity on the basis of poverty—that the only way towards prosperity is by a steadily rising standard of life on the part of the people; and we ask this Government to explain, as we on many occasions asked the late Government to explain, how, by reducing the purchasing power of the mass of the people—as all the economies that I have heard mentioned propose to do—how, on that basis, do they expect to restore prosperity and make the industries of this country move actively again? The Prime Minister waved that airily aside in his speech to-day. He says that you cannot start discussing whether the banking system wants to be changed, whether the fiscal system wants to be changed—that you cannot start discussing these things when disaster is upon you; you have got to take immediate steps to stop the disaster, to deal with the immediate crisis. I would ask hon. and right hon. Members on the other side of the House to remember that this crisis has been talked of, has been foreshadowed, all these years. It has not been innate in the situation. But each time it has been spoken about it has been pooh-poohed. It has been said, "Nonsense; British industry is coming through all right; British finance is coming through all right; we are having temporary difficulties arising out of the War, arising out of the instability of the currencies in certain European countries." Then, when that had worked itself threadbare it was the economic blizzard that had come. But it was always a temporary, passing thing. Each year, in its essence, the crisis has got worse, and we are not, in my view, in a real crisis yet.

In my view, the economies are not going to do more than postpone the real crisis for a very few weeks, and then you are going to have a real, genuine, economic collapse—not merely a flight from the pound, but a breakdown of your economic system. After you have had all the misery, all the loss, of the break-up of our financial and national life through collapse, then you will realise, and only then, after the disaster that should have been faced before, that you have come to a stage in historical development when your old capitalist system will no longer work, and you have got to establish a new system, in which the whole nation is a planned unity, both in its internal economic operations and in its relationships with other countries in the interchange of goods and services. The hon. Gentleman opposite shakes his head. I know him very well. He has been in every Parliament in which I have been—I do not know why. He shakes his head, but I want to point out—

Lord EUSTACE PERCY

I never moved my head.

Mr. MAXTON

I was not referring to the Noble Lord. I know why he is here, and so does he. I was referring to the hon. Member for Streatham (Sir W. Lane Mitchell)—a fellow-countryman of my own, but a deportee. [Interruption.] I say that you must get on to a planned and ordered system of society, with a central, national direction. You cannot economise to be at the mercy of nervous financial investors. We have been told several times in to-day's Debate, and we have been told in the newspapers of the last week, that finance is a very delicate matter. You may scarcely wink, or this delicate financial machinery will go to the Devil. Is not that a preposterous condition in which we are living? You dare not say a word, or this nervous, delicate, sensitive plant will shrink away into nothing, and you will all be left in a state of starvation. Wheat crops may be bigger than ever they were before; cotton crops may be more abundant than ever they were before; the power of bringing coal above the earth may be greater than ever before; the number of ways in which you can use it may be greater than ever before; the various alternative types of clothing may be more plentiful than ever before; but this delicate plant, the financial machine, can starve you all at a day's notice if you do not speak with bated breath and approach its high priests in awe and trembling. And the new National Government, as it has called itself, enters the House, not as the great, stalwart defender of the nation, as it describes itself, but as the miserable hireling, the kept person, of the banking interest in this country; and it enters on the clear understanding that finance and its high priests only tolerate it if it is prepared to take the milk out of the bottle of the unemployed man's baby.

Great Britain is going to live. It is going to be the great, wonderful country that was described by the right hon. Gentleman the Member for Epping. It is going to have its great future as the financial centre of the world by succumbing to the meanest, greediest, most grasping, least patriotic section of the community and by imposing sacrifices upon women and children who have known nothing but sacrifice during all their lives. We have been told that we made impossible promises to the people of the country. I plead guilty that through the length and breadth of this land I have told the common people that a better life than had ever been known before was possible for humanity. It is possible now. I only told them that because I believed it right down into the very depth of my being, and I believe it now. All the natural conditions present in the world, all the skill of hand and of brain present in the world, bounteous crops, great knowledge, wonderful skill and fine-class men and women and, I am told in the 20th century, in this year 1931, by the Prime Minister of Britain, by three Prime Ministers of Britain, one of whom carried us through the Great War, that. the message to the people of Great Britain to-day is, "Tighten your belt, starve on, you have the satisfaction of knowing that you are the saviours of the nation." Is it worth it?

Fancy the miserable calculation. You tell a man with 17s. a week that, if he watches the index figures that are issued so regularly by the Board of Trade, if he reads the Board of Trade Gazette regularly and understands it fully, he will know that in suffering a cut of 10 per cent. he is really having an, increase of 1½ per cent. I am much, happier here to-day than when I was on the other side of the House, watching old comrades and colleagues trying to make an impossible system possible. The thing that annoys me, worries me, and angers me, is that we are living in very big times. We are living in times of great opportunity, not for Britain but for the world, and we find presented to us a trivial pettifogging scheme, a miserable, miserly outlook and a meanness of attitude towards humanity. It cannot bring any good to Great Britain. It can bring no good to the working classes, and it cannot in any way help that great urge for human progress and development that is surging up in humanity's mind in every corner of the globe. Britain, which with all its advantages ought to be leading the world to progress, is to-day, under a Socialist Prime Minister, leading the world to reaction. I have heard rumours and seen indications that it is proposed by various devices to reduce Parliamentary opposition to a mere farce. I hope the Labour movement realises that Parliamentary Opposition is not its only resource. I hope the Labour movement will realise that it is rapidly approaching a revolutionary situation, and I hope it will be the duty of this Labour movement here to give the right hon. Gentleman the Member for Epping what he so much desires, a straight fight on an issue which will be clear enough even to suit him.

Sir ARTHUR STEEL-MAITLAND

With all the difference of opinion that is being expressed, there is one matter which is common ground even with the hon. Member who has just spoken and the others who have addressed the House to-day, and that is the gravity of the situation with which the nation has been and is still confronted. The reality of the present immediate crisis is not denied by anyone, nor is the fact that, if it is not surmounted by measures taken at this moment, it will affect the welfare and the prosperity of the country as a whole and of the vast body of individual citizens who compose it. Therefore, I submit that, in a crisis like this, it is the first, plain, primary duty of citizens, whether within this House or in the country, to support the Government of the day in its work unless quite overwhelming reasons are adduced to the contrary. If support is not given, it is true that the Government may fall. I agree with the hon. Member that, what- ever side you are on, the fall of the Government may be a small matter by comparison, but it would precipitate the same crisis over again with yet worse results and more difficult still to combat. Therefore, while it is quite legitimate to take particular points and criticise them, object to them if you like, at the same time, unless quite overwhelming reasons are shown to the contrary, general support ought to be given to the Government in a crisis of this kind.

I listened with great care to some of the speeches which have been made and to the speech of the late Foreign Secretary. I listened to his chief gravamen against the present state of affairs, and that was the manner of the formation of the Government. I ask any Member of the House, realising that we are faced with a crisis, to put himself back into the position of Saturday, 22nd August, in the middle of the crisis. Everyone who is conversant with the facts knows that the position with regard to the financial crisis was such that the sands were running out. It was not a matter of weeks, but a matter of days, almost a matter of hours, before the situation would have passed beyond recall. That was the position on that fateful Saturday, the day before the National Government was formed. That was the time when the late Foreign Secretary, on his own showing, remarked that the sooner the position was ended, so far as he was concerned, the better. What could he have calculated as being the result of his action? The only alternative to the course of affairs that happened would have been a general election, and, if a general election had supervened at that crisis, there would have been no hope whatever of surmounting it. Some Government had to be formed to carry on. When you put yourself back in that position and realise the urgent need for carrying and tackling the crisis, it was not a question of miserable cowardice on the part of the Prime Minister. If there was cowardice at all, it was on the part of the people who went away instead of facing this crisis and seeing it through. If there is any criticism of that sort, it does not apply to those who face the situation and who at present are gradually and with difficulty pulling the country through.

Again, we have just heard the hon. Member use the words "miserable, pettifogging scheme." No one likes these economies. In themselves they are disagreeable and unlikeable things. But let anyone put himself back at that date. I agree that, if action had been taken weeks or months beforehand, it might have been dealt with differently, but when it came as late as that fateful Saturday, when the Ministers now in Opposition left the Government, there was no other course open, except the course of the declaration of policy which was indeed taken, unless the country was to have been landed in difficulties leading to utter misery for the great bulk of the people.

At the same time—and I say it quite frankly—I wish with all my heart that the last Cabinet had been able to remain in office and deal successfully with the situation. I do so for this reason. They would then have been up against the facts. They would have had to deal with them as responsible Ministers, and if they had done so the country might have been saved from becoming divided, as it seems likely to be, on some of the fundamental principles of our industrial policy.

People generally are inclined to call this a currency or a money crisis. It is, but there is much more in the crisis than that alone. At the bottom of it all lies the weakness of our whole industrial system. If it had not been for that weakness there would have been no money crisis during the last few months. Therefore, I wish, with all the earnestness at my command, to direct the attention of the House, not only to the immediate trouble through which we are passing, but to the still greater danger that lies ahead. I agree—and here I am at one with the hon. Member for Bridgeton (Mr. Maxton)—that the industrial trouble has been staring us in the face for the last 18 months. But for it, the present trouble precipitated by the currency difficulty would never have occurred. No one likes being a prophet of woe, or playing the part of Cassandra and prophesying evil which comes about hut which is not prevented. But it was quite clearly discernable 18 months ago. Year by year the competitive power of this country has grown less as compared with other countries. Before the slump began we were being ousted by them and there was great unemployment here while they were prosperous. Since the world slump has been going on, the same decline, the same falling off with us has been continuing, and in comparison our position has been growing worse. After the slump is over, unless the position is remedied, we shall find ourselves, when other nations have regained their prosperity, with an unemployment figure of 1,500,000 or 2,000,000, and increasing.

It is no good for the hon. Member to think that you can take and re-plan all that quickly. It cannot be done. The bulk of our foreign investments, if they were mobilised, would not cure that. All the increase of spending power in the country would not cure it. I am with the hon. Member in saying that just a mere cutting of wages would not cure it either. Workers in unsheltered trades—miners, engineers, cotton operatives, have suffered too much already. I think that a tariff would help greatly. I am not going to enlarge upon that. A tariff would not by any manner of means do it all. You have to get a united nation together, and be agreed much more upon the fundamentals than is the case at present. It means union and not disunion, and not the discord which is being caused by the Ministers who have carried with them the bulk of the Labour party into opposition at the moment. That is the situation we have to face, and in those circumstances no reason whatever has been shown for withdrawing general support from this Government.

Take the question of economies. I ask any critic to view the matter in its proper perspective. Economies of this kind are a horrible job to have to carry out. I am with the hon. Member in that. But the tendency to-day is to represent those individuals who are in office at the moment as a set of hard-hearted men who are ready to cut wages severely and destroy benefits; to represent, at the same time, former Ministers as a body of humane men who are standing up against cuts or against tampering with benefits. It would be a very pretty picture if it were true, but it is far from being true. All the ex-Ministers were ready for drastic cuts. We have heard to-day that they were ready to make cuts of precisely the nature that the hon. Member for Bridgeton condemned. We heard of cuts of £55,000,000. Those were agreed upon provisionally. A further figure was stated—£66,000,000. [An HON. MEMBER: "£56,000,000."] £56,000,000 to start with, and then there was a further figure of £65,000,000 about which the late Foreign Secretary was questioned but very discreetly avoided giving an answer. Were there included in those cuts provision for any cuts in teachers' salaries? Of course there were. Were there included in them any dealing with transitional benefit? Of course there were. Were proposals included in them, or were there any proposals made by Ministers now sitting on that bench, for dealing with the length of time for which ordinary benefit was given? Would they deny it? Would they deny ever having made proposals even for touching the amount or the condition on which standard benefit is given? All these things which the hon. Member for Bridgeton condemns were in large measure agreed to—[An HON. MEMBER: "No!"]—provisionally by the Ministers who are now posing as the enemies of all cuts in wages or of touching the benefits. I ask, in those conditions, what was the difference? We have had disclosures by other Ministers, including the late Minister of Agriculture. The difference between the economies required and those they were ready to approve was one of £15,000,000, a large sum in itself, but only one-fifth of the whole. They were ready to go to 16s. in the £ provisionally. What was the proviso? [An HON.MEMBER: "Who told you?"] That is in the speech of the late Minister of Agriculture. I ask the hon. Member to read it.

Mr. MILLS

We have read it.

Sir A. STEEL-MA1TLAND

What condition was specified, if any? Was it the consent of the Trades Union Congress? What consent was it? The fact remains that whatever it was, they cannot go to the country and say that those on this side who in a crisis support econmies they do not like, but which was the only course to take, are the people who are anxious to cut wages or to cut benefits when they themselves were quite ready to do three-quarters of the whole amount.

Mr. MAXTON

There was a limit. The right hon. Gentleman knows that there was a length beyond which they were not prepared to go.

Sir A. STEEL-MAITLAND

They were ready to go up to 75 or 80 per cent. of all the things—all of which the hon. Member condemns—and when they did not do it, the hour was so late that unless the country was to be plunged into trouble far greater than these economies would have caused, they left their posts. The King's Government had to be carried on. That is the position in a crisis of this kind. None of us like economies, but we are ready to do this in order to save ourselves from what would be worse. This is the only part where I agree with the hon. Member. We have to deal with this crisis, but if we do not go further and try to get some consent to deal with the industrial crisis, we shall have weathered the storm merely to run into a hurricane later on. That is the thing to which one's hands ought to be put afterwards, but Sufficient unto the day is the evil thereof. At the moment we have to help the Government to save the country from one of the greatest disasters that could happen to it.

Mr. EDE

I am sure that every Member who is called upon in this Debate today will realise that he is speaking in probably the most important Debate that has ever taken place in this historic assembly, and that we are met to-day in circumstances which make it essential that we should endeavour to apply to this situation, while this institution still remains free and the place where men can discuss great national issues, the very acutest analysis that we can make. The right hon. Gentleman the Member for Tamworth (Sir A. Steel-Maitland) has been alluding to the position of my right hon. Friends on the Front Bench on this side of the House who were in the late Government. For many years we have heard a complaint that the Executive has gained an undue measure of control over this House. There seems to be a sort of understanding that when a few Members of a party, no matter how distinguished they may be, get together, they, of necessity pledge and bind the whole of the people who happen to be in the same party with them. I detected the note somewhat doubtfully struck in the speech of the right hon. Gentleman the Member for Epping (Mr. Churchill) who said that he had followed his leaders—he did not say who they were—on to that side of the House. I gather that if one could give a fractional vote in this Vote of Confidence, be has some confidence in them, but not very much. He hopes that they will not be so long with their present colleagues as to have those evil communications which corrupt good manners.

I had the advantage of hearing the Lord Chancellor give his account of the crisis. The phrase that I am going to quote has appeared in every newspaper in the country, and therefore I cannot be accused of divulging any confidence. He said with regard to the late Government: The May Committee's report did us in. The May Committee's report was obtained at. the Vote Office on the day on which the House rose for the Recess, the 31st July. I assumed that everyone outside His Majesty's Government was in, the same position in regard to that report. Until I went to the Vote Office I did not know, and I thought no other private Member knew what was in the report. I wish, however, to draw attention to a speech delivered by the present Minister for Mines, in his constituency, on 22nd August. I have shown this report to the hon. Member and he assures me that it is a correct report. I have tried to get into touch with him to-day to let him know that I was expecting to be called to speak, so that if he desired to comment on it he would be in a position to do so. This is what the hon. Member for Bodmin (Mr. Foot) said at Callington on 22nd August: Being a member of the ' Shadow Cabinet,' I knew what the Economy Report proposed before it was published. If the Members of the Liberal "Shadow Cabinet" knew prior to that document being in the Vote Office what was in it, there ought to be some explanation as to the way in which a document that, according to the Lord Chancellor, "did the late Government in"—it is his phrase and not mine, and I should hesitate to use it myself—got into the possession of Members of other parties. It is essential that the House should be told by the Prime Minister or the Chancellor of the Exchequer how it came about that Members of other parties were informed about that most important document, which was not available to their own supporters. I was at that time a Member of the Consultative Committee of our party and if the Liberal "Shadow Cabinet"—which has so mysteriously become substance during the Recess—had this information, why were not the Government's own sup- porters, who might be regarded as in some way a similar committee, given the information? I read the May Committee's report during the first week of my holidays, and at the end of the week so seriously perturbed was I at the implications of the report that, as a Member of the Consultative Committee of the party, I felt it my duty to write a letter to the Chairman. As the letter is brief, I hope the House will permit me to read it: My dear Barr, The Parliamentary Recess will give the Government an opportunity of considering the Economy Report, and doubtless by the time the House reassembles they will have clear ideas of the way it should he handled. I am not quite sure how far the Consultative Committee can function during a Recess, but I hope that, as chairman, you will be able to convey to the Prime Minister the grave anxiety caused among the rank and file of the party by the terms of the recommendations of the Majority Report. Any attempt to implement those recommendations must provoke the most serious crisis the party has yet faced, and I sincerely hope, therefore, that before we are committed to any course of action the Cabinet's recommendations may be submitted to the Parliamentary Party in such a form as will enable an effective discussion to take place and a clear vote to be taken on each issue that may he raised. I felt sure, after reading the Economy Report, that it was a direct challenge on every issue that it touched of everything that this party stood for. I felt that that was the capitalist reply to "Labour and the Nation" and that any attempt to implement that report by the Labour Cabinet could only result in the Labour party deserting the Cabinet that had placed it before the House. Early in this year the present Financial Secretary to the Treasury wrote an article in the "Sunday Times" It was his frequent habit before he took office.

The SECRETARY for MINES (Mr. Foot)

Your late Financial Secretary writes for the "Daily Express."

Mr. EDE

I have no objection to a man making money by writing. The hon. Member for Devonport (Mr. Hore-Belisha) writes in the Press. I am not complaining. I only mentioned the fact. In that particular article the present Financial Secretary to the Treasury said: The great success of the Conservative Opposition has been that we have managed to isolate the Government from their supporters, and there is a Cabinet with which the rank and file behind it have no communication. Little did the hon. and gallant Member think when he wrote that article that in a few short months the pincers surrounding the Government would have closed, to use a military phrase, but that most of the prisoners would have escaped, and that the hon. and gallant Member at the Treasury would be mounting guard over the principal prisoner they had managed to capture. Our party at no time could have stood for the proposals in the May Committee's Report. Something has been said about what happened on the 20th August May I read from the notes which I made after leaving Downing Street on 20th August? The Prime Minister and the Leader of the Opposition have alluded to the conversations on that date: We were received at 10, Downing Street by the Prime Minister, Henderson, Graham and Thomas. The Prime Minister had to return at once to the representatives of the other parties. Henderson said that the gulf was much wider than the £120,000,000 of the May Committee. Every expedient had been examined"— I want the House to listen to these notes, which give the impression of a man who had come straight from Penzance and walked into the committee room with no prior knowledge of what had taken place— but no final decision was reached. When the Prime Minister came in at. 11.30 he said that a new disturbance had occurred because the city was restive at the suggestion of the 'Daily Herald' about new taxation. Also I gathered that the Conservative and Liberal parties"— This is what I had put down from the statement that was made by the Prime Minister, when other Members were present in the room, and I see a distinguished chairman who, quite appropriately, sits on the Front Opposition Bench— insisted on the cost-of-living cut in unemployment benefit. Those of us who were on that committee retired to a room downstairs and held a brief consultation. I believe there were seven of us, and we came to the unanimous conclusion that if the Government attempted to meet the conditions that we were told had been placed upon them by the Conservative and Liberal parties, they might get their own votes in the Division Lobby, but it was very doubtful if they would get any other votes from our party other than the lawyers'.[Interruption.] The quotations which I have given to the House give the history of the crisis at that date in so far as it affected the rank and file of our party.

I pass now to the alleged crisis. I have asked myself many times a question which was put in heavy type in the "Sunday Express" last Sunday. "How did the crisis arise?" Lord Beaver-brook tells us. I assume that Lord Beaverbrook knows as much about it as I do. I am not going to suggest that Lord Beaverbrook in that article was saying anything that was not accurate. He said: Our financiers had been borrowing short and lending long—or, in effect, lending long because the German short money owing to us had become long money through the inability of that people to pay its debts on their due date. Our international financiers had been borrowing from the French and Americans at 2 per cent. and lending to the Germans at 8 per cent. I decline to believe that, but they are Lord Beaverbrook's figures. My agent is a Jew, and when I read this to him last Sunday, he said that such things ought not to be done between Christians: The anxiety about the position of some of our houses dealing in foreign credits resulted in demands for foreign funds beyond the capacity of the Bank of England to meet them. But the fact must not be forgotten that Great Britain has £4,000,000,000 invested abroad. The sum now due to the foreigner in the form of short-term money is not more than £200,000,000.

Mr. E. BROWN

Net.

Mr. EDE

I would prefer to take the word of the hon. Member for Leith (Mr. E. Brown), but I am merely quoting Lord Beaverbrook. I hope that the House will do me and Lord Beaverbrook the honour of listening to his final sentence: it is therefore preposterous to suggest: that Britain will fail to discharge these obligations to the foreigner. 7.0 p.m.

During the past month I have been a close reader of the Conservative Press, and I find that in the "Times" more than once—and I intend to read one or two quotations to prove it—there have been references to unemployment in America, and an intimation that the American unemployed have read and believed some of the statements made by Conservative statesmen in this country about the position of English unemployment. They were beginning to believe that the English unemployed man, without question asked, merely had to go to the Employment Exchange to be handed a substantial sum of money. They are beginning to ask the American Government to make similar provision for them. There was a very significant passage in the "Times" newspaper for the 2nd September. It was headed: Hoover Moratorium. Blight of uncertainty. From our own correspondent. New York. 1st September. and quoted the National City Bank's monthly bulletin. It said: Commenting on the state of affairs in Great Britain, the bulletin criticises the failure of British Labour to allow wages to be reduced and thus lower production costs. It says"— And I ask the House to note this sentence— that the dole has contributed to this tendency by removing the fear of unemployment which would otherwise compel men to accept low wages. Yesterday's "Times," in its leading article, sneered at the standard of living of the working classes. It said that it was only another word for extravagance. I venture to say that that quotation contains the true inner history of the crisis with which we are faced. The unemployed man, his wife and two children, getting 30s. a week, represent a standard that has to be broken, before the standard of living of the workers of the world can be broken, and this party can do no other than resist to the uttermost any such desire. I am willing, and I say it deliberately, to vote for the reduction of such a standard, when a man, his wife and two children can get no more than 30s. a week in any section of society, no matter how high.

I agree with my right hon. Friend the Leader of the Opposition, that, in these economies, the start has been made at the wrong end. I do not care, and I say it bluntly, how far right hon. Gentlemen on the Opposition Front Beach may have committed themselves; this party never would and never could have stood for the kind of thing that we have heard advocated this afternoon. I believe, with Lord Beaverbrook, that the credit of this country never was seriously in danger.I believe, with my right hon. Friend the Leader of the Opposition, that the repercussions of failure here would have been so great throughout the world, that America and France would never dare to let it happen. I see the right hon. Gentleman the President of the Board of Education on the Government Front Bench; he told his constituents on the 12th August that a National Government was not needed. He derided the National Government. But he is there to-day. I do not know how he felt during the speech of the right hon. Gentleman the Member for Epping. If Liberalism, that believes in something free and noble for existence, is to depend, as the Prime Minister told us on the 20th August, on an insistence upon bringing down the cost of living by a cut in unemployment benefit, then "Liberalism" is, for me, a word that has lost its meaning.

I stand here to-night to say, I believe on behalf of the overwhelming mass of the 'Members of this party, that we are prepared to take up the challenge that has been thrown down by the financial interests of this country. We have to determine whether the standard of life of our people is to be settled by themselves or is to be decreed by international finance. We as a people have broken great kings and military machines; we broke the greatest military machine that the world has ever seen, in March and April, 1918, through the steadfast heroism of the rank and file of the British Army, who were such fools that they did not know when they were beaten by all the rules of the game. That same spirit that carried us through then will carry us through the longer fight that we open to-night, and in which we shall settle when the decision is finally reached, that they, and not the bankers, are to determine the standard of life of this country.

The LORD PRESIDENT of the COUNCIL (Mr. Stanley Baldwin)

If I may venture to say so, I think, in the circumstances, the Ruling that you gave this House was a wise Ruling, that there should be more latitude of Debate than some of us had expected, under the terms of the Resolution which was moved by the Prime Minister, and it is only natural, following your Ruling, that we have wandered rather far and wide, into regions that will naturally come up for close and more meticulous discussion in the course of the next week or two. It has also been the case that there have been certain discrepancies of testimony, into which I will not venture to enter, and which will doubtless be further explored in Debate in the House.

Listening to the Debate to-day, I have had brought back to my mind the saying of a Scottish friend of mine which always gave me pleasure: "The longer he had been in public life, the less he was struck by the diversity of testimony than he was by the many-sidedness of truth." What truth may emerge is not for my profane hands, or for the hands of those who follow me; it rests between certain occupants of the two Front Benches. I say no more of that at this moment. I want to bring the House back, for the short time that I shall intervene in this Debate, to the crisis, towards the solution of which we are met, and to the reasons that led me to take the course that I did, reasons that caused my party to give me a unanimous vote of confidence.

We all know, and it would be acknowledged by a majority of the House, that there is a very grave financial situation. Let us leave it at that at the moment. Now naturally, in a Government, a "cooperation of individuals," as the Prime Minister called it when it was first established, there are differences of opinion as to causes and as to reasons, but that is only to be expected. I speak my own view and, I believe, the view of those who follow me, in addressing the House to-night. To us, the approach of this crisis has been visible for some time. My right hon. Friend the Member for Tam-worth (Sir A. Steel-Maitland), who made an admirable speech a short time ago—which deserved a better audience than it secured—dwelt on that point, and I shall call the attention of the House to this, and the House will remember that these points have been touched on, both in Debate and in the country. The signs that alarmed us, and made us feel that the crisis would come sooner or later, were two: an unbalanced Budget, that is to say, a Budget. that depended on borrowing for its balancing, and, secondly, the very alarming figures in the changing condition of the balance of trade.

In my view, and in the view of my hon. Friends—and here is where we differ from many hon. Members of this House—we believe that the first of these two situations can only be dealt with by a balanced Budget, balanced on the year's figures and not by borrowing. That balancing can only be attained—I say nothing about the proportions at the moment, because that point will doubtless be debated in the days to come—by economies and by taxation. I think that probably the vast majority of the House will agree with that proposition, holding themselves free for different views as to what the proportions should be between economies and taxation. In regard to the balancing of the Budget, I think there can be but little doubt that that is a matter which can be dealt with swiftly, and it has to be dealt with swiftly. I will come to that in a moment. The matter of the balance of trade is far more difficult, and it will be a much longer business for its solution. Here again in my view, and in the view of those who support me, an essential factor in achieving that rectification of that balance is a tariff. That, in brief, is our view—hon. Members on the benches opposite may say we are wrong, but, if there were wanting any proof that we regard it as a national crisis, it would be in this—as to one thing that we believe to be essential, together with economies and the balancing of the Budget, to the restoration of our credit to where it ought to stand and where it will stand again. We have, for the purpose of performing the necessary and essential work which ought to be done at once, namely, the balancing of the Budget, postponed the consideration of that, to us, vital question. That, as every politician in this House will immediately admit, is, from a party point. of view, a sacrifice. I repeat the fact of our being willing to do it. It is not merely a fad of mine, but I am supported in this by every colleague, and the fell that my verdict has been endorsed by the party shows that we realise the gravity of the situation that faces us.

One of the difficulties has been that it has been impossible to say either all that one knew, or all that one thought, about the increasing gravity of the situation. Had we done so, we might have precipitated that very panic that we were so anxious to avoid. That has been a real difficulty, and it has meant much personal restraint on the part of the individuals with special knowledge, because of those few here and there who would be pre- pared, for the sake of what they might think a party game, to take steps of which many of us would doubt the wisdom afterwards. That these difficulties were realised by the Chancellor of the Exchequer no one who heard his speech last February can have any doubt. He at least, in that peculiar position where all these mysteries are unfolded, was struck by the gravity of the then situation and was anxious, if not alarmed, at the prospect of the future.

Before the House rose for the Summer Recess the Government were getting alarmed about the position. I went down when the Recess began to make one of my rare appearances in my constituency, and I devoted some days to it. I got away for my holiday, which I hoped would be a good one, on the Saturday, but in about four days I had to come back to London. I spent a long and very busy day in London, and during that day I became convinced that the Government were facing up to the situation and were making a great effort to meet it. The co-operation of the other parties was willingly given to them for that purpose, and I indicated that, so far as our party was concerned, in any effort of that kind they could rely upon our support in the House of Commons. Two of my right hon. Friends were good enough to let me go away for a few days more while they stayed in London to investigate figures with Members of the Government. I certainly was convinced at that time that the Government could fight out this matter by themselves without breaking up the Government. I had no desire to see the Government broken up on this point. We would vastly have preferred the Government to have carried on and would have assisted them and held ourselves responsible for whatever blame might attach to any difficult or unpleasant tasks which would have devolved upon them.

The Leader of the Opposition has quoted some observations I made at Worcester. I never look at my own speeches, but I thought it was an uncommonly sensible speech. The last thing I should have thought of would have been to join a national Government. I never heard any talk at any time of a national Government not a word was said by any responsible person, though something may have appeared in the Press. A national Government reminds me of a picture, an old Leach picture in "Punch," of which I was very fond when a little boy. It is the drawing of a fox hunt in the country. A little hairdresser mounted on his hack says to the duke, "The beauty of ' unting, your Grace, is that it brings together people which would not otherwise meet." I never could have conceived circumstances in which my party would sit with others who are profoundly opposed to us on matters of principle. It is matters of principle which to my mind always make the great difficulty of a Coalition or national Government, because principles very often have to go, and in the long run that is a bad thing for the country.

But here, and mark this, there is no question of the subordination of principles. We were brought right up against it on Sunday fortnight. The hope and belief I had that the then Government would be able to deal with the crisis themselves, with the unanimous support of the House of Commons, proved to he fallacious. It is quite clear that on that Sunday evening the Government as then constituted, for reasons which will undoubtedly be discussed during our Debates of the next few days, and upon which I offer no comment or criticism at this moment, were unable to proceed with, much less accomplish, this great task. What was the situation? In our belief, and in the belief of those Members of the National Government who formerly sat with the Labour party, and in the belief of the Liberals, the crisis was upon us that night; it was a matter of hours to make a supreme effort to maintain the credit of the country, and no man to whom the appeal might be made to carry on the Government is those circumstances had any right to refuse, however difficult or disagreeable, or however impossible, the task might seem.

I must say, speaking for myself, that I admire the courage which animated the Prime Minister. Deserted by the whole of his party—it may be for very good and conscientious reasons, which I will not discuss now—it required no common courage to stand up and say, "I will form a Government to try and pull the country through this crisis." When an appeal was made to join such a Government for the purpose of balancing the Budget and carrying through the necessary economies and financial details which will be requisite to achieve that purpose, there was no alternative, and I had to say that I and my colleagues would readily give such help as they could give to the Prime Minister for the accomplishment of this task, which we are all convinced must be got through with the utmost celerity, not for the purpose of hiding what we are doing or baulking any legitimate discussion, but because it is essential to show the world not only that we are prepared to make the sacrifices which will be necessary to achieve the balancing of the Budget, but that it is actually done as a fact. Until that task is accomplished the whole of my strength and that of those who follow me will be behind the Prime Minister in the extraordinarily difficult task which lies before us.

There is no doubt that what has happened and the speeches which must of necessity be made at this time have shaken and are shaking the credit of this country, and, therefore, time is of the essence of the contract at the moment. It would be very desirable if we could have unanimity, but that I fear there cannot be. I would like to point out to the Opposition and to those they lead the great responsibility that rests upon them. I do not mean that I am appealing to them for support, but I mean the way in which they present their case. Our task by this opposition will be made a great deal more difficult, not in this House—I am not thinking of that—but in the outside world, and the world is very contracted in these days. What is said and done in every country runs right round the globe. If foreigners feel that there is a large section of the community in Great Britain at this time which does not realise the gravity of the issue or is reluctant to face the difficulties, that mere fact itself will tend to render nugatory a great deal of what we may do, and will prolong, possibly to a dangerous period, the length of time in which we hope to recover financial stability and the credit of our country in the eyes of the whole world.

In the course of the last few years, I have made a great many speeches at public meetings, and, besides dwelling on party questions of the hour, I have dwelt a great deal on the enormous responsibility which falls upon people in a democracy. I have always felt that finance is one of the acid tests of the strength and courage of democracy; an acid test because there is so much in finance which, while quite simple to those who have been brought up in it and are accustomed to it, lends itself only too facilely to misrepresentation, which often arises largely out of an incomplete apprehension. I know only too well, and I am convinced, that no disaster at the present time, or at any time, in this country could be comparable to the breaking of our international credit. It is not only the disaster to this country and what is bound up in it, but that the whole world has looked to us since the war as one of the stable elements in the world. We have done perhaps as much as any nation to help other struggling countries in times of financial difficulty to get on their feet again and any disaster to us of such a magnitude as would be possible in these circumstances would be a disaster not only to us but to the whole of humanity. I have nothing more to add. I have spoken quite as long as I intended. I wished to make the situation clear as far as my own position, and that of the party which I have the honour to lead, is concerned. We are going to see this matter through. We are going to give the Prime Minister our full and whole-hearted support to achieve the object for which this Government was created.

Sir OSWALD MOSLEY

The right hon. Gentleman who has just spoken has appealed for support for a National Government, and it, would quite clearly be the patriotic duty of every Member of this House to give support to a National Government, provided that he conscientiously believed that the measures proposed by that Government would improve rather than aggravate the situation. But the question we have to ask, when that appeal is made to us, is, whether the measures which the Government. are proposing will in fact improve the national situation. For my part, I have to say quite clearly that I believe those measures are inadequate to the situation and will not meet it, and in fact are likely to make it worse. But, in having that opinion, for my part again I would not oppose this Government with factious opposition. However wide our differences of opinion and our views as to remedies, we can at least he united in the belief that action, and speedy action, alone can, meet the situation. Therefore, whatever Government for the time being is trusted with the confidence of this House, should, in my view, not be opposed with Parliamentary obstruction, but should be given opportunities to carry its measures, and we who do not believe in those measures should content ourselves with putting forward a contrary opinion and registering our dissent. This is not a moment for Parliamentary obstruction; this is a moment for rapid action.' I hope that the measures of the Government will be successful in extricating the nation, but I do not believe that they will be.

I will give, as briefly as I may, my reasons for holding that opinion, and for the contrary policy that I have to suggest to the House. The view that I have to advance will differ as widely from the views of one side of the House as from those of the other side. It is an opinion which, I am afraid, is in complete conflict with every other opinion that has been advanced in this Debate. The right hon. Gentleman who has just spoken said that there were two things to be done. The first, and in -his view, the immediate thing, was to balance the Budget. The second was to deal with the industrial situation. Perhaps my views can be briefly summarised if I say that I believe it is vastly more important to deal, and deal quickly, with the industrial situation, than it is to deal with the Budget. And for this reason: The continual decline and collapse of the industries of this country makes completely illusory any attempt to balance the Budget. You may balance the Budget on the present basis of revenue, but there is no one in the House who can say with any confidence that this basis of revenue will be long maintained. After all it is a truism that revenue rests upon industrial prosperity, and when industry is progressively declining, revenue, which has a big time-lag behind industry, must progressively decline as well, and all this effort to balance the Budget to-day will prove completely illusory unless a policy of action in regard to the industrial situation is adopted, and adopted rapidly.

The right hon. Gentleman said that he had a remedy for the industrial situation, and he spoke of tariffs. Well, Protection as he understands it is not my remedy. But the right hon. Gentleman believes that tariffs are the remedy. Yet he said that, in order to prove his realisation of the gravity of the crisis, he would postpone the application of tariffs. What an extraordinary doctrine. In order to prove the existence of crisis you postpone the application of the remedy for crisis. Really that was the contention that the right hon. Gentleman advanced to-day. I would suggest, briefly, certain policies to meet the immediate Budgetary situation. But in a few words, before I come to that, I would put before the House the view that this crisis, this event of the last few weeks, is not in itself a crisis at all. It is merely the realisation of the fact that crisis exists, by people who for months, and some of them for years, have refused to face that obvious fact. It is the panic of all the woolly-headed people who refuse to face the facts, the menacing facts of the situation; it is that panic and that alone which led to the events of the last few weeks. The position of Great Britain as an industrial and financial nation is certainly no better and is very little worse than it has been for the last year or year and a-half. It is the sudden waking up to the fact of industrial crisis which has led to the present revenue and financial crisis. That industrial crisis has been referred to very briefly to-day. But the ugly fasts and figures of that crisis have not been mentioned at all. We have dealt purely in terms and figures of finance.

I am not going to burden the House with very many figures; in fact, I shall mention very few. But I would like to quote one or two figures which give the whole reason for the crisis. If we take the first seven months of this year and compare them with the first seven months of 1929, we find a 45 per cent. drop in the exports of this country. That is really your crisis. That is why you have panic on the markets of the world. Even if you make all allowances for slight monetary changes in the interval, that figure is startling and almost appalling. In the same period imports have fallen by only 30 per cent. It is the comparison between imports and exports, what the right hon. Gentleman referred to as the balance of trade, which is the really alarming aspect of the situation. Imports for this year have more than doubled exports. In 1929, only two years ago, they were little more than 50 per cent. above exports. In manufactured goods we now import as much as we export. In 1929 we exported twice as much as we imported.

That extraordinary change in the balance of trade, illustrated in those very few and obvious and simple figures, accounts and accounts entirely for the present financial panic. In view of the progressive deterioration of the industrial position what is the use of trying to balance your Budget on the present basis of revenue when, unless you have an active industrial policy, your revenue is bound again to collapse within a measureable distance of time? That is why the one thing which I want to urge upon the House is the immediate adoption of some constructive industrial policy. I do not care who does it. I do not so much care what the policy is, as long as someone gets busy and tries to produce an industrial policy. I put forward my suggestions for an industrial policy over 18 months ago. I also put forward an analysis of the position leading to the present crises which has since proved correct. So perhaps the remedies might be looked at now with a little more favour than they received at the time when I suggested them. The point is this: Some plan and some policy from some quarter to meet the industrial situation has to be adopted unless things are to get worse.

In face of this decrease of our industrial position it really is idle to talk about the recent crisis as a bankers' ramp, as really the frame-up of a few financiers to get rid of the Labour Government. If the Labour party had said that it was the banking policy of the last 10 years, a policy which they supported, that was responsible for this situation—[Interruption]—a policy which their Chancellor of the Exchequer supported and which they supported him in supporting, then they would be getting at the root facts of the present situation. [Interruption.] Over and over again, in party conferences and meetings and in this House, some of us challenged the policy of the Chancellor of the Exchequer, Over and over again the solid ranks of Labour closed up behind him, supported the policy of deflation, supported the policy of the Cunliffe Committee to which he adhered, supported the policy which led to wage reductions in 1921 and 1926, which led to the doubling of the burden of the National Debt, which led to the doubling of the interest of every debenture holder, rentier and bond-holder, and which placed upon British industry and trade a burden which no other industries in the world had to carry. The Labour party again and again, in the Division Lobby, at party meetings and conferences, supported the Chancellor of the Exchequer. They did not walk out of the bankers' palace till it fell about their ears. They were as fatuous in supporting the bankers' policy for the last two years as they are now in denouncing the bankers' ramp.

To talk of a bankers' ramp in order to get rid of the Labour Government, in face of the figures of industry, and the obvious argument that the bankers are not going to ruin themselves in order to unseat a few hon. Members, really reaches the height of dialectical absurdity. Anyhow, we shall have the test of this matter in the next few weeks. If it was a bankers' ramp to get rid of the Labour Government, the bankers' ramp has come off. You are out and the bankers have won. If it is just a bankers' ramp, now things will get better. If it was all a frame-up unemployment will now be lessened. They have got rid of you, and they have got the Government that they want. We shall soon know whether it was a bankers' ramp or whether it was a, profound industrial crisis which the Labour party, supporting the Labour Government, have resolutely ignored, while deriding every appeal to adopt a policy of action, whether in party meeting or conference, with the result that their people, the people they are pledged to defend and the people they want to defend, are faced to-day with wage reductions, with cuts in unemployment benefit, with reductions in their whole standards of life, because the Labour party would not respond to appeals to take action until the whole industrial fabric crumbled about their ears.

But I do not want to be drawn into an atmosphere of recrimination. [HON. MEMBERS:"Go on!"] All right. We will have it. I can assure my late hon. Friends that we will have it, but we will have it on the platform outside. We will have it in the right place. We are met here in a time of national crisis as a House of Commons to try to contribute all we can to the solution of that crisis. We have had a lot of recrimination here this afternoon, a great deal of humour and many good jokes. I do not want myself to indulge either in recriminations or in jokes, but to make what small contribution I can to the solution of the crisis which now confronts us. As I have said, I believe that the adoption of a constructive industrial policy is far and away the most important duty of a Government or a House of Commons. I believe that it is a far greater factor in actually holding our exchanges than the balancing of the Budget.What, after all, is more important to the foreign investor? Is it to see £100,000,000 or even £200,000,000 added to the £9,000,000,000 or so of our National Debt at present, or is it to see British industries go down and unemployment rush up past the 3,000,000 mark? If anybody were investing money in Britain, would he not be more worried by the collapse of our industries and the absence of any policy to remedy it, than by any temporary deficits in our Budget?

Mr. R. A. TAYLOR

Tell us how to make the foreigner buy the stuff.

Sir O. MOSLEY

The right hon. Gentleman the Member for Epping said that one thing about hon. Members was that they were so ungrateful when they were informed, and I have so often told them, what hon. Members ask when addressing private gatherings of the Labour party, and of this House of Commons that my heart was moved to the right hon. Gentleman. But I was about to observe that many people seem to think that we are the only country in the world faced with the prospect of a Budget deficit. As a matter of fact ours is the only country in the world which is taking any steps to meet it. Deficits are the fashion nowadays. All the best countries have deficits. America, the strong boy of the world has an enormous deficit, far bigger than the one confronting us. France, I think, has always a deficit. I am not sure, but at least I looked through a long list of the most respectable and powerful countries the other day, and I find that nearly all have big deficits. There is no collapse of their exchanges, no withdrawal of foreign deposits, no efflux of gold because they have deficits. Why? Because their industrial position is strong and the investor has confidence—[Interruption.] I say that their industrial position is relatively strong. Of course everything in the world is relative. Their position is stronger than ours, but I do not mean that there is a paradise in those countries. The point of the argument is that, relatively, their industrial position is stronger and therefore there is no strain upon their exchanges, although they have deficits, because the investor has confidence in recovery of those countries. Therefore, the view that I have to put before the House is this, that it is far more important to give the world—and Britishers—confidence in the industrial future of this country than to try to balance the Budget upon a basis of revenue which will soon prove illusory.

Suppose that we adopted the view that it is far more important to have industrial recovery than to balance our Budget and that we might, in fact, despite all our financial respectability and prudery in these matters have for the moment a deficit provided that we were sure that in a few years we should emerge from the present position by reason of a policy of industrial reconstruction. We then should adopt the method of balancing our Budget advocated by Mr. Keynes and other economists which is simply to continue to borrow—I know that it shocks hon. Members—to continue to borrow to provide for the Unemployment Insurance Fund, or I would prefer to say, borrow to provide constructive works to give employment in place of it, to suspend the Sinking Fund and to raise the remainder by a revenue, tariff, or, as I would say, a protective tariff.

Mr. MacLAREN

The same as in America and France.

Sir O. MOSLEY

After all, the American position is a great deal better than ours—[HON. MEMBERS: "Oh!"] Their industrial position is a great deal stronger. I am perfectly well aware that social services and the rest are practically non-existent there. Everybody knows that, but for the moment the question is whether the American position in relation to exchange, finance and industry, is stronger than ours, and obviously it is, or there would not be this rush away from sterling and towards the dollar which has brought about the National Government and has transferred hon. Members to these benches from the benches opposite. They have not yet found out what has lifted them from that side of the House to this, and in their dazed and bewildered condition, even when their seconds are trying to bring 'them round and tell them what has happened, they are ungrateful. They have had a terrible punch and they are scarcely conscious, and I am trying to explain to them just what has happened.

But may I try to develop this theme as seriously as the situation demands. Suppose that we balance our Budget in that way, would the resulting situation be so very terrible? A deficit is regarded as a dangerous thing because it is inflation, but does any hon. Member suggest that we are in danger of inflation in a period in which prices are sharply falling. It is true that a measure like that might tend to arrest the fall of prices in this country and maintain our price level above the world level; that there would be a disparity between the two and a consequent strain upon our exchange and a possible efflux of gold. But the very measures which have been suggested counteract that tendency, in that a strongly protective tariff tends to keep the trade balance much more favourable to us, and measures of expansion at home, such as borrowing for the reconditioning of British industry or even for constructive work of the kind which the Liberal party used to suggest, provide a more attractive outlet for British capital and prevent some of it going abroad.

The fact that such capital resources are available is clear from any study of recent figures. Capital issues have dropped from £30,000,000 a month in 1928, to £13,000,000 a month at present. That means, £17,000,000 a month or over £200,000,000 a year, which, if brought back into active use would provide employment for some 1,000,000 men in this country I suggest that if a protectionist policy, stimulating the home market and raising revenue, accompanied —and here of course I differ from hon. Gentlemen opposite—by stringent guarantees as to efficiency of industry, as to low prices, as to good wages and the whole of the scientific machinery which some of us suggest for ensuring that you will get the benefit of Protection without its evils—if a policy of protection of that kind which I might describe as scientific Protection—[HON. MEMBERS: "Oh!"] Well, hon. Members before they jeer should try to think of something better. I do not want to comment upon the speeches of their leaders, but I may be driven to it. A policy of scientific Protection of that kind linked with a policy for the reconstruction, reconditioning and restoring to world efficiency of British industry, would, I believe, be an alternative to the policy of mere cutting down and additional taxation which has been suggested.

What is the alternative of the Labour party? The alternative of their leaders was to burden the poor, or burden someone unspecified with some £56,000,000 a year—an extra burden of economies which must have come largely from poor people—and then when faced with the hold-up of world finance to which they refer so glibly, what was the contribution of their leaders? "Oh," they said, "things would never be pressed to that extremity. International finance would never have ruined us." True, we were in pawn, but the pawnbroker would not have closed upon us. And so the great Labour Government placed itself at the mercy of world finance and went on its knees to world finance and said, "We will knock off £56,000,000 if only you will not ruin us." Before they start jeering at any constructive suggestion which I am trying to put forward, they ought to revise their own, and think over again the case which they will have to put to the electors and the answers which some of us will be able to make to it.

We have not heard to-day any of the strong, manly posturing about the foreign investments. There has not been one word from the Labour benches about the mobilisation of foreign investments. Have they looked into it again? It was done in the War. We have, I believe, some £4,000,000,000 of foreign investments, and I believe that foreign deposits in this country total about £400,000,000. If we were able by any means to do what we did in the War by getting into our hands one-tenth of these foreign investments, we should not have had to go cap in hand to the markets of the world. We should not have had to hold out the hat of Britain as a supplicant. We could have said to Wall Street or to any other stock exchange, "We have £400,000,000 of dollar securities and unless we get the loan we want, they go on to Wall Street to-morrow morning and you will get the biggest bear raid in your market that you have known for the last two years." And you would have got your loan. If you want a policy of vigour and of virility to face world finance, there it is. I venture to suggest that you could have secured the loan which you have secured and which has pegged your exchange, without humiliation to Britain by the use of the financial strength which Britain possesses. I suggest, further, a policy of scientific Protection of home expansion and of the use of our capital resources. The reconditioning of our industries accompanying such a policy as that, would within a short period have placed this country in the forefront of the industrial nations of the world.

Lieut.-Commander KENWORTHY

Is not that in the manifesto?

Sir O. MOSLEY

I was asking the right hon. Gentleman why that policy or why part of it was not mentioned from either the front or the back benches, but no doubt the hon. and gallant Member for Central Hull (Lieut.-Commander Ken-worthy) will do what I have known him to do before and make the speech which his leader should have made. But may I suggest that at any rate such a policy is an attempt to bring Britain out of the crisis by activity rather than by lethargy? The alternative is to reduce the standard of life, to impose fresh burdens on the taxpayer, to reduce the home market and consequently greatly to curtail the markets which industry serves. On the other hand, if you adopt a contrary policy which has the authority, after all, of many of the greatest names in economics in this country—

Mr. MacLAREN

Who?

Sir O. MOSLEY

Well, Mr. Keynes for one.

Mr. MacLAREN

Would you call him a great economist?

Sir O. MOSLEY

I prefer him to the hon. Member for Burslem (Mr. Mac- Laren) but I have no hope that the hon. Member would prefer him.

Mr. MacLAREN

Not by any means.

Sir O. MOSLEY

May I suggest that such a, policy is at any rate worth considering? It seems to me that Britain in her crisis is being asked to turn her face to the wall and to give up like an old woman who knows that she has to die. I want to see this country at least make an effort. I do not believe and never have believed in the cure of fasting, but in the cure of effort. I believe that the way out is not the way of the monk but the way of the athlete. It is only by exertion, it is only by endeavour, by a great attempt to reorganise our in dustries, that this country can win through and I venture to suggest that the simple question before the House in this Debate is whether Great Britain is to, meet its crisis lying down or standing, up.

8.0 p.m.

Sir GODFREY COLLINS

In one respect I have always admired the hon. Member for Smethwick (Sir O. Mosley). He has always had a cure ready to solve the problems before us, but I feel that if his policy were adopted by his friends in the Government, the situation of the unemployed would be worsened rather than improved. The nation and the House of Commons, I feel sure, will be bitterly disappointed with the speech of the Leader of the Opposition. For two and a quarter years the right hon. Gentleman has been the spokesman of Britain abroad, and during that time he has received the good will and the assent of the House of Commons, but as I listened to him this afternoon it appeared to me that he was not speaking with the mind of a Foreign Secretary, but with the mind of a party manager. He was valuing and balancing the factors which had created this Government and the effect they might have on his party's future. I regret deeply that he has taken such a narrow view of this large question which has matured during the last 10 days. During the crisis he appears to have burked the issue, and when the question became a difficult one to solve, he was quite willing to place the burden of responsibility off his own shoulders on to those either of his late colleagues or of his political opponents.

How striking, in contrast to his attitude, was that of the Prime Minister, a man who, a fortnight ago, was prepared to differ profoundly from his political friends and associates on a great national question! We often speak in this House of the courage and wisdom shown by Sir Robert Peel many years ago. When I heard that the Prime Minister had determined to take office and to face the solid ranks of his own party in opposition, it occurred to me, as I am sure it must have occurred to many inside and outside this House, that his act on that date was a larger, straighter, and a more courageous act than the act of Sir Robert Peel many years ago. Great Britain, I believe, will range herself behind the Prime Minister, and it will not be necessary so much for the Prime Minister and his colleagues to defend their action as it will be for members of the Labour party to defend a policy which would have caused bread to rise in price by 3d. a loaf, meat by 4d. a lb., sugar perhaps by 2d., and tea by 2d.

Further, they would have had to defend their policy in Lancashire and to show the operatives there that it was in their interests that Great Britain would be forced to pay a higher price for her cotton, because the supporters of the Government can point out that under their policy of maintaining sterling at its true value British manufacturers can buy the cotton that they require at the lowest possible price and compete more successfully with Japanese manufacturers in the eastern markets of the world. Not only in Lancashire will the supporters of the Labour party have to defend the policy of dearer food to the people, a policy which would cause the housewife to pay more for every necessity of life, but in the industries which depend upon buying their raw material from abroad they will have to show to these people that it is a good thing, in their opinion, that Britain should pay more for her wool so as to maintain the present social services.

I believe that the people of this country, having known the curse of high prices some 10 years ago, will admire the Prime Minister for taking what, to start with, is an unpopular course so as to secure that sterling shall buy what it did during the last few months and years. This policy of trying to depreciate the pound sterling, which would be the natural result of the policy of the Leader of the Opposition of not facing the realities of the situation, would not only be a curse to every unemployed worker, but would hurt every employed worker and would create many more unemployed workers.

The hon. Member who has just spoken referred to the fact that our trade balances are against us, and that, he thought, was one of the main reasons why the pound might depreciate in the future. I agree that the balance of trade is a very important factor in bringing about the present situation, but I differ from him profoundly as to the methods to be adopted to secure an improvement in our export trade. I suggest to hon. Members opposite that the reason for the fall in our export trade is that our export prices are high in comparison with those of our competitors, and any policy in this country of artificially stimulating the home market through the outpouring of public money for one thing and another may be and is to the benefit of the importer, to the benefit of the sheltered trades, but it is at the expense of the export markets.

Since 1918 this country, irrespective of parties, has followed one very definite line of thought. It has endeavoured to solve her national problem by the outpouring of public money. I do not believe that one party is more responsible than another for the deficit. I admit that all parties have come together in their wisdom and created the situation which has arisen, but I suggest that the national thought and the national outlook which have dominated all parties since 1918 have brought about the present situation. Therefore, I rejoice, in the interests of the unemployed workers—[Laughter]—hon. Members opposite may smile, but I honestly believe it, and I suggest to them that their line of thought, of the outpouring of public money in large measure, has been fully tried and has been a ghastly failure, with the result that we have to-day a larger number of unemployed than any other nation in the world—[HON. MEMBERS: "No!"]—except America.

Lieut.-Colonel WATTS-MORGAN

And Germany.

Sir G. COLLINS

And for the last 10 years Great Britain has suffered more severely than any other nation in the world. I should have thought that that was common ground between all parties in the House. This policy has been tried—it has had a fair run, a long innings—and I suggest that this country, by returning, as she has done, to the policy, announced this afternoon by the Prime Minister, of endeavouring and intending to live within her income and of reducing her expenditure, so as to give confidence abroad, has taken the first step to her industrial recovery, which all parties in all quarters of the House desire to secure.

We have had many reports during the last few months as to what course this country should follow, and in the closing sentences of the Report of Lord Macmillan's Committee on Finance and Industry, there is one sentence, on page 281, in the Minority Report, signed by Lord Bradbury, who was at the Treasury throughout the War and was responsible for Britain's policy during the War, in which, in a very few words, he summarises his views, which coincide with mine. He says—and this is the view of a man who has had great public experience at the Treasury: The best contribution which the State can make to assist industry and promote employment is strict economy in public expenditure and lightening the burden of debt by prudent financial administration. We have had speeches from hon. Members opposite to-day appealing against a cut in the dole, including the speech of the hon. Member for Bridgeton (Mr. Maxton). Believe me, all parties in the House have as much sympathy with the unemployed workers as have hon. Members opposite. No one wishes to question the sincerity of Members of this House. We differ from hon. Members opposite as to the wisdom of their policy. We suggest that the high unemployment which exists to-day, with the loss of confidence which Britain has to face through other countries watching our movements here, has been brought about through a misplaced kindness on the part of the State, a notion that the State had a bottomless purse which could pour out its benefits to one and all.

Mr. McKINLAY

Will the hon. Member make his position clear as to what he means by misplaced kindness and over-generosity? To whom?

Sir G. COLLINS

I mean excessive expenditure in not living within our income, and also that some of the social services must be reduced—

Mr. McKINLAY

Which?

Sir G. COLLINS

—I am not anxious to shirk the question—and that the unemployment rates should be cut. I quite face the issue. I will support that, and I will get up on public platforms to defend it, on the ground that it is in the interests of the unemployed workers. I may be beaten, I admit, but I am convinced myself that when the unemployed workers realise, as I think I can show, that if the policy of the Opposition were carried out, their loaf would be 1s. or 1s. 3d. to-morrow, that their meat would rise in price, and that their tea would rise in price, although you are willing to give them their present benefits, will agree that the policy of the present Government would not raise the cost of living as the policy of the Opposition would. I think that it can be abundantly shown that the policy of excessive expenditure, of extravagance, and of not living within your income, will appeal to the educated democracy, and that hon. Members opposite, when they go to the country, will find a, strange result awaiting them.

Mr. LOGAN

Am I to understand that we are to go forward and inform the educated electors that by the deduction of 1s. 8d. from 17s., buying power will be greater? Is that the policy enunciated?

Sir G. COLLINS

I was submitting that the country has to choose between two policies—the one, the policy of temporary reduction in these amounts. and the other the policy which would lower the value of the pound and put up the cost of living. That is the question which will go forward, and it is because I believe that the policy of the Government is in the highest interests of the State and that the action of the Prime Minister is one of the finest things that has happened in British history, that I shall have pleasure in supporting it.

Colonel WEDGWOOD

I cannot make up my mind. Everybody who has listened to this Debate has heard from every section of opinion speeches which have carried no conviction to anybody. Apparently the House, so far as these speeches are concerned, may be said to be still quite unaware of the position to-day. I have listened to the New party. My excellent confrere, the hon. Member for Smethwick (Sir O. Mosley) made an admirable speech showing what was wrong, but still leaving out what he would do, except, so far as I could gather, borrowing as long as you can and then taxing when you can borrow no more. The right hon. Member opposite, clothed in Victorian rectitude, urges the reduction of expenditure and increased taxation. The right hon. Gentleman the Leader of the Opposition recommends accuracy in the reporting of Cabinet wrangles, which is really no cure for the condition in which the country finds itself. The right hon. Gentleman the Prime Minister recommends maintaining the integral value of the pound sterling at every cost. It was a moving appeal, but the whole House seems to be ignorant of the fact that the pound sterling is not what it was. If it is worth 20s. to-day, it is merely because the Government are pegging it. They are pegging the exchange to-day. How long will they be able to go on pegging the exchange?

Hon. Members opposite seem to think that all will be well in the world if they manage to balance the Budget. That is going to take more than they reckon on at the present time, but balancing the Budget will not put the balance of trade right. Did the House listen to and appreciate the speech of my hon. Friend the leader of the new party? He made one point with which I heartily agree. He pointed out that the balance of trade was gone. This year, for the first time, our exports, plus the interest on our foreign investments, plus the profits on shipping and insurance, were less than our imports into this country. It is said that that is largely due to a reduction of exports. It is equally largely due to the reduction in our interest on foreign investments, and the profits on shipping and insurance. There has been a triple decrease—in exports, in interest on foreign investments, and in profits on shipping and insurance—with the result that for the first time the balance, not of our animal Budget, but of our national income and expenditure, is on the wrong side by £100,000,000.

In the old days we saved money every year. There was an increase of the capital value of the wealth of this country. That increase would be used to loan abroad or loan at home as the case may be. This year, for the first time, there was not only no pool available for foreign and internal capital, but a deficit. You do not mend that by balancing the Budget; least of all do you mend it by an increasing taxation. The balance of trade in normal times cures itself when it goes wrong in that direction by the normal way of an export of gold instead of goods to make up the balance. If we do not export the goods, gold leaves the Bank of England to make the balance correct, and when gold leaves the Bank of England, in normal days, the Bank of England pushes up the bank rate so as to attract to this country foreign investments and foreign credits. That is in normal conditions, but those conditions have been upset.

The late Government put an embargo on foreign loans, preventing us lending money abroad, with the result that the export trade suffered because money is loaned abroad not in gold but in goods. This Government have done worse. Instead of lending money abroad, they have borrowed money from abroad. First it was £50,000,000, which has somehow vanished. Now it is £80,000,000. I gather from the Debate to-day that that, too, is vanishing. What are they doing with it? This is the real reason why I cannot have confidence in His Majesty's Government to-day. They have borrowed £80,000,000—I beg your pardon, not pounds; they have borrowed the equivalent of £40,000,000 in francs and £40,000,000 in dollars because they would not lend us pounds. We have borrowed these credits. I do not quite know who has borrowed them, and I should like some explanation as to who controls the use of that money now it has been borrowed.

For what is it being used? It is being used to buy sterling from those people who wish to sell sterling in order that they may buy francs or dollars. It is true that very largely it has been used by the French importer, and that he is buying sterling from the Bank of England out of this £80,000,000 loan; but there are also a few people in this country who are seeing how to use that £80,000,000 credit. They, too, are selling sterling to the Government or to the Bank of England—I do not know which—and buying francs. The rats are beginning to leave the ship, and they are leaving at good prices, thanks to this credit of the Government. How about the Government position? They borrowed £80,000,000. They are selling it gradually—we do not know how quickly; we shall certainly not get that information out of the Government. They are selling it at dollar parity or very near it. They are selling it, and it is gradually vanishing. The time will come when it will have vanished, and what will happen then?

I tell the House now that the pound to-day is not worth the price at which the Government are selling sterling. We "unpegged" the exchange before now, though hon. Members may not remember it. We "unpegged" the exchange in 1920. I remember it well enough. I wrote a letter to the "Westminster Gazette" on the Monday—and the "Westminster Gazette" were delighted to have it—pointing out the cost to us of maintaining the dollar exchange at parity. They were going to publish it, but they got a note from the City that they were not to do so, and they did not publish it, but the exchange was "unpegged" that week. I will not give the figure to which the pound sunk. I do not think it would sink as much to-day, but it is sure to sink when we do "unpeg," and for goodness sake let us face the realities instead of going on with the humbug of trying to keep up dollar parity when it has gone. When it has gone we shall have to repay the money—in a year's time—in dollars and in francs, and we shall have to repay £20,000,000 more than we borrowed, and that will be another pill when it comes to balancing the Budget. All done in sheer innocence, in sheer ignorance! I do not know who is to reply for the Government, but I hope it will be the hon. and gallant Member for Kelvingrove (Major Elliot), because he will treat this question seriously. The point is that we have in power to-day a Government who have pledged their credit, just as Haig pledged his credit at Paschendale, to save the pound at all costs; but it is going to be at the cost of the taxpayers of this country, and not of the Government, just as the cost at Paschendale was not that of the generals.

Suppose that we do "unpeg" the exchange. Will anything very terrible happen? We did it before. France did it; and Belgium did it. To-day France, after wiping off four-fifths of her national and municipal debt, and four-fifths of her private debts, sees greater prosperity, aye, has greater power and greater ease in borrowing money than we have. Belgium managed to do it even better than France. Will not the Government consider how Belgium managed it? I think I am right in saying that in Belgium the franc never went down below the price at which it has been stabilised. There was no panic; it was an ordered business. Will the Government consider the possibility of devaluing the pound without plunging this country into the peril of a flight from the pound, the peril of a collapse far greater and far worse than the actual figures of our adverse balance of trade would warrant?

From every side of the House except from the Liberal party we have had protests as to the disastrous effects that a fall in the value of the pound would have. There would be an increase in the cost of living. That has been emphasised perhaps more extensively than the reduction in the incomes of the whole of the rentier class. I would remind hon. Members on these benches as well as those opposite that the wages of the workers in this country are regulated to-day, as they have been for all time past, not by what their work is worth but by the cost of subsistence. There is an iron law of wages. If the cost of living goes up, wages will go up. The real disaster of a fall in prices is that everybody who has lent money loses it. I as a moneylender do not like that. We are all moneylenders, even on these benches. Every man who has saved £100 is a moneylender, and naturally the moneylenders do not like the idea that when they get their money back they are not going to get as much back as they lent, and that the interest on their money will have less and less purchasing value. It is a very unpleasant thing to contemplate.

But the problem has another side, also. Does the House realise that the whole of industry to-day was built up at a time when raw materials cost twice what they do at present? Every factory extension, every house, every industrial development whatsoever, every piece of machinery, every loom in a cotton factory, was created when prices were twice what they are to-day. They were built up on borrowed money. By competition, and by our present industrial system, prices have come down to the root; but debts still remain as heavy as when first borrowed—not the national debt, but private debts. The result is that every business—or the vast majority of businesses—is in the hands of the banks. If their overdrafts were called in it would bankrupt those concerned. The policy of industry is controlled by the banks. I do not believe in the talk of a bankers' ramp, or any nonsense of that sort, but I know perfectly well that the lenders of money are for keeping up the value of the pound and the borrowers and users of money are for keeping that value down. Just think what it would mean to the export trade of this country.

As so many speakers have rightly said, nothing can save the situation except an increase of employment. Cutting the dole is no cure; piling up debt for the dole is no cure. What we have to do is to get the unemployed to work. How can we imagine they can ever get to work while the pound retains its present value? A characteristic and admirable speech was delivered by the right hon. Member for Epping (Mr. Churchill). Listening to him one would have thought that he was not the prince of wild-cat financiers, that it was not his Budgets which began the road to ruin. Listening to him one would think that he had had nothing whatever to do with increasing the value of the pound from 18s. to 20s. and fettering us with dollar parity ever since. The right hon. Member for Epping has done more to hamper the export trade of this country than any other man in the country. He put the pound up to 20s.; he made it impossible for the coal trade to compete in the neutral markets of the world by shoving up the price of the pound and making it difficult for those neutral markets to buy pounds to pay for the coal. And not merely coal. Pottery suffered in the same way. I am in the pottery trade, and I know. Every trade exporting goods to this country found, when the pound was inflated, and the currency deflated, that they were in a difficulty in selling their goods in the neutral markets of the world. Their sales fell off, and more people were unemployed.

I was in Germany during the inflation period there, and a very interesting time it was. I travelled from Basle to Berlin first class for half-a-crown. Everybody said then that they were positively begging people to work—as long as inflation went on. Here, too, if we inflated, inevitably we should increase the export trade of the country. If you were to print a number of nice new five pound notes and give one to every working man each Saturday morning, there would be good trade for about a week, because the prosperity that comes when people get something for nothing is extraordinary. In the same way, if you depreciate your guarantees, trade booms. It is no use humbugging about these matters. We know on these benches that inflation is an extraordinarily difficult thing to start, and it is very unpleasant at the end, but as we are going to be forced into that it would be better if the Government made their plans so as to limit the amount of inflation, and determine the value to which the pound should sink.

Let us consider what will happen a fortnight, a month, or two months hence when credit will be exhausted. What will the Government do then? They can do two things. They can try to borrow more, or they can put an embargo on the export of gold. If they do that, immediately the value of the pound drops. This suggestion has already been put forward by the hon. Member for East Leicester (Mr. Wise), who has told us that the best and simplest method to adopt would be to put an export tax on gold. That would not put an embargo on the export of gold, but it would make it expensive to send gold out of the country. That would, in effect, limit the depreciation of the pound and the export of gold. I think that is a suggestion well worth considering, because there must be some regulation. No regulation of inflation and no definite fixing of the pound say at 15s. is practical unless at the same time the Budget balances. Balance the Budget by all means, but you must really balance it, and this must not be done in the way that Budgets have been balanced during the last 10 years. Balance your Budget and you can stop deflation at a fixed point, but if you allow your Budgets to go on in the same way as that which has been adopted during the last few years then your deflation must continue. You will come to the same point that you will have to put an embargo on the export of gold or raise the export duty on it by 10 or 20 per cent., thereby debasing the value of the pound.

I am, I think, in the best position of any Member of this House to lay down that policy. Before the House rose I pointed out that borrowing had gone on to such an extent, the Budget was so unbalanced and the trade of the country was so tied by debt, that there were only two ways of dealing with the situation. One of those ways was to reduce costs, and the other was to increase prices. At that time the reduction of costs seemed impossible. Now the Government are proposing to make an attempt to reduce costs, and I think they will find it even more difficult than it seems to be at the present moment. The only alternative is to increase prices. If you increase prices, that means inflation. The Macmillan report agreed that there should be inflation, that is international inflation, and that report urges international inflation in order to inflate prices.

The Macmillan Committee did not recommend the inflation of silver. The difficulty about international inflation is that those people who have gold will find that their gold is reduced in value, and it would be exceedingly difficult to get France or America to agree to international inflation. The more credit there is the smaller is the value of the gold which people possess, and the same argument applies to silver. Inflation would benefit those who own silver mines at the expense of those who own gold mines. The committee which considered the currency question was in favour of inflation as a means of raising prices as an alternative to cutting costs. The Government are finding it difficult enough to cut down the salaries of civil servants, and it is impossible for manufacturers to cut down wages and salaries because the trade unions are too strong and the workmen would not consent to that policy. Therefore, costs cannot be cut, and it is no use the "Times" saying that, as a necessary part of balancing the Budget, you must cut down the wages of the working class.

The other alternative is to increase prices. I have no confidence in any solution that has been put forward to-day, and I have not much confidence in my own solution, although it has the advantage of being supported by the Macmillan Committee and by many business people in this country. Before the House rose in July last I pointed out that if you raise prices you do not necessarily reduce costs. The trade of the country is in such a position that something has to go, and it had better be the currency. The only thing that I would beg this House and the Government to look for is how to let the currency go without disaster, realising that, bad as it may be for everybody who has lent money, it is the sole salvation for the industries of this country, overburdened as they are with debt and unable to export their goods with overhead charges such as they are at the present time. I still do not know how I am going to vote to-night. I am hoping to listen to a speech from a real currency expert, which may perhaps settle my views, but at the moment I can only say that the much despised, much condemned, and often ridiculed Trade Union Congress seems to have more sense than any party in this country.

Sir CLIVE MORRISON-BELL

The House has listened with great interest to the speech of the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood). I hope that his prophecies are not going to prove correct. I think that he mystified us a little, and that the House did not gather very clearly what his remedy really is. In fact, he himself says that he does not really know yet how he is going to vote. I think, however, that, to most people who have looked at the situation, the whole matter is fairly simple. We have heard speeches of which a great deal can be considered as entirely unreal. The situation is so simple that it can be expressed in a few words. We have been over-spending; we have been living above our income, and we have to come down; and it is that difficult operation which right hon. Gentlemen opposite have been unwilling to face. The bankers and the international bankers, if I may refer to such bogeymen, insist that, unless they can be assured that this country is going to cut down its national expenditure, they cannot lend us any more money. Why should they? They say that we are living above our income, as people often do, and have difficulty with their affairs in consequence. That is the situation in a nutshell. We have to reduce our expenditure and we have to balance our Budget; otherwise a flight from the pound begins.

The hon. Member for Smethwick (Sir O. Mosley), in his very interesting speech, put the cart before the horse. He says, "First get your trade right, and then balance the Budget." I entirely disagree. Balancing the Budget in the first place is a gesture which can be understood by the whole world, and we shall not get money until we have balanced our Budget. The right hon. and gallant Gentleman talked about German inflation, and, in fact, I gathered from what he said that he rather approved of inflation. I am afraid I cannot agree with him there. If once inflation began in this country, it is impossible to see where it would stop.

Colonel WEDGWOOD

We saw where is stopped in France.

Sir C. MORRISON-BELL

It could not be stopped in this country, and for this reason. In comparison with the London money market, those of France and Belgium are relatively unimportant. London is the world market, and, if a flight from the pound begins in earnest, who is to get in front of it and stop the flight? It could not be done. It could not be stopped as suggested when the pound was at 15s. No one can say to-day where it would go. May I give an illustration, as the right hon. and gallant Gentleman seemed to me rather to approve of inflation, and as he tells us he had experience of German inflation—

Colonel WEDGWOOD

I do not approve of inflation. I wish we could avoid it, but we cannot.

Sir C. MORRISON-BELL

I understand then that the right hon. and gallant Gentleman does not approve of inflation. I am in a little doubt as to what he does approve of, but he mentioned German inflation, and I have here an example which I hope may impress Members of the House. Here is a letter written to me from Berlin in November, 1926. It carries six stamps. There are four of 10,000,000,000 marks, and two of 20,000,000,000 marks, or 80,000,000,000 marks in all—in other words, in pre-War currency, £4,000,000,000. That happens to be the sum which has been mentioned by the right hon. Gentleman opposite as that of our foreign investments which can be mobilised to meet this situation. The right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) shakes his head, but that figure has been mentioned more than once as representing our foreign securities which could be mobilised.

Mr. WILLIAM GRAHAM

I am sorry to interrupt my hon. Friend, but that figure was quoted, I think in the "Economist," subject to great reservations as to the amount of it that could be mobilised. I did not use the figure personally.

Sir C. MORRISON-BELL

I did not include the right hon. Gentleman, because he knows too much about finance, but some of his colleagues have put forward, as an alternative proposal, that £4,000,000,000 can be brought back to this country from outside; that is the exact nominal sum which was paid for these stamps. That shows w hat inflation means. When you get conditions like that, who is it that suffers? Is it the rentier, the financial magnate, the capitalist? Surely, it must be the poorest of the poor who would suffer first. If it were necessary to pay £4,000,000,000 sterling, or its equivalent, for a stamp, what would the wretched housewife have to pay for a cabbage or a tin of milk? It is not the rich man in the first instance that suffers; it must be the housewife who would have to suffer. Where are these billions of pounds to be got? The working people's wages would not go up at the same rate; they would lag far behind. How could they live, or how should we live, under such conditions, if a flight from the pound once began? People say that it is all right in Germany—that it was brought off in Germany and it was brought off in Russia and other countries; but the answer is perfectly simple. Those countries in which there have been these great inflations, and whose currencies have dis- appeared, are agricultural countries, and feed themselves; but what would be the position of the poorest of the poor in this country if a flight from the pound sent prices to such heights? We do not feed ourselves—

Mr. LOGAN

Would it stop hens laying eggs?

Sir C. MORRISON-BELL

That interruption is hardly worthy of the hon. Member. If he had studied the statistics of the imports of eggs into this country, he would realise that we are about 20,000 hens short in this country, and, if we had to buy a corresponding number of eggs with an inflated pound, what should we have to pay for importing eggs or any other supplies into this country? That is why the Government are so keen about balancing the Budget first, and so stopping a flight from the pound. I am afraid that the proposals put forward by the Leader of the Opposition to-day were nothing more than an apology, and had nothing Le do with the case as it exists to-day, and could not help the present situation. The facts on this envelope cannot be argued away, and it really torpedoes the Trades Union Congress. I should like it to get into the hands of all the electors in this country. It would be something that they could understand. Most of the speeches to-day have been almost above the heads of most Members of the House, but this is something which could be proved, and which the people of this country could understand. If a flight from the pound began, the cost of living would rise to such a height that it would he impossible for them to procure their food, and, once they realise that, they will support the Government in balancing the Budget.

Mr. W. J. BROWN

The House has been called together to-day to discuss ways and means of solving the crisis that has arisen. I rise, not to suggest any solution for that crisis, but to suggest that there is no solution of it short of the working classes taking power into their own hands. I want to speak to that proposition and to look at the position that has been taken up by the Government, the Opposition, the hon. Baronet who spoke from below me, and the right Gentleman the Member for Epping (Mr. Churchill). I will begin with the last, because it is the easiest to dispose of him. His sole contribution to the discussion is that what we want is an early election. He may want an early election, but I imagine that it will carry little support in those circles which have been immediately responsible for the production of the current crisis, and, even if he had his way, which I think is exceedingly doubtful, the result of the election would not alter one iota the broad issue which this country and this House have to face. With regard to the position of the Government, one has to distinguish between the elements that compose it. I listened to the speech of the right hon. Gentleman the Member for Bewdley (Mr. S. Baldwin) with interest and with great respect, because I regard him as an honest exponent of capitalist philosophy and, when he said that the Tory party, which is par excellence the capitalist party, felt itself obliged to line itself up behind the Prime Minister and the Chancellor of the Exchequer, one understood and sympathised with the position that he and his colleagues have taken up.

The same sympathy cannot be extended to the Labour elements which now sit upon that side. The Prime Minister may have been perfectly right when he said they were called upon to face a crisis, not of weeks or months, but of hours, and, faced with that crisis, they had to act in a certain way. If one accepted the view that they had to act in that way—and I do not accept it—nothing that the Prime Minister or the Chancellor of the Exchequer can say can absolve them or their late colleagues for what has happened during the last two years. The charge against the late Government is not that it created the capitalist crisis. The charge against them is threefold. First, it is that, not having created that crisis, they did nothing substantial to deal with it. The second is that they allowed the masses for a period of two years to believe that, in the present situation of British capitalism vis-a-vis world capitalism, they could go on expanding the social services and maintaining or raising the standard of life of this country without coming into direct conflict with the whole capitalist system in Britain. The third charge against them is that, when 9.0 p.m

the hollowness of that position was demonstrated and they faced the crisis in its most acute form, at the first impact of that crisis they surrendered the whole philosophy upon which the Labour and Socialist movement has been built up and passively accepted the demands of the bankers. If I am opposing the National Government, as I am, I hope it will be made plain that I am not opposing it because of any sympathy with the record of the late Government, because in my view the passivity and the dishonesty of the late Government—[Interruption.] I am entitled to say that because I said it earlier. I am entitled to say it for one reason above all. When men upon these benches were sitting opposite, they were cheering to the echo the very men that they now denounce as traitors and expelled me from their party when I ventured to talk the very philosophy that they themselves are talking now. If anyone has a right to speak upon this issue, I suggest that it is myself. I will go further and I will say I have more respect for the men who carried the implications of their own position to a logical conclusion—and that is true of the Prime Minister and the Chancellor of the Exchequer—than I have for the position of many men who went nine-tenths of the way on that road and then, at the fifty-ninth minute of the eleventh hour, retreated.

Now I want to deal with the solution. [Interruption.] Jeers as to which part of the House I ought to sit in are completely misplaced. Wherever I sit, truth will be spoken as far as I understand it.

Mr. MUGGERIDGE

You are not the only one.

Mr. BROWN

I have not suggested that. It will be spoken with complete disregard for its effect upon political combinations in this House, for I believe we are reaching a phase which will make nonsense of all the carefully constructed political combinations that the mind of man can conceive of. I want to deal first with the position of the Government. Their position is that, faced with a capitalist crisis, they propose to take two broad lines of action. They propose, first, to balance the Budget, and, secondly, to inflict substantial reductions in the standard of life of the unemployed and the employed population. I say the employed population for the chief significance of the proposed reduction in unemployment benefit is not the saving that it will effect from the Exchequer point of view, but its effect in making it more difficult for the employed person to resist reductions in his standard of life.

The programme of the Government is a double programme of balancing the Budget, in the main at the expense of the social services and of State servants, and of inflicting an immense reduction in the standard of life of the employed and the unemployed population in order to restore partially the position of British capitalism in relation to world capitalism upon the overseas market. That is the programme of the so-called National Government. It is my view that that programme will defeat its own end. Suppose that the Government can secure a reduction of £100,000,000 in expenditure upon the Budget, and suppose that it can also secure the reductions in the standard of life in the employed and unemployed populations. I do not know that it can secure those things. It has been said in this House this afternoon that Parliamentary opposition is not the only resort of the working-class in this country. It is not. It may be that we may shortly enter a period of acute industrial strife which may knock the programme of the Government into smithereens before we are through.

But let us assume for the purpose of argument that they can carry through both aspects of that programme. I submit to the House that you cannot effect a reduction of £100,000,000 in State expenditure and a reduction in the standard of life of the employed and unemployed population without producing two consequences straight away. The first consequence is an increase in the size of the unemployment problem as far as the home market is concerned. The second consequence is a further diminution in revenue resulting from a reduction of turnover and profit and indirect taxation as a result of that very cut. It may be our view that the decline in the home market may be offset by the advantage to British capitalism in the world market derived from lowered production costs resulting from the enforced reduction of wage standards in Great Britain. It may be that a temporarxy advantage will be secured in that way. But all history goes to show that if the capitalist industrial system of any one country secures an advantage over its competitors by means of enforced reductions in the standard of life, those reductions are promptly combated in the capitalist systems of competing countries, and at the end of a very short period you are back in the same very difficult position.

Therefore, even if the Government can carry through their programme, the result will be two-fold. First, an increase in the size of the unemployment problem—and that increase will largely offset the proposed economies, because you cannot leave those men to starve without creating the conditions necessary for social revolution in Britain—and, secondly, a decline in revenue which will, within a very short space of time, present you with the same kind of Budgetary crisis as the country is facing now. So much for the position of that bench.

Now may I look at the position of the Front Bench on this side, because it is essential that my own position should be made sound and clear in relation to the Labour Front Bench just as I have tried to make it clear in relation to the Front Ranch opposite. The first thing about which we have to be clear on this side of the House is that any propaganda about the unreality of the crisis is a lie. The crisis in British capitalism is a real and desperate crisis, and if it is sought to confuse the minds of the people of this country by propaganda that this is an unreal or an artificial crisis, my voice will be lifted in opposition to that suggestion. The crisis is real. How does the Front Bench propose to deal with it? So far we have bad from the Front Bench no real statement of policy.

Lieut.-Commander KENWORTHY

It is an historical survey.

Mr. BROWN

My hon. and gallant Friend the Member for Central Hull (Lieut.-Commander Kenworthy), who likes to make everybody else's speech in addition to his own, tells me that it is an historical survey. If it was merely an historical survey, I suggest that an historical survey is no answer to the case that has been put from that Front Bench to-day.

Mr. MILLS

What case?

Mr. BROWN

The case put by the Prime Minister, that unless certain action was taken, you would have a flight from the pound, depreciated currency and complete uncertainty as to the purchasing power of incomes of every kind. My only concern with that historical survey is that it proves that for practical purposes there is not a halfpennyworth of difference in choosing between those two benches. This Front Bench was prepared to agree that cuts should be made in the wages of civil servants, in the pay of teachers, in the pay of the Army, the Navy and the police. They were prepared to agree that there should be economies even in Unemployment Insurance provided they stopped short of a cut in the standard rate of benefit. What is the difference between the two sides? The difference is that one will go ten-tenths of the way, and the other will go nine-tenths of the way. As far as the philosophic difference is concerned, there is none. The only difference is that those men carry the logic of their position to its conclusion, and these men retreat from the clear logic of their position behind the hope of electoral success.

I do not think that I have ever read a more disgraceful public pronouncement than the pronouncement of the late President of the Board of Trade. To what does it amount? That in a situation of tremendous crisis, from the capitalist point of view, a great public man who is not prepared to put up the alternative to capitalism hails the present situation as a miraculous escape for this side of the House and says in effect—[Interruption]. Oh, yes. If there is to be any argument about it, I will quote it. Listen! it is confidently assumed that the new Government must continue until the Budget of next year. It will continue longer. What is described as the record of the Labour Government will be speedily forgotten. Partners in another Coalition, nothing can now save Liberalism as an independent force, Conservatives will be denied the opportunity of proceeding with the major items in their programme; electorally they will suffer most because of the terribly disagreeable things affecting millions of the electorate that the National Government must do. Yes, that is true, but observe the note at the end. Yesterday they [Labour] dreaded a contest; to-day they are almost within sight of their clear majority in the House of Commons. Yes, a clear majority in the House of Commons for a body of men who went nine-tenths of the way along the capitalist path, and only retreated before the remaining one-tenth. Philosophically, there is no difference between the position of the two Front Benches. There is difference of emphasis, but it is my purpose to suggest that no difference of emphasis will meet the situation. What I want to suggest to the House and, above all, to the trade union representatives on this side, is that British capitalism in relation to world capitalism cannot survive except at the expense of affecting enormous reductions in the standard of life of the masses of the people. [Interruption.] I am trying to put my view as clearly as I can. Fundamentally, the fact of the situation is this—we may dodge it, but sooner or later we have to come to grips with it—that British capitalism cannot survive in the present world situation except at the cost of effecting immense reductions in the standard of life of our people. [Interruption.] I am getting cheered from this side now. I do not mind from which side the cheers come, provided that everyone who cheers me will face logic and the facts.

If what I have said represents the truth, and it has been cheered, that British capitalism cannot survive except at the cost of effecting enormous reductions in the standard of life, what is the conclusion? The conclusion is that you cannot get out of that situation by any hanky-panky about the mobilising of foreign securities. It may be true that you can mobilise foreign securities. We did it during the War.

Mr. MACQUISTEN

With the consent of the owners.

Mr. BROWN

It does not matter whether you do it with their consent or by compulsion. It is theoretically and practically possible to mobilize foreign in- vestments in London. That is my view. If the late Government had been able to do that it would not have altered the position one iota. It might have lessened the pressure from the banks, but it would have left the question of the balance of trade and British capitalism absolutely untouched. The process might have been drawn out and the late Government might have lingered for six months or 12 months instead of expiring in so many days, but the ultimate end would have been the same, because the basic facts of the industrial situation cannot be overcome by the kind of cheap and easy financial manoeuvre such as has been suggested. What is the logic of the statement of the kind that has been so enthusiastically cheered on this side?

If it be true that British capitalism cannot survive except at the expense of affecting enormous reductions in the standard of life, the conclusion is, that unless you are prepared to mobilise the masses to fight capitalism, then all the rest is humbug. You cannot fight the logical conclusion of a thing unless you are prepared to fight the thing itself. If the present situation of capitalistic economy in Britain demands these reductions in the standard of life, you cannot fight those reductions effectively unless you are prepared to fight capitalism itself and, if necessary, bring it down. [Interruption.] I do not understand the hon. Member.

Mr. MILLS

I will make it clear if I have a chance.

Mr. BROWN

If the hon. Member's point is that those who are prepared to bring down capitalism are minorities, I do not understand him.

Mr. MILLS

Perhaps I may be able to make myself clear later.

Mr. BROWN

Unless an hon. Member when he makes an interruption can make it intelligible so that one can deal with it, it is better not to make it.

Mr. MILLS

May I ask the hon. Member for West Wolverhampton (Mr. W. J. Brown) to re-read the concluding paragraph of the extract he has made from the statement by the late President of the Board of Trade, who draws the conclusion that a majority Government in power are able to do things which a minority cannot do?

Mr. BROWN

I am exceedingly grateful for that interruption, because that is the last facade of humbug it is necessary to tear aside before we get to grips with realities. If we had a complete Labour majority to-day in this House and we had the late Government back in power with a complete Parliamentary majority behind them, that Government would either do what the late Government did or find itself compelled to face up to the logic of the argument that I am now addressing to the House. This is not a question of mathematical majorities in the House of Commons or the country. It is not a question of willingness to face up to the logic of the historical situation and the historical events. Until men and women on this side of the House are prepared to face up to the logic of the present situation of British capitalism, then Labour politics will remain humbug. Any attempt to persuade the masses that they can effectively resist the wage reductions under the present situation which British capitalism makes necessary, without coming into direct conflict with capitalism, is to delude and deceive and ensnare the masses into action upon the basis of false pretences.

There is no solution of this problem short of the overthrow of the capitalist system. [An HON. MEMBER: "Is that what civil servants say?"1 It is not a question of what civil servants say. We have been asked to express our view of this situation, and I am expressing my view, and whether civil servants agree with it or not does not affect one iota the truth of what I am saying. When the House of Commons is summoned to consider ways and means of getting out of this crisis the short, honest answer is that there are only two solutions. One of them, the capitalist one, involves an immense reduction in the standard of life of the British people with the prospect of further reductions as time goes on, because every reduction here is followed by corresponding reductions elsewhere. If humanity gets into a descending spiral, with crises recurring and each time more acutely and each time on a lower level of life, the whole problem of His Majesty's Government—if it be not a mistake to call it His Majesty's Government; if it is not rather a Government of Threadneedle Street—is an attempt to solve a crisis upon one level and to avoid creating a greater crisis on a lower level of life.

Sir ALFRED BUTT

We are most interested to hear the hon. Member, but will he tell the House what he proposes to do, when he has overthrown British capitalism, to feed the population of this country?

Mr. BROWN

The short answer is that the feeding of the people of Great Britain does not depend upon the maintenance of the capitalistic system.

Sir A. BUTT

How are you going to obtain your food?

Mr. BROWN

How do we obtain it now?

Sir A. BUTT

By getting capital to provide work.

Mr. BROWN

You get your food by providing manufactured goods in exchange for food, and we can do that without the aid of the capitalist system. There are only two lines of suggestion. One is the Government's proposal, which may be defined as an attempt to solve a crisis upon one level of life by precipitating a greater crisis upon another and lower level of life, or, as my hon. Friend the Member for Camlachie (Mr. Stephen) reminds me, might be described as rather like the process of trying to feed a dog on its own tail; and the other solution is to attack the very system which gives rise to the appalling contradiction that people can only survive in a world of plenty by being willing to be starved. That is the crowning economic paradox of the whole capitalist system under which we live. If the men and women on this side of the House want to serve the interests of the masses outside, they will best do so, not by pretending that there is any kind of quack remedy to the situation, but by telling the people the truth. I think they have got to make their choice between two things: accept the reduction in the standards of life or be prepared to oppose the system that gives rise to the necessity for those reductions.

I would like to say something about my own position, and to use the words of Lenin to describe it: It is a necessity of the present situation that we must oppose Korniloff, but it by no means follows from the necessity of opposing Korniloff that we should support Karensky. This party must make up its mind where it stands. I have a very great deal of sympathy with the position of the hon. Baronet the Member for Smethwick (Sir O. Mosley). He is absolutely right when he says that he has urged this party again and again to face the logic of events. If the Labour party can do no more than jeer at people who try to make it face the logic of events—[Interruption.]—No, hon. Members are not jeering at me, but they jeered at the hon. Member for Smethwick. I have attended many meetings of the Parliamentary Labour party, and it is broadly true to say that. the attitude towards any Member who urged that we should face the logic of events was a hostile, cynical and jeering attitude.

Mr. THURTLE

Surely there are different views as to what is the logic of events?

Mr. BROWN

I beg this party to believe that if it only proposes to take the line of telling the masses that there is no crisis, but that this is merely a "bankers' ramp," and that we can avoid the consequences of it without facing up to the logic of the two issues that I have tried to put to the House, that will do nothing but serve as a smokescreen behind which reality is lost, and the country is allowed to drift further into disaster.

Mr. AMERY

The hon. Member for West Wolverhampton (Mr. W. J. Brown) has spoken with his accustomed sincerity. He has the advantage over some of his colleagues of being able to claim that he has been consistent in utterance during the last two years. It has been of great advantage that a Debate has been allowed to take place in which we are less trammelled than we often are by the rules of Procedure, and that Members on both sides have been able to touch the fundamentals of the great issues that affect the life of the nation. I have listened with deep interest, and sometimes with a much larger measure of agreement than I thought possible, to some of the speeches of hon. Members from the other side of the House, although I have not always shared their conclusions. I think that the hon. Member for West Wolverhampton in his speech, and even more perhaps the hon. Member for Bridgeton (Mr. Maxton) were trying to get at what is the essential issue before the country to-day, namely, as to whether the standard of living of our people and all that we mean by British civilisation can continue to be maintained on an unorganised basis. To that extent I join with them. It ought to be within the power of a great country like this, and still more within the power of a great group of countries, the free nations of the British Empire, not to be so entirely at the mercy of those fluctuations of prices which are the result of the unorganised efforts of bankers, investors and depositors, and of individuals all over the world. Surely, too, it ought to be within the power of this country to organise the activities of individuals in trade. I am a believer in individualism, yet laws can be passed by this Parliament for the regulation of trade to bring these individual activities into line and into harmony with the general interest. It is a hopeful sign that there should be this underlying agreement as to the problem that we have to solve.

The particular method which the hon. Member for Bridgeton has in view may not be my method, nor is his method the one that I noticed advocated in an interesting speech by the late Minister of Transport, but we believe to a large extent, and on all sides of the House, that there is a great crisis of lack of organisation that we have to face. At the same time we have to keep in view the fact that, urgent and supremely important as those issues are, there is an even more immediate crisis that grew up a few weeks ago. The hon. Baronet the Member for Smethwick dismissed that crisis as "the panic of all the woolly minds." It may have been the panic of the woolly minds, but it was a panic, and it had to be dealt with, and dealt with in relation to the fears that caused it. I did not gather from the view of the hon. Member for West Wolverhampton that the reconstruction of society which he advocated would have stopped that immediate panic, or stopped the disastrous consequences upon the livelihood of the people, if that panic had taken place.

Therefore, as far as the immediate issue is concerned for which the present Government was formed and for which this House has been called together, before we deal with those broader issues, we have to deal with the immediate trouble. This Government having been formed to carry through certain measures, unpalatable to us on this side of the House as well as to hon. Members on the other side, Measures that will involve considerable risks and sacrifices on the part of many of us who have to face an election, the only thing for us to do is to see those Measures through. We may not like every detail of them, but what is certain is that if this House, assembled in these conditions, defeats the Government on any of the main issues of economy that it is bringing forward, or creates the impression in the world that this Government is not able to carry them through, then the formation of this Government will have been in vain and the disaster which has been temporarily averted will be upon us at once. Therefore, from that point of view, the first duty of this House is to support the Government in dealing with these Measures as promptly and as effectively as possible.

But in dealing with them it will not be dealing with the real underlying crisis; it will not have done more than postpone for a few weeks the dangers which threaten the industrial fabric of this country. The Prime Minister this afternoon spoke of the panic of a fortnight ago as a typhoon. It was indeed a very serious squall. It all but sank the pound, and it did sink a Government in this country, but it was not the real storm which may yet break upon us. It was one of those fierce warning gusts which bid us beware lest the real hurricane overtake us unprepared. The barometer is still dead low; the real causes of the crisis are still with us. I agree with the hon. Member for Smethwick that the crisis is not essentially a Budget crisis. He said quite truly that in a country like the United States which has just had a deficit of £180,000,000, there is no panic about the dollar. If our industries were in a sound position and were capable of standing an additional taxation which is required to meet the situation, if our trade was balancing, I do not believe that any foreign investor or depositor would care a fig whether we were meeting our unemployment expenditure by borrowing or by paying on the nail. The real crisis is not in the Government Budget which we are met to discuss but in the national Budget, in the figures of our foreign trade and of our industrial production.

The fact is that as a nation we are not paying our way—[An HON. MEMBER: "And never did!"] We may not, have paid our way in the actual figures of our visible exports and imports but what has happened now is that the ever-widening gap between these two is no longer being closed by the earnings of our shipping and by our dividends overseas. As that gap has widened those earnings have gone down, and while last year the Board of Trade was able to claim that when everything was taken into account we had a favourable balance of £39,000,000, this year it is certain that we shall have a deficit of anything from £50,000,000 to £100,000,000 on our national trading account. For a, good number of years we have been investing abroad more than we have earned, borrowing the difference at short call, but in the present year we shall have to borrow not to invest but to exist; we shall have to borrow to pay for the foodstuffs and raw materials without which this country cannot live. That is the gravity of the present situation. Behind these trade figures you have the tragedy of our productive industries where, with very few exceptions in special or safeguarded branches, our industries are failing more and more to hold their own at home and abroad. I do not wish to weary the House with any figures. It is enough to point out that as compared with 1924 the June quarter of this year shows an increase in volume of 38 per cent. in our imports of manufactures and a decrease of 36 per cent, in our export of manufactures. No nation can continue to stand a position worsening as this position is with such terrifying acceleration.

That situation will not he appreciably changed by anything we shall do in the next few weeks. But until it is changed the danger is still with us and the run on the pound can begin again at any moment. The pound has not been saved by the formation of the present Government. It cannot be saved by anything we may do in helping the Government to get on with the necessary work of the next few weeks. It has had a respite, that is something, but it is still under suspended sentence of execution. There are, I believe, only two ways of solving this situation. There is one way which is often referred to as reducing our costs to competitive level, and generally in the mouth of those who use it it means a reduction of wages. That is the only solution possible if we continue our present unorganised, undefended trade system. But we have to face what that solution means if we are to make any success of it. It is no good talking about a 10 per cent. reduction in wages if we are to meet the competition of Belgium and Czechoslovakia, where wages are 50 per cent. lower than ours. We have to go far further than any of those leading articles in the newspapers or shrewd business men have told us is necessary.

Speaking for myself and, I believe, for everyone of my colleagues in this Government, and for the Prime Minister, we do not conceive the measures to be introduced this Session, the necessary and unescapable consequences of what has taken place in the last year or two, as the starting point of a new policy of reducing the standard of living, of wages, in this country. If I thought it was that I should certainly not support the policy or encourage the Government in carrying it through. That belongs to the past, to the immediate crisis which has arisen out of the mistakes of the past; it is something we have to deal with and clear away. There remains the other policy, the only policy which, I believe, can help us in our present difficulty, the policy of national economic defence and development, the policy of securing for our own manufacturers and producers the markets of this country, the policy of taking the immense opportunity that is being offered to us today from the British Empire. Never has there been such a need, so obvious and so urgent, for all the communities in the British Empire to get together. I believe that with such a policy we could also regain our position in the foreign trade of the world, not by cutting wages but by the economies that would result from large markets and the efficiency which the large market brings.

But that solution obviously cannot be carried out by the present Government or by this House of Commons. The Government, composed as it is, could not accept such a change. I should not be doing justice to the inexorable consistency of the Chancellor of the Exchequer or the Home Secretary if I suggested that that was possible. It cannot be done in this House, it can be done only in a House of Commons which has a clear and decisive mandate from the country behind it, and by a Government which is of one mind on this great issue. If I say "a Government of one mind," I do not necessarily say a Government of one party alone. I realise the immense advantages which would result if a great advance in national economic policy had behind it the wider authority and the more enduring sanction which could be given to a Government that was in any sense national, that enlisted in its ranks men of other parties who were prepared to join in that task. But I add this one qualification, that that wider basis is only worth securing if it is secured without loss of the efficiency of the policy which the need of the situation demands. The situation to-day is far too serious for weak compromises. When you have to cross a raging torrent that is 100 feet wide and swelling every hour, it is no good talking about the statesmanship of people of different views agreeing to build a bridge 20 feet wide.

It is no good to-day talking about a revenue tariff, about duties on manufactures only, without facing what is involved not merely for agriculture, but for the pound and the cost of living to the people of this country in a continuance of the unregulated flow of agricultural imports into this country. It must be a National Government with a bold and comprehensive policy. For such a policy, if the Prime Minister were convinced, as I believe the facts must convince him, that such a policy is necessary, and were prepared to come forward and put it before the people of this country, no mere consideration of partisanship, no mere desire for a monopoly of the fruits of office, would prevent us on these benches, whether now in the Government or outside, from welcoming, supporting and cooperating with him or with any other Members of the House in that task. We ask the Government to get on with the business that it has undertaken. When it has done that, one way or another, what is essential is that we should have a Government and a Parliament representing the views of the nation in this erisis. We in this Parliament were elected under conditions which have no relation to the situation of to-day. We were elected in another world, before the deluge. We are a dying Parliament. At the earliest possible opportunity, when this immediate work is done, let us go back and get a new warrant of authority from those we claim to represent, for the immense tasks that lie before us.

Mr. A. V. ALEXANDER

No one can speak from this Box during this Debate without being filled with a good deal of emotion. The separation that has taken place between my late colleagues and the rest of us in the recent Government has been painful, I believe, on both sides. As my right hon. Friend the Leader of the Opposition put it earlier to-day, it is breaking off a piece of work in which we were all concerned and to which we had given our lives, for raising the standard of life of the working classes of this country. If we have to take the field very shortly in our appeal, from both sides of the House, to the judgment of the electors upon what has taken place, so far as I am concerned, while I shall be bound rigidly right through to oppose the point of view that they have now taken, I hope I may be able to do it without bitterness or rancour.

We have had a Debate which seems to me very often to have wandered from the point of the Motion which the Prime Minister submitted, partly because you, Mr. Speaker, were kind enough to make the Debate as wide as possible, and partly because occasionally the Debate has been used for specific attacks. But, speaking on behalf of my colleagues on this side, I think it is essential that we should be quite clear about one or two things in connection with the immediate crisis which caused the resignation of the last Government. We have been taunted from this side of the House in one or two specific quarters with having consented to or decided on specific economies to which we ought never to have consented, and which many hon. Members on this side, no doubt speaking quite conscientiously, say that they would in no circumstances even have debated. But I think that their criticism and the position which the Government found themselves in three or four weeks ago prove the sincerity of the whole of the Labour Cabinet, as it existed then, in trying to deal with the crisis which, I shall show, was not the creation of the Labour Government. It is quite another thing to say, in regard to the economies which were then proposed, that the Labour Government as a whole was committed to the specific economies which had been under discussion as a whole.

I want to deal specifically with the point on which my right hon. Friend the Leader of the Opposition was challenged this afternoon by the Home Secretary, who, I understand, is to follow me. My right hon. Friend said that on the Saturday morning when there had been negotiations between the Prime Minister and the Chancellor of the Exchequer and the leaders of the other parties, we were told that the proposals which had been under consideration by the Labour Government would not be sufficient unless there were further economies of from £25,000,000 to £30,000,000, the bulk of which was to come from Unemployment insurance benefit. That was challenged. I want to say, on behalf of every one of my colleagues on this side, that whoever made the statement to those who were negotiating on behalf of the Labour Cabinet—and I cannot say specifically who it was—that was the statement to those of us who take our stand absolutely behind the statement made by the Leader of the Opposition this afternoon, and it will be for other people to explain how it was that we came to be faced with that position.

Nor, let me point out, is that inconsistent with the statement which was made by the Home Secretary to his party meeting last Saturday week when he was describing to them the necessity for the step which he had decided to take, in collaboration with the leaders of the other parties. I am sure that if the right hon. Gentleman refers to the report in "The Times" of 29th August, he will agree with what I am going to say. He said that there were substantial points of agreement as follows—first, that borrowing must cease, particularly for unemployment; secondly, that the Budget must be made to balance; thirdly, that large economies were necessary but that sacrifices must be equitably distributed over the community; fourthly, that a tariff was left in the background, and fifthly, that no greater disservice to the country could be rendered than to have an immediate General Election. Then he went on to say as reported in "The Times": The Prime Minister and Mr. Snowden indicated what their economy proposals were likely to be. Sir Donald Maclean and he (the Home Secretary) regarded them as in the main a bold and courageous scheme, but after consideration and consultation with others, they thought that some diminution must imperatively be made in the scale of unemployment benefit. Let me point out further, that there is not one of my late colleagues who sit opposite, who will say that the Members of the late Cabinet had agreed, as a whole, by Thursday morning, to the figure placed before them, on Wednesday, 19th August. What I have just read gives the account of the Home Secretary to his party, of what took place on Thursday, 20th August, and I want hon. Members to observe that the figure which was then in front of the Home Secretary and his colleagues, was not the figure of £56,000,000 which has been quoted. It was a much larger figure than that, a figure to which we were never committed and to which we did not agree, and yet on top of that figure, we were told that we had not gone far enough, although we had been described as bold and courageous.

I want the House and especially this side of the House to observe that the leaders of the Opposition parties were demanding specific cuts upon the unemployed, not merely on top of the figure which was put forward for discussion, but on a figure of nearer £80,000,000 which was first taken by the representatives of the Cabinet in order to discuss it and to see what the figure was likely to be. In face of that fact, I cannot see how it is necessary at all to discuss whether it was £25,000,000 or £30,000,000, or even whether in the particular case of the Home Secretary a figure was mentioned. The fact is that the statement of the Home Secretary to his own party reported in "The Times," proves the contention which was made by my right hon. Friend this afternoon.

10.0 p.m.

May I come now to the actual crisis itself? One thing for which I was sorry this afternoon and for which I am sure the Prime Minister himself would be sorry afterwards, was the taunt at us in the suggestion that, perhaps, we at last realised that there was a crisis. I am perfectly certain that there was not one of his colleagues who did not know that there were very grave dangers in the position as it was reported to us when we assembled on 19th August. Per- sonally, I resent the continuous suggestions from different parts of the House that members of the Labour Cabinet had not sufficient knowledge of practical matters to know what the result of inflation would be. It is perfectly ridiculous to suppose that those who were dealing with the matter responsibly, did not know what would be the dangers of inflation.

What we wanted to know in the first place was exactly how we should stand in trying to carry the Measures suggested, and my right hon. Friend was perfectly right this afternoon when he said that when the many proposals under consideration had been discussed, and after we had finally agreed, we should have been prepared to face Parliament and to take a Parliamentary decision. But we were told the whole time from 19th August, "There is no time to summon Parliament. You must give sufficient statutory notice and the whole crash will be upon you before you can get any effective action done." The Prime Minister will know that I do not put this in any way unfairly, and I admit that it is easy to be wise after the event, but, looking back, I cannot help thinking that if, as plainly indicated by his statement to-day and by events, he anticipated great difficulty in getting such economies and cuts through a House of Commons, in which the largest party were the representatives of the workers, it would have been far wiser to have given notice that Parliament was to meet as soon as the Cabinet had come to the conclusion of their negotiations with the different parties and to have given statutory notice in time for that.

As to the cause of the crisis, some hon. Members who have spoken in the country and one or two who have spoken to-night, are anxious, it seems to me, that we should not deal with the real cause of the crisis. It is perfectly easy in a Debate of this kind to go off upon the general position and the trade balance and the like. These questions can be discussed in detail when you come to deal with specific remedies from time to time, but we have a right in view of the way in which we have been unfairly attacked again and again, to state our case in this matter. My right hon. Friend has been compared to Judas taking the 30 pieces of silver, and Lord Hailsham said at a party meeting that Socialist legislation was responsible for the financial position. The right hon. Gentleman the Member for Bewdley (Mr. S. Baldwin) who made, in the circumstances, such a fair speech this afternoon, none the less told his party meeting when he was explaining his action, that it was quite plain that my right hon. Friend the Leader of the Opposition was taking his action because he wanted to lead class warfare. I think it will be found that there is a fair summary of what he attempted to convey to his party meeting. In those circumstances we are entitled to say tonight what our views are as to the real cause of the crisis. It is first of all because the country has never yet had the wisdom to take the advice that Labour has given the country consistently since the Armistice.

In the first instance, we said that it was suicide to expect that you would ever clear up the mess in Europe by requiring the nations of the world who were engaged in the War to go in for repayment of reparations and War debts. That has been consistently the position of Labour. [Interruption.] The hon. Lady says that everybody said it. I remember the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) being instrumental in publishing a report of a so-called Imperial Committee presided over by Mr. Hughes, of Australia, in which they reported that Germany could be made, with proper pressure, to pay £24,000,000,000. I remember well that in 1923 the same right hon. Gentleman, in the "Daily Telegraph," wrote, an article in which he stated that perhaps that was over-stated, that it took some time for the average mind to realise that there was a difference between internal payments and external payments. We are seeing to-day the real result of the nation not taking the original advice of Labour, given in the teeth of the War profiteers and the hard-faced men of two parties who constituted the 1918–1922 Government.

In the second place, the crisis was contributed to by a policy in regard to the repayment of international debts for which we were not responsible. The right hon. Gentleman opposite made a trip to America. He came back with a debt settlement with the States in his pocket which his late revered leader told him, so we understand, put this country in bondage for a generation. On top of that, the one whom he selected, but no longer favours, as Conservative Chancellor of the Exchequer made arrangements with France and Italy. What was the result of that? The result is that we forgave nearly £400,900,000 to France and a much larger percentage of the debt to Italy, and you have not reduced one tithe of the burden that you have forgiven in figures to your foreign debtors on the payments to be made to the rentier who holds the debt in this country. You forgive your debtors, but you pay your creditors, and the biggest part of your creditors in that respect are the rentiers in your own country. [interruption.] The hon. Member will permit me to make my own speech in, my own way. That burden, as a result, of those debts, is increasing, in its incidence of burden upon the community, every day.

It is a curious thing that when we are asked not to oppose specific overhead cuts in payments to the unemployed, we are told, "Ah, do not forget that there has been a slight reduction in the cost of living since 1929." We should all like to be put back to the position in 1929. What about those in receipt of interest on war loans? Let me point out to the House that there is not a single statistical authority who has examined this point who does not admit, not going back to 1918, but taking the change in the incidence of prices since 1924, that the increased value, the increased purchasing power, of the receivers of war debt interest has been 30 points since 1924, and that since 1929 they estimate it at 15. Why is it that the first attack is made upon the poorest? I am perfectly well aware that it will be said that during the Debates upon the Budget we must not forget that sacrifices are being asked for from other people as well. Sacrifice, it seems to me, always depends on what you have got left after making it.

It is also very necessary to say, especially in view of the last speech made by the right hon. Member for Sparkbrook (Mr. Amery), who has always been consistent in his economic and fiscal addresses both in this House and on platforms outside, that it has been made abundantly plain to us, as Members of the late Government, and in other circles, that there is a widespread feeling—we stand up to it—that the maintenance of unemployment benefit insurance at the present rates bolsters up, in their view, too rigid a minimum of rates of pay. There is not a single industrialist of any importance in this House who does not hold that a reduction in the rates of unemployment insurance benefit will make it easier for him to deal with the larger issue of wages. When the right hon. Gentleman puts up his other alternative, which is so well known and has been so often scientifically expounded by him, in regard to tariffs, he is only putting up an alternative to the reduction of wages by a back door. When that, is put up as an alternative to deal with the larger situation I hope the Home Secretary and my right hon. Friend the Chancellor of the Exchequer and others will be able to give him a little instruction as to what is going to be the effect upon our budgetary position, especially in relation to the volume of trade, of restricting imports by making it more difficult for people who send us imports to buy our exports, and generally putting as many interruptions in the course of international trade exchange as possible.

The PRESIDENT of the BOARD of TRADE (Sir Philip Cunliffe-Lister)

Are you speaking for your party?

Mr. ALEXANDER

I am quite prepared to say that I am speaking for my party if that is to be the remedy for the position. That will not be our remedy. I have not come to the end of the causes of the crisis about which some hon. Members opposite no doubt would like to forget. They have never been given, it seems to me, with such brilliance and argumentive ability as they were given by the Chancellor of the Exchequer in December, 1929. We are asked in the midst of this crisis suddenly, for the first time in the whole of the post-War period, to balance the Unemployment Insurance Fund. There is not a single Government of any colour or description since the Armistice, when the charge of unemployment became heavier than the normal fund provided, which has not borrowed; more than that, in 1921, in 1922 and part of 1923, not only were they borrowing on the fund but they had, because of the bankruptcy of local authorities who had to maintain those who were turned off the fund, to borrow through the agency of the Treasury and the Ministry of Health for current expenditure on Poor Law relief. The Chancellor put the blame in the right place when he said this of the late Chancellor of the Conservative Government: The right hon. Gentleman quoted from the Blanesburgh Report of 1927, but this story did not begin in 1927; it began in 1925 and 1926, when the right hon. Gentleman reduced the State contribution to the Unemployment Fund, and reduced all other contributions. He reduced the contributions to the Unemployment Fund by £10,000,000 a year. If that had not been done, the cost of the increased calls in respect of Unemployment Insurance could have been entirely met, and there would not have been one penny of debt on the Unemployment Fund to-day."—[OFFICIAL REPORT, 24th December, 1929; col. 2211, Vol. 233.] That was in December, 1929, yet what was the position? It was that the debt had been increased during that period of Conservative Government—wonderful, courageous people who are standing up—[Interruption]—and who with a majority of 200 had not the guts to tackle the position. When they increased the debt from—5,000,000 to—36,000,000, they at the same time reduced direct taxation, so that during that period they presented their friends, the direct taxpayers, with nearly—160,000,000. When they made the Unemployment Fund bankrupt, they reduced direct taxation when they knew in their hearts that they were piling up trouble for the future. Now they ask us to take the whole of the penalty of the reckoning which they were responsible for writing on the wall. So far as we are concerned, we knew of the crisis, and we were prepared to balance the Budget. That cannot be denied, but we took the attitude that if the Budget was to be balanced, it was to be balanced in such a way that if the working classes had to suffer in the way of economies they should not be those at the bottom, and it was to be dependent, if we were finally agreed upon it, on the proper proportion being raised by the taxation of the rich. I think that that is in complete accord with social justice. In the long run it was the right thing to do for the future of the trade of the country.

It is useless talking about protecting the home market unless your people are still able to buy. It is all very well talking about a protective market as being an alternative to cuts in the unemploy- ment pay. You might explain how it is that America, with a gold reserve of £900,000,000 and the highest protectionist tariff in the world, has 10,000,000 unemployed. A senator gets up in the Senate and makes the charge against the Government that 1,000 people were dying daily from starvation in the States. If you want to help, leave the person who has the least of his wants satisfied with at any rate a reasonable opportunity of satisfying them, in that way keeping the wheels of industry going.

We were told that we ran away. I forget who wrote it, but I remember reading many years ago the remark that it sometimes requires courage not to acquire somebody else's courage. We did not run away. [An HON. MEMBER: "You retired according to plan."] That statement is a deliberate lie. We did not run away. We were prepared to balance the Budget. I do not agree with all that has been said about a "bankers' ramp," but I do agree that the hold of the financier upon the lives of the people is something which has to be completely overhauled. In the particular instance of the need for the loan, I do not believe that the American bankers ever had put to them the details of what Labour might have been expected to approve in a balanced Budget. I believe they were only asked, "If a balanced Budget includes a 10 per cent. cut from the unemployed will that satisfy you?" In those circumstances, it is not reasonable or fair to endanger friendship with any country in the world, including the United States, by statements of that kind. When we come to the actual position of the banks themselves, let us remember that the City and the financial houses cannot escape their share of the contribution to the present position; and in those circumstances I cannot imagine why it is the unemployed are to be asked first to tighten their belts, in order to relieve the City financiers. I think my words prove themselves, but I have Confirmation from Lord Beaverbrook. Lord Beaverbrook, in a thrilling endeavour to get the Prime Minister to become a William Pitt, said this: How did the crisis arise? Our financiers had been borrowing short and lending long, or, in effect, lending long because German short money owing to us had become long money through the inability of that people to pay its debts on their due date. Our international financiers had been borrowing from the French and Americans at 2 percent. and lending to the Germans at 8 percent. I have not quoted figures before in my public statements, but I will take those given by this Press Lord. What is the position? Seventeen days were spent in Paris dealing with the Hoover plan which created a grave position and an internal panic in Germany, when the shutters were up on their banks, and financial transfers in connection with the banks had to be done under Decree; people who had lent short to London in order that London might lend long, and take the risk at a good profit said, "We had better collect from London while the going is good." If you will take the dates of the weeks of withdrawals of gold, you will find that they correspond.

The beginning of the difficulties in London therefore arose long before the publication of the details of the May report. We then got the same kind of propaganda which we had been suffering from for the previous two years. It was a wicked propaganda which from the first tended to undermine confidence all over the world. I remember meeting delegates and friends during the London Naval Conference, and almost the first thing they said in conversation was: "What is this that So-and-So has been saying about the Administration of Unemployment Insurance? Is it not bringing you into a very serious position." The same story has been repeated on many other occasions as to what was the actual administration of the Unemployment Insurance, and the harm it was said to be doing in this country. The same people and the same Press have used the publication of the May Economy Report to add to a feeling of that kind. I think the right hon. Gentleman the Member for Epping was right when he said that there was no real change in the financial situation and that there was no need for panic. We have been asked why we could not do something with regard to mobilising our credits overseas. I have heard interruptions from the Government Front Bench and other places which seem to indicate that that would have been impossible and yet on the 22nd August when the final stages of the crisis had been reached, the Economist stated: It is plain, therefore, that while a substantial proportion of our capital overseas could only be disposed of with difficulty and at great sacrifice, Great Britain still possesses enormous mobilisable resources which in the event of an extreme crisis might he made available (as a great quantity of them were during the late War) to support our exchange. In spite of the depreciation which the slump has wrought in them, British overseas assets are still far more than sufficient to rule out of the question any such immediate threat to our international exchange position as Germany and other debtor countries have undergone in the past few months." That article also included a list of the securities which were readily mobilisable. This is not the first time that the House of Commons has faced issues as to whether it is the rich or the poor who should be called upon to pay first—and that is the ultimate issue now. There is no one who has read of the events of the earlier years of the last century who will not recall exactly the same circumstances arising, and we have had them in more recent years still. While we were prepared to face economies and a balancing of the Budget which would spread the burden all round, we refused, and I believe my colleagues were right in refusing, to be literally pushed over the top to put the final and devastating blow upon the rates of unemployment benefit and, as a first blow against the minimum wage rates of the workers of this country.

Sir H. SAMUEL

The right hon. Gentleman has addressed the House with his accustomed cogency and vigour. He has spoken in a tone of strong controversy, but I shall not follow him in that tone. [Interruption.] I, for one, greatly deplore the fact that the House of Commons in these days should be divided as we see it to be, and that right hon. and hon. Gentlemen opposite find themselves conscientiously obliged to take up an attitude of antagonism to the present Government. I deplore that so deeply that nothing that I shall say to-night, or on any other occasion, will by a single word emphasise those divisions or enlarge these controversies. The right hon. Gentleman the Member for Epping (Mr. Churchill) has pointed out with much force this afternoon how great a weakness it is to the nation that in these days there should be these dissensions. I am not sure that his own speech was very helpful as a means of attaining greater unity. He expounded his own views with regard to a general tariff, his views with regard to India, his views with regard to a three-party system, and then he said, "On that basis we are all together." The right hon. Gentleman always thinks that where he is everyone is. I shall not, however, be tempted by his speech, or by that of the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) to say a single word in reference to the tariff controversy, greatly as I am tempted to do so. But it must not be taken from that fact that silence is assent; nor must it be assumed that all of us agree that the best way to deal with the adverse balance of trade is by means of a general tariff, or even that a general tariff would serve to redress the balance of trade. [interruption.] I prefer to do as my right hon. Friend the Member for Bewdley (Mr. S. Baldwin) did this afternoon. He deliberately put aside that issue, recognising that first things were first, and that it was the duty of all of us to combine together on measures on which we could be agreed in order to solve the immediate problem. Perhaps I may be permitted to say this, as an expression of my own opinion, that we should be wise not to give voice again to our political halloos until we are out of the present financial wood, or at all events until we see our way out of that wood. There are certain things on which, from the Debate to-day, it appears that the two sides of the House are agreed. One is that the crisis is not something imaginary but is a real crisis—that, whatever might be its causes, or whoever might be to blame for events in the past, the crisis itself is grave and urgent. The right hon. Gentleman the Leader of the Opposition said so in definite terms to-day; the late First Lord of the Admiralty has said so within our hearing a few moments ago; and another Member on the opposite bench, the late Minister of Health, the right hon. Gentleman the Member for Nelson and Colne (Mr. Greenwood), in a speech a few days ago, used these words. He attributed the crisis to the existing economic system. He said: The crisis was real, not an invention. During the last few weeks we have been, given society as it is, trembling on the very verge of national ruin. National ruin, if that phrase is not exaggerated, is a ruin in which all classes would suffer. It is not merely a flight from the pound. A flight from the pound also involves a flight from the shilling, and the working-classes and the poorest of the poor would suffer from the collapse of our currency. I had occasion a, few months ago to ascertain what was the total amount of investments in savings banks, national savings certificates, building societies, co-operative and friendly societies and trade unions, and the total I found to be £1,237,000,000. All those savings would have been profoundly affected if the value of sterling had collapsed. Once begun, hard indeed would it be to stop it. We may all of us regret the necessity for cuts in the national expenditure, but far better a cut of 10 per cent. than a slide of 50 per cent.

As to the causes of the crisis, we have heard little to-day, from the Front Bench at all events, about a bankers' conspiracy—some nefarious, sinister, secret, international conspiracy to overthrow the Labour Government in England. We all from time to time have letters from correspondents who are convinced that they are the victims of some malign semi-criminal conspiracy which is affecting their welfare and their health. It is called persecution mania. We have had something of the same kind in some of the speeches and articles of the last few weeks. It is not the bankers who have been the cause of the crisis. It is the facts with which the bankers had to deal. The leader of the Opposition spoke of the publication of the May Committee report as if that were one of the main origins of the crisis. We who used to sit on those benches were directly responsible for the appointment of the May Committee. We made the Motion, which was accepted by all parties in the House and passed almost unanimously, for the appointment of that Committee. Its report was published. Does anyone suggest that, apart from the recommendations as to remedies, the facts of the present situation as stated in that report were in any way distorted? Was it anything more than the truth that was told as to the actual facts of the financial situation and, if that report revealed nothing more than the truth, was the country not to know what its financial situation was? If such a report as that had been withheld, if such a revelation had not been made, when the shock did come, as come it must some day, it would have been far worse. Possibly the disease would have gone too far for remedy.

Whatever the causes, whoever was to blame, we are all agreed in this House to-night that the crisis was a real one, and we are agreed also as to the facts of the financial situation. If not, why did right hon. Gentlemen opposite and their Friends agree, provisionally and on certain conditions, to cuts in the national expenditure to the extent of £56,500,000? Provisionally, subject to other classes bearing their share, subject to unemployment allowances not being reduced, they did agree that it was essential in the present financial situation to make reductions of national expenditure of £56,500,000. That very fact is ample justification for the assertion that the crisis was a reality, was urgent, and had to be dealt with as a matter of imperative necessity.

Out of the financial crisis emerged the political crisis. I refer again to the speech of the right hon. Gentleman the Member for Epping this afternoon, who suggested that it might have been better if the Leader of the Conservative party, instead of forming part of a Government, on a comprehensive basis, had offered his support to the late Government if they were willing to continue in office and to do the work which essentially needed to be done. But those assurances of support were given, as he himself has said to-day, both by him and by those who were authorised to speak on behalf of the Liberal party. Our advice constantly was, that in order to preserve the unity of the nation, the late Government should continue in office provided they were willing to take measures that were adequate to meet the situation. Hon, and right hon. Gentlemen who cast their minds back over the course of events during the last two years will believe me when I say that I was not a party to any conspiracy to overthrow the late Government. The criticism of my action had been of the opposite kind. We all of us offered our support to the then Government if they would continue in power, and, further than that, we pledged ourselves to vote in Parliament for whatever measures of economy might be essential and to share any unpopularity in constituencies affected thereby.

Mr. LANSBURY

Is it not a fact that you insisted upon this cut in addition to the other cuts?

Sir H. SAMUEL

Perhaps the right hon. Gentleman will forgive me. In fact that is the next point with which I was about to deal. The Leader of the Opposition and the right hon. Gentleman who has just spoken has referred to the course of events during the few days prior to the resignation of the Government. I must say a few words as to the part which my friends and I played in those negotiations, but as for what happened in the Cabinet itself and the conversations which took place between the Prime Minister and the Chancellor of the Exchequer and their late colleagues, I, of course, cannot say a word, and it must be left to them to give such answers as they think desirable. But when the right hon. Gentleman the Leader of the Opposition said that they were called upon so to frame measures that the Unemployment Fund should balance, I was at a loss to understand him. If he meant that borrowing was to cease, that, indeed, we were all agreed upon. The late Minister of Labour had declared long ago that it was dishonest to go on borrowing for the Fund, and it was also dishonest to pretend that our Budget balanced when, in fact, we were borrowing at the rate of about £1,000,000 every week for that purpose.

That, I am sure, is not what the right hon. Gentleman had in mind. By the Unemployment Fund balancing, he must have meant that they were required at once, or in the near future, so to increase contributions, so to reduce benefits and so to stop unemployment benefit being given to persons who could be dealt with by public assistance committees and otherwise, that by such measures as those straightway the receipts and expenditure of the Unemployment Fund should balance. Did he mean that? I presume he did. Otherwise the words that the fund should balance have no meaning. That, undoubtedly, is a very desirable ideal, but I do not think anyone believes that it can be obtained by a single stroke and at the present moment. No one in the course of those negotiations suggested that was an imperative condition that must be fulfilled straight away by the production of their proposals. Similarly, when the right hon. Gentleman said that there were required by the representatives of the other parties economies of £25,000,000 to £30,000,000 more than had been proposed, involving a cut of 20 per cent. in the unemployment standard benefit—[HON. MEMBERS: "He did not say that!"] Yes. That is what he said. He quoted the figures. He said that the unemployment benefit of 30s. for a man and family was to be reduced to 24s. No one proposed that at any stage, so far as I am aware.

Mr. LANSBURY

rose—

Sir H. SAMUEL

Perhaps the right hon. Gentleman will allow me to proceed.

Mr. LANSBURY

You are telling a story which is not true.

Sir H. SAMUEL

It is perfectly true that we did represent to the Government that in our view some substantial effort should be made to lighten the enormous burden of the Unemployment Fund upon the public finances. When the Royal Commission reported and recommended a readjustment of the Fund so as to enable it really and actually to balance in the immediate future, no party in the State at that time was willing to urge that those recommendations should be carried out to their full effect. Conservatives, Liberals, and the Labour party were most reluctant to effect reductions in the benefit, but now we felt, both the Liberal representatives and the Conservative representatives, that the state of the country was so grave and the estimate for next year for the Unemployment Fund was so vast that there must be some cut, not to the extent of even the fall in the cost of living in the last two years, but some cut in the rate of benefit.

It has not yet been mentioned, and I have the permission of the Chancellor of the Exchequer to state it, that, if no economies or changes were made, apart from the premiums from the employers and employés, amounting to £28,000,000, the Estimate for the charge upon the public Exchequer for the unemployed for next year would amount to the immense sum of £115,000,000. [HON. MEMBERS: "What do you spend upon armaments?"] Some of the older Members of the House will remember the days when the whole of the expenditure of the State for all purposes was a less sum than that. We were reluctant to suggest a reduction, and most sincerely and genuinely reluctant, for I realise to the full that these are the poorest of the poor and that they bear, as I have said publicly, more than any other class of the community the brunt of the economic depression, but when other classes of the community are to be called upon to make sacrifices, we felt that there must be some effort made there also.

It has been suggested that this has been done merely out of deference to foreign observers who regarded a reduction under this heading of expenditure as essential if confidence was to be restored. I was much more animated by the fact that I believe that if the late Government or any Government had come to the House of Commons and had demanded from it increases in direct and in indirect taxation, which required great economies in the pay of various classes of servants of the State and did nothing to try to lessen the immense charge of unemployment upon the public purse, the House would not have accepted such a recommendation. Hon. Members may disagree, but those were the reasons which animated our action.

The late Government, as the Leader of the Opposition has said, found itself unable to cope with the problem as it was presented to them. They resigned and the present Government were formed. Let me express here the regret which is felt in all quarters in the House at the absence of one of its most distinguished figures, through the grave illness of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George). The course that was taken by the Liberal party received his approval and also received the unanimous endorsement of the Members of the party itself. We find ourselves now in co-operation with those to whom we have been actively opposed, contrary to our expectations and contrary, if I may respectfully say so, to our desires.

The loan which has been obtained has, of course, only temporarily redeemed the situation. Even if we were to do what some hon. Members suggest, to do what is called "mobilise our foreign investments," that is to say, obtain the compulsory loan of certain securities which are held by British nationals abroad, that would merely be a very temporary expedient. It would merely be like the old Irishwoman, who with great satisfaction, claimed that she had been able to borrow enough money to pay all her debts. A loan has to be re-paid, and when we open credits in America or in France, those credits, as soon as they are used, become debits, and sooner or later those debits have to be met. They are a mere temporary expedient. As for a more permanent solution of the grave position in which the country finds itself, what suggestion have we had, what single constructive suggestion, in the speech of the right hon. Gentleman the leader of the Opposition? The late Foreign Secretary rose in his place to-day to declare that, in his view, it is simply the duty of an Opposition to oppose. Yes, that is true, if they are against the whole purpose and object of the Government of the day, and it is true with regard to particular Measures with which they disagree. But in the crisis in which the nation finds itself, I venture respectfully to suggest to hon. and right hon. Gentlemen opposite that it is not their duty merely to offer an opposition to the Government of the day because they are the Opposition and because this is the Government. I have never believed in that somewhat crude political doctrine. If we had believed that it is merely the duty of an Opposition to oppose, when we sat on those benches, the country would have been deprived of the advantage, as I believe it to have been the advantage, of the services of the right hon. Gentleman who has been Foreign Secretary for the last two years.

I cannot believe that, in the present circumstances, those who have held great offices of State—Foreign Secretary, First Lord of the Admiralty, President of the Board of Trade—will not render such support as is in their power, to whatever extent their consciences allow them, to the Government of the day, in order to meet what is a very grave national crisis. When the whole situation of the country is revealed to the House and to the nation by the Chancellor of the Exchequer next Thursday, and the Measures, as we believe the equitable Measures, which are proposed to be adopted to meet it are brought forward, I feel certain that there will not be that uncompromising and bitter opposition which has been threatened in some quarters. If it does prevail, if that spirit is evident, the Government, in accordance with its duty, will be obliged to meet it. There will be no hithering and thithering; the Government will proceed swiftly and resolutely to deal with the problems which are within its grasp. If we are opposed, we shall throw ourselves, as we now do, upon the decision of the whole

House of Commons, in whose hands lie the fortunes of the nation.

Question put, That this House will, upon Thursday, resolve itself into a Committee to consider of the Ways and Means for raising the Supply to be granted to His Majesty.

The House divided: Ayes, 309; Noes, 249.

Division No. 465.]	AYES.	[11.0 p.m.
Acland-Troyte, Lieut.-Colonel	Collins, Sir Godfrey (Greenock)	Hamilton, Sir George (Ilford)
Ainsworth, Lieut.-Col. Charles	Colman, N. C. D.	Hamilton, Sir R. (Orkney & Zetland)
Altchison. Rt. Hon. Craigle M.	Colville, Major D. J.	Hammersley, S. S.
Albery, Irving James	Conway, Sir W. Martin	Hanbury, C.
Alexander, Sir Wm, (Glasgow. Cent'l)	Cooper, A. Duff	Hannon, Patrick Joseph Henry
Allen, Lt.-Col. Sir William (Armagh)	Courtauld, Major J. S.	Harbord, A.
Amery, Rt. Hon. Leopold C. M. S.	Courthope, Colonel Sir G. L.	Harris, Percy A.
Ashley, Lt.-Col. Rt. Hon. Wilfrid W.	Cranborne, Viscount	Hartington, Marquess of
Aske, Sir Robert	Crichton-Stuart, Lord C.	Harvey, Major S. E. (Devon, Totnes)
Astor, Mal. Hn. John J. (Kent, Dover)	Croft, Brigadier-General Sir H.	Haslam, Henry C.
Astor, Viscountess	Crookshank, Capt. H. C.	Henderson, Capt. R. R. (Oxf'd, Henley)
Atholl, Duchess of	Culverwell, C. T. (Bristol, West)	Heneage, Lieut.-Colonel Arthur P.
Atkinson, C.	Cunliffe-Lister, Rt. Hon. Sir Philip	Hennessy, Major Sir G. R. J.
Baillie-Hamilton, Hon. Charles W.	Dalkeith, Earl of	Hills, Major Rt. Hon. John Waller
Baldwin, Rt. Hon. Stanley (Bewdley)	Dalrymple-White, Lt.-Col. Sir Godfrey	Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Balfour, George (Hampstead)	Davidson, Rt. Hon. J. (Hertford)	Hope, Sir Harry (Forfar)
Balniel, Lord	Davies, Dr. Vernon	Hore-Belisha, Leslie
Beamish, Rear-Admiral T. P. H.	Davies, E. C. (Montgomery)	Home, Rt. Hon. Sir Robert S.
Beaumont, M. W.	Davies, Maj. Geo. F. (Somerset, Yeovil)	Hudson, Capt. A. U. M. (Hackney, N.)
Bellairs, Commander Carlyon	Davison, Sir W. H. (Kensington, S.)	Hunter-Weston, Lt.-Gen. Sir Aylmer
Bennett, Sir E. N. (Cardiff, Central)	Dawson, Sir Philip	Hurd, Percy A.
Berry, Sir George	Despencer-Robertson, Major J. A. F.	Hurst, Sir Gerald B.
Betterton, Sir Henry B.	Dixey, A. C.	Hutchison, Maj.-Gen. Sir R.
Bevan, S. J. (Holborn)	Dixon, Captain Rt. Hon. Herbert	Irskip, Sir Thomas
Birchall, Major Sir John Dearman	Duckworth, G. A. V.	Iveagh, Countess of
Birkett, W. Norman	Dudgeon, Major C. R.	Jones, Llewellyn-, F.
Blinded, James	Dugdale, Capt. T. L.	Jones, Sir G. W. H. (Stoke New'gton)
Boothby, R. J. G.	Eden, Captain Anthony	Jones, Henry Haydn (Merioneth)
Bourne, Captain Robert Croft	Edmondson, Major A, J.	Jones, Rt. Hon. Leif (Camborne)
Bowater, Col. Sir T. Vansittart	Elliot, Major Walter E.	Jowitt, Rt. Hon. Sir W. A. (Preston)
Bowyer, Captain Sir George E. W	Eimley. Viscount	Kedward, R. M. (Kent, Ashford)
Boyce, Lestle	England, Colonel A.	Kindersley, Major G. M.
Bracken, B.	Erskine, Lord (Somerset, Weston-s-M.)	Knight, Holford
Braithwaite, Major A. N.	Evans, Capt. Ernest (Welsh Univer-)	Knox, Sir Alfred
Brass, Captain Sir William	Everard, W. Lindsay	Lamb, Sir J. Q.
Briscoe, Richard George	Falle, Sir Bertram G.	Lambert, Rt. Hon. George (S. Molton)
Broadbent, Colonel J.	Ferguson, Sir John	Lane Fox, Col. Rt. Hon. George R.
Brown, Col. D. C. (N'th'l'd., Hexham)	Fermoy, Lord	Latham, H. P. (Scarboro' & Whitny)
Brown, Ernest (Leith)	Flelden, E. B.	Law, Sir Alfred (Derby, High Peak)
Brown, Brig.-Gen. H.C.(Berks, Newb'y)	Fison, F. G. Clavering	Leigh, Sir John (Clapham)
Buchan, John	Foot, Isaac	Leighton, Major B. E. P.
8uchan-Hepburn, P. G T.	Ford, Sir p. J.	Lewis, Oswald (Colchester)
Bullock, Captain Malcolm	Forestier-Walker, Sir L.	Little, Graham-, Sir Ernest
Burgin. Dr. E. L,	Frece, Sir Walter de	Llewellin, Major J. J.
Burton, Colonel H. W.	Fremantle, Lieut.-Colonel Francis E.	Locker-Lampion, Rt. Hon. Godfrey
Butler, R. A.	Galbraith, J. F. W.	Locker-Lampson, Com. O.(Handsw'th)
Butt, Sir Alfred	Ganzonl, Sir John	Lockwood, Captain J. H.
Cadogan, Major Hon. Edward	Gauit, Lieut.-Col. A. Hamilton	Long, Major Hon. Eric
Campbell, E. T.	George, Major G. Lloyd (Pembroke)	Lovat-Fraser, J. A.
Carver, Major W. H.	George, Megan Lloyd (Anglesea)	Lymington, Viscount
Castle Stewart, Earl of	Gibson, C. G. (Pudsey & Otley)	McConnell, Sir Joseph
Cautley, Sir Henry S.	Gillett, George M.	MacDonald, Rt. Hon. J. R. (Seaham)
Cayzer, Sir C. (Chester, city)	Gilmour, Lt.-Col. Rt. Hon. Sir John	MacDonald. Malcolm (Bassetlaw)
Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)	Glassey, A. E.	Macdonald, Sir M. (Inverness)
Cazalet, Captain Victor A.	Glyn, Major R. G. C.	Macdonald, Capt. P. D. (I. of W.)
Cecil, Rt. Hon. Lord H. (Ox. Univ.)	Gower, Sir Robert	Maclean, Sir Donald (Cornwall, N.)
Chadwick, Capt. Sir Robert Burton	Graham, Fergus (Cumberland, N.)	Macpherson, Rt. Hon. James I.
Chamberlain, Rt. Hn. Sir J.A.(Birm., W.)	Granville, E.	Macquisten, F. A.
Chamberlain, Rt. Hon. N. (Edgbaston)	Grattan-Doyle, Sir N.	Maitland, A. (Kent, Faversham)
Chapman, Sir S.	Greaves-Lord, Sir Walter	Makins, Brigadier-General E.
Christie, J. A.	Gray, Milner	Mander, Geoffrey le M.
Church, Major A. G.	Greene, W. p. Crawford	Margesson, Captain H. D.
Churchill, Rt. Hon. Winston Spencer	Gretton, Colonel Rt. Hon. John	Marjoribanks, Edward
Clydesdale, Marquess of	Griffith, F. Kingsley (Mlddlesbro' W.)	Mason, Colonel Glyn K.
Cobb, Sir Cyril	Gritten, W. G. Howard	Meller, R. J.
Cockerill, Brig.-General Sir George	Gunston, Captain D. W.	Merriman, Sir F. Boyd
Cohen, Major J. Brunel	Hacking, Rt. Hon. Douglas H.	Millar, J. D.
Colfox, Major William Philip	Hall, Lieut.-Col. Sir F. (Dulwich)	Milne, Wardlaw-, J. S.
Mitchell, Sir W. Lane (Streatham)	Rhys, Hon. Charles	Steel-Maitland, Rt. Hon. Sir Arthur
Moore, Lieut.-Colonel T. C. R. (Ayr)	Richardson, Sir P. W. (Sur'y, Ch'ts'y)	Stewart, W. J. (Belfast, South)
Morris, Rhys Hopkins	Roberts, Sir Samuel (Ecclesall)	Stuart, Hon. J. (Moray and Nairn)
Morris Jones, Dr. J. H. (Denbigh)	Rodd, Rt. Hon. Sir James Rennell	Sueter Rear-Admiral M. F.
Morrison, W. S. (Glos., Cirencester)	Rosbotham, D. S. T.	Taylor, Vice-Admiral E. A.
Morrison-Bell, Sir Arthur Clive	Ross, Ronald D.	Thomas, Rt. Hon. J. H. (Derby)
Muirhead, A. J.	Rothschild, J. de	Thomas, Major L. B. (King's Norton)
Nall-Cain, A. R. N.	Ruggles-Brise, Colonel E.	Thompson, Luke
Nathan, Major H. L.	Runclman, Rt. Hon. Walter	Thomson, sir F.
Newman, Sir R. H. S. D. L. (Exeter)	Russell, Alexander West (Tynemouth)	Titchfield, Major the Marquess of
Newton, Sir D. G. C. (Cambridge)	Russell, Richard John (Eddisbury)	Todd, Capt. A. J.
Nicholson, D. (Westminster)	Salmon, Major I.	Train, J.
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)	Samuel, A. M. (Surrey, Farnham)	Tryon, Rt. Hon. George Clement
O'Connor, T. J.	Samuel, Rt. Hon. Sir H. (Darwen)	Turton, Robert Hugh
Oliver, P. M. (Man., Blackley)	Samuel, Samuel (W'dsworth, Putney)	Vaughan-M organ, Sir Kenyon
Oman, Sir Charles William C.	Sandeman, Sir N. Stewart	Wallace, Capt. D. E. (Hornsey)
Ormsby-Gore, Rt. Hon. William	Sassoon, Rt. Hon. Sir Philip A. G. D.	Walters, Rt. Hon. Sir J. Tudor
Owen, H. F. (Hereford)	Savery, S. S.	Ward, Lieut.-Col. Sir A. Lambert
Peake, Capt. Osbert	Scott, James	Warrender, Sir Victor
Penny, Sir George	Shakespeare, Geoffrey H.	Waterhouse, Captain Charles
Percy, Lord Eustace (Hastings)	Shepperson, Sir Ernest Whittome	Wayland, Sir William A.
Perkins, W. R. D.	Simon, Rt. Hon. Sir John	Wells, Sydney R.
Peters, Dr. Sidney John	Sinclair, Rt. Hon. Sir A. (Caithness)	White, H. G.
Peto, Sir Basil E. (Devon, Barnstaple)	Skelton, A. N.	Williams, Charles (Devon, Torquay)
Power, Sir John Cecil	Smith, Louis W. (Sheffield, Hallam)	Wilson, G. H. A. (Cambridge U.)
Pownall, Sir Assheton	Smith, R.W. (Aberd'n & Kinc'dlne.C.)	Windsor-Clive, Lieut.-Colonel George
Preston, Sir Walter Rueben	Smith-Carington, Neville W.	Winterton, Rt. Hon. Earl
Purbrick, R.	Smithert, Waldron	Withers, Sir John James
Pybus, Percy John	Snowden, Rt. Hon. Philip	Wolmer, Rt. Hon. Viscount
Ramsay, T. B. Wilson	Somerset, Thomas	Womersley, W. J.
Ramsbotham, H.	Somerville, A. A. (Windsor)	Wood, Rt. Hon. Sir Kingsley
Rawson, Sir Cooper	Somerville, D. G. (Willesden, East)	Wood, Major McKenzie (Banff)
Reid, David D. (County Down)	Southby, Commander A. R. J,	Young, Rt. Hon. Sir Hilton
Remer, John R.	Spender-Clay, Colonel H.
Rentoul, Sir Gorvais S.	Stanley, Lord (Fylde)	TELLERS FOR THE AYES.—
Reynolds, Cot. Sir James	Stanley, Hon. O. (Westmorland)	Commander Sir B. Eyres Monsell and Major Owen.
NOES
Adamson, Rt. Hon, W. (Fife, West)	Dallas, George	Hoffman, P. C.
Adamson, W. M. (Stall., Cannock)	Dalton, Hugh	Hollins, A.
Addison, Rt. Hon. Dr. Christopher	Davies, D. L. (Pontypridd)	Hopkin, Daniel
Alexander, Rt, Hon. A. V. (Hillsbro')	Davies, Rhys John (Westhoughton)	Horrabin, J. F.
Allen, W. E. D. (Belfast, W.)	Oay, Harry	Hudson, James H. (Huddersfield)
Alpass, J. H.	Devlin, Joseph	Isaacs, George
Amnion, Charles George	Dukes, C.	Jenkins, sir William
Arnott, John	Duncan, Charles	John, William (Rhondda, West)
Attlee, Clement Richard	Dunnico, H.	Johnston, Rt. Hon. Thomas
Ayles, Walter	Ede, James Chuter	Jones, J. J. (West Ham, Sllvertown)
Baker, John (Wolverhampton, Bllston)	Edmunds, J. E.	Jones, Morgan (Caerphilly)
Baldwin, Oliver (Dudley)	Edwards, E. (Morpeth)	Jowett, Rt. Hon. F. W.
Barnes, Alfred John	Egan, W. H.	Kelly, W. T.
Barr, James	Evans, Major Herbert (Gateshead)	Kennedy, Rt. Hon. Thomas
Batey, Joseph	Forgan, Dr. Robert	Kenworthy, Lt.-Com. Hon. Joseph M.
Beckett, John (Camberwell, Peckham)	Freeman, Peter	Kinley, J.
Benn, Rt. Hon. Wedgwood	Gardner, B. W. (West Ham, Upton)	Kirkwood, D.
Bennett, William (Battersea, South)	Gibbins, Joseph	Lang, Gordon
Benson, G.	Gibson, H. M. (Lanes, Mossley)	Lansbury, Rt. Hon. George
Bevan, Aneurin (Ebbw Vale)	Gossling, A. G.	Lathan, G. (Sheffield, Park)
Bowen, J. W.	Gould, F.	Law, A. (Rossendale)
Bowerman, Rt. Hon. Charles W.	Graham, D. M. (Lanark, Hamilton)	Lawrence, Susan
Broad, Francis Alfred	Graham, Rt. Hon. WM. (Edin., Cent.)	Lawrie, Hugh Hartley (Stalybridge)
Brockway, A. Fenner	Greenwood, Rt. Hon. A. (Colne)	Lawson, John James
Bromfield, William	Grenfelt, D. R. (Glamorgan)	Lawther, W. (Barnard Castle)
Bromley, J.	Griffiths, T. (Monmouth, Pontypool)	Leach, W.
Brooke, W.	Groves, Thomas E.	Lee, Frank (Derby, N.E.)
Brothers, M,	Grundy, Thomas W.	Lee, Jennie (Lanark, Northern)
Brown, C. W. E. (Notts., Mansfield)	Hall, F. (York, W.R., Normanton)	Leonard, W.
Brown, Rt. Hon. J. (South Ayrshire)	Hall, G. H. (Merthyr Tydvil)	Lewis, T. (Southampton)
Brown, W. J. (Wolverhampton, West)	Hall, J. H. (Whitechapel)	Lindley. Fred W.
Buchanan, G.	Hall, Capt, W. G. (Portsmouth, C.)	Lloyd, C. Ellis
Buxton, C. R. (Yorks. W. R. Elland)	Hamilton, Mary Agnes (Blackburn)	Logan, David Gilbert
Cameron, A. G.	Hardle, David (Rutherglen)	Longbottom, A. W.
Cape, Thomas	Hardle, G. D. (Springburn)	Lonqden, F.
Carter, W. (St. Pancras, S.W.)	Hastings, Dr. Somerville	Lunn. William
Charleton. H. C.	Haycock, A. W.	Macdonald, Gordon (Ince)
Chater, Daniel	Healy, Cahir	McElwee, A.
Clark, J. S.	Henderson, Right Hon. A. (Burnley)	McEntee, V. L.
Cluse, W. S.	Henderson, Joseph (Ardwick)	McKinlay, A.
Cocks, Frederick Seymour	Henderson, Thomas (Glasgow)	MacLaren, Andrew
Compton, Joseph	Herriotts, J.	Maclean, Nell (Glasgow, Govan)
Cove, William G.	Hicks, Ernest George	MacNeill-Weir, L.
Cripps, Sir Stafford	Hirst, G. H.(York W. R. Wentworth)	McShane, John James
Daggar, George	Hirst, W. (Bradford, South)	Malone, C. L'Estrange (N'thampton)

Manning, E. L.	Richards, R.	Thorne, W. (West Ham, Plaistow)
Mansfield, W.	Richardson, R. (Houghton-le-Spring)	Thurtle, Ernest
March, S.	Riley, Ben (Dewsbury)	Tillett, Ben
Marcus, M.	Riley, F. F. (Stockton-on-Tees)	Tinker, John Joseph
Marley, J.	Ritson, J.	Toole, Joseph
Marshall, Fred.	Roberts, Rt. Hon. F. O. (W. Bromwich)	Tout, W. J.
Mathers, George	Romeril, H. G.	Townend, A. E.
Maxton, James	Rowson, Guy	Trevelyan, Rt. Hon. Sir Charles
Messer, Fred	Salter, Or. Alfred	Turner, Sir Ben
Middleton, G.	Samuel, H. Walter (Swansea, West)	Vaughan, David
Mills, J. E.	Sanders, W. S.	Viant, S. P.
Milner, Major J.	Sandham, E.	Walkden, A. G.
Montague, Frederick	Sawyer, G. F.	Walker, J.
Morley, Ralph	Scurr, John	Wallace, H. W.
Morrison, Rt. Hon. H. (Hackney, S.)	Sexton, Sir James	Watkins, F. C.
Morrison, Robert C. (Tottenham, N.)	Shepherd, Arthur Lewis	Watson, W. M. (Dunfermline)
Mort, D. L.	Sherwood, G. H.	Watts-Morgan, Lt.-Col. D. (Rhonddal)
Mosley, Lady C. (Stoke-on-Trent)	Shield, George William	Wellock, Wilfred
Mosley, Sir Oswald (Smethwick)	Shiels, Dr. Drummond	Welsh, James (Paisley)
Muff, G.	Shillaker, J. F.	Welsh, James C. (Coatbridge)
Muggeridgs, H. T.	Shinwell, E.	West, F. R.
Murnin, Hugh	Short, Alfred (Wednesbury)	Westwood, Joseph
Naylor, T. E.	Simmons, C. J.	Whiteley, Wilfrid (Birm., Ladywood)
Noel Baker, P. J.	Sinkinson, George	Whiteley, William (Blaydon)
Noel-Buxton, Baroness (Norfolk, N.)	Sitch, Charles H.	Wilkinson, Elian C.
Oldfield, J. R.	Smith, Ben (Bermondsey, Rotherhithe)	Williams, David (Swansea, East)
Oliver, George Harold (Ilkeston)	Smith, Frank (Nuneaton)	Williams, E. J. (Ogmore)
Palin, John Henry	Smith, Lees-, Rt. Hon. H.B.(Keighley)	Williams, Dr. J. H. (Llanelly)
Paling, Wilfrid	Smith, Tom (Pontefract)	Williams, T. (York, Don Valley)
Palmer, E. T.	Smith, w. R. (Norwich)	Wilson, C. H. (Sheffield, Attercliffe)
Parkinson, John Allen (Wigan)	Snowden, Thomas (Accrington)	Wilson, J. (Oldham)
Perry, S. F.	Sorensen, R.	Wilson, R. J. (Jarrow)
Pethick-Lawrence, F. W.	Stamford, Thomas W.	Winterton, G. E.(Leicester, Loughb'gh)
Phillips, Dr. Marlon	Stephen, Campbell	Wise, E. F.
Pole, Major D. G.	Strachey, E. J. St. Loe	Young, R. S. (Islington, North)
Potts, John S.	Sullivan, J.	Young, Sir R. (Lancaster, Newton)
Price, M. P.	Sutton, J. E.
Quibell, D. J. K.	Taylor, R. A. (Lincoln)	TELLERS FOR THE NOES.—
Raynes, w. R.	Taylor, W. B. (Norfolk, S.W.)	Mr. Charles Edwards and Mr. Hayes

The orders of the Day were read, and postponed.